**Exhibit 10.20**

 

GAS PURCHASE AGREEMENTBy And BetweenONEOK Texas FieldServices, L. P.AndW.O. OPERATING COMPANY, LTD.Dated JANUARY 1, 2005

 

 

Contract No. 431856

 

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**INDEX**

 
| **I.**     | ** ** | **BASIS  OF COMPENSATION**                                                                 | ** ** | **Page 1**  |
|------------|------------|--------------------------------------------------------------------------------------------|------------|------------------|
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **II.**    | ** ** | **TERM**                                                                                   | ** ** | **Page  1**      |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **III.**   | ** ** | **DEDICATION,  EXCLUSIVITY, INITIAL WELLS, AND SUBSEQUENT WELLS**                          | ** ** | **Page 1**       |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **IV.**    | ** ** | **RESERVATIONS  OF SELLER AND BUYER**                                                      | ** ** | **Page 2**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **V.**     | ** ** | **QUALITY  OF DELIVERED GAS**                                                              | ** ** | **Page 3**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **VI.**    | ** ** | **DELIVERY,  COMPRESSION, PRESSURES, METER FEES, REBUILD AND ALTERATIONS**                 | ** ** | **Page 3**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **VII.**   | ** ** | **DELIVERIES**                                                                             | ** ** | **Page 4**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **VIII.**  | ** ** | **PAYMENT,  ESCALATION OF FEES, EXAMINATION, INDEMNIFICATION, SUSPENSION, AND DEDUCTIONS** | ** ** | **Page 4**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **IX.**    | ** ** | **WARRANTY,  TITLE, AND EASEMENTS**                                                        | ** ** | **Page 5**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **X.**     | ** ** | **INDEMNITY,  INTERRUPTION, AND FORCE MAJEURE**                                            | ** ** | **Page 5**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **XI.**    | ** ** | **ROYALTY  AND TAXES**                                                                     | ** ** | **Page 6**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **XII.**   | ** ** | **MEASUREMENT  OF GAS VOLUME AND TESTING**                                                 | ** ** | **Page 7**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **XIII.**  | ** ** | **NOTICES  AND STATEMENTS**                                                                | ** ** | **Page 9**  |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **XIV.**   | ** ** | **DEFAULT**                                                                                | ** ** | **Page 10** |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **XV.**    | ** ** | **DEFINITIONS**                                                                            | ** ** | **Page 11** |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| **XVI.**   | ** ** | **MISCELLANEOUS**                                                                          | ** ** | **Page 13** |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| ** ** | ** ** | **EXHIBIT “A”**                                                             | ** ** | ** **       |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| ** ** | ** ** | **EXHIBIT “B”**                                                             | ** ** | ** **       |
| ** ** | ** ** | ** **                                                                                 | ** ** | ** **       |
| ** ** | ** ** | **EXHIBIT “C”**                                                             | ** ** | ** **       |

 

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**GAS PURCHASE AGREEMENT**

 

ThisGas Purchase Agreement (“Agreement”) is made and entered into as of JANUARY 1,2005, by and between ONEOK Texas Field Services, L. P., hereinafter referred toas “BUYER,” and W. O. OPERATING COMPANY, LTD., hereinafter, referred to as “SELLER”.

 

**W I T N E S S E T H:**

 

WHEREAS,SELLER owns and/or controls, natural; Gas produced from Wells on Lands or Leasesfrom properties more particularly described in Exhibit “B” attached hereto,including the right to process and sell such Gas, which shall be delivered toBUYER; and

 

WHEREAS,BUYER desires to purchase and SELLER desires to sell said Gas to BUYER; and

 

NOWTHEREFORE, BUYER and SELLER, in consideration of the mutual covenants, promises,and agreements contained herein and for other good and valuable consideration,do hereby agree as follows:

 

**I.  BASIS OF COMPENSATION**

 

1.1           **Compensation.**  Thebasis of compensation is set forth in Exhibit “A”attached hereto and included herein by this reference.

 

**II.  TERM**

 

2.1           **Term****.**  ThisAgreement shall be effective JANUARY 1, 2005 (“Effective Date”), and shallcontinue until JANUARY 31, 2005 (“Primary Term”), and Month to Monththereafter until terminated, such termination to be effective at the end ofsaid Primary Term or at any month thereafter by either party giving at leastthirty (30) days prior written notice to the other party or to be effective asotherwise provided by this Agreement.

 

**III.  DEDICATION,EXCLUSIVITY, INITIAL WELLS, AND SUBSEQUENT WELLS**

 

3.1           **Dedication.**  SELLERhereby commits and dedicates to the performance of this Agreement and for theterm hereof, all of its owned or controlled interest in Gas produced from allgeological formations under the Lands and Leases and/or Wells described in Exhibit “B”attached hereto (“Dedicated Wells”), except for the following reservationswhich SELLER specifically reserves:

 

3.1.1     To use Gas produced from or under the Landsor Leases and/or Wells and used by SELLER for the development and operation ofsame; including, but not limited to, Gas used by SELLER in Gas lifting andpressure maintenance operations;

 

3.1.2     To use Gas which may be required to fulfillSELLER’s obligations to the lessors of said Leases and/or Wells for domesticfuel; and,

 

3.1.3     To use Gas used as fuel in the operation ofSELLER’s compression, dehydration or treating facilities, if any, installed forthe delivery of Gas hereunder.

 

3.2           **Exclusivity.** Subject to the terms and conditions of this Agreement, SELLER herebycontracts exclusively with BUYER for the purchase of SELLER’s Gas and the rightto process and extract Plant Products attributable to SELLER’s Gas.  SELLER further agrees to dedicate to BUYER and

 

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tothe terms and conditions of this Agreement any interest in said Leases or Wellswhich (i) are acquired by SELLER, or (ii) are owned by SELLER but areno longer subject to the terms of any third-party agreement, subsequent to theEffective Date hereof.  Any transfer ofSELLER’s interest in the Leases or Wells dedicated hereunder shall be subjectto BUYER’s rights hereunder, and SELLER shall take action necessary to ensurethat any such transfer *is*subjectto BUYER’s rights hereunder.  BUYERreserves the right to reject any such additional dedication hereunder.

 

3.3           **Initial Well(s).** SELLER agrees to proceed with due diligence to install or cause to beinstalled, :at its expense, all facilities at and upstream of eachReceipt Point which are necessary to connect all Dedicated Wells completed forproduction as of the date of this Agreement to the existing gatheringsystem.  All such facilities will beowned and operated by SELLER or its designee at its expense.

 

3.4           **Subsequent Wells.**  Ifthe location of any Well (“Subsequent Well”) is within the dedication describedin Exhibit “B” then SELLER shall notify BUYER in writing upon start of theSubsequent Well’s drilling.  Aftercompletion of the Subsequent Well, SELLER shall, within seven (7) daysfrom the date of completion of such Subsequent Well, provide BUYER any and all relevantWell data (including, but not limited to, daily drilling reports, logs,completion reports, flow test, and gas analysis) (“Well Data”). BUYER shallhave the right, but not the obligation, to connect such Subsequent Well toBUYER’s system at its expense.  If BUYERelects not to construct such facilities, or does not initiate right-of-wayacquisition for such facilities within thirty (30) days after BUYER receivesthe Well Data, SELLER may construct, at its expense, the facilities necessaryto deliver the Gas from such Subsequent Well to BUYER’s existing system.  If neither party connects such SubsequentWell, SELLER shall be entitled to a wellbore release from this agreement forproduction from the Subsequent Well only.

 

**IV.  RESERVATIONS OF SELLER ANDBUYER**

 

4.1           **SELLER’s Reservations.**

 

4.1.1        To operate said Leases and/or Wells free fromcontrol by BUYER in such manner as SELLER, in SELLER’s sole discretion, maydeem advisable, including, without limitation, the right to drill new Wells, torepair and rework old Wells, and to abandon any Well or surrender any Leasewhen no longer deemed to be capable of producing Gas in commercial payingquantities under normal methods of operation by SELLER.

