EXECUTION VERSION

Purchase and Sale Agreement

By and Between

Maurice W. Brown Oil & Gas, LLC

as Seller

and

Fidelity Exploration & Production Company

and Fidelity Oil Co.

as Buyer

Dated February 10, 2014

Dated Effective October 1, 2013

Converse County, Wyoming

3062469.3

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TABLE OF CONTENTS
 
 
 
ARTICLE 1.
 Purchase and Sale
1

1.1
Purchase and Sale
1

1.2
The Assets
1

1.3
Excluded Assets
3

1.4
Overriding Royalties and other Burdens
4

1.5
Effective Time
5

1.6
Revenue and Expenses
5

1.7
Section 1031 Exchanges
5

 
 
 
ARTICLE 2.
Purchase Price
5

2.1
Purchase Price
5

2.2
Deposit
5

2.3
Allocation of the Purchase Price
6

2.4
Adjustments to Purchase Price
6

2.5
Preliminary Settlement Statement
8

 
 
 
ARTICLE 3.
Due Diligence and Exclusive Offer
8

3.1
The Records
8

3.2
Information Disclaimer
9

3.3
Physical Access to the Assets
9

3.4
Buyer’s Other Due Diligence Activities
9

3.5
Exclusive Offer
9

 
 
 
ARTICLE 4.
Title Matters
10

4.1
Definitions
10

4.2
Purchase Price Adjustments for Title Defects
14

4.3
Interest Addition
15

4.4
General Disclaimer of Title Warranties and Representations
16

4.5
Disputes Regarding Title
16

4.6
Casualty Loss
17

4.7
Preferential Rights and Consents to Assign
17

4.8
Rentals, Minimum Royalties, and Shut-in Royalties
19

4.9
Excluded Contracts
19

 
 
 
ARTICLE 5.
Environmental Matters
19

5.1
Definitions
19

5.2
Environmental Assessment
21

5.3
Environmental Representation and Warranty
21

5.4
Environmental Liabilities and Obligations
22

5.5
Contested Environmental Defects
23

5.6
Exclusive Remedies
24

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ARTICLE 6.
Seller’s Representations and Warranties
24

6.1
Company Representations
24

6.2
Liability for Brokers’ Fees
24

6.3
No Bankruptcy
24

6.4
Foreign Person
25

6.5
Litigation
25

6.6
Judgments
25

6.7
Compliance with Law
25

6.8
Material Contracts
25

6.9
Records
25

6.10
Property Expenses
25

6.11
Capital Projects
26

6.12
Leases
26

6.13
Licenses and Permits
26

6.14
Hydrocarbon Sales Contracts
26

6.15
Imbalance Volumes
26

6.16
Insurance
27

6.17
Plugging Obligations
27

6.18
Preferential Rights and Required Consents
27

6.19
Area of Mutual Interest, Tax Partnerships
27

6.20
Taxes
27

6.21
Title
27

6.22
Surface Access
27

6.23
Intellectual Property
27

 
 
 
ARTICLE 7.
Buyer’s Representations and Warranties
28

7.1
Corporate Representations
28

7.2
Liability for Brokers’ Fees
28

7.3
Litigation
28

7.4
Financing
28

7.5
Consents
28

7.6
Bankruptcy
29

7.7
Regulatory
29

7.8
Accredited Investor
29

7.9
Independent Evaluation
29

 
 
 
ARTICLE 8.
Covenants and Agreements
29

8.1
Covenants and Agreements of Seller
29

8.2
Covenants and Agreements of Buyer
30

8.3
Covenants and Agreements of the Parties
30

8.4
Suspense Accounts and Division of Interest
32

8.5
Record Retention
32

8.6
Disclaimers
32

 
 
 
ARTICLE 9.
Tax Matters
34

9.1
Definitions
34

9.2
Apportionment of Property Taxes
35

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9.3
Apportionment of Severance Taxes
36

9.4
Income Taxes
36

9.5
Transfer Taxes
36

9.6
Post-Closing Tax Matters
36

9.7
Allocations for Federal Income Tax Purposes
37

 
 
 
ARTICLE 10.
Conditions Precedent to Closing
37

10.1
Seller’s Conditions Precedent
37

10.2
Buyer’s Conditions Precedent
38

 
 
 
ARTICLE 11.
Termination
39

11.1
Termination
39

11.2
Remedies
39

 
 
 
ARTICLE 12.
Closing
40

12.1
Date of Closing
40

12.2
Place of Closing
41

12.3
Closing Obligations
41

 
 
 
ARTICLE 13.
Post-Closing Obligations
42

13.1
Final Settlement Statement
42

13.2
Financial Statements
43

13.3
Area of Mutual Interest
43

13.4
Further Assurances
43

 
 
 
ARTICLE 14.
Assumption and Retention of Obligations and Indemnification
44

14.1
Buyer’s Assumption of Liabilities and Obligations
44

14.2
Seller’s Retention of Liabilities and Obligations
44

14.3
Indemnification
45

14.4
Indemnification Limitations
45

14.5
Express Negligence
46

14.6
Exclusive Remedy
46

14.7
Procedure
46

14.8
Survival
47

14.9
Insurance
48

14.10
No Insurance; Subrogation
48

14.11
Reservation as to Non-Parties
48

14.12
Noncompensatory Damages
48

14.13
Disclaimer of Application of Anti-Indemnity Statutes
49

 
 
 
ARTICLE 15.
Miscellaneous
49

15.1
Expenses
49

15.2
Notices
49

15.3
Relationship of Buyer Entities
49

15.4
Amendments/Waiver
50

15.5
Assignment
50

15.6
Announcements
50

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15.7
Counterparts/Electronic Fax Signatures
50

15.8
Governing Law
50

15.9
Entire Agreement
50

15.10
Knowledge
50

15.11
Binding Effect
50

15.12
Dispute Resolution
51

15.13
References, Titles and Construction
51

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LIST OF EXHIBITS

Exhibit
Description
 
 
A
Transaction Area
 
 
B
Leases
 
 
C
Wells
 
 
D
Material Contracts
 
 
E
Form Assignment, Bill of Sale and Conveyance
 
 
F
Non Foreign Affidavit
 
 
G
Form of Seller’s Officer’s Certificate
 
 
H
Form of Buyer’s Officer’s Certificate

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LIST OF SCHEDULES

Schedules
Description
 
 
1.3N
Excluded Properties, Interests and Rights
 
 
2.3
Allocation Schedule
 
 
4.1B.2
Contested Tax Liens
 
 
4.1B.7
Contested Mechanics Liens
 
 
4.1B.10
Contested Liens
 
 
4.7
Preferential Rights and Required Consents
 
 
5.3
Environmental Issues
 
 
6.5
Litigation
 
 
6.6
Judgments
 
 
6.10(y)
Disputed Property Expenses
 
 
6.11
Capital Projects
 
 
6.15
Imbalances
 
 
6.16
Insurance
 
 
6.17
Plugging Obligations
 
 
6.19
Area of Mutual Interest; Tax Partnership
 
 
6.20
Tax Matters
 
 
8.4
Suspense Revenues
 
 
 
 

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PURCHASE AND SALE AGREEMENT
Converse County, Wyoming

This Purchase and Sale Agreement (the “Agreement”), dated February 10, 2014, but
effective as of October 1, 2013, is by and between Maurice W. Brown Oil & Gas,
LLC, a Wyoming limited liability company, whose address is 516 South Greeley
Highway, Cheyenne, Wyoming 82007 (“Seller”) and Fidelity Exploration &
Production Company, a Delaware corporation (“Fidelity Exploration”), and
Fidelity Oil Co., a Delaware corporation (“Fidelity Oil”), each of whose address
is 1700 Lincoln Avenue, Suite 2800, Denver, Colorado 80203 (Fidelity Exploration
and Fidelity Oil, collectively, “Buyer”). The transaction contemplated by this
Agreement may be referred to as the “Transaction.” Seller and Buyer may be
referred to individually as a “Party” or collectively as the “Parties.” The
obligations of the companies comprising Buyer under this Agreement shall be
several in the ratio of ninety-eight percent (98%) for Fidelity Exploration and
two percent (2%) for Fidelity Oil.
Recitals

A.    Seller owns certain interests in oil and gas leases covering lands and
certain oil and gas wells located in a portion of Converse County, Wyoming, as
more particularly described on attached Exhibit A (the “Transaction Area”).
B.    Seller and Buyer desire that Buyer acquire one hundred percent (100%) of
Seller’s interest in the Assets, as defined below, and all title and the rights
associated therewith by paying the Purchase Price, as that term is defined
below.
C.    To accomplish the foregoing, the Parties wish to enter into this
Agreement.
Agreement

In consideration of the mutual promises herein, One Hundred Dollars ($100.00)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties agree as follows:
ARTICLE 1.
PURCHASE AND SALE

1.1    Purchase and Sale. Seller agrees to sell and Buyer agrees to purchase the
Assets pursuant to the terms of this Agreement.

1.2    The Assets. As used herein, the term “Assets” (or individually an
“Asset”) refers to all (one hundred percent (100%)), of the Seller’s right,
title and interest in and to the following:

A.The oil, gas and/or mineral leases described in Exhibit B (the “Leases”, or
individually, a “Lease”) covering the lands described on Exhibit B, together
with the lands pooled or unitized therewith (the “Lands”), and the oil, gas and
other hydrocarbons produced or processed in association therewith (whether or
not such item is in liquid or gaseous form), or any combination thereof, and any
minerals (whether in liquid or gaseous form) produced in

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association therewith (“Hydrocarbons”) in, on or under the Leases or Lands
(including Hydrocarbons in storage or in pipelines, plants and tanks as of the
Effective Time (as later defined)), including the leasehold estates and
interests, contractual leasehold, other similar leasehold rights in the Leases
or Lands, working interests, mineral interests, royalty interests, overriding
royalty interests, production payments and net profits interests therein,
together with the property and rights incident thereto, subject to those
reservations, limitations or depth restrictions, if any, identified on such
Exhibit B;

B.The oil and gas wells, water, injection and disposal wells on the Lands, or on
lands pooled, communitized or unitized therewith as specifically described in
Exhibit C (the “Wells”);

C.All personal property, inventory, equipment, fixtures or improvements used in
connection with the exploration, drilling, production, gathering, treatment,
processing, storing, transportation, sale or disposal of Hydrocarbons or water
produced from the Wells and Leases or located on the Lands, including any
gathering systems and any compressors owned by Seller (the “Equipment”);

D.The rights, interests and estates created under those certain servitudes,
easements, rights-of-way, privileges, franchises, prescriptions, licenses,
leases, permits and/or other rights associated with the Leases and Lands,
together with any amendments, renewals, extensions, supplements, modifications
or other agreements related thereto, and further together with any other
servitudes, easements, rights-of-way, privileges, prescriptions, franchises,
licenses, permits and/or other rights (whether presently existing or hereafter
created and whether now owned or hereafter acquired by operation of law or
otherwise) used, held for use in connection with, or in any way related to the
properties and interests described in Sections 1.2A through 1.2J;

E.All permits, rights-of-way, surface access agreements and easements located on
the Lands or used in connection with the exploration, drilling, production,
gathering, treatment, processing, storing, transportation, sale or disposal of
Hydrocarbons or water produced from the Leases and Lands;

F.The unitization, pooling and communitization agreements, declarations and
orders, and the units created thereby and all other such agreements relating to
the properties and interests described in Sections 1.2A through 1.2E and to the
production of Hydrocarbons, if any, attributable to said properties and
interests;

G.All contracts and contractual rights, obligations, and interests, including
all farmout and farmin agreements, operating agreements, production sales and
purchase contracts, gas balancing agreements, saltwater disposal agreements,
surface leases, division and transfer orders, and other contracts or agreements
covering or affecting any or all of the properties and interests described or
referred to in Sections 1.2A through 1.2J (the “Contracts”), including the
Contracts that are material to the ownership and operation of the Assets to
which Seller is a party, or of which Seller has knowledge, as listed in
Exhibit D (the “Material Contracts”);

        

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H.    All engineering, geologic, geophysical and seismic data and licenses
pertaining to the properties and interests described in Sections 1.2A through
1.2J other than the Hornbuckle 3D Seismic Survey (the “Data”);

I.    All files, records and data relating to the items described in
Sections 1.2A through 1.2J maintained by Seller including, without limitation,
the following, if and to the extent that such files exist: all records, files,
title documents, including correspondence, records of production and
maintenance, revenue, sales, expenses, warranties, lease files, land files, well
files, division order files, abstracts, title opinions, assignments, reports,
property records, contract files, financial statements and associated work
papers and work product, which relate to the items described in Sections 1.2A
through 1.2J, including work product prepared by accountants, and the reserve
reports and lease operating statements for the items described in Sections 1.2A
through 1.2J for the years 2011, 2012, 2013, and that portion of 2014 prior to
Closing and such other records as Buyer may request or are necessary for Buyer
to prepare financial statements, tax returns, and other filings, but excluding
from the foregoing (i) those files, records and data subject to unaffiliated
third party contractual restrictions on disclosure or transfer, (ii) work
product prepared by accountants in connection with Seller’s tax planning and the
preparation of Seller’s income or franchise tax returns, (iii) third party
reserve reports and evaluations, and (iv) audited financial statements (after
such exclusions, the “Records”). To the extent that any of the Records contain
interpretations of Seller, Buyer agrees to rely on such interpretations at its
own risk; and

J.    All other real and personal properties, rights and titles of Seller, other
than the Excluded Assets, owned by Seller and located in, or pertaining to, the
Transaction Area as of the Effective Time, whether or not described in Sections
1.2A through 1.2I above, or included in an Exhibit or Schedule to this
Agreement.

1.3    Excluded Assets. As used herein, the term “Excluded Assets” refers to all
of Seller’s right, title and interest in and to the following, all of which are
excluded from the terms of this Agreement and shall remain the sole property of
Seller:

A.    All of Seller’s corporate minute books, financial records and other
business records that relate to Seller’s business generally (including the
ownership and operation of the Assets) and the items excluded from the Records
under Section 1.2I;

B.    All trade credits, all accounts, receivables and all other proceeds,
income or revenues attributable to the Assets with respect to any period of time
prior to the Effective Time;

C.    To the extent they do not relate to the Assumed Obligations, all claims
and causes of action of Seller arising under or with respect to any of the
Contracts that are attributable to periods of time prior to the Effective Time
(including claims for adjustments or refunds);

D.    All rights and interests of Seller (i) under any policy or agreement of
insurance or indemnity, (ii) under any bond, or (iii) to any insurance or
condemnation proceeds

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or awards arising, in each case, from acts, omissions or events, or damage to or
destruction of property prior to the Effective Time, to the extent they do not
relate to the Assumed Liabilities;

E.    All Hydrocarbons produced and sold from the Assets with respect to all
periods prior to the Effective Time;

F.    All claims of Seller for refunds (including rights to receive refunds from
any governmental entity) or loss carry forwards or credits with respect to
(i) Asset Taxes (hereafter defined) allocable to Seller pursuant to Section 9.2
or Section 9.3, except to the extent such Taxes resulted in an adjustment in the
final determination of the Final Purchase Price, (ii) Income Taxes of the
Seller, or (iii) any Taxes attributable to the Excluded Assets;

G.    All offices, office leases of Seller, office furniture, furnishings,
computer equipment, proprietary computer software, radio and telephone
equipment, patents, trade secrets, copyrights, names, trademarks, logos and all
other intellectual property;

H.    All documents and instruments of Seller that may be protected by an
attorney/client privilege or any attorney work product doctrine, but
specifically excluding title opinions;

I.    Any and all files, records, and documents relating to Seller’s sale of the
Assets, including any research, valuation or pricing information prepared by
Seller and/or any consultants for Seller in connection with Seller’s efforts to
sell the Assets, and any offers received for such interests and information and
correspondence in connection therewith;

J.    All engineering, geophysical and other seismic and related technical data
and information relating to the Assets which Seller may not disclose, assign or
transfer under its existing agreements and licenses without consent or without
making an additional payment, or incurring any liabilities or obligations except
to the extent that such payments, liabilities and obligations are permitted to
be assumed by Buyer under the applicable agreements and the same are assumed by
Buyer;

K.    Any debt instruments;

L.    Any of the Assets described in Section 1.2E, Section 1.2G, Section 1.2H or
Section 1.2I that are not assignable, without consent or without making any
additional payments, or incurring any liabilities or obligations except to the
extent that such payments, liabilities and obligations are permitted to be
assumed by Buyer under the applicable agreements and the same are assumed by
Buyer;

M.    The Hornbuckle 3D Seismic Survey; and

N.    All other properties, interests and rights expressly reserved to the
Seller and that are excluded from the Transaction under other provisions of this
Agreement, including those set forth on Schedule 1.3N.

1.4    Overriding Royalties and other Burdens. As of the Effective Time, Seller
has not and will not reserve or transfer an overriding royalty interest or
otherwise burden the Assets,

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except that Seller has previously reserved an overriding royalty interest under
the Helis Agreement (as later defined) which is to be transferred to Buyer as
part of the Assets (the “Helis Overriding Royalty”).

1.5    Effective Time. The purchase and sale of the Assets shall be effective as
of October 1, 2013, at 7:00 a.m. Mountain Daylight Time (the “Effective Time”).

1.6    Revenue and Expenses. Subject to the provisions hereof, Seller shall
(i) remain entitled to all of the rights of ownership (including the right to
all production, proceeds of production and all other income, proceeds, receipts
and credits) and (ii) remain responsible (by payment, through the adjustments to
the Purchase Price hereunder or otherwise) for all Property Expenses (as later
defined), in each case, attributable to the Assets for the period of time prior
to the Effective Time. Subject to the provisions hereof, and subject to the
occurrence of Closing, Buyer shall (iii) be entitled to all of the rights of
ownership (including the right to all production, proceeds of production and
other proceeds), and (iv) be responsible (by payment, through the adjustments to
the Purchase Price hereunder or otherwise) for all Property Expenses, in each
case, attributable to the Assets for the period of time from and after the
Effective Time.

1.7    Section 1031 Exchanges. Seller reserves the right, at or prior to
Closing, to assign its rights to all or a portion of the Purchase Price, and
that portion of the Assets associated therewith (“1031 Assets”), to a Qualified
Intermediary (as that term is defined in Section 1.1031(k)-1(g)(4) of the
Treasury Regulations) (the “QI”) to accomplish this transaction, in whole or in
part, as a like-kind exchange (“Like-Kind Exchange”) under Section 1031 of the
Internal Revenue Code of 1986, as amended (“Code”). Buyer hereby (i) consents to
Seller’s assignment of its rights in this Agreement to the 1031 Assets, and
(ii) if such an assignment is made, provided Buyer received timely notice
thereof, Buyer agrees to pay all or a portion of the Purchase Price into a
qualified trust account at Closing as directed in writing by Seller. Buyer
likewise reserves the right, at or prior to Closing, to assign all or a portion
of its rights in this Agreement to a QI or to Buyer’s Exchange Accommodation
Titleholder (as that term is defined in Revenue Procedure 2000-37) (the “EAT”)
in connection with effecting a Like-Kind Exchange. Seller and Buyer acknowledge
and agree that a whole or partial assignment of this Agreement to a QI or EAT
shall not release either Party from or expand any of their respective
liabilities and obligations to each other under this Agreement. Neither Party
shall be obligated to pay any additional costs or incur any additional
obligations as a result of any Like-Kind Exchange effected by the other Party
and each Party agrees to hold harmless and indemnify the other Party from and
against all claims, losses and liabilities, if any, resulting from such
Like-Kind Exchange.

