**Exhibit 10.1**

** **

**ASSETPURCHASE AND SALE AGREEMENT**

 

**by andbetween**

 

**NGS SUB.CORP.**

**(SELLER)**

 

**and**

 

**MWMENERGY, LLC**

**(BUYER)**

 

**Dated:FEBRUARY 15, 2008**

 

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** **
| **ARTICLE 1. - DEFINITIONS** | **1**                                                                              |
|------------------------------|------------------------------------------------------------------------------------|
| **1.1.**                     | **“Definitions”**                                                        | **1** |
| **1.2.**                     | **“Accounting Referee”**                                                 | **1** |
| **1.3.**                     | **“Aggregate Defect Basket”**                                            | **1** |
| **1.4.**                     | **“Agreement”**                                                          | **1** |
| **1.5.**                     | **“Allocated Value”**                                                    | **1** |
| **1.6.**                     | **“Assets”**                                                             | **2** |
| **1.7.**                     | **“Assumed Obligations”**                                                | **2** |
| **1.8.**                     | **“Benefit Plan”**                                                       | **2** |
| **1.9.**                     | **“Business Day”**                                                       | **2** |
| **1.10.**                    | **“Buyer”**                                                              | **2** |
| **1.11.**                    | **“Buyer Group”**                                                        | **3** |
| **1.12.**                    | **“Buyer’s Credits”**                                               | **3** |
| **1.13.**                    | **“Casualty Loss”**                                                      | **3** |
| **1.14.**                    | **“Certificate”**                                                        | **3** |
| **1.15.**                    | **“Claims”**                                                             | **3** |
| **1.16.**                    | **“Closing”**                                                            | **3** |
| **1.17.**                    | **“Closing Date”**                                                       | **3** |
| **1.18.**                    | **“Company”**                                                            | **3** |
| **1.19.**                    | **“Confidentiality Agreement”**                                          | **3** |
| **1.20.**                    | **“Defect Value”**                                                       | **3** |
| **1.21.**                    | **“Defensible Title”**                                                   | **3** |
| **1.22.**                    | **“Effective Time”**                                                     | **3** |
| **1.23.**                    | **“Encumbrance”**                                                        | **3** |
| **1.24.**                    | **“Environmental  Deductible”**                                          | **3** |
| **1.25.**                    | **“Environmental Defect”**                                               | **3** |
| **1.26.**                    | **“Environmental Defect  Notice Date”**                                  | **4** |
| **1.27.**                    | **“Environmental  Obligations”**                                         | **4** |
| **1.28.**                    | **“Escrow Agreement”**                                                   | **5** |
| **1.29.**                    | **“Escrow Deposit”**                                                     | **5** |
| **1.30.**                    | **“Excluded Assets”**                                                    | **5** |
| **1.31.**                    | **“Final Settlement” and “Final Settlement Statement”**        | **6** |
| **1.32.**                    | **“Governmental Authority” and “Final Settlement  Statement”** | **6** |
| **1.33.**                    | **“Hydrocarbons”**                                                       | **6** |
| **1.34.**                    | **“Inventory Hydrocarbons”**                                             | **6** |
| **1.35.**                    | **“Leases”**                                                             | **6** |
| **1.36.**                    | **“Material”**                                                           | **6** |
| **1.37.**                    | **“Material Adverse Effect”**                                            | **6** |
| **1.38.**                    | **“Material Contracts”**                                                 | **7** |
| **1.39.**                    | **“Permitted Encumbrances”**                                             | **7** |
| **1.40.**                    | **“Person”**                                                             | **7** |
| **1.41.**                    | **“Plugging and Abandonment Obligations”**                               | **7** |
| **1.42.**                    | **“Preferential Purchase Rights”**                                       | **7** |
| **1.43.**                    | **“Purchase Price”**                                                     | **8** |
| **1.44.**                    | **“Real Property, Personal Property and Incidental  Rights”**            | **8** |
| **1.45.**                    | **“Retained Obligations”**                                               | **9** |

 

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| **1.46.**                                                     | **“Seller’s Credits”**                                 | **9**  |
|---------------------------------------------------------------|-----------------------------------------------------------------------|--------|
| **1.47.**                                                     | **“Seller Group”**                                          | **9**  |
| **1.48.**                                                     | **“Shares”**                                                | **9**  |
| **1.49.**                                                     | **“Scheduled Interests” or “Scheduled Interest”** | **9**  |
| **1.50.**                                                     | **“Tax” or “Taxes”**                              | **10** |
| **1.51.**                                                     | **“Taxing Authority”**                                      | **10** |
| **1.52.**                                                     | **“Tax Return”**                                            | **10** |
| **1.53.**                                                     | **“Third Party Interests”**                                 | **10** |
| **1.54.**                                                     | **“Title Defect”**                                          | **10** |
| **1.55.**                                                     | **“Title Defect Deductible”**                               | **10** |
| **1.56.**                                                     | **“Title Defect Notice Date”**                              | **10** |
| **1.57.**                                                     | **“Title Defect Property”**                                 | **10** |
| **1.58.**                                                     | **“Well” or “Wells”**                             | **10** |
| **ARTICLE 2. - AGREEMENT TO PURCHASE AND SELL**               | **10**                                                                |
| **ARTICLE 3. - PURCHASE PRICE AND PAYMENT**                   | **10**                                                                |
| **3.1.**                                                      | **Purchase Price**                                                    | **10** |
| **3.2.**                                                      | **Escrow Deposit**                                                    | **11** |
| **3.3.**                                                      | **Adjustments to Purchase Price**                                     | **11** |
| **3.4.**                                                      | **Manner of Payment**                                                 | **12** |
| **3.5.**                                                      | **Final Settlement Statement**                                        | **13** |
| **3.6.**                                                      | **Post Closing Revenues**                                             | **13** |
| **3.2.**                                                      | **Post Closing Expenses**                                             | **14** |
| **3.8.**                                                      | **Purchase Price Allocation**                                         | **14** |
| **ARTICLE 4. - SELLER’S REPRESENTATIONS AND WARRANTIES** | **14**                                                                |
| **ARTICLE 5. - BUYER’S REPRESENTATIONS AND WARRANTIES**  | **19**                                                                |
| **ARTICLE 6. - ACCESS TO INFORMATION AND INSPECTIONS**        | **20**                                                                |
| **6.1.**                                                      | **Title Files**                                                       | **20** |
| **6.2.**                                                      | **Other Files**                                                       | **21** |
| **6.3.**                                                      | **Confidentiality Agreement**                                         | **21** |
| **6.4.**                                                      | **Inspections**                                                       | **21** |
| **6.5.**                                                      | **No Warranty or Representation on Seller’s  Information**       | **21** |
| **ARTICLE 7. - ENVIRONMENTAL MATTERS AND ADJUSTMENTS**        | **22**                                                                |
| **ARTICLE 8. - TITLE DEFECTS AND ADJUSTMENTS**                | **23**                                                                |
| **8.1.**                                                      | **Definitions**                                                       | **23** |
| (a)                                                           | **“Allocated Value”**                                       | 23     |
| (b)                                                           | **“Defensible Title”**                                      | 23     |
| (c)                                                           | **“Title Defect”**                                          | 24     |
| (d)                                                           | **“Title Defect Property”**                                 | 25     |
| (e)                                                           | **“Permitted Encumbrances”**                                | 25     |
| **8.2.**                                                      | **Notice of Title Defects**                                           | **26** |
| **8.3.**                                                      | **Title Defect Adjustment**                                           | **27** |
| **8.4.**                                                      | **Environmental Defect and Title Defect Values**                      | **27** |
| **8.5.**                                                      | **Title Warranty**                                                    | **29** |
| **ARTICLE 9. - DISCLAIMERS**                                  | **29**                                                                |
| **9.1.**                                                      | **Disclaimer – Representations and Warranties**                  | **29** |
| **9.2.**                                                      | **Statements and Information**                                        | **30** |

 

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| **ARTICLE 10. - PREFERENTIAL PURCHASE RIGHTS**   | **30**                                                     |
|--------------------------------------------------|------------------------------------------------------------|
| **10.1.**                                        | **Actions and Consents**                                   | **30** |
| **ARTICLE 11. - COVENANTS**                      | **31**                                                     |
| **11.1.**                                        | **Conduct of Operations**                                  | **31** |
| **11.2.**                                        | **Limitations on Seller’s Covenants Pending Closing** | **32** |
| **11.3.**                                        | **Conduct of Company Business**                            | **32** |
| **11.4.**                                        | **Return of Information**                                  | **33** |
| **ARTICLE 12. - CLOSING CONDITIONS**             | **33**                                                     |
| **12.1.**                                        | **Seller’s Closing Conditions**                       | **33** |
| **12.2.**                                        | **Buyer’s Closing Conditions**                        | **34** |
| **ARTICLE 13. - CLOSING**                        | **35**                                                     |
| **13.1.**                                        | **Closing**                                                | **35** |
| **13.2.**                                        | **Seller’s Closing Obligations**                      | **35** |
| **13.3.**                                        | **Buyer’s Closing Obligations**                       | **36** |
| **13.4.**                                        | **Joint Closing Obligations**                              | **36** |
| **ARTICLE 14. —LIMITATIONS ON WARRANTIES**  | **36**                                                     |
| **14.1.**                                        | **Limitations on Warranties and Remedies**                 | **36** |
| **14.2**.                                        | **Waiver of Trade Practices Acts**                         | **37** |
| **ARTICLE 15. - CASUALTY LOSS AND CONDEMNATION** | **38**                                                     |
| **ARTICLE 16. - REMEDIES**                       | **38**                                                     |
| **16.1.**                                        | **Seller’s Remedies**                                 | **38** |
| **16.2.**                                        | **Buyer’s Remedies**                                  | **39** |
| **16.3.**                                        | **Other Remedies**                                         | **39** |
| **16.4.**                                        | **Effect of Termination**                                  | **39** |
| **16.5.**                                        | **Limitations on Damages**                                 | **39** |
| **ARTICLE 17. - ASSUMPTION AND INDEMNITY**       | **39**                                                     |
| **17.1.**                                        | **Assumed Obligations; Pre-Closing Liabilities**           | **39** |
| **17.2.**                                        | **Buyer’s Indemnity**                                 | **40** |
| **17.3.**                                        | **Seller’s Indemnity**                                | **40** |
| **17.4.**                                        | **Stipulation Regarding Express Negligence And Fault**     | **40** |
| **17.5.**                                        | **Broker or Finder’s Fee**                            | **41** |
| **17.6.**                                        | **Litigation**                                             | **41** |
| **17.7.**                                        | **Insurance, Taxes**                                       | **41** |
| **17.8.**                                        | **Waiver of Certain Damages**                              | **41** |
| **17.9.**                                        | **Extent of Indemnification**                              | **41** |
| **17.10.**                                       | **Disclaimer of Application of Anti-Indemnity Statutes**   | **41** |
| **17.11.**                                       | **Waiver of Right to Rescission**                          | **42** |
| **17.12.**                                       | **Indemnity Claims**                                       | **42** |
| **ARTICLE 18. - MISCELLANEOUS**                  | **43**                                                     |
| **18.1.**                                        | **Receivables and other Excluded Funds**                   | **43** |
| **18.2.**                                        | **Arbitration**                                            | **43** |
| **18.3.**                                        | **Public Announcements**                                   | **44** |
| **18.4.**                                        | **Filing and Recording of Assignments, etc.**              | **45** |
| **18.5.**                                        | **Further Assurances and Records**                         | **45** |
| **18.6.**                                        | **Notices**                                                | **46** |
| **18.7.**                                        | **Incidental Expenses**                                    | **47** |

 

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| **18.8.**  | **Waiver**                                                 | **47** |
|------------|------------------------------------------------------------|--------|
| **18.9.**  | **Binding Effect; Assignment**                             | **48** |
| **18.10.** | **Taxes**                                                  | **48** |
| **18.11.** | **Audits**                                                 | **49** |
| **18.12.** | **Like-Kind Exchanges**                                    | **49** |
| **18.13.** | **Governing Law**                                          | **49** |
| **18.14.** | **Entire Agreement**                                       | **49** |
| **18.15.** | **Severability**                                           | **50** |
| **18.16.** | **Exhibits and Schedules**                                 | **50** |
| **18.17.** | **Delivery of Files After Closing**                        | **50** |
| **18.18.** | **Survival**                                               | **50** |
| **18.19.** | **Subsequent Adjustments**                                 | **50** |
| **18.20.** | **Counterparts**                                           | **51** |
| **18.21.** | **Subrogation**                                            | **51** |
| **18.22.** | **Suspended Monies**                                       | **51** |
| **18.23.** | **Change of Name**                                         | **51** |
| **18.24.** | **Replacement of Bonds, Letters of Credit and Guarantees** | **51** |
| **18.25.** | **No Third-Party Beneficiaries**                           | **51** |
| **18.26.** | **Time of Performance**                                    | **52** |

 

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**EXHIBITS**

 
| **Exhibit “A-1”** | **Leases**                                                              |
|----------------------------------|-------------------------------------------------------------------------|
| **Exhibit “A-2”** | **Wells**                                                               |
| **Exhibit “A-3”** | **Contracts  and Other Agreements**                                     |
| **Exhibit “A-4”** | **Right-of  Ways, Easements and Surface Leases**                        |
| **Exhibit “A-5”** | **Surface  Estates**                                                    |
| **Exhibit “B”**   | **Escrow  Agreement**                                                   |
| **Exhibit “C”**   | **Allocated  Values**                                                   |
| **Exhibit “D”**   | **Assignment,  Conveyance and Bill of Sale**                            |
| **Exhibit “E-1”** | **[Intentionally  Deleted]**                                            |
| **Exhibit “F”**   | **Litigation**                                                          |
| **Exhibit “G”**   | **Gas and  Oil Imbalances**                                             |
| **Exhibit “H”**   | **Consents  to Assign and Preferential Rights to Purchase and Burdens** |
| **Exhibit “I”**   | **Non-Foreign  Affidavit**                                              |
| **Exhibit “J”**   | **Certificate**                                                         |

 

**SCHEDULES**

 
| **Schedule  1.28(j)** | **Excluded  Assets**                      |
|-----------------------|-------------------------------------------|
| **Schedule  4.13(e)** | **Company  Liabilities**                  |
| **Schedule  4.19**    | **Company  Banks/Financial Institutions** |
| **Schedule  4.23**    | **Company  Initial Contracts**            |

 

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**ASSETPURCHASE AND SALE AGREEMENT**

 

This Asset Purchase andSale Agreement (**“Agreement”**), dated as of February 15,2008, is by and between **NGS Sub. Corp.**,a Delaware corporation, whose address is 2500 City West Boulevard, Suite 1300,Houston, Texas 77042 (**“Seller”**),and**MWM Energy, LLC,** a Texas limitedliability company (**“Buyer”**),whose address is 114 30thAvenue South, Nashville, Tennessee  37212. Seller and Buyer are sometimes together referred to herein individuallyas a **“Party”** or collectively as **“Parties.”**

 

**R E C I TA L S**

 

WHEREAS, Sellerowns certain oil and gas leasehold interests and related assets more fullydescribed on the exhibits hereto;

 

WHEREAS, Sellerowns all of the shares of Four Star Development Corporation as more fullydescribed herein;

 

WHEREAS, Sellerdesires to sell and Buyer desires to acquire these interests, related assets,and shares on the terms and conditions hereinafter provided;

 

NOW, THEREFORE, inconsideration of the mutual covenants and agreements hereinafter set forth, Sellerand Buyer hereby agree as follows:

 

**ARTICLE1. - DEFINITIONS**

 

**1.1.****                           ****“Definitions”** In this Agreement, capitalized terms have the meanings provided in thisSection, unless defined elsewhere in this Agreement.  All defined terms include both the singularand the plural of such terms.  Allreferences to Sections refer to Sections in this Agreement and all referencesto Exhibits or Schedules refer to Exhibits or Schedules attached to and made apart of this Agreement.  When the term “herein”is used in this Agreement, reference is made to the entire Agreement and not toany particular Section or subparagraph of a Section.  The word “including” shall mean includingwithout limitation.

 

**1.2.****                           ****“Accounting Referee”** means the accounting firm of KPMG, or such other nationally recognizedUnited States based accounting firm as is mutually agreed upon by the Parties,together with any experts such firm may require in order to settle a particulardispute.

 

**1.3.****                           ****“Aggregate Defect Basket”**shall be as defined in Section 7.4.

 

**1.4.****                           ****“Agreement”** shall mean this Asset Purchase and SaleAgreement between Seller and Buyer.

 

**1.5.****                           ****“Allocated Value”**shall mean the dollar amount allocated toeach Scheduled Interest as set forth on Exhibit “C.”

 

1

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**1.6.****                           ****“Assets”** shall mean the following describedassets and properties (except to the extent constituting Excluded Assets):

 

(a)                                  the Leases;

 

(b)                                 the Real Property, Personal Property andIncidental Rights;

 

(c)                                  the Inventory Hydrocarbons; and

 

(d)                                 the Shares.

 

**1.7.****                           ****“Assumed Obligations”** shall mean with respect to the Assets:

 

(a)                                  the Plugging and Abandonment Obligations;

 

(b)                                 all Environmental Obligations, whetherrelated to, or arising from, events occurring before or after the EffectiveDate, except those specifically included in the definition of “RetainedObligations”;

 

(c)                                  all obligations with respect to gasproduction, sales or imbalances with third parties;

 

(d)                                 except as otherwise provided in thisAgreement, including the Seller’s obligations to indemnify, all otherliabilities, duties, and obligations that arise out of the ownership, operationor use of the Assets after the Effective Time, including, but not limited to,the payment of all operating expenses and capital expenditures relating to theAssets, all liabilities, duties, and obligations, express or implied, imposedupon Seller herein under the provisions of the Leases and any and allassignments, subleases, farmout agreements, assignments of overriding royalty,joint operating agreements, easements, rights-of-way, and all other contracts,agreements and instruments affecting the Leases, or the premises coveredthereby, whether recorded or unrecorded, whether or not identified on theExhibits or schedules attached hereto and under all applicable laws, rules,regulations, orders and ordinances.

 

**1.8.****                           ****“Benefit Plan”**means: (a) each “employeebenefit plan,” as such term is defined in Section 3(3) of ERISA, (b) eachplan that would be an “employee benefit plan”, as such term is defined in Section 3(3) ofERISA, if it were subject to ERISA, such as foreign plans and plans fordirectors, (c) each stock bonus, stock ownership, stock option, stockpurchase, stock appreciation rights, phantom stock, or other equity-based plan,and (d) each bonus or incentive compensation plan, or other compensationagreement, contract or arrangement.

 

**1.9.****                           ****“Business Day”**means a Day, exceptSaturday, Sunday and Days when federally chartered banks in the United Statesare required to be closed.

 

**1.10.****                    ****“Buyer”**“Buyer” has the meaning setforth in the introductory paragraph.

 

2

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**1.11.****                    ****“Buyer Group”**“Buyer Group” means Buyerand its officers, directors, agents, representatives, consultants andemployees.

 

**1.12.**                     **“Buyer’s Credits”**shall be as defined in Section 3.3(b).

 

**1.13.****                    ****“Casualty Loss”** shall be as defined in Article 15.

 

**1.14.****                    ****“Certificate”**means a document in the formof Exhibit “J”.

 

**1.15.****                    ****“Claims”** shall be as defined in Section 17.2.

 

**1.16.****                    ****“Closing”** shall be as defined in Section 13.1.

 

**1.17.****                    ****“Closing Date”** shall be as defined in Section 13.1.

 

**1.18.****                    ****“Company”** shall mean Four Star DevelopmentCorporation, a Louisiana corporation.

 

**1.19.****                    ****“Confidentiality Agreement”**shall be asdefined in Section 6.3.

 

**1.20.****                    ****“Defect Value”** shall be as defined in Section 8.4.

 

**1.21.****                    ****“Defensible Title”**shall be as defined in Section 8.1(b).

 

**1.22.****                    ****“Effective Time”** shall mean 7:00 a.m., CentralStandard Time, on February 1, 2008.

 

**1.23.****                    ****“Encumbrance”** shall mean any lien, security interest,pledge, charge or encumbrance.

 

**1.24.****                    ****“Environmental Deductible”** shall mean any lien, security interest,pledge, charge or encumbrance.

 

**1.25.****                    ****“Environmental Defect”** shall mean:

 

(a)                                  a condition or activity with respect to aScheduled Interest that is in material violation, or reasonably likely tomaterially violate, any federal, state or local statute, or any rule, order,ruling or regulation entered, issued or made by any court, administrativeagency, or other governmental body or entity, federal, state, or local, or anyarbitrator (“**Environmental Law**”), orsurface or mineral lease obligation, whether an express or implied obligation,relating to natural resources, conservation, the environment, or the emission,release, storage, treatment, disposal, transportation, handling or managementof industrial or solid waste, hazardous waste, hazardous or toxic substances,chemicals or pollutants, petroleum, including crude oil, natural gas, naturalgas liquids, or liquefied natural gas, and any wastes associated with theexploration and production of oil and gas (“**RegulatedSubstances**”); or

 

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(b)                                 the presence of Regulated Substances inthe soil, groundwater, or surface water in, on, at or under a Scheduled Interestin any manner or quantity which is required to be remediated by EnvironmentalLaw or by any applicable action or guidance levels or other standards publishedby any governmental agency with jurisdiction over the Assets, or by a surfaceor mineral lease obligation, whether an express or implied obligation.  Buyer and Seller agree that for a conditionto be in violation of any statute or regulation it shall not be necessary thatSeller shall be under notice of violation from a federal or state regulatoryagency or lessor.

 

The Parties agreeand acknowledge that (i) Buyer will be provided an opportunity to examinethe Assets for potential naturally occurring radioactive materials (**“NORM”**), and any potential obligations with respectto NORM, and (ii) that the presence of NORM on any of the Assets may notbe raised by Buyer as the subject of an Environmental Defect.

 

**1.26.****                    ****“Environmental Defect NoticeDate”** shallbe as defined in Section 7.1.

 

**1.27.****                    ****“Environmental Obligations”** shall mean all liabilities, obligations,expenses (including, without limitation, all attorneys’ fees), fines,penalties, costs, claims, suits or damages (including natural resource damages)of any nature, associated with the Assets, and attributable to or resultingfrom:

 

(a)                                  pollution or contamination of soil,surface water, groundwater or air, on, in, by, from or under the Assets orlands in the vicinity thereof, and any other contamination of or adverse effectupon the environment;

 

(b)                                 underground injection activities andwaste disposal;

 

(c)                                  clean-up responses, remedial, control orcompliance costs, including the required cleanup or remediation of spills,pits, lakes, ponds, or lagoons, including any subsurface or surface pollutioncaused by such spills, pits, lakes, ponds, or lagoons;

 

(d)                                 noncompliance with applicable land use,permitting, surface disturbance, licensing or notification requirements,including those in a surface or mineral lease, whether an express or impliedobligation;

 

(e)                                  violation of any federal, state or localEnvironmental Law or land use law, or surface or mineral lease obligation,whether an express or implied obligation;

 

(f)                                    any other violation which could qualifyas an Environmental Defect (without being limited to Scheduled Interests); and

 

(g)                                 any and all indemnity obligations ofSeller with respect to the above, along with any and all Claims against Sellerfor indemnity with respect to the above, under, pursuant to or arising from anyacquisition, purchase and sale or other agreement.

 

Notwithstanding anyprovision of this Agreement to the contrary, “Environmental 

 

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Obligations” shallnot include Plugging and Abandonment Obligations (including with respect toNORM).

 

**1.28.****                    ****“Escrow Agreement”** shall be defined in Section 3.2.

 

**1.29.****                    ****“Escrow Deposit”** shall be as defined in Section 3.2.

 

**1.30.****                    ****“Excluded Assets”** shall mean the following:

 

(a)                                  (i) all trade credits, accountsreceivable, notes receivable and other receivables attributable to Seller’sinterest in the Assets with respect to any period of time prior to theEffective Time; (ii) all deposits, cash, checks in process of collection,cash equivalents and funds attributable to Seller’s interest in the Assets withrespect to any period of time prior to the Effective Time; and (iii) allproceeds, benefits, income or revenues accruing with respect to the Assetsprior to the Effective Time;

 

(b)                                 all corporate, financial, and tax recordsof Seller, and those records subject to attorney/client privilege; however,Buyer shall be entitled to receive copies of any tax records which directlyrelate to any Assumed Obligations, or which are necessary for Buyer’sownership, administration, or operation of the Assets;

 

(c)                                  all claims and causes of action of Sellerarising from acts, omissions or events, or damage to or destruction of theAsset, occurring prior to the Effective Time; provided, however, Seller shalltransfer to Buyer all claims and causes of action of Seller against priorowners of the Assets or third parties for Environmental Obligations that arenot Retained Obligations;

 

(d)                                 except as otherwise provided in Article 15,all rights, titles, claims and interests of Seller relating to the Assets priorto the Effective Time (i) under any policy or agreement of insurance orindemnity; (ii) under any bond; or (iii) to any insurance orcondemnation proceeds or awards;

 

(e)                                  all Hydrocarbons produced from orattributable to the Assets with respect to all periods prior to the EffectiveTime, together with all proceeds from or of such Hydrocarbons, except theInventory Hydrocarbons and the unsold inventory of gas plant products, if any,attributable to the Leases as of the Effective Time;

 

(f)                                    claims of Seller for refund of or losscarry forwards with respect to production, windfall profit, severance, advalorem or any other taxes attributable to any period prior to the EffectiveTime, or income or franchise taxes;

 

(g)                                 all amounts due or payable to Seller asadjustments or refunds under any contracts or agreements (including take-or-payclaims) affecting the Assets with respect to any period prior to the EffectiveTime;

 

(h)                                 all amounts due or payable to Seller asadjustments to insurance premiums 

 

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related to theAssets with respect to any period prior to the Effective Time;

 

(i)                                     all proceeds, benefits, income orrevenues accruing (and any security or other deposits made) with respect to theAssets, and all accounts receivable attributable to the Assets, prior to theEffective Time; and

 

(j)                                     all of Seller’s intellectual property,including, but not limited to, proprietary computer software, patents, tradesecrets, copyrights, names, marks and logos.

 

(k)                                  the Assets identified on Schedule1.28(j).

 

**1.31.****                    ****“Final Settlement”** and **“Final SettlementStatement”**shall be as defined in Section 3.5.

 

**1.32.****                    ****“Governmental Authority”**shall Governmental Authority” means anyfederal, state, local, municipal or other governments; any governmental,regulatory or administrative agency, commission, body or other authorityexercising or entitled to exercise any administrative, executive, judicial,legislative, police, regulatory or taxing authority or power; and any court orgovernmental tribunal

 

**1.33.****                    ****“Hydrocarbons”** shall mean crude oil, natural gas,casinghead gas, condensate, sulphur, natural gas liquids and other liquid orgaseous hydrocarbons, and shall also refer to all other minerals of every kindand character which may be covered by or included in the Leases and Assets.

 

**1.34.****                    ****“Inventory Hydrocarbons”** shall mean all merchantable oil andcondensate (for oil or liquids in storage tanks, being only that oil or liquidsphysically above the top of the inlet connection into such tanks) produced fromor attributable to the Leases prior to the Effective Time which have not beensold by Seller and are in storage at the Effective Time.

 

**1.35.****                    ****“Leases”** shall mean, except to the extentconstituting Excluded Assets, any and all interests owned by Seller in and tothe oil, gas and/or mineral leases set forth on Exhibit “A-1,”including any overriding royalty interests, net profit interests, workinginterests, reversionary interests, and any other interests of Seller in saidoil, gas and/or mineral leases, or the lands covered by said Leases.

 

**1.36.****                    ****“Material”** shall be as defined in Section 7.1.

 

**1.37.****                    ****“Material Adverse Effect”**“Material Adverse Effect”means an event or circumstance that (a) results in a material adverseeffect on the business, Assets, financial condition, or results of operationsof the Company taken as a whole or (b) makes impossible the consummationof the transactions contemplated by this Agreement; provided, however, that anyactual change or changes in reserves (including any reclassification orrecalculation of reserves in the ordinary course of business) or in the pricesof Hydrocarbons, ordinary wear and tear and any change in condition of theAssets for production of Hydrocarbons through normal depletion or othermechanical failure (including the watering-out of any well, 

 

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collapsed casing or sandinfiltration of any well), general economic conditions or local, regional,national or international industry or economic conditions (including changes inapplicable Laws and changes in financial or market conditions) shall be deemednot to constitute a “Material Adverse Effect.”

 

**1.38.****                    ****“Material Contracts”**“Material Contracts” has themeaning set forth in Section 4.23.

 

**1.39.****                    ****“Permitted Encumbrances”** shall be as defined in Section 8.1(e).

 

**1.40.****                    ****“Person” **means an individual, group,partnership, corporation, limited liability company, trust or other entity.

 

**1.41.****                    ****“Plugging and AbandonmentObligations”**shallmean the responsibility and liability, including but not limited to Claims fordamages and/or other relief, for the following plugging and abandonmentobligations related to the Assets, regardless of whether they are attributableto the ownership or operation of the Assets before or after the Effective Time:

 

(a)                                  the necessary and proper plugging,replugging and abandonment of all Wells, whether plugged and abandoned beforeor after the Effective Time;

 

(b)                                 the necessary and proper removal,abandonment, and disposal of all platforms, structures, pipelines, equipment,movables, immovables, abandoned property and junk located on or comprising partof the Assets;

 

(c)                                  to the extent allowed by the applicableauthorized governmental body and the owners of the property affected, thenecessary and proper capping and burying of all associated flow lines locatedon or comprising part of the Assets;

 

(d)                                 the necessary and proper restoration ofthe Assets and/or the property covered by the Assets or upon which the Assetsare located, both surface, surface water, groundwater, waterbottom and subsurface,to such condition as may be required by applicable laws, regulation orcontract;

 

(e)                                  any necessary clean-up or disposal ofAssets contaminated by NORM as may be required by applicable laws, regulationor contract;

 

(f)                                    all obligations arising from contractualrequirements and demands made by authorized governmental bodies or partiesclaiming an interest in the Assets and/or the property covered by the Assets orupon which the Assets are located; and

 

(g)                                 any and all indemnity obligations ofSeller with respect to the above, along with any and all Claims against Sellerfor indemnity with respect to the above, under, pursuant to or arising from anyacquisition, purchase and sale or other agreement.

 

**1.42.****                    ****“Preferential Purchase Rights”** shall be as defined in Section 10.1(b).

 

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**1.43.****                    ****“Purchase Price”** shall be as defined in Section 3.1.

 

**1.44.****                    ****“Real Property, PersonalProperty and Incidental Rights”** shall mean all right, title and interest of Seller inand to or derived from the following insofar as the same do not constituteExcluded Assets and are attributable to, appurtenant to, incidental to, or usedfor the operation of the Leases:

 

(a)                                  all fee interests and surface estateinterests described on Exhibit “A-5”;

 

(b)                                 all easements, rights-of-way, surfaceleases, permits, licenses, servitudes or other interests relating to the use ofthe surface, including but not limited to those described on Exhibit “A-4,”or in instruments described in Exhibit “A-3”;

 

(c)                                  all Wells, along with all equipment andother personal property, inventory, spare parts, tools, fixtures, pipelines,dehydration facilities, platforms, tank batteries, appurtenances, andimprovements situated upon the Leases or lands pooled or unitized therewith asof the Effective Time and used or held for use in connection with thedevelopment or operation of the Leases or the production, treatment, storage,compression, processing or transportation of Hydrocarbons from or in the Wellsor the Leases or lands pooled or unitized therewith including, but not limitedto those described on Exhibit “A-2”;

 

(d)                                 all unit agreements, orders and decisionsof state and federal regulatory authorities establishing units, joint operatingagreements, enhanced recovery and injection agreements, farmout agreements andfarmin agreements, options, drilling agreements, exploration agreements,assignments of operating rights, working interests, subleases and rights aboveor below certain footage depths or geological formations, to the extent same isattributable to the Assets, as of the Effective Time, including but not limitedto those described on Exhibit “A-3”;

 

(e)                                  all contracts, agreements, and titleinstruments to the extent attributable to and affecting the Assets in existenceat Closing, including all Hydrocarbon sales, purchase, gathering,transportation, treating, marketing, exchange, processing, disposal andfractionating contracts, joint operating agreements, including but not limitedto those described on Exhibit “A-3”;

 

(f)                                    originals of all lease files, land files,well files, production records, division order files (including paysheets andsupporting files), abstracts, title opinions, and contract files, insofar asthe same are directly related to the Leases, including, without limitation, allgeological, informationand data, to the extent that such data is not subject to any third partyrestrictions, but excluding Seller’s proprietary interpretations of same; and

 

(g)                                 the Company books, records and files ofFour Star Development Corporation, including but not limited to, permits,licenses, corporate records, minute book, contracts, title records, tax recordsrelating solely to the business of the Company, financial, engineering andsafety records.

 

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**1.45.****                    ****“Retained Obligations”**shall mean:

 

(a)                                  anyEnvironmental Obligation of any nature related to the Excluded Assets;

 

(b)                                 allEnvironmental Obligations of any nature that relate to or arise from eventsoccurring as of the date NGS acquired the Assets through the Closing Date.

 

(c)                                  Claims for personal injury or wrongful deathoccurring prior to the Effective Time;

 

(d)                                 responsibility to any governmental agencyfor any offsite storage and disposal by Seller, prior to the Effective Time, ofhazardous materials produced from the Assets, and stored or disposed of, on, inor below any property which does not form a part of the Assets, for which andto the extent that remediation is required by any environmental or conservationlaw in effect as of the Effective Time; for purposes of this subpart “(d),” “offsitestorage and disposal” shall not include the seepage, leakage or other migrationof hazardous materials from the property forming part of the Assets to otherlands;

 

(e)                                  responsibility and liability for thelitigation and threatened litigation listed on Exhibit “F,” and theClaims thereunder; and

 

(f)                                    except as otherwise provided in thisAgreement, all other liabilities, duties, and obligations that arise out of theownership, operation or use of the Assets prior to the Effective Time,including, but not limited to, the payment of all operating expenses andcapital expenditures relating to the Assets, all liabilities, duties, andobligations, express or implied, imposed upon Seller herein under theprovisions of the Leases and any and all assignments, subleases, farmoutagreements, assignments of overriding royalty, joint operating agreements,easements, rights-of-way, and all other contracts, agreements and instruments affectingthe Leases, or the premises covered thereby, whether recorded or unrecorded,whether identified or not on the Exhibits or Schedules attached hereto andunder all applicable laws, rules, regulations, orders and ordinances.

 

**1.46.****                    ****“Seller’s Credits”** shall be as defined in Section 3.3(a).

 

**1.47.****                    ****“Seller Group”**means (a) Seller andits officers, directors, agents, representatives, consultants and employees,and (b) Seller’s Parent and Affiliates and their officers, directors,agents, representatives, consultants and employees.

 

**1.48.****                    ****“Shares”** shall mean all of the issued andoutstanding capital stock of Four Star Development Corporation, a LouisianaCorporation.

 

**1.49.****                    ****“Scheduled Interests” or “ScheduledInterest”**shallmean that portion of the Assets attributable to the Leases or Wells identifiedon Exhibits “A-1” and “A-2” and having a value greater than $0.00.

 

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**1.50.****                    ****“Tax” or “Taxes”**means all income, profits, franchise,withholding, ad valorem, employment, social security, disability, occupation,property, severance and excise taxes, together with any interest and penaltieswith respect thereto, imposed by or on behalf of any Taxing Authority.

 

**1.51.****                    ****“Taxing Authority”**means, withrespect to any Tax, the governmental entity or political subdivision thereofthat imposes such Tax, and the agency (if any) charged with the collection ofsuch Tax for such entity or subdivision, including any governmental orquasi-governmental entity or agency that imposes, or is charged withcollecting, social security or similar charges or premiums.

 

**1.52.****                    ****“Tax Return”**means anyreturn, declaration, report, claim for refund, or information return orstatement relating to Taxes, including any schedule or attachment thereto.

 

**1.53.****                    ****“Third Party Interests”**shall be as defined in Section 10.1(c).

 

**1.54.****                    ****“Title Defect”**shall be as defined in Section 8.1(c).

 

**1.55.****                    ****“Title Defect Deductible”**shall be as defined in Section 8.3(a).

 

**1.56.****                    ****“Title Defect Notice Date”**shall be as defined in Section 8.2.

 

**1.57.****                    ****“Title Defect Property”**shall be as defined in Section 8.1(d).

 

**1.58.****                    ****“Well” or “Wells”** shallrefer to all wells locatedon the Assets, or lands pooled or unitized therewith, including but not limitedto those listed on Exhibit “A-2” attached hereto, whether or notsuch wells are producing, active or inactive, plugged and abandoned,temporarily abandoned, shut-in, injection, disposal, water supply or otherwise.

 

**ARTICLE2. - AGREEMENT TO PURCHASE AND SELL**

 

Subject to theterms and conditions of this Agreement, Seller agrees to sell and convey toBuyer and Buyer agrees to purchase and pay for the Assets and to assume theAssumed Obligations.

 

**ARTICLE3. - PURCHASE PRICE AND PAYMENT**

 

**3.1.****                           ****Purchase Price.**

 

Subject toadjustment as set forth below, the Purchase Price for the Assets shall beFourMillion Five Hundred Thousand and No/100 dollars ($4,500,000.00), allocatedamong the Scheduled Interests as provided in Section 3.8.

 

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**3.2.****                           ****Escrow Deposit.**

 

Immediately uponthe execution hereof, Buyer shall tender to Wells Fargo Bank, N.A.****(the **“Bank**”), by wire transfer, the Escrow Deposit inthe amount of One Hundred Thousand and No/100 dollars ($100,000.00) (the “EscrowDeposit”). The Escrow Deposit will be placed in an interest-bearing account withthe Bank in accordance with the escrow agreement that is attached hereto as **Exhibit “B”** (the “**Escrow Agreement**”). In the event the transaction contemplated hereby is consummated inaccordance with the terms hereof, the Escrow Deposit and any accrued interest,shall be applied to the Purchase Price to be paid by Buyer at Closing, inaccordance with Section 3.3(b). In the event this Agreement is terminated by the Buyer or Seller inaccordance with Article 16 below, the Escrow Deposit and anyaccrued interest, shall be returned to Buyer or retained by the Seller asprovided for herein. In the event the Escrow Deposit is not received by the Bank by the close of businesson the first Business Day after the execution of this Agreement, this Agreementshall be null and void, and the Parties shall have no further obligation toeach other hereunder.

 

**3.3.****                           ****Adjustments to PurchasePrice.**

 

The Purchase Pricefor the Assets shall be adjusted as follows with all such amounts beingdetermined in accordance with generally accepted accounting principals andCouncil of Petroleum Accountants Society (COPAS) standards:

 

(a)                                  The Purchase Price shall be adjustedupward by the following (**“Seller’s Credits”**):

 

(1)                                  the value of (i) all InventoryHydrocarbons, such value to be based upon the existing contract price for crudeoil in effect as of the Effective Time, less severance taxes, transportationfees and other fees deducted by the purchaser of such oil, such oil to bemeasured at the Effective Time by the operators of the Assets;

 

(2)                                  the amount of all direct expenditures,production expenses, operating expenses, capital expenses, and all otherexpenditures attributable to the Assets and incurred and paid by or on behalfof Seller in the ordinary course of owning and/or operating the Assets andattributable to the period from the Effective Time to the Closing Date, *provided, however*, this provision shall be subject to Section 11.1after the execution of the Agreement through the Closing Date;

 

(3)                                  an amount equal to all prepaid expensesthat are actually paid by or on behalf of Seller prior to the Initial ClosingDate in the ordinary course of owning and/or operating the Assets as heretoforeowned and/or operated and attributable to the Assets and allocable to anyperiod after the Effective Time;

 

(4)                                  an amount equal to the sum of any upwardadjustments provided elsewhere in this Agreement; and

 

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(5)                                  any other amount agreed upon by Sellerand Buyer in writing prior to Closing.

 

(b)                                 The Purchase Price shall be adjusteddownward by the following (**“Buyer’s Credits”**):

 

(1)                                  the amount of gross proceeds received byor credited to Seller that are attributable to the sale of any Hydrocarbonproduction from the Assets for any period of time after the Effective Time netof all applicable production related taxes and royalties paid by or on behalfof Seller;

 

(2)                                  the amount of all unpaid ad valorem,property, production, excise, severance and similar taxes and assessments (butnot including income taxes), which taxes and assessments become due and payableor accrue to the Assets prior to the Effective Time, which amount shall, wherepossible, be computed based upon the tax rate and values applicable to the taxperiod in question; otherwise, the amount of the adjustment under thisparagraph shall be computed based upon such taxes assessed against theapplicable portion of the Assets for the immediately preceding tax period justended;

 

(3)                                  the Escrow Deposit, and all accruedinterest thereon;

 

(4)                                  an amount equal to the sum of anydownward adjustments provided elsewhere in this Agreement; and

 

(5)                                  any other amount agreed upon by Sellerand Buyer in writing prior to Closing.

 

(c)                                  Seller shall prepare and deliver toBuyer, at least five (5) business days prior to Closing, Seller’s estimateof the adjusted Purchase Price to be paid at Closing, together with apreliminary statement setting forth Seller’s estimate of the amount of each adjustmentto the Purchase Price to be made pursuant to this Section 3.3.  The Parties shall negotiate in good faith andattempt to agree on such estimated adjustments prior to Closing.  In the event any estimated adjustment amountsare not agreed upon prior to Closing, the estimate of the adjusted PurchasePrice for purposes of Closing shall be calculated based on Seller’s and Buyer’sagreed upon estimated adjustments and Seller’s good faith estimate of anydisputed amounts (and any such disputes shall be resolved by the Parties inconnection with the resolution of the Final Settlement Statement).

 

**3.4.****                           ****Manner of Payment****.**

 

At Closing, Buyershall pay Seller the Adjusted Purchase Price by wire transfer of immediatelyavailable funds pursuant to Seller’s written instructions.  At Closing, the Buyer and Seller shall givejoint instructions to the Bank to disburse the Escrow Deposit to the Buyer,together with all accrued interest, in payment of the Purchase Price as adjustedhereinabove.

 

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**3.5.****                           ****Final Settlement Statement****.**

 

As soon asreasonably practicable, but in no event later than ninety (90) days after theClosing Date, Seller will deliver to Buyer a final settlement statement (the “FinalSettlement Statement”) setting forth the actual adjustments to the PurchasePrice pursuant to Section 3.3. As soon as reasonably practicable, but in no event later than thirty(30) Days after Buyer receives the Final Settlement Statement, Buyer maydeliver to Seller a written report containing any changes that Buyer proposesto be made to such statement.  Suchchanges shall be specified in reasonable detail with reasonable supportingdocumentation.  Any changes not sospecified shall be deemed waived, and Seller’s determinations shallprevail.  If Buyer fails to timelydeliver the written report to Seller containing changes Buyer proposes to bemade to the Final Settlement Statement, the statement as delivered by Sellerwill be deemed to be correct and will be final and binding on the Parties andnot subject to further audit or arbitration. As soon as reasonably practicable, but in no event later than fifteen(15) Days after Seller receives Buyer’s written report, the Parties shall meetand undertake to agree on the final adjustments to the Final SettlementStatement.  If the Parties fail to agreeon the final adjustments within the fifteen (15) Day period, either Party maysubmit the disputed items to the Accounting Referee for resolution.  The Parties shall direct the AccountingReferee to resolve the disputes within thirty (30) Days after having therelevant materials submitted for review. The decision of the Accounting Referee will be binding on andnon-appealable by the Parties.  The feesand expenses associated with the Accounting Referee will be borne equally bythe Parties.  Any amounts owed by oneParty to the other as a result of the Final Settlement Statement will be paidwithin five (5) Business Days after the date when the amounts are agreedupon by the Parties or the Parties receive a decision of the AccountingReferee, and the items included in the Final Settlement Statement will be finaland binding between the Parties and not subject to further audit orarbitration.

 

**3.6.****                           ****Post-Closing Revenues****.**

 

Except as expresslyprovided otherwise in this Agreement, Buyer will promptly pay to Seller any andall amounts received after Closing (but prior to the finalization of the FinalSettlement Statement) by Buyer or the Company (to the extent not accounted forin the Preliminary Settlement Statement) that are attributable to the Assets orthe business or the operations of the Company prior to the Effective Time orthat are attributable to the Excluded Assets. Except as expressly provided otherwise in this Agreement, Seller willpay to Buyer any and all amounts received after Closing (but prior to thefinalization of the Final Settlement Statement) by Seller (to the extent notaccounted for in the Preliminary Settlement Statement) that are attributable tothe Assets or the business or the operations of the Company on and after theEffective Time.  The Party responsiblefor the payment of amounts received shall reimburse the other Party within five(5) Business Days after the end of the month in which such amounts werereceived by the Party responsible for payment and such amounts shall not betaken into account for purposes of the Final Settlement Statement.  Notwithstanding the foregoing, this Section 3.6shall not apply to amounts received prior to Closing if such amounts are includedin the Preliminary Settlement Statement. Such amounts 

 

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(to the extent thesame differ from estimates in the Preliminary Settlement Statement) will beaccounted for in the Final Settlement Statement.

 

**3.7.****                           ****Post-Closing Expenses****.**

 

Except asexpressly provided otherwise in this Agreement, Seller will promptly reimburseBuyer for any and all costs and expenses paid after Closing (but prior to thefinalization of the Final Settlement Statement) by Buyer or the Company (to theextent not accounted for the Preliminary Settlement Statement) that areattributable to the Assets or the business or the operations of the Companyprior to the Effective Time or that are attributable to the Excluded Assets.  Except as provided otherwise in thisAgreement, Buyer will reimburse Seller for any and all costs and expenses paidafter Closing (but prior to the finalization of the Final Settlement Statement)by Seller (to the extent not accounted for in the Preliminary SettlementStatement) that are attributable to the Assets or the business or theoperations of the Company on and after the Effective Time.  The Party responsible for the payment of suchcosts and expenses shall reimburse the other Party within five (5) BusinessDays after the end of the month in which the applicable invoice and proof ofpayment of such invoice were received by the Party responsible for payment andsuch amounts shall not be taken into account for purposes of the FinalSettlement Statement.  Notwithstandingthe foregoing, this Section 3.7 shall not apply to amounts paidprior to Closing if such amounts are included, in whole or in part, in thePreliminary Settlement Statement.  Suchamounts (to the extent the same differ from the estimates in the PreliminarySettlement Statement) will be accounted for in the Final Settlement Statement.

 

**3.8.****                           ****Purchase Price Allocations****.**

 

Seller and Buyeragree to (i) allocate the Purchase Price as to the Scheduled Interests inaccordance with the allocation schedule attached as Exhibit “C”hereto (the “Allocated Values”), (ii) treat and report the transactionscontemplated by this Agreement in all respects consistent with Exhibit “C”for purposes of any Taxes, and (iii) not take any action inconsistent withsuch obligations.  Seller and Buyer shallduly prepare and timely file such reports and information returns as may beprescribed under Section 1060 of the Code, including Form 8594, andany similar returns or reports required under other applicable Law, to reportthe allocation of the Purchase Price in accordance with Exhibit “C.”

 

**ARTICLE4. - SELLER’S REPRESENTATIONS AND WARRANTIES**

 

Seller representsand warrants to Buyer as of the date hereof, and the Closing Date that:

 

**4.1.****                           **Seller is a corporationduly organized, validly existing and in good standing under the Laws of thestate of Delaware and has all requisite corporate power and authority to ownthe Assets owned by Seller.  Seller isduly licensed or qualified to do business as a foreign corporation and is ingood standing in the State of Louisiana.

 

**4.2.****                           **Seller has all requisite power andauthority to carry on its business as 

 

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presentlyconducted, to enter into this Agreement and the other documents and agreementscontemplated hereby, and to perform its obligations under this Agreement andthe other documents and agreements contemplated hereby. Effective as ofClosing, the consummation of the transactions contemplated by this Agreementwill not violate, nor be in conflict with, any provision of its governingdocuments or any agreement or instrument to which it is a party or by which itis bound (except any provision contained in agreements customary in the oil andgas industry relating to (1) the Preferential Purchase Rights (definedbelow) as to all or any portion of the Assets; (2) required consents totransfer and related provisions; (3) any other third-party approvals orconsents contemplated herein), or any judgment, decree, order, statute, rule,or regulation applicable to Seller.

 

**4.3.**                            This Agreement, and all documents andinstruments required hereunder to be executed and delivered by Seller atClosing, constitute legal, valid and binding obligations of Seller inaccordance with its respective terms, subject to applicable bankruptcy andother similar laws of general application with respect to creditors.

 

**4.4.**                            There are no bankruptcy, reorganizationor receivership proceedings pending, being contemplated by, or to the actualknowledge of Seller threatened against Seller.

 

**4.5.**                            The execution, delivery and performance(effective as of Closing) of this Agreement, and the transaction contemplatedhereunder has been duly and validly authorized by all requisite authorizingaction, corporate, partnership or otherwise, on the part of Seller.

 

**4.6.****                           **Except for a) any consents or approvals contained on any Leases, and b) anychange of control provisions or other applicable transfer restrictions in anycontracts to which the Company is a party or is bound, Seller’s execution anddelivery of this Agreement and the other documents and agreements contemplatedhereby, to which it is a party and the consummation of the transactionscontemplated by this Agreement by it shall not:

 

(i)                                     conflict with or require the consent of any Person under any of the terms,conditions or provisions of the organizational documents of Seller or of theCompany;

 

(ii)                                  violate any provision of, or require any filing, consent or approval under,any Laws applicable to Seller or the Company except (in each case) where suchviolation or the failure to make or obtain such filing, consent or approvalwould not have a Material Adverse Effect;

 

(iii)                               conflict with, result in a breach of, constitute a default under orconstitute an event that with notice or lapse of time, or both, wouldconstitute a default under, accelerate or permit the acceleration of theperformance required by, or require any consent, authorization, approval, orchange of control or similar payment under any Material Contract, except wheresuch conflict, breach or default would not have a Material Adverse Effect; or

 

(iv)                              result in the creation or imposition of any lien or Encumbrance upon one ormore of the Scheduled Interests or Shares except for the Permitted Encumbrancesand except where such lien or Encumbrance would not have a Material AdverseEffect.

 

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**4.7.**                            Seller has not incurred any obligation orliability, contingent or otherwise, for brokers’ or finders’ fees in connectionwith this Agreement and the transaction provided herein.

 

**4.8.**                            Other than as set forth in Exhibit “F,”there are no claims, investigations, demands, actions, suits, oradministrative, legal or arbitration proceedings (including condemnation,expropriation, or forfeiture proceedings) pending or, to the knowledge ofSeller, threatened against Seller, the Company, or any Asset: (i) seekingto prevent the consummation of the transactions contemplated hereby, or (ii) which,individually or in the aggregate, would have a Material Adverse Effect on theAssets.

 

**4.9.**                            The transfer of the Assets to Buyer willnot violate at the Closing Date any covenants or restrictions imposed on Sellerby any bank or other financial institution in connection with a mortgage orother instrument, and will not result in the creation or imposition of a lienon any portion of the Assets.

 

**4.10.**                     The authorized equity securities of the Company consist of the Shares.  The Shares constitute all of the issued andoutstanding capital stock of the Company. The Shares have been duly authorized and validly issued and are fullypaid and, to the extent provided by applicable Law, nonassessable.  Seller owns all of the Shares free and clearof any security interests, Claims, restrictions on transfer, options, warrants,purchase rights, conversion rights, and exchange rights, and there are no othercontracts or commitments that could require Seller to sell, transfer, orotherwise dispose of the Shares, other than this Agreement.  There are no voting trusts, proxies, or otheragreements or understandings with respect to the voting of the Shares.

 

**4.11.**                     Except as disclosed by Seller in writing, to Seller’sknowledge, it is in material compliance with all laws, rules, regulations andorders pertaining to such Scheduled Interest, including Environmental Laws.

 

**4.12.**                     To Seller’s knowledge, the Company has allgovernmental permits necessary for the operation of the Scheduled Interest andis not in material default under any permit, license or agreement relating tothe operation and maintenance of the Scheduled Interest.

 

**4.13.**                     (a)                                  The Company is a corporation duly organized, validly existing and in goodstanding under the laws of the State of Louisiana.  The Company has full corporate power andauthority to own, lease or otherwise hold the any assets it owns, leases orotherwise holds and conduct its business in the manner presently conducted

 

(b)                                 Seller has delivered to Buyer true and complete copies of theorganizational documents of the Company.

 

(c)                                  Except asset forth on Schedule 4.13(e), as of the Closing Date, the Company hasno liabilities that would be required to be reflected on a balance sheet(including the footnotes thereto) of the Company prepared in accordance withGAAP, other than current liabilities incurred in the ordinary course ofbusiness with respect to the Assets.

 

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(d)                                 The books of account, minute books, and other records of the Company, whichhave been or will be made available to Buyer prior to Closing, are complete andcorrect and accurately reflect all meetings held of, and Company action takenby, the directors, officers and any committees thereof.

 

(e)                                  The Company is an Operator in good standing with the Louisiana Office ofConservation, Department of Natural Resources, with full authority to carry onits business as it is currently conducted, and as it will be conducted as ofthe Closing Date.

 

**4.14.****                    **(a)                                  Effective as of the Closing Date, Seller warrants Defensible Title to theScheduled Interests shown in Exhibits “A-1” and “A-2” and to the otherAssets unto Buyer against every Person whomsoever lawfully claiming or to claimthe same or any part thereof by, through or under Seller, but not otherwise,subject, however, to the Permitted Encumbrances and to any matters properlyfiled of record in the Parish wherein the property is located.

 

(b)                                 The tangible personal property comprising the Assets is in a conditiongenerally sufficient to operate the Assets as currently operated.  The Assets are free and clear of allencumbrances other than Permitted Encumbrances.

 

**4.15.**                     Except as set forth on Exhibit “H,” toSeller’s knowledge, there are no waivers, consents to assign, approvals orsimilar rights owned by third parties and required in connection with theconveyance of the Assets from Seller to Buyer.

 

**4.16.**                     Except as set forth on Exhibit “H,” toSeller’s knowledge, there are no rights of first refusal, preferential rights,preemptive rights or contracts, or other commitments or understandings of asimilar nature to which Seller is a part or to which the Assets are subject.

 

**4.17.**                     No Hydrocarbons produced or to be produced from theLeases are subject to any gas sales contracts other than those identified on Exhibit “A-4”and, no third party has any call upon, option to purchase, take-or-payobligations, dedication rights or similar rights with respect to theHydrocarbons produced to be produced from Seller’s interest in the Leases,except as described on Exhibit “A-4”.

 

**4.18.**                     Except as set forth on Exhibit “G,” thereare no oil or gas production imbalances with respect to the Leases.

 

**4.19.****                    **Schedule 4.19 sets forth the name ofeach financial institution in which the Company has borrowing or investmentagreements, deposit or checking accounts or safe deposit boxes and the types ofthose arrangements and accounts, including, as applicable, names in whichaccounts or boxes are held, the account or box numbers and the name of eachPerson authorized to draw thereon or have access thereto.

 

**4.20.****                    **The Company does not have anyemployees.  On and after the Closing, theCompany will not have any severance arrangements, change in control payments oragreements, termination agreements or employment agreements, in each case withrespect to employees to the extent employed prior to the Closing.

 

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**4.21.****                    **On and after the Closing, theCompany****shall not sponsor,maintain, contribute to or have any liability to or with respect to any BenefitPlan that existed prior to the Closing or any former employee to the extentemployed prior to the Closing.

 

**4.22.****                    **(a)                                  With respect to theAssets, Seller has not entered into, or is not subject to, any agreements,consents, orders, decrees, judgments, license or permit conditions, or otherdirectives of any Governmental Authority in existence as of the date of thisAgreement based on any Environmental Laws that relate to the future use of anyof the Assets and that require any change in the present conditions of any ofthe Assets.

