TERMINATION AGREEMENT AND PURCHASE AND SALE AGREEMENT

     This Termination Agreement and Purchase and Sale Agreement
(this "Agreement"), dated as of December 18, 2000, is between
SAGA PETROLEUM CORP., a Colorado corporation ("Saga Petroleum"),
SAGA SALTWATER DISPOSAL CORP., a Texas corporation ("Saga SWD"),
BRENT J. MORSE ("Morse"), MORSE FAMILY SECURITY TRUST (the "Morse
Family Trust") and J. CHARLES FARMER ("Farmer") (collectively,
"Sellers"), 415 West Wall Street, Suite 835, Midland, Texas,
79701, and DELTA PETROLEUM CORPORATION, a Delaware corporation
("Buyer"), 555 - 17th Street, Suite 3310, Denver, Colorado 80202.

                            Recitals

     A.   By that Purchase and Sale Agreement dated September 6,
2000 (the "PSA") among Sellers and Buyer, as amended by that
letter dated September 25, 2000, and that First Amendment to
Purchase and Sale Agreement dated November 21, 2000 (as amended,
the "PSA"), Buyer agreed to purchase and Sellers agreed to sell
the Assets and Saga LLC Interests (as defined in the PSA) on the
terms set forth therein.  Capitalized terms used but not defined
herein shall have the meaning specified in the PSA.

     B.   Buyer has made the Deposit under the PSA in the form of
$500,000 in cash and 393,006 shares of Buyer's common stock  (the
"Deposit Shares").

     C.   Buyer and Sellers desire to terminate the PSA, to
release any claims they may have thereunder, to provide for the
purchase by Buyer from Saga Petroleum of Saga Petroleum's
interests in the Cedar State Well and associated leasehold
interests more particularly described on Exhibit A attached
hereto (the "Cedar State Well"), and to provide for the
application of the Deposit toward the purchase price for the
Cedar State Well, all as provided in this Agreement.

                            Agreement

     NOW THEREFOR, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer
and Sellers agree as follows:

                      I. Termination of PSA

          1.   Termination.  Buyer and Sellers each represent to
the other that they have not assigned or transferred any interest
under the PSA to any person.  Buyer and Sellers hereby
(i) terminate the PSA, (ii) agree that neither Buyer nor Sellers
shall have any further rights, obligations or liabilities
thereunder and (iii) release any claims they may have against the
other under the PSA.  Buyer waives, releases and agrees to
indemnify, defend and hold harmless the Sellers and Saga LLC, and
their respective directors, officers, shareholders, employees,
agents, partners, members, managers and representatives against
all claims for injury to, or death of, persons or for damage to
property arising in any way from the access to the Assets, the
LLC Assets and the records of Sellers afforded to Buyer under the
PSA and all costs and expenses incurred by Buyer in connection
with its review and inspection of Saga LLC, the Assets and the
LLC Assets, including, without limitation, engineering,
accounting, environmental and legal costs.

          2.   Deposit.  The Deposit under the PSA shall be
handled as provided in Section II below.

          3.   Confidentiality Agreement.  The Confidentiality
Agreement dated July 20, 2000 between Buyer and Saga Petroleum
shall continue in full force and effect.  Buyer acknowledges that
all financial, title, environmental, production, and other
information regarding Sellers or the Assets furnished by Sellers
or developed by Buyer shall be deemed to be Confidential
Information under the Confidentiality Agreement.  Buyer agrees
that it shall not disclose the Confidential Information to any
third person except for disclosure of the Buyer Developed
Materials to Potential Buyer Participants as provided in
paragraph 4.  "Buyer Developed Materials" shall mean all title
information and engineering and reserve reports developed by
Buyer and the environmental report dated November 27, 2000
prepared by Highlander Environmental Corporation with respect to
the Assets.  The Buyer Developed Materials shall not include the
environmental report dated November 10, 2000 prepared by
Highlander Environmental Corporation with respect to the Assets,
and Buyer acknowledges that such environmental report constitutes
Confidential Information under the Confidentiality Agreement.

