exv10w1






Exhibit
10.1





Execution Version




$600,000,000




PETROHAWK ENERGY CORPORATION




10.5% Senior Notes due 2014




PURCHASE AGREEMENT




January 22, 2009




J.P. Morgan Securities Inc.

As Representative of the several
 Initial
Purchasers named in Schedule I attached hereto,

c/o J.P. Morgan Securities Inc.

270 Park Avenue

New York, New York 10017




Ladies and Gentlemen:




     Petrohawk Energy Corporation, a Delaware corporation (the “Company”), proposes, upon the terms
and conditions set forth in this agreement (this “Agreement”), to issue and sell to you, as the
initial purchasers (the “Initial Purchasers”), $600,000,000 in aggregate principal amount of its
10.5% Senior Notes due 2014 (the “Notes”). The Notes will (i) have terms and
provisions that are summarized in the Offering Memorandum (as defined below) and (ii) are to be
issued pursuant to an Indenture (the “Indenture”) to be entered into among the Company, the
Guarantors (as defined below) and U.S. Bank National Association, as trustee (the “Trustee”). The
Company’s obligations under the Notes, including the due and punctual payment of interest on the
Notes, will be unconditionally guaranteed (the “Guarantees”) by the guarantors listed in
Schedule II hereto (together the “Guarantors”). As used herein, the term “Notes” shall
include the Guarantees, unless the context otherwise requires. This is to confirm the agreement
concerning the purchase of the Notes from the Company by the Initial Purchasers.



     1. Purchase and Resale of the Notes. The Notes will be offered and sold to the Initial
Purchasers without registration under the Securities Act of 1933, as amended (the “Securities
Act”), in reliance on an exemption pursuant to Section 4(2) under the Securities Act. The Company
and the Guarantors have prepared a preliminary offering memorandum, dated January 21, 2009 (the
“Preliminary Offering Memorandum”), a pricing term sheet substantially in the form attached hereto
as Schedule III (the “Pricing Term Sheet”) setting forth the terms of the Notes omitted
from the Preliminary Offering Memorandum and an offering memorandum, dated January 22, 2009 (the
“Offering Memorandum”), setting forth information regarding the Company, the Guarantors, the Notes,
and the Exchange Notes (as defined herein), the Guarantees and the Exchange Guarantees (as defined
herein). The Preliminary Offering Memorandum, as supplemented and amended as of the Applicable
Time (as defined below), together with the Pricing Term Sheet and any of the documents listed on
Schedule IV(a) hereto are collectively referred to as the “Pricing Disclosure Package.” The
Company and the Guarantors hereby confirm that they have authorized the use of the Pricing
Disclosure Package and the Offering Memorandum in connection with the offering and resale of
the Notes by the Initial Purchasers. “Applicable Time” means 4:00 p.m. (New York City time) on
the date of this Agreement.



 









 





     Any reference to the Preliminary Offering Memorandum, the Pricing Disclosure Package or the
Offering Memorandum shall be deemed to refer to and include the Company’s most recent Annual Report
on Form 10-K for the fiscal year ended December 31, 2007 and all documents for subsequent periods
and dates filed with the United States Securities and Exchange Commission (the “Commission”)
pursuant to Section 13(a) or 15(d) of the United States Securities Exchange Act of 1934, as amended
(the “Exchange Act”), on or prior to the date of the Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum, as the case may be and all documents otherwise
incorporated by reference into the Preliminary Offering Memorandum, Pricing Disclosure Package or
the Offering Memorandum. Any reference to the Preliminary Offering Memorandum, Pricing Disclosure
Package or the Offering Memorandum, as the case may be, as amended or supplemented, as of any
specified date, shall be deemed to include (i) any documents filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the date of the Preliminary Offering Memorandum,
Pricing Disclosure Package or the Offering Memorandum, as the case may be, and prior to such
specified date and all documents otherwise incorporated by reference into the Preliminary Offering
Memorandum, Pricing Disclosure Package or the Offering Memorandum prior to such specified date.
All documents filed under the Exchange Act and so deemed to be included in the Preliminary Offering
Memorandum, Pricing Disclosure Package or the Offering Memorandum, as the case may be, or any
amendment or supplement thereto are hereinafter called the “Exchange Act Reports.” The Exchange
Act Reports, when they were or are filed with the Commission, conformed or will conform in all
material respects to the applicable requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder.



     It is understood and acknowledged that upon original issuance thereof, and until such time as
the same is no longer required under the applicable requirements of the Securities Act, the Notes
(and all securities issued in exchange therefor or in substitution thereof) shall bear the
following legend (along with such other legends as the Initial Purchasers and their counsel deem
necessary):




“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)), OR
(B) IT IS A NON-U.S. PURCHASER AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF
REGULATION S, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE WHICH IS



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ONE YEAR (OR SUCH SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE 144(d) (OR ANY SUCCESSOR
PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF (OR ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S, OR
(E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND THE SECURITIES LAWS OF ANY OTHER JURISDICTION, INCLUDING ANY STATE OF THE
UNITED STATES, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF
THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.”



     You have advised the Company that you will make offers (the “Exempt Resales”) of the Notes
purchased by you hereunder on the terms set forth in each of the Pricing Disclosure Package and the
Offering Memorandum, as amended or supplemented, solely to (i) persons whom you reasonably believe
to be “qualified institutional buyers” as defined in Rule 144A under the Securities Act (“QIBs”)
and (ii) outside the United States to certain persons who are not U.S. Persons (as defined in
Regulation S under the Securities Act (“Regulation S”)) (such persons, “Non-U.S. Persons”) in
offshore transactions in reliance on Regulation S. Those persons specified in clauses (i) and (ii)
are referred to herein as the (“Eligible Purchasers”). You will offer the Notes to Eligible
Purchasers initially at a price equal to 91.279% of the principal amount thereof. Such price may
be changed at any time without notice.



     Holders (including subsequent transferees) of the Notes will have the registration rights set
forth in the registration rights agreement (the “Registration Rights Agreement”) among the Company,
the Guarantors and the Initial Purchasers to be dated January 27, 2009 (the “Closing Date”), for so
long as such Notes constitute “Transfer Restricted Securities” (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company



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and the Guarantors will agree to file with the Commission under the circumstances set forth
therein, a registration statement under the Securities Act (the “Exchange Offer Registration
Statement”) relating to the Company’s $600,000,000 10.5% Senior Notes due 2014 (the “Exchange
Notes”) and the Guarantors’ Exchange Guarantees (the “Exchange Guarantees”) to be offered in
exchange for the Notes and the Guarantees. Such portion of the offering is referred to as the
“Exchange Offer.”




     2. Representations, Warranties and Agreements of the Company and the Guarantors. The Company
and each of the Guarantors, jointly and severally, represent, warrant and agree as follows:



          (a) When the Notes and Guarantees are issued and delivered pursuant to this Agreement, such
Notes and Guarantees will not be of the same class (within the meaning of Rule 144A under the
Securities Act) as securities of the Company or the Guarantors that are listed on a United States
national securities exchange registered or that are quoted in a United States automated
inter-dealer quotation system.




          (b) Neither the Company nor any subsidiary is, and after giving effect to the offer and sale
of the Notes and the application of the proceeds therefrom as described under “Use of proceeds” in
each of the Pricing Disclosure Package and the Offering Memorandum will be, an “investment company”
or a company “controlled” by an “investment company” within the meaning of the Investment Company
Act of 1940, as amended, and the rules and regulations of the Commission thereunder.




          (c) Assuming that your representations and warranties in Section 3(b) are true, the purchase
and resale of the Notes pursuant hereto (including pursuant to the Exempt Resales) is exempt from
the registration requirements of the Securities Act. No form of general solicitation or general
advertising within the meaning of Regulation D (including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising) was used by the Company, the Guarantors or any of
their respective representatives (other than you, as to whom the Company and the Guarantors make no
representation) in connection with the offer and sale of the Notes.




          (d) No form of general solicitation or general advertising was used by the Company, the
Guarantors or any of their respective representatives (other than you, as to whom the Company and
the Guarantors make no representation) with respect to Notes sold outside the United States to
Non-U.S. Persons, by means of any directed selling efforts within the meaning of Rule 902 under the
Securities Act, and the Company, any affiliate of the Company and any person acting on its or their
behalf (other than you, as to whom the Company and the Guarantors make no representation) has
complied with and will implement the “offering restrictions” required by Rule 902 under the
Securities Act.




          (e) Each of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the
Offering Memorandum, each as of its respective date, contains all the
information specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Securities Act.




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          (f) The Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering
Memorandum have been prepared by the Company and the Guarantors for use by the Initial Purchasers
in connection with the Exempt Resales. No order or decree preventing the use of the Preliminary
Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or any order
asserting that the transactions contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued, and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company or any of the Guarantors is
contemplated.




          (g) The Pricing Disclosure Package did not, as of the Applicable Time, and will not, as of the
Closing Date, contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Pricing Disclosure Package in reliance upon and in
conformity with written information furnished to the Company through the Representative by or on
behalf of any Initial Purchaser specifically for inclusion therein, which information is specified
in Section 8(e).




          (h) The Offering Memorandum will not, as of its date and as of the Closing Date, contain an
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were made, not
misleading; provided that no representation or warranty is made as to information contained in or
omitted from the Offering Memorandum in reliance upon and in conformity with written information
furnished to the Company through the Representative by or on behalf of any Initial Purchaser
specifically for inclusion therein, which information is specified in Section 8(e).




          (i) Other than the Pricing Term Sheet, the Company has not made any offer to sell or
solicitation of an offer to buy the Notes that would constitute a “free writing prospectus” (if the
offering of the Notes was made pursuant to a registered offering under the Securities Act), as
defined in Rule 405 under the Securities Act (a “Free Writing Offering Document”) without the prior
consent of the Representative; any such Free Writing Offering Document the use of which has been
previously consented to by the Representative is listed on Schedule IV(a) and (b).
Each such Free Writing Offering Document, when taken together with the Pricing Disclosure Package,
did not, and at the Closing Date will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that no representation and
warranty is made with respect to any statements or omissions made in each such Free Writing
Offering Document in reliance upon and in conformity with information relating to any Initial
Purchaser furnished to the Company through the Representative by or on behalf of any Initial
Purchaser specifically for inclusion therein.




          (j) The Exchange Act Reports did not, and will not when filed with the Commission, contain an
untrue statement of material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.




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          (k) The statistical and market-related data included under the captions “Summary,”
“Management’s discussion and analysis of financial condition and results of operations,” and
“Business” in the Pricing Disclosure Package and the Offering Memorandum and the consolidated
financial statements of the Company and its subsidiaries included in the Pricing Disclosure Package
and the Offering Memorandum are based on or derived from sources that the Company believes to be
reliable and accurate in all material respects.




