<PAGE>

                                                                  EXHIBIT 10.4.1

                            RESTATED CREDIT AGREEMENT

                                      AMONG

                GREAT LAKES ENERGY PARTNERS, L.L.C., AS BORROWER

                                       AND

                                  BANK ONE, NA
                        AND THE INSTITUTIONS NAMED HEREIN
                                   AS LENDERS

                                       AND
                                  BANK ONE, NA,
                             AS ADMINISTRATIVE AGENT

                               JPMORGAN CHASE BANK
                              AS SYNDICATION AGENT,

                         CREDIT LYONNAIS NEW YORK BRANCH
                             AS DOCUMENTATION AGENT

                             THE BANK OF NOVA SCOTIA
                                AS MANAGING AGENT

                         BANC ONE CAPITAL MARKETS, INC.,
                               AS CO-LEAD ARRANGER

                                       AND

                          J.P. MORGAN SECURITIES INC.,
                               AS CO-LEAD ARRANGER

                                   MAY 3, 2002

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page No.
<S>                                                                                                            <C>
1.       Definitions......................................................................................        1
2.       Commitments of the Lenders.......................................................................       12
         (a)  Terms of Commitment.........................................................................       12
         (b)  Procedure for Borrowing.....................................................................       13
         (c)  Letters of Credit...........................................................................       13
         (d)  Procedure for Obtaining Letters of Credit...................................................       14
         (e)  Voluntary Reduction of Commitment...........................................................       15
         (f)  Several Obligations.........................................................................       15
         (g)  Type and Number of Advances.................................................................       15
3.       Notes Evidencing Loans...........................................................................       15
         (a)  Form of Notes...............................................................................       15
         (b)  Issuance of Additional Notes................................................................       16
         (c)  Interest Rates..............................................................................       16
         (d)  Payment of Interest.........................................................................       16
         (e)  Payment of Principal........................................................................       16
         (f)  Payment to Lenders..........................................................................       16
         (g)  Sharing of Payments, Etc....................................................................       17
         (h)  Non-Receipt of Funds by the Administrative Agent............................................       17
4.       Interest Rates...................................................................................       17
         (a)  Options.....................................................................................       17
         (b)  Interest Rate Determination.................................................................       18
         (c)  Conversion Option...........................................................................       18
         (d)  Recoupment..................................................................................       19
         (e)  Interest Rates Applicable After Default.....................................................       19
5.       Special Provisions Relating to Loans.............................................................       19
         (a)  Unavailability of Funds or Inadequacy of Pricing............................................       19
         (b)  Change in Laws..............................................................................       20
         (c)  Increased Cost or Reduced Return............................................................       20
         (d)  Discretion of Lender as to Manner of Funding................................................       22
         (e)  Breakage Fees...............................................................................       22
6.       Collateral Security..............................................................................       23
7.       Borrowing Base...................................................................................       24
         (a)  Initial Borrowing Base and Monthly Commitment Reduction.....................................       24
         (b)  Subsequent Determinations of Borrowing Base.................................................       24
8.       Fees.............................................................................................       25
         (a)  Unused Commitment Fee.......................................................................       25
         (b)  The Letter of Credit Fee....................................................................       26
         (c)  Agency Fees.................................................................................       26
9.       Prepayments......................................................................................       26
         (a)  Voluntary Prepayments.......................................................................       26
         (b)  Mandatory Prepayments.......................................................................       26
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                              <C>
10.      Representations and Warranties...................................................................       27
         (a)  Creation and Existence......................................................................       27
         (b)  Power and Authority.........................................................................       27
         (c)  Binding Obligations.........................................................................       28
         (d)  No Legal Bar or Resultant Lien..............................................................       28
         (e)  No Consent..................................................................................       28
         (f)  Financial Condition.........................................................................       28
         (g)  Liabilities.................................................................................       28
         (h)  Litigation..................................................................................       28
         (i)  Titles, Etc.................................................................................       29
         (j)  Defaults....................................................................................       29
         (k)  Casualties; Taking of Properties............................................................       29
         (l)  Use of Proceeds; Margin Stock...............................................................       29
         (m)  Location of Business and Offices............................................................       29
         (n)  Compliance with the Law.....................................................................       30
         (o)  No Material Misstatements...................................................................       30
         (p)  Not A Utility...............................................................................       30
         (q)  ERISA.......................................................................................       30
         (r)  Public Utility Holding Company Act..........................................................       30
         (s)  Subsidiaries................................................................................       30
         (t)  Environmental Matters.......................................................................       31
         (u)  Liens.......................................................................................       31
         (v)  Assets......................................................................................       31
11.      Conditions of Lending............................................................................       31
12.      Affirmative Covenants............................................................................       33
         (a)  Financial Statements and Reports............................................................       33
         (b)  Certificates of Compliance..................................................................       34
         (c)  Accountants' Certificate....................................................................       34
         (d)  Taxes and Other Liens.......................................................................       34
         (e)  Compliance with Laws........................................................................       35
         (f)  Further Assurances..........................................................................       35
         (g)  Performance of Obligations..................................................................       35
         (h)  Insurance...................................................................................       35
         (i)  Accounts and Records........................................................................       36
         (j)  Right of Inspection.........................................................................       36
         (k)  Notice of Certain Events....................................................................       37
         (l)  ERISA Information and Compliance............................................................       37
         (m)  Environmental Reports and Notices...........................................................       37
         (n)  Compliance and Maintenance..................................................................       38
         (o)  Operation of Properties.....................................................................       38
         (p)  Compliance with Leases and Other Instruments................................................       39
         (q)  Certain Additional Assurances Regarding Maintenance and Operations of Properties............       39
         (r)  Sale of Certain Assets/Prepayment of Proceeds...............................................       39
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                              <C>
         (s)  Title Matters...............................................................................       39
         (t)  Curative Matters............................................................................       40
         (u)  Change of Principal Place of Business.......................................................       40
         (v)  Sale of Equity..............................................................................       40
         (w)  New Guarantors..............................................................................       40
13.      Negative Covenants...............................................................................       40
         (a)  Negative Pledge.............................................................................       40
         (b)  Current Ratio...............................................................................       41
         (c)  Total Debt to EBITDAX.......................................................................       41
         (d)  Consolidations and Mergers..................................................................       41
         (e)  Debts, Guaranties and Other Obligations.....................................................       41
         (f)  Distributions or Dividends..................................................................       42
         (g)  Loans and Advances..........................................................................       42
         (h)  Sale or Discount of Receivables.............................................................       42
         (i)  Nature of Business..........................................................................       43
         (j)  Transactions with Affiliates................................................................       43
         (k)  Rate Management Transactions................................................................       43
         (l)  Investments.................................................................................       43
         (m)  Amendment to Certificate of Formation or Limited Liability Company Agreement................       43
         (n)  Payment or Pre-Payment of Other Indebtedness................................................       43
14.      Events of Default................................................................................       44
15.      The Agents and the Lenders.......................................................................       46
         (a)  Appointment and Authorization...............................................................       46
         (b)  Note Holders................................................................................       47
         (c)  Consultation with Counsel...................................................................       47
         (d)  Documents...................................................................................       47
         (e)  Resignation or Removal of Administrative Agent..............................................       47
         (f)  Responsibility of Administrative Agent......................................................       48
         (g)  Independent Investigation...................................................................       50
         (h)  Indemnification.............................................................................       50
         (i)  Benefit of Section 15.......................................................................       50
         (j)  Pro Rata Treatment..........................................................................       50
         (k)  Assumption as to Payments...................................................................       51
         (l)  Other Financings............................................................................       51
         (m)  Interests of Lenders........................................................................       51
         (n)  Investments.................................................................................       52
16.      Exercise of Rights...............................................................................       52
17.      Notices..........................................................................................       52
18.      Expenses.........................................................................................       53
19.      Indemnity........................................................................................       53
20.      Governing Law....................................................................................       54
21.      Invalid Provisions...............................................................................       54
22.      Maximum Interest Rate............................................................................       54
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                                                              <C>
23.      Amendments.......................................................................................       55
24.      Multiple Counterparts............................................................................       55
25.      Conflict.........................................................................................       55
26.      Survival.........................................................................................       55
27.      Parties Bound....................................................................................       55
28.      Assignments and Participations...................................................................       55
29.      Choice of Forum; Consent to Service of Process and Jurisdiction..................................       57
30.      Waiver of Jury Trial.............................................................................       58
31.      Other Agreements.................................................................................       58
32.      Financial Terms..................................................................................       58
33.      Joinder of Guarantors............................................................................       58
</TABLE>

EXHIBITS

Exhibit "A"       -        Notice of Borrowing

Exhibit "B"       -        Note

Exhibit "C"       -        Unlimited Guaranty

Exhibit "D"       -        Certificate of Compliance

Exhibit "E"       -        Assignment and Acceptance Agreement

Exhibit "F"       -        Pre-Approved Hedging Counterparties

SCHEDULES

Schedule 1        -        Liens

Schedule 2        -        Financial Condition

Schedule 3        -        Liabilities

Schedule 4        -        Litigation

Schedule 5        -        Subsidiaries' Addresses

Schedule 6        -        Owners

Schedule 7        -        Environmental Matters

Schedule 8        -        Title Matters

Schedule 9        -        Curative Matters

Schedule 10       -        Allocations

                                       iv

<PAGE>

                            RESTATED CREDIT AGREEMENT

         THIS RESTATED CREDIT AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 3rd day of May, 2002, by and among GREAT LAKES
ENERGY PARTNERS, L.L.C., a Delaware limited liability company (hereinafter
referred to as "Borrower") and BANK ONE, NA (successor by merger to Bank One,
Texas, N.A.) ("Bank One"), JPMORGAN CHASE BANK ("Chase"), THE BANK OF NOVA
SCOTIA ("Scotiabank"), BANK OF SCOTLAND ("BOS"), CREDIT LYONNAIS NEW YORK BRANCH
("CL"), FORTIS CAPITAL CORP. ("Fortis") and THE FROST NATIONAL BANK ("Frost")
and UNION BANK OF CALIFORNIA, N.A. ("Union") and each of the financial
institutions which is a party hereto (as evidenced by the signature pages to
this Agreement) or which may from time to time become a party hereto pursuant to
the provisions of Section 28 hereof or any successor or assignee thereof
(hereinafter collectively referred to as "Lenders", and individually, "Lender"),
Bank One, as Administrative Agent, Chase, as Syndication Agent, CL, as
Documentation Agent and Scotiabank, as Managing Agent.

                              W I T N E S S E T H:

         WHEREAS, Borrower, certain of Lenders and Agents entered into a
Restated Credit Agreement dated as of September 27, 2001 (as amended, restated
and renewed from time-to-time, the "Credit Agreement") pursuant to which the
Lenders agreed to make a revolving loan to the Borrower in amounts up to
$275,000,000; and

         WHEREAS, Borrower, Lenders and Agents have agreed to restate the Credit
Agreement to make certain amendments thereto as set forth herein and Union has
agreed to purchase an interest in the Loans concurrently with the closing of
such restatement.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:

         1.       Definitions. When used herein the terms "Administrative
Agent", "Agreement", "Bank One", "Borrower", "Chase", "Documentation Agent",
"Frost", "Lender", "Lenders", "Syndication Agent" and "Union" shall have the
meanings indicated above. When used herein the following terms shall have the
following meanings:

                  Administrative Agent means Bank One, NA or any successor
Administrative Agent.

                  Advance or Advances means a loan or loans hereunder.

                  Affiliate means any Person which, directly or indirectly,
         controls, is controlled by or is under common control with the relevant
         Person. For the purposes of this definition, "control" (including, with
         correlative meanings, the terms "controlled by" and "under common
         control with"), as used with respect to any Person, shall mean a member
         of the board of directors, a partner or an officer of such Person, or
         any other Person with

<PAGE>

         possession, directly or indirectly, of the power to direct or cause the
         direction of the management and policies of such Person, through the
         ownership (of record, as trustee, or by proxy) of voting shares,
         partnership interests or voting rights, through a management contract
         or otherwise. Any Person owning or controlling, directly or indirectly,
         ten percent or more of the voting shares, partnership interests or
         voting rights, or other equity interest of another Person shall be
         deemed to be an Affiliate of such Person.

                  Agents means the Administrative Agent, the Syndication Agent
         and the Documentation Agent.

                  Alternate Base Rate shall mean, as of any date, a rate of
         interest per annum equal to the higher of (i) the Corporate Base Rate
         for such date, and (ii) the sum of the Federal Funds Effective Rate for
         such date plus one-half of one percent (.50%) per annum.

                  Assignment and Acceptance means a document substantially in
         the form of Exhibit "E" hereto.

                  Base Rate shall mean, as of any date, the sum of the Alternate
         Base Rate plus the Base Rate Margin.

                  Base Rate Loans shall mean any loan during any period which
         bears interest based upon the Alternate Base Rate or which would bear
         interest based upon the Alternate Base Rate if the Maximum Rate ceiling
         was not in effect at that particular time.

                  Base Rate Margin shall be:

                           (i)      three-quarters of one percent (.75%) per
                  annum whenever the Borrowing Base Usage is equal to or greater
                  than 90%;

                           (ii)     five-eighths of one percent (.625%) per
                  annum whenever the Borrowing Base Usage is equal to or greater
                  than 75%, but less than 90%;

                           (iii)    one-half of one percent (.50%) per annum
                  whenever the Borrowing Base Usage is equal to or greater than
                  50% but less than 75%; or

                           (iv)     one-quarter of one percent (.25%) per annum
                  whenever the Borrowing Base Usage is less than 50%.

                  Borrowing Base means the value assigned by the Lenders from
         time to time to the Oil and Gas Properties pursuant to Section 7
         hereof. Until the next determination of the Borrowing Base pursuant to
         Section 7(b) hereof, the Borrowing Base shall be $205,000,000.

                                       2

<PAGE>

                  Borrowing Base Assets shall mean, as of any date, (i) Oil and
         Gas Properties either (A) given economic value in the most recent
         engineering report provided to the Lenders pursuant to Section 6
         hereof, or (B) other material proved producing Oil and Gas Properties,
         and (ii) gas pipelines and gas gathering systems which are owned by the
         Borrower and its subsidiaries.

                  Borrowing Base Usage shall mean, as of any date, all amounts
         outstanding on the Loan plus all outstanding Letters of Credit, divided
         by the Borrowing Base.

                  Borrowing Date means the date elected by Borrower pursuant to
         Section 2(b) hereof for an Advance on the Loan.

                  Business Day shall mean (i) with respect to any borrowing,
         payment or note selection of Eurodollar Loans, a day (other than
         Saturdays or Sundays) on which banks are legally open for business in
         Dallas, Texas and New York, New York and on which dealings in United
         States dollars are carried on in the London interbank market, and (ii)
         for all other purposes a day (other than Saturdays and Sundays) on
         which banks are legally open for business in Dallas, Texas.

                  Change of Control shall occur if Marbel HoldCo, Inc. and Range
         HoldCo, Inc. or their Affiliates cease to beneficially own and control
         at least sixty-six and two-thirds (66-2/3%) of the membership interests
         of Borrower.

                  Commitment shall mean (A) for all Lenders, the lesser of (i)
         $275,000,000 or (ii) the Borrowing Base, as reduced or increased from
         time to time pursuant to Sections 2 and 7 hereof, and (B) as to any
         Lender, its obligation to make Advances hereunder on the Loans and
         purchase participations in Letters of Credit issued hereunder by the
         Administrative Agent in amounts not exceeding, in the aggregate, an
         amount equal to such Lender's Commitment Percentage times the total
         Commitment as of any date. The Commitment of each Lender hereunder
         shall be adjusted from time to time to reflect assignments made by such
         Lender pursuant to Section 28 hereof. Each reduction in the Commitment
         shall result in a Pro Rata reduction in each Lender's Commitment.

                  Commitment Percentage shall mean, for each Lender, the
         percentage derived by dividing its Commitment at the time of the
         determination by the Commitment of all Lenders at the time of
         determination. The Commitment Percentage of each Lender hereunder as of
         the Effective Date set forth in Schedule 10 and shall be adjusted from
         time to time to reflect assignments made by such Lender pursuant to
         Section 28 hereof.

                  Consolidated Current Assets means the total of the
         consolidated current assets determined in accordance with GAAP, plus,
         as of any date, the unused availability on the Commitment, less any
         amount required to be included in Consolidated Current Assets as a
         result of the application of FASB Statement 133.

                                       3

<PAGE>

                  Consolidated Current Liabilities means the total of
         consolidated current obligations as determined in accordance with GAAP,
         excluding therefrom, as of any date, current maturities due on the
         Loans, less any amount required to be included in Consolidated Current
         Liabilities as a result of application of FASB Statement 133.

                  Consolidated EBITDAX shall mean Consolidated Net Income
         (excluding gains and losses from asset sales, extraordinary and
         non-recurring gains and losses and non-recurring formation costs) plus
         the sum of (i) income tax expense (but excluding income tax expense
         relating to the sales or other disposition of assets, including capital
         stock, the gains and losses from which are excluded in the
         determination of Consolidated Net Income), plus (ii) Consolidated
         Interest Expense, plus (iii) depreciation, depletion, impairment and
         amortization expense, plus (iv) exploration expenses.

                  Consolidated Interest Expense shall mean the aggregate amount
         of cash and non-cash interest expense (including capitalized interest)
         of Borrower as determined on a consolidated basis in accordance with
         GAAP in respect of all indebtedness, excluding (i) accrued and unpaid
         interest to intercompany indebtedness and (ii) amortization of deferred
         financing costs.

                  Consolidated Net Income shall mean Borrower's consolidated net
         income after income taxes calculated in accordance with GAAP, but
         excluding any non-cash gains or losses as a result of the application
         of FASB Statement 133.

                  Consolidated Total Debt means, as of any date, without
         duplication, (i) all obligations for borrowed money or for the purchase
         price of property, (ii) all obligations evidenced by bonds, debentures,
         notes, or other similar instruments, (iii) all other indebtedness
         (including obligations under capital leases, other than usual and
         customary oil and gas leases) on which interest charges are customarily
         paid or accrued, (iv) all guarantees, (v) the unfunded or unreimbursed
         portion of all letters of credit, (vi) any indebtedness or other
         obligation secured by a Lien on assets, whether or not assumed, and
         (vii) all liability as a general partner of a partnership for
         obligations of that partnership of the nature described in (i) through
         (vii) preceding, but excluding any liabilities required to be included
         as balance sheet liabilities as a result of the application of FASB
         Statement 133.

                  Corporate Base Rate means a rate per annum equal to the
         Corporate Base Rate announced by Administrative Agent from time to
         time, changing when and as said Corporate Base Rate changes.

                  Default means all the events specified in Section 14 hereof,
         regardless of whether there shall have occurred any passage of time or
         giving of notice, or both, that would be necessary in order to
         constitute such event as an Event of Default.

                                       4

<PAGE>

                  Default Rate shall mean a default rate of interest determined
         in accordance with Section 4(e) hereof.

                  Defaulting Lender is used herein as defined in Section 3(f)
         hereof.

                  Documentation Agent means Credit Lyonnais New York Branch or
         any successor Documentation Agent.

                  Effective Date means the date of this Agreement.

                  Eligible Assignee means any of (i) a Lender or any Affiliate
         of a Lender; (ii) a commercial bank organized under the laws of the
         United States, or any state thereof, and having a combined capital and
         surplus of at least $100,000,000; (iii) a commercial bank organized
         under the laws of any other country which is a member of the
         Organization for Economic Cooperation and Development, or a political
         subdivision of any such country, and having a combined capital and
         surplus of at least $100,000,000.00, provided that such bank is acting
         through a branch or agency located in the United States; (iv) a Person
         that is primarily engaged in the business of commercial lending and
         that (A) is a subsidiary of a Lender, (B) a subsidiary of a Person of
         which a Lender is a subsidiary, or (C) a Person of which a Lender is a
         subsidiary; (v) any other entity (other than a natural person) which is
         an "accredited investor" (as defined in Regulation D under the
         Securities Act) which extends credit or buys loans as one of its
         businesses, including, but not limited to, insurance companies, mutual
         funds, and lease financing companies; and (vi) with respect to any
         Lender that is a fund that invests in loans, any other fund that
         invests in loans and is managed by the same investment advisor of such
         Lender or by an Affiliate of such investment advisor (and treating all
         such funds so managed as a single Eligible Assignee); provided,
         however, that any Affiliate of Borrower that acquires an interest in
         any of the Commitment Loans shall not be entitled to vote as a Lender.

