Unassociated Document


     

    Exhibit
      10.1


     

    BANC
      OF
      AMERICA SECURITIES LLC

    BANC
      OF
      AMERICA BRIDGE LLC

    BANK
      OF
      AMERICA, N.A.

    9
      West
      57th Street

    New
      York,
      New York 10019

    


    March
      13,
      2007

     

    Energy
      Partners Ltd.

    201
      St.
      Charles Avenue, Suite 3400

    New
      Orleans, Louisiana, 70170

    


     

    
      	
              Attention:

            	
              Mr.
                Timothy R. Woodall

            
	 	
              Executive
                Vice President and

            
	 	
              Chief
                Financial Officer

            


    

    


    Commitment
      Letter

    


    Ladies
      and
      Gentlemen:

     

    This
      Commitment Letter, when executed by you together with an amended and restated
      Fee Letter (as defined herein) and an amended and restated Engagement Letter
      (as
      defined herein), amends and restates the Commitment Letter dated March 11,
      2007.


     

    You
      have
      advised Bank of America, N.A. (“Bank
      of America”),
      Banc
      of America Bridge LLC (“Banc
      of America Bridge”)
      and
      Banc of America Securities LLC (“BAS”)
      that
      you intend to finance the purchase (the “8.75%
      Notes Repurchase”)
      of the
      Borrower’s 8.75% Senior Notes due 2010 (the “8.75%
       Senior
      Notes”)
      and the
      purchase (the “Common
      Stock Repurchase”
and
      together with the 8.75% Notes Repurchase, the “Offers”)
      by the
      Borrower of up to $200.0 million of its outstanding common stock (the
“Common
      Stock”)
      pursuant to a tender offer relating to the Common Stock Repurchase and a tender
      offer and consent solicitation relating to the 8.75% Notes Repurchase
      (collectively, the “Tender
      Offers and Consent Solicitation”),
      costs
      and expenses related to the Transaction (as hereinafter defined) and the ongoing
      working capital and other general corporate purposes after consummation of
      the
      Transaction from the following sources (and that no financing other than the
      financing described herein will be required in connection with the Transaction):
      (a) $300.0 million in a senior secured revolving credit facility (the
“Revolving
      Credit Facility”)
      of the
      Borrower (as defined in the Summaries of Terms referred to below) of which
      not
      more than $165.0 million may be drawn on the Closing Date of the Transaction,
      and (b) at least $450.0 million in gross proceeds from the issuance and sale
      by
      the Borrower of notes (the “Notes”)
      and/or
      convertible notes (the “Convertible
      Notes”)
      or
      alternatively, at least $450.0 million of senior unsecured bridge loans under
      a
      bridge facility (the “Bridge
      Facility”
and,
      together with the Revolving Credit Facility, the “Facilities”)
      made
      available to the Borrower as interim financing to the Permanent Securities
      referred to below (such senior unsecured loans being the “Bridge
      Loans”
and,
      together with any Rollover Loans and Exchange Notes (as defined in Exhibit
      B
      hereto), the “Bridge
      Financing”).
      The
      entering into and funding of the Revolving Credit Facility, the issuance and
      sale of the Notes and/or the Convertible Notes or the entering into and funding
      of the Bridge Facility and the Tender Offers and Consent Solicitation and all
      related transactions are hereinafter collectively referred to as the


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Transaction.”
The
      sources and uses for the financing for the Transaction are as set forth on
      Schedule I hereto.

     

    BAS
      has
      also delivered to you a separate engagement letter dated the date hereof (the
      “Engagement
      Letter”)
      setting
      forth, among other things, the terms on which BAS is willing to act, on an
      exclusive basis, as sole underwriter, sole initial purchaser, sole arranger
      and
      sole placement agent for (i) the Notes and/or the Convertible Notes or (ii)
      if
      the Bridge Facility is funded on the Closing Date (as hereinafter defined),
      the
      notes, the convertible notes or any other securities of the Borrower or any
      of
      its subsidiaries that may be issued after the Closing Date (the “Permanent
      Securities”)
      for the
      purpose of refinancing all or a portion of the outstanding amounts under the
      Bridge Facility (the “Permanent
      Financing”).

     

    In
      connection with the foregoing, (a) Bank of America is pleased to advise you
      of
      its commitment to provide the full principal amount of the Revolving Credit
      Facility and to act as the sole administrative agent (in such capacity, the
      “Administrative
      Agent”)
      for the
      Revolving Credit Facility, all upon and subject to the terms and conditions
      set
      forth in this letter and in the summaries of terms attached as Exhibit A and
      Exhibit C hereto and incorporated herein by this reference (collectively, the
      “Senior
      Financing Summary of Terms”),
      (b)
      BAS is pleased to advise you of its willingness, as the sole lead arranger
      and
      sole bookrunning manager (in such capacities, the “Senior
      Lead Arranger”)
      for the
      Revolving Credit Facility, to form a syndicate of financial institutions and
      institutional lenders (including Bank of America) (collectively, the
“Senior
      Lenders”)
      reasonably acceptable to you for the Revolving Credit Facility,
      including Bank of America (the “Initial
      Senior Lender”),
      (c)
      Banc of America Bridge is pleased to advise you of its commitment to provide
      the
      full principal amount of the Bridge Facility, all upon and subject to the terms
      and conditions set forth in this letter and in the summaries of terms attached
      as Exhibit B and Exhibit C hereto (collectively, the “Bridge
      Summary of Terms”
and,
      together with the Senior Financing Summary of Terms, the “Summaries
      of Terms”
and,
      together with this letter agreement, the “Commitment
      Letter”),
      and
      (d) BAS is also pleased to advise you of its willingness, as the sole lead
      arranger and sole bookrunning manager (in such capacity, the “Bridge
      Lead Arranger”;
      BAS
      acting in its capacity as Senior Lead Arranger and/or Bridge Lead Arranger
      is
      sometimes referred to herein as the “Lead
      Arranger”)
      for the
      Bridge Facility, to form a syndicate of financial institutions and institutional
      lenders (collectively, the “Bridge
      Lenders”
and,
      together with the Senior Lenders, the “Lenders”)
      for the
      Bridge Facility, including Banc of America Bridge (the “Initial
      Bridge Lender”;
      and
      together with the Initial Senior Lender, the “Initial
      Lenders”)).
      All
      capitalized terms used and not otherwise defined herein shall have the same
      meanings as specified therefor in the Summaries of Terms. If you accept this
      Commitment Letter as provided below in respect of the Revolving Credit Facility,
      the date of the initial funding under the Revolving Credit Facility, and/or
      if
      you accept this Commitment Letter as provided below in respect of the Bridge
      Facility, the date of the initial funding of the Bridge Facility or of the
      issuance and sale of the Notes and/or the Convertible Notes in lieu of funding
      the Bridge Facility, in each case, is referred to herein as the “Closing
      Date.”

     

    BAS
      intends to commence syndication of each of the Facilities promptly upon your
      acceptance of this Commitment Letter and the Fee Letter related to such
      Facility, and the commitment of Bank of America or Banc of America Bridge
      hereunder, as the case may be, related to such Facility shall be reduced
      dollar-for-dollar as and when corresponding commitments are received from Senior
      Lenders or Bridge Lenders, respectively. You agree to actively assist BAS in
      achieving a syndication of each such Facility that is satisfactory to BAS and
      you. Such assistance shall include (a) your providing and causing your advisors
      to provide Bank of America, Banc of America Bridge and BAS and the other Lenders
      upon request with all information reasonably deemed necessary by Bank of
      America, Banc of America Bridge and BAS to complete syndication, including,
      but
      not limited to, information and evaluations prepared by you, and your advisors,
      or on your behalf, relating to the Transaction, (b) your assistance in the
      preparation of an Information Memorandum to be used in connection with the
      syndication of each such Facility, (c) using your best efforts to ensure that
      the syndication efforts of BAS benefit materially from your existing


     


    
      
        
        

      

      
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    lending
      relationships and (d) otherwise assisting Bank of America, Banc of America
      Bridge and BAS in their syndication efforts, including by making your officers
      and advisors available from time to time to attend and make presentations
      regarding the business and prospects of the Borrower and its subsidiaries at
      one
      or more meetings of prospective Lenders. You hereby agree that the Information
      Memorandum to be used in connection with the syndication of each Facility shall
      be completed at least 22 days prior to the Closing Date (as hereinafter
      defined).

     

    It
      is
      understood and agreed that BAS will manage and control all aspects of the
      syndication of each Facility, including decisions as to the selection of
      prospective Lenders and any titles offered to proposed Lenders, when commitments
      will be accepted and the final allocations of the commitments among the Lenders.
      It is understood that no Lender participating in either Facility will receive
      compensation from you in order to obtain its commitment, except on the terms
      contained herein and in the Summaries of Terms. It is also understood and agreed
      that the amount and distribution of the fees among the Lenders will be at the
      sole and absolute discretion of Bank of America, Banc of America Bridge and
      BAS.

     

    You
      hereby
      represent, warrant and covenant that (a) all information, other than Projections
      (as defined below), that has been or is hereafter made available to Bank of
      America, Banc of America Bridge, BAS or the Lenders by you or any of your
      representatives (or on your or their behalf) in connection with any aspect
      of
      the Transaction (the “Information”)
      is and
      will be complete and correct in all material respects and does not and will
      not
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary to make the statements contained therein not misleading and (b) all
      financial projections concerning the Borrower and its subsidiaries that have
      been or are hereafter made available to Bank of America, Banc of America Bridge,
      BAS or the Lenders by you or any of your representatives (or on your or their
      behalf) (the “Projections”)
      have
      been or will be prepared in good faith based upon reasonable assumptions. You
      agree to furnish us with such Information and Projections as we may reasonably
      request and to supplement the Information and the Projections from time to
      time
      until the Closing Date so that the representation, warranty and covenant in
      the
      immediately preceding sentence is complete and correct on the Closing Date.
      In
      issuing the commitments hereunder and in arranging and syndicating the
      Facilities, Bank of America, Banc of America Bridge and BAS are and will be
      using and relying on the Information and the Projections without independent
      verification thereof. The Information and Projections provided to Bank of
      America, Banc of America Bridge and BAS prior to the date hereof are hereinafter
      referred to as the “Pre-Commitment
      Information.”

     

    You
      hereby
      acknowledge that (a) BAS, Banc of America Bridge and/or Bank of America will
      make available Information and Projections (collectively, “Borrower
      Materials”)
      to the
      proposed syndicates of Lenders by posting the Borrower Materials on IntraLinks
      or another similar electronic system (the “Platform”)
      and (b)
      certain of the proposed Lenders may have personnel that do not wish to receive
      material non-public information (within the meaning of the United States federal
      securities laws, “MNPI”)
      with
      respect to the Borrower, its affiliates or any other entity, or the securities
      of any of the foregoing, and who may be engaged in investment and other market
      related activities to such entities’ securities) (each, a “Public
      Lender”;
      all
      other Lenders “Private
      Lenders”).
      If
      requested, you will assist us in preparing an additional version of the Borrower
      Materials not containing MNPI (the “Public
      Borrower Materials”)
      to be
      distributed to prospective Public Lenders.

