Exhibit 10.5

                       OPERATING AND MANAGEMENT AGREEMENT

      This Operating and Management  Agreement (the  "Agreement")  is made as of
the 22nd day of December,  2003 between QUEST CHEROKEE,  LLC, a Delaware limited
liability  company,  ("Company")  and  QUEST  ENERGY  SERVICE,  INC.,  a  Kansas
corporation ("Manager") (each of Company and Manager being sometimes referred to
herein as a "Party" and collectively referred to herein as the "Parties").

                               W I T N E S S E T H

      WHEREAS, pursuant to that certain Contribution, Conveyance, Assignment and
Assumption  Agreement,  dated of even date  herewith,  Manager,  Quest Oil & Gas
Corporation,  a Kansas  corporation  ("QOGC");  STP Cherokee,  Inc., an Oklahoma
corporation  ("STP Cherokee");  Ponderosa Gas Pipeline  Company,  Inc., a Kansas
corporation  ("PGPC");  Producers  Service,  Incorporated,  a Kansas corporation
("PSI");  and J-W Gas  Gathering,  L.L.C.,  a Kansas limited  liability  company
("J-W")  (Manager,  QOGC, STP Cherokee,  PGPC, PSI, and J-W being  collectively,
referred to as the "Quest  Subsidiaries")  (i) assigned to Company  certain coal
bed methane properties and associated  facilities,  equipment and related assets
within the Cherokee Basin of southeastern Kansas and northeastern  Oklahoma; and
(ii) assigned to Bluestem  Pipeline,  LLC, a Delaware limited  liability company
("Bluestem") certain gathering systems and pipelines and appurtenant  properties
in the Cherokee Basin; and

      WHEREAS, Company is the sole owner of Bluestem; and

      WHEREAS,  Company desires to engage Manager to provide contract  operating
services,  as more  fully  described  herein,  with  respect  to the oil and gas
properties and gathering systems now owned or hereafter  acquired by the Company
and its wholly-owned subsidiaries, including Bluestem.

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

                             Article I. DEFINITIONS

     Section 1.01 Defined Terms.  The following terms,  when used herein,  shall
have the meanings set forth below:

      "Affiliate"  means, with respect to a Person,  any Person that directly or
indirectly through one or more intermediaries  controls, is controlled by, or is
under  common  control  with  such  Person,  and the term  "control"  means  the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the management, activities or policies of any Person.

      "Agreement" means this Agreement, as it may be amended from time to time.

      "Acquisition"  means  any  acquisition  by  the  Company  of  (i)  all  or
substantially  all of the  interest  in any  company or  business  (whether by a
purchase of assets, purchase of stock, merger or



<PAGE>


otherwise);  or (ii) any acquisition by the Company of real or personal property
or other assets from any Person.

      "Amended  and  Restated  LLC  Agreement"  means the Amended  and  Restated
Limited Liability Company Agreement of the Company,  as such may be amended from
time to time.

      "Board" means the Board of Managers of the Company.

      "Business" means the oil and gas  exploration,  development and production
and the gas  gathering  activities  of the Company  Group,  as now or  hereafter
conducted.

      "Business  Day" shall mean any day which is not a Saturday,  Sunday or day
on which banks are authorized by law to close in the State of Texas or the State
of New York.

      "Change of Control"  has the meaning  provided in the Amended and Restated
LLC Agreement.

      "Company  Group"  means the  Company  and its  wholly-owned  subsidiaries,
including Bluestem.

      "Divestiture"  means  the  transfer,   sale,  lease,  farmout,   exchange,
abandonment,  mortgage or pledge or other disposition (or related series of such
transactions) of all or any portion of the Properties.

      "Fiscal Year" means the fiscal year of the Company for U.S. GAAP purposes.

      "GAAP" means those generally accepted accounting  principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor).

      "G&A Costs" shall have the meaning provided in Section 5.01.

      "Governmental  Authority"  (or  "Governmental")  means a  federal,  state,
local,   tribal  or  foreign   governmental   authority;   a  state,   province,
commonwealth,  territory or district thereof;  a county or parish; a city, town,
township,  village or other  municipality;  any executive,  legislative or other
governing  body  of  any  of  the  foregoing;  any  agency,  authority,   board,
department,  system, service, office,  commission,  committee,  council or other
administrative  body of any of the foregoing;  any court or other judicial body;
and any officer, official or other representative of any of the foregoing.

      "Hydrocarbons"  shall mean oil, gas, casinghead gas, coal bed methane gas,
condensate,  distillate,  liquid  hydrocarbons,  gaseous  hydrocarbons  and  all
products  refined  or  extracted  therefrom,  together  with all other  minerals
produced in association with these substances.

      "Law" means any applicable constitutional  provision,  statute, act, code,
law, regulation,  rule, ordinance,  order, decree, ruling, judgment, decision or
declaration of a Governmental Authority having valid jurisdiction.


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<PAGE>


      "Manager" has the meaning set forth in the above preamble.

      "Manager's Fee" has the meaning provided in Section 5.01.

      "Material  Decisions" has the meaning provided in the Amended and Restated
LLC Agreement.

      "Non-Public  Information"  means  information and records furnished by the
Company with respect to the Company Group,  the Business  and/or the Properties,
together  with any  reports,  analyses,  summaries,  spreadsheets,  evaluations,
memoranda or other documents prepared or generated by Manager or its consultants
or  agents  on the  basis of such  information,  whether  in  written,  graphic,
electronic or any other format,  to the extent such  information  is of a nature
that is  customarily  maintained as  confidential  and not disclosed by publicly
traded companies engaged in the oil and gas exploration and production business.
Such information includes, but is not limited to, seismic data, reserve reports,
prospect analyses, and privileged attorney-client communications.

      "Permits"  means  licenses,   permits,  variances,   exemptions,   orders,
franchises,   approvals  and  other   authorizations  of  or  from  Governmental
Authorities.

      "Person" means any individual,  firm,  corporation,  partnership,  limited
liability   company,   joint   venture,   association,   trust,   unincorporated
organization, Governmental Authority or any other entity.

