EXHIBIT 10.1

                             AMENDED AND RESTATED
                         LIMITED PARTNERSHIP AGREEMENT
                             OF CORAL ENERGY, L.P.

                          (DATED AS OF APRIL 1, 1997)

THE INTERESTS DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS (THE "ACTS").
SUCH INTERESTS ARE BEING OFFERED AND SOLD FOR INVESTMENT AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
INTERESTS UNDER THE ACTS OR AN EXEMPTION THEREFROM UNDER THE ACTS.
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                               TABLE OF CONTENTS


ARTICLE I     DEFINITIONS....................................................3
              1.1 Definitions................................................3
              1.2 Other Defined Terms.......................................18
              1.3 Construction..............................................18
              1.4 References................................................19

ARTICLE II    FORMATION, NAME, PURPOSES AND OFFICES.........................19
              2.1 Organization..............................................19
              2.2 Partnership Name..........................................19
              2.3 Purposes..................................................19
              2.4 Registered Office; Principal Office.......................20
              2.5 Term......................................................20
              2.6 Filings...................................................20
              2.7 Independent Activities....................................20
              2.8 Powers....................................................21
              2.9 Subsidiaries..............................................21

ARTICLE III   PARTNERS' CAPITAL CONTRIBUTIONS AND SHIFTS IN
              EQUITY SHARES.................................................21
              3.1 Capital Contributions.....................................21
              3.2 Capital Contributions of the Partners.....................21
              3.3 True-up of Value of Economic Interests Contributed........22
              3.4 Additional Funding........................................25
              3.5 Capital Accounts..........................................27
              3.6 Partnership Preferred Return Determination Prompted by
                  Unanticipated Change in Volume............................30
              3.7 Other Matters.............................................33

ARTICLE IV    DISTRIBUTIONS.................................................34
              4.1 Distributions.............................................34
              4.2 General Rule..............................................34
              4.3 Distribution of Portfolio Earnings........................35
              4.4 Tax Distributions.........................................35
              4.5 Special Distributions.....................................36

ARTICLE V     ALLOCATIONS...................................................36
              5.1 Allocations of Income and Loss............................36
              5.2 Allocations of Portfolio Earnings.........................36
              5.3 Special Allocations.......................................37
              5.4 Regulatory Allocations....................................38
              5.5 Curative Allocations......................................40
              5.6 Other Allocation Rules....................................41
              5.7 Allocations for Tax Purposes..............................42

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ARTICLE VI   MANAGEMENT OF THE PARTNERSHIP..................................45
             6.1  Board.....................................................45
             6.2  Officers..................................................49
             6.3  Powers Reserved to General Partners.......................50
             6.4  Resolution of Deadlock....................................53
             6.5  Duties, Rights and Obligations of Partners................54
             6.6  Indemnification of the General Partner....................55
             6.7  Partnership Accounts......................................56
             6.8  Approval by Limited Partners..............................56
             6.9  Reliance by Third Parties.................................56
             6.10 Transactions with Partners................................56

ARTICLE VII  BOOKS AND RECORDS..............................................56
             7.1  Books and Records; Periodic Reporting.....................56
             7.2  Right to Inspection.......................................58
             7.3  Tax Matters Partner.......................................58
             7.4  Tax Elections.............................................59

ARTICLE VIII TRANSFER; ADMISSION AND WITHDRAWAL OF PARTNERS.................59
             8.1  Restrictions on Transfer..................................59
             8.2  Transfer to Affiliate or Transfer with Consent............60
             8.3  "First Look" Transfers After Exit Date....................60
             8.4  "Last Look" Transfers After Exit Date.....................61
             8.5  Partnership Interest Retirement Option....................62
             8.6  Admission of New Limited Partners.........................63
             8.7  Change of Control.........................................64
             8.8  Withdrawal of a Partner...................................66
             8.9  Substitute Partners.......................................66
             8.10 Effect of Disposition.....................................67
             8.11 Effect of Noncompliance...................................67
             8.12 Effect on Supply Agreements...............................67

ARTICLE IX   DISSOLUTION OF PARTNERSHIP.....................................68
             9.1  Dissolution Events........................................68
             9.2  Reconstitution of the Partnership.........................70
             9.3  Salmon Purchase Option....................................70

ARTICLE X    LIQUIDATION OF THE PARTNERSHIP.................................71
             10.1 Liquidation...............................................71
             10.2 Compliance With Timing Requirements of Regulations........72
             10.3 Deemed Distribution and Reconstitution....................72
             10.4 Rights of Limited Partners................................72

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CONFIDENTIAL TREATMENT.  (NOTE: * INDICATES OMITTED MATERIAL FOR
WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.)

ARTICLE XI   REPRESENTATIONS OF LIMITED PARTNERS;
              INDEMNIFICATION................................................73
             11.1 Representations of Limited Partners........................73
             11.2 Indemnification............................................74
             11.3 Net Worth Maintenance......................................75

ARTICLE XII   MISCELLANEOUS..................................................75
             12.1  *.........................................................75
             12.2  Additional Documents and Acts.............................75
             12.3  Governing Law.............................................75
             12.4  Severability..............................................75
             12.5  Binding Effect............................................75
             12.6  Agreement Restricted to Partners..........................76
             12.7  Counterparts..............................................76
             12.8  Power of Attorney; Amendments.............................76
             12.9  Notices...................................................76
             12.10 Binding Arbitration.......................................77
             12.11 Confidential Information..................................79
             12.12 Waiver of Consequential and Punitive Damages; Express
                    Negligence...............................................80
             12.13 Conflicts with Initial Agreements.........................81
             12.14 Merger....................................................81

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EXHIBITS

  A1 - Initial Capital Contributions in 1995
  A2 - List of Original Partners
  A3 - Agreed Value of Contributed Contracts at January 1, 1997
  A4 - Salmon GP and LP Capital Contributions
  B -  Initial Agreements
  C -  Shell LP1 Economic Interest Contributions
  D -  Tejas LP1 Economic Interest Contributions
  E -  Projected Sales Margins of Shell LP1 Economic Interest Contributions
  F -  Projected Sales Volumes of Tejas LP1 Economic Interest Contributions
  G -  Initial Business Plan [See Section 3.6(a)]
  H -  Salmon Volume Projections [See Section 3.6(a)]
  I -  Capital Accounts opening balance and Partnership Percentages at 
         April 1, 1997
  J -  Definition of Applicable Amount

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THE INTERESTS DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS (THE "ACTS").
SUCH INTERESTS ARE BEING OFFERED AND SOLD FOR INVESTMENT AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
INTERESTS UNDER THE ACTS OR AN EXEMPTION THEREFROM UNDER THE ACTS.

                             AMENDED AND RESTATED
                       LIMITED PARTNERSHIP AGREEMENT OF
                              CORAL ENERGY, L.P.

      THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
("AGREEMENT") of Coral Energy, L.P. (the "PARTNERSHIP"), shall be effective as
of April 1, 1997 (the "EFFECTIVE DATE"), by and among Shell Coral Resources GP
Company ("Shell GP"), formerly known as Shell Gas Marketing Company, a Delaware
corporation, Tejas Coral GP Company, formerly known as Tejas Alliance GP
Company, a Delaware corporation ("Tejas GP"), Salmon Holdings, Inc. ("Salmon
GP"), a Delaware corporation, each as a general partner of the Partnership,
Shell Coral Investment Company ("SCIC"), formerly known as Shell Gas Investment
Company, a Delaware corporation, and Shell Coral Resources Company ("SCRC") a
Delaware corporation, Tejas Coral Resources Company, formerly known as Tejas
Alliance Resources Company ("TCRC"), a Delaware corporation, Tejas Coral Energy
Company, formerly known as Tejas Alliance Energy Company ("TCEC") a Delaware
corporation, and Salmon Resources Ltd. ("Salmon LP"), a Wyoming corporation, as
limited partners (together the "Parties").

                                   RECITALS:

      WHEREAS, subsidiaries and affiliates of, respectively, Tejas Gas
Corporation and Shell Oil Company, as more specifically described in EXHIBIT A2
to this Agreement, have formed the Partnership pursuant to the terms of the
Limited Partnership Agreement (the "Original Partnership Agreement") of the
Partnership dated as of September 1, 1995, for the purpose (without limitation
by this recital) of buying and selling natural gas, natural gas liquids and
electricity, engaging in the derivatives business and the financing of natural
gas, natural gas liquids, and electricity development projects, all of the
foregoing to be pursued throughout the United States, Canada, and Mexico;

      WHEREAS, Shell GP and Tejas GP are the general partners in the Partnership
as of December 31, 1996;

      WHEREAS, with effect from November 1, 1995, SOI and SWEPI (as such terms
are defined in EXHIBIT A2) each transferred their limited partnership Interests
in the Partnership to Shell Coral Resources Holdings, Inc. ("SCRHI");

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      WHEREAS, with effect from November 1, 1995, SCRHI transferred its limited
partnership Interest in the Partnership to Shell Gas Trading Company ("SGTC");

      WHEREAS, with effect from December 31, 1995, the entities comprising Tejas
LP1, as such term is defined in EXHIBIT A2 to this Agreement, each transferred
their respective limited partnership Interests in the Partnership to Tejas Coral
Holding Company ("TCHC"), formerly known as Tejas Alliance Holding Company;

      WHEREAS, with effect from December 31, 1995, TCHC transferred its limited
partnership Interest in the Partnership to TCEC;

      WHEREAS, with effect from December 31, 1995, SGTC transferred its Interest
in profits, but not capital, arising from its limited partnership Interest in
the Partnership to SCRC;

      WHEREAS, with effect from January 1, 1997, SGTC transferred its remaining
Partnership Interest to SCRC;

      WHEREAS, with effect from January 1, 1997, (i) Shell GP sold a 0.16-23rds%
general partnership Interest in the Partnership to Tejas GP, (ii) SCIC sold a
0.8696% limited partnership Interest to Tejas LP2 and (iii) SCRC sold a 15.6304%
limited partnership Interest in the Partnership to Tejas LP2, in each case in
accordance with the terms of the Sale and Purchase Agreement entered into
between all of these corporations dated as of January 1, 1997;

      WHEREAS, the Limited Partners in the Partnership as of January 1, 1997,
are therefore SCIC, SCRC, TCRC and TCEC;

      WHEREAS, SGTC and the Parties, other than Salmon GP and Salmon LP, entered
into a First Amendment Agreement (the "First Amendment Agreement") to the
Original Partnership Agreement dated as of April 3, 1996, amending certain of
the provisions of the Original Partnership Agreement with effect from November
1, 1995;

      WHEREAS, SGTC and the Parties, other than Salmon GP and Salmon LP, entered
into a Second Amendment Agreement (the "Second Amendment Agreement") to the
Original Partnership Agreement dated as of April 10, 1996, amending certain of
the provisions of the Original Partnership Agreement with effect from November
1, 1995;

      WHEREAS, in order to change the name of the Partnership from Coral Energy
Resources, L.P. to Coral Energy, L.P., SGTC and the Parties, other than Salmon
GP and Salmon LP, entered into a Third Amendment Agreement dated as of June 3,
1996, amending certain of the provisions of the Original Partnership Agreement;

                                    -2-
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CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

      WHEREAS, Salmon GP and Salmon LP now wish to participate in the
Partnership as a general partner and as a limited partner respectively with
effect from the Effective Date and accordingly have agreed to adhere to the
Original Partnership Agreement as amended and set forth in full in this
Agreement; and

      WHEREAS, references to Shell GP, Tejas GP, Salmon GP, SCIC, SCRC, TCRC,
TCEC and Salmon LP herein shall also refer to any successor to their respective
Interests (as herein defined).

      NOW, THEREFORE, in consideration of the mutual undertakings and agreements
in this Agreement, the Parties agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

      1.1 DEFINITIONS. In addition to the defined terms set forth above, the
following capitalized terms shall have the following meanings when used in this
Agreement:

            (a) ""*" CREDIT RATING" means a credit rating of "*" or above from
      Standard & Poor's or "*" or above from Moody's Investor Service.

            (b) "ACCOUNTANTS" means the independent accounting firm retained by
      the Board to audit the financial statements of the Partnership.

            (c) "ACT" means the Delaware Revised Uniform Limited Partnership
      Act, Title 6, Chapter 17 of the Delaware Code, as amended from time to
      time (or any corresponding provisions of succeeding law).

            (d) "ADDITIONAL CAPITAL CONTRIBUTION" means any Capital Contribution
      by a Partner other than its initial Capital Contributions.

            (e) "ADDITIONAL PARTNERS" means any Partner acquiring a newly
      created Interest after April 1, 1997.

            (f) "ADJUSTED CAPITAL ACCOUNT" means, with respect to any Limited
      Partner, the balance in such Limited Partner's Capital Account as of the
      end of the relevant Fiscal Year, after giving effect to the following
      adjustments:

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                  (i) Credit to such Capital Account the maximum amount which
            such Limited Partner could then be obligated to restore pursuant to
            any provision of this Agreement or is deemed to be obligated to
            restore pursuant to the penultimate sentences of Sections
            1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations;

                  (ii) Debit to such Capital Account the items described in
            Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
            1.704- 1(b)(2)(ii)(d)(6) of the Regulations.

      The foregoing definition of Adjusted Capital Account is intended to comply
      with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and
      shall be interpreted consistently therewith. The Adjusted Capital Account
      in respect of an interest held by a Limited Partner shall be the amount
      which such Adjusted Capital Account would be if such interest in the
      Partnership was the only interest in the Partnership held by a Limited
      Partner.

            (g) "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
      Limited Partner, the deficit balance, if any, in such Limited Partner's
      Adjusted Capital Account.

            (h) "ADJUSTED PROPERTY" means any property the Carrying Value of
      which has been adjusted pursuant to SECTION 3.5(b) OR 3.5(c). Once an
      Adjusted Property is deemed distributed by, and recontributed to, the
      Partnership for federal income tax purposes upon a termination thereof
      pursuant to Section 708 of the Code, such property shall thereafter
      constitute a Contributed Property until the Carrying Value of such
      property is subsequently adjusted pursuant to SECTION 3.5(b) OR 3.5(c).

            (i) "AFFILIATE" means, with respect to any Person, any Person
      controlling, controlled by or under common control with such Person, with
      the concept of control in such context meaning the possession, directly or
      indirectly, of the power to direct the management and policies of another,
      whether through the ownership of voting securities, by contract or
      otherwise.

            (j) "AGGREGATE APPLICABLE AMOUNT" has the meaning ascribed to such
      term on EXHIBIT J hereto.

            (k) "AGREED VALUE" of any Contributed Property means the fair market
      value of such property or other consideration at the time of contribution
      as determined by the Board using such reasonable method of valuation as it
      may adopt. The Board shall, in its sole discretion, use such method as it
      deems reasonable and appropriate to allocate the aggregate Agreed Value of
      Contributed Properties contributed to the Partnership in a single or
      integrated transaction among each separate property on a basis
      proportional to the fair market value of each Contributed Property.

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            (l)   "APPLICABLE AMOUNT" has the meaning ascribed to such term on
      EXHIBIT J hereto.

            (m)   "Asset Purchase Agreement" means the Asset Purchase Agreement
      dated April 1, 1997 between Salmon Resources Ltd. and the Partnership.

            (n) "BOARD" has the meaning ascribed to such term in SECTION 6.1(a).

            (o) "BOOK-TAX DISPARITY" means with respect to any item of
      Contributed Property or Adjusted Property, as of the Date of
      Determination, the difference between the Carrying Value of such
      Contributed Property or Adjusted Property and the adjusted basis thereof
      for federal income tax purposes as of such date. A Partner's share of the
      Partnership's Book-Tax Disparities in all of its Contributed Property and
      Adjusted Property will be reflected by the difference between such
      Partner's Capital Account balance as maintained pursuant to SECTION 3.5
      and the hypothetical balance of such Partner's Capital Account computed as
      if it had been maintained strictly in accordance with federal income tax
      accounting principles.

            (p) "BREAK-UP VALUE" means the cash plus fair market value of
      contracts and other assets (net of any liabilities and net of any debt
      encumbering such assets) that would be received by the Requesting Partner
      Group from a liquidation of the Partnership in accordance with ARTICLE X,
      following a dissolution in accordance with ARTICLE IX.

            (q) "BUSINESS DAY" means any day upon which national banks are open
      for business in the city of Houston, Texas.

            (r) "BUSINESS PLAN" means a document setting forth the Partnership's
      strategy, profit plan, marketing and trading plan, financing and
      capitalization plan, capital expenditures budget and expense budget, as
      approved by the Board. The initial Business Plan is attached as EXHIBIT G.

            (s) "CANADA" means the nation of Canada and each of its Provinces
      and territories, including without limitation, Quebec and Indian
      territories, reservations, and/or nations, whether or not any of the
      foregoing shall secede, become independent or otherwise change its
      relationship with the nation of Canada, together with the government of
      Canada and "Canadian" shall be construed accordingly.

            (t) "CAPITAL ACCOUNT" means the Capital Account maintained for each
      Partner pursuant to SECTION 3.5.

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CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            (u) "CAPITAL CHARGE" means an amount computed on the applicable
      outstanding balance, from time to time, at the rate of * per annum,
      pretax.

            (v) "CAPITAL CONTRIBUTIONS" means, with respect to any Partner, the
      amount of money, in cash, and the initial Net Agreed Value of any property
      (other than money) contributed to the Partnership with respect to the
      interest in the Partnership held by such Partner. Loans to the Partnership
      shall not be considered Capital Contributions or included in the Capital
      Account of any Partner. The principal amount of a promissory note which is
      not readily traded on an established securities market and which is
      contributed to the Partnership by the maker of the note (or a Partner
      related to the maker of the note within the meaning of Section
      1.704-1(b)(2)(ii)(c) of the Regulations) shall not be included in the
      Capital Account of any Partner until the Partnership makes a taxable
      disposition of the note or until (and to the extent) principal payments
      are made on the note, all in accordance with Section
      1.704-1(b)(2)(iv)(d)(2) of the Regulations.

            (w) "CARRYING VALUE" means (i) with respect to a Contributed
      Property, the Agreed Value of such property reduced (but not below zero)
      by all depreciation, amortization and cost recovery deductions charged to
      the Partners' Capital Accounts in respect of such Contributed Property and
      (ii) with respect to any other Partnership property, the adjusted basis of
      such property for federal income tax purposes, all as of the Date of
      Determination. The Carrying Value of any property shall be adjusted from
      time to time in accordance with SECTIONS 3.5(b) AND 3.5(c) and to reflect
      changes, additions or other adjustments to the Carrying Value for
      dispositions and acquisitions of Partnership properties, as approved by
      the General Partners.

            (x) "CASH CONTRIBUTION EQUIVALENT" means the amount of additional
      cash equity that would be required by the Partnership to achieve the same
      objective, were the credit support not to be provided.

            (y) "CEC" means Coral Energy Canada Inc., an entity continued under
      the laws of Alberta, Canada.

            (z) "CEC HOLDINGS" means Coral Energy Canada Holdings Inc., an
      entity formed under the laws of Alberta, Canada.

            (aa) "CEC SUPPLY AGREEMENT" means the Gas Sale and Purchase Contract
      between CEC and the Partnership and any and all renewals, extensions,
      amendments, and successors thereto.

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            (ab)  "CEO" has the meaning ascribed to such term in SECTION 6.2.

            (ac) "CERTIFICATE" means the Certificate of Limited Partnership of
      the Partnership as amended from time to time filed in the Office of the
      Secretary of State of Delaware.

            (ad) "CLASS A COMMON STOCK" means the Class A Common Stock issued by
      CEC Holdings and held by the Partnership.

            (ae) "CLASS B COMMON STOCK" means the Class B Common Stock issued by
      CEC Holdings and held by the Partnership.

            (af)  "CODE" means the Internal Revenue Code of 1986, as amended.

            (ag) "COMMITTED VOLUMES" (i) in the case of gas supplied by a member
      of the Salmon U.S. Partner Group, means the A-Line Quantity (as defined in
      the Supply Agreement with such member) in effect at the time and (ii) in
      the case of gas supply by any member of the Shell Partner Group or the
      Tejas Partner Group, means volumes of natural gas required for the
      Partnership's performance of delivery obligations under gas sales and
      purchase contracts in effect at the time viewed at the level of the
      Partnership's requirement for such volumes to fulfill its overall
      contractual commitments and, where applicable, in relation to specific
      contracts where volume requirements can only commercially realistically be
      satisfied from one source.

            (ah) "CONTINUING DIRECTORS" means those members of the board of
      directors of the Affected Shareholder who are not affiliated with or were
      not nominated by a New Control Group and who were members of the board of
      directors prior to the time such New Control Group acquired control of the
      Affected Shareholder.

            (ai) "CONTRIBUTED PROPERTY" means each property or other asset, in
      such form as may be permitted by the Act, but excluding cash or cash
      equivalents, contributed to the Partnership (or deemed contributed to the
      Partnership) by members of the Shell Partner Group, Salmon U.S. Partner
      Group or Tejas Partner Group whether on termination and reconstitution of
      the Partnership pursuant to Section 708 of the Code or otherwise. Once the
      Carrying Value of a Contributed Property is adjusted pursuant to SECTION
      3.5(b) AND 3.5(c), such property shall no longer constitute a Contributed
      Property, but shall be deemed an Adjusted Property.

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CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            (aj) "CURATIVE ALLOCATION" means any allocation of an item of
      income, gain, deduction, loss or credit pursuant to the provisions of
      SECTION 5.5.

            (ak) "DATE OF DETERMINATION" means, as the case may be, the date
      upon which there is a Capital Contribution of money or other property to
      the Partnership as consideration for an Interest, a liquidation of the
      Partnership, or a distribution of money or other property to a retiring or
      continuing Partner as consideration for the reduction of the Interest of
      the Partner in the Partnership.

            (al) "DEADLOCK" has the meaning ascribed to such term in SECTION
      6.4(a).

            (am) "DEBIT OF RETURN" means a reduction in the Partnership
      Percentages or distributions and/or income allocations of a Responsible
      Partner or Responsible Partners, as determined in accordance with SECTION
      3.6.

            (an) "EFFECTIVE DATE" has the meaning ascribed to such term in the
      initial paragraph hereof.

            (ao) "EFFECTIVE TAX RATE" means the sum of (i) the current maximum
      marginal federal income tax corporate rate and (ii) * (stipulated state
      and local income tax rate) multiplied by 1 minus the tax rate in clause
      (i).

            (ap) "FAIR MARKET VALUE" means appraised value (taking into account
      the effect of the termination of the Initial Agreements and/or the effect
      of the termination of the Shell Canada Supply Agreement on the value of
      the Partnership's beneficial interest in CEC and on the volumes supplied
      under the CEC Supply Agreement) on a going concern basis and applying no
      discount or premium for minority or majority interest. The appraisal shall
      be conducted by Morgan Stanley & Co. Incorporated (or if Morgan Stanley
      has a conflict or declines to conduct the appraisal for a market fee, then
      Merrill Lynch & Co.), or such other investment banking firm as the General
      Partners may agree.

            (aq) "FISCAL YEAR" means the period commencing on the Effective Date
      or any subsequent January 1 and ending on the earlier to occur of (A) the
      next December 31 or (B) the date on which all assets of the Partnership
      are distributed pursuant to SECTION 10.1 and the Certificate has been
      canceled pursuant to the Act.

            (ar) "GENERAL PARTNERS" means Shell GP, Tejas GP, Salmon GP and each
      other general partner admitted as a Partner in the Partnership.

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            (as) "GROSS MARGIN" during any period means the sum of (i) amounts
      of net benefit paid during such period by the Salmon U.S. Partner Group to
      the Partnership and its U.S. subsidiaries under the terms of the Asset
      Purchase Agreement, plus (ii) the amount of (w) the Partnership's and its
      U.S. subsidiaries' gross sales revenues for re-sale of gas purchased from
      the Salmon U.S. Partner Group during such period, minus (x) the cost of
      such gas paid by the Partnership and its U.S. subsidiaries to the Salmon
      U.S. Partner Group under the Salmon Supply Agreement, minus (y) applicable
      transportation costs, plus or minus, as the case may be, (z) the monthly
      Hedge Settlements on price, currency and basis hedges related to the
      physical gas contracts under which the Partnership and/or its U.S.
      subsidiaries purchase or sell such gas.

            (at) "HEDGE SETTLEMENTS" means the cash amounts actually paid and/or
      received by the Partnership and its U.S. subsidiaries (whether paid or
      received during or after the applicable period in question) in respect of
      price, currency and basis hedges in effect during any applicable period,
      whether under exchange-traded futures contracts, over-the-counter (OTC)
      contracts, swaps, or otherwise. In general, such payments will be
      determined by multiplying the settlement price established by the relevant
      futures exchange by the number of contracts (appropriately weighted for
      the volume per contract). For OTC contracts, the payments generally will
      be determined by multiplying the notional contract price by the contract
      volume. For some OTC contracts and swaps, payments may be determined by
      reference to independent quotations of prices from reference market
      makers.

            (au) "INDEPENDENT EVALUATOR" has the meaning ascribed to such term
      in SECTION 3.6; provided, that, if the Board members are unable to agree,
      the Independent Evaluator shall be the investment banking firm selected in
      accordance with the definition of "Fair Market Value" herein.

            (av) "INITIAL AGREEMENTS" means those agreements described on
      EXHIBIT B hereto.

            (aw)  "INTEREST" means the interest of a Partner in the Partnership.

            (ax) "INTEREST RATE" means the prime lending rate quoted by
      Citibank, N.A., to its best customers for loans having a maturity of 90
      days or less, plus 300 basis points.

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CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            (ay) "INVESTMENT GRADE" means, in relation to any Person, that such
      Person has a credit rating of "*" or above from Standard & Poor's or "*"
      or above from Moody's Investor Service.

            (az) "KEY MINORITY ACTION" has the meaning ascribed to such term in
      SECTION 6.4(a).

            (ba) "LIMITED PARTNERS" means SCIC, SCRC, TCRC, TCEC and Salmon LP
      and each other Person who becomes a limited partner pursuant to the terms
      of this Agreement.

            (bb) "LP1 PARTNER" means Shell LP1 and/or Tejas LP1, as the case may
      be.

            (bc) "MINIMUM NET WORTH" means 10% of the Partnership's Capital
      Contributions described in Section 4.03(1) of Rev. Proc. 92-88, 1992-2
      C.B. 496, as amended or otherwise modified.