     

    Before
      distribution of any Borrower Materials (a) to prospective Private Lenders,
      you
      shall provide us with a customary letter authorizing the dissemination of the
      Borrower Materials and (b) to prospective Public Lenders, you shall provide
      us
      with a customary letter authorizing the dissemination of the Public Borrower
      Materials and confirming the absence of MNPI therefrom. In addition, at our
      request, you shall identify Public Borrower Materials by clearly and
      conspicuously marking the same as “PUBLIC”.

     


    
      
        
        

      

      
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    You
      agree
      that BAS, Bank of America and/or Banc of America Bridge on your behalf may
      distribute the following documents to all prospective Lenders, unless you advise
      BAS, Bank of America and Banc of America Bridge in writing (including by email)
      within a reasonable time prior to their intended distributions that such
      material should only be distributed to prospective Private Lenders: (a)
      administrative materials for prospective Lenders such as lender meeting
      invitations and funding and closing memoranda, (b) notifications of changes
      to
      the Facilities’ terms and (c) other materials intended for prospective Lenders
      after the initial distribution of the Borrower Materials, including drafts
      and
      final versions of definitive documents with respect to the Facilities. If you
      advise us that any of the foregoing items should be distributed only to Private
      Lenders, then BAS, Bank of America and Banc of America Bridge will not
      distribute such materials to Public Lenders without further discussions with
      you. You agree (whether or not any Information Materials are marked “PUBLIC”)
      that Borrower Materials made available to prospective Public Lenders in
      accordance with this Commitment Letter shall not contain MNPI.

     

    You
      agree
      to pay the fees set forth in the Fee Letter dated as of the date hereof (the
      “Fee
      Letter”).
      By
      executing this Commitment Letter, you agree to reimburse Bank of America, Banc
      of America Bridge and BAS from time to time on demand for all reasonable
      out-of-pocket fees and expenses (including, but not limited to, (a) the
      reasonable fees, disbursements and other charges of Shearman & Sterling LLP,
      as counsel to the Lead Arranger and the Administrative Agent, and of special
      and
      local counsel to the Lenders retained by the Lead Arranger or the Administrative
      Agent, and (b) all CUSIP fees for registration with the Standard & Poor’s
      CUSIP Service Bureau) incurred in connection with the Facilities, the
      syndication thereof, the preparation of the definitive documentation therefor
      and the other transactions contemplated hereby. In addition, if this Commitment
      Letter is accepted with respect to the Bridge Facility, out-of-pocket fees
      and
      expenses incurred by BAS in connection with the Notes and/or the Convertible
      Notes or the Permanent Securities will be reimbursed as provided in the
      Engagement Letter.

     

    You
      agree
      to indemnify and hold harmless Bank of America, Banc of America Bridge, BAS,
      each Lender and each of their affiliates and their respective officers,
      directors, employees, agents, advisors and other representatives (each an
“Indemnified
      Party”)
      from
      and against (and will reimburse each Indemnified Party as the same are incurred
      for) any and all claims, damages, losses, liabilities and expenses (including,
      without limitation, the reasonable fees, disbursements and other charges of
      counsel) that may be incurred by or asserted or awarded against any Indemnified
      Party, in each case arising out of or in connection with or by reason of
      (including, without limitation, in connection with any investigation, litigation
      or proceeding or preparation of a defense in connection therewith) (a) any
      aspect of the Transaction or any similar transaction and any of the other
      transactions contemplated thereby or (b) the Facilities and any other
      financings, or any use made or proposed to be made with the proceeds thereof,
      except to the extent such claim, damage, loss, liability or expense is found
      in
      a final, nonappealable judgment by a court of competent jurisdiction to have
      resulted from such Indemnified Party’s gross negligence or willful misconduct.
      In the case of an investigation, litigation or proceeding to which the indemnity
      in this paragraph applies, such indemnity shall be effective whether or not
      such
      investigation, litigation or proceeding is brought by you, your equityholders
      or
      creditors or an Indemnified Party, whether or not an Indemnified Party is
      otherwise a party thereto and whether or not any aspect of the Transaction
      is
      consummated. You also agree that no Indemnified Party shall have any liability
      (whether direct or indirect, in contract or tort or otherwise) to you or your
      subsidiaries or affiliates or to your or their respective equity holders or
      creditors arising out of, related to or in connection with any aspect of the
      Transaction, except to the extent of direct, as opposed to special, indirect,
      consequential or punitive, damages determined in a final non-appealable judgment
      by a court of competent jurisdiction to have resulted from such Indemnified
      Party’s gross negligence or willful misconduct. It is further agreed that Bank
      of America and Banc of America Bridge shall only have liability to you (as
      opposed to any other person), that Bank of America and Banc of America Bridge
      shall each be liable solely in respect of its own commitment to the Facilities
      on a several, and not joint, basis with any other Lender and that such


     


    
      
        
        

      

      
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    liability
      shall only arise to the extent damages have been caused by a breach of Bank
      of
      America’s or Banc of America Bridge’s obligations hereunder to negotiate in good
      faith definitive documentation for the Facilities on the terms set forth herein
      as determined in a final non-appealable judgment by a court of competent
      jurisdiction. Notwithstanding any other provision of this Commitment Letter,
      no
      Indemnified Party shall be liable for any damages arising from the use by others
      of information or other materials obtained through electronic telecommunications
      or other information transmission systems.

     

    The
      commitment of Bank of America in respect of the Revolving Credit Facility,
      the
      commitment of Banc of America Bridge in respect of the Bridge Facility and
      the
      undertaking of BAS to provide the services described herein are subject to
      the
      satisfaction of each of the conditions set forth in Exhibit C hereto and each
      of
      the following conditions precedent in a manner acceptable to the Lead Arranger:
      (a) in the case of the Revolving Credit Facility and the Bridge Facility,
      respectively, you shall have accepted the Fee Letter as provided therein for
      the
      Revolving Credit Facility, the Bridge Facility, or both Facilities, as the
      case
      may be; and you shall have paid all applicable fees and expenses (including
      the
      reasonable fees and disbursements of counsel) that
      are due
      thereunder; (b) in the case of the Bridge Facility, you shall have accepted
      the
      Engagement Letter; and thereafter the Engagement Letter shall remain in full
      force and effect; (c) the negotiation, execution and delivery of definitive
      documentation respect to each such Facility satisfactory to the Lead Arranger
      under such Facility; (d) prior to and during the syndication of the Facilities,
      there shall be no offering, placement or arrangement of any debt securities
      or
      bank financing by or on behalf of either of the Borrower or any of its
      affiliates (other than the Notes and/or the Convertible Notes); and (e) none
      of
      Bank of America, Banc of America Bridge or BAS becoming aware after the date
      hereof of any information, or any event, development or change that is
      inconsistent in a material and adverse manner with any information or other
      matter disclosed to us prior to the date hereof.

    


    This
      Commitment Letter, the Fee Letter and the Engagement Letter and the contents
      hereof and thereof are confidential and, except for the disclosure hereof or
      thereof on a confidential basis to your accountants, attorneys and other
      professional advisors retained by you in connection with the Transaction or
      as
      otherwise required by law, may not be disclosed in whole or in part to any
      person or entity without our prior written consent; provided,
      however,
      it is
      understood and agreed that you may disclose this Commitment Letter but not
      the
      Fee Letter or the Engagement Letter, after your acceptance of this Commitment
      Letter and the Fee Letter, in any required filings with the Securities and
      Exchange Commission and other applicable regulatory authorities and stock
      exchanges; provided
      you use
      your best efforts to redact any pricing information contained in such Fee Letter
      relating to the Transaction. Bank of America, Banc of America Bridge and BAS
      hereby notify you that, pursuant to the requirements of the USA Patriot Act,
      Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the
“Patriot
      Act”),
      each
      of them is required to obtain, verify and record information that identifies
      the
      Borrower and each Guarantor (as defined in the Summaries of Terms), which
      information includes names and addresses and other information that will allow
      Bank of America, Banc of America Bridge or BAS, as applicable, to identify
      the
      Borrower and each Guarantor in accordance with the Patriot Act.

     

    You
      acknowledge that Bank of America, Banc of America Bridge and BAS or their
      affiliates may be providing financing or other services to parties whose
      interests may conflict with yours. Bank of America, Banc of America Bridge
      and
      BAS agree that they will not furnish confidential information obtained from
      you
      to any of their other customers and that they will treat confidential
      information relating to you, and your affiliates with the same degree of care
      as
      they treat their own confidential information. Bank of America, Banc of America
      Bridge and BAS further advise you that they will not make available to you
      confidential information that they have obtained or may obtain from any other
      customer. In connection with the services and transactions contemplated hereby,
      you agree that Bank of America, Banc of America Bridge and BAS are permitted
      to
      access, use and share with any of their bank or non-bank affiliates, agents,
      advisors (legal or otherwise) or representatives any information concerning
      you,
      or any 

     


    
      
        
        

      

      
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    of
      your
      affiliates that is or may come into the possession of Bank of America, Banc
      of
      America Bridge, BAS or any of such affiliates.

     

    In
      connection with all aspects of each transaction contemplated by this Commitment
      Letter, you acknowledge and agree, and acknowledge your affiliates’
understanding, that: (a) (i) the Facilities and the Bridge Financing and any
      related arranging or other services described in this letter is an arm’s-length
      commercial transaction between you and your affiliates, on the one hand, and
      Bank of America, Banc of America Bridge and BAS, each Lender and any other
      lead
      arranger, on the other hand, and (ii) you are capable of evaluating and
      understanding and understand and accept the terms, risks and conditions of
      the
      transactions contemplated by this letter; (b) (i) in connection with each
      transaction contemplated hereby and the process leading to such transaction,
      Bank of America, Banc of America Bridge and BAS and any other lead arranger,
      each is and has been acting solely as a principal and, except as otherwise
      expressly agreed in writing by the relevant parties, has not been, is not and
      will not be acting as an advisor, agent or fiduciary, for you or any of your
      affiliates or any other person or entity; (iii) neither Bank of America, Banc
      of
      America Bridge nor BAS nor any other lead arranger has assumed or will assume
      an
      advisory or fiduciary responsibility in your or your affiliates’ favor with
      respect to any of the transactions contemplated hereby or the process leading
      thereto (irrespective of whether Bank of America, Banc of America Bridge or
      BAS
      or any other lead arranger has advised or is currently advising you or your
      affiliates on other matters) and neither Bank of America, Banc of America Bridge
      nor BAS nor any other lead arranger has any obligation to you or your affiliates
      with respect to the transactions contemplated hereby except those obligations
      expressly set forth in this Commitment Letter; (iv) Bank of America, Banc of
      America Bridge and BAS and any other lead arranger, and their respective
      affiliates may be engaged in a broad range of transactions that involve
      interests that differ from yours and your affiliates and Bank of America, Banc
      of America Bridge and BAS and any other lead arranger have no obligation to
      disclose any such interests to you or your affiliates; and (v) Bank of America,
      Banc of America Bridge and BAS and any other lead arranger have not provided
      any
      legal, accounting, regulatory or tax advice with respect to any of the
      transactions contemplated hereby and you have consulted your own legal,
      accounting, regulatory and tax advisors to the extent you have deemed
      appropriate. You hereby waive and release, to the fullest extent permitted
      by
      law, any claims that you may have against Bank of America, Banc of America
      Bridge and BAS and any other lead arranger with respect to any breach or alleged
      breach of agency or fiduciary duty in connection with any aspect of any
      transaction contemplated by this Commitment Letter.