          4.   Negotiations for Sale of Assets Covered by PSA.
Buyer acknowledges and agrees that Sellers and Saga LLC shall
have the right to solicit, negotiate and close offers to purchase
all or any portion of the Assets (other than the Cedar State
Well), the LLC Assets, or interests in Saga LLC from any person,
including, without limitation, any Potential Buyer Participants,
without any obligation, fee or other consideration to Buyer,
notwithstanding that Buyer may have introduced the Potential
Buyer Participants to Sellers, informed the Potential Buyer
Participants regarding the Assets, the LLC Assets or Saga LLC, or
incurred costs in connection with Buyer's negotiations with the
Potential Buyer Participants.  "Potential Buyer Participants"
means Whiting Petroleum Corporation, Exco Resources, Inc.,
Western Energy Partners, Cody Energy Company and all other
persons with whom Buyer has discussed or negotiated for the
participation by such person(s) with Buyer in the acquisition of
the Assets, the LLC Assets or Saga LLC.  Buyer shall have the
right to contact any Potential Buyer Participant to request that
it reimburse Buyer for a portion of the costs incurred by Buyer
in connection with reviewing the Assets, the LLC Assets or Saga
LLC with such Potential Buyer Participant or pay Buyer a finders'
fee if such Potential Buyer Participant purchases all or a
portion of the Assets, and Buyer shall have the right to disclose
the Buyer Developed Materials to a Potential Buyer Participant in
connection therewith; provided, however, Buyer shall not
(i) interfere in any way with Sellers' or Saga LLC's negotiations
with any Potential Buyer Participant or other person, or
(ii) assert that Buyer has a legal right to any cost
reimbursement or finder's or broker's fee from any Potential
Buyer Participant in connection with Sellers, the Assets, the LLC
Assets or interests in Saga LLC, and the reimbursement of any
such costs or payment of any such fee shall be within the
discretion of a Potential Buyer Participant.

            II. Purchase and Sale of Cedar State Well

     1.   Purchase Price.

          (a)  Buyer agrees to purchase the Cedar State Well with
an effective date of January 1, 2001 at 7:00 a.m., local time
where the Cedar State Well is located (the "Cedar State Effective
Time").

          (b)  The purchase price for the Cedar State Well (the
"Cedar State Purchase Price") shall be $2,700,000.00 which shall
be paid as follows:  (i) Sellers shall retain the $500,000.00
cash portion of the Deposit under the PSA, (ii) Buyer shall
deliver by wire transfer at the Cedar State Closing an additional
$1,600,000.00 plus the Net Adjustment (which adjustment will be a
negative number if the aggregate downward adjustments in
paragraph II(1)(d)(ii) exceed the aggregate upward adjustments in
paragraph II(1)(d)(i)) in cash, and (iii) Sellers shall retain
the Cedar State Shares and (A) if the number of Deposit Shares
exceeds the number of Cedar State Shares, Sellers shall transfer
to Buyer such excess shares, or (B) if the number of Cedar State
Shares exceeds the number of Deposit Shares, Buyer shall deliver
to Sellers (50% to Farmer, 37-1/2% to Morse and 12-1/2% to the
Morse Family Trust) that number of additional shares of Buyer's
common stock equal to such excess number of shares.

          (c)  The "Cedar State Shares" shall be that number of
shares of Buyer's common stock with a value equal to $600,000.00,
with the value of such shares (the "Cedar Share Deemed Value")
deemed to be the lesser of:

               (i)  90% of the average closing sales price per
                    share for the period of 120 trading days
                    ending with and including the second trading
                    day immediately preceding the Cedar State
                    Closing Date; and

               (ii) 90% of the average closing sales price per
                    share for the period of 30 trading days
                    ending with and including the second trading
                    day immediately preceding the Cedar State
                    Closing Date.

