UNION OIL COMPANY OF CALIFORNIA


                                       AND



                         Magnum Hunter Production, Inc.


                           PURCHASE AND SALE AGREEMENT

                          Dated as of November 25, 1998



















<PAGE>



DEFINITIONS..............................................................8
         1.1      Defined Terms..........................................8
         1.2      Undefined Financial Accounting Terms..................13
         1.3      References............................................13
         1.4      Construction..........................................13


PURCHASE AND SALE.......................................................14
         2.1      Assets................................................14
         2.2      Excluded Assets.......................................15
         2.3      Purchase Price........................................16
         2.4      Payment Procedures....................................16
         2.5      Adjusted Purchase Price...............................16
         2.6      Cash Settlement.......................................17


TITLE EXAMINATION.......................................................17
         3.1      Access to Title Information...........................17
         3.2      Title Defects.........................................18
         3.3      Notice of Title Defect................................18
         3.4      Claim Value...........................................18
         3.5      Defect Value..........................................18
         3.6      Remedies for Title Defects............................18
         3.7      Purchase Price Adjustments Threshold..................19
         3.8      Preferential Purchase Rights..........................19
         3.9      Preferential Purchase Right Disputes..................20


ENVIRONMENTAL MATTERS...................................................20
         4.1      No Admission Against Interest.........................20
         4.2      Physical Condition of the Assets......................20
         4.3      Endangered Species, Critical Habitat, Wetlands, 
                  Geologic Hazards and Flooding.........................21
         4.4      Environmental Assessments and Completion of 
                  Environmental Due Diligence...........................21
         4.5      Buyer's Access to Assets; Indemnification; Insurance..22
         4.6      Assumption of Environmental Liabilities...............23
         4.7      Qualified Claim Cost Sharing..........................24
         4.8      Limitation............................................25
         4.9      Termination Due to Material Environmental 
                  Deficiencies..........................................26
         4.10     Determination of Value................................26

<PAGE>
OPERATIONS AND CASUALTY LOSS............................................27
         5.1      Operations............................................27
         5.2      Casualty Loss.........................................27
         5.3      Successor Operator....................................27
         5.4      Restrictions on Operations............................27


REPRESENTATIONS AND WARRANTIES OF UNOCAL................................28
         6.1      Organization..........................................28
         6.2      Authority to do Business..............................28
         6.3      Binding Obligation....................................28
         6.4      Litigation, Suits or Claims...........................28
         6.5      Relation to Assumed Liabilities.......................29
         6.6      Disclaimer of Warranties..............................29
         6.7      Gas Entitlements......................................29
         6.8      Disclosure............................................29
         6.9      No Breach.............................................30
         6.10     Environmental Condition of Assets.....................30
         6.11     Compliance with Laws and Agreements...................30
         6.12     Taxes.................................................30
         6.13     Brokers...............................................30
         6.14     Tax Partnership.......................................30


REPRESENTATIONS AND WARRANTIES OF BUYER.................................30
         7.1      Organization..........................................30
         7.2      Authority; Enforceability.............................31
         7.3      Consents..............................................31
         7.4      Litigation, Suits or Claims...........................31
         7.5      Disclosure............................................31
         7.6      No Breach.............................................32
         7.7      Investigations of Assets..............................32
         7.8      No Distribution.......................................32
         7.9      Resale Registration...................................32
         7.10     Oil and Gas Experience................................32
         7.11     Federal Leases........................................32
         7.12     Brokers...............................................32


CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNOCAL.......................32
         8.1      Purchase Price........................................32
         8.2      Buyer's Representations and Warranties True...........33
         8.3      Officer's Certificate.................................33
         8.4      Opinion of Counsel....................................33
         8.5      Pre-Closing Performance...............................34
         8.6      Authorization.........................................34
         8.7      Absence of Litigation.................................34
         8.8      Bonds.................................................34
         8.9      Preferential Purchase Rights..........................34
         8.10     Hart-Scott-Rodino Act.................................34


CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER........................35
         9.1      Delivery of Instruments of Transfer...................35
         9.2      Unocal's Representations and Warranties...............35
         9.3      Officer's Certificate.................................35
         9.4      Pre-Closing Performances..............................35
         9.5      Authorization.........................................35
         9.6      Absence of Litigation.................................35
         9.7      Hart-Scott Rodino Act.................................36

<PAGE>
COVENANTS...............................................................36
         10.1     Investigation and Decision............................36
         10.2     Access to Information.................................37
         10.3     General Liabilities and Assumed Liabilities...........37
         10.4     Assumption of Plugging and Abandonment Obligations....37
         10.5     Gas Imbalance.........................................37
         10.6     Hart-Scott-Rodino Act.................................38
         10.7     Third-Party Consents..................................38
         10.8     Completion of Due.....................................38
         10.9     Additional Agreements.................................38
         10.10    Payment of Certain Expenses Due and Payable After 
                  the Effective Date....................................39
         10.11    Notification of Certain Matters.......................39
         10.12    Announcements.........................................39
         10.13    Termination of Guarantees and Other Commitments.......39
         10.14    Like Kind Exchange....................................40
         10.15    Access to Geologic and Geophysical Information........40


EMPLOYEE MATTERS........................................................40
         11.1     Employee List.........................................40
         11.2     Job Classification....................................40


TAXES...................................................................41
         12.1     Apportionment of Ad Valorem and Property Taxes........41
         12.2     Sales Taxes, Filing Fees, Etc.........................41
         12.3     Other Taxes...........................................41


TERMINATION.............................................................41
         13.1     Termination...........................................42
         13.2     Effect of Termination.................................42
         13.3     Specific Performance..................................43


SURVIVAL AND INDEMNIFICATION............................................43
         14.1     Survival..............................................43
         14.2     Indemnification.......................................43
         14.3     Third Party Claims....................................44
         14.4     Method of Asserting Claims............................44
         14.5     Right to Cure.........................................47


CLOSING.................................................................47
         15.1     Time of Essence.......................................47
         15.2     Place and Date........................................47
         15.3     Unocal's Actions at Closing...........................47
         15.4     Buyer's Actions at Closing............................48
         15.5     Closing Statement.....................................49
         15.6     Notices...............................................49


ACTIONS AFTER CLOSING...................................................50
         16.1     Final Accounting......................................50
         16.2     Receipts and Credits..................................50
         16.3     Suspended Funds.......................................50
         16.4     Further Assurances....................................51
         16.5     Post-Closing Accounting...............................51
         16.6     Recording.............................................51
         16.7     Books and Records.....................................51
         16.8     Access to Properties and Records by...................51
         16.9     Access to Properties and Records by...................52


MISCELLANEOUS...........................................................52
         17.1     Governing Law.........................................52
         17.2     Assignment............................................52
         17.3     Written Notices.......................................53
         17.4     Expenses..............................................54
         17.5     Waiver of Compliance with Bulk Transfer Laws..........54
         17.6     WAIVER OF CONSUMER RIGHTS.............................54
         17.7     Waiver of Jury Trial..................................54
         17.8     Limitation of Liability...............................55
         17.9     No Admissions.........................................55
         17.10    Use of Unocal's Name..................................55
         17.11    Entire Agreement, Etc.................................55
         17.12    Parties in Interest...................................55
         17.13    Severability..........................................56
         17.14    Consents..............................................56






<PAGE>



SCHEDULE OF EXHIBITS

Exhibit "A" -         Leasehold Interests
Exhibit "B" -         Personal Property, Warehouse Stock and Idle Equipment
Exhibit "C" -         Claim Value Formula and Allocated Values Schedule
Exhibit "D" -         Arbitration Procedures
Exhibit "E" -         Environmental Assessment Fields
Exhibit "F" -         Gas Balancing Schedule
Exhibit "G" -         Environmental Disclosure Schedule
Exhibit "H" -         Disclosure Schedule
Exhibit "I" -         Geophysical Data Licensing Agreement
Exhibit "I-1"-        Geophysical Data
Exhibit "J" -         Satisfactory Completion of Due Diligence
Exhibit "K" -         Conveyance and Bill of Sale
Exhibit "L" -         Assumption Agreement


























<PAGE>


                           PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE  AGREEMENT is entered into  effective as of November
25,  1998,  by and  between  Union  Oil  Company  of  California,  a  California
corporation,  with an office at 14141 Southwest Freeway, Sugar Land, Texas 77478
(hereinafter  referred to as "Unocal"),  and Magnum Hunter  Production,  Inc., a
____ corporation,  whose address is 600 East Las Colinas Boulevard,  Suite 1200,
Irving, Texas 75039 (hereinafter referred to as "Buyer").

                                    RECITALS

     WHEREAS,  Unocal is the holder of certain  assets which include oil and gas
interests and properties in the state of Oklahoma; and

     WHEREAS, Unocal desires to sell such oil and gas interests,  properties and
related rights, as hereinafter described, to Buyer and Buyer desires to purchase
such interests, properties and rights from Unocal, upon the terms and subject to
the conditions set forth in this Agreement.

     NOW, THEREFORE,  in consideration of the covenants and agreements contained
herein, Unocal and Buyer agree as follows:

                                    SECTION 1

                                   DEFINITIONS

     1.1 Defined Terms: The following terms, when capitalized in this Agreement,
shall have the  meanings  defined  either in this  Section or  elsewhere in this
Agreement.

     "Adjusted Purchase Price" shall have the meaning specified in Section 2.5.

     "Accruing" or "Accrued" means, with respect to any obligation,  duty, loss,
liability,  claim,  fine,  expense,  damage,  cost or penalty,  the occurring or
happening  of any event which causes such  obligation,  duty,  loss,  liability,
claim, fine, expense, damage, cost or penalty to become demandable,  requirable,
assertible,  enforceable,  due and owing, or being incurred or occurring, as the
case may be.

     "Affiliate"  means, with respect to any specified Person,  any other Person
directly or indirectly controlling, controlled by, or under common control with,
such  Person.  For  purposes  of  this  definition,  "control"  shall  mean  the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the  management  and policies of such Person,  whether  through the
ownership of voting securities or otherwise.

     "Agreement" means this Purchase and Sale Agreement, including all Exhibits.

     "Allocated  Value(s)" means the value of the Assets based on the discounted
future net pre-tax proved  reserves as determined by Buyer,  and as set forth in
Exhibit "C".

     "Assets" shall have the meaning specified in Section 2.1.

     "Assumed   Liabilities"  means  all  Environmental   Liabilities,   General
Liabilities,  Plugging and Abandonment Obligations and other liabilities assumed
by Buyer under the terms of this Agreement.

     "Cash Settlement" shall have the meaning specified in Section 2.6.

     "Casualty  Loss" means a loss of or damage to  personality,  excluding oil,
gas and  other  minerals  in place,  that is  caused  by a  sudden,  unexpected,
catastrophic and unusual event or other acts of God.

     "Claim  Notice"  means   notification   by  an  Indemnified   Party  to  an
Indemnifying Party of any claim or demand for which the Indemnifying Party would
be liable  hereunder,  and providing  information which specifies the nature and
basis of the claim or demand and the amount or the estimated amount of the claim
or demand.

     "Claim Value" shall have the meaning specified in Section 3.4.

     "Claim Value Formula"  shall have the meaning  specified in Exhibit "C" or,
if none is provided  therein,  the claim value formula mutually agreed to by the
parties in writing.

     "Closing" means the consummation of the  transactions  contemplated in this
Agreement other than any  transactions  specifically  scheduled for a time after
Closing by the terms hereof.

     "Closing Date" means the date specified in Section 15.2, or such other date
as the parties may mutually agree upon in writing.

     "Confidentiality Agreement" means any Confidentiality Agreement between the
Parties,  and any amendments thereto,  executed prior to and in conjunction with
and for the purposes of this Agreement.

     "Contract Rights" means the Assets described in Section 2.1 (v).
<PAGE>
     "Defect Value" shall have the meaning specified in Section 3.5.

     "Defensible Title" means title which is determinable of record, and is free
of liens,  claims,  defects,  encumbrances or deficiencies  other than Permitted
Encumbrances.

     "Deleterious  Substance" means (i) any substance,  product,  waste or other
material  of any nature  whatsoever  which is or becomes  listed as a  hazardous
substance,   hazardous  waste,   hazardous   material  or  pollutant  under  any
Environmental Laws; (ii) any substance,  product, waste or other material of any
nature whatsoever which may give rise to liability under any Environmental Laws;
(iii) petroleum and its fractions,  crude oil and other petroleum products;  and
(iv)  radioactive  materials  including  but not limite to  naturally  occurring
radioactive materials.

     "Disclosure Schedule" means Exhibit "H" to this Agreement.

     "Due  Diligence  Period"  means the sooner of (i) thirty (30) calendar days
following the date of this Agreement, or (ii) the Closing Date.

     "Earnest  Money  Deposit"  shall have the meaning  specified in Section 2.4
(i).

     "Effective Date" means 11:59 p.m. local time in Houston, Texas, on December
31, 1998.

     "Environmental  Assessments"  shall have the meaning  specified  in Section
4.4.

     "Environmental Disclosure Schedule" means Exhibit "G" to this Agreement.

     "Environmental Laws" means any applicable laws, orders, rules, regulations,
judgments  or  decrees  of any  federal,  state,  tribal,  county  or  municipal
governing  authority having jurisdiction over any Asset or Party which relate to
pollution,  the  protection  or cleanup of the  environment,  or the  release or
disposal of  deleterious  substances  into the  environment,  including  but not
limited to ambient air, surface water,  groundwater,  land surface or subsurface
strata;  including  all such laws,  orders,  rules,  regulations,  judgments  or
decrees as they may be amended, varied or modified in the future.

     "Environmental   Liabilities"  means  all  obligations,   duties,   losses,
liabilities,  claims, fines, expenses, damages, costs (including attorney's fees
and  expenses)  or  penalties  created  by,  related  to, or arising  out of any
Environmental  Law,  whether  Accruing  before  or  after  the  Effective  Date;
excluding all Plugging and Abandonment Obligations.

     "Excluded Assets" shall have the meaning specified in Section 2.2.

     "Execution  Date"  means the date on which  this  Agreement  has been fully
executed by Unocal and Buyer.
<PAGE>
     "Facilities" means the Assets described in Section 2.1 (ii).

     "Final Accounting" shall have the meaning specified in Section 16.1.

     "Gas  Imbalance"  means the  difference  between the volume of produced gas
that Unocal took from an Asset(s) and the volume of Unocal's gas entitlement for
such Asset(s).

     "General Liabilities" means all obligations,  duties, losses,  liabilities,
claims, fines, expenses,  damages, costs (including attorneys fees and expenses)
or penalties created by, related to, or arising out of ownership or operation of
the Assets,  any contractual  relationship,  or any applicable law, order, rule,
regulation,  judgment  or  decree  of any  federal,  state,  tribal,  county  or
municipal  governing  authority  having  jurisdiction  over  the  Assets  or the
Parties, whether Accruing before or after the Effective Date; excluding Plugging
and   Abandonment   Obligations   (which  are   addressed   elsewhere   herein),
Environmental  Liabilities  (which  are  addressed  elsewhere  herein),  and all
obligations,  duties or liabilities for the payment of royalties and taxes which
Accrued prior to the Effective  Date,  as well as  liabilities  sums and amounts
that are  liquidated  and certain  which have been invoiced or charged to Unocal
under  contracts for services  rendered or goods provided prior to the Effective
Date,  and which ar  attributable  to periods prior to the Effective  Date,  and
which sums and amounts remain outstanding as of the Closing Date.

     "Geophysical Data Licensing  Agreement" means the agreement attached hereto
and designated as Exhibit "I".

     "Geophysical  Seismic  Licensing  Price"  means the  initial  fee of $1.00,
together  with all other fees and  charges  described  in the  Geophysical  Data
License Agreement, which the Buyer will pay to Unocal to license the Geophysical
Data described in the Geophysical Data Licensing Agreement.

     "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino  Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.

     "Indemnified  Party"  and  "Indemnifying  Party"  shall  have  the  meaning
specified in Section 14.4.

     "Interest Rate" means an interest rate of 6.5% per annum.

     "Knowledge"  means the actual knowledge of the applicable  Party's officers
and salaried  employees  directly,  immediately  and materially  involved in the
transactions  which are the subject  matter of this Agreement and, as to Unocal,
that are equal to or above the level of asset  manager  in  Unocal's  management
structure.

     "Leasehold Interests" means the Assets described in Section 2.1 (i).

     "Liens"  means any and all liens,  mortgages,  charges,  pledges,  security
interests,  or other similar type encumbrances,  including,  but not limited to,
such as may arise under any contracts or judgments.
<PAGE>
     "Material  Environmental  Deficiency" means a deficiency or deficiencies in
the Assets arising out of the Environmental Liabilities for which the cumulative
estimated  Remediation  Cost will  create a  liability  for which  Buyer will be
responsible  in an  amount  in  excess  of 8.5%  of the  Purchase  Price  (being
$3,111,694.20);  provided, however, that any Remediation Costs assumed by Unocal
under  Section  4.7(v)  below shall not be included  in any  calculation  of the
Material Environmental Deficiency.

     "Minimal  Environmental  Liabilities"  shall have the meaning  specified in
Section 4.7 (i).

     "NORM" means naturally occurring radioactive material.

     "P&A Conversion Price" shall mean U.S.$3,030,000.

     "Party"  or  "Parties"   means  Unocal  or  Buyer,   or  Unocal  and  Buyer
respectively.

     "Party Adverse  Effect" shall mean an event,  taking into account all facts
and  circumstances,  on  the  business,  properties,   condition  (financial  or
otherwise)  or  operations  of a Party,  which  has had or could  reasonably  be
expected  to have a  material  adverse  effect on the  ability  of such Party to
perform its obligations under this Agreement.

     "Permits"  means  any and  all  permits,  including  temporary  permits  to
construct or operate, authorizations,  approvals,  registrations, rights of way,
orders,  waivers,  variances or other licenses issued or granted by any federal,
state,  tribal or local  administrative  or  governmental  authority,  bureau or
agency.

     "Permitted  Encumbrances"  means (i) liens for taxes,  assessments or other
governmental charges or levies not yet delinquent; (ii) liens in connection with
workers' compensation,  unemployment insurance or other social security, old-age
pension or public  liability  obligations  which are not yet due or  delinquent;
(iii) liens in favor of vendors, carriers,  warehousemen,  repairmen, mechanics,
workmen, materialmen,  construction or similar liens arising by operation of law
in the  ordinary  course  of  business  as to  obligations  which  are  not  yet
delinquent or which have not been filed  pursuant to law; (iv) rights to consent
by, required notices to, filing with, or other actions by governmental  entities
in connection with the sale or conveyance of the applicable property if the same
are customarily  obtained subsequent to such sale or conveyance;  (v) easements,
rights of way, restrictions,  encroachments and other similar encumbrances,  and
minor  defects in the chain of title which do not  interfere  with the continued
current use of the applicable  property or materially  detract from the value of
such  property;  (vi) rights of utility  companies  to lay,  maintain and repair
pipelines,  conduits,  cable boxes and other installations on, under, and across
the applicable property;  (vii) rights reserved to or vested in any municipality
or  governmental,  statutory  or public  authority  to control or  regulate  any
interest  in any  manner,  and all  applicable  laws,  rules and  orders of such
authority; (viii) any lien or encumbrance in the form of a judgment secured by a
supersedeas   bond  or  other   security   approved  by  a  court  of  competent
jurisdiction;  and (ix) all  matters  disclosed  in the  Disclosure  Schedule or
Environmental Disclosure Schedule which affect the quality or quantity of title.