     

    The
      provisions of the immediately preceding five paragraphs shall remain in full
      force and effect regardless of whether any definitive documentation for the
      Facilities shall be executed and delivered, and notwithstanding the termination
      of this Commitment Letter or any commitment or undertaking of Bank of America,
      Banc of America Bridge or BAS hereunder; provided,
      however,
      that you
      shall be deemed released of your reimbursement and indemnification obligations
      hereunder with respect to (i) the Revolving Credit Facility, if you have
      accepted the commitments hereunder in respect of the Revolving Credit Facility,
      upon the execution and delivery of all definitive documentation for the
      Revolving Credit Facility and the initial extension of credit thereunder and
      (ii) the Bridge Facility if you have accepted the commitments hereunder in
      respect of the Bridge Facility, upon the execution and delivery of all
      definitive documentation for the Bridge Facility and the advance of the Bridge
      Loans thereunder or the execution and delivery of all definitive documentation
      for the Notes and/or the Convertible Notes and the issuance and sale thereof
      on
      the Closing Date.

     

    This
      Commitment Letter and the Fee Letter may be executed in multiple counterparts
      and by different parties hereto in separate counterparts, all of which, taken
      together, shall constitute an original. Delivery of an executed counterpart
      of a
      signature page to this Commitment Letter or the Fee Letter by telecopier or
      facsimile shall be effective as delivery of a manually executed counterpart
      thereof.

     


    
      
        
        

      

      
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    This
      Commitment Letter and the Fee Letter shall be governed by, and construed in
      accordance with, the laws of the State of New York. Each of you, Bank of
      America, Banc of America Bridge and BAS hereby irrevocably waives any and all
      right to trial by jury in any action, proceeding or counterclaim (whether based
      on contract, tort or otherwise) arising out of or relating to this Commitment
      Letter, the Fee Letter, the Transaction and the other transactions contemplated
      hereby and thereby or the actions of Bank of America, Banc of America Bridge
      and
      BAS in the negotiation, performance or enforcement hereof. Each of you, Bank
      of
      America, Banc of America Bridge
      and BAS
      hereby irrevocably submits to the jurisdiction of any New York State court
      or
      Federal court sitting in the Borough of Manhattan in New York City in respect
      of
      any suit, action or proceeding arising out of or relating to the provisions
      of
      this Commitment Letter (including, without limitation, the Summaries of Terms),
      the Fee Letter, the Transaction and the other transactions contemplated hereby
      and thereby and irrevocably agrees that all claims in respect of any such suit,
      action or proceeding may be heard and determined in any such court. Each of
      you,
      Bank of America, Banc of America Bridge and BAS waives, to the fullest extent
      permitted by applicable law, any objection that it may now or hereafter have
      to
      the laying of the venue of any such suit, action or proceedings brought in
      any
      such court, and any claim that any such suit, action or proceeding brought
      in
      any such court has been brought in an inconvenient forum.

     

    This
      Commitment Letter and the Fee Letter (and, if this Commitment Letter is accepted
      with respect to the Bridge Facility, the Engagement Letter) embody the entire
      agreement and understanding among Bank of America, Banc of America Bridge,
      BAS,
      you and your and its affiliates with respect to the Facilities and supersede
      all
      prior agreements and understandings relating to the subject matter hereof.
      However, please note that the terms and conditions of the commitments of Bank
      of
      America and Banc of America Bridge and the undertaking of BAS hereunder are
      not
      limited to those set forth herein, in the Summaries of Terms or the Fee Letter.
      Those matters that are not covered or made clear herein, in the Summaries of
      Terms or the Fee Letter are subject to mutual agreement of the parties. No
      party
      has been authorized by Bank of America, Banc of America Bridge or BAS to make
      any oral or written statements that are inconsistent with this Commitment
      Letter.

     

    This
      Commitment Letter is not assignable by you without our prior written consent
      and
      is intended to be solely for the benefit of the parties hereto and the
      Indemnified Parties.

     

    All
      commitments and undertakings of Bank of America and BAS hereunder with respect
      to the Revolving Credit Facility will expire at 5:00 p.m. (New York City time)
      on March 14, 2007 unless you execute this Commitment Letter and the Fee Letter
      and return them to us prior to that time. All commitments and undertakings
      of
      Banc of America Bridge and BAS hereunder with respect to the Bridge Facility
      will also expire at that time unless you execute this Commitment Letter, the
      Fee
      Letter and the Engagement Letter, and return them to us prior to that time.
      Thereafter, all accepted commitments and undertakings of Bank of America, Banc
      of America Bridge and BAS hereunder will expire on May 30, 2007. Unless the
      Closing Date occurs on or prior to such date the commitments and undertakings
      of
      Bank of America, Banc of America Bridge and BAS may be terminated by us if
      you
      fail to perform your obligations under this Commitment Letter or the Fee Letter
      or, if this Commitment Letter is accepted with respect to the Bridge Facility,
      the Engagement Letter on a timely basis. In consideration of the time and
      resources that BAS and Bank of America will devote to the Revolving Credit
      Facility, you agree that, until such expiration, you will not solicit, initiate,
      entertain or permit, or enter into any discussions in respect of, any offering,
      placement or arrangement of any competing senior credit facilities for the
      Borrower and its subsidiaries with respect to the matters addressed in this
      letter.

     

    BY
      SIGNING
      THIS COMMITMENT LETTER, EACH OF THE PARTIES HERETO HEREBY ACKNOWLEDGES AND
      AGREES THAT (A) BANK OF AMERICA IS OFFERING TO PROVIDE THE REVOLVING CREDIT
      FACILITY SEPARATE AND APART FROM BANC OF AMERICA BRIDGE’S OFFER TO PROVIDE THE
      BRIDGE FACILITY AND (B) BANC OF AMERICA BRIDGE 

     


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    IS
      OFFERING TO PROVIDE THE BRIDGE FACILITY SEPARATE AND APART FROM THE OFFER BY
      BANK OF AMERICA TO PROVIDE THE REVOLVING CREDIT FACILITY. YOU MAY, AT YOUR
      OPTION, ELECT TO ACCEPT THIS COMMITMENT LETTER (AND THE APPLICABLE PROVISIONS
      OF
      THE FEE LETTER) WITH RESPECT TO EITHER THE REVOLVING CREDIT FACILITY OR THE
      BRIDGE FACILITY OR BOTH.

     

    [THE
      BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    We
      are
      pleased to have the opportunity to work with you in connection with this
      important financing.

     

    Very
      truly
      yours,

     

    BANK
      OF AMERICA, N.A.

    


    By 
      /s/
      Scott Mackey        

          
      Name:  Scott
      Mackey     

          
      Title:    Vice
      President     

    


    


    BANC
      OF AMERICA BRIDGE LLC

    


    By: 
      /s/
      Lex
      Maultsby        

            Name:
      Lex
      Maultsby        

           
      Title: Managing
      Director      

    


    


    BANC
      OF AMERICA SECURITIES LLC

    


    By:
      /s/
      Lex
      Maultsby        

    


           Name: 
      Lex
      Maultsby        

          
      Title:    Managing
      Director      

    


    


    


    ENERGY
      PARTNERS LTD

    


    By:    
      /s/
      Timothy R. Woodall        

              
      Name:  Timothy
      R. Woodall        

              
      Title:    Executive
      Vice President & Chief

                  
               Financial
      Officer

     

    


     

    


     


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    



    Schedule
      I

     

    


     

    SOURCES
      AND USES OF FUNDS

    


    ($
      millions)

     

    


    
      	
              Sources

            	 	 	 	
              Uses

            	 	 	 
	
              Revolving
                Credit Facility

            	 	 	
              120.0

            	 	 	
              Share
                Repurchase

            	 	 	
              200.0

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Notes
                and/or the Convertible Notes

            	 	 	
              450.0

            	 	 	
              RefinancingRevolving
                Credit Facility

            	 	 	
              200.0

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
               

            	 	 	 	 	 	
              Refinance
                Senior Notes 

            	 	 	
              150.0

            	 
	
               

            	 	 	 	 	 	
              Estimated
                fees and expenses, including tender offer premium 

            	 	 	
              20.0

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Total
                Sources

            	 	
              $

            	
              570.0

            	 	 	
              Total
                Uses

            	 	
              $

            	
              570.0

            	 


    

    


    


    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    EXHIBIT
      A

     

    


     

    $300
      MILLION SENIOR SECURED REVOLVING CREDIT FACILITY

    Summary
      of Terms and Conditions

    


    Capitalized
      terms not otherwise defined herein have the same meanings as

    specified
      therefor in the Commitment Letter to which this Exhibit A is
      attached

     

    
      	
              Borrower:

            	
              Energy
                Partners Ltd. a Delaware corporation (the “Borrower”).
                

            
	 	 
	
              Guarantors:

            	
              The
                obligations of the Borrower and its subsidiaries under the Senior
                Credit
                Facility will be guaranteed by each existing and future direct and
                indirect subsidiary of the Borrower, other than any subsidiary that
                is a
                “controlled foreign corporation” (a “CFC”)
                under Section 957 of the Internal Revenue Code to the extent such
                guarantee would result in a material tax liability. All guarantees
                will be
                guarantees of payment and not of collection.

            
	 	 
	
              Administrative
                and

            	 
	
              Collateral
                Agent:

            	
              Bank
                of America, N.A. (“Bank
                of America”)
                will act as sole and exclusive administrative and collateral agent
                (the
                “Administrative
                Agent”).

            
	 	 
	
              Sole
                Lead Arranger and

            	 
	
              Sole
                Bookrunning

            	 
	
               Manager:

            	
              Banc
                of America Securities LLC (“BAS”)
                will act as sole and exclusive lead arranger and sole and exclusive
                bookrunning manager (the “Senior
                Lead Arranger”).

            
	 	 
	
              Senior
                Lenders:

            	
              Bank
                of America and other banks, financial institutions and institutional
                lenders acceptable to the Lead Arranger.

            
	 	 
	
              Senior
                Credit

            	 
	
              Facility:

            	
              A
                $300 million revolving credit facility (the “Revolving
                Credit Facility”),
                available from time to time until the fourth anniversary of the Closing
                Date, which will include a sublimit to be determined for the issuance
                of
                standby letters of credit (each a “Letter
                of Credit”).
                Letters of Credit will be initially issued by Bank of America (in
                such
                capacity, the “Fronting
                Bank”),
                and each of the Senior Lenders under the Revolving Credit Facility
                will
                purchase an irrevocable and unconditional participation in each Letter
                of
                Credit. 

