<PAGE>

                           PURCHASE AND SALE AGREEMENT


         This Purchase and Sale Agreement (this "Agreement") dated as of the 4th
day of August 2000, is between CASTLE OFFSHORE, L.L.C., a limited liability
company organized and existing under the laws of Louisiana ("CASTLE") and BWAB
LIMITED LIABILITY COMPANY, a limited liability company organized and existing
under the laws of Colorado ("BWAB") (collectively, the "Sellers") and DELTA
PETROLEUM CORPORATION, a corporation organized and existing under the laws of
Colorado ("Buyer"). Sellers and Buyer are referred to herein individually as a
"Party" and collectively as the "Parties."

         In consideration of the mutual promises contained herein, the benefits
to be derived by each Party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Sellers
agree as follows:


                                    ARTICLE 1
                                PURCHASE AND SALE

         1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Sellers agree to sell and convey and Buyer agrees to purchase and pay
for all of Sellers' right, title and interest in and to the Interests. The
Parties recognize that as between the Sellers, Castle owns and will sell and
convey seventy-five percent (75%) of the Interests and BWAB owns and will sell
and convey twenty-five percent (25%) of the Interests.

         1.2 Interests. All of the following shall be referred to in this
Agreement collectively as the "Interests" and individually as an "Interest":

             (a) The oil, gas and mineral leases described on Exhibit "A"
attached hereto (collectively, the "Leases"), including, without limitation,
working interests, overriding royalty interests, royalty interests and any other
interests of a similar nature affecting the lands covered by the Leases
(collectively, the "Lands").

             (b) The oil and gas wells described on Exhibit "A" (individually, a
"Well," and collectively, the "Wells"), together with all oil, natural gas,
casinghead gas, drip gasoline, natural gas liquids, condensate and other
minerals produced from such Wells.

             (c) All unitization, communitization, pooling, agreements, working
interest units created by operating agreements, partnership agreements and
orders covering the Leases and Lands, or any portion thereof, and the units and
pooled or communitized areas created thereby (collectively, the "Units").


                                       1

<PAGE>




             (d) The tangible personal property, tools, machinery, materials,
pipelines, plants, gathering systems, equipment, platforms and facilities,
fixtures and improvements, which are incident or attributable to or underlie the
Leases, Lands, Wells or Units with the production, transportation, treatment,
sale or disposal of hydrocarbons or water produced therefrom or attributable
thereto, (collectively, the "Equipment").

             (e) The licenses, permits, contracts, agreements and other
instruments owned by Sellers (other than bonds posted by Sellers) which concern
and relate to any of the Leases, Lands, Wells, Units and/or Equipment, INSOFAR
AND ONLY INSOFAR as same concern or relate to the Leases, Lands, Wells, Units
and/or Equipment, or the operation thereof; including, without limitation, oil,
gas and condensate purchase and sale contracts; permits; rights-of-way;
easements; licenses; servitudes; estates; surface leases; farmin and farmout
agreements; division orders and transfer orders; bottomhole agreements; dry hole
agreements; area-of-mutual interest agreements; salt water disposal agreements;
acreage contribution agreements; operating agreements; balancing agreements and
unit agreements; pooling agreements; pooling orders; communitization agreements;
processing, gathering, compression and transportation agreements; facilities or
equipment leases relating thereto or used or held for use in connection with the
ownership or operation thereof or with the production, treatment, sale or
disposal of hydrocarbons; and all other contracts and agreements related to the
Leases, Lands, Wells and/or Equipment.

             (f) Subject to Section 1.3 below, originals or copies of all
computer tapes and discs, files, records, information or data relating to the
Interests in the possession of Sellers, including, without limitation, title
records (including abstracts of title, title opinions, certificate of title and
title curative documents), accounting records and files, contracts,
correspondence, production records, electric logs, core data, pressure data,
decline curves, graphical production curves, drilling reports, well completion
reports, drill stem test charts and reports, regulatory reports, and all related
materials, INSOFAR AND ONLY INSOFAR as the foregoing items constitute materials
that may be lawfully conveyed to Buyer (i.e., the materials are not subject to a
proprietary agreement precluding their transfer to Buyer), and, to the extent
transferable, all other contract rights, intangible rights (excluding Sellers'
trademarks and service marks), inchoate rights, choses in action, rights under
warranties made by prior owners, manufacturers, vendors or other third parties,
and rights accruing under applicable statutes of limitation or prescription,
attributable to the Interests.

             (g) All payments, and all rights to receive payments, with respect
to the ownership of the production of hydrocarbons from or the conduct of
operations on the Interests accruing after the Effective Time.

         1.3 Reserved Interests. Notwithstanding any provision of this Agreement
to the contrary, Sellers reserve and retain (i) Sellers' corporate, financial,
tax and legal records and its other business records; (ii) cash, bank accounts,
letters of credit, travel letter accounts and prepaid insurance; (iii) the


                                       2

<PAGE>


management information systems and other intellectual property rights of Sellers
used by Sellers in the management and administration of its business; (iv) all
claims that Sellers may have under any policy of insurance, indemnity or bond
maintained by Sellers other than claims relating to property damage or casualty
loss affecting the Interests occurring between the Effective Time and Closing
(which claims shall be included in the Interests); (v) all accounts receivable,
trade credits or notes receivable accrued before the Effective Time; (vi) any
files or records that Sellers are contractually or otherwise obligated not to
disclose to Buyer; (vii) all claims and causes of action arising from acts,
omissions or events, or damage or destruction of property occurring prior to the
Effective Time; (viii) engineering studies or reserve reports relating to the
Interests; (ix) all interests and rights not included in the definition of the
Interests (the "Reserved Interests").

         1.4 Effective Time. The purchase and sale of the Interests shall be
effective as of July 1, 2000, at 7:00 a.m., central standard time (herein called
the "Effective Time").

         1.5 Ownership of the Interests. Subject to Section 13.1 and the other
provisions of this Agreement, should Closing occur, Sellers shall be entitled to
all of the rights of ownership (including, without limitation, the right to all
production, proceeds of production and other proceeds), and shall be subject to
the duties and obligations of such ownership attributable to the Interests for
the period of time prior to the Effective Time and Buyer shall be entitled to
all of the rights of ownership (including, without limitation, the right to all
production, proceeds of production and other proceeds) and shall be subject to
the duties and obligation of such ownership attributable to the Interests for
the period of time from and after the Effective Time. All expenses and costs,
including, without limitation, all ad valorem, property, production, severance,
and similar taxes and assessments based upon or measured by the ownership of the
Interests, the production of hydrocarbons, or the receipt of proceeds therefrom)
attributable to the Interests, shall be: (i) paid by or allocated to Sellers if
incurred or accruing with respect to operations conducted prior to the Effective
Time; or (ii) paid by or allocated to Buyer if incurred or accruing with respect
to operations conducted after the Effective Time. All hydrocarbons in storage
facilities above or upstream from the pipeline connection to each storage
facility, or downstream of delivery point sales meters on gas pipelines, as of
the Effective Time, shall belong to Sellers. All of the hydrocarbons placed in
such storage facilities or upstream of the aforesaid meters on pipelines after
the Effective Time shall belong to Buyer and shall become a part of the
Interests. In order to accomplish the foregoing allocation of production, the
parties shall rely upon the records maintained by the operator of the relevant
Interest, unless such records are demonstrated to be inaccurate.


                                       3
<PAGE>

         1.6 Risk of Loss. Buyer shall assume all risk of loss with respect to
the Interests from and after the Effective Time to Closing.

         1.7 Sellers' Agent. Castle shall act as agent on behalf of Sellers for
purposes of receiving payments of money or shares of Buyer's Common Stock under
this Agreement. Nothing herein shall limit the right of each Seller to make
individual elections as to alternative courses of action set forth in this
Agreement except as otherwise set forth in this Agreement and the Exhibits
thereto.






