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Exhibit 10.2

EXECUTION COPY

SECOND LIEN TERM LOAN AGREEMENT

DATED AS OF
NOVEMBER 23, 2004

AMONG

PETROHAWK ENERGY CORPORATION,
AS BORROWER,

BNP PARIBAS,
AS ADMINISTRATIVE AGENT,

AND

THE LENDERS PARTY HERETO

LEAD ARRANGER AND SOLE BOOKRUNNER

BNP PARIBAS

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TABLE OF CONTENTS

 
   
  Page

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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS    
Section 1.01
 
Terms Defined Above
 
1 Section 1.02   Certain Defined Terms   1 Section 1.03   Terms Generally; Rules
of Construction   17 Section 1.04   Accounting Terms and Determinations; GAAP  
18
ARTICLE II
THE LOANS
 
 
Section 2.01
 
Term Loans
 
18 Section 2.02   Loans   18 Section 2.03   Requests for the Loans   19 Section
2.04   Interest Elections   19 Section 2.05   Funding the Loans   20 Section
2.06   Termination   21 Section 2.07   Total PV   21 Section 2.08  
Subordination of Loans   22
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
 
 
Section 3.01
 
Repayment of the Loans
 
22 Section 3.02   Interest   22 Section 3.03   Alternate Rate of Interest   23
Section 3.04   Prepayments   23 Section 3.05   Fees   24
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
 
 
Section 4.01
 
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
 
24 Section 4.02   Presumption of Payment by the Borrower   25 Section 4.03  
Certain Deductions by the Administrative Agent   25 Section 4.04   Disposition
of Proceeds   25
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
 
 
Section 5.01
 
Increased Costs
 
26 Section 5.02   Break Funding Payments   27 Section 5.03   Taxes   27 Section
5.04   Mitigation Obligations; Replacement of Lenders   28 Section 5.05  
Illegality   28
ARTICLE VI
CONDITIONS PRECEDENT
 
 
Section 6.01
 
Effective Date
 
29 Section 6.02   Each Credit Event   32          

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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
 
 
Section 7.01
 
Organization; Powers
 
32 Section 7.02   Authority; Enforceability   32 Section 7.03   Approvals; No
Conflicts   39 Section 7.04   Financial Condition; No Material Adverse Change  
33 Section 7.05   Litigation   34 Section 7.06   Environmental Matters   34
Section 7.07   Compliance with the Laws and Agreements; No Defaults   35 Section
7.08   Investment Company Act   35 Section 7.09   Public Utility Holding Company
Act   35 Section 7.10   Taxes   35 Section 7.11   ERISA   35 Section 7.12  
Disclosure; No Material Misstatements   36 Section 7.13   Insurance   37 Section
7.14   Restriction on Liens   37 Section 7.15   Subsidiaries   37 Section 7.16  
Location of Business and Offices   37 Section 7.17   Properties; Titles, Etc  
37 Section 7.18   Maintenance of Properties   38 Section 7.19   Gas Imbalances,
Prepayments   39 Section 7.20   Marketing of Production   39 Section 7.21   Swap
Agreements   39 Section 7.22   Use of Proceeds   39 Section 7.23   Solvency   39
Section 7.24   Senior Indebtedness   39 Section 7.25   Mergers   40
ARTICLE VIII
AFFIRMATIVE COVENANTS
 
 
Section 8.01
 
Financial Statements; Ratings Change; Other Information
 
40 Section 8.02   Notices of Material Events   43 Section 8.03   Existence;
Conduct of Business   43 Section 8.04   Payment of Obligations   44 Section 8.05
  Performance of Obligations under Loan Documents   44 Section 8.06   Operation
and Maintenance of Properties   44 Section 8.07   Insurance   45 Section 8.08  
Books and Records; Inspection Rights   45 Section 8.09   Compliance with Laws  
45 Section 8.10   Environmental Matters   45 Section 8.11   Further Assurances  
46 Section 8.12   Reserve Reports   46 Section 8.13   Title Information   47
Section 8.14   Additional Collateral; Additional Guarantors   48 Section 8.15  
ERISA Compliance   48 Section 8.16   Swap Agreements   49 Section 8.17  
Unrestricted Subsidiaries   49 Section 8.18   Marketing Activities   49        
 

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ARTICLE IX
NEGATIVE COVENANTS
 
 
Section 9.01
 
Financial Covenants
 
50 Section 9.02   Debt   50 Section 9.03   Liens   51 Section 9.04   Dividends,
Distributions and Redemptions, Repayment of Senior Subordinated Convertible Note
  51 Section 9.05   Investments, Loans and Advances   52 Section 9.06  
Designation and Conversion of Restricted and Unrestricted Subsidiaries; Debt of
Unrestricted Subsidiaries   53 Section 9.07   Nature of Business; International
Operations   54 Section 9.08   Limitation on Leases   54 Section 9.09   Proceeds
of Notes   54 Section 9.10   ERISA Compliance   54 Section 9.11   Sale or
Discount of Receivables   55 Section 9.12   Mergers, Etc   55 Section 9.13  
Sale of Properties   55 Section 9.14   Environmental Matters   56 Section 9.15  
Transactions with Affiliates   56 Section 9.16   Subsidiaries   57 Section 9.17
  Negative Pledge Agreements; Dividend Restrictions   57 Section 9.18   Gas
Imbalances, Take-or-Pay or Other Prepayments   57 Section 9.19   Swap Agreements
  57 Section 9.20   Merger Documents   57 Section 9.21   Anti-Layering   57
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
 
 
Section 10.01
 
Events of Default
 
58 Section 10.02   Remedies   59
ARTICLE XI
THE ADMINISTRATIVE AGENT
 
 
Section 11.01
 
Appointment; Powers
 
60 Section 11.02   Duties and Obligations of Administrative Agent   60 Section
11.03   Action by Administrative Agent   61 Section 11.04   Reliance by
Administrative Agent   61 Section 11.05   Subagents   61 Section 11.06  
Resignation or Removal of Administrative Agent   62 Section 11.07  
Administrative Agent as a Lender   62 Section 11.08   No Reliance   62 Section
11.09   Authority of Administrative Agent to Release Collateral and Liens   63
Section 11.10   The Arranger   63
ARTICLE XII
MISCELLANEOUS
 
 
Section 12.01
 
Notices
 
63 Section 12.02   Waivers; Amendments   63 Section 12.03   Expenses, Indemnity;
Damage Waiver.   64          

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Section 12.04   Successors and Assigns   66 Section 12.05   Survival; Revival;
Reinstatement   69 Section 12.06   Counterparts; Integration; Effectiveness   69
Section 12.07   Severability   70 Section 12.08   Right of Setoff   70 Section
12.09   GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS   70 Section
12.10   Headings   71 Section 12.11   Confidentiality   71 Section 12.12  
Interest Rate Limitation   72 Section 12.13   EXCULPATION PROVISIONS   72
Section 12.14   No Third Party Beneficiaries   73 Section 12.15   USA Patriot
Act Notice   87

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ANNEXES, EXHIBITS AND SCHEDULES

Annex I   Commitments Annex II   Terms of Subordination
Exhibit A
 
Form of Note Exhibit B   Form of Borrowing Request Exhibit C   Form of Interest
Election Request Exhibit D   Form of Compliance Certificate Exhibit E-1   Form
of Legal Opinion of Hinkle Elkouri Law Firm L.L.C., special counsel to the
Borrower Exhibit E-2   Form of Legal Opinion of Local Counsel Exhibit F-1  
Security Instruments Exhibit F-2   Form of Guaranty and Collateral Agreement
Exhibit G   Form of Assignment and Assumption
Schedule 7.05
 
Litigation Schedule 7.15   Subsidiaries and Partnerships; Unrestricted
Subsidiaries Schedule 7.19   Gas Imbalances Schedule 7.20   Marketing Contracts
Schedule 7.21   Swap Agreements Schedule 9.05   Investments

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        THIS SECOND LIEN TERM LOAN AGREEMENT dated as of November 23, 2004, is
among: Petrohawk Energy Corporation, a corporation duly formed and existing
under the laws of the State of Delaware (the "Borrower"); each of the Lenders
from time to time party hereto; BNP Paribas (in its individual capacity, "BNP
Paribas"), as administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the "Administrative Agent").

R E C I T A L S

        A.    The Borrower has requested that the Lenders provide a $50,000,000
second lien term loan to the Borrower.

        B.    The Lenders have severally agreed to make such loan subject to the
terms and conditions of this Agreement.

        C.    In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:

ARTICLE I
Definitions and Accounting Matters

        Section 1.01    Terms Defined Above.    As used in this Agreement, each
term defined above has the meaning indicated above.

        Section 1.02    Certain Defined Terms.    As used in this Agreement, the
following terms have the meanings specified below:

        "ABR", when used in reference to any Tranche, refers to whether such
Tranche is bearing interest at a rate determined by reference to the Alternate
Base Rate.

        "Adjusted LIBO Rate" means, with respect to any Eurodollar Tranche for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

        "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

        "Affected Tranche" has the meaning assigned such term in Section 5.05.

        "Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

        "Agreement" means this Second Lien Term Loan Agreement, as the same may
from time to time be amended, modified, supplemented or restated.

        "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

        "Applicable Margin" means (a) with respect to each Eurodollar Tranche, a
rate per annum equal to 4.0%, which rate shall increase by 0.25% per annum on
the nineteenth (19th) day of each February, May, August and November after the
Effective Date, commencing February 19, 2005, until such rate per annum is equal
to 5.0%; and thereafter a rate equal to 5.0%; and (b) with respect to each ABR
Tranche, a rate per annum equal to 3.0%, which rate shall increase by 0.25% per
annum on the nineteenth (19th) day of each February, May, August and November
after the Effective Date, commencing February 19, 2005, until such rate per
annum is equal to 4.0%; and thereafter a rate equal to 4.0%.

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        "Approved Counterparty" means (a) any Lender or any Affiliate of a
Lender or (b) any other Person whose long term senior unsecured debt rating is
A/A2 by S&P or Moody's (or their equivalent) or higher.

        "Approved Fund" means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

        "Approved Petroleum Engineers" means Netherland, Sewell &
Associates, Inc., and any other independent petroleum engineers reasonably
acceptable to the Administrative Agent.

        "Arranger" means BNP Paribas, in its capacity as the lead arranger and
sole bookrunner hereunder.

        "Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit G or any other form approved by the Administrative Agent.

        "Board" means the Board of Governors of the Federal Reserve System of
the United States of America or any successor Governmental Authority.

        "Borrowing Request" means the request by the Borrower for the Loans in
accordance with Section 2.03.

        "Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City or Houston, Texas are authorized or
required by law to remain closed; and if such day relates to a Tranche or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Tranche or a
notice by the Borrower with respect to any such Tranche or continuation,
payment, prepayment, conversion or Interest Period, any day which is also a day
on which dealings in dollar deposits are carried out in the London interbank
market.

        "Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.

        "Cash Equivalent" means cash held in US dollars and all Investments of
the type identified in Section 9.05(c).

        "Casualty Event" means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Restricted
Subsidiaries having a fair market value in excess of $250,000.

        "Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof) other than the Permitted Holders, of
Equity Interests representing more than 35% of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests of the
Borrower, (b) occupation of a majority of the seats (other than vacant seats) on
the board of directors of the Borrower by Persons who were neither (i) nominated
by the board of directors of the Borrower nor (ii) appointed by directors so
nominated or (c) the acquisition of direct or indirect Control of the Borrower
by any Person or group other than the Permitted Holders.

        "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof

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by any Governmental Authority after the date of this Agreement or (c) compliance
by any Lender (or, for purposes of Section 5.01(b)), by any lending office of
such Lender or by such Lender's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

        "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

        "Commitment" means, with respect to each Lender, the commitment of such
Lender to make its Loan on the Effective Date hereunder. The initial amount of
each Lender's Commitment is set forth on Annex I.

        "Consolidated Net Income" means with respect to the Borrower and the
Consolidated Restricted Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and the Consolidated Restricted Subsidiaries
after allowances for taxes for such period determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net income
(to the extent otherwise included therein) the following: (a) the net income of
any Person in which the Borrower or any Consolidated Restricted Subsidiary has
an interest (which interest does not cause the net income of such other Person
to be consolidated with the net income of the Borrower and the Consolidated
Restricted Subsidiaries in accordance with GAAP), except to the extent of the
amount of dividends or distributions actually paid in cash during such period by
such other Person to the Borrower or to a Consolidated Restricted Subsidiary, as
the case may be; (b) the net income (but not loss) during such period of any
Consolidated Restricted Subsidiary to the extent that the declaration or payment
of dividends or similar distributions or transfers or loans by that Consolidated
Restricted Subsidiary is not at the time permitted by operation of the terms of
its charter or any agreement, instrument or Governmental Requirement applicable
to such Consolidated Restricted Subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) any
extraordinary non-cash gains or losses during such period and (d) any gains or
losses attributable to writeups or writedowns of assets, including ceiling test
writedowns; and provided further that if the Borrower or any Consolidated
Restricted Subsidiary shall acquire or dispose of any Property during such
period or a Subsidiary shall be redesignated as either an Unrestricted
Subsidiary or a Restricted Subsidiary, then Consolidated Net Income shall be
calculated after giving pro forma effect to such acquisition, merger,
disposition or redesignation, as if such acquisition, merger, disposition or
redesignation had occurred on the first day of such period.

        "Consolidated Restricted Subsidiaries" means any Restricted Subsidiaries
that are Consolidated Subsidiaries.

        "Consolidated Subsidiaries" means each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP.

        "Consolidated Unrestricted Subsidiaries" means any Unrestricted
Subsidiaries that are Consolidated Subsidiaries.

        "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to "control" such other Person. "Controlling" and
"Controlled" have meanings correlative thereto.

        "Debt" means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or

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other similar instruments; (b) all obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, surety or other bonds
and similar instruments; (c) all accounts payable and all accrued expenses,
liabilities or other obligations of such Person to pay the deferred purchase
price of Property or services; (d) all obligations under Capital Leases; (e) all
obligations under Synthetic Leases; (f) all Debt (as defined in the other
clauses of this definition) of others secured by (or for which the holder of
such Debt has an existing right, contingent or otherwise, to be secured by) a
Lien on any Property of such Person, whether or not such Debt is assumed by such
Person; (g) all Debt (as defined in the other clauses of this definition) of
others guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the Debt (howsoever such assurance shall be made) to
the extent of the lesser of the amount of such Debt and the maximum stated
amount of such guarantee or assurance against loss; (h) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt or Property of others;
(i) obligations to deliver commodities, goods or services, including, without
limitation, Hydrocarbons, in consideration of one or more advance payments,
other than gas balancing arrangements in the ordinary course of business;
(j) obligations to pay for goods or services whether or not such goods or
services are actually received or utilized by such Person; (k) any Debt of a
partnership for which such Person is liable either by agreement, by operation of
law or by a Governmental Requirement but only to the extent of such liability;
(l) Disqualified Capital Stock; and (m) the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment. The Debt of any Person shall
include all obligations of such Person of the character described above to the
extent such Person remains legally liable in respect thereof notwithstanding
that any such obligation is not included as a liability of such Person under
GAAP.

        "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

        "Designated Preferred Stock" means the Borrower's Series B 8%
Automatically Convertible Preferred Stock issued under certificate of
designation dated November 23, 2004.

        "Disqualified Capital Stock" means any Equity Interest that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable) or upon the happening of any event, matures or is
mandatorily redeemable for any consideration other than other Equity Interests
(which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans or other
obligations hereunder outstanding.

        "dollars" or "$" refers to lawful money of the United States of America.

        "Domestic Subsidiary" means any Restricted Subsidiary that is organized
under the laws of the United States of America or any state thereof or the
District of Columbia.

        "EBITDA" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income taxes, depreciation,
depletion, amortization and other similar noncash charges, minus all noncash
income added to Consolidated Net Income.

        "Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).

        "Engineering Reports" has the meaning assigned such term in
Section 2.07(b); provided that each such report hereafter delivered must
(a) separately report on Proved Developed Producing Reserves,

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Proved Developed Nonproducing Reserves and Proved Undeveloped Reserves and
separately calculate the PV of each such category of Proved Reserves for the
Borrower's or any Restricted Subsidiary's interest, (b) take into account the
Borrower's actual experiences with leasehold operating expenses and other costs
in determining projected leasehold operating expenses and other costs,
(c) identify and take into account any "over-produced" or "under-produced"
status under gas balancing arrangements, (d) contain information and analysis
comparable in scope to that contained in the Initial Engineering Report, and
(e) otherwise be in form and substance reasonably satisfactory to the Required
Lenders.

        "Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any Restricted Subsidiary is conducting or at any time has
conducted business, or where any Property of the Borrower or any Restricted
Subsidiary is located, including without limitation, the Oil Pollution Act of
1990 ("OPA"), as amended, the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation or
protection Governmental Requirements. The term "oil" shall have the meaning
specified in OPA, the terms "hazardous substance" and "release" (or "threatened
release") have the meanings specified in CERCLA, the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA and the term "oil
and gas waste" shall have the meaning specified in Section 91.1011 of the Texas
Natural Resources Code ("Section 91.1011"); provided, however, that (a) in the
event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment and (b) to the extent the
laws of the state or other jurisdiction in which any Property of the Borrower or
any Restricted Subsidiary is located establish a meaning for "oil," "hazardous
substance," "release," "solid waste," "disposal" or "oil and gas waste" which is
broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such
broader meaning shall apply.

        "Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.

        "ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.

        "ERISA Event" means (a) a "Reportable Event" described in section 4043
of ERISA and the regulations issued thereunder, (b) the withdrawal of the
Borrower, a Subsidiary or any ERISA Affiliate from a Plan during a plan year in
which it was a "substantial employer" as defined in section 4001(a)(2) of ERISA,
(c) the filing of a notice of intent to terminate a Plan or the treatment of a
Plan amendment as a termination under section 4041 of ERISA, (d) the institution
of proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of
withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or
condition which might constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.

        "Eurodollar", when used in reference to any Tranche, refers to whether
such Tranche is bearing interest at a rate determined by reference to the
Adjusted LIBO Rate.

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        "Event of Default" has the meaning assigned such term in Section 10.01.

        "Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord's
liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics',
suppliers', workers', materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (d) contractual Liens
which arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Restricted Subsidiary or materially
impair the value of such Property subject thereto; (e) Liens arising solely by
virtue of any statutory or common law provision relating to banker's liens,
rights of set-off or similar rights and remedies and burdening only deposit
accounts or other funds maintained with a creditor depository institution,
provided that no such deposit account is a dedicated cash collateral account or
is subject to restrictions against access by the depositor in excess of those
set forth by regulations promulgated by the Board and no such deposit account is
intended by Borrower or any of its Restricted Subsidiaries to provide collateral
to the depository institution; (f) easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of the
Borrower or any Restricted Subsidiary for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and equipment,
that do not secure any monetary obligations and which in the aggregate do not
materially impair the use of such Property for the purposes of which such
Property is held by the Borrower or any Restricted Subsidiary or materially
impair the value of such Property subject thereto; (g) Liens on cash or
securities pledged to secure performance of tenders, surety and appeal bonds,
government contracts, performance and return of money bonds, bids, trade
contracts, leases, statutory obligations, regulatory obligations and other
obligations of a like nature incurred in the ordinary course of business and
(h) judgment and attachment Liens not giving rise to an Event of Default,
provided that any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally terminated
or the period within which such proceeding may be initiated shall not have
expired and no action to enforce such Lien has been commenced; provided, further
that Liens described in clauses (a) through (e) shall remain "Excepted Liens"
only for so long as no action to enforce such Lien has been commenced and no
intention to subordinate the first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of such Excepted Liens.

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        "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrower or any Guarantor hereunder or under any other Loan
Document, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America or such other jurisdiction under the laws
of which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower or any
Guarantor is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 5.04(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's failure to comply
with Section 5.03(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts with respect to such
withholding tax pursuant to Section 5.03 or Section 5.03(c).

        "Existing Credit Agreements" means:

          (i)  that certain Credit Agreement dated as of September 30, 1996,
between Wynn-Crosby 1994, Ltd., a Texas limited partnership, and Union Bank of
California, N.A. ("UBOC"), as agent, and the lenders party thereto;

         (ii)  that certain Credit Agreement dated as of January 24, 1996,
between Wynn-Crosby 1995, Ltd., a Texas limited partnership, and UBOC, as agent,
and the lenders party thereto;

        (iii)  that certain Credit Agreement dated as of February 28, 1997,
between Wynn-Crosby 1996, Ltd., a Texas limited partnership, and UBOC, as agent,
and the lenders party thereto;

        (iv)  that certain Credit Agreement dated as of August 31, 2000, among
Wynn-Crosby 1997, Ltd., a Texas limited partnership, and UBOC, as agent, and the
lenders party thereto;

         (v)  that certain Credit Agreement dated as of April 30, 2001, among
Wynn-Crosby 1998, Ltd., a Texas limited partnership, and UBOC, as agent, and the
lenders party thereto;

        (vi)  that certain Credit Agreement dated as of May 30, 2000, among
Wynn-Crosby 1999, Ltd., a Texas limited partnership, and UBOC, as agent, and the
lenders party thereto;

       (vii)  that certain Revolving Credit Agreement dated as of March 30,
2001, among Wynn-Crosby 2000, Ltd., a Texas limited partnership, and UBOC, as
agent, and the lenders party thereto;

      (viii)  that certain Credit and Security Agreement dated as of
February 21, 2003 between Wynn-Crosby 2002, Ltd., a Texas limited partnership,
and UBOC, as agent, and the lenders party thereto;

        (ix)  that certain Credit and Security Agreement dated as of
November 14, 1997 between Wynn-Crosby Energy, Inc., a Texas corporation, and
UBOC, as agent, and the lenders party thereto; and

         (x)  that certain Credit and Security Agreement dated as of March 30,
1999 between the Borrower, and Bank of Oklahoma, as agent, and the lenders party
thereto;

        in each case as amended prior to the Effective Date.

        "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any

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day that is a Business Day, the average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.

        "Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.

        "Financial Statements" means the financial statement or statements of
the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).

        "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

        "Foreign Subsidiary" means any Restricted Subsidiary that is not a
Domestic Subsidiary.

        "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time subject to the terms and
conditions set forth in Section 1.04.

        "Gas Balancing Obligations" means those obligations set forth on
Schedule 7.19.

        "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Restricted Subsidiary, any of their
Properties, the Administrative Agent or any Lender.

        "Governmental Requirement" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.

        "GP" means, collectively:

•Kara Nicole Limited, a Texas limited partnership;

•Kristen Lee Limited, a Texas limited partnership;

•Eric Wynn Limited, a Texas limited partnership;

•Christopher David Limited, a Texas limited partnership;

•Paige Lee Limited, a Texas limited partnership;

•Bernadien Wynn Limited, a Texas limited partnership;

•Roger Lee Limited, a Texas limited partnership; and

•George Heaps Limited, a Texas limited partnership.

        "Guarantors" means, collectively:

        (a)   

•WCE;

•P-H Energy, LLC, a Texas limited liability company;

•Wynn-Crosby 1994, Ltd., a Texas limited partnership;

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•Wynn-Crosby 1995, Ltd., a Texas limited partnership;

•Wynn-Crosby 1996, Ltd., a Texas limited partnership;

•Wynn-Crosby 1997, Ltd., a Texas limited partnership;

•Wynn-Crosby 1998, Ltd., a Texas limited partnership;

•Wynn-Crosby 1999, Ltd., a Texas limited partnership;

•Wynn-Crosby 2000, Ltd., a Texas limited partnership;

•Wynn-Crosby 2002, Ltd., a Texas limited partnership;

•Beta Operating Company, L.L.C., Oklahoma limited liability company;

•TCM, L.L.C., an Oklahoma limited liability company; and

•Red River Field Services, L.L.C., an Oklahoma limited liability company.

        (b)   each other Material Domestic Subsidiary or other Domestic
Subsidiary that guarantees the Indebtedness pursuant to Section 8.14(b).

        "Guaranty Agreement" means an agreement executed by the Guarantors in
substantially the form of Exhibit F-2 unconditionally guarantying on a joint and
several basis, payment of the Indebtedness, as the same may be amended, modified
or supplemented from time to time.

        "Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.

        "Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.

        "Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.

        "Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any Restricted Subsidiary or any Guarantor to the Administrative Agent
or any Lender under any Loan Document and all renewals, extensions and/or
rearrangements of any of the above.

        "Indemnified Taxes" means Taxes other than Excluded Taxes.

        "Information Memorandum" means the Confidential Information Memorandum
dated November 2004 relating to the Borrower and the Transactions.

        "Initial Reserve Report" means the reports of Netherland, Sewell &
Associates, Inc. dated as of July 1, 2004, with respect to certain Oil and Gas
Properties of the Borrower and its Restricted Subsidiaries and of the Targets.

        "Intercreditor Agreement" means in respect of the Second Lien Term Loan
Agreement, the terms of subordination as attached as Annex II and in respect to
the Senior Subordinated Convertible Note, the Subordination Agreement.

        "Interest Election Request" means a request by the Borrower to convert
or continue a Tranche in accordance with Section 2.04.

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        "Interest Payment Date" means (a) with respect to any ABR Tranche, the
last day of each March, June, September and December and (b) with respect to any
Eurodollar Tranche, the last day of the Interest Period applicable to the
Tranche and, in the case of a Eurodollar Tranche with an Interest Period of more
than three months' duration, each day prior to the last day of such Interest
Period that occurs at intervals of three months' duration after the first day of
such Interest Period.

        "Interest Period" means with respect to any Eurodollar Tranche, the
period commencing on the date of such Tranche and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided, that (a) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period pertaining to a
Eurodollar Tranche that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Tranche initially shall be the date on which such Loan that such Tranche is
a part of is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Tranche.

        "Interim Redetermination" has the meaning assigned such term in
Section 2.07(a).

        "Investment" means, for any Person: (a) the acquisition (whether for
cash, Property, services or securities or otherwise) of Equity Interests of any
other Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or other extension of credit to,
any other Person (including the purchase of Property from another Person subject
to an understanding or agreement, contingent or otherwise, to resell such
Property to such Person, but excluding any such advance, loan or extension of
credit having a term not exceeding ninety (90) days representing the purchase
price of inventory or supplies sold by such Person in the ordinary course of
business) or (c) the entering into of any guarantee of, or other contingent
obligation (including the deposit of any Equity Interests to be sold) with
respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.

        "Knowledge" means, with respect to an individual, his or her actual
knowledge and with respect to any corporation, limited liability company,
partnership or other business entity, the actual knowledge of any officer,
general partner or individual being a member of the executive management of such
entity.

        "Lenders" means the Persons listed on Annex I and any Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

        "LIBO Rate" means, with respect to any Eurodollar Tranche for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Tranche for such Interest Period shall be the rate (rounded upwards,
if necessary, to the next 1/16 of 1%) at which dollar deposits of $5,000,000 and
for a maturity comparable to such Interest Period are offered by the principal
London office of the

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Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

        "Lien" means any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties. The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Restricted Subsidiaries shall
be deemed to be the owner of any Property which it has acquired or holds subject
to a conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.

        "Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Intercreditor Agreement and the Subordination Agreement.

        "Loans" means the term loan made by each Lender to the Borrower pursuant
to this Agreement.

        "Majority Lenders" means, at any time while no Loans are outstanding,
Lenders having at least sixty-six and two-thirds percent (662/3%) of the
Commitments; and at any time while any Loans are outstanding, Lenders holding at
least sixty-six and two-thirds percent (662/3%) of the outstanding principal
amount of the Loans (without regard to any sale by a Lender of a participation
in any Loan under Section 12.04(c)).

        "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, Property, condition (financial or otherwise) or prospects
of the Borrower and the Restricted Subsidiaries taken as a whole, (b) the
ability of the Borrower, any Restricted Subsidiary or any Guarantor to perform
any of its obligations under any Loan Document, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent or any Lender under any Loan
Document.

        "Material Domestic Subsidiary" means, as of any date, any Domestic
Subsidiary that (a) is a Wholly-Owned Subsidiary and (b) together with its
Restricted Subsidiaries, owns Property having a fair market value of $250,000 or
more.

        "Material Indebtedness" means Debt (other than the Loans), or
obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Restricted Subsidiaries in an aggregate principal amount
exceeding $500,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any Restricted
Subsidiary in respect of any Swap Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Swap Agreement were terminated
at such time.

        "Maturity Date" means February 24, 2009.

        "Mergers" means the merger of a Wholly-Owned Subsidiary of the Borrower
into WCE pursuant to the WCE Merger Agreement and the merger of eight
(8) limited partnership subsidiaries of the Borrower into the Guarantors (other
than P-H Energy, LLC) pursuant to the Partnerships Merger Agreement.

        "Merger Documents" means the Partnerships Merger Agreement and the WCE
Merger Agreement, both of which are dated as of October 13, 2004, and all other
agreements, instruments and documents executed in connection with the Mergers.

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        "Moody's" means Moody's Investors Service, Inc. and any successor
thereto that is a nationally recognized rating agency.

        "Mortgaged Property" means any Property owned by the Borrower or any
Guarantor, which is subject to the Liens existing and to exist under the terms
of the Security Instruments.

        "Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in section 3(37) or 4001 (a)(3) of ERISA.

        "New Total PV Notice" has the meaning assigned such term in
Section 2.07(c).

        "Non-Recourse Debt" means any Debt of any Unrestricted Subsidiary, in
each case in respect of which: (a) the holder or holders thereof (i) shall have
recourse only to, and shall have the right to require the obligations of such
Unrestricted Subsidiary to be performed, satisfied, and paid only out of, the
Property of such Unrestricted Subsidiary and/or one or more of its Subsidiaries
(but only to the extent that such Subsidiaries are Unrestricted Subsidiaries)
and/or any other Person (other than Borrower and/or any Restricted Subsidiary)
and (ii) shall have no direct or indirect recourse (including by way of
guaranty, support or indemnity) to the Borrower or any Restricted Subsidiary or
to any of the Property of Borrower or any Restricted Subsidiary, whether for
principal, interest, fees, expenses or otherwise; and (b) the terms and
conditions relating to the non-recourse nature of such Debt are in form and
substance reasonably acceptable to the Administrative Agent.

        "Notes" means the promissory notes of the Borrower described in
Section 2.02(d) and being substantially in the form of Exhibit A, together with
all amendments, modifications, replacements, extensions and rearrangements
thereof.

        "Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests;
(c) all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells, injection wells
or other wells, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.

        "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.

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        "Participant" has the meaning assigned to such term in
Section 12.04(c)(i).

        "Partnerships Merger Agreement" means the Agreement and Plan of Merger
dated October 13, 2004 between the Borrower, the Targets and others.

        "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

        "PDP PV" means the PV of Proved Developed Producing Reserves of the
Borrower and its Restricted Subsidiaries as described in the most recently
delivered Reserve Report.

        "Permitted Holders" means PHAWK LLC, a Delaware limited liability
company, EnCap Investments, L.P., Liberty Energy Holdings, each of their
respective Affiliates, and Floyd C. Wilson.

        "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

        "Plan" means any employee pension benefit plan, as defined in
section 3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained
or contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was
at any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.

        "Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective. Such rate is set by the Administrative Agent as a general reference
rate of interest, taking into account such factors as the Administrative Agent
may deem appropriate; it being understood that many of the Administrative
Agent's commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any customer and
that the Administrative Agent may make various commercial or other loans at
rates of interest having no relationship to such rate.

        "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.

        "Proposed Total PV" has the meaning assigned to such term in
Section 2.07(b).

        "Proposed Total PV Notice" has the meaning assigned to such term in
Section 2.07(b)(ii).

        "Proved Reserves" means "Proved Reserves" as defined in the Definitions
for Oil and Gas Reserves (in this paragraph, the "Definitions") promulgated by
the Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question. "Proved Developed Producing Reserves" means
Proved Reserves which are categorized as both "Developed" and "Producing" in the
Definitions, "Proved Developed Nonproducing Reserves" means Proved Reserves
which are categorized as both "Developed" and "Nonproducing" in the Definitions,
and "Proved Undeveloped Reserves" means Proved Reserves which are categorized as
"Undeveloped" in the Definitions.