      "Proceedings" means all proceedings,  actions,  claims, suits, and notices
of investigations by or before any arbitrator or Governmental Authority.

      "Properties"  means the oil and gas properties  and gathering  systems now
owned or  hereafter  acquired by the Company or its  wholly-owned  subsidiaries,
including, without limitation, oil and gas leases, mineral interests, pipelines,
flow lines, gathering lines, gathering systems, compressors,  dehydration units,
separators,   meters,  injection  facilities,  salt  water  disposal  wells  and
facilities,   plants,   wells,   downhole  and  surface   equipment,   fixtures,
improvements,  easements,  rights-of-way,  surface leases, licenses, permits and
other surface rights, and other real or personal property appurtenant thereto or
used in conjunction therewith.

      "Services"  means  the  services  provided  by  Manager  pursuant  to this
Agreement.

      "Third  Party"  means any Person other than Manager or a member of Company
Group.

                         Article II. OPERATOR SERVICES

     Section 2.01 Services to be provided by Operator. Manager shall perform all
operations  and  administrative  services as may be required for the  reasonable
conduct of the Business as presently or hereafter conducted,  including, without
limitation the following:


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<PAGE>


          (a) Production Sales and Administration. Manager will provide, or will
     contract with a Third Party  acceptable  to the Board to provide,  services
     relating to the sale of Hydrocarbons produced from the Properties, and will
     provide   contract   administration   services  in   connection   with  the
     administration of the gathering, treating,  processing,  transportation and
     sale of such production.

          (b) Operations Services. With respect to Properties as to which any of
     the Company Group is the designated operator, Manager will conduct physical
     operation of the wells, gathering lines, pipelines, plants, tanks and other
     facilities  comprising such Properties,  including without limitation,  the
     following (collectively the "Operations Services"):

               (i) Operating  and  maintaining  all oil and gas well,  gathering
          systems,  pipelines,   plants,  and  associated  equipment,   personal
          property, fixtures, and improvements;

               (ii)  Operating  automated  field  systems and  related  computer
          software and equipment, if any;

               (iii) Preparing and submitting  required  regulatory filings with
          Governmental Authorities;

               (iv)  Maintaining  well  files  and  records  and  providing  the
          necessary clerical and administrative assistance associated therewith;

               (v) Maintaining production,  drilling,  work-over and well status
          reports and records;

               (vi)  Arranging  the Company's  purchase of supplies,  materials,
          tools and equipment associated with operation of the Properties;

               (vii)  Subcontracting for services  associated with ownership and
          operation of the Properties; and

               (viii)  Negotiation,   administration  and  review  of  contracts
          associated with ownership and operation of the Properties.

          (c) Land  Administration  Services.  Manager  shall provide all lease,
     division order and other land administration services (collectively,  "Land
     Administration Services"), including, without limitation, the following:

               (i) Administering and maintaining leases and agreements  relating
          to the Properties;

               (ii)  Maintaining  and updating  lease,  ownership,  contract and
          property records and databases relating to the Properties;


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<PAGE>


               (iii) Maintaining and updating royalty payment and division order
          reports and databases;

               (iv) Generating,  verifying, and processing internal and external
          division  orders and transfer  orders required in the normal course of
          business;

               (v)  Identifying,  paying and invoicing  rentals,  rights of way,
          shut-in  payments and other  payments  required by the leases or other
          agreements relating to the Properties;

               (vi)  Maintaining  land,  contract,  division of interest,  lease
          files,  and other files  relating to the subject  land  administration
          functions; and

               (vii)   Performing  such  other  reasonable  and  customary  land
          administration  services as Company  deems  necessary to administer or
          maintain the leases or agreements relating to the Properties.

          (d) Accounting Services. Manager shall provide financial, revenue, and
     expense  accounting  services  relating  to the  Properties  (collectively,
     "Accounting Services"), including, without limitation, the following:

               (i) On or  before  forty-five  (45)  days  after the end of every
          calendar month,  Manager shall prepare a settlement statement for each
          member of Company Group indicating all cash,  checks or other proceeds
          received and expenses paid which relate to such Company Group member's
          ownership  or  operation of  Properties  during the previous  calendar
          month. All remittances shall be deposited into, and all expenses shall
          be paid from, the bank account of the respective  Company Group member
          to whom such  remittances or expenses are  attributable,  as such bank
          accounts may be designated by Company from time to time.

               (ii) Manager shall perform revenue accounting  functions relating
          to the Properties  including the  disbursement of revenue  proceeds to
          working interest,  third party,  royalty and overriding royalty owners
          as well  as  rental,  severance  or  production  taxes,  right  of way
          payments, and leasehold, minimum or advance payments due in the normal
          course of business;

               (iii)  Manager  shall  prepare  and file on behalf of the Company
          applicable   reporting  and  filing   requirements   of   Governmental
          Authorities;

               (iv) Manager shall perform  expenditure  accounting  functions as
          reasonably  directed by Company  relating to the Properties  including
          arranging the Company's  payment of invoices  and,  where  applicable,
          subsequent billing of same to working interest owners;

               (v)  Manager  shall  provide to Company a monthly  aged  accounts
          receivable report detailing uncollected joint interest billings issued
          to Third Parties for operations conducted on the Properties;


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<PAGE>


               (vi) Manager shall prepare monthly gas balancing statements; and

               (vii)  Within  forty-five  (45) days after the end of each month,
          Manager shall prepare a hedging report  showing the Company's  hedging
          positions  as of the  last  day of such  month,  and  forecasting  the
          projected amount of production, by reserves category [proved developed
          producing  ("PDP") and non-proved  developed  producing  ("non-PDP")],
          that is hedged for the three year  period  following  the date of such
          report.

          (e) Risk  Management.  Manager  shall,  at Company's cost and expense,
     arrange for the benefit of Company Group  insurance  coverages with respect
     to the Properties in accordance with the Company's risk management policies
     as  established  from  time  to  time  or  as  required  by  the  Company's
     contractual obligations.

