STOCK PURCHASE AGREEMENT

                                      AMONG

                             ONEOK RESOURCES COMPANY


                                       And


                          MAGNUM HUNTER RESOURCES, INC.

                             Dated: February 3, 1999


                                        

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                            STOCK PURCHASE AGREEMENT


         THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this 3rd
day of  February,  1999,  by and between  ONEOK  RESOURCES  COMPANY,  a Delaware
corporation  (the  "Purchaser"),   MAGNUM  HUNTER  RESOURCES,   INC.,  a  Nevada
corporation (the "Company"), MAGNUM HUNTER PRODUCTION, INC., a Texas corporation
("Production"),   GRUY  PETROLEUM   MANAGEMENT   COMPANY,  a  Texas  corporation
("Management"),  HUNTER GAS GATHERING,  INC., a Texas corporation  ("Gathering")
and BLUEBIRD ENERGY,  INC., an Oklahoma corporation  ("Bluebird").  (Production,
Management,  Gathering and Bluebird hereinafter  collectively referred to as the
"Subsidiaries")

         RECITALS:

     A. The Company has  authorized  the sale of an  aggregate  of 50,000  newly
issued shares of the Company's 1999 Series A 8% Convertible Preferred Stock, par
value  $.001 per share (the  "Preferred  Stock") in order to repay  Senior  bank
indebtedness,  to provide working capital for general corporate  purposes and to
finance acquisitions;

     B.  Purchaser  desires to  purchase  the  Preferred  Stock on the terms and
conditions  set  forth  herein  and enter  into the  Collateral  Agreements  (as
hereinafter defined); and

     C. The  Company  desires  to issue  and  sell  the  Preferred  Stock to the
Purchaser  on the  terms and  conditions  set forth  herein  and enter  into the
Collateral Agreements:

     NOW,  THEREFORE,  in consideration of the foregoing recitals and the mutual
promises and  agreements of the parties set forth  herein,  the parties agree as
follows:

I.       PURCHASE OF PREFERRED STOCK.

     A. Preferred Stock Purchase.

     1. At the Closing,  and under the terms and  conditions of this  Agreement,
the Company will sell and deliver 50,000 shares of the Company's Preferred Stock
and Purchaser  will purchase and accept such  Preferred  Stock from the Company.
The purchase  price for such  Preferred  Stock (the  "Purchase  Price") shall be
Fifty Million Dollars ($50,000,000) or One Thousand Dollars ($1,000) per share.

     2. The  Purchase  Price shall be paid to the Company at the Closing by wire
transfer in immediately  available funds in the amounts and to the account to be
specified by the Company.


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     3. The  Preferred  Stock  shall be issued by the  Company  with the rights,
voting powers,  preferences and  restrictions as set forth on the Certificate of
Designations attached as Exhibit A (the "Certificate of Designations").

     B. Delivery of Shares of Preferred Stock.

     1. The  Company  has  reserved  sufficient  shares  of its  authorized  but
unissued  Preferred  Stock for the purpose of the  transactions  contemplated by
this Agreement and shall cause such shares to be transferred to Purchaser on the
Closing Date. The Company has  additionally  reserved and authorized  sufficient
shares of the Company's common stock in order to allow Purchaser to convert each
share of the Preferred Stock into 190.476 shares of the Company's Common Stock.

     C. Closing Date. The closing of the transactions  contemplated  herein (the
"Closing")  shall take place on February  3, 1999,  or on such other date as the
Company and the  Purchaser may mutually  agree (the  "Closing  Date") at a place
mutually agreed to by the parties.

     D. Securities Law Compliance.

     1.  Purchaser  represents to the Company,  that the  Preferred  Stock being
purchased by the Purchaser is being  acquired for the  Purchaser's  own separate
account,  for investment only, and not with a view to, or for sale in connection
with, any distribution of the Preferred Stock in violation of the Securities Act
of 1933, as amended (the "Securities  Act"), or any rule or regulation under the
Securities  Act. The  Purchaser  further  represents  and agrees not to take, or
cause to be taken,  any  action  that  would  deem it to be an  underwriter  (as
defined in the Securities Act) of the Preferred Stock. The Purchaser understands
and agrees that (a) the Preferred Stock may not be transferred or sold for value
in  the  absence  of  registration  or   qualification   or  an  exemption  from
registration  or  qualification  under the Securities Act, and the securities or
Blue Sky laws of any state, as required, (b) a stop transfer instruction will be
issued with respect to the Preferred Stock, and (c) the following legend will be
placed on the certificates representing the Preferred Stock to be received :

     THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN  REGISTERED
UNDER  THE  SECURITIES  ACT OF  1933,  THE  NEVADA  SECURITIES  ACT OR  OKLAHOMA
SECURITIES  ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD OR  TRANSFERRED  FOR VALUE IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION  OR
QUALIFICATION  OF THEM UNDER THE SECURITIES  ACT OF 1933, THE NEVADA  SECURITIES
ACT AND THE SECURITIES OR BLUE SKY LAWS OF ANY OTHER STATE,  AS REQUIRED,  OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION 

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OR QUALIFICATION IS NOT REQUIRED UNDER SUCH ACTS AND/OR LAWS.

In addition, the Purchaser shall deliver such documents and other information as
the  Company  shall  reasonably  require  to  verify  their  its  status  as  an
"Accredited  Investor"  for  purposes  of  Regulation  D of the  Securities  and
Exchange Commission. .

II.      REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company hereby represents and warrants to Purchaser as follows:

     A.  Organization  and  Standing;  Charter  and  Bylaws.  The  Company  is a
corporation  duly organized and validly  existing  under,  and by virtue of, the
laws of the State of Nevada and is in good standing under such laws. The Company
has the requisite  corporate power to own and operate its properties and assets,
and to carry on its  businesses  as  presently  conducted  and as proposed to be
conducted.  The  Company is  qualified,  licensed or  domesticated  as a foreign
corporation  in any  jurisdiction  where the  failure to be so  qualified  could
reasonably be expected to have a material adverse effect on the business, assets
or financial condition of the Company and the Subsidiaries considered as a whole
(a "Material  Adverse  Effect").  The Company has furnished  the Purchaser  with
copies of its  certificate of  incorporation  and bylaws.  Said copies are true,
correct  and  complete  and  contain  all  amendments  through  the date of this
Agreement.

     B. Corporate Power. The Company has all requisite legal and corporate power
to enter into this Agreement and to carry out and perform its obligations  under
the terms of this Agreement. Neither the certificate of incorporation nor bylaws
of the  Company,  nor any other  material  instrument  to which the Company is a
party, or by which the Company is bound, nor any court order or any governmental
law,  rule or  regulation,  will be  violated  by the  Company's  execution  and
consummation of this Agreement; subject, however, to the Company's obtainment of
the consents referred to in Sections VI.F and G.

     C. Affiliates.  Except as set forth in Disclosure  Schedule II, Item C, the
Company  does not own,  directly  or  indirectly,  10% or more of the issued and
outstanding  shares  of stock or other  interests  in any  corporation,  limited
liability company, partnership, joint venture, or other entity.

     D. Capitalization. The authorized capital stock of the Company is listed on
Disclosure  Schedule II. D., attached hereto.  The issued and outstanding shares
of the Company's common stock are listed on Disclosure Schedule II.D.,  attached
hereto.  The  existing  issued  and  outstanding  shares  of all  series  of the
Company's  preferred  stock are as set forth on Disclosure  Schedule II.D.  Such
common  stock and all  series of the  Company's  preferred  stock have been duly
authorized and were or will be validly issued,  fully paid and nonassessable and
were or will be issued in compliance with all applicable  state and federal laws
concerning  the issuance of  securities.  Other than as set forth on  Disclosure
Schedule II.D., there are no outstanding rights, options,  warrants,  conversion
rights, or

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agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company owns 100% of all issued and outstanding stock of each
of the Subsidiaries.

     E.  Authorization.  All corporate action on the part of the Company and its
directors and  shareholders  necessary for the transaction  contemplated in this
Agreement  have  been  taken . This  Agreement  is a legal,  valid  and  binding
obligation of the Company,  enforceable  against the Company in accordance  with
its  terms,  except  as  limited  by  bankruptcy,  insolvency,   reorganization,
moratorium  or similar  laws of general  application  affecting  enforcement  of
creditors'  rights,  and except as limited by  application  of legal  principles
affecting the availability of equitable remedies.

     F.  Financial  Statements.  The  balance  sheet of the  Company and related
statement  of earnings  for the fiscal year ended  December  31,  1997,  and the
balance  sheet as of the  Interim  Date,  as defined  below  (collectively,  the
"Financial Statements of the Company") have been supplied to the Purchaser, have
been prepared in accordance with the principles  described  therein,  and fairly
present the  financial  condition and results of operations of the Company as of
the dates and for the periods  thereof.  The term "Interim Date" as used in this
Agreement shall mean September 30, 1998.

