# E-OCEANENERGY-E-02
NATURAL GAS PURCHASE AND SALE AGREEMENT

Duke
Energy Trading and Marketing, L.L.C., a Delaware limited liability company,
(DETM or Buyer) and Ocean Energy, Inc., a
Louisiana corporation (Ocean or Seller),
referred to collectively as the Parties and individually as
Party, enter into this Natural Gas Purchase and Sale Agreement (this
Agreement) effective as of the 1st day of October
2001 (the Effective Date).

# ARTICLE I
Term and Scope

This
Agreement shall be in effect from the Effective Date through the later of
September 30, 2002, or until terminated by either Party on thirty (30) days
prior written notice, subject however to the earlier termination pursuant to
other specific provisions of this Agreement.

# ARTICLE II
Quantity Obligations and Notice Procedures

The
Parties recognize that the natural gas market is volatile; and, therefore, it is
mutually desirable to arrange transactions verbally and to be bound by such oral
agreements confirmed promptly thereafter in writing. The Parties agree to the
following procedures for confirmations of and changes to the quantities and
points of equivalent value of Oceans Gas to be delivered to the Delivery
Point(s) by Ocean. Any oral confirmation of or change to the quantities and
points of equivalent value of Oceans Gas made by Ocean shall be binding
until superseded by an effective confirmationor change notice. Either
Partys telephones may be monitored by recording equipment to record such
confirmations and changes in quantities and points of equivalent value of
Oceans Gas. The Parties hereby consent to such recordings and any such
recordings shall serve as the best evidence of any oral agreement.

Ocean
shall sell and deliver and DETM shall, as the exclusive buyer, purchase and
receive Oceans owned and controlled gas volumes nominated and delivered by
Ocean to the Delivery Point(s) as defined in Article III below
(Oceans Gas). Each month during the term of this Agreement,
Ocean shall provide to DETM on or before 3:00 p.m. central clock time six (6)
Business Days prior to the first day of the next succeeding month a confirmation
notice, in the form of Exhibit A which shows the daily volumes of
Oceans Gas to be sold and delivered by Ocean and to be purchased and
received by DETM at the Delivery Point(s) during the next succeeding month. Any
nomination changes by Ocean to the quantities of Oceans Gas that will be
delivered by Ocean to the Delivery Point(s) will be made by Ocean per the
following Nomination Deadlines (i) for any gas day commencing
at 9:00 AM on Tuesday through Saturday by 7:00 am of the Business Day prior to
the gas day, and (ii) for gas days commencing at 9:00 am on Sunday and Monday by
7:00 am of the preceding Friday or preceding Business Day if Friday is not a
Business Day. Changes will be confirmed in writing in the form of change notice
which is attached hereto as Exhibit B. Any changes to the quantities
of Oceans Gas to be delivered by it hereunder to a Delivery Point after a
Nomination Deadline is an Intraday Nomination.
Business Day shall mean any day on which the member banks of
the Federal Reserve System in New York City, New York are open for business.

Each
Party shall use reasonable means to identify as far in advance as possible any
scheduled maintenance of facilities producing, delivering or receiving
Oceans Gas to the Delivery Point(s) hereunder and shall notify the other
Party as soon as reasonably practicable of such scheduled maintenance. Should a
Party not so notify the other Party of scheduled maintenance then such scheduled
maintenance will not be an event of Force Majeure hereunder.

# ARTICLE IIIDelivery Point

The
points for Oceans Gas to be delivered by Ocean and received by DETM
hereunder shall be those points specified on Appendix A and those
added to Appendix A by Ocean in a change notice for which the price
for Oceans Gas to be delivered and received there at has been mutually
agreed to by the Parties (DeliveryPoint(s)). Ocean shall
provide 30 days notice prior to the first day of a delivery month of points to
be deleted from Appendix A as a result of property divestitures.

# ARTICLE IVPurchase
Price

Except
as provided in Article X, the purchase price for all Oceans Gas delivered
to the Delivery Point(s) during a month shall be the index price(s) as specified
in Appendix A (Index Price) less the reasonable
and market competitive transportation and fuel charges not to exceed the
transportation and fuel charges actually paid by DETM to move Oceans Gas
from the applicable Delivery Point to the applicable Gas Daily Price Pipeline
Location, plus or minus the applicable adjustment, as specified in Appendix
A. For the purposes of such Appendix A, Gas
Daily Price means the Midpoint price per MMBtu of
gas for a Delivery Point published in Gas Daily, under the Daily Price
Survey (published by the McGraw-Hill Companies, Inc.) for a Delivery Point and
IF Price means the price per MMBtu of gas for a Delivery
Point as published in the first publication of the month of delivery of
Oceans Gas in Inside FERCs Gas Market Report (published by
the McGraw-Hill Companies, Inc.). The prices in Appendix A are based
on the capacity to flow without constraints. Should Gas become constrained, the
Parties shall mutually agree to an alternate price. If the Parties cannot
mutually agree to an alternate price for constrained gas within thirty (30) days
of a notice by Buyer, Buyer shall release the point from this Agreement
effective the 1st day of the subsequent month. If a publication
specified above ceases to exist or does not post an index price representative
of a Delivery Point(s), then the Parties shall mutually agree to an alternative
publication and posting which reflects the market value of Oceans Gas at
such Delivery Point(s). If the Parties fail to agree on an alternative price,
publication and/or posting for a Delivery Point within ten (10) Business Days of
a notice by a Party to the other Party that an Index Price fails to exist then
the new publication and posting will be determined by the one arbitrator
procedure of Article XI.

