Exhibit 10.1

EXECUTION COPY

$500,000,000

EXCO Resources, Inc.

8.500% Senior Notes due 2022

Underwriting Agreement

April 11, 2014

J.P. Morgan Securities LLC

    As Representative of the

    several Underwriters listed

    in Schedule 1 hereto

c/o J.P. Morgan Securities LLC

383 Madison Avenue

New York, New York 10179

Ladies and Gentlemen:

EXCO Resources, Inc., a Texas corporation (the “Company”), proposes to issue and
sell to the several Underwriters listed in Schedule 1 hereto (the
“Underwriters”), for whom you are acting as representative (the
“Representative”), $500,000,000 principal amount of its 8.500% Senior Notes due
2022 (the “Securities”). The Securities will be issued pursuant to an Indenture
dated as of September 15, 2010, as amended (the “Base Indenture”) among the
Company, the guarantors listed on Schedule 2 hereto (the “Guarantors”) and
Wilmington Trust Company, as trustee (the “Trustee”), as supplemented by the
Third Supplemental Indenture to be dated as of the Closing Date (as defined
herein) (the “Third Supplemental Indenture” and together with the Base
Indenture, the “Indenture”) and will be guaranteed on an unsecured senior basis
by each of the Guarantors (the “Guarantees”).

Each of the Company and the Guarantors hereby confirms its agreement with the
several Underwriters concerning the purchase and sale of the Securities, as
follows:

1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Securities Act”), an automatic shelf registration statement
on Form S-3 (File No. 333-195126), including a prospectus, relating to the
Securities. Such registration statement, as amended at the time it becomes
effective, including the information, if any, deemed pursuant to Rule 430A, 430B
or 430C under the Securities Act to be part of the registration statement at the
time of its effectiveness (“Rule 430 Information”), is referred to herein as the
“Registration Statement”; and as used herein,

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the term “Preliminary Prospectus” means each prospectus included in such
registration statement (and any amendments thereto) before it becomes effective,
any prospectus filed with the Commission pursuant to Rule 424(a) under the
Securities Act and the prospectus included in the Registration Statement at the
time of its effectiveness that omits Rule 430 Information, and the term
“Prospectus” means the prospectus in the form first used (or made available upon
request of purchasers pursuant to Rule 173 under the Securities Act) in
connection with confirmation of sales of the Securities. If the Company has
filed an abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the “Rule 462 Registration Statement”), then any reference
herein to the term “Registration Statement” shall be deemed to include such Rule
462 Registration Statement. Any reference in this Agreement to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the effective date of the
Registration Statement or the date of such Preliminary Prospectus or the
Prospectus, as the case may be and any reference to “amend”, “amendment” or
“supplement” with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “Exchange Act”) that are deemed to be incorporated by
reference therein. Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Registration Statement and the Prospectus.

At or prior to the time when sales of the Securities were first made (the “Time
of Sale”), the Company had prepared the following information (collectively, the
“Time of Sale Information”): a Preliminary Prospectus dated April 8, 2014, and
each “free-writing prospectus” (as defined pursuant to Rule 405 under the
Securities Act) listed on Annex B hereto.

The Company intends to use the proceeds of the offering of the Securities to
repay in full all outstanding term loan borrowings under the Amended and
Restated Credit Agreement, dated as of July 31, 2013, among EXCO Resources,
Inc., certain guarantors party thereto, the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent (as amended, the “Credit Agreement”)
and a portion of the revolving loan borrowings under the Credit Agreement, and
to pay related fees and expenses.

2. Purchase of the Securities by the Underwriters. (a) The Company agrees to
issue and sell the Securities to the several Underwriters as provided in this
Agreement, and each Underwriter, on the basis of the representations, warranties
and agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company the respective
principal amount of Securities set forth opposite such Underwriter’s name in
Schedule 1 hereto at a price equal to 98.25% of the principal amount thereof
plus accrued interest, if any, from April 16, 2014 to the Closing Date (as
defined below). Capital One Securities, Inc., acting as a “qualified independent
underwriter” within the meaning of Rule 5121 of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) has participated in the preparation of the
Preliminary Prospectus and has exercised the usual standards of due diligence
with respect thereto. The Company will not be obligated to deliver any of the
Securities except upon payment for all the Securities to be purchased as
provided herein.

 

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(b) Each of the Company and the Guarantors hereby understands that the
Underwriters intend to make a public offering of the Securities as soon after
the effectiveness of this Agreement as in the judgment of the Representative is
advisable, and initially to offer the Securities on the terms set forth in the
Time of Sale Information. Each of the Company and the Guarantors acknowledges
and agrees that the Underwriters may offer and sell Securities to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell
Securities purchased by it to or through any Underwriter.

(c) Payment for and delivery of the Securities will be made at the offices of
Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York, at
10:00 A.M., New York City time, on April 16, 2014, or at such other time or
place on the same or such other date, not later than the fifth business day
thereafter, as the Representative and the Company may agree upon in writing. The
time and date of such payment and delivery is referred to herein as the “Closing
Date”.

(d) Payment for the Securities shall be made by wire transfer in immediately
available funds to the account(s) specified by the Company to the Representative
against delivery to the nominee of The Depository Trust Company (“DTC”), for the
account of the Underwriters, of one or more global notes representing the
Securities (collectively, the “Global Note”), with any transfer taxes payable in
connection with the sale of the Securities duly paid by the Company. The Global
Note will be made available for inspection by the Representative not later than
1:00 P.M., New York City time, on the business day prior to the Closing Date.

(e) Each of the Company and the Guarantors acknowledges and agrees that the
Underwriters are acting solely in the capacity of an arm’s length contractual
counterparty to the Company and the Guarantors with respect to the offering of
Securities contemplated hereby (including in connection with determining the
terms of the offering) and not as a financial advisor or a fiduciary to, or an
agent of, the Company, the Guarantors or any other person. Additionally, neither
the Representative nor any other Underwriter is advising the Company, the
Guarantors or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company and the Guarantors shall
consult with their own advisors concerning such matters and shall be responsible
for making their own independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no responsibility or
liability to the Company or the Guarantors with respect thereto. Any review by
the Underwriters of the Company, the Guarantors, the transactions contemplated
hereby or other matters relating to such transactions will be performed solely
for the benefit of the Underwriters and shall not be on behalf of the Company,
the Guarantors or any other person.

 

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3. Representations and Warranties of the Company and the Guarantors. The Company
and the Guarantors jointly and severally represent and warrant to each
Underwriter that:

(a) Preliminary Prospectus. No stop order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, complied in all material
respects with the Securities Act and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that neither
the Company nor any of the Guarantors make any representation or warranty with
respect to any statements or omissions made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representative expressly for use in any
Preliminary Prospectus.

(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale
did not, and at the Closing Date will not, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that neither the Company nor any of the
Guarantors make any representation or warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representative expressly for use in the Preliminary Prospectus, the Time of
Sale Information or the Prospectus. No statement of material fact included in
the Prospectus has been omitted from the Time of Sale Information and no
statement of material fact included in the Time of Sale Information that is
required to be included in the Prospectus has been omitted therefrom.

(c) Issuer Free Writing Prospectus. The Company and the Guarantors (including
their agents and representatives, other than the Underwriters in their capacity
as such) has not prepared, made, used, authorized, approved or referred to and
will not prepare, make, use, authorize, approve or refer to any “written
communication” (as defined in Rule 405 under the Securities Act) that
constitutes an offer to sell or solicitation of an offer to buy the Securities
(each such communication by the Company and the Guarantors or their agents and
representatives (other than a communication referred to in clauses (i), (ii) and
(iii) below) an “Issuer Free Writing Prospectus”) other than (i) any document
not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities
Act or Rule 134 under the Securities Act, (ii) the Preliminary Prospectus,
(iii) the Prospectus, (iv) the documents listed on Annex B which constitute part
of the Time of Sale Information and (v) any electronic road show or other
written communications, in each case approved in writing in advance by the
Representative. Each such Issuer Free Writing Prospectus complied in all
material respects with the Securities Act, has been or will be (within the time
period specified in Rule 433) filed in accordance with the Securities Act (to
the extent required thereby) and, when taken together with the Preliminary
Prospectus filed prior to the first use of such Issuer Free

 

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Writing Prospectus, did not at the Time of Sale, and at the Closing Date will
not, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that neither
the Company nor any of the Guarantors make any representation or warranty with
respect to any statements or omissions made in each such Issuer Free Writing
Prospectus in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through the
Representative expressly for use in any Issuer Free Writing Prospectus.

