<PAGE>


                           PURCHASE AND SALE AGREEMENT
                                 BY AND BETWEEN
                         COLORADO INTERSTATE GAS COMPANY
                                    AS SELLER

                                       AND

                       PIONEER NATURAL RESOURCES USA, INC.
                                    AS BUYER


                              PANHANDLE AREA, TEXAS

                                GATHERING SYSTEM



<PAGE>


                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>      <C>                                                                                                    <C>
1.       SALE AND PURCHASE OF THE ASSETS..........................................................................1
         1.1      Acquired Assets.................................................................................1
         1.2      Excluded Assets and Concurrent Use Assets.......................................................3
         1.3      Assumed Liabilities.............................................................................3
         1.4      Retained Liabilities............................................................................3
         1.5      Contract Document Effect........................................................................4
         1.6      Pre-Effective Time 'B' Contract Rights and Obligations..........................................4

2.       PURCHASE PRICE...........................................................................................4
         2.1      Purchase Price..................................................................................4
         2.2      Adjustments to the Base Purchase Price..........................................................4
         2.3      Allocation......................................................................................6
         2.4      Allocation For Tax Purposes.....................................................................6
         2.5      No Double-Dipping...............................................................................7

3.       CLOSING..................................................................................................7
         3.1      Gathering Initial Closing.......................................................................7
         3.2      Gathering Assets Closing........................................................................9
         3.3      Delivery By Buyer..............................................................................10
         3.4      Further Cooperation............................................................................11
         3.5      Notice of Breach...............................................................................11
         3.6      Post-GAC Fuel Transportation...................................................................11

4.       ACCOUNTING ADJUSTMENTS..................................................................................12
         4.1      Closing Adjustments............................................................................12
         4.2      Metering.......................................................................................13
         4.3      Pioneer Management Fee.........................................................................13
         4.4      Post-GAC Closing Adjustments...................................................................13
         4.5      Suspended Funds................................................................................14
         4.6      Audit Adjustments..............................................................................14
         4.7      Asset Tax Refunds..............................................................................14
         4.8      [INTENTIONALLY DELETED]........................................................................15
         4.9      Cooperation....................................................................................15
         4.10     [INTENTIONALLY DELETED]........................................................................15

5.       DUE DILIGENCE; TITLE MATTERS............................................................................15
         5.1      General Access.................................................................................15
         5.2      Seller's Title.................................................................................16
         5.3      Good and Marketable Title......................................................................16
         5.4      INTENTIONALLY DELETED..........................................................................18
         5.5      Defect Letters.................................................................................18
         5.6      Effect of Title Defect.........................................................................21
         5.7      INTENTIONALLY DELETED..........................................................................23
         5.8      Exclusive Remedy...............................................................................23
</TABLE>





                                       ii
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>      <C>                                                                                                    <C>
6.       ENVIRONMENTAL ISSUES....................................................................................23
         6.1      Resolution of Environmental Issues.............................................................23
         6.2      Seller's $5,000,000 Post-Closing Environmental Contribution....................................23
         6.3      Buyer's and Seller's 50/50 Sharing of Costs and Expenses for Certain Groundwater Matters.......24
         6.4      Cooperation and Final Decision.................................................................24
         6.5      Physical Condition of the Assets...............................................................25
         6.6      Definitions....................................................................................25
         6.7      Disclaimer.....................................................................................26
         6.8      Remediation....................................................................................26
         6.9      Bivins Station Groundwater Matter..............................................................27

7.       REPRESENTATIONS AND WARRANTIES OF SELLER................................................................27
         7.1      Seller's Representations and Warranties........................................................27
         7.2      Scope of Representations of Seller.............................................................29

8.       REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................31
         8.1      Buyer's Representations and Warranties.........................................................31

9.       CERTAIN AGREEMENTS OF SELLER............................................................................32
         9.1      Maintenance of Assets..........................................................................32
         9.2      Consents or Assignments........................................................................33
         9.3      INTENTIONALLY DELETED..........................................................................33
         9.4      INTENTIONALLY DELETED..........................................................................33
         9.5      Records and Contracts..........................................................................33
         9.6      INTENTIONALLY DELETED..........................................................................34
         9.7      Gas Quality Waiver.............................................................................34
         9.8      FERC Abandonment...............................................................................34

10.      CERTAIN AGREEMENTS OF BUYER.............................................................................35
         10.1     INTENTIONALLY DELETED..........................................................................35
         10.2     INTENTIONALLY DELETED..........................................................................35
         10.3     Seller's Logos.................................................................................35
         10.4     Buyer's FERC Filing............................................................................35
         10.5     Like-Kind Exchanges............................................................................35
         10.6     INTENTIONALLY DELETED..........................................................................35

11.      CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............................................................35
         11.1     No Litigation..................................................................................35
         11.2     Representations and Warranties.................................................................35
         11.3     Acquisition of Production Assets...............................................................36
         11.4     Seller's Receipt of Waiver.....................................................................36
         11.5     No Litigation..................................................................................36
         11.6     Representations and Warranties.................................................................36
         11.7     FERC Order.....................................................................................36
         11.8     FERC Abandonment Approval......................................................................36
</TABLE>



                                      iii

<PAGE>
<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>      <C>                                                                                                    <C>

12.      CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.......................................................36
         12.1     No Litigation..................................................................................36
         12.2     Representations and Warranties at the GIC......................................................36
         12.3     Waivers of Restrictions........................................................................37
         12.4     Disposition of Production Assets...............................................................37
         12.5     No Litigation..................................................................................37
         12.6     Representations and Warranties.................................................................37
         12.7     FERC Abandonment Approval......................................................................37

13.      TERMINATION.............................................................................................37
         13.1     Causes of Termination..........................................................................37
         13.2     Effect of Termination..........................................................................38
         13.3     Unacceptable FERC Abandonment Action...........................................................38

14.      INDEMNIFICATION.........................................................................................39
         14.1     Indemnification By Seller......................................................................39
         14.2     Indemnification By Buyer.......................................................................40
         14.3     INTENTIONALLY DELETED..........................................................................40
         14.4     Notification...................................................................................40
         14.5     Limitation on Damages..........................................................................41
         14.6     Benefit........................................................................................41

15.      MISCELLANEOUS...........................................................................................41
         15.1     Casualty Loss..................................................................................41
         15.2     Third Party Beneficiaries......................................................................42
         15.3     Competition....................................................................................42
         15.4     Notice.........................................................................................42
         15.5     Press Releases and Public Announcements........................................................43
         15.6     Counterparts...................................................................................43
         15.7     Compliance With Express Negligence Test........................................................43
         15.8     Governing Law..................................................................................43
         15.9     Exhibits.......................................................................................44
         15.10    Fees, Expenses, Taxes and Recording............................................................44
         15.11    Assignment.....................................................................................44
         15.12    Entire Agreement...............................................................................44
         15.13    Severability...................................................................................45
         15.14    Captions.......................................................................................45
         15.15    Survival.......................................................................................45
</TABLE>



                                       iv
<PAGE>







Exhibits:

A                 'B' Contract Documents
1.1(A)-1          Facilities and Related Assets
1.2               Excluded Assets
1.2(A)            Concurrent Use Assets
2.3               Allocation
3.2(A)            Form of Assignment
3.2(B)            Certifications of Non-Foreign Status
3.2(E)            Amendments to GSOA
5.3(B)            Other Agreements (Gas Gathering)
5.3(B)(ii)(6)     Liens
6.9               Bivins Groundwater Report dated May 2001 (URS Corp.)
7.1(D)            Authorization for Expenditure's
7.1(E)            Contractual Restrictions
7.1(F)            Litigation
7.1(I)            Tax Liability
7.1(L)            Valid Agreements
15.15             Survival






                                       v
<PAGE>

                             INDEX OF DEFINED TERMS

<Table>
<Caption>
                       DEFINED TERM                                     SECTION                       PAGE
                       ------------                                     -------                       ----
<S>                                                                    <C>                           <C>
1987 Gathering Agreement                                               3.1(A)(i)                        7
2001 Gathering Agreement                                               3.1(A)(i)                        7
Adverse Environmental Condition                                         6.6(A)                         25
Affected Wells                                                         5.6(B)(i)                       22
Agreement                                                              Preamble                         1
Allocated Value/Allocated Values                                          2.3                           6
Assets                                                                    1.1                           1
Asset Taxes                                                           2.2(A)(ii)                        4
Assumed Liabilities                                                       1.3                           3
Base Purchase Price                                                       2.1                           4
'B' Contract                                                           Preamble                         1
'B' Contract Documents                                                 Preamble                         1
Bivins Station Groundwater Matter                                         6.9                          27
Buyer                                                                  Preamble                         1
Buyer Group                                                              14.1                          39
Buyer's Response                                                      5.5(C)(ii)                       19
Casualty                                                                15.1(A)                        42
Casualty Loss                                                           15.1(B)                        42
CIG                                                                    Preamble                         1
CIG System                                                                1.2                           3
CIGPC                                                                 3.1(A)(ii)                        8
CIG's Tariff                                                              9.7                          34
Code                                                                      2.4                           6
Contracts                                                               1.1(B)                          2
Effective Time                                                        2.2(A)(iii)                       5
Excluded Records                                                          9.5                          34
</TABLE>



                                       vi

<PAGE>
<Table>
<Caption>
                       DEFINED TERM                                     SECTION                       PAGE
                       ------------                                     -------                       ----
<S>                                                                    <C>                           <C>
GAC Closing Adjustment Statement                                        4.1(B)                         12
GIC Closing Adjustment Statement                                        4.1(A)                         12
Gathering Assets Closing (GAC)                                            3.2                           9
Gathering Assets Closing Date (GAC Date)                                  3.2                           9
Gathering Initial Closing (GIC)                                           3.1                          10
Gathering Initial Closing Date (CIG Date)                                 3.3                           7
GOF                                                                    3.1(A)(i)                        7
Effective Time                                                        2.2(A)(iii)                       5
Environmental Laws                                                      6.6(C)                         26
Excluded Assets                                                           1.2                           3
Excluded Records                                                          9.5                          34
Facilities                                                              1.1(A)                          2
FERC                                                                    1.1(C)                          2
FERC Abandonment Approval                                                12.7                          37
FTSA                                                                      3.6                          11
Good and Marketable Title                                                 5.3                          16
GSOA                                                                    3.1(B)                          8
Interest                                                              2.2(A)(vii)                       5
LOSS/LOSSES                                                             14.1(A)                        39
NORM                                                                      6.5                          25
Notice                                                                  5.5(A)                         18
Party/Parties                                                          Preamble                         1
Permitted Encumbrances                                                5.3(A)(ii)                       16
Post-GAC Adjustment Statements                                          4.4(A)                         13
Production Assets Closing                                                 3.1                           7
Production Assets PSA                                                     1.2                           3
Purchase Price                                                            2.2                           4
Records                                                                 1.1(H)                          3
</TABLE>


                                      vii
<PAGE>
<Table>
<Caption>
                       DEFINED TERM                                     SECTION                       PAGE
                       ------------                                     -------                       ----
<S>                                                                    <C>                           <C>
Related Assets                                                          1.1(D)                          2
Remediate/Remediation                                                   6.6(B)                         25
Retained Liabilities                                                      1.4                           4
Seller                                                                 Preamble                         1
Seller Group                                                             14.2                          40
Seller's Response                                                      5.5(C)(i)                       19
Tax/Taxes                                                               7.1(I)                         29
Title Consultant                                                      5.5(C)(iii)                      20
Title Defect Hurdle Rate                                                5.5(A)                         19
Title Defect Value                                                      5.6(B)                         22
Valid Title Defect                                                      5.5(A)                         19
Value Consultant                                                      5.5(C)(iv)                       20
Westpan                                                               3.1(A)(ii)                        8
Wells                                                                  5.6(B)(i)                       22
</Table>



                                      viii

<PAGE>


                           PURCHASE AND SALE AGREEMENT


         This Purchase and Sale Agreement (this "Agreement") is entered into
this 13th day of April, 2002, by and between COLORADO INTERSTATE GAS COMPANY a
Delaware corporation ("CIG"), and ("Seller") and PIONEER NATURAL RESOURCES USA,
INC., a Delaware corporation, ("Buyer," and "Buyer" includes any qualified party
designated by Buyer to acquire all or part of the Assets but only to the extent
related to the Assets acquired by said designee). Buyer and Seller are
collectively referred to herein as the "Parties" and sometimes individually
referred to as a "Party."


                                    RECITALS:

A.       Seller desires to sell to Buyer certain gas gathering facilities and
         related easements and other real and personal property interests on the
         terms and conditions set forth in this Agreement.

B.       Seller and Buyer (and/or Seller's and Buyer's affiliates) are parties
         to certain agreements and other instruments related to such properties
         and assets ("'B' Contract"), which agreements and other instruments are
         identified on Exhibit "A" to this Agreement ("'B' Contract Documents").

C.       Buyer desires to purchase or have its designee purchase from Seller
         such assets on the terms and conditions set forth in this Agreement.

                                   WITNESSETH:

         In consideration of the mutual agreements contained in this Agreement,
Buyer and Seller agree as follows:

1.       SALE AND PURCHASE OF THE ASSETS.

1.1      Acquired Assets. Subject to the terms and conditions of this Agreement,
         Seller agrees to sell, convey and deliver to Buyer and Buyer agrees to
         purchase and acquire or cause its designee to purchase and acquire from
         Seller all of Seller's right, title and interest in and to the
         following (collectively, the "Assets"):

         (A)  All of the real, personal and mixed property and facilities
              comprising Seller's Panhandle Field gas gathering system which is
              that Seller-owned gathering system located in Potter, Moore,
              Hutchinson, Carson, Oldham and Hartley Counties, Texas, including,
              without limitation, the pipelines, compression and other
              equipment, machinery, tanks, pumps, engines, heaters, meters,
              liquid handling facilities, tools, fire equipment, parts, pipe,
              supplies and other tangible personal property relating to or
              necessary for or used in connection with such gathering system,
              including pipelines and related property used to deliver processed
              fuel gas to compressors that


                                       1
<PAGE>

              are part of such gathering system, and all as more fully described
              and depicted in Exhibit 1.1(A)-1 (collectively "Facilities").

         (B)  To the extent assignable and applicable to the Facilities, all
              licenses, gas gathering agreements and processing agreements to
              the extent that the same pertain or relate to periods after the
              GIC Date, as hereinafter defined, except as provided in Section
              3.1(E)(iii), operating agreements, options, leases of equipment or
              facilities, utility contracts and intrastate gas transportation
              agreement between Seller, as shipper, and OneOK, as transporter,
              which are owned by Seller, in whole or in part, and are
              appurtenant to or necessary to the operation of the Facilities
              (collectively, the "Contracts"). The Contracts include, (except to
              the extent previously assigned to Buyer, and as set forth in
              Section 4.6 and on Exhibit 1.2): (i) the 'B' Contract Documents
              and all of Seller's rights and obligations thereunder; and (ii)
              the gas gathering and other agreements identified on Exhibit
              5.3(B) and all of Seller's rights and obligations thereunder.

         (C)  To the extent assignable, all governmental permits, licenses and
              authorizations (excluding those from the Federal Energy Regulatory
              Commission or its predecessor ["FERC"]), as well as any
              applications for the same, related to the Facilities or the use
              thereof.