                                       4




<PAGE>


                                    ARTICLE 2
                                 PURCHASE PRICE

         2.1 Purchase Price. The purchase price for the Interests shall be
comprised of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) paid
by wire transfer or other immediately available funds (the "Money Payment") and
Five Hundred Eighty-Three Thousand Three Hundred Thirty-Three (583,333) shares
of Buyer's Common Stock (the "Stock Payment"). The Money Payment and the Stock
Payment shall collectively be herein called the "Purchase Price". At Closing,
the Purchase Price shall be adjusted as set forth in Section 2.3 below. In
connection with the issuance of the shares of Buyer's Common Stock pursuant to
this Section 2.1 as well as other Sections of this Agreement, Buyer and Sellers
have executed contemporaneously with this Agreement the Registration Rights
Agreement and the Investment Representation Agreements, both as defined in
Section 9.6 below.

         2.2 Earnest Money Deposits. Following Buyer's execution of this
Agreement, to assure Buyer's performance of its obligations under this
Agreement, Buyer shall deposit with Castle for the account of Castle, Three and
Seventy-Five One Hundredths Percent (3.75%) of the Money Payment, Sixty Five
Thousand Six Hundred Twenty-Five Dollars ($65,625), by wire transfer or other
immediately available funds (the "Money Deposit") plus an additional Three and
Seventy-Five One Hundredths Percent (3.75%) of the Stock Payment, Twenty One
Thousand Eight Hundred Seventy-Five (21,875) shares of Buyer's Common Stock
(the "Stock Deposit"). The Cash Deposit and the Stock Deposit being herein
collectively called the "Earnest Money Deposits". If Closing occurs, the Earnest
Money Deposits will be applied to the Adjusted Purchase Price. If Closing fails
to occur, the Earnest Money Deposits shall be handled in accordance with Section
12.2 hereof

         2.3 Adjustments to Purchase Price. At Closing, the Purchase Price shall
be adjusted as follows and the resulting amount shall be referred to herein as
the "Adjusted Purchase Price":

            (a) The Purchase Price shall be adjusted upward by the following:

                    i.   The amount of all actual operating or capital
                         expenditures or prepaid expenses attributable to the
                         Interests incurred by or on behalf of Sellers in
                         connection with the operation of the Interests and
                         which are, according to generally accepted accounting
                         principles, attributable to the period of time between
                         the Effective Time and September 30, 2000. Such
                         expenditures and expenses shall include, without
                         limitation, royalties, rentals and other charges; ad
                         valorem, property, excise, and any other taxes based
                         upon or measured by the ownership of the Interests, the
                         production of hydrocarbons or the receipt of proceeds
                         therefrom; and expenses payable to a third person under
                         applicable joint operating agreements, including,
                         without limitation, overhead charges at normal company
                         overhead labor rates and royalty disbursement fees
                         payable to operator, or similar



                                       5
<PAGE>


                         payments to third party operators, or, in the absence
                         of any joint operating agreement, those items
                         customarily billed under such an agreement.

                    ii.  The value, less taxes (other than taxes on net income),
                         of all hydrocarbons in storage facilities above or
                         upstream from the pipeline connection in each storage
                         facility, or downstream of delivery point, sales meters
                         on gas pipelines, as of the Effective Time, at the
                         prevailing market value at the time of sale in the
                         area, adjusted for grade and gravity.

                    iii. Any other amounts agreed upon by Sellers and Buyer.

            (b) The Purchase Price shall be adjusted downward by the following:

                    i.   The Earnest Money Deposits made to Castle;

                    ii.  Reductions due to Title Failures as provided in
                         Sections 10.7.

                    iii. For uncured Title Defects and Contested Defects
                         pursuant to Section 10.8

                    iv.  Reductions due to Environmental Defects as provided in
                         Section 11.3.

                    v.   The gross proceeds earned by Sellers, net of applicable
                         severance and production taxes and compression and
                         transportation charges, and derived from the sale of
                         hydrocarbons attributable to the Interests to the
                         extent owned by Buyer between the Effective Time and
                         September 30, 2000, pursuant to the provisions of
                         Section 1.5 above.

                    vi.  Reductions due to receipt by Sellers of denials to
                         consent and of exercises of preferential rights as
                         provided in Section 10.11.

                    vii. Any other amounts agreed upon by Sellers and Buyer.

            (c) Sellers shall pay all capital expenditures and expenses accruing
prior to the Closing Date referenced in Section 2.3(a)(i) above and shall
collect and receive all proceeds accruing prior to the Closing Date referenced
in Section 2.3(b)(v) above. Sellers shall be responsible for accounting for all
revenues earned and expenses incurred through September 30, 2000.


                                       6
<PAGE>

            (d) Upward and downward adjustments to the Purchase Price pursuant
to Section 2.3 shall be divided equally between the Money Payment and the Stock
Payment, on the basis of each share of Buyer's Stock being valued at Three
Dollars ($3.00) per share, rounded off to the nearest whole share.

         2.4 Purchase Price Allocation. The Purchase Price shall be allocated
among the Interests as set forth in Exhibit "B" attached hereto (the "Allocated
Values").

         2.5 Preliminary Settlement Statement. Sellers shall prepare and deliver
to Buyer at least five (5) "Business Days" (which term shall mean any day except
a Saturday, Sunday or other day on which commercial banks in Denver, Colorado
are required or authorized by law to be closed) prior to the Closing Date,
Sellers' estimate of the Adjusted Purchase Price to be paid at Closing, together
with a statement setting forth Sellers' estimate of the amount of each
adjustment to the Purchase Price to be made pursuant to Section 2.2 (the
"Preliminary Settlement Statement"). The parties shall negotiate in good faith
and attempt to agree on such estimated adjustments prior to Closing. In the
event any estimated adjustment amounts are not agreed upon prior to Closing, the
Adjusted Purchase Price for purposes of Closing shall be calculated based on
Sellers' and Buyer's agreed upon estimated adjustments and Sellers' good faith
estimation of any disputed amounts, which estimate shall be subject to
adjustment in the Final Settlement Statement pursuant to Section 9.1.

         2.6 Letter-of-Credit Note. In consideration for the Sellers' agreement
to maintain after the Closing Date the posting of certain letters-of-credit with
respect to the Interests, Buyer will deliver a promissory note (the
"Letter-of-Credit Note") in the amount of One Million Three Hundred Thousand
Dollars ($1,300,000) payable to Sellers on or before June 30, 2001, accruing
interest at the rate of eight per cent (8%) per annum, payable quarterly in
either cash or shares of the Common Stock of Buyer, at the option of Buyer, the
value of such stock being fixed at Four Dollars ($4.00) per share. The form of
the Letter-of-Credit Note is attached and made a part hereof as Exhibit E.
Should Buyer either repay in full the Letter-of-Credit Note or replace the
letters-of-credit pursuant to Section 9.5 on or before December 31, 2000,
Sellers shall return the Letter-of-Credit Note to Buyer, no interest shall be
due under the Letter-of-Credit Note and any interest previously paid thereon by
Buyer in either cash or stock shall be refunded by Sellers. Should Buyer fail to
either repay the Letter-of-Credit Note or replace the letters-of-credit pursuant
to Section 9.5 on or before June 30, 2001, Sellers shall have the option to
require payment of the One Million Three Hundred Thousand Dollars ($1,300,000)
principal balance of the Letter-of-Credit Note, either (a) by wire transfer or
other immediately available funds, or (b) Three Hundred Twenty Five Thousand
(325,000) shares of Buyer's Common Stock. If Buyer has not paid all accrued
interest on the Letter-of-Credit Note on or before June 30, 2001, Sellers shall
have the option to require payment of such accrued and unpaid interest either
(a) by wire transfer or other immediately available funds, or (b) shares of
Buyer's Common Stock valued at $4.00 per share, rounded to the nearest whole
share.


                                       7
<PAGE>

         2.7 Stock Penalty. If Closing fails to occur, Buyer shall issue to BWAB
Fourteen Thousand Five Hundred Eighty-Three (14,583) shares of the Common Stock
of Buyer (the "Stock Penalty") in accordance with Section 12.2 hereof.


                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of Castle. Castle represents and
warrants to Buyer the following:

             (a) Castle is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Louisiana. Castle
is duly qualified to carry on its business in the State or States in which the
Interests are located and in each State where failure to so qualify would have a
material adverse effect upon its business or the Interests.