            (bd) "NET AGREED VALUE" means, (a) in the case of any Contributed
      Property, the Agreed Value of such property reduced by any liabilities
      either assumed by the Partnership upon such contribution or to which such
      property is subject when contributed, and (b) in the case of any property
      distributed to a Partner by the Partnership, the Partnership's Carrying
      Value of such property (as adjusted pursuant to SECTION 3.5(c) at the time
      such property is distributed), reduced by any indebtedness either assumed
      by such Partner upon such distribution or to which such property is
      subject at the time of distribution, in either case, as determined under
      Section 752 of the Code.

            (be) "NEW CONTROL GROUP" means any single person or group (other
      than Frederic C. Hamilton, Charles C. Gates, and Jay A. Precourt as to
      Tejas Parent, and other than members of the Royal Dutch/Shell Group of
      Companies as to Shell Parent and as to Shell Canada) within the meaning of
      Rule 13d-5 of the Securities Exchange Act of 1934, as amended, including,
      without limitation, any such Person or group that acquires such status as
      a result of a purchase in foreclosure or from a bankruptcy or
      reorganization under Chapter 11 of the Bankruptcy Code.

            (bf) "NIBT" means net income, before federal and state income taxes,
      of the Partnership determined in accordance with generally accepted
      accounting principles as applied to the Partnership.


                                    -10-
<PAGE>
            (bg) "NONRECOURSE DEDUCTIONS" has the meaning ascribed to such term
      in Section 1.704-2(b)(1) of the Regulations.

            (bh) "NONRECOURSE LIABILITY" has the meaning ascribed to such term
      in Section 1.704-2(b)(3) of the Regulations.

            (bi) "NON-NORTH AMERICAN SHELL AFFILIATE" means, subject to (iii)
      below, N.V. Koninklijke Nederlandsche Petroleum Maatschappij, a
      Netherlands company, The "Shell" Transport and Trading Company, p.l.c., an
      English company, and any company directly or indirectly affiliated to
      these two companies or either of them, and for the purposes of this
      definition a particular company is:

                  (i) "Directly affiliated" to a company or companies if the
            latter holds/hold stock representing fifty-percent (50%) or more of
            the votes exercisable at a general meeting (or its equivalent) of
            the particular company, and

                  (ii) "Indirectly affiliated" to a company or companies ("the
            parent company or companies") if a series of companies can be
            specified, beginning with the parent company or companies and ending
            with a particular company, so related that each company of the
            series, except the parent company or companies, is directly
            affiliated to one or more companies earlier in the series.

                  (iii) This definition of Non-North American Shell Affiliates
            shall not include Shell Parent or Shell Canada, as the case may be,
            respectively or any company directly or indirectly affiliated to
            Shell Parent or Shell Canada as appropriate where Shell Parent or
            Shell Canada is taken to be the parent company described in (ii)
            above.

            (bj) "OFFICERS" has the meaning ascribed to such term in SECTION
      6.2(a).

            (bk) "ORIGINAL PARTNERSHIP AGREEMENT" has the meaning ascribed to
      such term in the recitals to this Agreement.

            (bl) "PARTNER GROUP" means two or more Partners each of whom is an
      Affiliate of each of the others, it being understood and agreed that
      Partners in the Shell Partner Group and Partners in the Salmon Group are
      not Affiliates of each other for this purpose.

            (bm) "PARTNER NONRECOURSE DEBT" has the meaning ascribed to such
      term in Section 1.704-2(b)(4) of the Regulations.

            (bn) "PARTNER NONRECOURSE DEBT MINIMUM GAIN" means that amount, with
      respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum

                                    -11-
<PAGE>
      Gain that would result if such Partner Nonrecourse Debt were treated as a
      Nonrecourse Liability, determined in accordance with the principles of
      Section 1.704-2(i)(3) of the Regulations.

            (bo) "PARTNER NONRECOURSE DEDUCTIONS" means any and all items of
      loss, deduction or expenditure (including any expenditure described in
      Sections 705(a)(2)(b) of the Code) that, in accordance with the principles
      of Sections 1.704- 2(i)(1) and (2) of the Regulations, are attributable to
      a Partner Nonrecourse Debt.

            (bp) "PARTNERS" means the General Partners and the Limited Partners,
      where no distinction is required by the context in which the term is used
      herein.
      "Partner" means any one of the Partners.

            (bq) "PARTNERSHIP" means Coral Energy, L.P., the limited partnership
      created by the Original Partnership Agreement and continued in effect
      under the terms of this Agreement.

            (br) "PARTNERSHIP ACCOUNTS" has the meaning ascribed to such term in
      SECTION 6.7.

            (bs) "PARTNERSHIP PERCENTAGE" means the percentage share of certain
      items of profit and loss as from time to time established pursuant to the
      terms hereof. The Partnership Percentages of the Partners on April 1,
      1997, are set forth on EXHIBIT I hereto.

            (bt) "PARTNERSHIP MINIMUM GAIN" has the meaning ascribed to such
      term in Sections 1.704-2(b)(2) and (d) of the Regulations.

            (bu) "PERSON" means any individual, partnership, corporation,
      limited liability company, trust, or other entity.

            (bv) "PHYSICAL CONTRACT" means any contract for the physical
      delivery of energy (including, without limitation, energy in the form of
      natural gas, natural gas liquids or electricity) that the Partnership
      reasonably expects to perform by actual delivery of product to the
      counter-party.

            (bw) "PORTFOLIO" means all of the Salmon U.S. Partner Group's
      third-party natural gas supply contracts, gas sales contracts and agency
      agreements listed on EXHIBIT A4, as they exist on April 1, 1997, in
      respect of which interests or economic benefits are contributed to the
      Partnership or its U.S. subsidiaries.

            (bx) "PREFERRED RETURN" means an amount payable from NIBT to a
      Responsible Partner or Responsible Partners, as determined in accordance
      with SECTION 3.6. Preferred Returns shall be paid PARI PASSU with
      distributions under SECTIONS 4.1, 4.2 AND 4.3 to the Partners unless
      otherwise specified by the Board.

                                    -12-
<PAGE>
            (by) "PROPERTY OR PROPERTY" means all real and personal property
      acquired by the Partnership and any improvements thereto, and shall
      include both tangible and intangible property.

            (bz) "QUALIFIED FINANCIAL INSTITUTIONS" means banks, insurance
      companies, investment companies, mutual funds, investment banks, and other
      recognized financial institutions.

            (ca) "RECAPTURE INCOME" means any gain recognized by the Partnership
      (computed without regard to any adjustment required by Section 734 or 743
      of the Code) upon the disposition of any property or asset of the
      Partnership, which gain is characterized as ordinary income because it
      represents the recapture of deductions previously taken with respect to
      such property or assets.

            (cb) "REGULATIONS" means the Income Tax Regulations promulgated
      under the Code, as amended (including corresponding provisions of
      succeeding regulations).

            (cc) "RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or
      loss, as the case may be, of the Partnership recognized for federal income
      tax purposes resulting from a sale, exchange or other disposition of a
      Contributed Property or Adjusted Property, to the extent such item of gain
      is not allocated pursuant to SECTIONS 5.7(b)(i)(a) OR 5.7(b)(ii)(a), to
      eliminate Book-Tax Disparities.

            (cd) "RESPONDENT," whether one or more, or "RESPONDENTS," whether
      one or more, means (i) Tejas LP2 and Salmon LP (in proportions as agreed
      between them, otherwise in proportion to the respective Partnership
      Percentages of those of them electing to participate in the purchase),
      where Shell LP1, Shell LP2, or a successor to either of their Interests is
      the Selling Partner ("Shell LP Interests Sellers"), (ii) Shell LP2 and
      Salmon LP (in proportions as agreed between them, otherwise in proportion
      to the respective Partnership Percentages of those of them electing to
      participate in the purchase) where Tejas LP1, Tejas LP2 or a successor to
      either of their Interests is the Selling Partner ("Tejas LP Interests
      Sellers"), (iii) Tejas GP and Salmon GP (in proportions as agreed between
      them, otherwise in proportion to the respective Partnership Percentages of
      those of them electing to participate in the purchase) where Shell GP or a
      successor to its Interest is the Selling Partner, (iv) Shell GP and Salmon
      GP (in proportions as agreed between them, otherwise in proportion to the
      respective Partnership Percentages of those of them electing to
      participate in the purchase) where Tejas GP or a successor to its Interest
      is the Selling Partner, (v) Shell LP2, Salmon LP and Tejas LP2 (in
      proportions as agreed between them, otherwise in proportion to the
      respective Partnership Percentages of those of them electing to
      participate in the purchase) where any other Limited Partner is the
      Selling Partner, (vi) Shell GP, Salmon GP and Tejas GP (in proportions as
      agreed between them, otherwise in proportion to the respective Partnership
      Percentages of those of them electing to participate in the purchase)
      where any other General Partner is the Selling Partner, (vii) Shell

                                    -13-
<PAGE>
      LP2 and Tejas LP2 (in proportions as agreed between them, otherwise in
      proportion to the respective Partnership Percentages of those of them
      electing to participate in the purchase) where Salmon LP, or a successor
      to its Interests, is the Selling Partner (the "Salmon LP Interests
      Sellers"), (viii) Shell GP and Tejas GP (in proportions as agreed between
      them, otherwise in proportion to the respective Partnership Percentages of
      those of them electing to participate in the purchase) where Salmon GP is
      the Selling Partner, (ix) Tejas LP2 where both Shell LP Interests Sellers
      and Salmon LP Interests Sellers are Selling Partners, (x) Salmon LP where
      both Tejas LP Interest Sellers and Shell LP Interest Sellers are Selling
      Partners, (xi) Shell LP2 where both Tejas LP Interest Sellers and Salmon
      LP Interest Sellers are Selling Partners, and (xii) Tejas GP where both
      Salmon GP and Shell GP, or their respective successors, are Selling
      Partners; provided, however, that if, at any time when there is more than
      one Respondent, any Respondent fails to give a notice, fails to make an
      election, or rejects any offer, then the other Respondent shall have a
      period of 30 days, from the date of its actual knowledge of such failure
      or rejection, within which to assume the rights of such failing or
      rejecting Respondent.

            (ce) "RESPONSE" has the meaning ascribed to such term in SECTION
      8.3(a).

            (cf) "RESPONSIBLE PARTNER" means (i) in the case of additional or
      reduced volumes from or attributable to any member of the Shell Partner
      Group, the one or more Partners from among the Shell Partner Group
      designated by the Shell Parent, (ii) in the case of additional or reduced
      volumes from or attributable to any member of the Tejas Partner Group, the
      one or more Partners from among the Tejas Partner Group designated by the
      Tejas Parent, (iii) in the case of additional or reduced volumes from or
      attributable to any member of the Salmon U.S. Partner Group, the one or
      more Partners from among the Salmon U.S. Partner Group designated by
      Salmon; provided, that the Shell Parent, the Tejas Parent or Salmon, as
      the case may be, shall designate Partner(s) having sufficient Partnership
      Percentages to more than offset any Debit of Return.

            (cg) "RESPONSIBLE PARTNER GROUP" means the Shell Partner Group, the
      Salmon U.S. Partner Group or the Tejas Partner Group, as the case may be,
      that is responsible (directly or indirectly through Affiliates) for any
      increased or reduced volumes as described in SECTION 3.6.

            (ch) "SALES MARGIN" has the meaning ascribed to such term in SECTION
      3.3(b).

            (ci)  "SALMON" means Salmon Resources Ltd.

            (cj)  "SALMON AFFILIATE" means any member of the Salmon U.S. Partner
      Group.

                                    -14-
<PAGE>
            (ck)  "SALMON GP" means Salmon Holdings, Inc., together with any
      successor in interest to the Interest held by Salmon Holdings, Inc. or its
      successors.

            (cl)  "SALMON LP" means Salmon Resources Ltd., together with any
      successor in interest to the Interest held by Salmon Resources Ltd. or its
      successors.

            (cm) "SALMON MARKETING FEE" means the fee that Salmon LP pays to the
      Partnership pursuant to SECTION 3.7(d).

            (cn)  "SALMON PARENT" means Shell Canada.

            (co) "SALMON GROUP" means Shell Canada together with Salmon and
      other Affiliates of Shell Canada (other than Non-North American Shell
      Affiliates and members of the Shell Partner Group).

            (cp)  "SALMON PARTNERSHIP INTEREST" means the Interests held by the
      Salmon U.S. Partner Group.

            (cq) "SALMON SUPPLY AGREEMENT" means each and all of those certain
      Gas Sale and Purchase Contracts between Salmon and/or any of its
      Affiliates (excluding Non-North American Shell Affiliates, Affiliates
      (including Shell Canada) that do not conduct business in the U.S. and
      Shell Parent and its Affiliates), as seller, and the Partnership or any of
      its U.S. subsidiaries, as buyer, and any and all renewals, extensions,
      amendments, and successors thereto and any marketing or sales
      administration agreement providing for the same economic benefit for
      certain gas volumes that, due to restrictions, cannot be otherwise
      included in a Salmon Supply Agreement.

            (cr) "SALMON U.S. PARTNER GROUP" means Salmon together with its
      Affiliates (other than Non-North American Shell Affiliates, Affiliates
      (including Shell Canada) that do not conduct business in the US and
      members of the Shell Partner Group).

                                    -15-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            (cs) "* CONTRACT" means the Gas Sale and Purchase Agreement dated *
      between Shell Canada and * as amended from time to time.

            (ct) "SELLING PARTNER" means the Partner defined as such in SECTION
      8.3 or 8.4, as the case may be.

            (cu) "SHAREHOLDER" has the meaning ascribed to such term in SECTION
      8.7.

            (cv) "SHELL AFFILIATES" means any member of the Shell Partner Group.

            (cw) "SHELL CANADA" means Shell Canada Limited, a corporation
      incorporated under the laws of Canada.

            (cx) "SHELL CANADA SUPPLY AGREEMENT" means each and all of those
      certain Gas Sale and Purchase Contracts between Shell Canada and/or any of
      its Affiliates (excluding Non-North American Shell Affiliates, U.S.
      Affiliates of Shell Canada, and Shell Parent and its Affiliates), as
      seller, and CEC or any of its subsidiaries, as buyer, and any and all
      renewals, extensions, amendments, and successors thereto and any marketing
      or sales administration agreement providing for the same economic benefit
      for certain gas volumes that, due to restrictions, cannot be otherwise
      included in a Shell Canada Supply Agreement.

            (cy) "SHELL GP" means Shell Coral Resources GP Company, together
      with any successor in interest to the Interest held by Shell Coral
      Resources GP Company or its successors.

            (cz) "SHELL LP1" means Shell Coral Resources Company, together with
      any successor in interest to the Interest held by Shell Coral Resources
      Company or its successors.

            (da) "SHELL LP2" means Shell Coral Investment Company, together with
      any successor in interest to the Interest held by Shell Coral Investment
      Company or its successors.

            (db) "SHELL PARENT" means Shell Oil Company, a Delaware corporation.

            (dc) "SHELL PARTNER GROUP" means the Shell Parent together with
      Affiliates of the Shell Parent (other than Non-North American Shell
      Affiliates and members of the Salmon Group).

                                    -16-
<PAGE>
            (dd) "SHELL SUPPLY AGREEMENT" means each and all of those certain
      Gas Sale and Purchase Contracts between Shell Parent and/or any of its
      Affiliates (excluding Non-North American Shell Affiliates and Shell Canada
      and its Affiliates), as sellers, and the Partnership or any of its
      subsidiaries, as buyer, and any and all renewals, extensions, amendments,
      and successors thereto and any marketing or sales administration agreement
      providing for the economic benefit of certain gas volumes that, due to
      restrictions, cannot be otherwise included in a Shell Supply Agreement.

            (de) "SHELL TRUE-UP AMOUNT" has the meaning ascribed to such term in
      SECTION 3.3(b).

            (df) "SUBSIDIARY IN THE PARTNERSHIP LINE OF OWNERSHIP" means any
      Affiliate of the Shareholder which is a Partner in the Partnership or is
      in a direct ownership chain between the Shareholder and a Partner in the
      Partnership.

            (dg) "SUPPLY AGREEMENT" means the Salmon Supply Agreement, the Shell
      Supply Agreement or the Tejas Supply Agreement, as the case may be.

            (dh) "TAX AMOUNT" means for any Fiscal Year or any portion thereof,
      with respect to each Partner, the amount calculated by multiplying the
      Effective Tax Rate times the result obtained by subtracting (y) from (x),
      where (x) is the taxable income of the Partnership for the Fiscal Year or
      any portion thereof (determined under Section 703(a) of the Code with
      items of income, loss, or deduction under Section 703(a)(1) included in
      the determination) attributable to taxable income allocable to such
      Partner under ARTICLE V (except SECTIONS 5.2, 5.3 AND 5.7(e)), and (y) is
      the book amortization allocated to such Partner under SECTION 5.3(d).

            (di) "TAX DISTRIBUTION" means a distribution pursuant to SECTION
      4.4.

            (dj) "TAX MATTERS PARTNER" has the meaning ascribed to such term in
      SECTION 7.3.

            (dk) "TEJAS AFFILIATE" means any member of the Tejas Partner Group.

            (dl) "TEJAS GP" means Tejas Coral GP Company, together with any
      successor in interest to the Interest held by Tejas Coral GP Company or
      its successors.

            (dm) "TEJAS LP1" means Tejas Coral Energy Company, together with any
      successor in interest to the Interest held by Tejas Coral Energy Company
      or its successors.

                                    -17-
<PAGE>
            (dn) "TEJAS LP2" means Tejas Coral Resources Company, together with
      any successor in interest to the Interest held by Tejas Coral Resources
      Company or its successors.

            (do)  "TEJAS PARENT" means Tejas Gas Corporation, a Delaware
      corporation.

            (dp)  "TEJAS PARTNER GROUP" means the Tejas Parent together with
      Affiliates of Tejas Parent.

            (dq) "TEJAS SUPPLY AGREEMENT" means each and all of those certain
      Gas Sale and Purchase Contracts between Tejas Parent and/or any of its
      Affiliates, as sellers, and the Partnership or any of its subsidiaries, as
      buyer, and any and all renewals, extensions, amendments, and successors
      thereto.

            (dr) "TEJAS TRUE-UP AMOUNT" has the meaning ascribed to such term in
      SECTION 3.3(d).

            (ds) "THIRD PARTY" means any Person other than the Partnership, a
      Partner or an Affiliate of a Partner.

            (dt) "TRANSFER" has the meaning ascribed to such term in SECTION
      8.1.

            (du) "UNREALIZED GAIN" attributable to any item of Partnership
      property means, as of any Date of Determination, the excess, if any, of
      (a) the fair market value of such property as of such date (as determined
      under SECTIONS 3.5(d) AND 3.5(e)) over (b) the Carrying Value of such
      property as of such date (prior to any adjustment to be made pursuant to
      SECTIONS 3.5(b) AND 3.5(c) as of such date).

            (dv) "UNREALIZED LOSS" attributable to any item of Partnership
      property means, as of any Date of Determination, the excess, if any, of
      (a) the Carrying Value of such property as of such date (prior to any
      adjustment to be made pursuant to SECTIONS 3.5(d) AND 3.5(e)) as of such
      date) over (b) the fair market value of such property as of such date (as
      determined under SECTIONS 3.5(b) AND 3.5(c)).

            (dw)  "U.S." means United States of America.

      1.2 OTHER DEFINED TERMS. Other capitalized terms used in this Agreement
and not defined in SECTION 1.1 shall have the meanings indicated throughout this
Agreement.

      1.3 CONSTRUCTION. The words "HEREOF," "HEREIN" and "HEREUNDER" and words
of similar import, when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement. Whenever the
context requires, the gender of all words used herein shall include the
masculine, feminine and neuter, and the number of all words shall include the
singular and plural.

                                    -18-
<PAGE>
      1.4 REFERENCES. Unless otherwise specified, references in this Agreement
to "SECTIONS," "SUBSECTIONS" or "ARTICLES" refer to the sections, subsections or
articles in this Agreement.

                                  ARTICLE II

                     FORMATION, NAME, PURPOSES AND OFFICES

      2.1 ORGANIZATION. The Partners hereby confirm and ratify the organization
and formation of the Partnership as a limited partnership with effect from
September 18, 1995, pursuant to the provisions of the Act for the purposes set
forth in SECTION 2.3 below and upon the terms and conditions set forth in this
Agreement.

      2.2 PARTNERSHIP NAME. The name of the Partnership shall be Coral Energy,
L.P., and all business of the Partnership shall be conducted in such name or
such other name as the Board shall select.

      2.3 PURPOSES. The purposes and nature of the business to be conducted by
the Partnership shall be the following: to engage in the buying and selling of
natural gas, either wholesaling or retailing or both (by telemarketing, direct
sales or otherwise); to engage in the natural gas derivatives business,
including basis trading, futures trading, and the writing of swaps, collars,
options, or other derivatives instruments (whether in natural gas, electricity
or other energy sources; or in aluminum, metals or other finished goods or
products that consume energy in their manufacture, processing or production; or
in other commodities, currencies or interest rates incidental to the
Partnership's business); the arranging of natural gas transportation and other
related natural gas services; and the financing of natural gas development
projects and natural gas end-use projects. The Partnership may engage in
activities, similar to above, in electricity, natural gas liquids, and other
energy sources capable of conversion into British thermal units (Btu's) or
gigajoules (such as coal, fuel oil, crude oil, refined petroleum products,
natural gas, nuclear, hydro, waste, or other). All of the foregoing may be
pursued throughout the United States, Canada, and Mexico. The Partnership may do
anything necessary or appropriate to the foregoing including, without
limitation, engaging in activities (such as the buying of natural gas, liquefied
natural gas, natural gas liquids or liquefiables, electricity, energy or other
energy sources) outside the United States, Canada, and Mexico that are
incidental to, or that further, the activities of the Partnership (such as the
sale of natural gas, liquefied natural gas, natural gas liquids or liquefiables,
electricity, energy, or other energy sources) within the United States, Canada,
and Mexico.

                                    -19-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

      2.4 REGISTERED OFFICE; PRINCIPAL OFFICE. The registered office of the
Partnership in the State of Delaware is Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801, and the name of the registered agent for
service of process is The Corporation Trust Company. The Board may change the
registered office of the Partnership to any other place within the State of
Delaware upon 10 days' written notice to the Limited Partners and the
preparation and filing of an amendment of the Certificate of Limited Partnership
of the Partnership reflecting such change, if required. The principal business
office of the Partnership shall be located at 909 Fannin St., Suite 700,
Houston, Texas 77010. The Partnership may maintain other offices at such other
locations as the Board shall determine from time to time.

      2.5 TERM. The term of the Partnership commenced on September 18, 1995 with
the filing of a Certificate of Limited Partnership in the State of Delaware, and
shall continue until the earlier of (i) * or (ii) the winding up and liquidation
of the Partnership and its business following an event of dissolution as
described in SECTION 9.1 By mutual agreement of the General Partners, the term
of the Partnership may be extended annually for consecutive one-year terms,
commencing *.

      2.6   FILINGS.

            (a) The CEO shall take any and all actions reasonably necessary to
      perfect the admission of Salmon GP and Salmon LP as Partners in the
      Partnership and maintain the status of the Partnership as a limited
      partnership under the laws of the State of Delaware and any other states
      or jurisdictions in which the Partnership engages in business and
      otherwise to qualify the Partnership to engage in business in all such
      jurisdictions. Subject to SECTION 9.1(e), the Board shall cause amendments
      to the Certificate to be filed whenever required by the Act and/or such
      other laws. Such amendments may be executed by the Board on behalf of the
      Partnership and the Partners.

            (b) Upon the dissolution of the Partnership, the Board shall
      promptly execute and cause to be filed a certificate of cancellation in
      accordance with the Act and other filings required under the laws of any
      other states or jurisdictions in which the Partnership conducts business.

            (c) The CEO shall promptly deliver copies of all filings made on
      behalf of the Partnership in accordance with this Section to the Partners.

      2.7 INDEPENDENT ACTIVITIES. Except to the extent provided in SECTION 3.6
or in any other contract or agreement between the Partnership and any Partner,
each Partner and its Affiliates (including, for the avoidance of doubt, in the
case of the Shell Partner Group and of the Salmon U.S. Partner Group, the
Non-North American Shell Affiliates) shall be permitted to engage in any

                                    -20-
<PAGE>
business activity, including any activity that is competitive with the
Partnership, without offering any such opportunity to the Partnership or
accounting therefor to the Partnership or the other Partners.

      2.8 POWERS. The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described in
this ARTICLE II and for the protection and benefit of the Partnership.

      2.9 SUBSIDIARIES. The Partnership may form and own subsidiaries from time
to time which shall be authorized to engage in any one or more businesses in
which the Partnership is authorized to engage. Such subsidiaries may be wholly
or partially owned and may be partnerships, joint ventures, corporations,
limited liability companies or other entities. To the extent that the subsidiary
is expected to have significant earnings potential, the Partnership will use all
commercially reasonable efforts in the circumstances (including, without
limitation, amendments to this Agreement if approved in accordance with this
Agreement) to structure the subsidiary as a joint venture, a partnership, a
limited partnership or some form of direct ownership by the Partners with the
Partnership. Additionally, to the extent that the subsidiary is necessarily
incidental to the business of the Partnership, it may be in a corporate form.
Subject to the foregoing, in selecting one form of subsidiary over another, the
Partnership shall take into consideration the U.S., State, local, Canadian and
Provincial tax consequences to the Partners of such selection, the liability
aspects of the form selected, the needs of Third Parties that have an interest
in such subsidiary, and such other matters as the Officers of the Partnership
shall deem appropriate. If, after compliance with the foregoing, the Partnership
decides to form a subsidiary as a limited liability company, then the
Partnership shall use all reasonable commercial efforts in the circumstances to
reduce the amount of Partnership distributions otherwise payable to the Salmon
U.S. Partner Group resulting from the activities of such limited liability
company and to increase, by an amount equal to such reduction, the distributions
to the Salmon U.S. Partner Group from other sources of income to the
Partnership.