 

4.1.2        To unitize or pool any of the Leases orportions thereof with other Leases, in such event SELLER’s interest in the unitand the unit Gas attributable to SELLER’s interest shall be subject to andSELLER agrees to take all action necessary to commit such unit Gas attributableto SELLER’s interest to this Agreement.

 

4.1.3        To retain all liquids and Condensateseparated from the Gas by the use of typical volumetric (non-refrigerated) oiland Gas separators prior to the delivery of the Gas to BUYER at the Receipt Point(s)specified herein.

 

4.2           **BUYER’s Reservations.**

 

4.2.1        Processing Rights. SELLER does hereby grant, assign, and convey to BUYER exclusive processingrights for the recovery of Plant Products for Gas delivered to BUYER for processingat the Receipt Point(s). SELLER shall not process the Gas or allow the Gas to beprocessed prior to receipt by BUYER hereunder for processing.

 

4.2.2        Condensate.  Condensate recovered by BUYERdownstream of the Receipt Point(s) shall belong to BUYER.  Title to the Condensate shall pass to BUYERupon its recovery by BUYER and shall be free and clear of all liens, claims,and encumbrances created by,

 

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through or under SELLER.

 

4.2.3        Uneconomic.  At any time during the term ofthis Agreement, in the event purchasing of SELLER’s Gas from any Receipt Point becomes uneconomic, as determinedin the sole discretion andjudgment of BUYER, BUYER may (i) suspend receipt of Gas at that Receipt Point, (ii) terminate thisAgreement or (iii) modify Exhibit “B” attached hereto to remove that Receipt Point.  In such event, BUYER shall give SELLER thirty(30) days written notice thatpurchasing of Gas made available by SELLER from a Receipt Point has become economically unfeasible and whataction BUYER shall take. Removal of a Receipt Point constitutes a release of Dedication of the Well(s) behindthat Receipt Point.

 

**V. ****QUALITY OF DELIVERED GAS**

 

5.1           The Gas delivered at the Receipt Point(s)shall meet the quality specifications defined in Exhibit “C” attached hereto.

 

5.2           BUYER shall have the right to either (i) acceptGas that does not conform to such specifications and deduct from payment dueSELLER BUYER’s standard fee(s) for treatment as determined from time to time,or (ii) refuse delivery of the nonconforming Gas.  If BUYER refuses delivery of non-conformingGas and SELLER elects not to conform such Gas to thequality specifications set forth herein, this Agreement may be terminated withrespect to such non-conforming Gas upon thirty (30) days prior notice.

 

5.3           BUYER’s acceptance of Gas that does notconform to quality specifications set forth herein will not constitute a waiverof SELLER’s obligation to conform to such specifications in the future, nor awaiver of BUYER’s right to refuse delivery of such nonconforming Gas at anytime.

 

**VI.  DELIVERY****, COMPRESSION, PRESSURES,METER FEES, REBUILD AND ALTERATIONS**

 

6.1           **Delivery.**  Gasshall be delivered hereunder at the Receipt Point(s) described in Exhibit “B”attached hereto and shall be at pressures sufficient to enter, but not toexceed, the maximum allowable pressure for BUYER’s gathering system at theReceipt Point(s).  SELLER shall provideequipment required to protect BUYER’s systems from receiving Gas at pressuresthat exceed the maximum allowable pressures. BUYER will provide SELLER the maximum allowable pressure for specificReceipt Point(s).

 

6.2           **Pressures.**  Pressurescalculated for stages of compression shall be volume-weighted pressures at theReceipt Point(s) for the Month as determined by BUYER.

 

6.3           **Meter Fees.**  Inthe event that the total metered volume from any one (1) receipt Pointfalls below an average of ten (10) MCF per day for any month, BUYER shallcharge SELLER a meter Fee for each MCF delivered by or for the account ofSELLER for that month.  The meter fee foreach MCF delivered shall be determined by dividing a sum of Three HundredDollars ($300) by the total metered volume (MCF) for that month.  In the event the total metered volume is zero(0) the fee shall be Three Hundred Dollars ($300) multiplied by SELLER’s ownedor controlled interest.

 

6.4           **Rebuild and Alterations.**  BUYERreserves the right, in its sole discretion, to alter, repair, maintain, expandor rebuild, without approval of SELLER, any portion of BUYER’s facilities.  SELLER shall make no alterations, additions orrepairs to or on the facilities of BUYER.  SELLER agrees not to connect or cause theconnection of any third-party well to BUYER’s facilities for any purposewithout the express written consent of BUYER, such consent to be in

 

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BUYER’s sole discretion.  Ifthis condition is breached by SELLER, BUYER shall have the right and option,notwithstanding any other provision of this Agreement, to terminate thisAgreement immediately and without further obligation to SELLER.

 

**VII.  DELIVERIES**

 

7.1           **Deliveries.** SELLER shall deliver all available Gas in such uniform hourly flows asis commercially practicable.  In theevent SELLER anticipates a material increase or decrease in the flow of Gas atany Receipt Point, SELLER shall provide BUYER with reasonable advance notice ofchange.

 

**VIII.  PAYMENT,ESCALATION OF FEES, EXAMINATION, INDEMNIFICATION, SUSPENSION, AND DEDUCTIONS**

 

8.1           **Payment.**  BUYERshall, on the later of (i) the last day of the month or (ii) withinten (10) day’s of BUYER’s receipt of any necessary allocation statements,pay SELLER for the Gas delivered hereunder during the preceding month.  During any period BUYER purchases Gas fromSELLER and other SELLER(s) delivered to any Receipt Point(s), SELLER shallfurnish, or cause to be furnished, to BUYER on or before the fifteenth (15th)day of each calendar month, any necessary allocation statements containing data(including, but not limited to, quantity and BTU content) that BUYER mayrequire to enable BUYER to make payments.  SELLER is to cooperate with other SELLER(s)delivering Gas at the Receipt Point(s) in order to appoint in writing arepresentative who, as their agent, is to furnish an allocation statement.  BUYER is entitled to rely conclusively on suchallocation statement, and has a complete defense to any claim by SELLER for anysums due for Gas delivered by SELLER at the Receipt Point(s) during any periodby showing that BUYER has made payment to SELLER for its share, as identifiedin such allocation statement, of the total quantity of Gas received by BUYER atthe applicable Receipt Point(s) during the period in question (other than formeasurement error as specified in the Article titled MEASUREMENT OF GASVOLUME AND TESTING). If any allocation statement is not furnished to BUYERby the fifteenth (15th)day of any month, the time that BUYER has to make payment for delivered Gas(without interest) is to be extended until the payment cycle which next followsthe tenth (10th) dayafter BUYER’s receipt of the allocation statement.

 

8.2           **Final Payment.**  Allpayments under this Agreement will be final unless questioned by either partywithin two (2) years of the due date of a payment, and during this two (2) yearperiod either party may audit all records, accounts, books and charts of theother party, upon reasonable advance notice and during normal office hours, toverify the accuracy of any statement, charge, computation or demand made.

 

8.3           **Escalation of Fixed Fees.**  Thefixed fee charges contained herein, unless otherwise noted, shall be escalatedannually beginning on the first (1st) anniversary of the Effective Date of this Agreement based on the GDPImplicit Price Deflator contained in the Gross Domestic Product, fourth quarter(final) report, published by the U.S. Department of Commerce, Bureau of Economic analysis, “GDPDeflator” in March of each year for the previous year.  For purposes of escalating the fixed feecharges herein, the annual rate escalation percentage (“Escalator”) will be determinedby BUYER each April 1 by calculating the percent of increase from the yearpreceding said previous year’s GDP Deflator and the previous year’s GDPDeflator.

 

8.4           **Examination of Records.**  Eachparty to this Agreement shall have the right, at any and all reasonable timesduring normal business hours, to examine the books and records of the other

 

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party, to the extent necessary to verify the accuracy of any statement,charge, computation, or demand made under or pursuant to this Agreement, andboth parties shall keep all such records for at least twenty-four (24) monthsafter the Receipt of Gas to which such records are applicable.  Such books and records shall be conclusivelypresumed to be correct, except as to claims or corrections by the parties madeby written notice to the other within such twenty-four (24) month period.