          (d)  The Cedar State Purchase Price shall be adjusted
at the Cedar State Closing, and finally adjusted within 60 days
after the Cedar State Closing, to adjust for estimates made at
Cedar State Closing, as follows:

               (i)   Upward  Adjustments.  Cedar  State  Purchase
Price shall be adjusted upward by the following:

                    (1)  the value of all oil and natural gas
          liquids in storage above the pipeline connection owned
          by Saga Petroleum at the Cedar State Effective Time,
          and not previously sold by Saga Petroleum, that is
          attributable to the Cedar State Well, such value to be
          the market or contract price in effect as of the Cedar
          State Effective Time less taxes or gravity adjustments,
          transportation and marketing costs that are deducted by
          the purchaser of such oil or liquids (net of all
          royalties and overriding royalties payable to third
          parties that Buyer assumes and agrees to pay);

                    (2)  the amount of all expenditures
          (including without limitation capital expenditures,
          royalties, rentals and other charges, "Taxes" (which
          shall mean all ad valorem, property, production,
          excise, severance and other taxes based upon or
          measured by the ownership of property or the production
          of Hydrocarbons or the receipt of proceeds therefrom
          other than income taxes), expenses of the sort
          customarily billed under operating agreements) paid by
          or on behalf of Saga Petroleum in connection with the
          ownership or operation of the Cedar State Well from the
          Cedar State Effective Time to the Cedar State Closing
          Date; and

                    (3)  an amount equal to all prepaid expenses
          attributable to the Cedar State Well that are paid by
          or on behalf of Saga Petroleum prior to the Cedar State
          Closing Date and that are attributable to the period
          after the Cedar State Effective Time, including without
          limitation prepaid utility charges, prepayments under
          rights-of-way, prepaid insurance premiums and prepaid
          Taxes; delay rentals shall be allocated per day over
          the period by which the applicable lease is extended
          thereby and amounts attributable to the period after
          the Cedar State Effective Time shall be deemed to be
          prepaid expenses.

               (ii)   Downward  Adjustments.  The   Cedar   State
Purchase Price shall be adjusted downward by the following:

                    (1)  proceeds received by Saga Petroleum
          prior to the Closing Date attributable to the Cedar
          State Well and that are attributable to the period of
          time from and after the Cedar State Effective Time; and

                    (2)  an amount equal to all unpaid Taxes
          attributable to the Cedar State Well, for any period
          ending prior to the Cedar State Effective Time that are
          assumed by Buyer pursuant to Section II(8).

The "Net Adjustment" (which may be positive or negative) shall
mean the amount equal to the aggregate upward adjustments
described in clause (d) (i) above less the aggregate downward
adjustments described in clause (d)(ii) above.  Saga Petroleum
will deliver a preliminary settlement statement showing such
adjustments to be made at the Cedar State Closing, such
settlement statement to be provided to Buyer as soon as
reasonably possible after such adjustments are determined.  Saga
Petroleum and Buyer shall conduct a final accounting with respect
to the adjustments described above and make and pay the
appropriate adjustments to the other party within 60 days after
Closing.  All production produced from or attributable to the
Cedar State Well on or before the Cedar State Effective Time and
above the pipeline connection shall belong to Saga Petroleum and
all production produced from or attributable to the Cedar State
Well after Cedar State Effective Time shall belong to Buyers.
Buyers and Saga Petroleum agree promptly to reimburse to the
other any proceeds received by such party that are owned by the
other party and not accounted for in the preliminary settlement
statement.

     2.   Title and Environmental Matters.

          (a)  Buyer acknowledges that it has completed its examination of
title to and the environmental condition of the Cedar State Well
and is accepting the same "as is, where is," except for the
special warranty of title from Saga Petroleum described in
paragraph II4(a) below and except as provided in this paragraph
II(2).  Reference is made to that Acquisition Title Opinion dated
December 1, 2000, prepared by Canon, Short & Gaston (the "Title
Opinion"), a copy of which has been furnished by Buyer to Saga
Petroleum.

