ex10_2.htm


    
      

    

    EXHIBIT 10.2

     

    


    


    UNITED
STATES BANKRUPTCY COURT

    FOR
THE SOUTHERN DISTRICT OF TEXAS

    HOUSTON
DIVISION

    


    
      	
              In re:

            	
              §

            	 
      
	 
      	
              §

            	 
      
	
              BLAST ENERGY SERVICES, INC.

            	
              §

            	
              Case
      No.    07-30424-H4-11

            
	 
      	
              §

            	 
      
	
              EAGLE DOMESTIC DRILLING

            	
              §

            	
              Case
      No.    07-30426-H4-11

            
	
              OPERATIONS LLC

            	
              §

            	 
      
	
              Debtors

            	
              §

            	
              Jointly Administered Chapter
    11

            
	 
      	
              §

            	
              under Case No.
    07-30424-H4-11

            


    

    


    


    


    FIRST
AMENDED JOINT PLAN OF REORGANIZATION OF

    BLAST
ENERGY SERVICES, INC., DEBTOR AND

    EAGLE DOMESTIC DRILLING
OPERATIONS LLC, DEBTOR

    


    


    


    Dated:
September 11, 2007

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    TABLE OF
CONTENTS

    
       

      
        	
                 
      

              	

                ARTICLE
      1 DEFINITIONS AND RULES OF CONSTRUCTION

              	
                1

              


      

      
        	
                 
      

              	
                1.1

              	
                “Administrative
      Claim” 

              	
                1

              


      

      
        	
                 
      

              	
                1.2

              	
                “Administrative
      Claims Bar Date” 

              	
                1

              


      

      
        	
                 
      

              	
                1.3

              	
                “Administrative
      Expense” 

              	
                1

              


      

      
        	
                 
      

              	
                1.4

              	
                “Affiliate” 

              	
                2

              


      

      
        	
                 
      

              	
                1.5

              	
                “Allowed” 

              	
                2

              


      

      
        	
                 
      

              	
                1.6

              	
                “Allowed
      Amount” 

              	
                3

              


      

      
        	
                 
      

              	
                1.7

              	
                “Asset
      Purchase Agreement”. 

              	
                3

              


      

      
        	
                 
      

              	
                1.8

              	
                “Ballot” 

              	
                3

              


      

      
        	
                 
      

              	
                1.9

              	
                “Bankruptcy
      Code” 

              	
                3

              


      

      
        	
                 
      

              	
                1.10

              	
                “Bankruptcy
      Court” 

              	
                4

              


      

      
        	
                 
      

              	
                1.11

              	
                “Bankruptcy
      Rules” 

              	
                4

              


      

      
        	
                 
      

              	
                1.12

              	
                “Bar
      Date” 

              	
                4

              


      

      
        	
                 
      

              	
                1.13

              	
                “Berg
      McAfee”. 

              	
                4

              


      

      
        	
                 
      

              	
                1.14

              	
                “Business
      Day” 

              	
                4

              


      

      
        	
                 
      

              	
                1.15

              	
                “Cash” 

              	
                4

              


      

      
        	
                 
      

              	
                1.16

              	
                “Chapter
      11 Costs” 

              	
                4

              


      

      
        	
                 
      

              	
                1.17

              	
                “Claim” 

              	
                4

              


      

      
        	
                 
      

              	
                1.18

              	
                “Class” 

              	
                4

              


      

      
        	
                 
      

              	
                1.19

              	
                “Collateral
      Agreements”. 

              	
                4

              


      

      
        	
                 
      

              	
                1.20

              	
                “Common
      Stock” 

              	
                5

              


      

      
        	
                 
      

              	
                1.21

              	
                “Confirmation”
      or “Confirmation of the Plan” 

              	
                5

              


      

      
        	
                 
      

              	
                1.22

              	
                “Confirmation
      Date” 

              	
                5

              


      

      
        	
                 
      

              	
                1.23

              	
                “Confirmation
      Hearing” 

              	
                5

              


      

      
        	
                 
      

              	
                1.24

              	
                “Confirmation
      Order” 

              	
                5

              


      

      
        	
                 
      

              	
                1.25

              	
                “Convenience
      Claim” 

              	
                5

              


      

      
        	
                 
      

              	
                1.26

              	
                “Convertible
      Preferred Stock”. 

              	
                5

              


      

      
        	
                 
      

              	
                1.27

              	
                “Corporate
      Documents” 

              	
                5

              


      

      
        	
                 
      

              	
                1.28

              	
                “Creditors
      Committee” 

              	
                5

              


      

      
        	
                 
      

              	
                1.29

              	
                “Debtors”
      or “Debtors-in-Possession” 

              	
                6

              


      

      
        	
                 
      

              	
                1.30

              	
                “DIP
      Loan” 

              	
                6

              


      

      
        	
                 
      

              	
                1.31

              	
                “Directors”. 

              	
                6

              


      

      
        	
                 
      

              	
                1.32

              	
                “Disallowed” 

              	
                6

              


      

      
        	
                 
      

              	
                1.33

              	
                “Disbursing
      Agent” 

              	
                6

              


      

      
        	
                 
      

              	
                1.34

              	
                “Discharge
      Injunction” 

              	
                6

              


      

      
        	
                 
      

              	
                1.35

              	
                “Disclosure
      Statement” 

              	
                6

              


      

      
        	
                 
      

              	
                1.36

              	
                “Disputed
      Claim” 

              	
                6

              


      

      
        	
                 
      

              	
                1.37

              	
                “Disputed
      Claims Reserve” 

              	
                7

              


      

      
        	
                 
      

              	
                1.38

              	
                “Distribution
      Date” 

              	
                7

              


      

      
        	
                 
      

              	
                1.39

              	
                “Effective
      Date” 

              	
                8

              


      

      
        	
                 
      

              	
                1.40

              	
                “Entity” 

              	
                8

              


      

      
        	
                 
      

              	
                1.41

              	
                “Estates” 

              	
                8

              


      

      
        	
                 
      

              	
                1.42

              	
                “Existing
      Equity Interests” 

              	
                8

              


      

      
        


        
          
            
               


            

            
              i

              
                

              

            

            
               


            

          

        

      

      
        	
                 
      

              	
                1.43

              	
                “Final
      Order” 

              	
                8

              


      

      
        	
                 
      

              	
                1.44

              	
                “Hallwood
      Litigation”. 

              	
                9

              


      

      
        	
                 
      

              	
                1.45

              	
                “Injunction” 

              	
                9

              


      

      
        	
                 
      

              	
                1.46

              	
                “Intercompany
      Claims” 

              	
                9

              


      

      
        	
                 
      

              	
                1.47

              	
                “Interest” 

              	
                9

              


      

      
        	
                 
      

              	
                1.48

              	
                “Investor”. 

              	
                9

              


      

      
        	
                 
      

              	
                1.49

              	
                “Laurus” 

              	
                9

              


      

      
        	
                 
      

              	
                1.50

              	
                “Laurus
      Collateral” 

              	
                9

              


      

      
        	
                 
      

              	
                1.51

              	
                “Laurus
      Lien” 

              	
                9

              


      

      
        	
                 
      

              	
                1.52

              	
                “Laurus
      Retained Claim”. 

              	
                10

              


      

      
        	
                 
      

              	
                1.53

              	
                “Laurus
      Retained Claim Documents”. 

              	
                10

              


      

      
        	
                 
      

              	
                1.54

              	
                “Laurus
      Secured Debt” 

              	
                10

              


      

      
        	
                 
      

              	
                1.55

              	
                “Lien” 

              	
                10

              


      

      
        	
                 
      

              	
                1.56

              	
                “Net
      Proceeds” 

              	
                10

              


      

      
        	
                 
      

              	
                1.57

              	
                “Person” 

              	
                10

              


      

      
        	
                 
      

              	
                1.58

              	
                “Petition
      Date” 

              	
                10

              


      

      
        	
                 
      

              	
                1.59

              	
                “Plan” 

              	
                11

              


      

      
        	
                 
      

              	
                1.60

              	
                “Plan
      Documents” 

              	
                11

              


      

      
        	
                 
      

              	
                1.61

              	
                “Priority
      Claim” 

              	
                11

              


      

      
        	
                 
      

              	
                1.62

              	
                “Priority
      Tax Claim” 

              	
                11

              


      

      
        	
                 
      

              	
                1.63

              	
                “Private
      Placement Agreements” 

              	
                11

              


      

      
        	
                 
      

              	
                1.64

              	
                “Proof
      of Claim” 

              	
                11

              


      

      
        	
                 
      

              	
                1.65

              	
                “Pro
      Rata” 

              	
                11

              


      

      
        	
                 
      

              	
                1.66

              	
                “Quicksilver
      Litigation” 

              	
                12

              


      

      
        	
                 
      

              	
                1.67

              	
                “Rejected
      Executory Contracts” 

              	
                12

              


      

      
        	
                 
      

              	
                1.68

              	
                “Reorganization
      Cases” 

              	
                12

              


      

      
        	
                 
      

              	
                1.69

              	
                “Reorganized
      Debtor” or “Reorganized Blast” or “Reorganized
Eagle” 

              	
                12

              


      

      
        	
                 
      

              	
                1.70

              	
                “Rigs” 

              	
                12

              


      

      
        	
                 
      

              	
                1.71

              	
                “Sale
      Order” 

              	
                12

              


      

      
        	
                 
      

              	
                1.72

              	
                “Schedules” 

              	
                13

              


      

      
        	
                 
      

              	
                1.73

              	
                “Secured
      Claim” 

              	
                13

              


      

      
        	
                 
      

              	
                1.74

              	
                “Settlement
      Agreement” 

              	
                13

              


      

      
        	
                 
      

              	
                1.75

              	
                “Tax-Qualified
      Plan” 

              	
                13

              


      

      
        	
                 
      

              	
                1.76

              	
                “Timely
      Filed” 

              	
                13

              


      

      
        	
                 
      

              	
                1.77

              	
                “United
      States Trustee” 

              	
                14

              


      

      
        	
                 
      

              	
                1.78

              	
                “Unsecured
      Claim” 

              	
                14

              


      

       

      
        	
                 
      

              	

                ARTICLE
      2 TREATMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY TAX
    CLAIMS

              	14


      

      
        	
                 
      

              	
                2.1

              	
                Administrative
      Claims 

              	
                14

              


      

      
        	
                 
      

              	
                2.2

              	
                Priority
      Tax Claims 

              	
                14

              


      

      
        	
                 
      

              	
                2.3

              	
                Berg
      McAfee DIP 

              	
                15

              


      

       

      
        	
                 
      

              	

                ARTICLE
      3 CLASSIFICATION OF CLAIMS AND INTERESTS

              	
                15

              


      

      
        	
                 
      

              	
                3.1

              	
                Generally 

              	
                15

              


      

      
        	
                 
      

              	
                3.2

              	
                Unclassified
      Claims 

              	
                16

              


      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      
        	
                 
      

              	
                3.3

              	
                Classes 

              	
                16

              


      

       

      
        	
                 
      

              	
                ARTICLE
      4 TREATMENT OF CLAIMS AND INTERESTS

              


      

      
        	
                 
      

              	
                4.1

              	
                Unclassified
      Claims 

              	
                18

              


      

      
        	
                 
      

              	
                4.2

              	
                Classes
      of Claims and Interests. 

              	
                18

              


      

       

      
        	
                 
      

              	
                ARTICLE
      5 TREATMENT OF EXECUTORY CONTRACTS, AND UNEXPIRED
  LEASES

              


      

      
        	
                 
      

              	
                5.1

              	
                Assumption
      and Rejection of Unexpired Leases and Executory
      Contracts 

              	
                23

              


      

      
        	
                 
      

              	
                5.2

              	
                Continuation
      of Employee Compensation and Benefit Programs. 

              	
                23

              


      

      
        	
                 
      

              	
                5.3

              	
                Rejection
      Damages Claims 

              	
                23

              


      

      
        	
                 
      

              	
                5.4

              	
                Assumption
      Claims 

              	
                24

              


      

      
        	
                 
      

              	
                5.5

              	
                Employee
      Benefit and Welfare Programs 

              	
                24

              


      

       

      
        	
                 
      

              	
                ARTICLE
      6 ACCEPTANCE OR REJECTION OF THE
PLAN

              


      

      
        	
                 
      

              	
                6.1

              	
                Each
      Impaired Class Entitled to Vote Separately 

              	
                25

              


      

      
        	
                 
      

              	
                6.2

              	
                Acceptance
      By Impaired Classes of Claims 

              	
                25

              


      

      
        	
                 
      

              	
                6.3

              	
                Acceptance
      By Impaired Class of Interests 

              	
                25

              


      

      
        	
                 
      

              	
                6.4

              	
                Presumed
      Acceptance of Plan 

              	
                25

              


      

      
        	
                 
      

              	
                6.5

              	
                Cramdown 

              	
                26

              


      

       

      
        	
                 
      

              	
                ARTICLE
      7 CONDITIONS TO CONFIRMATION AND EFFECTIVENESS; REQUIRED
      NOTICES

              


      

      
        	
                 
      

              	
                7.1

              	
                Conditions
      to Confirmation 

              	
                26

              


      

      
        	
                 
      

              	
                7.2

              	
                Conditions
      to Effectiveness 

              	
                27

              


      

      
        	
                 
      

              	
                7.3

              	 Effect
      of Nonoccurrence of Conditions to Effective Date	
                28

              


      

      
        	
                 
      

              	
                7.4

              	
                Notice
      to Bankruptcy Court 

              	
                28

              


      

       

      
        	
                 
      

              	
                ARTICLE
      8 DESCRIPTION OF SECURITIES ISSUED UNDER
PLAN

              


      

      
        	
                 
      

              	
                8.1

              	
                Convertible
      Preferred Stock. 

              	
                29

              


      

      
        	
                 
      

              	
                8.2

              	
                Creditor
      Stock. 

