ex10_3.htm


    
      

    

    Exhibit 10.3

     

    
      The
Partnership has redacted certain confidential information in this agreement in
reliance upon its confidential treatment request that it has filed with the
Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934. In this agreement, we indicate each redaction by use of
an asterisk *.

    

     

    


    


    GAS
PURCHASE AND PROCESSING AGREEMENT

    


    BETWEEN

    


    DUKE
ENERGY FIELD SERVICES, INC., A COLORADO CORPORATION

    


    AND

    


    UNITED
STATES EXPLORATION, INC, A COLORADO CORPORATION

    


    AND

    


    PETROLEUM
DEVELOPMENT CORPORATION, A NEVADA CORPORATION

    


    


    ("DEDICATED
ACREAGE")

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    INDEX

    


    
      	
              I

            	
              REPRESENTATIONS
      OF SELLERS

            	
              2

            
	 	 	 
	
              II

            	
              COMMITMENT
      OF SELLERS' GAS

            	
              2

            
	 	 	 
	
              III

            	
              CONSTRUCTION
      OF PIPELINE GATHERING SYSTEM

            	
              2

            
	 	 	 
	
              IV

            	
              QUANTITY

            	
              2

            
	 	 	 
	
              V

            	
              GENERAL
      TERMS AND CONDITIONS

            	
              3

            
	 	 	 
	
              VI

            	
              PRICE

            	
              3

            
	 	 	 
	
              VII

            	
              NOTICES

            	
              3

            
	 	 	 
	
              VIII

            	
              TERM

            	
              4

            
	 	 	 
	
              IX

            	
              MISCELLANEOUS

            	
              4

            
	 	 	 
	 
      	
              EXHIBIT
      A - THE LEASES

            	
              Page
      1 A

            
	 	 	 
	 
      	
              EXHIBIT
      B - APPENDIX - GENERAL TERMS AND CONDITIONS

            	 
      
	 	 	 
	 
      	
              1

            	
              DEFINITIONS

            	
              Page
      1 E

            
	 
      	
              2

            	
              POINT(S)
      OF DELIVERY, PRESSURE AND OWNERSHIP

            	
              Page
      2 B

            
	 
      	
              3

            	
              RESERVATIONS
      OF SELLER

            	
              Page
      3 B

            
	 
      	
              4

            	
              QUANTITY
      RESTRICTIONS

            	
              Page
      3 B

            
	 
      	
              5

            	
              SELLER'S
      WARRANTIES

            	
              Page
      4 B

            
	 
      	
              6

            	
              EASEMENTS

            	
              Page
      4 B

            
	 
      	
              7

            	
              SHRINKAGE

            	
              Page
      4 B

            
	 
      	
              8

            	
              GAS
      MEASUREMENT AND QUALITY

            	
              Page
      4 B

            
	 
      	
              9

            	
              ALLOCATION
      OF RESIDUE GAS & PLANT PRODUCTS REVENUES

            	
              Page
      6 B

            
	 
      	
              10

            	
              PRICING
      INFORMATION & REFUNDS

            	
              Page
      7 B

            
	 
      	
              11

            	
              TAXES

            	
              Page
      7 B

            
	 
      	
              12

            	
              PAYMENT

            	
              Page
      7 B

            
	 
      	
              13

            	
              SELLER'S
      REPRESENTATIVE

            	
              Page
      8 B

            
	 
      	
              14

            	
              REGULATORY
      BODIES

            	
              Page
      9 B

            
	 
      	
              15

            	
              FORCE
      MAJEURE

            	
              Page
      9 B

            
	 
      	
              16

            	
              DEFAULTS

            	
              Page
      10 B

            
	 
      	
              17

            	
              UNECONOMIC
      WELL CONNECTIONS

            	
              Page
      10 B

            
	 
      	
              18

            	
              UNECONOMIC
      OPERATION OF GAS PLANTS

            	
              Page
      10 B

            
	 
      	
              19

            	
              LITIGATION
      - ATTORNEYS' FEES

            	
              Page
      11 B

            
	 
      	
              20

            	
              DAMAGES

            	
              Page
      11 B

            
	 
      	
              21

            	
              GENERAL

            	
              Page
      11 B

            


    

    (REVISED
10/11/99)

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    GPA 018 R
(TLL,S/D)

    


    GAS PURCHASE AND PROCESSING
AGREEMENT

    


    


    THIS GAS
PURCHASE AND PROCESSING AGREEMENT, entered into as of the last date acknowledged
below, (herein, as the same may be amended from time to time, called this "Agreement") by and between
DUKE ENERGY FIELD SERVICES, INC., a Colorado corporation, with offices at 370
Seventeenth Street, Suite 900, Denver, Colorado 80202, hereinafter referred to
as "Buyer/Processor",
and UNITED STATES EXPLORATION, INC, a Colorado corporation, whose address is
1560 Broadway, Suite 1900, Denver, Colorado 80202, and PETROLEUM DEVELOPMENT
CORPORATION, a Nevada corporation, whose address is 103 E. Main St., Bridgeport,
WV 26330, hereinafter referred to collectively as "Sellers".

    


    R E C I T A L S

    


    


    
      	
              1

            	
              Buyer/Processor
      owns, operates and maintains a natural gas gathering system, compression
      facilities and natural gas processing facilities, and Buyer/Processor's
      designee owns, operates and maintains certain natural gas liquids
      fractionation facilities (the "Fractionator"), all
      such facilities in the aggregate hereinafter referred to as the "Facilities", which
      Facilities are located in Weld, Larimer, Morgan, Adams and Boulder;
      Counties, Colorado, to enable Buyer/Processor to purchase and accept
      delivery of Sellers' natural gas (including natural gasoline and other
      liquefiable hydrocarbons), produced and saved from the oil and gas leases,
      lands and formations committed hereunder, at the Point(s) of Delivery
      defined herein.

            


    

    


    
      	
              2

            	
              Sellers
      own and hold, or have an interest or interests in certain oil and gas
      leases, wells and/or- lands described in Exhibit "A" attached hereto and
      made a part hereof, said oil and gas leases, wells and/or lands and
      formations thereunder hereinafter sometimes being referred to as the "Leases".

            


    

    


    
      	
              3.

            	
              Sellers
      desires to sell to Buyer/Processor all of the Gas owned or controlled by
      Sellers which is produced and saved from the Leases covered hereunder; as
      well- as to contract with Buyer/Processor to process all such Gas upon the
      terms and for the consideration herein
  expressed.

            


    

    


    
      	
              4

            	
              Buyer/Processor
      desires to purchase, gather and process Sellers' Gas, as defined herein,
      utilizing the Facilities constructed, owned and operated by
      Buyer/Processor upon the terms and for the consideration herein
      expressed.

            


    

    


    


    (DEDICATED
ACREAGE)

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      	
              5

            	
              Buyer/Processor
      has entered into, and may enter into additional, third-party Residue Gas
      Sales Agreements pursuant to which Buyer/Processor shall utilize its best
      efforts to sell the Residue Gas resulting from the processing of Sellers'
      Gas (as defined herein).

            


    

    


    FOR GOOD
AND VALUABLE CONSIDERATION, the Parties hereto agree as follows:

    


    ARTICLE
I

    REPRESENTATIONS OF
SELLERS

     

    
      	
              1.1

            	
              Sellers
      represent and warrant to Buyer/Processor, its successors and assigns, that
      Sellers own an interest in, or have the right to market Sellers' portion
      of the Gas produced and saved from the Leases ("Sellers' Gas") and that Sellers intend
      to construct, or cause to be constructed, the facilities necessary, if
      any, to enable Sellers to sell and deliver to Buyer/Processor for sale at
      the Point(s) of Delivery, as hereinafter set forth, all of Sellers' Gas in
      accordance with the terms and provisions of this
  Agreement.

            


    

    


    ARTICLE
II

    COMMITMENT OF SELLERS'
GAS

    


    
      	
              2.1

            	
              Subject
      to the terms and conditions contained herein, Sellers hereby commit to the
      performance of this Agreement all of Sellers' Gas produced and saved from
      the Leases, and to insure the faithful performance of the provisions of
      this Agreement, Sellers covenant to sell and deliver' the same to
      Buyer/Processor' at the Point(s) of Delivery without other disposition
      except as herein otherwise
provided.

            


    

    


    ARTICLE
III

    CONSTRUCTION OF PIPELINE
GATHERING SYSTEM

    


    
      	
              3.1

            	
              Subject
      to the terms and conditions contained herein, Buyer/Processor agrees to
      construct or has already constructed sufficient miles of pipeline
      gathering system to connect all of the wells drilled and produced, or to
      be drilled and produced, on the Leases by Sellers ("Sellers Wells") at the
      Point(s) of Delivery.

            


    

    


    ARTICLE
IV

    QUANTITY

    


    
      	
              4
      1

            	
              Subject
      to the terms and conditions contained herein, Sellers shall deliver and
      sell to Buyer/Processor, and Buyer/Processor shall receive and purchase
      Sellers' Gas on a best efforts
basis.

            


    

    


    
      	
              4.2

            	
              Sellers
      acknowledge and understand that Buyer/Processor will receive and purchase
      Sellers' Gas utilizing the Facilities which also receive, transmit and
      process Gas delivered to Buyer/Processor by other
  parties.