             (b) Castle has all requisite power and authority to carry on its
business as presently conducted and to enter into this Agreement and to perform
its obligations hereunder.

             (c) The execution, delivery and performance of this Agreement and
the transactions contemplated herein have been duly and validly authorized by
Castle.

             (d) This Agreement has been duly executed and delivered on behalf
of Castle, and all documents and instruments required hereunder to be executed
and delivered by Castle at or prior to Closing shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of Castle enforceable in
accordance with their terms.

             (e) Castle has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.

         3.2 Representations and Warranties of BWAB. BWAB represents and
warrants to Buyer the following:

             (a) BWAB is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Colorado. BWAB is
duly qualified to carry on its business in the State or States in which the
Interests are located and in each State where failure to so qualify would have a
material adverse effect upon its business or the Interests.

             (b) BWAB has all requisite power and authority to carry on its
business as presently conducted and to enter into this Agreement and to perform
its obligations hereunder.


                                       8
<PAGE>

             (c) The execution, delivery and performance of this Agreement and
the transactions contemplated herein have been duly and validly authorize by
BWAB.

             (d) This Agreement has been duly executed and delivered on behalf
of BWAB, and all documents and instruments required hereunder to be executed and
delivered by BWAB at or prior to Closing shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of BWAB enforceable in
accordance with their terms.

             (e) BWAB has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.

         3.3 Representations and Warranties of Sellers. Each of Sellers
separately represents and warrants to Buyer the following:

             (a) There are no outstanding authorizations for expenditures
("AFEs") that (i) require the drilling of wells or other material development
operations in order to earn or to continue to hold all or any portion of the
Interests, or (ii) obligate Sellers to make payments of any amounts in
connection with drilling of wells or other material capital expenditures
affecting the Interests.

             (b) Sellers are not obligated to deliver hydrocarbons produced from
the Interests at some future time without then or thereafter receiving full
payment for the production attributable to Sellers' ownership in and to the
Interests by virtue of: (i) a prepayment arrangement under any contract for the
sale of hydrocarbons and containing a "take or pay," or similar provisions, (ii)
a production payment, or (iii) any other arrangement.

             (c) Except for those taxes and assessments for which a Purchase
Price adjustment is made under Section 2.3(b)(v), during the period of Sellers'
ownership of the Interests, Sellers have properly paid all ad valorem, property,
production, severance, excise and similar taxes and assessments based on or
measured by the ownership of property or the production of hydrocarbons or the
receipt of proceeds therefrom on the Interests that have become due and payable
before the Effective Time.

             (d) No suit, action, claim, or other proceeding is pending or, to
the best of Sellers' knowledge, threatened before any court, arbitration panel
or governmental agency which relates to the Interests and which might result in
a material loss of Sellers' title to any portion of the Interests, or a material
diminution of the value of any of the Interests, or that might materially hinder
or impede the operation of the Leases.

             (e) As used in this Agreement, the term, "Existing Documents" shall
mean all of the oil, gas and other mineral leases, assignments or other
instruments or agreements that comprise the Interests, and all contractually
binding arrangements to which the Interests may be subject and which will be
binding on the Interests or Buyer after Closing (including, without limitation,
oil, gas and other mineral leases, overriding royalty assignments, farm-out and
farm-in agreements, option agreements, forced pooling orders, assignments of
production payments, partnership agreements, unit agreements, unit operating
agreements, joint operating agreements, balancing agreements, unit operating
agreements, production contracts, processing contracts, gas sales contracts,


                                       9

<PAGE>


marketing and transportation contracts and division orders). To the best of
Sellers' knowledge, (i) all Existing Documents are in full force and effect and
are the valid and legally binding obligations of the parties thereto and are
enforceable in accordance with their respective terms (subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar laws); (ii)
Sellers are not in material breach or default with respect to any of its
obligations pursuant to any such Existing Documents; and (iii) all payments
(including, without limitation, royalties, delay rentals, shut-in royalties and
valid calls under unit or operating agreements) due thereunder have been timely
paid and Sellers have received no notice of default under any of the Existing
Documents.

             (f) To the best of Sellers' knowledge, all of the Equipment Sellers
operate has been maintained in a state of repair so as to be adequate for normal
operations.

             (g) To the best of Sellers' knowledge, all of the Wells that have
been drilled and completed have been so drilled and completed within the
boundaries and limits permitted by contract, pooling or unit agreement, and by
law; and all drilling, completion, and other operations on or affecting the
Leases have been conducted in compliance with all applicable laws, ordinances,
rules, regulations and permits, and judgments, orders and decrees of any court
or governmental body or agency. No Well is subject to penalties or allowables
after the date hereof because of any over-production or any other violation of
applicable laws, rules, regulations or permits or judgments, orders of decrees
of any court or governmental body or agency.

             (h) Except as set forth on Exhibit "C" attached hereto:

                  (i)    Sellers' operations and activities with respect to the
                         Interests comply in all respects with all applicable
                         governmental laws, including, without limitation,
                         health and safety statutes and regulations and all
                         Environmental Laws, including any provisions requiring
                         notice to government agencies under Environmental Laws.

                  (ii)   There is no civil, criminal or administrative action,
                         suit, demand, claim, hearing, notice of violation,
                         investigation, proceeding, notice or demand letter
                         ("Environmental Proceeding") known to Sellers pending
                         or, to the best of Sellers' knowledge, threatened
                         against Sellers or any of the Interests relating in any
                         way to the Environmental Laws.


                                       10

<PAGE>


                  (iii)  Neither Sellers nor, to the best of Sellers'
                         knowledge, any other person have released, placed,
                         stored, buried or dumped any Hazardous Substances, Oil,
                         Pollutants or Contaminants or any other wastes on,
                         beneath, or adjacent to the Leases, except for
                         inventories of such substances to be used in the
                         ordinary course of business of Sellers (which
                         inventories and wastes, if any, were and are stored or
                         disposed of in accordance with applicable laws and
                         regulations).

                  (iv)   To the best of Sellers' knowledge, Sellers have not
                         received any notice or order from any governmental or
                         other public agency advising it that Sellers are
                         responsible for or potentially responsible for Cleanup
                         or paying for the cost of Cleanup of any Hazardous
                         Substances, Oils, Pollutants, or Contaminants or any
                         other waste or substance affecting the Interests.
                         Sellers are not aware of any facts which might
                         reasonably give rise to any such notice or order.

                  (v)    The term "Cleanup" shall mean all actions required to:
                         (1) cleanup, remove, treat or remediate Hazardous
                         Substances, Oils, Pollutants or Contaminants; (2)
                         prevent the Release of Hazardous Substances, Oils,
                         Pollutants or Contaminants so that they do not migrate,
                         endanger or threaten to endanger public health or
                         welfare or the environment; (3) perform pre-remedial
                         studies and investigations and post-remedial monitoring
                         and care; or (4) respond to any government requests for
                         information or documents in any way relating to
                         cleanup, removal, treatment or remediation or potential
                         cleanup, removal, treatment or remediation of Hazardous
                         Substances, Oils, Pollutants or Contaminants in the
                         indoor or outdoor environment.

                  (vi)   The term "Environmental Laws" shall mean all foreign,
                         Federal, state and local laws, regulations, rules and
                         ordinances relating to polluting or protection of the
                         environment, including, without limitation, laws
                         relating to Releases or threatened Releases of
                         Hazardous Substances, Oil, Pollutants or Contaminants
                         into the indoor or outdoor environment (including,
                         without limitation, ambient air, surface water,
                         groundwater, land, surface and subsurface strata) or
                         otherwise relating to the manufacture, processing,
                         distribution, use, treatment, storage, Release,
                         transport or handling of Hazardous Substances, Oil,
                         Pollutants or Contaminants, and all laws and
                         regulations with regard to record keeping,
                         notification, disclosure and reporting requirements
                         respecting Hazardous Substances, Oils, Pollutants or
                         Contaminants.


                                       11
<PAGE>


                  (vii)  The term "Hazardous Substances, Oils, Pollutants or
                         Contaminants" shall mean all substances defined as such
                         in the National Oil and Hazardous Substances Pollution
                         Contingency Plan, or defined as such by, or regulated
                         as such under, any Environmental Law.