 

(b)                                 Except as set forth in Exhibit “F”, Seller has not receivedwritten notice from any Person of any release, disposal, event, condition,circumstance, activity, practice or incident concerning any land, facility,asset or property included in the Assets that interferes with or preventscompliance by Seller with any Environmental Law or the terms of any license orpermit issued pursuant thereto which would have a Material Adverse Effect.

 

(c)                                  To Seller’s knowledge, all material reports, studies, written notices fromenvironmental Governmental Authorities, tests, analyses, and other documentsspecifically addressing environmental matters related to Seller’s ownership oroperation of the Assets, which are in Seller’s possession, have been madeavailable to Buyer.

 

**4.23.****                    **Material Contracts.

 

(a)                            Each of the contracts of the type described below to which the Company is aparty other than any such Contracts constituting Excluded Assets (collectively,the “Material Contracts”) are set forth on Schedule 4.23:

 

(i)                                     any Contract that can reasonably be expected to result in aggregatepayments by the Company of more than Ten Thousand Dollars ($10,000) during thecurrent or any subsequent fiscal year of the Company (based solely on the termsthereof and without regard to any expected increase in volumes or revenues);

 

(ii)                                  any Contract that can reasonably be expected to result in aggregaterevenues to the Company of more than Ten Thousand Dollars ($10,000) during thecurrent or any subsequent fiscal year of the Company (based solely on the termsthereof and without regard to any expected increase in volumes or revenues);

 

(iii)                               any indenture, mortgage, loan, credit or sale-leaseback or similar Contractthat can reasonably be expected to result in aggregate payments by the Companyof more than Ten Thousand Dollars ($10,000) during the current or anysubsequent fiscal year of the Company;

 

(iv)                              any Contract that constitutes a lease (other than an oil and gas lease),under which the Company is the lessor or the lessee of real or personalproperty which lease cannot be terminated by the Company without penalty uponsixty (60) Days or less notice and involves an annual base rental of more thanTen Thousand Dollars ($10,000); and

 

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(v)                                 any Contract with the Parent or an Affiliate of Seller that will not beterminated prior to Closing.

 

(b)                                 Except as set forth on Schedule 4.23 and except for such mattersthat would not have a Material Adverse Effect, the Material Contracts are infull force and effect in accordance with their respective terms, there exist nodefaults thereunder by Seller or the Company or, to Seller’s Knowledge, by anyother Person that is a party to such Material Contracts and no event hasoccurred that with notice or lapse of time or both would constitute any defaultunder any such Contract by the Company or, to Seller’s Knowledge, any otherPerson who is a party to such Material Contract.  Prior to the execution of this Agreement,Seller has furnished or made available to Buyer copies of each MaterialContract and all amendments thereto.

 

**ARTICLE5. - BUYER’S REPRESENTATIONS AND WARRANTIES**

 

Buyer representsand warrants to Seller as of the date hereof, and the Closing Date that:

 

**5.1****                              **Buyer is aTexas limited liability company duly organized, validly existing and in goodstanding under the Laws of the State of Texas and has all requisite corporatepower and authority to own the Assets. Buyer as of the Closing Date will be duly licensed or qualified to dobusiness as a foreign corporation and is in good standing in the State ofLouisiana.

 

**5.2****                              **Buyer has all requisite power andauthority to carry on its business as presently conducted, to enter into thisAgreement and the other documents and agreements contemplated hereby, and toperform its obligations under this Agreement and the other documents andagreements contemplated hereby.  Theconsummation of the transactions contemplated by this Agreement will notviolate, nor be in conflict with, any provision of Buyer’s articles ofincorporation, partnership agreement(s), by-laws or governing documents or anyagreement or instrument to which it is a party or by which it is bound, or anyjudgment, decree, order, statute, rule, or regulation applicable to Buyer;

 

**5.3****                              **The execution,delivery and performance of this Agreement and the transactions contemplatedhereunder have been duly and validly authorized by all requisite authorizingaction, corporate, partnership or otherwise, on the part of Buyer;

 

**5.4****                              **This Agreement,and all documents and instruments required hereunder to be executed anddelivered by Buyer at Closing, constitute legal, valid and binding obligationsof Buyer in accordance with their respective terms, subject to applicablebankruptcy and other similar laws of general application with respect tocreditors;

 

**5.5****                              **There are nobankruptcy, reorganization or receivership proceedings pending, beingcontemplated by, or to the actual knowledge of Buyer threatened against Buyer;

 

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**5.6****                              **Buyer has notincurred any obligation or liability, contingent or otherwise, for brokers’ orfinders’ fees in connection with this Agreement and the transaction providedherein;

 

**5.7****                              **Buyer has, orby Closing will have, the financial resources to close the transactioncontemplated by this Agreement, and pay to Seller the Purchase Price;

 

**5.8****                              **Buyeracknowledges the existence of the claims and suits described in Exhibit “F”and that these claims and suits are Permitted Encumbrances as set forth in Section 8.1(e).  Buyer further acknowledges that Buyer has, orby Closing will have, legal counsel of its choice fully review those claims andsuits identified on Exhibit “F.” Buyer further acknowledges to Seller that Buyer has inspected the RealProperty and Personal Property, as defined in Section1.44, and that anyoperating deficiencies present have been incorporated into the negotiatedPurchase Price.

 

**5.9****                              **Buyer isacquiring the Interests for its own account for use in its trade or businessand not with a view toward any sale or distribution thereof, nor with anypresent intention of making a distribution thereof within the meaning of theSecurities Act of 1933, as amended, and the rules and regulationsthereunder, any applicable state blue sky Laws or other applicable securitiesLaws; and

 

**5.10****                       ****Buyer is sophisticated in the evaluation, purchase, ownership andoperation of oil and gas properties and related facilities.  In making its decision to enter into thisAgreement and to consummate the transaction contemplated herein, Buyer hasrelied or shall rely solely on its own independent investigation and evaluationof the Assets including the environmental and physical condition of theAssets. ****Priorto entering into this Agreement, Buyer was advised by and has relied solely onits own expertise and legal, tax, reservoir engineering, accounting, and otherprofessional counsel concerning this Agreement, the Assets and the valuethereof;****Buyerhas no Knowledge of any fact that results in the breach of any representation,warranty or covenant of Seller given hereunder.**

 

**ARTICLE6. - ACCESS TO INFORMATION AND INSPECTIONS**

 

**6.1.****                           ****Title Files****.**

 

Promptly after theexecution of this Agreement and until the Closing Date, Seller shall permitBuyer and its representatives at reasonable times during normal business hoursto examine, in Seller’s offices at their actual location, all abstracts oftitle, title opinions, title files, ownership maps, lease files, assignments,division orders, payout statements, title curative, other title materials andagreements pertaining to the Assets as requested by Buyer, insofar as the samemay now be in existence and in the possession of Seller.  No warranty of any kind is made by Seller asto the information so supplied, and Buyer agrees that any conclusions drawntherefrom are the result of its own independent review and judgment.

 

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**6.2.****         Other Files.**

 

Promptly after theexecution of this Agreement and until the Closing Date, Seller shall permitBuyer and its representatives at reasonable times during normal business hoursto examine, in Seller’s offices at their actual location, all production, well,regulatory, engineering and geological information, accounting information,environmental information, inspections and reports, and other information,files, books, records, and data pertaining to the Assets as requested by Buyer,insofar as the same may now be in existence and in the possession of Seller,excepting economic evaluations and Seller’s proprietary interpretations ofsame, reserve reports and any such information that is subject toconfidentiality agreements or to the attorney/client and work productprivileges.  No warranty of any kind ismade by Seller as to the information so supplied, and Buyer agrees that anyconclusions drawn therefrom are the result of its own independent review andjudgment.

 

**6.3.****         Confidentiality Agreement.**

 

All informationmade available to Buyer by Seller pursuant to the terms of this Agreement shallbe maintained confidential by Buyer until Closing. The information protected bysuch confidentiality obligation does not include any information that (i) atthe time of disclosure is generally available to and known by the public (otherthan as a result of a disclosure by Buyer), or which after such disclosurecomes into the public domain through no fault of Buyer or its representatives,or (ii) is or was available to Buyer on a nonconfidential basis, or (iii) isalready known to Buyer, as evidenced by Buyer’s written records, at the time ofits disclosure by Seller to Buyer.  Buyermay disclose the information or portions thereof to those employees, agents orrepresentatives of Buyer who need to know such information for the purpose ofassisting Buyer in connection with its performance of this Agreement. Further,in the event that Buyer is requested or required (by deposition, interrogatory,request for documents, subpoena, civil investigative demand or similar process)to disclose any of the information, Buyer shall provide Seller with promptwritten notice of such request or requirement, so that Seller may seek suchprotective order or other appropriate remedy as it may desire.  Buyer shall further take reasonable steps toensure that Buyer’s employees, consultants and agents comply with theprovisions of this Section 6.3.

 

**6.4.****         Inspections.**

 

Promptly after theexecution of this Agreement and until Closing, Seller, subject to any necessarythird-party operator approval, shall permit Buyer and its representatives atreasonable times and at their sole risk, cost and expense, to conductreasonable inspections of the Assets for all purposes, including any EnvironmentalDefects.  The provisions of theConfidentiality Agreement are hereby incorporated herein and adopted byreference and shall apply to any such inspections of the Assets.

 

**6.5.****         No Warranty orRepresentation on Seller’s Information.**

 

**EXCEPT ASSET FORTH IN THIS AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION,EXPRESS OR IMPLIED, WITH RESPECT**

 

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**TO THEACCURACY, COMPLETENESS, OR MATERIALITY OF THE INFORMATION, RECORDS, AND DATANOW, HERETOFORE, OR HEREAFTER MADE AVAILABLE TO BUYER IN CONNECTION WITH THEASSETS OR THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THEASSETS, QUALITY OR QUANTITY OF HYDROCARBON RESERVES, IF ANY, PRODUCTION RATES,RECOMPLETION OPPORTUNITIES, DECLINE RATES, GAS BALANCING INFORMATION,ALLOWABLES OR OTHER REGULATORY MATTERS, POTENTIAL FOR PRODUCTION OFHYDROCARBONS FROM THE ASSETS, OR ANY OTHER MATTERS CONTAINED IN OR OMITTED FROMANY OTHER MATERIAL FURNISHED TO BUYER BY SELLER.  ANY AND ALL SUCH DATA, INFORMATION ANDMATERIAL FURNISHED BY SELLER IS PROVIDED AS A CONVENIENCE ONLY AND ANY RELIANCEON OR USE OF SAME IS AT BUYER’S SOLE RISK.**

 

**ARTICLE7. - ENVIRONMENTAL MATTERS AND ADJUSTMENTS**

 

**7.1.**         Upon execution of andpursuant to the terms of this Agreement, Buyer shall have the right, atreasonable times during normal business hours, to conduct its investigationinto the status of the physical and environmental condition of the Assets.  If, in the course of conducting suchinvestigation, Buyer discovers that any Scheduled Interest is subject to amaterial Environmental Defect, Buyer may raise such material EnvironmentalDefect in the manner set forth hereafter. For purposes hereof, the term “material” shall mean that the Buyer’sgood faith estimate, supported by documentation, of the cost of remediating anysingle Environmental Defect, or the net reduction in value of the ScheduledInterest affected by such Environmental Defect, whichever is lesser, exceeds aTen Thousand And No/100 dollars ($10,000.00) threshold amount, and the sum ofall material Environmental Defects in excess of each threshold exceeds FiftyThousand And No/100 dollars ($50,000.00) (the “**EnvironmentalDeductible”**). No later than 5:00 p.m. Central Standard Time onFriday, February 22, 2008 (the **“Environmental DefectNotice Date”**), Buyer shall notify Seller in writing specifyingsuch Environmental Defects, if any, the Scheduled Interests affected thereby,and Buyer’s good faith estimate of the costs of remediating such defects, orthe net reduction in value of the Scheduled Interests affected by such defects,whichever is lesser, together with supporting documentation.  Seller may, but shall be under no obligationto, correct at its own cost and expense such defects on or before the ClosingDate, in which case there shall be no reduction to the Purchase Price.  Prior to Closing, Buyer and Seller shalltreat all information regarding any environmental conditions as confidential,whether material or not, and shall not make any contact with any governmentalauthority or third party regarding same without the written consent of theother party unless required by law.

 

**7.2.**         If Buyer fails to notifySeller prior to or on the Environmental Defect Notice Date of any EnvironmentalDefects, all defects, whether known or unknown, will be deemed waived forpurposes of adjustments pursuant to this Article 7, the Partiesshall proceed with Closing, Seller shall be under no obligation to correct thedefects, and Buyer shall assume the risks, liability and obligations associatedwith such defects.

 

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**7.3.**         In the event anyEnvironmental Defect, for which notice has been timely given as providedhereinabove, remains uncured as of Closing, Seller, at its sole option, shall, (i) agreeto cure or remediate any Environmental Defect within a reasonable time afterClosing not to exceed one hundred eighty (180) and without any reduction to thePurchase Price in a manner acceptable to both Parties, or (ii) reduce thePurchase Price by the amount of the Defect Value as determined pursuant to Section 8.4,subject to application of the Environmental Deductible described in Section 7.1and the Aggregate Defect Basket described in Section 7.4.

 

**7.4.****        **The Parties agreethat adjustments to the Purchase Price under this Article 7 and Article 8shall only occur to the extent that the aggregate Defect Value for theEnvironmental Defects and Title Defects, collectively, exceed One HundredThirty Five Thousand and No/100 dollars ($135,000.00) (the **“AggregateDefect Basket”**) after taking the applicable Environmental orTitle Deductible into account.  For theavoidance of doubt and by way of example only, if the sum of the materialEnvironmental Defects less the aggregate threshold for each EnvironmentalDefect is One Hundred Fifty Thousand dollars ($150,000.00) and the sum of allTitle Defects less the aggregate threshold for each Title Defect is One HundredThousand dollars ($100,000.00), the total adjustment to the Purchase Pricewould be One Hundred Fifteen Thousand dollars ($115,000.00) [being One HundredFifty Thousand dollars ($150,000.00) for the Environmental Defects, plus OneHundred Thousand dollars ($100,000.00) for the Title Defects, minus One HundredThirty Five Thousand And No/100 dollars ($135,000.00) for the Aggregate DefectBasket].

 

**7.5.**         In the event anyadjustment to the Purchase Price is made due to an Environmental Defect raisedby Buyer, the Parties shall proceed with Closing, Seller shall be under noobligation to correct the Environmental Defect, and the Environmental Defectshall become an Assumed Obligation of Seller.

 

**ARTICLE8. - TITLE DEFECTS AND ADJUSTMENTS**

 

**8.1.****         Definitions.**

 

For purposeshereof, the terms set forth below shall have the meanings assigned thereto.

 

(a)           **“AllocatedValue”**shall mean the dollar amount allocated to each ScheduledInterest as set forth on Exhibit “C.”

 

(b)           **“DefensibleTitle”**, subject to and except for the Permitted Encumbrances (ashereinafter defined), means:

 

(1)           As to the Leases, such titleheld by Seller and reflected by appropriate documentation properly filed in theofficial records of the parish in which the Lease or Leases are located that (a) entitlesSeller and will entitle Buyer, after Closing, to own and receive and retain,without suspension, reduction or termination, payment of revenues for not lessthan a net revenue interest of at least that reflected on 

 

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Exhibit “A-2”****of all oil and gas produced, saved and marketed from orattributable to the Wells listed, excluding Permitted Encumbrances; (b) obligatesSeller, and will obligate Buyer after Closing, to bear not more than theworking interest percentage of the costs and expenses reflected on Exhibit “A-2”****as to the Wells listed, without a correspondingproportionate increase in the net revenue interest for such Well; (c) theLeases are free and clear of any liens, claims or encumbrances of any kind orcharacter as of the Closing, except Permitted Encumbrances; and (d) the Selleris not in default under a material provision of any Lease or other contract oragreement affecting the Leases;

 

(2)           As to personal propertyincluded in the Assets, record title to such property is free and clear of anyliens, claims or encumbrances of any kind or character as of the Closing,except Permitted Encumbrances; and

 

(3)           As to all other Assets,(a) such Assets are free and clear of any liens, claims or encumbrances ofany kind or character as of the Closing; and (b) the Seller is not indefault under a material provision of any Lease, operating agreement, or othercontract or agreement affecting the Assets.

 

(c)           **“TitleDefect”** shall mean (i) any matter which causes Seller tohave less than Defensible Title to any of the Scheduled Interests as of theClosing Date, or (ii) any matter that causes one or more of the followingstatements to be untrue, except for Permitted Encumbrances:

 

(1)           Seller has not receivedwritten notice from any governmental authority or any other person (includingemployees) claiming any violation of any law, rule, regulation, ordinance,order, decision or decree of any governmental authority with respect to theScheduled Interests.

 

(2)           Seller, or the Operatorof a Scheduled Interest, has complied in all material respects with theprovisions and requirements of all orders, regulations and rules issued orpromulgated by governmental authorities having jurisdiction with respect to theScheduled Interests and has filed for and obtained all governmentalcertificates, permits and other authorizations necessary for Seller’s currentoperation of the Scheduled Interests other than permits, consents andauthorizations required for the sale and transfer of the Assets to Buyer;

 

(3)           Seller has notmaterially defaulted or materially violated any agreement to which Seller is aparty or any obligation to which Seller is bound affecting or pertaining to theScheduled Interests other than as disclosed hereunder or on any exhibitattached hereto;

 

(4)           The Leases attributableto the Scheduled Interests are in full force and effect; and

 

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(5)           All taxes, rentals,royalties, operating costs and expenses, and other costs and expenses relatedto the Scheduled Interests which are due from or are the responsibility ofSeller have been paid.

 

(d)           **“Title Defect Property”** shall mean any ScheduledInterest or portion thereof burdened by a Title Defect.

 

(e)           **“Permitted Encumbrances”** shall mean any of thefollowing matters:

 

(1)           defects in the earlychain of title consisting of failure to recite marital status or the omissionof succession or heirship proceedings;

 

(2)           defects orirregularities arising out of uncancelled mortgages, judgments or liens, theinscriptions of which, on their face, have expired as a matter of law prior tothe Effective Time, or prior unreleased oil and gas leases which, on theirface, expired more than ten (10) years prior to the Effective Time andhave not been maintained in force and effect by production or operationspursuant to the terms of such leases;

 

(3)           tax liens and operator’sliens for amounts not yet due and payable, or those that are being contested ingood faith by Seller in the ordinary course of business;

 

(4)           to the extent any ofthe following do not materially diminish the value of, or impair the conduct ofoperations on, any of the Assets and do not impair Seller’s right to receivethe revenues attributable thereto: (i) easements, rights-of-way,servitudes, permits, surface leases and other rights in respect of surfaceoperations, pipelines, grazing, hunting, fishing, logging, canals, ditches,lakes, reservoirs or the like, (ii) easements for streets, alleys,highways, pipelines, telephone lines, power lines, railways and other similarrights-of-way, on, over or in respect of property owned or leased by Seller orover which Seller owns rights of way, easements, permits or licenses, and (iii) theterms and conditions of all leases, agreements, orders, instruments anddocuments pertaining to the Assets;

 

(5)           all lessors’ royalties,overriding royalties, net profits interests, carried interest, productionpayments, reversionary interests and other burdens on or deductions from theproceeds of production if the net cumulative effect of such burdens ordeductions does not reduce the net revenue interest of Seller in any Wellaffected thereby to the extent that Seller will not be able to deliver to Buyerat Closing, a net revenue interest of at least that reflected on Exhibit “A-2”of all oil and gas produced, saved and marketed from or attributable to theunitized sand or other sands listed from the Wells listed, or impair the rightto receive revenues attributable thereto;

 

(6)           preferential rights topurchase and required third party consents to assignments and similar agreementswith respect to which waivers or consents are

 

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obtained from theappropriate parties, or the appropriate time period for asserting the rightshas expired without an exercise of the rights prior to the Closing Date;

 

(7)           Required third-partyconsents to the assignment of the Leases, which Seller has previouslyrequested, but not obtained, and the lessor of any such lease or holder of anysuch right has not prior to the execution of this Agreement objected to suchassignment or notified Seller in writing of such objection obligation.

 

(8)           all rights to consentby, required notices to, filings with, or other actions by governmentalentities in connection with the sale or conveyance of oil and gas leases orinterests if they are customarily obtained subsequent to the sale orconveyance;

 

(9)           defects orirregularities of title arising out of events or transactions which have beenbarred by limitations or by acquisitive or liberative prescription;

 

(10)         rights reserved to orvested in any municipality or governmental, statutory or public authority tocontrol or regulate any of the Assets in any manner, and all applicable laws, rules andorders of governmental authority;

 

(11)         any encumbrance or othermatter (whether or not constituting a Title Defect) expressly waived in writingby Buyer or listed on Exhibit “F”;

 

(12)         the litigation andthreatened litigation, and any Claims thereunder, as listed on Exhibit “F.”

 

**8.2.****         Notice of TitleDefects.**

 

No later than 5:00 p.m.Central Standard Time on Friday, February 15, 2008 (the **“Title Defect Notice Date”**), Buyer may provide Sellerwritten notice of any Title Defect along with a description of those matterswhich, in Buyer’s reasonable opinion, constitute Title Defects and settingforth in detail Buyer’s calculation of the value for each Title Defect.  Seller may elect, at its sole cost andexpense, but without obligation, to cure all or any portion of such TitleDefects prior to Closing, in a manner acceptable to both Parties, in which caseno reduction in the Purchase Price shall be made.  Buyer’s failure to deliver to Seller suchnotice on or before the Title Defect Notice Date shall be deemed a waiver byBuyer of all Title Defects, known or unknown, that Seller does not have noticeof from Buyer on such date.  Any defector deficiency concerning Seller’s title to the Scheduled Interests not assertedby Buyer on or prior to the Title Defect Notice Date shall be deemed waived byBuyer for purposes of any adjustment to the Purchase Price, the Parties shallproceed with Closing, Seller shall be under no obligation to correct thedefects, and Buyer shall assume the risks, liability and obligations associatedwith such defects.  However, such waivershall not effect or impair the warranties of Seller set forth in Section 8.5or the indemnity obligations of Seller as set forth in Article 17.

 

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**8.3.****         Title DefectAdjustment.**

 

(a)           In the event any TitleDefect, for which notice has been timely given as provided hereinabove, remainsuncured as of Closing, Seller may elect to (i) cure such Title Defect byindemnifying Buyer against any damages, claims or expenses that may arise outof such Title Defect, subject to the provisions of Section 8.3(b) below,with no reduction in the Purchase Price; or (ii) reduce the Purchase Priceby an amount equal to the Defect Value as determined pursuant to Section 8.4,to the extent that each individual Title Defect exceeds a Ten Thousand AndNo/100 dollar ($10,000.00) threshold, and the sum of all individual TitleDefects in excess of each threshold amount exceeds Forty Five Thousand AndNo/100 dollars ($45,000.00) (the “**Title Defect Deductible**”)and the Aggregate Defect Basket described in Section 7.4.  Should Seller elect either alternative “(i)”(indemnity) or “(ii)” (price reduction) in this Section 8.3(a),those Assets affected by the Title Defect shall be transferred to Buyer atClosing.

 

(b)           The followingprovisions shall apply to an election by Seller under the second sentence of Section 8.3(a) tocure a Title Defect by indemnifying Buyer with regard to such Title Defect:

 

(1)           Seller’s indemnityshall be limited to a period of two (2) years from the Effective Time.

 

(2)           In no event shall Seller’sindemnity exceed the amount of the Defect Value as determined under Section 8.4hereof.

 

(3)           Seller’s indemnityshall be freely transferable by Buyer to its successors and assigns of theAssets affected by such Title Defect, including without limitation, any lenderto Buyer and any purchaser of such Assets, whether directly from Buyer orthrough any foreclosure proceeding; and

 

(4)           If the Defect Value, asdetermined under Section 8.4 hereof, individually or in theaggregate, for one or more Title Defects to be covered by the Seller’sindemnity exceeds Seven Hundred Fifty Thousand and No/100 dollars ($750,000.00)(after application of the appropriate deductible(s) and withoutapplication of the Aggregate Defect Basket provided for in Section 7.4),Seller shall have no right under to indemnify Buyer with regard to such TitleDefects without Buyer’s consent.

 

(c)           In the event anyadjustment to the Purchase Price is made due to a Title Defect raised by Buyer,the Parties shall proceed with Closing, Seller shall be under no obligation tocorrect such defect, and such defect shall become an Assumed Obligation ofBuyer.

 

**8.4.****         Environmental Defectand Title Defect Values.**

 

Upon timelydelivery of notice of an Environmental Defect and/or a Title Defect, Buyer and Sellershall use their best efforts to agree on the validity and value of the claimfor

 

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the purpose ofmaking any adjustment to the Purchase Price based on the provisions herein (**“Defect Value”**). Notwithstanding anything to the contrary set forth herein, the DefectValue and any related adjustment to the Purchase Price shall in no event exceedthe Allocated Value of the affected Scheduled Interest.  In determining the Defect Value of anEnvironmental Defect or a Title Defect, it is the intent of the Parties toinclude, to the extent possible, only that portion of the Scheduled Interests,whether an undivided interest, separate interest or otherwise, materially andadversely affected by the defect.  The followingguidelines shall be followed by the Parties in establishing the Defect Value ofany Environmental Defect or Title Defect for the purpose of adjusting thePurchase Price if the validity of the claim is agreed to by the Parties andproper notice has been timely given, subject to (i) application of theappropriate deductibles as set forth in this Agreement for EnvironmentalDefects and Title Defects, and (ii) application of the Aggregate DefectBasket requirement as set forth in Section 7.4 for EnvironmentalDefects and Title Defects:

 

(a)           If the Title Defect isbased on a difference in net revenue interest or expense interest from thatshown on Exhibit “C” for the affected Scheduled Interest, then thePurchase Price shall be proportionately reduced or increased as the case maybe.

 

(b)           If the EnvironmentalDefect or Title Defect is liquidated in amount (for example, but not limitedto, a lien, encumbrance, charge or penalty), then the adjustment to thePurchase Price shall be the lesser of (1) the sum necessary to be paid tothe obligee to remove the defect from the Scheduled Interest, or (2) thedecrease in the fair market value (determined as set forth below) of theScheduled Interest as a result of the defect.

 

(c)           If the EnvironmentalDefect or Title Defect represents an obligation or burden upon the affectedScheduled Interest for which the economic detriment is not liquidated but canbe estimated with reasonable certainty as agreed to by the Parties, theadjustment to the Purchase Price shall be the sum necessary to compensate Buyerat Closing for the adverse economic effect which the Environmental Defect orTitle Defect will have on the affected Scheduled Interest.  This sum shall be the lesser of the cost of remediatingthe defect, or the decrease in the fair market value (determined as set forthbelow) of the Scheduled Interest as a result of the defect.  The fair market value determination shall bemade by the Parties in good faith taking into account all relevant factors,including, but not limited to, the following:

 

(1)           the Allocated Value ofthe Scheduled Interest affected by the Environmental or Title Defect;

 

(2)           the productive statusof the affected Scheduled Interest (i.e., proved developed producing, etc.) andthe net present value of the future income expected to be produced therefrom;

 

(3)           if the Title Defectrepresents only a possibility of title failure, the probability that suchfailure will occur; and

 

(4)           the economic effect ofthe Environmental Defect or Title Defect.

 

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(d)           If the Defect Valuecannot be determined using the above guidelines, and if the Parties cannototherwise agree on the amount of an adjustment to the Purchase Price, or if thevalidity of the claim as to an Environmental Defect or Title Defect cannot beagreed upon, then the Closing shall include the Asset(s) affectedthereby.  If the validity of the claim isin dispute, there shall be no adjustment to the Purchase Price at Closing.  If the Defect Value of the claim is indispute, the Purchase Price at Closing shall be adjusted by Seller’s good faithestimate of the Defect Value.  In eithercase, Buyer shall have the right, exercisable within ninety (90) days after theClosing Date, to refer the disputed matter to arbitration in accordance with Section 18.2.  Subject to the terms of Section 18.2,the decision of the arbitrator regarding any dispute as to the validity orDefect Value of an Environmental Defect or a Title Defect Dispute shall befinal as between the Parties, provided in no event shall the Defect Value ofthe disputed Environmental Defect or Title Defect exceed the Allocated Value ofthe affected Scheduled Interest.

 

**8.5.****         Title Warranty.**

 

**SELLERSHALL CONVEY SELLER’S INTERESTS IN AND TO THE ASSETS TO BUYER AS PROVIDED INTHE FORM OF ASSIGNMENT, CONVEYANCE AND BILL OF SALE ATTACHED AS EXHIBIT“D” HERETO (THE “CONVEYANCE”). THE CONVEYANCE SHALL BE MADE WITHOUT WARRANTY OF TITLE, EITHER EXPRESS,IMPLIED, STATUTORY OR OTHERWISE, AND WITHOUT RECOURSE, EVEN AS TO THE RETURN OFTHE PURCHASE PRICE OR OTHER CONSIDERATION, EXCEPT THAT, SUBJECT TO THEPERMITTED ENCUMBRANCES, SELLER SHALL WARRANT TITLE TO THE ASSETS AGAINST ALLCLAIMS, LIENS, BURDENS AND ENCUMBRANCES ARISING BY, THROUGH OR UNDER SELLER,BUT NOT OTHERWISE AND NOT WITH RESPECT TO ANY IMPAIRMENT OR FAILURE OF TITLERELATED TO ANY LACK OF PRODUCTION IN PAYING QUANTITIES.  THE CONVEYANCE SHALL BE MADE WITH FULLSUBSTITUTION AND SUBROGATION TO BUYER IN AND TO ALL COVENANTS AND WARRANTIES BYOTHERS HERETOFORE GIVEN OR MADE TO SELLER WITH RESPECT TO THE ASSETS.**

** **

**THEPARTIES AGREE THAT THE EXISTENCE OF ANY SUCH IMBALANCES SHALL NOT BE DEEMED ATITLE DEFECT.**

 

**ARTICLE9. - DISCLAIMERS**

 

**9.1.****         Disclaimer —Representations and Warranties.  Buyer acknowledges andagrees that, except as otherwise expressly provided in Article 4,neither Seller nor Seller’s parent makes any representation or warranty,express, statutory, implied or otherwise with respect to the Company and theAssets.  Except as otherwise expresslyprovided in Article 4, Seller, for itself and its Parent, herebyexpressly disclaims any and all representations and warranties associated withthe Company, or the Assets express, statutory, implied or otherwise, includingany representation or warranty**

 

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**regarding:  (a) title(except as provided in Section 8.5, (b) any costs, expenses,revenues, receipts, accounts receivable, or accounts payable, (c) anycontractual, economic or financial information and data associated with theCompany, or the Assets, (d) the continued financial viability orproductivity of the Company or the Assets or transportability of product, (e) theenvironmental or physical condition of the Assets, (f) any federal, state,local or tribal income or other Tax consequences associated with the Companyand the Assets, (g) the absence of patent or latent defects, (h) thestate of repair of the Assets, (i) merchantability or conformity tomodels, (j) any rights of any member of Buyer Group under appropriate Lawsto claim diminution of consideration or return of the purchase price, (k) freedomfrom patents, copyright or trademark infringement, (l) fitness for aparticular purpose, and (m)  production rates, recompletion opportunities,decline rates, gas balancing information or the quality, quantity or volume ofthe reserves of Hydrocarbons, if any, attributable to the Assets.**

 

**9.2.****         Disclaimer– Statements and Information.  Seller expressly disclaimsany and all representations and warranties, except as otherwise expresslyprovided in Article 4, associated with the quality, accuracy,completeness or materiality of the information, data and materials furnished(whether electronically, orally, by video, in writing or any other medium, bycompact disk, in any data room, or otherwise) at any time to Buyer Groupassociated with transactions contemplated by this Agreement, including,information, data or materials regarding: (a) title to the Assets, (b) costs, expenses, revenues,receipts, accounts receivable or accounts payable associated with the Companyand the Assets, (c) contractual, economic or financial informationassociated with the Company, the Assets , (d) the continued financialviability or productivity of the Company or the Assets, or transportability ofproduct, (e) the environmental or physical condition of the Assets, (f) federal,state, local or tribal income or other Tax consequences associated with theCompany, the Assets, (g) the absence of patent or latent defects, (h) thestate of repair of the Assets, (i) any warranty regarding merchantabilityor conformity to models, (j) any rights of any member of Buyer Group underappropriate Laws to claim diminution of consideration or return of the purchaseprice, (k) any warranty of freedom from patent, copyright or trademarkinfringement, (l) warranties existing under applicable Law now orhereafter in effect, (m) any warranty regarding fitness for a particularpurpose and (n) production rates, recompletion opportunities, declinerates, gas balancing information or the quality, quantity or volume of thereserves of Hydrocarbons, if any, attributable to the Assets.**

 

**ARTICLE10. - PREFERENTIAL PURCHASE RIGHTS**

**ANDCONSENTS OF THIRD PARTIES**

 

**10.1.****       Actions and Consents.**

 

(a)           Seller and Buyer agreethat each shall use all reasonable efforts to take or cause to be taken allsuch action as may be necessary to consummate and make effective thetransactions provided in this Agreement and to assure that it will not be underany material corporate, legal, or contractual restriction that could prohibitor delay the timely consummation of such transaction.

 

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(b)           Seller shall notify allholders of (i) preferential rights to purchase the Assets (**“Preferential Purchase Rights”**), (ii) rights ofconsent to the assignment, or (iii) rights of approval to the assignmentof the Assets, and of such terms and conditions of this Agreement to which theholders of such rights are entitled. Seller shall promptly notify Buyer if any Preferential Purchase Rightsare exercised, any consents or approvals denied, or if the requisite period haselapsed without said rights having been exercised or consents or approvalshaving been received.  If prior toClosing, any such Preferential Purchase Rights are timely and properlyexercised, or Seller is unable to obtain a necessary consent or approval priorto Closing, the interest or part thereof so affected shall be eliminated fromthe Assets and the Purchase Price reduced by the portion of the Purchase Priceallocated to such interest or part thereof as provided in Exhibit “C.”  If any additional Preferential PurchaseRights are discovered after Closing, or if a third party Preferential PurchaseRights holder alleges improper notice, then Buyer agrees to cooperate withSeller in giving effect to any such valid third party Preferential PurchaseRights.  In the event any such validthird party preferential purchase rights are validly exercised after Closing,Buyer’s sole remedy against Seller shall be return by Seller to Buyer of thatportion of the Purchase Price allocated under Exhibit “C” to theportion of the assets on which such rights are exercised and lost by Buyer tosuch third party.  The Parties agree thatthe Allocated Values for properties subject to Preferential Purchase Rightsshall be the sole responsibility of Buyer, and Buyer agrees to indemnify andhold Seller harmless from all liability and claims related to thereasonableness of such values.

 

(c)           With respect to anyportion of the Assets for which a Preferential Purchase Right has not beenasserted prior to Closing or a consent or other approval to assign has not beengranted (other than Permitted Encumbrances) and for which the time for electionto exercise such Preferential Purchase Right or to grant such consent has notexpired, Closing with respect to the portion of the Assets subject to suchoutstanding obligations will be deferred (the **“ThirdParty Interests”**). Closing with respect to all other Assets willproceed as provided in this Agreement, but the Base Purchase Price delivered toSeller at Closing will be reduced by the Allocated Value of the Third PartyInterests.  In the event that withinninety (90) days after Closing any such Preferential Purchase Right is waivedor consent or approval is obtained or the time for election to purchase or todeliver a consent or approval passes (such that under the applicable documents,Seller may sell the affected Third Party Interest to Buyer), then the Closingwith respect to the applicable portion of the Third Party Interests willproceed promptly. If such waivers, consents or approvals as are necessary arenot received by Seller within the applicable ninety (90) day period, Sellershall retain such Third Party Interests and the Parties shall have no furtherobligation to each other with respect thereto.

 

**ARTICLE11. - COVENANTS**

 

**11.1.****       Conduct of Operations.**

 

(a)           From and after the dateof execution of this Agreement and until the Closing, and subject to Section 11.2and the constraints of applicable operating and other agreements,

 

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Seller shalloperate, manage, and administer or cause the operation, management andadministration of the Assets as a reasonable and prudent operator and in a goodand workmanlike manner consistent with its past practices, and shall carry onits business with respect to the Assets in substantially the same manner asbefore execution of this Agreement. Prior to Closing, Seller shall use all reasonable efforts to preserve infull force and effect all Leases, operating agreements, easements,rights-of-way, permits, licenses, and agreements which relate to the Assets inwhich Seller owns an interest, and shall perform all obligations of Seller inor under all such agreements relating to the Assets; provided, however, Buyer’ssole remedy for Seller’s breach of its obligations under this Section 11.1(a) shallbe limited to the amount of that portion of the Purchase Price allocated in Exhibit “C”to that portion of the Assets affected by such breach.  Seller shall, except for emergency actiontaken in the face of serious risk to life, property, or the environment (1) submitto Buyer, for prior written approval, all requests for operating or capitalexpenditures and all proposed contracts and agreements relating to the Assetswhich involve individual commitments of more than twenty-five thousand dollars($25,000.00); (2) consult with, inform, and advise Buyer regarding allmaterial matters concerning the operation, management, and administration ofthe Assets; (3) obtain Buyer’s written approval prior to voting under anyoperating, unit, joint venture, partnership or similar agreement; and (4) notapprove or elect to go nonconsent as to any proposed well or plug and abandonor agree to plug and abandon any Well without Buyer’s prior writtenapproval.  On any matter requiring Buyer’sapproval under this Section 11.1(a), Buyer shall respond withinfive (5) days to Seller’s request for approval, and failure of Buyer torespond to Seller’s request for approval within such time shall release Sellerfrom the obligation to obtain Buyer’s approval before proceeding on suchmatter.  With respect to emergencyactions taken by Seller in the face of serious risk to life, property, or theenvironment, without prior approval of Buyer pursuant to the provisions above,Seller will advise Buyer of its actions as promptly as reasonably possible andconsult with Buyer as to any further related actions.

 

(b)           Seller shall promptlynotify Buyer of any suit, lessor demand action, or other proceeding before anycourt, arbitrator, or governmental agency and any cause of action which relatesto the Assets or which might result in impairment or loss of Seller’s interestin any portion of the Assets or which might hinder or impede the operation ofthe Assets.

 

**11.2.****       Limitations on Seller’sCovenants Pending Closing.**

 

To the extentSeller is not the operator of any of the Assets, the obligations of Seller in Section 11.1concerning operations or activities which normally or pursuant to existingcontracts are carried out or performed by the operator, shall be construed torequire only that Seller use all reasonable efforts (without being obligated toincur any expense or institute any cause of action) to cause the operator ofsuch Assets to take such actions or render such performance as would areasonable prudent operator and within the constraints of the applicableoperating agreements and other applicable agreements.

 

**11.3.****       Conduct of CompanyBusiness.**

 

Except as set forth in Schedule 4.23,as provided in the Material Contracts, required by Law or Order, as otherwisewould not have a Material Adverse Effect or as specifically

 

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contemplated by this Agreement, from the date of this Agreement untilthe Closing Date, Seller shall cause the Company to, unless Buyer shallotherwise consent in writing (which consent shall not be unreasonably withheldor delayed):

 

(i)            operate only in the usual, regular and ordinarymanner consistent with past practice, and use its commercially reasonableefforts to preserve its present business operations and organization;

 

(ii)           maintain books, accounts and records in the usual,regular and ordinary manner, on a basis consistent with prior years, and complyin all material respects with all contractual and other obligations;

 

(iii)          comply in all material respects with all applicableLaws and Orders to which it is subject;

 

(iv)          not acquire by merger, consolidation, purchase ofstock or assets, or otherwise, any Person;

 

(v)           except in the ordinary course of business underexisting lines of credit, not create, incur or assume any debt for borrowedmoney;

 

(vi)          not make any material election with respect to Taxes;

 

(vii)         not amend or modify its organizational documents;

 

(viii)        not incur any capital expenditures in excess of TenThousand Dollars ($10,000) except in case of emergency or as may otherwise berequired to prevent injury or damage to persons, property or the environment;and

 

(ix)           not agree to take any action or actions prohibited byany of the foregoing clauses (i) through (ix).

 

**11.4.****       Return of Information.**  In the eventof termination of this Agreement, Buyer shall promptly, and in any event,within ten (10) Days of such termination, return or cause to be returnedto Seller all documents and other materials obtained from or on behalf ofSeller in connection with the transactions contemplated hereby and shall keepconfidential any such information, all in accordance with the provisions of Section 6.3.

 

**ARTICLE12. - CLOSING CONDITIONS**

 

**12.1.****       Seller’s ClosingConditions.**

 

The obligations ofSeller under this Agreement are subject, at the option of Seller, to thesatisfaction, at or prior to the Closing, of the following conditions:

 

(a)           All representations andwarranties of Buyer contained in this Agreement shall be true, accurate, andnot misleading in all material respects at and as of the Closing as if

 

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suchrepresentations and warranties were made at and as of the Closing, and Buyershall have performed, satisfied and complied with all agreements and covenants requiredby this Agreement to be performed, satisfied and complied with by Buyer at orprior to the Closing;

 

(b)           The execution,delivery, and performance of this Agreement and the transactions contemplatedthereby have been duly and validly authorized by all necessary action,corporate, partnership or otherwise, on the part of Buyer, and an officer’scertificate of Buyer confirming the same;

 

(c)           All necessary consentsof and filings with any state or federal governmental authority or agencyrelating to the consummation of the transactions contemplated by this Agreementshall have been obtained, accomplished or waived, except to the extent thatsuch consents and filings are normally obtained, accomplished or waived afterClosing; and

 

(d)           As of the Closing Date,no suit, action or other proceeding (excluding any such matter initiated bySeller) shall be pending or threatened before any court or governmental agencyseeking to restrain Seller or prohibit the Closing or seeking damages againstSeller as a result of the consummation of this Agreement.

 

**12.2.****       Buyer’s ClosingConditions.**

 

The obligations ofBuyer under this Agreement are subject, at the option of Buyer, to thesatisfaction, at or prior to the Closing, of the following conditions:

 

(a)           All representations andwarranties of Seller contained in this Agreement shall be true, accurate, andnot misleading in all material respects at and as of the Closing as if suchrepresentations and warranties were made at and as of the Closing, and Sellershall have performed, satisfied and complied with all agreements and covenantsrequired by this Agreement to be performed, satisfied and complied with bySeller at or prior to the Closing;

 

(b)           The execution,delivery, and performance of this Agreement and the transactions contemplatedthereby have been duly and validly authorized by all necessary action,corporate, partnership or otherwise, on the part of Seller, and an officer’scertificate of Seller confirming the same;

 

(c)           All necessary consentsof and filings with any state or federal governmental authority or agencyrelating to the consummation of the transactions contemplated by this Agreementshall have been obtained, accomplished or waived, except to the extent thatsuch consents and filings are normally obtained, accomplished or waived afterClosing; and

 

(d)           As of the Closing Date,no suit, action or other proceeding (excluding any such matter initiated byBuyer) shall be pending or threatened before any court or governmental agencyseeking to restrain Buyer or prohibit the Closing or seeking damages againstBuyer as a result of the consummation of this Agreement.

 

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**ARTICLE13. - CLOSING**

 

**13.1.****       Closing.**

 

The closing ofthis transaction (the **“Closing”**)shall be held at the offices of Adams and Reese, LLP located at 1221 McKinney, Suite 4400,Houston, Texas  77010 on March 3,2008 at 10:00 a.m. Central Standard Time, or at such earlier date or placeas the Parties may agree in writing (herein called **“ClosingDate”**).  Time is of theessence and the Closing Date shall not be extended unless by written agreementof the Parties.  Any extension of theClosing Date shall also extend the Effective Date to March 1, 2008,without any corresponding change in the Purchase Price.  On or before five (5) business daysprior to Closing, Buyer and Seller shall use their best efforts to provide eachother copies of all closing documents.

 

**13.2.****       Seller’s ClosingObligations.**

 

At Closing, exceptto the extent comprising the Excluded Assets, Seller shall deliver to Buyer thefollowing:

 

(a)           the Assignment,Conveyance and Bill of Sale substantially in the form attached as Exhibit “D,”and such other documents as may be reasonably necessary to convey all of Seller’sinterest in the Assets (except the Shares) to Buyer in accordance with the provisions hereof, executed by Seller;

 

(b)           two (2) non-foreignaffidavit executed by an authorized officer of Seller in the form attached as Exhibit “J”;

 

(c)           copies of allthird-party waivers, consents, approvals, permits and actions obtained;

 

(d)           exclusive possession ofthe Assets;

 

(e)           letters-in-lieu oftransfer orders in form acceptable to Seller and Buyer;

 

(f)            resignations of theboard of directors and officers of the Company;

 

(g)           two (2) originalsof the Certificate executed by an officer of the Seller;

 

(h)           two (2) originalsof resolutions of Seller’s authorizing bodies authorizing the transactionscontemplated by this Agreement (including designation of the Persons authorizedto execute this Agreement on behalf of Seller and the Operative Documents towhich it is a party); and

 

(i)            Stock Power and stockcertificate representing all outstanding and issued capital stock of theCompany.

 

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**13.3.****       Buyer’s ClosingObligations.**

 

At Closing, Buyershall deliver to Seller the following:

 

(a)           the Purchase Price, asadjusted, by wire transfer in immediately available funds to a bank accountdesignated, in writing, by Seller;

 

(b)           the Assignment,Conveyance and Bill of Sale substantially in the form attached as Exhibit “D”executed by Buyer;

 

(c)           two (2) originals of the Certificate executed by an authorized officeror an attorney-in-fact of Buyer; and

 

(d)           two (2) originals of resolutions of a Secretary’scertificate of Buyer certifying resolutions of Buyer’s Board of Directorsauthorizing the transactions contemplated by this Agreement (includingdesignation of the Persons authorized to execute this Agreement on behalf ofBuyer)

 

**13.4.****       Joint Closing Obligations.**

 

Both Parties atClosing shall execute a Settlement Statement evidencing the amount actuallywire transferred and all adjustments to the Purchase Price taken into accountat Closing.  All events of Closing shalleach be deemed to have occurred simultaneously with the other, regardless ofwhen actually occurring and each shall be a condition precedent to the other.

 

**ARTICLE14. –LIMITATIONS ON WARRANTIES**

**ANDREMEDIES/DTPA-UTPCPL WAIVER**

 

**14.1.****       Limitations onWarranties and Remedies.**

 

**THEEXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENTARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES,EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANYREPRESENTATION OR WARRANTY WITH RESPECT TO THE QUALITY, QUANTITY OR VOLUME OFTHE RESERVES, IF ANY, OF OIL, GAS OR OTHER HYDROCARBONS IN OR UNDER THE LEASES,OR THE ENVIRONMENTAL CONDITION OF THE ASSETS. THE ITEMS OF PERSONAL PROPERTY, EQUIPMENT, IMPROVEMENTS, FIXTURES ANDAPPURTENANCES CONVEYED AS PART OF THE ASSETS ARE SOLD HEREUNDER “AS IS,WHERE IS, AND WITH ALL FAULTS” AND NO WARRANTIES OR REPRESENTATIONS OF ANY KINDOR CHARACTER, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY,MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONDITION, ARE GIVEN BY ORON BEHALF OF SELLER.  IT IS UNDERSTOODAND AGREED THAT PRIOR TO CLOSING BUYER SHALL**

 

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**HAVEINSPECTED THE ASSETS FOR ALL PURPOSES AND HAS SATISFIED ITSELF AS TO THEIRPHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, AND THATBUYER ACCEPTS SAME IN ITS “AS IS, WHERE IS AND WITH ALL FAULTS” CONDITION.  BUYER HEREBY WAIVES ALL WARRANTIES, EXPRESSOR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OFMERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONDITION, OR CONFORMITYTO SAMPLES.**

 

**BUYEREXPRESSLY WAIVES THE WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTEEAGAINST HIDDEN OR LATENT REDHIBITORY VICES UNDER LOUISIANA LAW, INCLUDINGLOUISIANA CIVIL CODE ARTICLES 2520 THROUGH 2548, AND THE WARRANTY IMPOSED BYLOUISIANA CIVIL CODE ARTICLE 2475; BUYER WAIVES ALL RIGHTS IN REDHIBITIONPURSUANT TO LOUISIANA CIVIL CODE ARTICLE 2520, ET SEQ; BUYER ACKNOWLEDGES THATTHIS EXPRESS WAIVER IS A MATERIAL AND INTEGRAL PART OF THIS SALE AND THECONSIDERATION THEREOF; AND BUYER ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHTTO THE ATTENTION OF BUYER AND EXPLAINED IN DETAIL AND THAT BUYER HASVOLUNTARILY AND KNOWINGLY CONSENTED TO THIS WAIVER OF WARRANTY OF FITNESSAND/OR WARRANTY AGAINST REDHIBITORY VICES AND DEFECTS FOR THE ABOVE DESCRIBEDPROPERTY.**

 

**14.2.****       Waiver of Trade Practices Acts.**

 

(a)           It is the intention of the parties that Buyer’s rights and remedieswith respect to this transaction and with respect to all acts or practices ofSeller, past, present or future, in connection with this transaction shall begoverned by legal principles other than the Texas Deceptive Trade Practices—ConsumerProtection Act, Tex. Bus. & Com. Code Ann. § 17.41 *et seq*. (the**“DTPA”**)or the Louisiana unfair trade practices and consumer protection law, La. R.S.51:1402, *et seq*. (the **“UTPCPL”**).  Assuch, Buyer hereby waives the applicability of the DTPA and the UTPCPL to thistransaction and any and all duties, rights or remedies that might be imposed bythe DTPA and/or the UTPCPL, whether such duties, rights and remedies areapplied directly by the DTPA or the UTPCPL itself or indirectly in connectionwith other statutes; *provided, however*,Buyer does not waive § 17.555 of the DTPA. Buyer acknowledges, represents and warrants that it is purchasing thegoods and/or services covered by this Agreement for commercial or business use;that it has knowledge and experience in financial and business matters thatenable it to evaluate the merits and risks of a transaction such as this; thatit is not in a significantly disparate bargaining position with Seller, andthat Buyer has been represented by legal counsel in the negotiation of thisAgreement and the terms of this particular provision.

 

(b)           Buyer expresslyrecognizes that the price for which Seller has agreed to perform itsobligations under this Agreement has been predicated upon the inapplicabilityof the DTPA and the UTPCPL and this waiver of the DTPA and the UTPCPL.  Buyer further recognizes that

 

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Seller, indetermining to proceed with the entering into of this Agreement, has expresslyrelied on this waiver and the inapplicability of the DTPA and the UTPCPL.

 

**ARTICLE 15. - CASUALTY LOSS AND CONDEMNATION**

 

If, prior to theClosing, all or any portion of the Scheduled Interests is destroyed by fire orother casualty or if any portion of the Assets shall be taken by condemnationor under the right of eminent domain (all of which are herein called **“Casualty Loss”** and limited to property damage ortaking only), Buyer and Seller must agree prior to Closing either (i) todelete that portion of the Scheduled Interests which is subject to the CasualtyLoss from the Assets, and the Purchase Price shall be reduced by the valueallocated to the deleted interest as set out in Exhibit “C,” or (ii) forBuyer to proceed with the purchase of such Scheduled Interests, notwithstandingany such destruction or taking (without reduction of the Purchase Price) inwhich case Seller shall pay, at the Closing, to Buyer all sums paid to Sellerby third parties by reason of the destruction or taking of such ScheduledInterests and shall assign, transfer and set over unto Buyer all insuranceproceeds received by Seller as well as all of the right, title and interest ofSeller in and to any claims, causes of action, unpaid proceeds or otherpayments from third parties arising out of such destruction or taking.  If the Allocated Value of that portion of theScheduled Interests affected by the Casualty Loss as shown on Exhibit “C”exceeds Seven Hundred Fifty Thousand and No/100 dollars ($750,000.00), Buyerand Seller shall each have the right to terminate this Agreement upon writtennotification to the other, the transaction shall not close and thereafterneither Buyer nor Seller shall have any liability or further obligations to theother hereunder.  In the event of suchtermination, Seller shall return the Escrow Deposit to Buyer, without interest.  Prior to Closing, Seller shall not voluntarilycompromise, settle or adjust any amounts payable by reason of any Casualty Losswithout first obtaining the written consent of Buyer.

 

**ARTICLE16. - REMEDIES**

 

**16.1.****       Seller’s Remedies.**

 

If Seller andBuyer close the transaction contemplated by this Agreement on or before theClosing Date, as it may be extended in accordance herewith, the Escrow Depositand any accrued interest will be applied to the Purchase Price and the amountdue from Buyer at Closing will be reduced by the amount of the Escrow Deposit.  If the transaction contemplated by thisAgreement does not close on or before the Closing Date, as it may be extendedin accordance herewith, because (a) Seller is unable, unwilling or refusesto close, or because (b) a condition to Buyer’s obligation to close, asset forth in Section 12.2, is not satisfied or waived, or because (c) Buyerterminates this Agreement under the provisions of Article_15, or aselsewhere provided for and allowed in this Agreement, unless Buyer chooses theremedy of specific performance, if applicable, as set forth in Section 16.2,Seller will provide Buyer with written authorization to disburse the EscrowDeposit, with accrued interest, within five (5) days following the laterof the Closing Date or any extension thereof in accordance with the provisionsof this Agreement.  If for any reasonother than those set forth in subparagraphs (a), (b) and (c) above,Buyer fails, refuses or is unable to close the transaction contemplated by thisAgreement on or before the Closing Date, as it may be extended in accordanceherewith, Seller shall retain the Escrow Deposit together with any

 

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accrued interestas a liquidated damage and not as a penalty, and terminate this Agreement, asSeller’s sole and exclusive remedies for such default, all other remedies(except as expressly retained in Section 16.3) being expresslywaived by Seller.

 

**16.2.****       Buyer’s Remedies.**

 

Upon failure ofSeller to comply herewith by the Closing Date, as it may be extended inaccordance herewith, Buyer, at its sole option and in addition to any otherremedies it may have at law or equity, may (i) enforce specificperformance, or (ii) terminate this Agreement.  In the event Buyer elects to terminate thisAgreement as set forth above, Seller shall immediately return the EscrowDeposit to Buyer, without interest.

 

**16.3.****       Other Remedies.**

 

Notwithstandingthe foregoing, termination of this Agreement shall not prejudice or impairBuyer’s obligations under Section 6.3 (and the ConfidentialityAgreement referenced therein).  Theprevailing Party in any legal proceeding brought under or to enforce thisAgreement shall be additionally entitled to recover court costs and reasonableattorneys’ fees from the non-prevailing Party. Notwithstanding the provisions of Sections 16.1 and 16.2, theremedy of mediation and arbitration provided in Section 8.4(d) shallbe the exclusive remedy for the matters provided for in such Section.

 

**16.4.****       Effect of Termination.**

 

In the event oftermination of this Agreement under this Article 16, thetransaction shall not close and neither Buyer nor Seller shall have any furtherobligations, remedies, liabilities, rights or duties to the other hereunder,except as expressly provided herein.

 

**16.5.****       Limitationson Damages.**

 

Notwithstandingany other provision contained elsewhere in this Agreement to the contrary, theParties acknowledge that this Agreement does not authorize one Party to sue foror collect from the other Party its own punitive damages, or its ownconsequential or indirect damages in connection with this Agreement and thetransactions contemplated hereby and each Party expressly waives for itself andon behalf of its affiliates, any and all Claims it may have against the otherParty for its own such damages in connection with this Agreement and thetransactions contemplated hereby.

