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Execution Version
 
PURCHASE AND SALE AGREEMENT
 
BETWEEN
 
O'BRIEN RESOURCES, LLC
 
SEPCO II, LLC
 
LIBERTY ENERGY, LLC
 
CROW HORIZONS COMPANY
 
AND
 
O'BENCO II, LP
 
COLLECTIVELY, AS SELLER,
 
AND
 
BERRY PETROLEUM COMPANY,
 
AS PURCHASER,
 
DATED AS OF JUNE 10, 2008
 
 

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TABLE OF CONTENTS

ARTICLE I
PURCHASE AND SALE
 
Section 1.1
Purchase and Sale
1
Section 1.2
Certain Definitions
1
Section 1.3
Excluded Assets
7

 
ARTICLE II
PURCHASE PRICE
 
Section 2.1
Purchase Price
8
Section 2.2
Allocation of Purchase Price
8
Section 2.3
Adjustments to Purchase Price
9
Section 2.4
Ordinary Course Pre-Effective Date Costs Paid and Revenues Received Post-Closing
11
Section 2.5
Procedures
12

 
ARTICLE III
TITLE MATTERS
 
Section 3.1
Seller's Title
13
Section 3.2
Definition of Defensible Title
14
Section 3.3
Definition of Permitted Encumbrances
14
Section 3.4
Allocated Values
17
Section 3.5
Notice of Title Defects; Defect Adjustments
17
Section 3.6
Consents to Assignment and Preferential Rights to Purchase
21
Section 3.7
Limitations on Applicability
23

 
ARTICLE IV
ENVIRONMENTAL MATTERS
 
Section 4.1
Environmental Laws
23
Section 4.2
Environmental Defects
24
Section 4.3
Environmental Review
24
Section 4.4
Notice of Environmental Defects; Defect Adjustments
25
Section 4.5
Environmental Arbitration
28

 
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
 
Section 5.1
Seller Parties
29
Section 5.2
Litigation
30
Section 5.3
Taxes and Assessments
30

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TABLE OF CONTENTS
(continued) 

Section 5.4
Compliance with Laws
30
Section 5.5
Contracts
31
Section 5.6
Payments for Production
31
Section 5.7
Imbalances
31
Section 5.8
Material Consents and Preferential Purchase Rights
32
Section 5.9
Liability for Brokers' Fees
32
Section 5.10
Bankruptcy; Solvency
32
Section 5.11
Bonus, Rentals, and Royalties; Lease Accounts; Recordation of Leases; Depth
Limitations
32
Section 5.23
Limitations
34

 
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Section 6.1
Existence and Qualification
36
Section 6.2
Power
36
Section 6.3
Authorization and Enforceability
36
Section 6.4
No Conflicts
36
Section 6.5
Consents, Approvals or Waivers
37
Section 6.6
Litigation
37
Section 6.7
Financing
37
Section 6.8
Investment Intent
37
Section 6.9
Independent Investigation
37
Section 6.10
Opportunity to Verify Information
38
Section 6.11
Liability for Brokers' Fees
38
Section 6.12
Bankruptcy
38
Section 6.13
Qualification and Bonding
38

 
ARTICLE VII
COVENANTS OF THE PARTIES
 
Section 7.1
Access
38
Section 7.2
Notification of Breaches
39
Section 7.3
Press Releases
39
Section 7.4
Operation of Business
39
Section 7.5
Indemnity Regarding Access
41
Section 7.6
Governmental Reviews
42

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TABLE OF CONTENTS
(continued) 

Section 7.7
Operatorship
42
Section 7.8
Letters-in-Lieu
43
Section 7.9
Hedges
43
Section 7.10
Exclusivity
43
Section 7.11
Updated Schedules
43
Section 7.12
Contract Pumpers
43
Section 7.13
Seller's Financial Records and Data
43
Section 7.14
Legal Existence
45
Section 7.15
Acquisition of Deep Rights
45
Section 7.16
Further Assurances
46

 
ARTICLE VIII
CONDITIONS TO CLOSING
 
Section 8.1
Conditions of Seller to Closing
46
Section 8.2
Conditions of Purchaser to Closing
46

 
ARTICLE IX
CLOSING
 
Section 9.1
Time and Place of Closing
48
Section 9.2
Obligations of Seller at Closing
48
Section 9.3
Obligations of Purchaser at Closing
49
Section 9.4
Closing Payment and Post-Closing Purchase Price Adjustments
50

 
ARTICLE X
TAX MATTERS
 
Section 10.1
Liability for Taxes
52
Section 10.2
Contest Provisions
53
Section 10.3
Post-Closing Actions Which Affect Seller's Tax Liability
54
Section 10.4
Refunds
54
Section 10.5
Access to Information
54
Section 10.6
Like Kind Exchange
55
Section 10.7
Conflict
56

 
ARTICLE XI
TERMINATION AND AMENDMENT
 
Section 11.1
Termination
56
Section 11.2
Effect of Termination
56

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TABLE OF CONTENTS
(continued) 
 
Section 11.3
Distribution of Deposit Upon Termination
57

 
ARTICLE XII
INDEMNIFICATION; LIMITATIONS
 
Section 12.2
Indemnification
58
Section 12.3
Indemnification Actions
61
Section 12.4
Casualty and Condemnation
63
Section 12.5
Limitation on Actions
64

 
ARTICLE XIII
MISCELLANEOUS
 
Section 13.1
Counterparts
66
Section 13.2
Notices
66
Section 13.3
Sales or Use Tax, Recording Fees and Similar Taxes and Fees
67
Section 13.4
Expenses
67
Section 13.5
Replacement of Bonds, Letters of Credit, and Guarantees
67
Section 13.6
Records
68
Section 13.7
Use of Seller Party Names
68
Section 13.8
Governing Law and Venue
68
Section 13.9
Dispute Resolution
69
Section 13.10
Captions
69
Section 13.11
Waivers
69
Section 13.12
Assignment
69
Section 13.13
Entire Agreement
69
Section 13.14
Amendment
69
Section 13.15
No Third-Person Beneficiaries
69
Section 13.16
References
70
Section 13.17
Construction
70
Section 13.18
Limitation on Damages
70

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TABLE OF CONTENTS
(continued) 

EXHIBITS:

Exhibit A-1
Leases
Exhibit A-2
Wells
Exhibit A-3
Midstream Assets
Exhibit A-4
Equipment
Exhibit A-5
Plat
Exhibit B
Form of Assignment and Bill of Sale
Exhibit C
Form of Transition Services Agreement
Exhibit D
Plan of Operations
Exhibit E
Form of Non-Competition Agreement

SCHEDULES:
 
Schedule 1.3
Certain Excluded Assets
Schedule 3.1
Exclusion Acreage
Schedule 3.3
Permitted Encumbrances
Schedule 3.4
Allocated Values
Schedule 4.2
Environmental Disclosure
Schedule 5.2
Litigation
Schedule 5.3
Taxes and Assessments
Schedule 5.4
Compliance with Law
Schedule 5.5
Material Contracts
Schedule 5.6
Payments for Production
Schedule 5.7
Imbalances
Schedule 5.8
Consents and Preferential Rights to Purchase
Schedule 5.12
Outstanding Capital Commitments
Schedule 5.14
Payables
Schedule 5.15
Proceeds Held in Suspense
Schedule 5.19
Absence of Certain Changes
Schedule 5.20
Condition of the Properties
Schedule 5.22
Gross and Net Acres
Schedule 5.23
Knowledge of Seller Parties
Schedule 13.5
Bonds and Guarantees

 
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TABLE OF DEFINED TERMS
 

 
Page
   
Accounting Arbitrator
50
Accounting Principles 
11
Adjustment Period 
11
Affiliate 
3
Agreed Rate
3
Agreement 
1
Allocated Value 
17
Assets
1
Assignment and Bill of Sale
13
Assumed Seller Obligations 
57
Business Day
4
Casualty Loss
63
Claim 
61
Claim Notice 
61
Closing 
48
Closing Date
48
Closing Payment
50
Code
4
Confidentiality Agreement 
38
Contracts
2
Cut-Off Date
4
Damages
60
Deposit
8
Defensible Title
14

 
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TABLE OF DEFINED TERMS

 
Page
   
Effective Date
4
Environmental Arbitrator
28
Environmental Consultant
24
Environmental Defect
24
Environmental Defect Amount
26
Environmental Information
25
Environmental Laws
23
Environmental Review
24
Environmental Review Plan
24
Equipment 
2
Escrow Agent 
8
Escrow Agreement
8
Escrow Amount
65
Escrow Maintenance Period
65
Exchange Property
55
Excluded Assets 
7
Excluded Records
3
Governmental Authority 
4
Hart-Scott-Rodino Act 
4
Hydrocarbons 
4
Indemnified Person
61
Indemnifying Person
61
Independent Appraiser 
9
Lands
1

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TABLE OF DEFINED TERMS
 

 
Page
   
Laws
4
Leases
1
Lowest Cost Response 
4
Material Adverse Effect
4
Material Consent 
21
Material Contract 
5
Midstream Assets 
2
Minimum Damage Amount 
65
NORM 
24
Party 
1
Permitted Encumbrances
14
Person  
5
Post-Closing Period
52
Pre-Closing Period 
52
Properties 
2
Property Costs 
6
Purchase Price 
8
Purchaser 
1
Purchaser Group 
59
Records
3
Required Net Worth 
51
Reserve Report
6
Retained Seller Obligations
57
SEC
43

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TABLE OF DEFINED TERMS
 

 
Page
   
Seller
1
Seller Group 
58
Seller-Operated Properties 
42
Seller Party
1
Seller's Proposed Allocation Schedule 
8
Surface Rights
2
Target Closing Date 
48
Tax 
6
Tax Audit
53
Tax Indemnified Person  
53
Tax Indemnifying Person 
53
Tax Items 
52
Tax Return 
30
Title Arbitrator 
20
Title Defect
14
Title Defect Amount 
22
Transition Services Agreement 
49
Unadjusted Purchase Price
8
Undeveloped Assumption Data 
13
Undeveloped Locations
13
Units
2
Wells 
2

 
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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this "Agreement"), is dated as of June 10,
2008, by and between O'Brien Resources, LLC, a Texas limited liability company,
O'BENCO II, LP, a Delaware limited partnership, Liberty Energy, LLC, a
Massachusetts limited liability company, Crow Horizons Company, a Louisiana
general partnership, and Sepco II, LLC a Louisiana limited liability company
(collectively, the "Seller," and each a "Seller Party"), and Berry Petroleum
Company, a Delaware corporation ("Purchaser").  Seller and Purchaser are
sometimes referred to herein collectively as the "Parties" and individually as a
"Party."
 
RECITALS:
 
Seller desires to sell and Purchaser desires to purchase those certain interests
in oil and gas properties, rights and related assets that are defined and
described as "Assets" herein; and
 
It is the intent of the Seller to transfer, and the intent of Purchaser to
acquire, subject to the Excluded Assets and the further terms and conditions of
this Agreement, all other leases, lands, surface interests, and other assets
owned by Seller and located, as of the Effective Date or as of the Closing Date,
on the lands highlighted in yellow on the plat attached hereto as Exhibit A-5,
whether or not such leases, lands, surface interests, or other assets are
described on Exhibits A-1 through A-4 hereto.
 
NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
 
ARTICLE I
PURCHASE AND SALE
 
Section 1.1           Purchase and Sale.  On the terms and conditions contained
in this Agreement, Seller agrees to sell to Purchaser and Purchaser agrees to
purchase, accept, and pay for the Assets.
 
Section 1.2            Certain Definitions.  As used herein:
 
(a)           "Assets" means all of Seller's right, title, and interest in and
to the following:
 
(i)           The oil and gas leases, oil, gas, and mineral leases and subleases
described on Exhibit A-1 (the "Leases") together with the lands covered thereby
(the "Lands"), and all rights to production after the Effective Date relating to
the Leases and the Lands, including, without limitation, all royalties,
overriding royalties, net profits interests, mineral fee interests, carried
interests, and, without limiting the foregoing, other rights (of whatever
character, whether legal or equitable, and whether vested or contingent) in and
to the oil, gas, and other minerals in, on, under, and that may be produced
from, the Leases and the Lands;
 
 

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(ii)           Any and all oil, gas, water, CO2, or injection wells thereon or
on pooled, communitized, or unitized acreage that includes all or any part of
the Leases, including, without limiting the foregoing, the interests in the
wells shown on Exhibit A-2 attached hereto, whether producing, non-producing,
permanently or temporarily plugged and abandoned, and whether or not fully
described (the "Wells");
 
(iii)           All pooled, communitized, or unitized acreage which includes all
or part of any Leases (the "Units"), and all tenements, hereditaments, and
appurtenances belonging thereto;
 
(iv)           The gas processing plants, gas gathering systems, pipelines, drip
stations, and other mid-stream equipment described on Exhibit A-3 (the
"Midstream Assets" and, together with the Leases, Wells, and Units, the
"Properties");
 
(v)           All currently existing contracts, agreements, and instruments with
respect to the Properties, to the extent applicable to the Properties,
including, without limitation, operating agreements, unitization, pooling, and
communitization agreements, declarations and orders, area of mutual interest
agreements, joint venture agreements, farmin and farmout agreements, exchange
agreements, transportation agreements, agreements for the sale and purchase of
Hydrocarbons, and processing agreements; provided, however, that the term
"Contracts" shall not include (A) any contracts, agreements, and instruments
included within the definition of "Excluded Assets," and (B) the Leases and
other instruments constituting Seller's chain of title to the Leases (subject to
such exclusion and proviso, the "Contracts");
 
(vi)           All surface fee interests, easements, permits, licenses,
servitudes, rights-of-way, surface leases, and other rights to use the surface
appurtenant to, and used or held for use primarily in connection with, the
Properties, but excluding any permits and other appurtenances included within
the definition of "Excluded Assets" (subject to such exclusions, and including
without limitation those rights-of-way and other surface rights listed on
Exhibit A-3, the "Surface Rights");
 
(vii)          All equipment, machinery, fixtures, and other tangible personal
property and improvements located on the Properties or used or held for use
primarily in connection with the operation of the Properties or the production
of Hydrocarbons from the Properties, the material items of which are described
on Exhibit A-4, including, without limitation, the tubular inventory located on
the Oakes Field yard in Limestone County, Texas and in the Blocker Field
location in Harrison County, Texas and specifically described on Exhibit A-4,
but excluding items included within the definition of "Excluded Assets" (subject
to such exclusions, the "Equipment");
 
(viii)         All Hydrocarbons produced from, or directly attributable to, the
Leases, Units, or Wells after the Effective Date; all Hydrocarbon inventories
from the Properties in storage as of the end of the Effective Date; and, to the
extent related to the Properties, all production, plant, and transportation
imbalances as of the Effective Date (provided, however, that Purchaser's rights
to the Assets described in this subsection ‎(viii) shall be satisfied solely
pursuant to ‎Section 2.3); and

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(ix)           The data and records of Seller, to the extent directly relating
to the Properties, excluding, however:
 
(A)           all corporate, financial, Tax, and legal data and records of
Seller that relate to Seller's business generally (whether or not relating to
the Assets) or to Seller's business and operations not otherwise expressly
included in this Agreement;
 
(B)           any data, software, and records (including, without limitation,
the licenses or other agreements granting the right to use the same) to the
extent disclosure or transfer is prohibited or subjected to payment of a fee or
other consideration by any license agreement or other agreement with a Person
other than Affiliates of Seller, or by applicable Law, and for which no consent
to transfer has been received or for which Purchaser has not agreed in writing
to pay the fee or other consideration, as applicable;
 
(C)           all legal records and legal files of Seller including all work
product of and attorney-client communications with Seller's legal counsel (other
than Leases, title opinions, and Contracts);
 
(D)           data and records relating to the sale of the Assets, including,
without limitation, communications with the advisors or representatives of any
Seller Party or communications and arrangements among the Seller Parties and
bids received from, and records of negotiations with, third Persons;
 
(E)           any data and records relating to the other Excluded Assets; and
 
(F)           original data and records retained by Seller pursuant to ‎Section
13.6.
 
(Clauses (A) through (F) shall hereinafter be referred to as the "Excluded
Records" and subject to such exclusions, the data, software and records
described in this ‎Section 1.2(a)(ix) shall hereinafter be referred to as the
"Records.").
 
(b)           "Affiliate" means, with respect to any Person, a Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, with control in such context meaning the ability to direct
the management or policies of a Person through ownership of voting shares or
other securities, pursuant to a written agreement, or otherwise.
 
(c)           "Agreed Rate" means the lesser of (i) the one month London
Inter-Bank Offered Rate, as published on Page BBAM of the Bloomberg Financial
Markets Information Service on the last Business Day prior to the Effective Date
plus three percentage points (LIBOR +3%) and (ii) the maximum rate allowed by
applicable Laws.

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(d)           "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banks are closed for business in New York, New York or Shreveport,
Louisiana, United States of America.
 
(e)           "Code" means the United States Internal Revenue Code of 1986, as
amended.
 
(f)           "Cut-Off Date" means five o'clock local time at the location of
the Properties on a date that is the later to occur of (i) One-Hundred Eighty
(180) days after the Closing Date and (ii) December 31, 2008.
 
(g)           "Effective Date" means 12:00 a.m. Central Time on February 1,
2008.
 
(h)           "Governmental Authority" means any national government and/or
government of any political subdivision, and departments, courts, commissions,
boards, bureaus, ministries, agencies, or other instrumentalities of any of
them.
 
(i)            "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
 
(j)            "Hydrocarbons" means crude oil, gas, casinghead gas, condensate,
natural gas liquids, and other gaseous or liquid hydrocarbons (including,
without limitation, ethane, propane, iso-butane, nor-butane, gasoline, and
scrubber liquids) of any type and chemical composition.
 
(k)           "Laws" means all laws, statutes, rules, regulations, ordinances,
orders, decrees, requirements, judgments, and codes of Governmental Authorities.
 
(l)            "Lowest Cost Response" means, with respect to any Environmental
Defect, the response required or allowed under Environmental Laws that addresses
such Environmental Defect to the extent required by applicable Environmental
Laws at the lowest cost (considered as a whole taking into consideration any
material negative impact such response may have on the operations of the
relevant Assets and any potential material additional costs or liabilities that
may likely arise as a result of such response) as compared to any other response
that is required or allowed under Environmental Laws.
 
(m)           "Material Adverse Effect" means a material adverse effect (i) on
the ownership or operation of the Assets, taken as a whole, or (ii) on the
ability of Seller to perform its obligations under this Agreement to the extent
such obligations are to be performed prior to Closing or to consummate the
transactions contemplated hereby; provided, however, that Material Adverse
Effect shall not include material adverse effects resulting from general changes
in oil and gas prices; general changes in industry, economic or political
conditions, or markets; changes in condition or developments generally
applicable to the oil and gas industry in any area or areas where the Assets are
located; acts of God, including hurricanes and storms; acts or failures to act
of Governmental Authorities (where not caused by the willful or negligent acts
of Seller); civil unrest or similar disorder; terrorist acts; changes in Laws;
effects or changes that are cured or that no longer exist by the earlier of the
Closing and the termination of this Agreement pursuant to Article 11; and
changes resulting from the announcement of the transactions

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contemplated hereby or the performance of the covenants set forth in Article 7
or ‎Section 9.4(e) hereof.
 
(n)           "Material Contract" means, to the extent binding on the Properties
after Closing:
 
(i)            any farm-out agreements, participation, exploration, or other
similar upstream agreements, joint operating agreements, unit agreements, AMI
agreements, communitization agreements, pooling agreements, processing
agreements, transportation agreements, and water disposal agreements;
 
(ii)            any Contract for the sale of Hydrocarbons produced or to be
produced from the Properties that is not terminable by Seller or its successors
without penalty on no more than ninety (90) days notice;
 
(iii)           any Contract that can reasonably be expected to result in
aggregate payments by any Seller Party or Purchaser of more than Two-Hundred
Thousand dollars ($200,000) during the current or any subsequent fiscal year;
 
(iv)           any Contract that can reasonably be expected to result in
revenues to any Seller Party or Purchaser of more than Two-Hundred Thousand
dollars ($200,000) during the current or any subsequent fiscal year;
 
(v)            any Contract that constitutes a lease under which Seller is the
lessor or lessee of real or personal property which lease (A) cannot be
terminated by Seller without penalty upon sixty (60) days or less notice and
(B) pursuant to which Seller pays or receives an annual base rental of more than
One-Hundred Thousand dollars ($100,000);
 
(vi)           any Contract with any Affiliate of any Seller Party, except to
the extent that the obligations of Seller in and to the same will be merged or
otherwise cease to exist at Closing;
 
(vii)          any Contract pending for the acquisition or disposition, directly
or indirectly (by merger or otherwise), of Assets with a value in excess of
Two-Hundred Thousand dollars ($200,000) (other than sales of Hydrocarbons in the
ordinary course of business);
 
(viii)         Any Contract for the purchase of tubular or similar goods; and
 
(ix)           any Contract pending for the acquisition or disposition (by
merger or otherwise) of all or any part of the Properties, including, without
limitation, farm-out agreements, participation, exploration, or other similar
agreements, and area of mutual interest agreements, but excluding rights of
reassignment upon intent to abandon a Property.
 
(o)           "Person" means any individual, corporation, partnership, limited
liability company, trust, estate, Governmental Authority, or any other entity.

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(p)           "Property Costs" means all operating expenses (including without
limitation costs of insurance, rentals, shut-in payments, title examination and
curative actions, production and similar Taxes measured by units of production,
and severance Taxes, attributable to production of Hydrocarbons from the Assets,
but excluding Seller's other Taxes) and capital expenditures (including without
limitation bonuses, broker fees, and other Lease acquisition costs, costs of
drilling and completing wells, and costs of acquiring equipment) incurred in the
ownership and operation of the Assets in the ordinary course of business,
general and administrative costs with respect to the Assets, and overhead costs
charged to the Assets under the applicable operating agreement or, if none,
charged to the Assets on the same basis as charged on the date of this Agreement
(provided that, where Seller or its Affiliates operate a Well and there is no
applicable operating agreement, such overhead costs shall be Nine-Thousand
dollars ($9,000) per Well per month in the event that a Well is being drilled,
reworked, sidetracked, plugged and abandoned (whether permanently or
temporarily), or otherwise actively modified (provided that such operations are
in the ordinary course of business), or Nine-Hundred dollars ($900) per Well per
month for all other Wells, in either case, proportionately reduced to Seller's
working interest in any such Well), but excluding without limitation
liabilities, losses, costs, and expenses attributable to:
 
(i)             claims, investigations, administrative proceedings, arbitration,
or litigation directly or indirectly arising out, of or resulting from, actual
or claimed personal injury, illness, or death; property damage; environmental
damage or contamination; other torts; private rights of action given under any
Law; or violation of any Law;
 
(ii)            obligations to plug wells, dismantle facilities, close pits and
clear the site and/or restore the surface or seabed around such wells,
facilities, and pits;
 
(iii)           obligations to remediate actual or claimed contamination of
groundwater, surface water, soil, or Equipment;
 
(iv)           title and environmental claims (including claims that Leases have
terminated);
 
(v)            claims of improper calculation or payment of royalties (including
overriding royalties and other burdens on production) related to deduction of
post-production costs or use of posted or index prices or prices paid by
Affiliates;
 
(vi)           gas balancing and other production balancing obligations;
 
(vii)          casualty and condemnation; and
 
(viii)         any claims for indemnification, contribution, or reimbursement
from any third Person with respect to liabilities, losses, costs, and expenses
of the type described in preceding clauses (i) through (vii), whether such
claims are made pursuant to contract or otherwise.
 
(q)           "Reserve Report" means that certain report dated February 1, 2008
from Ryder Scott & Company entitled "Estimated Future Reserves and Income
Attributable to Certain Working Interests of the Consolidated Selling Interests
Including Liberty Energy, LLC."
 
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(r)           "Tax" means all taxes, including any foreign, federal, state, or
local income tax, surtax, remittance tax, presumptive tax, net worth tax,
special contribution, production tax, pipeline transportation tax, freehold
mineral tax, value added tax, withholding tax, gross receipts tax, windfall
profits tax, profits tax, severance tax, personal property tax, real property
tax, sales tax, goods and services tax, service tax, transfer tax, use tax,
excise tax, premium tax, stamp tax, motor vehicle tax, entertainment tax,
insurance tax, capital stock tax, franchise tax, occupation tax, payroll tax,
employment tax, unemployment tax, disability tax, alternative or add-on minimum
tax, and estimated tax, imposed by a Governmental Authority together with any
interest, fine, or penalty thereon.
 
