PURCHASE AND SALE AGREEMENT

                               BETWEEN

                        SMITH PRODUCTION INC.

                              AS SELLER

                                 AND

                        CNR PRODUCTION, LLC

                            AS PURCHASER

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Table of Contents

Definitions

Exhibits

Recitals

Article 1 Purchase and Sale

Section 1.1  Purchase and Sale

Section 1.2  Assets

Section 1.3  Excluded Assets

Section 1.4  Effective Time

Section 1.5  Copying and Receipt of Records

Section 1.5  Copying and Receipt of Records

Article 2 Purchase Price

Section 2.1  Purchase Price

Section 2.2  Adjustments to Purchase Price

Section 2.3  Allocation of Purchase Price

Article 3 Title Matters

Section 3.1 Net Revenue Interest; Working Interest

Section 3.2 Assignment and Bill of Sale

Section 3.3 Permitted Encumbrances

Section 3.4 Consents to Assignment

Section 3.5 Casualty Loss

Section 3.6 Condemnation Loss


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Article 4 Environmental Matters

Section 4.1 Environmental Assessment

Section 4.2 Limitations

Article 5 Representations and Warranties of Seller

Section 5.1 Disclaimers

Section 5.2 Existence and Qualification

Section 5.3 Power

Section 5.4 Authorization and Enforceability

Section 5.5 No Conflicts

Section 5.6 Purchaser's Liability for Brokers' Fees

Section 5.7 Litigation

Section 5.8 Taxes and Assessments

Section 5.9  Governmental Authorizations

Section 5.10 Consents to Assignments and Preferential
             Purchase Rights

Section 5.11 Non-foreign Person

Section 5.12 Condemnation

Section 5.13 Bankruptcy

Section 5.14 PUHCA/NGA

Section 5.15 Investment Company

Article 6 Representations and Warranties of Purchaser

Section 6.1 Existence and Qualification

Section 6.2 Power

Section 6.3 Authorization and Enforceability

Section 6.4 No Conflicts

Section 6.5 Seller's Liability for Brokers' Fees

Section 6.6 Litigation

Section 6.7 Financing


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Article 7 Covenants of the Parties

Section 7.1 Access

Section 7.2 Tax Matters

Section 7.3 Notification of Breaches

Section 7.4 Documents Delivered at Closing

Section 7.5 Public Announcements

Section 7.6 Further Assurances

Section 7.7 Indemnity Regarding Access

Section 7.8 Gas Imbalances and Take-or-Pay Make-up
            Obligations

Section 7.9  Consents to Assignment

Section 7.10 Like-Kind Exchange

Article 8 Conditions to Closing

Section 8.1 Conditions of Seller to Closing

Section 8.2 Conditions of Purchaser to Closing

Article 9 Closing

Section 9.1 Time and Place of Closing

Section 9.2 Obligations of Seller at Closing

Section 9.3 Obligations of Purchaser at Closing

Section 9.4 Closing Payment and Post-Closing Purchase
            Price Adjustments
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Article 10   Termination

Section 10.1 Termination

Section 10.2 Effect of Termination

Article 11   Post-Closing Matters

Section 11.1 Receipts

Section 11.2 Expenses

Section 11.3 Assumption

Section 11.4 Survival

Section 11.5 Waiver of Trade Practices Acts

Article 12   Miscellaneous

Section 12.1 Counterparts

Section 12.2 Notice

Section 12.3 Binding Agreement

Section 12.4 Expenses

Section 12.5 No Third-Party Beneficiaries

Section 12.6 Construction

Section 12.7 Governing Law

Section 12.8 Captions

Section 12.9 Waivers

Section 12.10 Assignment

Section 12.11 Entire Agreement

Section 12.12 Amendment

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (the "Agreement"), is executed
on January 1, 2003, by and between Smith Production Inc. ("Seller")
, a Texas corporation, and CNR Production, LLC ("Purchaser"), a
Texas limited liability company.

DEFINITIONS

"Adjustment Period" shall mean the period of time commencing at the
Effective Time and ending on the Closing Date as discussed in Section
2.2.

"Adjusted Purchase Price" shall mean the Purchase Price after
calculating and applyingthe adjustments set forth in Section 2.2.

"Affiliates" with respect to any Person, means any person that
directly or indirectlycontrols, is controlled by or is under common
control with such Person.

"Agreement" has the meaning set forth in the first paragraph of this
Agreement.

"Allocated Value" shall mean the allocation of the unadjusted Purchase
Price among each of the Assets as described in Section 2.3.

"Assets" shall mean an undivided two percent (2%) of Seller's right,
title and interest, as of the Effective Time, in the property rights
described in 1.2(a) through 1.2(h), inclusive.

"Assignment and Bill of Sale" shall mean the conveyance document by which
Seller conveys the Assets to Purchaser as described in Section 3.2.

"Business Day" means each calendar day except Saturdays, Sundays, and Federal
holidays.

"Closing" has the meaning set forth in Section 9.1.

"Closing Date" has the meaning set forth in Section 9.1.

"Closing Payment" has the meaning set forth in Section 9.4(a).

"Code" shall mean the Internal Revenue Code.

"Contracts" has the meaning set forth in Section 1.2(d).

"Damages" shall mean the amount of any and all liability, loss, cost,
diminution in value, expense, claim, demand, notice of violation,
investigation by any Governmental Body, cause of action, administrative
proceeding, payment, charge, obligation, fine, penalty, deficiency,
award or judgment incurred or suffered by any indemnified party arising
out of or resulting from the indemnified matter, including reasonable
fees and expenses of attorneys, consultants, accountants or other agents
and experts reasonably incident to matters indemnified against, and the
costs of investigation and/or monitoring of such matters, and the costs of
enforcement of the indemnity.

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"DTPA" has the meaning set forth in Section 11.5(a).

"Effective Time" has the meaning set forth in Section 1.4.

"Environmental Laws" means, as the same have been amended as of the
EffectiveTime, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Sections 9601 et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. Sections 6901 et seq.; the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C.
Section 7401 et seq. the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1471 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections
2601 through 2629; the Oil Pollution Act, 33 U.S.C. Sections 2701 et seq.;
the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections
11001 et seq.; and the Safe Drinking Water Act, 42 U.S.G. Sections 300f
through 300j; and all similar Laws as of the Effective Time of any Governmental
Body having jurisdiction over the Properties addressing pollution or protection
of the environment and all regulations implementing the foregoing.

"Environmental Liabilities" shall mean any and all environmental response
costs, costs to cure, restoration costs, costs of remediation, settlements,
penalties, fines, attorney fees, and Damages (i) related to a Material Adverse
Environmental Condition regardless of whether same occurred PRIOR TO, AT
OR AFTER THE EFFECTIVE TIME and/or (ii) incurred or imposed pursuant to any
claim or cause of action by a Governmental Body or other Person for
remediation or response costs or any remediation obligation or Damages
arising out of any violation of any Environmental Law which is attributable
to the ownership or operation of the Properties PRIOR TO, AT OR AFTER THE
EFFECTIVE TIME.

"Equipment" has the meaning set forth in Section 1.2(f).

"Excluded Assets" has the meaning set forth in Section 1.3.

"Governmental Authorization" has the meaning set forth in Section 5.9.

"Governmental Body" means any federal, state, local, municipal or other
governmental regulatory agency, administrative agency, commission, court,
tribunal, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or
taxing powers.

"Hydrocarbons" shall mean oil, gas, condensate, other gaseous and liquids
products and all products attributable thereto, produced from or
attributable to the Properties.

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"Lands" has the meaning set forth in Section 1.2(a).

"Laws" means all statutes, rules, regulations, ordinances, orders, and
codes ofGovernmental Bodies.

"Leases" has the meaning set forth in Section 1.2(a).

"Material Adverse Environmental Condition" shall mean any violations of
Environmental Laws; any condition that is required to be remediated or cured
under applicable Environmental Laws in effect at the time of the Environmental
Assessment; the failure to remediate or cure any condition that is required to
be remediated or cured under applicable Environmental Laws in effect at
the time of the Environmental Assessment; any action or proceeding before
any Governmental Body alleging potential liability arising out of or
resulting from any actual or alleged violation of, or any remedial
obligation under, any Environmental Law with respect to the Properties
or notice of same to Seller by any Person.

"Net Revenue Interest" shall mean an ownership interest, expressed either
as a decimal or percentage, in the stream of revenues attributable to the
Assets, net of all burdens, as discussed in Section 3.1(a).

"Permitted Encumbrances" has the meaning set forth in Section 3.3.

"Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, government or agency or subdivision thereof or any other
entity.

"Properties" shall mean the Units, Leases, Lands and Wells.

"Property Costs" shall mean all operating expenses and capital expenditures
incurred in the ownership and operation of the Assets and, where applicable,
in accordance with the relevant operating or unit agreement, and overhead
costs charged to the Assets under the relevant operating agreement or unit
agreement, if any. Property Costs shall include costs of insurance and ad
valorem, property, severance, production and similar Taxes based upon or
measured by the ownership or operation of the Assets or the production of
Hydrocarbons therefrom, but excluding any other Taxes. Property Costs shall
not include liabilities and expenses attributable to (i) claims,
investigations, administrative proceedings or litigation directly or
indirectly arising out of or resulting from actual or claimed personal
injury or death, property damage or violation of any Law, (ii) obligations
to plug wells, dismantle facilities, close pits and restore the surface
around such wells, facilities and pits, (iii) obligations to remediate
or cure any contamination of groundwater, surface water, soil or
Equipment under applicable Environmental Laws, (iv) obligations to
furnish make-up gas according to the terms of applicable gas sales,
gathering or transportation contracts, (v) gas balancing obligations,
(vi) obligations related to the Excluded Assets and (vii) obligations
to pay Working Interests, royalties, overridding royalties or other
interests held in suspense.

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"Purchase Price" has the meaning set forth in Section 2.1.

"Purchaser" has the meaning set forth in the first paragraph of this
Agreement.

"Purchaser Indemnitees" shall mean Purchaser, its officers, directors,
shareholders, members, employees, agents, representatives, Affiliates and
subsidiaries.

"Records" has the meaning set forth in Section 1.2(h).

"Seller" has the meaning set forth in the first paragraph of this Agreement.

"Seller Indemnitees" shall mean Seller, its officers, directors, shareholders,
members, employees, agents, representatives, Affiliates and subsidiaries.

"Surface Contracts" has the meaning set forth in Section 1.2(e).

"Tax(es)" means all federal, state, local and foreign income, profits,
franchise, sales, use,ad valorem, property, severance, production,
excise, stamp, documentary, real property transfer or gain, gross receipts,
goods and services, registration, capital, transfer, or withholding Taxes
or other governmental fees or charges imposed by any taxing authority,
including any interest, penalties or additional amounts which may be imposed
with respect thereto.

"Tax Returns" has the meaning set forth in Section 5.8.

"Title Defect" has the meaning set forth in Section 3.4.

"Units" has the meaning set forth in Section 1.2(c).

"Wells" has the meaning set forth in Section 1.2(b).

"Working Interest" shall mean the gross leasehold ownership interest in
the Leases, or, as the case may be, the gross ownership interest in fee
minerals or other types of interests which are included within the Assets, as
discussed in Section 3.1(b).

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EXHIBITS

Exhibit 1.2(a)          Leases

Exhibit 1.2(b)          Wells

Exhibit 1.2(c)          Units

Exhibit 2.3             Allocated Values

Exhibit 3.2             Assignment and Bill of Sale

Exhibit 5.10            Consents to Assignments

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RECITALS:

WHEREAS, Seller desires to sell the Assets to Purchaser and Purchaser
desires to purchase the Assets from Seller, subject to the terms of this
Agreement.