     G.  Changes  in  Financial  Condition.  Except as set  forth on  Disclosure
Schedule  II,  Item G, since the Interim  Date:  (a) The Company has not entered
into any transaction which was not in the ordinary course of business; (b) there
has been no adverse change in the condition (financial or otherwise),  business,
property,  assets,  or  liabilities  of the  Company  that could  reasonably  be
expected to have a Material  Adverse  Effect,  other than changes as a result of
drilling or other  customary oil and gas operations  which have been  consistent
with the past  practices  (including  changes in  production  rates on producing
wells) or as a result of general industry conditions (including prices) or other
changes in the  ordinary  course of  business;  (c) there has been no damage to,
destruction  of or  loss  of  physical  property  (whether  or  not  covered  by
insurance) that could reasonably be expected to have a Material Adverse Effect ;
(d) the Company has not declared or paid any  dividend or made any  distribution
on its common or preferred stock, redeemed,  purchased or otherwise acquired any
of its stock,  granted  any options to  purchase  shares of its stock  except in
accordance  with past  practices,  or issued any  shares of its  stock;  (e) the
Company has not materially  increased the  compensation  of any officer,  or the
rate of pay of its employees as a group, except as part of regular  compensation
increases in the ordinary  course of business;  (f) the Company has not received
notice that there has been a loss of any of its major gas purchasers;  (g) there
has been no  resignation  or termination of employment of any key officer or key
employee  of the  Company  and  the  Company  does  not  know  of the  impending
resignation  or  termination  of  employment of any of its officers or employees
that if  consummated  could  reasonably  be expected to have a Material  Adverse
Effect ; (h)  there  has been no labor  dispute  involving  the  Company  or its
employees and none is pending or, to the Company's  knowledge,  threatened;  (i)
there has been no write down of any of the  Company's  oil and gas  reserves  or
other assets;  and (j) to the knowledge of the Company,  there has been no other
event or  condition of any  character  pertaining  to or affecting  the asserts,
business,  properties  or  liabilities  of the Company that could  reasonably be
expected to have a Material Adverse Effect.



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     H. Material Contracts and Commitments. All material contracts, commitments,
agreements,  and instruments  (the  "Contracts") to which the Company is a party
are legal, valid, binding, and in full force and effect in all material respects
and  enforceable  in  accordance  with  their  terms,  except  (i) as limited by
bankruptcy, insolvency,  reorganization,  moratorium, or similar laws of general
application  affecting  enforcement  of  creditors'  rights,  (ii) as limited by
application  of  legal  principles   affecting  the  availability  of  equitable
remedies,  and (iii)  where  enforceability  would not have a  Material  Adverse
Effect. For purposes of this Section II.H., a contract, commitment, agreement or
instruments  shall be considered  "material" if it extends for a duration longer
than  thirty  (30) days or  involves  consideration  in excess of $10,000 in the
aggregate.  The Company is not in material  default under any of the  Contracts.
The Company has made available to Purchaser originals or copies of the Contracts
for review by Purchaser.

     I. Compliance with Other Instruments,  None Burdensome, etc. The Company is
not in violation of any term of its articles of incorporation  or bylaws,  or in
any  material  respect  of any of the  Contracts,  or, to the  knowledge  of the
Company,  any  judgment,  decree or order,  or any material  statute,  rule,  or
regulation applicable to it. Except as set forth on Disclosure Schedule II, Item
I, the execution,  delivery,  and  performance by the Company of this Agreement,
and the transfer of the securities  pursuant hereto, will not result in any such
violation or be in conflict with or constitute a default under any such term, or
cause the acceleration of maturity of any loan, indenture or material obligation
to which the Company is a party or by which it is bound or with respect to which
it is an obligor or  guarantor or result in the  creation or  imposition  of any
material lien, claim, charge, restriction, or encumbrance of any kind whatsoever
upon,  or, to the knowledge of the Company after due inquiry,  give to any other
person  any  interest  or  right   (including   any  right  of   termination  or
cancellation)  in or with  respect to any of the  material  properties,  assets,
business or agreements of the Company.

     J. Litigation. Except as set forth on Disclosure Schedule II, Item J, there
are no claims, demands, actions,  proceedings,  or investigations pending which,
either in any case or in the aggregate,  would, if adversely determined,  result
in  any  Material  Adverse  Effect  on the  business,  conditions,  affairs,  or
operations  of the Company or in any of its  properties  and assets taken in the
aggregate,  or in any material impairment of the right or ability of the Company
to carry on its business as presently conducted, or in any material liability on
the part of the Company, or which question the validity of this Agreement or any
action taken or to be taken in connection herewith.

     K. Governmental  Consents.  No consent,  approval,  or authorization of, or
designation,  declaration,  or filing with, any governmental unit is required on
the part of the Company in connection  with the valid  execution and delivery of
this Agreement or the  consummation  of the trans actions  contemplated  hereby,
except  for  such  filings  as  have  been  made  or are to be  made  under  the
Hart-Scott-Rodino  Act of 1976,  as amended (the "HSR Act") and Form D under the
Securities Act.

     L. Insurance.  The Company has currently in force liability  insurance with
insurance companies or associations,  and under policies listed and described in
Disclosure  Schedule II, Item L attached  hereto,  during the periods  described
therein, and, except as set forth on Disclosure Schedule


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II, Item L, the Company is not aware of any claims for personal injuries,  death
or property damage for any reason now pending or threatened  against the Company
and knows of no  material  damage to  personal  property  by the  Company or its
agents,  servants or employees,  which might give rise to such claims, or if any
such routine  claims have arisen they are  adequately  covered by such liability
insurance.

     M.  Intellectual  Property.  There  are no  patents,  patent  applications,
registered  trademarks,  trademark  applications,  trade names,  and  registered
copyrights under which the Company  operates,  except as disclosed on Disclosure
Schedule  II,  Item M. The  Company  has not  received  any  notice  or claim of
infringement of any patent, invention, right, trademark, trade name or copyright
of others with respect to any process,  method, formula or procedure used by the
Company in the present conduct of its business.

     N.  Title  to and  Condition  of  Properties.  The  Company  has  good  and
defensible  title to all of its  tangible  and  intangible  property  and assets
(other  than  the  Oil and Gas  Properties  defined  in  Sub-Section  U  below),
including  those  reflected in the Financial  Statements of the Company  (except
such  property or assets as have since the Interim  Date been sold or  otherwise
disposed  of in the  ordinary  course  of  business).  Except  as set  forth  in
Disclosure  Schedule II, Item N or as disclosed in the  Financial  Statements of
the  Company  such  property  and assets are  subject to no mortgage or security
interest,  conditional sales contract, charge, lien or encumbrance (except liens
for current taxes not yet due and payable,  mechanic's,  materialmen's and other
statutory liens and such imperfections of title, easements and encumbrances,  if
any, as are not substantial in character, amount or extent and do not materially
detract from the value of, or interfere  with the present use of the pro perties
subject thereto or affected thereby, or otherwise materially impair the business
operations of the Company).  Subsequent to the Interim Date, the Company has not
sold or disposed of any of its property and assets or obligated  itself to do so
except in the ordinary course of business.  Except for such minor defects as are
not  substantial in character and which do not have a materially  adverse effect
upon the validity  thereof,  all material  personal property leases to which the
Company  is a party  are valid  and  effective,  and there is not under any such
lease any existing material default or event which, with notice or lapse of time
or both, would constitute a material default and in respect of which the Company
has not taken reasonable steps to prevent such a default from occurring.

     O.  Taxes.  Except for the 1997  Federal  Tax  Return  (for which no tax is
owing),  the Company has timely  filed all tax returns that are required to have
been filed prior to the date of this  Agreement  with all  appropriate  federal,
state,  county and local  governmental  agencies or  instrumen  talities for the
Company, and each of the returns correctly reflects the income and tax liability
required to be shown therein.  The Company has paid all income,  franchise,  and
other taxes due by it as reflected on the returns.  There is no pending  dispute
with any taxing  authority  relating to any of the returns which,  if determined
adversely to the taxpayer, would result in the assertion by any taxing authority
of any valid  deficiency  in a material  amount for taxes  against the  Company.
Federal income tax returns of the Company and its  predecessors in interest have
never been audited by the Internal Revenue Service.



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     P. Environmental Matters.

     1. As used in this Agreement,  "Environmental Laws" means all local, state,
and federal  environmental,  health,  and safety  laws,  rules,  ordinances  and
regulations in all jurisdictions in which the Company has done business or owned
property,  including,  without limitation, the Federal Resource Conservation and
Recovery Act, the Federal Comprehensive Environmental Response, Compensation and
Liability  Act, the Federal  Clean Water Act, the Federal Clean Air Act, and the
Federal Occupational Safety and Heath Act.

