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                                                                    EXHIBIT 10.6




                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

                      INDEPENDENT PRODUCTION COMPANY, INC.

                                SAPPHIRE BAY, LLC

                                JOINTLY AS SELLER

                                       AND

                            BILL BARRETT CORPORATION

                                    AS BUYER

                         DATED EFFECTIVE JANUARY 1, 2003

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                               <C>
ARTICLE I   PURCHASE AND SALE ...............................................................      1
  1.1    Purchase and Sale ..................................................................      1
  1.2    Assets .............................................................................      1
  1.3    Retained Assets ....................................................................      3
  1.4    Effective Time .....................................................................      3
  1.5    1031 Exchange ......................................................................      3
ARTICLE II  PURCHASE PRICE ..................................................................      4
  2.1    Purchase Price .....................................................................      4
  2.2    Deposit ............................................................................      4
  2.3    Allocation of the Purchase Price ...................................................      4
  2.4    Adjustments to Purchase Price ......................................................      4
  2.5    Annual Contingent Net Profits Payment ..............................................      7
ARTICLE III BUYER'S INSPECTION ..............................................................      7
  3.1    Access to Records ..................................................................      7
  3.2    Access to Properties ...............................................................      7
ARTICLE IV  TITLE MATTERS ...................................................................      7
  4.1    Defensible Title to the Assets .....................................................      8
  4.2    Purchase Price Adjustments for Defective Interests .................................     11
  4.3    Preferential Purchase Rights and Required Consents to Assign .......................     14
ARTICLE V   ENVIRONMENTAL MATTERS ...........................................................     16
  5.1    Definitions ........................................................................     16
  5.2    Environmental Liabilities and Obligations ..........................................     17
  5.3    Environmental Defects less than the Environmental Deductible .......................     18
  5.4    Environmental Defects once the Environmental Threshold is Exceeded .................     18
  5.5    Contested Environmental Defects ....................................................     19
  5.6    Exclusive Remedies .................................................................     19
ARTICLE VI  SELLER'S REPRESENTATIONS AND WARRANTIES .........................................     19
  6.1    Organization and Standing ..........................................................     19
  6.2    Power ..............................................................................     20
  6.3    Authorization and Enforceability ...................................................     20
  6.4    No Liens ...........................................................................     20
  6.5    Liability for Brokers' Fees ........................................................     20
  6.6    No Bankruptcy ......................................................................     20
  6.7    Litigation .........................................................................     20
  6.8    Taxes ..............................................................................     20
  6.9    Wells/Projects in Progress .........................................................     21
  6.10   Material Agreements ................................................................     21
  6.11   Insurance ..........................................................................     21
  6.12   Judgments ..........................................................................     21
  6.13   Casualty Loss ......................................................................     21
  6.14   Accuracy of Information ............................................................     21
  6.15   Compliance with Law ................................................................     21
  6.16   Receipt of Proceeds from the Assets ................................................     22
  6.17   Preferential Rights and Required Consents ..........................................     22
</TABLE>

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<TABLE>
<S>                                                                                               <C>
  6.18   Audits .............................................................................     22
ARTICLE VII  BUYER'S REPRESENTATIONS AND WARRANTIES .........................................     22
  7.1    Organization and Standing ..........................................................     22
  7.2    Power ..............................................................................     22
  7.3    Authorization and Enforceability ...................................................     23
  7.4    Liability for Brokers' Fees ........................................................     23
  7.5    Litigation .........................................................................     23
  7.6    Financial Resources ................................................................     23
  7.7    Buyer's Evaluation .................................................................     23
ARTICLE VIII COVENANTS AND AGREEMENTS .......................................................     24
  8.1    Covenants and Agreements of Seller .................................................     24
  8.2    Covenants and Agreements of Buyer ..................................................     26
  8.3    Covenants and Agreements of the Parties ............................................     27
ARTICLE IX   TAX MATTERS ....................................................................     28
  9.1    Apportionment of Tax Liability .....................................................     28
  9.2    Calculation of Tax Liability .......................................................     28
  9.3    Tax Reports and Returns ............................................................     28
  9.4    Sales Taxes ........................................................................     29
  9.5    Tax Forms ..........................................................................     29
ARTICLE X    CONDITIONS PRECEDENT TO CLOSING ................................................     30
  10.1   Seller's Conditions Precedent ......................................................     30
  10.2   Buyer's Conditions .................................................................     30
ARTICLE XI   RIGHT OF TERMINATION AND ABANDONMENT ...........................................     31
  11.1   Termination ........................................................................     31
  11.2   Liabilities Upon Termination .......................................................     31
ARTICLE XII  CLOSING ........................................................................     32
  12.1   Date of Closing ....................................................................     32
  12.2   Place of Closing ...................................................................     32
  12.3   Closing Obligations ................................................................     32
ARTICLE XIII POST-CLOSING OBLIGATIONS .......................................................     33
  13.1   Post-Closing Adjustments ...........................................................     33
  13.2   Records ............................................................................     34
  13.3   Proceeds, Accounts Receivable and Invoices For Property Expenses
         Received After Closing .............................................................     34
  13.4   Limited Warranty of Title ..........................................................     35
  13.5   Insurance and Bonds ................................................................     35
  13.6   Further Assurances .................................................................     35
ARTICLE XIV  INDEMNIFICATION ................................................................     35
  14.1   Buyer's Assumption of Liabilities and Obligations ..................................     35
  14.2   Seller's Retention of Liabilities and Obligations ..................................     36
  14.3   Buyer's Indemnification of Seller ..................................................     36
  14.4   Seller's indemnification of Buyer ..................................................     36
  14.5   Release ............................................................................     36
  14.6   Procedure ..........................................................................     36
  14.7   Limitation on Seller's Indemnity Obligation ........................................     38
</TABLE>