          (l) Each of the Company, the Guarantors and their respective subsidiaries has been duly
organized and is validly existing and in good standing as a corporation or other business entity
under the laws of its jurisdiction of organization and is duly qualified to do business and in good
standing as a foreign corporation or other business entity in each jurisdiction in which its
ownership or lease of property or the conduct of its businesses requires such qualification, except
where the failure to be so qualified or in good standing would not, in the aggregate, reasonably be
expected to have a material adverse effect on the condition (financial or otherwise), results of
operations, stockholders’ equity, properties, business or prospects of the Company and its
subsidiaries taken as a whole or a material adverse effect on the performance by the Company and
the Guarantors of the performance of this Agreement, the Indenture or the Notes or the consummation
of any of the transactions contemplated hereby or thereby (a “Material Adverse Effect”); each of
the Company, the Guarantors and their respective subsidiaries has all power and authority necessary
to own or hold its properties and to conduct the businesses in which it is engaged. The Company
does not own or control, directly or indirectly, any corporation, association or other entity other
than the subsidiaries listed in the Company’s Annual Report on Form 10-K for the most recent fiscal
year and the subsidiaries listed on Schedule V. None of the subsidiaries of the Company
(other than the subsidiaries set forth on Schedule VI (collectively, the “Significant
Subsidiaries”)) is a “significant subsidiary” (as defined in Rule 405 under the Securities Act).




          (m) The Company has an authorized capitalization as set forth in each of the Pricing
Disclosure Package and the Offering Memorandum, and all of the issued shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and non-assessable; and
all of the issued shares of capital stock or other ownership interests of each subsidiary of the
Company have been duly authorized and validly issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or
claims, except as described in the Pricing Disclosure Package and the Offering Memorandum and
except for such liens, encumbrances, equities or claims as would not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.




          (n) The Company and each Guarantor has all requisite corporate power and authority to execute,
deliver and perform its obligations under the Indenture. The Indenture has been duly and validly
authorized by the Company and the Guarantors, and upon its execution and delivery and, assuming due
authorization, execution and delivery by the Trustee, will constitute the valid and binding
agreement of the Company and the Guarantors, enforceable against the Company and the Guarantors in
accordance with its terms, except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization,



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moratorium, and other laws relating to or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in a proceeding in
equity or at law); no qualification of the Indenture under the Trust Indenture Act of 1939 (the
“1939 Act”) is required in connection with the offer and sale of the Notes contemplated hereby or
in connection with the Exempt Resales. The Indenture will conform to the description thereof in
each of the Pricing Disclosure Package and the Offering Memorandum.




          (o) The Company has all requisite corporate power and authority to execute, issue, sell and
perform its obligations under the Notes. The Notes have been duly authorized by the Company and,
when duly executed by the Company in accordance with the terms of the Indenture, assuming due
authentication of the Notes by the Trustee, upon delivery to the Initial Purchasers against payment
therefor in accordance with the terms hereof, will be validly issued and delivered and will
constitute valid and binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except as such enforceability may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in equity or at law). The
Notes will conform in all material respects to the description thereof in each of the Pricing
Disclosure Package and the Offering Memorandum.




          (p) The Company has all requisite corporate power and authority to execute, issue and perform
its obligations under the Exchange Notes. The Exchange Notes have been duly and validly authorized
by the Company and if and when issued and authenticated in accordance with the terms of the
Indenture and delivered in accordance with the Exchange Offer provided for in the Registration
Rights Agreement, will be validly issued and delivered and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors’ rights generally and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).




          (q) Each Guarantor has all requisite corporate, partnership or limited liability company power
and authority, as applicable, to execute, issue and perform its obligations under the Guarantees.
The Guarantees have been duly and validly authorized by the Guarantors and when the Indenture is
duly executed and delivered by the Guarantors in accordance with its terms and upon the due
execution, authentication and delivery of the Notes in accordance with the Indenture and the
issuance of the Notes in the sale to the Initial Purchasers contemplated by this Agreement, will
constitute valid and binding obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The Guarantees will conform in
all material respects to the description thereof in each of the Pricing Disclosure Package and the
Offering Memorandum.




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          (r) Each Guarantor has all requisite corporate, partnership or limited liability company power
and authority, as applicable, to execute, issue and perform its obligations under the Exchange
Guarantees. The Exchange Guarantees have been duly and validly authorized by the Guarantors and if
and when executed and delivered by the Guarantors in accordance with the terms of the Indenture and
upon the due execution and authentication of the Exchange Notes in accordance with the Indenture
and the issuance and delivery of the Exchange Notes in the Exchange Offer contemplated by the
Registration Rights Agreement, will be validly issued and delivered and will constitute valid and
binding obligations of the Guarantors entitled to the benefits of the Indenture, enforceable
against the Guarantors in accordance with their terms, except as such enforceability may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in equity or at law).




          (s) The Company and each Guarantor has all requisite corporate, partnership or limited
liability company power and authority, as applicable, to execute, deliver and perform its
obligations under the Registration Rights Agreement. The Registration Rights Agreement has been
duly authorized by the Company and each Guarantor and, when executed and delivered by the Company
and each Guarantor in accordance with the terms hereof and thereof, will be validly executed and
delivered and (assuming the due authorization, execution and delivery thereof by you) will be the
legally valid and binding obligation of the Company and each Guarantor in accordance with the terms
thereof, enforceable against the Company and each Guarantor in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditor’s rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in equity or at law) and,
as to rights of indemnification and contribution, by principles of public policy. The Registration
Rights Agreement will conform to the description thereof in each of the Pricing Disclosure Package
and the Offering Memorandum.




          (t) The Company and each Guarantor has all requisite corporate power to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly and validly authorized,
executed and delivered by the Company and each of the Guarantors.




          (u) The issue and sale of the Notes and the Guarantees, the execution, delivery and
performance by the Company and the Guarantors of the Notes, the Guarantees, the Exchange Notes, the
Exchange Guarantees, the Indenture, the Registration Rights Agreement and this Agreement, the
application of the proceeds from the sale of the Notes as described under “Use of proceeds” in each
of the Pricing Disclosure Package and the Offering Memorandum and the consummation of the
transactions contemplated hereby and thereby, will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, impose any lien, charge or encumbrance upon any
property or assets of the Company, the Guarantors or their respective subsidiaries, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement, license, lease or other
agreement or instrument to which the Company, the Guarantors or any of their respective
subsidiaries is a party or by which the Company, the Guarantors or any of their respective
subsidiaries is bound or to which any of the property or assets of the Company, the Guarantors or
any of their respective subsidiaries is subject, (ii) result




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in any violation of the provisions of the charter or by-laws or similar organizational
document of the Company, the Guarantors or any of their respective subsidiaries or (iii) result in
any violation of any statute or any judgment, order, decree, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the Guarantors or any of their
respective subsidiaries or any of their properties or assets, except, with respect to clauses (i)
and (iii), conflicts or violations that could not reasonably be expected to have a Material Adverse
Effect.




          (v) No consent, approval, authorization or order of, or filing, registration or qualification
with any court or governmental agency or body having jurisdiction over the Company, the Guarantors
or any of their respective subsidiaries is required for the issue and sale of the Notes and the
Guarantees, the execution, delivery and performance by the Company and the Guarantors of the Notes,
the Guarantees, the Exchange Notes, the Exchange Guarantees, the Indenture, the Registration Rights
Agreement and this Agreement, the application of the proceeds from the sale of the Notes as
described under “Use of proceeds” in each of the Pricing Disclosure Package and the Offering
Memorandum and the consummation of the transactions contemplated hereby and thereby, except for the
filing of a registration statement by the Company with the Commission pursuant to the Securities
Act as required by the Registration Rights Agreement and the qualification of the Indenture under
the Trust Indenture Act of 1939 in connection with the registration of the Exchange Notes under the
Securities Act and such consents, approvals, authorizations, orders, filings, registrations or
qualifications as may be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Notes by the Initial Purchasers.




          (w) Except for the Registration Rights Agreements dated as of May 13, 2008 and June 19, 2008
among the Company, certain subsidiaries of the Company and the initial purchasers party thereto,
and the Registration Rights Agreement, there are no contracts, agreements or understandings between
the Company, any Guarantor and any person granting such person the right to require the Company or
any Guarantor to file a registration statement under the Securities Act with respect to any
securities of the Company or any Guarantor owned or to be owned by such person or to require the
Company or any Guarantor to include such securities in the securities registered pursuant to the
Registration Rights Agreement or in any securities being registered pursuant to any other
registration statement filed by the Company or any Guarantor under the Securities Act.




          (x) Neither the Company, any Guarantor nor any other person acting on behalf of the Company or
any Guarantor has sold or issued any securities that would be integrated with the offering of the
Notes contemplated by this Agreement pursuant to the Securities Act, the rules and regulations
thereunder or the interpretations thereof by the Commission. The Company and the Guarantors will
take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the
United States or to any U.S. person (as defined in Rule 902 under the Securities Act), of any Notes
or any substantially similar security issued by the Company or any Guarantor, within six months
subsequent to the date on which the distribution of the Notes has been completed (as notified to
the Company by the Initial Purchasers), is made under restrictions and other circumstances
reasonably designed not to affect the status of the offer and sale of the Notes in the United
States and to U.S. persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Securities Act, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act.




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          (y) Neither the Company, the Guarantors nor any of their respective subsidiaries has
sustained, since the date of the latest audited financial statements included or incorporated by
reference in the Pricing Disclosure Package and the Offering Memorandum, any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or decree, and, since
such date, there has not been any change in the capital stock, partnership or limited liability
interests, as applicable, or long-term debt, of the Company, the Guarantors or any of their
respective subsidiaries or any adverse change, or any development involving a prospective adverse
change, in or affecting the condition (financial or otherwise), results of operations,
stockholders’ equity, properties, management, business or prospects of the Company and its
subsidiaries, taken as a whole, in each case except as could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.