     2.  Except as set forth on  Disclosure  Schedule  II,  Item P,  neither the
conduct nor operation of the Company nor any condition of any property  owned or
leased or ever owned or leased and operated by the Company, and to the knowledge
of the Company, any oil and gas property owned or leased or ever owned or leased
but not operated by the Company: (i) violates or violated  Environmental Laws in
any respect that would have a Material Adverse Effect;  and (ii) no condition or
event has occurred with respect to the Company or any such property  that,  with
notice or the passage of time, or both, would  constitute a violation  requiring
action by the Company to remedy,  stabilize,  neutralize,  clean up or otherwise
alter the environmental  condition of any such property where the aggregate cost
of such  actions  would have a Material  Adverse  Effect.  The  Company  has not
received any notice from any  governmental  agency or any other person or entity
that the  operation of any  facilities or any property  ever owned,  leased,  or
operated  by  it,  is or was  in  violation  of  any  Environmental  Laws  or is
responsible   (or   potentially   responsible)   for  remedying,   establishing,
neutralizing, or cleaning up any pollutants, contaminants, or hazardous or toxic
waste,  substances or materials  at, on, or beneath any such property  where the
aggregate cost thereof would have a Material Adverse Effect.

     3. Except as set forth on  Disclosure  Schedule II, Item P, the Company has
obtained  or  applied  for all  environmental,  health and  safety  permits  and
authorizations   (collectively   "Environmental   Permits")  necessary  for  the
construction  of its facilities and the operation of its business,  as presently
conducted for the use, storage, treatment, transportation, release, emission and
disposal of raw  materials,  by-products,  wastes and other  substances  used or
produced by or otherwise  relating to its business  except to the extent failure
to obtain or apply for such permit or  authorization  would not in the aggregate
have a Material Adverse Effect, and all such permits are in good standing and in
all material respects in full force and effect or, where  applicable,  a renewal
application  has been  timely  filed,  and agency  approval  is  expected  to be
obtained,  and the Company is in  compliance  in all material  respects with all
terms and  conditions of all such  Environmental  Permits,  except to the extent
failure to comply with such  Environmental  Permits  would not in the  aggregate
have a Material Adverse Effect.

     Q. Compliance with the Law. Except as set forth on Disclosure  Schedule II,
Item P,  the  Company  (i) has all  licenses,  franchises,  permits,  and  other
governmental  authorizations  of a material nature that are legally  required to
enable it to conduct  its  business  in all  material  respects,  and (ii) is in
substantial  compliance in all material respects with all applicable laws, rules
and regulations except


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to the extent  failure to comply  therewith  or failure to obtain such  license,
franchise,  permit or  authorization  would not in the aggregate have a Material
Adverse Effect.

     R. Benefit  Plans and ERISA  Compliance.  Except as set forth on Disclosure
Schedule  II, Item R, the Company has no employee  benefit  plans or  employment
contracts.  Except  with  respect  to the  employee  benefit  plans set forth in
Disclosure  Schedule II, Item R, the Company is not subject to the  requirements
of the Employee  Retirement  Income Security Act of 1974, as amended  ("ERISA"),
and  contributions  or other  material  payments  are required to be made by the
Company  under ERISA.  No event has occurred or would  reasonably be expected to
subject the Company to any liability  under EISA,  the Internal  Revenue Code of
1986,  as amended (the  "Code") or similar or other  applicable  laws,  rules or
regulations in respect to any Company benefit plans, and no reportable event has
occurred  that would  reasonably  expect to result in material  liability to the
Company.  The Company is not a party to any collective  bargaining  agreement or
other labor agreement.

     S.  Condition of Assets.  To the knowledge of the Company,  the  buildings,
plants, structures, and equipment owned by the Company and which are material to
the  operations of the Company are  structurally  sound,  are in good  operating
condition and repair, and are adequate for the uses to which they are being put,
and none of such  buildings,  plants,  structures,  or  equipment  is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost to the Company.

     T. Accounts Receivable. All accounts receivable of the Company represent or
will represent  valid  obligations  arising from sales actually made or services
actually performed in the ordinary course of business.  Unless paid prior to the
Closing,  the  accounts  receivable  of the  Company  are or will be,  as of the
Closing, reasonably expected to be collectible in all material respects, subject
only to allowance for doubtful accounts,  and calculated  consistently with past
practice.  There is no contest,  claim or asserted  right of set-off,  under any
contract or with any obligor of a material  account  receivable  relating to the
amount or validity of such account receivable.

     U.  Oil and Gas  Properties.  The Oil and Gas  Properties,  as  hereinafter
defined, are subject to no mortgage, security interests, or liens created by the
Company except for Permitted  Encumbrance,  as hereinafter  defined. The Company
has either good title or is the owner of or has rights  consistent with industry
practice  to use its Oil and Gas  Properties,  if any.  The  term  "Oil  and Gas
Properties",  as used herein means all of the Company's right,  title,  interest
and estate,  real or personal,  recorded or  unrecorded,  movable or  immovable,
tangible or intangible,  in and to: (i) oil, gas and mineral  leases,  subleases
and other leaseholds,  royalties,  overriding royalties,  net profits interests,
mineral fee interests,  carried  interests,  and other  interests in oil and gas
(the "Leases") and any and all oil, gas,  water or injection  wells thereon (the
"Wells"),  (ii) any pools or units  which  include all or a part of any Lease or
include any Well (the "Units") and  including  all right,  title and interest of
the Company in production from any such pool or Unit,  whether such pool or Unit
production  comes from wells  located on or off of a Lease,  and all  tenements,
hereditaments  and  appurtenances  belonging  to the  Leases  and  Units,  (iii)
interests under or derived from all presently existing contracts, agreements and
instruments by which such properties are bound, to the extent applicable to such


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<PAGE>



properties,  including,  but not limited to, operating agreements,  unitization,
pooling and communitization  agreements,  declarations and orders, joint venture
agreements,  and  farmin  and  farmout  agreements,  (iv)  easements,   permits,
licenses,  servitudes,  rights-of-way,  surface  leases and other surface rights
appurtenant  to,  and  used or held  for  use  solely  in  connection  with  the
properties, and (v) equipment,  machinery, fixtures, and other tangible personal
property and improvements  located on such properties.  As used herein, the term
"Permitted  Encumbrances" means: (i) matters described without material omission
in Disclosure  Schedule II, Item N, or reflected in the Financial  Statements of
the  Company  (ii)  royalties,  overriding  royalties,  net  profits  interests,
production  payments  and other  burdens on  production  which do not reduce the
Company's net revenue interest in any of the Oil and Gas Properties to less than
the Company's interest; (iii) liens for taxes, assessments,  labor and materials
where  payment  is not  due,  (iii)  operating  agreements,  unit  agree  ments,
unitization   and  pooling   designations   and   declarations,   gathering  and
transportation agreements, processing agreements, gas, oil and liquids purchase,
sale and exchange  agreements,  and other similar  agreements  provided (A) they
contain terms and conditions customary in the oil and gas industry,  (B) they do
not adversely  affect or burden the ownership of the Oil and Gas  Properties (C)
all amounts due and payable by the Company  have been paid in full,  and (D) the
Company is not in material  default  thereunder,  (iv)  regulatory  authority of
governmental agencies not presently or previously violated,  easements,  surface
leases and rights,  plat  restrictions and similar  encumbrances,  provided that
they do not materially  detract from the value, or materially  increase the cost
of operation of any of the Oil and Gas Properties or otherwise  adversely affect
the operation thereof, and (v) liens,  charges,  encumbrances and irregularities
in the chain of title  which,  because  of  remoteness  in or  passage  of time,
statutory cure periods, marketable title acts or other similar reasons, have not
affected or interrupted,  and are not reasonably expected to affect or interrupt
in any  material  way,  the claimed  ownership  of the Company or the receipt of
production revenues from the Oil and Gas Properties affected thereby.

     V. Disclosure. This Agreement and the exhibits hereto, as they apply to the
Company,  Disclosure Schedule II, the Financial  Statements of the Company,  and
all  certificates  delivered to the Purchaser  pursuant to this Agreement,  when
read together, do not contain any untrue statement of a material fact and do not
omit to  state a  material  fact  necessary  in  order  to make  the  statements
contained therein or herein not misleading.

III.     REPRESENTATIONS AND WARRANTIES OF SUBSIDIARIES.

     The  Subsidiaries,  individually and not jointly,  join in the execution of
this Agreement for the purpose of making the  representations  and warranties to
the Purchaser as follows, with each Subsidiary representing only as to itself:

     A.   Organization   and  Standing,   Charter  and  By-Laws.   Each  of  the
Subsidiaries, except Bluebird, is a Texas corporation duly organized and validly
existing  under  and by  virtue of the laws of the State of Texas and is in good
standing under such laws. Bluebird is an Oklahoma corporation duly organized and
validly existing under and by virtue of the laws of the State of Oklahoma.  Each
of the Subsidiaries have the requisite  corporate power to own and operate their
properties and assets,


                                        9

<PAGE>



and to carry on their  businesses  as presently  conducted and as proposed to be
conducted. Each of the Subsidiaries is qualified,  licensed or domesticated as a
foreign  corporation in any jurisdiction  where the nature of its activities and
of  properties  owned or leased by it makes  such  qualification,  licensing  or
domestication  necessary at this time,  except where  failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect.  Each of the
Subsidiaries  have furnished the Purchaser with copies of their  certificates of
incorporation and bylaws. Said copies are true, correct and complete and contain
all amendments through the date of this Agreement.

