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                                                                   Exhibit 10.23

                  MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,
                FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION

          (THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS)

            This Mortgage, Deed of Trust, Security Agreement, Financing
Statement, and Assignment of Production (this "Deed of Trust") is executed
pursuant to the Credit Agreement dated as of as of December 19, 2002, by and
among PRIMEENERGY CORPORATION, a Delaware corporation ("Prime"), PRIMEENERGY
MANAGEMENT CORPORATION, a New York corporation ("PEMC") (Prime and PEMC herein
collectively, "Mortgagor"), PRIME OPERATING COMPANY, a Texas corporation
("POC"), EASTERN OIL WELL SERVICE COMPANY, a West Virginia corporation
("Eastern"), and SOUTHWEST OILFIELD CONSTRUCTION COMPANY, an Oklahoma
corporation ("Southwest") (Prime, PEMC, POC, Eastern and Southwest herein
collectively, "Borrowers"), and GUARANTY BANK, FSB, a federal savings bank,
individually as a Lender and as Agent for the lenders signatory thereto from
time to time (the "Lenders") (as amended, restated, or supplemented from time to
time, the "Credit Agreement"). Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.

            Mortgagor, acting herein by and through its proper officers who have
heretofore been duly authorized, and with its principal office in Stamford,
Connecticut, and whose mailing address is One Landmark Square, Suite 1100,
Stamford, Connecticut 06901-2605, hereby agrees as follows:

                                   ARTICLE 1

                                      GRANT

            1.1 Lien. Mortgagor, for valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the debt and trust
hereinafter mentioned, has granted, bargained, sold, conveyed, transferred and
assigned, and by these presents does grant, bargain, sell, convey, transfer and
assign to Arthur R. Gralla, Jr., Trustee, whose address is c/o Guaranty Bank,
FSB, 333 Clay Street, Suite 4400, Houston, Texas 77002-4103, and his successors
and substitutes in trust, as hereinafter provided (the "Trustee"), for the
benefit of Guaranty Bank, FSB, as Agent for the lenders, with banking quarters
in Houston, Harris County, Texas, the mailing address for which is 333 Clay
Street, Suite 4400, Houston, Texas 77002-4103 ("Mortgagee"), the following
described Property:

            (a) all right, title, and interest, whether now owned and existing
      or hereafter acquired or arising, of Mortgagor in and to the leases,
      rights of way, easements, or other documents described in Exhibit A
      attached hereto and incorporated herein for all purposes or described or
      referred to in the documents described in Exhibit A, without regard to any
      surface acreage and/or depth limitations set forth in Exhibit A, and all
      renewals and extensions thereof and all new leases, rights of way,
      easements, or other documents (i) in which an interest is acquired by
      Mortgagor after the termination or expiration of any lease, right of way,
      easement, or other document described or referred to in Exhibit A, and
      (ii) that covers all or any

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      part of the Property described in and covered by such terminated or
      expired lease, right of way, easement, or other document, to the extent,
      and only to the extent, such new leases, rights of way, easements, or
      other documents may cover such Property (all of the foregoing in this
      subsection (a) being the "Leases");

            (b) all right, title, and interest, whether now owned and existing
      or hereafter acquired or arising, of Mortgagor in and to the lands subject
      to the Leases or otherwise described or referred to in Exhibit A, without
      regard to any surface acreage and/or depth limitations set forth in
      Exhibit A (the "Lands"), including, without limitation, the oil, gas,
      mineral, and leasehold estates in and to the Lands;

            (c) all right, title, and interest, whether now owned and existing
      or hereafter acquired or arising, of Mortgagor in and to any of the oil,
      gas, and minerals in, on, or under the Lands, including, without
      limitation, all contractual rights, fee interests, leasehold interests,
      overriding royalty interests, non-participating royalty interests, mineral
      interests, production payments, net profits interests, or any other
      interest measured by or payable out of production of oil, gas, or other
      minerals from the Leases and/or Lands;

            (d) all of the foregoing interests of Mortgagor as such interests
      may be enlarged by the discharge of any payments out of production or by
      the removal of any charges or encumbrances;

            (e) all right, title, and interest, whether now owned and existing
      or hereafter acquired or arising, of Mortgagor in, to, and under or
      derived from any present or future operating, farmout, bidding, pooling,
      unitization, and communitization agreements, assignments, and subleases,
      whether or not described in Exhibit A, to the extent, and only to the
      extent, that such agreements, assignments, and subleases cover or include
      any right, title, and interest, whether now owned and existing or
      hereafter acquired or arising, of Mortgagor in and to all or any portion
      of the Leases and/or the Lands, and all units created by any such pooling,
      unitization, and communitization agreements and all units formed under
      orders, regulations, rules, or other official acts of any Governmental
      Authority having jurisdiction, to the extent and only to the extent that
      such units cover or include all or any portion of the Leases and/or the
      Lands;

            (f) all right, title, and interest, whether now owned and existing
      or hereafter acquired or arising, of Mortgagor in, to, and under or
      derived from all presently existing and future advance payment agreements,
      oil, casinghead gas, and gas sales, exchange, and processing contracts and
      agreements, including, without limitation, those contracts and agreements
      that are described or referred to in Exhibit A, to the extent, and only to
      the extent, those contracts and agreements cover or include all or any
      portion of the Leases and/or the Lands; and


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            (g) all right, title, and interest, whether now owned and existing
      or hereafter acquired or arising, of Mortgagor in, to, and under or
      derived from all existing and future permits, licenses, easements, and
      similar rights and privileges that relate to or are appurtenant to any of
      the Leases and/or the Lands.

            1.2 Security Interest. Mortgagor, for the same consideration, hereby
grants to Mortgagee a continuing security interest in all improvements and all
personal Property of any kind or character defined in and subject to the
provisions of the Uniform Commercial Code ("UCC"), including, but not limited
to, substitutions and replacements for, accessions to, and the proceeds and
products from any and all of such improvements and personal Property, as well as
any and all "as-extracted collateral" as such term is defined in the UCC,
whether now owned and existing or hereafter acquired or arising, and situated on
any of the Lands, including, but not limited to, pipe, casing, tubing, rods,
storage tanks, boilers, loading racks, pumps, foundations, warehouses, and all
other personal Property and equipment of every kind and character upon,
incident, appurtenant, or belonging to and used in connection with the interest
of Mortgagor, whether now owned and existing or hereafter acquired or arising,
in the Lands and/or the Leases, including all oil, gas, and other minerals
produced or to be produced to the account of Mortgagor from the Lands and all
accounts receivable, general intangibles, and contract rights of Mortgagor in
connection with the Lands and/or the Leases and all proceeds, products,
substitutions, and exchanges thereof (the Lands, the Leases, and the real and
personal Property interests described in this Section being the "Mortgaged
Property").

            1.3 Assignment of Security. Mortgagor, for the same consideration,
hereby grants to Mortgagee any and all rights of Mortgagor to Liens securing
payment of proceeds from the sale of production from the Mortgaged Property.

            1.4 After-Acquired Property. Mortgagor, for the same consideration,
hereby grants, bargains, sells, conveys, transfers, and assigns to the Trustee
or grants to Mortgagee a continuing security interest in, as the case may be,
all additional right, title, or interest which Mortgagor may hereafter acquire
or become entitled to in the interests, Properties, Lands, Leases, and premises
aforesaid, and in the oil, gas, or other minerals in and under or produced from
or attributable to any of the Lands or Leases, which additional right, title,
and interest, when acquired, shall constitute "Mortgaged Property," the same as
if expressly described and conveyed herein.

            1.5 Habendum. TO HAVE AND TO HOLD all and singular the Mortgaged
Property and all other Property which, by the terms hereof, has or may hereafter
become subject to the Liens of this Deed of Trust, together with all rights,
hereditaments, and appurtenances in anywise belonging thereto, to the Trustee or
Mortgagee, as the case may be, or the successors or assigns of either of them
forever.