            


    

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


    ARTICLE
V

    GENERAL TERMS AND
CONDITIONS

    


    
      	
              5.1

            	
              The
      General Terms and Conditions set forth in the Appendix attached hereto as
      Exhibit "B" (the "Appendix") are the
      general terms and conditions applicable to this Agreement, which Appendix
      is by reference hereby incorporated into and made an integral part of this
      Agreement.

            


    

    


    ARTICLE
VI

    PRICE

    


    
      	
              6.1

            	
              Effective
      the date of first deliveries of Sellers' Gas under this Agreement, Sellers
      shall receive a price for all of Sellers' Gas purchased hereunder which
      price shall be calculated as follows, pursuant to Section 9 of the
      Appendix:

            


    

    


    
      	
               
      

            	
              A.

            	
              [ *
      ] percent [ * ] of the Residue Gas Revenues
      attributable to each of Sellers' Wells;
plus

            


    

    


    
      	
               
      

            	
              B.

            	
              [ *
      ] percent [ * ] of the Plant Products Revenue attributable to
      each of Sellers' Wells

            


    

    


    
      	
              6.2

            	
              Sellers
      shall be responsible for distribution of revenues to owners of interest in
      the Gas purchased by Buyer/Processor hereunder, as further described in
      the Payment section of the
Appendix.

            


    

    


    ARTICLE
VII

    NOTICES

    


    
      	
              7.1

            	
              All
      notices and communications required or permitted under this Agreement
      shall be in writing and any communication or delivery hereunder shall be
      deemed to have been duly made when delivered personally or three (3)
      business days following deposit in the United States mails, certified
      mail, return receipt requested, or one (1) business day following delivery
      to recognized overnight courier- service, or upon transmittal by
      facsimile, in each such case postage or charges prepaid and addressed as
      follows:

            


    

     

    


    
      	
              TO:

            	
              SELLERS'
      REPRESENTATIVE:

            	 
      
	 	 	 
	 
      	
              United
      States Exploration, Inc

            	
              Petroleum
      Development Corporation

            
	 
      	
              1560
      Broadway, Suite 1900

            	
              103
      East Main Street

            
	 
      	
              Denver,
      Colorado 80202

            	
              P.O.  Box
      26

            
	 
      	 
      	
              Bridgeport,
      WV 26330

            


    

    


    
      	 
      	
              ATTN:

            	
              Connie
      L Nordberg

            	
              Thomas
      E. Riley

            
	 
      	 
      	
              (303)
      863-3505

            	
              Vice
      President

            
	 
      	 
      	
              (303)
      863-1932-FAX

            	
              (304)
      842-3597

            
	 
      	 
      	 
      	
              (304)
      842-8936- FAX

            


    

    


    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    


    TO:         BUYER/PROCESSOR:

    


    Duke
Energy Field Services, Inc

    370 -
17th Street, Suite 900

    Post
Office Box 5493

    Denver,
Colorado 80217

    


    
      	
               
      

            	
              ATTN:

            	
              Vice
      President - Gas Supply

            


    

    (303)
595-3331

    (303)
595-0480 - FAX

    


    


    ARTICLE VIII

    TERM

    


    
      	
              8.1

            	
              This
      Agreement shall be effective as of October 1, 1999 and shall continue and
      remain in full force and effect for the economic life of the
      Facilities.

            


    

     

    ARTICLE
IX

    MISCELLANEOUS

    


    9.1           Respecting
certain rights of the Parties hereto:

    


    
      	
               
      

            	
              A.

            	
              This
      Agreement shall be binding upon and inure to the benefit of the Parties
      hereto, their successors, assigns, heirs, administrators and/or executors
      and shall constitute a real right and covenant running with the lands and
      leasehold-interests covered hereby. Either Party may assign his or its
      right, title, and interest in, to and under this Agreement, including,
      without limitation, any and all renewals, extensions, amendments, and/or
      supplements hereto; provided, however; that no such assignment shall in
      any way operate to enlarge, alter, or change any right or obligation of
      the other Party or Parties hereto.  No assignment shall be effective
      or binding until a copy of same has been furnished to the other
      Party.

            


    

    


    
      	
               
      

            	
              B.

            	
              Further,
      this Agreement, including, without limitation, any and all renewals,
      extensions, amendments and/or supplements hereto shall be binding upon any
      purchaser of Buyer/Processor's Facilities and upon any purchaser of
      Sellers' Leases, or any part thereof or interest therein which are subject
      to this Agreement. It is agreed that no sale of Sellers' Leases, or any
      part thereof or interest therein, or of all or substantially all of
      Buyer/Processor's Facilities, shall be made unless the purchaser thereof
      shall assume and agree to be bound by this Agreement insofar as the same
      shall affect and relate to the Leases, Facilities or interests so sold or
      conveyed. It is further agreed, however; that nothing herein contained
      shall in any way prevent either Party hereto from pledging or mortgaging
      all or any part of such Party's Leases or Facilities as security under any
      mortgage, deed of trust, or other similar lien, or from pledging this
      Agreement or any benefits accruing hereunder to the Party making the
      pledge, without the assumption of obligations hereunder by the mortgagee,
      pledgee or other grantee under such an
  instrument.

            


    

    


    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

    


    
      	
               
      

            	
              C.

            	
              Nothing
      in this Agreement, expressed or implied, confers any rights or remedies on
      any person or entity not a party hereto other than successors and assigns,
      or heirs, administrators or executors of the Parties
    hereto.

            


    

    


    
      	
              9.2

            	
              Sellers
      expressly do not by the terms of this Agreement, sell, transfer or assign
      unto Buyer/Processor any title or interest whatsoever in the Leases or any
      pipe, meters, lines or other equipment of any nature owned or used by
      Sellers in the operation of Sellers' Wells and the
  Leases.

            


    

    


    
      	
              9.3

            	
              This
      Agreement constitutes the entire agreement and understanding between the
      Parties hereto and supersedes and renders null and void and of no further
      force and effect any prior understandings, negotiations or agreements
      between the Parties relating to the subject matter
      hereof, and all amendments and letter agreements in any way
      relating thereto. No provision of this Agreement may be changed, modified,
      waived or discharged orally, and no change, modification, waiver or
      amendment of any provision will be effective except by written instrument
      to be executed and approved by the Parties
  hereto.

            


    

    


    
      	
              9.4

            	
              THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
      OF THE STATE OF COLORADO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAWS.

            


    

    


    


    THE
PARTIES HERETO have executed this Agreement as of the day and year first above
written.

     

    
      


      
        	 
      	 	
                BUYER/PROCESSOR:

              	 
	
                (SEAL)

              	 	 
      	 
	
                ATTEST:

              	 	
                DUKE
      ENERGY FIELD SERVICES, INC

              	 
	 
      	 	
                A
      COLORADO CORPORATION

              	 
	 
      	 	 
      	 
	
                By:

              	
                /s/ WILLIAM B. MATHEWS

              	 	
                BY:

              	
                /s/ KEVIN L. WILLIAMS

              	 
	 
      	
                WILLIAM
      B. MATHEWS,

              	 	 
      	
                KEVIN
      L. WILLIAMS,

              	 
	 
      	
                ASSISTANT
      SECRETARY

              	 	 
      	
                VICE
      PRESIDENT

              	 


      

    

     

    
      
        
           


        

        
          5

          
            

          

        

        
           


        

      

    

     

    
      
        	 
      	 
      	 
      	 
      	
                SELLERS:

              
	 
      	 
      	 
      	 
      	 
      	 
      
	
                (SEAL)

              	 
      	 
      	 
      	 
      
	
                ATTEST:

              	 
      	 
      	
                UNITED
      STATES EXPLORATION, INC.

              
	 
      	 
      	 
      	 
      	
                A
      COLORADO CORPORATION

              
	 
      	 
      	 
      	 
      	 
      	 
      
	
                BY:

              	
                /s/ Shirley R. Kovar

              	 
      	
                BY:

              	
                /s/ Bruce D. Benson

              	 
      
	 
      	
                Shirley
      R. Kovar

              	 
      	 
      	
                Bruce
      D. Benson

              	 
      
	 
      	
                Assistant
      Secretary

              	 
      	 
      	
                President

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                SELLER'S
      TAX ID NO. 84-1120323

              
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
                (SEAL)

              	 
      	 
      	 
      	 
      
	
                ATTEST:

              	 
      	 
      	
                PETROLEUM
      DEVELOPMENT CORPORATION

              
	 
      	 
      	 
      	 
      	
                A
      NEVADA CORPORATION

              
	 
      	 
      	 
      	 
      	 
      	 
      
	
                BY:

              	/s/
      Dale G Rettinger	 
      	
                BY:

              	/s/
      Thomas E. Riley	 
      
	 
      	Assistant
      Secretary	 
      	 
      	Vice
      President	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                SELLER'S
      TAX ID NO. 95-2636730

              


      

      


      
        	
                STATE
      OF COLORADO

              	
                )

              
	 
      	
                )
      ss

              
	
                CITY
      & COUNTY OF DENVER

              	
                )

              


      

      


      Before
me, Elaine
D. Hegler, a Notary Public in and for said County and State, on this
28th
day of October,
1999, personally appeared KEVIN L. WILLIAMS and WILLIAM B. MATHEWS, known to me
to be the Vice President and Assistant Secretary, respectively, of Duke Energy
Field Services, Inc, a Colorado corporation, on behalf of said corporation and
acknowledged to me that they executed this Agreement for the considerations and
purposes therein set forth.