ARTICLE 2.
PURCHASE PRICE

2.1    Purchase Price. The “Purchase Price” for the Assets shall be Ninety-One
Million Five Hundred Thousand Dollars ($91,500,000.00).

2.2    Deposit. Contemporaneously with the execution of this Agreement, Buyer
has deposited with Seller by wire transfer in same day funds, the sum of Two
Million Dollars ($2,000,000.00) (the “Deposit”). The Deposit shall be
distributed to Seller and credited to the

5

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Purchase Price at Closing, or if this Agreement is terminated, shall be
distributed or retained pursuant to Article 11.

2.3    Allocation of the Purchase Price. Buyer, with Seller’s approval, has
allocated the Purchase Price among the Assets as set forth on Schedule 2.3. The
value so allocated to a particular Asset or spacing unit may be referred to as
the “Allocated Value” for that Asset.

2.4    Adjustments to Purchase Price. All adjustments to the Purchase Price
shall be made (i) according to the factors described in this Section 2.4, (ii)
in accordance with generally accepted accounting principles as consistently
applied in the oil and gas industry, and (iii) without duplication.

A.    Closing Amount. The term “Closing Amount” means the Purchase Price, less
the Deposit, adjusted as provided in this Section 2.4, using reasonable
estimates as agreed to by the Parties if actual numbers are not available.

B.    Property Expenses. For the purposes of this Agreement, the term “Property
Expenses” shall mean all capital expenses (including amounts paid, leases
acquired and other capital expenditures incurred after the Effective Time), and
all other direct and actual expenses attributable to the Assets, including,
without limitation, joint interest billings, lease operating expenses, third
party overhead charges, lease rental and maintenance costs, royalties,
overriding royalties, leasehold payments, Asset Taxes (as defined and
apportioned as of the Effective Time pursuant to Article 9), drilling expenses,
workover expenses, gathering costs, geological, geophysical and any other
exploration or development expenditures chargeable under applicable operating
agreements or other agreements consistent with the standards established by the
Council of Petroleum Accountant Societies of North America that are attributable
to the maintenance and operation of the Assets during the period in question. In
no event will Property Expenses include any costs or expenses of any kind
associated with Seller’s efforts to sell or market the Assets.

C.    Upward Adjustments. The Purchase Price shall be adjusted upward by the
following:

1.An amount equal to all proceeds (net of royalties, overriding royalties,
nonparticipating royalties, net profits interests or other similar burdens on or
measured by production of Hydrocarbons and Taxes not otherwise accounted for
hereunder) received and retained by the Buyer from the sale of all Hydrocarbons
produced from or credited to the Assets prior to the Effective Time;

2.An amount equal to all Property Expenses incurred and paid by Seller that are
attributable to the period after the Effective Time;

3.To the extent not covered in the preceding paragraph, an amount equal to all
prepaid expenses attributable to the Assets after the Effective Time, whether
paid before, on, or after the Effective Time, that were paid by or on behalf of
Seller, including applicable insurance costs, prepaid drilling and/or completion
costs, and prepaid utility charges;

4.An amount equal to the Interest Addition Adjustment;

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5.    An amount equal to the value of all Hydrocarbons in storage or in the
pipelines, plant and tanks as of the Effective Time that is credited or
attributable to the Assets; provided that the value of oil in the production
tanks shall be calculated to include only the oil stored above the load lines as
of the Effective Time (i.e. Buyer is not responsible for paying Seller “tank
bottoms”) and the value (i) for purposes of the Preliminary Settlement
Statement, to be the actual price received for such oil, gas, or natural gas
liquids, less applicable Taxes, upon the first unaffiliated third party sale
thereof, if available, and upon such estimates, as are reasonably agreed upon by
the Parties, to the extent actual amounts sold, or to be sold, and prices
obtained, or to be obtained, are not known at Closing, and (ii) for purposes of
the Final Settlement Statement, to be based upon actual amounts sold and prices
obtained, less applicable Taxes, from the first unaffiliated third party sale
thereof;

6.    An amount equal to the value of imbalances including, without limitation,
pipeline, plant, and under-produced gas owed to Seller as of the Effective Time,
with the value (i) for the purposes of the Preliminary Settlement Statement, to
be the actual price received for such Hydrocarbons to be based upon actual
amounts received in October of 2013, if available, and upon such estimates as
are reasonably agreed upon by the Parties, to the extent actual amounts are not
known at Closing, and (ii) for purposes of the Final Settlement Statement, to be
based upon actual amounts sold and prices received in October 2013; and

7.    Any amounts provided elsewhere in this Agreement and any other amount
agreed to by Buyer and Seller.

D.    Downward Adjustments. The Purchase Price shall be adjusted downward by the
following:
            
1.    An amount equal to all proceeds (net of royalties, overriding royalties,
nonparticipating royalties, net profits interests or other similar burdens on or
measured by production of Hydrocarbons and Taxes not otherwise accounted for
hereunder) received and retained by the Seller from the sale of all Hydrocarbons
produced from or credited to the Assets after the Effective Time;

2.    An amount equal to all Property Expenses that remain unpaid by Seller, or
that have been paid by Buyer, and that are attributable to the period prior to
the Effective Time;

3.    An amount equal to all cash in, or attributable to, suspense accounts held
by Seller relating to the Assets for which Buyer has accepted responsibility at
Closing pursuant to Section 8.4;

4.    An amount equal to (i) the value of imbalances including, without
limitation, pipeline, plant, and over-produced gas owed by Seller as of the
Effective Time, with the value to be based upon actual amounts received in
October of 2013, if available, and upon such estimates as are reasonably agreed
upon by the Parties, to the extent actual amounts are not known at Closing, and
(ii) for purposes of the Final Settlement Statement, be based upon actual
amounts received;

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5.    An amount equal to the Title and Environmental Defects Adjustment
(hereafter defined);

6.    An amount equal to the Exclusion Adjustments (hereafter defined); and

7.    Any other amounts provided elsewhere in this Agreement, and any other
amount agreed to by Buyer and Seller.

E.    Tax Adjustments. To adjust the Purchase Price for the apportionment of
Taxes, the Parties agree to adjust the Purchase Price downward or upward, as
appropriate, pursuant to the provisions of Article 9.

2.5    Preliminary Settlement Statement. The Purchase Price shall be adjusted at
Closing pursuant to a “Preliminary Settlement Statement” prepared by Seller,
submitted to Buyer, subject to Section 13.1, on or before the date that is three
(3) calendar days prior to Closing. The Preliminary Settlement Statement shall
set forth the Purchase Price and all adjustments thereto using the actual
numbers that are available, and the resulting amount, less the Deposit, will be
paid to Seller at Closing, together with the designation of Seller’s account for
the wire transfer of same day funds. As soon as practicable after the receipt of
the Preliminary Settlement Statement, but in no event later than the date that
is one (1) calendar day prior to Closing, Buyer shall deliver to Seller a
written report containing any changes that Buyer proposes to make to the
Preliminary Settlement Statement. The Parties shall attempt to resolve any
disputes regarding the Preliminary Settlement Statement prior to Closing.
Disputes regarding the Preliminary Settlement Statement that are not resolved
prior to Closing shall be resolved by the Parties on or before the Final
Settlement Statement Due Date, or otherwise pursuant to Section 13.1, and the
amount of such adjustments to the Purchase Price at Closing shall be that amount
set forth in the written report containing Buyer’s proposed changes to the
Preliminary Settlement Statement delivered by Buyer to Seller as provided in
this Section 2.5, but adjusted upwards or downwards for any items that have been
resolved by the Parties prior to Closing. After Closing, the Purchase Price
shall be adjusted pursuant to the Final Settlement Statement delivered pursuant
to Section 13.1.

ARTICLE 3.
DUE DILIGENCE AND EXCLUSIVE OFFER

3.1    The Records. From the date of this Agreement until Closing and subject to
Section 8.3A, Section 8.3B and Section 8.3C, Seller will make the Records and
Contracts available to Buyer for inspection, copying, and review at Seller’s
offices during normal business hours to permit Buyer to perform its due
diligence review. Subject to the consent and cooperation of third parties,
including but not limited to the Operator (hereafter defined), Seller will use
commercially reasonable efforts to assist Buyer to obtain, at Buyer’s expense,
such additional information from such third parties as Buyer may reasonably
desire. Buyer may inspect the Records, Contracts and such additional information
only to the extent it may do so without violating any obligation of confidence
or contractual commitment of Seller to a third party. Buyer acknowledges that
certain third parties, not Seller, are the operators with respect to all of the
Assets (each an “Operator” and together the “Operators”). As a result, pertinent

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information regarding the Assets may have to be obtained from the respective
Operator, which Seller shall use commercially reasonable efforts to assist Buyer
to obtain.

3.2    Information Disclaimer. Except for the representations and warranties
contained in this Agreement, Seller makes no representation or warranties of any
kind as to the Records, the Contracts, or any other information reviewed by
Buyer. Subject to (y) the items that were excluded to arrive at the definition
of Records, and (z) the items constituting the Excluded Assets, Seller
represents that during the Buyer’s inspection it has not, and will not, withhold
any Records, Contracts, or other information in its possession of any kind
related to its ownership of the Assets, or the environmental condition or value
of the Assets. Buyer agrees that any conclusions drawn from its review of the
Records, Contracts and other information shall be the result of its own
independent review and judgment.

3.3    Physical Access to the Assets. During reasonable business hours, Seller
agrees to grant Buyer physical access to the Assets to allow Buyer to conduct,
at Buyer’s sole risk and expense, on-site inspections or environmental
assessments of the Assets. In connection with any on-site inspections and
assessments of the Assets, Buyer agrees not to interfere with the normal
operation of the Assets and agrees to comply with all operational and safety
requirements of the Operators of the Assets. In connection with granting such
access, Buyer represents that it is adequately insured and waives, releases and
agrees to indemnify, defend and hold harmless Seller, and its directors,
officers, shareholders, employees, agents, members, partners, and
representatives against all claims for injury to, or death of, persons or for
damage to property arising in any way from the access afforded to Buyer
hereunder or the Operators or the activities of Buyer except to the extent
resulting from the gross negligence or willful misconduct of Seller. This
waiver, release and indemnity by Buyer shall survive termination of this
Agreement. Seller will use commercially reasonable efforts pursuant to its
rights under the applicable joint operating agreement to assist Buyer to obtain
access rights from the respective Operator for Buyer to conduct its
investigation and due diligence of the Assets under this Section 3.3; provided
that Seller shall not be required to incur any liability or pay any money in
order to assist Buyer to obtain such access rights. Upon completion of Buyer’s
due diligence, Buyer will, at its sole costs and expense and without any cost or
expense to Seller (i) repair all damage done to the Assets in connection with
Buyer’s due diligence and restore the Assets to at least the approximate same
condition as they were in prior to commencement of Buyer’s due diligence, and
(ii) remove all equipment, tools or other property brought onto the Assets in
connection with Buyer’s due diligence. The preceding sentence will survive the
termination of this Agreement.

3.4    Buyer’s Other Due Diligence Activities. In addition to Buyer’s rights
provided in Section 3.3, Seller acknowledges that Buyer will be conducting other
due diligence reviews of the Assets including, without limitation, confirming
(i) the quantum of the Net Revenue Acres of the Leases, and the Base NDI and
Base WI of the Wells, (ii) financials, production statements and the Records,
and (iii) ownership, title, acreage, and terms of the Assets.

3.5    Exclusive Offer. Upon execution of this Agreement, Seller shall not offer
the Lands and Leases as described herein, entertain offers from, or negotiate
for the sale of the Lands and Leases as described herein, to any third party
prior to Closing or the termination of this Agreement.

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ARTICLE 4.
TITLE MATTERS

4.1    Definitions.

A.    Defensible Title. The term “Defensible Title” means such title to the
Assets, that, subject to and except for Permitted Encumbrances:

1.    entitles Seller to receive the Net Decimal Interest share of the
Hydrocarbons produced, saved and marketed from any Well throughout the duration
of the productive life of such Well or such specified zone(s) therein of not
less than the Net Decimal Interest shown in Exhibit C for such Well. As used in
this Agreement, “Net Decimal Interest” (or “NDI”) with respect to a Well shall
mean (i) Seller’s percentage share of the Hydrocarbons produced, saved and
marketed from the Leases located within the spacing unit of such Well, after
satisfaction of all royalties, overriding royalties, nonparticipating royalties,
net profits interests or other similar burdens on or measured by production of
Hydrocarbons, multiplied by (ii) Seller’s Working Interest (as defined herein)
in the Leases located within the spacing unit of such Well. The Net Decimal
Interest for each Well as set forth on Exhibit C (which includes the Helis
Overriding Royalty or any other overriding royalty interest in the Leases owned
by Seller (unless expressly excluded pursuant to Section 1.3), where applicable)
is referred to herein as the “Base NDI”). The Base NDI, which may be adjusted
due to (i) decreases in connection with those operations which Seller has
elected or may elect to be a non-consenting co-owner, in compliance with
Section 8.1B, or (ii) decreases resulting from the establishment or amendment of
pools or units, but in each case, to the extent occurring after the Effective
Time and not otherwise reflected in Exhibit C is referred to herein as the
“Adjusted NDI ”.

2.    obligates Seller to bear a percentage of the costs and expenses for the
maintenance, development, operation and production relating to any Well
throughout the productive life of such Well (“Working Interest” or “WI”) not
greater than the Working Interest shown in Exhibit C for such Well (the “Base
WI”) without increase, except (i) increases to the extent that they are
accompanied by a proportionate increase in Seller’s Base NDI (or Adjusted NDI,
if applicable), (ii) increases resulting from contribution requirements with
respect to defaulting co-owners under applicable operating agreements occurring
after the Effective Time and not otherwise reflected in Exhibit C (such
increases the “WI Adjustments”). The Base WI for each Well on Exhibit C, as
adjusted by such Well’s WI Adjustments, will be referred to in this Agreement as
the Well’s “Adjusted WI.”

3.    entitles Seller, and will entitle Buyer after Closing, to own the Net
Revenue Acres in the Leases as set forth in Exhibit B. As used in this
Agreement, “Net Revenue Acres” or “NRA” with respect to a Lease shall mean (i)
the number of gross acres in the lands covered by the Lease, multiplied by (ii)
the lessor’s percentage interest in the oil and gas fee mineral estate in the
lands covered by the Lease, multiplied by (iii) Seller’s percentage leasehold
interest in the Lease, multiplied by (iv) Seller’s share of the Hydrocarbons
produced, saved and marketed from such Lease after satisfaction of all
royalties, overriding royalties, nonparticipating royalties, net profits
interests or other similar burdens on or measured by production of Hydrocarbons;

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4.    entitles Seller to own its proportionate interest in all depths pertaining
to the “Frontier Formation”, being the stratigraphic interval from 12,800 feet
to 13,033 feet, as found in the Diamond Shamrock Co. Henry Federal 23-10 well
(API No. 4900922066), located in the SW/4NE/4SW/4 of Section 10, Township 37
North, Range 74 West;

5.    is free and clear of any liens, burdens or encumbrances of any kind or
character, including any surface use restriction, that would materially
interfere with the operation or use of any of the Asset or materially reduce the
value thereof; and

6.    is deducible from the public record (including the records of the Bureau
of Land Management or the State of Wyoming - Office of State Lands) and is free
from reasonable doubt to the end that a prudent person engaged in the business
of ownership, development, and operation of oil and gas leases with knowledge of
all the facts and their legal bearing would be willing to accept the same
without adjustment to the Purchase Price.

B.    Permitted Encumbrances. The term “Permitted Encumbrances” shall mean:

1.    lessors’ royalties, overriding royalties, net profits interests,
production payments, reversionary interests and similar burdens if the net
cumulative effect of such burdens does not operate to (i) reduce the Net Revenue
Acres covered by a Lease below the Net Revenue Acres for such Lease as shown on
Exhibit B, (ii) reduce the NDI for such Well below the Base NDI (or Adjusted
NDI, if applicable) for such Well, or (iii) increase the Base WI for such Well
without a corresponding increase in the Base NDI (or Adjusted NDI, if
applicable) for such Well, in each case;

2.    liens for Taxes or assessments not yet due and delinquent, or that are
being contested in good faith by appropriate proceedings, the proceedings of
which Seller has knowledge are set forth on Schedule 4.1.B.2;

3.    all rights to consent by, required notices to, filings with, or other
actions by federal, state or local governmental bodies, in connection with the
conveyance of the applicable Asset if the same are customarily obtained after
such conveyance;

4.    rights of reassignment upon the surrender or expiration of any Lease;

5.    the terms and conditions of the Contracts and all documents of record to
the extent such do not (i) reduce the Net Revenue Acres covered by a Lease below
the Net Revenue Acres for such Lease as shown on Exhibit B, (ii) decrease the
Base NDI (or Adjusted NDI, if applicable) or increase the Base WI (or Adjusted
WI, if applicable) for the affected Well, or (iii) materially interfere with the
operation or use of the affected Lease or Well as has been conducted in the
past;

6.    easements, rights-of-way, servitudes, permits, surface leases and other
rights with respect to surface operations, on, over or in respect of any of the
Assets or any restriction on access thereto that do not materially interfere
with the operation or use of the affected Asset as has been conducted in the
past or materially affect the value thereof;

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7.    materialmen’s, mechanics’, operators’ or other similar liens arising in
the ordinary course of business incidental to operation of the Assets (i) if
such liens and charges have not been filed pursuant to law and the time for
filing such liens and charges has expired or (ii) if filed, such liens and
charges have not yet become due and payable or are being contested in good faith
by appropriate proceedings, the proceedings of which Seller has knowledge are
described on Schedule 4.1.B.7;

8.    any encumbrance on or affecting the Assets which is discharged by Seller
at or prior to Closing;

9.    all rights reserved to or vested in any municipality or governmental
statutory or public authority to control or regulate any of the Assets or the
operations with respect thereto in any manner, and all applicable laws, rules
and orders of any such authority which are not such as to materially interfere
with the operation or use of any of the Assets or materially reduce the value
thereof; and

10.    liens created under the Assets or operating agreements or by operation of
law in respect of obligations that are not due, or that are being contested in
good faith by appropriate proceedings, the proceedings of which Seller has
knowledge are described on Schedule 4.1.B.10.

