EXHIBIT 10.2



 


Exhibit 10.2




SETTLEMENT AGREEMENT & RELEASE




     This Settlement Agreement & Release is entered into as of the 24th day of
November, 2004 (the “Effective Date”) by and between WARREN RESOURCES OF
CALIFORNIA, INC., a California corporation; WARREN DEVELOPMENT CORP., a
Delaware corporation; WARREN RESOURCES, INC., a Maryland (formerly a Delaware)
corporation; and PETROLEUM DEVELOPMENT CORPORATION, a New Mexico corporation
(now Warren E&P) (collectively “Warren”) and MAGNESS PETROLEUM COMPANY, an
Oklahoma corporation (“MPC”).



RECITALS:





	A.	 	MPC and Warren are both owners of certain surface and mineral interests
within the Fault Block I Townlot Unit, Wilmington Oil Field (the “WTU”)
situated in the City of Los Angeles, County of Los Angeles, State of
California.
	 
	B.	 	MPC and Warren are also parties to that certain Joint Venture Agreement
dated May 24, 1999 (the “JV Agreement”).
	 
	C.	 	MPC and Warren have been engaged in protracted litigation, both in the
California and federal courts and in arbitration through Judicial
Arbitration & Mediation Service and American Arbitration Association
concerning, among other things, operations and billing with respect to the
WTU and the termination of the JV Agreement (the “Disputes”). There are
currently pending between the parties the following actions:







	 	1.	 	Warren Resources, et al. v. Magness Petroleum Co., JAMS Case
#BS071728
	 
	 	2.	 	Magness Petroleum v. Warren Resources, et al., AAA Action #72
180 00621 03 BETO
	 
	 	3.	 	Magness Petroleum v. Warren Resources, et al., L.A. County
Sup. Ct. #BC302653
	 
	 	 	 	The above referenced actions are collectively referred to herein as the
“Actions.”





 









 













	D.	 	The parties have determined that the only way to resolve the Disputes
(and to avoid future disputes) is for one party to acquire the other
party’s interests in the WTU.
	 
	E.	 	The parties desire to settle the Disputes and dismiss the Actions on the
following terms and conditions.





AGREEMENT:



     1. Acquisition of WTU Interests. Warren hereby agrees to purchase from
MPC and MPC hereby agrees to sell to Warren the “Assets” as such term is
defined and on the terms and conditions set forth in the Purchase and Sale
Agreement & Joint Escrow Instructions attached hereto as Exhibit “A” (the
“Purchase Agreement”). Concurrent with the execution of this Settlement
Agreement, the parties agree that they shall execute or cause the execution of
the Purchase Agreement and shall diligently (and in good faith) perform their
obligations thereunder. The parties acknowledge that a condition to the
effectiveness of the Purchase Agreement is the consent to same by Exxon-Mobil
Corporation, a Delaware corporation (“Exxon”) and by California/Nevada
Developments, LLC, a Nevada limited liability company (“CND”) [said consents
are referred to herein respectively as the “Exxon Consent” and the “CND
Consent"]. The parties further acknowledge that Exxon and/or CND may require
that Warren post bonds or pledge assets as security for the performance of
certain abandonment obligations within the WTU before approving the Purchase
Agreement. Warren is familiar with the abandonment obligations and the
security to be pledged with respect thereto. Warren hereby agrees to
immediately begin the process of posting all bonds and/or pledging all
collateral as may be required by Exxon and/or CND to obtain the Exxon Consent
and the CND Consent.



     2. Vacation of Awards and Dismissal of Actions. It is a condition of this
settlement that the Actions be stayed pending “Closing”, as such term is
defined in the Purchase Agreement. It is a further condition that the parties
shall jointly move for the vacation of all interim and final awards made in the
Actions; said vacation being contingent upon Closing. Concurrent with Closing,
the parties shall jointly dismiss the Actions with prejudice. Irrespective of
whether an arbitrator agrees to vacate an interim or final award in the Actions
(or any of them), and provided Closing occurs, the parties agree that,
effective on and as of the Closing, all interim and final awards in the Actions
are void, unenforceable and otherwise of no effect, including, but not limited
to the Order Determining Warren’s Further Recovery and Supplemental Award of
Judge Wisot



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in JAMS Case No. BS071728. Except as otherwise provided herein, each
party shall bear its own fees and costs.



     3. Failure to Close. If Closing does not occur pursuant to the Purchase
Agreement (as it may be amended from time to time by the parties thereto), then
this Settlement Agreement & Release shall terminate and prosecution of the
Actions may recommence on the motion of any party.



     4. Release of Claims.



        (a) Releases. MPC and Warren do hereby fully release each other, each
others’ partners, officers, directors, guarantors, agents, employees,
representatives, successors and assigns, and all other persons and
associations, from all claims and causes of action by reason of any damages,
injuries or losses which may have been sustained or may be sustained in the
future, arising out of, or in any way concerning, the WTU, Unit Operations (as
such term is defined in the Unit Agreement creating the WTU), the JV Agreement,
the Actions, or the matters identified in the Recitals hereto. Obligations
created by this Agreement are excepted from the coverage of this release.