 

8.5           **Indemnification PaymentSuspension****.**  Eachparty agrees to indemnify and hold the other party harmless with respect to allcosts, losses, and damages (including without limitation reasonable attorney’sfees) arising from or related to the breach of any covenant, representation, orwarranty made to the other party contained in this Agreement.  In the event of any claim arising from orrelating to such a breach, BUYER shall be entitled, at its option, in additionto any other rights it may have, to suspend payment of sums due SELLERhereunder until such claim is resolved, and such suspension shall notconstitute a breach of BUYER’s payment obligations under this Agreement.

 

8.6           **Deductions.**  BUYERshall also be entitled, at its option, in addition to any other rights it mayhave, to deduct from any payment due SELLER under this Agreement any amountspayable to BUYER from SELLER under this Agreement, any other agreement, orotherwise, and to apply such amounts deducted to pay such amounts payable toBUYER, and such deduction and application shall not constitute a breach ofBUYER’s payment obligations under this Agreement.

 

8.7           **Reimbursement of StateSeverance Taxes.**  The payment set forth on Exhibit “A” forgas purchased by BUYER hereunder shall be deemed to be inclusive ofreimbursement to SELLER for production and severance taxes borne by SELLER.  No additional payment from BUYER to SELLERhereunder, other than that specified on Exhibit “A”, shall be required tocompensate SELLER for such tax reimbursement.

 

**IX.  WARRANTY,TITLE, AND EASEMENTS**

 

9.1           **Warranty of Title.** SELLER warrants that it has the title to the Gas dedicated hereunder anddelivered at the ReceiptPoint(s), and said Gas is free from all liens and adverse claims of all kinds,including the right and authority to sell and to process for the recovery ofPlant Products.  SELLER shall hold BUYERharmless against adverse claims related thereto.

 

9.2           **Title.**  Titleshall pass to BUYER at the Receipt Point(s).

 

9.3           **Easements.**  Tothe extent SELLER has the right to do so, SELLER hereby permits BUYER the rightsof ingress and egress on the Leases to construct, install, operate, repair,inspect and maintain BUYER’s facilities necessary to receive Gas from SELLER atthe Receipt Point(s). SELLER hereby assigns and grants to BUYER, to the extentit has the right to do so, an easement and right-of-way upon all lands coveredby the Leases for the purposes above. Any property of BUYER placed in or upon any of those lands shall remainthe personal property of BUYER, and may be disconnected and removed at anytime.  SELLER shall, at its expense,maintain and provide all such easements, rights-of-way, lease roads and otherfacilities upon such Leases as may reasonably be deemed necessary by BUYER forits performance of this Agreement.  SELLERfurther agrees to indemnify BUYER from any adverse claims related thereto.

 

**X.  INDEMNITY, INTERRUPTION, AND FORCE MAJEURE**

 

10.1         **Indemnity.**  Inaddition to the indemnities contained herein, BUYER shall indemnify and holdSELLER harmless against any claims for damages arising out of the operationsconducted

 

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hereunder by BUYER. Likewise, SELLER shall indemnifyand hold BUYER harmless against any claims for damages arising out of SELLER’soperations hereunder.  The obligations ofthe parties under this Agreement are obligations of the parties only and norecourse or remedy shall be available against any officer, director, oremployee representative of a party or against any affiliate of a party.

 

10.2         **Interruption.**  It isunderstood and agreed that either party hereto may, without liability to the otherparty, interrupt the operations of its facilities for the purpose of makingnecessary alterations, maintenance, or repairs thereto, but that suchinterruption shall be for only such time as may be commercially reasonable toperform such operations.  Delivery and/orreceipt of Gas pursuant to this Agreement may be suspended for such period ofinterruption.

 

10.3         **Force Majeure.**  IfSELLER or BUYER is rendered unable, wholly or in part, by reason of force majeure,from carrying out its obligations under this Agreement (other than theobligation to make payment of amounts due hereunder), then upon said party’sgiving prompt written notice of such force majeure to the other party, theobligations of the party giving such notice, so far as they are affected bysuch force majeure, shall be suspended during the continuance of any inabilityso caused, but for no longer period, and such cause shall be remedied with all commerciallyreasonable dispatch.  The term “forcemajeure,” as used herein, shall include acts of God; acts of federal, state, orlocal government or any agencies thereof; compliance with rules, regulations,permits or orders of any governmental authority or any office, department,agency, or instrumentality thereof; strikes, lockouts, or other industrialdisturbances; acts of the public enemy, wars, blockages, insurrections, riots,and epidemics; landslides, lightning, earthquakes, fires, storms, floods, andwashouts; arrests and restraint of people; civil disturbances; explosions, leakage,breakage, or accident to equipment or pipes; freezing of Wells or pipes;weather-related shutdowns; inability to secure rights-of-way; inability totimely obtain equipment, supplies, materials, permits, labor; failures or delaysin transportation; receipt of non-specification or non- merchantable Gas; andany other causes, whether of the kind herein enumerated or otherwise, not withinthe reasonable control of the party claiming suspension, which, by the exerciseof due diligence, such party shall not have been able to avoid.  The settlement of strikes or lockouts shall beentirely within the discretion of the party having the difficulty.  The requirement that any force majeure shallbe remedied with all commercially reasonable dispatch shall not require the settlementof strikes or lockouts by acceding to the demands of the opposing party, whensuch is deemed inadvisable by the party involved.

 

**XI.  ROYALTY AND TAXES**

 

11.1         **Royalty.** SELLER shall account for and pay all royalties, overrides, and othersums due by SELLER to the owners of the mineral, royalty, and other interestsin the Gas, and SELLER shall indemnify and save BUYER harmless against allloss, damage, and expense of every character on account of adverse claims to allsuch Gas, Residue Gas, and Plant Products or royalties, taxes, payments, orother charges due thereon.  Should BUYERbe obligated by law or regulation to make payment for any royalties oroverrides due to be paid by SELLER, BUYER shall deduct such payments from anyamounts due by BUYER to SELLER.  Shouldsuch payments be in excess of amounts due by BUYER to SELLER, SELLER shallpromptly reimburse BUYER for the amount of royalties or overrides so paidwithin ten (10) days of receipt of such statement

 

11.2         **Taxes.** SELLER shall pay any sales, transaction, occupation, service,production, severance, gathering, transmission, or excise taxes, assessments,or fees levied, assessed, or fixed, whether by the United States, the state, orother governmental agency, in respect of or applicable to the

 

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Gas delivered hereunder.  Anytaxes and statutory charges levied or assessed against SELLER’s properties,facilities, or operations shall be borne by SELLER.  BUYER shall bear all taxes levied against itsproperties or facilities. Should BUYER be obligated by law or regulation tomake payment for any taxes due to be paid by SELLER, BUYER shall deduct suchpayments from any amounts due by BUYER to SELLER.

 

11.3         **Production Taxes.**  Notwithstandingthe provisions of Section 11.2, above, as an accommodation to SELLER,BUYER shall remit on behalf of SELLER any state production taxes in respect ofor applicable to the Gas delivered hereunder.  BUYER shall deduct such state production taxesremitted on behalf of SELLER from any amounts due by BUYER to SELLER. Shouldsuch state production taxes remitted on behalf of SELLER be in excess ofamounts due by BUYER to SELLER, SELLER shall promptly reimburse BUYER for theamount of such production taxes so remitted within ten (10) days ofreceipt of such statement. It is recognized that the remittance of stateproduction taxes by BUYER on behalf of SELLER is a voluntary accommodation byBUYER to SELLER and not an obligation of BUYER hereunder.  BUYER may, in its sole discretion, ceaseremitting state production taxes on behalf of SELLER at any time upon thirty(30) days’ written notice to SELLER.

 

**XII.  MEASUREMENTOF GAS VOLUME AND TESTING**

 

12.1         **Calibration.**  BUYERshall keep its measurement equipment accurately calibrated and in repair, makingtests at reasonable intervals of no less than once (1) every year.  BUYER agrees to give SELLER reasonable noticeof such tests of the measuring equipment so that, if SELLER desires, it mayhave its representative present.  In theevent the meters are found to be inaccurate, such meters will be adjusted toregister accurately.