                                  ARTICLE III

          PARTNERS' CAPITAL CONTRIBUTIONS AND SHIFTS IN EQUITY SHARES

      3.1 CAPITAL CONTRIBUTIONS. Salmon GP and Salmon LP hereby commit to
contribute to the Partnership the Capital Contributions described in EXHIBIT A4.
The Capital Contributions already contributed by the Shell and Tejas Partners
are described on EXHIBIT A1. Except as set forth in this ARTICLE III, the
Partners shall not be required to make any Additional Capital Contribution to
the Partnership. Except as expressly contemplated hereby, the obligations of a
Partner to make the Capital Contributions described herein shall not be affected
by the transfer of all or part of a Partner's Interest.

      3.2   CAPITAL CONTRIBUTIONS OF THE PARTNERS.

            (a) Effective November 1, 1995, each of the following Partners made
      initial Capital Contributions as follows:

                                    -21-
<PAGE>
                  (i) Shell GP, Tejas GP, Shell LP2 and Tejas LP2 each
            contributed, in cash, the respective amount set forth on EXHIBIT A1.

                  (ii) Shell LP1, or its predecessors in interest, contributed
            the economic interest in those natural gas contracts as set forth on
            EXHIBIT C hereto, which had a Net Agreed Value on January 1, 1997
            equal to the amount set forth for Shell LP1 on EXHIBIT A3 subject to
            SECTION 3.3 below.

                  (iii) Tejas LP1, or its predecessors in interest, contributed
            the economic interests in those natural gas contracts set forth on
            EXHIBIT D hereto, which have a Net Agreed Value on January 1, 1997
            equal to the amount set forth for Tejas LP1 on EXHIBIT A3, subject
            to SECTION 3.3 below.

            (b) Effective April 1, 1997, Salmon GP shall contribute, in cash,
      the amount set forth on EXHIBIT A4 and Salmon LP shall contribute the
      assets, promissory note, and the beneficial interests in those natural gas
      contracts as set forth on EXHIBIT A4 hereto, which have a Net Agreed Value
      as of April 1, 1997 equal to the amount set forth for Salmon LP on EXHIBIT
      A4.

      3.3   TRUE-UP OF VALUE OF ECONOMIC INTERESTS CONTRIBUTED.

            (a) Within 30 days after the end of each calendar year ending prior
      to January 1, 2005, Shell LP1 shall pay to the Partnership the Shell
      True-up Amount as determined pursuant to SECTION 3.3(b) and subject to
      SECTION 3.3(e). Such payment shall not be treated as an Additional Capital
      Contribution hereunder as it is intended to replace a shortfall of the
      actual value of the assets set forth on EXHIBIT C from the Agreed Value of
      such assets. The Carrying Value of such assets shall be decreased by the
      amount of any such payment, but the balance of the Partner's Capital
      Account will not be adjusted.

            (b) The "Shell True-up Amount" for any calendar year shall be the
      deficiency, if any, represented by the result obtained by subtracting as
      follows: (i) the actual aggregate Sales Margins received by the
      Partnership during such year with respect to the contracts identified on
      EXHIBIT C, minus (ii) the projected aggregate Sales Margins during such
      year with respect to such contracts, set forth on EXHIBIT E. As used
      herein, the term "Sales Margins" means (i) the proceeds of sale derived by
      the Partnership from the sale of natural gas, minus (ii) the Partnership's
      cost of sales for such natural gas, including the purchase price paid for
      such gas, together with costs of transportation borne by the Partnership
      with respect to such gas, but excluding any hedging costs associated with
      such gas for hedges put into place after the date of this Agreement;
      provided that, in computing "Sales Margins" it shall not be necessary to
      track actual gas molecules delivered, but rather "Sales Margins" shall be
      computed based upon supply from the Shell Supply Agreement that is deemed
      to be matched with sales to customers under the

                                    -22-
<PAGE>
      contracts on EXHIBIT E. If the Partnership (in accordance with the terms
      of Section 3(a) of the Volumetric Support Agreement (the "Support
      Agreement") entered into between SWEPI, Shell Oil Company and the
      Partnership as of March 29, 1996) deems by means of a Deemed Delivery
      Election, as defined in the Support Agreement, that specified volumes of
      natural gas delivered to the Partnership by SWEPI or deliverable to the
      Partnership by SWEPI under the Shell Supply Agreement, as defined in the
      Original Partnership Agreement, constitute deliveries of natural gas by
      SWEPI in satisfaction of SWEPI's performance obligations under the Support
      Agreement, then such volumes shall nonetheless still be treated as volumes
      supplied by SWEPI to the Partnership for the purposes of determining the
      Shell True-up Amount in accordance with this SECTION 3.3(b). For purposes
      of determining the Shell True-up Amount in accordance with this SECTION
      3.3(b), volumes of natural gas deemed to be delivered by means of a Deemed
      Delivery Election under the Support Agreement shall be deemed to have been
      delivered at a price equal to the Contract Price (as defined in the Shell
      Supply Agreement) that otherwise would have been applicable under the
      Shell Supply Agreement.

            (c) Within 30 days after the end of each calendar year ending prior
      to January 1, 2005, Tejas LP1 shall pay to the Partnership the Tejas
      True-up Amount as determined pursuant to SECTION 3.3(d) and subject to
      SECTION 3.3(e). Such payment shall not be treated as an Additional Capital
      Contribution hereunder as it is intended to replace a shortfall of the
      actual value of the assets set forth on EXHIBIT D from the Agreed Value of
      such assets. The Carrying Value of such assets shall be decreased by the
      amount of any such payment, but the balance of the Partner's Capital
      Account will not be adjusted.

                                    -23-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            (d) The "Tejas True-up Amount" for any calendar year shall be the
      deficiency, if any, represented by the result obtained by subtracting as
      follows: (i) * times the actual aggregate volumes sold during such year
      with respect to the contracts identified on EXHIBIT D, minus (ii) * times
      the aggregate volumes of natural gas projected to be sold during such year
      under such contracts as set forth on EXHIBIT F.

            (e) In the event that the Shell True-up Amount or the Tejas True-up
      Amount is a positive number as calculated for any calendar year, the
      positive balance shall be carried over to the next succeeding calendar
      year to reduce the amount of the Shell True-up Amount or Tejas True-up
      Amount, as the case may be, otherwise due for such succeeding calendar
      year. To the extent that the positive balance for any calendar year is not
      fully utilized to offset true-up amounts due in the next succeeding
      calendar year, then the remaining unutilized positive balance will not be
      carried forward, but instead will be remitted to Shell LP1 or Tejas LP1,
      as the case may be. Each Partner agrees to treat such positive amount for
      any year as a retained income interest in the relevant contracts and to
      report directly income equal to such positive number for any year. Any
      such remittance will not be treated as a distribution with respect to the
      Interest of the Partner, or of retained earnings or capital and will not
      directly affect the Capital Account of any Partner, as it is intended to
      correct an excess of the actual value of the assets described on EXHIBIT C
      or EXHIBIT D, as the case may be, over the Agreed Value of such assets.

            (f) In the event that a Shell True-up Amount or Tejas True-Up Amount
      remains outstanding and unpaid by a Partner at any time, then the
      Partnership shall have a right of set-off against any amounts from time to
      time distributable to such Partner. Such right shall be in addition to any
      other rights that may be available, at law or in equity, to the
      Partnership.

            (g) Salmon U.S. Partner Group is not, under any circumstances,
      subject to any obligation to pay any amount under this SECTION 3.3 but
      each member of the Salmon U.S. Partner Group shall have the benefits
      described in SECTION 5.7(e).

                                    -24-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

      3.4   ADDITIONAL FUNDING.

            (a) The Board has directed the Officers to determine the economic
      costs and benefits that may be derived from achieving and maintaining an
      "*" Credit Rating for the Partnership. The Officers will make a
      recommendation to the Board regarding whether the Partnership should seek
      to obtain or maintain an "*" Credit Rating, and the Board, in accordance
      with SECTIONS 6.1(d) AND 6.1(f)(XXV), shall determine whether it wishes to
      obtain and maintain an "*" Credit Rating and, if so, whether loans,
      Additional Capital Contributions, or other sources of funds will be
      required in order to achieve and maintain such rating.

            (b) In the event that the Board, in its discretion and acting in
      accordance with SECTIONS 6.1(d) AND 6.1(f)(XXV), determines that
      additional capital or credit support is required by the Partnership from
      the Partners (for example, to attain or maintain a desired credit rating),
      it will be funded through a combination of the following mechanisms at the
      option of the Board: (i) through Additional Capital Contributions from all
      Partners according to their Partnership Percentages, or (ii) through
      revolving credit facilities or other credit support from Third Parties
      (such as banks), or (iii) through revolving credit facilities or other
      credit support, if any, offered by any one or more of the Partners or
      their Affiliates. In the event that such funding is made in the form of
      revolving credit facilities or other committed credit support from a
      Partner, then the Partner shall be compensated for such commitment on an
      annual basis for the duration of that support by the payment of a
      commitment fee. The annual commitment fee will either be a commercially
      determined rate (such as might be required by a Third Party bank), or an
      annual return based on the Cash Contribution Equivalent of these credit
      facilities. In the event that the Partnership draws on the credit
      facilities provided by a Partner, then the Partner shall be paid an annual
      interest charge calculated by reference to commercial rates for a loan of
      that character for so long as the borrowing continues.

            (c) Nothing in this SECTION 3.4 shall create any rights, remedies,
      or claims in favor of any Third Party, liquidator, bankruptcy court,
      receiver, bankruptcy trustee, or other Person (other than the Board).

            (d) If any Partner fails to contribute timely all or any portion of
      any monetary sum that it has agreed to contribute in respect of Capital
      Contributions pursuant to the provisions of this SECTION 3.4, the
      Partnership may exercise, by fifteen (15) days prior written notice to
      such Partner (the "Delinquent Partner"), any one or more of the following
      rights or remedies:

                                    -25-
<PAGE>
                  (i) Taking such action as the Board or any General Partner
            deems appropriate to obtain payment by the Delinquent Partner of
            that portion of its agreed contribution that is in default, together
            with interest thereon at the Interest Rate from the date that such
            contribution was due until the date that such contribution is made,
            at the cost and expense of the Delinquent Partner;

                  (ii) Permitting those Partners that desire to do so (the
            "Non-Delinquent Partners") to advance that portion of the
            contribution that is in default, with the following results:

                        (A) The sum thus advanced shall be determined to be a
                  loan from the Non-Delinquent Partners to the Delinquent
                  Partner and a contribution of such sum to the Partnership by
                  the Delinquent Partner pursuant to this SECTION 3.4,

                        (B) The principal balance of such loan and all accrued
                  unpaid interest thereon shall be due payable in whole within
                  thirty days after written demand therefore has been given to
                  the Delinquent Partner by the Non-Delinquent Partners,

                        (C) The loan shall bear interest at the Interest Rate,
                  from the date that the loan was made until the date that such
                  loan, together with all interest accrued thereon, is repaid to
                  the Non-Delinquent Partners,

                        (D) All distributions from the Partnership that would
                  otherwise be made to the Delinquent Partner are hereby
                  assigned by the Delinquent Partner to the Non-Delinquent
                  Partners (whether before or after dissolution of the
                  Partnership) until the loan and all interest accrued thereon
                  have been repaid in full to the Non-Delinquent Partners (with
                  all such payments being applied first to interest earned and
                  unpaid and then to principal), and

                        (E) The Non-Delinquent Partners shall have the right, in
                  addition to the other rights and remedies granted to them
                  pursuant to this Agreement or available to them at law or in
                  equity, to take such action as the Non-Delinquent Partners
                  deem appropriate to obtain payment by the Delinquent Partner
                  of the principal balance of such loan and all

                                    -26-
<PAGE>
                  accrued and unpaid interest thereon, at the cost and
                  expense of the Delinquent Partner.

      3.5   CAPITAL ACCOUNTS.

            (a) The Partnership shall maintain for each Partner owning an
      Interest a separate Capital Account with respect to such Interest in
      accordance with the rules of SECTION 1.704-1(b)(2)(iv) of the Regulations.
      The April 1, 1997, balance in each Partner's Capital Account is reflected
      on EXHIBIT I. Such Capital Account shall be increased by (i) the cash
      amount or Net Agreed Value of all Capital Contributions made to the
      Partnership with respect to such Interest pursuant to this Agreement and
      (ii) all items of Partnership income and gain computed in accordance with
      SECTION 3.5(b) and allocated with respect to such Interest pursuant to
      SECTIONS 5.1 through 5.6, and decreased by (x) the amount of cash or the
      Net Agreed Value of all actual and deemed distributions of cash or
      property made with respect to such Interest pursuant to this Agreement and
      (y) all items of Partnership deduction and loss computed in accordance
      with SECTION 3.5(b) and allocated to such Interest under SECTIONS 5.1
      through 5.6.

            (b) For purposes of computing the amount of any item of income,
      gain, loss or deduction to be reflected in the Partners' Capital Accounts,
      the determination, recognition and classification of any such item shall
      be the same as its determination, recognition and classification for
      federal income tax purposes (including, without limitation, any method of
      depreciation, cost recovery or amortization used for that purpose),
      PROVIDED, that:

                  (i) All fees and other expenses incurred by the Partnership to
            promote the sale of (or to sell) an Interest that can neither be
            deducted nor amortized under Section 709 of the Code, if any, shall,
            for purposes of Capital Account maintenance, be treated as an item
            of deduction at the time such fees and other expenses are incurred
            and shall be allocated among the Partners pursuant to SECTIONS 5.1
            THROUGH 5.5.

                  (ii) Except as otherwise provided in Section 1.704-
            1(b)(2)(iv)(m) of the Regulations, the computation of all items of
            income, gain, loss and deduction shall be made without regard to any
            election under Section 754 of the Code which may be made by the
            Partnership and, as to those items described in Section 705(a)(1)(B)
            or 705(a)(2)(B) of the Code, without regard to the fact that such
            items are not includable in gross income or are neither currently
            deductible nor capitalized for federal income tax purposes.

                  (iii) Any income, gain or loss attributable to the taxable
            disposition of any Partnership property shall be determined as if
            the

                                    -27-
<PAGE>
            adjusted basis of such property as of such date of disposition were
            equal in amount to the Partnership's Carrying Value with respect to
            such property as of such date.

                  (iv) In accordance with the requirements of Section 704(b) of
            the Code, any deductions for depreciation, cost recovery or
            amortization attributable to any Contributed Property shall be
            determined as if the adjusted basis of such property on the date it
            was acquired by the Partnership were equal to the Agreed Value of
            such property. Upon an adjustment pursuant to SECTION 3.5(b) to the
            Carrying Value of any Partnership property subject to depreciation,
            cost recovery or amortization, any further deductions for such
            depreciation, cost recovery or amortization attributable to such
            property shall be determined (A) as if the adjusted basis of such
            property were equal to the Carrying Value of such property
            immediately following such adjustment and (B) using a rate of
            depreciation, cost recovery or amortization derived from the same
            method and useful life (or, if applicable, the remaining useful
            life) as is applied for federal income tax purposes; PROVIDED,
            HOWEVER, that, if the asset has a zero adjusted basis for federal
            income tax purposes, depreciation, cost recovery or amortization
            deductions shall be determined using any reasonable method that the
            Board may adopt.

            (c) A transferee of an Interest shall succeed to a prorata portion
      of the Capital Account of the transferor relating to the Interest so
      transferred. If, however, the transfer causes a termination of the
      Partnership under Section 708(b)(1)(B) of the Code, the Partnership's
      properties shall be deemed to have been distributed in liquidation of the
      Partnership to the Partners (including any transferee of an Interest that
      is a party to the transfer causing such termination) pursuant to SECTION
      10.1 and recontributed by such Partners in reconstitution of the
      Partnership. Any such deemed distribution shall be treated as an actual
      distribution for purposes of this SECTION 3.5. In such event, the Carrying
      Values of the Partnership properties shall be adjusted immediately prior
      to such deemed distribution pursuant to SECTION 3.5(e), and such Carrying
      Values shall then constitute the Agreed Values of such properties upon
      such deemed contribution to the reconstituted Partnership. The Capital
      Accounts of such reconstituted Partnership shall be maintained in
      accordance with the principles of this SECTION 3.5.

            (d) Consistent with the provisions of Section 1.704-1(b)(2)(iv)(f)
      of the Regulations, on an issuance of additional Interests for cash or
      Contributed Property, the Capital Accounts of all Partners and the
      Carrying Value of all Partnership properties immediately prior to such
      issuance shall be adjusted upward or downward to reflect any Unrealized
      Gain or Unrealized Loss attributable to such Partnership properties, as if
      such Unrealized Gain or Unrealized Loss had

                                    -28-
<PAGE>
      been recognized on an actual sale of each such property immediately prior
      to such issuance and had been allocated to the Partners at such time. In
      determining such Unrealized Gain or Unrealized Loss, the aggregate cash
      amount and fair market value of all Partnership assets (including, without
      limitation, cash or cash equivalents) immediately prior to the issuance of
      additional Interests shall be determined by the Board using such
      reasonable method of valuation as it may adopt.

            (e) In accordance with Section 1.704-1(b)(2)(iv)(f) of the
      Regulations, immediately prior to any actual or deemed distribution to a
      Partner of any Partnership property (other than a distribution of cash
      that is not in redemption or retirement of an Interest), the Capital
      Accounts of all Partners and the Carrying Value of all Partnership
      properties shall be adjusted upward or downward to reflect any Unrealized
      Gain or Unrealized Loss attributable to such Partnership properties, as if
      such Unrealized Gain or Unrealized Loss had been recognized on a sale of
      such properties immediately prior to such distribution for an amount equal
      to its fair market value. Any Unrealized Gain or Unrealized Loss
      attributable to such property shall be allocated in the same manner as it
      would have been allocated had it been realized in an actual sale. In
      determining such Unrealized Gain or Unrealized Loss the aggregate cash
      amount and fair market value of all Partnership assets (including, without
      limitation, cash or cash equivalents) immediately prior to a distribution
      shall be determined and allocated among the assets by the Board using such
      reasonable method of valuation as it may adopt.

                                    -29-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            (f) In the event that the Partnership's items of income, gain, loss,
      or deduction are adjusted by any taxing authority by reason of a
      transaction between the Partnership and a member of a group of
      organizations under common ownership or control (of which the Partnership
      is also a member), including but not limited to adjustments pursuant to
      Section 482 of the Code or any similar provisions under state, local or
      foreign law (any such adjustment referred to herein as a "TAX ADJUSTMENT")
      and such adjustment results in a deemed Capital Contribution to the
      Partnership by any Partner or a deemed distribution by the Partnership to
      any Partner, (i) the Capital Account of any Partner that is deemed to make
      such Capital Contribution shall be increased by the amount of such deemed
      Capital Contribution and (ii) the Capital Account of any Partner that is
      deemed to receive such a deemed distribution shall be reduced by the
      amount of such distribution. In general, the adjustments to Capital
      Accounts pursuant to this SECTION 3.5(f) are intended to cause, after
      taking into account the adjustments to Capital Accounts pursuant to this
      SECTION 3.5(f), each Partner's balance in his Capital Account, to the
      extent possible, to be equal to the balance such Capital Account would
      have had if no Tax Adjustment had occurred.

      3.6 PARTNERSHIP PREFERRED RETURN DETERMINATION PROMPTED BY UNANTICIPATED
CHANGE IN VOLUME.

            (a) In the event that volumes tendered for sale to the Partnership
      by a Partner or Affiliate of a Partner, or markets available to the
      Partnership, increase by more than * million cubic feet per day (* mmcfd)
      over the amounts reflected in the Partnership's initial Business Plan as
      set forth in EXHIBIT G (holding the year 2000 quantities constant for each
      succeeding year) as to Shell Partner Group and the Tejas Partner Group or
      over the amount reflected in EXHIBIT H (holding the year 2000 quantities
      constant for each succeeding year) as to the Salmon U.S. Partner Group,
      due either to a major acquisition or series of acquisitions during a 12
      month period by the Salmon U.S. Partner Group, Shell Partner Group or the
      Tejas Partner Group, as appropriate, of gas producing properties, a gas
      producer, a gas marketer, a gas pipeline or a pipeline company;

                                    -30-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            Then the Responsible Partner Group shall make those volumes
      available to the Partnership upon the terms and conditions of Salmon
      Supply Agreement, in the case of the Salmon U.S. Partner Group, the Shell
      Supply Agreement, in the case of the Shell Partner Group, or the Tejas
      Supply Agreement, in the case of the Tejas Partner Group, in any such
      case, subject to any limitations on doing so in existing gas sales and
      purchase contracts in effect prior to acquisition of such volumes by the
      Responsible Partner Group; provided, that such volumes shall be made
      available to the Partnership, as described above, immediately upon
      expiration or termination of the conflicting gas sales and purchase
      contracts. The Officers will recommend an appropriate Preferred Return to
      compensate the Responsible Partner, but disregarding in valuing the
      Preferred Return that the Responsible Partner is required by this Section
      to market its gas through the Partnership. The Preferred Return will be
      payable from Partnership NIBT, and shall be in addition to the Responsible
      Partner's Partnership Percentage. Within 10 days after determination of
      the Preferred Return, the Officers shall give the Board notice of the
      Preferred Return and the Board shall approve or reject the Preferred
      Return within 30 days after receipt of such notice. If no approval or
      rejection is communicated or if any General Partner objects to the
      Preferred Return, the Preferred Return will be deemed to have been
      rejected and the Board shall engage an independent investment banking firm
      or accounting firm, reasonably acceptable to all Board members (the
      "Independent Evaluator"), at Partnership expense, to value the
      contribution of the additional volumes to the Partnership (but
      disregarding in valuing the Preferred Return that the Responsible Partner
      is required by this Section to market its gas through the Partnership), to
      determine a Preferred Return as compensation to the Responsible Partner,
      and to present its valuation to the Board, which shall thereupon become
      the Preferred Return and shall be binding upon the Partnership, the
      Responsible Partner, and all other Partners.

            (b) In the event that the Salmon U.S. Partner Group, the Shell
      Partner Group or the Tejas Partner Group reduces the natural gas available
      for sale by it to or through the Partnership under the terms of the Salmon
      Supply Agreement, the Shell Supply Agreement or the Tejas Supply
      Agreement, as the case may be, by more than a cumulative amount of *
      million cubic feet per day (* mmcfd) due either to a major sale or series
      of sales by the Salmon U.S. Partner Group, the Shell Partner Group or the
      Tejas Partner Group, as appropriate, of gas producing properties or of gas
      pipelines;

            Then at the time that such cumulative amount of * mmcfd has been
      reached and each time that an additional cumulative amount of * mmcfd of
      reduction is reached thereafter, to the extent the Partnership has not
      been, or will not be,

                                    -31-
<PAGE>
      adequately reimbursed for the loss of such volumes through the operation
      of SECTION 3.3, the Officers will recommend an appropriate Debit of
      Return. The Debit of Return will reduce the Responsible Partner's share of
      distributions pursuant to ARTICLE IV AND ARTICLE X that otherwise would be
      made with respect to such Responsible Partner's Partnership Percentage and
      Interests. Within 10 days after determination of the Debit of Return, the
      Officers shall give the Board notice of the Debit of Return and the Board
      shall approve or reject the Debit of Return within 30 days after receipt
      of such notice. If no approval or rejection is communicated or if any
      General Partner objects to the Debit of Return, the Debit of Return will
      be deemed to have been rejected and the Board shall engage an Independent
      Evaluator, at Partnership expense, to value the reduction of volumes to
      the Partnership, to determine a Debit of Return as compensation to the
      Partnership and the other Partner Group, and to present its valuation of
      the appropriate Debit of Return to the Board, which shall thereupon become
      the Debit of Return and shall be binding upon the Partnership, the
      Responsible Partner, and all other Partners.

            (c) All volumes of natural gas below the threshold described in
      SECTION 3.6(a), coming under ownership or control of Salmon U.S. Partner
      Group, Tejas Partner Group or Shell Partner Group shall be made available
      by them to the Partnership upon the terms and conditions of the Salmon
      Supply Agreement, in the case of volumes and contracts made available from
      the Salmon U.S. Partner Group, upon the terms and conditions of the Shell
      Supply Agreement, in the case of volumes and contracts made available from
      the Shell Partner Group, or the Tejas Supply Agreement, in the case of
      volumes and contracts made available from the Tejas Partner Group.

            (d) In the event that a Third Party desires to be admitted as a
      Partner of the Partnership, or desires to share in the benefits or risks
      of the Partnership by becoming a partner of a Partner or by forming a
      strategic alliance with a Partner, then Shell GP and Tejas GP will
      consider the economic benefit to be derived by the admission of such new
      Partner or such desire to participate indirectly in the Partnership. Shell
      GP and Tejas GP, upon request of any General Partner, will use their best
      efforts to agree upon terms and conditions for the admission of the new
      Partner or to redetermine the Partners' Partnership Percentages, as
      appropriate, if such admission or redetermination is in the best economic
      interests of all Partners.

                                    -32-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

      3.7   OTHER MATTERS.

            (a) Except as otherwise provided in ARTICLE IV AND SECTION 10.1, no
      Partner shall demand or receive a return of its Capital Contribution.
      Under circumstances requiring a return of any Capital Contribution, no
      Partner shall have the right to receive property other than cash, except
      as may be specifically provided herein or as agreed to by the Board.

            (b) No Partner shall receive any interest with respect to its
      Capital Contribution or its Capital Account, except as otherwise provided
      in this Agreement.

            (c) The Limited Partners shall not be personally liable for the
      debts, negative account balances, liabilities, contracts or any other
      obligations of the Partnership. The General Partners shall not have any
      personal liability for the repayment of the Capital Contribution of any
      Limited Partner.

            (d) Notwithstanding any other provision of this Agreement in respect
      of the period commencing April 1, 1997 and ending December 31, 1997,
      Salmon LP shall be entitled to receive a special earnings distribution
      equivalent to 40 percent of the Gross Margin generated from the Portfolio
      during such period, as provided in SECTION 4.3(a). Salmon shall pay the
      Partnership a marketing fee of * US/MMBtu on 40% of the volumes giving
      rise to the Gross Margin generated from the Portfolio, which fee shall be
      distributed to the Shell Partner Group and the Tejas Partner Group in
      equal shares. The remaining 60 percent of the Gross Margin generated from
      the Portfolio during such period will be distributed to the Shell Partner
      Group and the Tejas Partner Group in equal shares, as provided in SECTION
      4.3(a). If the * is settled or renegotiated in *, the marketing fee of *
      US/MMBtu will be reduced to * US/MMBtu for the period from the effective
      settlement date of that contract until the end of *. A distribution to a
      Partner Group pursuant to this SECTION 3.7(d) shall be dealt with in the
      same manner as a Preferred Return under SECTION 3.6(a) except that it
      shall have priority in any allocation under SECTION 5.1 OR 5.3 and, at the
      option of Salmon GP, it shall have priority to any distribution under
      SECTION 4.1 OR 4.2.