                  Engineered Value is used herein as defined in Section 6
         hereof.

                  Environmental Laws means the Comprehensive Environmental
         Response, Compensation and Liability Act of 1980, as amended by the
         Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.A.
         Section 9601, et seq., the Resource Conservation and Recovery Act, as
         amended by the Hazardous Solid Waste Amendment of 1984, 42 U.S.C.A.
         Section 6901, et seq., the Clean Water Act, 33 U.S.C.A. Section 1251,
         et seq., the Clean Air Act, 42 U.S.C.A. Section 1251, et seq., the
         Toxic Substances Control Act, 15 U.S.C.A. Section 2601, et seq., The
         Oil Pollution Act of 1990, 33 U.S.G. Section 2701, et seq., and all
         other laws, statutes, codes, acts, ordinances, orders, judgments,
         decrees, injunctions, rules, regulations, orders, permits and
         restrictions of any federal, state, county, municipal and other
         governments, departments, commissions, boards, agencies, courts,
         authorities, officials and officers, domestic or foreign, relating to
         oil pollution, air pollution, water pollution, noise control and/or the
         handling, discharge, disposal or recovery of on-site or off-site
         asbestos, radioactive materials, spilled or leaked petroleum products,
         distillates or

                                       5

<PAGE>

         fractions and industrial solid waste or "hazardous substances" as
         defined by 42 U.S.C. Section 9601, et seq., as amended, as each of the
         foregoing may be amended from time to time.

                  Environmental Liability means any claim, demand, obligation,
         cause of action, order, violation, damage, injury, judgment, penalty or
         fine, cost of enforcement, cost of remedial action or any other costs
         or expense whatsoever, including reasonable attorneys' fees and
         disbursements, resulting from the violation or alleged violation of any
         Environmental Law or the release of any substance into the environment
         which is required to be remediated by a regulatory agency or
         governmental authority or the imposition of any Environmental Lien (as
         hereinafter defined) which could reasonably be expected to individually
         or in the aggregate have a Material Adverse Effect.

                  Environmental Lien means a Lien in favor of any court,
         governmental agency or instrumentality or any other Person (i) for any
         Environmental Liability or (ii) for damages arising from or cost
         incurred by such court or governmental agency or instrumentality or
         other person in response to a release or threatened release of asbestos
         or "hazardous substance" into the environment, the imposition of which
         Lien could reasonably be expected to have a Material Adverse Effect.

                  ERISA means the Employee Retirement Income Security Act of
         1974, as amended.

                  Eurodollar Base Rate shall mean, with respect to any
         Eurodollar Loan for the relevant Interest Period, the rate determined
         by the Administrative Agent to be the rate at which the Administrative
         Agent offers to place deposits in U.S. dollars with first-class banks
         in the London interbank market at approximately 11:00 a.m. (London
         time) two (2) Business Days prior to the first date of such Interest
         Period, in the approximate amount of the Administrative Agent's
         relevant Eurodollar Loan and having a maturity equal to such Interest
         Period.

                  Eurodollar Loans mean any Advance during any period which
         bears interest at the Eurodollar Rate, or which would bear interest at
         such rate if the Maximum Rate ceiling was not in effect at a particular
         time.

                  Eurodollar Margin shall be:

                           (i)      two percent (2%) per annum whenever the
                  Borrowing Base Usage is equal to or greater than 90%;

                           (ii)     one and seven-eighths percent (1.875%) per
                  annum whenever the Borrowing Base Usage is equal to or greater
                  than 75%, but less than 90%;

                           (iii)    one and three-quarters percent (1.75%) per
                  annum whenever the Borrowing Base Usage is equal to or greater
                  than 50%, but less than 75%; or

                                       6

<PAGE>

                           (iv)     one and one-half percent (1.50%) per annum
                  whenever the Borrowing Base Usage is less than 50%.

                  Eurodollar Rate means, with respect to a Eurodollar Loan for
         the relevant Interest Period, the sum of (i) the quotient of (A) the
         Eurodollar Base Rate applicable to such Interest Period, divided by (B)
         one minus the Reserve Requirement (expressed as a decimal) applicable
         to such Interest Period, plus the Eurodollar Margin. The Eurodollar
         Rate shall be rounded to the next higher multiple of 1/16th of one
         percent if the rate is not such a multiple.

                  Federal Funds Effective Rate shall mean, for any day, an
         interest rate per annum equal to the weighted average of the rates on
         overnight Federal funds transactions with members of the Federal
         Reserve System arranged by Federal funds brokers on such day, as
         published for such day (or, if such day is not a Business Day, for the
         immediately preceding Business Day) by the Federal Reserve Bank of New
         York, or, if such rate is not so published for any day which is a
         Business Day, the average of the quotations at approximately 10:00 a.m.
         (Dallas, Texas time) on such day on such transactions received by the
         Administrative Agent from three (3) Federal funds brokers of recognized
         standing selected by the Administrative Agent in its sole discretion.

                  Financial Statements means balance sheets, income statements,
         statements of cash flow and appropriate footnotes and schedules,
         prepared in accordance with GAAP.

                  GAAP means generally accepted accounting principles,
         consistently applied.

                  Guarantors means all Subsidiaries of Borrower.

                  Guaranties means unlimited guaranties of the Guarantors in the
         form of Exhibit "C" hereto.

                  Interest Payment Date shall mean the last Business Day of each
         calendar month in the case of Base Rate Loans and, in the case of
         Eurodollar Loans, the last day of the applicable Interest Period, and
         if such Interest Period is longer than three (3) months, at three-month
         intervals following the first day of such Interest Periods.

                  Interest Period shall mean with respect to any Eurodollar Loan
         (i) initially, the period commencing on the date such Eurodollar Loan
         is made and ending one (1), two (2), three (3), six (6), or nine (9)
         months thereafter as selected by the Borrower pursuant to Section
         4(a)(ii), and (ii) thereafter, each period commencing on the day
         following the last day of the next preceding Interest Period applicable
         to such Eurodollar Loan and ending one (1), two (2), three (3), six
         (6), or nine (9) months thereafter, as selected by the Borrower
         pursuant to Section 4(a)(ii); provided, however, that (i) if any
         Interest Period would otherwise expire on a day which is not a Business
         Day, such Interest Period shall

                                       7

<PAGE>

         expire on the next succeeding Business Day unless the result of such
         extension would be to extend such Interest Period into the next
         calendar month, in which case such Interest Period shall end on the
         immediately preceding Business Day, (ii) if any Interest Period begins
         on the last Business Day of a calendar month (or on a day for which
         there is no numerically corresponding day in the calendar month at the
         end of such Interest Period) such Interest Period shall end on the last
         Business Day of a calendar month, and (iii) any Interest Period which
         would otherwise expire after the Maturity Date shall end on such
         Maturity Date.

                  Letters of Credit is used herein as defined in Section 2(c)
         hereof.

                  Lien means any mortgage, deed of trust, pledge, security
         interest, assignment, encumbrance or lien (statutory or otherwise) of
         every kind and character.

                  Loans means an Advance or Advances made under the Commitment.

                  Loan Documents means this Agreement, the Notes, the Security
         Instruments and all other documents executed in connection with the
         transaction described in this Agreement.

                  Majority Lenders means Lenders holding 66-2/3% or more of the
         Commitments or if the Commitments have been terminated, Lenders holding
         66-2/3% of the outstanding Loans.

                  Managing Agent means the Bank of Nova Scotia and any successor
         Managing Agent.

                  Material Adverse Effect shall mean a material adverse effect
         on (i) the assets or properties, liabilities, financial condition,
         business, operations, affairs or circumstances of the Borrower, (ii)
         the ability of the Borrower to carry out its businesses as of the date
         of this Agreement or as proposed at the date of this Agreement to be
         conducted, (iii) the ability of Borrower to perform fully and on a
         timely basis its obligations under any of the Loan Documents, or (iv)
         the validity or enforceability of any of the Loan Documents or the
         rights and remedies of the Administrative Agent or the Lenders
         thereunder.

                  Maturity Date shall mean January 1, 2005.

                  Maximum Rate means at any particular time in question, the
         maximum non-usurious rate of interest which under applicable law may
         then be charged on the Note. If such Maximum Rate changes after the
         date hereof, the Maximum Rate shall be automatically increased or
         decreased, as the case may be, without notice to Borrower from time to
         time as the effective date of each change in such Maximum Rate.

                                       8

<PAGE>

                  Notes means the Notes described in Section 3 hereof,
         substantially in the form of Exhibit "B" hereto issued or to be issued
         hereunder to each Lender, respectively, to evidence the indebtedness to
         such Lender arising by reason of the Advances on the Loan, together
         with all modifications, renewals and extensions thereof or any part
         thereof.

                  Oil and Gas Properties means all oil, gas and mineral
         properties and interests, related personal properties (excluding gas
         pipelines and gas gathering systems), in which Borrower grants to the
         Lenders a first and prior lien and security interest pursuant to
         Section 6 hereof.

                  Other Financing is used herein as defined in Section 15(l)
         hereof.

                  Payor is used herein as defined in Section 3(h)hereof.

                  Permitted Liens shall mean (i) royalties, overriding
         royalties, reversionary interests, production payments and similar
         burdens; (ii) sales contracts or other arrangements for the sale of
         production of oil, gas or associated liquid or gaseous hydrocarbons
         which would not (when considered cumulatively with the matters
         discussed in clause (i) above) deprive Borrower of any material right
         in respect of Borrower's assets or properties (except for rights
         customarily granted with respect to such contracts and arrangements);
         (iii) statutory Liens for taxes or other assessments that are not yet
         delinquent (or that, if delinquent, are being contested in good faith
         by appropriate proceedings, levy and execution thereon having been
         stayed and continue to be stayed and for which Borrower has set aside
         on its books adequate reserves in accordance with GAAP); (iv)
         easements, rights of way, servitudes, permits, surface leases and other
         rights in respect to surface operations, pipelines, grazing, logging,
         canals, ditches, reservoirs or the like, conditions, covenants and
         other restrictions, and easements of streets, alleys, highways,
         pipelines, telephone lines, power lines, railways and other easements
         and rights of way on, over or in respect of Borrower's assets or
         properties and that do not individually or in the aggregate, cause a
         Material Adverse Effect; (v) materialmen's, mechanic's, repairman's,
         employee's, warehousemen's, landlord's, carrier's, pipeline's,
         contractor's, sub-contractor's, operator's, non-operator's (arising
         under operating or joint operating agreements), and other Liens
         (including any financing statements filed in respect thereof)
         incidental to obligations incurred by Borrower in connection with the
         construction, maintenance, development, transportation, storage or
         operation of Borrower's assets or properties to the extent not
         delinquent (or which, if delinquent, are being contested in good faith
         by appropriate proceedings and for which Borrower has set aside on its
         books adequate reserves in accordance with GAAP); (vi) all contracts,
         agreements and instruments, and all defects and irregularities and
         other matters affecting Borrower's assets and properties which were in
         existence at the time Borrower's assets and properties were originally
         acquired by Borrower and all routine operational agreements entered
         into in the ordinary course of business, which contracts, agreements,
         instruments, defects, irregularities and other matters and routine
         operational agreements are not such as to, individually or in the
         aggregate, interfere materially with the operation,

                                       9

<PAGE>

         value or use of Borrower's assets and properties, considered in the
         aggregate; (vii) liens in connection with workmen's compensation,
         unemployment insurance or other social security, old age pension or
         public liability obligations; (viii) legal or equitable encumbrances
         deemed to exist by reason of the existence of any litigation or other
         legal proceeding or arising out of a judgment or award with respect to
         which an appeal is being prosecuted in good faith and levy and
         execution thereon have been stayed and continue to be stayed; (ix)
         rights reserved to or vested in any municipality, governmental,
         statutory or other public authority to control or regulate Borrower's
         assets and properties in any manner, and all applicable laws, rules and
         orders from any governmental authority; (x) landlord's liens; (xi)
         Liens incurred pursuant to the Security Instruments; and (xii) Liens
         existing at the date of this Agreement which have been disclosed to
         Lenders in Schedule "1" hereto.

                  Person means an individual, a corporation, a partnership, an
         association, a trust or any other entity or organization, including a
         government or political subdivision or an agency or instrumentality
         thereof.

                  Plan means any plan subject to Title IV of ERISA and
         maintained by Borrower, or any such plan to which Borrower is required
         to contribute on behalf of its employees.

                  Pre-Approved Contracts as used herein shall mean any contracts
         or agreements entered into in connection with any Rate Management
         Transaction designed (i) to hedge, forward, sell or swap crude oil or
         natural gas or otherwise sell up to 80% of the Borrower's anticipated
         production from proved, developed producing reserves of crude oil,
         and/or 80% of the Borrower's anticipated production from proved,
         developed producing reserves of natural gas, during the period from the
         immediately preceding settlement date (or the commencement of the term
         of such hedge transactions if there is no prior settlement date) to
         such settlement date, and (ii) with one or more of the Lenders or
         counterparties to the hedging agreement listed on Exhibit "F" hereto.

                  Pro Rata or Pro Rata Part means for each Lender, (i) for all
         purposes where no Loan is outstanding, such Lender's Commitment
         Percentage and (ii) otherwise, the proportion which the portion of the
         outstanding Loans owed to such Lender bears to the aggregate
         outstanding Loans owed to all Lenders at the time in question.

                  Rate Management Transaction means any transaction (including
         an agreement with respect thereto) now existing or hereafter entered
         into between Borrower and Administrative Agent or the Lenders or the
         counterparties listed on Exhibit "F" hereto which is a rate swap, basis
         swap, forward rate transaction, commodity swap, commodity option,
         equity or equity index swap, equity or equity index option, bond
         option, interest rate option, forward exchange transaction, cap
         transaction, floor transaction, collar transaction, forward
         transaction, currency swap transaction, cross-currency rate swap
         transaction, currency option or any other similar transaction
         (including any option with respect to any of these transactions) or any
         combination thereof, whether linked to one or

                                       10

<PAGE>

         more interest rates, foreign currencies, commodity prices, equity
         prices or other financial measures.

                  Regulation D shall mean Regulation D of the Board of Governors
         of the Federal Reserve System as from time to time in effect and any
         successor thereto and other regulation or official interpretation of
         said Board of Governors relating to reserve requirements applicable to
         member banks of the Federal Reserve System.

                  Reimbursement Obligations means, at any time, the obligations
         of the Borrower in respect of all Letters of Credit then outstanding to
         reimburse amounts paid by any Lender in respect of any drawing or
         drawings under a Letter of Credit.

                  Release Price is used herein as defined in Section 12(r)
         hereof.

                  Required Lenders means Lenders holding 75% or more of the
         Commitments or if the Commitments have been terminated, Lenders holding
         75% of the outstanding Loans.

                  Required Payment is used herein as defined in Section 3(h)
         hereof.

                  Reserve Requirement means, with respect to any Interest
         Period, the maximum aggregate reserve requirement (including all basic,
         supplemental, marginal and other reserves) which is imposed under
         Regulation D or Eurocurrency liabilities.

                  Security Instruments is used collectively herein to mean this
         Agreement, all Deeds of Trust, Mortgages, Security Agreements,
         Assignments of Production and Financing Statements and other collateral
         documents covering the Oil and Gas Properties and related personal
         property, equipment, oil and gas inventory and proceeds of the
         foregoing, all such documents to be in form and substance satisfactory
         to Administrative Agent.

                  Subsidiary means any corporation or other entity of which
         securities or other ownership interests having ordinary voting power to
         elect a majority of the board of directors or other persons performing
         similar functions are at the time directly or indirectly owned by
         Borrower or another subsidiary.

                  Syndication Agent means JPMorgan Chase Bank or any successor
         Syndication Agent.

                  Total Outstandings means, as of any date, the sum of (i) the
         total principal balance outstanding on the Notes, plus (ii) the total
         face amount of all outstanding Letters of Credit, plus (iii) the total
         amount of all unpaid Reimbursement Obligations.

                  Tranche means a set of Eurodollar Loans made by the Lenders at
         the same time and for the same Interest Period.

                                       11

<PAGE>

                  Unscheduled Redeterminations means a redetermination of the
         Borrowing Base made at any time other than on the dates set for the
         regular semi-annual redetermination of the Borrowing Base which are
         made (A) at the request of Borrower (but only one between Borrowing
         Base redeterminations) (B) at the request of Majority Lenders (but only
         once between Borrowing Base redeterminations), provided, however, that
         (i) Majority Lenders may require an Unscheduled Redetermination at any
         time it appears to Administrative Agent or Majority Lenders, in the
         exercise of their reasonable discretion, that either (a) there has been
         a material decrease in the value of the Oil and Gas Properties, or (b)
         an event has occurred which is reasonably expected to have a Material
         Adverse Effect, or (ii) Majority Lenders may require an Unscheduled
         Redetermination if Borrower terminates any material agreements entered
         into in connection with a Rate Management Transaction used by Lenders
         in determining the Borrowing Base or if the counterparty to any such
         material agreement commences, or has commenced against it any
         proceeding under any bankruptcy, insolvency or similar law now or
         hereafter in effect.

                  Unused Commitment Fee Rate shall be:

                           (i)      one-half of one percent (.50%) per annum
                  whenever the Borrowing Base Usage is equal to or greater than
                  75%;

                           (ii)     three-eighths of one percent (.375%) per
                  annum whenever the Borrowing Base Usage is equal to or greater
                  than 50% but less than 75% and

                           (iii)    one-fourth of one percent (.25%) per annum
                  whenever the Borrowing Base Usage is less than 50%.

         2.       Commitments of the Lenders.

                  (a)      Terms of Commitment. On the terms and conditions
         hereinafter set forth, each Lender agrees severally to make Advances to
         the Borrower from time to time during the period beginning on the
         Effective Date and ending on the Maturity Date in such amounts as the
         Borrower may request up to an amount not to exceed, in the aggregate
         principal amount outstanding at any time, the Commitment less Total
         Outstandings. The obligation of the Borrower hereunder shall be
         evidenced by this Agreement and the Notes issued in connection
         herewith, said Notes to be as described in Section 3 hereof.
         Notwithstanding any other provision of this Agreement, no Advance shall
         be required to be made hereunder if any Default or Event of Default (as
         hereinafter defined) has occurred and is continuing. Each Advance under
         the Commitment shall be an aggregate amount of at least $1,000,000 or
         any whole multiples of $100,000 in excess thereof. Irrespective of the
         face amount of the Note or Notes, the Lenders shall never have the
         obligation to Advance any amount or amounts in excess of the Commitment
         or to increase the Commitment.

                                       12

<PAGE>

                  (b)      Procedure for Borrowing. Whenever the Borrower
         desires an Advance hereunder, it shall give Administrative Agent
         telegraphic, telex, facsimile or telephonic notice ("Notice of
         Borrowing") of such requested Advance, which in the case of telephonic
         notice, shall be promptly confirmed in writing. Each Notice of
         Borrowing shall be in the form of Exhibit "A" attached hereto and shall
         be received by Administrative Agent not later than 12:00 noon Dallas,
         Texas time, (i) one Business Day prior to the Borrowing Date in the
         case of the Base Rate Loan, or (ii) three Business Days prior to any
         proposed Borrowing Date in the case of Eurodollar Loans. Each Notice of
         Borrowing shall specify (i) the Borrowing Date (which shall be a
         Business Day), (ii) the principal amount to be borrowed, (iii) the
         portion of the Advance constituting Base Rate Loans and/or Eurodollar
         Loans, (iv) if any portion of the proposed Advance is to constitute
         Eurodollar Loans, the initial Interest Period selected by Borrower
         pursuant to Section 4 hereof to be applicable thereto, and (v) the date
         upon which such Advance is required. Upon receipt of such Notice,
         Administrative Agent shall advise each Lender thereof; provided, that
         if the Lenders have received at least one (1) day's notice of such
         Advance prior to funding of a Base Rate Loan, or at least three (3)
         days' notice of each Advance prior to funding in the case of a
         Eurodollar Loan, each Lender shall provide Administrative Agent at its
         office at 1717 Main Street, Dallas, Texas 75201, not later than 1:00
         p.m., Dallas, Texas time, on the Borrowing Date, in immediately
         available funds, its pro rata share of the requested Advance, but the
         aggregate of all such fundings by each Lender shall never exceed such
         Lender's Commitment. Not later than 2:00 p.m., Dallas, Texas time, on
         the Borrowing Date, Administrative Agent shall make available to the
         Borrower at the same office, in like funds, the aggregate amount of
         such requested Advance. Neither Administrative Agent nor any Lender
         shall incur any liability to the Borrower in acting upon any Notice
         referred to above which Administrative Agent or such Lender believes in
         good faith to have been given by a duly authorized officer or other
         person authorized to borrow on behalf of Borrower or for otherwise
         acting in good faith under this Section 2(b). Upon funding of Advances
         by Lenders in accordance with this Agreement, pursuant to any such
         Notice, the Borrower shall have effected Advances hereunder.