     B. Corporate  Power.  Each of the  Subsidiaries has all requisite legal and
corporate  power to enter into this Agreement and to carry out and perform their
obligations  under the  terms of this  Agreement.  Neither  the  certificate  of
incorporation  nor  bylaws of any of the  Subsidiaries,  nor any other  material
instrument to which any of the  Subsidiaries are a party, or by which any of the
Subsidiaries  are bound,  nor any court order or any  governmental  law, rule or
regulation,  will be violated by the Subsidiaries' execution and consummation of
this Agreement;  subject, however, to the obtainment of the consents referred to
in Sections VI.F and G.

     C. Subsidiaries and Affiliates.  Except as set forth in Disclosure Schedule
III, Item C, each Subsidiary does not own,  directly or indirectly,  10% or more
of the  issued  and  outstanding  shares  of  stock or  other  interests  in any
corporation,  limited liability company,  partnership,  joint venture,  or other
entity.

     D. Capitalization. The authorized capital stock of each of the Subsidiaries
is listed on  Disclosure  Schedule  III.  D.,  attached  hereto.  The issued and
outstanding  shares of the  Subsidiaries'  common stock are listed on Disclosure
Schedule III.D.,  attached hereto.  None of the Subsidiaries have any issued and
outstanding  shares  of  preferred  stock.  All  common  stock  of  each  of the
Subsidiaries  has been duly  authorized and was validly  issued,  fully paid and
nonassessable and was issued in compliance with all applicable state and federal
laws  concerning  the  issuance  of  securities.  Other  than  as set  forth  on
Disclosure Schedule III.D., there are no outstanding rights, options,  warrants,
conversion rights, or agreements for the purchase or acquisition from any of the
Subsidiaries of any shares of their respective capital stock.

     E.  Authorization.  All  corporate  action  on  the  part  of  each  of the
Subsidiaries and their directors  necessary for the transaction  contemplated in
this  Agreement  has been taken.  This  Agreement is a legal,  valid and binding
obligation  of  each  of  the  Subsidiaries,  enforceable  against  each  of the
Subsidiaries  in  accordance  with its terms,  except as limited by  bankruptcy,
insolvency,  reorganization,  moratorium or similar laws of general  application
affecting enforcement of creditors' rights, and except as limited by application
of legal principles affecting the availability of equitable remedies.

     F.  Changes  in  Financial  Condition.  Except as set  forth on  Disclosure
Schedule III, Item F, since the Interim Date: (a) Each of the Subsidiaries  have
not  entered  into any  transaction  which  was not in the  ordinary  course  of
business;  (b)  there has been no  materially  adverse  change in the  condition
(financial or otherwise),  business, property, assets, or liabilities of each of
the Subsidiaries


                                       10

<PAGE>



that could reasonably be expected to have a Material Adverse Effect,  other than
changes as a result of drilling or other customary oil and gas operations  which
have been  consistent with the past practices  (including  changes in production
rates  on  producing  wells)  or as a  result  of  general  industry  conditions
(including  prices) or other  changes in the ordinary  course of  business;  (c)
there  has  been no  damage  to,  destruction  of or loss of  physical  property
(whether or not covered by insurance) that could  reasonably be expected to have
a Material Adverse Effect; (d) each of the Subsidiaries has not declared or paid
any dividend or made any distribution on its common stock,  redeemed,  purchased
or otherwise acquired any of their stock, granted any options to purchase shares
of  their  stock,  or  issued  any  shares  of  their  stock;  (e)  each  of the
Subsidiaries have not materially  increased the compensation of any officer,  or
the  rate of pay of  their  employees  as a  group,  except  as part of  regular
compensation  increases  in the  ordinary  course of  business;  (f) each of the
Subsidiaries  have not received  notice that there has been a loss of any of its
major gas  purchasers;  (g)  there has been no  resignation  or  termination  of
employment  of any key  officer  or key  employee  of the  Subsidiaries  and the
Subsidiaries  do not  know  of  the  impending  resignation  or  termination  of
employment of any of their officers or employees that if consummated  that could
reasonably be expected to have a Material Adverse Effect;  (h) there has been no
labor dispute  involving each of the  Subsidiaries  or its employees and none is
pending or, to the knowledge of any of the  Subsidiaries  threatened;  (i) there
has been no write down of any of the Subsidiaries' oil and gas reserves or other
assets; and (j) to the knowledge of each of the Subsidiaries,  there has been no
other event or  condition  of any  character  pertaining  to and  affecting  the
assets,  business,  properties or  liabilities  of the  Subsidiaries  that could
reasonably be expected to have a Material Adverse Effect.

     G. Material Contracts and Commitments. All material contracts, commitments,
agreements,  and instruments (the "Subsidiaries' Contracts") to which any of the
Subsidiaries are a party are legal, valid, binding, and in full force and effect
in all material respects and enforceable in accordance with their terms,  except
(i) as limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws of general application  affecting enforcement of creditors' rights, (ii) as
limited  by  application  of legal  principles  affecting  the  availability  of
equitable remedies,  and (iii) where the lack of enforceability would not have a
Material  Adverse  Effect.  For  purposes of this  Section  III.G.,  a contract,
commitment,  agreement  or  instruments  shall be  considered  "material"  if it
extends for a duration longer than thirty (30) days or involves consideration in
excess of $10,000 in the  aggregate.  None of the  Subsidiaries  is in  material
default under any of the Subsidiaries'  Contracts.  Each of the Subsidiaries has
made  available to Purchaser  originals or copies of the material  Subsidiaries'
Contracts for review by Purchaser.

     H. Compliance with Other  Instruments,  None  Burdensome,  etc. Each of the
Subsidiaries   is  not  in  violation  of  any  term  of  its   certificates  of
incorporation or bylaws,  or in any material respect of any of the Subsidiaries'
Contracts to which such  Subsidiary  is a party,  or, to the knowledge of any of
the Subsidiaries,  any judgment, decree or order, or any material statute, rule,
or regulation applica ble to it. Except as set forth on Disclosure Schedule III,
Item H, the execution,  delivery, and performance by each of the Subsidiaries of
this  Agreement  will not result in any such violation or be in conflict with or
constitute a default under any such term, or cause the  acceleration of maturity
of any loan,  indenture or material  obligation to which any of the Subsidiaries
are a party or by which any


                                       11

<PAGE>



of the  Subsidiaries  are bound or with  respect to which they are an obligor or
guarantor or result in the creation or imposition of any material  lien,  claim,
charge,  restriction,  or  encumbrance of any kind  whatsoever  upon, or, to the
knowledge of any of the Subsidiaries after due inquiry, give to any other person
any interest or right (including any right of termination or cancellation) in or
with respect to any of the material properties,  assets,  business or agreements
of the Company and the Subsidiaries taken as a whole.

     I.  Litigation.  Except as set forth on  Disclosure  Schedule  III, Item I,
there are no claims, demands,  actions,  proceedings,  or investigations pending
which, either in any case or in the aggregate,  if adversely  determined,  could
reasonably  be expected to have a Material  Adverse  Effect,  or in any material
impairment of the right or ability of any of the  Subsidiaries to carry on their
respective business as presently conducted,  or in any material liability on the
part of  each of the  Subsidiaries,  or  which  question  the  validity  of this
Agreement or any action taken or to be taken in connection herewith.

     J. Governmental  Consents.  No consent,  approval,  or authorization of, or
designation,  declaration,  or filing with, any governmental unit is required on
the part of any of the  Subsidiaries  in connection with the valid execution and
delivery of this Agreement or the consummation of the trans actions contemplated
hereby.

     K.  Insurance.  Each of the  Subsidiaries  has  currently  in force (or the
Company currently maintains in force for its  benefits)liability  insurance with
insurance companies or associations,  and under policies listed and described in
Disclosure  Schedule III, Item K attached hereto,  during the periods  described
therein, and, except as set forth on Disclosure Schedule II, Item K, each of the
Subsidiaries is not aware of any claims for personal injuries, death or property
damage for any reason now pending or threatened  against any of the Subsidiaries
and  know  of no  material  damage  to  personal  property  by any of any of the
Subsidiaries  or their agents,  servants or employees,  which might give rise to
such  claims,  or if any such  routine  claims have  arisen they are  adequately
covered by such liability insurance.