(d) Registration Statement and Prospectus. The Registration Statement is an
“automatic shelf registration statement” as defined under Rule 405 of the
Securities Act that has been filed with the Commission not earlier than three
years prior to the date hereof; and no notice of objection of the Commission to
the use of such registration statement or any post-effective amendment thereto
pursuant to Rule 401(g)(2) under the Securities Act has been received by the
Company. No stop order suspending the effectiveness of the Registration
Statement has been issued by the Commission and no proceeding for that purpose
or pursuant to Section 8A of the Securities Act against the Company or related
to the offering has been initiated or, to the knowledge of the Company and the
Guarantors, threatened by the Commission; as of the applicable effective date of
the Registration Statement and any amendment thereto, the Registration Statement
complied and will comply in all material respects with the Securities Act and
the Trust Indenture Act of 1939, as amended, and the rules and regulations of
the Commission thereunder (collectively, the “Trust Indenture Act”), and did not
and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and as of the date of the Prospectus and any
amendment or supplement thereto and as of the Closing Date, the Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that neither the Company nor any of the Guarantors make any
representation or warranty with respect to (i) that part of the Registration
Statement that constitutes the Statement of Eligibility and Qualification (Form
T-1) of the Trustee under the Trust Indenture Act or (ii) any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representative expressly for use in the Registration Statement and the
Prospectus and any amendment or supplement thereto.

(e) Incorporated Documents. The documents incorporated by reference in each of
the Registration Statement, the Prospectus and the Time of Sale Information,
when filed with the Commission conformed in all material respects with the
requirements of the Exchange Act and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any further documents so filed
and incorporated by

 

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reference in the Registration Statement, the Prospectus or the Time of Sale
Information, when such documents either become effective or are filed with the
Commission, as the case may be, will conform in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

(f) Financial Statements. The financial statements of each of the Company, the
Acquired Chesapeake Oil and Natural Gas Properties (the “Acquired Chesapeake
Properties”) and TGGT Holdings, LLC (“TGGT”) included or incorporated by
reference in each of the Registration Statement, the Time of Sale Information
and the Prospectus, together with the related notes and schedules, comply in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and present fairly in all material respects the
consolidated financial position of the Company, the Acquired Chesapeake
Properties and TGGT, as applicable, as of the dates indicated and the
consolidated results of operations and cash flows of the Company and its
subsidiaries, the Acquired Chesapeake Properties and TGGT, as applicable, for
the periods specified and have been prepared in compliance in all material
respects with the requirements of the Exchange Act and in conformity with
generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods covered thereby (except, with respect to any unaudited
financial statements, for the absence of customary year-end adjustments) and the
supporting schedules included or incorporated by reference in each of the
Registration Statement, the Prospectus and the Time of Sale Information present
fairly the information required to be stated therein. The other financial and
accounting data included or incorporated by reference in each of the
Registration Statement, the Time of Sale Information and the Prospectus, has
been derived from the accounting records of the Company and present fairly the
information shown therein, in all material respects; and the pro forma financial
information and the related notes thereto included or incorporated by reference
in each of the Registration Statement, the Time of Sale Information and the
Prospectus have been prepared in accordance with the applicable requirements of
the Securities Act and the Exchange Act, as applicable, and the assumptions
underlying such pro forma financial information are reasonable and are set forth
in, or incorporated by reference in, each of the Registration Statement, the
Time of Sale Information and the Prospectus. The interactive data in eXtensible
Business Reporting Language included or incorporated by reference in the
Registration Statement, the Prospectus and the Time of Sale Information fairly
presents the information called for in all material respects and is prepared in
accordance with the Commission’s rules and guidelines applicable thereto.

(g) No Material Adverse Change. Since the date of the most recent financial
statements of the Company included or incorporated by reference in each of the
Registration Statement, the Time of Sale Information and the Prospectus, and
except as may be otherwise stated or incorporated by reference in the
Registration Statement, the Time of Sale Information and the Prospectus, there
has not been (A) any change in

 

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the capital stock or material change in the long-term debt of the Company or any
of its subsidiaries, or any dividend or distribution of any kind declared, set
aside for payment, paid or made by the Company on any class of capital stock, or
any material adverse change, or any development involving a prospective material
adverse change, financial or otherwise, in or affecting in the business,
properties, prospects, regulatory environment, results of operations or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole, except for (i) the exercise of outstanding stock options pursuant to
equity incentive plans as such equity incentive plans are disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus and
(ii) the Company’s declaration of a $0.05 per share dividend on March 10, 2014
and the payment of such dividend, (B) any transaction entered into by the
Company or any of its subsidiaries, which is material to the Company and its
subsidiaries, taken as a whole, or (C) any obligation, contingent or otherwise,
directly or indirectly, incurred by the Company or any of its subsidiaries,
which is material to the Company and its subsidiaries, taken as a whole, and
(D) except, as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect (defined below) on the Company and its
subsidiaries taken as a whole, none of the Company or any of its subsidiaries
has sustained any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator
or governmental or regulatory authority.

(h) Organization and Good Standing. The Company, each of its subsidiaries and
each of the entities in which the Company, directly or indirectly, owns
fifty-percent (50%) or less (the “Joint Ventures”) have been duly organized and
are validly existing and in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in good
standing in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified, in good standing or have such power
or authority would not, individually or in the aggregate, have a material
adverse effect on the business, properties, management, financial position,
results of operations or prospects of the Company and its subsidiaries taken as
a whole or on the performance by the Company or the Guarantors of their
obligations under this Agreement, the Securities and the Guarantees,
respectively (a “Material Adverse Effect”). The Company does not own an interest
in or control, directly or indirectly, any corporation, association or other
entity other than the subsidiaries and the Joint Ventures listed on Schedule 3
of this Agreement and a less than 5% interest in Azure Midstream Holdings, LLC.

(i) Capitalization. The Company has the authorized capitalization as set forth
in each of the Registration Statement, the Time of Sale Information and the
Prospectus under the heading “Capitalization” and all the outstanding shares of
capital stock or other equity interests of each subsidiary of the Company and
the Company’s interest in the Joint Ventures have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly
or indirectly by the Company, free and clear of any

 

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lien, charge, encumbrance, security interest, restriction on voting or transfer
or any other claim of any third party, except pursuant to the Credit Agreement
and the organizational and governance documents of each of the Joint Ventures
listed on Schedule 3 of this Agreement.

(j) Due Authorization. Each of the Company and the Guarantors has full right,
power and authority to execute and deliver this Agreement, the Securities and
the Indenture (including the Guarantees set forth therein) (collectively, the
“Transaction Documents”), to the extent it is a party thereto and to perform its
respective obligations hereunder and thereunder; and all action required to be
taken for the due and proper authorization, execution and delivery of each of
the Transaction Documents to which it is a party and the consummation by each of
them of the transactions contemplated thereby has been duly and validly taken.

(k) The Indenture. The Base Indenture has been duly authorized, executed and
delivered by the Company and each of the Guarantors and has been duly qualified
under the Trust Indenture Act and constitutes a valid and legally binding
agreement of the Company and each of the Guarantors enforceable against the
Company and each of the Guarantors in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting the
enforcement of creditors’ rights generally or by equitable principles relating
to enforceability (collectively, the “Enforceability Exceptions”). The Third
Supplemental Indenture has been duly authorized by the Company and each of the
Guarantors and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, the Indenture will constitute a valid and legally
binding agreement of the Company and each of the Guarantors enforceable against
the Company and each of the Guarantors in accordance with its terms, except as
enforceability may be limited by the Enforceability Exceptions.

(l) The Securities and the Guarantees. The Securities have been duly authorized
by the Company and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will constitute valid
and legally binding obligations of the Company enforceable against the Company
in accordance with their terms, subject to the Enforceability Exceptions, and
will be entitled to the benefits of the Indenture; and the Guarantees have been
duly authorized by each of the Guarantors and, when the Securities have been
duly executed, authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be valid and legally binding obligations
of each of the Guarantors, enforceable against each of the Guarantors in
accordance with their terms, except that the enforceability is subject to the
Enforceability Exceptions, and will be entitled to the benefits of the
Indenture.

(m) Underwriting Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and each of the Guarantors.

 

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(n) Descriptions of the Transaction Documents. Each Transaction Document
conforms in all material respects to the description thereof contained in each
of the Registration Statement, the Time of Sale Information and the Prospectus.

(o) No Violation or Default. Neither the Company nor any of its subsidiaries is
(i) in violation of its charter or by-laws or similar organizational documents,
(ii) in default, and no event has occurred that, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, or (iii) in violation of any law or
statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of clauses (ii) and
(iii) above, for any such default or violation that would not, individually or
in the aggregate, have a Material Adverse Effect.

(p) No Conflicts. The execution, delivery and performance by the Company and
each of the Guarantors of each of the Transaction Documents to which it is a
party, the issuance and sale of the Securities (including the Guarantees) and
compliance by the Company and each of the Guarantors with the terms thereof and
the consummation of the transactions contemplated by the Transaction Documents
will not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, result in the
termination, modification or acceleration of, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, (ii) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of the
Company or any of its subsidiaries, or (iii) result in the violation of any law
or statute or any judgment, order, rule or regulation of any court or arbitrator
or governmental or regulatory authority, except, in the case of clauses (i) and
(iii) above, for any such conflict, breach, violation, default, lien, charge or
encumbrance that would not, individually or in the aggregate, have a Material
Adverse Effect.