              	
                30

              


      

      
        	
                 
      

              	
                8.3

              	
                Newly
      Authorized Blast Common Stock 

              	
                30

              


      

      
        	
                 
      

              	
                8.4

              	
                Eagle
      Junior Secured Note 

              	
                30

              


      

      
        	
                 
      

              	
                8.5

              	
                Blast
      Junior Secured Note 

              	
                32

              


      

      
        	
                 
      

              	
                8.6

              	
                Management
      Warrants 

              	
                33

              


      

       

      
        	
                 
      

              	
                ARTICLE
      9 MEANS FOR IMPLEMENTATION OF THE
PLAN

              


      

      
        	
                 
      

              	
                9.1

              	
                Substantive
      Consolidation 

              	
                34

              


      

      
        	
                 
      

              	
                9.2

              	
                Conversion
      of Blast 

              	
                34

              


      

      
        	
                 
      

              	
                9.3

              	
                Revesting
      of Assets 

              	
                34

              


      

      
        	
                 
      

              	
                9.4

              	
                Management
      Contracts 

              	
                35

              


      

      
        	
                 
      

              	
                9.5

              	
                Effectuating
      Documents 

              	
                35

              


      

      
        	
                 
      

              	
                9.6

              	
                Initial
      Directors of Reorganized Blast 

              	
                35

              


      

      
        	
                 
      

              	
                9.7

              	Management
      of Reorganized Blast and Reorganized Eagle	
                35

              


      

      
        	
                 
      

              	
                9.8

              	
                Authority
      to Prosecute or Settle Litigation 

              	
                36

              


      

      
        	
                 
      

              	
                9.9

              	
                Further
      Authorizations 

              	
                36

              


      

       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      
        	
                 
      

              	
                9.10

              	
                Transfer
      Taxes 

              	
                36

              


      

      
        	
                 
      

              	
                9.11

              	
                Payment
      of United States Trustee’s Fees 

              	
                37

              


      

      
        	
                 
      

              	
                9.12

              	
                Recordable
      Order 

              	
                37

              


      

      
        	
                 
      

              	
                9.13

              	
                Effectuating
      Documents and Further Transactions 

              	
                37

              


      

      
        	
                 
      

              	
                9.14

              	
                Limited
      Liability Company and Corporate Action 

              	
                37

              


      

      
        	
                 
      

              	
                9.15

              	
                Dissolution
      of Committees 

              	
                37

              


      

      
        	
                 
      

              	
                9.16

              	
                Survival
      of Indemnification Obligations 

              	
                38

              


      

      
        	
                 
      

              	
                9.17

              	
                Compromise
      and Settlement 

              	
                38

              


      

       

      
        	
                 
      

              	
                ARTICLE
      10 INJUNCTIONS, RELEASES AND
DISCHARGE

              


      

      
        	
                 
      

              	
                10.1

              	
                Discharge
      and Release 

              	
                39

              


      

      
        	
                 
      

              	
                10.2

              	
                Discharge
      Injunction 

              	
                39

              


      

      
        	
                 
      

              	
                10.3

              	Discharge
      of Disallowed Claims and Disallowed Interests	
                39

              


      

      
        	
                 
      

              	
                10.4

              	
                Releases
      of Officers and Directors. 

              	
                40

              


      

      
        	
                 
      

              	
                10.5

              	
                Exoneration 

              	
                40

              


      

       

      
        	
                 
      

              	
                ARTICLE
      11 MATTERS INCIDENT TO PLAN
CONFIRMATION

              


      

      
        	
                 
      

              	
                11.1

              	
                Term
      of Certain Injunctions and Automatic Stay. 

              	
                42

              


      

      
        	
                 
      

              	
                11.2

              	
                No
      Liability for Tax Claims 

              	
                42

              


      

      
        	
                 
      

              	
                11.3

              	
                Compliance
      with Tax Requirements 

              	
                43

              


      

       

      
        	
                 
      

              	
                ARTICLE
      12 PROVISIONS GOVERNING DISTRIBUTIONS AND RESOLUTION OF DISPUTED
      CLAIMS

              


      

      
        	
                 
      

              	
                12.1

              	
                Plan
      Distributions 

              	
                43

              


      

      
        	
                 
      

              	
                12.2

              	
                Interest
      on Claims 

              	
                43

              


      

      
        	
                 
      

              	
                12.3

              	
                Unclaimed
      Property 

              	
                43

              


      

      
        	
                 
      

              	
                12.4

              	
                Withholding
      of Taxes 

              	
                44

              


      

      
        	
                 
      

              	
                12.5

              	Disputed
      Claims and Determination of Disputed Claims	
                44

              


      

      
        	
                 
      

              	
                12.6

              	
                Objection
      Deadline 

              	
                44

              


      

      
        	
                 
      

              	
                12.7

              	
                Prosecution
      of Objections 

              	
                45

              


      

      
        	
                 
      

              	
                12.8

              	
                Distribution
      Reserve 

              	
                45

              


      

      
        	
                 
      

              	
                12.9

              	
                Distribution
      After Resolution of Disputed Claims 

              	
                46

              


      

       

      
        	
                 
      

              	
                ARTICLE
      13 RETENTION OF JURISDICTION

              


      

      
        	
                 
      

              	
                13.1

              	
                Jurisdiction 

              	
                46

              


      

      
        	
                 
      

              	
                13.2

              	
                General
      Retention 

              	
                46

              


      

      
        	
                 
      

              	
                13.3

              	
                Specific
      Purposes 

              	
                47

              


      

      
        	
                 
      

              	
                13.4

              	
                Failure
      of Bankruptcy Court to Exercise Jurisdiction 

              	
                49

              


      

       

      
        	
                 
      

              	
                ARTICLE
      14 MISCELLANEOUS

              


      

      
        	
                 
      

              	
                14.1

              	
                Revocation
      of Plan 

              	
                49

              


      

      
        	
                 
      

              	
                14.2

              	
                Modification
      of Plan 

              	
                50

              


      

      
        	
                 
      

              	
                14.3

              	
                Modification
      of Payment Terms 

              	
                50

              


      

      
        	
                 
      

              	
                14.4

              	
                Section
      1145 Exemption 

              	
                50

              


      

      
        	
                 
      

              	
                14.5

              	
                Entire
      Agreement 

              	
                51

              


      

      
        	
                 
      

              	
                14.6

              	
                Severability 

              	
                51

              


      

      
        	
                 
      

              	
                14.7

              	
                Rules
      of Construction 

              	
                51

              


      

       

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

      
        	
                 
      

              	
                14.8

              	
                Successors
      and Assigns 

              	
                51

              


      

      
        	
                 
      

              	
                14.9

              	
                Headings 

              	
                52

              


      

      
        	 	 14.10
      	
                Administrative
      Claims Bar Date

              	
                52

              


      

      
        	 	 14.11	
                Governing
      Law

              	
                52

              


      

      
        	 	 14.12
      	
                

                  Consent
      to Jurisdiction

                

              	
                52

              


      

      
        	 	 14.13	
                

                  Setoffs

                

              	
                52

              


      

      
        	 	 14.14	
                

                  Non-Debtor
      Waiver of Rights

                

              	
                53

              


      

      
        	 	 14.15	
                

                  Professional
      Fees

                

              	
                53

              


      

      
        	 	 14.16	
                

                  Filing
      of Additional Documents

                

              	
                53

              


      

      
        	 	 14.17	
                

                  Notices

                

              	
                54

              


      

       

    

    Annex
1                      Eagle
Junior Secured Note

    Annex
2                      Blast
Junior Secured Note

    


    
      
        
           


        

        
          v

          
            

          

        

        
           


        

      

    

    


    DEBTORS’ FIRST AMENDED JOINT
PLAN OF REORGANIZATION

     

    This
First Amended Joint Plan of Reorganization is proposed by Blast Energy Services,
Inc., Debtor (“Blast”) and Eagle Domestic Drilling Operations LLC, Debtor
(“Eagle”) for reorganization of their financial affairs pursuant to chapter 11
of the Bankruptcy Code.  The Plan is facilitated by, and submitted in
connection with, the compromise and settlement of several of the Claims that
were being asserted against Blast and Eagle as well as a $3,000,000 private
placement of preferred equity described below. The satisfaction of these Claims
will be accomplished by the integration of the terms of the Settlement Agreement
and the Sale Order in this Plan, sale of certain of Eagle’s assets and the
compromise and settlement of certain Claims and Interests as more fully
described below. ALL HOLDERS OF
CLAIMS AND INTERESTS ARE URGED TO READ WITH CARE THIS PLAN, INCLUDING, IN
PARTICULAR, THE CONDITIONS PRECEDENT TO THE CONFIRMATION OF THE PLAN (set forth
in Article 3 below), AND, WHEN APPROVED, THE DEBTORS’ JOINT DISCLOSURE STATEMENT
IN EVALUATING HOW THIS PLAN WILL AFFECT THEIR CLAIMS OR
INTERESTS.

     

     

    I.

     

    DEFINITIONS
AND RULES OF CONSTRUCTION

     

    Unless
the context requires otherwise, the following terms shall have the following
meanings when used with the initial letter capitalized.  Such meanings
shall be equally applicable to both the singular and plural forms of such
terms.  Any term used in capitalized form that is not defined herein
but that is defined in the Bankruptcy Code or the Bankruptcy Rules shall have
the meaning ascribed to such term by the Bankruptcy Code or the Bankruptcy Rules
(with the Bankruptcy Code controlling in the case of a conflict or
ambiguity).  The rules of construction set forth in section 102 of the
Bankruptcy Code shall apply in construction of the Plan
Documents.  All references to the “Plan” herein shall be construed,
where applicable, to include references to this Plan and all of its exhibits,
appendices, schedules, and annexes (and any amendments hereto and thereto made
in accordance with the Bankruptcy Code).

     

    A. “Administrative
Claim”

     means
any claim for the payment of an Administrative Expense.

    B. “Administrative
Claims Bar Date”

     means
that date established pursuant to Article 14.10 of the Plan, as may be
extended from time to time by order of the Bankruptcy Court, as the deadline for
filing Administrative Claims.

    
      
        
        

      

      
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    C. “Administrative
Expense”

     means
(a) any cost or expense of administration as defined by section 503(b) of the
Bankruptcy Code (b) any fee or charge assessed against an Estate under 28 U.S.C.
§ 1930, and (c) any Claim allowed pursuant to 11 U.S.C. § 503.

    D. “Affiliate”

     shall
have the meaning in section 101(2) of the Bankruptcy Code.

    E.  “Allowed”

     means
when used in respect of a Claim, Interest or Administrative Expense, or a group
thereof, (a) such amount of the Claim, Interest or Administrative Expense
or group thereof which is (i) determined and allowed by a Final Order
pursuant to 11 U.S.C. §§ 502 or 503, as applicable, (ii) allowed under the
Plan, or (iii) allowed under a stipulation or settlement with the
Reorganized Debtor entered into after the Effective Date; and (b) if not
“Allowed” in accordance with subsection (a) above, a Claim, Interest or
Administrative Expense that has not been Disallowed and is not subject to a
pending objection, also will be deemed “Allowed” as follows:

    if no
proof of Claim or Interest has been Timely Filed, (A) a Claim also is deemed
“Allowed” in the amount and of the type of the Claim or group of Claims which
have been scheduled by the Debtor in its Schedules as liquidated in amount and
not disputed or contingent and (B) an Interest also is deemed “Allowed” in the
number and of the type of the Interests which have been listed by the Debtor in
its List of Equity Security Holders; or

    if a
proof of Claim or Interest is Timely Filed, (A) a Claim also is deemed “Allowed”
in the amount and of the type of the Claim or group of Claims reflected in the
proof(s) of Claim and (B) an Interest also is deemed “Allowed” in the number and
of the type of the Interest or group of Interests reflected in the proof(s) of
Interest, provided
however, (C) until, but only until, the Objection Deadline, (x) a Claim
will be deemed a Disputed Claim, and not be deemed “Allowed” under this
subsection, unless there exists a corresponding Claim of the same type listed in
the Debtor’s Schedules (and only up to the amount listed in the Debtor’s
Schedules), which is not listed as disputed, contingent, or unliquidated, and
(y) an Interest will be deemed a Disputed Claim, and not be deemed “Allowed”
under this subsection, unless there exists a corresponding Interest of the same
type listed in the  Debtor’s List of Equity Security Holders (and only
up to the number listed); and

    
      
        
        

      

      
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    an
Administrative Expense shall be deemed “Allowed” if (A) either incurred in the
ordinary course of business or a request for payment of the Administrative
Expense is Timely Filed, and (B) the Reorganized Debtor elects to pay it, provided that (C) the
Reorganized Debtor does not object to it by the Objection Deadline.

    F. “Allowed
Amount”

     means
the amount at which a Claim is Allowed.

    G. “Asset
Purchase Agreement” means that certain agreement dated
May 14, 2007, whereby, among other things, Eagle agreed to convey all of its
right, title and interest in the Rigs to Laurus or its assignee, which
conveyance resulted in the partial satisfaction of the Laurus Secured
Debt.

    H.  “Ballot”

     means
the ballot distributed to holders of Claims or Interests entitled to vote on the
Plan.

    I. “Bankruptcy
Code”

     means
title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., as in effect on the
Petition Date, together with all amendments and modifications thereto as
subsequently made applicable to the Reorganization Cases.

    
      
        
        

      

      
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    J. “Bankruptcy
Court”

     means
the United States Bankruptcy Court for the Southern District of Texas, Houston
Division or such other court as may have jurisdiction over the Reorganization
Cases.

    K. “Bankruptcy
Rules”

     means
the Federal Rules of Bankruptcy Procedure and the local rules of the Bankruptcy
Court, as in effect on the Petition Date, together with all amendments and
modifications thereto which were subsequently made applicable to the
Reorganization Cases.

    L. “Bar
Date”

     means
June 19, 2007.

    M. “Berg
McAfee” means the Berg McAfee
Companies LLC, its designee and/or any third party investor participating with
the Berg McAfee in this Plan.

     

    N. “Business
Day”

     means
any day other than a Saturday, Sunday or legal holiday (as such term is defined
in Bankruptcy Rule 9006(a)).

    O. “Cash”

    means
lawful currency of the United States of America and its
equivalents.

    P. “Chapter
11 Costs”

     means
the Allowed Claims of all professionals employed in the Reorganization Cases and
the Debtors’ cases under chapter 11 of the Bankruptcy Code pursuant to sections
327, 328 or 1103 of the Bankruptcy Code relating to services incurred after the
Petition Date and prior to and including the Effective Date.

    Q. “Claim”

     shall
have the meaning ascribed to such term in section 101(5) of the Bankruptcy
Code.

    R. “Class”

     means
a category of Claims or Interests, as classified in Article 3 of the
Plan.

    S. “Collateral
Agreements” means all
documents required for the granting and perfection of the security interests
relating to the Eagle Junior Secured Notes and the Blast Junior Secured Notes, which
will include a collateral agent agreement, among other
things.

    
      
        
        

      

      
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    T. “Common Stock” means the shares of authorized
common stock of Blast par value of $0.001

     

    U. “Confirmation”
or “Confirmation of the Plan”

     means
the approval of this Plan by the Bankruptcy Court at the Confirmation
Hearing.