            
	 	 
	
              Purpose:

            	
              The
                proceeds of the Revolving Credit Facility shall be used to (i) finance
                in
                part the Transaction; (ii) refinance certain existing indebtedness
                of the
                Company and its subsidiaries; (iii) pay fees and expenses incurred
                in
                connection with the Transaction; and (iv) provide ongoing working
                capital
                and for other general corporate purposes of the Borrower and its
                subsidiaries.

            


    


    
      
        
        

      

      
        Exhibit
          A-1

        
          

        

      

      
        
        

      

    


    


    
      	
              Closing
                Date:

            	
              The
                date of the initial extension of credit under the Revolving Credit
                Facility shall occur on or before a mutually agreeable date to be
                determined (the “Closing
                Date”).

            
	 	 
	
              Interest
                rates and

            	 
	
              Commitment
                Fees:

            	
              The
                Borrower will pay a fee (the “Commitment
                Fee”),
                determined in accordance with the Performance Pricing grid set forth
                below, on the unused portion of each Senior Lender’s commitments under the
                Revolving Credit Facility. The Commitment Fee is payable quarterly
                in
                arrears commencing upon the Closing Date.

            
	 	 
	
              Letters
                of

            	 
	
              Credit
                Fees:

            	
              The
                Borrower will pay a fee (the “Letter
                of Credit Fee”),
                determined in accordance with the Performance Pricing grid set forth
                below, on the maximum amount available to be drawn under each Letter
                of
                Credit that is issued and outstanding. The Letter of Credit Fee is
                payable
                quarterly in arrears, commencing on the Closing Date, and will be
                shared
                proportionately by the Senior Lenders.

            
	 	 
	
              Interest
                Rates:

            	
              At
                the Borrower’s
                option, any loan under the Revolving Credit Facility that is made
                to it
                will bear interest at a rate equal to the Applicable Margin, as determined
                in accordance with the Performance Pricing grid set forth below,
                plus one
                of the following indices: (i) LIBOR and (ii) for dollar-denominated
                loans
                only, the Base Rate (to be defined as the higher of (a) the Bank
                of
                America prime rate and (b) the federal funds rate plus 0.50%); provided,
                in each case, that if during the 180-day period following the Closing
                Date, any breakage costs, charges or fees are incurred on account
                of the
                syndication of the Revolving Credit Facility, the Borrower shall
                immediately reimburse the Administrative Agent for any such costs,
                charges
                or fees. Such right of reimbursement shall be in addition to and
                not in
                limitation of customary cost and yield protections.

            
	 	 
	 	
              The
                Borrower may select interest periods of 1, 2, 3 or 6 months for LIBOR
                loans, subject to availability. Interest shall be payable at the
                end of
                the selected interest period, but no less frequently than
                quarterly.

            
	 	 
	 	
              A
                default rate shall apply on all obligations in the event of default
                under
                the Revolving Credit Facility at a rate per annum of 2% above the
                applicable interest rate.

            
	 	 
	
              Performance

            	 
	
              Pricing:

            	
              The
                Commitment Fee, Applicable Margin and Letter of Credit Fee for the
                Revolving Credit Facility, for any fiscal quarter, shall be the applicable
                rate per annum set forth in the table below opposite the Borrowing
                Base
                Utilization Ratio determined as of the last day of the immediately
                preceding fiscal quarter.

            


    

    


     


    
      
        
        

      

      
        Exhibit
          A-2

        
          

        

      

      
        
        

      

    


    


     

    
      	
              Borrowing
                Base

              Utilization
                Ratio

            	
              LIBOR

              Margin

            	
              Base
                Rate

              Margin

            	
              Commitment

              Fee

            	
              Letter
                of

              Credit
                Fee

            
	
              ≥100%

            	
              2.50%

            	
              0.50%

            	
              0.500%

            	
              2.50%

            
	
              ≥90%

            	
              2.00%

            	
              0.25%

            	
              0.500%

            	
              2.00%

            
	
              ≥75%

            	
              1.75%

            	
              0.00%

            	
              0.375%

            	
              1.75%

            
	
              ≥50%

            	
              1.50%

            	
              0.00%

            	
              0.375%

            	
              1.50%

            
	
              ≥25%

            	
              1.25%

            	
              0.00%

            	
              0.300%

            	
              1.25%

            
	
              <25%

            	
              1.00%

            	
              0.00%

            	
              0.250%

            	
              1.00%

            


    

    


    
      	
              Calculation
                of

            	 	 
	
              Interest
                and Fees:

            	
              Other
                than calculations in respect of interest at the Bank of America prime
                rate
                (which shall be made on the basis of actual number of days elapsed
                in a
                365/366 day year), all calculations of interest and fees shall be
                made on
                the basis of actual number of days elapsed in a 360 day
                year.

            	 
	 	 	 
	
              Cost
                and Yield

            	 	 
	
              Protection:

            	
              Customary
                for transactions and facilities of this type, including, without
                limitation, in respect of breakage or redeployment costs incurred
                in
                connection with prepayments, changes in capital adequacy and capital
                requirements or their interpretation, illegality, unavailability,
                reserves
                without proration or offset and payments free and clear of withholding
                or
                other taxes.

            	 
	 	 	 
	
              Maturity:

            	
              The
                Revolving Credit Facility shall terminate and all amounts outstanding
                thereunder shall be due and payable in full four years after the
                Closing
                Date.

            	 
	 	 	 
	
              Availability:

            	
              From
                the Closing Date until the earlier of (i) the divestiture of certain
                assets identified in the Borrower’s
                press release dated March 12, 2007 (the “Divestiture”),
                or (ii) 12 months from the Closing Date, (the “Overadvance
                Period”)
                advances under the Revolving Credit Facility may be made on a revolving
                basis up to $25.0 million (the “Overadvance
                Amount”)
                in
                excess of the Borrowing Base (the advances made at any time under
                the
                Revolving Credit Facility in excess of the Borrowing Base at such
                time
                being referred to collectively as the “Overadvance”)
                and Letters of Credit may be issued up to the Letter of Credit sublimit.
                Thereafter, advances under the Revolving Credit Facility may be made,
                and
                Letters of Credit may be issued, on a revolving basis up to the full
                amount of the Revolving Credit Facility, subject to compliance with
                a
                borrowing base (the “Borrowing
                Base”)
                to
                be comprised of the Borrower’s
                petroleum reserves (with the eligibility criteria and the advance
                rates
                therefore to be agreed). 

            	 
	 	 	 
	
              Borrowing
                Base:

            	
              The
                Borrowing Base will be determined by the Administrative Agent in
                its sole
                discretion in accordance with its normal and customary oil and gas
                lending
                practices and approved by the Senior Lenders. The reaffirmation of
                an
                existing Borrowing Base amount or a decrease to the 

            	 


    


    
      
        
        

      

      
        Exhibit
          A-3

        
          

        

      

      
        
        

      

    


    


    
      	 	
              Borrowing
                Base shall require approval by more than 50% of the Senior Lenders
                under
                the Revolving Credit Facility (the “Required
                Lenders”).
                Increases to the Borrowing Base shall require approval by all Senior
                Lenders under the Revolving Credit Facility. The Borrowing Base shall
                be
                subject to review semi-annually; however
                Required Lenders reserve the right to have one additional redetermination
                of the Borrowing Base per year. Unscheduled redeterminations may
                be made
                at the request of the Borrower, but will be limited to one such request
                per calendar year.

            	 
	 	 	 
	 	
              The
                Borrowing Base will include proved developed producing reserves,
                proved
                developed non-producing reserves and proved undeveloped reserves.
                The
                Borrowing Base will be initially set at $200.0 million.

            	 
	 	 	 
	
              Mandatory
                Prepayments

            	 	 
	
              and
                Commitment

            	 	 
	
              Reductions:

            	
              100%
                of all net cash proceeds received by the Borrower and/or its subsidiaries
                not used to repay the Bridge Loans (i) from sales of property or
                assets of
                Borrower or its subsidiaries included in the Borrowing Base shall,
                if such
                net proceeds are received during the Overadvance Period,be applied
                first
                to
                prepay loans and/or cash collateralize Letters of Credit until the
                Overadvance at such time (if any) is eliminated, and second,
                subject to the provision below regarding the application of payments,
                be
                applied to eliminate any Borrowing Base Deficiency (defined below)
                after
                giving effect to such sale, (ii) from the issuance or incurrence
                after the
                Closing Date of additional senior secured debt of the Borrower or
                any of
                its subsidiaries not otherwise permitted under the loan documentation
                shall be applied, if such net proceeds are received during the Overadvance
                Period, first
                to
                prepay loans and/or cash collateralize Letters of Credit until the
                Overadvance at such time (if any) is eliminated, and second
                to
                the prepayment of (and permanent reduction of the commitments under)
                the
                Revolving Credit Facility, and (iii) if at any time during the Overadvance
                Period the Borrower receives net cash proceeds of any issuance of
                its
                equity interest, and there is an Overadvance at such time, the Borrower
                shall be required to apply such net cash proceeds to prepay loans
                and/or
                cash collateralize Letters of Credit until such Overadvance is
                eliminated.

            	 
	 	 	 
	 	
              Should
                the Borrowing Base (plus the Overadvance Amount at any time during
                the
                Overadvance Period) at any time (including after giving effect to
                any sale
                or other disposition of any assets included in the Borrowing Base)
                be less
                than the outstanding principal balance of all advances under the
                Revolving
                Credit Facility (including Letters of Credit issued and outstanding
                other
                than Letters of Credit cash collateralized) (a “Borrowing
                Base Deficiency”),
                the Borrowers will, within 10 days after being notified of such Borrowing
                Base Deficiency, indicate by written notice to the Administrative
                Agent,
                its election to do one or a combination of the following:

            	 
	 	 	 
	 	
              (i) Prepay
                such Borrowing Base Deficiency in whole within 10 days of such
                election;

            	 


    


    
      
        
        

      

      
        Exhibit
          A-4

        
          

        

      

      
        
        

      

    


    


    
      	 	
              (ii)  
                Prepay
                the deficiency in monthly installments over a term and in an amount
                satisfactory to the Administrative Agent, but in any event not to
                exceed
                six months, by immediately dedicating a sufficient amount of monthly
                cash
                flow from the oil and gas properties of the Borrowers;

            	 
	 	 	 
	 	
              (iii) 
                Provide
                additional Borrowing Base assets, the value of which shall be sufficient
                to cover such Borrowing Base Deficiency, and otherwise acceptable
                to the
                Administrative Agent in its sole discretion within 30 days of such
                election; or

            	 
	 	 	 
	 	
              (iv) 
                Sell
                properties to reduce any Borrowing Base Deficiency after giving effect
                to
                any reduction of the Borrowing Base as determined by Required Lenders
                as a
                result of such sale.

            	 
	 	 	 
	
              Optional
                Prepayments

            	 	 
	
              and
                Commitment

            	 	 
	
              Reductions:

            	
              The
                Revolving Credit Facility may be prepaid at any time in whole or
                in part
                without premium or penalty, except that any prepayment of LIBOR advances
                other than at the end of the applicable interest periods therefor
                shall be
                made with reimbursement for any funding losses and redeployment costs
                of
                the Senior Lenders resulting therefrom. The unutilized portion of
                any
                commitment under the Revolving Credit Facility in excess of the stated
                amount of all Letters of Credit may be irrevocably canceled in whole
                or in
                part.