        "PV" means, with respect to any Proved Reserves expected to be produced
from any Oil and Gas Properties, the net present value, discounted at 10% per
annum, of the future net revenues expected to accrue to the Borrower's and its
Restricted Subsidiaries' collective interests in such reserves during the
remaining expected economic lives of such reserves. PV means, with respect to
the Borrower's and its Restricted Subsidiaries' separate interests in such
Proved Reserves, the net present value, discounted at 10% per annum, of the
future net revenues expected to accrue to such separate interests in such
reserves during the remaining expected economic lives of such reserves. Each
calculation of such expected future net revenues shall be made in accordance
with the then existing standards of the Society of Petroleum Engineers, provided
that in any event (a) appropriate deductions shall be made for severance and ad
valorem taxes, and for operating, gathering, transportation and marketing costs
required for the production and sale of such reserves, (b) appropriate
adjustments shall be made for

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hedging operations, provided that Swap Agreements with non-investment grade
counterparties shall not be taken into account to the extent that such Swap
Agreements improve the position of or otherwise benefit the Borrower or any of
its Subsidiaries, (c) the pricing assumptions used in determining PV for any
particular reserves shall be based upon the following price decks: (i) for
natural gas, the quotation for deliveries of natural gas for each such year from
the New York Mercantile Exchange for Henry Hub, provided that with respect to
quotations for calendar years after the fifth calendar year, the quotation for
the fifth calendar year shall be applied and (ii) for crude oil, the quotation
for deliveries of crude oil for each such calendar year from the New York
Mercantile Exchange for Cushing, Oklahoma, provided that with respect to
quotations for calendar years after the fifth calendar year, the quotation for
the fifth calendar year shall be applied and (d) the cash-flows derived from the
pricing assumptions set forth in clause (b) above shall be further adjusted to
account for the historical basis differentials for each month during the
preceding 12-month period calculated by comparing realized crude oil and natural
gas prices to Cushing, Oklahoma and Henry Hub NYMEX prices for each month during
such period.

        "Redemption" means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt. "Redeem" has the correlative meaning thereto.

        "Register" has the meaning assigned such term in Section 12.04(b)(iv).

        "Regulation D" means Regulation D of the Board, as the same may be
amended, supplemented or replaced from time to time.

        "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person's Affiliates.

        "Remedial Work" has the meaning assigned such term in Section 8.10(a).

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        "Required Lenders" means, at any time while no Loans are outstanding,
Lenders having greater than eighty-seven and one-half percent (871/2%) of the
Commitments; and at any time while any Loans are outstanding, Lenders holding
greater than eighty-seven and one-half percent (871/2%) of the outstanding
principal amount of the Loans (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)).

        "Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Borrower
and the Restricted Subsidiaries, together with a projection of the rate of
production and future net income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, based upon the pricing
assumptions consistent with SEC reporting requirements at the time.

        "Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower.

        "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other Property) with respect to any Equity Interests in
the Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.

        "Restricted Subsidiary" means any Subsidiary of the Borrower that is not
an Unrestricted Subsidiary.

        "Restructured Subordinated Note" means any unsecured note issued by the
Borrower in exchange for the Senior Subordinated Convertible Note in an amount
not to exceed $35,000,000, the cash-pay coupon of which does not exceed 8% per
annum, the maturity of which is at least February 24, 2010, which is not
guaranteed by any Subsidiary of the Borrower and which is subordinated on terms
substantially identical to the Senior Subordinated Convertible Note, as amended
pursuant to Section 9.04(b).

        "Scheduled Redetermination" has the meaning assigned such term in
Section 2.07(a).

        "SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.

        "Security Instruments" means the Guaranty Agreement, mortgages, deeds of
trust and other agreements, instruments or certificates described or referred to
in Exhibit F-1, and any and all other agreements, instruments or certificates
now or hereafter executed and delivered by the Borrower or any other Person
(other than Swap Agreements with the Lenders or any Affiliate of a Lender or
participation or similar agreements between any Lender and any other lender or
creditor with respect to any Indebtedness pursuant to this Agreement) in
connection with, or as security for the payment or performance of the
Indebtedness, the Notes or this Agreement, as such agreements may be amended,
modified, supplemented or restated from time to time.

        "Senior Subordinated Convertible Note" means that certain $35,000,000 8%
Convertible Promissory Note dated as of May 25, 2004, due 2009, made by the
Borrower, as issuer, in favor of PHAWK, LLC, as payee, as hereafter amended or
supplemented pursuant to Section 9.04(b).

        "Senior Revolving Credit Agreement" means that certain $400,000,000
Senior Revolving Credit Agreement dated as of the Effective Date between the
Borrower, as borrower, BNP Paribas, as administrative agent and the other agents
and revolving lenders from time to time parties thereto and any "Loan Documents"
(as defined therein) executed in connection therewith, in each case, as
hereafter amended or supplemented from time to time, subject to Section 9.03(e)
and Section 9.02(i).

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        "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc., and any successor thereto that is a nationally
recognized rating agency.

        "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Tranches shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

        "Subordination Agreement" means that certain Subordination Agreement
dated as of the Effective Date among the Borrower, BNP Paribas, as the
Administrative Agent and PHAWK, LLC.

        "Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
"Subsidiary" shall mean a Subsidiary of the Borrower.

        "Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction, collar or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.

        "Synthetic Leases" means, in respect of any Person, all leases which
shall have been, or should have been, in accordance with GAAP, treated as
operating leases on the financial statements of the Person liable (whether
contingently or otherwise) for the payment of rent thereunder and which were
properly treated as indebtedness for borrowed money for purposes of U.S. federal
income taxes, if the lessee in respect thereof is obligated to either purchase
for an amount in excess of, or pay upon early termination an amount in excess
of, 80% of the residual value of the Property subject to such operating lease
upon expiration or early termination of such lease.

        "Target" means, collectively, the GP and the Guarantors (other than P-H
Energy, LLC).

        "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

        "Total Debt" means, at any date, all Debt of the Borrower and the
Consolidated Restricted Subsidiaries on a consolidated basis net of Cash
Equivalents and excluding the Senior Subordinated Convertible Note (but not
excluding the Restructured Subordinate Note or any other Debt that refinances or
replaces the Senior Subordinated Convertible Note).

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        "Total PV" means at any time an amount determined in accordance with
Section 2.07(a), as the same may be adjusted from time to time pursuant to
Section 8.13(b) or Section 9.13(e). No category of reserves other than Proved
Reserves shall be taken into account in determining Total PV and at least 70% of
Total PV must be comprised of PDP PV.

        "Tranche" means that portion of the Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Tranches,
as to which a single Interest Period is in effect.

        "Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement, each other Loan
Document and each Merger Document to which it is a party, the Mergers, the
borrowing of Loans, the use of the proceeds thereof, and the grant of Liens by
the Borrower on Mortgaged Properties and other Properties pursuant to the
Security Instruments and (b) each Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document and Merger Document to which
it is a party, the Mergers, the guaranteeing of the Indebtedness and the other
obligations under the Guaranty Agreement by such Guarantor and such Guarantor's
grant of the security interests and provision of collateral thereunder, and the
grant of Liens by such Guarantor on Mortgaged Properties and other Properties
pursuant to the Security Instruments.

        "Type", when used in reference to any Loan, refers to whether the rate
of interest on such Loan, is determined by reference to the Alternate Base Rate
or the Adjusted LIBO Rate.

        "Unrestricted Subsidiary" means any Subsidiary of the Borrower
designated as such on Schedule 7.15 or which the Borrower has designated in
writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant to
Section 9.06.

        "WCE" means Wynn-Crosby Energy, Inc., a Texas corporation.

        "WCE Merger Agreement" means that certain Agreement and Plan of Merger
between the Borrower and WCE.

        "Wholly-Owned Subsidiary" means any Restricted Subsidiary of which all
of the outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or
more of the Wholly-Owned Subsidiaries.

        "Wildcard Management Agreements" means those management agreements
between WCE and Wildcard Oil & Gas Company, Inc., Wildcard Family partnership
and Wynn-Crosby Royalty Company, as referenced in the Merger Documents.

        Section 1.03    Terms Generally; Rules of Construction.    The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any law shall be construed as
referring to such law as amended, modified, codified or reenacted, in whole or
in part, and in effect from time to time, (c) any reference herein to any Person
shall be construed to include such Person's successors and assigns (subject to
the restrictions contained herein), (d) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) with
respect to the determination of any time period, the word "from" means "from and
including" and the word "to"

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means "to and including" and (f) any reference herein to Articles, Sections,
Annexes, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Annexes, Exhibits and Schedules to, this Agreement. No
provision of this Agreement or any other Loan Document shall be interpreted or
construed against any Person solely because such Person or its legal
representative drafted such provision.

        Section 1.04    Accounting Terms and Determinations; GAAP.    Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the Financial Statements except for changes in which Borrower's
independent certified public accountants concur and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to Section 8.01(a); provided that,
unless the Borrower and the Majority Lenders shall otherwise agree in writing,
no such change shall modify or affect the manner in which compliance with the
covenants contained herein is computed such that all such computations shall be
conducted utilizing financial information presented consistently with prior
periods.

ARTICLE II
The Loans

        Section 2.01    Term Loans.    Subject to the terms and conditions set
forth herein, each Lender agrees on the Effective Date to make a Loan in dollars
to the Borrower in an aggregate principal amount equal to such Lender's
Commitment. The Commitments are not revolving and amounts repaid may not be
re-borrowed.

        Section 2.02    Loans.    

        (a)    Several Obligations.    Each Loan shall be made on the Effective
Date by the Lenders ratably in accordance with their respective Commitments. The
failure of any Lender to fund its Loan shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments are several and no Lender
shall be responsible for any other Lender's failure to fund its Loan as
required.

        (b)    Types of Tranches.    Subject to Section 3.03, each Loan shall be
comprised entirely of ABR Tranches or Eurodollar Tranches as the Borrower may
request in accordance herewith. Each Lender at its option (but subject to
Section 5.04) may fund any Eurodollar Tranche by causing any domestic or foreign
branch or Affiliate of such Lender to fund such Tranche; provided that any
exercise of such option shall not affect the obligation of the Borrower to repay
such Lender's Loan in accordance with the terms of this Agreement.

        (c)    Minimum Amounts.    At the commencement of each Interest Period
for any Eurodollar Tranche, such Tranche shall be in an aggregate amount that is
an integral multiple of $1,000,000 and not less than $10,000,000. At the time
that each ABR Tranche is made, such Tranche shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $5,000,000. Tranches of
more than one Type may be outstanding at the same time, provided that there
shall not at any time be more than a total of five Eurodollar Tranches
outstanding.

        (d)    Notes.    The Loan made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto, as of the date of this
Agreement or (ii) any Lender that becomes a party hereto pursuant to an
Assignment and Assumption, as of the effective date of the Assignment and
Assumption, payable to the order of such Lender in a principal amount equal to
such Lender's funded Loan as in effect on such date, and otherwise duly
completed. The date, amount, Type, interest rate and, if applicable, Interest
Period of each Tranche made by each Lender, and all payments made on account of
the

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principal thereof, shall be recorded by such Lender on its books for its Note,
and, prior to any transfer, may be endorsed by such Lender on a schedule
attached to such Note or any continuation thereof or on any separate record
maintained by such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of its Loan or affect the validity of such transfer by any Lender of
its Note.

        Section 2.03    Requests for the Loans    Not later than 12:00 noon, New
York City time, three Business Days before the Effective Date, the Borrower
shall request the Loans by notifying the Administrative Agent by telephone, fax
(or electronic communication, if arrangements for doing so have been approved by
the Administrative Agent), and shall confirm such request by delivering to the
Administrative Agent and the Lenders a written Borrowing Request in
substantially the form of Exhibit B and signed by the Borrower. Such telephonic,
electronic or written request shall specify the following information in
compliance with Section 2.02:

          (i)  the aggregate amount of the requested Loans;

         (ii)  the Effective Date, which shall be a Business Day;

        (iii)  whether any portion of such Loans is to be an ABR Tranche or a
Eurodollar Tranche;

        (iv)  in the case of a Eurodollar Tranche, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the definition
of the term "Interest Period"; and

         (v)  the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.05.

        If no election as to the Type is specified, then the entire portion of
the Loans shall be an ABR Tranche. If no Interest Period is specified with
respect to any requested Eurodollar Tranche, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration.

        Promptly following receipt of the Borrowing Request in accordance with
this Section 2.03, the Administrative Agent shall advise each Lender of the
details thereof and of the amount of such Lender's Loan to be made.

        Section 2.04    Interest Elections.    

        (a)    Conversion and Continuance.    Each Tranche initially shall be of
the Type specified in the Borrowing Request and, in the case of a Eurodollar
Tranche, shall have an initial Interest Period as specified in the Borrowing
Request. Thereafter, the Borrower may elect to convert such Tranche to a
different Type or to continue such Tranche and, in the case of a Eurodollar
Tranche, may elect Interest Periods therefor, all as provided in this
Section 2.04. The Borrower may elect different options with respect to different
portions of the affected Tranche, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Tranche,
and the Loans comprising each such portion shall be considered a separate
Tranche.

        (b)    Interest Election Requests.    To make an election pursuant to
this Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone, fax (or transmit by electronic communication, if
arrangements for doing so have been approved by the Administrative Agent) (i) in
the case of a Eurodollar Tranche, not later than 12:00 noon, New York City time,
three Business Days before the first day of the Interest Period related to such
Tranche and (ii) in the case of an ABR Tranche, not later than 12:00 noon, New
York City time, on the same Business Day of the proposed conversion or
continuation. Each such telephonic (or electronic communication) Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in substantially the form of Exhibit C and signed by the Borrower.

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        (c)    Information in Interest Election Requests.    Each telephonic,
electronic communication and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

          (i)  the Tranche to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Tranche (in
which case the information to be specified pursuant to Section 2.04(c)(iii) and
(iv) shall be specified for each resulting Tranche);

         (ii)  the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

        (iii)  whether the resulting Tranche is to be an ABR Tranche or a
Eurodollar Tranche; and

        (iv)  if the resulting Tranche is a Eurodollar Tranche, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest Period".

        If any such Interest Election Request requests a Eurodollar Tranche but
does not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.

        (d)    Notice to Lenders by the Administrative Agent.    Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Tranche.

        (e)    Effect of Failure to Deliver Timely Interest Election Request and
Events of Default on Interest Election.    If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Tranche prior to
the end of the Interest Period applicable thereto, then, unless such Tranche is
repaid as provided herein, at the end of such Interest Period such Tranche shall
be converted to an ABR Tranche. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing: (i) no outstanding
Tranche may be converted to or continued as a Eurodollar Tranche (and any
Interest Election Request that requests the conversion of any Tranche to, or
continuation of any Tranche as, a Eurodollar Tranche shall be ineffective) and
(ii) unless repaid, each Eurodollar Tranche shall be converted to an ABR Tranche
at the end of the Interest Period applicable thereto.

        Section 2.05    Funding the Loans.    

        (a)    Funding by Lenders.    Each Lender shall make its Loan on the
Effective Date by wire transfer of immediately available funds by 1:00 p.m., New
York, New York time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders. The Administrative
Agent will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower maintained
with the Administrative Agent in New York, New York and designated by the
Borrower in the Borrowing Request.

        (b)    Presumption of Funding by the Lenders.    Unless the
Administrative Agent shall have received notice from a Lender prior to the
Effective Date that such Lender will not make available to the Administrative
Agent such Lender's Loan, the Administrative Agent may assume that such Lender
has made its Loan available on such date in accordance with Section 2.05(a) and
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its Loan
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or

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(ii) in the case of the Borrower, the interest rate applicable to ABR Tranches.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan.

        Section 2.06    Termination    The Commitments shall terminate at
3.00 p.m., New York, New York time on the Effective Date.

        Section 2.07    Total PV    

        (a)    Scheduled and Interim Redeterminations.    The Total PV shall be
redetermined semi-annually in accordance with this Section 2.07 (a "Scheduled
Redetermination") and, subject to Section 2.07(c), such redetermined Total PV
shall become effective and applicable to the Borrower and the Lenders on
April 1st and October 1st of each year, commencing April 1, 2005. In addition,
the Borrower may, by notifying the Administrative Agent thereof, and the
Administrative Agent may, at the direction of the Majority Lenders, by notifying
the Borrower thereof, one time during any 12-month period, each elect to cause
the Total PV to be redetermined between Scheduled Redeterminations (an "Interim
Redetermination") in accordance with this Section 2.07.

        (b)    Scheduled and Interim Redetermination Procedure.    

          (i)  Each Scheduled Redetermination and each Interim Redetermination
shall be effectuated as follows: Upon receipt by the Administrative Agent of
(A) the Reserve Report and the certificate required to be delivered by the
Borrower to the Administrative Agent, in the case of a Scheduled
Redetermination, pursuant to Section 8.12(a) and (c), and, in the case of an
Interim Redetermination, pursuant to Section 8.12(b) and (c), and (B) such other
reports, data and supplemental information, including, without limitation, the
information provided pursuant to Section 8.12(c), as may, from time to time, be
reasonably requested by the Majority Lenders (the Reserve Report, such
certificate and such other reports, data and supplemental information being the
"Engineering Reports"), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in good faith, calculate a
proposed Total PV (the "Proposed Total PV") based upon the Total PV and such
other information (including, without limitation, the status of title
information with respect to the Oil and Gas Properties as described in the
Engineering Reports) as the Administrative Agent deems appropriate and
consistent with its normal oil and gas lending criteria as it exists at the
particular time.

         (ii)  The Administrative Agent shall notify the Borrower and the
Lenders of the Proposed Total PV based on the criteria set forth in the
definition of Total PV (the "Proposed Total PV Notice"):

        (A)  in the case of a Scheduled Redetermination (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before March 15th and September 15th of such year
following the date of delivery or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Total PV in accordance with Section 2.07(b)(i); and

        (B)  in the case of an Interim Redetermination, promptly, and in any
event, within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports.

        (iii)  Any Proposed Total PV that would increase the Total PV then in
effect must be approved or deemed to have been approved by all of the Lenders as
provided in this Section 2.07(b)(iii); and any Proposed Total PV that would
decrease or maintain the Total PV then in effect must be approved or be deemed
to have been approved by the Required Lenders as provided in this

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Section 2.07(b)(iii). Upon receipt of the Proposed Total PV Notice, each Lender
shall have fifteen (15) days to agree with the Proposed Total PV or disagree
with the Proposed Total PV by proposing an alternate Total PV. If at the end of
such fifteen (15) days, any Lender has not communicated its approval or
disapproval in writing to the Administrative Agent, such silence shall be deemed
to be an approval of the Proposed Total PV. If, at the end of such 15-day
period, the Required Lenders, in the case of a Proposed Total PV that would
decrease or maintain the Total PV then in effect, have approved or deemed to
have approved, as aforesaid, then the Proposed Total PV shall become the new
Total PV, effective on the date specified in Section 2.07(c). If, however, at
the end of such 15-day period, all of the Lenders or the Required Lenders, as
applicable, have not approved or deemed to have approved, as aforesaid, then the
Administrative Agent shall poll the Lenders to ascertain the highest Total PV
then acceptable to a number of Lenders sufficient to constitute the Required
Lenders, for purposes of this Section 2.07 and, so long as such amount does not
increase the Total PV then in effect, such amount shall become the new Total PV,
effective on the date specified in Section 2.07(c).

        (c)    Effectiveness of a Redetermined Total PV.    After a redetermined
Total PV is approved or is deemed to have been approved by all of the Lenders or
the Required Lenders, as applicable, pursuant to Section 2.07(b)(iii), the
Administrative Agent shall notify the Borrower and the Lenders of the amount of
the redetermined Total PV (the "New Total PV Notice"), and such amount shall
become the new Total PV, effective and applicable to the Borrower, the
Administrative Agent and the Lenders:

          (i)  in the case of a Scheduled Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on the April 1st or October 1st, as applicable, following
such notice, or (B) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to
Section 8.12(a) and (c) in a timely and complete manner, then on the Business
Day next succeeding delivery of such notice; and

         (ii)  in the case of an Interim Redetermination, on the Business Day
next succeeding delivery of such notice.

        Such Total PV shall then become the Total PV until the next Scheduled
Redetermination, the next Interim Redetermination or the next adjustment to the
Total PV under Section 8.13(c) or Section 9.13, whichever occurs first.
Notwithstanding the foregoing, no Scheduled Redetermination or Interim
Redetermination shall become effective until the New Total PV Notice is received
by the Borrower.

        Section 2.08    Subordination of Loans.    The Loans, the Notes, this
Agreement and the other Loan Documents; the rights and remedies of the Lenders
and the Administrative Agent hereunder and thereunder and the Liens created
thereby are subject to the Terms of Subordination attached hereto as Annex II.

ARTICLE III
Payments of Principal and Interest; Prepayments; Fees

        Section 3.01    Repayment of the Loans.    On the nineteenth (19th) day
of each November prior to the Maturity Date, commencing November 19, 2005, the
Borrower shall repay the aggregate principal amount of the Loans in the
principal amount equal to $500,000; and on the Maturity Date, the Borrower shall
repay the outstanding principal balance of the Loans in full.

        Section 3.02    Interest.    

        (a)    ABR Tranches.    The portion of the Loans comprising each ABR
Tranche shall bear interest at the Alternate Base Rate plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate.

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        (b)    Eurodollar Tranches.    The portion of the Loans comprising each
Eurodollar Tranche shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Tranche plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.

        (c)    Post-Default Rate.    Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower or any Guarantor hereunder or under any other Loan Document is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to two percent (2%) plus the rate applicable to ABR Tranches as
provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate.

        (d)    Interest Payment Dates.    Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Tranche; provided that
(i) interest accrued pursuant to Section 3.02(c) shall be payable on demand,
(ii) in the event of any prepayment of any Loan, accrued interest on the
principal amount prepaid shall be payable on the date of such prepayment, and
(iii) in the event of any conversion of any Eurodollar Tranche prior to the end
of the current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.

        (e)    Interest Rate Computations.    All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.

        Section 3.03    Alternate Rate of Interest.    If prior to the
commencement of any Interest Period for a Eurodollar Tranche:

        (a)   the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest
Period; or

        (b)   the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Tranche for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Tranche to, or continuation
of any Tranche as, a Eurodollar Tranche shall be ineffective, and (ii) if the
Borrowing Request requests a Eurodollar Tranche, such Tranche shall be made as
an ABR Tranche.

        Section 3.04    Prepayments.    

        (a)    Optional Prepayments.    Subject to any breakage funding costs
payable pursuant to Section 5.02, the Borrower shall have the right at any time
and from time to time to prepay the Loans in whole or in part without premium or
penalty, provided that each prepayment is in an amount that is an integral of
$1,000,000 and not less than $1,000,000, or if such amount is less than
$1,000,000, the outstanding principal amount of the Loans, subject to prior
notice in accordance with Section 3.04(b).

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        (b)    Notice and Terms of Optional Prepayment.    The Borrower shall
notify the Administrative Agent by telephone, electronic communication and/or
fax (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Tranche, not later than 12:00 noon, New York City
time, three Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Tranche, not later than 12:00 noon, New York City time, one
Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
the Loans or portion thereof to be prepaid. Promptly following receipt of any
such notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each prepayment of a Tranche shall be applied ratably to the Loans of
all Lenders. Prepayments shall be accompanied by accrued and unpaid interest to
the extent required by Section 3.02.

        (c)    Mandatory Prepayment.    The net cash proceeds of any asset sale
under Section 9.13(e), to the extent not applied in the manner specified
therein, shall be used to repay the Loans. Such payment shall be due on the 91st
day after the asset sale giving rise to such net cash proceeds.

        Section 3.05    Fees.    

        (a)    Administrative Agent Fees.    The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

        (b)    Payment of Fees.    All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to the Administrative Agent. Fees
paid shall not be refundable under any circumstances.

ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs

        Section 4.01    Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.    

        (a)    Payments by the Borrower.    The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest or fees, or
of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise)
prior to 12:00 noon, New York City time, on the date when due, in immediately
available funds, without defense, deduction, recoupment, set-off or
counterclaim. Fees, once paid, shall not be refundable under any circumstances.
Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices specified in
Section 12.01, as expressly provided herein and except that payments pursuant to
Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.

        (b)    Application of Insufficient Payments.    If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, interest and fees then due hereunder, such
funds shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal then due to such parties.

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        (c)    Sharing of Payments by Lenders.    If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on its Loan resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loan
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Loans of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in its Loan to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this Section 4.01(c) shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

        Section 4.02    Presumption of Payment by the Borrower.    Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

        Section 4.03    Certain Deductions by the Administrative Agent.    If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(b) or Section 4.02 then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.

        Section 4.04    Disposition of Proceeds.    The Security Instruments
contain an assignment by the Borrower and/or the Guarantors unto and in favor of
the Administrative Agent for the benefit of the Lenders of all of the Borrower's
or each Guarantor's interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Mortgaged Property. The
Security Instruments further provide in general for the application of such
proceeds to the satisfaction of the Indebtedness and other obligations described
therein and secured thereby. Notwithstanding the assignment contained in such
Security Instruments, until the occurrence of an Event of Default, (a) the
Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of such production nor take any other action to cause
such proceeds to be remitted to the Administrative Agent or the Lenders, but the
Lenders will instead permit such proceeds to be paid to the Borrower and its
Restricted Subsidiaries and (b) the Lenders hereby authorize the Administrative
Agent to take such actions as may be necessary to cause such proceeds to be paid
to the Borrower and/or such Restricted Subsidiaries.

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ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality

        Section 5.01    Increased Costs.    

        (a)    Eurodollar Changes in Law.    If any Change in Law shall:

          (i)  impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or

         (ii)  impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Tranches of such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Tranche (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.

        (b)    Capital Requirements.    If any Lender determines that any Change
in Law regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender's capital or on the capital of such Lender's
holding company, if any, as a consequence of this Agreement or the Loan made by
such Lender, to a level below that which such Lender or the or such Lender's
holding company could have achieved but for such Change in Law (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender such additional amount or amounts as will compensate
such Lender or such Lender's holding company for any such reduction suffered.

        (c)    Certificates.    A certificate of a Lender setting forth the
amount or amounts necessary to compensate such Lender or its holding company, as
the case may be, as specified in Section 5.01(a) or (b) shall be delivered to
the Borrower and shall be conclusive absent manifest error. The Borrower shall
pay such Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.

        (d)    Effect of Failure or Delay in Requesting Compensation.    Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section 5.01 shall not constitute a waiver of such Lender's right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Lender pursuant to this Section 5.01 for any increased costs or reductions
incurred more than 180 days prior to the date that such Lender notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender's intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

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        Section 5.02    Break Funding Payments.    In the event of (a) the
payment of any principal of any Eurodollar Tranche other than on the last day of
an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Tranche into an ABR Tranche other
than on the last day of the Interest Period applicable thereto, (c) the failure
to borrow, convert, continue or prepay any Eurodollar Tranche on the date
specified in any notice delivered pursuant hereto, or (d) the assignment of any
Eurodollar Tranche other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 5.04(b),
then, in any such event, the Borrower shall compensate each Lender for the loss,
cost and expense attributable to such event. In the case of a Eurodollar
Tranche, such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market.

A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

        Section 5.03    Taxes.    

        (a)    Payments Free of Taxes.    Any and all payments by or on account
of any obligation of the Borrower or any Guarantor under any Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower or any Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.03), the Administrative Agent or any Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or such Guarantor shall make such
deductions and (iii) the Borrower or such Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

        (b)    Payment of Other Taxes by the Borrower.    The Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

        (c)    Indemnification by the Borrower.    The Borrower shall indemnify
the Administrative Agent and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent or such Lender on or with respect to any payment by or
on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 5.03) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate of the Administrative Agent or a Lender as
to the amount of such payment or liability under this Section 5.03 shall be
delivered to the Borrower and shall be conclusive absent manifest error.

        (d)    Evidence of Payments.    As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental

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Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

        (e)    Foreign Lenders.    Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.

        Section 5.04    Mitigation Obligations; Replacement of Lenders.    

        (a)    Designation of Different Lending Office.    If any Lender
requests compensation under Section 5.01, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loan hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

        (b)    Replacement of Lenders.    If any Lender requests compensation
under Section 5.01, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 5.03, or if any Lender defaults in its obligation to fund
its Loan hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loan, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to Section 5.03, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.

        Section 5.05    Illegality.    Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Tranches either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender's obligation to make such Eurodollar Tranches shall be
suspended (the "Affected Tranches") until such time as such Lender may again
make and maintain such Eurodollar Tranches and (b) all Affected Tranches which
would otherwise be made by such Lender shall be made instead as ABR Tranches
(and, if such Lender so requests by notice to the Borrower and the
Administrative Agent, all Affected Tranches of such Lender then outstanding
shall be automatically converted into ABR Tranches on the date specified by such
Lender in such notice) and, to the extent that Affected Tranches

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are so made as (or converted into) ABR Tranches, all payments of principal which
would otherwise be applied to such Lender's Affected Tranches shall be applied
instead to its ABR Tranches.

ARTICLE VI
Conditions Precedent

        Section 6.01    Effective Date.    The obligations of each Lender to
make its Loans hereunder shall not become effective until the date on which each
of the following conditions is satisfied (or waived in accordance with
Section 12.02):

        (a)   The Administrative Agent, the Arranger and the Lenders shall have
received all fees and other amounts due and payable on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.

        (b)   The Administrative Agent shall have received a certificate of the
Secretary or an Assistant Secretary of the Borrower and each Guarantor setting
forth (i) resolutions of its board of directors with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of the Borrower or such Guarantor (y) who
are authorized to sign the Loan Documents to which the Borrower or such
Guarantor is a party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby,
(iii) specimen signatures of such authorized officers, and (iv) the articles or
certificate of incorporation and bylaws (or other organizational documents) of
the Borrower and such Guarantor, certified as being true and complete. The
Administrative Agent and the Lenders may conclusively rely on such certificate
until the Administrative Agent receives notice in writing from the Borrower to
the contrary.

        (c)   The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of the Borrower and each Guarantor.

        (d)   The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer and dated as of the date of Effective
Date.

        (e)   The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.

        (f)    The Administrative Agent shall have received duly executed Notes
payable to the order of each Lender in a principal amount equal to its
Commitment dated as of the date hereof.

        (g)   The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments, including the Guaranty
Agreement and the other Security Instruments described on Exhibit F-1. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall:

          (i)  be reasonably satisfied that the Security Instruments create
first priority, perfected Liens (subject only to Excepted Liens identified in
clauses (a) to (d) and (f) of the definition thereof, but subject to the
provisos at the end of such definition) on at least 80% of the total value of
the Oil and Gas Properties evaluated in the Initial Reserve Report;

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         (ii)  have received certificates, together with undated, blank stock
powers for each such certificate, representing all of the issued and outstanding
Equity Interests of each of the Guarantors and not less than 65% of all of the
issued and outstanding capital stock of each Foreign Subsidiary with total
assets in excess of $250,000 that is not a Guarantor, which is directly owned by
either the Borrower or a Domestic Subsidiary; and

        (iii)  be reasonably satisfied that it has a Lien on all Property
constituting security for the Senior Revolving Credit Agreement.

        (h)   The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that (i) the Borrower shall be
selling shares of the Borrower's preferred stock which shall result in net cash
proceeds of not less than $150,000,000, (ii) the Borrower shall be
contemporaneously closing the Senior Revolving Credit Agreement pursuant to
which the Borrower shall have not less than $200,000,000 of available credit of
which not more than $185,000,000 is drawn, or to be drawn, on the Effective Date
and (iii) attached to such certificate is a true and complete copy of the Senior
Subordinated Convertible Note. The structure, terms, conditions and
documentation, including execution and delivery of appropriate inter-creditor
and/or subordination documentation for each of the foregoing shall be reasonably
satisfactory to the Administrative Agent.

        (i)    The Administrative Agent shall have received an opinion of
(i) Hinkle Elkouri Law Firm L.L.C., special counsel to the Borrower,
substantially in the form of Exhibit E-1 hereto, and (ii) local counsel in each
of the following states: Texas, Oklahoma, New Mexico and Louisiana, and any
other jurisdictions requested by the Administrative Agent, substantially in the
form of Exhibit E-2.

        (j)    The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.

        (k)   The Administrative Agent shall be reasonably satisfied with the
status of title to the Oil and Gas Properties evaluated in the Initial Reserve
Report.

        (l)    The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Borrower and its
Restricted Subsidiaries.

        (m)  The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.

        (n)   The Administrative Agent shall have received evidence satisfactory
to it that the Borrower is repaying in full and terminating the Existing Credit
Agreements, and all credit facilities and funded Debt of the Targets are being
repaid and terminated, contemporaneously with the funding of the initial Loans
under this Agreement, and the Administrative Agent shall have received a
certificate dated as of the Effective Date, signed by a Responsible Officer, to
that effect. The Administrative Agent shall have received evidence satisfactory
to it that all Liens associated with the Existing Credit Agreements and all
credit facilities and funded Debt of the Targets have been released or
terminated contemporaneously with the making of such payments and that
arrangements satisfactory to the Administrative Agent has been made for
recording and filing of such releases.

        (o)   The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.12(c).

        (p)   The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties of the
Borrower and the Restricted

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Subsidiaries for each of the following jurisdictions: Texas, Oklahoma, Louisiana
and New Mexico and any other jurisdiction requested by the Administrative Agent;
other than those being assigned or released on or prior to the Effective Date or
Liens permitted by Section 9.03.