    V. “Confirmation
Date”

     means
the date on which the Confirmation Order is entered on the docket of the
Bankruptcy Court.

    W. “Confirmation
Hearing”

     means
the hearing(s) which will be held before the Bankruptcy Court in which the
Debtors will seek Confirmation of this Plan.

    X. “Confirmation
Order”

     means
the order of the Bankruptcy Court confirming the Plan.

    Y. “Convenience
Claim”

     means
any Allowed Unsecured Claim otherwise entitled to treatment under Class 5
or Class 6 of the Plan, which is $10,000 or less when aggregated with all other
Unsecured Claims of such holder, or, in the alternative, is reduced by election
of such holder on such holder’s Ballot, together with all other Unsecured Claims
of such holder, to an aggregate Unsecured Claim of $10,000. No Convenience Claim
shall exceed $10,000.

    Z. “Convertible Preferred
Stock” means the preferred
stock to be issued to the Investor pursuant to the terms of the Private
Placement Agreements and this Plan.

     

    AA.  “Corporate
Documents”

     means
the constituent organizational documents of any Debtor or a Reorganized Debtor,
including, but not limited to, certificates of incorporation, bylaws, or limited
liability company agreements.

    BB. “Creditors
Committee”

     means
the Official Committee of Unsecured Creditors appointed by the United States
Trustee in the Reorganization Cases.

    
      
        
        

      

      
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    CC. “Debtors”
or “Debtors-in-Possession”

     means
Blast Energy Services, Inc. and Eagle Domestic Drilling Operations LLC or either
of them.

    DD. “DIP
Loan”means the secured loan made by Berg
McAfee to the Debtors pursuant to section 364(d)(1) of the Bankruptcy
Code.

    EE. “Directors” means, and includes, each person
who was a member of the Blast board of directors on the Petition
Date.

    FF.  “Disallowed”

     means,
with respect to a Claim, Interest, Administrative Expense, or portion thereof,
that it is determined by a Final Order that the Claim, Interest, Administrative
Expense or portion thereof is not allowed under 11 U.S.C. §§ 502 or
503.

    GG. “Disbursing
Agent”

     means
Reorganized Blast or, as the case may be, any Person designated by the Debtors
or Reorganized Blast to make distributions required under the Plan.

    HH. “Discharge
Injunction”

     means
the injunction described in Article 10.2 of the Plan.

    II. “Disclosure
Statement”

     means
the Disclosure Statement with Respect to this Plan including all exhibits,
appendices, schedules, and annexes attached thereto, as submitted by the Debtors
pursuant to section 1125 of the Bankruptcy Code and approved by the Bankruptcy
Court, as such Disclosure Statement may be amended, supplemented, or modified
from time to time.

    JJ. “Disputed
Claim”

     means
(a) a Claim, Interest or Administrative Expense that is subject to a pending
objection; or (b) until the Objection Deadline,

    a Claim
for which a corresponding Claim has not been listed in the Debtor’s Schedules or
for which the corresponding Claim is listed in the Debtor’s Schedules with a
differing amount (to the extent of such difference), with a differing
classification, or as disputed, contingent, or unliquidated,

    
      
        
        

      

      
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    a Claim
which a Debtor in good faith believes is held by a holder either (A) from which
property is recoverable by the applicable Debtor under any of Bankruptcy Code §§
542, 543, 550 or 553 or (B) that is a transferee of a transfer avoidable under
Bankruptcy Code §§ 522(f), 522(h), 544, 545, 547, 548, 549 or 724(a) unless the
holder has paid the amount, or turned over any such property for which such
holder is liable under the terms of Bankruptcy Code §§ 522(i), 542, 543, 550, or
553; and

    an
Interest for which a corresponding Interest has not been listed in the Debtor’s
List of Equity Security Holders or has been listed in a different number (to the
extent of such difference).

    KK. “Disputed
Claims Reserve”

     shall
mean one or more interest bearing accounts to be established and held in trust
by the Disbursing Agent for the purpose of holding Cash that would otherwise
have been distributed with respect to Disputed Claims if such Claims were
Allowed.

    LL. “Distribution
Date”

     means,
when used with respect to an Allowed Claim, the date which is as soon as
reasonably practicable after the latest of:  (a) the Effective Date,
(b) the date on which such Claim is due and owing in accordance with its terms
or as provided for in any Plan Document, or (c) the first Business Day of the
next calendar quarter after the date upon which the Claim becomes Allowed,
unless the Claim becomes Allowed within fifteen (15) Business Days before the
first Business Day of the next calendar quarter, in which case the Distribution
Date shall be the first Business Day of the next succeeding calendar quarter;
provided, however, that
the Disbursing Agent shall have the
authority, in its sole discretion, to make earlier distributions if deemed
appropriate by it.

    
      
        
        

      

      
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    MM. “Effective
Date”

     means,
and shall occur on, the first Business Day immediately following the first day
upon which all of the conditions to occurrence of the Effective Date contained
in Article 7.2 of the Plan have been satisfied or waived.

    NN. “Entity”

     means
any corporation, general or limited liability partnership, limited liability
company, joint venture, association, governmental agency or body, or
unincorporated group or body.

    OO.  “Estates”

     means
the estates created for the Debtors by section 541 of the Bankruptcy Code upon
the commencement of the Reorganization Cases.

    PP. “Existing
Equity Interests”

     means
the issued and outstanding capital stock of Blast, and any warrants or options
to purchase such capital stock or conversion rights with respect thereto, or the
limited liability member interests in Eagle as of the Effective
Date.

    QQ.  “Final
Order”

     means
(1) an order of the Bankruptcy Court as to which the time to appeal, petition
for writ of certiorari, or move for reargument or rehearing has expired and as
to which no appeal, petition for writ of certiorari, or other proceedings for
reargument or rehearing shall then be pending or, (2) in the event that an
appeal, writ of certiorari, reargument, or rehearing thereof has been sought,
such order of the Bankruptcy Court shall have been affirmed by the highest court
to which such order was appealed, or such writ of certiorari shall have been
denied and the time to take any further appeal, to petition for writ of
certiorari or to move for reargument or rehearing shall have expired; provided, however, that no
order shall fail to be a Final Order solely because of the possibility that a
motion pursuant to Rule 60 of the Federal Rules of Civil Procedure may be filed
with respect to such order.

    
      
        
        

      

      
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    RR. “Hallwood
Litigation” means the court proceedings ongoing
between Hallwood Energy and Hallwood Petroleum against Eagle Domestic Drilling
Operations LLC pertaining to an early termination and resulting breach of two
IADC standard form drilling contracts, and any counterclaims asserted or to be
asserted by Eagle.

    SS. “Injunction”

     means
any of the injunctions granted under the terms of Article 10 of the Plan and any
injunction contained in the Confirmation Order.

    TT. “Intercompany
Claims”

     means
Claims by and between Blast and Eagle.

    UU. “Interest”

     means
any equity interest in the Debtors within the meaning of section 101(16) of the
Bankruptcy Code.

    VV. “Investor” means the Persons or Entities that
subscribe to the Private Placement Agreements, purchases the Convertible
Preferred Stock and provides the exit funding contemplated by the Private
Placement Agreements.

    WW. “Laurus” means Laurus Master Fund,
Ltd.

    XX. “Laurus
Collateral” means those assets
of the Debtors that are described and defined as collateral for Laurus in (i)
the pre-petition debt and security agreements, including the Master Security
Agreement, dated as of August 25, 2006, by and between the Debtors and Laurus
and (ii) the Settlement Agreement and the Sale Order, and which collateral
includes, without limitation, the Hallwood Litigation and the Quicksilver
Litigation and any recoveries or proceeds thereof.

    YY. “Laurus
Lien” means the Lien on the
Laurus Collateral that is retained by Laurus pursuant to the terms of the
Settlement Agreement and Sale Order and which will remain as a first priority
fully perfected Lien on such assets of the Reorganized Debtors after the
Effective Date as security for the payment in full of the Laurus Retained Claim,
subject to the limitations and carve-outs set forth in the Sale
Order.

    
      
        
        

      

      
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    ZZ. “Laurus
Retained Claim” has the
meaning ascribed to such term in Section 4.2(ii) of the
Plan.

    AAA. “Laurus
Retained Claim Documents” means such collateral and perfection
documents as required by Laurus to further document, perfect, confirm, continue,
enforce or protect the Laurus Lien. 

    BBB. “Laurus
Secured Debt” means the debt
obligation owed by the Debtors to Laurus pursuant to loan documents executed by
the Debtors on or about August 25, 2006 and which was Allowed as a first
priority secured claim against the Debtors in its full amount by order of the
Court entered on March 2, 2007.

    CCC. “Lien”

     means,
with respect to any asset or property, any mortgage, lien, pledge, charge,
security interest, encumbrance or other security device of any kind pertaining
to or affecting such asset or property.

    DDD. “Net
Proceeds” means, with respect
to the Hallwood Litigation and the Quicksilver Litigation, any amounts received
by Eagle or Reorganized Eagle from any judgment or settlement after deduction of
such fees and expenses of the Debtors’ special litigation counsel as approved by
the Bankruptcy Court.

    EEE. “Person”

     means
any person, individual, Entity, or other entity or being of whatever kind,
whether or not operating or existing for profit, including, but not limited to,
any “person” as such term is defined in section 101(41) of the Bankruptcy Code,
but excluding any Governmental Unit as defined therein.

    FFF. “Petition
Date”

     means
January 19, 2007.

    
      
        
        

      

      
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    GGG. “Plan”

     means
this First Amended Joint Plan of Reorganization for the Debtors, and any
amendments thereto made in accordance with the Bankruptcy Code.

    HHH. “Plan
Documents”

     means
the Plan, the Disclosure Statement, the Settlement Agreement, the Sale Order,
the Management Warrants, the Private Placement Agreements, the Convertible
Preferred Stock, the Laurus Retained Claim Documents, the Eagle Junior Secured
Notes, the Blast Junior Secured Notes, the Collateral Agreements and all
documents, attachments and exhibits thereto, and any other documents that aid in
effectuating the Plan, including, but not limited to, the Asset Purchase
Agreement and the Bill of Sale executed by Eagle in connection therewith, and as
required by the Settlement Agreement.

    III. “Priority
Claim”

     means
any Claim (other than an Administrative Expense Claim or a Priority Tax Claim)
to the extent such Claim is entitled to a priority in payment under section
507(a) of the Bankruptcy Code.

    JJJ. “Priority
Tax Claim”

     means
any Claim to the extent that such Claim is entitled to a priority in payment as
provided for in section 507(a)(8) of the Bankruptcy Code.

    KKK. “Private Placement
Agreements” means the documents that establish
the terms and conditions for the issuance of the Convertible Preferred Stock to
the Investor, including a subscription agreement, a warrant agreement and a
registration rights agreement.

    LLL. “Proof
of Claim”

     means
any proof of claim filed with the Bankruptcy Court with respect to a Debtor
pursuant to Bankruptcy Rules 3001 or 3002.

    MMM. “Pro
Rata”

     means
with respect to Claims, the proportion that the amount of an Allowed Claim in a
particular Class bears to the aggregate amount of all Claims in such class,
exclusive of Disallowed Claims, but including Disputed Claims.

    
      
        
        

      

      
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    NNN. “Quicksilver
Litigation” means the court
proceedings ongoing between Quicksilver Resources, Inc. against Eagle Domestic
Drilling Operations LLC pertaining to an early termination and resulting breach
of three IADC standard form drilling contracts and any counterclaims asserted
and to be asserted by Eagle.

    OOO. “Rejected
Executory Contracts”

     means
(a) any and all executory contracts and unexpired leases which are listed on the
“Schedule of Rejected
Executory Contracts” that will be attached to the Disclosure Statement as
a supplement prior to the Confirmation Hearing, all of which contracts and
leases shall be rejected on the Effective Date, (b) any and all such contracts
and leases rejected by order of the Bankruptcy Court prior to the Effective
Date, and  (c) any and all such contracts and leases which are the
subject of any motion to reject pending on the Confirmation Date that is
ultimately granted by Final Order.

    PPP. “Reorganization
Cases”

     means
the cases of the Debtors under chapter 11 of the Bankruptcy Code.

    QQQ. “Reorganized
Debtor” or “Reorganized Blast” or “Reorganized Eagle” means, on and after the Effective
Date, Blast Energy Services, Inc. or Eagle Domestic Drilling Operations LLC, as
is appropriate in the context.

    RRR.  “Rigs”

     means
the five land based oil and gas drilling rigs and associated equipment owned by
Eagle on the Petition Date and conveyed to Laurus pursuant to the Asset Purchase
Agreement and the Bill of Sale, the sale and conveyance of which enabled the
settlement of the Laurus Secured Debt and the promulgation and confirmation of
this Plan.

    SSS. “Sale
Order” means the “Order
Under 11 U.S.C. Sections 105(A) And 363 and Fed. R. Bankr. P. 2002 And 6004
Authorizing and Approving (I) Asset Purchase Agreement; (II) Asset Sale Free And
Clear Of Liens, Claims, Interests And Encumbrances; and (III) Certain Related
Relief” entered by the Court
on May_11, 2007 authorizing the Asset Purchase Agreement.

    
      
        
        

      

      
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    TTT. “Schedules”

     means
the schedules, statements and lists filed by the Debtors with the Bankruptcy
Court pursuant to Bankruptcy Rule 1007, as they have been and may be amended or
supplemented from time to time.

    UUU. “Secured
Claim”

     means
any Claim that is (a) secured in whole or part, as of the Petition Date, by a
Lien which is valid, perfected and enforceable under applicable law and is not
subject to avoidance under the Bankruptcy Code or applicable non-bankruptcy law,
or (b) subject to setoff under section 553 of the Bankruptcy Code, but, with
respect to both (a) and (b) above, only to the extent of the value, net of any
senior Lien, of the Estates’ interests in the assets or property securing any
such Claim or the amount subject to setoff, as the case may be.

    VVV. “Settlement
Agreement” means the agreement
among the numerous signatory parties, including the Debtors, Laurus and the
Class 10 Interest holder, approved by order of the Bankruptcy Court dated May
11, 2007, whereby, in connection with the Plan and in order to facilitate the
confirmation of the Plan, Eagle and Blast settled and compromised substantial
Claims and Interests, which settlement was, in part, facilitated by the transfer
of title to the Rigs and in conjunction with the treatment and payment of the
Class 2 Secured Claims and the purchase of the Class 11 Interests as provided
for in this Plan.