      


      Given
under my hand and seal of office this 28th day of October,
1999.

      


      


      
        	
                MY
      COMMISSION EXPIRES:

              	 	
                /s/ Elaine D. Hegler

              	 
	 
      	 	
                NOTARY
      PUBLIC

              	 
	
                11-17-02

              	 	 
      	 


      



    
      
        
           


        

        
          6

          
            

          

        

        
           


        

      

    

    


    
      


      
        	
                STATE
      OF Colorado

              	
                )

              
	 
      	
                )
      ss

              
	
                COUNTY
      OF Denver

              	
                )

              


      

      


      Before
me, CONSTANCE
L. NORDBERG, a Notary Public in and for said County and State, on this
15 day of October, 1999, personally
appeared BRUCE D.
BENSON, and SHIRLEY R. KOVAR,
known to me to be the PRESIDENT and ASSISTANT
SECRETARY respectively,
of United States Exploration, Inc., a Colorado corporation, on behalf of said
corporation and acknowledged to me that they executed this Agreement for the
considerations and purposes therein set forth.

      


      Given
under my hand and seal of office this 15 day of October
1999.

      


      


      
        	
                MY
      COMMISSION EXPIRES:

              	 	
                /s/ Constance L.
Nordberg

              
	 
      	 	
                NOTARY
      PUBLIC

              
	
                May 5, 2002

              	 	 
      
	 
      	 	
                CONSTANCE
      L. NORDBERG

              
	 
      	 	
                NOTARY
      PUBLIC

              
	 
      	 	
                STATE
      OF COLORADO

              
	 
      	 	
                My
      Commission Expires May 5, 2002

              


      

      


      
        	
                STATE
      OF
      West Virginia

              	
                )

              
	 
      	
                )
      ss

              
	
                COUNTY OF
      HARRISON

              	
                )

              


      

      


      Before
me, Misty
L. Finch, a Notary Public in and for said County and State, on this 20th
day of October,
1999, personally appeared Dale G.
Rettinger and Thomas E. Riley known
to me to be the Asst.
Secretary and Vice
President,
respectively, of Petroleum Development Corporation, a Nevada corporation,
on behalf of said corporation and acknowledged to me that they executed this
Agreement for the considerations and purposes therein set forth.

      


      Given
under my hand and seal of this 20th
day of October,
1999

      


      
        	
                MY
      COMMISSION EXPIRES:

              	 	
                /s/ Misty L. Finch

              
	 
      	 	
                NOTARY
      PUBLIC

              
	
                October 16, 2001

              	 	 
      


      

      


      

    

     

    
      
        
           


        

        
          7

          
            

          

        

        
           


        

      

    

     

    
      
        	
                EXHIBIT
      “A”

              
	
                LEASE
      SCHEDULE

              
	
                ESSOR

              	 	
                LESSEE

              	 	
                DESCRIPTON

              	 	
                LEASE
      DATE/TERM

              	 	
                RECORDED
      BOOK PAGE

              	 	
                COUNTY

              	 	
                GROSS
      ACRES

              	 	
                NET
      ACRES

              
	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	
                Union
      Pacific Resources Company

              	 	
                United
      States Exploration, Inc.

              	 	
                T4N-R67W
      Sec. 13; NENE Weld Co., CO Insofar and only Insofar as the Lease covers
      the Codell formation and further limited to the wellbore of the Bernhardt
      13A well located in the NENE of section 13, T4N-R67W

              	 	
                To
      be determined

                *

              	 	
                To
      be determined

                *

              	 	
                Weld

              	 	
                40

              	 	
                40

              


      

       

      
        	
                 
      

              	
                *

              	
                To
      be earned under that certain Exploration Agreement dated effective 6/1/98,
      as amended, by and between Union Pacific Resources Company and United
      States Exploration, Inc.

              


      

    

     

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    (ROGGEN)

    


    EXHIBIT
B

    


    APPENDIX

    TO

    GAS PURCHASE AND PROCESSING
AGREEMENT

    GENERAL TERMS AND
CONDITIONS

    


    


    
      	
              1.

            	
              DEFINITIONS

            


    

    


    A.          For
the purposes of the Gas Purchase and Processing Agreement {the "Agreement") to which this
Appendix is attached, unless the context of the Agreement requires otherwise,
the following terms and expressions used therein and in this Appendix shall be
defined as follows:

    


    
      	
               
      

            	
              1)

            	
              "Accounting Period",
      except the initial "Accounting Period",
      shall mean a period of one calendar month, commencing at 8:00 a.m. local
      time on the first day of each month, and ending at 8:00 a.m. local time on
      the first day of the succeeding calendar month. The initial “Accounting Period"
      shall commence at 8:00 a.m. local time on the date of initial deliveries
      of Gas hereunder, continuing for a period of consecutive calendar days
      until 8:00 a.m. local time on the first day of the succeeding calendar
      month.

            


    

    


    
      	
               
      

            	
              2)

            	
              "Btu" (British Thermal
      Unit) shall mean the amount of heat required to raise the temperature of
      one (1) avoirdupois pound of pure water from fifty-eight and five-tenths
      degrees (58.5°) to fifty-nine and five-tenths degrees (59.5°) Fahrenheit
      under standard conditions.

            


    

    


    
      	
               
      

            	
              3)

            	
              "Buyer/Processor's Gathering
      System" shall mean the pipelines (including field compression) and
      appurtenances constructed by Buyer/Processor for the purpose of accepting
      delivery and transmitting Seller's Gas from the Point(s) of Delivery to
      the Gas Plants.

            


    

    


    
      	
               
      

            	
              4)

            	
              "Cubic foot of Gas"
      shall mean the amount of Gas required to fill a cubic foot of space when
      the Gas is at a base pressure of 14.65 Psia and at a base temperature of
      60° F.

            


    

    


    
      	
               
      

            	
              5)

            	
              "Day" shall mean the
      24-hour period beginning and ending at 8:00 a.m. Local
    Time.

            


    

    


    
      	
               
      

            	
              6)

            	
              "Facilities" shall have
      meaning ascribed by the first Recital of the
  Agreement.

            


    

    


    
      	
               
      

            	
              7)

            	
              "Fractionator" shall
      have the meaning ascribed by the first Recital of the
      Agreement.

            


    

    


    
      	
               
      

            	
              8)

            	
              "Gas" shall mean the
      effluent vapor stream including ail of the constituents thereof, entrained
      liquids as produced from a well, whether a gas well or an oil well, and
      delivered into the Facilities by Seller and other producers at their
      respective Point(s) of Delivery.

            


    

    


    
      	
               
      

            	
              9)

            	
              "Gas Plant” shall mean
      Buyer/Processor's Roggen natural gas processing plant (excluding
      fractionation facilities) located in the SW1/4 of Section 24, Township 2
      North, Range 63 West, Weld County, Colorado, as well as those processing
      facilities which may be added or deleted (including the Roggen plant) by
      Buyer/Processor in its sole discretion from time to time for the efficient
      operation of any of the Facilities.  Buyer/Processor, in its sole
      discretion from time to time for the efficient administration of the
      Facilities, may perform allocations under this Agreement on a single
      processing facility basis or on a pooled basis among any or all of the
      processing facilities constituting the Gas
  Plant.

            


    

    


    
      	
               
      

            	
              10)

            	
              "MMBtu" shall mean one
      million (1,000,000) Btu's.

            


    

    


    


    {Revised
10/11/99}

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      	
               
      

            	
              11)

            	
              "Market Price" shall be
      defined as the weighted average commodity price per MM Btu received by
      Buyer/Processor for the amounts of Residue Gas (excluding any storage
      amounts) sold to uncommitted Residue Gas markets via the pipeline
      facilities of Public Service Company of Colorado or Colorado Interstate
      Gas Company at the best price then obtainable in Buyer/Processor's sole
      judgment and discretion, less any applicable transportation, handling and
      storage fees Incurred and paid by Buyer/Processor in association
      therewith. As used above, "uncommitted Residue Gas
      markets" shall mean those markets not committed to specific Gas
      Purchase and Processing or similar Agreements and/or
    sellers.

            


    

    


    
      	
               
      

            	
              12)

            	
              "Month" shall mean the
      period beginning at 8:00 a.m. local time on the first day of a calendar
      month and ending at 8:00 a.m. local time on the first day of the next
      succeeding calendar month.

            


    

    


    
      	
               
      

            	
              13)

            	
              "Party" or "Parties" shall mean
      one or both, respectively, of the signatories to this
      Agreement.

            


    

    


    
      	
               
      

            	
              14)

            	
              "Plant Products” shall
      mean all liquefiable hydrocarbons including without limitation ethane,
      propane, butane, and natural gasoline, individually or as a mixture, as
      determined by the latest GPA Publication 2145 extracted and saved at the
      Gas Plants from all of the Gas delivered to and processed by
      Buyer/Processor, whether or not fractionated into individual components at
      the Fractionator. Plant Products shall not be deemed to include liquids or
      drip (condensed hydrocarbons) which have collected in and are removed from
      Buyer/Processor's Gathering System upstream of the inlets to the Gas
      Plant.