          (f) Bonding. Manager shall, at Company's cost and expense, arrange for
     the Company's  production tax  withholding,  plugging and  abandonment  and
     surface restoration bonds, letters of credit or other surety required under
     applicable Law with respect to the Properties.

          (g) Engineering. Manager will, at Company's cost and expense, provide,
     or contract with a nationally  recognized  third party  engineering firm to
     provide, engineering support relating to the Properties, including, but not
     limited to, reserve evaluations and production  forecasting,  monitoring of
     allowables,  monitoring of well  profitability,  preparation and review of,
     and making of recommendations  and elections with respect to, proposals for
     drilling,  completion,  workovers,  or other operations with respect to the
     Properties, and recommendation of opportunities for enhancement of existing
     Hydrocarbon production.

          (h)  Exploration;  Acquisitions  and  Divestitures.  Manager will make
     recommendations  to Company with respect to the exploration and development
     of the  Company's  Properties  and  recommendations  for  Acquisitions  and
     Divestitures, including, without limitation, the following:

               (i) Geological  and  Geophysical.  Manager will provide  services
          relating to the acquisition,  processing and interpretation of seismic
          data (whether internally or externally),  and evaluation of internally
          and  externally  developed  prospect  proposals  and  review  of logs,
          isopach maps, and structure maps;

               (ii) Prospect Generation.  Manager will provide services relating
          to the generation of internal and evaluation of outside  proposals for
          the exploration and development of the Properties;

               (iii)  Acquisitions.  Manager  will make  recommendations  to the
          Company with respect to potential Acquisitions;


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<PAGE>


               (iv)  Divestitures.  Manager  will  make  recommendations  to the
          Company relating to proposed Divestitures,  including  recommendations
          with respect to Divestiture of underperforming or non-core Properties;

          (i)  Purchasing.  Manager shall provide  services for  procurement  of
     equipment,  supplies and other goods and services reasonably  necessary for
     the efficient day to day operation of the Business.

          (j) Compliance.  Manager shall provide services relating to regulatory
     compliance,  including,  but not limited to, arranging the application for,
     or maintenance of, and compliance with all required Permits with respect to
     the Company's  properties or the  Business;  preparation  and filing of all
     applications,  reports,  notices,  and other regulatory  filings or reports
     required by any Governmental  Authority;  and participation in hearings and
     other administrative proceedings on behalf of Company.

          (k) Reporting to the Company.  Manager shall prepare and submit to the
     Company the following information and reports:

               (i) Annual Budget: On or before February 15, 2004 with respect to
          the Fiscal Year ending May 31, 2004,  and within sixty (60) days prior
          to the end of each  subsequent  Fiscal Year,  Manager will prepare for
          the  consideration  and  adoption  of  the  Board  a  proposed  annual
          operating,  capital  expenditure,  maintenance and acquisition budget,
          and shall from time to time  propose  such  amendments  thereof as the
          Manager deems necessary and appropriate  (the "Annual  Budget").  Such
          Annual  Budget  shall set forth on a  monthly  basis at a minimum  the
          estimated receipts and expenditures (capital,  operating and other) of
          the  Company in  sufficient  detail to provide an  estimate of income,
          cash flow,  capital  proceeds and other financial  requirements of the
          Company for such year.  Each Annual  Budget  shall also  include  such
          other  information or other matters  reasonably  necessary in order to
          enable the Board to make an informed decision with respect to approval
          of such Annual Budget.

               (ii) Monthly  Financial  Statements:  Within forty-five (45) days
          after the end of each month,  Manager will provide a balance sheet and
          income statement for the current month and year-to-date  setting forth
          the  actual  results  for  the  periods  presented   together  with  a
          comparison  to the  respective  amounts  in the  Annual  Budget.  Such
          financial  statements  shall be prepared in accordance with GAAP other
          than  footnotes and subject to year-end audit  adjustments,  and shall
          contain a narrative description of variances to the Annual Budget.

               (iii) Monthly  Operating  Reports:  Within  forty-five  (45) days
          after the end of each month,  Manager will provide an operating report
          containing a summary of operations of the Properties.

               (iv)  Audited  Financial  Statements:  Manager  will  cause to be
          prepared and will furnish to Company within ninety (90) days after the
          end of each Fiscal Year, an audited balance sheet,  income  statement,
          statement of cashflows and a statement of


                                       7
<PAGE>


           changes in members' equity in the Company, all prepared in accordance
           with GAAP,  together with an audit opinion from a big four nationally
           recognized  accounting firm that, to the extent reasonably within the
           Manager's control, is unqualified.

               (v) Tax Estimate Report: Manager will use commercially reasonable
          efforts to cause the Company's  auditor to furnish  within thirty (30)
          days after the end of each Fiscal  Year an estimate of taxable  income
          for the Company and the  amounts  allocable  to each member of Company
          for the Fiscal Year.

               (vi) Forecasted Distributions:  Within forty-five (45) days after
          the end of each  quarter,  Manager  will  furnish  a  forecast  of the
          Company's  Net Cash Flow,  as defined in the Amended and  Restated LLC
          Agreement of the Company, for the remainder of the Fiscal Year.

               (vii) Income Tax Returns:  The Manager shall cause to be prepared
          Federal  and  required  state  income  tax  returns to be filed by the
          Company within one hundred twenty (120) days after the end of a Fiscal
          Year.  Contemporaneously  with filing by the  Company,  Manager  shall
          distribute  copies of such returns and Schedule K-1 (or similar  state
          schedule) to the Company's members.

               (viii) Other  reports:  The Manager  shall provide the Board with
          copies of (i) all material  reports  delivered to the Company and (ii)
          all material  information  related to any pending or, to the knowledge
          of Manager,  threatened  Proceedings,  insurance or required  permits,
          together  with such other  reports  and  information  relating  to the
          Business or the Services as the Company may reasonably request, to the
          extent  such  information  is in the  possession  of Manager or can be
          readily  obtained  by Manager  without  undue  effort or  unreimbursed
          expense.

