<PAGE>
                                                                    EXHIBIT 10.3

                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

                        WILLIAMS PRODUCTION RMT COMPANY,

                                   AS SELLER,

                                       AND

                            BILL BARRETT CORPORATION,

                                    AS BUYER

                      NATRONA AND FREMONT COUNTIES, WYOMING

                              Dated March 27, 2002

                             Effective March 1, 2002

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                                TABLE OF CONTENTS

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ARTICLE 1       PURCHASE AND SALE.........................................................................        1
        1.1     Purchase and Sale.........................................................................        1
        1.2     Assets....................................................................................        1
        1.3     Excluded Properties.......................................................................        3
        1.4     Seller's Reserved Interest................................................................        3
        1.5     Effective Time............................................................................        3
ARTICLE 2       PURCHASE PRICE............................................................................        3
        2.1     Purchase Price............................................................................        3
        2.2     Adjustments to Purchase Price.............................................................        3
        2.3     Allocated Values..........................................................................        5
ARTICLE 3       DUE DILIGENCE INSPECTION..................................................................        5
        3.1     Due Diligence.............................................................................        5
        3.2     Records...................................................................................        5
        3.3     No Representation or Warranty.............................................................        5
        3.4     Access to Properties......................................................................        6
ARTICLE 4       TITLE MATTERS.............................................................................        6
        4.1     Defensible Title..........................................................................        6
        4.2     Permitted Encumbrances....................................................................        6
        4.3     Title Defect..............................................................................        7
        4.4     Notice of Title Defects...................................................................        7
        4.5     Defect Adjustments and Thresholds.........................................................        7
        4.6     Title Dispute Resolution..................................................................        8
        4.7     Depletion and Depreciation of Personal Property...........................................        8
        4.8     Consents..................................................................................        8
        4.9     Preferential Purchase Rights..............................................................        9
        4.10    Casualty Loss.............................................................................        9
ARTICLE 5       ENVIRONMENTAL MATTERS.....................................................................       10
        5.1     Definitions...............................................................................       10
        5.2     Spills and NORM...........................................................................       10
        5.3     Environmental Assessment..................................................................       10
        5.4     Adjustments for Environmental Defects.....................................................       11
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                                  (Continued)
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        5.5     Environmental Dispute Resolution..........................................................       12
        5.6     "As Is, Where Is" Purchase................................................................       12
        5.7     Disposal of Materials, Substances and Wastes..............................................       12
        5.8     Buyer's Indemnity.........................................................................       12
ARTICLE 6       SELLER'S REPRESENTATIONS AND WARRANTIES...................................................       13
        6.1     Existence.................................................................................       13
        6.2     Power and Authority.......................................................................       13
        6.3     Authorization.............................................................................       13
        6.4     Execution and Delivery....................................................................       13
        6.5     Liabilities for Brokers' Fees.............................................................       14
        6.6     Litigation................................................................................       14
        6.7     Liens.....................................................................................       14
        6.8     No Bankruptcy.............................................................................       14
        6.9     Taxes.....................................................................................       14
        6.10    Agreements................................................................................       14
        6.11    Wells.....................................................................................       14
        6.12    Leases....................................................................................       14
ARTICLE 7       BUYER'S REPRESENTATIONS AND WARRANTIES....................................................       14
        7.1     Existence.................................................................................       14
        7.2     Power and Authority.......................................................................       15
        7.3     Authorization.............................................................................       15
        7.4     Execution and Delivery....................................................................       15
        7.5     Liabilities for Brokers' Fees.............................................................       15
        7.6     Litigation................................................................................       15
        7.7     Independent Evaluation....................................................................       15
        7.8     Qualification.............................................................................       15
ARTICLE 8       COVENANTS AND AGREEMENTS..................................................................       15
        8.1     Covenants and Agreements..................................................................       15
ARTICLE 9       CONDITIONS TO CLOSING.....................................................................       17
        9.1     Seller's Conditions.......................................................................       17
        9.2     Buyer's Conditions........................................................................       18
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                                TABLE OF CONTENTS
                                  (Continued)
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ARTICLE 10      RIGHT OF TERMINATION AND ABANDONMENT......................................................       18
        10.1    Termination...............................................................................       18
        10.2    Liabilities Upon Termination..............................................................       18
ARTICLE 11      CLOSING...................................................................................       19
        11.1    Date of Closing...........................................................................       19
        11.2    Closing Obligations.......................................................................       19
ARTICLE 12      POST-CLOSING OBLIGATIONS..................................................................       20
        12.1    Post-Closing Adjustments..................................................................       20
        12.2    Dispute Resolution........................................................................       20
        12.3    Records...................................................................................       20
        12.4    Transfer Taxes and Recording Fees.........................................................       21
        12.5    Rental and Royalty Administration.........................................................       21
        12.6    Lease Maintenance Costs for Jointly Owned Leases..........................................       21
        12.7    Further Assurances........................................................................       21
        12.8    Seller's Right of First Refusal to Market Gas.............................................       22
ARTICLE 13      TAXES.....................................................................................       22
        13.1    Apportionment of Ad Valorem and Property Taxes............................................       22
        13.2    Transfer Taxes............................................................................       22
        13.3    Other Taxes...............................................................................       22
        13.4    Tax Reports and Returns...................................................................       22
ARTICLE 14      ASSUMPTION AND RETENTION OF OBLIGATIONS; INDEMNIFICATION..................................       23
        14.1    Buyer's Assumption of Liabilities and Obligations.........................................       23
        14.2    Seller's Retention of Liabilities and Obligations.........................................       23
        14.3    Buyer's Plugging and Abandonment Obligations..............................................       23
        14.4    Indemnification...........................................................................       24
        14.5    Procedure.................................................................................       24
        14.6    No Insurance; Subrogation.................................................................       25
        14.7    Reservation as to Non-Parties.............................................................       26
ARTICLE 15      MISCELLANEOUS.............................................................................       26
        15.1    Exhibits..................................................................................       26
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                                  (Continued)
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        15.2    Expenses..................................................................................       26
        15.3    Notices...................................................................................       26
        15.4    Amendments................................................................................       27
        15.5    Assignment................................................................................       27
        15.6    Confidentiality...........................................................................       27
        15.7    Press Releases............................................................................       27
        15.8    Headings..................................................................................       27
        15.9    Counterparts..............................................................................       27
        15.10   References................................................................................       27
        15.11   Governing Law.............................................................................       27
        15.12   Binding Effect............................................................................       28
        15.13   Survival..................................................................................       28
        15.14   No Third-Party Beneficiaries..............................................................       28
        15.15   Limitation on Damages.....................................................................       28
        15.16   Severability..............................................................................       28
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                                      -iv-
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                                    EXHIBITS

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                                                                                        Section
Exhibit                         Description                                          Where Defined
-------                         -----------                                          -------------
<S>              <C>                                                                 <C>
  A-1            Leases, Fee Interests and Lands                                         1.2.a.
  A-2            Wells and Facilities                                                1.2.b., 1.2.e.
  A-3            Rights-of-Way and Surface Leases                                        1.2.e.
  A-4            Seismic Option Contracts                                                1.2.f.
  A-5            Geophysical Data                                                        1.2.g.
  A-6            Third Party Gathering Contracts                                         1.2.i.
   B             Allocated Values                                                         2.3.
   C             Material Agreements                                                 1.2.d., 6.10.
   D             Form of Assignment, Bill of Sale and Conveyance                        11.2.a.
   E             Form of Assignment and Assumption Agreement                            11.2.a.
   F             Form of Seismic License Agreement                                       1.2.g.
   G             Seller's Officer's Certificate                                         11.2.e.
   H             Buyer's Officer's Certificate                                          11.2.f.
</TABLE>

                                      -v-
<PAGE>

                           PURCHASE AND SALE AGREEMENT

      This PURCHASE AND SALE AGREEMENT ("AGREEMENT"), dated March 27, 2002, is
by and between Williams Production RMT Company, a Delaware corporation, whose
address is 1515 Arapahoe Street, Tower 3, Suite 1000, Denver, Colorado 80202
("SELLER") and Bill Barrett Corporation, a Maryland corporation, whose address
is 1099 18th Street, Suite 2300, Denver, Colorado 80202 ("BUYER").

                                    RECITALS

      A.    Seller owns and desires to sell certain real and personal property
interests located in Natrona and Fremont Counties, Wyoming, as more fully
described in Section 1.2 below (the "ASSETS").

      B.    Buyer desires to purchase the Assets upon the terms and conditions
set forth in this Agreement.

                                    AGREEMENT

      In consideration of the mutual promises contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer agree as follows:

                                    ARTICLE 1
                                PURCHASE AND SALE

      1.1   PURCHASE AND SALE. Seller agrees to sell and convey to Buyer, and
Buyer agrees to purchase and receive from Seller, all of Seller's right, title
and interest in the Assets, pursuant to the terms and conditions of this
Agreement.

      1.2   ASSETS. The "ASSETS" are all of Seller's right, title, and interest
in and to the following real and personal property interests located in Natrona
and Fremont Counties, Wyoming:

            a.    The oil and gas leases (including working interests, royalty
interests, overriding royalty interests, net profits interests and all other
leasehold interests whether described or not) described on EXHIBIT A-1 (the
"LEASES"), and the fee mineral interests described on EXHIBIT A-1 (the "FEE
INTERESTS"), insofar and only insofar as the Leases and Fee Interests cover the
lands described on EXHIBIT A-1 (the "LANDS"); the Lands described on EXHIBIT
A-1, whether or not Seller's interest in the Lands is correctly or sufficiently
described in EXHIBIT A-1; the oil, gas and all other hydrocarbons (including,
but not limited to, coalbed methane) and products ("HYDROCARBONS"), in, on or
under or that may be produced from the Lands.

            b.    The oil and gas wells located on the Leases, Fee Interests and
Lands, or lands pooled or unitized therewith, including without limitation, the
oil and gas wells specifically described on EXHIBIT A-2, whether producing or
non-producing, all injection and disposal wells
<PAGE>

on the Leases, Fee Interests and Lands (the "WELLS"), and all personal property
and equipment associated with the Wells as of the Effective Time.

            c.    The rights, to the extent transferable, in and to all existing
and effective unitization, pooling and communitization agreements, declarations
and orders, and the properties covered and the units created thereby, to the
extent that they relate to or affect any of the interests described in Sections
1.2.a. and 1.2.b. or the post-Effective Time production of Hydrocarbons from the
Leases, Fee Interests and Lands.