                                    -33-
<PAGE>
                                  ARTICLE IV

                                 DISTRIBUTIONS

      4.1 DISTRIBUTIONS. Subject to limitations contained in any bank credit
facility or agreement of the Partnership, the Partnership shall, from time to
time, distribute to the Partners cash in an amount equal to the Partnership's
NIBT for each quarter on or before the last Business Day of the first month
following such calendar quarter (in each case, reduced by any amount previously
distributed to the Partners with respect to such calendar quarter pursuant to
other provisions of this Article IV). Unless and until otherwise approved by the
Board, each Partner shall re-contribute to the capital of the Partnership an
amount equal to the excess, if any, of (a) the distribution to such Partner
under the preceding sentence over (b) distributions to which such Partner is
entitled with respect to such calendar quarter under SECTIONS 4.3, 4.4 AND 4.5.
Such re-contributions shall be made on the first Business Day following the date
of the distributions from the Partnership pursuant to the first sentence of this
SECTION 4.1, and the Partnership shall have all the rights and remedies provided
under Section 3.4(d), the same as though the contributions were made in
satisfaction of a capital call pursuant to Section 3.4(b). Re-distributions
(under this ARTICLE IV) of amounts previously re-contributed by the Partners
under this SECTION 4.1 (with respect to NIBT prior to April 1, 1997) shall be
made 50% to the Shell Partner Group and 50% to the Tejas Partner Group,
allocated to Partners within each such Partner Group in proportion to their
respective Partnership Percentages. Re-distributions (under this ARTICLE IV) of
amounts previously re-contributed by the Partners under this SECTION 4.1 (with
respect to NIBT from and after April 1, 1997) shall be made to the Partners in
proportion to their respective re-contributions of such previous distributions.
After (but not before) re-contributions pursuant to the second sentence of this
SECTION 4.1 have ceased, the Partnership shall begin to re-distribute amounts
previously re-contributed as cash becomes available for distribution. Such
amounts shall be re-distributed in the same chronological order in which they
were re-contributed and in the same proportions (determined on a quarter by
quarter basis) in which they were re-contributed by the Partners. After all
re-contributed amounts have been re-distributed, distributions shall resume in
accordance with SECTION 4.2. Except as provided in the preceding provisions of
this SECTION 4.1 or SECTION 10.1 (relating to distributions upon liquidation of
the Partnership), the Partnership shall distribute cash only at such times and
in such amounts as determined by the Board; provided that, without unanimous
Board approval, the Partnership shall not make distributions out of the initial
capital (before amortization of contributed contracts) contributed by the
Partners as described on EXHIBITS A1 AND A4 (except such distributions as are
re-contributed to the Partnership by the Partners pursuant to this SECTION 4.1).

      4.2 GENERAL RULE. Except as expressly otherwise provided in this ARTICLE
IV or SECTION 10.1 (relating to distributions upon liquidation of the
Partnership), all distributions shall be made to the Partners in proportion to
their respective shares of Partnership income allocated to them in accordance
with ARTICLE V.

                                    -34-
<PAGE>
      4.3   DISTRIBUTION OF PORTFOLIO EARNINGS.

            (a) Distributions pursuant to SECTION 3.7(d) shall be made 40% to
      Salmon LP, 30% to the Shell Partner Group, and 30% to the Tejas Partner
      Group until such time as the Partnership has distributed under this
      SECTION 4.3(a) an aggregate amount equal to the Gross Margin generated
      from the Portfolio from the Effective Date through December 31, 1997.
      Amounts distributed to the Shell Partner Group and the Tejas Partner Group
      under this SECTION 4.3(a) shall be distributed among the members of each
      such group prorata according to the members respective Partnership
      Percentages.

            (b) If the total distributions Salmon LP receives under SECTION
      4.3(a) are less than the total allocations of income to Salmon LP under
      SECTION 5.2 (a "distribution shortfall"), then distributions otherwise
      payable to the Shell Partner Group and the Tejas Partner Group shall
      instead be made to Salmon LP until such distribution shortfall has been
      eliminated. If the total distributions Salmon receives under SECTION
      4.3(a) exceed the total allocations of income (if any) that are made to
      Salmon LP under SECTION 5.2 (an "excess distribution"), or if Salmon has
      been allocated losses under SECTION 5.2 (in such case, the sum of any
      distribution made to Salmon LP under SECTION 4.3(a) plus such losses
      constituting an "excess distribution"), then distributions otherwise
      payable to Salmon LP shall instead be made 50% to the Shell Partner Group
      and 50% to the Tejas Partner Group until the Shell Partner Group and the
      Tejas Partner Group have together received distributions under this
      SECTION 4.3(b) equal to such excess distribution. Amounts distributed to
      the Shell Partner Group and the Tejas Partner Group under this SECTION
      4.3(b) shall be distributed among the members of each such group prorata
      according to their respective Partnership Percentages.

      4.4   TAX DISTRIBUTIONS.

            (a) CURRENT TAX LIABILITY DISTRIBUTIONS. Prior to any distribution
      being made pursuant to SECTION 4.2 AND 4.3, during each Fiscal Year, the
      Partnership shall (i) make distributions to each Partner equal to such
      Partner's Tax Amount. Such distributions shall be made from time to time
      during the Fiscal Year (or during the following January) as the Board
      determines would correspond to the estimated tax payment obligations of
      the Partners. The Board may designate a distribution made during January
      as a tax distribution with respect to the prior Fiscal Year. The Board may
      delay, reduce or eliminate a Tax Distribution, provided that any such
      delay or reduction shall affect the timing and amount of distributions to
      each Partner prorata (based upon the distributions they would otherwise
      receive under this SECTION 4.4(a)).

            (b) INCREASED TAX LIABILITY UNDER TAX CONTESTS. If the taxable
      income of the Partnership is increased by any taxing authority and the
      Partnership settles or receives a determination as defined in Section
      1313(a) of the Code, the Board shall make an additional Tax Distribution
      under the procedures described in

                                    -35-
<PAGE>
      SECTION 4.4(a) using the increased taxable income of the Partnership to
      calculate the Tax Amount for this distribution.

      4.5   SPECIAL DISTRIBUTIONS.

            (a) As soon as practicable following its receipt of any amount as a
      distribution with respect to the Class A Common Stock, or as consideration
      for the sale, exchange or other disposition of the Class A Common Stock,
      the Partnership shall distribute such amount to the members of the Shell
      Partner Group prorata among themselves according to their respective
      Partnership Percentages.

            (b) As soon as practicable following its receipt of any amount as a
      distribution with respect to the Class B Common Stock, or as consideration
      for the sale, exchange or other disposition of the Class B Common Stock,
      the Partnership shall distribute such amount to the members of the Tejas
      Partner Group prorata among themselves according to their respective
      Partnership Percentages.

            (c) As soon as practicable following its receipt of any Salmon
      Marketing Fee, the Partnership shall distribute 50% of such fee to the
      Shell Partner Group and 50% of such fee to the Tejas Partner Group.
      Amounts distributed to the Shell Partner Group and the Tejas Partner Group
      under this SECTION 4.5(c) shall be distributed among the members of each
      such group prorata among themselves according to their respective
      Partnership Percentages.

            (d) As soon as practicable following its receipt of any interest
      payment on any promissory note given by a Partner in payment or partial
      payment for its Interest, the Partnership shall distribute such interest
      payment to the Partner that made the interest payment.

                                   ARTICLE V

                                  ALLOCATIONS

      5.1 ALLOCATIONS OF INCOME AND LOSS. After giving effect to the special
allocations set forth in SECTIONS 5.2, 5.3, 5.4 AND 5.7(e), income or loss for
any Fiscal Year or portion thereof shall be allocated among the Partners in
accordance with their Partnership Percentages in effect during such period.

      5.2 ALLOCATIONS OF PORTFOLIO EARNINGS. Income and loss shall be allocated
40% to Salmon LP, 30% to the Shell Partner Group, and 30% to the Tejas Partner
Group until such time as the Partnership has allocated under this SECTION 5.2 an
aggregate amount equal to the Gross Margin generated from the Portfolio from the
Effective Date through December 31, 1997. Amounts allocated to the Shell Partner
Group and the Tejas Partner Group under this SECTION 5.2 shall be allocated
among the members of each such group prorata according to the members respective
Partnership Percentages.

                                    -36-
<PAGE>
      5.3   SPECIAL ALLOCATIONS.

            (a) For each Fiscal Year or portion thereof, the Shell Partner Group
      shall be allocated 100% of all items of income, gain, deduction, and loss
      resulting from (i) the Partnership's ownership of the Class A Common
      Stock, (ii) distributions received by the Partnership with respect to the
      Class A Common Stock and (iii) the sale, exchange, distribution, or other
      disposition of the Class A Common Stock. Items allocated under this
      SECTION 5.3(a) shall be allocated among the members of the Shell Partner
      Group prorata in proportion to their respective Partnership Percentages.

            (b) For each Fiscal Year or portion thereof, the Tejas Partner Group
      shall be allocated 100% of all items of income, gain, deduction, and loss
      resulting from (i) the Partnership's ownership of the Class B Common
      Stock, (ii) distributions received by the Partnership with respect to the
      Class B Common Stock and (iii) the sale, exchange, distribution, or other
      dispositions of the Class B Common Stock. Items allocated under this
      SECTION 5.3(b) shall be allocated among the members of the Tejas Partner
      Group prorata in proportion to their respective Partnership Percentages.

            (c) For each Fiscal Year or portion thereof, the Shell Partner Group
      and the Tejas Partner Group shall each be allocated 50% of the income
      attributed to the Salmon Marketing Fee. Income allocated to the Shell
      Partner Group and the Tejas Partner Group under this SECTION 5.3(c) shall
      be allocated among the members of such groups prorata according to their
      respective Partnership Percentages.

            (d) For purposes of computing income, gain, deduction and loss,
      amortization from EXHIBIT A4, EXHIBIT C and EXHIBIT D contracts shall be
      allocated to Salmon LP, Shell LP1, Tejas LP1 and Tejas LP2 in the
      following manner:

                  (i)   With respect to periods before January 1, 1997,
                        amortization from EXHIBIT C contracts shall be entirely
                        allocated to Shell LP1 and amortization from EXHIBIT D
                        contracts shall be entirely allocated to Tejas LP1.

                  (ii)  With respect to periods after December 31, 1996 and
                        before April 1, 1997 amortization from EXHIBIT C
                        contracts shall be allocated 75% to Shell LP1 and 25% to
                        Tejas LP2 and amortization from EXHIBIT D contracts
                        shall be entirely allocated to Tejas LP1.

                  (iii) With respect to periods from and after April 1, 1997:

                        (A)   amortization from EXHIBIT A4 contracts shall be
                              allocated entirely to Salmon LP;


                                    -37-
<PAGE>
                        (B)   amortization from EXHIBIT C contracts shall be
                              allocated 25% to Tejas LP2, the balance first in
                              the Applicable Amount to Salmon LP, and then the
                              remainder, if any, to Shell LP1. The total
                              amortization allocated to Salmon LP under this
                              Section 5.3(d)(iii)(B) shall not exceed the
                              Aggregate Applicable Amount.

                        (C)   amortization from EXHIBIT D contracts and Tejas
                              LP2's 25% of the amortization from EXHIBIT C
                              contracts shall be allocated first in the
                              Applicable Amount to Salmon LP. The balance, if
                              any, of the amortization from EXHIBIT D contracts
                              shall be allocated to Tejas LP1. The total
                              amortization allocated to Salmon LP under this
                              SECTION 5.3(d)(iii)(C) shall not exceed the
                              Aggregate Applicable Amount.

            (e) Income attributable to interest on any promissory note given by
      a Partner in payment or partial payment for its Interest in the
      Partnership shall be specially allocated to the Partner that owes such
      interest payment.


      5.4 REGULATORY ALLOCATIONS. The following allocations shall be made in the
following order:

            (a) DEFICIT CAPITAL ACCOUNT PROHIBITIONS. Notwithstanding any
      provision of SECTIONS 5.1 THROUGH 5.3, no deductions or losses shall be
      allocated to any Limited Partner to the extent that such an allocation
      would cause such Limited Partner to have an Adjusted Capital Account
      Deficit (determined after all cash distributions for the Fiscal Year) at
      the end of the Fiscal Year to which such allocation relates. All losses in
      excess of the limitation set forth in the preceding sentence shall be
      allocated among those Limited Partners that will not have an Adjusted
      Capital Account Deficit at the end of the Fiscal Year in the ratio of
      their relative positive Capital Account balances. In any Fiscal Year in
      which all the Limited Partners will have an Adjusted Capital Account
      Deficit, all losses in excess of the limitations described in the first
      two sentences of this SECTION 5.4(a) shall be allocated (i) to the General
      Partner, if any, that is a member of such Limited Partner's Partner Group
      or (ii) otherwise, to the General Partners in proportion to their positive
      Capital Account balances.

            (b) MINIMUM GAIN CHARGEBACK. Notwithstanding any other provisions of
      this ARTICLE V, except as provided in Section 1.704-2(f) of the
      Regulations, if there is a net decrease in Partnership Minimum Gain during
      any Fiscal Year, each Partner shall be allocated items of Partnership
      income and gain for such year (and, if necessary, subsequent years) in an
      amount equal to such Partner's share of the net decrease in Partnership
      Minimum Gain, determined in accordance with Section 1.704-2(g) of the
      Regulations. Allocations pursuant to the previous sentence shall be made
      in proportion to the respective amounts required to be

                                    -38-
<PAGE>
      allocated to each Partner pursuant thereto. The items to be so allocated
      shall be determined in accordance with Sections 1.704-2(f)(6) and
      1.704-2(j)(2) of the Regulations. This SECTION 5.4(b) is intended to
      comply with the minimum gain chargeback requirement in Section 1.704-2(f)
      of the Regulations and shall be interpreted consistently therewith.

            (c) CHARGEBACK OF PARTNER NONRECOURSE DEBT MINIMUM GAIN.
      Notwithstanding the other provisions of this ARTICLE V (other than SECTION
      5.4(b), except as provided in Section 1.704-2(i)(4) of the Regulations),
      if there is a net decrease in Partner Nonrecourse Debt Minimum Gain during
      any Partnership Fiscal Year, any Partner with a share of Partner
      Nonrecourse Debt Minimum Gain, determined in accordance with Section
      1.704-2(i)(5) of the Regulations, shall be allocated items of Partnership
      income and gain for such period (and if necessary, subsequent periods) in
      an amount equal to such Partner's share of the net decrease in Partner
      Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
      Debt, determined in accordance with Section 1.704-2(i)(4) of the
      Regulations. Allocations pursuant to the previous sentence shall be made
      in proportion to the respective amounts required to be allocated to each
      Partner pursuant thereto. The items to be so allocated shall be determined
      in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the
      Regulations. This SECTION 5.4(c) is intended to comply with the minimum
      gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations
      and shall be interpreted consistently therewith.

            (d) QUALIFIED INCOME OFFSET. In the event any Limited Partner
      unexpectedly receives any adjustments, allocations, or distributions
      described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
      1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Partnership income
      and gain shall be specially allocated to each such Limited Partner in an
      amount and manner sufficient to eliminate, to the extent required by the
      Regulations, the Adjusted Capital Account Deficit of such Limited Partner
      as quickly as possible, provided that an allocation pursuant to this
      SECTION 5.4(d) shall be made only if and to the extent that such Limited
      Partner would have an Adjusted Capital Account Deficit after all other
      allocations provided for in this ARTICLE V have been tentatively made as
      if this SECTION 5.4(d) were not in this Agreement. This SECTION 5.4(d) is
      intended to constitute a "qualified income offset" within the meaning of
      Section 1.704- 1(b)(2)(ii) of the Regulations, and shall be interpreted
      consistently therewith.

            (e) GROSS INCOME ALLOCATION. In the event any Limited Partner has an
      Adjusted Capital Account Deficit at the end of any Fiscal Year which is in
      excess of the sum of (i) the amount such Limited Partner is obligated to
      restore pursuant to any provision of this Agreement and (ii) the amount
      such Limited Partner is deemed to be obligated to restore pursuant to the
      penultimate sentences of Section 1.704-2(g)(1) and 1.704-2(i)(5) of the
      Regulations, each such Limited Partner shall be specially allocated items
      of Partnership income and gain in the amount of such excess as quickly as
      possible, provided that an allocation pursuant to this SECTION

                                    -39-
<PAGE>
      5.4(e) shall be made only if and to the extent that such Limited Partner
      would have an Adjusted Capital Account Deficit in excess of such sum after
      all other allocations provided for in this ARTICLE V have been made as if
      SECTION 5.4(d) and this SECTION 5.4(e) were not in this Agreement.

            (f) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Fiscal
      Year shall be allocated to the Partners in accordance with their
      Partnership Percentages.

            (g) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
      Deductions for any Fiscal Year or other period shall be specially
      allocated to the Partner who bears the economic risk of loss with respect
      to the Partner Nonrecourse Debt to which such Partner Nonrecourse
      Deductions are attributable in accordance with Section 1.704-2(i)(1) of
      the Regulations.

            (h) SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
      adjusted tax basis of any Partnership asset pursuant to Code Section
      734(b) or Code Section 743(b) is required, pursuant to Sections
      1.704-1(b)(2)(iv)(M)(2) or (4) of the Regulations, to be taken into
      account in determining Capital Accounts, the amount of such adjustment to
      the Capital Accounts shall be treated as an item of gain (if the
      adjustment increases the basis of the asset) or loss (if the adjustment
      decreases such basis) and such gain or loss shall be specially allocated
      to the Partners in a manner consistent with the manner in which their
      Capital Accounts are required to be adjusted pursuant to such Section of
      the Regulations.

            (i) INCOME/DEDUCTION ALLOCATIONS. In the event that a net deduction
      or loss is imputed to the Partnership as a result of the imputation of
      income or gain to any Partner by any taxing authority, such resulting
      deduction or loss shall be allocated among the Partners in the same
      proportion as the Partners are required to recognize the corresponding
      income or gain.

      5.5 CURATIVE ALLOCATIONS. The allocations set forth in SECTIONS 5.4(a)
THROUGH (h) (the "REGULATORY ALLOCATIONS") are intended to comply with certain
requirements of the Regulations. It is the intent of the Partners that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Partnership
income, gain, loss or deduction pursuant to this SECTION 5.5. Therefore,
notwithstanding any other provision of this ARTICLE V (other than the Regulatory
Allocations and the following sentence), the Board shall make such offsetting
special allocations of Partnership income, gain, loss or deduction in whatever
manner it determines appropriate so that, after such offsetting allocations are
made, each Partner's Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of this Agreement and all Partnership items were
allocated pursuant to SECTIONS 5.1, 5.2, 5.3, 5.4(i) AND 5.6. Notwithstanding
the previous sentence, the Board shall not be required to make special
allocations of income or gain under this SECTION 5.5 to offset Regulatory
Allocations previously made under SECTIONS 5.4(f) AND 5.4(g). To the extent a
Regulatory Allocation is the result of allocating amortization in accordance
with SECTION 5.3(d), the amount of such Regulatory

                                    -40-
<PAGE>
Allocation shall be accumulated and future income allocations for the Partner
causing such Regulatory Allocation shall be reduced until the effect of such
Regulatory Allocation has been eliminated.

      5.6   OTHER ALLOCATION RULES.

            (a) In the event the Partnership Percentages of the Partners are
      adjusted during a Fiscal Year, the allocations required by this Article V
      shall be made for such Fiscal Year by allocating the items of income,
      gain, loss, and deduction of the Partnership based on the Partnership
      Percentages in effect from time to time during the year. Absent an
      agreement of the Board to the contrary, the Partnership shall utilize the
      interim closing of the books method to apportion the items of income to
      the periods of time before and after a change in the Partnership
      Percentages of the Partners.

            (b) All allocations to the Partners pursuant to this ARTICLE V
      shall, except as otherwise expressly provided, be divided among them in
      proportion to their Partnership Percentages.

            (c) Except as otherwise provided in this Agreement, all items of
      Partnership income, gain, loss, deduction, and any other allocations not
      otherwise provided for shall be divided among the Partners in the same
      proportions as they share profits or losses, as the case may be. However,
      notwithstanding any other provision of this Agreement, the General
      Partners shall be allocated not less than 1%, in the aggregate of each
      item of Partnership income gain, loss, deduction or credit, except to the
      extent such an allocation would be contrary to the provisions of Section
      704(b) or (c) of the Code and related Regulations.

            (d) The Partners are aware of the income tax consequences of the
      allocations made by this ARTICLE V and hereby agree to be bound by the
      provisions of this ARTICLE V in reporting their shares of Partnership
      income and loss for income tax purposes.

            (e) Solely for purposes of determining a Partner's proportionate
      share of the "excess nonrecourse liabilities" of the Partnership within
      the meaning of Section 1.752- 3(a)(3) of the Regulations, the Partners'
      interests in Partnership profits are in proportion to their Partnership
      Percentages.

            (f) To the extent permitted by Sections 1.704-2(h) and 1.704-2(i)(6)
      of the Regulations, the Board shall endeavor to treat distributions as
      having been made from the proceeds of a Nonrecourse Liability or a Partner
      Nonrecourse Debt only to the extent that any such distribution would not
      cause or increase an Adjusted Capital Account Deficit for any Limited
      Partner.

                                    -41-
<PAGE>
      5.7   ALLOCATIONS FOR TAX PURPOSES.

            (a) Except as otherwise provided herein, for federal income tax
      purposes, each item of income, gain, loss and deduction shall be allocated
      among the Partners in the same manner as its correlative item of "book"
      income, gain, loss or deduction is allocated pursuant to SECTIONS 5.1
      THROUGH 5.6.

            (b) In an attempt to eliminate Book-Tax Disparities attributable to
      a Contributed Property or Adjusted Property, items of income, gain, loss,
      depreciation, amortization and cost recovery deductions shall be allocated
      for federal income tax purposes among the Partners as follows:

                  (i) (A) In the case of a Contributed Property, such items
            attributable thereto shall be allocated among the Partners in the
            manner provided under Section 704(c) of the Code that takes into
            account the variation between the Agreed Value of such Contributed
            Property and its adjusted basis at the time of contribution; and (B)
            except as otherwise provided in SECTION 5.7(b)(iv), any item of
            Residual Gain or Residual Loss attributable to a Contributed
            Property shall be allocated among the Partners in the same manner as
            its correlative item of "book" gain or loss is allocated pursuant to
            SECTIONS 5.1 THROUGH 5.6.

                  (ii) (A) In the case of an Adjusted Property, such items shall
            (1) FIRST, be allocated among the Partners in a manner consistent
            with the principles of Section 704(c) of the Code to take into
            account the Unrealized Gain or Unrealized Loss attributable to such
            property and the allocations thereof pursuant to SECTION 3.5(d) OR
            3.5(e), and (2) SECOND, in the event such property was originally a
            Contributed Property, be allocated among the Partners in a manner
            consistent with SECTION 5.7(b)(i); and (B) except as otherwise
            provided in SECTION 5.7(b)(iv), any item of Residual Gain or
            Residual Loss attributable to an Adjusted Property shall be
            allocated among the Partners in the same manner as its correlative
            item of "book" gain or loss is allocated pursuant to SECTIONS 5.1
            THROUGH 5.6. For purposes of this provision, consistent with the
            allocation of depreciation, amortization or cost recovery of the
            Carrying Value of Partnership property pursuant to SECTION 5.4(i) to
            the Partner whose Capital Account was adjusted to reflect the Net
            Agreed Value of a Contributed Property, the depreciation,
            amortization or cost recovery deductions computed for federal income
            tax purposes shall be allocated in the same manner as its
            correlative item of "book" depreciation, amortization or cost
            recovery deduction.

                                    -42-
<PAGE>
                  (iii) Except as otherwise provided in SECTION 5.7(b)(iv), all
            other items of income, gain, loss and deduction shall be allocated
            among the Partners in the same manner as their correlative item of
            "book" gain or loss is allocated pursuant to SECTIONS 5.1 THROUGH
            5.6.

                  (iv) Any items of income, gain, loss or deduction otherwise
            allocable under SECTION 5.7(a), 5.7(b)(ii) OR 5.7(b)(iii), at the
            election of the Board, shall be subject to allocation in any manner
            allowed under Section 1.704-3 of the Regulations that is designed to
            eliminate, to the maximum extent possible, Book-Tax Disparities in a
            Contributed Property or Adjusted Property otherwise resulting from
            the application of the "ceiling" limitation (under Section 704(c) of
            the Code or Section 704(c) principles) to the allocations provided
            under SECTION 5.7(b)(i)(A) OR 5.7(b)(ii)(A).

            (c) Any gain allocated to the Partners upon the sale or other
      taxable disposition of any Partnership asset shall, to the extent
      possible, after taking into account other required allocations of gain
      pursuant to this SECTION 5.7, be characterized as Recapture Income in the
      same proportions and to the same extent as such Partners (or their
      predecessors in interest) have been allocated any deductions directly or
      indirectly giving rise to the treatment of such gains as Recapture Income.

            (d) All items of income, gain, loss, deduction and credit recognized
      by the Partnership for federal income tax purposes and allocated to the
      Partners in accordance with the provisions hereof shall be determined
      without regard to any election under Section 754 of the Code which may be
      made by the Partnership; PROVIDED, HOWEVER, that such allocations, once
      made, shall be adjusted as necessary or appropriate to take into account
      those adjustments permitted or required by Sections 734 and 743 of the
      Code.