# ARTICLE V
Force Majeure

Except
with respect to payment obligations due under this Agreement, in the event
either Party is rendered unable, wholly or in part, by Force Majeure to carry
out its obligations hereunder, it is agreed that upon such Partys giving
notice of such Force Majeure to the other Party as soon as reasonably possible
(to be confirmed in writing via facsimile or email with particulars of the event
or occurrence as soon as reasonably possible), the obligations of the Parties,
to the extent they are affected by such event, shall be suspended from the
inception and during the continuance of the Force Majeure for a period of thirty
(30) consecutive days after which time the Party not giving the notice of Force
Majeure may declare a breach of this Agreement and terminate this Agreement with
respect to Oceans Gas which was the subject of the notice of Force Majeure
upon thirty (30) days written notice to the Party which has given notice of
Force Majeure.

Force
Majeure means an unforeseen event, which is not within the reasonable
control of a Party, or in the case of third party obligations or facilities, the
third party, claiming Force Majeure, and which by the exercise of due diligence
such Party, or third party, is unable to overcome. Force Majeure shall not
include: (i) the loss of Buyers markets; (ii) Buyers inability
economically to use or resell Oceans Gas purchased hereunder or (iii)
Sellers ability to sell Oceans Gas to a market at a more
advantageous price. Force Majeure shall include but not be limited
to the following: (i) physical events such as acts of God, landslides,
lightning, earthquakes, fires, storms or storm warnings which result in
evacuation of the affected area, floods, washouts, explosions, breakage or
accident or necessity of repairs to machinery or equipment or lines of pipe
(other than maintenance), weather related events such as hurricanes or freezing
or failure of wells, equipment or lines of pipe which affect an entire
geographic region; (ii) acts of others such as strikes, riots, sabotage,
insurrections or wars; (iii) governmental actions such as necessity for
compliance with any court order, law, statute, ordinance, or regulation
promulgated by a governmental authority having jurisdiction; and (iv) any other
causes, whether of the kind herein enumerated or otherwise not reasonably within
the control of the affected Party to prevent or overcome. Seller and Buyer shall
make reasonable efforts to avoid Force Majeure and to resolve the event or
occurrence once it has occurred in order to resume performance with reasonable
dispatch.

Neither
Party shall be entitled to the benefit of the provisions of Force Majeure under
either or both of the following circumstances: (i) to the extent the failure to
perform was caused by the sole or contributory negligence of the Party claiming
excuse; or (ii) to the extent the failure to perform was caused by the Party
claiming excuse having failed to remedy the condition and to resume the
performance of such covenants or obligations with reasonable dispatch.

Force
Majeure shall not excuse the payment of financial obligations hereunder.

# ARTICLE VITitle,
Risk of Loss, Indemnity and Imbalances

Seller
warrants that title to Oceans Gas is free from all liens and adverse
claims and warrants it will transfer good and merchantable title to all Ocean
Gas sold hereunder to Buyer. As between the Parties, Seller shall be deemed to
be in exclusive control and possession of Oceans Gas delivered hereunder
and responsible for any damage or injury caused thereby or loss thereto prior to
the time the same shall have been delivered to Buyer at the Delivery Point(s).
After delivery of Oceans Gas to Buyer at the Delivery Point(s), Buyer
shall be deemed to be in exclusive control and possession thereof and
responsible for any injury or damage caused thereby or loss thereto. Each Party
assumes all liability for and shall indemnify, defend and hold harmless the
other Party from any claims, including death or injury of persons or damage to
property arising from any act or incident occurring when title to gas is vested
in it. It is the intent of the Parties that this indemnity be without regard to
the causes thereof, including without limitation the negligence of any
indemnified Party, whether such negligence be sole, joint or concurrent, or
active or passive; provided, neither Party shall be liable in respect of any
claim to the extent same resulted from the gross negligence, willful misconduct
or bad faith of the indemnified Party. Title to Oceans Gas delivered
hereunder shall pass from Seller to Buyer at the Delivery Point(s).

Notwithstanding
the other provisions of this Article VI, as between Seller and Buyer, Seller
will be liable for all claims to the extent that such arise from failure of
Oceans Gas delivered by Seller to the Delivery Point(s) to meet the
quality requirements of Article XIII.