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<TABLE>
<S>                                                                                               <C>
  14.8   No Insurance or Subrogation ........................................................     38
  14.9   Reservation as to Non-Parties ......................................................     38
ARTICLE XV  MISCELLANEOUS ...................................................................     38
  15.1   Schedules and Exhibits .............................................................     39
  15.2   Expenses ...........................................................................     39
  15.3   Notices ............................................................................     39
  15.4   Amendments .........................................................................     40
  15.5   Assignment .........................................................................     40
  15.6   Announcements ......................................................................     40
  15.7   Headings ...........................................................................     40
  15.8   Counterparts/Facsimile Signatures ..................................................     40
  15.9   References .........................................................................     41
  15.10  Governing Law ......................................................................     41
  15.11  Entire Agreement ...................................................................     41
  15.12  Best Knowledge and Reasonable and Good Faith Efforts ...............................     41
  15.13  Binding Effect .....................................................................     41
  15.14  Survival ...........................................................................     41
  15.15  No Third-Party Beneficiaries .......................................................     41
  15.16  Waiver of Compliance with Bulk Transfer Laws .......................................     42
  15.17  Dispute Resolution .................................................................     42
  15.18  Disclaimer of Representations and Warranties .......................................     43
  15.19  No Recording .......................................................................     43
</TABLE>

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                           PURCHASE AND SALE AGREEMENT

                  This Purchase and Sale Agreement (this "Agreement"), dated
February 6, 2003, is by and between Independent Production Company, Inc., a
Colorado corporation ("IPC") and Sapphire Bay LLC, a Delaware limited liability
company ("Sapphire Bay"), 410 Seventeenth Street, Suite 570, Denver, Colorado
80202 (IPC and Sapphire Bay may be referred to collectively as "Seller") and
Bill Barrett Corporation, a Delaware corporation, 1099 18th Street, Suite 2300,
Denver, Colorado 80202 (the "Buyer"). Seller and Buyer may be referred to
individually as a "Party" or collectively as the "Parties." The transaction
contemplated by this Agreement may be referred to as the "Transaction."

                                    RECITALS

         A. Seller owns and desires to sell its working interests in certain oil
and gas properties located in the Powder River Basin of Wyoming, and other oil
and gas properties located elsewhere, all as more particularly described in
Section 1.2 below (collectively, the "Assets").

         B. Buyer has conducted an independent investigation of the nature and
extent of the Assets and is familiar with the development and production of
coalbed methane in the Powder River Basin of Wyoming, and desires to purchase
all of Seller's interest in the Assets pursuant to the terms of this Agreement.

         C. To accomplish the foregoing, the Parties wish to enter into 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, Buyer and Seller agree as follows:

                                    ARTICLE I
                                PURCHASE AND SALE

         1.1. Purchase and Sale. Seller agrees to sell and Buyer agrees to
purchase all of Seller's right, title and interest in the Assets under the terms
of this Agreement.

         1.2. The Assets. As used herein, the term "Assets" refers to all of the
Seller's right, title and interest in and to the following:

                  (a) The oil and gas leases described in Exhibit A (the
"Leases"), insofar as said Leases cover the land described in Exhibit A (the
"Land" or "Lands"), together with all the property and rights incident thereto
and the contracts and agreements relating to the Leases and Land, including
without limitation, all operating agreements, exploration agreements, pooling,
communitization and unitization

<PAGE>

agreements, farmout agreements, product purchase and sale contracts,
transportation, processing, treatment or gathering agreements, leases, permits,
rights-of-way, easements, licenses, declarations, orders, contracts, and
instruments in any way relating to the Leases;

                  (b) The oil and gas wells specifically described in Exhibit
A-2 (the "Wells"), together with all injection and disposal wells on the Leases
or Lands or on lands pooled or unitized therewith, and all personal property,
equipment, fixtures, improvements, permits, rights of-way and easements used in
connection with the production, gathering, treatment, processing, storing, sale
or disposal of Hydrocarbons or water produced from the properties and interests
described in subsection (a);

                  (c) The pooling and communitization agreements, declarations
and orders, and all other such agreements relating to the properties and
interests described in subsections (a) and (b) and to the production of
Hydrocarbon, if any, attributable to said properties and interests;

                  (d) All existing and effective sales, purchase, exchange,
gathering, transportation and processing contracts, operating agreements,
balancing agreements, farmout agreements, service agreements, the Field Office
and Yard Lease ("Gillette, Wyoming"), and other contracts, agreements and
instruments, including the Material Agreements described on Exhibit C, insofar
as they relate to the properties and interests described in subsections (a)
through (c);

                  (e) The oil, gas and water gathering, pipeline and
transportation systems (which include, without limitation, the IPC-owned CBM
Gas Pipeline/Gathering Systems described on Exhibit A-3) and all personal
property, equipment, fixtures, improvements, permits, rights-of-way, surface
leases and easements used in connection therewith and all contracts and
agreements relating thereto;

                  (f) The personal property and equipment located in the Field
Office and Yard Inventory listed on Exhibit D; and,