            d.    The rights, to the extent transferable, in and to Hydrocarbon
sales, purchase, gathering and processing contracts, operating agreements,
balancing agreements, joint venture agreements, partnership agreements, farmout
agreements and other contracts, agreements and instruments relating to the
interests described in Sections 1.2.a., 1.2.b. and 1.2.c., including without
limitation the Material Agreements described on EXHIBIT C, only insofar as they
relate to the Leases, Fee Interests and Lands, excluding any insurance contracts
and all firm transportation contracts.

            e.    All of the personal property, fixtures, improvements, permits,
licenses, approvals, servitudes, rights-of-way, easements, surface leases
(including without limitation the rights-of-way, easements and surface leases
described on EXHIBIT A-3), and other surface rights, tanks, boilers, buildings,
improvements, injection facilities, saltwater disposal facilities, compression
facilities, gathering systems, other appurtenances and facilities (including
without limitation the facilities described on EXHIBIT A-2) located on or used
as of the Closing Date in connection with or otherwise related to the
exploration for or production, gathering, treatment, processing, storing, sale
or disposal of Hydrocarbons or water produced from the properties and interests
described in Sections 1.2.a through 1.2.d.

            f.    The seismic option contracts described on EXHIBIT A-4 (the
"OPTION CONTRACTS"), insofar and only insofar as the Option Contracts cover the
lands described on EXHIBIT A-4 (the "OPTION LANDS").

            g.    Licenses, substantially in the form of EXHIBIT F, of the
geophysical and seismic data described on EXHIBIT A-5 (the "GEOPHYSICAL DATA");
and copies, to the extent contractually transferable, obtained at Buyer's sole
expense (including licensing fees for software), of all interpretative geologic
and geophysical data which relates to the Lands, including an electronic copy of
Seller's engineering and geologic database.

            h.    The files, records, data and information relating to the items
described in Sections 1.2.a. through 1.2.g. maintained by Seller (the
"RECORDS"), including without limitation, accounting files, lease files, land
files, well files, gas, oil and other hydrocarbon sales contract files, gas
gathering and processing files, division order files, abstracts, and title
opinions; and, to the extent reasonable available to Seller and contractually
and electronically transferable to Buyer, vendor histories by well for the year
2001 for those Assets operated by Seller.

            i.    The gas gathering and processing contracts (the "THIRD PARTY
GATHERING CONTRACTS") pursuant to which Williams gathers and processes the gas
of third parties produced

                                      -2-
<PAGE>

in the fields in which the Assets described in Sections 1.2.a. and 1.2.b. are
located, including without limitation the Third Party Gathering Contracts
described on EXHIBIT A-6.

      1.3   EXCLUDED PROPERTIES. All rights of Seller to earn an interest in the
Option Lands by drilling or other operations conducted on lands which are not
described on Exhibit A-1 and which are retained by Seller (the "RETAINED LANDS")
pursuant to the Option Contracts are excepted and excluded from this Agreement.

      1.4   SELLER'S RESERVED INTEREST. Seller shall reserve an overriding
royalty in oil, gas and other hydrocarbons, produced, saved and marketed from
the Leases and Lands located in the Boone Dome North, Buffalo Jump, Cooper
Reservoir, Coyote Creek, East Madden Area, Lance Gardens, Magna, Red Creek, Sand
Draw (Boone Dome S), Sioux Creek, Stone Cabin (Wind River Basin), Wallace Creek
CBM Prospects identified on EXHIBIT A-1, in an amount equal to the difference,
if any, between 18.75% and the amount of the total royalty and overriding
royalty burden on the Leases and Lands existing of record as of the Effective
Time, subject to proportionate reduction to the mineral interest covered by the
Leases and Seller's working interest in the Leases. Seller's overriding royalty
shall be reserved at the wellhead without deduction for post-production costs of
any kind, except taxes and transportation. There shall be no deduction for
post-production costs of separating, heater treating, dehydration, treating,
compression and gathering of Hydrocarbons.

      1.5   EFFECTIVE TIME. The purchase and sale of the Assets shall be
effective as of March 1, 2002 at 7:00 a.m., Mountain Time (the "EFFECTIVE
TIME").

                                   ARTICLE 2
                                 PURCHASE PRICE

      2.1   PURCHASE PRICE. The purchase price for the Assets shall be
$73,000,000.00 (the "PURCHASE PRICE"). At Closing, Buyer shall pay Seller the
Purchase Price as adjusted pursuant to Section 2.2 below by wire transfer of
immediately available funds.

      2.2   ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be adjusted
according to this Section without duplication. For all adjustments known as of
Closing, the Purchase Price shall be adjusted at Closing pursuant to a
"PRELIMINARY SETTLEMENT STATEMENT" approved by Seller and Buyer on or before
Closing. A draft of the Preliminary Settlement Statement will be prepared by
Seller. The Preliminary Settlement Statement shall set forth the Purchase Price
as adjusted as provided in this section using the best information available at
the Closing Date which amount shall be paid at Closing and is referred to as the
"CLOSING AMOUNT." The Closing Amount shall be paid at Closing by wire transfer
of immediately available funds. After Closing, final adjustments to the Purchase
Price shall be made pursuant to the Final Settlement Statement to be delivered
pursuant to Section 12.1.

         For the purposes of this Agreement, the term "PROPERTY EXPENSES" shall
mean all capital expenses, joint interest billings, lease operating expenses,
lease rental and maintenance costs, royalties, overriding royalties, Taxes (as
defined and apportioned as of the Effective Time pursuant to Article 13),
drilling expenses, workover expenses, geological, geophysical and any other
exploration or development expenditures chargeable under applicable operating

                                      -3-
<PAGE>

agreements or other agreements consistent with the standards established by the
Council of Petroleum Accountant Societies of North America that are attributable
to the maintenance and operation of the Assets during the period in question.

            a.    Upward Adjustments. The Purchase Price shall be adjusted
upward by the following:

                  (i)   The amount of all Property Expenses attributable to the
      Assets after the Effective Time and paid by Seller;

                  (ii)  The proceeds of production attributable to the Assets
      occurring before the Effective Time and received by Buyer, net of
      royalties and taxes measured by production, plus an amount equal to
      production from the Assets that occurred before the Effective Time but,
      because such production is in pipelines or in processing, had not been
      sold as of the Effective Time, times the price for which production from
      the Assets was sold immediately prior to the Effective Time; and

                  (iii) To the extent that there are any pipeline imbalances, if
      the net of such imbalances is an overdelivery imbalance (that is, at the
      Effective Time, Seller has delivered more gas to the pipeline than the
      pipeline has redelivered for Seller), the Purchase Price shall be adjusted
      upward by the first-of-the month price of spot gas delivered to pipelines
      for Colorado Interstate Gas Company (Rocky Mountains) as reported in
      Inside F.E.R.C.'s Gas Market Report for the month in which the Effective
      Time occurs times the net overdelivery imbalance in MMbtus. In the event
      such publication shall cease to be published, the parties shall select a
      comparable publication.

                  (iv)  An amount equal to the value, based upon the average
      price received for the month of March, 2002, of Seller's share of any
      condensate in the tanks produced from or credited to the Leases, Fee
      Interests and Lands prior to the Effective Time based upon the quantities
      in condensate tanks as measured by and reflected in Seller's records.

                  (v)   Post-Effective Time Lease rentals and shut-in payments
      made by Seller pursuant to Section 12.5.

            b.    Downward Adjustments. The Purchase Price shall be adjusted
downward by the following:

                  (i)   An amount equal to the sum of all Title Defect
      Adjustments (as defined in Section 4.5.c.) if the Title Threshold Amount
      as calculated pursuant to Section 4.5.d. has been exceeded;

                  (ii)  An amount equal to the sum of all Environmental Defect
      Adjustments (as defined in Section 5.4.b(i)) if the Environmental
      Threshold Amount as calculated pursuant to Section 5.4.b(ii) has been
      exceeded; and

                                      -4-
<PAGE>

                  (iii) The proceeds of production attributable to the Assets
      occurring on or after the Effective Time and received by Seller, net of
      royalties and taxes measured by production.

                  (iv)  To the extent that there are any pipeline imbalances, if
      the net of such imbalances is an underdelivery imbalance (that is, at the
      Effective Time, Seller has delivered less gas to the pipeline than the
      pipeline has redelivered for Seller), the Purchase Price shall be adjusted
      downward by the first-of-the-month price of spot gas delivered to
      pipelines for Colorado Interstate Gas Company (Rocky Mountains) as
      reported in Inside F.E.R.C.'s Gas Market Report for the month in which the
      Effective Time occurs times the net underdelivery imbalance in MMbtus. In
      the event such publication shall cease to be published, the parties shall
      select a comparable publication.

                  (v)   The amount of all Pre-Effective Time Property Expenses
      attributable to the Assets and paid by Buyer, subject to Article 13 and
      Section 14.2.

            c.    Well Imbalance Adjustments. Seller and Buyer agree that the
Purchase Price will be adjusted downward or upward, as appropriate, by an amount
equal to the well imbalances existing as of the Effective Time multiplied by the
average value on an MMbtu basis at the wellhead for sales of production during
the month in which the Effective Time occurs.

      2.3   ALLOCATED VALUES. Seller and Buyer agree to allocate the Purchase
Price among the Assets as set forth on EXHIBIT B.

                                   ARTICLE 3
                            DUE DILIGENCE INSPECTION

      3.1   DUE DILIGENCE. Subject to Subsection 3.3, Seller shall make the
Records and the Assets available to Buyer and its representatives for inspection
and review to permit Buyer to perform its due diligence review ("DUE DILIGENCE
REVIEW") as hereinafter provided. Buyer shall be entitled to conduct its Due
Diligence Review until 5:00 p.m., Mountain Time, on March 27, 2002 (the "DUE
DILIGENCE PERIOD").

      3.2   RECORDS. The Records will be made available to Buyer at the offices
of Seller during Seller's normal business hours or as otherwise reasonably
requested by Buyer to complete its Due Diligence Review. Subject to the consent
and cooperation of third parties, Seller will assist Buyer in Buyer's efforts to
obtain, at Buyer's expense, such additional information from such parties as
Buyer may reasonably desire. Buyer may inspect the Records and other Assets and
such additional information only to the extent that it may do so without
violating any obligation of confidence or contractual commitment of Seller to a
third party. Seller shall use reasonable efforts to obtain the necessary
consents to allow Buyer's examination of any confidential information that is
material to this transaction.

      3.3   NO REPRESENTATION OR WARRANTY. Except for the representations and
warranties contained in this Agreement, Seller makes no warranty or
representation of any kind as to the Records or any information contained
therein. Buyer agrees that any conclusions drawn from the Records shall be the
result of its own independent review and judgment.