Section 1.3            Excluded Assets.  Notwithstanding anything to the
contrary in ‎Section 1.2 or elsewhere in this Agreement, the "Assets" shall not
include any rights with respect to the Excluded Assets.  "Excluded Assets" shall
mean the following:
 
(a)           the Excluded Records;
 
(b)           copies of other Records retained by Seller pursuant to ‎Section
13.6;
 
(c)           Assets excluded from this Agreement pursuant to ‎Section 3.6;
 
(d)           all claims against insurers and other third Persons pending on or
prior to the Effective Date;
 
(e)           all trademarks, trade names, and other intellectual property;
 
(f)           all futures, options, swaps, and other derivatives, and all
software used for trading, hedging, and credit analysis;
 
(g)           all of Seller's interests in office leases, buildings and other
real property unless expressly identified in ‎Section 1.2(a)(i), ‎Section
1.2(a)(iii), ‎Section 1.2(a)(vi), or on Exhibit A-3;
 
(h)           any leased equipment and other leased personal property to the
extent the lease is not transferable without payment of a fee or other
consideration, subject, however, to ‎Section 3.6;
 
(i)           all office equipment, computers, software, cell phones, pagers,
and other hardware, personal property, and equipment, and contracts related
thereto that:  (A) do not relate solely and exclusively to the Properties or
relate to Seller's business generally or to other businesses or assets of Seller
and its Affiliates, except to the extent the same are expressly identified on
Exhibit A-3 or (B) are set forth on Schedule 1.3 (even if relating solely and
exclusively to the Assets);
 
(j)           any Tax refund (whether by payment, credit, offset, or otherwise,
and together with any interest thereon) in respect of any Taxes for which Seller
is liable for payment or required to indemnify Purchaser under ‎Section 10.1;

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(k)            refunds relating to severance Tax abatements (whether by payment,
credit, offset, or otherwise, and together with any interest thereon) with
respect to all taxable periods or portions thereof ending on or prior to the
Effective Date, whether received before, on, or after the Effective Date
(including, without limitation, refunds relating to the designation by the
Railroad Commission of Texas of any Well or Unit as "High Cost" pursuant to the
terms of 16 Tex. Admin. Code Sec.3.101);
 
(l)             all indemnities and other claims against Persons (even if
between the Seller Parties or their respective Affiliates) for Taxes for which
Seller or its Affiliates is liable for payment or required to indemnify
Purchaser under ‎Section 10.1;
 
(m)           claims against insurers under policies held by Seller or its
Affiliates;
 
(n)           costs and revenues associated with all joint interest audits and
other audits of Property Costs covering periods for which Seller is in whole or
in part responsible for the Assets;
 
(o)            any royalty, overriding royalty, net profits interest, volumetric
production payment, or other such interest reserved by, or conveyed to, any
Seller Party prior to the Closing Date, including, without limitation, (i) the
interests set forth on Schedule 1.3, and (ii) any overriding royalty interest
reserved by, or conveyed to, O'Brien Resources, LLC prior to the Closing Date;
and
 
(p)            any other assets, contracts, equipment, accounts, or other rights
or properties described on Schedule 1.3.
 
ARTICLE II
PURCHASE PRICE
 
Section 2.1           Purchase Price.  The purchase price for the Assets (the
"Purchase Price") shall be Five -Hundred Ninety Million dollars ($590,000,000)
(the "Unadjusted Purchase Price"), adjusted as provided in ‎Section
2.3.  Contemporaneously with the execution and delivery of this Agreement,
Purchaser has delivered or caused to be delivered to the Shreveport branch of
Capital One, N.A. (the "Escrow Agent"), a wire transfer in the amount equal to
ten percent (10%) of the Unadjusted Purchase Price in same-day funds (the
"Deposit") to be held, invested, and disbursed in accordance with the terms of
an escrow agreement of even date herewith among Seller, Purchaser, and Escrow
Agent (the "Escrow Agreement").  The Deposit and all income earned thereon shall
be distributed in accordance with the terms of this Agreement and the Escrow
Agreement.
 
Section 2.2            Allocation of Purchase Price.
 
(a)           At least ten (10) Business Days prior to the Target Closing Date,
Seller shall prepare and deliver to Purchaser, using and based upon the best
information available to Seller, a schedule (the "Seller's Proposed Allocation
Schedule") setting forth the following items:
 
(i)             the Unadjusted Purchase Price as set forth in ‎Section 2.1;
 
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(ii)            the liabilities associated with the Assets as of the Closing
that are taken into account for purposes of Section 1060 of the Code with
respect to the cost basis of the Assets as of Closing; and
 
(iii)           an allocation of the sum of (A) the Unadjusted Purchase Price
under clause (i) and (B) the aggregate amount of liabilities under clause (ii)
that are includable in the Purchaser's tax basis in the Assets among the classes
of the Assets (but not the specific Assets) as of the Closing, which allocations
shall be made in accordance with Section 1060 of the Code and the Treasury
Regulations promulgated thereunder, but which need not be consistent with the
Allocated Values established pursuant to ‎Section 3.4.
 
Seller shall, at Purchaser's request, make reasonable documentation available to
support the proposed allocations provided in Seller's Proposed Allocation
Schedule.  As soon as reasonably practicable, but not later than five (5)
Business Days following receipt of Seller's Proposed Allocation Schedule,
Purchaser shall deliver to Seller a written report setting forth any changes
that Purchaser proposes to be made to Seller's Proposed Allocation Schedule
(which report shall specify the reasons for any such changes in reasonable
detail and shall include true and complete copies of any supporting
documentation pursuant to which such changes are proposed).  The Parties shall
undertake to agree on a final schedule no later than two (2) Business Days prior
to the Closing Date.  In the event the Parties cannot reach agreement by that
date, the allocations set forth in Seller's Proposed Allocation Schedule shall
be used pending adjustment under the following paragraph.  Notwithstanding
anything to the contrary contained in this Agreement, the allocations of value
to Assets other than the Leases, Wells, and Units (including, without limitation
the Midstream Assets), if any, shall not exceed twenty-five million dollars
($25,000,000), whether by the initial allocation of value, any adjustments
thereto, or otherwise; provided, however, that to the extent that any adjustment
to the Unadjusted Purchase Price would cause the Allocated Value of such other
Assets to exceed twenty-five million dollars ($25,000,000), the amount of such
excess shall be allocated to the Wells and Units.
 
(b)           Within thirty (30) days after the determination of the Purchase
Price under ‎Section 9.4(b), Seller's Proposed Allocation Schedule shall be
amended by Seller and delivered to Purchaser to reflect the Purchase Price
following final adjustments.  Purchaser shall cooperate with Seller in the
preparation of such amended schedule.  If the Seller's amendments to Seller's
Proposed Allocation Schedule are not objected to by Purchaser (by written notice
to Seller specifying the reasons therefor in reasonable detail) within thirty
(30) days after delivery of Seller's adjustments to such schedule, it shall be
deemed agreed upon by the Parties.  In the event that the Parties cannot reach
an agreement within twenty (20) days after Seller receives notice of any
objection by Purchaser, then (i) Purchaser shall be entitled to report its
allocation of the Purchase Price for Tax purposes, (ii) each Seller Party shall
be entitled to report its respective allocation of the Purchase Price for Tax
purposes, and (iii) as between Purchaser and the Seller Parties collectively,
such separate reports as filed and reported for Tax purposes need not be
consistent.
 
Section 2.3            Adjustments to Purchase Price.  The Unadjusted Purchase
Price shall be adjusted as follows:

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(a)           Increased or decreased, as appropriate, in accordance with
‎Section 3.5 and ‎Section 4.4 (whether before or after the Closing);
 
(b)           Decreased as a consequence of Assets excluded from this
transaction as a consequence of the exercise of preferential rights to purchase
or the existence of a Casualty Loss, as described in ‎Section 3.6 or ‎Section
12.4, respectively;
 
(c)           Except with respect to amounts relating to item 1 on Schedule 5.2,
decreased by the amount of royalty, overriding royalty, and other burdens
payable out of production of Hydrocarbons from the Leases and Units or the
proceeds thereof to third Persons but held in suspense by Seller at the Closing,
and any interest accrued in escrow accounts for such suspended funds, to the
extent such funds are not transferred to Purchaser's control at the Closing;
 
(d)           Increased or decreased, as applicable, for the value of net
underproduction or net overproduction, if any, of gas from Seller's interest in
the Properties as a result of pipeline or other imbalances as of the Effective
Date, based upon the amount of the net imbalance in MMBtu multiplied by Inside
FERC's Gas Market Report Index price for East Texas, Houston Ship Channel as in
effect on the first day of the month of the Target Closing Date; provided,
however that:
 
(i)           Notwithstanding anything to the contrary contained in this
Agreement, there shall be no adjustment to the Purchase Price for imbalances
between the Seller Parties to the extent that any claim with respect to any such
imbalance is assigned to Purchaser; and
 
(ii)           Except with respect to breaches of the representation set forth
in ‎Section 5.7 , the adjustment to the Purchase Price set forth in this
‎Section 2.3(d) shall be in full settlement of all imbalances of any type, and,
at Closing, Purchaser shall assume Seller's proportionate share of any imbalance
with respect to the Properties, including, without limitation, the
responsibility for the payment of royalties with respect to such imbalance and
any obligation to balance, whether in cash or in kind.
 
(e)           Increased by the aggregate amount of Hydrocarbon inventories from
the Properties in storage on the Effective Date and produced for the account of
Seller with respect to the Properties on or prior to the Effective Date,
multiplied by the Contract price therefor, or, if there is no applicable
Contract, ninety dollars ($90.00) per barrel;
 
(f)           Except to the extent that such prepaid Taxes are included within
the definition of the "Excluded Assets," increased by the net amount of all
prepaid expenses (including prepaid Taxes, bonuses, rentals, cash calls to third
Person operators, and scheduled payments) less all third Person cash call
payments received by Seller as operator to the extent applying to the operation
of the Assets after the Effective Date; and
 
(g)           Adjusted for proceeds and other income attributable to the Assets,
Property Costs, and certain other costs attributable to the Assets as follows:

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(i)            Decreased by an amount equal to the aggregate amount of the
following proceeds received by Seller or any of its Affiliates:
 
(A)           amounts earned from the sale, during the period from and including
the Effective Date through but excluding the Closing Date (such period being
referred to as the "Adjustment Period"), of oil, gas, and other Hydrocarbons
produced from or attributable to the Properties (net of any (x) royalties,
overriding royalties, and other burdens payable out of production of oil, gas,
or other Hydrocarbons or the proceeds thereof that are not included in Property
Costs; (y) gathering, processing, and transportation costs paid in connection
with sales of oil, gas, or other Hydrocarbons that are not included as Property
Costs under ‎Section 2.3(g)(ii); and (z) production Taxes, other Taxes measured
by units of production, severance Taxes and any other Property Costs, that in
any such case are deducted by the purchaser of production, and excluding the
effects of any futures, options, swaps, or other derivatives), and
 
(B)           other income earned with respect to the Assets during the
Adjustment Period (provided that for purposes of this ‎Section 2.3(g), no
adjustment shall be made for funds received by Seller for the account of third
Persons, and excluding any income earned from futures, options, swaps, or other
derivatives); and
 
(ii)           Increased by an amount equal to the amount of all Property Costs,
and other amounts (including those Taxes and other amounts expressly excluded
from the definition of Property Costs) which are incurred in the ownership and
operation of the Assets during the Adjustment Period but paid by or on behalf of
Seller or any of its Affiliates, except in each case (A) any costs already
deducted in the determination of proceeds in ‎Section 2.3(g)(i), (B) Taxes
(other than production Taxes and other Taxes measured by units of production and
severance Taxes), which are addressed in ‎Section 10.1, and (C) costs
attributable to futures, options, swaps or other derivatives, or the elimination
of the same pursuant to ‎Section 7.9.
 
The amount of each adjustment to the Unadjusted Purchase Price described in
‎Section 2.3(f) and ‎Section 2.3(g) shall be determined in accordance with the
United States generally accepted accounting principles (the "Accounting
Principles").
 
Section 2.4           Ordinary Course Pre-Effective Date Costs Paid and Revenues
Received Post-Closing.
 
(a)           With respect to any revenues earned or Property Costs incurred
with respect to the Assets on or prior to the Effective Date but received or
paid after the Closing Date:
 
(i)            Seller shall be entitled to all amounts earned from the sale,
during the period up to but excluding the Effective Date, of oil, gas, and other
Hydrocarbons produced from or attributable to the Properties, which amounts are
received after Closing (net of any (A) royalties, overriding royalties, and
other burdens payable out of production of oil, gas, or other Hydrocarbons or
the proceeds thereof that are not included in Property Costs; (B) gathering,
processing, and transportation costs paid in connection with sales of oil, gas,
and other Hydrocarbons that are not included as Property Costs under ‎Section
2.4(a)(ii); and (C) production Taxes, other Taxes measured by units of
production, severance Taxes, and other Property Costs, that in any such case are
deducted by the purchaser of production), and to all other income earned with
respect to the Assets up to but excluding the Effective Date and received after
Closing; and

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(ii)           Seller shall be responsible for (and entitled to any refunds and
indemnities with respect to) all Property Costs incurred up to but excluding the
Effective Date that are paid after the Closing.
 
(b)           Without duplication of any adjustments made pursuant to ‎Section
2.3(g), should any Party or its Affiliates receive after Closing any proceeds or
other income to which the other Party is entitled under ‎Section 2.4(a), such
Party shall fully disclose, account for, and promptly remit the same to such
other Party.
 
(c)           Without duplication of any adjustments made pursuant to ‎Section
2.3(g), should any Party pay after Closing any Property Costs for which the
other Party is responsible under ‎Section 2.4(a), such Party shall reimburse the
other Party promptly after receipt of such other Party's invoice, accompanied by
copies of the relevant vendor or other invoice and proof of payment.
 
(d)           Without limiting the foregoing, Purchaser shall fully disclose,
account for, and promptly remit to Seller any amounts relating to item 1 on
Schedule 5.2 until such time as, in the opinion of Seller (in the exercise of
its sole discretion), it is no longer necessary to hold such amounts in
suspense.
 
"Earned" and "incurred," as used in this Section and ‎Section 2.3, shall be
interpreted in accordance with accounting recognition guidance under the
Accounting Principles.
 
Section 2.5            Procedures.
 
(a)           For purposes of allocating production (and accounts receivable
with respect thereto), under ‎Section 2.3 and ‎Section 2.4, (i) liquid
Hydrocarbons shall be deemed to be "from or attributable to" the Properties when
they pass through the pipeline connecting into the storage facilities into which
they are run or, if there are no such storage facilities, when they pass through
the LACT units or similar meters at the point of entry into the pipelines
through which they are transported from the applicable Lease or Unit, and
(ii) gaseous Hydrocarbons shall be deemed to be "from or attributable to" the
Properties when they pass through the delivery point sales meters or similar
meters at the point of entry into the pipelines through which they are
transported.  Seller shall utilize reasonable interpolative procedures to arrive
at an allocation of production when exact meter readings are not available.
 
Surface use fees, insurance premiums, and other Property Costs that are paid
periodically shall be prorated based on the number of days in the applicable
period falling on or before, or after, the Effective Date.  Production Taxes and
similar Taxes measured by units of production, and severance Taxes, shall be
prorated based on the amount of Hydrocarbons actually produced, purchased or
sold, as applicable, on or before, and after, the Effective Date.

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(b)           After Closing, Purchaser shall handle all joint interest audits
and other audits of Property Costs covering periods for which Seller is in whole
or in part responsible under ‎Section 2.4.  Purchaser shall not agree to any
adjustments to previously assessed costs for which Seller is liable, or any
compromise of any audit claims to which Seller would be entitled, without the
prior written consent of Seller, which consent shall not be unreasonably
withheld.  Purchaser shall provide Seller with a copy of all applicable audit
reports and written audit agreements received by Purchaser and relating to
periods for which Seller is responsible.
 
ARTICLE III
TITLE MATTERS
 
Section 3.1            Seller's Title.
 
(a)           Subject to ‎Section 13.18, Seller represents and warrants to
Purchaser that Seller's title to the Units and Wells shown on Exhibit A-2 and
the proved non-producing, undeveloped, probable, and possible locations shown on
Exhibit A-2 and depicted on Exhibit A-5 (the "Undeveloped Locations") is (and as
of the Closing Date shall be) Defensible Title as defined in ‎Section 3.2.  This
representation and warranty provides Purchaser's exclusive remedy with respect
to any Title Defects.
 
(b)           The Assignment and Bill of Sale to be delivered by Seller to
Purchaser at Closing (the "Assignment and Bill of Sale") shall be in form
identical to the assignment attached hereto as Exhibit B and shall contain a
special warranty of title to the Leases shown on Exhibit A-1 by, through, and
under each Seller Party severally and not jointly, but not otherwise, subject to
the Permitted Encumbrances.  Purchaser shall not be entitled to protection under
Seller's special warranty of title in the Assignment and Bill of Sale against
any Title Defect reported by Purchaser to Seller pursuant to this Article 3 or
to the extent the same has been cured or removed pursuant to ‎Section 3.5(b).
 
(c)           With respect to each Undeveloped Location, Purchaser shall not be
entitled to protection under Seller's representation in ‎Section 3.1(a) against
any Title Defect to the extent based upon, or arising out of, (i) Purchaser's
change in the surface or bottom hole location of such Undeveloped Location (or
the path of the borehole thereof) (A) to or across a location wholly or
partially outside of the applicable Unit (or, with respect to Undeveloped
Locations located within the Alton Sims lease, the applicable Lease), (B) to or
across a location which is not in all respects in compliance with any applicable
Laws (including, without limitation, density and spacing rules of the Texas
Railroad Commission), or (C) to or across all or any portion of the "Exclusion
Acreage" described on Schedule 3.1; or (ii) the completion of any Undeveloped
Location at depths deeper than the depth limitations applicable to such
Undeveloped Location, if any, described on Exhibit A-1 (collectively, the
"Undeveloped Assumption Data").

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Section 3.2            Definition of Defensible Title.
 
(a)           As used in this Agreement, the term "Defensible Title" means that
title of the Seller Parties which, subject to the Permitted Encumbrances:
 
(i)            Entitles all of the Seller Parties, collectively, to receive
(after satisfaction of all royalties, overriding royalties, nonparticipating
royalties, net profits interests, or other similar burdens on or measured by
production of oil and gas), not less than the "net revenue interest" share shown
in Exhibit A-2 of all oil, gas, and other minerals produced, saved, and marketed
from such Unit, Well, or Undeveloped Location, except decreases in connection
with those operations in which any Seller Party may be a nonconsenting co-owner
(provided that, in the event of a decrease due to an actual election of
non-consent by a Seller Party in which a third Person is entitled to all or a
portion of such Seller Party's interests, such decrease is reflected on
Exhibit A-2) decreases resulting from reversion of interest to co-owners with
respect to operations in which such co-owners elected not to consent (to the
extent reflected in Exhibit A-2), decreases resulting from the establishment or
amendment of pools or units, decreases required to allow other working interest
owners to make up past underproduction or pipelines to make up past under
deliveries, and except as otherwise stated in Exhibit A-2;
 
(ii)            Obligates all of the Seller Parties, collectively, to bear a
percentage of the costs and expenses for the maintenance and development of, and
operations relating to, any Unit, Well, or Undeveloped Location not greater than
the "working interest" shown in Exhibit A-2, except as stated in Exhibit A-2 and
except increases resulting from contribution requirements with respect to
defaulting or non-consenting co-owners under applicable operating agreements or
applicable Law and increases that are accompanied by at least a proportionate
increase in Seller's net revenue interest; and
 
(iii)           Is free and clear of liens, encumbrances, obligations, or
defects, other than Permitted Encumbrances.
 
(b)           As used in this Agreement, the term "Title Defect" means any lien,
charge, encumbrance, obligation, or defect, including, without limitation, a
discrepancy in net revenue interest or working interest that causes a breach of
Seller's representation and warranty in ‎Section 3.1.
 
Section 3.3            Definition of Permitted Encumbrances.  As used herein,
the term "Permitted Encumbrances" means any or all of the following:
 
(a)           Lessors' royalties and any overriding royalties, reversionary
interests, back-in interests, and other burdens to the extent that they do not,
individually or in the aggregate, reduce Seller's net revenue interest below
that shown in Exhibit A-2 or increase Seller's working interest above that shown
in Exhibit A-2 without a corresponding increase in the net revenue interest;
 
(b)           All leases, unit agreements, pooling agreements, operating
agreements, production sales contracts, division orders, farmouts, exploration
agreements, carried interests, sales agreements, royalty or overriding royalty
agreements, and other contracts, agreements, and instruments applicable to the
Assets, including provisions for penalties, suspensions, or forfeitures
contained therein, to the extent that they do not, individually or in the
aggregate, reduce Seller's net revenue interest below that shown in Exhibit A-2
or increase Seller's working interest above that shown in Exhibit A-2 without a
corresponding increase in the net revenue interest;

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 (c)           Subject to ‎Section 3.6, rights of first refusal, preferential
rights to purchase, and similar rights with respect to the Assets;
 
(d)           Third-party consent requirements and similar restrictions
(i) which are not applicable to the sale of the Assets contemplated by this
Agreement, (ii) with respect to which waivers or consents are obtained from the
appropriate Persons prior to the Closing Date, (iii) with respect to which the
appropriate time period for asserting the right has expired, (iv) which need not
be satisfied prior to a transfer, (v) which are not Material Consents, or
(vi) which relate to Excluded Records;
 
(e)           Liens for Taxes or assessments not yet delinquent or, if
delinquent, being contested in good faith by appropriate actions;
 
(f)           Materialman's, mechanic's, repairman's, employee's, contractor's,
operator's, and other similar liens or charges arising in the ordinary course of
business for amounts not yet delinquent (including any amounts being withheld as
provided by Law), or if delinquent, being contested in good faith by appropriate
actions;
 
(g)           All rights to consent, by required notices to, filings with, or
other actions by Governmental Authorities in connection with the sale or
conveyance of oil and gas leases or rights or interests therein if they are
customarily obtained subsequent to the sale or conveyance;
 
(h)           Rights of reassignment arising upon final intention to abandon or
release the Assets, or any of them;
 
(i)            Easements, rights-of-way, covenants, servitudes, permits, surface
leases, and other rights in respect of surface operations to the extent that
they do not reduce Seller's net revenue interest below that shown on Exhibit A-2
or increase Seller's working interest beyond that shown on Exhibit A-2 without a
corresponding increase in net revenue interest;
 
(j)            Any actual or asserted termination of Seller's title to any Lease
held by production as a consequence of the failure to conduct operations,
cessation of production, or insufficient production over any period prior to the
Closing Date unless the lessor thereunder has asserted that such Lease has
terminated, whether by direct communication, refusal to accept payment of
royalty, shut-in royalty, or other amounts calculable as a share of production
from such Lease, or otherwise;
 
(k)           All rights reserved to or vested in any Governmental Authorities
to control or regulate any of the Assets in any manner or to assess Tax with
respect to the Assets, the ownership, use or operation thereof, or revenue,
income, or capital gains with respect thereto, and all obligations and duties
under all applicable Laws of any such Governmental Authority or under any
franchise, grant, license, or permit issued by any Governmental Authority;
 
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(l)            The liens and encumbrances set forth on Schedule 3.3, and any
other lien, charge, or other encumbrance on or affecting the Assets which is
expressly waived, assumed, bonded, or paid by Purchaser at or prior to Closing
or which is discharged by Seller at or prior to Closing;
 
(m)           Any lien or trust arising in connection with workers'
compensation, unemployment insurance, pension, or employment laws or
regulations;
 
(n)           Assertions that Seller's files lack information (including,
without limitation, title opinions);
 
(o)           Failure to recite marital status in a document or omissions of
successors or heirship or estate proceedings, unless Purchaser provides
affirmative evidence that such failure or omission has resulted in another
Person's actual and superior claim of title to the relevant Property and either
(i) such other Person has asserted an actual and superior claim of title to the
relevant Property or (ii) less than two (2) years have elapsed since the date of
such document;
 
(p)           Lack of a survey, unless a survey is required by applicable Law;
 
(q)           Lack of corporate or other entity authorization absent reasonable
evidence of an actual claim of superior title from a third Person attributable
to such alleged lack of authorization;
 
(r)            Failure to record assignments of any Property between any Seller
Parties in the county in which such Property is located;
 
(s)           Matters for which the applicable statue of limitations for
assertion thereof has expired (including, without limitation, title by
limitations or adverse possession);
 
(t)            Matters cured by the acquisition by Purchaser of all right,
title, and interest of all Seller Parties in and to the Assets (including
requirements for stipulations between the Seller Parties or their respective
predecessors in interest) to the extent that the same do not, individually or in
the aggregate, reduce Seller's collective net revenue interest below that shown
in Exhibit A-2 or increase Seller's collective working interest above that shown
in Exhibit A-2 without a corresponding increase in the net revenue interest;
 
(u)           Unreleased instruments (including leases covering oil, gas, and
other minerals), absent specific evidence that such instruments continue in
force and effect and constitute a superior claim of title with respect to the
Wells, Units, or Undeveloped Locations shown on Exhibit A-2;
 
(v)           Leases or other instruments entitling a third Person to the rights
to coal, lignite, sulphur, uranium, or any other mineral, and operations
(including, without limitation, reclamation operations) conducted by third
Persons pursuant thereto absent specific evidence that existence thereof, and
operations currently being conducted pursuant thereto, materially interfere with
operations (i) currently being conducted by Seller or (ii) for which Seller has
specific plans existing as of the date hereof with respect to the Wells and
Units shown on Exhibit A-2;

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(w)           Depth severances or any other change in the working interest or
net revenue interest of Seller with depth to the extent that they do not reduce
Seller's net revenue interest below that shown on Exhibit A-2 or increase
Seller's working interest beyond that shown on Exhibit A-2 without a
corresponding increase in net revenue interest;
 
(x)           Any matters reflected on Exhibit A-2 or Schedule 3.3; and
 
(y)           Any other liens, charges, encumbrances, defects, or irregularities
which do not, individually or in the aggregate, materially detract from the
value of or materially interfere with the use or ownership of the Assets subject
thereto or affected thereby (as currently used or owned) and which would be
accepted by a reasonably prudent purchaser engaged in the business of owning and
operating oil and gas properties, including, without limitation, the absence of
any lease amendment or consent by any royalty interest or mineral interest
holder authorizing the pooling of any leasehold interest, royalty interest, or
mineral interest, matters for which Seller owns a protection or top lease or
other instrument, and the failure of Exhibits A-1 and A-2 to reflect any lease
or any unleased mineral interest where the owner thereof was treated as a
non-participating co-tenant during the drilling of any well.
 