 

**ARTICLE17. - ASSUMPTION AND INDEMNITY**

 

**17.1.****       Assumed Obligations;Pre-Closing Liabilities.**

 

Upon and afterClosing, Buyer shall own the Assets, together with all the rights, duties,obligations, and liabilities accruing after Closing, including the AssumedObligations and Buyer’s indemnity obligations hereunder.  Buyer agrees to assume and pay, perform,fulfill and discharge all Assumed Obligations and Buyer’s indemnityobligations.  Seller

 

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agrees to retainand pay, perform, fulfill and discharge all Retained Obligations, and Seller’sindemnity obligations.

 

**17.2.****       Buyer’s Indemnity.**

 

**BUYERAGREES TO INDEMNIFY, DEFEND AND HOLD SELLER, SELLER’S GROUP AND SELLER’SEMPLOYEES, OFFICERS AND DIRECTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,DEMANDS, LOSSES, DAMAGES, PUNITIVE DAMAGES, COSTS, EXPENSES, CAUSES OF ACTIONOR JUDGMENTS OF ANY KIND OR CHARACTER INCLUDING, WITHOUT LIMITATION, ANYINTEREST, PENALTY, REASONABLE ATTORNEYS’ FEES AND OTHER COSTS AND EXPENSESINCURRED IN CONNECTION THEREWITH OR THE DEFENSE THEREOF (COLLECTIVELY THE “*CLAIMS*”), WITH RESPECT TO ALLLIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIES ANDOBLIGATIONS CAUSED BY, RELATED TO, ATTRIBUTABLE TO, OR ARISING OUT OF THEASSUMED OBLIGATIONS.  THE DEFENSE ANDINDEMNITY OBLIGATIONS PROVIDED BY THIS SECTION SHALL APPLY REGARDLESS OFTHE SOLE OR PARTIAL OR COMPARATIVE OR CONCURRENT OR OTHER FAULT, NEGLIGENCE ORSTRICT, PRE-EXISTING OR OTHER LIABILITY ON THE PART OF SELLER.  ADDITIONALLY, THE DEFENSE AND INDEMNITYOBLIGATIONS PROVIDED BY THIS SECTION SHALL APPLY REGARDLESS OF THE NATUREOF THE OBLIGATIONS OF SELLER, BE THEY IN TORT, CONTRACT, QUASI-CONTRACT,STATUTORY, OR OTHERWISE.**

 

**17.3.****       Seller’s Indemnity.**

 

**SELLERAGREES TO INDEMNIFY, DEFEND AND HOLD BUYER AND BUYER’S EMPLOYEES, OFFICERS ANDDIRECTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS WITH RESPECT TO ALLLIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIES ANDOBLIGATIONS CAUSED BY, RELATED TO, ATTRIBUTABLE TO, OR ARISING OUT OF THERETAINED OBLIGATIONS.  THE DEFENSE ANDINDEMNITY OBLIGATIONS PROVIDED BY THIS SECTION SHALL APPLY REGARDLESS OFTHE SOLE OR PARTIAL OR COMPARATIVE OR CONCURRENT OR OTHER FAULT, NEGLIGENCE ORSTRICT, PRE-EXISTING OR OTHER LIABILITY ON THE PART OF BUYER.  ADDITIONALLY, THE DEFENSE AND INDEMNITYOBLIGATIONS PROVIDED BY THIS SECTION SHALL APPLY REGARDLESS OF THE NATUREOF THE OBLIGATIONS OF BUYER, BE THEY IN TORT, CONTRACT, QUASI-CONTRACT,STATUTORY, OR OTHERWISE.**

 

**17.4.****       Stipulation RegardingExpress Negligence And Fault.**

 

**THEPARTIES HERETO BOTH AGREE AND STIPULATE THAT THEY HAVE ACTUAL KNOWLEDGE OF ALLINDEMNITY PROVISIONS HEREIN, THAT THEY ARE FAMILIAR WITH THE EXPRESS NEGLIGENCETEST, THAT**

 

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**THISDEFENSE AND INDEMNIFICATION AGREEMENT COMPLIES WITH THE EXPRESS NEGLIGENCETEST, THAT THE PARTIES CLEARLY INTEND TO TRANSFER THE RISK OF LOSS FOR THEINDEMNITEE’S NEGLIGENCE, FAULT AND OTHER LIABILITIES AND OBLIGATIONS AS SETFORTH ABOVE TO BUYER, AND THAT THESE INDEMNIFICATION PROVISIONS ARECONSPICUOUS.**

 

**17.5.****       Broker or Finder’s Fee.**

 

Each Party herebyagrees to indemnify and hold the other harmless from and against any claim fora brokerage or finder’s fee or commission in connection with this Agreement orthe transactions contemplated by this Agreement to the extent such claim arisesfrom or is attributable to the actions of such indemnifying Party, including,without limitation, any and all losses, damages, punitive damages, attorneys’fees, costs and expenses of any kind or character arising out of or incurred inconnection with any such claim or defending against the same.

 

**17.6****        Litigation.****            **Seller shallretain responsibility and liability for the litigation and threatenedlitigation listed on Exhibit “F,” and the Claims thereunder, exceptas provided in this Section 17.6.

 

**17.7.****       Insurance, Taxes.**  The amount ofany Claims for which any party is entitled to indemnification under thisAgreement shall be reduced by any corresponding (a)  tax benefit createdor generated or (b)  insurance proceeds realized by such party if a claimwere properly pursued under the relevant insurance arrangements.

 

**17.8**.       **Waiver ofCertain Damages.**  Each of the Parties expressly waives and agrees notto, and to cause the members of the Buyer Group in the case of Buyer and themembers of the Seller Group in the case of Seller not to, seek indirect,consequential, punitive or exemplary damages or damages for lost profits of anykind with respect to any dispute arising under, related to, or in connectionwith this Agreement or breach hereof (except such damages that are payable to athird party with respect to a third party claim for which any Person is seekingindemnification hereunder).  The Partiesagree that no indemnified Person shall be entitled to any such damages underthis Agreement.

 

**17.9.****       Extentof Indemnification.**  **Without limiting or enlarging thescope of the indemnification, disclaimer and assumption obligations set forthin this Agreement, to the fullest extent permitted by Law, an indemnifiedPerson shall be entitled to indemnification hereunder in accordance with theterms hereof, regardless of whether the indemnifiable loss giving rise to anysuch indemnification obligation is the result of the sole, active, passive,concurrent or comparative negligence, strict liability or other legal fault orviolation of any Law of or by any such indemnified Person.  Buyer and Seller acknowledge that thisstatement complies with the express negligence rule and is conspicuous.**

 

**17.10.****     Disclaimer of Applicationof Anti-Indemnity Statutes.**  **The Parties acknowledge and agreethat the provisions of any anti-indemnity statute relating to**

 

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**oilfield services and associated activities shall not beapplicable to this Agreement or the transactions contemplated hereby.**

 

**17.11.****     Waiverof Right to Rescission.**  **Seller and Buyer acknowledge thatthe payment of money, as limited by the terms of this Agreement, shall beadequate compensation for breach of any representation, warranty, covenant oragreement contained herein or for any other claim arising in connection with orwith respect to the transactions contemplated in this Agreement.  As the payment of money shall be adequatecompensation, Buyer and Seller waive any right to rescind this Agreement or anyof the transactions contemplated hereby.**

 

**17.12.****     Indemnity Claims.**

 

From and afterInitial Closing, any demand for indemnity hereunder shall be made by writtennotice, together with a written description of any Claims asserted stating thenature and basis of such Claim and, if ascertainable, the amount thereof.  The Party upon whom notice is served shallhave a period of twenty (20) days after receipt of such notice within which torespond thereto or, in the case of an underlying demand which requires ashorter time for response, then within such shorter period as specified in suchnotice (the “**Notice Period**”).  If the Party upon whom notice is serveddenies liability or fails to provide the defense for any Claim, the other Partymay defend or compromise the Claim as it deems appropriate.  If the Party upon whom notice is servedaccepts liability and responsibility for the defense of any Claim, it shall sonotify the other Party as soon as is practicable prior to the expiration of theNotice Period and undertake the defense or compromise of such Claim withcounsel selected by the Party accepting such liability.  If the Party on whom notice is servedundertakes the defense or compromise of such Claim, the other Party shall beentitled, at its own expense, to participate in such defense.  No compromise or settlement of any Claimshall be made without reasonable notice to the other Party, and without theprior written approval of the other Party, which approval shall not beunreasonably withheld or delayed.  Nosuch approval shall be withheld if such compromise or settlement includes ageneral and complete release of the other Party, its successors, assigns,Affiliates and their respective Representatives in respect of the matter, withprejudice, and with no express or written admission of liability on the part ofthe other Party, its Affiliates and their respective Representatives, and iswithout cost or liability and has no constraints on the future conduct of itsor their respective businesses. Buyer and Seller acknowledge that theirobligations to indemnify, defend and hold the other Party and its Affiliatesharmless under this Agreement include obligations to pay the attorneys’ feesand court and arbitral costs incurred by the other Party and its Affiliates indefending said Claims, regardless of the merits of said Claims, where the Partyto whom notice is served hereunder denies liability or fails to provide thedefense for any said Claim.           Sellerand Buyer shall have the right at all times to participate, at their sole cost,in the preparation for any defense, hearing or trial related to the indemnitiesset forth in this Agreement, as well as the right to appear on their own behalfor to retain separate counsel to represent them at any such hearing or trial.

 

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**ARTICLE18. - MISCELLANEOUS**

 

**18.1.****       Receivables and otherExcluded Funds.**

 

Buyer shall beunder no obligation to collect on behalf of Seller any receivables or otherfunds included in the Excluded Assets above. With respect to receivables, Buyer shall be free to treat the interestsof any party with a delinquent receivable in any manner deemed appropriate byBuyer.

 

**18.2.****       Arbitration.**

 

Unless expressly provided otherwise in thisAgreement, any and all claims or causes of action arising out of or relating tothis Agreement must be resolved through the use of binding arbitration usingthree (3) arbitrators, in accordance with the Commercial Arbitration Rules ofthe AAA, as supplemented to the extent necessary to determine any proceduralappeal questions by the Federal Arbitration Act (Title 9 of the United StatesCode).  If there is any inconsistencybetween this Article and the Commercial Arbitration Rules or theFederal Arbitration Act, the terms of this Article shall control therights and obligations of the Parties. If there is more than one (1) Arbitrable Dispute that involves thesame facts and parties as the facts and parties with respect to which anarbitration has been initiated pursuant to this Agreement, such disputes shallbe consolidated into the first arbitration initiated pursuant to thisAgreement.  No other arbitration shall beconsolidated with any arbitration initiated pursuant to this Agreement withoutthe agreement of the Parties or parties thereto.  Arbitration may be initiated by a Party (“Claimant”)serving written notice on the other Party (“Respondent”) that the Claimant hasreferred the Arbitrable Dispute to binding arbitration.  Claimant’s notice initiating bindingarbitration must describe in reasonable detail the nature of the ArbitrableDispute and the facts and circumstances relating thereto and identify thearbitrator Claimant has appointed. Respondent shall respond to Claimant within thirty (30) Days afterreceipt of Claimant’s notice, identifying the arbitrator Respondent has appointed.  If Respondent fails for any reason to name anarbitrator within the thirty (30) Day period, Claimant shall name thearbitrator for Respondent’s account.  Thetwo (2) arbitrators so chosen shall select a third arbitrator (who musthave not less than seven (7) years experience as a lawyer in the energyindustry) within thirty (30) Days after the second arbitrator has beenappointed.  If the two arbitrators areunable to agree on a third arbitrator within thirty (30) Days from the date thesecond arbitrator has been appointed, then a third arbitrator shall be selectedby the AAA office in Houston, Texas, with due regard given to the selectioncriteria above and input from the Parties and other arbitrators.  The AAA shall select the third arbitrator notlater than ninety (90) Days from initiation of arbitration.  In the event AAA should fail to select thethird arbitrator within ninety (90) Days from initiation of arbitration, theneither Party may petition the Chief United States District Judge for theSouthern District of Texas to select the third arbitrator.  Due regard shall be given to the selectioncriteria above and input from the Parties and other arbitrators.  Claimant shall pay the compensation andexpenses of the arbitrator named by or for it, and Respondent shall pay thecompensation and expenses of the arbitrator named by or for it.  Claimant and Respondent shall each payone-half of the compensation and expenses of the third arbitrator.  All arbitrators must be neutral parties whohave never been officers, directors or employees of the Parties or any of theirAffiliates.  Unless expressly providedotherwise in this Agreement, the two (2)

 

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arbitrators named by the Parties must have not less than seven (7) yearsexperience in the energy industry, and must have a formal education or trainingin the area of dispute resolution.  Thehearing shall be conducted in Houston, Texas and commence within sixty (60)Days after the selection of the third arbitrator.  The Parties and the arbitrators shouldproceed diligently and in good faith in order that the award may be made aspromptly as possible.  The arbitratorsshall determine the Arbitrable Disputes of the Parties and render a final awardin accordance with the substantive Law of the State of Texas, excluding theconflicts provisions of such Law.  Thearbitrators shall render their decision on or before sixty (60) Days followingthe completion of the hearing.  Thearbitrator’s decision shall be in writing and set forth the reasons for theaward and shall include an award of costs to the prevailing party, includingwithout limitation reasonable attorneys’ fees and disbursements.  All statutes of limitations and defensesbased upon passage of time applicable to any Arbitrable Dispute (including anycounterclaim or setoff) shall be interrupted by the filing of the arbitrationand suspended while the arbitration is pending. The terms hereof shall not create or limit any obligations of a Party todefend, indemnify, or hold harmless another Party against court proceedings orother Claims.  In order to preventirreparable harm, the arbitrators shall have the power to grant temporary orpermanent injunctive or other equitable relief. A Party may, notwithstanding any other provision of this Agreement, seektemporary injunctive relief from any court of competent jurisdiction; providedthat the Party seeking such relief shall (if arbitration has not already beencommenced) simultaneously commence arbitration. Such court-ordered relief shall not continue more than ten (10) Daysafter the appointment of the arbitrators and in no event for longer than sixty(60) Days.  Except as provided in theFederal Arbitration Act, the decision of the arbitrators shall be binding onand non-appealable by the Parties.  EachParty agrees that any arbitration award against it may be enforced in any courtof competent jurisdiction and that any Party may authorize any such court toenter judgment on the arbitrators’ decisions. The arbitrators may not grant or award indirect, consequential, punitiveor exemplary damages or damages for lost profits.

 

**18.3.****       Public Announcements.**

 

The Parties heretoagree that prior to Closing, each may publicly disclose the principal terms ofthis Agreement following its execution, provided that prior to making anypublic announcement or statement with respect to the transaction contemplatedby this Agreement, the Party desiring to make such public announcement orstatement shall consult with the other Party hereto and exercise its bestefforts to (i) agree upon the text of a joint public announcement orstatement to be made by both of such Parties; or (ii) obtain writtenapproval of the other Party hereto to the text of a public announcement orstatement to be made solely by Seller or Buyer, as the case may be.  Nothing contained in this paragraph shall beconstrued to require either Party to obtain approval of the other Party heretoto disclose information with respect to the transaction contemplated by thisAgreement to any state or federal governmental authority or agency to theextent (i) required by applicable law or by any applicable rules,regulations or orders of any governmental authority or agency havingjurisdiction; or (ii) necessary to comply with disclosure requirements ofthe American Stock Exchange or other recognized exchange or over the counter,and applicable securities laws.

 

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**18.4.****       Filing and Recording ofAssignments, etc.**

 

Buyer shall besolely responsible for all filings and the prompt recording of assignments andother documents related to the transfer of the Assets as contemplated hereunderand for all fees connected therewith, and Buyer shall furnish certified copiesof all such filed and/or recorded documents to Seller.  Seller shall not be responsible for any lossto Buyer because of Buyer’s failure to file or record documents correctly orpromptly.  Buyer shall promptly file allappropriate forms, declarations or bonds with federal and state agenciesrelative to its assumption of operations and Seller shall cooperate with Buyerin connection with such filings.  Buyershall also comply with all notice provisions contained in the Leases or otherwiseapplicable to the transfer of the Assets.

 

**18.5.****       Further Assurances andRecords.**

 

(a)           After the Closing, eachof the Parties will execute, acknowledge and deliver to the other such furtherinstruments, and take such other action, as may be reasonably requested inorder to more effectively assure to said Party all of the respectiveproperties, rights, titles, interests, estates, and privileges intended to beassigned, delivered or inuring to the benefit of such Party in consummation ofthe transactions contemplated hereby. Without limiting the foregoing, in the event Exhibits “A-1”through “A-5” incorrectly or insufficiently describe or reference aninterest intended to be conveyed hereby, Seller agrees to, within twenty (20)days of Seller’s receipt of Buyer’s written request, together with supportingdocumentation satisfactory to Seller, correct such Exhibit and/or executean amended assignment or other appropriate instruments necessary to transferthe property or interest intended to be conveyed hereby to Buyer.

 

(b)           Buyer agrees to maintainthe files and records of Seller that are acquired pursuant to this Agreementfor seven (7) years after Closing. Buyer shall provide Seller and its representatives reasonable access toand the right to copy such files and records for the purposes of (i) preparingand delivering any accounting provided for under this Agreement and adjusting,prorating and settling the charges and credits provided for in this Agreement; (ii) complyingwith any law, rule or regulation affecting Seller’s interest in the Assetsprior to the Closing Date; (iii) preparing any audit of the books andrecords of any third party relating to Seller’s interest in the Assets prior tothe Closing Date, or responding to any audit prepared by such third parties; (iv) preparingtax returns; (v) responding to or disputing any tax audit; or (vi) asserting,defending or otherwise dealing with any claim or dispute under this Agreementor as to the Assets.

 

(c)           Buyer agrees thatwithin thirty (30) days after Closing or within thirty (30) days afteroperations are actually transferred, whichever is later, it will remove orcause to be removed its signs and the names and marks used by Seller and allvariations and derivatives thereof and logos relating thereto from the Assetsand will not thereafter make any use whatsoever of such names, marks and logos.

 

(d)           To the extent notobtained or satisfied as of Closing, Seller agrees to continue to use allreasonable efforts, but without any obligation to incur any cost or expense in

 

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connectiontherewith, and to cooperate with Buyer’s efforts to obtain for Buyer (i) accessto files, records and data relating to the Assets in the possession of thirdparties; and (ii) access to wells constituting a part of the Assetsoperated by third parties for purposes of inspecting same.

 

(e)           Buyer shall comply withall current and subsequently amended applicable laws, ordinances, rules, andregulations applicable to the Assets and shall promptly obtain and maintain allpermits required by governmental authorities in connection with the Assets.

 

**18.6.****       Notices.**

 

Except asotherwise expressly provided herein, all communications required or permittedunder this Agreement shall be in writing and may be given by personal delivery,facsimile, US mail (postage prepaid), or commercial delivery service, and anycommunication hereunder shall be deemed to have been duly given and receivedwhen actually delivered to the address of the Parties to be notified as setforth below and addressed as follows:

 
| If  to Seller, as follows: |                                    |         |
|----------------------------|-----------------------------------------|--------------|
|                       |                                    |         |   |
|                       | **NGS  Sub. Corp.**                     |         |   |
|                       | 2500 City West  Blvd, Suite 1300   |         |   |
|                       | Houston, Texas  77042                   |         |   |
|                       | Attention: Robert  S. Herlin, President |         |   |
|                       | Facsimile:                              | 713-935-0199 |
|                       | Confirm:                                | 713-935-0122 |
|                       |                                    |         |   |
| With  a copy to:           |                                    |         |
|                       |                                    |         |   |
|                       | **Mark  A. Mathews**                    |         |   |
|                       | Adams and Reese  LLP                    |         |   |
|                       | 4400 One Houston  Center                |         |   |
|                       | 1221 McKinney                           |         |   |
|                       | Houston, Texas  77010                   |         |   |
|                       | Facsimile:                              | 713-652-5152 |
|                       | Confirm:                                | 713-652-5151 |
|                       |                                    |         |   |
| If  to Buyer, as follows:  |                                    |         |
|                       |                                    |         |   |
|                       | **MWM Energy, LLC**                     |         |   |
|                       | 114 30th Avenue South                   |         |   |
|                       | Nashville, Tennessee 37212              |         |   |
|                       | Attention: Stephen  F. Moore, CEO       |         |   |
|                       | Facsimile:                              | 615-340-5391 |
|                       | Confirm:                                | 615-340-5389 |
|                            |                                         |              |  |  |  |

 

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|   | With copies to:                      |         |   |
|--------|--------------------------------------|--------------|--------|
|   |                                 |         |   |
|   | Gary Wadkins                         |         |   |
|   | 5100 Sweetbriar Lane, Suite 121 |         |   |
|   | Tyler, Texas 75703                   |         |   |
|   | Facsimile:                           | 903-534-6005 |
|   | Confirm:                             | 903-534-2944 |
|        |                                      |              |        |  |  |

 
|   | RR Advisors, LLC            |          |   |
|--------|-----------------------------|---------------|--------|
|   | 21 Waterway, Suite 300 |          |   |
|   | The Woodlands, Texas  77380 |          |   |
|   | Attention:                  | W. Mark Meyer |
|   | Facsimile:                  | 214-871-8644  |
|   | Confirm:                    | 832-287-8523  |
|        |                             |               |        |  |

 
|   | Charles Robert Bone               |         |   |
|--------|-----------------------------------|--------------|--------|
|   | Bone McAllester Norton  PLLC      |         |   |
|   | 511 Union Street, Suite 1600 |         |   |
|   | Nashville, Tennessee  37219       |         |   |
|   | Facsimile:                        | 615-238-6301 |
|   | Confirm:                          | 615-238-6301 |
|        |                                   |              |        |  |

 

Provided, however,that any notice required or permitted under this Agreement will be effective ifgiven verbally within the time provided, so long as such verbal notice isfollowed by written notice thereof in the manner provided herein withintwenty-four (24) hours following the end of such time period.  Any Party may, by written notice so deliveredto the other, change the address to which delivery shall thereafter be made.

 

**18.7.****       Incidental Expenses.**

 

Buyer shall bearand pay (i) all state or local government sales, transfer, gross proceeds,or similar taxes incident to or caused by the transfer of the Assets to Buyer, (ii) alldocumentary, transfer and other state and local government taxes incident tothe transfer of the Assets to Buyer; and (iii) all filing, recording orregistration fees for any assignment or conveyance delivered hereunder.  Each Party shall bear its own respectiveexpenses incurred in connection with the negotiation and Closing of thistransaction, including its own consultants’ fees, attorneys’ fees, accountants’fees, and other similar costs and expenses.

 

**18.8.****       Waiver.**

 

Any of the terms,provisions, covenants, representations, warranties or conditions hereof may bewaived only by a written instrument executed by the Party waivingcompliance.  Except as otherwiseexpressly provided in this Agreement, the failure of any Party at any time ortimes to require performance of any provision hereof shall in no manner affectsuch Party’s right to enforce the same. No waiver by any Party of any condition, or of the breach of any term,provision, covenant, representation or warranty contained in this

 

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Agreement, whetherby conduct or otherwise, in any one or more instances, shall be deemed to be orconstrued as a further or continuing waiver of any such condition or breach ora waiver of any other condition or of the breach of any other term, provision,covenant, representation or warranty.

 

**18.9.****       Binding Effect;Assignment.**

 

All the terms,provisions, covenants, obligations, indemnities, representations, warrantiesand conditions of this Agreement shall be covenants running with the land andshall inure to the benefit of, and be binding upon, and shall be enforceableby, the parties hereto and their respective successors and assigns.  The rights of Buyer under this Agreement toacquire the Assets are personal and this Agreement may not be assigned ortransferred by Buyer to any other party, firm, corporation or other entity,without the prior, express and written consent of Seller, and such consent maybe withheld for any reason, including convenience.  Any attempt to assign this Agreement by Buyerover the objection or without the express written consent of the Seller shallbe absolutely void.  Seller may conditionits consent to assign this Agreement on Buyer providing Seller with anappropriate guarantee of its assignee’s performance.  Any subsequent transfer of this Agreement orof all or any part of the Assets shall be made expressly subject to the termsand provisions of this Agreement.  In theevent Buyer sells, assigns or otherwise transfers all or a portion of theAssets, (i) this Agreement shall remain in effect between Buyer and Selleras to all the Assets regardless of such sale, assignment or transfer (and Buyershall not be thereby released, but shall remain obligated hereunder), (ii) Buyershall require its successors and assigns expressly to assume its duties,responsibilities and obligations under this Agreement, to the extent related orapplicable to the Assets or the portion thereof acquired by them, but suchassumption shall not release Buyer from any such assumed obligations, and (iii) Buyershall obtain Seller’s prior written consent. Any sale, assignment or other transfer of the Leases or other Assetsshall also contain such other language as is necessary to satisfy the terms andprovisions of such Leases or the agreements applicable to such Assets.

 

**18.10.****     Taxes.**

 

(a)           Seller and Buyer agreethat this transaction may be subject to the reporting requirement of Section 1060of the Internal Revenue Code of 1986, as amended, and that, therefore, IRS Form 8594,Asset Acquisition Statement, will be filed for this transaction.  The Parties will confer and cooperate in thepreparation and filing of their respective forms to reflect a consistentreporting of the agreed upon allocation.

 

(b)           Seller shall beresponsible for all state, local and federal property, ad valorem, excise, andseverance taxes attributable to or arising from the ownership or operation ofthe Assets prior to the Effective Time. Buyer shall be responsible for all property and severance taxesattributable to or arising from the ownership or operation of the Assets afterthe Effective Time.  Any Party which payssuch taxes for the other Party shall be entitled to prompt reimbursement uponevidence of such payment.  Each Partyshall be responsible for its own federal and state income taxes, if any, as mayresult from this transaction.

 

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(c)           If this transaction isdetermined to result in state sales or transfer taxes, Buyer shall be solely responsiblefor any and all such taxes due on the Assets acquired by Buyer by virtue ofthis transaction.  If Buyer is assessedsuch taxes, Buyer shall promptly remit same to the taxing authority.  If Seller is assessed such taxes, Buyer shallreimburse Seller for any such taxes paid by Seller to the taxing authority.

 

**18.11.****     Audits.**

 

It is expresslyunderstood and agreed that Seller retains its right to receive itsproportionate share of the proceeds from any audits relating to activitiesprior to the Effective Time, and Seller shall likewise pay its share of anycosts attributable to the period prior to the Effective Time resulting from anysuch audits.

 

**18.12.****     Like-Kind Exchanges.**

 

Seller  may elect to engage in a “like-kindexchange” under Section 1031 of the Internal Revenue Code of 1986, asamended, and the Treasury Regulations promulgated thereunder (collectively, the“1031 Rules”) with the Assets as “replacement property” under the 1031Rules.  If Seller so elects, and atSeller’s reasonable request, Buyer shall perform such actions and execute suchdocuments as Seller believes to be necessary or appropriate to facilitateSeller’s exchange transaction; provided however that (i) Seller agrees tohold Buyer harmless from and against any expenses or liability for performingsuch actions or executing such documents and (ii) Seller shall not bepermitted to assign any of its obligations under this Agreement in connectionwith any such transaction.

 

**18.13.****     Governing Law.**

 

THIS AGREEMENTSHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THESTATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISEAPPLICABLE TO SUCH DETERMINATIONS. JURISDICTION AND VENUE WITH RESPECT TO ANY DISPUTES ARISING HEREUNDERSHALL BE PROPER ONLY IN HARRIS COUNTY, TEXAS.

 

**18.14.****     Entire Agreement.**

 

This Agreementembodies the entire agreement between the Parties and replaces and supersedesall prior agreements, arrangements and understandings related to the subjectmatter hereof, whether written or oral. No other agreement, statement, or promise made by any Party, or to anyemployee, officer or agent of any Party which is not contained in thisAgreement shall be binding or valid. This Agreement may be supplemented, altered, amended, modified or revokedby a writing only, signed by the Parties hereto.  The headings herein are for convenience onlyand shall have no significance in the interpretation hereof.  The Parties stipulate and agree that thisAgreement shall be deemed and considered for all purposes, as prepared throughthe joint efforts of the Parties, and shall not be construed

 

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against one Partyor the other as a result of the preparation, submittal or other event ofnegotiation, drafting or execution thereof.

 

**18.15.****     Severability.**

 

If any provisionof this Agreement is found by a court of competent jurisdiction to be invalidor unenforceable, that provision will be deemed modified to the extentnecessary to make it valid and enforceable, and if it cannot be so modified, itshall be deemed deleted and the remainder of the Agreement shall continue andremain in full force and effect.

 

**18.16.****     Exhibits and Schedules.**

 

All Exhibitsattached to this Agreement, and the terms of those Exhibits and Schedules whichare referred to in this Agreement, are made a part hereof and incorporatedherein by reference.

 

**18.17.****     Delivery of Files AfterClosing.**

 

The Assets set outin Section 1.44 shall be made available to Buyer within ten (10) businessdays after the Closing Date at a location to be specified by Seller.  Any transportation, postage, or deliverycosts from Seller’s offices shall be at Buyer’s sole cost, risk and expense.

 

**18.18.****     Survival.**

 

Unless otherwisespecifically provided in this Agreement, all of the covenants, representations,warranties, and agreements of or by the Parties hereto shall not survive theClosing Date, *provided, however*, (i) therepresentations and warranties of the Parties set forth in Articles 4 and 5shall survive the Closing for a period of ninety (90) days after the ClosingDate, and (ii) the indemnity obligation between the Parties contained in Article 17and the Arbitration provisions contained in Section 18.2 shallsurvive Closing without limit.

 

**18.19.****     Subsequent Adjustments.**

 

Regardless of thedate set for the Final Settlement, Buyer and Seller agree that their intent isto allow for the earliest practical forwarding of revenue and reimbursement ofexpenses between them, and Seller and Buyer recognize that either may receivefunds or pay expenses after the Final Settlement Date which are properly theproperty or obligation of the other. Therefore, upon receipt of net proceeds or payment of net expenses dueto or payable by the other Party hereto, whichever occurs first, Seller orBuyer, as the case may be, shall submit a statement to the other Party heretoshowing the relevant items of income and expense with supporting documentation.Payment of any net amount due by Seller or Buyer, as the case may be, on thebasis thereof shall be made within ten (10) days of receipt of thestatement.

 

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**18.20.****     Counterparts.**

 

This Agreement maybe executed in any number of counterparts, and each and every counterpart shallbe deemed for all purposes one (1) agreement.

 

**18.21.****     Subrogation.**

 

To the fullestextent allowed by law and the applicable agreements with third parties, Sellergrants Buyer a right of subrogation in all claims or rights Seller may haveagainst third parties to the extent they relate to the Assumed Obligations.

 

**18.22.****     Suspended Monies.**

 

Except as providedin Section 3.5, at Closing, Seller shall deliver to Buyer themonies held in suspense by Seller for the account of third parties, or relateto a title dispute or question as to ownership, along with any documentation inSeller’s possession or available to Seller in support of such suspendedfunds.  Except as provided in Section 3.5,any additional monies of this nature received by Seller after Closing shall beremitted to Buyer within one hundred twenty (120) days after the Closinghereof.  At Closing, Buyer shall assumethe obligation for the payment of these monies.

 

**18.23.****    ****Change of Name****.**

 

Aspromptly as practicable, but in any case within thirty (30) days after the ClosingDate, Buyer shall eliminate the names “NGS Sub. Corp.”, “Evolution PetroleumCorporation,” or “Natural Gas Systems, Inc.” and any variants of thesenames from the Assets acquired pursuant to this Agreement and, except withrespect to such grace period for eliminating existing usage, shall have noright to use any logos, trademarks or trade names belonging to Seller, itsparent or any of its Affiliates.

 

**18.24.****    ****Replacement of Bonds, Letters of Credit and Guarantees****.**

 

Theparties understand that none of the bonds, letters of credit and guarantees, ifany, posted by Seller with Governmental Bodies and relating to the Assets maybe transferable to Buyer.  Promptlyfollowing Closing, Buyer shall obtain, or cause to be obtained in the name ofBuyer, replacements for such bonds, letters of credit and guarantees, to theextent such replacements are necessary to permit the cancellation of the bonds,letters of credit and guarantees posted by Seller or to consummate thetransactions contemplated by this Agreement.

 

**18.25.****    ****No Third-Party Beneficiaries.**

 

Nothingin this Agreement shall entitle any Person other than Buyer and Seller to anyClaims, remedy or right of any kind, except as to those rights expresslyprovided to Seller Indemnitees and Buyer Indemnitees (provided, however, anyclaim for indemnity hereunder on behalf of a Seller Indemnitee or a BuyerIndemnitee must be made and administered by a Party to this Agreement).

 

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**18.26.****    ****Time of Performance.****:**Time is of theessence in the performance of this Agreement.

 

IN WITNESSWHEREOF, the Parties have executed this Agreement as of the date first abovewritten.

 
| ** ** | **SELLER**:      |
|------------|------------------|
|       |             |   |
|       | NGS SUB. CORP.   |
|       |             |   |
|       |             |   |
|       | By:              | /s/Robert  S. Herlin |
|       |             |    Robert  S. Herlin, President |
|       |             |   |
|       |             |   |
| ** ** | **BUYER:**       |
|       |             |   |
|       | MWM ENERGY, LLC. |
|       |             |   |
|       |             |   |
|       | By:              | /s/W.  Mark Meyer |
|       |             | W.  Mark Meyer, Chairman |
|            |                  |  |  |

 

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**Exhibit “A-1”**

 

Attachedhereto and made a part of that certain

AssetPurchase and Sale Agreement dated February 15, 2008,

byand between NGS Sub. Corp., as Seller, and

MWMEnergy, LLC, as Buyer

 

**LEASES**

 

Being the following oil and gas leases described in that certain Act ofSale and Assignment dated September 2, 2004 from Atkins Production, Inc.,et al to NGS Sub. Corp., as recorded in Book 291, Page 179 of theConveyance Records of LaSalle Parish, Louisiana, more fully described asfollows, to-wit:

 

1.                                       Oil, gas and mineral lease executed byWilliam E. Zimmerman in favor of W.S. Ezell of date April 18, 1925,recorded at Oil and Gas Lease Book 3, Page 14, Registry 1333 of therecords of LaSalle Parish, Louisiana, **insofaras the said lease covers the following described property, to-wit: TheNortheast Quarter of the Southwest Quarter of Section 25, Township 10North, Range 1 East, LaSalle Parish, Louisiana.**

 

Lexington – Zimmerman #1 – 100’ North and 226’ West from the SE Cornerof NE/4 of Section 25, Township 10 North, Range 1 East, LaSalle Parish,Louisiana

Lexington – Zimmerman #2 – 440’ North and 100’ Westfrom the SE Corner of NE/4 of SW/4 of Section 25, Township10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #3 – 669’ North and 115’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #4– 490’North and 290’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #5– 327’ North and 430’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #6– 100’ North and 630’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #7– 300’ North and 630’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #8– 387’ North and 788’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, RangeI East, LaSalle Parish, Louisiana

Lexington – Zimmerman #14– 505’ South and 1217’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #15– 345’ South and 1095’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #16– 100’ South and 1135’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #17– 258’ South and 552’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #18– 245’ South and 300’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, RangeI East, LaSalle Parish, Louisiana

 

2.                                  (Hardtner “A” Lease) Oil, gas and minerallease executed by the Urania Lumber Company in favor of Southern Carbon Companyof date January 23, 1923, and recorded at Oil and Gas 

 

1

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Lease Book 2, Page 449, Registry 069784 of therecords of LaSalle Parish, Louisiana, **insofaras the said lease covers the following described property to-wit: The SoutheastQuarter of the Southeast Quarter of Section **7, **Township 10 North, Range 2 East, LaSalle Parish,Louisiana.**

 

3.                                  (Hardtner “C” Lease) Oil, gas and minerallease executed by the Urania Lumber Company in favor of S.M. Collins and A.Gibbons of date November 27, 1922, recorded at Oil and Gas Lease Book 2, Page 18,Registry 06608 of the records of LaSalle Parish, Louisiana, **insofar as the said lease covers the followingdescribed property, to-wit: That portion of the Northwest Quarter of theNortheast Quarter of Section 18, Township 10 North, Range 2 East, lyingsouth and east of the Iron Mountain Railway Company railroad.**

 

4.                                     (Urania****A, B, C and Hardtner-Edenborn lease**)**Oil, gas and mineral leaseexecuted by Q.T. Hardtner, Jr., et al, in favor of Ed Alexander of date October 26,1972, recorded at Oil and Gas Lease Book 36, Page 392, Registry 91253 ofthe records of LaSalle Parish, Louisiana, **insofaras the above described lease covers the following described property, to-wit:**

 

Township 10 North – Range 2East

 

Section 19:

 

NE/4 of NW/4 of NE/4;

NW/4 of SE/4 of NW/4 of NE/4;

SE/4 of SE/4 of NW/4 of NE/4;

NW/4 of SW/4 of NE/4;

NW/4 of NE/4 of NW/4 of SE/4;

NE/4 of NE/4 of NW/4 of SE/4;

SE/4 of NE/4 of NW/4 of SE/4;

SW/4 of SW/4 of NW/4 of E/4;

S/2 of NW/4 of SE/4 of NE/4;

SW/4 of NE/4 of SE/4 of NE/4;

NE/4 of SW/4 of NE/4 of SE/4;

E/2 of SW/4 of NE/4;

SW/4 of SE/4 of NW/4 of NE/4;

NW/4 of SW/4 of NE/4 of SE/4;

NE/4 of SW/4 less the NW/4;

NW/4 of NW/4 of SE/4 of SW/4;

SW/4 of SE/4 of NW/4 of NE/4.

 

5.                                (New Pendarvis lease) Oil, gas and minerallease from W.P. Pendarvis in favor of M.H. O’Hara, W.B. Letson, W.T. Murray,and W.L. Fort, dated August 16, 1923, recorded at Oil and Gas Lease Book2, Page 74 of the records of LaSalle Parish, Louisiana, **insofar and only insofar as the said lease covers andapplies from the surface of the earth to 100’ below the top of the WilcoxGroup, and insofar and only insofar as the above described lease covers andaffects one acre in the form of a square around the following wells:**

 

2

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Monroe Well Service – La. Petr. Assoc. - W.P.Pendarvis No. I – SN 193828 – located 145’ N and 415’ W from South QuarterCorner of Section 26, T10N – R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 2 – SN 193829 – located 345’ N and 415’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 3 – SN 193830 – located 545’ N and 415’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 4 – SN 193831 – located 745’ N and 415’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 5 – SN 193832 – located 790’ N and 215’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 6 – SN 193833 – located 590’ N and 215’ W from South QuarterCorner of Section 26, T10N-R1 E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 7 – SN 193834 – located 390’ N and 215’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 8 – SN 193835 – located 190’ N and 215’ W from South QuarterCorner of Section 26, T10N-R1 E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 10 – SN 193837 – located 435.14’ N and 15’ W from SouthQuarter Corner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 11 – SN 193838 – located 635.14’ N and 15’ W from SouthQuarter Corner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 12 – SN 194758 – located 345’ N and 170’ E from the S/Q/C ofSec. 26, T10N, R1E, LaSalle Parish, Louisiana.

Monroe Well Service – Beaver – Pendarvis No. I –(SN 193250) – located 1218’ N and 369’ W from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service – Beaver – Pendarvis No. 2 –(SN 193251) – located 1218’ N and 169’ W from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 3- (SN 193252) - located 818’ N and 320’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 4- (SN 193253) - located 618’ N and 411’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 6- (SN 193255) - located 100’ N and 301’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 7- (SN 194757) - located 444’ N and 345’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 9- (SN 194759) - located 545’ N and 165’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 10- (SN 194760) - located 765’ N and 140’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 11- (SN 194761) - located 970’ N and 175’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 12- (SN 194762) - located 870’ N and 30’ W from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 13- (SN 194763) - located 1085’ N and 8’ W from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

 

3

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Monroe Well Service - Beaver - Pendarvis No. 14- (SN 194764) - located 1020’ N and 200’ W from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

 

6.                                  (Old Pendarvis lease) Oil, gas and minerallease from W.P. Pendarvis in favor of M.H. O’Hara, W.B. Letson, W.T. Murray,and W.L. Fort, dated August 16, 1923, recorded at Oil and Gas Lease Book2, Page 74 of the records of LaSalle Parish, Louisiana, **INSOFAR AND ONLY INSOFAR as said lease covers andaffects one acre in the form of a square around each of the following wells:**

 

Pendarvis No. 3 - SN 010281 - located 640’ Nand 712’ W from SE/C of SW/4 of SE/4 of Section 26, T1ON - R1E, LaSalleParish, Louisiana

 

Pendarvis No. 4 - SN 010331 - located 85’ N and827’ W from SE/C of SW/4 of SE/4 of Section 26, T1ON - RIE, LaSalleParish, Louisiana

 

7.                                  Oil, gas and mineral lease dated May 24,1979, recorded in Oil and Gas Book 43, Page 750, Registry 142221 of therecords of LaSalle Parish, Louisiana, executed by Missouri Pacific Railroad,Lessor, in favor of Charles B. Bice, Lessee; **insofarand only insofar as said lease covers and affects the following:**

 

SSS Mopac No. 8, (SN 183703), located in thecenter of Lot 10 Block 1 of the original Town of Tullos, being 356’ North and17’ West from the East Quarter Corner of Section 26 Township 10 North,Range 1 West.

 

8.                                 Oil, Gas and Mineral Lease from TremontLumber Company to Jackie D. Nelson, dated May 20, 1968, recorded in Oiland Gas Book 31, Page 729, **insofar assaid lease covers the Southwest Quarter of Northwest Quarter of Section 30,Township 10 North, Range 2 East, LaSalle Parish, Louisiana, from the ground tothe base of the Wilcox Formation.**

 

9.**                                **Oil, Gas and Mineral Lease dated November 5,1975, recorded November 11, 1975, in Oil, Gas and Mineral Lease RecordBook 67, Page 367, records of Winn Parish, Louisiana, executed by C.S.Meredith, et al, Lessors, unto J.B. Stafford, Lessee, covering and affecting:

 

Southeast Quarter of Northwest Quarter (SE/4 ofNW/4), Section 6, Township 10 North, Range 1 East, Winn Parish, Louisiana,and **INSOFAR as said lease covers and affectsdown to the base of the Wilcox, together with a like interest in all oil and/orgas well located upon said lease.**

 

10.                                 Oil, Gas and Mineral Lease executed by C.S.Meredith, curator for Betty Lou Meredith to and in favor of Atkins Production, Inc.,a Louisiana Corporation, dated May 15, 1989, recorded in Conveyance Book124 at Page 66, records of Winn Parish, Louisiana covering and affectingthe following described property, to-wit:

 

The Southeast Quarter of Northwest Quarter of Section 6,Township 10 North, Range 1 East, Winn Parish, Louisiana.

 

4

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11.                               Oil, Gas and Mineral Lease executed by MonroeWell Service, Delaware to and in favor of SSM Partnership, dated June 21,1990, recorded in Conveyance Book 127 at Page 636 records of Winn Parish,Louisiana, **INSOFAR AND ONLY INSOFAR as saidlease covers and affects one acre in the from of a square (with the well in thecenter thereof) around each of the following 8 wells in the NW/4 of Section 5,Township 10 North, Range 1 East, Winn Parish, Louisiana.**

 

SSS Drilling Asso. Tremont No. 1 – SN 182799 –located 940’ N and 100’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 2 – SN 182800 – located 1021’ N and451’ E from the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 3 – SN 182801 – located 920’ N and77’ E of the SW corner of the SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 4 – SN 182802 –located 620’ N and 855’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 5 – SN 182803 – located 294’ N and895” E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 6 – SN 182804 –located 104’ N and 821’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 7 – SN 182805 – located 105’ N and1020’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 8 – SN 184928 –located 100’N and 517’ E of the SW corner of SW/4 of NW/4 of said Section 5being 8 acres situated in the South half of the NW/4 of Section 5, T1ON,R1E.

 

12.                            (Old Universal D lease) Oil, Gas and MineralLease dated October 22, 1943 from Urania Lumber Company in Favor ofM&W Oil Company, which lease is recorded in Book 11 at Page 284 of theconveyance records of LaSalle Parish, Louisiana and covers:

 

One acre in the form of a square (with the well as the center thereof)around each of the following three wells; the SSM – Urania Lumber Company #D-1Well, SN 115191, located 100 feet South and 100 feet West of the NortheastCorner of the SE/4 of NE/4 of NE/4, Section 24, TI ON – R1E; SSM – UraniaLumber Company #D-2 Well, SN 115192, located 100 feet South and 540 feet Westof the Northeast Corner of the NE/4 of NE/4 of said Section 24, SSM-UraniaLumber Company D-3 well, SN 115468, being three acres situated in the SE/4 ofNE/4 of NE/4, Section 24 T1 ON – R1E, LaSalle Parish, Louisiana, and **INSOFAR as said lease covers a depth down to 1600 feet**

 

13.                            (Old Universal C lease) Oil, Gas and MineralLease dated June 12, 1941 from the Urania Lumber Company in favor ofWillis C. Martin and M.E. Waldron, which lease is recorded in Book 9 at Page 249of the conveyance records of LaSalle Parish, Louisiana and covers:

 

One acre in the form of a square (with the well asthe center thereof) around each of the following three wells; SSM – UraniaLumber Company #C-2 Well, SN 115773, located 100 feet North and 100 feet Eastof the Southwest corner of the NW/4 of NW/4 of NW/4 Section 19, T1ON –R2E; SSM- Urania Lumber Company#C-5 Well, SN 115986, located 340 feet South and100 feet East of the Northwest Corner of said Section 19, C-4 well, SN116282, being three acres situated in the NW/4 of NW/4 of NW/4, Section 19,T1ON – R2E, LaSalle Parish, Louisiana and **INSOFARas said lease covers a depth down to 1600’**

 

5

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14.                            (Old Universal A lease) Oil, Gas and Minerallease dated October 22, 1943 from the Urania Lumber Company in favor ofM&W Oil Company, which lease is recorded in Book 11 at Page 284 of theconveyance records of LaSalle Parish, Louisiana and covers:

 

One acre in the form of a square (with the well asthe center thereof) around each of the following wells; SSM – Urania LumberCompany #A-2 Well, SN 114278, located 545 feet South and 545 feet West of theNortheast Corner of Section 24, T1ON-R1E; SSM – Urania Lumber Company #A-2Well SN 114442, located 300 feet West and 100 feet North of the SoutheastCorner of the NE/4 of NE/4 of NE/4 of said Section 24; SSM – Urania LumberCompany 14A-5 Well SN 114534 located 345 feet South and 100 feet West of theNortheast Corner of said Section 24, being three acres situated in theNE/4 of NE/4 of NE/4, Section 24, TION-R1E, LaSalle Parish, Louisiana and **INSOFAR as said lease covers a depth down to 1600 feet**

 

15.**                           ****(MDP Lease)**Lease dated September 28, 1949, recordedin Oil and Gas Lease Book 14, Page 127, records of LaSalle Parish, Louisiana,executed by Walter Herbert, Lessor, in favor of John T. Cupples, Lessee, **INSOFAR and ONLY INSOFAR as said lease covers andeffects:**

 

Lot 3 of Block 2, Original Town of Tullos,containing the Monroe Drilling Maxwell No. 1 well, Serial Number 179671,Monroe Drilling Maxwell No. 2 well, SN 179672 located 174 feet North and359 feet West from the East Quarter Corner of Section 26, Township 10North, Range 1 East, LaSalle Parish, Louisiana, and Lot 5 of Block 2, OriginalTown of Tullos, containing the Monroe Drilling Maxwell No. 2 well, SN179672 North and 424 feet West from the East Quarter Corner of Section 26,Township 10 North, Range 1 East, LaSalle Parish, Louisiana.

 

16.**                           ****(Shemen SWD)**Oil, Gas and Mineral Lease executed by UraniaLumber Company in favor of Willis C. Martin and M.E. Waldron of date June 12,1941, recorded at Oil and Gas Lease Book 9, Page 249 of the records ofLaSalle Parish, Louisiana, **INSOFAR AND ONLYINSOFAR as said lease covers a depth from the surface of the Earth down to adepth of 1600 feet, and INSOFAR AND ONLY INSOFAR as the above described leasecovers and affects one acre in the form of a square around the following wells:**

 

Urania Lumber Co., SWD #1*,*SN-971328, 100’ S of NE/C Section 24,T10N, R1E

 

17.                           Oil, Gas and Mineral Lease executed by theUrania Lumber Company in favor of M&W Oil Company of date October 22,1943, recorded at Oil and Gas Lease Book 11, Page 284 of the records ofLaSalle Parish, Louisiana, **INSOFAR AND ONLYINSOFAR as said lease covers a depth from the surface of the Earth down to adepth of 1600 feet, and INSOFAR AND ONLY INSOFAR as the above described leasecovers and affects one acre in the form of a square around the following wells:**

 

(Urania Lumber Co. – Shemenlease)

 

Monroe Well Service – Shemen – Urania Lumber Co. No. 1- (SN 191712) – located 362’ N and 507’ W from the SE/C of NE/4 of NE/4 of Section 24,T 10 N, R 1 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania Lumber Co. No. 2- (SN 191713) – located 162’ N and 507’ W from the SE/C of NE/4 of NE/4 of Section 24,T 10 N, R 1 E, LaSalle Parish, Louisiana

 

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Monroe Well Service – Shemen – Urania Lumber Co. No. 3(SN 191714) – located 362’ N and 307’ W from the SE/C of NE/4 of NE/4 of Section 24,T 10 N, R 1 E, LaSalle Parish, Louisiana

 

(Urania A – Shemen lease)

 

Monroe Well Service – Shemen – Urania “A” No. 1- (SN 191709) – located 559’ S and 78’ W from the NE/C Section 24, T 10 N,R 1 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania “A” No. 2- (SN 191784) – located 369’ S and 351’ W from the NE/C Section 24, T 10N, R 1 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania “A” No. 6- (SN 191788) – located 131’ S and 100’ W from the NE/C Section 24, T 10N, R 1 E, LaSalle Parish, Louisiana

 

18.                            Oil, Gas and Mineral Lease executed by theUrania Lumber Company in favor of Willis C. Martin and M.E. Waldron of date June 12,1941, recorded at Oil and Gas Lease Book 9, Page 249 of the records ofLaSalle Parish, Louisiana, **INSOFAR AND ONLYINSOFAR as said lease covers a depth from the surface of the Earth down to adepth of 1600 feet, and INSOFAR AND ONLY INSOFAR as the above described leasecovers and affects one acre in the form of a square around the following wells:**

 

Monroe Well Service – Shemen – Urania “C” No. 1(SN 191783) – located 131’ S and 100’ E from the NW/C Section 19, T 10 N,R 2 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania “C” No 2 - (SN191779) – located 359’ S and 302’ E from the NW/C Section 19, T 10 N, R 2E, LaSalle Parish, Louisiana

 

19.                            (LPO) Oil, Gas and Mineral Lease executed byLouisiana Pacific Corporation to and in favor of Atkins Production, Inc.,dated February 27, 1990, recorded under file number 144131 in ConveyanceBook 174, Page 631 of the records of LaSalle Parish, Louisiana. Coveringand affecting the following property as described:

 

Northeast Quarter of Northeast Quarter of Section 13,Township 10 North, Range 1 East

 

20.                            (LPO) Oil, Gas and Mineral Lease executed byWilliam Dows Blake, et al, to and in favor of Atkins Production, Inc.,dated February 1, 1990, recorded under file number 144130 in ConveyanceBook 174, Page 628 of the records of LaSalle Parish, Louisiana. Coveringand affecting the following property as described:

 

Northeast Quarter of the Northeast Quarter (NE/4 ofNE/4), Section 13, Township 10 North, Range 1 East.

 

21.                            (Silver City SWD) Urania E SWD *#1,*Serial #971269, located 192’ South and1210’ East from the Center of Section 19, TI ON, R2E, LaSalle Parish,Louisiana, along with all related Salt Water Disposal Equipment.

 

Hartner A SWD #1, Serial #971237, located 374’ Northand 998’ West from the SE corner of Section 7, T1ON, R2E, LaSalle Parish,Louisiana.

 

22.                                 (WP Pendarvis-La Petro lease) Pendarvis SWDWell #1, Serial #971428, located in Section 26, T1ON, RIE, LaSalle Parish,Louisiana

 

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23.                            (Miles Heirs and Miles Essex leases) Thatcertain oil, gas and mineral lease executed by D.F. Miles, et al, in favor ofEssex Drilling Co., Inc., dated February 14, 1984, as recorded in Oiland Gas Lease Book 61 at Page 302 of the records of LaSalle Parish,Louisiana;

 

That certain oil, gas and mineral lease executed by D.F. Miles, et al,in favor of Essex Drilling Co., Inc., dated March 22, 1984, asrecorded in Oil and Gas Lease Book 61 at Page 405 of the records ofLaSalle Parish, Louisiana;

 

That certain oil, gas and mineral lease executed byWilliam J. Miles, et al, in favor of Essex Drilling Co., Inc., dated asper acts recorded in Oil and Gas Lease Book 60, Pages 688 and 733; and Oiland Gas Lease Book 61, Pages 39, 41, 43, 45, 47, 49, 51, 53, 55, 57, 185,187, 189, 242 and 260 of the records of LaSalle Parish, Louisiana;

 

**Insofar as said leases cover and affect the followingdescribed lands in LaSalle Parish, Louisiana, to-wit:**

 

Begin at the NE Corner of the NW/4 of NW/4 of Section 25,T10N, R1E, and run thence South 0 degrees 12’ West 533.9 feet for the point ofbeginning; run thence South 0 degrees 12’ West 376 feet; run thence north 87degrees 41’ West 391.7 feet to an iron pipe in the center of theColumbia-Alexandria Road; run thence South 38 degrees 28’ West 278.5 feet to aniron pipe in the center of said road; run thence north 61 degrees 37’ West 29feet to an iron pipe on an old rail fence line on the property line of F.J.Miles; run north 16 degrees 44’ East 402 feet to an iron pipe; run thence north51 degrees 58’ West 10 feet to an iron pipe; run thence North 16 degrees 44’East 184 feet to an iron pipe on the line of the old Kendrick Gin Lot; runthence North 89 degrees 25’ East 424.7 feet to the point of beginning.

 

That certain oil, gas and mineral lease dated August 25, 1983,from William Julious Miles to Essex Drilling Co., Inc., as recorded in Oiland Gas Lease Book 60 at Page 688 of the records of LaSalle Parish,Louisiana;

 

That certain oil, gas and mineral lease dated September 6, 1983,from Edna Miles Gatherer and Lillie Mae Miles Little to Essex Drilling Co., Inc.,as recorded in Oil and Gas Lease Book 60 at Page 733 of the records ofLaSalle Parish, Louisiana. Co-Lessors’ Agreements identified with the EdnaMiles Gatherer, et al. Lease as recorded in Oil and Gas Lease Book 61 at Pages 39,41, 43, 45, 47, 49, 51, 53, 55, 57, 185, 187, 189, 242 and 260;

** **

**Insofar as said leases cover and affect the followingdescribed lands in LaSalle Parish, Louisiana, to-wit:**

 

A tract of land in the W/2 NW/4 of Section 25, Township 10 North,Range 1 East, described as beginning at the SWC of lands owned by W.T. Bass onthe East side of the Missouri Pacific right-of-way, running South along theright-of-way 224 yards, run thence East 106 yards, run thence North 224 yardsto the SEC of the W.T. Bass, run thence West 106 yards to the point of beginning.