          (b)  Saga Petroleum shall deliver to Buyer at the Cedar State
Closing a recordable release of the lien of Bank One Texas
described in paragraphs 1 and 2 under "Liens and Encumbrances" in
the Title Opinion, insofar as such lien covers the Cedar State
Well. Saga Petroleum shall have until six months after the Cedar
State Closing to cure the title defect described in paragraph 1
under "Requirements" in Schedule 1 to the Title Opinion (the
"Title Defect") to Buyer's reasonable satisfaction.  If the Title
Defect is not cured to Buyer's reasonable satisfaction by the end
of such six month period, Buyer shall deliver to Saga, within 15
business days after the end of such six month period, a written
notice stating that the Title Defect has not been cured to
Buyer's reasonable satisfaction and stating Buyer's basis for
such determination.  If, after timely receipt of such notice from
Buyer, Saga is unable to or does not cure such Title Defect to
Buyer's reasonable satisfaction, Saga shall defend, indemnify and
save and hold harmless Buyer from and against all claims made by
third parties arising out of the Title Defect, and associated
Losses incurred by Buyer, within five years after the Cedar State
Closing; provided Saga Petroleum's maximum aggregate liability
under this paragraph II(2)(b) shall be limited to $2,100,000 less
the cumulative net proceeds received by Buyer from the Cedar
State Well (i.e., Buyer's share of gross proceeds of production
less royalties, operating costs and taxes (other than income
taxes)).

     3.   Time and Place of Cedar State Closing.  The closing of
the purchase and sale of the Cedar State Well shall take place at
Buyer's offices in Denver, Colorado on January 22, 2001 (the
"Cedar State Closing").

     4.   Actions at Cedar State Closing.  At the Cedar State
Closing the following events shall occur:

          (a)  Saga Petroleum shall deliver an assignment of the
Cedar State Well, warranting title to the Cedar State Well
against all liens and encumbrances arising by, through or under
Saga Petroleum, but not otherwise.

          (b)   Buyer shall deliver, by wire transfer to an
account or accounts specified by Saga Petroleum, an amount equal
to $1,600,000.00 plus the Net Adjustment. Sellers shall retain
the $500,000.00 cash portion of the Deposit.

          (c)   Buyer  or  Sellers, as the  case  may  be,  shall
transfer  to  the other that number of shares of  Buyer's  common
stock  necessary  to  cause Sellers to receive  the  Cedar  State
Shares, as provided in Section II(1)(b)(iii) above.

          (d)  Saga Petroleum shall execute, acknowledge and
deliver to Buyer, division orders, transfer orders or letters in
lieu thereof directing all purchasers of production to make
payment to Buyer of proceeds attributable to production from the
Cedar State Well conveyed at the Cedar State Closing.

     5.   Registration of Buyer's Common Stock.  Buyer agrees to:

     (a)  use its reasonable best efforts to (i) cause the Cedar
State Shares to be registered, at Buyer's sole cost and expense,
under the Securities Act of 1933, as amended (the "Securities
Act"), on Form S-1 or any similar or successor long-form
registration or, if available, on Form S-2 or S-3 or any similar
or successor short-form registration, by May 1, 2001 and
(ii) cause the Cedar State Shares to be listed by May 1, 2001 on
each securities exchange on which Buyer's common stock is then
listed.  If by May 1, 2001 any of the Cedar State Shares held by
Sellers are not registered as provided in clause (i) and listed
as provided in clause (ii) (whether or not Buyer has used its
reasonable best efforts to do so), then Buyer shall pay to
Sellers, as liquidated damages for failure to achieve such
registration, an amount equal to (1) interest at 10% per annum,
compounded quarterly, on the Cedar Share Deemed Value multiplied
by the number of Cedar State Shares held by Sellers, from and
after May 1, 2001 until the earlier of such time as the Cedar
State Shares are covered by such registration statement or are
saleable without registration under Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act or
other such rule; such amount shall be payable quarterly within 15
days after the end of each quarter and any amounts not timely
paid will bear interest at 15% per annum, compounded quarterly;

          (b)  notify Sellers of the Cedar State Shares of the
effectiveness of each registration statement filed hereunder and
prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective for a period of not
less than 180 days and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;

          (c)  furnish to each seller of Cedar State Shares such
number of copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus)
and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Cedar State Shares
owned by such seller;