            	 
	 	 	 
	
              Security:

            	
              The
                Borrower and each of the Guarantors shall grant the Administrative
                Agent
                for the benefit of the Senior Lenders under the Revolving Credit
                Facility
                a valid and perfected first priority lien and security interest,
                a second
                priority lien and security interest (subject to certain exceptions
                to be
                set forth in the loan documentation), in all of the following (the
                “Collateral”):

            	 
	 	 	 
	 	
              (a)  
                All
                present and future shares of capital stock of (or other ownership
                or
                profit interests in) each of its present and future subsidiaries
                (limited,
                in the case of CFC’s, to a pledge of 66% of the capital stock of each
                first-tier CFC to the extent the pledge of any greater percentage
                would
                result in material adverse tax consequences to the
                Borrower).

            	 
	 	 	 
	 	
              (b)  
                All
                present and future intercompany debt of the Borrower and each
                Guarantor.

            	 
	 	 	 
	 	
              (c)  
                All
                of the present and future property and assets, real and personal,
                of the
                Borrower and each Guarantor, including, but not limited to, machinery
                and
                equipment, inventory and other goods, accounts receivable, owned
                real
                estate, leaseholds, fixtures, bank accounts, general intangibles,
                financial assets, investment property, license rights, patents,
                trademarks, tradenames, copyrights, chattel paper, insurance proceeds,
                contract rights, hedge agreements, documents, instruments, indemnification
                rights, tax refunds and cash.

            	 


    


    
      
        
        

      

      
        Exhibit
          A-5

        
          

        

      

      
        
        

      

    


    


    
      	 	
              (d)  
                All
                proven oil and gas reserves representing at least 80% of the Present
                Discounted Value (to be defined in the loan documentation) of the
                Borrower’s proven oil and gas reserves reviewed in determining the
                Borrowing Base (as determined by the Administrative Agent). In connection
                with the Administrative Agent’s due diligence, the Administrative Agent
                shall only require title opinions or other title due diligence with
                respect to oil and gas reserves representing up to 75% of the Present
                Discounted Value of the Borrowers’ proven oil and gas reserves reviewed in
                determining the Borrowing Base (as determined by the Administrative
                Agent).

            	 
	 	 	 
	 	
              (e)  
                All
                proceeds and products of the property and assets described in clauses
                (a),
                (b), (c) and (d) above.

            	 
	 	 	 
	 	
              The
                Collateral shall ratably secure the relevant party’s obligations in
                respect of the Revolving Credit Facility, any treasury management
                arrangements and any interest rate swap or similar agreements with
                a
                Senior Lender under the Revolving Credit Facility.

            	 
	 	 	 
	 	
              Intercreditor
                Agreement:
                The
                lien priority, relative rights and other creditors’ rights issues in
                respect of the Revolving Credit Facility will be set forth in a customary
                intercreditor agreement which shall be reasonably satisfactory to
                the
                Borrower, the Agent and the Senior lenders under the Revolving Credit
                Facility.

            	 
	 	 	 
	
              Initial
                Conditions

            	 	 
	
              Precedent:

            	
              Those
                specified in Exhibit C to the Commitment Letter.

            	 
	 	 	 
	
              Conditions
                Precedent

            	 	 
	
              to
                Each Borrowing

            	 	 
	
              Under
                the Senior

            	 	 
	
              Credit
                Facility:

            	
              Each
                borrowing or issuance or renewal of a Letter of Credit under the
                Revolving
                Credit Facility will be subject to satisfaction of the following
                conditions precedent: (i) all of the representations and warranties
                in the
                loan documentation shall be true and correct; (ii) no defaults or
                Events
                of Default shall have occurred and be continuing; and (iii) in the
                case of
                any borrowing under the Revolving Credit Facility, the aggregate
                principal
                amount of all outstanding advances under the Revolving Credit Facility
                and
                the aggregate undrawn amount of all outstanding Letters of Credit
                on such
                date, after giving effect to such borrowing or the issuance or renewal
                of
                such Letter of Credit, shall not exceed the Borrowing Base on such
                date.

            	 
	 	 	 
	
              Representations
                and

            	 	 
	
              warranties:

            	
              Usual
                and customary for a transaction of this type, and others deemed
                appropriate by the Senior Lead Arranger, including (without limitation):
                (i) existence, qualification and power; (ii) authorization and no
                violation of law, contracts or organizational documents; (iii) no
                governmental authorization and third party approvals or consents;
                (iv)
                binding effect; 

            	 


    


    
      
        
        

      

      
        Exhibit
          A-6

        
          

        

      

      
        
        

      

    


    


    
      	 	
              (v)
                financial statements and other information and no material adverse
                effect;
                (vi) no material litigation; (vii) no default; (viii) valid ownership
                of
                property and assets free and clear of liens; (ix) environmental matters;
                (x) insurance matters; (xi) tax matters; (xii) ERISA matters; (xiii)
                subsidiaries and equity interests; (xiv) margin regulations, Investment
                Company Act status and Public Utility Holding Company Act status;
                (xv)
                accuracy of disclosure; (xvi) compliance with laws; (xvii) intellectual
                property matters; (xviii) solvency; (xix) casualty, etc.; (xx) perfection
                of security interests and (xxi) senior debt and designated senior
                debt.

            	 
	 	 	 
	
              Covenants:

            	
              Usual
                and customary for a transaction of this type and others deemed appropriate
                by the Senior Lead Arranger, including (without
                limitation):

            	 
	 	 	 
	 	
              (a)  
                Affirmative
                Covenants
                -
                (i) financial statements and forecasts; (ii) Borrowing Base and other
                certificates and other information; (iii) notices; (iv) payment of
                taxes and other obligations; (v) preservation of corporate existence,
                etc. (vi) maintenance of properties; (vii) maintenance of insurance;
                (viii) compliance with laws and regulations; (ix) proper books and
                records; (x) visitation and inspection rights; (xi) use of proceeds;
                (xii)
                additional guarantees, collateral, etc.; (xiii) compliance with
                environmental laws; (xiv) environmental reports; (xv) further assurances;
                (xvi) performance of material agreements; and (xvii) interest rate
                hedging.

            	 
	 	 	 
	 	
              (b)  
                Negative
                Covenants
                -
                Restrictions on (i) liens; (ii) debt (with exceptions to include
                the Notes
                and/or the Convertible Notes or the Bridge Financing and the Permanent
                Securities in an amount sufficient to refinance the outstanding Bridge
                Financing); (iii) loans, acquisitions, joint ventures and other
                investments; (iv) mergers, consolidations, etc.; (v) sales, transfers
                and
                other dispositions of property or assets (with exceptions to include
                sales
                of inventory in the ordinary course of business); (vi) dividends,
                distributions, redemptions and other restricted payments; (vii) changes
                in
                the nature of business; (viii) transactions with affiliates; (ix)
                payment
                and dividend restrictions affecting subsidiaries of the Borrower;
                (x) capital expenditures; (xi) amending or modifying organizational
                documents, subordinated debt documents, transaction documents and
                other
                material agreements; (xii) prepaying, redeeming or repurchasing certain
                debt; (xiii) changes in accounting policies or reporting practices;
                (xiv)
                becoming a general partner in any partnership; (xv) speculative
                transactions and (xvi) passive holding company.

            	 
	 	
              (c)  
                Financial
                Covenants:

            	 
	 	
              ·  
                Maintenance
                of a minimum Interest Coverage Ratio (EBITDAX adjusted to add back
                non-cash hedging expense and M&A fees and expenses/total interest
                expense) of 2.5x;

            	 


    


    
      
        
        

      

      
        Exhibit
          A-7

        
          

        

      

      
        
        

      

    


    


    
      	 	
              ·  
                Maintenance
                of a maximum Leverage Ratio (net debt/EBITDAX adjusted to add back
                non-cash hedging expense and M&A fees and expenses) of 3.5x (3.0x
                after 4/1/08); and

            	 
	 	 	 
	 	
              ·  
                Maintenance
                of a minimum Current Ratio of 1.0x.

            	 
	 	 	 
	 	
              All
                of the financial covenants will be calculated on a consolidated basis
                and
                for each consecutive four fiscal quarter period. 

            	 
	 	 	 
	
              Reporting
                Requirements:

            	
              Usual
                and customary in transactions of this type, to include without
                limitation:

            	 
	 	 	 
	 	
              (i)   
                On
                April 1 of each year, commencing April 1, 2008, the Borrower shall
                deliver
                an engineering report dated January 1 of such fiscal year prepared
                by an
                independent petroleum engineering firm, acceptable to the Borrower
                and the
                Administrative Agent;

            	 
	 	 	 
	 	
              (ii)  
                On
                October 1 of each year, commencing October 1, 2007, the Borrower
                shall
                deliver an internally prepared engineering report dated as of July
                1 of
                such fiscal year;

            	 
	 	 	 
	 	
              (iii)  Quarterly
                unaudited consolidated financial statements (including balance sheet,
                income statement and cash flow statement) and quarterly unaudited
                consolidating balance sheets and income statements, in each case,
                of the
                Borrower and its Subsidiaries certified by the Chief Financial Officer
                of
                the Borrower within 45 days after the end of each fiscal
                quarter;

            	 
	 	 	 
	 	
              (iv) 
                Quarterly
                statements of compliance with financial covenants (showing calculations)
                certified by the Chief Financial Officer of the Borrower within 45
                days
                after the end of each fiscal quarter;

            	 
	 	 	 
	 	
              (v) 
                Annual
                audited consolidated financial statements and unaudited consolidating
                balance sheet, income statement and cash flow statement, in each
                case, of
                the Borrower and its Subsidiaries certified by the Chief Financial
                Officer
                of the Borrower within 90 days of the end of each fiscal year;
                and

            	 
	 	 	 
	 	
              (vi) 
                Annual
                budget (financial forecast) by April 1 of each fiscal year, commencing
                April 1, 2008.

            	 
	 	 	 
	
              Hedging:

            	
              The
                Borrower and Guarantors will hedge 25.0% of its projected proved
                development producing oil & gas production for the period from
                July 1, 2007 through September 30, 2009, which will be put into
                effect within 45 days of the Closing Date, but will not hedge more
                than an
                agreed upon maximum percentage of its oil and gas production at any
                time,
                and will be required to deliver a report of commodity hedges in place
                in
                conjunction with the delivery of quarterly financial statements and
                compliance reporting. The Borrower shall be permitted to purchase
                

            	 


    


    
      
        
        

      

      
        Exhibit
          A-8

        
          

        

      

      
        
        

      

    


    


    
      	 	 	 
	 	
              commodity
                floors or puts on up to an agreed upon maximum percentage of its
                production.

