<PAGE>

                                                                    EXHIBIT 10.1


                        SECURITIES REPURCHASE AGREEMENT

                                by and among the

                           SOUTHERN UTE INDIAN TRIBE

                                      and

                           CONTANGO OIL & GAS COMPANY


                           Dated as of March 28, 2002
<PAGE>

                        SECURITIES REPURCHASE AGREEMENT

     This SECURITIES REPURCHASE AGREEMENT dated as of March 28, 2002 (this
"AGREEMENT"), is entered into by and among the Southern Ute Indian Tribe, a
federally recognized Indian tribe organized under the Indian Reorganization Act
of 1934, doing business as Red Willow Production Company and as the Southern Ute
Indian Tribe Growth Fund ("SELLER") and Contango Oil & Gas Company, a Delaware
corporation ("BUYER") (collectively, the "PARTIES").

                                    RECITALS

     WHEREAS, Seller previously purchased (i) Two Million Five Hundred Thousand
(2,500,000) shares of Buyer's common stock (the "INITIAL SHARES") pursuant to
that certain Securities Purchase Agreement dated as of June 8, 2000, as amended
and modified to the date hereof (the "JUNE 2000 PURCHASE AGREEMENT"), (ii)
Seventy Five Thousand (75,000) shares of Buyer's common stock (the "ADDITIONAL
SHARES", and together with the Initial Shares, the "SHARES") pursuant to a Bill
of Sale - Common Stock dated September 27, 2001, executed by John P. Jurrius in
favor of Seller, and (iii) a warrant to purchase up to One Hundred Twenty Five
Thousand (125,000) shares of Buyer's common stock (the "WARRANT") pursuant to
that certain Securities Purchase Agreement dated as of August 24, 2000, as
amended and modified to the date hereof (the "AUGUST 2000 PURCHASE AGREEMENT");

     WHEREAS, in connection with the June 2000 Purchase Agreement, Seller and
Buyer entered into that certain Participation Agreement, dated June 8, 2000, as
amended and modified to the date hereof (the "PARTICIPATION AGREEMENT"),
pursuant to which Buyer granted to Seller the right to acquire an undivided
eighteen and 75/100ths percent (18.75%) interest in oil and gas exploration and
development prospects and acquisitions of proved oil and gas reserves acquired
by Buyer through Buyer's agreement with Juneau Exploration Company;

     WHEREAS, pursuant to the June 2000 Purchase Agreement, Buyer also granted
to Seller options to purchase up to 17,500 shares of Buyer's common stock (the
"OPTIONS");

     WHEREAS, Seller desires to sell to Buyer, and Buyer desires to repurchase
from Seller, all of Seller's right, title and interest in the Shares, all on the
terms and conditions set forth herein;

     WHEREAS, concurrently with the sale and purchase of the Shares, the Parties
also desire to terminate the Participation Agreement and cancel the Warrant and
the Options;

     NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

                                       1
<PAGE>

                                   ARTICLE I

                     DEFINITIONS AND RULES OF CONSTRUCTION

     Section 1.1  Definitions.  For purposes of this Agreement, including the
Exhibits and Schedules hereto, except as otherwise expressly provided or unless
the context otherwise requires, the terms defined in this Section 1.1 shall have
the meanings herein assigned to them and the capitalized terms defined elsewhere
in this Agreement, by inclusion in quotation marks and parentheses, shall have
the meanings so ascribed to them.

               "Affiliate" with respect to any party, any Person directly or
     indirectly controlling, controlled by, or under common control with such
     party, and any officer, director or executive employee of such party and
     includes any past or present Affiliate of any such Person.

               "August 2000 Purchase Agreement" has the meaning specified in the
     recitals to this Agreement.

               "Business Day" means a day, other than a Saturday, Sunday or
     legal holiday on which commercial banks are authorized or obligated by law
     or executive order to close in the State of Texas.