            


    

    


    
      	
               
      

            	
              15)

            	
              "Points of
      Delivery"
      shall have the meaning ascribed to it by Section 2 of this
      Appendix.

            


    

    


    
      	
               
      

            	
              16)

            	
              "Psia" shall mean
      pounds per square inch absolute.

            


    

    


    
      	
               
      

            	
              17)

            	
              "Psig" shall mean
      pounds per square inch gauge.

            


    

    


    
      	
               
      

            	
              18)

            	
              "Residue Gas" shall
      mean that portion of all Gas, as measured at the tailgate of the Gas
      Plant, remaining after the extraction therefrom of Plant Products, Gas
      Plant and field fuel requirements, and Gas Plant and field losses or uses
      of Gas at the Gas Plant.

            


    

    


    
      	
               
      

            	
              19)

            	
              "Seller's Gas Reserves”
      shall mean the total quantity of Seller's Gas attributable to Seller's
      present or future interest in, and/or which Seller has the right to market
      from the Leases.

            


    

    


    
      	
               
      

            	
              20)

            	
              "Shrinkage" shall mean
      the thermal reduction in the Gas which results from Facilities fuel gas
      consumption and the extraction of Plant
  Products.

            


    

    


    
      	
              2.

            	
              POINT(S) OF DELIVERY,
      PRESSURE AND OWNERSHIP

            


    

    


    A.           The
Point(s) of Delivery of all Gas delivered under the Agreement shall be at the
inlet of Buyer/Processor's metering facilities located at Seller's lease
separation facilities or at such other Point(s) of Delivery as may be mutually
agreed upon in writing by the Parties from time to time, and title to said Gas
(including such hydrocarbons from the Gas that have not been or cannot be
recovered through the use of conventional mechanical wellhead gas-oil
separators) shall pass from Seller to Buyer/Processor at said Point(s) of
Delivery with respect to all amounts of Seller's Gas sold to Buyer/Processor
hereunder.

    


    B.           Seller,
at its own expense, shall equip, maintain and operate all facilities to deliver
Seller's Gas to Buyer/Processor at the Point(s) of Delivery, including, but not
limited to, installation and maintenance of Seller's gathering facilities and
mechanical separation equipment.

    


    C.           Buyer/Processor
shall construct, maintain, own and operate all necessary facilities to accept
Seller's Gas from Seller at the Point(s) of Delivery.  Buyer/Processor
shall keep Buyer/Processor's Gathering System and Facilities reasonably clear of
obstruction and in consideration thereof shall own all vapors, liquids or drip
collected and removed from same.

    


    
      
        
           


        

        
          2
B

          
            

          

        

        
           


        

      

    

    


    D.           Seller
will deliver Gas at the Point(s) of Delivery at a pressure sufficient to enter
Buyer/Processor's Gathering System, which Buyer/Processor agrees to maintain at
an average maximum working pressure during each Accounting Period of [ *
] Psig. However, in the event Seller determines that such working pressure
excessively limits the production of Seller's Wells, Seller shall provide
written notice thereof to Buyer/Processor. Upon receipt of such notice,
Buyer/Process or, as soon as practicable, shall present to Seller a written
proposal pursuant to which Buyer/Processor shall construct, own and operate such
field compression facilities as may be necessary to reduce such pressure to a
mutually acceptable level and shall disclose the charges to be assessed Seller
therefore together with a schedule of payment. Once such proposal has been
accepted by Seller in writing, Buyer/Processor shall utilize its best efforts to
construct or cause to be constructed and placed in operation the required field
compression facilities within ninety (90) days of receipt of such written
acceptance.

    


    E.           As
between the Parties, Seder shall be in possession and control of the Gas
deliverable under the Agreement and responsible for any injury or damage caused
thereby until the same shall have been delivered to Buyer/Processor, after which
delivery Buyer/Processor shall be deemed to be in exclusive possession and
control thereof and responsible for any injury or damage caused
thereby.

    


    
      	
              3

            	
              RESERVATIONS OF
      SELLER

            


    

    


    A.           Seller,
as a reasonable and prudent operator, hereby expressly reserves the following
rights with respect to
Seller's Gas Reserves and the Leases subject hereto:

    


    
      	
               
      

            	
              1)

            	
              The
      right to use the Gas produced from the Leases prior to delivery to
      Buyer/Processor for the following
purposes:

            


    

    


    
      	
               
      

            	
              a)

            	
              For
      fuel in the development and operation of the Leases from which the Gas is
      produced;

            


    

    


    
      	
               
      

            	
              b)

            	
              For
      delivery to the lessors of the Leases of the Gas if such lessors are
      entitled to use or take such Gas in kind under the terms of the
      Leases;

            


    

    


    
      	
               
      

            	
              c)

            	
              For
      fuel in the operation of the facilities which Seller may install in order
      to deliver Gas hereunder in accordance with the terms
    hereof.

            


    

    


    
      	
               
      

            	
              2)

            	
              The
      right to pool or unitize the Leases (or-any portion thereof) with other
      lands and leases so long as such action does not reduce Seller's Gas
      Reserves. In the event of any such pooling or unitization, the Agreement
      will cover Seller's interest in the pool or unit and the Gas attributable
      thereto to the extent that such interest is derived from Seller's Gas
      Reserves.

            


    

    


    B.           Seller
shall provide to Buyer/Processor all necessary information whereby
Buyer/Processor can make the proper allocation herein called for or required by
Buyer/Processor's normai and customary accounting practices or required by
Buyer/Processor's normal and customary contract administration practices, when
different vintages of Gas are being delivered through a single Point of
Delivery.

    


    C.           Seller
shall operate the Leases free of any control by Buyer/Processor, including
without limitation the right to make farmouts of any lease subject to this
Agreement, and to abandon any well and surrender any lease when Seller deems the
same no longer capable of producing Gas in commercial quantities under normal
methods of operation. Seller shall not be required to produce any well or wells
in any manner which in its sole judgment and discretion would not constitute
good operating practice, nor shall Seller be obligated to drill additional wells
or to deepen, repair or rework any existing wells.

    


    
      	
              4.

            	
              QUANTITY
      RESTRICTIONS

            


    

    


    A.           Buyer/Processor's
obligation to receive Seller's Gas under the Agreement is subject to the
limitations and conditions set forth below:

    


    
      	
               
      

            	
              1)

            	
              If
      Buyer/Processor is unable to receive and purchase the total amounts of
      Seller's Gas tendered to Buyer/Processor from Seller's Wails due to market
      restrictions or capacity restrictions on the Facilities, Buyer/Processor
      shall receive and purchase only that portion of Seller's Gas available for
      delivery to the Gas Plant which is ratable on a thermal basis with the
      heating value of all Gas available for delivery to the Gas Plant,
      excluding gas being transported by Buyer/Processor, based upon the most
      recent Accounting Period of production during which no delivery
      restrictions wars imposed and/or no events of force majeure were in
      effect, after all required-purchase and/or dedicated capacity Gas has been
      received and purchased.

            


    

    


    
      
        
           


        

        
          3
B

          
            

          

        

        
           


        

      

    

    


    
      
        	
              	
                2) 

              	
                The
      terms of any third-party Residue Gas sales agreements then in
      force.

              


      

    

    


    
      	
              5.

            	
              SELLER'S
      WARRANTIES

            


    

    


    A.           Seller
hereby warrants title to the Gas sold and delivered hereunder and the right of
Seller to sell the same; and Seller warrants that all such Gas is owned by
Seller, or that Seller has the right to market said Gas free from ad liens and
adverse claims, including liens to secure payments of production taxes,
severance taxes, and other taxes. Seller agrees to defend (with counsel
reasonably acceptable to Buyer/Processor), indemnify Buyer/Processor and save it
harmless from all suits, actions, debts, accounts, damages, costs, losses and
expenses arising from or out of adverse claims, whether meritorious or not, of
any and all persons, firms, or corporations to said Gas or to royalties,
overriding royalties, taxes, license fees, or charges thereon, resulting from
actions of, by, through or under Seller, including, without limitation,
nonpayment or incorrect payment of proceeds of production. Buyer/Processor shall
be entitled to recover all attorneys’ fees incurred as a result of its
Involvement in any action or claim described herein. Buyer/Processor, at any
time thereafter, when it shall appear to Buyer/Processor by reason of receipt of
written notice of claim or dispute that the ownership or title to all or part of
the Leases, or the Gas produced therefrom, may be in a party or parties other
than Seller, or upon learning of any other claims, liens, taxes, royalties,
fees, expenses or other adverse claims, may suspend payments hereunder and
retain as security for the performance of Seller's obligations with respect
thereto, the entire purchase price of the Gas until Buyer/Processor has been
satisfied as to the amount of such claim or ownership claimed, and thereafter up
to the amount of such ownership interest or claim until it has been finally
determined and satisfied or until Seller shall have furnished a bond to
Buyer/Processor in an amount and with sureties satisfactory to Buyer/Processor,
conditioned upon the protection of Buyer/Processor with respect to such
ownership or claim.

    


    
      	
              6.