         (D)  All of the real, personal and mixed property and facilities
              located in, on or adjacent to the Facilities or used solely in the
              operation thereof which are owned by Seller, in whole or in part,
              including, without limitation, the easements, rights of way, fee
              interests, buildings, surface leases and other rights, privileges,
              benefits and powers with respect to the use and occupation of the
              surface of the land covered by the Facilities described and
              depicted in Exhibit 1.1(A)-1 ("Related Assets").

         (E)  All tenements, hereditaments and appurtenances belonging to or
              arising from the Assets and not otherwise excluded herein.

         (F)  All rights and benefits, intangible and tangible, pertaining to
              the Assets and all warranties and indemnities in favor of Seller
              or its predecessors in interest from other parties relating to the
              Assets;

         (G)  Every other interest in or pertaining to the Facilities and the
              Assets even if not described, or not fully or accurately described
              herein, it being the intent of Seller and Buyer that Buyer receive
              all of Seller's interest and that Seller retain no such interest
              except as expressly provided otherwise herein.

         (H)  All of Seller's files, records and data (including electronic and
              physical records and data) relating to the items described in
              subsections (A), (B), (C), (D), (E), (F) and (G) above, including,
              without limitation, title records (title curative documents);
              surveys, maps and drawings; contracts;


                                       2
<PAGE>
              correspondence; except: (i) to the extent the transfer, delivery
              or copying of such records may be restricted by contract with a
              third party; (ii) all documents and instruments of Seller that may
              be protected by a legal privilege, including without limitation
              the attorney-client privilege and the work product privilege; and
              (iii) all accounting and Tax files, books, records, Tax returns
              and Tax work papers related to such items [collectively the
              "Records"]. Seller represents that to the best of its knowledge
              there are no records meeting the description in Section 1.1(H)(i).

         If any of the foregoing items listed in Sections 1.1(B) and (D) are not
         assignable, Seller shall hold such non-assignable items as nominee for
         Buyer.

1.2      Excluded Assets and Concurrent Use Assets. Notwithstanding the
         foregoing, the Assets shall not include, and there is excepted,
         reserved and excluded from the purchase and sale contemplated herein:
         (i) those items listed in Exhibit 1.2 (the "Excluded Assets"); and (ii)
         the assets conveyed to Buyer pursuant to that certain Purchase and Sale
         Agreement dated April 8, 2002, between Buyer, Seller and Seller's
         affiliates ("Production Assets PSA"). It is the intent of Buyer and
         Seller that Seller retain all rights and interests relating solely to
         Seller's FERC-jurisdictional transmission system ("CIG System") even if
         not fully or accurately described in Exhibit 1.2 hereto. In addition,
         Exhibit 1.2(A) sets forth provisions regarding facilities and property
         that are or may be used concurrently in the operation of the Facilities
         as well as the CIG System.

1.3      Assumed Liabilities. Except as provided otherwise in this Agreement, or
         for matters for which an accounting or other adjustment is made
         pursuant to this Agreement, or for which provision is made in another
         agreement, on and after the GAC, Buyer shall assume and agree to timely
         and fully pay, perform and otherwise discharge, all of the liabilities
         and obligations of Seller and its successors, assigns or
         representatives, direct or indirect, known or unknown, asserted or
         unasserted, absolute or contingent, accrued or unaccrued, which relate,
         directly or indirectly, to the Assets (other than the Excluded Assets),
         to the extent such liabilities and obligations accrue on or after the
         GAC and Buyer also assumes certain liabilities for the pre-Effective
         Time regarding environmental issues as described in Article 6
         (collectively, the "Assumed Liabilities"). Notwithstanding the
         foregoing, Assumed Liabilities shall not include, and there is
         excepted, reserved and excluded from such liabilities assumed by Buyer,
         the liabilities and obligations for which Seller indemnifies Buyer
         against pursuant to Article 14.

1.4      Retained Liabilities. Except as provided otherwise in this Agreement,
         or for matters which an accounting or other adjustment is made pursuant
         to this Agreement, or for which provision is made in another agreement,
         on and after the GAC, Seller shall retain and agree to timely and fully
         pay, perform and otherwise discharge, all of the liabilities and
         obligations of Seller and its,


                                       3
<PAGE>

         successors, assigns or representatives, direct or indirect, known or
         unknown, asserted or unasserted, absolute or contingent, accrued or
         unaccrued, which relate, directly or indirectly, to the Excluded
         Assets, whenever accruing or occurring and Seller also retains certain
         liabilities for the pre-Effective Time regarding environmental issues
         as described in Article 6 (collectively, the "Retained Liabilities").
         Notwithstanding the foregoing, Retained Liabilities shall not include,
         and there is excepted, reserved and excluded from such liabilities
         assumed by Seller, the liabilities and obligations for which Buyer
         indemnifies Seller against pursuant to Article 14.

1.5      'B' Contract Document Effect. Sections 1.3 and 1.4 above shall take
         into account the gain or benefit which either Party would have received
         and/or the loss or burden for which either Party would be obligated
         under the terms of the 'B' Contract Documents up to the Effective Time
         as if this Agreement had not been executed, except as otherwise
         expressly provided in this Agreement.

1.6      Pre-Effective Time 'B' Contract Rights and Obligations. Except as
         otherwise provided in this Agreement (including Article 6), Seller and
         Buyer reserve all rights, obligations and claims under the 'B' Contract
         Documents with respect to the period prior to the Effective Time as the
         terms of the 'B' Contract Documents exist on the Effective Time.

2.       PURCHASE PRICE.

2.1      Purchase Price. The purchase price for the Assets is Nineteen Million
         Five Hundred Thousand Dollars ($19,500,000.00) (the "Base Purchase
         Price"), subject to the adjustments provided for herein.

2.2      Adjustments to the Base Purchase Price. At the Gathering Initial
         Closing and as adjusted for changes as of the GAC, appropriate
         adjustments to the Base Purchase Price shall be made as follows in
         accordance with Section 4.1 (as adjusted, the "Purchase Price"):

         (A) The Base Purchase Price shall be adjusted upward by:

             (i)     an amount equal to the amount of proceeds derived from the
                     gathering of Oil and Gas actually received by Buyer and
                     directly attributable to the Facilities which are, in
                     accordance with generally accepted accounting principles,
                     attributable to the period of time prior to the Effective
                     Time and attributable to Seller pursuant to Section 4.2;

             (ii)    Asset Taxes which are attributable to periods (or portions
                     thereof) beginning on or after the Effective Time and
                     ending on the GAC, other than such Taxes which are assumed
                     and paid by Buyer. For purposes of this Agreement, "Asset
                     Tax" shall mean any Tax in the nature of an ad valorem tax
                     which is attributable to any Asset. An


                                       4
<PAGE>

                     adjustment for Asset Taxes will not be included in the GIC
                     Closing Statement;

             (iii)   an amount equal to the costs, expenses, and other
                     expenditures (whether capitalized or expensed) paid by
                     Seller in the ordinary course of business in accordance
                     with this Agreement that are attributable and chargeable to
                     the Assets for the period from 9:00 a.m. (Central Time) on
                     July 1, 2002 (the "Effective Time") to the Gathering
                     Initial Closing Date;

             (iv)    [INTENTIONALLY DELETED]

             (v)     [INTENTIONALLY DELETED]

             (vi)    [INTENTIONALLY DELETED]

             (vii)   interest on the adjusted Base Purchase Price in an amount
                     equal to the lesser of (A) the prime rate of Chase
                     Manhattan Bank, N.A., plus two percent (2%) or (B) the
                     maximum legal rate (the "Interest"), with such Interest
                     accruing from the Effective Time until the actual Gathering
                     Initial Closing Date, compounded daily, to the extent that
                     the conditions set forth in Article 11 have been satisfied
                     or waived and Buyer improperly refuses or fails to proceed
                     to Gathering Initial Closing on or before the scheduled
                     Gathering Initial Closing Date set forth in Section 3.1,
                     other than as a result of Seller's breach of this Agreement
                     or Seller's improper refusal or failure to proceed to
                     Gathering Initial Closing on or before the scheduled
                     Gathering Initial Closing Date. Interest shall not be
                     applied to the changes in the adjusted Base Purchase Price
                     that relate to period of time from the GIC to the GAC
                     anticipated in Section 2.2(A)(ii);

             (viii)  [INTENTIONALLY DELETED]

             (ix)    [INTENTIONALLY DELETED]

             (x)     any other amount agreed upon in writing by Seller and
                     Buyer.

             Provided, however, any upward adjustment to the Base Purchase Price
             shall take into account the gain or benefit which Seller would have
             received and or loss or burden for which Seller would be obligated
             under the terms of the 'B' Contract Documents up to the Effective
             Time as if this Agreement had not been executed, except as
             otherwise provided in this Agreement.

         (B) The Base Purchase Price shall be adjusted downward by:

             (i)     an amount equal to the amount of proceeds derived from the
                     gathering of Oil and Gas, actually received by Seller and
                     directly


                                       5
<PAGE>

                     attributable to the Facilities which are, in accordance
                     with generally accepted accounting principles, attributable
                     to the period of time from and after the Effective Time and
                     attributable to Buyer pursuant to Section 4.2;

             (ii)    [INTENTIONALLY DELETED]

             (iii)   an amount equal to all expenditures, liabilities and costs
                     assumed by Buyer relating to the Assets that are unpaid as
                     of the GIC Date and assessed for or attributable to periods
                     of time prior to the Effective Time provided that to the
                     extent the actual amounts cannot be determined prior to the
                     agreement of Buyer and Seller with respect to the GIC
                     Closing Adjustment Statement, a reasonable estimate of such
                     expenditures, liabilities and costs shall be used (and to
                     such extent Buyer shall assume the liability and
                     responsibility for payment of such estimate);

             (iv)    [INTENTIONALLY DELETED]

             (v)     all amounts related to Title Defects as determined pursuant
                     to Section 5.6 and Casualty Losses as determined pursuant
                     to Section 15.1; and

             (vi)    any other amount agreed upon in writing by Seller and
                     Buyer.

                  Provided however, any downward adjustment to the Base Purchase
                  Price shall take into account the loss or exposure which Buyer
                  would have incurred and/or loss or burden for which Buyer
                  would be obligated under the terms of the 'B' Contract
                  Documents, up to the Effective Time as if this Agreement had
                  not been executed, except as provided otherwise in this
                  Agreement.

2.3      Allocation. The Base Purchase Price shall be allocated to the Assets as
         set forth in Exhibit 2.3. Seller and Buyer covenant and agree that the
         values allocated to various portions of the Assets, which are set forth
         on Exhibit 2.3 (singularly with respect to each item, the "Allocated
         Value" and collectively, the "Allocated Values"), shall be binding on
         Seller and Buyer and shall be used only for the purposes of adjusting
         the Base Purchase Price pursuant to Sections 5.6 (relating to Title
         Defects) and 15.1 (relating to Casualty Losses) and is not intended as
         a measure of value for any other purpose.

2.4      Allocation For Tax Purposes. For the purpose of making the requisite
         filings under Section 1060 of the Internal Revenue Code of 1986, as
         amended, (the "Code") and the regulations thereunder, Seller and Buyer
         shall, within one hundred-twenty (120) days following the Gathering
         Assets Closing Date, agree to allocate, in a manner consistent with the
         allocation set forth on Exhibit 2.3, the Base Purchase Price (as
         adjusted by Section 2.2) and all Assumed Obligations


                                       6
<PAGE>

         among the Assets. Seller and Buyer each agree to report the federal,
         state and local income and other Tax consequences of the transactions
         contemplated herein, and in particular to report the information
         required by Section 1060(b) of the Code, and to jointly prepare Form
         8594 (Asset Acquisition Statement under Section 1060) in a manner
         consistent with such allocation and shall not take any position
         inconsistent therewith upon examination of any Tax return, in any
         refund claim, in any litigation, investigation or otherwise unless
         required to do so by applicable law after notice to the other Party or
         with such other Party's prior consent. Seller and Buyer shall each
         furnish the other a copy of Form 5894 (Asset Acquisition Statement
         under Section 1060) proposed to be filed with the Internal Revenue
         Service by such Party or any affiliate thereof within 10 days prior to
         the filing of such form with the Internal Revenue Service.

2.5      No Double-Dipping. In no event shall any upward or downward adjustment
         be made to the Base Purchase Price or the Purchase Price to the extent
         such adjustment is made in computing the Base Purchase Price or the
         Purchase Price under the Production Assets PSA or has otherwise been
         either received or paid to either Buyer or Seller pursuant to the terms
         of this Agreement or the GSOA.

3.   CLOSING.

3.1      Gathering Initial Closing. The "Gathering Initial Closing" or "GIC"
         shall occur at the same time as the closing of the purchase and sale of
         assets described in the Production Assets PSA ("Production Assets
         Closing"), subject to the occurrence of each of the following: (i) the
         fulfillment or waiver of the Conditions Precedent set forth at Articles
         11 and 12; and (ii) the absence of any termination pursuant to Article
         13 or Section 15.1. Upon and after the GIC:

         (A)  Buyer shall be entitled to receive from Seller, and be placed in
              the same economic position by Seller (i.e., with the benefits and
              detriments associated therewith) as if Buyer had owned the Assets
              beginning as of the Effective Time and continuing to the GAC. In
              furtherance thereof, upon and after the occurrence of GIC:

             (i)     Seller shall waive in writing the gathering fee as
                     described in Article III (including all Field Fuel costs as
                     described in Article IV) due Seller by Buyer under the
                     terms of the 2001 Gathering Agreement dated February 1,
                     2001, between Buyer and Seller ("2001 Gathering Agreement")
                     and the Gathering Agreement dated May 29, 1987, in Section
                     III, as amended, between Buyer and Seller ("1987 Gathering
                     Agreement"), to the extent such amounts are applicable to
                     the period from and after the Effective Time through the
                     Gathering Asset Closing. Buyer shall waive in writing the
                     Gathering Operations Fee ("GOF") provided for in the GSOA,
                     in consideration of the fee to be paid Buyer provided for
                     in Section 4.3.


                                       7
<PAGE>


             (ii)    Seller shall further waive in writing at the GIC any rights
                     it may have, if any, to all amounts due Seller from Westpan
                     NGL Co. ("Westpan"), to the extent such amounts are
                     applicable to the period from and after the Effective Time
                     through the Gathering Asset Closing, under the terms of the
                     1996 Agreement, as amended, among Seller, Buyer, CIG
                     Production Company, L.P. ("CIGPC") and Westpan.

             (iii)   Seller shall pay to Buyer monthly an amount equal to all
                     amounts billed by Seller during the previous month by
                     reason of the gathering of gas for third parties through
                     the Assets.

             (iv)    Except as provided in this Section 3.1 and in the GSOA,
                     Buyer shall be responsible for the out of pocket costs of
                     operating and maintaining the Facilities, and shall
                     reimburse Seller the costs associated with owning the
                     Facilities from and after the Effective Time until GAC
                     (other than costs associated with Seller's pursuit of the
                     FERC Abandonment Approval).

             (v)     Seller shall deliver an amendment to the GSOA as provided
                     in Exhibit 3.2(E).

         (B)  Buyer shall continue to operate and maintain Seller's Panhandle
              Field gas gathering system pursuant to the terms of the Gathering
              System Operating & Maintenance Agreement dated May 1, 2001, as
              amended, between Seller and Buyer ("GSOA") until the GAC. Buyer
              shall continue to pay for transportation of fuel gas volumes
              pursuant to the provisions of item 7 of Exhibit "A" to the 2001
              Gathering Agreement, except that the rate shall be $.03 per
              decatherm.