 

12.2         **Accuracy.**  Eachparty shall have the right to challenge the accuracy of any related equipment and,when challenged, the equipment shall be tested, calibrated and repaired byBUYER; the cost of any such special test shall be borne by BUYER if thepercentage of inaccuracy is found to be more than two percent (2%), but if thepercentage of inaccuracy is found to be two percent (2%) or less, the cost ofsuch special test shall be borne by SELLER. If, upon any test, the percentage of inaccuracy of the measuringequipment is found to be in excess of two percent (2%), registrations thereofand any payment based upon such registration shall be corrected for a periodextending back to the time (not to exceed one (1) year) when suchinaccuracy began, if such time is ascertainable, and if not ascertainable, thenback one-half (1/2) of the time elapsed since the last date of calibration not exceeding,however, forty-five (45) days.

 

12.3         **Repairs.**  If,for any reason, the meters are out of service or out of repair so that theamount of Gas delivered cannot be ascertained or computed from the readingthereof, the Gas delivered during the period such meters are out of service orout of repair shall be estimated and agreed upon by the parties hereto upon thebasis of the data available using the first of the following methods that isfeasible:

 

12.3.1      By using the registration of any check meteror meters if installed and accurately registering, or in theabsence of (12.3.1) then;

 

12.3.2      By correcting the error if the percentage oferror is ascertainable by calibration, special test, or mathematicalcalculation, or in the absence of both (12.3.1) and (12.3.2) then;

 

12.3.3      By estimating the quantity of Gas deliveredbased on the registration of any meter or meters if installed and accuratelyregistering, or in the absence of (12.3.1), (12.3.2), and (12.3.3) then;

 

12.3.4      By estimating the quantity of Gas delivered orredelivered based on deliveries or

 

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redeliveries during preceding periods under similarconditions when the meter was registering accurately.

 

12.4         **Records.**  Therecords from the measuring equipment shall remain the property of the party owningsuch equipment and shall be kept by such party on file for a period of not lessthan two (2) years.  At any timewithin such period, such party shall, upon request to the other party, submit tosuch party records from the measuring equipment, together with calculations therefrom,for inspection and verification, subject to return within thirty (30) days fromreceipt thereof.

 

12.5         **Measurement Standards.**  Themeasuring station or stations provided for hereunder shall be so equipped withmeters, recording gauges, or other types of meter or meters of standard makeand design used in the industry and according to applicable AGA or APIstandards, so as to accomplish the measurement of Gas delivered and redeliveredhereunder.  Gas measured hereunder willhave its volume, mass, gravity, composition or energy content determined and computedin accordance with applicable AGA standards in effect at the date ofinstallation of the measurement equipment and shall comply with applicablestate and federal regulation.  At BUYER’soption, BUYER may update the measurement equipment and/or the determination of volume,mass, gravity, composition or energy content in accordance with subsequentrevisions, supplements, and appendices to said AGA standards.

 

12.6         **Pulsation.**  TheParties shall design, install, operate and maintain their respective equipmentin such a manner that pulsation-induced measurement error is minimized.  Pulsation-induced error shall not exceed onequarter of one percent (0.25%) of square root error (SRE). Either party has theright to request a test of the orifice meter facility.  If SRE is found to exceed the limit stated above,the party responsible for the creation of the SRE must have a plan for theelimination of the SRE within thirty (30) days and equipment installed ormodified to correct SRE in a reasonable amount of time, not to exceed six (6) months.  Pulsation errorsdetermined by the use of a square root error indicator manufactured under alicense for the Southern Gas Association are to be used only for the purpose ofdetermining SRE and are not to be used for adjusting measured volumes.

 

12.7         **Boyle’s Law.**  Themeasurement hereunder shall be corrected for deviation from Boyle’s Law at thepressures and temperatures under which Gas is delivered hereunder.

 

12.8         **Temperature.**  Thetemperature of the Gas shall be determined to the nearest one degree Fahrenheit(1°F) at the points of measurement by the continuous use of recordingthermometers of standard manufacture acceptable to the parties, to be installedin accordance with the recommendations contained in American Gas AssociationMeasurement Committee Report Number 3, 7, or 9 as appropriate, and thearithmetical average of hourly temperatures of the Gas so determined each dayshall be used in computing temperatures of the Gas during each day.

 

12.9         **Supercompressibility.**  Unlessotherwise allowed by state law, adjustment for the effect of supercompressibilityshall be determined by test or by mutual consent of the parties hereto accordingto the provisions contained in American Gas Association Measurement Committee ReportNumber 3, 7, 8 or 9 as appropriate, for the average conditions of pressure,flowing temperature, and specific gravity at which the Gas was measured duringthe period under consideration and with the respective proportionate values forcarbon dioxide and nitrogen fractional values and to obtain subsequent valuesof these Components as may be required from time to time.

 

12.10       **Check Measurement.**  Atthe Receipt Point(s) SELLER may install check measuring equipment at its owncost and expense; provided, such equipment shall be so installed as not to interferewith the operations of the BUYER.  BUYER’smeter shall be the meter used for all

 

8

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measurement purposes, BUYER and SELLER, in the presence of each other,shall have access to the other’s measuring equipment at all reasonable times;but the reading, calibrating, and adjusting thereof, and the changing ofcharts, if any, shall be done only by the owner of the meter or itsrepresentative unless otherwise agreed. Each party shall give noticesufficiently in advance, and the other parties notified shall have the right tobe present at the time of any installing, reading, cleaning, changing,repairing, inspecting, testing, calibrating, or adjusting done in connectionwith the other’s measuring equipment; provided, however, failure of either partyso notified to witness such an operation after due notification shall notaffect the validity of such operation in any way.

 

12.11       **Sampling.**  BUYERshall obtain a sample at least annually of Gas at the Receipt Point(s) by usingmethods contained in GPA Standard 2166 / API 14.1, as revised, “Methods forObtaining Natural Gas Samples for Analysis by Gas Chromatography.” This samplemay be obtained utilizing a spot sampler, continuous sampler, on-streamchromatograph or other instruments approved by BUYER.  SELLER may request that additional samples betaken in order that SELLER may have its own sample tested independently.  Any additional samples requested by SELLERshall be at SELLER’s sole expense.

 

12.12       **Composition, Gross HeatingValue, Specific Gravity.**  The composition of the Gas shall be determinedfrom the sample of the Gas by using GPA Standard 2261, as revised, “Method of Analysisfor Natural Gas and Similar Gaseous Mixtures by Gas Chromatography,” with the exceptionof sulfur compounds.  The gallons per MCFand the Gross Heating Value of the Gas shall be determined by using technicallycorrect methods contained in GPA Standard 2172, as revised, “Method forCalculation of Gross Heating Value, Specific Gravity, and Compressibility ofNatural Gas Mixtures from Compositional Analysis”, and the Gross Heating Valuesfrom GPA Standard 2145, as revised from time to time, “Table of PhysicalConstants for the Paraffin Hydrocarbons and Other Components of Natural Gas.”  Each composition, Gross Heating Value andSpecific Gravity determination shall be effective until the next determination. The Specific Gravity of the Gas shall berecorded to the nearest one-thousandth (0.001).

 

12.13       **Water Content.**  Gasdelivered at the Receipt Point(s) shall be considered to be saturated with waterat measurement temperature and pressure, unless Gas has been dehydrated to awater content of seven (7) lbs/MMCF or less prior to the point ofmeasurement.  The water content shall bedetermined by BUYER using practices contained in GPA 181, GPA 2172, AGA Report No. 3or other reasonable practices as determined appropriate by BUYER.  Gas with seven (7) lbs/MMCF or lessshall be considered dry, i.e. containing no water.

 

12.14       **Assumed AtmosphericPressure.**  The atmospheric pressure shall be assumed to be the average atmosphericpressure for the elevation as used by BUYER in that particular geographic arearegardless of the actual atmospheric pressure where Gas is measured.

 

12.15**      ****Sulfur.**  The sulfur content shall be determined fromtests taken at the Receipt Point(s) by methods accepted in the industry, suchas GPA Standard 2377, as revised, “Method of Test for Hydrogen Sulfide andCarbon Dioxide in Natural Gas Using Length of Stain Tubes.” Other sulfurspecies can be determined by chromatographic analysis conditional on the parties’acceptance of the type of analysis to be used and the condition of the sample.