C.    Title Defect. The term “Title Defect” means any lien, encumbrance, claim,
defect in or objection to real property title, excluding Permitted Encumbrances,
that alone or in combination with other defects renders the Seller’s title to
the Asset, including an individual Lease or Well, to be (i) less than Defensible
Title, and (ii) the Title Defect Value of which is more than Twelve Thousand
Five Hundred Dollars ($12,500.00) (with such amount being the “Individual Title
Threshold”). In the event a Title Defect impacts multiple Assets, the Buyer may,
in its sole discretion, aggregate the Title Defect Value of all Assets impacted
by the Title Defect for the purposes of determining the Individual Title
Threshold. Notwithstanding the foregoing, the following shall not be considered
Title Defects:

1.    defects in the chain of title, consisting of the failure to recite marital
status in a document or omissions of heirship or estate proceedings, unless
Buyer provides reasonable written evidence that such failure or omission has
resulted in another party claiming title to the relevant Asset;

2.    defects based upon unsubordinated Deeds of Trust or Mortgages on minerals
so long as such Deeds of Trust or Mortgages were granted after the date the
Lease covering such minerals was executed;

3.    defects arising out of lack of survey;

4.    defects that have been cured under applicable statutes of limitation for
adverse possession or for prescription, or under Wyoming’s Marketable Title
statute, Wyo. Stat. §§ 34‑10‑101, et. seq.;

5.    defects or irregularities arising out of the lack of recorded powers of
attorney from corporations to execute and deliver documents on their behalf;

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6.    proof of representative capacity on behalf of a corporation, partnership,
limited liability company or trust, unless it is clear from other documentation
that a signatory party has not signed a document in the proper representative
capacity;

7.    defects in acknowledgments;

8.    defects arising out of a lack of corporate or other entity authorization
unless Buyer provides a reasonable basis for the assertion that such corporate
or other entity action was not authorized and results in another person’s actual
or superior claim of title to the relevant Asset;

9.    defects based upon failure to record leases issued by the Bureau of Land
Management or the State of Wyoming - Office of State Lands in the real property
records of the county in which the land covered by such leases is located;

10.    defects or irregularities arising out of prior oil and gas leases which
have not been released of record, which on their face, expired more than, and no
production attributable thereto has been reported to the Wyoming Oil and Gas
Conservation Commission during the, five (5) years prior to the Effective Time
(as long as Buyer does not provide evidence that such leases have been
maintained by continuous production);

11.    such Title Defects as have been waived by Buyer; and

12.    defects based solely on: (i) lack of information in Seller’s files; or
(ii) reference to an unrecorded document to which Seller, or a predecessor of
Seller, or the Operator is not a party and which is not in the Records.

D.    Title Defect Value. “Title Defect Value” means the amount by which the
Allocated Value of an Asset has been reduced by a Title Defect. In determining
the Title Defect Value, the Parties intend to include only that portion of the
Asset affected by the Title Defect. The Title Defect Value may not exceed the
Allocated Value of the Asset and shall be determined by the Parties in good
faith taking into account all relevant factors including, without limitation,
the following:

1.    If the Title Defect is based upon the Seller’s owning an NDI (the
“Corrected NDI”) which is less than the Base NDI (or Adjusted NDI, if
applicable) for a Well, then the Title Defect Value shall be equal to the
Allocated Value of the Asset multiplied by a fraction, the numerator of which is
the difference between the Base NDI (or Adjusted NDI, if applicable) and the
Corrected NDI and the denominator of which is the Base NDI (or Adjusted NDI, if
applicable) for the Well.

2.    If the Title Defect is that the actual Net Revenue Acres covered by a
Lease is less than the number of Net Revenue Acres set forth in Exhibit B for
such Lease, the Title Defect Value shall be an amount equal to such difference
in Net Revenue Acres multiplied by a fraction, the numerator of which is the
Allocated Value of the affected Lease, and the denominator of which is the
number of Net Revenue Acres set forth in Exhibit B for the affected Lease.

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3.    If the Title Defect is based on an obligation or burden that is liquidated
in amount, the adjustment will be the sum necessary to remove the obligation or
burden from the affected Asset; provided, however, that the adjustment shall
never exceed the Allocated Value of the affected Asset.

4.    If the Title Defect is based on an obligation or burden that is not
liquidated in amount (including, but not limited to, any increase in the Base WI
(or Adjusted WI, if applicable) for which there is not a proportionate increase
in the Base NDI (or Adjusted NDI, if applicable)), but can be estimated with
reasonable certainty, the adjustment will be the sum necessary to compensate
Buyer on the Closing Date for the adverse economic effect on the affected Asset;
provided, however, that the adjustment shall never exceed the Allocated Value of
the affected Asset.

5.    If the Title Defect (taking into account Seller’s interest in all Leases
covering the same Lands) is based on a lack of rights to the Frontier Formation,
the Title Defect Value shall be 66.67% of the Allocated Value of the affected
Asset.

6.    If the Title Defect is a lien or encumbrance on the Asset created by
Seller, Seller shall have the lien or encumbrance unconditionally released prior
to Closing and if so released, there shall be no Title Defect Value associated
with such lien or encumbrance.
4.2    Purchase Price Adjustments for Title Defects.

A.    Notices of Title Defects. Buyer shall give Seller a written “Title Defect
Notice” on or before 5:00 p.m. Mountain Time on February 28, 2014, (the “Title
Defect Date”). To be effective, each Title Defect Notice must be in writing and
must satisfy the following conditions precedent: (i) name the affected Asset;
(ii) describe each Title Defect in reasonable detail; (iii) describe the basis
for each Title Defect; (iv) attach Supporting Documentation; (v) state the
Allocated Value of the affected Asset; (vi) state Buyer’s good faith estimate of
the Title Defect Value; and (vii) set forth the computations upon which Buyer’s
estimate is based. For the purposes of this Section 4.2A, “Supporting
Documentation” for a particular Title Defect means the following: (x) if the
basis is derived from any document, a copy of such document (or pertinent part
thereof); (y) if the basis is derived from any gap in Seller’s chain of title,
the documents preceding and following the gap shall be attached, or in any case,
other reasonable written documentation, or (z) if the basis is derived from a
title opinion, then a copy of the pertinent title comment and requirement from
that opinion. Buyer shall be deemed to have waived, for all purposes of this
Agreement, and Seller shall have no liability for, any Title Defect existing
prior to the Title Defect Date which Buyer failed to assert as a Title Defect by
a properly delivered Title Defect Notice received by Seller on or before the
Title Defect Date, except that for purposes of the special warranty of title in
the Assignment Buyer shall be deemed to have waived only those Title Defects
existing prior to the Title Defect Date (which would otherwise be subject to
such special warranty) of which Buyer had knowledge, but failed to notify the
Seller of on or before the Title Defect Date.

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B.    Defect Adjustments.

1.    The Purchase Price will be reduced under Section 2.4 and as set forth
below, unless: (i) Seller cures, at Seller’s sole cost and expense, the Title
Defect prior to Closing to Buyer’s reasonable satisfaction; (ii) Buyer agrees to
waive the relevant Title Defect, which waiver may be withheld by Buyer in
Buyer’s sole discretion; or (iii) Seller elects on or before Closing, to attempt
to cure to Buyer’s reasonable satisfaction such Title Defect, at Seller’s sole
cost and expense, no later than the Final Settlement Statement Due Date (as
later defined).
 
2.    There shall not be any adjustment to the Purchase Price or other remedies
available to Buyer (i) for any individual Title Defect for which the Title
Defect Value does not exceed the Individual Title Threshold; and (ii) in no
event shall there be any adjustment to the Purchase Price or other remedies
available to Buyer for Title Defects that exceed the Individual Title Threshold
unless (A) the sum of (1) the aggregate Title Defect Values of all such Title
Defects that exceed the Individual Title Threshold (but excluding any such Title
Defects (I) which are cured by Seller prior to Closing, (II) waived by the
Buyer, or (III) with respect to Assets which are deemed to be Excluded Assets,
other than as provided in Section 1.3) (the “1 Amount”) plus (2) the aggregate
of all Environmental Defect Values that exceed the Individual Environmental
Threshold (but excluding any Environmental Defects (I) which are Remediated by
Seller, or (II) waived by the Buyer) (the “2 Amount”), exceeds (B) Two Million
Nine Hundred Thousand ($2,900,000.00) (the “Aggregate Deductible”), after which
Buyer will be entitled to an adjustment of the Purchase Price or other
applicable remedies available hereunder, but only with respect to the amount by
which the sum of the 1 Amount plus the 2 Amount exceeds the Aggregate Deductible
(the “Title and Environmental Defects Adjustment”). Notwithstanding the
foregoing, with respect to any Title Defect described in Section 4.1D.5, the
Title and Environmental Defects Adjustment shall include the Title Defect Value
of such Title Defect, first dollar, without regard to the Individual Title
Threshold or Aggregate Deductible.

3.    If prior to Closing Seller elects to cure the relevant Title Defect
post-Closing, the affected Asset shall not be assigned to Buyer at Closing and
the Purchase Price will be reduced by the Allocated Value of such affected
Asset. Seller shall have until the Final Settlement Statement Due Date to
attempt to cure such Title Defect, and shall deliver evidence that any Title
Defects have been cured prior to the Final Settlement Statement Due Date.
Following the Final Settlement Statement Due Date, Seller shall assign to Buyer
(in substantially the same form as the Assignment) the Assets affected by a
Title Defect that Seller elected to cure post-Closing, and there shall be an
upward adjustment in the Final Settlement Statement for the Allocated Value of
the affected Asset, less the Title Defect Value of any Title Defect that has not
been cured to Buyer’s reasonable satisfaction, subject to Section 4.2B.2,
provided however, if the Title Defect Value equals 100% of the Allocated Value
of the affected Asset, unless the Parties otherwise agree, Seller may retain the
affected Asset, in which event the affected Asset will be an Excluded Asset.

4.3    Interest Addition. Promptly on discovery, but on or before the Title
Defect Date, Buyer shall in good faith notify Seller, or Seller shall in good
faith notify Buyer, of any Interest Addition. As used in this Agreement an
“Interest Addition” shall mean, (i) any right title or interest of Seller in any
real or personal property located within or used in connection with the

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Transaction Area, other than the Excluded Assets, that are not listed on Exhibit
B or Exhibit C, (ii) any interest that entitles Seller to receive (y) more than
the Net Revenue Acres identified on Exhibit B for any particular Lease, (z) a
higher Base NDI (or Adjusted NDI, if applicable), in any particular Well than
the Base NDI (or Adjusted NDI, if applicable) for the Well, provided such
increase is equal to or in excess of any proportionate increase in the Base WI
(or Adjusted WI, if applicable) for such Well, or (iii) a lesser Base WI in any
particular Well than the Base WI (or Adjusted WI, if applicable) for the Well,
provided such decrease is in excess of any proportionate decrease in the Base
NDI (or Adjusted NDI, if applicable) for such Well. Each such notice of an
Interest Addition shall be in writing and shall describe the Interest Addition,
the estimated Allocated Value for the Interest Addition, or the amount by which
the Allocated Value of the Asset has been increased by the Interest Addition
(“Value of Interest Addition”), together with the associated computations and
supporting documentation. The Parties shall determine the Value of the Interest
Addition in good faith in the same manner as provided in Section 4.1D, taking
into account all relevant factors. The Purchase Price shall be increased for
only those Value of Interest Additions that exceed the Individual Title
Threshold and only to the extent the aggregate value of all Value of Interest
Additions that exceed the Individual Title Threshold exceeds One Million Four
Hundred Fifty Thousand Dollars ($1,450,000.00) (the “Section 4.3 Aggregate
Deductible”) after which Seller will be entitled to an adjustment of the
Purchase Price but only with respect to the amount by which the sum of all Value
of Interest Additions exceed the Section 4.3 Aggregate Deductible (with the
amount of such adjustment being the “Interest Addition Adjustment”).

4.4    General Disclaimer of Title Warranties and Representations. Except for
the representations and warranties contained in this Agreement and the special
warranty of title set forth in the Assignment, Seller makes no representation
and warranty, express, implied, statutory or otherwise, with respect to Seller’s
title to any of the Assets, and Buyer hereby acknowledges and agrees Buyer’s
sole remedy for any defect of title, including any Title Defect, with respect to
any Asset (i) in existence before the Title Defect Date, shall be as set forth
in Section 4.2 or Section 4.5 or, if applicable, Section 11.1C and (ii) after
the Title Defect Date, shall be pursuant to the special warranty of title set
forth in the Assignment as provided in Section 4.2A.

4.5    Disputes Regarding Title. In the event of a dispute concerning (i) the
scope or validity of a Title Defect, (ii) the Title Defect Value of a Title
Defect, (iii) Seller’s cure of any Title Defect to the reasonable satisfaction
of Buyer, (iv) the scope and validity of an Interest Addition, (v) the Value of
Interest Additions, or (vi) any other matter relating to title to the Assets (a
“Title Disputed Matter”), the principals of each of Buyer and Seller capable of
making a final binding decision for each Party shall meet in person at the
offices of Buyer, at least one (1) calendar day prior to Closing, and attempt to
resolve such Title Disputed Matter. If resolution is not achieved during that
meeting, then the Asset affected by such Title Disputed Matter shall not be
assigned to Buyer at Closing, the Purchase Price will be reduced by the
Allocated Value of such affected Asset, and such Title Disputed Matter will be
determined by binding arbitration, with a single arbitrator mutually acceptable
to Seller and Buyer who is licensed to practice law in the State of Wyoming and
who has at least ten (10) years of mineral title examination experience (the
“Title Arbitrator”). The arbitration will occur as soon as is practicable but in
any event within thirty (30) days following designation of the Title Arbitrator,
and the Title Arbitrator will issue a decision within ten (10) business days
following completion of the arbitration. If the Parties are unable to agree upon
the Title Arbitrator within ten (10) days

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of the Parties’ meeting, then either Party may apply to the court of the Eighth
Judicial District in and for Converse County, Wyoming, for the appointment of
the Title Arbitrator pursuant to Wyo. Stat. § 1-36-101, et seq., of the Wyoming
Uniform Arbitration Act. The fees charged by the Title Arbitrator shall be paid
fifty percent (50%) by Seller and fifty percent (50%) by Buyer. Upon issuance of
the Title Arbitrator’s decision, Seller shall promptly assign to Buyer (in
substantially the same form as the Assignment) the Assets affected by the Title
Disputed Matter, and there shall be an upward adjustment in the Final Settlement
Statement for the Allocated Value of the affected Asset, less the Title Defect
Value of any Title Defect that has not been cured to Buyer’s reasonable
satisfaction subject to Section 4.2B.2, consistent with the Title Arbitrator’s
decision, provided however, if the Title Defect Value (consistent with the Title
Arbitrator’s decision) equals 100% of the Allocated Value of the affected Asset,
unless the Parties otherwise agree, Seller may retain the affected Asset, in
which event the affected Asset will be an Excluded Asset.

4.6    Casualty Loss.

A.    Notwithstanding anything herein to the contrary, from and after the
Effective Time, if Closing occurs, Buyer shall assume all risk of loss with
respect to production of Hydrocarbons through normal depletion (including
watering out of any well, collapsed casing or sand infiltration of any well) and
the depreciation of personal property due to ordinary wear and tear, in each
case with respect to the Assets, and Buyer shall not assert any such matter as
Casualty Losses (as later defined) or Title Defects under this Agreement.

B.    Prior to Closing, if a portion of the Assets is destroyed by fire or other
casualty, or is taken or threatened to be taken in condemnation or under the
right of eminent domain (with such event being a “Casualty Loss”), Buyer shall
purchase the Asset at Closing for the Allocated Value of the Asset, reduced by
an amount equal to the difference between (i) the estimated cost to repair or
replace such Asset (with equipment of similar utility), less (ii) any insurance
proceeds which Seller pays or causes to be paid to Buyer, up to the Allocated
Value thereof (the reduction being the “Net Casualty Loss”). At its sole option,
Seller may elect to cure such Casualty Loss prior to Closing, and in such event
Seller shall be entitled to all insurance proceeds. If Seller elects to cure
such Casualty Loss, Seller may replace any personal property that is the subject
of a Casualty Loss with equipment of similar grade and utility. If Seller cures
the Casualty Loss prior to Closing, Buyer shall purchase the affected Asset at
Closing for the Allocated Value thereof without any Purchase Price Adjustment
for such Casualty Loss.

4.7    Preferential Rights and Consents to Assign. To Seller’s knowledge, all
preferential purchase rights and consents to assign affecting the Assets, except
governmental consents that are customarily obtained after Closing, are set forth
on Schedule 4.7. “Required Consents” include all consents and approvals except
those governmental approvals which are customarily obtained post-Closing. To the
extent that there are preferential purchase rights or consents to assign
affecting the Assets, the provisions of this Section 4.7 shall apply. Seller
shall use its commercially reasonable efforts to obtain all consents to assign.
If Buyer discovers a consent to assign or preferential right to purchase during
the course of Buyer’s due diligence activities that is not listed on Schedule
4.7, Buyer shall notify Seller immediately, and Seller

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shall use commercially reasonable efforts to obtain such consents or waivers and
to give the notices required in connection with the preferential rights prior to
Closing.

A.    Required Consents. Except with respect to the Required Consents that are
conditions precedent to the Parties’ obligation to close under Article 10, as to
any Asset affected by any other Required Consent that has not been obtained as
of the Closing: (i) the portion of the Assets for which such Required Consent
has not been obtained shall not be conveyed at the Closing; (ii) the Allocated
Value for that Asset (or such portion thereof) shall not be paid to Seller; and
(iii) Seller shall use commercially reasonable efforts to obtain such Required
Consent as promptly as possible following Closing. If such Required Consent has
been obtained as of the Final Settlement Statement Due Date, Seller shall convey
the affected Asset to Buyer effective as of the Effective Time and Buyer shall
pay Seller the Allocated Value of the affected Asset. If such Required Consent
has not been obtained as of the Final Settlement Statement Due Date, the
affected Asset shall be deemed to be an Excluded Asset. Buyer shall reasonably
cooperate with Seller in obtaining any Required Consent including providing
assurances of reasonable financial conditions, but Buyer shall not be required
to expend funds or make any other type of financial commitments a condition of
obtaining such consent.

B.    Preferential Purchase Rights. If the Parties cannot obtain a waiver of a
preferential right to purchase any portion of the Assets before Closing, then
the following provisions shall apply:

1.    If any preferential right to purchase is exercised and consummated prior
to the Closing Date, that portion of the Assets affected by such preferential
purchase right shall be an Excluded Asset and the Purchase Price shall be
adjusted downward by an amount equal to the Allocated Value of such affected
Assets without the requirement for Buyer to give notice.