                                      -5-
<PAGE>

      3.4   ACCESS TO PROPERTIES. Seller hereby consents to Buyer conducting,
prior to 5:00 p.m., Mountain Time, on March 27, 2002 and upon advance notice to
Seller, at Buyer's sole risk and expense, on-site inspections and an
environmental assessment of the Assets; provided that Buyer shall not conduct
any sampling activities without prior notice and consent of Seller, which
consent shall not be unreasonably withheld. In connection with any such on-site
inspections or environmental assessment, Buyer agrees not to interfere with the
normal operation of the Assets and agrees to comply with all requirements and
safety policies of the operator. If Buyer or its agents prepares an
environmental assessment of any property, Buyer will furnish copies thereof to
Seller. The parties shall execute a "common undertaking" letter regarding the
confidentiality of environmental assessments where appropriate. In connection
with the granting of such access, Buyer represents that it is adequately insured
and, except to the extent caused by Seller's gross negligence or willful
misconduct, waives, releases and agrees to indemnify Seller and Seller's
representatives against all claims for injury to, or death of, persons or for
damage to property arising in any way from the access afforded to Buyer
hereunder or the activities of Buyer. This waiver, release and indemnity by
Buyer shall survive termination of this Agreement.

                                   ARTICLE 4
                                  TITLE MATTERS

      4.1   DEFENSIBLE TITLE. The term "DEFENSIBLE TITLE" means such title of
Seller in and to the Assets that, subject to and except for the Permitted
Encumbrances: (i) entitles Seller to receive not less than the net revenue
interest described on EXHIBIT B ("NRI"); (ii) obligates Seller to bear costs and
expenses relating to the Assets in an amount not greater than the working
interest described on EXHIBIT B ("WI"); and (iii) is free and clear of material
liens, taxes, encumbrances, mortgages, claims and production payments and any
defects that would create a material impairment of use and enjoyment of or loss
of interest in the affected Asset.

      4.2   Permitted Encumbrances. The term "Permitted Encumbrances" shall
mean:

            a.    Lessors' royalties, overriding royalties net profits
interests, production payments, reversionary interests and similar burdens if
the net cumulative effect of such burdens does not operate to reduce the NRIs
below those set forth on EXHIBIT B;

            b.    Any required third-party consents to assignment of Leases and
contracts, and preferential purchase rights which are handled exclusively under
Sections 4.8 and 4.9 below;

            c.    Liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are being contested in good faith in the
normal course of business;

            d.    All rights to consent by, required notices to, filings with,
or other actions by federal, state, local governmental entities or tribal
entities in connection with the sale or conveyance of the Assets if the same are
customarily obtained subsequent to such sale or conveyance;

            e.    Rights of reassignment, to the extent any exist as of the date
of this Agreement, upon the surrender or expiration of any lease;

                                      -6-
<PAGE>

            f.    Easements, rights-of-way, servitudes, permits, surface leases
and other rights with respect to surface operations, on, over or in respect of
any of the properties or any restriction on access thereto and that do not
materially interfere with the operation of the affected property;

            g.    Materialmen's, mechanics', repairmen's, employees',
contractors', operators' or other similar liens or charges arising in the
ordinary course of business incidental to construction, maintenance or operation
of the Assets, (i) if they have not been filed pursuant to law and the time for
filing them has expired, (ii) if filed, they have not yet become due and payable
or payment is being withheld as provided by law, or (iii) if their validity is
being contested in good faith by appropriate action;

            h.    Rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or regulate any of the
Assets in any manner; and all applicable laws, rules, regulations and orders of
general applicability in the area; and

            i.    Liens arising under operating agreements, unitization and
pooling agreements and production sales contracts securing amounts not yet due
or, if due, being contested in good faith in the ordinary course of business.

      4.3   TITLE DEFECT. The term "TITLE DEFECT" means any encumbrance,
encroachment, irregularity, defect in or objection to real property title,
excluding Permitted Encumbrances, that alone or in combination with other
defects:

            a.    Renders title to any portion of the Assets less than
Defensible Title;

            b.    Reduces, impairs or prevents Buyer from receiving payment from
the purchasers of production from any portion of the Assets;

            c.    Restricts or extinguishes Buyer's right to use any portion of
the Assets as owner, lessee, licensee or permittee, as applicable.

      4.4   NOTICE OF TITLE DEFECTS. Buyer shall deliver to Seller a written
"NOTICE OF TITLE DEFECTS" on or before March 27, 2002, 5:00 p.m., Mountain Time.
The Notice of Title Defects shall (i) describe the Title Defect, (ii) describe
the basis of the Title Defect and (iii) describe Buyer's good faith estimate of
the reduction in the Assets' Allocated Value caused by the Title Defect ("DEFECT
VALUE") and associated calculations and documentation. Buyer will be deemed to
have conclusively waived any Title Defect about which it fails to notify Seller
in writing prior to March 27, 2002 at 5:00 p.m., Mountain Time.

      4.5   DEFECT ADJUSTMENTS AND THRESHOLDS. The parties shall proceed as
follows:

            a.    Seller shall have the option of attempting to cure such Title
Defects to the reasonable satisfaction of Buyer on or before thirty (30) days
after the Closing Date (the "CURE PERIOD"), which option shall be communicated
to Buyer no later than 5:00 p.m., Mountain Time, on March 28, 2002. If Seller is
unable to cure such Title Defects during the Cure Period, any necessary Purchase
Price Adjustments shall be made in the Final Settlement Statement.

                                      -7-
<PAGE>

            b.    Seller may contest the Defect Value by so notifying Buyer. If
Buyer and Seller are unable to agree on the Defect Value (agreement shall result
in the "ACTUAL DEFECT VALUE") within fifteen (15) days of Seller's notice
contesting the Defect Value, then Seller or Buyer may submit such Defect Value
dispute to a mutually agreeable, duly licensed, petroleum engineering,
geological, accounting or law firm, in accordance with the expertise required to
determine the Actual Defect Value, which firm shall determine the Actual Defect
Value and such determination shall be final and binding upon Seller and Buyer.
The fees charged by said firm for making a determination under this Section
4.5.b. shall be paid one-half by Buyer and one-half by Seller.

            c.    If Seller does not elect to cure or is unable to cure such
Title Defects to the reasonable satisfaction of Buyer on or before thirty (30)
days after the Closing Date or such later date as is mutually agreed to by the
parties, either Seller or Buyer shall have the option to exclude such Asset from
this Agreement (the "EXCLUDED ASSET"). If Seller or Buyer elects to exclude such
Asset, the Purchase Price shall be adjusted downward by an amount equal to the
Allocated Value of the Excluded Asset. If neither Seller nor Buyer elect to
exclude such Asset from this Agreement, Buyer shall accept assignment of the
Asset affected by such Title Defect, and the Purchase Price shall be adjusted
downward by the Actual Defect Value ("TITLE DEFECT ADJUSTMENT").

            d.    There shall be no reduction to the Purchase Price under
Section 4.5.c unless Seller's share of a proposed reduction as to any single
incident exceeds $20,000.00. In addition, if Seller's share of the proposed
reduction under Section 4.5.c as to any single incident exceeds $20,000.00,
there shall be no reduction to the Purchase Price until such time as the total
of these excess amounts (over $20,000.00) exceeds $500,000.00. (the "TITLE
THRESHOLD AMOUNT") but, in such event, the Purchase Price reduction shall
exclude the Title Threshold Amount. For the purposes of application of the
foregoing thresholds, "single incident" shall be applicable on a well-by-well or
property-by-property basis.

      4.6   TITLE DISPUTE RESOLUTION. Seller and Buyer agree to resolve disputes
concerning the following matters pursuant to this Section: (i) the existence and
scope of a Title Defect and (ii) the adequacy of Seller's Title Defect curative
materials. The parties agree to attempt to initially resolve all disputes
through good faith negotiations. If the parties cannot resolve disputes
regarding items (i) or (ii) on or before 45 days after Closing, the disputed
matters will be finally determined by binding arbitration pursuant to Section
14.5.d.

      4.7   DEPLETION AND DEPRECIATION OF PERSONAL PROPERTY. Buyer shall assume
all risk of loss with respect to, and any change in the condition of, the Assets
from the Effective Time until Closing for production of oil, gas and/or other
hydrocarbons through depletion (including the watering-out of any well,
collapsed casing or sand infiltration of any well) and the depreciation of
personal property due to ordinary wear and tear.

      4.8   CONSENTS. Seller shall use reasonable efforts to obtain all required
consents. If Buyer discovers other affected properties during the course of
Buyer's due diligence activities, Buyer shall notify Seller immediately and
Seller shall use its commercially reasonable efforts to obtain such consents
prior to Closing. Except for consents and approvals which are customarily
obtained post-Closing and those consents which would not invalidate the
conveyance of the

                                      -8-
<PAGE>

Assets, if a necessary consent to assign any Asset has not been obtained as of
the Closing, then (i) the portion of the Assets for which such consent has not
been obtained shall be included with the Assets at the Closing, and the Purchase
Price for that portion of the Assets shall be included in the Preliminary
Settlement Statement, (ii) Seller shall employ reasonable efforts to obtain such
consent as promptly as possible following Closing, and (iii) if such consent has
not been obtained as of the Final Settlement Date, the Allocated Value of that
portion of the Assets shall be a downward adjustment to the Purchase Price on
the Final Settlement Statement and Buyer shall reassign such Asset to Seller,
effective as of the Effective Time. Buyer shall reasonably cooperate with Seller
in obtaining any required consent including providing assurances of reasonable
financial conditions.

      4.9   PREFERENTIAL PURCHASE RIGHTS. Seller does not believe that any
preferential purchase rights are applicable to the transaction contemplated by
this Agreement. Nonetheless, if Seller becomes aware of any facts to the
contrary, then Seller shall send notice of this Agreement prior to Closing to
all persons holding such rights offering to sell to each such person that
portion of the Assets for which such a preferential right is held for an amount
equal to the Allocated Values of such Assets and subject to all other terms and
conditions of this Agreement. If, prior to Closing, any of such persons
asserting a preferential purchase right notifies Seller that it intends to
consummate the purchase of that portion of the Assets to which it holds a
preferential purchase right pursuant to the terms and conditions of such notice
and this Agreement, then such Assets shall be excluded from the Assets
identified in this Agreement and the Purchase Price shall be reduced by the
Allocated Values of such Assets; provided, however, that if the holder of such
preferential right fails to consummate the purchase of such Assets prior to the
Closing Date, then Seller shall promptly so notify Buyer, and Seller shall sell
to Buyer, and Buyer shall purchase from Seller, the Assets to which the
preferential purchase right was asserted for the Allocated Values of such
Assets. All Assets for which a preferential purchase right has not been asserted
prior to Closing, or with respect to which closing does not occur on or before
the Closing Date following the assertion of a preferential purchase right, shall
be sold to Buyer at Closing pursuant to the provisions of this Agreement. If one
or more of the holders of any preferential purchase rights notifies Seller
subsequent to Closing that it intends to assert its preferential purchase right,
Seller shall give notice thereof to Buyer, whereupon Buyer shall perform all
valid preferential purchase right obligations of Seller to such holders and
Buyer shall be entitled to receive (and Seller hereby assigns to Buyer all of
Seller's rights to) all proceeds received from such holders in connection with
such preferential purchase rights.