                  (c)      Letters of Credit. On the terms and conditions
         hereinafter set forth, the Administrative Agent shall from time to time
         during the period beginning on the Effective Date and ending on the
         Maturity Date upon request of Borrower issue standby and/or commercial
         Letters of Credit for the account of Borrower (the "Letters of Credit")
         in such face amounts as Borrower may request, but not to exceed in the
         aggregate face amount at any time outstanding the sum of Twenty Million
         Dollars ($20,000,000.00). The face amount of all Letters of Credit
         issued and outstanding hereunder shall be considered as Advances on the
         Commitment for Borrowing Base purposes and all payments made by the
         Administrative Agent on such Letters of Credit shall be considered as
         Advances under the Notes. Each Letter of Credit issued for the account
         of Borrower hereunder shall (i) be in favor of such beneficiaries as
         specifically requested by Borrower, (ii) have an expiration date not
         exceeding the earlier of (a) one year or (b) the Maturity Date, and
         (iii) contain such other terms and provisions as may be required by

                                       13

<PAGE>

         issuing Lender. Each Lender (other than Administrative Agent) agrees
         that, upon issuance of any Letter of Credit hereunder, it shall
         automatically acquire a participation in the Administrative Agent's
         liability under such Letter of Credit in an amount equal to such
         Lender's Commitment Percentage of such liability, and each Lender
         (other than Administrative Agent) thereby shall absolutely,
         unconditionally and irrevocably assume, as primary obligor and not as
         surety, and shall be unconditionally obligated to Administrative Agent
         to pay and discharge when due, its Commitment Percentage of
         Administrative Agent's liability under such Letter of Credit. The
         Borrower hereby unconditionally agrees to pay and reimburse the
         Administrative Agent for the amount of each demand for payment under
         any Letter of Credit that is in substantial compliance with the
         provisions of any such Letter of Credit at or prior to the date on
         which payment is to be made by the Administrative Agent to the
         beneficiary thereunder, without presentment, demand, protest or other
         formalities of any kind. Upon receipt from any beneficiary of any
         Letter of Credit of any demand for payment under such Letter of Credit,
         the Administrative Agent shall promptly notify the Borrower of the
         demand and the date upon which such payment is to be made by the
         Administrative Agent to such beneficiary in respect of such demand.
         Forthwith upon receipt of such notice from the Administrative Agent,
         Borrower shall advise the Administrative Agent whether or not it
         intends to borrow hereunder to finance its obligations to reimburse the
         Administrative Agent, and if so, submit a Notice of Borrowing as
         provided in Section 2(b) hereof. If Borrower fails to so advise
         Administrative Agent and thereafter fails to reimburse Administrative
         Agent, the Administrative Agent shall notify each Lender of the demand
         and the failure of the Borrower to reimburse the Administrative Agent,
         and each Lender shall reimburse the Administrative Agent for its
         Commitment Percentage of each such draw paid by the Administrative
         Agent and unreimbursed by the Borrower. All such amounts paid by
         Administrative Agent and/or reimbursed by the Lenders shall be treated
         as an Advance or Advances under the Commitment, which Advances shall be
         immediately due and payable and shall bear interest at the Maximum
         Rate.

                  (d)      Procedure for Obtaining Letters of Credit. The amount
         and date of issuance, renewal, extension or reissuance of a Letter of
         Credit pursuant to the Commitments shall be designated by Borrower's
         written request delivered to Administrative Agent at least three (3)
         Business Days prior to the date of such issuance, renewal, extension or
         reissuance. Concurrently with or promptly following the delivery of the
         request for a Letter of Credit, Borrower shall execute and deliver to
         the Administrative Agent an application and agreement with respect to
         the Letters of Credit, said application and agreement to be in the form
         used by the Administrative Agent. The Administrative Agent shall not be
         obligated to issue, renew, extend or reissue such Letters of Credit if
         (A) the amount thereon when added to the face amount of the outstanding
         Letters of Credit plus any Reimbursement Obligations exceeds Twenty
         Million Dollars ($20,000,000.00) or (B) the amount thereof when added
         to the Total Outstandings would exceed the Commitment. Borrower agrees
         to pay the Administrative Agent for the benefit of the Lenders
         commissions for issuing the Letters of Credit (calculated separately
         for each Letter of Credit) in an amount equal to the Eurodollar

                                       14

<PAGE>

         Margin multiplied by the maximum face amount of the Letter of Credit.
         Borrower further agrees to pay Administrative Agent for its own account
         an additional fronting fee equal to one-quarter of one percent (.25%)
         per annum multiplied times the maximum face amount of each Letter of
         Credit. Such commissions shall be payable prior to the issuance of each
         Letter of Credit and thereafter on each anniversary date of such
         issuance while such Letter of Credit is outstanding. Such commissions
         and fronting fee will be calculated based on the basis of a year
         consisting of 360 days.

                  (e)      Voluntary Reduction of Commitment. The Borrower may
         at any time, or from time to time, upon not less than three (3)
         Business Days' prior written notice to Administrative Agent, reduce or
         terminate the Commitment; provided, however, that (i) each reduction in
         the Commitment must be in the amount of $1,000,000 or more, in
         increments of $1,000,000 and (ii) each reduction must be accompanied by
         a prepayment of the Notes in the amount by which the outstanding
         principal balance of the Notes exceeds the Commitment as reduced
         pursuant to this Section 2.

                  (f)      Several Obligations. The obligations of the Lenders
         under the Commitments are several and not joint. The failure of any
         Lender to make an Advance required to be made by it shall not relieve
         any other Lender of its obligation to make its Advance, and no Lender
         shall be responsible for the failure of any other Lender to make the
         Advance to be made by such other Lender. No Lender shall be required to
         lend hereunder any amount in excess of its legal lending limit.

                  (g)      Type and Number of Advances. Any Advance under the
         Commitment may be a Base Rate Loan or a Eurodollar Loan, or a
         combination thereof, as selected by the Borrower pursuant to Section 4
         hereof. The total number of Tranches which may be outstanding at any
         time shall never exceed eight (8).

         3.       Notes Evidencing Loans. The loans described above in Section 2
shall be evidenced by promissory notes of Borrower as follows:

                  (a)      Form of Notes. The Loans shall be evidenced by a Note
         or Notes in the aggregate face amount of $275,000,000, and shall be in
         the form of Exhibit "B" hereto with appropriate insertions (each a
         "Note"). Notwithstanding the face amount of the Notes, the actual
         principal amount due from the Borrower to Lenders on account of the
         Notes, as of any date of computation, shall be the sum of Advances then
         and theretofore made on account thereof, less all principal payments
         actually received by Lenders in collected funds with respect thereto.
         Although the Notes may be dated as of the Effective Date, interest in
         respect thereof shall be payable only for the period during which the
         loans evidenced thereby are outstanding and, although the stated amount
         of the Notes may be higher, the Notes shall be enforceable, with
         respect to Borrower's obligation to pay the principal amount thereof,
         only to the extent of the unpaid principal amount of the Loans.
         Irrespective of the face amount of the Notes, no Lender shall ever be
         obligated to advance on the Commitment any amount in excess of its
         Commitment then in effect.

                                       15

<PAGE>

                  (b)      Issuance of Additional Notes. At the Effective Date
         there shall be outstanding Notes in the aggregate face amount of
         $275,000,000. From time to time new Notes may issued to other Lenders
         as such Lenders become parties to this Agreement. Upon request from
         Administrative Agent, the Borrower shall execute and deliver to
         Administrative Agent any such new or additional Notes. From time to
         time as new Notes are issued the Administrative Agent shall require
         that each Lender exchange its Note(s) for newly issued Note(s) to
         better reflect the extent of each Lender's Commitments hereunder.

                  (c)      Interest Rates. The unpaid principal balance of the
         Notes shall bear interest from time to time as set forth in Section 4
         hereof.

                  (d)      Payment of Interest. Interest on the Notes shall be
         payable on each Interest Payment Date.

                  (e)      Payment of Principal. Principal of the Note or Notes
         shall be due and payable to the Administrative Agent for the ratable
         benefit of the Lenders on the Maturity Date unless earlier due in whole
         or in part as a result of an acceleration of the amount due or pursuant
         to the mandatory prepayment provisions of Section 9(b) hereof.

                  (f)      Payment to Lenders. Each Lender's Pro Rata Part of
         payment or prepayment of the Loans shall be directed by wire transfer
         to such Lender by the Administrative Agent at the address provided to
         the Administrative Agent for such Lender for payments no later than
         2:00 p.m., Dallas, Texas, time on the Business Day such payments or
         prepayments are deemed hereunder to have been received by
         Administrative Agent; provided, however, in the event that any Lender
         shall have failed to make an Advance as contemplated under Section 2
         hereof (a "Defaulting Lender") and the Administrative Agent or another
         Lender or Lenders shall have made such Advance, payment received by
         Administrative Agent for the account of such Defaulting Lender or
         Lenders shall not be distributed to such Defaulting Lender or Lenders
         until such Advance or Advances shall have been repaid in full to the
         Lender or Lenders who funded such Advance or Advances. Any payment or
         prepayment received by Administrative Agent at any time after 12:00
         noon, Dallas, Texas, time on a Business Day shall be deemed to have
         been received on the next Business Day. Interest shall cease to accrue
         on any principal as of the end of the day preceding the Business Day on
         which any such payment or prepayment is deemed hereunder to have been
         received by Administrative Agent. If Administrative Agent fails to
         transfer any principal amount to any Lender as provided above, then
         Administrative Agent shall promptly direct such principal amount by
         wire transfer to such Lender together with interest thereon with
         respect of the period commencing on the date one (1) day after such
         amount was made available to the Administrative Agent until the date
         the Administrative Agent pays such principal amount to the Lender at
         the rate applicable to such portion of the applicable loan.

                                       16

<PAGE>

                  (g)      Sharing of Payments, Etc. If any Lender shall obtain
         any payment (whether voluntary, involuntary, or otherwise) on account
         of the Loans, (including, without limitation, any set-off) which is in
         excess of its Pro Rata Part of payments on either of the Loans, as the
         case may be, obtained by all Lenders, such Lender shall purchase from
         the other Lenders such participation as shall be necessary to cause
         such purchasing Lender to share the excess payment pro rata with each
         of them; provided that, if all or any portion of such excess payment is
         thereafter recovered from such purchasing Lender, the purchase shall be
         rescinded and the purchase price restored to the extent of the
         recovery. The Borrower agrees that any Lender so purchasing a
         participation from another Lender pursuant to this Section may, to the
         fullest extent permitted by law, exercise all of its rights of payment
         (including the right of offset) with respect to such participation as
         fully as if such Lender were the direct creditor of the Borrower in the
         amount of such participation.

                  (h)      Non-Receipt of Funds by the Administrative Agent.
         Unless the Administrative Agent shall have been notified by a Lender or
         the Borrower (the "Payor") prior to the date on which such Lender is to
         make payment to the Administrative Agent of the proceeds of a Loan to
         be made by it hereunder or the Borrower is to make a payment to the
         Administrative Agent for the account of one or more of the Lenders, as
         the case may be (such payment being herein called the "Required
         Payment"), which notice shall be effective upon receipt, that the Payor
         does not intend to make the Required Payment to the Administrative
         Agent, the Administrative Agent may assume that the Required Payment
         has been made and may, in reliance upon such assumption (but shall not
         be required to), make the amount thereof available to the intended
         recipient on such date and, if the Payor has not in fact made the
         Required Payment to the Administrative Agent, the recipient of such
         payment shall, on demand, pay to the Administrative Agent the amount
         made available to it together with interest thereon in respect of the
         period commencing on the date such amount was made available by the
         Administrative Agent until the date the Administrative Agent recovers
         such amount at the rate applicable to such portion of the applicable
         Loan.

         4.       Interest Rates.

                  (a)      Options.

                           (i)      Base Rate Loans. On all Base Rate Loans the
                  Borrower agrees to pay interest on the Notes calculated on the
                  basis of the actual days elapsed in a year consisting of 360
                  days with respect to the unpaid principal amount of each Base
                  Rate Loan from the date the proceeds thereof are made
                  available to Borrower until maturity (whether by acceleration
                  or otherwise), at a varying rate per annum equal to the lesser
                  of (i) the Maximum Rate (defined herein), or (ii) the sum of
                  the Base Rate plus the Base Rate Margin. Subject to the
                  provisions of this Agreement as to prepayment, the principal
                  of the Notes representing Base Rate Loans shall be payable as
                  specified in Section 3(d) hereof and the interest in

                                       17

<PAGE>

                  respect of each Base Rate Loan shall be payable on each
                  Interest Payment Date. Past due principal and, to the extent
                  permitted by law, past due interest in respect to each Base
                  Rate Loan, shall bear interest, payable on demand, at a rate
                  per annum equal to the Maximum Rate.

                           (ii)     Eurodollar Loans. On all Eurodollar Loans
                  the Borrower agrees to pay interest calculated on the basis of
                  a year consisting of 360 days with respect to the unpaid
                  principal amount of each Eurodollar Loan from the date the
                  proceeds thereof are made available to Borrower until maturity
                  (whether by acceleration or otherwise), at a varying rate per
                  annum equal to the lesser of (i) the Maximum Rate, or (ii) the
                  Eurodollar Rate plus the Eurodollar Margin. Subject to the
                  provisions of this Agreement with respect to prepayment, the
                  principal of the Notes shall be payable as specified in
                  Section 3(d) hereof and the interest with respect to each
                  Eurodollar Loan shall be payable on each Interest Payment
                  Date. Past due principal and, to the extent permitted by law,
                  past due interest shall bear interest, payable on demand, at a
                  rate per annum equal to the Maximum Rate. Upon three (3)
                  Business Days' written notice prior to the making by the
                  Lenders of any Eurodollar Loan (in the case of the initial
                  Interest Period therefor) or the expiration date of each
                  succeeding Interest Period (in the case of subsequent Interest
                  Periods therefor), Borrower shall have the option, subject to
                  compliance by Borrower with all of the provisions of this
                  Agreement, as long as no Event of Default exists, to specify
                  whether the Interest Period commencing on any such date shall
                  be a one (1), two (2), three (3), six (6) or nine (9) month
                  period. If Administrative Agent shall not have received timely
                  notice of a designation of such Interest Period as herein
                  provided, Borrower shall be deemed to have elected to convert
                  all maturing Eurodollar Loans to Base Rate Loans.

                  (b)      Interest Rate Determination. The Administrative Agent
         shall determine each interest rate applicable to the Loans hereunder.
         The Administrative Agent shall give prompt notice to the Borrower and
         the Lenders of each rate of interest so determined and its
         determination thereof shall be conclusive absent error.

                  (c)      Conversion Option. Borrower may elect from time to
         time (i) to convert all or any part of its Eurodollar Loans to Base
         Rate Loans by giving Administrative Agent irrevocable notice of such
         election in writing prior to 10:00 a.m. (Dallas, Texas time) on the
         conversion date and such conversion shall be made on the requested
         conversion date, provided that any such conversion of a Eurodollar Loan
         shall only be made on the last day of the Eurodollar Interest Period
         with respect thereof, (ii) to convert all or any part of its Base Rate
         Loans to Eurodollar Loans by giving the Administrative Agent
         irrevocable written notice of such election three (3) Business Days
         prior to the proposed conversion and such conversion shall be made on
         the requested conversion date or, if such requested conversion date is
         not a Business Day, on the next succeeding

                                       18

<PAGE>

         Business Day. Any such conversion shall not be deemed to be a
         prepayment of any of the loans for purposes of this Agreement on the
         Notes.

                  (d)      Recoupment. If at any time the applicable rate of
         interest selected pursuant to Sections 4(a)(i) or 4(a)(ii) above shall
         exceed the Maximum Rate, thereby causing the interest on the Notes to
         be limited to the Maximum Rate, then any subsequent reduction in the
         interest rate so selected or subsequently selected shall not reduce the
         rate of interest on the Notes below the Maximum Rate until the total
         amount of interest accrued on the Note equals the amount of interest
         which would have accrued on the Notes if the rate or rates selected
         pursuant to Sections 4(a)(i) or (ii), as the case may be, had at all
         times been in effect.

                  (e)      Interest Rates Applicable After Default.
         Notwithstanding anything to the contrary contained in this Section 4,
         during the continuance of a Default or an Event of Default the Majority
         Lenders may, at their option, by notice from Administrative Agent to
         the Borrower (which notice may be revoked at the option of the Majority
         Lenders notwithstanding the provisions of Section 15 hereof, which
         requires all Lenders to consent to changes in interest rates) declare
         that no Advance may be made as, converted into, or continued as a
         Eurodollar Loan. During the continuance of an Event of Default, the
         Majority Lenders, may, at their option, by notice from Administrative
         Agent to the Borrower (which notice may be revoked at the option of
         Majority Lenders notwithstanding the provisions of Section 15 hereof,
         which requires all Lenders to consent to changes in interest rates)
         declare that (i) each Eurodollar Loan shall bear interest for the
         remainder of the applicable Interest Period at the rate otherwise
         applicable to such Interest Period plus two percent (2%) per annum and
         (ii) each Base Rate Loan shall bear interest at the rate otherwise
         applicable to such Interest Period plus two percent (2%), provided
         that, during the continuance of an Event of Default under Section 14(f)
         or 14(g), the interest rate set forth in clauses (i) and (ii) above
         shall be applicable to all outstanding Loans without any election or
         action on the part of the Administrative Agent or any Lender.

         5.       Special Provisions Relating to Loans.

                  (a)      Unavailability of Funds or Inadequacy of Pricing. In
         the event that, in connection with any proposed Eurodollar Loan, the
         Administrative Agent determines, which determination shall, absent
         manifest error, be final, conclusive and binding upon all parties, due
         to changes in circumstances since the date hereof, adequate and fair
         means do not exist for determining the Eurodollar Rate or such rate
         will not accurately reflect the costs to the Lenders of funding
         Eurodollar Loan for such Eurodollar Interest Period, the Administrative
         Agent shall give notice of such determination to the Borrower and the
         Lenders, whereupon, until the Administrative Agent notifies the
         Borrower and the Lenders that the circumstances giving rise to such
         suspension no longer exist, the obligations of the Lenders to make,
         continue or convert a Loan into a Eurodollar Loan

                                       19

<PAGE>

         shall be suspended, and all loans to Borrower shall be Base Rate Loans
         during the period of suspension.

                  (b)      Change in Laws. If at any time any new law or any
         change in existing laws or in the interpretation of any new or existing
         laws shall make it unlawful for any Lender to make or continue to
         maintain or fund a Eurodollar Loan hereunder, then such Lender shall
         promptly notify Borrower in writing and such Lender's obligation to
         make, continue or convert Loans into Eurodollar Loans under this
         Agreement shall be suspended until it is no longer unlawful for such
         Lender to make or maintain Eurodollar Loans. Upon receipt of such
         notice, Borrower shall either repay the outstanding Eurodollar Loan
         owed to the Lenders, without penalty, on the last day of the current
         Interest Periods (or, if any Lender may not lawfully continue to
         maintain and fund such Eurodollar Loan, immediately), or Borrower may
         convert such Eurodollar Loan at such appropriate time to Base Rate
         Loan.

                  (c)      Increased Cost or Reduced Return.