The
Parties shall use reasonable efforts to avoid imposition by any transporter of
Oceans Gas of an imbalance charge, expense or penalty relating to
Oceans Gas. Imbalance charges, expenses and penalties (including, but not
limited to, any cash-out costs) imposed by any transporter of Oceans Gas
prior to, at or after the Delivery Point(s) (imbalance charge(s))
will be the responsibility of and will be paid by DETM unless the imbalance
charge(s) were caused by Oceans failure to properly deliver, confirm or
change its quantity of Oceans Gas as provided for hereunder and such
failure causes a Party to incur an imbalance charge to a transporter or other
third party. If an imbalance charge for which Ocean is responsible hereunder
occurs DETM will use commercially reasonable efforts to give Ocean notice
therefore with full details of the occurrence, extent and amount of the
imbalance charge(s).

# ARTICLE VIITaxes

Seller
shall be responsible for and will pay all taxes, transportation charges and
expenses and production related costs attributable to Oceans Gas prior to
its delivery to the Delivery Point(s). Seller shall reimburse Buyer for any such
taxes, transportation charges and expenses and production related costs actually
paid on behalf of Seller by Buyer. Buyer shall be responsible for and will pay
all taxes and transportation charges and expenses related to Oceans Gas at
or after the Delivery Point(s) including, but not limited to, all sales or use,
gross receipts, consumption and franchise taxes. Buyer shall provide Seller with
any applicable certificate or other documentation of sales or use tax exemption;
and Buyer shall be liable for any sales or use tax and associated interest or
penalties assessed against Seller due to Buyers failure to timely provide
or properly complete any such certificate or documentation.

# ARTICLE VIII
Financial Responsibility

If
a Party has reasonable grounds to suspect that the other Partys ability to
meet its obligations hereunder are materially impaired then a Party may require
upon notice to the other Party that such other Party make assurance of the other
Partys ability to perform which may include (i) the required posting of a
letter of credit acceptable to the Party requiring further assurances and the
issuing bank; (ii) cash prepayments; (iii) corporate guarantee or (iv) other
acceptable security.

In
the event a Party shall not make adequate assurances as provided above within
five (5) Business Days of receipt of the notice requiring same then in addition
to any and all other remedies available hereunder or pursuant to law, the other
Party shall have the right upon prior notice to such Party to withhold or
suspend deliveries or receipts of Oceans Gas hereunder or terminate the
Agreement upon thirty (30) days notice to such Party.

# ARTICLE IXBilling
and Payment

Billing
and payment will be based on actual quantities of Oceans Gas delivered to
the Delivery Point(s). Confirmed nominations or best available operating data
for Oceans Gas shall be used if such actual quantities are unavailable to
make payment by the 25th of the month following the month of
deliveries of Oceans Gas. If actual quantities of Oceans Gas are not
used in a monthly billing statement and payment then DETM shall make any
necessary adjustments on the next succeeding monthly statement and payment to
reflect the actual quantities of Oceans Gas delivered in the previous
month. Within ten (10) days of the request of either Party, the other Party
shall provide, to the extent it has a legal right of access thereto and/or such
statement which is then available, a copy of the applicable transporters
allocation or imbalance statement requested by the Party.

Buyer
shall pay Seller in U.S. Dollars the full amount due Ocean for gas deliveries
hereunder by Ocean in a month by wire transfer, Automated Clearinghouse (ACH),
electronic funds transfer or other similarly expeditious means, as provided
below, on or before the twenty-fifth (25th) day of the month
immediately following the delivery month or the first Business Day thereafter if
the 25th is not a Business Day. On the day of such payment Buyer will
forward to Seller a statement showing for the previous month the quantity of
Oceans Gas delivered to each Delivery Point(s) and the price for
Oceans Gas at each Delivery Point, Exhibit C for Intraday Gas,
the volumes of Oceans Gas and/or Oceans PTR or PVR and prices
therefore for which Ocean is obligated hereunder to reimburse DETM, any
adjustments to the quantities of Oceans Gas (including Oceans PTR or
PVR) delivered to DETM provided for herein, any imbalance charges owed by Ocean
pursuant to the terms of this Agreement and the total amount payable to Seller.
In the event Buyer fails to pay the full amount payable by it when due, interest
on the unpaid portion shall accrue from the date due until the date of payment
at a rate equal to the lower of (i) the then effective prime rate of interest
for large U.S. Money Center commercial banks, published under Money
Rates by The Wall Street Journal, plus two percent (2%) per annum
or (ii) the maximum applicable lawful interest rate.

The
Parties agree that each month the accounting personnel of each Party will meet
and review, discuss and resolve any billing, payments and accounting matters,
issues and problems under this Agreement for the previous month and any
outstanding matters, issues and problems unless prior to the twentieth
(20th) day of the month the Parties agree that a meeting is not
necessary for such month. To facilitate resolution of discrepancies, the Parties
agree to provide a coordinator and agree that the management of Buyer and Seller
shall support the process of resolving discrepancies timely.