NOW, THEREFORE, in consideration of the premises, mutual promises, and
other valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:


ARTICLE 1
PURCHASE AND SALE

Section 1.1  Purchase and Sale.

At the Closing, and upon the terms and subject to the conditions of this
Agreement, Seller agrees to sell and convey the Assets to Purchaser and
Purchaser agrees to purchase, accept and pay for the Assets.

Section 1.2  Assets.

Seller conveys and assigns to Purchaser an undivided two percent (2%) of
Seller's right, title and interest in the following property rights described
in 1.2(a) through 1.2(h), inclusive:

(a) Oil, gas and mineral leases; subleases and other leaseholds; carried
interests; farmout rights; options; and other properties and interests
as described on Exhibit 1.2(a), subject to such depth limitations,
exclusions and other restrictions as described on Exhibit 1.2 (a)
(collectively, the "Leases") and all tenements, hereditaments and
appurtenances belonging to the Leases, together with each and every
kind and character of right, title, claim, and interest that Seller
has in and to the Leases and the lands covered thereby, pooled,
unitized or communitized therewith (the "Lands");

(b) Oil, gas, water, disposal or injection wells located on the Lands
including the interests in the wells as described on Exhibit 1.2(b)
attached hereto (the "Wells");

(c) Units which include all or portions of the Leases, Lands or
Wells as described on Exhibit 1.2(c) (the "Units") including
production from any such Unit and all tenements, hereditaments
and appurtenances belonging to the Units;

(d) All contracts, agreements, orders and instruments by which
the Assets are bound or to which the Assets are subject, or that
relate to or are otherwise applicable to the Assets (all of which
are hereinafter collectively referred to as "Contracts") but
excluding the Leases and any contracts, agreements and instruments
to the extent transfer is restricted by third-party agreement or
applicable law and the necessary consents to transfer are not
obtained pursuant to Section 7.9;

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(e) Easements, permits, licenses, servitudes, rights-of-way, surface
leases and other surface rights ("Surface Contracts") appurtenant
to, and used or held for use primarily in connection with the
Properties, excluding any permits and other appurtenances to the
extent transfer is restricted by third-party agreement or
applicable law and the necessary consents to transfer are not
obtained pursuant to Section 7.9;

(f) Equipment, machinery, fixtures, facilities and improvements located
on the Properties but excluding (i) vehicles, (ii) computers and
related peripheral equipment, (iii) communications equipment and
(iv) communications licenses granted by the Federal Communications
Commission or other governmental agency (subject to such exclusions,
the "Equipment");

(g) Hydrocarbons produced from or attributable to the Properties from
and after the Effective Time and all oil, gas, condensate and
imbalances with co-owners and with pipelines and all make-up rights
with respect to take-or-pay payments; and

(h) To the extent transferable, photocopies of all files; title opinions;
land surveys; and non-confidential logs related to the Assets listed
above in subsections (a)-(g), inclusive, but excluding (i) any
books, records, data, files, maps and accounting records to the
extent disclosure or transfer is restricted by third-party agreement
or applicable law and the necessary consents to transfer are
not obtained pursuant to Section 7.9, (ii) computer software,
(iii) work product of Seller's legal counsel (other than title
opinions), (iv) records and documents relating to the negotiation
and consummation of the sale of the Assets and (v) corporate,
financial, income and franchise tax and legal records of Seller
that relate to Seller's business generally (whether or not
relating to the Assets) (subject to such exclusions,
the "Records"). Seller shall retain the originals of all Records.

Section 1.3 Excluded Assets.

Notwithstanding the foregoing, the Assets shall not include the following
listed items which are excepted and reserved to Seller and excluded from this
Agreement (collectively, the "Excluded Assets"):

(a) The documents, files, records and information excluded in 1.2(h)
above;

(b) The equipment, machinery, licenses, fixtures and other tangible
 personal property excluded in 1.2(f) above;

(c) All rights to any refund of Taxes or other costs or expenses borne
 by Seller or Seller's predecessors in interest and title
 attributable to periods prior to the Effective Time;

(d) Seller's bonds, letters of credit, guarantees, permits and
licenses; and

(e) All trade credits, account receivables, note receivables,
take-or-pay amounts receivable, and other receivables
attributable to the Assets with respect to any period of time
prior to the Effective Time.

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Section 1.4 Effective Time.

Seller shall transfer possession of the Assets to Purchaser at the
Closing, but the effective time of the transfer of the Assets shall be
January 1, 2003 at 7:00 a.m., local time at the location of the Properties
(the "Effective Time").

Section 1.5 Copying and Receipt of Records.

Purchaser shall be entitled to photocopy the Records at Purchaser's expense.
Purchaser may take possession of the photocopies of the Records at any time
convenient to Purchaser after Closing.

Section 1.6 Proration of Costs and Revenues.

(a) Purchaser shall be entitled to Purchaser's proportionate share
of all (i) Hydrocarbons produced from or attributable to the
Properties at and after the Effective Time, (ii) proceeds from
the sale of Hydrocarbons at and after the Effective Time and
(iii) other income, proceeds, receipts and credits earned
with respect to the Assets at or after the Effective Time.
Purchaser shall be liable and responsible for Purchaser's
proportionate share of (and entitled to any refunds with respect
to) all Property Costs incurred at and after the Effective
Time.

(b) Seller shall be entitled to all (i) Hydrocarbons produced from
or attributable to the Properties prior to the Effective Time,
(ii) proceeds from the sale of Hydrocarbons prior to the
Effective Time and (iii) other income, proceeds, receipts
and credits earned with respect to the Assets prior to the
Effective Time. Seller shall be liable and responsible for
(and entitled to any refunds with respect to) all Property
Costs incurred prior to the Effective Time.

(c) Purchaser shall be responsible for Purchaser's proportionate
share of ad valorem, production, severance and similar Taxes
allocated to the period at and after the Effective Time. Seller
shall be responsible for such Taxes allocated to the period
before the Effective Time.

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ARTICLE 2 PURCHASE PRICE

Section 2.1  Purchase Price.

The purchase price for the Assets (the "Purchase Price") shall be
U.S. $1,080,000.00.

Section 2.2  Adjustments to Purchase Price.

The Purchase Price for the Assets shall be adjusted as follows:

(a)	Reduced by the aggregate amount of the proceeds received by Seller
from the sale of Purchaser's proportionate share of Hydrocarbons and
other proceeds earned and attributable to the Assets during the
Adjustment Period;

(b)	Reduced in accordance with Section 3.4 by an amount equal to the
Allocated Value of those Properties that cannot be transferred at
Closing because consents to the assignments of those Properties have
not been obtained;

(c)   Reduced in accordance with Section 3.5 Casualty Loss and Section 3.6
Condemnation Loss;

(d)   Increased by the amount of all Property Costs attributable to
Purchaser's proportionate share of the Assets which have been paid by
Seller and incurred during the Adjustment Period, except for any
Property Costs and other such costs already deducted in the
determination of proceeds in Section 2.2(a); and

(e)   Increased or decreased by other amounts mutually agreed to by Seller
and Purchaser.

Section 2.3   Allocation of Purchase Price.

The Purchase Price shall be allocated among each of the Assets in the
same proportion as Seller's Purchase Price was allocated among each of the
Assets at the time that Seller acquired the Assets. Exhibit 2.3 shall set
forth the allocation of the Purchase Price among the Assets (the "Allocated
Values").

ARTICLE 3 TITLE MATTERS

Section 3.1 Net Revenue Interest; Working Interest.

(a)   Purchaser's proportionate share of the Hydrocarbons produced, saved
and marketed from any Unit or Well throughout the duration of the
productive life of such Unit or Well after satisfaction of all
royalties, overriding royalties, nonparticipating royalties, net
profits interests or other similar burdens on or measured by production of
Hydrocarbons (a "Net Revenue Interest") shall entitle Purchaser to receive
a Net Revenue Interest of not less than Purchaser's proportionate share of
the Net Revenue Interest share shown in Exhibit 1.2(b) for the Wells, except
decreases in connection with those operations in which Seller may after the
Effective Time be a non-consenting co-owner, decreases resulting from
the establishment or amendment after the Effective Time of units, and
decreases required to allow other working interest owners to make up
past underproduction or pipelines to make up past under deliveries; and

(b)   Purchaser's proportionate share of the Hydrocarbons shall obligate
Purchaser to bear a percentage of the Property Costs relating to any Unit
or Well not greater than the "Working Interest" shown in Exhibit 1.2(b) for
Wells and Exhibit 1.2 (c) for Units without increase throughout the productive
life of such Wells or Units except increases resulting from contribution
requirements with respect to defaulting co-owners under applicable operating
agreements and increases that are accompanied by at least a proportionate
increase in Purchaser's proportionate share of the Net Revenue Interest.

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Section 3.2 Assignment and Bill of Sale.

The Assignment and Bill of Sale to be delivered by Seller to Purchaser shall
be in form identical to the assignment shown on Exhibit 3.2 attached hereto
and shall contain a special warranty of title by, through and under Seller,
but not otherwise, to the Leases shown on Exhibit 1.2(a), subject to the
Permitted Encumbrances. Otherwise, the Assignment and Bill of Sale shall
be without warranty of title, express, implied, statutory or otherwise.
The Assignment and Bill of Sale shall transfer to Purchaser all rights
or actions on title warranties given or made by Seller's predecessors
(other than Affiliates of Seller), to the extent Seller may legally
transfer such rights.

Section 3.3 Permitted Encumbrances.

As used herein, the term "Permitted Encumbrances" shall mean any or all
of the following:

(a) Currently valid and subsisting royalties and any overriding royalties,
reversionary interests and other burdens to the extent that they do not,
individually or in the aggregate, reduce Seller's Net Revenue Interest
below that shown in Exhibit 1.2(b) and Exhibit 1.2 (c) or increase
Seller's Working Interest above that shown in Exhibit 1.2(b) and Exhibit
1.2 (c) without a corresponding increase in the Net Revenue Interest;

(b) Currently valid and subsisting leases, unit agreements, pooling
agreements, operating agreements, production sales contracts, division
orders and other Contracts applicable to the Assets, to the extent that they
do not, individually or in the aggregate, reduce Seller's Net Revenue
Interest below that shown in Exhibit 1.2(b) and Exhibit 1.2 (c) or increase
Seller's Working Interest above that shown in Exhibit 1.2(b) and Exhibit
1.2 (c) without a corresponding increase in the Net Revenue Interest;

<PAGE>

(c) Third-party consent to assignment requirements and similar restrictions
with respect to which waivers or consents are obtained by Seller from the
appropriate parties prior to the Closing Date or the appropriate time period
for asserting the right has expired or which need not be satisfied prior
to a transfer;

(d) Liens for current Taxes or assessments not yet delinquent or, if
delinquent, being contested in good faith by appropriate actions;

(e) Liens or charges arising in the ordinary course of business for amounts
not yet delinquent (including any amounts being withheld as provided by law),
or if delinquent, being contested in good faith by appropriate actions;

(f) All rights to consent, by required notices to, filings with, or other
actions by Governmental Bodies in connection with the sale or conveyance
of oil and gas leases or interests therein if they are not required prior
to the sale or conveyance;

(g) Rights of reassignment arising upon final intention to abandon or
release the Assets, or any of them;

(h) Easements, rights-of-way, servitudes, permits, surface leases and other
rights in respect of surface operations to the extent that they do not,
individually or in the aggregate, reduce Seller's Net Revenue Interest below
that shown in Exhibits 1.2(b) and Exhibit 1.2 (c) or increase Seller's
Working Interest above that shown in Exhibits 1.2(b) and Exhibit 1.2 (c)
without a corresponding increase in Net Revenue Interest;

(j) Calls on production under existing Contracts;

(k) All rights reserved to or vested in any Governmental Body to control
or regulate any of the Assets in any manner and all obligations and duties
under all applicable laws, rules and orders of any such Governmental Body or
under any franchise, grant, license or permit issued by any such Governmental
Body;

(l) Any matters shown on Exhibit 1.2(a), Exhibit 1.2(b) and Exhibit 1.2 (c);
and

(m) Any other liens, charges, encumbrances, defects or irregularities which
do not, individually or in the aggregate, materially detract from the value
of or materially interfere with the use or ownership of the Assets subject
thereto or affected thereby (as currently used or owned), which would be
accepted by a reasonably prudent Purchaser engaged in the business of owning
and operating oil and gas Assets, and which do not reduce Seller's Net Revenue
Interest below that shown in Exhibit 1.2(b) and Exhibit 1.2 (c), or increase
Seller's Working Interest above that shown in Exhibit 1.2(b) and Exhibit 1.2
(c)without a corresponding increase in Net Revenue Interest.

