Exhibit 10.78


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                      Space above for County Recorder's Use

                           SECOND LIEN DEED OF TRUST,
           ASSIGNMENT OF AS-EXTRACTED COLLATERAL, SECURITY AGREEMENT,
                     FIXTURE FILING AND FINANCING STATEMENT

                                      FROM

                              BARON PRODUCTION LLC

                                       TO

                             PCEC-B, LLC, AS TRUSTEE

                               FOR THE BENEFIT OF

                                 PCEC SUB 1, LLC

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       A CARBON, PHOTOGRAPHIC, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
                      SUFFICIENT AS A FINANCING STATEMENT.

A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT.  IN CERTAIN STATES, A POWER
OF SALE MAY ALLOW THE TRUSTEE OR THE BENEFICIARY TO TAKE THE MORTGAGED  PROPERTY
AND SELL IT WITHOUT GOING TO COURT IN A  FORECLOSURE  ACTION UPON DEFAULT BY THE
GRANTOR UNDER THIS INSTRUMENT.

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

THIS INSTRUMENT COVERS PROCEEDS OF MORTGAGED PROPERTY.

THIS  INSTRUMENT  COVERS  MINERALS  AND OTHER  SUBSTANCES  OF VALUE WHICH MAY BE
EXTRACTED  FROM THE EARTH  (INCLUDING  WITHOUT  LIMITATION  OIL AND GAS) AND THE
ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE WELLHEADS OF THE WELL OR
WELLS LOCATED ON THE PROPERTIES  DESCRIBED IN THE EXHIBIT HERETO. THIS FINANCING
STATEMENT IS TO BE FILED OR FILED FOR RECORD,  AMONG OTHER  PLACES,  IN THE REAL
ESTATE RECORDS OR SIMILAR RECORDS OF THE RECORDERS OF THE COUNTIES LISTED ON THE
EXHIBIT  HERETO.  THE  GRANTOR  HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND
IMMOVABLE  PROPERTY  CONCERNED,  WHICH  INTEREST  IS  DESCRIBED  IN THE  EXHIBIT
ATTACHED HERETO.

PORTIONS OF THE MORTGAGED  PROPERTY ARE GOODS WHICH ARE OR ARE TO BECOME AFFIXED
TO OR FIXTURES ON THE LAND  DESCRIBED  IN OR REFERRED TO IN THE EXHIBIT  HERETO.
THIS  FINANCING  STATEMENT  IS TO BE FILED FOR RECORD OR  RECORDED,  AMONG OTHER
PLACES,  IN THE REAL ESTATE  RECORDS OR SIMILAR  RECORDS OF EACH COUNTY IN WHICH
SAID LAND OR ANY PORTION THEREOF IS LOCATED.  THE GRANTOR IS THE OWNER OF RECORD
INTEREST IN THE REAL ESTATE CONCERNED.  THIS INSTRUMENT IS ALSO TO BE INDEXED IN
THE INDEX OF FINANCING STATEMENTS OR THE UCC RECORDS.
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                             TABLE OF CONTENTS

                                                                          Page
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                                   ARTICLE I
                                  DEFINITIONS

Section 1.01. Terms Defined Above...........................................1

Section 1.02. UCC and Other Defined Terms...................................2

Section 1.03. Definitions...................................................2

                                   ARTICLE II
                     GRANT OF LIEN AND SECURED OBLIGATIONS

Section 2.01. Grant of Liens................................................4

Section 2.02. Grant of Security Interest....................................5

Section 2.03. Secured Obligations...........................................6

Section 2.04. Fixture Filing, Etc...........................................7

Section 2.05. Pro Rata Benefit..............................................7

                                  ARTICLE III
                     ASSIGNMENT OF AS-EXTRACTED COLLATERAL

Section 3.01. Assignment....................................................7

Section 3.02. No Modification of Payment Obligations........................8

Section 3.03. Rights and Title of Consignee.................................9

                                   ARTICLE IV
                   REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 4.01. Title.........................................................9

Section 4.02. Defend Title..................................................9

Section 4.03. Not a Foreign Person.........................................10

Section 4.04. Power to Create Lien and Security............................10

Section 4.05. Revenue and Cost Bearing Interest............................10

Section 4.06. Rentals Paid; Leases in Effect...............................10

Section 4.07. Operation By Third Parties...................................10

Section 4.08. Abandon, Sales...............................................10

Section 4.09. Failure to Perform...........................................11

                                   ARTICLE V
                              RIGHTS AND REMEDIES

Section 5.01. Event of Default.............................................11

Section 5.02. Foreclosure and Sale.........................................11

Section 5.03. Substitute Trustees and Agents...............................13

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Section 5.04. Judicial Foreclosure; Receivership...........................13

Section 5.05. Foreclosure for Installments.................................13

Section 5.06. Separate Sales...............................................13

Section 5.07. Possession of Mortgaged Property.............................14

Section 5.08. Occupancy After Foreclosure..................................14

Section 5.09. Remedies Cumulative, Concurrent and Nonexclusive.............14

Section 5.10. Discontinuance of Proceedings................................15

Section 5.11. No Release of Obligations....................................15

Section 5.12. Release of and Resort to Collateral..........................15

Section 5.13. Waiver of Redemption, Notice and Marshalling of
              Assets, Etc..................................................15

Section 5.14. Application of Proceeds......................................16

Section 5.15. Resignation of Operator......................................16

Section 5.16. Indemnity....................................................17

                                   ARTICLE VI
                                  THE TRUSTEE

Section 6.01. Duties, Rights, and Powers of Trustee........................17

Section 6.02. Successor Trustee............................................18

Section 6.03. Retention of Moneys..........................................18

                                  ARTICLE VII
                                 MISCELLANEOUS

Section 7.01. Instrument Construed as Mortgage, Etc........................18

Section 7.02. Releases.....................................................19

Section 7.03. Severability.................................................19

Section 7.04. Successors and Assigns.......................................19

Section 7.05. Subordination................................................19

Section 7.06. Application of Payments to Certain Obligations...............19

Section 7.07. Nature of Covenants..........................................20

Section 7.08. Notices......................................................20

Section 7.09. Counterparts.................................................20

Section 7.10. Governing Law................................................20

Section 7.11. Financing Statement; Fixture Filing..........................20

Section 7.12. Execution of Financing Statements............................21

Section 7.13. Exculpation Provisions.......................................21

Section 7.14. References...................................................22

EXHIBITS

Exhibit A   Oil and Gas Properties

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     THIS  SECOND LIEN DEED OF TRUST,  ASSIGNMENT  OF  AS-EXTRACTED  COLLATERAL,
SECURITY  AGREEMENT,  FIXTURE  FILING AND  FINANCING  STATEMENT  (this  "Deed of
Trust")  is entered  into as of July 28,  2014 (the  "Effective  Date") by BARON
PRODUCTION LLC, a Texas limited liability  company (the "Grantor"),  in favor of
PCEC-B,  LLC,  as Trustee  for the  benefit of PCEC SUB 1, LLC, a Texas  limited
liability company (together with its successors and assigns, the "Beneficiary").

                                 R E C I T A L S

     A. The Grantor, as seller, and the Beneficiary,  as purchaser, have entered
into that certain  Purchase and Sale Agreement dated as of the date hereof (such
Purchase and Sale Agreement, as amended,  restated,  supplemented,  or otherwise
modified from time to time, the "Purchase and Sale Agreement"), for the sale and
purchase of the of Production  Payment in the Subject  Interests,  as such terms
are defined in the Conveyance described below.

     B. By way of that certain  Conveyance of Term Overriding  Royalty  Interest
dated  as  of  the  date  hereof  (such   Conveyance,   as  amended,   restated,
supplemented,  or otherwise modified from time to time, the  "Conveyance"),  the
Grantor conveyed the Production Payment to the Beneficiary.

     C. Pursuant to that certain Production and Marketing  Agreement dated as of
the date hereof (such Production and Marketing Agreement, as amended,  restated,
supplemented,  or otherwise  modified  from time to time,  the  "Production  and
Marketing  Agreement"),  the Grantor has agreed to perform  certain  obligations
with respect to, among other things, the operation and production of the Subject
Interests and the marketing of the Production  Payment  Hydrocarbons  (each,  as
defined in the Conveyance).

     D. The payment and  performance of the obligations of the Grantor under the
Purchase and Sale  Agreement,  the  Conveyance  and the Production and Marketing
Agreement,  and the other  Production  Payment  Documents  (defined  below)  are
guaranteed by Baron Energy, Inc., a Nevada corporation (the "Parent"),  pursuant
to that certain  Guaranty  Agreement  dated as of the date hereof (such Guaranty
Agreement, as amended, restated,  supplemented,  or otherwise modified from time
to time, the "Parent Guaranty Agreement").

     E. The Purchase and Sale  Agreement  requires that the Grantor  execute and
deliver this Deed of Trust.

     F.  Therefore,  in order to comply  with the terms  and  conditions  of the
Purchase and Sale Agreement and for other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the Grantor hereby
agrees as follows:

                                   ARTICLE I
                                  DEFINITIONS

     Section 1.01 Terms Defined Above. As used in this Deed of Trust,  each term
defined above has the meaning indicated above.

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     Section 1.02 UCC and Other Defined Terms.  Unless otherwise  defined in the
Applicable UCC, each capitalized term used in this Deed of Trust and not defined
in this Deed of  Trust,  shall  have the  meaning  ascribed  to such term in the
Conveyance. Any capitalized term not defined in either this Deed of Trust or the
Conveyance shall have the meaning ascribed to such term in the Applicable UCC.

     Section 1.03 Definitions.

     "Applicable  UCC"  means the  provisions  of the  Uniform  Commercial  Code
presently in effect in the  jurisdiction in which the relevant UCC Collateral is
situated or which  otherwise is  applicable to the creation or perfection of the
Liens described herein or the rights and remedies of Beneficiary under this Deed
of Trust.

     "Collateral"  means collectively all the Mortgaged Property and all the UCC
Collateral.

     "Credit Agreement" means that certain Credit Agreement dated as of the date
hereof, by and among, the Grantor, the Parent, and the lenders from time to time
parties thereto,  Petro Capital,  as administrative  agent for such lenders,  as
amended, restated, supplemented, or otherwise modified from time to time.

     "Default Rate" shall mean a rate of interest per annum equal to 17%.

     "Event of Default" has the meaning ascribed to such term in Section 5.01.

     "Guarantor"  means the Parent and any other party  which is a guarantor  of
the Secured Obligations, on any portion thereof, from time to time.

     "Hydrocarbon Interests" means all rights, titles, interests and estates and
the lands and premises covered or affected thereby now or hereafter  acquired by
the Grantor in and to oil and gas leases,  oil, gas and mineral leases, or other
liquid or gaseous hydrocarbon leases, fee interests,  surface interests, mineral
fee interests,  overriding royalty and royalty  interests,  net profit interests
and production payment  interests,  including any reserved or residual interests
of whatever  nature,  in each case,  which are  described on Exhibit A; provided
that,  it is the intent of the  Grantor all of its  interests  be subject to the
Lien of this  Deed of Trust  even if (i) its  interests  on  Exhibit  A shall be
incorrectly  described or a description of a part or all of such property or the
Grantor's  interests therein be omitted limited to particular  lands,  specified
depths or  particular  types of property  interests or (ii) such  properties  or
interests may be hereafter acquired.

     "Hydrocarbons"  means all oil, gas, casinghead gas, drip gasoline,  natural
gasoline, condensate,  distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated  therefrom and all other minerals which may be
produced and saved from or  attributable  to the Oil and Gas  Properties  of the
Grantor,  including all oil in tanks, and all rents, issues, profits,  proceeds,
products,  revenues and other incomes from or  attributable  to the  Hydrocarbon
Interests or other  properties  constituting  Oil and Gas Properties;  provided,
that the term  "Hydrocarbons"  shall not  include  the  Production  Payment  (as
defined in the Conveyance).

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     "Indemnified  Parties"  means the  Trustee,  the  Beneficiary,  each  Other
Secured   Person   and   their   officers,   directors,   managers,   employees,
representatives, agents, attorneys, accountants and experts.

     "Lien" means any interest in property  securing an obligation owed to, or a
claim by, a Person other than the owner of the  property,  whether such interest
is based on the common law, statute or contract,  and whether such obligation or
claim is fixed or  contingent,  and including but not limited to (a) the lien or
security  interest  arising  from  a  mortgage,  encumbrance,  pledge,  security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties.

     "Mortgaged  Property" means the Oil and Gas Properties and other properties
and assets described in Section 2.01(a) through Section  2.01(e).  The Mortgaged
Property shall not include the Production Payment.