2.    If by Closing, the time frame for the exercise of such preferential
purchase rights has not expired and Seller has not received notice of an intent
not to exercise or a waiver of the preferential purchase right, then Seller will
retain the portion of the Assets affected by the preferential purchase right and
the Purchase Price will be reduced by the Allocated Value (or a portion of the
Allocated Value) for the portion of the Assets affected by the preferential
purchase right. If, prior to the Final Settlement Statement Due Date, the
preferential purchase right has expired without having been exercised, or has
been waived, then Seller will convey the portion of the Assets affected by the
preferential purchase right to Buyer pursuant to a conveyance in the form of the
Assignment effective as of the Effective Time, and the Purchase Price shall be
increased by the amount the Purchase Price was reduced at Closing.

C.    Exclusion Adjustments. The Allocated Values of the Assets not conveyed to
Buyer at Closing by reason of the application of Section 4.2B.3, Section 4.5,
Section 4.6B, Section 4.7A, Section 4.7B.1, Section 4.9, Section 5.4C,
Section 5.4D, and Section 5.5 will be referred to in this Agreement as the
“Exclusion Adjustments,” provided that if any such Assets are later conveyed to
the Buyer as provided in this Agreement, such Assets will no longer be an
Excluded Asset, and the Purchase Price for the Final Settlement Statement will
be increased by the Exclusion Adjustment for such Asset.
        

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D.    Exclusive Remedy. Except as otherwise provided in this Agreement, the
remedies set forth in this Section 4.7 are the exclusive remedies under this
Agreement related to the existence and exercise of preferential purchase rights
and Required Consents to assign the Assets.

4.8    Rentals, Minimum Royalties, and Shut-in Royalties. Seller shall be
responsible for the payment of all rental payments, minimum royalty payments,
and shut-in royalty payments, or such other payments that are necessary, due, or
may become necessary or due both before and after the Effective Time, and prior
to the date that is sixty (60) days after the Closing Date, other than for those
portions of the Assets for which the respective Operator is responsible to make
such payments to the extent attributable to the period after the Effective Time,
and Buyer agrees to remit its proportionate share of all such payments due after
the Effective Time to Seller within thirty (30) days of receipt of invoice for
same to the extent such payment is not included as an adjustment to the Purchase
Price according to Section 2.4, Section 13.1A, or Section 13.1B.

4.9    Excluded Contracts. In the event that Buyer, prior to the Title Defect
Date, discovers a Contract that (i) is not listed on Exhibit D, and (ii) will
materially reduce the value to Buyer, or materially impair the use or operation,
of the Assets affected by such Contract, Buyer, by written notice to Seller on
or before the Title Defect Date, shall have the right to exclude such Contract
and the Assets affected thereby from the Transaction, and reduce the Purchase
Price by the Allocated Value of such affected Assets, whereupon such Contract
and the Assets affected thereby shall be Excluded Assets. After Closing, Seller
shall have the right, at its sole cost and expense, to attempt to obtain a
termination, amendment or waiver of, or otherwise cure, to the reasonable
satisfaction of Buyer, any Contract excluded by Buyer pursuant to this Section
4.9. In the event Seller is able to terminate, amend, waive or otherwise cure
any such Contract to the reasonable satisfaction of Buyer on or before the Final
Settlement Date, such Contract and the Assets affected thereby shall no longer
be Excluded Assets, but shall be assigned to Buyer, using the form of Assignment
attached hereto as Exhibit E, and the Purchase Price for the Final Settlement
Statement will be increased by the Allocated Value of such Assets.

ARTICLE 5.
Environmental Matters

The provisions of this Article apply only to the environmental matters
associated with the Assets as the result of oil and gas operations on the Lands.
5.1    Definitions. For the purposes of the Agreement, the following terms shall
have the following meanings:

“Environmental Consultant” means a qualified employee of the Buyer or a third
party consultant reasonably acceptable to Buyer and Seller.
“Environmental Defect” means (a) a condition in, on, or under an Asset
(including, without limitation, air, land, soil, surface and subsurface strata,
surface water and groundwater), or any circumstance, occurrence, act or omission
that (i) causes an Asset to bein material violation of an Environmental Law or
(ii) requires Remediation under an Environmental Law,

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and (b) the Environmental Defect Value of which exceeds Twelve Thousand Five
Hundred Dollars ($12,500.00) per incident or condition (“Individual
Environmental Threshold”). It is understood and agreed that matters of an
essentially similar nature such as, but not limited to, oil spills, chemical
barrels, or hazardous materials found at a single site shall be deemed a single
incident or condition of an Environmental Defect. Buyer acknowledges that the
Assets have been used for exploration, development and production of oil and gas
and that there may be petroleum, produced water, wastes or other substances or
materials located in, on or under the Assets or associated with the Assets.
Equipment and sites included in the Assets may contain asbestos, NORM or other
hazardous substances. 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 Assets or included in the Assets may contain NORM,
asbestos and other wastes or hazardous substances. NORM containing material and
other wastes or hazardous substances may have come in contact with various
environmental media, including, water, soils or sediment. Special procedures may
be required for the assessment, remediation, removal, transportation, or
disposal of environmental media, wastes, asbestos, NORM and other hazardous
substances from the Assets. The presence of NORM, asbestos-containing materials
that are non-friable, Hydrocarbons or hazardous substances cannot be claimed as
an Environmental Defect, except to the extent constituting a material violation
of Environmental Laws.
“Environmental Defect Notice” means each written notice given by Buyer to Seller
on or before the date that is six (6) calendar days prior to Closing, as may be
extended pursuant to Section 12.1 (the “Environmental Defect Date”) alleging an
Environmental Defect. To be effective, each Environmental Defect Notice must be
in writing and must satisfy the following conditions precedent: (i) name the
affected Asset; (ii) describe the condition that causes the Environmental
Defect; (iii) provide reasonable factual substantiation for the Environmental
Defect; and (iv) state the estimated Remediation cost as reasonably calculated
by the Environmental Consultant. Buyer shall be deemed to have waived, and
Seller shall have no liability for, any Environmental Defect which Buyer fails
to assert as an Environmental Defect by a properly delivered Environmental
Defect Notice received by Seller on or before the Environmental Defect Date.
“Environmental Defect Value” means the reasonable costs to Remediate that
particular Environmental Defect.
“Environmental Law” means any and all laws, as they exist on the date hereof,
(whether common or statutory), compacts, treaties, conventions, rules,
regulations, orders, decrees judgments, injunctions, promulgated or entered
under such laws by any federal, state, tribal or local governmental entity
relating to public or employee health and safety, pollution or protection of the
environment including, without limitation, common law claims and theories of
liability in negligence, trespass, nuisance, strict liability or any other
common law theory, Comprehensive Environmental Response, Compensation and
Liability Act, as amended (“CERCLA”), the Superfund Amendments and
Reauthorization Act of 1986, as amended (“SARA”), the Resource Conservation and
Recovery Act, as amended (“RCRA”), the Federal Safe Drinking Water Act, the
Federal Water Pollution Control Act, the Emergency Planning and Community
Right-to-Know Act, the Clean Air Act, the Oil Pollution Act, the Hazardous and
Solid Waste Amendments Acts of 1984, as amended, and the Toxic Substances
Control Act, as

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amended, including the rules of the Occupational Safety and Health Act, as
amended (“OSHA”) and/or the State of Wyoming, and any and all other federal,
state, tribal and local laws, rules, regulations and orders relating to
reclamation of land, wetlands and waterways or relating to use, storage,
emissions, discharges, cleanup, releases or threatened releases of pollutants on
or into the workplace or the environment (including, without limitation, ambient
air, oceans, waterways, wetlands, surface water, groundwater (tributary and
non-tributary), land surface or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of hazardous substances, and the production,
handling, processing, distribution, use, treatment, storage, disposal injection,
and transportation of oil and gas and all matters utilized, handled or produced
in association, including salt water.
“Remediation,” “Remediate” or “Remediated” means actions taken to correct an
Environmental Defect or otherwise required to remediate an Environmental Defect
in compliance with applicable Environmental Law, as recommended in writing by
the Environmental Consultant.
5.2    Environmental Assessment. Buyer may conduct an onsite inspection,
environmental assessment and compliance audit of the Assets (“Environmental
Assessment”) at Buyer’s cost and expense. Seller shall provide Buyer with all
information in Seller’s possession or control, and shall use commercially
reasonable efforts assist Buyer to obtain all information from the Operator,
pertaining to the environmental condition of the Asset including, but not
limited to, status of any environmental audits, permits, records and
assessments, and shall make available to Buyer all present personnel employed by
Seller who would reasonably be expected to have knowledge or information
regarding the environmental status or condition of the Assets. Buyer shall
provide Seller prior written notice of any environmental inspections and tests,
including sampling activities and Buyer shall give Seller the opportunity to
participate in all such inspections and tests. Upon Seller’s request, Buyer
shall provide to Seller, at Seller’s reasonable expense, all reports of
environmental inspections and tests, provided that all such reports shall be
deemed to be confidential between the Parties and subject to the confidentiality
provisions of Section 8.3A. Buyer’s obligations under the first and fourth
sentences of this Section 5.2 will survive termination of this Agreement. In
addition, Buyer will have the environmental inspection and access rights and
obligations set forth in Section 3.3.

5.3    Environmental Representation and Warranty . Except for those matters
identified on Schedule 5.3, (i) to Seller’s knowledge, the Assets are being
operated in material compliance with all Environmental Laws, (ii) Seller, or to
Seller’s knowledge, the respective Operator, has not received a written notice
of a violation of any Environmental Law from a governmental authority with
respect to the Assets, (iii) to Seller’s knowledge, no notice of action alleging
a material violation of an Environmental Law is pending or threatened against
the Assets, (iv)  there are no civil, criminal or administrative actions,
lawsuits, litigation, hearing or proceeding against the Seller, or to Seller’s
knowledge the respective Operator, with respect to the Assets as a result of the
violation or breach of any Environmental Law. Identifying a matter on
Schedule 5.3 shall not preclude a claim by Buyer that the matter identified on
Schedule 5.3 is an Environmental Defect under this Agreement. With respect to
any matter identified on Schedule 5.3, Seller shall provide Buyer, within three
(3) business days of execution of this Agreement, a report providing all of the
information (but only to the extent of information in the

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Records and Seller’s other files) required for Buyer to prepare an Environmental
Defect Notice pursuant to this Agreement for each matter identified on
Schedule 5.3.

5.4    Environmental Liabilities and Obligations.
 
A.    Assumed Environmental Liabilities. Subject to the provisions of
Section 5.4C, Section 5.4D and Section 5.5, from and after Closing, Buyer agrees
to assume and pay, perform, fulfill, discharge and release Seller from all
Losses relating to environmental conditions in, on, or under the Assets
attributable to the period of time before and after Closing including, without
limitation, any and all liability for (i) groundwater contamination; (ii) NORM;
(iii) man-made material fibers; (iv) the obligation to plug and abandon all of
the wells located on the Lands and reclamation of existing well sites on the
Lands, other than those wells identified on Schedule 6.17; and (v) Environmental
Defects (disregarding, for this purpose, the Individual Environmental Threshold
and the Aggregate Deductible) attributable to the period of time before and
after the Closing (collectively, the “Assumed Environmental Liabilities”).
 
B.    Environmental Defect Notice. For those Environmental Defects, if any, to
be alleged prior to Closing, Buyer shall give Seller written notice of any
Environmental Defects pursuant to an Environmental Defect Notice delivered no
later than the Environmental Defect Date.

C.    Defect Adjustments. Upon delivery of a timely Environmental Defect Notice,
the Parties shall proceed as set forth in this Section 5.4. With respect to
those Environmental Defects that are not contested by Seller, Seller shall elect
one of the following options: (i) to Remediate, at Seller’s sole cost and
expense, the Environmental Defect on the affected Assets as promptly as
practicable prior to Closing, such Remediation to be consistent with
Environmental Laws and to the reasonable satisfaction of Buyer; (ii) to attempt
to Remediate, at Seller’s sole cost and expense, the specified Environmental
Defect(s) consistent with Environmental Laws after Closing and to the reasonable
satisfaction of Buyer, as provided in Section 5.4D; (iii) with Buyer’s consent,
which may be withheld in its sole discretion, to reduce the Purchase Price by
the Environmental Defect Value, in which event Buyer hereby releases Seller from
any further obligations relating to the Environmental Defects for which the
Purchase Price was reduced; or (iv) to retain the Asset affected by such
Environmental Defect and reduce the Purchase Price by the Allocated Value of
such affected Asset, in which case the affected Asset shall become an Excluded
Asset. Notwithstanding anything in this Section 5.4C, there shall not be any
adjustment to the Purchase Price or other remedies available to Buyer (i) for
any Individual Environmental Defect for which the Environmental Defect Value
does not exceed the Individual Environmental Threshold; and (ii) in no event
shall there be any adjustment to the Purchase Price for Environmental Defects
that exceed the Individual Environmental Threshold, except to the extent the
Aggregate Deductible is exceeded, as provided in Section 4.2B.2.

D.    Post-Closing Remediation. If Seller elects to Remediate an Environmental
Defect(s) post-Closing, the Asset affected by the Environmental Defect will be
deemed to be an Excluded Asset and will be retained by Seller at Closing, and
the Purchase Price will be reduced by the Allocated Value of the Asset affected
by the Environmental Defect(s). If Seller Remediates the Environmental Defect(s)
to Buyer’s reasonable satisfaction on or before the Final

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Settlement Due Date, Seller will convey the affected Asset to Buyer effective as
of the Effective Time, and the Final Settlement Statement will be adjusted
upwards by an amount equal to the reduction in the Purchase Price at Closing
with respect to such Asset. If Seller does not Remediate the Environmental
Defect(s) to Buyer’s reasonable satisfaction by the Final Settlement Statement
Due Date, then unless (a) Seller and Buyer agree that the affected Assets will
be conveyed to Buyer for an amount equal to the Allocated Value thereof less the
Environmental Defect Value, subject to Section 4.2B.2, or such other amount as
is agreed by the Parties, (b) Seller will retain the affected Asset and there
will be no further downward adjustment to the Purchase Price, and such affected
Asset shall become an Excluded Asset. If the Parties agree on alternative (a),
Seller will convey the Asset affected by the Environmental Defect to Buyer
effective as of the Effective Time, and the Final Settlement Statement will be
adjusted by the amount agreed upon by the Parties with respect thereto. During
the period of time from Closing to the Final Settlement Statement Due Date,
Buyer agrees to afford Seller and its officers, employees, and other authorized
representatives reasonable access, during normal business hours, to the Assets
and all Records in Buyer’s or any of its affiliates’ possession in order to
facilitate Seller’s attempt to cure such Environmental Defect(s).

5.5    Contested Environmental Defects. If Seller contests the existence of an
Environmental Defect or the Environmental Defect Value, Seller shall notify
Buyer in writing on or before four (4) calendar days after receipt of the
Environmental Defect Notice (“Rejection Notice”). The Rejection Notice shall
state with reasonable specificity the basis of the rejection of the
Environmental Defect or the Environmental Defect Value. If Seller fails to
timely deliver a Rejection Notice, Seller shall be deemed to have accepted the
validity of the Environmental Defect and Buyer’s estimate of the Environmental
Defect Value, and shall be deemed to have waived its own option to contest the
Environmental Defect pursuant to Section 5.4 or this Section 5.5. Within one (1)
calendar day of receipt of the Rejection Notice, representatives of Buyer and
Seller knowledgeable in environmental matters shall meet and, either
(i) mutually agree to reject the particular Environmental Defect; (ii) agree on
the validity of such Environmental Defect and the Environmental Defect Value; or
(iii) agree that the Asset affected by such Environmental Defect shall be
retained by Seller and shall become an Excluded Asset. If the Parties cannot
agree on any option in the preceding sentence, then disputed matters relating to
the validity of a claimed Environmental Defect or Environmental Defect Value,
whether an Environmental Defect has been Remediated to Buyer’s reasonable
satisfaction or any other disputed environmental matters (“Environmental
Disputed Matters”) will be determined by binding arbitration, with a single
arbitrator mutually acceptable to Seller and Buyer who either is a reputable
environmental consultant or is licensed to practice law in the State of Wyoming
and who has at least ten (10) years of environmental consulting or environmental
law experience (the “Environmental Arbitrator”). The arbitration will occur as
soon as practicable but in any event within thirty (30) days following
designation of the Environmental Arbitrator, and the Environmental Arbitrator
shall issue a decision within ten (10) business days following completion of the
arbitration. The Environmental Arbitrator’s determination shall be final and
binding upon Seller and Buyer and enforceable in any court of competent
jurisdiction. The fees charged by the Environmental Arbitrator shall be paid
fifty percent (50%) by Seller and fifty percent (50%) by Buyer. In the event
that arbitration of any Environmental Disputed Matters is required and the
arbitration is not completed by Closing, the affected Asset shall not be
assigned to Buyer at Closing and the Purchase Price will be reduced by the
Allocated Value of such affected Asset. Upon issuance of the Environmental
Arbitrator’s decision, Seller, at Seller’s

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option, may either (i) with Buyer’s consent, which may be withheld in its sole
discretion, assign to Buyer (in substantially the same form as the Assignment)
the Asset affected by the Environmental Disputed Matter, and there shall be an
upward adjustment in the Final Settlement Statement for the Allocated Value of
the affected Asset, less the Environmental Defect Value of any Environmental
Defect that has not been Remediated to Buyer’s reasonable satisfaction, subject
to Section 4.2B.2 consistent with the Environmental Arbitrator’s decision, or
(ii) retain the affected Asset, in which event the affected Asset will be an
Excluded Asset.

5.6    Exclusive Remedies. Except as otherwise provided in this Agreement, the
rights and remedies granted each Party in this Article, including the rights of
each Party to not close pursuant to Article 11.1C, are the exclusive rights and
remedies against the other Party related to any Environmental Defect or other
environmental matters.

ARTICLE 6.
SELLER'S REPRESENTATIONS AND WARRANTIES

Seller makes the following representations and warranties as of the execution of
this Agreement and as of Closing:
6.1    Company Representations.
 
A.    Status and Authority. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Wyoming. Seller has all requisite power and authority to own the Assets, to
carry on its business as presently conducted, to execute, deliver, and perform
this Agreement and each other document executed or to be executed by Seller in
connection with the Transactions contemplated herein. The execution, delivery,
and performance by Seller of this Agreement and each other document executed or
to be executed by Seller in connection with the Transaction and the consummation
by it of the Transaction have been duly authorized by all necessary limited
liability company actions of Seller.

B.    No Violation. Assuming the receipt of all Required Consents, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby do not and will not: (i) create a lien or encumbrance on the
Assets that will remain in existence after Closing; (ii) violate, or be in
conflict with, any provision of Seller’s governing documents, (iii) violate or
conflict with any provision of any statute, rule or regulation applicable to
Seller or the Assets or any Material Contract, or (iv) violate, or be in
conflict with, any judgment, decree or order applicable to Seller, except in the
case of clauses (iii) and (iv) where such violation or conflict would not have a
material effect upon the ability of Seller to consummate the Transaction and
perform its obligations under this Agreement.