 

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Oil,gas and mineral lease dated August 16, 1983, from Frank Doughty, Chairmanof the Board for the LaSalle State Bank in Favor of Russell A, Flowers, husbandof Sally Ann Flowers, as recorded in Oil and Gas Lease Book 60 at Page 745of the records of LaSalle Parish, Louisiana

 

**Insofar as said lease covers the following described lands inLaSalle Parish, Louisiana, to-wit:**

 

Lots1, 2, 3 and 4 of Block 2, and Lot 4 of Block 12 of the Urania Lumber CompanyAddition to the Town of Tullos, LaSalle Parish, Louisiana, or 728 West and 803North from SEC of SW/4 NW/4 of Section 25, Township 10 North, Range IEast, LaSalle Parish, Louisiana.

 

Being the following Oil,Gas and Mineral Leases described in that certain Assignment of Oil, Gas andMineral Leases dated December 28, 2004 from Atkins Production, Inc.to Natural Gas Systems Corporation, as recorded in Conveyance Book 294, Page 455of the records of LaSalle Parish, Louisiana, more fully described as follows,to-wit:,

 

24.           Oil, Gas and Mineral lease executed by SouthernHeritage Bank in favor of Atkins Production, Inc. dated October 8,2004, recorded at Conveyance Book 292, Page 99 of the records of LaSalleParish, Louisiana

 

Oil, Gas and MineralLease executed by the Town of Tullos in favor of Atkins Production, Inc.as recorded December 9, 2004 at Conveyance Book 293, Page 330 of therecords of LaSalle Parish, Louisiana.

 

Insofar as said leasescover and affect Lots 1, 2, 3 and 4 of Block 2 and Lot 4 of Block 12 of theUrania Lumber Company Addition to the Town of Tullos, LaSalle Parish,Louisiana.

 

Being the following Oil,Gas and Mineral Leases described in that certain Assignment of Oil, Gas andMineral Leases dated June 22, 2005 from Atkins Production, Inc. toNGS SUB. Corp. as recorded under Registry Number 191278 and in Conveyance Book149, Page 438 of the records of Winn Parish, Louisiana, more fullydescribed as follows, to-wit:

 

25.           Oil, Gas and Mineral Lease dated May 23, 2005from Cornelia Pray, et al to Atkins Production, Inc., as recorded inConveyance Book 149, Page 424 of the records of Winn Parish, Louisiana

 

26.           Oil, Gas and Mineral Lease dated May 23, 2005from Priscilla Long Bedgood to Atkins Production, Inc., as recorded inConveyance Book 149, Page 428 of the records of Winn Parish, Louisiana

 

9

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27.           Oil, Gas and Mineral Lease dated May 23, 2005from Cynthia Brown Beauchamp to Atkins Production, Inc., as recorded inConveyance Book 149, Page 432 of the records of Winn Parish, Louisiana

 

28.           Oil, Gas and Mineral Lease dated March 22, 2005from Brandon R. Hawkins and Brandy Coburn Hawkins to Atkins Production, Inc.,as recorded in Conveyance Book 149, Page 436 of the records of WinnParish, Louisiana

 

Being the following oiland gas leases described in that certain Act of Sale and Assignment dated February 1,2005 from Chadco, Inc., et al to NGS Sub. Corp., as recorded in Book 294, Page 333of the Conveyance Records of LaSalle Parish, Louisiana, more fully described asfollows, to-wit:

 

29.           Oil, gas and mineral lease executed byWilliam C. Pringle, et al, in favor of E.R. Waller dated August 26, 1936,recorded in Oil and Gas Lease Book W, Page 449-A, Registry #23478, recordsof LaSalle Parish, Louisiana, covering lands in Lot 15, Section 26,Township 10 North, Range I East, LaSalle Parish, Louisiana.

 

30.           Oil, gas and mineral lease executed byRussell A. Flowers, et ux, in favor of Sara Productions, dated June 6,1995, recorded in Conveyance Book 220, Page 252, Registry #159489*,*records of LaSalle Parish, Louisiana,covering the following described property, to-wit:

 

Section 26, Township 10 North, Range 1 East

 

Lot 4, Block 10, original Town of Tullos, in the NE/4of SE/4.

Lot 1of Russell Flowers Subdivision being a re-subdivision of Lot 3 of Block 13 ofthe Original Town of Tullos, in the NE/4 of SE/4.

Lot 2of the Russell Flowers Subdivision being a re-subdivision of Lot 3 of Block 13of the original Town of Tullos, in the NE/4 of the SE/4.

Lot 3of the Russell Flowers Subdivision being a re-subdivision of Lot 3 of Block 13of the original Town of Tullos, in the NE/4 of the SE/4.

Lot 4 of the Russell Flowers Subdivision, in the SE/4of the SE/4.

Lot 5 of the Russell Flowers Subdivision, in the SE/4of the SE/4.

 

31.         Oil, gas and mineral lease executed byThe Urania Lumber Co. Ltd., in favor of Southern Carbon Company, dated January 23,1923, recorded in Oil and Gas Lease Book 2, Page 449, Registry #6978,records of LaSalle Parish, Louisiana, as the said lease covers the followingdescribed property, to-wit:

 

Thespecific acreage in the SE/4 of SE/4, of Section 7, Township 10 North,Range 2 East, LaSalle Parish, Louisiana.

 

**INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS ONE (1) ACREIN A SQUARE SURROUNDING THE FOLLOWING WELLS, TO-WIT:**

 

HardtnerA No. 3, SN186514; located 270’ N & 516’W from SE corner of Sec.7

 

10

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HardtnerA No. 4, SN186515; located 105’ N & 630’ W from SE corner of Sec.7

HardtnerA No. 5, SN186516; located 320’ N & 305’ W from SE corner of Sec.7

HardtnerA No. 6, SN186517; located 105’ N & 206’ W from SE corner of Sec.7

HardtnerA No. 11, SN187940; located 670’ N & 500’ W from SE corner ofSec.7

HardtnerA No. 12, SN187871; located 670’ N & 702’W from SE corner of Sec.7

HardtnerA No. 13, SN187872 located 275’ N & 740’ W from SE corner of Sec7.

HardtnerA No. 15, SN187874; located 862’ N & 452’ W from SE corner ofSec.7

HardtnerA No. 16, SN187875 located 618’ N & 897’ W from SE corner of Sec.7

HardtnerA No. 17, SN187876; loc. 395’ N & 908’ W from SE corner of Sec 7

HardtnerA No. 18, SN187877; loc. 217’ N & 1001’ W from SE corner of Sec.7

HardtnerA No. 28, SN188202; loc. 100’ N & 1167’ W from SE corner of Sec.7

 

32.           Oil, gas and mineral lease executed byWillie Green Bradford, et ux, in favor of Russell A. Flowers, dated May 18,1981, recorded in Oil and Gas Lease Book 48, Page 703, Registry *#*114379*,*records of LaSalle Parish, Louisiana, covering lands in the SE/4 ofthe SE/4 of Section 26, Township 10 North, Range 1 East, LaSalle Parish,Louisiana.

 

33.           Oil, gas and mineral lease executed byBoard of Levee Commissioners Tensas Basin Levee District, in favor of Max W.Maxwell dba M &**M OilProperties, dated May 19, 1969, recorded in Oil and Gas Lease Book 32, Page 683,Registry #8289, records of LaSalle Parish, Louisiana, the following describedproperty located in the NW/4 of NE/4, of Section 26, Township 10 North,Range 1 East, LaSalle Parish, Louisiana,

 

**INSOFAR AND ONLY INSOFAR AS the said lease covers and affectsone (1) acre in the form of a square (with the well as the center hereof)around the following drillsite locations:**

 

TensasBasin Levee District No. 1, SN134605; located 345’ S 380’ E of NW cornerof NW/4 of NE/4 of Section 26, Township10 North, Range I East, LaSalleParish, Louisiana.

TensasBasin Levee District No. 3, SN 178732; located 120’ S & 180’ Efrom NW corner of Section 26, Township10 North, Range 1 East, LaSalleParish, Louisiana.

TensasBasin Levee District SWD No.2, SN990623; located 196’ South & 113’East of NW/C of the NW/4 of NE/4 of Section 26, Township 10 North, Range 1East, LaSalle Parish, Louisiana.

 

34.       Oil, gas and mineral lease executed byTremont Lumber Company, in favor of Arkansas Fuel Oil Company, dated May 1,1947, recorded in Oil and Gas Lease Book 13, Page 88, records of LaSalleParish, Louisiana,

 

**INSOFAR AND ONLY INSOFAR as the following wells on asub-lease 100’ in a circle around each:**

 

TremontB. No. 1, SN187623; located 189.9’ FNL & 892.8’ FEL of SW/4 ofNE/4 of Section 25, Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 3, SN187822; located 307.2’ FNL & 27.1’ FEL of SW/4 ofNE/4 of Section 25, Township 10 North, Range 1, East, LaSalle Parish,LaTremont B. No. 4, SN187824; located 404’ FNL & 405.2’ FEL ofSW/4 of NE/4 of Section 25, Township 10 North, Range 1, East, LaSalleParish, La.

TremontB. No. 5, SN188181; located 1131’ FEL & 604’ FNL of SE/4 of NE/4of Section 25, Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 6, SN189535; located 678.8’ NWL & 420.2’ FSL of SW/4 ofNE/4 of Section 25, Township 10 North, Range 1, East, LaSalle Parish, La.

 

11

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TremontB. SWD No. 1, SN187820; located 193.3’ FNL & 889.3’ FEL of SW/4of NE/4 of Section 25, Township 10 North, Range 1, East, LaSalle Parish,La.

TremontB. No. 7, SN189696; located 1276’ FEL & 1022’ FNL of SE/4 of NE/4of Section 25, Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 8, SN 191205; located 443’ FEL & 109’ FNL of SE/4 of NE/4of Section 25, Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 9, SN 191207; located 202.1’ FNL & 355.4’ FWL of SE/4 ofNE/4 of Section 25, Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 10, SN178262; located 656’ North & 471’ East of SW/C ofNE/4 of Section 25, Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 12, SN182291; located 382’ South and 100’ West of NE/C of Section 25,Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 13, SN182292; located 321’ South & 356’ West of NE/C of Section 25,Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 14, SN 182295; located 383’ South & 546’ West of NE/C of Section 25,Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 15, SN182296; located 100’ South & 200’ East of NW/C ofNE/4 of NE/4, of Section 25, Township 10 North, Range 1, East, LaSalleParish, La

TremontB. No. 16, SN183884; located 378’ South & 749’ West of NE/C of Section 25,Township 10 North, Range 1, East, LaSalle Parish, La.

TremontB. No. 17, SN183885; located 210’ South & 863’ West of NE/C of Section 25,Township 10 North, Range 1, East, LaSalle Parish, La.

 

35.           Oil, gas and mineral lease executed byRoberta Stewart Taylor, in favor of Russell Flowers, dated October 7,1991, recorded in Conveyance Book 190, Page 195, Registry #149263 recordsof LaSalle Parish, Louisiana covering lands located in Lot 15 of the originalTown of Tullos, Section 26, Township 10 North, Range 1 East, LaSalleParish, Louisiana.

 

36.          Oil, gas and mineral lease executed bySouthern Heritage Bank, in favor of Marvin Douglas Murphrey, dated October 18,1993, recorded in Conveyance Book 206, Page 280, Registry #154486, recordsof LaSalle Parish, Louisiana, covering Lots 2, 3 and 4 of Block 6 of theRussell addition to Tullos, Louisiana, and a strip of land adjacent theretolocated in the SE/C of Section 26, Township 10 North, Range 1 East,LaSalle Parish, Louisiana.

 

37.          Oil, gas and mineral lease executed by AnadarkoLand Corp., et al, in favor of Chadco, Inc., dated February 1, 2003,recorded in Conveyance Book 278, Page 318, Registry #187644, records ofLaSalle Parish, Louisiana, covering the following described property, to-wit:

 

Township 10 North, Range 1 East, Section 26:

 

Lots8, 10 and 12 of Block 17, Town of Tullos, LaSalle Parish, Louisiana. Lots 2, 6,8 and 10 of Block 20, Town of Tullos, LaSalle Parish, Louisiana.

 

38.          Oil, gas and mineral lease executed byLane Capps, et al, in favor of Chadco, Inc., dated May 28, 2004,recorded in Oil and Gas Lease Book 289, Page 496, Registry #193577,records of LaSalle Parish, Louisiana, covering the following describedproperty, to-wit: One (1) acre, more or less, located in the original Townof Tullos, situated in Section 25, Township 10 North, Range 1 East,LaSalle Parish, Louisiana.

 

12

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39.          Oil, gas and mineral lease executed byTremont Lumber Company, in favor of Arthur W. Sour, Jr., dated May 31,1966, recorded in Oil and Gas Lease Book 28, Page 553, Registry #75957,records of LaSalle Parish, Louisiana, covering lands in Section 26,Township 10 North, Range 1 East, LaSalle Parish, Louisiana,

 

**INSOFAR AND ONLY INSOFAR as the said lease covers thefollowing described property, to-wit:**

 

Moore &Munger Hydrocarbons, Inc., S.T. Holland #1 and S.T. Holland #2, Lot 10,Block 6, Tremont Addition to Tullos, LA., as located in the SE/4 of the NW/4 ofSection 25, Town 10 North, Range 1 East, LaSalle Parish, Louisiana.

 

40.           Oil, gas and mineral lease executed byRichard L. Walsh, et ux, in favor of Walter W. Heard, Jr., dated September 8,1958, recorded in Oil and Gas Lease Book 20, Page 216, Registry #59119,records of LaSalle Parish, Louisiana, covering three (3) lots located inthe original Town of Tullos, Louisiana, located in the SW/4 of the NE/4 of Section 26Township 10 North, Range 1 East, LaSalle Parish, Louisiana.

 

41.           Oil, gas and mineral lease executed byJohnny C. Maxwell, Jr., in favor of Len White, dated June 24, 1992,recorded in Conveyance Book 194, Page 155, Registry 150724, records ofLaSalle Parish, Louisiana, covering Lots 1, 2 and 3 of the Urania LumberCompany Addition to the Town of Tullos, LaSalle Parish, Louisiana

 

42.           Oil, gas and mineral lease executed byThelma W. Allbritton, et al, in favor of Chadco, Inc., dated June 23,1993, recorded in Conveyance Book 204, Page 151, Registry *#*153940,**records of LaSalle Parish, Louisiana; and

 

Oil,gas and mineral lease executed by Gerald J. Wright in favor of Chadco, Inc.,dated June 29, 1993, recorded in Conveyance Book 204, Page 156,Registry #153941, records of LaSalle Parish, Louisiana; and

 

Oil,gas and mineral lease executed by Herman.Wright, in favor of Chadco. Inc.,dated July 20, 1993, recorded in Conveyance Book 204, Page 160,Registry 4153942*,*records ofLaSalle Parish, Louisiana;

 

Saidleases covering three (3) lots located in the Town of Tullos, in the SE/4of the SE/4 of Section 26, Township 10 North, Range 1 East.

 

43.           Oil, gas and mineral lease executed byLacey Leon Tullos, in favor of Milton Galoob, dated September 10, 1979,recorded in Oil and Gas Lease Book 44, Page 401, Registry #109233*,*records of LaSalle Parish, Louisiana,covering lands in Section 26, Township 10 North, Range 1 East.

 

44.           Oil, gas and mineral lease executed byTensas Basin Levee District, in favor of Alfred S. Black, Trustee, dated June 14,1955, recorded in Oil and Gas Lease Book 17, Page 574, Registry #53780,records of LaSalle Parish, Louisiana, covering Lot 2 or Tract. NW1/4 of NE/4 of

 

13

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Section 26, Township 10 North, Range 1 East,containing 28.54 acres, more or less, situated in LaSalle Parish, Louisiana.

 

45.           Oil, gas and mineral lease executed byThomas Clarence Long, in favor of M.E. McGaugh, dated June 17, 1958,recorded in Oil and Gas Lease Book 20, Page 23, Registry #58398, recordsof LaSalle Parish, Louisiana, and Correction to Description, executed by ThomasClarence Long, in favor of M.E. McGaugh, dated March 11, 1959, recorded inOil and Gas Lease Book 20, Page 480; Registry #60095, covering lands inthe original Town of Tullos, located in Section 26, Township 10 North,Range 1 East.

 

46.           Oil, gas and mineral lease executed byMissouri Pacific Railroad Company, in favor of Warren B. Melton, dated December 20,1960, recorded in Oil and Gas Lease Book 22, Page 195, Registry #63943,records of LaSalle Parish, Louisiana, covering Lots 2, 4, 6, 10 and 12; Block18, Lots 2, 6, 8 and 10; Block 20 and all of Fractional Block H, all in theTownsite of Tullos, located in Section 26, Township 10 North, Range 1East. LaSalle Parish, Louisiana.

 

47.           Oil, gas and mineral lease executed byAlene Atnip Holmes, in favor of ZAD, Inc., dated May 22, 1998,recorded in Conveyance Book 244, Page 99, Registry #169627, records ofLaSalle Parish, Louisiana, covering lands in Lots 11 and 12, Block 1, Holmesand Adams addition to Town of Tullos and Lot A of original Town of Tullos asper plat in Conveyance Book M, Page 166, LaSalle Parish, Louisiana, Section 25,Township 10 North, Range 1 East.

 

48.           Oil, gas and mineral lease executed byA.P. Kyle, et al, in favor of J.L. Ferguson, dated February 23, 1926,recorded in Oil and Gas Lease Book 3, Page 175, Registry #3407, records ofLaSalle Parish, Louisiana, covering lands in Lot Eight (8) of Block one (1) ofHolmes and Adams Addition to the Town of Tullos in LaSalle Parish, Louisiana,according to the new plat of said Town of Tullos, in Section 25, Township10 North, Range 1 East.

 

49.           Oil, gas and mineral lease executed byGeorgia-Pacific Corporation, in favor of Ed Alexander, dated September 13,1972, recorded in Oil and Gas Lease Book 36, Page 388, Registry #91252,records of LaSalle Parish, Louisiana; and

 

Oil,gas and mineral lease executed by Q.T. Hardtner, Jr., Agent, et al, infavor of Ed Alexander, dated October 26, 1972, recorded in Oil and GasLease Book 36, Page 392, Registry #91253, records of LaSalle Parish,Louisiana,

 

Bothof the above leases covering lands all in Section 19 Township 10 North,Range 2 East,

 

**INSOFAR AND ONLY INSOFAR AS SAID LEASES COVER AND AFFECT ONE (1) ACREIN THE FORM OF A SQUARE AROUND THE FOLLOWING WELLS, TO-WIT:**

 

LTF-UraniaNo. 6, SN 193625; located 1606’ S & 495’ E from NW/C of NE/4 of Section 19,T10N, R2E.

 

14

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50.           Oil, gas and mineral lease executed byHarry R. Brinkley, et al, in favor of C.A. McCartney, dated September 15,1980, recorded in Oil and Gas Lease Book 96, Page 236, Registry #115261,records of Winn Parish, Louisiana; and

 

Oil,gas and mineral lease executed by Harry R. Brinkley, et al, in favor of C.A.McCartney, dated April 20, 1981, recorded in Oil and Gas Lease Book 97, Page 20,Registry *#*115676*,*records of Winn Parish, Louisiana; andOil, gas and mineral lease executed by Harry R. Brinkley, et al, in favor ofChadco, Inc., dated January 15, 1990, recorded in Oil and Gas LeaseBook 127, Page 90, Registry #145329, records of Winn Parish, Louisiana;

 

All ofthe above leases covering lands located in the NW/4 of NE/4 of Section 30.Township 11 North, Range I West, Winn Parish, Louisiana.

 

**INSOFAR AND ONLY INSOFAR AS said leases cover and affect one (1) acrein the form of a square (with the well in the center thereof) around each ofthe following 8 wells:**

 

BrinkleyHeirs LTF No. 1, SN186324; located 100’ N & 100’ E from SW/C ofNW/4 of NW/4 of NE/4, Section 30, T11N, R1W.

BrinkleyHeirs LTF SWD No. 2, SN186325; located 300’ N & 100’ E from SW/Cof NW/4 of NW/4 of NE/4, Section 30, T11N RI W.

BrinkleyHeirs LTF No. 3, SN186326; located 500’ N & 100’ E from SW/C ofNW/4 of NW/4 of NE/4, Section 30, T11N, RI W.

BrinkleyHeirs LTF No. 4, SN 186327; located 375’ N & 375’ W from SE/C ofNW/4 of NW/4 of NE/4, Section 30, T1 IN, RI W.

BrinkleyHeirs LTF No. 5, SN186328; located 100’ N & 150’ W from SE/C ofNW/4 of NW/4 of NE/4, Section 30, T11N, R1W.

BrinkleyHeirs LTF No. 6, SN186329; located 300’ N & 150’ W from SE/C ofNW/4 of NW/4 of NE/4, Section 30, T11N, R1W.

BrinkleyHeirs LTF No. 7, SN187021; located 500’ N & 488’ E from SW/C ofNW/4 of NW/4 of NE/4, Section 30, TI 1N, R1W.

BrinkleyHeirs LTF No. 8, SN187179; located 560’ N & 294’ E from SW/C ofNW/4 of NW/4 of NE/4, Section 30, T11N, RI W.

 

51.           Oil, gas and mineral lease executed by Mrs. BonnieBartley, et ux, in favor of W.O. Weaver, dated November 12, 1959, recordedin Oil and Gas Lease Book 18, Page 67, Registry #6731, records of WinnParish, Louisiana, covering lands located in the SE/4 of SE/4 of Section 20,Township 11 North, Range 1 West, Winn Parish, Louisiana.

 

52.           Oil, gas and mineral lease executed byJudge Jones, in favor of W.O. Weaver, dated June 30, 1959, recorded in Oiland Gas Lease Book 17, Page 299, Registry #6582, records of Winn Parish,Louisiana, covering the NE/4 of SE/4 of Section 20, Township 11 North,Range 1 West, Winn Parish, Louisiana.

 

53.           Oil, gas and mineral lease executed byJewel Taylor, et al, in favor of Frontier, Inc., dated September 20,1990, recorded in Oil and Gas Lease Book 128, Page 498, Registry #147837,records of Winn Parish, Louisiana, covering all that portion of the N 1/3 ofNE/4 of SE/4 of Section 20, T1N, R1W, Winn Parish, Louisiana.

 

15

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Lease acquired by NGS SUB Corporation

 

54.           Oil and Gas Lease dated December 2,2005 from the LP Mineral Owners to NGS SSUB. Corporation, as recorded inConveyance Book 300, Page 708 of the records of LaSalle Parish, Louisiana.

 

55.           Oil and Gas Lease dated December 5,2005 from William D. Blake, as Agent and Attorney-In-Fact for Henry E. Blake,et al, to NGS Sub Corporation, as recorded in Conveyance Book 300, Page 713of the records of LaSalle Parish, Louisiana.

 

56.           Oil, Gas and Mineral Lease dated December 1, 2005from Lane Capps and Sherry Capps Cannon to NGS SUB. Corp., as recorded inConveyance Book 300, Page 39 of the records of LaSalle Parish, Louisiana.

 

16

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**Exhibit “A-2”**

 

Attached to and made a part of that certain

Asset Purchase and Sale Agreement dated February 15, 2008

by and between NGS Sub. Corp., as Seller, and

MWM Energy, LLC, as Buyer

 

**WELLS**

** **
| ** ** | ** ** | **Serial** | ** ** | **LUW**    | ** ** | ** **               | ** ** | **Well**   | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                          | ** ** |
|------------|------------|------------|------------|------------|------------|--------------------------|------------|------------|------------|------------|------------|------------|------------|-------------------------------------|------------|
| ** ** | ** ** | **No.**    | ** ** | **Code**   | ** ** | **Well Name**       | ** ** | **No.**    | ** ** | **WI**     | ** ** | **NRI**    | ** ** | **Comments**                        | ** ** |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                          | ** ** |
| ** ** |       |       |       |       |       | **Ag Oil - Capps Lease** |       |       |       |       |       |       |       |                                |       |
| 1          |       | 173393     |       | 037481     |       | Ag Oil -  Capps          |       | 1          |       | 1.000      |       | 0.83333    | ** ** | ** **                          | ** ** |
| 2          |       | 173394     |       | 037481     |       | Ag Oil -  Capps          |       | 2          |       | 1.000      |       | 0.83333    | ** ** | ** **                          | ** ** |
|       |       |       |       |       |       |                     |       |       |       |       |       |       |       |                                |       |
| ** ** |       |       |       |       |       | **Ag-Oil MOPAC Lease**   |       |       |       |       |       |       |       |                                |       |
| 3          |       | 166837     |       | 037288     |       | Ag-Oil MOPAC             |       | 1          |       | 1.000      |       | 0.75000    |       | misnamed in Sonris as Bice-Mopac #1 |       |
| 4          |       | 171065     |       | 037288     |       | Ag-Oil MOPAC             |       | 2          |       | 1.000      |       | 0.75000    |       |                                |       |
| 5          |       | 171066     |       | 037288     |       | Ag-Oil-MOPAC             |       | 3          |       | 1.000      |       | 0.75000    |       |                                |       |
| 6          |       | 171067     |       | 037288     |       | Ag-Oil-MOPAC             |       | 4          |       | 1.000      |       | 0.75000    | ** ** | ** **                          | ** ** |
| 7          |       | 171069     |       | 037288     |       | Ag-Oil-MOPAC             |       | 6          |       | 1.000      |       | 0.75000    |       |                                |       |
| 8          |       | 171070     |       | 037288     |       | Ag-Oil-MOPAC             |       | 7          |       | 1.000      |       | 0.75000    | ** ** | ** **                          | ** ** |
| 9          |       | 171068     |       | 037288     |       | Ag-Oil-MOPAC  SWD        |       | 5          |       | 1.000      |       |       |       |                                |       |
|       |       |       |       |       |       |                     |       |       |       |       |       |       |       |                                |       |
| ** ** |       |       |       |       |       | **Atkins B Lease**       |       |       |       |       |       |       |       |                                |       |
| 10         |       | 159038     |       | 037633     |       | Atkins B                 |       | 1          |       | 1.000      |       | 0.81250    |       |                                |       |
| 11         |       | 160179     |       | 037633     |       | Atkins B                 |       | 2          |       | 1.000      |       | 0.81250    |       |                                |       |
|       |       |       |       |       |       |                     |       |       |       |       |       |       |       |                                |       |
| ** ** |       |       |       |       |       | **B Bartley Lease**      |       |       |       |       |       |       |       |                                |       |
| 12         |       | 77088      |       | 010224     |       | B Bartley                |       | 1          |       | 1.000      |       | 0.82639    |       |                                |       |
| 13         |       | 77089      |       | 010224     |       | B Bartley                |       | 2          |       | 1.000      |       | 0.82639    |       |                                |       |
| 14         |       | 83034      |       | 010224     |       | B Bartley                |       | 3          |       | 1.000      |       | 0.82639    |       |                                |       |
| 15         |       | 89960      |       | 010224     |       | B Bartley                |       | 4          |       | 1.000      |       | 0.82639    |       |                                |       |

 

1

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| 16         |   | 125107 |   | 010224 |   | B Bartley                     |   | 5      |   | 1.000  |   | 0.82639 |     |                                                |     |
|------------|--------|--------|--------|--------|--------|-------------------------------|--------|--------|--------|--------|--------|---------|----------|-----------------------------------------------------|----------|
|       |   |   |   |   |   |                          |   |   |   |   |   |    |     |                                                |     |
| ** ** |   |   |   |   |   | **Bradford Lease**            |   |   |   |   |   |    |     |                                                |     |
| 17         |   | 175684 |   | 037857 |   | Bradford                      |   | 1      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 18         |   | 182138 |   | 037857 |   | Bradford                      |   | 4      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 19         |   | 199462 |   | 037857 |   | Bradford                      |   | 5      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 20         |   | 990616 |   | 037857 |   | Bradford SWD                  |   | 3      |   | 1.000  |   |    |     |                                                |     |
|       |   |   |   |   |   |                          |   |   |   |   |   |    |     |                                                |     |
| ** ** |   |   |   |   |   | **Brinkley Heirs LTF Lease**  |   |   |   |   |   |    |     |                                                |     |
| 21         |   | 186324 |   | 040080 |   | Brinkley  Heirs LTF           |   | 1      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 22         |   | 186326 |   | 040080 |   | Brinkley  Heirs LTF           |   | 3      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 23         |   | 186327 |   | 040080 |   | Brinkley  Heirs LTF           |   | 4      |   | 1.000  |   | 0.83000 | * * | * *                                            | * * |
| 24         |   | 186328 |   | 040080 |   | Brinkley  Heirs LTF           |   | 5      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 25         |   | 186329 |   | 040080 |   | Brinkley  Heirs LTF           |   | 6      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 26         |   | 187021 |   | 040080 |   | Brinkley  Heirs LTF           |   | 7      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 27         |   | 187179 |   | 040080 |   | Brinkley  Heirs LTF           |   | 8      |   | 1.000  |   | 0.83000 |     |                                                |     |
| 28         |   | 186325 |   |   |   | Brinkley  Heirs LTF SWD       |   | 2      |   | 1.000  |   |    |     |                                                |     |
| 29         |   | 173495 |   | 037681 |   | Brinkley  Heirs N             |   | 1      |   | 1.000  |   | 0.83000 |     |                                                |     |
|       |   |   |   |   |   |                          |   |   |   |   |   |    |     |                                                |     |
| ** ** |   |   |   |   |   | **Flowers, Russell Lease**    |   |   |   |   |   |    |     |                                                |     |
| 30         |   | 197897 |   | 041921 |   | Flowers,  Russell             |   | 1      |   | 1.000  |   | 0.80000 |     |                                                |     |
| 31         |   | 197898 |   | 041921 |   | Flowers,  Russell             |   | 2      |   | 1.000  |   | 0.80000 |     |                                                |     |
| 32         |   | 199021 |   | 041921 |   | Flowers,  Russell             |   | 3      |   | 1.000  |   | 0.80000 |     |                                                |     |
| 33         |   | 199022 |   | 041921 |   | Flowers,  Russell             |   | 4      |   | 1.000  |   | 0.80000 |     | Sonris records not updated from prior transfers     |     |
|       |   |   |   |   |   |                          |   |   |   |   |   |    |     |                                                |     |
| ** ** |   |   |   |   |   | **Gates Lease**               |   |   |   |   |   |    |     |                                                |     |
| 34         |   | 168176 |   | 036775 |   | Gates                         |   | 1      |   | 1.000  |   |    |     | no lease or production                              |     |
| 35         |   | 168341 |   |   |   | Gates SWD                     |   | 4      |   | 1.000  |   |    |     | no lease or production                              |     |
|       |   |   |   |   |   |                          |   |   |   |   |   |    |     |                                                |     |
| ** ** |   |   |   |   |   | **Hardtner (Atkins) A Lease** |   |   |   |   |   |    |     |                                                |     |
| 36         |   | 990145 |   | 007087 |   | Hardtner A                    |   | 2      |   | 1.000  |   | 0.80000 |     | Sonris records not updated for transfer from Atkins |     |
| 37         |   | 990146 |   | 007087 |   | Hardtner A                    |   | 7      |   | 1.000  |   | 0.80000 |     | Sonris records not updated for transfer from Atkins |     |
| 38         |   | 149552 |   | 007087 |   | Hardtner A                    |   | 9      |   | 1.000  |   | 0.80000 |     |                                                |     |

 

2

----

 
| 39         |   | 153621 |   | 007087 |   | Hardtner A                    |   | 11     |       | 1.000  |       | 0.80000    |       |                                                        |       |
|------------|--------|--------|--------|--------|--------|-------------------------------|--------|--------|------------|--------|------------|------------|------------|-------------------------------------------------------------|------------|
| 40         |   | 971237 |   | 007087 |   | Hardtner A  SWD               |   | 1      |       | 1.000  | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
|       |   |   |   |   |   |                          |   |   |       |   |       |       |       |                                                        |       |
| ** ** |   |   |   |   |   | **Hartdner (Atkins) C Lease** |   |   |       |   |       |       |       |                                                        |       |
| 41         |   | 19746  |   | 007089 |   | Hardtner C                    |   | 9      |       | 1.000  |       | 0.80000    |       |                                                        |       |
| 42         |   | 107472 |   | 007089 |   | Hardtner C                    |   | 13     |       | 1.000  |       | 0.80000    |       |                                                        |       |
| 43         |   | 153622 |   | 007089 |   | Hardtner C                    |   | 14     |       | 1.000  |       | 0.80000    |       |                                                        |       |
|       |   |   |   |   |   |                          |   |   |       |   |       |       |       |                                                        |       |
| ** ** |   |   |   |   |   | **Hardtner (Chadco) A Lease** |   |   |       |   |       |       |       |                                                        |       |
| 44         |   | 186438 |   | 040289 |   | Hardtner A                    |   | 1      |       | 1.000  |       | 0.828125   |       | Sonris records not updated for transfer from Atkins/Phoenix |       |
| 45         |   | 186514 |   | 7087   |   | Hardtner A                    |   | 3      |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 46         |   | 186515 |   | 7087   |   | Hardtner A                    |   | 4      |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 47         |   | 186516 |   | 7087   |   | Hardtner A                    |   | 5      |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 48         |   | 186517 |   | 7087   |   | Hardtner A                    |   | 6      |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 49         |   | 187871 |   | 7087   |   | Hardtner A                    |   | 12     |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 50         |   | 187872 |   | 7087   |   | Hardtner A                    |   | 13     |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 51         |   | 187873 |   | 040289 |   | Hardtner A                    |   | 14     |       | 1.000  |       | 0.828125   |       | Sonris records not updated for transfer from Atkins/Phoenix |       |
| 52         |   | 187875 |   | 7087   |   | Hardtner A                    |   | 16     |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 53         |   | 187876 |   | 7087   |   | Hardtner A                    |   | 17     |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 54         |   | 187877 |   | 7087   |   | Hardtner A                    |   | 18     |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 55         |   | 188134 |   | 040289 |   | Hardtner A                    |   | 20     |       | 1.000  |       | 0.828125   |       | Sonris records not updated for transfer from Atkins/Phoenix |       |
| 56         |   | 188202 |   | 7087   |   | Hardtner A                    |   | 28     |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 57         |   | 187940 |   | 7087   |   | Hardtner A                    |   | 29     |       | 1.000  |       | 0.828125   |       |                                                        |       |
| 58         |   | 187874 |   | 7087   |   | Hardtner A  15 SWD            |   | 15     |       | 1.000  |       |       |       |                                                        |       |
|       |   |   |   |   |   |                          |   |   |       |   |       |       |       |                                                        |       |
| ** ** |   |   |   |   |   | **Holland, ST Lease**         |   |   |       |   |       |       |       |                                                        |       |
| 59         |   | 186412 |   | 040355 |   | Holland, ST                   |   | 1      |       | 1.000  |       | 0.78711    |       |                                                        |       |
| 60         |   | 187825 |   | 040355 |   | Holland, ST                   |   | 2      |       | 1.000  |       | 0.78711    |       |                                                        |       |
| 61         |   | 971390 |   |   |   | SSM SWD                       |   | 1      | ** ** | 1.000  | ** ** | ** ** | ** ** | ** **                                                  | ** ** |

 

3

----

 
| ** ** |     |     |     |     |     | **Holmes, WL Lease**   |     |     |     |     |     |     |     |     |     |
|------------|----------|----------|----------|----------|----------|------------------------|----------|----------|----------|----------|----------|----------|----------|----------|----------|
| 62         |     | 154696   |     | 034641   |     | Holmes, WL             |     | 1        |     | 1.000    |     | 0.75000  |     |     |     |
| 63         |     | 154738   |     | 034641   |     | Holmes, WL             |     | 2        |     | 1.000    |     | 0.75000  |     |     |     |
| 64         |     | 154737   |     | 034641   |     | Holmes, WL             |     | 3        |     | 1.000    |     | 0.75000  |     |     |     |
|       |     |     |     |     |     |                   |     |     |     |     |     |     |     |     |     |
| ** ** |     |     |     |     |     | **J Jones Lease**      |     |     |     |     |     |     |     |     |     |
| 65         |     | 77712    |     | 010223   |     | J Jones                |     | 1        |     | 1.000    |     | 0.82639  |     |     |     |
| 66         |     | 77885    |     | 010223   |     | J Jones                |     | 2        |     | 1.000    |     | 0.82639  |     |     |     |
| 67         |     | 80893    |     | 010223   |     | J Jones                |     | 3        |     | 1.000    |     | 0.82639  |     |     |     |
| 68         |     | 80331    |     | 010223   |     | J Jones                |     | 4        |     | 1.000    |     | 0.82639  |     |     |     |
| 69         |     | 82292    |     | 010223   |     | J Jones                |     | 5        |     | 1.000    |     | 0.82639  |     |     |     |
| 70         |     | 82778    |     | 010223   |     | J Jones                |     | 6        |     | 1.000    |     | 0.82639  |     |     |     |
| 71         |     | 83229    |     | 010223   |     | J Jones                |     | 8        |     | 1.000    |     | 0.82639  |     |     |     |
| 72         |     | 204917   |     | 010223   |     | J Jones                |     | 11       |     | 1.000    |     | 0.82639  |     |     |     |
| 73         |     | 972679   |     | 010223   |     | J Jones SWD            |     | 12       |     | 1.000    |     |     |     |     |     |
|       |     |     |     |     |     |                   |     |     |     |     |     |     |     |     |     |
| ** ** |     |     |     |     |     | **J Jones A Lease**    |     |     |     |     |     |     |     |     |     |
| 74         |     | 212912   |     | 046565   |     | J Jones A              |     | 2        |     | 1.000    |     | 0.83000  |     |     |     |
| 75         |     | 212913   |     | 046565   |     | J Jones A              |     | 3        |     | 1.000    |     | 0.83000  |     |     |     |
| 76         |     | 83979    |     | 046565   |     | J Jones A              |     | 4        |     | 1.000    |     | 0.83000  |     |     |     |
|       |     |     |     |     |     |                   |     |     |     |     |     |     |     |     |     |
| ** ** | * * | * * | * * | * * | * * | **Kyle-Davis Lease**   | * * | * * | * * | * * | * * | * * | * * | * * | * * |
| 77         |     | 9400     |     | 007688   |     | Kyle-Davis             |     | 1        |     | 1.000    |     | 0.83000  |     |     |     |
|       |     |     |     |     |     |                   |     |     |     |     |     |     |     |     |     |
| ** ** |     |     |     |     |     | **La Pacific O Lease** |     |     |     |     |     |     |     |     |     |
| 78         |     | 154412   |     | 039847   |     | LA PACIFIC O           |     | 2        |     | 1.000    |     | 0.80000  |     |     |     |
| 79         |     | 156342   |     | 039847   |     | LA PACIFIC O           |     | 5        |     | 1.000    |     | 0.80000  |     |     |     |
| 80         |     | 155943   |     | 039847   |     | LA PACIFIC O           |     | 2D       |     | 1.000    |     | 0.80000  |     |     |     |
| 81         |     | 156839   |     | 039847   |     | LA PACIFIC O  SWD      |     | 6        |     | 1.000    |     |     |     |     |     |
|       |     |     |     |     |     |                   |     |     |     |     |     |     |     |     |     |
| ** ** |     |     |     |     |     | **La Pacific Lease**   |     |     |     |     |     |     |     |     |     |
| 82         |     | 150510   |     | 034425   |     | La Pacific             |     | 1        |     | 1.000    |     | 0.80000  |     |     |     |
| 83         |     | 150771   |     | 034425   |     | La Pacific             |     | 3        |     | 1.000    |     | 0.80000  |     |     |     |
| 84         |     | 154606   |     | 034425   |     | La Pacific             |     | 4        |     | 1.000    |     | 0.80000  |     |     |     |
| 85         |     | 154605   |     | 034425   |     | La Pacific  SWD        |     | 5        |     | 1.000    |     |     |     |     |     |

 

4

----

 
| 86         |   | 009597                                                                                          |   | 009751 |   | Urania Voltz               |   | 1      |   | 1.000  |   | 0.80000 |   |                   |   |
|------------|--------|-------------------------------------------------------------------------------------------------|--------|--------|--------|----------------------------|--------|--------|--------|--------|--------|---------|--------|------------------------|--------|
| 87         |   | 059103                                                                                          |   | 009751 |   | Urania Voltz               |   | 2      |   | 1.000  |   | 0.80000 |   |                   |   |
| 88         |   | 148110                                                                                          |   | 009751 |   | Urania Voltz               |   | 3      |   | 1.000  |   | 0.80000 |   |                   |   |
| 89         |   | 175370                                                                                          |   | 009751 |   | Urania Voltz               |   | 4      |   | 1.000  |   | 0.80000 |   |                   |   |
| 90         |   | 175371                                                                                          |   | 009751 |   | Urania Voltz               |   | 5      |   | 1.000  |   | 0.80000 |   |                   |   |
| 91         |   | 096703                                                                                          |   | 009751 |   | Urania Voltz               |   | 6      |   | 1.000  |   | 0.80000 |   |                   |   |
|       |   |                                                                                            |   |   |   |                       |   |   |   |   |   |    |   |                   |   |
| ** ** |   |                                                                                            |   |   |   | **La Salle St Bank Lease** |   |   |   |   |   |    |   |                   |   |
| 92         |   | 190522                                                                                          |   | 040711 |   | LASALLE ST  BANK           |   | 3      |   | 1.000  |   | 0.80000 |   |                   |   |
| 93         |   | 190558                                                                                          |   | 040711 |   | LASALLE ST  BANK           |   | 4      |   | 1.000  |   | 0.80000 |   |                   |   |
|       |   |                                                                                            |   |   |   |                       |   |   |   |   |   |    |   |                   |   |
| ** ** |   |                                                                                            |   |   |   | **Loe, Glen D Lease**      |   |   |   |   |   |    |   |                   |   |
| 94         |   | 196405                                                                                          |   | 041637 |   | Loe, Glen D                |   | 1      |   | 1.000  |   |    |   | no lease or production |   |
| 95         |   | 196406                                                                                          |   | 041637 |   | Loe, Glen D                |   | 2      |   | 1.000  |   |    |   | no lease or production |   |
| 96         |   | 197043                                                                                          |   | 041637 |   | Loe, Glen D                |   | 3      |   | 1.000  |   |    |   | no lease or production |   |
| 97         |   | 197330                                                                                          |   | 041637 |   | Loe, Glen D                |   | 4      |   | 1.000  |   |    |   | no lease or production |   |
|       |   |                                                                                            |   |   |   |                       |   |   |   |   |   |    |   |                   |   |
| ** ** |   |                                                                                            |   |   |   | **Long, CO Lease**         |   |   |   |   |   |    |   |                   |   |
| 98         |   | 146924                                                                                          |   | 033544 |   | Long , CO                  |   | 1      |   | 1.000  |   | 0.80000 |   |                   |   |
| 99         |   | 153135                                                                                          |   | 033544 |   | Long , CO                  |   | 2      |   | 1.000  |   | 0.80000 |   |                   |   |
| 100        |   | 153170                                                                                          |   | 033544 |   | Long , CO                  |   | 3      |   | 1.000  |   | 0.80000 |   |                   |   |
| 101        |   | 153171                                                                                          |   | 033544 |   | Long , CO                  |   | 4      |   | 1.000  |   | 0.80000 |   |                   |   |
| 102        |   | 153346                                                                                          |   | 033544 |   | Long , CO                  |   | 5      |   | 1.000  |   | 0.80000 |   |                   |   |
|       |   |                                                                                            |   |   |   |                       |   |   |   |   |   |    |   |                   |   |
| ** ** |   |                                                                                            |   |   |   | **Long, Mary Lease**       |   |   |   |   |   |    |   |                   |   |
| 103        |   | 146886                                                                                          |   | 033540 |   | Long, Mary                 |   | 1      |   | 1.000  |   |    |   | no lease or production |   |
| 104        |   | 153134                                                                                          |   | 033540 |   | Long, Mary                 |   | 2      |   | 1.000  |   |    |   |                   |   |
|       |   |                                                                                            |   |   |   |                       |   |   |   |   |   |    |   |                   |   |
| ** ** |   |                                                                                            |   |   |   | **Long, TC Lease**         |   |   |   |   |   |    |   |                   |   |
| 105        |   | 71148                                                                                           |   | 007906 |   | Long, TC                   |   | 1      |   | 1.000  |   | 0.75000 |   |                   |   |
| 106        |   | 165436                                                                                          |   | No LUW |   | Long, TC                   |   | 3      |   | 1.000  |   | 0.75000 |   |                   |   |
|       |   | http://sonlite.  dnr.state.la.us  /sundown/cart  _prod/cart_co  n_wellinfo2?  p_wsn=17248  0%20 |   |   |   |                       |   |   |   |   |   |    |   |                   |   |

 

5

----

 
| 107        |       | 163343                                                                                          |       |       |       | Maxwell SWD                 |       | 1          | ** ** | 1.000      | ** ** | ** ** | ** ** | ** ** | ** ** |
|------------|------------|-------------------------------------------------------------------------------------------------|------------|------------|------------|-----------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** ** | ** ** | ** **                                                                                      | ** ** | ** ** | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** ** |       |                                                                                            |       |       |       | **Meredith C, SK Lease**    |       |       |       |       |       |       |       |       |       |
| 108        |       | 183009                                                                                          |       | 039273     |       | Meredith C,  SK             |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |
| 109        |       | 183012                                                                                          |       | 039273     |       | Meredith C,  SK             |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
| 110        |       | 183013                                                                                          |       | 039273     |       | Meredith C,  SK             |       | 5          |       | 1.000      |       | 0.80000    |       |       |       |
| 111        |       | 154273                                                                                          |       | 034685     |       | Meredith,  Cecil            |       | 2          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |                                                                                            |       |       |       |                        |       |       |       |       |       |       |       |       |       |
| ** ** |       |                                                                                            |       |       |       | **MILES HEIRS Lease**       |       |       |       |       |       |       |       |       |       |
| 112        |       | 191214                                                                                          |       | 040915     |       | MILES HEIRS                 |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |
| 113        |       | 191251                                                                                          |       | 040915     |       | MILES HEIRS                 |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |                                                                                            |       |       |       |                        |       |       |       |       |       |       |       |       |       |
| ** ** |       |                                                                                            |       |       |       | **MILES - AG OIL EJ Lease** |       |       |       |       |       |       |       |       |       |
| 114        |       | 172482                                                                                          |       | 037360     |       | MILES-AG  OIL-EJ            |       | 3          |       | 1.000      |       | 0.80000    |       |       |       |
| 115        |       | 172483                                                                                          |       | 037360     |       | MILES-AG  OIL-EJ            |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
| 116        |       | 172480                                                                                          |       | 037360     |       | MILES-AG  OILEJ SWD         |       | 1          |       | 1.000      |       |       |       |       |       |
|       |       |                                                                                            |       |       |       |                        |       |       |       |       |       |       |       |       |       |
|       | ** ** | http://sonlite.  dnr.state.la.us  /sundown/car  t_prod/cart_c  on_wellinfo2  ?p_wsn=172  480%20 |       |       |       | **Miles Essex Lease**       |       |       |       |       |       |       |       |       |       |
| 117        |       | 190736                                                                                          |       | 040778     |       | MILES-ESSEX                 |       | 3          |       | 1.000      |       | 0.80000    |       |       |       |
| 118        |       | 190783                                                                                          |       | 040778     |       | MILES-ESSEX                 |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |                                                                                            |       |       |       |                        |       |       |       |       |       |       |       |       |       |
| ** ** |       |                                                                                            |       |       |       | **MDP Maxwell Lease**       |       |       |       |       |       |       |       |       |       |
| 119        |       | 179671                                                                                          |       | 038553     |       | MDP MAXWELL                 |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |
| 120        |       | 179672                                                                                          |       | 038553     |       | MDP MAXWELL                 |       | 2          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |                                                                                            |       |       |       |                        |       |       |       |       |       |       |       |       |       |
| ** ** |       |                                                                                            |       |       |       | **MOP Lease**               |       |       |       |       |       |       |       |       |       |
| 121        |       | 91994                                                                                           |       | 016494     |       | Missouri  Pacific RR        |       | 2          |       | 1.000      |       | 0.75000    |       |       |       |
| 122        |       | 83963                                                                                           |       | 012886     |       | MOP #1 SWD                  |       | 1          |       | 1.000      |       |       |       |       |       |

 

6

----

 
| 123        |   | 183703 |   | 039526 |   | MOPAC SSS                   |   | 8      |       | 1.000  |       | 0.80000    |       |       |       |
|------------|--------|--------|--------|--------|--------|-----------------------------|--------|--------|------------|--------|------------|------------|------------|------------|------------|
|       |   |   |   |   |   |                        |   |   |       |   |       |       |       |       |       |
| ** ** |   |   |   |   |   | **Morrison, James Lease**   |   |   |       |   |       |       |       |       |       |
| 124        |   | 176677 |   | 038190 |   | Morrison, James             |   | 1      |       | 1.000  |       | 0.83000    |       |       |       |
|       |   |   |   |   |   |                        |   |   |       |   |       |       |       |       |       |
| ** ** |   |   |   |   |   | **Maxwell, JC M80 Lease**   |   |   |       |   |       |       |       |       |       |
| 125        |   | 170664 |   | 037215 |   | Maxwell, JC M80             |   | 1      |       | 1.000  |       | 0.80000    |       |       |       |
| 126        |   | 171769 |   | 037215 |   | Maxwell, JC M80             |   | 2      |       | 1.000  |       | 0.80000    |       |       |       |
| 127        |   | 171770 |   | 037215 |   | Maxwell, JC M80             |   | 3      |       | 1.000  |       | 0.80000    |       |       |       |
|       |   |   |   |   |   |                        |   |   |       |   |       |       |       |       |       |
| ** ** |   |   |   |   |   | **Pendarvis Lease**         |   |   |       |   |       |       |       |       |       |
| 128        |   | 193250 |   | 041573 |   | PENDARVIS                   |   | 1      |       | 1.000  |       | 0.7657824  |       |       |       |
| 129        |   | 193251 |   | 041573 |   | PENDARVIS                   |   | 2      |       | 1.000  |       | 0.7657824  |       |       |       |
| 130        |   | 193252 |   | 041573 |   | PENDARVIS                   |   | 3      |       | 1.000  |       | 0.7657824  |       |       |       |
| 131        |   | 193253 |   | 041573 |   | PENDARVIS                   |   | 4      |       | 1.000  |       | 0.7657824  |       |       |       |
| 132        |   | 193255 |   | 041573 |   | PENDARVIS                   |   | 6      |       | 1.000  |       | 0.7657824  |       |       |       |
| 133        |   | 194757 |   | 041573 |   | PENDARVIS                   |   | 7      |       | 1.000  |       | 0.7657824  |       |       |       |
| 134        |   | 194759 |   | 041573 |   | PENDARVIS                   |   | 9      |       | 1.000  |       | 0.7657824  |       |       |       |
| 135        |   | 194760 |   | 041573 |   | PENDARVIS                   |   | 10     |       | 1.000  |       | 0.7657824  |       |       |       |
| 136        |   | 194761 |   | 041573 |   | PENDARVIS                   |   | 11     |       | 1.000  |       | 0.7657824  |       |       |       |
| 137        |   | 194762 |   | 041573 |   | PENDARVIS                   |   | 12     |       | 1.000  |       | 0.7657824  |       |       |       |
| 138        |   | 194763 |   | 041573 |   | PENDARVIS                   |   | 13     |       | 1.000  |       | 0.7657824  |       |       |       |
| 139        |   | 194764 |   | 041573 |   | PENDARVIS                   |   | 14     |       | 1.000  |       | 0.7657824  |       |       |       |
| 140        |   | 10281  |   | 008680 |   | PENDARVIS A                 |   | 3      |       | 1.000  |       | 0.7657824  |       |       |       |
| 141        |   | 10331  |   | 008680 |   | PENDARVIS A                 |   | 4      |       | 1.000  |       | 0.7657824  |       |       |       |
| 142        |   | 971428 |   |   |   | PENDARVIS A SWD             |   | 1      | ** ** | 1.000  | ** ** | ** ** | ** ** | ** ** | ** ** |
|       |   |   |   |   |   |                        |   |   |       |   |       |       |       |       |       |
| ** ** |   |   |   |   |   | **Pendarvis LaPetro Lease** |   |   |       |   |       |       |       |       |       |
| 143        |   | 193828 |   | 041572 |   | Pendarvis - La Petro        |   | 1      |       | 1.000  |       | 0.7657824  |       |       |       |
| 144        |   | 193829 |   | 041572 |   | Pendarvis - La Petro        |   | 2      |       | 1.000  |       | 0.7657824  |       |       |       |
| 145        |   | 193830 |   | 041572 |   | Pendarvis - La Petro        |   | 3      |       | 1.000  |       | 0.7657824  |       |       |       |
| 146        |   | 193831 |   | 041572 |   | Pendarvis - La Petro        |   | 4      |       | 1.000  |       | 0.7657824  |       |       |       |
| 147        |   | 193832 |   | 041572 |   | Pendarvis - La Petro        |   | 5      |       | 1.000  |       | 0.7657824  |       |       |       |
| 148        |   | 193833 |   | 041572 |   | Pendarvis - La Petro        |   | 6      |       | 1.000  |       | 0.7657824  |       |       |       |
| 149        |   | 193834 |   | 041572 |   | Pendarvis - La Petro        |   | 7      |       | 1.000  |       | 0.7657824  |       |       |       |
| 150        |   | 193835 |   | 041572 |   | Pendarvis - La Petro        |   | 8      |       | 1.000  |       | 0.7657824  |       |       |       |

 

7

----

 
| 151        |   | 193837                                                                                          |   | 041572 |   | Pendarvis - La Petro    |   | 10      |   | 1.000  |   | 0.7657824 |   |   |   |
|------------|--------|-------------------------------------------------------------------------------------------------|--------|--------|--------|-------------------------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|
| 152        |   | 193838                                                                                          |   | 041572 |   | Pendarvis - La Petro    |   | 11      |   | 1.000  |   | 0.7657824 |   |   |   |
| 153        |   | 194758                                                                                          |   | 041572 |   | Pendarvis - La Petro    |   | 12  SWD |   | 1.000  |   |      |   |   |   |
|       |   | http://sonlite.  dnr.state.la.u  s/sundown/ca  rt_prod/cart_  con_wellinfo  2?p_wsn=97  1428%20 |   |   |   |                    |   |    |   |   |   |      |   |   |   |
| ** ** |   |                                                                                            |   |   |   | **Pringle Heirs Lease** |   |    |   |   |   |      |   |   |   |
| 154        |   | 158868                                                                                          |   | 035563 |   | Pringle Heirs           |   | 1       |   | 1.000  |   | 0.81250   |   |   |   |
| 155        |   | 162747                                                                                          |   | 035563 |   | Pringle Heirs SWD       |   | 2       |   | 1.000  |   |      |   |   |   |
| 156        |   | 19432                                                                                           |   | 035563 |   | Pringle SWD             |   | 3       |   | 1.000  |   |      |   |   |   |
|       |   |                                                                                            |   |   |   |                    |   |    |   |   |   |      |   |   |   |
| ** ** |   |                                                                                            |   |   |   | **PV 80 MILES TB**      |   |    |   |   |   |      |   |   |   |
| 157        |   | 172920                                                                                          |   | 037330 |   | PV 80 - MILES           |   | 1       |   | 1.000  |   | 0.80000   |   |   |   |
| 158        |   | 172922                                                                                          |   | 037330 |   | PV 80 - MILES           |   | 3       |   | 1.000  |   | 0.80000   |   |   |   |
| 159        |   | 172923                                                                                          |   | 037330 |   | PV 80 - MILES           |   | 4       |   | 1.000  |   | 0.80000   |   |   |   |
| 160        |   | 172924                                                                                          |   | 037330 |   | PV 80 - MILES           |   | 5       |   | 1.000  |   | 0.80000   |   |   |   |
| 161        |   | 172925                                                                                          |   | 037330 |   | PV 80 - MILES           |   | 6       |   | 1.000  |   | 0.80000   |   |   |   |
| 162        |   | 172926                                                                                          |   | 037330 |   | PV 80 - MILES           |   | 7       |   | 1.000  |   | 0.80000   |   |   |   |
| 163        |   | 174930                                                                                          |   | 037330 |   | PV 80 - MILES           |   | 9       |   | 1.000  |   | 0.80000   |   |   |   |
| 164        |   | 182489                                                                                          |   | 039369 |   | JRB MAXWELL             |   | 2       |   | 1.000  |   | 0.80000   |   |   |   |
|       |   |                                                                                            |   |   |   |                    |   |    |   |   |   |      |   |   |   |
| ** ** |   |                                                                                            |   |   |   | **PV 80 - MOPAC Lease** |   |    |   |   |   |      |   |   |   |
| 165        |   | 172927                                                                                          |   | 037539 |   | PV 80 - MOPAC           |   | 2       |   | 1.000  |   | 0.75000   |   |   |   |
| 166        |   | 172928                                                                                          |   | 037539 |   | PV 80 - MOPAC           |   | 3       |   | 1.000  |   | 0.75000   |   |   |   |
| 167        |   | 172929                                                                                          |   | 037539 |   | PV 80 - MOPAC           |   | 4       |   | 1.000  |   | 0.75000   |   |   |   |
| 168        |   | 172930                                                                                          |   | 037539 |   | PV 80 - MOPAC           |   | 5       |   | 1.000  |   | 0.75000   |   |   |   |
| 169        |   | 174030                                                                                          |   | 037539 |   | PV 80 - MOPAC           |   | 7       |   | 1.000  |   | 0.75000   |   |   |   |
| 170        |   | 174029                                                                                          |   | 037539 |   | PV 80 - MOPAC           |   | 8       |   | 1.000  |   | 0.75000   |   |   |   |
|       |   |                                                                                            |   |   |   |                    |   |    |   |   |   |      |   |   |   |
| ** ** |   |                                                                                            |   |   |   | **Tensas BLD Lease**    |   |    |   |   |   |      |   |   |   |
| 171        |   | 134605                                                                                          |   | 031228 |   | Tensas BLD              |   | 1       |   | 1.000  |   | 0.75000   |   |   |   |
| 172        |   | 178732                                                                                          |   | 031228 |   | Tensas BLD              |   | 3       |   | 1.000  |   | 0.75000   |   |   |   |