                  (viii) The term "Release" or "Releases" means any release,
                         spill, emission, discharge, leaking, pumping,
                         injection, deposit, disposal, discharge, dispersal,
                         leaching or migration into the indoor or outdoor
                         environmental (including, without limitation, ambient
                         air, surface water, groundwater, and surface or
                         subsurface strata) or into or out of any property,
                         including the movement of Hazardous Substances, Oils,
                         Pollutants or Contaminants through or in the air, soil,
                         surface water, groundwater or property.

         3.4 Representations and Warranties of Buyer. Buyer represents and
warrants to Sellers the following:

             (a) Buyer is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Pennsylvania. Buyer is or will be
prior to Closing duly qualified to conduct business in the State or States in
which the Interests are located.

             (b) Buyer has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, and to purchase
the Interests on the terms described in this Agreement and perform its other
obligations under this Agreement.

             (c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized.

             (d) This Agreement has been duly executed and delivered by or on
behalf of Buyer; all documents and instruments required hereunder to be executed
and delivered by Buyer at or prior to Closing shall have been duly executed and
delivered; and this Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of Buyer enforceable in
accordance with their terms.

             (e) Buyer has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Sellers shall have any responsibility
whatsoever.

             (f) All shares of the Common Stock of Buyer issued to Sellers
pursuant to this Agreement shall be duly authorized and when issued shall be
fully paid, non-assessable shares of the Common Stock of Buyer and shall carry
all of the same rights and privileges as all other issues of Buyer's Common
Stock.

                                       12
<PAGE>

             (g) Prior to Closing, Buyer will have inspected the Interests, the
public records and Sellers' files for all purposes, including, but not limited
to, detecting the presence and concentration of naturally-occurring radioactive
materials and satisfying itself as to the physical condition and environmental
condition of the Interests, both surface and subsurface. In entering into this
Agreement, Buyer has relied solely on the express representations and covenants
of Sellers in this Agreement, its independent investigation of, and judgment
with respect to, the Interests and the advice of its own legal, tax, economic,
environmental, engineering, geological and geophysical advisors, and not on any
comments or statements of any representatives of, or consultants or advisors
engaged by Sellers.

             (h) At Closing, Buyer will meet the bonding and other requirements
required by all governmental authorities in respect to the Interests (and
Sellers agree to provide Buyer, prior to Closing, with a list of such
requirements) and, after Closing, Buyer anticipates that it will continue to be
able to meet such bonding requirements. Buyer is, and after the Closing is
expected to continue to be, otherwise qualified to own the Interests. The
consummation of the transactions contemplated hereby will not cause Buyer to be
disqualified to be an owner of oil, gas, and mineral leases or to exceed any
acreage limitation imposed by law, statute, rule or regulation. Buyer is not
aware of any fact that could reasonably be expected to cause the appropriate
governmental authorities to fail to unconditionally approve the assignment of
the Interests to Buyer. Sellers will cooperate and will assist Buyer relating to
the preparation and presentation of documents relating to changes in ownership
and/or operatorship of the Interests.

             (i) Buyer is an experienced and knowledgeable investor and operator
in the oil and gas business. Buyer is acquiring the Interests for its own
account and not with a view to, or for offer of resale in connection with, a
distribution thereof, within the meaning of the Securities Act of 1933, as
amended, or any other rules, regulations, and laws pertaining to the
distribution of securities.

             (j) Buyer has arranged or will have arranged to have available by
the Closing Date sufficient funds to enable the payment to Sellers, by wire
transfer, of the Adjusted Purchase Price in accordance with Section 2.3 and to
otherwise perform Buyer's obligations under this Agreement.


                                    ARTICLE 4
                          CERTAIN AGREEMENTS OF SELLERS

         4.1 Agreements Between Execution of Agreement and Closing. During the
period between the execution of this Agreement and the Closing Date, Sellers
shall not, without the prior written consent of Buyer, (i) sell, convey, assign,
transfer or encumber any of the Interests; (ii) make or agree to make any
expenditure in excess of $25,000.00, net to Sellers' interest, except for


                                       13

<PAGE>


obligations under existing contracts, expenditures necessary to maintain the
Interests, or in the event of any emergency as to which Sellers have notified
Buyer; (iii) sell oil, gas or other minerals from the Interests except sales
made in the ordinary course of business; (iv) enter into any agreement amending,
modifying or terminating any of the Leases; or (v) take any other action with
respect to any of the Interests that would cause a material diminution in the
value thereof or that would materially and adversely affect the use and
enjoyment thereof.

         4.2 Access to Records. Following the execution of this Agreement by the
Parties, Sellers shall afford to Buyer and its authorized representatives,
during normal business hours, reasonable access to well and land files, title,
contract and legal materials and operating data and information in Sellers'
possession or to which it has access affecting the Interests.

         4.3 Notification of Additional Proceedings. Sellers shall promptly
notify Buyer of any new suits, actions, claims or other proceedings threatened
or pending before, or required to be filed with, any court, arbitrator or
governmental agency which relate to the Interests.

         4.4 Consents. Sellers shall use their best efforts to obtain any
consents necessary to transfer the Interests to Buyer.

         4.5 Letters-of-Credit. Subject to the provisions of Section 9.5,
Sellers will leave in place their letters-of-credit with respect to the
Interests until Buyer obtains replacement letters-of-credit.


                                    ARTICLE 5
                           CERTAIN AGREEMENTS OF BUYER

         5.1 Cooperation. Buyer shall cooperate with Sellers to assist Sellers
in carrying out the agreements of Sellers hereunder.


                                    ARTICLE 6
                          BUYER'S CONDITIONS TO CLOSING

         The obligations of Buyer to consummate the transactions provided for
herein are subject, at the option of Buyer, to the fulfillment on or prior to
Closing of each of the following conditions:

         6.1 Representations. The representations and warranties by Castle set
forth in Section 3.1, by BWAB set forth in Section 3.2 and by Sellers set forth
in Section 3.3 above shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date.


                                       14
<PAGE>

         6.2 Changes. There shall have been no material adverse change in the
physical condition of the Interests, except depletion through normal production
within authorized allowable and rates of production, depreciation of equipment
through ordinary wear and tear, and other transactions permitted under this
Agreement or approved in writing by Buyer.

         6.3 Performance. Sellers shall have timely performed and complied with
all agreements and covenants required by this Agreement.

         6.4 No Legal Proceedings. No suit, action or other proceeding shall be
pending or threatened before any court, arbitration panel or governmental agency
seeking to restrain, prohibit or declare illegal, or seeking substantial damages
in connection with the purchase and sale contemplated by this Agreement, or
which might result in a material loss of any portion of the Interests, a
material diminution in the value of any of the Interests, or materially
interfere with the use or enjoyment of the Interests, except (i) matters that
are disclosed on Exhibit "D" or (ii) any suit or proceeding affecting only a
portion of the Interests, which portion could be treated as subject to a Title
Defect in accordance with Article 10.

         6.5 Existing Documents. Buyer must be reasonably satisfied with the
terms and conditions of the Existing Documents.


                                    ARTICLE 7
                         SELLERS' CONDITIONS TO CLOSING

         The obligations of Sellers to consummate the transactions provided for
herein are subject, at the option of Sellers, to the fulfillment on or prior to
Closing of each of the following conditions:

         7.1 Representations. The representations and warranties by Buyer set
forth in Section 3.4 above shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date.

         7.2 Performance. Buyer shall have timely performed and complied in all
material respects with all agreements and covenants required by this Agreement.

         7.3 No Legal Proceedings. No suit or other proceeding shall be pending
before any court or governmental agency seeking to restrain prohibit or declare
illegal, or seeking substantial damages in connection with, the sale
contemplated by this Agreement, except (i) matters with respect to which Sellers
have been adequately indemnified by Buyer or (ii) any suit or other proceeding
affecting only a portion of the Interests, which portion could be treated as
subject to a Title Defect in accordance with Article 10.