      4.10  CASUALTY LOSS. Prior to Closing, if a portion of the Assets is
destroyed by fire or other casualty or if a portion of the Assets is taken or
threatened to be taken in condemnation or under the right of eminent domain
("CASUALTY LOSS"), Buyer shall not be obligated to purchase such Asset. If Buyer
declines to purchase such Asset, the Purchase Price shall be adjusted as agreed
to by Buyer and Seller. If Buyer elects to purchase such Asset, the Purchase
Price shall be reduced by the estimated cost to repair such Asset (with
equipment of similar utility) as agreed to by Buyer and Seller (the reduction
being the "NET CASUALTY LOSS"). The Net Casualty Loss shall not, however, exceed
the Allocated Value of such Asset. Seller, at its sole option, may elect to cure
such Casualty Loss. If Seller elects to cure such Casualty Loss, Seller may
replace any personal property that is the subject of a Casualty Loss with
equipment of similar grade and utility, or replace any real property with real
property of similar nature and kind if

                                      -9-

<PAGE>

such property is acceptable to Buyer in its sole discretion. If Seller elects to
cure the Casualty Loss to the satisfaction of Buyer, there shall be no
adjustment to the Purchase Price.

                                   ARTICLE 5
                              ENVIRONMENTAL MATTERS

      5.1   DEFINITIONS. For the purposes of the Agreement, the following terms
shall have the following meanings:

      "ENVIRONMENTAL DEFECT" means a condition in, on or under the Assets
(including, without limitation, air, land, soil, surface and subsurface strata,
surface water, ground water, or sediments) that causes any portion of the Assets
to be in material violation of an Environmental Law or a condition that can
reasonably be expected to give rise to costs or liability under applicable
Environmental Laws. NORM (defined in Section 5.2) contaminated pipe, tubing and
wellheads shall not be an Environmental Defect.

      "ENVIRONMENTAL LAW" means any statute, rule, regulation, code or order,
issued by any federal, state, or local governmental entity in effect on or
before the Effective Time (collectively, "LAWS") relating to the protection of
the environment or the release or disposal of waste materials.

      "REMEDIATION" means actions taken to correct an Environmental Defect and
"REMEDIATION COSTS" means the actual, or good faith estimates of the costs to
conduct such remediation.

      5.2   SPILLS AND NORM. Buyer acknowledges that in the past there may have
been spills of wastes, crude oil, produced water, or other materials (including,
without limitation, any toxic, hazardous or extremely hazardous substances) onto
the Lands. In addition, some production equipment may contain asbestos and/or
Naturally Occurring Radioactive Material (hereinafter referred to as "NORM"). In
this regard Buyer expressly understands that NORM may affix or attach itself to
the inside of wells, materials and equipment as scale or in other forms, that
said wells, materials and equipment located on the Lands or included in the
Assets described herein may contain NORM and that NORM-containing material may
have been buried or otherwise disposed of on the Lands. Buyer also expressly
understands that special procedures may be required for the remediation,
removal, transportation and disposal of asbestos or NORM from the Assets and
Lands where such material may be found and that Buyer assumes all liability for
or in connection with the assessment, containment, removal, remediation,
transportation and disposal of any such materials, in accordance with all past,
present or future applicable laws, rules, regulations and other requirements of
any governmental or judicial entities having jurisdiction and also with the
terms and conditions of all applicable leases and other contracts.

      5.3   ENVIRONMENTAL ASSESSMENT. Prior to Closing, Buyer may conduct an
on-site inspection, environmental assessment and compliance audit of the Assets
(an "ENVIRONMENTAL ASSESSMENT") at Buyer's cost and expense. Seller shall
provide Buyer with access to the Assets and to all information in Seller's
possession or control pertaining to the environmental condition of the Assets,
including, but not limited to, status or any environmental reports, permits,
records

                                      -10-

<PAGE>

and assessments in Seller's possession or control, and shall make available to
Buyer all past or present personnel who would reasonably be expected to have
knowledge or information regarding the environmental status or condition of the
Assets. Buyer shall provide Seller prior written notice of any environmental
inspections and tests, including sampling activities, and Buyer shall give
Seller the opportunity to participate in all such inspections and tests. Buyer
shall provide Seller, at no cost to Seller, all reports of environmental
inspections and tests, provided that all such reports shall be deemed to be
confidential between the parties and subject to the confidentiality provisions
of Section 8.1.h of this Agreement. Buyer agrees to release, indemnify, defend,
and hold harmless Seller against all Losses (as defined in Section 14.4) arising
from or related to the activities of Buyer, its employees, agents, contractors
and other representatives in connection with Buyer's Environmental Assessment
regardless of the negligence or strict liability of Seller.

      5.4   ADJUSTMENTS FOR ENVIRONMENTAL DEFECTS.

            a.    Notice of Environmental Defects. Buyer shall provide Seller
with written notice of any Environmental Defect which Buyer's Environmental
Assessment reveals and will provide evidence thereof. Such notice and evidence
shall be given on or before March 27, 2002, 5:00 p.m., Mountain Time.

            b.    Defect Adjustments. The parties shall proceed as follows:

                  (i)   Upon receipt of a notice of Environmental Defect, Seller
      may, at its sole election on or before thirty (30) days after the Closing
      Date, either: (x) agree with Buyer on an adjustment to the Purchase Price,
      which adjustment shall reflect the cost to remediate such Environmental
      Defect ("ENVIRONMENTAL DEFECT ADJUSTMENT"); or (y) in the event of the
      failure of the parties to come to agreement under (x), remove the affected
      Asset(s) from the Assets being conveyed and adjust the Purchase Price
      accordingly. In no event will Seller have any obligation to remediate any
      Environmental Defect unless Seller expressly agrees in writing to do so.

                  (ii)  There shall be no reduction to the Purchase Price under
      Section 5.4.b(i) unless Seller's share of a proposed reduction as to any
      single incident exceeds $50,000.00. In addition, if Seller's share of the
      proposed reduction under Section 5.4.b(i) as to any single incident
      exceeds $50,000.00, there shall be no reduction to the Purchase Price
      until such time as the total of these excess amounts (over $50,000.00)
      exceeds $1,000,000.00 (the "ENVIRONMENTAL THRESHOLD AMOUNT") but, in such
      event, the Purchase Price reduction shall exclude the Environmental
      Threshold Amount. For the purposes of application of the foregoing
      thresholds, "single incident" shall be applicable on a well-by-well or
      property-by-property basis.

                  (iii) If Seller and Buyer agree to an adjustment of the
      Purchase Price, said adjustment shall be made only for the net present
      value, calculated using a ten percent discount rate (PV 10), of the most
      cost effective means to achieve the remediation required by applicable
      federal, state or local law or other governmental or judicial directive
      and not for any other cost.

                                      -11-

<PAGE>

      5.5   ENVIRONMENTAL DISPUTE RESOLUTION. The parties agree to resolve
disputes concerning the following matters pursuant to this Section: (i) the
existence and scope of an Environmental Defect, (ii) Buyer's estimate of costs
of Remediation of an Environmental Defect and (iii) the effectiveness of
Seller's Remediation. The parties agree to attempt to initially resolve all
disputes through good faith negotiations. If the parties cannot resolve disputes
regarding items (i), (ii) or (iii) on or 45 days after the Closing Date, the
disputed matters will be finally determined by binding arbitration pursuant to
Section 14.5.d.

      5.6   "AS IS, WHERE IS" PURCHASE. Buyer shall acquire the Assets
(including Assets for which a notice was given under Section 5.4 above) in an
"AS IS, WHERE IS" condition and shall assume all risks that the Assets may
contain waste materials (whether toxic, hazardous, extremely hazardous or
otherwise) or other adverse physical conditions, including, but not limited to,
the presence of unknown abandoned oil and gas wells, water wells, sumps, pits,
pipelines or other waste or spill sites which may not have been revealed by
Buyer's investigation. On and after the Effective Time, all responsibility and
liability related to all such conditions, whether known or unknown, fixed or
contingent, will be transferred from Seller to Buyer.

      5.7   DISPOSAL OF MATERIALS, SUBSTANCES AND WASTES. Buyer shall properly
handle, remove, transport and dispose of any material, substance or waste
(whether toxic, hazardous, extremely hazardous or otherwise) from the Assets or
Lands (including, but not limited to, produced water, drilling fluids and other
associated wastes), whether present before or after the Effective Time, in
accordance with applicable local, state and federal laws and regulations. Buyer
shall keep records of the types, amounts and location of materials, substances
and wastes, which are transported, handled, discharged, released or disposed
onsite and offsite. When and if any Lease is terminated, Buyer shall take
whatever additional testing, assessment, closure, reporting or remedial action
with respect to the Assets or Lands as is necessary to meet any local, state or
federal requirements directed at protecting human health or the environment in
effect at that time.

      5.8   BUYER'S INDEMNITY.

            a.    Buyer shall indemnify, hold harmless, release and defend
Seller from and against all damages, losses, claims, demands, causes of action,
judgments and other costs (including but not limited to any civil fines,
penalties, costs of assessment, clean-up, removal and remediation of pollution
or contamination, and expenses for the modification, repair or replacement of
facilities on the Lands) brought by any and all persons and any agency or other
body of federal, state or local government, on account of any personal injury,
illness or death, any damage to, destruction or loss of property, and any
contamination or pollution of natural resources (including soil, air, surface
water or groundwater) to the extent any of the foregoing directly or indirectly
is caused by or otherwise involves any environmental condition of the Assets or
Lands, whether created or existing before, on or after the Effective Time,
including, but not limited to, the presence, disposal or release of any material
(whether hazardous, extremely hazardous, toxic or otherwise) of any kind in, on
or under the Assets or the Lands.

            b.    Buyer's indemnification obligations shall extend to and
include, but not be limited to (i) the negligence or other fault of Seller,
Buyer and third parties, whether such

                                      -12-

<PAGE>
negligence is active or passive, gross, joint, sole or concurrent, (ii)
Seller's or Buyer's strict liability, and (iii) Seller's or Buyer's liabilities
or obligations under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.),
the Clean Water Act (33 U.S.C. Sections 466 et seq.), the Safe Drinking Water
Act (14 U.S.C. Sections 1401-1450), the Hazardous Materials Transportation Act
(49 U.S.C. Sections 1801 et seq.), the Toxic Substances Control Act (15 U.S.C.
Sections 2601-2629), the Clean Air Act (42 U.S.C. Section 7401 et seq.) as
amended, the Clean Air Act Amendments of 1990 and all state and local laws and
any replacement or successor legislation or regulation thereto. This
indemnification shall be in addition to any other indemnity provisions contained
in this Agreement, and it is expressly understood and agreed that any terms of
this article shall control over any conflicting or contradicting terms or
provisions contained in this Agreement.