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                                   ARTICLE 2

                              INDEBTEDNESS SECURED

            This conveyance is made, IN TRUST, HOWEVER, to secure and enforce
the payment of the following indebtedness, obligations, and liabilities:

            2.1 Specific Obligations. The Obligations, including, without
limitation, the indebtedness evidenced by (a) the Credit Agreement, (b) the
Promissory Note dated December 19, 2002, executed by Borrowers to the order of
the Lenders pursuant to the Credit Agreement in the aggregate face amount of up
to $50,000,000, bearing interest and being payable as provided therein or as
provided in the Credit Agreement, with a final maturity of December 19, 2004,
and (c) Promissory Note dated December 19, 2002, executed by Borrowers in the
order of the Lenders pursuant to the Credit Agreement in the face amount of
$4,000,000, bearing interest and being payable as provided therein or as
provided in the Credit Agreement, with a final maturity of December 19, 2004.

            2.2 Additional Indebtedness.

            (a) Payment of and performance of any and all present or future
      obligations of Borrowers under Commodity Hedge Agreements, as defined in
      the Credit Agreement.

            (b) Payment of and performance of any and all present or future
      obligations of Borrowers under any Rate Management Transaction, as defined
      in the Credit Agreement, entered into by and between Borrowers and a
      Lender.

            (c) Payment of and performance of any and all present or future
      obligations of Borrowers under any guaranty in favor of Lenders of any of
      the Borrowers' subsidiary's obligations under Commodity Hedge Agreements
      and Rate Management Transactions and all present or future obligations of
      Borrowers or Borrowers' subsidiaries under Commodity Hedge Agreements and
      Rate Management Transactions.

            2.3 Other and Further Indebtedness. This Deed of Trust is intended
to secure a revolving credit line as set forth in the Credit Agreement. If
intermediate paydowns by Borrowers reduce the outstanding Indebtedness to zero,
it is intended that the Liens created under this Deed of Trust shall remain in
full force and effect as long as any Commitment exists. In addition, it is
contemplated that Borrowers may from time to time borrow additional sums of
money from or otherwise be or become obligated to Lenders. This Deed of Trust is
given to secure any and all indebtedness of Borrowers, present or future, either
direct or indirect, primary or secondary, fixed or contingent, which Borrowers
may now or hereafter owe, or as to which Borrowers may in any manner become
obligated to Lenders for payment, including, without limitation, indebtedness
arising by way of guaranty as to obligations of another to Lenders and
indebtedness originally owed to a party other than Lenders but which becomes
owing to Lenders as the result of Lenders having


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acquired the right to payment thereof. This Deed of Trust shall likewise secure
not only the above described indebtedness, but any and all renewals for any
period, extensions, and rearrangements of all or any portion thereof; and the
Liens under this Deed of Trust shall be cumulative of all other Liens and
security of any and every other kind or character whatsoever securing the
above-described indebtedness. Notwithstanding the foregoing, it is not the
intention of the parties hereto to extend the Liens of this Deed of Trust so as
to violate, or give rise to an allegation of violation of, any provision of any
statute, regulation, rule, ordinance or order of any applicable jurisdiction, or
any agency or subdivision of any of such jurisdictions. In this connection, this
Deed of Trust shall not, solely as to the relevant indebtedness, serve as
security for any indebtedness when for it to do so would violate any provision
of any statute, regulation, rule, ordinance or order of any applicable
jurisdiction, or any agency or subdivision of any of such jurisdictions.

            2.4 Indebtedness. The word "Indebtedness" wherever used in this Deed
of Trust shall refer to all present and future debts, obligations, and
liabilities described or referred to in this Article 2, subject, however, to the
limitations provided hereinabove in this Article 2.

                                   ARTICLE 3

                                   WARRANTIES

            3.1 Warranty of Title. Mortgagor hereby binds itself, its legal
representatives, successors, and assigns, to warrant and forever defend all and
singular the Mortgaged Property to the Trustee and the successors and assigns of
the Trustee forever against every Person whomsoever lawfully claiming or to
claim the same or any part thereof. Notwithstanding that this Deed of Trust
covers all of the right, title, and interest, whether now owned and existing or
hereafter acquired or arising, of Mortgagor in and to the Mortgaged Property,
Mortgagor, for itself, its legal representatives, successors, and assigns,
further covenants, represents, and warrants that Mortgagor has good and
indefeasible title to the Mortgaged Property and that the interests of Mortgagor
in and to the Leases and/or Lands described in Exhibit A are not greater than
the working interest nor less than the net revenue interest, overriding royalty
interest, net profit interest, production payment interest, royalty interest, or
other interest payable out of or measured by production set forth in connection
with each oil and gas well described in Exhibit A. In the event Mortgagor owns
any other or greater interest, such additional interest is nonetheless included
in, covered by, and subject to the liens and security interests created by this
Deed of Trust.

            3.2 Additional Warranties. In consideration of the Indebtedness,
Mortgagor, for itself, its legal representatives, successors, and assigns,
covenants, represents, and warrants that:

            (a) Leases in Effect. All of the Leases specifically described or
      referred to in Exhibit A are in full force and effect. All covenants,
      express or implied, in respect of the Leases specifically described or
      referred to in Exhibit A, or of any assignment of any of such Leases,
      which may affect the validity of any of such Leases, have been performed
      insofar as such Leases pertain to the Lands.


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            (b) Interests Free of Liens. The interests of Mortgagor in the
      Mortgaged Property are free and clear of all Liens except for Permitted
      Liens. All gross production taxes and all taxes as to which non-payment
      could result in a Lien against any of the Mortgaged Property have been
      paid.

            (c) Representations and Warranties. As of the date hereof, all
      representations and warranties of Mortgagor set forth in the Credit
      Agreement are true and correct in all material respects, except to the
      extent such representations and warranties relate solely to an earlier
      date, and all such representations and warranties are hereby remade by
      Mortgagor to Mortgagee.

                                   ARTICLE 4

                             COVENANTS OF MORTGAGOR

            In consideration of the Indebtedness, Mortgagor, for itself, its
legal representatives, successors, and assigns, covenants and agrees as follows:

            4.1 Maintenance of Leases. Mortgagor will keep and continue all
Leases, estates, and interests herein described and all contracts and agreements
relating thereto in full force and effect in accordance with the terms thereof
and will not permit the same to lapse or otherwise become impaired for failure
to comply with the obligations thereof, whether express or implied. In this
connection, Mortgagor shall not release any of the Leases without the prior
written consent of Mortgagee.

            4.2 Maintenance of Property. Mortgagor will keep and maintain all
improvements, personal Property, and equipment now or hereafter situated on the
Lands and constituting a portion of the Mortgaged Property and used or obtained
in connection therewith in good repair and condition, ordinary wear and tear
excepted, and will not tear down or remove the same or permit the same to be
torn down or removed without the prior consent of Mortgagee, except in the usual
course of operations as may be required for replacement when otherwise in
compliance with the provisions of this Deed of Trust and the Credit Agreement.

            4.3 Pooling or Unitization. Mortgagor will not, without the prior
written consent of Mortgagee, pool or unitize all or any part of the Mortgaged
Property where the pooling or unitization would result in the diminution of the
net revenue interest of Mortgagor in production from the pooled or unitized
lands attributable to the Mortgaged Property constituting a portion of such
pooled or unitized lands. Immediately after the formation of any pool or unit in
accordance herewith, Mortgagor will furnish to Mortgagee a conformed copy of the
pooling agreement, declaration of pooling, or other instrument creating the pool
or unit. The interest of Mortgagor included in any pool or unit attributable to
the Mortgaged Property or any part thereof shall become a part of the Mortgaged
Property and shall be subject to the Liens hereof in the same manner and with
the same effect as though the pool or unit and the interest of Mortgagor therein
were specifically described in Exhibit A. In the event any proceedings of any
Governmental Authority which could result in pooling


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or unitizing all or any part of the Mortgaged Property are commenced, Mortgagor
shall give immediate written notice thereof to Mortgagee. Any pooling or
unitization of all or any part of the Mortgaged Property in violation of this
Section shall be of no force or effect against the Trustee or Mortgagee.