                                       15
<PAGE>

                                    ARTICLE 8
                                     CLOSING

         8.1 Date of Closing. Subject to the conditions stated in this
Agreement, the purchase and sale of the Interests pursuant to this Agreement
(the "Closing") shall occur on or before September 30, 2000, at 10:00 a.m.,
Mountain Time, or on such other date and time as Buyer and Sellers may agree
(the "Closing Date").

         8.2 Place of Closing. The Closing shall be held at the offices of
Sellers as set forth hereinabove; provided, however, the Parties may agree to
close via facsimile or overnight mail.

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

                  (i)    Sellers shall execute and deliver: (1) an Assignment,
                         Bill of Sale and Conveyance in the form attached hereto
                         as Exhibit "D" (the "Assignment") (in sufficient
                         counterparts to facilitate recording) conveying the
                         Interests, subject to the Permitted Encumbrances; (2)
                         such other instruments as may be required to convey the
                         Interests to Buyer and otherwise effectuate the
                         transactions contemplated by this Agreement.

                  (ii)   Sellers and Buyer shall execute and deliver the
                         Preliminary Settlement Statement.

                  (iii)  Buyer shall deliver by direct bank or wire transfer to
                         Sellers or to Sellers' account (at such place as may be
                         designated by Sellers in a written notice, such notice
                         to be delivered to Buyer not less than two (2) Business
                         Days prior to the Closing) the Money Payment of the
                         Adjusted Purchase Price and shall deliver to Seller the
                         Stock Payment of the Adjusted Purchase Price.

                  (iv)   Sellers shall deliver on forms supplied by Buyer
                         transfer orders or letters in lieu thereof, directing
                         the operator or purchaser to make payment of proceeds
                         attributable to production from the Interests after the
                         Effective Time to Buyer.

                  (v)    Buyer shall execute and deliver to Sellers the
                         Letter-of-Credit Note.

         8.4 Records. In addition to the obligations set forth under Sections
4.2 and 8.3 above, within thirty (30) days after Closing, Sellers shall deliver
to Buyer all original well and land files in its possession or to which it has
access. Buyer shall be entitled to all original records affecting the Interests
assigned to Buyer pursuant to the terms of this Agreement. Sellers shall be
entitled to keep a copy of such records for its files. Buyer agrees to preserve
and maintain such records for at least five (5) years after the Closing Date and
to provide Sellers access to such records during normal business hours during
such period.

                                       16
<PAGE>

                                    ARTICLE 9
                              POST-CLOSING MATTERS

         9.1 Final Settlement Statement. As soon as practicable after the
Closing, but in no event later than ninety (90) days after Closing, Sellers
shall prepare and deliver to Buyer, in accordance with this Agreement and
generally accepted accounting principles, a statement ("Final Settlement
Statement") setting forth each adjustment (other than adjustments for Title
Defects) finally determined as of Closing and showing the calculation of such
adjustments. Within thirty (30) days after receipt of the Final Settlement
Statement, Buyer shall deliver to Sellers a written report containing any
changes that Buyer proposes be made in good faith to resolve any questions with
respect to the amounts due pursuant to such Final Settlement Statement no later
than one hundred twenty (120) days after the Closing.

         9.2 Unpaid Third Party Funds. At such time as Buyer and Sellers agree
on a Final Settlement Statement, Sellers will transfer to Buyer all funds held
by Sellers in suspense for a third party owner of royalty, overriding royalty,
working interests, mineral interest or other similar interests, attributable to
the Interests, and will deliver all records in Sellers' possession, including a
schedule of such funds listing the owners thereof, which may be used to
determine proper disbursement. Buyer shall thereafter be responsible for
determining the proper payment of such amounts and shall indemnify and hold
harmless Sellers from and against any and all cost, loss or expense of whatever
kind, including attorneys' fees, arising from or in connection with the claim or
any person, up to the amount listed on the schedule provided by Sellers with
respect thereto, with respect to the funds transferred to Buyer pursuant to this
Section 9.2.

         9.3 Further Assurances. After Closing, Sellers, and Buyer shall
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action as may be necessary or
advisable to carry out their obligations under this Agreement and under any
Exhibit, document, certificate or other instrument delivered pursuant hereto.

         9.4 Survival. All representations and warranties set forth in this
Agreement in Sections 3.1 (a) - (e), 3.2 (a) - (e), 3.3 (a) - (c) and 3.4 (a) -
(f) shall survive the Closing, but no other representations and warranties shall
survive the Closing.

         9.5 Letters-of-Credit.

         (a)   Subject to the provisions of this Section 9.5, Sellers will leave
               in place their letters-of-credit with respect to the Interests
               until Buyer obtains replacement letters-of-credit.

                                       17
<PAGE>


         (b)   Buyer will use its best efforts to obtain letters-of-credit to
               replace those posted by Sellers with respect to the Interests as
               soon as possible, but not later than June 30, 2001.

         (c)   If Sellers require payment from Buyer of the Letter-of-Credit
               Note on or after June 30, 2001, and Buyer pays the
               Letter-of-Credit Note, Sellers shall assign to Buyer Sellers' One
               Million Three Hundred Thousand Dollars ($1,300,000) certificates
               of deposit to secure Buyer's replacement letters-of-credit.

         (d)   If the beneficiaries of the posted letters-of-credit withhold
               their consent to accept the letters-of-credit obtained by Buyer
               in replacement for Sellers' posted letters-of-credit, Buyer
               instead will obtain letters-of-credit in favor of Sellers to
               support Sellers' posted letters-of-credit within twenty (20) days
               following notification by such beneficiaries withholding consent.

         9.6 Buyer's Stock. Buyer grants to Sellers piggyback registration
rights with respect to any shares of Buyer's Common Stock assigned to Sellers
pursuant to this Agreement. If Buyer does not cause such shares attributable to
the Stock Deposit, Stock Penalty or Stock Payment or to be registered on or
before December 31, 2000, Sellers are entitled to one demand registration of
such shares at Buyer's expense. If Sellers receive shares of Buyer's Common
Stock in payment for principal and/or interest due under the Letter-of-Credit
Note pursuant to Section 2.6, and Buyer does not cause such shares to be
registered on or before December 31, 2001, Sellers are entitled to one demand
registration of such shares at Buyer's expense. The provisions of Sellers'
registration rights are more specifically set forth in the Registration Rights
Agreement to be executed by the Parties attached hereto as Exhibit "F" and
incorporated herein (the "Registration Rights Agreement"). The representations
of the Sellers as to their suitability to receive shares of the Common Stock of
Buyer pursuant to this Agreement are more specifically set forth in the
Investment Representation Agreements to be executed by the Parties attached
together hereto as Exhibit "G" and incorporated herein (the "Investment
Representation Agreements")


                                   ARTICLE 10
                                  TITLE MATTERS

         10.1 Access to Title and Other Documents.

             (a) After the date hereof, Sellers will make available to Buyer and
to its representatives (such representatives to include employees, consultants,
independent contractors, attorneys and other advisors of Buyer) for Buyer's
copying and/or inspection (at Buyer's cost and expense), at Sellers' offices
during normal business hours the following documents in Sellers' possession or
under its control:

                                       18

<PAGE>

                  (i)    All abstracts of title, title opinions, title curative
                         materials, ownership reports, division orders, bills of
                         sale, other documents evidencing transfers of title,
                         tax receipts, and licenses and registrations pertaining
                         to the Interests.

                  (ii)   All of the lease records, lease files, leases,
                         conveyances and assignments of interest in the Leases;
                         unitization, unit, pooling and operating agreements;
                         division orders; contracts; transfer orders; orders of
                         the applicable regulatory authorities or administrative
                         agencies; mortgages, deeds of trust, security
                         agreements, and financing statements; and all other
                         contracts, agreements and documents affecting the
                         Interests.

                  (iii)  Instruments and documents concerning proper payment of
                         all general and special assessments, ad valorem and
                         property taxes, and production, severance and similar
                         taxes and assessments based on or measured by the
                         ownership of the Interests, the production of
                         hydrocarbons, or the receipt of proceeds therefrom for
                         1999 and years prior for which the applicable statute
                         of limitations has not expired.

                  (iv)   All geological maps, geophysical surveys, ownership
                         maps, seismic surveys, logs, core studies, and surveys
                         relating to the Interests.