                                   ARTICLE 6
                     SELLER'S REPRESENTATIONS AND WARRANTIES

      Seller makes the following representations and warranties as of the date
of this Agreement:

      6.1   EXISTENCE. Seller is a corporation duly organized and validly
existing under the laws of the State of Delaware.

      6.2   POWER AND AUTHORITY. Seller has all requisite power and authority to
carry on its business as presently conducted, to enter into this Agreement and
each of the documents contemplated to be executed by Seller at Closing, and to
perform its obligations under this Agreement and under such documents. To the
best of Seller's knowledge, the consummation of the transaction contemplated by
this Agreement and each of the documents contemplated to be executed by Seller
at Closing will not violate, nor be in conflict with, (i) any provision of
Seller's organizational or governing documents, (ii) any agreement or instrument
to which Seller is a party or is bound, or (iii) any judgment, decree, order,
statute, rule or regulation applicable to Seller.

      6.3   AUTHORIZATION. The execution, delivery and performance of this
Agreement and each of the documents contemplated to be executed by Seller at
Closing and the contemplated transaction has been duly and validly authorized by
all requisite corporate and shareholder action on the part of Seller.

      6.4   EXECUTION AND DELIVERY. This Agreement has been duly executed and
delivered on behalf of Seller, and all documents and instruments required
hereunder to be executed and delivered by Seller have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of Seller enforceable in
accordance with their terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application with
respect to creditors, (ii) general principles of equity and (iii) the power of a
court to deny enforcement of remedies generally based upon public policy.

                                      -13-

<PAGE>

      6.5   LIABILITIES FOR BROKERS' FEES. Seller has incurred no liability,
contingent or otherwise, for brokers' or finders' fees relating to the
transaction contemplated by this Agreement for which Buyer shall have any
responsibility whatsoever.

      6.6   LITIGATION. Seller is not aware of and Seller has not received
written notice of any demand, lawsuit, compliance order, notice of probable
violation or similar governmental action that, if adversely determined, might
(i) result in an impairment or loss of title to the Assets, (ii) materially
impair the value of the Assets or (iii) materially hinder or impede the
operation of the Assets. To the best of Seller's knowledge, there is no action,
suit, proceeding, claim or investigation by any person, entity, administrative
agency or governmental body pending or, to Seller's knowledge, threatened,
against Seller before any governmental authority that impedes or is likely to
impede Seller's ability to consummate the transaction contemplated by this
Agreement and to assume the liabilities to be assumed by Seller under this
Agreement.

      6.7   LIENS. Except for the liens created by or arising under joint
operating agreements covering the Assets or applicable state statutes, the
Assets are free and clear of all liens.

      6.8   NO BANKRUPTCY. There are no bankruptcy proceedings pending, being
contemplated by, or to Seller's knowledge, based upon reasonable inquiry and
investigation, threatened against Seller.

      6.9   TAXES. Based on Seller's knowledge, all taxes and assessments
pertaining to the Assets based on or measured by the ownership of property for
all taxable periods prior to the taxable period in which this Agreement is
executed have been properly paid. All income taxes and obligations relating
thereto that could result in a lien or other claim against any of the Assets
have been properly paid, unless contested in good-faith by appropriate
proceeding.

      6.10  AGREEMENTS. To the best of Seller's knowledge, all of the material
agreements (excluding Leases and pooling or communitization agreements)
pertaining to the Assets are listed on EXHIBIT C.

      6.11  WELLS. To the best of Seller's knowledge, each Well is properly
permitted and operated in substantial compliance with all applicable statutes,
ordinances, rules, regulations and orders, including without limitation
Environmental Laws.

      6.12  LEASES. To the best of Seller's knowledge, the Leases are in full
force and effect in accordance with their respective terms, and there exist no
defaults in the performance of any obligation thereunder.

                                   ARTICLE 7
                     BUYER'S REPRESENTATIONS AND WARRANTIES

      Buyer makes the following representations and warranties as of the date of
this Agreement:

      7.1   EXISTENCE. Buyer is a corporation, duly organized, validly existing
and formed under the laws of the State of Maryland, and Buyer is duly qualified
and in good standing in the State of Colorado.

                                      -14-

<PAGE>

      7.2   POWER AND AUTHORITY. Buyer has all requisite power and authority to
carry on its business as presently conducted, to enter into this Agreement and
each of the documents contemplated to be executed by Buyer at Closing, and to
perform its obligations under this Agreement and under such documents. The
consummation of the transaction contemplated by this Agreement and each of the
documents contemplated to be executed by Buyer at Closing will not violate, nor
be in conflict with, (i) any provision of Buyer's organizational or governing
documents, (ii) any agreement or instrument to which Buyer is a party or is
bound, or (iii) any judgment, decree, order, statute, rule or regulation
applicable to Buyer.

      7.3   AUTHORIZATION. The execution, delivery and performance of this
Agreement and each of the documents contemplated to be executed by Buyer at
Closing and the contemplated transaction has been duly and validly authorized by
all requisite action on the part of Buyer.

      7.4   EXECUTION AND DELIVERY. This Agreement has been duly executed and
delivered on behalf of Buyer, and at the Closing all documents and instruments
required hereunder to be executed and delivered by Buyer shall have been duly
executed and delivered. This Agreement does, and such documents and instruments
shall, constitute legal, valid and binding obligations of Buyer enforceable in
accordance with their terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application with
respect to creditors, (ii) general principles of equity and (iii) the power of a
court to deny enforcement of remedies generally based upon public policy.

      7.5   LIABILITIES FOR BROKERS' FEES. Buyer has incurred no liability,
contingent or otherwise, for brokers' or finders' fees relating to the
transaction contemplated by this Agreement for which Seller shall have any
responsibility whatsoever.

      7.6   LITIGATION. There is no action, suit, proceeding, claim or
investigation by any person, entity, administrative agency or governmental body
pending or, to Buyer's knowledge, threatened in writing, against Buyer before
any governmental authority that impedes or is likely to impede Buyer's ability
to consummate the transactions contemplated by this Agreement and to assume the
liabilities to be assumed by Buyer under this Agreement.

      7.7   INDEPENDENT EVALUATION. Buyer is an experienced and knowledgeable
investor in the oil and gas business. Buyer has been advised by and has relied
solely upon its own expertise in legal, tax, reservoir engineering and other
professional counsel concerning this transaction, the Assets and the value
thereof.

      7.8   QUALIFICATION. Buyer is now or at closing will be and thereafter
will continue to be qualified to own and operate any federal or State of Wyoming
oil and gas lease that constitutes part of the Assets, including meeting all
bonding requirements. Completing the transaction set out in this Agreement will
not cause Buyer to be disqualified or to exceed any acreage limitation imposed
by law, statute or regulation.

                                   ARTICLE 8
                            COVENANTS AND AGREEMENTS

      8.1   COVENANTS AND AGREEMENTS. As to the period of time from the
execution hereof until Closing, Seller and Buyer agree as follows:

                                      -15-
<PAGE>

            a.    Operation Prior to Closing. Except as otherwise consented to
in writing by Buyer or provided in this Agreement, from the date of execution
hereof to the Closing, Seller shall use Seller's best efforts to ensure that the
Assets are maintained and operated in a good and workmanlike manner. Subject to
the provisions of Section 2.2, Seller shall pay or cause to be paid its
proportionate share of all costs and expenses incurred in connection with such
operations. To the extent Seller receives written AFEs or actual notice of such,
Seller shall notify Buyer of ongoing activities and major capital expenditures
in excess of $10,000.00 per activity net to Seller's interest conducted on the
Assets and shall consult with Buyer regarding all such matters and operations.

            b.    Restriction on Operations. Subject to Section 8.1.a., unless
Seller obtains the prior written consent of Buyer to act otherwise, Seller will
use good-faith efforts within the constraints of the applicable operating
agreements and other applicable agreements not to (i) abandon any part of the
Assets (except in the ordinary course of business or the abandonment of leases
upon the expiration of their respective primary terms or if not capable of
production in paying quantities), (ii) except for capital projects which are
deemed to be approved, approve any operations on the properties anticipated in
any instance to cost the owner of the Assets more than $10,000.00 per activity
net to Seller's interest (excepting emergency operations, operations required
under presently existing contractual obligations, ongoing commitments under
existing AFEs and operations undertaken to avoid a monetary penalty or
forfeiture provision of any applicable agreement or order), (iii) convey or
dispose of any material part of the Assets (other than replacement of equipment
or sale of oil, gas, and other liquid products produced from the Assets in the
regular course of business) or enter into any farmout, farmin or other similar
contract affecting the Assets, (iv) let lapse any insurance now in force with
respect to the Assets, or (v) materially modify or terminate any contract
material to the operation of the Assets.

            c.    Marketing. Unless Seller obtains the prior written consent of
Buyer to act otherwise, Seller will not alter any existing marketing contracts
currently in existence, or enter into any new marketing contracts or agreements
providing for the sale of Hydrocarbons for a term in excess of one (1) month.

            d.    Legal Status. Seller and Buyer shall use all reasonable
efforts to maintain their respective legal statuses from the date hereof until
the Final Settlement Date and to assure that as of the Closing Date they will
not be under any material corporate, legal or contractual restriction that would
prohibit or delay the timely consummation of the transaction contemplated
hereby.

            e.    Notices of Claims. Seller shall promptly notify Buyer and
Buyer shall promptly notify Seller if, between the date hereof and the Closing
Date, Seller or Buyer, as the case may be, receives notice of any claim, suit,
action or other proceeding of the type referred to in Sections 6.6 and 7.6.

            f.    Compliance with Laws. During the period from the date of this
Agreement to the Closing Date, Seller shall attempt in good faith to comply in
all material respects with all applicable statutes, ordinances, rules,
regulations and orders relating to the ownership and operation of the Assets.

