EXHIBIT 10.19

[Letterhead of Legacy Reserves Operating, LP]

August 29, 2008
 
Chancellor Group, Inc,
Western National Bank
Gryphon Production Company, LLC
Attention: Marshall Vicknair
Gryphon Field Services, LLC
508 W. Wall, Suite 1100
Attention: Tom Grantham
Midland, Texas 79701
216 South Price Road
 
Pampa, Texas 79065
 

 
 
RE:
Purchase and Sale Agreement dated July 14, 2008 by and between Chancellor Group,
Inc. et al, (“Seller”), Legacy Reserves Operating, LP, (“Buyer”) and Western
National Bank et al (“Lender”), (the “Agreement”).

Gentlemen:

Reference is made to that certain Escrow Agreement dated July 14, 2008, attached
to and made a part of the Agreement (the “Escrow Agreement”). Section 2.2 of the
Agreement required that Buyer transmit to Western National Bank (“WNB”), as
Escrow Agent, the Deposit (as that term is defined in the Agreement), in an
amount equal to Six Hundred Seventy-Five Thousand and No/100 Dollars
($675,000.00). Buyer has previously tendered that Deposit, and the Escrow Agent
currently holds the Deposit pursuant to the terms of the Escrow Agreement. In
recognition of the actions filed by New Concept’s Energy, Inc. (“NCE”) related
to the Bankruptcy Cases, and the indemnification provisions of Section 16.1(D)
the parties have agreed to modify the amount to be held in the Escrow Account as
well as the terms for release of funds from the Escrow Account by the Escrow
Agent. In that regard, the parties agree to the following:

1.  
At Closing, in addition to the $675,000 that has previously been deposited in
the Escrow Account, Seller agrees that an additional $825,000 of Seller’s
Closing Proceeds be placed in the Escrow Account, for a total amount of
$1,500,000. For purposes of clarity, the Escrow Agent will not make the Closing
Distribution as provided under Section 1.03 (c) of the Escrow Agreement, and
$1,500,000 will be the amount of the Escrowed Funds after Closing. The Escrowed
Funds will be held pursuant to the Escrow Agreement, as modified by this letter
agreement.

2.  
Under Section 1.03(d)(iv), all remaining Escrowed Funds after taking into
account amounts distributed under Sections 1.03(d)(i), (ii) and (iii), shall be
held until the later of (A) 180 days from the date of Closing, or (B) the date
when the Order of Dismissal becomes a final and non-appealable order of the
Bankruptcy Court not subject to review by any court of competent jurisdiction.
However, the Escrowed Funds may be distributed early, subject to the provisions
of Sections 1.03(d)(i), (ii) and (iii), if Seller provides Buyer with release
executed by NCE that fully releases Buyer from any liability related to any and
all claims of NCE against Buyer in connection with the Assets, the form of which
must be acceptable to Buyer’s legal counsel, in their sole and complete
discretion.

 

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3.  
In the event that Buyer is required to expend funds after Closing because of
actions taken by NCE which affect the Assets, Seller agrees to consent to
distributions of amounts to Buyer from the Escrowed Funds under Section
1.03(d)(iv), and on a monthly basis, allow Escrow Agent to reimburse Buyer for
any and all reasonable attorneys’ fees, costs and/or expenses that Buyer incurs
in connection with the claims made by NCE after Closing. Invoices presented to
the Escrow Agent for such expenses as a Notice of Liquidated Claim shall provide
sufficient evidence for the Escrow Agent to reimburse Buyer for such expenses.

Please sign in the space provided below indicating your acceptance of all the
terms and conditions described above and return to me at your earliest possible
convenience.

Sincerely yours,

/s/ Kyle A. McGraw

Kyle A. McGraw
Executive Vice President - Business Development and Land

Agreed to and Accepted this 29th day of August, 2008.
 

CHANCELLOR GROUP, INC.                 /s/ Thomas H. Grantham    

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Thomas H. Grantham    
President
   

 

GRYPHON PRODUCTION CO., LLC.                /s/ Thomas H. Grantham    

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Thomas H. Grantham    
Manager
   

 

GRYPHON FIELD SERVICES, LLC                /s/ Thomas H. Grantham    

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Thomas H. Grantham     Manager    

 

ESCROW AGENT:                WESTERN NATIONAL BANK               
/s/ Marshall Vicknair
   

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Marshall Vicknair, Senior Vice President    

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