               "Closing Date" means the date of Closing, or such later date on
     which each condition specified in Article VI has been fulfilled or waiver
     by the Party for whose benefit such condition exists, or such other date as
     the Parties may mutually agree in writing.

               "Governmental Authority" means any federal, state, provincial,
     local, governmental, judicial, public, quasi-public or administrative
     authority or agency.

               "June 2000 Purchase Agreement" has the meaning specified in the
     recitals to this Agreement.

               "Lien" means any mortgage, lien, security interest, pledge,
     encumbrance, restriction on transferability, defect of title, charge or
     claim of any nature whatsoever on any property or property interest.

               "Losses" means any and all losses, liabilities, claims, demands,
     penalties, fines, settlements, damages (excluding consequential, punitive,
     exemplary, special and incidental damages) and any related expenses
     (including, without limitation, legal, accounting, consulting and
     investigation expenses and litigation costs).

               "Options" has the meaning specified in the recitals to this
     Agreement.

               "Participation Agreement" has the meaning specified in the
     recitals to this Agreement.

               "Person" means any individual, sole proprietorship, partnership,
     limited

                                       2
<PAGE>

     liability company, joint venture, trust, unincorporated association,
     corporation, other entity or any Governmental Authority.

               "Shares" has the meaning specified in the recitals to this
     Agreement.

               "Warrant" has the meaning specified in the recitals to this
     Agreement.

               "Other Definitions".  The following terms have the meaning
     ascribed to them in the Sections noted:

                                                     SECTION
                                                     -------
                "Buyer Indemnified Party"            Section 5.1
                "Closing"                            Section 2.1
                "Losses"                             Section 5.1
                "Purchase Price"                     Section 2.2
                "Seller Indemnified Party"           Section 5.2

     Section 1.2 Rules of Construction. For purposes of this Agreement,
including the Schedules hereto, if any

          (a) General. Unless the context otherwise requires, (i) "or" is not
     exclusive; (ii) words in the singular include the plural and words in the
     plural include the singular; (iii) words in the masculine include the
     feminine and words in the feminine include the masculine; (iv) any date
     specified for any action that is not a Business Day shall be deemed to mean
     the first Business Day after such date; and (v) a reference to a Person
     includes its successors and assigns.

          (b) Articles and Sections. References to Articles and Sections are,
     unless otherwise specified, to Articles and Sections of this Agreement.
     Neither the captions to Articles or Sections hereof shall be deemed to be a
     part of this Agreement.

          (c) Other Agreements. References herein to any agreement or other
     instrument shall, unless the context otherwise requires (or the definition
     thereof otherwise specifies), be deemed references to the same as it may
     from time to time be changed, amended or extended. There is no
     incorporation by reference unless expressly stated.

                                  ARTICLE II
                    CLOSING; REPURCHASE AND SALE OF SHARES;
                    TERMINATION OF PARTICIPATION AGREEMENT;
                      CANCELLATION OF WARRANT AND OPTIONS

     Section 2.1 Closing. The transactions that are the subject of this
Agreement shall be consummated at the office of Buyer in Houston, Texas as soon
as possible but no later

                                       3
<PAGE>

than March 29, 2002 or such other date as the parties may designate from time to
time (the "CLOSING").

     Section 2.2 Repurchase and Sale of the Shares. On the terms and subject to
the conditions set forth herein, and in reliance upon the representations,
warranties, obligations and agreements set forth herein, at the Closing, (i)
Buyer shall deliver cash in the amount of Six Million One Hundred Eighty
Thousand Dollars ($6,180,000) to Seller (the "PURCHASE PRICE"), and (ii) Seller
shall sell, transfer and deliver to Buyer the Shares, free and clear of all
Liens created by Seller, terminate the Participation Agreement in accordance
with Section 2.7 hereof, and cancel the Warrant and the Options, in accordance
with Section 2.6 hereof.

     Section 2.3 Transfer of the Shares. At the Closing, Seller shall deliver to
Buyer those stock certificates representing the Shares, duly endorsed in blank.

