Exhibit 10.16
 ASSET PURCHASE AGREEMENT
 ASSET PURCHASE AGREEMENT Agreement Seminole
Gas Company Buyer NGAS Gathering, LLC NGL Daugherty Petroleum, Inc. DPI Sellers NGAS Gathering II, LLC New NGAS Gathering Article 1 Schedule H
 RECITALS
 Duke
    Exhibit K-1
 Exhibit A,
 Exhibit H,
   Exhibit I
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Exhibit M-1, Exhibit M-2
 NGAS Options
 Kay Jay ROFR Schedule H
   NOW, THEREFORE,
 ARTICLE 1
DEFINITIONS
 Action
 Additional Capital Costs Section 2.5(a)(ii)(3)
 Affiliate
 Agreement
 Ancillary Agreements Section 2.7
 2




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Ancillary Option Agreements Schedule H
 Assumed Contracts Schedule C .
 Assumed Liabilities
 Bankruptcy Section 2.8 Del. C et seq
 Bill of Sale Exhibit B
 Books and Records
 Business
 Business Day
 Buyer Claim Section 8.2(a)
 Buyer Claim Notice Section 8.2(b)
 3




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Buyer Indemnified Parties Section 8.2(a)
 Buyer Secured Obligations
 Code
 Closing
 Closing Date Article 6
 Consent Costs Section 8.4
 Contracts
 Counterparty Counterparties
 Deductible Section 8.4
 Delaware Act Del. C et seq
 DPI Contract Operating Agreement
 DPI Producers
 Effective Date
 Environmental Laws
 4




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Equity Releases Exhibit G
 Excluded Assets Schedule C
 FERC
 Forward Sales Agreements Section 2.15
 Gathering System
  Spectra Interconnect Schedule A Schedule A
  5




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Exhibit G
 Schedule B
 Schedule F
  Schedule G
   Governing Documents
 Governmental Action
 Governmental Body
 Governmental Permits
 Guarantors
 Hazardous Materials
 Independent Director
 6




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Intellectual Property
 IRR
 IRR Specified Discount Rate
 Joint Ownership Agreement Exhibit A
 Kay Jay ROFR Assets Schedule H
 Kay Jay ROFR Schedule H
 Knowledge of the Buyer
 Knowledge of the Sellers
 Law
 Lease ROW Section 3.15(b)
 Lien
 Losses Section 8.2(a)
 Master Netting Agreement Exhibit T
 Maximum Indemnity Amount Section 8.4
 Memorandum of Options and Agreements Exhibit N
 NAESB Purchase Agreement Exhibit I
 7




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Natural Gas Act
 Natural Gas Policy Act
 New NGAS Gathering
 NGAS Credit Agreement Schedule 2.14(c)
 NGAS Mortgages Exhibit M-1
 NGAS Option Promissory Note Exhibit G
 NGAS Options NGAS Option Promissory Note NGAS Options Price Exhibit G
 NGAS Securities Purchase Agreement
 NNG LLC Agreement Exhibit E
 NRI
 100% Assigned Contracts Schedule I
 Operational Data
 Party
 Permitted Encumbrances
 8




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Schedule F provided, however, that
 Person
 Preferential Rights Section 3.15
 Purchased Assets
 Purchase Price Section 2.2
 Put Notice Exhibit G
 Receipt Meters
 Retained Gathering Assets
 Required Consents Section 5.1
 Requirements of Law
 Recitals
 Restricted Information Section 11.16(b)
 Retained Gathering Assets
 Retained Liabilities
 9




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Rights of Way
 Securities Act
 Sellers
 Seller Claim Section 8.3(a)
 Seller Claim Notice Section 8.3(b)
 Seller Indemnified Parties Section 8.3(a)
 Seller Parent Guaranty Exhibit C
 Seller Secured Obligations
 SES
 SES Contract Operating Agreement
 SES Gathering Agreement Exhibit H
 Seminole Mortgages Exhibit M-2
 Subsequent Transaction Section 10.1(c)
 10