            4.4 Operation of Mortgaged Property. Mortgagor will operate or, to
the extent that the right of operation is vested in others, will exercise its
best efforts to require the operator to operate the Mortgaged Property and all
wells now or hereafter located thereon continuously and in a prudent and
workmanlike manner in accordance with the best usage of the field and in
accordance with all applicable Requirements of Law. Mortgagor will comply with
all terms and conditions of the Leases and each assignment or contract
obligating Mortgagor in any way with respect to the Mortgaged Property; but
nothing herein shall be construed to empower Mortgagor to bind the Trustee or
Mortgagee to any contract or obligation or render the Trustee or Mortgagee in
any way responsible or liable for bills or obligations incurred by Mortgagor.

            4.5 Compliance with Operating Agreements. Mortgagor agrees to
promptly pay all bills for labor and materials incurred in the operation of the
Mortgaged Property and will promptly pay its share of all costs and expenses
incurred under any joint operating agreement affecting the Mortgaged Property or
any portion thereof; will furnish Mortgagee, as and when requested, full
information as to the status of any joint account maintained with others under
any such operating agreement; will not take any action to incur any liability or
Lien thereunder; and will not enter into any new operating agreement or any
amendment of any existing operating agreement affecting the Mortgaged Property
without the prior written consent of Mortgagee. Furthermore, Mortgagor will not
consent or agree to participate in any proposed operation under any presently
existing operating agreement affecting the Mortgaged Property unless Mortgagor
obtains the prior written consent of Mortgagee and, if requested by Mortgagee,
deposits with the operator or Mortgagee, where Mortgagor is a non-operator, or
with Mortgagee, where Mortgagor is an operator, Mortgagor's share of the
estimated cost of the proposed operation prior to electing to participate in the
operation. To the extent that Mortgagor is unable to consent to any proposed
operation with respect to any of the Mortgaged Property, prior to electing not
to participate in the proposed operation, Mortgagor will use its best efforts,
to the extent practicable and to the extent allowed to do so under the relevant
operating agreement or other applicable contract, to farmout to others
acceptable to Mortgagee, on the best terms obtainable and acceptable to
Mortgagee, the interest or relevant portion of the interest of Mortgagor in the
proposed operation.

            4.6 Access to Mortgaged Property. Mortgagor will permit Mortgagee
and its accredited agents, representatives, attorneys and employees, at the
expense of Mortgagor, at all times to go upon, examine, inspect, conduct
environmental audits and other testing of, and remain on, the Mortgaged
Property, and to go upon the derrick floor of any well at any time drilled or
being drilled thereon, and will furnish Mortgagee, upon request, all pertinent
information regarding the development and operation of the Mortgaged Property.

            4.7 Waivers. Mortgagor hereby expressly waives, to the full extent
permitted by applicable law, any and all rights or privileges of marshalling of
assets, sale in inverse order of alienation, notices, appraisements, redemption,
and any prerequisite in the event of foreclosure of the


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Liens created herein. Mortgagee at all times shall have the right to release any
part of the Mortgaged Property now or hereafter subject to the Liens of this
Deed of Trust, any part of the proceeds of production or other income herein or
hereafter assigned or pledged, or any other security it now has or may hereafter
have securing the Indebtedness, without releasing any other part of the
Mortgaged Property, proceeds, or income, and without affecting the Liens hereof
as to the part or parts of the Mortgaged Property, proceeds, or income not so
released or the right to receive future proceeds and income.

            4.8 Compliance with Laws. Mortgagor will comply with all
Requirements of Law applicable to the Mortgaged Property and the operations
conducted thereon, including, without limitation, the Natural Gas Policy Act of
1978, as amended, and Environmental Laws; and cause all employees, crew members,
agents, contractors, sub-contractors, and future lessees (pursuant to
appropriate lease provisions) of Mortgagor, while such Persons are acting within
the scope of their relationship with Mortgagor, to comply with all such
Requirements of Law as may be necessary or appropriate to enable Mortgagor to so
comply.

            4.9 Hazardous Substances Indemnification. MORTGAGOR HEREBY
INDEMNIFIES AND HOLDS MORTGAGEE AND THE LENDERS AND THEIR RESPECTIVE
SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, AND
AFFILIATES AND THE TRUSTEE HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES,
DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES, ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS, REQUIREMENTS AND
ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES INCURRED IN
CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND
EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY MORTGAGED PROPERTY,
WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED ON OR
UNDERTAKEN ON OR OFF ANY MORTGAGED PROPERTY, WHETHER PRIOR TO OR DURING THE TERM
HEREOF, AND WHETHER BY MORTGAGOR OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF MORTGAGOR OR ANY OTHER PERSON AT ANY TIME
OCCUPYING OR PRESENT ON ANY MORTGAGED PROPERTY, IN CONNECTION WITH THE HANDLING,
TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION, OR
DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER
SUCH PROPERTY, (C) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY MORTGAGED
PROPERTY, (D) ANY CONTAMINATION OF ANY MORTGAGED PROPERTY OR NATURAL RESOURCES
ARISING IN CONNECTION WITH THE GENERATION, USE, HANDLING, STORAGE,
TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE BY MORTGAGOR OR ANY
EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF MORTGAGOR WHILE SUCH PERSONS
ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH MORTGAGOR, IRRESPECTIVE
OF WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH
APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND ENFORCEMENT OF THIS
DEED OF TRUST OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO THIS
DEED OF TRUST OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT
LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE,
WHETHER SOLE OR CONCURRENT, ON THE PART OF MORTGAGEE OR ANY LENDER OR ANY OF
THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, OR AFFILIATES OR THE TRUSTEE; WITH THE FOREGOING INDEMNITY
SURVIVING SATISFACTION OF THE INDEBTEDNESS, THE TERMINATION OF THE CREDIT
AGREEMENT, AND THE RELEASE OF THE LIENS CREATED HEREBY.


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            4.10 Site Assessments. Mortgagee (by its officers, employees and
agents) at any time and from time to time, either prior to or after the
occurrence of an Event of Default, may contract, at the expense of Mortgagor,
for the services of Persons (the "Site Reviewers") to perform environmental site
assessments and other tests ("Site Assessments") on all or any portion of the
Mortgaged Property for the purpose of determining whether any environmental
condition exists on any Mortgaged Property which could reasonably be expected to
result in any liability, cost, or expense to Mortgagee or any owner, occupier,
or operator of such Mortgaged Property. The Site Assessments may be performed at
any time or times, upon reasonable notice, and under reasonable conditions
established by Mortgagor which do not impede the performance of the Site
Assessments. The Site Reviewers are hereby authorized to enter upon all or any
portion of the Mortgaged Property for such purposes. The Site Reviewers are
further authorized to perform both above and below the ground testing for
environmental damage or the presence of Hazardous Substances on the Mortgaged
Property and such other tests on the Mortgaged Property as may be necessary to
conduct the Site Assessments in the reasonable opinion of the Site Reviewers.
Mortgagor will supply to the Site Reviewers such historical and operational
information regarding the Mortgaged Property as may be reasonably requested by
the Site Reviewers to facilitate the Site Assessments and will make available
for meetings with the Site Reviewers appropriate personnel having knowledge of
such matters. On request, Mortgagee shall make the results of such Site
Assessments available to Mortgagor, which, prior to an Event of Default, may at
its election participate under reasonable procedures in the direction of such
Site Assessments and the description of tasks of the Site Reviewers. The cost of
performing all Site Assessments shall be paid by Mortgagor upon demand of
Mortgagee and any such obligations shall be Indebtedness secured by this Deed of
Trust.