     "Oil  and  Gas  Properties"  means  (a)  Hydrocarbon  Interests;   (b)  the
properties now or hereafter pooled or unitized with Hydrocarbon  Interests;  (c)
all  presently  existing  or  future   unitization,   communitization,   pooling
agreements  and  declarations  of pooled  units and the  units  created  thereby
(including  without  limitation all units created under orders,  regulations and
rules of any Governmental  Authority) which may affect all or any portion of the
Hydrocarbon Interests;  (d) all operating agreements,  production sales or other
contracts,  farmout  agreements,  farm-in  agreements,  area of mutual  interest
agreements,  equipment  leases and other  agreements  which relate to any of the
Hydrocarbon  Interests  or any  interests  therein or to the  production,  sale,
purchase, exchange, processing,  handling, storage, transporting or marketing of
the  Hydrocarbons  from or attributable to such Oil and Gas Properties;  (e) all
Hydrocarbons; (f) all tenements, hereditaments,  appurtenances and properties in
any manner  appertaining,  belonging,  affixed or incidental to the  Hydrocarbon
Interests,  including all compressor sites, settling ponds and equipment or pipe
yards; and (g) all properties,  rights, titles,  interests and estates described
or referred to above whether now owned or  hereinafter  acquired,  including any
and all property, real or personal, immoveable or moveable, situated upon, used,
held for use or useful in connection with the operating,  working or development
of any of such  Hydrocarbon  Interests  or property  (excluding  drilling  rigs,
automotive  equipment,  rental equipment or other personal property which may be
on such  premises  for the  purpose  of  drilling  a well or for  other  similar
temporary uses) and including any and all oil wells, gas wells,  injection wells
or other wells,  structures,  fuel separators,  liquid extraction plants,  plant
compressors,  pumps, pumping units,  pipelines,  sales and flow lines, gathering
systems, field gathering systems, salt water disposal facilities, tanks and tank
batteries,  fixtures,  valves, fittings,  machinery and parts, engines, boilers,
steam generation facilities,  meters, apparatus,  equipment,  appliances, tools,
implements,  cables,  wires,  towers,  casing,  tubing and rods, surface leases,
rights-of-way,  easements,  servitudes licenses and other surface and subsurface
rights, together with all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing.

     "Other Secured Persons" means each  Indemnified  Party and any legal owner,
holder, assignee or pledgee of any of the Secured Obligations.

     "Paid In Full" means the  irrevocable  and  indefeasible  performance,  and
payment in full in cash, of all Secured Obligations.

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     "Petro  Capital" means Petro Capital  Energy  Credit,  LLC, a Texas limited
liability company.

     "Permitted Encumbrances" has the meaning specified in the Conveyance.

     "Production Payment" has the meaning specified in the Conveyance.

     "Production Payment Documents" means,  collectively,  the Purchase and Sale
Agreement,  the Conveyance,  the Production and Marketing Agreement,  the Parent
Guaranty  Agreement,  this Deed of Trust and each other  agreement,  instrument,
certificate  or other  document at any time made or given by Grantor  with or to
Beneficiary in connection with the Purchase and Sale Agreement,  the Conveyance,
the  Production  and Marketing  Agreement,  the Parent  Guaranty or this Deed of
Trust,  including all supplements  and amendments to and  restatements of any of
the foregoing.

     "Secured Obligations" has the meaning specified in Section 2.03.

     "Trustee"  means PCEC-B,  LLC,  whose address for notice  hereunder is 3710
Rawlins  Street,  Suite  1000,  Dallas,  Texas  75219,  and any  successors  and
substitutes in trust hereunder.

     "UCC  Collateral"  means the property and other assets described in Section
2.02.

                                   ARTICLE II
                      GRANT OF LIEN AND SECURED OBLIGATIONS

     Section 2.01.  Grant of Liens.  The Grantor does by these  presents  hereby
GRANT, BARGAIN, SELL, ASSIGN, MORTGAGE,  TRANSFER and CONVEY to the Trustee, for
the use and benefit of the  Beneficiary and the Other Secured  Persons,  all the
following properties, rights and interests, TO HAVE AND TO HOLD unto the Trustee
forever to secure the payment and performance of the Secured Obligations:

     (a) All  rights,  titles,  interests  and  estates  now owned or  hereafter
acquired  by the  Grantor  in and to the  Oil and Gas  Properties  described  on
Exhibit A.

     (b) All  rights,  titles,  interests  and  estates  now owned or  hereafter
acquired  by the  Grantor in and to all  geological,  geophysical,  engineering,
accounting, title, legal and other technical or business data concerning the Oil
and Gas Properties,  the Hydrocarbons or any other item of property which are in
the possession of the Grantor,  and all books, files,  records,  magnetic media,
computer records and other forms of recording or obtaining access to such data.

     (c) All  rights,  titles,  interests  and  estates  now owned or  hereafter
acquired by the Grantor in and to all Hydrocarbons.

     (d) Any property  that may from time to time  hereafter,  by delivery or by
writing  of any kind,  be  subjected  to the Liens  hereof by the  Grantor or by
anyone on the  Grantor's  behalf;  and the Trustee  and/or the  Beneficiary  are
hereby  authorized  to  receive  the  same at any  time as  additional  security
hereunder.

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     (e) All of the rights,  titles and interests of every nature whatsoever now
owned or hereafter  acquired by the Grantor in and to the Oil and Gas Properties
described in Exhibit A and all other rights,  titles,  interests and estates and
every  part and parcel  thereof,  including,  without  limitation,  any  rights,
titles,  interests  and estates as the same may be enlarged by the  discharge of
any  payments  out of  production  or by the removal of any charges or Permitted
Encumbrances  to which  any of such  Oil and Gas  Properties  or  other  rights,
titles, interests or estates are subject or otherwise; all rights of the Grantor
to Liens  securing  payment of proceeds from the sale of production  from any of
such Oil and Gas  Properties,  together with any and all renewals and extensions
of any of such related rights,  titles,  interests or estates; all contracts and
agreements supplemental to or amendatory of or in substitution for the contracts
and  agreements  described  or  mentioned  above;  and any  and  all  additional
interests  of any kind  hereafter  acquired  by the  Grantor  in and to the such
related rights, titles, interests or estates.

     Notwithstanding any provision in this Deed of Trust to the contrary,  in no
event is any Building (as defined in the applicable Flood Insurance  Regulation)
or  Manufactured  (Mobile) Home (as defined in the  applicable  Flood  Insurance
Regulation)  included in the definition of "Mortgaged  Property" and no Building
or  Manufactured  (Mobile) Home is hereby  encumbered by this Deed of Trust.  As
used herein,  "Flood  Insurance  Regulations"  shall mean (i) the National Flood
Insurance  Act of 1968 as now or  hereafter in effect or any  successor  statute
thereto,  (ii) the Flood Disaster  Protection Act of 1973 as now or hereafter in
effect or any successor  statute  thereto,  (iii) the National  Flood  Insurance
Reform Act of 1994 (amending 42 USC 4001, et. seq.),  as the same may be amended
or recodified from time to time, and (iv) the Flood Insurance Reform Act of 2004
and any regulations promulgated thereunder.

     Any  fractions  or  percentages  specified on Exhibit A in referring to the
Grantor's  interests  are  solely for  purposes  of the  warranties  made by the
Grantor  pursuant to Section  4.01 and Section 4.05 and shall in no manner limit
the quantum of interest  affected by this  Section  2.01 with respect to any Oil
and Gas Property or with respect to any unit or well identified on Exhibit A.

     Section 2.02. Grant of Security Interest. To further secure the payment and
performance  of the  Secured  Obligations,  the  Grantor  hereby  grants  to the
Beneficiary,  for its benefit and the benefit of the Other  Secured  Persons,  a
security  interest  in and to all of the  following  (whether  now or  hereafter
acquired  by  operation  of law or  otherwise)  to the  extent  arising  from or
pertaining, relating or attributable to any of the Mortgaged Property:

     (a) all Accounts;

     (b) all General  Intangibles and all rights under  insurance  contracts and
rights to insurance proceeds;

     (c) all Instruments;

     (d) all Goods;

     (e) all  As-Extracted  Collateral  from or  attributable to the Oil and Gas
Properties;

     (f) all books and records pertaining to the Oil and Gas Properties;

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     (g) all Fixtures;

     (h) all Hydrocarbons;

     (i) to the extent not otherwise included, any other property insofar as the
it consists of personal property of any kind or character defined in and subject
to the Applicable UCC; and

     (j) to the extent not otherwise included,  all Proceeds and products of any
and all of the  foregoing  and all  collateral  security,  guarantees  and other
Supporting Obligations given with respect to any of the foregoing;

provided  that,  notwithstanding  any other  provision set forth in this Deed of
Trust,  the  term  "Collateral"  and the  term  "Mortgaged  Properties"  and the
component  definitions  thereof shall not include,  and this Deed of Trust shall
not,  at any time,  constitute  a grant of a security  interest in or Lien on or
otherwise encumber, the Production Payment or any products or proceeds thereof.

     Section  2.03.  Secured  Obligations.  This Deed of Trust is  executed  and
delivered  by the  Grantor to secure and  enforce the  following  (the  "Secured
Obligations"):

     (a) Payment and  performance  of all  obligations  and  liabilities  of the
Grantor  and/or  the  Parent to the  Beneficiary,  whether  direct or  indirect,
absolute  or  contingent,  due or to become due,  or now  existing or  hereafter
incurred,  which may arise  under,  out of, or in  connection  with,  any of the
Production  Payment Documents or any other document made,  delivered or given in
connection herewith or therewith,  whether on account of covenants,  agreements,
indemnities,  costs,  expenses (including all fees, charges and disbursements of
counsel to the  Beneficiary  that are  required to be paid by the Grantor or the
Parent pursuant to any Production Payment Document) or otherwise.

     (b)  Any  sums  which  may  be  advanced  or  paid  by the  Trustee  or the
Beneficiary or any Other Secured Person under the Production  Payment  Documents
on account of the  failure of the Grantor to comply  with the  covenants  of the
Grantor  contained  herein or the other  Production  Payment  Documents  whether
pursuant to Section 4.09 or otherwise and all other obligations, liabilities and
indebtedness of the Grantor or any Guarantor  arising pursuant to the provisions
of this Deed of Trust or any other Production Payment Document.

     (c)  Any  and  all  renewals,  modifications,   amendments,  substitutions,
rearrangements  or  extensions of any of the  foregoing,  whether in whole or in
part.

     Notwithstanding anything herein to the contrary, the Secured Obligations do
not include the Production Payment.

     Section  2.04.  Fixture  Filing,  Etc.  Without in any manner  limiting the
generality  of any of the  other  provisions  of this  Deed of  Trust:  (i) some
portions of the goods  described or to which reference is made herein are or are
to become Fixtures on the land described or to which reference is made herein or
on  Exhibit A; (ii) the  security  interests  created  hereby  under  applicable
provisions of the Applicable UCC will attach to all As-Extracted Collateral (all
minerals  including oil and gas and the Accounts resulting from the sale thereof
at the wellhead or minehead  located on the Oil and Gas Properties  described or
to which  reference is made herein or on Exhibit A) and all other  Hydrocarbons;

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(iii) this Deed of Trust is to be filed of record in the real estate  records or
other appropriate records as a financing statement;  and (iv) the Grantor is the
record owner of the real estate or  interests  in the real estate or  immoveable
property comprised of the Mortgaged Property.

     Section 2.05. Pro Rata Benefit.  This Deed of Trust is executed and granted
for the pro rata benefit and security of the  Beneficiary  and the Other Secured
Persons to secure the Secured Obligations for so long as same remains unpaid and
thereafter until the Secured Obligations have been Paid in Full.

                                  ARTICLE III
                      ASSIGNMENT OF AS-EXTRACTED COLLATERAL

     Section 3.01. Assignment.

     (a) Subject to the last  sentence of paragraph  (b) below,  the Grantor has
absolutely and  unconditionally  assigned,  transferred,  conveyed and granted a
security  interest,  and does  hereby  absolutely  and  unconditionally  assign,
transfer, convey and grant a security interest unto the Beneficiary in and to:

     (i)  all of its  As-Extracted  Collateral  located  in or  relating  to the
Mortgaged  Properties  located in the county  where this Deed of Trust is filed,
including  without  limitation,  all  As-Extracted  Collateral  relating  to the
Hydrocarbon  Interests,  the Hydrocarbons and all products obtained or processed
therefrom;

     (ii) the  revenues  and proceeds  now and  hereafter  attributable  to such
Mortgaged  Properties,  including  the  Hydrocarbons,  and said products and all
payments in lieu, such as "take or pay" payments or settlements; and

     (iii) all amounts and proceeds hereafter payable to or to become payable to
the  Grantor  or  now or  hereafter  relating  to any  part  of  such  Mortgaged
Properties  and all  amounts,  sums,  monies,  revenues  and income which become
payable  to the  Grantor  from,  or  with  respect  to,  any  of  the  Mortgaged
Properties,  present  or future,  now or  hereafter  constituting  a part of the
Hydrocarbon Interests.