               (ix) Meetings. At each meeting of the Board, Manager will provide
          information  relevant  to (a) any  Material  Decision,  together  with
          Manager's  recommendation  with respect thereto and reasons  therefor,
          and a summary of actions taken  pursuant to Material  Decisions  since
          the preceding meeting of the Board, (b) any material Proceedings which
          are pending or, to the  knowledge of Manager,  threatened  against the
          Company or in connection with the Properties or the Business,  and (c)
          any other material  developments with respect to the Properties or the
          Business.

          (l) Maintenance of Books and Records. Manager shall maintain the books
     and records of the Company  Group.  Manager agrees to retain all such books
     and records for the time periods  specified in the commercially  reasonable
     records  retention  policies  that may from time to time be  adopted by the
     Company.  If  Manager  desires  to destroy  any such  records  prior to the
     expiration  of  the  time  periods  established  in the  Company's  records
     retention policy (or in the absence of a Company records retention policy),
     then  Manager  shall  notify the  Company  and obtain the  Company's  prior
     approval prior to destroying any such records.


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<PAGE>


          (m) Other.  Manager will perform such other  functions not  heretofore
     enumerated  in this  Article  II which  were  performed  by  Manager or its
     Affiliates prior to the date hereof with respect to Properties owned by the
     Company Group as of the date hereof.

                    Article III. MATTERS RESERVED TO COMPANY

     Section 3.01 Execution of Contracts.  Manager is an independent  contractor
of Company.  Manager  may enter into  subcontracts  with  service  providers  in
connection with the performance of its obligations hereunder, but Manager is not
authorized   hereunder   to  execute   contracts,   assignments,   certificates,
applications,  authorizations,  regulatory  filings,  or any other  documents or
instruments   in  the  Company   Group's   name.   Company   Group  retains  all
responsibility  and authority for execution of any such instruments to which the
Company Group shall be a party. However,  nothing herein shall preclude Company,
at its  discretion,  from  appointing  from time to time Manager as its agent or
attorney-in-fact  for the purpose of executing  and  delivering  instruments  in
connection  with the  consummation  of  transactions  relating to the Properties
which may be authorized hereunder or approved by the Company.

                          Article IV. STANDARD OF CARE

     Section  4.01  Standard of Care.  Manager  shall  perform the Services as a
reasonable  prudent  operator,  in a  good  and  workmanlike  manner,  with  due
diligence  and  dispatch,  in accordance  with good  oilfield  practice,  and in
compliance  with  applicable  laws,  regulations,   contracts,  leases,  orders,
security instruments,  and other agreements to which Company Group is a party or
by which Company Group or any of its Properties are bound; but in no event shall
it have any  liability  as  Manager to Company  Group for  losses  sustained  or
liabilities  incurred except such as may result from gross negligence or willful
misconduct;  provided,  however,  that  Manager  shall  have  no  liability  for
omissions of Manager  resulting  from the  Company's  failure to approve or fund
actions recommended by the Manager.

     Section 4.02 Procurement of Goods and Services.  To the extent that Manager
arranges  contracts with Third Parties for goods and services in connection with
the  operation of the  Properties,  Manager  shall use  commercially  reasonable
efforts (i) to obtain such goods and  services at rates  competitive  with those
otherwise  generally available in the area in which services or materials are to
be  furnished;  and (ii) to obtain from such Third  Parties  the best  available
warranties and guarantees with respect to the goods and services so furnished.

     Section 4.03 Protection from Liens. Manager agrees to timely pay all of its
subcontractors,  materialmen,  laborers, and vendors for labor,  materials,  and
supplies furnished by Manager in connection with the operation of the Properties
hereunder,  and to  allow  no  lien,  encumbrance  or  charge  arising  from the
provision of


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<PAGE>


services or material to become fixed upon any of the Properties other than liens
being contested in good faith by appropriate proceedings.

     Section 4.04 Commingling of Assets.  Manager shall separately  maintain and
not commingle the assets of Company with those of Manager.

     Section 4.05  Insurance.  Manager shall obtain and maintain,  from insurers
who are reliable and  acceptable to the Company and authorized to do business in
the state or states or  jurisdictions  in which  Services are to be performed by
Manager,  insurance  coverages  in the types  and  minimum  limits  set forth on
Exhibit  "A".  Manager  agrees to  provide  the  Company  with  certificates  of
insurance evidencing such insurance coverage and, upon request of Company, shall
furnish  copies of such policies.  Except with respect to workers'  compensation
coverage,  the policies shall name the Company Group as additional  insureds and
shall contain  waivers by the insurers of any and all rights of  subrogation  to
pursue any claims or causes of action  against the Company  Group.  The policies
shall  provide  that they will not be cancelled  or reduced  without  giving the
Company at least ten (10) days' prior  written  notice of such  cancellation  or
reduction.

     Section 4.06  Intellectual  Property Rights.  If Manager uses  intellectual
property  owned by Third Party's in the  performance  of the  Services,  Manager
shall  obtain and maintain any such  licenses  and  authorizations  necessary to
authorize its use of such intellectual property, and shall indemnify, defend and
hold Company Group harmless from any liability from Manager's infringement upon,
unauthorized use or misappropriation  of, any intellectual  property owned by or
belonging to any other person.

                       Article V. MANAGER'S COMPENSATION

     Section 5.01  Manager's  Fee. On the 1st day of each calendar  month during
the term hereof,  Company shall pay Manager the sum of $292,000 as a monthly fee
for Services rendered hereunder ("Manager's Fee"). Manager's Fee for any partial
month  shall be  prorated  based on the number of days of  Services  rendered by
Manager during such month,  with payment of Manager's Fee for services  rendered
from the date hereof through  December 31, 2003 to be due and payable on January
1,  2004.  In the event the 1st day of the month is a day other  than a Business
Day, payment shall be due on the next Business Day. Manager's Fee is intended to
reimburse Manager for all of its general and  administrative  costs and expenses
incurred in connection with the performance of the Services,  including, without
limitation,  the cost and  expense of  salaries,  wages,  and  benefits  paid to
Manager's employees  (excluding field employees and First Level Supervisors,  as
defined in Exhibit B attached hereto),  office space,  office equipment,  office
services, office communications equipment,  office computer equipment,  vehicles
(excluding field vehicles),  and Manager's liability insurance required pursuant
to Exhibit A  (collectively,  "G&A Costs").  In the event the Manager's Fee does
not


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<PAGE>


reasonably reimburse Manager's G&A Costs, Manager may request an increase in the
Manager's Fee, such request to be accompanied by (i) reasonable documentation of
Manager's  actual G&A Costs,  and (ii) an  explanation  of the  reasons for such
increased costs; provided, however, that the Manager's Fee shall not be adjusted
prior to the end of the  Fiscal  Year  ending in 2007  except  with the  Board's
approval in connection with a material  Acquisition  approved by the Board,  and
further provided that any increase shall be subject to approval by the Company's
creditors, if required under the Company's credit agreements.