                  (v)    All production records; transportation agreements;
                         contracts concerning the purchase of gas, oil,
                         casinghead gas, distillate, gas condensate or other
                         hydrocarbons; processing agreements; all correspondence
                         relating to the Interests; and data sheets relating to
                         the Interests and to bonuses, rentals and royalties
                         payable with respect thereto.

                  (vi)   All agreements relating to the purchase, sale,
                         processing, and transportation of production from the
                         Wells.

                  (vii)  All bonds, leases, permits, easements, licenses,
                         orders, saltwater disposal agreements, agreements with
                         pumpers and other agreements in any way relating to the
                         Interests or the operation thereof.

Reliance on such information shall be at the sole risk of the Buyer, and Sellers
make no guaranty or representation as to the accuracy or completeness of such
data, except as otherwise provided in this Agreement.

         Sellers shall authorize Buyer and its representatives to consult with
attorneys, abstract companies and other consultants or independent contractors
of Sellers (whether utilized in the past or present) concerning title related
matters. Reliance on such information of such third parties shall be at the sole
risk of the Buyer, and Sellers make no guaranty or representation as to the
accuracy or completeness of such data.

                                       19
<PAGE>


         10.2 No Warranty or Representation. At the Closing, Sellers shall
convey to Buyer all the Interests. Such conveyance shall be subject to the
Permitted Encumbrances and WITHOUT ANY WARRANTY OF TITLE, EITHER EXPRESS OR
IMPLIED, AND WHETHER BY COMMON LAW, STATUTE OR OTHERWISE, except for the
warranty of title as to persons claiming by, through and under Sellers contained
in the Assignment. Without limiting Buyer's right to reduce the Purchase Price
in the manner provided in this Article 10, Sellers make no warranty or
representation, express or implied, with respect to the accuracy or completeness
of any information. Records or data now, heretofore, or hereafter made available
to Buyer in connection with this Agreement, including, without limitation, any
description of the Interests, pricing assumptions, potential for production of
hydrocarbons from the Interests, or any other matters contained in any material
furnished by Sellers to Buyer or its officers, directors, employees, agents,
advisors or representatives.

         10.3 Disclaimer. ALL PERSONAL PROPERTY, MACHINERY, FIXTURES, EQUIPMENT
AND MATERIALS CONVEYED HEREBY ARE SOLD AND ASSIGNED AND ACCEPTED BY BUYER IN
THEIR "WHERE IS, AS IS" CONDITION, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED OR
STATUTORY, OF MARKETABILITY, QUALITY, CONDITION, MERCHANTABILITY AND/OR FITNESS
FOR A PARTICULAR PURPOSE OR USE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED.

         10.4 Permitted Encumbrances. As used in this Agreement, the term
"Permitted Encumbrances" shall mean the following, provided that the same shall
not operate to reduce the net revenue interest or increase the gross working
interest of an Interest beyond that shown on Exhibit "A":

             (a) Lessors' royalties, non-participating royalties, overriding
royalties, division orders, reversionary interests, and similar burdens.

             (b) Preferential rights to purchase and required third party
consents to assignments and similar agreements, with respect to which, prior to
Closing (i) waivers or consents are obtained from the appropriate parties, (ii)
the appropriate time period for asserting such rights has expired without an
exercise of such rights, or (iii) arrangements acceptable to Buyer can be made
by Buyer and Sellers to allow Buyer to receive substantially the same economic
benefits as if all such waivers and consents to assign have been obtained.

             (c) Liens for taxes or assessments not yet due or delinquent or, if
delinquent, that are being contested in good faith in the normal course of
business.

                                       20
<PAGE>

             (d) All rights to consent by, required notices to, filing with, or
other actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests therein, if the same are customarily obtained
subsequent to such sale or conveyance and neither Sellers nor Buyer has no
reason to believe they cannot be obtained.

             (e) Such Title Defects as Buyer may have waived in writing.

             (f) Rights reserved to or vested in any governmental authority.

             (g) Rights of a common owner of any Interest in rights-of-way or
easements currently held by Sellers and such common owner as tenants in common
or through common ownership.

             (h) Easements, conditions, covenants, restrictions, servitudes,
permits, rights-of-way, surface leases and other rights in the Interests for
the purpose of surface operations, roads, alleys, highways, railways, pipelines,
transmission lines, transportation lines, distribution lines, power lines,
telephone lines, and removal of timber, grazing, logging operations, canals,
ditches, reservoirs and other like purposes, or for the joint or common use of
real estate, rights-of-way, facilities and equipment which do not materially
impair the rights held by Buyer or the use and enjoyment of the Interests.

             (i) Defects, irregularities and deficiencies in title to any
rights-of-way, easements, surface lease or other rights which in the aggregate
do not materially impair the use of such right-of-way, easements, surface
leases or other rights for the purpose of which such rights will be held by
Buyer.

             (j) Zoning, planning and environmental laws and ordinances and
municipal regulations.

             (k) Vendors, carriers, warehousemen, repairmen, mechanics, workmen,
materialmen, construction or other like liens arising by operation of law in the
ordinary course of business or incident to the construction or improvement of
any property in respect of obligations which are not yet due, or which are being
contested in good faith by appropriate proceedings by or on behalf of Sellers.

             (l) Liens created under operating agreements in respect of
obligations that are not yet due or that are being contested in good faith by
appropriate proceedings by or on behalf of Sellers.

             (m) The terms and provisions of the Existing Documents.

                                       21
<PAGE>


         10.5 Good and Defensible Title. For the purposes of this Article 10,
the term "Good and Defensible Title" shall mean, with respect to each of the
Interests, that title of Sellers which, subject to and except for Permitted
Encumbrances:

             (a) Entitles Sellers, throughout the duration of the relevant
Interest, to receive from such Interest (free and clear of all royalties,
overriding royalties, non-participating royalties, net profits interests, or
other burdens on or measured by production of hydrocarbons) not less than the
interest shown as the net revenue interest on Exhibit "A" in all hydrocarbons
produced, saved and marketed from the Interest and of all hydrocarbons produced,
saved, and marketed from any unit of which the Interest is a part and which is
allocated to such Interest; all without reduction, suspension, or termination of
the Interest.

             (b) Obligates Sellers to bear the percentage of the costs and
expenses relating to the maintenance and development of, and operations relating
to, the Interest not greater than the gross working interest shown on Exhibit
"A" without increase throughout the duration of such Interest.

             (c) Is free and clear of liens, encumbrances and defects.

             (d) All irregularities of title that would not reasonably be
expected to result in claims that would materially and adversely affect Sellers'
title to an Interest shall not be considered a Title Defect, including but not
limited to (i) defects in the chain of title consisting of failure to recite
marital status or the omission of succession or heirship proceedings; (ii)
defects or irregularities arising out of prior oil and gas leases which, on
their face, expired more than three (3) years prior to the Effective Time, and
which have not been released of record; (iii) defects or irregularities arising
out of acknowledgments, questions of identity, trusts or trustees, executors and
personal representatives, and the manner in which they executed documents or
were identified thereon; (iv) defects or irregularities arising out of mortgages
or deeds of trust which, by their terms, matured more than six (6) years prior
to the Effective Time but which remain unreleased of record; (v) defects or
irregularities arising out of the lack of survey of specific land or lease
description; (vi) defects or irregularities arising out of the lack of recorded
powers of attorneys from corporations, banks, trusts or personal representatives
to execute and deliver documents on their behalf or on behalf of others; (vii)
defects or irregularities cured by possession under applicable statutes of
limitation and statutes relating to prescription.

         10.6 Notice of Title Defect. Except for Permitted Encumbrances, any
defect in title, lien, encumbrance, or defect that would cause Sellers' title to
any Interest not to be Good and Defensible Title shall be a title defect ("Title
Defect"). Not later than five (5) days before the Closing Date (the "Warranty
Claim Date"), Buyer must notify Sellers in writing of any matter that Buyer
considers to be a Title Defect ("Notice of Title Defect"), which notice shall
include, (i) a specific description of the matter Buyer asserts as a Title
Defect, (ii) a specific description of the Interest or the portion of the
Interest that is affected by the Title Defect, (iii) Buyer's calculation of the


                                       22

<PAGE>

amount ("Title Defect Amount") that the value of the Interest should be reduced
because of the Title Defect based on the Allocated Value shown on Exhibit "B,"
and (iv) appropriate supporting documentation.