    WWW.  “Tax-Qualified
Plan”

     means
a tax-qualified plan under ERISA, including the Blast Energy Services, Inc.
401(k) Plan.

    XXX. “Timely
Filed”

     with
respect to a Claim, Interest or Administrative Expense, means, that a proof of
such Claim or Interest or request for payment of such Administrative Expense was
filed with the Bankruptcy Court within such applicable period of time fixed by
the Plan, statute, or pursuant to both Bankruptcy Rule 3003(c)(3) and a Final
Order (e.g., the Bar Date).

    
      
        
        

      

      
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    YYY. “United
States Trustee”

     means
the United States Trustee for the Southern District of Texas.

    ZZZ. “Unsecured
Claim”

     means
any Claim (regardless of whether such Claim is covered by insurance) that is
neither secured nor entitled to priority under the Bankruptcy Code or by a Final
Order of the Bankruptcy Court, including, but not limited to:  (a) any
claim arising from the rejection of an executory contract or unexpired lease
under section 365 of the Bankruptcy Code, and (b) any portion of a Claim to the
extent the value of the holder’s interest in the applicable Estate’s interest in
the property securing such Claim is less than the amount of the Claim, or to the
extent that the amount of the Claim subject to setoff is less than the amount of
the Claim, as determined pursuant to section 506(a) of the Bankruptcy
Code.

    II.

     

    TREATMENT
OF ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS

     

    A. Administrative
Claims.

    Each
holder of an Allowed Administrative Claim (except any holder that
agrees in writing prior to the Confirmation Date to different treatment)
shall receive the unpaid Allowed Amount of its Administrative Claim, in Cash, in
full satisfaction, settlement, release, extinguishment, and discharge of such
Claim, on the Effective Date or as provided in a Final Order; provided, however, that
Allowed Administrative Claims representing post-petition liabilities incurred in
the ordinary course of business by any of the Debtors shall be paid by
Reorganized Blast in accordance with the terms and conditions of the agreements
establishing or giving rise to such liabilities.

    B. Priority
Tax Claims.

    Each
Allowed Priority Tax Claim, if any, shall be paid (i) in equal annual
installments of principal and interest by deferred Cash payments commencing on
the tenth (10th) Business Day after January 1, 2008, and the date such Priority
Tax Claim is Allowed, or as soon thereafter as is practicable, final payment
being made on January 19, 2012, with simple interest from the Effective Date at
the rate in effect under 26 U.S.C. § 6621(b)(3) on the Confirmation Date; provided that any such Claim
may be prepaid without penalty or premium at any time in whole or from time to
time in part at the option of the Debtors or the Reorganized Debtor, as the case
may be, with simple interest from the later of the Effective Date or the date on
which the Claim is allowed at the rate in effect under 26 U.S.C. § 6621(b)(3) on
the Confirmation Date or (ii) as the holder of such Allowed Priority Tax Claim
and the Debtors or the Reorganized Debtor, as the case may be, otherwise may
agree.

    
      
        
        

      

      
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    C. Berg
McAfee DIP.

    The Berg
McAfee DIP Loan Claim, which is a secured Administrative Claim, shall be deemed
fixed and allowed as of the Effective Date and on the Effective Date, shall be
paid in full by converting the outstanding balance of the Berg McAfee DIP Loan
into shares of Reorganized Blast Common Stock at the rate of $0.20 per
share.

    III.

     

    CLASSIFICATION
OF CLAIMS AND INTERESTS

     

    A. Generally.

    Claims
and Interests against the Debtors shall be treated in accordance with the
classification scheme set forth in this Article 3.  A Claim or
Interest is classified in a particular Class only to the extent that the Claim
or Interest qualifies within the description of the Class and shall be
classified in a different Class to the extent the Claim or Interest qualifies
within the description of that different Class. The payment and treatment of Claims
and Interests set forth in this Article 3, as well as the payment of
Administrative and Priority Claims described in Article 2, is subject to the
following preconditions each of which must be satisfied in order for a
Confirmation Order to be entered:

    
      
        
        

      

      
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    The
total amount of all Administrative Claims shall not exceed
$1,075,000

    The
total amount of all Priority Claims shall not exceed $ 190,000

    The
total amount of Claims to be included in Class 5 shall not exceed
$74,000

    The
total amount of Claims to be included in Class 6 shall not exceed
$33,000

    The
total amount of Claims to be included in Class 7 shall not exceed
$234,000

    The
total amount of Claims to be included in Class 8 shall not exceed
$917.000

    Prior to
the date of the Confirmation Hearing the Debtors will file and request hearings
on the allowance or estimation of disputed Claims in order to determine whether
the above stated preconditions to Confirmation can be satisfied. If, in the
Debtors’ determination the stated preconditions cannot be satisfied, the
Debtors, in their sole discretion, may withdraw this Plan.

    B. Unclassified
Claims.

    In
accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims
and Priority Tax Claims are not classified and are excluded from the following
Classes and shall be paid in accordance with the provisions set forth in Article
2 of the Plan.

    C. Classes.

    The
following constitute the Classes of Claims against and Interests in the
Debtors:

    Class 1 - Allowed Priority
Claims.  Class 1 consists of all Allowed Priority Claims
against the Debtors.

    Class 2 - Allowed Secured
Claim of Laurus.  Class 2 consists of all Allowed Secured
Claims of Laurus.

    
      
        
        

      

      
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    Class 3 - Allowed Secured
Claims of Berg McAfee.  Class 3 consists of all Allowed Claims
of Berg McAfee.

    Class 4 - Allowed Secured
Claims.  Class 4 consists of all Allowed Secured Claims not
treated in any other Class.

    Class 5 - Allowed Eagle
Convenience Claims. Class 5 consists of all Allowed Eagle
Convenience Claims

    Class 6 - Allowed Blast
Convenience Claims.  Class 6 consists of all Allowed
Convenience Claims with the exception of the Claims of Creditors in Class
12.

    Class 7- Allowed Eagle
Unsecured Claims.  Class 7 consists of all Allowed Eagle
Unsecured Claims.

    Class 8 – Allowed Blast
Unsecured Claim. Class 8 consists of all Allowed Blast Unsecured Claims
with the exception of the Claims of Creditors in Class 12.

    Class 9 - Interests in the
Debtor Blast.  Class 9 consists of all Interests, including all
Existing Equity Interests, in the Debtor Blast, excluding the stock owned by the
Class 11 Interest holder.

    Class 10
– Interests in the
Debtor Eagle.  Class 10 consists of all Interests in the Debtor
Eagle.

    Class 11 - Second Bridge,
LLC Interest.  Class 11 consists of the Interest owned and held
by Second Bridge, LLC evidenced by 900,000 shares of Blast common
stock.

    Class 12 – Directors’
Unsecured Claim. Class 12 consists of all Allowed Unsecured Claims held
by the Directors.

    IV.

     

    TREATMENT
OF CLAIMS AND INTERESTS

     

    Claims
and Interests shall be treated in the manner set forth in this Article
4.

    
      
        
        

      

      
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    A. Unclassified
Claims.

    Each
holder of an Allowed Administrative Claim or an Allowed Priority Tax Claim shall
receive the treatment set forth in Article 2 of the Plan.

    B. Classes
of Claims and Interests.

    Class 1 - Priority
Claims.  On the Distribution Date, each holder of an Allowed
Priority Claim against the Debtors shall receive either (a) the Allowed Amount
of its Priority Claim, in Cash or (b) such other, lesser treatment as may be
agreed to in writing between such holder and the Debtors or the Disbursing
Agent.  This Class is unimpaired.

    Class 2 - Secured Claim of
Laurus. The Allowed Secured Claim of Laurus against the Debtors shall be
fully satisfied by (a) transfer of the Rigs pursuant to the Settlement Agreement
and Asset Purchase Agreement and (b) payment of $2,100,000 (the “Laurus Retained
Claim”) pursuant to the terms of the Settlement Agreement and the Sale Order and
from the sources and in the manner provided for in the Settlement Agreement and
the Sale Order.  The Laurus Retained Claim shall remain joint and
several obligations of Reorganized Blast and Reorganized Eagle after the
Effective Date and shall be secured by the Laurus Lien on the Laurus
Collateral.

    Any
rights and claims of Laurus under the Asset Purchase Agreement, the Settlement
Agreement and the Sale Order shall not be extinguished, released, altered,
impaired or discharged under the Plan or the Confirmation Order. 
This Class is unimpaired.

    
      
        
        

      

      
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    Class 3 - Secured Claim of
Berg McAfee.  On the Effective Date, the Berg McAfee Secured
Claims will be fully satisfied by issuance of a new note to Berg McAfee that
contains the following provisions:

    (i) Principal
amount:  $1,120,000

    (ii) Term:
due date three years from the Effective Date;

    (iii) Interest
rate of 8.0% per annum;

    (iv) Interest
payable: at end of term in Reorganized Blast Common Stock at the rate of $0.20
per share.

    (v) Principal
payable: at end of term

    (vi) Right
to convert to registered shares of Reorganized Blast Common Stock at a
conversion price of $0.20 per share.

    This
Class is impaired.

    Class 4 - Secured
Claims.  For voting purposes and to comply with
section 1122(a) of the Bankruptcy Code, each Allowed Secured Claim shall be
deemed to be in its own subclass.  On the Distribution Date, at the
election of the Debtor, the holder of each Allowed Secured Claim shall, on
account of such Secured Claim, either (i) be paid in Cash in full, (ii) have
surrendered to it, without representation or warranty, the collateral securing
its Claim, or (iii) receive a note, secured by the Lien securing its Allowed
Secured Claim, in the principal amount of its Allowed Secured Claim which
provides for deferred Cash payments totaling the Allowed amount of such Secured
Claim, of a value, as of the Effective Date at least equal to the value of such
holder’s interest in the Estate’s interest in such property as determined by
Final Order of the Bankruptcy Court.  Any holder of an Allowed Secured
Claim may agree to accept less favorable treatment.  In the case of
option (ii), in the event that any such Claim is not completely satisfied
by such distribution, the deficiency amount will constitute a deficiency claim
and will be classified as a General Unsecured Claim in Class 7 or Class 8
and will receive the same treatment as provided to other Claims in Class 7
or Class 8 as the case may be.

    This
Class is impaired.

    
      
        
        

      

      
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    Class 5 – Eagle Convenience
Claims.  In full and final satisfaction of its Claim, each
holder of an Allowed Eagle Convenience Claim against Eagle shall receive Cash on
the Distribution Date equal to 75% of such Allowed Convenience Claim. Election
by the holder of an Allowed Unsecured Claim(s) otherwise treated under Class 7
of the Plan to reduce the Claim(s) of such holder to a total of no more than
$10,000 and to receive distribution as a Class 5 Eagle Convenience Claim shall
constitute a waiver of the right to recover any amount in excess of $10,000
against any Person who otherwise might be liable for such sum.  Notwithstanding the foregoing
proposal for payment of Allowed Eagle Convenience Claims, in the event that each
holder of a Class 5 Claim does not vote to accept the Plan all Allowed Eagle
Convenience Claims will be reclassified as Class 7 Eagle Unsecured Claims and
such Allowed Claims will be paid as a Class 7 Claim, and no separate Eagle
Convenience Claims payments will be made. The determination of whether a Claim
is a Class 5 Claim shall be made by the Debtors prior to the Confirmation Date
using the information in the Debtors’ Schedule of Liabilities and the Claims
Register in these cases.

    This
Class is impaired.

    Class 6 – Blast Convenience
Claims.  In full and final satisfaction of its Claim, each
holder of an Allowed Blast Convenience Claim against Blast shall receive Cash on
the Distribution Date equal to 75% of such Allowed Blast Convenience Claim.
Election by the holder of an Allowed Unsecured Claim(s) otherwise treated under
Class 8 of the Plan to reduce the Claim(s) of such holder to no more than
$10,000 and to receive distribution as a Class 6 Blast Convenience Claim shall
constitute a waiver of the right to recover any amount in excess of $10,000
against any Person who otherwise might be liable for such sum.  Notwithstanding the foregoing
proposal for payment of Allowed Blast Convenience Claims, in the event that each
holder of Class 6 Claims does not vote to accept the Plan all Allowed Blast
Convenience Claims will be reclassified as Class 8 Blast Unsecured Claims and
such Allowed Claims will be paid as a Class 8 Claim, and no separate Blast
Convenience Claims payments will be made. The determination of whether a Claim
is a Class 6 Claim shall be made by the Debtors prior to the Confirmation Date
using the information in the Debtors’ Schedule of Liabilities and the Claims
Register in these cases.

    This
Class is impaired.

    
      
        
        

      

      
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    Class 7 – Eagle Unsecured
Claims.  Except to the extent that a holder of an Allowed Class
7 Unsecured Claim has agreed to receive other lesser treatment, such holder
shall receive on the Distribution Date in full and final satisfaction of its
Claim the following :

    (vii)  Cash
equal to 35% of such holder’s Allowed Unsecured Claim;

    (viii)  An
Eagle Junior Secured Note equal to 65% of such holder’s Allowed Unsecured
Claim.

    (ix) Payments
on the Eagle Junior Secured Note will be made in accordance with the terms
outlined in Annex 1 to the Plan.

    At or
prior to the Confirmation Hearing, Blast will appoint a collateral agent to
administer the Lien securing the payment of the Eagle Junior Secured Note and
the rights of the Class 7 Creditors with respect thereto.

    This
Class is impaired.

    Class 8 – Blast Unsecured
Claims.  Except to the extent that a holder of an Allowed Class
8 Unsecured Claim has agreed to receive other lesser treatment, such holder
shall receive on the Distribution Date in full and final satisfaction of its
Claim the:

    (x) Cash
equal to 35% of such holder’s Allowed Unsecured Claim;

    (xi)  A
Blast Junior Secured Note equal to 65% of such holder’s Allowed Unsecured
Claim.

    (xii) Payments
on the Blast Junior Secured Note will be made in accordance with the terms
outlined in Annex 2 to the Plan.

    (xiii) At
or prior to the Confirmation Hearing Blast will appoint a collateral agent to
administer the Lien securing the payment of the Blast Junior Secured Note and
the rights of the Class 8 Creditors with respect thereto.

    This
Class is impaired.

    
      
        
        

      

      
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    Class 9 -
Interests.  All Interests, including all Existing Equity
Interests, in the Debtor Blast shall not be modified or impaired unless agreed
to in writing by the Debtor Blast and any such Interest holder, and except with
respect to the issuance of new shares of Blast common stock or new warrants as
provided for in this Plan.