            	 
	
              Events
                of Default:

            	
              Usual
                and customary for a transaction of this type, and others deemed
                appropriate by the Senior Lead Arranger, including (without limitation):
                (i) nonpayment of principal, interest, fees or other amounts; (ii)
                failure
                to perform or observe covenants set forth under “Mandatory Prepayments and
                Commitment Reductions” above, or otherwise in the loan documentation
                within a specified period of time, where customary and appropriate,
                after
                such failure; (iii) any representation or warranty proving to have
                been
                materially incorrect when made or confirmed; (iv) cross-defaults to
                other indebtedness in an amount to be agreed; (v) bankruptcy,
                insolvency proceedings, etc. (with grace period for involuntary
                proceedings); (vi) inability to pay debts, attachment, etc., (vii)
                monetary judgment defaults in an amount to be agreed and material
                nonmonetary judgment defaults; (viii) customary ERISA defaults;
                (ix) actual or asserted invalidity or impairment of loan
                documentation or Collateral; and (x) change of control.

            	 
	 	 	 
	
              Assignments
                and

            	 	 
	
              participations:

            	
              Each
                Senior Lender will be permitted to make assignments in respect of
                the
                Revolving Credit Facility in a minimum amount equal to $5 million
                to other
                financial institutions approved by the Administrative Agent and,
                so long
                as no Event of Default has occurred and is continuing, the Borrower,
                which
                approval shall not be unreasonably withheld or delayed; provided,
                however,
                that the approval of the Borrower shall not be required in connection
                with
                assignments to other Senior Lenders, to any affiliate of a Senior
                Lender,
                or to any Approved Fund (as such term is defined in the definitive
                documentation) and the approval of the Administrative Agent shall
                not be
                required in connection with assignments to other Lenders under the
                Revolving Credit Facility. Notwithstanding the foregoing, however,
                any
                Lender assigning a Commitment (as such term shall be defined in the
                definitive loan documentation) shall be required to obtain the approval
                of
                the Administrative Agent and the Fronting Bank, unless the proposed
                assignee is already a Senior Lender.

            	 
	 	 	 
	 	
              Assignments
                Generally:
                An
                assignment fee will be charged with respect to each assignment as
                set
                forth in Addendum I. Each Senior Lender will also have the right,
                without
                consent of the Borrower or the Administrative Agent, to assign as
                security
                all or part of its rights under the loan documentation to any Federal
                Reserve Bank.

            	 
	 	 	 
	 	
              Participations:
                Senior Lenders will be permitted to sell participations with voting
                rights
                limited to significant matters such as changes in amount, rate, maturity
                date and releases of all or substantially all of the Collateral or
                the
                value of the guarantees.

            	 
	 	 	 
	
              Waivers
                and

            	 	 
	
              amendments:

            	
              Amendments
                and waivers of the provisions of the loan documentation will require
                the
                approval of Senior Lenders holding advances and commitments representing
                more than 50% of the aggregate advances and 

            	 


    


    
      
        
        

      

      
        Exhibit
          A-9

        
          

        

      

      
        
        

      

    


    


    
      	 	 	 
	 	
              commitments
                under the Revolving Credit Facility, except that (a) the consent
                of each
                affected Senior Lender shall be required with respect to (i) increases
                in
                commitment amounts, (ii) reductions of principal, interest, or fees
                and
                (iii) extensions of scheduled maturities or times for payment, (b)
                the
                consent of all Senior Lenders shall be required with respect to releases
                of all or substantially all of the Collateral or value of the guarantees
                and (c) the consent of Senior Lenders holding more than 50% of the
                advances and commitments under the Revolving Credit Facility shall
                be
                required for any amendment or waiver of any conditions to funding
                obligations under the Revolving Credit Facility.

            	 
	 	 	 
	
              Indemnification:

            	
              The
                Borrower will indemnify and hold harmless the Administrative Agent,
                the
                Senior Lead Arranger, each Senior Lender and each of their affiliates
                and
                their officers, directors, employees, agents and advisors from and
                against
                all losses, liabilities, claims, damages or expenses arising out
                of or
                relating to the Transaction, the Revolving Credit Facility, the Borrower’s
                use of loan proceeds or the commitments, including, but not limited
                to,
                reasonable attorneys’ fees (including the allocated cost of internal
                counsel) and settlement costs. This indemnification shall survive
                and
                continue for the benefit of all such persons or entities, notwithstanding
                any failure of the Revolving Credit Facility to close.

            	 
	 	 	 
	
              Governing
                Law:

            	
              New
                York.

            	 
	 	 	 
	
              Expenses:

            	
              The
                Borrower will pay all reasonable costs and expenses associated with
                the
                due diligence, syndication and closing of the Revolving Credit Facility
                and the preparation, negotiation and administration of all loan
                documentation, including, without limitation, the reasonable legal
                fees of
                the counsel to the Administrative Agent and BAS (including the allocated
                cost of internal counsel),
                regardless of whether or not the Revolving Credit Facility are closed.
                The
                Borrower will also pay the expenses of the Administrative Agent and
                each
                Senior Lender in connection with the enforcement of any of the loan
                documentation.

            	 
	 	 	 
	
              Counsel
                to the

            	 	 
	
              administrative

            	 	 
	
              agent:

            	
              Shearman
                & Sterling LLP.

            	 
	 	 	 
	
              Miscellaneous:

            	
              Each
                of the parties shall (i) waive its right to a trial by jury and (ii)
                submit to New York jurisdiction. The loan documentation will contain
                customary increased cost, withholding tax, capital adequacy and yield
                protection provisions.

            	 


    

    


     

    


     


    
      
        
        

      

      
        Exhibit
          A-10

        
          

        

      

      
        
        

      

    



    ADDENDUM
      I

    PROCESSING
      AND RECORDATION FEES

    


    


    The
      Administrative Agent will charge a processing and recordation fee (an
“Assignment
      Fee”)
      in the
      amount of $2,500 for each assignment; provided,
      however,
      that in
      the event of two or more concurrent assignments to members of the same Assignee
      Group (which may be effected by a suballocation of an assigned amount among
      members of such Assignee Group) or two or more concurrent assignments by members
      of the same Assignee Group to a single Eligible Assignee (or to an Eligible
      Assignee and members of its Assignee Group), the Assignment Fee will be $2,500
      plus
      the
      amount set forth below:

     

    
      	
              Transaction:

            	
              Assignment
                Fee:

            
	 	 
	
              First
                four concurrent assignments or suballocations to members of an Assignee
                Group (or from members of an Assignee Group, as
                applicable)

            	
              -0-

            
	 	 
	
              Each
                additional concurrent assignment or suballocation to a member of
                such
                Assignee Group (or from a member of such Assignee Group, as
                applicable)

            	
              $500

            


    

    


    For
      purposes hereof, “Assignee
      Group”
means
      two or more Eligible Assignees that are Affiliates of one another or two or
      more
      Approved Funds managed by the same investment advisor. The terms “Affiliate,”
      “Approved
      Fund”
and
      “Eligible
      Assignee”
shall
      be
      defined in the definitive loan documentation.

    


    



    
      
        
        

      

      
        Addendum
          I
          to Exhibit A

        
          

        

      

      
        
        

      

    



    EXHIBIT
      B-1

    


     

    


    $
      450 MILLION SENIOR UNSECURED BRIDGE FACILITY

    Summary
      of Terms and Conditions

    


    Capitalized
      terms not otherwise defined herein have the same meanings as

    specified
      therefor in the Commitment Letter to which this Exhibit B-1 is
      attached

     

    
      	
              Borrower:

            	
              Same
                Borrower as in the Summary of Terms for the Senior Credit
                Facilities.

            
	 	 
	
              Guarantors:

            	
              Same
                Guarantors as in the Summary of Terms for the Senior Credit
                Facilities.

            
	 	 
	
              Sole
                Lead Arranger and

            	 
	
              Sole
                Bookrunning

            	 
	
              manager:

            	
              Banc
                of America Securities LLC (“BAS”)
                will act as sole and exclusive lead arranger and sole and exclusive
                bookrunning manager for the Bridge Facility (the “Bridge
                Lead Arranger”).

            
	 	 
	
              Bridge
                Lenders:

            	
              Banc
                of America Bridge LLC or an affiliate thereof (“Banc
                of America Bridge”
or
                the “Initial
                Bridge Lender”)
                and other financial institutions and institutional lenders acceptable
                to
                BAS.

            
	 	 
	
              Bridge Facility:

            	
              Up
                to $450.0 million of senior unsecured bridge loans (the “Bridge
                Loans”).
                The Bridge Loans will be available to the Borrower in one drawing
                upon
                consummation of the Transactions.

            
	 	 
	
              Ranking:

            	
              The
                Bridge Loans will be senior unsecured obligations of the Borrower
                and
                ranking pari
                passu
                with or senior to all other unsecured obligations of the Borrower.
                The
                Guarantees will be senior unsecured obligations of each Guarantor,
                subordinated to such Guarantor’s guarantee under the Revolving Credit
                Facility and ranking pari
                passu
                with or senior to all other unsecured obligations of such
                Guarantor.

            
	 	 
	
              Purpose:

            	
              Together
                with borrowings under the Revolving Credit Facility, the proceeds
                of the
                Bridge Facility shall be used (i) to finance in part the Transaction;
                (ii)
                refinance certain existing indebtedness of the Company and its
                subsidiaries; and (iii) to
                pay fees and expenses incurred in connection with the
                Transaction.

            
	 	 
	
              Closing
                Date:

            	
              The
                date of the extension of credit under the Bridge Facility, which
                shall
                occur on or before a mutually agreed upon date (the “Closing
                Date”).

            
	 	 
	
              Interest
                rates:

            	
              Interest
                shall be payable quarterly in arrears at a rate per annum equal to
                the
                greater of (i) three-month LIBOR plus a margin initially equal to
                4.50%
                per annum, and (ii) 9.25% per annum. The rate referred to in clause
                (ii)
                above shall increase by 0.50% per annum at the end of the
                

            


    


    
      
        
        

      

      
        Exhibit
          B-1-1

        
          

        

      

      
        
        

      

    


    


    
      	 	
              period
                6 months after the Closing Date and each three-month period thereafter
                for
                as long as the Bridge Financing is outstanding; provided
                that the interest rate shall not exceed 11.5% per annum. Notwithstanding
                the foregoing, in the case of an Event of Default, the applicable
                interest
                rate for the Bridge Financing shall be increased by 2.0% per
                annum.

            
	 	 
	
              Maturity:

            	
              12
                months from the Closing Date (the “Bridge
                Loan Maturity Date”
or
                “Rollover
                Date”).

            
	 	 
	
              Optional
                Prepayment:

            	
              The
                Bridge Loans may be prepaid prior to the Bridge Loan Maturity Date,
                without premium or penalty, in whole or in part, upon written notice,
                at
                the option of the Borrower, at any time, together with accrued interest
                to
                the prepayment date.

            
	
              Mandatory

            	 
	
              Prepayments:

            	
              The
                Borrower will prepay the Bridge Loans, without premium or penalty,
                together with accrued interest to the prepayment date, with any of
                the
                following: (i) the net proceeds from the issuance of any subordinated
                debt
                or equity securities of the Borrower; (ii) subject to customary exceptions
                to be agreed and only to the extent such amounts are not required
                to be
                paid to the Senior Lenders, the net proceeds from any other indebtedness
                incurred by the Borrower or any of the Borrower’s subsidiaries; and (iii)
                subject to customary exceptions to be agreed and only to the extent
                such
                amounts are not required to be paid to the Senior Lenders under the
                Revolving
                Credit Facility, the net proceeds from asset sales by the Borrower
                or any
                of the Borrower’s subsidiaries.