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Section 3.4	Consents to Assignment.

Seller shall exercise reasonable efforts to obtain all such permissions,
approvals and consents to assignment of the Assets which are reasonably
obtainable by Closing and are required to assign Purchaser's proportionate
share of the Assets to Purchaser. Seller shall notify Purchaser at least
four (4) Business Days prior to Closing of all required third-party consents
to the assignment of the Assets to Purchaser which have not been obtained
and the Assets to which they pertain. In no event shall there be included
in the Assignment and Bill of Sale at Closing any Asset subject to a consent
requirement that provides that transfer of the Asset without consent will
result in a termination or other material impairment of any rights in relation
to such Asset. In cases where the Asset subject to such a requirement is a
Contract and Purchaser is assigned the Assets to which the Contract relates,
but the Contract is not transferred to Purchaser due to the unwaived consent
requirement, Seller shall continue after Closing to use reasonable efforts
to obtain such consent so that such Contract can be transferred to Purchaser
upon receipt of such consent. In cases where the Asset subject to such a
requirement is a Property and the third-party consent to the sale and transfer
of the Property is not obtained prior to the Closing Date, Purchaser may
elect to treat the unsatisfied consent requirement as a Title Defect by
giving Seller notice thereof at least one (1) Business Day prior to the Closing
Date. In such event, the failure to obtain such consent to assignment shall
be treated as if the affected Assets were subject to a defect ("Title Defect")
that resulted in the complete loss of title to such Assets, and the Purchase
Price shall be reduced under Section 2.2(b) by the Allocated Value for such
Assets. If a consent requirement with respect to which a Purchase Price
adjustment is made is subsequently satisfied prior to the date of the final
adjustment to the Purchase Price, Seller shall be paid the amount of the
previous reduction in the Purchase Price and the affected Assets shall be
assigned to Purchaser.

Section 3.5 Casualty Loss.

If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed by fire or other casualty and the resulting
loss is an amount equal to or greater than ten percent (10%) of the Purchase
Price, this transaction shall nevertheless close. In such event, Seller, at
Seller's sole election, shall select one of the following options which shall
apply to the casualty: (i) Seller shall cause the Assets affected by such
casualty to be repaired or restored to at least its condition prior to such
casualty, at Seller's sole cost, as promptly as reasonably practicable
(which work may extend after the Closing Date); or (ii) Seller shall, at
Closing, pay to Purchaser all sums paid to Seller by third parties by reason
of such casualty and shall assign to Purchaser all of Seller's right, title
and interest (if any) in insurance claims, unpaid awards, and other rights
against third parties other than Seller Indemnitees arising out of the
casualty; or (iii) Seller may treat such casualty as a Title Defect with
respect to the affected Assets. In the event that Seller elects (i) or (iii)
above, Seller shall retain all rights to insurance and other claims against
third parties with respect to the casualty. In the event that the loss
resulting from the casualty is an amount less than ten percent (10%) of
the Purchase Price, this transaction shall nevertheless close and Seller
shall have no obligation regarding the casualty.

<PAGE>

Section 3.6 Condemnation Loss.

If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is taken in condemnation or under right of eminent
domain, this transaction shall nevertheless close. In such event, Seller, at
Seller's sole election, shall select one of the following options which shall
apply to the taking: (i) Seller shall, at Closing, pay to Purchaser all sums
paid to Seller by third parties by reason of such taking and shall assign,
transfer and set over to Purchaser all of Seller's right, title and interest
(if any) in insurance claims, unpaid awards, and other rights against third
parties other than Seller Indemnitees arising out of the taking; or (ii)
Seller shall treat the taking as if the affected Assets were subject to a
Title Defect that resulted in the complete loss of title to such Assets, and
the Purchase Price shall be reduced under Section 2.2 by the Allocated Value
for such Assets. In the case of (ii) above, Seller shall retain all
rights to insurance and other claims against third parties with respect
to the taking.

<PAGE>

ARTICLE 4 ENVIRONMENTAL MATTERS

Section 4.1 Environmental Assessment.

Purchaser may review environmental studies obtained by Seller at the time
that Seller acquired the Assets. In the alternative, Purchaser may, at
its expense, cause a phase one environmental assessment of all or any
portion of the Properties to be conducted by a reputable environmental
consulting or engineering firm approved in advance in writing by Seller.
The environmental assessment shall be conducted at the sole risk, cost and
expense of Purchaser, and Purchaser shall Indemnify Seller from and against
any and all losses arising from the environmental assessment as provided in
Section 7.7.

Section 4.2 Limitations.

(a) Purchaser hereby fully releases and discharges Seller from any and all
Damages and claims at law or in equity, known or unknown, whether occurring
before the Effective Time, existing at the Effective Time or arising after the
Effective Time, contingent or otherwise, with respect to all matters relating
to Material Adverse Environmental Conditions, Environmental Laws, the release
of materials into the environment or the protection of the environment or
health EVEN IF SUCH DAMAGES OR CLAIMS ARE CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT) OF SELLER OR THE STRICT
LIABILITY OF SELLER provided, however, Purchaser does not release any
contribution claims against Seller with respect to third party claims asserted
against Purchaser, which claims shall only pertain to liability, if any,
attributable to Seller's post-Effective Time ownership interest percentage.

(b) Seller has made copies of Seller's environmental studies covering the
Assets available to Purchaser. Purchaser acknowledges and stipulates that
Seller's environmental studies were made available to Purchaser without any
representation or warranty, express, implied, statutory or whatsoever, and
that Seller has not made any representation or warranty, express, implied,
statutory or whatsoever, to Purchaser regarding any matter or circumstance
relating to Environmental Laws, Material Adverse Environmental Conditions,
the release of materials into the environment or protection of the environment
or health, and that nothing in Article 5 or otherwise shall be construed as
such a representation or warranty.

<PAGE>

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER

Section 5.1 Disclaimers.

(a) Except as set forth in Article 5 of this Agreement or in the
Assignment and Bill of Sale to be delivered by Seller to Purchaser
hereunder, (i) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE AND (ii) SELLER EXPRESSLY DISCLAIMS ALL
LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT
OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO
PURCHASER OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR
REPRESENTATIVES (INCLUDING, WITHOUT LIMITATION, ANY OPINION, INFORMATION,
PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO PURCHASER BY ANY OFFICER,
DIRECTOR, EMPLOYEE, AGENT, ATTORNEY, CONSULTANT, REPRESENTATIVE OR ADVISOR
OF SELLER OR ANY OF SELLER'S AFFILIATES).

(b) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 3 OR THIS ARTICLE
5, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, STATUTORY
OR OTHERWISE AS TO (i) TITLE TO ANY OF THE ASSETS, (ii) THE CONTENTS,
CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, DOCUMENTS, REPORTS OF
ANY PETROLEUM ENGINEERING CONSULTANT OR ANY GEOLOGICAL, GEOPHYSICAL OR
SEISMIC DATA OR INTERPRETATION RELATING TO THE ASSETS, (iii) THE
QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS OR PETROLEUM
SUBSTANCES IN OR FROM THE ASSETS, (iv) ANY ESTIMATES OF THE VALUE OF
THE ASSETS OR FUTURE REVENUES THAT MAY BE ATTRIBUTABLE TO THE ASSETS,
(v) THE PRODUCTION OF HYDROCARBONS OR PETROLEUM SUBSTANCES FROM THE
ASSETS, (vi) THE MAINTENANCE, STATE OR REPAIR OR LACK THEREOF, PHYSICAL
CONDITION, QUALITY, SUITABILITY FOR ANY PURPOSE, DESIGN OR MARKETABILITY
OF THE ASSETS, (vii) THE CONTENT, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY THIRD
PARTIES, (viii) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN
MADE AVAILABLE OR COMMUNICATED TO PURCHASER, ITS AFFILIATES OR ITS
EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION
WITH THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO,
(ix) ANY REPRESENTATION OR WARRANTY, EXPRESS OR  IMPLIED, STATUTORY OR
OTHERWISE, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT OR (x)
ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK
INFRINGEMENT.IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES
HERETO THAT PURCHASER SHALL BE DEEMED TO BE PURCHASING THE EQUIPMENT
AND PERSONAL PROPERTY IN ITS PRESENT STATUS, CONDITION AND STATE OF
REPAIR, "AS IS" AND "WHERE IS," WITH ALL FAULTS. PURCHASER HAS MADE OR
CAUSED TO BE MADE SUCH INSPECTIONS OF THE ASSETS AS PURCHASER DEEMS
APPROPRIATE.

<PAGE>

(c) Any representation "to the knowledge of Seller" or "to Seller's
knowledge" is limited to matters within the actual knowledge of the officers
or management employees, including those with titles of "Manager", "Vice
President" and "President," of Seller. Actual knowledge includes information
actually personally known or information which should have been ascertained
had a reasonable inquiry or investigation been undertaken. The standard of
reasonableness is that which would be exercised by a reasonably prudent
person who has been advised that the person is expected to make
representations and warranties with respect to conditions and information
relating to the Assets which are to be conveyed.

(d) Subject to the foregoing provisions of this Section 5.1, Seller represents
and warrants to Purchaser the matters set out in this Article 5.

Section 5.2 Existence and Qualification.

Seller is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Texas. Seller is duly qualified to do business
as a corporation in the respective jurisdictions where the Assets are located.

Section 5.3 Power.

Seller has the corporate power to enter into this Agreement, perform the terms
of this Agreement and consummate the transactions contemplated by this
Agreement.

<PAGE>

Section 5.4 Authorization and Enforceability.

The execution, delivery and performance of this Agreement have been or by
Closing will have been duly authorized by all necessary corporate action on
the part of Seller. This Agreement has been duly executed and delivered by
Seller (and alldocuments required hereunder to be executed and delivered by
Seller at Closing will be duly executed and delivered by Seller) and this
Agreement constitutes the valid and binding obligation of Seller, enforceable
in accordance with its terms except as such enforceability may be limited by
applicable bankruptcy or other similar laws affecting the rights and remedies
of creditors generally as well as to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law). As evidence of the foregoing, Seller has delivered to Purchaser
simultaneous with the execution of this Agreement a unanimous consent executed,
adopted and approved by the board of directors of Seller which specifically
approves the terms of this Agreement, the execution of this Agreement by
Seller and the completion of the transaction contemplated by this Agreement.

Section 5.5 No Conflicts.

The execution, delivery and performance of this Agreement by Seller will
not (i) violate any provision of the certificate of incorporation or bylaws
of Seller, (ii) result in default (with due notice or lapse of time or
both) or the creation of any lien or encumbrance or give rise to any right
of termination, cancellation or acceleration under any of the terms,
conditions or provisions of any note, bond, mortgage or indenture to which
Seller is a party or which affect the Assets, (iii) violate any judgment,
order, ruling, or decree applicable to Seller as a party in interest or
(iv) violate any Laws, rule or decree applicable to Seller or any of the
Assets, except for rights to consent by, required notices to, and filings
with or other actions by Governmental Bodies where the same are not
required prior to the assignment of oil and gas interests.