                           (i)      If, after the date hereof, the adoption of
                  any applicable law, rule, or regulation, or any change in any
                  applicable law, rule, or regulation, or any change in the
                  interpretation or administration thereof by any governmental
                  authority, central bank, or comparable agency charged with the
                  interpretation or administration thereof, or compliance by any
                  Lender with any request or directive (whether or not having
                  the force of law) of any such governmental authority, central
                  bank, or comparable agency:

                                    (A)      shall subject such Lender to any
                           tax, duty, or other charge with respect to any
                           Eurodollar Loan, its Notes, or its obligation to make
                           Eurodollar Loans, or change the basis of taxation of
                           any amounts payable to such Lender under this
                           Agreement or its Notes in respect of any Eurodollar
                           Loan (other than franchise taxes and taxes imposed on
                           the overall net income of such Lender);

                                    (B)      shall impose, modify, or deem
                           applicable any reserve, special deposit, assessment,
                           or similar requirement (other than reserve
                           requirements, if any, taken into account in the
                           determination of the Eurodollar Rate) relating to any
                           extensions of credit or other assets of, or any
                           deposits with or other liabilities or commitments of,
                           such Lender, including the Commitment of such Lender
                           hereunder; or

                                    (C)      shall impose on such Lender or on
                           the London interbank market any other condition
                           affecting this Agreement or its Notes or any of such
                           extensions of credit or liabilities or commitments;

                                       20

<PAGE>

                  and the result of any of the foregoing is to increase the cost
                  to such Lender of making, converting into, continuing, or
                  maintaining any Eurodollar Loan or to reduce any sum received
                  or receivable by such Lender under this Agreement or its Notes
                  with respect to any Eurodollar Loan, then Borrower shall pay
                  to such Lender on demand such amount or amounts as will
                  compensate such Lender for such increased cost or reduction.
                  If any Lender requests compensation by Borrower under this
                  Section 5(c), Borrower may, by notice to such Lender (with a
                  copy to Administrative Agent), suspend the obligation of such
                  Lender to make or continue Eurodollar Loans, or to convert all
                  or part of the Base Rate Loan owing to such Lender to a
                  Eurodollar Loan, until the event or condition giving rise to
                  such request ceases to be in effect (in which case the
                  provisions of Section 5(c) shall be applicable); provided that
                  such suspension shall not affect the right of such Lender to
                  receive the compensation so requested.

                           (ii)     If, after the date hereof, any Lender shall
                  have determined that the adoption of any applicable law, rule,
                  or regulation regarding capital adequacy or any change therein
                  or in the interpretation or administration thereof by any
                  governmental authority, central bank, or comparable agency
                  charged with the interpretation or administration thereof, or
                  any request or directive regarding capital adequacy (whether
                  or not having the force of law) of any such governmental
                  authority, central bank, or comparable agency, has or would
                  have the effect of reducing the rate of return on the capital
                  of such Lender or any corporation controlling such Lender as a
                  consequence of such Lender's obligations hereunder to a level
                  below that which such Lender or such corporation could have
                  achieved but for such adoption, change, request, or directive
                  (taking into consideration its policies with respect to
                  capital adequacy), then from time to time upon demand Borrower
                  shall pay to such Lender such additional amount or amounts as
                  will compensate such Lender for such reduction.

                           (iii)    Each Lender shall promptly notify Borrower
                  and Administrative Agent of any event of which it has
                  knowledge, occurring after the date hereof, which will entitle
                  such Lender to compensation pursuant to this Section 5(c) and
                  will designate a separate lending office, if applicable, if
                  such designation will avoid the need for, or reduce the amount
                  of, such compensation and will not, in the judgment of such
                  Lender, be otherwise disadvantageous to it. Any Lender
                  claiming compensation under this Section 5(c) shall furnish to
                  Borrower and Administrative Agent a statement setting forth
                  the additional amount or amounts to be paid to it hereunder
                  which shall be conclusive in the absence of manifest error. In
                  determining such amount, such Lender may use any reasonable
                  averaging and attribution methods.

                           (iv)     Any Lender giving notice to the Borrower
                  through the Administrative Agent, pursuant to Sections 3(k) or
                  5(c) shall give to the Borrower a statement signed by an
                  officer of such Lender setting forth in reasonable detail

                                       21

<PAGE>

                  the basis for, and the calculation of such additional cost,
                  reduced payments or capital requirements, as the case may be,
                  and the additional amounts required to compensate such Lender
                  therefor.

                           (v)      Within five (5) Business Days after receipt
                  by the Borrower of any notice referred to in Sections 3(k) or
                  5(c), the Borrower shall pay to the Administrative Agent for
                  the account of the Lender issuing such notice such additional
                  amounts as are required to compensate such Lender for the
                  increased cost, reduce payments or increase capital
                  requirements identified therein, as the case may be.

                  (d)      Discretion of Lender as to Manner of Funding.
         Notwithstanding any provisions of this Agreement to the contrary, each
         Lender shall be entitled to fund and maintain its funding of all or any
         part of its Loan in any manner it sees fit, it being understood,
         however, that for the purposes of this Agreement all determinations
         hereunder shall be made as if each Lender had actually funded and
         maintained each Eurodollar Loan through the purchase of deposits having
         a maturity corresponding to the last day of the Eurodollar Interest
         Period applicable to such Eurodollar Loan and bearing an interest rate
         to the applicable interest rate for such Eurodollar Period.

                  (e)      Breakage Fees. Without duplication under any other
         provision hereof, if any Lender incurs any loss, cost or expense
         including, without limitation, any loss of profit and loss, cost,
         expense or premium reasonably incurred by reason of the liquidation or
         re-employment of deposits or other funds acquired by such Lender to
         fund or maintain any Eurodollar Loan or the relending or reinvesting of
         such deposits or amounts paid or prepaid to the Lenders as a result of
         any of the following events other than any such occurrence as a result
         in the change of circumstances described in Sections 5(a) and (b):

                           (i)      any payment, prepayment or conversion of a
                  Eurodollar Loan on a date other than the last day of its
                  Eurodollar Interest Period (whether by acceleration,
                  prepayment or otherwise);

                           (ii)     any failure to make a principal payment of a
                  Eurodollar Loan on the due date thereof; or

                           (iii)    any failure by the Borrower to borrow,
                  continue, prepay or convert to a Eurodollar Loan on the dates
                  specified in a notice given pursuant to Section 2(c) or 4(c)
                  hereof;

         then the Borrower shall pay to such Lender such amount as will
         reimburse such Lender for such loss, cost or expense. If any Lender
         makes such a claim for compensation, it shall furnish to Borrower and
         Administrative Agent a statement setting forth the amount of such loss,
         cost or expense in reasonable detail (including an explanation of the
         basis

                                       22

<PAGE>

         for and the computation of such loss, cost or expense) and the amounts
         shown on such statement shall be conclusive and binding absent manifest
         error.

         6.       Collateral Security. To secure the performance by Borrower and
the Guarantors of their respective obligations hereunder, and under the Notes,
the Guaranties and Security Instruments, whether now or hereafter incurred,
matured or unmatured, direct or contingent, joint or several, or joint and
several, including extensions, modifications, renewals and increases thereof,
and substitutions therefore, Borrower and each Guarantor have heretofore granted
and assigned to Administrative Agent for the ratable benefit of the Lenders a
first and prior Lien on certain of its Oil and Gas Properties, certain related
equipment, oil and gas inventory, stock and membership interest in Borrower's
subsidiaries, and proceeds of the foregoing. The Oil and Gas Properties
heretofore or hereafter mortgaged to the Administrative Agent shall represent
not less than 80% of the Engineered Value (as hereinafter defined) of Borrower's
and Guarantors' oil and gas properties as of the Effective Date. All Rate
Management Agreements shall be secured by the Collateral and repaid on a pari
passu basis with the indebtedness and obligations of the Borrower and the
Guarantors under the Loan Documents. All Oil and Gas Properties and other
collateral in which Borrower and the Guarantors herewith grant or hereafter
grants to Administrative Agent for the ratable benefit of the Lenders a first
and prior Lien (to the satisfaction of the Administrative Agent) in accordance
with this Section 6, as such properties and interests are from time to time
constituted, are hereinafter collectively called the "Collateral".

         The granting and assigning of such security interests and Liens by
Borrower and the Guarantors shall be pursuant to Security Instruments in form
and substance reasonably satisfactory to the Administrative Agent. Concurrently
with the delivery of each of the Security Instruments or within a reasonable
time thereafter, Borrower and the Guarantors shall furnish to the Administrative
Agent mortgage and title opinions and other title information satisfactory to
Administrative Agent with respect to the title and Lien status of Borrower's and
Guarantors' interests in not less than 80% of the Engineered Value of the Oil
and Gas Properties covered by the Security Instruments as Administrative Agent
shall have designated. "Engineered Value" for this purpose shall mean future net
revenues discounted at the discount rate being used by the Administrative Agent
as of the date of any such determination utilizing the pricing parameters used
in the engineering report furnished to the Administrative Agent for the ratable
benefit of the Lenders, pursuant to Sections 7 and 12 hereof. Borrower and the
Guarantors will cause to be executed and delivered to the Administrative Agent,
in the future, additional Security Instruments if the Administrative Agent
reasonably deems such are necessary to insure perfection or maintenance of
Lenders' security interests and Liens in the Oil and Gas Properties or any part
thereof.

                                       23

<PAGE>

         7.       Borrowing Base.

                  (a)      Initial Borrowing Base and Monthly Commitment
         Reduction. At the Effective Date, the Borrowing Base shall be
         $205,000,000.

                  (b)      Subsequent Determinations of Borrowing Base.
         Subsequent determinations of the Borrowing Base shall be made by the
         Lenders at least semi-annually on April 1 and October 1 of each year
         beginning October 1, 2002 or as Unscheduled Redeterminations. The
         Borrower shall furnish to the Lenders as soon as possible but in any
         event no later than March 1 of each year, beginning March 1, 2003, with
         (i) an engineering report in form and substance satisfactory to the
         Administrative Agent prepared by Wright & Company or another
         independent petroleum engineering firm acceptable to Administrative
         Agent covering at least 80% of the Oil and Gas Properties and (ii) an
         engineering report in form and substance acceptable to Administrative
         Agent prepared by Borrower's in-house engineering staff covering the
         remaining 20% of the Oil and Gas Properties, both of said engineering
         reports to utilize economic and pricing parameters used by
         Administrative Agent as established from time to time, together with
         such other information concerning the value of the Oil and Gas
         Properties as the Administrative Agent shall deem necessary to
         determine the value of the Oil and Gas Properties. Each such
         engineering report required to be furnished by March 1 of each year
         shall be dated as of December 31 of the preceding year. By September 1
         of each year, or within thirty (30) days after either (i) receipt of
         notice from Administrative Agent that the Lenders require an
         Unscheduled Redetermination, or (ii) the Borrower gives notice to
         Administrative Agent of its desire to have an Unscheduled
         Redetermination performed, the Borrower shall furnish to the Lenders an
         engineering report in form and substance satisfactory to Administrative
         Agent prepared by Borrower's in-house engineering staff valuing all of
         the Oil and Gas Properties utilizing economic and pricing parameters
         used by the Administrative Agent as established from time to time,
         together with such other information, reports and data concerning the
         value of the Oil and Gas Properties as Administrative Agent shall deem
         reasonably necessary to determine the value of such Oil and Gas
         Properties. Each such engineering report required to furnished by
         September 1 of each year, shall be dated as of the preceding June 30.
         Administrative Agent shall by notice to the Borrower no later than
         April 1 and October 1 of each year, or within a reasonable time
         thereafter (herein called the "Determination Date"), notify the
         Borrower of the designation by the Lenders of the new Borrowing Base
         for the period beginning on such Determination Date and continuing
         until, but not including, the next Determination Date. If an
         Unscheduled Redetermination is made by the Lenders, the Administrative
         Agent shall notify the Borrower within a reasonable time after receipt
         of all requested information of the new Borrowing Base, and such new
         Borrowing Base shall continue until the next Determination Date. If the
         Borrower does not furnish all such information, reports and data by any
         date specified in this Section 7(b), unless such failure is of no fault
         of the Borrower, the Lenders may nonetheless designate the Borrowing
         Base at such amount which the Lenders in their discretion determine and
         may redesignate the Borrowing Base

                                       24

<PAGE>

         from time to time thereafter until the Lenders receive all such
         information, reports and data, whereupon the Lenders shall designate a
         new Borrowing Base as described above. The procedure for determining
         the Borrowing Base at each redetermination shall be that the Agents
         shall determine the Borrowing Base and submit the same to the Lenders.
         If, at any time, the Agents cannot otherwise agree upon the Borrowing
         Base to be recommended, the Borrowing Base to be recommended by the
         Agents shall be determined based upon the weighted arithmetic average
         of the amounts proposed by each Agent. Said proposals to be weighted
         according to each Agent's Commitment. Increases in the Borrowing Base
         will require approval of all Lenders, but all other changes to the
         Borrowing Base will be subject to approval by Required Lenders. If any
         redetermined Borrowing Base is not approved by the required percentage
         of Lenders within twenty (20) days after it is submitted to the Lenders
         by the Agents, the Administrative Agent shall notify each of the
         Lenders that the proposed Borrowing Base has not been approved and each
         Lender will submit within ten (10) days thereafter its proposed
         Borrowing Base. The redetermined Borrowing Base shall be then
         determined based upon the weighted arithmetic average of the proposed
         amounts submitted by each Lender, said proposals to be weighted
         according to each Lender's Commitment. Each Lender shall determine the
         amount of its proposed Borrowing Base based upon the loan collateral
         value which such Lender in its discretion (using such methodology,
         assumptions and discounts rates as such Lender customarily uses in
         assigning collateral value to oil and gas properties, oil and gas
         gathering systems, gas processing and plant operations) assigns to such
         Oil and Gas Properties of the Borrower at the time in question and
         based upon such other credit factors consistently applied (including,
         without limitation, the assets, liabilities, cash flow, business,
         properties, prospects, management and ownership of the Borrower and its
         affiliates) as such Lender customarily considers in evaluating similar
         oil and gas credits, but such Lender in its discretion shall not be
         required to give any additional positive value to any Oil and Gas
         Property over the current economic and pricing parameters used by such
         Lender for such Determination Date which additional value is derived
         directly from a hedging, forward sale or swap agreement covering such
         Oil and Gas Property as of the date of such determination. If at any
         time any of the Oil and Gas Properties are sold, the Borrowing Base
         then in effect shall automatically be reduced by a sum equal to the
         amount of prepayment required to be made pursuant to Section 12(r)
         hereof. The Borrowing Base shall be additionally reduced from time to
         time pursuant to the provisions of Section 2(e) hereof. It is expressly
         understood that the Lenders have no obligation to designate the
         Borrowing Base at any particular amount, except in the exercise of
         their discretion, whether in relation to the Commitment or otherwise.
         Provided, however, that the Lenders shall not have the obligation to
         designate a Borrowing Base in an amount in excess of the Commitment.

         8.       Fees.

                  (a)      Unused Commitment Fee. The Borrower shall pay to
         Administrative Agent for the ratable benefit of the Lenders an unused
         commitment fee (the "Unused Commitment Fee") equivalent to the Unused
         Commitment Fee Rate times the daily

                                       25

<PAGE>

         average of the unadvanced amount of the Commitment. Such Unused
         Commitment Fee shall be calculated on the basis of a year consisting of
         360 days. The Unused Commitment Fee shall be payable in arrears on the
         last Business Day of each calendar quarter beginning June 28, 2002 with
         the final fee payment due on the Maturity Date for any period then
         ending for which the Unused Commitment Fee shall not have been
         theretofore paid. In the event the Commitment terminates on any date
         prior to the end of any such monthly period, the Borrower shall pay to
         the Administrative Agent for the ratable benefit of the Lenders, on the
         date of such termination, the total Unused Commitment Fee due for the
         period in which such termination occurs.

                  (b)      The Letter of Credit Fee. Borrower shall pay to the
         Administrative Agent the Letter of Credit fees required above in
         Section 2(d).

                  (c)      Agency Fees. The Borrower shall pay to the
         Administrative Agent certain fees for acting as Administrative Agent
         hereunder in amounts to be negotiated between the Borrower and the
         Administrative Agent.

         9.       Prepayments.

                  (a)      Voluntary Prepayments. Subject to the provisions of
         Section 5(g) hereof, the Borrower may at any time and from time to
         time, without penalty or premium, prepay the Notes, in whole or in
         part. Each such prepayment shall be made on at least three (3) Business
         Days' notice to Administrative Agent in the case of Eurodollar Loans
         and not later than 11:00 a.m., Dallas, Texas time, in the case of Base
         Rate Loans and shall be in a minimum amount of (i) $500,000 or any
         whole multiples of $100,000 in excess thereof (or the unpaid balance of
         the Notes, whichever is less), for Base Rate Loans, and (ii) $1,000,000
         or any whole multiple of $100,000 in excess thereof (or the unpaid
         balance of the Notes, whichever is less), on Eurodollars Loans, plus
         accrued interest thereon to the date of prepayment.

                  (b)      Mandatory Prepayments.

                           (i)      Borrowing Base Deficiency. In the event the
                  Total Outstandings ever exceed the Borrowing Base as
                  determined by Lenders pursuant to Section 7(b) hereof, the
                  Borrower shall either (A) within ninety (90) days after
                  notification from the Administrative Agent, by instruments
                  reasonably satisfactory in form and substance to the Lender,
                  provide the Administrative Agent with collateral with value
                  and quality in amounts satisfactory to all of the Lenders in
                  their discretion in order to increase the Borrowing Base by an
                  amount at least equal to such excess, or (B) prepay, without
                  premium or penalty, the principal amount of the Notes in an
                  amount, of 50% of such excess plus accrued interest thereon to
                  the date of prepayment within ninety (90) days after such
                  notification, and the remaining amount of such excess plus
                  accrued interest thereon within one hundred eighty (180) days
                  after such notification. If the Total

                                       26

<PAGE>

                  Outstandings ever exceed the Commitment as a result of a
                  Monthly Commitment Reduction or any other required reduction
                  in the Commitment, then in such event, Borrower shall
                  immediately prepay the principal amount of the Notes in an
                  amount at least equal to such excess plus accrued interest to
                  the date of prepayment.

                           (ii)     Sale of Assets and/or Equity. The
                  prepayments required to be made pursuant to the provisions of
                  Sections 12(r) and 12(v) hereof.

                           (iii)    Rate Management Transactions. In the event
                  the Borrower terminates or cancels any agreement entered into
                  in connection with a Rate Management Transaction which was
                  used by Lenders in determining the Borrowing Base, the
                  Borrower or any Subsidiary will immediately pay over to the
                  Administrative Agent for the ratable benefit of Lenders as a
                  prepayment of principal on the Notes, an amount equal to 100%
                  of the "Release Price" received by Borrower or any Subsidiary
                  from the termination or cancellation of such agreement. The
                  term "Release Price" as used herein shall mean the Borrowing
                  Base value assigned to the Borrowing Base asset covered by the
                  agreement which was terminated or cancelled as of the last
                  Borrowing Base determination.

         10.      Representations and Warranties. In order to induce the Lenders
to enter into this Agreement, the Borrower hereby represents and warrants to the
Lenders (which representations and warranties will survive the delivery of the
Notes) that:

                  (a)      Creation and Existence. Borrower and Oceana
         Exploration Company, L.C. are both limited liability companies duly
         organized, validly existing and in good standing under the laws of the
         jurisdiction in which they were formed and are duly qualified in all
         jurisdictions wherein failure to qualify may result in a Material
         Adverse Effect. Ohio Intrastate Gas Transmission Company is a
         corporation duly organized, validly existing and in good standing under
         the laws of the jurisdiction in which is was formed and is duly
         qualified in all jurisdictions wherein failure to qualify may result in
         a Material Adverse Effect. Borrower and each of its Subsidiaries has
         all power and authority to own their respective properties and assets
         and to transact the business in which they are engaged.

                  (b)      Power and Authority. Borrower is duly authorized and
         empowered to create and issue the Notes; and Borrower and each of its
         Subsidiaries is duly authorized and empowered to execute, deliver and
         perform their respective Loan Documents, including this Agreement; and
         all action on Borrower's part requisite for the due creation and
         issuance of the Notes on Borrower's and each Subsidiary's part for the
         due execution, delivery and performance of their respective Loan
         Documents, including this Agreement, has been duly and effectively
         taken.

                                       27

<PAGE>

                  (c)      Binding Obligations. This Agreement does, and the
         Notes and other Loan Documents upon their creation, issuance, execution
         and delivery will, constitute valid and binding obligations of
         Borrower, enforceable in accordance with their respective terms (except
         that enforcement may be subject to any applicable bankruptcy,
         insolvency, or similar debtor relief laws now or hereafter in effect
         and relating to or affecting the enforcement of creditors' rights
         generally). The Guaranties, upon their execution and delivery will
         constitute valid and binding obligations of the Guarantors, enforceable
         in accordance with their respective terms (except that enforcement may
         be subject to any applicable bankruptcy, insolvency, or similar debtor
         relief laws now or hereafter in effect and relating to or affecting the
         enforcement of creditors' rights generally).