         (C)  Buyer shall pay Seller the sum of $23,000 per month for
              continuance of Seller's performance of its obligations under the
              GSOA from and after the Effective Time through the Gathering Asset
              Closing. Such amount shall be Seller's sole compensation for
              performing such obligations during such period, and such
              obligations shall be excluded from consideration in determining
              whether Buyer and Seller are, as of the GAC, in fact in the same
              economic position as if Buyer had owned the Assets as of the GIC.

         (D)  Seller shall, for the amounts listed in Sections 3.1(A)(iii),
              3.1(A)(iv) and 3.1(C), net the amounts with the amounts due
              Seller. For any net amount due to Buyer, Seller shall remit such
              amounts to Buyer by the 20th day of the following month. Should
              such net amount result in an amount due Seller by Buyer, an
              invoice detailing such amounts due shall be prepared by Seller by
              the 20th day of the following month and paid by Buyer to Seller by
              the last day of the same month.


                                       8
<PAGE>


         (E)  At the GIC:

             (i)     Seller shall assign or release, as requested by Buyer, to
                     Buyer all of Seller's rights and obligations from and after
                     the Effective Time in and under the intrastate gas
                     transportation agreement between Seller, as shipper, and
                     OneOK, as transporter, dated November 1, 1999, for the PFC
                     #6 fuel gas volumes. If release is requested by Buyer prior
                     to GAC, Buyer will pay any release fees required in the
                     OneOK agreement covering the period from the Effective
                     Time.

             (ii)    Seller shall execute and deliver to Buyer a memorandum
                     suitable for recording in the real property records of the
                     counties in which the Facilities are located, reflecting
                     the execution by the Parties of this Agreement.

             (iii)   Buyer shall enter into a natural gas gathering agreement
                     with Seller to gather all gas owned by Buyer. Such
                     agreement shall be Seller's standard form gas gathering
                     agreement for new service on the Facilities, and shall
                     provide for a rate of $.25 per Mcf, or the minimum FERC
                     rate if greater, and Buyer, as contract operator, will
                     provide compressor fuel in-kind and such provision of
                     compressor fuel shall be deemed to meet the FERC tariff
                     fuel gas requirement. The term of such agreement shall be
                     from the period beginning on the GIC Date and ending on the
                     GAC Date.

         (F)  Seller shall continue to remain responsible for compliance with
              all applicable FERC rules and regulations and Buyer shall
              cooperate with Seller to effect such compliance.

3.2      Gathering Assets Closing. Subject to the Conditions Precedent set forth
         at Articles 11 and 12 and any termination pursuant to Article 13 or
         Section 15.1, the sale and purchase of the Assets ("Gathering Assets
         Closing" or "GAC") shall -unless otherwise agreed - be held on the
         first day of the month following ten (10) business days after FERC
         Abandonment Approval ("Gathering Assets Closing Date" or "GAC Date").
         At the Gathering Assets Closing, Seller shall deliver to Buyer:

         (A)  Duly executed copies of an Assignment(s) and Bill of Sale,
              substantially in the form attached hereto as Exhibit 3.2(A) and
              such other deeds, conveyances or instruments in forms consistent
              with the terms of this Agreement (which forms Seller shall provide
              advance copies of to Buyer at least five (5) business days before
              the GAC), effecting the sale, transfer, conveyance and assignment
              of the Assets to Buyer or Buyer's designee (which for purposes of
              this Agreement shall be a duly qualified designee of Buyer), in
              sufficient multiple originals to allow for recording in all
              appropriate jurisdictions;


                                       9
<PAGE>

         (B)  A Certification of Non-Foreign Status substantially in the form
              attached hereto as Exhibit 3.2(B).

         (C)  A certificate by an authorized corporate officer of Seller, dated
              as of the GAC, certifying on behalf of Seller that the conditions
              set forth in Sections 7.1(A) and 7.1(B) have been fulfilled;

         (D)  A certificate duly executed by the secretary or any assistant
              secretary of Seller, dated as of the GAC, (i) attaching and
              certifying on behalf of Seller complete and correct copies of (A)
              the certificate of incorporation and the bylaws of Seller, each as
              in effect as of the GAC, (B) the resolutions of the Board of
              Directors of Seller, if required, authorizing the execution,
              delivery, and performance by Seller of this Agreement and the
              transactions contemplated hereby, and (C) any required approval by
              the stockholders of Seller of this Agreement and the transactions
              contemplated hereby and (ii) certifying on behalf of Seller the
              incumbency of each officer of Seller executing this Agreement or
              any document delivered in connection with the GAC:

         (E)  [INTENTIONALLY DELETED].

         (F)  [INTENTIONALLY DELETED].

         (G)  Possession of the Assets.

         Except as otherwise agreed, the GAC will take place at the offices of
         Seller at 2 North Nevada Avenue, Colorado Springs, CO 80903.

3.3      Delivery By Buyer. At the transfer to Buyer described in Section 3.1(A)
         ("Gathering Initial Closing" or "GIC"), Buyer shall deliver to Seller
         or Seller's designee the Purchase Price set forth in the Closing
         Adjustment Statement by wire transfer in immediately available funds.
         Seller shall provide wiring instructions to Buyer at least five (5)
         business days prior to the date the Gathering Initial Closing occurs
         (anticipated to be July 1, 2002) ["Gathering Initial Closing Date" or
         "GIC Date"].

         Buyer shall also provide at the GIC:

         (A)  A certificate by an authorized corporate officer of Buyer, dated
              as of the GIC, certifying on behalf of Buyer that the conditions
              set forth in Sections 8.1(A) and 8.1(B) have been fulfilled.

         (B)  A certificate duly executed by the secretary or any assistant
              secretary of Buyer, dated as of the GIC, (i) attaching and
              certifying on behalf of Buyer complete and correct copies of (A)
              the certificate of incorporation and the bylaws of Buyer, each as
              in effect as of the GIC, (B) the resolutions of the Board of
              Directors of Buyer if required, authorizing the execution,
              delivery,


                                       10
<PAGE>

              and performance by Buyer of this Agreement and the transactions
              contemplated hereby, and (C) any required approval by the
              stockholders of Buyer of this Agreement and the transactions
              contemplated hereby and (ii) certifying on behalf of Buyer the
              incumbency of each officer of Buyer executing this Agreement or
              any document delivered in connection with the GIC.

         (C)  An amendment to the GSOA in the form set forth as Exhibit 3.2(E).

3.4      Further Cooperation. At the Gathering Initial Closing as well as the
         GAC and thereafter as may be necessary, Seller and Buyer shall execute
         and deliver such other instruments and documents and take such other
         actions as may be reasonably necessary to evidence and effectuate the
         transactions contemplated by this Agreement.

3.5      Notice of Breach. Seller and Buyer, until the GIC and the GAC,
         respectively, agree as follows:

         (A)  Buyer shall notify Seller promptly if Buyer believes that any
              representation or warranty of Seller contained in this Agreement
              is untrue in any material respect or will be untrue in any
              material respect as of the Gathering Initial Closing Date or the
              GAC Date, respectively, or that any covenant or agreement to be
              performed or observed by Seller prior to or on the Gathering
              Initial Closing Date or the GAC Date, respectively, has not been
              so performed or observed in any material respect.

         (B)  Seller shall notify Buyer promptly if Seller believes that any
              representation or warranty of Buyer contained in this Agreement is
              untrue in any material respect or will be untrue in any material
              respect as of the Gathering Initial Closing Date or the GAC Date,
              respectively, or that any covenant or agreement to be performed or
              observed by Buyer prior to or on the Gathering Initial Closing
              Date or the GAC Date, respectively, has not been so performed or
              observed in any material respect.

         (C)  If any such asserted breach of representation, warranty, covenant
              or agreement shall (if curable) be cured by the Gathering Initial
              Closing (or, if Gathering Initial Closing does not occur, by the
              date set forth in Section 13.1 (b)) or be cured before the GAC (in
              the case of notices delivered after the Gathering Initial Closing
              Date but before the GAC Date), then such breach shall be
              considered not to have occurred for all purposes of this
              Agreement.

3.6      Post-GAC Fuel Transportation. At the GAC, Seller and Buyer shall enter
         into a Firm Transportation Service Agreement pursuant to the provisions
         of Rate Schedule TF-1 of CIG's FERC Gas Tariff ("FTSA") for the
         transportation of gas needed for fuel in certain compressors that are
         part of the Assets. The FTSA shall contain the following material
         provisions:


                                       11
<PAGE>


         Term: From and after the GAC to the date which is two years after the
         GAC.

         Rate: From Big Canyon to Fourway, the rate shall be CIG's minimum
         commodity rate, plus applicable fuel when actually consumed, lost and
         unaccounted-for volumes and applicable surcharges, with such rate
         payable only on volumes actually transported. The rate to other points
         of delivery shall, unless otherwise agreed, be the maximum rate under
         Rate Schedule FT-1 of CIG's Tariff.

         Maximum Daily Quantity:  6,500 Dth/day

4.       ACCOUNTING ADJUSTMENTS

4.1      Closing Adjustments.

         (A)  With respect to matters that can be determined as of the GIC,
              Seller shall prepare, in accordance with the provisions of the
              Agreement and this Article 4, a statement (the "GIC Closing
              Adjustment Statement") with relevant supporting information
              setting forth each adjustment to the Base Purchase Price submitted
              by Seller. Seller shall submit the GIC Closing Adjustment
              Statement to Buyer, together with all records or data supporting
              the calculation of amounts presented on the GIC Closing Adjustment
              Statement, no later than five (5) business days prior to the
              scheduled GIC Date. Prior to the GIC, Buyer and Seller shall
              review the adjustments proposed by Seller in the GIC Closing
              Adjustment Statement. Agreed upon adjustments shall be taken into
              account in computing any adjustments to be made to the Base
              Purchase Price at the GIC. When available, actual figures will be
              used for the adjustments at the GIC. To the extent actual figures
              are not available, estimates shall be used subject to final
              adjustments as described in Section 4.4 below.

         (B)  With respect to matters that can be determined as of the GAC,
              Seller shall prepare, in accordance with the provisions of the
              Agreement and this Article 4, a statement (the "GAC Closing
              Adjustment Statement") with relevant supporting information
              setting forth each adjustment to the Base Purchase Price submitted
              by Seller. Seller shall submit the GAC Closing Adjustment
              Statement to Buyer, together with all records or data supporting
              the calculation of amounts presented on the GAC Closing Adjustment
              Statement, no later than five (5) business days prior to the
              scheduled GAC Date. Prior to the GAC, Buyer and Seller shall
              review the adjustments proposed by Seller in the GAC Closing
              Adjustment Statement. Agreed upon adjustments shall be taken into
              account in computing any adjustments to be made to the Base
              Purchase Price at the GAC. When available, actual figures will be
              used for the adjustments at



                                       12
<PAGE>



              the GAC. To the extent actual figures are not available, estimates
              shall be used subject to final adjustments as described in Section
              4.4 below.

4.2      Metering. Seller or its contract operator will cause the meter charts
         on the Facilities to be read as of the Effective Time.

4.3      Pioneer Management Fee.

         (A)  For volumes gathered between GIC and GAC, Seller shall pay Buyer,
              on or about the 20th of the subsequent month, an amount equal to
              the gathering revenues received by Seller from Buyer pursuant to
              the FERC gathering agreement described in Section 3.1(E)(iii) as
              an approximation to recompense Buyer's out-of-pocket field
              operating costs for operating Seller's Facilities.

         (B)  For cash balancing purposes, the monthly amounts due both Buyer
              and Seller under Section 3.1(E)(iii) and Section 4.3(A) may be
              netted.

4.4      Post-GAC Closing Adjustments.

         (A)  A post-GAC closing adjustment statement (the "Post-GAC Adjustment
              Statements") shall be prepared and delivered by Seller to Buyer
              within one hundred twenty (120) days after the GAC, proposing
              further adjustments to the calculation of the Purchase Price based
              on the information then available. Seller or Buyer, as the case
              may be, shall be given access to and shall be entitled to review
              and audit the other Party's records pertaining to the computation
              of amounts claimed in such Post-GAC Adjustment Statements.

         (B)  Within sixty (60) days after receipt of the Post-GAC Adjustment
              Statement, Buyer shall deliver to Seller a written statement
              describing in reasonable detail its objections (if any) to any
              amounts or items set forth on the Post-GAC Adjustment Statement.
              If Buyer does not raise objections within such period, then the
              Post-GAC Adjustment Statement shall become final and binding upon
              the Parties at the end of such period.

         (C)  If Buyer raises objections, the Parties shall negotiate in good
              faith to resolve any such objections. If the Parties are unable to
              resolve any disputed item within sixty (60) days after Buyer's
              delivery of its objections to the Post-GAC Adjustment Statement,
              any such disputed item shall be submitted to a nationally
              recognized independent accounting firm mutually agreeable to the
              Parties who shall be instructed to resolve such disputed item
              within thirty (30) days. The resolution of disputes by the
              accounting firm so selected shall be set forth in writing and
              shall be conclusive, binding and non-appealable upon the Parties
              and the Post-GAC Adjustment Statement shall become final and
              binding upon the Parties on


                                       13
<PAGE>
              the date of such resolution. The fees and expenses of such
              accounting firm shall be paid one-half by Buyer and one-half by
              Seller.

         (D)  After the Post-GAC Adjustment Statement has become final and
              binding on the Parties, Seller or Buyer, as the case may be, shall
              - within ten (10) days thereafter - pay to the other such sums as
              are due to settle accounts between the Parties due to differences
              between the adjusted Purchase Price paid pursuant to the Closing
              Adjustment Statement and the actual Purchase Price set forth on
              the Post-GAC Adjustment Statement.

         (E)  The Post-GAC Adjustment shall be based on the actual income and
              expenses of the Parties. The Post-GAC Adjustment is intended to
              place the Parties in the same economic position as if Buyer had
              owned the Assets as of the GIC.

4.5      Suspended Funds. At least ten (10) days prior to the GIC, Seller shall
         provide to Buyer a listing showing all proceeds from gathering through
         the GIC Date attributable to the Facilities which are currently held in
         suspense and shall transfer to Buyer at GIC and GAC all of those
         suspended proceeds. UPON AND AFTER GIC AND GAC, Buyer shall be
         responsible for proper distribution of all the suspended proceeds to
         the extent turned over to it by Seller, to the parties lawfully
         entitled to them AND ANY CLAIMS RELATED THERETO, and BUYER hereby
         agrees, ON AND AFTER GIC, to indemnify, defend and hold harmless Seller
         from and against any and all claims, liabilities, losses, costs and
         expenses arising out of or relating to BUYER'S HANDLING OF those
         suspended proceeds PAID TO IT BY SELLER. Seller represents that to the
         date of this Agreement there are no such proceeds held in suspense.

4.6      Audit Adjustments. Buyer and Seller waive all rights to "true up"
         adjustments and audit for the year 2002 to the gathering fee under the
         2001 Gathering Agreement, and the gathering fee under the 1987
         Gathering Agreement and the GOF under the GSOA. For all periods prior
         to 2002, Buyer and Seller retain all rights to adjustments to charges
         and volumes that may be due one another under any other 'B' Contract
         Document but all audits must be completed and report submitted on or
         before December 31, 2002, however, during the audit process Seller
         shall provide timely responses to Buyer's requests for information
         related to said audit.