     Section 2.4 Method of Payment. Any amount payable under this Agreement
shall be payable in immediately available funds by means of a wire transfer, if
to Seller, to the account of Seller, Bank One, Colorado, ABA #102001017, for
Account No. 485297376, in the name of Southern Ute Indian Tribe, for further
credit to Southern Ute Growth Fund, or to such other account number and
depository as Seller may by written notice direct.

     Section 2.5  Fees and Stamp and other Transfer Taxes.  Seller shall pay all
sales, documentary, stamp and other transfer taxes, if any, payable as a result
of the sale and transfer of the Shares and the Warrant, or payable as the result
of any other action contemplated by this Agreement.

    Section 2.6 Cancellation of Warrant and Options. As of the Closing Date, the
Parties agree that the Warrant and Options shall be, and hereby are, cancelled,
and shall have no further force or effect. At the Closing, Seller shall deliver
to Buyer the original Warrant for cancellation.

     Section 2.7 Termination of Participation Agreement. As of the Closing Date,
the Parties agree that notwithstanding the terms of Section 15.1 of the
Participation Agreement, the Participation Agreement shall be, and hereby is,
terminated, and shall have no further force or effect.

     Section 2.8  Further Assurances.  From time to time after the Closing, and
without further consideration, the Parties shall execute such further documents
and perform such further acts as may be necessary to transfer and convey the
Shares on the terms contained herein, and to otherwise comply with the terms of
this Agreement and consummate the transactions contemplated hereby.

     Section 2.9 Failure to Close. If the Closing does not occur on or before
the scheduled closing date as set forth in Section 2.1 hereof, either party may
terminate this Agreement by giving written notice to the other party.
Thereafter, neither party shall have any further obligations to the other
hereunder, other than any obligations and liabilities arising prior to such
termination and those obligations that by their terms survive the termination of
this Agreement.

                                       4
<PAGE>

                                  ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents, warrants and covenants to Buyer that:

     Section 3.1  Organization.  Seller is a federally recognized Indian tribe
organized under the Indian Reorganization Act of 1934.  Seller has the power and
authority to own its properties and to carry on its business as now conducted
and to enter into and to carry out the terms of this Agreement.

     Section 3.2 Authorization. Seller has the requisite power and authority, to
execute, deliver and perform its obligations under this Agreement. The
execution, delivery and performance by Seller of this Agreement has been duly
authorized by all necessary action of Seller, and no other act or proceeding on
the part of Seller or its members is necessary to authorize the execution,
delivery or performance by Seller of this Agreement.

     Section 3.3 Validity of Agreement. This Agreement constitutes the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except as enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally, and (ii) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).

     Section 3.4  Consents and Approvals.  To the best of Seller's knowledge, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Person is required to be made or obtained by Seller in
connection with the authorization, execution, delivery and performance by Seller
of this Agreement and the transactions contemplated hereby.

     Section 3.5 No Violation. The execution, delivery and performance by Seller
of this Agreement and the consummation of the transactions contemplated herein
(a) will not result in the breach of any of the terms or conditions of, or
constitute a default under, or in any manner release any party thereto from any
obligation under, any mortgage, note, bond, indenture, contract, agreement,
license or other instrument or obligation of any kind or nature by which Seller
may be bound or affected; (b) to the best of Seller's knowledge will not violate
any law, order, writ, injunction, rule, regulation, statute or decree of any
court, administrative agency, or Governmental Authority; (c) will not result in
the creation or imposition of any Liens upon the Shares, the Warrant or the
Options; or (d) will not violate any provision of the organizational documents
of Seller.

     Section 3.6 Absence of Liabilities. As of the Closing Date, Seller will
have no indebtedness, liability or obligation of any kind, whether known or
unknown, accrued, absolute, asserted or unasserted, contingent or otherwise with
respect to the Shares, the Warrant or the Options.