Section 3.4           Allocated Values.  Schedule 3.4 sets forth the agreed
allocation of the Unadjusted Purchase Price among the Properties for purposes of
Seller's title representation in this Article 3.  The "Allocated Value" for any
Well, Unit, or Undeveloped Location equals the portion of the Unadjusted
Purchase Price that is allocated to such Well, Unit, or Undeveloped Location on
Schedule 3.4, increased or decreased by a share of each adjustment to the
Unadjusted Purchase Price under ‎Section 2.3(c), ‎(d), ‎(e), ‎(f), and
‎(g).  The share of each adjustment allocated to a particular Well, Unit, or
Undeveloped Location shall be obtained by allocating that adjustment among the
various Assets on a pro-rata basis in proportion to the Unadjusted Purchase
Price allocated to each such Asset on Schedule 3.4.  Seller has accepted such
Allocated Values for purposes of this Article 3, but otherwise makes no
representation or warranty as to the accuracy of such values.  Notwithstanding
anything to the contrary contained in this Agreement, the Allocated Value of the
Assets other than the Leases, Wells, and Units (including, without limitation
the Midstream Assets) if any, shall not exceed twenty-five million dollars
($25,000,000), whether by the initial allocation of value made pursuant to this
‎Section 3.4, any adjustments thereto, or otherwise; provided, however, that to
the extent that any adjustment to the Unadjusted Purchase Price would cause the
Allocated Value of such other Assets to exceed twenty-five million dollars
($25,000,000), the amount of such excess shall be allocated to each of the other
Wells, Units, and Undeveloped Locations to which a portion of the Unadjusted
Purchase Price was allocated in proportion to the relationship that the
Allocated Value for such Well, Unit, or Undeveloped Location bears to the
aggregate Allocated Values of such Wells, Units, and Undeveloped Locations.
 
Section 3.5            Notice of Title Defects; Defect Adjustments.
 
(a)           To assert a claim arising out of a breach of ‎Section 3.1,
Purchaser must deliver a defect claim notice or notices to Seller on or before
the Cut-Off Date; provided, however, that Purchaser shall use its commercially
reasonable efforts to deliver a defect claim notice with respect to a specific
alleged Title Defect on or before five (5) Business Days after Purchaser obtains
knowledge of the existence of such Title Defect, even if the date of delivery of
such defect claim notice is prior to the Cut-Off Date.  Each such notice shall
be in writing and shall include:

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(i)           a description of the alleged Title Defect(s);
 
(ii)           the Units, Wells, or Undeveloped Locations affected;
 
(iii)           the Allocated Values of the Units, Wells, or Undeveloped
Locations subject to the alleged Title Defect(s);
 
(iv)           true and complete copies of any documentation supporting the
existence, nature, and basis of the alleged Title Defect(s); and
 
(v)           the amount by which Purchaser reasonably believes the Allocated
Values of those Units, Wells, or Undeveloped Locations are reduced by the
alleged Title Defect(s) and the computations and information upon which
Purchaser's belief is based.
 
PURCHASER SHALL BE DEEMED TO HAVE WAIVED ALL BREACHES OF ‎SECTION 3.1 OF WHICH
SELLER HAS NOT BEEN GIVEN NOTICE ON OR BEFORE THE CUT-OFF DATE.
 
(b)           Seller shall have the right, but not the obligation, to attempt,
at Seller's sole cost, to cure or remove on or before sixty (60) days after the
Cut-Off Date any Title Defects of which Seller has been advised by
Purchaser.  No reduction shall be made in the Unadjusted Purchase Price with
respect to a Title Defect if Seller has provided notice at least five (5)
Business Days after the Cut-Off Date of Seller's intent to attempt to cure the
Title Defect.  If the Title Defect is not cured at the end of the sixty (60) day
period, the adjustment required under this Article 3 shall be made pursuant to
‎Section 2.3(a).  Seller's election to attempt to cure a Title Defect shall not
constitute a waiver of any rights of Seller under this Article 3, including,
without limitation, Seller's right to dispute the existence, nature or value of,
or cost to cure, the Title Defect.
 
(c)           With respect to each Unit, Well, or Undeveloped Location affected
by Title Defects reported under ‎Section 3.5(a), the Unit, Well, or Undeveloped
Location shall be assigned at Closing, subject to all uncured Title Defects,
and, subject to Seller's election under ‎Section 3.5(b), the Unadjusted Purchase
Price shall be reduced by an amount (the "Title Defect Amount") equal to the
reduction in the Allocated Value for such Unit, Well, or Undeveloped Location
caused by such Title Defects, as determined pursuant to ‎Section
3.5(e).  Notwithstanding the foregoing provisions of this ‎Section 3.5(c), no
reduction shall be made in the Unadjusted Purchase Price with respect to any
Title Defect for which Seller at its election executes and delivers to Purchaser
a written indemnity agreement, in form and substance reasonably satisfactory to
Purchaser, under which Seller agrees to fully, unconditionally, and irrevocably
indemnify and hold harmless Purchaser and its successors and assigns from any
and all Damages (irrespective of any limitation on amount contained in ‎Section
12.2(d)(iii)) arising out of or resulting from such Title Defect.
 
(d)‎           SECTION 3.5(C) SHALL, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BE THE EXCLUSIVE RIGHT AND REMEDY OF PURCHASER WITH RESPECT TO
SELLER'S BREACH OF ITS WARRANTY AND REPRESENTATION IN ‎SECTION 3.1.  EXCEPT AS
SPECIFICALLY PROVIDED IN ‎SECTION 3.5(C) AND THE ASSIGNMENT AND BILL OF SALE,
PURCHASER RELEASES, REMISES, AND FOREVER DISCHARGES EACH SELLER PARTY AND ITS
RESPECTIVE AFFILIATES AND ALL SUCH PARTIES' MEMBERS, PARTNERS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ADVISORS, AND REPRESENTATIVES FROM ANY AND ALL
SUITS, LEGAL OR ADMINISTRATIVE PROCEEDINGS, CLAIMS, DEMANDS, DAMAGES, LOSSES,
COSTS, LIABILITIES, INTEREST, OR CAUSES OF ACTION WHATSOEVER, IN LAW OR IN
EQUITY, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT NOW OR SUBSEQUENTLY MAY HAVE,
BASED ON, RELATING TO OR ARISING OUT OF, ANY TITLE DEFECT.

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 (e)           The Title Defect Amount resulting from a Title Defect shall be
determined as follows:
 
(i)             if Purchaser and Seller agree on the Title Defect Amount, that
amount shall be the Title Defect Amount;
 
(ii)            if the Title Defect is a lien, encumbrance, or other charge
which is undisputed and liquidated in amount, then the Title Defect Amount shall
be the amount necessary to be paid to remove the Title Defect from Seller's
interest in the affected Unit, Well, or Undeveloped Location;
 
(iii)           if the Title Defect represents a discrepancy between (A) the net
revenue interest for any Unit, Well, or Undeveloped Location and (B) the net
revenue interest or percentage stated on Exhibit A-2, then the Title Defect
Amount shall be the product of the Allocated Value of such Unit, Well, or
undeveloped location multiplied by a fraction, the numerator of which is the net
revenue interest or percentage ownership decrease and the denominator of which
is the net revenue interest or percentage ownership stated on Exhibit A-2,
provided that if the Title Defect does not affect the Unit, Well, or Undeveloped
Location throughout its entire productive life, or, with respect to a
Undeveloped Location, if the Hydrocarbons (if any) attributable to such
Undeveloped Location would not be produced until a future date, the Title Defect
Amount determined under this ‎Section 3.5(e)(iii) shall be reduced to take into
account the applicable time period only;
 
(iv)           if the Title Defect represents an obligation, encumbrance,
burden, or charge upon or other defect in title to the affected Unit, Well, or
Undeveloped Location of a type not described in subsections ‎(i), ‎(ii), or
‎(iii) above, the Title Defect Amount shall be determined by taking into account
the Allocated Value of the Unit, Well, or Undeveloped Location so affected, the
portion of Seller's interest in the Unit, Well, or Undeveloped Location affected
by the Title Defect, the legal effect of the Title Defect, the potential
economic effect of the Title Defect over the life of the affected Unit, Well, or
Undeveloped Location, the values placed upon the Title Defect by Purchaser and
Seller, and such other factors as are necessary to make a proper evaluation;

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(v)           notwithstanding anything to the contrary in this Article 3, (A) an
individual claim for a Title Defect for which a claim notice is given prior to
the Cut-Off Date shall only generate an adjustment to the Unadjusted Purchase
Price under this Article 3 if the Title Defect Amount with respect thereto
exceeds Two-Hundred Thousand dollars ($200,000), (B) the aggregate Title Defect
Amounts attributable to the effects of all Title Defects upon any given Unit,
Well, or Undeveloped Location shall not exceed the Allocated Value of such Unit,
Well, or Undeveloped Location and (C) there shall be no adjustment to the
Unadjusted Purchase Price for Title Defects unless and until the aggregate Title
Defect Amounts that are entitled to an adjustment under ‎Section 3.5(e)(v)(A)
and for which claim notices were timely delivered in accordance with the
requirements of this Article 3 exceed Two Million dollars ($2,000,000), after
which the Unadjusted Purchase Price may be adjusted for all Title Defect Amounts
that are entitled to an adjustment under ‎Section 3.5(e)(v)(A);
 
(vi)           if a Title Defect is reasonably susceptible of being cured, the
Title Defect Amount determined under subsections ‎(iii) or ‎(iv) above shall not
be greater than the reasonable cost and expense of curing such Title Defect; and
 
(vii)           the Title Defect Amount with respect to a Title Defect shall be
determined without duplication of any costs or losses (A) included in another
Title Defect Amount hereunder or (B) for which Purchaser otherwise receives
credit in the calculation of the Purchase Price.
 
(f)            If Seller and Purchaser are unable to agree upon a Title Defect
Amount (or the adjustment to the Unadjusted Purchase Price to be made pursuant
thereto) on or before the Cut-Off Date, then, subject to ‎Section 3.5(b),
Seller's good faith estimate shall be used to determine the Title Defect Amount
pending resolution of the dispute pursuant to this ‎Section 3.5(f), and the
Title Defect Amounts in dispute shall be exclusively and finally resolved by
arbitration pursuant to this ‎Section 3.5(f) (subject to ‎Section
3.5(b)).  During the 10-day period following the Cut-Off Date, Title Defect
Amounts in dispute shall be submitted to a title attorney with at least 10
years' experience in oil and gas titles in Texas as selected by mutual agreement
of Purchaser and Seller, or, absent such agreement during the 10-day period, by
the Houston office of the American Arbitration Association (the "Title
Arbitrator").  Likewise, if by the end of the sixty (60) day cure period under
‎Section 3.5(b), Seller has failed to cure any Title Defects which it provided
notice that it would attempt to cure, and Seller and Purchaser have been unable
to agree on the Title Defect Amounts for such Title Defects (or their
existence), the Title Defect Amounts in dispute shall be submitted to the Title
Arbitrator.  The Title Arbitrator shall not have worked as an employee or
outside counsel for any Party or its Affiliates during the five (5) year period
preceding the arbitration or have any financial interest in the dispute.  The
arbitration proceeding shall be held in Houston, Texas and shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, to the extent such rules do not conflict with the terms of this
Section.  The Title Arbitrator's determination shall be made within forty-five
(45) days after submission of the matters in dispute and shall be final and
binding upon the Parties, without right of appeal.  In making his determination,
the Title Arbitrator shall be bound by the rules set forth in ‎Section 3.5(e)
and may consider such other matters as in the opinion of the Title Arbitrator
are necessary or helpful to make a proper determination.  Additionally, the
Title Arbitrator may consult with and engage disinterested third Persons to
advise the arbitrator, including title attorneys from other states and petroleum
engineers.  The Title Arbitrator shall act as an expert for the limited purpose
of determining the specific disputed Title Defect Amounts submitted by any Party
and may not award damages, interest, or penalties to any Party with respect to
any matter.  Seller and Purchaser shall each bear its own legal fees and other
costs of presenting its case.  Purchaser shall bear one-half of the costs and
expenses of the Title Arbitrator and Seller shall be responsible for the
remaining one-half of the costs and expenses.

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Section 3.6            Consents to Assignment and Preferential Rights to
Purchase.
 
(a)           Promptly after the date hereof, Seller shall prepare and send
(i) notices to the holders of any required consents to assignment that are set
forth on Schedule 5.8 requesting consents to the transactions contemplated by
this Agreement and (ii) notices to the holders of any applicable preferential
rights to purchase or similar rights that are set forth on Schedule 5.8 in
compliance with the terms of such rights and requesting waivers of such
rights.  Any preferential purchase right must be exercised subject to all terms
and conditions set forth in this Agreement, including the successful Closing of
this Agreement pursuant to Article 9.  The consideration payable under this
Agreement for any particular Asset for purposes of preferential purchase right
notices shall be the Allocated Value for such Asset.  Seller shall use
commercially reasonable efforts to cause such consents to assignment and waivers
of preferential rights to purchase or similar rights (or the exercise thereof)
to be obtained and delivered prior to Closing, provided that Seller shall not be
required to make payments or undertake obligations to or for the benefit of the
holders of such rights in order to obtain the required consents and
waivers.  Purchaser shall cooperate with Seller in seeking to obtain such
consents to assignment and waivers of preferential rights.
 
(b)           In no event shall there be transferred at Closing any Asset
(i) for which a consent requirement providing that transfer of the Asset without
the consent will result in a termination or other material impairment of any
rights in relation to the Asset pursuant to the express terms of the instrument
containing such restriction without the consent, or (ii) that is a Lease if a
consent to assign requirement contained in such Lease has not been satisfied (in
the case of either (i) or (ii), above, a "Material Consent"); provided, however,
that restrictions upon the pledge, mortgage, or other granting of a lien or
security interest on an Asset shall not be considered to be a Material
Consent.  In cases in which the Asset subject to such a Material Consent is a
Contract and Purchaser is assigned the Lease(s) or other Asset(s) to which the
Contract relates, but the Contract is not transferred to Purchaser due to the
unwaived Material Consent requirement, Purchaser shall continue after Closing to
use commercially reasonable efforts to obtain the consent so that such Contract
can be transferred to Purchaser upon receipt of the consent, the Contract shall
be held by Seller for the benefit of Purchaser, Purchaser shall pay all amounts
due thereunder, and Purchaser shall be responsible for the performance of any
obligations under such Contract to the extent that Purchaser has been
transferred the Assets necessary to perform under such Contract until such
consent is obtained.  In cases in which the Asset subject to such a Material
Consent is a Lease and the third Person consent to the transfer of the Lease is
not obtained by Closing, Purchaser may elect to treat the unsatisfied Material
Consent requirements as a Title Defect (without regard to the limitations set
forth in ‎Section 3.5(e)(v) and receive the appropriate adjustment to the
Unadjusted Purchase Price under ‎Section 2.3 by giving Seller written notice
thereof in accordance with ‎Section 3.5(a), except that such notice may be given
on or before six (6) days prior to the Target Closing Date.  If an unsatisfied
Material Consent requirement with respect to which an adjustment to the
Unadjusted Purchase Price is made under ‎Section 3.5 is subsequently satisfied
prior to the date of the final adjustment to the Unadjusted Purchase Price under
‎Section 9.4(b), Seller shall be reimbursed in that final adjustment for the
amount of any previous deduction from the Unadjusted Purchase Price, the Lease,
if not previously transferred to Purchaser, shall be transferred, and the
provisions of this ‎Section 3.6 shall no longer apply to such Material Consent
requirement.

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 (c)           If any preferential right to purchase any Assets is exercised
prior to Closing, the Purchase Price shall be decreased by the Allocated Value
for such Assets, the affected Assets shall not be transferred at Closing, and
the affected Assets shall be deemed to be deleted from Exhibits A-1 through A-4
to this Agreement, as applicable, for all purposes.
 
(d)           Should a third Person fail to exercise or waive its preferential
right to purchase as to any portion of the Assets prior to Closing and the time
for exercise or waiver has not yet expired, then subject to the remaining
provisions of this ‎Section 3.6, such Assets shall be included in the
transaction at Closing, there shall be no adjustment to the Purchase Price at
Closing with respect to such preferential right to purchase, and Seller shall,
at its sole expense, continue to use commercially reasonable efforts to obtain
the waiver of the preferential purchase rights and shall continue to be
responsible for the compliance therewith.
 
(e)           Should the holder of the preferential purchase right validly
exercise same (whether before or after Closing), then:
 
(i)            Seller shall convey the affected Assets to the holder on the
terms and provisions set out in the applicable preferential right provision.  If
the affected Assets were previously transferred to Purchaser at Closing,
Purchaser agrees to transfer the affected Assets back to Seller on the terms and
provisions set out herein to permit Seller to comply with this obligation (or,
if Seller so requests, shall transfer the affected Assets directly to the holder
on the terms and provisions set out in the applicable preferential purchase
right provision);
 
(ii)           Pursuant to ‎Section 2.3(b), Seller shall credit Purchaser with
the Allocated Value of any Asset transferred pursuant to ‎Section 3.6(e)(i);
 
(iii)           Seller shall be entitled to the consideration paid by such
holder;
 
(iv)           If the affected Assets were previously transferred to Purchaser
at Closing, Purchase Price adjustments calculated in the same manner as the
adjustments in Section 2.3(g) shall be calculated for the period from the
Closing Date to the date of the reconveyance and the net amount of such
adjustment, if positive, shall be paid by Purchaser to Seller and, if negative,
by Seller to Purchaser; and
 
(v)           If the affected Assets were previously transferred to Purchaser at
Closing, Seller shall assume all obligations assumed by Purchaser with respect
to such Assets under ‎Section 12.1, and shall indemnify, defend, and hold
harmless Purchaser from all Damages incurred by Purchaser caused by or arising
out of or resulting from the ownership, use, or operation of such Asset from the
Closing Date to the date of the reconveyance, excluding, however, any such
Damages (irrespective of any limitation on amount contained in ‎Section
12.2(d)(iii)) resulting from any violation of any Law caused by the actions of,
or implementation of policies or procedures of, Purchaser, breach of any
contract by Purchaser after Closing, or gross negligence or willful misconduct
of Purchaser after Closing.

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 (f)           If any Material Consent requirement that is unsatisfied as of the
Closing Date is not subsequently satisfied prior to the date of the final
adjustment to the Unadjusted Purchase Price under ‎Section 9.4(b) and has not
otherwise been transferred to Purchaser, Purchaser may, by giving Seller written
notice thereof on or before five (5) Business Days prior to the date of the
final adjustment to the Unadjusted Purchaser Price under ‎Section 9.4(b), elect
(i) to treat the Asset subject to such unsatisfied Material Consent requirement
as an Excluded Asset (whereupon such Asset shall be deemed to have been included
in the definition of the term "Excluded Asset," and the terms and provisions of
this ‎Section 3.6 shall no longer apply to such Asset), or (ii) to cause Seller
to assign the Asset subject to such unsatisfied Material Consent requirement to
Purchaser notwithstanding the unsatisfied Material Consent requirement, subject,
however, to the agreement of Purchaser to save, indemnify, and hold harmless
Seller Group under ‎Section 12.2(a) from and against any Damages (excluding,
however, the application of ‎Section 12.2(d)(ii) and ‎Section 12.2(d)(iii))
incurred or suffered by Seller Group caused by, arising out of, or resulting
from, the transfer of such Asset without consent, in which case the amount of
any downward adjustment to the Unadjusted Purchase Price made pursuant to
‎Section 3.6(b) shall be credited to Seller pursuant to ‎Section 9.4(b).
 
Section 3.7            Limitations on Applicability.  The representation and
warranty in ‎Section 3.1 shall terminate as of the Cut-Off Date and shall have
no further force and effect thereafter, provided there shall be no termination
of Purchaser's or Seller's rights under ‎Section 3.5 with respect to any bona
fide Title Defect claim properly reported on or before the Cut-Off Date.
 
ARTICLE IV
ENVIRONMENTAL MATTERS
 
Section 4.1            Environmental Laws.  
 
(a)           Subject to ‎Section 13.18, each Seller Party severally represents
and warrants that (i) the Properties and Surface Rights, and each Seller Party's
ownership and operation of the Properties and Surface Rights is, since the
Effective Date has been, and as of the Closing Date shall be, in compliance with
all applicable Environmental Laws except such failures to comply as would not,
individually or in the aggregate, have a Material Adverse Effect; (ii) no
written notice from any Person has been delivered to any Seller Party which
asserts the existence of an Environmental Defect on or before the Effective Date
and relating to the Lands or any other Property or Surface Right that
constitutes a violation of Environmental Laws or gives rise to or results in any
common law or other liability of Seller to any Person; and (iii) with regard to
the Properties and Surface Rights, Seller has not entered into, or is subject
to, any agreements, consents, orders, decrees, judgments, or other directives of
any Governmental Authority based on any Environmental Laws that require any
change in the conditions of any of the Properties or Surface Rights on or before
the Effective Date.  As used in this Agreement, the term "Environmental Laws"
means, as the same have been amended to the date hereof, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Sec. 9601 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et seq.;
the Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Clean
Air Act, 42 U.S.C. Sec. 7401 et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Sec. 5101 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Sec.Sec. 2601 through 2629; the Oil Pollution Act, 33 U.S.C. Sec. 2701 et seq.;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. Sec. 11001 et
seq.; and the Safe Drinking Water Act, 42 U.S.C. Sec.Sec. 300f through 300j, in
each case as amended to the date hereof, and all similar Laws as of the date
hereof of any Governmental Authority having jurisdiction over the property in
question, together with common law claims or theories of liability in
negligence, trespass, nuisance, strict liability or any other common law theory,
in each case addressing or relating to pollution or protection of the
environment, or public or employee health, safety, or welfare, and all
regulations, orders, decrees, or judgments implementing the foregoing.

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(b)           Purchaser acknowledges that the Assets have been used for the
exploration, development, and production of Hydrocarbons and that there may be
petroleum, produced water, wastes, or other substances or materials located in,
on, or under the Properties or associated with the Assets.  Equipment and sites
included in the Assets may contain hazardous materials, including naturally
occurring radioactive material ("NORM").  NORM may affix or attach itself to the
inside of wells, materials, and equipment as scale, or in other forms.  The
wells, materials, and equipment located on the Properties or included in the
Assets may contain hazardous materials, including NORM.  Hazardous materials,
including NORM, may have come into contact with various environmental media,
including water, soils, or sediment.  Notwithstanding anything to the contrary
in this Section or elsewhere in this Agreement, Seller makes no, and hereby
disclaims any, representation or warranty, express or implied, with respect to
the presence or absence of NORM, asbestos, mercury, drilling fluids and
chemicals, and produced waters and Hydrocarbons in or on the Properties or
Equipment in quantities typical for oilfield operations in the areas in which
the Properties and Equipment are located, except to the extent the presence of
the same causes a breach of Seller's representation in ‎Section 4.1.
 
Section 4.2            Environmental Defects.  As used in this Agreement, the
term "Environmental Defect" means any matter that causes a breach of Seller's
representation in ‎Section 4.1.
 
Section 4.3             Environmental Review.
 
(a)           From and after the date of this Agreement, and prior to the
Cut-Off Date, Purchaser shall have the right to conduct, or cause a reputable
environmental consulting or engineering firm approved in advance in writing by
Seller, such approval not to be unreasonably withheld (the "Environmental
Consultant"), to conduct an environmental review of the Properties (the
"Environmental Review").
 
(b)           With respect to an Environmental Review conducted prior to
Closing, prior to commencing its Environmental Review, Purchaser shall furnish
to Seller for Seller's review a written plan setting forth the proposed time,
scope, and approximate location of the activities to be conducted pursuant to
the Environmental Review, which plan shall include a description of the
activities to be conducted, a description of the approximate locations of such
activities, and the name of the Environmental Consultant, and a list of any
sampling, boring, drilling, or other invasive activity to be conducted (the
"Environmental Review Plan").  Purchaser shall not begin its Environmental
Review until Seller has approved the Environmental Review Plan, which approval
shall not be unreasonably withheld or delayed; provided, however, that Seller
may withhold its consent to any sampling, boring, drilling, operation of
machinery, or other invasive activity proposed to be conducted in the
Environmental Review Plan if Seller reasonably believes that such activities
would substantially interfere with Seller's ownership or operation of the Assets
or violate any Law.  For any Property not operated by Seller, Seller shall, upon
written notice from Purchaser, use commercially reasonable efforts to obtain
permission from the operator of such Property for Purchaser to conduct its
Environmental Review, but, provided that Seller has exercised such commercially
reasonable efforts, Seller shall have no liability to Purchaser for failure to
obtain such operator's permission.  Purchaser shall not contact any such
operator without the written consent of Seller, which consent shall not be
unreasonably withheld or delayed.  Seller shall have the right to have one or
more representatives accompany Purchaser and the Environmental Consultant at all
times during the Environmental Review (whether or not such Environmental Review
is conducted before, on, or after Closing).

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(c)            In performing its Environmental Review, Purchaser shall (and
shall cause the Environmental Consultant to): (i) perform all work in a safe and
workmanlike manner; (ii) perform all work in such a way as to not unnecessarily
and unreasonably interfere with Seller's operations; (iii) comply with all
applicable Laws; (iv) comply in all respects with the Environmental Review Plan
(except as may be agreed to in a writing executed by the Parties); (v) at its
sole cost, risk, and expense, restore the Properties to their condition prior to
the commencement of the Environmental Review, and, unless Seller requests
otherwise, promptly dispose of all drill cuttings, corings, or other wastes
generated in the course of the Environmental review; and (vi) with respect to
any samples taken, take split samples and provide one of such samples, properly
labeled and identified, to Seller free of charge.
 