                  (g) The files, records, and data of Seller relating to the
items described in subsections (a), through (f) above (the "Records"), and to
the extent that Seller has the following, the Records shall include, without
limitation, lease records, well records, and division order records; well files;
title records (including abstracts of title, title opinions and memoranda, and
title curative documents related to the Leases and Wells); contracts and
contract files; correspondence; geological, geophysical and seismic records
(subject to applicable third-party licensing restrictions or other restrictions
on disclosure or transfer), current Netherland Sewell Reserve Report prepared as
of January 1, 2003 (the "Reserve Report"); historical production data, revenue,
and operating expense for the three years preceding the Effective Time; maps and
other related information. Seller agrees to provide Buyer with its original
files, and to the extent that Seller has electronic copies of the Records,
Seller agrees to furnish Buyer with such electronic copies; provided that Seller
shall not incur any additional costs reformatting electronic data so that such
data is compatible with Buyer's computer

                                       -2-

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software. The records shall not include any data or information that is subject
to applicable third-party licensing restrictions or other restrictions on
disclosure or transfer.

         1.3. Retained Assets. The Assets shall not include and Seller reserves
and excepts from the sale any interest Seller has in and to overriding royalty
interests burdening the Assets created and filed of record prior to the
Effective Time (collectively, the "Seller ORR"). Buyer acknowledges that Seller
now owns and will continue to own certain other working interests in oil and gas
leases that are not listed on Exhibit B or B-1 or in the Reserve Report, and
that were not described or mentioned in the data room, the Reserve Report, or
any other materials provided to Buyer by Seller (collectively, "Seller's Other
Oil and Gas Interests"). Seller's Other Oil and Gas Interests and the Seller ORR
may be collectively referred to as the "Retained Assets." Seller acknowledges
that Buyer is not selling the Retained Assets, and that the Retained Assets are
not part of the Assets being sold to Buyer in this Transaction. Buyer further
agrees that it will not claim any interest in and to the Retained Assets.

         1.4. Effective Time. The purchase and sale of the Assets shall be
effective as of January 1, 2003, at 12:01 A.M. Mountain Standard Time (the
"Effective Time").

         1.5. 1031 Exchange. Seller reserves the right, at or prior to Closing,
to assign its rights under this Agreement with respect to all or a portion of
the Purchase Price, and that portion of the Assets associated therewith ("1031
Assets"), to a Qualified Intermediary ("QI") (as that term is defined in Section
1.1031(k)-1(g)(4)(v) of the Treasury Regulations) to accomplish this
Transaction, in whole or in part, in a manner that will comply with the
requirements of a like-kind exchange ("Like-Kind Exchange") pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended ("Code"). If Seller so
elects, Seller may assign its rights under this Agreement to the 1031 Assets to
the QI. Buyer hereby (i) consents to Seller's assignment of its rights in this
Agreement with respect to the 1031 Assets, and (ii) if such an assignment is
made, agrees to pay all or a portion of the Purchase Price into the qualified
trust account at Closing as directed in writing by Seller, provided that Seller
shall pay or reimburse Buyer for any and all reasonable administrative or other
costs incurred by Buyer as a result of such consent or agreement. Seller and
Buyer acknowledge and agree that a whole or partial assignment of this Agreement
to a QI shall not release either Party from any of its respective liabilities
and obligations to each other or expand any such respective liabilities or
obligations under this Agreement. Neither Party represents to the other that any
particular tax treatment will be given to either Party as a result of the
Like-Kind Exchange. The Party not participating in the Like-Kind Exchange shall
not be obligated to pay any additional costs or incur any additional obligations
in its sale of the Assets if such costs are the result of the other Party's
Like-Kind Exchange, and the Party participating in the Like-Kind Exchange shall
hold harmless and indemnify the other Party from and against all claims, losses
and liabilities, if any, resulting from such a Like-Kind Exchange.

                                       -3-

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                                   ARTICLE II
                                 PURCHASE PRICE

         2.1. Purchase Price. The purchase price for the Assets shall be
thirty-five million five hundred thousand dollars ($35,500,000.00) (the
"Purchase Price").

         2.2. Deposit. Upon execution of this Agreement, Buyer agrees to pay
Seller an earnest money deposit equal to five percent of the Purchase Price
($1,775,000.00) (the "Deposit") by wire transfer of immediately available funds
into a mutually acceptable escrow account. The Deposit shall be distributed to
Seller and credited to the Purchase Price at Closing, or if this Agreement is
terminated, shall be distributed or retained pursuant to Article XI.

         2.3. Allocation of the Purchase Price. For the purposes of determining
the value of a particular Asset for the purposes of this Agreement, the Purchase
Price allocation among the Assets as set forth for each portion of the Assets
given a "line Item" value on Exhibit B or B-1 shall be applicable, including
without limitation for the purpose of the provisions of this Agreement set forth
in (a) through (f), below. The value allocated to an Asset may be referred to as
the "Allocated Value" for that Asset.

                  (a)      Title Defects (Section 4.2),

                  (b)      Environmental Defects (Section 5.4),

                  (c)      Preferential Rights (Section 4.3(b) and (c)),

                  (d)      Required Consents (Section 4.3(a)),

                  (e)      Remedies (Section 11.2), and

                  (f)      Taxes (Section 9.5).

         2.4. Adjustments to Purchase Price. All adjustments to the Purchase
Price shall be made (i) according to the factors described in this Section, (ii)
in accordance with generally accepted accounting principles as consistently
applied in the oil and gas industry, and (iii) without duplication.