                                      -16-
<PAGE>

            g.    Government Reviews and Filings. Before and after the Closing,
Buyer and Seller shall cooperate to provide requested information, make required
filings with, prepare applications to and conduct negotiations with each
governmental agency as required to consummate the transaction contemplated
hereby. Each party shall make any governmental filings occasioned by its
ownership or structure. Buyer shall make all filings after the Closing at its
expense with governmental agencies necessary to transfer title to the Assets or
to comply with laws and shall indemnify and hold harmless Seller from and
against all claims, costs, expenses, liabilities and actions arising out of
Buyer's holding of such title after the Closing and prior to the securing of any
necessary governmental approvals of the transfer.

            h.    Confidentiality. All data and information obtained by Buyer
from Seller in connection with the transactions contemplated by this Agreement,
whether before or after the execution of this Agreement, and data and
information generated by Buyer in connection with this transaction
(collectively, the "INFORMATION") is deemed by the parties to be confidential
and proprietary to Seller. Until completion of the Closing, except as required
by law, Buyer and its officers, agents and representatives will hold in strict
confidence all Information, except any Information which: (i) at the time of
disclosure to Buyer by Seller is in the public domain; (ii) after disclosure to
Buyer by Seller becomes part of the public domain by publication or otherwise,
except by breach of this commitment by Buyer; (iii) Buyer can establish by
competent proof was rightfully in its possession at the time of disclosure to
Buyer by Seller; (iv) Buyer rightfully receives from third parties free of any
obligation of confidence; (v) is disclosed to Buyer's consultants, investors and
lenders who similarly agree to protect the confidentiality of such Information
and agree to use such Information only for their due diligence evaluation of the
Assets; or (vi) is developed independently by Buyer, provided that the person or
persons developing the Information shall not have had access to the Information.

            i.    Return of Information. If the transaction contemplated by this
Agreement does not close on or before March 29, 2002, Buyer shall return to
Seller all copies of the Information in the possession of Buyer obtained or
generated by Buyer pursuant to any provision of this Agreement. The terms of
Sections 8.1.h. and 8.1.i shall survive termination of this Agreement.

                                    ARTICLE 9
                              CONDITIONS TO CLOSING

      9.1   SELLER'S CONDITIONS. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction at or prior to Closing of
the following conditions precedent:

            a.    Representations, Warranties and Covenants. All representations
and warranties of Buyer contained in Article 7 of this Agreement shall be true
and correct in all material respects on and as of the Closing and Buyer shall
have performed and satisfied all covenants and agreements required by this
Agreement to be performed and satisfied by Buyer at or prior to the Closing in
all material respects;

            b.    Closing Documents. Buyer shall have executed and delivered the
documents which are contemplated to be executed and delivered by it pursuant to
Article 11 hereof prior to or on the Closing Date;

                                      -17-
<PAGE>

            c.    No Action. No order shall have been entered by any court or
governmental agency having jurisdiction over the parties or the subject matter
of this Agreement that restrains or prohibits the purchase and sale contemplated
by this Agreement and which remains in effect at the time of Closing or seeks to
recover damages from Seller resulting therefrom.

      9.2   BUYER'S CONDITIONS. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction on or prior to the Closing
of the following conditions precedent:

            a.    Representations and Warranties. The representations and
warranties of Seller contained in Article 6 of this Agreement shall be true and
correct in all material respects on and as of the Closing Date, and Seller shall
have performed and satisfied all covenants and agreements required by this
Agreement to be performed and satisfied by Buyer at or prior to the Closing in
all material respects;

            b.    Closing Documents. Seller shall have executed and delivered
the documents which are contemplated to be executed and delivered by it pursuant
to Article 11 hereof prior to or on the Closing Date;

            c.    No Action. No order shall have been entered by any court or
governmental agency having jurisdiction over the parties or the subject matter
of this Agreement that restrains or prohibits the purchase and sale contemplated
by this Agreement and which remains in effect at the time of Closing or seeks to
recover damages from Buyer resulting therefrom.

                                   ARTICLE 10
                      RIGHT OF TERMINATION AND ABANDONMENT

      10.1  TERMINATION. This Agreement may be terminated in accordance with the
following provisions:

            a.    by Seller if the conditions set forth in Section 9.1 are not
satisfied, through no fault of Seller, or waived by Seller in writing, as of the
Closing Date; or

            b.    by Buyer if the conditions set forth in Section 9.2 are not
satisfied, through no fault of Buyer, or waived by Buyer in writing, as of the
Closing Date.

            c.    by Seller or Buyer if the aggregate of Title Defect
Adjustments and Environmental Defect Adjustments exceeds 2% of the Purchase
Price.

      10.2  LIABILITIES UPON TERMINATION.

            a.    Buyer's Default. If the transactions contemplated by this
Agreement are not consummated on or before the date specified in Section 11.1 by
reason of Buyer's wrongful failure to tender performance at Closing, and if
Seller is not in material default under the terms of this Agreement and is
ready, willing and able to Close, Buyer shall pay Seller an amount equal to
seven percent (7%) of the Purchase Price as liquidated damages. Seller and Buyer
agree that

                                      -18-
<PAGE>

Seller's damages in the event Buyer fails to close are difficult to measure and
both Seller and Buyer agree that the amount of the liquidated damages provided
herein bears a reasonable relationship to and is a reasonable estimation of such
damages.

            b.    Seller's Default. If the transactions contemplated by this
Agreement are not consummated on or before the date specified in Section 11.1 by
reason of Seller's wrongful failure to tender performance at Closing and if
Buyer is not in material default under this Agreement and is ready, willing and
able to Close, Buyer shall be entitled to specific performance as Buyer's sole
and exclusive remedy.

            c.    Other Termination. If Seller and Buyer agree to terminate this
Agreement, each party shall release the other party from any and all liability
for termination of this Agreement.

                                   ARTICLE 11
                                     CLOSING

      11.1  DATE OF CLOSING. The closing of the transactions contemplated by
this Agreement ("CLOSING" or "CLOSING DATE") shall be held on or before March
29, 2002 at the offices of Davis Graham & Stubbs LLP in Denver, Colorado, at
8:30 a.m. or at such other time and place as the parties may agree in writing.
The actual change of operations from Seller to Buyer shall occur on April 2,
2002, at 7:00 a.m., Mountain Time.

      11.2  CLOSING OBLIGATIONS. At Closing, the following events shall occur,
each being a condition precedent to the others and each being deemed to have
occurred simultaneously with the others:

            a.    Assignment. Seller and Buyer shall execute, acknowledge and
deliver (i) an Assignment, Bill of Sale and Conveyance of the Assets effective
as of the Effective Time (in sufficient counterparts to facilitate filing and
recording) substantially in the form of EXHIBIT D with a special warranty of
title by, through and under Seller but not otherwise; with no warranties,
express or implied, as to the personal property, fixtures or condition of the
Assets which are conveyed "as is, where is"; (ii) such other assignments, bills
of sale, or deeds necessary to transfer the Assets to Buyer, including without
limitation any conveyances on official forms and related documentation necessary
to transfer the Assets to Buyer in accordance with requirements of state and
federal governmental regulations; and (iii) Licenses of the Geophysical Data to
the extent all necessary third party consents for such licenses have been
obtained; and (iv) an Assignment and Assumption Agreement in the form of EXHIBIT
E under which Seller assigns its interest in the Third Party Gathering Contracts
included in the Assets and under which Buyer assumes the obligations thereunder
in accordance with the terms of this Agreement.

            b.    Preliminary Settlement Statement. Seller and Buyer shall
execute and deliver the Preliminary Settlement Statement.

            c.    Purchase Price. Buyer shall deliver to Seller the Closing
Amount by wire transfer of immediately available funds.

                                      -19-
<PAGE>

            d.    Letters in Lieu. Seller and Buyer shall execute and deliver
all necessary letters in lieu of transfer orders directing all purchasers of
production to pay Buyer the proceeds attributable to production from the Assets
from and after the Effective Time.

            e.    Seller's Officer's Certificate. Seller shall execute and
deliver to Buyer an officer's certificate in form and substance similar to
EXHIBIT G, stating that all conditions precedent to Closing have been satisfied.

            f.    Buyer's Officer's Certificate. Buyer shall execute and deliver
to Seller an officer's certificate in form and substance similar to EXHIBIT H,
stating that all conditions precedent to Closing have been satisfied.

                                   ARTICLE 12
                            POST-CLOSING OBLIGATIONS

      12.1  POST-CLOSING ADJUSTMENTS. As soon as practicable after the Closing,
but on or before one hundred twenty (120) days after Closing, Seller, with the
assistance of Buyer's staff and with access to such records as necessary, shall
prepare and deliver to Buyer a final settlement statement (the "FINAL SETTLEMENT
STATEMENT") setting forth each adjustment or payment that was not finally
determined as of the Closing and showing the calculation of such adjustment and
the resulting final purchase price (the "FINAL PURCHASE PRICE"). The Final
Settlement Statement shall set forth all well (on a well-by-well basis) and
pipeline imbalances for which no Purchase Price adjustments were made in the
Preliminary Settlement Statement. As soon as practicable after receipt of
Seller's proposed Final Settlement Statement, but on or before fifteen (15) days
after receipt of Seller's proposed Final Settlement Statement, Buyer shall
deliver to Seller a written report containing any changes that Buyer proposes to
make to the Final Settlement Statement. Buyer's failure to deliver to Seller a
written report detailing changes to the proposed Final Settlement Statement by
that date shall be deemed an acceptance by Buyer of the Final Settlement
Statement as submitted by Seller. The parties shall agree with respect to the
changes proposed by Buyer, if any, no later than fifteen (15) days after receipt
by Seller of Buyer's comments to the proposed Final Settlement Statement. The
date upon which such agreement is reached or upon which the Final Purchase Price
is established for a transaction shall be called the "FINAL SETTLEMENT DATE." If
the Final Purchase Price is more than the Closing Amount, Buyer shall pay Seller
the amount of such difference. If the Final Purchase Price is less than the
Closing Amount, Seller shall pay to Buyer the amount of such difference. Any
such payment by Buyer or Seller shall be by wire transfer in immediately
available funds within five (5) days of the Final Settlement Date.

      12.2  DISPUTE RESOLUTION. If the parties are unable to resolve disputes
concerning the Final Settlement Statement or Final Purchase Price on or before
thirty (30) days after the Final Settlement Statement is received by Buyer, such
disputes shall be resolved in accordance with Section 14.5.d.

      12.3  RECORDS. Seller shall make the Records available for pick up by
Buyer at a mutually agreeable time. Seller may retain copies of the Records. The
Records shall be made available to Seller for review and copying as reasonably
requested at any time after Closing by Seller. Buyer agrees not to destroy or
otherwise dispose of the Records for a period of six (6)

                                      -20-
<PAGE>

years after the Closing without giving Seller reasonable notice and an
opportunity to copy the Records.