     Section 5.02 Other  Expenditures.  Except for  Manager's  G&A Costs (which,
subject to the Company's  payment of Manager's  Fee, shall be borne by Manager),
and except for matters for which the Company is entitled to indemnification from
Manager pursuant to Article VI herein,  all other costs and expenses incurred by
Manager in  performing  Services  hereunder  shall be  charged  to the  Company,
without mark-up or profit to Manager,  including,  without limitation,  expenses
incurred in the  exploration,  development  and operation of the  Properties and
other  costs and  expenses  which  constitute  "direct  charges"  as provided in
Exhibit B attached hereto; provided, however, that Manager shall not charge as a
third-party expense the cost of performing general and administrative  functions
of the types  contemplated in Section 5.01 with respect to the Properties  owned
as of the date hereof that were customarily  performed in-house by Manager prior
to the date hereof and outsourced after the date hereof.

     Section  5.03  Cash  Advances.  On or  before  the 15th day of each  month,
Manager  shall  submit  a  statement  to  Company  specifying  the  expenditures
estimated  to be made by Manager  in the  following  month  with  respect to the
performance  of Services  authorized by Company.  Manager shall bill Company for
the amount of such  estimated  expenses and Company shall advance such amount to
Manager  on or before  the first day of the  month  for which  such  advance  is
required.  In the event actual expenditures are less than the amount advanced by
the Company,  Manager shall apply any excess  advance to the  following  month's
estimated expenditures,  unless requested by the Company to return the amount of
such excess.

                          Article VI. INDEMNIFICATION

     Section 6.01  Indemnification by Manager.  Manager hereby agrees to defend,
indemnify and hold  harmless  each member of Company Group and their  respective
officers, managers, members, employees, agents and Affiliates (collectively, the
"Company  Indemnitees")  from any and all threatened or actual claims,  demands,
causes  of  action,  suits,  proceedings,  losses,  damages,  fines,  penalties,
liabilities,  costs and expenses of any nature,  including  attorneys'  fees and
court costs (collectively,  "Liabilities")  sustained or incurred by or asserted
against the Company  Indemnitees  arising from  Manager's  gross  negligence  or
willful misconduct in the performance of the Services.


                                       11
<PAGE>


     Section  6.02  Indemnification  by Company.  Except for matters as to which
Manager is obligated to indemnify  Company Group pursuant to Section 6.01 above,
Company  hereby agrees to defend,  indemnify  and hold harmless  Manager and its
officers, directors and employees (collectively, the "Manager Indemnitees") from
any and all  Liabilities  sustained or incurred or asserted  against the Manager
Indemnitees in connection with the performance of the Services.

     Section 6.03 Negligence; Strict Liability. THE INDEMNITY OBLIGATIONS HEREIN
SHALL APPLY REGARDLESS OF CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING
SOLE  NEGLIGENCE,  CONCURRENT  NEGLIGENCE OR STRICT  LIABILITY),  BREACH OF DUTY
(STATUTORY OR OTHERWISE), VIOLATION OF LAW, OR OTHER FAULT OF ANY INDEMNITEE, OR
ANY PRE-EXISTING DEFECT;  PROVIDED,  HOWEVER, THAT MANAGER INDEMNITEES SHALL NOT
BE  ENTITLED  TO  INDEMNIFICATION  IN RESPECT OF  LIABILITIES  ARISING  FROM THE
MANAGER INDEMNITEES' GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

     Section 6.04 Survival.  The provisions of this Article VI shall survive the
termination of this Agreement.

                          Article VII. CONFIDENTIALITY

     Section 7.01 Confidentiality. Manager shall maintain the confidentiality of
all Non-Public  Information  with respect to Company Group,  the Business and/or
the  Properties;  provided,  however,  that Manager may disclose such Non-Public
Information (i) in any judicial or alternative dispute resolution  proceeding to
resolve  disputes  between  Company and Manager arising  hereunder;  (ii) to the
extent disclosure is legally required under applicable Laws (including,  without
limitation,  applicable  securities  and tax laws) or any agreement to which any
member of Company Group is a party or by which it is bound,  provided,  however,
that  prior  to  making  any  legally  required  disclosures  in  any  judicial,
regulatory or dispute  resolution  proceeding,  Manager shall,  if so advised by
counsel,  seek a protective order or other relief to prevent or reduce the scope
of such  disclosure;  and (iii) to  Company's  existing  or  potential  lenders,
investors, joint interest owners, purchasers, or other parties with whom Company
may enter into contractual relationships,  to the extent deemed by Manager to be
reasonably necessary or desirable to enable it to perform the Services, provided
that Manager shall require such Third Parties to execute  agreements to maintain
the  confidentiality  of the Non-Public  Information  so disclosed;  and (iv) if
authorized by the Board. Manager acknowledges that the Non-Public Information is
being furnished to Manager for the sole and exclusive  purpose of enabling it to
perform the Services,  and the Non-Public  Information may not be used by it for
any other purpose.  The provisions of this Section shall survive the termination
of this Agreement.