4.7      Asset Tax Refunds. Refunds of Asset Taxes paid (or to the extent
         payable but not paid due to offset against other Taxes) with respect to
         or attributable to the Assets shall be promptly paid by the Party
         receiving the benefit of the payment or offset as follows: (i) to
         Seller and distributed pursuant to the 'B' Contract Documents if
         attributable to Asset Taxes with respect to any Tax year or portion
         thereof ending on or before the Effective Time; and (ii) to Buyer if
         attributable to


                                       14
<PAGE>

         Asset Taxes with respect to any Tax year or portion thereof beginning
         from and after the Effective Time.

4.8      [INTENTIONALLY DELETED].

4.9      Cooperation. Each Party covenants and agrees to promptly inform the
         other with respect to amounts owing under Sections 4.4, 4.6, 4.7 and
         this 4.9 hereof. Further, upon and after the GIC and subject to and
         except as provided otherwise under the terms of this Agreement and
         except to the extent for which adjustments or an accounting under this
         Agreement has been made, all monies, refunds, proceeds, receipts,
         credits, receivables, accounts and income attributable to the Assets
         (a) for all periods of time from and after the Effective Time shall be
         the property and entitlement of Buyer, and, to the extent received by
         Seller after the Effective Time, Seller shall fully disclose and
         account therefor to Buyer promptly, and (b) for the period of time
         prior to the Effective Time shall be the sole property and entitlement
         of Seller and to the extent received by Buyer after the Effective Time,
         Buyer shall fully disclose and account therefor to Seller promptly and,
         similarly, (c) all operating expenses and capital expenditures (except
         as provided in the GSOA) incurred in the ownership and operation of the
         Assets in the ordinary course of business prior to the Effective Time
         shall be the sole responsibility of Seller and Seller shall promptly
         pay, or if paid by Buyer, promptly reimburse Buyer for same and (d) to
         the extent incurred in the ownership or operation of the Assets in
         ordinary course of business after the Effective Time shall be the sole
         obligation of Buyer and Buyer shall promptly pay, or if paid by Seller
         promptly reimburse Seller for same. Notwithstanding the foregoing
         sentences in this Section 4.9, this Section 4.9 shall take into account
         the gain or benefit which either Party would have received and/or the
         loss or burden for which either Party would be obligated under the
         terms of the 'B' Contract Documents up to the Effective Time as if this
         Agreement had not been executed except as provided otherwise in this
         Agreement.

4.10     [INTENTIONALLY DELETED].

5.       DUE DILIGENCE; TITLE MATTERS.

5.1      General Access. Beginning on the second business day after the date of
         this Agreement and ending on the 14th day prior to the GIC, Seller
         shall:

         (A)  Give Buyer and its representatives, employees, consultants,
              independent contractors, attorneys and other advisors reasonable
              access to the Assets and reasonable access by telephone or in
              person to Seller's personnel with knowledge of the Assets or
              operations thereof (including, but not limited to, division
              orders, land administration, accounting, regulatory, and
              measurements) during regular office hours for any and all
              inspections and investigations and to the extent such contact with
              Seller's personnel does not unreasonably interfere with the
              ongoing operations of Seller.


                                       15
<PAGE>


         (B)  Use reasonable efforts to obtain and submit to Buyer or its
              representatives as promptly as practicable, copies of such
              documents as Buyer may reasonably request.

         (C)  Furnish to Buyer all other information with respect to the Assets
              as Buyer may from time to time reasonably request, unless Seller
              is prohibited therefrom by any agreement, contract, applicable
              privilege, obligation or duty by which it is bound or by the
              necessity of any third party approval; provided that, if requested
              by Buyer, Seller shall use reasonable efforts to obtain the waiver
              of any such prohibition or the granting of any such approval.

5.2      Seller's Title. The documents to be executed and delivered by Seller to
         Buyer transferring the Assets to Buyer shall be subject to the
         Permitted Encumbrances and shall be substantially in the form set forth
         in Exhibit 3.2(A) modified to conform to this Agreement, recognizing
         however, that some instruments may be in or on a form required by
         governmental agencies. Seller shall warrant and defend unto Buyer the
         title to the Assets as Good and Marketable against every person
         lawfully claiming the Assets or any part thereof, by, through or under
         Seller, but not otherwise. However, all of Seller's interests in the
         Assets are to be sold AS IS AND WHERE IS AND WITHOUT WARRANTY OF
         MERCHANTABILITY, CONDITION OR FITNESS FOR A PARTICULAR PURPOSE, EITHER
         EXPRESS OR IMPLIED.

5.3      Good and Marketable Title. As used herein the term "Good and
         Marketable" title shall mean to the Facilities and Related Assets, 100%
         ownership and full economic benefit thereof.

         (A)  That title of Seller to the Assets:

             (i)     At the GIC, is free and clear of liens and encumbrances
                     (except for Permitted Encumbrances as defined in subsection
                     (ii) below) and (a) with respect to real property interests
                     to be transferred to Buyer, real property interests are of
                     record (or deemed to be of record, constructively or
                     otherwise) in the relevant counties or governmental
                     offices; and (b) with respect to any consent rights, such
                     rights have been waived and consents obtained from all
                     necessary third parties.

             (ii)    As used herein the term "Permitted Encumbrances" shall mean
                     any one (1) or more of the following described below or
                     created or described in documents described below:

                     (1)  The terms and conditions of the easements, rights of
                          way, fee interest and surface leases or the oil and
                          gas leases described under the Production Assets PSA
                          insofar as such oil and gas leases grant surface
                          access being conveyed


                                       16
<PAGE>

                          hereunder, that individually or in the aggregate do
                          not reduce Seller's title to less than Good and
                          Marketable Title, reduce the value of any Asset or
                          otherwise (except for due to the conduct of Buyer)
                          interfere with the current or future and uninterrupted
                          use of the Assets or any part thereof;

                     (2)  The terms and provisions of the 'B' Contract Documents
                          and the gas purchase, sales, processing and other
                          agreements identified on Exhibit 5.3(B);

                     (3)  [INTENTIONALLY DELETED].

                     (4)  Except as provided in Exhibit 5.3 (B), the sales
                          contracts terminable without penalty upon no more than
                          thirty (30) days notice to the purchaser;

                     (5)  Required third party consents to assignment and
                          similar agreements with respect to which waivers or
                          consents are obtained from the appropriate parties, or
                          the appropriate time period for asserting any such
                          right has expired without an exercise of the right;

                     (6)  Materialman's, mechanic's, repairman's, employee's,
                          contractor's, operator's and other similar liens or
                          charges arising in the ordinary course of business for
                          obligations that are not delinquent or that will be
                          paid and discharged in the ordinary course of
                          business, or if delinquent, that are being contested
                          in good faith by appropriate action and which are
                          listed on Exhibit 5.3(B)(ii)(6);

                     (7)  All rights to consent by, required notices to, filings
                          with, or other actions by governmental entities in
                          connection with the sale or conveyance of easements,
                          rights of way and surface leases or interests therein
                          if they are routinely obtained subsequent to the sale
                          or conveyance;

                     (8)  Easements, rights-of-way, servitudes, permits, surface
                          leases and other rights in respect of surface
                          operations that individually or in the aggregate do
                          not reduce Seller's title to less than Good and
                          Marketable Title, reduce the value of any Asset or
                          otherwise (except for due to the conduct of Buyer)
                          interfere with the current or future and uninterrupted
                          use of the Assets or any part thereof;

                     (9)  All operating agreements affecting the Assets that are
                          either (i) of record in Seller's chain of title or
                          (ii) reflected in the




                                       17


<PAGE>

                          Records, that individually or in the aggregate do not
                          reduce Seller's title to less than Good and Marketable
                          Title, reduce the value of any Asset or otherwise
                          (except for due to the conduct of Buyer) interfere
                          with the current or future and uninterrupted use of
                          the Assets or any part thereof;

                     (10) Conventional rights of reassignment prior to release
                          or surrender requiring notice to the holders of the
                          rights;

                     (11) All rights reserved to or vested in any governmental,
                          statutory or public authority to control or regulate
                          any of the Assets in any manner, and all applicable
                          laws, rules and orders of governmental authority;

                     (12) All agreements affecting the Assets that are of record
                          in Seller's chain of title or are reflected in the
                          Records that individually or in the aggregate do not
                          reduce Seller's title to less than Good and Marketable
                          Title, reduce the value of any Asset or otherwise
                          (except for due to the conduct of Buyer) interfere
                          with the current or future and uninterrupted use of
                          the Assets or any part thereof;

                     (13) All other liens, charges, encumbrances, contracts,
                          agreements, obligations, defects and irregularities
                          affecting the Assets that individually or in the
                          aggregate do not reduce Seller's title to less than
                          Good and Marketable Title, reduce the value of any
                          Asset or otherwise (except for due to the conduct of
                          Buyer) interfere with the current or future and
                          uninterrupted use of the Assets or any part thereof;
                          and;

                     (14) Any other Title Defects that Buyer expressly waives in
                          writing, any Title Defects for which an adjustment to
                          the Base Purchase Price is made pursuant to Section
                          5.6, or any Title Defects for which the applicable
                          Asset is not transferred pursuant to this Agreement
                          due to the election of Seller not to cure a Title
                          Defect and not transfer such Asset pursuant to Section
                          5.6 or which are otherwise deemed to have become
                          Permitted Encumbrances under this Agreement.

5.4      [INTENTIONALLY DELETED].

5.5      Defect Letters.

         (A)  Buyer may, by no later than fourteen (14) days prior to the GIC,
              notify Seller in writing (a "Notice") of any defects in Title or
              liens, charges, contracts, obligations, encumbrances, defects and
              irregularities of title



                                       18
<PAGE>
              which would cause title to all or part of the Assets not to be
              Good and Marketable as defined in Section 5.3 hereof, or which
              causes or represents or contains a charge upon the Assets ("Valid
              Title Defect"), provided that no Valid Title Defect shall be
              deemed to exist unless (i) the Title Defect Value thereof exceeds
              Ten Thousand Dollars ($10,000.00); and, (ii) the aggregate Title
              Defect Values of all Title Defects satisfying the condition in
              clause (i) exceed One Million One Hundred Eighty Thousand Dollars
              ($1,180,000) (the "Title Defect Hurdle Rate"). A "Valid Title
              Defect" is a claimed Title Defect which has been determined to be
              valid by (i) mutual agreement of the Parties (ii) the decision of
              the Title Consultant, or (iii) Seller's removal of the Asset from
              this Agreement pursuant to the terms of this Agreement. In order
              to provide Seller a reasonable opportunity to cure any Valid Title
              Defects prior to the GIC, Buyer shall use reasonable efforts to
              provide the Notice as soon as reasonably possible after becoming
              aware of or making its determination of the claimed Title Defect.
              For matters or claims raised by third parties between the 14th day
              before the GIC and the GIC, Buyer and Seller shall meet to discuss
              and resolve said issue.

         (B)  In the Notice, Buyer must describe with reasonable detail each
              alleged Title Defect and the steps required to cure each Title
              Defect, include Buyer's reasonable estimate of the Title Defect
              Value attributable to each, and include all data and information
              in Buyer's possession or control which bear on such claim, except
              for data that is protected by legal privilege.

         (C)  Upon timely delivery of a Notice by Buyer:

             (i)     Within five (5) days after Seller's receipt of the Title
                     Defects Notice, Seller shall notify Buyer whether Seller
                     agrees with Buyer's claimed Title Defects and/or the
                     proposed Title Defect Values therefor ("Seller's
                     Response"). If Seller does not agree with any claimed Title
                     Defect and/or the proposed Title Defect Value therefor,
                     then the Parties shall enter into good faith negotiations
                     and shall attempt to agree on such matters and Seller shall
                     provide Buyer all data and information in Seller's
                     possession or control which bear on such dispute, except
                     for data that is protected by legal privilege.

             (ii)    Within three (3) days after Seller's notice of its cure of
                     a Title Defect, Buyer shall notify Seller whether Buyer
                     agrees with Seller's proposed cure of a Title Defect
                     ("Buyer's Response"). If Buyer does not agree with any such
                     cure, then the Parties shall enter into good faith
                     negotiations and shall attempt to agree on such matters.

             (iii)   If the Parties cannot reach agreement concerning either the
                     existence of a Valid Title Defect, or Seller's or Buyer's
                     proposed cure of a Title Defect within ten (10) days after
                     Buyer's receipt of Seller's Response or Seller's receipt of
                     Buyer's Response, as




                                       19
<PAGE>

                     applicable, upon either Party's request, the Parties shall
                     mutually agree on and employ an oil and gas attorney with
                     at least ten (10) years recent experience in title
                     examination in the state where the Assets are located
                     ("Title Consultant") to resolve all points of disagreement
                     relating to Title Defects, provided that if the Parties
                     cannot agree on an attorney then one having the required
                     qualifications will be appointed by the Chief Justice of
                     the Supreme Court in the state in which the property sits,
                     or his designee. The Title Consultant shall be a neutral
                     party and shall have no financial interest in the outcome
                     of the Title Defect and shall not have worked for either
                     Seller or Buyer in the prior five (5) years.

             (iv)    If the Parties cannot reach agreement concerning the Title
                     Defect Value of a Valid Title Defect within ten (10) days
                     after Buyer's receipt of Seller's Response or Seller's
                     receipt of Buyer's Response, as applicable, upon either
                     Party's request, the Parties shall mutually agree on and
                     employ Advantica Stoner ("Value Consultant") to resolve all
                     points of disagreement relating to Title Defect Values.

             (v)     Each Party shall present a written statement of its
                     position on the Title Defect in question to the Title
                     Consultant within five (5) days after the Title Consultant
                     is selected, and the Title Consultant shall make a
                     determination of all points of disagreement in accordance
                     with the terms and conditions of this Agreement within ten
                     (10) business days of receipt of such position statements.
                     The Title Consultant may choose only Seller's or Buyer's
                     position with regard to each separate Title Defect. The
                     determination by the Title Consultant of whether a Title
                     Defect is valid shall be conclusive and binding on the
                     Parties, and shall be enforceable against any Party in any
                     court of competent jurisdiction. Prior to the decision of
                     the Title Consultant, the GIC shall be deferred until the
                     Title Consultant has made a determination of the disputed
                     issues with respect thereto and all subsequent dates and
                     required activities with respect to any such Assets having
                     reference to the GIC Date shall be correspondingly
                     deferred; provided, however, that, unless Seller and Buyer
                     mutually agree to the contrary, the GIC Date shall not be
                     deferred in any event for more than sixty (60) days beyond
                     the scheduled GIC Date in Section 3.1.

             (vi)    Each Party shall present a written statement of its
                     position on the Title Defect Value in question to the Value
                     Consultant within five (5) days after the Value Consultant
                     is hired, and the Value Consultant shall make a
                     determination of all points of disagreement in accordance
                     with the terms and conditions of this Agreement within ten
                     (10) business days of receipt of such position statements.
                     The Value Consultant may choose only Seller's or Buyer's
                     position with




                                       20
<PAGE>

                     regard to each separate Title Defect Value. The
                     determination by the Value Consultant of the amount of a
                     Title Defect Value shall be conclusive and binding on the
                     Parties, and shall be enforceable against any Party in any
                     court of competent jurisdiction. Prior to the decision of
                     the Value Consultant, the GIC shall be deferred until the
                     Value Consultant has made a determination of the disputed
                     issues with respect thereto and all subsequent dates and
                     required activities with respect to any such Assets having
                     reference to the GIC Date shall be correspondingly
                     deferred; provided, however, that, unless Seller and Buyer
                     mutually agree to the contrary, the GIC Date shall not be
                     deferred in any event for more than sixty (60) days beyond
                     the scheduled GIC Date in Section 3.1.