Each
of the Parties, at its own expense, shall have the right, upon reasonable notice
and at reasonable times during regular business hours, to examine the books and
records of the other Party to the extent reasonably necessary to verify the
accuracy of any statement, payment, demand, charge, or computation made under
this Agreement. Any such audit and any claim based upon errors in any statement
must be made within two (2) years of the date of such statement. Neither Party
shall have the right to perform more than two (2) such audits per calendar year.
Such right to audit shall be available for the term of this Agreement and for
two (2) years after its termination.

In
the event an error is discovered in the amount in any statement rendered
hereunder, which had been settled by the Parties, the Party noticing such error
shall notify the other Party as soon as commercially practical and such error
shall be rectified by payment, or credit, applied to the next invoice.. In the
event a dispute arises as to the amount payable in any statement rendered
hereunder, the disputing Party shall provide written notice to the other Party
indicating the disputed amount and the reason for such dispute. In the event a
difference for volumes of Oceans Gas delivered cannot be reconciled,
payment shall be based upon the delivery volumes specified by the delivering
transporter(s) to the Delivery Point(s). A payment hereunder shall not be deemed
to be a waiver of the right by Buyer to recoup any overpayment, nor shall
acceptance of any payment be deemed to be a waiver by Seller of any underpayment
except as otherwise provided herein.

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|Payment:          | 
|By Wire Transfer: | 
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|Payment:          | 
|By Check:         | 
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|Payment:          | 
|By Wire Transfer: | 
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# ARTICLE X
Damages

For
a breach of this Agreement for which an express remedy or measure of damages is
herein provided, such express remedy or measure of damages shall be the sole and
exclusive remedy hereunder, the obligors liability shall be limited as set
forth herein and all other remedies or damages at law or in equity for any such
breach are waived. If no remedy or measure of damages is expressly herein
provided for a breach of this Agreement, the obligors liability shall be
limited to actual damages only, such actual damages shall be the sole and
exclusive remedy hereunder for any such breach and all other remedies or damages
at law or in equity thereof are waived.

For
a breach of this Agreement involving the failure of Buyer to purchase and
receive Oceans Gas from Seller at the Delivery Point(s)
(Buyers failure) the following liquidated damages will
be the sole remedy Seller will have for such breach. For Buyers failure,
Seller shall be entitled to receive liquidated damages equal to an amount
calculated by multiplying the quantity of Oceans Gas (expressed in MMBtu)
that was required to be purchased and received by Buyer from Seller at the
Delivery Point(s) pursuant to the terms and conditions of this Agreement which
was not actually purchased and received by Buyer from Seller at the Delivery
Point(s) (DETMs Default Gas) times an amount per MMBtu
equal to the positive difference between the price to be paid by Buyer to Seller
hereunder for DETMs Default Gas and the price Seller could have or has
received for selling and delivering DETMs Default Gas to other parties at
the Delivery Point(s).

For
a breach of this Agreement by Seller in failing to deliver or by overdelivering
Oceans Gas to the Delivery Point(s), the following liquidated damages will
be the sole remedy for such breach. If Oceans Gas delivered in a day is
covered by Intraday Nomination(s) then the following provisions shall apply with
respect thereto:

| | 1.
     The increases and decreases in daily volumes of Oceans Gas to be sold that
     are Intraday Nominations under Article II shall be netted against
     each other (Net Amount).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.
If the net amount calculated as provided in 1. above (positive or negative) is greater
than 5,000 MMBtu of gas then the quantity of Ocean's Gas more than 5,000 MMBtu of gas is
"Ocean's Intraday Gas" and the provisions of 3. or 4. immediately below will apply.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.
     If Oceans Intraday Gas is an increase in volumes of Oceans Gas
     delivered by Ocean to the Delivery Point(s) then DETM is owed an amount by Ocean
     which will be shown as a credit to the amount owed by DETM in the statement for
     the month in which Oceans Intraday Gas nomination occurred equal to the
     quantity of Oceans Intraday Gas times the positive difference between the
     posted Midpoint price for Henry Hub in Gas Dailys Daily Price
     Survey for the day that such Oceans Intraday Gas was nominated and the
     lower of (a) the lowest posted price per MMBtu of gas in the range shown under
     Common for Henry Hub in Gas Dailys Daily Price Survey for the day
     of delivery that such Oceans Intraday Gas is nominated or (b) the posted
     price per MMBtu of gas shown under Midpoint for Henry Hub in Gas
     Dailys Daily Price Survey for the day after the day the Ocean Intraday
     Gas is nominated.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. If Oceans Intraday Gas is a decrease in volumes of Oceans Gas delivered by Ocean
to the Delivery Point(s) then DETM is owed an amount by Ocean which will be shown as a
credit to the amount owed Ocean in the statement for the month in which the Oceans
Intraday Gas occurred equal to the quantity of Oceans Intraday Gas times a price
per MMBtu of gas equal to the positive difference between the higher of (a) the highest
posted price per MMBtu of gas in the range shown under Common for Henry Hub in GasDailysDaily
Price Survey for the day of delivery that such Oceans Intraday Gas should have been
delivered or (b) the posted price per MMBtu of gas shown under Midpoint for Henry Hub in
Gas DailysDaily Price Survey for the day after the day the Ocean Intraday
Gas should have been delivered and the posted Midpoint price for Henry Hub in Gas DailysDaily
Price Survey for the day that such Oceans Intraday Gas should have been delivered.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. Any amounts due DETM under numbers 3 and 4 above shall be substantiated in a statement in the
format attached hereto as Exhibit "C".
| | ---------------------------------------------------------------------------------------------------------------------------------------