Section 5.6 Purchaser's Liability for Brokers' Fees.

Purchaser shall not have any responsibility, liability or expense, as a
result of undertakings or agreements of Seller, for brokerage fees, finder'S
fees, agent's commissions or other similar forms of compensation in connection
with this Agreement or any agreement or transaction contemplated hereby.

Section 5.7 Litigation.

No investigation, proceeding, action, suit, or other legal proceeding of any
kind or nature before any Governmental Body or arbitrator (including any
take-or-pay claims) is pending and no written notice from any Governmental
Body or any other Person has been received by Seller claiming any violation
of or noncompliance with any Laws with respect to the Assets including,
without limitation, Environmental Laws.

<PAGE>

Section 5.8 Taxes and Assessments.

With respect to all Taxes related to the Assets, Seller warrants and represents
that (a) all reports, returns, statements (including estimated reports, returns
or statements), and other similar filings (the "Tax Returns") relating to the
Assets required to be filed on or before the Closing Date by Seller with
respect to any Taxes have been or will be timely filed with the appropriate
Governmental Body in all jurisdictions in which such Tax Returns are required
to be filed; (b) such Tax Returns are true and correct in all material
respects, and all Taxes reported on such Tax Returns have been paid; (c) there
are not currently in effect any extension or waiver of any statute of
limitations of any jurisdiction regarding the assessment or collection of any
Tax; (d) there are no administrative proceedings or lawsuits pending against
the Assets or Seller by any taxing authority; and (e) there are no liens on any
of the Assets except for liens for Taxes not yet due.

Section 5.9 Governmental Authorizations.

To Seller's knowledge, there are no proceedings that might result in any
modification, revocation, termination or suspension of any permits, franchises,
orders, exemptions, variances, waivers, authorizations, certificates, consents,
rights, privileges and applications ("Governmental Authorizations") which would
require any corrective or remediation action by Seller.

Section 5.10 Consents to Assignments and Preferential Purchase Rights.

Except as set forth on Exhibit 5.10, none of the Assets are subject to any
preferential rights to purchase, restrictions on assignment or required
third-party consents to assignment, which may be applicable to the
transactions contemplated by this Agreement, except for governmental consents
and approvals of assignments that are customarily obtained after Closing.

Section 5.11 Non-foreign Person.

Seller is not a "foreign Person" within the meaning of Sections 1445 and
7701of the Code.

Section 5.12 Condemnation.

To Seller's knowledge, there is no actual or threatened taking of any part of
the Assets by reason of condemnation or eminent domain proceeding.

Section 5.13 Bankruptcy.

There are no bankruptcy, reorganization, or similar arrangement proceedings
pending, being contemplated by or, to Seller's knowledge, threatened against
Seller or any Affiliate of Seller.

<PAGE>

Section 5.14 PUHCA/NGA.

Seller is not (a) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company," or an "affiliate" of
a "subsidiary" of a "holding company," or a "public-utility company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or
(b) subject in any respect to the provisions of said act. No consent is
required in connection with the transaction contemplated hereby under the
Natural Gas Policy Act of 1978, as amended. Seller is not an interstate
pipeline company within the meaning of the Natural Gas Act of 1938.

Section 5.15 Investment Company.

Seller is not (a) an investment company or a company controlled by an
investment company within the meaning of the Investment Company Act of 1940,
as amended, or (b) subject in any respect to the provisions of said act.

ARTICLE 6  REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller the following:

Section 6.1 Existence and Qualification.

Purchaser is a corporation organized, validly existing and in good standing
under the laws of the state of its incorporation. Purchaser is duly qualified
to do business as a corporation in the respective jurisdictions where the
Assets are located.

Section 6.2 Power.

Purchaser has the corporate power to enter into this Agreement, perform the
terms of this Agreement and consummate the transactions contemplated by this
Agreement.

Section 6.3 Authorization and Enforceability.

The execution, delivery and performance of this Agreement have been or by
Closing will have been duly authorized by all necessary corporate action on
the part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser (and all documents required hereunder to be executed and delivered
by Purchaser at Closing will be duly executed and delivered by Purchaser) and
this Agreement constitutes the valid and binding obligations of Purchaser,
enforceable in accordance with their terms except as such enforceability may
be limited by applicable bankruptcy or other similar laws affecting the rights
and remedies of creditors generally as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). As evidence of the foregoing, Purchaser has delivered to
Seller simultaneous with the execution of this Agreement either a resolution
or a unanimous consent executed, adopted and approved by the board of
directors of Purchaser which specifically approves the terms of this
Agreement, the execution of this Agreement by Purchaser and the completion of
the transaction contemplated by this Agreement.

Section 6.4 No Conflicts.

The execution, delivery and performance of this Agreement by Purchaser,
and the transactions contemplated by this Agreement will not (i) violate
any provision of the certificate of incorporation or bylaws of Purchaser,
(ii) result in a material default (with due notice or lapse of time or both)
or the creation of any lien or encumbrance or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license or agreement
to which Purchaser is a party, (iii) violate any judgment, order, ruling,
or regulation applicable to Purchaser as a party in interest, or (iv)
violate any Law, rule or decree applicable to Purchaser or any of the
Assets, except for rights to consent by, required notices to, and filings
with or other actions by Governmental Bodies where the same are not required
prior to the assignment of oil and gas interests.

<PAGE>

Section 6.5 Seller's Liability for Brokers' Fees.

Seller shall not have any responsibility, liability or expense, as a result of
undertakings or agreements of Purchaser, for brokerage fees, finder's fees,
agent's commissions or other similar forms of compensation in connection with
this Agreement or any agreement or transaction contemplated hereby.

Section 6.6 Litigation.

As of the date of the execution of this Agreement there are (and as of the
Closing Date there will be) no actions, suits or proceedings pending, or to
Purchaser's knowledge, threatened in writing, before any Governmental Body or
brought by any Person against Purchaser or any Affiliate of Purchaser with
respect to this Agreement, the transaction contemplated by this Agreement or
the Assets.

Section 6.7 Financing.

Purchaser has sufficient cash, available lines of credit or other sources of
immediately available funds in United States dollars to enable it to pay the
Closing Payment to Seller at the Closing.

<PAGE>

ARTICLE 7
COVENANTS OF THE PARTIES

Section 7.1 Access.

(a) Between the date of execution of this Agreement and the Closing Date,
Seller will give Purchaser and its representatives access to the Assets and
the right to copy, at Purchaser's expense, the Records in Seller's possession,
for the purpose of conducting an investigation of the Assets, but only to the
extent that Seller may do so without violating any obligations to any third
party and to the extent that Seller has authority to grant such access without
breaching any restriction binding on Seller. Such access by Purchaser shall
be limited to Seller's normal business hours, and any weekends and after hours
requested by Purchaser that can be reasonably accommodated by Seller, and
Purchaser's investigation shall be conducted in a manner that minimizes
interference with the operation of the Assets. All information obtained by
Purchaser and its representatives under this Section 7.1 shall be maintained
in strictest confidence by Purchaser.

(b) PURCHASER ACKNOWLEDGES THAT EXCEPT TO THE EXTENT CONTAINED IN AN EXPRESS
REPRESENTATION IN ARTICLE 5 OF THIS AGREEMENT OR THE ASSIGNMENT AND BILL OF
SALE, SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES, WHETHER ORAL OR
WRITTEN. SELLER DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE AS TO THE ACCURACY OR COMPLETENESS OF INFORMATION OBTAINED BY
PURCHASER FROM SELLER OR AS TO SELLER'S TITLE TO THE ASSETS. IN ENTERING
INTO AND PERFORMING THIS AGREEMENT, PURCHASER HAS RELIED AND WILL RELY SOLELY
UPON ITS INDEPENDENT INVESTIGATION OF, AND JUDGMENT WITH RESPECT TO, THE
ASSETS, THE VALUE OF THE ASSETS, AND SELLER'S TITLE THERETO AND UPON THOSE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE 5 OF THIS
AGREEMENT OR THEASSIGNMENT AND BILL OF SALE.

Section 7.2 Tax Matters.

(a) Subject to the provisions below, Seller shall be responsible for paying
all Taxes attributable to the Assets. Purchaser shall reimburse Seller for
Purchaser's proportionate share of all such Taxes attributable to any period
of time at and after the Effective Time, save and except for income Taxes
of Seller.

(b) Purchaser shall pay any sales, use, excise, registration, documentary,
stamp or transfer Taxes, recording fees incurred and imposed with respect to
the conveyance of the Properties contemplated hereby.

<PAGE>

Section 7.3 Notification of Breaches.

Until the Closing,

(a) Purchaser shall notify Seller promptly after Purchaser obtains actual
knowledge that any representation or warranty of Seller contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be
performed or observed by Seller prior to or on the Closing Date has not been
so performed or observed in any material respect.

(b) Seller shall notify Purchaser promptly after Seller obtains actual
knowledge that any representation or warranty of Purchaser contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be
performed or observed by Purchaser prior to or on the Closing Date has not
been so performed or observed in a material respect.

Section 7.4 Documents Delivered at Closing.

On the Closing Date, Seller shall execute and deliver to Purchaser Assignments
and Bills of Sale in sufficient number of originals to facilitate recording
in each county in which the Properties are located and Assignments and Bills
of Sale necessary to convey to Purchaser all federal or state leases, if any,
in the form as prescribed by the applicable Governmental Body and otherwise
acceptable to Purchaser and Seller.

Section 7.5 Public Announcements.

Neither party shall make any press release or other public announcement
regarding the existence of this Agreement, the contents hereof or the
transactions contemplated hereby without the prior written consent of the
other.

Section 7.6 Further Assurances.

After Closing, Seller and Purchaser shall take such further actions and
execute, acknowledge and deliver all such further documents as are reasonably
requested by the other party for carrying out the purposes of this Agreement
or of any document delivered pursuant to this Agreement.

<PAGE>

Section 7.7 Indemnity Regarding Access.

PURCHASER, ON BEHALF OF ITSELF AND THE PURCHASER INDEMNITEES,
SHALL INDEMNIFY, DEFEND, HOLD HARMLESS AND COVENANT NOT TO
SUE SELLER INDEMNITEES, THE OTHER OWNERS OF INTERESTS IN THE
ASSETS, AND ALL SUCH PERSONS' DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS AND REPRESENTATIVES, FROM AND AGAINST ANY AND ALL
DAMAGES ARISING FROM OR RELATED TO ACCESS TO THE ASSETS BY THE
PURCHASER INDEMNITEES PURSUANT TO SECTION 7.1.

PURCHASER SHALL INDEMNIFY SELLER AGAINST DAMAGES FOR MATTERS
COVERED BY PURCHASER'S INDEMNIFICATION OBLIGATIONS ARISING OUT
OF AND RESULTING FROM:

1.  THE NEGLIGENCE OF SELLER, WHETHER THE NEGLIGENCE IS
ORDINARY, ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE; AND

2.  THE STRICT LIABILITY OF SELLER, BUT EXCLUDING CLAIMS
BASED ON THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER.

PURCHASER AND SELLER BOTH AGREE AND STIPULATE THAT THIS INDEMNIFICATION
AGREEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE TEST, AND THAT THE PARTIES
CLEARLY INTEND TO TRANSFER THE RISK OF LOSS FOR THE INDEMNITEE'S NEGLIGENCE.
PURCHASER AND SELLER BOTH AGREE AND STIPULATE THAT THESE INDEMNIFICATION
PROVISIONS ARE CONSPICUOUS.