 

8

----

 
| 173        |   | 183525 |   | 031228 |   | Tensas BLD             |   | 4      |   | 1.000  |   | 0.75000 |   |                           |   |
|------------|--------|--------|--------|--------|--------|------------------------|--------|--------|--------|--------|--------|---------|--------|--------------------------------|--------|
| 174        |   | 178731 |   | 031228 |   | Tensas BLD             |   | 5      |   | 1.000  |   | 0.75000 |   |                           |   |
| 175        |   | 990623 |   | 031228 |   | Tensas BLD SWD         |   | 2      |   | 1.000  |   |    |   |                           |   |
|       |   |   |   |   |   |                   |   |   |   |   |   |    |   |                           |   |
| ** ** |   |   |   |   |   | **Tensas BLD A Lease** |   |   |   |   |   |    |   |                           |   |
| 176        |   | 59321  |   | 009515 |   | Tensas BLD A           |   | 1      |   | 1.000  |   | 0.80000 |   |                           |   |
| 177        |   | 64687  |   | 009515 |   | Tensas BLD A           |   | 2      |   | 1.000  |   | 0.80000 |   |                           |   |
| 178        |   | 153875 |   | 009515 |   | Tensas BLD A           |   | 5      |   | 1.000  |   | 0.80000 |   |                           |   |
| 179        |   | 153876 |   | 009515 |   | Tensas BLD A           |   | 6      |   | 1.000  |   | 0.80000 |   |                           |   |
| 180        |   | 182387 |   | 009515 |   | Tensas BLD A           |   | 7      |   | 1.000  |   | 0.80000 |   |                           |   |
|       |   |   |   |   |   |                   |   |   |   |   |   |    |   |                           |   |
| ** ** |   |   |   |   |   | **Tremont B Lease**    |   |   |   |   |   |    |   |                           |   |
| 181        |   | 187623 |   | 043930 |   | Tremont B              |   | 1      |   | 1.000  |   | 0.78711 |   |                           |   |
| 182        |   | 187822 |   | 043930 |   | Tremont B              |   | 3      |   | 1.000  |   | 0.78711 |   |                           |   |
| 183        |   | 187824 |   | 043930 |   | Tremont B              |   | 4      |   | 1.000  |   | 0.78711 |   |                           |   |
| 184        |   | 188181 |   | 043930 |   | Tremont B              |   | 5      |   | 1.000  |   | 0.78711 |   |                           |   |
| 185        |   | 189535 |   | 043930 |   | Tremont B              |   | 6      |   | 1.000  |   | 0.78711 |   |                           |   |
| 186        |   | 189696 |   | 043930 |   | Tremont B              |   | 7      |   | 1.000  |   | 0.78711 |   |                           |   |
| 187        |   | 191207 |   | 043930 |   | Tremont B              |   | 9      |   | 1.000  |   | 0.78711 |   |                           |   |
| 188        |   | 178262 |   | 043930 |   | Tremont B              |   | 10     |   | 1.000  |   | 0.78711 |   |                           |   |
| 189        |   | 182059 |   | 043930 |   | Tremont B              |   | 11     |   | 1.000  |   | 0.78711 |   |                           |   |
| 190        |   | 182291 |   | 043930 |   | Tremont B              |   | 12     |   | 1.000  |   | 0.78711 |   |                           |   |
| 191        |   | 182292 |   | 043930 |   | Tremont B              |   | 13     |   | 1.000  |   | 0.78711 |   |                           |   |
| 192        |   | 182295 |   | 043930 |   | Tremont B              |   | 14     |   | 1.000  |   | 0.78711 |   |                           |   |
| 193        |   | 182296 |   | 043930 |   | Tremont B              |   | 15     |   | 1.000  |   | 0.78711 |   |                           |   |
| 194        |   | 183884 |   | 043930 |   | Tremont B              |   | 16     |   | 1.000  |   | 0.78711 |   |                           |   |
| 195        |   | 187820 |   | 043930 |   | Tremont B SWD          |   | 1      |   | 1.000  |   |    |   |                           |   |
| 196        |   | 191205 |   |   |   | Tremont B              |   | 8      |   | 1.000  |   | 0.78711 |   | P&A  but remains on SONRIS |   |
| 197        |   | 183885 |   |   |   | Tremont B              |   | 17     |   | 1.000  |   | 0.78711 |   | P&A  but remains on SONRIS |   |
|       |   |   |   |   |   |                   |   |   |   |   |   |    |   |                           |   |
| ** ** |   |   |   |   |   | **Tremont SSS Lease**  |   |   |   |   |   |    |   |                           |   |
| 198        |   | 182799 |   | 039161 |   | Tremont SSS            |   | 1      |   | 1.000  |   | 0.80000 |   |                           |   |
| 199        |   | 182800 |   | 039161 |   | Tremont SSS            |   | 2      |   | 1.000  |   | 0.80000 |   |                           |   |

 

9

----

 
| 200        |   | 182801                                                                                          |   | 039161       |   | Tremont SSS        |   | 3            |   | 1.000        |   | 0.80000      |   |                                                 |   |
|------------|--------|-------------------------------------------------------------------------------------------------|--------|--------------|--------|--------------------|--------|--------------|--------|--------------|--------|--------------|--------|------------------------------------------------------|--------|
| 201        |   | 182802                                                                                          |   | 039161       |   | Tremont SSS        |   | 4            |   | 1.000        |   | 0.80000      |   |                                                 |   |
| 202        |   | 182803                                                                                          |   | 039161       |   | Tremont SSS        |   | 5            |   | 1.000        |   | 0.80000      |   |                                                 |   |
| 203        |   | 182804                                                                                          |   | 039161       |   | Tremont SSS        |   | 6            |   | 1.000        |   | 0.80000      |   |                                                 |   |
| 204        |   | 182805                                                                                          |   | 039161       |   | Tremont SSS        |   | 7            |   | 1.000        |   | 0.80000      |   |                                                 |   |
| 205        |   | 184928                                                                                          |   | 039161       |   | Tremont SSS        |   | 8            |   | 1.000        |   | 0.80000      |   |                                                 |   |
|       |   |                                                                                            |   |         |   |               |   |         |   |         |   |         |   |                                                 |   |
| 206        |   | 990137                                                                                          |   | 009660       |   | Tullos, Frank      |   | 1            |   | 1.000        |   |         |   | no  lease or production                              |   |
| 207        |   | 203730                                                                                          |   | 009660       |   | Tullos, Frank      |   | 2            |   | 1.000        |   |         |   | no  lease or production                              |   |
|       |   |                                                                                            |   |         |   |               |   |         |   |         |   |         |   |                                                 |   |
| ** ** |   |                                                                                            |   |         |   | **Urania A Lease** |   |         |   |         |   |         |   |                                                 |   |
| 208        |   | 214541                                                                                          |   | 047519       |   | URANIA             |   | 1            |   | 1.000        |   | 0.75000      |   |                                                 |   |
| 209        |   | 214542                                                                                          |   | 047519       |   | URANIA             |   | 2            |   | 1.000        |   | 0.75000      |   |                                                 |   |
| 210        |   | 127062                                                                                          |   | 040908       |   | URANIA LBR CO A    |   | 1            |   | 1.000        |   | 0.75000      |   |                                                 |   |
| 211        |   | 127414                                                                                          |   | 040908       |   | URANIA LBR CO A    |   | 2            |   | 1.000        |   | 0.75000      |   | Sonris  records not updated for transfer from Atkins |   |
| 212        |   | 127415                                                                                          |   | 040908       |   | URANIA LBR CO A    |   | 5            |   | 1.000        |   | 0.75000      |   |                                                 |   |
| 213        |   | 126926                                                                                          |   | 040908       |   | URANIA LBR CO A    |   | 6            |   | 1.000        |   | 0.75000      |   |                                                 |   |
| 214        |   | 127417                                                                                          |   | 040908       |   | URANIA LBR CO A    |   | 7            |   | 1.000        |   | 0.75000      |   |                                                 |   |
| ** ** |   | ** **                                                                                      |   | ** **   |   | ** **         |   | ** **   |   | ** **   |   | ** **   |   |                                                 |   |
|       |   | http://sonlite.  dnr.state.la.u  s/sundown/ca  rt_prod/cart_  con_wellinfo  2?p_wsn=97  1269%20 |   | *** *** |   | **Urania B Lease** |   | *** *** |   | *** *** |   | *** *** |   |                                                 |   |
| 215        |   | 127264                                                                                          |   | 040909       |   | URANIA LBR CO B    |   | 1            |   | 1.000        |   | 0.75000      |   |                                                 |   |
| 216        |   | 127418                                                                                          |   | 040909       |   | URANIA LBR CO B    |   | 3            |   | 1.000        |   | 0.75000      |   | Sonris records not  updated for transfer from Atkins |   |
| 217        |   | 214543                                                                                          |   | 047519       |   | URANIA             |   | 3            |   | 1.000        |   | 0.75000      |   |                                                 |   |

 

10

----

 
|       |     |                                                                                            |     |     |     | **Urania C TB**             |     |     |       |     |       |       |       |                                                |       |
|------------|----------|-------------------------------------------------------------------------------------------------|----------|----------|----------|-----------------------------|----------|----------|------------|----------|------------|------------|------------|-----------------------------------------------------|------------|
| 218        |     | 127389                                                                                          |     | 040910   |     | URANIA LBR  CO C            |     | 1        |       | 1.000    |       | 0.75000    |       | Sonris records not updated for transfer from Atkins |       |
| 219        |     | 128428                                                                                          |     | 040910   |     | URANIA LBR  CO C            |     | 3        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 220        |     | 128427                                                                                          |     | 040910   |     | URANIA LBR  CO C            |     | 6        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 221        |     | 121694                                                                                          |     | 040910   |     | URANIA LBR  CO C            |     | 7        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 222        |     | 125446                                                                                          |     | 040910   |     | URANIA LBR  CO C            |     | 8        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 223        |     | 134419                                                                                          |     | 029323   |     | HARDTNER-EDENBORN           |     | 1        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 224        |     | 128374                                                                                          |     | 040909   |     | URANIA LBR  CO B            |     | 4        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 225        |     | 128336                                                                                          |     | 040909   |     | URANIA LBR  CO B SWD        |     | 2        |       | 1.000    |       |       |       |                                                |       |
| 226        |     | 971269                                                                                          |     |     |     | URANIA LBR  CO E SWD        |     | 1        | ** ** | 1.000    | ** ** | ** ** | ** ** | ** **                                          | ** ** |
|       |     |                                                                                            |     |     |     |                        |     |     |       |     |       |       |       |                                                |       |
| ** ** | * * | * *                                                                                        | * * | * * | * * | **Urania  LTF Lease**       | * * | * * | * *   | * * | * *   | * *   | * *   | * *                                            | * *   |
| 227        |     | 187028                                                                                          |     | 040144   |     | Urania, LTF                 |     | 1        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 228        |     | 193625                                                                                          |     | 040144   |     | Urania, LTF                 |     | 6        |       | 1.000    |       | 0.75000    |       |                                                |       |
|       |     | http://sonlite.  dnr.state.la.u  s/sundown/ca  rt_prod/cart_  con_wellinfo  2?p_wsn=97  1269%20 |     |     |     |                        |     |     |       |     |       |       |       |                                                |       |
| ** ** |     |                                                                                            |     |     |     | **Urania  Shemen  TB** |     |     |       |     |       |       |       |                                                |       |
| 229        |     | 191712                                                                                          |     | 041167   |     | URANIA-SHEMEN               |     | 1        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 230        |     | 191713                                                                                          |     | 041167   |     | URANIA-SHEMEN               |     | 2        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 231        |     | 191714                                                                                          |     | 041167   |     | URANIA-SHEMEN               |     | 3        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 232        |     | 115191                                                                                          |     | 040839   |     | URANIA LBRCO  D             |     | 1        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 233        |     | 115192                                                                                          |     | 040839   |     | URANIA LBRCO  D             |     | 2        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 234        |     | 115468                                                                                          |     | 040839   |     | URANIA LBRCO  D             |     | 3        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 235        |     | 191709                                                                                          |     | 041134   |     | URANIA  A-SHEMEN            |     | 1        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 236        |     | 191784                                                                                          |     | 041134   |     | URANIA  A-SHEMEN            |     | 2        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 237        |     | 191783                                                                                          |     | 041135   |     | URANIA  C-SHEMEN            |     | 1        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 238        |     | 191779                                                                                          |     | 041135   |     | URANIA  C-SHEMEN            |     | 2        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 239        |     | 114278                                                                                          |     | 040908   |     | URANIA LBR  CO A            |     | 3        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 240        |     | 114442                                                                                          |     | 040908   |     | URANIA LBR  CO A            |     | 4        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 241        |     | 114534                                                                                          |     | 040908   |     | URANIA LBR  CO A            |     | 8        |       | 1.000    |       | 0.75000    |       |                                                |       |
| 242        |     | 115773                                                                                          |     | 040910   |     | URANIA LBR  CO C            |     | 2        |       | 1.000    |       | 0.75000    |       |                                                |       |

 

11

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| 243        |         | 116282       |         | 040910       |         | URANIA LBR  CO C         |         | 4            |         | 1.000        |         | 0.75000      |         |         |   |
|------------|--------------|--------------|--------------|--------------|--------------|--------------------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------|
| 244        |         | 115986       |         | 040910       |         | URANIA LBR  CO C         |         | 5            |         | 1.000        |         | 0.75000      |         |         |   |
| 245        |         | 971328       |         |         |         | URANIA LBR  CO SWD       |         | 1            |         | 1.000        |         |         |         |         |   |
| 246        |         | 191788       |         | 041134       |         | URANIA  A-SHEMEN SWD     |         | 6            |         | 1.000        |         |         |         |         |   |
|       |         |         |         |         |         |                     |         |         |         |         |         |         |         |         |   |
| ** ** |         |         |         |         |         | **Urania  Stenco Lease** |         |         |         |         |         |         |         |         |   |
| 247        |         | 126642       |         | 026661       |         | URANIA-STENCO            |         | 2            |         | 1.000        |         | 0.80000      |         |         |   |
| 248        |         | 33328        |         | 026661       |         | URANIA-STENCO            |         | 3            |         | 1.000        |         | 0.80000      |         |         |   |
|       |         |         |         |         |         |                     |         |         |         |         |         |         |         |         |   |
| ** ** |         |         |         |         |         | **Walsh  Lease**         |         |         |         |         |         |         |         |         |   |
| 249        |         | 72539        |         | 009846       |         | Walsh                    |         | 1            |         | 1.000        |         | 0.83000      |         |         |   |
|       |         |         |         |         |         |                     |         |         |         |         |         |         |         |         |   |
| ** ** |         |         |         |         |         | **White ,  Mike Lease**  |         |         |         |         |         |         |         |         |   |
| 250        |         | 189448       |         | 040597       |         | White, Mike              |         | 1            |         | 1.000        |         | 0.78711      |         |         |   |
|       |         |         |         |         |         |                     |         |         |         |         |         |         |         |         |   |
| ** ** |         |         |         |         |         | **Wright ,  WE Lease**   |         |         |         |         |         |         |         |         |   |
| 251        |         | 175340       |         | 037484       |         | Wright, WE               |         | 1            |         | 1.000        |         | 0.83000      |         |         |   |
| 252        |         | 173245       |         | 037484       |         | Wright, WE               |         | 2            |         | 1.000        |         | 0.83000      |         |         |   |
| 253        |         | 174438       |         | 037484       |         | Wright, WE               |         | 3            |         | 1.000        |         | 0.83000      |         |         |   |
|       |         |         |         |         |         |                     |         |         |         |         |         |         |         |         |   |
| ** ** | *** *** | *** *** | *** *** | *** *** | *** *** | **Zimmerman  Lease**     | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** |   |
| 254        |         | 990136       |         | 010118       |         | Zimmerman                |         | 6            |         | 1.000        |         | 0.80000      |         |         |   |
| 255        |         | 43888        |         | 010118       |         | Zimmerman                |         | 14           |         | 1.000        |         | 0.80000      | *** *** | *** *** |   |
| 256        |         | 53293        |         | 010118       |         | Zimmerman                |         | 16           |         | 1.000        |         | 0.80000      |         |         |   |
| 257        |         | 58021        |         | 010118       |         | Zimmerman                |         | 17           |         | 1.000        |         | 0.80000      |         |         |   |
| 258        |         | 62964        |         | 010118       |         | Zimmerman                |         | 18           |         | 1.000        |         | 0.80000      | ** **   | ** **   |   |
| 259        |         | 66344        |         | 010118       |         | Zimmerman                |         | 19           |         | 1.000        |         | 0.80000      |         |         |   |
| 260        |         | 68370        |         | 010118       |         | Zimmerman                |         | 20           |         | 1.000        |         | 0.80000      | ** **   | ** **   |   |
| 261        |         | 77368        |         | 010118       |         | Zimmerman                |         | 22           |         | 1.000        |         | 0.80000      |         |         |   |
| 262        |         | 86436        |         | 010118       |         | Zimmerman                |         | 23           |         | 1.000        |         | 0.80000      |         |         |   |
| 263        |         | 40901        |         | 010118       |         | Zimmerman                |         | A-4          |         | 1.000        |         | 0.80000      |         |         |   |

 

12

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|   | ** ** | http://sonlite.  dnr.state.la.u  s/sundown/ca  rt_prod/cart_  con_wellinfo  2?p_wsn=99  0136%20 |   |   |   | **Zimmerman , Lex Lease** |   |   |   |   |   |    |       |       |   |
|--------|------------|-------------------------------------------------------------------------------------------------|--------|--------|--------|---------------------------|--------|--------|--------|--------|--------|---------|------------|------------|--------|
| 264    |       | 187003                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 1      |   | 1.000  |   | 0.80000 |       |       |   |
| 265    |       | 187004                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 2      |   | 1.000  |   | 0.80000 |       |       |   |
| 266    |       | 187007                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 4      |   | 1.000  |   | 0.80000 |       |       |   |
| 267    |       | 187008                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 5      |   | 1.000  |   | 0.80000 |       |       |   |
| 268    |       | 187010                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 7      |   | 1.000  |   | 0.80000 |       |       |   |
| 269    |       | 187011                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 8      |   | 1.000  |   | 0.80000 |       |       |   |
| 270    |       | 187012                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 9      |   | 1.000  |   | 0.80000 |       |       |   |
| 271    |       | 187236                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 14     |   | 1.000  |   | 0.80000 |       |       |   |
| 272    |       | 187237                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 15     |   | 1.000  |   | 0.80000 | ** ** | ** ** |   |
| 273    |       | 187238                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 16     |   | 1.000  |   | 0.80000 | ** ** | ** ** |   |
| 274    |       | 187239                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 17     |   | 1.000  |   | 0.80000 |       |       |   |
| 275    |       | 187240                                                                                          |   | 040143 |   | ZIMMERMAN, Lex            |   | 18     |   | 1.000  |   | 0.80000 |       |       |   |
| 276    |       | 236125                                                                                          |   | 40143  |   | Zimmerman,  Lex           |   | 19     |   | 1.000  |   | 0.80000 |       |       |   |
| 277    |       | 187009                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex  SWD |   | 6      |   | 1.000  |   |    |       |       |   |
| 278    |       | 973077                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex SWD       |   | 12     |   | 1.000  |   |    |       |       |   |

 

13

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**Exhibit “A-3”**

 

Attached to and made a part of that certain

Asset Purchase and Sale Agreement dated February 15, 2008

by and between NGS Sub. Corp., as Seller, and

MWM Energy, LLC, as Buyer.

 

**CONTRACTS AND OTHER AGREEMENTS**

 

1.               Pumping Service Contract by and between NGSSub Corp. and Carl Bruce

 

2.               Pumping Service Contract by and between NGSSub Corp. and Sumrall Pumper Service

 

3.               Pumping Service Contract by and between NGSSub Corp. and James W. Sumrall II

 

4.               Pumping Service Contract by and between NGS SubCorp. and Lance Coleman

 

5.               Salt Water Disposal Contract by and betweenNGS Sub Corp. and Page Development, LLC for use of the Hardtner A SWD #2

 

6.               Verbal agreement for salt water disposal byDonnie Morrow into Bradford SWD

 

7.               Verbal agreement for salt water disposal byQuentin Sagdahl into Bradford SWD

 

8.               Verbal agreement for salt water disposal byAJ  & J Thornton into Urania SWD

 

1

----

 

**Exhibit “A-4”**

 

Attached to and made a part of that certain

Asset Purchase and Sale Agreement dated February 15, 2008

by and between NGS Sub. Corp., as Seller, and

MWM Energy, LLC, as Buyer

 

Right-of-Ways,Easements and Surface Leases

 

**NONE**

 

1

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**Exhibit “A-5”**

 

Attached to and made a part of that certain

Asset Purchase and Sale Agreement dated February 15, 2008

by and between NGS Sub. Corp., as Seller, and

MWM Energy, LLC, as Buyer

 

**SURFACE ESTATES**

 

**FEE LAND**

 

**TRACT I:**

 

Lots1, 3, 5, Block 16, Lots 1, 3, 9, 11, Block 21, and Lots 1, 3, 5, 7, 9, 11,Block 23 of the Original Town of Tullos, Section 26, Township 10 North,Range 1 East, LaSalle Parish, Louisiana

** **

**TRACT II**:

 

Acertain parcel of land thirty (30) feet square, situated in the Southwestcorner of property described hereinbelow, with well described below situatedthereon.

 

MonroeWell Service/SSM – SWD #1, serial #971390, Section 25, Township 10 North,Range 2 East, Tullos-Urania Field, LaSalle Parish, Louisiana.

 

TractsI and II, being the same land described in that certain Act of Sale andAssignment dated September 2, 2004 from Atkins Production, Inc. toNGS Sub. Corp., as recorded in Book 291, Page 179 of the Conveyance Booksof LaSalle Parish, Louisiana.

 

1

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**Exhibit “B”**

 

Attached to and made a part of that certain

Asset Purchase and Sale Agreement dated February 15, 2008

by and between NGS Sub. Corp., as Seller, and

MWM Energy, LLC, as Buyer

 

**ESCROW ACCOUNT AGREEMENT**

 

This Escrow Agreement (“Escrow Agreement”) is entered into as of the 15thday of  February, 2008 by and among NGSSub. Corp. (‘Seller”), MWM Energy, LLC (“Buyer”), and together with Seller,sometimes referred to individually as Party and collectively as the “Parties”)and Wells Fargo Bank, N.A. (“Escrow Agent”).

 

The Parties hereby appoint the Escrow Agent as their escrow agent forthe purposes set forth herein, and the Escrow Agent hereby accepts suchappointment under the terms and conditions set forth herein.

 

Now, therefore, the Buyer, Seller and Escrow Agent agree as follows:

 

1.             Concurrent with the execution hereof by allParties and Escrow Agent, Buyer shall deposit into escrow with the Escrow Agentby wire transfer of immediately available funds the sum of One Hundred ThousandAnd No/100 Dollars ($100,000.00) (the “Escrow Deposit”) to be held by EscrowAgent in an interest bearing Money Market Deposit Account as set forth in Schedule1  at Wells Fargo Bank, N.A. (“EscrowAccount”) representing an initial deposit by the Buyer for the purchase of oiland gas producing properties from the Seller.  The Escrow Agent shall hold the Escrow Deposit, together with allinterest accrued thereon (collectively, the “Escrow Funds”) as directed herein.

 

2.             The Escrow Agent shall, promptly upon receiptof the Escrow Deposit deliver a facsimile acknowledgement substantially in theform set forth in Schedule 2, to the Seller and Buyer, acknowledgingreceipt of each such deposit.

 

3.             The Escrow Agent is hereby authorized anddirected to hold the Escrow Funds in the Escrow Account (“Escrow Account”) inaccordance with the terms and provisions hereof, and to disburse the EscrowFund as may be authorized and directed, and only as authorized and directed, byan Approval for Disbursement signed by each of Seller and Buyer substantiallyin the form attached hereto as Exhibit “A” and made a part hereof (“DisbursementLetter”).  The Escrow Agent shalldisburse the Escrow Fund within one (1) Business Day following receipt ofthe Disbursement Letter.  “Business Day”shall mean any day other than a Saturday, Sunday or any other day on which theEscrow Agent located at the notice address set forth in Paragraph 9below is authorized or required by law or executive order to remain closed.

 

4.             Notwithstanding anything to the contrary, ifSeller and Buyer cannot agree on how the Escrow Fund should be disbursed inaccordance with this Escrow Agreement and the PSA, then upon a FinalDetermination (as defined below) with respect to any such disbursement, eitherSeller or Buyer may submit an Approval for Disbursement signed by such Partysubstantially in the form attached hereto as Exhibit “B” and made apart hereof (“Final Determination Disbursement Request”).  The Escrow Agent shall disburse the EscrowFunds within one (1) Business Day following receipt of the FinalDetermination Disbursement Request.  A “FinalDetermination” shall mean a final non-appealable judgment of a court ofcompetent jurisdiction pursuant to the terms of the PSA.  The Escrow Agent shall act on such FinalDetermination Disbursement Request without further question or the Escrow Agentmay file an interpleader action in any court of competent jurisdiction, andupon the filing thereof, the Escrow Agent shall be relieved of all liability asto the Escrow Funds and shall be entitled to recover attorneys’ fees, expensesand other costs incurred in commencing and maintaining any such interpleaderaction.

 

Escrow Agreement

(7/19/07 – Vers. 1)

 

----

 

5.             Each of the Parties and the Escrow Agentagree that the following provisions shall control with respect to the rights,duties, liabilities, privileges and immunities of the Escrow Agent:

 

(a)           The Escrow Agent is not a party to and is not bound by, or charged withnotice of (except as provided in Paragraph (11)), any agreement outof which the escrow arrangement contemplated hereby may arise.  The Escrow Agent is acting hereunder as adepository only, and is not responsible or liable in any manner whatsoever forthe sufficiency, correctness, genuineness or validity of any instrument orother written instructions, including the Disbursement Letter or the FinalDetermination Disbursement Request, given to the Escrow Agent pursuant to thisEscrow Agreement.

 

(b)           The Escrow Funds held in the Escrow Account shall not be subject to anyright of set-off or claim which the Escrow Agent may have from time to timeagainst either Seller or Buyer.

 

(c)           In carrying out and performing its duties under this Escrow Agreement,the Escrow Agent shall not incur any liability to anyone for any damages,losses, or expenses with respect to the establishment and administration of theEscrow Account hereunder, except for its willful misconduct or grossnegligence, and accordingly the Escrow Agent shall not incur any liability withrespect to:

 

(1)           Anyaction taken or omitted to be taken in good faith upon the advice of the EscrowAgent’s counsel given with respect to any questions relating to the duties andresponsibilities of the Escrow Agent under this Escrow Agreement. The EscrowAgent shall be under no duty to inquire into or investigate the validity,accuracy or content of any such document, notice, instruction or request.  The Escrow Agent shall have no duty tosolicit any payments which may be due it or the Escrow Funds.  The Escrow Agent shall not be liable for anyaction taken or omitted by it in good faith except to the extent that a finaladjudication pursuant to Paragraph 11 below determines that the EscrowAgent’s gross negligence or willful misconduct was the primary cause of anyloss to either of the Parties.  In theevent the Escrow Agent shall be uncertain as to its duties or rights hereunder,it shall be entitled to refrain from taking any action and its sole obligationshall be to keep safely all property held in escrow until it shall be directedotherwise either in writing by each of the Buyer and Seller or in a FinalDetermination.  Anything in this EscrowAgreement to the contrary notwithstanding, in no event shall the Escrow Agentbe liable for special, indirect or consequential loss or damage of any kindwhatsoever (including but not limited to lost profits), even if the EscrowAgent has been advised of the likelihood of such loss or damage and regardlessof the form of action. No party to this Escrow Agreement shall be liable to anyother party for losses due to, or if it is unable to perform its obligationsunder the terms of this Escrow Agreement because of, acts of God, fire, war,terrorism, floods, strikes, electrical outages, equipment or transmissionfailure, or other causes reasonably beyond its control.

 

(2)           Any action taken or omitted to be taken in reliance upon theDisbursement Letter, the Final Determination Disbursement Request, or any otherinstrument or written instructions signed by Seller and Buyer.

 

(3)           Any instructions received by the Escrow Agent pursuant to theDisbursement Letter, the Final Determination Disbursement Request or theaccuracy, validity, or propriety of any such instructions or any statementtherein.  The Escrow Agent shall be underno duty or obligation to make any inquiry about or verify the authenticity ofany signature on any letter or document received pursuant to this EscrowAgreement, including the Disbursement Letter, the Final DeterminationDisbursement Request, or the authority of the person purporting to have signedsaid document.

 

Escrow Agreement

(2/18/08 – Vers. 1)

 

3

----

 

(d)           Seller and Buyer jointly and severally agree to indemnify, defend andhold harmless the Escrow Agent and its directors, officers, agents andemployees (the “indemnitees”) against any and all losses, claims, damages,liabilities and expenses, including reasonable costs of investigation and feesand payments to outside counsel, which may be imposed upon or incurred by theEscrow Agent in connection with the acceptance of its appointment hereunder,the establishment and administration of the Escrow Account hereunder, or theperformance of any of its duties hereunder, except as may be caused by thegross negligence or willful misconduct by or on the part of the Escrow Agent orany indemnitee.  Promptly after receiptby the Escrow Agent or any indemnitee of service of process for thecommencement of any action the Escrow Agent will, if a claim with respectthereto is to be made against any of the Parties, notify the Parties of thecommencement of such action. The Parties hereto acknowledge that the foregoingindemnities shall survive the resignation or removal of the Escrow Agent or thetermination of this Escrow Agreement.

 

(e)           The Escrow Agent may seek the advice of legal counsel concerning anymatter relating to its duties hereunder, and it shall incur no liability inacting in accordance with the opinion and instructions of such counsel.

 

(f)                            (1)           TheEscrow Agent may resign and be discharged from its duties or obligationshereunder by giving thirty (30) days advance notice in writing of suchresignation to the Parties specifying a date when such resignation shall takeeffect.  Any corporation or associationinto which the Escrow Agent may be merged or converted or with which it may beconsolidated, or any corporation or association to which all or substantiallyall the escrow business of the Escrow Agent’s corporate trust line of businessmay be transferred, shall be the Escrow Agent under this Escrow Agreementwithout further act.  Escrow Agent’s soleresponsibility after such thirty (30) day notice period expires shall be tohold the Escrow Funds (without any obligation to reinvest the same) and todeliver the same to a designated substitute escrow agent, if any, or inaccordance with the directions of a final order or judgment of a court ofcompetent jurisdiction, at which time of delivery Escrow Agent’s obligationshereunder shall cease and terminate.  Ifthe Parties have failed to appoint a successor escrow agent prior to theexpiration of thirty (30) days following receipt of the notice of resignation,the Escrow Agent may petition any court of competent jurisdiction for theappointment of a successor escrow agent or for other appropriate relief, andany such resulting appointment shall be binding upon the Parties.

 

(2)           The Parties, acting together, may at any timereplace the Escrow Agent hereunder by giving notice to such effect and thedetails of a successor escrow agent to the Escrow Agent.  Within ten (10) days of receipt of suchnotice and details, the Escrow Agent shall transfer the Escrow Funds to thesuccessor escrow agent.

 

6.             The Escrow Agent’s fee of $2,000.00 shall bepaid equally by the Seller and Buyer at the time this Agreement is delivered toEscrow Agent.  The Buyer further agreesto reimburse Escrow Agent upon demand for all expenses incurred in connectionwith this Escrow Agreement, including without limitation, Escrow Agent’sservice fees for all services performed in connection with this EscrowAgreement as described in its applicable fee and information schedule.  This provision shall survive the terminationof this Agreement.

 

7.

**a.****    **Each of the Parties represents that its correct TaxpayerIdentification Number (“TIN”) assigned by the Internal Revenue Service (“IRS”)is set forth on the signature page hereof. All income earned by the Escrow Agent on funds invested pursuant to thisEscrow Agreement shall be reportable as

 

4

----

 

income to the Internal Revenue Service or any applicable State RevenueDepartment, as income of the Buyer.  Anytax returns or reports required to be prepared and filed on behalf of or by theEscrow Funds will be prepared and filed by Buyer and the Escrow Agent shallhave no responsibility for the preparation and/or filing or any tax return withrespect to any income earned by the Escrow Funds.  In addition, any tax or other paymentsrequired to be made pursuant to such tax return or filing will be paid byBuyer.  Escrow Agent shall have noresponsibility for such payment.  Anypayment by the Escrow Agent under this Escrow Agreement shall by made withoutany deduction or withholding for or on account of any taxes or other amounts.

 

**b.****    **Prior to closing, the Buyer and Seller shallprovide the Escrow Agent with certified tax identification numbers byfurnishing appropriate forms W-9 or W-8 and such other forms and documents thatthe Escrow Agent may request.   Theparties understand that if such tax reporting documentation is not provided andcertified to the Escrow Agent, the Escrow Agent may be required by the InternalRevenue Code of 1986, as amended, and the Regulations promulgated thereunder,to withhold a portion of any interest or other income earned on the investmentof the Escrow Funds.

 

**c.****    **To the extent that the Escrow Agent becomesliable for the payment of any taxes in respect of income derived from theinvestment of the Escrow Funds, the Escrow Agent shall satisfy such liabilityto the extent possible from the Escrow Funds. The Parties, jointly and severally, shall indemnify, defend and hold theEscrow Agent harmless from and against any tax, late payment, interest, penaltyor other cost or expense that may be assessed against the Escrow Agent on orwith respect to the Escrow Funds and the investment thereof unless such tax,late payment, interest, penalty or other expense was directly caused by thegross negligence or willful misconduct of the Escrow Agent.  The indemnification provided by this Section 7(c) isin addition to the indemnification provided in Section 5(d) and shallsurvive the resignation or removal of the Escrow Agent and the termination ofthis Escrow Agreement.

 

8.             This Escrow Agreement shall remain in forceand effect until the earlier of (i) the disbursement by the Escrow Agentof the Escrow Funds in accordance with the Disbursement Letter or the FinalDetermination Disbursement Request, or (ii) the resignation of the EscrowAgent as Escrow Agent and the delivery to a successor specified by the Partiesof the Escrow Agreement, the Escrow Funds and any other related instruments ordocuments.  Notwithstanding theforegoing, if a an arbitration is pending challenging Seller’s right to theEscrow Funds, or otherwise alleging a dispute as to the distribution of theEscrow Funds, and provided the Escrow Agent has received written notice thereofand a copy of all pleadings filed as of the date of such notice, the EscrowAgent shall maintain such funds under the further provisions of this EscrowAgreement until an award or decision is entered or the Parties otherwisemutually agree in writing.

 

9.             All notices, requests and instructionspermitted or required to be given under the terms of this Escrow Agreementshall be in writing, and may be served by personal delivery by certified USmail addressed to the party to be notified, postage prepaid, return receiptrequested or by facsimile transmission. Notice deposited in the mail in the manner hereinabove described shallbe deemed to have been given and received on the date of the delivery as shownon the return receipt.  Notice sent byfacsimile transmission shall be deemed to have been given if the recipientconfirms via telephone or facsimile its receipt of such notice to thesender.  Notice served in any othermanner shall be deemed to have been given and received only if and whenactually received by the addressee.

 

5

----

 

If to Seller:

 

NGS Sub. Corp.

2500City West Blvd, Suite 1300

Houston,Texas 77042

Attention:Robert S. Herlin, President

Facsimile:      713-935-0199

Telephone:     713-935-0122

 

6

----

 

With a copy to:

 

Adamsand Reese LLP

1221McKinney, Suite 4400

Houston,Texas 77010

Attention:       Mr. Mark A. Mathews

Telephone:     (713) 308-0158

Telecopy:       (713)652-5152

 

If to Buyer:

 

MWM Energy, LLC

114 30th Avenue South

Nashville, Tennessee  37212

Attention: Stephen F. Moore, CEO

Facsimile:      615-340-5391

Telephone:     615-340-5389

 

Ifto Escrow Agent:

Wells Fargo Bank, N.A.

1021Main Street, Suite 2403

MAC:  T5017-241

Houston,Texas  77002

Attention:Josie Hixon

Telephone:     (713) 289-3469

Telecopy:      (713) 289-3488

 

The Parties’ and the Escrow Agent’s respective addresses may be changedby the appropriate Party or entity so notifying the other Party or entity inthe manner provided above.

 

10.           This Escrow Agreement and all instruments executed in accordanceherewith shall be governed by and interpreted in accordance with the laws ofthe State of Texas, without regard to conflict of law rules that woulddirect application of the laws of another jurisdiction.

 

11.           Any claim, counterclaim, demand, cause of action, dispute, or any othercontroversy arising out of or relating to this Escrow Agreement solely betweenthe Buyer and Seller or in any way relating to the subject matter of thisEscrow Agreement (each a “Dispute”) shall be resolved by binding arbitration bythe Parties hereto.  A Dispute shall beresolved through arbitration regardless of whether the Dispute involves claimsthat this Escrow Agreement is unlawful, unenforceable, void, or voidable orinvolves claims under state or federal statutory or common law.  The validity, construction and interpretationof this Escrow Agreement to arbitrate, and all other procedural aspects of thearbitration conducted pursuant hereto shall be decided by the arbitrators.  Any Party hereto may commence an arbitrationproceeding by transmitting written notice to the other Parties hereto pursuantto the notice provisions of Paragraph (k) of this Escrow Agreementand to the AAA regional office associated with the Location, of such party’sdemand for arbitration with respect to such party’s cause of action or claimthat is a Dispute (the “Demand for Arbitration”).  Any arbitration under this Escrow Agreementshall be conducted in accordance with the Commercial Arbitration Rules (the“Rules”) of the American Arbitration Association (“AAA”).  In resolving any Dispute, the arbitratorsshall refer to the governing law as specified in the first sentence of this

 

7

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Paragraph(11).  **THEARBITRATORS SHALL NOT BE EMPOWERED TO AWARD, AND SHALL NOT AWARD, PUNITIVE,EXEMPLARY, MULTIPLE, TREBLE, CONSEQUENTIAL, INDIRECT, AND SPECIAL DAMAGES,REGARDLESS OF THE NATURE OF THE CAUSE OF ACTION, INCLUDING WITHOUT LIMITATION,BREACH OF CONTRACT, TORT, AND NEGLIGENCE. EACH OF THE PARTIES AND THE ESCROW AGENT WAIVES ANY RIGHT THAT SUCHPARTY OR ENTITY MAY HAVE TO RECOVER SUCH DAMAGES FROM ANY OTHER PARTY ORENTITY**.** **The arbitration shall be held inHarris County, Texas (the “Location”). If the parties hereto initiate multiple arbitration proceedings, thesubject matters of which are related by common questions of law or fact andwhich could result in conflicting awards or obligations, then all suchproceedings may be consolidated into a single arbitral proceeding.  Unless otherwise agreed by the parties to theDispute, the Dispute shall be decided by a panel of three (3) neutralarbitrators selected as follows.  Ifthere are only two (2) parties to the Dispute, then each party to theDispute shall appoint one (1) arbitrator within thirty (30) days of thefiling of the arbitration, and the two arbitrators so appointed shall selectthe presiding arbitrator within thirty (30) days after the latter of the twoarbitrators has been appointed by the parties to the Dispute.  If a party to the Dispute fails to appointits party-appointed arbitrator or if the two party-appointed arbitrators cannotreach an agreement on the presiding arbitrator within the applicable timeperiod, then the AAA shall serve as the appointing authority and shall appointthe remainder of the three arbitrators not yet appointed.  If the arbitration is to be conducted bythree arbitrators and there are more than two parties to the Dispute, thenwithin thirty (30) days of the filing of the arbitration, all claimants shalljointly appoint one arbitrator and all respondents shall jointly appoint onearbitrator, and the two arbitrators so appointed shall select the presidingarbitrator within thirty (30) days after the latter of the two arbitrators hasbeen appointed by the parties to the Dispute. In the event of a dispute concerning the alignment of the parties to theDispute, such dispute shall be resolved by the AAA as the administrativeauthority.  If  either of the Parties is not a party to theDispute, it will not appoint an arbitrator. If the parties to the Dispute agree in writing, the Dispute may be decidedby a single arbitrator who shall be specified in such written agreement betweenor among the parties to the Dispute.  Thearbitrators may award interim measures or injunctive relief, which may beenforced by the arbitrators or by a court of law. The arbitration award issuedby the arbitrators shall be final and binding. The award shall be required to be in writing, stating the amount of theaward, and if applicable the amount of attorneys’ fees and costs.  Any litigation relating to or arising underthis Paragraph (11) must be brought in the state or federal courtssitting in the Location.  The Partiesfurther hereby waive any right to a trial by jury with respect to any lawsuitor judicial proceeding arising or relating to this Escrow Agreement.  Any arbitration award may be enforced by thestate or federal courts of Texas or by any court of competent subject matterjurisdiction (including but not limited to any jurisdiction in which a party tothe Dispute holds or keeps assets).  Theparties hereto agree that service of process may be accomplished according tothe notice procedures of Paragraph (k) or by any other meansauthorized by applicable law.  Theparties hereto agree to waive any objection they may have to service of processif accomplished according to the procedures of Paragraph (k).  The arbitrators are authorized to award costsof the arbitration in its award, including without limitation (i)  thereasonable fees and expenses of the arbitrators; (ii) the reasonable costsof assistance required by the tribunal, including its experts; (iii) thereasonable fees and expenses of the administrator; (iv) the reasonablecosts for legal representation of a successful party to the Dispute, includingattorneys’ fees, expert witness fees, out of pocket costs and other reasonableexpenses; and (v) any such reasonable costs incurred in connection with anapplication for interim measures or emergency relief and to allocate thosecosts between the parties to the Dispute. The award shall include pre-judgment interest at a rate to be determinedby the arbitrators (not to exceed the maximum amount permitted by law) from thedate of the breach or default.  Interestshall accrue until the date the award is paid in full.  Any arbitration (including a settlement resultingfrom an award, documents exchanged or produced during an arbitrationproceeding, and memorials, briefs or other documents prepared for thearbitration) shall be confidential and may not be disclosed by the partieshereto, their employees, officers, directors, counsel, consultants, and expertwitnesses, except (i) in a legal proceeding to enforce rights under this Paragraph(11), (ii) in response to a subpoena or legal process, but only aftergiving the other parties hereto reasonable notice in advance for them to takesteps to preserve the confidentiality of the material, (iii) by agreementof the parties hereto or (iv) as required by applicable law or anyapplicable stock exchange.  A breach ofthis Paragraph (11) shall not void any settlement or award.  If any provision of Paragraph (11) isfound by a court to be unenforceable or unlawful, then it shall be severed fromthis Escrow Agreement and the remaining terms shall be enforced as written.

 

8

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12.           This Escrow Agreement shall be binding upon and inure to the benefit ofthe Parties and the Escrow Agent, and their respective successors and assigns.

 

13.           In the event a Disbursement Letter or Final Determination DisbursementRequest is given, the Escrow Agent is authorized to seek confirmation of suchinstructions by telephone call-back to the person or persons designated on Schedule3 hereto, and the Escrow Agent may rely upon the confirmation of anyonepurporting to be the person or persons so designated.  Each Disbursement Letter or FinalDetermination Disbursement Request shall be executed by an authorizedsignatory, a list of such authorized signatories is set forth on Schedule 3.  The undersigned is authorized to certify thatthe signatories on Schedule 3 are authorized signatories.  The persons and telephone numbers forcall-backs may be changed only in a writing actually received and acknowledgedby the Escrow Agent.  The Escrow Agentand the beneficiary’s bank in any funds transfer may rely solely upon anyaccount numbers or similar identifying numbers provided by Seller or Buyer toidentify (i) the beneficiary, (ii) the beneficiary’s bank, or (iii) anintermediary bank.  The Escrow Agent mayapply any of the escrowed funds for any payment order it executes using anysuch identifying number, even when its use may result in a person other thanthe beneficiary being paid, or the transfer of funds to a bank other than thebeneficiary’s bank or an intermediary bank designated.** **Theparties to this Escrow Agreement acknowledge that these security procedures arecommercially reasonable.

 

14.           The provisions of this Escrow Agreement may be waived, altered, amendedor supplemented, in whole or in part, only by a writing signed by the Partiesand Escrow Agent.  This Escrow Agreementmay be executed in one or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the sameinstrument. All signatures of the Parties and of the Escrow Agent may betransmitted by facsimile, and such facsimile will, for all purposes, be deemedto be the original signature of such Party or entity whose signature itreproduces, and will be binding upon such Party or entity.

 

15.           In the event that any portion of the Escrow Funds shall be attached,garnished or levied upon by any court order, or the delivery thereof shall bestayed or enjoined by an order of a court, or any order, judgment or decreeshall be made or entered by any court order affecting the Escrow Funds, theEscrow Agent is hereby expressly authorized, in its sole discretion, to obeyand comply with all writs, orders or decrees so entered or issued, which it isadvised by legal counsel of its own choosing is binding upon it, whether withor without jurisdiction, and in the event that the Escrow Agent obeys orcomplies with any such writ, order or decree it shall not be liable to any ofthe Parties or to any other person, firm or corporation, by reason of suchcompliance notwithstanding such writ, order or decree be subsequently reversed,modified, annulled, set aside or vacated.

 

9

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**IN WITNESS WHEREOF**, the Parties and the Escrow Agent have executed this Escrow Agreementas of the date set forth above.

 
| ** ** | **BUYER:**                 |
|------------|----------------------------|
|       |                       |
|       | **MWM ENERGY, LLC**        |
|       | ** **                 |
|       |                       |
|       | By:                        |   |
|       |                       |
|       | Name:                      |   |
|       |                       |
|       | Title:                     |   |
|       |                       |
|       | TIN:                       |   |
|       |                       |
|       | **SELLER:**                |
|       |                       |
|       | **NGS SUB CORP.**          |
|       | ** **                 |
|       |                       |
|       | By:                        |   |
|       |                       |
|       | Name:                      |   |
|       |                       |
|       | Title:                     |   |
|       |                       |
|       | TIN:                       |   |
|       |                       |
|       |                       |
|       | **ESCROW AGENT:**          |
|       |                       |
|       | **WELLS FARGO BANK, N.A.** |
|       | ** **                 |
|       |                       |
|       | By:                        |   |
|       |                       |
|       | Name:                      |   |
|       |                       |
|       | Title:                     |   |
|            |                            |  |  |  |

 

10

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** **

**Schedule 1**

 

**Agencyand Custody Account Direction**

**For CashBalances**

**WellsFargo Money Market Deposit Accounts**

 

Direction to use thefollowing Wells Fargo Money Market Deposit Accounts for Cash Balances for theescrow account or accounts (the “Account”) established under the EscrowAgreement to which this Exhibit A is attached.

 

You are hereby directedto deposit, as indicated below, or as I shall direct further in writing fromtime to time, all cash in the Account(s) in the following money marketdeposit account of Wells Fargo Bank, National Association (Bank):

 

Wells Fargo MoneyMarket Deposit Account (MMDA)

 

I understand that amountson deposit in the MMDA are insured, subject to the applicable rules andregulations of the Federal Deposit Insurance Corporation (FDIC), in the basicFDIC insurance amount of $100,000 per depositor, per insured bank. Thisincludes principal and accrued interest up to a total of $100,000.   I understand that deposits in the MMDA arenot secured.

 

I acknowledge that I havefull power to direct investments of the Account(s).

 

I understand that I maychange this direction at any time and that it shall continue in effect untilrevoked or modified by me by written notice to you.

 

 
|                          |   |                          |
|-------------------------------|--------|-------------------------------|
| Authorized  Representative,   |   | Authorized Representative,    |
| NGS Sub. Corp.                |   | MWM Energy, LLC               |
|                          |   |                          |
| Date: February 15,  2008 |   | Date: February 15,  2008 |

 

Schedule 1

----

 

**Schedule 2**

 

**FORM OF ESCROW AGENT’SACKNOWLEDGEMENT**

 

**TO:**

** **
| NGS Sub Corp.                                        |   | MWM Energy, LLC                  |
|------------------------------------------------------|--------|----------------------------------|
| 2500 City West  Blvd                                 |   | 114 30th Avenue South       |
| Suite 1300                                      |   | Nashville, Tennessee 37212       |
| Houston, Texas  77042                                |   | Attention: Stephen F. Moore, CEO |
| Attention:  Robert S. Herlin, President              |   | Facsimile:                       | 615-340-5391 |
| Facsimile:713-935-0199                               |   | Telephone:                       | 615-340-5389 |
| Telephone:     713-935-0122 |   |                             |

 

**REFERENCE:**

 

Escrow Agreementdated as of the 15th day of February, 2008  (“Escrow Agreement”) by and among NGS SubCorp. (“Seller”), MWM Energy, LLC (“Buyer”) and Wells Fargo Bank, N.A. (“EscrowAgent”) pursuant to which an escrow account designated as the               accountbearing Account Number                     (the “Escrow Account”) has been established.

 

**ACKNOWLEDGEMENT:**

 

In our capacity asEscrow Agent under the Escrow Agreement, we hereby acknowledge receipt of $[                                            ]from Buyer by wire transfer of immediately available funds into the EscrowAccount.

 

Dated: [                      ],2008

 
|   | **ESCROW  AGENT:**          |
|--------|-----------------------------|
|   |                        |
|   | **WELLS  FARGO BANK, N.A.** |
|   | ** **                  |
|   |                        |
|   | By:                         |   |
|   |                        |   |
|   | Name:                       |   |
|   |                        |   |
|   | Title:                      |   |
|        |                             |  |  |  |  |

 

Schedule2

----

 

##### ***Schedule 3***

##### *** ***

### **Telephone Number(s) and signature(s) for**

### ** **

### **Person(s) Designated to give and confirm FundsTransfer Instructions**

### ** **

| If to Seller: |             |   |             |
|---------------|------------------|--------|------------------|
|          |             |   |             |
|          | Name             |   | Telephone Number |   | Signature |
|          |             |   |             |   |   |
| 1.            | Robert S. Herlin |   | (713) 935-0122   |   |   |
|          |             |   |             |   |   |
| 2.            |             |   |             |   |   |
|          |             |   |             |   |   |
| 3.            |             |   |             |   |   |
|          |             |   |             |   |   |
| If to Buyer:  |             |   |             |   |
|          |             |   |             |   |   |
|          | Name             |   | Telephone Number |   | Signature |
|          |             |   |             |   |   |
| 1.            | W. Mark Meyer    |   | (281) 296-3140   |   |   |
|          |             |   |             |   |   |
| 2.            |             |   |             |   |   |
|          |             |   |             |   |   |
| 3.            |             |   |             |   |   |

 

Telephone call backsshall be made to both Seller and Buyer if joint instructions are requiredpursuant to the Escrow Agreement. All funds transfer instructions must includethe signature of the person(s) authorizing said funds transfer.

 

 

Escrow Agreement

(7/19/07 – Vers. 1)

 

----

 

**Exhibit “A”**

 

To that certain Escrow Agreement

dated the         day of February , 2008 by and among

NGS Sub. Corp., MWM Energy, LLC and

Wells Fargo Bank, N.A.

 

**APPROVAL FOR DISBURSEMENT**

 

Wells Fargo Bank, N.A.

1000 Louisiana St, 4th Floor

Houston, TX 77002

MAC T5002-044

Telecopy:  713739-1080

 
| RE:    | Escrow Agreement   |
|--------|--------------------|
|   | Escrow Account No. |   |   |

 

Gentlemen:

 

The undersigned, beingall of the parties (other than Escrow Agent) to that certain Escrow Agreementdated the            day ofFebruary, 2008 hereby request that the following amounts be paid out of thereferenced Escrow Account via wire transfer of immediately available funds tothe named payees at the addresses and banking coordinates indicated below:

 
| **Payee**       | ** ** | **Amount** | ** **                                                                                                   |
|-----------------|------------|------------|--------------------------------------------------------------------------------------------------------------|
|            |       |       |                                                                                                         |
| NGS Sub Corp.   |       | $          |                    |   |
|            |       |       |                                                                                                         |
| Bank:           |       |       |                                                                                                         |
| ABA No.:        |       |       |                                                                                                         |
| Account Number: |       |       |                                                                                                         |
|            |       |       |                                                                                                         |
| MWM Energy, LLC |       | $          |                    |   |
|            |       |       |                                                                                                         |
| Bank:           |       |       |                                                                                                         |
| ABA No.:        |       |       |                                                                                                         |
| Account Number: |       |       |                                                                                                         |

 

Should you have anyquestions regarding the above instructions, please contact representatives ofeach of the undersigned parties.

 
|   | **SELLER:**        |
|--------|--------------------|
|   |               |
|   | **NGS  SUB CORP.** |
|   |               |
|   |               |
|   | By:                |   |
|   |               |
|   | Name:              |   |
|   |               |
|   | Title:             |   |
|        |                    |  |  |  |

 

1

----

 
|   | **BUYER:**           |
|--------|----------------------|
|   |                 |
|   | **MWM  ENERGY, LLC** |
|   | ** **           |
|   |                 |
|   | By:                  |   |
|   |                 |
|   | Name:                |   |
|   |                 |
|   | Title:               |   |
|        |                      |  |  |  |

 

2

----

 

**Exhibit “B”**

 

To that certain Escrow Agreement

dated the         day of February, 2008 by and among

NGS Sub. Corp., MWM Energy, LLC and

Wells Fargo Bank, N.A.

 

**FINAL DETERMINATION DISBURSEMENTREQUEST**

 

Wells Fargo Bank, N.A.