     "Person"  means  any   individual,   partnership,   joint  venture,   firm,
corporation, association, trust, limited liability company, joint stock company,
estate,  unincorporated  organization or other entity,  and their successors and
assigns;  or any  governmental or political  subdivision,  including any agency,
department or instrumentality thereof.

     "Plugging and Abandonment  Obligations"  means all usual and normal prudent
operations for the plugging,  abandonment,  surface restoration, site clearance,
and disposal of related waste  materials,  including  NORM and asbestos,  of all
oil,  gas,  injection,   water  or  other  wells,  sumps,  pits,  ponds,  tanks,
impoundments,  foundations,  pipelines,  structures and equipment of any kind or
description  on the  Assets,  in  compliance  with  all  applicable  contractual
obligations and applicable  rules and regulations of governmental  bodies having
jurisdiction  over the  Assets.  Plugging  and  Abandonment  Obligations  do not
include  cleanup of  polluted  lands,  air or water other than  routine  cleanup
normally  associated  with plugging and  abandonment,  such cleanup  obligations
which  are  other  than  routine  being   included   within  the  definition  of
Environmental Liabilities.

     "Purchase Price" shall have the meaning specified in Section 2.3.
<PAGE>
     "Qualified  Claim" means an unknown  Environmental  Liability which Accrued
prior to the  Effective  Date,  and which is the  subject of a specific  written
claim asserting Unocal's or Buyer's  responsibility made and asserted during the
period within six (6) months following the Closing Date (or, with respect to any
claims of Environmental Liability made or asserted within one (1) year following
the Closing Date by the  Oklahoma  Corporation  Commission  in  connection  with
Complaint # 185990GD041094  received by the Oklahoma  Corporation  Commission on
October 14,  1998) either by a  governmental  entity or by a third party that is
not an  Affiliate  or a  successor  in interest  of Buyer,  with a Claim  Notice
provided  by Buyer to Unocal at once but in no case later than  thirty (30) days
after Buyer's receipt of such claim.  Provided,  however,  Environmental Law for
purposes of determining  Environmental  Liabilities that can be Qualified Claims
shall not include Environmental Laws as they may be amended,  varied or modified
in the  future,  but  shall be  limited  to  Environmental  Laws in  effect  and
applicable to the Assets as of the Effective Date.

     "Qualified Claim Cost Sharing  Allocation" shall have the meaning specified
in Section 4.7.

     "Remediation  Cost"  means the cost to remedy any  Environmental  Liability
using the most  cost  effective  methods  and  manner  that  satisfy  applicable
Environmental  Laws,  and which are  consistent  with the  continued  use of the
affected  Assets in the same  capacity  and for the same  purposes  as they were
being used on the Effective Date.

     "Surface Access Agreements" means the Assets described in Section 2.1 (vi).

     "Title Defect" shall have the meaning specified in Section 3.2.

     1.2 Undefined Financial  Accounting Terms:  Undefined financial  accounting
terms used in this Agreement  shall be defined  according to generally  accepted
accounting principles.

     1.3 References:  References in this Agreement to Sections or Exhibits shall
be to the  entirety of the  Sections or  Exhibits  of this  Agreement  which are
referred  to  unless  expressly  limited  to a  sub-Section  in  the  reference.
References,  if any, in this  Agreement  to "hereby",  "herein",  "hereinabove",
"hereinafter", "hereinbelow", "hereof", "hereunder", and words of similar import
shall  be to this  Agreement  in its  entirety  and not  only to the  particular
Section or Exhibit in which such reference appear unless expressly stated to the
contrary.

     1.4 Construction:  Unless the context otherwise  requires:  (i) "or" is not
exclusive;  (ii) words used in the singular include the plural and words used in
the plural include the singular;  (iii) words used in the masculine  include the
feminine and words used in the  feminine  include the  masculine;  (iv) any date
specified  for any action that is not a business  day as such term is  generally
defined  in the  United  States  of  America  shall be  deemed to mean the first
business day after such date; (v) neither the captions to Sections or paragraphs
hereof nor the Table of Contents  shall be deemed to be a part of the Agreement;
(vi) the Exhibits form a part of the Agreement and shall have the same force and
effect as if set out in the body of the Agreement;  and (vii) references  herein
to any other  agreement  or  instrument  shall,  unless  the  context  otherwise
requires or specifies,  be deemed  references to that agreement or instrument as
it may from time to time be changed,  amended or  extended,  but shall not be an
incorporation by reference unless specifically so provided.
<PAGE>
                                    SECTION 2

                                PURCHASE AND SALE

     2.1 Assets:  Subject to the terms and conditions of this Agreement,  Unocal
shall sell and Buyer shall  purchase on the Closing  Date,  effective  as of the
Effective Date,  without  warranty of title,  either express or implied,  all of
Unocal's right, title and interest in the following assets ("Assets"):

     (i) Unocal's  leasehold  interest in the oil, gas and other mineral  leases
described in Exhibit "A",  insofar as same cover and affect the lands  described
in Exhibit "A" ("Leasehold Interests");

     (ii) the wells,  equipment and facilities  permanently located on the lands
described  in Exhibit "A,  including,  but not limited  to,  pumps,  surface and
subsurface  well equipment,  gas plants,  saltwater  disposal  wells,  lines and
facilities,  sulfur  recovery  facilities,   compressors,  compressor  stations,
dehydration  facilities,  treating  facilities,  gathering  lines,  flow  lines,
valves,  meters,   separators,   tanks,  tank  batteries,   and  other  fixtures
("Facilities"); 

     (iii) the oil,  condensate  and  natural  gas  liquids  produced  after the
Effective  Date,  including  line fill below the pipeline  connections as of the
Effective Date attributable to the leasehold interests described in Exhibit "A";

     (iv) all personal property, warehouse stock and idle equipment described in
Exhibit "B";

     (v) all contracts and agreements  concerning  the  properties  described in
Exhibits "A" and "B",  including,  but not limited to, unit agreements,  pooling
agreements,  areas of mutual interest  agreements,  farmout  agreements,  farmin
agreements, saltwater disposal agreements, water injection agreements, line well
injection  agreements,  road  use  agreements,   drilling  contracts,  operating
agreements,  well service contracts,  production sales contracts, gas contracts,
gas balancing agreements,  storag or warehouse  agreements,  supplier contracts,
service contracts, construction agreements, division orders and transfer orders,
insofar  as and only  insofar as they  relate to the  interests  and  properties
described in Exhibits "A" and "B" ("Contract Rights"); and

     (vi) all  surface  use  agreements,  easements,  rights  of way,  licenses,
authorizations, Permits, and similar rights and interests applicable to, or used
in connection  with,  any or all of the interests  and  properties  described in
Exhibits "A" and "B" ("Surface Access Agreements"); and

     2.2 Excluded Assets:  It is specifically  agreed that Unocal is not selling
and Buyer is not purchasing the following assets ("Excluded Assets"):

     (i) all rights and interests of any kind in the leases and lands  described
in Exhibit "A" other than the  leasehold  interests  specifically  described  in
Section 2.1 (i);

     (ii) in  conjunction  with any interests  retained by Unocal in the leases,
lands and wells  described  in Exhibit  "A", a like  interest in all  applicable
Facilities, Contract Rights and Surface Access Agreements;

     (iii)  any  and  all   interests  in  the  Assets   Unocal  is  legally  or
contractually restricted from selling;

     (iv) all  materials  and  equipment  leased or  temporarily  located on the
Leasehold  Interests,  and any materials,  equipment,  pipelines,  facilities or
interests in the land owned by a purchaser and/or  transporter of oil and/or gas
therefrom, a lessor, or a third Person;

     (v) all interests in  pipelines,  Facilities,  Contract  Rights and Surface
Access  Agreements  owned by  Unocal  that are not used in  connection  with the
Assets or which cover lands described in the Leasehold Interests,  but which are
used in connection  with  properties  that are not being sold under the terms of
this Agreement;

     (vi)  items  sold,  transferred,  disposed  of or  consumed  and  contracts
terminated prior to the Closing Date in the ordinary course of business;

     (vii) any right to use the "Unocal" name,  marks,  trade dress or insignia,
or to use the name of any other  subsidiary  of Unocal  Corporation;  and all of
Unocal's intellectual  property,  including,  but not limited to patents,  trade
secrets, and copyrights;

     (viii) all amounts due or payable to Unocal as adjustments or refunds under
any  contracts  affecting  the  Assets  for all  periods  of time  prior  to the
Effective Date, specifically including, without limitation,  amounts recoverable
from audits under operating agreements;

     (ix) all rights,  titles,  claims and interests of Unocal or its Affiliates
to or under any policy or agreement of insurance or  indemnity,  any bond, or to
any insurance proceeds or awards; and any employment,  consulting,  office lease
or accounting service contracts;

     (x) all claims and chooses in action of Unocal arising from acts, omissions
or events,  or damages to or  destruction  of property,  occurring  prior to the
Effective Date;

     (xi) all proceeds, benefits, income or revenue accruing to the Assets prior
to the Effective Date, and any claims of Unocal for refunds of or losses carried
forwards with respect to taxes  attributable  to the Assets for any period prior
to the Effective Date; and

     all geophysical, geological and seismic data, surveys, analysis and similar
data or information,  which is not  specifically  licensed under the Geophysical
Data Licensing Agreement.
<PAGE>
     2.3 Purchase  Price:  The Purchase Price for the Assets shall be THIRTY SIX
MILLION SIX HUNDRED  EIGHT  THOUSAND ONE HUNDRED  SIXTY SEVEN DOLLARS AND NO/100
($36,608,167.00) ("Purchase Price") in United States currency.

     2.4 Payment Procedures: Payment shall be made as follows:

     (i) contemporaneous  with the execution of this Agreement,  Buyer shall pay
and  deliver to Unocal by wire  transfer  of  immediately  available  funds,  as
specified by Unocal,  an Earnest Money Deposit of $1,830,408.35  ("Earnest Money
Deposit");

     (ii) at Closing,  Buyer shall pay to Unocal the  remainder  of the Adjusted
Purchase  Price,  plus  or  minus  any  Cash  Settlement  by  wire  transfer  of
immediately available funds as specified by Unocal.

     2.5 Adjusted  Purchase  Price:  The net price which Buyer shall pay for the
Assets ("Adjusted Purchase Price") shall be:

     (i) the Purchase Price; plus or minus

     (ii) any adjustments for Title Defects; minus

     (iii) the Allocated  Value or Claim Value of any part of the Assets sold to
a third Person pursuant to the exercise of a preferential purchase right; plus

     the Geophysical Seismic License Price; plus

     the upward  adjustment for the P&A Conversion  Price,  if applicable  under
Section 15.4 below.

     2.6 Cash  Settlement:  The sum ("Cash  Settlement")  due to settle accounts
until the Final  Accounting  shall be determined,  in good faith,  by Unocal for
Closing  purposes by adding or subtracting  from the Adjusted  Purchase Price as
follows:

     (i) subtract the Earnest Money Deposit;

     (ii) add the  amount of  estimated  expenditures  made by  Unocal  that are
attributable to the Assets for the period between the Effective Date and Closing
Date  including,  without  limitation,  royalties,  taxes,  rentals  and similar
charges  and  expenses,   including  those  billed  under  applicable  operating
agreements, and all prepaid expenses;

     (iii)  subtract  the amount of  estimated  revenues  received  by Unocal in
connection with sales of hydrocarbons  and associated  products from the Assets,
together  with any other income from the Assets,  Accruing  after the  Effective
Date,  excluding  estimated  revenues  from the sale of liquid  hydrocarbons  in
storage  tanks above the pipeline  connection  on the  Effective  Date valued at
market or contract  prices in effect as of the  Effective  Date after  deducting
royalty and tax obligations;

     (iv) add any positive adjustments for any underbalanced  position of Unocal
with respect to any Gas Imbalances.
<PAGE>
                                    SECTION 3

                                TITLE EXAMINATION

     3.1 Access to Title Information: After the date of this Agreement and until
the end of the Due Diligence  Period,  Unocal shall make all of its land records
that are not privileged or confidential  available to Buyer at Unocal's  offices
located at 14141 Southwest Freeway, Sugar Land, Texas 77478, or such other place
as deemed  appropriate by Unocal,  during normal business hours, for examination
by Buyer.  Unocal  shall not be  obligated  to perform  any title  work,  and no
abstracts or title  opinions  will b made current by Unocal.  NO WARRANTY OF ANY
KIND IS MADE BY UNOCAL AS TO THE INFORMATION SO SUPPLIED,  AND BUYER AGREES THAT
ANY  CONCLUSIONS  DRAWN  THEREFROM  SHALL BE THE  RESULT OF ITS OWN  INDEPENDENT
REVIEW AND JUDGMENT.  SUBJECT TO THE OTHER  PROVISIONS OF THIS AGREEMENT,  BUYER
ASSUMES  THE RISK OF ANY TITLE  DEFECTS  AND/OR  CONFLICTING  ADVERSE  RIGHT(S),
TITLE(S)  AND/OR   INTEREST(S)  WHICH  A  RECORD  TITLE  CHECK  AND/OR  PHYSICAL
INSPECTION REVEALS OR WOULD HAVE REVEALED.

     3.2  Title  Defects:  For  purposes  of this  Agreement,  a defect in title
("Title  Defect")  shall mean a defect in one or more of the following  respects
only:

     (i) Unocal's  interest in any one or more of the properties  comprising the
Assets  described  in  Exhibit  "A" is more or less than the  interest  for such
property(ies) reflected in Exhibit "A";

     (ii)  Unocal's  rights  and  interests  in one or  more  of the  properties
comprising  the Assets  described in Exhibit "A" are subject to being reduced by
virtue of the  exercise by a third party of a  reversionary,  back-in or similar
right not  reflected  in Exhibit "A" nor  disclosed  to Buyer in the  Disclosure
Schedule; or

     (iii) Unocal's title to one or more of the properties comprising the Assets
described in Exhibit "A" is subject to any lien, claim,  defect,  encumbrance or
deficiency   which  causes  Unocal  to  not  have   Defensible   Title  to  such
property(ies).

     3.3 Notice of Title Defect:  Upon  discovery of a Title  Defect,  the Party
discovering  same shall as soon as  reasonably  possible  thereafter  notify the
other  Party of the Title  Defect.  The notice  shall  include  with  reasonable
specificity  the  property  or  properties  described  in Exhibit  "A" which are
affected,  the particular Title Defect claimed,  and the notifying  Party's good
faith estimate of the Claim Value or Defect Value. Any Title Defect which is not
asserted by Unocal or Buyer prior to the end of the Due  Diligence  Period shall
conclusively be deemed waived by both parties for all purposes.

     3.4 Claim Value: If a claim of Title Defect is made pursuant to Section 3.2
(i) or (ii),  the value of the claim ("Claim  Value") shall be calculated  using
the Claim Value Formula and Allocated Values set out in Exhibit "C".

     3.5 Defect  Value:  If a claim of Title Defect is made  pursuant to Section
3.2 (iii) for a matter not covered by Sections 3.2 (i) or (ii), the value of the
defect  ("Defect  Value") for a defect that is a  liquidated  or certain  amount
shall be such liquidated or certain amount,  and as to unliquidated or uncertain
amounts it shall be an amount  necessary  to  compensate  Buyer for the  adverse
economic effect of such Title Defect on the value of the property(ies) affected,
taking into  consideration  all relevant  factors,  including  the practical and
legal  effect of the Title  Defect.  In no instance  shall a Defect  Value be an
amount in excess of the Allocated Value of an affected property.

     3.6 Remedies for Title Defects:

     (i) Unocal may elect to cure any or all Title Defects;  provided,  however,
if Unocal elects to cure a Title  Defect,  but has not been able to do so by the
Closing Date,  the Parties shall proceed with the Closing,  with the Claim Value
or Defect Value,  as  applicable,  being an  adjustment  to the Purchase  Price.
Unocal shall retain the right to cure any such Title Defect for a period of time
not to exceed  one year  after the  Closing  Date.  Within  thirty  (30) days of
Buyer's receipt of curative  documents  which eliminate the Title Defect,  Buyer
shall tender to Unocal the  applicable  Claim Value or Defect Value  withheld at
Closing.  Unocal's  option to cure  Sections 3.2 (i) or (ii) Title Defects shall
include the option to partially  cure any such Title Defect or Title  Defects so
as to reduce the Claim Value of the Title  Defect or Title  Defects to an amount
Unocal shall in its sole discretion determine.

     (ii) If the  Claim  Value or  Defect  Value of a Title  Defect  is equal to
twenty-five percent (25%) or more of the Allocated Value of a property described
in Exhibit "A", Unocal may in its sole  discretion  elect to retain the affected
property and delete it from the Assets.  In such  instance,  the Purchase  Price
shall  be  adjusted  in an  amount  equal  to the  Claim  Value  of the  deleted
property(ies).

     (iii) If a Title Defect is a Section 3.2 (i),  (ii),  or (iii) Title Defect
which increases or decreases  Unocal's  interest in the Assets,  and Unocal does
not elect to cure the Title Defect,  the Purchase  Price shall be adjusted up or
down by the Claim Value of the Title Defect.

     (iv) If Unocal  contests  the  existence  of a Title Defect or Buyer's good
faith  estimate  of the Claim  Value or Defect  Value of the Title  Defect,  the
Parties  shall meet and use their best efforts to agree on the  validity  and/or
value of the Title Defect.  If the Parties  cannot agree on the validity  and/or
value of a Title  Defect,  and  neither  Party  elects to waive its  claim,  the
dispute shall be submitted to  arbitration  in accordance  with the  arbitration
procedures set forth in Exhibit "D".
<PAGE>
     3.7  Purchase  Price  Adjustments  Threshold:  No  other  provision  herein
withstanding,  the  Purchase  Price shall not be adjusted  due to or for a Title
Defect,  and neither Party shall notify the other Party of a Title Defect unless
or until the Claim Value or Defect Value of the Title Defect exceeds $10,000.00.
This  $10,000.00  Title Defect  threshold  shall be applied  separately  to each
property  described in Exhibit "A" that has been  assigned a separate  Allocated
Value, but shall be calculated on a cumulative  basis if a separate  property is
subject to more than one Title Defect.

     3.8 Preferential Purchase Rights: Preferential purchase rights shall not be
considered  Title  Defects  hereunder  regardless  of  whether  or not  they are
reflected in the Disclosure  Schedule.  As to any and all preferential  purchase
rights affecting  Unocal's  interest in all or part of the Assets, in accordance
with the provisions of the agreement which created the rights, Unocal shall send
to the owner or owners of such rights a notice offering to sell to such owner or
owners,  those Assets covered by such rights for the Allocated Value assigned to
the affected  Assets.  If the owner or owners of the rights  exercise  same, the
affected  portion of the Assets shall be deleted from the  transaction,  and the
Purchase Price shall be reduced in an amount equal to the Allocated Value of the
deleted Assets. If the specific Assets affected do not have a separate Allocated
Value, the value shall be the Claim Value of the deleted Assets.

     3.9 Preferential Purchase Right Disputes:

     (i) If an owner of a preferential  purchase right obtains  judicial  relief
which  permanently  enjoins the  consummation of the  transactions  contemplated
under this  Agreement,  such  enjoinder  shall be deemed a  termination  of this
Agreement by mutual consent of the Parties.

     (ii) If an owner of a preferential  purchase  right seeks judicial  relief,
other than  injunctive  relief,  Buyer shall  indemnify,  defend and hold Unocal
harmless from any and all claims,  causes of action,  costs and expenses arising
out of or relating to such dispute.