                  (a) Settlement Statements. The Purchase Price shall be
adjusted at Closing pursuant to a "Preliminary Settlement Statement" prepared by
Seller and submitted to Buyer on or before Thursday March 13, 2003 for Buyer's
comment and review, which shall be provided to Seller on or before Monday March
17, 2003. The Preliminary Settlement Statement shall set forth the Closing
Amount and all adjustments to the Purchase Price and associated calculations.
The term "Closing Amount" means the Purchase Price adjusted as provided in this
Section 2.4, using the best information available, less the Deposit. After
Closing, the Purchase Price shall be adjusted pursuant to the Settlement
Statement delivered pursuant to Section 13.1.

                                      -4-

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                  (b) Effective Time Apportionment. Subject to the provisions of
Section 13.3, Seller and Buyer agree that (i) all revenues, costs and expenses,
including Property Expenses (as defined below) will be apportioned between Buyer
and Seller as of the Effective Time, (ii) Seller shall be entitled to any
production revenues or other amounts realized from and accruing to the Assets
attributable to the period of time before the Effective Time, and shall be
liable for the payment of all costs and expenses, including Property Expenses,
attributable to the Assets for the period of time before to the Effective Time
and (iii) Buyer shall be entitled to any production revenues or other amounts
realized from and accruing to the Assets attributable to the period of time
after the Effective Time, and shall be liable for the payment of all costs and
expenses including Property Expenses, attributable to the Assets for the period
of time after the Effective Time.

                  (c) Property Expenses. The term "Property Expenses" shall mean
all capital expenses, joint interest billings, lease operating expenses, lease
rental and maintenance costs, royalties, taxes (as defined and apportioned
pursuant to Article IX), drilling expenses, dewatering expenses, completion
expenses, workover expenses, expenses associated with environmental analysis or
studies, permitting costs, and any other exploration, development or maintenance
expenditures chargeable under applicable operating agreements or other
agreements consistent with the standards established by the Council of Petroleum
Accountant Societies of North America that are attributable to the Assets prior
to the Effective Time or after the Effective Time, as applicable. Property
Expenses shall not include geological and geophysical expenses and general and
administrative expenses in IPC's Denver office attributable to the Assets after
the Effective Time.

                  (d) Upward Adjustments. The Purchase Price shall be adjusted
upward by the following:

                           (1) an amount equal to all proceeds (net of royalty
         and production taxes not otherwise accounted for hereunder) received
         by and retained by Buyer from the sale of Hydrocarbons attributable to
         the period of time before the Effective Time;

                           (2) an amount equal to all expenses attributable to
         the Assets after the Effective Time that were paid by Seller (all to be
         apportioned as of the Effective Time except as otherwise provided),
         including without limitation, Property Expenses, prepaid insurance
         costs, prepaid utility charges, prepaid rentals and royalties,
         including lease rentals, prepaid drilling costs (to be apportioned as
         of the Effective Time based on drilling days) and prepaid Taxes (to be
         apportioned as of the Effective Time pursuant to Article IX);

                           (3) an amount equal to the value of Seller's share of
         all oil in storage tanks at the Effective Time to be calculated as
         follows: The value shall be the product of (i) the volume in each
         storage tank (attributable to Seller's net revenue interest) as of the
         Effective Time as shown by the actual gauging reports multiplied by
         (ii) the Equivalent Daily Price - Wyoming Sweet for December 2002

                                      -5-

<PAGE>

         production, plus $2.00, less applicable Taxes and other adjustments for
         other matters that were made or would have been made by the purchasers
         of such production consistent with past practices; provided, however,
         that the adjustment contemplated by this subsection (3) shall be made
         only to the extent that Seller does not receive and retain the
         proceeds, or portion thereof, attributable to the pre-Effective Time
         oil in the storage tanks; and

                           (4) an amount equal to the sum of all Interest
         Addition Adjustments (as defined in Section 4.3); and;

                           (5) an amount equal to $37,500 per month for Buyer's
         operation of the Assets from the Effective Time until Closing (prorated
         for any partial months).

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

                           (1) an amount equal to the sum of all Defect
         Adjustments (as defined and in accordance with subsection 4.2(c));

                           (2) the amount of all direct and actual expenses
         attributable to the Assets, including, without limitation, the Property
         Expenses, that remain unpaid by Seller, or that have been paid by
         Buyer, that are attributable to the period prior to the Effective Time;

                           (3) an amount equal to the sum of all Environmental
         Defect Adjustments (as defined in Section 5.4);

                           (4) an amount equal to the sum of all Defect
         Adjustments for Excluded Assets (as defined in subsection 4.2(c)) and
         Exclusion Adjustments (as defined in Sections 4.4), 4.2(c)(2)(ii) and
         5.4; and

                           (5) all proceeds from the production of hydrocarbons
         subsequent to the Effective Time that are received and retained by the
         Seller.

                  (f) Well and Pipeline Imbalance Adjustments. In addition to
the foregoing, the Purchase Price shall be adjusted downward or upward, as
appropriate, by an amount equal to $2.00 (less taxes) per MmBTU (net of royalty)
for the well and pipeline gas imbalances existing as of the Effective Time. Such
imbalances are estimated to be as stated in Schedule 2.4(f) and will be subject
to adjustment at Closing and final adjustment under Section 13.1 based upon the
best information then available.

         2.5 Annual Contingent Net Profits Payment. In addition to the Purchase
Price, Buyer shall pay to Seller as part of the total consideration for the
Assets, the Annual Contingent Net Profits Payment ("ACNPP") described in
Exhibit I.