(q) No Consents Required. No approval, authorization, consent or order of or
filing with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or of or with the rules of the New
York Stock Exchange, or approval of the shareholders of the Company or its
subsidiaries, is required in connection with the execution, delivery and
performance by the Company and each of the Guarantors of each of the Transaction
Documents to which it is a party, the issuance and sale by the Company of the
Securities and the issuance by the Guarantors of the Guarantees or the
consummation of the transactions as contemplated hereby and by the Transaction
Documents, except for the registration of the Securities and the Guarantees
under the Securities Act, the qualification of the

 

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Indenture under the Trust Indenture Act and such consents, approvals,
authorizations, orders and registrations or qualifications as may be required
under applicable state securities laws in connection with the purchase, offer
and distribution of the Securities by the Underwriters.

(r) Legal Proceedings. Except as described in each of the Registration
Statement, the Time of Sale Information and the Prospectus, there are no legal,
governmental or regulatory investigations, actions, demands, claims, suits,
arbitrations, inquiries or proceedings (“Actions”) pending to which the Company
or any of its subsidiaries is or may be a party or to which any property of the
Company or any of its subsidiaries is or may be the subject that, individually
or in the aggregate, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect; no
Actions are, to the knowledge of the Company and each of the Guarantors,
threatened or contemplated by any governmental or regulatory authority or other
parties; and (i) there are no current or pending Actions that are required under
the Securities Act to be described in the Registration Statement or the
Prospectus that are not so described in the Registration Statement, the Time of
Sale Information and the Prospectus and (ii) there are no statutes, regulations
or contracts or other documents that are required under the Securities Act to be
filed as exhibits to the Registration Statement or described in the Registration
Statement or the Prospectus that are not so filed as exhibits to the
Registration Statement or described in the Registration Statement, the Time of
Sale Information and the Prospectus.

(s) Independent Accountants. KPMG, LLP, who has certified certain financial
statements of the Company and its subsidiaries, was at the time of such
certification an independent registered public accounting firm with respect to
the Company and its subsidiaries, as required by the Securities Act and the
Exchange Act, and the applicable published rules and regulations thereunder and
the rules and regulations of the Public Company Accounting Oversight Board.
KPMG, LLP, who has certified certain financial statements of the Acquired
Chesapeake Properties and TGGT, was at the applicable time of such certification
an independent auditor with respect to the Acquired Chesapeake Properties and
TGGT within the applicable rules and regulations adopted by the American
Institute of Certified Public Accountants.

(t) Title to Real and Personal Property. The Company and each of its
subsidiaries have good and marketable title to all material property (real and
personal), or has valid rights to lease or otherwise use, all items of real and
personal property that are material to the respective businesses of the Company
and its subsidiaries described or incorporated by reference in the Registration
Statement, the Time of Sale Information and the Prospectus as being owned by
each of them, free and clear of all liens, claims, security interests or other
encumbrances except those that (i) do not materially interfere with the use made
and proposed to be made of such property by the Company and its subsidiaries,
(ii) could not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect or (iii) were placed on such property in connection
with the Credit Agreement and the organizational documents of the Joint
Ventures.

 

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(u) Title to Intellectual Property. The Company and its subsidiaries own or
possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective businesses;
and the conduct of their respective businesses will not conflict in any material
respect with any such rights of others, and the Company and its subsidiaries
have not received any notice of any claim of infringement or conflict with any
such rights of others.

(v) Investment Company Act. Neither the Company nor any of its subsidiaries is
and, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Registration Statement,
the Time of Sale Information and the Prospectus, none of them will be an
“investment company” or an entity “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, the “Investment Company
Act”).

(w) Taxes. The Company and its subsidiaries have paid all federal, state, local
and foreign taxes and filed all tax returns required to be paid or filed through
the date hereof, except for any failure to pay such taxes or file such returns
that would not, individually or in the aggregate, have a Material Adverse
Effect; and except as otherwise disclosed in each of the Registration Statement,
the Time of Sale Information and the Prospectus, there is no material tax
deficiency that has been, or could reasonably be expected to be, asserted
against the Company or any of its subsidiaries or any of their respective
properties or assets.

(x) Licenses and Permits. The Company and its subsidiaries possess all licenses,
sub-licenses, certificates, permits and other authorizations issued by, and have
made all filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the ownership or
lease of their respective properties or the conduct of their respective
businesses as described in each of the Registration Statement, the Time of Sale
Information and the Prospectus, except where the failure to possess or make the
same would not, individually or in the aggregate, have a Material Adverse
Effect; and except as described in each of the Registration Statement, the Time
of Sale Information and the Prospectus, neither the Company nor any of its
subsidiaries has received notice of any revocation or modification of any such
license, sub-license, certificate, permit or authorization, except for any
revocation or modification or failure to renew that would not, individually or
in the aggregate, have a Material Adverse Effect.

(y) No Labor Disputes. Neither the Company nor its subsidiaries are involved in
any labor dispute with their respective employees nor, to the knowledge of the
Company, is any such dispute threatened except, in each case, for disputes which
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.

 

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(z) Compliance With Environmental Laws. (i) The Company and its subsidiaries
(x) are in compliance with any and all applicable federal, state, local and
foreign laws, rules, regulations, requirements, decisions and orders relating to
the protection of human health or safety, the environment, natural resources,
hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, “Environmental Laws”); (y) have received and are in compliance
with all permits, licenses, certificates or other authorizations or approvals
required of them under applicable Environmental Laws to conduct their respective
businesses; and (z) have not received notice of any actual or potential
liability under or relating to any Environmental Laws, including for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, and have no knowledge of any
event or condition that would reasonably be expected to result in any such
notice; and (ii) there are no costs or liabilities associated with Environmental
Laws of or relating to the Company or its subsidiaries, except in the case of
each of (i) and (ii) above, for any such failure to comply, or failure to
receive required permits, licenses, certificates or other authorizations, or
approvals, or cost or liability, as would not, individually or in the aggregate,
have a Material Adverse Effect; and (iii) except as described in each of the
Time of Sale Information and the Prospectus, (x) there are no proceedings that
are pending, or that are known to be contemplated, against the Company or any of
its subsidiaries under any Environmental Laws in which a governmental entity is
also a party, other than such proceedings regarding which it is reasonably
believed no monetary sanctions of $100,000 or more will be imposed, and (y) the
Company and its subsidiaries are not aware of any issues regarding compliance
with Environmental Laws, or liabilities or other obligations under Environmental
Laws or concerning hazardous or toxic substances or wastes, pollutants or
contaminants, that could reasonably be expected to have a material adverse
effect on the capital expenditures, earnings or competitive position of the
Company and its subsidiaries, and (z) none of the Company and its subsidiaries
anticipates material capital expenditures relating to any Environmental Laws.

(aa) Compliance with ERISA. (i) Each employee benefit plan, within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), for which the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled group of
companies within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) has or could have any liability (each, a “Plan”)
has been maintained in compliance, in all material respects, with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code; (ii) no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Plan, excluding transactions effected pursuant to a
statutory, administrative or other applicable exemption (including individual
exemptions that have been or will be applied for with the U.S. Department of
Labor); (iii) no Plan that is subject to the funding rules of Sections

 

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412 or 430 of the Code or Section 302 of ERISA has failed to satisfy the minimum
funding standards applicable to such Plan, whether or not waived, and no such
Plan has been determined to be, or is reasonably expected to be, in “at risk”
status (within the meaning of Section 430 of the Code or Section 303 of ERISA);
(iv) the fair market value of the assets of each Plan equals or exceeds the
present value of all benefits accrued under such Plan (determined based on those
assumptions used to fund such Plan); (v) no “reportable event” (within the
meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to
occur; (vi) each Plan that is intended to be qualified under Section 401(a) of
the Code is so qualified and to the knowledge of the Company and the Guarantors,
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification; and (vii) neither the Company nor any member of
its Controlled Group has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than contributions to the Plan or
premiums to the Pension Benefit Guarantee Corporation, in the ordinary course
and without default) in respect of a Plan (including a “multiemployer plan,”
within the meaning of Section 4001(a)(3) of ERISA).

(bb) Disclosure Controls. The Company maintains an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15(e) of the
Exchange Act) that is designed to ensure that material information required to
be disclosed by the Company, including its consolidated subsidiaries, in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported as required under the Exchange Act within the time
periods specified in the Commission’s rules and forms, including controls and
procedures designed to ensure that such information is accumulated and
communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. The Company has carried out evaluations
of the effectiveness of its disclosure controls and procedures as required by
Rule 13a-15 of the Exchange Act.

(cc) Accounting Controls. The Company and its subsidiaries maintain systems of
“internal control over financial reporting” (as defined in Rule 13a-15(f) of the
Exchange Act) that comply with the requirements of the Exchange Act and have
been designed by, or under the supervision of, their respective principal
executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including,
but not limited to internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences; and (v) interactive data in eXtensible
Business Reporting Language included or incorporated by reference in the
Registration Statement, the Prospectus and the Time of Sale Information is
prepared in accordance with the

 

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Commission’s rules and guidelines applicable thereto. Except as disclosed in
each of the Registration Statement, the Time of Sale Information and the
Prospectus, there are no material weaknesses or significant deficiencies in the
Company’s internal controls.