                                    SECTION 4

                              ENVIRONMENTAL MATTERS

     4.1 No Admission Against Interest:  Nothing contained in this Section 4, or
elsewhere in this  Agreement,  shall be  construed  to be an  admission  against
interest as to Unocal or Buyer. Unocal and Buyer have not included Environmental
Liability  related  provisions  herein  due  to  any  perceived   liability  and
specifically  disclaim  the  existence of any such  liability  to third  parties
(including governmental entities) based on contract, tort, statute or otherwise.

     4.2 Physical  Condition of the Assets:  Buyer  acknowledges that the Assets
have been used for oil and gas drilling and production  operations,  related oil
field  operations  and  possibly  for the  storage and  disposal of  Deleterious
Substances,  and the Assets may be contaminated  with such  materials.  Physical
changes in or under the Leasehold  Interests or adjacent lands may have occurred
as a result of such uses. The Assets may contain wells, sumps, landfills,  pits,
ponds, tanks, impoundments,  foundations, pipelines and other equipment, whether
or not of a similar nature,  any of which may be buried and contain  Deleterious
Substances,  and the locations of which may not be known to Unocal or be readily
apparent by a physical  inspection  of the  property.  Further,  spills,  leaks,
blowouts and routine operations may have led to contamination of the Assets with
Deleterious Substances,  the locations of which may not be known to Unocal or be
readily  apparent by a physical  inspection of the property.  Buyer  understands
that Unocal does not have the requisite  information with which to determine the
exact  nature or  condition  of the Assets nor the effect any use has had on the
physical  condition of the Assets. In addition Buyer  acknowledges that some oil
field  production  equipment may contain  asbestos  and/or NORM. In this regard,
Buyer expressly  understands  that NORM may affix or attach itself to the inside
of wells,  pipelines,  materials and  equipment as scale or in other forms,  and
that wells,  materials and equipment  located on the Assets described herein may
contain  asbestos and NORM, and that NORM in the form of scale or in other forms
may have become dislodged from the inside of wells,  materials and equipment and
be located on the Property and that asbestos and NORM  containing  materials may
be  buried  or have been  otherwise  disposed  of on the  Property.  Buyer  also
expressly  understands  that special  procedures may be required for the removal
and  disposal  of  asbestos,  NORM and  other  Deleterious  Substances  from the
Property where they may be found.

     4.3 Endangered Species,  Critical Habitat,  Wetlands,  Geologic Hazards and
Flooding:  "Endangered  Species" as used herein  shall have the same  meaning as
"endangered species" is defined pursuant to 16 U.S.C. 1532(6) or the laws of the
state in which the Leasehold  Interest is located;  as  "threatened  species" is
defined  pursuant  to 16 U.S.C.  1533(30)  or the laws of the state in which the
Leasehold  Interest is located;  and/or, as a candidate species for such listing
under  federal or state law.  "Critical  Habitat" as used herein  shall have the
meaning as defined pursuant to 16 U.S.C. 1532(5). "Wetland" as used herein shall
have the meaning as defined in 40 Code of Federal  Regulations  ss.230.3(a),  or
under  the  laws of the  state in  which  the  Leasehold  Interest  is  located.
"Geologic  Hazards" as used herein shall  include  seismic  hazard and any earth
slides or other earth  movement.  "Flooding"  as used herein  shall  include the
risks  associated with a flood plain,  flood way or restriction  zone and/or any
diminution in the value of the Property or  restriction  of its use by reason of
the risk of water entering or remaining thereon. WITHOUT IN ANY WAY LIMITING ANY
OTHER DISCLAIMERS OF WARRANTY HEREIN AND NOTWITHSTANDING ANY DISCLOSURES MADE BY
UNOCAL  TO  BUYER,   UNOCAL   DISCLAIMS  ANY  EXPRESS  OR  IMPLIED  WARRANTY  OR
REPRESENTATION  AS OF THE DATE OF THIS AGREEMENT AND/OR AS OF THE CLOSING OF THE
COMPLETENESS  OF ANY SUCH  DISCLOSURE  OR THAT  THE  PROPERTY  IS FREE  FROM ANY
ENDANGERED  SPECIES  OR THAT ALL OR ANY PART OF THE  PROPERTY  IS NOT A CRITICAL
HABITAT OR A WETLAND, OR THAT ANY PART OF THE ASSETS DOES NOT INCLUDE A GEOLOGIC
HAZARD,  OR  THAT  ANY  PART  OF  THE  PROPERTY  IS  NOT  SUBJECT  TO  FLOODING.
Notwithstanding  any  knowledge  that could be imputed to Unocal,  Buyer has the
obligation  to ascertain the presence of and extent of any  Endangered  Species,
Critical  Habitat,  Wetland,  Geologic  Hazards  and the risk of Flooding on the
Property.
<PAGE>
     4.4   Environmental   Assessments  and  Completion  of  Environmental   Due
Diligence:  From the date of this  Agreement,  Unocal will provide Buyer (or its
contractor) with reasonable  access to the Assets operated by Unocal for the Due
Diligence  Period,  during which Buyer will,  as part of Buyer's due  diligence,
conduct, at its sole risk and expense, Phase I environmental site assessments as
provided  below and such  additional  environmental  site  assessments  as Buyer
determines is appropriate (collectively, the "Environmental Assessments"). Buyer
agrees to conduct a Phase I environmental site assessment  (pursuant to American
Society for Testing and Materials  standards) on each of the fields  operated by
Unocal set forth in Exhibit "E", to be  conducted  by an  unrelated  third party
qualified to conduct such Phase I environmental  site assessments.  Buyer agrees
to  immediately  provide  to  Unocal  a copy of the  Environmental  Assessments,
including  all reports,  data and  conclusions,  and, in any event,  Buyer shall
provide  Unocal a copy of all of the  foregoing  no later  than 10 days prior to
Closing.  Buyer  shall  keep  any  data  or  information  acquired  by all  such
examinations  and the  results  of all  analyses  of such  data and  information
strictly confidential and, unless required by law, will not disclose same to any
person or agency  without the prior  written  approval  of Unocal  except to the
extent such disclosure is to financial institutions,  environmental consultants,
legal counsel or other parties to whom  disclosure is appropriate  and desirable
to consummate this  transaction,  but subject to the prior agreement of any such
party to maintain the  confidentiality of the information.  Buyer shall complete
its environmental due diligence within the Due Diligence Period.

     4.5 Buyer's Access to Assets; Indemnification; Insurance:

     (i) Buyer  shall  have  reasonable  access to the  Assets  to  conduct  its
environmental  due  diligence  including  but not  limited to the  Environmental
Assessments.  Buyer shall not perform any act or permit the  performance  of any
act that would injure the Assets or disrupt Unocal's  activities  thereon or the
surface owner's or the surface tenant's  activities  thereon.  If the consent of
the surface owner or the surface  tenant or any other third party is required in
connection  with  Buyer's  access to the  Assets,  Buyer  agrees to obtain  such
consent  before  entering  onto the Assets  affected  thereby  (and  Unocal will
reasonably  cooperate (at no cost to Unocal) with Buyer's attempt to obtain such
third-party consents).

     (ii) Buyer  RELEASES  AND  AGREES TO  INDEMNIFY,  DEFEND AND HOLD  HARMLESS
Unocal , its directors,  officers,  employees, agents and Affiliates against all
claims for injury to, or death of, persons or damage to property  arising in any
way from the exercise of access rights  granted to Buyer for  environmental  due
diligence or due  diligence  for any other  purpose,  or from the  activities of
Buyer or its  employees,  agents  or  contractors  on the  Assets.  Buyer  shall
indemnify  Unocal,  its directors,  officers,  employees,  agents and Affiliates
against  and hold  each and all of said  indemnitees  harmless  from any and all
loss, cost, damage, expense or liability,  including reasonable attorney's fees,
arising  out of (i) any and all third party  statutory  or  common-law  Liens or
other  encumbrances  for labor or materials  furnished in  connection  with such
tests,  samplings,  studies or surveys as Buyer may conduct  with respect to the
Assets; and (ii) any injury to or death of any of Buyer's  employees,  agents or
representatives  or damage to property  occurring  in, on or about the Assets as
the result of Buyer's due diligence activities, REGARDLESS OF THE SOLE, JOINT OR
CONCURRENT NEGLIGENCE,  STRICT LIABILITY, PREMISES LIABILITY, BREACH OF CONTRACT
OR OTHER  FAULT OR  RESPONSIBILITY  OF ANY PARTY OR PERSON  (except for any such
injuries or damages caused solely by the gross negligence or willful  misconduct
of any said  indemnitees).  The foregoing  obligation of indemnity shall survive
Closing or termination of this Agreement without Closing.

     (iii) Buyer shall obtain and maintain insurance  acceptable to Unocal which
is primary as to any insurance or  self-insurance  available to Unocal and which
names Unocal as an additional  insured with respect to liability  arising out of
Buyer's or its agents'  activities on the Assets,  including a  severability  of
interest clause (cross liability),  which additional  insured  endorsement shall
not  exclude  coverage  based  upon the  alleged  or  actual  negligence  of the
additional insured. Such insurance shall include:

     (a)  commercial  general  liability   insurance   occurrence  form  or  the
equivalent with the amendment-aggregate limits of insurance covering contractual
liability, subcontractor's liability, blanket contractual liability, and, unless
waived in writing by Unocal,  liability  arising from  explosion,  collapse,  or
underground  property  damage,  all  with a  minimum  combined  single  limit of
$1,000,000.00  each  occurrence,  $2,000,000.00  aggregate,  for bodily  injury,
death, property damage, business interruption and personal injury;

     (b) comprehensive automobile liability insurance or business auto policy on
an occurrence basis covering all owned,  hired or otherwise  operated  non-owned
vehicles with a minimum combined single limit of  $1,000,000.00  each occurrence
for bodily injury, death and property damage;

     (c) workers' compensation insurance as required by law; and

     (d) employers'  liability  insurance with a minimum limit of  $1,000,000.00
each occurrence.

     Such  insurance  shall be written by a carrier with a Best's rating of A IX
or above. Before the entry by Buyer upon the Assets,  Buyer shall provide Unocal
with policies or certificates of the aforesaid insurance  acceptable in form and
substance to Unocal which shall provide that  coverage  shall not be canceled or
materially  changed  prior to  thirty  (30)  days'  written  notice  to  Unocal.
Subrogation  against Unocal shall be waived with respect to all of the insurance
policies  set  forth  above  (including  without  limitation,  policies  of  any
consultant).  An  alternate  employer  endorsement  may be  substituted  for the
additional insured endorsement with respect to worker's  compensation  insurance
and  employer's  liability  insurance  only.  The  insurance  required  by  this
provision in no way limits Buyer's  obligations  under any other Section of this
Agreement.  Further,  the  insurance to be carried shall in no way be limited by
any limitation  expressed elsewhere in this Agreement,  or any limitation placed
on the indemnity herein given or as a matter of law.
<PAGE>
     4.6  Assumption  of  Environmental  Liabilities:  Buyer  shall  assume  and
discharge any and all Environmental  Liabilities relating to or arising from the
Assets,  whether  relating to or arising from ownership or operations  before or
after the Effective Date, except as follows:

     (i) Buyer  assumes no  Environmental  Liabilities  unless and until Closing
occurs; and

     Based on the  Qualified  Claim Cost  Sharing  Allocation,  Unocal  shall be
responsible for a portion of the Remediation Costs for Qualified Claims.

     4.7 Qualified Claim Cost Sharing:  Any Remediation  Costs incurred by Buyer
or Unocal in  satisfying a Qualified  Claim shall be allocated  and satisfied by
the Parties as follows ("Qualified Claim Cost Sharing Allocation"):

     (i) each separate and distinct  Qualified  Claim for which the  Remediation
Cost is $10,000 or less ("Minimal Environmental Liabilities") shall be allocated
to and satisfied by Buyer;

     Subject to  Section  4.7 (i) above,  cumulative  Remediation  Costs for all
Qualified Claims, except Minimal Environmental  Liabilities,  up to an aggregate
amount  equal to $50,000 are  allocated  to and shall be satisfied by Unocal and
buyer as follows:  Buyer shall satisfying the first $10,000 of each separate and
distinct  Qualified Claim for which the Remediation Cost is greater than $10,000
and Unocal satisfying the balance of the claim up to an aggregate amount for all
Qualified Claims of $50,000;

     (iii) Subject to Sections 4.7 (i) and (ii),  cumulative  Remediation  Costs
for all Qualified Claims, except Minimal Environmental Liabilities, which exceed
an  aggregate  amount  equal to $50,000  (with such  aggregate  $50,000  for all
Qualified  claims  being  allocated  and  satisfied  in the manner  described in
Section  4.7 (ii)  above) and up to an  aggregate  amount  equal to one  hundred
percent  (100%) of the  Adjusted  Purchase  Price are  allocated to and shall be
satisfied one-half by Buyer and one-half by Unocal.

     (iv) Subject to Sections 4.7 (i) - (iii),  cumulative Remediation Costs for
all Qualified Claims, except Minimal Environmental Liabilities,  which exceed an
aggregate  amount equal to one hundred  percent (100%) of the Purchase Price are
allocated to and shall be satisfied by Buyer.

     (v)  Notwithstanding  Subparagraphs  (i)- (iv) above, with respect to those
Remediation  Costs associated with a proposed mercury  remediation  described on
Exhibit  "G"  regarding  the  Caddo  Field and  Plant,  shall be  allocated  and
satisfied by Unocal,  insofar and only insofar as (a) such Remediation Costs are
liquidated  and certain as of the  Execution  Date or are incurred  subsequently
pursuant to a written  statement or scope of work  approved and signed by Unocal
(and Buyer shall provide  Unocal access to the Assets after Closing to supervise
and complete said statements or scopes of work),  and (b) the Remediation  Costs
only relate to clean-up or environmentally required remediation to the standards
expressly required of Unocal by the Oklahoma Department of Environmental Quality
pursuant to a written  "Mercury  Cleanup  Workplan  for Unocal  Caddo Gas Field,
Springer,   Oklahoma"   for  EMCON  Project  No.:   61900-037.002   under  those
Environmental  Laws existing as of the Execution  Date, and (c) the  Remediation
Costs are actually  incurred by Unocal prior to December 31, 1999; and any other
Environmental  Liabilities or Remediation  Costs  associated with or relating to
such  mercury  (or other)  contamination,  associated  with or  relating  to the
remediation  or clean-up  thereof shall be handled in accordance  with the terms
and  provisions  of this  Agreement  and assumed by Buyer as part of the Assumed
Liabilities.
<PAGE>
     4.8 Limitation:

     No obligations allocated to or assumed by Unocal under this Agreement shall
include any obligation to remediate any Environmental  Liability in or upon land
or any water  course or body of water  including  ground water beyond the lawful
requirements  of the government  agency or agencies with  jurisdiction  over the
Assets or a court of competent jurisdiction,  nor shall such obligations include
any action,  cost or expense other than actions,  costs, or expenses required by
law. Between the Parties,  Unocal shall have the right but not the obligation to
direct and control any work required to remedy  Environmental  Liabilities if it
may be  responsible  for more than fifty percent (50%) of the costs and expenses
of such work attributable to the interest of the Parties; provided,  however, if
the Parties have  control,  regardless  of which Party  directs and controls any
required work to remedy Environmental Liabilities, all such actions shall be the
most cost efficient  possible to comply with applicable  Environmental  Laws and
which are consistent with continued use of the Assets for the same purposes they
were being used on the Effective Date, and shall be based on mutually acceptable
actions after consultation with the other Party.

     THE  LIMITATIONS  ON  UNOCAL'S   LIABILITY,   AND  THE  ASSUMPTION  OF  ALL
LIABILLITIES ABOVE SUCH LIMITATIONS BY BUYER, UNDER THIS SECTION 4 AND ELSEWHERE
IN THIS AGREEMENT SHALL APPLY  REGARDLESS OF WHETHER SUCH  LIABILITIES ARE KNOWN
OR UNKNOWN,  RELATE TO ACTIONS,  EVENTS OR CONDITIONS EXISTING OR OCCURING PRIOR
TO THE  EFFECTIVE  DATE,  WHETHER  ATTRIBUTABLE  (IN  WHOLE  OR IN  PART) TO THE
ACTIONS,  SOLE,  JOINT OR CONCURRENT  NEGLIGENCE,  STRICT  LIABILITY,  BREACH OF
CONTRACT,  PRODUCTS LIABILITY,  ENVIRONMENTAL LIABILITY,  PREMISES LIABILITY, OR
OTHER FAULT, LIABILITY OR RESPONSIBILITY OF UNOCAL OR ANY OTHER PERSON OR PARTY,
AND REGARDLESS OF WHETHER ASSERTED UNDER ANY THEORY OF LIABILITY.

     4.9  Termination  Due  to  Material  Environmental  Deficiencies:  If it is
determined  during  the  Due  Diligence  Period  that a  Material  Environmental
Deficiency exists, either Buyer or Unocal may elect to terminate this Agreement,
unless Buyer and Unocal  mutually  agree in writing to delete all or part of the
affected   Assets  from  this  Agreement  such  that  the  total   Environmental
Liabilities remaining do not constitute a Material Environmental Deficiency.

     4.10 Determination of Value:

     (i) Upon delivery of notice by Buyer to Unocal of a Material  Environmental
Deficiency,  Buyer and Unocal  shall meet and use their best efforts to agree on
whether  such  a  Material   Environmental   Deficiency  exists.  The  value  of
Environmental Liabilities shall be based on the estimated Remediation Cost.

     (ii) If,  during the Due  Diligence  Period,  Buyer  determines  there is a
Material  Environmental  Deficiency and desires to terminate this Agreement,  it
shall  immediately so notify Unocal.  Unocal shall respond on the earlier of the
Date of Closing or seven (7) days from the date of notice  whether it concurs in
Buyer's  determination  that the estimated  Remediation  Cost of the  applicable
Environmental  Liabilities is sufficient to constitute a Material  Environmental
Deficiency.   In  the  event  Unocal  concurs  in  Buyer's  determination,   the
termination  of this  Agreement  shall be  treated  as a  termination  by mutual
consent of the Parties.

     (iii) If Unocal  timely  notifies  Buyer that it does not  concur  with the
Buyer's  determination of the estimated Remediation Costs, Buyer may still elect
to terminate  this  Agreement  and request a  determination  of the value of the
Environmental  Liabilities by the following  procedure:  the Parties will submit
the issue of the existence of a Material Environmental Deficiency to arbitration
in accordance with the  arbitration  procedures set forth in Exhibit "D". If the
arbitrators determine that a Material  Environmental  Deficiency does not exist,
Buyer will pay the arbitration  costs and shall not be entitled to the return of
the Earnest Money Deposit. If the arbitrators find that a Material Environmental
Deficiency does exist,  Unocal will pay the  arbitration  costs and shall return
Buyer's  Earnest Money Deposit with interest at the Interest Rate within fifteen
(15)  business  days. If Buyer does not elect to terminate  this  Agreement in a
written notice to Unocal prior to the  commencement of arbitration in connection
with this  Section,  then  Buyer  shall be deemed  to have  waived  its right to
terminate  this  Agreement  under this  Section  4.10(iii)  unless and until the
arbitors determine that a Material Environmental  Deficiency exists, and if such
arbitors determine that no Material Environmental  Deficiency exists, then Buyer
shall pay all arbitration costs an proceed toward Closing,  subject to the other
terms and conditions of this Agreement.