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Tax Taxes
 Tax Returns
 Treasury Regulations
 ARTICLE 2
PURCHASE AND SALE; CONTRIBUTION; OTHER AGREEMENTS
 2.1 Purchase and Sale
 2.2 Consideration/Purchase Price Article 2 Purchase Price Sections
2.5 5.1(b) 9.1
 2.3 No Assumption of Retained Liabilities
 2.4 Excluded Assets Section 2.1
 2.5 Adjustments at Closing
 Closing Adjustments
 Preliminary Settlement Statement Closing
Price Preliminary Settlement Statement Section 2.5(b)
 11




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Upward Adjustments
   Downward Adjustments
   Adjustments After Closing
 Final Settlement Statement Section 2.5(a) Final Settlement Statement
 Payment of Post-Closing Adjustments
 Additional Closing Payments
 Section 8.4
 Section 5.2 Additional Capital Costs
 2.6 Operation of Gathering System; Joint Ownership Agreement
 12




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2.7 Sellers Lien Releases Exhibit J
 2.8 Contribution of Retained Gathering Assets; Security Interests; New NGAS
Gathering
 Contribution of Retained Gathering Assets.
 Security Interests in Retained Gathering Assets.
 Independent Director; Governing Documents of New NGAS Gathering. Exhibit K-1 Exhibit K-1
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Other Provisions of NNG LLC Agreement.
 2.9 Seller Parent Guarantees Exhibit C
 2.10 SES Gathering Agreement
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2.11 NAESB Purchase Agreement Exhibit I
 2.12 Buyer Second Lien
 2.13 NGAS Options; Kay Jay ROFR; Covenants .
 NGAS Options .
 Kay Jay ROFR . Schedule H
 Covenants . Schedules G Schedule H
 2.14 Partial Repayment of NGAS Credit Agreement; Option Proceeds; Amendment to NGAS Credit
Agreement .
   Schedule 2.14(c)
 15




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2.15 Forward Sales Agreement; Master Netting Agreement; Forward Sales
Agreement Forward Sales Agreements
 Master Netting Agreement
 ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
  3.1 Organization
 3.2 Authorization
 3.3 Non-Contravention; Absence of Breach
  16




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3.4 Requirements of Law
 3.5 Governmental Permits Schedule 3.5 Exhibit D Section 3.5
 3.6 Intellectual Property Schedule 3.6
 3.7 Title to Purchased Assets; Condition of Purchased Assets Section 2.7
 3.8 Assumed Contracts .
 Schedule C Schedule C
 Schedule 3.8(b)
  Schedule C
 17




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3.9 Litigation Schedule 3.9
 3.10 Tax Representations .
     Section 9.1
     18




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3.11 Brokers .
  3.12 Bankruptcy; Solvency .
 Section 3.12 Solvent
 3.13 Take or Pay Arrangements .
  3.14 Imbalances .
 3.15 Preferential Purchase Rights and Consents; Lease ROW.
 Schedule 3.15 Preferential
Rights
 Lease ROW
 19




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3.16 Pipeline Regulation .
  3.17 Environmental .
 Schedule 3.17
 3.18 Affiliate Held Assets .
 Schedule 3.18
 3.19 Information Underlying Reserve Reports .
  3.20 Sufficiency of Assets; No Adverse Change .
  3.21 Capitalization of New NGAS Gathering; No Subsidiaries .
  20




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3.22 Representations Regarding NGAS Credit Agreement .
  Section 2.14(c)
   3.23 Hard Rock Operations and Arkoma Operations .
 Hard Rock Operations Arkoma Operations
  3.24 Production Data
 ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
  4.1 Organization
 21




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4.2 Authorization
 4.3 Non-Contravention
 4.4 Litigation
 4.5 Buyers Financial Capacity .
 ARTICLE 5
CONSENTS; ADDITIONAL COVENANTS
 5.1 Required Consents; Waivers of Preferential Rights
 Exhibit U Section 8.4
 Schedule 5.1(b)
 5.2 Operation of the Purchased Assets
  Article 2
 22