6.2    Liability for Brokers’ Fees. Seller has not incurred any liability,
contingent or otherwise, for brokers’ or finders’ fees relating to this
Transaction for which Buyer shall have any responsibility whatsoever.

6.3    No Bankruptcy. There are no bankruptcy proceedings pending, being
contemplated by or, to the knowledge of Seller, threatened against Seller by any
third party.

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6.4    Foreign Person. Seller is not a “foreign person” within the meaning of
the Internal Revenue Code of 1986, as amended (the “Code”), Sections 1445 and
7701 (i.e., Seller is not a nonresident alien, foreign corporation, foreign
partnership, foreign trust, or foreign estate as those terms are defined in the
Code and any regulation promulgated thereunder).

6.5    Litigation. Except as set forth on Schedule 6.5, there are no suits,
actions, arbitrations or other proceedings by or before any court, arbitrator or
other governmental agency pending against Seller (or to Seller’s knowledge, the
respective Operator) or, to Seller’s knowledge, threatened in writing against
Seller or the respective Operator, which relate to (and could diminish the value
of or impede the operation of) the Assets or the Transaction.
  
6.6    Judgments. Except as set forth on Schedule 6.6, there are no unsatisfied
judgments or injunctions issued by a court of competent jurisdiction or other
governmental agency outstanding against Seller (or to Seller’s knowledge, the
respective Operator) that would be reasonably expected to materially interfere
with the operation of any of the Assets, or materially affect the value of any
of the Assets, or impair Seller’s ability to enter into this Agreement or
consummate this Transaction.

6.7    Compliance with Law. To Seller’s knowledge, the Assets have been operated
in material compliance with all applicable federal, state and local laws, rules,
regulations and orders, excluding Environmental Laws, the Seller’s
representations and warranties with respect to which are in Section 5.3, Seller
(or to Seller’s knowledge, the respective Operator) has not received a notice of
a violation of any statute, law, ordinance, regulation, permit, rule or order of
any federal, state, tribal or local government or any other governmental
department or agency, or any judgment, decree or order of any court, applicable
to the Assets or operations of the Assets, which remains uncured.

6.8    Material Contracts. Exhibit D includes all of the contracts and
agreements that are material to the ownership and operation of the Assets to
which Seller is a party, or of which Seller has knowledge. To Seller’s
knowledge, the Material Contracts are in full force and effect and constitute
valid and binding obligations of the parties thereto. Seller is not in breach,
violation or default (and no situation exists which with the passing of time or
giving of notice would create a breach, violation, or default) of its
obligations under the Material Contracts, and to Seller’s knowledge there is no
breach, violation, or default under the Material Contracts by any third party
(and no situation exists which with the passing of time of giving of notice
would create a breach, violation, or default) exists.

6.9    Records. Subject to (y) the items excluded to arrive at the definition of
Records, and (z) items which are Excluded Assets, Seller represents that:
(i) all of the Records are files, or copies thereof, that Seller has used in the
ordinary course of operating and owning the Assets; (ii) Seller has not
intentionally withheld any material information from the Records; and
(iii) Seller has not intentionally misrepresented any material information in
the Records.

6.10    Property Expenses. In the ordinary course of business, (i) Seller has
paid its share of all Property Expenses attributable to the period of time prior
to the Effective Time as such Property Expenses become due, and (ii) such
Property Expenses are being paid in a timely manner before the same become
delinquent, except (y) such Property Expenses as are disputed in

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good faith by Seller in a timely manner and for which Seller shall retain
responsibility, as set forth on Schedule 6.10(y), and (z) except such Property
Expenses as have or will be taken into account as an adjustment to the Purchase
Price under Section 2.4.

6.11    Capital Projects. Schedule 6.11 is a list and description of all wells
or other specified capital projects, of which Seller has been made aware, to the
extent such capital projects will extend beyond the Effective Time, and
associated costs or estimates thereof to the extent such costs or estimates are
reasonably estimated to exceed Fifty Thousand Dollars ($50,000.00) per well or
project net to Seller’s interest (the “Capital Projects”). All costs and
expenses incurred by the Parties with respect to the Capital Projects will be
apportioned between the Parties as of the Effective Time, with Buyer assuming
all post-Effective Time costs and expenses and Seller retaining all
pre-Effective Time costs and expenses.
 
6.12    Leases. To Seller’s knowledge, all conditions necessary to keep each
Lease in full force and effect in accordance with its terms have been performed
and all material obligations under the Leases have been fully performed,
including the proper and timely payment of all royalties, rentals, shut-in
payments and other payments due under the Leases. To Seller’s knowledge, there
are no currently pending requests or demands for payments, adjustments of
payments or performance pursuant to obligations under the Leases. Seller (or to
Seller’s knowledge, the respective Operator) has not received a written notice
of default with respect to the payment or calculation of rentals and royalties
attributable to the Assets.

6.13    Licenses and Permits. Seller (or to Seller’s knowledge, the respective
Operator) has all governmental licenses, permits, authorizations, consents, and
approvals required for the ownership of the Assets, and has materially complied
with all applicable rules, regulations, and ordinances of any governmental
authority having jurisdiction over the Assets and as to which non-compliance
would have a material effect on the Assets or any of them.

6.14    Hydrocarbon Sales Contracts. Except under the Contracts, Seller (or to
Seller’s knowledge, the respective Operator) has not (i) sold forward any
Hydrocarbons or (ii) received any material advance, “take-or-pay” or other
similar payments under production sales contracts that entitle the purchasers to
“make up” or otherwise receive deliveries of Hydrocarbons without paying at such
time the contract price therefor. To Seller’s knowledge, and except under the
Contracts, no Hydrocarbons are subject to a sales contract (other than division
orders or spot sales agreements terminable on no more than thirty (30) days’
notice) and no person has any call upon, option to purchase or similar rights
with respect to the production from the Assets and the Assets are not bound by
futures, hedge, swap, collar, put, call, floor, cap, option or other contracts
that are intended to benefit from, relate to or reduce or eliminate the risk of
fluctuations in the price of commodities, including Hydrocarbons, securities,
foreign exchange rates or interest rates. Proceeds from the sale of oil,
condensate, and gas from the Assets are being received in all respects by Seller
in a timely manner and are not being held in suspense for any reason.

6.15    Imbalance Volumes. To Seller’s knowledge, except as identified on
Schedule 6.15, as of the Effective Time and as of Closing, there will not exist
any material imbalances (a) with any gatherers, processors, or transporters
associated with the Assets where Seller has received a quantity of gas prior to
the Effective Time for which Seller will have a duty

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after the Effective Time to deliver an equivalent quantity of gas or pay a sum
of money, and (b) relating either to production from or at the wellhead between
to co-tenant or working interest owners in a well, unit, or field which are
associated with the Assets where Seller has received any quantity of gas prior
to the Effective Time for which Buyer will have a duty after the Effective Time
to deliver an equivalent quantity of gas or pay a sum of money.

6.16    Insurance. Seller maintains, and through the Closing Date will maintain,
with respect to the Assets, the insurance coverage described on Schedule 6.16.

6.17    Plugging Obligations. To Seller’s knowledge, only the Wells listed on
Schedule 6.17 are currently obligated by law or contract to be plugged and
abandoned in compliance with all applicable requirements of regulatory authority
having jurisdiction thereof.

6.18    Preferential Rights and Required Consents . Except as identified on
Schedule 4.7 and for consents of federal and state agencies or authorities in
connection with the assignment of any federal and state leases or interest
therein, there are no preferential rights of purchase or consents to assign in
favor of third parties with respect to the Assets.

6.19    Area of Mutual Interest, Tax Partnerships. Except as identified on
Exhibit D or Schedule 6.19, no Asset is subject to (or has related to it) any
area of mutual interest agreements or any farm-out or farm-in agreement under
which any party thereto is entitled to receive assignments not yet made, or
could earn additional interests in or assignments of all or any portion of the
Assets after the Effective Time, or contain any drilling commitments that Buyer
would be obligated to satisfy after the Effective Time. No Asset is owned by,
subject to, or has related to it in any way, directly or indirectly, any tax
partnership for federal, state or local tax purposes.

6.20    Taxes. All due and payable Taxes (as later defined) with respect to the
Assets, which became due prior to the Closing Date for any periods prior to the
Effective Time, have been properly paid, or if not due prior to the Closing Date
for any periods prior to the Effective Time, adequate provision has been made
for their payment. With respect to the Assets, there are no suits, actions,
claims, investigations, audits, inquiries or proceedings pending, or to Seller’s
knowledge threatened, against Seller in respect of Taxes. There are no tax liens
burdening the Assets, except liens for current Taxes not yet due and payable and
for which adequate provision has been made for their payment. Notwithstanding
the foregoing, Seller’s representation and warranties under this Section 6.20
are limited to Seller’s knowledge with respect to any Taxes payable by the
Operator.

6.21    Title. Seller warrants title to the Assets only as provided in the
Assignment.

6.22    Surface Access. To Seller’s knowledge, there are no surface use or
access agreements currently in force and effect that would materially interfere
with oil and gas operations on the Leases.

6.23    Intellectual Property. There are no trademarks, trade names, patents,
service marks, brand names, computer programs, databases, industrial designs,
copyrights or other intangible property owned or licensed by Seller (the
“Intellectual Property”), that are materially necessary for the operation, or
continued operation of any Asset, or for the ownership and

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operation, or continued ownership and operation, of any Asset, except for the
Intellectual Property which is a part of the Assets.

ARTICLE 7.
Buyer’s Representations and Warranties

Buyer makes the following representations and warranties to Seller as of the
execution of this Agreement and as of Closing:
7.1    Corporate Representations. Each Buyer makes the following representations
and warranties with respect to itself:

A.    Status and Authority. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
authorized to conduct business in Wyoming. Buyer has all requisite power and
authority to own the Assets, to carry on its business as presently conducted, to
execute, deliver, and perform this Agreement and each other document executed or
to be executed by Buyer in connection with the Transactions contemplated herein.
The execution, delivery, and performance by Buyer of this Agreement and each
other document executed or to be executed by Buyer in connection with the
Transaction and the consummation by it of the Transaction have been duly
authorized by all necessary company and/or corporate actions of Buyer.

B.    No Violation. The execution and delivery of this Agreement does not
(i) violate or conflict with any provision of Buyer’s governing documents, or
any provision of any statute, rule or regulation applicable to Buyer or any
material lease, contract, agreement, instrument or obligation to which Buyer is
a party or by which Buyer is bound or (ii) violate or conflict with any
judgment, decree or order applicable to Buyer.

7.2    Liability for Brokers’ Fees. Buyer has not incurred any liability,
contingent or otherwise, for brokers’ or finders’ fees relating to this
Transaction for which Seller shall have any responsibility whatsoever.

7.3    Litigation. There is no action, suit, proceeding, claim or investigation
by any person, entity, administrative agency or governmental body pending or, to
Buyer’s knowledge, threatened in writing against it before any governmental
authority that impedes or is likely to impede Buyer’s ability to consummate this
Transaction and to assume the liabilities to be assumed by Buyer under this
Agreement, including without limitation, the Assumed Liabilities.

7.4    Financing. As of Closing, Buyer has the financial resources available to
close this Transaction without financing that is subject to any contingency and
to fund the obligations required by this Agreement.

7.5    Consents. There are no consents, including requirements for consents from
third parties, in each case, that Buyer is required to obtain in connection with
its acquisition and ownership of the Assets as contemplated by this Agreement.

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7.6    Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to Buyer’s knowledge, threatened
in writing against Buyer or any affiliate of Buyer.

7.7    Regulatory. Buyer is and hereafter shall continue to be qualified to own
and assume operatorship of the Assets in the jurisdiction where the Assets are
located, and the consummation of the transactions contemplated by this Agreement
will not cause Buyer to be disqualified as such an owner or operator.

7.8    Accredited Investor. Buyer is an “accredited investor,” as such term is
defined in Regulation D of the Securities Act of 1933, as amended, and will
acquire the Assets for its own account and not with a view to a sale or
distribution thereof in violation of the Securities Act of 1933, as amended, and
the rules and regulations thereunder, any state blue sky laws or any other
securities Laws.

7.9    Independent Evaluation. Buyer is experienced and knowledgeable in the oil
and gas business and is aware of its risks. Buyer has been afforded the
opportunity to examine the Records, and materials made available to it by Seller
with respect to the Assets (the “Background Materials”). The Background
Materials include files, or copies thereof, that Seller has used in its normal
course of business and other information about the Assets that Seller has
compiled or generated.

ARTICLE 8.
COVENANTS AND AGREEMENTS

8.1    Covenants and Agreements of Seller. Seller covenants and agrees with
Buyer as follows:

A.    Operations and Status Prior to Closing. From the date of execution hereof
to the Closing, Seller will maintain (and shall use commercially reasonable
efforts to cause the Operator to maintain) the Assets in a manner consistent
with its past practices. Seller agrees to maintain the insurance that it now has
in effect with respect to the Assets through the date of Closing. From the date
of execution of this Agreement to the Closing Date, Seller shall pay or cause to
be paid its share of all Property Expenses incurred in connection with the
ownership or operation of the Assets, subject to adjustment to the Purchase
Price pursuant to Section 2.4 and shall maintain the insurance described in
Schedule 6.16. Seller shall maintain its limited liability company status from
the date hereof until Closing to assure that as of the Closing Date, Seller will
not be under any material, legal or contractual restriction that would prohibit
or delay the timely consummation of this Transaction.

B.    Restriction on Operations. Except (x) for operations covered by Capital
Projects, (y) for actions taken in connection with emergency situations or to
maintain a Lease that is otherwise about to expire, and (z) as expressly
contemplated by this Agreement, unless Seller obtains the prior written consent
of Buyer to act otherwise, from the date of execution of this Agreement to the
Closing Seller shall not (i) propose or approve any operations on the Assets
anticipated to cost, net to the Seller’s interest, more than Fifty Thousand
Dollars ($50,000.00) per activity, (ii) convey or dispose of any part of the
Assets (other than replacement

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of equipment or sale of Hydrocarbons or obsolete equipment in the regular course
of business); (iii) enter into any new farmout, farmin or other similar contract
affecting the Assets, (iv) enter into any new contracts affecting the Assets
with obligations in excess of thirty (30) days other than such new contracts
which are terminable on not more than thirty (30) days’ notice; (v) abandon any
Well or release (or permit to terminate), or modify its rights under all or any
portion of the Leases; (vi) modify or terminate any Material Contract; and
(vii) respond to any, or fail to respond, to any notices of forced pooling or
spacing applications pertaining to Leases or Lands without providing a copy of
said notice to Buyer and allowing Buyer to determine how to respond to said
notice on behalf of Seller. Buyer acknowledges that Seller owns undivided
interests in the Assets that the Seller is not the operator thereof, and Buyer
agrees that the acts or omissions of the other working interest owners
(including the Operators) shall not constitute a breach of the provisions of
this Section 8.1B, and no action required of other working interest owners shall
constitute a breach of this Section 8.1B, so long as Seller has voted its
interest in a manner that complies with the provisions of this Section 8.1B.

C.    Operatorship. In the event any Operator resigns or is deemed to have
resigned as operator of any of the Assets pursuant to the terms of the
applicable joint operating agreement pertaining to such Assets, Seller shall
vote solely for Ballard Petroleum Holdings LLC, pursuant to the terms of the
applicable joint operating agreement, to succeed as operator of such Assets.
This obligation shall survive Closing with respect to any Assets not conveyed to
Buyer at Closing by reason of the application of Section 4.2B.3, Section 4.5,
Section 4.6B, Section 4.7A, Section 4.7B.1, Section 5.4C, Section 5.4D or
Section 5.5, until such Assets are conveyed to Buyer or conclusively determined
to be Excluded Assets.

D.    Notification of Claims. Seller shall promptly notify Buyer of any suit,
action or other proceeding before any court or governmental agency and any cause
of action that relates to the Assets or that might result in impairment or loss
of Seller’s title to any portion of the Assets or the value thereof or that
might hinder or impede the operation of the Leases arising or threatened prior
to the Closing.

8.2    Covenants and Agreements of Buyer. Buyer covenants and agrees with Seller
that Buyer shall maintain its limited liability company status from the date
hereof until the Closing Date and use all reasonable efforts to assure that as
of the Closing Date it will not be under any material, legal or contractual
restriction that would prohibit or delay the timely consummation of this
Transaction.
 
8.3    Covenants and Agreements of the Parties. The Parties covenant and agree
as follows:

A.    Confidentiality. Subject to Section 15.6, all data and information,
whether written or oral, obtained from either Party in connection with this
Transaction, including the Records, whether obtained by either Party before or
after the execution of this Agreement, data and information generated by either
Party in connection with this Transaction, and all information regarding the
existence of this Transaction (collectively, the “Information”), is deemed by
the Parties to be confidential and proprietary of the Parties. Until the Closing
and for a one (1) year period after the Closing, except as required by law or
applicable stock exchange rule, the Parties and its officers, agents and
representatives will hold in strict confidence the

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terms of this Agreement, and all Information, except any Information which:
(i) at the time of disclosure to one Party by the other Party is in the public
domain; (ii) after disclosure to one Party by the other Party becomes part of
the public domain by publication or otherwise, except by breach of this
commitment by either Party; (iii) the Parties can establish by competent proof
was rightfully in the other Party’s possession at the time of disclosure;
(iv) either Party rightfully receives from third parties free of any obligation
of confidence; (v) is developed independently by either Party without the
Information, provided that the person or persons developing the data shall not
have had access to the Information, (vi) is disclosed to a Party’s attorneys,
accountants, lending institutions, members and shareholders, subject to the same
confidentiality restrictions as are set forth in this Section 8.3A, or (vii) the
relevant details regarding the Transaction are disclosed to third parties in
order to obtain Required Consents, or the relevant parts of this Agreement are
disclosed to third parties to deal with preferential rights to purchase under
Section 4.7B. In the event the Closing does not occur, the Parties will be bound
by the terms and conditions of that certain Confidentiality Agreement dated
August 7, 2013.

B.    Return of Confidential Information. If this Transaction does not close on
or before Closing, or such later date as agreed to by the Parties, Buyer shall
(i) return to Seller all copies of the Confidential Information in possession of
Buyer obtained pursuant to any provision of this Agreement; (ii) destroy any and
all notes, reports, studies or analyses based on or incorporating the
Confidential Information. The terms of Section 8.3A, Section 8.3B, and Section
8.3C shall survive termination of this Agreement.