(d)           Purchaser and its Affiliates shall maintain, and shall cause their
respective officers, directors, employees, contractors, consultants (including
the Environmental Consultant), and other advisors to maintain, all information,
reports (whether interim, draft, final, or otherwise), data, work product, and
other matters (including the fact of the existence of the Environmental Review)
obtained or generated from or attributable to the Environmental Review (the
"Environmental Information") strictly confidential pursuant to the terms of the
Confidentiality Agreement (as such term is defined in ‎Section 7.1).  Unless
otherwise required by Law, Purchaser may not use the Environmental Information
except in connection with the transaction contemplated by this Agreement.  If
this Agreement is terminated prior to the Closing, Purchaser shall deliver the
Environmental Information to Seller, which Environmental Information shall
become the sole property of Seller.  Without limiting any of the foregoing, the
Environmental Information shall be subject to the Confidentiality Agreement.
 
Section 4.4            Notice of Environmental Defects; Defect Adjustments.
 
(a)           To assert a claim arising out of a breach of ‎Section 4.1,
Purchaser must deliver a claim notice or notices to Seller on or before the
Cut-Off Date; provided, however, that Purchaser shall use commercially
reasonable efforts to deliver a defect claim notice with respect to a specific
alleged Environmental Defect on or before five (5) Business Days after Purchaser
obtains knowledge of the existence of such alleged Environmental Defect, even if
the date of delivery of such defect claim notice is prior to the Cut-Off
Date.  Each such notice shall be in writing and shall include:

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(i)            a description of the alleged Environmental Defect(s), including
the specific citation of the provisions of the Environmental Laws alleged to be
violated and the facts that substantiate such violation;
 
(ii)           the Properties affected, including, if available, a site plan
showing the location of all sampling events, boring logs, and other field notes
describing the sampling methods utilized and field conditions observed, and the
chain of custody documents and laboratory reports for any samples taken;
 
(iii)           Purchaser's estimate of the Environmental Defect Amount as
calculated pursuant to ‎Section 4.4(e); and
 
(iv)           true and complete copies of any documents and other Environmental
Information supporting the existence of the alleged Environmental Defects and
the computations and information upon which Purchaser's estimate of the
Environmental Defect Amount is based.
 
PURCHASER SHALL BE DEEMED TO HAVE WAIVED ALL BREACHES OF ‎SECTION 4.1 OF WHICH
SELLER HAS NOT BEEN GIVEN NOTICE PURSUANT TO THIS ‎SECTION 4.4 ON OR BEFORE THE
CUT-OFF DATE.  SELLER'S REPRESENTATION IN ‎SECTION 4.1 SHALL NOT SURVIVE THE
CUT-OFF DATE.
 
(b)           Seller shall have the right, but not the obligation, to attempt,
at Seller's sole cost, to cure or remove, on or before sixty (60) days (or such
other period of time as the Parties may agree to in writing) after the Cut-Off
Date, any Environmental Defect of which Seller has been advised by Purchaser
pursuant to ‎Section 4.4(a).  No reduction in the Unadjusted Purchase Price
shall be made with respect to a notice of Environmental Defects if Seller has
provided notice at least five (5) Business Days after the Cut-Off Date of
Seller's intent to attempt to cure the Environmental Defect.  If the
Environmental Defect is not cured at the end of such period of time, the
adjustment required under this Article 4 shall be made pursuant to ‎Section
2.3(a).  Seller's election to attempt to cure an alleged Environmental Defect
shall not constitute a waiver of Seller's right to dispute the existence,
nature, or value of, or cost to cure, the alleged Environmental Defect.
 
(c)           With respect to each Property affected by an Environmental Defect
reported in accordance with ‎Section 4.4(a), the Property shall be assigned at
Closing, subject to all uncured Environmental Defects, and, subject to ‎Section
4.4(b), the Unadjusted Purchase Price shall be reduced by an amount (the
"Environmental Defect Amount") determined pursuant to ‎Section
4.4(e).  Notwithstanding the foregoing provisions of this ‎Section 4.4(c), no
reduction shall be made in the Unadjusted Purchase Price with respect to any
Environmental Defect for which Seller, at its election, executes and delivers to
Purchaser a written indemnity agreement, in form and substance reasonably
satisfactory to Purchaser, pursuant to which Seller agrees to fully,
unconditionally, and irrevocably indemnify, defend, and hold harmless Purchaser
and its successors and assigns from any and all Damages (irrespective of any
limitation on amount contained in ‎Section 12.2(d)(iii)) arising out of, or
resulting from, such Environmental Defect.

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(d)‎          SECTION 4.4(C) AND ‎SECTION 12.2(B) (WITH RESPECT TO THE RETAINED
SELLER OBLIGATIONS) SHALL, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW,
BE THE EXCLUSIVE RIGHT AND REMEDY OF PURCHASER WITH RESPECT TO SELLER'S BREACH
OF ITS WARRANTY AND REPRESENTATION IN ‎SECTION 4.1 AND, THE RELEASE OF MATERIALS
INTO THE ENVIRONMENT, THE PROTECTION OF THE ENVIRONMENT OR HEALTH OR ANY OTHER
MATTERS THAT PURCHASER COULD HAVE INCLUDED IN A NOTICE DELIVERED PURSUANT TO
‎SECTION 4.4(A).  PURCHASER ACKNOWLEDGES THAT, EXCEPT TO THE EXTENT SET FORTH IN
‎SECTION 4.1(A) SELLER HAS NOT MADE, AND WILL NOT MAKE, ANY REPRESENTATION OR
WARRANTY REGARDING THE SAME.  EXCEPT AS SPECIFICALLY PROVIDED IN ‎SECTION 4.4(C)
AND ‎SECTION 12.2(B) (WITH RESPECT TO THE RETAINED SELLER OBLIGATIONS),
PURCHASER RELEASES, REMISES, AND FOREVER DISCHARGES SELLER GROUP FROM ANY AND
ALL SUITS, LEGAL OR ADMINISTRATIVE PROCEEDINGS, CLAIMS, DEMANDS, DAMAGES,
LOSSES, COSTS, LIABILITIES, INTEREST OR CAUSES OF ACTION WHATSOEVER, IN LAW OR
IN EQUITY, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT NOW OR SUBSEQUENTLY HAVE,
BASED ON, RELATING TO, OR ARISING OUT OF ANY ENVIRONMENTAL DEFECT OR DEFICIENCY,
EVEN IF SUCH SUITS, LEGAL OR ADMINISTRATIVE PROCEEDINGS, CLAIMS, DEMANDS,
DAMAGES, LOSSES, COSTS, LIABILITIES, OR CAUSES OF ACTION ARE CAUSED IN WHOLE OR
IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT, OR CONCURRENT) OF SELLER OR THE
STRICT LIABILITY OF SELLER GROUP.
 
(e)           The Environmental Defect Amount resulting from an Environmental
Defect shall be determined as follows:
 
(i)             if Purchaser and Seller agree on the Environmental Defect
Amount, that amount shall be the Environmental Defect Amount;
 
(ii)            the Environmental Defect Amount shall not be greater than the
Lowest Cost Response;
 
(iii)           the Environmental Defect Amount with respect to an Environmental
Defect shall be determined without duplication of any costs or losses
(A) included in another Environmental Defect Amount or Casualty Loss hereunder;
(B) for which Purchaser otherwise receives credit in the calculation of the
Purchaser Price; or (C) which has been taken into account in the formulation of
the Unadjusted Purchase Price; and

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(iv)           notwithstanding anything to the contrary in this Agreement, (A)
an individual claim for an Environmental Defect for which a claim notice is
given in accordance with the requirements of this Article 4 shall only generate
an adjustment to the Unadjusted Purchase Price under this Article 4 if the
Environmental Defect Amount with respect thereto exceeds Two-Hundred Thousand
dollars ($200,000); (B) the aggregate Environmental Defect Amounts attributable
to the effects of all Environmental Defects upon any given Property shall not
exceed the Allocated Value of such Property; and (C) there shall be no
adjustment to the Unadjusted Purchase Price for Environmental Defects unless and
until the aggregate of all Environmental Defect Amounts for Environmental
Defects which are entitled to an adjustment under ‎Section 4.4(e)(iv)(A) and for
which claim notices were timely delivered in accordance with the requirements of
this Article 4 exceed Two Million dollars ($2,000,000), after  which the
Unadjusted Purchase Price may be adjusted for all Environmental Defect Amounts
that are entitled to an adjustment under ‎Section 4.4(e)(iv)(A).
 
Section 4.5            Environmental Arbitration.  If Seller and Purchaser are
unable to agree upon an Environmental Defect Amount (or the adjustment to the
Unadjusted Purchase Price to be made pursuant thereto) on or before the Cut-Off
Date, then, subject to ‎Section 4.4(b), Seller's good faith estimate shall be
used to determine the Environmental Defect Amounts pending resolution of the
dispute pursuant to this ‎Section 4.5, and the Environmental Defect Amounts in
dispute shall be exclusively and finally resolved by arbitration pursuant to
this ‎Section 4.5.  During the 10-day period following the Cut-Off Date,
Environmental Defect Amounts in dispute shall be submitted to a reputable
environmental consultant or engineer with at least 10 years' experience in
corrective environmental action regarding oil and gas properties in Texas as
selected by mutual agreement of Purchaser and Seller, or, absent such agreement
during the 10-day period, by the Houston office of the American Arbitration
Association (the "Environmental Arbitrator").  Likewise, if by the end of the
sixty (60) day cure period under ‎Section 4.4(b), Seller has failed to cure any
Environmental Defects which it provided notice that it would attempt to cure,
and Seller and Purchaser have been unable to agree on the Environmental Defect
Amounts for such Environmental Defects (or their existence), the Environmental
Defect Amounts in dispute shall be submitted to the Environmental
Arbitrator.  The Environmental Arbitrator shall not have performed professional
services as an employee or outside counsel for any Party or its Affiliates
during the five (5) year period preceding the arbitration or have any financial
interest in the dispute.  The arbitration proceeding shall be held in Houston,
Texas and shall be conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, to the extent such rules do not
conflict with the terms of this Section.  The Environmental Arbitrator's
determination shall be made within forty-five (45) days after submission of the
matters in dispute and shall be final and binding upon the Parties, without
right of appeal.  In making his determination, the Environmental Arbitrator
shall be bound by the rules set forth in ‎Section 4.4(e) and may consider such
other matters as in the opinion of the Environmental Arbitrator are necessary or
helpful to make a proper determination.  Additionally, the Environmental
Arbitrator may consult with and engage disinterested third Persons to advise the
arbitrator.  The Environmental Arbitrator shall act as an expert for the limited
purpose of determining the specific disputed Environmental Defect Amounts
submitted by any Party and may not award damages, interest or penalties to any
Party with respect to any matter.  Seller and Purchaser shall each bear its own
legal fees and other costs of presenting its case.  Purchaser shall bear
one-half of the costs and expenses of the Environmental Arbitrator and Seller
shall be responsible for the remaining one-half of the costs and expenses.

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Section 4.6             Limitations on Applicability.
 
(a)           The representation and warranty in ‎Section 4.1 shall terminate as
of the Cut-Off Date and shall have no further force and effect thereafter,
provided that there shall be no termination of Purchaser's or Seller's rights
under ‎Section 4.4 with respect to any Environmental Defect claim properly
reported pursuant to the requirements of this Article 4 on or before the Cut-Off
Date.  Purchaser shall not be entitled to protection under Seller's
representation in ‎Section 4.1 or Seller's indemnity in ‎Section 12.2(b) with
respect to any Environmental Defect to the extent that it has been cured or
removed by Seller pursuant to ‎Section 4.4(b).
 
(b)           It is understood and agreed by the Parties that Seller's
representation in ‎Section 4.1 shall be Purchaser's sole remedy with respect to
Environmental Defects and other environmental deficiencies with the Assets prior
to the Cut-Off Date.  Purchaser shall not be entitled to protection under
Seller's indemnity under ‎Section 12.2(b) with respect to (i) Environmental
Defects and other environmental deficiencies with the Assets until the
occurrence of the Cut-Off Date, and (ii) Environmental Defects and other
environmental deficiencies with the Assets of which Purchaser notified Seller on
or before the Cut-Off Date pursuant to ‎Section 4.4(a).
 
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
 
Subject to the provisions of this Article 5, and the other terms and conditions
of this Agreement (including, without limitation ‎Section 13.18), each Seller
Party represents and warrants to Purchaser the matters set out in ‎Section 5.1
through ‎Section 5.21.
 
Section 5.1            Seller Parties.
 
(a)           Existence and Qualification.  O'Brien Resources, LLC is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the state of Texas.  O'BENCO II, LP is a limited partnership duly
organized, validly existing, and in good standing under the laws of the state of
Delaware.  Sepco II, LLC is a limited liability company duly organized, validly
existing, and in good standing under the laws of the state of Louisiana. Crow
Horizons Company is a general partnership duly organized, validly existing, and
in good standing under the laws of the state of Louisiana.  Liberty Energy, LLC
is a limited liability company duly organized, validly existing, and in good
standing under the laws of the state of Massachusetts.  Each Seller Party, other
than Crow Horizons Company and Sepco II, LLC, is qualified to do business as a
foreign limited partnership or foreign limited liability company in, and is in
good standing under, the laws of the state of Texas.
 
(b)           Power.  Each Seller Party has the power to enter into and perform
this Agreement (and all documents required to be executed and delivered by
Seller at Closing) and to consummate the transactions contemplated by this
Agreement (and such documents).

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(c)           Authorization and Enforceability.  The execution, delivery, and
performance of this Agreement (and all documents required to be executed and
delivered by each Seller Party at Closing), and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary action on the part of each Seller Party.  This
Agreement has been duly executed and delivered by each Seller Party (and all
documents required to be executed and delivered by Seller at Closing shall be
duly executed and delivered by each Seller Party), and this Agreement
constitutes, and at the Closing such documents shall constitute, the valid and
binding obligations of each Seller Party, enforceable in accordance with their
terms except as such enforceability may be limited by applicable bankruptcy or
other similar Laws affecting the rights and remedies of creditors generally as
well as to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
 
(d)           No Conflicts.  The execution, delivery, and performance of this
Agreement by each Seller Party, and the consummation of the transactions
contemplated by this Agreement shall not (i) violate any provision of the
certificate of incorporation or bylaws, or certificate or articles of formation
or organization, and limited liability company or partnership agreement, of such
Seller Party, (ii) except with respect to the items set forth under the heading
"Liens to be Released at Closing" on Schedule 3.3, which shall be terminated
and/or released as to the Assets at Closing, result in a default (with due
notice or lapse of time or both) or the creation of any lien or encumbrance or
give rise to any right of termination, cancellation, or acceleration under any
material note, bond, mortgage, indenture, or other financing instrument to which
such Seller Party is a party or by which it is bound, (iii) violate any
judgment, order, ruling, or decree applicable to such Seller Party as a party in
interest or (iv) violate any Laws applicable to such Seller Party, except any
matters described in clauses (ii), (iii), or (iv) above which would not have a
Material Adverse Effect.
 
Section 5.2            Litigation.  Except as disclosed on Schedule 5.2, there
are no claims, demands, actions, suits, or proceedings pending, or to each
Seller Party's knowledge threatened in writing, by or before any Governmental
Authority or arbitrator with respect to the Assets.  There are no claims,
demands, actions, suits, or proceedings pending, or to each Seller Party's
knowledge, threatened in writing, before any Governmental Authority or
arbitrator against any Seller Party or any of its Affiliates, which are
reasonably likely to impair or delay materially such Seller Party's ability to
perform its obligations under this Agreement.  To each Seller Party's knowledge,
no event has occurred and no event exists that is reasonably likely to give rise
to, or serve as the basis for, any such claim, demand, action, suit, or
proceeding.

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Section 5.3            Taxes and Assessments.  Except as disclosed on
Schedule 5.3:
 
(a)           To the knowledge of each Seller Party, such Seller Party has filed
each material Tax return, declaration, report, claim for refund or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof (a "Tax Return") required to be
filed by it and paid all material Taxes with respect to the Assets; and
 
(b)           To the knowledge of each Seller Party, such Seller Party has not
received written notice of any pending claim against it (which remains
outstanding) from any applicable taxing authority for assessment of material
Taxes with respect to the Assets.
 
Section 5.4            Compliance with Laws.  Except with respect to
Environmental Laws, which are addressed in Article 4 and except as disclosed on
Schedule 5.4, to each Seller Party's knowledge, such Seller Party's ownership
and operation of the Assets is, and since the Effective Date has been, in
compliance with all applicable Laws, except such failures to comply as would
not, individually or in the aggregate, have a Material Adverse Effect.
 
Section 5.5            Contracts.  Schedule 5.5 contains a complete and accurate
list of all Material Contracts.  Except as disclosed on Schedule 5.5, and except
to the extent that the same would not, individually or in the aggregate, have a
Material Adverse Effect:
 
(a)           to each Seller Party's knowledge, (i) each Material Contract and
each Surface Right is in full force and effect and is valid and enforceable in
accordance with its terms in all material respects; (ii) no event has occurred
and no circumstances exist which, presently or with the passage of time, would
give any other party to any Material Contract or Surface Right the right to
declare a default or exercise any remedy under, or to cancel, terminate, or
modify in any material respect any Material Contract or Surface Right.  There
are no futures, options, swaps, or other derivatives with respect to the sale of
production that will be binding on the Assets after Closing.
 
(b)           with respect to the Leases and Material Contracts, (i) Seller is
fully qualified to own and hold all of the Leases and Material Contracts,
(ii) other than with respect to the expiration of a Lease due solely to the end
of the primary term thereof, there are no obligations to engage in continuous
development operations in order to maintain any Lease or other interest in real
property in full force and effect for the areas and depths covered thereby,
(iii) there are no royalty provisions (other than those (x) allowing a lessor
the right to take in kind or (y) disallowing the deduction of certain expenses
relating to the transportation, processing, or other handling of Hydrocarbons
prior to the sale thereof from the amount due to a lessor) requiring the payment
of royalty on any basis other than proceeds actually received by the lessee;
 
(c)           with respect to the Material Contracts that are joint, unit, and
other operating agreements, (i) Seller has informed Purchaser of the status of
all material operations by less than all parties; (ii) there are no material
operations with respect to which Seller, or, to the knowledge of Seller (and
except as reflected on Exhibit A-2), any other Person, has become a
non-consenting party, and (iii) all third Persons owning interests in the
contract areas or similar areas covered by such joint, unit, or other operating
agreements have executed such agreements, except to the extent that such
agreements need not be executed.
 
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Section 5.6           Payments for Production.  Except as disclosed on
Schedule 5.6, no Seller Party is obligated by virtue of a take-or-pay payment,
advance payment, or other similar payment (other than royalties, overriding
royalties, and similar arrangements established in the Leases or reflected on
Exhibit A-1 or Exhibit A-2), to deliver oil or gas, or proceeds from the sale
thereof, attributable to such Seller Party's interest in the Properties at some
future time without receiving payment therefor at or after the time of delivery.
 
Section 5.7           Imbalances.  Except as set forth on Schedule 5.7, as of
the Effective Date, no Seller Party had production, transportation, plant, or
other imbalances with respect to production from the Properties.
 
Section 5.8            Material Consents and Preferential Purchase
Rights.  There are no preferential rights to purchase or required third Person
Material Consents, which may be applicable to the sale of Assets by any Seller
Party as contemplated by this Agreement, except (a) for consents and approvals
of Governmental Authorities that are customarily obtained after Closing, (b) as
set forth on Schedule 5.8, and (c) Material Consents related to Excluded
Records.
 
Section 5.9           Liability for Brokers' Fees.  Purchaser shall not directly
or indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of any Seller Party prior to Closing, for brokerage
fees, finder's fees, agent's commissions, or other similar forms of compensation
to an intermediary in connection with the negotiation, execution, or delivery of
this Agreement or any agreement or transaction contemplated hereby.
 
Section 5.10         Bankruptcy; Solvency.  There are no bankruptcy,
reorganization, or receivership proceedings pending, being contemplated by, or,
to the knowledge of any Seller Party, threatened against, such Seller Party or
any Affiliate thereof (whether by such Seller Party or a third Person).  No
Seller Party is entering into this Agreement with actual intent to hinder,
delay, or defraud any creditor.  Immediately prior to, and immediately
subsequent to, the Closing, (a) no Seller Party will have incurred, nor does it
intend to or believe that it will incur, debts (including, without limitation,
contingent obligations) beyond its ability to pay such debts as such debts
mature or come due (taking into account the timing and amounts of cash to be
received from any source, and amounts to be payable on or in respect of debts),
(b) the amount of cash available to such Seller Party after taking into account
all other anticipated uses of funds is anticipated to be sufficient to pay all
such amounts on or in respect of debts, when such amounts are required to be
paid, and (c) each Seller Party will have sufficient capital with which to
conduct its business.

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Section 5.11         Bonus, Rentals, and Royalties; Lease Accounts; Recordation
of Leases; Depth Limitations.
 
(a)           Seller has properly and timely paid, or by Closing will have
properly and timely paid, all accrued bonuses, delay rentals, and royalties due
with respect to Seller's interests in the Leases, in each case in accordance
with the Leases and applicable Law.
 
(b)           Except as would not have a Material Adverse Effect, with respect
to federal and state Leases, all Lease accounts are current and all payments
required thereunder have been made.
 
(c)           Except as identified on Exhibit A-1, all Leases have been, or by
the Closing Date will be, properly recorded in the official public records of
the applicable county.
 
(d)           Except as identified on Exhibit A-1, no Lease is subject to a
depth limitation.
 
Section 5.12        Outstanding Capital Commitments.  Except (i) as disclosed on
Schedule 5.12, (ii) as would not be binding upon Purchaser or the Properties
after Closing, or (iii) with respect to periods between the date hereof and the
Closing Date, as are permitted pursuant to ‎Section 7.4, there are no
outstanding authorities for expenditure or other commitments to make capital
expenditures which are now, and will be after Closing, binding on the Properties
of which Seller has received notice and which Seller reasonably anticipates will
require expenditures by all Seller Parties in excess of One-Hundred Thousand
dollars ($100,000) per authority for expenditure.
 
Section 5.13         The Records.  The Records have been maintained in the
ordinary course of Seller's business, and Seller has not intentionally omitted
any material information from the Records.
 
Section 5.14         Payables.  Except (i) as disclosed on Schedule 5.14,
(ii) for revenues which are being suspended in accordance with applicable Law,
and (iii) for payment of amounts that Seller is contesting in good faith, all
oil and gas production proceeds payable by Seller to other Persons from the
Properties have been paid in material compliance with all of the terms and
conditions of the Leases and other applicable instruments.
 
Section 5.15        No Suspense.  Except as disclosed on Schedule 5.15, to the
knowledge of each Seller Party, proceeds from the sale of all oil, condensate,
and gas produced from the Properties are being received by Seller and are not
being held in suspense by any purchaser thereof for any reason.
 
Section 5.16         Permits and Licenses.  Seller holds all licenses, permits,
or other authorizations necessary to carry on operations connected with the
Properties as currently conducted in compliance with all applicable Laws.  All
such licenses, permits, and other authorizations are in full force and
effect.  No material violations of such licenses, permits, or other
authorizations exist or have been recorded in respect of any such licenses,
permits, or other authorizations, and no proceeding is pending, or, to the
knowledge of each Seller Party, threatened seeking to challenge, revoke, or
limit such licenses, permits, or authorizations.

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Section 5.17         Plugging and Abandonment.  As of the date of this
Agreement, to the knowledge of each Seller Party, there are no wells located on
the Leases that are required by any Governmental Authority to be plugged,
abandoned, and reclaimed that have not been plugged, abandoned, and reclaimed.
 
Section 5.18         Reserve Report.  Seller has delivered to Purchaser a copy
of the Reserve Report.  To the knowledge of Seller, the historical factual
information, excluding title information, provided to Ryder Scott & Company by
Seller regarding the Properties for preparation of such report consisting of
production volumes, sales prices for production, contractual pricing provisions
under oil or gas sales or marketing contracts under hedging arrangements, and
costs of operations and development relating to the Properties was accurate in
all material respects when furnished.
 
Section 5.19         Absence of Certain Changes and Events.  Except as set forth
on Schedule 5.19, to the knowledge of Seller, since the Effective Date:
 
(a)           In the case of claims or rights pertaining to the Properties,
Seller has not cancelled, compromised, waived, or released any claims with a
value in excess of Two-Hundred Thousand dollars ($200,000) individually, or One
Million dollars ($1,000,000) in the aggregate;
 
(b)           No Seller Party has merged or consolidated with any other Person;
 
(c)           No Seller Party has made any loan to, or entered into any other
transaction with, any of the members, directors, officers, or employees of such
Seller Party that is not in the ordinary course of business of such Seller Party
and that would be binding upon the Properties after the Closing;
 
(d)           Seller has not transferred, sold, or disposed of any material
portion of the Properties, other than Hydrocarbons sold in the ordinary course
of business;
 
(e)           There has not been a Material Adverse Effect, or any event or
circumstance reasonably likely to have a Material Adverse Effect, on the
Properties; and
 
(f)            No Seller Party has entered into any agreement, whether oral or
written, to do any of the foregoing.
 