                                       -6-

<PAGE>

                                   ARTICLE III
                               BUYER'S INSPECTION

         3.1. Access to Records. Subject to Section 8.3(a), prior to Closing,
Seller will make the Records available to Buyer and its representatives for
inspection and review at the offices of Seller during Seller's normal business
hours for the purpose of permitting Buyer to perform its due diligence review.
Seller shall permit Buyer to inspect the Records only to the extent, in each
case, that Seller may do so without violating any obligation of confidence or
contractual commitment of Seller to a third party. Subject to the consent and
cooperation of operators and other 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, to the extent in each case that
Seller may do so without violating legal constraints or any obligation of
confidence or other contractual commitment of Seller to a third party. 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, and Buyer agrees that any conclusions drawn therefrom shall
be the result of its own independent review and judgment.

         3.2. Access to Properties. Prior to Closing, if Buyer so requests in
writing, Seller will allow Buyer to conduct, at Buyer's sole risk and expense,
on-site inspections of the Assets during reasonable business hours. If Seller is
not the operator of the Assets, Seller will use its reasonable efforts to cause
the operator to grant such access to Buyer. In connection with any such on-site
inspections, Buyer agrees not to interfere with the normal operation of the
Assets and agrees to comply with all requirements of the operator. If Buyer or
its agents prepares an environmental assessment of any Asset, at Buyer's sole
expense, 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 grant of access to the
Assets, 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 its parent, affiliates, directors, officers,
shareholders, employees, agents, partners, members, and 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 IV
                                  TITLE MATTERS

         4.1. Defensible Title to the Assets.

                  (a) Defensible Title.

                           (1) Assets Listed on Exhibit B. The term "Defensible
         Title" with respect to the portion of the Assets that are given an
         Allocated Value on

                                       -7-

<PAGE>

         Exhibit B means such title that, subject to and except for Permitted
         Encumbrances: (i) entitles Seller to receive not less than the net
         revenue interest for the interest set forth on Exhibit B ("NRI"); (ii)
         obligates Seller to bear costs and expenses relating to the
         maintenance, development, operation and the production of Hydrocarbons
         from the interest set forth on Exhibit B in an amount not greater than
         the corresponding working interest set forth in Exhibit B ("WI"); and
         (iii) is free and clear of encumbrances and liens.

                           (2) Assets Listed on Exhibit B-1. The term
         "Defensible Title" with respect to the portion of the Assets that are
         listed on Exhibit B-1 means such title, that, subject to and except for
         Permitted Encumbrances: (i) entitles Seller to receive the Net Acres as
         set forth on Exhibit B-1 (ii) is free and clear of encumbrances and
         liens; provided, however, with respect to the Assets on Exhibit B-1,
         Seller's title shall be deemed Defensible Title unless Buyer provides
         Seller with written evidence that such title either has failed or is
         likely to fail.

                  (b) Permitted Encumbrances. The term "Permitted Encumbrances"
shall mean:

                           (1) 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 NRI for the formation upon which an allocated
         value has been established as set forth in Exhibit B or B-1;

                           (2) subject to the provisions of Section 4.4, any
         preferential rights to purchase and required third party consents to
         assignments of contracts or property and similar agreements;

                           (3) liens for taxes or assessments not yet due and
         delinquent or, if delinquent, that are being contested in good faith in
         the normal course of business;

                           (4) rights of reassignment upon the surrender or
         expiration of any Lease;

                           (5) 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 that do not materially interfere with the operation of
         the affected Asset as has been conducted in the past;

                           (6) such Title Defects (as defined in subsection
         4.1(c)) which have been cured or Buyer has waived;

                                       -8-

<PAGE>

                           (7) the terms and conditions of the Material
         Agreements to the extent such terms and conditions do not (i) cause the
         present NRI to be less than or the present WI to be more than as set
         forth in Exhibit B or (ii) cause the net acres to less than as
         represented B-1 for the applicable Asset (other than reversions,
         back-ins, unit revisions and other events expressly contemplated by
         such agreements);

                           (8) 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 such liens and charges
         have not been filed pursuant to law and the time for filing such liens
         and charges has expired, (ii) if filed, such liens and charges 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;

                           (9) rights reserved to or vested in any federal,
         state, local, tribal or foreign governmental body, authority or agency
         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 of the Assets;

                           (10) liens arising under operating agreements,
         unitization and pooling agreements and production sales contracts
         securing amounts not yet delinquent or, if delinquent, being contested
         in good faith in the ordinary course of business;

                           (11) except as listed on Exhibit C as a Material
         Agreement, all calls on or preferential rights to purchase production
         at a price (adjusted for quality, transportation and location) no less
         than average area spot prices with respect to gas;

                           (12) the litigation and claims listed on Schedule
         6.7;

                           (13) The Mortgage in favor of U.S. Bank, which will
         be released at Closing;

                           (14) all documents and matters of record as of the
         Effective Time, unless the document or matter has properly been
         identified as a Title Defect in a Title Defect Notice; and

                           (15) As to the Assets on Exhibit B-1, routine title
         curative matters expected to be encountered in a non-producing property
         in the area and that are customarily cured in the normal course of
         development of non-producing properties without material expense and
         not reasonably anticipated to cause a material impairment of Buyer's
         ability to develop the interest in question.