                  (d)      No Legal Bar or Resultant Lien. The Notes and the
         Loan Documents, including this Agreement, do not and will not, to the
         best of the Borrower's knowledge violate any provisions of any
         contract, agreement, law, regulation, order, injunction, judgment,
         decree or writ to which Borrower or any Subsidiary is subject, or
         result in the creation or imposition of any lien or other encumbrance
         upon any assets or properties of Borrower or any Subsidiary, other than
         those contemplated by this Agreement.

                  (e)      No Consent. The execution, delivery and performance
         by Borrower of the Notes and the Loan Documents, including this
         Agreement, and the execution, delivery and performance by the
         Guarantors of their respective Guaranties, do not require the consent
         or approval of any other person or entity, including without limitation
         any regulatory authority or governmental body of the United States or
         any state thereof or any political subdivision of the United States or
         any state thereof except for consents required for federal, state and,
         in some instances, private leases, right of ways and other conveyances
         or encumbrances of oil and gas leases, which consents have been
         obtained by the Borrower or its Subsidiaries, as the case may be.

                  (f)      Financial Condition. No change from the December 31,
         2001 Financial Statements furnished by Borrower to the Agents has
         occurred which is reasonably expected to have a Material Adverse
         Effect, except as disclosed to the Lenders in Schedule "2" attached
         hereto.

                  (g)      Liabilities. Neither Borrower nor any Subsidiary has
         any material liability, direct or contingent, except as disclosed to
         the Lenders in the Financial Statements and on Schedule "3" attached
         hereto. No unusual or unduly burdensome restrictions, restraint, or
         hazard exists by contract, law or governmental regulation or otherwise
         relative to the business, assets or properties of Borrower or any
         Subsidiary which is reasonably expected to have a Material Adverse
         Effect.

                  (h)      Litigation. Except as described in the Financial
         Statements, or as otherwise disclosed to the Lenders in Schedule "4"
         attached hereto, there is no litigation, legal or administrative
         proceeding, investigation or other action of any nature pending or, to
         the knowledge of the officers of Borrower threatened against or
         affecting Borrower or

                                       28

<PAGE>

         any Subsidiary which involves the possibility of any judgment or
         liability not fully covered by insurance, and which is reasonably
         expected to have a Material Adverse Effect.

                  (i)      Titles, Etc. Borrower and each Subsidiary has good
         and defensible title to their respective assets, including without
         limitation, the Oil and Gas Properties, free and clear of all liens or
         other encumbrances except Permitted Liens.

                  (j)      Defaults. Neither Borrower nor any Subsidiary is in
         default and no event or circumstance has occurred which, but for the
         passage of time or the giving of notice, or both, would constitute a
         default under any loan or credit agreement, indenture, mortgage, deed
         of trust, security agreement or other agreement or instrument to which
         Borrower or any Subsidiary is a party in any respect that would be
         reasonably expected to have a Material Adverse Effect. No Default or
         Event of Default hereunder has occurred and is continuing.

                  (k)      Casualties; Taking of Properties. Since the dates of
         the pro forma financial statements of the Borrower delivered to
         Lenders, neither the business nor the assets or properties of Borrower
         or any Subsidiary has been affected (to the extent it is reasonably
         likely to cause a Material Adverse Effect), as a result of any fire,
         explosion, earthquake, flood, drought, windstorm, accident, strike or
         other labor disturbance, embargo, requisition or taking of property or
         cancellation of contracts, permits or concessions by any domestic or
         foreign government or any agency thereof, riot, activities of armed
         forces or acts of God or of any public enemy.

                  (l)      Use of Proceeds; Margin Stock. The proceeds of the
         Commitment may be used by the Borrower for the purposes of (i) working
         capital, (ii) Letters of Credit, and (iii) general corporate purposes.
         Borrower is not engaged principally or as one of its important
         activities in the business of extending credit for the purpose of
         purchasing or carrying any "margin stock " as defined in Regulation U
         of the Board of Governors of the Federal Reserve System (12 C.F.R. Part
         221), or for the purpose of reducing or retiring any indebtedness which
         was originally incurred to purchase or carry a margin stock or for any
         other purpose which might constitute this transaction a "purpose
         credit" within the meaning of said Regulation U.

                  Neither Borrower, any Subsidiary nor any other Person or
         entity acting on behalf of Borrower or any Subsidiary has taken or will
         take any action which might cause the loans hereunder or any of the
         Loan Documents, including this Agreement, to violate Regulation U or
         any other regulation of the Board of Governors of the Federal Reserve
         System or to violate the Securities Exchange Act of 1934 or any rule or
         regulation thereunder, in each case as now in effect or as the same may
         hereafter be in effect.

                  (m)      Location of Business and Offices. The principal place
         of business and chief executive offices of the Borrower is located at
         the address stated in Section 17

                                       29

<PAGE>

         hereof. The principal place of business and chief executive office of
         each of the Subsidiaries is located at the addresses shown on Schedule
         "5" hereto.

                  (n)      Compliance with the Law. To the best of Borrower's
         knowledge, neither Borrower or any Subsidiary:

                           (i)      is in violation of any law, judgment,
                  decree, order, ordinance, or governmental rule or regulation
                  to which Borrower, or any of its assets or properties are
                  subject; or

                           (ii)     has failed to obtain any license, permit,
                  franchise or other governmental authorization necessary to the
                  ownership of any of its assets or properties or the conduct of
                  its business;

         which violation or failure is reasonably expected to have a Material
         Adverse Effect.

                  (o)      No Material Misstatements. No information, exhibit or
         report furnished by Borrower to the Lenders in connection with the
         negotiation of this Agreement or in the preparation of the offering
         memo contained any material misstatement of fact or omitted to state a
         material fact or any fact necessary to make the statement contained
         therein not materially misleading.

                  (p)      Not A Utility. Borrower is not an entity engaged in
         the State of Texas in the (i) generation, transmission, or distribution
         and sale of electric power; (ii) transportation, distribution and sale
         through a local distribution system of natural or other gas for
         domestic, commercial, industrial, or other use; (iii) provision of
         telephone or telegraph service to others; (iv) production,
         transmission, or distribution and sale of steam or water; (v) operation
         of a railroad; or (vii) provision of sewer service to others.

                  (q)      ERISA. Borrower and each Subsidiary is in compliance
         in all material respects with the applicable provisions of ERISA, and
         no "reportable event", as such term is defined in Section 403 of ERISA,
         has occurred with respect to any Plan of Borrower or any Subsidiary.

                  (r)      Public Utility Holding Company Act. Borrower is not a
         "holding company", or "subsidiary company" of a "holding company", or
         an "affiliate" of a "holding company" or of a "subsidiary company" of a
         "holding company", or a "public utility" subject to the registration
         requirements of the Public Utility Holding Company Act of 1935, as
         amended.

                  (s)      Subsidiaries. Ohio Intrastate Gas Transmission
         Company and Oceana Exploration Company, L.C. are the only Subsidiaries
         of Borrower as of the Effective Date. Borrower is owned by the parties
         shown on Schedule "6" hereto.

                                       30

<PAGE>

                  (t)      Environmental Matters. Except as disclosed on
         Schedule "7", neither Borrower nor any Subsidiary (i) has received
         notice or otherwise learned of any Environmental Liability which would
         be reasonably likely to individually or in the aggregate have a
         Material Adverse Effect arising in connection with (A) any
         non-compliance with or violation of the requirements of any
         Environmental Law or (B) the release or threatened release of any toxic
         or hazardous waste into the environment, (ii) has received notice of
         any threatened or actual liability in connection with the release or
         notice of any threatened release of any toxic or hazardous waste into
         the environment which would be reasonably likely to individually or in
         the aggregate have a Material Adverse Effect or (iii) has received
         notice or otherwise learned of any federal or state investigation
         evaluating whether any remedial action is needed to respond to a
         release or threatened release of any toxic or hazardous waste into the
         environment for which Borrower or any Subsidiary is or may be liable
         which may reasonably be expected to result in a Material Adverse
         Effect.

                  (u)      Liens. Except (i) as disclosed on Schedule "1" hereto
         and (ii) for Permitted Liens, the assets and properties of the Borrower
         and each Subsidiary are free and clear of all liens and encumbrances.

                  (v)      Assets. All assets, including, but not limited to the
         Collateral indicated in the Borrower's Financial Statement or other
         information furnished to the Administrative Agent and the Lenders are
         to be owned by Borrower and its Subsidiaries are, in fact, owned by
         Borrower or one of its Subsidiaries as of the Effective Date.

         11.      Conditions of Lending.

                  (a)      The effectiveness of this Agreement, and the
         obligation to make the initial Advance or issue any initial Letter of
         Credit under the Commitment shall be subject to satisfaction of the
         following conditions precedent:

                           (i)      Execution and Delivery. The Borrower has
                  executed and delivered the Agreement, the Notes and other
                  required Loan Documents, all in form and substance
                  satisfactory to the Administrative Agent;

                           (ii)     Resolutions. The Administrative Agent shall
                  have received appropriate certified resolutions of Borrower
                  and each Guarantor;

                           (iii)    Good Standing. The Administrative Agent
                  shall have received evidence of existence and good standing
                  for Borrower and each Guarantor;

                           (iv)     Incumbency. The Administrative Agent shall
                  have received a signed certificate of Borrower and each
                  Guarantor, certifying the names of the officers of Borrower
                  and each Guarantor authorized to sign loan documents on behalf
                  of Borrower and each Guarantor, together with the true
                  signatures of each such officer. The Administrative Agent may
                  conclusively rely on such certificate

                                       31

<PAGE>

                  until the Administrative Agent receives a further certificate
                  of Borrower or any Guarantor canceling or amending the prior
                  certificate and submitting signatures of the officers named in
                  such further certificate;

                           (v)      Corporate and Limited Liability Company
                  Documents. The Administrative Agent shall have received copies
                  of (i) the Certificates of Formation of Borrower and any
                  limited liability company Subsidiary and all amendments
                  thereto, certified by the Secretary of State of the State of
                  its organization, and a copy of the Limited Liability Company
                  Agreements of Borrower and any limited liability company
                  Subsidiary and all amendments thereto, certified by one or
                  more officers of Borrower as being true, correct and complete
                  and (ii) Articles of Incorporation of any corporate Subsidiary
                  and all amendments thereto, certified by the Secretary of
                  State of the State of its organization, and a copy of the
                  Bylaws of such Subsidiaries, and all amendments thereto,
                  certified by one or more officers of such Subsidiary as being
                  true, correct and complete;

                           (vi)     Representation and Warranties. The
                  representations and warranties of Borrower under this
                  Agreement are true and correct in all material respects as of
                  such date, as if then made (except to the extent that such
                  representations and warranties related solely to an earlier
                  date);

                           (vii)    No Event of Default. No Event of Default
                  shall have occurred and be continuing nor shall any event have
                  occurred or failed to occur which, with the passage of time or
                  service of notice, or both, would constitute an Event of
                  Default;

                           (viii)   Other Documents. Administrative Agent shall
                  have received such other instruments and documents incidental
                  and appropriate to the transaction provided for herein as
                  Administrative Agent or its counsel may reasonably request,
                  and all such documents shall be in form and substance
                  reasonably satisfactory to the Administrative Agent; and

                           (ix)     Legal Matters Satisfactory. All legal
                  matters incident to the consummation of the transactions
                  contemplated hereby shall be reasonably satisfactory to
                  special counsel for Administrative Agent retained at the
                  expense of the Borrower.

                  (b)      The obligation of the Lenders to make any Advance or
         issue any Letter of Credit under the Commitment (including the initial
         Advance) shall be subject to the following additional conditions
         precedent that, at the date of making each such Advance and after
         giving effect thereto:

                           (i)      Representation and Warranties. The
                  representations and warranties of Borrower under this
                  Agreement are true and correct in all material

                                       32

<PAGE>

                  respects as of such date, as if then made (except to the
                  extent that such representations and warranties related solely
                  to an earlier date);

                           (ii)     No Event of Default. No Event of Default
                  shall have occurred and be continuing nor shall any event have
                  occurred or failed to occur which, with the passage of time or
                  service of notice, or both, would constitute an Event of
                  Default;

                           (iii)    Other Documents. Administrative Agent shall
                  have received such other instruments and documents incidental
                  and appropriate to the transaction provided for herein as
                  Administrative Agent or its counsel may reasonably request,
                  and all such documents shall be in form and substance
                  reasonably satisfactory to the Administrative Agent; and

                           (iv)     Legal Matters Satisfactory. All legal
                  matters incident to the consummation of the transactions
                  contemplated hereby shall be reasonably satisfactory to
                  special counsel for Administrative Agent retained at the
                  expense of Borrower.

         12.      Affirmative Covenants. A deviation from the provisions of this
Section 12 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by Majority Lenders prior to the date of
deviation. The Borrower will at all times comply with the covenants contained in
this Section 12 from the date hereof and for so long as the Commitments are in
existence or any amount is owed to the Administrative Agent or the Lenders under
this Agreement or the other Loan Documents.

                  (a)      Financial Statements and Reports. Borrower shall
         promptly furnish to the Administrative Agent from time to time upon
         request such information regarding the business and affairs and
         financial condition of Borrower, as the Administrative Agent may
         reasonably request, and will furnish to the Administrative Agent:

                           (i)      Annual Audited Financial Statements. As soon
                  as available, and in any event within ninety (90) days after
                  the close of each fiscal year beginning with the fiscal year
                  ended December 31, 2002, the annual audited consolidated and
                  consolidating Financial Statements of Borrower, prepared in
                  accordance with GAAP accompanied by an unqualified opinion
                  rendered by an independent accounting firm reasonably
                  acceptable to the Administrative Agent;

                           (ii)     Quarterly Financial Statements. As soon as
                  available, and in any event within forty-five (45) days after
                  the end of each fiscal quarter of each year, beginning with
                  the fiscal quarter ended March 31, 2002, the quarterly
                  unaudited, consolidated and consolidating Financial Statements
                  of Borrower prepared in accordance with GAAP;

                                       33

<PAGE>

                           (iii)    Report on Properties. As soon as available
                  and in any event on or before March 1 and September 1 of each
                  calendar year, and at such other times as any Lender, in
                  accordance with Section 7 hereof, may request, the engineering
                  reports required to be furnished to the Administrative Agent
                  under such Section 7 on the Oil and Gas Properties;

                           (iv)     Additional Information. Promptly upon
                  request of the Administrative Agent from time to time any
                  additional financial information or other information that the
                  Administrative Agent may reasonably request.

         All such reports, information, balance sheets and Financial Statements
         referred to in Subsection 12(a) above shall be in such detail as the
         Administrative Agent may reasonably request and shall be prepared in a
         manner consistent with the Financial Statements.

                  (b)      Certificates of Compliance. Concurrently with the
         furnishing of the annual audited Financial Statements pursuant to
         Subsection 12(a)(i) hereof and the quarterly unaudited Financial
         Statements pursuant to Subsection 12(a)(ii) hereof for the months
         coinciding with the end of each calendar quarter, Borrower will furnish
         or cause to be furnished to the Administrative Agent a certificate in
         the form of Exhibit "D" attached hereto, signed by the President, Chief
         Financial Officer, Treasurer or Controller of Borrower, (i) stating
         that Borrower has fulfilled in all material respects its obligations
         under the Notes and the Loan Documents, including this Agreement, and
         that all representations and warranties made herein and therein
         continue (except to the extent they relate solely to an earlier date)
         to be true and correct in all material respects (or specifying the
         nature of any change), or if a Default has occurred, specifying the
         Default and the nature and status thereof; (ii) to the extent requested
         from time to time by the Administrative Agent, specifically affirming
         compliance of Borrower in all material respects with any of its
         representations (except to the extent they relate solely to an earlier
         date) or obligations under said instruments; (iii) setting forth the
         computation, in reasonable detail as of the end of each period covered
         by such certificate, of compliance with Sections 13(b) and (c); and
         (iv) containing or accompanied by such financial or other details,
         information and material as the Administrative Agent may reasonably
         request to evidence such compliance.

                  (c)      Accountants' Certificate. Concurrently with the
         furnishing of the annual audited Financial Statement pursuant to
         Section 12(a)(i) hereof, Borrower will furnish a statement from the
         firm of independent public accountants which prepared such Financial
         Statement to the effect that nothing has come to their attention to
         cause them to believe that there existed on the date of such statements
         any Event of Default and specifically calculating Borrower's compliance
         with Sections 13(b) and (c) of this Agreement.

                  (d)      Taxes and Other Liens. The Borrower will pay and
         discharge, and will cause each Subsidiary to pay and discharge,
         promptly all taxes, assessments and

                                       34

<PAGE>

         governmental charges or levies imposed upon the Borrower or any
         Subsidiary, or upon the income or any assets or property of Borrower or
         any Subsidiary, as well as all claims of any kind (including claims for
         labor, materials, supplies and rent) which, if unpaid, might become a
         Lien or other encumbrance upon any or all of the assets or property of
         Borrower or any Subsidiary and which could reasonably be expected to
         result in a Material Adverse Effect; provided, however, that neither
         Borrower nor any Subsidiary shall be required to pay any such tax,
         assessment, charge, levy or claim if the amount, applicability or
         validity thereof shall currently be contested in good faith by
         appropriate proceedings diligently conducted, levy and execution
         thereon have been stayed and continue to be stayed and if Borrower or
         such Subsidiary shall have set up adequate reserves therefor, if
         required, under GAAP.

                  (e)      Compliance with Laws. Borrower will observe and
         comply, and will cause each of its Subsidiaries to observe and comply,
         in all material respects, with all applicable laws, statutes, codes,
         acts, ordinances, orders, judgments, decrees, injunctions, rules,
         regulations, orders and restrictions relating to environmental
         standards or controls or to energy regulations of all federal, state,
         county, municipal and other governments, departments, commissions,
         boards, agencies, courts, authorities, officials and officers, domestic
         or foreign.

                  (f)      Further Assurances. The Borrower will cure promptly
         any defects in the creation and issuance of the Notes and the execution
         and delivery of the Notes and the Loan Documents, including this
         Agreement. The Borrower will cause the Guarantors to promptly cure any
         defects in the issuance of the Guaranties. The Borrower at its sole
         expense will promptly execute and deliver, and will cause its
         Subsidiaries to execute and deliver, to Administrative Agent upon its
         reasonable request all such other and further documents, agreements and
         instruments in compliance with or accomplishment of the covenants and
         agreements in this Agreement, or to correct any omissions in the Notes
         or more fully to state the obligations set out herein. The Borrower
         shall cause each existing Subsidiary and each new Subsidiary to execute
         and deliver Guaranties to Administrative Agent. The Borrower shall and
         shall cause each of its Subsidiaries to pledge to Administrative Agent,
         for the ratable benefit of the Lenders, as security for the obligations
         under the Loan Documents, any interest in a Subsidiary.

                  (g)      Performance of Obligations. The Borrower will pay the
         Notes and other obligations incurred by it hereunder according to the
         reading, tenor and effect thereof and hereof; and Borrower will, and
         will cause each of its Subsidiaries to, do and perform every act and
         discharge all of the obligations provided to be performed and
         discharged by the Borrower under the Loan Documents, including this
         Agreement, at the time or times and in the manner specified.