          (z) The historical financial statements (including the related notes and supporting schedules)
included or incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum
present fairly in all material respects the financial condition, results of operations and cash
flows of the entities purported to be shown thereby, at the dates and for the periods indicated,
and have been prepared in conformity with accounting principles generally accepted in the United
States applied on a consistent basis throughout the periods involved. The pro forma financial
statements included or incorporated by reference in the Pricing Disclosure Package and the Offering
Memorandum include assumptions that provide a reasonable basis for presenting the significant
effects directly attributable to the transactions and events described therein, the related pro
forma adjustments give appropriate effect to those assumptions, and the pro forma adjustments
reflect the proper application of those adjustments to the historical financial statement amounts
in the pro forma financial statements included in the Pricing Disclosure Package. The pro forma
financial statements included or incorporated by reference in the Pricing Disclosure Package and
the Offering Memorandum have been prepared in accordance with the Commission’s rules and guidance
with respect to pro forma financial information. The pro forma financial statements included or
incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum have been
prepared on the basis consistent with such historical financial statements, except for the pro
forma adjustments specified therein include all material adjustments to the historical financial
data required by Rule 11-02 of Regulation S-X to reflect the Company’s sale of its Gulf Coast
properties (as discussed in the Pricing Disclosure Package and the Offering Memorandum), and give
effect to assumptions made on a reasonable basis and in good faith present fairly in all material
respects the historical and proposed transactions contemplated by the Pricing Disclosure Package
and the Offering Memorandum. The other financial information and data included in the Pricing
Disclosure Package and the Offering Memorandum, historical and pro forma, are, in all material
respects, accurately presented and prepared on a basis consistent with such financial statements
and the books and records of the Company.




          (aa) Deloitte & Touche LLP, who have certified certain financial statements of the Company and
its consolidated subsidiaries, whose report appears in the Pricing Disclosure Package and the
Offering Memorandum or is incorporated by reference therein and who have delivered the initial
letter referred to in Section 7(f) hereof, are independent public accountants as required by the
Securities Act and the rules and regulations thereunder; and Ernst & Young LLP, whose report is
incorporated by reference into the Preliminary Offering Memorandum and



10









 






the Offering Memorandum and who has delivered the initial letter referred to in Section 7(g)
hereof, were independent public accountants as required by the Securities Act and the rules and
regulations thereunder and the rules and regulations of the Public Company Accounting Oversight
Board (the “PCAOB”) during the periods covered by the financial statements on which they reported
contained in the Pricing Disclosure Package and the Offering Memorandum.




          (bb) Netherland, Sewell & Associates, Inc., an oil and gas consulting firm (“NSAI”), whose
report dated February 22, 2008, is summarized or excerpted in reports incorporated by reference, or
included, in the Pricing Disclosure Package and the Offering Memorandum and who has delivered the
initial expert letter referred to in Section 7(j) hereof, was, as of the date of such report, and
is, as of the date hereof, an independent petroleum engineer with respect to the Company. The
written engineering report prepared by NSAI dated February 22, 2008, setting forth the proved
reserves attributed to the oil and gas properties of the Company and its subsidiaries accurately
reflects in all material respects the ownership interests of the Company its subsidiaries in the
properties therein as of December 31, 2007; the information furnished by the Company to NSAI for
purposes of preparing its report, including, without limitation, production, costs of operation and
development, current prices for production, agreements relating to current and future operations
and sales of production, was true, correct and complete in all material respects on the date
supplied and was prepared in accordance with customary industry practices, as indicated in the
letter of NSAI dated February 22, 2008.




          (cc) Except as described in the Pricing Disclosure Package and the Offering Memorandum, the
Company, the Guarantors and each of their respective subsidiaries has defensible title to all of
their interests in oil and gas properties (other than interests earned under farm-out,
participation or similar agreements in which an assignment or transfer is pending) and all their
interests in other real property and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (i) are described in the Pricing Disclosure Package and the
Offering Memorandum, (ii) liens and encumbrances under operating agreements, unitization and
pooling agreements, production sales contracts, farm-out agreements and other oil and gas
exploration participation and production agreements, in each case that secure payment of amounts
not yet due and payable for the performance of other unmatured obligations and are of a scope and
nature customary in the oil and gas industry or arise in connection with drilling and production
operations, or (iii) would not have a Material Adverse Effect on the value of the affected property
or the use made and proposed to be made of such property by the Company, the Guarantors or any of
their respective subsidiaries, as the case may be; except as would not have a Material Adverse
Effect, all of the leases and subleases of real property of the Company, the Guarantors or any of
their respective subsidiaries and under which the Company, the Guarantors or any of their
respective subsidiaries holds properties described in the Pricing Disclosure Package and the
Offering Memorandum, are in full force and effect, and neither the Company, the Guarantors nor any
of their respective subsidiaries has received written notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company, the Guarantors or any of their respective
subsidiaries under any of such leases or subleases, or affecting or questioning the rights of the
Company, the Guarantors or any of their respective subsidiaries to the continued possession of the
leased or subleased premises under any such lease or sublease.




11









 








          (dd) The Company and each of its subsidiaries have such permits, licenses, patents,
franchises, certificates of need and other approvals or authorizations of governmental or
regulatory authorities (“Permits”) as are necessary under applicable law to own their properties
and conduct their businesses in the manner described in the Pricing Disclosure Package and the
Offering Memorandum, except for any of the foregoing that could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect; each of the Company and its subsidiaries has
fulfilled and performed all of its obligations with respect to the Permits, and no event has
occurred that allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the holder or any such Permits, except
for any of the foregoing that could not reasonably be expected to have a Material Adverse Effect.




          (ee) The Company and each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses, know-how, software, systems and
technology (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of their respective
businesses and have no reason to believe that the conduct of their respective businesses will
conflict with, and have not received any notice of any claim of conflict with, any such rights of
others.




          (ff) There are no legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject that could, in the aggregate, reasonably be expected to have a Material
Adverse Effect or could, in the aggregate, reasonably be expected to have a material adverse effect
on the performance by the Company and the Guarantors of the performance of this Agreement, the
Indenture or the Notes or the consummation of any of the transactions contemplated hereby; and to
the Company’s and each Guarantors’ knowledge, no such proceedings are threatened or contemplated by
governmental authorities or others.




          (gg) There are no legal or governmental proceedings or contracts or other documents that would
be required to be described in a registration statement filed under the Securities Act or, in the
case of documents, would be required to be filed as exhibits to a registration statement of the
Company pursuant to Item 601(10) of Regulation S-K that have not been described in the Pricing
Disclosure Package and the Offering Memorandum. Neither the Company, the Guarantors nor any of
their respective subsidiaries has knowledge that any other party to any such contract, agreement or
arrangement has any intention not to render full performance as contemplated by the terms thereof;
and that statements made in the Pricing Disclosure Package and the Offering Memorandum under the
captions “Business,” “Material U.S. federal tax considerations,” and “Certain ERISA considerations”
insofar as they purport to constitute summaries of the terms of legal or governmental proceedings
or contracts and other documents, constitute accurate summaries of the terms of such legal and
governmental proceedings and contracts and other documents in all material respects.




          (hh) No relationship, direct or indirect, that would be required to be described in a
registration statement of the Company pursuant to Item 404 of Regulation S-K, exists between or
among the Company or any Guarantor, on the one hand, and the directors, officers,




12









 







stockholders, customers or suppliers of the Company or any Guarantor, on the other hand, that
has not been described in the Pricing Disclosure Package and the Offering Memorandum.




          (ii) No labor disturbance by the employees of the Company or any of its subsidiaries exists
or, to the knowledge of the Company or any Guarantor, is imminent that could reasonably be expected
to have a Material Adverse Effect.




          (jj) (i) Each “employee benefit plan” (within the meaning of Section 3(3) of the Employee
Retirement Security Act of 1974, as amended (“ERISA”)) for which the Company or any member of its
“Controlled Group” (defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended
(the “Code”)) would have any liability (each a “Plan”) has been maintained in compliance with its
terms and with the requirements of all applicable statutes, rules and regulations including ERISA
and the Code; (ii) with respect to each Plan subject to Title IV of ERISA (a) no “reportable event”
(within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur,
(b) no “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412
of the Code), whether or not waived, has occurred or is reasonably expected to occur, (c) the fair
market value of the assets under each Plan exceeds the present value of all benefits accrued under
such Plan (determined based on those assumptions used to fund such Plan) and (d) neither the
Company or any member of its Controlled Group has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC in
the ordinary course and without default) in respect of a Plan (including a “multiemployer plan”,
within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.




          (kk) The Company and each of its subsidiaries has filed all federal, state, local and foreign
income and franchise tax returns required to be filed through the date hereof, subject to permitted
extensions, and paid all taxes due thereon, and (i) no tax deficiency has been determined adversely
to the Company, the Guarantors or any of their respective subsidiaries, nor (ii) does the Company
or any Guarantor have any knowledge of any tax deficiencies that could, in the case of clause (i)
or (ii) in the aggregate, reasonably be expected to have a Material Adverse Effect.




          (ll) There are no transfer taxes or other similar fees or charges under Federal law or the
laws of any state, or any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company or sale by the Company of
the Notes.




          (mm) Since the date as of which information is given in the Pricing Disclosure Package and the
Offering Memorandum and except as may otherwise be described in the Pricing Disclosure Package and
the Offering Memorandum, neither the Company nor any Guarantor has (i) issued or granted any
securities, (ii) incurred any liability or obligation, direct or contingent, other than liabilities
and obligations that were incurred in the ordinary course of business, (iii) entered into any
material transaction not in the ordinary course of business or (iv) declared or paid any dividend
on its capital stock.




13









 








          (nn) The Company and each of its subsidiaries (i) makes and keeps accurate financial books and
records and (ii) maintains and has maintained effective internal control over financial reporting
as defined in Rule 13a-15 under the Exchange Act and a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed in accordance with
management’s general or specific authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements in conformity with accounting principles generally
accepted in the United States and to maintain accountability for its assets, (C) access to its
assets is permitted only in accordance with management’s general or specific authorization and (D)
the reported accountability for its assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.




          (oo) Neither the Company nor any of its subsidiaries (i) is in violation of its charter or
by-laws (or similar organizational documents), (ii) is in default, and no event has occurred that,
with notice or lapse of time or both, would constitute such a default, in the due performance or
observance of any term, covenant, condition or other obligation contained in any indenture,
mortgage, deed of trust, loan agreement, license or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets is subject or (iii) is in
violation of any statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over it or its property or assets or has failed to obtain any license,
permit, certificate, franchise or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business, except in the case of clauses (ii) and
(iii), to the extent any such conflict, breach, violation or default could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.




          (pp) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company and
the Guarantors, any director, officer, agent, employee or other person associated with or acting on
behalf of the Company, the Guarantors or any of their respective subsidiaries, has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.