                                       -9-

<PAGE>

                  (c) Title Defect. The term "Title Defect" means any lien,
encumbrance, adverse claim, encroachment, defect in or objection to real
property title, excluding Permitted Encumbrances, that alone or in combination
with other defects renders Seller's title less than Defensible Title.
Notwithstanding the foregoing, the following shall not be considered Title
Defects:

                           (1) defects based solely on (i) lack of information
         in the Seller's files, or (ii) references to a document(s) if such
         document(s) is not in Seller's files;

                           (2) defects in the early chain of title consisting of
         the mere failure to recite marital status in a document or omissions of
         successors of heirship or estate proceedings, unless Buyer provides
         affirmative evidence that such failure or omission has resulted in
         another party's actual and superior claim of title to the relevant
         Asset;

                           (3) defects arising out of lack of survey, unless a
         survey is required by applicable laws or regulations;

                           (4) defects arising out of lack of corporate or other
         entity authorization unless Buyer provides affirmative evidence that
         the action was not authorized and results in another party's actual and
         superior claim of title to the Asset;

                           (5) defects that are defensible by possession under
         applicable statutes of limitation for adverse possession or for
         prescription;

                           (6) defects based on failure to record Leases issued
         by the BLM or any state or federal forms of assignments of record title
         or operating rights in such Leases, in the real property or other
         county records of the county in which such Asset is located;

                           (7) defects based on a gap in Seller's chain of title
         in the BLM records as to federal leases, in the state's records as to
         state leases or in the county records as to fee leases, unless such gap
         is affirmatively shown to exist in such records by an abstract of
         title, title opinion or landman's title chain, which documents shall be
         included in a Title Defect Notice; and

                           (8) defects relating to gas balancing issues.

                  (d) Allocated Value. If an Asset has not been given an
Allocated Value, or if the Asset's Allocated Value is $5,000 or less, Seller
shall be deemed to have Defensible Title to such Asset.

                                      -10-

<PAGE>

         4.2. Purchase Price Adjustments for Defective Interests.

                  (a) Defective interest; Threshold Value. "Defective Interest"
means an Asset (i.e., a line item on Exhibit B or B-1) affected by a Title
Defect that reduces the Allocated Value of the affected Asset by more than
$5,000.00. The amount by which the Allocated Value of a Defective Interest has
been reduced by a Title Defect (the "Defect Value") shall be calculated pursuant
to subsection 4.2(d). For purposes of this Section 4.2(a), "Threshold Value"
shall mean that the total Defect Values for all Defective Interests reduces the
Allocated Value of the affected Asset(s) by more than $100,000 in the aggregate
for all affected Assets. Buyer shall not be entitled to give notice pursuant to
Section 4.2(b) or be entitled to adjustments pursuant to Section 4.2(d) unless
the Threshold Value has been reached or exceeded.

                  (b) Title Defect Notice. Buyer shall give Seller written
"Title Defect Notice" as soon as possible but no later than on or before Monday
March 10, 2003 at 5:00 p.m. Mountain Time. This notice must be in writing and
satisfy the following conditions precedent: the Title Defect Notice must
include (i) a description of each Defective Interest; (ii) the basis for each
Defective Interest, and, if the basis is derived from any document, a copy of
such document (or pertinent part thereof) shall be attached or if the basis is
derived from any gap in Seller's chain of title, the documents preceding and
following the gap shall be attached; (iii) the Allocated Value of the affected
Asset; and (iv) Buyer's good faith estimate of the Defect Value and the
computations upon which Buyer's estimate is based.

                  (c) Defect Adjustments.

                           (i) Subject to subsections 4.2(a) and (b), if an
                  Asset is a Defective Interest, the Purchase Price will (so
                  long as the Threshold Value is exceeded and subject to the
                  limitation in the next succeeding sentence) be reduced under
                  Section 2.4 by the corresponding Defect Value (which reduction
                  is called a "Defect Adjustment") unless, at Seller's election,
                  (i) the basis for treating such property as a Defective
                  Interest has been removed by Seller at its sole cost and
                  expense prior to Closing, (ii) Buyer agrees to waive the
                  relevant Title Defect, (iii) Seller elects on or before
                  Closing to cure such Title Defect no later than 90 days after
                  Closing, (iv) Seller elects on or before Closing to indemnify
                  Buyer against any loss attributable to the relevant Title
                  Defect, or (v) Seller elects on or before Closing to retain
                  the affected property (the "Excluded Asset") as of the
                  Effective Time in which case the Defect Adjustment shall equal
                  the Allocated Value of the Excluded Asset. If Seller elects
                  not to pursue any of its options in the previous sentence, the
                  Purchase Price shall be adjusted in the amount of the
                  aggregate of all Defect Adjustments (other than Defect
                  Adjustments for Excluded Assets), net of Interest Addition
                  Adjustments.

                           (ii) If Seller elects to cure the applicable Title
                  Defect post-Closing, then Buyer shall, pending such
                  post-Closing period, withhold and

                                      -11-

<PAGE>

                  retain from the Purchase Price payable at Closing an amount
                  equal to the Title Defect Value attributable to the affected
                  Asset and Seller shall not assign the affected Asset to Buyer
                  at Closing.

                                    (A) If Seller cures the applicable Title
                           Defect to Buyer's reasonable satisfaction within the
                           90-day time period (or such longer period as may be
                           agreed to by the Parties), Buyer shall pay to Seller
                           the Title Defect Value attributable to the affected
                           Asset and Seller shall assign such Asset to Buyer.