     (iv) Any and all disagreements between Buyer and Unocal regarding the value
of  Environmental  Liabilities  shall be submitted to  arbitration in accordance
with the arbitration procedures set forth in Exhibit "D".
<PAGE>
                                    SECTION 5

                          OPERATIONS AND CASUALTY LOSS

     5.1 Operations:  Between the Execution Date and Closing,  as to the portion
of the Assets to be conveyed  which Unocal now  operates,  it shall  operate the
same in a good and  workmanlike  manner.  At Closing  such  operations  shall be
turned  over to and become the  responsibility  of Buyer,  unless an  applicable
unit, pooling,  communitization or operating  agreement requires  otherwise,  in
which case (unless Buyer and Unocal  otherwise  agree) Unocal shall continue the
physical  operation  of such  portion of the  Assets,  pursuant to and under the
terms of such  applicable  agreement,  until  such time  after  Closing  as such
applicable  agreement  may require.  However,  Unocal shall have no liability as
operator to Buyer, for any operations by Unocal,  for loss or damages sustained,
or liabilities incurred,  REGARDLESS OF THE SOLE, JOINT,  CONCURRENT NEGLIGENCE,
STRICT LIABILITY,  BREACH OF CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF UNOCAL
OR ANY OTHER PERSON OR PARTY,  except as may result directly from Unocal's gross
negligence or willful  misconduct.  Such  operations  from and after the Closing
shall be conducted  by Unocal for and on behalf of Buyer,  and Unocal shall make
appropriate charges to Buyer pursuant to any applicable operating agreement.  In
the  absence  of any  applicable  operating  agreement,  for any  such  services
performed  by Unocal as operator of the Assets (or  portions  thereof)  from and
after the  Effective  Date,  Buyer  shall pay to Unocal the  applicable  Asset's
working  interest  percentage of an overhead  operating charge of $400 per month
per active well operated by Unocal;  plus Buyer shall  reimburse all  reasonable
and  necessary  expenses  incurred by Unocal in such  operation,  protection  or
maintenance  of the Assets as are not  normally  included  within the  operating
charge in standard form  accounting  procedures  but are paid as direct  charges
thereunder.  Any such charges and expenses  shall be recovered by Unocal as part
of the Closing or Final Accounting adjustments as appropriate.

     5.2 Casualty Loss: Upon the Closing,  the risk of Casualty Loss relating to
the Assets shall pass from Unocal to Buyer.

     5.3 Successor  Operator:  Buyer  acknowledges and agrees that Unocal cannot
and does not covenant or warrant that Buyer shall become  successor  operator of
all or any  portion of the Assets,  since the Assets or portions  thereof may be
subject to unit, pooling,  communitization,  operating or other agreements which
control the appointment of a successor operator.

     5.4  Restrictions  on  Operations:  Between the Execution Date and Closing,
except as necessary in Unocal's  opinion in emergency  situations,  Unocal shall
not, without Buyer's consent,  voluntarily incur any liability or enter into any
commitment  with  respect to the Assets which will cost in excess of $25,000 net
to Unocal with respect to an individual project;  cancel any contract associated
with the Assets  except in the ordinary  course of  business;  or enter into any
hedging, forward sales or similar agreements with respect to production from the
Assets.
<PAGE>
                                    SECTION 6

                    REPRESENTATIONS AND WARRANTIES OF UNOCAL

     Unocal hereby represents and warrants to Buyer as follows:

     6.1 Organization:  Unocal is a corporation duly organized, validly existing
and in good standing under the laws of the state of California, and is qualified
to do business and is in good standing as a foreign  corporation  in every other
jurisdiction  where the failure to so qualify would have a Party Adverse  Effect
on Unocal.

     6.2 Authority to do Business:  Unocal has all requisite power and authority
to own,  lease  or  operate  the  Assets  and to carry  on the  business  as now
conducted.

     6.3 Binding Obligation:

     (i) Unocal has all  requisite  corporate  power and authority to enter into
and  perform  its  obligations  under  this  Agreement  and  to  carry  out  the
transactions contemplated hereby.

     (ii) All  corporate  acts and  other  proceedings  required  to be taken by
Unocal to authorize the  execution,  delivery and  performance by Unocal of this
Agreement, have been duly and properly taken.

     (iii) This  Agreement  has been duly  executed and  delivered by Unocal and
constitutes  the valid and binding  obligation  of Unocal,  enforceable  against
Unocal in accordance with its terms.

     (iv) The  execution,  delivery and  performance by Unocal of this Agreement
does not and will not conflict  with,  or result in any  violation of or default
under any provision of the Articles of Incorporation or By-laws of Unocal or any
law,  ordinance,  rule,  regulation,  order,  decree,  agreement,  instrument or
license applicable to Unocal or to the Assets.

     6.4 Litigation, Suits or Claims: To Unocal's Knowledge, except as disclosed
in the Disclosure Schedule,  there are no actions,  suits or proceedings pending
or threatened in writing  against Unocal which if decided  unfavorably to Unocal
could have a Party Adverse Effect on Unocal, or a material adverse effect on the
value of any one of the Assets (other than actions, suits, proceedings, asserted
or  threatened,  relating  to Title  Defects  or  Environmental  Liabilities  or
disclosed  in  the  Environmental   Disclosure   Schedule  or  other  Disclosure
Schedules).

     6.5  Relation  to  Assumed  Liabilities:   No  representation  or  warranty
contained  herein shall be deemed a  representation  or warranty by Unocal which
abrogates  the  obligations  of Buyer to  investigate  the  Assets,  and make an
independent decision to purchase the Assets; and Buyer's obligations herein with
respect to the  investigation  of, and  independent  decision  to  purchase  the
Assets, are not diminished by any representations or warranties herein.

     6.6 Disclaimer of  Warranties:  THE ASSETS ARE SOLD "AS IS," "WHERE IS" AND
"WITH ALL FAULTS AS TO ALL  MATTERS,"  AND  EXPRESSLY  DISCLAIMS AND NEGATES ANY
REPRESENTATION  OR WARRANTY,  EXPRESS,  IMPLIED,  AT COMMON LAW, BY STATUTE,  OR
OTHERWISE  RELATING  TO (a) THE  CONDITIONS  OF THE ASSETS  (INCLUDING,  WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A
PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS), (b) ANY
INFRINGEMENT  BY UNOCAL OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD PARTY,
(c) ANY  INFORMATION,  DATA OR OTHER  MATERIALS  (WRITTEN OR ORAL)  FURNISHED TO
BUYER BY OR ON BEHALF OF UNOCAL  (INCLUDING  WITHOUT  LIMITATION,  IN RESPECT OF
GEOLOGICAL  AND  ENGINEERING  DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER
MINERAL  RESERVES,  THE  RECOVERABILITY  OF OR THE COST OF  RECOVERING  ANY SUCH
RESERVES, THE VALUE OF SUCH RESERVES,  ANY PRODUCT PRICING ASSUMPTIONS,  AND THE
ABILITY TO SELL OIL OR GAS  PRODUCTION  AFTER  CLOSING),  (d) THE  ENVIRONMENTAL
CONDITION AND OTHER CONDITION OF THE ASSETS AND ANY POTENTIAL  LIABILITY ARISING
FROM OR RELATED TO THE ASSETS, AND (e) THE FAILURE OF ANY COMPUTER, ELECTRONICS,
SOFTWARE,  OR  COMPONENTS TO BE FREE OF ANY BUGS OR ERRORS,  INCLUDING,  BUT NOT
LIMITED TO, ANY  DEFICIENCIES  RELATING TO THE  INABILITY  TO PROPERLY  FUNCTION
BEYOND DECEMBER 31, 1999 (BEING SOMETIMES  REFERRED TO AS THE "YEAR 2000 BUG" OR
"Y2K PROBLEM").
<PAGE>
     6.7 Gas Entitlements: To Unocal's Knowledge, except as described in Exhibit
"F",  Unocal  is not  obligated  by  virtue  of any  prepayment  made  under any
production sales contract or any other contract containing a take-or-pay clause,
or under any similar arrangement, to deliver oil, gas or other minerals produced
from or  allocated  to any of the  Assets at any time after the  Effective  Date
without receiving full payment therefor at the time of delivery.

     6.8  Disclosure:  To Unocal's  Knowledge,  neither this  Agreement  nor any
certificate to be furnished by Unocal contains or, upon delivery  thereof,  will
contain any untrue  statement of a material  fact or omission,  or upon delivery
thereof,  will omit to state a material  fact  necessary to make the  statements
herein or therein,  in light of the  circumstances  under which they were or are
made, not misleading.

     6.9 No Breach:  To Unocal's  Knowledge,  Unocal is not party to, or subject
to, or bound by any provision of any judgment, order, writ, injunction or decree
of  any  court,  or  governmental  body,  or any  statute,  rule  or  regulation
applicable  to Unocal  which  prohibits or would be violated by, or which allows
for the  termination or  modification  of this Agreement due to Unocal  entering
into, executing, delivering or consummating same.

     6.10  Environmental  Condition  of  Assets:  To  Unocal's  Knowledge,   all
environmental  problems  affecting the Assets are referred to in documents which
have been or, prior to Closing,  will be provided or made available to Buyer, or
referred to in the Disclosure Schedule, the Environmental Disclosure Schedule or
elsewhere in this Agreement.

     6.11 Compliance with Laws and Agreements: To Unocal's Knowledge,  Unocal is
in substantial compliance with all permits, contracts and agreements relating to
the Assets,  and in substantial  compliance with all laws, rules and regulations
of federal,  state or local entities which have  jurisdiction over Unocal or the
Assets  such that any  failure of  compliance  will not have a material  adverse
effect on the value of the Assets.

     6.12 Taxes:  All ad valorem,  property,  production,  severance and similar
taxes and  assessments  based on or measured by the ownership of property or the
production or removal of hydrocarbons  or the receipt of proceeds  therefrom and
relating to the Assets and  attributable  to the periods  prior to the Effective
Date, to the extent such taxes and assessments have become due and payable, have
been timely paid;  provided,  however,  that Unocal makes no  representation  or
warranty regarding the manner, method, calculation,  valuation or other criteria
or procedure used to determine or pay such taxes or assessments.

     6.13  Brokers:  Unocal  has  not  incurred  any  obligation  or  liability,
contingent or otherwise,  for any fee payable to a broker or finder with respect
to the matters  provided for in this Agreement  which could be  attributable  to
Buyer.

     6.14 Tax  Partnership:  No part of the Assets is treated for Federal income
tax  purposes  as being  owned  by a  partnership  except  as  disclosed  in the
Disclosure Schedule.
<PAGE>
                                    SECTION 7

                     REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby represents and warrants to Unocal as follows:

     7.1 Organization:

     (i) Buyer is a corporation  duly  organized,  validly  existing and in good
standing under the Laws of the state wherein it was  incorporated  or organized,
and is qualified to do business and is in good standing as a foreign corporation
in every other  jurisdiction  where the failure to so qualify would have a Party
Adverse Effect on Buyer.

     (ii) Buyer is authorized to do business in the State of Oklahoma.

     (iii)  Prior to the  Closing,  Buyer will have  delivered  to Unocal  true,
correct and complete copies of Buyer's Certificates or Articles of Incorporation
and Bylaws and Certificates of Good-Standing, as currently in effect.

     (iv) Buyer's headquarters and principal offices are located in the State of
Texas.

     7.2 Authority; Enforceability:

     (i) Buyer has all requisite corporate power and authority to enter into and
perform its obligations  under this Agreement and to carry out the  transactions
contemplated hereby.

     (ii) All corporate acts and other proceedings required to be taken by Buyer
to authorize the execution, delivery and performance by Buyer of this Agreement,
have been duly and properly taken.

     (iii) This  Agreement  has been duly  executed  and  delivered by Buyer and
constitutes  the  legal,  valid and  binding  obligation  of Buyer,  enforceable
against Buyer in accordance with its terms.

     (iv) The execution, delivery and performance of this Agreement by Buyer and
the  consummation  by Buyer of the  transactions  contemplated by this Agreement
does not and will not conflict  with,  or result in any  violation of or default
under any provision of the Articles of  Incorporation  or By- laws of Buyer,  or
any law,  ordinance,  rule,  regulation,  judgment,  order,  decree,  agreement,
instrument or license applicable to Buyer or to its properties or assets.

     7.3 Consents:  Except for the consents of governmental  agencies  regarding
the  transfer  of leases,  licenses  and Permits  which apply to the Assets,  no
consent, approval, authorization,  notice, filing, registration or qualification
is required to be obtained or effected by Buyer for the  execution,  delivery or
performance by Buyer of this Agreement.

     7.4  Litigation,  Suits or  Claims:  To  Buyer's  Knowledge,  there  are no
actions,  suits or  proceedings  pending or threatened in writing  against Buyer
which if  decided  unfavorably  to Buyer  could have a Party  Adverse  Effect on
Buyer, or a material adverse effect on the value of the Assets.

     7.5  Disclosure:  To Buyer's  Knowledge,  neither  this  Agreement  nor any
certificate to be furnished to Unocal contains or, upon delivery  thereof,  will
contain any untrue  statement of a material  fact or omission,  or upon delivery
thereof,  will omit to state a material  fact  necessary to make the  statements
herein or therein,  in light of the  circumstances  under which they were or are
made, not misleading.

     7.6 No Breach: To Buyer's Knowledge,  Buyer is not party to, or subject to,
or bound by any provision of any judgment,  order, writ, injunction or decree of
any court, or governmental body, or any statute,  rule or regulation  applicable
to Buyer  which  prohibits  or would be  violated  by, or which  allows  for the
termination  or  modification  of this  Agreement  due to Buyer  entering  into,
executing, delivering or consummating same.

     7.7  Investigations  of Assets:  In accordance  with the provisions of this
Agreement,  Buyer has made,  or will make or arrange  for  others to make,  such
inspection  of the  Assets as it deems  appropriate,  and,  except as  otherwise
provided herein,  Buyer will accept the Assets "AS IS," "WHERE IS" AND "WITH ALL
FAULTS AS TO ALL MATTERS."

     7.8 No Distribution:  Buyer is acquiring the Assets for its own account for
investment  purposes and not with a view to or for sale in  connection  with any
distribution  thereof  within the  meaning  of the  Securities  Act of 1933,  as
amended,  and the rules and  regulations  thereunder  and any  applicable  state
securities laws.

     7.9 Resale Registration:  Buyer will not sell, transfer, lease or otherwise
convey in any manner,  in whole or in part,  the Assets  without  the  necessary
registrations,  or  exemptions  therefrom,  under  applicable  federal and state
securities laws.

     7.10 Oil and Gas Experience:  Buyer (or its predecessor, if any) is and has
been  during  the  preceding  two years  primarily  engaged in the  business  of
exploring  for,  drilling  for,  producing or refining oil or gas and derives at
least 80%,  or  $5,000,000  of its annual  gross  income,  from  exploring  for,
drilling for, producing or refining oil or gas.

     7.11 Federal  Leases:  If the Assets include any federal  leases,  Buyer is
qualified to own such federal leases or will be so qualified at Closing.

     7.12  Brokers:   Buyer  has  not  incurred  any  obligation  or  liability,
contingent or otherwise,  for any fee payable to a broker or finder with respect
to the matters  provided for in this Agreement  which could be  attributable  to
Unocal.
<PAGE>
                                    SECTION 8

                CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNOCAL

     The obligation of Unocal to consummate  the  transactions  contemplated  by
this  Agreement  shall be subject to the  fulfillment  at Closing of each of the
following conditions,  each of which may be waived by Unocal except as otherwise
required by law:

     8.1 Purchase Price: At Closing, Buyer shall deliver:

     (i) the Adjusted Purchase Price less the Earnest Money Deposit; and

     (ii) plus or minus as applicable the Cash Settlement.

     8.2 Buyer's  Representations  and Warranties True: The  representations and
warranties of Buyer contained  herein on the date hereof shall have been correct
in all material  respects,  and shall be correct in all material respects on and
as of the  Closing  with the same force and  effect as though  made at and as of
such time, except for the representations and warranties  specifically  relating
to a time or times other than the Closing, or as may be affected by transactions
contemplated hereby.

     8.3 Officer's Certificate:  Buyer shall have furnished Unocal a certificate
of an officer of Buyer certifying that:

     (i) the representations and warranties of Buyer contained in this Agreement
are true and correct in all material respects on and as of the Closing Date with
the same  force and  effect as though  made at and as of such  time,  except for
representations  and warranties  specifically  relating to a time or times other
than  the  Closing  Date,  or  except  as may be  affected  by the  transactions
contemplated hereby; and

     (ii) Buyer has performed all of its obligations contained in this Agreement
required to be performed by it prior to Closing.

     8.4  Opinions of  Counsel:  Buyer  shall have  furnished  Unocal an opinion
rendered by legal counsel of Buyer, dated as of the Closing, to the effect that:

     (i) Buyer is a corporation duly organized,  validly  existing,  and in good
standing  under the laws of the state wherein it was  incorporated  or organized
and is authorized to do business in the State of Oklahoma; and

     (ii) Buyer has full  power to carry out the  transactions  provided  for in
this  Agreement;  this  Agreement has been duly executed and delivered by Buyer;
and this Agreement is the legal and binding obligation of Buyer,  enforceable in
accordance with its terms except as  enforceability  may be limited or denied by
bankruptcy, insolvency, reorganization,  moratorium or similar laws from time to
time in effect  that  affect the  rights of  creditors  generally  and except as
enforcement  or  remedies  may  be  limited  or  denied  by  general   equitable
principles; and

     (iii) the  execution,  delivery and  performance of this Agreement by Buyer
and the consummation by Buyer of the transactions contemplated by this Agreement
will not  constitute a breach,  violation,  or default under the  Certificate or
Articles of Incorporation or By-laws of Buyer.

     8.5  Pre-Closing  Performance:  Buyer  shall have  performed,  observed  or
complied  in all  material  respects  with all its  obligations  and  conditions
required by this  Agreement to be performed,  observed or complied with by it at
or prior to Closing.

     8.6  Authorization:  All  corporate  actions  necessary  to  authorize  the
execution,  delivery and  performance of this Agreement and the  consummation of
the transactions  contemplated  hereby shall have been duly and validly taken by
Buyer.

     8.7 Absence of Litigation: No litigation or administrative proceeding shall
be pending (or threatened),  and no investigation shall have been commenced (and
be  pending),  by Buyer or any third party  seeking to restrain or prohibit  (or
questioning the validity or legality of) the  consummation  of the  transactions
contemplated by this Agreement or seeking damages in connection  therewith which
makes it  unreasonable  to proceed  with the  consummation  of the  transactions
contemplated hereby.

     8.8 Bonds:  Buyer  shall have  delivered  to Unocal  either  copies of such
bonds, in form and substance and issued by corporate  sureties (which  corporate
sureties  are  satisfactory  to Unocal),  covering the Assets as may be required
under any laws,  rules or  regulations  of any federal,  Indian tribe,  state or
local government  agencies having  jurisdiction over the Assets, or a commitment
by a surety company, satisfactory to Unocal, to issue such bonds upon Closing.

     8.9  Preferential   Purchase  Rights:  All  preferential   purchase  rights
affecting  the  Assets  shall have been  exercised,  waived or  assumed,  or the
election time shall have expired.

     8.10 Hart-Scott-Rodino Act: All obligations under the Hart-Scott-Rodino Act
shall have been satisfied.

     8.11 Parent Guaranty:  Buyer shall have delivered to Unocal a Guaranty,  in
form and  substance  satisfactory  to Unocal,  executed and  delivered by Magnum
Hunter  Resources,  Inc.,  pursuant  to  which  Magnum  Hunter  Resources,  Inc.
unconditionally  guarantees  to  Unocal  all  of the  obligations,  liabilities,
indemnities  and  covenants  of Buyer under this  Agreement  and any  agreement,
instrument or document executed or delivered by Buyer in connection herewith.