             (vii)   The costs of any Title Consultant(s) and Value Consultant
                     shall be borne fifty percent (50%) by Seller and fifty
                     percent (50%) by Buyer.

5.6      Effect of Title Defect.

         (A)  In the event Buyer provides Seller with a timely Notice and the
              Valid Title Defects remaining uncured at the GIC exceed the Title
              Defect Hurdle Rate:

             (i)     Seller may at its sole discretion:

                     (a)  adjust downward the Base Purchase Price in the amount
                          of Buyer's Title Defect Value(s) of the Asset(s) to
                          which such Title Defects relate and proceed to the GIC
                          on all Assets; or

                     (b)  may elect to require that the affected Wells be
                          removed from this Agreement by requiring Buyer to
                          assign to Seller hereunder the affected Wells and the
                          affected portion of the gathering system immediately
                          associated with such affected Wells and the minimum
                          lease rights needed to produce such Wells, such
                          assignment to occur promptly after GIC and the
                          conveyance of said Wells from the Seller in the
                          Production Assets PSA to Buyer, and the Base Purchase
                          Price hereunder shall be reduced by the Allocated
                          Value of such Wells; however, such Wells and removed
                          gathering system portion shall continue upon removal
                          hereunder to be subject to the terms of the 'B'
                          Contract Documents as they exist immediately prior to
                          GIC to the limited extent applicable to said Wells
                          unless and only to the extent as otherwise may be
                          agreed by the Parties.

             (ii)    In the alternative, Buyer and Seller may mutually agree to
                     proceed with the GIC on those Assets not affected by the
                     outstanding Valid Title Defects and defer the GIC on those
                     other Assets to which



                                       21
<PAGE>

                     a Valid Title Defect relates and for which Seller requests
                     an attempt to cure such Valid Title Defect and the Base
                     Purchase Price shall be reduced by the amount Buyer shall
                     place into escrow equal to the Allocated Values of the
                     Affected Wells, which withheld amount shall be paid
                     proportionally to Seller when the Asset affected by any
                     Valid Title Defect is cured or the Valid Title Defect is
                     waived by Buyer and the affected Asset and Affected Well(s)
                     is conveyed from Seller to Buyer. If Seller later
                     determines it will not cure a Valid Title Defect on or
                     before six (6) months from the GIC Date, the amount in the
                     escrow account attributable to such Valid Title Defect will
                     be returned to Buyer and Seller shall retain such Asset
                     affected by such Valid Title Defect and the affected Wells,
                     and any removed affected gathering system portion shall
                     upon removal hereunder continue to be subject to the terms
                     of the "B" Contract Documents as they exist immediately
                     prior to GIC to the limited extent applicable to said Wells
                     unless and only to the extent as otherwise may be agreed by
                     the Parties.

         (B)  The diminution in value of an Asset attributable to a Valid Title
              Defect (the "Title Defect Value") notified in a Notice shall be
              determined by the following:

             (i)     If the Valid Title Defect asserted is that the operation of
                     all or part of the Facilities will be prevented or the
                     value diminished by the Valid Title Defect, then the amount
                     of the Title Defect Value is equal to the Allocated Value
                     of the Wells connected to the portion of the Facilities
                     subject to the Valid Title Defect (the "Affected Wells").
                     The terms "Allocated Value" and "Wells" are defined in the
                     Production Assets PSA").

             (ii)    If the Valid Title Defect represents an obligation,
                     encumbrance, burden or charge upon the affected Asset, the
                     amount of the Title Defect Value is to be determined by
                     taking into account the value of the Asset, the portion of
                     the Asset affected by the Title Defect, the legal effect of
                     the Title Defect, the immediate or potential economic and
                     operational effect of the Title Defect over the affected
                     Asset, and the Title Defect Values placed upon the Title
                     Defect by Buyer and Seller.

         (C)  If the aggregate amount of the Title Defect Values hereunder
              (without counting any Valid Title Defect twice) plus the aggregate
              amount of Valid Title Defects pursuant to the Production Asset PSA
              plus the Allocated Value of Assets removed under this Agreement or
              the Production Asset PSA exceeds Eleven Million Eight Hundred
              Fifty Thousand Dollars ($11,850,000) then either Party hereunder
              may terminate this Agreement on or prior to GIC.



                                       22
<PAGE>


5.7      [INTENTIONALLY DELETED].

5.8      Exclusive Remedy. Buyer's sole and exclusive remedy after the GIC with
         regard to any matter pertaining to title of the Assets shall be
         Seller's special warranty of title contained in the Assignment and Bill
         of Sale or other instruments executed by Seller and Buyer pursuant to
         this Agreement, however, recognizing that the Assignment and Bill of
         Sale will not be executed until GAC, the Parties will treat the
         Assignment and Bill of Sale and Seller's Special Warranty of Title
         therein as being in effect on and after GIC.

6.       ENVIRONMENTAL ISSUES.

6.1      Resolution of Environmental Issues. Buyer and Seller recognize the
         difficulty of trying to resolve before GIC all the issues pertaining to
         the environmental condition of the Assets and have agreed to handle
         such issues after the GIC as described further in this Article 6. In
         consideration of Seller's covenants contained in this Article 6, Buyer
         waives all rights to make any claims for a Purchase Price adjustment
         based on the environmental condition of the Assets. Seller's and
         Buyer's covenants set forth in this Article 6 shall commence at GIC and
         survive the GAC. The provisions of Article 6 shall prevail over any
         conflicting or inconsistent provisions in this Agreement subject only
         to the provision that Seller shall not be required to contribute toward
         the Remediation cost of any Adverse Environmental Condition pursuant to
         this Article 6 to the extent the same was caused by Buyer's new
         operations after the Effective Time or as to Section 6.3 below only, if
         Seller gets a non-appealable judgment against Buyer from a court of
         competent jurisdiction that the basis for said Adverse Environmental
         Condition did not exist, in whole or in part, at the Effective Time.

6.2      Seller's $5,000,000 Post-Closing Environmental Contribution. For the
         period beginning at GIC and ending on the fifth anniversary of GIC,
         upon demand by Buyer from time to time, Seller and Buyer shall share
         equally, 50%/50%, Buyer's third party or outside costs or expenses (or
         Buyer's internal costs or activities approved by Seller) toward the
         Remediation, investigation, defense or handling of matters or claims or
         actions related thereto for any Adverse Environmental Condition or
         suspected Adverse Environmental Condition, or violation or possible
         violation of Environmental Laws. Seller's maximum aggregate
         contribution to Buyer under this Section 6.2 is five million dollars
         ($5,000,000) and is independent of and in addition to Seller's
         contribution pursuant to 6.3 below. Seller's contribution in this
         Section 6.2 may be applied to any Asset, wherever located. Seller's
         contribution under this Section 6.2 is in addition to that sharing of
         costs by Seller in 6.3 below.

         In determining: (i) Seller's compliance with the provisions of this
         Section 6.2; as well as (ii) the compliance of the Seller entities with
         the provisions of Section 6.2 of the Production Assets PSA, the
         contributions of Seller under this Section 6.2 and the contributions of
         the Seller entities under Section 6.2 of the Production Assets PSA
         shall be totaled. In determining: (i) Buyer's compliance with the



                                       23
<PAGE>

         provisions of this Section 6.2; as well as (ii) the compliance of Buyer
         with the provisions of Section 6.2 of the Production Assets PSA, the
         contributions of Buyer under this Section 6.2 and the contributions of
         the Buyer under Section 6.2 of the Production Assets PSA shall be
         totaled. Accordingly, Seller's obligations under Section 6.2 of this
         Agreement and the obligations of the Seller entities under Section 6.2
         of the Production Assets PSA shall not exceed, in total, the sum of $5
         Million Dollars.

6.3      Buyer's and Seller's 50/50 Sharing of Costs and Expenses for Certain
         Groundwater Matters. In addition to Seller's contribution provide in
         6.2 above, after GIC, upon demand by Buyer from time to time, Seller
         and Buyer shall share equally, 50%/50%, Buyer's third party or outside
         costs (or Buyer's internal costs or activities approved by Seller)
         toward the Remediation, investigation, defense or handling of matters
         or claims or actions related thereto for any instance for which: (i)
         Buyer has reasonably determined may constitute a violation of
         Environmental Laws with regard to groundwater, surface or subsurface at
         any depth and such contamination (regardless of the composition of such
         contamination) that may have been or was caused, at any time, by the
         ownership, operation or use of the Assets or any act or omission
         related thereto or such contamination was aggravated thereby, or (ii)
         the Remediation has been ordered by a regulatory agency having
         jurisdiction, or by a court of competent jurisdiction. Groundwater as
         used in this Article 6 does not include water contained in soil that is
         approved by the applicable governmental agency regulating such matter
         to be cleaned up through the application of soil cleanup standards.

         In determining: (i) Seller's compliance with the provisions of this
         Section 6.3; as well as (ii) the compliance of the Seller entities with
         the provisions of Section 6.3 of the Production Assets PSA, the
         contributions of Seller under this Section 6.3 and the contributions of
         the Seller entities under Section 6.3 of the Production Assets PSA
         shall be totaled. In determining: (i) Buyer's compliance with the
         provisions of this Section 6.3; as well as (ii) the compliance of Buyer
         with the provisions of Section 6.3 of the Production Assets PSA, the
         contributions of Buyer under this Section 6.3 and the contributions of
         the Buyer under Section 6.3 of the Production Assets PSA shall be
         totaled.

6.4      Cooperation and Final Decision. Buyer shall provide Seller with Buyer's
         justification for a proposed action, a description of the background
         and the anticipated costs and method of handling the matter for which
         it is seeking a contribution from Seller pursuant to Section 6.2 and/or
         the sharing of costs in Section 6.3 above, and Buyer and Seller shall
         work in a commercially reasonable manner to determine if they agree on
         the course to be taken with regard to such matter(s), with Buyer having
         the final say, under the standard of a reasonably prudent operator, in
         resolving differences or deciding a course of action in this regard
         between Buyer and Seller.



                                       24
<PAGE>


6.5      Physical Condition of the Assets. Buyer acknowledges that the Assets
         have been used or may have been used for natural gas gathering
         operations and may contain waste materials or hazardous substances
         related to standard oil field operations. Physical changes in or under
         the Assets or adjacent lands may have occurred as a result of such
         uses. The Assets also may contain buried pipelines and other equipment,
         whether or not of a similar nature, the locations of which may not now
         be known by Seller or be readily apparent by a physical inspection of
         the Assets. Buyer understands that Seller does not have the requisite
         information with which to determine the exact nature or condition of
         the Assets nor the effect any such use has had on the physical
         condition of the Assets

         In addition, Buyer acknowledges that some oil field production
         equipment located on the Assets may contain mercury, asbestos and/or
         naturally-occurring radioactive material ("NORM"). In this regard,
         Buyer expressly understands that NORM may affix or attach itself to the
         inside of wells, materials and equipment as scale or in other forms,
         and that wells, materials and equipment located on the Assets described
         herein may contain NORM and that NORM-containing materials may be
         buried or have been otherwise disposed of on the Assets. Buyer also
         expressly understands that special procedures may be required for the
         removal and disposal of mercury, asbestos and NORM from the Assets
         where it is found.

6.6      Definitions.

         (A)  The term "Adverse Environmental Condition" means (i) the failure
              of the Assets or the lands on which any of the Assets are located
              or which are affected by any Assets to be in compliance with all
              applicable Environmental Laws; (ii) the Assets or the lands on
              which any of the Assets are located or which are affected by any
              Asset being subject to any agreements, consent orders, decrees or
              judgments currently in existence based on any Environmental Laws
              that negatively impact the present or future use of any portion of
              the Assets or that require any material change in the present
              conditions of any of the Assets; (iii) the Assets or the lands on
              which any of the Assets are located or pertain being subject to
              any uncured notices of violations of or non-compliance with any
              applicable Environmental Laws; including any item which is
              disclosed in this Agreement or was otherwise disclosed to Buyer;
              or (iv) any of the Assets or the lands on which any of the Assets
              are located or which are affected by the Assets are contaminated,
              surface or subsurface, including with, but not limited to, harmful
              or potentially harmful substances, or which are a current or
              potential safety hazard.

         (B)  The term "Remediate" or "Remediation" means, with respect to any
              condition of the Assets or the lands on which any of the Assets
              are located or affect or any Adverse Environmental Condition, the
              investigation, planning, contracting, undertaking and/or
              completion of those actions and



                                       25
<PAGE>

              activities of whatever nature or degree toward the goal of
              bringing the Assets (or said lands) into compliance with the
              Environmental Laws.

         (C)  "Environmental Laws" means all applicable local, state, and
              federal laws, rules, regulations, permits and orders regulating or
              otherwise pertaining to: (i) the use, generation, migration,
              storage, removal, treatment, remedy, discharge, release,
              transportation, disposal, or cleanup of pollutants, contamination,
              hazardous wastes, hazardous substances, hazardous materials, toxic
              substances or toxic pollutants; (ii) surface waters, ground
              waters, ambient air and any other environmental medium on or off
              any Lease; or (iii) the environment or health and safety-related
              matters; including the following as from time to time amended and
              all others whether similar or dissimilar: the Comprehensive
              Environmental Response, Compensation, and Liability Act of 1980,
              as amended by the Superfund Amendments and Reauthorization Act of
              1986, the Resource Conservation and Recovery Act of 1976, as
              amended by the Used Oil Recycling Act of 1980, the Solid Waste
              Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
              Amendments of 1984, the Hazardous Materials Transportation Act, as
              amended, the Toxic Substance Control Act, as amended, the Clean
              Air Act, as amended, the Clean Water Act, as amended, and all
              regulations promulgated pursuant thereto.

6.7      Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER IS
         PURCHASING THE ASSETS WITH NO WARRANTIES OF ANY KIND, EXPRESS OR
         IMPLIED, EITHER ORAL OR WRITTEN, MADE BY ANY MEMBER OF THE SELLER GROUP
         WITH RESPECT TO THE PHYSICAL OR ENVIRONMENTAL CONDITION OF THE ASSETS
         OR WITH RESPECT TO THE EXISTENCE OR ABSENCE OF PETROLEUM OR HAZARDOUS
         SUBSTANCES IN, ON, UNDER OR AFFECTING THE ASSETS OR WITH RESPECT TO THE
         COMPLIANCE OF THE ASSETS OR ITS OPERATION WITH ANY LAWS, ORDINANCES OR
         REGULATIONS OF ANY GOVERNMENT OR OTHER BODY.

6.8      Remediation. Subject to Section 6.4 of this Agreement, if, after GIC,
         Buyer elects or either Party is ordered by a regulatory agency having
         jurisdiction or a court of competent jurisdiction to Remediate or
         otherwise address an Adverse Environmental Condition, the following
         will govern the Remediation:

         (A)  Buyer shall be responsible for all negotiations and contacts with
              federal, state, and local agencies and authorities with regard to
              the Adverse Environmental Condition or Remediation. Unless Seller
              gives Buyer reasonable notice and a reasonable opportunity to
              participate jointly with Seller, Seller may not make any
              independent contacts with any agency, authority, or other
              non-affiliated third party with respect to the Adverse
              Environmental Condition or Remediation and shall keep all
              information regarding the Adverse Environmental Condition and/or
              Remediation



                                       26
<PAGE>

              confidential, except in each instance to the extent required by
              applicable law.