            	
              EASEMENTS

            


    

    


    A.           To
the extent that it may contractually or lawfully do so under its leasehold
interest without impairing its own similar right. Seller hereby assigns and
transfers to Buyer/Processor any easement across the Seller's Leases, and across
any adjoining lands in which Seller may have an interest, for the purposes of
installing, using, inspecting, repairing, operating, replacing, and/or removing
Buyer/Processor's pipe, meters, lines, and other equipment used or useful in the
performance of the Agreement, It is intended that any property of
Buyer/Processor placed in or upon any of such land shall remain the personal
property of Buyer/Processor, subject to removal by it upon the expiration or
termination of the Agreement for any reason.  Buyer/Processor shall have a
reasonable time after the expiration or termination of the Agreement to remove
same. Buyer/Processor shall defend (with counsel reasonably acceptable to
Seller), indemnify and hold Seller harmless of and from any and all claims and
damages for all injuries to persons, including death, or damage to property
arising out of or incident to Buyer/Processor's use of the easement hereunder
transferred, only in the event said claim or damage shall be the result of
negligence legally imputable to Buyer/Processor, its employees, agents, and
representatives.

    


    
      	
              7.

            	
              SHRINKAGE

            


    

    


    A.           Buyer/Processor
agrees to use ordinary care in transporting Seller's Gas from the Point(s) of
Delivery to the Gas Plant, and after processing Seller's Gas, delivering the
resultant Residue Gas to its purchaser at the tailgate of the Gas Plant.
 However, the Parties understand and agree that certain losses in the Gas
will occur and shall be shared by and among Seller and other third parties whose
gas is transported to the Gas Plant, in the proportion that each party delivers
gas into Buyer/Processor's Gathering System at their respective Point(s) of
Delivery.

    


    
      	
              8.

            	
              GAS MEASUREMENT AND
      QUALITY

            


    

    


    A.           Buyer/Processor
shall furnish and install a suitable orifice meter at the Point(s) of Delivery
of the Gas covered hereby.  Each meter installed by Buyer/Processor shall
be a meter acceptable in the industry and each mater shall be installed and
operated in accordance with the requirements of applicable provisions in
ANSI/API 2530, “Orifice
Metering of Natural Gas” (American Gas Association Gas Measurement
Committee Report No. 3) of the Natural Gas Department of the American Gas
Association, as amended from time to time, or by any other method commonly used
in the industry and mutually acceptable to the Parties, Any meter installed
hereunder shall be open to inspection by Seller at ail reasonable times. The
charts and records pertaining to measurement hereunder shall be kept on file by
Buyer/Processor for a period of two (2) years for the mutual use of the Parties.
 In the event any question arises as to the accuracy of the measurement,
the meter or meters shall be tested upon the demand of either Party. The expense
of any such special test shall be borne by the Party demanding same if the meter
registration is found to be correct, and by Buyer/Processor if found to be
incorrect.

    


    
      
        
           


        

        
          4
B

          
            

          

        

        
           


        

      

    

    


    B.           Seller
may, at its option and sole expense, install, maintain and operate check meters
and other equipment to check Buyer/Processor's meters; provided, however, that
such check meters and other equipment shall be installed by Seller so as not to
interfere with the operation of any of the Facilities.. Buyer/Processor and
Seller shall have access to each other's measuring equipment at all times during
business hours, but the reading, calibrating and adjustment thereof and the
changing of charts shall be done only by the employees or agents of
Buyer/Processor and Seller, respectively, as to meters or check meters so
installed hereunder.

     

    C.           At
least semi-annually Buyer/Processor shall calibrate all meters installed
hereunder and make adjustments as necessary. Should Seller so desire,
Buyer/Processor shall give notice to Seller of the time of such calibrations
sufficiently in advance of holding same in order that Seller may have its
representative present. With respect to any test made hereunder, a registration
within two percent (2%) of correct shall be considered correct. However, the
meter or meters, when found to be incorrect, shall be adjusted to one hundred
percent (100%) accuracy as soon as possible. Settlement for any period during
which the meter registration deviates by more than two percent (2%) of correct
shall be corrected at the rate of inaccuracy for any period of inaccuracy which
is definitely known or agreed upon; but in case the period is not definitely
known or agreed upon, then either for a period of fifteen (15) days prior to the
date of said test, or for a period calculated from the beginning of the
Accounting Period in which the test was conducted, whichever is longer. The rate
of the inaccuracy shall be estimated and agreed upon by the Parties hereto on
the basis of the best available data, using the first of the following methods
which is feasible:

     

    
      	
               
      

            	
              1)

            	
              By
      using the registration of any check meter or meters if installed and
      accurately registering; or, in the absence
  thereof,

            


    

    
      	
               
      

            	
              2)

            	
              By
      calibration, test, or mathematical calculation;
  or

            


    

    
      	
               
      

            	
              3)

            	
              By
      estimation based on comparison of the quantity of deliveries with
      deliveries during preceding periods under similar conditions when the
      meter was registering accurately.

            


    

     

    D.           All
fundamental constants, observations, records and procedures involved in the
determination and/or verification of the quantity and other characteristics of
Gas measured hereunder, unless otherwise specified herein, shall be In
accordance with the applicable provisions in ANSI/API 2530, "Orifice Metering of Natural Gas" (American
Gas Association Gas Measurement Committee Report No. 3) of the Natural Gas
Department of the American Gas Association, as amended from time to time, or by
any other method commonly used in the industry and mutually acceptable to the
Parties.  The average local atmospheric pressure shall be assumed to be
12.3 Psia. The temperature of Gas flowing through each meter shall be determined
by a recording thermometer, installed by Buyer/Processor at its sole cost and
expense to properly record the temperature of the flowing Gas, and the
arithmetical average of the temperature recorded while the Gas is flowing during
each meter chart interval shall be used in correcting amounts delivered
hereunder to a temperature base of sixty degrees Fahrenheit (60°F) and to a
pressure base of 14.65 pounds Psia.

     

    E.           Seller
agrees that all Gas delivered to Buyer/Processor under the Agreement
shall:

     

    
      	
               
      

            	
              1)

            	
              Contain
      not more than one-fourth (1⁄4) grain of
      hydrogen sulfide per one hundred (100) cubic feet of Gas, or more than
      five (5) grains of total sulfur per one hundred (100) cubic feet of
      Gas;

            


    

     

    
      	
               
      

            	
              2)

            	
              Contain
      not more than two percent (2%) by volume of carbon dioxide, nor more than
      three percent (3%) by volume of nitrogen, nor more than two-tenths percent
      (0.2%) by volume of oxygen;

            


    

     

    
      	
               
      

            	
              3)

            	
              Not
      have a maximum temperature greater than one hundred twenty degrees
      Fahrenheit (120°F), or a minimum temperature less than forty degrees
      Fahrenheit (40°F); and

            


    

     

    
      	
               
      

            	
              4)

            	
              Be
      commercially free of all objectionable dust or other solid or liquid or
      gaseous matters which might interfere with its merchantability or cause
      injury to or interference with proper operations of any of the Facilities
      through which the Gas flows.

            


    

    


    
      
        
           


        

        
          5
B

          
            

          

        

        
           


        

      

    

    


    F.           Buyer/Processor
may test Seller's Gas delivered hereunder for adherence to the specifications
above set forth, such testing to be in accordance with generally accepted
industry standards and procedures. If the Gas so delivered by Seller does not
meet the specifications set forth above. Buyer/Processor, at its option, may
refuse to accept delivery of said Gas into its Facilities, or may accept such
Gas, provided that measured volumes of such Gas shall be reduced by the amount
by which the total volume of inert components exceed five percent (5%) as set
forth above. If Seller shall deliver Gas to Buyer/Processor which exceeds the
maximum pressure specifications or fails to meet the quality specifications for
any given Delivery Point, Seller shall be responsible for any damages caused to
Buyer/Processor's Facilities and any other damages as a result of Seller's
delivery of such nonconforming Gas.

     

    G.           At
least annually, Buyer/Processor shall take samples from each of Seller's Wells
at the Delivery Points and have such samples analyzed by chromatograph analysis
to determine the liquids content by component and the heating value of such Gas.
Buyer/Processor shall have the right to take and analyze a spot Gas sample prior
to the regularly scheduled sampling. Additionally, upon Seller's written request
to Buyer/Processor and at Seller's sole cost, risk and expense, Buyer/Processor
shall take and analyze Gas samples more frequently, All Gas samples taken
hereunder shall be taken at such times that are reasonably mutually agreeable so
that the sample will be representative of the Gas produced, shall be analyzed
using the most current Gas Processor's Association Publications and Seller shall
be permitted to be present for such sampling and permitted to take a split
sample.  Heating values determined by calculation from compositional
analysis according to GPA Standard 2172-84 (or latest revision) shall be
converted to values that reflect the actual condition of the Gas on delivery as
adjusted for pressure, water content, and compressibility unless otherwise
prescribed by statute. Gas produced and not dehydrated at point of measurement
shall be considered to be saturated with water at measurement temperature and
pressure unless determined otherwise. For the purpose of making Btu
calculations, Gas which contains seven (7) pounds of water or more per Mcf shall
constitute wet gas and Gas which contains less than seven (7) pounds of water
per Mcf shall constitute dry gas. Any chromatograph analysis taken hereunder
shall be effective for Gas delivered commencing on the first day of the next
succeeding month and shall not be effective retroactively unless otherwise
mutually agreed by the Parties.

