**EXHIBIT 10.16****AFFIRMATION OF OBLIGATIONS**     This Affirmation of Obligations is delivered by the undersigned, pursuant to Section5.1.4 of the Amended and Restated Credit Agreement, dated as of December 20, 2005 (as amended,supplemented, amended and restated or otherwise modified from time to time, the “Amended andRestated Credit Agreement”), among NEG Operating LLC, as Borrower, (the “Borrower”) AREP Oil & GasLLC as the Lender and the Administrative Agent, and Citicorp USA, Inc., as Collateral Agent for theLenders and the Hedging Counterparties (the “Collateral Agent”). The Amended and Restated CreditAgreement amends and restates in its entirety that certain Credit Agreement, dated as of December29, 2003, among the Borrower, Mizuho Corporate Bank, Ltd., as Administrative Agent for the Lenders,Bank of Texas, N.A. and The Bank of Nova Scotia, as co-agents for the Lenders and Bank of Texas,N.A., as Collateral Agent for the Lenders (the “Original Credit Agreement”). Unless otherwisedefined herein, terms used herein have the meanings provided in the Amended and Restated CreditAgreement.     In connection with the Amended and Restated Credit Agreement, each Security Document, eachNote, each Hedging Agreement among Borrower or any Guarantor and any Hedging Counterparty, and anyand all other agreements, documents, or instruments from time to time executed or delivered inconnection with or pursuant to any of the foregoing shall form part of the “Loan Documents” as suchterm is defined in the Amended and Restated Credit Agreement.     For the benefit of the Secured Parties, each of the Borrower, and NEG Holding LLC, ShanaNational LLC, NGX GP of Delaware LLC, NGX LP of Delaware LLC, and NGX Energy Limited Partnership,(hereinafter collectively referred to as the “Obligors”) hereby acknowledges, confirms andreconfirms its obligations under the Loan Documents, and represents, warrants and agrees (i) thatthe documents which form the Loan Documents (x) are legal, valid and binding obligations of suchObligor, enforceable against such Obligor in accordance with their terms and (y) with respect tothe Loan Documents purporting to grant to the Collateral Agent a security interest in the assetscovered thereby, that such Loan Documents so grant and, after giving effect to the execution,delivery and effectiveness of the Amended and Restated Credit Agreement, will continue to so grantto the Collateral Agent on behalf of the Secured Parties a perfected, security interest in suchassets, subject only to the liens permitted by the Amended and Restated Credit Agreement and (ii)to continue to comply with the terms and conditions of the Loan Documents.     Each Obligor agrees that it will execute and deliver to the Collateral Agent all suchinstruments and other documentation and shall take such other action as may be reasonably requestedby the Collateral Agent in order to perfect the Secured Parties’ security interest and to giveeffect to the collateral assignment by AREP Oil & Gas LLC to Citicorp USA, Inc., as AdministrativeAgent under the AREP Oil & Gas LLC Credit Agreement, dated as of December 20, 2005.     Nothing in this Affirmation of Obligations or the documents referred to herein shall have theresult that any officer, director, employee, agent, shareholder or partner of any of the Obligorswill have any personal liability of any nature whatsoever under applicable legal requirements(except in the case of any such Person who is a party to a Loan Document to the extent expresslystated in the applicable Loan Documents).*(Signature Page Follows)*
 

 
     **IN WITNESS WHEREOF**, the undersigned has executed this certificate as of this 20th day ofDecember, 2005.       **NEG OPERATING LLC**       By:           /s/ PHILIP D. DEVLIN              Name: Philip D. Devlin         Title: Vice President and Secretary         **Acceptance of Affirmation of Obligations:**           **CITICORP USA, INC.**, as Collateral Agent for the    Lenders and the Hedging Counterparties.             By:            /s/ DAVID E. HUNT             Name: David E. Hunt      Title: Vice President  
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     **IN WITNESS WHEREOF**, the undersigned has executed this certificate as of this 20th day ofDecember, 2005.       **NEG HOLDING LLC**  By: AREP Oil & Gas LLC, managing member       By:           /s/ PHILIP D. DEVLIN              Name: Philip D. Devlin         Title: Vice President and Secretary         **Acceptance of Affirmation of Obligations:**           **CITICORP USA, INC.**, as Collateral Agent for the    Lenders and the Hedging Counterparties.             By:            /s/ DAVID E. HUNT             Name: David E. Hunt      Title: Vice President  
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     **IN WITNESS WHEREOF**, the undersigned has executed this certificate as of this 20th day ofDecember, 2005.       **SHANA NATIONAL LLC**  By: NEG Operating LLC, sole member  By: NEG Holding LLC, sole member  By: AREP Oil & Gas LLC, managing member       By:            /s/ PHILIP D. DEVLIN              Name: Philip D. Devlin         Title: Vice President and Secretary         **Acceptance of Affirmation of Obligations:**           **CITICORP USA, INC.**, as Collateral Agent for the    Lenders and the Hedging Counterparties.             By:           /s/ DAVID E. HUNT             Name: David E. Hunt      Title: Vice President  
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     **IN WITNESS WHEREOF**, the undersigned has executed this certificate as of this 20th day ofDecember, 2005.       **NGX ENERGY LIMITED PARTNERSHIP**  By: NGX GP of Delaware LLC  By: NEG Operating LLC, sole member  By: NEG Holding LLC, sole member  By: AREP Oil & Gas LLC, managing member       By:            /s/ PHILIP D. DEVLIN              Name: Philip D. Devlin         Title: Vice President and Secretary         **Acceptance of Affirmation of Obligations:**           **CITICORP USA, INC.**, as Collateral Agent for the    Lenders and the Hedging Counterparties.             By:              /s/ DAVID E. HUNT             Name: David E. Hunt      Title: Vice President  
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     **IN WITNESS WHEREOF**, the undersigned has executed this certificate as of this 20th day ofDecember, 2005.       **NGX GP OF DELAWARE LLC**  By: NEG Operating LLC, sole member  By: NEG Holding LLC, sole member  By: AREP Oil & Gas LLC, managing member       By:           /s/ PHILIP D. DEVLIN              Name: Philip D. Devlin         Title: Vice President and Secretary         **Acceptance of Affirmation of Obligations:**             **CITICORP USA, INC.**, as Collateral Agent for the    Lenders and the Hedging Counterparties.             By:              /s/ DAVID E. HUNT             Name: David E. Hunt      Title:  Vice President  
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     **IN WITNESS WHEREOF**, the undersigned has executed this certificate as of this 20th day ofDecember, 2005.         **NGX LP OF DELAWARE LLC**  By: NEG Operating LLC, sole member  By: NEG Holding LLC, sole member  By: AREP Oil & Gas LLC, managing member       By:           /s/ PHILIP D. DEVLIN              Name: Philip D. Devlin         Title: Vice President and Secretary         **Acceptance of Affirmation of Obligations:**           **CITICORP USA, INC.**, as Collateral Agent for the    Lenders and the Hedging Counterparties.     By:              /s/ DAVID E. HUNT             Name: David E. Hunt      Title: Vice President  
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