            
	 	 
	
              Change
                of Control:

            	
              In
                the event of a Change of Control, each Bridge Lender will have the
                right
                to require the Borrower, and the Borrower must offer, to prepay the
                outstanding principal amount of the Bridge Loans plus accrued and
                unpaid
                interest thereon to the date of prepayment plus a prepayment fee
                equal to
                1% of such outstanding principal amount. Prior to making any such
                offer,
                the Borrower will, within 30 days of the Change of Control, repay
                all
                obligations under the Senior Credit Facility or obtain any required
                consent of the Senior Lenders under the Senior Credit Facility to
                make
                such prepayment of the Bridge Loans.

            
	 	 
	
              Permitted

            	 
	
              Refinancing:

            	
              If
                the Bridge Loans have not been previously prepaid in full for cash
                on or
                prior to the Rollover Date, the principal amount of the Bridge Loans
                outstanding on the Rollover Date shall, subject to the conditions
                precedent set forth in Exhibit B-2, be refinanced by unsecured, senior
                subordinated rollover loans with a maturity of five years from the
                Rollover Date (the “Rollover
                Loans”)
                and otherwise having the terms set forth in Exhibit B-2. On or after
                the
                Rollover Date, each Bridge Lender will have the right to exchange
                the
                outstanding Rollover Loans held by it for unsecured, senior subordinated
                exchange notes of the Borrower having the terms set forth in Exhibit
                B-3.

            
	 	 


    


    
      
        
        

      

      
        Exhibit
          B-1-2

        
          

        

      

      
        
        

      

    


    


    
      	
              Conditions

            	 
	
              Precedent:

            	
              Those
                specified in Exhibit C to the Commitment Letter.

            
	 	 
	
              Covenants:

            	
              Usual
                and customary for a transaction of this type, including financial
                covenants, and others deemed appropriate by the Bridge Lead Arranger,
                including covenants similar to those contained in the Revolving
                Credit Facility and a covenant for the Borrower to use its best efforts
                to
                refinance the Bridge Facility with the proceeds of the Permanent
                Financing
                as promptly as practicable following the Closing Date.

            
	 	 
	
              Representations
                and

            	 
	
              Warranties,
                Events

            	 
	
              Of
                Default, Waivers

            	 
	
              And
                Consents:

            	
              Usual
                and customary for a transaction of this type, and others deemed
                appropriate by the Bridge Lead Arranger, including provisions similar
                to
                those contained in the Revolving
                Credit Facility.

            
	 	 
	
              Right
                to Assign

            	 
	
              Bridge
                Loans:

            	
              The
                Bridge Lenders shall have the right to assign their interest in the
                Bridge
                Loans in whole or in part in compliance with applicable law to any
                third
                parties only with the prior written consent of the Bridge Lead Arranger
                and the Borrower, such consent not to be unreasonably withheld
                provided
                the
                Borrower is not in default under the Bridge Loans.

            
	 	 
	
              Governing
                Law:

            	
              New
                York.

            
	
              Expenses
                :

            	
              The
                Borrower will pay all reasonable costs and expenses associated with
                the
                due diligence, syndication and closing of the Bridge Facility and
                the
                preparation, negotiation and administration of all loan documentation,
                including, without limitation, the reasonable legal fees and expenses
                of
                the Bridge Lead Arranger’s counsel including the allocated cost of
                internal counsel, regardless of whether or not the Bridge Facility
                is
                closed. The Borrower will also pay the expenses of each Bridge Lender
                in
                connection with the enforcement of any of the loan
                documentation.

            
	 	 
	
              Counsel
                to Bridge

            	 
	
              Lead
                Arranger:

            	
              Shearman
                & Sterling LLP.

            
	 	 
	
              Fees:

            	
              As
                provided in the Fee Letter.

            
	 	 
	
              Miscellaneous:

            	
              Each
                of the parties shall (i) waive its right to a trial by jury and (ii)
                submit to New York jurisdiction. The loan documentation will contain
                customary increased cost, withholding tax, capital adequacy and yield
                protection provisions.

            


    

    


     

    


     


    
      
        
        

      

      
        Exhibit
          B-1-3

        
          

        

      

      
        
        

      

    



    EXHIBIT
      B-2

    


     

    


    $450
      MILLION SENIOR UNSECURED ROLLOVER FACILITY

    Summary
      of Terms and Conditions

    


    Capitalized
      terms not otherwise defined herein have the same meanings as

    specified
      therefor in the Commitment Letter to which this Exhibit B-2 is
      attached

     

    
      	
              Borrower:

            	
              Same
                Borrower as in the Summary of Terms for the Senior Credit Facilities
                and
                the Summary of Terms for the Bridge Facility.

            
	 	 
	
              Guarantors:

            	
              Same
                Guarantors as in the Summary of Terms for the Senior Credit Facilities
                and
                the Summary of Terms for the Bridge Facility.

            
	 	 
	
              Rollover Facility:

            	
              Senior
                unsecured, rollover loans (the “Rollover
                Loans”)
                in an initial principal amount equal to 100% of the outstanding principal
                amount of the Bridge Loans on the Rollover Date. Subject to the conditions
                precedent set forth below, the Rollover Loans will be available to
                the
                Borrower to refinance the Bridge Loans on the Rollover Date. The
                Rollover
                Loans will be governed by the definitive documents for the Bridge
                Loans
                and, except as set forth below, shall have the same terms as the
                Bridge
                Loans.

            
	 	 
	
              Ranking:

            	
              Same
                as Bridge Loans.

            
	 	 
	
              Interest
                rate:

            	
              Rate
                and margins to continue to increase as set forth in Exhibit B-1 for
                the
                Bridge Loans.

            
	 	 
	
              Maturity:

            	
              Five
                years from the Rollover Date (the “Rollover
                Maturity Date”).

            
	 	 
	
              Optional
                Prepayment:

            	
              For
                so long as the Rollover Loans have not been exchanged for senior
                unsecured, exchange notes of the Borrower as provided in Exhibit
                B-3, they
                may be prepaid at the option of the Borrower, in whole or in part,
                at any
                time, together with accrued and unpaid interest to the prepayment
                date
                (but without premium or penalty).

            
	
              Conditions
                Precedent

            	 
	
              to
                Rollover:

            	
              The
                ability of the Borrower to refinance any Bridge Loans with Rollover
                Loans
                is subject to the following conditions being satisfied:

            
	 	 
	 	
              (i)   
                at
                the time of any such refinancing, there shall exist no Event of Default
                or
                event that, with notice and/or lapse of time, could become an Event
                of
                Default;

            
	 	 
	 	
              (ii)  
                all
                fees due to the Bridge Lead Arranger and the Initial Bridge Lender
                shall
                have been paid in full;

            


    


    
      
        
        

      

      
        Exhibit
          B-2-1

        
          

        

      

      
        
        

      

    


    


    
      	 	
              (iii)    
                the
                Bridge Lenders shall have received promissory notes evidencing the
                Rollover Loans (if requested) and such other documentation as shall
                be set
                forth in the loan documents; and

            
	 	 
	 	
              (iv)     
                no
                order, decree, injunction or judgment enjoining any such refinancing
                shall
                be in effect.

            
	 	 
	
              Right
                to Assign

            	 
	
              Rollover
                Loans:

            	
              The
                Bridge Lenders shall have the right to assign their interest in any
                Rollover Loans in whole or in part in compliance with applicable
                law to
                any third parties only with the prior written consent of the Bridge
                Lead
                Arranger.

            
	 	 
	
              Rollover
                Covenants:

            	
              From
                and after the Rollover Date, the covenants applicable to the Rollover
                Loans will conform to those applicable to the Exchange Notes, except
                for
                covenants relating to the obligation of the Borrower to effect the
                Permanent Financing and others to be agreed.

            
	 	 
	
              Governing
                Law:

            	
              New
                York.

            
	 	 
	
              Expenses:

            	
              Same
                as the Bridge Loans.

            
	 	 
	
              Fees:

            	
              As
                provided in the Fee Letter.

            


    

    


     


    
      
        
        

      

      
        Exhibit
          B-2-2

        
          

        

      

      
        
        

      

    



    EXHIBIT
      B-3

    


    $450
      MILLION SENIOR UNSECURED EXCHANGE NOTES

    Summary
      of Terms and Conditions

    


    Capitalized
      terms not otherwise defined herein have the same meanings as

    specified
      therefor in the Commitment Letter to which this Exhibit B-3 is
      attached

     

    
      	
              Borrower:

            	
              Same
                Borrower as in the Summary of Terms for the Senior Credit Facilities
                and
                the Summary of Terms for the Bridge Facility.

            
	 	 
	
              Guarantors:

            	
              Same
                Guarantors as in the Summary of Terms for the Senior Credit Facilities
                and
                the Summary of Terms for the Bridge Facility.

            
	 	 
	
              Exchange
                Notes:

            	
              At
                any time on or after the Rollover Date, Rollover Loans due to Bridge
                Lenders holding not less than 25% of the outstanding Rollover Loans
                may,
                at the option of such Bridge Lenders, be exchanged for an equal principal
                amount of senior unsecured, exchange notes of the Borrower (the
                “Exchange
                Notes”).
                The Borrower will issue the Exchange Notes under an indenture that
                complies with the Trust Indenture Act of 1939, as amended (the
                “Indenture”).
                The Borrower will appoint a trustee reasonably acceptable to the
                holders
                of the Exchange Notes. The Indenture will be in substantially the
                form
                attached as an exhibit to the definitive agreement for the Bridge
                Facility. The Indenture will include provisions customary for an
                indenture
                governing publicly traded high yield debt securities, but with covenants
                that are more restrictive in certain respects. Except as expressly
                set
                forth above, the Exchange Notes shall have the same terms as the
                Rollover
                Loans.

            
	 	 
	
              Ranking:

            	
              Same
                as Bridge Loans.

            
	 	 
	
              Interest
                rate

            	 
	
              Redemption

            	 
	
              Provision:

            	
              Each
                Exchange Note will initially bear interest at the rate in effect
                on the
                Rollover Loans for which it is exchanged and, thereafter, the rate
                and
                margin will continue to increase as set forth in Exhibit B-1 for
                the
                Bridge Loans. For so long as they bear interest at an increasing
                rate of
                interest, the Exchange Notes will be redeemable at the option of
                the
                Borrower, in whole or in part at any time, at par plus accrued and
                unpaid
                interest to the redemption date. Each holder of Exchange Notes shall
                have
                the option to fix the interest rate on the Exchange Notes to a rate
                that
                is equal to the then applicable rate of interest borne by the Exchange
                Notes (but in no event in excess of 11.5% per annum or 11% per annum
                pursuant to the terms of the Fee Letter). In such event, such Exchange
                Notes will be non-callable until the third anniversary of the Closing
                Date
                and will be callable thereafter at par plus accrued interest plus
                a
                premium equal to one-half of the coupon in effect on the date on
                which the
                interest rate was fixed, declining ratably to par on the maturity
                of the
                Exchange Notes. The fixed rate Exchange Notes will provide for mandatory
                repurchase offers customary for publicly traded high yield debt
                securities.