        (q)   The Administrative Agent shall have received evidence that the
Borrower or one of its Restricted Subsidiaries has purchased one or more
commodity price floors, collars or price swaps with one or more Approved
Counterparties, which have (i) a fixed price payor or floor prices acceptable to
the Administrative Agent, and (ii) aggregate notional volumes of not less than
80% during the calendar year 2005 and 2006 and 50% during calendar year 2007 and
2008 of the reasonably estimated projected crude oil production and of the
reasonably estimated projected natural gas production, in each case, from its
proved developed, producing Oil and Gas Properties as determined by reference to
the Initial Reserve Reports for each year during the period commencing with the
Effective Date and ending on December 31, 2006.

        (r)   The Administrative Agent shall have received (i) a certificate of
a Responsible Officer of the Borrower certifying: (A) that the Borrower is
concurrently consummating the Mergers in accordance with the terms of the Merger
Documents (with all of the material conditions precedent thereto having been
satisfied in all material respects by the parties thereto, including termination
of the Wildcard Management Agreements); and (B) as to the final purchase price
after giving effect to all adjustments as of the closing date contemplated by
the Merger Documents and specifying, by category, the amount of such adjustment
as (1) title defect, (2) casualty loss, (3) environmental defect, (4) gas
imbalance, (5) cash distributions made to equity owners subsequent to June 30,
2004, (6) state income tax liability for the accounting period of January 1,
2004 through June 30, 2004, (7) current liabilities as of June 30, 2004,
(8) long-term outstanding debt as of June 30, 2004, (9) negative or positive
amount (if any) of the marked-to-market value of commodity derivatives as of
June 30, 2004, determined in accordance with GAAP, (10) cost of preparing such
Target's tax returns and (11) an amount equal to any damages incurred pursuant
to Section I.F.(xi) of the Merger Documents; (ii) a true and complete executed
copy of each of the Merger Documents and (iii) such other related documents and
information as the Administrative Agent shall have reasonably requested.

        The Administrative Agent shall be reasonably satisfied with the terms,
conditions and documentation of the Mergers and the Merger Documents. The
Borrower recognizes and agrees that (a) it shall have delivered to the
Administrative Agent notice of any price adjustments to the purchase price of
the Mergers for the items listed in B(1), (2), (3) and (4) above not less than
three (3) days prior to the Effective Date and (b) if the purchase price
adjustment is greater than $2,500,000, then the Administrative Agent shall
suggest to the Majority Lenders a reduced Total PV and the Majority Lenders
shall reach a consensus as to an adjusted Total PV. Promptly upon the decision
by the Majority Lenders of such new values, the Administrative Agent shall
notify the Borrower and each Lender of such allocation.

        (s)   The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that: (i) Targets and the
Borrower are concurrently consummating the Mergers in accordance with the terms
of the Merger Documents (with all of the material conditions thereto having been
satisfied in all material respects by the parties thereto), and (ii) attached
thereto is a true and complete copy of each Certificate of Merger to be filed
with the Texas Secretary of State.

        (t)    The Administrative Agent shall have received a copy, certified by
a Responsible Officer as true and complete, of the Merger Documents (together
with all amendments, if any), the Senior Subordinated Convertible Note and the
Senior Revolving Credit Agreement, the terms and conditions of which shall be
reasonably acceptable to the Administrative Agent.

        (u)   The Administrative Agent shall have received such other documents
as the Administrative Agent or special counsel to the Administrative Agent may
reasonably request.

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        The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make its Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 12.02) at or prior to 2:00 p.m., New
York City time, on December 15, 2004 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).

        Section 6.02    Each Credit Event.    The obligation of each Lender to
fund its Loan is subject to the satisfaction of the following conditions:

        (a)   At the time of and immediately after giving effect to the Loans,
no Default shall have occurred and be continuing.

        (b)   At the time of and immediately after giving effect to the Loans,
no event, development or circumstance has occurred or shall then exist that has
resulted in, or could reasonably be expected to have, a Material Adverse Effect.

        (c)   The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct on and as of the Effective Date, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the Effective Date, such representations and warranties
shall continue to be true and correct as of such specified earlier date.

        (d)   The making of such Loan, would not conflict with, or cause any
Lender to violate or exceed, any applicable Governmental Requirement, and no
Change in Law shall have occurred, and no litigation shall be pending or
threatened, which does or, with respect to any threatened litigation, seeks to,
enjoin, prohibit or restrain, the making or repayment of any Loan, or any
participations therein or the consummation of the transactions contemplated by
this Agreement or any other Loan Document.

        (e)   The receipt by the Administrative Agent of the Borrowing Request
in accordance with Section 2.03.

ARTICLE VII
Representations and Warranties

        The Borrower represents and warrants to the Lenders that:

        Section 7.01    Organization; Powers.    Each of the Borrower and the
Restricted Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority, and has all material governmental licenses, authorizations,
consents and approvals necessary, to own its assets and to carry on its business
as now conducted, and is qualified to do business in, and is in good standing
in, every jurisdiction where such qualification is required, except where
failure to have such power, authority, licenses, authorizations, consents,
approvals and qualifications could not reasonably be expected to have a Material
Adverse Effect.

        Section 7.02    Authority; Enforceability.    The Transactions are
within the Borrower's and each Guarantor's corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder action
(including, without limitation, any action required to be taken by any class of
directors of the Borrower, whether interested or disinterested, in order to
ensure the due authorization of the Transactions). Each Loan Document and Merger
Document to which the Borrower and each Guarantor is a party has been duly
executed and delivered by the Borrower and such Guarantor and constitutes a
legal, valid and binding obligation of the Borrower and such Guarantor, as
applicable, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency,

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reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

        Section 7.03    Approvals; No Conflicts.    The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority or any other third Person, nor is any such
consent, approval, registration, filing or other action necessary for the
validity or enforceability of any Loan Document or the consummation of the
Transactions, except such as have been obtained or made and are in full force
and effect other than (i) the recording and filing of the Security Instruments
as required by this Agreement and (ii) those third party approvals or consents
which, if not made or obtained, would not cause a Default hereunder, could not
reasonably be expected to have a Material Adverse Effect or do not have an
adverse effect on the enforceability of the Loan Documents, (b) will not violate
any applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any
Restricted Subsidiary or its Properties, or give rise to a right thereunder to
require any payment to be made by the Borrower or such Restricted Subsidiary and
(d) will not result in the creation or imposition of any Lien on any Property of
the Borrower or any Restricted Subsidiary (other than the Liens created by the
Loan Documents).

        Section 7.04    Financial Condition; No Material Adverse Change.    

        (a)   The Borrower has heretofore furnished to the Lenders (i) its
consolidated balance sheet and statements of income, stockholders equity and
cash flows (x) as of and for the fiscal year ended December 31, 2003, reported
on by Ernst & Young LLP, independent public accountants, and (y) as of and for
the fiscal quarter and the portion of the fiscal year ended June 30, 2004,
reviewed by KPMG LLP, (ii) the consolidated balance sheet and statements of
income, stockholders equity and cash flows of each Target (x) as of and for the
2001, 2002 and 2003 fiscal years, reported on by KPMG LLP, independent public
accountants and (y) as of and for the fiscal quarter and the portion of the
fiscal year ended June 30, 2004, certified by its chief financial officer and
(iii) the consolidated balance sheet and statements of income, stockholders
equity and cash flows of each GP as of and for the fiscal quarter and the
portion of the fiscal year ended June 30, 2004, certified by its chief financial
officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the unaudited quarterly financial statements. The
Borrower has heretofore furnished to the Lenders the unaudited, pro forma
consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the six-month period ended June 30, 2004 adjusted to
give effect to the Mergers, this Agreement, and the other transactions
contemplated by Section 6.01(h), certified by its chief financial officer as
presenting fairly, in all material respects, the consolidated pro forma
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such date and for such period in accordance
with GAAP, subject to year-end audit adjustments and the absence of footnotes in
the case of the unaudited quarterly financial statements.

        (b)   Since December 31, 2003, (i) there has been no event, development
or circumstance that has had or could reasonably be expected to have a Material
Adverse Effect and (ii) the business of the Borrower and its Restricted
Subsidiaries has been conducted only in the ordinary course consistent with past
business practices.

        (c)   Neither the Borrower nor any Restricted Subsidiary has on the date
hereof any material Debt (including Disqualified Capital Stock) or any
contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments (other than the Gas
Balancing Obligations and

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the Swap Agreements listed on Schedule 7.21) which are not referred to or
reflected or provided for in the Financial Statements.

        Section 7.05    Litigation.    

        (a)   Except as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the Knowledge of the Borrower, threatened
against or affecting the Borrower, any Restricted Subsidiary, any Target or
involving the Mergers (i) not fully covered by insurance (except for normal
deductibles) as to which there is a reasonable possibility of an adverse
determination that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect,
(ii) that involve any Loan Document, any Merger Document or the Transactions or
(iii) that could impair the consummation of the Mergers on the time and in the
manner contemplated by the Merger Documents.

        (b)   Since the date of this Agreement, there has been no change in the
status of the matters disclosed in Schedule 7.05 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.

        Section 7.06    Environmental Matters.    Except as could not be
reasonably expected to have a Material Adverse Effect (or with respect to (c),
(d) and (e) below, where the failure to take such actions could not be
reasonably expected to have a Material Adverse Effect):

        (a)   neither any Property of the Borrower or any Restricted Subsidiary
nor the operations conducted thereon violate any order or requirement of any
court or Governmental Authority or any Environmental Laws.

        (b)   no Property of the Borrower or any Restricted Subsidiary nor the
operations currently conducted thereon or, to the Knowledge of the Borrower, by
any prior owner or operator of such Property or operation, are in violation of
or subject to any existing, pending or threatened action, suit, investigation,
inquiry or proceeding by or before any court or Governmental Authority or to any
remedial obligations under Environmental Laws.

        (c)   all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Borrower and each Restricted
Subsidiary, including, without limitation, past or present treatment, storage,
disposal or release of a hazardous substance, oil and gas waste or solid waste
into the environment, have been duly obtained or filed, and the Borrower and
each Restricted Subsidiary are in compliance with the terms and conditions of
all such notices, permits, licenses and similar authorizations.

        (d)   all hazardous substances, solid waste and oil and gas waste, if
any, generated at any and all Property of the Borrower or any Restricted
Subsidiary have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the Knowledge of the Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Authority in connection with any Environmental Laws.

        (e)   the Borrower has taken all steps reasonably necessary to determine
and has determined that no oil, hazardous substances, solid waste or oil and gas
waste, have been disposed of or otherwise released and there has been no
threatened release of any oil, hazardous substances, solid waste or oil and gas
waste on or to any Property of the Borrower or any Restricted Subsidiary

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except in compliance with Environmental Laws and so as not to pose an imminent
and substantial endangerment to public health or welfare or the environment.

        (f)    to the extent applicable, all Property of the Borrower and each
Restricted Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA, and the Borrower does not have any reason to
believe that such Property, to the extent subject to the OPA, will not be able
to maintain compliance with the OPA requirements during the term of this
Agreement.

        (g)   neither the Borrower nor any Restricted Subsidiary has any known
contingent liability or Remedial Work in connection with any release or
threatened release of any oil, hazardous substance, solid waste or oil and gas
waste into the environment.

        Section 7.07    Compliance with the Laws and Agreements; No
Defaults.    

        (a)   Each of the Borrower and each Restricted Subsidiary is in
compliance with all Governmental Requirements applicable to it or its Property
and all agreements and other instruments binding upon it or its Property, and
possesses all licenses, permits, franchises, exemptions, approvals and other
governmental authorizations necessary for the ownership of its Property and the
conduct of its business, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

        (b)   Neither the Borrower nor any Restricted Subsidiary is in default
nor has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default or would require the Borrower or a Restricted Subsidiary to Redeem or
make any offer to Redeem under any indenture, note, credit agreement or
instrument pursuant to which any Material Indebtedness is outstanding or by
which the Borrower or any Restricted Subsidiary or any of their Properties is
bound.

        (c)   No Default has occurred and is continuing.

        Section 7.08    Investment Company Act.    Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.

        Section 7.09    Public Utility Holding Company Act.    Neither the
Borrower nor any Subsidiary is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," or a "public utility" within the
meaning of, or subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.

        Section 7.10    Taxes.    Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with GAAP
or (b) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate.
No Tax Lien has been filed and, to the Knowledge of the Borrower, no claim is
being asserted with respect to any such Tax or other such governmental charge.

        Section 7.11    ERISA.    

        (a)   The Borrower, the Subsidiaries and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan.

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        (b)   Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code.

        (c)   No act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability
damages under section 409 of ERISA.

        (d)   No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has been or
is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Event with respect to any Plan has
occurred.

        (e)   Full payment when due has been made of all amounts which the
Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contributions to such Plan as of the
date hereof, and no accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan.

        (f)    The actuarial present value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.

        (g)   Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its
sole discretion at any time without any material liability.

        (h)   Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the six-year period
preceding the date hereof sponsored, maintained or contributed to, any
Multiemployer Plan.

        (i)    Neither the Borrower, the Subsidiaries nor any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the Plan.

        Section 7.12    Disclosure; No Material Misstatements.    The Borrower
has disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Restricted Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither the Information Memorandum nor any of the other
reports, financial statements, certificates or other information furnished by or
on behalf of the Borrower or any Restricted Subsidiary to the Administrative
Agent or any Lender or any of their Affiliates in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or under any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. There is no fact peculiar to the Borrower or any
Restricted Subsidiary which could reasonably be expected to have a Material
Adverse

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Effect or in the future is reasonably likely to have a Material Adverse Effect
and which has not been set forth in this Agreement or the Loan Documents or the
other documents, certificates and statements furnished to the Administrative
Agent or the Lenders by or on behalf of the Borrower or any Restricted
Subsidiary prior to, or on, the date hereof in connection with the transactions
contemplated hereby. No statements or conclusions exist in any Reserve Report
which are based upon or include misleading information or which fail to take
into account material information regarding the matters reported therein to the
extent such misstatement, misleading information or failure could reasonably be
expected to have a Material Adverse Effect.

        Section 7.13    Insurance.    The Borrower has, and has caused all its
Restricted Subsidiaries to have, (a) all insurance policies sufficient for the
compliance by each of them with all material Governmental Requirements and all
material agreements and (b) insurance coverage in at least amounts and against
such risk (including, without limitation, public liability) that are usually
insured against by companies similarly situated and engaged in the same or a
similar business for the assets and operations of the Borrower and its
Restricted Subsidiaries. The Administrative Agent and the Lenders have been
named as additional insureds in respect of such liability insurance policies and
the Administrative Agent has been named as loss payee with respect to Property
loss insurance.

        Section 7.14    Restriction on Liens.    Neither the Borrower nor any of
the Restricted Subsidiaries is a party to any material agreement or arrangement
(other than Capital Leases creating Liens permitted by Section 9.03(c), but then
only on the Property subject of such Capital Lease), or subject to any order,
judgment, writ or decree, which either restricts or purports to restrict its
ability to grant Liens to the Administrative Agent and the Lenders on or in
respect of their Properties to secure the Indebtedness and the Loan Documents.

        Section 7.15    Subsidiaries.    Except as set forth on Schedule 7.15 or
as disclosed in writing to the Administrative Agent (which shall promptly
furnish a copy to the Lenders), which shall be a supplement to Schedule 7.15,
the Borrower has no Subsidiaries and the Borrower has no Foreign Subsidiaries.
Schedule 7.15 identifies each Subsidiary as either Restricted or Unrestricted,
and each Restricted Subsidiary on such schedule is a Wholly-Owned Subsidiary.

        Section 7.16    Location of Business and Offices.    The Borrower's
jurisdiction of organization is Delaware; the name of the Borrower as listed in
the public records of its jurisdiction of organization is Petrohawk Energy
Corporation; and the organizational identification number of the Borrower in its
jurisdiction of organization is 3828463 (or, in each case, as set forth in a
notice delivered to the Administrative Agent pursuant to Section 8.01(n) in
accordance with Section 12.01). The Borrower's principal place of business and
chief executive offices are located at the address specified in Section 12.01
(or as set forth in a notice delivered pursuant to Section 8.01(n) and
Section 12.01(c)). Each Restricted Subsidiary's jurisdiction of organization,
name as listed in the public records of its jurisdiction of organization,
organizational identification number in its jurisdiction of organization, and
the location of its principal place of business and chief executive office is
stated on Schedule 7.15 (or as set forth in a notice delivered pursuant to
Section 8.01(n)).

        Section 7.17    Properties; Titles, Etc.    

        (a)   Each of the Borrower and the Restricted Subsidiaries has good and
defensible title to the Oil and Gas Properties evaluated in the most recently
delivered Reserve Report and good title to all its personal Properties, in each
case, free and clear of all Liens except Liens permitted by Section 9.03. After
giving full effect to the Excepted Liens, the Borrower or the Restricted
Subsidiary specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or such Restricted Subsidiary to bear the
costs and expenses relating to the maintenance, development and operations of
each such Property in an amount in excess of the working interest of each
Property set forth in the most recently delivered Reserve Report that is

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not offset by a corresponding proportionate increase in the Borrower's or such
Restricted Subsidiary's net revenue interest in such Property.

        (b)   All material leases and agreements necessary for the conduct of
the business of the Borrower and the Restricted Subsidiaries are valid and
subsisting, in full force and effect, and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which could
reasonably be expected to have a Material Adverse Effect.

        (c)   The rights and Properties presently owned, leased or licensed by
the Borrower and the Restricted Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Borrower and the Restricted Subsidiaries to conduct their business in
all material respects in the same manner as its business has been conducted
prior to the date hereof.

        (d)   All of the Properties of the Borrower and the Restricted
Subsidiaries which are reasonably necessary for the operation of their
businesses are in good working condition and are maintained in accordance with
prudent business standards.

        (e)   The Borrower and each Restricted Subsidiary owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
Property material to its business, and the use thereof by the Borrower and such
Restricted Subsidiary does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect. The Borrower
and its Restricted Subsidiaries either own or have valid licenses or other
rights to use all databases, geological data, geophysical data, engineering
data, seismic data, maps, interpretations and other technical information used
in their businesses as presently conducted, subject to the limitations contained
in the agreements governing the use of the same, which limitations are customary
for companies engaged in the business of the exploration and production of
Hydrocarbons, with such exceptions as could not reasonably be expected to have a
Material Adverse Effect.

        Section 7.18    Maintenance of Properties.    Except for such acts or
failures to act as could not be reasonably expected to have a Material Adverse
Effect, the Oil and Gas Properties (and Properties unitized therewith) of the
Borrower and its Restricted Subsidiaries have been maintained, operated and
developed in a good and workmanlike manner and in conformity with all Government
Requirements and in conformity with the provisions of all leases, subleases or
other contracts comprising a part of the Hydrocarbon Interests and other
contracts and agreements forming a part of the Oil and Gas Properties of the
Borrower and its Restricted Subsidiaries. Specifically in connection with the
foregoing, except for those as could not be reasonably expected to have a
Material Adverse Effect, (i) no Oil and Gas Property of the Borrower or any
Restricted Subsidiary is subject to having allowable production reduced below
the full and regular allowable (including the maximum permissible tolerance)
because of any overproduction (whether or not the same was permissible at the
time) and (ii) none of the wells comprising a part of the Oil and Gas Properties
(or Properties unitized therewith) of the Borrower or any Restricted Subsidiary
is deviated from the vertical more than the maximum permitted by Government
Requirements, and such wells are, in fact, bottomed under and are producing
from, and the well bores are wholly within, the Oil and Gas Properties (or in
the case of wells located on Properties unitized therewith, such unitized
Properties) of the Borrower or such Restricted Subsidiary. All pipelines, wells,
gas processing plants, platforms and other material improvements, fixtures and
equipment owned in whole or in part by the Borrower or any of its Restricted
Subsidiaries that are necessary to conduct normal operations are being
maintained in a state adequate to conduct normal operations, and with respect to
such of the foregoing which are operated by the Borrower or any of its
Restricted Subsidiaries, in a manner consistent with the Borrower's or its
Restricted Subsidiaries' past

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practices (other than those the failure of which to maintain in accordance with
this Section 7.18 could not reasonably be expected to have a Material Adverse
Effect).

        Section 7.19    Gas Imbalances, Prepayments.    As of the date hereof,
except as set forth on Schedule 7.19 or on the most recent certificate delivered
pursuant to Section 8.12(c), on a net basis there are no gas imbalances, take or
pay or other prepayments which would require the Borrower or any of its
Restricted Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor exceeding 0.8 bcf of gas (on an mcf equivalent basis) in the aggregate.

        Section 7.20    Marketing of Production.    Except for contracts listed
and in effect on the date hereof on Schedule 7.20, and thereafter either
disclosed in writing to the Administrative Agent or included in the most
recently delivered Reserve Report (with respect to all of which contracts the
Borrower represents that it or its Restricted Subsidiaries are receiving a price
for all production sold thereunder which is computed substantially in accordance
with the terms of the relevant contract and are not having deliveries curtailed
substantially below the subject Property's delivery capacity), no material
agreements exist which are not cancelable on 60 days notice or less without
penalty or detriment for the sale of production from the Borrower's or its
Restricted Subsidiaries' Hydrocarbons (including, without limitation, calls on
or other rights to purchase, production, whether or not the same are currently
being exercised) that (a) pertain to the sale of production at a fixed price and
(b) have a maturity or expiry date of longer than six (6) months from the date
hereof.

        Section 7.21    Swap Agreements.    Schedule 7.21, as of the date
hereof, and after the date hereof, each report required to be delivered by the
Borrower pursuant to Section 8.01(e), sets forth, a true and complete list of
all Swap Agreements of the Borrower and each Restricted Subsidiary, the material
terms thereof (including the type, term, effective date, termination date and
notional amounts or volumes), the net mark to market value thereof, all credit
support agreements relating thereto (including any margin required or supplied)
and the counterparty to each such agreement.

        Section 7.22    Use of Proceeds.    The proceeds of the Loans shall be
used to provide working capital for exploration and production operations, to
refinance Debt under the Existing Credit Agreements, to provide funding in
connection with the Mergers and for general corporate purposes. The Borrower and
its Subsidiaries are not engaged principally, or as one of its or their
important activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying margin stock
(within the meaning of Regulation T, U or X of the Board). No part of the
proceeds of any Loan will be used for any purpose which violates the provisions
of Regulations T, U or X of the Board.

        Section 7.23    Solvency.    After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt (after taking into account the timing and amounts of
cash to be received by each of the Borrower and the Guarantors and the amounts
to be payable on or in respect of its liabilities, and giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement) as such Debt becomes absolute and matures and (c) each
of the Borrower and the Guarantors will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct
of its business.

        Section 7.24    Senior Indebtedness.    The Indebtedness of the Borrower
constitutes "Senior Indebtedness" and the Indebtedness of each Guarantor under
the Loan Documents to which it is a

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party constitutes "Guarantor Senior Indebtedness" under and as defined in the
Senior Subordinated Convertible Note.

        Section 7.25    Mergers.    The copies of the Merger Documents
previously delivered by the Borrower to the Administrative Agent are true,
accurate and complete and have not been amended or modified in any manner, other
than pursuant to amendments or modifications previously delivered to the
Administrative Agent. Neither the Borrower nor any Person constituting a
Subsidiary prior to the effectiveness of the Mergers is in default in respect of
any material term or obligation set forth in the Merger Documents. To the
Knowledge of the Borrower, none of the Targets or any of each Target's
respective shareholders, members, partners or other holders of Equity Interests
is in default in respect of any material term or obligation set forth in the
Merger Documents.

ARTICLE VIII
Affirmative Covenants

        Until the principal of and interest on each Loan and all fees payable
hereunder and all other amounts payable under the Loan Documents shall have been
paid in full, the Borrower covenants and agrees with the Lenders that:

        Section 8.01    Financial Statements; Ratings Change; Other
Information.    The Borrower will furnish to the Administrative Agent and each
Lender:

        (a)    Annual Financial Statements.    As soon as available, but in any
event in accordance with then applicable law and not later than 90 days after
the end of each fiscal year of the Borrower, its audited consolidated balance
sheet and related statements of operations, stockholders' equity and cash flows
as of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by independent
public accountants of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied.

        (b)    Quarterly Financial Statements.    As soon as available, but in
any event in accordance with then applicable law and not later than 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower, its consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes.

        (c)    Certificate of Financial Officer—Compliance.    Concurrently with
any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit D hereto
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 8.13(b) and Section 9.01 and (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 7.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate.

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        (d)    Certificate of Financial Officer—Consolidating
Information.    If, at any time, all of the Consolidated Subsidiaries of the
Borrower are not Consolidated Restricted Subsidiaries, then concurrently with
any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer setting forth consolidating spreadsheets that
show all Consolidated Unrestricted Subsidiaries and the eliminating entries, in
such form as would be presentable to the auditors of the Borrower.

        (e)    Certificate of Financial Officer—Swap Agreements.    Concurrently
with any delivery of financial statements under Section 8.01(a) and
Section 8.01(b), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all Swap
Agreements of the Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark-to-market value therefor, any new credit
support agreements relating thereto not listed on Schedule 7.21, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.

        (f)    Certificate of Insurer—Insurance Coverage.    Concurrently with
any delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.

        (g)    Other Accounting Reports.    Promptly upon receipt thereof, a
copy of each other report or letter submitted to the Borrower or any of its
Subsidiaries by independent accountants in connection with any annual, interim
or special audit made by them of the books of the Borrower or any such
Subsidiary, and a copy of any response by the Borrower or any such Subsidiary,
or the Board of Directors of the Borrower or any such Subsidiary, to such letter
or report.

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        (h)    SEC and Other Filings; Reports to Shareholders.    Promptly after
the same become publicly available, and upon the request of the Lenders, copies
of all periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the SEC, or with any national securities
exchange and distributed by the Borrower to its shareholders.

        (i)    Notices Under Material Instruments.    Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.

        (j)    Lists of Purchasers.    Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 8.12, a list of
Persons who purchase (or did purchase in the last six months) at least 70% of
the Hydrocarbons from the Borrower or any Restricted Subsidiary.

        (k)    Notice of Sales of Oil and Gas Properties.    In the event the
Borrower or any Restricted Subsidiary intends to sell, transfer, assign or
otherwise dispose of at least $250,000 worth of any Oil or Gas Properties or any
Equity Interests in any Subsidiary in accordance with Section 9.13, prior
written notice of such disposition, the price thereof and the anticipated date
of closing.

        (l)    Notice of Casualty Events.    Prompt written notice, and in any
event within three Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event.

        (m)    Certificate of Responsible Officer—Total Debt.    Upon (A) any
change to Total PV pursuant to a Scheduled Redetermination or an Interim
Redetermination or pursuant to Section 8.12(b) or Section 9.13 or (B) the
incurrence of any Debt by the Borrower or any of its Consolidated Subsidiaries,
the Borrower will promptly, but in any event within fifteen (15) days after any
such event, deliver a certificate of a Responsible Officer of the Borrower
setting forth the Total Debt of the Borrower and the Total PV, both prior to and
after giving effect to such event, and demonstrating compliance with
Section 2.07.

        (n)    Information Regarding Borrower and Guarantors.    Prompt written
notice (and in any event within thirty (10) days prior thereto) of any change
(i) in the Borrower or any Guarantor's corporate name or in any trade name used
to identify such Person in the conduct of its business or in the ownership of
its Properties, (ii) in the location of the Borrower or any Guarantor's chief
executive office or principal place of business, (iii) in the Borrower or any
Guarantor's identity or corporate structure or in the jurisdiction in which such
Person is incorporated or formed, (iv) in the Borrower or any Guarantor's
jurisdiction of organization or such Person's organizational identification
number in such jurisdiction of organization, and (v) in the Borrower or any
Guarantor's federal taxpayer identification number.

        (o)    Production Report and Lease Operating Statements.    With the
delivery of quarterly financial statements under Section 8.01(b) and in any
event, no later than 60 days after the end of each fiscal quarter, a report
setting forth, for each calendar month during the then current fiscal year to
date on a production date basis, the volume of production and sales attributable
to production (and the prices at which such sales were made and the revenues
derived from such sales) for each such calendar month from the Oil and Gas
Properties, and setting forth the related ad valorem, severance and production
taxes and lease operating expenses attributable thereto and incurred for each
such calendar month.

        (p)    Notices of Certain Changes.    Promptly, but in any event within
five (5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the

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certificate or articles of incorporation, by-laws, any preferred stock
designation or any other organic document of the Borrower or any Restricted
Subsidiary.

        (q)    Ratings Change.    Promptly after Moody's or S&P shall have
announced a change in the rating, established or deemed to have been established
for the Borrower or any Material Indebtedness, written notice of such rating
change.

        (r)    Notices Relating to Mergers.    In the event that the purchase
price of the Mergers is adjusted, the Borrower shall promptly give the
Administrative Agent notice in reasonable detail of such circumstances as set
forth in Section 6.01(r).

        (s)    Other Requested Information.    Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent or any Lender
may reasonably request.

        (t)    Delivery of Information Electronically.    Notices to the
Administrative Agent and the Lenders under this Section 8.01 may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent, including broadcast email to the Lenders that the
available information has been made available to the Lenders on either the
Borrower's "Intralinks" page or the Borrower's website at www.petrohawk.com.

        Section 8.02    Notices of Material Events.    The Borrower will furnish
to the Administrative Agent and each Lender prompt written notice of the
following:

        (a)   the occurrence of any Default;

        (b)   the filing or commencement of, or the threat in writing of, any
action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against or affecting the Borrower or any
Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or
arbitration previously disclosed to the Lenders that, if adversely determined,
could reasonably be expected to result in liability in excess of $1,000,000 not
fully covered by insurance, subject to normal deductibles;

        (c)   the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$500,000; and

        (d)   any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

        Section 8.03    Existence; Conduct of Business.    The Borrower will,
and will cause each Restricted Subsidiary to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business and maintain, if necessary, its qualification to
do business in each other jurisdiction in which its Oil and Gas Properties is
located or the ownership of its Properties requires such qualification, except
where the failure to so qualify could not reasonably be expected to have a
Material Adverse Effect; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 9.12.

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        Section 8.04    Payment of Obligations.    The Borrower will, and will
cause each Restricted Subsidiary to, pay its obligations, including Tax
liabilities of the Borrower and all of its Subsidiaries before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) the Borrower or
such Restricted Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect or result in the seizure or levy of any Property of the Borrower
or any Subsidiary.

        Section 8.05    Performance of Obligations under Loan Documents.    The
Borrower will pay the Notes according to the reading, tenor and effect thereof,
and the Borrower will, and will cause each Restricted Subsidiary to, do and
perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified.

        Section 8.06    Operation and Maintenance of Properties.    The
Borrower, at its own expense, will, and will cause each Restricted Subsidiary
to:

        (a)   operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a careful and efficient manner in accordance with the practices of
the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without limitation,
applicable pro ration requirements and Environmental Laws, and all applicable
laws, rules and regulations of every other Governmental Authority from time to
time constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.

        (b)   keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its Oil and Gas Properties and other
Properties, including, without limitation, all equipment, machinery and
facilities except, in each case, where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.

        (c)   promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.

        (d)   promptly perform or make reasonable and customary efforts to cause
to be performed, in accordance with industry standards, the obligations required
by each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties.

        (e)   operate its Oil and Gas Properties and other material Properties
or cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be operated in accordance with the
practices of the industry and in material compliance with all applicable
contracts and agreements and in compliance in all material respects with all
Governmental Requirements.

        (f)    to the extent the Borrower is not the operator of any Property,
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 8.06.

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        Section 8.07    Insurance.    The Borrower will, and will cause each
Restricted Subsidiary to, maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations. The loss payable clauses or
provisions in said insurance policy or policies insuring any of the collateral
for the Loans shall be endorsed in favor of and made payable to the
Administrative Agent as its interests may appear and such policies shall name
the Administrative Agent and the Lenders as "additional insureds" and provide
that the insurer will endeavor to give at least 30 days prior notice of any
cancellation to the Administrative Agent.

        Section 8.08    Books and Records; Inspection Rights.    The Borrower
will, and will cause each Restricted Subsidiary to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each Restricted Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its Properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.

        Section 8.09    Compliance with Laws.    The Borrower will, and will
cause each Restricted Subsidiary to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its Property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

        Section 8.10    Environmental Matters.    

        (a)   The Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary and each Subsidiary's
Properties and operations to comply, with all applicable Environmental Laws, the
breach of which could be reasonably expected to have a Material Adverse Effect;
(ii) not dispose of or otherwise release, and shall cause each Subsidiary not to
dispose of or otherwise release, any oil, oil and gas waste, hazardous
substance, or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties or any other Property to the extent caused by the
Borrower's or any of its Subsidiaries' operations except in compliance with
applicable Environmental Laws, the disposal or release of which could reasonably
be expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower's or its Subsidiaries'
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the "Remedial Work") in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(v) establish and implement, and shall cause each Subsidiary to establish and
implement, such procedures as may be necessary to continuously determine and
assure that the Borrower's and its Subsidiaries' obligations under this
Section 8.10(a) are timely and fully satisfied, which failure to establish and
implement could reasonably be expected to have a Material Adverse Effect.