(dd) Insurance. The Company and its subsidiaries have insurance covering their
respective properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such
losses and risks as are adequate to protect the Company and its subsidiaries and
their respective businesses; and neither the Company nor any of its subsidiaries
has (i) received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in order
to continue such insurance or (ii) any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage at reasonable cost from similar insurers as may be
necessary to continue its business.

(ee) No Unlawful Payments. None of the Company, any of its subsidiaries or, to
the knowledge of the Company and each of the Guarantors, any director, officer,
or employee of the Company or any of its subsidiaries, or any agent, or other
person associated with or acting on behalf of the Company or any of its
subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made or taken an act in furtherance of an offer, promise or authorization
of any direct or indirect unlawful payment or benefit to any foreign or domestic
government official or employee, including of any government-owned or controlled
entity or of a public international organization, or any person acting in an
official capacity for or on behalf of any of the foregoing, or any political
party or party official or candidate for political office; (iii) violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or any applicable law or regulation implementing the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions, or committed an offence under the Bribery Act 2010 of the United
Kingdom, or any other applicable anti-bribery or anti-corruption law; or
(iv) made, offered, agreed, requested or taken an act in furtherance of any
unlawful bribe or other unlawful benefit, including, without limitation, any
rebate, payoff, influence payment, kickback or other unlawful or improper
payment or benefit. The Company and its subsidiaries have instituted, maintain
and enforce policies and procedures designed to promote and ensure compliance
with all applicable anti-bribery and anti-corruption laws.

(ff) Compliance with Money Laundering Laws. The operations of the Company and
its subsidiaries are and, to the knowledge of the Company, have been conducted
at all times in compliance with applicable financial recordkeeping and reporting
requirements, including those of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the applicable money laundering statutes of all
jurisdictions where the Company or any of its subsidiaries conducts business,
the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental
agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries with respect to
the Anti-Money Laundering Laws is pending or, to the knowledge of the Company or
any of the Guarantors, threatened.

 

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(gg) No Conflicts with Sanctions Laws. None of the Company, any of its
subsidiaries, or, to the knowledge of the Company and the Guarantors, any
director, officer, employee, agent or other person associated with or acting on
behalf of the Company or any of its subsidiaries is currently the subject or the
target of any sanctions administered or enforced by the U.S. government
(including, without limitation, the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“OFAC”) or the U.S. Department of State and
including, without limitation, the designation as a “specially designated
national” or “blocked person”), the United Nations Security Council (“UNSC”),
the European Union, Her Majesty’s Treasury (“HMT”), or other relevant sanctions
authority (collectively, “Sanctions”), nor is the Company, any of its
subsidiaries or any of the Guarantors located, organized or resident in a
country or territory that is the subject or the target of Sanctions, including,
without limitation, Cuba, Iran, North Korea, Sudan and Syria (each, a
“Sanctioned Country”); and the Company will not directly or indirectly use the
proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity (i) to fund or facilitate any activities of or
business with any person, that, at the time of such funding or facilitation, is
the subject or the target of Sanctions, (ii) to fund or facilitate any
activities of or business in any Sanctioned Country or (iii) in any other manner
that will result in a violation by any person (including any person
participating in the transaction, whether as underwriter, advisor, investor or
otherwise) of Sanctions. For the past five years, the Company and its
subsidiaries have not knowingly engaged in, and are not now knowingly engaged
in, any dealings or transactions with any person that at the time of the dealing
or transaction is or was the subject or the target of Sanctions or with any
Sanctioned Country.

(hh) Solvency. On and immediately after the Closing Date, none of the Company
nor any of the Guarantors (after giving effect to the issuance of the Securities
(including the Guarantees) and the other transactions related thereto as
described in the Registration Statement, the Time of Sale Information and the
Prospectus) will be “insolvent” as defined under the United States Bankruptcy
Code.

(ii) No Restrictions on Subsidiaries. No subsidiary of the Company is currently
prohibited, directly or indirectly, under any agreement or other instrument to
which it is a party or is subject, from paying any dividends to the Company,
from making any other distribution on such subsidiary’s capital stock or similar
ownership interest, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such subsidiary’s
properties or assets to the Company or any other subsidiary of the Company.

(jj) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or any
of its subsidiaries or any Underwriter for a brokerage commission, finder’s fee
or like payment in connection with the offering and sale of the Securities.

 

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(kk) No Registration Rights. No person has the right to require the Company or
any of its subsidiaries to register any Securities for sale under the Securities
Act by reason of the filing of the Registration Statement with the Commission or
the issuance and sale of the Securities.

(ll) No Stabilization. Neither the Company nor any of the Guarantors has taken,
directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of the price of
the Securities.

(mm) Sarbanes-Oxley Act. There is and has been no failure on the part of the
Company or any of the Company’s directors or officers, in their capacities as
such, to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
promulgated in connection therewith (the “Sarbanes-Oxley Act”), including
Section 402 related to loans and Sections 302 and 906 related to certifications.

(nn) Status under the Securities Act. The Company is not an ineligible issuer
and is a well-known seasoned issuer, in each case as defined under the
Securities Act, in each case at the times specified in the Securities Act in
connection with the offering of the Securities.

(oo) Reserve Report Data. Other than as disclosed in the Registration Statement,
the Time of Sale Information and the Prospectus, the oil and gas reserve
estimates of the Company and its subsidiaries for the fiscal years ended
December 31, 2013, 2012 and 2011 contained in the Registration Statement, the
Time of Sale Information and the Prospectus are derived from reports that have
been prepared by or have been audited by either (a) Lee Keeling and Associates,
Inc. (b) Haas Petroleum Engineering Services Inc., (c) Ryder Scott Company,
L.P., (d) Netherland, Sewell & Associates, Inc. or (e) the Company’s internal
engineers, as set forth therein, and such reserves were prepared in accordance
with the Statement of Financial Accounting Standards No. 69 and Rule 4-10 of
Regulation S-X.

(pp) Independent Reserve Engineering Firm. Each of Lee Keeling and Associates,
Inc., Haas Petroleum Engineering Services Inc., Ryder Scott Company, L.P. and
Netherland, Sewell & Associates, Inc., who have certified the oil and gas
reserve estimates of the Company and its subsidiaries, has represented to the
Company that it is, and the Company believes each to be, an independent reserve
engineering firm with respect to the Company and its subsidiaries for the
periods set forth in the Registration Statement, the Time of Sale Information
and the Prospectus.

(qq) Federal Power Act. None of the Company or any of its subsidiaries is
subject to regulation as a “public utility company”, “public service company”,
“holding company” (or similar designation) by any governmental or regulatory
authority, including under the Federal Power Act, as amended (“FPA”) or any
applicable state utility laws.

 

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4. Further Agreements of the Company and the Guarantors. The Company and each of
the Guarantors jointly and severally covenant and agree with each Underwriter
that:

(a) Required Filings. The Company will file the final Prospectus with the
Commission within the time periods specified by Rule 424(b) and Rule 430A, 430B
or 430C under the Securities Act, will file any Issuer Free Writing Prospectus
(including the Term Sheet in the form of Annex C hereto) to the extent required
by Rule 433 under the Securities Act; and will file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Securities; and the Company will furnish copies of the Prospectus and each
Issuer Free Writing Prospectus (to the extent not previously delivered) to the
Underwriters in New York City prior to 10:00 A.M., New York City time, on the
business day next succeeding the date of this Agreement in such quantities as
the Representative may reasonably request. The Company will pay the registration
fees for this offering within the time period required by Rule 456(b)(1)(i)
under the Securities Act (without giving effect to the proviso therein) and in
any event prior to the Closing Date.

(b) Delivery of Copies. The Company will deliver, without charge, (i) to the
Representative, two copies of the signed Registration Statement as originally
filed and each amendment thereto, in each case including all exhibits and
consents filed therewith and documents incorporated by reference therein, and
(ii) make available to each Underwriter electronically through EDGAR (A) a
conformed copy of the Registration Statement as originally filed and each
amendment thereto, in each case including all exhibits and consents filed
therewith and (B) deliver, without charge, during the Prospectus Delivery Period
(as defined below), as many copies of the Prospectus (including all amendments
and supplements thereto and documents incorporated by reference therein) and
each Issuer Free Writing Prospectus as the Representative may reasonably
request. As used herein, the term “Prospectus Delivery Period” means such period
of time after the first date of the public offering of the Securities as in the
opinion of counsel for the Underwriters a prospectus relating to the Securities
is required by law to be delivered (or required to be delivered but for Rule 172
under the Securities Act) in connection with sales of the Securities by any
Underwriter or dealer.

(c) Amendments or Supplements; Issuer Free Writing Prospectuses. Prior to the
later of (i) the Closing Date or (ii) the expiration of the Prospectus Delivery
Period, before preparing, using, authorizing, approving, referring to or filing
any Issuer Free Writing Prospectus, and before filing any amendment or
supplement to the Registration Statement or the Prospectus, whether before or
after the time that the Registration Statement becomes effective the Company
will furnish to the Representative and counsel for the Underwriters a copy of
the proposed Issuer Free Writing Prospectus,

 

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amendment or supplement for review and will not prepare, use, authorize,
approve, refer to or file any such Issuer Free Writing Prospectus or file any
such proposed amendment or supplement to which the Representative reasonably
objects.