          (d)  use its reasonable best efforts to register or
qualify such Cedar State Shares under such other securities or
blue sky laws of such jurisdictions as any Seller reasonably
requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Seller to
consummate the disposition in such jurisdictions of the Cedar
State Shares owned by such Seller provided that the Buyer shall
not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process
in any such jurisdiction;

          (e)  notify Sellers, at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary
to make the statements therein not misleading, and, at the
request of any Seller, prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of
such Cedar State Shares, such prospectus shall not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;

          (f)  make available for inspection by Sellers, any
underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial
and other records, pertinent corporate documents and properties
of the Buyer, and cause the Buyer's officers, directors,
employees and independent accountants to supply all information
reasonably requested by any Seller, underwriter, attorney,
accountant or agent in connection with such registration
statement;

          (g)  in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of
any order suspending or preventing the use of any related
prospectus or suspending the qualification of any common stock
included in such registration statement for sale in any
jurisdiction, the Buyer shall use its best efforts promptly to
obtain the withdrawal of such order;

          (h)  use its reasonable best efforts to cause such
Cedar State Shares covered by such registration statement to be
registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the sellers thereof
to consummate the disposition of such Cedar State Shares; and

          (i)  indemnify, defend and save and hold harmless, to
the extent permitted by law, each holder of Cedar State Shares,
its officers and directors and each Person that controls such
holder (within the meaning of the Securities Act) against all
Losses (as defined in paragraph 6(c)) caused by any untrue or
alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any
information furnished in writing to the Buyer by such holder
expressly for use therein or by such holder's failure to deliver
a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Buyer has furnished
such holder with a sufficient number of copies of the same.  In
connection with an underwritten offering, the Buyer shall
indemnify such underwriters, their officers and directors and
each person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Cedar State
Shares.  The indemnification provided for under this paragraph
shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or
any officer, director, partner or controlling Person of such
indemnified party and shall survive the transfer of securities.
The Buyer also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such
party in the event the Buyer's indemnification is unavailable for
any reason such that such provisions provide the same obligations
and benefits to the indemnified party as those which would have
been applicable had the indemnification provisions in this
paragraph been available.

     6.   Indemnification of Sellers.

               (a)  Buyer's Indemnification of Sellers for
Environmental Matters.  If the Cedar State Closing occurs, Buyer
shall be deemed to have assumed all risk, liability, obligation
and Losses in connection with, and shall defend, indemnify and
save and hold harmless the Indemnified Seller Parties forever
from and against all Losses incurred by the Indemnified Seller
Parties in connection with any Environmental Matter.
"Indemnified Seller Parties" means (x) Saga Petroleum, Saga SWD,
Saga LLC, Morse, the Morse Family Trust and Farmer, (y) all
parties serving as officers, directors, shareholders, partners,
members, managers, principals or trustees of Saga Petroleum, Saga
SWD, Saga LLC or the Morse Family Trust at any time prior to the
Closing, and (z) as to all of the persons and entities in clauses
(x) and (y) above, their respective representatives, employees,
agents, affiliates, and personal representatives.  "Environmental
Matter" means the following matters arising in connection with
the Cedar State Well, regardless of whether incurred with respect
to events occurring prior to or after the Cedar State Effective
Time:  (i) the violation of, and compliance with past, present
and future Environmental Laws (as such term is defined in the
PSA, which definition shall survive the termination of the PSA);
(ii) remediation and restoration of the Cedar State Well,
including, without limitation, plugging and abandonment and
remediation of wells and well sites; (iii) naturally occurring
radioactive materials; (iv) asbestos and (v) damage to persons or
property on account of Pollutants (as such term is defined in the
PSA, which definition shall survive the termination of the PSA).

               (b)  Buyer's Assumption of Liabilities and
Indemnification of Sellers.  If the Cedar State Closing occurs,
Buyer shall be deemed to have assumed all risk, liability,
obligation and Losses in connection with, and Buyer agrees to
defend, indemnify and save and hold harmless the Indemnified
Seller Parties, their successors and assigns, forever from and
against all Losses which arise from or in connection with, the
following whether arising or attributable to periods before or
after the Effective Time:  (i) ownership or operation of the
Cedar State Well, and (ii) the joint operating agreement, product
sale contracts, and all other contracts and agreements relating
to the Cedar State Well.