        (b)   The Borrower will promptly, but in no event later than five days
of the occurrence of a triggering event, notify the Administrative Agent and the
Lenders in writing of any threatened action,

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investigation or inquiry by any Governmental Authority or any threatened demand
or lawsuit by any landowner or other third party against the Borrower or its
Subsidiaries or their Properties of which the Borrower has Knowledge in
connection with any Environmental Laws (excluding routine testing and corrective
action) if the Borrower reasonably anticipates that such action will result in
liability (whether individually or in the aggregate) in excess of $500,000, not
fully covered by insurance, subject to normal deductibles.

        (c)   The Borrower will, and will cause each Subsidiary to, provide
environmental audits and tests in accordance with American Society of Testing
Materials standards upon request by the Administrative Agent and the Lenders and
no more than once per year in the absence of any Event of Default (or as
otherwise required to be obtained by the Administrative Agent or the Lenders by
any Governmental Authority), in connection with any future acquisitions of Oil
and Gas Properties or other Properties.

        Section 8.11    Further Assurances.    

        (a)   The Borrower at its expense will, and will cause each Restricted
Subsidiary to, promptly execute and deliver to the Administrative Agent all such
other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of the Borrower or any Restricted
Subsidiary, as the case may be, in the Loan Documents, including the Notes, or
to further evidence and more fully describe the collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.

        (b)   The Borrower hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property without the signature of
the Borrower or any other Guarantor where permitted by law. A carbon,
photographic or other reproduction of the Security Instruments or any financing
statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law.

        Section 8.12    Reserve Reports.    

        (a)   On or before March 1st and September 1st of each year, commencing
January 1, 2005, the Borrower shall furnish to the Administrative Agent and the
Lenders a Reserve Report. The Reserve Report as of January 1 of each year shall
be prepared by one or more Approved Petroleum Engineers, and the July 1 Reserve
Report of each year shall be prepared by or under the supervision of the chief
engineer of the Borrower who shall certify such Reserve Report to be true and
accurate and to have been prepared in accordance with the procedures used in the
immediately preceding January 1 Reserve Report.

        (b)   In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of the Borrower who shall certify
such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding January 1
Reserve Report. For any Interim Redetermination requested by the Administrative
Agent or the Borrower pursuant to Section 2.07(a), the Borrower shall provide
such Reserve Report with an "as of" date as required by the Administrative Agent
as soon as possible, but in any event no later than thirty (30) days following
the receipt of such request.

        (c)   With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material

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respects: (i) the information contained in the Reserve Report and any other
information delivered in connection therewith is true and correct, and no
statements or conclusions exist in such Reserve Report which are based upon or
include misleading information or which fail to take into account material
information regarding the matters reported therein to the extent such
misstatement, misleading information or failure could reasonably be expected to
have a Material Adverse Effect, (ii) the Borrower or its Restricted Subsidiaries
owns good and defensible title to the Oil and Gas Properties evaluated in such
Reserve Report and such Properties are free of all Liens except for Liens
permitted by Section 9.03, (iii) except as set forth on an exhibit to the
certificate, on a net basis there are no gas imbalances, take or pay or other
prepayments in excess of the volume specified in Section 7.19 with respect to
its Oil and Gas Properties evaluated in such Reserve Report which would require
the Borrower or any Restricted Subsidiary to deliver Hydrocarbons either
generally or produced from such Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor, (iv) none of their
Oil and Gas Properties have been sold since the date of the last Total PV
determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such detail
as reasonably required by the Administrative Agent, (v) attached to the
certificate is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report which the
Borrower could reasonably be expected to have been obligated to list on
Schedule 7.20 had such agreement been in effect on the date hereof and
(vi) attached thereto is a schedule of the Oil and Gas Properties evaluated by
such Reserve Report that are Mortgaged Properties and certifying that each Oil
and Gas Property that constitutes collateral for the Senior Revolving Credit
Agreement also constitutes collateral for the Indebtedness outstanding under
this Agreement.

        Section 8.13    Title Information.    

        (a)   On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering enough of the Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall be reasonably satisfied with the status of
title to the Oil and Gas Properties evaluated by such Reserve Report.

        (b)   If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 90 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance acceptable to the Administrative Agent so that the
Administrative Agent shall be reasonably satisfied with the status of title to
the Oil and Gas Properties evaluated by such Reserve Report.

        (c)   If the Borrower is unable to cure any title defect requested by
the Administrative Agent or the Lenders to be cured within the 90-day period or
the Borrower does not comply with the requirements to provide acceptable title
information to the Oil and Gas Properties evaluated in the most recent Reserve
Report, such default shall not be a Default, but instead the Administrative
Agent and/or the Majority Lenders shall have the right to exercise the following
remedy in their sole discretion from time to time, and any failure to so
exercise this remedy at any time shall not be a waiver as to future exercise of
the remedy by the Administrative Agent or the Lenders. To the extent that the
Administrative Agent or the Majority Lenders are not satisfied with title to any
Mortgaged Property after the 90-day period has elapsed, the Administrative Agent
may send a notice to the Borrower and the Lenders that the then outstanding
Total PV shall be reduced by an amount as determined by the Majority Lenders to
cause the Borrower to be in compliance with the requirement

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to provide acceptable title information to the Oil and Gas Properties. This new
Total PV shall become effective immediately after receipt of such notice.

        Section 8.14    Additional Collateral; Additional Guarantors.    

        (a)   In connection with each redetermination of the Total PV, the
Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the
Mortgaged Properties represent at least 80% of the total value of the Oil and
Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Mortgaged Properties do not
represent at least 80% of such total value, then the Borrower shall, and shall
cause its Restricted Subsidiaries to, grant, within thirty (30) days of delivery
of the certificate required under Section 8.12(b), to the Administrative Agent
as security for the Indebtedness a first-priority Lien interest (subject only to
Excepted Liens of the type described in clauses (a) to (d) and (f) of the
definition thereof, but subject to the provisos at the end of such definition)
on additional Oil and Gas Properties not already subject to a Lien of the
Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 80% of such total value. All such Liens will
be created and perfected by and in accordance with the provisions of deeds of
trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes. In order to
comply with the foregoing, if any Restricted Subsidiary places a Lien on its Oil
and Gas Properties and such Restricted Subsidiary is not a Guarantor, then it
shall become a Guarantor and comply with Section 8.14(b).

        (b)   In the event that (i) the Borrower determines that any Restricted
Subsidiary is a Material Domestic Subsidiary or (ii) any Domestic Subsidiary
incurs or guarantees any Debt, the Borrower shall promptly cause such Restricted
Subsidiary to guarantee the Indebtedness pursuant to the Guaranty Agreement. In
connection with any such guaranty, the Borrower shall, or shall cause such
Restricted Subsidiary to, (A) execute and deliver a supplement to the Guaranty
Agreement executed by such Subsidiary, (B) pledge all of the Equity Interests of
such new Subsidiary (including, without limitation, delivery of original stock
certificates evidencing the Equity Interests of such Subsidiary, together with
an appropriate undated stock powers for each certificate duly executed in blank
by the registered owner thereof) and (C) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.

        (c)   In the event that the Borrower or any Domestic Subsidiary becomes
the owner of a Foreign Subsidiary which has total assets in excess of $500,000,
then the Borrower shall promptly, or shall cause such Domestic Subsidiary to
promptly, guarantee the Indebtedness pursuant to the Guaranty Agreement. In
connection with any such guaranty, the Borrower shall, or shall cause such
Domestic Subsidiary to, (i) execute and deliver a supplement to the Guaranty
Agreement, (ii) pledge 65% of all the Equity Interests of such Foreign
Subsidiary (including, without limitation, delivery of original stock
certificates evidencing such Equity Interests of such Foreign Subsidiary,
together with appropriate stock powers for each certificate duly executed in
blank by the registered owner thereof) and (iii) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.

        Section 8.15    ERISA Compliance.    The Borrower will promptly furnish
and will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to
the Administrative Agent (i) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan or any trust created
thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA
Event or of any "prohibited transaction," as described in section 406 of ERISA
or in section 4975 of the Code, in connection with any Plan or any trust created
thereunder, a written notice signed by the President or

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the principal Financial Officer, the Subsidiary or the ERISA Affiliate, as the
case may be, specifying the nature thereof, what action the Borrower, the
Subsidiary or the ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken or proposed by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, and
(iii) immediately upon receipt thereof, copies of any notice of the PBGC's
intention to terminate or to have a trustee appointed to administer any Plan.
With respect to each Plan (other than a Multiemployer Plan), the Borrower will,
and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full and
in a timely manner, without incurring any late payment or underpayment charge or
penalty and without giving rise to any Lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.

        Section 8.16    Swap Agreements.    The Borrower shall or shall cause
one or more of its Restricted Subsidiaries (which is a Guarantor) to maintain
the hedged position established by the Swap Agreements required under
Section 6.01(q) during the period specified therein and shall neither assign,
terminate or unwind any such Swap Agreements nor sell any Swap Agreements if the
effect of such action (when taken together with any other Swap Agreements
executed contemporaneously with the taking of such action) would have the effect
of canceling its positions under such Swap Agreements required hereby.

        Section 8.17    Unrestricted Subsidiaries.    The Borrower:

        (a)   will cause the management, business and affairs of each of the
Borrower and its Restricted Subsidiaries to be conducted in such a manner
(including, without limitation, by keeping separate books of account, furnishing
separate financial statements of Unrestricted Subsidiaries to creditors and
potential creditors thereof and by not permitting Properties of the Borrower and
its respective Restricted Subsidiaries to be commingled) so that each
Unrestricted Subsidiary that is a corporation will be treated as a corporate
entity separate and distinct from Borrower and the Restricted Subsidiaries.

        (b)   will not, and will not permit any of the Restricted Subsidiaries
to, incur, assume, guarantee or be or become liable for any Debt of any of the
Unrestricted Subsidiaries.

        (c)   will not permit any Unrestricted Subsidiary to hold any Equity
Interest in, or any Debt of, the Borrower or any Restricted Subsidiary.

        Section 8.18    Marketing Activities.    The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, engage in marketing activities
for any Hydrocarbons or enter into any contracts related thereto other than
(i) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to
be produced from their proved Oil and Gas Properties during the period of such
contract, (ii) contracts for the sale of Hydrocarbons scheduled or reasonably
estimated to be produced from proved Oil and Gas Properties of third parties
during the period of such contract associated with the Oil and Gas Properties of
the Borrower and its Restricted Subsidiaries that the Borrower or one of its
Restricted Subsidiaries has the right to market pursuant to joint operating
agreements, unitization agreements or other similar contracts that are usual and
customary in the oil and gas business and (iii) other contracts for the purchase
and/or sale of Hydrocarbons of third parties (A) which have generally offsetting
provisions (i.e. corresponding pricing mechanics, delivery dates and points and
volumes) such that no "position" is taken and (B) for which appropriate credit
support has been taken to alleviate the material credit risks of the
counterparty thereto.

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ARTICLE IX
Negative Covenants

        Until the principal of and interest on each Loan and all fees payable
hereunder and all other amounts payable under the Loan Documents have been paid
in full, the Borrower covenants and agrees with the Lenders that:

        Section 9.01    Financial Covenants.    

        (a)    Total PV to Total Debt Ratio.    The Borrower will not at any
time after March 31, 2005 permit its ratio of Total PV to Total Debt to be less
than 1.5 to 1.0.

        (b)    Ratio of Total Debt to EBITDA.    The Borrower will not, at any
time, permit its ratio of Total Debt as of such time to EBITDA for the period of
four fiscal quarters ending on the last day of the fiscal quarter immediately
preceding the date of determination for which financial statements are available
to be greater than 4.0 to 1.0.

        Section 9.02    Debt.    The Borrower will not, and will not permit any
Restricted Subsidiary to, incur, create, assume or suffer to exist any Debt,
except:

        (a)   the Notes or other Indebtedness arising under the Loan Documents
or any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.

        (b)   Debt of the Borrower and its Restricted Subsidiaries existing on
the date hereof that is reflected in the Financial Statements.

        (c)   accounts payable and accrued expenses, liabilities or other
obligations to pay the deferred purchase price of Property or services, from
time to time incurred in the ordinary course of business which are not greater
than sixty (60) days past the date of invoice or delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP.

        (d)   Debt under Capital Leases not to exceed $1,000,000.

        (e)   Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of the Oil and Gas
Properties.

        (f)    intercompany Debt between the Borrower and any Restricted
Subsidiary or between Restricted Subsidiaries to the extent permitted by
Section 9.05(g); provided that such Debt is not held, assigned, transferred,
negotiated or pledged to any Person other than the Borrower or one of its
Wholly-Owned Subsidiaries, and, provided further, that any such Debt owed by
either the Borrower or a Guarantor shall be subordinated to the Indebtedness on
terms set forth in the Guaranty Agreement.

        (g)   endorsements of negotiable instruments for collection in the
ordinary course of business.

        (h)   Debt under the Senior Subordinated Convertible Note or the
Restructured Subordinated Note, the principal amount of which does not exceed
$35,000,000 in the aggregate.

        (i)    Debt now or hereafter outstanding under the Senior Revolving
Credit Agreement (and any guaranties thereof by the Guarantors), provided that
(A) the aggregate principal amount of the Senior Revolving Credit Agreement
shall not exceed $400,000,000, (B) no part of the Debt for principal owing under
the Senior Revolving Credit Agreement is subordinated in right or payment to any
other Debt for principal owing under the Senior Revolving Credit Agreement, and
(C) at the time each such item of Debt is incurred (1) the aggregate amount
thereof does not exceed the Borrowing Base then in effect under the Senior
Revolving Credit Agreement (or, if such "Borrowing Base" ever ceases to exist or
diverges materially from a conventional commercial bank borrowing base, does not
exceed a conventional commercial bank borrowing base), and (2) after

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giving effect to the incurrence of such Debt, no Default or Event of Default
then exists under Section 9.01.

        (j)    other Debt not to exceed $1,000,000 in the aggregate at any one
time outstanding.

        Section 9.03    Liens.    The Borrower will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on
any of its Properties (now owned or hereafter acquired), except:

        (a)   Liens securing the payment of any Indebtedness.

        (b)   Excepted Liens.

        (c)   Liens securing Capital Leases permitted by Section 9.02(d) but
only on the Property under lease.

        (d)   Liens on Property not constituting collateral for the Indebtedness
and not otherwise permitted by the foregoing clauses of this Section 9.03;
provided that the aggregate principal or face amount of all Debt secured under
this Section 9.03(d) shall not exceed $1,000,000 at any time.

        (e)   Liens on Property securing the Senior Revolving Credit Agreement
permitted by Section 9.02(i) provided; however, that no Lien shall be granted on
any Property to secure the Senior Revolving Credit Agreement unless the Lien is
also being granted to secure the Indebtedness, this Agreement and the other Loan
Documents.

        Section 9.04    Dividends, Distributions and Redemptions, Repayment of
Senior Subordinated Convertible Note.    

        (a)    Restricted Payments.    The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, return any capital to its
stockholders or make any distribution of its Property to its Equity Interest
holders, except (i) the Borrower may declare and pay dividends with respect to
its Equity Interests payable solely in additional shares of its Equity Interests
(other than Disqualified Capital Stock), (ii) Subsidiaries may declare and pay
dividends ratably with respect to their Equity Interests, (iii) the Borrower may
make Restricted Payments pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Borrower and its
Subsidiaries and (iv) the Borrower may redeem fractional shares of its common
stock for cash in connection with the conversion of the Senior Subordinated
Convertible Note, provided that the aggregate amount so redeemed does not exceed
$50,000, (v) the Borrower may declare and pay scheduled cash dividends from and
after April 1, 2005 with respect to its Designated Preferred Stock at a coupon
not to exceed 8% per annum, provided that at the time such dividend is declared
and paid (1) no Borrowing Base deficiency exists under the Senior Revolving
Credit Agreement and (2) no Event of Default exists or would result from the
payment of such dividend and (vi) the Borrower may terminate its directors' or
employees' option agreements or restricted stock agreements under any of
Borrower's incentive stock plans provided; however, that the aggregate amounts
paid in respect thereof do not exceed $500,000.

        (b)    Redemption of Senior Subordinated Convertible Note; Amendment of
Senior Subordinated Convertible Note.    The Borrower will not, and will not
permit any Restricted Subsidiary to: (i) prior to the date that is ninety-one
(91) days after the Maturity Date, call, make or offer to make any optional or
voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether
in whole or in part) the Senior Subordinated Convertible Note in respect
thereof, provided that the Borrower may (A) Redeem the Senior Subordinated
Convertible Note with the cash proceeds of one or more sales of Equity Interests
(other than Disqualified Capital Stock) either after the Effective Date or on
the Effective Date with the gross proceeds of the sale of Equity Interests
contemplated by Section 6.01(h) to the extent the gross proceeds exceed
$175,000,000, provided that if the gross proceeds from the sale of such Equity
Interests contemplated by Section 6.01(h) is $200,000,000 or more, the Borrower
may

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Redeem the entire outstanding balance of the Senior Subordinated Convertible
Note, provided in any case under this clause (A) (1) no Default or Event of
Default has occurred or is continuing or would occur after giving effect thereto
and (2) the Borrower would have at least $15,000,000 of unused availability
under the Senior Revolving Credit Agreement, (B) exchange the Senior
Subordinated Convertible Note with the Restructured Subordinated Note and
(C) prepay the Senior Subordinated Convertible Note, in whole, but not in part,
with the net cash proceeds of any increases in the principal amount of the Loans
subject to the terms of Section 12.02(b)(ix), (ii) amend, modify, waive or
otherwise change, consent or agree to any amendment, modification, waiver or
other change to, any of the terms of the Senior Subordinated Convertible Note,
if (A) the effect thereof would be to shorten its maturity or average life or
increase the amount of any payment of principal thereof or increase the rate or
shorten any period for payment of interest thereon or (B) such action requires
the payment of a consent fee (howsoever described).

        Section 9.05    Investments, Loans and Advances.    The Borrower will
not, and will not permit any Restricted Subsidiary to, make or permit to remain
outstanding any Investments in or to any Person, except that the foregoing
restriction shall not apply to:

        (a)   Investments reflected in the Financial Statements or which are
disclosed to the Lenders in Schedule 9.05.

        (b)   accounts receivable arising in the ordinary course of business.

        (c)   direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof.

        (d)   commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by S&P or Moody's.

        (e)   deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody's, respectively or, in the case of any Foreign
Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary
conducts operations having assets in excess of $500,000,000 (or its equivalent
in another currency).

        (f)    deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).

        (g)   Investments (i) made by the Borrower in or to the Guarantors,
(ii) made by any Restricted Subsidiary in or to the Borrower or any Guarantor,
(iii) made by the Borrower or any Restricted Subsidiary in or to all other
Domestic Subsidiaries which are not Guarantors in an aggregate amount at any one
time outstanding not to exceed $200,000, and (iv) made by the Borrower or any
Restricted Subsidiary in or to any Foreign Subsidiary in an aggregate amount at
any one time outstanding not to exceed $100,000.

        (h)   subject to the limits in Section 9.07, Investments (including,
without limitation, capital contributions) in general or limited partnerships or
other types of entities (each a "venture") entered into by the Borrower or a
Restricted Subsidiary with others in the ordinary course of business; provided
that (i) any such venture is engaged exclusively in oil and gas exploration,
development, production, processing and related activities, including
transportation, (ii) the interest in such venture is acquired in the ordinary
course of business and on fair and reasonable terms

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and (iii) such venture interests acquired and capital contributions made (valued
as of the date such interest was acquired or the contribution made) do not
exceed, in the aggregate at any time outstanding an amount equal to $500,000.

        (i)    subject to the limits in Section 9.07, Investments in direct
ownership interests in additional Oil and Gas Properties and gas gathering
systems related thereto or related to farm-out, farm-in, joint operating, joint
venture or area of mutual interest agreements, gathering systems, pipelines or
other similar arrangements which are usual and customary in the oil and gas
exploration and production business located within the geographic boundaries of
the United States of America.

        (j)    loans or advances to employees, officers or directors in the
ordinary course of business of the Borrower or any of its Restricted
Subsidiaries, in each case only as permitted by applicable law, including
Section 402 of the Sarbanes Oxley Act of 2002, but in any event not to exceed
$50,000 in the aggregate at any time.

        (k)   Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 9.05
owing to the Borrower or any Restricted Subsidiary as a result of a bankruptcy
or other insolvency proceeding of the obligor in respect of such debts or upon
the enforcement of any Lien in favor of the Borrower or any of its Restricted
Subsidiaries; provided that the Borrower shall give the Administrative Agent
prompt written notice in the event that the aggregate amount of all Investments
held at any one time under this Section 9.05(k) exceeds $500,000.

        (l)    Investments in Unrestricted Subsidiaries, provided that the
aggregate amount of all such Investments at any one time shall not exceed
$5,000,000 (or its equivalent in other currencies as of the date of Investment).

        Section 9.06    Designation and Conversion of Restricted and
Unrestricted Subsidiaries; Debt of Unrestricted Subsidiaries.    

        (a)   Unless designated as an Unrestricted Subsidiary on Schedule 7.15
as of the date hereof or thereafter, assuming compliance with Section 9.06(b),
any Person that becomes a Subsidiary of the Borrower or any of its Restricted
Subsidiaries shall be classified as a Restricted Subsidiary.

        (b)   The Borrower may designate by written notification thereof to the
Administrative Agent, any Restricted Subsidiary, including a newly formed or
newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) prior, and after
giving effect, to such designation, no Default would exist and (ii) such
designation is deemed to be an Investment in an Unrestricted Subsidiary in an
amount equal to the fair market value as of the date of such designation of the
Borrower's direct and indirect ownership interest in such Subsidiary and such
Investment would be permitted to be made at the time of such designation under
Section 9.05(l). Except as provided in this Section 9.06(b), no Restricted
Subsidiary may be redesignated as an Unrestricted Subsidiary.

        (c)   The Borrower may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if after giving effect to such designation, (i) the
representations and warranties of the Borrower and its Restricted Subsidiaries
contained in each of the Loan Documents are true and correct on and as of such
date as if made on and as of the date of such redesignation (or, if stated to
have been made expressly as of an earlier date, were true and correct as of such
date), (ii) no Default would exist and (iii) the Borrower complies with the
requirements of Section 8.13(c), Section 8.17 and Section 9.16. Any such
designation shall be treated as a cash dividend in an amount equal to the lesser
of the fair market value of the Borrower's direct and indirect ownership
interest in such Subsidiary or the amount of the Borrower's cash investment
previously made for purposes of the limitation on Investments under
Section 9.05(l).

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        (d)   The Borrower shall not permit the aggregate principal amount of
all Non-Recourse Debt outstanding at any one time to exceed $10,000,000.

        Section 9.07    Nature of Business; International Operations.    Neither
the Borrower nor any Restricted Subsidiary will allow any material change to be
made in the character of its business as an independent oil and gas exploration
and production company. From and after the date hereof, the Borrower and its
Domestic Subsidiaries will not acquire or make any other expenditure (whether
such expenditure is capital, operating or otherwise) in or related to, any Oil
and Gas Properties not located within the geographical boundaries of the United
States.

        Section 9.08    Limitation on Leases.    Neither the Borrower nor any
Restricted Subsidiary will create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal but excluding Capital Leases and leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made by the Borrower and the Restricted Subsidiaries
pursuant to all such leases or lease agreements, including, without limitation,
any residual payments at the end of any lease, to exceed $3,000,000 in any
period of twelve consecutive calendar months during the life of such leases.

        Section 9.09    Proceeds of Notes.    The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.22. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. If requested by the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.

        Section 9.10    ERISA Compliance.    The Borrower and the Subsidiaries
will not at any time:

        (a)   engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter
43 of Subtitle D of the Code.

        (b)   terminate, or permit any ERISA Affiliate to terminate, any Plan in
a manner, or take any other action with respect to any Plan, which could result
in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to the
PBGC.

        (c)   fail to make, or permit any ERISA Affiliate to fail to make, full
payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto.

        (d)   permit to exist, or allow any ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan.

        (e)   permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by the
Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title IV
of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.

        (f)    contribute to or assume an obligation to contribute to, or permit
any ERISA Affiliate to contribute to or assume an obligation to contribute to,
any Multiemployer Plan.

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        (g)   acquire, or permit any ERISA Affiliate to acquire, an interest in
any Person that causes such Person to become an ERISA Affiliate with respect to
the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the
Borrower or a Subsidiary if such Person sponsors, maintains or contributes to,
or at any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan
that is subject to Title IV of ERISA under which the actuarial present value of
the benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities.

        (h)   incur, or permit any ERISA Affiliate to incur, a liability to or
on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.

        (i)    contribute to or assume an obligation to contribute to, or permit
any ERISA Affiliate to contribute to or assume an obligation to contribute to,
any employee welfare benefit plan, as defined in section 3(1) of ERISA,
including, without limitation, any such plan maintained to provide benefits to
former employees of such entities, that may not be terminated by such entities
in their sole discretion at any time without any material liability.

        (j)    amend, or permit any ERISA Affiliate to amend, a Plan resulting
in an increase in current liability such that the Borrower, a Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under
section 401(a)(29) of the Code.

        Section 9.11    Sale or Discount of Receivables.    Except for
receivables obtained by the Borrower or any Restricted Subsidiary out of the
ordinary course of business or the settlement of joint interest billing accounts
in the ordinary course of business or discounts granted to settle collection of
accounts receivable or the sale of defaulted accounts arising in the ordinary
course of business in connection with the compromise or collection thereof and
not in connection with any financing transaction, neither the Borrower nor any
Restricted Subsidiary will discount or sell (with or without recourse) any of
its notes receivable or accounts receivable.

        Section 9.12    Mergers, Etc.    With the exception of the Mergers, the
Borrower will not, and will not permit any Restricted Subsidiary to, merge into
or consolidate with any other Person, or permit any other Person to merge into
or consolidate with it, or sell, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its Property to any other Person (whether now owned or hereafter
acquired) (any such transaction, a "consolidation"), or liquidate or dissolve;
provided that the Borrower or any Restricted Subsidiary may participate in a
consolidation with any other Person; provided that:

        (a)   any Restricted Subsidiary (including a Foreign Subsidiary) may
participate in a consolidation with the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or any other Restricted
Subsidiary that is a Domestic Subsidiary (provided that if one of such parties
to the consolidation is a Foreign Subsidiary, such Domestic Subsidiary shall be
the continuing or surviving Person) and if one of such Restricted Subsidiaries
is a Wholly-Owned Subsidiary, then the surviving Person shall be a Wholly-Owned
Subsidiary; and

        (b)   any Foreign Subsidiary of the Borrower may participate in a
consolidation with any one or more Foreign Subsidiaries; provided that if one of
such Foreign Subsidiaries is a Wholly-Owned Subsidiary, the survivor shall be a
Wholly-Owned Subsidiary.

        Section 9.13    Sale of Properties.    The Borrower will not, and will
not permit any Restricted Subsidiary to, sell, assign, farm-out, convey or
otherwise transfer any Property except for (a) the sale of Hydrocarbons in the
ordinary course of business; (b) farmouts of undeveloped acreage and assignments
in connection with such farmouts; (c) the sale or transfer of equipment that is
no longer necessary for the business of the Borrower or such Restricted
Subsidiary or is replaced by equipment of at least comparable value and use;
(d) the sale, transfer or other disposition of Equity Interests in Unrestricted

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Subsidiaries; (e) the sale or other disposition (including Casualty Events) of
any Oil and Gas Property or any interest therein or any Restricted Subsidiary
owning Oil and Gas Properties; provided that (i) the consideration received in
respect of such sale or other disposition shall be cash, (ii) the consideration
received in respect of such sale or other disposition shall be equal to or
greater than the fair market value of the Oil and Gas Property, interest therein
or Restricted Subsidiary subject of such sale, lease or other disposition (as
reasonably determined by the board of directors of the Borrower and, if
requested by the Administrative Agent, the Borrower shall deliver a certificate
of a Responsible Officer of the Borrower certifying to that effect); provided
that if a "Borrowing Base" deficiency under the Senior Revolving Credit
Agreement shall exist, then either (1) the Majority Lenders must have consented,
such consent not to be unreasonably withheld or delayed, to such sale, lease or
other disposition, (2) the sale, lease or other disposition must occur pursuant
to an auction held in accordance with procedures that are ordinary and customary
in the oil and gas industry or (3) the sale, lease or other disposition must
occur pursuant to a non-binding bid process conducted by the Borrower or a
regionally or nationally recognized oil and gas asset disposition advisory
company in accordance with procedures that are customary in the oil and gas
industry, (iii) at such time and after giving effect to such sale, lease or
other disposition, no Borrowing Base deficiency under the Senior Revolving
Credit Agreement shall exist, provided, that the condition that no Borrowing
Base deficiency under the Senior Revolving Credit Agreement shall exist at the
time of any such sale, lease or other disposition shall not apply if the
Borrower notifies the Administrative Agent that proceeds of such sale, lease or
other disposition shall be used to remedy a Borrowing Base deficiency under the
Senior Revolving Credit Agreement and the Borrower in fact uses such proceeds to
remedy such Borrowing Base deficiency, to the extent thereof, with any surplus
proceeds being used for one or more of the purposes permitted by clause (v) of
this Section 9.13, (iv) if such sale or other disposition of Oil and Gas
Property or Restricted Subsidiary owning Oil and Gas Properties included in the
most recently delivered Engineering Report during any period between two
successive Scheduled Redeterminations is sold for a price in excess of
$7,500,000, individually or in the aggregate, then the Total PV shall be
reduced, effective immediately upon such sale or disposition, by an amount equal
to the value, if any, assigned such Property in the most recently delivered
Engineering Report and (v) an amount equal to 100% of the net proceeds received
from such sale, lease or other disposition shall be used within 90 days of such
disposition: (1) to acquire Property, plant and equipment or any business entity
used or useful in carrying on the business of the Borrower and its Restricted
Subsidiaries and having a fair market value at least equal to the fair market
value of the Properties sold, leased or otherwise disposed of or to improve or
replace any existing Property of the Borrower and its Subsidiaries used or
useful in carrying on the business of the Borrower and its Subsidiaries, (2) to
repay or retire Debt under the Senior Revolving Credit Agreement (with a
permanent reduction in the commitments thereunder) or (3) to Redeem the Notes;
and (f) sales and other dispositions of Properties not regulated by
Section 9.13(a) to (e) having a fair market value not to exceed $2,000,000
during any 12-month period.

        Section 9.14    Environmental Matters.    The Borrower will not, and
will not permit any Restricted Subsidiary to, cause or permit any of its
Property to be in violation of, or do anything or permit anything to be done
which will subject any such Property to any Remedial Work under any
Environmental Laws, assuming disclosure to the applicable Governmental Authority
of all relevant facts, conditions and circumstances, if any, pertaining to such
Property where such violations or remedial obligations could reasonably be
expected to have a Material Adverse Effect.

        Section 9.15    Transactions with Affiliates.    The Borrower will not,
and will not permit any Restricted Subsidiary to, enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (other than the Guarantors
and Wholly-Owned Subsidiaries of the Borrower) unless such transactions are
otherwise permitted under this Agreement and are upon fair and reasonable terms
no less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.

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        Section 9.16    Subsidiaries.    The Borrower will not, and will not
permit any Restricted Subsidiary to, create or acquire any additional Restricted
Subsidiary or redesignate an Unrestricted Subsidiary as a Restricted Subsidiary
unless the Borrower gives written notice to the Administrative Agent of such
creation or acquisition and complies with Section 8.14(b) and Section 8.14(c).
The Borrower shall not, and shall not permit any Restricted Subsidiary to, sell,
assign or otherwise dispose of any Equity Interests in any Restricted Subsidiary
except in compliance with Section 9.13(e).

        Section 9.17    Negative Pledge Agreements; Dividend
Restrictions.    The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any contract, agreement
or understanding (other than this Agreement, the Security Instruments or Capital
Leases creating Liens permitted by Section 9.03(c)) which in any way prohibits
or restricts the granting, conveying, creation or imposition of any Lien on any
of its Property in favor of the Administrative Agent and the Lenders or
restricts any Restricted Subsidiary from paying dividends or making
distributions to the Borrower or any Guarantor, or which requires the consent of
or notice to other Persons in connection therewith.

        Section 9.18    Gas Imbalances, Take-or-Pay or Other Prepayments.    The
Borrower will not allow gas imbalances, take-or-pay or other prepayments with
respect to the Oil and Gas Properties of the Borrower or any Restricted
Subsidiary that would require the Borrower or such Restricted Subsidiary to
deliver Hydrocarbons at some future time without then or thereafter receiving
full payment therefor to exceed 0.8 bcf of gas (on an mcf equivalent basis) in
the aggregate.