Section 5.20          Condition of the Property.  Except as set forth on
Schedule 5.20, and except as would not have a Material Adverse Effect, (a) all
Wells have been drilled and completed at legal locations within the boundaries
of the respective Leases, and all drilling and completion of the Wells and all
development and operation of the Wells have been conducted in all material
respects in compliance with applicable Law; (b) to the knowledge of Seller, no
Well is subject to allowables after the date hereof because of any
overproduction or violation of applicable Laws or order of any court or other
Governmental Authority which would prevent such Well from being entitled to its
full legal and regular allowance from and after the date hereof; (c) all
currently producing Wells are, to the knowledge of Seller, in an operable state
of repair adequate to maintain normal operations in accordance with past
practices, ordinary wear and tear excepted, and, to the knowledge of Seller, do
not contain junk, fish, or other mechanical obstructions that would impede or
interfere with production, recompletions, or stimulations with respect to
reserves categorized as "Proved" in the Reserve Report; and (d) except to the
extent idled or abandoned as of the date hereof, the Equipment is in an operable
state of repair adequate to maintain normal operations in accordance with past
practices, ordinary wear and tear excepted.

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Section 5.21         Sufficiency of Assets.  Except for the Excluded Assets and
equipment and other assets not located on the Lands and not used solely in
connection with the Properties, and except as would not have a Material Adverse
Effect, the Assets constitute all of the assets necessary to operate the
Properties in the manner presently operated by Seller and in compliance with
applicable Laws.
 
Section 5.22         Gross and Net Acres.  Except as would not have a Material
Adverse Effect, Schedule 5.22 accurately sets forth the number of gross and net
acres owned by Seller in the Leases and Units.
 
Section 5.23          Limitations.
 
(a)           Except as and to the extent expressly set forth in Article 3,
Article 4, Article 5, the Assignment and Bill of Sale, or in the certificate of
the Seller Parties to be delivered pursuant to ‎Section 9.2(e), (i) no Seller
Party makes any representations or warranties, express or implied, and (ii) each
Seller Party expressly disclaims all liability and responsibility for any
representation, warranty, statement, or information made or communicated (orally
or in writing) to Purchaser or any of its Affiliates, employees, agents,
consultants, or representatives (including, without limitation, any opinion,
information, projection, or advice that may have been provided to Purchaser by
any officer, director, employee, agent, consultant, representative or advisor of
any Seller Party or any of their Affiliates).
 
(b)           EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 3, ARTICLE 4,
THIS ARTICLE 5, IN THE ASSIGNMENT AND BILL OF SALE, OR IN THE CERTIFICATE OF THE
SELLER PARTIES TO BE DELIVERED AT CLOSING PURSUANT TO ‎SECTION 9.2(E), WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, SELLER PARTIES MAKE NO, AND EXPRESSLY
DISCLAIM, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) TITLE TO
ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY
GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS, (III) THE
QUANTITY, QUALITY, OR RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE
ASSETS, (IV) THE EXISTENCE OF ANY PROSPECT, RECOMPLETION, INFILL, OR STEP-OUT
DRILLING OPPORTUNITIES, (V) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE
REVENUES GENERATED BY THE ASSETS, (VI) THE PRODUCTION OF PETROLEUM SUBSTANCES
FROM THE ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS, OR IN PAYING
QUANTITIES, OR ANY PRODUCTION OR DECLINE RATES, (VII) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN, OR MARKETABILITY OF THE ASSETS,
(VIII) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT, OR (IX) ANY OTHER
MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO
PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS,
REPRESENTATIVES, OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER
DISCLAIM ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE
PARTIES HERETO THAT, EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE ASSETS ARE BEING
TRANSFERRED "AS IS, WHERE IS," WITH ALL FAULTS AND DEFECTS, AND THAT PURCHASER
HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.

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(c)           Without limiting the provisions of ‎Section 13.18, any
representation "to the knowledge of Seller", "to Seller's knowledge", or words
of similar import, is limited to matters within the actual knowledge of the
individuals identified on Schedule 5.23 without any duty of investigation.  Any
representation "to the knowledge of each Seller Party" or to the knowledge of a
specific Seller Party is limited to matters within the actual knowledge of the
individuals identified on Schedule 5.23 under the name of such Seller Party,
without any duty of investigation.
 
(d)           Any representation of any Seller Party in this Article 5 that
relates to Properties in which any Seller Party is a non-operator under a joint
operating agreement or similar agreement is limited to the knowledge of such
Seller Party.
 
(e)           Inclusion of a matter on a schedule attached hereto with respect
to a representation or warranty that addresses matters having a Material Adverse
Effect shall not be deemed an indication that such matter does, or may, have a
Material Adverse Effect.  Schedules may include matters not required by the
terms of the Agreement to be listed on the Schedule, which additional matters
are disclosed for purposes of information only, and inclusion of any such matter
does not mean that all such matters are included.
 
(f)           A matter scheduled as an exception for any representation shall be
deemed to be an exception to all representations for which it is relevant.
 
(g)           In the event that a schedule or exhibit to this Agreement is
amended or supplemented prior to Closing, any reference to such schedule or
exhibit in this Agreement shall be deemed to be a reference to such schedule or
exhibit as so amended or supplemented.

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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser represents and warrants to Seller the following:
 
Section 6.1          Existence and Qualification.  Purchaser is a corporation
organized, validly existing and in good standing under the laws of
Delaware.  Purchaser is duly qualified as a foreign corporation in, and is in
good standing under, the laws of the state of Texas.
 
Section 6.2           Power.  Purchaser has the corporate power to enter into
and perform its obligations under this Agreement (and all documents required to
be executed and delivered by Purchaser at Closing) and to consummate the
transactions contemplated by this Agreement (and such documents).
 
Section 6.3           Authorization and Enforceability.  The execution,
delivery, and performance of this Agreement (and all documents required to be
executed and delivered by Purchaser at Closing), and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of Purchaser.  This
Agreement has been duly executed and delivered by Purchaser (and all documents
required to be executed and delivered by Purchaser at Closing will be duly
executed and delivered by Purchaser) and this Agreement constitutes, and at the
Closing such documents will constitute, the valid and binding obligations of
Purchaser, enforceable in accordance with their terms except as such
enforceability may be limited by applicable bankruptcy or other similar laws
affecting the rights and remedies of creditors generally as well as to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
 
Section 6.4            No Conflicts.  The execution, delivery, and performance
of this Agreement by Purchaser, and the consummation of the transactions
contemplated by this Agreement, will not (i) violate any provision of the
certificate of incorporation or bylaws (or other governing instruments) of
Purchaser, (ii) result in a material default (with due notice or lapse of time
or both) or the creation of any lien or encumbrance or give rise to any right of
termination, cancellation, or acceleration under any material note, bond,
mortgage, indenture, or other financing instrument to which Purchaser is a party
or by which it is bound, (iii) violate any judgment, order, ruling, or
regulation applicable to Purchaser as a party in interest, or (iv) violate any
Law applicable to Purchaser, except any matters described in clauses (ii), (iii)
or (iv) above which would not have a material adverse effect on Purchaser or its
properties.
 
Section 6.5           Consents, Approvals or Waivers.  Except with respect to
the Hart-Scott-Rodino Act (if applicable), and except with respect to consents
that are typically obtained after the consummation of transactions of the nature
contemplated herein (to the extent the same would not interfere with the ability
of Purchaser to consummate the transactions contemplated hereby), the execution,
delivery, and performance of this Agreement by Purchaser will not be subject to
any consent, approval, or waiver from any Governmental Authority or other third
Person.

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Section 6.6            Litigation.  There are no claims, demands, actions,
suits, or proceedings pending, or to Purchaser's knowledge, threatened in
writing before any Governmental Authority or arbitrator against Purchaser or any
Affiliate of Purchaser which are reasonably likely to impair or delay materially
Purchaser's ability to perform its obligations under this Agreement.
 
Section 6.7            Financing.  Purchaser has sufficient cash, available
lines of credit, or other sources of immediately available funds (in United
States dollars) to enable it to pay the Closing Payment to Seller at the
Closing.
 
Section 6.8            Investment Intent.  Purchaser is acquiring the Assets for
its own account and not with a view to their sale or distribution in violation
of the Securities Act of 1933, as amended, the rules and regulations thereunder,
any applicable state blue sky Laws, or any other applicable securities Laws.
 
Section 6.9            Independent Investigation.  Purchaser is (or its advisors
are) experienced and knowledgeable in the oil and gas business and aware of the
risks of that business.  Purchaser acknowledges and affirms that (a) it has been
provided the opportunity to conduct its independent investigation, verification,
analysis, and evaluation of the Assets, and (b) it has made all such reviews and
inspections of the Assets as it has deemed necessary or appropriate to enter
into this Agreement.  Except for the representations and warranties expressly
made by Seller in Articles 3, 4, and 5 of this Agreement or in the Assignment
and Bill of Sale or the certificate to be delivered to Purchaser pursuant to
‎Section 9.2(e) of this Agreement, Purchaser acknowledges that there are no
representations or warranties, express or implied, as to the financial
condition, liabilities, operations, business, or prospects of the Assets and
that, in making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser has relied solely upon its own
independent investigation, verification, analysis and evaluation.  Purchaser
understands and acknowledges that neither the United States Securities and
Exchange Commission nor any federal, state, or foreign agency has passed upon
the Assets or made any finding or determination as to the fairness of an
investment in the Assets or the accuracy or adequacy of the disclosures made to
Purchaser, and except as set forth in Article 11, Purchaser is not entitled to
cancel, terminate, or revoke this Agreement.  
 
Section 6.10          Opportunity to Verify Information.  Without limitation of
Purchaser's rights under ‎Section 7.1 hereof, or the disclaimers contained in
‎Section 7.5 Purchaser and its representatives have (a) been permitted full and
complete access to all materials relating to the Assets, (b) been afforded the
opportunity to ask all questions of Seller (or one or more Persons acting on
Seller's behalf) concerning the Assets, (c) been afforded the opportunity to
investigate the condition, including the subsurface condition, of the Assets,
and (d) had the opportunity to take such other actions and make such other
independent investigations as Purchaser deems necessary to evaluate the Assets
and understand the merits and risks of an investment therein and the verify the
truth, accuracy, and completeness of the materials, documents, and other
information provided or made available to Purchasers (whether by Seller or
otherwise).
 
Section 6.11         Liability for Brokers' Fees.  Seller shall not directly or
indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of Purchaser, for brokerage fees, finder's fees,
agent's commissions, or other similar forms of compensation to an intermediary
in connection with the negotiation, execution or delivery of this Agreement or
any agreement or transaction contemplated hereby.

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Section 6.12         Bankruptcy.  There are no bankruptcy, reorganization, or
receivership proceedings pending, being contemplated by, or, to the knowledge of
Purchaser, threatened against Purchaser or any Affiliate of Purchaser (whether
by Purchaser or a third Person).
 
Section 6.13         Qualification and Bonding.  Purchaser is now, or as of the
Closing Date shall be, and after the Closing shall continue to be, qualified
under all applicable Laws and with all applicable Governmental Authorities to
own and, where applicable, operate the Assets.  Without limiting ‎Section 13.5
hereof, as of the Closing Date, Purchaser shall have and shall maintain all
necessary bonds to own and operate of the Assets.
 
ARTICLE VII
COVENANTS OF THE PARTIES
 
Section 7.1            Access.  Subject to the limitations expressly set forth
in this Agreement, Seller will give Purchaser and its representatives access to
the Assets and access to and the right to copy, at Purchaser's sole expense, the
Records in Seller's possession, for the purpose of conducting a confirmatory
review of the Assets, but only to the extent that Seller may do so without
(i) violating applicable Laws, including the Hart-Scott Rodino Act,
(ii) violating any obligations to any third Person, and (iii) to the extent that
Seller has authority to grant such access without breaching any restriction
binding on any Seller Party.  Such access by Purchaser shall be limited to
Seller's normal business hours, and Purchaser's investigation shall be conducted
in a manner that minimizes interference with the operation of the Assets or
Seller's business with respect thereto or the business of Seller
generally.  Except as set forth in Article 4, Purchaser's right of access shall
not entitle Purchaser to operate Equipment or conduct intrusive testing or
sampling.  All information obtained by Purchaser and its representatives under
this ‎Section 7.1 shall be subject to the terms of that certain confidentiality
agreement between the Seller Parties and Purchaser dated March 17, 2008 (as
amended hereby, the "Confidentiality Agreement") and any applicable privacy laws
regarding personal information.  Purchaser and Seller Parties agree that,
notwithstanding that Liberty Energy, LLC was not a signatory to the
Confidentiality Agreement, for the purposes of this Agreement, the schedules and
exhibits hereto, the documents to be executed in connection herewith, and the
transactions contemplated hereby, Liberty Energy, LLC shall be deemed to have
been a signatory to the Confidentiality Agreement, and each of the Parties
agrees that the rights, benefits, obligations contained therein shall be binding
upon, and shall accrue to the benefit of, Liberty Energy, LLC as though it were
a party thereto and included in the definition of the term "Company" thereunder.
 
Section 7.2            Notification of Breaches.  Until the Closing,
 
(a)           Purchaser shall notify Seller promptly after Purchaser obtains
actual knowledge that any representation or warranty of any Seller Party
contained in this Agreement is untrue in any material respect or will be untrue
in any material respect as of the Closing Date or that any covenant or agreement
to be performed or observed by Seller prior to or on the Closing Date has not
been so performed or observed in any material respect; and

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(b)           Seller shall notify Purchaser promptly after Seller obtains actual
knowledge that any representation or warranty of Purchaser contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be performed
or observed by Purchaser prior to or on the Closing Date has not been so
performed or observed in a material respect.
 
If any of Purchaser's or Seller's representations or warranties is untrue or
shall become untrue in any material respect between the date of execution of
this Agreement and the Closing Date, or if any of Purchaser's or Seller's
covenants or agreements to be performed or observed prior to or on the Closing
Date shall not have been so performed or observed in any material respect, but
if such breach of representation, warranty, covenant or agreement shall (if
curable) be cured on or before the Closing (or, if the Closing does not occur,
by the date set forth in ‎Section 11.1) or if the Closing otherwise occurs
notwithstanding such breach, then such breach shall be considered not to have
occurred for all purposes of this Agreement.
 
Section 7.3            Press Releases.  Until the Closing, neither Seller nor
Purchaser, nor any Affiliate thereof, shall make any press release regarding the
existence of this Agreement, the contents hereof or the transactions
contemplated hereby without the prior written consent of the Purchaser (in the
case of announcements by any Seller Party or its Affiliates) or Seller (in the
case of announcements by Purchaser or its Affiliates), which consent shall not
be unreasonably withheld or delayed; provided, however, the foregoing shall not
restrict disclosures by Purchaser or any Seller Party (i) to the extent that
such disclosures are required by applicable securities or other Laws or the
applicable rules of any stock exchange having jurisdiction over the disclosing
Party or its Affiliates or (ii) to Governmental Authorities and third Persons
holding preferential rights to purchase, rights of consent or other rights that
may be applicable to the transactions contemplated by this Agreement, as
reasonably necessary to provide notices, seek waivers, amendments or
terminations of such rights, or seek such consents.  Each Seller Party and
Purchaser shall each be liable for the compliance of its respective Affiliates
with the terms of this Section.
 
Section 7.4            Operation of Business.  Except as may be required by
‎Section 7.9 or otherwise by this Agreement, and except as otherwise approved by
Purchaser, until the Closing Seller shall operate its business with respect to
the Assets in the ordinary course, and, without limiting the generality of the
preceding, shall:
 
(a)           not transfer, sell, hypothecate, encumber, or otherwise dispose of
any of the Assets, except for sales and dispositions of oil and gas and
equipment and materials made in the ordinary course of business;
 
(b)           where it operates Leases, Units, or Wells, produce oil, gas and/or
other Hydrocarbons from those Leases, Units, or Wells consistent with recent
practices, subject to the terms of the applicable Leases and Contracts,
applicable Laws and requirements of Governmental Authorities and interruptions
resulting from force majeure, mechanical breakdown and planned maintenance;

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(c)           not terminate, materially amend, execute, or extend any Material
Contract other than the execution or extension of a contract for the sale or
exchange of oil, gas and/or other hydrocarbons terminable on ninety (90) days or
shorter notice;
 
(d)           maintain insurance coverage on the Assets in the amounts and of
the types presently in force;
 
(e)           use commercially reasonable efforts to maintain in full force and
effect all Leases to the extent that such Leases are capable of producing in
paying quantities at applicable prices in effect as of the date that Seller
proposes to allow such Leases to terminate;
 
(f)            maintain all material governmental permits and approvals
affecting the Assets;
 
(g)           not act in any manner with respect to the Assets other than in the
ordinary course of business, consistent with prior practice, and in compliance
with applicable Law;
 
(h)           not waive, compromise, or settle any claim with a value in excess
of Two-Hundred Thousand dollars ($200,000) with respect to the Assets;
 
(i)            not approve, expend, or cause any operation or series or related
operations except in accordance with the Plan of Operations attached hereto as
Exhibit D except as would not require an expenditure (or series of expenditures)
net to the collective interests of the Seller Parties of greater than or equal
to Two-Hundred Thousand dollars ($200,000) per operation, unless in the case of
an emergency or to conduct an operation required to perpetuate a Lease (or as
otherwise required pursuant to a Contract);
 
(j)            not resign as operator of any of the Properties;
 
(k)           except as would not have a Material Adverse Effect, not merge or
consolidate with any other Person or undergo a change of control of
fifty-percent (50%) or more of any Seller's Party's equity ownership;
 
(l)            use commercially reasonable efforts to preserve relationships
with all third Persons having material business dealings with respect to the
Properties; and
 
(m)           promptly after the same becomes known to Seller, notify Purchaser
of any cessation of production from any Unit or Well and any other event that
would reasonably be expected to have a Material Adverse Effect.
 
Requests for approval of any action restricted by this ‎Section 7.4 shall be
delivered to either of the following individuals, each of whom shall have full
authority to grant or deny such requests for approval on behalf of Purchaser:
 
 
George Ciotti
Ken Frost
gwc@bry.com
krf@bry.com
(303) 870-4623 (cell)
(661) 616-3900 (office)
(303) 825-3344 (office)
(661) 616-3381 (Fax)
(303) 825-3350 (fax)
 

 
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Purchaser's approval of any action restricted by this ‎Section 7.4 shall not be
unreasonably withheld or delayed and shall be considered granted in full within
five (5) days (unless a shorter time is reasonably required by the circumstances
and such shorter time is specified in Seller's notice) of Seller's notice to
Purchaser requesting such consent unless Purchaser notifies Seller to the
contrary during that period.  Notwithstanding the foregoing provisions of this
‎Section 7.4, in the event of an emergency, Seller may take such action as
reasonably necessary and shall notify Purchaser of such action promptly
thereafter.  Purchaser acknowledges that Seller may own undivided interests in
certain of the Assets, and Purchaser agrees that the acts or omissions of third
Persons who are not affiliated with Seller shall not constitute a violation of
the provisions of this ‎Section 7.4, nor shall any action required by a vote of
working interest owners constitute such a violation so long as each Seller Party
has voted its interests in a manner consistent with the provisions of this
‎Section 7.4.
 
Section 7.5           Indemnity Regarding Access.  Purchaser's access to the
Assets and its (and its Affiliates and representatives, including the
Environmental Consultant) examinations and inspections, whether under ‎Section
7.1, ‎Section 4.3, or otherwise, shall be at Purchaser's sole risk, cost, and
expense, and Purchaser WAIVES AND RELEASES ALL CLAIMS AGAINST ALL SELLER
PARTIES, THEIR AFFILIATES, AND THEIR RESPECTIVE PARTNERS, MEMBERS, OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, CONTACTORS, AGENTS, OR OTHER REPRESENTATIVES,
ARISING IN ANY WAY THEREFROM, OR IN ANY WAY CONNECTED THEREWITH.  Purchaser
agrees to indemnify, defend, and hold harmless each Seller Party and its
Affiliates and all such Seller Party's directors, officers, employees, agents,
and representatives from and against any and all claims, liabilities, losses,
costs, and expenses (including court costs and reasonable attorneys' fees),
including claims, liabilities, losses, costs, and expenses attributable to
personal injury, death, or property damage, arising out of, or relating to,
access to the Assets prior to the Closing by Purchaser, its Affiliates, or its
or their directors, officers, employees, agents, or representatives, EVEN IF
CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR
CONCURRENT), STRICT LIABILITY, OR OTHER LEGAL FAULT OF ANY INDEMNIFIED PERSON,
OTHER THAN GROSS NEGLIGENCE AND WILLFUL MISCONDUCT OF ANY INDEMNIFIED
PERSON.  PURCHASER RECOGNIZES AND AGREES THAT, EXCEPT AS SPECIFICALLY SET FORTH
IN ‎SECTION 5.13, ALL MATERIALS, DOCUMENTS, SAMPLES, REPORTS, AND OTHER
INFORMATION OF ANY TYPE AND NATURE MADE AVAILABLE TO IT, ITS AFFILIATES OR
REPRESENTATIVES, IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY, WHETHER
MADE AVAILABLE PURSUANT TO THIS SECTION OR OTHERWISE, ARE MADE AVAILABLE TO IT
AS AN ACCOMMODATION, AND WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER
EXPRESS, IMPLIED, OR STATUTORY, AS TO THE ACCURACY AND COMPLETENESS OF SUCH
MATERIALS, DOCUMENTS, SAMPLES, REPORTS, AND OTHER INFORMATION.  NO WARRANTY OF
ANY KIND IS MADE BY ANY SELLER PARTY AS TO THE INFORMATION SUPPLIED TO PURCHASER
OR ITS AFFILIATES OR REPRESENTATIVES OR WITH RESPECT TO PROPERTIES TO WHICH THE
INFORMATION RELATES.  PURCHASER EXPRESSLY AGREES THAT ANY RELIANCE UPON, OR
CONCLUSIONS DRAWN THEREFROM, SHALL BE THE RESULT OF ITS OWN INDEPENDENT REVIEW
AND JUDGMENT.

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Section 7.6           Governmental Reviews.  Seller and Purchaser shall each in
a timely manner make (or cause its applicable Affiliate to make) (i) all
required filings, including (if applicable) filings required under the
Hart-Scott-Rodino Act, and prepare applications to and conduct negotiations
with, each Governmental Authority as to which such filings, applications or
negotiations are necessary or appropriate in the consummation of the
transactions contemplated hereby, and (ii) provide such information as the other
may reasonably request in order to make such filings, prepare such applications
and conduct such negotiations.  Each Party shall cooperate with and use all
reasonable efforts to assist the other with respect to such filings,
applications and negotiations.  Purchaser shall bear the cost of all filing or
application fees payable to any Governmental Authority with respect to the
transactions contemplated by this Agreement, regardless of whether Purchaser,
Seller, or any Affiliate of any of them is required to make the payment.
 
Section 7.7           Operatorship.  Seller makes no representation or warranty
as to Purchaser's ability to succeed to operatorship of the Properties currently
operated by Seller (the "Seller-Operated Properties").  Seller shall use
commercially reasonable efforts on or before the Closing Date to assist
Purchaser in Purchaser's efforts to succeed Seller as operator of the
Seller-Operated Properties.  Without limiting the rights of Seller and
obligations of Purchaser pursuant to ‎Section 13.5, Purchaser shall, promptly
following Closing, file all appropriate forms and declarations or bonds with any
applicable Governmental Authority relative to Purchaser's assumption of
operatorship.  For all Seller-Operated Properties, Seller shall execute and
deliver to Purchaser on the Closing Date, and Purchaser shall promptly (but in
no event later than thirty (30) days after the Closing Date) file all
appropriate forms with the applicable Governmental Authority (including, without
limitation, P-4 forms designating Purchaser as operator of any Seller-Operated
Properties) transferring operatorship of such Properties to Purchaser, and
assuming responsibility for all wells located on the Properties or the lands
covered thereby to the extent consistent with this Agreement.
 
Section 7.8           Letters-in-Lieu.  Seller shall execute and deliver to
Purchaser on the Closing Date letters in lieu of division and transfer orders
relating to the Assets to reflect the transaction contemplated hereby.  Such
letters shall be on forms prepared by Seller and reasonably satisfactory to
Purchaser.
 
Section 7.9            Hedges.  At or prior to Closing, Seller and its
Affiliates shall eliminate all futures, options, swaps, and other derivatives,
with respect to the sale of production from the Assets that are currently
binding on the Assets.
 
Section 7.10         Exclusivity.  Upon the execution of this Agreement and
until the termination of this Agreement pursuant to Article 11, Seller shall
not, directly or indirectly, solicit or entertain, or cause any other Person to
solicit or entertain, any other offer to acquire the Assets, or any portion
thereof, or provide information to others concerning the purchase and sale of
the Assets contemplated herein, or enter into any negotiation or agreement that
provides for the acquisition of any portion of the Assets by any Person other
than Purchaser.

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Section 7.11         Updated Schedules.  Both of Purchaser and Seller shall
notify the other Party promptly after such Party obtains actual knowledge that
any representation or warranty of the other Party contained in this Agreement
is, or has become, untrue in any material respect.  Each Party shall, prior to
Closing, supplement the Schedules and Exhibits to this Agreement with additional
information that, if existing or known to it on the date of this Agreement,
would have been required to have been included in one or more of the Schedules
or Exhibits to this Agreement.  For the purpose of determining the satisfaction
of any of the conditions of the obligations of each Party in Article 8, and the
liability of each Party following Closing for breaches of its representations,
warranties, and covenants herein, the Schedules and Exhibits to this Agreement
shall be deemed to include only (a)  the information contained therein on the
date of this Agreement, (b)  information added to such Schedules and Exhibits by
written supplements to this Agreement delivered prior to Closing by a Party that
are accepted by both Parties or reflect actions permitted by this Agreement to
be taken prior to Closing, and (c) information actually known to a Party on or
prior to the Closing Date that such Party would be required to report to the
other Party pursuant to the first sentence of this ‎Section 7.11.
 