C.    Injunctive Relief. Buyer and Seller agree that they will not have an
adequate remedy at law if the other Party violates any of the terms of
Sections 8.3A and/or Section 8.3B. In such event, the non-breaching Party will
have the right, in addition to any other it may have, to obtain injunctive
relief to restrain any breach or threatened breach of the terms of Sections 8.3A
and/or Section 8.3B, or to obtain specific enforcement of such terms.

D.    Notice of and Cure Period for Breach. If, prior to Closing, either Seller
or Buyer develops or possesses information that leads it to believe that the
other Party may have breached a representation, warranty or covenant under this
Agreement that Party shall promptly notify the other Party of such potential
breach. Any breach of this Agreement may be cured within 48 hours after the
notification, exclusive of weekends and holidays, of receipt of written notice
of such breach. Notwithstanding the foregoing, this Article shall not apply to
breach of the Parties’ obligations at and after Closing and shall not operate to
delay Closing.

E.    Notice of Material Adverse Effect. If, prior to Closing, either Seller or
Buyer develops, receives or possesses information of a potential Material
Adverse Effect not known by or previously disclosed to the other Party, such
Party shall promptly notify the other Party of such potential Material Adverse
Effect. As used in this Agreement, “Material Adverse Effect” shall mean any
state of facts, change, event, effect or occurrence (when taken together with
all other states of fact, changes, events, effects or occurrences), that is (i)
materially adverse to the ownership, use, operations or value of the Assets, as
a whole, or (ii) materially adverse to the ability of the Parties to consummate
the transactions contemplated by this Agreement in a timely manner.
Notwithstanding the foregoing, the following shall not be considered a Material
Adverse Effect: (a) national or international business, economic or political
conditions; (b) events affecting the financial, banking or securities markets;
(c) conditions (or changes in

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such conditions) generally affecting the oil and gas industry; (d) increases in
energy, electricity, natural gas, oil, or other raw materials or operating
costs; (e) changes in generally accepted accounting principles or Law; (f) any
event of force majeure; (g) changes in oil or natural gas prices, including
changes in price differentials; or (h) acts of terrorism, sabotage, or war,
whether declared or undeclared.

8.4    Suspense Accounts and Division of Interest. Seller has identified,
listed, and scheduled the amount of all revenues or royalties currently held in
suspense by Seller related to the Assets along with a brief description of the
justification for the suspension in Schedule 8.4. At the Closing, Seller will
provide to Buyer: (i) information regarding all of Seller’s accounts holding
moneys in suspense together with a written explanation (as contained in Seller’s
files) of why such moneys are held in suspense or other information identifying
the proper disposition of such moneys and (ii) Seller’s division of interest and
all supporting documentation regarding those royalty owners and working interest
owners in the Leases for whom Seller disburses proceeds of production, together
with all accounts holding funds payable to such third parties. From after
Closing, Buyer agrees to pay and perform all of Seller’s obligations with
respect to the suspense accounts listed on Schedule 8.4.

8.5    Record Retention. Seller may retain copies of all of the Records. For so
long as Buyer owns an interest in the Assets, Buyer shall (a) retain the
Records, (b) provide each Seller, its affiliates and its respective officers,
employees and representatives with access to the Records during normal business
hours for review and copying at Seller’s expense and (c) provide Seller, its
affiliates and its respective officers, employees and representatives with
access, during normal business hours, to materials received or produced after
Closing relating to any indemnity claim made under Article 14 for review and
copying at Seller’s expense.

8.6    Disclaimers.

A.    EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT
OR THE ASSIGNMENT, (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS,
STATUTORY OR IMPLIED, AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND
RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE
OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER OR ANY OF ITS AFFILIATES,
EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES (INCLUDING ANY OPINION,
INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER BY ANY
OFFICER, DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF
SELLER OR ANY OF THEIR AFFILIATES).

B.    EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED OTHERWISE IN
THIS AGREEMENT OR THE ASSIGNMENT, AND WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS,
STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS,
CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR
ANY ENGINEERING, GEOLOGICAL OR

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SEISMIC DATA OR INTERPRETATION RELATING TO THE ASSETS, (III) THE QUANTITY,
QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS, (IV) ANY
ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES TO BE GENERATED BY THE
ASSETS, (V) THE PRODUCTION OF OR ABILITY TO PRODUCE HYDROCARBONS FROM THE
ASSETS, (VI) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR
MARKETABILITY OF THE ASSETS, (VII) THE CONTENT, CHARACTER OR NATURE OF ANY
INFORMATION MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY
SELLER OR THIRD PARTIES WITH RESPECT TO THE ASSETS, (VIII) ANY OTHER MATERIALS
OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE TO BUYER OR ITS AFFILIATES, OR
ITS OR THEIR RESPECTIVE EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR
ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY DISCUSSION OR PRESENTATION RELATING THERETO AND (IX) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT. EXCEPT AS AND TO THE
LIMITED EXTENT EXPRESSLY REPRESENTED OTHERWISE IN THIS AGREEMENT, SELLER FURTHER
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF
MERCHANTABILITY, FREEDOM FROM LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR
PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE ASSETS,
RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION OR RETURN OF THE PURCHASE PRICE, OR ANY CLAIM BY BUYER FOR DAMAGES
OR DEFECTS, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT BUYER
SHALL BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS, CONDITION
AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR
UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT BUYER HAS MADE OR
CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE.

C.    EXCEPT AS TO THE LIMITED EXTENT REPRESENTED OTHERWISE IN SECTION 5.3,
SELLER HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY
MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS
INTO THE ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL
RESOURCES OR THE ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF THE
ASSETS, AND NOTHING IN THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A
REPRESENTATION OR WARRANTY, AND BUYER SHALL BE DEEMED TO BE TAKING THE ASSETS
“AS IS” AND “WHERE IS” WITH ALL FAULTS FOR PURPOSES OF THEIR ENVIRONMENTAL
CONDITION AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH ENVIRONMENTAL
INSPECTIONS AS BUYER DEEMS APPROPRIATE.

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D.    SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY LAW TO BE
EFFECTIVE, THE DISCLAIMERS OF CERTAIN REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS SECTION 8.6 ARE “CONSPICUOUS” DISCLAIMERS FOR THE PURPOSE OF ANY LAW.

ARTICLE 9.
TAX MATTERS

9.1    Definitions. For the purposes of this Agreement:

A.    “Asset Taxes” means all Property Taxes and Severance Taxes.

B.    “Income Taxes” means all Taxes based upon, measured by, or calculated with
respect to (a) gross or net income or gross or net receipts or profits
(including, but not limited to, franchise Tax and any capital gains, alternative
minimum Taxes, net worth and any Taxes on items of Tax preference, but not
including sales, use, goods and services, real or personal property transfer or
other similar Taxes), (b) multiple bases (including, but not limited to,
corporate franchise, doing business or occupation Taxes) if one or more of the
bases upon which such Tax may be based upon, measured by, or calculated with
respect to, is described in clause (a) above, or (c) withholding Taxes measured
with reference to or as a substitute for any Tax described in clauses (a) or (b)
above, and (d) and any penalties, additions to Tax, and interest levied or
assessed with respect to a Tax described in (a), (b), or (c).

C.     “Property Taxes” means all ad valorem, real property, personal property,
and all other Taxes and similar obligations, and any penalties, additions to
Tax, and interest levied or assessed thereon, assessed against the Assets or
based upon or measured by the ownership of the Assets, but not including Income
Taxes, Severance Taxes, or Transfer Taxes.

D.    “Severance Taxes” means all extraction, production, excise, net proceeds,
severance, windfall profit and all other Taxes and similar obligations, and any
penalties, additions to Tax, and interest levied or assessed thereon, with
respect to the Assets that are based upon or measured by the production of
Hydrocarbons or the receipt of proceeds therefrom, but not including Property
Taxes, Income Taxes, and Transfer Taxes.

E.    “Tax” or “Taxes” means any and all taxes, including any interest,
penalties or other additions to tax, that may become payable in respect thereof,
imposed by any governmental authority, which taxes shall include all income
taxes, profits taxes, taxes on gains, alternative minimum taxes, estimated
taxes, payroll taxes, employee withholding taxes, unemployment insurance taxes,
social security taxes, welfare taxes, disability taxes, severance taxes, license
charges, taxes on stock, sales taxes, harmonized sales taxes, use taxes, ad
valorem taxes, value added taxes, excise taxes, goods and services taxes,
franchise taxes, gross receipts taxes, occupation taxes, real or personal
property taxes, land transfer taxes, stamp taxes, environmental taxes, transfer
taxes, workers’ compensation taxes, windfall taxes, net worth taxes, and other
taxes, fees, duties, levies, customs, tariffs, imposts, assessments, obligations
and charges of the same or of a similar nature to any of the foregoing.

F.    “Transfer Taxes” means any and all transfer Taxes (excluding Income Taxes,
Severance Taxes and Property Taxes), including sales, use, excise, goods and
services,

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stock, conveyance, gross receipts, registration, business and occupation,
securities transactions, real estate, land transfer, stamp, documentary,
notarial, filing, recording, Permit, license, authorization and similar Taxes,
fees, duties, levies, customs, tariffs, imposts, assessments, obligations and
charges.

9.2    Apportionment of Property Taxes.

A.    The Parties acknowledge that the Converse County, Wyoming Property Taxes
assessed with respect to certain of the Assets are measured by the production of
Hydrocarbons (“Oil and Gas Property Taxes”). Oil and Gas Property Taxes shall be
apportioned between the Parties in accordance with the relative ownership
periods pre- and post-Effective Times. 2013 Oil and Gas Property Taxes, based on
the value of 2013 production of Hydrocarbons and payable in 2014, shall be
allocated between the Seller and Buyer in accordance with their proportionate
ownership periods during 2013 before and after the Effective Time. For the
purpose of calculating the Closing Amount under Section 2.4 and the Final
Purchase Price under Section 13.1, 2013 Oil and Gas Property Taxes, which are
determined by 2013 production and are payable in 2014 shall be estimated based
on the then-current mill levies and the production occurring prior to the
Effective Date with the resulting Purchase Price adjustment under Section 13.1
to be considered full and final settlement of all such Oil and Gas Property
Taxes without regard to the actual Tax rates or assessments; provided that, if
the actual amounts of such production and mill levies are not known at the time
of the Closing, the amounts shall be re-estimated based on the best information
available at the time of the Final Settlement Statement, and such estimated
amounts shall thereupon become full and final settlement of such Oil and Gas
Property Taxes for purposes of this Agreement.

B.    Property Taxes other than those described in clause A (“Other Property
Taxes”) shall be deemed attributable to the period during which ownership of the
applicable Assets gives rise to liability for such Other Property Taxes, and
liability therefor allocated to Seller for all periods ending prior to the
Effective Time and to Buyer for all periods beginning on or after the Effective
Time. To the extent the actual amount of an Other Property Tax that is
attributable to a period ending prior to the Effective Time (but not due and
payable prior to the Closing) is not determinable at the time an adjustment to
the Purchase Price is to be made with respect to such Other Property Tax
pursuant to Section 2.4 and/or Section 13.1, as applicable, the Parties shall
utilize the most recent information available in estimating the amount of such
Other Property Tax for purposes of such adjustment, and the amount of such Other
Property Tax used for purposes of Section 13.1 shall be considered full and
final settlement of such Other Property Tax without regard to the actual Tax
rates or assessments.

C.    Buyer shall be entitled to all rights to any refunds of Property Taxes
allocable to Buyer pursuant to this Section 9.2 regardless of when received.
Seller shall be entitled to all rights to any refunds of Property Taxes
allocated to Seller pursuant to this Section 9.2. After Closing, Buyer shall
timely file or cause to be filed all Tax Returns for Property Taxes required to
be filed after the Closing and shall timely pay or cause to be paid to the
taxing authorities all Property Taxes that become due and payable after the
Closing. Any penalty, addition to Tax, or interest levied or assessed with
respect to any Property Tax shall be allocated to, and shall be payable by, the
Party to which the Tax to which such penalty, addition to Tax or interest
relates is allocated, regardless of when such penalty, addition to Tax, or
interest is levied

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or assessed; provided, however, that the liability for any penalty, addition to
Tax, or interest levied or assessed with respect to any failure of Buyer to
comply with the previous sentence shall be allocated to, and shall be payable
by, Buyer.

9.3    Apportionment of Severance Taxes. Severance Taxes shall be deemed
attributable to the period during which the production of the Hydrocarbons with
respect to such Severance Taxes occurred, and liability therefor shall be
allocated to Seller for pre-Effective Time Severance Taxes and to Buyer for
post-Effective Time Severance Taxes. For the purpose of calculating the Closing
Amount under Section 2.4 and the Final Purchase Price under Section 13.1,
Severance Taxes for which the actual liability amount is not known as of such
time shall be estimated based on current Wyoming Severance Tax rates, with the
resulting Purchase Price adjustment under Section 13.1 to be considered full and
final settlement of all such Taxes without regard to the actual Tax rates or
assessments; provided that, if the actual amounts of the applicable Severance
Tax rates are not known at the time of the Closing, the amounts shall be
re-estimated based on the best information available at the time of the Final
Closing Statement, and such estimated amounts shall thereupon become full and
final settlement of such Severance Taxes for purposes of this Agreement. Buyer
shall be entitled to all rights to any refunds of Severance Taxes allocable to
Buyer pursuant to this Section 9.3 regardless of when received. Seller shall be
entitled to all rights to any refunds of Severance Taxes allocated to Seller
pursuant to this Section 9.3. After Closing, Buyer shall timely file or cause to
be filed all Tax Returns for Severance Taxes required to be filed after the
Closing and shall timely pay or cause to be paid to the taxing authorities all
Severance Taxes that become due and payable after the Closing. Any penalty,
addition to Tax, or interest levied or assessed with respect to any Severance
Tax shall be allocated to, and shall be payable by, the Party to which the Tax
to which such penalty, addition to Tax or interest relates is allocated,
regardless of when such penalty, addition to Tax, or interest is levied or
assessed; provided, however, that the liability for any penalty, addition to
Tax, or interest levied or assessed with respect to any failure of Buyer to
comply with the previous sentence shall be allocated to, and shall be payable
by, Buyer.

9.4    Income Taxes. Each Party shall be responsible for its own Income Taxes.

9.5    Transfer Taxes. Buyer shall be liable for and shall indemnify the Seller
Indemnified Parties for, any Transfer Taxes (including any related interest,
penalties or legal costs) that may be imposed on any transfer of the Assets
pursuant to this Agreement. If required by applicable law, Seller shall, in
accordance with applicable law, calculate and remit any Transfer Taxes that are
required to be paid as a result of the transfer of the Assets to Buyer and Buyer
shall promptly reimburse Seller therefor. If Seller receives notice that any
Transfer Taxes are due, Seller shall promptly forward such notice to Buyer for
handling.

9.6    Post-Closing Tax Matters. After the Closing, each of Buyer and Seller
shall:

A.    reasonably cooperate and assist the other (i) in preparing any Tax Returns
relating to any Tax the Assets or imposed, or the Transaction, and (ii) in
qualifying for any exemption or reduction in Tax that may be available;

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B.    reasonably cooperate in preparing for any audits, examinations or other
tax proceedings by, or disputes with, taxing authorities regarding any Tax
relating to the Assets or the Transaction;

C.    make available to the other, and to any taxing authority as reasonably
requested, any information, records, and documents relating to a Tax incurred or
imposed in connection with the Assets or the Transaction;

D.    provide timely notice to the other in writing of any pending or threatened
Tax audit, examination, or assessment that could reasonably be expected to
affect the other’s Tax liability under applicable law or this Agreement (a “Tax
Controversy”), and to promptly furnish the other with copies of all
correspondence with respect to any Tax Controversy; and

E.    allow the other to participate, at its own expense, in any Tax
Controversy, and not settle any Tax Controversy without the prior written
consent of the other, which may not be unreasonably withheld, conditioned or
delayed.

9.7    Allocations for Federal Income Tax Purposes. Buyer and Seller acknowledge
that, under Section 1060 of the Code, Buyer and Seller must report information
regarding the allocation of the Purchase Price and any other amounts treated as
consideration for federal income tax purposes (collectively, the “Allocation
Amount”) to the United States Secretary of Treasury by attaching Department of
Treasury, Internal Revenue Service, Form 8594 to their federal income tax
returns for the tax period which includes the Closing Date. Buyer and Seller
agree that the “Allocation Amount” shall be allocated among the Assets for Tax
purposes in accordance with an allocation schedule that will be prepared and
mutually agreed upon by the Parties prior to the Final Settlement Date (the “Tax
Allocation Schedule”), in a manner consistent with Section 1060 of the Code to
take into account any adjustments to the Purchase Price pursuant to this
Agreement, including any indemnification payments pursuant to Article 14. Buyer
and Seller shall each prepare their respective Forms 8594 with respect to
transactions contemplated by this Agreement in a manner consistent with the Tax
Allocation Schedule. The Parties shall not take any income tax position (whether
in audits, on tax returns, or otherwise) that is inconsistent with such
allocation unless required to do so by applicable law. Any dispute regarding the
Tax Allocation Schedule will be determined by the Accounting Arbitrator pursuant
to Section 13.1B.

ARTICLE 10.
CONDITIONS PRECEDENT TO CLOSING

10.1    Seller’s Conditions Precedent. The obligations of Seller at the Closing
are subject, at the option of Seller, to the satisfaction or waiver at or prior
to the Closing of the following conditions precedent:

A.    All representations and warranties of Buyer contained in this Agreement
are true in all material respects (for this purpose any materiality qualifier in
such representations and warranties will be ignored) at and as of the Closing in
accordance with their terms as if such representations and warranties were
remade at and as of the Closing, other than for representations and warranties
that refer to a specified date, which need only be true on and as of

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the specified date. Buyer has performed and satisfied all covenants and
agreements required by this Agreement to be performed and satisfied by Buyer at
or prior to the Closing in all material respects;

B.    No order has been entered by any court or governmental agency having
jurisdiction over the Parties or the subject matter of this Agreement that
restrains or prohibits this Transaction and that remains in effect at the time
of Closing;

C.    Union Bank, N.A. shall have consented to the Transaction and shall have
released any liens it may hold against the Assets;

D.    Helis Oil & Gas Company, L.L.C. (“Helis”) and Samson Resources Corporation
(“Samson”) shall have consented to the Seller’s assignment to Buyer of that
certain Leasehold Purchase and Exploration Agreement dated November 1, 2009 by
and between Seller, Ballard Petroleum Holdings LLC, and Helis, as amended from
time to time (as so amended, the “Helis Agreement”); and

E.    No Material Adverse Effect shall have occurred and still be outstanding.

10.2    Buyer’s Conditions Precedent. The obligations of Buyer at the Closing
are subject, at the option of Buyer, to the satisfaction or waiver at or prior
to the Closing of the following conditions precedent:

A.    All representations and warranties of Seller contained in this Agreement
are true in all material respects (for this purpose any materiality qualifier in
such representations and warranties will be ignored) at and as of the Closing in
accordance with their terms as if such representations and warranties were
remade at and as of the Closing, other than for representations and warranties
that refer to a specified date, which need only be true on and as of the
specified date. Seller has performed and satisfied all covenants and agreements
required by this Agreement to be performed and satisfied by Seller at or prior
to the Closing in all material respects;

B.    No order has been entered by any court or governmental agency having
jurisdiction over the Parties or the subject matter of this Agreement that
restrains or prohibits this Transaction and that remains in effect at the time
of Closing;

C.    Except as provided in Section 4.7, Seller has delivered to Buyer all
Required Consents other than any required governmental approvals that are the
type of Required Consent ordinarily obtained post-Closing;

D.    Union Bank, N.A. shall have consented to the Transaction and shall have
released any liens it may hold against the Assets; and

E.    Helis and Samson shall have consented to the assignment of the Helis
Agreement.

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F.    Ballard Petroleum Holdings LLC shall be ready, willing and able to Close
under that certain Purchase and Sale Agreement entered into contemporaneously
herewith, by and between Ballard Petroleum Holdings LLC, as seller, and Buyer.