            4.11 Uneconomic Wells. Should proceeds from the sale of production
from any oil and/or gas well constituting part of the Mortgaged Property (net of
production, severance and windfall profit taxes and royalties, overriding
royalties and other payments out of or measured by production) not exceed the
expense of operation of such well (including, but not limited to, operator's
overhead, payments to contractors and suppliers, and annual taxes assessed on
the basis of the value of the Property prorated on a monthly basis, but
expressly excluding any portion of the cost of drilling or completing the
relevant well or the cost of non-routine workover or remedial operations) for a
period in excess of three consecutive calendar months, then, upon receipt by
Mortgagor of written notification from Mortgagee, Mortgagor will (a) take all
necessary steps to abandon the relevant well, or (b) provide from sources other
than proceeds from the sale of production attributable to the Mortgaged Property
(i.e., through borrowings or contractual commitments obtained from third parties
not in violation of any provision of this Deed of Trust or any other Loan
Document) the funds required to pay the share of Mortgagor of the expenses
associated with the continuing operation of such well.

            4.12 Performance of Gas Contracts. Mortgagor will perform and
observe in all material respects all of its obligations under each contract
relating to the sale of gas produced from or attributable to the Mortgaged
Property and will not, except in good faith and as the result of arm's length
negotiations and with prior written notice to Mortgagee, change, modify, amend
or waive any of the terms or provisions of any such contract or take any other
action which would release any other party from its obligations or liabilities
under any such contract.


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            4.13 Covenants Running with the Land. All covenants and agreements
herein contained shall constitute covenants running with the Land.

                                   ARTICLE 5

                            DEFEASANCE, FORECLOSURE
                               AND OTHER REMEDIES

            5.1 Defeasance. Should the Indebtedness be paid, then the conveyance
of the Mortgaged Property shall become of no further force and effect, and, at
the request and expense of Mortgagor, the Lien granted hereunder shall be
released, without recourse or warranty; otherwise, it shall remain in full force
and effect.

            5.2 Events of Default. The occurrence of any Event of Default under
the Credit Agreement shall constitute an Event of Default under this Deed of
Trust.

            5.3 Acceleration and Exercise of Power of Sale.

            (a) Upon the occurrence of an Event of Default specified in Sections
      7.1(f) or 7.1(g) of the Credit Agreement, the aggregate principal amount
      of all Indebtedness then outstanding and all interest accrued thereon
      shall automatically become immediately due and payable, without
      presentment, demand, protest, notice of protest, default or dishonor,
      notice of intent to accelerate maturity, notice of acceleration of
      maturity, or other notice of any kind, all of which are hereby expressly
      waived by Mortgagor to the full extent permitted by applicable law. Upon
      the occurrence of any other Event of Default, Mortgagee may declare the
      aggregate principal amount of all Indebtedness then outstanding and all
      interest accrued thereon immediately due and payable, whereupon the same
      shall become immediately due and payable without presentment, demand,
      protest, notice of protest, default or dishonor, notice of intent to
      accelerate maturity, notice of acceleration of maturity, or other notice
      of any kind, all of which are hereby expressly waived by Mortgagor to the
      full extent permitted by applicable law.

            (b) Upon the occurrence of any Event of Default or at any time
      thereafter while the Indebtedness or any part thereof remains unpaid, it
      shall be the duty of the Trustee, on request of Mortgagee (which request
      is hereby presumed), to enforce this Trust and, after advertising the time
      and place of the sale for at least 21 days prior to the day of sale, by
      posting or causing to be posted a written or printed notice thereof at the
      courthouse door and by filing a copy of such notice in the office of the
      county clerk of each county in which the Mortgaged Property or any part
      thereof may be situated, and serving written notice of the proposed sale
      on each debtor obligated to pay the Indebtedness according to the records
      of Mortgagee, by postage prepaid, certified United States mail, at the
      most recent address for such debtor as shown by the records of Mortgagee,
      at least 21 days prior to the day of sale, to sell the


                                       10
<PAGE>

      Mortgaged Property, either as a whole or in parcels, as the Trustee may
      deem proper, at public venue at the courthouse of the county in which the
      Mortgaged Property or any part thereof may be situated (and being the
      county designated in the notice of sale) on the first Tuesday of any month
      between the hours of 10:00 a.m. and 4:00 p.m., to the highest bidder for
      cash, and after such sale to execute and deliver to the purchaser or
      purchasers good and sufficient deeds and assignments, conveying such
      Property so sold to the purchaser or purchasers with general warranty of
      title made on behalf of Mortgagor. The Trustee, or his successor or
      substitute, is hereby authorized and empowered to appoint any one or more
      Persons as his attorneys-in-fact or agents to act as Trustee under him and
      in his name, place and stead, such appointment to be evidenced by a
      written instrument executed by the Trustee, or his successor or
      substitute, to perform any one or more act or acts necessary or incident
      to any sale under the power of sale hereunder, including, without
      limitation, the posting and filing of any notices, the conduct of the sale
      and the execution and delivery of any instruments conveying the Mortgaged
      Property as a result of the sale, but in the name and on behalf of the
      Trustee, or his successor or substitute; and all acts done or performed by
      such attorneys-in-fact or agents shall be valid, lawful and binding as if
      done or performed by the Trustee, or his successor or substitute. No
      single sale or series of sales by the Trustee shall extinguish the Lien or
      exhaust the power of sale hereunder except with respect to the items of
      Property sold, but such Lien and power shall exist for so long as and may
      be exercised in any manner by law or as herein provided as often as the
      circumstances require to give Mortgagee full relief hereunder. The
      purchaser at any such sale shall not assume, nor shall the heirs, legal
      representatives, successors or assigns of such purchaser, be deemed to
      have assumed, by reason of the acquisition of Property or rights mortgaged
      hereunder, any liability or obligation of any lessee or operator of the
      Mortgaged Property, or any part thereof, arising by reason of any
      occurrence taking place prior to such sale. It shall not be necessary to
      have present, or to exhibit at any such sale, any of the personal Property
      subject to the Lien hereof.

            5.4 Rights as Secured Party. Upon the occurrence of any Event of
Default, Mortgagee shall be entitled to all of the rights, powers, and remedies
afforded a secured party by the UCC with respect to the personal Property and
fixtures and as-extracted collateral in which Mortgagee has been granted a
security interest hereby, or Mortgagee may proceed in accordance with the
provisions hereof as to both the real and personal Property covered hereby.

            5.5 Application of Proceeds of Sale. The Trustee is authorized to
receive the proceeds of each sale of Mortgaged Property and apply the same as
follows:

            FIRST: to the payment of all necessary costs and expenses incident
            to the execution of this Deed of Trust, including, but not limited
            to, a fee to the Trustee of 5% of the amount realized at the sale,
            if required by the Trustee;


                                       11
<PAGE>

            SECOND: to any and all Indebtedness then hereby secured, application
            to be made in such order and in such manner as Mortgagee may, in its
            discretion, elect;

            THIRD: the balance, if any, to Mortgagor or its successors or
            assigns, or other Person legally entitled thereto.

            5.6 Substitute Trustee. In the event of the death of the Trustee, or
his removal from the State of Texas, or his failure, refusal, or inability for
any reason to make any such sale or to perform any of the trusts herein
declared, or at any time, whether with or without cause, Mortgagee may appoint,
in writing, a substitute trustee who shall thereupon succeed to all the estates,
rights, powers, and trusts herein granted to and vested in the Trustee. In the
same events as first above stated, and in the same manner, successive substitute
Trustees may thereafter be appointed.

            5.7 Statements by Trustee. It is agreed that in any deed or deeds
given by any Trustee any and all statements of fact or other recitals therein
made as to the identity of the holder or holders of the Indebtedness, or as to
default in the payments thereof or any part thereof, or as to the breach of any
covenants herein contained, or as to the request to sell, notice of sale, time,
place, terms and manner of sale, and receipt, application, and distribution of
the money realized therefrom, or as to the due and proper appointment of a
substitute trustee, and, without being limited by the foregoing, as to any other
or additional act or thing having been done by Mortgagee or the Trustee, shall
be taken by all courts of law and equity as prima facie evidence that the
statements or recitals state facts and are without further question to be so
accepted. Mortgagor does hereby ratify and confirm any and all acts that the
Trustee may lawfully do in the premises by virtue of the terms and conditions of
this Deed of Trust.