            (e) (i) This SECTION 5.7(e)(i) shall apply to gross income earned
      and True-up payments made with respect to periods before January 1, 1997.
      Gross income, as defined under the Code, arising from natural gas
      contracts described in EXHIBIT C and EXHIBIT D shall be allocated 66-2/3%
      to Shell LP1 and 33-1/3% to Tejas LP1. Gross income specially allocated to
      the Partners in this SECTION 5.7(e)(i) shall be further adjusted for
      True-up payments made by Shell LP1 and by Tejas LP1 (the "True-up
      Adjustment"). The True-up Adjustment occurs after the special allocation
      described in the second sentence of this SECTION 5.7(e)(i). Shell LP1's
      gross income allocation will be increased by, and Tejas LP1's gross income
      allocation will be decreased by, 66-2/3% of the True-up payment to be made
      by Tejas LP1 to the Partnership. Tejas LP1's gross income allocation will
      be increased by, and Shell LP1's gross income allocation will be decreased
      by, 33-1/3% of the True-up payment to be made by Shell LP1 to the
      Partnership.

                                    -43-
<PAGE>
            (ii) This SECTION 5.7(e)(ii) shall apply to gross income earned and
      True-up payments made with respect to periods after December 31, 1996 and
      before April 1, 1997. Gross income, as defined under the Code, arising
      from natural gas contracts described in EXHIBIT C and EXHIBIT D shall be
      allocated 50% to Shell LP1, 33-1/3% to Tejas LP1 and 16-2/3% to Tejas LP2.
      Gross income specially allocated to the Partners in this SECTION
      5.7(e)(ii) shall be further adjusted for True-up payments made by Shell
      LP1 and by Tejas LP1 (the "True-up Adjustment"). The True-up Adjustment
      occurs after the special allocation described in the second sentence of
      this SECTION 5.7(e)(ii). Shell LP1's gross income allocation will be
      increased by 50% of the True-up payment to be made by Tejas LP1 to the
      Partnership, Tejas LP2's gross income allocation will be increased by
      16-2/3% of the True-up payment to be made by Tejas LP1 to the Partnership,
      and Tejas LP1's gross income allocation will be decreased by 66-2/3% of
      the True-up payment to be made by Tejas LP1 to the Partnership. Tejas
      LP1's gross income allocation will be increased by 33-1/3% of the True-up
      payment to be made by Shell LP1 to the Partnership, Tejas LP2's gross
      income allocation will be increased by 16-2/3% of the True-up payment to
      be made by Shell LP1 to the Partnership, and Shell LP1's gross income
      allocation will be decreased by 50% of the True-up payment to be made by
      Shell LP1 to the Partnership.

            (iii) This SECTION 5.7(e)(iii) shall apply to gross income earned
      and True-up payments made with respect to the period from and after April
      1, 1997. Subject to SECTION 3.7(d), gross income, as defined under the
      Code, arising from natural gas contracts described in EXHIBIT A4, EXHIBIT
      C and EXHIBIT D shall be allocated 12% to Salmon LP, 44% to Shell LP1,
      33-1/3% to Tejas LP1, and 10-2/3% to Tejas LP2. Gross income specially
      allocated to the Partners in this SECTION 5.7(e)(iii) shall be further
      adjusted for True-up payments made by Shell LP1 and by Tejas LP1 (the
      "True-up Adjustment"). The True-up Adjustment occurs after the special
      allocation described in the second sentence of this SECTION 5.7(e)(iii).
      Tejas LP1's gross income allocation will be increased by 33-1/3% of the
      True-up payment to be made by Shell LP1 to the Partnership, Tejas LP2's
      gross income allocation will be increased by 10-2/3% of the True-up
      payment to be made by Shell LP1 to the Partnership, Salmon LP's gross
      income allocation will be increased by 12% of the True-up payment to be
      made by Shell LP1 to the Partnership, and Shell LP1's gross income
      allocation will be decreased by 56% of the True-up payment to be made by
      Shell LP1 to the Partnership. Shell LP1's gross income allocation will be
      increased by 44% of the True-up payment to be made by Tejas LP1 to the
      Partnership, Salmon LP's gross income allocation will be increased by 12%
      of the True-up payment to be made by Tejas LP1 to the Partnership, Tejas
      LP2's gross income allocation shall be increased by 10-2/3% of the True-up
      payment to be made by Tejas LP1, and Tejas LP1's gross income allocation
      will be decreased by 66-2/3% of the True-up payment to be made by Tejas
      LP1 to the Partnership.

                                    -44-
<PAGE>
                                  ARTICLE VI

                         MANAGEMENT OF THE PARTNERSHIP

      6.1   BOARD.

            (a) Except as specifically delegated in SECTIONS 6.2 AND 6.3 or as
      otherwise expressly set forth herein, the management and control of the
      business and affairs of the Partnership shall be exclusively vested in a
      five person governing board (the "Board") the members of which shall be
      appointed, removed and replaced as provided herein. The Shell GP and the
      Tejas GP shall each designate two persons as members of the Board and
      Salmon GP shall designate one person as a member of the Board. The current
      Board members, to serve until their successors have been duly appointed,
      shall be James W. Whalen (appointed by Tejas GP), Jack E. Little
      (appointed by Shell GP), Jay A. Precourt (appointed by Tejas GP), and
      Dominique Gardy (appointed by Shell GP). The member of the Board to be
      appointed by Salmon GP shall be Neal G. McKim. Any of the Salmon GP, the
      Shell GP or the Tejas GP may remove any of its designees, or in the case
      of Salmon GP, its designee, at any time and replace such member pursuant
      to the second preceding sentence.

            (b) If the CEO is an employee or former employee of a Partner or an
      Affiliate of a Partner, the General Partner by whom (or by whose
      Affiliate) the CEO was not most recently employed, shall designate a
      member of the Board to act as Chairman of the Board. Otherwise, the
      Chairman of the Board shall be elected by the Board. The current Chairman
      of the Board is Jay A. Precourt (appointed by Tejas) and the current CEO
      is Murry Gerber.

            (c) Regular meetings of the Board shall be held at least quarterly
      and shall be called and scheduled by the Chairman at least thirty calendar
      days in advance thereof. Special meetings of the Board may be held at any
      time upon the call of the Chairman, the CEO, or any two Board members on
      at least three business days notice, unless such notice is waived by all
      members. The member(s) or CEO calling the meeting shall give notice to
      each other member by facsimile transmission sent to the facsimile number
      for such notice that has been given by such member. A quorum shall exist
      for any meeting of the Board if at least two members of the Board are in
      attendance provided that such quorum includes at least one Board member
      designated by Shell GP and one Board member designated by Tejas GP.
      Attendance at any such meeting by any director designated by Tejas GP
      shall constitute a waiver of notice of such meeting by all directors
      designated by Tejas GP, and attendance at any such meeting by any director
      designated by Shell GP shall constitute a waiver of notice of such meeting
      by all directors appointed by Shell GP. Any or all members may attend the
      meeting telephonically. Risk positions and controls will be on the agenda
      of each Board meeting, if requested by any member of the Board.

                                    -45-
<PAGE>
            (d) Unanimous Board approval shall be required for capital calls
      that would cause the Salmon U.S. Partner Group's Additional Capital
      Contributions to exceed U.S. $10 million in any calendar year (excluding
      recontributions of amounts distributed by the Partnership to the Partners
      periodically in excess of the Partners' Tax Amounts). Any and all other
      actions of the Board shall be taken by the affirmative vote of not less
      than eighty percent (80%) of the members of the Board. A member of the
      Board appointed by either Shell GP or Tejas GP absent from a meeting
      automatically shall be deemed to have given his proxy to the other member
      of the Board designated by the same General Partner, to vote on behalf of
      the absent member. The Board shall have the sole and exclusive right to
      manage the business of the Partnership and shall when acting in accordance
      with this Agreement have all of the rights and powers that may be
      possessed by a general partner under the Act. Members of the Board shall
      carry out the purposes and business of the Partnership in accordance with
      this Agreement; devote to the Partnership's business such time as
      reasonably shall be required; supervise performance of Officers of the
      Partnership; and conduct the affairs of the Partnership in the best
      interest of the Partnership and the Partners. The Board shall at least
      annually approve and adopt an updated Business Plan. Such Business Plan
      shall be the basis of Partnership operations for the following 12 months
      and will be used as a basis for measuring executive performance and
      determining executive compensation. In lieu of acting at a properly called
      meeting, the Board may act by written consent of the number of directors
      whose vote would be required to approve such action at a meeting of the
      Board.

            (e) The Partnership shall reimburse members of the Board for their
      out-of-pocket expenses incurred in connection with their duties as a
      member of the Board. The members of the Board may receive such
      compensation for their service as a member of the Board, as the General
      Partners shall determine from time to time.

            (f) In addition to the powers now or hereafter granted a general
      partner of a limited partnership under applicable law or which are granted
      to the Board under any other provision of this Agreement, the Board,
      subject to SECTION 6.3, shall have full power and authority to do all
      things and on such terms as it, in its sole discretion, may deem necessary
      or appropriate to conduct the business of the Partnership, to exercise all
      powers, and to effectuate the purposes, set forth in ARTICLE II, including
      without limitation:

                  (i) the making of any expenditures, the lending or borrowing
            of money, the assumption or guarantee of, or other contracting for,
            indebtedness and other liabilities, the issuance of evidences of
            indebtedness and the incurring of any other obligations and the
            securing of same by mortgage, deed of trust or other lien or
            encumbrance;

                                    -46-
<PAGE>
                  (ii) the disposition, mortgage, pledge, encumbrance,
            hypothecation or exchange of any or all of the assets of the
            Partnership or the merger or other combination of the Partnership
            with or into another Person (the matters described in this clause
            (ii) being subject, however, to any prior approval that may be
            required by SECTION 6.3);

                  (iii) the making of any material change in any agreement
            between the Partnership and a Partner or Affiliate of a Partner;

                  (iv) the approval of the annual budget together with
            construction and operating budgets;

                  (v) the purchase, lease or other acquisition of property or
            purchase of services in an amount in excess of prior Board
            authorizations;

                  (vi) the selection of accountants and auditors;

                  (vii) the adoption of material accounting and tax policies,
            procedures and principles;

                  (viii) the making of any borrowings in excess of prior Board
            authorizations;

                  (ix) the making of any material changes to the form of
            employment agreement;

                  (x) the making of any material changes to any employee benefit
            plan;

                  (xi) the determining of the amount and timing of Partnership
            distributions;

                  (xii) the making of any filing for bankruptcy following a
            winding-up or dissolution of the Partnership approved as provided in
            SECTION 6.3;

                  (xiii) the making of any material public announcements;

                  (xiv) the modification or establishment of risk management
            policies;

                  (xv) the admission of new Partners subject to SECTIONS 6.3(b)
            and 6.3(d);

                                    -47-
<PAGE>
                  (xvi) the request of any Additional Capital Contributions in
            accordance with SECTION 3.4;

                  (xvii) the selection and dismissal of employees and agents,
            outside attorneys, accountants, consultants and contractors and
            determination of their compensation and other terms of employment or
            hiring;

                  (xviii) the formation of, or acquisition of an interest in,
            and the contribution of property to, any further limited or general
            partnerships, joint ventures, corporations or other relationships;

                  (xix) the institution of (r) policies for the protection of
            confidential information, (s) business conduct guidelines, (t)
            non-compete provisions with its key employees, (u) employment
            contracts with key employees, and (v) key person insurance for key
            employees;

                  (xx) the institution of employee retirement plans, and welfare
            benefits plans, including medical, dental, and disability insurance;

                  (xxi) the indemnification of any Person by the Partnership
            against liabilities and contingencies to the extent permitted by
            law, except that either the Officers or the Board may approve any
            contracts, conveyances or other instruments entered into in the
            ordinary course of the Partnership's business;

                  (xxii) the purchase, sale or other acquisition or disposition
            of Interests;

                  (xxiii) the authorization of the Initial Agreements on behalf
            of the Partnership;

                  (xxiv) the authorization and approval of contracts for the
            sale or purchase of natural gas, electricity, liquefied natural gas
            or natural gas liquids or liquefiables, having a term in excess of
            five years or requiring a guarantee pursuant to SECTION 12.1 (except
            renewals or extensions of contracts previously guaranteed); and

                  (xxv) the determination of the economic requirement for a
            credit rating to meet the ongoing needs of the Partnership.

            (g) Notwithstanding the foregoing, in the case of dispute, potential
      dispute, negotiation, or renegotiation between the Partnership and any
      General Partner or Affiliate of a General Partner, or in the case of any
      notice to be given,

                                    -48-
<PAGE>
      or option, right of first refusal, or other right or privilege to be
      exercised by the Partnership under any agreement between the Partnership
      and any General Partner or Affiliate of a General Partner (including,
      without limitation, the decision of the Partnership to retire a Partner's
      Interest under SECTION 8.5), then those members of the Board not appointed
      by such General Partner shall exclusively have all powers of the Board and
      the General Partners to cause the Partnership to initiate, pursue, settle
      such dispute, to be given such notice, to exercise such option, right of
      first refusal, or other right or privilege, or to waive any rights of the
      Partnership against or amend any agreement with such General Partner or
      its Affiliate or otherwise act in such matter on behalf of the
      Partnership.

      6.2   OFFICERS.

            (a) The Partnership shall have employees or agents who are
      denominated as Officers (including, but not limited to, a Chief Executive
      Officer ("CEO"), a Chief Financial Officer, and Senior Vice Presidents or
      Vice Presidents of Market Development, Trading and Risk Management), as
      the Board may designate from time to time (the "OFFICERS"). The CEO shall
      annually update the Business Plan and submit it to the Board for comment,
      revision and approval. The Officers will establish internal financial
      procedures and bookkeeping practices to conform with bookkeeping
      guidelines established in consultation with the Board.

            (b) The Officers shall be responsible for implementing the decisions
      of the Board and for conducting the ordinary and usual business and
      affairs of the Partnership, including, subject to the policies and
      limitations established by the Board:

                  (i) the making of tax, regulatory and other filings, or
            rendering of periodic or other reports to governmental or other
            agencies having jurisdiction over the business or assets of the
            Partnership;

                  (ii)  the acquisition or disposition of assets of the
            Partnership in the ordinary course of its business;

                  (iii) the use of the assets of the Partnership (including,
            without limitation, the financing of the conduct of the operations
            of the Partnership, the lending of funds to other Persons and the
            repayment of obligations of the Partnership);

                  (iv) the negotiation, execution and performance of any
            contracts, conveyances or other instruments in the ordinary course
            of the Partnership's business, subject to prior approval by the
            Board of contracts for the sale or purchase of natural gas,
            electricity, liquefied natural gas or natural gas liquids or
            liquefiables, having a term in excess of five years or for the sale
            or purchase of natural

                                    -49-
<PAGE>
            gas in excess of 150 million cubic feet per day or requiring a
            guarantee pursuant to SECTION 12.1 (except renewals or extensions of
            contracts previously guaranteed);

                  (v)   the maintenance of insurance for the benefit of the
            Partners and the Partnership;

                  (vi) the control of any matters affecting the rights and
            obligations of the Partnership, including, without limitation, the
            bringing and defending of actions at law or in equity and otherwise
            engaging in the conduct of litigation and the incurring of legal
            expense and settlement of claims and litigation up to $500,000 in
            amount; and

                  (vii) the issuance of guarantees by the Partnership to secure
            the contractual obligations of 50%-or-more-owned ventures that it
            holds to the same extent as would be permissible were such
            contractual obligations undertaken by the Partnership itself.

            (c) The Officers shall be entitled to receive for their services to
      the Partnership such compensation as may be determined by the Board from
      time to time, such compensation to be paid by the Partnership. The
      Officers shall at all times be subject to the supervision and control of
      the Board and shall conform to policies and programs established by the
      Board, and the scope of the Officers' authority shall be limited to such
      policies and programs. The acts of the Officers shall bind the Partnership
      when within the scope of the authority of such Officers. Except as
      otherwise authorized by the Board, no other Person shall have authority to
      bind or act for, or assume any obligations or responsibilities on behalf
      of, the Partnership. The Officers shall keep the Board informed as to all
      matters of concern to the Partnership.

      6.3 POWERS RESERVED TO GENERAL PARTNERS. Notwithstanding SECTION 6.1, the
Board shall have the authority to do any of the following only with the prior
written consent:

      (a) of all the General Partners:

            (i) do any act in contravention of this Agreement;

            (ii) make an agreement on behalf of or bind any Partner, except to
      the extent a General Partner, in its capacity as such, may be liable to a
      creditor of the Partnership by operation of law;

            (iii) dispose of the goodwill of the Partnership;

            (iv) cause the performance of any act that would subject any Limited
      Partner to liability as a general partner; or

                                    -50-
<PAGE>
            (v) make a material change to the scope of the Corporation's
      business or strategic direction as set forth in SECTION 2.3 (but the
      consent of Salmon GP to such a change shall not be unreasonably withheld).

      (b)   of Shell GP and Tejas GP:

            (i) which shall only be given in circumstances where such action
      would not commercially disadvantage the Salmon U.S. Partner Group,

                  (A)   become a party to any merger, consolidation, or any
                        other business combination or change of control;

                  (B)   admit any new Partner, except as contemplated by
                        SECTIONS 8.2, 8.3 AND 8.4 of this Agreement; or

            (ii) take any act that would cause the winding up or dissolution of
      the Partnership.

      (c) For the purpose of paragraph 6.3(b)(i), "commercially disadvantage"
means

            (i) to dilute the Interests of Salmon U.S. Partner Group
      disproportionately with the Interests of the Shell Partner Group and the
      Tejas Partner Group,

            (ii) to reasonably be expected to significantly increase the risk of
      curtailment by the Partnership of natural gas supplied by members of the
      Salmon U.S. Partner Group disproportionately to natural gas supplied by
      the Shell Partner Group or the Tejas Partner Group,

            (iii) to reasonably be expected to significantly impair the ability
      of the Salmon U.S. Partner Group to fairly utilize its natural gas
      processing capacity, or

                                    -51-
<PAGE>
            (iv) to reasonably be expected to provide the Shell Partner Group or
      the Tejas Partner Group with a material benefit outside the Partnership
      unless such benefit is proportionately available to the other Partner
      Groups.

      (d) of Salmon GP, which consent will not be unreasonably withheld in the
first case of the admission of a General Partner and one or more Affiliated
Limited Partners whose parent's primary business is the U.S. electric business:

            admit any new Partner, except as contemplated by SECTIONS 8.2, 8.3
      and 8.4 of this Agreement, or become a party to any merger, consolidation,
      or any other business combination or change of control if (x) such action
      would cause the Interests of the Salmon U.S. Partner Group to fall below
      10% in the aggregate or (y) such action would result in the admission of a
      Canadian pipeline or producer as a new Partner (it being understood and
      agreed that a Canadian pipeline or producer is one that has a majority of
      its supply from sources within Canada; a pipeline or producer that has a
      majority of its supply in the U.S. will be considered a U.S. pipeline or
      producer).

                                    -52-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

      6.4   RESOLUTION OF DEADLOCK.

            (a) If any matter presented to the Board or the General Partners for
      action has been considered by a meeting of the Board or by a meeting of
      the General Partners and no resolution has been carried at such meeting in
      relation to the matter, and such matter is still unresolved within 30 days
      from the date of such meeting despite any intervention by the General
      Partners, whether in a General Partner's meeting or otherwise, then such a
      situation shall be termed a "Deadlock." *

            (b) If a Deadlock has occurred and not been resolved, any Partner
      Group can give notice to each other Partner Group of its desire to have
      the provisions of this SECTION 6.4 apply. Within seven days of the
      delivery of such notice, each General Partner shall cause its appointee or
      appointees on the Board to prepare and circulate to the other General
      Partners a memorandum or other form of statement setting out its position
      on the matter in dispute and its reasons for adopting such position. Each
      such memorandum shall be considered by a senior member of the management
      of Salmon GP, of Shell GP and of Tejas GP respectively nominated for the
      purpose who shall use their respective reasonable endeavors to develop
      together and recommend a solution to resolve the Deadlock. If these
      management representatives reach agreement upon a resolution of the
      Deadlock, they shall prepare a form of resolution to be placed before
      meetings of the Board or of the General Partners as appropriate and the
      General Partners shall use their respective reasonable endeavors to ensure
      that such resolutions, if adopted, are promptly carried into effect. If
      the management representatives of Salmon GP, of Shell GP and of Tejas GP
      are unable to reach agreement on a satisfactory resolution of the issue
      creating the Deadlock, except as otherwise provided in SECTION 6.4(c) the
      Partnership shall continue to operate as if the matter in dispute had
      never been raised.

            (c) In the event that, after exhaustion of the efforts to resolve
      the Deadlock under SECTION 6.4(b), a Deadlock still persists for more than
      six months regarding the failure of the Board or the General Partners to
      agree upon (i) a proposal by either the Shell Partner Group or the Tejas
      Partner Group to file for bankruptcy of the Partnership, or (ii) a
      proposal by either the Shell Partner Group or the Tejas Partner Group to
      dissolve the Partnership, then, in either such event, Shell GP or Tejas GP
      may elect to have the Deadlock resolved as provided in SECTION 6.4(e)
      below.

                                    -53-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

            (d)   *

            (e)   *

            (f)   *

            (g) In the event that the Minority Partner Group or a Requesting
      Partner Group sells its entire Interests pursuant to SECTION 6.4(e) or
      6.4(f), then such Minority Partner Group or Requesting Partner Group, by
      notice not less than 10 Business Days before such sale, shall have the
      option to terminate the Supply Agreement, to which any member of such
      Minority Partner Group or Requesting Partner Group is a party as a
      "Seller" thereunder, as to natural gas volumes that are not Committed
      Volumes. Such Supply Agreement shall not terminate, and shall remain in
      full force and effect, as to Committed Volumes. Any such termination as to
      volumes that are not Committed Volumes shall be effective 60 days after
      the closing of the sale by the Minority Partner Group or Requesting
      Partner Group of its Interests in accordance with SECTION 6.4(e) or
      6.4(f).

            (h)   *

      6.5   DUTIES, RIGHTS AND OBLIGATIONS OF PARTNERS.

            (a) The Partners have agreed that it is in the best interest of the
      Partnership and all of its Partners to cause the General Partners to act
      solely through the mechanisms provided herein relating to the appointment
      and authority of the Board. All Partners agree that each General Partner
      shall have fully satisfied all obligations of care it owes to the
      Partnership and the other Partners by virtue of its appointment of members
      to the Board. Except as specifically provided herein, no General Partner
      shall take any act on behalf of or that would bind the Partnership.

            (b) Except as otherwise permitted by this Agreement or applicable
      law, the Limited Partners acting in their capacity as Limited Partners
      shall not have any right (i) to participate in the management or control
      of the Partnership or its business and affairs, (ii) to bring an action
      for partition or sale in connection with the property or assets of the
      Partnership, whether real or personal, or (iii) to act for or bind the
      Partnership in any way.

            (c) In connection with the determination of any and all matters
      presented to the Board or the General Partners for action, the Partners
      agree and acknowledge that each member of the Board will be acting as the
      representative of

                                    -54-
<PAGE>
      the General Partner that appointed such member. Therefore, each such Board
      member may act, and will be fully protected in acting, at the direction or
      control of, or in a manner which such Board members believe is in the best
      interest of, the General Partner (or Affiliates of the General Partner)
      that appointed such Board member without regard to the interest of any
      other Partner or the Partnership. Further, each General Partner, and/or
      Affiliate of the General Partner, may exercise direction and control of
      the decisions of Board members appointed by such General Partner without
      duty to or regard for the interests of any other Partner or the
      Partnership. The Partnership and each Partner therefore waive, to the full
      extent permitted by law, any claim or cause of action against any General
      Partner, Affiliate of any General Partner, or member of the Board
      appointed by a General Partner, asserting, in connection with the
      determination of any and all matters presented to the Board or the General
      Partners for action, breach of fiduciary duty, duty of care, duty of
      loyalty or any other duty, breach of the Act, or breach of any duty
      created by special circumstances arising out of this Agreement or
      otherwise.

      6.6   INDEMNIFICATION OF THE GENERAL PARTNER.

            (a) THE PARTNERSHIP, ITS RECEIVER, OR ITS TRUSTEE SHALL DEFEND,
      INDEMNIFY, SAVE HARMLESS, AND PAY ALL JUDGMENTS AND CLAIMS AGAINST THE
      GENERAL PARTNERS, OR ANY OF THEM, ANY LIMITED PARTNER, THE BOARD, ANY
      BOARD MEMBERS, OR ANY OFFICER (EACH, AN "INDEMNITEE" AND, COLLECTIVELY,
      THE "INDEMNITEES") RELATING TO ANY LIABILITY OR DAMAGE INCURRED BY REASON
      OF ANY ACT PERFORMED OR OMITTED TO BE PERFORMED BY SUCH INDEMNITEE IN
      CONNECTION WITH THE BUSINESS OF THE PARTNERSHIP, INCLUDING REASONABLE
      ATTORNEYS' FEES INCURRED BY SUCH INDEMNITEE IN CONNECTION WITH THE DEFENSE
      OF ANY ACTION BASED ON SUCH ACT OR OMISSION, INCLUDING ANY ACT OR OMISSION
      WHICH CONSTITUTES NEGLIGENCE.

            (b) IN THE EVENT OF ANY ACTION BY A LIMITED PARTNER AGAINST SUCH
      INDEMNITEE, INCLUDING A PARTNERSHIP DERIVATIVE SUIT, THE PARTNERSHIP SHALL
      DEFEND, INDEMNIFY, SAVE HARMLESS, AND PAY ALL EXPENSES OF SUCH INDEMNITEE,
      INCLUDING REASONABLE ATTORNEYS' FEES, INCURRED IN THE
      DEFENSE OF SUCH ACTION.

            (c) NOTWITHSTANDING THE PROVISIONS OF SECTIONS 6.6(a) AND (b) ABOVE,
      AN INDEMNITEE SHALL NOT BE INDEMNIFIED FROM ANY LIABILITY, CLAIM, COST OR
      EXPENSE RESULTING FROM THE FRAUD, WILLFUL CRIMINAL MISCONDUCT OR BREACH OF
      CONTRACT OF SUCH INDEMNITEE.

                                    -55-
<PAGE>
      6.7 PARTNERSHIP ACCOUNTS. The Officers shall establish and maintain one or
more depository accounts as directed by the Board ("PARTNERSHIP ACCOUNTS") for
funds of the Partnership at depositories selected by the Board. The Partnership
Accounts shall be administered in accordance with any contractual agreements to
which the Partnership is a party or by which it is bound, and subject thereto,
in accordance with the business judgment of the Board. If so requested in
writing by any Partner, the CEO shall notify the Partners in writing of the
location of all Partnership Accounts. All funds of the Partnership shall be
deposited in one of the Partnership Accounts and used exclusively for
Partnership purposes. No Partner shall commingle any other funds with the funds
of the Partnership in the Partnership Accounts.