Both
Parties shall use commercially reasonable efforts to notify the other Party of
any deficiencies in the receipt or delivery of Oceans Gas. The Parties
recognize that each Party may have access to certain information necessary to
confirm deliveries and receipts of Oceans Gas hereunder
(confirming information) and agree to share such confirming
information on a commercially reasonable basis. Therefore, a Party shall not be
considered to be in default of its obligations to deliver or receive
Oceans Gas hereunder until it has received confirming information. A Party
shall have until the end of the third (3rd) Business Day following
the day it received the other Partys notice of deficiency to eliminate the
deficiencies in deliveries or receipts of Oceans Gas. If Oceans Gas
is delivered and received at a Delivery Point(s) where there is an operator
balancing agreement or similar agreement in place, then no default hereunder
shall be deemed to have occurred so long as DETM pays Ocean for all Oceans
Gas delivered pursuant to this Agreement at such Delivery Point(s). For purposes
of this paragraph, a DETM default shall not be deemed to have occurred unless,
and then only to the extent that, Oceans Gas is curtailed and not actually
delivered to the Delivery Point(s).

UNLESS
EXPRESSLY OTHERWISE HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY, INDIRECT OR
PUNITIVE DAMAGES OF ANY CHARACTER, INCLUDING BUT NOT LIMITED TO LOSS OF USE,
LOST PROFITS (PAST AND FUTURE), OR OTHER BUSINESS INTERRUPTION DAMAGES,
IRRESPECTIVE OF WHETHER SUCH DAMAGES (OR CLAIMS OR ACTIONS THEREFOR) ARE BASED
UPON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE

# ARTICLE XI
Arbitration

In
the event the Parties are unable to resolve any dispute regarding this Agreement
and such dispute involves less than U.S. $5,000,000, both Parties agree to
resolve such dispute through the arbitration provisions of this Article XI to be
held in Houston, TX.

Within
twenty (20) Business Days of either Partys written notice to the other
Party to arbitrate a dispute which arises under this Agreement involving less
than U.S. $500,000, the Parties shall agree on one arbitrator to decide any such
dispute. As to disputes involving between U.S. $500,000 and U.S. $5,000,000,
each Party shall choose one arbitrator within twenty (20) Business Days of
either Partys written notice to the other Party to arbitrate, and within
ten (10) Business Days after both such arbitrators are chosen, such arbitrators
shall choose a third arbitrator thus completing the whole arbitration panel. In
the event of a dispute as to whether the applicable amount in dispute is less
than U.S. $500,000, or if the Parties are unable to agree to a single
arbitrator, the arbitration panel shall consist of three arbitrators. Any
arbitrator chosen shall be a disinterested party with knowledge of the industry.

The
arbitrator(s), once chosen, shall consider any documents, tapes or any other
evidence which the arbitrator(s) deem necessary and shall then accept sealed
written resolutions of the subject dispute from each Party on a confidential
basis to be submitted within twenty (20) Business Days of establishment of the
arbitration panel. The written submissions shall be in a form and subject to any
limitations as may be prescribed by the arbitrator(s). The arbitrator(s) shall
then choose one of the proposed solutions, (without modification) as the
fairest solution to the dispute within ten (10) Business Days of receipt of the
written submissions of both Parties. In the event of a three member arbitration
panel, a majority vote shall govern. The decision of the arbitrators shall be
final and nonappealable.

Any
expenses of the arbitrator(s) shall be shared and paid equally between the
Parties. Each Party shall bear and pay its own expenses incurred by each in
connection with the arbitration, unless otherwise included in a solution chosen
by the arbitration panel. In the event either Party must file a court action to
enforce an arbitration award under this Article XI, the prevailing Party shall
be entitled to recover its court costs and reasonable attorney fees.

This
Article XI shall not apply to any disputes involving U.S. $5,000,000 or more,
and each Party retains its respective rights to pursue all legal and equitable
remedies regarding any such disputes. The Parties, however, may consent to
resolve such disputes by the provisions of this Article XI.