     (b) The  Hydrocarbons  and  products  are to be  delivered  into pipe lines
connected  with the  Mortgaged  Property,  or to the purchaser  thereof,  to the
credit of the Beneficiary,  for its benefit and the benefit of the Other Secured
Persons, free and clear of all taxes, charges,  costs and expenses; and all such
revenues and proceeds shall be paid directly to the Beneficiary,  at its offices
in Dallas,  Texas,  with no duty or  obligation  of any party paying the same to
inquire into the rights of the Beneficiary to receive the same, what application
is made  thereof,  or as to any other  matter.  Notwithstanding  anything to the
contrary  contained  herein,  so long as no Event of Default has occurred and is
continuing,  the  Grantor  shall  have the right to  collect  all  revenues  and
proceeds  attributable  to the  Hydrocarbons  that  accrue  to the  Oil  and Gas
Properties or the products obtained or processed therefrom.

     (c) Subject to the last sentence of paragraph (b) above, the Grantor agrees
to perform all such acts, and to execute all such further assignments, transfers

                                       7
<PAGE>
and division  orders and other  instruments as may be required or desired by the
Beneficiary  or any party in order to have said proceeds and revenues so paid to
the  Beneficiary.  In  addition  to any and all rights of a secured  party under
Sections  9-607  and  9-609 of the  Applicable  UCC,  the  Beneficiary  is fully
authorized to receive and receipt for said revenues and proceeds; to endorse and
cash any and all checks and  drafts  payable to the order of the  Grantor or the
Beneficiary  for the account of the Grantor  received from or in connection with
said  revenues  or  proceeds  and to hold the  proceeds  thereof  as  additional
collateral  securing  the  Secured  Obligations;  and to  execute  transfer  and
division  orders  in the name of the  Grantor,  or  otherwise,  with  warranties
binding the Grantor.  All proceeds received by the Beneficiary  pursuant to this
grant and assignment shall be applied as provided in Section 5.14.

     (d) The Beneficiary  shall not be liable for any delay,  neglect or failure
to effect  collection  of any proceeds or to take any other action in connection
therewith  or  hereunder;  but the  Beneficiary  shall  have the  right,  at its
election,  in the name of the Grantor or otherwise,  to prosecute and defend any
and all actions or legal  proceedings  deemed  advisable by the  Beneficiary  in
order to collect  such funds and to protect  the  interests  of the  Beneficiary
and/or the Grantor,  with all costs,  expenses and  attorneys'  fees incurred in
connection therewith being paid by the Grantor.

     (e) The Grantor hereby appoints the Beneficiary as its  attorney-in-fact to
pursue any and all rights of the Grantor to Liens in the  Hydrocarbons  securing
payment of proceeds of runs attributable to the Hydrocarbons. In addition to the
Liens granted to the Trustee  and/or the  Beneficiary  in Section  2.01(e),  the
Grantor hereby further transfers and assigns to the Beneficiary any and all such
Liens,  security  interests,  financing  statements or similar  interests of the
Grantor attributable to its interest in the As-Extracted  Collateral,  any other
Hydrocarbons  and proceeds of runs  therefrom  arising  under or created by said
statutory  provision,  judicial  decision  or  otherwise.  The power of attorney
granted to the Beneficiary in this Section 3.01, being coupled with an interest,
shall be irrevocable until the Secured Obligations have been Paid in Full.

     Section  3.02.  No  Modification  of Payment  Obligations.  Nothing  herein
contained  shall modify or otherwise alter the obligation of the Grantor to make
prompt payment of all amounts  constituting  Secured Obligations when and as the
same  become  due  regardless  of  whether  the  proceeds  of  the  As-Extracted
Collateral  and  Hydrocarbons  are  sufficient  to pay the same  and the  rights
provided  in  accordance  with  the  foregoing  assignment  provision  shall  be
cumulative  of all other  security of any and every  character  now or hereafter
existing to secure payment of the Secured  Obligations.  Nothing in this Article
III is intended to be an acceptance of collateral in satisfaction of the Secured
Obligations.

     Section  3.03.  Rights and Title of  Consignee.  In addition to the rights,
titles and interests  hereby  conveyed  pursuant to Section 2.01 of this Deed of
Trust,  the  Grantor  hereby  grants to the  Beneficiary  those  Liens  given to
purchasers of Hydrocarbons to secure their sale at the wellhead, including those
rights provided in Tex. Bus. & Com. Code ss.9.343 ("Tex.  UCC"), as amended from
time to time.

                                   ARTICLE IV
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

     The Grantor hereby represents, warrants and covenants as follows:

     Section 4.01. Title. To the extent of the undivided  interests specified on
Exhibit A, the Grantor has good and defensible  title to and is possessed of the
Hydrocarbon  Interests and has good title to the UCC Collateral.  The Collateral
is free of all Liens except Permitted Encumbrances.

                                       8
<PAGE>
     Section 4.02. Defend Title. This Deed of Trust is, and always will be kept,
a direct second  priority  Lien upon the  Collateral;  provided  that  Permitted
Encumbrances  may exist,  but no intent to subordinate the priority of the Liens
created hereby is intended or inferred by such  existence.  The Grantor will not
create or suffer to be created or permit to exist any Lien, security interest or
charge  prior or  junior  to or on a parity  with the Lien of this Deed of Trust
upon the Collateral or any part thereof other than such Permitted  Encumbrances.
The  Grantor  will  warrant and defend the title to the  Collateral  against the
claims  and  demands  of all other  Persons  whomsoever  and will  maintain  and
preserve  the  Lien  created  hereby  (and  its  priority)   until  the  Secured
Obligations  shall be Paid in Full. If (i) an adverse claim be made against or a
cloud  develop  upon  the  title  to any  part of the  Collateral  other  than a
Permitted  Encumbrance  or (ii) any Person,  including the holder of a Permitted
Encumbrance,  shall  challenge  the priority or validity of the Liens created by
this Deed of Trust,  then the Grantor agrees to immediately  defend against such
adverse claim, take appropriate  action to remove such cloud or subordinate such
Permitted Encumbrance, in each case, at the Grantor's sole cost and expense. The
Grantor  further  agrees that the Trustee and/or the  Beneficiary  may take such
other action as they deem advisable to protect and preserve  their  interests in
the Collateral, and in such event the Grantor will indemnify the Trustee and the
Beneficiary  against any and all cost,  attorneys' fees and other expenses which
they may incur in defending  against any such adverse  claim or taking action to
remove any such cloud.

     Section 4.03. Not a Foreign Person.  The Grantor is not a "foreign  person"
within the meaning of the Code,  Sections 1445 and 7701 (i.e. the Grantor is not
a non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign  estate  as those  terms  are  defined  in the Code and any  regulations
promulgated thereunder).

     Section 4.04. Power to Create Lien and Security. The Grantor has full power
and lawful authority to grant,  bargain,  sell, assign,  transfer,  mortgage and
convey a  security  interest  in all of the  Collateral  in the  manner and form
herein provided.  No authorization,  approval,  consent or waiver of any lessor,
sublessor,  Governmental  Authority  or other  party or  parties  whomsoever  is
required in  connection  with the  execution and delivery by the Grantor of this
Deed of Trust.

     Section 4.05. Revenue and Cost Bearing Interest. The Grantor's ownership of
the Hydrocarbon  Interests and the undivided  interests  therein as specified on
Exhibit A will, after giving full effect to all Permitted  Encumbrances,  afford
the  Grantor  not less  than  those  net  interests  (expressed  as a  fraction,
percentage  or decimal) in the  production  from or which is  allocated  to such
Hydrocarbon  Interest specified as Net Revenue Interest (as specified on Exhibit
A) on  attached  Exhibit A and will cause the Grantor to bear not more than that
portion (expressed as a fraction,  percentage or decimal),  specified as Working
Interest on Exhibit A, of the costs of drilling,  developing  and  operating the
wells  identified  on  Exhibit  A  except  to the  extent  of any  proportionate
corresponding increase in the Net Revenue Interest.

     Section 4.06. Rentals Paid; Leases in Effect. All rentals and royalties due
and payable in accordance with the terms of any leases or subleases comprising a
part of the  Mortgaged  Property  have been duly paid or provided  for,  and all
leases or  subleases  comprising  a part of the Oil and Gas Property are in full
force and effect.

     Section 4.07.  Operation By Third Parties.  If any portion of the Mortgaged
Property is comprised of interests which are not working  interests or which are
not operated by the Grantor or one of its Affiliates,  then with respect to such
interests and properties,  the Grantor's  covenants as expressed in this Article
IV are modified to require that the Grantor use reasonable commercial efforts to
obtain  compliance  with such  covenants by the working  interest  owners or the
operator or operators of such Mortgaged Properties.

     Section 4.08.  Abandon,  Sales. The Grantor will not sell,  lease,  assign,
transfer  or  otherwise  dispose  or  abandon  any of the  Collateral  except as
permitted by the Production and Marketing Agreement.

                                       9
<PAGE>
     Section 4.09.  Failure to Perform.  The Grantor  agrees that if it fails to
perform  any act or to take any action  which it is  required to perform or take
hereunder or pay any money which the Grantor is required to pay hereunder,  each
of the  Beneficiary  and the Trustee,  in the Grantor's name or its or their own
name,  may, but shall not be obligated to,  perform or cause to perform such act
or take such action or pay such money, and any expenses so incurred by either of
them and any money so paid by either of them shall be a demand  obligation owing
by the Grantor to the  Beneficiary or the Trustee,  as the case may be, and each
of the  Beneficiary  and  the  Trustee,  upon  making  such  payment,  shall  be
subrogated  to all of the  rights of the Person  receiving  such  payment.  Each
amount due and owing by the Grantor to each of the  Beneficiary  and the Trustee
pursuant  to this  Deed of  Trust  shall  bear  interest  from  the date of such
expenditure or payment to such Person until paid at the Default Rate.

                                   ARTICLE V
                               RIGHTS AND REMEDIES

     Section  5.01.  Event of Default.  The  occurrence  of any of the following
shall be an "Event of Default" under this Deed of Trust:

     (a) any  Performance  Default (as defined in the  Production  and Marketing
Agreement); or

     (b) any Event of Default (as defined in the Credit Agreement).

     Section 5.02. Foreclosure and Sale.

     (a) If an Event of Default  shall  occur and be  continuing,  to the extent
provided by applicable law, the  Beneficiary  shall have the right and option to
proceed  with  foreclosure  and to sell  all or any  portion  of such  Mortgaged
Property  at one or more sales,  as an entirety or in parcels,  at such place or
places in otherwise  such manner and upon such notice as may be required by law,
or,  in the  absence  of any  such  requirement,  as the  Beneficiary  may  deem
appropriate,  and to make  conveyance to the purchaser or purchasers.  Where the
Mortgaged  Property is situated in more than one  jurisdiction,  notice as above
provided  shall be posted and filed in all such  jurisdictions  (if such notices
are required by law),  and all such  Mortgaged  Property may be sold in any such
jurisdiction  and any such notice shall  designate the  jurisdiction  where such
Mortgaged  Property is to be sold.  Nothing contained in this Section 5.02 shall
be construed so as to limit in any way any rights to sell the Mortgaged Property
or any portion  thereof by private  sale if and to the extent that such  private
sale is permitted under the laws of the applicable  jurisdiction or by public or
private sale after entry of a judgment by any court of competent jurisdiction so
ordering.   The  Grantor  hereby  irrevocably   appoints  the  Trustee  and  the
Beneficiary, with full power of substitution, to be the attorneys-in-fact of the
Grantor  and in the name and on behalf of the Grantor to execute and deliver any
deeds,  transfers,  conveyances,  assignments,  assurances and notices which the
Grantor  ought to execute  and  deliver and do and perform any and all such acts
and things which the Grantor ought to do and perform under the covenants  herein
contained and  generally,  to use the name of the Grantor in the exercise of all
or any of the powers hereby conferred on the Trustee and/or the Beneficiary.  At
any such sale:  (i) whether made under the power  herein  contained or any other
legal  enactment,  or by virtue of any judicial  proceedings  or any other legal
right,  remedy or  recourse,  it shall not be  necessary  for the Trustee or the

                                       10
<PAGE>
Beneficiary, as appropriate, to have physically present, or to have constructive
possession  of, the  Mortgaged  Property  (the Grantor  hereby  covenanting  and
agreeing  to deliver  any  portion of the  Mortgaged  Property  not  actually or
constructively  possessed by the Trustee or the Beneficiary immediately upon his
or its demand)  and the title to and right of  possession  of any such  property
shall  pass to the  purchaser  thereof  as  completely  as if the  same had been
actually  present and delivered to purchaser at such sale,  (ii) each instrument
of conveyance executed by the Trustee or the Beneficiary shall contain a general
warranty of title,  binding  upon the Grantor and its  successors  and  assigns,
(iii) each and every recital  contained in any instrument of conveyance  made by
the  Trustee  or the  Beneficiary  shall  conclusively  establish  the truth and
accuracy  of  the  matters  recited  therein,  including,   without  limitation,
nonpayment of the Secured Obligations, advertisement and conduct of such sale in
the manner provided herein and otherwise by law and appointment of any successor
trustee hereunder,  (iv) any and all prerequisites to the validity thereof shall
be conclusively presumed to have been performed, (v) the receipt of the Trustee,
the  Beneficiary  or of such other  party or officer  making the sale shall be a
sufficient  discharge to the purchaser or purchasers  for its purchase money and
no such  purchaser or  purchasers,  or its assigns or personal  representatives,
shall  thereafter be obligated to see to the application of such purchase money,
or be in any way  answerable  for any loss,  misapplication  or  non-application
thereof,  (vi) to the fullest  extent  permitted  by law,  the Grantor  shall be
completely and irrevocably divested of all of its right, title, interest,  claim
and demand  whatsoever,  either at law or in equity, in and to the property sold
and such sale shall be a  perpetual  bar both at law and in equity  against  the
Grantor, and against any and all other persons claiming or to claim the property
sold or any part  thereof,  by,  through or under the Grantor,  and (vii) to the
extent and under such circumstances as are permitted by law, the Beneficiary may
be a  purchaser  at any such sale,  and shall have the  right,  after  paying or
accounting for all costs of said sale or sales,  to credit the amount of the bid
upon the amount of the Secured  Obligations  (in the order of priority set forth
in Section 5.14) in lieu of cash payment.