1000 Louisiana St, 4th Floor

Houston, TX 77002

MAC T5002-044

Telecopy:  713739-1080

 
| RE:    | Escrow Agreement   |
|--------|--------------------|
|   | Escrow Account No. |   |   |

 

Gentlemen:

 

The undersigned, being aparty to that certain Escrow Agreement dated the           day of February, 2008 (the “Escrow Agreement”) by and among NGS Sub Corp. (“Seller”),MWM Energy, LLC (“Buyer”) and Wells Fargo Bank, N.A. (“Escrow Agent”), herebyrequests that the following amounts be paid out of the referenced EscrowAccount via wire transfer of immediately available funds, to the named payeesat the addresses and banking coordinates indicated below pursuant to this FinalDetermination Disbursement Request (as defined in the Escrow Agreement), a copyof the Final Determination (as defined in the Escrow Agreement) is attachedhereto:

 
| **Payee**                | ** ** | **Amount** | ** **                                                                                                         |
|--------------------------|------------|------------|--------------------------------------------------------------------------------------------------------------------|
|                     |       |       |                                                                                                               |
| NGS Sub Corp.            |       | $          |                     |   |
| Bank:                    |       |       |                                                                                                               |
| ABA No.:                 |       |       |                                                                                                               |
| Account Number:          |       |       |                                                                                                               |
|                     |       |       |                                                                                                               |
| MWM Energy, LLC          |       | $          |                     |   |
|                     |       |       |                                                                                                               |
| Bank: .                  |       |       |                                                                                                               |
| ABA No.: Account Number: |       |       |                                                                                                               |

 

Should you have anyquestions regarding the above instructions, please contact representatives ofthe Seller and Buyer.

 
|   | **[NGS  SUB CORP.]**   |
|--------|------------------------|
|   |                   |
|   | **[OR]**               |
|   |                   |
|   | **[MWM  ENERGY, LLC]** |
|   |                   |
|   | By:                    |   |
|   |                   |   |
|   | Name:                  |   |
|   |                   |
|   | Title:                 |   |
|        |                        |  |  |  |  |

 

1

----

 

**Exhibit “D”**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**ASSIGNMENT, CONVEYANCE ANDBILL OF SALE**

 
| STATE OF LOUISIANA           |   | § |   |
|------------------------------|--------|--------|--------|
|                         |   | § |   |
| PARISHES OF LASALLE AND WINN |   | § |   |

 

THAT, **NGS Sub.Corp.**, a Delaware corporation, whose address is 2500 City WestBoulevard, Suite 1300, Houston, Texas 77042 (“**Assignor**”),in consideration of Ten Dollars ($10.00) and other good and valuable considerationto it in hand paid, the receipt and sufficiency of which are herebyacknowledged, does hereby GRANT, BARGAIN, CONVEY, SELL, ASSIGN, TRANSFER andDELIVER to **MWM Energy, LLC,** a Texas limitedliability company, whose address is 114 30th Avenue South, Nashville,Tennessee 37212 (“**Assignee**”),effective February 1, 2008 at 7:00 a.m. CST (the “**Effective Time**”), the assets andproperties described in **Section II**below, except to the extent constituting Excluded Assets, which, after saidexclusion, shall be collectively referred to as the “**Assets**.”  This Assignment, Conveyance and Bill of Sale(the “**Conveyance**”) relates to thatcertain Purchase and Sale Agreement dated February 15, 2008, effective February 1,2008, between Assignor and Assignee (referred to as the “**Agreement**”).  Each capitalized term used in this Conveyancethat is not otherwise defined herein shall have the meaning as set out in theAgreement.

 

**I.  DEFINITIONS**

 

In this Conveyance, capitalized terms have the meanings provided inthis Section, unless defined elsewhere in this Conveyance.  All defined terms include both the singularand the plural of such terms.  Allreferences to Sections refer to Sections in this Conveyance and all referencesto Exhibits or Schedules refer to Exhibits or Schedules attached to and made apart of this Conveyance.  When the term “herein”is used in this Conveyance, reference is made to the entire Conveyance and notto any particular Section or subparagraph of a Section.  The word “including” shall mean includingwithout limitation.

 

(a)**                                 ****“AssigneeGroup”** means Assignee and its officers, directors, agents,representatives, consultants and employees.

 

(b)**                                ****“AssignorGroup”** means (1) Assignor and its officers,directors, agents, representatives, consultants and employees, and (2) Assignor’sParent and Affiliates and their officers, directors, agents, representatives,consultants and employees.

 

EscrowAgreement

(7/19/07– Vers. 1)

 

----

 

(c)                                  **“Claims”** shall mean anyand all claims, demands, losses, damages, punitive damages, costs, expenses,causes of action or judgments of any kind or character including, withoutlimitation, any interest, penalty, reasonable attorneys’ fees and other costsand expenses incurred in connection therewith or the defense thereof.

 

(d)                                 **“Company”** shall meanFour Star Development Corporation, a Louisiana corporation.

 

(e)                                  **“EnvironmentalDefect”** shall mean:

 

(1)                                  a condition oractivity with respect to a Scheduled Interest that is in material violation, orreasonably likely to materially violate, any federal, state or local statute,or any rule, order, ruling or regulation entered, issued or made by any court,administrative agency, or other governmental body or entity, federal, state, orlocal, or any arbitrator (“**Environmental Law**”),or surface or mineral lease obligation, whether an express or impliedobligation, relating to natural resources, conservation, the environment, orthe emission, release, storage, treatment, disposal, transportation, handlingor management of industrial or solid waste, hazardous waste, hazardous or toxicsubstances, chemicals or pollutants, petroleum, including crude oil, naturalgas, natural gas liquids, or liquefied natural gas, and any wastes associatedwith the exploration and production of oil and gas (“**RegulatedSubstances**”); or

 

(2)                                  the presence ofRegulated Substances in the soil, groundwater, or surface water in, on, at orunder a Scheduled Interest in any manner or quantity which is required to beremediated by Environmental Law or by any applicable action or guidance levelsor other standards published by any governmental agency with jurisdiction overthe Assets, or by a surface or mineral lease obligation, whether an express orimplied obligation.  Assignee andAssignor agree that for a condition to be in violation of any statute orregulation it shall not be necessary that Assignor shall be under notice ofviolation from a federal or state regulatory agency or lessor.

 

The Parties agree and acknowledge that Assignee was provided anopportunity to examine the Assets for potential naturally occurring radioactivematerials (“**NORM**”), and any potentialobligations with respect to NORM and that the presence of NORM on any of theAssets, except with respect to inactive wells, facilities, pipelines and otherequipment, may not be raised by Assignee as the subject of an EnvironmentalDefect.

 

(f)                                    **“EnvironmentalObligations”**shall mean all liabilities, obligations, expenses(including, without limitation, all attorneys’ fees), fines, penalties, costs,claims, suits or damages (including natural resource damages) of any nature,associated with the Assets, and attributable to or resulting from:

 

(1)                                  pollution orcontamination of soil, surface water, groundwater or air, on, in, by, from orunder the Assets or lands in the vicinity thereof, and any other contaminationof or adverse effect upon the environment;

 

3

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(2)                                  undergroundinjection activities and waste disposal;

 

(3)                                  clean-upresponses, remedial, control or compliance costs, including the requiredcleanup or remediation of spills, pits, lakes, ponds, or lagoons, including anysubsurface or surface pollution caused by such spills, pits, lakes, ponds, orlagoons;

 

(4)                                  noncompliancewith applicable land use, permitting, surface disturbance, licensing ornotification requirements, including those in a surface or mineral lease,whether an express or implied obligation;

 

(5)                                  violation ofany federal, state or local Environmental Law or land use law, or surface ormineral lease obligation, whether an express or implied obligation;

 

(6)                                  any otherviolation which could qualify as an Environmental Defect (without being limitedto Scheduled Interests); and

 

(7)                                  any and allindemnity obligations of Assignor with respect to the above, along with any andall Claims against Assignor for indemnity with respect to the above, under,pursuant to or arising from any acquisition, purchase and sale or otheragreement.

 

Notwithstanding any provision of this Conveyance orthe Agreement to the contrary, “Environmental Obligations” shall not includePlugging and Abandonment Obligations (including with respect to NORM).

 

(g)                                 **“GovernmentalAuthority”** means any federal, state, local, municipal or othergovernments; any governmental, regulatory or administrative agency, commission,body or other authority exercising or entitled to exercise any administrative,executive, judicial, legislative, police, regulatory or taxing authority orpower; and any court or governmental tribunal.

 

(h)                                 **“PermittedEncumbrances”** shall mean any of the following matters:

 

(1)                                  defects in theearly chain of title consisting of failure to recite marital status or theomission of succession or heirship proceedings;

 

(2)                                  defects orirregularities arising out of uncancelled mortgages, judgments or liens, theinscriptions of which, on their face, have expired as a matter of law prior tothe Effective Time, or prior unreleased oil and gas leases which, on theirface, expired more than ten (10) years prior to the Effective Time andhave not been maintained in force and effect by production or operationspursuant to the terms of such leases;

 

(3)                                  tax liens andoperator’s liens for amounts not yet due and payable, or those that are beingcontested in good faith by Assignor in the ordinary course of business;

 

(4)                                  to the extentany of the following do not materially diminish the value of, or impair theconduct of operations on, any of the Assets and do not impair Assignor’s rightto receive the revenues attributable thereto: (i) easements, rights-of-way,servitudes,

 

4

----

 

permits, surface leases and other rights in respect of surfaceoperations, pipelines, grazing, hunting, fishing, logging, canals, ditches,lakes, reservoirs or the like, (ii) easements for streets, alleys,highways, pipelines, telephone lines, power lines, railways and other similarrights-of-way, on, over or in respect of property owned or leased by Assignoror over which Assignor owns rights of way, easements, permits or licenses, and (iii) theterms and conditions of all leases, agreements, orders, instruments anddocuments pertaining to the Assets;

 

(5)                                  all lessors’royalties, overriding royalties, net profits interests, carried interest,production payments, reversionary interests and other burdens on or deductionsfrom the proceeds of production if the net cumulative effect of such burdens ordeductions does not reduce the net revenue interest of Assignor in any Wellaffected thereby below that reflected on Exhibit “A-2” of all oiland gas produced, saved and marketed from or attributable to the unitized sandor other sands listed from the Wells listed, or impair the right to receiverevenues attributable thereto;

 

(6)                                  preferentialrights to purchase and required third party consents to assignments and similaragreements with respect to which waivers or consents are obtained from theappropriate parties, or the appropriate time period for asserting the rightshas expired without an exercise of the rights prior to the date of execution ofthis Conveyance;

 

(7)                                  Requiredthird-party consents to the assignment of the Leases, which Assignor haspreviously requested, but not obtained, and the lessor of any such lease orholder of any such right has not prior to the execution of the Agreement objectedto such assignment or notified Assignor in writing of such objectionobligation;

 

(8)                                  all rights toconsent by, required notices to, filings with, or other actions by governmentalentities in connection with the sale or conveyance of oil and gas leases orinterests if they are customarily obtained subsequent to the sale orconveyance;

 

(9)                                  defects orirregularities of title arising out of events or transactions which have beenbarred by limitations or by acquisitive or liberative prescription;

 

(10)                            rights reservedto or vested in any municipality or governmental, statutory or public authorityto control or regulate any of the Assets in any manner, and all applicablelaws, rules and orders of governmental authority;

 

(11)                            any encumbranceor other matter (whether or not constituting a Title Defect) expressly waivedin writing by Assignee or listed on Exhibit “F”; and

 

(12)                            the litigationand threatened litigation, and any Claims thereunder, as listed on Exhibit “F.”

 

(i)                                     **“Person”** means anindividual, group, partnership, corporation, limited liability company, trustor other entity.

 

5

----

 

(j)**                                    ****“Pluggingand Abandonment Obligations”**shall mean theresponsibility and liability, including but not limited to Claims for damagesand/or other relief, for the following plugging and abandonment obligationsrelated to the Assets, regardless of whether they are attributable to theownership or operation of the Assets before or after the Effective Time:

 

(1)                                  the necessaryand proper plugging, replugging and abandonment of all Wells, whether pluggedand abandoned before or after the Effective Time;

 

(2)                                  the necessaryand proper removal, abandonment, and disposal of all platforms, structures,pipelines, equipment, movables, immovables, abandoned property and junk locatedon or comprising part of the Assets;

 

(3)                                  to the extentallowed by the applicable authorized governmental body and the owners of theproperty affected, the necessary and proper capping and burying of all associatedflow lines located on or comprising part of the Assets;

 

(4)                                  the necessaryand proper restoration of the Assets and/or the property covered by the Assetsor upon which the Assets are located, both surface, surface water, groundwater,waterbottom and subsurface, to such condition as may be required by applicablelaws, regulation or contract;

 

(5)                                  any necessaryclean-up or disposal of Assets contaminated by NORM as may be required byapplicable laws, regulation or contract;

 

(6)                                  all obligationsarising from contractual requirements and demands made by authorizedgovernmental bodies or parties claiming an interest in the Assets and/or theproperty covered by the Assets or upon which the Assets are located; and

 

(7)                                  any and allindemnity obligations of Assignor with respect to the above, along with any andall Claims against Assignor for indemnity with respect to the above, under,pursuant to or arising from any acquisition, purchase and sale or otheragreement.

 

(k)                                  **“ScheduledInterests” or “Scheduled Interest”**shall mean that portion ofthe Assets attributable to the Leases or Wells identified on Exhibits “A-1”and “A-2” and having a value greater than $0.00.

 

(l)                                     **“Tax”** or **“Taxes”** means all income, profits, franchise,withholding, ad valorem, employment, social security, disability, occupation,property, severance and excise taxes, together with any interest and penaltieswith respect thereto, imposed by or on behalf of any Taxing Authority.

 

(m)                               **“TaxingAuthority”** means, with respect to any Tax, the governmentalentity or political subdivision thereof that imposes such Tax, and the agency(if any) charged with the collection of such Tax for such entity orsubdivision, including any governmental or quasi-governmental

 

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entity or agency that imposes, or is chargedwith collecting, social security or similar charges or premiums.

 

**II.  ASSETS CONVEYED**

 

The Assets shall becomprised of all of Assignor’s right, title and interest in and to or derivedfrom the following, except to the extent constituting Excluded Assets:

 

(a)                                  any and allinterests owned by Assignor in and to the oil, gas and/or mineral leases setforth on Exhibit “A-1” (“the **Leases**”),including any overriding royalty interests, net profit interests, workinginterests, reversionary interests, and any other interests of Assignor in saidoil, gas and/or mineral leases, or the lands covered by said Leases;

 

(b)                                 all right,title and interest of Assignor in and to or derived from the following insofaras the same do not constitute Excluded Assets and are attributable to,appurtenant to, incidental to, or used for the operation of the Leases(collectively, “the **Real Property, PersonalProperty and Incidental Rights**”):

 

(1)                                  all feeinterests and surface estate interests described on Exhibit “A-5”;

 

(2)                                  all easements,rights-of-way, surface leases, permits, licenses, servitudes or other interestsrelating to the use of the surface, including but not limited to thosedescribed on Exhibit “A-4,” or in instruments described in Exhibit “A-3”;

 

(3)                                  all wellslocated on the Assets, or lands pooled or unitized therewith, including but notlimited to those listed on Exhibit “A-2”, whether or not such wellsare producing, active or inactive, plugged and abandoned, temporarilyabandoned, shut-in, injection, disposal, water supply or otherwise(collectively “the **Wells**”),along with all equipment and other personal property, inventory, spare parts,tools, fixtures, pipelines, dehydration facilities, platforms, tank batteries,appurtenances, and improvements situated upon the Leases or lands pooled orunitized therewith as of the Effective Time and used or held for use inconnection with the development or operation of the Leases or the production,treatment, storage, compression, processing or transportation of crude oil,natural gas, casinghead gas, condensate, sulphur, natural gas liquids and otherliquid or gaseous hydrocarbons, and all other minerals of every kind andcharacter which may be covered by or included in the Leases and Assets (“the **Hydrocarbons**”), from or in theWells or the Leases or lands pooled or unitized therewith including, but notlimited to those described on Exhibit “A-2”;

 

(4)                                  all unitagreements, orders and decisions of state and federal regulatory authoritiesestablishing units, joint operating agreements, enhanced recovery and injectionagreements, farmout agreements and farmin agreements, options, drillingagreements, exploration agreements, assignments of operating rights, workinginterests, subleases and rights above or below certain footage depths orgeological formations, to the extent same is attributable to the Assets, as ofthe Effective Time, including but not limited to those described on Exhibit “A-3”;

 

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(5)                                  all contracts,agreements, and title instruments to the extent attributable to and affectingthe Assets in existence as of the date of execution of this Conveyance,including all Hydrocarbon sales, purchase, gathering, transportation, treating,marketing, exchange, processing, disposal and fractionating contracts, jointoperating agreements, including but not limited to those described on Exhibit “A-3”;

 

(6)                                  originals ofall lease files, land files, well files, production records, division orderfiles (including paysheets and supporting files), abstracts, title opinions,and contract files, insofar as the same are directly related to the Leases,including, without limitation, all geological, information and data, to theextent that such data is not subject to any third party restrictions, butexcluding Assignor’s proprietary interpretations of same; and

 

(7)                                  the Companybooks, records and files of Four Star Development Corporation, a LouisianaCorporation, including but not limited to, permits, licenses, corporaterecords, minute book, contracts, title records, tax records relating solely tothe business of the Company, financial, engineering and safety records;

 

(c)                                  allmerchantable oil and condensate (for oil or liquids in storage tanks, being onlythat oil or liquids physically above the top of the inlet connection into suchtanks) produced from or attributable to the Leases prior to the Effective Timewhich have not been sold by Assignor and are in storage at the Effective Time (“the**Inventory Hydrocarbons**”); and

 

(d)                                 all of theissued and outstanding capital stock of Four Star Development Corporation, aLouisiana Corporation (“the **Shares**”).

 

(e)                                  It is theintent of the Parties that this Conveyance shall, except for the ExcludedAssets (as defined in this Conveyance), assign, transfer and convey all ofAssignor’s right, title and interest in the Assets, and all Hydrocarbonsproduced therefrom after the Effective Time, irrespective of whether thoseAssets and rights are set forth on the exhibits and schedules attached hereto.

 

**III.  EXCLUDED ASSETS**

 

Thereis specifically SAVED, EXCEPTED and RESERVED from this Conveyance, thefollowing described assets and properties, herein called “**ExcludedAssets**.”  As used in thisConveyance, the term “**Excluded Assets**”shall mean the following:

 

(a)                                  (i) alltrade credits, accounts receivable, notes receivable and other receivablesattributable to Assignor’s interest in the Assets with respect to any period oftime prior to the Effective Time; (ii) all deposits, cash, checks inprocess of collection, cash equivalents and funds attributable to Assignor’sinterest in the Assets with respect to any period of time prior to theEffective Time; and (iii) all proceeds, benefits, income or revenuesaccruing with respect to the Assets prior to the Effective Time;

 

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(b)                                 all corporate,financial, and tax records of Assignor, and those records subject toattorney/client privilege; however, Assignee shall be entitled to receivecopies of any tax records which directly relate to any Assumed Obligations, orwhich are necessary for Assignee’s ownership, administration, or operation ofthe Assets;

 

(c)                                  all claims andcauses of action of Assignor arising from acts, omissions or events, or damageto or destruction of the Asset, occurring prior to the Effective Time;provided, however, Assignor shall transfer to Assignee all claims and causes ofaction of Assignor against prior owners of the Assets or third parties forEnvironmental Obligations that are not Retained Obligations;

 

(d)                                 all rights,titles, claims and interests of Assignor relating to the Assets prior to theEffective Time (i) under any policy or agreement of insurance orindemnity; (ii) under any bond; or (iii) to any insurance orcondemnation proceeds or awards;

 

(e)                                  allHydrocarbons produced from or attributable to the Assets with respect to allperiods prior to the Effective Time, together with all proceeds from or of suchHydrocarbons, except the Inventory Hydrocarbons and the unsold inventory of gasplant products, if any, attributable to the Leases as of the Effective Time;

 

(f)                                    claims ofAssignor for refund of or loss carry forwards with respect to production,windfall profit, severance, ad valorem or any other taxes attributable to anyperiod prior to the Effective Time, or income or franchise taxes;

 

(g)                                 all amounts dueor payable to Assignor as adjustments or refunds under any contracts oragreements (including take-or-pay claims) affecting the Assets with respect toany period prior to the Effective Time;

 

(h)                                 all amounts dueor payable to Assignor as adjustments to insurance premiums related to theAssets with respect to any period prior to the Effective Time;

 

(i)                                     all proceeds,benefits, income or revenues accruing (and any security or other deposits made)with respect to the Assets, and all accounts receivable attributable to theAssets, prior to the Effective Time;

 

(j)                                     all of Assignor’sintellectual property, including, but not limited to, proprietary computersoftware, patents, trade secrets, copyrights, names, marks and logos; and

 

(k)                                  the Assetsidentified on Schedule 1.28(j).

 

**IV.  OBLIGATIONS ASSUMED BYASSIGNEE**

 

Assignee expressly assumesand agrees to pay, perform, fulfill and discharge the following obligations(the “**Assumed Obligations**”), except tothe extent included within those matters which Assignor has agreed toindemnify, defend and hold Assignee harmless from under **Section VI(g) **below:

 

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(a)                                  the Pluggingand Abandonment Obligations;

 

(b)                                 allEnvironmental Obligations, whether related to, or arising from, eventsoccurring before or after the Effective Date, except those specificallyincluded under Section V below as “Retained Obligations”;

 

(c)                                  all obligationswith respect to gas production, sales or imbalances with third parties;

 

(d)                                 except asotherwise provided in this Conveyance or in the Agreement, including theAssignor’s obligations to indemnify, all other liabilities, duties, andobligations that arise out of the ownership, operation or use of the Assetsafter the Effective Time, including, but not limited to, the payment of alloperating expenses and capital expenditures relating to the Assets, allliabilities, duties, and obligations, express or implied, imposed upon Assignorherein under the provisions of the Leases and any and all assignments,subleases, farmout agreements, assignments of overriding royalty, jointoperating agreements, easements, rights-of-way, and all other contracts,agreements and instruments affecting the Leases, or the premises coveredthereby, whether recorded or unrecorded, whether or not identified on theExhibits or schedules attached hereto or to the Agreement and under allapplicable laws, rules, regulations, orders and ordinances.

 

**V.  OBLIGATIONS RETAINED BYASSIGNOR**

 

Asof the Effective Time, Assignor expressly retains and agrees to pay, perform,fulfill and discharge the following (collectively, “**RetainedObligations**”):

 

(a)                                  anyEnvironmental Obligation of any nature related to the Excluded Assets;

 

(b)                                 allEnvironmental Obligations of any nature that relate to or arise from eventsoccurring as of the date Assignor acquired the Assets through the date ofexecution of this Conveyance;

 

(c)                                  Claims forpersonal injury or wrongful death occurring prior to the Effective Time;

 

(d)                                 responsibilityto any governmental agency for any offsite storage and disposal by Assignor,prior to the Effective Time, of hazardous materials produced from the Assets,and stored or disposed of, on, in or below any property which does not form apart of the Assets, for which and to the extent that remediation is required byany environmental or conservation law in effect as of the Effective Time; forpurposes of this subpart “(d),” “offsite storage and disposal” shall notinclude the seepage, leakage or other migration of hazardous materials from theproperty forming part of the Assets to other lands;

 

(e)                                  responsibilityand liability for the litigation and threatened litigation listed on Exhibit “F,”and the Claims thereunder; and

 

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(f)                                    except asotherwise provided in this Conveyance or the Agreement, all other liabilities,duties, and obligations that arise out of the ownership, operation or use ofthe Assets prior to the Effective Time, including, but not limited to, thepayment of all operating expenses and capital expenditures relating to theAssets, all liabilities, duties, and obligations, express or implied, imposedupon Assignor herein under the provisions of the Leases and any and allassignments, subleases, farmout agreements, assignments of overriding royalty,joint operating agreements, easements, rights-of-way, and all other contracts,agreements and instruments affecting the Leases, or the premises coveredthereby, whether recorded or unrecorded, whether identified or not on theExhibits or Schedules attached hereto or to the Agreement and under allapplicable laws, rules, regulations, orders and ordinances.

 

**VI.  LIMITED WARRANTIES, WAIVERSAND INDEMNIFICATIONS**

 

**(a)****                                 ****THISCONVEYANCE IS MADE WITHOUT WARRANTY OF TITLE, EITHER EXPRESS, IMPLIED,STATUTORY OR OTHERWISE, AND WITHOUT RECOURSE, EVEN AS TO THE RETURN OF THEPURCHASE PRICE OR OTHER CONSIDERATION, EXCEPT THAT, SUBJECT TO THE PERMITTEDENCUMBRANCES, ASSIGNOR WARRANTS TITLE TO THE ASSETS AGAINST ALL CLAIMS, LIENS,BURDENS AND ENCUMBRANCES ARISING BY, THROUGH OR UNDER ASSIGNOR, BUT NOTOTHERWISE AND NOT WITH RESPECT TO ANY IMPAIRMENT OR FAILURE OF TITLE RELATED TOANY LACK OF PRODUCTION IN PAYING QUANTITIES. THIS CONVEYANCES IS MADE WITH FULL SUBSTITUTION AND SUBROGATION TOASSIGNEE IN AND TO ALL COVENANTS AND WARRANTIES BY OTHERS HERETOFORE GIVEN ORMADE TO ASSIGNOR WITH RESPECT TO THE ASSETS.**

 

**(b)****                                 ****ASSIGNEE ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISEEXPRESSLY PROVIDED IN THE AGREEMENT, NEITHER ASSIGNOR NOR ASSIGNOR’S PARENTMAKES ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY, IMPLIED OR OTHERWISEWITH RESPECT TO THE COMPANY AND THE ASSETS. ASSIGNOR, FOR ITSELF AND ITS PARENT, HEREBY EXPRESSLY DISCLAIMS ANY ANDALL REPRESENTATIONS AND WARRANTIES ASSOCIATED WITH THE COMPANY, OR THE ASSETS,EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING ANY REPRESENTATION ORWARRANTY REGARDING:  (A) TITLE(EXCEPT AS PROVIDED IN SECTION VI(a) ABOVE, (B) ANYCOSTS, EXPENSES, REVENUES, RECEIPTS, ACCOUNTS RECEIVABLE, OR ACCOUNTS PAYABLE, (C) ANYCONTRACTUAL, ECONOMIC OR FINANCIAL INFORMATION AND DATA ASSOCIATED WITH THECOMPANY, OR THE ASSETS, (D) THE CONTINUED FINANCIAL VIABILITY ORPRODUCTIVITY OF THE COMPANY OR THE ASSETS OR TRANSPORTABILITY OF PRODUCT, (E) THEENVIRONMENTAL OR PHYSICAL CONDITION OF THE ASSETS, (F) ANY FEDERAL, STATE,LOCAL OR TRIBAL INCOME OR OTHER TAX CONSEQUENCES ASSOCIATED WITH THE COMPANYAND THE ASSETS, (G) THE ABSENCE OF PATENT OR LATENT DEFECTS, (H) THESTATE OF REPAIR OF THE ASSETS, (I) MERCHANTABILITY OR CONFORMITY TOMODELS, (J) ANY RIGHTS OF ANY MEMBER OF**

 

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**ASSIGNEE GROUP UNDER APPROPRIATE LAWS TOCLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE, (K) FREEDOMFROM PATENTS, COPYRIGHT OR TRADEMARK INFRINGEMENT, (L) FITNESS FOR APARTICULAR PURPOSE, AND (M) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES,DECLINE RATES, GAS BALANCING INFORMATION OR THE QUALITY, QUANTITY OR VOLUME OFTHE RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE ASSETS.**

 

**(c)**                                  **THEEXPRESS REPRESENTATIONS AND WARRANTIES OF ASSIGNOR CONTAINED IN THIS CONVEYANCEARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES,EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANYREPRESENTATION OR WARRANTY WITH RESPECT TO THE QUALITY, QUANTITY OR VOLUME OFTHE RESERVES, IF ANY, OF OIL, GAS OR OTHER HYDROCARBONS IN OR UNDER THE LEASES,OR THE ENVIRONMENTAL CONDITION OF THE ASSETS. THE ITEMS OF PERSONAL PROPERTY, EQUIPMENT, IMPROVEMENTS, FIXTURES AND APPURTENANCESCONVEYED AS PART OF THE ASSETS ARE SOLD HEREUNDER “AS IS, WHERE IS, ANDWITH ALL FAULTS” AND NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE OR CONDITION, ARE GIVEN BY OR ON BEHALF OFASSIGNOR.  IT IS UNDERSTOOD AND AGREEDTHAT ASSIGNEE HAS INSPECTED THE ASSETS FOR ALL PURPOSES AND HAS SATISFIEDITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE ANDSUBSURFACE, AND THAT ASSIGNEE ACCEPTS SAME IN ITS “AS IS, WHERE IS AND WITH ALLFAULTS” CONDITION.  ASSIGNEE HEREBYWAIVES ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANYIMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONDITION,OR CONFORMITY TO SAMPLES.**

 

**(d)****                                 ****THEEXPRESS REPRESENTATIONS AND WARRANTIES OF ASSIGNOR CONTAINED IN THIS CONVEYANCEARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES,EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTY OFFITNESS FOR INTENDED PURPOSES OR GUARANTEE AGAINST HIDDEN OR LATENT REDHIBITORYVICES UNDER LOUISIANA LAW, INCLUDING LOUISIANA CIVIL CODE ARTICLES 2520 (1870)THROUGH 2548 (1870), AND THE WARRANTY IMPOSED BY LOUISIANA CIVIL CODE ARTICLE2476; AND ASSIGNEE EXPRESSLY WAIVES THE WARRANTY OF FITNESS FOR INTENDEDPURPOSES OR GUARANTEE AGAINST HIDDEN OR LATENT REDHIBITORY VICES UNDERLOUISIANA LAW, INCLUDING LOUISIANA CIVIL CODE ARTICLES 2520 THROUGH 2548, ANDTHE WARRANTY IMPOSED BY LOUISIANA CIVIL CODE ARTICLE 2475; ASSIGNEE WAIVES ALLRIGHTS IN REDHIBITION PURSUANT TO LOUISIANA CIVIL CODE ARTICLE 2520, ET SEQ;ASSIGNEE ACKNOWLEDGES THAT THIS EXPRESS WAIVER IS A MATERIAL**

 

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**AND INTEGRAL PART OF THIS SALE AND THE CONSIDERATION THEREOF; ANDASSIGNEE ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT TO THE ATTENTION OFASSIGNEE AND EXPLAINED IN DETAIL AND THAT ASSIGNEE HAS VOLUNTARILY ANDKNOWINGLY CONSENTED TO THIS WAIVER OF WARRANTY OF FITNESS AND/OR WARRANTYAGAINST REDHIBITORY VICES AND DEFECTS FOR THE ABOVE DESCRIBED PROPERTY.**

** **

**(e)****                                 ****TO THEEXTENT APPLICABLE TO THE ASSETS OR ANY PORTION THEREOF, ASSIGNEE HEREBYVOLUNTARILY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT(DTPA), CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE(OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), TEX. BUS. &COM. CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS.  IN ORDER TO EVIDENCE ITS ABILITY TO GRANTSUCH WAIVER, ASSIGNEE HEREBY REPRESENTS AND WARRANTS TO ASSIGNOR THAT IT (i) ISIN THE BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS ORSERVICES FOR COMMERCIAL OR BUSINESS USE; (ii) HAS CONSULTED WITH ANATTORNEY OF ASSIGNEE’S OWN CHOOSING; (iii) HAS KNOWLEDGE AND EXPERIENCE INFINANCIAL, BUSINESS AND OIL AND GAS MATTERS THAT ENABLE IT TO EVALUATE THEMERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED HEREBY; (iv) IS NOT IN ASIGNIFICANTLY DISPARATE BARGAINING POSITION; AND (v) UNDERSTANDS THAT THISWAIVER IS A MATERIAL AND INTEGRAL PART OF THIS CONVEYANCE AND THECONSIDERATION THEREOF.  IN ADDITION,ASSIGNEE WAIVES ITS RIGHTS UNDER ALL OTHER CONSUMER PROTECTION STATUTES OFTEXAS OR ANY OTHER STATE APPLICABLE TO THIS TRANSACTION THAT MAY BE WAIVEDINCLUDING BUT NOT LIMITED TO THE LOUISIANAUNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW, LA. R.S. 51:1402, *ET SEQ*. (THE “UTPCPL”).ASSIGNEE EXPRESSLY RECOGNIZES THAT THE PURCHASE PRICE FOR WHICH ASSIGNOR HASAGREED TO PERFORM ITS OBLIGATIONS UNDER THIS CONVEYANCE HAS BEENPREDICATED UPON THE INAPPLICABILITY OF THE DTPA AND THE UTPCPL, AND THE WAIVEROF ASSIGNEE OF ITS RIGHTS UNDER CONSUMER PROTECTION STATUTES AND ASSIGNEEFURTHER RECOGNIZES THAT ASSIGNOR IN DETERMINING TO PROCEED WITH THE ENTERINGINTO OF THIS CONVEYANCE, HAS EXPRESSLY RELIED ON THIS WAIVER AND THEINAPPLICABILITY OF THE DTPA, THE UTPCPL AND THE CONSUMER PROTECTION STATUTES.**

 

**(f)**                                    **ASSIGNEEAGREES TO INDEMNIFY, DEFEND AND HOLD ASSIGNOR, ASSIGNOR’S GROUP AND ASSIGNOR’SEMPLOYEES, OFFICERS AND DIRECTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,DEMANDS, LOSSES, DAMAGES, PUNITIVE DAMAGES, COSTS, EXPENSES, CAUSES OF ACTIONOR JUDGMENTS OF ANY KIND OR CHARACTER INCLUDING, WITHOUT LIMITATION, ANYINTEREST, PENALTY, REASONABLE ATTORNEYS’ FEES AND OTHER COSTS AND EXPENSESINCURRED IN CONNECTION THEREWITH OR THE DEFENSE THEREOF (COLLECTIVELY THE “*CLAIMS*”), WITH RESPECT TO ALLLIABILITIES AND OBLIGATIONS OR**

 

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**ALLEGED OR THREATENED LIABILITIES AND OBLIGATIONS CAUSED BY, RELATEDTO, ATTRIBUTABLE TO, OR ARISING OUT OF THE ASSUMED OBLIGATIONS.  THE DEFENSE AND INDEMNITY OBLIGATIONSPROVIDED BY THIS SECTION SHALL APPLY REGARDLESS OF THE SOLE OR PARTIAL ORCOMPARATIVE OR CONCURRENT OR OTHER FAULT, NEGLIGENCE OR STRICT, PRE-EXISTING OROTHER LIABILITY ON THE PART OF ASSIGNOR. ADDITIONALLY, THE DEFENSE AND INDEMNITY OBLIGATIONS PROVIDED BY THIS SECTION SHALLAPPLY REGARDLESS OF THE NATURE OF THE OBLIGATIONS OF ASSIGNOR, BE THEY IN TORT,CONTRACT, QUASI-CONTRACT, STATUTORY, OR OTHERWISE.**

 

**(g)****                                ****ASSIGNORAGREES TO INDEMNIFY, DEFEND AND HOLD ASSIGNEE AND ASSIGNEE’S EMPLOYEES,OFFICERS AND DIRECTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS WITHRESPECT TO ALL LIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIESAND OBLIGATIONS CAUSED BY, RELATED TO, ATTRIBUTABLE TO, OR ARISING OUT OF THERETAINED OBLIGATIONS.  THE DEFENSE ANDINDEMNITY OBLIGATIONS PROVIDED BY THIS SECTION SHALL APPLY REGARDLESS OFTHE SOLE OR PARTIAL OR COMPARATIVE OR CONCURRENT OR OTHER FAULT, NEGLIGENCE ORSTRICT, PRE-EXISTING OR OTHER LIABILITY ON THE PART OF ASSIGNEE.  ADDITIONALLY, THE DEFENSE AND INDEMNITYOBLIGATIONS PROVIDED BY THIS SECTION SHALL APPLY REGARDLESS OF THE NATUREOF THE OBLIGATIONS OF ASSIGNEE, BE THEY IN TORT, CONTRACT, QUASI-CONTRACT,STATUTORY, OR OTHERWISE.**

 

**(h)****                                ****THEPARTIES HERETO BOTH AGREE AND STIPULATE THAT THEY HAVE ACTUAL KNOWLEDGE OF ALLINDEMNITY PROVISIONS HEREIN, THAT THEY ARE FAMILIAR WITH THE EXPRESS NEGLIGENCETEST, THAT THIS DEFENSE AND INDEMNIFICATION AGREEMENT COMPLIES WITH THE EXPRESSNEGLIGENCE TEST, THAT THE PARTIES CLEARLY INTEND TO TRANSFER THE RISK OF LOSSFOR THE INDEMNITEE’S NEGLIGENCE, FAULT AND OTHER LIABILITIES AND OBLIGATIONS ASSET FORTH ABOVE TO ASSIGNEE, AND THAT THESE INDEMNIFICATION PROVISIONS ARECONSPICUOUS.**

 

**(i)****                                   ****EachParty hereby agrees to indemnify and hold the other harmless from and againstany claim for a brokerage or finder’s fee or commission in connection with thisConveyance or the transactions contemplated by this Conveyance to the extentsuch claim arises from or is attributable to the actions of such indemnifyingParty, including, without limitation, any and all losses, damages, punitivedamages, attorneys’ fees, costs and expenses of any kind or character arisingout of or incurred in connection with any such claim or defending against thesame.**

 

**(j)****                                   ****The amount of any Claims for which any party is entitled toindemnification under this Conveyance shall be reduced by any corresponding (1) tax benefit created or**

 

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**generated or (2)  insurance proceedsrealized by such party if a claim were properly pursued under the relevantinsurance arrangements.**

** **

**(k)****                               ****Each of the Parties expressly waives and agrees not to, and to causethe members of the Assignee Group in the case of Assignee and the members ofthe Assignor Group in the case of Assignor not to, seek indirect,consequential, punitive or exemplary damages or damages for lost profits of anykind with respect to any dispute arising under, related to, or in connectionwith this Conveyance or breach hereof (except such damages that are payable toa third party with respect to a third party claim for which any Person isseeking indemnification hereunder).  TheParties agree that no indemnified Person shall be entitled to any such damagesunder this Conveyance.**

** **

**(l)****                                   ****Without limiting or enlarging the scope of theindemnification, disclaimer and assumption obligations set forth in thisConveyance, to the fullest extent permitted by Law, an indemnified Person shallbe entitled to indemnification hereunder in accordance with the terms hereof,regardless of whether the indemnifiable loss giving rise to any suchindemnification obligation is the result of the sole, active, passive, concurrentor comparative negligence, strict liability or other legal fault or violationof any Law of or by any such indemnified Person.  Assignee and Assignor acknowledge that thisstatement complies with the express negligence rule and is conspicuous.**

** **

**(m)****                             ****The Parties acknowledge and agree that the provisions ofany anti-indemnity statute relating to oilfield services and associatedactivities shall not be applicable to this Conveyance or the transactionscontemplated hereby.**

 

**(n)****                                ****Assignor and Assignee acknowledge that the payment ofmoney, as limited by the terms of this Conveyance and/or the Agreement, shallbe adequate compensation for breach of any representation, warranty, covenantor agreement contained herein or for any other claim arising in connection withor with respect to the transactions contemplated in this Conveyance and/or theAgreement.  As the payment of money shallbe adequate compensation, Assignee and Assignor waive any right to rescind thisConveyance and/or the Agreement or any of the transactions contemplated by thisConveyance and/or the Agreement.**

 

(o)                                 Any demand forindemnity hereunder shall be made by written notice, together with a writtendescription of any Claims asserted stating the nature and basis of such Claimand, if ascertainable, the amount thereof. The Party upon whom notice is served shall have a period of twenty (20)days after receipt of such notice within which to respond thereto or, in thecase of an underlying demand which requires a shorter time for response, thenwithin such shorter period as specified in such notice (the “**Notice Period**”).  Ifthe Party upon whom notice is served denies liability or fails to provide thedefense for any Claim, the other Party may defend or compromise the Claim as itdeems appropriate.  If the Party uponwhom notice is served accepts liability and responsibility for the defense ofany Claim, it shall so notify the other Party as soon as is practicable priorto the expiration of the Notice Period and undertake the defense or compromiseof such Claim with counsel selected by the Party accepting such liability.  If the Party on whom notice is servedundertakes the defense or compromise of such Claim, the other Party shall beentitled, at its own expense, to participate in such defense.  No compromise or

 

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settlement of any Claim shall be made without reasonable notice to theother Party, and without the prior written approval of the other Party, whichapproval shall not be unreasonably withheld or delayed.  No such approval shall be withheld if suchcompromise or settlement includes a general and complete release of the otherParty, its successors, assigns, Affiliates and their respective Representativesin respect of the matter, with prejudice, and with no express or writtenadmission of liability on the part of the other Party, its Affiliates and theirrespective Representatives, and is without cost or liability and has noconstraints on the future conduct of its or their respective businesses. Assigneeand Assignor acknowledge that their obligations to indemnify, defend and holdthe other Party and its Affiliates harmless under this Agreement includeobligations to pay the attorneys’ fees and court and arbitral costs incurred bythe other Party and its Affiliates in defending said Claims, regardless of themerits of said Claims, where the Party to whom notice is served hereunderdenies liability or fails to provide the defense for any said Claim.  Assignor and Assignee shall have the right atall times to participate, at their sole cost, in the preparation for anydefense, hearing or trial related to the indemnities set forth in thisAgreement, as well as the right to appear on their own behalf or to retainseparate counsel to represent them at any such hearing or trial.

 

**VII.  MISCELLANEOUS PROVISIONS**

 

(a)                                  Governing Law.  THIS CONVEYANCE SHALL BE GOVERNED, CONSTRUEDAND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA, WITHOUTREGARD TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCHDETERMINATIONS.  IN THE EVENT OF ANYDISPUTE WITH RESPECT TO THIS CONVEYANCE, THE RESOLUTION THEREOF SHALL BESUBJECT TO AND GOVERNED BY THE PROVISIONS OF SECTION 18.2 OF THEAGREEMENT.

 

(b)                                 Captions.  The captions in this Conveyance are for convenienceonly and shall not be considered a part of or affect the construction orinterpretation of any provision of this Conveyance.

 

(c)                                  Ejusdem*Generis*  The word “includes” and “including”and their syntactical variants mean “includes, but not limited to” and itscorresponding syntactical variants.  The rule of*ejusdem generis* may not be invokedto restrict or limit the scope of the general term or phrase followed orproceeded by an enumeration of particular examples.

 

(d)                                 NoRatification.  Recitation ofor reference to any agreement or other instrument in this Conveyance, includingits exhibits, does not operate to ratify, confirm, revise, or reinstate theagreement or instrument if it has previously lapsed or expired.

 

(e)                                  Not to beConstrued Against Drafter. Assignor and Assignee acknowledge that they have read this Conveyance,have had the opportunity to review it with an attorney of their respectivechoice, and have agreed to all its terms. Under these circumstances, Assignee and Assignor agree that the rule ofconstruction that a contract be construed against the drafter shall not beapplied in interpreting this Conveyance and that in the event of any ambiguityin any of the terms or conditions of this Conveyance, including any exhibitshereto and whether or not 

 

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placed of record, suchambiguity shall not be construed for or against any party hereto on the basisthat such party did or did not author the same.

 

(f)                                    Waiver of JuryTrial.  ASSIGNOR AND ASSIGNEE DOHEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALLRIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASEDUPON, ARISING OUT OF OR RELATING TO THIS CONVEYANCE, THE RIGHTS AND OBLIGATIONSUNDER THIS CONVEYANCE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(g)                                 ExpressNegligence Rule; Conspicuousness. ASSIGNOR AND ASSIGNEEACKNOWLEDGE THAT THE PROVISIONS IN THIS CONVEYANCE THAT ARE SET OUT IN ITALICS,IN BOLD, UNDERLINE OR CAPITALS (OR ANY COMBINATION THEREOF) SATISFY THEREQUIREMENTS FOR THE EXPRESS NEGLIGENCE RULE AND/OR ARE CONSPICUOUS.

 

(h)                                 Counterparts.  This Conveyance may be executed in one ormore counterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

(i)                                     Compliance withLaws.  Assignee shall comply with allcurrent and subsequently amended applicable laws, ordinances, rules, andregulations applicable to the Assets and shall promptly obtain and maintain allpermits required by governmental authorities in connection with the Assets.

 

(j)                                     Recognition.  Assignee will take all necessary steps toensure that Assignee is recognized as the owner of the Assets, as providedherein, by all appropriate parties, including any regulatory commission, bodyor board or jurisdiction.

 

(k)                                  Purchase andSale Agreement. This Conveyance is subject to the terms andconditions of the Agreement.  TheAgreement remains in force and effect in accordance with its terms and is notintended to be, and is not, merged into this Conveyance.  In the event of a conflict or inconsistencybetween the terms and provisions of this Conveyance and the Agreement, theterms of the Agreement shall control.

 

(l)                                     FurtherAssurances.  Each of theParties will execute, acknowledge and deliver to the other such furtherinstruments, and take such other action, as may be reasonably requested inorder to more effectively assure to said Party all of the respectiveproperties, rights, titles, interests, estates, and privileges intended to beassigned, delivered or inuring to the benefit of such Party in consummation ofthe transactions contemplated hereby. Without limiting the foregoing, in the event Exhibits “A-1” through “A-5”incorrectly or insufficiently describe or reference an interest intended to beconveyed hereby, Assignor agrees to, within twenty (20) days of Assignor’sreceipt of Assignee’s written request, together with supporting documentationsatisfactory to Assignor, correct such Exhibit and/or execute an amendedassignment or other appropriate instruments necessary to transfer the propertyor interest intended to be conveyed hereby to Assignee.

 

17

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(m)                               Exhibits.  All exhibits and schedules attached to thisConveyance, and the terms of those exhibits and schedules which are referred toin this Conveyance, are made a part hereof and incorporated herein byreference.  References in such exhibitsor schedules to instruments on file in the public records are made for allpurposes.  Unless provided otherwise, allrecording references in such exhibits or schedules are to the appropriaterecords of the County/Parish or Counties/Parishes in which the Assets arelocated.

 

(n)                                 Unenforceability.  If any provision of this Conveyance is foundby a court of competent jurisdiction to be invalid or unenforceable, thatprovision will be deemed modified to the extent necessary to make it valid andenforceable, and if it cannot be so modified, it shall be deemed deleted andthe remainder of the Conveyance shall continue and remain in full force andeffect.

 

(o)                                 CovenantsRunning with the Land.  Allthe terms, provisions, covenants, obligations, indemnities, representations,warranties and conditions of this Conveyance shall be covenants running withthe land and shall inure to the benefit of and be binding upon, and shall beenforceable by, the parties hereto and their respective successors and assigns,subject to the requirements of this Section VII(o).  Any subsequent transfer of all or any part ofthe Assets conveyed and assigned herein shall be made expressly subject to theterms and provisions of this Conveyance and the Agreement.  In the event Assignee sells, assigns orotherwise transfers all or a portion of the Assets, (i) this Conveyanceand the Agreement shall remain in effect between Assignee and Assignor as toall the Assets regardless of such sale, assignment or transfer (and Assigneeshall not be thereby released, but shall remain obligated hereunder), (ii) Assigneeshall require its successors and assigns expressly to assume its duties,responsibilities and obligations under this Conveyance and the Agreement, tothe extent related or applicable to the Assets or the portion thereof acquiredby them, but such assumption shall not release Assignee from any such assumedobligations, and (iii) Assignee shall obtain Assignor’s prior writtenconsent.  Any sale, assignment or othertransfer of the Leases or other Assets shall also contain such other languageas is necessary to satisfy the terms and provisions of such Leases or theagreements applicable to such Assets.

 

(p)                                 Notices.  Except as otherwise expressly providedherein, all communications required or permitted under this Conveyance shall bein writing and may be given by personal delivery, facsimile, US mail (postageprepaid), or commercial delivery service, and any communication hereunder shallbe deemed to have been duly given and received when actually delivered to theaddress of the Parties to be notified as set forth below and addressed asfollows:

 
| If to Assignor, as  follows:            |         |
|-----------------------------------------|--------------|
|                                    |         |
| **NGS Sub. Corp.**                      |         |
| 2500 City West Blvd,  Suite 1300   |         |
| Houston, Texas 77042                    |         |
| Attention: Robert S. Herlin,  President |
| Facsimile:                              | 713-935-0199 |
| Confirm:                                | 713-935-0122 |
|                                         |              |  |

 

18

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| With  a copy to:                      |          |
|---------------------------------------|---------------|
|                                  |          |
| **Mark A. Mathews**                   |          |
| Adams and Reese LLP                   |          |
| 4400 One Houston Center               |          |
| 1221 McKinney                         |          |
| Houston, Texas 77010                  |
| Facsimile:                            | 713-652-5152  |
| Confirm:                              | 713-652-5151  |
|                                  |
| If to Assignee, as  follows:          |          |
|                                  |          |
| **MWM Energy, LLC**                   |          |
| 114 30th Avenue South                 |          |
| Nashville, Tennessee 37212            |          |
| Attention: Stephen F. Moore, CEO      |
| Facsimile:                            | 615-340-5391  |
| Confirm:                              | 615-340-5389  |
|                                  |
| With copies to:                       |          |
|                                  |          |
| Gary  Wadkins                         |          |
| 5100  Sweetbriar Lane, Suite 121 |          |
| Tyler,  Texas 75703                   |
| Facsimile:                            | 903-534-6005  |
| Confirm:                              | 903-534-2944  |
|                                  |
| RR  Advisors, LLC                     |          |
| 21  Waterway, Suite 300          |          |
| The  Woodlands, Texas 77380           |
| Attention:                            | W. Mark Meyer |
| Facsimile:                            | 214-871-8644  |
| Confirm:                              | 832-287-8523  |
|                                  |          |
| Charles  Robert Bone                  |
| Bone  McAllester Norton PLLC          |
| 511  Union Street, Suite 1600    |
| Nashville,  Tennessee 37219           |
| Facsimile:                            | 615-238-6301  |
| Confirm:                              | 615-238-6301  |
|                                       |               |  |  |  |  |  |

 

Provided,however, that any notice required or permitted under this Conveyance will beeffective if given verbally within the time provided, so long as such verbalnotice is followed by written notice thereof in the manner provided hereinwithin twenty-four (24) hours following the end of such time period.  Any Party may, by written notice so deliveredto the other, change the address to which delivery shall thereafter be made.

 

19

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(q)                                 Filing andRecording of Assignments, etc.  Assignee shall be solely responsible for allfilings and the prompt recording of assignments and other documents related tothe transfer of the Assets as contemplated hereunder, including but not limitedto this Conveyance, and for all fees connected therewith, and Assignee shallfurnish certified copies of all such filed and/or recorded documents toAssignor.  Assignor shall not be responsiblefor any loss to Assignee because of Assignee’s failure to file or recorddocuments, including but not limited to this Conveyance, correctly orpromptly.  Assignee shall promptly fileall appropriate forms, declarations or bonds with federal and state agencies relativeto its assumption of operations and Assignor shall cooperate with Assignee inconnection with such filings.  Assigneeshall also comply with all notice provisions contained in the Leases orotherwise applicable to the transfer of the Assets.

 

**TO HAVEAND TO HOLD** unto Assignee, its successors and assigns, forever.

 

**INWITNESS WHEREOF**, the undersigned have executed this instrument onthe dates of the respective acknowledgments annexed hereto, but effective as ofthe above-stated Effective Time.

 

 
| ** ** | **ASSIGNOR:**       |
|------------|---------------------|
| ** ** | **NGS SUB. CORP.**  |
|       |                |
|       | By:                 |   |   |
|       |                |
|       | Title:              |   |   |
|       |                |
|       |                |
|       |                |
| ** ** | **ASSIGNEE:**       |
| ** ** | **MWM ENERGY, LLC** |
|       |                |
|       | By:                 |   |   |
|       |                |
|       | Title:              |   |   |
|            |                     |  |  |  |  |

 

20

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STATEOF TEXAS

 

COUNTYOF HARRIS

 

Onthis         day of March, 2008,before me personally appeared****                                            ,to me personally known, who, being by me duly sworn, did say that he is the                                    of **NGS SUB. CORP.,**a Delaware corporationand that the foregoing instrument was signed and delivered on behalf of suchcorporation and that he acknowledged the instrument to be the free act and deedof said corporation.

 

IN WITNESS WHEREOF, Ihereunto set my hand and official seal.

 

 
|   |   |                                        |
|--------|--------|---------------------------------------------|
|   |   | Notary Public in and for the State of Texas |

 

 

STATEOF TEXAS

 

COUNTYOF HARRIS

 

On this           day of March, 2008, before me personally came and appeared                                              tome known, who, being by me duly sworn, did say that he is the                                  of**MWM Energy, LLC**, a Texas limitedliability company, that he signed the foregoing instrument on behalf of saidlimited liability company and as the free act and deed of said limitedliability company.

 

IN WITNESS WHEREOF, I hereunto set my hand andofficial seal.

 

 
|   |   |                                         |
|--------|--------|----------------------------------------------|
|   |   | Notary Public in and for the State of Texas. |

 

21

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**Exhibit “A-1”**

 

Attached to and made a part of that certain

Assignment, Conveyance and Bill of Sale dated effective February 1,2008

by and between NGS Sub. Corp., as Assignor, and

MWM Energy, LLC, as Assignee

 

**LEASES**

 

Being the following oil and gas leases described inthat certain Act of Sale and Assignment dated September 2, 2004 fromAtkins Production, Inc., et al to NGS Sub. Corp., as recorded in Book 291,Page 179 of the Conveyance Records of LaSalle Parish, Louisiana, morefully described as follows, to-wit:

 

1.                                       Oil, gas andmineral lease executed by William E. Zimmerman in favor of W.S. Ezell of date April 18,1925, recorded at Oil and Gas Lease Book 3, Page 14, Registry 1333 of therecords of LaSalle Parish, Louisiana, **insofaras the said lease covers the following described property, to-wit: TheNortheast Quarter of the Southwest Quarter of Section 25, Township 10North, Range 1 East, LaSalle Parish, Louisiana.**

 

Lexington – Zimmerman #1 – 100’ North and 226’ Westfrom the SE Corner of NE/4 of Section 25, Township 10 North, Range 1 East,LaSalle Parish, Louisiana

Lexington – Zimmerman #2 – 440’ North and 100’ Westfrom the SE Corner of NE/4 of SW/4 of Section 25, Township10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #3 – 669’ North and 115’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #4– 490’North and 290’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #5– 327’ North and 430’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #6– 100’ North and 630’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #7– 300’ North and 630’ Westfrom the SE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

 

1

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Lexington – Zimmerman #8–387’ North and 788’ West from the SE corner of NE/4 of SW/4 of Section 25,Township 10 North, Range I East, LaSalle Parish, Louisiana

Lexington – Zimmerman #14– 505’ South and 1217’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #15– 345’ South and 1095’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #16– 100’ South and 1135’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #17– 258’ South and 552’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana

Lexington – Zimmerman #18– 245’ South and 300’ Westfrom the NE corner of NE/4 of SW/4 of Section 25, Township 10 North, RangeI East, LaSalle Parish, Louisiana

 

2.                                  (Hardtner “A”Lease) Oil, gas and mineral lease executed by the Urania Lumber Company infavor of Southern Carbon Company of date January 23, 1923, and recorded atOil and Gas Lease Book 2, Page 449, Registry 069784 of the records ofLaSalle Parish, Louisiana, **insofar as thesaid lease covers the following described property to-wit: The SoutheastQuarter of the Southeast Quarter of Section **7, **Township 10 North, Range 2 East, LaSalle Parish,Louisiana.**

 

3.                                  (Hardtner “C”Lease) Oil, gas and mineral lease executed by the Urania Lumber Company infavor of S.M. Collins and A. Gibbons of date November 27, 1922, recordedat Oil and Gas Lease Book 2, Page 18, Registry 06608 of the records ofLaSalle Parish, Louisiana, **insofar as thesaid lease covers the following described property, to-wit: That portion of theNorthwest Quarter of the Northeast Quarter of Section 18, Township 10North, Range 2 East, lying south and east of the Iron Mountain Railway Companyrailroad.**

 

4.                                       (Urania****A,B, C and Hardtner-Edenborn lease**)**Oil,gas and mineral lease executed by Q.T. Hardtner, Jr., et al, in favor ofEd Alexander of date October 26, 1972, recorded at Oil and Gas Lease Book36, Page 392, Registry 91253 of the records of LaSalle Parish, Louisiana, **insofar as the above described lease covers thefollowing described property, to-wit:**

 

2

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Township 10 North – Range 2East

 

Section 19:

 

NE/4 of NW/4 of NE/4;

NW/4 of SE/4 of NW/4 of NE/4;

SE/4 of SE/4 of NW/4 of NE/4;

NW/4 of SW/4 of NE/4;

NW/4 of NE/4 of NW/4 of SE/4;

NE/4 of NE/4 of NW/4 of SE/4;

SE/4 of NE/4 of NW/4 of SE/4;

SW/4 of SW/4 of NW/4 of E/4;

S/2 of NW/4 of SE/4 of NE/4;

SW/4 of NE/4 of SE/4 of NE/4;

NE/4 of SW/4 of NE/4 of SE/4;

E/2 of SW/4 of NE/4;

SW/4 of SE/4 of NW/4 of NE/4;

NW/4 of SW/4 of NE/4 of SE/4;

NE/4 of SW/4 less the NW/4;

NW/4 of NW/4 of SE/4 of SW/4;

SW/4 of SE/4 of NW/4 of NE/4.