# ARTICLE
XIIQuality

Seller
represents that all Oceans Gas shall meet the effective tariff or
published quality specifications of the receiving transporter at the applicable
Delivery Point(s) or in the case of Oceans Gas Processed in a Processing
plant downstream of the Delivery Point(s) the quality specifications of the
receiving transporter at the tailgate of such Processing plant. Buyer shall have
the right not to purchase and receive Oceans Gas that does not meet such
quality specifications. Unless otherwise agreed nothing herein, including an
event of Force Majeure, shall require or permit either Party to schedule
Oceans Gas at a point other than a Delivery Point or in excess of
Oceans nominated quantity of Oceans Gas on such day. If either Party
receives an operational flow order from a transporter requiring action (the
OFO), such Party shall immediately notify the other Party of
the OFO and provide a copy of same by facsimile. Each Party shall take all OFO
actions required by it and shall indemnify, defend and hold harmless the other
Party from any claims related to the OFO under which the indemnifying Party
failed to take the action required thereby.

# ARTICLE
XIIIPressure and Measurement

Ocean
will deliver and DETM will receive Oceans Gas at the Delivery Point(s) at
the pressure prevailing from time to time in the facilities delivering
Oceans Gas thereto. Measurement of Oceans Gas quantities hereunder
shall be in accordance with the effective tariff or published procedures of the
receiving transporter(s) at the Delivery Point(s).

# ARTICLE
XIVProcessing

Seller
reserves the ongoing right from time to time, at its sole cost and expense, to
Process at a Processing plant any of Oceans Gas hereunder upstream and/or
downstream of the Delivery Point(s), provided that Processing does not render
such Processed gas incapable of meeting the quality specification set forth in
Article XII.

For
the purposes of this Agreement Processing or
Process shall mean to separate and/or extract from
Oceans Gas, by whatever method, liquid and liquefiable hydrocarbons and
non-hydrocarbons, including any commercially valuable constituents other than
methane that are entrained in the gas (together with such methane as must be
removed to effect the recovery of the components being extracted) and
PTR shall mean the MMBtu equivalent of the products extracted
from Oceans Gas by a Processing plant, plus the gas used as plant fuel in
the Processing plant to Process such gas and to extract those products, plant
flare and other plant losses in the Processing plant. When expressed as a volume
(in Mcf rather than in MMBtu) PTR shall mean PVR.

Buyer
shall be responsible for and obligated to obtain and maintain during the term of
this Agreement transportation agreements to transport Oceans Gas
(including Oceans PTR and PVR) which Ocean elects from time to time to
Process from the Delivery Point(s) to Processing plant(s) (DETM
transportation agreements). Seller shall reimburse Buyer for the
reasonable and market competitive transportation costs, not to exceed those
actually paid by Buyer, to transport Oceans PTR and PVR from the Delivery
Point(s) to a Processing plant for Processing.

Ocean
and DETM acknowledge DETM is administering PTR obligations of Ocean with Duke
Energy Field Services, LLC at the North Terrebonne Plant on Transco and the Toca
Plant on Southern Natural. The Parties agree that DETM shall be kept
economically whole on transportation and delivered prices to these processing
facilities.

For
Oceans Gas (including Oceans PTR or PVR) to be transported under the
DETM transportation agreements, Ocean, when required, shall separately nominate
in accordance with the provisions of this Agreement the estimated Oceans
PTR or PVR and the residue gas attributable to Oceans Gas after
Processing. At the inlet to a Processing plant(s) where Oceans Gas
(including Oceans PTR or PVR) is delivered by DETM pursuant to the DETM
transportation agreements title and risk of loss of Oceans Gas (including
Oceans PTR or PVR) so delivered is transferred and assigned to Ocean by
DETM. Title and risk of loss to the residue gas attributable to Oceans Gas
and allocated to Ocean by the processor after Processing is transferred and
assigned by Ocean to DETM at the tailgate of the Processing plant.

# ARTICLE
XVEqual Employment Opportunity

The
Equal Employment Opportunity Clause required under Executive Order No. 11246,
the affirmative action commitment for veterans set forth in 41 CFR 60-250.4, the
affirmative action clause for handicapped workers set forth in CFR 650-741.4,
and the related regulations of the Secretary of Labor, 41 CFR Chapter 60, are
incorporated by reference in this Agreement, with which compliance therewith is
certified by each Party to the other Party.

# ARTICLE
XVIEvents Of Default

Event
of Default. Notwithstanding anything herein to the contrary, the occurrence
of any of the following events will constitute an event of default under this
Agreement (an Event of Default) with respect to a Party:

(a)
a failure to pay when due under this Agreement and such failure is not remedied
on or before the fifth Business Day after receipt of notice of such failure;

(b)
a failure to comply with or perform any obligation, other than failure to
deliver or receive Oceans Gas for which a liquidated remedy is provided
herein, and such failure is not remedied within five Business Days after receipt
of notice of such failure;

(c)
a general assignment or arrangement for the benefit of creditors;

(d)
a filing of a petition or otherwise commencing a proceeding under any
bankruptcy, insolvency, reorganization or similar law, or having any such
petition filed or commenced against it;

(e)
becoming insolvent, however evidenced, or unable to pay its debts as they fall due;

(f)
having a liquidator, administrator, receiver, trustee, conservator or similar official
appointed with respect to it or any substantial portion of its property or assets;

(g)
challenging its own legal authority or capacity to enter into natural gas purchase and
sale agreements with other third parties;

(h)
is a Defaulting Party under any ISDA Agreement executed between the Parties;

(i) is
in breach of a representation and warranty of this Agreement and such breach is not
remedied on or before the fifth Business Day after receipt of a notice of such breach.