        Section 9.19    Swap Agreements.    The Borrower will not, and will not
permit any Restricted Subsidiary to, enter into any Swap Agreements with any
Person other than (a) Swap Agreements in respect of commodities (i) with an
Approved Counterparty and (ii) the notional volumes for which (when aggregated
with other commodity Swap Agreements then in effect other than basis
differential swaps on volumes already hedged pursuant to other Swap Agreements)
do not exceed, as of the date such Swap Agreement is executed, 85% of the
reasonably anticipated projected production (as shown in the Borrower's most
recent Engineering Report) from proved, developed, producing Oil and Gas
Properties for each month during the period during which such Swap Agreement is
in effect for each of crude oil and natural gas, calculated separately, (b) Swap
Agreements in respect of interest rates with an Approved Counterparty, as
follows: (i) Swap Agreements effectively converting interest rates from fixed to
floating, the notional amounts of which (when aggregated with all other Swap
Agreements of the Borrower and its Restricted Subsidiaries then in effect
effectively converting interest rates from fixed to floating) do not exceed 50%
of the then outstanding principal amount of the Borrower's Debt for borrowed
money which bears interest at a fixed rate and (ii) Swap Agreements effectively
converting interest rates from floating to fixed, the notional amounts of which
(when aggregated with all other Swap Agreements of the Borrower and its
Restricted Subsidiaries then in effect effectively converting interest rates
from floating to fixed) do not exceed 75% of the then outstanding principal
amount of the Borrower's Debt for borrowed money which bears interest at a
floating rate, and (c) Swap Agreements required under Section 6.01(q). In no
event shall any Swap Agreement contain any requirement, agreement or covenant
for the Borrower or any Restricted Subsidiary to post collateral or margin to
secure their obligations under such Swap Agreement or to cover market exposures.

        Section 9.20    Merger Documents.    The Borrower will not, and will not
permit any of its Subsidiaries to, amend, modify or supplement any of the Merger
Documents if the effect thereof could reasonably be expected to have a Material
Adverse Effect (and provided that the Borrower promptly furnishes to the
Administrative Agent a copy of such amendment, modification or supplement).

        Section 9.21    Anti-Layering.    Notwithstanding the foregoing, the
Borrower will not, and will not permit any Subsidiary to, incur, create, assume
or suffer to exist any Debt if such Debt is subordinate or junior in ranking in
right of payment to the Senior Revolving Credit Agreement, unless such Debt is
expressly subordinated in right of payment to the obligations under this
Agreement.

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ARTICLE X
Events of Default; Remedies

        Section 10.01    Events of Default.    One or more of the following
events shall constitute an "Event of Default":

        (a)   the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise.

        (b)   the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days.

        (c)   any representation or warranty made or deemed made by or on behalf
of the Borrower or any Restricted Subsidiary in or in connection with any Loan
Document or any amendment or modification of any Loan Document or waiver under
such Loan Document, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect when made or deemed made.

        (d)   the Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in Section 8.01(i),
Section 8.01(m), Section 8.01(q), Section 8.02, Section 8.03, Section 8.15 or in
ARTICLE IX.

        (e)   the Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d))
or any other Loan Document, and such failure shall continue unremedied for a
period of 30 days after the earlier to occur of (A) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (B) a Responsible Officer of the Borrower or such Restricted
Subsidiary otherwise becoming aware of such default.

        (f)    the Borrower or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness prior to the longer of (i) three (3) Business Days
after the same shall become due and payable or (ii) the expiration of any
applicable grace period.

        (g)   any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or require the Borrower or any Restricted Subsidiary
to make an offer in respect thereof.

        (h)   an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Restricted Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall be entered.

        (i)    the Borrower or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent

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to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in Section 10.01(h), (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Restricted Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing.

        (j)    the Borrower or any Restricted Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due.

        (k)   one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 (to the extent not covered by independent third
party insurance provided by insurers of the highest claims paying rating or
financial strength as to which the insurer does not dispute coverage and is not
subject to an insolvency proceeding) shall be rendered against the Borrower, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Restricted
Subsidiary to enforce any such judgment.

        (l)    the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against the Borrower or a Guarantor party thereto or shall be repudiated by any
of them, or cease to create a valid and perfected Lien of the priority required
thereby on any of the collateral purported to be covered thereby, except to the
extent permitted by the terms of this Agreement, or the Borrower or any
Restricted Subsidiary or any of their Affiliates shall so state in writing.

        (m)  the Subordination Agreement, after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in full
force and effect and valid, binding and enforceable in accordance with their
terms against the Borrower, PHAWK, LLC, any party thereto or holder of the
Senior Subordinated Convertible Note or shall be repudiated by any of them, or
cause the payment of the obligations of the Senior Subordinated Convertible Note
to be senior or pari passu in right to the payment of obligations of this
Agreement or any payment by the Borrower or any Guarantor in violation of the
terms of the Intercreditor Agreement.

        (n)   an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding (i) $250,000 in any year
or (ii) $500,000 for all periods.

        (o)   a Change in Control shall occur.

        Section 10.02    Remedies.    

        (a)   In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent, at
the direction of the Majority Lenders, shall, by notice to the Borrower, declare
the Notes and the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower and the Guarantors
accrued hereunder and under the Notes and the other Loan Documents (including,
without limitation, shall become due and payable immediately, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by the
Borrower and each Guarantor; and in case of

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an Event of Default described in Section 10.01(h), Section 10.01(i) or
Section 10.01(j), the Notes and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and the other obligations of
the Borrower and Guarantors accrued hereunder and under the Notes and the other
Loan Documents, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower and each Guarantor.

        (b)   In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.

        (c)   All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied: first, to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second, to accrued interest on the Notes; third, to fees; fourth, pro rata to
principal outstanding on the Notes; fifth, to any other Indebtedness; and any
excess shall be paid to the Borrower or as otherwise required by any
Governmental Requirement.

ARTICLE XI
The Administrative Agent

        Section 11.01    Appointment; Powers.    

        (a)   Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof and the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto.

        (b)   The Administrative Agent is hereby designated as the CUSIP agent
for all parties and is authorized to take all necessary or desirable steps to
obtain CUSIP Numbers from the CSB Service Bureau and to include those numbers on
all Loan Documents. The Administrative Agent is further authorized to take all
actions necessary or desirable to maintain accurate and updated information with
the CSB, including in connection with any amendment, modification, or
restatement of this Agreement. After the Effective Date, the Administrative
Agent is authorized to allow the CSB to publish the CUSIP Data to CUSIP
Subscribers.

        Section 11.02    Duties and Obligations of Administrative Agent.    The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except as
provided in Section 11.03, and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in ARTICLE VI or elsewhere herein, other than to confirm
receipt of items expressly required to

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be delivered to the Administrative Agent or as to those conditions precedent
expressly required to be to the Administrative Agent's satisfaction, (vi) the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower and its Subsidiaries or any other
obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its obligations hereunder or under any
other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein.

        Section 11.03    Action by Administrative Agent.    The Administrative
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Majority Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 12.02) and in all cases the Administrative Agent shall be fully
justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable, (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in
Section 12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, then the Administrative Agent shall take
such action with respect to such Default as shall be directed by the requisite
Lenders in the written instructions (with indemnities) described in this
Section 11.03, provided that, unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the Lenders.
In no event, however, shall the Administrative Agent be required to take any
action which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement, the Loan Documents or applicable law. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Majority Lenders or the Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02), and otherwise the Administrative
Agent shall not be liable for any action taken or not taken by it hereunder or
under any other Loan Document or under any other document or instrument referred
to or provided for herein or therein or in connection herewith or therewith
INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or
willful misconduct.

        Section 11.04    Reliance by Administrative Agent.    The Administrative
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person. The Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon and each of
the Borrower, and the Lenders hereby waives the right to dispute the
Administrative Agent's record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

        Section 11.05    Subagents.    The Administrative Agent may perform any
and all its duties and exercise its rights and powers by or through any one or
more sub-agents appointed by the Administrative Agent. The Administrative Agent
and any such sub-agent may perform any and all its

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duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions of the preceding Sections of this ARTICLE XI
shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities as Administrative Agent.

        Section 11.06    Resignation or Removal of Administrative
Agent.    Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this Section 11.06, the Administrative Agent
may resign at any time by notifying the Lenders, and the Borrower, and the
Administrative Agent may be removed at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right, with the consent of the Borrower, which consent shall not
be unreasonably withheld or delayed, to appoint a successor. If no successor
shall have been so appointed and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its resignation
or removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent. Upon the acceptance of its appointment as Administrative
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Administrative Agent's resignation hereunder, the provisions of this
ARTICLE XI and Section 12.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Administrative Agent.

        Section 11.07    Administrative Agent as a Lender.    Each bank serving
as an Administrative Agent hereunder shall have the same rights and powers in
its capacity as a Lender as any other Lender and may exercise the same as though
it were not an Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not an
Administrative Agent hereunder.

        Section 11.08    No Reliance.    Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and each
other Loan Document to which it is a party. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document, any
related agreement or any document furnished hereunder or thereunder. The
Administrative Agent shall not be required to keep themselves informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, neither the Administrative Agent nor the Arranger shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Administrative
Agent or any of its Affiliates. In this regard, each Lender acknowledges that
Vinson & Elkins L.L.P. is acting in this transaction as special counsel to the
Arranger only in respect of the Senior Revolving Credit Agreement. Each other
party hereto will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.

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        Section 11.09    Authority of Administrative Agent to Release Collateral
and Liens.    Each Lender hereby authorizes the Administrative Agent to release
any collateral that is permitted to be sold or released pursuant to the terms of
the Loan Documents. Each Lender hereby authorizes the Administrative Agent to
execute and deliver to the Borrower, at the Borrower's sole cost and expense,
any and all releases of Liens, termination statements, assignments or other
documents reasonably requested by the Borrower in connection with any sale or
other disposition of Property to the extent such sale or other disposition is
permitted by the terms of Section 9.13 or is otherwise authorized by the terms
of the Loan Documents.

        Section 11.10    The Arranger.    The Arranger shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than its duties, responsibilities and liabilities in its
capacity as Lender hereunder.

ARTICLE XII
Miscellaneous

        Section 12.01    Notices.    

        (a)   Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

          (i)  if to the Borrower, to it at 1100 Louisiana, Suite 4400, Houston,
Texas 77002, Attention: Shane M. Bayless (Telecopy No. (832) 204-2827), with a
copy to Hinkle, Elkouri Law Firm L.L.C., 301 North Main, Suite 2000, Wichita,
Kansas 67202, Attention: David S. Elkouri (Telecopy No. (316) 660-6011);

         (ii)  if to the Administrative Agent, to it at 919 Third Avenue, New
York, New York 10022, Attention: Millie Carillo, Loan Assistant (Telecopy No.
(212) 841-2683), with a copy to 1200 Smith Street, Suite 3100, Houston, Texas
77002, Attention: Brian Malone (Telecopy No. (713) 659-6915); and

        (iii)  if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

        (b)   Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.

        (c)   Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

        Section 12.02    Waivers; Amendments.    

        (a)   No failure on the part of the Administrative Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege, or any abandonment or discontinuance of steps
to enforce such right, power or privilege, under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any

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right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies of the Administrative Agent and the Lenders hereunder
and under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or any other Loan Document or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by Section 12.02(b), and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.

        (b)   Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall
(i) increase the Commitment of any Lender without the written consent of such
Lender, (ii) increase the amount determined to be Total PV without the written
consent of the Required Lenders, or modify Section 2.07 without the consent of
each Lender, (iii) reduce the principal amount of the Loan or reduce the rate of
interest thereon, or reduce any fees payable hereunder, or reduce any other
Indebtedness hereunder or under any other Loan Document, without the written
consent of each Lender affected thereby, (iv) postpone the scheduled date of
payment or prepayment of the principal amount of the Loan, or any interest
thereon, or any fees payable hereunder, or any other Indebtedness hereunder or
under any other Loan Document, or reduce the amount of, waive or excuse any such
payment, or postpone or extend the Maturity Date without the written consent of
each Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vi) waive or amend Section 6.01,
Section 8.14, or Section 10.02(c), or change the definition of the terms
"Domestic Subsidiary", "Foreign Subsidiary", "Material Domestic Subsidiary" or
"Subsidiary", without the written consent of each Lender, (vii) release any
Guarantor (except as set forth in the Guaranty Agreement), release a substantial
portion of the collateral (other than as provided in Section 11.09), or reduce
the percentage set forth in Section 8.14(a) to less than 80%, without the
written consent of each Lender, (viii) change any of the provisions of this
Section 12.02(b) or the definitions of "Required Lenders" or "Majority Lenders"
or any other provision hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or under any other Loan
Documents or make any determination or grant any consent hereunder or any other
Loan Documents, without the written consent of each Lender; provided further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, or (ix) increase
the principal amount of the Loans outstanding under this Agreement to an amount
in excess of $50,000,000 without the consent of each Lender. Notwithstanding the
foregoing, any supplement to Schedule 7.15 (Subsidiaries) shall be effective
simply by delivering to the Administrative Agent a supplemental schedule clearly
marked as such and, upon receipt, the Administrative Agent will promptly deliver
a copy thereof to the Lenders.

        Section 12.03    Expenses, Indemnity; Damage Waiver.    

        (a)   The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses, including all

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Intralinks expenses, and the cost of environmental audits and surveys and
appraisals, in connection with the syndication of the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and administration
(both before and after the execution hereof and including advice of counsel to
the Administrative Agent as to the rights and duties of the Administrative Agent
and the Lenders with respect thereto) of this Agreement and the other Loan
Documents and any amendments, modifications or waivers of or consents related to
the provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated) including, without limitation, fees and
expenses incurred in the process of obtaining and maintaining the CUSIP Numbers
and the information relative thereto with the CSB, (ii) all costs, expenses,
Taxes, assessments and other charges incurred by the Administrative Agent or any
Lender in connection with any filing, registration, recording or perfection of
any security interest contemplated by this Agreement or any Security Instrument
or any other document referred to therein, (iii) all out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement or any other Loan Document, including its rights under this
Section 12.03, or in connection with the Loans made hereunder, including,
without limitation, all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans.

        (b)   THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE
ARRANGER, AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND
RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL
FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY
OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY RESTRICTED SUBSIDIARY TO
COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH
ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY
BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN
ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR THE USE OF THE PROCEEDS
THEREFROM, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF
THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS
SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE
THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR
PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE,
RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL
OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR
ANY SUBSIDIARY WITH ANY

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ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (x) THE PAST
OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST
ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE
AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE,
STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT,
ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS
WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES
OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED
PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR
OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR
(xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH
THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A
PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNITEE.

        (c)   To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under Section 12.03(a) or (b), each
Lender severally agrees to pay to the Administrative Agent such Lender's ratable
share (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent in its capacity as such.

        (d)   To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the Transactions, or any Loan or the use of the
proceeds thereof.

        (e)   All amounts due under this Section 12.03 shall be payable not
later than five days after written demand therefor.

        Section 12.04    Successors and Assigns.    

        (a)   The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without

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the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section 12.04. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in Section 12.04(c)) and,
to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

        (b)   (i) Subject to the conditions set forth in Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:

        (A)  the Borrower, provided that no consent of the Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund or, if an Event of Default has occurred and is continuing, any other
assignee; and

        (B)  the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment to an assignee that is
a Lender immediately prior to giving effect to such assignment.

         (ii)  Assignments shall be subject to the following additional
conditions:

        (A)  except in the case of an assignment to a Lender or an Affiliate of
a Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment or Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

        (B)  each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement;

        (C)  the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

        (D)  the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

        (iii)  Subject to Section 12.04(b)(iv) and the acceptance and recording
thereof, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 5.01,
Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 12.04 shall be treated for purposes of this Agreement as a sale by

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such Lender of a participation in such rights and obligations in accordance with
Section 12.04(c).

        (iv)  The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and Commitments and principal amount of the Loans,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice. In
connection with any changes to the Register, if necessary, the Administrative
Agent will reflect the revisions on Annex I and forward a copy of such revised
Annex I to the Borrower and each Lender.

         (v)  Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 12.04(b)
and any written consent to such assignment required by Section 12.04(b), the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this Section 12.04(b).

        (c)   (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (A) such Lender's obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent, and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the proviso to Section 12.02 that affects such Participant. In
addition such agreement must provide that the Participant be bound by the
provisions of Section 12.03. Subject to Section 12.04(c)(ii), the Borrower
agrees that each Participant shall be entitled to the benefits of Section 5.01,
Section 5.02 and Section 5.03 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 12.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 12.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 4.01(c) as though it were a Lender.

         (ii)  A Participant shall not be entitled to receive any greater
payment under Section 5.01 or Section 5.03 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 5.03
unless the Borrower is notified of the participation sold to such Participant
and such Participant

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agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as
though it were a Lender.

        (d)   Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 12.04(d) shall not apply
to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

        (e)   Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower and the Guarantors to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any
state.

        Section 12.05    Survival; Revival; Reinstatement.    

        (a)   All covenants, agreements, representations and warranties made by
the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent, or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid. The provisions of Section 5.01, Section 5.02, Section 5.03 and
Section 12.03 and ARTICLE XI shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the termination of this Agreement, any other Loan
Document or any provision hereof or thereof.

        (b)   To the extent that any payments on the Indebtedness or proceeds of
any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.

        Section 12.06    Counterparts; Integration; Effectiveness.    

        (a)   This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.

        (b)   This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT

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ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

        (c)   Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

        Section 12.07    Severability.    Any provision of this Agreement or any
other Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

        Section 12.08    Right of Setoff.    If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations (of
whatsoever kind, including, without limitations obligations under Swap
Agreements) at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower or any Restricted Subsidiary against any of and
all the obligations of the Borrower or any Restricted Subsidiary owed to such
Lender now or hereafter existing under this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. The rights of each Lender under this Section 12.08 are in
addition to other rights and remedies (including other rights of setoff), which
such Lender or its Affiliates may have.

        Section 12.09    GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.    

        (a)   THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED. CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL
NOT APPLY TO THIS AGREEMENT OR THE NOTES.

        (b)   ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT
PRECLUDE A PARTY FROM

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OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING
JURISDICTION.

        (c)   EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED
PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

        (d)   EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
(iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION
12.09.

        Section 12.10    Headings.    Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

        Section 12.11    Confidentiality.    Each of the Administrative Agent
and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to this Agreement or any other Loan Document, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 12.11, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any Swap Agreement relating to the Borrower and its obligations,
(g) with the consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section 12.11 or (ii) becomes available to the Administrative Agent or any
Lender on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section 12.11, "Information" means all information received
from the Borrower or any Restricted Subsidiary relating to the Borrower or any
Restricted Subsidiary and their businesses, other than any such information that

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is available to the Administrative Agent or any Lender on a nonconfidential
basis prior to disclosure by the Borrower or a Restricted Subsidiary; provided
that, in the case of information received from the Borrower or any Restricted
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

        Section 12.12    Interest Rate Limitation.    It is the intention of the
parties hereto that each Lender shall conform strictly to usury laws applicable
to it. Accordingly, if the transactions contemplated hereby would be usurious as
to any Lender under laws applicable to it (including the laws of the United
States of America and the State of Texas or any other jurisdiction whose laws
may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to
the contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under law applicable
to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by such Lender on the principal amount
of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower); and (ii) in the event that the maturity of the Notes is
accelerated by reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
such Lender as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by such Lender on the principal amount of
the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the stated term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Lender would be less than the amount of interest payable to such Lender computed
at the Highest Lawful Rate applicable to such Lender, then the amount of
interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.12. To the extent that Chapter 303 of the Texas
Finance Code is relevant for the purpose of determining the Highest Lawful Rate
applicable to a Lender, such Lender elects to determine the applicable rate
ceiling under such Chapter by the weekly ceiling from time to time in effect.
Chapter 346 of the Texas Finance Code does not apply to the Borrower's
obligations hereunder.

        Section 12.13    EXCULPATION PROVISIONS.    EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN

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DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS
FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS
AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS
CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT
RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."

        Section 12.14    No Third Party Beneficiaries.    This Agreement, the
other Loan Documents, and the agreement of the Lenders to make Loans hereunder
are solely for the benefit of the Borrower, and no other Person (including,
without limitation, any Subsidiary of the Borrower, any obligor, contractor,
subcontractor, supplier or materialsman) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent or any Lender for any reason whatsoever. There are no third
party beneficiaries.

        Section 12.15    USA Patriot Act Notice.    Each Lender hereby notifies
the Borrower that pursuant to the requirements of the USA Patriot Act (Title III
of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Act.

[SIGNATURES BEGIN NEXT PAGE]

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        The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.

BORROWER:   PETROHAWK ENERGY CORPORATION
 
 
By:
    

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Floyd C. Wilson
President and Chief Executive Officer
ADMINISTRATIVE AGENT:
 
BNP PARIBAS,
as Administrative Agent
 
 
By:
/s/  BRIAN M. MALONE      

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    Name: Brian M. Malone     Title: Authorized Signatory
 
 
By:
/s/  GABE ELLISOR      

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    Name: Gabe Ellisor     Title: Authorized Signatory
LENDERS:
 
BNP PARIBAS
 
 
By:
/s/  BRIAN M. MALONE      

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    Name: Brian M. Malone     Title: Authorized Signatory
 
 
By:
/s/  GABE ELLISOR      

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    Name: Gabe Ellisor     Title: Authorized Signatory
LENDERS:
 
KEYBANK, NATIONAL ASSOCIATION
 
 
By:
/s/  THOMAS RAJAN      

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    Name: Thomas Rajan     Title: Authorized Signatory
LENDERS:
 
GAIA OFFSHORE MASTER FUND, LTD.     By: Promethean Asset Management L.L.C.    
Its: Investment Manager
 
 
By:
/s/  ROBERT J. BRANTMAN      

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    Name: Robert J. Brantman     Title: Partner, Authorized Signatory        

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LENDERS:
 
HFTP INVESTMENT L.L.C.     By: Promethean Asset Management L.L.C.     Its:
Investment Manager
 
 
By:
/s/  ROBERT J. BRANTMAN      

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    Name: Robert J. Brantman     Title: Partner, Authorized Signatory
LENDERS:
 
U.S. BANK NATIONAL ASSOCIATION
 
 
By:
/s/  MONTE E. DECKERD      

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    Name: Monte E. Deckerd     Title: Authorized Signatory

[Signature Page—Term Loan Agreement]

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ANNEX I COMMITMENTS

Name of Lender

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  Percentage

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  Commitment Amount

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BNP Paribas   50.00 % $ 25,000,000.00 KeyBank National Association   20.00 % $
10,000,000.00 GAIA Offshore Master Fund, Ltd.   12.00 % $ 6,000,000.00 HFTP
Investment L.L.C.   8.00 % $ 4,000,000.00 U.S. Bank National Association   10.00
% $ 5,000,000.00 TOTAL   100.00 % $ 50,000,000.00

Annex I-1

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ANNEX II
TERMS OF SUBORDINATION

        Section 1.1    Subordination of Obligations.    The Borrower and each
Restricted Subsidiary covenant and agree, and each Term Lender by its acceptance
of a Term Note covenants and agrees, that the payment of the Subordinated
Obligations shall, to the extent set forth in this Annex II, be subordinate and
junior and subject in right of payment to the prior payment in full in cash of
all Senior Indebtedness, whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed.

        Section 1.2    Payment Default or Acceleration.    Except under
circumstances when the terms of Section 1.5 of this Annex II are applicable, if
(a) a Payment Default or Senior Indebtedness Acceleration shall have occurred
and be continuing and (b) the Term Lenders or the Term Administrative Agent or
other representative shall have received a Payment Default Notice, then neither
the Borrower nor any Restricted Subsidiary may make, and no Term Lender shall
accept, receive or collect, any direct or indirect payment or distribution of
any kind or character (in cash, securities, other Property, by setoff, or
otherwise other than Reorganization Securities) of any properties or assets of
the Borrower or any Restricted Subsidiary on account of the Subordinated
Obligations during the Payment Blockage Period; provided, however, that in the
case of any payment on or in respect of any Subordinated Obligation that would
(in the absence of any such Payment Default Notice) have been due and payable on
any date (a "Scheduled Payment Date") during such Payment Blockage Period
pursuant to the terms of the Term Notes as in effect on the date hereof or as
amended consistent with the provisions of Section 1.12 of this Annex II, the
provisions of this Section 1.2 shall not prevent the making and acceptance of
such payment (a "Scheduled Payment"), together with any additional default
interest as is due on the Term Notes, on or after the date immediately following
the termination of such Payment Blockage Period. In the event that,
notwithstanding the foregoing, neither the Borrower nor any Restricted
Subsidiary shall make any payment or distribution to any Term Lender prohibited
by the foregoing provisions of this Section 1.2, then and in such event such
payment or distribution shall be held in trust for the benefit of and
immediately shall be paid over to the holders of the Senior Indebtedness or the
Senior Indebtedness Representative for application against the Senior
Indebtedness remaining unpaid until such Senior Indebtedness are paid in full in
cash. Any Payment Default Notice shall be deemed received by the Term Lenders
upon the date of actual receipt by the Term Lenders or the Term Administrative
Agent or other representative of such Payment Default Notice in writing.

        Section 1.3    Non-Payment Default.    Except under circumstances when
the terms of Section 1.2 of this Annex II or Section 1.5 of this Annex II are
applicable, if (a) a Non-Payment Default shall have occurred and be continuing,
(b) the Term Lenders or the Term Administrative Agent or other representative
shall have received a Non-Payment Default Notice, and (c) no Non-Payment Default
Notice shall have been given within the 360 day period immediately preceding the
giving of such Non-Payment Default Notice, then neither the Borrower nor any
Restricted Subsidiary may make, and no Term Lender shall accept, receive or
collect, any direct or indirect payment or distribution of any kind or character
(in cash, securities, other Property, by

Annex II-1

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setoff, or otherwise other than Reorganization Securities) of any properties or
assets of the Borrower or any Restricted Subsidiary on account of the
Subordinated Obligations during the Non-Payment Blockage Period; provided,
however, that in the case of any Scheduled Payment on or in respect of any
Subordinated Obligation that would (in the absence of any such Non-Payment
Default Notice) have been due and payable on any Scheduled Payment Date during
such Non-Payment Blockage Period pursuant to the terms of the Term Notes as in
effect on the date hereof or as amended consistent with the requirements of
Section 1.12 of this Annex II, the provisions of this Section 1.3 shall not
prevent the making and acceptance of such Scheduled Payment, together with any
additional default interest as is due on the Term Notes, on or after the date
immediately following the termination of such Non-Payment Blockage Period. In
the event that, notwithstanding the foregoing, the Borrower or any Restricted
Subsidiary shall make any payment or distribution to any Term Lender prohibited
by the foregoing provisions of this Section 1.3, then and in such event such
payment or distribution shall be held in trust for the benefit of and
immediately shall be paid over to the holders of the Senior Indebtedness or the
Senior Indebtedness Representative for application against the Senior
Indebtedness remaining unpaid until such Senior Indebtedness are paid in full in
cash. Any Non-Payment Default Notice shall be deemed received by the Term
Lenders upon the date of actual receipt by the Term Lenders or the Term
Administrative Agent or other representative of such Non-Payment Default Notice
in writing.

        Section 1.4    Standstill.    At any time that the Term Lenders are not
permitted to receive payments on the Subordinated Obligations pursuant to either
Section 1.2 or 1.3 of this Annex II, the Term Lenders and the Term
Administrative Agent or other representative of the Term Lenders will not
commence any Enforcement Action relative to the Borrower or any Restricted
Subsidiary during the Standstill Period. Upon the termination of the Standstill
Period, the Term Lenders may exercise all rights or remedies they may have in
law or equity; provided, however, that if a Standstill Period terminates
pursuant to clause (e) thereof, no Term Lender and no agent or representative
thereof shall exercise any remedies against, or attempt to foreclose upon,
garnish, sequester or execute upon, any Property known to it as constituting
collateral for the Senior Indebtedness (other than to file or record any
judgment Liens it may have obtained against such collateral) during the period
that such Standstill Period would have been in effect but for termination
pursuant to clause (e) of the definition of "Standstill Period;" provided
further, that the Payment Blockage Period or the Non-Payment Blockage Period, as
the case may be, if not also terminated, shall continue for its full period
notwithstanding the termination of the Standstill Period. Notwithstanding the
foregoing, no Standstill Period may be commenced while any other Standstill
Period exists or within 180 days following the termination of any prior
Standstill Period (provided that this sentence shall not relieve any Term Lender
of its obligation to provide notice under Section 1.9 of this Annex II).

        Section 1.5    Insolvency; Bankruptcy; Etc.    In the event of the
institution of any Insolvency Proceeding relative to the Borrower or any
Restricted Subsidiary, then:

        (a)   The holders of the Senior Indebtedness shall be entitled to
receive payment in full in cash of the Senior Indebtedness before the Term
Lenders are entitled to receive any direct or indirect payment or distribution
of any kind or character, whether in cash,

Annex II-2

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Property or securities (other than Reorganization Securities) on account of the
Subordinated Obligations.

        (b)   Any direct or indirect payment or distribution of any kind or
character, whether in cash, Property or securities, by setoff or otherwise,
which may be payable or deliverable in such proceedings in respect of the
Subordinated Obligations but for the provisions of this Annex II shall be paid
or delivered by the Person making such payment or distribution, whether the
Borrower, a Subsidiary of the Borrower, a trustee in bankruptcy, a receiver, a
liquidating trustee, or otherwise, directly to the holders of the Senior
Indebtedness or the Senior Indebtedness Representative, to the extent necessary
to make payment in full in cash of all Senior Indebtedness remaining unpaid;
provided, however, that no such delivery of any Reorganization Securities shall
be made to any holders of the Senior Indebtedness. In the event that,
notwithstanding the foregoing provisions of this Section 1.5, any Term Lender
shall have received any such payment or distribution of any kind or character,
whether in cash, Property or securities, by setoff or otherwise, before all
Senior Indebtedness is paid in full in cash, which is to be paid to the holders
of the Senior Indebtedness under the foregoing provisions of this Section 1.5,
then and in such event such payment or distribution shall be held in trust for
the benefit of and immediately shall be paid over to the holders of the Senior
Indebtedness or the Senior Indebtedness Representative for application to the
payment of all Senior Indebtedness remaining unpaid until all such Senior
Indebtedness shall have been paid in full in cash.

        (c)   If no proof of claim is filed in any Insolvency Proceeding with
respect to any Subordinated Obligations by the tenth day prior to the bar date
for any such proof of claim, the Senior Indebtedness Representative may, after
notice to the Term Lenders or the Term Administrative Agent or other
representative, file such a proof of claim on behalf of the Term Lenders, and
each Term Lender hereby irrevocably appoints the Senior Indebtedness
Representative as its agent and attorney-in-fact for such limited purpose;
provided, that the foregoing shall not confer to the holder of any Senior
Indebtedness the right to vote on behalf of the Term Lenders in any Insolvency
Proceedings.

        Section 1.6    No Impairment.    No right of any present or future
holder of Senior Indebtedness to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Borrower or any Restricted Subsidiary or by any non-compliance
by the Borrower or any Restricted Subsidiary with the terms, provisions, and
covenants of this Annex II, the Term Loan Agreement or the Term Notes,
regardless of any knowledge thereof any such Term Lender may have or be
otherwise charged with. The provisions of this Annex II shall be enforceable
directly by any present or future holder of the Senior Indebtedness and/or the
Senior Indebtedness Representative.

        Section 1.7    Rights of Creditors; Subrogation.    The provisions of
this Annex II are for the purpose of defining the relative rights of the holders
of the Senior Indebtedness on the one hand, and the Term Lenders on the other
hand, and nothing herein shall impair, as between the Borrower and the
Guarantors and the Term Lenders, the obligation of the Borrower and the
Guarantors, which are unconditional and absolute, to pay to the Term Lenders the
principal thereof and interest thereon in accordance with their terms and the
provisions thereof, nor shall anything herein, except as otherwise provided in
Section 1.4 of this Annex II, prevent the Term

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Lenders from exercising all remedies otherwise permitted by applicable law or
hereunder upon default under the Term Loan Agreement or under the Term Notes
(including the right to demand payment and sue for performance thereof and of
the Term Notes and to accelerate the maturity thereof as provided by the terms
of the Term Notes), subject to the rights of holders of the Senior Indebtedness
under this Annex II. Upon payment in full of the Senior Indebtedness in cash and
termination of the commitments of any holder of the Senior Indebtedness to make
loans or extensions of credit, and expiration or termination of all letters of
credit issued by any holder of the Senior Indebtedness, the Term Lenders shall,
to the extent of any payments or distributions paid or delivered to the holders
of the Senior Indebtedness or otherwise applied to the Senior Indebtedness
pursuant to the provisions of this Annex II, be subrogated to the rights of the
holders of the Senior Indebtedness to receive payments or distributions of
assets of the Borrower or any Guarantor made on Senior Indebtedness (and any
security therefor) until the Subordinated Obligations shall be paid in full
(and, for this purpose, no such payments or distributions paid or delivered to
the holders of the Senior Indebtedness or otherwise applied to the Senior
Indebtedness shall be deemed to have discharged the Subordinated Obligations),
and, for the purposes of such subrogation, no payments to the holders of the
Senior Indebtedness of any cash, assets, stock, or obligations to which the Term
Lenders would be entitled except for the provisions of this Annex II shall, as
between the Borrower and the Guarantors, any of their respective creditors
(other than the holders of the Senior Indebtedness), and the Term Lenders, be
deemed to be a payment by the Borrower or any Guarantor to or on account of
Senior Indebtedness. The fact that failure to make any payment on account of the
Subordinated Obligations is caused by reason of the operation of any provision
of this Annex II shall not be construed as preventing the occurrence of an Event
of Default.