Section 7.8 Gas Imbalances and Take-or-Pay Make-up Obligations.

Purchaser expressly assumes its proportionate share of any and all obligations
attributable to gas production imbalances with co-owners of the Properties
and gas take-or-pay make-up obligations with purchasers or sellers of natural
gas from the Properties.

Section 7.9 Consents to Assignment.

Seller shall promptly prepare and send notices to the holders of any required
consents to assignment of any Assets requesting such consents. Seller shall
use reasonable efforts to obtain all such consents which are reasonably
obtainable by Closing. Purchaser shall cooperate with Seller in seeking to
obtain such consents. In the event that Seller is unable to obtain such
consents, Purchaser may elect to treat the unsatisfied consent requirement
as a Title Defect and the procedures set forth in Section 3.4 shall apply.

<PAGE>

Section 7.10 Like-Kind Exchange

Purchaser and Seller agree to use reasonable cooperation so that the transfer
of the Properties shall, at either party's election, be accomplished in a
manner enabling the transfer of the Properties to qualify as a like-kind
exchange of property within the meaning of Section 1031 of the Code. If such
an election is made, the parties shall reasonably cooperate to effect such
like-kind exchange, which cooperation shall include (i) having any cash
payment be paid directly from a 1031 account which has been established
with a qualified intermediary, as that term is defined in Section 1031 of the
Code, in a manner which enables such transfer of the Properties to qualify as
part of a like-kind exchange of property within the meaning of Section 1031
of the Code and (ii) assigning rights to the Properties to a qualified
intermediary or an escrow agent acting as a qualified intermediary for the
purpose of receiving an assignment of the Properties in a manner which enables
such transfer of the Properties to qualify as part of a like-kind exchange of
property within the meaning of Section 1031 of the Code. In such events, the
parties shall cooperate in the negotiation and execution of such additional
documents.

<PAGE>

ARTICLE 8 CONDITIONS TO CLOSING

Section 8.1 Conditions of Seller to Closing.

The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject, at the option of Seller, to the satisfaction on or prior
to Closing of each of the following conditions:

(a) Representations. The representations and warranties of Purchaser set forth
in Article 6 shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date;

(b) Performance. Purchaser shall have performed and observed, in all material
respects, all covenants and agreements to be performed or observed by it under
this Agreement prior to or on the Closing Date;

(c) Pending Litigation. No suit, action or other proceeding by a third party,
including any Governmental Body, seeking to restrain, enjoin or otherwise
prohibit the conveyance of the Assets or the consummation of the transactions
contemplated by this Agreement shall be pending;

(d) Deliveries. Purchaser shall have delivered to Seller duly executed
counterparts of the Assignment and Bill of Sale;

(e) Payment. Purchaser shall have paid the Closing Payment;

<PAGE>

(f) Approval by Board of Directors. Purchaser shall have delivered to Seller
either

(i) a resolution executed by the board of directors of Purchaser which
specifically approves the terms of this Agreement, the execution of this
Agreement by Purchaser and the completion of the transaction contemplated by
this Agreement or (ii) a unanimous consent of the board of directors of
Purchaser which specifically approves the terms of this Agreement, the
execution of this Agreement by Purchaser and the completion of the transaction
contemplated by this Agreement.

Section 8.2 Conditions of Purchaser to Closing.

The obligations of Purchaser to consummate the transactions contemplated by
this Agreement are subject, at the option of Purchaser, to the satisfaction on
or prior to Closing of each of the following conditions:

(a) Representations. The representations and warranties of Seller set forth in
Article 5 shall be true and correct as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (other than any
representations and warranties that refer to a specified date which need only
be true and correct on and as of such specified date);

(b) Performance. Seller shall have performed and observed, in all material
respects, all covenants and agreements to be performed or observed by it under
 this Agreement prior to or on the Closing Date;

(c) Pending Litigation. No suit, action or other proceeding by a third party
(including any Governmental Body) seeking to restrain, enjoin or otherwise
prohibit the conveyance of the Assets or the consummation of the transactions
contemplated by this Agreement shall be pending;

(d) Deliveries. Seller shall have delivered to Purchaser duly executed
counterparts of the Assignment and Bill of Sale;

(e) Approval by Board of Directors. Seller shall have delivered to Purchaser a
unanimous consent of the board of directors of Seller which specifically
approves the terms of this Agreement, the execution of this Agreement by
Seller and the completion of the transaction contemplated by this Agreement.

ARTICLE 9 CLOSING

Section 9.1 Time and Place of Closing.

Consummation of the purchase and sale transaction as contemplated by this
Agreement (the "Closing"), shall, unless otherwise agreed to in writing by
Purchaser and Seller, take place at the offices of Seller located at 14425
Torrey Chase, Suite 190 Houston, Texas 77014, at 10:00 a.m., local time,
on or before March 31, 2002 (the "Closing Date").

<PAGE>

Section 9.2 Obligations of Seller at Closing.

At the Closing, Seller shall deliver or cause to be delivered to Purchaser,
among other things, Assignments and Bills of Sale of the Assets, in sufficient
number of originals to allow recording in all counties in which the
Properties are located and other appropriate jurisdictions and offices, as
applicable, duly executed by Seller.

Section 9.3 Obligations of Purchaser at Closing.

At the Closing, Purchaser shall deliver or cause to be delivered to Seller,
among other things, the following:

(a) a wire transfer of the Closing Payment in immediately available U.S.
dollars; and

(b) copies of the Assignment and Bill of Sale of the Assets, duly executed by
Purchaser.

Section 9.4 Closing Payment and Post-Closing Purchase Price Adjustments.

(a) Not later than two (2) Business Days prior to the Closing Date, Seller
shall prepare and deliver to Purchaser, based upon the best information
available to Seller, a preliminary settlement statement estimating the
Adjusted Purchase Price after giving effect to all Purchase Price adjustments
set forth in Section 2.2. The preliminary settlement statement shall
constitute the dollar amount to be paid by Purchaser to Seller at the Closing
(the "Closing Payment").

(b) As soon as reasonably practicable after the Closing but not later than
one hundred twenty (120) days following the Closing Date, Seller shall prepare
and deliver to Purchaser a final settlement statement setting forth the final
calculation of the Adjusted Purchase Price and showing the calculation of each
adjustment, based, to the extent possible on actual credits, charges, receipts
and other items before and after the Effective Time. Seller shall, at
Purchaser's request, supply reasonable documentation available to support any
credit, charge, receipt or other item. Not later than the thirty (30) days
following receipt of the final settlement statement, Purchaser shall deliver
to Seller a written report containing any changes that Purchaser proposes be
made to the final settlement statement. The parties shall undertake to agree
on the final statement of the Adjusted Purchase Price no later than one
hundred eighty (180) days after the Closing Date.

(c) All payments made or to be made hereunder to Seller shall be by
electronic transfer of immediately available funds in U.S. dollars to:

<PAGE>

J P Morgan Chase
For the account of Smith Production Inc.
ABA No. 113000609
Account No. 03400025957

All payments made or to be made hereunder to Purchaser shall be by electronic
transfer of immediately available funds to a bank and account specified by
Purchaser in writing to Seller.

ARTICLE 10

TERMINATION

Section 10.1 Termination.

This Agreement may be terminated as follows:

(a) by the mutual prior written consent of Seller and Purchaser prior to
Closing;

(b) by Seller in the events that (i) Closing has not occurred on the Closing
Date;
(ii) Seller is not otherwise in default under the provisions of this
Agreement; and
(iii) the Conditions of Seller to Closing in Section 8.1 have not been
satisfied; and

(c) by Purchaser in the events that (i) Closing has not occurred on the
Closing Date; (ii) Purchaser is not otherwise in default under the provisions
of this Agreement; and (iii) the Conditions of Purchaser to Closing in Section
8.2 have not been satisfied.

Section 10.2 Effect of Termination.

If this Agreement is terminated pursuant to Section 10.1, this Agreement
shall become void and of no further force or effect except for the provisions
of Section 5.6 (Purchaser's Liability for Brokers' Fees), Section 6.5
(Seller's Liability for Brokers' Fees), Section 7.7 (Indemnity Regarding
Access) and Section 12.4 (Expenses) which shall continue in full force and
effect. Seller shall be free immediately to enjoy all rights of ownership of
the Assets and to sell, transfer, encumber or otherwise dispose of the Assets
to any party without any restriction under this Agreement.


ARTICLE 11 POST-CLOSING MATTERS

Section 11.1 Receipts.

(a) Purchaser's proportionate share of all production from or attributable to
the Assets (and all products and proceeds attributable thereto) and all other
income, proceeds, receipts and credits earned with respect to the Assets which
are not reflected in the final settlement statement to which Purchaser is
entitled under Section 1.6 shall be the sole property and entitlement of
Purchaser, and, to the extent received by Seller, Seller shall fully disclose,
account for and remit the same promptly to Purchaser.

<PAGE>

(b) All production from or attributable to the Assets (and all products and
proceeds attributable thereto) and all other income, proceeds, receipts and
credits earned with respect to the Assets which are not reflected in the final
settlement statement to which Seller is entitled under Section 1.6 shall be
the sole property and entitlement of Seller and, to the extent received by
Purchaser, Purchaser shall fully disclose, account for and remit the same
promptly to Seller.

Section 11.2 Expenses.

(a) All Property Costs which are not reflected in the final settlement
statement for which Seller is responsible under Section 1.6 shall be the sole
obligation of Seller, and Seller shall promptly pay same, or if same have been
paid by Purchaser, Seller shall promptly reimburse Purchaser for and hold
Purchaser harmless from and against same.

(b) Purchaser's proportionate share of all Property Costs which are not
reflected in the final settlement statement for which Purchaser is responsible
under Section 1.6 shall be the sole obligation of Purchaser, and Purchaser
shall promptly pay same, or if same have been paid by Seller, Purchaser shall
promptly reimburse Seller for and hold Seller harmless from and against same.

(c) Seller is entitled to resolve all joint interest audits and other audits
of Property Costs covering periods prior to the Effective Time.

Section 11.3 Assumption.

In the event of Closing, as of the Effective Time, Purchaser shall become
liable for, assume, perform and discharge Purchaser's proportionate share of
all of the obligations and liabilities of Seller, known or unknown, with
respect to the Assets, including, without limitation, any Environmental
Liabilities, regardless of whether such obligations or liabilities arose prior
to the Effective Time, at the Effective Time or after the Effective Time.
Purchaser, however, does not assume any obligations or liabilities of Seller to
the extent that they are attributable to or arise out of the Excluded Assets or
claims for wrongful death and/or personal injury related to the Properties
which claims arose before the Effective Time.

<PAGE>

Section 11.4 Survival.

In the event of Closing:

(a)  The representations and wattanties made herein shall terminate six months
after Closing; and

(b) Purchaser's indemnification obligations in Section 7.7 shall not terminate
and shall continue without time limit.

Section 11.5 Waiver of Trade Practices Acts.

(a) The Purchaser's rights and remedies with respect to this Agreement and
with respect to all acts or practices of Seller, past, present or future,
connection with this Agreement shall be governed by legal principles other
than the Texas Deceptive Trade Practices-Consumer Protection Act, Tex. Bus. &
Com. Code Ann. Sections 17.41 et seq. (the "DTPA"). Purchaser hereby waives
the applicability of the DTPA to this Agreement and any and all duties, rights
or remedies that might be imposed by the DTPA, whether such duties, rights and
remedies are applied directly by the DTPA itself or indirectly in connection
with other statutes; provided, however, Purchaser does not waive Sections
17.555 of the DTPA. Purchaser acknowledges, represents and warrants that
Purchaser is purchasing the goods and/or services covered by this Agreement
for commercial or business use; that Purchaser has assets of $5 million or
more according to its most recent financial statement prepared in accordance
with generally accepted accounting principles; that Purchaser has knowledge
and experience in financial and business matters that enable Purchaser to
evaluate the merits and risks of a transaction such as this; and that
Purchaser is not in a significantly disparate bargaining position with Seller.