     8.12 Delayed Closing:  If Closing shall not have occurred on or before 3:00
p.m.,CST,  December  31, 1998,  for any reason  whatsoever,  including,  but not
limited to, because a Party has sought dispute resolution under the arbitration,
or other dispute resolution provisions,  hereunder prior to Closing, then Unocal
may, in its sole discretion, elect to terminate this Agreement. If Unocal elects
to terminate  this Agreement for failure of this condition in this Section 8.12,
it  shall  be  treated  as a  termination  by  mutual  consent  of both  Parties
hereunder.
<PAGE>
                                    SECTION 9

                CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER

     The  obligations of Buyer to consummate the  transactions  contemplated  by
this Agreement shall be subject to the fulfillment,  at or prior to Closing,  of
each of the following conditions, each of which may be waived by Buyer except as
otherwise required by law:

     9.1 Delivery of Instruments of Transfer:  At Closing,  Unocal shall deliver
to Buyer  executed,  and  where  appropriate  recordable,  bills of sale,  lease
assignments,  and other  instruments of conveyance as required herein,  and such
other  documents  as  may  be  mutually  agreed  and  customary  and  usual  for
transactions of this type.

     9.2  Unocal's  Representations  and  Warranties:  The  representations  and
warranties of Unocal contained herein on the date hereof shall have been correct
in all material  respects,  and shall be correct in all material respects on and
as of the  Closing  with the same force and  effect as though  made at and as of
such time, except for the representations and warranties  specifically  relating
to a time or times other than the Closing, or as may be affected by transactions
contemplated hereby.

     9.3 Officer's Certificate:  Unocal shall have furnished Buyer a certificate
of an officer of Unocal certifying that:

     (i)  the  representations  and  warranties  of  Unocal  contained  in  this
Agreement are true and correct in all material respects on and as of the Closing
Date with the same  force and  effect  as  though  made at and as of such  time,
except for  representations  and warranties  specifically  relating to a time or
times  other  than  the  Closing  Date,  or  except  as may be  affected  by the
transactions contemplated hereby; and

     (ii)  Unocal  has  performed  all  of its  obligations  contained  in  this
Agreement required to be performed by it prior to Closing.

     9.4  Pre-Closing  Performances:  Unocal shall have  performed,  observed or
complied  in all  material  respects  with all its  obligations  and  conditions
required by this  Agreement to be performed,  observed or complied with by it at
or prior to Closing.

     9.5  Authorization:  All  corporate  actions  necessary  to  authorize  the
execution,  delivery and  performance of this Agreement and the  consummation of
the transactions  contemplated  hereby shall have been duly and validly taken by
Unocal.

     9.6 Absence of Litigation: No litigation or administrative proceeding shall
be pending (or threatened),  and no investigation shall have been commenced (and
be pending), by Unocal or by a third party against Unocal seeking to restrain or
prohibit (or  questioning  the validity or legality of) the  consummation of the
transactions  contemplated  by this  Agreement or seeking  damages in connection
therewith which makes it  unreasonable  to proceed with the  consummation of the
transactions contemplated hereby.

     9.7 Hart-Scott Rodino Act: all obligations under the  Hart-Scott-Rodino Act
shall have been satisfied.

     9.8 Change of Operator  Forms:  Unocal shall have provided to Buyer,  where
applicable,  executed change of operator forms to be filed,  by Buyer,  with the
relevant regulatory agency naming Buyer, or its designee,  the operator of those
Assets  (active or inactive)  which  Unocal  operated as of the Closing Date and
that are  subject to this  Agreement,  provided,  however,  that Buyer  shall be
responsible for completing and complying with any balloting or voting procedures
required under any applicable operating  agreements  regarding  appointment of a
successor operator and Unocal in no way represents or guarantees that Buyer will
be elected or appointed as the successor operator under the applicable operating
agreements  covering  those  Assets (and Unocal  assumes that Buyer is otherwise
qualified to operate such Assets).
<PAGE>
                                   SECTION 10

                                    COVENANTS

     10.1 Investigation and Decision: The Parties further covenant as follows:

     Investigation  of Assets:  During the Due Diligence Period Buyer shall: (i)
make, or arrange for others to make,  such inspection and  investigation  of the
Assets and Assumed  Liabilities as it deems  appropriate;  (ii)  investigate and
have  knowledge of operative or proposed  laws to which the Assets are or may be
subject;  (iii) accept the Assets and Assumed  Liabilities upon the basis of its
review and determination of the applicability and effect of such laws; (iv) have
reviewed  and  evaluated  any data room  materials  or other  materials to which
access has been provided to Buyer by Unocal under this  Agreement;  and (v) have
made such  investigations of the title,  condition,  status under  Environmental
Laws,  oil  and gas  laws  and any  other  aspects  of the  Assets  and  Assumed
Liabilities  as  may  be  necessary  or  appropriate.  Buyer  agrees  that  such
inspections shall not unreasonably interfere with the business and operations of
Unocal, and that such inspections and all such documents shall be subject to the
Confidentiality Agreement.

     Independent  Decision:  Buyer has made its own independent  judgment of the
commercial  potential,  condition  and  usefulness  of the  Assets,  taking into
consideration all current  Environmental  Laws and other laws and the likelihood
that such Environmental Laws and other laws will change in the future. Buyer has
such  knowledge and  experience  in business and  financial  affairs in general,
securities  and  investments,  and of the oil and gas business as conducted  and
regulated in the State of Oklahoma in  particular as to be capable of evaluating
the merits and risks of purchasing the Assets.

     10.2 Access to Information:

     Unocal has  afforded  to Buyer and to Buyer's  representatives,  reasonable
access  during the period  prior to the  execution  of this  Agreement  and will
continue to afford to Buyer reasonable access until Closing,  and, to the extent
that the Parties  mutually  agree the same is necessary,  for a reasonable  time
after the Closing, to all of Unocal's properties,  books,  contracts,  documents
and non-interpretative  records relating to the Assets, and, during such period,
Unocal has used and will continue to use reasonable  efforts to furnish promptly
to Buyer  all  material  information  concerning  the  business  and  properties
relating to the  ownership  and  operations  of the Assets  (subject to existing
confidentiality   agreements   with  third  parties  and  subject  also  to  the
attorney-client  privilege),  including,  to the extent prepared in the ordinary
course,  such data and  operating  reports as may  reasonably  be  necessary  or
appropriate for any relevant  purposes of investigation  and analysis related to
this Agreement.  Upon Buyer's reasonable request, Unocal shall attempt to secure
waivers of any such confidentiality agreements. Unocal shall, to the best of its
ability,  arrange for Buyer and its  representatives to discuss with appropriate
officers, employees, consultants, contractors and representatives of Unocal such
matters related to the transactions  provided for herein as Buyer may reasonably
request.  Buyer will hold such  information in confidence in accordance with the
Confidentiality Agreement.

     10.3 General Liabilities and Assumed  Liabilities:  If Closing occurs, then
Buyer assumes hereby any and all General  Liabilities  and Assumed  Liabilities,
subject to the other provisions of this Agreement.

     10.4 Assumption of Plugging and Abandonment Obligations: If Closing occurs,
Buyer assumes hereby any and all Plugging and Abandonment Obligations.

     10.5 Gas Imbalance: As to any Gas Imbalances which exist, the Parties agree
that:

     Unocal will  furnish  Buyer with a  statement,  in the form of Exhibit "F",
showing the most current  estimate of the over or under  production  between the
owners as of the most recent available date.

     From and after the Effective  Date, any and all benefits,  obligations  and
liabilities   associated  with  Gas  Imbalances  shall  accrue  to  and  be  the
responsibility   of  Buyer.   Buyer  shall  assume   Unocal's   overproduced  or
underproduced  position in the wells located on the  Leasehold  Properties as of
the  Effective  Date,  including but not limited to the  responsibility  for the
payment of  royalties  on the volume of such gas which  Unocal took in excess of
its  entitlement  and any obligation to balance  whether in cash or in kind. The
Final Accounting  shall include an adjustment for any Gas Imbalance  differences
between the volume shown on Exhibit "F" and the actual Gas  Imbalances as of the
Effective  Date.  Notwithstanding  the actual amounts or proceeds that Buyer may
receive from the Gas Imbalances due to  underproduced  positions,  or the actual
amounts that Buyer must pay with respect to Gas Imbalances  due to  overbalanced
positions,  the parties shall settle such Gas Imbalances as between  themselves,
and the adjustments to the Purchase Price and/or at the Final Accounting will be
calculated using a settlement price of $1.25 per Mcf (thousand cubic feet).
<PAGE>
     10.6  Hart-Scott-Rodino  Act: Each Party shall  prepare and submit,  within
fifteen (15) days of the execution of this Agreement,  any necessary  filings in
connection with the transactions  contemplated by this Agreement under the Hart-
Scott-Rodino  Act, but each Party shall be responsible for its respective filing
costs and expenses. The Parties shall request expedited treatment of such filing
by the  Federal  Trade  Commission,  shall  promptly  make  any  appropriate  or
necessary  subsequent or supplemental  filings,  and shall furnish to each other
copies of all filings made under the Hart-Scott-Rodino Act at the same time they
are filed with the government.

     10.7 Third-Party  Consents:  Certain of the transfers  contemplated by this
Agreement  are  subject  to various  forms of  third-party  consents,  including
compliance  with the provisions of the  Hart-Scott-Rodino  Act. Unocal and Buyer
shall cooperate and shall promptly take such action as may be required to obtain
all  necessary  consents  prior to  Closing.  Unocal and Buyer agree that to the
extent any  contract  or Permit  that would  otherwise  be  assigned  under this
Agreement  is  not  capable  of  being  assigned,   transferred,   subleased  or
sublicensed without the consent of, or waiver by any other party thereto, or any
other  Person,  or if such  assignment,  transfer,  sublease  or  sublicense  or
attempted assignment, transfer, sublease or sublicense would constitute a breach
thereof,  or a violation of any law,  this  Agreement  shall not  constitute  an
assignment,  transfer,  sublease  or  sublicense,  or an  attempted  assignment,
transfer, sublease or sublicense of any such contract or Permit. With respect to
each contract  that, but for the reasons set forth in the first sentence of this
Section,  would be assigned,  Unocal  agrees to provide  Buyer with the benefits
(including the right to terminate any such contract or Permit in accordance with
the terms  thereof)  of such  contract  or  Permit,  to the  extent  related  to
transactions or periods that occur at or after Closing,  and to the extent it is
possible  to do so;  and, if and to the extent  such  benefits  are  provided to
Buyer, Buyer agrees to observe and perform such contract or Permit. Unocal shall
continue to use its reasonable  efforts to obtain an assignment to Buyer of each
contract or Permit that,  but for the reasons set forth in the first sentence of
this Section,  would be assigned;  provided,  however,  that Unocal shall not be
required to pay any consideration or suffer any financial disadvantage to obtain
such assignment.

     10.8  Completion  of  Due:  Within  three  (3)  days  of the end of the Due
Diligence Period Buyer shall give Unocal a letter of satisfactory  completion of
due diligence and proof of financing  substantially  in the form attached hereto
as Exhibit "J".

     10.9  Additional  Agreements:  Unocal and Buyer shall  execute such further
documents and  instruments,  requested by either  Party,  as may be necessary or
reasonably  desirable  to  consummate  the  transactions  contemplated  by  this
Agreement or any part thereof. Subject to the other terms and conditions of this
Agreement, each of the Parties, hereto agrees to use its best efforts at its own
expense to take,  or cause to be taken,  all  actions  and to do, or cause to be
done,  all  things  necessary,  proper or  advisable  under  applicable  laws to
consummate and make effective the transactions contemplated by this Agreement.

     10.10 Payment of Certain Expenses Due and Payable After the Effective Date:
Buyer shall pay, as and when due,  all fees and bills due and payable  after the
Closing  Date,  and Unocal shall  reimburse  Buyer within thirty (30) days after
invoice for any amounts under such bills attributable to any period prior to the
Effective Date for which it is responsible hereunder;  provided, however that if
after  Closing  Unocal is  obligated  to continue as operator  under an existing
agreement Unocal shall make payments for Buyer's account and at Buyer's expense.

     10.11  Notification  of Certain  Matters:  Between the  Effective  Date and
Closing,  Unocal and Buyer will each give prompt  notice to the other of (i) any
information that indicates that any  representation or warranty contained herein
was not true and  correct as of the date  hereof or will not be true and correct
as of the Closing Date;  (ii) the occurrence of any event which will result,  or
has a  reasonable  prospect  of  resulting,  in the  failure to  consummate  the
transactions  contemplated hereunder on or before the Closing Date or to satisfy
a  condition  to  Closing  herein as the case may be;  (iii) any notice or other
communication  from any third party  alleging that the consent or waiver of such
third party is required in  connection  with the  execution and delivery of this
Agreement  or  the  consummation  of  the  transactions   contemplated  by  this
Agreement;  and (iv) any  notice  of,  or other  communication  relating  to any
default or event  which,  with notice or lapse of time or both,  would  become a
default under any contract to be assigned at Closing.

     10.12  Announcements:  At all times  prior to  Closing,  Unocal  and Buyer,
including their respective Affiliates, shall use their best efforts to cooperate
in the  development  and  distribution  of all news  releases  and other  public
disclosures relating to the proposed  transactions  described in this Agreement,
and agree that no such releases or disclosures will be made without prior notice
to the other Party; provided,  however, that from the date of this Agreement and
continuing  for twelve  (12)  months  after the  Closing if reserve  volumes are
estimated in a news release in conjunction  with a Purchase Price disclosure the
release must state that the reserve estimates are the disclosing Party's reserve
estimates,  and no news  release or public  disclosure  whatsoever  by Buyer may
disclose the identity of Unocal or a specific  description  of the Assets unless
both Parties agree to the form and content of such disclosure,  each being under
no  obligation  to agree and  having  the right to  withhold  agreement  for any
reason;  provided,  also that either  Party may make all  disclosures  which are
required or prudent under applicable laws, including, but not limited to, rules,
regulations  and  guidelines  of the  Securities  and  Exchange  Commission  and
applicable stock exchanges.
<PAGE>
     10.13 Termination of Guarantees and Other Commitments:

     Subject to applicable  laws,  as of the Closing Date,  all of the following
shall be canceled or terminated as to Buyer: (i)  undertakings,  comfort letters
or guarantees by Unocal or any of its  Affiliates to third parties in connection
with the Assets;  (ii) letters of credit,  surety bonds,  and related  indemnity
agreements  arranged  and  maintained  by Unocal or any of its  Affiliates  with
respect to the Assets;  and (iii) any credit card  accounts  issued by Unocal or
any of its Affiliates to any employees in connection with the Assets.

     Buyer  understands and agrees that all insurance  policies,  provided to or
for the Assets  through  Unocal,  any Affiliate of Unocal,  or a  self-insurance
program of Unocal will be terminated as to the Assets as of the Closing Date.

     Unocal and Unocal's  Affiliates shall have no  responsibility  or liability
under this Agreement to provide for insurance  coverage or any such security for
the Assets in any manner whatsoever after the Effective Date.

     10.14 Like Kind Exchange: Without affecting its obligations hereunder, with
appropriate prior notice to the other Party, either Party shall have the option,
at or before  Closing,  to structure the Closing of this  transaction  in such a
manner so as to qualify as a like kind exchange  pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended,  provided that such a structure shall
not delay the  Closing  in any way.  The other  Party  will  cooperate  with the
electing  Party  to  facilitate  a like  kind  exchange  but will in no event be
required to take title to any replacement properties.  In the event either Party
desires such exchange,  it shall timely notify the other Party,  in writing,  of
its intent  and the  electing  Party  shall be  responsible  for  arranging  the
structure of the exchange,  compliance with time limits for like kind exchanges,
the preparation of appropriate  documents to complete the  transaction,  and all
additional costs directly  related  thereto.  The electing Party shall indemnify
the other Party against all losses, costs, expenses,  taxes, fines, penalties or
assessments arising out of any like kind exchange structure.

     10.15 Access to Geologic and Geophysical  Information:  As long as the same
remains in Buyer's  possession or control,  Unocal retains the right to copy any
and all geologic and  geophysical  information  transferred or licensed to Buyer
hereunder, and Buyer agrees to co-operate with Unocal in granting access to such
information.
<PAGE>
                                   SECTION 11

                                EMPLOYEE MATTERS

     11.1 Employee List: To the extent requested by Buyer in writing, within ten
days after  execution of this  Agreement,  Unocal shall  provide Buyer a list of
field  employees at each work  location  for the Assets,  indicating  name,  job
classification and years of service with Unocal.

     11.2 Hired  Employee  List:  Within  thirty days after  Closing (or,  after
Closing,  within  thirty (30) days of hiring such employee at any time within 18
months  following  the Closing),  Buyer shall provide  Unocal with a list of all
Unocal field employees hired by Buyer (whether as regular or contract employees)
and their base pay rate.

                                   SECTION 12

                                      TAXES

     12.1  Apportionment of Ad Valorem and Property Taxes: All ad valorem taxes,
real property taxes,  personal  property taxes and similar  obligations shall be
apportioned  as of the Effective  Date between Buyer and Unocal.  All such taxes
allocable to the periods before the Effective Date shall be paid by Unocal,  and
all such taxes allocable to the Effective Date and after shall be paid by Buyer.
Any refunds of taxes  allocable to periods prior to the Effective  Date shall be
the  property  of Unocal.  Buyer  shall  file or cause to be filed all  required
reports and returns incident to such taxes which are due on or after the Closing
Date, and shall pay or cause to be paid to the taxing authorities all such taxes
reflected on such reports and returns.

     12.2 Sales  Taxes,  Filing  Fees,  Etc:  The  Purchase  Price  provided for
hereunder  is net of any sales  taxes or other  transfer  taxes.  Buyer shall be
liable  for any  sales  tax or  other  transfer  tax as  well as any  applicable
conveyance, transfer and recording fees, and real estate transfer stamp or taxes
imposed  upon the sale  pursuant to this  Agreement,  and Buyer shall defend any
action by a  governmental  agency to collect  such taxes or fees,  and will hold
Unocal harmless from any cost or liability for taxes, fees, penalty, interest or
costs,  including  reasonable  attorney's  fees,  assessed  as a result  of this
transaction.

     12.3 Other Taxes: All production,  severance or excise taxes,  conservation
fees and other similar such taxes or fees (other than income taxes)  relating to
oil and gas produced and sold from the Assets prior to the Effective  Date shall
be paid by  Unocal,  and all such  taxes and fees  relating  to such oil and gas
produced and sold on the Effective Date and after shall be paid or reimbursed by
Buyer.  (or if  attributable to periods after the Effective Date and Unocal pays
such taxes, then Buyer shall reimburse Unocal therefore).  Any rebates,  refunds
or similar credits  attributable to such taxes and fees for periods prior to the
Effective Date shall be, and remain, the property of Unocal (and Buyer is hereby
notified that Unocal may be seeking certain rebates,  refunds or similar credits
from the applicable taxing authorities). In the event such taxes attributable to
the Assets are not assessed on a current year basis, it is agreed that when such
taxes  are  assessed,  insofar  as they  Accrued t the  Assets on or before  the
Effective  Date,  they shall be paid by Unocal upon  receipt of a statement  and
supporting documentation.