     Section 3.7  Ownership of Shares, Warrant and Options.  Seller is the sole
beneficial holder of the Shares, the Warrant and the Options and has good and
marketable title to the Shares, the Warrant and the Options, free and clear of
any and all covenants,

                                       5
<PAGE>

conditions, restrictions, liens and claims (other than restrictions under the
Securities Act of 1933, as amended, and state securities laws). Seller has not
heretofore exercised any of the Options nor has it exercised the Warrant.

     Section 3.8 Access to Information Regarding Buyer. Seller is closely
familiar with the business affairs and financial condition of Buyer. Seller has
had the opportunity to meet with the officers and directors of Buyer throughout
the period of time since its initial acquisition of the Shares, the Warrant and
the Options, to learn about the business affairs and financial condition of
Buyer and to access fully Buyer's books and records. Seller has received all
information that it has requested from Buyer regarding Buyer, Buyer's assets,
financial condition, results of operations, business and its prospects, and has
had an opportunity to discuss the foregoing with Buyer's management and to ask
questions of the officers of Buyer.

     Section 3.9 Acknowledgment and Waiver Regarding Certain Information;
Knowledge and Experience. Seller hereby acknowledges that: (i) Buyer, its
officers, directors, employees or affiliates may be in possession of material,
nonpublic information regarding Buyer, its financial condition, results of
operations, businesses, properties, assets, liabilities, management,
projections, appraisals, plans and prospects, as well as information regarding
the claims of creditors of Buyer; and (ii) if Seller were in possession of some
or all of such information Seller might not sell any or all of the Shares, agree
to cancel the Warrant and the Options or agree to terminate the Participation
Agreement pursuant to this Agreement. Seller also agrees to waive any right to
the information referred to in the preceding sentence. Seller further
acknowledges that it has conducted its own investigation, to the extent that
Seller has determined necessary or desirable, regarding the information
described in the first sentence of this Section 3.9. Seller further represents
and warrants that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of selling the
securities.

                                  ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby represents, warrants and covenants to Seller that:

     Section 4.1 Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

     Section 4.2 Authorization. The execution and delivery of this Agreement,
the performance by Buyer of its obligations hereunder and the consummation by
Buyer of the transactions contemplated hereby have been duly authorized by all
necessary organizational action and no other act or proceeding on the part of
Buyer is necessary. Buyer has full power and authority to enter into, execute
and deliver this Agreement and to perform its obligations hereunder.

     Section 4.3 No Violation. The execution, delivery and performance by Buyer
of this Agreement and the consummation of the transactions contemplated herein
do not and will not: (a) result in the breach of any of the terms or conditions
of, or constitute a default under, or in any manner release any party thereto
from any obligation under, any

                                       6
<PAGE>

mortgage, note, bond, indenture, contract, agreement, license or other
instrument or obligation of any kind or nature by which Buyer may be bound or
affected; (b) violate any law, order, writ, injunction, rule, regulation,
statute or decree of any court, administrative agency, or Governmental
Authority; or (c) violate any provision of the Certificate of Incorporation or
by-laws of Buyer.

     Section 4.4 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any Person is required to be
made or obtained by Buyer in connection with the execution and delivery of this
Agreement by Buyer, the performance by Buyer of its obligations hereunder, and
the consummation by it of the transactions contemplated hereby.

                                   ARTICLE V

                                INDEMNIFICATION

     Section 5.1 Indemnification by Seller. If the Closing occurs, Seller hereby
agrees to indemnify, defend and save Buyer and its officers, directors,
employees, agents and Affiliates (all or each, a "BUYER INDEMNIFIED PARTY")
harmless from and against (a) any and all liabilities (whether contingent, fixed
or unfixed, liquidated or unliquidated, or otherwise), obligations,
deficiencies, demands, claims, suits, actions, or causes of action, assessments,
losses, costs, expenses, interest, fines, penalties, and damages (including
reasonable fees and expenses of attorneys, accountants and other experts)
(individually and collectively, the "LOSSES") suffered, sustained or incurred by
any Buyer Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of any misrepresentation or breach of the representations or
warranties of Seller contained in this Agreement or in any exhibit or schedule
hereto; (b) the failure of Seller to perform any of its covenants or obligations
contained in this Agreement; and (c) the liabilities and obligations relating to
or arising out of the ownership of the Shares, the Warrant or the Options and
attributable to any act, omission, occurrence or event occurring prior to
Closing.