          (qq) The Company and each of its subsidiaries (i) are, and at all times prior hereto were, in
compliance with all laws, regulations, ordinances, rules, orders, judgments, decrees, permits or
other legal requirements of any governmental authority, including without limitation any
international, national, state, provincial, regional, or local authority, relating to the
protection of human health or safety, the environment, or natural resources, or to hazardous or
toxic substances or wastes, pollutants or contaminants (“Environmental Laws”) applicable to such
entity, which compliance includes, without limitation, obtaining, maintaining and complying with
all permits and authorizations and approvals required by Environmental Laws to conduct their
respective businesses, and (ii) have not received notice of any actual or alleged violation of
Environmental Laws, or of any potential liability for or other obligation concerning the presence,
disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except
in the case of clause (i) or (ii) where such non-compliance, violation, liability, or other
obligation could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
Except as described in the Pricing Disclosure Package, (A) there are no




14









 







proceedings that are pending, or known to be contemplated, against the Company or any of its
subsidiaries under Environmental Laws in which a governmental authority is also a party, other than
such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000 or
more will be imposed, (B) the Company, the Guarantors and their respective subsidiaries are not
aware of any issues regarding compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws or concerning hazardous or toxic substances or wastes,
pollutants or contaminants, that could reasonably be expected to have a Material Adverse Effect,
and (C) none of the Company, the Guarantors and their respective subsidiaries anticipates material
capital expenditures other than in the ordinary course of business relating to Environmental Laws.




          (rr) None of the transactions contemplated by this Agreement (including, without limitation,
the use of the proceeds from the sale of the Notes), will violate or result in a violation of
Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System.




          (ss) The statements set forth in each of the Pricing Disclosure Package and the Offering
Memorandum under the caption “Description of the notes,” insofar as they purport to constitute a
summary of the terms of the Notes and the Guarantees and under the captions “Material U.S. federal
tax considerations,” “Description of other indebtedness,” and “Plan of distribution,” insofar as
they purport to describe the provisions of the documents referred to therein, are accurate in all
material respects.




          (tt) The Company and its affiliates have not taken, directly or indirectly, any action
designed to or that has constituted or that could reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company or the Guarantors in
connection with the offering of the Notes.




          (uu) (i) The Company and each of its subsidiaries have established and maintain disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act), (ii) such
disclosure controls and procedures are designed to ensure that the information required to be
disclosed by the Company in the reports they file or submit under the Exchange Act (assuming the
Company was required to file or submit such reports under the Exchange Act) is accumulated and
communicated to management of the Company and its subsidiaries, including their respective
principal executive officers and principal financial officers, as appropriate, to allow timely
decisions regarding required disclosure to be made; and (iii) such disclosure controls and
procedures are effective in all material respects to perform the functions for which they were
established.




          (vv) Since the date of the most recent balance sheet of the Company and its consolidated
subsidiaries reviewed or audited by Deloitte & Touche LLP and the audit committee of the board of
directors of the Company, (i) the Company has not been advised by its auditors of (A) any
significant deficiencies in the design or operation of internal controls that would adversely
affect the ability of the Company or any of its subsidiaries to record, process, summarize and
report financial data, or any material weaknesses in internal controls and (B) any fraud, whether
or not material, that involves management or other employees who have a










15












 





significant role in the internal controls of the Company and each of its subsidiaries, and (ii)
since that date, there have been no significant changes in internal controls or in other factors
that would significantly affect internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.




          (ww) No subsidiary of the Company is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on such subsidiary’s capital
stock, from repaying to the Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in the Pricing Disclosure Package.




          (xx) There is and has been no failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply with the provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith.




          (yy) The section entitled “Management’s discussion and analysis of financial condition and
results of operations — Critical accounting policies and estimates” contained in the Pricing
Disclosure Package and the Offering Memorandum accurately and fully describes in all material
respects (A) the accounting policies that the Company believed as of the date thereof were the most
important in the portrayal of the Company’s financial condition and results of operations and that
required management’s most difficult, subjective or complex judgments; (B) the judgments and
uncertainties affecting the application of critical accounting policies; and (C) the likelihood
that materially different amounts would be reported under different conditions or using different
assumptions and an explanation thereof.




          (zz) The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes
of all jurisdictions, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened, except, in each case, as would not reasonably be expected to have a Material
Adverse Effect.




          (aaa) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds
of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.




16









 








          (bbb) The Company has not taken any action or omitted to take any action (such as issuing any
press release relating to any Notes without an appropriate legend) which may result in the loss by
any of the Initial Purchasers of the ability to rely on any stabilization safe harbor provided by
the Financial Services Authority under the Financial Services and Markets Act 2000 (the “FSMA”).
The Company has been informed of the guidance relating to stabilization provided by the Financial
Services Authority, in particular in Section MAR 2 Annex 2G of the Financial Services Handbook.




          (ccc) Immediately after the consummation of the issuance and sale of the Notes in accordance
with the terms of this Agreement, the Company will be Solvent. As used in this paragraph, the term
“Solvent” means, with respect to a particular date, that on such date (i) the present fair market
value (or present fair saleable value) of the assets of the Company and its subsidiaries are not
less than the total amount required to pay the probable liabilities of the Company and its
subsidiaries on their total existing debts and liabilities (including contingent liabilities) as
they become absolute and matured, (ii) the Company and its subsidiaries are able to realize upon
their assets and pay their debts and other liabilities, contingent obligations and commitments as
they mature and become due in the normal course of business, (iii) assuming the sale of the Notes
as contemplated by this Agreement, the Pricing Disclosure Package and the Offering Memorandum, the
Company and its subsidiaries are not incurring debts or liabilities beyond their ability to pay as
such debts and liabilities mature and (iv) the Company and its subsidiaries are not engaged in any
business or transaction, and are not about to engage in any business or transaction, for which
their property would constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company and its subsidiaries are engaged. In
computing the amount of such contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or
matured liability.




          (ddd) As of the date hereof, (i) all royalties, rentals, deposits and other amounts owed under
the oil and gas leases constituting the oil and gas properties of the Company, the Guarantors and
their respective subsidiaries have been properly and timely paid (other than amounts held in
suspense accounts pending routine payments or related to disputes about the proper identification
of royalty owners), and no material amount of proceeds from the sale or production attributable to
the oil and gas properties of the Company, the Guarantors and their respective subsidiaries are
currently being held in suspense by any purchaser thereof, except where such amounts due could not,
individually or in the aggregate, have a Material Adverse Effect on the Company, the Guarantors or
any of their respective subsidiaries, and (ii) there are no claims under take-or-pay contracts
pursuant to which natural gas purchasers have any make-up rights affecting the interests of the
Company, the Guarantors or their respective subsidiaries in their oil and gas properties, except
where such claims could not, individually or in the aggregate, have a Material Adverse Effect on
the Company, the Guarantors or any of their respective subsidiaries.




          Any certificate signed by any officer of the Company or any Guarantor and delivered to the
Representative or counsel for the Initial Purchasers in connection with the offering of the Notes
shall be deemed a representation and warranty by the Company or such Guarantor, as to matters
covered thereby, to each Initial Purchaser.




17









 








     3. Purchase of the Notes by the Initial Purchasers, Agreements to Sell, Purchase and Resell.
(a) The Company and the Guarantors, jointly and severally hereby agree, on the basis of the
representations, warranties and agreements of the Initial Purchasers contained herein and subject
to all the terms and conditions set forth herein, to issue and sell to the Initial Purchasers and,
upon the basis of the representations, warranties and agreements of the Company and the Guarantors
herein contained and subject to all the terms and conditions set forth herein, each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company, at a purchase price of
89.279% of the principal amount thereof, the total principal amount of Notes set forth opposite the
name of such Initial Purchaser in Schedule I hereto. The Company and the Guarantors shall
not be obligated to deliver any of the securities to be delivered hereunder except upon payment for
all of the securities to be purchased as provided herein.



          (b) Each of the Initial Purchasers, severally and not jointly hereby represents and warrants
to the Company that it will offer the Notes for sale upon the terms and conditions set forth in
this Agreement and in the Pricing Disclosure Package. Each of the Initial Purchasers hereby
represents and warrants to, and agrees with, the Company, on the basis of the representations,
warranties and agreements of the Company and the Guarantors, that such Initial Purchaser: (i) is a
QIB with such knowledge and experience in financial and business matters as are necessary in order
to evaluate the merits and risks of an investment in the Notes; (ii) is purchasing the Notes
pursuant to a private sale exempt from registration under the Securities Act; (iii) in connection
with the Exempt Resales, will solicit offers to buy the Notes only from, and will offer to sell the
Notes only to, the Eligible Purchasers in accordance with this Agreement and on the terms
contemplated by the Pricing Disclosure Package; and (iv) will not offer or sell the Notes, nor has
it offered or sold the Notes by, or otherwise engaged in, any form of general solicitation or
general advertising (within the meaning of Regulation D, including, but not limited to,
advertisements, articles, notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) and will not engage in any
directed selling efforts within the meaning of Rule 902 under the Securities Act, in connection
with the offering of the Notes. The Initial Purchasers have advised the Company that they will
offer the Notes to Eligible Purchasers at a price initially equal to 91.279% of the principal
amount thereof, plus accrued interest, if any, from the date of issuance of the Notes. Such price
may be changed by the Initial Purchasers at any time without notice.




          (c) Each Initial Purchaser, severally and not jointly, represents and warrants to and agrees
with the Company that:





	 	(i)	 	it has complied and will comply with all applicable provisions
of the Financial Services and Markets Act 2000 (the “FSMA”) with respect to
anything done by it in relation to the Notes in, from or otherwise involving
the United Kingdom, and it has only communicated or caused to be communicated
and it will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of section 21
of the FSMA) received by it in connection with the issue or sale of any Notes,
in circumstances in which section 21(1) of the FSMA does not apply to the
Company; and




18









 












	 	(ii)	 	in relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a Relevant Member State),
with effect from and including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the “Relevant Implementation Date”),
it has not made and will not make an offer of the Notes to the public in that
Relevant Member State prior to the publication of a prospectus in relation to
the Notes which has been approved by the competent authority in that Relevant
Member State or, where appropriate, approved in another Relevant Member State
and notified to the competent authority in that Relevant Member State, all in
accordance with the Prospectus Directive, except that it may, with effect from
and including the Relevant Implementation Date, make an offer of the Notes to
the public in that Relevant Member State at any time:






	 	(A)	 	to legal entities which are
authorized or regulated to operate in the financial markets or,
if not so authorized or regulated, whose corporate purpose is
solely to invest in securities;
	 
	 	(B)	 	to any legal entity which has two
or more of (1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
€43,000,000 and (3) an annual net turnover of more than
€50,000,000, as shown in its last annual or consolidated
accounts; or
	 
	 	(C)	 	in any other circumstances which
do not require the publication by the issuer of a prospectus
pursuant to Article 3 of the Prospectus Directive.





          For the purposes of this representation, the expression an “offer of Notes to the public” in
any Relevant Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe the Notes, as the same may be varied in that Relevant Member State
by any measure implementing the Prospectus Directive in that Relevant Member State and the
expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing
measure in each Relevant Member State.