         Notwithstanding anything to the contrary in this Agreement, the Buyer
shall be deemed to have waived any Title Defect which the Buyer has not
specifically asserted in its Notice of Title Defect presented before the
Warranty Claim Date.

         10.7 Title Failure. Any item that Sellers acknowledges is a Title
Defect but that Sellers are unwilling to cure shall be deemed a title failure
("Title Failure") and, subject to Section 10.9 below, the Purchase Price shall
be reduced for such Title Defect pursuant to Section 2.3 unless, in Sellers'
reasonable judgment, it is unlikely that material losses, costs, expenses and
liabilities will be experienced with respect to such Title Defect and Sellers
agree to indemnify Buyer with respect thereto.

         10.8 Defect Notice; Sellers' Opportunity to Cure. To the extent that
Sellers dispute that any item described in the Notice of Title Defect actually
constitutes a Title Defect or disputes the Title Defect Amount assigned by Buyer
to any such Title Defect ("Contested Defect"), Sellers shall deliver to Buyer a
notice so stating ("Defect Notice"). Subject to the provisions of 10.9 below,
the portion of the Purchase Price attributable to Title Defects which Sellers
are willing to cure but which are uncured at Closing, or which are not waived by
Buyer at Closing (including Contested Defects), shall be deposited into an
escrow account pursuant to an escrow agreement agreed to by the Parties and the
Assignment will be revised to delete all of that portion of the Interests
affected by such Title Defects (including Contested Defects). If Sellers fail to
cure a Title Defect within ninety (90) days after Closing, it shall be deemed a
Title Failure and the funds attributable to such Title Defect shall be released
from escrow to Buyer and the property on which such Title Defect exists shall
not be conveyed to Buyer.

         10.9 Title Purchase Price Adjustments. Notwithstanding any provision
hereof to the contrary, there shall be no reduction in the Purchase Price for
Title Failures and no escrow for Title Defects or Contested Defects unless and
until the aggregate amount of such Title Defects (including Title Failures and
Contested Defects) exceeds four percent (4%) of the Purchase Price and only for
the amount in excess of such amount.

         10.10 Termination Amount. Notwithstanding any provision hereof to the
contrary, in the event the aggregate adjustments for Title Defects pursuant to
this Article 10 and for Environmental Defects pursuant to Article 11 amount to
twenty percent (20%) or more of the Adjusted Purchase Price (the "Termination
Amount"), either Party shall have the option to terminate this Agreement,
without any liability, upon written notice to the other Party.

         10.11 Preferential Rights and Consents to Assign. Some Interests may be
subject to existing preferential rights to purchase the Interests or consents
may be required in order to assign the Interests. Sellers shall provide Buyer
with a list, and shall make a good faith effort to obtain consent and waivers of


                                       23

<PAGE>


any preferential rights which Sellers know must be obtained prior to Closing and
are not ordinarily obtained after Closing. Buyer shall notify Sellers of any
additional consent requirement or preferential right to purchase it discovers
prior to Closing. If a preferential right is exercised or a consent is denied
prior to Closing, the Purchase Price shall be adjusted downward in an amount
equal to the price paid to Sellers for the Interest with respect to which the
preferential right has been exercised or the consent has been denied and such
Interest shall be deleted from this Agreement. In the case of a preferential
right to purchase, Sellers shall be entitled to all proceeds paid by the third
party exercising its preferential right to purchase. If a third party
preferential purchase right burdening any Interest has not been exercised or
waived by Closing, Buyer shall pay for and accept an assignment covering such
Interest and, if the preferential right is exercised after Closing, Buyer shall
be entitled to all proceeds paid for such interest by the third party exercising
such preferential purchase right. Buyer shall be responsible for conveying title
to the Interest affected by said preferential right to the party exercising the
same and shall indemnify and hold Sellers harmless from and against any claim or
liability for Buyer's failure to make such conveyance.


                                   ARTICLE 11
                                  ENVIRONMENTAL

         11.1 Inspection; Indemnity. Buyer and its authorized representatives,
at Buyer's sole risk and expense, shall have the right to enter upon and inspect
the real and personal properties comprising the Interests, and to conduct such
well, environmental and other tests and assessments as Buyer shall deem
appropriate, subject to the approval of the operator in the case of non-operated
properties. Buyer shall repair any damages to the Interests resulting from its
inspection and shall defend and hold Sellers harmless from and against any and
all losses, damages, claims, obligations, liabilities, expenses (including court
costs and attorneys' fees) or causes of action directly resulting from Buyer's
inspection of the Interests.

         11.2 Environmental Assessment. As part of its inspection of the
Interests, Buyer and its authorized representatives shall have the right to
conduct soil and water tests and borings, and generally to conduct such tests,
examinations, investigations and studies as may be necessary or appropriate in
Buyer's sole judgment to make an environmental assessment of the Interests.
Buyer shall keep any data or information acquired through such examination and
the results of all analyses of such data and information strictly confidential
and shall not disclose the same to any person or agency without the prior
written approval of Sellers unless such disclosure is required by law. Buyer
shall take all steps necessary to ensure that Buyer's authorized representatives
comply with the provisions of this Article 11. If Buyer has discovered in its
environmental assessment circumstances which require remediation, control or
other response under environmental laws, rules or regulations then in effect (an
"Environmental Defect"), Buyer shall notify Sellers of such circumstances as
soon as practicable, but in no event less than ten (10) days prior to Closing.


                                       24
<PAGE>


         11.3 Environmental Defects If Buyer properly notifies Sellers of an
Environmental Defect related to an Interest, Buyer may (i) waive the
Environmental Defect and Close, or (ii) request Sellers to cure the
Environmental Defect. If Buyer asks Sellers to cure an Environmental Defect, and
if the aggregate amount of all such Environmental Defects exceeds four percent
(4%) of the Purchase Price, Sellers have the option (i) to cure the
Environmental Defect, or (ii) to exclude the Interest affected by the
Environmental Defect from this Agreement. If Sellers elect to cure the
Environmental Defect, but the cure has not been completed by Closing, the
Interest affected by the Environmental Defect shall not be conveyed to Buyer at
Closing, the Purchase Price shall be reduced by the amount allocated to such
Interest and such amount shall be deposited into the escrow account referred to
in Section 10.7. If the Environmental Defect is cured within ninety (90) days
after Closing, within five (5) days after the Environmental Defect is cured,
Sellers will convey to Buyer the Interest affected by the Environmental Defect
and the applicable amount shall be released from escrow to Sellers. If Sellers
elect to exclude the Interest affected by the Environmental Defect from this
Agreement, subject to Section 11.4 below, the Purchase Price will be reduced by
the allocated value of the Interest affected.

         11.4 Environmental Purchase Price Adjustment. Notwithstanding any
provision hereof to the contrary, there shall be no reduction in the Purchase
Price for uncured Environmental Defects unless, and only to the extent that, the
aggregate amount of such uncured Environmental Defects exceeds four percent (4%)
of the Purchase Price and then only for the amount in excess of such amount.









                                       25



<PAGE>




                                   ARTICLE 12
                        TERMINATION, DEFAULT AND REMEDIES

         12.1 Right of Termination. The Agreement and the transactions
contemplated herein may be terminated at any time at or prior to Closing:

         (i)   By Sellers, at Sellers' option, in the event any of the
               conditions set forth in Article 7 have not been satisfied as
               provided therein.

         (ii)  By Buyer, at Buyer's option, in the event any of the conditions
               set forth in Article 6 have not been satisfied as provided
               therein.

         (iii) By either Party in the event that the adjustments to the Purchase
               Price exceed the Termination Amount, as provided for in Section
               10.10.

         (iv)  At any time by the mutual written agreement of the Parties.