     Section 5.2 Indemnification by Buyer. If the Closing occurs, Buyer agrees
to indemnify, defend and save Seller and its Affiliates, and their respective
officers, directors, employees and agents (each, a "SELLER INDEMNIFIED PARTY")
forever harmless from and against any and all Losses sustained or incurred by
any Seller Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of: (a) any misrepresentation in or breach of the
representations and warranties of Buyer contained in this Agreement or in any
schedule or exhibit hereto; (b) the failure of Buyer to perform any of its
covenants or obligations contained in this Agreement or in any exhibit or
schedule hereto; and (c) the liabilities and obligations relating to or arising
out of ownership of the Shares or the cancellation of the Warrant and the
Options and attributable to any act, omission, occurrence or event occurring
after Closing.

     Section 5.3  Indemnification Procedure. Any party seeking indemnification
pursuant to this Article V shall promptly provide written notice of any claim to
the party from which it seeks indemnification within a reasonable period of
time.  The indemnifying person, if it so elects, shall assume and control the
defense thereof (and shall consult with the indemnified person with respect
thereto), including the employment of counsel reasonably satisfactory to the
indemnified person within ten (10) Business Days after

                                       7
<PAGE>

receipt of the notice with respect thereto, and the payment of all necessary
expenses; provided that as a condition precedent to the indemnifying person's
right to assume control of such defense, it must first enter into an agreement
with the indemnified person (in form and substance reasonably satisfactory to
the indemnified person) pursuant to which the indemnifying person agrees to be
fully responsible for all losses relating to such claim and unconditionally
guarantees the payment and performance of any liability or obligation which may
arise with respect to such claim or the facts giving rise to such claim for
indemnification; provided further that the indemnifying person shall not have
the right to assume control of such defense if the claim which the indemnifying
person seeks to assume control of (i) seeks non-monetary relief or (ii) involves
criminal or quasi-criminal allegations; and provided further that (i) the
indemnifying person shall not consent to the imposition of any injunction
against the indemnified person without the written consent of the indemnified
person, (ii) the indemnifying person shall permit the indemnified person to
participate in such conduct or settlement through counsel chosen by the
indemnified person, but the fees and expenses of such counsel shall be borne by
the indemnified person (except as provided below), and (iii) upon a final
determination of such action, suit or proceeding, the indemnifying person shall
promptly reimburse to the full extent required under this Article V the
indemnified person for the full amount of any Loss resulting from such action,
suit or proceeding and all reasonable and related expenses incurred by the
indemnified person, other than fees and expenses of counsel for the indemnified
person incurred after the assumption of the conduct and control of such action,
suit or proceeding by the indemnifying person (except as provided below). If the
indemnifying person is permitted to assume and control the defense and elects to
do so, the indemnified person shall have the right to employ counsel separate
from counsel employed by the indemnifying person in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the indemnified person shall be at the expense of the indemnified
person unless (i) the employment thereof has been specifically authorized by the
indemnifying person in writing, (ii) the indemnifying person has been advised by
counsel that a reasonable likelihood exists of a conflict of interest between
the indemnifying person and the indemnified person, (iii) the indemnifying
person has failed to assume the defense and employ counsel; or (iv) the
indemnified person has reasonably determined that an adverse outcome could have
a material adverse effect on its business reputation or could reasonably be
expected to have a materially adverse precedential effect; in which case the
fees and expenses of the indemnified person's counsel shall be paid by the
indemnifying person. In the event the indemnifying person fails to elect to
defend such claim in accordance with the foregoing, then the indemnified person
may elect, but shall not be required, to defend against or settle such claim as
it sees fit, provided that any settlement of such claim shall require the
consent of the indemnifying person, which consent shall not be unreasonably
withheld.