     (b) If an Event of  Default  shall  occur and be  continuing,  then (i) the
Beneficiary shall be entitled to all of the rights, powers and remedies afforded
a secured party by the  Applicable  UCC with  reference to the UCC Collateral or
(ii)  the  Trustee  or the  Beneficiary  may  proceed  as to any  Collateral  in
accordance  with the rights  and  remedies  granted  under this Deed of Trust or
applicable law in respect of the  Collateral.  Such rights,  powers and remedies
shall be  cumulative  and in  addition  to those  granted to the  Trustee or the
Beneficiary  under any other  provision of this Deed of Trust or under any other
Production  Payment  Document.  Written notice mailed to the Grantor as provided
herein at least ten (10)  days  prior to the date of public  sale of any part of
the  Collateral  which is personal  property  subject to the  provisions  of the
Applicable  UCC, or prior to the date after which  private sale of any such part
of the Collateral will be made, shall constitute reasonable notice.

                                       11
<PAGE>
     Section 5.03.  Substitute  Trustees and Agents.  The Trustee or Beneficiary
may appoint or delegate  any one or more  persons as agent to perform any act or
acts  necessary  or  incident  to any sale held by the  Trustee or  Beneficiary,
including the posting of notices and the conduct of sale, but in the name and on
behalf of the Trustee or Beneficiary.  If the Trustee or Beneficiary  shall have
given notice of sale hereunder,  any successor or substitute  trustee  appointed
may complete the sale and the conveyance of the property  pursuant thereto as if
such notice had been given by the successor or substitute trustee conducting the
sale.

     Section 5.04.  Judicial  Foreclosure;  Receivership.  If any of the Secured
Obligations  shall  become due and payable and shall not be promptly  paid,  the
Trustee or the  Beneficiary  shall have the right and power to proceed by a suit
or suits in  equity  or at law,  whether  for the  specific  performance  of any
covenant or agreement  herein  contained or in aid of the execution of any power
herein  granted,  or for  any  foreclosure  hereunder  or for  the  sale  of the
Collateral  under the  judgment  or  decree of any court or courts of  competent
jurisdiction,  or for the  appointment  of a receiver  pending  any  foreclosure
hereunder or the sale of the Collateral  under the order of a court or courts of
competent  jurisdiction  or under  executory or other legal process,  or for the
enforcement  of any  other  appropriate  legal or  equitable  remedy.  Any money
advanced by the  Trustee  and/or the  Beneficiary  in  connection  with any such
receivership  shall be a demand  obligation (which obligation the Grantor hereby
expressly  promises  to pay)  owing by the  Grantor  to the  Trustee  and/or the
Beneficiary  and shall bear interest from the date of making such advance by the
Trustee and/or the Beneficiary until paid at the Default Rate.

     Section 5.05. Foreclosure for Installments. The Beneficiary shall also have
the option to proceed with  foreclosure in satisfaction  of any  installments of
the  Secured  Obligations  which have not been paid when due either  through the
courts or by directing the Trustee to proceed with  foreclosure in  satisfaction
of the matured but unpaid portion of the Secured  Obligations as if under a full
foreclosure,  conducting the sale as herein  provided and without  declaring the
entire principal balance and accrued interest and other Secured Obligations then
due;  such sale may be made  subject to the  unmatured  portion  of the  Secured
Obligations,  and any such sale  shall not in any manner  affect  the  unmatured
portion of the  Secured  Obligations,  but as to such  unmatured  portion of the
Secured  Obligations  this Deed of Trust  shall  remain in full force and effect
just as  though no sale had been  made  hereunder.  It is  further  agreed  that
several sales may be made hereunder without exhausting the right of sale for any
unmatured  part of the  Secured  Obligations,  it being  the  purpose  hereof to
provide for a  foreclosure  and sale of the security for any matured  portion of
the Secured  Obligations  without exhausting the power to foreclose and sell the
Mortgaged  Property  for  any  subsequently  maturing  portion  of  the  Secured
Obligations.

     Section 5.06.  Separate  Sales.  The  Collateral may be sold in one or more
parcels and to the extent  permitted by applicable  law in such manner and order
as the  Beneficiary,  in its sole  discretion,  may  elect,  it being  expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

     Section  5.07.  Possession  of Mortgaged  Property.  If an Event of Default
shall  have  occurred  and be  continuing,  then,  to the  extent  permitted  by
applicable law, the Trustee or the Beneficiary shall have the right and power to
enter into and upon and take  possession of all or any part of the Collateral in
the possession of the Grantor, its successors or assigns, or its or their agents
or servants,  and may exclude the Grantor,  its  successors or assigns,  and all

                                       12
<PAGE>
persons claiming under the Grantor,  and it's or their agents or servants wholly
or partly therefrom; and, holding the same, the Beneficiary may use, administer,
manage,  operate and control the Collateral and conduct the business  thereof to
the same extent as the Grantor, its successors or assigns,  might at the time do
and may exercise all rights and powers of the  Grantor,  in the name,  place and
stead of the  Grantor,  or  otherwise as the  Beneficiary  shall deem best.  All
costs,  expenses  and  liabilities  of every  character  incurred by the Trustee
and/or the Beneficiary in administering,  managing,  operating,  and controlling
the Mortgaged  Property shall constitute a demand  obligation  (which obligation
the  Grantor  hereby  expressly  promises  to pay)  owing by the  Grantor to the
Trustee and/or the  Beneficiary and shall bear interest from date of expenditure
until paid at the Default Rate.

     Section  5.08.  Occupancy  After  Foreclosure.  In  the  event  there  is a
foreclosure  sale  hereunder  and at the time of such  sale the  Grantor  or the
Grantor's heirs, devisees,  representatives,  successors or assigns or any other
person claiming any interest in the Collateral by, through or under the Grantor,
are occupying or using the Mortgaged Property or any part thereof,  each and all
shall immediately become the tenant of the purchaser at such sale, which tenancy
shall  be a  tenancy  from day to day,  terminable  at the  will of  either  the
landlord or tenant,  or at a  reasonable  rental per day based upon the value of
the  property  occupied,  such rental to be due daily to the  purchaser;  to the
extent   permitted  by  applicable  law,  the  purchaser  at  such  sale  shall,
notwithstanding  any language herein  apparently to the contrary,  have the sole
option to  demand  immediate  possession  following  the sale or to  permit  the
occupants  to remain as  tenants  at will.  In the  event  the  tenant  fails to
surrender  possession  of said  property  upon demand,  the  purchaser  shall be
entitled  to  institute  and  maintain a summary  action for  possession  of the
Mortgaged  Property  (such as an action for forcible  entry and detainer) in any
court having jurisdiction.

     Section 5.09.  Remedies  Cumulative,  Concurrent  and  Nonexclusive.  Every
right,  power,  privilege  and  remedy  herein  given  to  the  Trustee  or  the
Beneficiary shall be cumulative and in addition to every other right,  power and
remedy herein  specifically given or now or hereafter existing in equity, at law
or by statute  (including  specifically  those granted by the  Applicable UCC in
effect and applicable to the Collateral or any portion thereof).  Each and every
right,  power,  privilege  and  remedy  whether  specifically  herein  given  or
otherwise  existing may be exercised  from time to time and so often and in such
order as may be deemed  expedient  by the  Trustee or the  Beneficiary,  and the
exercise,  or the beginning of the  exercise,  or the  abandonment,  of any such
right,  power,  privilege or remedy shall not be deemed a waiver of the right to
exercise,  at the same time or thereafter any other right,  power,  privilege or
remedy.  No delay or  omission by the  Trustee or the  Beneficiary  or any Other
Secured  Person in the  exercise of any right,  power or remedy shall impair any
such right, power,  privilege or remedy or operate as a waiver thereof or of any
other right, power, privilege or remedy then or thereafter existing.

     Section  5.10.  Discontinuance  of  Proceedings.  If  the  Trustee  or  the
Beneficiary  shall  have  proceeded  to invoke  any  right,  remedy or  recourse
permitted hereunder or under any Production Payment Document or available at law
and shall thereafter  elect to discontinue or abandon same for any reason,  then
it shall have the unqualified  right so to do and, in such an event, the parties
shall  be  restored  to their  former  positions  with  respect  to the  Secured
Obligations,  this Deed of Trust, the Collateral and otherwise,  and the rights,

                                       13
<PAGE>
remedies,   recourses  and  powers  of  the  Trustee  and  the  Beneficiary,  as
applicable, shall continue as if same had never been invoked.

     Section 5.11. No Release of Obligations. Neither the Grantor, any Guarantor
nor any other person  hereafter  obligated for payment of all or any part of the
Secured  Obligations  shall be relieved of such obligation by reason of: (a) the
failure  of the  Trustee  to comply  with any  request  of the  Grantor,  or any
Guarantor or any other Person so obligated to foreclose the Lien of this Deed of
Trust or to enforce any  provision  hereunder  or under any  Production  Payment
Document;  (b)  the  release,  regardless  of  consideration,  of the  Mortgaged
Property or any portion thereof or interest therein or the addition of any other
property to the Mortgaged Property; (c) any agreement or stipulation between any
subsequent  owner  of the  Mortgaged  Property  and the  Beneficiary  extending,
renewing,  rearranging  or in any other way  modifying the terms of this Deed of
Trust without first having  obtained the consent of, given notice to or paid any
consideration  to the Grantor,  any Guarantor or such other Person,  and in such
event the Grantor,  Guarantor  and all such other person s shall  continue to be
liable  to  make  payment  according  to the  terms  of any  such  extension  or
modification  agreement unless  expressly  released and discharged in writing by
the  Beneficiary;  or (d) by any other act or occurrence  save and except if the
Secured Obligations are Paid in Full.

     Section 5.12.  Release of and Resort to  Collateral.  The  Beneficiary  may
release, regardless of consideration,  any part of the Collateral without, as to
the remainder, in any way impairing,  affecting,  subordinating or releasing the
Lien created in or evidenced by this Deed of Trust or its stature as a first and
prior  Lien  in and to the  Collateral,  and  without  in any way  releasing  or
diminishing  the liability of any Person liable for the repayment of the Secured
Obligations.  For payment of the Secured Obligations, the Beneficiary may resort
to any other  security  therefor held by the  Beneficiary or the Trustee in such
order and manner as the Beneficiary may elect.

     Section 5.13. Waiver of Redemption,  Notice and Marshalling of Assets, Etc.
To the fullest  extent  permitted by law,  the Grantor  hereby  irrevocably  and
unconditionally  waives and releases  (a) all benefits  that might accrue to the
Grantor by virtue of any present or future moratorium law or other law exempting
the Collateral from  attachment,  levy or sale on execution or providing for any
appraisement,  valuation,  stay of  execution,  exemption  from  civil  process,
redemption  or extension  of time for  payment;  (b) all notices of any Event of
Default or of the  Beneficiary's  or any other  secured  Person's  intention  to
accelerate maturity of the Secured Obligations or of any election to exercise or
any actual exercise of any right,  remedy or recourse  provided for hereunder or
under any Production  Payment Document or available at law; and (c) any right to
a  marshalling  of assets or a sale in inverse order of  alienation.  If any law
referred to in this Deed of Trust and now in force,  of which the Grantor or its
successor or successors  might take  advantage  despite the  provisions  hereof,
shall hereafter be repealed or cease to be in force,  such law shall  thereafter
be deemed not to  constitute  any part of the  contract  herein  contained or to
preclude the operation or application of the provisions  hereof.  If the laws of
any state which  provides for a redemption  period do not permit the  redemption
period to be waived, the redemption period shall be specifically  reduced to the
minimum amount of time allowable by statute.