          (d) Such Initial Purchaser has not nor, prior to the later to occur of (A) the Closing Date
and (B) completion of the distribution of the Notes, will not, use, authorize use of, refer to or
distribute any material in connection with the offering and sale of the Notes other than (i) the
Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering Memorandum, (ii) any
written communication that contains no “issuer information” (as defined in Rule 433(h)(2) under the
Act) that was not included (including through incorporation by reference) in the Preliminary
Offering Memorandum or any Free Writing Offering Document listed on Schedule IV(a) and
(b) hereto, (iii) the Free Writing Offering Documents listed on Schedule IV(a) and
(b) hereto, (iv) any written communication prepared by such Initial Purchaser and approved
by the Company in writing, or (v) any written communication relating to




19









 







or that contains the terms of the Notes and/or other information that was included (including
through incorporation by reference) in the Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum.




          Each of the Initial Purchasers understands that the Company and, for purposes of the opinions
to be delivered to the Initial Purchasers pursuant to Sections 7(c) and 7(e) hereof, counsel to the
Company and counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations, warranties and agreements, and the Initial Purchasers hereby consents to
such reliance.




     4. Delivery of the Notes and Payment Therefor. Delivery to the Initial Purchasers of and
payment for the Notes shall be made at 10:00 A.M., New York City time, on the third full business
day following the date of this Agreement or at such other date or place as shall be determined by
agreement between the Representative and the Company (the “Closing Date”). The place of closing
for the Notes and the Closing Date may be varied by agreement between the Initial Purchasers and
the Company.



          The Notes will be delivered to the Initial Purchasers, or the Trustee as custodian for The
Depository Trust Company (“DTC”), against payment by or on behalf of the Initial Purchasers of the
purchase price therefor by wire transfer in immediately available funds, by causing DTC to credit
the Notes to the account of the Initial Purchasers at DTC. The Notes will be evidenced by one or
more global securities in definitive form (the “Global Notes”) and will be registered in the name
of Cede & Co. as nominee of DTC. The Notes to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the Closing Date.




     5. Agreements of the Company and the Guarantors. The Company and the Guarantors, jointly and
severally, agree with each of the Initial Purchasers as follows:



          (a) The Company and the Guarantors will furnish to the Initial Purchasers, without charge,
within one business day of the date of the Offering Memorandum, such number of copies of the
Offering Memorandum as may then be amended or supplemented as they may reasonably request.




          (b) The Company and the Guarantors will not make any amendment or supplement to the Pricing
Disclosure Package or to the Offering Memorandum of which the Initial Purchasers shall not
previously have been advised or to which they shall reasonably object after being so advised.




          (c) The Company and each of the Guarantors consents to the use of the Pricing Disclosure
Package and the Offering Memorandum in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Notes are offered by the Initial Purchasers and by all dealers to whom
Notes may be sold, in connection with the offering and sale of the Notes.




          (d) If, at any time prior to completion of the distribution of the Notes by the Initial
Purchasers to Eligible Purchasers, any event occurs or information becomes known that, in the
judgment of the Company or any of the Guarantors or in the opinion of counsel for the




20









 







Initial Purchasers, should be set forth in the Pricing Disclosure Package or the Offering
Memorandum so that the Pricing Disclosure Package or the Offering Memorandum, as then amended or
supplemented, does not include any untrue statement of material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or amend the Pricing
Disclosure Package or the Offering Memorandum in order to comply with any law, the Company and the
Guarantors will forthwith prepare an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Initial Purchasers and dealers a reasonable number of copies thereof.




          (e) None of the Company nor any Guarantor will make any offer to sell or solicitation of an
offer to buy the Notes that would constitute a Free Writing Offering Document without the prior
consent of the Representative, which consent shall not be unreasonably withheld or delayed; if at
any time following issuance of a Free Writing Offering Document any event occurred or occurs as a
result of which such Free Writing Offering Document conflicts with the information in the
Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum or, when
taken together with the information in the Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum, includes an untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, as promptly as practicable after becoming aware
thereof, the Company will give notice thereof to the Initial Purchasers through the Representative
and, if requested by the Representative, will prepare and furnish without charge to each Initial
Purchaser a Free Writing Offering Document or other document which will correct such conflict,
statement or omission.




          (f) Promptly from time to time to take such action as the Initial Purchasers may reasonably
request to qualify the Notes for offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Notes; provided that in connection therewith the Company shall
not be required to (i) qualify as a foreign corporation in any jurisdiction in which it would not
otherwise be required to so qualify, (ii) file a general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it would not
otherwise be subject.




          (g) For a period commencing on the date hereof and ending on the 90th day after the date of
the Offering Memorandum, the Company and the Guarantors agree not to, directly or indirectly, (1)
offer for sale, sell, or otherwise dispose of (or enter into any transaction or device that is
designed to, or would be expected to, result in the disposition by any person at any time in the
future of) any debt securities of the Company substantially similar to the Notes or securities
convertible into or exchangeable for such debt securities of the Company, or sell or grant options,
rights or warrants with respect to such debt securities of the Company or securities convertible
into or exchangeable for such debt securities of the Company, (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such debt securities of the Company, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of debt securities of the Company
or other securities, in cash or otherwise, (3) file or cause to be filed a registration




21









 







statement, including any amendments, with respect to the registration of debt securities of
the Company substantially similar to the Notes or securities convertible, exercisable or
exchangeable into debt securities of the Company or (3) publicly announce an offering of any debt
securities of the Company substantially similar to the Notes or securities convertible or
exchangeable into such debt securities, in each case without the prior written consent of J.P.
Morgan Securities Inc., on behalf of the Initial Purchasers, except in exchange for the Exchange
Notes and the Exchange Guarantees in connection with the Exchange Offer.




          (h) The Company will furnish to the holders of the Notes as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and statements of income,
stockholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending after the date of the
Offering Memorandum), will make available to its securityholders consolidated summary financial
information of the Company and its subsidiaries for such quarter in reasonable detail; provided
that so long as the Company files periodic reports pursuant to Section 13 or 15(d) of the Exchange
Act for the foregoing periods, the Company shall be deemed to comply with this Section 5(h).




          (i) So long as any of the Notes are outstanding, the Company and the Guarantors will furnish
to the Initial Purchasers (i) as soon as available, a copy of each report of the Company or any
Guarantor mailed to stockholders generally or filed with any stock exchange or regulatory body and
(ii) from time to time such other information concerning the Company or the Guarantors as the
Initial Purchasers may reasonably request.




          (j) The Company and the Guarantors will apply the net proceeds from the sale of the Notes to
be sold by it hereunder substantially in accordance with the description set forth in the Offering
Memorandum under the caption “Use of proceeds.”




          (k) The Company, the Guarantors and their respective affiliates will not take, directly or
indirectly, any action designed to or that has constituted or that reasonably would be expected to
cause or result in the stabilization or manipulation of the price of any security of the Company or
the Guarantors in connection with the offering of the Notes.




          (l) The Company and the Guarantors will use their best efforts to permit the Notes to be
designated as Private Offerings, Resales and Trading through Automated Linkages (PORTAL)
MarketSM (the “PORTAL MarketSM”) securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in
the PORTAL MarketSM and to permit the Notes to be eligible for clearance and settlement
through DTC.




          (m) The Company and the Guarantors will not, and will not permit any of their respective
affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Notes that have
been acquired by any of them, except for Notes purchased by the Company, the Guarantors or any of
their respective affiliates and resold in a transaction registered under the Securities Act.




22









 








          (n) The Company and the Guarantors agree not to sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be
integrated with the sale of the Notes in a manner that would require the registration under the
Securities Act of the sale to the Initial Purchasers or the Eligible Purchasers of the Notes.




          (o) The Company and the Guarantors agree to comply with all the terms and conditions of the
Registration Rights Agreement and all agreements set forth in the representation letters of the
Company and the Guarantors to DTC relating to the approval of the Notes by DTC for “book entry”
transfer.




          (p) The Company and the Guarantors will take such steps as shall be necessary to ensure that
neither the Company nor any of the Company’s subsidiaries becomes an “investment company” within
the meaning of such term under the Investment Company Act of 1940, as amended.




          (q) Neither the Company nor any Guarantor will take any action or omit to take any action
(such as issuing any press release relating to the Notes without an appropriate legend) which may
result in the loss by any of the Initial Purchasers of the ability to rely on any stabilization
safe harbor provided by the Financial Services Authority under the FSMA.




          (r) None of the Company or any of its affiliates or any other person acting on its or their
behalf (other than the Initial Purchasers, as to which no covenant is given) will (i) solicit
offers for, or offer or sell, the Notes by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed
selling efforts within the meaning of Regulation S, and all such persons will comply with the
offering restrictions requirement of Regulation S.




          (s) The Company and the Guarantors will do and perform all things required or necessary to be
done and performed under this Agreement by them prior to the Closing Date, and to satisfy all
conditions precedent to the Initial Purchasers’ obligations hereunder to purchase the Notes.




     6. Expenses. Whether or not the transactions contemplated by this Agreement are consummated
or this Agreement becomes effective or is terminated, the Company and the Guarantors, jointly and
severally, agree, to pay all costs, expenses, fees and taxes incident to and in connection with:
(i) the preparation, printing, filing and distribution of the Preliminary Offering Memorandum, the
Pricing Disclosure Package and the Offering Memorandum (including, without limitation, financial
statements and exhibits) and all amendments and supplements thereto (including the fees,
disbursements and expenses of the Company’s accountants and counsel, but not, however, legal fees
and expenses of the Initial Purchasers’ counsel incurred in connection therewith); (ii) the
preparation, printing (including, without limitation, word processing and duplication costs) and
delivery of this Agreement, the Indenture, the Registration Rights Agreement, all Blue Sky
memoranda and all other agreements, memoranda, correspondence and other documents printed and
delivered in connection therewith and with the Exempt Resales (but not, however, legal fees and
expenses of the Initial Purchasers’



23









 




counsel incurred in connection with any of the foregoing other than fees of such counsel plus
reasonable disbursements incurred in connection with the preparation, printing and delivery of such
Blue Sky memoranda); (iii) the issuance and delivery by the Company of the Notes and by the
Guarantors of the Guarantees and any taxes payable in connection therewith; (iv) the qualification
of the Notes and Exchange Notes for offer and sale under the securities or Blue Sky laws of the
several states (including, without limitation, the reasonable fees and disbursements of the Initial
Purchasers’ counsel relating to such registration or qualification); (v) the furnishing of such
copies of the Pricing Disclosure Package and the Offering Memorandum, and all amendments and
supplements thereto, as may be reasonably requested for use in connection with the Exempt Resales;
(vi) the preparation of certificates for the Notes (including, without limitation, printing and
engraving thereof); (vii) the application for quotation of the Notes in the PORTAL MarketSM
(including all disbursements and listing fees); (viii) the approval of the Notes by DTC for
“book-entry” transfer (including fees and expenses of counsel); (ix) the rating of the Notes and
the Exchange Notes; (x) the obligations of the Trustee, any agent of the Trustee and the counsel
for the Trustee in connection with the Indenture, the Notes, the Guarantees, the Exchange Notes and
the Exchange Guarantees; (xi) the performance by the Company and the Guarantors of their other
obligations under this Agreement; and (xii) all travel expenses (including expenses related to
chartered aircraft) of each Initial Purchaser and the Company’s officers and employees and any
other expenses of each Initial Purchaser and the Company in connection with attending or hosting
meetings with prospective purchasers of the Notes, and expenses associated with any electronic road
show.




