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                                                                    Exhibit 10.7

                            MASTER OFFSET AGREEMENT

       This Master Offset Agreement (this "Agreement") is entered into and shall
be effective as of January 31, 2001 among IP PETROLEUM COMPANY, INC., a Delaware
corporation, and SOUTHLAND ENERGY COMPANY, a Texas corporation (collectively,
the "Limited Partners"), THE BRANIGAR ORGANIZATION, INC., an Illinois
corporation, and PURE PARTNERS, L.P. ("Pure Partners"), a Delaware limited
partnership.

       Reference is made to the Amended and Restated Agreement of Limited
Partnership of Pure Partners, dated January 31, 2001, between the Limited
Partners, International Paper Realty Corporation, Transtates Properties
Incorporated, PK I, L.P., PK II, L.P., PK III, L.P., PK IV, L.P., all as limited
partners, and Pure Resources I, Inc., as general partner (the "LP Agreement")
and the other Operative Documents.  Capitalized terms used herein and not
defined herein shall have the meanings given such terms in the LP Agreement.

       In consideration of the mutual promises, covenants and agreements set
forth in the LP Agreement, the parties hereto hereby agree as follows:

   1.  Distributions for Claims. In connection with any Redemption of the
       Limited Partners' Partnership Interests by Pure Partners, a Liquidation
       of Pure Partners or the maturity of other amounts due and payable from
       Pure Partners under the LP Agreement with respect to such Redemption or
       Liquidation (any such amount due from Pure Partners to a Limited Partner
       under the LP Agreement being sometimes hereinafter referred to as
       "Limited Partner Receivables"), Pure Partners shall have the legally
       enforceable right to require the Limited Partner holding such Limited
       Partner Receivables to relinquish its claim against Pure Partners with
       respect to such Limited Partner Receivables by (i) distributing or
       transferring to such Limited Partner all or a portion of the BOI Note (or
       any obligation arising therefrom) or its right to other amounts due from
       the Limited Partner (such BOI Note and other amounts due from the Limited
       Partner to Pure Partners being sometimes hereinafter referred to as
       "Limited Partner Payables"), and (ii) to the extent required by the LP
       Agreement, tendering a payment to such Limited Partner equal to the
       amount by which the contractual balance due on such Limited Partner
       Receivables exceeds the contractual balance due on such Limited Partner
       Payables.

   2.  Rights of Holders of Limited Partner Receivables. Upon the maturity of
       any Limited Partner Payables, a Limited Partner holding Limited Partner
       Receivables shall have the legally enforceable right to require Pure
       Partners to relinquish its claim with respect to any such Limited Partner
       Payables by requiring or causing (i) satisfaction by offset of its
       Limited Partner Receivables against such Limited Partner Payables to the
       extent that the contractual balance due on such Limited Partner Payables
       does not exceed the contractual balance due on such Limited Partner
       Receivables, and (ii) the obligor under such Limited Partner Payables to
       tender to Pure Partners a payment equal to the amount by which the
       contractual balance due on such Limited Partner Payables exceeds the
       contractual balance due on such Limited Partner Receivables. In the event
       that the amounts due from Pure

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       Partners on the Limited Partner Receivables satisfied in accordance
       herewith exceed amounts due to Pure Partners on the Limited Partner
       Payables distributed or transferred in accordance herewith, Pure Partners
       shall be required, to the extent required by the LP Agreement, to make a
       payment to the Limited Partner in the amount of such difference.

   3.  Valuation of Limited Partner Receivables and Limited Partner Payables.
       For purposes hereof, the contractual balance due on any Limited Partner
       Payables or Limited Partner Receivables shall be determined based on the
       governing documents and shall equal the value thereof at any time the
       contractual balance must be determined prior to the maturity of any such
       Limited Partner Payable or Limited Partner Receivable. Specifically, (i)
       the contractual balance due at any time on the Class A Limited
       Partnership Interests shall equal its Capital Account balance as adjusted
       from time to time in accordance with the terms of the LP Agreement, and
       (ii) the contractual balance due on the BOI Note shall equal the Carrying
       Value thereof as determined in accordance with the LP Agreement.

   4.  Governing Law. The laws of the State of New York shall govern the
       validity of this Agreement, the construction of its terms, and the
       interpretation of the rights and duties of the parties hereto.

   5.  Severability. Every provision of this Agreement is intended to be
       serverable, and, if any terms or provision of this Agreement is illegal
       or invalid for any reason whatsoever, such illegality or invalidity shall
       not affect the validity or legality of the remainder of this Agreement.
       The preceding sentence of this Section 5 shall be of no force or effect
       if the consequence of enforcing the remainder of this Agreement without
       such illegal or invalid term or provision would cause any party hereto to
       lose the benefit of its economic bargain.

    6.  Successors and Assigns. This Agreement shall be binding upon the parties
        hereto and their successors and permitted assigns (including, without
        limitation, assignees of the Limited Partners).

    7.  Counterpart Execution. This Agreement may be executed in any number of
        counterparts with the same effect as if all the other parties had signed
        the same document. All counterparts shall be construed together and
        shall constitute one agreement.

    8.  Entire Agreement. This Agreement (i) constitutes the entire agreement
        and supersedes all prior agreements and understandings, both written and
        oral, among the parties with respect to the subject matter hereof and
        (ii) is not intended to confer upon any person other than the parties
        hereto any rights or remedies hereunder.

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     IN WITNESS WHEREOF, the parties named below have caused this Agreement to
     be executed by their duly authorized officers and representatives on the
     date first above written.



                                   IP PETROLEUM COMPANY, INC.


                                   By: /s/ JAMES R. MONTAGUE
                                       --------------------------------
                                   Name: James R. Montague
                                   Title: Agent and Attorney-in-Fact

                                   SOUTHLAND ENERGY COMPANY


                                   By: /s/ JAMES R. MONTAGUE
                                       --------------------------------
                                   Name: James R. Montague
                                   Title: Agent and Attorney-in-Fact


                                   THE BRANIGAR ORGANIZATION, INC.

                                   By: /s/ JAMES R. MONTAGUE
                                       --------------------------------
                                   Name: James R. Montague
                                   Title: Agent and Attorney-in-Fact


                                   PURE PARTNERS, L.P.

                                   By: /s/ JACK HIGHTOWER
                                       --------------------------------
                                   Name: Jack Hightower
                                   Title: President

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