      6.8 APPROVAL BY LIMITED PARTNERS. Unless a different percentage vote is
expressly indicated, all actions taken or approvals given by Limited Partners
shall require the approval of the Limited Partners holding at least 80% of the
Interests of the Limited Partners.

      6.9 RELIANCE BY THIRD PARTIES. Notwithstanding any other provision of this
Agreement to the contrary, no lender or purchaser or other Person, including any
purchaser of property from the Partnership or any other Person dealing with the
Partnership, shall be required to verify any representation by the Board or its
delegatees as to its authority to encumber, sell or otherwise use any assets or
properties of the Partnership, and any such lender, purchaser or other Person
shall be entitled to rely exclusively on such representations.

      6.10 TRANSACTIONS WITH PARTNERS. All transactions with Partners or their
Affiliates shall be on an arms-length basis. Any professional or administrative
services provided by any Partner or its Affiliates shall be pursuant to a
written contract service agreement.

                                  ARTICLE VII

                               BOOKS AND RECORDS

      7.1   BOOKS AND RECORDS; PERIODIC REPORTING.

            (a) The Partnership shall keep accurate and complete books of
      account and records on an accrual basis showing exclusively the assets and
      liabilities, results of operations, transactions and financial condition
      of the Partnership in accordance with generally accepted accounting
      principles and the accounting principles used by the Partnership for U.S.
      federal income tax purposes. All financial statements shall not be
      materially misstated and in all material respects shall present fairly the
      financial position and results of operations of the Partnership. The books
      of account and records of the Partnership shall at all times be maintained
      at the principal office of the Partnership.

            (b) The Board shall cause to be delivered to each Partner the
      following:

            (i)   Within 45 days after the end of each Fiscal Year, a
                  statement of financial position and statement of income from

                                    -56-
<PAGE>
                  operations, Partners' equity and cash flows, all of which
                  shall be prepared in accordance with generally accepted
                  accounting principles or as otherwise specified by this
                  Agreement, together, within 15 days thereafter, with an
                  opinion thereon from the Partnership's independent certified
                  public accountants who at the date of this Agreement are
                  Arthur Andersen L.L.P.;

            (ii)  Within 30 days after the end of each calendar month, an
                  unaudited monthly statement of income from operations prepared
                  in accordance with generally accepted accounting principles,
                  other than footnotes, subject to normal year end adjustments;

            (iii) Within 15 Business Days after the receipt of the financial
                  statements described in SECTION 7.1(b)(i), information
                  concerning the Partnership reasonably necessary for the
                  preparation of the Partners' state income tax returns or for
                  Partners', or their Affiliates', Canadian federal or
                  provincial tax or information returns;

            (iv)  By August 15 after the end of each Fiscal Year:

                  (A)   U.S. Federal Income Tax Form K-1;

                  (B)   a reconciliation between the financial figures included
                        in the audited financial statements and the financial
                        information used for the Partnership's federal income
                        tax return;

            (v)   By September 15 after the end of each Fiscal Year, any
                  forms similar to the U.S. Federal Income Tax Form K-1
                  required by any state or local tax authority;

            (vi)  Within 15 Business Days of the end of the applicable period,
                  annual and monthly statements of the Partnership's risk
                  management business according to provisions determined by the
                  Officers subject to the approval of the Board. In the Board's
                  discretion, these statements may be reviewed by the
                  Accountants.

            (c) The Partnership's federal, state and local income and other tax
      returns shall be prepared by the Partnership. The Board shall furnish
      drafts of such tax returns to the General Partners for comment before they
      are finalized. All tax returns shall be signed on behalf of the
      Partnership and filed by the Tax Matters Partner.

                                    -57-
<PAGE>
            (d) Within five Business Days after the receipt of the information
      described in SECTION 7.1(b)(ii), the Tax Matters Partner shall compute the
      Tax Amount to be used by the Partners in determining their estimated tax
      payments and by the Board under SECTION 4.4.

      7.2 RIGHT TO INSPECTION. Each Partner shall have the right at all
reasonable times upon reasonable notice to examine and audit at its expense,
including the appointment of one of the "Big 6" firms of independent certified
public accountants, the books and records of the Partnership. As used herein,
"Big 6" means the six largest nationally recognized professional independent
certified public accounting firms in the U.S., from time to time.

      7.3 TAX MATTERS PARTNER. Shell GP is hereby designated as the "Tax Matters
Partner" of the Partnership, as defined in Section 6231(a)(7) of the Code. In
carrying out its duties set out in this Agreement, the Tax Matters Partner shall
act in a fiduciary capacity with respect to the Partnership and the other
Partners and shall take no action (other than the performance of ministerial
duties) without prior written notice of such action to the other Partners.

            (a) The Tax Matters Partner shall have the authority to extend the
      statute of limitations for assessment of tax deficiencies against the
      Partners with respect to adjustments to the Partnership's federal, state,
      local or foreign tax returns, and to the extent provided in Sections 6222
      through 6231 of the Code, to represent the Partnership and the Partners
      before taxing authorities or courts of competent jurisdiction in tax
      matters affecting the Partnership and the Partners in their capacities as
      Partners, and to file any tax returns and execute any agreements or other
      documents relating to or affecting such tax matters, including agreements
      or other documents that bind the Partners with respect to such tax matters
      or otherwise affect the rights of the Partnership and the Partners;
      PROVIDED that, to the extent any such extension, agreement, election or
      document might have a material effect on any Partner, such Partner must
      consent in writing to such extension, agreement, election or document and
      the Tax Matters Partner must reasonably consult with such Partner in any
      discussions or negotiations associated with such agreement or document.
      Each Partner agrees to cooperate with the Tax Matters Partner and to do or
      refrain from doing any or all things reasonably required by the Tax
      Matters Partner to conduct such proceedings.

            (b) The Tax Matters Partner shall keep each Partner informed of all
      administrative and judicial proceedings, as required by Section 6223(g) of
      the Code, and shall furnish each Partner who so requests in writing a copy
      of each notice or other communication received by the Tax Matters Partner.
      If any Partner intends to file a notice of inconsistent treatment under
      Section 6222(b) of the Code, such Partner shall, prior to the filing of
      such notice, provide notice to the Tax Matters Partner of such intent and
      the manner in which the Partner's intended treatment of the Partnership
      item is (or may be) inconsistent with the treatment of that item by the
      Partnership.

                                    -58-
<PAGE>
            (c) Each Partner will bear its own costs resulting from any tax
      examination of its investment in the Partnership.

            (d) The Tax Matters Partner shall be reimbursed by the Partnership
      for all the reasonable costs incurred by it as Tax Matters Partner in
      connection with any examination of the Partnership tax returns by a taxing
      authority.

      7.4 TAX ELECTIONS. The Partnership shall be treated, and shall file its
tax returns, as a partnership for federal, state and local income and other tax
purposes. If any Partner receives notice of a tax examination of the Partnership
by any federal, state or local authority, it shall promptly give notice thereof
to the other Partners. All elections permitted to be made by the Partnership
under the Code shall be made by the Board; PROVIDED, HOWEVER, that the Board
upon the request of any Partner shall make the election under Section 754 of the
Code in accordance with applicable regulations thereunder AND PROVIDED that the
Partnership shall elect to deduct expenses, if any, incurred by it in organizing
itself, ratably over a 60-month period as provided in Section 709 of the Code.
The Board, upon notice to and consent by the other Partners, shall seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the Board determination that such revocation is in
the best interests of the Partnership.

                                 ARTICLE VIII

                TRANSFER; ADMISSION AND WITHDRAWAL OF PARTNERS

      8.1   RESTRICTIONS ON TRANSFER.

            (a) Except as permitted in SECTIONS 8.2, 8.3 OR 8.4, (i) no Partner
      shall sell, assign, transfer, mortgage, charge, or otherwise encumber or
      hypothecate (a "Transfer") any part or all of its Interest or suffer any
      Third Party to cause a Transfer of its Interest or contract with any party
      to Transfer its Interests, and (ii) Salmon Parent, Shell Parent and Tejas
      Parent shall not transfer any interest in a Subsidiary in the Partnership
      Line of Ownership and shall not permit any Subsidiary in the Partnership
      Line of Ownership to transfer all or any part of its beneficial ownership
      of the Interests.

            (b) In the event of a proposed Transfer of shares, partnership
      interests, or other equity interests in any Subsidiary in the Partnership
      Line of Ownership that does not constitute a member of the Partner Group
      offered in compliance with SECTIONS 8.3 and 8.4 and that does not satisfy
      the requirements of SECTION 8.2, then Salmon Parent, Shell Parent or Tejas
      Parent, as the case may be, shall cause such Transfer to exclude any
      beneficial ownership of the Interests.

                                    -59-
<PAGE>
      8.2   TRANSFER TO AFFILIATE OR TRANSFER WITH CONSENT.

            (a) A Partner may transfer part or all of its Interest or shares in
      any Subsidiary in the Partnership Line of Ownership, without the consent
      of any other Partner, to any U.S. entity 100% of the equity interests of
      which are directly or indirectly held by Salmon Parent, Shell Parent or
      Tejas Parent; provided that any such transaction from the Salmon Group to
      the Shell Partner Group shall be offered 50% to the Tejas Partner Group.
      Any such transferee of Interests shall be admitted as a Partner.

            (b) A Partner may Transfer its Interest at any time either (i) with
      the consent of Tejas GP and Shell GP, which consent may be withheld in the
      absolute discretion of either of them, or (ii) by compliance with the
      provisions of SECTIONS 8.3 OR 8.4 below.

            (c) A Shareholder or Subsidiary in the Partnership Line of Ownership
      may Transfer its Partner's Interest or shares or any Subsidiary in the
      Partnership Line of Ownership pursuant to or in connection with a
      mortgage, pledge or grant of a security interest presently existing or
      that is entered into or placed in effect after the date hereof with
      Qualified Financial Institutions.

      8.3   "FIRST LOOK" TRANSFERS AFTER EXIT DATE.

            (a) Any Partner and/or its Affiliates (the "Selling Partner") may
      offer (the "Offer") to sell all of its Interest or all of its Affiliate's
      shares of the Partner Group (such Interests or shares being herein
      referred to as the "Offered Interests") to the Respondents at any time
      after January 1, 1999. The Offer shall include a copy of all material
      agreements pursuant to which the sale of the Offered Interests would
      occur. Respondents shall have a period of 30 days to respond to such Offer
      and within such time may make a written acceptance (the "Response") to the
      Selling Partner to purchase the Selling Partner's Offered Interest upon
      the price, terms, and conditions of the Offer.

            (b) In the event Respondents deliver a Response within the 30-day
      period, the Selling Partner and Respondents shall close the sale within 90
      days of the Response or as soon thereafter as practicable.

            (c) In the event the Respondents fail to deliver a Response within
      the required period or reject the offer, then, after compliance with
      SECTION 8.4 below, the Selling Partner may, but is not obligated to, sell
      the subject Offered Interest, upon the terms and conditions of SECTION 8.4
      below. If the Selling Partner does not make such a sale, it shall retain
      its Offered Interest, subject to the restrictions on Transfer provided in
      this Agreement.

            (d) In the event that, at any time when there is more than one
      Respondent, any Respondent fails to give a notice, fails to make an
      election, or

                                    -60-
<PAGE>
      rejects any offer, then the other Respondent shall have a period of 30
      days, from the date of its actual knowledge of such failure or rejection,
      within which to assume the rights of such failing or rejecting Respondent.

      8.4 "LAST LOOK" TRANSFERS AFTER EXIT DATE. For clarity, the Partners
expressly acknowledge and agree that, except for Transfers expressly permitted
under SECTIONS 8.1, 8.2 OR 8.3(b) (it being understood that such Transfers do
not require compliance with this SECTION 8.4), no Partner may Transfer any part
or all of its Interest without compliance with the following provisions:

            (a) Following compliance with SECTION 8.3, the Selling Partner may
      accept or solicit an Offer (as defined above) from a single Person (acting
      alone or through multiple wholly-owned subsidiaries) to buy the Offered
      Interests for cash at the closing (i) after January 1, 1999, and (ii)
      pursuant to a written Offer the acceptance of which by such Person would
      create a binding and enforceable agreement of sale of the Offered
      Interest, but only after compliance with SECTIONS 8.4(b) through 8.4(f)
      hereof.

            (b) Prior to accepting an Offer, the Selling Partner shall give
      written notice to the Respondents and the Partnership of all the terms,
      provisions, and conditions (including, without limitation, whether an
      election under Section 338(h)(10) of the Code is being made) with respect
      to such Offer, including a copy thereof, and the Selling Partner shall
      offer to sell to Respondents, subject to the Retirement Option in SECTION
      8.5, the Selling Partner's Offered Interest which is subject to such Offer
      on the same terms, price, provisions, and conditions as are set forth in
      the Offer, except that the purchase price may be increased as provided in
      SECTION 8.4(f).

            (c) Respondents shall have a period of 30 days from the date of its
      receipt of the written notice from the Selling Partner to accept such
      offer on the same terms, price, provisions, and conditions stated in such
      written notice insofar as they may be applicable to Respondents (subject
      to any increase in the purchase price required by SECTION 8.4(f)), which
      acceptance must be in writing and be received by the Selling Partner prior
      to the expiration of such 30-day period. Any purported acceptance made
      orally shall be ineffective, and any purported acceptance which varies the
      terms of such offer shall be deemed a rejection thereof for all purposes.
      If Respondents accept such offer in accordance with the foregoing
      provisions, Respondents shall be bound to purchase the Offered Interest in
      accordance with such offer and the Selling Partner shall be bound to sell
      the Offered Interest on the terms, price, provisions, and conditions set
      forth in the Selling Partner's written notice (including any increase in
      the purchase price required by SECTION 8.4(f)). The closing of the
      purchase by Respondents shall be held at the time and place specified in
      the written notice from the Selling Partner, or such later date as is
      mutually agreed to by Respondents and the Selling Partner, but in no event
      shall closing take place earlier than sixty (60) days from the date of
      receipt by Respondent of the written notice from the Selling Partner.

                                    -61-
<PAGE>
            (d) In the event Respondents deliver written notice of rejection to
      the Selling Partner, or in the event Respondents fail to accept the Offer
      in the manner required by SECTION 8.4(c) hereof, the Offer made by the
      Selling Partner shall be deemed to have been rejected by Respondents, the
      Selling Partner shall be free to sell, transfer, assign, or convey such
      Offered Interest in the Partnership to the Third Party on the terms,
      provisions and conditions set forth in the written notice to Respondent or
      other terms and conditions not less favorable to the Selling Partner. Any
      such purchaser, transferee, or assignee shall become a Partner.

            (e) In the event that such transaction is not consummated as
      provided in SECTION 8.4(d) hereof on or before sixty (60) days after the
      closing date specified in the notice from the Selling Partner to
      Respondents, or, in the event any terms and provisions of such transaction
      are changed following a rejection by the Selling Partner in a manner which
      renders such terms less favorable to the Selling Partners no Transfer of
      such interest in the Partnership may be made unless the provisions of this
      Agreement restricting Transfers are again complied with.

            (f) The purchase price payable by the Respondents under SECTION 8.4
      shall be increased by 10% if (and only if) the Third Party Offer under
      SECTION 8.4(a) exceeds the price at which the Selling Partner offered to
      sell the Offered Interests to the Respondent under SECTION 8.3. No 10%
      premium shall be due in the event of an unsolicited offer from a Third
      Party to the Selling Partner.

            (g) In the event that, at any time when there is more than one
      Respondent, any Respondent fails to give a notice, fails to make an
      election, or rejects any offer, then the other Respondent shall have a
      period of 30 days, from the date of its actual knowledge of such failure
      or rejection, within which to assume the rights of such failing or
      rejecting Respondent.

      8.5   PARTNERSHIP INTEREST RETIREMENT OPTION.

      If a Selling Partner has offered to sell directly all of its Interests
under SECTION 8.3 or has given notice to the Partnership under SECTION 8.4(b),
then the Partnership, at its option within ten days after receipt of the notice,
may retire all of the Selling Partner's Partnership Interest (the "Retirement
Option") on the following terms:

            (a) The Retirement Option will take priority over Respondents'
      option under SECTION 8.3 OR 8.4(b),

            (b) The Partnership shall make a retirement distribution to the
      Selling Partner equal to the purchase price required by SECTION 8.3 or
      8.4,

            (c) A Selling Partner will be subject to the same terms, provisions
      and conditions as established in the Offer,

                                    -62-
<PAGE>
            (d) The retirement distribution shall occur no later than 60 days
      from the date that the Selling Partner elects to require the Partnership
      to retire the Offered Interests and

            (e) Upon the making of the retirement distribution, the Selling
      Partner shall cease to be a Partner and its Interests shall be
      extinguished. The Partnership Percentages of the other Partners shall be
      proportionately increased.

      Any premium pursuant to SECTION 8.4(f) shall be treated as a guaranteed
payment within the meaning of Section 707(c) of the Code and recorded as an
expense of the Partnership for income tax and financial reporting purposes and
will not be considered a distribution of money to the Selling Partner that
reduces its Capital Account.

      In the event of a change in the Code where the maximum marginal corporate
capital gains tax rate is lower than the maximum marginal ordinary corporate
income tax rate, the Selling Partner shall receive an additional Guaranteed
Payment (herein so called) computed as follows:

            (i) The Guaranteed Payment times the maximum marginal federal
      ordinary corporate tax rate minus the Guaranteed Payment times the maximum
      marginal federal corporate capital gains tax rate.

            (ii) The positive amount in clause (i) immediately preceding is
      divided by the difference between 1 minus the maximum marginal federal
      ordinary corporate tax rate.

      8.6   ADMISSION OF NEW LIMITED PARTNERS.

            (a) Subject to SECTIONS 6.3, 6.4(a), 8.2(a), 8.4(d), 8.6(b) AND
      8.6(c), with the written consent of Shell GP and Tejas GP, which consent
      may be arbitrarily withheld in the sole discretion of Shell GP and Tejas
      GP, the Partnership may admit one or more new Limited Partners. Any
      Limited Partner so admitted shall (i) make a Capital Contribution and (ii)
      have a Partnership Percentage, in such amounts as shall be determined by
      Shell GP and Tejas GP and shall dilute the existing General and Limited
      Partners prorata.

            (b) No new Partner shall be admitted to the Partnership (i) if the
      effect of such admission would be the transfer of greater than 50% of the
      Partnership Interests in any twelve-month period; or (ii) if such
      admission could, with the giving of notice, the passage of time or both,
      violate the terms of, or constitute a breach of or a default under, this
      Agreement or any other agreement, document, contract or instrument to
      which the Partnership is a party to or by which the Partnership or its
      assets are bound.

            (c) The admission of any new Partner to the Partnership (i) may be
      conditioned on the receipt by the Partnership of opinions of counsel
      acceptable to the Board with respect to compliance by the Partnership and
      the new Partner with

                                    -63-
<PAGE>
      securities, tax and other laws and such other matters as the Board may
      deem appropriate and (ii) shall be conditioned on the confirmation by the
      new Partner of the accuracy of the representations and warranties, and the
      agreement of such new Partner to be bound by the covenants, contained in
      ARTICLE XI of this Agreement, insofar as such representations, warranties
      and covenants pertain to such new Partner.

            (d) Notwithstanding the foregoing, if at any time the aggregate
      Interests held by the members of the Tejas Partner Group amount to 50% of
      the total Interests held by all Partners in the Partnership, then, upon
      request of Tejas GP, Shell LP2 and Tejas LP2 will each transfer a
      proportionate share of their respective Partnership Percentages (up to one
      percentage point in the aggregate) to a mutually acceptable Third Party
      upon terms to be reasonably agreed upon by Shell LP2 and Tejas LP2. Any
      such transfer shall not be subject to the provisions of SECTIONS 8.1, 8.2,
      8.3, 8.4 AND 8.5.

      8.7   CHANGE OF CONTROL.  (a) In the event that:

      (A) any of Salmon Parent, Shell Parent or Tejas Parent (each, a
      "Shareholder") or a Subsidiary in the Partnership Line of Ownership
      (together, the "Affected Shareholder") enters into an agreement to (i)
      sell substantially all of its assets, (ii) merge into another business
      entity (the Shareholder or Subsidiary in the Partnership Line of
      Ownership, as the case may be, not being a survivor to the merger), (iii)
      sell voting stock representing a majority of its outstanding voting stock
      to a New Control Group, or (iv) transfer control over its business and
      affairs to a New Control Group, or

      (B) a New Control Group acquires a majority of the voting stock of a
      Shareholder or of any Subsidiary in the Partnership Line of Ownership, or

      (C) a New Control Group other than the then-current management of the
      Shareholder acquires by proxy, written consent or otherwise the ability to
      name a majority of the board of directors of the Shareholder or of any
      Subsidiary in the Partnership Line of Ownership, or

      (D) any of the foregoing events described in (A) through (C) immediately
      preceding shall be caused by, or result, directly or indirectly, from any
      exercise by a creditor of any rights under any credit agreement, any
      foreclosure, bankruptcy or other event described in clauses (E) or (F)
      below, or

      (E) the Shareholder or any Subsidiary in the Partnership Line of Ownership
      commences a voluntary case under any applicable bankruptcy, insolvency or
      other similar law now or hereafter in effect or shall consent to the entry
      of any order for relief in an involuntary case under any such law, or
      shall consent to the appointment of or taking possession by a receiver,
      liquidator, assignee, trustee, custodian, sequestrator or similar official
      of the Shareholder or Subsidiary in the

                                    -64-
<PAGE>
      Partnership Line of Ownership or for any substantial part of its property,
      or shall make any general assignment for the benefit of creditors, or

      (F) a court having jurisdiction in the premises shall enter a decree or
      order for relief in respect of the Shareholder or of any Subsidiary in the
      Partnership Line of Ownership in an involuntary case under any applicable
      bankruptcy, insolvency or other similar law now or hereafter in effect, or
      appointing a receiver, liquidator, assignee, trustee, custodian,
      sequestrator or similar official of the Shareholder or such Subsidiary in
      the Partnership Line of Ownership or such affiliate or for all or
      substantially all of its property, or ordering the winding-up or
      liquidation of its affairs and such decree or order shall remain unstayed
      and in effect for a period of 60 consecutive days

(each of the foregoing (A) through (F) immediately preceding being a "Triggering
Event"), then the other Shareholders (the "Non-Changing Shareholders") shall
have an option to acquire the Partnership Interest owned by both the General
Partner and the Limited Partners owned or controlled by the Affected Shareholder
in such proportions as agreed between the Non-Changing Shareholders or, if no
agreement is reached, (x) in proportion to the respective Partnership
Percentages of Partners owned or controlled by each of the Non-Changing
Shareholders if the Affected Shareholder owns or controls or is a member of the
Salmon U.S. Partner Group, (y) 100% by the Shell Partner Group if the Affected
Shareholder owns or controls or is a member of the Tejas Partner Group or (z)
100% by the Tejas Partner Group if the Affected Shareholder owns or controls or
is a member of the Shell Partner Group.

      (b) Such option may be exercised by the Non-Changing Shareholders by
delivery of a written notice delivered to the Affected Shareholder not later
than the 180th calendar day following the earlier of (i) delivery to the
Non-Changing Shareholders by the Affected Shareholder of a written notice
specifying that a Triggering Event had occurred, (ii) publication of the fact
that a Triggering Event had occurred in THE WALL STREET JOURNAL, or (iii) the
filing by a group or Person of a notice under the Securities Exchange Act of
1934, as amended, of a notice that such group or Person had acquired or made an
agreement to acquire not less than 50% of the voting stock of the Affected
Shareholder. Upon exercise of such option by the Non-Changing Shareholders, the
Initial Agreements with the Affected Shareholder may be terminated:

            (i) at the election of such Affected Shareholder if the Triggering
      Event was approved by the Continuing Directors; and

            (ii) at the election of the Non-Changing Shareholders if the
      Triggering Event was not approved by the Continuing Directors;

provided, however, that the Salmon Supply Agreement, the Shell Supply Agreement
or the Tejas Supply Agreement, as the case may be, between the Affected
Shareholder or its affiliates and the Partnership or any of their respective
subsidiaries shall continue in full force and effect as to Committed Volumes.

                                    -65-
<PAGE>
      (c) The purchase price of the Partnership Interests to be so purchased
shall be paid in cash by the Non-Changing Shareholders and shall be equal to the
Fair Market Value of such Partnership Interests.

      (d) In the event that, at any time when there is more than one
Non-Changing Shareholder, any Non-Changing Shareholder fails to give a notice,
fails to make an election, or rejects any offer, then the other Non-Changing
Shareholder shall have a period of 30 days, from the date of its actual
knowledge of such failure or rejection, within which to assume the rights of
such failing or rejecting Non-Changing Shareholder.

      8.8   WITHDRAWAL OF A PARTNER.

            (a) Except following a sale of all of its Partner Group's Interests
      in compliance with SECTION 6.4 OR ARTICLE VIII, a General Partner may not
      withdraw from the Partnership without breaching this Agreement. In the
      event the General Partner withdraws, the Interest of the withdrawing
      General Partner shall be converted to, and treated as, an Interest held by
      a Limited Partner. The withdrawing General Partner shall have the right to
      become a substitute Limited Partner with the consent of the other General
      Partners. The withdrawing General Partner shall continue to have the same
      rights to profits, losses and distributions as if it had remained a
      General Partner.

            (b) Except following a sale of all of its Interest in compliance
      with SECTION 6.4 OR ARTICLE VIII, no Limited Partner may withdraw from the
      Partnership without the written consent of Shell GP and Tejas GP. In
      granting such consent, Shell GP and Tejas GP shall condition the
      withdrawal of the withdrawing Limited Partner on such matters as each
      Partner may deem appropriate, and, in granting such consents, shall
      determine (i) the extent, if any, to which such withdrawing Partner shall
      retain an interest in the Partnership; (ii) the terms and conditions on
      and timing of the return of such withdrawing Partner's capital; and (iii)
      the extent, if any, to which such withdrawing Partner shall remain
      obligated or liable for obligations and liabilities of the Partnership
      and/or at risk with respect to ongoing Partnership operations.