                                       12
<PAGE>


                       Article VIII. TERM AND TERMINATION

     Section 8.01 Term.  This  Agreement  shall remain in force and effect until
terminated  (a) by mutual  agreement of the parties;  or (b) by Company upon the
occurrence of any of the following:  (i) Manager's  gross  negligence or willful
misconduct in the performance of the Services; (ii) Manager's material breach of
this  Agreement,  if such breach is not  remedied  within  sixty (60) days after
Manager's receipt of Company's written notice thereof,  or such longer period as
is reasonably  required to cure such breach,  provided that Manager commences to
cure such  breach  within  such  sixty (60) day  period  and  proceeds  with due
diligence to cure such breach;  (iii) the conviction of Manager or any chairman,
vice-chairman,  president,  chief executive  officer,  chief operating  officer,
chief  financial  officer,  senior vice  president  or other  senior  officer of
Manager  of  any  felony  (other  than  vehicular   offenses);   (iv)  Manager's
undertaking  of material  activities  with respect to the Property  that are not
authorized  by  the  Company  or  Manager's  disregard  of  the  Board's  lawful
instructions;  (v) a Change in Control of Manager or Manager's parent entity; or
(vi) the sale of all or substantially all of the Properties,  either in a single
transaction or series of transactions, or a winding-up of the Business.

     Section  8.02  Post-Termination   Transition.   Upon  termination  of  this
Agreement, Manager will:

          (a) provide to the Company all original files and records in Manager's
     possession or under  Manager's  control  relating to the  Properties or the
     Services  rendered  by  Manager  hereunder,  excluding,  however,  employee
     records;

          (b) to the extent  assignable,  assign to Company or its  designee all
     permits and licenses  held by Manager that are  necessary or desirable  for
     the  operation of the  Properties in the manner in which they were operated
     upon termination of this Agreement;

          (c)  cooperate  with the Company's  transfer of the  operations of the
     Properties and execute such instruments and take such further action as the
     Company may reasonably request to transfer operations; and

          (d) at the Company's request, provide transition services for up to 60
     days  after  termination  of this  Agreement  in  order to  facilitate  the
     transfer of  operations of the  Properties to a new operator  designated by
     the Company;  provided that during such  transition  period,  Company shall
     continue to pay Manager the Manager's  Fee,  prorated to the number of days
     of  transition  services  provided  by Manager and  continue  to  reimburse
     Manager,  as provided in Section 5.02,  for costs and expenses  incurred by
     Manager in connection with transition services.


                                       13
<PAGE>


                 Article IX. AUDIT RIGHTS AND DISPUTE RESOLUTION

     Section 9.01 Audit Rights.  At any time during the term of this  Agreement,
during Manager's  normal business hours,  Company shall have the right to review
and, at Company's  expense,  to copy the books and records maintained by Manager
relating to the Properties.  In addition,  to the extent necessary to verify the
performance  by Manager of its  obligations  under this  Agreement,  the Company
shall have the right, at Company's expense, exercisable no more than once in any
twelve-month  period, to audit,  examine and make copies of or extracts from the
books and records of Manager (the "Audit Right"). Company may exercise the Audit
Right through such  auditors as the Board may determine in its sole  discretion.
Company  shall (i)  exercise  the Audit  Right  only upon  reasonable  notice to
Manager  and (ii) use  reasonable  efforts to conduct  the Audit Right in such a
manner as to minimize the inconvenience and disruption to Manager.

     Section  9.02  Dispute  Resolution.  The  Parties  shall  use  the  dispute
resolution  procedures  set forth in Exhibit C to the Amended and  Restated  LLC
Agreement to resolve in good faith any dispute,  controversy or claim related to
this  Agreement,  including  any  dispute  over the  payment of  indemnification
pursuant to the provisions of Article VI.

                      Article X. MISCELLANEOUS PROVISIONS

     Section 10.01 Notices.  All notices or advices  required or permitted to be
given by or pursuant  to this  Agreement,  shall be given in  writing.  All such
notices  and  advices  shall be (i)  delivered  personally,  (ii)  delivered  by
facsimile or delivered by U.S.  Registered  or Certified  Mail,  Return  Receipt
Requested  mail,  or (iii)  delivered  for  overnight  delivery by a  nationally
recognized  overnight courier service.  Such notices and advices shall be deemed
to have been given (i) on the date of delivery  if  delivered  personally  or by
facsimile,  (ii) on the third  Business  Day  following  the date of  mailing if
mailed by U.S. Registered or Certified Mail, Return Receipt Requested,  or (iii)
on the date of receipt if  delivered  for  overnight  delivery  by a  nationally
recognized overnight courier service. All such notices and advices and all other
communications related to this Agreement shall be given as follows:


           If to Company:

           Quest Cherokee, LLC
           5901 N. Western, Suite 200
           Oklahoma City, OK  73118
           Attn: President/CEO
           Telephone:  (405) 840-9894
           Fax:  (405) 840-9897


                                       14
<PAGE>


                With a copy to:

                Cherokee Energy Partners LLC
                200 Clarendon Street, 55th Floor
                Boston, MA 02117
                Attn:  General Counsel
                Telephone:  (617) 531-6316
                Fax:  (617) 867-4698

           If to Manager:

           Quest Energy Service, Inc.
           5901 N. Western, Suite 200
           Oklahoma City, OK  73118
           Attn:  Jerry D. Cash
           Telephone:  (405) 840-9894
           Fax:  (405) 840-9897


or to such other address as the party may have furnished to the other parties in
accordance  herewith,  except  that  notice  of  change  of  addresses  shall be
effective only upon receipt.

     Section  10.02  Waiver  of  Consequential  Damages.  NEITHER  PARTY NOR ITS
AFFILIATES  SHALL,  IN ANY  EVENT,  BE LIABLE  TO ANY OTHER  PARTY OR ANY OF ITS
RESPECTIVE AFFILIATES FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF SUCH
OTHER PARTY,  INCLUDING,  BUT NOT LIMITED TO, LOSS OF REVENUE,  COST OF CAPITAL,
LOSS OF BUSINESS  REPUTATION OR OPPORTUNITY WHETHER SUCH LIABILITY ARISES OUT OF
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.

     Section  10.03  Governing  Law.  This  Agreement  shall be subject  to, and
interpreted  by and in  accordance  with,  the laws  (excluding  conflict of law
provisions) of the State of Kansas.