(d) Notice to the Representative. The Company will advise the Representative
promptly, and confirm such advice in writing, (i) when any amendment to the
Registration Statement filed prior to the later of (x) the Closing Date or
(y) the expiration of the Prospectus Delivery Period or otherwise relating to
the Securities has been filed or becomes effective; (ii) when any supplement to
the Prospectus or any amendment to the Prospectus or any Issuer Free Writing
Prospectus relating to the Securities has been filed; (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or the receipt of any comments from the
Commission relating to the Registration Statement or any other request by the
Commission for any additional information as of the later of (x) the Closing
Date or (y) the expiration of the Prospectus Delivery Period; (iv) of the
issuance by the Commission of any order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or the initiation or threatening of any proceeding
for that purpose or pursuant to Section 8A of the Securities Act; (v) of the
occurrence of any event within the Prospectus Delivery Period as a result of
which the Prospectus, the Time of Sale Information or any Issuer Free Writing
Prospectus as then amended or supplemented would include any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus, the Time of Sale Information or any
such Issuer Free Writing Prospectus is delivered to a purchaser, not misleading;
(vi) of the receipt by the Company of any notice of objection of the Commission
to the use of the Registration Statement or any post-effective amendment thereto
pursuant to Rule 401(g)(2) under the Securities Act; and (vii) of the receipt by
the Company of any notice with respect to any suspension of the qualification of
the Securities for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its
reasonable best efforts to prevent the issuance of any such order suspending the
effectiveness of the Registration Statement, preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or suspending any such
qualification of the Securities and, if any such order is issued, will use its
reasonable best efforts to obtain as soon as possible the withdrawal thereof.

(e) Time of Sale Information. If at any time prior to the Closing Date (i) any
event shall occur or condition shall exist as a result of which any of the Time
of Sale Information as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading or (ii) it is necessary to amend or
supplement the Time of Sale Information to comply with applicable law, the
Company will promptly notify the Underwriters thereof and forthwith prepare and,
subject to paragraph (c) above, file with the Commission (to the extent
required) and furnish to the Underwriters and to such dealers as the

 

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Representative may designate, such amendments or supplements to the Time of Sale
Information (or any document to be filed with the Commission and incorporated by
reference therein) as may be necessary so that the statements in any of the Time
of Sale Information as so amended or supplemented (including such documents to
be incorporated by reference therein) will not, in the light of the
circumstances under which they were made, be misleading or so that any of the
Time of Sale Information will comply with applicable law.

(f) Ongoing Compliance. If during the Prospectus Delivery Period (i) any event
shall occur or condition shall exist as a result of which the Prospectus as then
amended or supplemented would include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances existing
when the Prospectus is delivered to a purchaser, not misleading or (ii) it is
necessary to amend or supplement the Prospectus to comply with applicable law,
the Company will promptly notify the Underwriters thereof and forthwith prepare
and, subject to paragraph (c) above, file with the Commission and furnish to the
Underwriters and to such dealers as the Representative may designate, such
amendments or supplements to the Prospectus (or any document to be filed with
the Commission and incorporated by reference therein) as may be necessary so
that the statements in the Prospectus as so amended or supplemented including
such documents to be incorporated by reference therein will not, in the light of
the circumstances existing when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with applicable law.

(g) Blue Sky Compliance. The Company will qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and will continue such qualifications in
effect so long as required for distribution of the Securities; provided that the
Company shall not be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.

(h) Earning Statement. The Company will make generally available to its security
holders and the Representative as soon as practicable an earning statement that
satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder covering a period of at least twelve
months beginning with the first fiscal quarter of the Company occurring after
the “effective date” (as defined in Rule 158) of the Registration Statement.

(i) Clear Market. During the period from the date hereof through and including
the date that is 90 days after the date hereof, the Company will not, without
the prior written consent of the Representative, offer, sell, contract to sell
or otherwise dispose of any debt securities issued or guaranteed by the Company
and having a tenor of more than one year.

 

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(j) Use of Proceeds. The Company will apply the net proceeds from the sale of
the Securities as described in each of the Registration Statement, the Time of
Sale Information and the Prospectus under the heading “Use of proceeds”.

(k) No Stabilization. The Company will not take, directly or indirectly, any
action designed to or that could reasonably be expected to cause or result in
any stabilization or manipulation of the price of the Securities.

(l) Record Retention. The Company will, pursuant to reasonable procedures
developed in good faith, retain copies of each Issuer Free Writing Prospectus
that is not filed with the Commission in accordance with Rule 433 under the
Securities Act.

5. Certain Agreements of the Underwriters. Each Underwriter hereby represents
and agrees that

(a) It has not and will not use, authorize use of, refer to, or participate in
the planning for use of, any “free writing prospectus”, as defined in Rule 405
under the Securities Act (which term includes use of any written information
furnished to the Commission by the Company and not incorporated by reference
into the Registration Statement and any press release issued by the Company)
other than (i) a free writing prospectus that, solely as a result of use by such
Underwriter, would not trigger an obligation to file such free writing
prospectus with the Commission pursuant to Rule 433, (ii) any Issuer Free
Writing Prospectus listed on Annex B or prepared pursuant to Section 3(c) or
Section 4(c) above (including any electronic road show); or (iii) any free
writing prospectus prepared by such Underwriter and approved by the Company in
advance in writing (each such free writing prospectus referred to in clauses
(i) or (iii), an “Underwriter Free Writing Prospectus”). Notwithstanding the
foregoing, the Underwriters may use a term sheet substantially in the form of
Annex C hereto without the consent of the Company.

(b) It is not subject to any pending proceeding under Section 8A of the
Securities Act with respect to the offering (and will promptly notify the
Company if any such proceeding against it is initiated during the Prospectus
Delivery Period).

6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter
to purchase Securities on the Closing Date as provided herein is subject to the
performance by the Company and each of the Guarantors of their respective
covenants and other obligations hereunder and to the following additional
conditions:

(a) Registration Compliance; No Stop Order. No order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose, pursuant to Rule 401(g)(2) or pursuant to
Section 8A under the Securities Act shall be pending before or threatened by the
Commission; the Prospectus and each Issuer Free Writing Prospectus shall have
been timely filed with the Commission under the Securities Act (in the case of
an Issuer Free Writing

 

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Prospectus, to the extent required by Rule 433 under the Securities Act) and in
accordance with Section 4(a) hereof; and all requests by the Commission for
additional information shall have been complied with to the reasonable
satisfaction of the Representative.

(b) Representations and Warranties. The representations and warranties of the
Company and each of the Guarantors contained herein shall be true and correct on
the date hereof and on and as of the Closing Date; and the statements of the
Company and each of the Guarantors, and their respective officers made in any
certificates delivered pursuant to this Agreement shall be true and correct on
and as of the Closing Date.

(c) No Downgrade. Between the earlier of (A) the Time of Sale and (B) the
execution and delivery of this Agreement and the Closing Date, (i) no
downgrading shall have occurred in the rating accorded the Securities or any
other debt securities or preferred stock of or guaranteed by the Company or any
of the Guarantors by any “nationally recognized statistical rating
organization”, as such term is defined under Section 3(a)(62) of the Exchange
Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, or has changed its outlook with respect to, its
rating of the Securities or of any other debt securities or preferred stock of
or guaranteed by the Company or any of its subsidiaries (other than an
announcement with positive implications of a possible upgrading).

(d) No Material Adverse Change. No event or condition of a type described in
Section 3(g) hereof shall have occurred or become known between the time of
execution of this Agreement and the Closing Date, which event or condition is
not described in each of the Registration Statement, the Time of Sale
Information (excluding any amendment or supplement thereto) and the Prospectus
(excluding any amendment or supplement thereto) and the effect of which in the
judgment of the Representative is so material and adverse as to make it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Securities on the terms and in the manner contemplated by this Agreement,
the Registration Statement, the Time of Sale Information and the Prospectus.

(e) Officer’s Certificate. The Representative shall have received on and as of
the Closing Date a certificate of an executive officer of the Company and each
Guarantor who has specific knowledge of the Company’s or such Guarantor’s
financial matters and is satisfactory to the Representative (i) confirming that
such officer has carefully reviewed the Registration Statement, the Time of Sale
Information and the Prospectus and, to the knowledge of such officer, the
representations set forth in Sections 3(b) and 3(d) hereof are true and correct
as of the Closing Date, (ii) confirming that the other representations and
warranties of the Company and the Guarantors in this Agreement are true and
correct as of the Closing Date and that the Company and the Guarantors have
complied with all agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date and (iii) to
the effect set forth in paragraphs (a), (c) and (d) above.