            5.8 Suit to Collect and Foreclose. Mortgagee, at its election, or
the Trustee, upon written request of Mortgagee, may proceed by suit or suits, at
law or in equity, to enforce the payment of the Indebtedness in accordance with
the terms hereof and of the notes, guaranties, or other documents evidencing it,
and to foreclose the Lien of this Deed of Trust as against all or any portion of
the Mortgaged Property and to have such Property sold under the judgment or
decree of a court of competent jurisdiction.

            5.9 Mortgagee or Trustee as Purchaser. Mortgagee or the Trustee may
be a purchaser of all or any portion of the Mortgaged Property at any sale
thereof, whether such sale be under the power of sale hereinabove vested in the
Trustee, upon any other foreclosure of the Lien hereof, or otherwise. Mortgagee
or the Trustee so purchasing shall, upon any such purchase, acquire title to the
Mortgaged Property so purchased, free of the Lien of this Deed of Trust and free
of all rights of redemption in Mortgagor.

            5.10 Entry and Operation. Upon the occurrence of any Event of
Default, then in each and every such case and in addition to the other rights
and remedies hereunder, the Trustee or Mortgagee, whether or not the
Indebtedness shall have become due and payable, may, but shall not be obligated
to, enter into and upon and take possession of all or any portion of the
Mortgaged Property and may exclude Mortgagor, its agents and servants wholly
therefrom and have, hold, use, operate,


                                       12
<PAGE>

manage, and control all or any portion of the Mortgaged Property and produce the
oil, gas, and other minerals therefrom and market the same, all at the sole risk
and expense of Mortgagor and at the expense of the Mortgaged Property, applying
the net proceeds so derived, first, to the cost of maintenance and operation of
such Mortgaged Property; second, to the payment of the Indebtedness, application
to be made first to interest and then to principal; and the balance thereof, if
any, shall be paid to Mortgagor. Upon such payment of all such costs and
Indebtedness, the Mortgaged Property shall be returned to Mortgagor in its then
condition, and neither the Trustee nor Mortgagee shall be liable to Mortgagor
for any damage or injury to the Mortgaged Property except such as may be caused
through the fraud or willful misconduct of the Trustee or Mortgagee, as the case
may be.

            5.11 Power of Attorney to Mortgagee. Mortgagor does hereby designate
Mortgagee as the agent of Mortgagor to act in the name, place, and stead of
Mortgagor in the exercise of each and every remedy set forth herein and in
conducting any and all operations and taking any and all action reasonably
necessary to do so, recognizing such agency in favor of Mortgagee to be coupled
with the interests of Mortgagee under this Deed of Trust and, thus, irrevocable
so long as this Deed of Trust is in force and effect.

            5.12 Remedies Cumulative and Non-Exclusive. The rights of entry,
sale, or suit, as hereinabove or hereinafter conferred, are cumulative of all
other rights and remedies herein or by law or in equity provided, and shall not
be deemed to deprive Mortgagee or the Trustee of any such other legal or
equitable rights or remedies, by judicial proceedings or otherwise, appropriate
to enforce the conditions, covenants, and terms of this Deed of Trust and the
other Loan Documents. The employment of any remedy hereunder or otherwise shall
not prevent the concurrent or subsequent employment of any other appropriate
remedy or remedies.

                                   ARTICLE 6

                            ASSIGNMENT OF PRODUCTION

            6.1 Assignment. In addition to the conveyance to the Trustee herein
made, Mortgagor does hereby transfer, assign, deliver and convey unto Mortgagee,
its successors and assigns, all of the oil, gas, and other minerals produced,
saved, or sold from the Mortgaged Property and attributable to the interests of
Mortgagor therein subsequent to 7:00 a.m. on the first day of the month in which
this Deed of Trust is executed, together with the proceeds of any sale thereof.
Mortgagor hereby directs any purchaser now or hereafter taking any production
from the Mortgaged Property to pay to Mortgagee such proceeds derived from the
sale thereof and to continue to make payments directly to Mortgagee until
notified in writing by Mortgagee to discontinue the same. The purchaser of any
such production shall not be required to see to the application of the proceeds
thereof by Mortgagee, and payment made to Mortgagee shall be binding and
conclusive as between such purchaser and Mortgagor. Mortgagor further agrees to
perform all such acts and to execute all such further assignments, transfer and
division orders, and other instruments as may be required or desired by
Mortgagee or any other party to have such proceeds and revenues so paid to
Mortgagee.


                                       13
<PAGE>

            6.2 Postponement of Payment. For its convenience, Mortgagee has
elected not to exercise immediately its right to receive payment to it directly
of the proceeds of any sale of the oil , gas and other minerals produced or sold
from the Mortgaged Property and the purchasers may continue to make such payment
or delivery of the proceeds to Mortgagor until such time as Mortgagor and the
purchasers have received notice that an Event of Default has occurred and is
continuing, and that the purchasers are directed to make payment or delivery of
the proceeds directly to Mortgagee. Such failure by Mortgagee to exercise its
rights immediately shall not in any way waive the right of Mortgagee to receive
any of the proceeds, or to make any such demand, or to affect any such
assignment as to any proceeds not theretofore paid or delivered to Mortgagor. In
this regard, if any of the proceeds are paid or delivered directly to Mortgagee
and then, at the request of Mortgagee, the proceeds are, for a period or periods
of time, paid or delivered to Mortgagor, Mortgagee shall nevertheless have the
right, effective upon written notice, to require that future proceeds be again
paid or delivered directly to it. Mortgagee shall never be required to send any
such notice to all purchasers, and may direct such notice only to those
purchasers as it may, in its discretion, desire. It shall never be necessary for
Mortgagee to institute legal proceedings to enforce the assignment of
hydrocarbons, proceeds, or other rents, profits, or income contained in this
instrument. It shall not be necessary for Mortgagee to obtain possession of the
Mortgaged Property as a prerequisite to Mortgagee's right to collect or receive
any hydrocarbons, other minerals, proceeds, or other rents, profits, or income
assigned to Mortgagee under this instrument. Mortgagor and Mortgagee expressly
agree and it is the express intention of Mortgagor and Mortgagee that in no
event will any reduction in the obligations be measured by the fair market value
of the hydrocarbons, other minerals, proceeds, or other rents, profits, or
income assigned to Mortgagee under this instrument.

            6.3 Change of Purchaser. Should any purchaser taking the production
from the Mortgaged Property fail to make prompt payment to Mortgagee in
accordance with the provisions of Section 6.1, Mortgagee shall have the right,
at the expense of Mortgagor, to demand a change of connection and to designate
another purchaser with whom a new connection may be made, without any liability
on the part of Mortgagee in making such selection, so long as ordinary care is
used in the making thereof. Promptly upon such demand, Mortgagor shall take all
necessary and appropriate action to effect such change of connection.

            6.4 Application of Proceeds. Mortgagor authorizes and empowers
Mortgagee to receive, hold, and collect all sums of money paid to Mortgagee in
accordance with the provisions of Section 6.1, and to apply the same as
hereinafter provided, all without any liability or responsibility on the part of
Mortgagee, save and except as to good faith in so receiving and applying such
sums. Mortgagee may apply all sums received by Mortgagee pursuant to Section 6.1
to the payment of the Indebtedness, application to be made in such manner as
Mortgagee may elect, regardless of whether the application so made shall exceed
the payments of principal and interest then due as provided in the Loan
Documents. After such application has been so made by Mortgagee, the balance of
any such sums shall be paid to Mortgagor.