     L.  Intellectual  Property.  There  are no  patents,  patent  applications,
registered  trademarks,  trademark  applications,  trade names,  and  registered
copyrights under which any of the Subsidiaries  operate,  except as disclosed on
Disclosure  Schedule III, Item L. The Subsidiaries  have not received any notice
or claim of infringement of any patent, invention,  right, trademark, trade name
or copyright of others with respect to any process, method, formula or procedure
used by the Subsidiaries in the present conduct of their business.

     M. Title to and Condition of Properties.  Each of the Subsidiaries has good
and defensible  title to all of its tangible and intangible  property and assets
(other  than  the  Oil and Gas  Properties  defined  in  Sub-Section  U  below),
including  those  reflected  in the  Financial  Statements  of the  Subsidiaries
(except  such  property  or assets as have since the  Interim  Date been sold or
otherwise  disposed of in the ordinary course of business).  Except as set forth
in Disclosure Schedule III, Item M, or as disclosed in the Financial  Statements
of the Company such property and assets are subject


                                       12

<PAGE>



to no mortgage or security interest, conditional sales contract, charge, lien or
encumbrance  (except liens for current taxes not yet due and payable mechanic's,
materialmen's  and  other  statutory  liens  and such  imperfections  of  title,
easements and encumbrances, if any, as are not substantial in charac ter, amount
or extent and do not materially detract from the value of, or interfere with the
present use of the properties subject thereto or affected thereby,  or otherwise
materially impair the business  operations of the  Subsidiaries).  Subsequent to
the Interim Date, none of the  Subsidiaries has sold or disposed of any of their
property  and assets or  obligated  themselves  to do so except in the  ordinary
course of  business.  Except for such minor  defects as are not  substantial  in
character  and which do not have a materially  adverse  effect upon the validity
thereof,  all material personal property leases to which any of the Subsidiaries
is a party are valid and  effective,  and there is not under any such  lease any
existing  material default or event which, with notice or lapse of time or both,
would  constitute  a  material  default  and  in  respect  of  which  any of the
Subsidiaries  have not taken  reasonable  steps to prevent  such a default  from
occurring.

     N. Environmental Matters.

     1. Except as set forth on  Disclosure  Schedule  III,  Item M,  neither the
conduct  nor  operation  of any of the  Subsidiaries  nor any  condition  of any
property  owned or leased or ever  owned or leased  and  operated  by any of the
Subsidiaries,  and to the knowledge of any of the Subsidiaries,  any oil and gas
property  owned or leased or ever owned or leased but not operated by any of the
Subsidiaries:  (i) violates or violated  Environmental  Laws in any respect that
would  have a  Material  Adverse  Effect ; and (ii) no  condition  or event  has
occurred with respect to any of the Subsidiaries or any such property that, with
notice or the passage of time, or both, would  constitute a violation  requiring
action by any of the Subsidiaries to remedy, stabilize,  neutralize, clean up or
otherwise  alter the  environmental  condition  of any such  property  where the
aggregate  cost of such  actions  would  have a  Material  Adverse  Effect.  The
Subsidiaries  have not received any notice from any  governmental  agency or any
other person or entity that the operation of any facilities or any property ever
owned,  leased,  or operated by it as of the date hereof, is or was in violation
of any  Environmental  Laws or is responsible (or potentially  responsible)  for
remedying,   establishing,   neutralizing,   or  cleaning  up  any   pollutants,
contaminants,  or hazardous or toxic waste,  substances  or materials at, on, or
beneath any such property where the aggregate cost thereof would have a Material
Adverse Effect.

     2.  Except as set forth on  Disclosure  Schedule  III,  Item N, each of the
Subsidiaries  has obtained or applied for all  environmental,  health and safety
permits and authorizations  (collectively "Environmental Permits") necessary for
the  construction  of its  facilities  and the  operation  of its  business,  as
presently conducted for the use, storage,  treatment,  transportation,  release,
emission and disposal of raw materials, by-products, wastes and other substances
used or produced by or otherwise  relating to its business  except to the extent
failure  to obtain or apply for such  permit or  authorization  would not in the
aggregate  have a Material  Adverse  Effect,  and all such  permits  are in good
standing  and in all  material  respects  in full  force and  effect  or,  where
applicable,  a renewal application has been timely filed, and agency approval is
expected to be obtained,  and the Subsidiaries are in compliance in all material
respects with all terms and conditions of all such Environmental


                                       13

<PAGE>



Permits except to the extent failure to comply with such  Environmental  Permits
would not in the aggregate have a Material Adverse Effect..

     O. Compliance with the Law. Each of the  Subsidiaries (i) has all licenses,
franchises,  permits, and other governmental authorizations of a material nature
that are legally  required to enable it to conduct its  business in all material
respects,  and (ii) are in substantial  compliance in all material respects with
all  applicable  laws,  rules and  regulations  except to the extent  failure to
comply  therewith  or  failure  to obtain  such  license,  franchise,  permit or
authorization would not in the aggregate have a Material Adverse Effect.

     P. Benefit  Plans and ERISA  Compliance.  Except as set forth on Disclosure
Schedule III, Item P, each of the  Subsidiaries has no employee benefit plans or
employment  contracts.  Except with  respect to the employee  benefit  plans set
forth in  Disclosure  Schedule  III,  Item P,  each of the  Subsidiaries  is not
subject to the  requirements of the ERISA and no contributions or other material
payments are required to be made by the  Subsidiaries  under ERISA. No event has
occurred or would  reasonably be expected to subject any of the  Subsidiaries to
any liability under ERISA,  the Code or similar or other  applicable laws, rules
or regulations  in respect to any of the  Subsidiaries'  benefit  plans,  and no
reportable event has occurred that would reasonably expect to result in material
liability to any of the Subsidiaries. Each of the Subsidiaries is not a party to
any collective bargaining agreement or other labor agreement.

     Q. Condition of Assets. To the knowledge of each of the  Subsidiaries,  the
buildings,  plants,  structures, and equipment owned by each of the Subsidiaries
and  which  are  material  to the  operations  of each of the  Subsidiaries  are
structurally sound, in good operating condition and repair, and adequate for the
uses  to  which  they  are  being  put,  and  none of  such  buildings,  plants,
structures,  or  equipment  is in need of  maintenance  or  repairs  except  for
ordinary,  routine  maintenance  and repairs  that are not material in nature or
cost to the Company and the Subsidiaries taken as a whole.

     R. Accounts Receivable. All accounts receivable of each of the Subsidiaries
represent or will represent valid  obligations  arising from sales actually made
or services actually  performed in the ordinary course of business.  Unless paid
prior to the Closing, the accounts receivable of each of the Subsidiaries are or
will  be,  as of the  Closing,  reasonably  expected  to be  collectible  in all
material  respects,  subject  only  to  allowance  for  doubtful  accounts,  and
calculated  consistently  with  past  practice.  There is no  contest,  claim or
asserted right of set-off,  under any contract or with any obligor of a material
account  receivable   relating  to  the  amount  or  validity  of  such  account
receivable.

     S. Oil and Gas Properties.  The  Subsidiaries'  Oil and Gas Properties,  as
hereinafter  defined, are subject to no mortgage,  security interests,  or liens
created  by  any  of  the  Subsidiaries,   except  for  Subsidiaries'  Permitted
Encumbrance,  as hereinafter  defined.  Each of the Subsidiaries has either good
title or is the  owner  of or has the  right to use,  consistent  with  industry
practice its respective  Subsidiaries' Oil and Gas Properties,  if any. The term
"Subsidiaries'  Oil and Gas  Properties",  as used herein  means for each of the
Subsidiaries  their  respective  right,  title,  interest  and  estate,  real or
personal, recorded or unrecorded,  movable or immovable, tangible or intangible,
in and


                                       14

<PAGE>



to: (i) oil, gas and mineral leases, subleases and other leaseholds,  royalties,
overriding  royalties,  net profits  interests,  mineral fee interests,  carried
interests, and other interests (the "Subsidiaries' Leases") and any and all oil,
gas,  water or injection  wells thereon (the  "Subsidiaries'  Wells"),  (ii) any
pools or units which include all or a part of any Subsidiaries' Lease or include
any  Subsidiaries'  Well (the  "Subsidiaries'  Units") and  including all right,
title and  interest  of the  Subsidiaries  in  production  from any such pool or
Subsidiaries'  Unit,  whether such pool or  Subsidiaries'  Unit production comes
from  wells  located  on or off of a  Subsidiaries'  Lease,  and all  tenements,
hereditaments  and  appurtenances  belonging  to the  Subsidiaries'  Leases  and
Subsidiaries'  Units;  (iii)  interests  under or  derived  from  all  presently
existing  contracts,  agreements and  instruments  by which such  properties are
bound, to the extent applicable to such properties,  including,  but not limited
to, operating agreements,  unitization,  pooling and communitization agreements,
declarations  and  orders,  joint  venture  agreements,  and farmin and  farmout
agreements,  (iv)  easements,  permits,  licenses,  servitudes,   rights-of-way,
surface leases and other surface rights appurtenant to, and used or held for use
solely  in  connection  with  the  properties,  and  (v)  equipment,  machinery,
fixtures,  and other tangible personal property and improvements located on such
properties.  As used herein,  the term  "Subsidiaries'  Permitted  Encumbrances"
means: (i) matters described  without material  omission in Disclosure  Schedule
III,  Item S,  (ii)  any  pools  or  units  which  include  all or a part of any
Subsidiaries'  Lease or  include  any  Subsidiaries'  Well  (the  "Subsidiaries'
Units") and  including  all right,  title and  interest of the  Subsidiaries  in
production  from any such  pool or  Subsidiaries'  Unit,  whether  such  pool or
Subsidiaries'  Unit  production  comes  from  wells  located  on  or  off  of  a
Subsidiaries'   Lease,  and  all  tenements,   hereditaments  and  appurtenances
belonging to the Subsidiaries'  Leases and Subsidiaries'  Units, (iii) liens for
taxes, assessments, labor and materials where payment is not due, (iv) operating
agreements,   unit   agreements,   unitization  and  pooling   designations  and
declarations,  gathering and transportation  agreements,  processing agreements,
gas, oil and liquids purchase,  sale and exchange agreements,  and other similar
agreements and which, if material to the value of the  Subsidiaries' Oil and Gas
Properties taken as a whole,  contain terms and conditions  customary in the oil
and gas industry.