 

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(f) Comfort Letters. On the date of this Agreement and on the Closing Date,
KPMG, LLP shall have furnished to the Representative, at the request of the
Company, letters with respect to each of the Company and its subsidiaries, the
Acquired Chesapeake Properties and TGGT, dated the respective dates of delivery
thereof and addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representative, containing statements and information of the
type customarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained
or incorporated by reference in each of the Registration Statement, the Time of
Sale Information and the Prospectus; provided that the letter delivered on the
Closing Date shall use a “cut-off” date no more than three business days prior
to the Closing Date.

(g) Opinion and 10b-5 Statement of Counsel for the Company. (i) Haynes and Boone
LLP, counsel for the Company, shall have furnished to the Representative, at the
request of the Company, their written opinion and 10b-5 Statement, dated the
Closing Date and addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representative, substantially to the effect set forth in
Annex D hereto and (ii) William L. Boeing, general counsel for the Company,
shall have furnished to the Representative, at the request of the Company, his
written opinion, dated the Closing Date and addressed to the Underwriters, in
form and substance reasonably satisfactory to the Representative, substantially
to the effect set forth in Annex E hereto.

(h) Opinion and 10b-5 Statement of Counsel for the Underwriters. The
Representative shall have received on and as of the Closing Date an opinion and
10b-5 Statement of Simpson Thacher & Bartlett LLP, counsel for the Underwriters,
with respect to such matters as the Representative may reasonably request, and
such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.

(i) No Legal Impediment to Issuance. No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any federal, state or foreign governmental or regulatory authority that would,
as of the Closing Date, prevent the issuance or sale of the Securities or the
issuance of the Guarantees; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing Date, prevent
the issuance or sale of the Securities or the issuance of the Guarantees.

(j) Good Standing. The Representative shall have received on and as of the
Closing Date satisfactory evidence of the good standing of the Company and the
Guarantors in their respective jurisdictions of organization and their good
standing in such other jurisdictions as the Representative may reasonably
request, in each case in writing or any standard form of telecommunication from
the appropriate governmental authorities of such jurisdictions.

 

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(k) Reserve Report Confirmation Letters. On the date of this Agreement and on
the Closing Date, Lee Keeling and Associates, Inc., Haas Petroleum Engineering
Services Inc., Ryder Scott Company, L.P. and Netherland, Sewell & Associates,
Inc., each shall have furnished to the Representative, at the request of the
Company, letters, dated the respective dates of delivery thereof and addressed
to the Underwriters, in form and substance reasonably satisfactory to the
Representative, containing statements and information with respect to the
estimated oil and gas reserves of the Company and its subsidiaries contained in
the Registration Statement, the Time of Sale Information and the Prospectus.

(l) Chief Financial Officer Certificate. The Representative shall have received
on and as of the Closing Date a certificate of the chief financial officer of
the Company confirming that (i) he is familiar with the books and records and
internal accounting practices, policies, procedures and controls of the Company
and has had responsibility for accounting matters with respect to the Company,
(ii) he has reviewed the identified information, which is included in the
Registration Statement, the Time of Sale Information and the Prospectus and
which has not been otherwise reviewed by KPMG, LLP, the Company’s independent
registered public accounting firm, and (iii) attesting to the accuracy of the
identified information in all material respects.

(m) New Borrowing Base Notice. On or prior to the Closing Date, the Company
shall have received the New Borrowing Base Notice (as defined in the Credit
Agreement) setting forth the redetermined Borrowing Base (as defined in the
Credit Agreement) in an amount of no less than $1.0 billion (such amount to be
further and automatically reduced on the Closing Date by $125.0 million as a
result of the issuance of the Securities).

(n) DTC. The Securities shall be eligible for clearance and settlement through
DTC.

(o) Third Supplemental Indenture and Securities. The Third Supplemental
Indenture shall have been duly executed and delivered by a duly authorized
officer of the Company, each of the Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by a duly authorized
officer of the Company and duly authenticated by the Trustee.

(p) Additional Documents. On or prior to the Closing Date, the Company and the
Guarantors shall have furnished to the Representative such further certificates
and documents as the Representative may reasonably request.

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

 

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7. Indemnification and Contribution.

(a) Indemnification of the Underwriters. The Company and each of the Guarantors
jointly and severally agree to indemnify and hold harmless each Underwriter, its
affiliates, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, reasonable legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim
asserted, as such fees and expenses are incurred), joint or several, that arise
out of, or are based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, not
misleading, (ii) or any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or supplement
thereto), any Issuer Free Writing Prospectus or any Time of Sale Information, or
caused by any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case except
insofar as such losses, claims, damages or liabilities arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to any Underwriter furnished to the Company in writing by such Underwriter
through the Representative expressly for use therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in subsection (b) below.

The Company and each of the Guarantors also jointly and severally agree to
indemnify and hold harmless Capital One Securities, Inc., its affiliates,
directors and officers and each person, if any, who controls Capital One
Securities, Inc. within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities incurred as a result of Capital One Securities, Inc.’s
participation as a “qualified independent underwriter” within the meaning of
Rule 5121 of FINRA in connection with the offering of the Securities.

(b) Indemnification of the Company and the Guarantors. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, each of
the Guarantors, and each of their respective directors, their respective
officers who signed the Registration Statement and each person, if any, who
controls the Company or any of the Guarantors within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the indemnity set forth in paragraph (a) above, but only with respect to any
losses, claims, damages or liabilities that arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Representative expressly for use in the Registration Statement, the Prospectus
(or any amendment or supplement thereto), any Issuer Free Writing Prospectus or
any Time of Sale Information, it being understood and agreed that the only such
information furnished by any Underwriter consists of the following: the second
and third sentences concerning discounts and commissions under the third
paragraph, the third sentence certain market making activities of the ninth
paragraph, and the tenth paragraph concerning certain stabilization transactions
under the heading “Underwriting”.

 

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(c) Notice and Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the “Indemnified
Person”) shall promptly notify the person against whom such indemnification may
be sought (the “Indemnifying Person”) in writing; provided that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under paragraph (a) or (b) of this Section 7 except to the extent that
it has been materially prejudiced (through the forfeiture of substantive rights
or defenses) by such failure; and provided, further, that the failure to notify
the Indemnifying Person shall not relieve it from any liability that it may have
to an Indemnified Person otherwise than under paragraph (a) or (b) of this
Section 7. If any such proceeding shall be brought or asserted against an
Indemnified Person and it shall have notified the Indemnifying Person thereof,
the Indemnifying Person shall retain counsel reasonably satisfactory to the
Indemnified Person (who shall not, without the consent of the Indemnified
Person, be counsel to the Indemnifying Person) to represent the Indemnified
Person and any others entitled to indemnification pursuant to Section 7 that the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such proceeding and shall pay the fees and expenses of counsel
related to such proceeding, as incurred. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless
(i) the Indemnifying Person and the Indemnified Person shall have mutually
agreed to the contrary; (ii) the Indemnifying Person has failed within a
reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named parties in any
such proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interest
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred, provided,
however that if indemnity may be sought pursuant to the second paragraph of
Section 7(a) above in respect of such proceeding, then in addition to such
separate firm of the Underwriters, their affiliates and such control persons of
the Underwriters, the indemnifying party shall be liable for the fees and
expenses of not more than one separate firm (in addition to any local counsel)
for Capital One Securities, Inc. in its capacity as a “qualified independent
underwriter,” its affiliates, directors, officers and all persons, if any, who
control Capital One Securities, Inc. within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act. Any such separate firm for
any Underwriter, its affiliates, directors and officers and any control persons
of such Underwriter shall be designated in writing by J.P. Morgan Securities LLC
and any such separate firm for the Company, the Guarantors, their respective
directors, their respective officers who signed the Registration Statement and
any control persons of the Company shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
that an Indemnifying Person reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by this paragraph, the Indemnifying Person
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by the Indemnifying Person of such request and (ii) the Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance

 

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with such request prior to the date of such settlement. No Indemnifying Person
shall, without the written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have
been sought hereunder by such Indemnified Person, unless such settlement
(x) includes an unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (y) does not
include any statement as to or any admission of fault, culpability or a failure
to act by or on behalf of any Indemnified Person.

(d) Contribution. If the indemnification provided for in paragraphs (a) and
(b) above is unavailable to an Indemnified Person or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Underwriters or Capital One Securities, Inc. in its capacity as a “qualified
independent underwriter”, as the case may be, on the other from the offering of
the Securities or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault of the
Company and the Guarantors on the one hand and the Underwriters or Capital One
Securities, Inc. in its capacity as a “qualified independent underwriter”, as
the case may be, on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Guarantors on the one hand and the Underwriters or Capital One
Securities, Inc. in its capacity as a “qualified independent underwriter”, as
the case may be, on the other shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the
Company from the sale of the Securities and the total underwriting discounts and
commissions received by the Underwriters in connection therewith, in each case
as set forth in the table on the cover of the Prospectus, or the fee to be
received by Capital One Securities, Inc. in its capacity as a “qualified
independent underwriter”, as the case may be, bear to the aggregate offering
price of the Securities. The relative fault of the Company and the Guarantors on
the one hand and the Underwriters or Capital One Securities, Inc. in its
capacity as a “qualified independent underwriter”, as the case may be, on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or any Guarantor or by the Underwriters or Capital One Securities, Inc. in its
capacity as a “qualified independent underwriter”, as the case may be, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

(e) Limitation on Liability. The Company, the Guarantors and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. Notwithstanding the

 

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provisions of this Section 7, in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect to the
offering of the Securities exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’ obligations to
contribute pursuant to this Section 7 are several in proportion to their
respective purchase obligations hereunder and not joint.