 

5.                                  (New Pendarvislease) Oil, gas and mineral lease from W.P. Pendarvis in favor of M.H. O’Hara,W.B. Letson, W.T. Murray, and W.L. Fort, dated August 16, 1923, recordedat Oil and Gas Lease Book 2, Page 74 of the records of LaSalle Parish,Louisiana, **insofar and only insofar as thesaid lease covers and applies from the surface of the earth to 100’ below thetop of the Wilcox Group, and insofar and only insofar as the above describedlease covers and affects one acre in the form of a square around the followingwells:**

 

Monroe Well Service – La. Petr. Assoc. - W.P.Pendarvis No. I – SN 193828 – located 145’ N and 415’ W from South QuarterCorner of Section 26, T10N – R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 2 – SN 193829 – located 345’ N and 415’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 3 – SN 193830 – located 545’ N and 415’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 4 – SN 193831 – located 745’ N and 415’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 5 – SN 193832 – located 790’ N and 215’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

 

3

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Monroe Well Service – La.Petr. Assoc. – W.P. Pendarvis No. 6 – SN 193833 – located 590’ N and 215’W from South Quarter Corner of Section 26, T10N-R1 E, LaSalle Parish,Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 7 – SN 193834 – located 390’ N and 215’ W from South QuarterCorner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 8 – SN 193835 – located 190’ N and 215’ W from South QuarterCorner of Section 26, T10N-R1 E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 10 – SN 193837 – located 435.14’ N and 15’ W from SouthQuarter Corner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 11 – SN 193838 – located 635.14’ N and 15’ W from SouthQuarter Corner of Section 26, T10N-R1E, LaSalle Parish, Louisiana.

Monroe Well Service – La. Petr. Assoc. – W.P.Pendarvis No. 12 – SN 194758 – located 345’ N and 170’ E from the S/Q/C ofSec. 26, T10N, R1E, LaSalle Parish, Louisiana.

Monroe Well Service – Beaver – Pendarvis No. I –(SN 193250) – located 1218’ N and 369’ W from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service – Beaver – Pendarvis No. 2 –(SN 193251) – located 1218’ N and 169’ W from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 3- (SN 193252) - located 818’ N and 320’ E from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 4- (SN 193253) - located 618’ N and 411’ E from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 6- (SN 193255) - located 100’ N and 301’ E from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 7- (SN 194757) - located 444’ N and 345’ E from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 9- (SN 194759) - located 545’ N and 165’ E from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 10- (SN 194760) - located 765’ N and 140’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 11- (SN 194761) - located 970’ N and 175’ E from the S/Q/C of Sec. 26, T10N, R1E,LaSalle Parish, Louisiana.

 

4

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Monroe Well Service - Beaver- Pendarvis No. 12 - (SN 194762) - located 870’ N and 30’ W from the S/Q/Cof Sec. 26, T10N, R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 13- (SN 194763) - located 1085’ N and 8’ W from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

Monroe Well Service - Beaver - Pendarvis No. 14- (SN 194764) - located 1020’ N and 200’ W from the S/Q/C of Sec. 26, T10N,R1E, LaSalle Parish, Louisiana.

 

6.                                  (Old Pendarvislease) Oil, gas and mineral lease from W.P. Pendarvis in favor of M.H. O’Hara,W.B. Letson, W.T. Murray, and W.L. Fort, dated August 16, 1923, recordedat Oil and Gas Lease Book 2, Page 74 of the records of LaSalle Parish,Louisiana, **INSOFAR AND ONLY INSOFAR as saidlease covers and affects one acre in the form of a square around each of thefollowing wells:**

 

Pendarvis No. 3 - SN 010281 - located 640’ Nand 712’ W from SE/C of SW/4 of SE/4 of Section 26, T1ON - R1E, LaSalleParish, Louisiana

 

Pendarvis No. 4 - SN 010331 - located 85’ N and827’ W from SE/C of SW/4 of SE/4 of Section 26, T1ON - RIE, LaSalleParish, Louisiana

 

7.                                  Oil, gas andmineral lease dated May 24, 1979, recorded in Oil and Gas Book 43, Page 750,Registry 142221 of the records of LaSalle Parish, Louisiana, executed byMissouri Pacific Railroad, Lessor, in favor of Charles B. Bice, Lessee; **insofar and only insofar as said lease covers andaffects the following:**

 

SSS Mopac No. 8, (SN 183703), located in thecenter of Lot 10 Block 1 of the original Town of Tullos, being 356’ North and17’ West from the East Quarter Corner of Section 26 Township 10 North,Range 1 West.

 

8.                                 Oil, Gas andMineral Lease from Tremont Lumber Company to Jackie D. Nelson, dated May 20,1968, recorded in Oil and Gas Book 31, Page 729, **insofar as said lease covers the Southwest Quarter ofNorthwest Quarter of Section 30, Township 10 North, Range 2 East, LaSalleParish, Louisiana, from the ground to the base of the Wilcox Formation.**

 

9.**                                **Oil, Gas andMineral Lease dated November 5, 1975, recorded November 11, 1975, inOil, Gas and Mineral Lease Record Book 67, Page 367, records of WinnParish, Louisiana, executed by C.S. Meredith, et al, Lessors, unto J.B.Stafford, Lessee, covering and affecting:

 

5

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Southeast Quarter ofNorthwest Quarter (SE/4 of NW/4), Section 6, Township 10 North, Range 1East, Winn Parish, Louisiana, and **INSOFAR assaid lease covers and affects down to the base of the Wilcox, together with alike interest in all oil and/or gas well located upon said lease.**

 

10.                                 Oil, Gas andMineral Lease executed by C.S. Meredith, curator for Betty Lou Meredith to andin favor of Atkins Production, Inc., a Louisiana Corporation, dated May 15,1989, recorded in Conveyance Book 124 at Page 66, records of Winn Parish,Louisiana covering and affecting the following described property, to-wit:

 

The Southeast Quarter of Northwest Quarter of Section 6,Township 10 North, Range 1 East, Winn Parish, Louisiana.

 

11.                               Oil, Gas andMineral Lease executed by Monroe Well Service, Delaware to and in favor of SSMPartnership, dated June 21, 1990, recorded in Conveyance Book 127 at Page 636records of Winn Parish, Louisiana, **INSOFARAND ONLY INSOFAR as said lease covers and affects one acre in the from of asquare (with the well in the center thereof) around each of the following 8wells in the NW/4 of Section 5, Township 10 North, Range 1 East, WinnParish, Louisiana.**

 

SSS Drilling Asso. Tremont No. 1 – SN 182799 –located 940’ N and 100’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 2 – SN 182800 –located 1021’ N and 451’ E from the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 3 – SN 182801 –located 920’ N and 77’ E of the SW corner of the SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 4 – SN 182802 –located 620’ N and 855’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 5 – SN 182803 –located 294’ N and 895” E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 6 – SN 182804 –located 104’ N and 821’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 7 – SN 182805 –located 105’ N and 1020’ E of the SW corner of SW/4 of NW/4 of said Section 5

SSS Drilling Asso. Tremont No. 8 – SN 184928 –located 100’N and 517’ E of the SW corner of SW/4 of NW/4 of said Section 5being 8 acres situated in the South half of the NW/4 of Section 5, T1ON,R1E.

 

12.                            (Old UniversalD lease) Oil, Gas and Mineral Lease dated October 22, 1943 from UraniaLumber Company in Favor of M&W Oil Company, which lease is recorded in Book11 at Page 284 of the conveyance records of LaSalle Parish, Louisiana andcovers:

 

6

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One acre in the form of asquare (with the well as the center thereof) around each of the following threewells; the SSM – Urania Lumber Company #D-1 Well, SN 115191, located 100 feetSouth and 100 feet West of the Northeast Corner of the SE/4 of NE/4 of NE/4, Section 24,TI ON – R1E; SSM – Urania Lumber Company #D-2 Well, SN 115192, located 100 feetSouth and 540 feet West of the Northeast Corner of the NE/4 of NE/4 of said Section 24,SSM-Urania Lumber Company D-3 well, SN 115468, being three acres situated inthe SE/4 of NE/4 of NE/4, Section 24 T1 ON – R1E, LaSalle Parish,Louisiana, and **INSOFAR as said lease covers adepth down to 1600 feet**

 

13.                            (Old UniversalC lease) Oil, Gas and Mineral Lease dated June 12, 1941 from the Urania LumberCompany in favor of Willis C. Martin and M.E. Waldron, which lease is recordedin Book 9 at Page 249 of the conveyance records of LaSalle Parish,Louisiana and covers:

 

One acre in the form of a square (with the well asthe center thereof) around each of the following three wells; SSM – UraniaLumber Company #C-2 Well, SN 115773, located 100 feet North and 100 feet Eastof the Southwest corner of the NW/4 of NW/4 of NW/4 Section 19, T1ON –R2E; SSM- Urania Lumber Company#C-5 Well, SN 115986, located 340 feet South and100 feet East of the Northwest Corner of said Section 19, C-4 well, SN116282, being three acres situated in the NW/4 of NW/4 of NW/4, Section 19,T1ON – R2E, LaSalle Parish, Louisiana and **INSOFARas said lease covers a depth down to 1600’**

 

14.                            (Old UniversalA lease) Oil, Gas and Mineral lease dated October 22, 1943 from the UraniaLumber Company in favor of M&W Oil Company, which lease is recorded in Book11 at Page 284 of the conveyance records of LaSalle Parish, Louisiana andcovers:

 

One acre in the form of a square (with the well asthe center thereof) around each of the following wells; SSM – Urania LumberCompany #A-2 Well, SN 114278, located 545 feet South and 545 feet West of theNortheast Corner of Section 24, T1ON-R1E; SSM – Urania Lumber Company #A-2Well SN 114442, located 300 feet West and 100 feet North of the SoutheastCorner of the NE/4 of NE/4 of NE/4 of said Section 24; SSM – Urania LumberCompany 14A-5 Well SN 114534 located 345 feet South and 100 feet West of theNortheast Corner of said Section 24, being three acres situated in theNE/4 of NE/4 of NE/4, Section 24, TION-R1E, LaSalle Parish, Louisiana and **INSOFAR as said lease covers a depth down to 1600 feet**

 

15.**                           ****(MDP Lease)**Lease dated September 28, 1949, recorded in Oiland Gas Lease Book 14, Page 127, records of LaSalle Parish, Louisiana,executed by Walter Herbert,

 

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Lessor, in favor of John T.Cupples, Lessee, **INSOFAR and ONLY INSOFAR assaid lease covers and effects:**

 

Lot 3 of Block 2, Original Town of Tullos,containing the Monroe Drilling Maxwell No. 1 well, Serial Number 179671,Monroe Drilling Maxwell No. 2 well, SN 179672 located 174 feet North and359 feet West from the East Quarter Corner of Section 26, Township 10North, Range 1 East, LaSalle Parish, Louisiana, and Lot 5 of Block 2, OriginalTown of Tullos, containing the Monroe Drilling Maxwell No. 2 well, SN179672 North and 424 feet West from the East Quarter Corner of Section 26,Township 10 North, Range 1 East, LaSalle Parish, Louisiana.

 

16.**                           ****(Shemen SWD)**Oil, Gas and Mineral Lease executed by Urania LumberCompany in favor of Willis C. Martin and M.E. Waldron of date June 12,1941, recorded at Oil and Gas Lease Book 9, Page 249 of the records ofLaSalle Parish, Louisiana, **INSOFAR AND ONLYINSOFAR as said lease covers a depth from the surface of the Earth down to adepth of 1600 feet, and INSOFAR AND ONLY INSOFAR as the above described leasecovers and affects one acre in the form of a square around the following wells:**

 

Urania Lumber Co., SWD #1*,*SN-971328, 100’ S of NE/C Section 24,T10N, R1E

 

17.                           Oil, Gas andMineral Lease executed by the Urania Lumber Company in favor of M&W OilCompany of date October 22, 1943, recorded at Oil and Gas Lease Book 11, Page 284of the records of LaSalle Parish, Louisiana, **INSOFARAND ONLY INSOFAR as said lease covers a depth from the surface of the Earthdown to a depth of 1600 feet, and INSOFAR AND ONLY INSOFAR as the abovedescribed lease covers and affects one acre in the form of a square around thefollowing wells:**

 

(Urania Lumber Co. – Shemenlease)

 

Monroe Well Service – Shemen – Urania Lumber Co. No. 1- (SN 191712) – located 362’ N and 507’ W from the SE/C of NE/4 of NE/4 of Section 24,T 10 N, R 1 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania Lumber Co. No. 2- (SN 191713) – located 162’ N and 507’ W from the SE/C of NE/4 of NE/4 of Section 24,T 10 N, R 1 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania Lumber Co. No. 3(SN 191714) – located 362’ N and 307’ W from the SE/C of NE/4 of NE/4 of Section 24,T 10 N, R 1 E, LaSalle Parish, Louisiana

 

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(Urania A – Shemen lease)

 

Monroe Well Service – Shemen– Urania “A” No. 1 - (SN 191709) – located 559’ S and 78’ W from the NE/C Section 24,T 10 N, R 1 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania “A” No. 2- (SN 191784) – located 369’ S and 351’ W from the NE/C Section 24, T 10N, R 1 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania “A” No. 6- (SN 191788) – located 131’ S and 100’ W from the NE/C Section 24, T 10N, R 1 E, LaSalle Parish, Louisiana

 

18.                            Oil, Gas andMineral Lease executed by the Urania Lumber Company in favor of Willis C.Martin and M.E. Waldron of date June 12, 1941, recorded at Oil and GasLease Book 9, Page 249 of the records of LaSalle Parish, Louisiana, **INSOFAR AND ONLY INSOFAR as said lease covers a depthfrom the surface of the Earth down to a depth of 1600 feet, and INSOFAR ANDONLY INSOFAR as the above described lease covers and affects one acre in theform of a square around the following wells:**

 

Monroe Well Service – Shemen – Urania “C” No. 1(SN 191783) – located 131’ S and 100’ E from the NW/C Section 19, T 10 N,R 2 E, LaSalle Parish, Louisiana

Monroe Well Service – Shemen – Urania “C” No 2 - (SN191779) – located 359’ S and 302’ E from the NW/C Section 19, T 10 N, R 2E, LaSalle Parish, Louisiana

 

19.                            (LPO) Oil, Gasand Mineral Lease executed by Louisiana Pacific Corporation to and in favor ofAtkins Production, Inc., dated February 27, 1990, recorded under filenumber 144131 in Conveyance Book 174, Page 631 of the records of LaSalleParish, Louisiana. Covering and affecting the following property as described:

 

Northeast Quarter of Northeast Quarter of Section 13,Township 10 North, Range 1 East

 

20.                            (LPO) Oil, Gasand Mineral Lease executed by William Dows Blake, et al, to and in favor ofAtkins Production, Inc., dated February 1, 1990, recorded under filenumber 144130 in Conveyance Book 174, Page 628 of the records of LaSalleParish, Louisiana. Covering and affecting the following property as described:

 

Northeast Quarter of the Northeast Quarter (NE/4 ofNE/4), Section 13, Township 10 North, Range 1 East.

 

21.                            (Silver CitySWD) Urania E SWD *#1,*Serial#971269, located 192’ South and 1210’ East from the Center of Section 19,TI ON, R2E, LaSalle Parish, Louisiana, along with all related Salt WaterDisposal Equipment.

 

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Hartner A SWD #1, Serial#971237, located 374’ North and 998’ West from the SE corner of Section 7,T1ON, R2E, LaSalle Parish, Louisiana.

 

22.                                 (WPPendarvis-La Petro lease) Pendarvis SWD Well #1, Serial #971428, located in Section 26,T1ON, RIE, LaSalle Parish, Louisiana

 

23.                            (Miles Heirsand Miles Essex leases) That certain oil, gas and mineral lease executed byD.F. Miles, et al, in favor of Essex Drilling Co., Inc., dated February 14,1984, as recorded in Oil and Gas Lease Book 61 at Page 302 of the recordsof LaSalle Parish, Louisiana;

 

That certain oil, gas and mineral lease executed byD.F. Miles, et al, in favor of Essex Drilling Co., Inc., dated March 22,1984, as recorded in Oil and Gas Lease Book 61 at Page 405 of the recordsof LaSalle Parish, Louisiana;

 

That certain oil, gas and mineral lease executed byWilliam J. Miles, et al, in favor of Essex Drilling Co., Inc., dated asper acts recorded in Oil and Gas Lease Book 60, Pages 688 and 733; and Oiland Gas Lease Book 61, Pages 39, 41, 43, 45, 47, 49, 51, 53, 55, 57, 185,187, 189, 242 and 260 of the records of LaSalle Parish, Louisiana;

 

**Insofar as said leases cover andaffect the following described lands in LaSalle Parish, Louisiana, to-wit:**

 

Begin at the NE Corner of the NW/4 of NW/4 of Section 25,T10N, R1E, and run thence South 0 degrees 12’ West 533.9 feet for the point ofbeginning; run thence South 0 degrees 12’ West 376 feet; run thence north 87degrees 41’ West 391.7 feet to an iron pipe in the center of theColumbia-Alexandria Road; run thence South 38 degrees 28’ West 278.5 feet to aniron pipe in the center of said road; run thence north 61 degrees 37’ West 29feet to an iron pipe on an old rail fence line on the property line of F.J.Miles; run north 16 degrees 44’ East 402 feet to an iron pipe; run thence north51 degrees 58’ West 10 feet to an iron pipe; run thence North 16 degrees 44’East 184 feet to an iron pipe on the line of the old Kendrick Gin Lot; runthence North 89 degrees 25’ East 424.7 feet to the point of beginning.

 

That certain oil, gas and mineral lease dated August 25,1983, from William Julious Miles to Essex Drilling Co., Inc., as recordedin Oil and Gas Lease Book 60 at Page 688 of the records of LaSalle Parish,Louisiana;

 

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Thatcertain oil, gas and mineral lease dated September 6, 1983, from EdnaMiles Gatherer and Lillie Mae Miles Little to Essex Drilling Co., Inc., asrecorded in Oil and Gas Lease Book 60 at Page 733 of the records ofLaSalle Parish, Louisiana. Co-Lessors’ Agreements identified with the EdnaMiles Gatherer, et al. Lease as recorded in Oil and Gas Lease Book 61 at Pages 39,41, 43, 45, 47, 49, 51, 53, 55, 57, 185, 187, 189, 242 and 260;

** **

**Insofar as said leases cover and affect the followingdescribed lands in LaSalle Parish, Louisiana, to-wit:**

 

A tract of land in the W/2 NW/4 of Section 25,Township 10 North, Range 1 East, described as beginning at the SWC of landsowned by W.T. Bass on the East side of the Missouri Pacific right-of-way,running South along the right-of-way 224 yards, run thence East 106 yards, runthence North 224 yards to the SEC of the W.T. Bass, run thence West 106 yardsto the point of beginning.

 

Oil,gas and mineral lease dated August 16, 1983, from Frank Doughty, Chairmanof the Board for the LaSalle State Bank in Favor of Russell A, Flowers, husbandof Sally Ann Flowers, as recorded in Oil and Gas Lease Book 60 at Page 745of the records of LaSalle Parish, Louisiana

** **

**Insofar as said lease covers the following describedlands in LaSalle Parish, Louisiana, to-wit:**

 

Lots 1, 2, 3 and 4 of Block 2, and Lot 4 of Block 12of the Urania Lumber Company Addition to the Town of Tullos, LaSalle Parish,Louisiana, or 728 West and 803 North from SEC of SW/4 NW/4 of Section 25,Township 10 North, Range I East, LaSalle Parish, Louisiana.

 

Beingthe following Oil, Gas and Mineral Leases described in that certain Assignmentof Oil, Gas and Mineral Leases dated December 28, 2004 from AtkinsProduction, Inc. to Natural Gas Systems Corporation, as recorded inConveyance Book 294, Page 455 of the records of LaSalle Parish, Louisiana,more fully described as follows, to-wit:,

 

24.                                 Oil, Gas and Mineral leaseexecuted by Southern Heritage Bank in favor of Atkins Production, Inc.dated October 8, 2004, recorded at Conveyance Book 292, Page 99 ofthe records of LaSalle Parish, Louisiana

 

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Oil,Gas and Mineral Lease executed by the Town of Tullos in favor of AtkinsProduction, Inc. as recorded December 9, 2004 at Conveyance Book 293,Page 330 of the records of LaSalle Parish, Louisiana.

 

Insofaras said leases cover and affect Lots 1, 2, 3 and 4 of Block 2 and Lot 4 ofBlock 12 of the Urania Lumber Company Addition to the Town of Tullos, LaSalleParish, Louisiana.

 

Beingthe following Oil, Gas and Mineral Leases described in that certain Assignmentof Oil, Gas and Mineral Leases dated June 22, 2005 from Atkins Production, Inc.to NGS SUB. Corp. as recorded under Registry Number 191278 and in ConveyanceBook 149, Page 438 of the records of Winn Parish, Louisiana, more fullydescribed as follows, to-wit:

 

25.                                 Oil, Gas and Mineral Leasedated May 23, 2005 from Cornelia Pray, et al to Atkins Production, Inc.,as recorded in Conveyance Book 149, Page 424 of the records of WinnParish, Louisiana

 

26.                                 Oil, Gas and Mineral Leasedated May 23, 2005 from Priscilla Long Bedgood to Atkins Production, Inc.,as recorded in Conveyance Book 149, Page 428 of the records of WinnParish, Louisiana

 

27.                                 Oil, Gas and Mineral Leasedated May 23, 2005 from Cynthia Brown Beauchamp to Atkins Production, Inc.,as recorded in Conveyance Book 149, Page 432 of the records of WinnParish, Louisiana

 

28.                                 Oil, Gas and Mineral Leasedated March 22, 2005 from Brandon R. Hawkins and Brandy Coburn Hawkins toAtkins Production, Inc., as recorded in Conveyance Book 149, Page 436of the records of Winn Parish, Louisiana

 

Beingthe following oil and gas leases described in that certain Act of Sale andAssignment dated February 1, 2005 from Chadco, Inc., et al to NGSSub. Corp., as recorded in Book 294, Page 333 of the Conveyance Records ofLaSalle Parish, Louisiana, more fully described as follows, to-wit:

 

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29.                                 Oil, gas andmineral lease executed by William C. Pringle, et al, in favor of E.R. Wallerdated August 26, 1936, recorded in Oil and Gas Lease Book W, Page 449-A,Registry #23478, records of LaSalle Parish, Louisiana, covering lands in Lot15, Section 26, Township 10 North, Range I East, LaSalle Parish,Louisiana.

 

30.                                 Oil, gas andmineral lease executed by Russell A. Flowers, et ux, in favor of SaraProductions, dated June 6, 1995, recorded in Conveyance Book 220, Page 252,Registry #159489*,*records ofLaSalle Parish, Louisiana, covering the following described property, to-wit:

 

Section 26, Township 10 North, Range 1 East

 

Lot 4, Block 10, original Town of Tullos, in theNE/4 of SE/4.

Lot 1 of Russell Flowers Subdivision being are-subdivision of Lot 3 of Block 13 of the Original Town of Tullos, in the NE/4of SE/4.

Lot 2 of the Russell Flowers Subdivision being are-subdivision of Lot 3 of Block 13 of the original Town of Tullos, in the NE/4of the SE/4.

Lot 3 of the Russell Flowers Subdivision being are-subdivision of Lot 3 of Block 13 of the original Town of Tullos, in the NE/4of the SE/4.

Lot 4 of the Russell Flowers Subdivision, in theSE/4 of the SE/4.

Lot 5 of the Russell Flowers Subdivision, in theSE/4 of the SE/4.

 

31.                            Oil, gas andmineral lease executed by The Urania Lumber Co. Ltd., in favor of SouthernCarbon Company, dated January 23, 1923, recorded in Oil and Gas Lease Book2, Page 449, Registry #6978, records of LaSalle Parish, Louisiana, as thesaid lease covers the following described property, to-wit:

 

The specific acreage in the SE/4 of SE/4, of Section 7,Township 10 North, Range 2 East, LaSalle Parish, Louisiana.

 

**INSOFAR AND ONLY INSOFAR AS SAIDLEASE COVERS ONE (1) ACRE IN A SQUARE SURROUNDING THE FOLLOWING WELLS,TO-WIT:**

 

Hardtner A No. 3, SN186514; located 270’ N &516’W from SE corner of Sec. 7

Hardtner A No. 4, SN186515; located 105’ N &630’ W from SE corner of Sec. 7

Hardtner A No. 5, SN186516; located 320’ N &305’ W from SE corner of Sec. 7

Hardtner A No. 6, SN186517; located 105’ N &206’ W from SE corner of Sec. 7

Hardtner A No. 11, SN187940; located 670’ N &500’ W from SE corner of Sec.7

Hardtner A No. 12, SN187871; located 670’ N &702’W from SE corner of Sec. 7

Hardtner A No. 13, SN187872 located 275’ N &740’ W from SE corner of Sec 7.

Hardtner A No. 15, SN187874; located 862’ N &452’ W from SE corner of Sec.7

Hardtner A No. 16, SN187875 located 618’ N &897’ W from SE corner of Sec. 7

Hardtner A No. 17, SN187876; loc. 395’ N &908’ W from SE corner of Sec 7

 

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Hardtner A No. 18, SN187877; loc. 217’ N &1001’ W from SE corner of Sec. 7

Hardtner A No. 28, SN188202; loc. 100’ N &1167’ W from SE corner of Sec. 7

 

32.                                 Oil, gas andmineral lease executed by Willie Green Bradford, et ux, in favor of Russell A.Flowers, dated May 18, 1981, recorded in Oil and Gas Lease Book 48, Page 703,Registry *#*114379*,*records of LaSalle Parish, Louisiana,covering lands in the SE/4 of the SE/4 of Section 26, Township 10 North,Range 1 East, LaSalle Parish, Louisiana.

 

33.                                 Oil, gas andmineral lease executed by Board of Levee Commissioners Tensas Basin LeveeDistrict, in favor of Max W. Maxwell dba M &**M Oil Properties, dated May 19, 1969, recorded in Oiland Gas Lease Book 32, Page 683, Registry #8289, records of LaSalleParish, Louisiana, the following described property located in the NW/4 ofNE/4, of Section 26, Township 10 North, Range 1 East, LaSalle Parish,Louisiana,

** **

**INSOFAR AND ONLY INSOFAR AS thesaid lease covers and affects one (1) acre in the form of a square (withthe well as the center hereof) around the following drillsite locations:**

 

Tensas Basin Levee District No. 1, SN134605;located 345’ S 380’ E of NW corner of NW/4 of NE/4 of Section 26,Township10 North, Range I East, LaSalle Parish, Louisiana.

Tensas Basin Levee District No. 3, SN 178732;located 120’ S & 180’ E from NW corner of Section 26, Township10North, Range 1 East, LaSalle Parish, Louisiana.

Tensas Basin Levee District SWD No.2, SN990623;located 196’ South & 113’ East of NW/C of the NW/4 of NE/4 of Section 26,Township 10 North, Range 1 East, LaSalle Parish, Louisiana.

 

34.                     Oil, gas and mineral leaseexecuted by Tremont Lumber Company, in favor of Arkansas Fuel Oil Company,dated May 1, 1947, recorded in Oil and Gas Lease Book 13, Page 88,records of LaSalle Parish, Louisiana,

** **

**INSOFAR AND ONLY INSOFAR as thefollowing wells on a sub-lease 100’ in a circle around each:**

 

Tremont B. No. 1, SN187623; located 189.9’ FNL &892.8’ FEL of SW/4 of NE/4 of Section 25, Township 10 North, Range 1,East, LaSalle Parish, La.

Tremont B. No. 3, SN187822; located 307.2’ FNL &27.1’ FEL of SW/4 of NE/4 of Section 25, Township 10 North, Range 1, East,LaSalle Parish, LaTremont B. No. 4, SN187824; located 404’ FNL &405.2’ FEL of SW/4 of NE/4 of Section 25, Township 10 North, Range 1,East, LaSalle Parish, La.

 

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Tremont B. No. 5, SN188181; located 1131’ FEL &604’ FNL of SE/4 of NE/4 of Section 25, Township 10 North, Range 1, East,LaSalle Parish, La.

Tremont B. No. 6, SN189535; located 678.8’ NWL &420.2’ FSL of SW/4 of NE/4 of Section 25, Township 10 North, Range 1,East, LaSalle Parish, La.

Tremont B. SWD No. 1, SN187820; located 193.3’FNL & 889.3’ FEL of SW/4 of NE/4 of Section 25, Township 10North, Range 1, East, LaSalle Parish, La.

Tremont B. No. 7, SN189696; located 1276’ FEL &1022’ FNL of SE/4 of NE/4 of Section 25, Township 10 North, Range 1, East,LaSalle Parish, La.

Tremont B. No. 8, SN 191205; located 443’ FEL &109’ FNL of SE/4 of NE/4 of Section 25, Township 10 North, Range 1, East,LaSalle Parish, La.

Tremont B. No. 9, SN 191207; located 202.1’ FNL &355.4’ FWL of SE/4 of NE/4 of Section 25, Township 10 North, Range 1,East, LaSalle Parish, La.

Tremont B. No. 10, SN178262; located 656’ North &471’ East of SW/C of NE/4 of Section 25, Township 10 North, Range 1, East,LaSalle Parish, La.

Tremont B. No. 12, SN182291; located 382’ Southand 100’ West of NE/C of Section 25, Township 10 North, Range 1, East,LaSalle Parish, La.

Tremont B. No. 13, SN182292; located 321’ South &356’ West of NE/C of Section 25, Township 10 North, Range 1, East, LaSalleParish, La.

Tremont B. No. 14, SN 182295; located 383’South & 546’ West of NE/C of Section 25, Township 10 North, Range1, East, LaSalle Parish, La.

Tremont B. No. 15, SN182296; located 100’ South &200’ East of NW/C of NE/4 of NE/4, of Section 25, Township 10 North, Range1, East, LaSalle Parish, La

Tremont B. No. 16, SN183884; located 378’ South &749’ West of NE/C of Section 25, Township 10 North, Range 1, East, LaSalleParish, La.

Tremont B. No. 17, SN183885; located 210’ South &863’ West of NE/C of Section 25, Township 10 North, Range 1, East, LaSalleParish, La.

 

35.                                 Oil, gas andmineral lease executed by Roberta Stewart Taylor, in favor of Russell Flowers,dated October 7, 1991, recorded in Conveyance Book 190, Page 195,Registry #149263 records of LaSalle Parish, Louisiana covering lands located inLot 15 of the original Town of Tullos, Section 26, Township 10 North,Range 1 East, LaSalle Parish, Louisiana.

 

36.                               Oil, gas andmineral lease executed by Southern Heritage Bank, in favor of Marvin DouglasMurphrey, dated October 18, 1993, recorded in Conveyance Book 206, Page 280,Registry #154486, records of LaSalle Parish, Louisiana, covering Lots 2, 3 and4 of Block 6 of the Russell addition to Tullos, Louisiana, and a strip of landadjacent thereto located in the SE/C of Section 26, Township 10 North,Range 1 East, LaSalle Parish, Louisiana.

 

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37.                               Oil, gas andmineral lease executed by Anadarko Land Corp., et al, in favor of Chadco, Inc.,dated February 1, 2003, recorded in Conveyance Book 278, Page 318,Registry #187644, records of LaSalle Parish, Louisiana, covering the followingdescribed property, to-wit:

 

Township 10 North, Range 1East, Section 26:

 

Lots 8, 10 and 12 of Block 17, Town of Tullos,LaSalle Parish, Louisiana. Lots 2, 6, 8 and 10 of Block 20, Town of Tullos,LaSalle Parish, Louisiana.

 

38.                               Oil, gas andmineral lease executed by Lane Capps, et al, in favor of Chadco, Inc., datedMay 28, 2004, recorded in Oil and Gas Lease Book 289, Page 496,Registry #193577, records of LaSalle Parish, Louisiana, covering the followingdescribed property, to-wit: One (1) acre, more or less, located in theoriginal Town of Tullos, situated in Section 25, Township 10 North, Range1 East, LaSalle Parish, Louisiana.

 

39.                               Oil, gas andmineral lease executed by Tremont Lumber Company, in favor of Arthur W. Sour, Jr.,dated May 31, 1966, recorded in Oil and Gas Lease Book 28, Page 553,Registry #75957, records of LaSalle Parish, Louisiana, covering lands in Section 26,Township 10 North, Range 1 East, LaSalle Parish, Louisiana,

** **

**INSOFAR AND ONLY INSOFAR as thesaid lease covers the following described property, to-wit:**

 

Moore & Munger Hydrocarbons, Inc.,S.T. Holland #1 and S.T. Holland #2, Lot 10, Block 6, Tremont Addition toTullos, LA., as located in the SE/4 of the NW/4 of Section 25, Town 10North, Range 1 East, LaSalle Parish, Louisiana.

 

40.                                 Oil, gas andmineral lease executed by Richard L. Walsh, et ux, in favor of Walter W. Heard, Jr.,dated September 8, 1958, recorded in Oil and Gas Lease Book 20, Page 216,Registry #59119, records of LaSalle Parish, Louisiana, covering three (3) lotslocated in the original Town of Tullos, Louisiana, located in the SW/4 of theNE/4 of Section 26 Township 10 North, Range 1 East, LaSalle Parish,Louisiana.

 

41.                                 Oil, gas andmineral lease executed by Johnny C. Maxwell, Jr., in favor of Len White,dated June 24, 1992, recorded in Conveyance Book 194, Page 155,Registry 150724, records of LaSalle Parish, Louisiana, covering Lots 1, 2 and 3of the Urania Lumber Company Addition to the Town of Tullos, LaSalle Parish,Louisiana

 

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42.                                 Oil, gas andmineral lease executed by Thelma W. Allbritton, et al, in favor of Chadco, Inc.,dated June 23, 1993, recorded in Conveyance Book 204, Page 151,Registry *#*153940,**records of LaSalle Parish, Louisiana; and

 

Oil, gas and mineral lease executed by Gerald J.Wright in favor of Chadco, Inc., dated June 29, 1993, recorded inConveyance Book 204, Page 156, Registry #153941, records of LaSalleParish, Louisiana; and

 

Oil, gas and mineral lease executed byHerman.Wright, in favor of Chadco. Inc., dated July 20, 1993, recorded inConveyance Book 204, Page 160, Registry 4153942*,*records of LaSalle Parish, Louisiana;

 

Said leases covering three (3) lots located inthe Town of Tullos, in the SE/4 of the SE/4 of Section 26, Township 10North, Range 1 East.

 

43.                                 Oil, gas andmineral lease executed by Lacey Leon Tullos, in favor of Milton Galoob, dated September 10,1979, recorded in Oil and Gas Lease Book 44, Page 401, Registry #109233*,*records of LaSalle Parish, Louisiana,covering lands in Section 26, Township 10 North, Range 1 East.

 

44.                                 Oil, gas andmineral lease executed by Tensas Basin Levee District, in favor of Alfred S.Black, Trustee, dated June 14, 1955, recorded in Oil and Gas Lease Book17, Page 574, Registry #53780, records of LaSalle Parish, Louisiana,covering Lot 2 or Tract. NW1/4 of NE/4 of Section 26, Township 10 North,Range 1 East, containing 28.54 acres, more or less, situated in LaSalle Parish,Louisiana.

 

45.                                 Oil, gas andmineral lease executed by Thomas Clarence Long, in favor of M.E. McGaugh, datedJune 17, 1958, recorded in Oil and Gas Lease Book 20, Page 23,Registry #58398, records of LaSalle Parish, Louisiana, and Correction toDescription, executed by Thomas Clarence Long, in favor of M.E. McGaugh, dated March 11,1959, recorded in Oil and Gas Lease Book 20, Page 480; Registry #60095,covering lands in the original Town of Tullos, located in Section 26,Township 10 North, Range 1 East.

 

46.                                 Oil, gas andmineral lease executed by Missouri Pacific Railroad Company, in favor of WarrenB. Melton, dated December 20, 1960, recorded in Oil and Gas Lease Book 22,Page 195, Registry #63943, records of LaSalle Parish, Louisiana, coveringLots 2, 4, 6, 10 and 12; Block 18, Lots 2, 6, 8 and 10; Block 20 and all ofFractional Block H, all in the Townsite of Tullos, located in Section 26,Township 10 North, Range 1 East. LaSalle Parish, Louisiana.

 

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47.                                 Oil, gas andmineral lease executed by Alene Atnip Holmes, in favor of ZAD, Inc., datedMay 22, 1998, recorded in Conveyance Book 244, Page 99, Registry#169627, records of LaSalle Parish, Louisiana, covering lands in Lots 11 and12, Block 1, Holmes and Adams addition to Town of Tullos and Lot A of originalTown of Tullos as per plat in Conveyance Book M, Page 166, LaSalle Parish,Louisiana, Section 25, Township 10 North, Range 1 East.

 

48.                                 Oil, gas andmineral lease executed by A.P. Kyle, et al, in favor of J.L. Ferguson, dated February 23,1926, recorded in Oil and Gas Lease Book 3, Page 175, Registry #3407,records of LaSalle Parish, Louisiana, covering lands in Lot Eight (8) ofBlock one (1) of Holmes and Adams Addition to the Town of Tullos inLaSalle Parish, Louisiana, according to the new plat of said Town of Tullos, inSection 25, Township 10 North, Range 1 East.

 

49.                                 Oil, gas andmineral lease executed by Georgia-Pacific Corporation, in favor of EdAlexander, dated September 13, 1972, recorded in Oil and Gas Lease Book36, Page 388, Registry #91252, records of LaSalle Parish, Louisiana; and

 

Oil, gas and mineral lease executed by Q.T. Hardtner, Jr.,Agent, et al, in favor of Ed Alexander, dated October 26, 1972, recordedin Oil and Gas Lease Book 36, Page 392, Registry #91253, records ofLaSalle Parish, Louisiana,

 

Both of the above leases covering lands all in Section 19Township 10 North, Range 2 East,

** **

**INSOFAR AND ONLY INSOFAR AS SAIDLEASES COVER AND AFFECT ONE (1) ACRE IN THE FORM OF A SQUARE AROUNDTHE FOLLOWING WELLS, TO-WIT:**

 

LTF-Urania No. 6, SN 193625; located 1606’ S &495’ E from NW/C of NE/4 of Section 19, T10N, R2E.

 

50.                                 Oil, gas andmineral lease executed by Harry R. Brinkley, et al, in favor of C.A. McCartney,dated September 15, 1980, recorded in Oil and Gas Lease Book 96, Page 236,Registry #115261, records of Winn Parish, Louisiana; and

 

Oil, gas and mineral lease executed by Harry R.Brinkley, et al, in favor of C.A. McCartney, dated April 20, 1981,recorded in Oil and Gas Lease Book 97, Page 20, Registry *#*115676*,*records of Winn Parish, Louisiana; and Oil, gas and mineral leaseexecuted by Harry R. Brinkley, et al, in favor of Chadco, Inc., 

 

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dated January 15, 1990, recorded in Oil and GasLease Book 127, Page 90, Registry #145329, records of Winn Parish,Louisiana;

 

All of the above leases covering lands located inthe NW/4 of NE/4 of Section 30. Township 11 North, Range I West, WinnParish, Louisiana.

** **

**INSOFAR AND ONLY INSOFAR AS saidleases cover and affect one (1) acre in the form of a square (with thewell in the center thereof) around each of the following 8 wells:**

 

Brinkley Heirs LTF No. 1, SN186324; located 100’N & 100’ E from SW/C of NW/4 of NW/4 of NE/4, Section 30, T11N,R1W.

Brinkley Heirs LTF SWD No. 2, SN186325; located300’ N & 100’ E from SW/C of NW/4 of NW/4 of NE/4, Section 30,T11N RI W.

Brinkley Heirs LTF No. 3, SN186326; located 500’N & 100’ E from SW/C of NW/4 of NW/4 of NE/4, Section 30, T11N,RI W.

Brinkley Heirs LTF No. 4, SN 186327; located375’ N & 375’ W from SE/C of NW/4 of NW/4 of NE/4, Section 30, T1IN, RI W.

Brinkley Heirs LTF No. 5, SN186328; located 100’N & 150’ W from SE/C of NW/4 of NW/4 of NE/4, Section 30, T11N,R1W.

Brinkley Heirs LTF No. 6, SN186329; located 300’N & 150’ W from SE/C of NW/4 of NW/4 of NE/4, Section 30, T11N,R1W.

Brinkley Heirs LTF No. 7, SN187021; located 500’N & 488’ E from SW/C of NW/4 of NW/4 of NE/4, Section 30, TI 1N,R1W.

Brinkley Heirs LTF No. 8, SN187179; located 560’N & 294’ E from SW/C of NW/4 of NW/4 of NE/4, Section 30, T11N,RI W.

 

51.                                 Oil, gas andmineral lease executed by Mrs. Bonnie Bartley, et ux, in favor of W.O.Weaver, dated November 12, 1959, recorded in Oil and Gas Lease Book 18, Page 67,Registry #6731, records of Winn Parish, Louisiana, covering lands located inthe SE/4 of SE/4 of Section 20, Township 11 North, Range 1 West, WinnParish, Louisiana.

 

52.                                 Oil, gas andmineral lease executed by Judge Jones, in favor of W.O. Weaver, dated June 30,1959, recorded in Oil and Gas Lease Book 17, Page 299, Registry #6582,records of Winn Parish, Louisiana, covering the NE/4 of SE/4 of Section 20,Township 11 North, Range 1 West, Winn Parish, Louisiana.

 

53.                                 Oil, gas andmineral lease executed by Jewel Taylor, et al, in favor of Frontier, Inc.,dated September 20, 1990, recorded in Oil and Gas Lease Book 128, Page 498,Registry #147837, records of Winn Parish, Louisiana, covering all that portionof the N 1/3 of NE/4 of SE/4 of Section 20, T1N, R1W, Winn Parish,Louisiana.

 

19

----

 

Lease acquired by NGS SUBCorporation

 

54.                               Oil and GasLease dated December 2, 2005 from the LP Mineral Owners to NGS SSUB.Corporation, as recorded in Conveyance Book 300, Page 708 of the recordsof LaSalle Parish, Louisiana.

 

55.                                 Oil and GasLease dated December 5, 2005 from William D. Blake, as Agent and Attorney-In-Factfor Henry E. Blake, et al, to NGS Sub Corporation, as recorded in ConveyanceBook 300, Page 713 of the records of LaSalle Parish, Louisiana.

 

56.                                 Oil, Gas and Mineral Leasedated December 1, 2005 from Lane Capps and Sherry Capps Cannon to NGS SUB.Corp., as recorded in Conveyance Book 300, Page 39 of the records ofLaSalle Parish, Louisiana.

 

20

----

 

**Exhibit “A-2”**

 

Attached to and made a part of that certain

Assignment, Conveyance and Bill of Sale datedeffective February 1, 2008

by and between NGS Sub. Corp., as Assignor,and

MWM Energy, LLC, as Assignee

 

**WELLS**

** **
| ** ** | ** ** | **Serial** | ** ** | **LUW**    | ** ** | ** **               | ** ** | **Well**   | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                          | ** ** |
|------------|------------|------------|------------|------------|------------|--------------------------|------------|------------|------------|------------|------------|------------|------------|-------------------------------------|------------|
| ** ** | ** ** | **No.**    | ** ** | **Code**   | ** ** | **Well Name**       | ** ** | **No.**    | ** ** | **WI**     | ** ** | **NRI**    | ** ** | **Comments**                        | ** ** |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                          | ** ** |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Ag Oil - Capps Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                          | ** ** |
| 1          |       | 173393     |       | 037481     |       | Ag  Oil - Capps          |       | 1          |       | 1.000      |       | 0.83333    |       |                                |       |
| 2          |       | 173394     |       | 037481     |       | Ag  Oil - Capps          |       | 2          |       | 1.000      |       | 0.83333    |       |                                |       |
|       |       |       |       |       |       |                     |       |       |       |       |       |       |       |                                |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Ag-Oil MOPAC Lease**   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                          | ** ** |
| 3          |       | 166837     |       | 037288     |       | Ag-Oil  MOPAC            |       | 1          |       | 1.000      |       | 0.75000    |       | misnamed in Sonris as Bice-Mopac #1 |       |
| 4          |       | 171065     |       | 037288     |       | Ag-Oil  MOPAC            |       | 2          |       | 1.000      |       | 0.75000    |       |                                |       |
| 5          |       | 171066     |       | 037288     |       | Ag-Oil-MOPAC             |       | 3          |       | 1.000      |       | 0.75000    |       |                                |       |
| 6          |       | 171067     |       | 037288     |       | Ag-Oil-MOPAC             |       | 4          |       | 1.000      |       | 0.75000    |       |                                |       |
| 7          |       | 171069     |       | 037288     |       | Ag-Oil-MOPAC             |       | 6          |       | 1.000      |       | 0.75000    |       |                                |       |
| 8          |       | 171070     |       | 037288     |       | Ag-Oil-MOPAC             |       | 7          |       | 1.000      |       | 0.75000    |       |                                |       |
| 9          |       | 171068     |       | 037288     |       | Ag-Oil-MOPAC  SWD        |       | 5          |       | 1.000      |       |       |       |                                |       |
|       |       |       |       |       |       |                     |       |       |       |       |       |       |       |                                |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Atkins B Lease**       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                          | ** ** |
| 10         |       | 159038     |       | 037633     |       | Atkins  B                |       | 1          |       | 1.000      |       | 0.81250    |       |                                |       |

** **

1

----

 
| 11         |       | 160179     |       | 037633     |       | Atkins  B                    |       | 2          |       | 1.000      |       | 0.81250    |       |       |       |
|------------|------------|------------|------------|------------|------------|------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
|       |       |       |       |       |       |                         |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **B Bartley Lease**          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 12         |       | 77088      |       | 010224     |       | B  Bartley                   |       | 1          |       | 1.000      |       | 0.82639    |       |       |       |
| 13         |       | 77089      |       | 010224     |       | B  Bartley                   |       | 2          |       | 1.000      |       | 0.82639    |       |       |       |
| 14         |       | 83034      |       | 010224     |       | B  Bartley                   |       | 3          |       | 1.000      |       | 0.82639    |       |       |       |
| 15         |       | 89960      |       | 010224     |       | B  Bartley                   |       | 4          |       | 1.000      |       | 0.82639    |       |       |       |
| 16         |       | 125107     |       | 010224     |       | B  Bartley                   |       | 5          |       | 1.000      |       | 0.82639    |       |       |       |
|       |       |       |       |       |       |                         |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Bradford Lease**           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 17         |       | 175684     |       | 037857     |       | Bradford                     |       | 1          |       | 1.000      |       | 0.83000    |       |       |       |
| 18         |       | 182138     |       | 037857     |       | Bradford                     |       | 4          |       | 1.000      |       | 0.83000    |       |       |       |
| 19         |       | 199462     |       | 037857     |       | Bradford                     |       | 5          |       | 1.000      |       | 0.83000    |       |       |       |
| 20         |       | 990616     |       | 037857     |       | Bradford  SWD                |       | 3          |       | 1.000      |       |       |       |       |       |
|       |       |       |       |       |       |                         |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Brinkley Heirs LTF Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 21         |       | 186324     |       | 040080     |       | Brinkley  Heirs LTF          |       | 1          |       | 1.000      |       | 0.83000    |       |       |       |
| 22         |       | 186326     |       | 040080     |       | Brinkley  Heirs LTF          |       | 3          |       | 1.000      |       | 0.83000    |       |       |       |
| 23         |       | 186327     |       | 040080     |       | Brinkley  Heirs LTF          |       | 4          |       | 1.000      |       | 0.83000    |       |       |       |
| 24         |       | 186328     |       | 040080     |       | Brinkley  Heirs LTF          |       | 5          |       | 1.000      |       | 0.83000    |       |       |       |
| 25         |       | 186329     |       | 040080     |       | Brinkley  Heirs LTF          |       | 6          |       | 1.000      |       | 0.83000    |       |       |       |
| 26         |       | 187021     |       | 040080     |       | Brinkley  Heirs LTF          |       | 7          |       | 1.000      |       | 0.83000    |       |       |       |
| 27         |       | 187179     |       | 040080     |       | Brinkley  Heirs LTF          |       | 8          |       | 1.000      |       | 0.83000    |       |       |       |
| 28         |       | 186325     |       |       |       | Brinkley  Heirs LTF SWD      |       | 2          |       | 1.000      |       |       |       |       |       |
| 29         |       | 173495     |       | 037681     |       | Brinkley  Heirs N            |       | 1          |       | 1.000      |       | 0.83000    |       |       |       |
|       |       |       |       |       |       |                         |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Flowers, Russell Lease**   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 30         |       | 197897     |       | 041921     |       | Flowers,  Russell            |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |
| 31         |       | 197898     |       | 041921     |       | Flowers,  Russell            |       | 2          |       | 1.000      |       | 0.80000    |       |       |       |
| 32         |       | 199021     |       | 041921     |       | Flowers,  Russell            |       | 3          |       | 1.000      |       | 0.80000    |       |       |       |

 

2

----

 
| 33         |       | 199022     |       | 041921     |       | Flowers,  Russell             |       | 4          |       | 1.000      |       | 0.80000    |       | Sonris records not updated from prior transfers             |       |
|------------|------------|------------|------------|------------|------------|-------------------------------|------------|------------|------------|------------|------------|------------|------------|-------------------------------------------------------------|------------|
|       |       |       |       |       |       |                          |       |       |       |       |       |       |       |                                                        |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Gates Lease**               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
| 34         |       | 168176     |       | 036775     |       | Gates                         |       | 1          |       | 1.000      |       |       |       | no lease or production                                      |       |
| 35         |       | 168341     |       |       |       | Gates  SWD                    |       | 4          |       | 1.000      |       |       |       | no lease or production                                      |       |
|       |       |       |       |       |       |                          |       |       |       |       |       |       |       |                                                        |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Hardtner (Atkins) A Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
| 36         |       | 990145     |       | 007087     |       | Hardtner  A                   |       | 2          |       | 1.000      |       | 0.80000    |       | Sonris records not updated for transfer from Atkins         |       |
| 37         |       | 990146     |       | 007087     |       | Hardtner  A                   |       | 7          |       | 1.000      |       | 0.80000    |       | Sonris records not updated for transfer from Atkins         |       |
| 38         |       | 149552     |       | 007087     |       | Hardtner  A                   |       | 9          |       | 1.000      |       | 0.80000    |       |                                                        |       |
| 39         |       | 153621     |       | 007087     |       | Hardtner  A                   |       | 11         |       | 1.000      |       | 0.80000    |       |                                                        |       |
| 40         |       | 971237     |       | 007087     |       | Hardtner  A SWD               |       | 1          |       | 1.000      |       |       |       |                                                        |       |
|       |       |       |       |       |       |                          |       |       |       |       |       |       |       |                                                        |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Hartdner (Atkins) C Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
| 41         |       | 19746      |       | 007089     |       | Hardtner  C                   |       | 9          |       | 1.000      |       | 0.80000    |       |                                                        |       |
| 42         |       | 107472     |       | 007089     |       | Hardtner  C                   |       | 13         |       | 1.000      |       | 0.80000    |       |                                                        |       |
| 43         |       | 153622     |       | 007089     |       | Hardtner  C                   |       | 14         |       | 1.000      |       | 0.80000    |       |                                                        |       |
|       |       |       |       |       |       |                          |       |       |       |       |       |       |       |                                                        |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Hardtner (Chadco) A Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
| 44         |       | 186438     |       | 040289     |       | Hardtner  A                   |       | 1          |       | 1.000      |       | 0.828125   |       | Sonris records not updated for transfer from Atkins/Phoenix |       |
| 45         |       | 186514     |       | 7087       |       | Hardtner  A                   |       | 3          |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 46         |       | 186515     |       | 7087       |       | Hardtner  A                   |       | 4          |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 47         |       | 186516     |       | 7087       |       | Hardtner  A                   |       | 5          |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 48         |       | 186517     |       | 7087       |       | Hardtner  A                   |       | 6          |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 49         |       | 187871     |       | 7087       |       | Hardtner  A                   |       | 12         |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 50         |       | 187872     |       | 7087       |       | Hardtner  A                   |       | 13         |       | 1.000      |       | 0.828125   |       |                                                        |       |

 

3

----

 
| 51         |       | 187873     |       | 040289     |       | Hardtner  A           |       | 14         |       | 1.000      |       | 0.828125   |       | Sonris records not updated for transfer from Atkins/Phoenix |       |
|------------|------------|------------|------------|------------|------------|-----------------------|------------|------------|------------|------------|------------|------------|------------|-------------------------------------------------------------|------------|
| 52         |       | 187875     |       | 7087       |       | Hardtner  A           |       | 16         |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 53         |       | 187876     |       | 7087       |       | Hardtner  A           |       | 17         |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 54         |       | 187877     |       | 7087       |       | Hardtner  A           |       | 18         |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 55         |       | 188134     |       | 040289     |       | Hardtner  A           |       | 20         |       | 1.000      |       | 0.828125   |       | Sonris records not updated for transfer from Atkins/Phoenix |       |
| 56         |       | 188202     |       | 7087       |       | Hardtner  A           |       | 28         |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 57         |       | 187940     |       | 7087       |       | Hardtner  A           |       | 29         |       | 1.000      |       | 0.828125   |       |                                                        |       |
| 58         |       | 187874     |       | 7087       |       | Hardtner  A 15 SWD    |       | 15         |       | 1.000      |       |       |       |                                                        |       |
|       |       |       |       |       |       |                  |       |       |       |       |       |       |       |                                                        |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Holland, ST Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
| 59         |       | 186412     |       | 040355     |       | Holland,  ST          |       | 1          |       | 1.000      |       | 0.78711    |       |                                                        |       |
| 60         |       | 187825     |       | 040355     |       | Holland,  ST          |       | 2          |       | 1.000      |       | 0.78711    |       |                                                        |       |
| 61         |       | 971390     |       |       |       | SSM  SWD              |       | 1          |       | 1.000      |       |       |       |                                                        |       |
|       |       |       |       |       |       |                  |       |       | ** ** | ** ** |       |       |       |                                                        |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Holmes, WL Lease**  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
| 62         |       | 154696     |       | 034641     |       | Holmes,  WL           |       | 1          |       | 1.000      |       | 0.75000    |       |                                                        |       |
| 63         |       | 154738     |       | 034641     |       | Holmes,  WL           |       | 2          |       | 1.000      |       | 0.75000    |       |                                                        |       |
| 64         |       | 154737     |       | 034641     |       | Holmes,  WL           |       | 3          |       | 1.000      |       | 0.75000    |       |                                                        |       |
|       |       |       |       |       |       |                  |       |       |       |       |       |       |       |                                                        |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **J Jones Lease**     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                                  | ** ** |
| 65         |       | 77712      |       | 010223     |       | J  Jones              |       | 1          |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 66         |       | 77885      |       | 010223     |       | J  Jones              |       | 2          |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 67         |       | 80893      |       | 010223     |       | J  Jones              |       | 3          |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 68         |       | 80331      |       | 010223     |       | J  Jones              |       | 4          |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 69         |       | 82292      |       | 010223     |       | J  Jones              |       | 5          |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 70         |       | 82778      |       | 010223     |       | J  Jones              |       | 6          |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 71         |       | 83229      |       | 010223     |       | J  Jones              |       | 8          |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 72         |       | 204917     |       | 010223     |       | J  Jones              |       | 11         |       | 1.000      |       | 0.82639    |       |                                                        |       |
| 73         |       | 972679     |       | 010223     |       | J  Jones SWD          |       | 12         |       | 1.000      |       |       |       |                                                        |       |