        Section 1.8    Payments on Senior Indebtedness.    In the event that any
Term Lender determines in good faith that evidence is required with respect to
the right of any holder of the Senior Indebtedness to participate in any payment
or distribution pursuant to this Annex II or the amount of such participation,
such Term Lender may request such Person to furnish evidence to the reasonable
satisfaction of such Term Lender as to the amount of Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Annex II, and if such evidence is not furnished, such Term
Lender may defer any payment to such Person pending judicial determination as to
the right of such Person to receive such payment; provided that, upon the
written request of such Person to such Term Lender, such payment shall be made
to the court having jurisdiction over such judicial determination or to another
Person mutually satisfactory to such Person and such Term Lender, as escrowee,
to be held and invested pending such judicial determination in accordance with
such instructions as shall be mutually satisfactory to such Person and such Term
Lender and upon such judicial determination becoming final and non-appealable to
be distributed in accordance therewith to the Person entitled thereto.

        Section 1.9    Notice of Acceleration, Enforcement Action.    

        (a)   Each Term Lender agrees that in the event any Event of Default
shall occur, and as a result thereof, any Term Lender or the Term Administrative
Agent or other representative of such Term Lender accelerates maturity of the
Term Notes, then such Term Lender or the Term Administrative Agent or other
representative shall give prompt (and in any

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event within three (3) Business Days) notice thereof in writing to the holders
of the Senior Indebtedness or the Senior Indebtedness Representative. Neither
the Borrower nor any Restricted Subsidiary may pay the Term Notes until ten
(10) Business Days after the Senior Indebtedness Representative receives the
notice described above and, after that ten (10) Business Day period, may pay the
Term Notes, and the Term Lenders may receive or collect such payment, only if
the provisions of this Annex II do not prohibit such payment at that time.

        (b)   Each Term Lender agrees that in the event any Event of Default
shall occur, and as a result thereof, any Term Lender or the Term Administrative
Agent or other representative of such Term Lender intends to commence any
Enforcement Action, then such Term Lender or the Term Administrative Agent or
other representative shall first deliver notice thereof in writing to the Senior
Indebtedness Representative both (i) not less than ten (10) days prior to taking
any such Enforcement Action, and (ii) one (1) Business Day after such
Enforcement Action is taken.

        Section 1.10    Reinstatement.    The provisions of this Annex II shall
remain in force and effect until the indefeasible payment in full of all Senior
Indebtedness and the termination of all commitments of any holder of the Senior
Indebtedness to make loans or extensions of credit, and expiration or
termination of all letters of credit issued by any holder of the Senior
Indebtedness. To the extent any payment of or distribution in respect of the
Senior Indebtedness (whether by or on behalf of the Borrower or any of its
Subsidiaries, as proceeds of security or enforcement of any right of set off or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to the Borrower or any Restricted Subsidiary or any receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
if such payment or distribution is recovered by, or paid over to, the Borrower
or any Restricted Subsidiary or such receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person, the Senior Indebtedness or
part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment has not occurred and the
provisions of this Annex II shall continue to be applicable in respect of said
reinstated Senior Indebtedness.

        Section 1.11    Rights of holders of the Senior Indebtedness.    The
holders of the Senior Indebtedness may, at any time and from time to time
subject to the terms of the Senior Indebtedness, without the consent of or
notice to the Term Lenders or the Term Administrative Agent or other
representative of the Term Lenders, without incurring responsibility to the Term
Lenders and without impairing or releasing the subordination or other benefits
provided in this Annex II or the obligations hereunder of the Term Lenders to
the holders of the Senior Indebtedness, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew, increase (but not in excess of the cap provided for in the
definition of "Senior Indebtedness"), alter or amend, Senior Indebtedness or any
instrument evidencing the same or any covenant or agreement under which Senior
Indebtedness is outstanding or secured or any liability of any obligor thereon;
(b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness; (c) settle or compromise
any Senior Indebtedness or any liability of any obligor thereon or release any
Person liable in any manner for the payment of Senior Indebtedness; and
(d) waive any default under Senior Indebtedness and exercise or refrain from
exercising any

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rights against the Borrower, any Restricted Subsidiary or any other Person. The
foregoing provisions are not intended to permit a change to the definition of
"Senior Indebtedness".

        Section 1.12    Amendments.    No amendment of this Annex II, or the
definitions used in this Annex II, or which would have the effect of modifying
this Annex II, or the definitions used in this Annex II, shall be effective
unless it is in writing and made with the prior written consent of each of the
Required Senior Revolving Lenders or by the Senior Indebtedness Representative
acting at their written discretion on their behalf.

        Section 1.13    Identity of Term Lenders for Notice Purposes.    For
purposes of any notice required or permitted to be given hereunder by the
holders of the Senior Indebtedness or the Senior Indebtedness Representative to
the Term Lenders, or any of them, the holders of the Senior Indebtedness and the
Senior Indebtedness Representative shall be entitled to rely, conclusively, on
the identity and address of each Term Lender as set forth in the Term Loan
Agreement or as otherwise set forth in the most recent notice received by the
Senior Indebtedness Representative from a Term Lender referring to the Term Loan
Agreement for purposes of providing the identity and address of each Term
Lender. The Term Lenders agree that any notices required to be given to the Term
Lenders shall be effective if such notice is given to the Term Administrative
Agent or other representative of the Term Lenders. For so long as the
Subordinated Obligations are outstanding, the Term Lenders agree to designate
and maintain an agent or other representative for such purposes.

        Section 1.14    Liens.    

        (a)   All Liens granted by the Borrower, or, if applicable, any
Guarantor, which at any time secure the Term Loan Agreement, any Term Note or
any other Term Loan Document are hereby made, and will at all times prior to the
full payment or discharge of the Senior Indebtedness be, subject and subordinate
to all Liens granted by the Borrower or any Guarantor which at any time secure
the Senior Indebtedness, which subordination shall be effective whether or not
all such Liens securing Senior Indebtedness have been properly recorded, filed
and otherwise perfected prior to all such Liens securing any Term Note and
regardless of the relative priority of such Liens as determined without regard
to this Annex II. The mortgages included in the Senior Revolving Documents do
(and other mortgages, security agreements and similar Senior Revolving Documents
may) describe the indebtedness secured thereby in a manner which might include
indebtedness other than the Senior Indebtedness. For so long as any Term Note is
outstanding, as between the Term Lenders and the holders of the Senior
Indebtedness, only the Senior Indebtedness shall be deemed to be secured by any
Liens granted under the Senior Revolving Documents.

        (b)   Each Term Lender agrees that it will not initiate, join in or
prosecute any claim, action or other proceeding challenging the validity or
enforceability of the Senior Indebtedness or the Liens securing the Senior
Indebtedness.

Annex II-6

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        Section 1.15    Legend.    

        (a)   Each Term Note shall be conspicuously inscribed with a legend
substantially in the form and substance as follows:

PAYMENT OF THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN ANNEX II OF THE
TERM LOAN AGREEMENT DATED NOVEMBER 23, 2004 BY AND AMONG PETROHAWK ENERGY
CORPORATION, BNP PARIBAS, AS ADMINISTRATIVE AGENT AND THE TERM LENDERS PARTIES
THERETO, BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN
FULL OF ALL SENIOR INDEBTEDNESS, THE PROVISIONS OF WHICH ANNEX II OF SUCH LOAN
AGREEMENT BEING INCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE A PART
HEREOF.

        (b)   The Borrower and each Term Lender or the Term Administrative Agent
or other representative of the Term Lenders shall cause each mortgage, security
agreement and other instrument securing all or any part of the Subordinated
Obligations to be conspicuously inscribed with a legend substantially in the
form and substance as follows:

ALL LIENS GRANTED BY THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN ANNEX II
OF THE TERM LOAN AGREEMENT DATED NOVEMBER 23, 2004 BY AND AMONG PETROHAWK ENERGY
CORPORATION, BNP PARIBAS, AS ADMINISTRATIVE AGENT AND TERM LENDERS PARTIES
THERETO, BE SUBORDINATE AND JUNIOR TO ALL LIENS GRANTED BY GRANTOR TO SECURE THE
SENIOR INDEBTEDNESS REGARDLESS OF THE RELATIVE PRIORITY OF SUCH LIENS AS
DETERMINED WITHOUT REGARD TO SUCH ANNEX II OF SUCH TERM LOAN AGREEMENT, THE
PROVISIONS OF WHICH ANNEX II OF SUCH TERM LOAN AGREEMENT BEING INCORPORATED
HEREIN AND BY THIS REFERENCE BEING MADE A PART HEREOF.

        Section 1.16    Successors and Assigns.    Each Term Lender acknowledges
and agrees that the provisions of this Annex II are, and are intended to be, an
inducement and a consideration to each holder of the Senior Indebtedness to
make, extend and continue the Senior Indebtedness; and each holder of the Senior
Indebtedness shall be deemed conclusively to have relied upon the provisions of
this Annex II in permitting the Borrower to incur the Subordinated Obligations
and in making, extending, continuing and/or acquiring such Senior Indebtedness.
This Annex II shall pass to and be fully binding upon the successors and assigns
of each Term Lender and shall inure to the benefit of the present and future
holders of the Senior Indebtedness and the Senior Indebtedness Representative
and their respective successors and assigns (including without limitation any
Person refinancing any Senior Indebtedness).

Annex II-7

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        Section 1.17    Defined Terms.    

        (a)   Each capitalized term used in this Annex II, but not defined
herein, shall have the meaning ascribed such term in the Term Loan Agreement.

        (b)   The following terms have the following meanings when used in this
Annex II:

        "Blockage Period" means a Non-Payment Blockage Period or a Payment
Blockage Period.

        "Eligible Swap Agreement" means any present or future Swap Agreement
between the Borrower or any Restricted Subsidiary and any Senior Revolving
Lender or any Affiliate of any Senior Revolving Lender. For the avoidance of
doubt, a Swap Agreement ceases to be an Eligible Swap Agreement if the Person
that is the counterparty to the Borrower under a Swap Agreement ceases to be a
Senior Revolving Lender under the Senior Revolving Credit Agreement (or, in the
case of an affiliate of a Senior Revolving Lender, the Person affiliated
therewith ceases to be a Senior Revolving Lender under the Senior Revolving
Credit Agreement).

        "Enforcement Action" means, with respect to any Subordinated
Obligations: any enforcement of any right or remedy including any enforcement or
foreclosure of Liens granted by the Borrower or any Restricted Subsidiary to
secure any or all of such Subordinated Obligations, any enforcement or
foreclosure of Liens on any capital stock or other equity interests in the
Borrower or any Restricted Subsidiary which may be granted by the Borrower or
its Subsidiaries or any holder of equity in the Borrower to secure any or all of
such Subordinated Obligations, or any other efforts to collect proceeds from the
Borrower's or any of its Subsidiary's assets or properties (including proceeds
of production) to satisfy the Subordinated Obligations, including, without
limitation, the commencement, or the joining with any other creditor of the
Borrower or any Restricted Subsidiary in the commencement of any Insolvency
Proceeding against the Borrower or any Restricted Subsidiary; provided, that
none of the following shall constitute an Enforcement Action: (a) acceleration
of any of the Subordinated Obligations following acceleration of any of the
Senior Indebtedness (provided that such acceleration of Senior Indebtedness has
not previously been rescinded), (b) acceleration of any of the Senior
Indebtedness following acceleration of any of the Subordinated Obligations
(provided that such acceleration of the Subordinated Obligations has not
previously been rescinded), (c) actions by any Term Lender to obtain possession
of or receive Reorganization Securities, or (d) taking any action described
above during the existence of any Insolvency Proceeding subject to the
jurisdiction of a court of competent authority.

        "Insolvency Proceeding" shall mean (a) any voluntary or involuntary
case, action, or proceeding before any Governmental Authority having
jurisdiction over the applicable Person or its assets relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up,
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case whether undertaken under U.S. Federal, state, or
foreign law.

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        "Non-Payment Blockage Period" means, with respect to any Non-Payment
Default, the period from and including the date of receipt by the Term Lenders
or the Term Administrative Agent or other representative of a Non-Payment
Default Notice relating thereto until the first to occur of (a) the date upon
which the Senior Indebtedness have been paid in full in cash, all commitments of
any holder of Senior Indebtedness to make loans or extensions of credit have
terminated, and all letters of credit issued by any holder of Senior
Indebtedness have expired, terminated or fully collateralized in cash, (b) the
179th day after receipt of such Non-Payment Default Notice, (c) the date on
which the Non-Payment Default which is the subject of such Non-Payment Default
Notice has been waived in writing by the applicable holder or holders of the
Senior Indebtedness or an agent or representative on their behalf, cured, or
ceased to exist, or (d) the date upon which the Person(s) giving such
Non-Payment Default Notice notify the Term Lenders or the Term Administrative
Agent or other representative in writing of the termination of such Non-Payment
Blockage Period.

        "Non-Payment Default" means the occurrence of any event under any Senior
Revolving Document evidencing Senior Indebtedness, not constituting a Payment
Default, which gives the holder(s) of such Senior Indebtedness, or an agent or
representative acting on behalf of such holder(s), the right to cause the
maturity of such Senior Indebtedness to be accelerated immediately without any
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace period.

        "Non-Payment Default Notice" means a written notice from or on behalf of
the Senior Indebtedness Representative that a Non-Payment Default has occurred
and is continuing which identifies such Non-Payment Default and specifically
designates such notice as a "Non-Payment Default Notice".

        "Payment Blockage Period" means, with respect to any Payment Default or
Senior Indebtedness Acceleration, the period from and including the date of
receipt by the Term Lenders or the Term Administrative Agent or other
representative of a Payment Default Notice relating thereto until the first to
occur of (a) the date upon which the Senior Indebtedness have been paid in full
in cash, all commitments of any holder of Senior Indebtedness to make loans or
extensions of credit have terminated, and all letters of credit issued by any
holder of Senior Indebtedness have expired, terminated or fully collateralized
in cash, (b) if such Payment Default Notice relates to a Payment Default, the
date on which the Payment Default which is the subject of such Payment Default
Notice has been waived in writing by the applicable holder or holders of the
Senior Indebtedness or an agent or representative on their behalf, cured or
ceased to exist, or if such Payment Default Notice relates to a Senior
Indebtedness Acceleration, the date on which such acceleration is rescinded,
annulled or ceased to exist, or (c) the day upon which the Person(s) giving such
Payment Default Notice notify the Term Lenders or the Term Administrative Agent
or other representative in writing of the termination of such Payment Blockage
Period.

        "Payment Default" means a default by the Borrower or any Guarantor in
the payment of any amount owing with respect to the Senior Indebtedness, whether
with respect to principal, interest, premium, letter of credit reimbursement
obligations, commitment fees or letter of credit

Annex II-9

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fees or otherwise when the same becomes due and payable, whether at maturity or
at a date fixed for payment of an installment or prepayment or by declaration or
acceleration or otherwise.

        "Payment Default Notice" means a written notice from or on behalf of the
Senior Indebtedness Representative that either (i) a Payment Default with
respect to such Senior Indebtedness has occurred and is continuing, or (ii) a
Senior Indebtedness Acceleration with respect to such Senior Indebtedness has
occurred and is continuing.

        "Reorganization Securities" means (a) debt securities that are issued
pursuant to an Insolvency Proceeding the payment of which is subordinate and
junior at least to the extent provided in this Annex II to the payment of the
Senior Indebtedness outstanding at the time of the issuance thereof (including
any refinancing of Senior Indebtedness pursuant to an Insolvency Proceeding) and
to the payment of all debt securities issued in exchange for such Senior
Indebtedness in such Insolvency Proceeding (whether such subordination is
effected by the terms of such securities, an order or decree issued in such
Insolvency Proceeding, by agreement of the Term Lenders or otherwise), or
(b) equity securities that are issued pursuant to an Insolvency Proceeding;
provided, in either case, that such securities are authorized by an order or
decree made by a court of competent jurisdiction in such Insolvency Proceeding.

        "Required Senior Revolving Lenders" means Senior Revolving Lenders
holding at least sixty-six and two-thirds percent (662/3%) of the outstanding
Senior Indebtedness, or if no principal amount of Loans or letters of credit is
then outstanding, Senior Revolving Lenders holding at least sixty-six and
two-thirds percent (662/3%) of the total commitments.

        "Senior Indebtedness" means and includes (a) all principal indebtedness
for loans now outstanding or hereafter incurred, and all letter of credit
reimbursement obligations now existing or hereafter arising, under the Senior
Revolving Credit Agreement, provided that the aggregate outstanding principal
amount of Senior Indebtedness under this clause (a) shall not exceed
$400,000,000 at any time, and provided further, that if the aggregate principal
amount of Senior Indebtedness (constituting principal and letter of credit
reimbursement obligations) shall exceed $400,000,000, then the subordination of
the Term Notes as contemplated by Annex II to the Senior Indebtedness of
$400,000,000 or less shall not be impaired, (b) all amounts now or hereafter
owing to any of the Senior Revolving Lenders or any of their Affiliates under
any Eligible Swap Agreement, (c) all interest accruing on the Senior
Indebtedness described in the preceding clauses (a) and (b), and (d) all other
monetary obligations (whether now outstanding or hereafter incurred) for which
the Borrower or any Guarantor is responsible or liable as obligor, guarantor or
otherwise under or pursuant to any of the Senior Revolving Documents including,
without limitation, all fees, penalties, yield protections, breakage costs,
damages, indemnification obligations, reimbursement obligations, and expenses
(including, without limitation, fees and expenses of counsel to the Senior
Indebtedness Representative and the Senior Revolving Lenders) together with
interest on the foregoing to the extent provided for in the Senior Revolving
Documents. The interest described in the preceding clause (c) and the premiums
and penalties described in the preceding clause (d) include, without limitation,
all interest accruing after the commencement of any Insolvency Proceeding under
the terms of the Senior Revolving Documents whether or not such interest
constitutes an allowed claim in any such Insolvency Proceeding.

Annex II-10

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        "Senior Indebtedness Acceleration" means with respect to the Senior
Indebtedness that the holder or holders of such Senior Indebtedness, or an agent
or representative on behalf of such holder or holders, have caused the maturity
of such Senior Indebtedness to be accelerated.

        "Senior Indebtedness Default" means a Payment Default or a Non-Payment
Default.

        "Senior Indebtedness Representative" means (a) initially, BNP Paribas,
as administrative agent for the Senior Revolving Lenders under the Senior
Revolving Credit Agreement or (b) such other Person selected by the Majority
Lenders (as such term is defined in the Senior Revolving Credit Agreement) to
replace BNP Paribas or the then Senior Indebtedness Representative.

        "Senior Revolving Credit Agreement" means that certain $400,000,000
Senior Revolving Credit Agreement dated as of the November 23, 2004 among the
Borrower, BNP Paribas, as administrative agent and the financial institutions
listed therein from time to time as Senior Revolving Lenders, as from time to
time renewed, extended, amended, supplemented, or restated, and any agreements
representing the refinancing, replacement, or substitution in whole or in part
of the revolving credit loans and letter of credit liabilities made or incurred
under such Senior Revolving Credit Agreement.

        "Senior Revolving Documents" means, collectively, (a) the Senior
Revolving Credit Agreement and the Eligible Swap Agreements, (b) any note, bond
or other instrument evidencing Senior Indebtedness, (c) all mortgages, security
agreements, pledge agreements or financing statements evidencing, creating or
perfecting any Lien to secure the Senior Indebtedness in any way, (d) all
guarantees of the Senior Indebtedness, (d) all other documents, instruments or
agreements relating to the Senior Indebtedness now or hereafter executed or
delivered by and among the Borrower, any Restricted Subsidiary, the Senior
Indebtedness Representative or any Senior Revolving Lender, including without
limitation each of the other the "Loan Documents" as such term is defined in the
Senior Revolving Credit Agreement, and (e) all renewals, extensions, amendments,
modifications or restatements of the foregoing.

        "Senior Revolving Lenders" means all Persons which now or hereafter
constitute a "Lender" under the Senior Revolving Credit Agreement and their
respective successors and assigns, and all Person refinancing any Senior
Indebtedness and their respective successors and assigns.

        "Standstill Period" means the period beginning with the commencement of
a Blockage Period and ending on the earliest of (a) the date when the Senior
Indebtedness Default giving rise to such Blockage Period has been cured or
waived in writing, (b) the date of the repayment in full in cash of the Senior
Indebtedness, (c) the date that is 90 days after the commencement of a Blockage
Period, (d) the end of the Non-Payment Blockage Period applicable to such Senior
Indebtedness Default, (e) the date on which the Senior Indebtedness shall have
been declared due and payable prior to its stated maturity or any holder of
Senior Indebtedness commences proceedings to collect any Senior Indebtedness or
realize upon any material part of the collateral for any Senior Indebtedness and
(f) the date upon which any Insolvency Proceeding is commenced.

Annex II-11

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        "Subordinated Obligations" means any and all indebtedness (whether for
principal, interest, fees, indemnifications or otherwise, but not expenses) now
or hereafter owing by the Borrower or any Restricted Subsidiary under or in
connection with the Term Loan Agreement, the Term Notes, any mortgage, guaranty
or other security instrument given in connection therewith, and any letter
agreement or other agreement providing for payment of fees in connection
therewith.

        "Term Administrative Agent" means BNP Paribas, in its capacity as
administrative agent for the Term Lenders under the Term Loan Agreement,
together with any successors in such capacity.

        "Term Lenders" means all Persons which now or hereafter constitute a
"Lender" under the Term Loan Agreement and their respective successors and
assigns, and all Person refinancing any Senior Indebtedness and their respective
successors and assigns.

        "Term Loan Agreement" means that certain $50,000,000 Second Lien Term
Loan Agreement dated as of the November 23, 2004 among the Borrower, BNP
Paribas, as administrative agent and the financial institutions listed therein
from time to time as Term Lenders, as from time to time renewed, extended,
amended, supplemented, or restated, and any agreements representing the
refinancing, replacement, or substitution in whole or in part of the loans made
or incurred under such Term Loan Agreement.

        "Term Loan Documents" means, collectively, (a) the Term Loan Agreement,
(b) the Term Notes and any other note, bond or other instrument evidencing
Senior Indebtedness, (c) all mortgages, security agreements, pledge agreements
or financing statements evidencing, creating or perfecting any Lien to secure
the Term Loan Agreement and the Term Notes in any way, (d) all guarantees
thereof, (d) all other documents, instruments or agreements relating to the Term
Loan Agreement or the Term Note now or hereafter executed or delivered by and
among the Borrower, any Restricted Subsidiary, the Term Administrative Agent or
any Term Lender, including without limitation each of the other the "Loan
Documents" as such term is defined in the Term Loan Agreement, and (e) all
renewals, extensions, amendments, modifications or restatements of the
foregoing.

        "Term Notes" means each promissory note issued under the Term Loan
Agreement evidencing the term loans made pursuant to the term thereof, as from
time to time renewed, extended, amended, supplemented, or restated, and any
agreements representing the refinancing, replacement, or substitution in whole
or in part thereof.

Annex II-12

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EXHIBIT A
FORM OF
NOTE

PAYMENT OF THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN ANNEX II OF THE
SECOND LIEN TERM LOAN AGREEMENT DATED NOVEMBER 23, 2004 BY AND AMONG PETROHAWK
ENERGY CORPORATION, BNP PARIBAS, AS ADMINISTRATIVE AGENT AND THE TERM LENDERS
PARTIES THERETO, BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR
PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS, THE PROVISIONS OF WHICH ANNEX II OF
SUCH SECOND LIEN TERM LOAN AGREEMENT BEING INCORPORATED HEREIN AND BY THIS
REFERENCE BEING MADE A PART HEREOF.

$[            ]
 
November 23, 2004

        FOR VALUE RECEIVED, PETROHAWK ENERGY CORPORATION, a corporation validly
formed and existing under the laws of the State of Delaware (the "Borrower")
hereby promises to pay to the order of [            ] (the "Lender"), at the
principal office of BNP Paribas, as administrative agent (the "Administrative
Agent"), at [            ], the principal sum of [            ] Dollars ($
[            ]), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Second Lien Term Loan Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Second Lien Term
Loan Agreement.

        The date, amount, Type, interest rate, Interest Period and maturity of
the Loan made by the Lender to the Borrower, and each payment made on account of
the principal thereof, shall be recorded by the Lender on its books and, prior
to any transfer of this Note, may be endorsed by the Lender on the schedules
attached hereto or any continuation thereof or on any separate record maintained
by the Lender. Failure to make any such notation or to attach a schedule shall
not affect any Lender's or the Borrower's rights or obligations in respect of
such Loan or affect the validity of such transfer by any Lender of this Note.

        This Note is one of the Notes referred to in the Second Lien Term Loan
Agreement dated as of November 23, 2004 among the Borrower, the Administrative
Agent and lenders signatory thereto (including the Lender), and evidences the
Loan made by the Lender thereunder (such Second Lien Term Loan Agreement as the
same may be amended, supplemented or restated from time to time, the "Second
Lien Term Loan Agreement"). Capitalized terms used in this Note have the
respective meanings assigned to them in the Second Lien Term Loan Agreement.

        This Note is issued pursuant to the Second Lien Term Loan Agreement and
is entitled to the benefits provided for in the Second Lien Term Loan Agreement
and the other Loan Documents. The Second Lien Term Loan Agreement provides for
the acceleration of the maturity of this Note upon the occurrence of certain
events, for prepayments of Loans upon the terms and conditions specified therein
and other provisions relevant to this Note.

        THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS.

    PETROHAWK ENERGY CORPORATION
 
 
By:
       

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    Name:        

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    Title:        

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Exhibit A - 1

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EXHIBIT B
FORM OF BORROWING REQUEST

        November 23, 2004

        Petrohawk Energy Corporation, a corporation duly formed and existing
under the laws of the State of Delaware (the "Borrower"), pursuant to
Section 2.03 of the Second Lien Term Loan Agreement dated as of November 23,
2004 (together with all amendments, restatements, supplements or other
modifications thereto, the "Agreement") among the Borrower, BNP Paribas, as
Administrative Agent and lenders (the "Lenders") which are or become parties
thereto (unless otherwise defined herein, each capitalized term used herein is
defined in the Second Lien Term Loan Agreement), hereby requests the Loans as
follows:

(i)Aggregate amount of the requested Loan is $50,000,000;

(ii)Date of such Loan is November 23, 2004

(iii)Requested Loan is to be [an ABR Tranche] [a Eurodollar Tranche];

(iv)In the case of a Eurodollar Tranche, the initial Interest Period applicable
thereto is [                        ]; and

(v)Location and number of the Borrower's account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05 of the
Second Lien Term Loan Agreement, is as follows:

[   ]      

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

      [   ]      

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

      [   ]      

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

      [   ]      

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

      [   ]      

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

     

        The undersigned certifies that he/she is the [            ] of the
Borrower, and that as such he/she is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested Loan under the terms and conditions of the Second Lien Term Loan
Agreement.

    PETROHAWK ENERGY CORPORATION
 
 
By:
       

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    Name:        

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    Title:        

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Exhibit B - 1

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EXHIBIT C
FORM OF INTEREST ELECTION REQUEST

November 23, 2004

        PETROHAWK ENERGY CORPORATION, a Delaware corporation (the "Borrower"),
pursuant to Section 2.04 of the Second Lien Term Loan Agreement dated as
November 23, 2004 among the Borrower, BNP Paribas, as Administrative Agent and
lenders (the "Lenders") which are or become parties thereto (unless otherwise
defined herein, each capitalized term used herein is defined in the Second Lien
Term Loan Agreement), hereby makes an Interest Election Request as follows:

          (i)  The Tranche to which this Interest Election Request applies, and
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information specified pursuant to (iii) and (iv) below shall be
specified for each resulting Borrowing) is [                  ];

         (ii)  The effective date of the election made pursuant to this Interest
Election Request is [                        ], 200[  ];[and]

        (iii)  The resulting Tranche is to be [an ABR Tranche] [a Eurodollar
Tranche][; and]

       [(iv)  [If the resulting Tranche is a Eurodollar Tranche] The Interest
Period applicable to the resulting Tranche after giving effect to such election
is [                  ]].

        The undersigned certifies that he/she is the [                  ] of the
Borrower, and that as such he/she is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested continuation or conversion under the terms and conditions of the
Second Lien Term Loan Agreement.

    PETROHAWK ENERGY CORPORATION
 
 
By:
       

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    Name:        

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    Title:        

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Exhibit C-1

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EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE

        The undersigned hereby certifies that he/she is the [            ] of
PETROHAWK ENERGY CORPORATION, a Delaware corporation (the "Borrower"), and that
as such he/she is authorized to execute this certificate on behalf of the
Borrower. With reference to the Second Lien Term Loan Agreement dated as of
November 23, 2004 (together with all amendments, restatements, supplements or
other modifications thereto being the "Agreement") among the Borrower, BNP
Paribas, as Administrative Agent, and lenders (the "Lenders") which are or
become a party thereto, and such Lenders, the undersigned represents and
warrants as follows (each capitalized term used herein having the same meaning
given to it in the Agreement unless otherwise specified):

        (a)   The representations and warranties of the Borrower contained in
Article VII of the Agreement and in the Loan Documents and otherwise made in
writing by or on behalf of the Borrower pursuant to the Agreement and the Loan
Documents were true and correct when made, and are repeated at and as of the
time of delivery hereof and are true and correct in all material respects at and
as of the time of delivery hereof, except to the extent such representations and
warranties are expressly limited to an earlier date or the Majority Lenders have
expressly consented in writing to the contrary.

        (b)   The Borrower has performed and complied with all agreements and
conditions contained in the Agreement and in the Loan Documents required to be
performed or complied with by it prior to or at the time of delivery hereof [or
specify default and describe].

        (c)   Since December 31, 2003, no change has occurred, either in any
case or in the aggregate, in the condition, financial or otherwise, of the
Borrower or any Restricted Subsidiary which could reasonably be expected to have
a Material Adverse Effect [or specify event].

        (d)   There exists no Default or Event of Default [or specify Default
and describe].

        (e)   Attached hereto are the detailed computations necessary to
determine whether the Borrower is in compliance with Section 9.01 and
Section 8.14 as of the end of the [fiscal quarter][fiscal year] ending
[        ].

        EXECUTED AND DELIVERED this [        ] day of [                  ].

    PETROHAWK ENERGY CORPORATION
 
 
By:
       

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    Name:        

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    Title:        

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Exhibit D-1

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EXHIBIT E-1
FORM OF LEGAL OPINION OF HINKLE ELKOURI LAW FIRM L.L.C.

November 23, 2004

BNP PARIBAS, as Administrative Agent
and each of the Agents and Lenders party to the
herein described Loan Agreements

Re:Second Lien Term Loan Agreement (the "Term Loan Agreement") dated as of
November 23, 2004 among PETROHAWK ENERGY CORPORATION, as borrower, each of the
Agents and Lenders from time to time party thereto and BNP PARIBAS, as
administrative agent for the Lenders and Senior Revolving Credit Agreement (the
"Revolving Credit Agreement")(the Term Loan Agreement and Revolving Credit
Agreement shall be collectively referred to herein as the "Loan Agreements")
dated as of November 23, 2004 among PETROHAWK ENERGY CORPORATION, as borrower,
each of the Agents and Lenders from time to time party thereto and BNP Paribas,
as administrative agent for the Lenders (in such capacity under the Loan
Agreements, the "Administrative Agent."