         (B)  Buyer, after reasonable and good faith consultation with Seller
              may Remediate the Adverse Environmental Condition to the level it
              deems appropriate, provided that, as to matters subject to Section
              6.3 hereof, in no event shall Seller be obligated to pay for costs
              associated with cleaning up environmental media to the extent
              beyond (i) the level actually required by applicable Environmental
              Law or (ii) by a regulatory agency having jurisdiction or (iii) by
              order of a court having competent jurisdiction, unless Seller has
              given its written consent before such costs are incurred. Buyer
              shall provide Seller with copies of invoices of costs incurred and
              final reports or studies prepared by Buyer regarding such
              Remediation for which Seller is contributing pursuant to Sections
              6.2 and 6.3. Upon Seller's request, Buyer shall also provide all
              non-privileged draft reports and/or underlying data or analyses
              thereof regarding such Remediation or cleanup.

6.9      Bivins Station Groundwater Matter. Notwithstanding the other provisions
         of this Agreement, as between Seller and Buyer, Seller shall be
         responsible for the completion of the ongoing Remediation of
         groundwater contamination at the Bivins Natural Gas Compressor Station,
         located in the vicinity of Masterson, Texas, as such contamination is
         delineated in that certain First Quarter 2001 Groundwater Sampling
         report of URS Corporation, 8181 E. Tufts Avenue, Denver, Colorado,
         80237, URS Project No. 6800024272.00 T00022, a copy of which is
         attached as Exhibit 6.9 ("Bivins Station Groundwater Matter"). Seller
         shall indemnify Buyer for this matter as described in Section 14.1(D).
         Seller's obligations under this Section 6.9 are in addition to and
         independent of Seller's other obligations contained elsewhere in this
         Article 6. Section 6.8 does not apply to matters pertaining to this
         Section 6.9.

7.       REPRESENTATIONS AND WARRANTIES OF SELLER.

7.1      Seller's Representations and Warranties. Subject to the disclosures set
         forth in Exhibits 7.1 (D), (E), (F), (I) and (L), Seller represents and
         warrants on the Effective Date and the GIC [which representations and
         warranties shall terminate at the GAC hereof, except Section 7.1(D)
         survives GIC for ninety (90) days (but shall not terminate prior to
         GAC), Sections 7.1(E)and (K) survive for four (4) years after GIC,
         Section 7.1 (G) survives for one (1) year after GIC, Sections 7.1(H)and
         (J) survive without time limit after GIC and Section 7.1 (I) survives
         GIC for a period lasting until the end of ninety (90)days after the
         expiration of the applicable statutes of limitation] as follows:

         (A)  Status of Incorporation. CIG is a corporation duly incorporated,
              validly existing and in good standing under the laws of the State
              of Delaware.




                                       27
<PAGE>


         (B)  Authority. Seller has the requisite power and authority to enter
              into this Agreement, to carry out the transactions contemplated
              hereby, to transfer the Assets in the manner contemplated by this
              Agreement, and to undertake all of the obligations of Seller set
              forth in this Agreement.

         (C)  Validity of Obligations. The consummation of the transactions
              contemplated by this Agreement will not in any respect violate,
              nor be in conflict with, any provision of Seller's charter,
              by-laws or other governing documents, or any agreement or
              instrument to which Seller is a party or is bound, or any
              judgment, decree, order, statute, rule or regulation applicable to
              Seller (subject to receipt: [i] by Seller of FERC Abandonment
              Approval; and [ii] other governmental consents and approvals
              customarily obtained after the GAC). This Agreement constitutes
              legal, valid and binding obligations of Seller, enforceable in
              accordance with its terms.

         (D)  Authorization for Expenditures. Except for Authorizations for
              Expenditures exchanged between Buyer and Seller prior to the date
              of this Agreement, with respect to agreements relating to the
              Assets, to Seller's knowledge, except as set forth in Exhibit
              7.1(D), there are no material outstanding calls or payments under
              authorities for expenditures for payments relating to the Assets
              which are due or which Seller has committed to make which have not
              been made.

         (E)  Contractual Restrictions. Seller has not entered into any
              contracts for or received prepayments, take-or-pay arrangements,
              buydowns, buyouts for Oil and Gas, or storage of the same or
              production payments relating to the Assets which Buyer shall be
              obligated to honor and make deliveries of Oil and Gas or pay
              refunds of amounts previously paid under such contracts or
              arrangements (excepting refunds that may be required by the FERC).

         (F)  Litigation. To Seller's knowledge, except as set forth in Exhibit
              7.1(F), there is no suit or action pending, arising out of, or
              with respect to the ownership, operation or environmental
              condition of the Assets that would have a material adverse affect
              upon the Assets.

         (G)  Permits and Consents. To Seller's knowledge, Seller has (i)
              acquired all material permits, licenses, approvals and consents
              from appropriate governmental bodies, authorities and agencies to
              conduct operations on the Assets in compliance with applicable
              laws, rules, regulations, ordinances and orders; and (ii) is in
              material compliance with all such permits, licenses, approvals and
              consents and with applicable Environmental Laws.

         (H)  Broker's Fees. Seller shall retain the obligation or liability,
              contingent or otherwise, for brokers' or finders' fees in respect
              of the matters provided for in this Agreement and Buyer shall have
              no responsibility therefor.



                                       28
<PAGE>


         (I)  Taxes. Except as set forth in Exhibit 7.1(I), (i) Seller has filed
              or will file prior to GAC (with respect to the Assets) all
              material Tax returns that are due, (ii) all Taxes (with respect to
              the Assets) shown to be due on such returns have been paid, or
              will be paid prior to GAC and (iii) there is no material dispute
              or claim concerning any Tax liability of the Seller (with respect
              to the Assets) claimed or raised by any Tax authority in writing.
              For purposes of this Agreement, the term "Tax" or "Taxes" means
              any federal, state, local or tribal, income, gross receipts,
              license, payroll, employment, excise, severance, stamp,
              occupation, premium, windfall profits, environmental (including
              taxes under Section 59A of the Code), custom duties, capital
              stock, franchise, profits, withholding, social security (or
              similar excises), unemployment, disability, real property,
              personal property, sales, use, transfer, registration, value
              added, alternative or add-on minimum, estimated, or other tax of
              any kind whatsoever, including any interest, penalty or addition
              thereto, whether disputed or not.

         (J)  All of Seller's Interest. Except as expressly provided otherwise
              in this Agreement, the Assets to be conveyed to Buyer pursuant to
              this Agreement represent all of Seller's interest and contractual
              entitlement to interest in the Assets (except for the Excluded
              Assets). Seller has not entered into any contract or arrangement
              with affiliates of Seller which creates any entitlement to any
              interest in the Facilities and the Related Assets.

         (K)  No Unpaid Amounts. Seller has paid, and shall have paid at GIC,
              all obligations that are due and payable based on gathering from
              or ownership of Seller's interest in the Assets excluding the
              suspended funds delivered to Buyer pursuant to Section 4.5 at GIC.

         (L)  Valid Agreements. Except as set forth in Exhibit 7.1 (L), and
              excluding disputes between Buyer and Seller under the "B" Contract
              Documents, all material contracts and agreements constituting a
              part of the Assets are valid and in full force and effect, and no
              party is in breach or default, or with the lapse of time or giving
              of notice or both would be in breach or default, with respect to
              any of its obligations thereunder and no party has given or
              threatened to give Seller notice of any default thereunder.

         Seller also makes each of the above representations and warranties as
of the GAC.


7.2      Scope of Representations of Seller.

         (A)  Information About the Assets. Except as expressly set forth in
              this Agreement, Seller disclaims all liability and responsibility
              for any representation, warranty, statements or communications
              (orally or in writing) to Buyer, including any information
              contained in any opinion,




                                       29
<PAGE>

              information or advice that may have been provided to Buyer by any
              member of the Seller Group, or any consultant, engineer or
              engineering firm, trustee, partner, member, beneficiary,
              stockholder or contractor of Seller pursuant to this Agreement,
              wherever and however made, including those made in any data room
              expressly made available to Buyer and any supplements or
              amendments thereto or during any negotiations with respect to this
              Agreement or any confidentiality agreement previously executed by
              the Parties with respect to the Asset. EXCEPT AS SET FORTH IN
              ARTICLE 7 OF THIS AGREEMENT, SELLER MAKES NO WARRANTY OR
              REPRESENTATION, EXPRESS, STATUTORY OR IMPLIED, AS TO (i) THE
              ACCURACY, COMPLETENESS OR MATERIALITY OF ANY DATA, INFORMATION OR
              RECORDS FURNISHED TO BUYER IN CONNECTION WITH THE ASSETS OR
              OTHERWISE CONSTITUTING A PORTION OF THE ASSETS; (ii) THE PRESENCE,
              QUALITY AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE
              TO THE ASSETS, INCLUDING WITHOUT LIMITATION SEISMIC DATA AND
              SELLER'S INTERPRETATION AND OTHER ANALYSIS THEREOF; (iii) THE
              ABILITY OF THE ASSETS TO PRODUCE HYDROCARBONS, INCLUDING WITHOUT
              LIMITATION PRODUCTION RATES, DECLINE RATES AND RECOMPLETION
              OPPORTUNITIES; (iv) IMBALANCE OR PAYOUT ACCOUNT INFORMATION,
              ALLOWABLES, OR OTHER REGULATORY MATTERS; (v) THE PRESENT OR FUTURE
              VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS, IF ANY, TO BE
              DERIVED FROM THE ASSETS; (vi) THE ENVIRONMENTAL CONDITION OF THE
              ASSETS; (vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT
              OCCUR; (viii) THE TAX ATTRIBUTES OF ANY ASSET; (ix) ANY OTHER
              MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL
              FURNISHED TO BUYER BY THE SELLER GROUP OR OTHERWISE CONSTITUTING A
              PORTION OF THE ASSETS; AND (x) THE COMPLETENESS OR ACCURACY OF THE
              INFORMATION CONTAINED IN ANY EXHIBIT HERETO. ANY DATA, INFORMATION
              OR OTHER RECORDS FURNISHED BY SELLER ARE PROVIDED TO BUYER AS A
              CONVENIENCE AND BUYER'S RELIANCE ON OR USE OF THE SAME IS AT
              BUYER'S SOLE RISK.

         (B)  Independent Investigation. Buyer acknowledges that it has, or by
              GIC will have, made its own independent investigation, analysis
              and evaluation of the transactions contemplated by this Agreement
              (including Buyer's own estimate and appraisal of the extent and
              value of Seller's Oil and Gas reserves attributable to the Assets
              and an independent assessment and appraisal of the environmental
              risks and liabilities associated with the acquisition of the
              Assets). Buyer assumes it will have prior to GIC, access to all
              information necessary to perform its investigation and, based on
              such assumption, Buyer has not relied and will not rely on any


                                       30

<PAGE>

              representations by Seller other than those expressly set forth in
              this Agreement.

         (C)  Waiver of Deceptive Trade Practices Acts. BUYER WAIVES ITS RIGHTS
              UNDER THE DECEPTIVE TRADE PRACTICES ACT SECTION 17.41 et seq.,
              TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
              RIGHTS, AND UNDER SIMILAR STATUTES ADOPTED IN OTHER STATES, TO THE
              EXTENT THEY HAVE APPLICABILITY TO THE TRANSACTIONS CONTEMPLATED BY
              THIS AGREEMENT. AFTER CONSULTATION WITH AN ATTORNEY OF ITS
              SELECTION, BUYER CONSENTS TO THIS WAIVER.

8.       REPRESENTATIONS AND WARRANTIES OF BUYER.

8.1      Buyer's Representations and Warranties. Buyer represents and warrants
         on the Effective Date and GIC [which representations and warranties
         shall not survive the GAC (except that Section 8.1(F) survives the GIC
         for four (4) years after GIC and Sections 8.1(E) and (H) survive
         without time limitation after the GIC] as follows:

         (A)  Status of Incorporation. Buyer is a corporation duly incorporated,
              validly existing and in good standing under the laws of the State
              of Delaware.

         (B)  Corporate Authority. Buyer has the corporate power and authority
              to enter into this Agreement, to carry out the transactions
              contemplated hereby and to undertake all of the obligations of
              Buyer set out in this Agreement.

         (C)  Validity of Obligations. The consummation of the transactions
              contemplated by this Agreement will not in any respect violate,
              nor be in conflict with, any provision of Buyer's charter, by-laws
              or other governing documents, or any agreement or instrument to
              which Buyer is a party or is bound, or any judgment, decree,
              order, statute, rule or regulation applicable to Buyer (subject to
              governmental consents and approvals customarily obtained after the
              GAC). This Agreement constitutes legal, valid and binding
              obligations of Buyer, enforceable in accordance with its terms.

         (D)  Qualification and Bonding. Buyer represents and warrants that it
              is in compliance with the bonding and liability insurance
              requirements in accordance with all applicable state or federal
              laws or regulations and that it is and henceforth will continue to
              be qualified to own the Facilities.

         (E)  Non-Security Acquisition. Buyer hereby represents to Seller that
              it intends to acquire the Assets for its own benefit and account
              and that it is not acquiring said Assets with the intent of
              distributing fractional undivided interests thereof such as would
              be subject to regulation by federal or state securities laws, and
              that if, in the future, it should sell, transfer or otherwise
              dispose of said Assets or fractional undivided interests therein,



                                       31
<PAGE>

              it will do so in compliance with any applicable federal and state
              securities laws.

         (F)  Evaluation. Buyer represents that by reason of Buyer's knowledge
              and experience in the evaluation, acquisition and operation of gas
              gathering assets, Buyer has evaluated the merits and risks of
              purchasing the Assets from Seller and has formed an opinion based
              solely upon Buyer's knowledge and experience and not upon any
              representations or warranties by the Seller Group.

         (G)  Financing. Buyer has sufficient cash, available lines of credit or
              other sources of immediately available funds to enable it to pay
              the Purchase Price to Seller at the GIC.

         (H)  Broker's Fees. Buyer has incurred no obligation or liability,
              contingent or otherwise, for brokers' or finders' fees in respect
              of the matters provided for in this Agreement, or, if any such
              obligation or liability exists, it shall remain an obligation of
              Buyer, and Seller shall have no responsibility therefor.

         Buyer also makes each of the above representations and warranties as of
the GAC.

9.       CERTAIN AGREEMENTS OF SELLER. Seller agrees and covenants (which
         covenants shall, with the exception of those set forth in Section 9.1,
         survive GAC) that, unless Buyer shall have otherwise agreed in writing,
         the following provisions shall apply:

9.1      Maintenance of Assets. From the date of this Agreement until GAC,
         Seller agrees that, to the extent that it operates the Facilities, it
         shall:

         (A)  Administer the Facilities in accordance with the applicable
              Contracts and operating agreements.

         (B)  Not introduce any new methods of management, operation or
              accounting with respect to any or all of the Assets.

         (C)  Use commercially reasonable efforts to maintain and keep the
              Assets in full force and effect; and fulfill all contractual or
              other covenants, obligations and conditions imposed upon Seller
              with respect to the Assets.

         (D)  [INTENTIONALLY DELETED]

         (E)  Not voluntarily relinquish its position as operator to anyone
              other than Buyer with respect to any of the Facilities.