         12.2 Effect of Termination. In the event of the termination of this
Agreement by Sellers pursuant to Section 12.1 (i) hereof due to Buyer's failure
to meet a condition of Closing, Sellers may terminate this Agreement whereupon
Castle shall retain the Earnest Money Deposits and any accrued interest thereon
which shall be Castle's sole remedy, and whereupon Buyer shall issue to BWAB the
Stock Penalty which shall be BWAB's sole remedy; provided, however, that the
rights of Sellers set forth in the Registration Rights Agreements with respect
to registration of the shares of Buyer's Stock received by Sellers under the
Stock Deposit and the Stock Penalty, as well as the representations made by
Sellers in the Investment Representation Agreements, shall survive such
termination. In the event Buyer terminates this Agreement pursuant to Section
12.1 (ii) hereof due to Sellers' failure to meet a condition of Closing, Buyer
may pursue its rights and remedies against Sellers for Sellers' breach of this
Agreement and receive back the Earnest Money Deposits, with accrued interest. In
the event of the termination of this Agreement pursuant to either Section 12.1
(iii) or (iv) hereof, the termination shall be without penalty and the Parties
shall have no further obligations to, nor rights against, one another, except
that Sellers shall return the Earnest Money Deposits to Buyer, with accrued
interest.

         12.3 Dispute Resolution. If the Parties disagree as to the cause for
termination, they will first attempt to resolve such disagreement through a
meeting, to be held within ten (10) days of such termination, of senior
executives of each party, and if such meeting fails to resolve the matter,
through a neutral arbitrator appointed by such executives within thirty (30)
days of the date of such meeting.


                                       26
<PAGE>

         12.4 Return of Documentation. Upon termination of this Agreement, Buyer
shall return to Sellers all title, geological data, reports, contracts, and maps
and other information furnished by Sellers to Buyer and all copies thereof.


                                   ARTICLE 13
                            ASSUMPTION OF OBLIGATIONS

         13.1 Assumption of Obligations. At Closing, Buyer shall assume (a) the
obligation to (i) plug and abandon or remove and dispose of all Wells (whether
then producing or temporarily or permanently abandoned), platforms, structures,
flow lines, pipelines, and the other equipment now or hereafter located on the
Interests; (ii) cap and bury all flow lines and (iii) dispose of other pipelines
now or hereafter located on the Interests, and all other pollutants, wastes,
contaminants, or hazardous, extremely hazardous, or toxic materials, substances,
chemicals or wastes now or hereafter located on the Interests; (b) all
obligations and liabilities arising from or in connection with any gas
production, pipeline, storage, processing or other imbalance attributable to
substances produced from the Interests on or after the Effective Time; and (c)
all other costs, obligations and liabilities that relate to the Interests and,
in each case, arise from or relate to events occurring on or after the Effective
Time. All such plugging, replugging, abandonment, removal, disposal, and
restoration operations shall be in compliance with applicable laws and
regulations and contracts, and shall be conducted in a good and workmanlike
manner.


                                   ARTICLE 14
                                  MISCELLANEOUS

         14.1 Fees and Taxes. Except as otherwise specifically provided, all
fees, costs and expense incurred by Buyer or Sellers in negotiating this
Agreement or in consummating the transactions contemplated by this Agreement
shall be paid by the Party incurring the same, including, without limitation,
legal and accounting fees, costs and expenses. All required documentary, filing
and recording fees for the assignments, conveyance or other instruments required
to convey title to the Interests to Buyer shall be borne by Buyer. In addition,
the liability for any sales, use, transfer or similar tax associated with the
sale and/or transfer of the Interests shall be the liability of, and for the
account of, the Buyer and such liability shall not be subject to proration as
provided in Section 2.3.

         14.2 Notices. All notices and communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
made when actually delivered, including delivery by courier, facsimile,
telecopy, or other electronic medium, or if mailed by registered to certified
mail, postage prepaid, addressed as follows:



                                       27
<PAGE>


SELLERS:

CASTLE OFFSHORE, L.L.C.
One Radnor Corporate Center, Suite 250
100 Matsonford Road
Radnor, Pennsylvania  19087
Attn: Richard E. Staedtler
Chief Financial Officer
Telephone:  (610) 995-9400
Facsimile:  (610) 995-0409



BWAB LIMITED LIABILITY COMPANY
Suite 1390
475 Seventeenth Street
Denver, Colorado 80202
Attn: Steven A. Roitman
Manager
Telephone:  (303) 295-7444
Facsimile:  (303) 294-9878

BUYER:

DELTA PETROLEUM CORPORATION
555 17th Street, Suite 3310
Denver, Colorado 80202
Attn: Roger Parker
Chief Executive Officer
Telephone:  (303) 293-9133
Facsimile:  (303) 298-8251


         Either Party may, by written notice so delivered to the other, change
the address to which delivery shall thereafter be made.

         14.3 Amendments. This Agreement may not be amended except by an
instrument in writing signed by Buyer and Sellers.

         14.4 Preparation of Agreement. Both Sellers and Buyer and their
respective counsel participated in the preparation of this Agreement. In the
event of any ambiguity in this Agreement, no presumption shall arise based on
the identity of the draftsman of this Agreement.



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<PAGE>


         14.5 Headings. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.

         14.6 Counterparts. This Agreement may be executed by Buyer and Sellers
in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument.

         14.7 References. References made in this Agreement, including use of a
pronoun, shall be deemed to include, where applicable, masculine, feminine,
singular or plural, individuals or corporations. As used in this Agreement,
"person" shall mean any natural person, corporation, partnership, trust, estate
or other entity.

         14.8 Governing Law. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Colorado without giving effect to the conflicts of law rules thereof.
Any disputes concerning this Agreement or the subject matter hereof shall be
brought in a court of competent jurisdiction of the State of Colorado.

         14.9 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding between the Parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and prior
agreements and understanding relating to such subject matter.

         14.10 Assignment; Parties in Interest. Neither Party shall assign this
Agreement without the other Party's prior written consent; provided, however,
that this requirement shall not apply to a subsidiary or other affiliate of the
assigning Party so long as the assigning Party remains responsible for its
assignee's obligations hereunder. Subject to the foregoing, this Agreement shall
be binding upon, and shall inure to the benefit of, the Parties and their
respective successors and assigns.

         14.11 Further Cooperation. After the Closing, Buyer and Sellers shall
execute and deliver, or shall caused to be executed and delivered from time to
time, such further instruments of conveyance and transfer and shall take such
other action as any Party may reasonably request to convey and deliver the
Interests to Buyer, to accomplish the orderly transfer of the Interests to
Buyer, or to otherwise effectuate the transactions contemplated by this
Agreement. If either Party hereto receives monies belonging to the other, such
amount shall immediately be paid over to the proper Party. If an invoice or
other evidence of an obligation is received by a Party, which is partially an
obligation of both Sellers and Buyer, then the Parties shall consult with each
other and each shall promptly pay its portion of such obligation to the obligee.



                                       29

<PAGE>

         14.12. Press Release. Neither Party shall make any press release or
other announcement in connection with the execution of this Agreement or the
Closing without first consulting with the other Party. Following such
consultation and good faith attempt to make reasonable accommodations, either
Party may make any announcement or press release that it believes is either
required by applicable law or the rules of any stock exchange, or is advisable
in connection with such Party's obligation to provide public disclosure
regarding its activities. This provision shall not apply to any filing with any
governmental body or stock exchange required by law, rule or regulation.

         14.13 Subrogation. Buyer shall be subrogated to all rights, actions and
warranties that Sellers may have with respect to Sellers'
predecessors-in-interest as to the Interests.

         EXECUTED as of the date first above stated, but made effective as of
the Effective Time.

                                    SELLERS:

                                    CASTLE OFFSHORE, L.L.C.



                                    By  /s/ Richard E. Staedtler
                                        ----------------------------------------
                                            Richard E. Staedtler
                                            Chief Financial Officer

                                    BWAB LIMITED LIABILITY COMPANY



                                    By  /s/ Steven A. Roitman
                                        ----------------------------------------
                                            Steven A. Roitman
                                            Manager


                                    BUYER:

                                    DELTA PETROLEUM CORPORATION



                                    By  /s/ Aleron H. Larson, Jr.
                                        ----------------------------------------
                                            Aleron H. Larson, Jr.
                                            Chief Executive Officer/Chairman



                                       30