     7. Conditions to Initial Purchasers’ Obligations. The respective obligations of the Initial
Purchasers hereunder are subject to the accuracy, when made and on and as of the Closing Date, of
the representations and warranties of the Company and the Guarantors contained herein, to the
performance by the Company and the Guarantors of their respective obligations hereunder, and to
each of the following additional terms and conditions:



          (a) The Initial Purchasers shall not have discovered and disclosed to the Company on or prior
to the Closing Date that the Pricing Disclosure Package or the Offering Memorandum, or any
amendment or supplement thereto, contains an untrue statement of a fact which, in the opinion of
counsel to the Initial Purchasers, is material or omits to state a fact which, in the opinion of
such counsel, is material and is necessary to make the statements therein not misleading.




          (b) All corporate proceedings and other legal matters incident to the authorization, form and
validity of this Agreement, the Notes, the Guarantees, the Exchange Notes, the Exchange Guarantees,
the Registration Rights Agreement, the Indenture, the Pricing Disclosure Package and the Offering
Memorandum, and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the
Initial Purchasers, and the Company and the Guarantors shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to pass upon such
matters.




          (c) Thompson & Knight LLP shall have furnished to the Initial Purchasers its written opinion,
as counsel to the Company and the Guarantors, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the
Representative.




24









 








          (d) David Elkouri, General Counsel of the Company, shall have furnished to the Initial
Purchasers his written opinion, as counsel to the Company and the Guarantors, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the
Representative.




          (e) The Initial Purchasers shall have received from Vinson & Elkins L.L.P., counsel for the
Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to the issuance
and sale of the Notes, the Pricing Disclosure Package, the Offering Memorandum and other related
matters as the Initial Purchasers may reasonably require, and the Company shall have furnished to
such counsel such documents and information as they reasonably request for the purpose of enabling
them to pass upon such matters.




          (f) At the time of execution of this Agreement, the Initial Purchasers shall have received
from Deloitte & Touche LLP a letter, in form and substance satisfactory to the Initial Purchasers,
addressed to the Initial Purchasers and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act and the rules of the PCAOB
and are in compliance with the applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective dates as of which
specified financial information is given in the Pricing Disclosure Package, as of a date not more
than three days prior to the date hereof), the conclusions and findings of such firm with respect
to the financial information and (iii) covering such other matters as are ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered public offerings.




          (g) At the time of execution of this Agreement, the Initial Purchasers shall have received
from Ernst & Young LLP a letter, in form and substance satisfactory to the Initial Purchasers,
addressed to the Initial Purchasers and dated the date hereof (i) confirming that they were
independent public accountants within the meaning of the Securities Act and the rules of the PCAOB
during the periods covered by the financial statements on which they reported and are in compliance
with the applicable requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of which specified
financial information is given in the Pricing Disclosure Package, as of a date not more than three
days prior to the date hereof), the conclusions and findings of such firm with respect to the
financial information and (iii) covering such other matters as are ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered public offerings.




          (h) With respect to the letters of Deloitte & Touche LLP and Ernst & Young LLP referred to in
the preceding paragraph and delivered to the Initial Purchasers concurrently with the execution of
this Agreement (each, an “initial letter”), the Company shall have furnished to the Initial
Purchasers a letter (each, a “bring-down letter”) of such accountants, addressed to the Initial
Purchasers and dated the Closing Date (i) confirming that they were independent public accountants
within the meaning of the Securities Act and the rules of the




25









 







PCAOB during the periods covered by the financial statements on which they reported and are in
compliance with the applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating, as of the Closing Date (or, with respect to
matters involving changes or developments since the respective dates as of which specified
financial information is given in each of the Pricing Disclosure Package or the Offering
Memorandum, as of a date not more than three days prior to the date of the Closing Date), the
conclusions and findings of such firms with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material respects the conclusions and
findings set forth in the initial letter.




          (i) (i) Neither the Company, any Guarantor nor any of their respective subsidiaries shall have
sustained, since the date of the latest audited financial statements included in the Pricing
Disclosure Package, any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree or (ii) since such date, there shall not have been any change in the
capital stock or long-term debt of the Company, any Guarantor or any of their respective
subsidiaries or any change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), results of operations, stockholders’ equity, properties,
management, business or prospects of the Company, the Guarantors and their respective subsidiaries,
taken as a whole, the effect of which, in any such case described in clause (i) or (ii), is,
individually or in the aggregate, in the judgment of the Representative, so material and adverse as
to make it impracticable or inadvisable to proceed with the offering, sale or the delivery of the
Notes being delivered on the Closing Date on the terms and in the manner contemplated in the
Offering Memorandum.




          (j) At the time of execution of this Agreement, the Initial Purchasers shall have received
from NSAI an initial letter (the “initial expert letter”), in form and substance satisfactory to
the Initial Purchasers, addressed to the Initial Purchasers and dated the date hereof, confirming
that they are independent with respect to the Company and stating the conclusions and findings of
such firm with respect to matters pertaining to the Company’s use of NSAI’s report on proved
reserves of the Company as of December 31, 2007, as is customary to initial purchasers in
connection with similar transactions. On the Closing Date, the Initial Purchasers shall have
received from NSAI a bring-down letter in form and substance satisfactory to the Initial
Purchasers, addressed to the Initial Purchasers and dated as of the Closing Date, which such letter
shall cover the period from the initial expert letter to the Closing Date, confirming they are
independent with respect to the Company and stating the conclusions and findings of such firm with
respect to matters pertaining to the Company’s use of NSAI’s report on proved reserves of the
Company as of December 31, 2007, as is customary to initial purchasers in connection with similar
transactions.




          (k) The Company and each Guarantor shall have furnished or caused to be furnished to the
Initial Purchasers on the Closing Date certificates of officers of the Company and each Guarantor
satisfactory to the Initial Purchasers as to such matters as the Representative may reasonably
request, including, without limitation, a statement that:





     (i) The representations, warranties and agreements of the Company and the Guarantors in
Section 2 are true and correct on and as of the Closing Date, and the



26









 






Company has complied with all its agreements contained herein and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to the Closing
Date; and




     (ii) They have carefully examined the Pricing Disclosure Package and the Offering
Memorandum, and, in their opinion, (A) the Pricing Disclosure Package, as of the Applicable
Time and as of the Closing Date, and the Offering Memorandum, as of its date and as of the
Closing Date, did not and do not contain any untrue statement of a material fact and did not
and do not omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading and (B) since the date
of the Pricing Disclosure Package and the Offering Memorandum, no event has occurred which
should have been set forth in a supplement or amendment to the Pricing Disclosure Package of
the Offering Memorandum.



          (l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have
occurred in the rating accorded the Company’s debt securities by any “nationally recognized
statistical rating organization,” as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its rating of any of the
Company’s debt securities.




          (m) The Notes shall have been designated for trading on the PORTAL MarketSM and
shall be eligible for clearance and settlement through DTC.




          (n) The Company and the Guarantors shall have executed and delivered the Registration Rights
Agreement in form and substance reasonably satisfactory to the Representative, and the Initial
Purchasers shall have received an original copy thereof, duly executed by the Company and the
Guarantors.




          (o) The Company, the Guarantors and the Trustee shall have executed and delivered the
Indenture, and the Initial Purchasers shall have received an original copy thereof, duly executed
by the Company, the Guarantors and the Trustee.




          (p) Subsequent to the execution and delivery of this Agreement there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been suspended or materially
limited or the settlement of such trading generally shall have been materially disrupted or minimum
prices shall have been established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by federal or state authorities, (iii) the United
States shall have become engaged in hostilities, there shall have been an escalation in hostilities
involving the United States or there shall have been a declaration by the United States of a
national emergency, or there shall have occurred any calamity or crisis or war involving the United
States or (iv) there shall have occurred such a material adverse change in general economic,
political or financial conditions, including, without limitation, as a result of terrorist
activities after the date hereof (or the effect of international




27









 







conditions on the financial markets in the United States shall be such), as to make it, in the
judgment of the Representative, impracticable or inadvisable to proceed with the offering, sale or
delivery of the Notes being delivered on the Closing Date on the terms and in the manner
contemplated in the Offering Memorandum or that, in the judgment of the Representative, would
materially and adversely affect the financial markets or the markets for the Notes and other debt
securities.




          (q) The Company shall have furnished to the Initial Purchasers a certificate, dated the
Closing Date, of the Chief Financial Officer of the Company as to the Solvency of the Company
following the consummation of the issuance and sale of the Notes in accordance with the terms of
this Agreement.




          (r) Holland & Hart LLP and Stradley Ronan Stevens & Young, LLP shall have furnished to the
Initial Purchasers their written opinions, as local counsel to the Company and the Guarantors,
addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Representative.




          (s) Hinkle Elkouri Law Firm L.L.C. shall have furnished to the Initial Purchasers its written
opinion, as local counsel to the Company and the Guarantors, addressed to the Initial Purchasers
and dated the Closing Date, in form and substance reasonably satisfactory to the Representative.




     All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers.



     8. Indemnification and Contribution.



          (a) The Company and each Guarantor, hereby agree, jointly and severally, to indemnify and hold
harmless each Initial Purchaser, its affiliates, directors, officers and employees and each person,
if any, who controls any Initial Purchaser within the meaning of Section 15 of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Notes), to which that Initial Purchaser, affiliate, director, officer,
employee or controlling person may become subject, under the Securities Act or otherwise, insofar
as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any Free Writing Offering
Document, the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum or in any amendment or supplement thereto, (B) in any Blue Sky application or other
document prepared or executed by the Company or any Guarantor (or based upon any written
information furnished by the Company or any Guarantor) specifically for the purpose of qualifying
any or all of the Notes under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a “Blue Sky Application”) or (C) in
any materials or information provided to investors by, or with the approval of, the Company in
connection with the marketing of the offering of the Notes (“Marketing Materials”), including any
roadshow or investor presentations made to investors by the Company (whether in person or
electronically) or any materials prepared for the





28












 




purpose of compliance with Canadian securities laws, (ii) the omission or alleged omission to
state in any Free Writing Offering Document, the Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum, or in any amendment or supplement thereto, or in any
Blue Sky Application or in any Marketing Materials, any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Initial Purchaser and each such director, officer, employee or
controlling person promptly upon demand for any legal or other expenses reasonably incurred by that
Initial Purchaser, director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and the Guarantors
shall not be liable in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Offering Memorandum, the Pricing Disclosure
Package or Offering Memorandum, or in any such amendment or supplement thereto, or in any Blue Sky
Application or in any Marketing Materials, in reliance upon and in conformity with written
information concerning such Initial Purchaser furnished to the Company through the Representative
by or on behalf of any Initial Purchaser specifically for inclusion therein, which information
consists solely of the information specified in Section 8(e). The foregoing indemnity agreement is
in addition to any liability that the Company or the Guarantors may otherwise have to any Initial
Purchaser or to any director, officer, employee or controlling person of that Initial Purchaser.