               (c)  "Losses" shall mean any loss, cost, expense,
liability, obligation, damage, demands, suits (including royalty
claims and claims for Taxes) sanctions of every kind and
character including reasonable fees and expenses of attorneys,
technical experts and expert witnesses reasonably incident to
matters indemnified against; excluding any special,
consequential, punitive or exemplary damages except to the extent
recovered against the indemnified persons by a third-party
claimant.

               (d)  Release.  Buyer shall be deemed to have
released the Indemnified Seller Parties, and their predecessors,
successors and assigns, at the Cedar State Closing from any and
all Losses for which Buyer has agreed to indemnify the
Indemnified Seller Parties hereunder.

               (e)  THE INDEMNIFICATION OBLIGATIONS UNDER THIS
AGREEMENT SHALL BE WITHOUT REGARD TO THE INDEMNIFIED PERSON'S
SOLE, JOINT OR CONCURRENT NEGLIGENCE, GROSS NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT.

               (f)  THE PARTIES AGREE THAT, TO THE EXTENT
REQUIRED BY APPI.ICABLE LAW TO BE OPERATIVE, THE DISCLAIMERS OF
WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS"
DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LAW, RULE OR
ORDER.  WITHOUT LIMITATION OF THE GENERALITY OF THE IMMEDIATELY
PRECEDING SENTENCE, SELLERS EXPRESSLY DISCLAIM AND NEGATE AS TO
ALL PERSONAL PROPERTY, FIXTURES AND EQUIPMENT, (I) ANY IMPLIED OR
EXPRESS WARRANTY OF MERCHANTABILITY; (II) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; (III) ANY IMPLIED
OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS; (IV) ANY RIGHTS OF BUYER UNDER APPLICABLE STATUTES TO
CLAIM DIMINUTION OF CONSIDERATION; AND (V) ANY CLAIM BY BUYER FOR
DAMAGES BECAUSE OF DEFECTS IN ANY PERSONAL PROPERTY INCLUDED
WITHIN THE ASSETS OR LLC ASSETS, WHETHER KNOWN OR UNKNOWN, IT
BEING EXPRESSLY UNDERSTOOD BY BUYER THAT PERSONAL PROPERTY
FIXTURES AND EQUIPMENT INCLUDED WITHIN THE CEDAR STATE WELL ARE
BEING CONVEYED TO BUYER "AS IS," "WHERE IS," WITH ALL FAULTS, AND
IN THE PRESENT CONDITION AND STATE OF REPAIR.

               (g)  No Insurance or Subrogation.  The
indemnifications provided in this Agreement shall not be
construed as a form of insurance. Buyer hereby waives for itself,
its successors or assigns, including, without limitation, any
insurers, any rights to subrogation for Losses for which it is
liable and, if required by applicable policies, shall obtain
waiver of such subrogation from its insurers.

     7.   Like-Kind Exchange.  If requested by Saga Petroleum,
Buyer will cooperate with Saga Petroleum to accommodate a like-
kind exchange under Section 1031 of the Code with respect to the
Cedar State Well.  Such cooperation will include, without
limitation, the execution of certain documents in connection with
such like-kind exchange, but Buyer shall not assume any
additional liabilities or obligations in connection therewith.
Saga Petroleum shall have the right, without the consent of
Buyer, to assign all or any portion of its interests in the Cedar
State Well to Meeteetse Gas LLC or another third party designated
by Saga Petroleum for purposes of facilitating the like-kind
exchange.  Saga Petroleum shall indemnify, save and hold harmless
Buyer from and against any and all Losses arising from the like-
kind exchange.