    This
Class is not impaired.

    Class 10 -
Interests.  All Interests, including all Existing Equity
Interests, in the Debtor Eagle shall not be impaired.

    This
Class is not impaired.

    Class 11 - Second Bridge LLC
Interest.  In accordance with and as required by the terms of
the Settlement Agreement, 900,000 shares of Blast common stock owned and held by
Second Bridge, LLC will, on the Effective Date, be purchased by Reorganized
Blast for Nine Hundred Dollars ($ 900.00). Such repurchased shares shall be
returned to treasury.

    
      
        
        

      

      
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    Class 12 – Directors’
Unsecured Claims. In full and final satisfaction of a Director’s Allowed
Unsecured Claim each such holder’s Allowed Unsecured Directors’ Claim shall be
converted to Blast common stock at the rate of $ 0.20 per share. Any holder of
an Allowed Class 12 Directors’ Unsecured Claim shall receive his shares of Blast
common stock on or before thirty (30) days following the Distribution
Date.

    This
Class is impaired.

     

    V.

     

    TREATMENT
OF EXECUTORY CONTRACTS,

     

    AND
UNEXPIRED LEASES

     

    A. Assumption
and Rejection of Unexpired Leases and Executory Contracts.

    On and
effective as of the Effective Date, with the exception of those contracts and
leases set forth on schedule 5.1, all executory contracts and unexpired leases
listed on the Schedules filed by the Debtors (including any amendments,
revisions, or modifications thereto), excluding Rejected Executory Contracts,
will be assumed.  Executory contracts and leases entered into after
the Petition Date will be performed by Reorganized Blast in the ordinary course
of business.

    B. Continuation
of Employee Compensation and Benefit Programs.

    On the
Effective Date, Blast shall transfer sponsorship of the 2003 Blast Stock Option
Plan to Reorganized Blast.  All Tax-Qualified Plans of the Debtors
shall continue in full force and effect on the Effective Date as obligations of
Reorganized Blast, except as such plans may be modified, amended, or terminated
in accordance with their terms or applicable policies, procedures or
law.

    C. Rejection
Damages Claims.

    Any
Claims arising out of the rejection of an executory contract or unexpired lease
must be filed with the Bankruptcy Court no later than the earlier of (a) thirty
(30) days after the Effective Date, or (b) thirty (30) days after the date of
any Final Order approving a Debtor’s rejection of such contract or
lease.  Any Claim not so filed shall be forever barred and may not be
asserted against any of the Debtors, the Reorganized Debtor, or their properties
or their Estates.  Each Claim resulting from such rejection shall
constitute a either a Class 5 Claim, a Class 6 Claim, a Class 7 Claim or a Class
8 Claim, depending on the Allowed Claim amount and the Debtor that is the party
to the executory contract as the case may be.

    
      
        
        

      

      
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    D. Assumption
Claims.

    All cure
and compensation payments which may be required by section 365(b)(1) and (2) of
the Bankruptcy Code under any executory contracts and unexpired leases which are
assumed shall constitute Administrative Claims and shall be treated under
Article 2.1 of the Plan; provided, however, in the
event of a dispute regarding the amount of any such payments, the cure of any
other defaults, the ability of the Reorganized Debtor to provide adequate
assurance of future performance or any other matter pertaining to assumption,
the Reorganized Debtor shall make such payments and cure such other defaults and
provide adequate assurance of future performance only following the entry of a
Final Order resolving such dispute.  The Debtors may provide prior
notice in writing to a party to an executory contract or unexpired lease (with
copy to counsel to the Creditors Committee) to be assumed hereunder setting
forth the amount of any cure or compensation payments it intends to pay and any
adequate assurance of future performance it intends to provide.  If a
party to such executory contract or unexpired lease has not filed an appropriate
pleading with the Bankruptcy Court on or before the tenth (10th) day after
mailing of such notice disputing the terms for assumption set forth in the
Debtors’ notice and requesting a hearing thereon, then such party shall be
deemed to have accepted such terms for assumption and waived its right to
dispute such matters.

    E. Employee
Benefit and Welfare Programs.

    All
employee benefit and welfare programs of the Debtors, including programs subject
to Section 1114 of the Bankruptcy Code, entered into before or after the
Petition Date (and not subsequently terminated) are vested, and shall be deemed
to be, and shall be treated as though they are, executory contracts that are
assumed under this Article 5, and the Debtors’ obligations shall
continue.

    
      
        
        

      

      
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    VI.

     

    ACCEPTANCE
OR REJECTION OF THE PLAN

     

    A. Each
Impaired Class Entitled to Vote Separately.

    The
holders of Claims or Interests in one or more impaired Class of Claims or
Interests shall be entitled to vote separately to accept or reject the
Plan.

    B. Acceptance
By Impaired Classes of Claims.

    Pursuant
to section 1126(c) of the Bankruptcy Code, an impaired Class of Claims shall
have accepted the Plan if (a) the holders of at least two-thirds in dollar
amount of the Allowed Claims actually voting in such Class have voted to accept
the Plan and (b) more than one-half in number of such Allowed Claims actually
voting in such Class have voted to accept the Plan. However, the vote of a
holder of a Claim that is designated pursuant to section 1126(e) of the
Bankruptcy Code may not be counted to determine acceptance or rejection of the
Plan.

    C. Acceptance
By Impaired Class of Interests.

    Pursuant
to section 1126(d) of the Bankruptcy Code, an impaired Class of Interests shall
have accepted the Plan if the holders of at least two-thirds in amount of the
Allowed Interests actually voting in such Class (other than Interests held by
any holder designated pursuant to section 1126(e) of the Bankruptcy Code) have
voted to accept the Plan.

    D. Presumed
Acceptance of Plan.

    Classes
2, 10 and 11 are not impaired.  Under section 1126(f) of the
Bankruptcy Code, the holders of Claims or Interests in such Classes are
conclusively presumed to have voted to accept the Plan.

    
      
        
        

      

      
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    E. Cramdown.

    The
Debtors will request the Bankruptcy Court to confirm the Plan in accordance with
section 1129(b) of the Bankruptcy Code in the event any other Class of Claims
votes to reject the Plan on the basis that the Plan is fair and equitable and
does not discriminate unfairly as to holders of any Class of
Claims.

    VII.

     

    CONDITIONS
TO CONFIRMATION AND

     

    EFFECTIVENESS;
REQUIRED NOTICES

     

    A. Conditions
to Confirmation.

    Confirmation
of the Plan shall not occur unless the  Bankruptcy Court shall have
made such findings and determinations regarding the Plan as shall enable the
entry of the Confirmation Order, and any other order entered in conjunction
therewith, in form and substance acceptable to the Debtors, and
Laurus.  Additionally, Confirmation of the Plan is subject to and may not occur unless
each of the following preconditions is satisfied  prior to the date of
the Confirmation Hearing:

    The
total amount of all Administrative Claims shall not exceed
$1,075,000.

    The
total amount of all Priority Claims shall not exceed $190,000.

    The
total amount of Claims to be included in Class 5 shall not exceed
$74,000.

    The
total amount of Claims to be included in Class 6 shall not exceed
$33,000.

    The
total amount of Claims to be included in Class 7 shall not exceed
$234,000.

    The
total amount of Claims to be included in Class 8 shall not exceed
$917,000.

    
      
        
        

      

      
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    The
determination of whether such preconditions have been satisfied shall be made in
the Debtors’ sole discretion. If, in the Debtors’ determination the
stated preconditions cannot be satisfied, the Debtors, in their sole discretion,
may withdraw this Plan.

    B. Conditions
to Effectiveness.

    Notwithstanding
any other provision of the Plan or the Confirmation Order, the Effective Date of
the Plan shall not occur unless and until each of the following conditions has
been satisfied or, if applicable, waived, in writing, by the Debtors and
Laurus:

    Confirmation
Order.  The Confirmation Order shall have become a Final Order;
provided, however, that the Effective
Date may occur at a point in time when the Confirmation Order is not a Final
Order at the option of the Debtors, and Laurus, unless the effectiveness of the
Confirmation Order has been stayed or vacated, in which case the Effective Date
may be, again at the option of the Debtors, and Laurus, the first Business Day
immediately following the expiration or other termination of any stay of
effectiveness of the Confirmation Order.

    Plan
Documents.  The Amended and Restated Blast Certificate of
Incorporation and the Plan Documents necessary or appropriate to implement the
Plan, shall be in final form and ready for execution or shall have been executed
and be ready for delivery.

    United States Trustee’s
Fees.  The fees of the United States Trustee then owing by the
Debtors shall have been paid in full.

    Private Placement
Agreements.  The Debtors shall have delivered the Convertible
Preferred Stock and received the proceeds of the Private Placement Agreements in
an amount satisfactory to provide for payment of the Plan obligations required
on the Effective Date and to provide for the working capital needs of
Reorganized Blast.

    
      
        
        

      

      
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    C. Effect
of Nonoccurrence of Conditions to Effective Date.

    Each of
the conditions to the Effective Date must be satisfied or duly waived, as
provided above, within 90 days after the Confirmation Date.  If each
condition to the Effective Date has not been satisfied or duly waived, as
described above, within 90 days after the Confirmation Date, then upon motion by
any party in interest made before the time that each of such conditions has been
satisfied or duly waived and upon notice to such parties in interest as the
Bankruptcy Court may direct, the Confirmation Order shall be vacated by the
Bankruptcy Court.  Notwithstanding the filing of such motion, however,
the Confirmation Order may not be vacated if each of the conditions to the
Effective Date is either satisfied or duly waived before the Bankruptcy Court
enters an order granting such motion.  If the Confirmation Order is
vacated for failure to satisfy a condition to the Effective Date, the Plan shall
be deemed null and void in all respects, including, without limitation, the
discharge of Claims and termination of Interests pursuant to section 1141
of the Bankruptcy Code and the assumptions, assumptions and assignments or
rejections of executory contracts and unexpired leases pursuant to the Plan, and
nothing contained in the Plan will (i) constitute a waiver or release of
any Claims by or against, or any Interests in, the Debtors or
(ii) prejudice in any manner the rights of the Debtors.

    D. Notice
to Bankruptcy Court.

    Promptly
after the Effective Date, Reorganized Blast or the Disbursing Agent shall file
with the clerk of the Bankruptcy Court a notice that the Plan has become
effective; provided,
however, that failure
to file such notice shall not affect the effectiveness of the Plan or the rights
and substantive obligations of any entity hereunder.

    
      
        
        

      

      
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    VIII.

     

    DESCRIPTION
OF SECURITIES ISSUED UNDER PLAN

     

    A. Convertible
Preferred Stock.

    Subscription
Amount:  $3,000,000;

    Type of
security: Cumulative Convertible Preferred;

    Dividend:  8%
cumulative; payable at the option of Reorganized Blast in cash or, if sufficient
cash is not available on due date, in Common Stock at a conversion price
of  $0.50 per share;

    Payment:
Following the Effective Date;

    Conversion
price: $0.50 per share;

    Conversion
Timing: Upon five days notice at investor’s option;

    Automatic conversion: When share price
exceeds $3 per share at an average volume of 50,000 shares/day for more than 20
consecutive trading days;

    Warrant
Term: Three (3) years;

    Warrant
Coverage: 25% based on number of shares purchased

    Warrant
Exercise Price: $0.10 per share;

    Mandatory
Redemption: At Blast’s option based on receipt of proceeds from Hallwood
Litigation or Quicksilver Litigation with six (6) months prior notice to
Investor; during the notice period the Investor can accept redemption or convert
the Convertible Preferred Stock to Common Stock at a conversion price of $0.50
per share;

    Redemption
Notice:                                                   Three
months;

    Redemption
Rights:                                                   Investor
can either (a) accept principal and interest in cash, or (b) to partially or
entirely convert into common stock at $0.50 per share;

    Seniority:                              Senior
only to Blast Common Stock;

    
      
        
        

      

      
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    Funding:
$ 3,000,000 in cash to be funded on the Effective Date of a plan of
reorganization proposed by Blast.

    B. Creditor
Stock.

    Stock
Issuance.  Subject to Confirmation of the Plan and compliance
with the requirements of the Bankruptcy Code and the terms of the Plan, Blast
shall issue such new shares of Reorganized Blast Common Stock as are necessary
to comply with the terms of this Plan.

    C. Newly
Authorized Blast Common Stock.

    Authorized
Shares.  The Amended and Restated Certificate of Incorporation
of Reorganized Blast shall provide that Reorganized Blast will have the
authority to issue up to one hundred eighty million (180,000,000) shares of its
Common Stock and twenty million (20,000,000) shares of its Convertible Preferred
Stock.

    Par
Value.  The Blast common stock shall have a par value of
$0.001.

    Voting. The holders
of shares of Blast common stock shall be entitled to vote upon all matters
submitted to a vote of the stockholders of Reorganized Blast and shall be
entitled to one vote for each share of Blast common stock held.

    Dividend Rights.
Holders of shares of Blast common stock shall be entitled to receive dividends,
if, when and as declared by Reorganized Blast’s Board of Directors.

    Transferability.  The
Blast Common Stock shall be freely transferable, subject to compliance with
applicable securities laws.

    D. Eagle
Junior Secured Note.

    Issuance.  Subject
to Confirmation of the Plan and compliance with the requirements of the
Bankruptcy Code and the terms of the Plan, Reorganized Blast shall execute and
deliver to each Class 7 Creditor that is the holder of an Allowed Eagle
Unsecured Claim the Eagle Security Agreement and an Eagle Junior Secured Note,
which notes shall be in the principal amount of 65% of each such holder’s
Allowed Eagle Unsecured Claim.

    
      
        
        

      

      
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    Maturity.  The
Eagle Junior Secured Note shall mature on the fifth anniversary of the Effective
Date (“Maturity Date”). Any remaining unpaid amount of either principal or
interest shall be due and payable in full on the Maturity Date.

    Security.  The
Eagle Junior Secured Note shall be secured by a Lien on the proceeds of the
Hallwood Litigation and Quicksilver Litigation , which Lien is subject and
subordinate to the fees and expenses payable to Special Litigation Counsel and
the Laurus Lien .  No exercise of any rights or remedies with respect
to the collateral unless and until the Laurus Retained Claim is paid in
full.

    Interest.  The
Eagle Junior Secured Note shall bear interest at a rate of eight percent (8%)
per annum, payable semi-annually and calculated on the basis of a 365 day year
and the actual number of days elapsed.