          (b) Each Initial Purchaser, severally and not jointly, hereby agrees to indemnify and hold
harmless the Company, each Guarantor, their respective officers and employees, each of their
respective directors, and each person, if any, who controls the Company or any Guarantor within the
meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company, any Guarantor or any such
director, officer, employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any
Free Writing Offering Document, Preliminary Offering Memorandum, the Pricing Disclosure Package or
the Offering Memorandum or in any amendment or supplement thereto, (B) in any Blue Sky Application,
or (C) in any Marketing Materials or (ii) the omission or alleged omission to state in any Free
Writing Offering Document, Preliminary Offering Memorandum, the Pricing Disclosure Package or the
Offering Memorandum, or in any amendment or supplement thereto, or in any Blue Sky Application or
in any Marketing Materials any material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in conformity with written
information concerning such Initial Purchaser furnished to the Company through the Representative
by or on behalf of that Initial Purchaser specifically for inclusion therein, which information is
limited to the information set forth in Section 8(e). The foregoing indemnity agreement is in
addition to any liability that any Initial Purchaser may otherwise have to the Company, any
Guarantor or any such director, officer, employee or controlling person.




          (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim
or the commencement of any action, the indemnified party shall, if a claim in



29









 






respect thereof is to be made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any liability that it
may have under Section 8(a) or 8(b) except to the extent it has been materially prejudiced by such
failure and; provided, further, that the failure to notify the indemnifying party shall not relieve
it from any liability that it may have to an indemnified party otherwise than under Section 8(a) or
8(b). If any such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to the indemnified
party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable costs of investigation;
provided, however, that the Initial Purchasers shall have the right to employ counsel to represent
jointly the Initial Purchasers and their respective directors, officers, employees and controlling
persons who may be subject to liability arising out of any claim in respect of which indemnity may
be sought by the Initial Purchasers against the Company or any Guarantor under this Section 8, if
(i) the Company, the Guarantors and the Initial Purchasers shall have so mutually agreed; (ii) the
Company and the Guarantors have failed within a reasonable time to retain counsel reasonably
satisfactory to the Initial Purchasers; (iii) the Initial Purchasers and their respective
affiliates, directors, officers, employees and controlling persons shall have reasonably concluded,
based on the advice of counsel, that there may be legal defenses available to them that are
different from or in addition to those available to the Company and the Guarantors; or (iv) the
named parties in any such proceeding (including any impleaded parties) include both the Initial
Purchasers or their respective affiliates, directors, officers, employees or controlling persons,
on the one hand, and the Company and the Guarantors, on the other hand, and representation of both
sets of parties by the same counsel would present a conflict due to actual or potential differing
interests between them, and in any such event the fees and expenses of such separate counsel shall
be paid by the Company and the Guarantors. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such claim, action, suit or
proceeding and does not include any statement as to or admission of fault, culpability or failure
to act by or on behalf of any indemnified party, or (ii) be liable for any settlement of any such
action effected without its written consent (which consent shall not be unreasonably withheld), but
if settled with the consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such settlement or judgment.




          (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of
any loss, claim, damage or liability, or any action in respect thereof, referred to



30









 






therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and
the Initial Purchasers, on the other, from the offering of the Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Guarantors, on the one hand, and the Initial Purchasers, on
the other, with respect to the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes purchased under this Agreement
(before deducting expenses) received by the Company and the Guarantors, on the one hand, and the
total discounts and commissions received by the Initial Purchasers with respect to the Notes
purchased under this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the Notes under this Agreement. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the Company, the Guarantors, or the
Initial Purchasers, the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. For purposes of the preceding
two sentences, the net proceeds deemed to be received by the Company shall be deemed to be also for
the benefit of the Guarantors, and information supplied by the Company shall also be deemed to have
been supplied by the Guarantors. The Company, the Guarantors, and the Initial Purchasers agree
that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be
determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no
Initial Purchaser shall be required to contribute any amount in excess of the amount by which the
net proceeds from the sale to Eligible Purchasers of the Notes initially purchased by it exceeds
the amount of any damages that such Initial Purchaser has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers’ obligations to contribute as provided in this
Section 8(d) are several in proportion to their respective purchase obligations and not joint.




          (e) The Initial Purchasers severally confirm and the Company and the Guarantors acknowledge
and agree that the marketing names of the Initial Purchasers appearing on the front cover of the
Offering Memorandum, and the third paragraph, the fourth and fifth sentences of the eleventh
paragraph and the thirteenth paragraph of the section entitled “Plan of distribution” in the
Pricing Disclosure Package and the Offering Memorandum are correct and



31









 






constitute the only information concerning such Initial Purchasers furnished in writing to the
Company or any Guarantor by or on behalf of the Initial Purchasers specifically for inclusion in
the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum or
in any amendment or supplement thereto.




     9. Defaulting Initial Purchasers. If, on the Closing Date, any Initial Purchaser defaults in
the performance of its obligations under this Agreement, the remaining non-defaulting Initial
Purchasers shall be obligated to purchase the Notes that the defaulting Initial Purchaser agreed
but failed to purchase on the Closing Date in the respective proportions that the number of Notes
set opposite the name of each remaining non-defaulting Initial Purchaser in Schedule I
hereto bears to the total number of Notes set opposite the names of all the remaining
non-defaulting Initial Purchasers in Schedule I hereto; provided, however, that the
remaining non-defaulting Initial Purchasers shall not be obligated to purchase any of the Notes on
the Closing Date if the aggregate principal amount of Notes that the defaulting Initial Purchaser
or Initial Purchasers agreed but failed to purchase on such date exceeds 9.09% of the aggregate
principal amount of Notes to be purchased on the Closing Date, and any remaining non-defaulting
Initial Purchasers shall not be obligated to purchase more than 110% of the aggregate principal
amount of Notes that it agreed to purchase on the Closing Date pursuant to the terms of Section 3.
If the foregoing maximums are exceeded, the remaining non-defaulting Initial Purchasers, or those
other Initial Purchasers satisfactory to the Initial Purchasers who so agree, shall have the right,
but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all
the Notes to be purchased on the Closing Date. If the remaining Initial Purchasers or other
Initial Purchasers satisfactory to the Initial Purchasers do not elect to purchase the Notes that
the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase on the Closing
Date, this Agreement shall terminate without liability on the part of any non-defaulting Initial
Purchaser or the Company or the Guarantors, except that the Company and the Guarantors will
continue to be liable for the payment of expenses to the extent set forth in Sections 6 and 11. As
used in this Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule I hereto that,
pursuant to this Section 9, purchases Notes that a defaulting Initial Purchaser agreed but failed
to purchase.



          Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may
have to the Company or any Guarantor for damages caused by its default. If other Initial
Purchasers are obligated or agree to purchase the Notes of a defaulting or withdrawing Initial
Purchaser, either the remaining Initial Purchasers or the Company may postpone the Closing Date for
up to seven full business days in order to effect any changes that in the opinion of counsel for
the Company or counsel for the Initial Purchasers may be necessary in the Pricing Disclosure
Package, the Offering Memorandum or in any other document or arrangement.




     10. Termination. The obligations of the Initial Purchasers hereunder may be terminated by the
Initial Purchasers by notice given to and received by the Company prior to delivery of and payment
for the Notes if, prior to that time, any of the events described in Sections 7(i) or (p) shall
have occurred or if the Initial Purchasers shall decline to purchase the Notes for any reason
permitted under this Agreement.



32









 





     11. Reimbursement of Initial Purchasers’ Expenses. If (a) the Company fails to tender the
Notes for delivery to the Initial Purchasers for any reason or (b) the Initial Purchasers shall
decline to purchase the Notes for any reason permitted under this Agreement, the Company and the
Guarantors shall reimburse the Initial Purchasers for all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) incurred by the Initial Purchasers in connection with
this Agreement and the proposed purchase of the Notes, and upon demand the Company and the
Guarantors shall pay the full amount thereof to the Initial Purchasers. If this Agreement is
terminated pursuant to Section 10 by reason of the default of one or more Initial Purchasers, the
Company and the Guarantors shall not be obligated to reimburse any defaulting Initial Purchaser on
account of those expenses.



     12. Notices, Etc. All statements, requests, notices and agreements hereunder shall be in
writing, and:



          (a) if to any Initial Purchaser, shall be delivered or sent by hand delivery, mail, telex,
overnight courier or facsimile transmission to the Representative c/o J.P. Morgan Securities Inc.,
270 Park Avenue, New York, New York 10017 (fax: (212) 270-1063); Attention: Lawrence Landry;




          (b) if to the Company or any Guarantor, shall be delivered or sent by mail, telex, overnight
courier or facsimile transmission to the address of the Company set forth in the Pricing Disclosure
Package, Attention: David S. Elkouri, Executive Vice-President and General Counsel (Fax:
832-204-2872);



provided, however, that any notice to an Initial Purchaser pursuant to Section 8(c) shall be
delivered or sent by hand delivery, mail, telex or facsimile transmission to such Initial Purchaser
at its address set forth in its acceptance telex to J.P. Morgan Securities Inc., which address will
be supplied to any other party hereto by J.P. Morgan Securities Inc. upon request. Any such
statements, requests, notices or agreements shall take effect at the time of receipt thereof. The
Company shall be entitled to act and rely upon any request, consent, notice or agreement given or
made on behalf of the Initial Purchasers by J.P. Morgan Securities Inc.




     13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Company, the Guarantors and their respective
successors. This Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that the representations, warranties, indemnities and agreements of the
Company and the Guarantors contained in this Agreement shall also be deemed to be for the benefit
of the affiliates, directors, officers and employees of the Initial Purchasers and each person or
persons, if any, controlling any Initial Purchaser within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 13, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.



     14. Survival. The respective indemnities, representations, warranties and agreements of the
Company, the Guarantors and the Initial Purchasers contained in this Agreement or made by or on
behalf on them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the Notes and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any of them.



33









 





     15. Definition of the Terms “Business Day,” “Affiliate” and “Subsidiary.” For purposes of
this Agreement, (a) “business day” means any day on which the New York Stock Exchange, Inc. is open
for trading and (b) “affiliate” and “subsidiary” have the meanings set forth in Rule 405 under the
Securities Act.