                                    (B) If Seller elects to cure the applicable
                           Title Defect post-Closing, but does not cure the
                           applicable Title Defect to Buyer's reasonable
                           satisfaction within the 90 day time period (or such
                           longer period as may be agreed to by the Parties),
                           Buyer may waive the applicable Title Defect, or if
                           Buyer does not waive the Title Defect, then, at
                           Seller's election, (i) the Purchase Price shall be
                           adjusted for the Title Defect Value of the affected
                           Asset in accordance with the terms of this Agreement
                           or (ii) Seller may elect to treat the affected Asset
                           as an Excluded Asset. If Seller elects to treat the
                           affected Asset as an Excluded Asset, Seller will
                           retain the Excluded Asset and the Allocated Value of
                           the Excluded Asset will be a credit to Buyer in the
                           Settlement Statement. If the Title Defect is not
                           cured and Seller elects to adjust the Purchase Price
                           for the Title Defect and there is a dispute
                           concerning the Defect Value, the adequacy of Seller's
                           title curative material, the Parties agree to submit
                           the dispute to arbitration under Section 15.17.

                  (d) Defect Value. In determining which portion of a Asset is a
Defective Interest, it is the intent of the Parties to include, to the extent
possible, only that portion of the Asset materially and adversely affected by
the defect or basis for such Asset being treated as a Defective Interest. The
Defect Value may not exceed the Allocated Value of the Asset and shall be
determined by the Parties in good faith taking into account all relevant
factors, including without limitation, the following:

                           (1) The Allocated Value of the affected Asset;

                           (2) The potential for or actual reduction in the NRI
         of the Defective Interest, or the potential for or actual increase in
         the WI to the extent such increase is not accompanied by a
         corresponding increase in NRI;

                           (3) The present value of the future income expected
         to be produced therefrom, as set forth in Exhibit B and Exhibit B-1;

                           (4) If the Title Defect represents only a possibility
         of title failure, the probability that such failure will occur;

                           (5) The legal effect of the Title Defect;

                                      -12-

<PAGE>

                           (6) If the Title Defect is a lien or encumbrance on
         the property, the cost of removing such lien or encumbrance; and

                           (7) Whether Seller has received proceeds of
         production from the Defective Interest, consistent with the NRI set
         forth on Exhibit B or B-1, for the last two years without interruption
         or challenge based on the Title Defect.

         4.3. Interest Additions. Promptly on discovery at any time prior to
Closing, Buyer or Seller, whichever is the discovering Party, shall in good
faith notify the other of any interest that would be an Asset hereunder, but
that is not listed on Exhibits A, A-2, A-3, B or B-1, including any interest
that entitles Seller to receive more than the NRI set forth in Exhibit B or more
net acres than are listed on Exhibit B-1, or obligates Seller to bear costs and
expenses in an amount less than the WI set forth in Exhibit B and that increases
the Allocated Value of the affected Asset by more than $5,000 (collectively,
"Interest Additions"). Buyer acknowledges and agrees to comply with the
affirmative obligation set forth in the preceding sentence. The Party
discovering the Interest Additions must give the other Party written notice of
Interest Additions as soon as possible, but in no event later than on or before
Monday March 10, 2003 at 5:00 p.m. Mountain Time. This notice must be in writing
and must include (i) a description of each Interest Addition, (ii) the basis for
each Interest Addition, (iii) the Allocated Value of the Asset affected by the
Interest Addition, and (iv) the value of the Interest Addition ("Value of
Interest Addition") and the computations upon which such Party's belief is
based. The Value of the Interest Addition shall be determined by the Parties in
good faith taking into account all relevant factors. The Purchase Price shall be
increased for Interest Additions only to the extent that the aggregate of the
Value of all Interest Additions net of the sum of all Title Defect Values for
all of the Assets exceeds the Title Threshold (with the amount of such
adjustment being the "Interest Addition Adjustment") and the Purchase Price will
be increased in accordance with Section 2.4 by such an amount.

         4.4. Preferential Purchase Rights and Required Consents to Assign.
Seller shall use its best efforts to obtain all "Required Consents" (as defined
below) and to give notices required in connection with preferential purchase
rights prior to Closing. If Buyer discovers other affected Assets during the
course of Buyer's due diligence activities, Buyer shall notify Seller
immediately and Seller shall use its best efforts to obtain such Required
Consents or obtain waivers and to give the notices required in connection with
the preferential rights prior to Closing. The preferential purchase rights and
required consents affecting the Assets are listed on Exhibit H.

                  (a) Required Consents. Except for consents and approvals which
are customarily obtained post-Closing and those consents which would not
invalidate the conveyance of the Assets, if a necessary consent to assign any
Lease has not been obtained as of the Closing that would invalidate the
conveyance of the Asset (a "Required Consent"), then the Parties agree to choose
one of the following options:

                                      -13-

<PAGE>

                           (1) The portion of the Assets for which such Required
         Consent has not been obtained shall not be conveyed at the Closing, the
         Allocated Value for that Asset shall not be paid to Seller, and Seller,
         with Buyer's assistance, shall use its reasonable efforts to obtain
         such Required Consent as promptly as possible following Closing. If
         such Required Consent has been obtained as of the Settlement Date,
         Seller shall convey the affected Asset to Buyer effective as of the
         Effective Time and Buyer shall pay Seller the Allocated Value of the
         affected Asset, less any proceeds from the affected Asset attributable
         to the period of time after the Effective Time received and retained by
         Seller (net of any Property Expenses paid by Seller attributable to
         such period). If such Required Consent has not been obtained as of the
         Settlement Date, the affected Asset shall be deemed to be an Excluded
         Asset and Seller shall retain such Asset and the Purchase Price shall
         be deemed to be reduced by an amount equal to the Allocated Value of
         the particular Asset (with such adjustment being an "Exclusion
         Adjustment"). Buyer shall reasonably cooperate with Seller in obtaining
         any Required Consent including providing assurances of reasonable
         financial conditions, but Buyer shall not be required to expend funds
         or make any other type of financial commitments a condition of
         obtaining such Required Consent.