    Principal
Repayment.    Prior to the Maturity Date principal
payments shall be made from 25% of the Net Proceeds of the Hallwood Litigation
and the Quicksilver Litigation to which the Debtors are entitled pursuant to the
Settlement Agreement and the Sale Order within ten (10) business days from the
receipt of any such Net Proceeds, and no sooner than simultaneously with
payments to Laurus on account of the Laurus Retained Claim. After the Laurus
Retained Claim is paid in full payments will be made on the Eagle Junior Secured
Notes from 90% of the Net Proceeds within ten (10) business days from the
receipt of any such Net Proceeds.

    
      
        
        

      

      
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    Optional
Prepayments.  At any time and from time to time, Reorganized
Blast at its option may prepay the Eagle Junior Secured Note without premium or
penalty.

    Other Provisions. Set
forth in Annex 1 to the Plan is a further description of the principal terms of
the Eagle Junior Secured Note.

    E.  Blast
Junior Secured Note.

    Issuance.  Subject
to Confirmation of the Plan and compliance with the requirements of the
Bankruptcy Code and the terms of the Plan, Reorganized Blast shall execute and
deliver to each Class 8 Creditor that is the holder of an Allowed Blast
Unsecured Claim the Blast Security Agreement and an Blast Junior Secured Note,
which notes shall be in the aggregate principal amount of 65% of each such
holder’s Allowed Blast Unsecured Claim.

    Maturity.  The
Blast Junior Secured Note shall mature on the fifth anniversary of the Effective
Date (“Maturity Date”).

    Security.  The
Blast Junior Secured Note shall be secured by a Lien on the proceeds of the
Hallwood Litigation and Quicksilver Litigation, which Lien is subject and
subordinate to the fees and expenses payable to Special Litigation Counsel, the
Laurus Lien, and the Eagle Junior Secured Note. No exercise of any rights or
remedies with respect to the collateral unless and until the Laurus Retained
Claim is paid in full.

    Interest.  The
Blast Junior Secured Note shall bear interest at a rate of eight percent (8%)
per annum, payable semi-annually after the Laurus Retained Claim is paid in full
and calculated on the basis of a 365 or 366 day year and the actual number of
days elapsed.

    
      
        
        

      

      
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    Principal
Repayment.    Prior to the Maturity Date and after
the Eagle Junior Secured Notes are paid in full, but prior to the payment in
full of the Laurus Retained Claim principal payments shall be made from 25% of
the Net Proceeds of the Hallwood Litigation and the Quicksilver Litigation to
which the Debtors are entitled pursuant to the Settlement Agreement and the Sale
Order within ten (10) business days from the receipt of any such Net Proceeds,
and no sooner than simultaneously with payments to Laurus on account of the
Laurus Retained Claim. After the Laurus Retained Claim and the Eagle Junior
Secured Notes are paid in full, payments will be made on the Blast Junior
Secured Notes from 90% of the Net Proceeds within ten (10) business days from
the receipt of any such Net Proceeds. Optional
Prepayments.  At any time and from time to time, Reorganized
Blast at its option may prepay the Blast Junior Secured Note without premium or
penalty.

    Other Provisions. Set
forth in Annex 1 to the Plan is a further description of the principal terms of
the Blast Junior Secured Note.

    F. Management
Warrants.

    Issuance.  Subject
to Confirmation of the Plan and compliance with the requirements of the
Bankruptcy Code and the terms of the Plan, the Reorganized Blast Board of
Directors shall, at its sole discretion, allocate the Management Warrants to
Reorganized Blast’s senior management from time to time after the Distribution
Date.

    Number. 4
million

    Term.  The
Management Warrants shall be exercisable at any time from the Distribution Date
to and through the fifth (5th)
anniversary of the Effective Date.

    
      
        
        

      

      
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    Exercise
Price.  The Management Warrants shall be exercisable at an
exercise price per share equal to $0.20.

    IX.

     

    MEANS
FOR IMPLEMENTATION OF THE PLAN

     

    A. Substantive
Consolidation.

    The
Debtors’ Estates shall not be substantively consolidated. All obligations of the
Debtors under the Plan to holders of Claims shall be the liability of either
Eagle or Blast, and shall not be the joint and several obligations of the
Debtors, except with respect to the Laurus Retained Claim which shall remain a
joint and several obligations.

    B. Conversion
of Blast.

    Prior to
or as of the Effective Date, Blast shall be converted into a Texas corporation
and Eagle shall remain a Texas limited liability company.  Upon the
conversion of Blast into a Texas corporation there will be no name
change.  Blast’s amended and restated certificate of incorporation and
bylaws shall be filed as Plan Documents.  Consistent with
section 1123(a)(6) of the Bankruptcy Code, the amended and restated
certificate of incorporation of Reorganized Blast shall prohibit, among other
things, the issuance of nonvoting equity securities as part of the
Reorganization Cases.

    C. Revesting
of Assets.

    On the
Effective Date each of the remaining assets of each of the Debtors’ Estates and
title thereto shall be deemed held, and simultaneously therewith, revest in
Reorganized Blast and Reorganized Eagle, respectively . Thereafter, Reorganized
Blast and Reorganized Eagle may operate their respective businesses and may use,
acquire, and dispose of property free of any restrictions of the Bankruptcy
Code, the Bankruptcy Rules, and the Bankruptcy Court.  As of the
Effective Date all property of Reorganized Blast and Reorganized Eagle shall be
free and clear of all Claims and Interests, except as specifically provided in
the Plan or the Confirmation Order.

    
      
        
        

      

      
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    D. Management
Contracts.

    On the
Effective Date, Reorganized Blast will execute employment contracts with on
substantially the same terms and conditions as their prior employment agreements
with Blast.

    E. Effectuating
Documents.

    Final or
near-final versions of the Plan Documents, including the Private Placement
Agreements, Reorganized Blast Convertible Preferred Stock, the Management
Warrants, the Eagle Junior Secured Note, the Blast Junior Secured Note, the
Collateral Agreements and the Laurus Retained Claim Documents shall be filed by
the Debtors with the Bankruptcy Court on or before a date, as determined by the
Debtors, that is as soon as practicable but in no event later than five (5)
calendar days before the commencement of the Confirmation
Hearing.  The Plan Documents shall be in form and content acceptable
to the Debtors and Laurus.  On or before the Effective Date, all
documents necessary to effectuate this Plan shall be executed and delivered, and
where appropriate, filed with appropriate governmental authorities.

    F. Initial
Directors of Reorganized Blast.

    The
initial directors of Reorganized Blast shall be those individuals identified in
the pleading to be filed by the Debtors with the Bankruptcy Court, not later
than fifteen (15) days prior to the initial date of the Confirmation Hearing,
each of whom shall serve for the initial term indicated therein next to the name
of such individual.

    G. Management
of Reorganized Blast and Reorganized Eagle.

    Except as
otherwise provided in the Plan, all existing corporate officers of Blast and
Eagle shall serve as corporate officers of Reorganized Blast and the Reorganized
Eagle in the same capacities under terms similar to their existing offices and
employment contracts, if any.

    
      
        
        

      

      
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    H. Authority
to Prosecute or Settle Litigation.

    Neither
the Debtors nor Reorganized Blast nor any representative of their Estates shall
commence and/or prosecute any avoidance or recovery actions under sections 544,
545, 547, 548, 549, or 550 of the Bankruptcy Code, and on the Effective Date,
all such avoidance actions shall be deemed waived, released, and forever
barred.  The disputed matters with Saddle Creek Energy Development,
the Hallwood Litigation, and the Quicksilver Litigation, shall be prosecuted,
settled, or compromised as deemed appropriate by the board of directors of
Reorganized Blast in an exercise of its business judgment under applicable
corporate law; provided however that
until the Laurus Retained Claim is paid in full, any settlement or compromise of
either the Hallwood Litigation or the Quicksilver Litigation, will require the
prior written consent of Laurus. Net Proceeds, if any, from
such causes of action or the settlement thereof shall be distributed and used as
provided for in this Plan, the Settlement Agreement and the Sale
Order.

    I. Further
Authorizations.

    The
Debtors and Reorganized Blast, if and to the extent necessary, may seek such
orders, judgments, injunctions, and rulings that any of them deems necessary to
further carry out the intentions and purposes of, and give full effect to the
provisions of, the Plan.

    J. Transfer
Taxes.

    Pursuant
to section 1146 of the Bankruptcy Code, the issuance, transfer, or exchange of
any of the securities issued under, or the transfer of any other assets or
property pursuant to, or in connection with, the Plan or the making or delivery
of an instrument of transfer under or in connection with the Plan, including,
but not limited to, the sale of the Rigs, shall not be taxed under any law
imposing a stamp tax, transfer tax, sales tax or other similar tax.

    
      
        
        

      

      
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    K. Payment
of United States Trustee’s Fees.

    On the
Effective Date, the Debtors shall pay all fees to the United States Trustee as
required by applicable laws of the United States.

    L. Recordable
Order.

    Upon
Confirmation of the Plan, the Confirmation Order shall be deemed to be in
recordable form, and shall be accepted by any recording officer for filing and
recording purposes without further or additional orders when certified by the
Clerk of the Bankruptcy Court.

    M. Effectuating
Documents and Further Transactions.

    The Chief
Executive Officer, President, or any managing member of the Debtors and/or
Reorganized Blast or other officer authorized under Corporate Documents to
perform such function, shall be authorized to execute, deliver, file, or record
such contracts, instruments, releases, indentures, and other agreements or
documents and take or direct such actions as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of the
Plan.  The Secretary of the Debtors and/or Reorganized Blast shall be
authorized to certify or attest to any of the foregoing actions.

    N.  Limited
Liability Company and Corporate Action.

    All
matters provided for under the Plan involving the organizational structure of
the Debtors, Reorganized Eagle or Reorganized Blast, or any manager, limited
liability company or corporate action to be taken by, or required of, the
Debtors or Reorganized Blast, shall be deemed to have occurred and be effective
as provided herein, and shall be authorized and approved in all respects without
any requirement for further action by the members, stockholders or directors of
any of such entities.

    O. Dissolution
of Committees.

    To the
extent not dissolved earlier, the Creditors Committee, and any other committee
appointed by the United States Trustee pursuant to section 1102 of the
Bankruptcy Code in these Reorganization Cases shall be dissolved on the
Effective Date.

    
      
        
        

      

      
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    P. Survival
of Indemnification Obligations.

    Notwithstanding
any other provision of the Plan, all obligations of the Debtors to indemnify
their and their Affiliates’ current and former members or directors, and current
officers, employees, or agents and representatives, including, without
limitation, (i) indemnification obligations arising under the certificate of
incorporation and bylaws of the Debtors, (ii) indemnification obligations
arising by contract, and (iii) indemnification obligations arising under
applicable, non-bankruptcy law, shall be assumed pursuant to this Plan, survive
Confirmation of the Plan and shall be performed as obligations of Reorganized
Blast, irrespective of whether such indemnification was owed at time of
Confirmation or only became owing in the future, and irrespective, further, of
whether indemnification is owed in connection with an event occurring before,
on, or after the Petition Date.  Reorganized Blast shall not amend any
of its Corporate Documents in a manner to affect adversely any Person benefited
by such indemnities.  Reorganized Blast shall maintain insurance in an
amount consistent with past practices to fund indemnification obligations under
this provision of the Plan.

    Q. Compromise
and Settlement.

    Pursuant
to Bankruptcy Rule 9019(a), the Plan incorporates and is intended to serve as a
compromise and settlement of various Claims against the Debtors and/or claims
that they may have against other persons, including Intercompany
Claims.  The Debtors expressly reserve the right (with Bankruptcy
Court approval, following appropriate notice and opportunity for a hearing) to
compromise and settle Claims against them and claims that they may have against
other persons up to and including the Effective Date.  After the
Effective Date, such right shall pass to the Reorganized Debtors pursuant to the
Plan.

    
      
        
        

      

      
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    X.

     

    INJUNCTIONS,
RELEASES AND DISCHARGE

     

    A. Discharge
and Release.

    Except as
specifically provided in the Plan or in the Confirmation Order, effective on the
Effective Date, consummation of the Plan shall discharge and release the
Debtors, Reorganized Blast and  Reorganized Eagle from any and all
Claims and demands including any Claim of a kind specified in section 502(g),
502(h), or 502(i) of the Bankruptcy Code, whether or not (i) a Proof of Claim
based on such Claim was filed or deemed filed under section 501 of the
Bankruptcy Code, or such Claim was listed on the Schedules of the Debtor, (ii)
such Claim is or was Allowed under section 502 of the Bankruptcy Code, or (iii)
the holder of such Claim has voted on or accepted the Plan; provided, however, that no
Claim of a governmental unit within the meaning of section 101(27) of the
Bankruptcy Code for or related to environmental remediation shall be included
within the scope of this discharge.

    B. Discharge
Injunction.

    Except as
specifically provided in the Plan Documents to the contrary, the satisfaction,
release, and discharge set forth in Article 10.1 of the Plan also shall operate
as an injunction prohibiting and permanently enjoining the commencement or
continuation of any action, the employment of process or any act to collect,
recover from, or offset (a) any Claim against or Interest in the Debtors,
Reorganized Blast or Reorganized Eagle by any Entity and (b) any cause of
action, whether known or unknown, based on the same subject matter as any Claim
or Interest.

    C. Discharge
of Disallowed Claims and Disallowed Interests.

    On and
after the Effective Date, the Debtors shall be fully and finally discharged of
any liability or obligation on a Disallowed Claim or a Disallowed Interest, and
any order creating a Disallowed Claim or a Disallowed Interest that is not a
Final Order as of the Effective Date solely because of an Entity’s right to move
for reconsideration of such order pursuant to section 502 of the Bankruptcy Code
or Bankruptcy Rule 3008 shall nevertheless become and be deemed to be a Final
Order on the Effective Date.  The Confirmation Order, except as
otherwise provided herein, or unless the Bankruptcy Court orders otherwise,
shall constitute an order:  (a) disallowing all Claims and Interests
to the extent such Claims and Interests are not allowable under any provision of
section 502 of the Bankruptcy Code, including, but not limited to, time-barred
Claims and Interests, and Claims for unmatured interest, and (b) disallowing or
subordinating, as the case may be, any Claims, or portions of Claims, for
penalties or non-compensatory damages.

    
      
        
        

      

      
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    D. Releases
of Officers and Directors.