 

12.16       **NGL Measurement.**  TheNatural Gas Liquids removed by processing will be measured using measurementequipment and practices accepted in the industry and supported by AGA, APIand/or GPA standards, as applicable.

 

9

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**XIII.  NOTICES AND STATEMENTS**

 

13.1         All notices, statements, payments and othercommunications required or permitted to be given hereunder shall be in writingand shall be deemed to have been effectively given when delivered by facsimileor mailed by first class mail, addressed to the parties as follows:

 
| **NOTICE TYPE** | ** ** | **BUYER**                          | ** ** | **SELLER**                    |
|-----------------|------------|------------------------------------|------------|-------------------------------|
| ** **      | ** ** | ** **                         | ** ** | ** **                    |
| **CONTRACTS**   | ** ** | ONEOK  Texas Field Services, L. P. | ** ** | W.O.  OPERATING COMPANY, LTD. |
| ** **      | ** ** | Attn:  Contract Administration     | ** ** | Attn:                         |
|            |       | P.  O. Box 871                |       | PO  BOX 960,                  |
|            |       | Tulsa,  OK 74102-0871              |       | PAMPA,  TX 79066-0960         |
|            |       | Telephone:  (918) 591-5000         |       | Telephone:  (806)             |
|            |       | Fax:  (918) 588-7466               |       | Fax:  (806)                   |
|            |       |                               |       |                          |
| **SCHEDULING**  |       | ONEOK  Texas Field Services, L. P. |       | W.O.  OPERATING COMPANY, LTD. |
|            |       | Attn:  Scheduling                  |       | Attn:                         |
|            |       | P.  O. Box 871                     |       | PO BOX 960,                   |
|            |       | Tulsa,  OK 74102-0871              |       | PAMPA, TX 79066-0960          |
| ** **      |       | Telephone:  (918) 591-5000         |       | Telephone:  (806)             |
|            |       | Fax:  (918) 588-7499               |       | Fax:  (806)                   |
| ** **      |       |                               |       |                          |
| **ACCOUNTING**  |       | ONEOK  Texas Field Services, L. P. |       | W.O.  OPERATING COMPANY, LTD. |
|            |       | Attn:  Plant Accounting            |       | Attn:                         |
|            |       | P.  O. Box 871                |       | PO  BOX 960,                  |
|            |       | Tulsa,  OK 74102-0871              |       | PAMPA,  TX 79066-0960         |
|            |       | Telephone:  (918) 591-5000         |       | Telephone:  (806)             |
|            |       | Fax:  (918) 732-1325               |       | Fax:  (806)                   |
|            |       |                               |       |                          |
| **PAYMENTS**    |       | **By Check**                       |       | **By Check**                  |
|            |       | ONEOK  Texas Field Services, L. P. |       | W.O. OPERATING COMPANY,  LTD. |
|            |       | c/o  OEG A/R Group, 17-1           |       | PO BOX 960,                   |
|            |       | P.  O. Box 871                     |       | PAMPA, TX 79066-0960          |
|            |       | Tulsa,  OK 74102-0871              |       |                          |
|            |       |                               |       |                          |
| **PAYMENTS**    |       | **By Wire**                        |       | **By Wire**                   |
|            |       | Bank  One, Oklahoma, NA            |       |                          |
|            |       | 15  East 5th Street                |       |                          |
|            |       | Tulsa,  OK 74103                   |       |                          |
|            |       | ABA#  103000648                    |       |                          |
|            |       | Bank  Account #632944542           |       |                          |
|            |       |                               |       |                          |
| TAX  ID:        |       | 17603639265                        |       | 752675224                     |

 

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13.2         **Changes.**  Noticesof change of address of any of the parties shall be given in writing to theother in the manner aforesaid and shall be observed in the giving of all futurenotices, statements, or other communications required or permitted to be givenhereunder.

 

**XIV.  DEFAULT**

 

14.1         If either party shall fail to perform any ofthe covenants and obligations imposed upon it under and by virtue of thisAgreement (except where such failure shall be excused under any of the provisionsof this Agreement), then in such event the other party may, at its option,terminate this Agreement by proceeding as follows:

 

14.1.1      The party not in default shall give noticestating specifically the cause for terminating this Agreement and declaring itto be the intention of the party giving the notice to terminate same.

 

14.1.2      The party in default shall have sixty (60)days after the service of the aforesaid notice in which to remedy or removecause or causes stated in the notice for terminating this Agreement, and, ifwithin said period of sixty (60) days, the party in default does so remove orremedy said cause or causes and fully indemnifies and/or reimburses the partynot in default for any and all damages, losses, and consequences of suchbreach, then such notice shall be withdrawn and this Agreement shall continuein full force and effect.

 

14.1.3      In case the party in default does not soremedy and remove the cause or causes or does not indemnify and/or reimbursethe party giving the notice for any and all damages, losses, and consequencesof such breach within said period of sixty (60) days, then this Agreementshall, at the expiration of said sixty (60) day period, terminate, except as toall accrued obligations not yet discharged; provided, however, that if suchdefault be remedied but no indemnification therefore has been made due to abona fide dispute between the parties as to the amount thereof, then thisAgreement shall not terminate, but the party not in default shall have theright to seek indemnification in any manner provided by law or by thisAgreement.

 

Any cancellation of this Agreement, pursuant to the provisions of thisArticle, shall be without prejudice to the right of the party not in default tocollect any amounts due for breach of this Agreement; provided, however, theprovisions herein for termination of this Agreement shall not apply if thefailure of BUYER involves failure to pay any sum or amount due hereunder, andBUYER’s refusal to pay is subject to a bona fide dispute, and BUYER pays allamounts not in dispute; provided further, however, that any termination of thisAgreement for breach shall be carried out by the party not in defaultexclusively in accordance with to the provisions set out in this Article.

 

14.2         No waiver of any default under this Agreementshall constitute a waiver of any other default, whether of like or differentcharacter.

 

**XV.  DEFINITIONS**

 

15.1         For the purpose of this Agreement, unless thecontext clearly indicates otherwise, the following definitions shall beapplicable:

 

15.1.1      **BTU** shall mean British ThermalUnit and is equal to 1055.05585262 Joule.

 

15.1.2      **Business Day** shall mean any day except Saturday, Sundayor Federal Reserve Bank holidays starting at eight o’clock a.m. CentralStandard Time.

 

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15.1.3      **Condensate******shall mean the liquid hydrocarbons that arerecovered from the Gas in typical oil and Gas separators or pipeline drips,compressor discharge or suction scrubbers, usually from changes in ambient orground temperature and/or pressure, but not from processing.

 

15.1.4**     ****Cubic Foot of Gas******forthe purpose of measurement of the Gas delivered hereunder shall mean the amountof Gas necessary to fill one cubic foot of space at a base pressure of fourteenand seventy-three hundredths (14.73) pounds per square inch absolute and at abase temperature of sixty degrees Fahrenheit (60°F) (“Base Conditions”) andshall be the volume unit of measurement.

 

15.1.5      **Day or day******shall mean a twenty-four (24) consecutivehour period.  For measurement purposesdescribed herein it will begin with the hour that is the then beginning hourthat is the standard practice of BUYER.

 

15.1.6      **Dehydration******shall mean the dehydration process thatremoves water and water vapor from the Gas or Natural Gas Liquids such as withthe use of glycol, methanol, molecular sieves, etc.

 

15.1.7      **FL&U******shall mean the sum of the MMBTU’s of fieldfuel and the MMBTU’s of lost and unaccounted gas, but not including other fuelretained for services such as compression and dehydration.

 

15.1.8      **Gas or gas******shall mean natural gas as produced from Wellsin its natural state that meets the quality specifications of Article V ofthis Agreement.

 

15.1.9      **GPM******shall mean gallons per MCF.