            6.5 No Postponement of Installments on Indebtedness. It is
understood and agreed that should such payments provided for by Section 6.1 be
less than the sum or sums then due on the Indebtedness, such sum or sums then
due shall nevertheless be paid by Mortgagor in


                                       14
<PAGE>

accordance with the provisions of the Loan Documents, and neither the assignment
made pursuant to Section 6.1 nor any other provisions hereof shall in any manner
be construed to affect the terms and provisions of the Loan Documents. Likewise,
neither the assignment made pursuant to Section 6.1 nor any other provisions
hereof shall in any manner be construed to affect the Liens, rights, title, and
remedies herein granted securing the Indebtedness or the liability of Mortgagor
therefor. The rights under this Article VI are cumulative of all other rights,
remedies, and powers granted under this Deed of Trust and are cumulative of any
other security which Mortgagee now holds or may hereafter hold to secure the
payment of the Indebtedness.

            6.6 Turnover to Mortgagee. Should Mortgagor receive any of the
proceeds of any sale of oil, gas, or other minerals produced, saved, or sold
from the Mortgaged Property, which under the terms hereof should have been
remitted to Mortgagee, Mortgagor will immediately remit same in full to
Mortgagee.

            6.7 Release of Proceeds Upon Payment of Indebtedness. Upon payment
in full of all Indebtedness and the termination of the Commitment, the remainder
of such proceeds held by Mortgagee, if any, shall be paid over to Mortgagor upon
demand, and a release of the interest hereby assigned will be made, without
recourse or warranty, by Mortgagee to Mortgagor at its request and its expense.

            6.8 Duty of Mortgagee. Mortgagee shall not be liable for any failure
to collect, or for any failure to exercise diligence in collecting, any funds
assigned hereunder. Mortgagee shall be accountable only for funds actually
received.

            6.9 Power of Attorney to Mortgagee. Mortgagor does hereby designate
Mortgagee as the agent of Mortgagor to act in the name, place, and stead of
Mortgagor for the purpose of taking any and all actions deemed by Mortgagee
necessary for the realization by Mortgagee of the benefits of the assignment of
production provided herein, recognizing such agency in favor of Mortgagee to be
coupled with the interests of Mortgagee under this Deed of Trust and, thus,
irrevocable so long as this Deed of Trust is in force and effect.

                                   ARTICLE 7

                                  MISCELLANEOUS

            7.1 Further Assurances. Upon request of Mortgagee, Mortgagor will
promptly correct any defects, errors, or omissions in the execution or
acknowledgment of this Deed of Trust or any other Loan Document, and execute,
acknowledge, and deliver such other assurances and instruments as shall, in the
opinion of Mortgagee, be necessary to fulfill the terms of this Deed of Trust.

            7.2 Interest. Any provision in any document that may be executed in
connection herewith to the contrary notwithstanding, Mortgagee shall in no event
be entitled to receive or


                                       15
<PAGE>

collect, nor shall any amounts received hereunder be credited so that Mortgagee
shall be paid, as interest a sum greater than that authorized by law. If any
possible construction of this Deed of Trust or any Loan Document seems to
indicate any possibility of a different power given to Mortgagee or any
authority to ask for, demand, or receive any larger rate of interest, this
clause shall override and control, and proper adjustments shall be made
accordingly.

            7.3 Agreement as Entirety. This Deed of Trust, for convenience only,
has been divided into Articles, Sections, and subsections. The rights, powers,
privileges, duties, and other legal relations of Mortgagor, the Trustee, and
Mortgagee shall be determined from this Deed of Trust as an entirety and without
regard to the aforesaid division into Articles, Sections, and subsections and
without regard to headings affixed to such Articles, Sections, or subsections.

            7.4 Number and Gender. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural, and
the plural shall likewise be understood to include the singular. Words denoting
sex shall be construed to include the masculine, feminine, and neuter when such
construction is appropriate; and specific enumeration shall not exclude the
general, but shall be construed as cumulative.

            7.5 Rights and Remedies Cumulative. All rights, powers, immunities,
remedies, and Liens of Mortgagee existing and to exist hereunder or under any
other instruments or at law or in equity and all other or additional security
shall be cumulative and not exclusive, each of the other. Mortgagee shall, in
addition to the rights and remedies herein expressly provided, be entitled to
such other remedies as may now or hereafter exist at law or in equity for
securing and collecting the Indebtedness, for enforcing the covenants herein,
and for foreclosing the Liens hereof. Resort by Mortgagee to any right or remedy
provided for hereunder or at law or in equity shall not prevent concurrent or
subsequent resort to the same or any other right or remedy. No security
heretofore, herewith, or subsequently taken by Mortgagee shall in any manner
impair or affect the security given by this Deed of Trust or any security by
endorsement or otherwise presently or previously given; and all security shall
be taken, considered, and held as cumulative.

            7.6 Parties in Interest. This Deed of Trust shall be binding upon
the parties and their respective heirs, administrators, legal representatives,
successors, and assigns and shall inure to the benefit of the Mortgagee and its
legal representatives, successors, and assigns. The terms used to designate any
of the parties herein shall be deemed to include the heirs, administrators,
legal representatives, successors, and assigns of such parties. The term
"Mortgagee" shall also include any lawful owner, holder, or pledgee of any
Indebtedness.

            7.7 Supplements. Without in any manner limiting the effect of
Section 1.4 or any other provisions of this Deed of Trust as to the binding
effect of this Deed of Trust on after-acquired rights of Mortgagor, it is
contemplated by the parties hereto that from time to time additional interests
and properties may or will be added to the interests and properties subject to
the Liens, rights, titles, and interests created by this Deed of Trust by means
of supplemental indentures identifying this Deed of Trust and describing such
interests and properties to be so added and included. Upon the execution of any
such supplemental indenture, the Liens, rights, titles, and interests created
herein shall immediately attach to and be effective with respect to any such
interests and properties so


                                       16
<PAGE>

described, the same as if such interests and properties had been specifically
described herein, and such interests and properties being included in the term
"Mortgaged Property," as used herein.

            7.8 Invalidity. In the event that any one or more of the provisions
contained in this Deed of Trust shall for any reason be held invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this Deed of Trust or
any other Loan Document.

            7.9 Construction. All titles or headings to Articles, Sections,
subsections, or other divisions of this Deed of Trust or the exhibits hereto are
only for the convenience of the parties and shall not be construed to have any
effect or meaning with respect to the other content of such Articles, Sections,
subsections, or other divisions, such other content being controlling as to the
agreement among the parties hereto. Article, Section, subsection, and Exhibit
references herein are to such Articles, Sections, subsections, and Exhibits of
this Deed of Trust unless otherwise specified. The words "hereby," "herein,"
"hereinabove," "hereinafter," "hereinbelow," "hereof," and "hereunder" when used
in this Deed of Trust shall refer to this Deed of Trust as a whole and not to
any particular Article, Section, subsection, or provision of this Deed of Trust.

            7.10 Fixtures, Minerals and Accounts. Without in any manner limiting
the generality of any of the foregoing hereof, some portions of the personal
Property described hereinabove are or are to become fixtures on the Lands. In
addition, the security interest created hereby under applicable provisions of
the UCC attaches to minerals, including oil and gas, and accounts resulting from
the sale thereof, at the wellhead or minehead located on the Lands.

            7.11 Financing Statement Filings. This Deed of Trust may be filed as
provided in Article 9 of the UCC to assure that the security interests granted
by this Deed of Trust are perfected. In this connection, this Deed of Trust may
be presented to a filing officer under the UCC to be filed in the real estate
records as a Financing Statement covering minerals and fixtures. Further,
Mortgagor authorizes Mortgagee to execute and file at any time and from time to
time any and all Financing Statements and amendments thereto in any UCC
jurisdiction, pursuant to Article 9 of the UCC, as Mortgagee deems necessary in
its sole discretion, in conjunction with this Deed of Trust, and Mortgagor
expressly authorizes execution and filing of such Financing Statements by
Mortgagee without need of signature or execution by Mortgagor.

            7.12 Addresses. For purposes of filing this Deed of Trust as a
financing statement, the addresses for Mortgagor, as the debtor, and Mortgagee,
as the secured party, are as set forth hereinabove.