Ladies and Gentlemen:

        We have acted as special counsel for Petrohawk Energy Corporation, a
Delaware corporation (the "Borrower"), Wynn-Crosby Energy, Inc., a Texas
corporation ("WCE"), Wynn-Crosby 1994, Ltd., a Texas limited partnership
("WC94"), Wynn-Crosby 1995, Ltd., a Texas limited partnership ("WC95"),
Wynn-Crosby 1996, Ltd., a Texas limited partnership ("WC96"), Wynn-Crosby
1997, Ltd., a Texas limited partnership ("WC97"), Wynn-Crosby 1998, Ltd., a
Texas limited partnership ("WC98"), Wynn-Crosby 1999, Ltd., a Texas limited
partnership ("WC99"), Wynn-Crosby 2000, Ltd., a Texas limited partnership
("WC2000"), Wynn-Crosby 2002, Ltd., a Texas limited partnership ("WC2002"), P-H
Energy, LLC, a Texas limited liability company ("P-H Energy"), Beta Operating
Company, L.L.C., an Oklahoma limited liability company ("Beta Operating"), TCM,
L.L.C., an Oklahoma limited liability company ("TCM") and Red River Field
Services, L.L.C., an Oklahoma limited liability company ("Red River")
(collectively being the "Guarantors" and together with the Borrower collectively
being the "Obligors"), in connection with the execution and delivery of the Loan
Agreements and the other Loan Documents (as defined below). This opinion is
being furnished to you pursuant to Section 6.01(i)(i) of each of the Loan
Agreements. All capitalized terms not defined herein shall have the same
meanings assigned to them in the Loan Agreements.

        In connection with the opinions set forth herein, we have examined
originals, or copies certified or otherwise identified to our satisfaction, of
the following documents (items (A) through (H) being referred to as the "Loan
Documents"):

(A)the Term Loan Agreement;

(B)the Revolving Credit Agreement;

(C)the Guarantee and Collateral Agreement dated of even date with the Revolving
Credit Agreement executed by the Obligors in favor of the Administrative Agent
for the benefit of the Lenders;

(D)the Mortgage, Line of Credit Mortgage, Deed of Trust, Assignment of
As-Extracted Collateral, Security Agreement and Financing Statement for each of
the Obligors (the "Mortgages");

(E)the Stock Powers of the Borrower executed in connection with (C) above (the
"Stock Powers");

Exhibit E-1 - 1

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[(F)the Financing Statements (UCC-1) to be delivered in connection with
(C) above (the "Guarantee Financing Statements")];

[(G)the Financing Statements (UCC-1) to be delivered in connection with
(D) above (the "Financing Statements")]; and

(H)the Notes.

        In rendering the opinions set forth herein, we have relied upon
certificates of officers and general partners of the Obligors, certificates or
telegrams of public officials and such other documents, records and information
as we have deemed necessary or appropriate. We have assumed that all signatures
are genuine; that all documents submitted to us as originals are authentic; that
all documents submitted to us as copies conform to the originals; and that the
facts stated in all such documents are true and correct. In rendering this
opinion, we have not made any independent investigation as to accuracy or
completeness of any facts or representations, warranties, data or other
information, whether written or oral, that may have been made by or on behalf of
the parties, except as specifically set forth herein.

        Based upon the foregoing, and subject to the qualifications set forth
herein, it is our opinion that:

1.(a). The Borrower is a corporation duly formed, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do business
and is in good standing as a corporation in the States of Texas, Louisiana and
Oklahoma.

(b).    WCE is a corporation duly formed, validly existing and in good standing
under the laws of the State of Texas and is qualified to do business and is in
good standing as a corporation in Alabama, Arkansas, Kansas, Louisiana,
Mississippi, New Mexico, North Dakota, Oklahoma, Utah and Wyoming.

(c).    WC94 is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Texas and is qualified to do business
and is in good standing as a limited partnership in Alabama, Louisiana,
Mississippi, New Mexico and Oklahoma.

(d).    WC95 is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Texas and is qualified to do business
and is in good standing as a limited partnership in Louisiana and Oklahoma.

(e).    WC96 is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Texas and is qualified to do business
and is in good standing as a limited partnership in Utah and Wyoming.

(f).    WC97 is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Texas and is qualified to do business
and is in good standing as a limited partnership in Louisiana.

(g).    WC98 is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Texas and is qualified to do business
and is in good standing as a limited partnership in Arkansas, Kansas, Louisiana,
New Mexico, and Oklahoma.

(h).    WC99 is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Texas and is qualified to do business
and is in good standing as a limited partnership in Louisiana and Oklahoma.

(i).    WC2000 is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Texas and is qualified to do
business and is in good standing as a limited partnership in Arkansas,
Louisiana, New Mexico, Oklahoma and Wyoming.

Exhibit E-1 - 2

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(j).    WC2002 is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Texas and is qualified to do
business and is in good standing as a limited partnership in Oklahoma.

(k).    P-H Energy is a limited liability company duly formed, validly existing
and in good standing under the laws of the State of Texas.

[(l).    Beta Operating is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Oklahoma and is
qualified to do business and is in good standing as a limited liability company
in the states of Texas, Louisiana and Kansas.]

[(m).    TCM is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Oklahoma.]

[(n).    Red River is a limited liability company duly formed, validly existing
and in good standing under the laws of the State of Oklahoma.]

The foregoing opinions with respect to good standing are given solely on the
basis of certificates of appropriate state agencies of the identified states,
and such opinions is limited to the meaning ascribed to such certificates by
each applicable state agency.

        2.     Each of the Obligors has the corporate, limited liability company
or partnership (as applicable) power and authority to execute, deliver and
perform its obligations under each of the Loan Documents to which it is a party.
The Borrower has taken all corporate action and each Guarantor has taken all
necessary corporate, limited liability company or partnership (as applicable)
action to authorize the execution and delivery of, and performance of its
obligations under, each of the Loan Documents to which it is a party. Such
execution, delivery and performance of its obligations under the Loan Documents
to which it is a party will not (i) result in a violation of the Borrower's
Certificate of Incorporation or WCE's Articles of Incorporation or By-laws or
any Guarantor's (excluding WCE) limited partnership agreement or operating
agreement (as applicable), or any applicable law, (ii) result in a violation of
or constitute a breach or default under any material agreement or instrument
relating to the borrowing of money or judicial or regulatory order binding upon
it or (iii) result in the creation or imposition of any Lien on any of its
properties pursuant to any such material agreement or instrument or judicial or
regulatory order. Each of the Loan Documents to which an Obligor is a party has
been duly authorized, executed and delivered by such Obligor.

        3.     Each of the Loan Documents constitutes the legal, valid and
binding obligation of each Obligor party thereto, enforceable against it in
accordance with its terms, except that enforcement may be subject to any
applicable bankruptcy, insolvency, or similar debtor relief laws now or
hereafter in effect and relating to or affecting the enforcement of creditors'
rights generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity). The enforceability and binding nature of each of the Obligors'
obligations under the Loan Documents are subject to the qualification that
certain provisions of the Loan Documents are or may be unenforceable in whole or
in part (but the inclusion of such provisions does not affect the validity of
the instruments, and each instrument contains adequate provisions for the
practical realization of the material benefits afforded thereby). Further, we
express no opinion as to the enforceability of provisions in the Loan Documents
(i) purporting to waive any rights of any Obligor, (ii) purporting to grant
powers of attorney or authority to execute documents or to act by power of
attorney on behalf of any Obligor, (iii) purporting to restrict access to legal
or equitable remedies (including, without limitation, proper jurisdiction and
venue), (iv) purporting to grant to the Agent or the Lenders a right of set-off
against any accounts belonging to a third party or otherwise held by any Obligor
in a fiduciary or like capacity, (v) purporting to release, exculpate or exempt
a party from, or require the indemnification of a party for, liability for its
own action or inaction, to the extent that the same are

Exhibit E-1 - 3

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inconsistent with public policy, (vi) purporting to establish evidentiary
standards for suits or proceedings to enforce the Loan Documents, (vii) that
relate to subrogation rights, delay or omission of enforcement of rights and
remedies, or (viii) that decisions by a party are conclusive. In addition, we
express no opinion with respect to the enforceability of any provision of the
Loan Documents prohibiting or purporting not to give effect to oral amendments
or oral waivers to Loan Documents or limiting the effect of a course of dealing
between the parties thereto.

        4.     To our knowledge, no authorization, consent, approval, license or
exemption of, or filing or registration with, any Governmental Authority of the
United States or any Governmental Authority of the State of Delaware, Oklahoma
or Texas in connection with any application of: the General Corporation Law of
the State of Delaware; the Texas Business Corporation Act; the Texas Limited
Liability Company Act; the Oklahoma Limited Liability Company Act; or the Texas
Revised Limited Partnership Act is necessary for either (i) the due execution
and delivery by each Obligor of the Loan Documents to which it is a party,
(ii) the borrowing of Loans and obtaining of Letters of Credit by the Borrower
or (iii) payment by the Obligors of the Loans or any other amounts payable under
the Loan Documents.

        5.     There are, to the best of our knowledge, no actions, suits or
proceedings pending or threatened against any Obligor or its property which
involves the possibility of any judgment or liability against such Obligor which
could reasonably be expected to have a Material Adverse Effect.

        6.     None of the Obligors is subject to regulation under the
Investment Company Act of 1940, as amended, or the Public Utility Holding
Company act of 1935, as amended.

        Our opinion as to any factual matter in connection with this opinion is
limited to the current actual knowledge of the lawyers in our firm who have
participated in the negotiation and preparation of this opinion, and does not
include constructive inquiry or imputed knowledge. We advise you that no special
investigation of the relevant facts or circumstances has been made. In that
connection, we have made no review of the files of the Obligors whether in the
possession of the Obligors or the possession of any other party. In addition, we
have made no investigation or review of any agreements, instruments, judgments,
decrees, franchises, permits, rules or other regulations or decrees by which the
Obligors may be bound and have made no independent search through the records of
any judicial authority or governmental agency or as to the existence of any
actions, suits, investigations or proceedings, if any, pending or threatened
against the Obligors.

        The opinions rendered herein are for the sole benefit of, and may only
be relied upon by the Lenders and the Administrative Agent, together with any
successors or permitted assigns, and the opinions herein expressed are not to be
used, disclosed, quoted, filed with a Governmental Authority or otherwise
referred to in connection with any transaction other than those contemplated by
the Loan Documents without our prior written consent. This opinion is
specifically limited to the presently effective laws of the United States of
America, the State of Oklahoma, the State of Texas and the General Corporation
Law of the State of Delaware, and we express no opinion of the effect on the
matters covered by this opinion of the laws of any other jurisdiction. In this
regard, please note that we are not licensed in the State of Delaware, but have
reviewed Delaware law in connection with the opinions expressed herein. We
assume no obligation to supplement this opinion if any applicable laws change
after the date of this opinion, or if we become aware of any facts that might
change the opinions expressed above after the date of this opinion. We have not
been asked to, and we do not, render any opinion as to any matter except as
specifically set forth herein.

    Very truly yours,                 HINKLE ELKOURI LAW FIRM L.L.C.

Exhibit E-1 - 4

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EXHIBIT E-2
FORM OF LEGAL OPINION OF LOCAL COUNSEL

November 23, 2004

BNP Paribas,
as Administrative Agent
919 Third Avenue
New York, New York 10022
Attention: Millie Carillo, Loan Assistant

Re:Second Lien Term Loan Agreement dated as of November 23, 2004 among Petrohawk
Energy Corporation, a Delaware corporation (the "Borrower"), the banks now or
hereafter signatory thereto (the "Lenders"), and BNP Paribas, as administrative
agent for the Lenders (in such capacity the "Administrative Agent") (the
"Agreement").

Gentlemen:

        We have acted as special [                        ] counsel to the
Borrower and its Subsidiaries, including [                        ], a
[            ] ("Mortgagor"), in connection with the execution and delivery of
that certain Deed of Trust, Mortgage, Assignment of As-Extracted Collateral,
Security Agreement and Financing Statement dated November [    ], 2004 by the
Mortgagor in favor of the Administrative Agent, for its benefit and the benefit
of the Lenders and others (the "Mortgage"). This opinion is being furnished to
you pursuant to Section 6.01(i)(ii) of the Agreement. All capitalized terms not
defined herein shall have the same meanings assigned to them in the Agreement.
In connection with the opinions set forth herein, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of the following
documents (the "Loan Documents"):

[(A)] the Mortgage[; and]

[(B)the UCC-1 Financing Statement covering as-extracted collateral and goods
that are or are to become fixtures prepared in connection with the Mortgage (the
"Financing Statement")].(1)

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

(1)Under Section 9.502 of UCC, a record of our form of mortgage is effective as
a financing statement filed as a fixture filing or as a financing statement
covering as-extracted collateral or timber to be cut. Some counties, however,
maintain separate indexes for UCC filings, and in such case, a UCC-1 financing
statement covering such collateral should be prepared and filed separately.

        In rendering the opinions set forth herein, we have relied upon
certificates of officers of the Mortgagor, certificates or telegrams of public
officials and such other documents, records and information as we have deemed
necessary or appropriate. We have assumed that all

Exhibit E-2-1

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signatures are genuine; that all documents submitted to us as originals are
authentic; that all documents submitted to us as copies conform to the
originals; and that the facts stated in all such documents are true and correct.
In rendering this opinion, we have not made any independent investigation as to
accuracy or completeness of any facts or representations, warranties, data or
other information, whether written or oral, that may have been made by or on
behalf of the parties, except as specifically set forth herein.

        Based upon the foregoing, and subject to the qualifications set forth
herein, it is our opinion that:

        1.     The form of the Mortgage, including the form of acknowledgments
thereto, [and the Financing Statement,] comply with the laws of the State of
[            ], including all applicable recording, filing and registration laws
and regulations, and are adequate and legally sufficient for the purposes
intended to be accomplished thereby.

        2.     The descriptions of those portions of the Mortgaged Property
located within the State of [            ] which are shown on Exhibit "A"
attached to the Mortgage are legally sufficient descriptions for the purpose of
creating and maintaining the Liens purported to be created by the Mortgage and
for the purposes of all applicable recording, filing and registration laws in
the State of [            ].

        3.     The Mortgagor is duly qualified as a foreign corporation to do
business and to own its Property and is in good standing in the State of
[            ].

        4.     So far as the law of the State of [            ] is concerned,
the Mortgage constitutes legal, valid and binding obligations of the Mortgagor
enforceable against it in accordance with their terms except as limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general application relating to or affecting creditors' rights generally and to
general principles of equity.

        5.     The Mortgage is effective to create in favor of the
Administrative Agent (or the Trustee named therein, as applicable) for the
benefit of the Administrative Agent and the Lenders, for the payment of the
obligations described therein, a valid mortgage Lien on all of the Mortgagor's
right, title and interest in and to the portion of the Mortgaged Property
constituting real property described in the Mortgage as being mortgaged thereby
and a valid security interest in all of the Mortgagor's right, title and
interest in and to as-extracted collateral located in the county in which the
Mortgaged Property is situated and all fixtures located on the real property
described in the Mortgage.

        6.     Fully executed counterparts of the Mortgage and the Financing
Statement should be filed for record in each county in the State of
[            ] where any portion of the Mortgaged Property is located [or if
other, please specify]. Other than the foregoing, no authorization, consent,
approval, license or exemption of, or filing or registration with, any
Governmental Authority of the State of [            ] is necessary for either
the due execution and delivery by the Mortgagor of the Mortgage, the perfection
of the Liens intended to be created thereby or with the

Exhibit E-2-2

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holding and enforcement by the Administrative Agent of the Mortgage or the
obligations secured thereby.

        7.     After the recordings and filings specified in paragraph 6 have
occurred, the Liens created by the Mortgage will be perfected.

        8.     After the recordings and filings specified in paragraph 6 have
occurred, no instruments need be recorded, registered or filed or re-recorded,
re-registered or re-filed in any public office in the State of [            ] in
connection with the execution and delivery of the Mortgage in order to maintain
the perfection and priority of the Liens created thereby after the date of
recordation, other than [state rule if necessary] and continuation statements as
required by the Uniform Commercial Code as in effect in the State of
[            ].

        9.     No state or local recording tax, stamp tax or other similar fee,
tax or governmental charge (other than statutory filing and recording fees to be
paid upon the filing of the Mortgage [or the Financing Statement]) is required
to be paid in connection with the filing and recording of [either] the Mortgage
[or the Financing Statement][, except as follows: explain if necessary].

        10.   The execution, delivery and performance by the Mortgagor of its
obligations under the Mortgage will not result in a violation of any laws, rules
and regulations of the State of [            ] which, in our experience,
exercising customary professional diligence, are normally applicable to
transactions of the type provided for in the Loan Documents.

        11.   A [            ] state court of competent jurisdiction or a
federal court sitting in the State of [            ] of competent jurisdiction
and applying conflicts of laws principles of the State of [            ], if
properly presented with a choice of law issue, will honor the choice of Texas
law to govern the Agreement, the Notes and the Mortgage that state such
documents shall be governed by the laws of the State of Texas.

        The foregoing opinions are subject to the following additional
assumptions and qualifications:

[add appropriate qualifications, if any].

        The opinions rendered herein are for the sole benefit of, and may only
be relied upon by, the addressee and the Persons from time to time Lenders under
the Agreement, and the opinions herein expressed are not to be used, circulated
or otherwise referred to in connection with any transaction other than those
contemplated by the Loan Documents. This opinion is specifically limited to the
presently effective laws of the State of [            ]. We have not been asked
to, and we do not, render any opinion as to any matter except as specifically
set forth herein.

 
 
Very truly yours,
 
 
    

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

Exhibit E-2-3

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

EXHIBIT F-1
SECURITY INSTRUMENTS

        1)    Guaranty and Collateral Agreement dated as of November 23, 2004 by
the Borrower and the Restricted Subsidiaries party thereto, as Guarantors, in
favor of the Administrative Agent and the Lenders.

        2)    Financing Statements in respect of item 1, by:

        a)    the Borrower;

        b)    Wynn-Crosby Energy, Inc., a Texas corporation;

        c)     P-H Energy, LLC, a Texas limited liability company;

        d)    Wynn-Crosby 1994, Ltd., a Texas limited partnership;

        e)    Wynn-Crosby 1995, Ltd., a Texas limited partnership;

        f)     Wynn-Crosby 1996, Ltd., a Texas limited partnership;

        g)     Wynn-Crosby 1997, Ltd., a Texas limited partnership;

        h)    Wynn-Crosby 1998, Ltd., a Texas limited partnership;

        i)     Wynn-Crosby 1999, Ltd., a Texas limited partnership;

        j)     Wynn-Crosby 2000, Ltd., a Texas limited partnership;

        k)    Wynn-Crosby 2002, Ltd., a Texas limited partnership.

        l)     Beta Operating Company, L.L.C., Oklahoma limited liability
company;

        m)   TCM, L.L.C., an Oklahoma limited liability company; and

        n)    Red River Field Services, L.L.C., an Oklahoma limited liability
company.

        3)    Stock Powers delivered in respect of item 1 by:

        a)    Wynn-Crosby Energy, Inc., a Texas corporation; and

        b)    Petrohawk Energy, LLC, a Texas limited liability company.

        4)    Deed of Trust, Mortgage, Assignment of As-Extracted Collateral,
Security Agreement and Financing Statement dated as of November [    ], 2004 by
the [Guarantor(s)], as mortgagor, in favor of Brian Malone, as Trustee, for the
benefit of the Administrative Agent, the Lenders and others.

        5)    Financing Statements in respect of item 4.

        6)    The Fee Letters between the Borrower and BNP Paribas.

Exhibit F-1 - 1

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

EXHIBIT F-2
FORM OF GUARANTY AND COLLATERAL AGREEMENT

Exhibit F-2 - 1

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

EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION

        This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee]
(the "Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Second Lien Term Loan Agreement identified below
(as amended, the "Agreement"), receipt of a copy of which is hereby acknowledged
by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part
of this Assignment and Assumption as if set forth herein in full.

        For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor's rights and
obligations in its capacity as a Lender under the Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any guarantees included in such facilities) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of the Assignor (in its capacity as
a Lender) against any Person, whether known or unknown, arising under or in
connection with the Agreement, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based
on or related to any of the foregoing, including contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as the "Assigned Interest").
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by the Assignor.

1.   Assignor:            

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

2.
 
Assignee:
 
         

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

[and is an Affiliate/Approved Fund of [identify Lender]
3.
 
Borrower:
 
PetroHawk Energy Corporation
4.
 
Administrative Agent:
 
BNP Paribas, as the administrative agent under the Agreement
5.
 
Agreement:
 
The Second Lien Term Loan Agreement dated as of November 23, 2004 among
Petrohawk Energy Corporation, the Lenders parties thereto, and BNP Paribas, as
Administrative Agent.
 
 
 
 
 

Exhibit G - 1

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

6.
 
Assigned Interest:
 
 

Commitment Assigned

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

  Aggregate Amount of
Commitment/Loans
for all Lenders

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

  Amount of
Commitment/Loans
Assigned

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

  Percentage Assigned
of
Commitment/Loans(2)

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

      $     $       %     $     $       %     $     $       %

Effective Date:                        , 20    [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

    ASSIGNOR
 
 
[NAME OF ASSIGNOR]
 
 
By:
       

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

        Title:
 
 
ASSIGNEE
 
 
[NAME OF ASSIGNEE]
 
 
By:
       

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

        Title:

Exhibit G - 2

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

Consented to and Accepted:  
BNP PARIBAS, as
    Administrative Agent
 
By
 
   

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

      Title:  
By
 
   

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

      Title:  
[Consented to:]
 
PETROHAWK ENERGY CORPORATION
 
By
 
   

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

      Title:  

Exhibit G - 3

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

ANNEX 1

PETROHAWK ENERGY CORPORATION SECOND LIEN TERM LOAN AGREEMENT

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

        1.    Representations and Warranties.    

        1.1    Assignor.    The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

        1.2.    Assignee.    The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Agreement,
(ii) it satisfies the requirements, if any, specified in the Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Agreement as a Lender thereunder and, to the extent of the
Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it
has received a copy of the Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 8.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender,
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Agreement, duly completed and
executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

        2.    Payments.    From and after the Effective Date, the Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignor for
amounts which have accrued to but excluding the

Exhibit G-1

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

Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.

        3.    General Provisions.    This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of Texas.

Exhibit G-2

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

SCHEDULE 7.05
LITIGATION

None.

Schedule 7.05-1

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

SCHEDULE 7.15
SUBSIDIARIES AND PARTNERSHIPS; UNRESTRICTED SUBSIDIARIES

Restricted Subsidiaries

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

  Jurisdiction of
Organization

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

  Organizational
Identification
Number

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

  Principal Place of
Business
and Chief Executive
Office

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

Wynn-Crosby Energy, Inc.   Texas   01262202-00   1100 Louisiana
Suite 4400
Houston, TX 77002 P-H Energy, LLC   Texas   800414887   1100 Louisiana
Suite 4400
Houston, TX 77002 Beta Operating Company, L.L.C.   Oklahoma   3500593601   1100
Louisiana
Suite 4400
Houston, TX 77002 Red River Field Services, L.L.C.   Oklahoma   3500620355  
1100 Louisiana
Suite 4400
Houston, TX 77002 TCM, L.L.C.   Oklahoma   3500593600   1100 Louisiana
Suite 4400
Houston, TX 77002
Partnerships
 
 
 
 
 
 
Wynn-Crosby 1994, Ltd.
 
Texas
 
00076385-10
 
1100 Louisiana
Suite 4400
Houston, TX 77002 Wynn-Crosby 1995, Ltd.   Texas   00085893-10   1100 Louisiana
Suite 4400
Houston, TX 77002 Wynn-Crosby 1996, Ltd.   Texas   00095234-10   1100 Louisiana
Suite 4400
Houston, TX 77002 Wynn-Crosby 1997, Ltd.   Texas   00097592-10   1100 Louisiana
Suite 4400
Houston, TX 77002 Wynn-Crosby 1998, Ltd.   Texas   00111816-10   1100 Louisiana
Suite 4400
Houston, TX 77002 Wynn-Crosby 1999, Ltd.   Texas   0013341610   1100 Louisiana
Suite 4400
Houston, TX 77002 Wynn-Crosby 2000, Ltd.   Texas   0014728210   1100 Louisiana
Suite 4400
Houston, TX 77002 Wynn-Crosby 2002, Ltd.   Texas   800131427   1100 Louisiana
Suite 4400
Houston, TX 77002
Unrestricted Subsidiaries
 
 
 
 
 
 
BETAustralia, LLC
 
California
 
199805110004
 
1100 Louisiana
Suite 4400
Houston, TX 77002

Schedule 7.15 - 1

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

SCHEDULE 7.19
GAS IMBALANCES

Well

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

  Working Interest

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

  Net Revenue
Interest

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

  Cumulative Over/(Under) Balance to Working Interest
(Mcf)

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

  As of Date

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

  Cumulative Over/(Under) Balance to Net Revenue Interest
(Mcf)

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

  Wynn-Crosby 1994, Ltd.                      
None
 
 
 
 
 
 
 
 
 
 
 
Wynn-Crosby 1995, Ltd.
 
 
 
 
 
 
 
 
 
 
 
Adkerson #1
 
6.45800
%
5.60310
%
(2,636
)
12/03
 
(2,287
) Alexander, C.S. #1-24   11.08140 % 8.61940 % (50 ) 5/04   (39 ) Allison #1-35
  10.05050 % 7.66890 % 241   5/04   184   Bar "D" #1-36   17.13530 % 13.97250 %
(300 ) 9/03   (245 ) Barbee, Alma #1   4.08830 % 3.36240 % 11,632   6/04   9,567
  Barrow #1-36   8.00000 % 5.68000 % 12   3/04   9   Barrow #2-36   8.00000 %
5.68000 % (96 ) 4/04   (68 ) Barter Island #2-25   11.11700 % 8.54550 % (79 )
5/04   (61 ) Bean, J. #1-10   7.50000 % 5.55000 % (9,311 ) 5/04   (6,890 ) Bean,
J. #3-10   15.63940 % 11.59210 % 20,346   5/04   15,081   Bean, J. #4-10  
16.35610 % 12.18630 % 463   5/04   345   Bear #1-19   1.06180 % 0.81940 % 236  
6/04   182   Brauchi #1-22   5.20540 % 2.17960 % 11,907   5/04   4,986  
Buckmaster #1-30   5.72540 % 4.41500 % 6,800   6/04   5,244   Carpenter 6-21  
3.00290 % 2.24800 % (1,222 ) 6/04   (915 ) Clay #1-33   0.79890 % 0.64050 % 130
  6/04   104   Clear #1-33   0.84280 % 0.67500 % (1,420 ) 6/04   (1,137 ) Clift
Thorton 1-36 (C.G.)   4.99740 % 3.56680 % (247 ) 12/03   (176 ) Coker #1-30  
31.52540 % 25.78290 % 41   6/04   34   Cook #1-24   14.24810 % 11.27450 % (410 )
8/02   (324 ) Copeland #1   7.50000 % 6.32740 % 14,404   6/04   12,152  
Copeland #2   8.96910 % 7.56680 % 3,952   5/04   3,334   Cupp #1   9.36190 %
7.80770 % (310 ) 6/04   (259 ) Cupp #2   13.69710 % 11.43600 % 231   6/04   193
  Cupp 3-27   11.00560 % 8.88860 % (13,641 ) 5/04   (11,017 ) Cupp "A" #1  
6.49930 % 5.52250 % 22,340   5/04   18,982   Cupp "A" #2   6.61880 % 5.61170 %
791   11/98   671   Cupp "B" #2   14.05470 % 11.74340 % (3,098 ) 11/98   (2,589
) Cupp "B" #5   1.59800 % 1.34400 % (1,891 ) 6/04   (1,590 ) Cupp "C" #1  
11.01670 % 9.54610 % (15,332 ) 2/00   (13,285 ) Cupp "C" #2   9.70000 % 7.90420
% 2,146   12/03   1,749   Cupp "D" #2   5.05200 % 4.24000 % 931   6/02   781  
Cupp "D" #3   9.70000 % 7.90420 % 138   5/04   112   Dessie 1-11   3.37500 %
2.60300 % 93   4/04   72   Ellis #1-33   3.33230 % 2.90750 % 4,793   4/97  
4,182   Ellis #2-33   3.32290 % 2.90750 % 964   5/04   843   Ellis #3-33  
3.32290 % 2.90750 % (484 ) 5/04   (424 ) Ethel #1-29   10.05910 % 8.02510 % 449
  6/04   358   Evans 2-6   5.66880 % 4.25160 % 1,263   6/04   947              
           

Schedule 7.19 - 1

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

Felton #1-24   17.47500 % 14.15790 % (9,677 ) 6/01   (7,840 ) Freida #1-25  
25.00000 % 18.40630 % (327 ) 6/02   (241 ) Gates #1-33   4.34780 % 3.08690 %
(6,181 ) 12/03   (4,388 ) Gates 8-33   4.34780 % 3.08690 % 13   4/04   9   Gill
#1-13   12.77540 % 10.17760 % 703   6/04   560   Goldston 46   25.00000 %
20.50780 % (8,616 ) 6/04   (7,068 )(1) Gray, Donald #1-28   1.17300 % 0.95350 %
22,544   3/04   18,325   Green #2-1   28.26770 % 21.46300 % (23 ) 5/04   (17 )
Green #4-1A   9.44640 % 6.99250 % 447   5/04   331   Green Estate #2   1.40600 %
1.23050 % (1,796 ) 6/04   (1,572 ) Green Estate #3   0.00030 % 0.00030 % (127 )
3/04   (127 ) Gunter #2-35   10.05050 % 7.66890 % 637   6/04   486   Hatcher
Farms #1A-19   16.66670 % 13.49200 % 14   5/04   11   Hay 5-33   4.34780 %
3.15150 % (1,639 ) 6/04   (1,188 ) Hay 7-33   4.34780 % 3.15150 % 26   4/04   19
  Heriford #1-18   6.65920 % 5.03170 % 95   5/04   72   Heriford #2-18   6.04450
% 0.04749 % (7,314 ) 6/03   (57 ) Heriford #4-18   6.43110 % 4.95050 % (609 )
5/04   (469 ) Heriford #5A-18   6.04450 % 4.74840 % (495 ) 5/04   (389 )
Heriford #6-18   6.04450 % 4.74840 % (320 ) 5/04   (251 ) Heriford #7-18  
6.04450 % 4.74840 % (805 ) 5/04   (632 ) Hinz #1-22   11.19000 % 8.17580 %
(2,199 ) 6/03   (1,607 ) Ima Woods 1-2   6.25000 % 4.74220 % (7,010 ) 9/03  
(5,319 ) Isch #1-11   3.53660 % 3.01550 % 28,035   5/04   23,904   Jahnel #1  
10.00000 % 6.90000 % 1,064   12/03   734   Jennings #1-29   5.94060 % 4.97910 %
24   6/04   20   Keck "A" 1-A   11.31400 % 4.67360 % 18,349   6/04   7,580  
Keck #2-30   7.60250 % 5.84970 % (457 ) 6/04   (352 ) Kendall Family   3.37500 %
2.48110 % (27 ) 4/04   (20 ) Larson #1-32   25.54570 % 21.40110 % 40   6/04   34
  Larson 1-31   4.58950 % 3.69890 % (8,050 ) 6/04   (6,488 ) Larson 1-32  
25.54570 % 21.40110 % 40   6/04   34   Lasley #2-11   0.83300 % 0.67640 % 340  
5/04   276   Littauer #1   6.67900 % 5.16540 % (69 ) 6/04   (53 ) Lorene #1-33  
1.31990 % 1.05270 % (106 ) 2/03   (85 ) Lovett 1-11   3.37500 % 2.60300 % 246  
6/04   190   Lubinus #1-15   9.37500 % 7.08410 % 3,989   5/04   3,014          
               

Schedule 7.19 - 2

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

Marshall Lake 1-31   12.53650 % 8.44200 % (403 ) 1/02   (271 ) McClellan #1-11  
3.74970 % 2.89700 % (1,513 ) 4/04   (1,169 ) McColgin State #1-21   25.78130 %
19.07810 % 248   3/04   184   Meacham #2-19   2.84700 % 2.18400 % 425   11/00  
326   Meacham #3-19   3.70130 % 2.83050 % 130   3/00   99   Medders #4-1  
9.44640 % 6.99250 % (5,942 ) 5/04   (4,398 ) Medders #6-1   3.13800 % 2.28520 %
3   5/04   2   Mikles 1-10   9.34300 % 7.23260 % 22,689   12/03   17,564  
Mikles #1-12   4.68750 % 3.32230 % (1,197 ) 6/04   (848 ) Mogg-Hawkins #1-27  
0.88000 % 0.76150 % 6,739   3/04   5,832   Moore #1-30   6.30510 % 5.15660 % 68
  12/03   56   Morse #1-13   1.13810 % 0.91180 % 7,798   5/04   6,247   Murray
#1-19   9.44800 % 6.87650 % 115   6/00   84   Nichols #1-22   7.10820 % 5.40090
% (28 ) 5/04   (21 ) Oklahoma St. #1-13   4.38300 % 3.53610 % (40,951 ) 12/03  
(33,038 ) Page #1-13   4.34020 % 3.33660 % (1,822 ) 6/03   (1,401 ) Page #5-13  
3.97160 % 3.21310 % 92   5/04   74   Page #6-13   3.97160 % 3.21310 % 1,240  
5/04   1,003   Page #7-13   3.97160 % 3.21310 % (1,255 ) 6/03   (1,015 )
Patricia #1-24   3.97160 % 3.21310 % 917   5/04   742   Pauline #1-19   25.00000
% 17.43750 % 7,549   5/04   5,265   Peggy #1-30   25.38130 % 20.75800 % (1,661 )
12/03   (1,358 ) Donnie Johnson #1-1(Atoka B)   4.05830 % 2.87630 % 11,025  
5/03   7,814 (2) Phillips 27-1   0.88010 % 0.76130 % (66 ) 4/04   (57 ) Pond
#1-34 (Redfork)   18.34200 % 14.38540 % 4,245   5/04   3,329   Reeves 1-31  
12.53650 % 8.44200 % 2,407   11/03   1,621   Rennels #1-35   10.05050 % 7.68380
% 450   5/04   344   Reynolds 1-30   17.31350 % 13.48980 % (1,340 ) 6/04  
(1,044 ) Roger #1-2   7.50000 % 5.23220 % 208   12/03   145   S.-McMurrey #7
Lobo 1,3   15.00000 % 10.65000 % 1,604   6/00   1,139   Sanborn #1-32   16.55150
% 6.83220 % 10   6/04   4   Sanborn #2-32   13.81610 % 11.50150 % (3,270 ) 6/04
  (2,722 ) Sanborn #3-32   6.22250 % 5.05920 % 481   6/04   391   Sanborn #4-32
  8.57420 % 6.82090 % 48   6/04   38   Sanborn #5-32   4.43940 % 3.71600 % (477
) 6/04   (399 ) Sara #2-13   4.56230 % 3.78400 % 4,836   6/04   4,011   Saunders
#1-33   2.22340 % 1.76560 % 43   12/03   34   Sears #1-29   12.28750 % 5.33260 %
1,009   5/04   438   Sooner #1 Unit   4.38820 % 3.72970 % 2,090   5/04   1,776  
Sooner #2-35   10.67040 % 9.48110 % 1,345   5/04   1,195   State #1-36 (Harper
State)   75.00000 % 60.02330 % 8   5/04   6   Stevens #1-17   1.07820 % 0.86530
% 377   3/04   303   Stevens #1-18   1.17830 % 0.95780 % 5   6/04   4   Stratton
Farms #1-26   5.10420 % 3.70560 % 278   6/97   202   Sutton #1-17   1.43560 %
1.10090 % (155 ) 3/04   (119 ) Sutton #2-17   5.74220 % 4.40370 % 90   6/04   69
                         

Schedule 7.19 - 3

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

Taylor Estate #1-27   9.37510 % 6.67970 % 51,407   5/04   36,627   Ten Bears
#1-5   3.12500 % 2.31250 % (41 ) 12/03   (30 ) Thetford #1-34   0.08560 %
0.05920 % (247 ) 3/04   (171 ) Thomas 6-33   4.34780 % 3.15150 % 20   6/04   14
  Tolle #1-1   9.44640 % 6.88040 % (35,594 ) 5/04   (25,925 ) Viers #1-32  
23.97520 % 13.24750 % 8,958   5/04   4,950   Viers #2-32   6.72200 % 4.43580 %
(53 ) 5/04   (35 ) Wagner #1-A   0.15020 % 0.11680 % 7,555   3/96   5,875  
Wagner #4-19   2.84700 % 2.18400 % 266   6/04   204   Wagner #5-19   5.78380 %
4.43770 % (121 ) 6/04   (93 ) Walter #2-17 (Atoka C)   5.09640 % 3.61770 % 2,681
  1/04   1,903   Warren King 1-27   0.88030 % 0.76130 % (367 ) 5/04   (317 )
Whitfield 1-34   12.50000 % 10.15630 % (807 ) 6/04   (656 ) Wright #22-1  
0.46670 % 0.38890 % (104 ) 7/03   (87 ) Young #1-33   0.10980 % 0.09490 % 676  
12/03   584   Young, E L 1-28   1.17300 % 0.95300 % 4,400   3/04   3,575   Zac
#1-9   21.03620 % 16.57160 % (51 ) 12/03   (40 )    

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

 

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

 

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

 

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

 

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

                      95,098                      

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

 
Wynn-Crosby, 1996, Ltd.
 