<PAGE>


     13.1 Termination:  This Agreement and the transactions  contemplated herein
may be terminated at any time prior to Closing:

     (i) by mutual consent of the Parties; or

     (ii) by either  Party,  without  impairing any other rights  hereunder,  if
there has been a material  breach of covenant  or  agreement  contained  in this
Agreement on the part of the other Party,  or a failure of a condition  and such
breach of a  covenant  or  agreement  or  failure  of a  condition  has not been
promptly cured, or a failure of Buyer to obtain financing satisfactory to Unocal
to close and consummate the transactions contemplated herein; or

     by either  Party,  upon  written  notice to the other  Party,  pursuant  to
Section 4.9.

     13.2 Effect of Termination:

     (i) In the event of  termination of this Agreement by mutual consent of the
Parties,  this  Agreement  shall  forthwith  become  void and there  shall be no
liability or obligation on the part of either Party or their respective officers
or directors or shareholders except as otherwise set forth herein.  Unocal shall
in such event return the earnest money deposit within fifteen (15) business days
of such termination plus interest calculated at the Interest Rate.

     (ii) In the event this  Agreement is terminated  under Section 13.1 (ii) by
Buyer:

     (a) If Unocal  concurs  with Buyer that a material  breach of  covenant  or
agreement or failure of a condition  has  occurred  and was not promptly  cured,
Unocal shall return the Earnest Money Deposit  within fifteen (15) business days
of such termination, plus interest calculated at the Interest Rate;

     (b) If Unocal does not concur with Buyer that a material breach of covenant
or agreement or failure of a condition has occurred and was not promptly  cured,
Unocal shall interplead the Earnest Money Deposit,  plus interest  calculated at
the Interest Rate,  into a court or arbitration of competent  jurisdiction;  and
the prevailing  party shall receive the  interplead  monies and the losing party
shall pay the prevailing  Party's costs and reasonable  attorney's fees incurred
in conjunction with the proceeding.

     (iii) If this  Agreement is  terminated  by Buyer or Unocal  because  Buyer
failed to get  satisfactory  financing to close and consummate the  transactions
contemplated  herein,  then  Unocal  shall be  entitled  to keep and  retain the
Earnest Money Deposit as liquidated damages.

     (iv) If Unocal prevails in the arbitration  proceeding  regarding the value
of Material  Environmental  Deficiencies  pursuant to Section 4.10 (iii),  or if
Unocal  terminates under Section 13.1 (ii) for good cause, then Unocal shall, in
consideration  of holding the Assets off the market and refraining  from dealing
with others concerning the Assets and as liquidated damages in lieu of all other
damages,  retain the Earnest  Money  Deposit made by Buyer.  The Parties  hereby
acknowledge  that the extent of damages to Unocal  occasioned  by such breach or
default  or  failure  to  proceed  by Buyer  would be  impossible  or  extremely
impractical  to  ascertain  and that the  Earnest  Money  Deposit  is a fair and
reasonable estimate of such damages under the circumstances.  Provided, also, if
Buyer does not contest Unocal's  termination  under Section 13.1 (ii) by written
notification  within ten (10) days, or if Buyer terminates under Section 4.9 and
the  existence  of a  Material  Environmental  Deficiency  is  being  arbitrated
hereunder,  Unocal  shall be free to enjoy all rights of ownership of the Assets
and to sell, transfer,  encumber or otherwise dispose of the Assets to any party
without any restriction under this Agreement.
<PAGE>
     13.3 Specific Performance: If Closing does not occur as contemplated herein
by reason of Unocal's  determination  that Buyer has breached this  Agreement or
failed to satisfy a condition,  Buyer may contest  Unocal's  termination of this
Agreement and seek specific  performance of the Agreement,  provided it notifies
Unocal in writing of its election to seek specific  performance  within ten (10)
days of Unocal's notice of termination under Section 13.1 (ii). The losing Party
shall pay the prevailing  Party's costs and reasonable  attorney's fees together
with (i) in the case of the  Buyer  being the  losing  Party,  and  Buyer  shall
release any claims to(and Unocal shall  retain) the Earnest Money  Deposit,  and
(ii) in the case of Unocal  being the losing  Party,  Buyer shall be entitled to
specific performance,  subject to the other terms and provisions hereof, of this
Agreement.  This  Section  represents  Buyer's  sole and  exclusive  remedy with
respect to the matters covered hereby.





     14.1 Survival:  Notwithstanding  any  investigation  conducted by any Party
hereto and any information which any Party may receive,  a claim for a breach of
any of the representations, warranties or covenants contained in this Agreement,
or in any Exhibit, certificate, document or statement delivered pursuant hereto,
or pursuant to any  indemnification,  or of any third party claims under Section
14.3 (i) must be made within one (1) year following Closing; provided,  however,
that nothing in this  Section  shall be construed to limit the time for making a
claim by Unocal against, or seeking  indemnification  from, Buyer with regard to
Assumed Liabilities.

     14.2 Indemnification:

     (i) Except as otherwise set forth herein and except for Assumed Liabilities
of Buyer, Unocal shall indemnify and hold harmless Buyer, and its successors and
assigns,  against,  and in respect  of,  any and all  damages,  claims,  losses,
liabilities  and expenses,  including,  without  limitation,  reasonable  legal,
accounting  and  other  expenses,  which may  arise  out of:  (i) any  breach or
violation  of  this  Agreement  by  Unocal;  (ii)  any  breach  of  any  of  the
representations,  warranties or covenants made in this  Agreement by Unocal;  or
(iii) liabilities expressly retained by Unocal in this Agreement.

     (ii) Buyer  shall  indemnify  and hold  harmless  Unocal,  and its or their
successors and assigns, against, and in respect of, any and all damages, claims,
losses,  liabilities and expenses,  including,  without  limitation,  reasonable
legal, accounting and other expenses,  which may arise out of: (i) any breach or
violation  of  this  Agreement  by  Buyer;   (ii)  any  breach  of  any  of  the
representations,  warranties or covenants  made in this  Agreement by Buyer;  or
(iii) Assumed Liabilities of Buyer.

     14.3 Third Party Claims:

     (i) Except as otherwise set forth herein and except for Assumed Liabilities
of Buyer,  Unocal shall  indemnify and hold Buyer and its successors and assigns
harmless against any and all damages, claims, losses,  liabilities and expenses,
including, without limitation,  reasonable legal, accounting and other expenses,
arising out of any third party claim,  legal suit or proceeding  against  Buyer,
which claim, legal suit or proceeding arises from the conduct of the business of
Unocal or the ownership of the properties owned or leased by Unocal prior to the
Closing Date;  provided,  however,  that Unocal's indemnity obligation hereunder
shall be limited to the Adjusted Purchase Price.

     (ii) Buyer shall  indemnify and hold Unocal and its  successors and assigns
harmless against any and all damages, claims, losses,  liabilities and expenses,
including, without limitation,  reasonable legal, accounting and other expenses,
arising out of any third party legal suit or proceeding  against  Unocal,  which
legal suit or proceeding arises out of Assumed Liabilities,  or from the conduct
of the business of Buyer or the ownership of the  properties  owned or leased by
Buyer after the Closing Date.

     14.4  Method of  Asserting  Claims:  The Party  making a claim  under  this
Section, or any other indemnity provision herein, is hereinafter  referred to as
the  "Indemnified  Party" and the Party against whom such claims are asserted is
hereinafter  referred  to  as  the  "Indemnifying   Party".  All  claims  by  an
Indemnified Party shall be asserted and resolved as follows:

     (i) If any claim or demand for which an Indemnifying  Party would be liable
to an Indemnified  Party hereunder is asserted against or sought to be collected
from such Indemnified  Party by a third party,  such Indemnified  Party shall as
promptly as is practicable after its receipt of such claim or demand,  deliver a
Claim Notice to the Indemnifying Party;  provided,  however, that any failure to
give such notice will not waive any rights of the  Indemnified  Party  except to
the  extent  that  eithe the  rights  of the  Indemnifying  Party  are  actually
prejudiced  or such notice is not given within the  applicable  time periods set
forth in this Agreement.

     The  Indemnifying  Party may,  and upon  request of the  Indemnified  Party
shall,  retain counsel of its choice to represent the Indemnified  Party and any
others the Indemnifying  Party may reasonably  designate in connection with such
claim or demand and shall pay the fees and  disbursements  of such  counsel with
regard  thereto;  provided,  however,  that  any  Indemnified  Party  is  hereby
authorized  prior  to the  date on which it  receives  written  notice  from the
Indemnifying  Party  designating such counsel to retain counsel whose reasonable
fees and expenses shall be at the expense of the Indemnifying  Party to file any
action,  answer or other  pleading  and take such  other  action  which it shall
reasonably deem necessary to protect its interests or those of the  Indemnifying
Party until the date on which the  Indemnified  Party  receives such notice from
the Indemnifying Party.

     In the event that the  Indemnifying  Party shall retain such  counsel,  the
Indemnified  Party  shall have the right to retain its own  counsel but the fees
and expenses of such counsel  shall be at the expense of the  Indemnified  Party
unless:

     (a) the  Indemnifying  Party and the Indemnified  Party shall have mutually
agreed to the retention of such counsel; or

     (b) the named parties to any such  proceeding  (including,  but not limited
to,  any  impleaded  parties)  include  both  the  Indemnifying  Party  and  the
Indemnified  Party and  representation of both Parties by the same counsel would
involve such counsel in an actual or potential conflict of interest in violation
of applicable principles of professional ethics.

     (ii) If requested by the Indemnifying  Party, the Indemnified  Party agrees
to cooperate with the Indemnifying Party and its counsel in contesting any claim
or demand that the Indemnifying Party defends, or, if appropriate and related to
the claim in question,  in making any counterclaim  against the Person asserting
the third party claim or demand,  or any cross- complaint against any Person. If
the  Indemnifying  Party has  accepted  responsibility  in writing,  no claim or
demand that would result in an Indemnifying  Party being liable hereunder may be
settled without the consent of the Indemnifying Party which consent shall not be
unreasonably  withheld.  Unless the  Indemnifying  Party  shall  have  agreed in
writing that any and all damages to the Indemnified  Party related to a claim or
demand are fully covered by the indemnities  provided  herein,  no such claim or
demand may be  settled  without  the  consent of the  Indemnified  Party,  which
consent will not be  unreasonably  withheld.  Except with respect to settlements
entered into without the Indemnified Party's consent pursuant to the immediately
preceding  sentence,  to the extent it shall be determined  that the Indemnified
Party shall have no right  pursuant  to this  Section to be  indemnified  by the
Indemnifying Party, the Indemnified Party shall promptly pay to the Indemnifying
Party:

     (a) any amounts  previously paid or advanced by the  Indemnifying  Party to
the  Indemnified  Party with respect to such matters  pursuant to this  Section;
plus

     (b) interest  thereon until paid by the  Indemnified  Party at the Interest
Rate for the period  commencing  on the date on which it was finally  determined
that the Indemnified Party had no such right to be indemnified.

     (iii) In the event the  Indemnified  Party should have a claim  against the
Indemnifying  Party  hereunder  which does not  involve a claim or demand  being
asserted  against  or  sought  to be  collected  from it by a third  party,  the
Indemnified  Party shall as promptly as is  practical  send a Claim  Notice with
respect to such claim to the Indemnifying  Party;  provided,  however,  that any
failure to give such notice will not waive any rights of the  Indemnified  Party
except to the  extent  that  either  the  rights of the  Indemnifying  Party are
actually  prejudiced  or such  notice is not given  within the  applicable  time
periods  set forth in this  Agreement.  If the  Indemnifying  Party  notifies in
writing the Indemnified Party that it does not dispute such claim, the amount of
such claim shall be conclusively  deemed a liability of the  Indemnifying  Party
hereunder  and  shall  be  paid to the  Indemnified  Party  immediately.  If the
Indemnifying  Party disputes such claim,  such dispute shall be resolved by good
faith negotiations between the Parties.

     (iv)  From and after  the  delivery  of a Claim  Notice  hereunder,  at the
reasonable request of the Indemnifying  Party, the Indemnified Party shall grant
the Indemnifying Party and its  representatives  full and complete access to the
books,  records and properties of the Indemnified Party to the extent reasonably
related  to  the  matters  with  which  the  Claim  Notice  is  concerned.   The
Indemnifying Party will not, and shall require that its  representatives do not,
use (except in connection with suc Claim Notice) or disclose to any third Person
other than the Indemnifying Party's  representatives  (except as may be required
by law) any  information  obtained  that is designated  as  confidential  by the
Indemnified Party, unless such information is:

     (a)  generally  available  to the  public  other  than as the  result  of a
wrongful act or omission by the Indemnifying Party;

     (b) already within the knowledge of the Indemnifying Party;

     (c) available to the Indemnifying Party through other Sections herein, or

     (d) provided to the  Indemnifying  Party in writing by a third party who is
under no  obligation  to the  Indemnified  Party to protect the  confidentiality
thereof.
<PAGE>
     All such access shall be granted  during normal  business  hours,  shall be
subject to the normal safety  regulations of the Indemnified Party, and shall be
granted  under  conditions  that  will  not  interfere  with  the  business  and
operations of the Indemnified Party.  Nothing contained in this Section shall be
construed  to expand or reduce the  rights or  obligations  of the  Indemnifying
Party with respect to any information  previously  provided to the  Indemnifying
Party pursuant to any other confidentialit agreement.

     14.5 Right to Cure: Any Party that is obligated to indemnify, defend and/or
hold harmless any other Party pursuant to any provision of this Agreement  shall
have the  right to cure,  within a  reasonable  time and in a manner  reasonably
satisfactory  to  such  Indemnified  Party,  any  matter  giving  rise  to  such
obligation;  provided,  however,  that any such cure shall not relieve or reduce
any such obligation to the extent that such cure is inadequate.  The Indemnified
Party may, if there is no attempt to cure or if the cure is  inadequate,  expend
reasonable sums to cure,  which sums shall be reimbursed  together with interest
at the Interest Rate.




     15.1 Time of Essence: Time is expressly declared to be of the essence under
this Agreement.

     15.2  Place and Date:  Closing  shall  occur at  Unocal's  offices at 14141
Southwest Freeway, Sugar Land, Texas 77478 on or before 3:00 p.m., CST, December
31, 1998 ("Closing Date"), unless extended by agreement of the parties.

     15.3  Unocal's  Actions at Closing:  At Closing,  Unocal shall  perform the
following actions:

     (i) Unocal shall deliver to Buyer  herein-required  opinions of counsel and
certificates;

     (ii) Unocal shall execute and deliver to Buyer all required  instruments of
conveyance  and  sale,  including  a  Conveyance  and  Bill of Sale in the  form
attached hereto as Exhibit "K";

     (iii) Unocal shall (subject to the terms of applicable operating agreements
and other  provisions  hereof)  deliver  to Buyer  exclusive  possession  of the
Assets;

     (iv) Unocal shall, at or as promptly as reasonably  possible after Closing,
provide and make available to the Buyer, at Buyer's cost and expense, subject to
the attorney-client privilege,  photocopies of the following records relating to
the Assets to the extent  they are in Unocal's  possession:  lease  files;  unit
files;  lease contract files;  well files,  land files, oil and gas purchase and
sales contract  files;  and all  non-interpretative  geologic  information,  but
specifically  excluding any  information or data that Unocal is restricted  from
disclosing,  information  which is trade secret or  proprietary to Unocal and is
not part of the Assets and all other  records,  including,  but not  limited to,
corporate records,  computer programs and general tax records. Unocal shall also
provide  copies of all seismic  data  covering  the Assets  described in Exhibit
"I-1", subject to Buyer's execution of a Geophysical Data Licensing Agreement in
the  form of  Exhibit  "I"  covering  such  seismic  data,  that  Unocal  is not
contractually or otherwise legally restricted from disclosing. As to any seismic
data Unocal is  contractually or otherwise  legally  restricted from disclosing,
Buyer may prepare and provide  Unocal with documents  requesting  waivers of the
applicable  restrictions,  and Unocal  shall  forward  such  requests as well as
provide  Buyer such other  assistance  in  obtaining  waivers of the  applicable
restrictions as is reasonable  under the  circumstances.  If Buyer obtains,  via
license,  any or all seismic data described in Exhibit "I-1", the Purchase Price
shall be  increased  by the value  amount  corresponding  the  obtained  data in
Exhibit "I-1" ("Geophysical Seismic License Price"). Any data documents or other
information  provided or made  available  hereunder  or in  connection  with the
transactions  contemplated  herein is  provided  WITHOUT ANY  REPRESENTATION  OR
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,  INCLUDING,  WITHOUT LIMITATION, AS TO
THE ACCURACY OR COMPLETENESS OF THE INFORMATION  CONTAINED THEREIN, and shall be
at Buyer's sole risk and expense.  Any other  provision of this Agreement to the
contrary  notwithstanding,  Unocal  shall not  provide  Buyer with copies of any
records or data or access to any  records or data which  Unocal  cannot  legally
provide to Buyer because of third party restrictions on Unocal; and

     (v) Unocal shall deliver to Buyer a certificate  of a corporate  officer to
the effect that, as of the Closing  Date, it is not a foreign  person as defined
in the Internal  Revenue Code of 1986, as amended,  and Income Tax  Regulations,
such  certificate  to  be  substantially  in  the  form  described  in  Treasury
Regulation Section  1.1445-2(b)(2)(iii)(B)  or otherwise within the requirements
of Section 1.1445-2(b)(2) of that regulation.

     15.4  Buyer's  Actions at  Closing:  At Closing,  Buyer  shall  perform the
following actions:

     Buyer shall  execute and deliver to Unocal an  Assumption  Agreement in the
form attached hereto as Exhibit "L";

     Buyer shall execute and deliver to Unocal all herein  required  opinions of
counsel and certificates;

     Buyer shall pay Unocal the balance  remaining due of the Adjusted  Purchase
Price, plus or minus the Cash Settlement,

     Unocal and Buyer  acknowledge that if, for any reason,  Unocal is prevented
or prohibited by the Oklahoma  Corporation  Commission (or other local, state or
federal  governmental agency or body having  jurisdiction) from transferring any
of the wells  located in the  Cumberland  Field (up to an aggregate of 80 wells)
which are down,  shut-in,  temporarily  abandoned or other similar wells in this
Field unless and until such wells are plugged and  abandoned,  then (a) title to
such wells  shall  remain with  Unocal and shall not be deemed  transferred  and
assigned to Buyer (or, to the extent necessary,  such wells shall be re-assigned
and  re-transferred  to  Unocal by Buyer  after  receipt  of the  notice of such
prohibition or  restriction);  (b) Buyer shall pay and deliver to Unocal the P&A
Conversion  Price (if the notice of such  prohibition or restriction on transfer
is  received  prior to Closing,  then this  amount  shall be added as a positive
adjustment  to the Purchase  Price to be delivered at Closing,  if the notice is
received  after  closing,  then Buyer shall pay and deliver such P&A  Conversion
Price  within 10 days  after  Unocal  provides  written  notice to Buyer of such
prohibition or restriction),  provided,  however, that if less than all 80 wells
are  prohibited or  restricted  from  transfer,  then Buyer shall pay a pro rata
portion of the P&A Conversion  Price to Unocal (with such pro rata portion being
calculated as follows:  [P&A Conversion Price] x [(number of wells prohibited or
restricted from transfer)  divided by (80)]; (c) Unocal shall be responsible for
the Plugging and Abandonment  Obligations  only for such wells as are prohibited
or restricted from being transferred and assigned, but Buyer shall be liable for
any and all other Assumed  Liabilities  relating to these wells; (d) Buyer shall
provide  Unocal  Access to the Assets to  supervise  conduct  the  plugging  and
abandonment of these wells;  (e) as soon as reasonably  practicable  after these
wells have been plugged and  abandoned,  Unocal  shall  transfer and assign such
wells to Buyer, subject to and in accordance with the other terms and provisions
hereof.