            7.13 Counterparts. For the convenience of the parties, this Deed of
Trust may be executed in multiple counterparts, each of which for all purposes
shall be deemed, and may be enforced from time to time as, a chattel mortgage,
real estate mortgage, deed of trust, security agreement, assignment or contract,
or as one or more thereof. For recording purposes, various counterparts have
been executed, and there may be attached to each such counterpart an Exhibit A
containing only the description of the Mortgaged Property, or portions thereof,
which relates to the county or state in which the particular counterpart is to
be recorded. A complete, original


                                       17
<PAGE>

counterpart of this Deed of Trust with a complete Exhibit A may be obtained from
Mortgagee. Each of the counterparts hereof so executed shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

            7.14 No Waiver by Mortgagee. No course of dealing on the part of
Mortgagee, its officers or employees, nor any failure or delay by Mortgagee with
respect to exercising any of its rights or remedies hereunder shall operate as a
waiver thereof nor shall the exercise or partial exercise of any such right or
remedy shall preclude the exercise of any other right or remedy.

            7.15 Amendment of Prior Security Documents This Deed of Trust is
intended, in part, as an amendment and restatement of those security documents
described on Exhibit B hereto or which relate to security documents assigned to
Mortgagee pursuant to the documents described on Exhibit B hereto (collectively,
the "Prior Security Documents"), and the liens and security interests created by
the Prior Security Documents are preserved and carried forward hereby.

            7.16 Governing Agreement. This Deed of Trust is made pursuant and
subject to the terms and provisions of the Credit Agreement. In the event of a
conflict between the terms and provisions of this Deed of Trust and those of the
Credit Agreement, the terms and provisions of the Credit Agreement shall govern
and control. The inclusion in this Deed of Trust of provisions not addressed in
the Credit Agreement shall not be deemed a conflict, and all such additional
provisions contained herein shall be given full force and effect.

            7.17 Special Provisions Applicable to Mortgaged Property in
Oklahoma. The following special provisions shall apply to that portion of the
Mortgaged Property situated in the State of Oklahoma:

            (a) The foreclosure and other remedial provisions of this Deed of
      Trust are subject to the applicable provisions of Oklahoma law.

            (b) Upon the occurrence of an Event of Default, prior to enforcing
      the trust created hereby, notice shall be properly and duly posted as
      required by the laws of the State of Oklahoma, after which the Mortgaged
      Property may be sold at public auction for cash. Accordingly, Mortgagee,
      personally or by its agents or attorneys, shall have the right and power,
      with or without first taking possession, to declare the Indebtedness due
      and payable, and to sell, to the extent permitted by law, at one or more
      sales, as an entirety or in parcels, as it may elect, the Mortgaged
      Property and all of the Mortgagor's estate, right, title and interest,
      claim and demand therein and right of redemption thereof, all at such
      place or places and otherwise in such manner and upon such notice as may
      be required by Title 46 Okla. Stat. Sections 40-48 (Oklahoma Power of Sale
      Mortgage Foreclosure Act) or other applicable law, or, in the absence of
      any such requirement, as Mortgagee may deem appropriate, and to make such
      conveyance to the purchaser or purchasers. Mortgagee may postpone the sale
      of all or any portion of such Property by public announcement at the time
      and place of such sale, and from time to time thereafter may further
      postpone such sale by public announcement made at the time of sale fixed
      by the preceding postponement. The


                                       18
<PAGE>

      right of sale hereunder shall not be exhausted by one or any sale, and
      Mortgagee may make other successive sales until all of the Mortgaged
      Property is legally sold.

            (c) In lieu of or in addition to exercising any power of sale
      hereinabove given, Mortgagee (whether or not the notice provided for in
      Title 46 Okla. Stat. Section 44 has been given by Mortgagee, but after the
      time for cure therein provided if such notice has been given) may proceed
      by a suit or suits in equity or at law, whether for a foreclosure
      hereunder, or for the sale of the Mortgaged Property, or for the specific
      performance of any covenant or agreement herein contained or in aid of the
      execution of any power herein granted, or to enforce the payment of the
      Indebtedness in accordance with the terms hereof and of the notes,
      guaranties, or other documents evidencing it, or for the enforcement of
      any other appropriate legal or equitable remedy. Should Mortgagee elect
      judicial foreclosure of this Deed of Trust in lieu of exercising the power
      of sale hereinabove granted, the Indebtedness shall, at the election of
      Mortgagee, become immediately due and payable without notice. Appraisement
      of the Mortgaged Property is hereby waived, or not waived, at the option
      of Mortgagee, such option to be exercised at or prior to the time judgment
      is rendered in any judicial foreclosure hereof. In case of any sale by
      virtue of judicial proceedings, the Mortgaged Property may be sold in one
      parcel and as an entirety or in such parcels, manner or order as Mortgagee
      in its sole discretion may elect.

            (d) To the full extent that it may be lawfully so agreed, Mortgagor
      for itself and for all who may claim under Mortgagor agrees that it will
      not at any time insist upon, plead, claim, or take the benefit or
      advantage of any stay, extension, or redemption law now or hereafter in
      force, in order to prevent or hinder the enforcement of this Deed of Trust
      or the sale of the Mortgaged Property, or any part thereof, pursuant
      thereto or the possession thereof by any purchaser at any such sale, but
      Mortgagor, for itself and all who may claim under it, insofar as it now or
      hereafter lawfully may, hereby waives the benefit of all such laws.

            (e) The Trustee herein shall be deemed to be a mortgagee acting on
      behalf of Mortgagee. The power of sale herein granted shall apply only to
      the extent permitted by the laws of the State of Oklahoma.

            (f) A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST. A POWER
      OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT
      WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE
      MORTGAGOR UNDER THIS DEED OF TRUST.

            7.18 Special Provisions Applicable to Mortgaged Property in
Colorado. The following special provisions shall apply to that portion of the
Mortgaged Property located in the State of Colorado:


                                       19
<PAGE>

            (a) The foreclosure and other remedy provisions of this Deed of
      Trust are subject to the provisions of Colorado law, particularly 1973
      C.R.S. 38-37-101 et seq., as same may be amended or supplemented.

            (b) Any action taken with respect to Mortgaged Property located in
      the State of Colorado shall not require the signature of the Trustee for
      its effectiveness.

            (c) All words of grant and conveyance to the Trustee hereunder shall
      be construed as words of grant and conveyance unto and in favor of
      Mortgagee and the rights and authority granted to the Trustee hereunder
      may be enforced and asserted by Mortgagee in accordance with the laws of
      the State of Colorado and the same may be foreclosed at the option of
      Mortgagee as to any or all such portions of the Mortgaged Property in any
      manner permitted by the laws of the State of Colorado.

            (d) This Deed of Trust is granted and conveyed to secure the maximum
      amount of indebtedness of Mortgagor, which, at any time outstanding, shall
      not exceed $100,000,000.

            7.19 Special Provisions Applicable to Mortgaged Property in
Mississippi. The following special provisions shall apply to that portion of the
Mortgaged Property located in the State of Mississippi:

            (a) In the event any of the provisions of this Deed of Trust are
      contrary to the provisions of the laws of Mississippi, the provisions of
      this Deed of Trust are subject to the laws of Mississippi.