 
 
 
 
 
 
 
 
 
 
Bartlett & Bailey #1
 
47.04340
%
39.04600
%
9,516
 
6/04
 
7,898
  Bartlett & Bailey #2   47.04340 % 39.04600 % 8,435   6/04   7,001   Bartlett &
Bailey #3   47.04340 % 39.04600 % 28,384   6/04   23,559   Bartlett & Bailey #4
  47.04340 % 39.04600 % 52,872   6/04   43,884   E. Texas Gas System PL
Imbalance   95.56000 % 73.67198 % 5,694   6/04   4,390   Golden Gas Unit 2  
3.71340 % 3.10420 % (407 ) 6/04   (340 ) Golden Gas Unit 1   3.71340 % 3.10420 %
(295 ) 6/04   (246 ) James Gas Unit 4, 706357   10.25610 % 8.94030 % (4,181 )
6/04   (3,645 ) James Gas Unit 1, 805069   4.91010 % 4.29630 % 2,447   6/04  
2,141   Jones, RD 2-23   9.38430 % 7.24560 % 2,013   4/04   1,554      

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

 

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

 

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

 

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

 

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

                      86,196                      

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

                         

Schedule 7.19 - 4

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

Wynn-Crosby, 1997, Ltd.
 
 
 
 
 
 
 
 
 
 
 
Hi A-446A
 
0.79037
%
0.65864
%
221,539
 
6/04
 
184,616
  Hi A-447 A-1, 2&5   4.16520 % 3.47100 % (14,147 ) 6/04   (11,789 ) Hi A-447
B-14   4.16520 % 3.47100 % 22,927   3/03   19,106   Hi A-447 "B' wells   4.16520
% 3.47100 % 11,677   3/03   9,731   Hi A-448A   1.87207 % 1.56006 % (2,410 )
6/04   (2,008 ) Hi A-448 9   3.96271 % 3.30226 % (1,741 ) 6/04   (1,451 ) OCS
00828 SS0214   6.23239 % 5.19366 % 165,884   6/04   138,237   OCSG01528 SS0233  
11.85570 % 9.87975 % (78,197 ) 6/04   (65,164 ) OCSG03169 SS0238   12.11916 %
10.09930 % (12,545 ) 6/04   (10,454 ) OCSG01025 SS0239   5.26920 % 4.39100 %
8,713   6/04   7,261   South Marsh Island 265   3.99580 % 3.32980 % (2,569 )
4/02   (2,141 ) South Marsh Island 256   3.99580 % 3.33300 % (171 ) 4/02   (143
) State Lease 6618 1   6.93750 % 5.40580 % 1,731   7/99   1,349   State Lease
6618 3   18.07780 % 14.36500 % (4,247 ) 7/99   (3,375 )    

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

 

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

 

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

 

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

 

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

                      263,774                      

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

 
Wynn-Crosby, 1998, Ltd.
 
 
 
 
 
 
 
 
 
 
 
Avery #4
 
17.01560
%
14.84890
%
9,955
 
5/04
 
8,687
  Avery 1-26   50.81720 % 39.99400 % 25,517   6/04   20,082   Avery 2-26  
75.12970 % 61.38400 % (4 ) 6/04   (3 ) Avery 3-26   51.65210 % 43.59560 % 297  
6/04   251   Ballard 1-6   2.34970 % 1.90420 % 593   5/04   481   Biggers 1-6  
7.41460 % 5.56090 % 156   3/02   117   Boucher 1-5   20.69580 % 16.29790 % 8,703
  6/04   6,854   Brinks 1   35.23300 % 29.46980 % (5,232 ) 12/99   (4,376 )
Brinks 2-28   41.67250 % 34.05920 % 1,802   4/04   1,473   Davis, ET #1  
2.43750 % 1.95000 % 9,715   6/04   7,772 (3) Floyd 1-27   76.07860 % 58.14460 %
(58 ) 6/04   (44 ) Gunter #1   57.36050 % 48.36660 % 3,741   6/04   3,154  
Holt, Delia #1   43.01128 % 32.66172 % 3,718   6/04   2,823   Hunter Tucker
#1-31   17.02600 % 14.89780 % 1,240   4/04   1,085   Jarrad 1-35   29.06380 %
21.88270 % (184 ) 6/04   (139 ) Jarrad 2-35   60.50000 % 47.55490 % 92   6/04  
72   Jones, RD 2-23   12.50030 % 9.88000 % 2,013   4/04   1,591   Kluckner 1-26
  1.83340 % 1.46670 % (112 ) 8/01   (90 ) Kluckner 2-26   0.91670 % 0.87500 %
203   12/03   194   Lackey 1-32   55.53120 % 46.10920 % (33 ) 6/04   (27 )
Lackey Twin   55.53120 % 45.86270 % (1,504 ) 6/04   (1,242 ) LeFlore, Lillie 1  
97.60240 % 77.32320 % 910   4/04   721   Legrand 2-32   2.71283 % 2.03451 %
2,152   6/04   1,614   Lizzabell 1   22.61030 % 17.06400 % 714   6/04   539  
Loudermilk 1-28   30.27350 % 24.81520 % 299   6/04   245   Mackey 1-20  
47.59100 % 35.51060 % 22,189   6/04   16,557   Martin Est 1-35   0.32550 %
0.26450 % 6   6/04   5   Mason 3A   41.06980 % 33.11740 % (491 ) 6/04   (396 )  
                     

Schedule 7.19 - 5

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

Parkway 16   56.52000 % 40.17510 % 1,958   7/04   1,392   Parkway West 10  
1.17190 % 0.95210 % (172 ) 8/03   (140 ) Parkway West 2   9.50520 % 8.24390 %
621   8/03   539   Parkway West 3   9.50520 % 8.24390 % (3,043 ) 8/03   (2,639 )
Parkway West 5   11.25380 % 9.43860 % (856 ) 8/03   (718 ) Parkway West 6  
9.61390 % 8.33130 % 3,775   8/03   3,271   Parkway West 7   9.50520 % 8.24390 %
11,168   8/03   9,686   Parkway West 8   8.33330 % 7.29170 % 14   8/03   12  
Parkway West 9   9.50520 % 8.24380 % (20 ) 8/03   (17 ) Pearl 1-32   15.66720 %
11.95280 % (35 ) 12/02   (27 ) Powell 1-24   43.33990 % 33.71200 % (12,515 )
3/04   (9,735 ) Rees #1   25.45460 % 20.24370 % 177   6/04   141   Ritter 2-35  
48.69850 % 33.37730 % (91 ) 6/04   (62 ) Smith 1   60.93750 % 53.32030 % 64,870
  11/03   56,761 (4) Smith 2   53.12500 % 46.48440 % 51,730   10/03   45,264 (4)
Spring Mountain 1   64.93130 % 53.40935 % (387 ) 6/04   (318 ) Thronton #2-17  
4.87500 % 3.79780 % 19,010   6/04   14,809   Tipton 5-29   2.44050 % 1.81320 %
8,781   6/04   6,524   Tipton 6-29   2.44050 % 1.83030 % 1,948   6/04   1,461  
Todd 26G Federal 1   3.00320 % 2.37770 % 4,118   6/04   3,260   University 18-29
GU#1   3.04670 % 2.66590 % 13,348   6/04   11,680   University 18-29 GU#10  
3.04670 % 2.66590 % 1,322   6/04   1,157   University 18-29 GU#2   3.04670 %
2.66590 % (29 ) 6/04   (25 ) University 18-29 GU#3   3.04670 % 2.66590 % (565 )
6/04   (494 ) University 18-29 GU#4   3.04670 % 2.66590 % 5,482   6/04   4,797  
University 18-29 GU#5   3.04670 % 2.66590 % (894 ) 6/04   (782 ) University
18-29 GU#6   3.04670 % 2.66590 % 3,127   6/04   2,736   University 18-29 GU#7  
3.04670 % 2.66590 % (556 ) 6/04   (487 ) University 18-29 GU#8   3.04670 %
2.66590 % (2,178 ) 6/04   (1,906 ) University 18-30 GU#2   3.04670 % 2.66590 %
5,336   6/04   4,669   University 18-30 GU#3   3.04670 % 2.66590 % (446 ) 6/04  
(390 ) University 18-31 GU#3   3.62380 % 2.66590 % 3,527   6/04   2,595  
University 18-31 GU#4   3.62380 % 2.66590 % 5,389   6/04   3,964   University
18-31 GU#6   3.62380 % 2.66590 % 2,629   6/04   1,934   Young 1-3   41.42280 %
31.98770 % (7,776 ) 6/04   (6,005 )    

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

 

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

 

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

 

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

 

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

                      220,906                      

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

                         

Schedule 7.19 - 6

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

Wynn-Crosby 1999, Ltd.
 
 
 
 
 
 
 
 
 
 
 
Arco Fee #3
 
0.20240
%
0.15220
%
(43
)
6/04
 
(32
) Arco Fee #4   0.20240 % 0.15220 % 1   6/04   1   Arco Fee GU #1   0.20240 %
0.15220 % (2 ) 6/04   (2 ) Arco Fee GU #2   0.20240 % 0.15220 % 48   6/04   36  
DS&B #1 (Dibert Stark & Brown)   9.28063 % 6.98208 % (6,350 ) 6/04   (4,777 )
Gingrich #1-26   21.37500 % 15.74490 % 1,376   2/01   1,014   Kincaid JW A-1  
4.87060 % 4.31690 % (823 ) 12/03   (729 ) La Main Cam a Ra Unit   0.15806 %
0.11855 % (622 ) 6/04   (467 ) Lillie Mae #1-18   1.35100 % 1.16360 % (7 ) 4/04
  (6 ) Long Arroyo Federal 1   0.46470 % 0.40660 % (2 ) 6/04   (2 ) Rawls 1  
5.60070 % 4.90060 % 872   6/04   763   Rawls 2   5.60070 % 4.90060 % 985   6/04
  862   Regan #1   8.90630 % 6.67970 % 270   6/04   202   Walker, WE A#4  
2.57410 % 2.57410 % 176   4/01   176   Waskow, H. A#1   1.90270 % 1.54460 %
(2,299 ) 3/04   (1,866 ) Williams, Lorende D 1   5.26090 % 6.24030 % 433   6/04
  514   Williams, LD GU 1 #2   5.68500 % 6.24030 % 57   6/04   63      

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

 

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

 

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

 

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

 

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

                      (4,251 )                    

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

 
Wynn-Crosby 2000, Ltd.
 
 
 
 
 
 
 
 
 
 
 
Abbott 1-8
 
23.43750
%
19.88280
%
23274
 
5/04
 
19,744
  Baker #1-28   3.10420 % 2.71620 % (32 ) 3/04   (28 ) Bakke Unit   5.33170 %
5.04550 % 13   6/04   12   Bannister 1-8   23.43750 % 19.62890 % 958   5/04  
802   Barton #1   3.12500 % 2.34380 % 41,796   6/04   31,348   Bartlett, Arnold
#1   6.07740 % 5.31780 % 9,191   3/04   8,042   Bartlett, Arnold #2   6.07740 %
5.31780 % 6   3/04   5   Belva 1-33   62.61400 % 47.24740 % 2,758   5/04   2,081
  Caprito 82 1L/1U   23.46590 % 19.26480 % (1,027 ) 3/04   (843 ) Caprito 100
Unit 1   0.87710 % 0.76760 % 11,686   5/04   10,227   Carlson 1-27   1.56250 %
1.56250 % 309   6/04   309   Champlin Cities Service #6   37.94000 % 29.01460 %
14,660   6/04   11,211   Champlin Cities Service #7   37.93999 % 29.01457 %
79,776   6/04   61,009   Champlin Cities Service #8   8.95320 % 7.27450 % (633 )
6/04   (514 ) Clarke-State 2-26   18.75000 % 16.40630 % (362 ) 12/03   (317 )
Clift #1-4   1.03930 % 0.90930 % (18 ) 12/03   (16 ) Clift #2-4   1.03930 %
0.90930 % (262 ) 12/03   (229 ) Clift #3-4   1.03930 % 0.90930 % (59 ) 12/03  
(52 ) Cooper Gas Com 1 DK   15.75000 % 13.58440 % 734   5/04   633   Cooper Gas
Com 1E DK   15.75000 % 13.58440 % (487 ) 5/04   (420 ) Cooper Gas Com 1E CH  
15.75000 % 13.58440 % (6,893 ) 5/04   (5,945 ) Daniels #2   19.16420 % 16.76870
% (3,662 ) 6/04   (3,204 ) Deal #2   37.50000 % 29.25540 % (3,535 ) 6/04  
(2,758 )                        

Schedule 7.19 - 7

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

Elbow Canyon   65.62500 % 46.94810 % (4,589 ) 3/03   (3,283 ) Fort #1-23  
5.38000 % 4.54663 % 98   3/04   83   Frost #4-PC   50.00000 % 43.75000 % (6,267
) 6/04   (5,483 ) Frost #501-FC   50.00000 % 43.75000 % (32,114 ) 6/04   (28,100
) Garland 1-29   53.52000 % 39.73500 % (13 ) 6/04   (10 ) Gum 28 #1   30.53170 %
23.79840 % 1,852   5/04   1,443   Glenn #2   0.07010 % 0.04910 % 20   7/04   14
  Glenn #3   0.07010 % 0.06540 % (250 ) 7/04   (233 ) Glenn #5   1.55110 %
1.09210 % 1,055   7/04   743   Harney 1-5   37.73310 % 30.65820 % 695   6/04  
565   Harrison Estate #1-23   7.45900 % 6.48100 % (11,560 ) 06/04   (10,044 )
Heavin #1-31   2.99190 % 2.23620 % 201   6/04   150   Irene #3-6   4.72890 %
4.13780 % 628   6/04   550   Johnston, D.L.   3.65140 % 3.19500 % 3,907   6/03  
3,419   JV-S ROC #1   2.77910 % 2.43170 % (5,140 ) 10/03   (4,497 ) Lamar #1-31
  8.92920 % 7.81310 % (1,114 ) 6/04   (975 ) LeJeune #1   5.72190 % 3.60010 %
1,319   6/04   830   Lisa 3-30   1.67570 % 1.46630 % 61   6/04   53   Lockhart
#1   38.74150 % 33.89880 % 3,961   6/04   3,466   Mae West 2-26   5.55774 %
4.88020 % (1,768 ) 6/04   (1,552 ) Marriott 1-36   9.37500 % 7.19670 % (507 )
12/03   (389 ) Martindale 1-33   9.25310 % 7.51820 % (248 ) 5/04   (202 ) Martin
8-2   18.84260 % 13.83290 % 78   8/03   57   Marvin 1-6   65.71800 % 49.83200 %
(17 ) 5/04   (13 ) McDonald 6-1   50.00000 % 37.50000 % 22,943   6/04   17,207  
McDonald 6-2   50.00000 % 37.50000 % 14,435   6/04   10,826   Monroe 2  
23.75000 % 20.78130 % 6,160   3/04   5,390   Monroe 3   23.75000 % 20.78130 %
(44,962 ) 9/02   (39,342 ) Quattlebaum 4   1.51580 % 1.13690 % 611   6/04   458
  Quattlebaum 1   1.51580 % 1.13690 % 11,001   6/04   8,251   Quattlebaum 2  
1.51580 % 1.13690 % (831 ) 6/04   (624 ) Rowley COM 500 PC   12.98540 % 10.97270
% 2,006   6/04   1,695   Rowley COM 500 FC   19.46110 % 16.44470 % 667   6/04  
563   Russell 1-20   9.64060 % 7.62740 % (1,334 ) 12/03   (1,055 )              
         

Schedule 7.19 - 8

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

Sandra Kay 1-26   5.57740 % 4.88020 % (1 ) 6/04   (1 ) Schenk #1-22   14.04750 %
12.03630 % (31,161 ) 6/04   (26,700 ) Shelton 1-10   1.04170 % 0.91150 % 11,090
  6/04   9,704   Shelton 2-10   1.04170 % 0.91150 % (968 ) 3/03   (847 ) Shwen
1-14   6.2500 % 4.91410 % (100,782 ) 6/04   (79,240 ) SL 5419 #1   0.29790 %
0.17910 % (193 ) 6/04   (116 ) Sprowls #1-5   4.66700 % 3.74140 % 1,799   6/04  
1,442   Sprowls #2-5   4.66700 % 3.74140 % (28,711 ) 6/04   (23,017 ) Sprowls
#4-5   4.66700 % 3.74140 % (5,731 ) 6/04   (4,594 ) Spurlin #25-1   74.18980 %
58.90200 % 108,568   6/04   86,196 (5) State 1-16   39.37290 % 32.84490 % 151  
6/00   126   State M #1 DK   15.75000 % 13.78130 % 1,407   6/04   1,231   State
M #1 DK   15.75000 % 13.78130 % (1,660 ) 6/04   (1,452 )(6) State M #1E DK  
15.75000 % 13.78130 % 1,198   6/04   1,048   State M #1E DK   15.75000 %
13.78130 % (477 ) 6/04   (417 )(6) State Com AM #37 DK   31.89850 % 27.90970 %
92   6/04   80   State Com Am #37 DK   31.89850 % 27.90970 % (46 ) 6/04   (40
)(6) Stewart A Com LS 2 Ron   28.66500 % 24.43610 % 282   2/04   240   Stewart A
Com LS #2B MV   28.66500 % 24.43690 % (10,315 ) 6/04   (8,794 ) Stewart A Com LS
2M MV   28.66500 % 24.43610 % 3,359   6/04   2,863   Stewart A Com LS 2M MV  
28.66500 % 24.43610 % (13,003 ) 6/04   (11,085 )(6) Stewart A Com LS #2 MV  
28.66500 % 24.43610 % 272   6/04   232   Stewart A Com LS #2 MV   28.66500 %
24.43610 % (860 ) 6/04   (733 )(6) Stewart A Com LS #2M DK   28.66500 % 24.43610
% 1,560   6/04   1,330   Stewart A Com LS #2M DK   28.66500 % 24.43610 % (1,315
) 6/04   (1,121 )(6) Switzer, Larry 3   1.56250 % 1.36720 % 265   6/04   231  
Switzer, Larry 2   1.56250 % 1.36720 % 7   6/04   7   Switzer, Larry 1   1.56250
% 1.36720 % 73,874   6/04   64,640   Three States Com #1A MV   15.75000 %
13.78130 % (1,167 ) 6/04   (1,021 ) Three States Com #1A MV   15.75000 %
13.78130 % 482   6/04   422 (6) Three States Com #1 MV   15.75000 % 13.78130 %
(223 ) 6/04   (195 ) Three States Com #1 MV   15.75000 % 13.78130 % 537   6/04  
470 (6) Three States Com #1 PC   15.75000 % 13.78130 % (482 ) 6/04   (422 )
Thurmond Ranch #1-2   1.59340 % 1.39420 % 2,811   3/04   2,460   Todd #14-1  
1.136000 % 1.56250 % (4 ) 6/04   (6 ) Todd #19-1   1.136000 % 1.56250 % (12 )
6/04   (17 ) Todd #15-1   1.136000 % 1.56250 % (5 ) 6/04   (7 ) Touchstone 1-14
  1.56250 % 1.36720 % (39 ) 12/03   (34 )                        

Schedule 7.19 - 9

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

Waid #1   11.25000 % 9.53130 % 32,122   6/03   27,215   Walker #1-3   1.04100 %
0.91090 % (2,418 ) 6/04   (2,116 ) Whitfield 1-34   12.50000 % 10.15630 % (807 )
6/04   (656 ) Young 1-3   41.42280 % 31.98770 % 3458   6/04   2,670      

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

 

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

 

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

 

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

 

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

                      131,038                      

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

 
Wynn-Crosby 2002, Ltd.
 
 
 
 
 
 
 
 
 
 
 
LeJenue #1
 
5.09870
%
3.39960
%
1,290
 
6/04
 
860
  Blackburn #3T   14.04264 % 12.00100 % 315   6/04   269   Blackburn #3C  
14.04264 % 12.00100 % (117 ) 6/04   (100 ) Blackburn #4   21.06395 % 18.00150 %
(10,469 ) 6/04   (8,947 ) Blackburn #5   14.92030 % 12.75110 % (576 ) 6/04  
(492 )    

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

 

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

 

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

 

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

 

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

                      (8,410 )                    

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

 
Wildcard Oil & Gas Company
 
 
 
 
 
 
 
 
 
 
 
Bartlett & Bailey #1
 
2.18580
%
1.81420
%
442
 
6/04
 
367
  Bartlett & Bailey #2   2.18580 % 1.81420 % 392   6/04   325   Bartlett &
Bailey #3   2.18580 % 1.81420 % 1,319   6/04   1,095   Bartlett & Bailey #4  
2.18580 % 1.81420 % 2,457   6/04   2,039   E. Texas Gas System PL Imbalance  
4.440000 % 4.440000 % 265   6/04   265   Golden Gas Unit #2, 805545   0.17250 %
0.14420 % (407 ) 6/04   (340 ) Golden Gas Unit #1, 957595   0.17250 % 0.14420 %
(295 ) 6/04   (247 ) James Gas Unit 1, 805069   0.22810 % 0.19960 % 386   6/04  
338   James Gas Unit 4, 706357   0.47640 % 0.41530 % (284 ) 6/04   (248 )    

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

 

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

 

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

 

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

 

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

                      3,595                      

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

  Combined Total                   787,946                      

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

 

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

(1)Field imbalance due from Shell.

(2)Imbalance is disputed, well ceased production in 1992, well acquired in 1996
w/(1028) gas imbalance. Received revised imbalance in May 2004.

(3)Dispute balance Statement has obvious errors

(4)Per Jack Roach, Wynn-Crosby 1998, Ltd did not assume this imbalance. No GBA.

(5)Oneok measurement problem. Wynn-Crosby 200, Ltd. estimates this volume by
comparing field estimates to Oneok statements. Oneok has not sent Wynn-Crosby
any statement claiming they are owed this gas.

(6)Wynn-Crosby 2002, Ltd. acquired 70% of this property from Neward along with
Neward's imbalance Conoco has not made adjustments to allocate 70% of Neward's
imbalance.

Schedule 7.19 - 10

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

SCHEDULE 7.20
MARKETING CONTRACTS

        None.

Schedule 7.20 - 1

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

SCHEDULE 7.21
SWAP AGREEMENTS

        Commodity Hedges as of November 18, 2004

Trade Type

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

  Quantity

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

  Trade Date

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

  Basis

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

  Period

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

  Floor Price

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

  Ceiling Price

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

  Swap Price

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

  Counterparty

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

WC oil swaps   5,000 bbl/month   11/18/2004   NYMEX WTI   Jan-Mar 05            
  $ 32.31 avg.   Cinergy/Coral WC gas swaps   148,000 mmtu/mo avg       NYMEX
gas   Jan-Jun 05     na     na   $ 4.08 avg.   Cinergy/Coral WC gas collar  
400,000 mmbtu/mo   10/21/2004   NYMEX gas   cal 05   $ 6.35   $ 10.05        
Paribas WC oil collar   5,000 bbl/mo   11/18/2004   NYMEX WTI   cal 05     38.00
  $ 51.40         Paribas HAWK gas collar   90,000 mmbtu/mo   9/14/2004   NYMEX
gas   cal 05   $ 5.50   $ 7.59         Paribas HAWK gas collar   45,000 mmbtu/mo
  8/26/2004   NYMEX gas   cal 05   $ 5.00   $ 7.82         B of A HAWK gas
collar   35,000 mmbtu/mo   10/29/2004   NYMEX gas   cal 05   $ 7.00   $ 8.75    
    B of A WC gas collar   170,000 mmbtu/mo   11/18/2004   NYMEX gas   Jul-Dec
05   $ 6.00   $ 7.68         Paribas WC oil collar   27,000 bbl/mo   10/21/2004
  NYMEX WTI   cal 05   $ 43.00   $ 57.00         Paribas HAWK oil collar   9,000
bbl/mo   10/29/2004   NYMEX WTI   cal 05   $ 43.00   $ 52.30         B of A WC
oil collar   27,000 bbl/mo   10/21/2004   NYMEX WTI   cal 06   $ 40.00   $ 49.30
        Paribas HAWK gas collar   150,000 mmbtu/mo   10/29/2004   NYMEX gas  
cal 06   $ 6.00   $ 8.26         B of A WC gas collar   400,000 mmbtu/mo  
10/21/2004   NYMEX gas   cal 06   $ 5.50   $ 9.54         Paribas HAWK oil
collar   7,000 bbl/mo   10/29/2004   NYMEX WTI   cal 06   $ 40.00   $ 47.30    
    B of A HAWK gas swap   100,000 mmbtu/mo   11/9/2004   NYMEX gas   cal 07    
          $ 6.06   B of A HAWK oil collar   6,000 bbl/mo   11/5/2004   NYMEX WTI
  cal 07   $ 36.00   $ 45.75         B of A WC gas collar   240,000 mmbtu/mo  
11/18/2004   NYMEX gas   cal 07   $ 5.30   $ 7.12         Paribas WC oil collar
  14,000 bbl/mo   11/18/2004   NYMEX WTI   cal 07   $ 35.00   $ 43.20        
Paribas HAWK oil collar   5,000 bbl/month   11/5/2004   NYMEX WTI   cal 08   $
34.00   $ 45.30         B of A WC gas collar   210,000 mmbtu/mo   11/18/2004  
NYMEX gas   cal 08   $ 5.00   $ 6.45         Paribas WC oil swap   12,000 bbl/mo
  11/18/2004   NYMEX WTI   cal 08               $ 38.10   Paribas HAWK gas
collar   90,000 mmbtu/mo   11/5/2004   NYMEX gas   cal 08   $ 5.15   $ 6.71    
    B of A

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Petrohawk Energy Corporation
Commodities Trade Summary

Banc of America

Trade Date

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

  Start Date

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

  End Date

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

  MMBTU

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

  Price

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

  MTM for
09.30.04

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

  Current Month
Change

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

  MTM for
10.29.04

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  Natural Gas                                   08.26.04   12.23.04   11.28.05  
547,500   $ 7.83   (252,765 ) (193,305 ) (446,070 )   08.26.04   12.23.04  
11.28.05   547,500   $ 5.00   51,036   (32,851 ) 18,185                        

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                        (201,729 ) (226,156 ) (427,885 )                      

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  BNP Paribas                            
Natural Gas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    09.14.01   01.04.05   12.05.05   1,095,000   $ 7.59   (586,665 ) (429,106 )
(1,015,771 )   09.14.01   01.04.05   12.05.05   1,095,000   $ 5.50   195,898  
(121,185 ) 74,713                        

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                        (390,767 ) (550,291 ) (941,058 )                      

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

 

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                        (592,496 ) (776,447 ) (1,368,943 )                      

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Schedule 7.21 - 1

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SCHEDULE 9.05
INVESTMENTS

None.

Schedule 9.05-1

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QuickLinks

Exhibit 10.2

EXECUTION COPY

SECOND LIEN TERM LOAN AGREEMENT
TABLE OF CONTENTS
ANNEXES, EXHIBITS AND SCHEDULES
ARTICLE VI Conditions Precedent
ARTICLE XI The Administrative Agent
ANNEX I COMMITMENTS
ANNEX II TERMS OF SUBORDINATION
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF BORROWING REQUEST
EXHIBIT C FORM OF INTEREST ELECTION REQUEST
EXHIBIT D FORM OF COMPLIANCE CERTIFICATE
EXHIBIT E-1 FORM OF LEGAL OPINION OF HINKLE ELKOURI LAW FIRM L.L.C.
EXHIBIT E-2 FORM OF LEGAL OPINION OF LOCAL COUNSEL
EXHIBIT F-1 SECURITY INSTRUMENTS
EXHIBIT F-2 FORM OF GUARANTY AND COLLATERAL AGREEMENT
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION

ANNEX 1

PETROHAWK ENERGY CORPORATION SECOND LIEN TERM LOAN AGREEMENT STANDARD TERMS AND
CONDITIONS FOR ASSIGNMENT AND ASSUMPTION
SCHEDULE 7.05 LITIGATION
SCHEDULE 7.15 SUBSIDIARIES AND PARTNERSHIPS; UNRESTRICTED SUBSIDIARIES
SCHEDULE 7.19 GAS IMBALANCES
SCHEDULE 7.20 MARKETING CONTRACTS
SCHEDULE 7.21 SWAP AGREEMENTS
Petrohawk Energy Corporation Commodities Trade Summary
SCHEDULE 9.05 INVESTMENTS