     Section  10.04  Attorneys'  Fees and Expenses.  In any action  brought by a
party  hereto  to  enforce  the  obligations  of any  other  party  hereto,  the
prevailing  party shall be entitled to collect from the  opposing  party to such
action such party's reasonable  litigation costs and attorneys fees and expenses
(including  court costs,  reasonable fees of accountants and experts,  and other
expenses incidental to the litigation).

     Section 10.05 Entire  Agreement.  This Agreement is the entire Agreement of
the parties respecting the subject matter hereof. There are no other agreements,
representations or warranties,  whether oral or written,  respecting the subject
matter hereof.


                                       15
<PAGE>


     Section 10.06 Construction.  This Agreement, and all the provisions of this
Agreement,  shall be deemed drafted by all of the Parties hereto,  and shall not
be construed  against either Party on the basis of that Party's role in drafting
this Agreement.

     Section 10.07 Further Assurances.  In connection with this Agreement,  each
Party shall execute and deliver any  additional  documents and  instruments  and
perform any  additional  acts that may be necessary or appropriate to effectuate
and perform the provisions of this Agreement.

     Section 10.08 Successors and Assigns. This Agreement may not be assigned by
either Party hereto without the prior written  consent of the other Party.  This
Agreement  shall be binding  upon and shall  inure to the benefit of the Parties
and their respective successors and permitted assigns.

     Section  10.09 No Third  Party  Beneficiaries.  Nothing  in this  Agreement
(except as provided in Article VI) shall  provide any benefit to any Third Party
or entitle any Third Party to any claim, cause of action, remedy or right of any
kind,  it being the  intent of the  Parties  that  this  Agreement  shall not be
construed as a Third Party beneficiary contract.

     Section 10.10 Relationship of the Parties.  Nothing in this Agreement shall
be construed to create a partnership or joint venture,  nor to authorize  either
Party to act as agent for or representative of the other Party. Each Party shall
be deemed an  independent  contractor  and  neither  Party shall act as, or hold
itself out as acting as, agent for any other Party.

     Section  10.11 No  Waiver.  A Party to this  Agreement  may  decide  not to
require,  or fail to  require,  full or  timely  performance  of any  obligation
arising under this Agreement. The decision not to require, or failure of a Party
to require,  full or timely  performance  of any  obligation  arising under this
Agreement  (whether on a single occasion or on multiple  occasions) shall not be
deemed a waiver of any such obligation. No such decisions or failures shall give
rise to any claim of  estoppel,  laches,  course of dealing,  amendment  of this
Agreement by course of dealing, or other defense of any nature to any obligation
arising hereunder.

     Section 10.12 Amendments. This Agreement may be amended or modified only in
a writing signed by both Parties which specifically references this Agreement.


                                       16
<PAGE>


     Section  10.13  Unenforceability.  In  the  event  any  provision  of  this
Agreement,  or  the  application  of  such  provision  to any  person  or set of
circumstances,  shall be determined to be invalid, unlawful, or unenforceable to
any extent for any reason, the remainder of this Agreement,  and the application
of such provision to Persons or circumstances other than those as to which it is
determined to be invalid, unlawful, or unenforceable,  shall not be affected and
shall continue to be enforceable to the fullest extent permitted by law.

     Section  10.14  Counterparts.  This  Agreement  may be executed in multiple
counterparts,  each of  which  shall  be  deemed  an  original  and all of which
together shall constitute but a single agreement.


                                       17
<PAGE>





     EXECUTED this 22nd day of December, 2003.

                                    "MANAGER"

                                    QUEST ENERGY SERVICE, INC.



                                    By:  /s/ Jerry Cash
                                         ---------------------------
                                          Jerry D. Cash
                                          Co-Chief Executive Officer


                                    "COMPANY"

                                    QUEST CHEROKEE, LLC




                                    By:  /s/ Jerry Cash
                                         ---------------------------
                                          Jerry D. Cash
                                          Manager



                                       18
<PAGE>



                                   EXHIBIT "A"

                      INSURANCE TO BE MAINTAINED BY MANAGER

1.   Worker's Compensation Insurance,  written to cover the employees of MANAGER
     in compliance with the state having  jurisdiction over each employee,  with
     the following endorsements and limits:

     Endorsements                           Limits
     ------------                           ------
     Basic Workers' Compensation Policy     Statutory   Limits  (or,
                                            if  no  such   statutory
                                            limits,   the   combined
                                            single     limit     per
                                            occurrence of $1,000,000)

     Employers' Liability                   Combined Single Limit per
                                            occurrence of $1,000,000

2.   Commercial General Liability  Insurance,  written to include the following
     endorsements and limits:

     Endorsements                           Limits
     ------------                           ------
     Personal Injury                        Combined  Single Limit per
     Bodily Injury                          occurrence of $1,000,000
     Products & Completed Operations
     Broad Form Contractual
     Liability
     Broad Form Property Damage
     Premises
     Independent Contractors

3.   Comprehensive  Automobile  Liability  Insurance,  written to  include  the
     following endorsements and limits:

     Endorsements                           Limits
     ------------                           ------
     Owned Vehicles                         Combined  Single  Limit per
     Non-owned Vehicles                     occurrence of $1,000,000
     Hired Vehicles
     Form MCS-90 (if applicable)
          (Endorsed on)








<PAGE>


4.   If  Watercraft  are  provided by MANAGER  and used by MANAGER in  MANAGER's
     operations:

      A.  Protection  and Indemnity  Insurance  written to include the following
      endorsements  and  limits  (or,  in  the  alternative,   deletion  of  the
      watercraft exclusion from the Comprehensive General Liability Policy):

     Endorsements                           Limits
     ------------                           ------
     Chartered Vessel                       Combined  Single Limit per
     Members of Crew                        occurrence of $5,000,000
     Marine Contractual
     Tower's Liability
     In Rem
     Collision Liability
     Removal of "other than owner" clause
     regarding Limitation of Liability
     Removal of any clause limiting coverage to
       "as owner of the vessel"

      B.   Hull  and  Machinery  Insurance  written  to  include  the  following
           endorsements and limits:

     Endorsements                           Limits
     ------------                           ------
    Collision Liability                     Value of Vessel or $1,000,000
    Removal  of "other  than  owner"        whichever greater
    clause  regarding  Limitation of
    Liability

5.   If Aircraft,  including helicopters, are provided by MANAGER and/or used by
     MANAGER in MANAGER's  operation,  Aircraft Liability,  Passenger Liability,
     and Property Damage Liability  Insurance,  written to include the following
     endorsements and limits:

     Endorsements                           Limits
     ------------                           ------
     Owned Aircraft                         Combined  Single Limit
     Non-owned Aircraft                     per    occurrence   of
     Hired Aircraft                         $10,000,000

6.   Excess Umbrella Insurance

      MANAGER shall provide  commercial general liability  insurance  ("Umbrella
      Policy") with limits not less than $5,000,000.