IV.      REPRESENTATIONS AND WARRANTIES OF PURCHASER.

     Purchaser represents and warrants to the Company as follows:

     A. Organization and Standing. Purchaser is a corporation duly organized and
existing  under,  and by virtue of, the laws of the State of Oklahoma  and is in
good standing under its laws. Purchaser is qualified,  licensed, or domesticated
as a foreign corporation in each jurisdiction where the nature of its activities
or the properties owned or leased by it makes such qualification,  licensing, or
domestication necessary at this time.

     B. Corporate Powers.  Purchaser has all requisite legal and corporate power
to enter  into  this  Agreement  and to carry  out and  perform  its  respective
obligations  under the  terms of this  Agreement.  Neither  the  certificate  of
incorporation  nor bylaws of  Purchaser,  nor any other  instrument to which the
Purchaser is a party, or by which Purchaser is bound, nor any court order or


                                       15

<PAGE>



any  governmental  law,  rule or  regulation,  will be violated  by  Purchaser's
execution and consummation of this Agreement.

     C. No  Restriction.  Purchaser  is not  subject to any order,  judgment  or
decree,  or the  subject  of any  litigation,  claim or  proceeding,  pending or
threatened,  or any  other  restriction  of  any  kind  or  character  known  to
Purchaser,  which  would  affect  its  ability  to  carry  out the  transactions
contemplated by this Agreement.

     D.  Authorization.  All  corporate  action  on the part of  Purchaser,  its
directors, and stockholders necessary for the transactions  contemplated by this
Agreement  shall have been taken on or before the  execution of this  Agreement.
This  Agreement  is  a  legal,   valid,  and  binding  obligation  of  Purchaser
enforceable against Purchaser in accordance with its terms, except as limited by
bankruptcy,  insolvency,  reorganization,  moratorium or similar laws of general
application affecting enforcement of creditors' rights, and except as limited by
application  of  legal  principles   affecting  the  availability  of  equitable
remedies.

     E. Governmental Consent, etc. No consent, approval, or authorization of, or
designation,  declaration,  or filing with, any governmental unit is required on
the part of Purchaser in  connection  with the valid  execution  and delivery of
this Agreement or the consummation of the transactions contemplated hereby.

     F. Litigation,  etc. There are no actions,  proceedings,  or investigations
pending or, to Purchaser's knowledge, any basis therefor thereof, which question
the  validity  of this  Agreement  or any other  action  taken or to be taken in
connection herewith or which would have a material adverse effect on Purchaser.

     G.  Purchaser's  Ownership  of Stock  of  Company.  Prior  to the  Closing,
Purchaser does not own any other equity securities or debt instruments issued by
the Company, including, but not limited to any of the Company's Common Stock and
10% Senior Notes.

     H.  Disclosure.  This Agreement and the exhibits and schedules  hereto,  as
they apply to Purchaser, when read together, do not contain any untrue statement
of a material fact and do not omit to state a material  fact  necessary in order
to make the statements contained therein or herein not misleading.

V.       OTHER AGREEMENTS.

     A. The Shareholder Agreement. At the Closing, the Company and the Purchaser
shall  execute  the   Shareholder   and  Voting   Agreement  (the   "Shareholder
Agreement"),  a copy of which is  attached  hereto as  Exhibit  B,  which  shall
include,  among  other  things,  provisions  relating  to  Purchaser's  right to
nominate two members to the Company's Board of Directors.



                                       16

<PAGE>



     B.  Registration  Rights  Agreement.  At the  Closing,  the Company and the
Purchaser shall execute the  Registration  Rights  Agreement (the  "Registration
Rights Agreement"), a copy of which is attached hereto as Exhibit C.

     C. Participation  Agreement.  On or before the Closing, the Company and the
Purchaser  shall  execute  the  Participation   Agreement  (the   "Participation
Agreement") attached hereto as Exhibit D.

     D.  Marketing  Agreement.  On or before the  Closing,  the  Company and the
Purchaser  shall execute the Marketing  Agreement (the  "Marketing  Agreement"),
attached hereto as Exhibit E.

     E. Collateral Agreements.  For the purposes of this Agreement,  "Collateral
Agreements" shall mean the Shareholder Agreement, Registration Rights Agreement,
Participation Agreement and Marketing Agreement.

VI.      CONDITIONS TO THE COMPANY'S OBLIGATIONS.

     The  obligations  of the Company to close this  transaction  on the Closing
Date are subject, unless waived by the Company, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions:

     A  Representations,  Warranties  and  Covenants.  All  representations  and
warranties  of the  Purchaser  contained  in this  Agreement  shall  be true and
correct  in all  material  respects  at and as of the  Closing  Date  as if such
representations  and  warranties  were made at and as of the Closing  Date,  and
Purchaser  shall have  performed in all material  respects  all  agreements  and
covenants  required  hereby to be performed by the Purchaser  prior to or at the
Closing Date.

     B.  Consents.  All  consents,   approvals  and  waivers  from  governmental
authorities  and other parties  necessary to permit the Company to carry out the
transactions as contemplated by this Agreement shall have been obtained.

     C.  No   Governmental   Proceeding   or   Litigation.   No  suit,   action,
investigation,  inquiry or other  proceeding  by any  governmental  authority or
other  person shall have been  instituted  or  threatened  which  questions  the
validity  or legality of the  transactions  contemplated  hereby and which could
reasonably  be  expected  to  adversely  affect  the  transactions  contemplated
hereunder.

     D.  Corporate  Approvals.  The  Board of  Directors  and  shareholders,  if
necessary,  of the Company shall have approved this  Agreement,  the  Collateral
Agreements and the transactions contemplated thereby,  including adoption of the
Certificate of Designations in conjunction with issuance of the Preferred Stock.



                                       17

<PAGE>



     E. HSR Act  Compliance.  Expiration of the  applicable  waiting  period and
receipt of any  necessary  approvals of the  transactions  contemplated  by this
Agreement by the Federal Trade  Commission  and  Department of Justice under the
HSR Act.

     F.  Amendment of the  Company's  Senior Credit  Facility.  On or before the
Closing,  the  Company  shall have  received  an  amendment  or waiver,  in form
reasonably  satisfactory  to the Purchaser under the Second Amended and Restated
Credit Agreement,  dated as of June 1, 1998, as amended,  entered into among the
Company and certain  banks,  including  Bankers Trust Company as  Administrative
Agent and Issuing Bank,  authorizing payment of cash dividends by the Company on
the Preferred Stock being purchased by the Purchaser.

     G. Amendment to Indenture for Senior Notes.  On or before the Closing,  the
Company shall have received an amendment or waiver under the Indenture  dated as
of May 29, 1997 for the 10% Senior Notes due 2007,  authorizing  payment of cash
dividends by Company on the Preferred Stock being purchased by the Purchaser, in
form reasonably satisfactory to the Purchaser.

     H. Opinion. Receipt by the Company of an opinion from BT Wolfensohn in form
and content  satisfactory  to the Company's  Board of Directors  confirming  the
fairness to the Company,  from a financial point of view, of the Purchase Price,
as of the Closing Date.

     I.  Collateral  Agreements.  Execution  and  delivery by the  Company,  the
Purchaser and any other parties to the Collateral Agreements.

VII.     CONDITIONS TO PURCHASER'S OBLIGATIONS.

     The  obligations of Purchaser to close the  transaction on the Closing Date
are subject,  unless waived by Purchaser to the  satisfaction,  on or before the
Closing Date, of each of the following conditions:

     A.  Representations,  Warranties and  Covenants.  All  representations  and
warranties of the Company  contained in this Agreement shall be true and correct
in  all   material   respects  at  and  as  of  the  Closing  Date  as  if  such
representations  and warranties were made at and as of the Closing Date, and the
Company  shall have  performed  in all  material  respects  all  agreements  and
covenants  required  hereby to be  performed  by the Company  prior to or at the
Closing Date.