     16. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of New York.



     17. No Fiduciary Duty. The Company and the Guarantors acknowledge and agree that in
connection with this offering, or any other services the Initial Purchasers may be deemed to be
providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or subsequently made by the
Initial Purchasers: (i) no fiduciary or agency relationship between the Company, any Guarantor and
any other person, on the one hand, and the Initial Purchasers, on the other, exists; (ii) the
Initial Purchasers are not acting as advisors, expert or otherwise, to the Company or the
Guarantors, including, without limitation, with respect to the determination of the purchase price
of the Notes, and such relationship between the Company and the Guarantors, on the one hand, and
the Initial Purchasers, on the other, is entirely and solely commercial, based on arms-length
negotiations; (iii) any duties and obligations that the Initial Purchasers may have to the Company
and the Guarantors shall be limited to those duties and obligations specifically stated herein; and
(iv) the Initial Purchasers and their respective affiliates may have interests that differ from
those of the Company and the Guarantors. The Company and the Guarantors hereby waive any claims
that the Company and the Guarantors may have against the Initial Purchasers with respect to any
breach of fiduciary duty in connection with the Notes.



     18. Counterparts. This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to be an original but
all such counterparts shall together constitute one and the same instrument.



     19. Headings. The headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.



[Signature pages follow.]





34









 








          If the foregoing correctly sets forth the agreement among the Company, the Guarantors, and the
Initial Purchasers, please indicate your acceptance in the space provided for that purpose below.




	 	 	 	 	 
	 	Very truly yours,



Petrohawk Energy Corporation

 	 
	 	By  	    /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	Petrohawk Operating Company

 	 
	 	By  	  /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	P-H Energy, LLC

 	 
	 	By  	  /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	Hawk Field Services, LLC

 	 
	 	By  	  /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 



Signature Page to Purchase Agreement — Page 1



 









 






	 	 	 	 	 



	 	 	 	 	 	 	 	 	 
	 	 	Petrohawk Properties, LP	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	P-H Energy, LLC,	 	 
	 

	 	 	 	 	 	Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By  
	  /s/ David S. Elkouri	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	David S. Elkouri	 	 
	 

	 	 	 	Title:
	 	 Executive Vice President –	 	 
	 

	 	 	 	 	 	General Counsel & Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Winwell Resources, L.L.C.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By  
	  /s/ David S. Elkouri	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	David S. Elkouri	 	 
	 

	 	 	 	Title:
	 	 Executive Vice President –	 	 
	 

	 	 	 	 	 	General Counsel & Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	WSF, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By  
	  /s/ David S. Elkouri	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	David S. Elkouri	 	 
	 

	 	 	 	Title:
	 	 Executive Vice President –	 	 
	 

	 	 	 	 	 	General Counsel & Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	KCS Resources, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By  	  /s/ David S. Elkouri	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	David S. Elkouri	 	 
	 

	 	 	 	Title:
	 	 Executive Vice President –	 	 
	 

	 	 	 	 	 	General Counsel & Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	KCS Energy Services, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By  	  /s/ David S. Elkouri	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	David S. Elkouri	 	 
	 

	 	 	 	Title:
	 	 Executive Vice President –	 	 
	 

	 	 	 	 	 	General Counsel & Secretary	 	 





Signature
Page to Purchase Agreement — Page 2



 









 






	 	 	 	 	 
	 	Medallion California Properties Company

 	 
	 	By  	  /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	Proliq, Inc.

 	 
	 	By  	  /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	One TEC, LLC

 	 
	 	By  	        /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	One TEC Operating, LLC

 	 
	 	By  	  /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	Bison Ranch LLC

 	 
	 	By  	        /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 



Signature
Page to Purchase Agreement — Page 3



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	Petrohawk Holdings LLC

 	 
	 	By  	        /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Executive Vice President –

General Counsel & Secretary 	 
	 
	 	HK Energy Marketing, LLC

 	 
	 	By  	        /s/ David S. Elkouri
 	 
	 	 	Name:  	David S. Elkouri 	 
	 	 	Title:  	Secretary 	 



Signature
Page to Purchase Agreement — Page 4



 









 






	 	 	 	 	 



Accepted: January 22, 2009




J.P. Morgan Securities Inc.




For itself and as Representative of the several Initial Purchasers named on Schedule I hereto.




	 	 	 	 	 
	By 

	 	/s/ Jack D. Smith
	 	 
	 

	 	 

Authorized Signatory
	 	 







Signature
Page to Purchase Agreement — Page 5



 









 








SCHEDULE I




	 	 	 	 	 
	 	 	Principal	 
	 	 	Amount of Notes	 
	Initial Purchasers	 	to be Purchased	 
	J.P. Morgan Securities Inc. 
	 	$	204,000,000	 
	BNP Paribas Securities Corp.
	 	 	66,000,000	 
	Wachovia Capital Markets, LLC
	 	 	48,000,000	 
	Banc of America Securities LLC
	 	 	48,000,000	 
	BMO Capital Markets Corp.
	 	 	48,000,000	 
	Barclays Capital Inc.
	 	 	30,000,000	 
	Fortis Securities LLC
	 	 	24,000,000	 
	Calyon Securities (USA) Inc.
	 	 	24,000,000	 
	RBC Capital Markets Corporation
	 	 	24,000,000	 
	Capital One Southcoast, Inc.
	 	 	24,000,000	 
	Wedbush Morgan Securities Inc.
	 	 	12,000,000	 
	Natixis Bleichroeder Inc.
	 	 	12,000,000	 
	Citigroup Global Markets Inc.
	 	 	12,000,000	 
	BBVA Securities, Inc.
	 	 	12,000,000	 
	Piper Jaffray & Co.
	 	 	12,000,000	 
	 
	 	 	 
	Total
	 	$	600,000,000	 
	 
	 	 	 






I-1









 






SCHEDULE II




Guarantors




Petrohawk Operating Company

P-H Energy, LLC

Hawk Field Services, LLC

Petrohawk Properties, LP

Winwell Resources, L.L.C.

WSF, Inc.

KCS Resources, LLC

KCS Energy Services, Inc.

Medallion California Properties Company

Proliq, Inc.

One Tec, LLC

One Tec Operating, LLC

Bison Ranch LLC

Petrohawk Holdings LLC

HK Energy Marketing, LLC




II-1









 





SCHEDULE III




Petrohawk Energy Corporation




PRICING TERM SHEET




	 	 	 	 	 	 	 
	Issuer:
	 	Petrohawk Energy Corporation	 	 	 	 
	Security Description:
	 	Senior Notes	 	 	 	 
	Distribution:
	 	144A/RegS w/ Registration Rights	 	 	 	 
	Face:
	 	$600,000,000	 	 	 	 
	Gross Proceeds:
	 	$547,674,000	 	 	 	 
	Coupon:
	 	10.500%	 	 	 	 
	Maturity:
	 	August 1, 2014	 	 	 	 
	Offering Price:
	 	91.279%	 	 	 	 
	Yield to Maturity:
	 	12.750%	 	 	 	 
	Spread to Treasury:
	 	+1083 basis points	 	 	 	 
	Benchmark:
	 	UST 4.25% due 11/15/2014	 	 	 	 
	Ratings:
	 	B3/B	 	 	 	 
	Interest Pay Dates:
	 	August 1 and February 1	 	 	 	 
	Beginning:
	 	August 1, 2009	 	 	 	 
	Equity Clawback:
	 	Up to 35% at 110.5%	 	 	 	 
	Until:
	 	February 1, 2012	 	 	 	 
	Optional redemption:
	 	Makewhole call @ T+50bps prior to February 1, 2012, then:	 	 	 	 






	 	 	 	 	 
	 	 	On or after:	 	Price:
	 
	 	February 1, 2012	 	110.500%
	 
	 	February 1, 2013	 	105.250%
	 
	 	February 1, 2014 and thereafter	 	100.000%
	Change of control:	 	Put @ 101% of principal plus accrued interest
	Trade Date:
	 	January 22, 2009	 	 
	Settlement Date:      (T+3)
	 	January 27, 2009	 	 
	CUSIP:
	 	144A: 716495AE6	 	 
	 
	 	Reg S:  U71618AD1	 	 
	ISIN:
	 	USU71618AD11	 	 
	Denominations:
	 	2,000x1,000	 	 
	Bookrunners:
	 	JPMorgan	 	 
	 
	 	Banc of America Securities LLC	 	 
	 
	 	BMO Capital Markets	 	 
	 
	 	BNP PARIBAS	 	 
	 
	 	Wachovia Securities	 	 
	Senior Co-Mgrs:
	 	Barclays Capital	 	 
	 
	 	Fortis Securities LLC	 	 
	 
	 	Capital One Southcoast	 	 
	 
	 	RBC Capital Markets	 	 
	Co-Mgrs:
	 	Citi	 	 
	 
	 	Natixis Bleichroeder Inc.	 	 
	 
	 	Piper Jaffray	 	 
	 
	 	Wedbush Morgan Securities Inc.	 	 
	 
	 	BBVA Securities	 	 
	 
	 	Calyon	 	 







III-1











 





SCHEDULE IV




     (a) Free Writing Offering Documents and other documents that comprise the Pricing Disclosure
Package:




     Term sheet containing the terms of the securities, substantially in the form of
Schedule III.



     (b) Free Writing Offering Documents not included in the Pricing Disclosure Package




     Electronic Roadshow of the Company dated January 22, 2009, including related graphic
presentations in the form available on www.netroadshow.com



IV-1









 





SCHEDULE V




Hawk Field Services, LLC

Medallion California Properties Company

Proliq, Inc.

Bison Ranch LLC

Petrohawk Holdings LLC

HK Energy Marketing, LLC





V-1









 








SCHEDULE VI




	 	 	 
	Subsidiary	 	Jurisdiction of Organization
	1. Petrohawk Operating Company

	 	Texas
	 
	 	 
	2. P-H Energy, LLC

	 	Texas
	 
	 	 
	3. Petrohawk Holdings, LLC

	 	Delaware
	 
	 	 
	4. Petrohawk Properties, LP

	 	Texas
	 
	 	 
	5. Winwell Resources, LLC

	 	Louisiana
	 
	 	 
	6. WSF, Inc.

	 	Louisiana
	 
	 	 
	7. KCS Resources, LLC

	 	Delaware
	 
	 	 
	8. KCS Energy Services, Inc.

	 	Delaware
	 
	 	 
	9. One TEC, LLC

	 	Texas
	 
	 	 
	10. One TEC Operating, LLC

	 	Texas
	 
	 	 
	11. HK Energy Marketing, LLC

	 	Delaware
	 
	 	 
	12. Hawk Field Services, LLC

	 	Oklahoma







VI-1