<PAGE>


                                    EXHIBIT B
                                       to
                       Operating and Management Agreement


Direct Charges

1.    Ecological and Environmental

      Costs  incurred  for  the  benefit  of  the  Properties  as  a  result  of
      requirements   of  Governmental   Authorities  to  satisfy   environmental
      considerations  applicable  to the  Properties.  Such  costs  may  include
      surveys of an ecological or  archaeological  nature and pollution  control
      procedures as required by applicable Laws.

2.    Rentals and Royalties

      Lease rentals and royalties paid by Manager for the Properties.

3.    Labor

      (a)  Salaries and wages of Manager's  field  employees and employees whose
           primary function is the direct  supervision of other employees and/or
           contract labor directly  employed in the  performance of the Services
           in a field operating  capacity ("First Level  Supervisors")  directly
           employed on the Properties.

      (b)  Manager's cost of holiday, vacation, sickness and disability benefits
           and other  customary  allowances paid to employees whose salaries and
           wages are chargeable to the Company under  Paragraph 3(a). Such costs
           under  this  Paragraph  3(b) may be  charged  on a "when  and as paid
           basis" or by  "percentage  assessment"  on the amount of salaries and
           wages  chargeable to the Company under  Paragraph 3(a). If percentage
           assessment  is used,  the rate shall be based on the  Manager's  cost
           experience.

      (c)  Expenditures or contributions made pursuant to assessments imposed by
           governmental  authority  which  are  applicable  to  Manager's  costs
           chargeable to the Company under Paragraphs 3(a) and 3(b).

      (d)  Travel and other  reimburseable  expenses  of those  employees  whose
           salaries  and wages are  chargeable  to the Company  under  Paragraph
           3(a).

4.    Employee Benefits

      Manager's  current costs of established  plans for  employees'  group life
      insurance,  hospitalization,  pension, retirement, stock purchase, thrift,
      bonus,  and other benefit plans of a like nature,  applicable to Manager's
      labor cost chargeable to the Company under  Paragraphs 3(a) and 3(b) shall
      be  Manager's  actual  cost  not  to  exceed  the  percent  most  recently
      recommended by the Council of Petroleum Accountants Societies.


<PAGE>


5.    Material

      Material purchased or furnished by Manager for use on the Properties. Only
      such material  shall be purchased for or  transferred to the Properties as
      may be required  for  immediate  use and as is  reasonably  practical  and
      consistent with efficient and economical  operations.  The accumulation of
      surplus stocks shall be avoided.

6.    Transportation

      Transportation  of employees and material  necessary for operations on the
      Properties.

7.    Services

      The cost of contract services, equipment and utilities provided by outside
      sources.

8.    Equipment and Facilities Furnished by Manager

      (a)  Manager  shall  charge the  Company  for use of  Manager-owned  field
           equipment  and  facilities  at  rates   commensurate  with  costs  of
           ownership   and   operation.   Such  rates  shall  include  costs  of
           maintenance,  repairs,  other operating  expense,  insurance,  taxes,
           depreciation,  and  interest  on gross  investment  less  accumulated
           depreciation  not to exceed eight percent (8%) per annum.  Such rates
           shall not exceed average commercial rates currently prevailing in the
           immediate area of the Properties.

      (b)  In lieu of charges in Paragraph 8(a) above,  Manager may elect to use
           average  commercial  rates  prevailing in the  immediate  area of the
           Properties less 20%. For automotive  equipment,  Manager may elect to
           use rates published by the Petroleum Motor Transport Association.

9.    Damages and Losses to Joint Property

      All  costs  or  expenses  necessary  for  the  repair  or  replacement  of
      Properties  made necessary  because of damages or losses incurred by fire,
      flood, storm, theft, accident, or other cause, except those resulting from
      Manager's gross  negligence or willful  misconduct.  Manager shall furnish
      Company   written  notice  of  damages  or  losses  incurred  as  soon  as
      practicable after a report thereto has been received by Manager.

10.   Legal Expense

      Expense of  handling,  investigating  and settling  litigation  or claims,
      discharging of liens, payment of judgments and amounts paid for settlement
      of claims incurred in or resulting from operations  under the agreement or
      necessary to protect or recover the Properties,  except that no charge for
      service of Manager's  legal staff or fees or expense of outside  attorneys
      shall be made unless previously agreed to by the Company.  All other legal
      expense is considered to be covered by Manager's G&A Costs.


<PAGE>


11.   Taxes

      Taxes of every kind and nature  assessed or levied  upon or in  connection
      with the Properties, the operation thereof, or the production therefrom.

12.   Insurance

      Premiums paid for insurance obtained for the benefit of the Company or the
      Properties.

13.   Abandonment and Reclamation

      Costs incurred for abandonment of the Properties, including costs required
      by Governmental Authorities.

14.   Communication

      Cost  of  acquiring,   leasing,  installing,   operating,   repairing  and
      maintaining   communication   systems,   including   radio  and  microwave
      facilities directly serving the Properties.

15.   Other Costs and Expenses

      Any other  expenditure not covered above which is of direct benefit to the
      Properties  and is incurred by Manager in the necessary and proper conduct
      of operations of the Properties, excluding Manager's G&A Costs.