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ARTICLE 6
CONDITIONS TO CLOSING
 6.1 Condition to Closing .
 Buyers Conditions.
  23




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Section 7.2
  Exhibit D
  Section
2.14(c) Schedule 2.14(c)
      Article 8
 Sellers Conditions.
  Section 7.3
 24




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Article 8
 ARTICLE 7
CLOSING
 7.1 Closing Article 7
 7.2 Sellers Deliveries Section 6.1(a)
     Section 6.1
   Section 6.1(a)
 Article 2
 Section 2.7
  25




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Section 3.15
   7.3 Buyers Deliveries . Section 6.1(a)
       ARTICLE 8
INDEMNIFICATION
 8.1 Limitation on and Survival of Representations and Warranties Sections 3.1 3.2 3.3 3.7 Section 3.10
 8.2 Indemnification by the Sellers
 Article 8 Buyer Indemnified Parties Losses Buyer Claim
  26




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Article 7
  Section 8.2 Buyer Claim Notice
  8.3 Indemnification by the Buyer .
 Article 8 Seller Indemnified Parties Seller Claim
  Article 8
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Section 8.3 Seller Claim Notice
  8.4 Limitation of Liability . Section 8.2(a)(i) Deductible Section 8.2(a)(i) Maximum Indemnity Amount Section 8.2(a)(i) Sections 3.1 3.2 3.3 3.10 3.11 Section 8.2(a)(i) Section 3.7 Consent Costs
 8.5 Sole and Exclusive Remedy . Article 8
 8.6 Tax Treatment of Indemnity Payments Article 8
 ARTICLE 9
TAXES AND FURTHER ASSURANCES
 9.1 Transfer Taxes
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9.2 Allocation of Purchase Price Exhibit L Exhibit L Allocated Values Allocated Value Exhibit L
 ARTICLE 10
TERMINATION
 10.1 Termination Events
  provided, however
 Section 7.2 provided, however provided furthermore
 Section 7.3 provided, however provided furthermore
  10.2 Effect of Termination
 Section 10.1 Section 10.2(b)
 Section 10.2(a) Section 10.01(d) Section 10.1(e)
  29




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ARTICLE 11
MISCELLANEOUS
 11.1 Entire Agreement; Amendment Exhibit G
 11.2 Expenses
 11.3 Governing Law; Jurisdiction & Venue
 11.4 Assignment
 11.5 Notices Section 11.5
 If to the Buyer:
    
    Seminole Gas Company
1323 E. 71st Street
Suite 300
Tulsa, OK 74136
Attn: Alex Goldberg
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If to the Sellers:
    
    Daugherty Petroleum, Inc.NGAS Gathering, LLC120 Prosperous Place, Suite 201Lexington, Kentucky 40509Attn: William G. Barr III
 11.6 Counterparts; Headings
 11.7 Interpretation
 11.8 Occasional and Bulk Sales Law .
 11.9 Waiver of Damages
  11.10 Severability
 11.11 No Reliance
 11.12 Agreement for the Parties Benefit Article
8
 11.13 Non-Waiver
 11.14 Further Assurances
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11.15 Public Announcements
 11.16 Confidentiality
  Restricted Information Section 11.16 Section 11.16
  11.17 WAIVER OF JURY TRIAL
 11.18 Post Closing Obligations
   32




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11.19 Counterparts
 11.20 Survival Section 8.1
 [Signature Page Follows]
 33




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NGAS GATHERING, LLCBy:
    /s/ William G. Barr III,William G. Barr III,Chief Executive OfficerDAUGHERTY PETROLEUM, INC.By:
    /s/ William G. Barr III,William G. Barr III,Chief Executive OfficerNGAS GATHERING II, LLCBy:
    /s/ William G. Barr III,William G. Barr III,Chief Executive OfficerSEMINOLE GAS COMPANYBy:
    /s/ Robert B. Rosene Jr.Robert B. Rosene Jr.,Chief Executive Officer and President 34