(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies that may otherwise be
available to any Indemnified Person at law or in equity.

8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.

9. Termination. This Agreement may be terminated in the absolute discretion of
the Representative, by notice to the Company, if after the execution and
delivery of this Agreement and on or prior to the Closing Date (i) trading of
securities generally shall have been suspended or materially limited on the New
York Stock Exchange or the over-the-counter market; (ii) trading of any
securities issued or guaranteed by the Company or any of the Guarantors shall
have been suspended on any exchange or in any over-the-counter market; (iii) a
general moratorium on commercial banking activities shall have been declared by
federal or New York State authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that, in the
judgment of the Representative, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Securities on the terms and in the manner contemplated by this Agreement,
the Time of Sale Information and the Prospectus.

10. Defaulting Underwriter. (a) If, on the Closing Date, any Underwriter
defaults on its obligation to purchase the Securities that it has agreed to
purchase hereunder, the non-defaulting Underwriters may in their discretion
arrange for the purchase of such Securities by other persons satisfactory to the
Company on the terms contained in this Agreement. If, within 36 hours after any
such default by any Underwriter, the non-defaulting Underwriters do not arrange
for the purchase of such Securities, then the Company shall be entitled to a
further period of 36 hours within which to procure other persons satisfactory to
the non-defaulting Underwriters to purchase such Securities on such terms. If
other persons become obligated or agree to purchase the Securities of a
defaulting Underwriter, either the non-defaulting Underwriters or the Company
may postpone the Closing Date for up to five full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Underwriters may be necessary in the Registration Statement, the Time of
Sale

 

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Information and the Prospectus or in any other document or arrangement, and the
Company agrees to promptly prepare any amendment or supplement to the
Registration Statement, the Time of Sale Information and the Prospectus that
effects any such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise
requires, any person not listed in Schedule 1 hereto that, pursuant to this
Section 10, purchases Securities that a defaulting Underwriter agreed but failed
to purchase.

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

(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
principal amount of such Securities that remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities, or if the
Company shall not exercise the right described in paragraph (b) above, then this
Agreement shall terminate without liability on the part of the non-defaulting
Underwriters. Any termination of this Agreement pursuant to this Section 10
shall be without liability on the part of the Company, except that the Company
will continue to be liable for the payment of expenses as set forth in
Section 11 hereof and except that the provisions of Section 7 hereof shall not
terminate and shall remain in effect.

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

11. Payment of Expenses. (a) Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Company and
each of the Guarantors jointly and severally agree to pay or cause to be paid
all costs and expenses incident to the performance of their respective
obligations hereunder, including without limitation, (i) the costs incident to
the authorization, issuance, sale, preparation and delivery of the Securities
and any taxes payable in that connection; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any
Time of Sale Information and the Prospectus (including all exhibits, amendments
and supplements thereto) and the distribution thereof; (iii) the costs of
reproducing and distributing each of the Transaction Documents; (iv) the fees

 

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and expenses of the Company’s and the Guarantors’ counsel and independent
accountants; (v) the fees and expenses incurred in connection with the
registration or qualification and determination of eligibility for investment of
the Securities under the laws of such jurisdictions as the Representative may
designate and the preparation, printing and distribution of a Blue Sky
Memorandum (including the related fees and expenses of counsel for the
Underwriters); (vi) any fees charged by rating agencies for rating the
Securities; (vii) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (viii) all
expenses and application fees incurred in connection with any filing with, and
clearance of the offering by, the Financial Industry Regulatory Authority, Inc.;
and (ix) all expenses incurred by the Company in connection with any “road show”
presentation to potential investors.

(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the Company
for any reason fails to tender the Securities for delivery to the Underwriters
or (iii) the Underwriters decline to purchase the Securities for any reason
permitted under this Agreement, the Company and each of the Guarantors jointly
and severally agree to reimburse the Underwriters for all out-of-pocket costs
and expenses (including the reasonable fees and expenses of their counsel)
reasonably incurred by the Underwriters in connection with this Agreement and
the offering contemplated hereby.

12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and any controlling persons referred
to herein, and the affiliates of each Underwriter referred to in Section 7
hereof. Nothing in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein. No purchaser of Securities
from any Underwriter shall be deemed to be a successor merely by reason of such
purchase.

13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Guarantors and
the Underwriters contained in this Agreement or made by or on behalf of the
Company, the Guarantors or the Underwriters pursuant to this Agreement or any
certificate delivered pursuant hereto shall survive the delivery of and payment
for the Securities and shall remain in full force and effect, regardless of any
termination of this Agreement or any investigation made by or on behalf of the
Company or the Underwriters.

14. Certain Defined Terms. For purposes of this Agreement, (a) except where
otherwise expressly provided, the term “affiliate” has the meaning set forth in
Rule 405 under the Securities Act; (b) the term “business day” means any day
other than a day on which banks are permitted or required to be closed in New
York City; and (c) the term “subsidiary” has the meaning set forth in Rule 405
under the Securities Act. For the avoidance of doubt, the term “subsidiary”
shall exclude the Joint Ventures.

 

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

16. Miscellaneous. (a) Authority of the Representative. Any action by the
Underwriters hereunder may be taken by J.P. Morgan Securities LLC on behalf of
the Underwriters, and any such action taken by J.P. Morgan Securities LLC shall
be binding upon the Underwriters.

(b) Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Underwriters
shall be given to the Representative c/o J.P. Morgan Securities LLC, 383 Madison
Avenue, New York, New York 10179 (fax: (212)-270-1063); Attention: Lawrence
Landry. Notices to the Company and Guarantors shall be given to it at 12377
Merit Drive, Suite 1700, Dallas, Texas 75251, (fax: (214) 706-3409); Attention:
William L. Boeing, Vice President, General Counsel and Secretary.

(c) Governing Law. This Agreement and any claim, controversy, or dispute arising
under or related to this Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles other than Sections 5-1401 and 5-1402 of the New York General
Obligation Law that would require the application of the law of any other state.

Service of any process, summons, notice or document by mail to such party’s
address set forth above shall be effective service of process for any suit,
action or other proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby that directly relate to the offering of the
Securities brought in any court of competent jurisdiction.

The Company and the Guarantors further agree that nothing herein shall affect
the Representative’s rights to effect service of process in any other manner
permitted by law or to bring a suit, action or proceeding (including a
proceeding for enforcement of a judgment) in any other court or jurisdiction in
accordance with applicable law.

(d) Submission to Jurisdiction. The Company and each of the Guarantors hereby
submit to the exclusive jurisdiction of the U.S. federal and New York state
courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company and each of the Guarantors waive any objection
which it may now or hereafter have to the laying of venue of any such suit or
proceeding in such courts. Each of the Company and each of the Guarantors agrees
that a final judgment in any such suit, action or proceeding brought in such
court shall be conclusive and binding upon the Company and each Guarantor, as
applicable, and may be enforced in any court to the jurisdiction of which
Company and each Guarantor, as applicable, is subject by a suit upon such
judgment.

 

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(e) Waiver of Jury Trial. Each of the parties hereto hereby waives any right to
trial by jury in any suit or proceeding arising out of or relating to this
Agreement.

(f) Counterparts. This Agreement may be signed in counterparts (which may
include counterparts delivered by any standard form of telecommunication), each
of which shall be an original and all of which together shall constitute one and
the same instrument.

(g) Amendments or Waivers. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.

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

 

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If the foregoing is in accordance with your understanding, please indicate your
acceptance of this Agreement by signing in the space provided below.

 

Very truly yours, EXCO RESOURCES, INC. By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO SERVICES, INC. By:  

/s/ William L. Boeing_

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO PARTNERS GP, LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO GP PARTNERS OLD, LP

By: EXCO PARTNERS GP, LLC

Its: General Partner

By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary

[Underwriting Agreement Signature Page]

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

EXCO PARTNERS OLP GP, LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO OPERATING COMPANY, LP By: EXCO PARTNERS OLP GP, LLC Its: General Partner
By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO MIDCONTINENT MLP, LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO HOLDING (PA), INC. By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO PRODUCTION COMPANY (PA), LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary

 

[Underwriting Agreement Signature Page]

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EXCO PRODUCTION COMPANY (WV), LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO EQUIPMENT LEASING, LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO RESOURCES (XA), LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO LAND COMPANY, LLC By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary
EXCO HOLDING MLP, INC. By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel and Secretary

 

[Underwriting Agreement Signature Page]

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Accepted: April 11, 2014 J.P. MORGAN SECURITIES LLC For itself and on behalf of
the several Underwriters listed in Schedule 1 hereto. By:  

/s/ Larry Landry

  Authorized Signatory

 

[Underwriting Agreement Signature Page]

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Schedule 1

 

Underwriter

   Principal Amount  

J.P. Morgan Securities LLC

   $ 155,000,000   

Wells Fargo Securities, LLC

     80,000,000   

Merrill Lynch, Pierce, Fenner & Smith Incorporated

     62,500,000   

BMO Capital Markets Corp.