     15.5  Closing  Statement:  Unocal and Buyer shall  execute a joint  closing
statement  acknowledging  the payment of the Adjusted  Purchase Price,  the Cash
Settlement, the transfer of the Assets, and the assumption of liabilities.

     15.6 Notices:  Immediately after Closing, Buyer shall notify all operators,
non-operators,  oil or gas  purchasers,  government  agencies and royalty owners
that it has purchased the Assets.


<PAGE>


     16.1 Final  Accounting:  Within 120 days after Closing Unocal shall provide
Buyer with a statement of accounting ("Final Accounting").  Buyer shall have the
right to cause its accountant,  in  consultation  with Unocal's  accountant,  to
review the Final  Accounting  within an  additional  thirty (30) days  following
Unocal's delivery of such notice. If Buyer's accountant and Unocal's  accountant
are unable to agree upon the Final Accounting  within an additional  thirty (30)
days following  completion of Buyer's review of the Final  Accounting  described
above,  then the two accountants  jointly shall select,  within such thirty (30)
day period,  an independent  accounting firm of national  reputation which shall
determine the final  accounting  as soon as reasonably  possible but in no event
later  than  180 days  after  Closing.  The  determination  by such  independent
accounting firm shall be conclusive.  The expense of such independent accounting
firm shall be borne one-half by Unocal and one-half by Buyer.

     16.2  Receipts  and  Credits:  The Final  Accounting  notwithstanding,  all
monies,  proceeds,  receipts,  credits and income attributable to the Assets for
all  periods  of time  subsequent  to the  Effective  Date  except as  otherwise
provided herein, shall be the sole property and entitlement of Buyer, and to the
extent  received  by Unocal,  Unocal  shall  account for and reflect the same to
Buyer in the Final Accounting after Closing. All monies, proceeds,  receipts and
income attributable to the Assets except as otherwise provided in this Agreement
for all periods of time prior to the  Effective  Date shall be the sole property
and  entitlement  of Unocal  and, to the extent  received by Buyer,  Buyer shall
fully  disclose,  account for and transmit same to Unocal  promptly.  All costs,
expenses and disbursements  attributable to the Assets for periods of time prior
to the Effective Date except as otherwise  provided  herein,  regardless of when
due or payable, shall be the sole obligation of Unocal and Unocal shall promptly
pay, or if paid by Buyer,  promptly  reimburse Buyer for and hold Buyer harmless
from and against same. All costs, expenses and disbursements attributable to the
Assets for periods of time  subsequent to the Effective Date  regardless of when
due or payable,  shall be the sole  obligation of Buyer and Buyer shall promptly
pay,  or if paid by  Unocal,  promptly  reimburse  Unocal  for and  hold  Unocal
harmless  from and against  same.  Unocal  shall be entitled to a credit for and
reimbursement  in an amount equal to any amount  received by Buyer after Closing
for any delivery or performance by Unocal prior to the Effective Date, and Buyer
shall be entitled to a credit for and  reimbursement  in an amount  equal to any
amount received by Unocal after Closing for any delivery or performance by Buyer
after the Effective Date.

     16.3  Suspended  Funds:  After the Closing,  Unocal will provide to Buyer a
listing  showing all proceeds  from  production  attributable  to the  Leasehold
Interests  which are currently  held in suspense and shall transfer to Buyer all
of those suspended proceeds.  Buyer shall be responsible for proper distribution
of all the suspended proceeds, to the extent turned over to it by Unocal, to the
parties  lawfully  entitled to them, and hereby agrees to indemnify,  defend and
hold harmless Unocal from and against any and all claims,  liabilities,  losses,
costs and expenses,  arising out of or relating to those  suspended  proceeds to
the extent turned over to it by Unocal.

     16.4 Further Assurances: After Closing, Unocal and Buyer agree to take such
further  actions  and to  execute,  acknowledge  and  deliver  all such  further
documents  that are  necessary  or useful in carrying  out the  purposes of this
Agreement or of any document delivered pursuant hereto.

     16.5 Post-Closing  Accounting:  Subsequent to Closing,  at Buyer's request,
Unocal shall have the option to continue performing  accounting  obligations for
the Assets for a period of time not to exceed six (6)  months.  Unocal  shall be
compensated  their  mutually  agreed  sum per  month for each  month or  portion
thereof  during  which Buyer  requests  such  assistance.  Unocal  shall have no
obligation to provide accounting assistance  post-Closing for any portion of the
Assets,  except as is reasonable  in good fait in a transaction  of this type to
transfer files and necessary information to Buyer.


     16.6  Recording:  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 thereby 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
Unocal, at Unocal's cost, with a true and accurate photocopy of all the recorded
and filed  assignments  within a reasonable period of time after their recording
and filing.

     16.7  Books  and  Records:   Notwithstanding  any  other  provision  herein
contained, Buyer shall retain all original documents, if any, delivered by Buyer
hereunder  which pertain to the Assets  (documents  delivered by Buyer hereunder
may be  maintained  on compact  discs) for as long as it so desires and make the
same  available  after the Closing for  inspection  and copying by Unocal during
normal business  hours,  upon  reasonable  request and upon  reasonable  notice;
provided,  however,  that  during the first ten (10 years  after  Closing,  such
books,  records or  documents  shall not be  disposed of or  destroyed  by Buyer
without  first  advising   Unocal  in  writing  and  giving  Unocal   reasonable
opportunity to obtain possession thereof.

     16.8 Access to Properties  and Records by: From and after the Closing Date,
Unocal will afford to Buyer and its authorized representatives reasonable access
during  normal  business  hours to the then current  officers  and  employees of
Unocal  retained by Unocal who were employed in  connection  with the Assets and
will  cooperate  with Buyer in making  available  to Buyer at  Buyer's  expense,
unless the action is an action by Buyer against Unocal, as a witness or deponent
such  employees  of Unocal in each  case only so long as such  persons  are then
employees  of  Unocal or an  Affiliate  of  Unocal,  as Buyer  may  request  for
financial reporting, tax or similar purposes,  purposes of investigating claims,
or conducting  litigation or  administrative  proceedings  with third parties or
government  agencies.  Unocal  will  also  afford  to Buyer  and its  authorized
representatives,  for appropriate purposes, such reasonable access during normal
business  hours to the  properties  and  relevant  books and  records  of Unocal
associated  with the Assets  prior to the Closing  Date but not  transferred  to
Buyer.

     16.9 Access to Properties  and Records by: From and after the Closing Date,
Buyer  will  afford  to Unocal  and its  authorized  representatives  reasonable
access, during normal business hours, to the transferred employees,  as shall at
such  time be  employees  of  Buyer  and who  were  prior  to the  Closing  Date
associated with the Assets,  and to such properties,  books and records relating
to the Assets transferred to Buyer hereunder without charge, and will furnish to
Unocal such additional information, and will cooperate with Unocal in such other
respects,  including the making available to Unocal at Unocal's expense,  unless
the action is an action by Unocal against  Buyer,  as a witness or deponent such
former employees of Unocal as shall be at the time employees of Buyer, as Unocal
may  request  for  financial  reporting,  tax or similar  purposes,  purposes of
investigating  claims, or conducting  litigation or  administrative  proceedings
with third parties or government  agencies.  Buyer will also provide to Unocal's
authorized  representatives  such reasonable access without charge during normal
business  hours  to the  officers,  employees,  properties,  books  and  records
transferred to Buyer in connection with this  Agreement.  In addition Buyer will
provide access to the Assets,  and Buyer will  cooperate  with other  reasonable
requests of Unocal,  in connection with any  investigation  of or procurement of
insurance  by Unocal  relating to the  Assets.  including,  without  limitation,
requests by Unocal (or its  insurer) of  financial,  operational,  environmental
compliance and other information of or relating to Buyer.
<PAGE>
                                   SECTION 17

                                  MISCELLANEOUS

     17.1 Governing Law: THIS AGREEMENT  SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA, WITHOUT REGARD TO CONFLICT OF
LAWS  PROVISIONS.  All assignments  and instruments  executed in accordance with
this Agreement  shall be governed by and interpreted in accordance with the laws
of the state where the Assets conveyed thereby are located.

     17.2 Assignment:

     (i) This Agreement and the rights and  obligations  hereunder  shall not be
assignable  by either  Party  hereto  without the prior  written  consent of the
other; provided, however, that Unocal and Buyer shall have the right without the
other  Party's  consent (but upon  written  notice to the other Party) to assign
this Agreement, but not the right to assign any duties or obligations hereunder,
to an Affiliate(s) or a subsidiary company. In addition, prior to Closing, Buyer
may (upon  written  notice to Unocal)  assign this  Agreement to an Affiliate of
Buyer, insofar as any assignment by Buyer shall in no way affect or diminish the
obligations  or  liabilities  of Buyer or, its ultimate  parent,  Magnum  Hunter
Resources, Inc. under the Guarantee described in Section 8.11 above.

     (ii) Any Party hereto may assign or delegate  any of its rights,  benefits,
duties or obligations hereunder: (i) to any Person, if it has received the prior
written consent of the other Party;  (ii) to its legal  successor,  if it merges
(whether or not it is the surviving corporation); or (iii) to any Person to whom
it  has  made  any  sale,  lease,  transfer  or  other  disposition  of  all  or
substantially all of its assets;  provided,  however,  that no Party may make an
assignment or delegation described in clauses (ii) and (iii), above, unless such
Party delivers to the other Party hereto such written assumptions,  affirmations
and/or  legal  opinions as such other Party may  reasonably  request to preserve
their rights and remedies hereunder.

     (iii) In the event of an approved assignment,  the rights, benefits, duties
and  obligations  of each Party  hereto  shall  inure to the  benefit of, and be
binding upon, each Party's successors, assigns or delegates.

     17.3 Written  Notices:  Any notices required to be given hereunder shall be
in writing and transmitted by telex or telecopier,  delivered by air courier, or
deposited in the mail,  postage prepaid and certified,  and addressed as follows
or as otherwise specified by Unocal and Buyer by notice hereunder:
<PAGE>
                                   To Unocal:

                         Union Oil Company of California
                             14141 Southwest Freeway
                              Houston, Texas 77478
                             Fax No. (281) 287-5170
                    Attention: Director, Business Development

                                 with a copy to:

                         Union Oil Company of California
                              dba Spirit Energy 76
                             14141 Southwest Freeway
                             Sugar Land, Texas 77476
                              Fax No. (281)287-7376
                  Attention: Vice President and General Counsel

                                    To Buyer:

                         Magnum Hunter Production, Inc.
                   600 East Las Colinas Boulevard, Suite 1200
                               Irving, Texas 75039
                             Attention: ___________
                             Fax No. (972) 401-3110

                    Notices shall be effective upon receipt.
<PAGE>
     17.4 Expenses:  Except as otherwise  provided  herein,  each Party shall be
solely  responsible  for all  expenses  incurred by it in  connection  with this
transaction (including without limitation,  fees and expenses of its own counsel
and accountants).

     17.5 Waiver of Compliance with Bulk Transfer Laws: Buyer waives  compliance
with any applicable bulk transfer law relating to the transactions  contemplated
by this  Agreement,  and agrees to assume all risk and  liability in  connection
with the failure to so comply.

     17.6 WAIVER OF CONSUMER  RIGHTS:  BUYER HEREBY  WAIVES ITS RIGHTS UNDER THE
DECEPTIVE  TRADE  PRACTICES - CONSUMER  PROTECTION  ACT,  SECTION 17.41 ET SEQ.,
BUSINESS  &  COMMERCE  CODE,  A LAW THAT  GIVES  CONSUMERS  SPECIAL  RIGHTS  AND
PROTECTIONS.  AFTER  CONSULTATION  WITH AN ATTORNEY OF ITS OWN SELECTION,  BUYER
VOLUNTARILY  CONSENTS TO THIS WAIVER.  IN ADDITION,  TO THE EXTENT APPLICABLE TO
THE ASSETS OR ANY PORTION  THEREOF,  BUYER HEREBY  WAIVES THE  PROVISIONS OF THE
TEXAS  CONSUMER  PROTECTION  LAWS  REGARDING  FALSE,  MISLEADING  AND  DECEPTIVE
BUSINESS PRACTICES,  UNCONSCIONABLE ACTIONS AND BREACHES OF WARRANTY;  PROVIDED,
HOWEVER,  THAT NOTHING HEREIN  CONTAINED SHALL BE DEEMED A WAIVER BY BUYER WHERE
SUCH WAIVER IS PROHIBITED BY LAW. IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH
WAIVER,  BUYER HEREBY REPRESENTS AND WARRANTS TO UNOCAL THAT BUYER (i) IS IN THE
BUSINESS OF SEEKING OR ACQUIRING,  BY PURCHASE OR LEASE,  GOODS, OR SERVICES FOR
COMMERCIAL  OR BUSINESS  USE,  (ii) HAS ASSETS OF FIVE  MILLION  DOLLARS OR MORE
ACCORDING TO IT MOST RECENT  FINANCIAL  STATEMENT  PREPARED IN  ACCORDANCE  WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,  (iii) HAS KNOWLEDGE AND EXPERIENCE IN
FINANCIAL  MATTERS  THAT  ENABLE  IT TO  EVALUATE  THE  MERITS  AND RISKS OF THE
TRANSACTION  CONTEMPLATED  HEREBY, AND (iv) IS NOT IN A SIGNIFICANTLY  DISPARATE
BARGAINING POSITION. Nothing in this Section shall be interpreted as a waiver of
the express representations and warranties in this Agreement.

     17.7 Waiver of Jury Trial: UNOCAL AND BUYER DO HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION,  SUIT OR OTHER LEGAL PROCEEDING BASED UPON,  ARISING OUT OF, OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     17.8 Limitation of Liability:  Notwithstanding  anything herein provided to
the contrary, Unocal and Buyer do hereby covenant and agree that, after Closing,
the recovery by either Party hereto of any damages suffered or incurred by it as
a result of any breach by the other Party of any of its  covenants,  agreements,
representations,  guaranties,  warranties,  disclaimers,  waivers or  continuing
obligations under this agreement shall be limited to the actual damages suffered
or  incurred  by the  non-  breachin  Party  as a result  of the  breach  by the
breaching  Party  of its  covenants,  agreements,  representations,  guaranties,
warranties, disclaimers, waivers, or continuing obligations hereunder plus costs
and  reasonable  attorney's  fees and in no event shall the  breaching  Party be
liable to the non-breaching  Party for consequential  damages as a result of the
breach  by  the   breaching   Party  of  any  of  its   covenants,   agreements,
representations,  guaranties,  warranties,  disclaimers,  waivers or  continuing
obligations hereunder;  provided, however that nothing herein contained shall be
deemed a limitation on either Party's  indemnity  obligations  contained in this
Agreement.

     17.9 No Admissions: Buyer and Unocal agree that neither this Agreement, nor
any part hereof,  nor any performance  under this Agreement,  nor any payment of
any amount  pursuant to any provision of this Agreement  shall  constitute or be
construed as a finding,  evidence of, or an admission or  acknowledgment  of any
liability,  fault, or past or present wrongdoing, or violation of any law, rule,
regulation,  or  policy,  by  either  Unocal  or Buyer  or by  their  respective
officers, directors, employees, or agents.

     17.10 Use of Unocal's  Name: As soon as practicable  after Closing,  and in
any event no later than 180 calendar days after  Closing,  Buyer shall remove or
cause to be removed  the names and marks used by Unocal and all  variations  and
derivations  thereof and logos  relating  thereto  from the Assets and shall not
make any use whatsoever of those names, marks and logos.

     17.11  Entire  Agreement,  Etc:  This  Agreement,  including  the  Exhibits
referred  to  herein  or   delivered   pursuant  to  this   Agreement   and  the
Confidentiality  Agreement,  which is  incorporated  herein by this reference as
though fully set forth hereby,  constitutes the entire agreement  between Unocal
and Buyer with respect to the subject  matter  hereof,  and supersedes all prior
oral or written agreements,  commitments or understandings with respect thereto.
No amendment of this Agreement shall be binding on the Parties unless in writing
and signed by the authorized  representatives of both Parties hereto. Any waiver
of any breach of any term or condition of this Agreement  shall not operate as a
waiver of any other  breach of such term or  condition  or of any other  term or
condition of this Agreement.

     17.12 Parties in Interest:  Nothing in this  Agreement,  whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement  on any  Persons  other  than the  Parties  to it and their  permitted
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge  the  obligation  or liability of any third  Persons to any
Party to this  Agreement,  nor shall any  provision  give any third  Persons any
right of subrogation or action over and against any Party to this Agreement.

     17.13 Severability:  If any provision of this Agreement shall be held to be
invalid or unenforceable  under present or future law in whole or in part by any
court of any  jurisdiction,  such provision shall, as to such  jurisdiction,  be
ineffective  to the  extent  of  such  invalidity  or  unenforceability  without
invalidating  the  remaining  provisions  of this  Agreement  or  affecting  the
validity or enforceability of such provisions in any other jurisdiction.

     17.14  Consents:  When a consent is required of either Party  hereto,  such
consent shall not be unreasonably withheld.






<PAGE>



     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

                                                Union Oil Company of California


                                          By:
                                                Attorney-in-Fact


                                                Magnum Hunter Production, Inc.


                                          By:
                                          Name:
                                          Title:


<PAGE>

                    AMENDMENT TO PURCHASE AND SALE AGREEMENT


     This AMENDMENT TO PURCHASE AND SALE AGREEMENT (hereinafter  "Amendment") is
executed this 28th day of December,  1998,  but effective for all purposes as of
November  25, 1998,  by and between  Union Oil Company of  California,  at 14141
Southwest  Freeway,   Sugar  Land,  Texas  77478  (hereinafter  referred  to  as
"Unocal"),  and MAGNUM  HUNTER  PRODUCTION,  INC.,  a Texas  corporation,  whose
address is 600 East Las  Colinas  Boulevard,  Suite  1200,  Irving,  Texas 75039
(herein referred to as "Buyer").

     WHEREAS,  reference  is  herein  made to that  certain  PURCHASE  AND  SALE
AGREEMENT  (hereinafter  "Purchase Agreement") dated as of November 25, 1998, by
and  between  Unocal  and  Buyer.  All  capitalized  terms  used  herein but not
otherwise  defined  shall have the meanings  attributed  to them in the Purchase
Agreement;

     WHEREAS,  Unocal and Buyer desire to make certain changes and amendments to
the Purchase Agreement, as set forth herein.

     NOW, THEREFORE,  for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby  acknowledged,  the parties hereby amend the Purchase Agreement
and agree as follows:


     1. Certain Elections; INDEMNITY:

     a. Elva Love #3.  Pursuant to that certain  proposal  letter dated November
18, 1998 from Oryx Energy Company ("Oryx"), Oryx proposed to drill the Elva Love
#3 Well ("EL3  Operations") in Harper County,  Oklahoma pursuant to the terms of
that certain Operating  Agreement dated October 1, 1956, between Sun Oil Company
and  Union  Oil  Company  of  California,  et al, as  amended,  ("EL3  Operating
Agreement").  But for Buyer's desire to have Unocal participate in this well and
Buyer's agreement  herein,  Unocal would not elect to consent to and participate
in the EL3 Operations.  Therefore, to the extent that Unocal consents to the EL3
Operations,  Buyer shall  indemnify,  defend and hold Unocal  harmless  from and
against any and all costs, charges,  fees, expenses (including,  but not limited
to,  attorney fees and court costs),  damages and any other  liabilities  of any
kind whatsoever relating to or arising from the EL3 Operations  (including,  but
not limited  to, any  charges  assessed  or  allocated  to Unocal  under the EL3
Operating Agreement);  provided however, that in the event that the transactions
contemplated under the Purchase Agreement are not consummated, then, insofar and
only insofar as the EL3 Operations are successful and Unocal  actually  receives
any proceeds from its share of the




<PAGE>
production  from  this  well,   Unocal  shall reimburse to Buyer,  only from the
proceeds from Unocal's  current working interest share of proceeds of production
actually received by Unocal from this well, up to an aggregate maximum amount of
200% of the amounts  indemnified and paid by Buyer under this Section (and after
such  payout,  Buyer shall have no further  right or interest in any proceeds or
production from said well).