      12.4  TRANSFER TAXES AND RECORDING FEES. Buyer shall pay all sales,
transfer, use or similar taxes occasioned by the sale or transfer of the Assets
and all documentary, transfer, filing, licensing, and recording fees required in
connection with the processing, filing, licensing or recording of any
assignments, titles or bills of sale.

      12.5  RENTAL AND ROYALTY ADMINISTRATION. Seller shall continue to receive,
for the account of Buyer, gross revenues attributable to production from the
Assets for the months of March and April, 2002, and shall pay taxes and disburse
such production revenue, including Buyer's share of such production net revenue,
in accordance with Seller's pre-Effective Time business practices. Seller shall
pay all Lease rentals and shut-in payments due and payable in March and April,
2002. The Final Settlement Statement shall include an upward adjustment to the
Purchase Price for Lease rentals and shut-in payments paid by Seller for the
months of March, 2002 and April, 2002, to the extent such payments by Seller are
not reflected in the Preliminary Settlement Statement, and any further
adjustments required by reason of Seller's disbursement of production revenue
and payment of taxes under this Section 12.5. Buyer assumes all risk, liability,
obligation and Losses (as defined in Section 14.4) in connection with, and shall
defend, indemnify, and save and hold harmless Seller, Seller's partners,
employees and agents, from and against all Losses which arise from or in
connection with disbursements and Lease rental and shut-in payments made by
Seller pursuant to this Section 12.5, including Losses caused by the negligence
or fault of Seller.

      12.6  LEASE MAINTENANCE COSTS FOR JOINTLY OWNED LEASES. Post-closing,
Seller shall pay all Lease rentals and other Lease maintenance costs for Leases
which cover both lands retained by Seller and lands conveyed to Buyer. Buyer
shall reimburse Seller within five (5) days after receipt of an invoice from
Seller for Buyer's proportionate share of such Lease rentals and other Lease
maintenance costs. Buyer's proportionate share of Lease rentals and other Lease
maintenance costs shall be in the proportion that the acreage held (without
regard to depth limitations or restrictions) by Buyer under a particular lease
bears to the total acreage covered by the Lease. If, through mistake or
oversight, any rental, shut-in well payment, minimum royalty or royalty payment,
or other payment necessary to maintain all or a portion of any Lease is not paid
or is erroneously paid and as a result a Lease terminates, there shall be no
monetary liability against Seller. Upon coordination with Seller, Buyer shall
have the right, but not the obligation, to pay any Lease rentals or other Lease
maintenance costs and invoice Seller for its pro rata share of the same.

      12.7  FURTHER ASSURANCES. It is Seller's intent to convey all of its oil,
gas and mineral interests in Township 33 North, Ranges 86, 87 West; Township 34
North, Ranges 84, 85, 87, 88, 90 West; Sections 1-4, 9-16, 21-28, 31-36 in
Township 35 North, Range 84 West; Sections 4-9, 15-23, NW/4 and S/2 Section 25,
26 - 36, Township 35 North, Range 85 West; Township 35 North, Ranges 86, 90
West; Sections 1-32, Township 36 North, Range 85 West; Township 36 North, Ranges
86, 87, 93, 94 West; Township 37 North, Ranges 86, 87 West; Township 38 North,
Ranges 87, 88, 89 West; Township 39 North, Ranges 87, 88, 89, 93 West; and
Township 40 North, Range 89 West, EXCLUDING all rights of Seller to earn an
interest in the Option Lands by drilling or other operations conducted on
Retained Lands pursuant to the

                                      -21-
<PAGE>

Option Contracts. From time to time after Closing, Seller and Buyer shall each
execute, acknowledge and deliver to the other such further instruments and take
such other action as may be reasonably requested in order more effectively to
assure to the other the full beneficial use and enjoyment of the Assets and
otherwise to accomplish the purposes of the transactions contemplated by this
Agreement.

      12.8  SELLER'S RIGHT OF FIRST REFUSAL TO MARKET GAS. Seller shall have the
right, at any time and from time to time, for a period of two (2) years from the
Effective Time to match any offer by a third party to market Buyer's production
from the Leases, Fee Interests and Lands. Buyer shall provide Seller full
information in writing relating to the third party offer to market Buyer's
production, and Seller shall have five (5) days to notify Buyer of Seller's
election to market Buyer's production upon the same terms and conditions as the
third party offer.

                                   ARTICLE 13
                                      TAXES

      13.1  APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES. A downward
adjustment to the Purchase Price (the "PROPERTY TAX ADJUSTMENT") shall be made
for Seller's share (2/12ths) of all ad valorem or real property taxes and
personal property taxes, including interest and penalties (the "PROPERTY
TAXES"), for the tax year ("TAX PERIOD") during which the Effective Time occurs.
The owner of record on the assessment date shall file or cause to be filed all
required reports and returns incident to the Property Taxes and shall pay or
cause to be paid to the taxing authorities all Property Taxes for the Tax Period
during which the Effective Time occurs.

      13.2  TRANSFER TAXES. The Purchase Price excludes, and Buyer shall be
liable for, any Transfer Taxes (as defined below) required to be paid in
connection with the sale of the Assets pursuant to this Agreement. "TRANSFER
TAXES" means any sales, use, excise, stock, stamp, document, filing, recording,
registration, authorization and similar taxes, fees and charges.

      13.3  OTHER TAXES. Subject to Section 12.5, with the exception of income
taxes, all other federal, state and local taxes, specifically including
severance taxes (including interest and penalties attributable thereto) on the
ownership or operations of the Assets which are imposed with respect to periods
or portions of periods prior to the Effective Time shall be paid by Seller and
all taxes imposed with respect to periods or portions of periods beginning on or
after the Effective Time shall be paid by Buyer.

      13.4  TAX REPORTS AND RETURNS. For tax periods in which the Effective Time
occurs, Seller agrees to immediately forward to Buyer copies of any tax reports
and returns received by Seller after Closing and provide Buyer with any
information Seller has that is necessary for Buyer to file any required tax
reports and returns related to the Assets. Buyer agrees to file all tax returns
and reports applicable to the Assets that Buyer is required to file after the
Closing and, subject to the provisions of Sections 12.5 and 13.1, to pay all
Taxes payable with respect to the Assets.

                                      -22-
<PAGE>

                                   ARTICLE 14
                           ASSUMPTION AND RETENTION OF
                          OBLIGATIONS; INDEMNIFICATION

      14.1 BUYER'S ASSUMPTION OF LIABILITIES AND OBLIGATIONS. Upon Closing,
Buyer shall assume and pay, perform, fulfill and discharge all claims, costs,
expenses, liabilities and obligations ("OBLIGATIONS") accruing or relating to
the ownership and operation of the Assets after the Effective Time, including
(i) the owning, developing, exploring, operating or maintaining of the Assets or
the producing, transporting and marketing of Hydrocarbons from the Assets,
including, without limitation, the payment of Property Expenses, the obligation
to plug and abandon all wells located on the Lands and reclaim all well sites
located on the Lands regardless of when the obligations arose, the make-up and
balancing obligations for overproduction of gas from the Wells, all liability
for royalty and overriding royalty payments made and Taxes paid with respect to
the Assets, (ii) the Assumed Environmental Liabilities, and (iii) all
Obligations accruing or relating to the ownership or operation of the Assets
before the Effective Time for which Seller is not liable pursuant to the
provisions of Section 14.2 (collectively, the "ASSUMED LIABILITIES").

      14.2 SELLER'S RETENTION OF LIABILITIES AND OBLIGATIONS. Subject to the
provisions of Section 5.8, upon Closing Seller shall retain and pay (i) all
Property Expenses of Seller relating to the ownership and operation of the
Assets and the producing, transporting and marketing of Hydrocarbons from the
Assets prior to the Effective Time, BUT ONLY AS TO CLAIMS ASSERTED BEFORE ONE
(1) YEAR AFTER THE CLOSING DATE; and (ii) all liability for royalty and
overriding royalty payments made and Taxes paid prior to the Effective Time with
respect to the Assets (collectively, the "RETAINED LIABILITIES").

      14.3 BUYER'S PLUGGING AND ABANDONMENT OBLIGATIONS. In addition to the
Assumed Liabilities, upon Closing Buyer assumes full responsibility and
liability for the following plugging and abandonment obligations related to the
Assets ("BUYER'S PLUGGING AND ABANDONMENT OBLIGATIONS"), regardless of whether
they are attributable to the ownership or operation of the Assets before or
after the Effective Time. All operations by Buyer under this section shall be
conducted in a good and workmanlike manner and in compliance with all applicable
laws and regulations.

            a. The necessary and proper plugging, replugging and abandonment of
all wells on the Assets;

            b. The necessary and proper removal, abandonment and disposal of all
structures, pipelines, equipment, abandoned property, trash, refuse and junk
located on or comprising part of the Assets;

            c. The necessary and proper capping and burying of all associated
flow lines located on or comprising part of the Assets;

            d. The necessary and proper restoration of the surface and
subsurface to the condition required by applicable laws, regulations or
contract;

                                      -23-
<PAGE>

            e. All obligations relating to the items described in Section
14.3.a. through 14.3.d. arising from contractual requirements and demands made
by courts, authorized regulatory bodies or parties claiming a vested interest in
the Assets; and

            f. Obtaining and maintaining all bonds, or supplemental or
additional bonds, that may be required contractually or by governmental
authorities.

      14.4 INDEMNIFICATION. "LOSSES" shall mean any actual losses, costs,
expenses (including court costs, reasonable fees and expenses of attorneys,
technical experts and expert witnesses and the costs of investigation),
liabilities, damages, demands, suits, claims, and sanctions of every kind and
character (including civil fines) arising from, related to or reasonably
incident to matters indemnified against; excluding however any special,
consequential, punitive or exemplary damages, diminution of value of an Asset,
loss of profits incurred by a party hereto or Loss incurred as a result of the
indemnified party indemnifying a third party.

            After the Closing, Buyer and Seller shall indemnify each other as
follows:

            a. Seller's Indemnification of Buyer. Seller assumes all risk,
liability, obligation and Losses in connection with, and shall defend,
indemnify, and save and hold harmless Buyer, its officers, directors, employees
and agents, from and against all Losses which arise from or in connection with
(i) the Retained Liabilities, (ii) any material breach of any representation or
warranty made by Seller, (iii) any matter for which Seller has agreed to
indemnify Buyer under this Agreement, and (iv) any material breach by Seller of
this Agreement.

            b. Buyer's Indemnification of Seller. Buyer assumes all risk,
liability, obligation and Losses in connection with, and shall defend,
indemnify, and save and hold harmless Seller, Seller's partners, employees and
agents, from and against all Losses which arise from or in connection with (i)
the Assumed Liabilities, (ii) any material breach of any representation or
warranty made by Buyer, (iii) any matter for which Buyer has agreed to indemnify
Seller under this Agreement, and (iv) any material breach by Buyer of this
Agreement.