    On the
Effective Date, the Debtors, on their own behalf and on behalf of their Estates,
shall be deemed, without need for further action, to have granted an
unconditional release to all current officers and current and former members or
directors of any of the Debtors or their Affiliates for any and all claims,
obligations, suits, judgments, damages, rights, causes of action, and
liabilities, other than for willful misconduct,  arising under the
Bankruptcy Code or during the Reorganization Cases whether known or unknown,
accruing or related to acts or omissions in the course of performing their
respective duties occurring after the Petition Date and prior to the Effective
Date.

    The terms
of this provision shall be effectuated by a permanent injunction which shall be
included in the Confirmation Order.

    E. Exoneration.


    Unless a
claim for any of the following is initiated prior to the date of the
Confirmation Hearing, the Persons identified in 10.4 above shall not be liable,
other than for willful misconduct, to any holder of a Claim or Interest or to
any Person or with respect to any action, omission, forbearance from action,
decision, or exercise of discretion taken at any time after the Petition Date
and prior to the Effective Date in connection with: (a) the management or
operation of the Debtors, or the discharge of their duties under the Bankruptcy
Code or applicable non-bankruptcy law, (b) the implementation of any of the
transactions provided for, or contemplated in, the Plan or the Plan Documents,
(c) any action taken in connection with either the enforcement of the Debtors’
rights against any Entities or the defense of Claims asserted against the
Debtors with regard to the Reorganization Cases, (d) any action taken in the
negotiation, formulation, development, proposal, disclosure, Confirmation, or
implementation of the Plan, or (e) the administration of the Plan or the assets
and property to be distributed pursuant to the Plan.  In any action,
suit or proceeding by any holder of a Claim or Interest or any other Entity
contesting any action by, or non-action of, the Debtors, Reorganized Blast,
Reorganized Eagle, and of their respective stockholders, directors, officers,
agents, employees, members, attorneys, accountants, financial advisors, and
representatives, the reasonable attorneys’ fees and costs of the prevailing
party shall be paid by the losing party and as a condition to going forward with
such action, suit, or proceeding at the outset thereof, all parties thereto
shall be required to provide appropriate proof and assurances of their capacity
to make such payments of reasonable attorneys’ fees and costs in the event they
fail to prevail.

    
      
        
        

      

      
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    The provisions of Section 10.5 above
and the exoneration from liability contained therein shall not be binding upon
Laurus with respect to the Laurus Retained Claim.

    10.6.                      Asset
Purchase Agreement; Settlement Agreement; Sale Order.  Notwithstanding
anything to the contrary in this Article 10 or the Plan, any rights and claims
of Laurus under the Asset Purchase Agreement, the Settlement Agreement and the
Sale Order shall not be extinguished, released, altered, impaired or discharged
under or pursuant to the Plan or the Confirmation Order and shall remain
obligations of the Reorganized Debtors.

    
      
        
        

      

      
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    XI.

     

    MATTERS
INCIDENT TO PLAN CONFIRMATION

     

    A. Term
of Certain Injunctions and Automatic Stay. 

    All of
the injunctions and/or automatic stays provided for in or in connection with the
Reorganization Cases, whether pursuant to section 105, section 362 or any other
provision of the Bankruptcy Code or other applicable law, in existence
immediately prior to Confirmation shall remain in full force and effect until
the Injunctions become effective, and thereafter if so provided by the Plan, the
Confirmation Order, or by their own terms.  In addition, on and after
the Confirmation Date, the Debtors may seek such further orders as they may deem
necessary to preserve the status quo during the time between Confirmation and
the Effective Date.

    Each of
the Injunctions shall become effective on the Effective Date and shall continue
in effect at all times thereafter.  Notwithstanding anything to the
contrary contained elsewhere in the Plan, all actions in the nature of those to
be enjoined by the Injunctions shall be enjoined during the period between the
Confirmation Date and the Effective Date.

    B. No
Liability for Tax Claims.

    Unless a
taxing authority has asserted a Claim against a Debtor before the bar date
established therefor, no Claim of such authority shall be Allowed against the
Debtors, Reorganized Blast or  for taxes, penalties, interest,
additions to tax, or other charges arising out of the failure, if any, of the
Debtors or any other Person to have paid taxes or to have filed any tax return
(including, but not limited to, any income tax return or franchise tax return)
in or for any prior year or arising out of an audit of any return for a period
before the Petition Date.

    
      
        
        

      

      
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    C. Compliance
with Tax Requirements

    .  In
connection with the Plan, Reorganized Blast and the Disbursing Agent shall
comply with all applicable withholding and reporting requirements imposed by
federal, state, and local taxing authorities.  Creditors may be
required to provide certain tax information as a precondition to distributions
under the Plan.

    XII.

     

    PROVISIONS
GOVERNING DISTRIBUTIONS

     

    AND
RESOLUTION OF DISPUTED CLAIMS

     

    A. Plan
Distributions.

    The
Disbursing Agent shall make all distributions required under the
Plan.  Distributions shall be made on the Distribution Date (unless
otherwise provided in a Plan Document or ordered by the Bankruptcy Court) with
respect to all Claims.  Distributions to be made on the Distribution
Date shall be deemed actually made on the Distribution Date if made either (a)
on the Distribution Date or (b) as soon as practicable thereafter.

    B. Interest
on Claims.

    Unless
otherwise specifically provided for in the Plan or the Confirmation Order, or
required by applicable bankruptcy law, post-petition interest shall not accrue
or be paid on Claims, and no holder of a Claim shall be entitled to interest
accruing on or after the Petition Date on any Claim.  Interest shall
not accrue or be paid upon any Disputed Claim in respect of the period from the
Petition Date to the date a final distribution is made thereon if and after such
Disputed Claim becomes an Allowed Claim.

    C. Unclaimed
Property.

    Any Cash,
assets, and other property to be distributed under the Plan that remains
unclaimed (including by an Entity’s failure to negotiate a check issued to such
Entity) or is otherwise not deliverable to the Entity entitled thereto on the
later of (a) one year after distribution or (b) 120 calendar days after the
order allowing such Entity’s Claim becomes a Final Order, shall become vested
in, and shall be transferred and delivered to, Reorganized Blast for use in its
discretion on the thirtieth (30th) day after Reorganized Blast or the Disbursing
Agent files a notice with the Bankruptcy Court setting forth information
regarding the holders whose distributions are unclaimed or undeliverable and the
amount of such distributions (if Cash) or a description of the property to be
distributed.  In such event, such Entity’s Claim or Interest shall no
longer be deemed to be Allowed and such Entity shall be deemed to have forever
waived its rights to such payments or distributions under the Plan pursuant to
section 1143 of the Bankruptcy Code.

    
      
        
        

      

      
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    D. Withholding
of Taxes.

    The
Disbursing Agent shall withhold from any assets or property distributed under
the Plan any assets or property which must be withheld for foreign, federal,
state, and local taxes payable with respect thereto or payable by the Person
entitled to such assets to the extent required by applicable law.

    E. Disputed
Claims and Determination of Disputed Claims.

    Only
Claims that are Allowed shall be entitled to distributions under the
Plan.  A Claim which is not a Disputed Claim in its entirety shall be
considered a Disputed Claim only to the extent of the portion thereof which is
disputed, and shall be considered an Allowed Claim as to the undisputed portion
thereof.  The Debtors reserve the right to contest and object to any
Claims asserted against the Debtors, including any Claims not listed in the
Debtors’ Schedules, listed therein as disputed, contingent and/or unliquidated
in amount or listed therein at a lesser amount than asserted in a Proof of
Claim.

    F. Objection
Deadline.

    As soon
as practicable, but in no event later than thirty (30) days after the Effective
Date, unless otherwise ordered by the Bankruptcy Court, Reorganized Blast and
Reorganized Eagle shall file objections to Claims with the Bankruptcy Court;
provided, however, that
Reorganized Blast or Reorganized Eagle may seek to extend such period (or to
extend further any extended period) for cause.

    
      
        
        

      

      
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    G. Prosecution
of Objections.

    After the
Effective Date, only Reorganized Blast and Reorganized Eagle, in their sole
discretion, shall have authority to file objections to Claims and to litigate to
judgment, settle, or withdraw such objections to Disputed Claims.  The
failure of the Debtors prior to Confirmation to object to a Claim for purposes
of voting on the Plan shall in no way be deemed to be a waiver of the right of
the Reorganized Debtors to object to such Claim in whole or in
part.

    H. Distribution
Reserve.

    Notwithstanding
all references in the Plan to Claims that are Allowed, in undertaking the
calculations concerning Allowed Claims under the Plan, including the
determination of the amount or number of distributions due to the holders of
Allowed Claims, each Disputed Claim shall be treated as if it were an Allowed
Claim, except that if the Bankruptcy Court estimates, pursuant to Section 502(c)
of the Bankruptcy Code, the likely portion of a Disputed Claim to be Allowed or
authorized or otherwise determines the amount or number which would constitute a
sufficient reserve for a Disputed Claim (which estimates and determinations may
be requested by the Debtor, the Reorganized Blast, Reorganized Eagle or the
Disbursing Agent), such estimated amount or number as determined by the
Bankruptcy Court shall be used as to such Claim for purposes of both reserve and
distribution.  The Cash distributions due in respect of Disputed
Claims based on the calculations required by the Plan shall be reserved for the
holders of Disputed Claims and deposited in the Disputed Claims
Reserve.

    
      
        
        

      

      
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    I. Distribution
After Resolution of Disputed Claims.

    After an
objection to a Disputed Claim is withdrawn, resolved by agreement, or determined
by Final Order, the distributions due on account of any resulting Allowed Claim
shall be made by the Disbursing Agent, provided that any distribution of Cash
shall be made from the Disputed Claims Reserve.  Such distribution
shall be made on the Distribution Date or as otherwise provided in the
Plan.

    Should a
finally Allowed Claim of a holder otherwise entitle the holder to a Cash
distribution in an amount in excess of the undistributed assets in the Disputed
Claims Reserve, unless the Reorganized Debtor elects to pay such holder sooner,
the holder shall receive, for the shortfall in the reserve to pay amounts
already due, a three (3) year straight note from Reorganized Blast for such
amount bearing five percent (5%) per annum simple interest from the date of the
resolution of the Disputed Claim and in no event shall such holder have recourse
to any payments or distributions theretofore made to or for the benefit of any
holder of a Claim hereunder.

     

    After an
objection to such a Disputed Claim is sustained in whole or in part by a Final
Order or by agreement such that the Disputed Claim is Disallowed in whole or in
part, (1) any amount held in the Disputed Claims Reserve in respect of the
particular Disputed Claim (in excess of the distributions due on account of any
resulting Allowed Claim) shall be returned by the Disbursing Agent to the
Reorganized Debtors shall become the property of the Reorganized Debtors and may
be used by the Reorganized Debtors in any manner not inconsistent with this
Plan.

     

    XIII.

     

    RETENTION
OF JURISDICTION

     

    A. Jurisdiction.

    Until the
Reorganization Cases are closed, the Bankruptcy Court shall retain the fullest
and most extensive jurisdiction permissible, including all jurisdiction
necessary to ensure that the purposes and intent of the Plan are carried
out.  Except as otherwise provided in the Plan, the Bankruptcy Court
shall retain jurisdiction to hear and determine all Claims against and Interests
in the Debtors, and to adjudicate and enforce all other causes of action that
may exist on behalf of the Debtors.

    o General
Retention.

    Following
the Confirmation of the Plan, the administration of the Reorganization Cases
will continue until the Effective Date.  The Bankruptcy Court shall
also retain jurisdiction for the purpose of classification of any Claim and the
re-examination of Claims which have been Allowed for purposes of voting, and the
determination of such objections as may be filed with the Bankruptcy Court with
respect to any Claim.

    
      
        
        

      

      
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    B. Specific
Purposes.

    In
addition to, and without limitation of, the foregoing, the Bankruptcy Court
shall retain jurisdiction for the following specific purposes after
Confirmation:

    to modify
the Plan after Confirmation pursuant to the provisions of the Bankruptcy Code
and the Bankruptcy Rules;

    to
correct any defect, cure any omission, reconcile any inconsistency, or make any
other necessary changes or modifications in or to the Plan, any Plan Documents,
or the Confirmation Order as may be necessary to carry out fully the purposes
and intent of the Plan, including the adjustment of the date(s) of performance
under the Plan Documents in the event that the Effective Date does not occur as
provided herein so that the intended effect of the Plan may be substantially
realized thereby;

    to assure
the performance by the Disbursing Agent of the obligations to make distributions
under the Plan;

    to
enforce and interpret the terms and conditions of the Plan
Documents;

    to enter
such orders or judgments, including, but not limited to, injunctions (i) as are
necessary to enforce the title, rights, and powers of the Debtors, Reorganized
Blast and Reorganized Eagle and (ii) unless otherwise provided in the Plan, as
are necessary to enable holders of Claims to pursue their rights against any
Entity that may be liable therefor pursuant to applicable law or otherwise,
including, but not limited to, Bankruptcy Court orders;

    
      
        
        

      

      
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    to hear
and determine any motions or contested matters involving taxes, tax refunds, tax
attributes, tax benefits, and similar or related matters with respect to the
Debtors, Reorganized Eagle or Reorganized Blast arising on or prior to the
Effective Date, arising on account of transactions contemplated by the Plan
Documents, or relating to the period of administration of the Reorganization
Cases;

    to allow,
disallow, determine, liquidate, classify, estimate or establish the priority or
secured or unsecured status of any Claim or Interest, including the resolution
of any request for payment of any Administrative Expense, the resolution of any
objections to the allowance or priority of Claims or Interests, or the
resolution of any dispute as to the treatment necessary to reinstate a Claim
pursuant to the Plan;

    to hear
and determine disputes and controversies with respect to the validity,
perfection, or enforceability of any pre-petition or post-petition
Liens;

    to hear
and determine all applications for compensation of professionals and
reimbursement of expenses under sections 330, 331, or 503(b) of the Bankruptcy
Code;

    to hear
and determine any causes of action arising during the period from the Petition
Date through the Effective Date;

    to hear
and determine any cause of action in any way related to the Plan Documents or
the transactions contemplated thereby, against the Debtors, Reorganized Blast,
Reorganized Eagle and their respective officers, directors, stockholders,
employees, members, attorneys, accountants, financial advisors, representatives,
and agents;

    to hear
and determine the Hallwood Litigation and the Quicksilver
Litigation;

    
      
        
        

      

      
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    to hear
and determine any and all motions pending as of Confirmation for the rejection,
assumption, or assumption and assignment of executory contracts or unexpired
leases and the allowance of any Claim resulting therefrom, and resolve any
matters related thereto;

    to hear
and determine such other matters and for such other purposes as may be provided
in the Confirmation Order;

    (xv)           to
hear and determine all questions and disputes regarding, and to enforce terms
and provisions of, the Settlement Agreement, the Asset Purchase Agreement and
the Sale Order;

    to
consider and act on the compromise and settlement of any Claim against or
Interest in the Debtors or their Estates including, without limitation, any
disputes relating to the Administrative Claims Bar Date and the Bar Date;
and

    to hear
and determine all questions and disputes regarding title to the assets of the
Debtors or their Estates.