Upon
the occurrence of an Event of Default, the Party not affected by the event,
(hereinafter referred to as the Non-Defaulting Party) shall
be entitled to exercise the remedies as hereinafter set forth in this Article
XVI.

After
an occurrence of an Event of Default, the Non-Defaulting Party shall have the
right to terminate this Agreement upon five (5) Business Days prior written
notice to the other Party (Early Termination Date) and pursue
all legal remedies available under law.

# ARTICLE
XVIINotices

All
notices, invoices, payments, statements and communications made pursuant to this
Agreement shall be in writing and made as follows:

|                             | 
|---------------------------- | 
|BUYER:                       | 
|                            
|Duke
Energy Trading and      | 
|Marketing,
L.L.C             | 
|5400
Westheimer Court        | 
|Houston,
Texas 77056         | 
|Attention:
Producer Services | 
|Telephone:
713-989-0912      | 
|Facsimile:
713-989-0489      | 

All
notices required pursuant to this Agreement may be sent by facsimile or mutually
acceptable electronic means, a nationally recognized overnight courier service,
first class mail, certified mail-return receipt requested, or hand delivered.

Notice
shall be given when received on a Business Day by the addressee. In the absence
of proof of the actual receipt date, the following presumptions will apply.
Notices sent by facsimile shall be deemed to have been received upon the sending
Partys receipt of its facsimile machines confirmation of successful
transmission, if the day on which such facsimile is received is not a business
day or is after five p.m. (at the receiving Partys place of business) on a
Business Day, then such facsimile shall be deemed to have been received on the
next following Business Day. Notice by overnight mail or courier shall be deemed
to have been received on the next Business Day after it was sent or such earlier
time as is confirmed by the receiving Party. First class mail is deemed
delivered three (3) days after mailing.

# ARTICLE
XVIIIAssignment and Confidentiality

This
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Parties hereto, and the covenants, conditions, rights and
obligations of this Agreement shall run for the full term of this Agreement. No
assignment of this Agreement, in whole or in part, will be made by a Party
except that a Party may make an assignment of this Agreement, in whole or in
part, to a wholly owned affiliate of no less than equal credit standing or to
any other party with the consent of the non-assigning Party which consent will
not be unreasonably withheld. Notwithstanding any of the other provisions of
this Article XVIII or this Agreement to the contrary, if Seller sells any
property specified on Appendix A then effective at the end of the
day on the last day of the month following the closing date of the sale of any
such property by Seller this Agreement will terminate as to such property except
for the provisions hereof which survive termination of this Agreement in
accordance with such provisions. Ocean must give DETM notice of a pending sale
of a property subject to this Agreement at least fifteen (15) days before the
closing date of such a sale of property.

The
terms and conditions of this Agreement including, but not limited to, the price,
the quantity, the term, the identified transporter(s) and all other material
terms hereof shall be kept confidential by the Parties hereto, except to the
extent that any information must be disclosed to a third party for the purpose
of transporting Oceans Gas subject to this Agreement, to respond to an
audit request or to comply with any order, rule, regulation or directive of any
court, legislative body or governmental entity having jurisdiction or to obtain
any financing. As a condition of conducting an audit pursuant to the terms of
this Agreement, the auditing Party acknowledges that the documents and records
provided may contain proprietary or competitively sensitive information, which
the auditing Party shall treat as confidential and not use in competition with
the audited Party.

# ARTICLE
XIXForward Contract

The
Parties agree this Agreement is a forward contract within the meaning of and for
the purposes of the United States Bankruptcy Code, as amended. Further, each
Party represents to the other Party that it is a forward contract merchant as
such term is defined in and for the purposes of the Bankruptcy Code, as amended.
Ocean recognizes DETM is not an end user of Oceans Gas.