     8.   (a)  Apportionment of Tax Liability.  All Taxes shall
be prorated between Buyer and Saga Corp as of the Cedar State
Effective Time for all taxable periods that include the Cedar
State Effective Time.  Based on the best current information
available as of Cedar State Closing, the proration shall be made
between the parties as an adjustment to the Cedar State Purchase
Price as provided above and shall constitute a final settlement
of Taxes between the parties.  Taxes based on or measured by
production of Hydrocarbons or the value thereof shall be deemed
attributable to the period when such production occurred
notwithstanding that such Taxes are not assessed or payable until
a subsequent period.  Accordingly, after Closing Buyer expressly
assumes all obligations and liabilities for all Taxes payable by
the Saga Petroleum with respect to the Cedar State Well and
production therefrom, regardless of whether such Taxes are
attributable to the period of time before or after the Cedar
State Effective Time.

          (b)  Tax Reports and Returns.  For the tax period in
which the Effective Time occurs, Saga Petroleum agrees to
immediately forward to Buyer any such tax reports and returns
received by Saga Corp after the Cedar State Closing and provide
Buyer with any information Saga Petroleum has that is necessary
for Buyer to file any required tax reports and returns.  Buyer
agrees to file all tax returns and reports applicable to the
Cedar State Well, and required to be filed after the Closing, pay
all required Taxes payable with respect to the Cedar State Well
and production therefrom, and Saga LLC or its assets, and
indemnify the Sellers against liability for the payment of Taxes
and the filing of tax returns or reports.

     9.   Miscellaneous.

          (a)   Schedules and Exhibits.  The Schedules and
Exhibits referred to in this Agreement are hereby incorporated in
this Agreement by reference and constitute a part of this
Agreement.

          (b)  Expenses.  Except as otherwise specifically
provided, all fees, costs and expenses incurred by Buyer or
Sellers in negotiating this Agreement or in consummating the
transactions contemplated by this Agreement shall be paid by the
party incurring thc same, including, without limitation,
engineering, land, title, legal and accounting fees, costs and
expenses.

          (c)  Notices.  All notices and communications required
or permitted under this Agreement shall be in writing and
addressed as set forth below.  Any communication or delivery
hereunder shall be deemed to have been duly made and the
receiving party charged with notice (i) if personally delivered,
when received, (ii) if sent by telecopy or facsimile
transmission, when received (iii) if mailed, five business days
after mailing, certified mail, return receipt requested, or
(iv) if sent by overnight courier, one day after sending.  All
notices shall be addressed as follows:

If to Sellers:

     Saga Petroleum Corp.
     415 West Wall Street, Suite 1900
     Midland, Texas 79701
     Attention: J. Charles Farmer
     Fax: 915-684-0829

     With copy to:

     Saga Petroleum Corp.
     410-17th Street, Suite 1150
     Denver, Colorado
     Attention:  Brent J. Morse
     Fax: 303-592-1013

If to Buyer:

     Delta Petroleum Corporation
     555 - 17th Street, Suite 3310
     Denver, Colorado 80202
     Attention: Roger A. Parker
     Fax: (303) 298-8251

Any party may, by written notice so delivered to the other
parties, change the address or individual to which delivery shall
thereafter be made.

          (d)  Amendments; Waivers.  Except for waivers
specifically provided for in this Agreement, this Agreement may
not be amended nor any rights hereunder waived except by an
instrument in writing signed by the party to be charged with such
amendment or waiver and delivered by such party to the party
claiming the benefit of such amendment or waiver.

          (e)  Assignment.  Neither Buyer nor Sellers shall
assign all or any portion of their respective rights or delegate
all or any portion of their respective duties hereunder without
the other parties prior written consent.

          (f)  Announcements.  Saga Petroleum and Buyer shall
consult with each other with regard to all press releases and
other announcements issued after the date of execution of this
Agreement and prior to the Closing Date concerning this Agreement
or the transactions contemplated hereby and, except as may be
required by applicable laws or the applicable rules and
regulations of any governmental agency or stock exchange, neither
Buyer nor Sellers shall issue any such press release or other
publicity without the prior written consent of the other party,
which consent shall not be unreasonably withheld.