Section 7.12         Contract Pumpers.  At the request of Purchaser, Seller
shall use commercially reasonable efforts to cooperate with Purchaser in
Purchaser's efforts to retain Seller's four contract pumpers engaged with
respect to Seller's Freestone Consolidated Navasota area and Seller's two
contract pumpers engaged with respect to Seller's Darco SE Field.
 
Section 7.13          Seller's Financial Records and Data.  
 
(a)           Notwithstanding anything in ‎Section 7.1 or elsewhere herein to
the contrary, during the period beginning on the date hereof and continuing
through the seventy-fifth (75th) day following the Closing Date, upon reasonable
advance written notice from Purchaser each Seller Party shall provide to
Purchaser, its auditors, PricewaterhouseCoopers LLP, and other representatives,
within the time period requested by Purchaser in such notice, but in no event
earlier than five (5) Business Days after such Seller Party receives such notice
(provided that Purchaser shall use commercially reasonable efforts to request
any information that it requires, or reasonably expects that it may require, as
soon as possible prior to the date that Purchaser requires such information for
the purposes described in this ‎Section 7.13, and provided further that O'Brien
Resources, LLC shall exercise its commercially reasonable efforts to provide the
requested information and access listed below as promptly as practicable and in
any event no later than two (2) Business Days after such receipt, but O'Brien
Resources, LLC shall not be deemed to be in breach of this covenant if,
notwithstanding the exercise of such commercially reasonable efforts, O'Brien
Resources, LLC is unable to timely provide such information or access and it so
notifies Purchaser prior to the end of such period), to the extent relating to
historical information solely regarding the Assets to the extent in existence
and in the possession of such Seller Party:
 
(i)           any audited or reviewed, segmented, or other financial statements
of such Seller Party as such presently exist; and

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(ii)           access for a representative previously designated in writing by
Purchaser, during normal business hours and in the presence of a representative
of such Seller Party, to such Seller Party’s financial, operating, and other
books and records (to the extent relating solely to the Assets), in each case at
Purchaser’s expense
 
as necessary in order to prepare and audit segmented and other financial
statements and other reports as may be required by the rules and regulations of
the United States Securities and Exchange Commission (“SEC”), the Securities Act
of 1933 or other applicable Law to be submitted by Purchaser in connection with,
or to be incorporated by Purchaser in, any Form 8-K, 10-QSB, registration
statement or other filing required to be submitted by Purchaser to the
SEC.  Notwithstanding the foregoing, O'Brien Resources, LLC shall provide the
foregoing information whether or not the information requested is contained in
documents or records which contains information not solely regarding the
Assets.  O'Brien Resources, LLC reserves the right to redact all such
information which is not related in whole or in part to the Assets.
 
(b)           In addition, (i) at Purchaser's sole cost and expense, and upon
reasonable advance written notice by Purchaser, its auditors, or other
representatives, each Seller Party shall make available knowledgeable financial
and other personnel who shall respond to requests for information and other
materials requested by Purchaser, its auditors, and other representatives in
connection with such filings within the time frames requested by Purchaser, its
auditors or other representatives, and (ii) at Purchaser’s sole cost and
expense, each Seller Party shall arrange for its auditor, if any, to promptly
furnish such assistance to Purchaser as Purchaser shall reasonably request in
connection with Purchaser’s SEC filings.
 
(c)           Notwithstanding the foregoing, except with respect to  ‎Section
7.13(b)(ii) above, in no event shall any Seller Party be obligated to: (i) make
modifications to its existing systems, equipment, records, or procedures;
(ii) acquire or expand assets, equipment, rights, or properties (including,
without limitation, computer equipment, software, furniture, fixtures,
machinery, vehicles, tools, and other tangible personalty) beyond the level and
location currently provided by such Seller Party as of the date hereof;
(iii) hire additional employees or contractors; or (iv) pay any costs related to
the transfer or conversion of data from such Seller Party or its Affiliates or
any other Person to Purchaser.
 
(d)           Each Seller Party acknowledges that Purchaser’s rights under
‎Section 7.13 are unique and that Purchaser shall, in addition to such other
remedies as may be available to it at law or in equity, have the right to
enforce its rights under ‎Section 7.13 by actions for specific performance to
the extent permitted by applicable Law.  Each Seller Party further acknowledges
that monetary Damages would not be adequate compensation for any Damages
suffered as a result of such Seller Party’s breach of ‎Section 7.13, and waives
the defense in any action for specific performance that a remedy at Law would be
adequate, and any requirement for security or the posting of any bond or other
surety in connection with any temporary or permanent award of equitable relief.
 
(e)           The fact that the SEC subjects any filing by Purchaser to
supplementation shall not create any presumption of a breach by any Seller Party
of any of its obligations under this ‎Section 7.13.  No Seller Party shall have
any liability to Purchaser with respect to any registration rights agreement or
obligation involving Purchaser or the pricing, salability, market response, or
any other matter relating to the issuance or sale of any security by or on
behalf of Purchaser, and PURCHASER SHALL SAVE, INDEMNIFY, AND HOLD HARMLESS EACH
SELLER PARTY AND ITS RESPECTIVE AFFILIATES AND ALL SUCH SELLER PARTY’S MEMBERS,
PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS AND REPRESENTATIVES
FROM AND AGAINST ANY AND ALL DAMAGES (IRRESPECTIVE OF SIZE OR AMOUNT) WHICH
PURCHASER OR ANY THIRD PERSON OR GOVERNMENTAL AUTHORITY MIGHT NOW OR
SUBSEQUENTLY MAY HAVE RELATING TO THE FOREGOING.

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Section 7.14          Legal Existence.  During the period beginning on the
Closing Date and ending on December 31, 2010, each Seller Party shall maintain
its legal existence, and no Seller Party shall voluntarily take any action or
make any election as a result of which such Seller Party would be dissolved
during such period; provided, however, that nothing contained in this ‎Section
7.14 shall restrict the ability of a Seller Party to merge, consolidate,
dissolve, or otherwise terminate or change its legal existence if, as of the
date of such merger, consolidation, dissolution, termination or change, another
Person has agreed in writing to assume such Seller Party's obligations under
this Agreement, which Person is in compliance with ‎Section 9.4(e), or the
obligations of such Seller Party hereunder have been bonded or otherwise
financially secured to the reasonable satisfaction of
Purchaser.  Notwithstanding the foregoing, in the event that, on or after
January 1, 2010, O'Benco II, LP closes or otherwise consummates a transaction
(or series of transactions) pursuant to which it disposes (whether by sale,
merger, consolidation, assignment, change of control, or otherwise) of all or
substantially all of its assets, such transaction shall not constitute a breach
of this ‎Section 7.14, and this covenant shall be of no further force and effect
with respect to O'Benco II, LP as of the date of the closing or consummation of
such transaction (or series of transactions).
 
Section 7.15         Acquisition of Deep Rights.  From the date hereof until the
Closing Date, O'Brien Resources, LLC shall continue to exercise its commercially
reasonable efforts to arrange for the purchase by Purchaser (at Purchaser's sole
cost and expense) of leasehold and other similar rights to all depths lying
below the deepest depth covered by any Lease which as of the date hereof is
limited in depth as to any portion of the lands highlighted in yellow on the
plat attached hereto as Exhibit A-5.
 
Section 7.16          Further Assurances.  After Closing, Seller and Purchaser
each agrees to take such further actions and to execute, acknowledge, and
deliver all such further documents as are reasonably requested by the other for
carrying out the purposes of this Agreement or of any document delivered
pursuant to this Agreement.
 
ARTICLE VIII
CONDITIONS TO CLOSING
 
Section 8.1            Conditions of Seller to Closing.  The obligations of
Seller to consummate the transactions contemplated by this Agreement are
subject, at the option of Seller, to the satisfaction on or prior to Closing of
each of the following conditions:

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(a)           Representations.  The representations and warranties of Purchaser
set forth in Article 5 shall be true and correct in all material respects
(considering the transaction as a whole) as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date;
 
(b)           Performance.  Purchaser shall have performed and observed, in all
material respects, all covenants and agreements to be performed or observed by
it under this Agreement prior to or on the Closing Date;
 
(c)            No Action.  On the Closing Date, no injunction, order, or award
restraining, enjoining, or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, or granting substantial damages in
connection therewith, shall have been issued and remain in force, and no suit,
action, or other proceeding (excluding any such matter initiated by Seller or
any of its Affiliates) shall be pending before any Governmental Authority or
body of competent jurisdiction seeking to enjoin or restrain or otherwise
prohibit the consummation of the transactions contemplated by this Agreement or
recover substantial damages from Seller or any Affiliate of Seller resulting
therefrom; and
 
(d)           Governmental Consents.  All material consents and approvals of any
Governmental Authority required for the transfer of the Assets from Seller to
Purchaser as contemplated under this Agreement, except consents and approvals of
assignments by Governmental Authorities that are customarily obtained after
closing, shall have been granted, or the necessary waiting period shall have
expired, or early termination of the waiting period shall have been granted.
 
Section 8.2            Conditions of Purchaser to Closing.  The obligations of
Purchaser to consummate the transactions contemplated by this Agreement are
subject, at the option of Purchaser, to the satisfaction on or prior to Closing
of each of the following conditions:
 
(a)           Representations.  The representations and warranties of Seller set
forth in Article 5 shall be true and correct in all material respects
(considering the transaction as a whole) as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date (other than
representations and warranties that refer to a specified date, which need only
be true and correct on and as of such specified date);
 
(b)           Performance.  Seller shall have performed and observed, in all
material respects, all covenants and agreements to be performed or observed by
it under this Agreement prior to or on the Closing Date except, in the case of
breaches of ‎Section 7.4, for such breaches, if any, as would not have a
Material Adverse Effect;
 
(c)           No Action.  On the Closing Date, no injunction, order, or award
restraining, enjoining, or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, or granting substantial damages in
connection therewith, shall have been issued and remain in force, and no suit,
action, or other proceeding (excluding any such matter initiated by Purchaser or
any of its Affiliates) shall be pending before any Governmental Authority or
body of competent jurisdiction seeking to enjoin or restrain or otherwise
prohibit the consummation of the transactions contemplated by this Agreement or
recover substantial damages from Purchaser or any Affiliate of Purchaser
resulting therefrom;

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(d)           Governmental Consents.  All material consents and approvals of any
Governmental Authority required for the transfer of the Assets from Seller to
Purchaser as contemplated under this Agreement, except consents and approvals of
assignments by Governmental Authorities that are customarily obtained after
closing, shall have been granted or the necessary waiting period shall have
expired, or early termination of the waiting period shall have been granted;
 
(e)            Encumbrances.  Seller shall have delivered to Purchaser partial
releases of the liens set forth under the heading "Liens to be Released at
Closing" on Schedule 3.3 with respect to the Assets; and
 
(f)            Termination.  No Seller Party shall have terminated this
Agreement without the other Seller Parties assuming and performing all of the
obligations (including the obligation to sell and convey its undivided interest
in the Assets) of such terminating Seller Party hereunder or without such
terminating Seller Party agreeing pursuant to a separate agreement with
Purchaser to perform such obligations.
 
(g)           Non-Competition Covenant.  Each Seller Party (except Liberty
Energy, LLC), and William J. O'Brien III shall have executed and delivered for
the benefit of Purchaser, a non-competition covenant in the form attached hereto
as Exhibit E.
 
ARTICLE IX
CLOSING
 
Section 9.1           Time and Place of Closing.  The consummation of the
purchase and sale of the Assets contemplated by this Agreement (the "Closing")
shall, unless otherwise agreed to in writing by Purchaser and Seller, take place
at the offices of Bracewell & Giuliani LLP located at 711 Louisiana St., Suite
2300, Houston, Texas, at 10:00 a.m., local time, on July 15, 2008 (the "Target
Closing Date"), or if all conditions in Article 8 to be satisfied prior to
Closing have not yet been satisfied or waived, as soon thereafter as such
conditions have been satisfied or waived, subject to the provisions of
Article 11.  The date on which the Closing occurs is referred to herein as the
"Closing Date."
 
Section 9.2            Obligations of Seller at Closing.  At the Closing, upon
the terms and subject to the conditions of this Agreement, and subject to the
simultaneous performance by Purchaser of its obligations pursuant to ‎Section
9.3, Seller shall deliver or cause to be delivered to Purchaser, among other
things, the following:
 
(a)           Counterparts of the Assignment and Bill of Sale in the form
attached hereto as Exhibit B, duly executed by each Seller Party, in sufficient
duplicate originals to allow recording in all appropriate jurisdictions and
offices;
 
(b)           Assignments in form required by any Governmental Authority for the
assignment of any Assets controlled by such Governmental Authority, duly
executed by any applicable Seller Party, in sufficient duplicate originals to
allow recording in all appropriate offices;

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(c)           Executed certificates described in Treasury Regulation
Sec. 1.1445-2(b)(2) certifying that no Seller Party is a foreign person within
the meaning of the Code;
 
(d)           Letters-in-lieu of transfer orders with respect to the Properties
duly executed by all applicable Seller Parties;
 
(e)           A certificate duly executed by an authorized corporate officer of
each Seller Party, dated as of the Closing, certifying on behalf of such Seller
Party that the conditions set forth in ‎Section 8.2(a) and ‎Section 8.2(b) have
been fulfilled;
 
(f)           A certificate duly executed by the secretary or any assistant
secretary (or other authorized officer) of each Seller Party, dated as of the
Closing,(i) attaching and certifying on behalf of such Seller Party complete and
correct copies of (A) the resolutions of the Board of Directors, managers, or
other equivalent governing body of such Seller Party authorizing the execution,
delivery, and performance by such Seller Party of this Agreement and the
transactions contemplated hereby, and (B) any required approval by the
stockholders, members, or partners, as applicable, of such Seller Party of this
Agreement and the transactions contemplated hereby and (ii) certifying on behalf
of such Seller Party the incumbency of each officer of such Seller Party
executing this Agreement or any document delivered in connection with the
Closing;
 
(g)           Where notices of approval are received by Seller pursuant to a
filing or application under ‎Section 7.6, copies of those notices of approval;
 
(h)           Counterparts of a transition services agreement between O'Brien
Resources, LLC and Purchaser in the form attached hereto as Exhibit C (the
"Transition Services Agreement"), duly executed by O'Brien Resources, LLC;
 
(i)           For the Seller-Operated Properties, validly executed transfer of
Railroad Commission form P-4s designating Purchaser as operator of such
Seller-Operated Properties and any other forms or documents required to
designate Purchaser as operator of the such Seller-Operated Properties;
 
(j)           Any other forms required by any Governmental Authority relating to
the assignments of the Assets and relating to the assumption of operations by
Purchaser;
 
(k)           Releases of the liens listed on Schedule 3.3 under the heading
"Liens to be Released at Closing"; and
 
(l)           All other instruments, documents, and other items reasonably
necessary to effectuate the terms of this Agreement, as may be reasonably
requested by Purchaser.
 
Section 9.3            Obligations of Purchaser at Closing.  At the Closing,
upon the terms and subject to the conditions of this Agreement, and subject to
the simultaneous performance by Seller of its obligations pursuant to ‎Section
9.2, Purchaser shall deliver or cause to be delivered to Seller, among other
things, the following:

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(a)           A wire transfer of the Closing Payment in same-day funds;
 
(b)           Counterparts of the Assignment and Bill of Sale, duly executed by
Purchaser, in sufficient duplicate originals to allow recording in all
appropriate jurisdictions and offices;
 
(c)           Assignments in form required by any Governmental Authority for the
assignment of any Assets controlled by such Governmental Authority, duly
executed by Purchaser, in sufficient duplicate originals to allow recording in
all appropriate offices;
 
(d)           A certificate by an authorized corporate officer of Purchaser,
dated as of the Closing, certifying on behalf of Purchaser that the conditions
set forth in ‎Section 8.1(a) and ‎Section 8.1(b) have been fulfilled;
 
(e)           A certificate duly executed by the secretary or any assistant
secretary (or other authorized officer) of Purchaser, dated as of the Closing,
(i) attaching and certifying on behalf of Purchaser complete and correct copies
of (A) the resolutions of the Board of Directors, managers, or other equivalent
governing body of Purchaser authorizing the execution, delivery, and performance
by Purchaser of this Agreement and the transactions contemplated hereby, and
(B) any required approval by the stockholders, members, or partners, as
applicable, of Purchaser of this Agreement and the transactions contemplated
hereby, and (ii) certifying on behalf of Purchaser the incumbency of each
officer of Purchaser executing this Agreement or any document delivered in
connection with the Closing;
 
(f)           Where notices of approval are received by Purchaser pursuant to a
filing or application under ‎Section 7.6, copies of those notices of approval;
 
(g)           Evidence of replacement bonds, guarantees, and letters of credit,
pursuant to ‎Section 13.5; and
 
(h)           Counterparts of the Transition Services Agreement, duly executed
by Purchaser; and
 
(i)            All other instruments, documents, and other items reasonably
necessary to effectuate the terms of this Agreement, as may be reasonably
requested by Seller.
 
Section 9.4            Closing Payment and Post-Closing Purchase Price
Adjustments.
 
(a)           Not later than five (5) Business Days prior to the Closing Date,
Seller shall prepare and deliver to Purchaser, using and based upon the best
information available to Seller, a preliminary settlement statement estimating
the Purchase Price for the Assets after giving effect to all adjustments set
forth in ‎Section 2.3 and the amount of the Deposit (but excluding any income
thereon).  The estimate delivered in accordance with this ‎Section 9.4(a) shall
constitute the dollar amount to be payable by Purchaser to Seller at the Closing
(the "Closing Payment").
 
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(b)           As soon as reasonably practicable after the Closing but not later
than the one hundred and twentieth (120th) day following the Closing Date,
Seller shall prepare and deliver to Purchaser a draft statement setting forth
the final calculation of the Purchase Price and showing the calculation of each
adjustment under ‎Section 2.3, based on the most recent actual figures for each
adjustment.  Seller shall, at Purchaser's request, make reasonable documentation
available to support the final figures.  As soon as reasonably practicable, but
not later than the thirtieth (30th) day following receipt of Seller's statement
hereunder, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to such statement.  Seller may deliver a
written report to Purchaser during this same period reflecting any changes that
Seller proposes to be made to such statement as a result of additional
information received after the statement was prepared.  The Parties shall
undertake to agree on the final statement of the Purchase Price no later than
ninety (90) days after delivery of Seller's statement.  In the event that the
Parties cannot reach agreement within such period of time, any Party may refer
the items of adjustment which are in dispute to the Houston office of Deloitte &
Touche LLP, or, if such firm is not able or willing to serve, a
nationally-recognized independent accounting firm or consulting firm mutually
acceptable to both Purchaser and Seller (the "Accounting Arbitrator"), for
review and final determination by arbitration.  The Accounting Arbitrator shall
conduct the arbitration proceedings in Houston, Texas in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, to the
extent such rules do not conflict with the terms of this Section.  The
Accounting Arbitrator's determination shall be made within forty-five (45) days
after submission of the matters in dispute and shall be final and binding on all
Parties, without right of appeal.  In determining the proper amount of any
adjustment to the Purchase Price, the Accounting Arbitrator shall be bound by
the terms of ‎Section 2.3 and may not increase the Purchase Price more than the
increase proposed by Seller nor decrease the Purchase Price more than the
decrease proposed by Purchaser, as applicable.  The Accounting Arbitrator shall
act as an expert for the limited purpose of determining the specific disputed
aspects of Purchase Price adjustments submitted by any Party and may not award
damages, interest (except as expressly provided for in this Section), or
penalties to any Party with respect to any matter.  Seller and Purchaser shall
each bear their own legal fees and other costs of presenting their case.  Seller
shall bear one-half and Purchaser shall bear one-half of the costs and expenses
of the Accounting Arbitrator.  Within ten (10) days after the earlier of (i) the
expiration of Purchaser's thirty (30) day review period without delivery of any
written report or (ii) the date on which the Parties or the Accounting
Arbitrator finally determine the Purchase Price, (x) Purchaser shall pay to
Seller the amount by which the Purchase Price exceeds the Closing Payment or
(y) Seller shall pay to Purchaser the amount by which the Closing Payment
exceeds the Purchase Price, as applicable.  Any post-Closing payment pursuant to
this ‎Section 9.4 shall bear interest from the Closing Date to the date of
payment at the Agreed Rate.
 
(c)           Purchaser shall assist Seller in preparation of the final
statement of the Purchase Price under ‎Section 9.4(b) by furnishing invoices,
receipts, reasonable access to personnel and such other assistance as may be
requested by Seller to facilitate such process post-Closing.
 
(d)           All payments made or to be made under this Agreement to Seller
shall be made by electronic transfer of immediately available funds to O'Brien
Resources, LLC, acting as representative of the Seller Parties, at a bank
account to be specified in writing by O'Brien Resources, LLC on or before ten
(10) Business Days prior to the Closing Date, for the credit of the Seller
Parties, or to such other bank and account as may be specified by Seller in
writing.  All payments made or to be made hereunder to Purchaser shall be by
electronic transfer or immediately available funds to a bank and account
specified by Purchaser in writing to Seller, for the credit of Purchaser.

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(e)           During the period beginning on the Closing Date and ending on
December 31, 2010, each Seller Party shall maintain a net worth of not less than
twenty-five percent (25%) of its proportionate share of the final Purchase Price
(the "Required Net Worth").  Each Seller Party's proportionate share of any
Escrow Amount (as the same may be reduced from time to time pursuant to ‎Section
12.6) shall be taken into account for the purposes of calculating such Seller
Party's net worth pursuant to this ‎Section 9.4(e); provided however, in the
event the Escrow Amount is reduced as a result of payments from the Escrow
Account to Purchaser, the Required Net Worth amount shall be reduced
proportionately to give effect to such payment.  Notwithstanding the foregoing,
in the event that, on or after January 1, 2010, O'Benco II, LP closes or
otherwise consummates a transaction (or series of transactions) pursuant to
which it disposes (whether by sale, merger, consolidation, assignment, change of
control, or otherwise) of all or substantially all of its assets, such
transaction shall not constitute a breach of this ‎Section 9.4(e), and this
covenant shall be of no further force and effect with respect to O'Benco II, LP
as of the date of the consummation of such transaction (or series of
transactions).  At Closing and on the first and second anniversary of Closing,
each Seller shall deliver a certification as to its financial condition in the
form and with such substance as is delivered by each Seller in the
certifications delivered at the execution of this Agreement.  Any information
disclosed to Purchaser pursuant to this ‎Section 9.4(e), ‎Section 7.13, and
‎Section 7.1, together with any other information regarding any Seller Party,
including, without limitation, its existence, structure, assets (other than the
Assets), businesses, employees, and Affiliates, shall be considered to be
"Evaluation Material" pursuant to the terms of the Confidentiality Agreement (as
modified hereby), which Confidentiality Agreement shall, notwithstanding the
terms or termination provisions set forth therein, (i) terminate as of the
Closing with respect to the Records and other information or data to the extent
the same relate directly to the Assets (excluding, however, the Excluded
Asssets), and (ii) survive the Closing indefinitely in all other respects.
 
ARTICLE X
TAX MATTERS
 
Section 10.1          Liability for Taxes.
 
(a)           Taxes with Respect to Assets.  Seller shall be responsible for
filing any Tax Return (as defined in ‎Section 5.3(a)) with respect to Taxes
attributable to the Assets for a taxable period ending on or prior to the
Closing Date, and, except with respect to Seller's income Tax Returns, Purchaser
shall be responsible for filing any other Tax Return with respect to the
Assets.  Subject to the further terms of this ‎Section 10.1, from and after
Closing, Seller shall be liable for, and shall indemnify, defend, and hold
harmless Purchaser from and against, all Taxes with respect to the Assets
attributable to any taxable period ending on or prior to the Closing Date,
including income Taxes arising as a result of Seller's gain on the sale of the
Assets as contemplated by this Agreement.  From and after Closing, Purchaser
shall be liable for, and shall indemnify, defend, and hold harmless Seller and
its Affiliates from and against, all such Taxes attributable to any taxable
period beginning after the Closing Date and shall reimburse Seller and its
Affiliates for any such money paid by Seller or its Affiliates with respect to
such Taxes no later than seven (7) calendar days after Purchaser's receipt of
notice from Seller of Purchaser's liability therefor.  If a taxable period
includes the Closing Date, any Taxes with respect to the Assets allocable to any
taxable period beginning on or prior to the Closing Date and ending after the
Closing Date which is allocable to the portion of such period occurring on or
prior to the Closing Date (the "Pre-Closing Period") and determined as described
in ‎Section 10.1(b) shall be the liability of Seller and any other Taxes with
respect to the Assets, including, without limitation, to the extent allocable to
the portion of a taxable period occurring after the Closing Date, shall be the
liability of Purchaser.
 