    C. Failure
of Bankruptcy Court to Exercise Jurisdiction.

    If the
Bankruptcy Court abstains or exercises discretion not to hear any matter within
the scope of its jurisdiction, nothing herein shall prohibit or limit the
exercise of jurisdiction by any other tribunal having competent jurisdiction
over such matter.

    XIV.

     

    MISCELLANEOUS

     

    A. Revocation
of Plan.

    The
Debtors reserve the right to revoke and withdraw the Plan before the entry of
the Confirmation Order.  If the Debtors revoke or withdraw the Plan,
or if Confirmation does not occur, then, with respect to all parties in
interest, the Plan shall be deemed null and void and nothing contained herein
shall be deemed to constitute a waiver or release of any Claims by or against
the Debtors or any other Entity or to prejudice in any manner the rights of the
Debtors or such Entity in any further proceedings involving the
Debtors.

    
      
        
        

      

      
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    B. Modification
of Plan.

    The
Debtors may propose amendments to or modifications of the Plan under section
1127 of the Bankruptcy Code at any time prior to the Confirmation
Date.  After Confirmation, the Debtors, Reorganized Eagle and/or
Reorganized Blast may remedy any defects or omissions or reconcile any
inconsistencies in the Plan or the Confirmation Order or any other order entered
for the purpose of implementing the Plan in such manner as may be necessary to
carry out the purposes and intent of the Plan as long as the interests
of  holders of Allowed Claims are not adversely affected.

    C. Modification
of Payment Terms.

    The
Debtors, Reorganized Eagle and/or Reorganized Blast reserve the right to modify
the treatment of any Allowed Claim, as provided in section 1123(a)(4) of the
Bankruptcy Code, at any time after the Effective Date upon the consent of the
holder of such Allowed Claim.

    D. Section
1145 Exemption.

    The
provisions of Section 5 of the Securities Act of 1933 and any state and local
laws requiring registration for offer or sale of a security do not apply to any
securities issued pursuant to the Plan and for the considerations stated in
Section 1145(a) of the Bankruptcy Code. unless the transferor of any such
securities is deemed to be an “underwriter” within the meaning of the provisions
of section 1145(b) of the Bankruptcy Code. However,
any securities being issued under the Plan, whether Common Stock, Convertible
Preferred Stock, Warrants or options, that are not issued in exchange for an
existing Claim or Interest are not entitled to the benefits of the exemptions
provided for in Section 1145 of the Bankruptcy Code.

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    E. Entire
Agreement.

    The Plan
Documents set forth the entire agreement and undertakings relating to the
subject matter thereof and supersede all prior discussions and
documents.  No Entity shall be bound by any terms, conditions,
definitions, warranties, understandings, or representations with respect to the
subject matter hereof, other than as expressly provided for herein or as may
hereafter be agreed to by the parties in writing.

    F. Severability.

    If, prior
to Confirmation, any term or provision of the Plan is held by the Bankruptcy
Court to be invalid, void or unenforceable, the Bankruptcy Court, at the request
of the Debtors, shall have the power to alter and interpret such term or
provision to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be
invalid, void or unenforceable, and such term or provision shall then be
applicable as altered or interpreted.  Notwithstanding any such
holding, alteration or interpretation, the remainder of the terms and provisions
of the Plan shall remain in full force and effect and shall in no way be
affected, impaired or invalidated by such holding, alteration or
interpretation.  The Confirmation Order shall constitute a judicial
determination and shall provide that each term and provision of the Plan, as it
may have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.

    G. Rules
of Construction.

    Where
used in the Plan, a word or phrase appearing in the singular shall be
interpreted as appearing in the plural, and vice versa, if the context or
circumstances require.

    H. Successors
and Assigns.

    The terms
of the Plan shall be binding on and inure to the benefit of successors and
assigns of the original parties bound to or entitled to benefits under such
Plan.

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    I. Headings.

    Headings
are utilized in the Plan for convenience and reference only and shall not
constitute a part of the Plan for any other purpose.

    J. Administrative
Claims Bar Date.

    Unless
otherwise ordered by the Bankruptcy Court, the bar date for Administrative
Claims shall be the first Business Day that is forty-five (45) days after the
Effective Date.  Claimants holding Administrative Claims against the
Debtors not paid on the Effective Date must submit a Request for Payment of
Administrative Expense on or before such bar date.  The notice of
Confirmation to be delivered pursuant to Bankruptcy Rules 2002 and 3020(c) will
set forth such date and constitute notice of the Administrative Claims Bar
Date.  Reorganized Blast, Reorganized Eagle and any other party in
interest will have thirty (30) days after the Administrative Claims Bar Date to
review and object to such Claims before a hearing for determination of such
Administrative Claims is held by the Bankruptcy Court, provided that such thirty
day period of review may be extended by the Bankruptcy Court upon the request of
Reorganized Blast.

    K. Governing
Law.

    Except to
the extent that federal law (including, but not limited to, the Bankruptcy Code
and the Bankruptcy Rules) is applicable or where the Plan provides otherwise,
the rights and obligations arising under the Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas,
without giving effect to its principles of conflicts of law.

    L. Consent
to Jurisdiction.

    Upon
default under the Plan, the Debtors and Reorganized Blast consent to the
jurisdiction of the Bankruptcy Court, or any successor thereto, and agree that
it shall be the preferred forum for all proceedings relating to such
default.

    M. Setoffs.

    Subject
to the limitations provided in section 553 of the Bankruptcy Code, the Debtors
and/or Reorganized Debtor may, but shall not be required to, setoff against any
Claim and the payments or other distributions to be made pursuant to the Plan in
respect of such Claim, claims of any nature whatsoever that the Debtors may have
against the holder of such Claim, but neither the failure to do so nor the
allowance of any Claim hereunder shall constitute a waiver or release by the
Debtors of any such claim that the Debtors may have against such
holder.  With respect to any Intercompany Claims, the payments or
other distributions to be made pursuant to the Plan in respect of any
pre-petition Claim of an Affiliate of the Debtors shall be setoff against any
post-petition Claim of the Debtors, provided however, if such setoff results in
a net Claim owing from an Affiliate to a Debtor such Debtor waives and releases
such Claim against the Affiliate.

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    N. Non-Debtor
Waiver of Rights.

    Non-debtor
parties shall have the right to voluntarily waive any rights, benefits or
protections that are afforded to them under the provisions of the Plan or any
order issued in furtherance of the Plan, and such waiver shall supersede such
rights, benefits or protections.  Any such waiver shall only be
effective if such party expressly and specifically waives in writing one or more
of such rights, benefits or protections.

    O. Professional
Fees.

    Subject
to Article 9.15 of the Plan, payment of fees and expenses incurred after the
Effective Date in connection with the Chapter 11 Cases of the Debtors and
their Affiliates by professionals retained pursuant to sections 327, 328, and
1103 of the Bankruptcy Code shall not be subject to approval by the Bankruptcy
Court and may be paid by Reorganized Blast in the ordinary course as those
obligations become due.

    P. Filing
of Additional Documents.

    On or
before the Effective Date, the Debtors may file with the Bankruptcy Court such
other agreements and/or other documents as may be necessary to further evidence
the terms and conditions of the Plan.

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    Q. Notices

    .  All
notices, requests, or demands in connection with the Plan shall be in writing
and shall be mailed or electronically transmitted to:

    If to the
Debtors-in-Possession or Reorganized Debtor:

    


    Blast
Energy Services, Inc.

    Attn:  John
O’Keefe

    14550
Torrey Chase Boulevard

    Suite
330

    Houston,
TX  77014

    Email:  john@blast-es.com

    


    with a
copy to:

    


    H. Rey
Stroube, III

    710
Buckingham Drive

    Houston,
Texas  77024

    Facsimile:  (713)
688-4331

    Email:  rstroube@houston.rr.com

    


    If to the
Creditors Committee:

    


    Akin Gump
Strauss Hauer & Feld LLP

    Attn:  S. Margie
Venus

    1111
Louisiana Street, 44th
Floor

    Houston,
Texas  77002

    Facsimile:  (713)
236-0822

    Email:  svenus@akingump.com

    


    If to the
United States Trustee:

    


    Office of
the United States Trustee

    Attn:  Ellen
Hickman

    U.S.
Department of Justice

    515 Rusk
Avenue, Third Floor

    Houston,
Texas  77002

    Facsimile:  (713)
718-4680

    Email:  ellen.hickman@usdoj.gov

     

    If to
Laurus to:

    


    Laurus
Master Fund Ltd.

    Attn:
Brendan Phalen

    335
Madison Avenue, 10th Floor

    New York,
NY 10017

    Telephone:
212-541-5800

    Facsimile:
212-541-4434

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    with a
copy to:

     

    Stuart
Komrower, Esq.

     

    Cole,
Schotz, Meisel, Forman & Leonard, P.A.

     

    25 Main
Street

     

    Hackensack,
NJ  07601

     

    201.525.6331
direct dial

     

    201.678-6331
direct fax

     

    and

    


    Warner
Stevens, L.L.P.

    301
Commerce Street,  Suite 1700

    Fort
Worth, Texas 76102

    Attention:
Michael D. Warner, Esq.

    Telephone:
817-810-5250

    Facsimile:
817-810-5255

    


    


    


    


    Dated:
September 11, 2007

    


    


    Signatures

    This Plan
may be executed in any number of counterparts, each of which shall be deemed to
be an original and all of which shall be deemed one and the same
instrument.

     

    Blast
Energy Services, Inc

     

    


     

    By: /s/ John
O’Keefe

    


    


     

    Eagle
Domestic Drilling Operations LLC

     

    


     

    By: /s/ John
O’Keefe

    


    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    


    


    By:  H.
Rey Stroube, III

    H. Rey Stroube, III

    State Bar
No. 19422000

    710 Buckingham Drive

    Houston,
Texas  77024

    Telephone:  (713)
688-4331

    rstroube@houston.rr.com
(e-mail)

    


    ATTORNEY
FOR BLAST ENERGY SERVICES, INC.

    EAGLE
DOMESTIC DRILLING OPERATIONS LLC, DEBTORS.

    


    
       

    

    ANNEX 1

    


    EAGLE JUNIOR SECURED
NOTE

    $ 234,000 Total
Indebtedness

    


    
      	
              1.  Borrower

            	
              Reorganized
      Blast

            
	
              2.  Amount

            	
              $234,000,
      approximately

            
	
              3.  Collateral

            	
              Lien
      on proceeds of the Hallwood Litigation and Quicksilver Litigation subject
      and subordinate to the Laurus Lien.  No exercise of any rights
      or remedies with respect to the collateral unless and until the Laurus
      Retained Claim is paid in full.

            
	
              4.  Maturity

            	
              5
      years after the effective date of Blast’s Plan any remaining unpaid
      principal or interest is due and payable

            
	
              5.  Repayment

            	
              Prior
      to the Maturity Date principal payments shall be made from 25% of the Net
      Proceeds of the Hallwood Litigation and the Quicksilver Litigation within
      ten (10) business days from the receipt of any such Net Proceeds. After
      the Laurus Retained Claim is paid in full payments, will be made on the
      Eagle Junior Secured Notes from 90% of the Net Proceeds within ten (10)
      business days from the receipt of any such Net
Proceeds.

            
	
              6.  Interest
      rate

            	
              8%
      per annum; interest payable semi-annually .

            
	
              7.  Optional
      Prepayment

            	
              Blast
      may prepay the Eagle Junior Secured Notes at any time, without premium or
      penalty.

            
	
              9.  Covenants

            	
              Affirmative
      and negative covenants customary for a credit and note structure of this
      type, including, but not limited to, incurrence of indebtedness, debt to
      net worth ratio, fixed charge coverage ratio, distributions, sale of
      assets, encumbrances, and merger and consolidation.

            
	
              10.  Assignability

            	
              none

            
	
              11.
      Payment Dates

            	
              within
      ten (10) business days after receipt of Net
  Proceeds

            


    

    


    
      
        
           


        

        
          56

          
            

          

        

        
           


        

      

    

    


    ANNEX 2

    BLAST JUNIOR SECURED
NOTE

    $ 917,000 Total
Indebtedness

    


    
      	
              1.  Borrower

            	
              Reorganized
      Blast

            
	
              2.  Amount

            	
              $917,000,
      approximately

            
	
              3.  Collateral

            	
              Lien
      on proceeds of the Hallwood Litigation and Quicksilver Litigation subject
      and subordinate to the Laurus Lien, and to the Lien securing the Eagle
      Junior Secured Note.  No exercise of any rights or remedies with
      respect to the collateral unless and until the Laurus Retained Claim is
      paid in full.

            
	
              4.  Maturity

            	
              5
      years after the effective date of Blast’s Plan any remaining unpaid
      principal or interest is due and payable

            
	
              5.  Repayment

            	
              Prior
      to the Maturity Date and after the Eagle Junior Secured Notes are paid in
      full, but prior to the payment in full of the Laurus Retained Claim
      principal payments shall be made from 25% of the Net Proceeds of the
      Hallwood Litigation and the Quicksilver Litigation within ten (10)
      business days from the receipt of any such Net Proceeds. After the Laurus
      Retained Claim and the Eagle Junior Secured Notes are paid in full,
      payments will be made on the Blast Junior Secured Notes from 90% of the
      Net Proceeds within ten (10) business days from the receipt of any such
      Net Proceeds.

            
	
              6.  Interest
      rate

            	
              8%
      per annum; interest payable semi-annually after the Laurus Retained Claim
      is paid in full.

            
	
              7.  Optional
      Prepayment

            	
              Blast
      may prepay the Blast Junior Secured Notes at any time, without premium or
      penalty.

            
	
              9.  Covenants

            	
              Affirmative
      and negative covenants customary for a credit and note structure of this
      type, including, but not limited to, incurrence of indebtedness, debt to
      net worth ratio, fixed charge coverage ratio, distributions, sale of
      assets, encumbrances, and merger and consolidation.

            
	
              10.  Assignability

            	
              none

            
	
              11.
      Payment Dates

            	
              periodic,
      depending on litigation recoveries