(b) Purchaser expressly recognizes that the price for which Seller has agreed
to perform Seller's obligations under this Agreement has been predicated upon
the inapplicability of the DTPA and Purchaser's agreement to waive the
applicability of the DTPA. Purchaser further recognizes that Seller, in
determining to proceed with the entering into of this Agreement, has expressly
relied on such waiver by Purchaser and the inapplicability of the DTPA.


ARTICLE 12 MISCELLANEOUS

Section 12.1 Counterparts.

This Agreement may be executed in counterparts, each of which shall be deemed
an original instrument, but all such counterparts together shall constitute
but one agreement.

Section 12.2 Notice.

All notices which are required or may be given pursuant to this Agreement
shall be sufficient in all respects if given in writing and delivered
personally, by facsimile or by registered or certified mail, postage prepaid,
as follows:

If to Seller:

Smith Production Inc.
14425 Torrey Chase, Suite 190
Houston, Texas 77014

Attention: Glenn R. Smith

Telephone: 281.583.0196
Facsimile: 281.893.6396

If to Purchaser:

CNR Production, LLC
911 Main Street, Suite 1710
Kansas City, MO 64105

Attention: Mr. Gary Pennington
Telephone: 816.842.2430
Telecopy:  816.471.8676

<PAGE>

Either Party may change its address by notice to the other in the manner set
forth above. All notices shall be deemed to have been duly given at the time
of receipt by the party to which such notice is addressed.

Section 12.3 Binding Agreement

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.

Section 12.4 Expenses.

All expenses incurred by Seller in connection with or related to the
authorization, preparation or execution of this Agreement, the Assignment and
Bill of Sale delivered hereunder and the Exhibits hereto, and all other
matters related to the Closing, including without limitation, all fees and
expenses of counsel, accountants and financial advisers, shall be borne solely
and entirely by the party incurring same.

Section 12.5 No Third-Party Beneficiaries.

Nothing in this Agreement shall entitle any Person other than Purchaser and
Seller to any claims, cause of action, remedy or right of any kind.

Section 12.6 Construction.

Seller and Purchaser have had (i) substantial input into the drafting and
preparation of this Agreement and (ii) the opportunity to exercise business
discretion in relation to the negotiation of the details of the transaction
contemplated hereby. This Agreement is the result of arm's length negotiations
from equal bargaining positions and shall not be construed against either
party.

<PAGE>

Section 12.7 Governing Law.

This Agreement and the legal relations between the parties shall be governed
by and construed in accordance with the laws of the State of Texas without
regard to principles of conflicts of laws otherwise applicable to such
determinations.

Section 12.8 Captions.

The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.

Section 12.9 Waivers.

Any failure by any party or parties to comply with any of its or their
obligations, agreements or conditions herein contained may be waived in
writing, but not in any other manner, by the party or parties to whom such
compliance is owed. No waiver of, or consent to a change in, any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of,
or consent to a change in, other provisions hereof (whether or not similar),
nor shall such waiver constitute a continuing waiver unless otherwise expressly
provided.

Section 12.10 Assignment.

No party shall assign all or any part of this Agreement, nor shall any party
assign or delegate any of its rights or duties hereunder, without the prior
written consent of the other party and any assignment or delegation made
without such consent shall be void.

Section 12.11 Entire Agreement.

This Agreement and the documents to be executed hereunder and the Exhibits
attached hereto constitute the entire agreement between the parties pertaining
to the subject matter hereof, and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties pertaining to the subject matter hereof.

Section 12.12 Amendment.

This Agreement may be amended or modified only by an agreement in writing
executed by both parties.

IN WITNESS WHEREOF, this Agreement has been signed by each of the parties
hereto on the date first above written.

<PAGE>

SELLER:                                       PURCHASER

/s/ Glenn R. Smith                            /s/ Phelps C. Wood
___________________                           __________________
By: Glenn R. Smith                            By: Phelps C. Wood
Title: President                              Title: President

<PAGE>

EXHIBIT 1.2(a)

LEASES

PART I - BASS ACQUISITION


Bass Lease Number:           41790C
Lessor:                      Ethal Barbara Van Dresar
Lessee:                      Del Oro Leasing Company, Inc.
Lease Date:                  January 7, 1998
Recording:                   Book, 802, Page 216

Bass Lease Number:           41790D
Lessor:                      Marie L. Benavides, et al
Lessee:                      Del Oro Leasing Company, Inc.
Lease Date:                  January 7, 1998
Recording:                   Book, 802, Page 205

Bass Lease Number:           41790E
Lessor:                      Oliver C. Aldrich, III et al
Lessee:                      Del Oro Leasing Company, Inc.
Lease Date:                  January 7, 1998
Recording:                   Book, 802, Page 222

Bass Lease Number:           41790F
Lessor:                      George M. Aldrich
Lessee:                      Del Oro Leasing Company, Inc.
Lease Date:                  January 7, 1998
Recording:                   Book, 802, Page 228

Bass Lease Number:           41790G
Lessor:                      Alice Statham Aldrich, et al
Lessee:                      Del Oro Leasing Company, Inc.
Lease Date:                  January 7, 1998
Recording:                   Book, 802, Page 225

Bass Lease Number:           35382
Lessor:                      Samuel D. Bloombergch, et al
Lessee:                      The Texas Company
Lease Date:                  September 23, 1933
Recording:                   Book, 74, Page 142

<PAGE>

Bass Lease Number:           35454
Lessor:                      Samuel D. Bloombergch, et al
Lessee:                      The Texas Company
Lease Date:                  September 23, 1933
Recording:                   Book, 74, Page 142

Bass Lease Number:           35748
Lessor:                      Samuel D. Bloombergch, et al
Lessee:                      The Texas Company
Lease Date:                  September 23, 1933
Recording:                   Book, 74, Page 142

Bass Lease Number:           38553
Lessor:                      Samuel D. Bloombergch, et al
Lessee:                      The Texas Company
Lease Date:                  September 23, 1933
Recording:                   Book, 74, Page 142

Bass Lease Number:           39527
Lessor:                      EFS Family. LLC, et al
Lessee:                      Hanson Production Inc.
Lease Date:                  February 4, 1994
Recording:                   Book, 693, Page 604

Bass Lease Number:           40560
Lessor:                      J. A. Garcia, Jr., Et al
Lessee:                      Hanson Production Inc.
Lease Date:                  December 18, 1991
Recording:                   Book, 648, Page 541

Bass Lease Number:           41260
Lessor:                      Ida Margaret Ramsey Kent
Lessee:                      Perry R. Bass, Trustee, et al
Lease Date:                  August 15, 1997
Recording:                   Book, 790, Page 766
Bass Lease Number:           41315
Recording:                   Book 786, Page 400

Bass Lease Number:           41790A
Lessor:                      Dorothy E. Ferguson
Lessee:                      Del Oro Leasing Company, Inc.
Lease Date:                  January 7, 1998
Recording:                   Book, 802, Page 219

<PAGE>

Bass Lease Number:           41790B
Lessor:                      Ruth E. Van Dresar Estate
Lessee:                      Del Oro Leasing Company, Inc.
Lease Date:                  January 7, 1998
Recording:                   Book, 802, Page 213


PART II - TOTALFINAELF ACQUISITION

INSOFAR AND ONLY INSOFAR as the Leases cover the following depths and
formations:

All depths and formations encountered on the downthrown side of the Tabasco
Fault as further defined below:

All depths and formations lying above the stratigraphic equivalent of the
base of the "Z" sand as seen at a depth of 10,750' in the ARCO - M.J.
Sobel #2 Well and encountered on the downthrown side of the Tabasco Fault as
further defined below:

The Tabasco Fault was encountered and identified on the electric logs for the
following wells at the approximate measured depths indicated:

At 9,260' in the Houston Oil Co. of Texas #1 B. Cerda well (TD-9,576'),
Los Ejidos De Reynosa Viejo Survey, A-70, Hidalgo County, Texas;

At 11,950' TMD in the Arco #2 Wood Gas Unit well (TD-12,600'TMD), Porcion 78,
Dionisio Ramirez Survey, A-563, Hidalgo County, Texas;

At 11,918' TVD in the Arco Volz #1 well (TD 11,438' TMD ), Porcion 77, Pedro
Flores Survey, A-577, Hidalgo County, Texas;

At 8,800' in the Atlantic Richfield #26 West well (TD-9,348' TMD), Porcion 75,
Nicolas Flores Survey, A-61, Hidalgo County, Texas;

At 8,720' in the Winchester #1 Chapa well (TD-12,721'), Porcion 75, Nicolas
Flores Survey, A-61, Hidalgo County, Texas; and,

At 8,000' in the Houston Oil Co. of Texas #4 West well (TD-10,104'), Porcion
74, Manuel Martinez Survey, A-582, Hidalgo County, Texas.

The approximate location and depth of the Tabasco Fault as it traverses the
Leases is reflected on the Tabasco Fault Plane Map, which map is attached as
Exhibit 3.04 (b) to that certain Mission Prospect Exploration Agreement
effective October 1, 2002, between Smith Production Inc. and Sid R. Bass Inc.,
et al.

<PAGE>

Fina (TFE)  Lease Number:     01TX018055-000
Lessor:                       Hidalgo County Watere Control and Improvement
                              District #6
Lessee:                       Thomas W. Schleier
Date:                         December 15, 1994
Recording:                    Document #452121, Hidalgo County, Texas

Fina (TFE)  Lease Number:     09TX016510-000
Lessor:                       David Chapa, et al
Lessee:                       William Maarks
Date:                         May 8, 1951
Recording:                    Volume 114, Page 506, Hidalgo County, Texas

Fina (TFE)  Lease Number:     09TX016510-000
Lessor:                       Amancia J. Chapa et. ux.
Lessee:                       William Maarks
Date:                         May 8, 1951
Recording:                    Volume 114, Page 227, Hidalgo County, Texas

Fina (TFE)  Lease Number:     09TX016505-000
Lessor:                       Hanna M. Barnebee Baugh, Individually and as
                              Independent Executor of the Estate of James
                              Hosea Barnebee
Lessee:                       Hugh Kirkpatrick
Date:                         April 28, 1952
Recording:                    Volume 128, Page 234, Hidalgo County, Texas

Fina (TFE)  Lease Number:     09TX016506-001
Lessor:                       Fred W. Volz, Sr., et ux
Lessee:                       Hugh Kirkpatrick
Date:                         March 3, 1952
Recording:                    Volume 128, Page 235, Hidalgo County, Texas

Fina (TFE)  Lease Number:     09TX016506-002
Lessor:                       Ibsen F. Boyce, et ux
Lessee:                       Hugh Kirkpatrick
Date:                         April 14, 1952
Recording:                    Volume 128, Page 239, Hidalgo County, Texas

Fina (TFE)  Lease Number:     09TX016507-000
Lessor:                       Ethyl May Lyon, et al
Lessee:                       Hugh Kirkpatrick
Date:                         March 28, 1952
Recording:                    Volume 128, Page 237, Hidalgo County, Texas

<PAGE>

FEE MINERALS

Fina (TFE)  Lease Number:     09RPTX2783-000
Grantor:                      Thomas W. Schleier
Grantee:                      Fina Oil and Chemical Company
Date:                         July 20,1994
Recording:                    File #420949, Hidalgo County, Texas