 

15.1.10    **Gross Heating Value of theGas******shall mean the BTU content of one Cubic Footof Gas at defined conditions which is the number of BTU’s produced by thecomplete combustion of such Cubic Foot of Gas, at constant pressure with air ofthe same temperature and pressure as the Gas, when the products of combustionare cooled to the initial temperatures of the Gas and air, and when water isformed by such combustion is condensed to a liquid state at the initialtemperature of the Gas.

 

15.1.11    **Gross Heating Value of the****NGL’s** shall mean the BTU per gallon, fuel as idealgas, as described in the current GPA Standard 2145 with the exception ofhexanes plus, which shall be that recommended in the current GPA Standard 2261,i.e. 60% hexane, 30% n-heptane and 10% n-octane

 

15.1.12    **Lands and Lease(s)** shall mean the contractual right to the titleof and to the minerals, including oil and gas, from geological formations onand below the properties described in Exhibit “B” attached hereto and madea part hereof and as amended from time to time, including certain surfacerights as necessary to explore, develop, drill and produce said minerals fromsuch properties or lands.

 

15.1.13    **MCF******shall mean one thousand (1,000) Cubic Foot ofGas.

 

15.1.14    **MMBTU** shall mean one million (1,000,000) BritishThermal Units.

 

15.1.15    **MMCF** shall mean one million (1,000,000) Cubic Footof Gas.

 

15.1.16    **Month******shall mean that period of time beginning onthe first Day of a calendar Month and ending on the first Day of the followingcalendar Month, except that the first Month shall commence on the Day ofinitial receipt of Gas hereunder and shall end on the first Day of thefollowing calendar Month.

 

15.1.17    **Natural Gas Liquids or NGL’s** shall mean those liquid hydrocarbonsextracted from the Gas from Processing. The components (“Components”) of the NGL’s are identified as ethane,propane, iso-butane, normal butane, natural gasolines and

 

12

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incidental methane and other miscellaneous liquids thatbecome associated with the NGL’s.

 

15.1.18    **NYMEX****Gas Close Price** shall mean the last NYMEX contract settlementprice for Henry Hub gas that occurs in the Month preceding the applicable Month.

 

15.1.19    **Psig** shall mean pounds per square inch gauge.

 

15.1.20    **Psia** shall mean pounds per square inch absolute.

 

15.1.21    **Plant(s)** shall mean Gas Processing facilities whereNatural Gas Liquids and other Plant Products are separated from the Gas as aresult of Processing.

 

15.1.22    **Plant Products** shall mean the Natural Gas Liquids andhelium, if any, as extracted from Processing.

 

15.1.23    **Processing** shall mean the extraction of Natural Gas Liquidsfrom the Gas through equipment specifically intended to extract Natural GasLiquids and/or Plant Products from the Gas such as turboexpander (cryogenic),refrigeration, refrigerated lean oil absorption, ambient oil absorption, joulethompson or similar processes.

 

15.1.24    **Receipt Point(s)** shallmean the inlet flange of BUYER’s pipeline facilities installed to takedeliveries of Gas from SELLER.

 

15.1.25    **Treating** shall mean the treating process by whichcontaminates are removed from the Gas or Natural Gas Liquids.  These contaminates can be, but not limitedto, hydrogen sulfide, sulfur compounds, carbon dioxide and mercury.

 

15.1.26    **Wells** shall mean the Well or Wells productive ofGas from all geological formations which is completed on the Leases describedin Exhibit “B” attached hereto and in which SELLER has an interest, ownsor controls the right to dispose of Gas produced therefrom.

 

15.1.27    **Year** shall mean any period of twelve (12)consecutive calendar Months.

 

**XVI.  MISCELLANEOUS**

 

16.1         **Changes****.**  Allmodifications, ratifications, amendments or changes to this Agreement, whether madesimultaneously with or after the execution of this Agreement shall be inwriting, executed by both BUYER and SELLER, and attached hereto.

 

16.2         **Regulation****.**  ThisAgreement shall be subject to all valid rules, regulations, interpretations,and orders of any duly constituted federal or state regulatory body havingjurisdiction hereof.  This Agreement andthe respective rights and obligations of the parties hereto are subject to all existingand future laws, statutes, rules, regulations, orders or directives promulgatedby any duly constituted state or federal governmental authority, regulatorybody or commission having jurisdiction or control over the parties, theirrespective facilities or services contemplated herein.  Should either party be ordered or required todo any act inconsistent with the provisions of this Agreement, this Agreementshall be deemed modified to conform to the requirements of such law orregulation.  If any provision of thisAgreement is held to be illegal, invalid, unenforceableor have a material and substantial negative impact on the rights, duties or obligationsof either party, then the parties shall meet in good faith to determine if suchnegative impact can be eliminated or mitigated. If such negative impact cannot be eliminated or mitigated to thesatisfaction of either party, then either party shall have the right toterminate this Agreement.

 

16.3         **Assignment****.**  BUYERmay assign all or part of its rights under this Agreement, provided that BUYERshall within ten (10) Days after any such assignment provide to SELLER acopy of all instruments effecting that assignment.  SELLER may not in any circumstances assign allor any

 

13

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part of its rights under this Agreement without the prior written consentof BUYER.  No claim or demand againstBUYER under this Agreement shall be assigned or transferred by SELLER withoutthe prior written consent of BUYER.

 

16.4         **Entire Agreement.**  ThisAgreement contains the entire agreement between the parties hereto and thereare no oral promises, agreements, or warranties affecting same.

 

16.5         **Headings.**  Thetopical headings and index used herein are inserted for convenience only and shallnot be construed as having any substantive significance or meaning whatsoever,or as indicating that all of the provisions of this Agreement relating to anyparticular topic are to be found in any particular section.

 

16.6         **Interpretations.**  Theparties hereto agree and confirm that, in the consideration and interpretationof this Agreement, same shall be construed under the laws of the State ofTexas, excluding any conflicts of law, rule, principle, or law which mightrefer to the laws of another state and this Agreement was prepared by allparties hereto and not by any party to the exclusion of the other or others.

 

16.7         **Independent Contractor.**  It isnot the intention of the parties hereto to create, nor is there created hereby,a partnership, joint venture, or association. The status of each party hereunder is solely that of an independentcontractor.

 

16.8         **Confidentiality.** SELLER AGREES THAT THE TERMS AND CONDITIONS OF THIS AGREEMENT WILL BEHELD CONFIDENTIAL AND SHALL NOT BE DISCLOSED TO OTHER PARTIES WITHOUT CONSENTOF BUYER UNLESS THAT DISCLOSURE IS REQUIRED BY FEDERAL OR STATE LAW ORAGENCY.  SELLER SHALL FURNISH BUYERPROMPT NOTICE IF SUCH DISCLOSURE IS MADE.

 

16.9         **Damages****.**

 

16.9.1  In no event shall either party be liable to theother for consequential, incidental, special, punitive, indirect damages, lostprofits, or other business interruption damages in connection with theperformance or nonperformance of the parties under this Agreement.

 

16.9.2  THE PARTIES CERTIFY THAT THEY ARE NOT “CONSUMERS”WITHIN THE MEANING OF THE TEXAS DECEPTIVE TRADE PRACTICES CONSUMER PROTECTIONACT, SUBCHAPTER E OF CHAPTER 17, SECTIONS 17.41 *ET SEQ.  *OF THE TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED, (“DTPA”).THE PARTIES COVENANT, FOR THEMSELVES AND FOR AND ON BEHALF OF ANY SUCCESSOR ORASSIGNEE, THAT, IF THE DTPA IS APPLICABLE TO THIS AGREEMENT, (1) THEPARTIES ARE “BUSINESS CONSUMERS” AS THAT TERM IS DEFINED IN THE DTPA, (2) OTHERTHAN SECTION 17.555 OF THE TEXAS BUSINESS AND COMMERCE CODE, EACH PARTYHEREBY WAIVES AND RELEASES ALL OF ITS RIGHTS AND REMEDIES THEREUNDER ASAPPLICABLE TO THE OTHER PARTY AND ITS SUCCESSORS AND ASSIGNS, AND (3) **EACH PARTY SHALL DEFEND AND INDEMNIFY THE OTHER PARTY FROM AND AGAINSTANY AND ALL CLAIMS OF OR BY THE INDEMNIFYING PARTY OR ANY OF ITS SUCCESSORS ANDASSIGNS OR ANY OF ITS OR THEIR AFFILATES OR SUBSIDIARIES BASED IN WHOLE OR IN PARTON THE DTPA ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.**

 

16.10       **Replacement****.**  ThisAgreement terminates and supersedes any prior agreements for the sale of gasbetween the parties or their predecessors in interest concerning any gasproduced from any sources covered by this Agreement described in Exhibit “B”hereto as of the Effective Date.