G.    No Material Adverse Effect shall have occurred and still be outstanding.

ARTICLE 11.
Termination

11.1    Termination. This Agreement may be terminated in accordance with the
following provisions:

A.    by Seller, at Seller’s option, if any of the conditions set forth in
Section 10.1 have not been satisfied on or before March 6, 2013 (or such other
date set for Closing pursuant to Section 12.1), through no fault of Seller or
are not waived by Seller, as of March 6, 2013 (or such other date set for
Closing pursuant to Section 12.1), provided that in the case of a failure of
only the condition under Section 10.1A, the condition remains unsatisfied for
five (5) business days following written notice thereof from Seller to Buyer
specifying the reason such condition is unsatisfied (including any breach by
Buyer of this Agreement);

B.    by Buyer, at Buyer’s option, if any of the conditions set forth in Section
10.2 have not been satisfied on or before March 6, 2013 (or such other date set
for Closing pursuant to Section 12.1), through no fault of Buyer, or are not
waived by Buyer, as of March 6, 2013 (or such other date set for Closing
pursuant to Section 12.1), provided that in the case of a failure of only the
condition under Section 10.2A, the condition remains unsatisfied for five (5)
business days following written notice thereof from Buyer to Seller specifying
the reason such condition is unsatisfied (including any breach by Seller of this
Agreement);

C.    by Buyer or Seller, upon notice to the other given prior to Closing, if
the aggregate of the Title and Environmental Defects Adjustment and the
Exclusion Adjustments exceed ten percent (10%) of the Purchase Price;

D.    by either Party if Closing shall not have occurred on or before May 6,
2014; or

E.    upon the Parties’ mutual agreement;

provided, however, that no Party shall have the right to terminate this
Agreement pursuant to Paragraph A through D above if such Party is at such time
in material breach of any provision of this Agreement. Except as provided in
Section 11.2A, if a Party has rightfully terminated this Agreement, then the
Deposit shall be promptly returned to Buyer, but in any event, within three (3)
business days of such termination.
11.2    Remedies.
 
A.    Buyer’s Breach. If Closing does not occur because Buyer wrongfully fails
to tender performance at Closing or otherwise is in material breach of this
Agreement prior to

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Closing, and Seller is not in material breach of this Agreement and is ready and
otherwise able to close, Seller shall retain the Deposit, and Seller may
terminate this Agreement and keep the Deposit, which shall constitute liquidated
damages hereunder, and which remedy shall be the sole and exclusive remedy
available to Seller for any such failure of Buyer. The Parties acknowledge that
(i) Seller’s actual damages upon such termination are difficult to ascertain,
(ii) the liquidate damages set forth in the proceeding sentence is a reasonable
estimate by the Parties of such actual damages to Seller, and (iii) such
liquidated damages do not constitute a penalty. Buyer’s failure to tender
performance at Closing shall not be considered wrongful if all of the conditions
set forth in Section 10.2 have not been satisfied.

B.    Seller’s Breach. If Closing does not occur because Seller wrongfully fails
to tender performance at Closing or otherwise is in material breach of this
Agreement prior to Closing, and Buyer is not in material breach of this
Agreement and is ready and otherwise able to close, Seller shall return the
Deposit within three (3) business days, and Buyer may terminate this Agreement
or pursue all legal and equitable remedies for Seller’s breach of this Agreement
and Seller’s wrongful failure to close (excluding special, consequential,
punitive or exemplary damages or loss of profits), including an action for
specific performance. Seller’s failure to tender performance at Closing shall
not be considered wrongful if all of the conditions set forth in Section 10.1
have not been satisfied.

C.    Effect of Termination. If this Agreement is terminated as provided in
Section 11.1 or Section 11.2, then this Agreement shall be of no further force
and effect and the Parties have no liability or obligation under this Agreement
except for (i) the provisions of this Agreement which expressly survive
termination of this Agreement, and (ii) the provisions of this Agreement
relating to the retention or return of the Deposit, Section 6.2, Section 7.2,
Section 8.3A, Section 8.3B, Section 8.3C, Section 14.14, Article 15, and such
defined terms as set forth in this Agreement to give context to the provisions
of this Agreement which survive termination under this Section 11.2C, all of
which shall continue in full force and effect.

ARTICLE 12.
Closing

12.1    Date of Closing. The “Closing” of this Transaction shall be held on
March 6, 2014, at 10:00 a.m. or such other date and time selected by mutual
agreement of the Parties in writing. Upon execution of this Agreement, Buyer
shall immediately commence its due diligence with respect to the environmental
condition of the Assets, pursuant to Section 3.3 and Section 5.2, and shall use
commercially reasonable efforts to complete such environmental due diligence
prior to February 28, 2014. In the event that Buyer, despite its commercially
reasonable efforts, due to snow cover or other adverse weather conditions, is
unable to complete its onsite inspections or environmental assessments of the
Assets (the uncompleted portion referred to as the “Outstanding Environmental
Diligence”) on or before February 28, 2014, Buyer may, in its sole discretion,
by written notice to Seller delivered on or before February 28, 2014 (an
“Extension Notice”), elect to extend Closing to the date set forth in the
Extension Notice, but in no event later than May 6, 2014. At the time Seller
delivers the Extension Notice, Buyer will deliver to Seller a list of the
Outstanding Environmental Diligence. In the event Buyer elects to extend Closing
as set forth in the preceding sentence, Buyer shall use commercially reasonable
efforts to complete the Outstanding Environmental Diligence and close

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as soon as possible, but in any event, on or before May 6, 2014. If Buyer has so
elected to extend the Closing, Closing will take place on the tenth (10th)
business day after Buyer has completed the Outstanding Environmental Diligence,
but in no event later than May 6, 2014. The date the Closing actually occurs is
called the “Closing Date”.

12.2    Place of Closing. The Closing shall be held at Buyer’s office in Denver,
Colorado, or at such other place as Buyer and Seller may agree in writing.

12.3    Closing Obligations. At Closing, the following events shall occur, each
being a condition precedent to the others and each being deemed to have occurred
simultaneously with the others:

A.    Seller shall execute, acknowledge and deliver to Buyer (a) an Assignment,
Bill of Sale, and Conveyance in the form attached as Exhibit E (the
“Assignment”) conveying the Assets to Buyer as of the Effective Time, and
(b) such other assignments or transfers necessary to convey the Assets to Buyer,
including without limitation, any conveyances on official forms and related
documentation necessary to transfer the Assets to Buyer in accordance with
governmental regulation;

B.    Buyer shall deliver the Closing Amount to the account at the bank
designated by Seller in the Preliminary Settlement Statement or other notice by
wire transfer in immediately available funds, or by such other method as agreed
to by the Parties;

C.    Seller shall execute and deliver to Buyer an affidavit of non-foreign
status and no requirement for withholding under Section 1445 of the Code in the
form attached as Exhibit F.

D.    Seller shall execute and deliver to Buyer an Officer’s Certificate, dated
as of the Closing Date, in form and substance as set forth in Exhibit G;

E.    Buyer shall execute and deliver to Seller an Officer’s Certificate, dated
as of the Closing Date, in form and substance as set forth in Exhibit H;

F.    Seller shall deliver the Records to Buyer, at Buyer’s expense, at Buyer’s
Denver, Colorado offices within ten (10) business days after the Closing;

G.    Seller shall deliver to Buyer all Required Consents obtained as of Closing
other than required governmental approvals ordinarily obtained post-Closing;

H.    Seller shall deliver and Seller and Buyer shall execute and deliver
letters in lieu of transfer orders; and

I.    Seller and Buyer shall take such other actions and deliver such other
documents as are contemplated by this Agreement.

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ARTICLE 13.
Post-Closing Obligations

13.1    Final Settlement Statement.

A.    On or before one hundred and twenty (120) days after the Closing Date
(“Final Settlement Statement Due Date”), Seller will prepare and deliver to
Buyer a “Final Settlement Statement” setting forth each adjustment or payment
that was not finally determined as of the Closing, and showing the calculation
of such adjustment and the resulting final purchase price (the “Final Purchase
Price”). On or before thirty (30) days after receipt of Seller’s proposed Final
Settlement Statement, Buyer shall deliver to Seller a written report containing
Buyer’s proposed changes to the Final Settlement Statement. Buyer’s failure to
deliver to Seller a written report detailing proposed changes to the Final
Settlement Statement by that date shall be deemed an acceptance by Buyer of the
Final Settlement Statement as submitted by Seller. The Parties shall attempt to
agree with respect to the changes proposed by Buyer, no later than five (5) days
after receipt of Buyer’s suggested changes to the Final Settlement Statement
(the “Dispute Resolution Date”). If the Parties are unable to agree
Section 13.1B will apply. The date upon which such agreement is reached or upon
which the Final Purchase Price is established, as provided in Section 13.1B,
shall be herein called the “Final Settlement Date.” If the Final Purchase Price
is more or less than the sum of the Closing Amount plus the Deposit, Buyer or
Seller shall make the appropriate payments by wire transfer in same day funds to
the appropriate Party, without interest, within ten (10) days of the Final
Settlement Date.

B.    If Seller and Buyer are unable to resolve the matters with respect to
Buyer’s proposed changes by the Dispute Resolution Date, each of Buyer and
Seller shall within ten (10) business days after the Dispute Resolution Date,
summarize its position with regard to such dispute in a written document of
twenty (20) pages or less and submit such summaries to such person as the
Parties may mutually select (the “Accounting Arbitrator”), together with Buyer’s
proposed changes, the Final Settlement Statement and any other documentation
such Party may desire to submit. Within ten (10) business days after receiving
the Parties’ respective submissions, the Accounting Arbitrator shall render a
decision based on the materials described above. Any decision rendered by the
Accounting Arbitrator pursuant hereto shall be final, conclusive and binding on
Seller and Buyer and enforceable against any of the Parties in any court of
competent jurisdiction. The costs of the Accounting Arbitrator shall be borne
one-half by Buyer and one-half by Seller. If the parties are unable to agree
upon the Accounting Arbitrator within ten (10) business days after the Dispute
Resolution Date, then either Party may apply to the Eighth Judicial District
Court in and for Converse County, Wyoming for the appointment of an arbitrator
pursuant to the Wyoming Uniform Arbitration Act, Wyo. Stat. § 1-36-101, et seq.

C.    If after the delivery of the Final Settlement Statement pursuant to the
provisions of Section 13.1A (i) either Party receives monies (including proceeds
of production) belonging to the other Party pursuant to Section 1.6 or
otherwise, then such monies shall, within five (5) business days after the end
of the month in which they were received, be paid over by the receiving Party to
the owed Party, (ii) either Party pays monies for Property Expenses that are the
obligation of the other Party pursuant to Section 1.6 or otherwise, then the
obligated Party shall, within five (5) Business Days after the end of the month
in which the applicable invoice

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and proof of payment of such invoice are received by it, reimburse the paying
Party therefor, (iii) either Party receives an invoice of an expense or
obligation that is owed by the other Party pursuant to Section 1.6 or otherwise,
then the receiving Party shall promptly forward such invoice to the obligated
Party and (iv) if an invoice of an expense or other obligation is received by
either Party and is the obligation of both Parties, then the Parties shall
consult with each other and shall each promptly pay its portion of such invoice
to the obligee. Each Party shall be permitted to offset any monies owed by it to
the other Party pursuant to this Section 13.1C against amounts owing by it to
such other Party pursuant to this Section 13.1C.

13.2    Financial Statements. Seller acknowledges that Buyer and its affiliates
may be required to include statements of revenues and direct operating expenses
and other financial information relating to the Transaction in documents filed
by Buyer and its affiliates with the Securities Exchange Commission (the “SEC”)
pursuant to the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended, and that such financial statements may be required to
be audited. Accordingly, but subject to (y) those items that are excluded to
arrive at the definition of Records, and (z) items that are Excluded Assets,
from and after the date of execution of this Agreement, Seller shall use
commercially reasonable efforts to (a) promptly provide Buyer with such
information about the Assets that is in Seller’s possession or is provided to
Seller by an Operator and that is reasonably requested by Buyer on the grounds
that it is required to be included in documents filed by Buyer and its
affiliates with the SEC, (b) provide, and shall cause its affiliates, officers
and employees to provide, reasonable cooperation in connection with the Buyer’s
preparation of documents to be filed by Buyer and its affiliates with the SEC,
including providing reasonable access to employees, books and records and any
existing financial data relating to the Assets that is reasonably requested by
Buyer in connection with such filings with the SEC, and (c) request that
Operators provide information and documents that Seller is entitled by Contract
to receive and that is reasonably requested by Buyer in connection with such
filings with the SEC; provided, however, that Seller shall not be required under
this Section 13.2 to prepare or cause to be prepared any new reports, documents
or financial data relating to the Assets.

13.3    Area of Mutual Interest. If, during the period of time from the Closing
Date until two (2) year after the Closing Date, Seller, or any if its
affiliates, representatives, agents, partners, successors or assigns
(collectively a “Seller Party”) shall lease, purchase, trade, or otherwise
acquire, either directly or indirectly any oil and gas lease, leasehold rights,
mineral interest or development rights (including entering into any farmout or
participation agreement) covering lands within the Transaction Area, such Seller
Party shall immediately notify Buyer of such acquisition in writing, and within
fourteen (14) days thereof, at Buyer’s option, exercisable in its sole
discretion, such Seller Party shall assign 100% of such interest to Buyer, at
such Seller Party’s actual cost, free and clear of any overriding royalties,
leasehold burdens, liens or other encumbrances placed thereon by such Seller
Party, pursuant to an assignment substantially in the form of Exhibit E,
containing a special warranty of title by, through and under such Seller Party,
but not otherwise. This Section 13.3 shall not apply to Seller’s ownership, use
and development of any of the Excluded Assets.

13.4    Further Assurances. From time to time after Closing, the Parties shall
each execute, acknowledge and deliver to the other such further instruments and
take such other

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action as may be reasonably requested in order to accomplish more effectively
the purposes of the Transaction.

ARTICLE 14.
Assumption and Retention of Obligations and Indemnification

14.1    Buyer’s Assumption of Liabilities and Obligations. From and after
Closing, and except for Retained Liabilities, Buyer shall assume and pay,
perform, fulfill, and discharge: (a) all claims, costs, expenses, liabilities,
Losses and obligations accruing or relating to its owning, developing,
exploring, or maintaining of the Assets or the producing, transporting, and
marketing of Hydrocarbons from the Assets for the periods after the Effective
Time, or, in the case of Taxes, to the extent apportioned pursuant to Article 9
to the period of time after the Effective Time; (b) all obligations of Seller
arising under the Leases and Contracts after the Effective Time (except as
otherwise provided in this Agreement); (c) the Assumed Environmental
Liabilities; (d) furnishing of makeup gas and settlements of imbalances
according to the terms of applicable gas sales, processing, gathering and
transportation contracts; and (e) payment of royalties, overriding royalties,
net profit interests or other interests or obligations attributable to the sales
of Hydrocarbons after the Effective Time, (f) the payment of those amounts held
in suspense for which the Purchase Price was adjusted pursuant to Section 2.4
whether attributable to the period before or after the Effective Time and (g)
the Special Obligations (as later defined, but substituting Buyer in the place
of any reference to Seller) to the extent attributable to the period of time
after Closing (collectively, the “Assumed Liabilities”).

14.2    Seller’s Retention of Liabilities and Obligations.

A.    From and after Closing, and except for the Assumed Liabilities, Seller
retains and agrees to continue to be liable to perform, fulfill and discharge
all claims, costs, expenses, liabilities, Losses and obligations accruing or
relating to its owning, developing, exploring or maintaining of the Assets prior
to the Effective Time, or, in the case of Taxes, to the extent apportioned
pursuant to Article 9, to the period of time prior to the Effective Time.

B.    From and after Closing and except for the Assumed Liabilities, Seller
retains and agrees to continue to be liable to perform, fulfill and discharge
all claims, costs, expenses, liabilities, Losses and obligations accruing or
relating to (i) any injury, death, casualty, tortious action or inaction
occurring on or attributable to the Assets; (ii) employee-related claims of
Seller; (iii) obligations with respect to the payment or mis-payment of
royalties, overriding royalties, net profits interests or other interests or
obligations attributable to the sale of Hydrocarbons; and (iv) Taxes (the
“Special Obligations”), in each case attributable to the period of time prior to
Closing.

C.    From and after Closing, Seller retains and agrees to perform, fulfill and
discharge all claims, costs, expenses, liabilities, Taxes, and obligations
accruing or relating to the owning, developing, exploring or maintaining of the
Excluded Assets before or after the Effective Time.

D.    To the extent the Assets are or may be deemed to be “securities” under the
Securities Act of 1933, as amended, and certain applicable state securities or
Blue Sky laws

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and that resales thereof may therefore be subject to the registration
requirements of such acts, Seller shall retain any and all liability for Losses
attributable to representations made to its investors.

The liabilities set forth in Section 14.2A, Section 14.2B, Section 14.2C and
Section 14.2D are, collectively, the “Retained Liabilities.”
14.3    Indemnification. “Losses” shall mean any actual losses, costs, expenses
(including court costs, reasonable fees and expenses of attorneys, technical
experts and expert witnesses and the cost of investigation), liabilities,
damages, demands, suits, claims, and sanctions of every kind and character
(including civil fines) arising from, related to or reasonably incident to
matters indemnified against.

After the Closing, the Parties shall indemnify each other as follows:
A.    Seller’s Indemnification of Buyer. Seller assumes all risk, liability,
obligation and Losses in connection with, and shall defend, indemnify, and save
and hold harmless Buyer, its officers, directors, shareholders, partners,
members, affiliates, employees, agents, and successors and assigns (“Buyer
Indemnified Parties”), from and against any and all Losses and causes of action,
liabilities and expenses relating to, or arising out of, or connected, directly
or indirectly, with the Retained Liabilities, and any breach of the Seller’s
representations, warranties and covenants under this Agreement.