# ARTICLE
XXSet Off

Both
Parties hereto acknowledge and agree that upon the designation or deemed
designation of an Early Termination Date under this Agreement the Non-Defaulting
Party may set off (i) all amounts, that are due to the Defaulting Party
hereunder, plus any cash or other form of collateral then available to the
Non-Defaulting Party pursuant to any collateral agreement with the other Party
plus any or all other amounts due to the Defaulting Party under any other
forward contract with the other Party (including, but not limited to, amounts
owed, but not yet paid, for commodities previously delivered in accordance with
the forward contracts) and, to the extent it is permitted by law, any amounts
due to the Defaulting Party pursuant to the ISDA Agreement (and the Exhibits and
Annexes thereto) entered into between the Parties (ISDA) plus
any cash or other form of collateral then available to the Non-Defaulting Party
pursuant thereto, against (ii) all such amounts that are due to the
Non-Defaulting Party by the other Party, plus any cash or other form of
collateral then available to the other Party pursuant to any collateral
agreement agreed to by the Parties plus any or all other amounts due to the
Non-Defaulting Party under any other forward contracts between the Parties
(including, but not limited to, amounts owed, but not yet paid, for commodities
previously delivered and reasonable attorneys fees incurred by the
Non-Defaulting Party) and, to the extent it is permitted by applicable law, any
amounts due to the Non-Defaulting Party pursuant to the ISDA plus any cash or
other form of collateral then available to the Defaulting Party pursuant
thereto, so that all such amounts shall be netted to a single liquidated amount
(the Termination Payment) payable by one Party to the other
Party. The Termination Payment shall be made by the owing Party within five (5)
Business Days after notice requesting such is given. The obligations of the
Parties under this Agreement, any other forward contract executed by the Parties
and the ISDA in respect of such amounts shall be deemed satisfied and discharged
to the extent of any such set off. A Party performing a set off under this
Article XX will give the other Party notice of such set off as soon as
practicable thereafter provided that the failure to give such timely notice
shall not affect the validity of the set off. Notwithstanding any contrary
provision of this Agreement, where an Event of Default specified in sub-sections
(c), (d), (e) or (f) of Article XVI is governed by law which does not permit an
Early Termination Date to be declared on or after such an Event of Default then
termination of this Agreement shall be deemed to have taken place at a time
immediately preceding the occurrence of such Event of Default, and upon the
occurrence of any such automatic termination of this Agreement, the Party
causing the Event of Default shall indemnify the Non-Defaulting Party on demand
against all expense, loss, damage or liability that the Non-Defaulting Party
actually incurs with respect to this Agreement as a consequence thereof.

# ARTICLE
XXIMiscellaneous

There
are no third party beneficiaries to this Agreement and none are intended by the
Parties.

If
any provision of this Agreement is determined to be invalid, void or
unenforceable by any court having jurisdiction, such determination shall not
invalidate, void or make unenforceable any other provision, agreement or
covenant of this Agreement.

No
waiver of any breach of this Agreement shall be held to be a waiver of any other
or subsequent breach.

All
rights, duties and obligations arising under this Agreement shall be exercised
and discharged in good faith and in a commercially reasonable manner.

Each
Appendix and Exhibit referenced herein and attached hereto is made a part of
this Agreement for all purposes. This Agreement sets forth all understandings
between the Parties respecting the subject matter hereof, and any prior
contracts, understandings and representations, whether oral or written, relating
to such matters are merged into and superseded by this Agreement. This Agreement
may be amended only by a writing executed by both Parties.

Each
Party to this Agreement represents and warrants that it has full and complete
authority to enter into and perform this Agreement, including having obtained
any regulatory authority necessary to transact business under this Agreement.
Each person who executes this Agreement on behalf of either Party represents and
warrants that he/she has full and complete authority to do so and that such
Party will be bound thereby.

Compliance
with the confirmation and change in quantities of Oceans Gas procedures of
this Agreement satisfies any writing requirements imposed under the
Uniform Commercial Code or any other applicable contract law.

The
interpretation and performance of this Agreement shall be governed by,
construed, interpreted and enforced in accordance with the substantive laws of
the State of Texas, without reference to its choice of law doctrine. Each Party
agrees to submit to the nonexclusive jurisdiction of the courts of the State of
Texas.

IN
WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals
to be effective as of the day and year first written above.

| | DUKE ENERGY TRADING AND MARKETING, L.L.C.
| | -----------------------------------------

| | By:  
Name:  Peter Ledig
Title: Vice President of Eastern Gas Trading - Physical
| | --------------------------------------------------------------------------------

| | OCEAN ENERGY, INC.
| | ------------------

| | By:  Name:    William L. Transier
Title:   Executive Vice President & Chief Financial Officer
| | ---------------------------------------------------------------------------------------------

---

# Exhibit
BToNatural Gas Purchase and Sale AgreementBy and Between
Duke Energy Trading and Marketing, L.L.C.AndOcean Energy, Inc.Effective
October 1, 2001

[On
Ocean Energy, Inc. Letterhead]

[Date]

Duke Energy
Trading and Marketing, L.L.C. 10777 Westheimer Suite 650 Houston, Texas
77042

ATTN: Contract
Administration

Re:
Change Novice

Dear
Sirs:

Reference
is made to that certain Natural Gas Purchase and Sale Agreement effective
October 1, 2001 (Agreement) by and between Duke Energy
Trading and Marketing, L.L.C. (Buyer) and Ocean Energy, Inc.
(Seller) which is incorporated herein for all purposes by
this reference.

This
letter notifies Buyer that, effective at ___:00 ____ on ____________________,
Seller changes the quantity of Oceans Gas to be delivered by it to the
below described Delivery Point(s) under the Agreement to the following:

|               | 
|-------------- | 
|Delivery Point | 
|              

Sincerely yours,