     

    
      	
              9.

            	
              ALLOCATION OF RESIDUE
      GAS AND PI ANT PRODUCTS
REVENUES

            


    

     

    A.           For
the purpose of determining the Residue Gas MMBtu's attributable to Producer's
Gas, Gatherer/Processor shall calculate a fraction, the numerator being the
Theoretical Residue MMBtu's of Gas attributable to each of Producer's Wells and
the denominator being the total Theoretical Residue MMBtu's of all Gas received
and processed-by Gatherer/Processor, This fraction shall be multiplied by the
total Residue Gas MMBtu's available at the tailgate of the Gas Plant to
determine the Residue Gas attributable to each of Producer's Wells.. Residue Gas
attributable to each of Producer's Wells shall be allocated to
Gatherer/Processor and Producer pursuant to the Gathering and Processing Fees
provisions contained herein.. For the purpose of making Btu calculations, Gas
which contains seven (7) pounds of water or more per Mcf shall constitute wet
gas and Gas which contains less than seven (7) pounds of water per Mcf shall
constitute dry gas. Any chromatograph analysis taken hereunder shall be
effective for Gas delivered commending on the first day of the next succeeding
month and shall not be effective retroactively unless otherwise agreed by the
Parties.

     

    B.           Theoretical
Residue MMBtu's attributable to each of Producer's Wells shall be determined by
calculating the MMBtu's measured at each of Producer's Wells and deducting the
Shrinkage MMBtu's attributable to each of Producer's Wells Shrinkage MMBtu's
shall be the sum of the MMBtu's determined by multiplying the allocated gallons
of each of Plant Product attributable to each of Producer's Wells by the
following conversion factors:

     

    
      	
              Plant
      Product

            	
              Conversion
      Factor (Btu/Gallon)

            
	
              [
      * ]

            


    

     

     

    C.           Plant
Products Revenue attributable to each of Producer's Wells shall be calculated by
multiplying the percentage of each Plant Product allocable to each of Producer's
Wells by the total apportioned fractionated and non-fractionated Plant Products
Sales Revenue received by Gatherer/Processor for the total of each Plant Product
marketed by Gatherer/Processor or it designee during the applicable Accounting
Period {FOB the Gas Plant and/or the Fractionator, as applicable), less
transportation and fractionation fees with respect to fractionated volumes
(currently [ * ][ * ] per gallon), subject to adjustment by Gatherer/Processor
or its designee, as determined at the inlet to the Fractionator. Division of
revenues from tile Plant Products shall be determined in accordance with the
Gathering and Processing Fees provisions contained herein.

    


    
      
        
           


        

        
          6
B

          
            

          

        

        
           


        

      

    

    


    D.           For
purposes of determining the percentage of each plant Product allocable to each
of Producer's Wells, Gatherer/Processor shall multiply the volume in MCF's of
Gas attributable to each of Producer's Wells by the GPM (Gallons Per MCF) for
each Plant Product contained in the well stream. Said GPM shall be determined by
an Initial chromatograph analysis taken on spot Gas samples from each of
Producer's Wells subject to the measurement provisions of the Existing
Agreements, The calculated value will be the Theoretical Plant Product Content
for each Plant Product of Producer's Gas. Said Theoretical Plant Product Content
for each Plant Product shall be divided by the Total Theoretical Plant Product
Content for each Plant Product of all gas received by Gatherer/Processor to
determine the percentage of Plant Product for each Plant Product attributable to
each of Producer's Wells.

     

    E.           Gatherer/Processor
or its designee, in its sole discretion, shall determine whether or not to
fractionate ail or any portion of the Plant Products based upon then current
market conditions, and will market one hundred percent (100%) of the Plant
Products, both fractionated and unfractionated, upon terms which, in
Gatherer/Processor's or its Designee's sole judgement, are commercially
reasonable. Upon request, Gatherer/Processor will furnish Producer on a monthly
basis with reports containing volumes sold and prices applicable thereto. Upon
execution of Gatherer/Processor's confidentiality agreement. Producer shall have
the right at reasonable times during normal business hours to review the books
and records of Gatherer/Processor pertaining to the sale of Plant Products,
allocation of Residue Gas and revenues received therefrom.

     

    
      	
              10.

            	
              PRICING INFORMATION
      AND REFUNDS

            


    

     

    A.           Seder
agrees that it will supply data and information at Buyer/Processor's reasonable
request, and otherwise cooperate with Buyer/Processor in any regulatory
proceeding wherein the price or other provisions set forth herein may be the
subject of review.

     

    B.           Should
Buyer/Processor make payment to Seller based on the price for any category of
Gas subject to any governmental agency or judicial review of such determination,
and if it is subsequently determined that the Gas for which payment was made was
not eligible for the price upon which payment was based, or if the price to be
paid hereunder for such Gas is determined to be in excess of the maximum lawful
price permitted by applicable NGPA price categories, or if for any reason
Buyer/Processor is not permitted to receive or retain such prices in its resale
rates, then the rate thereafter to be paid shall be accordingly reduced and
Seller will refund to Buyer/Processor any previous excess payments together with
interest at the rate prescribed in 18 C.F.R. Sec. 273.302 or subsequent
regulation.

     

    C.    The Parties
acknowledge that Buyer/Processor has not reviewed the terms of Seller's Leases
pertaining to Seller's Gas and that, to the extent it is responsible for doing
so, Buyer/Processor shall account and make payment to royalty, overriding
royalty, and other interest owners and to taxing authorities based on the price
paid by Buyer/Processor for Seller's Gas as set forth in the Agreement, and that
so long as Buyer/Processor makes payment as aforesaid, Buyer/Processor shall not
be responsible for any other deficiency or overpayment.

     

    
      	
              11.

            	
              TAXES

            


    

     

    A.           Seller
agrees to pay, or cause to be paid, when due, the taxes lawfully levied on
Seller's Gas prior to its delivery to Buyer/Processor, as wall as its
proportionate share of taxes, if any, levied upon the Plant Products to be
marketed by Buyer/Processor hereunder and not paid by the
purchaser.

     

    
      	
              12.

            	
              PAYMENT

            


    

     

    A.           After
delivery of Seller's Gas has commenced, Buyer/Processor shall mail a statement
to Seller indicating the quantity of Gas delivered to and the Plant Products and
Residue Gas purchased by Buyer/Processor during the preceding Accounting Period,
adjustments, if any, made by Buyer/Processor, and the amount due therefore.
Where Buyer/Processor is responsible for distribution of revenues, it shall be
the obligation of Buyer/Processor to cause proper settlement and accounting to
be made and to make distribution of proceeds to all owners of interest in the
proceeds from the sale of Gas delivered to Buyer/Processor hereunder, and in
consideration therefore, Buyer/Processor shall charge a monthly accounting and
settlement fee in the amount of  [ * ] Dollars [ *
] per well per interest owner to whom Buyer/Processor distributes revenues,
said fee to be deducted by Buyer/Processor pro rata from the amount due the
working interest owners hereunder on a per-well basis, The monthly accounting
and settlement fee shall be increased [ each July 1 ] by a percentage equal to
the percentage change In the cumulative implicit GNP price deflator (January
1995 = 1.0) computed and published as an annual rate by the U.S. Department of
Commerce (or, if not available, a comparable economic indicator), provided that
such number shall never be a negative number. Where Seller is responsible for
revenue distribution, Buyer/Processor shall remit the amount due for all Gas
purchased to Seller, and it shall be the obligation of Seller to cause proper
settlement and accounting to be made and to make distribution of proceeds to all
owners of interest in the proceeds from the sale of Gas delivered to
Buyer/Processor hereunder, Buyer/Processor shall mail the statement and payment
either on or before the last day of each month (or on the next business day if
such day is a weekend or holiday) for Gas purchased the preceding Accounting
Period, provided, however, that until Buyer/Processor has received satisfactory
evidence of title, it may suspend payments hereunder.  The Party
responsible for distribution of revenues to owners of interest in the Gas hereby
agrees to defend (with counsel reasonably acceptable to the other Party)),
indemnify and hold the other harmless of and from any and all claims, demands,
actions, causes of action, costs, damages and expenses related to, arising out
of or in any way stemming from such obligation; provided, however, that
notwithstanding anything contained herein or the Agreement to the
contrary.  Seller shall defend (with counsel reasonably acceptable to
Buyer/Processor), indemnify and hold Buyer/Processor of and from any and all
claims, demands, actions, causes of action, costs, damages and expenses related
to incorrect information provided to Buyer/Processor concerning ownership
interests in the proceeds of production. Buyer/Processor, at its election, may
deduct from its payment to Seller, sums, if any, due to Buyer/Processor under
the terms of the Agreement or other transactions.

    


    
      
        
           


        

        
          7
B

          
            

          

        

        
           


        

      

    

    


    B.           Buyer/Processor
shall have the right to deduct from payment to Seller a metering fee of [ *
] per meter, per month for each meter that is less than 100 MMBtu during
any month is delivered to Buyer/Processor.