            


    


    
      
        
        

      

      
        Exhibit
          B-3-1

        
          

        

      

      
        
        

      

    


    


    
      	
              Registration
                Rights:

            	
              Within
                270 days after the Closing Date the Borrower shall file a shelf
                registration statement with the Securities and Exchange Commission
                and the
                Borrower shall use its best efforts to cause such shelf registration
                statement to be declared effective by the Bridge Loan Maturity Date
                and
                keep such shelf registration statement effective, with respect to
                resales
                of the Exchange Notes, for as long as it is required by the holders
                to
                resell the Exchange Notes. Upon failure to comply with the requirements
                of
                the registration rights agreement (a “Registration
                Default”),
                the Borrower shall pay liquidated damages to each holder of Exchange
                Notes
                with respect to the first 90-day period immediately following the
                occurrence of the first Registration Default accruing at a rate equal
                to
                one-half of one percent (0.50%) per annum on the principal amount
                of
                Exchange Notes held by such holder. The rate of accrual of the liquidated
                damages will increase by an additional one-half of one percent (0.50%)
                per
                annum on the principal amount of Exchange Notes with respect to each
                subsequent 90-day period until all Registration Defaults have been
                cured,
                up to a rate of accrual of liquidated damages for all Registration
                Defaults of 1.50% per annum.

            
	 	 
	
              Governing
                Law:

            	
              New
                York.

            


    

    


     

    


     


    
      
        
        

      

      
        Exhibit
          B-3-2

        
          

        

      

      
        
        

      

    



    EXHIBIT
      C

    


    


    Conditions
      Precedent

    


    Capitalized
      terms not otherwise defined herein have the same meanings as

    specified
      therefor in the Commitment Letter to which this Exhibit C is
      attached

     

    
      	
              Conditions
                Precedent

            	 
	
              to
                Closing:

            	
              The
                closing and the initial extension of credit under the Revolving Credit
                Facility and the advances of the Bridge Loans under the Bridge Facility
                will be subject to the following:

            
	 	 
	 	
              (i)    All
                of the Pre-Commitment Information shall be complete and correct in
                all
                material respects; and
                no changes, occurrences or developments shall have occurred, and
                no new or
                additional information shall have been received or discovered by
                the Lead
                Arranger or the Initial Lenders, regarding the Borrower and its
                subsidiaries or the Transaction after the date of
                the Commitment Letter to which this Exhibit C is attached
                that either individually or in the aggregate, could reasonably be
                expected
                to materially
                and adversely affect the ability of the Borrower or any Guarantor
                to
                perform their respective obligations under the applicable loan
                documentation, or materially and adversely affect the rights and
                remedies
                of the Administrative Agent or the Lenders under the applicable loan
                documentation (collectively,
                a “Material
                Adverse Effect”).

            
	 	 
	 	
              (ii)  
                The
                negotiation, execution and delivery of definitive documentation with
                respect to each Facility reasonably satisfactory to BAS and the
                Administrative Agent under such Facility.

            
	 	 
	 	
              (iii)
                The
                final terms and conditions of each aspect of the Transaction, including,
                without limitation, all tax aspects thereof, shall be (a) as described
                in
                the Commitment Letter and consistent with the description thereof
                received
                in writing as part of the Pre-Commitment Information and (b) otherwise
                satisfactory to the Lead Arranger.

            
	 	 
	 	
              (iv)
                Since
                December 31, 2006 there shall not have occurred any change, occurrence
                or
                development other than as publicly disclosed that has had or could
                reasonably be expected to have a Material Adverse
                Effect.

            
	 	 
	 	
              (v) 
                In
                the case of the Revolving Credit Facility, the Administrative Agent
                shall
                have received satisfactory evidence of receipt by the Borrower of
                not less
                than $425.0 million cash proceeds from the advance of the Bridge
                Loans or
                the issuance by the Borrower of

            


    


    
      
        
        

      

      
        Exhibit
          C-1

        
          

        

      

      
        
        

      

    


    


    
      	 	
              the
                Notes and/or the Convertible Notes; and, in the case of the Bridge
                Facility, the Lead Arranger shall have received evidence satisfactory
                to
                the Lead Arranger that all other conditions to commitments of the
                Senior
                Lenders under the Revolving Credit Facility have been
                satisfied.

            
	 	 
	 	
              (vi)     The
                Lenders under each Facility shall have received opinions of counsel
                to the
                Borrower and the Guarantors (which shall cover, among other things,
                authority, legality, validity, binding effect and enforceability
                of the
                documents for such Facility and, in the case of the Revolving Credit
                Facility, creation and perfection of the liens granted thereunder
                on the
                Collateral) and of appropriate local counsel and such corporate
                resolutions, certificates, instruments and other documents as the
                Administrative Agent or the Initial Lenders shall reasonably
                require.

            
	 	 
	 	
              (vii)   
                The
                Administrative Agent (on behalf of the Lenders under the Revolving
                Credit
                Facility) shall have a valid and perfected first priority lien and
                security interest in the Collateral, all filings, recordations and
                searches necessary or desirable in connection with the Collateral
                shall
                have been duly made, all filing and recording fees and taxes shall
                have
                been duly paid and any surveys, title insurance, landlord waivers
                and
                access letters requested by the Administrative Agent with respect
                to real
                property interests of the Borrower and its subsidiaries shall have
                been
                obtained. The Lenders shall be satisfied with the amount, types and
                terms
                and conditions of all insurance maintained by the Borrower and its
                subsidiaries; and the Administrative Agent shall have received
                endorsements naming the Administrative Agent on behalf of the Revolving
                Lenders as an additional insured or loss payee, as the case may be,
                under
                all insurance policies to be maintained with respect to the properties
                of
                the Borrower and its subsidiaries forming part of the
                Collateral.

            
	 	 
	 	
              (viii)   
                Receipt
                of all governmental, shareholder and third party consents and approvals
                necessary or, in the opinion of the Lead Arranger, desirable in connection
                with the Transaction, each of which shall be in full force and effect,
                and
                expiration of all applicable waiting periods without any action being
                taken by any authority that could restrain, prevent or impose any
                material
                adverse conditions on the Borrower and its subsidiaries or the
                Transaction.

            
	 	 
	 	
              (ix)     
                All
                loans made by the Lenders to the Borrower or any of its affiliates
                shall
                be in full compliance with the Federal Reserve’s margin
                regulations.

            
	 	 
	 	
              (x)     
                The
                Lead Arranger and the Lenders shall have received: (a) audited
                consolidated financial statements of the Borrower and its subsidiaries
                for
                the three fiscal years ended most recently prior to the Transaction,
                unaudited consolidated
                financial

            


    


    
      
        
        

      

      
        Exhibit
          C-2

        
          

        

      

      
        
        

      

    


    


    
      	 	
              statements
                of the Borrower and its subsidiaries for any interim quarterly periods
                that have ended since the most recent of such audited financial
                statements, and pro
                forma financial
                statements as to the Borrower and its subsidiaries giving effect
                to the
                Transaction for the most recently completed fiscal year and the period
                commencing with the end of the most recently completed fiscal year
                and
                ending with the most recently completed month, which (1) in the case
                of
                pro forma information, shall be reasonably satisfactory in form and
                substance to the Lead Arranger, (2) in the case of unaudited consolidated
                financial information delivered after the date of the Commitment
                Letter,
                shall not be materially inconsistent with the Pre-Commitment Information,
                and (3) with respect to any annual or quarterly periods shall meet
                the
                requirements of Regulation S-X under the Securities Act of 1933,
                as
                amended, and all other accounting rules and regulations of the SEC
                promulgated thereunder applicable to a registration statement under
                such
                Act on Form S-1; (b) forecasts prepared by management of the Borrower
                and
                its subsidiaries, each in form reasonably satisfactory to the Lead
                Arranger, of balance sheets, income statements and cash flow statements
                for each month for the first twelve months following the Closing
                Date;
                (c) evidence satisfactory to the Lead Arranger that (1) the ratio of
                total debt of the Borrower and its subsidiaries at the Closing Date
                to the
                consolidated EBITDAX of the Borrower and its subsidiaries for the
                twelve
                months ended March 31, 2007 (which pro forma ratio shall be calculated
                reflecting the Transaction on a pro forma basis) was not greater
                than
                2.0:1 and (3) the pro forma financial statements delivered pursuant
                to
                clause (a) above and the forecasts delivered pursuant to clause (b)
                above
                were prepared in good faith on the basis of the assumptions stated
                therein, which assumptions are fair in light of the then existing
                conditions.

            
	 	 
	 	
              (xi)    
                The
                Revolving Credit Facility and the Bridge Facility shall have received
                a
                ratings from Moody’s Investor Service Inc. (“Moody’s”)
                and from Standard & Poor’s, a division of The McGraw-Hill Companies,
                Inc. (“S&P”),
                by such rating agencies at least 20 days prior to the Closing
                Date.

            
	 	 
	 	
              (xii)    
                All
                accrued fees and expenses of the Administrative Agent, the Lead Arranger
                and the Initial Lenders (including the fees and expenses of counsel
                for
                the Administrative Agent and the Lead Arranger and local counsel
                for the
                Lenders) shall have been paid. The Borrower shall have complied with
                all
                of the terms of the Fee Letter and, if the Commitment Letter shall
                have
                been accepted as to the Bridge Facility, the Engagement Letter to
                be
                complied with on or before such date.

            
	 	 
	 	
              (xiii)  
                The
                Lead Arranger shall have received, as they are available to the Borrower
                or otherwise, including as the Borrower, and/or its subsidiaries
                may have
                provided historically to any party
                or

            


    


    
      
        
        

      

      
        Exhibit
          C-3

        
          

        

      

      
        
        

      

    


    


    
      	 	
              pursuant
                to any credit agreement that the Borrower and/or, its subsidiaries
                are a
                party to, all petroleum reports and audits, environmental reports,
                and
                such other reports, audits and other information or
                certifications.

            
	 	 
	 	
              (xiv)   
                In
                the case of the Bridge Facility, (a) not later than 22 days
                prior to the Closing Date, the Borrower shall have completed and
                made
                available to the Lead Arranger and potential investors copies of
                either a
                prospectus or an offering memorandum for the offer and sale of the
                Notes
                and/or the Convertible Notes pursuant to Rule 144A of the rules and
                regulations under the Securities Act, in each case, containing such
                disclosures as may be required by applicable laws, as are customary
                and
                appropriate for such a document or as may be required by the Bridge
                Lead
                Arranger (including all audited, pro forma and other financial statements
                and schedules of the type that would be required in a registered
                public
                offering of the Notes on Form S-1), and (b) senior management of
                the
                Borrower shall have made themselves available for due diligence,
                rating
                agency presentations and a road show and other meetings with potential
                investors for the Notes and/or the Convertible Notes as required
                by the
                Bridge Lead Arranger in its reasonable judgment to market the Notes
                and/or
                the Convertible Notes.

            


    

    
 

     

     

    Exhibit
      C-4