            (c) No Limited Partner may withdraw from the Partnership if the
      effect of such withdrawal could, with the giving of notice, the passage of
      time, or both, violate the terms of or constitute a breach of or a default
      under this Agreement or any other agreement, document, contract or
      instrument to which the Partnership is a party or by which the Partnership
      or its assets are bound.

            (d) Subject to SECTION 8.8(b), on the withdrawal of a Limited
      Partner from the Partnership in accordance with this Section, such Limited
      Partner shall cease to be a Partner for all purposes.

      8.9 SUBSTITUTE PARTNERS. Except in the case of assignees pursuant to the
provisions of SECTIONS 8.2, 8.3, AND 8.4, an assignee of an Interest shall not
become a substitute Partner without

                                    -66-
<PAGE>
the written consent of Shell GP and Tejas GP, which consents may be arbitrarily
withheld in the sole discretion of such Partners. Each assignee shall execute an
instrument in form and substance satisfactory to Shell GP and Tejas GP agreeing
to be bound by this ARTICLE VIII and any other appropriate provisions of this
Agreement. Any assignee who is not admitted to the Partnership shall have only
the rights to receive distributions and allocations.

      8.10 EFFECT OF DISPOSITION. Except as provided in SECTION 8.8(a), any
Partner that has disposed of all of its Interest shall cease to be a Partner for
purposes of this Agreement; PROVIDED, HOWEVER, that such Partner shall remain
liable for its obligations under this Agreement incurred prior to the
disposition of its Interest, and shall remain liable to the Partnership and the
other Partners for the actions and omissions of such Partner prior to the
disposition of its Interest.

      8.11 EFFECT OF NONCOMPLIANCE. Any purported Transfer of an Interest other
than in accordance with the provisions of this Article shall be void AB INITIO
and shall not cause a dissolution of the Partnership.

      8.12 EFFECT ON SUPPLY AGREEMENTS. In the event that a Partner Group sells
its entire Interests pursuant to SECTION 8.3 OR 8.4 or has its Interests
redeemed pursuant to SECTION 8.5, then the selling Partner Group, by notice not
less than 10 Business Days before such sale, shall have the option to terminate
the Salmon Supply Agreement, Shell Supply Agreement or Tejas Supply Agreement,
as the case may be, to which any member of its respective Salmon U.S. Partner
Group, Shell Partner Group or Tejas Partner Group, as the case may be, is party
as a "Seller" thereunder, as to natural gas volumes that are not Committed
Volumes. The Salmon Supply Agreement, Shell Supply Agreement or Tejas Supply
Agreement shall not terminate, and shall remain in full force and effect, as to
Committed Volumes. Any such termination as to volumes that are not Committed
Volumes shall be effective 60 days after the closing of the sale by the selling
Partner Group of its Interests in accordance with SECTION 8.3 OR 8.4 or the
redemption pursuant to SECTION 8.5. In the event that a Third Party purchaser of
the Interests from the selling Partner Group offers to supply the Committed
Volumes upon terms and conditions identical to, or more favorable to the
Partnership than, those of the Salmon Supply Agreement, Shell Supply Agreement
or Tejas Supply Agreement, as the case may be, and such Third Party is capable
of performing such commitment in the reasonable judgment of Shell GP and Tejas
GP, then the respective Salmon U.S. Partner Group, Shell Partner Group or Tejas
Partner Group, as the case may be, of which the Selling Partner Group is a
member shall be released from its obligation to continue supplying Committed
Volumes as required by this SECTION 8.12; provided that Salmon Group, Shell
Partner Group or Tejas Partner Group, as the case may be, of which the selling
Partner Group is a member, shall guarantee performance by such Third Party of
its obligations to supply the Committed Volumes.

                                    -67-
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                                  ARTICLE IX

                          DISSOLUTION OF PARTNERSHIP

      9.1 DISSOLUTION EVENTS. The Partnership shall be dissolved upon the
occurrence of any of the following events:

            (a) The voluntary agreement of Shell GP and Tejas GP to dissolve the
      Partnership;

            (b) The expiration of the term specified in SECTION 2.5; provided,
      that, where the term has been extended, dissolution shall not occur until
      expiration of the final extension;

            (c) Upon the occurrence of any of the following events by or with
      respect to Shell GP or Tejas GP (the "DEFAULTING PARTNER"):

                  (i) the Defaulting Partner (A) makes a general assignment for
            the benefit of creditors; (B) files a voluntary bankruptcy petition;
            (C) files a petition or answer seeking for itself a reorganization,
            arrangement, composition, readjustment, liquidation, dissolution or
            similar relief under any law; (D) files an answer or other pleading
            admitting or failing to contest the material allegations of a
            petition filed against the Defaulting Partner in a proceeding of the
            type described in clauses (A)-(C) of this sentence; or (E) seeks,
            consents to or acquiesces in the appointment of a trustee, receiver
            or liquidator of the Defaulting Partner or of all or any substantial
            part of its properties; or

                  (ii) a final and non-appealable judgment is entered by a court
            with appropriate jurisdiction ruling that a Defaulting Partner is
            bankrupt or insolvent, or a final non-appealable order for relief is
            entered by a court with appropriate jurisdiction against the
            Defaulting Partner, in each case under any federal or state
            bankruptcy or insolvency laws as now or hereinafter in effect;

      provided that in each case the Defaulting Partner shall use its best
      efforts to provide prior notice of at least 24 hours to the Partnership of
      the pending occurrence of such event and in any event will provide
      notification of the occurrence of such event to the Partnership within two
      Business Days of it having occurred;

            (d) A Partner (the "Defaulting Partner") shall breach this Agreement
      in any material respect, which breach continues for 30 days after a
      non-defaulting General Partner (that is not an Affiliate of the Defaulting
      Partner) has given written notice thereof to the Defaulting Partner;

                                    -68-
<PAGE>
            (e) If, during the existence of the Partnership, there shall be
      enacted in the U.S. or Canada any law, regulation or directive, whether
      federal, state, or provincial (or any change occurs to the interpretation,
      whether by judicial decision or change in policy of a U.S., Canadian or
      state or provincial governmental body, of such law, regulation or
      directive) the effect of which would be either:

                  (i)   to reduce or to require a Partner Group to reduce or
            dispose of any material part of its Interest in the Partnership; or

                  (ii) to cause any one of this Agreement, any of the Initial
            Agreements, the Shell Canada Supply Agreement, or the CEC Supply
            Agreement to be terminated or modified in a manner substantially
            prejudicial to the Salmon Group, Shell Partner Group, Tejas Partner
            Group or the Partnership; or

                  (iii) cause the Salmon U.S. Partner Group, Shell Partner
            Group or Tejas Partner Group to suffer serious material hardship
            for reasons concerning its participation in the Partnership;

      AND PROVIDED THAT such enactment or change in interpretation does not
      equally affect all Partner Groups, THEN, at the request of any adversely
      affected Partner Group, Shell GP and Tejas GP will dissolve the
      Partnership and liquidate the Partnership in an orderly manner as soon as
      practicable in accordance with Article X; PROVIDED FURTHER THAT, if Shell
      GP and Tejas GP do not agree that a dissolution of the Partnership is
      appropriate or if Shell GP and Tejas GP cannot agree upon a plan of
      dissolution, such disagreement shall be submitted for arbitration in
      accordance with SECTION 12.10; PROVIDED FURTHER THAT, if at least two
      different Partner Groups are unaffected by the enactment or change in
      interpretation, the unaffected Partners shall thereafter reconstitute the
      Partnership, upon the same terms and conditions as this Agreement, but
      without the adversely affected Partner Group.

            (f) Notice from Shell GP of its election to dissolve the Partnership
      within 60 days following its actual knowledge of termination, for any
      reason, of the Tejas Supply Agreement;

            (g) Notice from Tejas GP of its election to dissolve the Partnership
      within 60 days following its actual knowledge of termination, for any
      reason, of the Shell Supply Agreement, Salmon Supply Agreement or the
      Shell Canada Supply Agreement; PROVIDED, HOWEVER, that, if the dissolution
      shall be on account of termination of the Salmon Supply Agreement or the
      Shell Canada Supply Agreement, then the Shell Partner Group and Tejas
      Partner Group shall thereafter reconstitute the Partnership, upon the same
      terms and conditions as this Agreement, but without any member of the
      Salmon U.S. Partner Group;

                                    -69-
<PAGE>
            (h) Any of the events stated in SECTION 9.1(c) occurs with respect
      to the Partnership (as though the Partnership were the "Defaulting
      Partner" as that term is used in such Section);

            (i)   Any event requiring dissolution under SECTION 6.4 shall have
      occurred; or

            (j) Any other act by or with respect to the Partnership constituting
      a dissolution under applicable law.

      9.2 RECONSTITUTION OF THE PARTNERSHIP. On the occurrence of an event
described in SECTIONS 9.1(a), 9.1(b) OR 9.1(f), the Partnership shall be
liquidated, and the affairs of the Partnership shall be wound up in accordance
with the provisions of ARTICLE X. On the occurrence of an event described in
SECTIONS 9.1(c) OR 9.1(d), upon the consent within 90 days after such event of a
majority in Interest of the Limited Partners (excluding Partners who are
Defaulting Partners or Affiliates of Defaulting Partners), the Partnership shall
be reconstituted without the Defaulting Partners and the business of the
Partnership shall be continued without interruption, otherwise, the Partnership
shall be liquidated and shall be wound up pursuant to ARTICLE X. On the
occurrence of an event described in SECTIONS 9.1(e) OR 9.1(g), the Partnership
shall be reconstituted as therein provided and the business of the Partnership
shall be continued without interruption. On the occurrence of an event described
in SECTION 9.1(h) OR 9.1(i) upon the consent within 90 days after such event of
a majority in Interest of the Limited Partners not causing the dissolution of
the Partnership, the Partnership shall be reconstituted and the business of the
Partnership shall be continued without interruption to the extent permitted
under applicable law, or, absent such consent, the Partnership shall be
liquidated and wound up pursuant to ARTICLE X.

      9.3 SALMON PURCHASE OPTION. If the Partnership is dissolved pursuant to
SECTION 9.1 and such dissolution does not result in a reconstitution of the
Partnership with a member of the Salmon U.S. Partner Group as a Partner pursuant
to SECTION 9.2, then the Salmon U.S. Partner Group shall have the option,
exercisable by notice to the other Partners within 30 days after such
dissolution, to purchase all (but not less than all) of the stock of CEC owned
directly or indirectly by the Partnership or any of the Partners or their
Affiliates for the Fair Market Value of such stock. Any such purchase shall
close within 90 days following such notice. IF (a) following such dissolution,
the Partnership is liquidated pursuant to ARTICLE X and (b) at the time of the
closing of the Salmon U.S. Partner Group's purchase of the stock of CEC, as
described above, CEC has insufficient funds for the redemption or retraction of
its Series A Preferred Shares held by Shell Canada, THEN the Partnership shall
contribute (on such liquidation and prorata with distributions of capital to the
Shell Partner Group and the Tejas Partner Group pursuant to SECTION 10.1(c)
hereof) to CEC Holdings (and CEC Holdings thereafter shall contribute to CEC) an
amount equal to such deficiency, limited to the cash dividends, if any, received
by the Partnership (or the Partners, as successors to the Partnership) on the
Class A Common Stock and the Class B Common Stock, up to (but not exceeding) the
amount of the aggregate allocation to Salmon LP of amortization of the EXHIBIT C
and EXHIBIT D contracts under SECTION 5.3(d).

                                    -70-
<PAGE>
                                   ARTICLE X

                        LIQUIDATION OF THE PARTNERSHIP

      10.1 LIQUIDATION. In the event of dissolution of the Partnership where the
business of the Partnership is not reconstituted, liquidation shall occur. The
Board shall cause a determination of the Fair Market Value of the Partnership's
assets and shall supervise the liquidation of the Partnership; PROVIDED THAT, if
a wrongful act of a General Partner dissolved the Partnership, Board members
appointed by such General Partner shall not be entitled to participate in such
supervision. In the event of any liquidation of the Partnership under this
Agreement or the Act, except as otherwise provided herein, the proceeds of
liquidating the Partnership shall be applied and distributed in the following
order of priority (each item to be satisfied in full in the order listed below
before any of such proceeds are allocated to the subsequent item):

            (a) First, to creditors, including Partners who are creditors (to
      the extent not otherwise prohibited by law), in satisfaction of
      liabilities of the Partnership (whether by payment or the making of
      reasonable provision for payment therefor), other than liabilities for
      which reasonable provision for payment has been made and liabilities for
      interim distributions to Partners and distributions to Partners on
      withdrawal; then

            (b) Second, to the setting up of any reserves which the supervising
      members of the Board determine to be reasonably necessary for any
      contingent liabilities of the Partnership or of any Partner arising out
      of, or in connection with, a Partnership liability; then

            (c) Third, subject to SECTION 10.2, to the Partners prorata in
      proportion to their positive Capital Accounts balances until those
      positive balances all equal zero; then

            (d) Finally, subject to SECTION 10.2, the balance, if any, to the
      Partners prorata in proportion to their Partnership Percentages;

provided, that, to the fullest extent practicable and subject to the requirement
that all distributions to the Partners shall be in proportion to their positive
Capital Accounts balances, (i) Shell LP1 and, thereafter, Shell LP2 and Shell GP
shall be distributed Shell LP1 Economic Interest Contributions as reflected on
EXHIBIT C and any Physical Contract the performance of which by the Partnership
is guaranteed by Shell Parent or one of its Affiliates and Tejas LP1, and Tejas
LP2 and Tejas GP shall be distributed Tejas LP1 Economic Interest Contributions
as reflected on EXHIBIT D and any Physical Contract the performance of which by
the Partnership is guaranteed by Tejas Parent or one of its Affiliates; and
Salmon LP shall be distributed Salmon LP Economic Interest Contributions as
reflected on EXHIBIT A4; (ii) after satisfaction of clause (i) immediately
preceding, any Physical Contracts with customers who were customers under any
contracts identified on EXHIBIT C shall be distributed to the Shell Partner
Group and any Physical Contracts with customers who were customers under any
contracts identified on EXHIBIT D shall be distributed to the Tejas Partner
Group and any Physical Contracts with customers who were

                                    -71-
<PAGE>
customers under any contracts identified on EXHIBIT A4 shall be distributed to
the Salmon U.S. Partner Group; and (iii) thereafter, any remaining Physical
Contract or other asset shall be distributed equitably to the Partner Group
having the closest business nexus to the customer or transaction associated with
such Physical Contract or asset. Any portfolio of futures contracts, hedges, and
other similar derivatives shall be marked to market and, upon request by any
Partner, shall be sold to the highest bidder.

      Neither the General Partner nor the Board shall receive any compensation
for any services performed pursuant to this ARTICLE X.

      10.2 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. In the event the
Partnership is "liquidated" within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Regulations:

            (i) distributions shall be made pursuant to this ARTICLE X to the
      Partners who have positive Capital Accounts in compliance with Section
      1.704-1(b)(2)(ii)(b)(2) of the Regulations as adjusted under Section
      1.704-1(b)(2)(iv)(f) of the Regulations; and

            (ii) if a General Partner's Capital Account has a deficit balance
      (after giving effect to all contributions, distributions and allocations
      for all taxable years, including the year during which such liquidation
      occurs), the General Partner shall contribute to the capital of the
      Partnership the amount necessary to restore such deficit balance to zero
      in compliance with Section 1.704-1(b)(2)(ii)(b)(3) of the Regulations.

      10.3 DEEMED DISTRIBUTION AND RECONSTITUTION. Notwithstanding any other
provision of this ARTICLE X, in the event the Partnership is liquidated within
the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations but the
Partnership is not liquidated under this ARTICLE X, the Property of the
Partnership shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the assets of the
Partnership in kind to the Partners, who shall be deemed to have assumed and
taken subject to all Partnership liabilities, all in accordance with their
respective Capital Accounts. Immediately thereafter, the Partners shall be
deemed to have recontributed the Property in kind to the Partnership, which
shall be deemed to have assumed and taken subject to all such liabilities.

      10.4 RIGHTS OF LIMITED PARTNERS. Except as otherwise provided in this
Agreement, each Limited Partner shall look solely to the assets of the
Partnership for the return of his Capital Contribution and shall have no right
or power to demand or receive property other than cash from the Partnership. No
Limited Partner shall have priority over any other Limited Partner as to the
return of his Capital Contributions, or distributions or allocations.

                                    -72-
<PAGE>
                                  ARTICLE XI

                     REPRESENTATIONS OF LIMITED PARTNERS;
                                INDEMNIFICATION

      11.1 REPRESENTATIONS OF LIMITED PARTNERS. Each of the Limited Partners and
assignees of an interest of a Limited Partner hereby represents, warrants and
acknowledges to the Partnership and the other Partners that:

            (a) the Limited Partner or assignee is acquiring its Interest for
      its own account for investment and not with a view to, or for resale in
      connection with, any distribution or public offering thereof within the
      meaning of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
      or other applicable securities law or regulations;

            (b) each Limited Partner's Interest may only be disposed of pursuant
      to an effective registration statement filed under the Securities Act, or
      pursuant to an exemption from the registration requirements of the
      Securities Act; the Partnership has not filed such a registration
      statement nor has any obligation to do so, nor has agreed to do so, nor
      contemplates doing so in the future; and in the absence of such a
      registration statement or such an exemption, the Limited Partner may have
      to hold its Interest indefinitely and may be unable to liquidate it in
      case of a financial emergency;

            (c) each Limited Partner is acquiring its Interest in the
      Partnership solely for such Partner's account, for investment, without a
      view to a distribution thereof within the meaning of the Securities Act,
      and the Interest of that Limited Partner will not be offered, sold or
      transferred by such Limited Partner in violation of the Securities Act or
      the securities laws of any state or other jurisdiction;

            (d) each Limited Partner confirms that the Partnership and the
      General Partners have made available to such Limited Partner, or to the
      representative of such Limited Partner, the opportunity to ask questions
      and to acquire such additional information about the business and
      financial condition of the Partnership as such Limited Partner has
      requested or desired;

            (e) such Limited Partner understands and has taken cognizance of all
      risk factors related to the acquisition of its Interest in the
      Partnership, and its knowledge and experience, and/or that of its
      authorized representatives, in financial and business matters is such that
      it is, and/or its authorized representatives are, capable of evaluating
      the merits and risks of acquiring an Interest in the Partnership;

                                    -73-
<PAGE>
            (f) such Limited Partner has and/or its authorized representative
      has, (i) knowledge of finance, securities and investments, generally, and
      (ii) experience and skill in investments based on actual participation;

            (g) there are no understandings or agreements among the Limited
      Partners regarding the pricing or timing of any future disposition of
      Interests other than as may be specifically provided for in this
      Agreement;

            (h) each Limited Partner is investing in the Partnership for its own
      account and not as an agent, directly or indirectly, for any other person.

      11.2 INDEMNIFICATION. EACH PARTNER, AND EACH ASSIGNEE OF AN INTEREST OF A
PARTNER (EACH AN "INDEMNITOR"), HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD
HARMLESS THE PARTNERSHIP AND THE OTHER PARTNERS FROM AND AGAINST ANY LOSS, COST,
DAMAGE, CLAIM, LIABILITY OR EXPENSE, INCLUDING THE COSTS OF DEFENDING ANY ACTION
BROUGHT AGAINST THE PARTNERSHIP OR ANY PARTNER, ARISING OUT OF OR RELATING TO
INDEMNITOR'S BREACH OF OR DEFAULT OR MISREPRESENTATION UNDER THIS AGREEMENT.

                                    -74-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

      11.3 NET WORTH MAINTENANCE. The Shell GP, the Tejas GP and the Salmon GP
or any other General Partner shall separately maintain their share of Minimum
Net Worth. Each General Partner's share of Minimum Net Worth shall be the
product of the (i) Minimum Net Worth, times (ii) the proportion (expressed as a
percentage) that such General Partner's Partnership Percentage bears to the
Partnership Percentages of all General Partners. Any indemnity payment made
under SECTION 11.2 due to a reclassification of the Partnership as a corporation
taxable for federal income tax purposes will be grossed-up for any federal or
state taxes related to the receipt by the indemnitee less any tax savings
resulting from the indemnity payment, the defaulting General Partner to
indemnify the other Partners accordingly.

                                  ARTICLE XII

                                 MISCELLANEOUS

      12.1  *

      12.2 ADDITIONAL DOCUMENTS AND ACTS. In connection with this Agreement, as
well as all transactions contemplated by this Agreement, each Partner agrees to
execute and deliver such additional documents and instruments, and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement, and
all such transactions. All approvals of a Partner hereunder shall be in writing.

      12.3  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE WITHOUT REGARD TO CONFLICTS OF LAW.

      12.4 SEVERABILITY. If this Agreement or any portion thereof is, or the
operations contemplated hereby are, found to be inconsistent with or contrary to
any valid applicable laws or official orders, rules and regulations, the
inconsistent or contrary provisions of this Agreement shall be null and void and
such laws, orders, rules and regulations shall control and this Agreement, as so
modified, shall continue in full force and effect; PROVIDED, HOWEVER, that
nothing herein contained shall be construed as a waiver of any right to question
or contest any such law, order, rule or regulation in any forum having
jurisdiction.

      12.5 BINDING EFFECT. Except as herein otherwise expressly stipulated to
the contrary, this Agreement shall be binding upon and inure to the benefit of
the parties signatory hereto and their respective successors and assigns.

                                    -75-
<PAGE>
      12.6 AGREEMENT RESTRICTED TO PARTNERS. This Agreement is solely for the
parties hereto and no covenant or other provision herein shall create any rights
in, or give rise to any obligation to or any cause of action by, any person not
a party hereto.

      12.7 COUNTERPARTS. This Agreement may be executed in a number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.

      12.8 POWER OF ATTORNEY; AMENDMENTS. Each of the Limited Partners hereby
makes, constitutes and appoints each General Partner as its true and lawful
attorney, to make, sign, execute, acknowledge and file with respect to the
Partnership;

            (a) such Certificates of Limited Partnership and such amended
      Certificates of Limited Partnership and such assumed name certificates and
      amendments thereto as may be required by law or pursuant to the provisions
      of this Agreement;

            (b) all documents required to qualify the Partnership to do business
      in other states;

            (c) documents of admission of new Partners or of transfer or
      issuance of Interests (including, without limitation, amendments of this
      Agreement necessary or appropriate to effect the same) and all other
      instruments to effect said admissions, transfers or issuances, but only if
      the provisions of this Agreement (including, without limitation, SECTIONS
      6.3(b) and 6.3(d)) have been complied with; and

            (d) all documents required to reflect the dissolution and
      termination of the Partnership after it has been dissolved or terminated
      in accordance herewith.

      The foregoing power of attorney is hereby declared to be irrevocable and
is a power coupled with an interest, and it shall survive and not be affected by
the subsequent death, incompetency, legal disability, withdrawal, dissolution,
bankruptcy, insolvency or termination of any Partner or the transfer of all or
any portion of an Interest, and shall extend to each Partner's heirs, legal
representatives, successors and assigns.

      Any other amendments to this Agreement may be made only with the written
approval of the General Partners and the Limited Partners.

      12.9 NOTICES. All notices and demands provided for in this Agreement shall
be in writing and shall be given to the other Partners by hand, by telegram (or
telefax), or by United States Registered or Certified Mail, postage prepaid,
return receipt requested, to the addresses set forth below or to such other
addresses as any Partner hereto may hereafter specify in writing:

                                    -76-
<PAGE>
      If to any member        5670 Greenwood Plaza Boulevard
      of the Salmon U.S.      Suite 112
      Partner Group:          Englewood, Colorado,  80111, USA
                              Attn:  President
                              Telecopier:  (303) 694-4997

      With a copy to:         Shell Canada Limited
                              400-4th Avenue S.W. T2P OJ4
                              P.O. Box 1444, Station M,
                              Calgary, Alberta, T2P 2L6
                              Attn: Director of Marketing, Resources
                              Telecopier:  (403) 269-5444

      If to any member        c/o Shell Oil Company
      of the Shell Partner    One Shell Plaza
      Group:                  900 Louisiana, Room 4401A
                              Houston, Texas 77002
                              Attn: Mr. Jack E. Little
                              Telecopier:  (713) 241-6946

      If to any member        c/o Tejas Gas Corporation
      of the Tejas Partner    1301 McKinney, Suite 700
      Group:                  Houston, Texas 77010
                              Attn:  James W. Whalen
                              Telecopier:  (713) 658-9600

      In each of the above    Coral Energy, L.P.
      cases, with a copy      909 Fannin St., Suite 700
                              Houston, Texas  77010
                              Attn:  Murry Gerber
                              Telecopier:  (713) 767-5440

      Each notice or demand given by hand shall be effective as of its delivery
to the other Partners as so provided. Each notice given by telegram or telefax
shall be effective as of the date on which such telegram or telefax is
transmitted and confirmation of delivery thereof is received. Each notice or
demand given by mail shall be deemed delivered and effective on the earlier to
occur of (a) the date of delivery as shown by the return receipt or (b) three
(3) Business Days after the mailing thereof in accordance with the provisions
hereof. Any Partner may change its address for purposes of receiving notices by
giving notice thereof to the other Partners as provided in this ARTICLE XII.

      12.10 BINDING ARBITRATION.

      Any controversy or claim ("claim"), whether based on contract, tort,
statute or other legal or equitable theory (including but not limited to any
claim of fraud, misrepresentation or fraudulent inducement or any question of
validity or effect of this Agreement including this clause)

                                    -77-
<PAGE>
arising out of or related to this Agreement (including any amendments or
extensions), or the breach or termination thereof shall be settled by
arbitration in accordance with the then current CPR Institute for Dispute
Resolution Rules for Non-Administered Arbitration of Business Disputes, and this
provision. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. ss.ss.1-16 to the exclusion of any provision of state law
inconsistent therewith or which would produce a different result, and judgment
upon the award rendered by the arbitrator may be entered by any court having
jurisdiction.

      The arbitration shall be held in Houston, Texas.

      There shall be one arbitrator.

      The arbitrator shall determine the claims of the parties and render a
final award in accordance with the substantive law of the State of Delaware,
excluding the conflicts provisions of such law. The arbitrator shall set forth
the reasons for the award in writing.

      Any claim by any party shall be time-barred if the asserting party
commences arbitration with respect to such claim later than two years after the
cause of action accrues. All statutes of limitations and defenses based upon
passage of time applicable to any claim of defending party (including any
counterclaim or setoff) shall be tolled while the arbitration is pending.