      14.5 PROCEDURE. The indemnifications contained in Section 14.4 shall be
implemented as follows:

            a. Coverage. Such indemnity shall extend to all Losses suffered or
incurred by the indemnified party.

            b. Claim Notice. The party seeking indemnification under the terms
of this Agreement ("INDEMNIFIED PARTY") shall submit a written "CLAIM NOTICE" to
the other party ("INDEMNIFYING PARTY") which, to be effective, must state: (i)
the amount of each payment claimed by an Indemnified Party to be owing, (ii) the
basis for such claim, with supporting documentation, and (iii) a list
identifying to the extent reasonably possible each separate item of Loss for
which payment is so claimed. The amount claimed shall be paid by the
Indemnifying Party to the extent required herein within ten (10) days after
receipt of the Claim Notice, or after the amount of such payment has been
finally established, whichever last occurs.

                                      -24-
<PAGE>

            c. Information. Within twenty (20) days after the Indemnified Party
receives notice of a claim or legal action that may result in a Loss for which
indemnification may be sought under this Article 14 ("CLAIM"), the Indemnified
Party shall give written notice of such Claim to the Indemnifying Party. If the
Indemnifying Party or its counsel so requests, the Indemnified Party shall
furnish the Indemnifying Party with copies of all pleadings and other
information with respect to such Claim. At the election of the Indemnifying
Party made within sixty (60) days after receipt of such notice, the Indemnified
Party shall permit the Indemnifying Party to assume control of such Claim (to
the extent only that such Claim, legal action or other matter relates to a Loss
for which the Indemnifying Party is liable), including the determination of all
appropriate actions, the negotiation of settlements on behalf of the Indemnified
Party, and the conduct of litigation through attorneys of the Indemnifying
Party's choice; provided, however, that no such settlement can result in any
liability or cost to the Indemnified Party for which it is entitled to be
indemnified hereunder without its consent not to be unreasonably withheld. If
the Indemnifying Party elects to assume control, (i) any expense incurred by the
Indemnified Party thereafter for investigation or defense of the matter shall be
borne by the Indemnified Party, and (ii) the Indemnified Party shall give all
reasonable information and assistance, other than pecuniary, that the
Indemnifying Party shall deem necessary to the proper defense of such Claim,
legal action, or other matter. In the absence of such an election, the
Indemnified Party will use its best efforts to defend, at the Indemnifying
Party's expense, any claim, legal action or other matter to which such other
party's indemnification under this Article 14 applies until the Indemnifying
Party assumes such defense, and, if the Indemnifying Party fails to assume such
defense within the time period provided above, settle the same in the
Indemnified Party's reasonable discretion at the Indemnifying Party's expense.
If such a Claim requires immediate action, both the Indemnified Party and the
Indemnifying Party will cooperate in good faith to take appropriate action so as
not to jeopardize defense of such Claim or either party's position with respect
to such Claim.

            d. Dispute Resolution. If the existence of a valid Claim or amount
to be paid by an Indemnifying Party is in dispute, the parties agree to submit
determination of the existence of a valid Claim or the amount to be paid
pursuant to the Claim Notice to binding arbitration. The arbitration shall be
before a three person panel of neutral arbitrators, consisting of one person
from each of the following categories: (1) an attorney who has practiced in the
area of oil and gas law for at least ten (10) years; (2) a retired judge at the
Colorado or United States District Court or Appellate Court level; and (3) a
person with at least ten years of oil and gas industry experience as a petroleum
engineer. The American Arbitration Association ("AAA") shall submit a list of
persons meeting the criteria outlined above for each category of arbitrator, and
the parties shall select one person from each category in the manner established
by the AAA. The arbitrators shall conduct a hearing no later than sixty (60)
days after submission of the matter to arbitration, and a written decision shall
be rendered by the arbitrators within thirty (30) days of the hearing. Any
payment due pursuant to the arbitration shall be made within fifteen (15) days
of the arbitrators' decision.

      14.6 NO INSURANCE; SUBROGATION. The indemnifications provided in this
Article 14 shall not be construed as a form of insurance. Buyer and Seller
hereby waive for themselves, their successors or assigns, including, without
limitation, any insurers, any rights to subrogation for Losses for which each of
them is respectively liable or against which each respectively

                                      -25-
<PAGE>

indemnifies the other, and, if required by applicable policies, Buyer and Seller
shall obtain waiver of such subrogation from their respective insurers.

      14.7 RESERVATION AS TO NON-PARTIES. Nothing in this Agreement is intended
to limit or otherwise waive any recourse Buyer or Seller may have against any
non-party for any obligations or liabilities that may be incurred with respect
to the Assets.

                                   ARTICLE 15
                                  MISCELLANEOUS

      15.1 EXHIBITS. The Exhibits referred to in this Agreement are hereby
incorporated in this Agreement by reference and constitute a part of this
Agreement.

      15.2 EXPENSES. Except as otherwise specifically provided, all fees, costs
and expenses incurred by Seller or Buyer in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid by
the party incurring same, including, without limitation, legal and accounting
fees, costs and expenses.

      15.3 NOTICES. All notices and communications required or permitted under
this Agreement shall be in writing and addressed as follows:

            If to Seller:   Williams Production RMT Company
                            1515 Arapahoe Street, Tower 3, Suite 1000
                            Denver, Colorado  80202
                            Telephone: (303) 606-4052
                            Facsimile: (303) 629-8281
                            Attention: Joseph P. Barrett
                                       Director, Land

                                          and

                            Williams Production RMT Company
                            1 Williams Center, MD41-3
                            Tulsa, Oklahoma 74172
                            Telephone: (918) 573-0249
                            Facsimile: (918) 573-8024
                            Attention: Exploration and Production Legal Counsel

            If to Buyer:    Bill Barrett Corporation
                            1099 18th Street
                            Suite 2300
                            Denver, Colorado  80202
                            Telephone: (303) 293-9100
                            Facsimile: (303) 291-0420
                            Attention: Hunt Walker
                                       Land Manager

                                      -26-
<PAGE>

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 faxed, when received if receipt is confirmed by telephone by
the sender, (iii) if mailed, certified mail, return receipt requested, on the
date set forth on the return receipt or (iv) if sent by overnight courier, one
day after sending. Any party may, by written notice so delivered to the other
party, change the address or individual to which delivery shall thereafter be
made.

      15.4 AMENDMENTS. 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.

      15.5 ASSIGNMENT. Prior to Closing, neither party shall assign all or any
portion of its respective rights or delegate all or any portion of its
respective duties hereunder without the prior written consent of the other
party.

      15.6 CONFIDENTIALITY. Seller and Buyer agree the provisions of this
Agreement shall be kept confidential except as disclosure may be required by
applicable law, rules and regulations of governmental agencies or stock
exchanges. Buyer shall inform Seller of all such disclosures by Buyer.

      15.7 PRESS RELEASES. Seller and Buyer agree that prior to making any press
releases or other public announcements concerning this Agreement and the
transactions contemplated hereby, the party desiring to make such public
announcement shall obtain the written consent of the other party not to be
unreasonably withheld. Seller retains the right to edit and/or reject any press
release submitted by Buyer. Nothing herein shall preclude Buyer from making such
disclosures deemed necessary by Buyer's counsel under any federal securities
laws or New York Stock Exchange rule.

      15.8 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.

      15.9 COUNTERPARTS. This Agreement may be executed by Seller and Buyer in
any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute one and the same
instrument. Execution can be evidenced by fax signatures with original signature
pages to follow in due course.

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

      15.11 GOVERNING LAW. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Colorado.

                                      -27-
<PAGE>

      15.12 BINDING EFFECT. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto, and their respective successors and
assigns.

      15.13 SURVIVAL. The following shall survive Closing: (i) all post-closing
obligations and indemnities of Seller and Buyer, (ii) Seller's representations
and warranties in Article 6 and, (iii) Buyer's representations and warranties in
Article 7.

      15.14 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended only to
benefit the parties hereto and their respective permitted successors and
assigns.

      15.15 LIMITATION ON DAMAGES. Consistent with Article 14, the parties
hereto expressly waive any and all rights to consequential, special, incidental,
punitive or exemplary damages, or loss of profits resulting from breach of this
Agreement.

      15.16 SEVERABILITY. It is the intent of the parties that the provisions
contained in this Agreement shall be severable. Should any provisions, in whole
or in part, be held invalid as a matter of law, such holding shall not affect
the other portions of this Agreement, and such portions that are not invalid
shall be given effect without the invalid portion.

              [the remainder of this page intentionally left blank]

                                      -28-
<PAGE>

            Executed on the dates set forth in the acknowledgments below.

                                           SELLER:

                                           WILLIAMS PRODUCTION RMT COMPANY

                                           /s/ Joseph N. Jaggers
                                           -------------------------------------
                                           Joseph N. Jaggers
                                           Vice President

                                           BUYER:

                                           BILL BARRETT CORPORATION

                                           /s/ William J. Barrett
                                           -------------------------------------
                                           William J. Barrett
                                           Chief Executive Officer

                                      -29-
<PAGE>

STATE OF COLORADO  )
     CITY AND      ) ss.
COUNTY OF DENVER   )

      The foregoing instrument was acknowledged before me this 27th day of
March, 2002 by Joseph N. Jaggers, as Vice President for Williams Production RMT
Company, a Delaware corporation.

            Witness my hand and official seal.

            My commission expires:  March 17, 2004.

                                           /s/ E. Marks
                                           -------------------------------------
                                           E. Marks, Notary Public
                                           1515 Arapahoe Street
                                           Tower 3, Suite 1000
                                           Denver, Colorado  80202

STATE OF COLORADO  )
     CITY AND      ) ss.
COUNTY OF DENVER   )

      The foregoing instrument was acknowledged before me this 27th day of
March, 2002 by William J. Barrett, as Chief Executive Officer of Bill Barrett
Corporation, a Maryland corporation.

            Witness my hand and official seal.

            My commission expires:  July 2, 2004

                                           /s/ Chrisine Thompson
                                           -------------------------------------
                                           Christine Thompson, Notary Public
                                           1550 Seventeenth Street, Suite 500
                                           Denver, Colorado 80202

                                      -30-