                  (h)      Insurance. The Borrower and each Subsidiary will have
         in force as of the Effective Date and will continue to maintain
         insurance with financially sound and reputable insurers with respect to
         its assets against such liabilities, fires, casualties, risks

                                       35

<PAGE>

         and contingencies and in such types and amounts as is customary in the
         case of persons engaged in the same or similar businesses and similarly
         situated. Upon request of the Administrative Agent, the Borrower will
         furnish or cause to be furnished to the Administrative Agent from time
         to time a summary of the insurance coverage of Borrower and each
         Subsidiary in form and substance satisfactory to the Administrative
         Agent, and, if requested, will furnish the Administrative Agent copies
         of the applicable policies. Upon demand by Administrative Agent any
         insurance policies covering any such property shall be endorsed (i) to
         provide that such policies may not be canceled, reduced or affected in
         any manner for any reason without fifteen (15) days prior notice to
         Administrative Agent, (ii) to provide for insurance against fire,
         casualty and other hazards normally insured against, in the amount of
         the full value (less a reasonable deductible not to exceed amounts
         customary in the industry for similarly situated business and
         properties) of the property insured, and (iii) to provide for such
         other matters as the Administrative Agent may reasonably require. The
         Borrower shall at all times maintain, and shall cause each Subsidiary
         to maintain, adequate insurance with respect to all of its assets,
         including but not limited to, the Oil and Gas Properties or any
         collateral against its liability for injury to persons or property,
         which insurance shall be by financially sound and reputable insurers
         and shall without limitation provide the following coverages:
         comprehensive general liability (including coverage for damage to
         underground resources and equipment, damage caused by blowouts or
         cratering, damage caused by explosion, damage to underground minerals
         or resources caused by saline substances, broad form property damage
         coverage, broad form coverage for contractually assumed liabilities and
         broad form coverage for acts of independent contractors), worker's
         compensation and automobile liability. The Borrower shall at all times
         maintain, and shall cause each Subsidiary owning Oil and Gas
         Properties, to maintain cost of control of well insurance with respect
         to the Oil and Gas Properties which shall insure the Borrower and such
         Subsidiary against seepage and pollution expense; redrilling expense;
         and cost of control of well; fires, blowouts, etc., if deemed
         economical in the reasonable discretion of the Borrower and such
         Subsidiary. Additionally, the Borrower shall at all times maintain, and
         cause its Subsidiaries to maintain, adequate insurance with respect to
         all of its other assets and wells in accordance with prudent business
         practices.

                  (i)      Accounts and Records. Borrower will keep books,
         records and accounts and will cause each Subsidiary to keep books,
         records and accounts, in which full, true and correct entries will be
         made of all dealings or transactions in relation to its business and
         activities, prepared in a manner consistent with prior years, subject
         to changes suggested by Borrower's or any Subsidiary's auditors.

                  (j)      Right of Inspection. Borrower will permit, and will
         cause each Subsidiary to permit, any officer, employee or agent of the
         Lenders to examine Borrower's or any Subsidiary's books, records and
         accounts, and take copies and extracts therefrom, all at such
         reasonable times during normal business hours and as often as the
         Lenders may reasonably request. The Lenders will use best efforts to
         keep all Confidential

                                       36

<PAGE>

         Information (as herein defined) confidential and will not disclose or
         reveal the Confidential Information or any part thereof other than (i)
         as required by law, and (ii) to the Lenders', and the Lenders'
         subsidiaries', Affiliates, officers, employees, legal counsel and
         regulatory authorities or advisors to whom it is necessary to reveal
         such information for the purpose of effectuating the agreements and
         undertakings specified herein or as otherwise required in connection
         with the enforcement of the Lenders' and the Administrative Agent's
         rights and remedies under the Notes, this Agreement and the other Loan
         Documents. As used herein, "Confidential Information" means information
         about the Borrower or any Subsidiary furnished by the Borrower or any
         Subsidiary to the Lenders, but does not include information (i) which
         was publicly known, or otherwise known to the Lenders (except not in
         violation of any confidentiality agreement), at the time of the
         disclosure, (ii) which subsequently becomes publicly known through no
         act or omission by the Lenders (except not in violation of any
         confidentiality agreement), or (iii) which otherwise becomes known to
         the Lenders, other than through disclosure by the Borrower.

                  (k)      Notice of Certain Events. The Borrower shall, and
         shall cause each Subsidiary to, promptly notify the Administrative
         Agent if Borrower or any Subsidiary learns of the occurrence of (i) any
         event which constitutes an Event of Default together with a detailed
         statement by Borrower of the steps being taken to cure such Event of
         Default; (ii) any legal, judicial or regulatory proceedings affecting
         Borrower or any Subsidiary, or any of the assets or properties of
         Borrower or any Subsidiary which, if adversely determined, could
         reasonably be expected to have a Material Adverse Effect; (iii) any
         dispute between Borrower, any Subsidiary and any governmental or
         regulatory body or any other Person or entity which, if adversely
         determined, might reasonably be expected to cause a Material Adverse
         Effect; (iv) any other matter which in Borrower's reasonable opinion
         could have a Material Adverse Effect.

                  (l)      ERISA Information and Compliance. The Borrower will,\
         and will cause each Subsidiary to, promptly furnish to the
         Administrative Agent immediately upon becoming aware of the occurrence
         of any "reportable event", as such term is defined in Section 4043 of
         ERISA, or of any "prohibited transaction", as such term is defined in
         Section 4975 of the Internal Revenue Code of 1954, as amended, in
         connection with any Plan or any trust created thereunder, a written
         notice signed by the chief financial officer of Borrower or such
         Subsidiary specifying the nature thereof, what action Borrower or any
         such Subsidiary is taking or proposes to take with respect thereto,
         and, when known, any action taken by the Internal Revenue Service with
         respect thereto.

                  (m)      Environmental Reports and Notices. The Borrower will,
         and will cause each Subsidiary to, deliver to the Administrative Agent
         (i) promptly upon its becoming available, one copy of each report sent
         by Borrower or any Subsidiary to any court, governmental agency or
         instrumentality pursuant to any Environmental Law, (ii) notice, in
         writing, promptly upon Borrower's or any Subsidiary's receipt of notice
         or otherwise learning of any claim, demand, action, event, condition,
         report or investigation indicating

                                       37

<PAGE>

         any potential or actual liability arising in connection with (x) the
         non-compliance with or violation of the requirements of any
         Environmental Law which reasonably could be expected to have a Material
         Adverse Effect; (y) the release or threatened release of any toxic or
         hazardous waste into the environment which reasonably could be expected
         to have a Material Adverse Effect or which release Borrower or any
         Subsidiary would have a duty to report to any court or government
         agency or instrumentality, or (iii) the existence of any Environmental
         Lien on any properties or assets of Borrower or any Subsidiary, and
         Borrower shall immediately deliver, and shall cause any such Subsidiary
         to immediately deliver, a copy of any such notice to Administrative
         Agent.

                  (n)      Compliance and Maintenance. The Borrower will, and
         will cause each Subsidiary to, (i) observe and comply in all material
         respects with all Environmental Laws; (ii) except as provided in
         Subsections 12(o) and 12(p) below, maintain the Oil and Gas Properties
         and other assets and properties in good and workable condition at all
         times and make all repairs, replacements, additions, betterments and
         improvements to the Oil and Gas Properties and other assets and
         properties as are needed and proper so that the business carried on in
         connection therewith may be conducted properly and efficiently at all
         times in the opinion of the Borrower or any Subsidiary exercised in
         good faith; (iii) take or cause to be taken whatever actions are
         necessary or desirable to prevent an event or condition of default by
         Borrower or any Subsidiary under the provisions of any gas purchase or
         sales contract or any other contract, agreement or lease comprising a
         part of the Oil and Gas Properties or other collateral security
         hereunder which default could reasonably be expected to result in a
         Material Adverse Effect; and (iv) furnish Administrative Agent upon
         request evidence satisfactory to Administrative Agent that there are no
         Liens, claims or encumbrances on the Oil and Gas Properties, except
         laborers', vendors', repairmen's, mechanics', worker's, or
         materialmen's liens arising by operation of law or incident to the
         construction or improvement of property if the obligations secured
         thereby are not yet due or are being contested in good faith by
         appropriate legal proceedings or Permitted Liens.

                  (o)      Operation of Properties. Except as provided in
         Subsection 12(p) and (q) below, the Borrower will and will cause each
         Subsidiary to, operate, or use reasonable efforts to cause to be
         operated, all Oil and Gas Properties in a careful and efficient manner
         in accordance with the practice of the industry and in compliance in
         all material respects with all applicable laws, rules, and regulations,
         and in compliance in all material respects with all applicable
         proration and conservation laws of the jurisdiction in which the
         properties are situated, and all applicable laws, rules, and
         regulations, of every other agency and authority from time to time
         constituted to regulate the development and operation of the properties
         and the production and sale of hydrocarbons and other minerals
         therefrom; provided, however, that the Borrower and any such Subsidiary
         shall have the right to contest in good faith by appropriate
         proceedings, the applicability or lawfulness of any such law, rule or
         regulation and pending such contest may defer compliance therewith, as
         long as such deferment shall not subject the properties or any part
         thereof to foreclosure or loss.

                                       38

<PAGE>

                  (p)      Compliance with Leases and Other Instruments. The
         Borrower will, and will cause each Subsidiary to, pay or cause to be
         paid and discharge all rentals, delay rentals, royalties, production
         payment, and indebtedness required to be paid by Borrower or any
         Subsidiary (or required to keep unimpaired in all material respects the
         rights of Borrower or any Subsidiary in the Oil and Gas Properties)
         accruing under, and perform or cause to be performed in all material
         respects each and every act, matter, or thing required of Borrower or
         any Subsidiary by each and all of the assignments, deeds, leases,
         subleases, contracts, and agreements in any way relating to Borrower or
         any Subsidiary or any of the Oil and Gas Properties and do all other
         things necessary of Borrower or any Subsidiary to keep unimpaired in
         all material respects the rights of Borrower or any Subsidiary
         thereunder and to prevent the forfeiture thereof or default thereunder;
         provided, however, that nothing in this Agreement shall be deemed to
         require Borrower or any Subsidiary to perpetuate or renew any oil and
         gas lease or other lease by payment of rental or delay rental or by
         commencement or continuation of operations nor to prevent Borrower or
         any Subsidiary from abandoning or releasing any oil and gas lease or
         other lease or well thereon when, in any of such events, in the opinion
         of Borrower or any Subsidiary exercised in good faith, it is not in the
         best interest of the Borrower or such Subsidiary to perpetuate the
         same.

                  (q)      Certain Additional Assurances Regarding Maintenance
         and Operations of Properties. With respect to those Oil and Gas
         Properties which are being operated by operators other than the
         Borrower or its Subsidiaries, the Borrower or its Subsidiaries shall
         not be obligated to perform any undertakings contemplated by the
         covenants and agreement contained in Subsections 12(o) or 12(p) hereof
         which are performable only by such operators and are beyond the control
         of the Borrower or its Subsidiaries; however, the Borrower agrees to
         promptly take, and cause each Subsidiary to take, all reasonable
         actions available under any operating agreements or otherwise to bring
         about the performance of any such material undertakings required to be
         performed thereunder.

                  (r)      Sale of Certain Assets/Prepayment of Proceeds. The
         Borrower or any Subsidiary will immediately pay over to the
         Administrative Agent for the ratable benefit of the Lenders as a
         prepayment of principal on the Notes, an amount equal to 100% of the
         "Release Price" received by Borrower or any Subsidiary from the sale of
         Borrowing Base Assets. The term "Release Price" as used herein shall
         mean the Borrowing Base value assigned to the Borrowing Base Assets
         sold as of the last Borrowing Base determination. Any such prepayment
         of principal on the Notes required by this Section 12(r), shall not be
         in lieu of, but shall be in addition to, any mandatory prepayment of
         principal required to be paid pursuant to Section 9(b) hereof.

                  (s)      Title Matters. As to any Oil and Gas Properties
         hereafter mortgaged to Administrative Agent, Borrower will, and will
         cause each Subsidiary to, promptly (but in no event more than thirty
         (30) days following such mortgaging), furnish Administrative Agent with
         title opinions and/or title information reasonably satisfactory to

                                       39

<PAGE>

         Administrative Agent showing good and defensible title of Borrower or
         any such Subsidiary to such Oil and Gas Properties subject only to
         Permitted Liens.

                  (t)      Curative Matters. Within sixty (60) days after the
         Effective Date with respect to matters listed on Schedule "9" and,
         thereafter, within sixty (60) days after receipt by Borrower from
         Administrative Agent or its counsel of written notice of title defects
         the Administrative Agent reasonably requires to be cured, Borrower
         shall, and shall cause each Subsidiary to, either (i) provide such
         curative information, in form and substance satisfactory to
         Administrative Agent, or (ii) substitute Oil and Gas Properties of
         value and quality satisfactory to the Administrative Agent for all of
         Oil and Gas Properties for which such title curative was requested but
         upon which Borrower or any Subsidiary elected not to provide such title
         curative information, and, within sixty (60) days of such substitution,
         provide title opinions or title information satisfactory to the
         Administrative Agent covering the Oil and Gas Properties so
         substituted. If the Borrower or any Subsidiary fails to satisfy (i) or
         (ii) above within the time specified, the loan collateral value
         assigned by the Lenders to the Oil and Gas Properties for which such
         curative information was requested shall be deducted from the Borrowing
         Base resulting in a reduction thereof.

                  (u)      Change of Principal Place of Business. Borrower
         shall, and shall cause each Subsidiary to, give Administrative Agent at
         least thirty (30) days prior written notice of its intention to move
         its principal place of business from the address set forth in Section
         17 hereof.

                  (v)      Sale of Equity. The Borrower or any Subsidiary will
         immediately pay over to the Administrative Agent for the ratable
         benefit of the Lenders as a prepayment of principal on the Notes, an
         amount equal to 50% of the cash proceeds (net of direct costs of sale)
         received by Borrower or any Subsidiary from the sale of any equity
         interest in, or securities of, the Borrower or any such Subsidiary.

                  (w)      New Guarantors. The Borrower shall cause any new
         Subsidiary to execute and deliver a Guaranty in the form of Exhibit "C"
         hereto within ten (10) days of its formation or acquisition by
         Borrower.

         13.      Negative Covenants. A deviation from the provisions of this
Section 13 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by Majority Lenders prior to the date of
deviation. The Borrower will at all times comply with the covenants contained in
this Section 13 from the date hereof and for so long as the Commitment is in
existence or any amount is owed to the Administrative Agent or the Lenders under
this Agreement or the other Loan Documents.

                  (a)      Negative Pledge. Borrower shall not, and shall not
         allow its Subsidiaries to, without the prior written consent of the
         Lenders:

                                       40

<PAGE>

                           (i)      create, incur, assume or permit to exist any
                  Lien, security interest or other encumbrance on any of its
                  assets or properties except Permitted Liens; or

                           (ii)     sell, lease, transfer or otherwise dispose
                  of, in any fiscal year, any of its assets except for (A)
                  sales, leases, transfers or other dispositions made in the
                  ordinary course of Borrower's oil and gas businesses, (B)
                  sales made with the consent of Majority Lenders which are made
                  pursuant to, and in full compliance with, Section 12(r)
                  hereof; and (C) sales, leases or transfers or other
                  dispositions (including those referred to in Section
                  13(a)(ii)(B)) made by Borrower and its Subsidiaries which do
                  not exceed $10,000,000 in the aggregate during any fiscal
                  year.

                  (b)      Current Ratio. Borrower shall not allow its ratio of
         Consolidated Current Assets to Consolidated Current Liabilities to be
         less than 1.0 to 1.0 as of the end of any fiscal quarter.

                  (c)      Total Debt to EBITDAX. The Borrower will not allow
         its ratio of Consolidated Total Debt to Consolidated EBITDAX to be in
         excess of 4.0 to 1.0 as of the end of any calendar quarter beginning
         with the calendar quarter ending March 31, 2002, calculated on a
         trailing four-quarter basis.

                  (d)      Consolidations and Mergers. Borrower will not, and
         will not allow any of its Subsidiaries to, consolidate or merge with or
         into any other Person, except that Borrower or any such Subsidiary may
         merge with another Person if Borrower or such Subsidiary is the
         surviving entity in a non-hostile merger and if, after giving effect
         thereto, no Default or Event of Default shall have occurred and be
         continuing.

                  (e)      Debts, Guaranties and Other Obligations. Without the
         consent of Majority Lenders, Borrower will not, and will not allow any
         of its Subsidiaries to, incur, create, assume or in any manner become
         or be liable in respect of any indebtedness, nor will Borrower or any
         Subsidiary guarantee or otherwise in any manner become or be liable in
         respect of any indebtedness, liabilities or other obligations of any
         other person or entity, whether by agreement to purchase the
         indebtedness of any other person or entity or agreement for the
         furnishing of funds to any other person or entity through the purchase
         or lease of goods, supplies or services (or by way of stock purchase,
         capital contribution, advance or loan) for the purpose of paying or
         discharging the indebtedness of any other person or entity, or
         otherwise, except that the foregoing restrictions shall not apply to:

                           (i)      the Notes and any renewal or increase
                  thereof, or other indebtedness of the Borrower and any
                  Subsidiary heretofore disclosed to Lenders in the Borrower's
                  Financial Statements or on Schedule "4" hereto; or

                           (ii)     taxes, assessments or other government
                  charges which are not yet due or are being contested in good
                  faith by appropriate action promptly initiated

                                       41

<PAGE>

                  and diligently conducted, if such reserve as shall be required
                  by GAAP shall have been made therefor and levy and execution
                  thereon have been stayed and continue to be stayed; or

                           (iii)    indebtedness not exceeding in the aggregate
                  outstanding at any time the sum of $10,000,000; or

                           (iv)     any renewals or extensions of any of the
                  foregoing.

                  (f)      Distributions or Dividends. Borrower will not (i)
         declare or pay any cash distribution, or dividend; (ii) purchase,
         redeem or otherwise acquire for value any of its stock now or hereafter
         outstanding; (iii) return any capital to its stockholders, or (iv) make
         any distribution of its assets to its stockholders as such, except the
         foregoing shall not apply to cash distributions or dividends paid to
         its owners or used to purchase, redeem or otherwise acquire for value
         any of its stock now or hereafter outstanding in amounts not exceeding
         in the aggregate (measured cumulatively from January 1, 2002) the sum
         of (i) $10,000,000 plus (ii) 50% of net proceeds (net of direct costs
         of sale only) received by Borrower from the sale of any equity interest
         in, or securities of, the Borrower or any Subsidiary completed after
         January 1, 2002, plus (iii) 50% of Consolidated Net Income earned after
         January 1, 2002; provided, however, that immediately before and after
         giving effect thereto no (A) Default or Event of Default or (B)
         Borrowing Base deficiency or requirement to make any mandatory
         prepayment of principal pursuant to Section 9(b) hereof, shall exist.
         For the purposes of this Section 13(f) only, Consolidated Net Income
         shall exclude non-cash charges and credits as prescribed under
         Financial Accounting Standards Board Statements Nos. 19, 121 and 133.

                  (g)      Loans and Advances. Borrower shall not, and shall not
         allow any Subsidiary to, make or permit to remain outstanding any loans
         or advances to or in any person or entity, except that the foregoing
         restriction shall not apply to:

                           (i)      loans or advances to any person, the
                  material details of which have been set forth in the Financial
                  Statements of the Borrower or any Subsidiary heretofore
                  furnished to Lenders; or

                           (ii)     loans or advances not exceeding $1,000,000 a
                  year in the aggregate.

                  (h)      Sale or Discount of Receivables. Borrower will not,
         nor will Borrower allow any of its Subsidiaries to, discount or sell
         with recourse, or sell for less than the greater of the face or market
         value thereof, any of its notes receivable or accounts receivable.

                                       42

<PAGE>

                  (i)      Nature of Business. Borrower will not, nor will
         Borrower allow any of its Subsidiaries to, permit any material change
         to be made in the character of its business as carried on at the date
         hereof.

                  (j)      Transactions with Affiliates. Borrower will not, nor
         will Borrower allow any of its Subsidiaries to, enter into any
         transaction with any Affiliate, except transactions upon terms that are
         no less favorable to it than would be obtained in a transaction
         negotiated at arm's length with an unrelated third party.

                  (k)      Rate Management Transactions. Borrower will not, and\
         will not permit any Subsidiary to, enter into any Rate Management
         Transaction, except the foregoing prohibitions shall not apply to (x)
         non-speculative transactions consented to in writing by the
         Administrative Agent, or (y) Pre-Approved Contracts. Once Borrower
         enters into a Rate Management Transaction, the terms and conditions of
         such Rate Management Transaction may not be amended or modified, nor
         may such Rate Management Transaction be terminated or cancelled without
         Borrower having given the Agent written notice of such amendment,
         modification, cancellation or termination within three (3) Business
         Days from the date such action takes place. Borrower further agrees to
         give Agent written notice immediately upon learning that any
         counterparty to any such agreement has commenced, or had commenced,
         against it, any bankruptcy, insolvency or similar proceeding.

                  (l)      Investments. Borrower shall not make, nor will
         Borrower allow any of its Subsidiaries to make, any investments in any
         person or entity, except such restriction shall not apply to
         investments not exceeding $3,000,000 in the aggregate per year for
         Borrower and all of its Subsidiaries.