         (F)  Not, without the prior written consent of Buyer (which consent
              shall not be unreasonably withheld, delayed or conditioned), (i)
              enter into any




                                       32
<PAGE>

              agreement or arrangement (other than one constituting a Permitted
              Encumbrance) transferring, selling or encumbering any of the
              Assets (other than in the ordinary course of business, including
              ordinary course sales of production, inventory or salvage or with
              respect to any Assets with a value less than Twenty-Five Thousand
              Dollars ($25,000) or pursuant to any agreements existing on the
              date hereof); (ii) grant any preferential or other right to
              purchase or agree to require the consent of any party not
              otherwise required to consent to the transfer and assignment of
              the Assets to Buyer; or (iii) except as otherwise required by FERC
              rules and regulations, incur or agree to incur any contractual
              obligation or liability (absolute or contingent) with respect to
              the Assets except as otherwise provided herein (including ordinary
              course sales of production, inventory or salvage or with respect
              to any Assets with a value less than Twenty-Five Thousand Dollars
              ($25,000) or pursuant to any disclosed Authorization for
              Expenditures covering the Assets).

         (G)  To the extent known to Seller, provide Buyer with written notice
              of (i) any claims, demands, suits or actions made against Seller
              which materially affect the Assets; or (ii) any proposal from a
              third party to engage in any material transaction (e.g., a
              farmout) with respect to the Assets.

         (H)  Not sell, transfer, assign, convey, remove or otherwise dispose of
              any of the Assets subject to Seller's control, other than (a) oil,
              gas and other hydrocarbons produced, saved and sold in the
              ordinary course of business, or (b) personal property and
              equipment which is replaced with property and equipment of
              comparable or better value and utility in the ordinary and routine
              maintenance and operation of the Assets.

9.2      Consents or Assignments. Seller shall exercise reasonable commercial
         efforts to obtain all such permissions, approvals and consents by
         governmental authorities and others which are reasonably obtainable by
         the GAC and are required to vest Good and Marketable title to the
         Assets in Buyer or as may be otherwise reasonably requested by Buyer.
         Seller will execute all necessary or appropriate transfer orders (or
         letters in lieu thereof) designating Buyer as the appropriate party for
         payment effective as of the GAC Date. Except for a failure to obtain
         FERC-related permits and approvals (including FERC Abandonment
         Approval), any failure to obtain such permissions, approvals and
         consents that are required to vest Good and Marketable title to the
         Assets shall be deemed a Title Defect and the procedures set forth in
         Section 5.5 shall apply.

9.3      [INTENTIONALLY DELETED]]

9.4      [INTENTIONALLY DELETED].

9.5      Records and Contracts. Seller shall have the right to make and retain
         copies of the Records and Contracts as Seller may desire prior to the
         delivery of the Records and Contracts to Buyer. Buyer, for a period of
         seven (7) years after the




                                       33
<PAGE>

              GIC Date, shall make available to Seller (at the location of such
              Records and Contracts in Buyer's organization) access to such
              Records and Contracts as Buyer may have in its possession (or to
              which it may have access) upon written request of Seller, during
              normal business hours; provided, however, that Buyer shall not be
              liable to Seller for the loss of any Records or Contracts by
              reason of clerical error or inadvertent loss or destruction of
              Records or Contracts. Seller, for a period of seven (7) years
              after the GIC Date, shall make available to Buyer (at the location
              of such records in Seller's organization) access to records
              described in Section 1.1(J)(iii) (the "Excluded Records") as
              Seller may have in its possession (or to which it may have access)
              upon written request of Buyer, during normal business hours;
              provided, however, that Seller shall not be liable to Buyer for
              the loss of any Excluded Records by reason of clerical error or
              inadvertent loss or destruction of Excluded Records.
              Notwithstanding the foregoing, Buyer may convey the Records
              associated with any property sold to a third party, subject to the
              purchaser of said property assuming the obligations remaining
              under this Section 9.5 above with regard to said property. The
              provisions of this section shall not be construed to require
              Seller to provide any information to Buyer that Seller is
              prohibited from providing by the rules and regulations of the
              FERC.

9.6      [INTENTIONALLY DELETED] ]

9.7      Gas Quality Waiver. From and after the date of this Agreement, CIG
         agrees to waive the oxygen specifications of its FERC gas tariff, as
         amended from time to time ("CIG's Tariff") for gas delivered to CIG by
         Buyer at the Big Canyon compressor station point of receipt for
         transportation on CIG's FERC-jurisdictional transmission system,
         unless: (i) such gas contains more than 2000 parts per million (.200
         percent) by volume of oxygen; or (ii) CIG, in its reasonable discretion
         and judgment, has determined that such gas tendered must conform to the
         quality specifications of CIG's Tariff to (1) maintain prudent and safe
         operation of part or all of CIG's transmission system and storage
         facilities; or (2) ensure that such gas does not adversely affect
         Seller's ability to provide service to others; or (3) ensure that such
         gas will be accepted for delivery by a downstream pipeline or end user.
         Provided however, in the event of any conflict between the foregoing
         provision and the provisions of CIG's FERC gas tariff, such tariff
         shall control.

9.8      FERC Abandonment. As promptly as commercially reasonable after GIC,
         Seller shall file an application with the FERC to abandon the
         Facilities by sale to Buyer and have the Facilities declared
         nonjurisdictional. Seller shall diligently pursue the approval of said
         application, responding to FERC requests, filing amendments and
         devoting commercially reasonable levels of staff and resources in its
         efforts to obtain such approval. Seller shall consult with Buyer, upon
         request, to apprise Buyer of the status of Seller's application and
         provide information reasonably requested regarding the matters in this
         Section 9.8 and in Section 10.4.



                                       34
<PAGE>


10.      CERTAIN AGREEMENTS OF BUYER. Buyer agrees and covenants that unless
         Seller shall have consented otherwise in writing, the following
         provisions shall apply:

10.1     [INTENTIONALLY DELETED].

10.2     [INTENTIONALLY DELETED].

10.3     Seller's Logos.. After GAC, Buyer shall promptly cover or cause to be
         covered by decals or new signage any names and marks used by Seller,
         and all variations and derivatives thereof and logos relating thereto,
         from the Assets and shall not thereafter make any use whatsoever of
         such names, marks and logos. Buyer shall complete such work by no later
         than sixty (60) days after GAC.

10.4     Buyer's FERC Filing. Buyer may file an application with FERC, seeking
         an order that the Facilities, following receipt by Seller of
         abandonment authority, are non-jurisdictional. If Buyer makes such a
         filing, Buyer shall consult with Seller, upon request, to apprise
         Seller of the status of Buyer's application.

10.5     Like-Kind Exchanges. Prior to GIC, Buyer shall cooperate fully, as and
         to the extent reasonably requested by Seller, in connection with the
         transactions contemplated herein to make such modifications as may be
         necessary to qualify such transactions, in whole or in part, as a
         "like-kind" exchange pursuant to Section 1031 of the Code.

10.6     [INTENTIONALLY DELETED].

11.      CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. All obligations of Buyer
         under this Agreement are, at Buyer's election, subject to the
         fulfillment, prior to or at the GIC and/or the GAC (as specified
         below), of each of the following conditions:

                                   At the GIC

11.1     No Litigation. At the GIC, no suit, action or other proceeding shall be
         pending before any court or governmental agency which attempts to
         prevent the occurrence of the transactions contemplated by this
         Agreement.

11.2     Representations and Warranties as of the GIC. All representations and
         warranties of Seller contained in this Agreement shall be true in all
         material aspects as of the GIC as if such representations and
         warranties were made as of the GIC Date (except for those
         representations or warranties that are expressly made only as of
         another specific date, which representations and warranties shall be
         true in all material respects as of such other date) and Seller shall
         have performed and satisfied in all material respects all covenants and
         fulfilled all conditions required by this Agreement to be performed and
         satisfied by Seller at or prior to the GIC.




                                       35
<PAGE>


11.3     Acquisition of Production Assets. The Closing under the Production
         Assets PSA ("Production Assets Closing") occurs contemporaneously with
         the GIC herewith.

11.4     Seller's Receipt of Waiver. That Seller has received the waivers or
         amendments referred to in Section 12.3 below.

                                   At the GAC

11.5     No Litigation. At the GAC, no suit, action or other proceeding shall be
         pending before any court or governmental agency which attempts to
         prevent the occurrence of the transactions contemplated by this
         Agreement.

11.6     Representations and Warranties as of the GAC. All representations and
         warranties of Seller contained in this Agreement shall be true in all
         material aspects as of the GAC as if such representations and
         warranties were made as of the GAC Date (except for those
         representations or warranties that are expressly made only as of
         another specific date, which representations and warranties shall be
         true in all material respects as of such other date) and Seller shall
         have performed and satisfied in all material respects all covenants and
         fulfilled all conditions required by this Agreement to be performed and
         satisfied by Seller at or prior to the GAC.

11.7     FERC Order. If sought by Buyer, the FERC has issued an order,
         satisfactory to Buyer in its sole discretion exercised in good faith,
         declaring that the Facilities and the service to be provided by Buyer
         by means of the Facilities are, following receipt by Seller of
         abandonment authority, non-jurisdictional. Provided however, Buyer
         shall file with the FERC for any such relief at or about the same time
         that Seller files seeking the FERC Abandonment Approval.

11.8     FERC Abandonment Approval. That Seller has received the FERC
         Abandonment Approval in accordance with the provisions of Section 12.7,
         and such FERC Abandonment Approval is satisfactory to Buyer in its sole
         discretion exercised in good faith.

12.      CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. All obligations of
         Seller under this Agreement are, at Seller's election, subject to the
         fulfillment, prior to or at the GIC and/or the GAC (as specified
         below), of each of the following conditions:

                                   At the GIC

12.1     No Litigation. At GIC, no suit, action or other proceeding shall be
         pending before any court or governmental agency which attempts to
         prevent the occurrence of the transactions contemplated by this
         Agreement.

12.2     Representations and Warranties at the GIC. All representations and
         warranties of Buyer contained in this Agreement shall be true in all
         material aspects as of




                                       36
<PAGE>

         the GIC, as if such representations and warranties were made as of the
         GIC Date (except for those representations or warranties that are
         expressly made only as of another specific date, which representations
         and warranties shall be true in all material respects as of such other
         date) and Buyer shall have performed and satisfied in all material
         respects all covenants and fulfilled all conditions required by this
         Agreement to be performed and satisfied by Buyer at or prior to the
         GIC.

12.3     Waivers of Restrictions. The Assets to be sold by the Seller support a
         financing, and the sale of the Assets is subject to certain
         restrictions (including potential mandatory prepayments of such
         financing) imposed under the terms of such financing. The Parties
         hereby agree that, as a condition precedent to the Parties' respective
         obligations to close the sale of the Assets, the Seller shall have
         obtained effective waivers or amendments--in each case on terms
         acceptable to Seller--of the restrictive provisions of such financing
         relating to sales of the Assets. The Seller agrees to use commercially
         reasonable efforts to obtain such waivers or amendments prior to the
         Effective Time.

12.4     Disposition of Production Assets. The Production Assets Closing occurs
         contemporaneously with the GIC herewith.

                                   At the GAC

12.5     No Litigation. At GAC, no suit, action or other proceeding shall be
         pending before any court or governmental agency which attempts to
         prevent the occurrence of the transactions contemplated by this
         Agreement.

12.6     Representations and Warranties at the GAC. All representations and
         warranties of Buyer contained in this Agreement shall be true in all
         material aspects as of the GAC, as if such representations and
         warranties were made as of the GAC Date (except for those
         representations or warranties that are expressly made only as of
         another specific date, which representations and warranties shall be
         true in all material respects as of such other date) and Buyer shall
         have performed and satisfied in all material respects all covenants and
         fulfilled all conditions required by this Agreement to be performed and
         satisfied by Buyer at or prior to the GAC.

12.7     FERC Abandonment Approval. Receipt by Seller of approval, in form and
         substance satisfactory to Seller in its sole discretion exercised in
         good faith, of the FERC to abandon the Facilities by sale to Buyer and
         a declaration that the Facilities are non-jurisdictional, and the
         expiration of all applicable periods for challenge of such FERC action
         (the "FERC Abandonment Approval").

13.      TERMINATION.

13.1     Causes of Termination. This Agreement and the transactions contemplated
         herein may be completely terminated:



                                       37
<PAGE>


         (A)  At any time by mutual consent of the Parties.

         (B)  By either Party if the GIC shall not have occurred by September 1,
              2002, despite the good faith reasonable efforts of the Parties,
              and if the Party desiring to terminate is not in breach of this
              Agreement or the Production Assets PSA.

         (C)  If the GAC has not occurred solely by reason of the lack of the
              satisfaction or waiver of the conditions set forth in Section 11.7
              and/or 12.7 hereof, then the provisions of Section 13.3 hereof
              shall apply.

         (D)  By either Party in the event of a Casualty Loss pursuant to
              Section 15.1(B).

         (E)  [INTENTIONALLY DELETED].

         (F)  By Buyer prior to or at the GIC if, on the GIC Closing Date, any
              of the conditions set forth in Sections 11.1 through 11.4 hereof
              shall not have been satisfied or waived. By Buyer prior to or at
              the GAC if, on the GAC Closing Date, any of the conditions set
              forth in Sections 11.5 through 11.7 hereof shall not have been
              satisfied or waived.

         (G)  By Seller prior to or at the GIC if, on the GIC Closing Date, any
              of the conditions set forth in Sections 12.1 through 12.4 hereof
              shall not have been satisfied or waived. By Seller prior to or at
              the GAC if, on the GAC Closing Date, any of the conditions set
              forth in Sections 12.5 through 12.7 hereof shall not have been
              satisfied or waived.

         (H)  By either Party as provided in Section 5.6(C).

13.2     Effect of Termination. In the event of the termination of this
         Agreement pursuant to the provisions of this Article 13 or elsewhere in
         this Agreement, this Agreement shall become void and have no further
         force and effect and neither Party shall have any further right, duty
         or liability to the other hereunder, except for any breach of this
         Agreement prior to such termination; and (iii) any other continuing
         confidentiality requirement. Upon termination, Buyer agrees to use
         commercially reasonable efforts to return to Seller, or - at Seller's
         option - destroy, all materials, documents and copies thereof provided,
         obtained or discovered in the course of any due diligence
         investigations.

13.3     Unacceptable FERC Abandonment Action. Should: (i) the FERC issue an
         order(s) in response to Seller's application described in Section 12.7;
         and/or Buyer's request described in Section 11.7 that do not satisfy
         the provisions of such Sections or the provisions of Section 11.8; or
         (ii) the provisions of Section 13.1(C) apply, then (provided the other
         conditions to GAC have been satisfied or waived) the Parties shall
         engage in good faith negotiations designed to reach agreement upon a
         course of action designed to effectuate the intent of this Agreement,
         so as to place the Parties in the same position as nearly as possible




                                       38
<PAGE>

         as if Seller had sold and Buyer had purchased the Assets as of the
         Effective Time.