          (g)  Headings.  The headings of the Articles and
Sections of this Agreement are for guidance and convenience of
reference only and shall not limit or otherwise affect any of the
terms or provisions of this Agreement.

          (h)  Counterparts.  This Agreement may be executed by
Buyer and Saga Petroleum in any number of counterparts, each of
which shall be deemed an original instrument, but all of which
together shall constitute but one and the same instrument.

          (i)  References.  References made in this Agreement,
including use of a pronoun, shall be deemed to include where
applicable, masculine, feminine, singular or plural, individuals
or entities.  As used in this Agreement, "person" shall mean any
natural person, corporation, partnership, trust, limited
liability company, court, agency, government, board, commission,
estate or other entity or authority.

          (j)  Governing Law.  This Agreement and the
transactions contemplated hereby and any arbitration or dispute
resolution conducted pursuant hereto shall be construed in
accordance with, and governed by, the laws of the State of
Colorado.

          (k)  Entire Agreement.  This Agreement constitutes the
entire understanding among the parties, their respective
partners, members, managers, shareholders, officers, directors
and employees with respect to the subject matter hereof,
superseding all negotiations, prior discussions and prior
agreements and understandings relating to such subject matter;
provided, however, paragraph 1(b) of that letter agreement dated
July 20, 2000 between Buyer and Saga Petroleum, Saga SWD, Morse
and Farmer shall survive the execution and delivery of this
Agreement and the termination of such letter agreement.

          (l)  Binding Effect.  This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto, and
their respective successors and assigns.

          (m)  No Third-Party Beneficiaries.  This Agreement is
intended only to benefit the parties hereto and their respective
permitted successors and assigns, except that the Potential Buyer
Participants shall be third party beneficiaries or the provisions
of Section I(4).

          (n)  Waiver of Compliance with Bulk Transfer Laws.
Buyer waives compliance with any applicable bulk transfer laws
relating to the transactions contemplated by this Agreement.

          (o)  Disclaimer of Representations and Warranties.
Except as expressly set forth in this Agreement, the parties
hereto each disclaim all liability and responsibility for any
other representation, warranty, statements or communications
(orally or in writing) to any other party (including, but not
limited to, any information contained in any opinion, information
or advice that may have been provided to any such party by any
partner, officer, member, trustee, beneficiary, stockholder,
director, employee, agent, consultant, member, representative or
contractor of such disclaiming party or its affiliates or any
engineer or engineering firm, or other agent, consultant or
representative) wherever and however made, including, but not
limited to, those made in any data room and any supplements or
amendments thereto or during any negotiations.  Without limiting
the generality of the foregoing, none of the parties makes any
representation or warranty as to (i) the amount, value, quality
or deliverability of petroleum, natural gas or other reserves
attributable to the Cedar State Well, (ii) any geological,
engineering or other interpretations of economic valuation, or
(iii) predictions as to when any event will or will not occur or
is likely to occur.

                    (signatures on next page)

          Executed on the dates set forth in the acknowledgments
below but effective as of the Effective Time.

                              BUYER:

                              DELTA PETROLEUM CORPORATION


                              By: s/Roger A. Parker

                              Name: s/Roger A. Parker
                              Title: President


                              SELLERS:

                              SAGA PETROLEUM CORP.

                              By: s/J. Charles Farmer
                              Name: s/J. Charles Farmer
                              Title:  President


                              SAGA SALTWATER DISPOSAL CORP.

                              By: s/J. Charles Farmer
                              Name: s/J. Charles Farmer
                              Title:  President


                              MORSE FAMILY SECURITY TRUST

                              By:________________________________
                              Name:______________________________
                              Title:  Trustee


                              s/Brent J. Morse
                              Brent J. Morse

                              s/J. Charles Farmer
                              J. Charles Farmer

       Saga  Petroleum Limited Liability Company of  Colorado  is
executing this Agreement solely for the purpose of Section I  and
for no other purpose:

                              SAGA PETROLEUM LIMITED
                              LIABILITY COMPANY OF COLORADO

                              By: s/J. Charles Farmer
                              Name: s/J. Charles Farmer
                              Title: Manager