     Section 5.4 Failure to Give Timely Notice. A failure by an indemnified
person to give timely, complete or accurate notice as provided in Section 5.3
will not affect the rights or obligations of any party hereunder except and only
to the extent that such failure results in actual prejudice to the indemnifying
person.

                                       8
<PAGE>

                                  ARTICLE VI

                               CLOSING CONDITIONS

     Section 6.1  Buyer's Conditions to Closing.  Subject to Section 7.6, the
obligation of Buyer to proceed with the Closing contemplated hereby is subject
to the satisfaction on or prior to the Closing of all of the following
conditions:

          (a) Representations and Warranties. The representations and warranties
     of Seller contained in Article III of this Agreement shall be true and
     correct in all material respects.

          (b) Board Approval. Buyer shall have received authorization to acquire
     the Shares, to terminate the Participation Agreement, and to cancel the
     Warrant and the Options from its Board of Directors.

          (c) Compliance with Agreement. At Closing, Seller shall have performed
     and complied with all agreements and conditions required by this Agreement
     to be performed and complied with by it prior to or on the date scheduled
     for Closing.

          (d) No Obstructive Proceedings. As of the Closing, there shall be no
     suit, action or other proceeding, or injunction, writ, final judgment or
     preliminary restraining order or any order of any nature issued by a court
     or Governmental Authority of competent jurisdiction directing that the
     transactions provided for herein or any of them not be consummated as
     herein provided and no proceeding or lawsuits shall have been commenced or
     threatened by any Governmental Authority or other person with respect to
     any of the transactions contemplated by this Agreement.

          (e) Approvals and Consents. Buyer shall be reasonably satisfied that
     all approvals and consents necessary for the consummation of the
     transactions contemplated by this Agreement shall have been obtained,
     including, without limitation, (i) the consent of the holders of Buyer's
     Series A Senior Convertible Cumulative Preferred Stock and Series B Senior
     Convertible Cumulative Preferred Stock with respect to Buyer's repurchase
     of the Shares from Seller, and (ii) the consent of Guaranty Bank, FSB,
     Buyer's senior lender, with respect to the Credit Agreement dated June 29,
     2001, between Buyer and Guaranty Bank, FSB.

     Section 6.2  Seller's Conditions to Closing.  Subject to Section 7.6, the
obligation of Seller to proceed with the Closing contemplated hereby is subject
to the satisfaction on or prior to the Closing of all of the following
conditions:

          (a) Representations and Warranties. The representations and warranties
     of Buyer contained in Article IV of this Agreement shall be true and
     correct in all material respects.

          (b) Compliance with Agreement. At Closing, Buyer shall have performed
     and complied with all agreements and conditions required by this Agreement
     to be performed and complied with by it prior to or on the date scheduled
     for Closing.

                                       9
<PAGE>

                                  ARTICLE VII

                                 MISCELLANEOUS

     Section 7.1 Notices. All notices, reports, records or other communications
that are required or permitted to be given to the Parties under this Agreement
shall be sufficient in all respects if given in writing and delivered in person,
by telecopy, by overnight courier or by registered or certified mail, postage
prepaid, return receipt requested, to the receiving party at the following
address:

     If to Seller:       Southern Ute Indian Tribe, doing business as Red Willow
                         Production Company
                         2577 Main Avenue
                         Durango, CO  81301
                         Attention: Robert J. Zahradnik
                         Telecopier: 970.375.2216
                         Phone: 970.375.2199

     If to Buyer:        Contango Oil & Gas Company
                         3700 Buffalo Speedway, Suite 960
                         Houston, TX  77098
                         Attention:  Kenneth R. Peak
                         Telecopier: 713.960.1065
                         Phone: 713.960.1901

or such other address as such party may have given to the other party by notice
pursuant to this Section 7.1.  Notice shall be deemed given on (i) the date such
notice is personally delivered, (ii) three (3) days after the mailing if sent by
Certified or Registered Mail, (iii) one (1) day after the date of delivery to
the overnight courier if sent by overnight courier, or (iv) the next succeeding
day after transmission by facsimile.