     

    C.           Upon
execution of the other Party's Confidentiality Agreement, each Party to the
Agreement shall have, at its expense, the right at all times to examine the
books and records of the other Party, during normal working hours, to the extent
necessary to verify the accuracy of any statement, charge, computation, or
demand made under or pursuant to the Agreement. Each Party agrees to keep
records and books of account in accordance with generally accepted accounting
principles in the industry.  The Parties agree that the sole and
exclusive remedy and measure of damages for any improper payments under this
Agreement shall be the amount of underpayment or overpayment, as the case may
be, during the two (2) year period immediately preceding the date on which a
statement delivered hereunder was questioned in writing.

     

    
      	
              13.

            	
              SELLER’S
      REPRESENTATIVE

            


    

     

    A.           The
party set forth in Article 7 of the Agreement, Notices, is designated as
Seller's representative with respect to all matters under this Agreement,
including but not limited to the following:

     

    
      	
               
      

            	
              1)

            	
              To
      give and receive all notices;

            


    

     

    
      	
               
      

            	
              2)

            	
              To
      make and witness any tests to be made of Seller's Gas and measuring
      equipment and adjustments to such
equipment;

            


    

     

    
      	
               
      

            	
              3)

            	
              To
      deliver the quantities of Seller's Gas deliverable
    hereunder;

            


    

     

    
      	
               
      

            	
              4)

            	
              To
      obtain, execute and deliver to Buyer/Processor such division order title
      opinions and division orders as may be required by Buyer/Processor
      hereunder; and

            


    

     

    
      	
               
      

            	
              5)

            	
              To
      comply with the requirements, rules and regulations of any duly
      constituted authority having
jurisdiction.

            


    

     

    
      	
               
      

            	
              6)

            	
              If
      Seller is responsible for distribution of revenues, to receive payment
      hereunder and to cause proper settlement and accounting to be made and
      make distribution of proceeds to all owners of interest in the proceeds
      from the sale of Gas delivered to Buyer/Processor
    hereunder.

            


    

     

    B.           Buyer/Processor
may act, and shall be fully protected in acting, in reliance upon any and all
acts and things done and performed by or agreements made with respect to all
matters dealt with herein by said Representative on behalf of Seller as fully
and with the same effect as though Seller had done, performed, made or executed
the same.

    


    
      
        
           


        

        
          8
B

          
            

          

        

        
           


        

      

    

    


    C.           Seller
may change its Representative designated above, or designate a new
Representative from time to time by delivery of written notice of change and
designation of Representative to Buyer/Processor.  The Representative
so designated shad have and may exercise all power and authority therein granted
with like effect as though named as such Representative herein in the first
instance.

     

    14.           REGULATORY
BODIES

     

    A.           The
Agreement is subject to all present and future valid laws and lawful orders of
all regulatory bodies now or hereafter having jurisdiction of the Parties, or
either of them; and should either of the Parties, by force of such law or
regulation imposed at any time during the term of the Agreement, be ordered or
required to do any act inconsistent with the provisions of the Agreement, the
Agreement shall continue nevertheless and shall be deemed modified to conform
with the requirements of such law or regulation for that period only during
which the requirements of such law or regulation are applicable. Nothing in the
Agreement or this Appendix shall prohibit either Party from obtaining or seeking
to obtain modification or repeal of such law or regulation or restrict either
Party's right to legally contest the validity of such law or regulation, and
each Party reserves the right to file with such regulatory bodies any material
necessary to implement the terms of the Agreement and this Appendix as they
existed prior to the modification.

     

    15           FORCE
MAJEURE

     

    A.           Except
for Buyer/Processor's and Seller's respective obligations to make proper
settlement, accounting and distribution of proceeds to all interest owners as
provided above for Gas delivered to and purchased by Buyer/Processor under the
Agreement, in the event either Buyer/Processor or Seller is rendered unable, by
reason of an event of force majeure, to perform, wholly or in part, any
obligation or commitment set forth in the Agreement, then upon such Party giving
notice and full particulars (including all supporting documentation) of such
event as soon as practicable after the occurrence thereof, the obligations of
both Parties shall be suspended to the extent and for the period of such force
majeure provided that the Party claiming an event of force majeure shall make
all reasonable attempts to remedy the same with all reasonable
dispatch.

     

    B.           The
term "force majeure",
as used herein, shall mean acts of God, strikes, lockouts or industrial disputes
or disturbances, civil disturbances, arrest and restraint of rulers or people,
interruptions by government or court orders, necessity for compliance with any
present and future valid orders of court, or any law, statute, ordinance or
regulation promulgated by any governmental or regulatory authority having proper
jurisdiction, acts of the public enemy, wars, riots, blockades, insurrections,
including inability to secure materials by reason of allocations promulgated by
authorized governmental agencies, epidemics, landslides, lightning, earthquakes,
fires, storms, floods, washouts, inclement weather which necessitates
extraordinary measures and expense to construct facilities and/or maintain
operations, explosions, partial or entire failure of Gas supply, breakage or
accident to machinery or lines of pipe, freezing of wells or pipelines,
inability to obtain or delays in obtaining easements or rights-of-way, the
shutting in of facilities for the making of repairs, alterations or maintenance
to wells, pipelines or plants, or any other cause whether of the kind herein
enumerated or otherwise, not reasonably within the control of the Party claiming
"force
majeure”.

     

    C.           Neither
Party shall be entitled to the benefit of the provisions of this Section under
either or both of the following circumstances:

     

    
      	
               
      

            	
              1)

            	
              To
      the extent that the failure was caused by the Party claiming suspension
      having failed to remedy the condition by taking all reasonable acts, short
      of litigation, if such remedy requires litigation, and having failed to
      resume performance of such commitments or obligations with reasonable
      dispatch; or,

            


    

     

    
      	
               
      

            	
              2)

            	
              If
      the failure was caused by lack of funds, or with respect to the payment of
      any amount or amounts then due
hereunder.

            


    

     

    D.           Settlement
of strikes and lockouts shall be entirely within the discretion of the Party
affected, and the duty that any event of force majeure shall be remedied with
all reasonable dispatch shall not require the settlement of strikes and lockouts
by acceding to the demands of the Parties directly or indirectly involved in
such strikes or lockouts when such course is inadvisable in the discretion of
the Party having such difficulty.

    


    
      
        
           


        

        
          9
B

          
            

          

        

        
           


        

      

    

    


    16.           DEFAULTS

     

    A.           It
is covenanted and agreed that if either Party shall fail to perform any of the
covenants or obligations imposed upon it under and by virtue of the Agreement or
this Appendix, in addition to its other rights and remedies, the other Party may
terminate the Agreement by proceeding as follows:

     

    
      	
               
      

            	
              1)

            	
              The
      Party not In default shall cause a written notice to be served on the
      other Party in default, stating specifically the cause for terminating the
      Agreement, and declaring it to be the Intention of the Party giving notice
      to terminate the same; thereupon, the Party in default shall have thirty
      (30) days after the service of the aforesaid notice in which to remedy or
      remove the cause or causes stated in the notice for terminating the
      Agreement. If within said thirty (30) days the Party in default does so
      remove and remedy said cause or causes, or fully indemnifies the Party not
      in default for any and all consequences of such breach, then such notice
      shall be withdrawn and the Agreement shall continue in full force and
      effect.

            


    

     

    
      	
               
      

            	
              2)

            	
              In
      case the Party in default does not remedy and remove the cause or causes,
      or does not indemnify the Party giving the notice for any and all
      consequences of such breach, within said period of thirty (30) days, then
      the Agreement shall become null and void from and after the expiration of
      said period.

            


    

     

    
      	
               
      

            	
              3)

            	
              Any
      cancellation of the Agreement pursuant to the provisions of this Section
      shall be without prejudice to the obligation of Buyer/Processor to make
      proper settlement, accounting and distribution of proceeds to ad owners of
      interest in the proceeds received for Gas delivered to Buyer/Processor
      thereunder to the time of cancellation, and without waiver of any remedy
      to which the Party not in default may be entitled for violations of the
      Agreement.

            


    

     

    B.           No
waiver by either Seller or Buyer/Processor of any default of the other under
this Agreement shall operate as a waiver of any future default, whether of like
or different character or nature, nor shall any failure to exercise any right
hereunder be considered as a waiver of such right in the future

     

    17.           UNECONOMIC WELL
CONNECTIONS

     

    A.           In
the event Seller desires Buyer/Processor to connect a well to Buyer/Processor's
Gathering System which well, in Buyer/Processor's sole opinion, would not
constitute an economic connection, Buyer/Processor shall be under no obligation
to connect any such well, or to accept any Gas therefrom. Nevertheless,
Buyer/Processor, upon Seller's request, may accept Gas from any such well if
Seller shall acquire and assign without charge to Buyer/Processor a - measuring
station site on Buyer/Processor's existing Gathering System at a mutually
agreeable point, together with all necessary rights of ingress and egress
thereto, and bear the cost of the construction, operation and maintenance of all
facilities necessary to deliver Gas from such well into Buyer/Processor's
Gathering System at said mutually agreeable point. Should Seller elect not to
deliver Gas to Buyer/Processor from such well, Buyer/Processor shall release
such well and the acreage attributable to the drilling and spacing unit thereof
from the Agreement, but only as to the formation in which such well is then
completed.