B.    Buyer’s Indemnification of Seller. Buyer assumes all risk, liability,
obligation and Losses in connection with, and shall defend, indemnify, and save
and hold harmless Seller, its officers, directors, employees, shareholders,
partners, members, affiliates, agents, and successors and assigns (“Seller
Indemnified Parties”) from and against any and all Losses and causes of action,
liabilities and expenses relating to, or arising out of or connected, directly
or indirectly, with the Assumed Liabilities and any breach of the Buyer’s
representations, warranties and covenants under this Agreement.

C.    Release.    Buyer shall be deemed to have released Seller at the Closing
from any Losses for which Buyer has agreed to indemnify Seller hereunder, and
Seller shall be deemed to have released Buyer at the Closing from any Losses for
which Seller has agreed to indemnify Buyer hereunder. The releases in the
preceding sentence shall extend to each Party’s respective officers, directors,
shareholders, partners, members, representatives, employees, agents and
affiliates.

14.4    Indemnification Limitations.

A.    Neither Seller nor Buyer shall not have any liability for any
indemnifications under Section 14.3A or Section 14.3B for any Loss (without
duplication) arising from a single event unless the amount with respect to such
Loss exceeds Twenty-Five Thousand Dollars ($25,000.00) (the “Individual
Indemnity Threshold”) and until and unless the aggregate amount of all Losses
exceeding the Individual Indemnity Threshold and for which Claim Notices are
delivered by the Indemnified Party prior to expiration of the applicable period
under Section 14.8 exceeds Two Hundred and Fifty Thousand Dollars ($250,000.00)
(the “Indemnity Deductible”), and then only to the extent such Losses exceed the
Indemnity

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Deductible. Notwithstanding anything to the contrary contained in this
Agreement, Seller and Buyer shall not be required to indemnify the other Party
for aggregate Losses in excess of twenty percent (20%) of the Purchase Price
(the “Indemnity Cap”).

B.    Notwithstanding the foregoing, (i) Seller’s obligation to indemnify Buyer
for those Retained Liabilities set forth in Section 14.2B or Section 14.2C, (ii)
Buyer’s obligation to indemnify Seller for those Assumed Liabilities set forth
in Section 14.1(g), or, Section 14.1(c), but only with respect to any Claim
asserted by delivery of a Claim Notice with respect to Section 14.1(c) on or
before twenty four (24) months after the Closing Date, and (iii) either Party’s
breach of the Special Representations, or any covenant or agreement contained in
this Agreement, shall not be limited by Section 14.4A, and the obligation to
indemnify shall be from the first dollar of any Loss, and without regard to the
Individual Indemnity Threshold, the Indemnity Deductible and the Indemnity Cap.

14.5    Express Negligence. EXCEPT AS OTHERWISE PROVIDED IN SECTION 3.3, THE
DEFENSE, INDEMNIFICATION, HOLD HARMLESS, RELEASE AND ASSUMED OBLIGATIONS
PROVISIONS PROVIDED IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE
LOSSES IN QUESTION AROSE OR RESULTED SOLELY OR IN PART FROM THE SOLE, ACTIVE,
PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT
OR VIOLATION OF LAW OF OR BY ANY INDEMNIFIED PARTY, EXCLUDING HOWEVER THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PARTY. BUYER AND SELLER
ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS
“CONSPICUOUS.”

14.6    Exclusive Remedy. Except for causes of action based on actual fraud or
willful misconduct, notwithstanding anything to the contrary contained in this
Agreement, the Parties agree that, from and after Closing, the Assignment,
Section 1.7, Section 3.3, Section 4.2B, Section 4.5, Section 4.9, Section 5.4D,
Section 5.5, Section 8.3C, Section 13.1A, Section 13.1B, Section 14.3A,
Section 14.3B and Section 15.12 contain the Parties’ exclusive remedies against
each other with respect to the Transaction, including breaches of
representation, warranties, covenants and agreements of the Parties contained in
this Agreement or in any document or certificate delivered pursuant to this
Agreement.

14.7    Procedure. The indemnifications contained in this Article shall be
implemented as follows:

A.    Claim Notice. The Party seeking indemnification under the terms of this
Agreement (“Indemnified Party”) shall submit a written “Claim Notice” to the
other Party (“Indemnifying Party”) which shall list the amount claimed by an
Indemnified Party, the basis for such claim, with supporting documentation, and
list each separate item of Loss for which payment is so claimed. The amount
claimed shall be paid by the Indemnifying Party to the extent required herein
within thirty (30) days after receipt of the Claim Notice, or after the amount
of such payment has been finally established, whichever last occurs.

B.    Information. If the Indemnified Party receives notice of a claim or legal
action that may result in a Loss for which indemnification may be sought under
this Agreement

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(a “Claim”), the Indemnified Party shall give written notice of such Claim to
the Indemnifying Party as soon as is practicable. If the Indemnifying Party or
its counsel so requests, the Indemnified Party shall furnish the Indemnifying
Party with copies of all pleadings and other information with respect to such
Claim. At the election of the Indemnifying Party made within sixty (60) days
after receipt of such notice, the Indemnified Party shall permit the
Indemnifying Party to assume control of such Claim (to the extent only that such
Claim, legal action or other matter relates to a Loss for which the Indemnifying
Party is liable), including the determination of all appropriate actions, the
negotiation of settlements on behalf of the Indemnified Party, and the conduct
of litigation through attorneys of the Indemnifying Party’s choice; provided,
however, that any settlement of the claim by the Indemnifying Party may not
result in any liability or cost to the Indemnified Party without its prior
written consent. If the Indemnifying Party elects to assume control, (i) any
expense incurred by the Indemnified Party thereafter for investigation or
defense of the matter shall be borne by the Indemnified Party, and (ii) the
Indemnified Party shall give all reasonable information and assistance, other
than pecuniary, that the Indemnifying Party shall deem necessary to the proper
defense of such Claim. In the absence of such an election, the Indemnified Party
will use its best efforts to defend, at the Indemnifying Party’s expense, any
claim, legal action or other matter to which such other Party’s indemnification
under this Article 14 applies until the Indemnifying Party assumes such defense.
If the Indemnifying Party fails to assume such defense within the time period
provided above, the Indemnified Party may settle the Claim, in its reasonable
discretion at the Indemnifying Party’s expense. An Indemnifying Party (or the
Indemnified Party if the Indemnified Party is defending the Claim) shall not,
without the written consent of the other Party, (i) settle any Claim or consent
to the entry of any judgment with respect to the Claim which does not include an
unconditional written release of the Indemnified Party or the Indemnifying
Party, as the case may be, from all liability in respect of such Claim, or
(ii) settle any Claim or consent to the entry of any judgment with respect to
the Claim in any manner that may materially or adversely affect the Indemnified
Party or the Indemnified Party, as the case may be (other than as a result of
money damages covered by the indemnity). If such a Claim requires immediate
action, both the Indemnified Party and the Indemnifying Party will cooperate in
good faith to take appropriate action so as not to jeopardize defense of such
Claim or either Party’s position with respect to such Claim.

14.8    Survival.

A.    Except as provided in Section 14.8B, a Party’s representations,
warranties, covenants or agreements under this Agreement will survive the
Closing or terminate at the Closing (in each case, the “Survival Period”):

(a)    Except as provided in Paragraphs (b), (c), (d) and (e), all
representations and warranties will survive the Closing until 5:00 o’clock p.m.
prevailing Mountain Time twelve (12) months after the Closing Date;
(b)    The representations and warranties set forth in Section 5.3 will survive
the Closing until 5:00 o’clock p.m. prevailing Mountain Time twelve (12) months
after the Closing Date;

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(c)    The following representations and warranties will survive the Closing
until the expiration of the applicable Statute of Limitations: Sections 6.1A,
6.1B, 6.2, 6.3, 6.4, 6.5, 6.6, 7.1A, 7.1B, 7.2, 7.3, 7.8, and 7.9 (the “Special
Representations”);
(d)    All of the covenants, agreements, disclaimers and releases contained in
this Agreement will survive the Closing in accordance with their terms.
Representations and warranties shall be of no further force and effect after the
end of the respective Survival Period; provided that there shall be no
termination of any bona fide Claim asserted pursuant to this Agreement by the
delivery of a Claim Notice with respect to such representation or warranty prior
to end of the respective Survival Period.
B.    The indemnities contained in this Agreement, including under Section 1.7,
Section 3.3, Section 9.3, Section 14.3A and Section 14.3B, shall survive Closing
until expiration of the applicable Statute of Limitations, and shall be of no
further force and effect thereafter, except with respect to any bona fide Claim
asserted pursuant to this Agreement by delivery of a Claim Notice with respect
to such indemnification prior to its expiration date.
14.9    Insurance. The amount of any Losses for which any of the Buyer
Indemnified Parties or the Seller Indemnified Parties, as applicable, is
entitled to indemnification under this Agreement or in connection with or with
respect to the Transaction shall be reduced by any corresponding insurance
proceeds from insurance policies carried by the Buyer Indemnified Party or
Seller Indemnified Party, as applicable, if a claim were properly pursued under
the relevant insurance arrangements (net of any collection costs).

14.10    No Insurance; Subrogation. The indemnifications provided in this
Agreement shall not be construed as a form of insurance. Buyer and Seller hereby
waive for themselves, their respective successors or assigns, including, without
limitation, any insurers, any rights to subrogation for Losses for which each of
them is respectively liable or against which each respectively indemnifies the
other, and, if required by applicable policies, Buyer and Seller shall obtain
waiver of such subrogation from their respective insurers.

14.11    Reservation as to Non-Parties. Nothing herein is intended to limit or
otherwise waive any recourse Buyer or Seller may have against any non-Party for
any obligations or liabilities that may be incurred with respect to the Assets.

14.12    Noncompensatory Damages. None of the Buyer Indemnified Parties nor
Seller Indemnified Parties shall be entitled to recover from Seller or Buyer, as
applicable, or their respective affiliates, any loss of profits, special,
indirect, consequential, punitive, exemplary, remote or speculative damages
arising under or in connection with the Agreement or the Transaction, except to
the extent any such Party is liable for such damages to a third party. Subject
to the preceding sentence, Buyer, on behalf of each of the Buyer Indemnified
Parties and Seller, on behalf of each of the Seller Indemnified Parties, each
waive any right to recover any loss of profit, special, indirect, consequential,
punitive, exemplary, remote or speculative damages arising in connection with or
with respect to this Agreement or the Transaction.

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14.13    Disclaimer of Application of Anti-Indemnity Statutes. The Parties
acknowledge and agree that the provisions of Wyo. Stat. § 30-1-131 relating to
oilfield services and associated activities shall not be applicable to this
Agreement or the Transaction.

ARTICLE 15.
Miscellaneous

15.1    Expenses. All fees, costs, and expenses incurred by Buyer or Seller in
negotiating this Agreement or in consummating this Transaction shall be paid by
the Party incurring the same including, without limitation, engineering, land,
title, legal and accounting fees, costs and expenses.

15.2    Notices. All notices and communications required or permitted under this
Agreement shall be in writing and addressed as set forth below. Any
communication or delivery hereunder shall be deemed to have been made and the
receiving Party charged with notice when received whether by: (i) personal
delivery; (ii) mail (provided that a Party will be deemed to have received
notice mailed by registered or certified mail five (5) days after mailing); or
(iii) overnight courier. All notices shall be addressed as follows:

Seller

Maurice W. Brown Oil & Gas, LLC
516 South Greeley Highway
Cheyenne, Wyoming 82007
Attention: Robert McCue
Telephone: 307-634-8605

Buyer

Fidelity Exploration & Production Company
1700 Lincoln Avenue, Suite 2800
Denver, Colorado 80203
Attention: Darrell Finneman
Telephone: 303-893-3133

Fidelity Oil Co.
1700 Lincoln Avenue, Suite 2800
Denver, Colorado 80203
Attention: Darrell Finneman
Telephone: 303-893-3133

A Party may, by written notice so delivered to the other Party, change the
address or individual to which delivery shall thereafter be made.
15.3    Relationship of Buyer Entities. It is not the intention of the Fidelity
Exploration or Fidelity Oil to create a partnership, joint venture, mining
partnership or association among such entities, and neither this Agreement nor
the ownership of the Assets by Fidelity Exploration

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and Fidelity Oil after Closing as co-tenants shall be construed as creating such
a relationship. The liability of Fidelity Exploration and Fidelity Oil under
this Agreement shall be several and separate, not joint or collective.

15.4    Amendments/Waiver. Except for waivers specifically provided for in this
Agreement, this Agreement may not be amended nor any rights hereunder waived
except by an instrument in writing signed by the Party to be charged with such
amendment or waiver and delivered by such Party to the Party claiming the
benefit of such amendment or waiver.

15.5    Assignment. This Agreement may not be assigned by Buyer without prior
written consent of Seller.

15.6    Announcements. Except as may be required by applicable laws or the
applicable rules and regulations of any governmental agency or stock exchange,
Seller and Buyer shall consult with each other with regard to all press releases
and other announcements issued concerning this Agreement or this Transaction,
and Buyer or Seller shall not issue any such press release or other publicity
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld.

15.7    Counterparts/Electronic Fax Signatures. Buyer and Seller may execute
this Agreement in any number of counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute but one and the
same instrument. The Parties agree that facsimile signatures and signatures
transmitted by electronic mail are binding.

15.8    Governing Law. This Agreement and this Transaction and any dispute
resolution conducted pursuant hereto shall be construed in accordance with, and
governed by, the laws of the State of Wyoming.

15.9    Entire Agreement. This Agreement constitutes the entire understanding
among the Parties, their respective members, shareholders, officers, directors
and employees with respect to the subject matter hereof, superseding all written
or oral negotiations and discussions, and prior agreements and understandings
relating to such subject matter. Each Exhibit and Schedule attached to this
Agreement is incorporated into this Agreement.

15.10    Knowledge. The term “knowledge” shall mean, for purposes of this
Agreement, the actual, conscious knowledge, after reasonable due inquiry, (i) in
the case of Seller, Maurice W. Brown or Robert McCue or the respective manager
level personnel responsible for land, legal and environmental matters, and
(ii) in the case of Buyer, Darrell Finneman or Patrick Rutty.

15.11    Binding Effect. This Agreement shall be binding upon, and shall inure
to the benefit of, the Parties hereto and their respective successors and
permitted assigns, but only those persons that will have responsibilities
pursuant to this Agreement are Parties to this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
express or implied, is intended to confer on any person or entity other than the
Parties or their successors and permitted assigns, or the Parties’ respective
related Indemnified Parties hereunder, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
    

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15.12    Dispute Resolution. Before commencing litigation regarding any dispute
arising under this Agreement, other than any dispute covered by the dispute
resolution procedures under Section 4.5, Section 5.5 or Section 13.1B, the
provisions of this Section 15.11 shall apply. Each Party agrees to notify the
other Party, in writing, of any such dispute.  The Parties shall then, acting in
good faith, use commercially reasonable efforts to resolve the dispute as soon
as possible.  If the dispute is not resolved within thirty (30) days after
notice is given, then the dispute will be referred to members of senior
management of each of the Parties for resolution and each Party will appoint a
senior officer with the authority to settle the dispute. The senior officers so
appointed will attempt to resolve the dispute within a further period of thirty
(30) days from the date such referral notice is given.  If the Parties are
unable to resolve the dispute within thirty (30) days of such notice, the
Parties agree to endeavor to resolve the dispute through mediation.  The Parties
agree to utilize good faith in selecting a mediator, scheduling the mediation
and participating in the mediation.  Expenses of the mediation, excluding legal
fees, shall be divided equally between the Parties.  If the dispute is not
resolved through mediation, despite the Parties good faith efforts, either Party
may initiate litigation within the State or Federal courts located within the
State of Wyoming to resolve the dispute. Nothing in this Section 15.11 shall
prevent either Party from seeking interim injunctive relief in the State or
Federal courts, to maintain the status quo and avoid irreparable injury pending
the outcome of the dispute resolution procedures set forth in this Section
15.11.

15.13    References, Titles and Construction
.
A.    All references in this Agreement to articles, sections, subsections and
other subdivisions refer to corresponding articles, sections, subsections and
other subdivisions of this Agreement unless expressly provided otherwise.

B.    Titles appearing at the beginning of any of such subdivisions are for
convenience only and shall not constitute part of such subdivisions and shall be
disregarded in construing the language contained in such subdivisions.

C.    The words “this Agreement,” “this instrument,” “herein,” “hereof,”
“hereby,” “hereunder,” and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited.

D.    Words in the singular form shall be construed to include the plural and
vice versa, unless the context otherwise requires. Pronouns in masculine,
feminine, and neutral genders shall be construed to include any other gender.

E.    Unless the context otherwise requires or unless otherwise provided herein,
the terms defined in this Agreement which refer to a particular agreement,
instrument or document also refer to and include all renewals, extensions,
modifications, amendments or restatements of such agreement, instrument or
document, provided that nothing contained in this Article shall be construed to
authorize such renewal, extension, modification, amendment or restatement.

F.    Examples shall not be construed to limit, expressly or by implication, the
matter they illustrate.
        

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G.    The word “or” is not intended to be exclusive and the word “includes” and
its derivatives mean “includes, but is not limited to” and corresponding
derivative expressions.

H.    No consideration shall be given to the fact or presumption that one party
had a greater or lesser hand in drafting this Agreement.

I.    All references herein to “$” or “dollars” shall refer to U.S. Dollars.

J.    References in this Agreement to a “business day” shall mean a day, other
than a Saturday or Sunday, on which national banks are open for business in the
State of Wyoming. If the date for a performance under this Agreement falls on a
day that is not a business day, the date for such performance will be extended
to the next business day.

K.    References in this Agreement to use “commercially reasonable efforts” or
to “reasonably cooperate” or phrases of similar import shall not be interpreted
to require the expenditure of any funds or the incurrence of any obligations.

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IN WITNESS WHEREOF, this Agreement has been duly executed this Agreement
effective as of the Effective Time.

 
 
SELLER:
 
 
 
 
 
 
MAURICE W. BROWN OIL & GAS LLC
 
 
 
 
 
 
By:
/s/ Maurice W. Brown
 
 
 
Name: Maurice W. Brown
 
 
 
Title: Manager
 

 
BUYER:
 
 
 
 
 
 
FIDELITY EXPLORATION & PRODUCTION
 
 
COMPANY
 
 
 
 
 
 
By:
/s/ Patrick M. Rutty
 
 
 
Name: Patrick M. Rutty
 
 
 
Title: Vice President of Exploration
 

 
FIDELITY OIL CO.
 
 
 
 
 
 
By:
/s/ Darwin Subart
 
 
 
Name: Darwin Subart
 
 
 
Title: Chief Financial Officer
 

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