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(b)           Straddle Period Taxes.  Whenever it is necessary for purposes of
this Agreement to determine the portion of any Taxes with respect to any Asset
for a taxable period beginning on or prior to and ending after the Closing Date
which is allocable to the Pre-Closing Period or any taxable period beginning on
or prior to the Effective Date and ending after the Closing Date which is
allocable to the portion of such period occurring after the Closing Date (the
"Post-Closing Period"), the determination shall be made as follows: any Taxes
allocable to the Pre-Closing Period that are based on or related to income,
gains, or receipts will be computed (by an interim closing of the books) as if
such taxable period ended as of the Closing Date and any other Pre-Closing
Period Taxes (except production Taxes and other Taxes measured by units of
production, and severance Taxes) will be prorated based upon the number of days
in the applicable period falling on or before, or after, the Closing Date.  To
the extent necessary, Seller shall estimate Taxes based on the Seller's
liability for Taxes with respect to the same or similar items of income, gain,
loss, deduction, and credit or other items (collectively "Tax Items") in the
immediately preceding year.  Notwithstanding anything to the contrary herein,
any ad valorem or property Taxes paid or payable with respect to the Assets
shall be allocated to the taxable period applicable to the ownership of the
Assets regardless of when such Taxes are assessed
 
(c)           Production Taxes.  Notwithstanding anything to the contrary in
this Agreement, production Taxes and other Taxes measured by units of
production, and severance Taxes, shall not be subject to ‎Section 10.1 and
responsibility therefor and payment thereof shall be exclusively addressed by
‎Section 1.3(j), ‎Section 1.3(k), ‎Section 1.3(l), ‎Section 2.3, ‎Section 2.4
and ‎Section 10.4.
 
(d)           Allocation Audits and Damages.  Tax Audits and Taxes, liabilities,
losses, costs, expenses, claims, awards, judgments, or other damages related
thereto suffered by any Person with respect to the reporting of allocations of
value and amounts realized by each Party for Tax purposes pursuant to the third
sentence of ‎Section 2.2(b) shall be the sole responsibility of such Person,
and, from and after Closing, each of Purchaser and Seller shall save, indemnify,
and hold harmless the other Party from and against any and all such Taxes,
liabilities, losses, costs, expenses, claims, awards, judgments, and other
damages that are such Party's sole responsibility hereunder.
 
Section 10.2          Contest Provisions.
 
(a)           Each of Purchaser, on the one hand, and Seller, on the other hand
(the "Tax Indemnified Person"), shall notify the chief tax officer (or other
appropriate person) of Seller or Purchaser, as the case may be (the "Tax
Indemnifying Person"), in writing within ten (10) days of receipt by the Tax
Indemnified Person of written notice of any pending or threatened audits,
adjustments, claims, examinations, assessments, or other proceedings (a "Tax
Audit") which are likely to affect the liability for Taxes of such other
Party.  If the Tax Indemnified Person fails to give such timely notice to the
other Party, it shall not be entitled to indemnification for any Taxes arising
in connection with such Tax Audit if such failure to give notice adversely
affects the other Party's right to participate in the Tax Audit.

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(b)           If such Tax Audit relates to any taxable period, or portion
thereof, ending on or before the Closing Date or for any Taxes for which only
Seller would be liable to indemnify Purchaser under this Agreement, Seller shall
have the option, at its expense, to control the defense and settlement of such
Tax Audit.  If such Tax Audit relates to any taxable period, or portion thereof,
beginning after the Closing Date or for any Taxes for which only Purchaser would
be liable under this Agreement, Purchaser shall, at its expense, control the
defense and settlement of such Tax Audit to the extent that such Tax Audit
relates to Tax Items for which Purchaser is liable to indemnify Seller under
‎Section 10.1.
 
(c)           If such Tax Audit relates to Taxes for which both Seller and
Purchaser could be liable under this Agreement, to the extent practicable, such
Tax Items will be distinguished and each Party will have the option to control
the defense and settlement of those Taxes for which it is so liable.  If such
Tax Audit relates to a taxable period, or portion thereof, beginning on or
before and ending after the Closing Date and any Tax Item cannot be identified
as being a liability of only one party or cannot be separated from a Tax Item
for which the other party is liable, Seller, at its expense, shall have the
option to control the defense and settlement of the Tax Audit, provided that
such Party defends the items as reported on the relevant Tax Return and provided
further that no such matter shall be settled without the written consent of both
Parties, not to be unreasonably withheld.
 
(d)           Any Party whose liability for Taxes may be affected by a Tax Audit
shall be entitled to participate at its expense in such defense and to employ
counsel of its choice at its expense and shall have the right to consent to any
settlement of such Tax Audit (not to be unreasonably withheld) to the extent
that such settlement would have an adverse effect with respect to a period for
which that party is liable for Taxes, under this Agreement or otherwise.
 
Section 10.3          Post-Closing Actions Which Affect Seller's Tax Liability.
 
(a)           Except as set forth in ‎Section 10.1(d), Purchaser shall not and
shall not permit its Affiliates to take any action which could increase any
Seller Party's liability for Taxes (including any liability of Seller to
indemnify Purchaser for Taxes under this Agreement).
 
(b)           Except to the extent required by applicable Laws, Purchaser shall
not and shall not permit its Affiliates to amend any Tax Return with respect to
a taxable period for which any Seller Party may be liable to indemnify Purchaser
for Taxes under ‎Section 10.1.
 
Section 10.4          Refunds.  Purchaser agrees to pay to Seller any refund
received (whether by payment, credit, offset or otherwise, and together with any
interest thereon) after the Closing by Purchaser or its Affiliates in respect of
any Taxes for which any Seller Party is liable or required to indemnify
Purchaser under ‎Section 10.1.  Seller agrees to pay to Purchaser any refund
received (whether by payment, credit, offset, or otherwise, and together with
any interest received thereon) after the Closing by any Seller Party or any of
their respective Affiliates in respect of any Taxes for which Purchaser is
liable or required to indemnify Seller under ‎Section 10.1.  Each Party shall
cooperate with the other and its Affiliates in order to take all necessary steps
to claim any such refund.  Any such refund received by a Party or its Affiliates
shall be paid to the Party entitled to the refund hereunder within thirty (30)
days after such refund is received.  Each Party agrees to notify the other
within ten (10) days following the discovery of a right to claim any such refund
and upon receipt of any such refund.  Each Party agrees to claim any such refund
as soon as possible after the discovery of a right to claim a refund and to
furnish to the other Party all information, records and assistance necessary to
verify the amount of the refund or overpayment.

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Section 10.5          Access to Information.
 
(a)           From and after Closing, Seller shall grant to Purchaser (or its
designees) access at all reasonable times to all of the information, books and
records relating to the Assets within the possession of Seller (including
without limitation work papers and correspondence with taxing authorities, but
excluding work product of and attorney-client communications with any of
Seller's legal counsel and personnel files), and shall afford Purchaser (or its
designees) the right (at Purchaser's sole expense) to take extracts therefrom
and to make copies thereof, to the extent reasonably necessary to permit
Purchaser (or its designees) to prepare Tax Returns, to conduct negotiations
with Tax authorities, and to implement the provisions of, or to investigate or
defend any claims between the Parties arising under, this Agreement.
 
(b)           From and after Closing, Purchaser shall grant to Seller (or
Seller's designees) access at all reasonable times to all of the information,
books and records relating to the Assets within the possession of Purchaser
(including without limitation work papers and correspondence with taxing
authorities, but excluding work product of and attorney-client communications
with any of Purchaser's legal counsel and personnel files), and shall afford
Seller (or Seller's designees) the right (at Seller's expense) to take extracts
therefrom and to make copies thereof, to the extent reasonably necessary to
permit Seller (or Seller's designees) to prepare Tax Returns, to conduct
negotiations with Tax authorities, and to implement the provisions of, or to
investigate or defend any claims between the Parties arising under, this
Agreement.
 
(c)           Each of the Parties hereto will preserve and retain all schedules,
work papers and other documents relating to any Tax Returns of or with respect
to Taxes relating to the Assets or to any claims, audits or other proceedings
affecting the Assets until the expiration of the statute of limitations
(including extensions) applicable to the taxable period to which such documents
relate or until the final determination of any controversy with respect to such
taxable period, and until the final determination of any payments that may be
required with respect to such taxable period under this Agreement.
 
(d)           At Seller's request, Purchaser shall provide reasonable access to
Purchaser's and its Affiliates' personnel who have knowledge of the information
described in this ‎Section 10.5.

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Section 10.6         Like Kind Exchange.  Either Purchaser and/or Seller may, at
or before Closing, elect to affect a tax-deferred exchange of the Assets for
other qualifying properties (the "Exchange Property") in accordance with the
following:
 
(a)           In the event that Seller makes such an election prior to the
Closing, Seller may elect, by notice to Purchaser delivered on or before the
Closing Date, to have the Purchase Price paid to a qualified intermediary until
Seller has designated the Exchange Property.  The Exchange Property shall be
designated by Seller and acquired by the qualified intermediary within the time
periods prescribed in Section 1031(a)(3) of the Code, and shall thereupon be
conveyed to Seller.  In the event Seller fails to designate, and the qualified
intermediary fails to acquire, the Exchange Property within such time periods,
unless the agreement with the qualified intermediary provides otherwise, the
agency or trust shall terminate and the proceeds then held by the qualified
intermediary shall be paid immediately to Seller.
 
(b)           In the event that Purchaser makes an election under this Section
prior to Closing, Purchaser may elect, by notice to Seller delivered on or
before the Closing Date, to have the Assets conveyed to a qualified intermediary
or an exchange accommodation titleholder (as such term is defined in Rec. Proc.
2000-37 issued effective September 15, 2000).
 
(c)           The rights and responsibilities of Seller, Purchaser, and the
qualified intermediary or exchange accommodation titleholder shall be documented
with such agreements containing such terms and provisions as shall be reasonably
determined by Seller and Purchaser to be necessary to accomplish a tax deferred
exchange under Section 1031 of the Code, subject, however, to the limitations on
costs and liabilities of Purchaser and Seller set forth below.  If Seller makes
a tax deferred exchange election, Purchaser shall not be obligated to pay
additional costs or incur any additional obligations in the acquisition of the
Assets.  If Purchaser makes a tax deferred exchange election, no Seller Party
shall be obligated to pay any additional costs or incur any additional
obligations in the consummation of the transactions contemplated by this
Agreement.  Any such tax deferred exchange election by either Party shall not
affect the duties, rights, or obligations of the Parties except as expressly set
forth in this ‎Section 10.6.
 
Should either Seller or Purchaser make a tax deferred exchange election and
should the tax deferred exchange fail or be disallowed by the Internal Revenue
Service for any reason, (i) the non-electing Party's sole responsibility and
liability to the electing Party shall be to take such actions as are required by
subsections ‎(a), ‎(b), and ‎(c) above; (ii) such non-electing Party shall have
no other responsibility or liability whatsoever to the electing Party pursuant
to this ‎Section 10.6; and (iii) the electing Party shall release, indemnify,
and hold harmless the non-electing Party from any responsibility or liability
related to such election except for such actions as may be required pursuant to
subsections ‎(a), ‎(b), and ‎(c) above.  Notwithstanding anything to the
contrary in this Agreement, the indemnities in this ‎Section 10.6 shall survive
the Closing and delivery of the Assignment and Bill of Sale indefinitely.
 
Section 10.7         Conflict.  In the event of a conflict between the
provisions of this Article 10 and any other provision of this Agreement, except
‎Section 13.3 hereof, this Article 10 shall control.

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ARTICLE XI
TERMINATION AND AMENDMENT
 
Section 11.1          Termination.  This Agreement may be terminated at any time
prior to Closing: (a) by the mutual prior written consent of Seller and
Purchaser; (b) by either Seller or Purchaser, if Closing has not occurred on or
before January 1, 2009; (c) by either Party if the aggregate adjustment to the
Unadjusted Purchase Price pursuant to Articles 3 and 4 is greater than ten
percent (10%) of the Unadjusted Purchase Price, or (d) by either Party if the
provisions of ‎Section 12.4 give it the right to do so; provided, however, that
no Party shall be entitled to terminate this Agreement under ‎Section 11.1(b) if
the Closing has failed to occur because such Party negligently or willfully
failed to perform or observe in any material respect its covenants and
agreements hereunder or such Party is in breach of its representations and
warranties set forth in this Agreement.
 
Section 11.2          Effect of Termination.  If this Agreement is terminated
pursuant to ‎Section 11.1, this Agreement shall become void and of no further
force or effect (except for the provisions of Article 1; the waiver provisions
of ‎Section 3.5(a) and ‎Section 4.4(d); ‎Sections 3.5(d), ‎4.3(d), ‎4.4(d),
‎5.9, ‎5.23, ‎6.8, ‎6.9, ‎6.10, ‎6.11, ‎7.1 (solely to the extent of the
modification of the Confidentiality Agreement), ‎7.3, ‎7.5, ‎7.6, ‎7.13 (solely
with respect to the indemnity provisions thereof), ‎11.3, ‎13.2, ‎13.3, ‎13.4,
‎13.8, ‎13.9, ‎13.15, ‎13.16, ‎13.17, and ‎13.18; and the Confidentiality
Agreement (as modified by this Agreement), all of which shall continue in full
force and effect).  Notwithstanding anything to the contrary in this Agreement,
the termination of this Agreement under ‎Section 11.1 shall not relieve any
Party from liability for any willful or negligent failure to perform or observe
in any material respect any of its agreements or covenants contained herein that
are to be performed or observed at or prior to Closing.  In the event this
Agreement terminates under ‎Section 11.1 and any Party has willfully or
negligently failed to perform or observe in any material respect any of its
agreements or covenants contained herein which are to be performed or observed
at or prior to Closing, then the other Party shall be entitled to all remedies
available at law or in equity and shall be entitled to recover court costs and
attorneys' fees in addition to any other relief to which such Party maybe
entitled.
 
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Section 11.3          Distribution of Deposit Upon Termination.
 
(a)           If Seller terminates this Agreement under ‎Section 11.1(b), and
Purchaser has negligently or willfully failed to perform or observe in any
material respect its covenants and agreements or is in breach of its
representations and warranties hereunder, then Seller shall be entitled to
receive, as its sole and exclusive remedy, the Deposit and any income thereon as
liquidated damages, free of any claims by Purchaser or any other Person with
respect thereto.  In such event, Seller and Purchaser shall execute and deliver
joint written instructions to the Escrow Agent to disburse the Deposit together
with any income thereon to Seller.  It is expressly stipulated by the Parties
that the actual amount of damages resulting from such a termination would be
extremely difficult or impossible to determine accurately because of (among
other things) the unique nature of the Assets and the uncertainties of
applicable commodity markets, and the amount of the Deposit is a fair and
reasonable estimate by the Parties of such damages.
 
(b)           If this Agreement is terminated for any reason other than the
reasons set forth in ‎Section 11.3(a), then Purchaser shall be entitled to
receive the Deposit and any income thereon, free of any claims by Seller or any
other Person with respect thereto.  In such event, Seller and Purchaser shall
execute and deliver joint written instructions to the Escrow Agent to disburse
the Deposit together with any income thereon to Purchaser.
 
ARTICLE XII
INDEMNIFICATION; LIMITATIONS
 
Section 12.1          Assumption.  Without limiting Purchaser's rights to
indemnity under this Article 12, on the Closing Date Purchaser shall assume and
hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled,
performed, paid or discharged) all obligations and liabilities of Seller and its
Affiliates, whether known or unknown (the "Assumed Seller Obligations"):
(i) arising under or with respect to the Assets and attributable to actions,
omissions, or conditions first occurring on or after the Effective Date, or to
actions, omissions, or conditions first occurring prior to the Effective Date to
the extent that Damages (irrespective of amount) with respect to such actions,
omissions, or conditions relate to the period of time on or after the Effective
Date; (ii) relating or attributable to the ownership, use, or operation of the
Assets from and after the Effective Date; (iii) for plugging and abandonment of
all of the Wells and dismantlement or abandonment of all structures and
Equipment included in the Assets and restoration of the surface of the Lands in
accordance with applicable Laws (whether or not required to be plugged,
abandoned, dismantled, or restored as of the Effective Date); (iv) to furnish
makeup gas according to the terms of applicable gas balancing, sales, gathering
or transportation Contracts; (v) subject to Article 3 and Article 4, relating
to, or arising from, Title Defects or environmental matters (solely to the
extent that, with respect to environmental matters, Purchaser knew or, in the
exercise of reasonable diligence, should have known prior to the Cut-Off Date of
such environmental matter or any Damages (irrespective of amount) relating
thereto or arising therefrom and did not notify Seller of the same pursuant to
‎Section 4.4(a)); (vi) subject to ‎Section 3.6 and ‎Section 5.8, obligations and
liabilities related to or arising from the conveyance of the Assets to Purchaser
at Closing without the consent of a third Person; (vii) continuing obligations
under any agreements pursuant to which the Seller or its Affiliates purchased
Assets prior to the Closing to the extent that Damages therefrom relate to
periods of time on or after the Effective Date; (viii) are required to be borne
by Purchaser under ‎Section 2.3 or ‎Section 2.4; and (ix) are Tax obligations
assumed by Purchaser pursuant to Article 10; provided, however, that Purchaser
does not assume any obligations to the extent that they (collectively, the
"Retained Seller Obligations"):

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(a)           are attributable to actions, omissions, or conditions occurring or
existing prior to the Effective Date, except to the extent addressed in clauses
(i), (iii), (iv), (v), (viii), or (ix) above;
 
(b)           relate or are attributable to the ownership, use, or operation of
the Assets prior to the Effective Date, except to the extent addressed in
clauses (i), (iii), (iv), (v), (viii), or (ix) above;
 
(c)           are attributable to or arise out of the Excluded Assets;
 
(d)           are required to be borne by Seller under ‎Section 2.3 or ‎Section
2.4;
 
(e)           are attributable to or arise out of any futures, options, swaps,
or other derivatives in place prior to Closing; or
 
(f)           are Tax obligations retained by Seller pursuant to Article 10.
 
(g)           are related to the matters shown on Schedule 5.2 and Schedule 4.2.
 
Section 12.2          Indemnification.
 
(a)           From and after Closing Purchaser shall indemnify, defend and hold
harmless each Seller Party and their Affiliates and their respective officers,
directors, employees, and agents (the "Seller Group") from and against all
Damages incurred or suffered by Seller Group:
 
(i)            caused by, arising out of, or resulting from the Assumed Seller
Obligations,
 
(ii)           caused by, arising out of, or resulting from Purchaser's breach
of any of Purchaser's covenants or agreements contained in Article 7, or
 
(iii)           caused by, arising out of, or resulting from any breach of any
representation or warranty made by Purchaser contained in Article 6 of this
Agreement or in the certificate delivered at Closing pursuant to ‎Section
9.3(d),
 
even if such Damages are caused in whole or in part by the negligence (whether
sole, joint, or concurrent), strict liability or other legal fault of any
Indemnified Person, invitee or third Person (but excluding the gross negligence
and willful misconduct of any Indemnified Person), but excepting in each case
Damages against which Seller would be required to indemnify Purchaser under
‎Section 12.2(b) at the time the claim notice is presented by Purchaser.

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(b)           From and after Closing (and, notwithstanding the foregoing, with
respect to environmental matters and deficiencies not assumed by Purchaser
pursuant to ‎Section 12.1(v), from and after the Cut-Off Date), each Seller
Party shall indemnify, defend, and hold harmless Purchaser and its Affiliates,
and its and their respective officers, directors, employees, and agents (the
"Purchaser Group") against and from all Damages incurred or suffered by
Purchaser Group:
 
(i)           caused by, arising out of, or resulting from such Seller Party's
breach of any of such Seller Party's covenants or agreements contained in
Article 7 and ‎Section 9.4(e);
 
(ii)           caused by, arising out of, or resulting from any breach of any
representation or warranty made by such Seller Party contained in Article 5 of
this Agreement, or in the certificates delivered at Closing pursuant to ‎Section
9.2(e);
 
(iii)           caused by, or arising out of, or resulting from, the Retained
Seller Obligations, to the extent of the ownership of such Seller Party in and
to the affected Asset;
 
even if such Damages are caused in whole or in part by the negligence (whether
sole, joint, or concurrent), strict liability or other legal fault of any
Indemnified Person, invitee, or third Person (but excluding the gross negligence
and willful misconduct of any Indemnified Person).
 
(c)           Except as set forth in ‎Section 12.2(f), each Party's sole and
exclusive remedy against the other Party for (i) any and all breaches of the
representations, warranties, covenants, and agreements of such other Party
contained in Articles 5, 6, and 7; ‎Section 9.4(e) and the affirmations of such
representations, warranties, covenants, and agreements contained in the
certificates delivered by Seller and Purchaser at Closing pursuant to ‎Section
9.2(e) and ‎Section 9.3(d), respectively (provided, however, that Purchaser
shall be entitled to pursue whatever equitable remedies are available to it
notwithstanding the terms of this ‎Section 12.2 to enforce the covenants and
agreements of Seller contained in ‎Section 7.6, ‎Section 7.13(d), ‎Section 7.14,
‎Section 7.16, and ‎Section 9.4(e)); and (ii) the Seller Retained Obligations
and Seller Assumed Obligations, is set forth in this ‎Section 12.2 (and,
(x) where applicable with respect to Article 7, ‎Section 11.2 and (y) with
respect to Taxes, Article 10), and if no such right of indemnification is
expressly provided, then such claims are hereby waived to the fullest extent
permitted by Law.  Except as expressly set forth above, each Party hereto
releases, remises, and forever discharges the other Party and its Affiliates,
and its and their respective officers, directors, employees, and agents from any
and all suits, legal, or administrative proceedings, claims, demands, damages,
losses, costs, liabilities, interest, or causes of action whatsoever, in law or
in equity, known or unknown, which such Parties might now or subsequently may
have, based on, relating to, or arising out of, this Agreement or the ownership,
use, or operation of the Assets, or the condition, quality, status, or nature of
the Assets, INCLUDING RIGHTS TO CONTRIBUTION UNDER THE COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED,
BREACHES OF STATUTORY AND IMPLIED WARRANTIES, NUISANCE OR OTHER TORT ACTIONS,
RIGHTS TO PUNITIVE DAMAGES, COMMON LAW RIGHTS OF CONTRIBUTION, ANY RIGHTS UNDER
INSURANCE POLICIES ISSUED OR UNDERWRITTEN BY THE OTHER PARTY OR ANY OF ITS
AFFILIATES, AND ANY RIGHTS UNDER AGREEMENTS BETWEEN ANY SELLER PARTY AND ANY
OTHER SELLER PARTY AND/OR ANY AFFILIATE OF ANY SELLER PARTY, EVEN IF CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT
LIABILITY OR OTHER LEGAL FAULT OF ANY RELEASED PERSON INVITEE, OR THIRD
PARTY.  Without limiting the generality of the preceding sentence, Purchaser
agrees that its only remedy with respect to the breach by any Seller Party of
its respective covenants and agreements in Article 7 and ‎Section 9.4(e) shall
be (x) the indemnity of Seller in ‎Section 12.2(b), as limited by the terms of
this Article 12, and, if applicable, as set forth in ‎Section 11.2 and ‎Section
11.3, and (y) the equitable remedies described in ‎Section 12.2(c)(i), above.

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(d)           "Damages," for purposes of this Agreement, shall mean the amount
of any actual liability, loss, cost, expense, claim, award, or judgment incurred
or suffered by any Indemnified Person arising out of or resulting from the
indemnified matter, whether attributable to personal injury or death, property
damage, contract claims, torts, or otherwise, including reasonable fees and
expenses of attorneys, consultants, accountants, or other agents and experts
reasonably incident to matters indemnified against, and the costs of
investigation and/or monitoring of such matters, and the costs of enforcement of
the indemnity; provided, however, that "Damages" shall not include any
adjustment for Taxes that may be assessed on payments under this Article 12 or
for Tax benefits received by the Indemnified Person as a consequence of any
Damages.  Notwithstanding the foregoing, neither Purchaser nor Seller shall be
entitled to indemnification under this ‎Section 12.2 for, and Damages shall not
include, (i) loss of profits, whether actual or consequential, or other
consequential damages suffered by the Party claiming indemnification, or any
punitive damages (other than loss of profits, consequential damages, or punitive
damages suffered by third Persons for which responsibility is allocated among
the Parties), (ii) any increase in liability, loss, cost, expense, claim, award,
or judgment to the extent such increase is caused by the actions or omissions of
any Indemnified Person after the Closing Date or (iii)  any liability, loss,
cost, expense, claim, award, or judgment that does not individually exceed
Two-Hundred Thousand dollars ($200,000).
 
(e)           Any claim for indemnity under this ‎Section 12.2 by any Affiliate,
director, officer, employee, or agent must be brought and administered by the
applicable Party to this Agreement.  No Indemnified Person other than the Seller
Parties and Purchaser shall have any rights against either the Seller Parties or
Purchaser under the terms of this ‎Section 12.2 except as may be exercised on
its behalf by Purchaser or any of the Seller Parties, as applicable, pursuant to
this ‎Section 12.2(e).  Each of Seller and Purchaser may elect to exercise or
not exercise indemnification rights under this Section on behalf of the other
Indemnified Persons affiliated with it in its sole discretion and shall have no
liability to any such other Indemnified Person for any action or inaction under
this Section.
 
(f)           ‎Section 12.2(b) shall not apply in respect of Title Defects,
which are exclusively covered by Article 3 and, until the Cut-Off Date
Environmental Defects and other environmental deficiencies, which are
exclusively covered by Article 4.  This ‎Section 12.2 shall not apply in respect
of (i) tax matters other than ‎Section 5.3, which are exclusively covered by
Article 2 and Article 10, (ii) claims for Property Costs, which are covered
exclusively by ‎Section 2.3, and ‎Section 2.4, (iii) any claims by a Party
resulting or arising from the other Party's intentional or willful
misrepresentation of material fact contained in this Agreement and the Schedules
or Exhibits hereto, which misrepresentation constitutes common law fraud
pursuant to applicable Law, or (iv) any claims by Purchaser to the extent based
upon or arising out of the Excluded Assets.

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(g)           The Parties shall treat, for Tax purposes, any amounts paid under
this Article 12 as an adjustment to the Purchase Price.
 