     

    B.           In
the event Gas volumes available for delivery from any of Seller's Wells
hereunder become uneconomic to Buyer/Processor in the exercise of
Buyer/Processor's reasonable judgment, Buyer/Processor agrees to release from
dedication to this Agreement the affected Well(s) and the Leases to the extent
of the drilling and spacing unit(s) corresponding to such WelI(s).

     

    
      	
              18.

            	
              UNECONOMIC OPERATION
      OF GAS PLANT OR BUYER/PROCESSOR'S GATHERING
  SYSTEM

            


    

     

    A.           If,
in the opinion of Buyer/Processor, any of the Gas Plant or Buyer/Processor's
Gathering System is or becomes uneconomic to operate due to its volume, quality,
Plant Products content, governmental regulation or any other cause,
Buyer/Processor may either modify or suspend operations thereof, in which case
Buyer/Processor shall not be obligated to take delivery of, or may cease
processing all or any portion of the Gas from Seller's Wells, so long as such
condition exists. For the purposes hereof, "uneconomic operation" shall be
defined as circumstances under which Buyer/Processor's share of net operating
revenues (the sum of Buyer/Processor's percentage of revenues attributable to
sales of Plant Products and Residue Gas) of any of the Gas Plant or
Buyer/Processor's Gathering System is insufficient to offset actual operating
costs thereof.

    


    
      
        
           


        

        
          10
B

          
            

          

        

        
           


        

      

    

    


    B.           During
periods of uneconomic operation of any of the Gas Plant or Buyer/Processor's
Gathering System and/or suspension of operation of portions thereof,
Buyer/Processor, at the request of the Seller, shall place back in service and
operate such suspended portions of the affected Gas Plant or Buyer/Processor's
Gathering System as may be necessary to accept and process all or any portion of
Seller's Gas'. In consideration thereof, Seller agrees to reimburse
Buyer/Processor, in the same proportion as the ratio of the Gas volumes
supplied by Seller bear to the total Gas volumes supplied to the affected Gas
Plant or Buyer/Processor's Gathering System by other third-party sellers, for
any losses (costs of operations of the affected Gas Plant or Buyer/Processor's
Gathering System in excess of revenues attributable to operations of the
affected Gas Plant or Buyer/Processor's Gathering System after deducting
payments to all contributing producers for Gas delivered to and processed by the
affected Gas Plant or Buyer/Processor's Gathering System) incurred by
Buyer/Processor during such continued uneconomic operations. Buyer/Processor
may, at its option, elect to sell the affected Gas Plant or Buyer/Processor's
Gathering System rather than operate the same under the terms of this
Section.

     

    
      	
              19.

            	
              LITIGATION -
      ATTORNEYS' FEES

            


    

     

    A.           In
the event litigation arising out of the Agreement (excluding litigation or
actions indemnified pursuant to Section 5, Seller's Warranties,
or Sections 2.E or 21 A of this Appendix) should be initiated by any Party
hereto, the prevailing Party, after the entry of a final non-appealable order,
shall be entitled to recover from the other Party, as a part of said judgment,
all court costs, fees and expenses of such litigation, including reasonable
attorneys' fees.

     

    
      	
              20.

            	
              DAMAGES

            


    

     

    A.           Whether
or not occasioned by a default or other breach of the Agreement, neither Party
shall be liable to he other for special, exemplary, or consequential damages,
except as to third-party claims, pursuant to the indemnification provisions of
the Agreement or this Appendix.

     

    
      	
              21.

            	
              GENERAL

            


    

     

    A.           The
Parties hereto assume full responsibility and liability for the maintenance and
operation of their respective properties and agree to indemnify and save
harmless the other Party from all liability and expense on account of any
damages, claims or actions arising from any act or accident in connection with
the installation, presence, maintenance or operation of the property or
equipment of the indemnifying Party.

     

    B.           Seller
agrees that Buyer/Processor, its successors and assigns, shall have the right,
but not the obligation, at any time to redeem for Seller, its successors and
assigns, or other interest owners by payment of any taxes, deeds of trust,
judgments or other liens on the Leases described in Exhibit "A" hereto, on
Seller's Gas Reserves or the production therefrom, in the event of default of
payment by Seller or other interest owners, and be subrogated to the rights of
the holder or holders thereof Seller further agrees that any such redemption and
payment by Buyer/Processor for the account of Seller or other interest owners
shall be applied by way of a setoff against the purchase price which
Buyer/Processor would otherwise pay to Seller or the other interest owners under
Section 9 of the Appendix attached hereto, such set-off to continue until all
payments by Buyer/Processor under this Agreement, plus interest, have been fully
recouped by Buyer/Processor.

     

    C.           Upon
consent of Buyer/Processor, this Agreement may be ratified and adopted by any
owner of an interest in the Leases subject hereto, or any leases with which the
Leases subject hereto may be pooled or unitized, by execution and delivery to
Buyer/Processor of a separate written instrument ratifying and adopting this
Agreement insofar as said owner's interest in any such lands or leases is
concerned, all the terms and provisions of this Agreement shall be binding upon
such interest owner.  In addition, upon Buyer/Processor's request, Seller
shall cause each interest owner in the Leases to execute and deliver to
Buyer/Processor a ratification of this Agreement.

     

    D.          Each
Seller executing or ratifying the Agreement makes and enters into the Agreement
severally and not jointly with other sellers, and they are not acting as
partners, joint venturers, or otherwise jointly in this transaction, and nothing
herein contained or provided shall operate to create, or be construed as
creating, any such relationship, It is expressly provided that there shall never
be any joint liability against the Parties designated herein as Seller and that
no single party Seller shall be liable for the acts or omissions of any other
single party Seller.

     

    E.           In
the event Seller desires to commit additional Gas produced and saved, or to be
produced and saved, from oil and gas leases other than those dedicated hereunder
and in which Seller owns and holds, or has an interest or interests, such oil
and gas leases and the wells drilled and completed, or to be drilled and
completed, thereon shall be covered by a separate Gas Purchase and Processing
Agreement between Seller and Buyer/Processor.

    


    
      
        
           


        

        
          11
B

          
            

          

        

        
           


        

      

    

    


    F.           The
Equal Employment Opportunity Clause required under Executive Order No. 11246,
the affirmative action commitment for disabled veterans and veterans of the
Vietnam Era, set forth in 41 CFR 60-250 4, the affirmative action clause for
handicapped workers, set forth in CFR 650-741 4, and the related regulations of
the Secretary of Labor, 41 CFR Chapter 60, are incorporated by reference in this
Agreement. By accepting this Agreement, Seller certifies that it complies with
the authorities cited above and that it does not maintain segregated facilities
or permit its employees to perform services at locations where segregated
facilities are maintained, as required by 41 CFR 60.1.8.

     

    


    END OF GENERAL TERMS AND
CONDITIONS

    


    
      
        
           


        

        
          12
B

          
            

          

        

        
           


        

      

    

     

    
      
        		 	
                K N
      Gas Gathering, Inc. 

                A
      Subsidiary of K N Energy Inc 

                635
      N 7th Ave. Brighton,
      CO 80601 

                (303)
      659-5922

              


      

      


      


      September
17, 1999

      


      


      Connie L.
Nordberg

      United
States Exploration, Inc

      1560
Broadway, Suite 1900

      Denver,
CO 80202

      


      Ms.
Nordberg,

      


      KN Gas
Gathering, Inc., hereby releases the following proposed well from our gathering
contract dedication: Bernhardt 13-A, located at NE/4, Section 13 - T4N - R67W,
in Weld County, Colorado

      


      If you
have any questions, please call me at 303-655-4341.

      


      Sincerely,

      


      


      /s/ Scott
Emerson

      Scott
Emerson

      General
Manager

      Wattenberg
Operations

      


      
        	
                Cc:

              	
                Rick
      Williams

              
	 
      	
                Billy
      Cantwell

              
	 
      	
                Darrel
      Gentry

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                Denver
      District Office

              	 	
                 
      

              


      

      


      


      October
4, 1999

      


      


      Ms.
Connie Nordberg

      United
States Exploration, Inc

      1560
Broadway

      Suite
1900

      Denver,
Colorado S0202

      


      
        	
                RE:

              	
                Gas
      Purchase and Sale Agreement

              
	 
      	
                Greater
      Wattenberg Area

              
	 
      	
                Bernhardt
      #13 A T4N, R67W Section 13: NENE

              
	 
      	
                Weld
      County, Colorado

              


      

      


      


      Dear
Connie:

      


      I'm
writing in response to your recent request for a Release of Dedication for the
referenced well from our Gas Purchase and Sale Agreement, effective July 1,
1999.  Narco hereby agrees to release the referenced well from the
dedication of acreage as contained in our Area of Mutual Interest (AMI) to
enable UXP to connect said well to Duke's Gathering System.

      


      All other
terms and conditions remain in full force and effect.  This release
applys only to the referenced well Should you have any questions, please let me
know.

      


      


      Sincerely,

      


      /s/
Christopher J. Denison

      Christopher
J Denison

      Gas
Supply Representative

      


      


      1700
Broadway • Suite 2000 • Denver, Colorado 80290

      Telephone:
303-861-9183