        (b) Waiver of Unknown Claims. Each party acknowledges and agrees that the
above release applies to claims for injuries, damages, or losses to his or its
own person and property, real or personal, whether those injuries, damages or
losses are known or unknown, foreseen or unforeseen, patent or latent, which
he, she or it may have against the other party arising out of the matters
described hereinabove. Each party certifies that he, she or it has read and is
familiar with the provisions of California Civil Code Section 1542, which
provides that,




A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR


and waives the application of that section.




     5. Warranties.



        (a) Volitional Agreement. The parties hereto warrant and represent that
this Agreement is freely and voluntarily executed by them after having been
apprised of all of the relevant information.



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        (b) Understanding. Each party warrants and represents that it has read
this Agreement (or has had this Agreement read to it) and has had the terms
used herein and the consequences hereof explained to it by its attorneys. Each
party expressly understands that the other parties admit no liability of any
sort and have made no representations as to any liabilities or obligations and
have made no agreements or promises to do or admit to do any act or thing not
set forth herein.



        (c) Performance. Each party hereto agrees to promptly and as
expeditiously as possible carry out and execute its responsibilities under the
terms of this Agreement and to execute any and all documents which may be
necessary from time to time in the future to implement the terms of this
Agreement.



        (d) Right. Each party warrants that no other person or entity has or had
or claims to have had any interest in the claims, demands, causes of action,
obligations, damages or liabilities described herein; and that they have not
sold, assigned, transferred, conveyed, or otherwise disposed of any claim,
demand, cause of action, obligation, damage or liability covered herein.



        (e) Disparaging Statements. Commencing with the Effective Date and for a
period of five (5) years after the Closing of the Purchase and Sale Agreement &
Joint Escrow Instructions, all of the parties hereto agree to and shall refrain
from making any derogatory or disparaging statements, either orally,
electronically, or in writing, about each other or any other party hereto,
including any of their respective Affiliates and Associated Parties, as those
terms are defined in Exhibit “A”.



     6. Miscellaneous.



        (a) Severability. Each provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the legality
or validity of the remainder of the Agreement.



        (b) Survival of Representation and Warranties. All of the terms,
representations, warranties and other provisions of this Agreement shall
survive and remain in effect after the Effective Date.



        (c) Time and Benefit. Time is of the essence of this Agreement and each
and every provision hereof.



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        (d) Costs. Each party shall pay its own legal fees and expenses
associated with the Actions, this Agreement and the consummation of the
transactions contemplated hereby.



        (e) Execution of Documents. Each party agrees to execute all documents
necessary to carry out the purpose of this Agreement and to cooperate with each
other for the expeditiously filing of any and all documents and the fulfillment
of the terms of this Agreement.



        (f) Binding Effect. This Agreement shall bind and inure to the benefit of
all successors, assigns and heirs of the parties.



        (g) Modification Must be in Writing. This Agreement may not be altered,
amended or modified, except by writing executed by duly authorized
representatives of all parties.



        (h) Construction. Should any paragraph, clause or provision of this
Agreement be construed to be against public policy or determined by a court of
competent jurisdiction to be void, invalid or unenforceable, such construction
and decision shall affect only those paragraphs, clauses or provisions so
construed or interpreted, and shall in no way affect the remaining paragraphs,
clauses or provisions of this Agreement which shall remain in force.



        (i) Counterpart Signatures. The Agreement may be executed in two or more
counterparts by facsimile, with originals following by mail or express
delivery.



        (j) Entire Agreement. This Agreement states the entire agreement among
the parties and supersedes their prior agreements, negotiations or
understandings. Each of these parties acknowledges and agrees that no other
party, nor agent, nor attorney of any of the parties has made any promise,
representation or warranty, express or implied, not set forth in this
Agreement. Each party acknowledges that such party has not executed this
Agreement on reliance on any promise, representation, conduct or warranty of
any other party not expressly set forth in this Agreement.



        (k) Governing Law. This Agreement shall be construed and governed by the
laws of the State of California.



        (l) Separate Counsel. Each party stipulates that it has been represented
by counsel of its own choosing in connection with this Agreement, that each
party has had the contents of this Agreement fully explained



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by its respective counsel, and that each party is fully aware of the
contents of this Agreement and its legal effect. If any party is not
represented in this transaction, each such party has had the opportunity to
seek counsel of his, hers or its choice, but has chosen not to do so.



     WHEREFORE, this Settlement Agreement and Mutual Release is executed
as of the Effective Date.



	 	 	 
	WARREN RESOURCES, INC.,

	 	WARREN RESOURCES OF CALIFORNIA, INC.,
	a Maryland (formerly Delaware) corporation

	 	a California corporation
	By:                                      

	 	By:                                      
	     Norman F. Swanton, Chief

	 	     Norman F. Swanton, Chief
	     Executive Officer and President

	 	     Executive Officer and President
	 
	 	 
	WARREN DEVELOPMENT CORP,

	 	WARREN E&P, INC.,
	a Delaware corporation

	 	a New Mexico corporation
	By:                                      

	 	By:                                      
	Its:                                      

	 	Its:                                      
	MAGNESS PETROLEUM COMPANY,
	 	 
	an Oklahoma corporation
	 	 
	By:                                      
	 	 
	Gary D. Magness, President
	 	 







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EXHIBIT “A”




PURCHASE AND SALE AGREEMENT




This page intentionally left blank. Exhibit “A” commences on following page.





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