      The obligation to arbitrate any claim shall extend to the successors,
assigns and Third Party beneficiaries of the parties. The parties shall use
their best efforts to cause the obligation to arbitrate any claim to extend to
any officer, director, employee, shareholder, agent, trustee, affiliate, or
subsidiary. The terms hereof shall not limit any obligations of a party to
defend, indemnify or hold harmless another party against court proceedings or
other claims, losses, damages or expenses.

      The arbitrator shall order the parties to promptly exchange copies of all
exhibits and witness lists, and, if requested by a party, to produce other
relevant documents, to answer up to ten interrogatories (including subparts), to
respond to up to ten requests for admissions (which shall be deemed admitted if
not denied) and to produce for deposition and, if requested, at the hearing all
witnesses that such party has listed and up to four other persons within such
party's control. Any additional discovery shall only occur by agreement of the
parties or as ordered by the arbitrator upon a finding of good cause.

      Each party shall bear its own costs, expenses and attorney's fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorney's fees in connection with
such court proceeding.

      In order to prevent irreparable harm, the arbitrator shall have the power
to grant temporary or permanent injunctive or other equitable relief. Prior to
the appointment of an arbitrator a party may, notwithstanding any other
provision of this Agreement, seek temporary injunctive relief from any court of
competent jurisdiction; provided that the party seeking such relief shall (if
arbitration has not already been commenced) simultaneously commence arbitration.
Such court

                                    -78-
<PAGE>
ordered relief shall not continue more than 10 days after the appointment of the
arbitrator (or in any event for longer than 60 days).

      If any part of this arbitration provision is held to be unenforceable, it
shall be severed and shall not affect either the duty to arbitrate or any other
part of this provision.

      12.11 CONFIDENTIAL INFORMATION.

            (a) For the purpose of this SECTION 12.11, "Confidential
      Information" shall mean:

                  (i) any knowledge, information, technical data or know how
            supplied by any Partner or its Affiliates (the "Disclosing
            Partner"), including, for the avoidance of doubt, Non-North American
            Shell Affiliates, to one or more of the other Partners or to the
            Partnership (the "Receiving Partner") concerning the Disclosing
            Partner's proprietary information; and

                  (ii) any information relating to the business of any Partner
            or of an Affiliate of any Partner (including, for the avoidance of
            doubt, Non-North American Shell Affiliates), of which a Partner
            learns as a result of its involvement with the Partnership;

            In each case whether in writing, drawings, and computer programs or
      in any other way as well as all data derived therefrom. The Partners agree
      to procure between them the compliance of the Partnership with the
      provisions of this SECTION 12.11.

            (b) Each Disclosing Partner warrants to the other that it is the
      licensee or proprietor of the Confidential Information disclosed by it and
      is authorized to disclose it on the terms of this Agreement.

            (c) Each Partner undertakes, and agrees to procure that the
      Partnership will undertake, both during the continuance of the Partnership
      and, in the case of the Partners only, for a period of ten years following
      its termination for any reason and other than in respect of its own
      Confidential Information:

                  (i) To keep confidential and in safe custody all Confidential
            Information and not to disclose to any Third Party any Confidential
            Information except with the prior written consent of the Disclosing
            Partner or its Affiliate.

                  (ii) To limit access to Confidential Information to those of
            its employees who reasonably require such information for the
            purposes of the Partnership's business, to inform each employee of
            the foregoing restrictions as to the confidentiality, disclosure and

                                    -79-
<PAGE>
            use of such Confidential Information and to insure that each such
            employee shall observe such restrictions;

                  (iii) To insure that any Third Party to which any Confidential
            Information is disclosed pursuant to (a) above shall keep the same
            confidential, shall not disclose it to any other Third Party, shall
            not use such information other than for the purposes to which the
            Disclosing Partner or its Affiliate has given its consent and shall
            comply with such restrictions as the Disclosing Partner or its
            Affiliate may impose in giving its consent pursuant to (a) above.

            (d) The foregoing restrictions concerning confidentiality shall not
      apply to any Confidential Information which is or becomes public knowledge
      otherwise than by default on the part of the Partnership or one of the
      Receiving Partners or which is or becomes lawfully available to the
      Partnership or the Receiving Partners otherwise than directly or
      indirectly from the Disclosing Partner or its Affiliates and without
      restriction on the Partnership or the Receiving Partnership against
      subsequent use, duplication or disclosure.

            (e) In the event that the Receiving Partner is requested or becomes
      legally compelled (by oral questions, interrogatories, requests for
      information or documents, subpoena, civil investigations demand or similar
      process) to disclose any Confidential Information, the Receiving Partner
      agrees that it shall provide the Disclosing Partner with prompt written
      notice of such request, including identifying information about the legal
      proceeding and the parties thereto, so that the Disclosing Partner may
      seek a protective order or other appropriate remedy and/or waive
      compliance with the provisions of this Agreement. In the event that such
      protective order or other remedy is not obtained, the Receiving Partner
      agrees that it shall furnish only that portion of the Confidential
      Information which is legally required and shall exercise its best efforts
      to obtain reliable assurance that confidential treatment shall be accorded
      to the Confidential Information which is disclosed in such manner.

      12.12 WAIVER OF CONSEQUENTIAL AND PUNITIVE DAMAGES; EXPRESS NEGLIGENCE. NO
PARTY TO THIS AGREEMENT OR THEIR AFFILIATES SHALL BE LIABLE TO ANY OTHER PARTY
OR ITS AFFILIATES FOR INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES RESULTING FROM
OR ARISING OUT OF THIS AGREEMENT INCLUDING, BUT NOT LIMITED TO, LOSS OF USE OF
PROPERTY, LOSS OF PROFITS, LOSS OF PRODUCTS OR BUSINESS INTERRUPTION. WHENEVER,
IN THIS AGREEMENT, ANY INITIAL AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT
WHATSOEVER, ANY OF THE PARTNERS, THEIR AFFILIATES, OR THE PARTNERSHIP AND/OR CEC
AND THEIR RESPECTIVE AFFILIATES AGREE TO INDEMNIFY EACH OTHER OR ANY OF THEIR
RESPECTIVE EMPLOYEES, CONTRACTORS, OR AGENTS, IT IS THE INTENT AND AGREEMENT OF
SUCH PARTIES THAT SUCH INDEMNITY BE WITHOUT REGARD TO THE CAUSES THEREOF (EXCEPT
AS EXPRESSLY OTHERWISE STATED IN SUCH INDEMNITY PROVISION), INCLUDING, WITHOUT
LIMITATION, THE

                                    -80-
<PAGE>
NEGLIGENCE OF ANY INDEMNIFIED PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE OR THE STRICT LIABILITY OF ANY INDEMNIFIED
PARTY.

      12.13 CONFLICTS WITH INITIAL AGREEMENTS. In the event of any conflict
between any provision of this Agreement and any provision of any of the Initial
Agreements, the provisions of this Agreement shall prevail.

      12.14 MERGER. From and after the Effective Date, this Agreement amends,
restates, supersedes and replaces the Original Partnership Agreement, the First
Amendment Agreement, the Second Amendment Agreement, and the Third Amendment
Agreement, the letter of intent dated September 5, 1996, and the confidentiality
agreement dated October 16, 1995. The Original Partnership Agreement, as amended
and in effect from time to time, shall continue to apply with respect to periods
prior to the Effective Date to establish the rights and obligations of the Tejas
Partner Group and the Shell Partner Group under the Sale and Purchase Agreement
dated as of January 1, 1997.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

Shell Coral Resources GP Company    Tejas Coral GP Company

By:                                       By:
Title:                                    Title:


Shell Coral Investment Company      Tejas Coral Energy Company

By:                                       By:
Title:                                    Title:


Shell Coral Resources Company       Tejas Coral Resources Company

By:                                       By:
Title:                                    Title:

                                    -81-
<PAGE>
Salmon Holdings, Inc.               Salmon Resources Ltd.

By:                                       By:
Title:                                    Title:

                                    -82-
<PAGE>
      The undersigned have executed this Agreement solely for the purpose of
confirming their agreement to SECTIONS 3.6, 8.1, 8.3, 8.4, 8.7, 8.12, 9.3, 12.1
(AS TO TEJAS PARENT AND SHELL PARENT ONLY), 12.12, 12.13 AND 12.14 hereof.

Shell Oil Company                         Tejas Gas Corporation

By:                                       By:
Title:                                    Title:


Shell Canada Limited

By:
Title:

                                    -83-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                                  EXHIBIT A1



                                               INITIAL CAPITAL       PARTNERSHIP
          NAME                                  CONTRIBUTION         PERCENTAGES
          ----                                 ---------------       -----------
GENERAL PARTNERS
      Shell Gas Marketing Company                       *            0.66-2/3%
      ("Shell GP")                                               

      Tejas Coral GP Company                            *            0.33-1/3%
      ("Tejas GP")                                               

LIMITED PARTNERS                                                 
      Shell Gas Investment Company                      *             3.4786%
      ("Shell LP2")                                              

      Tejas Coral Resources Company                     *             1.7468%
      ("Tejas LP2")                                              

      Shell Gas Trading Company                         *            47.9117%
      ("Shell LP1" after November 1, 1995)                       

      Tejas Coral Energy Company                        *         not applicable
      ("Tejas LP1" after December 31, 1995)                      
                                                                 
The following companies, together with Shell                     
Gas Trading Company, comprise                                    
"Shell LP1" until November 1, 1995:                              
--------------------------------------------
      Shell Offshore Inc.                               *            11.3700%

      Shell Western E&P Inc.                            *             3.2397%
                                                         
                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

The following companies comprise 
"Tejas LP1" until December 31, 1995:
------------------------------------
      Tejas Gas Corp.                                     *          0.0014%
      Tejas-Gulf Corporation                              *          0.2556%
      Tejas Hydrocarbons Company                          *          1.1452%
      Gulf Energy Pipeline Company                        *          0.9212%
      Gulf Energy Marketing Company                       *          1.6857%
      LEDCO Inc.                                          *          0.0176%
      Louisiana State Gas Corporation                     *          0.0817%
      Acadian Gas Pipeline System                         *          0.0032%
      Pontchartrain Natural Gas System                    *         14.4513%
      Calcasieu Gas Gathering System                      *          0.5827%
      Spindletop Gas Distribution System                  *          0.9185%
      Cypress Gas Pipeline Company                        *          1.0289%
      Cypress Gas Marketing Company                       *          0.3148%
      Tejas Gas Marketing Company                         *          9.6323%
      Tejas Gas Pipeline Company                          *          0.0000%
      Tejas Gas Transmission Company                      *          0.2131%
                                                                    
TOTAL                                                     *           100%
---------------------                                          
  * Those Shell LP1 Economic Interest Contributions identified on EXHIBIT C to
the Agreement that belong to such limited partner, having a Net Agreed Value of
* in the aggregate for all Shell LP1 Economic Interest Contributions contributed
by all contributing entities.

 ** Those Tejas LP1 Economic Interest Contributions identified on EXHIBIT D to
the Agreement that belong to such limited partner, having a Net Agreed Value of
* in the aggregate for all Tejas LP1 Economic Interest Contributions contributed
by all contributing entities.

*** Those Tejas LP1 Economic Interest Contributions identified on EXHIBIT D to
the Agreement that belong to G C Marketing Company and that are distributable to
Tejas Gas Transmission Company on account of its partnership interest in G C
Marketing Company (consisting of approximately 70% interest in the G C Marketing
Company earnings and distributions).

                                    -2-
<PAGE>
                                  EXHIBIT A2

          ORIGINAL PARTNERS IN THE PARTNERSHIP AS OF NOVEMBER 1, 1995

GENERAL PARTNERS:

      Shell Gas Marketing Company (now known as Shell Coral Resources GP
        Company)
      Tejas Alliance GP Company (now known as Tejas Coral GP Company)

LIMITED PARTNERS:

      Shell Gas Investment Company (now known as Shell Coral Investment Company)
      Shell Gas Trading Company
      Shell Offshore Inc. ("SOI")
      Shell Western E&P Inc. ("SWEPI")
      Tejas Alliance Resources Company (now known as Tejas Coral Resources
        Company)
      Tejas Alliance Energy Company (now known as Tejas Coral Energy Company)

      and:

      Tejas Gas Corp.
      Tejas-Gulf Corporation
      Tejas Hydrocarbons Company
      Gulf Energy Pipeline Company
      Gulf Energy Marketing Company
      LEDCO Inc.
      Louisiana State Gas Corporation
      Acadian Gas Pipeline System
      Pontchartrain Natural Gas System 
      Calcasieu Gas Gathering System 
      Spindletop Gas Distribution System 
      Cypress Gas Pipeline Company 
      Cypress Gas Marketing Company 
      Tejas Gas Marketing Company 
      Tejas Gas Pipeline Company
      Tejas Gas Transmission Company (together "Tejas LP1")

                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                                  EXHIBIT A3

              Agreed Value of Contributed Contracts as of 1/1/97

                              SHELL LP1      TEJAS LP1
                            -------------   ----------
Agreed Value at 11/1/95     $     *           $    *
1995 Amortization/True-up         *                *
1996 Amortization/True-up         *                *
                            --------------------------

Agreed Value 1/1/97         $     *           $    *
                            ==========================

                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                                  EXHIBIT A4

                    SALMON GP AND LP CAPITAL CONTRIBUTIONS

      Reference is made to the Asset Purchase Agreement dated April 1, 1997,
between Salmon GP, Salmon LP and the Partnership for the list of cash,
promissory note, contracts, and other assets contributed to the Partnership by
Salmon LP and Salmon GP.

      The Net Agreed Value of the Salmon LP contributed contracts is U.S.*.

      For clarity, it is understood and agreed that Salmon LP shall receive
capital account credit for the U.S.* promissory note referenced in the Asset
Purchase Agreement upon payment of the principal thereof, but not before.

                                    -1-
<PAGE>
                                   EXHIBIT B

                              INITIAL AGREEMENTS

1.    Gas Sale and Purchase Contract dated as of November 1, 1995, by and
      between Tejas Gas Corp., as Seller, and the Partnership, as Buyer.

2.    Gas Sale and Purchase Contract dated as of November 1, 1995, by and
      between Acadian Gas Corporation, as Seller, and the Partnership, as Buyer.

3.    Gas Sale and Purchase Contract dated as of November 1, 1995, by and
      between SWEPI, as Seller, and the Partnership, as Buyer.

4.    Gas Sale and Purchase Contract dated as of November 1, 1995, by and
      between Shell Frontier Oil & Gas Inc. ("SFOGI"), as Seller, and the
      Partnership, as Buyer.

5.    Gas Sale and Purchase Contract dated as of November 1, 1995, by and
      between SOI, as Seller, and the Partnership, as Buyer.

6.    Services Administration Agreement dated as of November 1, 1995, by and
      between the Partnership and SOI, pursuant to which the Partnership will
      receive a services fee in respect of natural gas volumes of SOI.

7.    Gas Purchase and Sale and Administration Agreement dated as of November 1,
      1995, by and between the Partnership and SGTC, pursuant to which the
      Partnership will sell natural gas to SGTC.

8.    Services Administration Agreement dated as of November 1, 1995, by and
      between the Partnership and SWEPI, pursuant to which the Partnership will
      receive a services fee in respect of natural gas volumes of SWEPI.

9.    Services Administration Agreement dated as of November 1, 1995, by and
      between the Partnership and SMACKOVER Shell Limited, pursuant to which the
      Partnership will receive a services fee in respect of natural gas volumes
      of SMACKOVER Shell Limited.

10.   Gas Sale and Purchase Contract dated as of April 1, 1997, by and between
      Salmon Resources Ltd., as Seller, and Coral Energy Resources, L.P., as
      Buyer.

11.   Contract Management Agreement dated as of April 1, 1997, by and between
      Salmon Resources Ltd. and Coral Energy Resources, L.P.

                                      -1-
<PAGE>
                                   EXHIBIT C

                   SHELL LP1 ECONOMIC INTEREST CONTRIBUTIONS

Except for the exclusions described in SECTION 3.1 of each Gas Sale and Purchase
Contract, with a Shell Partner Group entity, that is identified on EXHIBIT B
hereto, all contracts of SGTC, SOI, SWEPI, SFOGI, and other members of the Shell
Partner Group as set forth on EXHIBIT C-2 will be contributed to the Partnership
or the economic benefit thereof in excess of applicable market index prices will
be contributed through assignment of a net profits interest or through a
marketing fee. Without limiting the foregoing, in particular, the Shell Partner
Group:

1.    has attached as EXHIBIT C-2 a list of those agreements which are
      contributed to the Partnership hereunder effective November 1, 1995. Those
      agreements which are indicated on EXHIBIT C-2 as not to be assigned or
      which are not assignable will be handled by the Partnership as an
      independent contractor.

2.    will terminate existing SGTC gas purchase agreements with SOI, SWEPI, and
      any other relevant Shell Affiliates on or before November 1, 1995.

3.    will address the existing Redwood arrangement prior to November 1, 1995,
      by the contribution to the Partnership of their contract with Redwood and
      will not contribute the NORSTAR arrangements, but will provide the True-up
      payments described in EXHIBIT C-3.

4.    has attached Exhibits to the Services Administration Agreements effective
      November 1, 1995 listed on EXHIBIT B indicating contracts not assigned or
      not assignable for which the economic benefit accrues to the Partnership.

5.    will transfer the SGTC Risk Book and risk management position in respect
      of its hedging position to the Partnership as of November 1, 1995.

                                    -1-
<PAGE>
                   EXHIBIT C-2 TO THE PARTNERSHIP AGREEMENT

Reference is made to EXHIBIT C-2 to the Limited Partnership Agreement of Coral
Energy, L.P., dated as of September 1, 1995, the terms and provisions of which
are incorporated herein as fully as though repeated verbatim herein.

                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                EXHIBIT C-3 TO THE PARTNERSHIP AGREEMENT

                                NORSTAR

I.    The following special true-up mechanism modifies the one described in
      SECTION 3.3 (b) of the Agreement for NORSTAR since its contribution is net
      income before taxes (hereinafter, "Earnings"), not cash.

II.   The approximate net present value of NORSTAR's Earnings is *.

III.  NORSTAR's Earnings are projected as follows:

            YEAR          AMOUNT ($MM)-UNDISCOUNTED
            ----          -------------------------
            1995                     *
            1996                     *
            1997                     *
            1998                     *
            1999                     *
            2000-2004                * per year

IV.   For years 1995-1998, Shell will true-up against the Earnings in schedule
      III (hereinafter "Schedule") above, with cash if NORSTAR does not achieve
      the Earnings in the Schedule.

      A.    All Earnings above the Schedule are "banked" by Coral Energy
            Resources, L.P. (hereinafter "Coral") for Shell's credit.

      B.    Banked excess Earnings may not be used to offset an Earnings
            shortfall in future years (i.e. each year is trued-up on a stand
            alone basis, comparing Earnings per Schedule to actual annual
            NORSTAR Earnings). Banked excess Earnings shall be treated as a
            liability of Coral to the applicable Shell Partner and not recorded
            in that Shell Partner's Capital Account.

      C.    When NORSTAR distributions except for tax distributions (such
            distributions, excluding tax distributions, are hereinafter referred
            to as "Distributions") are made, then Coral will distribute the
            Distributions to Shell to the extent of Shell's "banked" excess
            Earnings over the Schedule.

                                    -1-
<PAGE>
V.    For years 1999-2004, Shell is still obligated to true-up any Earnings
      shortfall as projected in the Schedule above with cash.

      A.    All Earnings above the Schedule accrue to Coral.

      B.    Any Distributions applicable to any "banked" Shell excess Earnings
            for 1995-1998 will be distributed by Coral to Shell.

      C.    All Distributions in excess of Shell's 1995-1998 "banked" excess
            Earnings entitlement accrue to Coral.

VI.   For years 2005 and beyond, Shell does not true-up Earnings by NORSTAR.

      A.    Coral gets the benefit of all Earnings (or the detriment of any
            losses) accruing to the ownership of NORSTAR.

      B.    Any Distributions applicable to any "banked" Shell excess Earnings
            for 1995-1998 will be distributed by Coral to Shell.

      C.    All Distributions in excess of Shell's 1995-1998 "banked" excess
            Earnings entitlement accrue to Coral.

VII.  If NORSTAR or any part of NORSTAR is sold, net sales proceeds (sales
      proceeds less all costs incident to the sale) will be distributed in the
      following order:

      A.    Shell gets net sale proceeds to the extent of its "banked" Earnings.

      B.    Coral gets net sale proceeds to the extent of the cumulative
            undistributed Earnings less the Shell "banked" Earnings. In
            addition, Coral will receive a ten percent return through date of
            sale on the undistributed Earnings accumulated from 11/1/95 through
            the earlier of 12/31/98 or date of sale.

      C.    Shell gets NPV credit against its remaining true-up obligations
            shown in the Schedule.

      D.    Coral gets remaining funds over and above Shell's obligation shown
            in the Schedule.

                                    -2-
<PAGE>
                                EXHIBIT D

                TEJAS LP1 ECONOMIC INTEREST CONTRIBUTIONS

Reference is made to EXHIBIT D to the Limited Partnership Agreement of Coral
Energy, L.P., dated as of September 1, 1995, which Exhibit is hereby
incorporated by reference herein as fully as though repeated verbatim herein.

                                    -1-
<PAGE>
                                EXHIBIT E

   PROJECTED SALES MARGINS OF SHELL LP ECONOMIC INTEREST CONTRIBUTIONS

Reference is made to EXHIBIT E to the Limited Partnership Agreement of Coral
Energy, L.P., dated as of September 1, 1995, which Exhibit is hereby
incorporated by reference herein as fully as though repeated verbatim herein.

                                    -1-
<PAGE>
                                EXHIBIT F

  PROJECTED SALES VOLUMES OF TEJAS LP1 ECONOMIC INTEREST CONTRIBUTIONS

Reference is made to EXHIBIT F to the Limited Partnership Agreement of Coral
Energy, L.P., dated as of September 1, 1995, which Exhibit is hereby
incorporated by reference herein as fully as though repeated verbatim herein.

                                    -1-
<PAGE>
                                EXHIBIT G

                          INITIAL BUSINESS PLAN

Reference is made to EXHIBIT G to the Limited Partnership Agreement of Coral
Energy, L.P., dated as of September 1, 1995, which Exhibit is hereby
incorporated by reference herein as fully as though repeated verbatim herein.

                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                                EXHIBIT H

              SALMON VOLUME PROJECTIONS PER SECTION 3.6(a)

     PIPELINE         EXPECTED VOLUME         UNITS              TERM
     --------         ---------------         -----              ----
PGT                          *               MMBtu/D         1997 -> 2010
Kern River                   *               MMBtu/D         1997 -> 2007
==================  ================== ================== ==================

                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                                EXHIBIT I

CAPITAL ACCOUNT OPENING BALANCES/PARTNERSHIP PERCENTAGES AT APRIL 1, 1997

                                 PARTNERSHIP                        CAPITAL
NAME OF PARTNER                  PERCENTAGE                         ACCOUNT*
---------------                  -----------                        --------
Shell GP                           0.4400%                  US$        *
Shell LP1                         41.2641%                             *
Shell LP2                          2.2959%                             *
                                   -------                           ---
   Subtotal                       44.0000%                             *

Tejas GP                           0.4400%                             *
Tejas LP1                         27.5028%                             *
Tejas LP2                         16.0572%                             *
                                  --------                           ---
   Subtotal                       44.0000%                             *

Salmon GP                          0.1200%                             *
Salmon LP                         11.8800%                             *
                                  --------                           ---
   Subtotal                       12.0000%                             *

Total at 4/1/97                  100.0000%                  US$        *
                                 =========                           ===
----------------------------
*     For clarity, it is understood and agreed that Salmon LP shall receive
      capital account credit for the U.S. * promissory note referenced in the
      Asset Purchase Agreement upon payment of the principal thereof, but not
      before.

                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                                EXHIBIT J

                     DEFINITION OF APPLICABLE AMOUNT

      As used in the Agreement to which this EXHIBIT J is attached, the
following terms shall have the following indicated meanings:

A. "AGGREGATE APPLICABLE AMOUNT" means Canadian $*, as to the aggregate amount
of amortization to be reallocated from members of the Tejas Partner Group to
Salmon LP, and means Canadian $*, as to the aggregate amount of amortization to
be reallocated from members of the Shell Partner Group to Salmon LP, in each
case adjusted periodically as provided in Paragraph C below, to total the sum of
the Applicable Amounts described in Paragraph B below.

B. "APPLICABLE AMOUNT" means the following respective amount of amortization to
be reallocated from members of the Tejas Partner Group and the Shell Partner
Group, respectively, to Salmon LP, in each of the following years, converted to
U.S. $ as provided in Paragraph C below:

                                     AMOUNT (EXPRESSED IN CANADIAN $)
                                   TO BE REALLOCATED TO SALMON LP FROM:
                                -----------------------------------------
                                SHELL PARTNER
             YEAR                   GROUP            TEJAS PARTNER GROUP
             ----               -------------       ---------------------
                                                      LP1           LP2
                                                    --------       ------
             1997                     *                *             *
             1998                     *                *             *
             1999                     *                *             *
             2000                     *                *             *
             2001                     *                *             *
             2002                     *                *             *

                                    -1-
<PAGE>
CONFIDENTIAL TREATMENT. (NOTE: * INDICATES OMITTED MATERIAL FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.)

                                    AMOUNT (EXPRESSED IN CANADIAN $)
                                  TO BE REALLOCATED TO SALMON LP FROM:
                                  ------------------------------------
             2003                     *            *            *
             2004                     *            *            *
             2005                     *            *            *
Aggregate Applicable Amount:          *            *            *

C. The amounts set forth in Paragraphs A and B above shall be converted to U.S.$
periodically as follows:

            (i) Each Applicable Amount shall be converted to U.S.$ using the
      currency exchange rate utilized in the Coral Energy, L.P. consolidated
      financial statements for the applicable period.

            (ii) The Aggregate Applicable Amount shall be adjusted to reflect
      U.S.$ as each conversion is made, so that, after the last such conversion,
      the Aggregate Applicable Amount shall be comprised of the sum of each
      periodic amount following conversion into U.S.$.

                                    -2-