Fina (TFE)  Lease Number:     09RPTX2783-000
Grantor:                      Thomas W. Schleier
Grantee:                      Fina Oil and Chemical Company
Date:                         May 8, 2000, effectiveDecember 1, 1994
Recording:                    File #872849, Hidalgo County, Texas

<PAGE>

EXHIBIT 1.2(b)

PART I - BASS ACQUISITION

Well/Field                    County      WI          NRI

Flores Field

Bloomberg #11                 Starr       1.00000000  .80576128
Bloomberg #15                 Starr       1.00000000  .80576128
Bloomberg, Samuel D. #3       Starr        .65000000  .50272491
Bloomberg #18                 Starr       1.00000000  .80576128
Bloomberg #1                  Starr        .65000000  .50272490

Flores West Field

Bloomberg, Samuel D. #14      Starr       1.00000000  .81143579
Kent #1                       Starr        .82500000  .66563327
Bloomberg, Unit A #1          Starr        .82500000  .66563327
Bloomberg, Samuel D. #2       Starr        .65000000  .50845719
Bloomberg, Samuel D. #5       Starr        .65000000  .50845719
Bloomberg, Samuel D. #7       Starr       1.00000000  .72459990
Bloomberg #17                 Starr       1.00000000  .80576128
Bloomberg, Samuel D. #13      Starr       1.00000000  .74000000
Bloomberg, Samuel D. #12      Starr       1.00000000  .81143539
Bloomberg #10                 Starr       1.00000000  .74000000  (1)
                              Starr       1.00000000  .80576128  (2)
Slick-State #1                Starr       1.00000000  .72078378
Bloomberg, Samuel D. #8       Starr        .65000000  .73033219
Bloomberg #20                 Starr       1.00000000  .81143539
Bloomberg #19                 Starr       1.00000000  .81143539
Garcia, J. A. #2              Hidalgo      .56050000  .39356000
Bloomberg #21                 Starr       1.00000000  .80576128
Garcia, J. A. #2              Starr        .56050000  .39356000
Bloomberg #4                  Starr       1.00000000  .72933148  (3)
                              Starr        .65000000  .51104365  (4)
Bloomberg, Samuel D. #6       Starr        .65000000  .50272490
Bloomberg #16                 Starr       1.00000000  .80097876


(1)	10 % of the production is calculated at this interest.
(2)	90 % of the production is calculated at this interest.
(3)	BPO working and net revenue interest.
(4)	APO working and net revenue interest.

<PAGE>

PART II - TOTALFINAELF ACQUISITION

Well/Field                    County      WI          NRI

Tabasco Field

Chapa Gas Unit- Well Numbers
1,2,4,6,7,8 and 9 and Volx 3  Hidalgo    1.0000000    .8017551

Chapa Gas Unit- Well Numbers
1, 4 and 5                    Hidalgo    1.0000000    .8750000

<PAGE>

EXHIBIT 1.2(c)

Units

PART I - BASS ACQUISITION

Bloomberg Unit A#1 Well

40 Acre Unit located in two (2) tracts, of which one (1)  20 acre tract is
located in the N. Zamora Survey, A-699 and one (1) 20 acre tract is located
in the N. Zamora Survey, A-282, as described in the Bloomberg Unit A#1 Unit
designation recorded in Volume 872, Page 699 and Volume 872, Page 692 of the
Deed Records of Starr County, Texas, as amended.


PART II - TOTALFINAELF ACQUISITION

Designation of Chapa Gas Unit effective December 1, 1995 recorded under
Document No. 489260, Official Public Records, Hidalgo County, Texas - limited
in depth from surface to 11,500'.

Dissolution and Reformation and Designation of Volz Gas Unit effective
December 1, 1995 recorded under Document No. 489261, official Public Records,
Hidalgo County, Texas - limited in depth from the surface to 11,500.

<PAGE>

EXHIBIT 2.3

ALLOCATED VALUES

To be completed

EXHIBIT 3.2

(Two forms of assignment)

ASSIGNMENT AND BILL OF SALE

This Assignment and Bill of Sale ("Assignment") is from Smith Production Inc.
("Assignor"), a Texas corporation, whose address is 14425 Torrey Chase, Suite
190, Houston, Texas 77014, to Moran Resources Company, a Texas corporation,
whose address is 2803 Sackett, Houston, Texas 77098; CNR Production, LLC, a
Texas limited liability company, whose address is 911 Main Street, Suite 1710
Kansas City, Missouri 64105; and Frost National Bank, N.A., Trustee for Franke
Interests, Inc. (H10834), whose address is P.O. Box 1600, San Antonio, Texas
78296 (jointly referred to as "Assignees" and singularly referred to as
"Assignee"). This Assignment shall be effective as of January 1, 2003 at
7:00 a.m. Central Standard Time (the "Effective Time").

WITNESSETH:

In consideration of One Hundred Dollars ($100.00) cash and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Assignor does hereby grant, convey, assign,
transfer, and deliver unto Assignees an undivided fifteen percent (15%)
of Assignor's right, title and interest in the following property rights as
of the Effective Time (the "Assigned Interests"):

(a) Oil, gas and mineral lease as described on Exhibit 1.2(a), subject to
such depth limitations, exclusions and other restrictions as described on
Exhibit 1.2 (a) (collectively, the "Lease") and all tenements, hereditaments
and appurtenances belonging to the Lease, together with each and every kind
and character of right, title, claim, and interest that Assignor has in and
to the Lease and the lands covered thereby, pooled, unitized or communitized
therewith (the "Lands");

(b) Oil, gas, water, disposal or injection wells located on the Lands
including the interests in the wells as described on Exhibit 1.2(b) attached
hereto (the "Wells");

(c) Units which include all or portions of the Lease, Lands or Wells as
described on Exhibit 1.2(c) (the "Units") including production from any such
Unit and all tenements, hereditaments and appurtenances belonging to the
Units;

(d) All valid and subsisting contracts, agreements, orders and instruments by
which the Assigned Interests are bound or to which the Assigned Interests are
subject, or that relate to or are otherwise applicable to the Assigned
Interests (all of which are hereinafter collectively referred to as
"Contracts") but excluding any Contracts to the extent transfer is restricted
by third-party agreement or applicable law;

(e) All valid and subsisting easements, permits, licenses, servitudes,
rights-of-way, surface leases and other surface rights ("Surface Contracts")
appurtenant to, and used or held for use primarily in connection with the
Assigned Interests, excluding any Surface Contracts to the extent transfer is
restricted by third-party agreement or applicable law;

(f) Equipment, machinery, fixtures, facilities and improvements located on the
Assigned Interests but excluding (i) vehicles, (ii) computers and related
peripheral equipment, (iii) communications equipment and (iv) communications
licenses granted by the Federal Communications Commission or other
governmental agency (subject to such exclusions, the "Equipment");

<PAGE>

(g) Hydrocarbons produced from or attributable to the Assigned Interests from
and after the Effective Time; and

(h) To the extent transferable, photocopies of all files; title opinions;
land surveys; and non-confidential logs related to the Assigned Interests
listed above in subsections (a)-(g), inclusive, but excluding (i) any books,
records, data, files, maps and accounting records to the extent disclosure or
transfer is restricted by third-party agreement or applicable law, (ii)
computer software, (iii) work product of Assignor's legal counsel (other than
title opinions), (iv) records and documents relating to the negotiation and
consummation of the sale of the Assigned Interests and (v) corporate,
financial, income and franchise tax and legal records of Assignor that relate
to Assignor's business generally (whether or not relating to the Assigned
Interests).

The Assigned Interests shall be owned Eighty Percent (.8000000) by
Moran Resources Company, Thirteen and One-Third Percent (.1333333) by
CNR Production, LLC and Six and Two-Thirds Percent (.0666667) by Frost
National Bank, N.A., Trustee for Franke Interests, Inc.

TO HAVE AND TO HOLD all and singular the Assigned Interests, together with all
rights, titles, interests, estates and privileges thereunto appertaining to
Assignees forever. Assignor does by these presents bind itself to WARRANT and
FOREVER DEFEND all and singular the Lease unto the Assignees against every
person whomsoever lawfully claiming or to claim the same or any part thereof,
BY, THROUGH OR UNDER ASSIGNOR ONLY, BUT NOT OTHERWISE. Assignor's special
warranty covering the Lease is limited to the extent of each Assignee's
proportionate ownership interest in the Assigned Interests.

This Assignment is made subject to the terms and provisions of (i) that
certain unrecorded Purchase and Sale Agreement dated effective as of the
Effective Time between Smith Production Inc., as Seller, and Moran Resources
Company, as Purchaser, (ii) that certain unrecorded Purchase and Sale
Agreement dated effective as of the Effective Time between Smith Production
Inc., as Seller, and CNR Production, LLC, as Purchaser, and (iii) that certain
unrecorded Purchase and Sale Agreement dated effective as of the Effective
Time between Smith Production Inc., as Seller, and Frost National Bank, N.A.,
Trustee for Franke Interests, Inc., as Purchaser, (jointly referred to as the
"Purchase and Sale Agreements") including, without limitation, all Permitted
Encumbrances, as that term is defined in the Purchase and Sale Agreements.
Assignees shall be severally liable for the obligations, liabilities and
duties of Purchaser as provided in the Purchase and Sale Agreements to the
extent of each Assignee's proportionate ownership interest in the Assigned
Interests.

Assignor also hereby grants and transfers to Assignees, to the extent so
transferable, the benefit of and the right to enforce the covenants and
warranties, if any, which Assignor is entitled to enforce with respect to the
Assigned Interests against Assignor's predecessors in title to the Assigned
Interests.

EXCEPT FOR THE SPECIAL WARRANTY OF TITLE COVERING THE LEASE,
ASSIGNOR EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE AS TO ASSIGNED
INTERESTS. ASSIGNEES ACCEPT THE EQUIPMENT AND PERSONAL
PROPERTY IN ITS PRESENT STATUS, CONDITION AND STATE OF REPAIR,
"AS IS" AND "WHERE IS," WITH ALL FAULTS.

<PAGE>

Nothing herein shall be deemed to ratify or create any rights in parties who
are not signatory parties to this Assignment.

This Assignment may be executed in any number of counterparts, and each
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts shall constitute but one assignment.

This Assignment shall bind and inure to the benefit of Assignor and Assignees
and their respective successors and assigns.

This Assignment has been executed on the dates of the acknowledgments hereto,
but shall be effective for all purposes as of the Effective Time.

[EXECUTION PAGES OF THE PARTIES BEGINS ON THE FOLLOWING PAGE]

<PAGE>

[EXECUTION PAGE OF ASSIGNOR]



Smith Production Inc.

By:  /s/ Glenn R. Smith
     __________________________
     Glenn R. Smith
     President


<PAGE>

[EXECUTION PAGES OF ASSIGNEES]



Moran Resources Company

By:/s/ Patrick J. Moran
   _________________________
   Patrick J. Moran
   President


<PAGE>

[EXECUTION PAGES OF ASSIGNEES CONTINUED]


CNR Production, LLC

By: /s/ Phelps C. Wood
    ____________________________
    Phelps C. Wood
    President

<PAGE>


[EXECUTION PAGES OF ASSIGNEES CONTINUED]

Frost National Bank, N.A., Trustee for Franke Interests, Inc. (H10834)

By: /s/ Baker Duncan
    ____________________________
    Printed Name: Baker Duncan
    Title: Senior Vice President

[END OF EXECUTION PAGES]

<PAGE>

Acknowledgments

THE STATE OF TEXAS

COUNTY OF HARRIS

This instrument was acknowledged before me on February 26, 2003 by Glenn
R. Smith, President of Smith Production Inc., a Texas corporation, on
behalf of said corporation.