                                       14
<PAGE>
     Section  5.14.  Application  of  Proceeds.  The proceeds of any sale of the
Mortgaged  Property  or any part  thereof and all other  monies  received in any
proceedings for the enforcement  hereof or otherwise,  whose application has not
elsewhere herein been specifically provided for, shall be applied:

     (a) First,  to the payment of all  expenses  incurred by the Trustee or the
Beneficiary  incident  to the  enforcement  of this  Deed of Trust or any of the
other  Production  Payment  Documents  to collect  any  portion  of the  Secured
Obligations  (including,  without  limiting,  the  generality of the  foregoing,
expenses of any entry or taking of  possession,  of any sale,  of  advertisement
thereof,  and of  conveyances,  and court  costs,  compensation  of  agents  and
employees,  legal fees and a reasonable  commission  to the Trustee  acting,  if
applicable), and to the payment of all other charges, expenses,  liabilities and
advances  incurred or made by the Trustee or the Beneficiary  under this Deed of
Trust or in executing any trust or power hereunder; and

     (b)  Second,  to the  Secured  Obligations  in such  order  and  manner  as
Beneficiary shall determine from time to time at its sole discretion.

     Section  5.15.  Resignation  of  Operator.  In  addition  to all rights and
remedies under this Deed of Trust, at law and in equity, if any Event of Default
shall occur and the Trustee or the Beneficiary shall exercise any remedies under
this Deed of Trust with respect to any portion of the Mortgaged Property (or the
Grantor  shall  transfer  any  Mortgaged  Property  "in  lieu  of"  foreclosure)
whereupon  the Grantor is divested  of its title to any of the  Collateral,  the
Beneficiary  shall have the right to request that any operator of any  Mortgaged
Property  which is either the Grantor or any  Affiliate of the Grantor to resign
as operator under the joint operating agreement applicable thereto, and no later
than 60 days after receipt by the Grantor of any such request, the Grantor shall
resign (or cause such other Person to resign) as operator of such Collateral.

     Section 5.16.  Indemnity.  THE INDEMNIFIED  PARTIES SHALL NOT BE LIABLE, IN
CONNECTION  WITH  ANY  ACTION  TAKEN,  FOR ANY  LOSS  SUSTAINED  BY THE  GRANTOR
RESULTING  FROM AN ASSERTION  THAT THE  BENEFICIARY  HAS RECEIVED FUNDS FROM THE
PRODUCTION  OF  HYDROCARBONS  CLAIMED BY THIRD PERSONS OR ANY ACT OR OMISSION OF
ANY INDEMNIFIED PARTY IN ADMINISTERING,  MANAGING,  OPERATING OR CONTROLLING THE
MORTGAGED  PROPERTY  INCLUDING  SUCH LOSS  WHICH MAY  RESULT  FROM THE  ORDINARY
NEGLIGENCE  OF AN  INDEMNIFIED  PARTY  UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED  PARTY SEEKING  INDEMNITY.  NO
INDEMNIFIED  PARTY SHALL BE OBLIGATED TO PERFORM OR  DISCHARGE  ANY  OBLIGATION,
DUTY OR  LIABILITY OF THE  GRANTOR.  THE GRANTOR  SHALL AND DOES HEREBY AGREE TO
INDEMNIFY  EACH  INDEMNIFIED  PARTY  FOR,  AND TO HOLD  EACH  INDEMNIFIED  PARTY
HARMLESS  FROM,  ANY AND ALL  LIABILITY,  LOSS OR  DAMAGE  WHICH MAY OR MIGHT BE
INCURRED  BY ANY  INDEMNIFIED  PARTY  BY  REASON  OF THIS  DEED OF  TRUST OR THE
EXERCISE OF RIGHTS OR REMEDIES  HEREUNDER.  IF ANY INDEMNIFIED  PARTY SHALL MAKE
ANY  EXPENDITURE ON ACCOUNT OF ANY SUCH  LIABILITY,  LOSS OR DAMAGE,  THE AMOUNT
THEREOF,  INCLUDING COSTS,  EXPENSES AND REASONABLE  ATTORNEYS' FEES, SHALL BE A
DEMAND  OBLIGATION  (WHICH  OBLIGATION THE GRANTOR HEREBY EXPRESSLY  PROMISES TO
PAY) OWING BY THE GRANTOR TO SUCH INDEMNIFIED PARTY AND SHALL BEAR INTEREST FROM
THE DATE EXPENDED UNTIL PAID AT THE DEFAULT RATE. THE GRANTOR HEREBY ASSENTS TO,
RATIFIES AND CONFIRMS ANY AND ALL ACTIONS OF EACH INDEMNIFIED PARTY WITH RESPECT
TO THE MORTGAGED  PROPERTY TAKEN UNDER AND IN COMPLIANCE  WITH THE TERMS OF THIS
DEED OF TRUST.  THE LIABILITIES OF THE GRANTOR AS SET FORTH IN THIS SECTION 5.16
SHALL SURVIVE THE TERMINATION OF THIS DEED OF TRUST.

                                       15
<PAGE>
                                   ARTICLE VI
                                  THE TRUSTEE

     Section 6.01. Duties, Rights, and Powers of Trustee. The Trustee shall have
no duty to see to any recording, filing or registration of this Deed of Trust or
any other instrument in addition or supplemental  thereto, or to give any notice
thereof,  or to see to the payment of or be under any duty in respect of any tax
or  assessment or other  governmental  charge which may be levied or assessed on
the Mortgaged  Property,  or any part thereof, or against the Grantor, or to see
to the  performance  or  observance  by the Grantor of any of the  covenants and
agreements  contained  herein.  The  Trustee  shall not be  responsible  for the
execution, acknowledgment or validity of this Deed of Trust or of any instrument
in  addition  or  supplemental  hereto or for the  sufficiency  of the  security
purported to be created hereby,  and makes no  representation in respect thereof
or in respect of the rights of the Beneficiary. The Trustee shall have the right
to advise with counsel  upon any matters  arising  hereunder  and shall be fully
protected in relying as to legal  matters on the advice of counsel.  The Trustee
shall not incur any personal  liability  hereunder  except for the Trustee's own
willful  misconduct;  and  the  Trustee  shall  have  the  right  to rely on any
instrument, document, or signature authorizing or supporting any action taken or
proposed  to be  taken by him  hereunder,  believed  by him in good  faith to be
genuine.

     Section 6.02.  Successor Trustee.  The Trustee may resign by written notice
addressed to the  Beneficiary or be removed at any time with or without cause by
an instrument in writing duly executed on behalf of the Beneficiary.  In case of
the death, resignation,  or removal of the Trustee, a successor may be appointed
by the Beneficiary by instrument of  substitution  complying with any applicable
law, or, in the absence of any such  requirement  under  applicable law, without
formality other than  appointment and designation in writing.  Written notice of
such  appointment  and  designation  shall be given  by the  Beneficiary  to the
Grantor,  but the  validity  of any such  appointment  shall not be  impaired or
affected  by  failure  to  give  such  notice  or by any  defect  therein.  Such
appointment and designation shall be full evidence of the right and authority to
make the same and of all the facts therein recited.  Upon the making of any such
appointment and designation,  this Deed of Trust shall vest in the successor all
the estate and title in and to all of the  Mortgaged  Property and the successor
shall thereupon succeed to all of the rights, powers, privileges, immunities and
duties hereby conferred upon the Trustee named herein,  and one such appointment
and  designation  shall  not  exhaust  the right to  appoint  and  designate  an
additional  successor  but such  right  may be  exercised  repeatedly  until the
Secured  Obligations are Paid in Full. To facilitate the  administration  of the
duties hereunder, the Beneficiary may appoint multiple trustees to serve in such
capacity or in such jurisdictions as the Beneficiary may designate.

     Section  6.03.  Retention  of Moneys.  All moneys  received  by the Trustee
shall,  until  used or  applied  as  herein  provided,  be held in trust for the
purposes for which they were received,  but need not be segregated in any manner
from any other  moneys  (except to the extent  required  by law) and the Trustee
shall  be  under  no  liability  for  interest  on any  moneys  received  by him
hereunder.

                                       16
<PAGE>
                                  ARTICLE VII
                                 MISCELLANEOUS

     Section 7.01.  Instrument  Construed as Mortgage,  Etc. With respect to any
portions of the Mortgaged  Property  located in any State or other  jurisdiction
the laws of which do not provide for the use or  enforcement  of a deed of trust
or the  office,  rights and  authority  of the Trustee as herein  provided,  the
general  language of  conveyance  hereof to the Trustee is intended and the same
shall be construed as words of mortgage unto and in favor of the Beneficiary and
the rights and  authority  granted to the  Trustee  herein may be  enforced  and
asserted by the Beneficiary in accordance  with the laws of the  jurisdiction in
which such  portion of the  Mortgaged  Property  is located  and the same may be
foreclosed  at the option of the  Beneficiary  as to any or all such portions of
the Mortgaged  Property in any manner  permitted by the laws of the jurisdiction
in which such portions of the Mortgaged Property is situated.

     This  Deed  of  Trust  may be  construed  as a  mortgage,  deed  of  trust,
conveyance,  assignment,  security agreement,  fixture filing, pledge, financing
statement, hypothecation or contract, or any one or more of them, in order fully
to effectuate the Lien hereof and the purposes and agreements herein set forth.

     Section 7.02. Releases.

     (a) Full Release. If all Secured Obligations shall be performed and Paid In
Full, the Beneficiary  shall forthwith cause  satisfaction and discharge of this
Deed of Trust to be entered  upon the record at the  expense of the  Grantor and
shall execute and deliver or cause to be executed and delivered such instruments
of satisfaction and reassignment as may be appropriate.  Otherwise, this Deed of
Trust shall remain and continue in full force and effect.

     (b)  Partial  Release.  If any of the  Mortgaged  Property  shall  be sold,
transferred or otherwise  disposed of by the Grantor in a transaction  permitted
by the Purchase and Marketing  Agreement,  then the Beneficiary,  at the request
and sole  expense of the  Grantor,  shall  promptly  execute  and deliver to the
Grantor all releases,  re-conveyances or other documents reasonably necessary or
desirable for the release of the Liens created hereby on the Mortgaged Property.

     Section  7.03.  Severability.   If  any  provision  hereof  is  invalid  or
unenforceable in any  jurisdiction,  the other provisions hereof shall remain in
full force and effect in such  jurisdiction and the remaining  provisions hereof
shall be liberally  construed in favor of the Trustee,  the  Beneficiary and the
Other  Secured  Persons  in order  to  effectuate  the  provisions  hereof.  The
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the  validity or  enforceability  of any such  provision in any other
jurisdiction.

     Section 7.04. Successors and Assigns. The terms used to designate any party
or group of  persons  shall be deemed to include  the  respective  heirs,  legal
representatives, successors and assigns of such Persons.

     Section  7.05.  Subordination.  This  Deed of  Trust  is for  all  purposes
subordinate, junior and subject to the liens, security interests and assignments
created pursuant to the Security Documents (as defined in the Credit Agreement).
Neither the  Beneficiary  nor the Trustee  shall  exercise  any  remedies  under

                                       17
<PAGE>
Article III or Article V of this Deed of Trust without the prior written consent
of Petro Capital.

     Section 7.06.  Application of Payments to Certain Obligations.  If any part
of the Secured  Obligations  cannot be lawfully secured by this Deed of Trust or
if any part of the  Mortgaged  Property  cannot be lawfully  subject to the Lien
hereof to the full extent of the Secured  Obligations,  then all  payments  made
shall be applied on said Secured  Obligations first in discharge of that portion
thereof which is not secured by this Deed of Trust.

     Section 7.07.  Nature of Covenants.  The  covenants and  agreements  herein
contained shall constitute covenants running with the land and interests covered
or affected hereby and shall be binding upon the heirs,  legal  representatives,
successors and assigns of the parties hereto.

     Section 7.08. Notices. All notices,  requests,  consents, demands and other
communications  required or permitted hereunder shall be in writing and shall be
deemed  sufficiently  given or furnished if delivered by registered or certified
United States mail,  postage prepaid,  or by personal service (including express
or courier  service) at the addresses  specified in Section 7.12 (unless changed
by similar notice in writing given by the  particular  party whose address is to
be changed). Any such notice or communication shall be deemed to have been given
either  at the time of  personal  delivery  or, in the case of  delivery  at the
address and in the manner provided herein, upon receipt;  provided that, service
of  notice  as  required  by the  laws of any  state in  which  portions  of the
Mortgaged  Property may be situated shall for all purposes be deemed appropriate
and sufficient with the giving of such notice.