            (b) The non-judicial foreclosure and sale of any part of the
      Mortgaged Property located in the State of Mississippi shall be made at
      public outcry to the highest bidder for cash. Sale shall be made after
      having advertised for three consecutive weeks preceding the sale in a
      newspaper published in the county in which the Mortgaged Property is
      situated or, if none is so published, then in some newspaper having a
      general circulation therein, and by posting a notice for the same time at
      the courthouse of the same county. The Trustee may appoint or delegate any
      one or more Persons as agent to perform any act or acts necessary or
      incident to any sale held by the Trustee, including the posting of notices
      and the conduct of the sale, but in the name of and on behalf of the
      Trustee, his substitute or successor. Mortgagor waives the provisions of
      Section 89-1-55 of the Mississippi Code of 1972, as amended, insofar as
      this section restricts the right of the Trustee to offer at sale more than
      160 acres at a time; and the Trustee may, in his discretion, offer the
      Mortgaged Property as a whole or in such part or parts as he may deem
      desirable regardless of the manner in which it may be described. Any sale
      made by the Trustee hereunder may be adjourned by announcement at the time
      and place appointed for such sale without further notice except as may be
      required by law. If the Mortgaged Property is situated in two or more
      counties, or in two judicial districts of the same county, the Trustee
      shall have full power to select in which county or judicial district


                                       20
<PAGE>

      the sale of the Property is to be made, newspaper advertisement published
      and notice of sale posted, and the Trustee's selection shall be binding
      upon Mortgagor and Mortgagee. Any corporate officer of Mortgagee may
      declare Mortgagor to be in default and may request the Trustee to sell the
      Property.

            (c) The Trustee may not be a purchaser of the Mortgaged Properties.]

            7.20 Special Provision Applicable to Mortgaged Property in Montana.
The following special provision shall apply to that portion of the Mortgaged
Property located in the State of Montana:

            This Deed of Trust is granted and conveyed to secure the maximum
      amount of indebtedness of Mortgagor, which, at any time outstanding, shall
      not be in excess of $100,000,000.

            7.21 Special Provisions Applicable to Mortgaged Property in New
Mexico. The following special provisions shall apply to that portion of the
Mortgaged Property situated in the State of New Mexico:

            (a) All words of grant to the Trustee hereunder shall be construed
      as words creating a Lien in favor of Mortgagee on the Mortgaged Property
      situated in the State of New Mexico.

            (b) The redemption period under New Mexico law is hereby
      specifically shortened to one month in lieu of nine months.

            (c) This Deed of Trust is granted and conveyed to secure the maximum
      amount of indebtedness of Mortgagor, which, at any time outstanding, shall
      not be in excess of $100,000,000.

            7.22 Special Provisions Applicable to Mortgaged Property in North
Dakota. The following special provisions shall apply to that portion of the
Mortgaged Property located in the State of North Dakota:

            (a) The federal tax identification number for Mortgagor is
      84-0637348 and 13-2929065.

            (b) MORTGAGOR AGREES THAT THIS DEED OF TRUST CONSTITUTES A
      COLLATERAL REAL ESTATE MORTGAGE PURSUANT TO NORTH DAKOTA CENTURY CODE,
      CHAPTER 35-03.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       21
<PAGE>

            IN WITNESS WHEREOF, this Deed of Trust is executed on the date of
the acknowledgment below but effective as of the 19th day of December, 2002.

                                   MORTGAGOR AND BORROWERS (DEBTOR):

                                   PRIMEENERGY CORPORATION
                                   PRIMEENERGY MANAGEMENT CORPORATION
                                   PRIME OPERATING COMPANY,
                                   EASTERN OIL WELL SERVICE COMPANY
                                   SOUTHWEST OIL FIELD CONSTRUCTION COMPANY,
                                   each company represented by


                                   _____________________________________________
                                   Beverly A. Cummings
                                   Executive Vice President, Treasurer,
                                   and Chief Financial Officer of each of the
                                   companies listed above


                                       22
<PAGE>

STATE OF TEXAS                  Section
                                Section
COUNTY OF HARRIS                Section

      BEFORE ME, the undersigned authority, on this day personally appeared
BEVERLY A. CUMMINGS, Executive Vice President, Treasurer, and Chief Financial
Officer of each of PRIMEENERGY CORPORATION, a Delaware corporation, PRIMEENERGY
MANAGEMENT CORPORATION, a New York corporation, PRIME OPERATING COMPANY, a Texas
corporation, EASTERN OIL WELL SERVICE COMPANY, a West Virginia corporation, and
SOUTHWEST OILFIELD CONSTRUCTION COMPANY, an Oklahoma corporation, on behalf of
each of said corporations, known to me to be the person whose name is subscribed
to the foregoing instrument, and acknowledged to me that she executed the same
for the purposes and consideration therein expressed, as the act and deed of
each of such corporations, and in the capacity therein stated for each of said
corporations.

      GIVEN UNDER MY HAND AND SEAL OF OFFICE this 19th day of December, 2002.


                                     ___________________________________________
                                     NOTARY PUBLIC in and for the State of Texas


                                       23
<PAGE>

                                    EXHIBIT A
                                       TO
                  MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,
                FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION

            The designation "Working Interest" or "WI" when used in this Exhibit
means an interest owned in an oil, gas, and mineral lease that determines the
cost-bearing percentage of the owner of such interest. The designation "Net
Revenue Interest" or "NRI" means that portion of the production attributable to
the owner of a working interest after deduction for all royalty burdens,
overriding royalty burdens or other burdens on production, except severance,
production, and other similar taxes. The designation "Overriding Royalty
Interest" or "ORRI" means an interest in production which is free of any
obligation for the expense of exploration, development, and production, bearing
only its pro rata share of severance, production, and other similar taxes and,
in instances where the document creating the overriding royalty interest so
provides, costs associated with compression, dehydration, other treating or
processing, or transportation of production of oil, gas, or other minerals
relating to the marketing of such production. The designation "Royalty Interest"
or "RI" means an interest in production which results from an ownership in the
mineral fee estate or royalty estate in the relevant land and which is free of
any obligation for the expense of exploration, development, and production,
bearing only its pro rata share of severance, production, and other similar
taxes and, in instances where the document creating the royalty interest so
provides, costs associated with compression, dehydration, other treating or
processing or transportation of production of oil, gas, or other minerals
relating to the marketing of such production.

            Any reference in this Exhibit to wells or units is for warranty of
interest, administrative convenience, and identification and shall not limit or
restrict the right, title, interest, or properties covered by this Deed of
Trust. All right, title, and interest of Mortgagor in the properties described
herein are and shall be subject to this Deed of Trust, regardless of the
presence of any units or wells not described herein.

            The references to book or volume and page herein refer to the
recording location of each respective Mortgaged Property described herein in the
county where the land covered by the Mortgaged


                                       A-i
<PAGE>

                                    EXHIBIT A
                                       TO
                  MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,
                FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION

                         OIL, GAS AND MINERAL INTERESTS


                                      A-ii
<PAGE>

                  MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,
                FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION

          (THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS)

                                      FROM

                             PRIMEENERGY CORPORATION
                   Taxpayer Identification Number: 84-0637348
                                       and
                       PRIMEENERGY MANAGEMENT CORPORATION
                   Taxpayer Identification Number: 13-2929065
                             (Mortgagor and Debtor)

                                       TO

                         Arthur R. Gralla, Jr., Trustee
                               for the benefit of

                            GUARANTY BANK, FSB, Agent
                          (Mortgagee and Secured Party)

                           Effective December 19, 2002

For purposes of filing this Deed of Trust as a financing statement, the mailing
address of Mortgagor is One Landmark Square, Suite 1100, Stamford, Connecticut
06901-2605; the mailing address of Mortgagee is 333 Clay Street, Suite 4400,
Houston, Texas 77002-4103.

                          * * * * * * * * * * * * * * *

This instrument, prepared by R. H. Walls, Jackson Walker L.L.P., 1401 McKinney,
Suite 1900, Houston, Texas 77010, 713-752-4200, contains after-acquired property
provisions and covers future advances and proceeds to the fullest extent allowed
by applicable law.

ATTENTION OF RECORDING OFFICER: This instrument is a mortgage of both real and
personal property and is, among other things, a Security Agreement and Financing
Statement under the Uniform Commercial Code. This instrument creates a lien on
rights in or relating to lands of Mortgagor which are described in Exhibit A
hereto or in documents described in Exhibit A.

RECORDED DOCUMENT SHOULD BE RETURNED TO:

                              JACKSON WALKER L.L.P.
                            1401 McKinney, Suite 1900
                              Houston, Texas 77010
                            Attn.: Ms. Lorena Nichols