     Section 7.2  Entire Agreement.  The Schedules and Exhibits attached to this
Agreement shall be deemed to be an integral part of this Agreement.  This
Agreement, including the Schedules and Exhibits, set forth the entire
understanding of the Parties with respect to the subject matter hereof and may
be modified only by instruments signed by both of the Parties hereto.

     Section 7.3  Counterparts.  This Agreement may be executed via facsimile in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

     Section 7.4 Third Parties. Nothing in this Agreement, express or implied,
is intended to confer any right or remedy under or by reason of this Agreement
on any Person other than the Parties hereto and their respective heirs,
representatives, successors and assigns, nor is anything set forth herein
intended to affect or discharge the obligation or liability of any third persons
to any party to this Agreement, nor shall any provision give any third party any
right of subrogation or action over against any party to this Agreement.

                                       10
<PAGE>

     Section 7.5 Expenses. Each of the Parties shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this Agreement and
in closing and carrying out the transactions contemplated by hereunder,
including, without limitation, legal and accounting fees and expenses.

     Section 7.6 Waiver. No failure of any party to exercise any right or remedy
given such party under this Agreement or otherwise available to such party or to
insist upon strict compliance by any other party with its obligations hereunder,
and no custom or practice of the Parties in variance with the terms hereof,
shall constitute a waiver of any party's right to demand exact compliance with
the terms hereof, unless such waiver is set forth in writing and executed by
such party.

     Section 7.7 Survival. All representations, warranties, indemnifications and
rights to set off of the Parties hereto contained in or arising out of this
Agreement or otherwise in connection herewith shall survive the Closing
hereunder and shall continue in effect until the expiration of all applicable
statute of limitations (including any extensions of said statute). Unless a
specified period is set forth in this Agreement (in which event such specified
period will control), all covenants contained in this Agreement will survive the
Closing and remain in effect indefinitely.

     Section 7.8 Governing Law; Jurisdiction. This Agreement shall be construed
and governed in accordance with the laws of the State of Texas without regard to
the principles of conflicting laws. Any action to enforce, or which arises out
of or relates in any way to, any of the provisions of this Agreement shall be
brought and prosecuted solely in the Texas state courts or the Federal district
courts located in Harris County, Texas.

     Section 7.9  Assignment.  No party may assign its rights or delegate its
obligations hereunder without the consent of the other party.  Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective heirs, successors and assigns.

     Section 7.10 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner to
any party. Upon any binding determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible and in an acceptable manner, to the end that the
transaction hereby may be contemplated to the extent possible.

     Section 7.11 Headings. The subject headings of paragraphs and subparagraphs
of this Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.

                                       11
<PAGE>

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

                              SELLER:

                              SOUTHERN UTE INDIAN TRIBE,
                              DOING BUSINESS AS RED WILLOW PRODUCTION COMPANY
                              AND AS SOUTHERN UTE INDIAN TRIBE GROWTH FUND


                              By:  /s/  ROBERT SANTISTEVAN
                                   --------------------------------------------
                              Name:  Robert Santistevan
                              Title: Executive Director, Southern Ute Indian
                                     Tribe Growth Fund


                              BUYER:

                              CONTANGO OIL & GAS COMPANY,
                              A DELAWARE CORPORATION


                              By:  /s/  KENNETH R. PEAK
                                   --------------------------------------------
                                   Kenneth R. Peak
                                   President and Chief Executive Officer

                                       12