Section 12.3          Indemnification Actions.  All claims for indemnification
under ‎Section 12.2 shall be asserted and resolved as follows:
 
(a)           For purposes of this Article 12, the term "Indemnifying Person"
when used in connection with particular Damages shall mean the Person having an
obligation to indemnify another Person or Persons with respect to such Damages
pursuant to this Article 12, and the term "Indemnified Person" when used in
connection with particular Damages shall mean a Person having the right to be
indemnified with respect to such Damages pursuant to this Article 12 (including,
for the avoidance of doubt, those Persons identified in ‎Section 12.2(e)).
 
(b)           To make a claim for indemnification under ‎Section 12.2, an
Indemnified Person shall notify the Indemnifying Person of its claim, including
the specific details of and specific basis under this Agreement for its claim
(the "Claim Notice").  In the event that the claim for indemnification is based
upon a claim by a third Person against the Indemnified Person (a "Claim"), the
Indemnified Person shall provide its Claim Notice promptly after the Indemnified
Person has actual knowledge of the Claim and shall enclose a complete copy of
all papers (if any) served with respect to the Claim; provided that the failure
of any Indemnified Person to give notice of a Claim as provided in this ‎Section
12.3 shall not relieve the Indemnifying Person of its obligations under ‎Section
12.2 except to the extent such failure results in insufficient time being
available to permit the Indemnifying Person to effectively defend against the
Claim or otherwise prejudices the Indemnifying Person's ability to defend
against the Claim.  In the event that the claim for indemnification is based
upon an inaccuracy or breach of a representation, warranty, covenant, or
agreement, the Claim Notice shall specify the representation, warranty, covenant
or agreement that was inaccurate or breached.
 
(c)           In the case of a claim for indemnification based upon a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the Claim
Notice to notify the Indemnified Person whether it admits or denies its
obligation to defend the Indemnified Person against such Claim under this
Article 12.  If the Indemnifying Person does not notify the Indemnified Person
within such thirty (30) day period regarding whether the Indemnifying Person
admits or denies its obligation to defend the Indemnified Person, it shall be
conclusively deemed obligated to provide such indemnification hereunder.  The
Indemnified Person is authorized, prior to and during such thirty (30) day
period, to file any motion, answer or other pleading that it shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Person and that is not prejudicial to the Indemnifying Person.
 
(d)           If the Indemnifying Person admits its obligation, it shall have
the right and obligation to diligently defend, at its sole cost and expense, the
Claim.  The Indemnifying Person shall have full control of such defense and
proceedings, including any compromise or settlement thereof.  If requested by
the Indemnifying Person, the Indemnified Person agrees to cooperate in
contesting any Claim which the Indemnifying Person elects to contest (provided,
however, that the Indemnified Person shall not be required to bring any
counterclaim or cross-complaint against any Person).  The Indemnified Person may
participate in, but not control, any defense or settlement of any Claim
controlled by the Indemnifying Person pursuant to this ‎Section 12.3(d).  An
Indemnifying Person shall not, without the written consent of the Indemnified
Person, settle any Claim or consent to the entry of any judgment with respect
thereto that (i) does not result in a final, non-appealable, resolution of the
Indemnified Person's liability with respect to the Claim (including, in the case
of a settlement, an unconditional written release of the Indemnified Person from
all further liability in respect of such Claim) or (ii) may materially and
adversely affect the Indemnified Person (other than as a result of money damages
covered by the indemnity).

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(e)           If the Indemnifying Person does not admit its obligation or admits
its obligation but fails to diligently defend or settle the Claim, then the
Indemnified Person shall have the right to defend against the Claim (at the sole
cost and expense of the Indemnifying Person, if the Indemnified Person is
entitled to indemnification hereunder), with counsel of the Indemnified Person's
choosing, subject to the right of the Indemnifying Person to admit its
obligation to indemnify the Indemnified Person and assume the defense of the
Claim at any time prior to settlement or final, non-appealable determination
thereof.  If the Indemnifying Person has not yet admitted its obligation to
indemnify the Indemnified Person, the Indemnified Person shall send written
notice to the Indemnifying Person of any proposed settlement and the
Indemnifying Person shall have the option for ten (10) days following receipt of
such notice to (i) admit in writing its obligation for indemnification with
respect to such Claim and (ii) if its obligation is so admitted, assume the
defense of the Claim, including the power to reject the proposed settlement.  If
the Indemnified Person settles any Claim over the objection of the Indemnifying
Person after the Indemnifying Person has timely admitted its obligation for
indemnification in writing and assumed the defense of the Claim, the Indemnified
Person shall be deemed to have waived any right to indemnity therefor.
 
(f)            If Purchaser would be required to defend a Claim as provided in
this ‎Section 12.3 but for the assertion that any liability, loss, cost,
expense, claim, award, judgment or other damages incurred or suffered by Seller
would not constitute "Damages" as defined in ‎Section 12.2(d), Purchaser shall
nevertheless have the right and obligation to defend against such Claim as set
forth in ‎Section 12.3(d) subject to the indemnification obligations of Seller
set forth in this Article 12.
 
(g)           In the case of a claim for indemnification not based upon a Claim,
the Indemnifying Person shall have thirty (30) days from its receipt of the
Claim Notice to (i) cure the Damages complained of, (ii) admit its obligation to
provide indemnification with respect to such Damages or (iii) dispute the claim
for such Damages.  If the Indemnifying Person does not notify the Indemnified
Person within such thirty (30) day period that it has cured the Damages or that
it disputes the claim for such Damages, the Indemnifying Person shall be
conclusively deemed obligated to provide indemnification hereunder.
 
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Section 12.4          Casualty and Condemnation.  If, after the date of this
Agreement but prior to Closing Date, any portion of the Assets is destroyed by
fire or other casualty or is expropriated or taken in condemnation or under
right of eminent domain that Seller has not been able to repair or otherwise
cure (a "Casualty Loss"), Seller and Purchaser shall agree prior to the Closing
either to (a) delete the Assets (or portion thereof) which are subject to the
Casualty Loss from this Agreement and reduce the Unadjusted Purchase Price in
the same manner set forth in ‎Section 3.5(e), or (b) to proceed with the
purchase and sale of such Assets notwithstanding the Casualty Loss (without any
reduction in the Unadjusted Purchase Price) in which case Seller shall pay to
Purchaser all sums paid by third Persons to Seller by reason of the Casualty
Loss (without duplication of any other sums or proceeds paid or to be paid to
Purchaser pursuant to this Agreement) to the extent paid with respect to the
Assets (including, without limitation proceeds of policies of insurance)
promptly upon receipt of such sums by Seller and, to the extent permitted
pursuant to applicable Law, Seller shall assign all right, title, and interest
of Seller in and to any claims, causes of action, unpaid proceeds, or other
payments from third Persons arising out of such Casualty Loss (to the extent
related to the Assets).  In the event that the value of the portion of the
Assets affected by such Casualty Loss (which shall be determined in the same
manner set forth in ‎Section 3.5(e)) exceeds Thirty Million dollars
($30,000,000), Seller and Purchaser shall have the right to terminate this
Agreement upon written notification to the other Party, and the Parties shall
have the rights set forth in Article 11.
 
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Section 12.5          Limitation on Actions.
 
(a)           Except as set forth to the contrary in this ‎Section 12.5(a), the
representations and warranties of the Seller and Purchaser in Article 5 and
Article 6 and the covenants and agreements of the Parties in Article 7 and the
corresponding representations and warranties given in the certificates delivered
at Closing pursuant to ‎Section 9.2(e) and ‎Section 9.3(d), as applicable, shall
survive the Closing until the Cut-Off Date (except that the covenants of Sellers
and Purchaser set forth in ‎Section 9.4(e) shall survive the Closing for the
periods of time set forth therein).  Notwithstanding the foregoing:
 
(i)           the representations and warranties of Seller set forth in ‎Section
5.14, ‎Section 5.15, ‎Section 5.11(d), and ‎Section 5.22, shall terminate as of
the Closing;
 
(ii)           the representations of Seller set forth in ‎Section 5.3 and
‎Section 5.4 shall survive the Closing for the applicable statute of limitations
periods;
 
(iii)           the representations of Seller and Purchaser in ‎Section 5.1 and
‎Section 6.1, respectively shall survive the Closing indefinitely;
 
(iv)           the covenant of Seller in ‎Section 7.13 shall survive the Closing
for the period of time set forth therein with respect to Seller's obligations
and indefinitely as to the indemnity provision therein,
 
(v)           the covenant of Purchaser set forth in ‎Section 7.5 shall survive
the Closing indefinitely;
 
(vi)           the covenants of Seller in ‎Section 7.6 and ‎Section 7.16 shall
survive the Closing indefinitely; and
 
(vii)           the covenants of Seller set forth in ‎Section 7.14 shall survive
the Closing for the period of time set forth therein.
 
(b)           Except as specifically set forth in this Agreement, the remainder
of this Agreement shall survive the Closing without time limit except as may
otherwise be expressly provided herein.  Representations, warranties, covenants,
and agreements shall be of no further force and effect after the date of their
expiration, provided that there shall be no termination of any bona fide claim
asserted pursuant to this Agreement with respect to such a representation,
warranty, covenant, or agreement prior to its expiration date.
 
(c)           The indemnities in ‎Section 12.2(a)(ii), ‎Section 12.2(a)(iii),
‎Section 12.2(b)(i), and ‎Section 12.2(b)(ii) shall terminate as of the
termination date of each respective representation, warranty, covenant, or
agreement that is subject to indemnification, except in each case as to matters
for which a specific written claim for indemnity has been delivered to the
Indemnifying Person on or before such termination date.  The indemnity in
‎Section 12.2(b)(iii) shall survive the Closing for the applicable statute of
limitations with respect to ‎Section 12.1(a), ‎Section 12.1(b), and ‎Section
12.1(d), and indefinitely as to the remainder of the Seller Retained
Obligations. The indemnities in ‎Section 12.2(a)(i) shall continue without time
limit, except with respect to ‎Section 12.1(x), which indemnity shall continue
for the period of the applicable statute of limitations.
 
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(d)           Neither Party shall have any liability for any indemnification
under ‎Section 12.2 until and unless the aggregate amount of the liability for
all Damages (i) for which Claim Notices are delivered by the other Party, and
(ii) with respect to which the indemnifying Party admits (or it is otherwise
finally determined) that the indemnifying Party has an obligation to indemnify
the indemnified Party pursuant to the terms of ‎Section 12.2 exceeds Two Million
Five Hundred Thousand dollars ($2,500,000) (the "Minimum Damage Amount"), at
which time the indemnified Party will be entitled to recover all such Damages;
provided, however, that, for the purposes of this ‎Section 12.5, the Minimum
Damage Amount shall not apply with respect to any Damages to the extent arising
out of or resulting from (w) the breach by Seller of its representations and
warranties contained in ‎Section 5.3, (x)  breach by a Party of its covenants
and agreements Parties contained in Article 10, (y) the breach by a Party of its
representations in ‎Section 5.1 and ‎Section 6.1 through ‎Section 6.4,
inclusive, (z) the Assumed Seller Obligations or the Retained Seller
Obligations.  Neither the Minimum Damage Amount nor the monetary limitation on
Damages set forth in ‎Section 12.2(d) shall apply to breaches of Seller's
representation in ‎Section 5.7.  With respect to claims relating to
Environmental Defects or other environmental deficiencies with the Assets for
which Purchaser is entitled to indemnification pursuant to ‎Section 12.2(b), the
amount of Damages shall be determined pursuant to ‎Section 4.4(e)(i), (ii), and
(iii).
 
(e)           Notwithstanding anything to the contrary contained elsewhere in
this Agreement, neither Party shall be required to indemnify the other Party
under this Article 12 for aggregate Damages in excess of One-Hundred Fifty
Million dollars ($150,000,000).
 
(f)           The amount of any Damages for which an Indemnified Person is
entitled to indemnity under this Article 12 shall be reduced by the amount of
insurance proceeds realized by the Indemnified Person or its Affiliates with
respect to such Damages (net of any collection costs, and excluding the proceeds
of any insurance policy issued or underwritten by the Indemnified Person or its
Affiliates).
 
(g)           Neither Party shall have any obligation or liability under this
Agreement or in connection with or with respect to the transactions contemplated
by this Agreement for any breach, misrepresentation, or noncompliance with
respect to any representation, warranty, covenant, indemnity, or obligation if
such breach, misrepresentation, or noncompliance shall have been waived by the
other Party.
 
Section 12.6          Escrow.
 
(a)           The Deposit, together with any interest thereon (the "Escrow
Amount"), shall be maintained in the Escrow Account until (i) the later to occur
of one-hundred eighty (180) days after the Closing Date and December 31, 2008
(the "Escrow Maintenance Period") and (ii) so long thereafter as is required to
resolve any claims asserted by Purchaser in accordance with the procedure
described in ‎Section 12.6(b); provided, however, that, from time to time upon
and after the termination of the Escrow Maintenance Period, the Escrow Amount
shall be distributed to Seller to the extent that Purchaser's unresolved claims
which were asserted in accordance with ‎Section 12.6(b) are less than the Escrow
Amount, and Purchaser agrees to take all actions as may be required to
distribute such amounts to Seller.

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(b)           Upon notice to Seller specifying in reasonable detail the basis
therefor, Purchaser may, prior to the termination of the Escrow Maintenance
Period, give written notice to the Escrow Agent of any claim to which it may be
entitled pursuant to the terms of this Agreement, excluding, however, any claims
that may indemnified, bonded, or cured pursuant to ‎Section 3.5 or ‎Section
4.4.  Such notice shall specify the Damages to which Purchaser reasonably
believes it is entitled and shall certify that, during the period of time set
forth in ‎Section 12.3(b) or ‎Section 12.3(g), as applicable, Seller has not
paid the Damages claimed by Purchaser or otherwise responded to Purchaser's
Claim Notice in a manner acceptable to Purchaser, in the exercise of its
commercially reasonable discretion.  The delivery by Purchaser of a notice of a
claim for Damages to the Escrow Agent hereunder shall not constitute an election
of remedies and shall not limit Purchaser in any manner in the enforcement of
other remedies to which it may be entitled hereunder.
 
ARTICLE XIII
MISCELLANEOUS
 
Section 13.1         Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original instrument, but all such
counterparts together shall constitute but one agreement.
 
Section 13.2         Notices.  All notices that are required or may be given
pursuant to this Agreement shall be sufficient in all respects if given in
writing, in English and delivered personally, by telecopy or by recognized
courier service, as follows:
 
 
If to Seller:
O'Brien Resources, LLC

 
425 Ashley Ridge Boulevard, Suite 300

 
Shreveport, Louisiana 71106

 
Attention:
William J. O'Brien, III

 
Telephone:
(318) 865-8568

 
Facsimile:
(318) 865-5173

 
 
with a copy to:
Bracewell & Giuliani LLP

 
Pennzoil Place, South Tower

 
711 Louisiana Street, Suite 2300

 
Houston, Texas 77002

 
Attention:
James McAnelly III

 
Telephone:
(713) 221-1194

 
Telecopy:
(713) 222-3241

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If to Purchaser:
Berry Petroleum Company

 
950 – 17th Street, Suite 2400

 
Denver, Colorado 80202

 
Attention:
Michael Duginski

 
Telephone:
(303) 825-3344

 
Telecopy:
(303) 825-3350

 
 
With a copy to:
Holland & Hart LLP

 
555 – 17th Street, Suite 3200

 
Denver, Colorado 80202

 
Attention:
Davis O'Connor

 
Telephone:
(303) 295-8000

 
Telecopy:
(303) 295-8261

 
Either Party may change its address for notice by notice to the other in the
manner set forth above.  All notices shall be deemed to have been duly given at
the time of receipt by the Party to which such notice is addressed.
 
Section 13.3         Sales or Use Tax, Recording Fees and Similar Taxes and
Fees.  Notwithstanding anything to the contrary in Article 10, Purchaser shall
bear any sales, use, excise, real property transfer or gain, gross receipts,
goods and services, registration, capital, documentary, stamp or transfer Taxes,
recording fees, and similar Taxes and fees incurred and imposed upon, or with
respect to, the property transfers or other transactions contemplated
hereby.  Should any Seller Party or any Affiliate of any Seller Party pay any
amount for which Purchaser is liable under this ‎Section 13.3, Purchaser shall,
promptly following receipt of Seller's invoice, reimburse the amount paid.  If
such transfers or transactions are exempt from any such taxes or fees upon the
filing of an appropriate certificate or other evidence of exemption, Purchaser
shall timely furnish to Seller such certificate or evidence.
 
Section 13.4          Expenses.  Except as provided in ‎Section 7.6 and in
‎Section 12.3, all expenses incurred by Seller in connection with or related to
the authorization, preparation or execution of this Agreement, and the Exhibits
and Schedules hereto and thereto, and all other matters related to the Closing,
including without limitation, all fees and expenses of counsel, accountants and
financial advisers employed by Seller, shall be borne solely and entirely by
Seller, and all such expenses incurred by Purchaser shall be borne solely and
entirely by Purchaser.
 
Section 13.5         Replacement of Bonds, Letters of Credit, and
Guarantees.  The Parties understand that none of the bonds, letters of credit
and guarantees, if any, posted by Seller or any Affiliate of Seller with any
Governmental Authority or third Person and relating to the Assets are to be
transferred to Purchaser.  On or before Closing, Purchaser shall obtain, or
cause to be obtained in the name of Purchaser, replacements for such bonds,
letters of credit and guarantees, and shall cause, effective as of the Closing,
the cancellation or return to Seller of the bonds, letters of credit, and
guarantees posted by Seller and such Affiliates.  Schedule 13.5 identifies the
corporate guarantees (but not surety bonds or other forms of security) posted by
Seller or any Affiliate of Seller with respect to the Assets as of the date
noted on such schedule.

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Section 13.6          Records.
 
(a)           Within thirty (30) days after the Closing Date, Seller shall
deliver or cause to be delivered to Purchaser any Records that are in the
possession of Seller or its Affiliates, subject to ‎Section 13.6(b).
 
(b)           Seller may retain the originals of those Records relating to Tax
and accounting matters and provide Purchaser, at its request, with copies of
such Records that pertain to non-income Tax matters solely related to the
Assets.  Seller may retain copies of any other Records.
 
(c)           Purchaser, for a period of seven (7) years following the Closing,
shall:
 
(i)           retain the Records,
 
(ii)           provide Seller, its Affiliates, and their respective officers,
employees, and representatives with access to the Records during normal business
hours for review and copying at Seller's expense; and
 
(iii)           provide Seller, its Affiliates, and their respective officers,
employees, and representatives with access, during normal business hours, to
materials received or produced after Closing relating to
 
(A)           Seller's obligations under Article 10 (including to prepare Tax
Returns and to conduct negotiations with Tax Authorities), or
 
(B)           any claim for indemnification made under ‎Section 12.2 of this
Agreement (excluding, however, attorney work product and attorney-client
communications with respect to any such claim being brought by Purchaser under
this Agreement)
 
for review and copying at Seller's expense and to the Purchaser's personnel for
the purpose of discussing any such matter or claim.
 
Section 13.7         Use of Seller Party Names.  As promptly as practicable, but
in any case within one hundred twenty (120) days after the Closing Date,
Purchaser shall eliminate the use of the names O'Brien Resources, O'Brien
Energy, O'BENCO, Sepco, and variants thereof from the Assets and business of
Purchaser conducted therewith, and, except with respect to such grace period for
eliminating existing usage, shall have no right to use any logos, trademarks or
trade names belonging to any Seller Party or any of Affiliate of any Seller
Party.  Purchaser shall be solely responsible for any direct or indirect costs
or expenses resulting from the change in use of name, and any resulting
notification or approval requirements.
 
Section 13.8         Governing Law and Venue.  This Agreement and the legal
relations between the Parties shall be governed by and construed in accordance
with the laws of the State of Texas, without regard to principles of conflicts
of laws that would direct the application of the laws of another jurisdiction.
 
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Section 13.9          Dispute Resolution.  Each Party consents to personal
jurisdiction in any action brought in the United States federal courts located
in the State of Texas with respect to any dispute, claim or controversy arising
out of or in relation to or in connection with this Agreement, and each of the
Parties hereto agrees that any action instituted by it against the other with
respect to any such dispute, controversy, or claim (except to the extent a
dispute, controversy, or claim arising out of or in relation to or in connection
the determination of a Title Defect Amount pursuant to ‎Section 3.5(f), the
Environmental Defect Amount pursuant to ‎Section 4.5, or the determination of
Purchase Price adjustments pursuant to ‎Section 9.4(b) is referred to an expert
pursuant to those Sections) will be instituted exclusively in the United States
District Court for the Southern District of Texas, Houston Division.  The
Parties hereby waive trial by jury in any action, proceeding, or counterclaim
brought by any Party against another in any matter whatsoever arising out of or
in relation to or in connection with this Agreement.
 
Section 13.10       Captions.  The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
 
Section 13.11       Waivers.  Any failure by any Party to comply with any of its
obligations, agreements, or conditions herein contained may be waived by the
Party to whom such compliance is owed by an instrument signed by the Party to
whom compliance is owed and expressly identified as a waiver, but not in any
other manner.  No waiver of, or consent to a change in, any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
 
Section 13.12       Assignment.  No Party shall assign (including, without
limitation, by change of control, merger, consolidation, or stock purchase) or
otherwise transfer all or any part of this Agreement, nor shall any Party
delegate any of its rights or duties hereunder (including, without limitation,
by change of control, merger, consolidation, or stock purchase), without the
prior written consent of the other Party and any transfer or delegation made
without such consent shall be void.  Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and assigns.
 
Section 13.13       Entire Agreement.  The Confidentiality Agreement, this
Agreement and the documents to be executed hereunder and the Exhibits and
Schedules attached hereto constitute the entire agreement among the Parties
pertaining to the subject matter hereof, and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties pertaining to the subject matter hereof.
 
Section 13.14       Amendment.  This Agreement may be amended or modified only
by an agreement in writing signed by Seller and Purchaser and expressly
identified as an amendment or modification.
 
Section 13.15       No Third-Person Beneficiaries.  Nothing in this Agreement
shall entitle any Person other than Purchaser and Seller to any claim, cause of
action, remedy or right of any kind, except the rights expressly provided to the
Persons described in ‎Section 7.5 and ‎Section 12.2(e).

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Section 13.16        References.
 
In this Agreement:
 
(a)           References to any gender includes a reference to all other
genders;
 
(b)           References to the singular includes the plural, and vice versa;
 
(c)           Reference to any Article or Section means an Article or Section of
this Agreement;
 
(d)           Reference to any Exhibit or Schedule means an Exhibit or Schedule
to this Agreement, all of which are incorporated into and made a part of this
Agreement;
 
(e)           Unless expressly provided to the contrary, "hereunder", "hereof",
"herein", and words of similar import are references to this Agreement as a
whole and not any particular Section or other provision of this Agreement;
 
(f)           References to "$" or "dollars" means United States dollars; and
 
(g)           "Include" and "including" shall mean include or including without
limiting the generality of the description preceding such term.
 
Section 13.17       Construction.  Purchaser is capable of making such
investigation, inspection, review and evaluation of the Assets as a prudent
purchaser would deem appropriate under the circumstances, including with respect
to all matters relating to the Assets, their value, operation, and
suitability.  Each of Seller and Purchaser has had the opportunity to exercise
business discretion in relation to the negotiation of the details of the
transaction contemplated hereby.  This Agreement is the result of arm's-length
negotiations from equal bargaining positions.  It is expressly agreed that this
Agreement shall not be construed against any Party, and no consideration shall
be given or presumption made, on the basis of who drafted this Agreement or any
particular provision thereof.
 
Section 13.18       Limitation on Damages.  Notwithstanding anything to the
contrary contained herein, none of Purchaser, any Seller Party, or any of their
respective Affiliates shall be entitled to consequential, special, or punitive
damages in connection with this Agreement and the transactions contemplated
hereby (other than special or punitive damages suffered by third Persons for
which responsibility is allocated between the Parties) and each of Purchaser and
each Seller Party, for itself and on behalf of its Affiliates, hereby expressly
waives any right to consequential, special, or punitive damages in connection
with this Agreement and the transactions contemplated hereby.  It is understood
and agreed by Purchaser that there are a number of Parties constituting Seller
under this Agreement, and that, except as specifically set forth herein, any
representations, warranties, covenants, or agreements made by "Seller" hereunder
are severally made by each Party constituting Seller with respect to itself and
its ownership interest in the Assets only, and not with respect to any other
Seller Party or any other interest in the Assets.  The obligations of the
Parties constituting "Seller" hereunder shall be several and not joint, and no
party who is a part of the Parties constituting Seller shall be responsible for
the obligations of any other Party or any matters relating to any other Party or
any other Party's interest in the Assets.

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IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties as of
the date first above written.
 

    SELLER:                 O'BRIEN RESOURCES, LLC           By:           
William J. O'Brien III       Chairman and Chief Executive Officer

 

    O'BENCO II, LP             By: O'BENCO II GP, LLC, its General Partner      
      By: O'Brien Resources, LLC, its Manager             By:          William
J. O'Brien III       Chairman and Chief Executive Officer        

 

    SEPCO II, LLC             By:            Jack R. Touchstone      
 Management Committee Chairman

 

    CROW HORIZONS COMPANY             By: O'Brien Resources, LLC, its Agent and
Attorney-in-Fact             By:          William J. O'Brien III       Chairman
and Chief Executive Officer

 

    LIBERTY ENERGY, LLC             By:          Scott Carson       Investment
Officer

 

    PURCHASER:             BERRY PETROLEUM COMPANY             By:        
Name:          Title:        

 
 

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