     62,500,000   

Credit Suisse Securities (USA) LLC

     25,000,000   

ING Financial Markets LLC

     25,000,000   

UBS Securities LLC

     25,000,000   

Natixis Securities Americas LLC

     25,000,000   

Capital One Securities, Inc.

     10,000,000   

CIT Capital Securities LLC

     10,000,000   

Deutsche Bank Securities Inc.

     10,000,000   

Goldman, Sachs & Co.

     10,000,000      

 

 

 

Total

   $ 500,000,000   

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Schedule 2

Guarantors

EXCO Services, Inc.

EXCO Partners GP, LLC

EXCO GP Partners Old, LP

EXCO Partners OLP GP, LLC

EXCO Operating Company, LP

EXCO Midcontinent MLP, LLC

EXCO Holding (PA), Inc.

EXCO Production Company (PA), LLC

EXCO Production Company (WV), LLC

EXCO Equipment Leasing, LLC

EXCO Resources (XA), LLC

EXCO Land Company, LLC

EXCO Holding MLP, Inc.

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Schedule 3

Subsidiaries

EXCO Services, Inc.

EXCO Equipment Leasing, LLC

EXCO Partners GP, LLC

EXCO GP Partners Old, LP

EXCO Partners OLP GP, LLC

EXCO Operating Company, LP

EXCO Midcontinent MLP, LLC

EXCO Holding (PA), Inc.

EXCO Production Company (PA), LLC

EXCO Production Company (WV), LLC

EXCO Resources (XA), LLC

Black Bear Gathering, LLC

EXCO Land Company, LLC

EXCO Holding MLP, Inc.

Joint Ventures

EBG Resources, LLC

EXCO Resources (PA), LLC

Appalachia Midstream, LLC

Bonchasse Land Company, LLC

PCMWL, LLC

Moran Minerals, L.L.C.

Moran Land Company, L.L.C.

EXCO/HGI GP, LLC

EXCO/HGI Production Partners, LP

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Annex B

Time of Sale Information

Final pricing term sheet substantially in the form of Annex C attached hereto.

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Annex C

Issuer Free Writing Prospectus dated April 11, 2014

Filed pursuant to Rule 433 under the Securities Act of 1933

Supplementing the preliminary prospectus supplement dated April 8, 2014 to the
prospectus, dated April 8, 2014

Registration Statement on Form S-3 (File No. 333-195126)

Pricing Term Sheet

EXCO Resources, Inc.

$500,000,000

8.500% Senior Notes due 2022

This pricing term sheet supplements the preliminary prospectus supplement dated
April 8, 2014 to the prospectus dated April 8, 2014 (together, the “Preliminary
Prospectus”) of EXCO Resources, Inc. This pricing term sheet relates only to the
securities described below and is qualified in its entirety by reference to the
Preliminary Prospectus. Terms used and not defined herein have the meanings
assigned in the Preliminary Prospectus.

 

Issuer:    EXCO Resources, Inc. Security description:    8.500% Senior Notes due
2022 Distribution:    SEC Registered Offering size:    $500,000,000 Gross
proceeds:    $500,000,000 Net proceeds (before expenses):    $491,250,000
Maturity date:    April 15, 2022 Coupon:    8.500% Interest Payment Dates:   
April 15 and October 15, beginning on October 15, 2014. Interest will accrue
from April 16, 2014. Price:    100.000% of principal amount Yield to maturity:
   8.500% Spread to Benchmark Treasury:    +611 basis points Benchmark Treasury:
   UST 1.75% due May 15, 2022 Equity Clawback:    Up to 35% at 108.500% plus
accrued and unpaid interest Until:    April 15, 2017

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Optional redemption:    On and after April 15, 2017, at the prices set forth
below (expressed as percentages of the principal amount), plus accrued and
unpaid interest:     

Year

  

Percentage

   2017    106.375%    2018    104.250%    2019    102.125%    2020 and
thereafter    100.000% Make-whole call:    T+50 bps prior to April 15, 2017
Change of control:    Putable at 101% of principal plus accrued and unpaid
interest Trade date:    April 11, 2014 Settlement:    T+3; April 16, 2014 CUSIP
number:    269279 AE5 ISIN number:    US269279AE58 Denominations/Multiple:   
$2,000 x $1,000 Joint Book-Running Managers:    J.P. Morgan Securities LLC   

Wells Fargo Securities, LLC

Merrill Lynch, Pierce, Fenner & Smith Incorporated

BMO Capital Markets Corp.

Senior Co-Managers:   

Credit Suisse Securities (USA) LLC

ING Financial Markets LLC

UBS Securities LLC

Natixis Securities Americas LLC

Co-Managers:   

Capital One Securities, Inc.

CIT Capital Securities LLC

Deutsche Bank Securities Inc.

Goldman, Sachs & Co.

CHANGES TO THE PRELIMINARY PROSPECTUS

Ratio of earnings to fixed charges

For the year ended December 31, 2013, the Issuer’s pro forma ratio of earnings
to fixed charges would have been 1.2x, after giving effect to the completion of
the offering and the application of the net proceeds therefrom.

Increase in principal amount offered

The Issuer has increased the size of the offering such that the principal amount
of the notes offered has increased from $400.0 million aggregate principal
amount to $500.0 million aggregate principal amount.

All figures presented as giving effect to the offering, including net proceeds
from the offering, cash and cash equivalents, long-term debt and total
capitalization are adjusted accordingly to give effect to the increase in the
offering size and an assumed use of the net proceeds to repay the term loan and
a portion of the revolving commitment under the EXCO Resources Credit Agreement.

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The Issuer estimates that the proceeds from this offering, after deducting
estimated discounts to the underwriters and offering fees and expenses, will be
approximately $490.0 million.

As of March 31, 2014, after giving effect to the completion of the offering and
the application of the net proceeds therefrom and the expected borrowing base
redetermination, the borrowing base under the EXCO Resources Credit Agreement
would have been $875.0 million.

After giving effect to the completion of this offering and the application of
net proceeds therefrom and the expected borrowing base redetermination, as of
March 31, 2014, the Issuer would have had approximately $1.4 billion of total
indebtedness (including the notes), of which:

 

  •   the Issuer would have had approximately $1.3 billion of unsecured
indebtedness (including the notes), which would have ranked equally with the
notes; and

 

  •   the Issuer would have had approximately $183.7 million of secured
indebtedness under the EXCO Resources Credit Agreement to which the notes will
be effectively subordinated, excluding $6.9 million of outstanding letters of
credit, and the Issuer would have had total unused availability of approximately
$684.4 million under the EXCO Resources Credit Agreement.

Capitalization

As of December 31, 2013, on an as further adjusted basis to reflect the
completion of this offering and the application of net proceeds therefrom:

 

  •   the Issuer’s cash and cash equivalents would have been $66.5 million;

 

  •   the Issuer’s total long-term debt would have been $1.5 billion; and

 

  •   the Issuer’s total capitalization would have been $1.9 billion.

Variable rate indebtedness and interest rate risk

As of March 31, 2014, after giving effect to the completion of the offering and
the application of the use of proceeds therefrom, the Issuer expects that its
total interest expense, excluding amortization of deferred financing costs and
its proportionate share of interest expense for the EXCO/HGI Partnership, on an
annual basis based on currently available interest rates would change by
approximately $1.8 million for every 1% change in interest rates.

Description of the notes

The following changes are being made to the “Description of the notes” section
of the preliminary prospectus supplement:

Certain covenants—Restricted Payments

On p. 69, the disclosure is amended by deleting the following text “; plus
(E) $500.0 million” and inserting a period at the end of clause (D) on p. S-68.

The foregoing sentence on page S-69 (and elsewhere in the preliminary prospectus
supplement where similar information appears) is hereby amended as follows:

“As of December 31, 2013, the total amount available under the foregoing clause
(3) would have been approximately $197.5 million, or approximately $470.5
million after giving effect to the Rights Offering.”

Correlative changes to relevant sections of the Preliminary Prospectus are
hereby deemed made in a manner consistent with the foregoing.

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The Issuer has filed a registration statement (including a prospectus) with the
SEC for the offering to which this communication relates. Before you invest, you
should read the prospectus in that registration statement, the preliminary
prospectus supplement and other documents the Issuer has filed with the SEC for
more complete information about the Issuer and this offering. You may get these
documents for free by visiting EDGAR on the SEC Web site at www.sec.gov.
Alternatively, the Issuer, any underwriter or any dealer participating in the
offering will arrange to send you the prospectus if you request it by calling
toll-free 1-800-245-8812.

This communication should be read in conjunction with the preliminary prospectus
supplement, dated April 8, 2014, and the accompanying prospectus, dated April 8,
2014.

Any disclaimer or other notice that may appear below is not applicable to this
communication and should be disregarded. Such disclaimer or notice was
automatically generated as a result of this communication being sent by
Bloomberg or another email system.