     Section 7.09. Counterparts. This Deed of Trust is being executed in several
counterparts, all of which are identical, except that to facilitate recordation,
if  the  Mortgaged  Property  is  situated  in  or  on  more  than  one  county,
descriptions of only those portions of the Mortgaged  Property  located in or on
the county in which a particular  counterpart  is recorded  shall be attached as
Exhibit A to such counterpart.  Each of such counterparts shall for all purposes
be deemed to be an original and all such counterparts shall together  constitute
but one  and  the  same  instrument.  Complete  copies  of  this  Deed of  Trust
containing the entire Exhibit A have been retained by the Beneficiary.

     Section 7.10.  Governing Law. Insofar as permitted by otherwise  applicable
law, this Deed of Trust shall be construed under and governed by the laws of the
State of Texas;  provided,  however,  that,  with  respect to any portion of the
Mortgaged  Property located outside of the State of Texas, the laws of the place
in which such  property is located in, or offshore  area  adjacent to (and State
law made  applicable as a matter of Federal  law),  shall apply to the extent of
procedural and substantive  matters  relating only to the creation,  perfection,
foreclosure  of Liens  and  enforcement  of  rights  and  remedies  against  the
Mortgaged Property.

     Section 7.11. Financing Statement; Fixture Filing. This Deed of Trust shall
be effective as a financing  statement filed as a fixture filing with respect to
all Fixtures included within the Mortgaged  Property and is to be filed or filed
for record in the real estate  records,  mortgage  records or other  appropriate
records of each jurisdiction where any part of the Mortgaged Property (including
said  fixtures)  are  situated.  This Deed of Trust shall also be effective as a

                                       18
<PAGE>
financing statement covering As-Extracted  Collateral (including oil and gas and
all other  substances  of value  which may be  extracted  from the  ground)  and
accounts  financed at the wellhead or minehead of wells or mines  located on the
properties  subject to the  Applicable  UCC and is to be filed for record in the
real  estate  records,   UCC  records  or  other  appropriate  records  of  each
jurisdiction where any part of the Mortgaged Property is situated.

     Section 7.12. Execution of Financing Statements. Pursuant to the Applicable
UCC, the Grantor authorizes the Beneficiary,  its counsel or its representative,
at any time  and from  time to time,  to file or  record  financing  statements,
continuation  statements,  amendments  thereto  and other  filing  or  recording
documents or  instruments  with respect to the  Mortgaged  Property  without the
signature of the Beneficiary in such form and in such offices as the Beneficiary
reasonably  determines  appropriate  to perfect the  security  interests  of the
Beneficiary  under this Agreement.  The Grantor also authorizes the Beneficiary,
its counsel or its representative, at any time and from time to time, to file or
record such financing statements that describe the collateral covered thereby as
"all assets of the  Beneficiary",  "all personal property of the Beneficiary" or
words of similar  effect.  The Grantor shall pay all costs  associated  with the
filing of such instruments.

     In that regard, the following information is provided:

     Name of Debtor:               Baron Production LLC
     Address of Debtor             300 S. CM Allen Pkwy, Suite 400
                                   San Marcos, Texas 78666

     State of Formation/Location   Texas
     Organizational ID Number      801793395
     Facsimile:                    (512) 392-7238
     Telephone:                    (512) 392-5775

     Principal Place of
     Business of Debtor:           Texas

     Name of Secured Party:        PCEC Sub 1, LLC
     Address of Secured            3710 Rawlins Street
     Party:                        Dallas, Texas 75219
     Facsimile:                    214.661.7760
     Telephone:                    214.661.7761

     Owner of Record of
     Real Property:                Baron Production LLC

     Section  7.13.   Exculpation   Provisions.   EACH  OF  THE  PARTIES  HERETO
SPECIFICALLY  AGREES  THAT IT HAS A DUTY TO READ THIS DEED OF TRUST;  AND AGREES
THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST;
THAT IT HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY  INFORMED  AND HAS FULL
NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST;

                                       19
<PAGE>
THAT  IT HAS  BEEN  REPRESENTED  BY  INDEPENDENT  LEGAL  COUNSEL  OF ITS  CHOICE
THROUGHOUT THE  NEGOTIATIONS  PRECEDING ITS EXECUTION OF THIS DEED OF TRUST; AND
HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND
THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS DEED OF TRUST RESULT IN ONE
PARTY  ASSUMING THE LIABILITY  INHERENT IN SOME ASPECTS OF THE  TRANSACTION  AND
RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY  FOR SUCH LIABILITY.  EACH PARTY
HERETO  AGREES  AND  COVENANTS   THAT  IT  WILL  NOT  CONTEST  THE  VALIDITY  OR
ENFORCEABILITY  OF ANY EXCULPATORY  PROVISION OF THIS DEED OF TRUST ON THE BASIS
THAT  THE  PARTY  HAD NO  NOTICE  OR  KNOWLEDGE  OF SUCH  PROVISION  OR THAT THE
PROVISION IS NOT "CONSPICUOUS".

     Section 7.14.  References.  The words "herein,"  "hereof,"  "hereunder" and
other words of similar import when used in this Deed of Trust refer to this Deed
of Trust as a whole, and not to any particular  article,  section or subsection.
Any  reference  herein to a Section  shall be deemed to refer to the  applicable
Section of this Deed of Trust unless  otherwise  stated  herein.  Any  reference
herein to an  exhibit  or  schedule  shall be deemed to refer to the  applicable
exhibit or schedule attached hereto unless otherwise stated herein.


                          [SIGNATURES BEGIN NEXT PAGE]

                                       20
<PAGE>
     EXECUTED this 28th day of July, 2014, to be effective as of the 28th day of
July, 2014.

                                 BARON PRODUCTION LLC

                                 By:
                                       -----------------------------------------
                                 Name:
                                       -----------------------------------------
                                 Title:
                                       -----------------------------------------

STATE OF TEXAS           ss.
                         ss.
COUNTY OF _______        ss.

     This  instrument  was  acknowledged   before  me  on  July  ___,  2014,  by
_________________________,  the  _________________________  of Baron  Production
LLC, a Texas limited liability company, on behalf of said company.



                                 -----------------------------------
                                 Notary Public

Seal:


                                       21
<PAGE>
                                    EXHIBIT A

                                 DEED OF TRUST,
           ASSIGNMENT OF AS-EXTRACTED COLLATERAL, SECURITY AGREEMENT,
                     FIXTURE FILING AND FINANCING STATEMENT

                                  Introduction

     The  capitalized  terms used but not defined in this  Exhibit A are used as
defined in the Deed of Trust.  For  purposes of this  Exhibit A the  capitalized
terms not defined in the Deed of Trust are as follows:

     1. "Working  Interest" or "Gross  Working  Interest" and "W.I." or "G.W.I."
means an interest  owned in an oil, gas and mineral  lease that  determines  the
cost bearing percentage of the owner of such interest.

     2. "Net Revenue  Interest" or "N.R.I."  means an interest  (expressed  as a
percentage or decimal  fraction),  determined net of all  royalties,  overriding
royalties,  production  payments or other burdens payable out of production,  in
and to all  Hydrocarbons  produced and saved from or  attributable to a Well. In
the case of any Well listed in Exhibit A, the Net Revenue Interest specified for
such Well shall mean the sum of the  percentage  or decimal  fraction  set forth
after the words "Net Revenue  Interest" in the portion  applicable  to such Well
plus,  in the case of any Well with respect to which a royalty  interest  and/or
overriding  royalty is stated in this Exhibit A and applicable to such Well, the
percentage or decimal  fraction set forth after the words "Royalty  Interest" or
"Overriding Royalty Interest" in each such portion of Exhibit A.

     3. "Well" means (i) any existing well  identified  in Exhibit A,  including
replacement  well  drilled in lieu  thereof  from which gas is now or  hereafter
produced and (ii) any well at any time  producing  or capable of  producing  gas
attributable to the Hydrocarbons as defined above,  including any well which has
been shut-in, has temporarily ceased production or on which workover, reworking,
plugging and abandonment or other operations are being conducted or planned.

     All  references  contained in this Exhibit A to the Oil and Gas  Properties
are  intended to include  references  to (i) the volume or book and page,  file,
entry or instrument  number of the appropriate  records of the particular county
in the State where each such lease or other  instrument is recorded and (ii) all
valid and existing  amendments  to such lease or other  instrument  of record in
such  county  records  regardless  of  whether  such  amendments  are  expressly
described  herein. A special  reference is here made to each such lease or other
instrument  and the record  thereof  for a more  particular  description  of the
property  and  interests  sought to be affected by the Deed of Trust and for all
other purposes.

     For recording  purposes,  in regards to each county portion to this Exhibit
A, this Introduction may be attached to an original executed copy of the Deed of
Trust, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing
and Financing Statement to be separately filed of record in each county.

                                       22
<PAGE>
                                 EXHIBIT A
                                (Continued)

EAST PEARSALL (STEWART) PROSPECT

TRACT 1 - 1985 ACRES

Lease 1: Oil and Gas Lease dated August 13, 2009,  from Federal  Royalty LLC, as
General Partner for Federal Royalty  Partners,  Ltd., as Lessor,  to Sien Energy
Company,  as Lessee,  recorded by  Memorandum of Oil and Gas Lease in Volume 66,
page 502,  Official Public  Records,  Frio County,  Texas, as amended,  covering
1,985  acres of land,  more or less,  out of the  A.B.&M.  Survey 5,  A-29,  the
A.B.&M.  Survey 7, A-30, the A.B.&M.  Survey 9, A-31, the R.H. Adcock Survey 10,
A-1341 and the B.S.&F. Survey 1, A-111, Frio County, Texas.

Lease 2: Oil and Gas Lease dated March 26, 2009,  from Cimarron Texas  Minerals,
Ltd., as Lessor,  to Sien Energy Company,  as Lessee,  recorded by Memorandum of
Oil and Gas Lease dated March 31, 2009 in Volume 67, page 831,  Official  Public
Records, Frio County,  Texas, as amended,  covering 1,985 acres of land, more or
less, being the same land described above in Lease 1.

Lease 3: Paid Up Oil and Gas Lease dated March 6, 2009,  from Joseph M.  Dawson,
Jr., as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page
504,  Official Public Records,  Frio County,  Texas, as amended,  covering 1,985
acres of land, more or less, being the same land described in Lease 1.

Lease 4: Paid Up Oil and Gas Lease dated March 6, 2009, from Dorothy D. Burlage,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page 508,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

Lease 5: Paid Up Oil and Gas Lease dated January 16, 2009, from Hager Oil & Gas,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page 512,
Official Public Records,  Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.

Lease 6: Paid Up Oil and Gas Lease dated  September 28, 2009,  from Bill Bishop,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page 528,
Official Public Records,  Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.

Lease 7: Paid Up Oil and Gas Lease dated September 28, 2009, from Robert L. Dow,
Jr., as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page
524, Official Public Records,  Frio County, Texas, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.

                                       23
<PAGE>
Lease 8: Paid Up Oil and Gas Lease  dated  September  28,  2009,  from Wesley K.
Winn, as Lessor, to Sien Energy Company, as Lessee,  recorded in Volume 66, page
517, Official Public Records,  Frio County, Texas, covering 1,985 acres of land,
more or less, being the same land described in Lease 1.

Lease 9: Paid Up Oil and Gas Lease  dated  September  28,  2009,  from  Tolar N.
Hamblen,  III, as Lessor, to Sien Energy Company, as Lessee,  recorded in Volume
67, page 828, Official Public Records,  Frio County, Texas, covering 1,985 acres
of land, more or less, being the same land described in Lease 1.

Lease 10:  Paid Up Oil and Gas Lease  dated  September  28,  2009,  from  Ginger
Busboom,  as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66,
page 521, Official Public Records,  Frio County,  Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

Lease 11: Paid Up Oil and Gas Lease dated August 24, 2009,  from Mark E. McCourt
and wife, Susan McCourt, as Lessor, to Sien Energy Company, as Lessee,  recorded
in Volume 66, page 536, Official Public Records,  Frio County,  Texas,  covering
1,985 acres of land, more or less, being the same land described in Lease 1.

Lease 12: Paid Up Oil and Gas Lease dated August 24, 2009, from A.L. Furnace and
wife, Pauline Furnace, as Lessor, to Sien Energy Company, as Lessee, recorded in
Volume 66, page 532, Official Public Records, Frio County, Texas, covering 1,985
acres of land, more or less, being the same land described in Lease 1.

Lease 13:  Paid Up Oil and Gas Lease  dated  August  10,  2009,  from  Dickerson
Resources,  Arthur J. Milbarger and Joseph E. Stewart, as Lessor, to Sien Energy
Company,  as Lessee,  recorded in Volume 66, page 540,  Official Public Records,
Frio County,  Texas,  covering 1,985 acres of land, more or less, being the same
land described in Lease 1.