     B.  Consents.  All  consents,   approvals  and  waivers  from  governmental
authorities and other parties necessary to permit the Purchaser to carry out the
transactions  as  contemplated  hereby  shall have been  obtained by the Closing
Date.

     C.  No   Governmental   Proceeding   or   Litigation.   No  suit,   action,
investigation,  inquiry or other  proceeding  by any  governmental  authority or
other  person shall have been  instituted  or  threatened  which  questions  the
validity  or legality of the  transactions  contemplated  hereby and which could
reasonably  be  expected  to  adversely  affect  the  transactions  contemplated
hereunder.


                                       18

<PAGE>



     D. Due  Diligence.  Completion by the Purchaser of reasonable due diligence
of the Company by the Purchaser.

     E. Corporate Approvals.  The Board of Directors of the Purchaser shall have
approved  this  Agreement,   the  Collateral  Agreements  and  the  transactions
contemplated thereby.

     F. HSR Act  Compliance.  Expiration of the  applicable  waiting  period and
receipt of any  necessary  approvals of the  transactions  contemplated  by this
Agreement by the Federal Trade  Commission  and the  Department of Justice under
the HSR Act.

     G.  Collateral  Agreements.  Execution  and  delivery by the  Company,  the
Purchaser and any other parities of the Collateral Agreements.

     H. Reservation of Conversion  Shares.  Sufficient shares of common stock of
the Company have been duly  authorized and reserved for issuance upon conversion
by Purchaser of the Preferred Stock to the Company's common stock.

VIII.    THE CLOSING PROCEDURE.

     A. Closing Documents.

     1. At the Closing,  the Company  shall  deliver or cause to be delivered to
the Purchaser:

     a. A certified copy of the resolutions of the Company's Board of Directors,
as required for valid  approval of the execution and delivery of this  Agreement
and  the  Collateral   Agreements  and  the  consummation  of  the  transactions
contemplated  hereby,  including,  but not limited to issuance of the  Preferred
Stock.

     b. A certificate  signed by an appropriate  officer of the Company  stating
that the warranties and  representations of the Company under this Agreement are
true and correct in all material respects as of the Closing Date and the Company
has complied in all material respects with all of its obligations and agreements
required to be performed prior to the Closing.

     c.  Copies  of  the  Collateral  Agreements  executed  by  the  Company  or
Subsidiary, as appropriate.

     d. A certified  copy of the  Certificate  of  Designation as filed with the
Secretary of State of Nevada.

     e. A duly  authorized  and issued  certificate  representing  the Preferred
Stock.



                                       19

<PAGE>



     2. At the Closing, the Purchaser shall deliver to the Company:

     a. A certified copy of the resolutions of Purchaser's Board of Directors as
required for valid approval of the execution of this  Agreement,  the Collateral
Agreements, and the consummation of the transactions contemplated hereby.

     b. Certificate  signed by an appropriate  officer of the Purchaser  stating
that the warranties and  representations  of the Purchaser  under this Agreement
are true  and  correct  in all  material  respects  as of the  Closing  Date and
Purchaser has complied in all material  respects with all of its obligations and
agreements required to be performed prior to the Closing.

     c. Copies of the Collateral Agreements executed by the Purchaser.

     3. In addition, at the Closing or thereafter, the parties shall execute and
deliver such other documents and take such other actions as are required by this
Agreement or as any party may reasonably require.

IX.      PAYMENT OF EXPENSES.

     All costs and  expenses,  including,  without  limitation,  legal  fees and
taxes,  incurred by each party  hereto,  in  negotiating  this  Agreement  or in
consummating the transactions  contemplated  hereby shall be paid by such party;
provided,  however, that, at the Closing, the Company shall pay to the Purchaser
a fee of $905,000.00 in consideration for Purchaser's  purchase of the Preferred
Stock.  The  parties  shall  share on an equal basis the cost of the filing fees
associated with the HSR Act.

X.       INDEMNIFICATION.

     A. By The Company.

     1. Notwithstanding any investigation conducted before or after the Closing,
the Company  shall  indemnify  and hold harmless the Purchaser in respect to any
and all monies, losses,  damages,  liabilities and expenses (including,  without
limitation,  settlement  costs and any legal,  accounting and other expenses for
investigating  or defending  any actions or  threatened  actions)  (herein after
"Damages")  reasonably incurred by the Purchaser in connection with each and all
of the following (a "Claim"):

     (a) The breach of any  representation  or  warranty  made by the Company in
this  Agreement  or any  document  or  instrument  delivered  pursuant  to  this
Agreement; and

     (b) The breach of any agreement or  obligation of the Company  contained in
this  Agreement  or any  documents  or  instruments  delivered  pursuant to this
Agreement.



                                       20

<PAGE>



     2. Anything to the contrary herein not withstanding, the Company shall only
be liable to the Purchaser for any Claims to the extent the Purchaser shall have
given written  notice thereof in the manner  provided in Section XI.C.  below no
later  than two (2) years  after the  Closing  Date,  except  that as to any tax
claim,  the notice  shall be given  prior to the  expiration  of the  applicable
statute of limitations,  without  extensions,  for assessment of taxes under the
Code (the "Release Date").

     3. The indemnification  obligations of the Company pursuant to this Article
X shall be subject to the following  limitations and other  provisions set forth
herein:

     (a) No indemnification shall be required to be made by the Company pursuant
to this  Article X with  respect  to any Claims  except to the  extent  that the
aggregate amount of Damages incurred by the Purchaser with respect to all Claims
(whether  asserted,  resulting,  imposed,  or incurred before,  on, or after the
Closing Date) exceeds $500,000.

     (b) THE INDEMNIFICATION OBLIGATIONS OF THE COMPANY PURSUANT TO THIS ARTICLE
X SHALL  BE  LIMITED  TO  ACTUAL  DAMAGES  AND  SHALL  NOT  INCLUDE  INCIDENTAL,
CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES.

     B By Purchaser.

     1.  Purchaser  shall  indemnify and hold harmless the Company in respect of
any and all Damages  reasonably  incurred by the Company in connection with each
and all of the following (a "Claim"):

     (a) The breach of any  representation  or  warranty  made by the Company in
this  Agreement  or any  document  or  instrument  delivered  pursuant  to  this
Agreement; and

     (b) The breach of any agreement or  obligation of the Company  contained in
this  Agreement  or any  documents  or  instruments  delivered  pursuant to this
Agreement.

     2. Anything to the contrary  herein  notwithstanding,  the Purchaser  shall
only be liable for Claims to the extent the  Company  has given  written  notice
thereof in the manner  provided  in  Section  XI.C.  below no later than two (2)
years after the Closing Date (the "Release Date").

     3.  The  indemnification  obligations  of the  Purchaser  pursuant  to this
Article X shall be subject to the following limitations and other provisions set
forth herein:

     (a) No  indemnification  shall  be  required  to be made  by the  Purchaser
pursuant to this Article X with respect to any Claims  except to the extent that
the  aggregate  amount of Damages  incurred by the Company  with  respect to all
Claims (whether asserted,  resulting,  imposed, or incurred before, on, or after
the Closing Date) exceeds $500,000.


                                       21

<PAGE>



     (b) THE  INDEMNIFICATION  OBLIGATIONS  OF THE  PURCHASER  PURSUANT  TO THIS
ARTICLE X SHALL BE LIMITED TO ACTUAL  DAMAGES AND SHALL NOT INCLUDE  INCIDENTAL,
CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES.

     C. Procedures.

     1. If,  prior to the  Release  Date,  a party shall  receive  notice of the
existence  of any Claim for which such party  claims  indemnity  hereunder  (the
"Indemnitee"),  the Indemnitee shall promptly give written notice thereof to the
other party (the  "Indemnitor").  The Indemnitee shall furnish to the Indemnitor
in reasonable  detail such  information  as the Indemnitee may have with respect
thereto  (including  in any case,  copies  of any  summons,  complaint  or other
pleading  which  may have  been  served  on it and any  written  claim,  demand,
invoice,  billing or other document evidencing or asserting the same); provided,
however,  that no failure or delay by the  Indemnitee in the  performance of the
foregoing  prior to the  Release  Date  shall  reduce or  otherwise  affect  the
obligation  of the  Indemnitor to indemnify  and hold the  Indemnitee  harmless,
except to the extent that such failure or delay shall have actually impaired the
Indemnitor's  ability  to defend  against,  settle or  satisfy  such  liability,
damage, loss, claim or demand, or increased the cost thereof.