 

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16.11       **Purpose of Agreement****.**  Theparties agree that the Prior Gas Purchase Agreement between SELLER and BUYERcovering the gas produced from those sources covered by this Agreement (the “PriorAgreement”), was terminated effective December 31, 2004, by BUYER inaccordance with the provisions of the Prior Agreement.  The purpose of this Agreement is to provide atemporary agreement pertaining to the sale and purchase of gas produced fromthe sources covered by this Agreement, to allow the parties time to (i) negotiate,if possible, a long term agreement for the purchase and sale of said gas; and (ii) negotiate,if possible, a resolution of the SELLER’s claims asserted against BUYER underthe Prior Agreement in Case No. 32,558 in the 223rd JudicialDistrict Court of Gray County, Texas (the “Litigation”). Notwithstandinganything contained in this Agreement to the contrary, it is specificallyunderstood and agreed between the parties that (i) this Agreement isdifferent from the Prior Agreement, and nothing contained herein reflects or isprobative of the understandings or intentions of the parties to the PriorAgreement, or any of the terms contained therein; (ii) nothing containedin this Agreement shall diminish or otherwise affect SELLER’s claims assertedin the Litigation, which shall remain valid and subsisting; and (iii) thisAgreement is not relevant to any of the issues asserted in the Litigation forany purpose.

 

INWITNESS WHEREOF, the parties have executed this Agreement in one or more copiesor counterparts, each of which, when executed by BUYER and SELLER, shallconstitute and be an original effective Agreement between BUYER and suchSELLER.

 
| **“BUYER”**              | ** **           | **“SELLER”**        |
|------------------------------------|----------------------|-------------------------------|
| ONEOK  Texas Field Services, L. P. |                 | W.O.  OPERATING COMPANY, LTD. |
| a  limited partnership             |                 |                          |
| By:  ONEOK Field Services Company  |                 |                          |
| general  partner                   |                 |                          |
|                               |                 |                          |
|                               |                 |                          |
| By:                                | /s/ Terry K. Spencer |                          |   | By: | /s/ Miles O’Loughlin |   |
|                               |                 |                          |
| Name:  Terry K. Spencer            |                 | Name:                         | Miles O’Loughlin |   |
|                               |                 |                          |
| Title:  Vice President             |                 | Title:                        | Manager |   |
|                               |                 |                          |
| Date:                              | 2/18/05              |                          |   | Date: | Feb. 11, 2005 |   |
|                                    |                      |                               |  |  |  |  |  |  |  |

 

15

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**EXHIBIT “A”Percent of ProceedsAllocated Plants**

 

This Exhibit “A” is incorporated intothat certain Gas Purchase Agreement dated JANUARY 1, 2005, by and betweenONEOK Texas Field Services, L.P., hereinafter referred to as “BUYER,” and W.O.OPERATING COMPANY, LTD., hereinafter referred to as “SELLER.”

 

BASISOF COMPENSATION shall be the sum of the following:

 

1.             NGL Products Payment.  BUYERshall pay to SELLER an amount equal to EIGHTY-FIVE percent (85%) of the Net NGLProceeds.

2.             Residue Gas Payment.  BUYERshall pay to SELLER an amount equal EIGHTY-FIVE percent (85%) of the NetResidue Proceeds.

3.             Compression Fee.  Notapplicable

4.             Gathering Fee.  Notapplicable.

5.             Dehydration Fee.  BUYERshall not charge a dehydration fee under this Agreement.

6.             Treating Fee.  Notapplicable.

 

DEFINITIONS:

 

SELLER’sNGL Products shall bedetermined by multiplying the total quantity of each NGL Component saved andsold at thePlant(s) by a fraction, the numerator of which shall be the theoretical gallonsof such Component contained in SELLER’s Gas delivered at the Receipt Point(s)and the denominator of which shall be the total theoretical gallons of eachComponent contained in all Gas delivered to BUYER’s facilities upstream of thePlant(s).

 

NetNGL Proceeds shall bethe sum of each Component of SELLER’s NGL Products multiplied by the MonthlyAverage NGL Sales Price of each Component.

 

MonthlyAverage NGL Sales Priceshall mean the average net price received by BUYER f.o.b. BUYER’s Plant for thesale of each NGL Component.

 

ResidueGas shall mean thetotal quantity of MMBTU’s of gas (both processed and unprocessed) sold at thetailgate of BUYER’s Plant(s).

 

NGLShrinkage shall bethe sum of the BTU equivalent (BTU/gal, fuel as ideal gas) of each such NGLComponent as set forth in the GPA Standard 2145, as revised, “Table of PhysicalConstants of Paraffin Hydrocarbons and Other Components of Natural Gas with theexception of hexanes plus, the value of which shall be 117,007 BTU per gallon.

 

ResiduePrice shall meanaverage net price per MMBTU received by BUYER, f.o.b. BUYER’s Plant for thesale of Residue Gas.

 

NetResidue Proceedsshall be determined by multiplying SELLER’s Residue Gas by the Residue Price.

 

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SELLER’sResidue Gas shall bethe total MMBTU’s of Residue Gas multiplied by a fraction, the numerator ofwhich shall be the MMBTU’s contained in SELLER’s Gas at the Receipt Point(s),less the MMBTU’s of NGL Shrinkage attributable to SELLER’s NGL Products and thedenominator of which shall be the total MMBTU’s of all gas delivered to BUYERupstream of BUYER’s Plant less NGL Shrinkage attributable to the total quantityof NGL Components saved and sold from BUYER’s Plant(s).

 

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**EXHIBIT “B”**

 

This Exhibit “B” is incorporated intothat certain Gas Purchase Agreement dated the 1st day of January, 2005, by andbetween ONEOK Texas Field Services, L. P., hereinafter referred to as “BUYER,”and, W. O. Operating COMPANY, Ltd., hereinafter referred to as “SELLER.”

 

SELLER dedicates to this Gas Purchase Agreement, as amended from timeto time, the Wells and Leases described below:

 
| **Wells/Lease**       | ** ** | **Lands/Lease Description**         | ** ** | **County** | ** ** | **State** | ** ** | ***WI%** |
|-----------------------|------------|-------------------------------------|------------|------------|------------|-----------|------------|----------|
|                  |       |                                |       |       |       |      |       |     |
| Jord                  |       | Sec.  106, Blk. 4, I&GN         |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #40281)        |       | RR  Co. Survey                      |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| D.  Jordan            |       | SW/4  of Sec. 114, Blk. 4, I&GN |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #40481)        |       | RR  Co. Survey                      |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| Jordan  D, S-West     |       | S/2,  SW/4 of Sec. 105, Blk. 4,     |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #40491)        |       | I&GN  RR Co. Survey             |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| Block                 |       | W/2  NE/4 of Sec. 112, Blk. 4       |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #41341)        |       | I&GN  RR Co. Survey             |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| Block  “A”  |       | N/2  NW/4 SE/4, SE/4 NW/4           |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #41261)        |       | SE/4,  N/2 NE/4 SE/4,               |       |       |       |      |       |     |
|                  |       | SE/4  NE/4 SE/4, NE/4 SW/4          |       |       |       |      |       |     |
|                  |       | SE/4,  SW/4 SE/4 SE/4 of            |       |       |       |      |       |     |
|                  |       | Sec.  111, Blk. 4, I&GN         |       |       |       |      |       |     |
|                  |       | RR  Co. Survey                      |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| Block  “B”  |       | E/2  SE/4 SE/4, NW/4 SE/4           |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #41251)        |       | SE/4,  SW/4 NE/4 SE/4,              |       |       |       |      |       |     |
|                  |       | SW/4  NW/4 SE/4, NW/4 SW/4          |       |       |       |      |       |     |
|                  |       | SE/4,  S/2 SW/4 SE/4 of Sec. 111,   |       |       |       |      |       |     |
|                  |       | Blk.  4, I&GN RR Co. Survey     |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| Block  “C”  |       | NE/4  of Sec. 111, Blk. 4,          |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #41271)        |       | I&GN  RR Co. Survey             |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| Cooper  “A” |       | NW/4  SE/4, SW/4 NE/4               |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #41411)        |       | of  Sec. 4, Blk. 9, I&GN        |       |       |       |      |       |     |
|                  |       | RR  Co. Survey                      |       |       |       |      |       |     |
|                  |       |                                |       |       |       |      |       |     |
| Cooper  “B” |       | NE/4  NE/4, N/2 SE/4 NE/4           |       | Carson     |       | Texas     |       | 100.00   |
| (Mtr.  #41471)        |       | of  Sec. 5, Blk. 9, I&GN        |       |       |       |      |       |     |
|                  |       | RR  Co. Survey                      |       |       |       |      |       |     |