     King #32B. Pursuant to that certain proposal letter dated November 18, 1998
from Sanguine Ltd.  ("Sanguine"),  Sanguine proposed to drill the King #32B Well
("K32B  Operations")  in Caddo  County,  Oklahoma  pursuant to the terms of that
certain Operating  Agreement dated June 6, 1980, between Sanguine Ltd.and Rocket
Oil Company, et al, as amended,  ("K32B Operating  Agreement").  But for Buyer's
desire to have Unocal  participate  in this well and Buyer's  agreement  herein,
Unocal  would not elect to consent to and  participate  in the K32B  Operations.
Therefore,  to the extent that Unocal  consents  to the K32B  Operations,  Buyer
shall  indemnify,  defend and hold Unocal  harmless from and against any and all
costs, charges, fees, expenses (including, but not limited to, attorney fees and
court costs),  damages and any other liabilities of any kind whatsoever relating
to or arising  from the K32B  Operations  (including,  but not  limited  to, any
charges  assessed or allocated to Unocal  under the K32B  Operating  Agreement);
provided however, that in the event that the transactions contemplated under the
Purchase  Agreement are not consummated,  then,  insofar and only insofar as the
K32B  Operations are successful and Unocal  actually  receives any proceeds from
its share of the  production  from this well,  Unocal shall  reimburse to Buyer,
only from the proceeds from Unocal's  current working interest share of proceeds
of  production  actually  received by Unocal fro this well,  up to an  aggregate
maximum amount of 400% of the amounts  indemnified  and paid by Buyer under this
Section (and after such payout, Buyer shall have no further right or interest in
any proceeds or production from said well).

     2. Designated  Operator:  Buyer hereby  designates its affiliated  company,
Gruy  Petroleum  Management  Co. (a wholly owned  subsidiary  of Buyer's  parent
company,  Magnum  Hunter  Resources,  Inc.) to operate  those Assets which would
otherwise have been operated by Buyer, provided,  however, that such designation
shall in no way relieve or release Buyer from any  obligations or liabilities to
Unocal under the Purchase Agreement. 

     3. Additional  Disclosures:  Exhibit H to the Purchase  Agreement is hereby
amended and supplemented to add reference to the following  disclosures:  (i) In
connection  with the Brewer  described in Section A(5) of Exhibit H, there was a
second complaint filed with the OCC (in addition to and similar to the complaint
described  in the this  Section of Exhibit H ) by Mr. Ray Brewer on October  14,
1998  (Incident No.  99-41095),  and (ii) Claude C. Arnold,  Trustee,  et al. v.
Unocal, et al., Case No.9 288, in  the District Court of Caddo County, Oklahoma,
filed on December 3, 1998 (this is a suit relating to gas balancing  and  Unocal
is  currently  in  settlement negotiations with the plaintiff)..


     4.  Ratification:  Except as expressly amended hereby, all of the terms and
provisions  of the Purchase  Agreement  are hereby  ratified and affirmed in all
respects and are incorporated herein by reference. 

     5. Entire Agreement: This Amendment constitutes the entire agreement of the
parties with regard to the subject  matter hereof and  supersedes any prior oral
or written  agreements  or  understandings.  This  amendment  may not be amended
except   through  a  written   agreement   executed  by  the   parties   hereto.

     Counterparts:  This Amendment may be executed in one or more  counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument. 

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written, but effective for all purposes as of November 25, 1998.

Union Oil Company of California

By: 
     Name: 
     Title: Attorney-in-Fact

MAGNUM HUNTER PRODUCTION, INC.

By: 
     Name: 
     Title:

<PAGE>

                 SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT


     This  SECOND   AMENDMENT  TO  PURCHASE  AND  SALE  AGREEMENT   (hereinafter
"Amendment") is executed this 31st day of December,  1998, but effective for all
purposes  as of  November  25,  1998,  by  and  between  Union  Oil  Company  of
California,  at 14141 Southwest  Freeway,  Sugar Land, Texas 77478  (hereinafter
referred  to  as  "Unocal"),  and  MAGNUM  HUNTER  PRODUCTION,   INC.,  a  Texas
corporation,  whose  address  is 600 East Las  Colinas  Boulevard,  Suite  1200,
Irving, Texas 75039 (herein referred to as "Buyer").

     WHEREAS,  reference  is  herein  made to that  certain  PURCHASE  AND  SALE
AGREEMENT  dated as of November 25, 1998,  by and between  Unocal and Buyer,  as
amended by that certain  Amendment to Purchase and Sale Agreement dated December
28,  1998(hereinafter  "Purchase Agreement").  All capitalized terms used herein
but not  otherwise  defined  shall have the meanings  attributed  to them in the
Purchase Agreement;

     WHEREAS,  Unocal and Buyer desire to make certain changes and amendments to
the Purchase Agreement, as set forth herein.

     NOW, THEREFORE,  for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby  acknowledged,  the parties hereby amend the Purchase Agreement
and agree as follows:


     1. Office Lease:  From and after  February 1, 1999,  Buyer agrees to assume
all  liabilities  and  obligations  in and under that certain office lease dated
commencing  on August 1,  1996,  between  Unocal  and Great  Western  Management
Corporation,  agent for MacArthur  Executive  Center,  covering the office space
located at Suite 300, MacArthur Executive Center, 5909 N.W. Expressway, Oklahoma
City,  Oklahoma  73132-5103.  In  connection  with this  assumption,  all of the
following,  to the extent  owned by Unocal and located at this  office,  will be
transferred  to Buyer on the same terms and conditions as if they had been added
to Exhibit "B"  attached to the Purchase  Agreement:  (i) office  furniture  and
fixtures (other than computers,  printers and other ancillary  equipment),  (ii)
file cabinets, (iii) copier, and (iv) fax machine.

     2. Scout Card  Library:  To the extent  that  Unocal is not  restricted  or
prohibited from  transferring  the same to Buyer,  all of the following,  to the
extent  owned by Unocal  and  located at either (i) the  concourse  of  Unocal's
offices located at 14141  Southwest  Freeway,  Sugar Land,  Texas 77478, or (ii)
Hayes storage management in Houston,  Texas, will be transferred to Buyer on the
same terms and conditions as if they had been added to Exhibit




<PAGE>


     "B" attached to the Purchase Agreement:  Unocal's historical  collection of
well scout tickets over many  Oklahoma  counties,  which have been  collected by
Pure Oil Company and Unocal  either by direct  purchase  from data  companies or
through Unocal representatives.

     3. DISCLAIMER:  All of the items described in Section 1 and Section 2 above
will be  transferred  and sold on an "AS IS," "WHERE IS" AND "WITH ALL FAULTS AS
TO ALL MATTERS," AND UNOCAL EXPRESSLY  DISCLAIMS AND NEGATES ANY  REPRESENTATION
OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE,
OR OTHERWISE  RELATING TO (a) THE CONDITION OF THESE ITEMS  (INCLUDING,  WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A
PARTICULAR  PURPOSE,  OR OF  CONFORMITY  TO MODELS OR SAMPLES OF  MATERIALS,  OR
ACCURACY OR COMPLETENESS OF ANY  INFORMATION OR DATA),  (b) ANY  INFRINGEMENT BY
UNOCAL  OF  ANY  PATENT  OR  PROPRIETARY  RIGHT  OF ANY  THIRD  PARTY,  (c)  ANY
INFORMATION,  DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR
ON BEHALF OF UNOCAL (INCLUDING WITHOUT LIMITATION,  IN RESPECT OF GEOLOGICAL AND
ENGINEERING DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER MINERAL RESERVES,
THE RECOVERABILITY OF OR THE COST OF RECOVERING ANY SUCH RESERVES,  THE VALUE OF
SUCH RESERVES,  ANY PRODUCT PRICING ASSUMPTIONS,  AND THE ABILITY TO SELL OIL OR
GAS  PRODUCTION  AFTER  CLOSING),  (d) THE  ENVIRONMENTAL  CONDITION  AND  OTHER
CONDITION OF THE ITEMS AND ANY  POTENTIAL  LIABILITY  ARISING FROM OR RELATED TO
THE ITEMS OR THE OFFICE LEASE, AND (e) THE FAILURE OF ANY COMPUTER, ELECTRONICS,
SOFTWARE,  OR  COMPONENTS TO BE FREE OF ANY BUGS OR ERRORS,  INCLUDING,  BUT NOT
LIMITED TO, ANY  DEFICIENCIES  RELATING TO THE  INABILITY  TO PROPERLY  FUNCTION
BEYOND DECEMBER 31, 1999.

     4. Title  Defects;  WAIVER  AND  RELEASE:  In  consideration  for  Unocal's
agreement to accept a one-time  downward  adjustment  to the  Purchase  Price at
Closing of (and the  Purchase  Price is hereby  reduced  by) an amount  equal to
FIFTY SIX THOUSAND  TWO HUNDRED AND SIXTY NINE DOLLARS AND NO/100  ($56,269.00),
BUYER HEREBY WAIVES AND RELEASES UNOCAL FROM ANY AND ALL CLAIMS (INCLUDING,  BUT
NOT LIMITED TO, CONTRACT,  COMMON-LAW,  TORT, OR CLAIMS ASSERTED UNDER ANY OTHER
THEORY OF  LIABILITY)  ARISING  FROM OR  RELATING  TO ANY AND ALL TITLE  DEFECTS
RELATING TO THE ASSETS, WHETHER KNOWN OR UNKNOWN, WHETHER ASSERTED OR UNASSERTED
AS OF THE DATE HEREOF,  REGARDLESS OF WHETHER CREATED OR ESTABLISHED BY, THROUGH
OR UNDER UNOCAL OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL ALLEGED
TITLE DEFECTS  DESCRIBED IN CORRESPONDENCE  FROM BUYER'S LEGAL COUNSEL,  ELLIS &
PREHN,  P.C.  Notwithstanding  that  Buyer has waived  and  released  any claims
regarding any Title Defects,  Unocal, for a period of 120 days after the Closing
shall  attempt to use  commercially  reasonable  efforts to  cooperate  with any
attempts of Buyer to cure those items described as possible Title Defects in the
letter  from Steve  Haworth,  with the lawfirm of Ellis & Prehn,  P.C.,  to Greg
Jessup (with Magnum Hunter Production,  Inc.) dated December 30, 1998 (a copy of
which was  provided to Unocal);  provided,  however,  that such  cooperation  by
Unocal  shall not  require  Unocal to  expend  or incur any  amounts  whatsoever
(unless  agreed to be paid or  reimbursed  by Buyer) or devote any  unreasonable
amount of time, determined in Unocal's sole discretion,  and Unocal shall not be
in any way liable or responsible if any attempts to cure any such items or Title
Defects fails for any reason whatsoever.

     5. Cumberland  Seismic Data License:  Pursuant to the terms of that certain
Cumberland  AMI/Exploration Agreement ("CAMIE Agreement") between Unocal and The
Quintin Little Company, Inc. ("QLC"), Unocal has a joint interest in certain 3-D
seismic data covering  certain acreage in the Cumberland Field in Oklahoma (such
data referred to in the CAMIE  Agreement as the 3-D Seismic Data). To the extent
that within five (5) year(s) after Closing, QLC provides any required consent or
approval for Unocal to license such 3-D Seismic Data, on a  non-exclusive  basis
and on terms comparable (in Unocal's sole  determination)  to those set forth in
the form of Geophysical  Data License  Agreement  attached as Exhibit "I" to the
Purchase Agreement,  then to the extent that Unocal continues to own an interest
therein, Unocal would agree to license the same to Buyer on such terms and waive
any license fee that Unocal would  otherwise be entitled to in  connection  with
such non-exclusive  license;  provided,  however, that notwithstanding  anything
stated herein to the contrary,  nothing herein shall be deemed a  representation
or warranty  that QLC will  provide any such  required  consent or approval  and
nothing herein shall be deemed a waiver,  release,  reduction,  or diminution of
any rights of QLC,  including,  but not  limited to, the right of QLC to any fee
that QLC may be entitled to in connection with any such license.

     6. Certain  Cumberland  Wells:  It is currently  known that six wells in or
near the  Cumberland  Field have recently  failed certain  mechanical  integrity
tests. Of these six wells, five wells were previously inactive wells and one was
an active salt-water  injection well ("Injection Well"). With regard to the five
previously  inactive  wells and any other wells that may fail  similar  tests in
connection  with  this  proposed  sale to Buyer,  if,  after  the  Closing,  the
applicable  Oklahoma  governmental  authority prohibits or restricts transfer of
these wells unless or until they are plugged and  abandoned,  then there will be
an adjustment and payment by Buyer in the manner and amount  contemplated  under
Section  15.4(iv)  within  thirty  (30) days after  receipt of notice  from such
Oklahoma  governmental  authority  stating that such  transfer is  restricted or
prohibited.  With regard to the  Injection  Well,  if,  after the  Closing,  the
applicable  Oklahoma  governmental  authority prohibits or restricts transfer of
this well until such well is either plugged and abandoned or repaired,  then (i)
to the extent  that Buyer would  prefer  this well to be plugged and  abandoned,
then Buyer shall provide Unocal written notice of this and tender the payment to
Unocal for such well in the same manner and amount  contemplated  under  Section
15.4(iv)  within  thirty (30) days after  receipt of notice  from such  Oklahoma
governmental  authority  stating that such transfer is restricted or prohibited,
or (ii) to the extent that Buyer would  prefer  this well to be  repaired,  then
Buyer shall provide  Unocal written notice of this within thirty (30) days after
receipt of notice from such Oklahoma  governmental  authority  stating that such
transfer is restricted or prohibited,  and Buyer shall thereafter assume and pay
(or reimburse Unocal) for all costs and expenses relating to the repair thereof.

     7.  Ratification:  Except as expressly amended hereby, all of the terms and
provisions  of the Purchase  Agreement  are hereby  ratified and affirmed in all
respects and are incorporated herein by reference. 

     8. Entire Agreement: This Amendment constitutes the entire agreement of the
parties with regard to the subject  matter hereof and  supersedes any prior oral
or written  agreements  or  understandings.  This  amendment  may not be amended
except   through  a  written   agreement   executed  by  the   parties   hereto.


     9.   Counterparts:   This   Amendment  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. 


     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written, but effective for all purposes as of November 25, 1998.

                                        Union Oil Company of California


                                  By:
                                  Name:
                                  Title:   Attorney-in-Fact


                                        MAGNUM HUNTER PRODUCTION, INC.


                                  By:
                                  Name:
                                  Title:



<PAGE>


                 THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT


     This  THIRD   AMENDMENT  TO  PURCHASE  AND  SALE   AGREEMENT   (hereinafter
"Amendment") is executed this ____ day of February,  1999, but effective for all
purposes  as of  February  __,  1999,  by  and  between  Union  Oil  Company  of
California,  at 14141 Southwest  Freeway,  Sugar Land, Texas 77478  (hereinafter
referred  to  as  "Unocal"),  and  MAGNUM  HUNTER  PRODUCTION,   INC.,  a  Texas
corporation,  whose  address  is 600 East Las  Colinas  Boulevard,  Suite  1200,
Irving, Texas 75039 (herein referred to as "Buyer").

     WHEREAS,  reference  is  herein  made to that  certain  PURCHASE  AND  SALE
AGREEMENT  dated as of November 25, 1998,  by and between  Unocal and Buyer,  as
amended by that certain  Amendment to Purchase and Sale Agreement dated December
28, 1998, and as further  amended by that certain  Second  Amendment to Purchase
And Sale Agreement dated December 31, 1998 (hereinafter  "Purchase  Agreement").
All  capitalized  terms used  herein but not  otherwise  defined  shall have the
meanings attributed to them in the Purchase Agreement;

     WHEREAS,  Unocal and Buyer desire to make certain changes and amendments to
the Purchase Agreement, as set forth herein.

     NOW, THEREFORE,  for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby  acknowledged,  the parties hereby amend the Purchase Agreement
and agree as follows:

     1.  Certain  Little 100-7  groundwater  testing.  Notwithstanding  that the
following  would not constitute a Qualified  Claim under the Purchase  Agreement
(as they are not actual  Remediation  Costs  incurred  to  satisfy  unaffiliated
third-party or governmental claims of an unknown  Environmental  Liability which
Accrued  prior to the  Effective  Date and which have been  asserted  within the
6-month period after the Closing  Date):  Unocal and Buyer hereby agree that (i)
Unocal will conduct  testing to evaluate the  condition  of  groundwater  at the
Little 100-7 wellsite through a consultant or contractor of its selection;  (ii)
Unocal will control, direct the scope of, and supervise,  the testing activities
with regard to the Little 100- 7 wellsite;  (iii) Unocal will  communicate  with
Buyer  regarding  procedures and costs relating to, and access to the Assets for
purposes of  controlling  and  supervising,  the testing of  groundwater  at the
Little 100-7 wellsite. (iv) all of the costs, expenses, charges, fees, and other
amounts  attributable  to the testing shall be allocated and satisfied by Unocal
and the Buyer on a 50:50  basis--one-half  by Buyer and  one-half by Unocal (and
Buyer will pay or  reimburse  Unocal for 50% of each dollar  spent or  liability
incurred by Unocal for such costs, expenses, charges, fees, and other amounts in
connection  with the  testing  of  groundwater  at the Little  100-7  wellsite);
provided,  however, that notwithstanding anything stated herein to the contrary,
Unocal's  aggregate   liability  under  this  Section  (together  with  Unocal's
aggregate liability for any and all Qualified Claims) shall not exceed the


<PAGE>


aggregate  limitations  set  forth  in  Section  4.7(iii)  of the  Purchase
Agreement.

     3.   Ratification.   Except  as  expressly  amended  herein,  the  Purchase
Agreement,  as amended by this Agreement, is hereby ratified and affirmed in all
respects.

     4. Governing Law: THIS  AGREEMENT  SHALL BE GOVERNED BY AND  INTERPRETED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF OKLAHOMA,  WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS.

     5. Entire  Agreement;  Amendments:  This Agreement,  constitutes the entire
agreement  between  Unocal and Buyer with respect to the subject  matter hereof,
and   supersedes   all  prior  oral  or  written   agreements,   commitments  or
understandings  with respect  thereto.  No amendment of this Agreement  shall be
binding  on  the  Parties  unless  in  writing  and  signed  by  the  authorized
representatives  of both Parties hereto. Any waiver of any breach of any term or
condition of this Agreement shall not operate as a waiver of any other breach of
such term or condition or of any other term or condition of this Agreement.

     6.   Counterparts:   This   Amendment  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

Union Oil Company of California


By: ____________________________  Date: ________________
Name: __________________________
Title:   Attorney-in-Fact


Magnum Hunter Production, Inc.


By: ____________________________  Date: _________________
Name: __________________________
Title: _________________________