                  (m)      Amendment to Certificate of Formation or Limited
         Liability Company Agreement. Without the consent of the Administrative
         Agent, Borrower will not permit any material amendment to, or any
         material alteration of, its Certificate of Formation or Limited
         Liability Company Agreement. Borrower will not allow any Subsidiary to
         make any material amendment or alteration to any of their Certificates
         of Formation, Articles of Incorporation, Limited Liability Company
         Agreements or Bylaws. Borrower shall provide a copy of any such
         amendment, whether the same requires consent or not pursuant to this
         Section 13(l), to the Administrative Agent as soon as reasonably
         possible after adoption thereof.

                  (n)      Payment or Pre-Payment of Other Indebtedness. Except
         as otherwise provided for in this Agreement, Borrower shall not make,
         nor allow any of its Subsidiaries to make, any unscheduled principal
         payments or redeem any of its indebtedness (other than indebtedness
         owed the Lenders hereunder), or redeem any of its equity unless such
         payment, prepayment, redemption or purchase is made in compliance with
         Section 13(f) hereof, or is approved by Majority Lenders.

                                       43

<PAGE>

                  Sale of Interests in Subsidiaries. Other than as may be
         permitted under Section 13(d) hereof, Borrower will not sell or
         otherwise transfer any its ownership interests in any of its
         Subsidiaries.

         14.      Events of Default. Any one or more of the following events
shall be considered an "Event of Default" as that term is used herein:

                  (a)      The Borrower shall fail to pay when due or declared
         due the principal of, and the interest on, the Notes, or any fee or any
         other indebtedness of the Borrower incurred pursuant to this Agreement
         or any other Loan Document; or

                  (b)      Any representation or warranty made by Borrower under
         this Agreement, or in any certificate or statement furnished or made to
         the Lenders pursuant hereto, or in connection herewith, or in
         connection with any document furnished hereunder, shall prove to be
         untrue in any material respect as of the date on which such
         representation or warranty is made (or deemed made), or any
         representation, statement (including financial statements),
         certificate, report or other data furnished or to be furnished or made
         by Borrower under any Loan Document, including this Agreement, proves
         to have been untrue in any material respect, as of the date as of which
         the facts therein set forth were stated or certified; or

                  (c)      Default shall be made in the due observance or
         performance of any of the covenants or agreements of the Borrower or
         any Subsidiary contained in the Loan Documents, including this
         Agreement (excluding covenants contained in Section 12(m) or Section 13
         of the Agreement for which there is no cure period), and such default
         shall continue for more than thirty (30) days; or

                  (d)      Default shall be made in the due observance or
         performance of the covenants of Borrower contained in Section 12(m) or
         Section 13 of this Agreement; or

                  (e)      Default shall be made in respect of any obligation
         for borrowed money, other than the Notes, for which Borrower or any of
         its Subsidiaries is liable (directly, by assumption, as guarantor or
         otherwise), or any obligations secured by any mortgage, pledge or other
         security interest, lien, charge or encumbrance with respect thereto, on
         any asset or property of Borrower or any of its Subsidiaries or in
         respect of any agreement relating to any such obligations unless
         Borrower or any of its Subsidiaries is not liable for same (i.e.,
         unless remedies or recourse for failure to pay such obligations is
         limited to foreclosure of the collateral security therefor), and if
         such default shall continue beyond the applicable grace period, if any;
         or

                  (f)      Borrower or any of its Subsidiaries shall commence a
         voluntary case or other proceeding seeking liquidation, reorganization
         or other relief with respect to itself or its debts under any
         bankruptcy, insolvency or other similar law now or hereafter in effect
         or seeking an appointment of a trustee, receiver, liquidator, custodian
         or other

                                       44

<PAGE>

         similar official of it or any substantial part of its property, or
         shall consent to any such relief or to the appointment of or taking
         possession by any such official in an involuntary case or other
         proceeding commenced against it, or shall make a general assignment for
         the benefit of creditors, or shall fail generally to pay its debts as
         they become due, or shall take any corporate action authorizing the
         foregoing; or

                  (g)      An involuntary case or other proceeding, shall be
         commenced against Borrower or any of its Subsidiaries seeking
         liquidation, reorganization or other relief with respect to it or its
         debts under any bankruptcy, insolvency or similar law now or hereafter
         in effect or seeking the appointment of a trustee, receiver,
         liquidator, custodian or other similar official of it or any
         substantial part of its property, and such involuntary case or other
         proceeding shall remain undismissed and unstayed for a period of sixty
         (60) days; or an order for relief shall be entered against Borrower or
         any of its Subsidiaries under the federal bankruptcy laws as now or
         hereinafter in effect; or

                  (h)      A final judgment or order for the payment of money in
         excess of $1,500,000 (or judgments or orders aggregating in excess of
         $1,500,000) shall be rendered against Borrower or any of its
         Subsidiaries and such judgments or orders shall continue unsatisfied
         and unstayed for a period of thirty (30) days; or

                  (i)      In the event the Total Outstandings shall at any time
         exceed the Borrowing Base established for the Notes, and the Borrower
         shall fail to comply with the provisions of Section 9(b) hereof; or

                  (j)      A Change of Control shall occur; or

                  (k)      An Event of Default shall have occurred under any
         agreement entered into in connection with a Rate Management
         Transaction.

         Upon occurrence of any Event of Default specified in Subsections 14(f)
and (g) hereof, the entire principal amount due under the Notes and all interest
then accrued thereon, and any other liabilities of the Borrower hereunder, shall
become immediately due and payable all without notice and without presentment,
demand, protest, notice of protest or dishonor or any other notice of default of
any kind, all of which are hereby expressly waived by the Borrower.
Notwithstanding any other provision of this Agreement or any provision of the
Notes, in any other Event of Default, the Administrative Agent, upon request of
Majority Lenders, shall by notice to the Borrower declare the principal of, and
all interest then accrued on, the Notes and any other liabilities hereunder to
be forthwith due and payable, whereupon the same shall forthwith become due and
payable without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other notice of any kind, all of which the Borrower
hereby expressly waives, anything contained herein or in the Notes to the
contrary notwithstanding. Nothing contained in this Section 14 shall be
construed to limit or amend in any way the Events of Default enumerated in the
Notes, or any other document executed in connection with the transaction
contemplated herein.

                                       45
<PAGE>

         Upon the occurrence and during the continuance of any Event of Default,
the Lenders are hereby authorized at any time and from time to time, without
notice to the Borrower or any of its Subsidiaries, (any such notice being
expressly waived by the Borrower), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by any of the Lenders to or for the credit
or the account of the Borrower or any of its Subsidiaries against any and all of
the indebtedness of the Borrower or any Subsidiaries under the Notes and the
Loan Documents, including this Agreement, irrespective of whether or not the
Lenders shall have made any demand under the Loan Documents, including this
Agreement or the Notes and although such indebtedness may be unmatured. Any
amount set-off by any of the Lenders shall be applied against the indebtedness
owed the Lenders by the Borrower pursuant to this Agreement and the Notes. The
Lenders agree promptly to notify the Borrower and the affected Subsidiary after
any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lenders may
have.

         15.      The Agents and the Lenders.

                  (a)      Appointment and Authorization. Each Lender hereby
         appoints Administrative Agent as its nominee and Administrative Agent,
         in its name and on its behalf: (i) to act as nominee for and on behalf
         of such Lender in and under all Loan Documents; (ii) to arrange the
         means whereby the funds of Lenders are to be made available to the
         Borrower under the Loan Documents; (iii) to take such action as may be
         requested by any Lender under the Loan Documents (when such Lender is
         entitled to make such request under the Loan Documents); (iv) to
         receive all documents and items to be furnished to Lenders under the
         Loan Documents; (v) to be the secured party, mortgagee, beneficiary,
         and similar party in respect of, and to receive, as the case may be,
         any collateral for the benefit of Lenders; (vi) to promptly distribute
         to each Lender all material information, requests, documents and items
         received from the Borrower under the Loan Documents; (vii) to promptly
         distribute to each Lender such Lender's Pro Rata Part of each payment
         or prepayment (whether voluntary, as proceeds of insurance thereon, or
         otherwise) in accordance with the terms of the Loan Documents and
         (viii) to deliver to the appropriate Persons requests, demands,
         approvals and consents received from Lenders. Each Lender hereby
         authorizes Administrative Agent to take all actions and to exercise
         such powers under the Loan Documents as are specifically delegated to
         Administrative Agent by the terms hereof or thereof, together with all
         other powers reasonably incidental thereto. With respect to its
         Commitments hereunder and the Notes issued to it, Administrative Agent
         and any successor Administrative Agent shall have the same rights under
         the Loan Documents as any other Lender and may exercise the same as
         though it were not the Administrative Agent; and the term "Lender" or
         "Lenders" shall, unless otherwise expressly indicated, include
         Administrative Agent and any successor Administrative Agent in its
         capacity as a Lender. Administrative Agent and any successor
         Administrative Agent and its Affiliates may accept deposits from, lend
         money

                                       46

<PAGE>

         to, act as trustee under indentures of and generally engage in any kind
         of business with the Borrower and any person which may do business with
         the Borrower, all as if Administrative Agent and any successor
         Administrative Agent was not Administrative Agent hereunder and without
         any duty to account therefor to the Lenders; provided that, if any
         payments in respect of any property (or the proceeds thereof) now or
         hereafter in the possession or control of Administrative Agent which
         may be or become security for the obligations of the Borrower arising
         under the Loan Documents by reason of the general description of
         indebtedness secured or of property contained in any other agreements,
         documents or instruments related to any such other business shall be
         applied to reduction of the obligations of the Borrower arising under
         the Loan Documents, then each Lender shall be entitled to share in such
         application according to its pro rata part thereof. Each Lender, upon
         request of any other Lender, shall disclose to all other Lenders all
         indebtedness and liabilities, direct and contingent, of the Borrower to
         such Lender as of the time of such request.

                  (b)      Note Holders. From time to time as other Lenders
         become a party to this Agreement, Administrative Agent shall obtain
         execution by the Borrower of additional Notes in amounts representing
         the Commitment of each such new Lender, up to an aggregate face amount
         of all Notes not exceeding $275,000,000. The obligation of such Lender
         shall be governed by the provisions of this Agreement, including but
         not limited to, the obligations specified in Section 2 hereof. From
         time to time, Administrative Agent may require that the Lenders
         exchange their Notes for newly issued Notes to better reflect the
         Commitments of the Lenders. Administrative Agent may treat the payee of
         any Note as the holder thereof until written notice of transfer has
         been filed with it, signed by such payee and in form satisfactory to
         Administrative Agent.

                  (c)      Consultation with Counsel. Lenders agree that
         Administrative Agent may consult with legal counsel selected by
         Administrative Agent and shall not be liable for any action taken or
         suffered in good faith by it in accordance with the advice of such
         counsel. LENDERS ACKNOWLEDGE THAT GARDERE WYNNE SEWELL LLP IS COUNSEL
         FOR BANK ONE, BOTH AS ADMINISTRATIVE AGENT AND AS A LENDER, AND THAT
         SUCH FIRM DOES NOT REPRESENT ANY OF THE OTHER LENDERS IN CONNECTION
         WITH THIS TRANSACTION.

                  (d)      Documents. Administrative Agent shall not be under a
         duty to examine or pass upon the validity, effectiveness,
         enforceability, genuineness or value of any of the Loan Documents or
         any other instrument or document furnished pursuant thereto or in
         connection therewith, and Administrative Agent shall be entitled to
         assume that the same are valid, effective, enforceable and genuine and
         what they purport to be.

                  (e)      Resignation or Removal of Administrative Agent.
         Subject to the appointment and acceptance of a successor Administrative
         Agent as provided below, Administrative Agent may resign at any time by
         giving written notice thereof to Lenders and the Borrower, and
         Administrative Agent may be removed at any time with or without cause
         by all Lenders (other than Administrative Agent). If no successor
         Administrative

                                       47

<PAGE>

         Agent has been so appointed by Majority Lenders (and approved by the
         Borrower) and has accepted such appointment within 30 days after the
         retiring Administrative Agent's giving of notice of resignation or
         removal of the retiring Administrative Agent, then the retiring
         Administrative Agent may, on behalf of Lenders, appoint a successor
         Administrative Agent. Any successor Administrative Agent must be
         approved by Borrower, which approval will not be unreasonably withheld.
         Upon the acceptance of any appointment as Administrative Agent
         hereunder by a successor Administrative Agent, such successor
         Administrative Agent shall thereupon succeed to and become vested with
         all the rights and duties of the retiring Administrative Agent, and the
         retiring Administrative Agent, as the case may be, shall be discharged
         from its duties and obligations hereunder. After any retiring
         Administrative Agent's resignation or removal hereunder as
         Administrative Agent, the provisions of this Section 15 shall continue
         in effect for its benefit in respect to any actions taken or omitted to
         be taken by it while it was acting as Administrative Agent. To be
         eligible to be an Administrative Agent hereunder the party serving, or
         to serve, in such capacity must own a Pro Rata Part of the Commitments
         equal to the level of Commitment required to be held by any Lender
         pursuant to Section 28 hereof.

                  (f)      Responsibility of Administrative Agent. It is
         expressly understood and agreed that the obligations of Administrative
         Agent under the Loan Documents are only those expressly set forth in
         the Loan Documents as to each and that Administrative Agent, shall be
         entitled to assume that no Default or Event of Default has occurred and
         is continuing, unless Administrative Agent has actual knowledge of such
         fact or has received notice from a Lender or the Borrower that such
         Lender or the Borrower considers that a Default or an Event of Default
         has occurred and is continuing and specifying the nature thereof.
         Neither Administrative Agent nor any of its directors, officers,
         attorneys or employees shall be liable for any action taken or omitted
         to be taken by them under or in connection with the Loan Documents,
         except for its or their own gross negligence or willful misconduct.
         Administrative Agent shall not incur liability under or in respect of
         any of the Loan Documents by acting upon any notice, consent,
         certificate, warranty or other paper or instrument believed by it to be
         genuine or authentic or to be signed by the proper party or parties, or
         with respect to anything which it may do or refrain from doing in the
         reasonable exercise of its judgment, or which may seem to it to be
         necessary or desirable.

                  Administrative Agent shall not be responsible to Lenders for
         any of the Borrower's recitals, statements, representations or
         warranties contained in any of the Loan Documents, or in any
         certificate or other document referred to or provided for in, or
         received by any Lender under, the Loan Documents, or for the value,
         validity, effectiveness, genuineness, enforceability or sufficiency of
         or any of the Loan Documents or for any failure by the Borrower to
         perform any of its obligations hereunder or thereunder. Administrative
         Agent may employ agents and attorneys-in-fact and shall not be
         answerable, except as to money or securities received by it or its
         authorized agents, for

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<PAGE>

         the negligence or misconduct of any such agents or attorneys-in-fact
         selected by it with reasonable care.

                  The relationship between Administrative Agent and each Lender
         is only that of Administrative Agent and principal and has no fiduciary
         aspects. Nothing in the Loan Documents or elsewhere shall be construed
         to impose on Administrative Agent any duties or responsibilities other
         than those for which express provision is therein made. In performing
         its duties and functions hereunder, Administrative Agent does not
         assume and shall not be deemed to have assumed, and hereby expressly
         disclaims, any obligation or responsibility toward or any relationship
         of agency or trust with or for the Borrower or any of its beneficiaries
         or other creditors. As to any matters not expressly provided for by the
         Loan Documents, Administrative Agent shall not be required to exercise
         any discretion or take any action, but shall be required to act or to
         refrain from acting (and shall be fully protected in so acting or
         refraining from acting) upon the instructions of all Lenders and such
         instructions shall be binding upon all Lenders and all holders of the
         Notes; provided, however, that Administrative Agent shall not be
         required to take any action which is contrary to the Loan Documents or
         applicable law.

                  Administrative Agent shall have the right to exercise or
         refrain from exercising, without notice or liability to the Lenders,
         any and all rights afforded to Administrative Agent by the Loan
         Documents or which Administrative Agent may have as a matter of law;
         provided, however, Administrative Agent shall not (i) except as
         provided in Section 7(b) hereof, without the consent of Required
         Lenders designate the amount of the Borrowing Base (except for increase
         thereof) or (ii) without the consent of Majority Lenders, take any
         other action with regard to amending the Loan Documents, waiving any
         default under the Loan Documents or taking any other action with
         respect to the Loan Documents which requires consent of Majority
         Lenders. Provided further, however, that no amendment, waiver, or other
         action shall be effected pursuant to the preceding clause (ii) without
         the consent of all Lenders which: (i) would increase the Borrowing Base
         or decrease the Monthly Commitment Reduction, (ii) would reduce any
         fees hereunder, or the principal of, or the interest on, any Lender's
         Note or Notes, (iii) would postpone any date fixed for any payment of
         any fees hereunder, or any principal or interest of any Lender's Note
         or Notes, (iv) would materially increase any Lender's obligations
         hereunder or would materially alter Administrative Agent's obligations
         to any Lender hereunder, (v) would release Borrower from its obligation
         to pay any Lender's Note or Notes, (vi) would change the definition of
         Majority or Required Lenders, (vii) would amend, modify or change any
         provision of this Agreement requiring the consent of all the Lenders,
         (viii) would waive any of the conditions precedent to the Effective
         Date or the making of any Loan or issuance of any Letter of Credit or
         (ix) would extend the Maturity Date or (x) would amend this sentence or
         the previous sentence. Administrative Agent shall not have liability to
         Lenders for failure or delay in exercising any right or power possessed
         by Administrative Agent pursuant to the Loan Documents or otherwise
         unless such failure or delay is caused by the gross negligence of

                                       49

<PAGE>

         the Administrative Agent, in which case only the Administrative
         Agent responsible for such gross negligence shall have liability
         therefor to the Lenders.

                  (g)      Independent Investigation. Each Lender severally
         represents and warrants to the Agents that it has made its own
         independent investigation and assessment of the financial condition and
         affairs of the Borrower in connection with the making and continuation
         of its participation hereunder and has not relied exclusively on any
         information provided to such Lender by the Agents in connection
         herewith, and each Lender represents, warrants and undertakes to Agents
         that it shall continue to make its own independent appraisal of the
         credit worthiness of the Borrower while the Notes are outstanding or
         its commitments hereunder are in force. The Agents shall not be
         required to keep themselves informed as to the performance or
         observance by the Borrower of this Agreement or any other document
         referred to or provided for herein or to inspect the properties or
         books of the Borrower. Other than as provided in this Agreement, the
         Agents shall not have any duty, responsibility or liability to provide
         any Lender with any credit or other information concerning the affairs,
         financial condition or business of the Borrower which may come into the
         possession of Administrative Agent.

                  (h)      Indemnification. Lenders agree to indemnify the '
         Agents, ratably according to their respective Commitments on a Pro Rata
         basis, from and against any and all liabilities, obligations, losses,
         damages, penalties, actions, judgments, suits, costs, expenses or
         disbursements of any proper and reasonable kind or nature whatsoever
         which may be imposed on, incurred by or asserted against any of the
         Agents in any way relating to or arising out of the Loan Documents or
         any action taken or omitted by Administrative Agent under the Loan
         Documents, provided that no Lender shall be liable for any portion of
         such liabilities, obligations, losses, damages, penalties, actions,
         judgments, suits, costs, expenses or disbursements resulting from any
         of the Agent's gross negligence or willful misconduct. Each Lender
         shall be entitled to be reimbursed by the Agents for any amount such
         Lender paid to the Agents under this Section 15(h) to the extent the
         Agents have been reimbursed for such payments by the Borrower or any
         other Person. THE PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION TO
         APPLY TO AND PROTECT THE AGENTS FROM THE CONSEQUENCES OF ANY LIABILITY
         INCLUDING STRICT LIABILITY IMPOSED OR THREATENED TO BE IMPOSED ON THE
         AGENTS AS WELL AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER
         OR NOT THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING OR CONCURRING CAUSE OF
         ANY SUCH LIABILITY.

                  (i)      Benefit of Section 15. The agreements contained in
         this Section 15 are solely for the benefit of Administrative Agent and
         the Lenders and are not for the benefit of, or to be relied upon by,
         the Borrower, any affiliate of the Borrower or any other person.