 

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| Cooper “E”      |   | NW/4 of Sec. 4, Blk. 9               |   | Carson                        |   | Texas  |   | 100.00 |
|---------------------------|--------|--------------------------------------|--------|-------------------------------|--------|--------|--------|--------|
| (Mtr. #41431)             |   | I&GN RR Co. Survey               |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Cooper “G”      |   | SE/4 NE/4, NE/4 SE/4                 |   | Carson                        |   | Texas  |   | 100.00 |
| (Mtr. #41421)             |   | of Sec. 4, Blk. 9,  I&GN         |   |                          |   |   |   |   |
|                      |   | RR Co, Survey                        |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Cooper “H”      |   | E/2 NW/4 of Sec. 5, Blk. 9           |   | Carson                        |   | Texas  |   | 100.00 |
| (Mtr. #41281)             |   | I&GN RR Co. Survey               |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| E. Cooper                 |   | SW/4 of Sec. 1, SW/4 of  Sec. 4,     |   | Carson                        |   | Texas  |   | 100.00 |
| NCT A (Mtr. #41511)       |   | SW/4 of Sec, 5 all in Blk.  9,       |   |                          |   |   |   |   |
| NCT B (Mtr. #40141)       |   | I&GN RR Co. Survey               |   |                          |   |   |   |   |
| NCT C (Mtr.#41521)        |   |                                 |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Langdon                   |   | N/2 NE/4 of Sec. 125, Blk.  4,       |   | Hutchinson                    |   | Texas  |   | 100.00 |
| (Mtr. #41301)             |   | BS&F Survey                      |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Newblock                  |   | S/2 NE/4 of Sec. 125, Blk.  4,       |   | Hutchinson                    |   | Texas  |   | 100.00 |
| (Mtr. #41301)             |   | BS&F Survey                      |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Quinn                     |   | SW/4 of Sec. 7, Blk. 9,              |   | Hutchinson &Carson   |   | Texas  |   | 100.00 |
| (Mtr. #41291)             |   | I&GN RR Co. Survey               |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Siebold                   |   | E/2 SE/4 of Sec. 125, Blk.  4,       |   | Hutchinson &  Carson |   | Texas  |   | 100.00 |
| (Mtr. #41321)             |   | I&GN RR Co. Survey               |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Pitcher                   |   | NW/4 of Sec. 19, Blk. M-21           |   | Hutchinson                    |   | Texas  |   | 100.00 |
| (Mtr. #41351)             |   | TCRR Co. Survey                      |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| McConnell #1 & 3 |   | W/2 of Sec. 65, Blk 4,  I&GN     |   | Carson                        |   | Texas  |   | 100.00 |
| (Mtr. #72521 &   |   | RR Co. Survey                        |   |                          |   |   |   |   |
| 525650)                   |   |                                 |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Jordan #22                |   |                                 |   |                          |   | Texas  |   | 100.00 |
| (Mtr. #40801)             |   |                                 |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| Fee 244                   |   | E/2, SW/4 of Sec. 89, N/2  of        |   | Carson                        |   | Texas  |   | 100.00 |
| (Mtr. #248018)            |   | Sec. 90, E/2, SW/4 of Sec.  91,      |   |                          |   |   |   |   |
|                      |   | E/2 Sec. 108, All of Sec.  109, E/2, |   |                          |   |   |   |   |
|                      |   | SW/4 of Sec. 110, Blk. 4,            |   |                          |   |   |   |   |
|                      |   | I&GN RR Co. Survey               |   |                          |   |   |   |   |
|                      |   |                                 |   |                          |   |   |   |   |
| B. F. Block               |   |                                 |   | Carson                        |   | Texas  |   | 100.00 |
| (Mtr. #41331)             |   |                                 |   |                          |   |   |   |   |

 

19

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| Schafer        |   |                       |   | Carson |   | Texas  |   | 100.00 |
|----------------|--------|----------------------------|--------|--------|--------|--------|--------|--------|
| (Mtr. #248022) |   |                       |   |   |   |   |   |   |
|           |   |                       |   |   |   |   |   |   |
| Bryan ABCD     |   |                       |   |   |   |   |   |   |
| (Mtr. #40216)  |   | Sec. 92, Blk. 4, I&GN  |   | Carson |   | Texas  |   | 100.00 |
|           |   | RR Co. Survey              |   |   |   |   |   |   |
|           |   |                       |   |   |   |   |   |   |
| (Mtr. #40081)  |   | Sec. 107, Blk, 4, I&GN |   | Carson |   | Texas  |   | 100.00 |
|           |   | RR Co. Survey              |   |   |   |   |   |   |

 

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*Includesowned and/or controlled interest.

 

20

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**EXHIBIT “C”**

 

**Quality Specifications.**  Unlessexcepted by specific exemption on Exhibit “B”attached hereto, Gas from each Receipt Point(s) shall meet the followingquality specifications:

 

Hydrogen Sulfide.  The Gas shall not contain morethan one part per million (1 ppm) of hydrogen sulfide by volume as determinedby a method generally acceptable for use in the gas industry and to the partieshereto.

 

Total Sulfur.  The Gas shall not contain morethan one quarter (1/4) grain of total sulfur per one hundred (100) Cubic Footof Gas as determined by a method generally acceptable for use in the gas industryand to the parties hereto.

 

Temperature.  The Gas shall not have a temperature of lessthan forty degrees Fahrenheit (40°F) nor more than one hundred-twenty degreesFahrenheit (120°F).

 

Carbon Dioxide.  The Gas shall not contain inexcess of three-tenths of one percent (0.3%) by volume of carbon dioxide.

 

Nitrogen.  The Gas shall not contain in excess of twopercent (2%) by volume of nitrogen.

 

Oxygen.  The Gas shall not contain in excess of tenparts per million (10 ppm) by volume of oxygen.

 

Objectionable Liquids, Solids, Contaminants.  TheGas shall be free of liquids and solids and other potentially harmfulcontaminants such as arsenic, mercury, selenium, radon, or antimony, Well treating chemicals, dust, gums, gum-formingconstituents, or other objectionable liquid or solid matter.

 

Hazardous Waste.  The Gas shall be free from all “hazardouswaste” as defined in the Resources Conservation and Recovery Act, 42 USC 6901,et seq.

 

Water.  The Gas shall not contain free water.  Gas which contains in excess of seven (7) poundsof water vapor per one million (1,000,000) Cubic Foot shall incur a charge fordehydration service as shown in Exhibit “A” attached hereto.

 

Mercaptans.  The Gas shall have a mercaptan content not inexcess of one tenth of one part per million (0.1 ppm) by volume.

 

Hydrogen.  The Gas shall contain no carbon monoxide,halogens, or unsaturated hydrocarbons, and no more than four hundred parts permillion (400 ppm) of hydrogen.

 

Hydrocarbon Constituents.  The Gas shall have not lessthan a ninety-five percent (95%) hydrocarbon constituency by volume and shallhave a Heating Value of not less than one thousand (1,000) BTU per Cubic Foot.

 

21

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