14.      INDEMNIFICATION

14.1     INDEMNIFICATION BY SELLER. UPON AND AFTER THE GIC, SELLER SHALL TO THE
         FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND, INDEMNIFY, AND HOLD
         HARMLESS BUYER, ITS PARENT AND SUBSIDIARY COMPANIES, AND AFFILIATED
         ENTITIES AND EACH OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
         AGENTS AND OTHER REPRESENTATIVES (THE "BUYER GROUP") FROM AND AGAINST
         THE FOLLOWING:

         (A)  MISREPRESENTATIONS. ALL CLAIMS, DEMANDS, LIABILITIES, JUDGMENTS,
              LOSSES AND REASONABLE COSTS, EXPENSES AND ATTORNEYS' FEES
              (INDIVIDUALLY A "LOSS" AND COLLECTIVELY, THE "LOSSES") ARISING
              FROM THE BREACH BY SELLER OF ANY REPRESENTATION OR WARRANTY SET
              FORTH IN THIS AGREEMENT TO THE EXTENT THE SAME SURVIVES;

         (B)  BREACH OF COVENANTS. ALL LOSSES ARISING FROM THE BREACH BY SELLER
              OF ANY COVENANT SET FORTH IN THIS AGREEMENT TO THE EXTENT THE SAME
              SURVIVES; AND

         (C)  OWNERSHIP AND OPERATION. EXCEPT FOR MATTERS INDEMNIFIED BY BUYER
              PURSUANT TO SECTION 14.2 BELOW OR AS PROVIDED IN THE GSOA, ALL
              LOSSES ARISING FROM THE OWNERSHIP AND OPERATION OF THE ASSETS
              PRIOR TO THE EFFECTIVE TIME DIRECTLY ASSOCIATED WITH THE FOLLOWING
              MATTERS:

             (i)     WELLS PLUGGED AND ABANDONED ON THE ASSETS BY SELLER OR ANY
                     OF SELLER'S PREDECESSORS IN INTEREST PRIOR TO THE EFFECTIVE
                     TIME;

             (ii)    ALL TAXES FOR ALL PERIODS UP TO GIC OTHER THAN TAXES WHICH,
                     IF PAID BY SELLER, WOULD RESULT IN A PURCHASE PRICE
                     ADJUSTMENT IN ITS FAVOR UNDER SECTION 2.2(A)(ii); AND

         (D)  BIVINS STATION MATTER. ALL LOSSES, INCLUDING BUT NOT LIMITED TO,
              THOSE DUE TO PERSONAL INJURY AND/OR PROPERTY DAMAGE, WHETHER
              ARISING OR ACCRUING BEFORE, ON OR AT ANY TIME AFTER THE EFFECTIVE
              TIME, ARISING FROM THE BIVINS COMPRESSOR STATION MATTER AND THE
              CONTAMINATION DESCRIBED IN SECTION 6.9 AND EXHIBIT 6.9, OTHER THAN
              TO THE



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<PAGE>

              EXTENT CAUSED DIRECTLY BY THE ACTIONS OF BUYER AFTER THE EFFECTIVE
              TIME.

14.2     INDEMNIFICATION BY BUYER. UPON AND AFTER GIC, BUYER SHALL TO THE
         FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND, INDEMNIFY, AND HOLD
         HARMLESS Seller, its parent, subsidiary and affiliated entities, and
         each of their respective directors, officers, employees, agents and
         other representatives and their successor and assigns (collectively,
         the "Seller Group") AGAINST THE FOLLOWING:

         (A)  MISREPRESENTATIONS. ALL LOSSES ARISING FROM THE BREACH BY BUYER OF
              ANY REPRESENTATION OR WARRANTY SET FORTH IN THIS AGREEMENT TO THE
              EXTENT THE SAME SURVIVES;

         (B)  BREACH OF COVENANTS. ALL LOSSES ARISING FROM THE BREACH BY BUYER
              OF ANY COVENANT SET FORTH IN THIS AGREEMENT TO THE EXTENT THE SAME
              SURVIVES;

         (C)  OWNERSHIP AND OPERATION. EXCEPT FOR MATTERS INDEMNIFIED BY SELLER
              PURSUANT TO SECTION 14.1 ABOVE OR AS PROVIDED IN THE GSOA, ALL
              LOSSES ARISING FROM THE OWNERSHIP AND OPERATION OF THE ASSETS FROM
              AND AFTER THE EFFECTIVE TIME, DIRECTLY ASSOCIATED WITH THE
              FOLLOWING MATTERS:

             (i)     DAMAGES TO PERSONS OR PROPERTY;

             (ii)    THE VIOLATION BY BUYER OF ANY LAW OR REGULATION OR THE
                     TERMS OF ANY AGREEMENT BINDING UPON BUYER;

             (iii)   CLAIMS OF BUYER'S CO-OWNERS, PARTNERS, JOINT VENTURERS AND
                     OTHER PARTICIPANTS IN THE FACILITIES (EXCLUDING SELLER);
                     AND

             (iv)    TAXES ATTRIBUTABLE TO THE ASSETS OTHER THAN TAXES DESCRIBED
                     IN SECTION 14.1(C)(ii).

14.3     [INTENTIONALLY DELETED].

14.4     Notification. Neither Party shall be obligated to indemnify the other
         for any Loss unless notice regarding same has been sent as provided in
         this Agreement but the obligation to indemnify hereunder shall continue
         beyond any applicable survival period under this Agreement to the
         extent such notice has been given. As soon as reasonably practical
         after obtaining knowledge thereof, the indemnified Party shall notify
         the indemnifying Party of any claim or demand



                                       40
<PAGE>

         which the indemnified Party has determined has given or could give rise
         to a claim for indemnification under this Article 14. Such notice shall
         specify the agreement, representation or warranty with respect to which
         the claim is made, the facts giving rise to the claim and the alleged
         basis for the claim, and the amount (to the extent then determinable)
         of liability for which indemnity is asserted. In the event any action,
         suit or proceeding is brought with respect to which a Party may be
         liable under this Article 14, the defense of the action, suit or
         proceeding (including all settlement negotiations and arbitration,
         trial, appeal, or other proceeding) shall be at the discretion of and
         conducted by the indemnifying Party. If an indemnified Party shall
         settle any such action, suit or proceeding without the written consent
         of the indemnifying Party (which consent shall not be unreasonably
         withheld), the right of the indemnified Party to make any claim against
         the indemnifying Party on account of such settlement shall be deemed
         conclusively denied. An indemnified Party shall have the right to be
         represented by its own counsel at its own expense in any such action,
         suit or proceeding, and if an indemnified Party is named as the
         defendant in any action, suit or proceeding, it shall be entitled to
         have its own counsel and defend such action, suit or proceeding with
         respect to itself at its own expense. Subject to the foregoing
         provisions of this Article 14, neither Party shall, without the other
         Party's written consent, settle, compromise, confess judgment or permit
         judgment by default in any action, suit or proceeding if such action
         would create or attach any liability or obligation to the other Party.
         The Parties agree to make available to each other, and to their
         respective counsel and accountants, all information and documents
         reasonably available to them which relate to any action, suit or
         proceeding, and the Parties agree to render to each other such
         assistance as they may reasonably require of each other in order to
         ensure the proper and adequate defense of any such action, suit or
         proceeding.

14.5     Limitation on Damages. The indemnification obligations of Buyer and
         Seller pursuant to this Article 14 shall be limited to actual Losses
         and shall not include incidental, consequential, indirect, punitive or
         exemplary Losses except to the extent the indemnified Party is
         obligated to pay non-affiliated third parties for such Losses.

14.6     Benefit. Notwithstanding the foregoing sections in this Article 14,
         this Article 14 shall take into account the gain or benefit which
         either Party would have received and/or the loss or burden for which
         either Party would be obligated under the terms of the 'B' Contract
         Documents up to Effective Time as if this Agreement had not been
         executed, except as otherwise expressly provided in this Agreement.

15.      MISCELLANEOUS.

15.1     Casualty Loss.

         (A)  An event of casualty means volcanic eruptions, acts of God, fire,
              explosion, earthquake, wind storm, flood, drought, condemnation,
              the




                                       41
<PAGE>

              exercise of any right of eminent domain, confiscation and seizure
              (a "Casualty"). A Casualty does not include depletion due to
              normal production and depreciation or failure of equipment or
              casing.

         (B)  If, prior to the GIC, a Casualty occurs (or Casualties occur)
              which results in a reduction in the value of the Assets in excess
              of ten percent (10%) of the Base Purchase Price (as determined
              immediately prior to such Casualty Loss) ["Casualty Loss"], Buyer
              or Seller may elect prior to GIC to terminate this Agreement. If
              this Agreement is not so terminated, then this Agreement shall
              remain in full force and effect notwithstanding any such Casualty
              Loss, and, upon agreement of the Parties, (i) Seller may retain
              such Asset and such Asset shall be the subject of an adjustment to
              the Base Purchase Price in the same manner set forth in Section
              5.6 hereof, or (ii) at the GIC, Seller shall pay to Buyer all sums
              paid to Seller by reason of such Casualty Loss, (provided however,
              that the Base Purchase Price shall not be adjusted by reason of
              such payment except to the extent said payment is less than the
              value of the damage to the affected Asset, and then the Base
              Purchase Price shall be reduced only by the difference between the
              payment and the damage to the affected Asset, and Seller shall at
              GIC assign, transfer and set over unto Buyer all of the right,
              title and interest of Seller in and to such Asset and any unpaid
              awards or other payments arising out of such Casualty Loss.

15.2     Third Party Beneficiaries. There are no third parties intended to
         benefit from this Agreement other than the parties protected or
         indemnified by either Party pursuant to Article 14 and then only to the
         extent provided in said Article 14.

15.3     Competition. Buyer acknowledges that Seller may presently own interests
         or have leads, prospects, information or ideas on properties or
         leaseholds adjacent to, adjoining or in the vicinity of the Assets.
         Seller shall not be prohibited in any way from competing with Buyer or
         pursuing any activity or business opportunity on property not being
         transferred to Buyer pursuant to this Agreement and Buyer shall not be
         prohibited in any way from competing with Seller or pursuing any
         activity or business opportunity on property not being transferred to
         Buyer pursuant to this Agreement.

15.4     Notice. Any notice, request, demand, or consent required or permitted
         to be given hereunder shall be in writing and delivered in person or by
         certified letter, with return receipt requested, or by facsimile
         addressed to the Party for whom intended at the following addresses:



                                       42
<PAGE>


         SELLER:

                  COLORADO INTERSTATE GAS COMPANY
                  2 North Nevada Ave.
                  Colorado Springs, CO 80903
                  Attn:    Greg Gettman
                  Tel:     (719) 520-4533
                  Fax:     (719) 520-4618

         BUYER:
                  PIONEER NATURAL RESOURCES USA, INC.
                  5205 N. O'Connor Blvd., Suite 1400
                  Irving, Texas 75039-3746
                  Attn:    W. T. Howard
                  Tel:     (972) 969-3811
                  Fax:     (972) 969-3533

         or at such other address as any of the above shall specify by like
         notice to the other.

15.5     Press Releases and Public Announcements. No Party shall issue any press
         release or make any public announcement relating to the subject matter
         of this Agreement prior to the GIC without the prior approval of the
         other Party; provided, however, that any Party may make any public
         disclosure it believes in good faith is required by applicable law or
         any listing or trading agreement concerning its or its affiliates'
         publicly-traded securities (in which case the disclosing Party shall
         use all reasonable efforts to advise the other Party, and give the
         other Party an opportunity to comment on the proposed disclosure, prior
         to making the disclosure).

15.6     Counterparts. This Agreement may be executed in multiple counterparts,
         each of which will be deemed an original. If this Agreement is executed
         by facsimile, the signatures thereon shall be deemed original and
         self-proving for all purposes but the Party so executing shall replace
         such facsimile signature with an original and provide such original to
         the other Party.

15.7     Compliance With Express Negligence Test. THE PARTIES AGREE THAT THE
         INDEMNIFICATION OBLIGATIONS OF THE INDEMNIFYING PARTY SHALL BE WITHOUT
         REGARD TO THE NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNIFIED
         PERSON(S), WHETHER THE NEGLIGENCE OR STRICT LIABILITY IS ACTIVE,
         PASSIVE, JOINT, CONCURRENT OR SOLE.

15.8     Governing Law. This Agreement is governed by and must be construed
         according to the laws of the State of Texas, excluding any
         conflicts-of-law rule or principle that might apply the law of another
         jurisdiction. All disputes related to this Agreement shall be submitted
         to the jurisdiction of the courts of the State of Texas and venue shall
         be in the civil district courts of Harris County, Texas.



                                       43
<PAGE>


15.9     Exhibits. The Exhibits attached to this Agreement are incorporated into
         and made a part of this Agreement.

15.10    Fees, Expenses, Taxes and Recording.

         (A)  Each Party shall be solely responsible for all costs and expenses
              incurred by it in connection with this transaction (including, but
              not limited to fees and expenses of its counsel and accountants)
              and shall not be entitled to any reimbursements from the other
              Party, except as otherwise provided in this Agreement.

         (B)  Buyer shall file all necessary tax returns and other documentation
              with respect to all transfer, documentary, sales, use, stamp,
              registration and other similar taxes and fees, and, if required by
              applicable law, Seller shall join in the execution of any such tax
              returns and other documentation. Notwithstanding anything set
              forth in this Agreement to the contrary, Buyer shall pay any
              transfer, documentary, sales, use, stamp, registration and other
              similar taxes and fees incurred in connection with this Agreement
              and the transactions contemplated hereby.

         (C)  Buyer shall, at its own cost, immediately record all instruments
              of conveyance and sale in the appropriate office of the state and
              county in which the lands covered by such instrument are located.
              Buyer shall immediately file for and obtain the necessary approval
              of all federal, Indian, tribal or state government agencies to the
              assignment of the Assets. The assignment of any state, federal or
              Indian tribal oil and gas leases shall be filed in the appropriate
              governmental offices on a form required and in compliance with the
              applicable rules of the applicable government agencies. Buyer
              shall supply Seller with a true and accurate photocopy reflecting
              the recording information of all the recorded and filed
              assignments within a reasonable period of time after their
              recording and filing.

15.11    Assignment. This Agreement or any part hereof may not be assigned by
         either Party without the prior written consent of the other Party;
         provided, however, upon notice to the other Party, either Party shall
         have the right to assign all or part of its rights (but none of its
         obligations) under this Agreement in order to qualify transfer of the
         Assets as a "like-kind" exchange for federal tax purposes. Subject to
         the foregoing, this Agreement is binding upon the Parties hereto and
         their respective successors and assigns. The conveyance of any of the
         Assets at GAC to a designee of Buyer shall not relieve Pioneer Natural
         Resources USA, Inc., of any of its obligations under this Agreement.

15.12    Entire Agreement. This Agreement constitutes the entire agreement
         reached by the Parties with respect to the subject matter hereof,
         superseding all prior negotiations, discussions, agreements and
         understandings, whether oral or written, relating to such subject
         matter, except that the Confidentiality Agreement



                                       44
<PAGE>

         dated April 1, 2002, between the Parties shall remain in full force and
         effect in accordance with its terms.

15.13    Severability. In the event that any one or more covenants, clauses or
         provisions of this Agreement shall be held invalid or illegal, such
         invalidity or unenforceability shall not affect any other provisions of
         this Agreement.

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

15.15    Survival. The covenants of Buyer and Seller contained in this Agreement
         terminate at GAC, with the exception of those Articles and Sections
         contained in Exhibit 15.15 which shall survive GAC.



                                       45

<PAGE>



         Executed as of the day and year first above written.

                                      SELLER:

                                      COLORADO INTERSTATE GAS COMPANY


                                      By:   /s/ PATRICIA A. SHELTON
                                         ---------------------------------------
                                      Name:     Patricia A. Shelton
                                      Title:    President



                                      BUYER:

                                      PIONEER NATURAL RESOURCES USA, INC.

                                      By:  /s/ MARK L. WITHROW
                                         ---------------------------------------
                                      Name:    Mark L. Withrow
                                      Title:   Executive Vice President







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