Lease 14: Paid Up Oil and Gas Lease dated March 20, 2009,  from Douglas C. Koch,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page 544,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

Lease 15: Paid Up Oil and Gas Lease dated March 20, 2009, from Wayne A. Bissett,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page 550,
Official Public Records, Frio County, Texas, as amended, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

Lease 16: Paid Up Oil and Gas Lease dated  December  3, 2007,  from  Clarence J.
Fraser,  as Lessor,  to Sien Energy Company,  as Lessee,  recorded in Volume 66,
page 556, Official Public Records,  Frio County,  Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

                                       24
<PAGE>
Lease 17:  Paid Up Oil and Gas Lease  dated  August 12,  2009,  from  Dorothy L.
Hardin,  as Lessor,  to Sien Energy Company,  as Lessee,  recorded in Volume 66,
page 559, Official Public Records,  Frio County,  Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

Lease 18: Paid Up Oil and Gas Lease dated August 12, 2009, from Anne L. Madigan,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 66, page 563,
Official Public Records,  Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.

Lease 19:  Paid Up Oil and Gas Lease  dated  September  2,  2009,  from  Jessica
Stansell,  as Lessor, to Sien Energy Company, as Lessee,  recorded in Volume 66,
page 567, Official Public Records,  Frio County,  Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

Lease 20: Paid Up Oil and Gas Lease dated March 24, 2009,  from  Thornton  Davis
Minerals, L.P., as Lessor, to Sien Energy Company, as Lessee, recorded in Volume
66, page 570, Official Public Records,  Frio County, Texas, covering 1,985 acres
of land, more or less, being the same land described in Lease 1.

Lease 21:  Paid-Up  Oil and Gas Lease  dated  September  1, 2009,  from  Stewart
Information Services Corporation,  as Lessor, to Sien Energy Company, as Lessee,
recorded by  Memorandum  of Oil and Gas Lease in Volume 66,  page 574,  Official
Public Records,  Frio County,  Texas, as amended,  covering 1,985 acres of land,
more or less, being the same land described in Lease 1.

Lease 22: Paid-Up Oil and Gas Lease dated September 2, 2009, from Nathan Weaver,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 70, page 249,
Official Public Records,  Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.

Lease 23: Paid-Up Oil and Gas Lease dated  September 2, 2009, from Jesse Walker,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 73, page 621,
Official Public Records,  Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.

Lease 24: Paid-Up Oil and Gas Lease dated March 23, 2011, from Wanda Weaver,  as
Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 91, page 773,
Official Public Records,  Frio County, Texas, covering 1,985 acres of land, more
or less, being the same land described in Lease 1.

Lease 25: Paid Up Oil and Gas Lease dated June 23, 2011,  from Charles  McClain,
as Receiver for Mineral Interests in Cause No.  11-03-00095CVF,  for Nancy Brown
et al., as Lessor, to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 92,
page 996, Official Public Records,  Frio County,  Texas, covering 1,985 acres of
land, more or less, being the same land described in Lease 1.

                                       25
<PAGE>
TRACT 2 - 640 ACRES

Lease 1: Paid Up Oil and Gas Lease dated  November 6, 2009,  from Roxana Kelfer,
Individually  and as Trustee of the Louis A. Michael Trust,  as Lessor,  to Sien
Energy  Company,  as Lessee,  recorded in Volume 68, page 237,  Official  Public
Records,  Frio County,  Texas,  covering 640 acres of land, more or less, out of
the E.A. Mudd Survey 8, A-1333, Frio County, Texas.

Lease 2: Paid Up Oil and Gas Lease dated  November 6, 2009,  from Lynn Kendrick,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 68, page 242,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County,  Texas, being the same
land described in Lease 1.

Lease 3: Paid Up Oil and Gas Lease  dated  November  6, 2009,  from  Caroline J.
Wanke, as Lessor, to Sien Energy Company, as Lessee, recorded in Volume 68, page
247, Official Public Records,  Frio County,  Texas,  covering 640 acres of land,
more or less, out of the E.A. Mudd Survey 8, A-1333,  Frio County,  Texas, being
the same land described in Lease 1.

Lease 4: Paid Up Oil and Gas Lease dated November 6, 2009,  from Diana Morawski,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 68, page 251,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County,  Texas, being the same
land described in Lease 1.

Lease 5: Paid Up Oil and Gas Lease dated  November 6, 2009,  from Claudia Davis,
as Lessor, to Sien Energy Company,  as Lessee,  recorded in Volume 68, page 255,
Official Public Records, Frio County, Texas, covering 640 acres of land, more or
less, out of the E.A. Mudd Survey 8, A-1333, Frio County,  Texas, being the same
land described in Lease 1.

THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING WELLS:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Ricochet - Stewart No. 1 Well                   89.100000%            66.825000%
(API #42-163-33411 / RRC ID #15635)
Ricochet - Stewart No. 2 Well                   89.100000%            66.825000%
(API #42-163-33455 / RRC ID #15635)
Ricochet - Stewart-Michael Unit No. 1 Well      89.100000%            66.907685%
(API #42-163-33535 / RRC ID #16563)
Ricochet - Stewart-Michael No. 2H Unit Well     89.100000%            66.825000%
(API #42-163-33550 / RRC ID #16379)
Ricochet - Stewart No. 4RE Well                 95.466809%            71.600107%
(API #42-163-33585 / RRC ID #17349)

BREAZEALE PROSPECT (NEAL TRUST UNIT)

Lease 1: Paid Up Oil and Gas Lease  dated July 25,  2011,  from Iven A. Neal and
Ruby  Neal,  as  Trustees  of the Iven A. Neal and Ruby Neal  Living  Trust,  as

                                       26
<PAGE>
Lessor, to Ricochet Energy,  Inc., as Lessee,  recorded by Memorandum of Paid Up
Oil and Gas Lease in Volume 95, page 113, Official Public Records,  Frio County,
Texas,  insofar as and only insofar as said lease  covers  148.37 acres of land,
more or less, out of the B.S.&F.  Survey No. 3, A-112, Frio County, Texas, being
the lands  pooled  in the  Ricochet  Energy,  Inc.  - Neal  Trust No. 1H Unit as
described in a Declaration  of Unit dated  October 10, 2012,  recorded in Volume
122, page 855, Official Records, Frio County, Texas.

Lease 2: Paid Up Oil and Gas Lease dated July 25,  2011,  from James P. Neal and
Coleen F.  Neal,  as  Trustees  of the James P. Neal and  Coleen F. Neal  Living
Trust, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by Memorandum of
Paid Up Oil and Gas Lease in Volume 95, page 110, Official Public Records,  Frio
County,  Texas, insofar as and only insofar as said lease covers 148.37 acres of
land, more or less, out of the B.S.&F.  Survey No. 3, A-112, Frio County, Texas,
being the lands pooled in the Ricochet Energy,  Inc. - Neal Trust No. 1H Unit as
described in a Declaration  of Unit dated  October 10, 2012,  recorded in Volume
122, page 855,  Official  Records,  Frio County,  Texas, and being the same land
described in Lease 1.

Lease 3: Oil and Gas Lease dated July 18, 2011, from Providence  Minerals,  LLC,
as Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded by Memorandum of Oil
and Gas Lease in Volume 95, page 116,  Official  Public  Records,  Frio  County,
Texas,  insofar as and only  insofar as said lease  covers  127.9 acres of land,
more or less, out of the B.S.&F.  Survey No. 3, A-112, Frio County, Texas, being
the lands  pooled  in the  Ricochet  Energy,  Inc.  - Neal  Trust No. 1H Unit as
described in a Declaration  of Unit dated  October 10, 2012,  recorded in Volume
122, page 855, Official Records,  Frio County, Texas, and being part of the same
land described in Lease 1.

Lease 4: Oil and Gas Lease dated August 16, 2011, from Texas Osage Royalty Pool,
Inc., as Lessor, to Ricochet Energy, Inc., as Lessee,  recorded by Memorandum of
Oil and Gas Lease in Volume 95, page 819, Official Public Records,  Frio County,
Texas,  insofar as and only  insofar as said lease  covers  127.9 acres of land,
more or less, out of the B.S.&F.  Survey No. 3, A-112, Frio County, Texas, being
the lands  pooled  in the  Ricochet  Energy,  Inc.  - Neal  Trust No. 1H Unit as
described in a Declaration  of Unit dated  October 10, 2012,  recorded in Volume
122, page 855, Official Records,  Frio County, Texas, and being part of the same
land described in Lease 1.

Lease 5: Paid Up Oil and Gas Lease  dated  September  30,  2011,  from Vicki Lee
Gates and Sherri Lynn Tope,  as Lessor,  to Ricochet  Energy,  Inc.,  as Lessee,
recorded  by  Memorandum  of Paid Up Oil and Gas  Lease in Volume  99,  page 37,
Official Public Records, Frio County, Texas, insofar as and only insofar as said
lease covers 65.59 acres of land, more or less, out of the B.S.&F. Survey No. 3,
A-112, Frio County, Texas, being the lands pooled in the Ricochet Energy, Inc. -
Neal Trust No. 1H Unit as described in a  Declaration  of Unit dated October 10,
2012, recorded in Volume 122, page 855, Official Records, Frio County, Texas.

Lease 6: Paid Up Oil and Gas Lease dated  October 14, 2011,  from The Collis and
Lucille  Woodward  Family Trust dated August 29,  1990,  as Lessor,  to Ricochet
Energy, Inc., as Lessee,  recorded by Memorandum of Paid Up Oil and Gas Lease in
Volume 100, page 20, Official Public Records, Frio County, Texas, insofar as and
only insofar as said lease covers 88.02 acres of land,  more or less, out of the
Frio County School Land League No. 1, A-310, Frio County, Texas, being the lands
pooled in the Ricochet  Energy,  Inc. - Neal Trust No. 1H Unit as described in a

                                       27
<PAGE>
Declaration  of Unit dated  October 10, 2012,  recorded in Volume 122, page 855,
Official Records, Frio County, Texas.

Lease 7: Paid Up Oil and Gas Lease dated October 14, 2011, from The Clyde E. and
Valerie V. Woodward Family Trust dated November 12, 1996, as Lessor, to Ricochet
Energy, Inc., as Lessee,  recorded by Memorandum of Paid Up Oil and Gas Lease in
Volume 100, page 18, Official Public Records, Frio County, Texas, insofar as and
only insofar as said lease covers 88.02 acres of land,  more or less, out of the
Frio County School Land League No. 1, A-310, Frio County, Texas, being the lands
pooled in the Ricochet  Energy,  Inc. - Neal Trust No. 1H Unit as described in a
Declaration  of Unit dated  October 10, 2012,  recorded in Volume 122, page 855,
Official Records, Frio County, Texas, and being the same land described in Lease
6.

THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING WELL:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Ricochet - Neal Trust No. 1H Unit Well            100.000%             75.000%
(API #42-163-33643 / RRC ID #17593)

FRIO AUSTIN CHALK PROSPECT

(CULPEPPER AREA)

JANE T. CULPEPPER ET AL., LEASES

Lease 1: Oil and Gas Lease  dated  January 18,  2010,  from Jane  Culpepper,  as
Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 70, page 672,
Official Public Records,  Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 441, Official Public Records, Frio County,
Texas, covering 718 acres of land, more or less, out of the J. E. Roberts Survey
No. 4, A-903,  the L.I.M. & C. Co. Survey No. 112, A-754 and the B.S. & F Survey
No. 3, A-109, Frio County, Texas.

Lease 2: Oil and Gas Lease  dated  January 18,  2010,  from John  Culpepper,  as
Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 70, page 675,
Official Public Records,  Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 444, Official Public Records, Frio County,
Texas,  covering  593 acres of land,  more or less,  being a portion of the same
land described above in Lease 1.

Lease 3: Oil and Gas Lease  dated  January  18,  2010,  from Jim  Culpepper,  as
Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 70, page 678,
Official Public Records,  Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 446, Official Public Records, Frio County,
Texas,  covering  593 acres of land,  more or less,  being a portion of the same
land described above in Lease 1.

Lease 4: Oil and Gas Lease  dated  January 18,  2010,  from Bill  Culpepper,  as
Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 70, page 681,
Official Public Records,  Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 448, Official Public Records, Frio County,

                                       28
<PAGE>
Texas,  covering  593 acres of land,  more or less,  being a portion of the same
land described above in Lease 1.

Lease 5: Oil and Gas Lease dated  January 18,  2010,  from Nancy C.  Flores,  as
Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 70, page 684,
Official Public Records,  Frio County, Texas, as amended by Amendment of Oil and
Gas Lease recorded in Volume 73, page 450, Official Public Records, Frio County,
Texas,  covering  593 acres of land,  more or less,  being a portion of the same
land described above in Lease 1.

THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING WELLS:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Ricochet - Culpepper No. 1H Unit Well             100.000%             80.000%
(API #42-163-33480 / RRC ID #16214)
Ricochet - Culpepper No. 2H Unit Well             100.000%             80.000%
(API #42-163-33494 / RRC ID #16115)

JAMES W. CULPEPPER ET AL., LEASES - (3C LEASES)

Lease 1: Oil and Gas Lease dated  February  3, 2010,  from James  Culpepper  and
wife, Kat Saunders, as Lessor, to Ricochet Energy, Inc., as Lessee,  recorded in
Volume 70, page 765,  Official  Public  Records,  Frio County,  Texas,  covering
657.28 acres of land, more or less, out of the J. E. Roberts Survey No. 2, A-904
and the James Cummings Survey No. 105, A-269, Frio County, Texas.

Lease 2: Oil and Gas Lease dated February 3, 2010, from John Culpepper and wife,
Andrea M. Culpepper, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded in
Volume 70, page 770,  Official  Public  Records,  Frio County,  Texas,  covering
657.28 acres of land, more or less, being the same land described above in Lease
1.

Lease 3: Oil and Gas Lease  dated  February  3,  2010,  from Joe  Culpepper,  as
Lessor,  to Ricochet Energy,  Inc., as Lessee,  recorded in Volume 75, page 590,
Official Public Records, Frio County, Texas, covering 104.14 acres of land, more
or less,  out of the J. E.  Roberts  Survey No. 2, A-904 and the James  Cummings
Survey No. 105,  A-269,  Frio  County,  Texas,  being a portion of the same land
described above in Lease 1.

Lease 4: Oil and Gas Lease  dated  October  31,  2010,  from Tommy J. Muston and
wife,  Deborah A.  Muston,  as Lessor,  to  Ricochet  Energy,  Inc.,  as Lessee,
recorded by  Memorandum  of Oil and Gas Lease in Volume 83,  page 692,  Official
Public Records, Frio County, Texas, covering 224.14 acres of land, more or less,
out of the J. E. Roberts Survey No. 2, A-904 and the J. E. Roberts Survey No. 6,
A-905, Frio County,  Texas,  being a portion of the same land described above in
Lease 1.

THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING WELLS:

                                       29
<PAGE>
          Wells                                      WI                  NRI
          -----                                      --                  ---
Ricochet - 3C No. 1H Unit Well                   100.000%             79.715823%
(API #42-163-33508 / RRC ID #16225)
Ricochet - 3C No. 2H Unit Well                   100.000%             79.715823%
(API #42-163-33563 / RRC ID #16225)

KOTZEBUE LEASE

Oil and Gas Lease  dated  August  26,  2010,  from David W.  Kotzebue  and wife,
Deborah R. Kotzebue, as Lessor, to Ricochet Energy, Inc., as Lessee, recorded by
Memorandum of Oil and Gas Lease in Volume 79, page 752, Official Public Records,
Frio County, Texas,  originally covering 527.33 acres of land, more or less, out
of the J. E. Roberts  Survey No. 4, A-903,  Frio County,  Texas,  insofar as and
only  insofar as said lease  covers 400 acres of land,  more or less,  being the
retained  acreage  allocated to the  Kotzebue  No. 1 Well,  as described in that
certain Partial Release of Oil and Gas Lease and Designation of Well Tract dated
effective January 1, 2014, executed by Ricochet Energy, Inc. et al., recorded in
Volume 150, page 793, Official Public Records, Frio County, Texas.

THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING WELL:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Ricochet - Kotzebue No. 1 Well                    100.000%             75.000%
(API #42-163-33589 / RRC ID #17063)

EXPRESS RE-ENTRY PROSPECTS

CANTU-HENDERSON UNIT

Ricochet Energy,  Inc. -  Cantu-Henderson  No. 1H Unit, being the pooled unit of
495.17 acres out of the J. Poitevent  Survey No. 5, A-559 and the R.M.  Harkness
Survey No. 6, A-890, Frio County, Texas, as more particularly  described in that
certain  Declaration  of Unit dated  September  24,  2010,  executed by Ricochet
Energy,  Inc.,  recorded in Volume 81, page 174,  Official Public Records,  Frio
County, Texas, pooling the acreage covered by the following described leases.

Lease 1: Oil, Gas and Mineral Lease dated  September 17, 2008,  from Herlinda G.
Cantu, as Lessor,  to Express Oil & Gas, as Lessee,  recorded in Volume 57, page
798,  Official  Public  Records,  Frio  County,  Texas,  (and also  recorded  by
Memorandum of Oil and Gas Lease in Volume 57, page 796, Official Public Records,
Frio County, Texas), as amended, covering 177.45 acres, more or less, out of the
J. Poitevent  Survey No. 5, A-559,  Frio County,  Texas, all of the 177.45 acres
covered by said lease, as more particularly described therein, being included in
this unit.

Lease 2: Oil,  Gas and  Mineral  Lease  dated  October 28,  2008,  from  Winfred
Henderson and wife, Alice A. Henderson, as Lessor, to Express Oil & Gas, Co., as

                                       30
<PAGE>
Lessee,  recorded in Volume 60, page 193, Official Public Records,  Frio County,
Texas, covering 317.72 acres, more or less, out of the R. M. Harkness Survey No.
6, A-890 in Frio County,  Texas and A-1014 in LaSalle County,  Texas, all of the
317.72 acres  covered by said lease,  as more  particularly  described  therein,
being included in this unit.

Lease 3:  Oil,  Gas and  Mineral  Lease  dated  October  28,  2008,  from  Jimmy
Henderson,  as Lessor, to Express Oil & Gas, Co., as Lessee,  recorded in Volume
60, page 200,  Official  Public  Records,  Frio County,  Texas,  covering 317.72
acres,  more or less,  out of the R. M.  Harkness  Survey  No. 6,  A-890 in Frio
County,  Texas and  A-1014 in LaSalle  County,  Texas,  all of the 317.72  acres
covered by said lease,  comprising  the same lands  described  above in Lease 2,
being included in this unit.

Lease 4: Oil, Gas and Mineral Lease dated October 28, 2008, from Selfa A. Garza,
joined pro forma by her husband,  Tino Garza,  as Lessor,  to Express Oil & Gas,
Co., as Lessee,  recorded in Volume 60, page 180, Official Public Records,  Frio
County, Texas, as ratified and amended, covering 317.72 acres, more or less, out
of the R. M.  Harkness  Survey No. 6, A-890 in Frio County,  Texas and A-1014 in
LaSalle County, Texas, all of the 317.72 acres covered by said lease, comprising
the same lands described above in Lease 2, being included in this unit.

Lease 5: Oil, Gas and Mineral Lease dated  November 17, 2008,  from Linda Green,
joined pro forma by her  husband,  Ken Green,  as Lessor,  to Express Oil & Gas,
Co., as Lessee,  recorded in Volume 60, page 173, Official Public Records,  Frio
County,  Texas,  covering 317.72 acres,  more or less, out of the R. M. Harkness
Survey No. 6, A-890 in Frio County,  Texas and A-1014 in LaSalle County,  Texas,
all of the  317.72  acres  covered  by said  lease,  comprising  the same  lands
described above in Lease 2, being included in this unit.

Lease 6: Oil, Gas and Mineral Lease dated November 17, 2008,  from Larry Myrick,
as Lessor,  to Express Oil & Gas,  Co.,  as Lessee,  recorded in Volume 60, page
187, Official Public Records, Frio County, Texas, covering 317.72 acres, more or
less,  out of the R. M. Harkness  Survey No. 6, A-890 in Frio County,  Texas and
A-1014 in LaSalle County,  Texas, all of the 317.72 acres covered by said lease,
comprising  the same lands  described  above in Lease 2, being  included in this
unit.

Lease 7: Oil, Gas and Mineral Lease dated July 10, 2009,  from Donna Myrick,  as
Lessor, to Express Oil & Gas, as Lessee,  recorded by Memorandum of Oil, Gas and
Mineral  Lease in Volume 63, page 76,  Official  Public  Records,  Frio  County,
Texas, covering 317.72 acres, more or less, out of the R. M. Harkness Survey No.
6, A-890 in Frio County,  Texas and A-1014 in LaSalle County,  Texas, all of the
317.72 acres covered by said lease, comprising the same lands described above in
Lease 2, being included in this unit.

Lease 8: Oil,  Gas and  Mineral  Lease  dated  November  17,  2008,  from Janice
Hemphill,  as Lessor,  to Express Oil & Gas, Co., as Lessee,  recorded in Volume
63, page 70, Official Public Records, Frio County, Texas, covering 317.72 acres,
more or less,  out of the R. M.  Harkness  Survey No. 6,  A-890 in Frio  County,
Texas and A-1014 in LaSalle  County,  Texas,  all of the 317.72 acres covered by
said lease, comprising the same lands described above in Lease 2, being included
in this unit.

                                       31
<PAGE>
THE LEASES DESCRIBED ABOVE COVER THE FOLLOWING WELL:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Ricochet - Cantu-Henderson No. 1H Unit Well      100.000%             77.042448%
(API #42-163-33426 / RRC ID #12392)

HARRIS LEASE

Oil, Gas and Mineral  Lease dated January 13, 1976,  from William  Donald Harris
and wife, Mary Ann Harris,  as Lessor,  to Charles R.  Stubblefield,  as Lessee,
recorded in Volume 342,  page 485, Deed Records,  Frio County,  Texas,  covering
735.00 acres, more or less, out of the William Webber Survey, A-668 and the G.B.
Pilant Survey,  A-540, Frio County,  Texas,  insofar as and only insofar as said
lease covers 281.4 acres of land, more or less, around the Ricochet Energy, Inc.
- Harris  No. 2 and Harris No. 3 Wells  (but  expressly  excluding  the well and
wellbore  for the  Express Oil & Gas - Harris #4 Well [API #  42-163-32691])  in
Frio County, Texas.

THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING WELLS:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Ricochet - Harris No. 2 Well                       90.000%             67.500%
(API #42-163-32604 / RRC ID #15063)
Ricochet - Harris No. 3 Well                       90.000%             67.500%
(API #42-163-32647 / RRC ID #15063)

W.S. SHAFFER AND W.S. SHAFFER -B- LEASES

Oil, Gas and Mineral Lease dated September 9, 1958, from W.S.  Shaffer and wife,
E.S. Shaffer, as Lessors to J.R. McLean, as Lessee, recorded in Volume 574, page
186, Deed Records, Taylor County, Texas, covering the following tracts:

Tract 1

Being 314.80 acres of land situated in Taylor County, Texas, and being the North
Half of Survey No. 12,  Certificate  No.  17/368,  Block No. 3, S. P. RR Company
Lands,  and being the same land  described  by metes and bounds in a Patent from
the State of Texas to J. L.  Pierce,  dated April 12,  1951,  recorded in Volume
G-2, Page 143, of the Patent Records of Taylor County, Texas.

Tract 2

Being 167.5 acres,  more or less, out of Survey No. 6,  Certificate No. 4508, G.
C. & S. RR Company  Lands in Taylor  County,  Texas being  described as follows,
to-wit:

BEGINNING at the Northwest corner S. F. 15185, W. S. Shaffer Survey No. 1;
THENCE South  15(degree)East  with the West line S.F.  15185,  2,293  varas,  to
fence;

                                       32
<PAGE>
THENCE in a westerly  direction with said fence to an inner corner of said G. C.
& S. RR Company Survey No. 6;
THENCE  North  15(degree)West  with a west  line of  said G. C. & S. RR  Company
Survey No. 6, 2,152.2 varas to the South line of a tract owned by Sayles;
THENCE North 75o 25' East 425.6 varas with a fence to the place of beginning.

THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING WELLS:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Baron - W.S. Shaffer -B- #3                        75.000%             56.250%
(API #42-441-81191 / RRC ID #11127)
Baron - W.S. Shaffer -B- #4                        75.000%             56.250%
(API #42-441-81192 / RRC ID #11127)

W.S. SHAFFER -C- LEASE

Oil, Gas and Mineral Lease dated April 30, 1970,  from M.C.  Shaffer,  et al, as
Lessors to J.D.  Tompkins,  as Lessee,  recorded in Volume 880,  page 501,  Deed
Records,  Taylor County,  Texas,  covering all of the W.S. Shaffer Survey No. 1,
S.F. 15185,  Patented to W.S. Shaffer by the State of Texas on June 11, 1951, by
Patent No. 475, Volume 17-B, and containing 136.55 acres, more or less.

AS THE LEASE DESCRIBED ABOVE COVERS THE FOLLOWING WELL:

          Wells                                      WI                  NRI
          -----                                      --                  ---
Baron - W.S. Shaffer -C- #1                        75.000%             56.250%
(API #42-441-30235 / RRC ID #11495)

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