     2. In the event of asserted  liabilities to and claims and demands of third
parties,  including any action, suit or proceeding related thereto,  which would
serve as a basis for a Claim,  unless  within  fifteen (15)  business days after
notice the Indemnitor elects to assume the defense thereof with counsel selected
by the Indemnitor and reasonably acceptable to Indemnitee,  the Indemnitee shall
have the right to pay,  compromise,  settle or otherwise dispose of any claim or
conduct  the defense or  settlement  of any action,  suit or  proceeding  as the
Indemnitee shall deem appropriate;  provided, however, that if the Indemnitee or
Indemnitor shall pay any claim or settle any suit, action or proceeding  without
the written consent of the other,  the right of the Indemnitee to make any claim
against the  Indemnitor  shall neither be deemed  conclusively  established  nor
conclusively  denied.  The party not  responsible for the defense shall have the
right to be represented by advisory counsel and accountants (at its own expense)
in connection with any action, suit or proceeding,  and shall be kept reasonably
informed by the defending party of such action, suit or proceeding at reasonable
times  at all  stages  thereof,  whether  or not such  party is so  represented.
Subject to any legal  privilege,  the Indemnitee  and  Indemnitor  agree to make
available to each other, their counsel all information and documents  reasonably
available  to  them  which  relate  to such  action,  suit  or  proceeding,  and
Indemnitee and Indemnitor  agree to render to each other such assistance as they
may reasonably  require of each other in order to ensure the proper and adequate
defense of any such action, suit or proceeding.

     3.  Notwithstanding  anything  in  this  Agreement  to  the  contrary,  any
liabilities of the Indemnitor on account of any indemnification  hereunder shall
be satisfied solely by exercise of the Indemnitee's rights under this Agreement,
provided  that nothing in this  Agreement  shall be deemed to limit any right or
remedy of the  Indemnitee  or any other person  against any other person for the
fraud or criminal activity of such other person.


                                       22

<PAGE>



XI.      MISCELLANEOUS.

     A.  Waivers.  At any time prior to the  Effective  Date,  the Company,  the
Purchaser and the Subsidiaries  may, to the extent legally  allowed,  extend the
time for  performance  of any  obligations  or other  acts of the other  parties
hereto,  waive any inaccuracies in the representations and warranties  contained
herein or in any document delivered pursuant hereto and waive performance of any
of the  covenants  or  agreements  or  satisfaction  of  any  of the  conditions
contained  herein.  Any  agreement  on the  part of a party  hereto  to any such
extension  or waiver  shall be valid  only if set forth in a written  instrument
signed on behalf of such party. Except as provided in this Agreement,  no action
taken pursuant to this Agreement, including any investigation by or on behalf of
any  party,  shall be deemed to  constitute  a waiver by the party  taking  such
action  of  compliance  with  any  representations,   warranties,  covenants  or
agreements  contained  in this  Agreement.  The waiver by any party  hereto of a
breach of any provision  hereof shall not operate or be construed as a waiver of
any prior or subsequent breach of the same or any other provision hereof.

     B.  Amendment.  This  Agreement  may not be  amended  except  by a  written
instrument signed on behalf of each of the parties hereto.

     C. Governing  Law. This Agreement  shall be governed in all respects by the
laws of the State of  Oklahoma as such laws are  applied to  agreements  between
Oklahoma residents entered into and to be performed entirely within Oklahoma.

     D.  Successors  .  Except  as  otherwise  expressly  provided  herein,  the
provisions  hereof  shall  inure to the  benefit  of, and be binding  upon,  the
successors of the parties  hereto.  No party hereto shall assign this Agreement,
or any rights  thereto,  without the prior written  consent of the other parties
hereto.

     E. Entire  Agreement.  This  Agreement  and the other  documents  delivered
pursuant  hereto  constitute  the full and entire  understanding  and  agreement
between the parties hereto with re gard to the subjects hereof and thereof.

     F. Notices, etc. All notices and other communications required or permitted
hereunder  shall be in writing and shall be effective on the first day following
the day when delivered or received personally,  by facsimile or by registered or
certified  mail  (postage  pre-paid,  return  receipt  requested)  (1) if to the
Purchaser,  at the address or telecopy set forth below, or at such other address
or telecopy as the Purchaser shall have furnished to the Company in writing, (2)
if to the  Company,  at the address or telecopy set forth below or at such other
address or telecopy as the Company  shall have  furnished  to the  Purchaser  in
writing.







                                       23

<PAGE>



     (a) ONEOK RESOURCES COMPANY

                  P.O. Box 871 
                  Tulsa,  OK  74102-0871
                  ATTN:  J. D.  Holbird  Vice  President
                  Telephone (918) 588-7930 Facsimile (918) 588-7961

                  with copy to:

                  Gable & Gotwals
                  100 West Fifth Street, Ste. 1000
                  Tulsa, Oklahoma 74103-4219
                  Telephone (918) 588-7800
                  Facsimile   (918) 588-7873
                  Attn:    John R. Barker, Esq.
                  Attn:    Donald A. Kohl, Esq.

         (b)      MAGNUM HUNTER RESOURCES, INC. and the Subsidiaries

                  600 East Las Colinas Boulevard
                  Suite 1200
                  Irving, Texas 75039
                  ATTN: Gary C. Evans
                  President and Chief Executive Officer
                  Telephone (972) 401-0752
                  Facsimile   (972) 401-3110

     G.  Separability.  In case any provision of this  Agreement not material to
the benefits  intended to be conferred hereby shall be determined to be invalid,
illegal,  or unenforceable,  the validity,  legality,  and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     H. Finders' Fees.

     1. The Company (i)  represents  and warrants that it has retained no finder
or broker in connection  with the  transactions  contemplated  by this Agreement
except B. T. Wolfensohn and J. W. Brown and (ii) agrees to indemnify and to hold
the Purchaser and its respective officers,  directors,  and controlling persons,
harmless of and from any liability for any  commission  or  compensation  in the
nature of a finder's  fee to any  broker or other  person or firm (and the costs
and expenses of  defending  against such  liability or asserted  liability)  for
which the Company or any of


                                       24

<PAGE>



     its employees or representatives, are responsible. The Company will pay all
fees and commissions associated with its retention of B. T. Wolfensohn and J. W.
Brown.

     2 The Purchaser (i) represents and warrants that it has retained no finder,
broker  or others  in  connection  with the  transactions  contemplated  by this
Agreement  except Bear Stearns and Larry Akers and (ii) agrees to indemnify  and
to hold the Company,  harmless of and from any liability  for any  commission or
compensation  in the nature of a finder's  fee to any broker or other  person or
firm (and the costs and expenses of defending against such liability or asserted
liability) for which the Purchaser,  or any of its employees or representatives,
are responsible. The Purchaser will pay all fees and commissions associated with
its retention of Bear Stearns and Larry Akers.

     I.  Other  Documents.  The  parties to this  Agreement  shall in good faith
execute such other and further  instruments,  assignments or documents as may be
necessary  or  advisable  to carry  out the  transactions  contemplated  by this
Agreement.

     J.  Public  Disclosure.   After  the  Closing,  the  parties  hereto  shall
coordinate any public release of information  regarding the matters contemplated
herein.

     K.  Titles  and  Subtitles.  The  titles  of  the  Articles,  Sections  and
subsections of this Agreement are for  convenience of reference only and are not
to be considered in construing this Agreement. References herein to exhibits and
schedules to this  Agreement  shall be deemed to  incorporate  such  exhibits by
reference.

     L.  Counterparts.   This  Agreement  may  be  executed  in  any  number  of
counterparts, each of which shall be an original and all of which together shall
constitute  one  instrument,  and which shall become  effective when there exist
copies signed by all of the parties hereto.

     IN WITNESS  WHEREOF,  the  undersigned  have  caused this  Agreement  to be
executed by their duly authorized representatives,  effective as of the date set
forth on the first page hereof.

                                           ONEOK RESOURCES COMPANY,
                                            a Delaware corporation



                                            By:_____________________________
                                               David L. Kyle, President

                                                    "PURCHASER"





                                       25

<PAGE>



                                            MAGNUM HUNTER RESOURCES, INC.,
                                             a Nevada corporation



                                            By:______________________________
                                               Gary C. Evans, President and 
                                               Chief Executive Officer

                                                        "COMPANY"

                                            MAGNUM HUNTER PRODUCTION, INC.,
                                              a Texas corporation



                                            By: _______________________________
                                                Gary C. Evans,  Chief Executive
                                                Officer

                                            GRUY PETROLEUM MANAGEMENT COMPANY,
                                              a Texas corporation



                                            By: _______________________________
                                                Gary C. Evans,  Chief Executive
                                                Officer

                                               HUNTER GAS GATHERING, INC.
                                                   a Texas corporation



                                            By: _______________________________
                                                Gary C. Evans,  Chief Executive
                                                Officer

                                                BLUEBIRD ENERGY, INC.
                                                an Oklahoma corporation



                                            By: _______________________________
                                                Gary C. Evans,  Chief Executive
                                                Officer

                                                         "SUBSIDIARIES"


                                       26