                  (j)      Pro Rata Treatment. Subject to the provisions of this
         Agreement, each payment (including each prepayment) by the Borrower and
         collection by Lenders (including offsets) on account of the principal
         of and interest on the Notes and fees

                                       50

<PAGE>

         provided for in this Agreement, payable by the Borrower shall be made
         Pro Rata; provided, however, in the event that any Defaulting Lender
         shall have failed to make an Advance as contemplated under Section 3
         hereof and Administrative Agent or another Lender or Lenders shall have
         made such Advance, payment received by Administrative Agent for the
         account of such Defaulting Lender or Lenders shall not be distributed
         to such Defaulting Lender or Lenders until such Advance or Advances
         shall have been repaid in full to the Lender or Lenders who funded such
         Advance or Advances.

                  (k)      Assumption as to Payments. Except as specifically
         provided herein, unless Administrative Agent shall have received notice
         from the Borrower prior to the date on which any payment is due to
         Lenders hereunder that the Borrower will not make such payment in full,
         Administrative Agent may, but shall not be required to, assume that the
         Borrower has made such payment in full to Administrative Agent on such
         date and Administrative Agent may, in reliance upon such assumption,
         cause to be distributed to each Lender on such due date an amount equal
         to the amount then due such Lender. If and to the extent the Borrower
         shall not have so made such payment in full to Administrative Agent,
         each Lender shall repay to Administrative Agent forthwith on demand
         such amount distributed to such Lender together with interest thereon,
         for each day from the date such amount is distributed to such Lender
         until the date such Lender repays such amount to Administrative Agent,
         at the interest rate applicable to such portion of the Loan.

                  (l)      Other Financings. Without limiting the rights to
         which any Lender otherwise is or may become entitled, such Lender shall
         have no interest, by virtue of this Agreement or the Loan Documents, in
         (a) any present or future loans from, letters of credit issued by, or
         leasing or other financial transactions by, any other Lender to, on
         behalf of, or with the Borrower (collectively referred to herein as
         "Other Financings") other than the obligations hereunder; (b) any
         present or future guarantees by or for the account of the Borrower
         which are not contemplated by the Loan Documents; (c) any present or
         future property taken as security for any such Other Financings; or (d)
         any property now or hereafter in the possession or control of any other
         Lender which may be or become security for the obligations of the
         Borrower arising under any loan document by reason of the general
         description of indebtedness secured or property contained in any other
         agreements, documents or instruments relating to any such Other
         Financings.

                  (m)      Interests of Lenders. Nothing in this Agreement shall
         be construed to create a partnership or joint venture between Lenders
         for any purpose. The Agents, Lenders and the Borrower recognize that
         the respective obligations of Lenders under the Commitments shall be
         several and not joint and that neither the Agents nor any of Lenders
         shall be responsible or liable to perform any of the obligations of the
         other under this Agreement. Each Lender is deemed to be the owner of an
         undivided interest in and to all rights, titles, benefits and interests
         belonging and accruing to Administrative Agent under the Security
         Instruments, including, without limitation, liens and security
         interests in any collateral, fees and payments of principal and
         interest by the Borrower under the

                                       51

<PAGE>

         Commitments on a Pro Rata basis. Each Lender shall perform all duties
         and obligations of Lenders under this Agreement in the same proportion
         as its ownership interest in the Loans outstanding at the date of
         determination thereof.

                  (n)      Investments. Whenever Administrative Agent in good
         faith determines that it is uncertain about how to distribute to
         Lenders any funds which it has received, or whenever Administrative
         Agent in good faith determines that there is any dispute among the
         Lenders about how such funds should be distributed, Administrative
         Agent may choose to defer distribution of the funds which are the
         subject of such uncertainty or dispute. If Administrative Agent in good
         faith believes that the uncertainty or dispute will not be promptly
         resolved, or if Administrative Agent is otherwise required to invest
         funds pending distribution to the Lenders, Administrative Agent may
         invest such funds pending distribution (at the risk of the Borrower).
         All interest on any such investment shall be distributed upon the
         distribution of such investment and in the same proportions and to the
         same Persons as such investment. All monies received by Administrative
         Agent for distribution to the Lenders (other than to the Person who is
         Administrative Agent in its separate capacity as a Lender) shall be
         held by the Administrative Agent pending such distribution solely as
         Administrative Agent for such Lenders, and Administrative Agent shall
         have no equitable title to any portion thereof.

         16.      Exercise of Rights. No failure to exercise, and no delay in
exercising, on the part of the Administrative Agent or the Lenders, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right. The rights of the Administrative Agent and the Lenders
hereunder shall be in addition to all other rights provided by law. No
modification or waiver of any provision of the Loan Documents, including this
Agreement, or the Notes nor consent to departure therefrom, shall be effective
unless in writing, and no such consent or waiver shall extend beyond the
particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other circumstances without such notice or demand.

         17.      Notices. Any notices or other communications required or
permitted to be given by this Agreement or any other documents and instruments
referred to herein must be given in writing (which may be by facsimile
transmission) and must be personally delivered or mailed by prepaid certified or
registered mail to the party to whom such notice or communication is directed at
the address of such party as follows: (a) BORROWER: GREAT LAKES ENERGY PARTNERS,
L.L.C., 125 State Route 43, Hartville, Ohio 44632, Attention: Thomas W. Stoelk,
Chief Financial Officer, Facsimile No. (330) 877-4586; (b) Administrative Agent:
BANK ONE, NA, 1717 Main Street, Dallas, Texas 75201, Facsimile No. (214)
290-2332, Attention: Wm. Mark Cranmer, Director, Capital Markets. Any such
notice or other communication shall be deemed to have been given (whether
actually received or not) on the day it is personally delivered or delivered by
facsimile as aforesaid or, if mailed, on the third day after it is mailed as
aforesaid. Any party may change its address for purposes of this Agreement by
giving notice of such change to the other party pursuant to this Section 17. Any
notice required to be given to the

                                       52

<PAGE>

Lenders shall be given to the Administrative Agent and distributed to all
Lenders by the Administrative Agent.

         18.      Expenses. The Borrower shall pay (i) all reasonable and
necessary out-of-pocket expenses of the Administrative Agent, including
reasonable fees and disbursements of special counsel for the Administrative
Agent, in connection with the preparation of this Agreement, any waiver or
consent hereunder or any amendment hereof or any default or Event of Default or
alleged default or Event of Default hereunder, (ii) all reasonable and necessary
out-of-pocket expenses of the Administrative Agent, including reasonable fees
and disbursements of special counsel for the Administrative Agent in connection
with the preparation of any participation agreement for a participant or
participants requested by the Borrower or any amendment thereof and (iii) if an
Event of Default occurs and is continuing, all reasonable and necessary
out-of-pocket expenses incurred by the Lenders, including fees and disbursements
of counsel, in connection with such default and Event of Default and collection
and other enforcement proceedings resulting therefrom. THE BORROWER HEREBY
ACKNOWLEDGES THAT GARDERE WYNNE SEWELL LLP IS SPECIAL COUNSEL TO BANK ONE, AS
ADMINISTRATIVE AGENT AND AS A LENDER, UNDER THIS AGREEMENT AND THAT IT IS NOT
COUNSEL TO, NOR DOES IT REPRESENT THE BORROWER IN CONNECTION WITH THE
TRANSACTIONS DESCRIBED IN THIS AGREEMENT. The Borrower is relying on separate
counsel in the transaction described herein. The Borrower shall indemnify the
Lenders against any transfer taxes, document taxes, assessments or charges made
by any governmental authority by reason of the execution, delivery and filing of
the Loan Documents. The obligations of this Section 18 shall survive any
termination of this Agreement, the expiration of the Loans and the payment of
all indebtedness of the Borrower to the Lenders hereunder and under the Notes.

         19.      Indemnity. The Borrower agrees to indemnify and hold harmless
the Agents and the Lenders and their respective officers, employees, agents,
attorneys and representatives (singularly, an "Indemnified Party", and
collectively, the "Indemnified Parties") from and against any loss, cost,
liability, damage or expense (including the reasonable fees and out-of-pocket
expenses of counsel to the Lenders, including all local counsel hired by such
counsel) ("Claim") incurred by the Lenders in investigating or preparing for,
defending against, or providing evidence, producing documents or taking any
other action in respect of any commenced or threatened litigation,
administrative proceeding or investigation under any federal securities law,
federal or state environmental law, or any other statute of any jurisdiction, or
any regulation, or at common law or otherwise, which is alleged to arise out of
or is based upon any acts, practices or omissions or alleged acts, practices or
omissions of the Borrower or its agents or arises in connection with the duties,
obligations or performance of the Indemnified Parties in negotiating, preparing,
executing, accepting, keeping, completing, countersigning, issuing, selling,
delivering, releasing, assigning, handling, certifying, processing or receiving
or taking any other action with respect to the Loan Documents and all documents,
items and materials contemplated thereby even if any of the foregoing arises out
of an Indemnified Party's ordinary negligence. The indemnity set forth herein
shall be in addition to any other obligations or liabilities of the Borrower to
the Agents and the Lenders hereunder or at common law or otherwise, and shall
survive any termination of this Agreement, the expiration of the Loans and

                                       53

<PAGE>

the payment of all indebtedness of the Borrower to the Lenders hereunder and
under the Notes, provided that the Borrower shall have no obligation under this
Section to the Lenders with respect to any of the foregoing arising out of the
gross negligence or willful misconduct of the Lenders. If any Claim is asserted
against any Indemnified Party, the Indemnified Party shall endeavor to notify
the Borrower of such Claim (but failure to do so shall not affect the
indemnification herein made except to the extent of the actual harm caused by
such failure). The Indemnified Party shall have the right to employ, at the
Borrower's expense, counsel of the Indemnified Parties' choosing and to control
the defense of the Claim. The Borrower may at its own expense also participate
in the defense of any Claim. Each Indemnified Party may employ separate counsel
in connection with any Claim to the extent such Indemnified Party believes it
reasonably prudent to protect such Indemnified Party. THE PARTIES INTEND FOR THE
PROVISIONS OF THIS SECTION TO APPLY TO AND PROTECT EACH INDEMNIFIED PARTY FROM
THE CONSEQUENCES OF ANY LIABILITY INCLUDING STRICT LIABILITY IMPOSED OR
THREATENED TO BE IMPOSED ON ADMINISTRATIVE AGENT AS WELL AS FROM THE
CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE,
CONTRIBUTING, OR CONCURRING CAUSE OF ANY CLAIM.

         20.      Governing Law. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED,
AND IS INTENDED TO BE PERFORMED, IN DALLAS, DALLAS COUNTY, TEXAS, AND THE
SUBSTANTIVE LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.

         21.      Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Agreement, such provisions shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of the Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement.

         22.      Maximum Interest Rate. Regardless of any provisions contained
in this Agreement or in any other documents and instruments referred to herein,
the Lenders shall never be deemed to have contracted for or be entitled to
receive, collect or apply as interest on the Notes any amount in excess of the
Maximum Rate, and in the event any Lender ever receives, collects or applies as
interest any such excess, or if an acceleration of the maturities of any Notes
or if any prepayment by the Borrower results in the Borrower having paid any
interest in excess of the Maximum Rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance of
the Notes for which such excess was received, collected or applied, and, if the
principal balance of such Note is paid in full, any remaining excess shall
forthwith be paid to the Borrower. All sums paid or agreed to be paid to the
Lenders for the use, forbearance or detention of the indebtedness evidenced by
the Notes and/or this Agreement shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the rate or

                                       54

<PAGE>

amount of interest on account of such indebtedness does not exceed the Maximum
Rate. In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Rate of interest permitted by law, the
Borrower and the Lenders shall, to the maximum extent permitted under applicable
law, (i) characterize any non-principal payment as an expense, fee or premium,
rather than as interest; and (ii) exclude voluntary prepayments and the effect
thereof; and (iii) compare the total amount of interest contracted for, charged
or received with the total amount of interest which could be contracted for,
charged or received throughout the entire contemplated term of the Note at the
Maximum Rate.

         23.      Amendments. This Agreement may be amended only by an
instrument in writing executed by an authorized officer of the party against
whom such amendment is sought to be enforced.

         24.      Multiple Counterparts. This Agreement may be executed in a
number of identical separate counterparts, each of which for all purposes is to
be deemed an original, but all of which shall constitute, collectively, one
agreement. No party to this Agreement shall be bound hereby until a counterpart
of this Agreement has been executed by all parties hereto.

         25.      Conflict. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the Loan Documents, the
terms or provisions contained in this Agreement shall be controlling.

         26.      Survival. All covenants, agreements, undertakings,
representations and warranties made in the Loan Documents, including this
Agreement, the Notes or other documents and instruments referred to herein shall
survive all closings hereunder and shall not be affected by any investigation
made by any party.

         27.      Parties Bound. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, assigns,
heirs, legal representatives and estates, provided, however, that the Borrower
may not, without the prior written consent of all of the Lenders, assign any
rights, powers, duties or obligations hereunder.

         28.      Assignments and Participations.

                  (a)      Assignments. Each Lender shall have the right to
         sell, assign or transfer all or any part of its Note or Notes, its
         Commitment and its rights and obligations hereunder to one or more
         Affiliates, banks, financial institutions, pension plans, insurance
         companies, investment funds, or similar Persons who are Eligible
         Assignees or to a Federal Reserve Bank; provided, that in connection
         with each sale, assignment or transfer (other than to an Affiliate, a
         Lender or a Federal Reserve Bank), shall require the consent of
         Administrative Agent and the Borrower, which consents will not be
         unreasonably withheld; provided, however, that if an Event of Default
         has occurred and is continuing, the consent of the Borrower shall not
         be required. Any such assignee, transferee or recipient shall have, to
         the extent of such sale, assignment, or transfer, the same rights,
         benefits and obligations as it would if it were such Lender and a
         holder of such Note,

                                       55

<PAGE>

         Commitment and rights and obligations, including, without limitation,
         the right to vote on decisions requiring consent or approval of all
         Lenders, Required Lenders or Majority Lenders and the obligation to
         fund its Commitment; provided, that (1) each such sale, assignment, or
         transfer (other than to an Affiliate, a Lender or a Federal Reserve
         Bank) shall be in an aggregate principal amount not less than
         $5,000,000, (2) each remaining Lender shall at all times maintain
         Commitment then outstanding in an aggregate principal amount at least
         equal to $5,000,000; (3) each such sale, assignment or transfer shall
         be of a Pro Rata portion of such Lender's Commitment, (4) no Lender may
         offer to sell its Note or Notes, Commitment, rights and obligations or
         interests therein in violation of any securities laws; and (5) no such
         assignments (other than to a Federal Reserve Bank) shall become
         effective until the assigning Lender and its assignee delivers to
         Administrative Agent and Borrower an Assignment and Acceptance and the
         Note or Notes subject to such assignment and other documents evidencing
         any such assignment. An assignment fee in the amount of $3,500 for each
         such assignment (other than to an Affiliate, a Lender or the Federal
         Reserve Bank) will be payable to Administrative Agent by assignor or
         assignee. Within five (5) Business Days after its receipt of copies of
         the Assignment and Acceptance and the other documents relating thereto
         and the Note or Notes, the Borrower shall execute and deliver to
         Administrative Agent (for delivery to the relevant assignee) a new Note
         or Notes evidencing such assignee's assigned Commitment and if the
         assignor Lender has retained a portion of its Commitment, a replacement
         Note in the principal amount of the Commitment retained by the assignor
         (except as provided in the last sentence of this paragraph (a) such
         Note or Notes to be in exchange for, but not in payment of, the Note or
         Notes held by such Lender). On and after the effective date of an
         assignment hereunder, the assignee shall for all purposes be a Lender,
         party to this Agreement and any other Loan Document executed by the
         Lenders and shall have all the rights and obligations of a Lender under
         the Loan Documents, to the same extent as if it were an original party
         thereto (except that an Affiliate of Borrower shall not have the right
         to vote as a Lender on matters that other Lenders have the right to
         vote on under the provisions of the Agreement), and no further consent
         or action by Borrower, Lenders or the Administrative Agent shall be
         required to release the transferor Lender with respect to its
         Commitment assigned to such assignee and the transferor Lender shall
         henceforth be so released.

                  (b)      Participations. Each Lender shall have the right to
         grant participations in all or any part of such Lender's Notes and
         Commitment hereunder to one or more pension plans, investment funds,
         insurance companies, financial institutions or other Persons, provided,
         that:

                           (i)      each Lender granting a participation shall
                  retain the right to vote hereunder, and no participant shall
                  be entitled to vote hereunder on decisions requiring consent
                  or approval of Lenders, Required Lenders or Majority Lenders
                  (except as set forth in (iii) below);

                                       56

<PAGE>

                           (ii)     in the event any Lender grants a
                  participation hereunder, such Lender's obligations under the
                  Loan Documents shall remain unchanged, such Lender shall
                  remain solely responsible to the other parties hereto for the
                  performance of such obligations, such Lender shall remain the
                  holder of any such Note or Notes for all purposes under the
                  Loan Documents, and Administrative Agent, each Lender and
                  Borrower shall be entitled to deal with the Lender granting a
                  participation in the same manner as if no participation had
                  been granted; and

                           (iii)    no participant shall ever have any right by
                  reason of its participation to exercise any of the rights of
                  Lenders hereunder, except that any Lender may agree with any
                  participant that such Lender will not, without the consent of
                  such participant (which consent may not be unreasonably
                  withheld) consent to any amendment or waiver requiring
                  approval of all Lenders.

                  (c)      Financial Information. It is understood and agreed
         that any Lender may provide to assignees and participants and
         prospective assignees and participants financial information and
         reports and data concerning Borrower's properties and operations which
         was provided to such Lender pursuant to this Agreement.

                  (d)      Assignees' and Participants' Indemnity. Upon the
         reasonable request of either Administrative Agent or Borrower, each
         Lender will identify those to whom it has assigned or participated any
         part of its Notes and Commitment, and provide the amounts so assigned
         or participated.

         29.      Choice of Forum; Consent to Service of Process and
Jurisdiction. THE OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS ARE
PERFORMABLE IN DALLAS COUNTY, TEXAS. ANY SUIT, ACTION OR PROCEEDING AGAINST THE
BORROWER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT
IN RESPECT THEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, COUNTY
OF DALLAS, OR IN THE UNITED STATES COURTS LOCATED IN DALLAS COUNTY, TEXAS AND
THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR
THE PURPOSE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN
SAID COURT BY THE MAILING THEREOF BY LENDER BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER, AS APPLICABLE, AT THE ADDRESS FOR NOTICES AS
PROVIDED IN SECTION 17. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS
LOCATED IN THE STATE OF TEXAS, COUNTY OF DALLAS, AND HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM

                                       57

<PAGE>

THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

         30.      Waiver of Jury Trial. THE BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

         31.      Other Agreements. THIS WRITTEN CREDIT AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

         32.      Financial Terms. All accounting terms used in this Agreement
which are not specifically defined herein shall be construed in accordance with
GAAP.

         33.      Joinder of Guarantors. The Guarantors are executing this
Restated Credit Agreement to (i) consent and agree to the execution of this
Restated Credit Agreement and the other documents to be executed in connection
herewith, (ii) acknowledge and agree to the provisions of this Restated Credit
Agreement, (iii) ratify and confirm their respective Guaranties, and (iv) agree
that their respective Guaranties shall remain in full force and effect and shall
continue to be the legal, valid and binding obligation of each such Guarantor
enforceable against each such Guarantor in accordance with the terms of each
such Guaranty.

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<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                        BORROWER:

                                        GREAT LAKES ENERGY PARTNERS, L.L.C.,
                                        a Delaware limited liability company

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        GUARANTORS:

                                        OCEANA EXPLORATION COMPANY, L.C.

                                        By: Great Lakes Energy Partners, L.L.C.,
                                            managing member

                                            By: ________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        OHIO INTRASTATE GAS TRANSMISSION
                                        COMPANY

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

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<PAGE>

                                        LENDERS AND AGENTS:

                                        BANK ONE, NA
                                        (Main Office Chicago)
                                        as a Lender and as Administrative Agent

                                        By: ____________________________________
                                                Wm. Mark Cranmer, Director,
                                                Capital Markets

                                        JPMORGAN CHASE BANK
                                        as a Lender and as Syndication Agent
                                        (successor by merger to Chase Bank of
                                        Texas National Association)

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        CREDIT LYONNAIS NEW YORK BRANCH
                                        as a Lender and as Documentation Agent

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        BANK OF SCOTLAND

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        THE BANK OF NOVA SCOTIA
                                        as a Lender and as Managing Agent

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

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<PAGE>

                                        FORTIS CAPITAL CORP.

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        THE FROST NATIONAL BANK

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        UNION BANK OF CALIFORNIA, N.A.

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                       61