 

4

----

 
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **J Jones A Lease**        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
|------------|------------|------------|------------|------------|------------|----------------------------|------------|------------|------------|------------|------------|------------|------------|------------------------|------------|
| 74         |       | 212912     |       | 046565     |       | J  Jones A                 |       | 2          |       | 1.000      |       | 0.83000    |       |                   |       |
| 75         |       | 212913     |       | 046565     |       | J  Jones A                 |       | 3          |       | 1.000      |       | 0.83000    |       |                   |       |
| 76         |       | 83979      |       | 046565     |       | J  Jones A                 |       | 4          |       | 1.000      |       | 0.83000    |       |                   |       |
|       |       |       |       |       |       |                       |       |       |       |       |       |       |       |                   |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Kyle-Davis Lease**       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 77         |       | 9400       |       | 007688     |       | Kyle-Davis                 |       | 1          |       | 1.000      |       | 0.83000    |       |                   |       |
|       |       |       |       |       |       |                       |       |       |       |       |       |       |       |                   |       |
|       |       |       | ** ** | ** ** | ** ** | **La Pacific O Lease**     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 78         |       | 154412     |       | 039847     |       | LA  PACIFIC O              |       | 2          |       | 1.000      |       | 0.80000    |       |                   |       |
| 79         |       | 156342     |       | 039847     |       | LA  PACIFIC O              |       | 5          |       | 1.000      |       | 0.80000    |       |                   |       |
| 80         |       | 155943     |       | 039847     |       | LA  PACIFIC O              |       | 2D         |       | 1.000      |       | 0.80000    |       |                   |       |
| 81         |       | 156839     |       | 039847     |       | LA  PACIFIC O SWD          |       | 6          |       | 1.000      |       |       |       |                   |       |
|       |       |       |       |       |       |                       |       |       |       |       |       |       |       |                   |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **La Pacific Lease**       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 82         |       | 150510     |       | 034425     |       | La  Pacific                |       | 1          |       | 1.000      |       | 0.80000    |       |                   |       |
| 83         |       | 150771     |       | 034425     |       | La  Pacific                |       | 3          |       | 1.000      |       | 0.80000    |       |                   |       |
| 84         |       | 154606     |       | 034425     |       | La  Pacific                |       | 4          |       | 1.000      |       | 0.80000    |       |                   |       |
| 85         |       | 154605     |       | 034425     |       | La  Pacific SWD            |       | 5          |       | 1.000      |       |       |       |                   |       |
| 86         |       | 009597     |       | 009751     |       | Urania  Voltz              |       | 1          |       | 1.000      |       | 0.80000    |       |                   |       |
| 87         |       | 059103     |       | 009751     |       | Urania  Voltz              |       | 2          |       | 1.000      |       | 0.80000    |       |                   |       |
| 88         |       | 148110     |       | 009751     |       | Urania  Voltz              |       | 3          |       | 1.000      |       | 0.80000    |       |                   |       |
| 89         |       | 175370     |       | 009751     |       | Urania  Voltz              |       | 4          |       | 1.000      |       | 0.80000    |       |                   |       |
| 90         |       | 175371     |       | 009751     |       | Urania  Voltz              |       | 5          |       | 1.000      |       | 0.80000    |       |                   |       |
| 91         |       | 096703     |       | 009751     |       | Urania  Voltz              |       | 6          |       | 1.000      |       | 0.80000    |       |                   |       |
|       |       |       |       |       |       |                       |       |       |       |       |       |       |       |                   |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **La Salle St Bank Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 92         |       | 190522     |       | 040711     |       | LASALLE  ST BANK           |       | 3          |       | 1.000      |       | 0.80000    |       |                   |       |
| 93         |       | 190558     |       | 040711     |       | LASALLE  ST BANK           |       | 4          |       | 1.000      |       | 0.80000    |       |                   |       |
|       |       |       |       |       |       |                       |       |       |       |       |       |       |       |                   |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Loe, Glen D Lease**      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 94         |       | 196405     |       | 041637     |       | Loe,  Glen D               |       | 1          |       | 1.000      |       |       |       | no lease or production |       |
| 95         |       | 196406     |       | 041637     |       | Loe,  Glen D               |       | 2          |       | 1.000      |       |       |       | no lease or production |       |

 

5

----

 
| 96         |       | 197043                                                                                              |       | 041637     |       | Loe,  Glen D         |       | 3          |       | 1.000      |       |       |       | no lease or production |       |
|------------|------------|-----------------------------------------------------------------------------------------------------|------------|------------|------------|----------------------|------------|------------|------------|------------|------------|------------|------------|------------------------|------------|
| 97         |       | 197330                                                                                              |       | 041637     |       | Loe,  Glen D         |       | 4          |       | 1.000      |       |       |       | no lease or production |       |
|       |       |                                                                                                |       |       |       |                 |       |       |       |       |       |       |       |                   |       |
| ** ** | ** ** | ** **                                                                                          | ** ** | ** ** | ** ** | **Long, CO Lease**   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 98         |       | 146924                                                                                              |       | 033544     |       | Long  , CO           |       | 1          |       | 1.000      |       | 0.80000    |       |                   |       |
| 99         |       | 153135                                                                                              |       | 033544     |       | Long  , CO           |       | 2          |       | 1.000      |       | 0.80000    |       |                   |       |
| 100        |       | 153170                                                                                              |       | 033544     |       | Long  , CO           |       | 3          |       | 1.000      |       | 0.80000    |       |                   |       |
| 101        |       | 153171                                                                                              |       | 033544     |       | Long  , CO           |       | 4          |       | 1.000      |       | 0.80000    |       |                   |       |
| 102        |       | 153346                                                                                              |       | 033544     |       | Long  , CO           |       | 5          |       | 1.000      |       | 0.80000    |       |                   |       |
|       |       |                                                                                                |       |       |       |                 |       |       |       |       |       |       |       |                   |       |
| ** ** | ** ** | ** **                                                                                          | ** ** | ** ** | ** ** | **Long, Mary Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 103        |       | 146886                                                                                              |       | 033540     |       | Long,  Mary          |       | 1          |       | 1.000      |       |       |       | no lease or production |       |
| 104        |       | 153134                                                                                              |       | 033540     |       | Long,  Mary          |       | 2          |       | 1.000      |       |       |       |                   |       |
|       |       |                                                                                                |       |       |       |                 |       |       |       |       |       |       |       |                   |       |
| ** ** | ** ** | ** **                                                                                          | ** ** | ** ** | ** ** | **Long, TC Lease**   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **             | ** ** |
| 105        |       | 71148                                                                                               |       | 007906     |       | Long,  TC            |       | 1          |       | 1.000      |       | 0.75000    |       |                   |       |
| 106        |       | 165436                                                                                              |       | No LUW     |       | Long,  TC            |       | 3          |       | 1.000      |       | 0.75000    |       |                   |       |
|       |       | http://sonli  te.dnr.state  .la.us/sund  own/cart_  prod/cart_  con_wellin  fo2?p_wsn  =172480%  20 |       |       |       |                 |       |       |       |       |       |       |       |                   |       |

 

6

----

 
| 107        |       | 163343                                                                                              |       |       |       | Maxwell  SWD                |       | 1          |       | 1.000      |       |       |       |       |       |
|------------|------------|-----------------------------------------------------------------------------------------------------|------------|------------|------------|-----------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
|       |       |                                                                                                |       |       |       |                        |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** **                                                                                          | ** ** | ** ** | ** ** | **Meredith C, SK Lease**    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 108        |       | 183009                                                                                              |       | 039273     |       | Meredith  C, SK             |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |
| 109        |       | 183012                                                                                              |       | 039273     |       | Meredith  C, SK             |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
| 110        |       | 183013                                                                                              |       | 039273     |       | Meredith  C, SK             |       | 5          |       | 1.000      |       | 0.80000    |       |       |       |
| 111        |       | 154273                                                                                              |       | 034685     |       | Meredith,  Cecil            |       | 2          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |                                                                                                |       |       |       |                        |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** **                                                                                          | ** ** | ** ** | ** ** | **MILES HEIRS Lease**       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 112        |       | 191214                                                                                              |       | 040915     |       | MILES  HEIRS                |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |
| 113        |       | 191251                                                                                              |       | 040915     |       | MILES  HEIRS                |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |                                                                                                |       |       |       |                        |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** **                                                                                          | ** ** | ** ** | ** ** | **MILES - AG OIL EJ Lease** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 114        |       | 172482                                                                                              |       | 037360     |       | MILES-AG  OIL-EJ            |       | 3          |       | 1.000      |       | 0.80000    |       |       |       |
| 115        |       | 172483                                                                                              |       | 037360     |       | MILES-AG  OIL-EJ            |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
| 116        |       | 172480                                                                                              |       | 037360     |       | MILES-AG  OILEJ SWD         |       | 1          |       | 1.000      |       |       |       |       |       |
|       |       |                                                                                                |       |       |       |                        |       |       |       |       |       |       |       |       |       |
|       |       |                                                                                                | ** ** | ** ** | ** ** | **Miles Essex Lease**       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|       |       | http://sonli  te.dnr.state  .la.us/sund  own/cart_  prod/cart_  con_wellin  fo2?p_wsn  =172480%  20 | ** ** | ** ** | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |

 

7

----

 
| 117        |       | 190736     |       | 040778     |       | MILES-ESSEX                    |       | 3          |       | 1.000      |       | 0.80000    |       |       |       |
|------------|------------|------------|------------|------------|------------|--------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| 118        |       | 190783     |       | 040778     |       | MILES-ESSEX                    |       | 4          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |       |       |       |       |                           |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **MDP Maxwell Lease**          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 119        |       | 179671     |       | 038553     |       | MDP  MAXWELL                   |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |
| 120        |       | 179672     |       | 038553     |       | MDP  MAXWELL                   |       | 2          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |       |       |       |       |                           |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **MOP Lease**                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 121        |       | 91994      |       | 016494     |       | Missouri  Pacific RR           |       | 2          |       | 1.000      |       | 0.75000    |       |       |       |
| 122        |       | 83963      |       | 012886     |       | MOP  #1 SWD                    |       | 1          |       | 1.000      |       |       |       |       |       |
|       |       |       |       |       |       |                           |       |       |       |       |       |       |       |       |       |
| 123        |       | 183703     |       | 039526     |       | MOPAC  SSS                     |       | 8          |       | 1.000      |       | 0.80000    |       |       |       |
|       |       |       |       |       |       |                           |       |       |       |       |       |       |       |       |       |
| ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Morrison, James Lease**      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 124        |       | 176677     |       | 038190     |       | Morrison,  James               |       | 1          |       | 1.000      |       | 0.83000    |       |       |       |
|       |       |       |       |       |       | **Maxwell, JC M80 Lease** |       |       |       |       |       |       |       |       |       |
| 125        |       | 170664     |       | 037215     |       | Maxwell, JC M80                |       | 1          |       | 1.000      |       | 0.80000    |       |       |       |

 

8

----

 
| 126        |   | 171769 |   | 037215 |   | Maxwell, JC  M80    |   | 2      |   | 1.000  |   | 0.80000   |   |       |   |
|------------|--------|--------|--------|--------|--------|---------------------|--------|--------|--------|--------|--------|-----------|--------|------------|--------|
| 127        |   | 171770 |   | 037215 |   | Maxwell, JC  M80    |   | 3      |   | 1.000  |   | 0.80000   |   |       |   |
|       |   |   |   |   |   |                |   |   |   |   |   |      |   |       |   |
| ** ** |   |   |   |   |   | **Pendarvis Lease** |   |   |   |   |   |      |   |       |   |
| 128        |   | 193250 |   | 041573 |   | PENDARVIS           |   | 1      |   | 1.000  |   | 0.7657824 |   |       |   |
| 129        |   | 193251 |   | 041573 |   | PENDARVIS           |   | 2      |   | 1.000  |   | 0.7657824 |   |       |   |
| 130        |   | 193252 |   | 041573 |   | PENDARVIS           |   | 3      |   | 1.000  |   | 0.7657824 |   |       |   |
| 131        |   | 193253 |   | 041573 |   | PENDARVIS           |   | 4      |   | 1.000  |   | 0.7657824 |   |       |   |
| 132        |   | 193255 |   | 041573 |   | PENDARVIS           |   | 6      |   | 1.000  |   | 0.7657824 |   |       |   |
| 133        |   | 194757 |   | 041573 |   | PENDARVIS           |   | 7      |   | 1.000  |   | 0.7657824 |   |       |   |
| 134        |   | 194759 |   | 041573 |   | PENDARVIS           |   | 9      |   | 1.000  |   | 0.7657824 |   |       |   |
| 135        |   | 194760 |   | 041573 |   | PENDARVIS           |   | 10     |   | 1.000  |   | 0.7657824 |   |       |   |
| 136        |   | 194761 |   | 041573 |   | PENDARVIS           |   | 11     |   | 1.000  |   | 0.7657824 |   |       |   |
| 137        |   | 194762 |   | 041573 |   | PENDARVIS           |   | 12     |   | 1.000  |   | 0.7657824 |   |       |   |
| 138        |   | 194763 |   | 041573 |   | PENDARVIS           |   | 13     |   | 1.000  |   | 0.7657824 |   |       |   |
| 139        |   | 194764 |   | 041573 |   | PENDARVIS           |   | 14     |   | 1.000  |   | 0.7657824 |   |       |   |
| 140        |   | 10281  |   | 008680 |   | PENDARVIS A         |   | 3      |   | 1.000  |   | 0.7657824 |   |       |   |
| 141        |   | 10331  |   | 008680 |   | PENDARVIS A         |   | 4      |   | 1.000  |   | 0.7657824 |   |       |   |
| 142        |   | 971428 |   |   |   | PENDARVIS A  SWD    |   | 1      |   | 1.000  |   |      |   | ** ** |   |

 

9

----

 
| ** ** |   |   |   |   |   | **Pendarvis LaPetro Lease** |   |   |   |   |   |      |   |   |   |
|------------|--------|--------|--------|--------|--------|-----------------------------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|
| 143        |   | 193828 |   | 041572 |   | Pendarvis -  La Petro       |   | 1      |   | 1.000  |   | 0.7657824 |   |   |   |
| 144        |   | 193829 |   | 041572 |   | Pendarvis -  La Petro       |   | 2      |   | 1.000  |   | 0.7657824 |   |   |   |
| 145        |   | 193830 |   | 041572 |   | Pendarvis -  La Petro       |   | 3      |   | 1.000  |   | 0.7657824 |   |   |   |
| 146        |   | 193831 |   | 041572 |   | Pendarvis -  La Petro       |   | 4      |   | 1.000  |   | 0.7657824 |   |   |   |
| 147        |   | 193832 |   | 041572 |   | Pendarvis -  La Petro       |   | 5      |   | 1.000  |   | 0.7657824 |   |   |   |
| 148        |   | 193833 |   | 041572 |   | Pendarvis -  La Petro       |   | 6      |   | 1.000  |   | 0.7657824 |   |   |   |
| 149        |   | 193834 |   | 041572 |   | Pendarvis -  La Petro       |   | 7      |   | 1.000  |   | 0.7657824 |   |   |   |
| 150        |   | 193835 |   | 041572 |   | Pendarvis -  La Petro       |   | 8      |   | 1.000  |   | 0.7657824 |   |   |   |
| 151        |   | 193837 |   | 041572 |   | Pendarvis -  La Petro       |   | 10     |   | 1.000  |   | 0.7657824 |   |   |   |
| 152        |   | 193838 |   | 041572 |   | Pendarvis -  La Petro       |   | 11     |   | 1.000  |   | 0.7657824 |   |   |   |
| 153        |   | 194758 |   | 041572 |   | Pendarvis -  La Petro       |   | 12 SWD |   | 1.000  |   |      |   |   |   |

 

10

----

 
| ** ** |   | http://so  nlite.dnr.  state.la.u  s/sundo  wn/cart_  prod/cart  _con_we  llinfo2?p  _wsn=97  1428%2  0 |   |   |   | ** **               |   |   |   |   |   |    |   | ** ** | ** ** |
|------------|--------|---------------------------------------------------------------------------------------------------------|--------|--------|--------|--------------------------|--------|--------|--------|--------|--------|---------|--------|------------|------------|
| ** ** |   |                                                                                                    |   |   |   | **Pringle  Heirs Lease** |   |   |   |   |   |    |   | ** ** | ** ** |
| 154        |   | 158868                                                                                                  |   | 035563 |   | Pringle  Heirs           |   | 1      |   | 1.000  |   | 0.81250 |   |       |       |
| 155        |   | 162747                                                                                                  |   | 035563 |   | Pringle  Heirs SWD       |   | 2      |   | 1.000  |   |    |   |       |       |
| 156        |   | 19432                                                                                                   |   | 035563 |   | Pringle SWD              |   | 3      |   | 1.000  |   |    |   |       |       |
|       |   |                                                                                                    |   |   |   |                     |   |   |   |   |   |    |   |       |       |
| ** ** |   |                                                                                                    |   |   |   | **PV 80  MILES TB**      |   |   |   |   |   |    |   |       |       |
| 157        |   | 172920                                                                                                  |   | 037330 |   | PV 80 -  MILES           |   | 1      |   | 1.000  |   | 0.80000 |   |       |       |
| 158        |   | 172922                                                                                                  |   | 037330 |   | PV 80 - MILES            |   | 3      |   | 1.000  |   | 0.80000 |   |       |       |
| 159        |   | 172923                                                                                                  |   | 037330 |   | PV 80 -  MILES           |   | 4      |   | 1.000  |   | 0.80000 |   |       |       |
| 160        |   | 172924                                                                                                  |   | 037330 |   | PV 80 -  MILES           |   | 5      |   | 1.000  |   | 0.80000 |   |       |       |
| 161        |   | 172925                                                                                                  |   | 037330 |   | PV 80 -  MILES           |   | 6      |   | 1.000  |   | 0.80000 |   |       |       |
| 162        |   | 172926                                                                                                  |   | 037330 |   | PV 80 - MILES            |   | 7      |   | 1.000  |   | 0.80000 |   |       |       |
| 163        |   | 174930                                                                                                  |   | 037330 |   | PV 80 -  MILES           |   | 9      |   | 1.000  |   | 0.80000 |   |       |       |
| 164        |   | 182489                                                                                                  |   | 039369 |   | JRB MAXWELL              |   | 2      |   | 1.000  |   | 0.80000 |   |       |       |
|       |   |                                                                                                    |   |   |   |                     |   |   |   |   |   |    |   |       |       |
| ** ** |   |                                                                                                    |   |   |   | **PV 80 -  MOPAC Lease** |   |   |   |   |   |    |   |       |       |
| 165        |   | 172927                                                                                                  |   | 037539 |   | PV 80 - MOPAC            |   | 2      |   | 1.000  |   | 0.75000 |   |       |       |

 

11

----

 
| 166        |   | 172928 |   | 037539 |   | PV 80 -  MOPAC          |   | 3      |   | 1.000  |   | 0.75000 |   | ** ** | ** ** |
|------------|--------|--------|--------|--------|--------|-------------------------|--------|--------|--------|--------|--------|---------|--------|------------|------------|
| 167        |   | 172929 |   | 037539 |   | PV 80 -  MOPAC          |   | 4      |   | 1.000  |   | 0.75000 |   |       |       |
| 168        |   | 172930 |   | 037539 |   | PV 80 -  MOPAC          |   | 5      |   | 1.000  |   | 0.75000 |   |       |       |
| 169        |   | 174030 |   | 037539 |   | PV 80 -  MOPAC          |   | 7      |   | 1.000  |   | 0.75000 |   |       |       |
| 170        |   | 174029 |   | 037539 |   | PV 80 -  MOPAC          |   | 8      |   | 1.000  |   | 0.75000 |   |       |       |
|       |   |   |   |   |   |                    |   |   |   |   |   |    |   |       |       |
| ** ** |   |   |   |   |   | **Tensas  BLD Lease**   |   |   |   |   |   |    |   |       |       |
| 171        |   | 134605 |   | 031228 |   | Tensas BLD              |   | 1      |   | 1.000  |   | 0.75000 |   |       |       |
| 172        |   | 178732 |   | 031228 |   | Tensas BLD              |   | 3      |   | 1.000  |   | 0.75000 |   |       |       |
| 173        |   | 183525 |   | 031228 |   | Tensas BLD              |   | 4      |   | 1.000  |   | 0.75000 |   |       |       |
| 174        |   | 178731 |   | 031228 |   | Tensas BLD              |   | 5      |   | 1.000  |   | 0.75000 |   |       |       |
| 175        |   | 990623 |   | 031228 |   | Tensas BLD  SWD         |   | 2      |   | 1.000  |   |    |   |       |       |
|       |   |   |   |   |   |                    |   |   |   |   |   |    |   |       |       |
| ** ** |   |   |   |   |   | **Tensas  BLD A Lease** |   |   |   |   |   |    |   |       |       |
| 176        |   | 59321  |   | 009515 |   | Tensas BLD A            |   | 1      |   | 1.000  |   | 0.80000 |   |       |       |
| 177        |   | 64687  |   | 009515 |   | Tensas BLD A            |   | 2      |   | 1.000  |   | 0.80000 |   |       |       |
| 178        |   | 153875 |   | 009515 |   | Tensas BLD A            |   | 5      |   | 1.000  |   | 0.80000 |   |       |       |
| 179        |   | 153876 |   | 009515 |   | Tensas BLD A            |   | 6      |   | 1.000  |   | 0.80000 |   |       |       |

 

12

----

 
| 180        |   | 182387 |   | 009515 |   | Tensas BLD A         |   | 7      |   | 1.000  |   | 0.80000 |   | ** ** | ** ** |
|------------|--------|--------|--------|--------|--------|----------------------|--------|--------|--------|--------|--------|---------|--------|------------|------------|
|       |   |   |   |   |   |                 |   |   |   |   |   |    |   |       |       |
| ** ** |   |   |   |   |   | **Tremont  B Lease** |   |   |   |   |   |    |   |       |       |
| 181        |   | 187623 |   | 043930 |   | Tremont B            |   | 1      |   | 1.000  |   | 0.78711 |   |       |       |
| 182        |   | 187822 |   | 043930 |   | Tremont B            |   | 3      |   | 1.000  |   | 0.78711 |   |       |       |
| 183        |   | 187824 |   | 043930 |   | Tremont B            |   | 4      |   | 1.000  |   | 0.78711 |   |       |       |
| 184        |   | 188181 |   | 043930 |   | Tremont B            |   | 5      |   | 1.000  |   | 0.78711 |   |       |       |
| 185        |   | 189535 |   | 043930 |   | Tremont B            |   | 6      |   | 1.000  |   | 0.78711 |   |       |       |
| 186        |   | 189696 |   | 043930 |   | Tremont B            |   | 7      |   | 1.000  |   | 0.78711 |   |       |       |
| 187        |   | 191207 |   | 043930 |   | Tremont B            |   | 9      |   | 1.000  |   | 0.78711 |   |       |       |
| 188        |   | 178262 |   | 043930 |   | Tremont B            |   | 10     |   | 1.000  |   | 0.78711 |   |       |       |
| 189        |   | 182059 |   | 043930 |   | Tremont B            |   | 11     |   | 1.000  |   | 0.78711 |   |       |       |
| 190        |   | 182291 |   | 043930 |   | Tremont B            |   | 12     |   | 1.000  |   | 0.78711 |   |       |       |
| 191        |   | 182292 |   | 043930 |   | Tremont B            |   | 13     |   | 1.000  |   | 0.78711 |   |       |       |
| 192        |   | 182295 |   | 043930 |   | Tremont B            |   | 14     |   | 1.000  |   | 0.78711 |   |       |       |
| 193        |   | 182296 |   | 043930 |   | Tremont B            |   | 15     |   | 1.000  |   | 0.78711 |   |       |       |
| 194        |   | 183884 |   | 043930 |   | Tremont B            |   | 16     |   | 1.000  |   | 0.78711 |   |       |       |
| 195        |   | 187820 |   | 043930 |   | Tremont B  SWD       |   | 1      |   | 1.000  |   |    |   |       |       |

 

13

----

 
| 196        |   | 191205 |   |   |   | Tremont B              |   | 8      |   | 1.000  |   | 0.78711 |   | P&A but remains on SONRIS | ** ** |
|------------|--------|--------|--------|--------|--------|------------------------|--------|--------|--------|--------|--------|---------|--------|-------------------------------|------------|
| 197        |   | 183885 |   |   |   | Tremont B              |   | 17     |   | 1.000  |   | 0.78711 |   | P&A but remains on SONRIS |       |
|       |   |   |   |   |   |                   |   |   |   |   |   |    |   |                          |       |
| ** ** |   |   |   |   |   | **Tremont  SSS Lease** |   |   |   |   |   |    |   |                          |       |
| 198        |   | 182799 |   | 039161 |   | Tremont SSS            |   | 1      |   | 1.000  |   | 0.80000 |   |                          |       |
| 199        |   | 182800 |   | 039161 |   | Tremont SSS            |   | 2      |   | 1.000  |   | 0.80000 |   |                          |       |
| 200        |   | 182801 |   | 039161 |   | Tremont SSS            |   | 3      |   | 1.000  |   | 0.80000 |   |                          |       |
| 201        |   | 182802 |   | 039161 |   | Tremont SSS            |   | 4      |   | 1.000  |   | 0.80000 |   |                          |       |
| 202        |   | 182803 |   | 039161 |   | Tremont SSS            |   | 5      |   | 1.000  |   | 0.80000 |   |                          |       |
| 203        |   | 182804 |   | 039161 |   | Tremont SSS            |   | 6      |   | 1.000  |   | 0.80000 |   |                          |       |
| 204        |   | 182805 |   | 039161 |   | Tremont SSS            |   | 7      |   | 1.000  |   | 0.80000 |   |                          |       |
| 205        |   | 184928 |   | 039161 |   | Tremont SSS            |   | 8      |   | 1.000  |   | 0.80000 |   |                          |       |
|       |   |   |   |   |   |                   |   |   |   |   |   |    |   |                          |       |
| 206        |   | 990137 |   | 009660 |   | Tullos,  Frank         |   | 1      |   | 1.000  |   |    |   | no lease or production        |       |
| 207        |   | 203730 |   | 009660 |   | Tullos,  Frank         |   | 2      |   | 1.000  |   |    |   | no lease or production        |       |
|       |   |   |   |   |   |                   |   |   |   |   |   |    |   |                          |       |
| ** ** |   |   |   |   |   | **Urania A Lease**     |   |   |   |   |   |    |   |                          |       |
| 208        |   | 214541 |   | 047519 |   | URANIA                 |   | 1      |   | 1.000  |   | 0.75000 |   |                          |       |
| 209        |   | 214542 |   | 047519 |   | URANIA                 |   | 2      |   | 1.000  |   | 0.75000 |   |                          |       |
| 210        |   | 127062 |   | 040908 |   | URANIA LBR  CO A       |   | 1      |   | 1.000  |   | 0.75000 |   |                          |       |

 

14

----

 
| 211        |       | 127414                                                                                            |       | 040908     |       | URANIA LBR  CO A   |         | 2            |         | 1.000        |         | 0.75000      |         | Sonris records not updated for transfer from Atkins |         |
|------------|------------|---------------------------------------------------------------------------------------------------|------------|------------|------------|--------------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|-----------------------------------------------------|--------------|
| 212        |       | 127415                                                                                            |       | 040908     |       | URANIA LBR  CO A   |         | 5            |         | 1.000        |         | 0.75000      |         |                                                |         |
| 213        |       | 126926                                                                                            |       | 040908     |       | URANIA LBR  CO A   |         | 6            |         | 1.000        |         | 0.75000      |         |                                                |         |
| 214        |       | 127417                                                                                            |       | 040908     |       | URANIA LBR  CO A   |         | 7            |         | 1.000        |         | 0.75000      | ** **   | ** **                                          | ** **   |
| ** ** | ** ** | ** **                                                                                        | ** ** | ** ** | ** ** | ** **         | ** **   | ** **   | ** **   | ** **   | ** **   | ** **   | ** **   | ** **                                          | ** **   |
|       | ** ** | http://sonlite  .dnr.state.la.  us/sundown/  cart_prod/ca  rt_con_welli  nfo2?p_wsn  =971269%2  0 | ** ** |       | ** ** | **Urania B Lease** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** ***                                        | *** *** |
| 215        |       | 127264                                                                                            |       | 040909     |       | URANIA LBR  CO B   |         | 1            |         | 1.000        |         | 0.75000      |         |                                                |         |
| 216        |       | 127418                                                                                            |       | 040909     |       | URANIA LBR  CO B   |         | 3            |         | 1.000        |         | 0.75000      |         | Sonris records not updated for transfer from Atkins |         |
| 217        |       | 214543                                                                                            |       | 047519     |       | URANIA             |         | 3            |         | 1.000        |         | 0.75000      |         |                                                |         |
|       |       |                                                                                              |       |       |       |               |         |         |         |         |         |         |         |                                                |         |
| ** ** |       |                                                                                              |       |       |       | **Urania C TB**    |         |         |         |         |         |         |         |                                                |         |
| 218        |       | 127389                                                                                            |       | 040910     |       | URANIA LBR  CO C   |         | 1            |         | 1.000        |         | 0.75000      |         | Sonris records not updated for transfer from Atkins |         |
| 219        |       | 128428                                                                                            |       | 040910     |       | URANIA LBR  CO C   |         | 3            |         | 1.000        |         | 0.75000      |         |                                                |         |

 

15

----

 
| 220        |     | 128427                                                                                          |     | 040910     |     | URANIA LBR  CO C      |     | 6        |     | 1.000    |       | 0.75000    |       |       |       |
|------------|----------|-------------------------------------------------------------------------------------------------|----------|------------|----------|-----------------------|----------|----------|----------|----------|------------|------------|------------|------------|------------|
| 221        |     | 121694                                                                                          |     | 040910     |     | URANIA LBR  CO C      |     | 7        |     | 1.000    |       | 0.75000    |       |       |       |
| 222        |     | 125446                                                                                          |     | 040910     |     | URANIA LBR  CO C      |     | 8        |     | 1.000    |       | 0.75000    |       |       |       |
| 223        |     | 134419                                                                                          |     | 029323     |     | HARDTNER-EDENBORN     |     | 1        |     | 1.000    |       | 0.75000    |       |       |       |
| 224        |     | 128374                                                                                          |     | 040909     |     | URANIA LBR  CO B      |     | 4        |     | 1.000    |       | 0.75000    |       |       |       |
| 225        |     | 128336                                                                                          |     | 040909     |     | URANIA LBR  CO B SWD  |     | 2        |     | 1.000    |       |       |       |       |       |
| 226        |     | 971269                                                                                          |     |       |     | URANIA LBR  CO E SWD  |     | 1        |     | 1.000    | ** ** | ** ** | ** ** | ** ** | ** ** |
|       |     |                                                                                            |     |       |     |                  |     |     |     |     |       |       |       |       |       |
| ** ** | * * | ** **                                                                                      | * * | ** ** | * * | **Urania  LTF Lease** | * * | * * | * * | * * | * *   | * *   | * *   | * *   | * *   |
| 227        |     | 187028                                                                                          |     | 040144     |     | Urania, LTF           |     | 1        |     | 1.000    |       | 0.75000    |       |       |       |
| 228        |     | 193625                                                                                          |     | 040144     |     | Urania, LTF           |     | 6        |     | 1.000    |       | 0.75000    |       |       |       |
|       |     | http://sonlite  .dnr.state.la.  us/sundown/  cart_prod/ca  rt_con_welli  nfo2?p_wsn  =971269%20 |     |       |     |                  |     |     |     |     |       |       |       |       |       |
| ** ** |     |                                                                                            |     |       |     | **Urania Shemen TB**  |     |     |     |     |       |       |       |       |       |
| 229        |     | 191712                                                                                          |     | 041167     |     | URANIA-SHEMEN         |     | 1        |     | 1.000    |       | 0.75000    |       |       |       |

 

16

----

 
| 230 |   | 191713 |   | 041167 |   | URANIA-SHEMEN        |   | 2 |   | 1.000 |   | 0.75000 |   |   |   |
|-----|--------|--------|--------|--------|--------|----------------------|--------|---|--------|-------|--------|---------|--------|--------|--------|
| 231 |   | 191714 |   | 041167 |   | URANIA-SHEMEN        |   | 3 |   | 1.000 |   | 0.75000 |   |   |   |
| 232 |   | 115191 |   | 040839 |   | URANIA LBRCO  D      |   | 1 |   | 1.000 |   | 0.75000 |   |   |   |
| 233 |   | 115192 |   | 040839 |   | URANIA LBRCO  D      |   | 2 |   | 1.000 |   | 0.75000 |   |   |   |
| 234 |   | 115468 |   | 040839 |   | URANIA LBRCO  D      |   | 3 |   | 1.000 |   | 0.75000 |   |   |   |
| 235 |   | 191709 |   | 041134 |   | URANIA  A-SHEMEN     |   | 1 |   | 1.000 |   | 0.75000 |   |   |   |
| 236 |   | 191784 |   | 041134 |   | URANIA  A-SHEMEN     |   | 2 |   | 1.000 |   | 0.75000 |   |   |   |
| 237 |   | 191783 |   | 041135 |   | URANIA  C-SHEMEN     |   | 1 |   | 1.000 |   | 0.75000 |   |   |   |
| 238 |   | 191779 |   | 041135 |   | URANIA  C-SHEMEN     |   | 2 |   | 1.000 |   | 0.75000 |   |   |   |
| 239 |   | 114278 |   | 040908 |   | URANIA LBR  CO A     |   | 3 |   | 1.000 |   | 0.75000 |   |   |   |
| 240 |   | 114442 |   | 040908 |   | URANIA LBR  CO A     |   | 4 |   | 1.000 |   | 0.75000 |   |   |   |
| 241 |   | 114534 |   | 040908 |   | URANIA LBR  CO A     |   | 8 |   | 1.000 |   | 0.75000 |   |   |   |
| 242 |   | 115773 |   | 040910 |   | URANIA LBR  CO C     |   | 2 |   | 1.000 |   | 0.75000 |   |   |   |
| 243 |   | 116282 |   | 040910 |   | URANIA LBR  CO C     |   | 4 |   | 1.000 |   | 0.75000 |   |   |   |
| 244 |   | 115986 |   | 040910 |   | URANIA LBR  CO C     |   | 5 |   | 1.000 |   | 0.75000 |   |   |   |
| 245 |   | 971328 |   |   |   | URANIA LBR  CO SWD   |   | 1 |   | 1.000 |   |    |   |   |   |
| 246 |   | 191788 |   | 041134 |   | URANIA  A-SHEMEN SWD |   | 6 |   | 1.000 |   |    |   |   |   |

 

17

----

 
| ** ** |         |         |         |         |         | **Urania Stenco Lease** |         |         |         |         |         |         |         |         |         |
|------------|--------------|--------------|--------------|--------------|--------------|-------------------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|
| 247        |         | 126642       |         | 026661       |         | URANIA-STENCO           |         | 2            |         | 1.000        |         | 0.80000      |         |         |         |
| 248        |         | 33328        |         | 026661       |         | URANIA-STENCO           |         | 3            |         | 1.000        |         | 0.80000      |         |         |         |
|       |         |         |         |         |         |                    |         |         |         |         |         |         |         |         |         |
| ** ** |         |         |         |         |         | **Walsh Lease**         |         |         |         |         |         |         |         |         |         |
| 249        |         | 72539        |         | 009846       |         | Walsh                   |         | 1            |         | 1.000        |         | 0.83000      |         |         |         |
|       |         |         |         |         |         |                    |         |         |         |         |         |         |         |         |         |
| ** ** |         |         |         |         |         | **White , Mike Lease**  |         |         |         |         |         |         |         |         |         |
| 250        |         | 189448       |         | 040597       |         | White, Mike             |         | 1            |         | 1.000        |         | 0.78711      |         |         |         |
|       |         |         |         |         |         |                    |         |         |         |         |         |         |         |         |         |
| ** ** |         |         |         |         |         | **Wright , WE Lease**   |         |         |         |         |         |         |         |         |         |
| 251        |         | 175340       |         | 037484       |         | Wright, WE              |         | 1            |         | 1.000        |         | 0.83000      |         |         |         |
| 252        |         | 173245       |         | 037484       |         | Wright, WE              |         | 2            |         | 1.000        |         | 0.83000      |         |         |         |
| 253        |         | 174438       |         | 037484       |         | Wright, WE              |         | 3            |         | 1.000        |         | 0.83000      |         |         |         |
|       |         |         |         |         |         |                    |         |         |         |         |         |         |         |         |         |
| ** ** | *** *** | *** *** | *** *** | *** *** | *** *** | **Zimmerman Lease**     | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** |
| 254        |         | 990136       |         | 010118       |         | Zimmerman               |         | 6            |         | 1.000        |         | 0.80000      |         |         |         |
| 255        |         | 43888        |         | 010118       |         | Zimmerman               |         | 14           |         | 1.000        |         | 0.80000      | *** *** | *** *** | *** *** |
| 256        |         | 53293        |         | 010118       |         | Zimmerman               |         | 16           |         | 1.000        |         | 0.80000      |         |         |         |
| 257        |         | 58021        |         | 010118       |         | Zimmerman               |         | 17           |         | 1.000        |         | 0.80000      |         |         |         |
| 258        |         | 62964        |         | 010118       |         | Zimmerman               |         | 18           |         | 1.000        |         | 0.80000      | ** **   | ** **   | ** **   |

 

18

----

 
| 259    |       | 66344                                                                                           |   | 010118 |   | Zimmerman                 |   | 19     |   | 1.000  |   | 0.80000 |       |       |       |
|--------|------------|-------------------------------------------------------------------------------------------------|--------|--------|--------|---------------------------|--------|--------|--------|--------|--------|---------|------------|------------|------------|
| 260    |       | 68370                                                                                           |   | 010118 |   | Zimmerman                 |   | 20     |   | 1.000  |   | 0.80000 | ** ** | ** ** | ** ** |
| 261    |       | 77368                                                                                           |   | 010118 |   | Zimmerman                 |   | 22     |   | 1.000  |   | 0.80000 |       |       |       |
| 262    |       | 86436                                                                                           |   | 010118 |   | Zimmerman                 |   | 23     |   | 1.000  |   | 0.80000 |       |       |       |
| 263    |       | 40901                                                                                           |   | 010118 |   | Zimmerman                 |   | A-4    |   | 1.000  |   | 0.80000 |       |       |       |
|   |       |                                                                                            |   |   |   |                      |   |   |   |   |   |    |       |       |       |
|   | ** ** | http://sonlite  .dnr.state.la.  us/sundown/  cart_prod/ca  rt_con_welli  nfo2?p_wsn  =990136%20 |   |   |   | **Zimmerman , Lex Lease** |   |   |   |   |   |    |       |       |       |
| 264    |       | 187003                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 1      |   | 1.000  |   | 0.80000 |       |       |       |
| 265    |       | 187004                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 2      |   | 1.000  |   | 0.80000 |       |       |       |
| 266    |       | 187007                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 4      |   | 1.000  |   | 0.80000 |       |       |       |
| 267    |       | 187008                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 5      |   | 1.000  |   | 0.80000 |       |       |       |
| 268    |       | 187010                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 7      |   | 1.000  |   | 0.80000 |       |       |       |
| 269    |       | 187011                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 8      |   | 1.000  |   | 0.80000 |       |       |       |
| 270    |       | 187012                                                                                          |   | 040143 |   | ZIMMERMAN,  Lex           |   | 9      |   | 1.000  |   | 0.80000 |       |       |       |

 

19

----

 
| 271 |   | 187236 |   | 040143 |   | ZIMMERMAN,  Lex     |   | 14 |   | 1.000 |   | 0.80000 |       |       |       |
|-----|--------|--------|--------|--------|--------|---------------------|--------|----|--------|-------|--------|---------|------------|------------|------------|
| 272 |   | 187237 |   | 040143 |   | ZIMMERMAN,  Lex     |   | 15 |   | 1.000 |   | 0.80000 | ** ** | ** ** | ** ** |
| 273 |   | 187238 |   | 040143 |   | ZIMMERMAN,  Lex     |   | 16 |   | 1.000 |   | 0.80000 | ** ** | ** ** | ** ** |
| 274 |   | 187239 |   | 040143 |   | ZIMMERMAN,  Lex     |   | 17 |   | 1.000 |   | 0.80000 |       |       |       |
| 275 |   | 187240 |   | 040143 |   | ZIMMERMAN,  Lex     |   | 18 |   | 1.000 |   | 0.80000 |       |       |       |
| 276 |   | 236125 |   | 40143  |   | Zimmerman,  Lex     |   | 19 |   | 1.000 |   | 0.80000 |       |       |       |
| 277 |   | 187009 |   | 040143 |   | ZIMMERMAN,  Lex SWD |   | 6  |   | 1.000 |   |    |       |       |       |
| 278 |   | 973077 |   | 040143 |   | ZIMMERMAN,  Lex SWD |   | 12 |   | 1.000 |   |    |       |       |       |

 

20

----

** **

**Exhibit “A-3”**

 

Attached to and made a part of that certain

Assignment, Conveyance and Bill of Sale dated effective February 1,2008

by and between NGS Sub. Corp., as Assignor, and

MWM Energy, LLC, as Assignee

 

**CONTRACTS AND OTHER AGREEMENTS**

 

9.               Pumping Service Contract byand between NGS Sub Corp. and Carl Bruce

 

10.         Pumping Service Contract byand between NGS Sub Corp. and Sumrall Pumper Service

 

11.         Pumping Service Contract byand between NGS Sub Corp. and James W. Sumrall II

 

12.         Pumping Service Contract byand between NGS Sub Corp. and Lance Coleman

 

13.         Salt Water Disposal Contractby and between NGS Sub Corp. and Page Development, LLC for use of theHardtner A SWD #2

 

14.         Verbal agreement for saltwater disposal by Donnie Morrow into Bradford SWD

 

15.         Verbal agreement for saltwater disposal by Quentin Sagdahl into Bradford SWD

 

16.         Verbal agreement for saltwater disposal by AJ  & J Thornton into Urania SWD

 

1

----

 

**Exhibit “A-4”**

 

Attached to and made a part of that certain

Assignment, Conveyance and Bill of Sale dated effective February 1,2008

by and between NGS Sub. Corp., as Assignor, and

MWM Energy, LLC, as Assignee

 

Right-of-Ways,Easements and Surface Leases

 

**NONE**

 

1

----

 

**Exhibit “A-5”**

 

Attached to and made a part of that certain

Assignment, Conveyance and Bill of Sale dated effective February 1,2008

by and between NGS Sub. Corp., as Assignor, and

MWM Energy, LLC, as Assignee

 

**SURFACE ESTATES**

 

**FEE LAND**

 

**TRACT I:**

 

Lots1, 3, 5, Block 16, Lots 1, 3, 9, 11, Block 21, and Lots 1, 3, 5, 7, 9, 11,Block 23 of the Original Town of Tullos, Section 26, Township 10 North,Range 1 East, LaSalle Parish, Louisiana

** **

**TRACT II**:

 

Acertain parcel of land thirty (30) feet square, situated in the Southwestcorner of property described hereinbelow, with well described below situatedthereon.

 

MonroeWell Service/SSM – SWD #1, serial #971390, Section 25, Township 10 North,Range 2 East, Tullos-Urania Field, LaSalle Parish, Louisiana.

 

TractsI and II, being the same land described in that certain Act of Sale andAssignment dated September 2, 2004 from Atkins Production, Inc. toNGS Sub. Corp., as recorded in Book 291, Page 179 of the Conveyance Booksof LaSalle Parish, Louisiana.

 

1

----

 

**Exhibit “F”**

 

Attached to and made a part of that certain

Assignment, Conveyance and Bill of Sale datedeffective February 1, 2008

by and between NGS Sub. Corp., as Assignor,and

MWM Energy, LLC, as Assignee

 

**LITIGATION AND CLAIMS**

 

**Litigation:**

 

**NONE**

 

**Claims:**

 

Those claims relating to certain requests forinformation from the United States Environmental Protection Agency, Region6, pursuant to Clean Water Act Section 308 relating to a release ofhydrocarbons in LaSalle Parish, Louisiana , on or about August 1, 2007,identified in NRC Report No. 844158 and HI-07-04354, and penaltiespotentially resulting therefrom.

 

1

----

 

**Schedule 1.28(j)**

 

Attached to and made a part of that certain

Assignment, Conveyance and Bill of Sale dated effective February 1,2008

by and between NGS Sub. Corp., as Assignor, and

MWM Energy, LLC, as Assignee

 

**Excluded Assets**

 

**Wellsand related leasehold for all rights, title and interest in and to:**

 

1.             Lexington-Zimmerman #2 Well (SN187004), together with and including a 1 acre tract surrounding the wellbore.

 

2.             Zimmerman #6 Well (SN 990136),together with and including a 1 acre tract surrounding the wellbore.

 

Theidentified wells and acreage are located in the Tullos Urania Field, Section 25,Township 10 North, Range 1 East, LaSalle Parish, Louisiana.

 

**Equipment:**

 

1.             Two (2) two hundred (200)barrel swab tanks; and

 

2.             ten (10)  man-way covers.

 

**AdditionalExcluded Assets:**

 

1.             Any and all reimbursements,refunds, claims, causes of action, and any other rights topayment, whether now pending or as may be made or come due in thefuture, relating to a release of hydrocarbons in LaSalle Parish, Louisiana,on or about August 1, 2007, identified in NRC Report No. 844158 andHI-07-04354, including any insurance proceeds, claims against the Oil SpillLiability Trust Fund, and recoveries from any third-party.

 

1

----

 

**Exhibit D**

 

1

----

 

**Exhibit “E-1”**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**[INTENTIONALLY LEFT BLANK]**

 

1

----

 

**Exhibit “F”**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**LITIGATION AND CLAIMS**

 

**Litigation:**

 

**NONE**

 

**Claims:**

 

Thoseclaims relating to certain requests for information from the United StatesEnvironmental Protection Agency, Region 6, pursuant to Clean Water Act Section 308relating to a release of hydrocarbons in LaSalle Parish, Louisiana , on orabout August 1, 2007, identified in NRC Report No. 844158 andHI-07-04354, and penalties potentially resulting therefrom.

 

1

----

 

**Exhibit “G”**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**OIL AND GAS IMBALANCES**

 

**NONE**

 

1

----

 

**Exhibit “H”**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**CONSENTS TO ASSIGN AND PREFERENTIAL RIGHTS TO PURCHASE**

 

The following agreementsrequire consent to assign:

 

1)                                      Oil, Gas and Mineral Lease dated February 27,1990 from Louisiana-Pacific Corporation to Atkins Production, Inc., asrecorded in Conveyance Book 174, Page 631 of the records of LaSalleParish, Louisiana.

 

2)                                      Oil and Gas Lease dated September 13,1972 from Georgia Pacific Corporation to Ed Alexander, as recorded in Oil andGas Lease Book 36, Page 388 of the records of LaSalle Parish, Louisiana

 

3)                                      Oil, Gas and Mineral Lease dated February 1,2003 from Anadarko Land Corporation to Chadco, Inc., as recordedConveyance Book 278, Page 318, as recorded in the records of LaSalleParish, Louisiana.

 

4)                                      Oil and Gas Lease dated December 2,2005 from the LP Mineral Owners to NGS SUB. Corporation, as recorded inConveyance Book 300, Page 708 of the records of LaSalle Parish, Louisiana.

 

5)                                      Oil and Gas Lease dated December 5,2005 from William D. Blake, Agent and Attorney-in-Fact for Henry E. Blake, etal to NGS Sub Corporation, as recorded in Conveyance Book 300, Page 713 ofthe records of LaSalle Parish, Louisiana

 

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**Exhibit “I”**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**Non-Foreign Certificate**

** **

**Exemption from Withholding of Tax For**

**Dispositions of U.S. Real Property Interests**

 

Article 1445 of theInternal Revenue Code provides that a transferee of a U.S. real propertyinterest must withhold tax if the transferor is a foreign person.  To inform **MWM Energy,LLC**(“Buyer”) that withholding of tax is not required upon thedisposition of a U.S. real property interest by NGS Sub Corp. (“Seller”), theundersigned hereby certifies as follows:

 

1.             Seller is not a nonresident alien, foreign corporation,foreign partnership, foreign trust, or foreign estate for purposes of U.S.income taxation (as those terms are defined in the Internal Revenue Code of1986, as amended and the Treasury regulations thereunder).

 

2.             Seller’s taxpayer identifying number is                             ;and

 

3.             Seller has an office at 2500 City West Boulevard, Suite 1300,Houston, Texas, 77042.

 

Seller understands thatthis certification may be disclosed to the Internal Revenue Service by Buyerand that any false statement contained herein could be punished by fine,imprisonment, or both.

 

Under penalty of perjury,I declare that I have examined this certification and, to the best of myknowledge and belief, it is true, correct, and complete, and I further declareI have authority to sign this document.

 

 
|   | **NGS SUB CORP.** |
|--------|-------------------|
|   | ** **        |
|   | By:               |   |
|   | Name:             |   |
|   | Title:            |   |

 

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| STATE OF TEXAS   | § |
|------------------|--------|
|             | § |
| COUNTY OF HARRIS | § |

 

The foregoinginstrument was acknowledged before me this               day of February 2008, by                                 ,as                                               on behalf of NGS Sub Corp.  a Delawarecorporation.

 

 
|   |                                        |
|--------|---------------------------------------------|
|   | Name (Printed, Typed or  Stamped)           |
|   | Notary Public in and for the State of Texas |

 

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** **

**Exhibit “J”**

** **

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

** **

**Certificate (Buyer)**

** **

This Certificate is beingdelivered in connection with Section 10.3(b) of that certainAsset  Purchase and Sale Agreement, datedas of February 15, 2008 (the “Purchase Agreement”), by and between NGS SubCorp. (“Seller”) and MWM Energy, LLC (“Buyer”). All capitalized terms used herein and not otherwise defined herein shallhave the respective meanings given to those terms in the Purchase Agreement.

 

The undersigned herebycertifies that he/she is an authorized officer of Buyer and that he/she hascarefully reviewed the contents of this Certificate.  Based on the foregoing, the undersigned hasconcluded and certifies on behalf of Buyer that:

 

(a)           The representationsand warranties of Buyer contained in Article 7 of the Purchase Agreementare true and correct in all material respects at and as of Closing as thoughsuch representations and warranties were made at such time; and

 

(b)           Buyer has compliedin all material respects with all covenants and obligations contained in thePurchase Agreement to be performed or complied with by Buyer prior to Closing.

 

IN WITNESS WHEREOF, thisCertificate is executed by the undersigned as of **[**                                       **]**, 2008.

 
| ** ** | **MWM ENERGY, LLC** |
|------------|---------------------|
|       |                |
|       |                |
|       | By:                 |   |
|       | Name:               |   |
|       | Title:              |   |

 

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**Exhibit “J”**

** **

Attached to and madea part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC, as Buyer

** **

**Certificate (Seller)**

 

This Certificate is beingdelivered in connection with Section 10.2(c) of that certain AssetPurchase and Sale Agreement, dated as of February 15, 2008 (the “PurchaseAgreement”), by and between MGS Sub Corp. (“Seller”) and MWM Energy, LLC (“Buyer”)all capitalized terms used herein and not otherwise defined herein shall havethe respective meanings given to those terms in the Purchase Agreement.

 

The undersigned herebycertifies that he/she is an authorized officer of Seller and that he/she hascarefully reviewed the contents of this Certificate.  Based on the foregoing, the undersigned hasconcluded and certifies on behalf of Seller that:

 

(a)           The representationsand warranties of Seller contained in Article 6 of the Purchase Agreement (i) thatare qualified as to Material Adverse Effect are true and correct as of theClosing Date as though such representations and warranties were made at suchtime (except to the extent such representations and warranties expressly relateto an earlier date, in which case as of such earlier date), and (ii) thosenot so qualified are true and correct as of the Closing Date as though suchrepresentations and warranties were made at such time (except to the extentsuch representations and warranties expressly relate to an earlier date, inwhich case as of such earlier date), except for failures of the representationsand warranties referred to in this clause (ii) to be true and correct aswould not reasonably be expected to have, in the aggregate, a Material AdverseEffect; and

 

(b)           Seller has compliedin all material respects with all covenants and obligations contained in thePurchase Agreement to be performed or complied with by Seller prior to Closing.

 

IN WITNESS WHEREOF, thisCertificate is executed by the undersigned as of **[**                                           **]**, 2008.

 
| ** ** | **NGS SUB CORP.** |
|------------|-------------------|
| ** ** | ** **        |
|       | By:               |   |
|       | Name:             |   |
|       | Title:            |   |
| ** ** | ** **        |

 

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**Schedule 1.28(j)**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**ExcludedAssets**

 

**Wells and related leasehold forall rights, title and interest in and to:**

 

1.             Lexington-Zimmerman #2 Well (SN 187004), together withand including a 1 acre tract surrounding the wellbore.

 

2.             Zimmerman #6 Well (SN 990136), together with andincluding a 1 acre tract surrounding the wellbore.

 

The identified wells andacreage are located in the Tullos Urania Field, Section 25, Township 10North, Range 1 East, LaSalle Parish, Louisiana.

 

**Equipment:**

 

1.             Two (2) two hundred (200) barrel swab tanks; and

 

2.             ten (10)  man-way covers.

 

**Additional Excluded Assets:**

 

1.             Any and all reimbursements, refunds, claims, causes ofaction, and any other rights to payment, whether now pending or asmay be made or come due in the future, relating to a release ofhydrocarbons in LaSalle Parish, Louisiana, on or about August 1, 2007,identified in NRC Report No. 844158 and HI-07-04354, including anyinsurance proceeds, claims against the Oil Spill Liability Trust Fund, andrecoveries from any third-party.

 

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**Schedule 4.13(e)**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**CompanyLiabilities**

 

**NONE**, other than as disclosed on **Exhibit “F”.**

 

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**Schedule 4.19**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**CompanyBanks/Financial Institutions**

 

**NONE**

 

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**Schedule 4.23**

 

Attached to andmade a part of that certain

Asset Purchase andSale Agreement dated February 15, 2008

by and between NGSSub. Corp., as Seller, and

MWM Energy, LLC,as Buyer

 

**CompanyMaterial Contracts**

 

**NONE**

 

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