Given under my hand and seal of office this 26th day of February,
2003.

/s/ Mary Jo Higgins
____________________________
Notary Public in and for the
State of Texas


<PAGE>

THE STATE OF TEXAS

COUNTY OF HARRIS

This instrument was acknowledged before me on February 26, 2003 by
Patrick J. Moran, President of Moran Resources Company, a Texas
corporation, on behalf of said corporation.

Given under my hand and seal of office this 26th day of February,
2003.

/s/ Mary Jo Higgins
____________________________
Notary Public in and for the
State of Texas

<PAGE>

THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO

This instrument was acknowledged before me on February 27th, 2003 by
Phelps C. Wood, President of CNR Production, LLC, a Texas limited liability
company, on behalf of said corporation.

Given under my hand and seal of office this 27th day of February,
2003.

/s/ Janet Bonillia
____________________________
Notary Public in and for the
State of California

<PAGE>

THE STATE OF TEXAS

COUNTY OF BEXAR

This instrument was acknowledged before me on February 25th, 2003 by
Baker Duncan, Senior Vice President of Frost National Bank, N.A., acting
in its capacity as Trustee for Franke Interests, Inc. (H10834).

Given under my hand and seal of office this 25th day of February,
2003.

/s/ Rosa I. Bonilla
____________________________
Notary Public in and for the
State of Texas


[END OF ASSIGNMENT]

<PAGE>

EXHIBIT 3.2

ASSIGNMENT AND BILL OF SALE

This Assignment and Bill of Sale ("Assignment") is from Smith Production
Inc. ("Assignor"), a Texas corporation, whose address is 14425 Torrey Chase,
Suite 190, Houston, Texas 77014, to Moran Resources Company, a Texas
corporation, whose address is 2803 Sackett, Houston, Texas 77098; CNR
Production, LLC, a Texas limited liability company, whose address is 911
Main Street, Suite 1710 Kansas City, Missouri 64105; and Frost National Bank,
N.A., Trustee for Franke Interests, Inc. (H10834), whose address is P.O. Box
1600, San Antonio, Texas 78296 (jointly referred to as "Assignees" and
singularly referred to as "Assignee"). This Assignment shall be effective
as of January 1, 2003 at 7:00 a.m. Central Standard Time (the "Effective
Time").

WITNESSETH:

In consideration of One Hundred Dollars ($100.00) cash and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Assignor does hereby grant, convey, assign,
transfer, and deliver unto Assignees an undivided fifteen percent (15%)
of Assignor's right, title and interest in the following property rights as
of the Effective Time (the "Assigned Interests"):

(a) Oil, gas and mineral leases; subleases and other leaseholds; carried
interests; farmout rights; options; and other Assigned Interests and interests
as described on Exhibit 1.2(a), subject to such depth limitations, exclusions
and other restrictions as described on Exhibit 1.2 (a) (collectively, the
"Leases") and all tenements, hereditaments and appurtenances belonging to the
Leases, together with each and every kind and character of right, title, claim,
and interest that Assignor has in and to the Leases and the lands covered
thereby, pooled, unitized or communitized therewith (the "Lands");

(b) Oil, gas, water, disposal or injection wells located on the Lands including
the interests in the wells as described on Exhibit 1.2(b) attached hereto
(the "Wells");

(c) Units which include all or portions of the Leases, Lands or Wells as
described on Exhibit 1.2(c) (the "Units") including production from any such
Unit and all tenements, hereditaments and appurtenances belonging to the
Units;

(d) All valid and subsisting contracts, agreements, orders and instruments by
which the Assigned Interests are bound or to which the Assigned Interests are
subject, or that relate to or are otherwise applicable to the Assigned
Interests (all of which are hereinafter collectively referred to as
"Contracts") but excluding any Contracts to the extent transfer is restricted
by third-party agreement or applicable law;

<PAGE>

(e) All valid and subsisting easements, permits, licenses, servitudes,
rights-of-way, surface leases and other surface rights ("Surface Contracts")
appurtenant to, and used or held for use primarily in connection with the
Assigned Interests, excluding any Surface Contracts to the extent transfer is
restricted by third-party agreement or applicable law;

(f) Equipment, machinery, fixtures, facilities and improvements located on the
Assigned Interests but excluding (i) vehicles, (ii) computers and related
peripheral equipment, (iii) communications equipment and (iv) communications
licenses granted by the Federal Communications Commission or other governmental
 agency (subject to such exclusions, the "Equipment");

(g) Hydrocarbons produced from or attributable to the Assigned Interests from
and after the Effective Time; and

(h) To the extent transferable, photocopies of all files; title opinions; land
surveys; and non-confidential logs related to the Assigned Interests listed
above in subsections (a)-(g), inclusive, but excluding (i) any books, records,
data, files, maps and accounting records to the extent disclosure or transfer
is restricted by third-party agreement or applicable law, (ii) computer
software, (iii) work product of Assignor's legal counsel (other than title
opinions), (iv) records and documents relating to the negotiation and
consummation of the sale of the Assigned Interests and (v) corporate,
financial, income and franchise tax and legal records of Assignor that relate
to Assignor's business generally (whether or not relating to
the Assigned Interests).

The Assigned Interests shall be owned Eighty Percent (.8000000) by Moran
Resources Company, Thirteen and One-Third Percent (.1333333) by CNR Production,
LLC and Six and Two-Thirds Percent (.0666667) by Frost National Bank, N.A.,
Trustee for Franke Interests, Inc.

TO HAVE AND TO HOLD all and singular the Assigned Interests, together with all
rights, titles, interests, estates and privileges thereunto appertaining to
Assignees forever. Assignor does by these presents bind itself to WARRANT and
FOREVER DEFEND all and singular the Leases unto the Assignees against every
person whomsoever lawfully claiming or to claim the same or any part thereof,
BY, THROUGH OR UNDER ASSIGNOR ONLY, BUT NOT OTHERWISE. Assignor's special
warranty covering the Leases is limited to the extent of each Assignee's
proportionate ownership interest in the Assigned Interests.

This Assignment is made subject to the terms and provisions of (i) that
certain unrecorded Purchase and Sale Agreement dated effective as of the
Effective Time between Smith Production Inc., as Seller, and Moran Resources
Company, as Purchaser, (ii) that certain unrecorded Purchase and Sale Agreement
dated effective as of the Effective Time between Smith Production Inc., as
Seller, and CNR Production, LLC, as Purchaser, and (iii) that certain
unrecorded Purchase and Sale Agreement dated effective as of the Effective
Time between Smith Production Inc., as Seller, and Frost National Bank, N.A.,
Trustee for Franke Interests, Inc., as Purchaser, (jointly referred to as the
"Purchase and Sale Agreements")including, without limitation, all Permitted
Encumbrances, as that term is defined in the Purchase and Sale Agreements.
Assignees shall be severally liable for the obligations, liabilities and
duties of Purchaser as provided in the Purchase and Sale Agreements to the
extent of each Assignee's proportionate ownership interest in the Assigned
Interests.

<PAGE>

Assignor also hereby grants and transfers to Assignees, to the extent so
transferable, the benefit of and the right to enforce the covenants and
warranties, if any, which Assignor is entitled to enforce with respect to the
Assigned Interests against Assignor's predecessors in title to the Assigned
Interests.

EXCEPT FOR THE SPECIAL WARRANTY OF TITLE COVERING THE LEASES, ASSIGNOR
EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE AS TO ASSIGNED INTERESTS. ASSIGNEES ACCEPT THE
EQUIPMENT AND PERSONAL PROPERTY IN ITS PRESENT STATUS, CONDITION AND STATE
OF REPAIR, "AS IS" AND "WHERE IS," WITH ALL FAULTS.

Nothing herein shall be deemed to ratify or create any rights in parties who
are not signatory parties to this Assignment.

This Assignment may be executed in any number of counterparts, and each
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts shall constitute but one assignment.

This Assignment shall bind and inure to the benefit of Assignor and Assignees
and their respective successors and assigns.

This Assignment has been executed on the dates of the acknowledgments hereto,
but shall be effective for all purposes as of the Effective Time.


[EXECUTION PAGES OF THE PARTIES BEGINS ON THE FOLLOWING PAGE]


<PAGE>


[EXECUTION PAGE OF ASSIGNOR]

Smith Production Inc.

By:/S/ Glenn R. Smith
   __________________________
   Glenn R. Smith
   President


<PAGE>

[EXECUTION PAGES OF ASSIGNEES]



Moran Resources Company

By: /s/ Patrick J. Moran
    _________________________
    Patrick J. Moran
    President


<PAGE>

[EXECUTION PAGES OF ASSIGNEES CONTINUED]


CNR Production, LLC

By: /s/ Phelps C. Wood
   ____________________________
   Phelps C. Wood
   President


<PAGE>

[EXECUTION PAGES OF ASSIGNEES CONTINUED]

Frost National Bank, N.A., Trustee for Franke Interests, Inc. (H10834)

By:/s/ Baker Duncan
   ____________________________
   Printed Name: Baker Duncan
   Title: Senior Vice President



[END OF EXECUTION PAGES]

<PAGE>

Acknowledgments

THE STATE OF TEXAS

COUNTY OF HARRIS

This instrument was acknowledged before me on February 26, 2003 by Glenn
R. Smith, President of Smith Production Inc., a Texas corporation, on
behalf of said corporation.

Given under my hand and seal of office this 26th day of February,
2003.

/s/ Mary Jo Higgins
____________________________
Notary Public in and for the
State of Texas


<PAGE>

THE STATE OF TEXAS

COUNTY OF HARRIS

This instrument was acknowledged before me on February 26, 2003 by
Patrick J. Moran, President of Moran Resources Company, a Texas
corporation, on behalf of said corporation.

Given under my hand and seal of office this 26th day of February,
2003.

/s/ Mary Jo Higgins
____________________________
Notary Public in and for the
State of Texas

<PAGE>


THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO

This instrument was acknowledged before me on February 27th, 2003 by
Phelps C. Wood, President of CNR Production, LLC, a Texas limited liability
company, on behalf of said corporation.

Given under my hand and seal of office this 27th day of February,
2003.

/s/ Janet Bonillia
____________________________
Notary Public in and for the
State of California

<PAGE>


THE STATE OF TEXAS

COUNTY OF BEXAR

This instrument was acknowledged before me on February 25th, 2003 by
Baker Duncan, Senior Vice President of Frost National Bank, N.A., acting
in its capacity as Trustee for Franke Interests, Inc. (H10834).

Given under my hand and seal of office this 25th day of February,
2003.

/s/ Rosa I. Bonilla
____________________________
Notary Public in and for the
State of Texas



[END OF ASSIGNMENT]

<PAGE>

EXHIBIT 5.10

Consents to Assignments


PART I - BASS ACQUISITION

Lease Number:    405060
Lessor:          J.A Garcia, Jr. et al
Lessee:          Hanson Minerals Company
Lease Date:      December 18, 1991
Recorded:        Book 648, Page 541, Starr County, Texas

Prior written consent required by Lessee, furnishing Lessee a recorded copy
of Assignment.  Any assignment made by Lessee of all or any portion of or
interest in this lease shall contain certain provisions per paragraph X of
lease.

Lease Number:    41260
Lessor:          Ida Margaret Ramsey Kent
Lessee:          Perry R. Bass, Trustee et al
Lease Date:      August 15, 1997
Recorded:        Book 790, Page 766, Starr County, Texas

Prior written consent required by Lessee, furnishing Lessee a recorded copy of
Assignment.  Any assignment made by Lessee of all or any portion of or interest
in this lease shall contain certain provisions per paragraph X of lease.


PART II - TOTALFINAELF ACQUISITION

NONE

[END]