                           (2) If Buyer agrees to indemnify, defend and hold
         harmless Seller from and against any and all damages, liability,
         financial loss (including loss of the lease, interest or portion of the
         Asset in question) or Losses resulting from the assignment in question,
         Seller will assign at Closing the portion of the Assets for which such
         Required Consent has not been obtained and Buyer shall pay Seller the
         Allocated Value for that Asset. Seller, with Buyer's assistance, agrees
         to use its reasonable efforts to obtain such Required Consent as
         promptly as possible following Closing and Buyer agrees to cooperate
         with Seller in obtaining any Required Consent, but Buyer shall not be
         required to expend funds or make any other type of financial
         commitments a condition of obtaining such Required Consent. If such
         Required Consent has not been obtained as of the Settlement Date, then
         (i) Buyer may elect to re-convey the affected Asset to Seller effective
         as of the Effective Time, and, receive a refund of the Allocated Value
         attributable to such Asset (net of the revenues and Property Expenses
         received and expended by Buyer with respect to such Asset during the
         period of its ownership) and indemnify Seller from and against all
         Losses incurred directly or indirectly by Seller as a result of the
         assignment, or (ii) Buyer may continue to own the affected Assets and
         continue to indemnify Seller from and against all Losses incurred
         directly or indirectly by Seller as a result of the assignment, without
         limitation as to time or amount.

                  (b) Preferential Purchase Rights. Prior to Closing, if 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,

                                      -14-

<PAGE>

however, that if the holder of such preferential right fails to consummate the
purchase of such Assets on 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 in
accordance herewith for the Allocated Values of such Assets. All Assets for
which a preferential purchase right has not been asserted prior to Closing by
the holder of such right, 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.

                  (c) Preferential Purchase Rights After Closing. With respect
to any Assets for which a preferential purchase right is exercised within
eighteen months after the Closing Date, Buyer shall have the option of either:
(i) reassigning the subject Asset to Seller, or (ii) assuming the responsibility
and liability to reach a settlement with the holder of such preferential
purchase right. In the event Buyer notifies Seller that Buyer elects to reassign
to Seller the Asset subject to the preferential purchase right, Seller shall
return the Allocated Value of the affected Assets to Buyer. Thereafter, Buyer
and Seller shall use their best efforts to enter into an arrangement whereby
Seller agrees to convey Buyer an interest in the affected property so that Buyer
will be able to realize the same economic benefit of the affected Assets as
Buyer would have realized it if retained ownership of said Assets, taking into
consideration any investment made by Buyer and further development of the Assets
by Buyer. Upon entering into such agreement, Buyer shall pay Seller the
Allocated Value of the affected Assets, and Buyer shall operate the affected
Assets after such transactions, and indemnify Seller from all liabilities and
obligations associated with such operations.

                  (d) Exclusive Remedies. The rights and remedies granted each
Party in this Section 4.4 are the exclusive rights and remedies against the
other Party related to any preferential purchase rights and Required Consents.

                                    ARTICLE V
                              ENVIRONMENTAL MATTERS

         The provisions of this Article apply only to the environmental matters
associated with the Assets as the result of oil and gas operations on the Land.

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

         "Environmental Consultant" means a third party environmental consultant
experienced in conducting Phase I environmental assessments on oil and gas
properties similar to the Assets.

         "Environmental Defect" means a condition in, on or under the Assets
(including, without limitation, air, land, soil, surface and subsurface strata,
surface water and ground water) that causes an Asset to be in violation of an
Environmental Law or that is

                                      -15-

<PAGE>

the basis for a claim by a third party that such condition has caused and/or
will cause damage to such third party, based on common law or any statute, and
the Environmental Defect Value must exceed $5,000 per condition net to Seller's
interest. The fact that the Assets are subject to the Power River Basin ElS, the
Big Porcupine CBM Project Environmental Assessment and other studies required by
governmental agencies, shall not be considered an Environmental Defect.

         "Environmental Defect Notice" means a notice given by Buyer to Seller
alleging an Environmental Defect. This notice must be in writing and satisfy the
following conditions precedent: (i) name the affected Asset, (ii) describe the
Environmental Defect in reasonable detail, (iii) set forth the estimated
Environmental Defect Value substantiated in writing by an Environmental
Consultant, (iv) set forth reasonable factual substantiation for the defect
supporting Buyer's conclusion and (v) it must be received by Seller on before
Monday March 10, 2003 at 5:00 p.m. Mountain Time.

         "Environmental Defect Value" means for a particular Environmental
Defect, the costs to remediate that Environmental Defect plus the "actual Losses
incurred or expected to be incurred" by the owner of the Asset in question as a
result of the Environmental Defect. As used in the preceding sentence, "actual
Losses incurred or expected to be incurred" means Losses (as defined herein)
reasonably anticipated to be incurred as evidenced by written demands, written
actions or penalties imposed or threatened in writing to be imposed or other
reasonable evidence.

         "Environmental Laws" shall mean any federal, tribal, state, local or
foreign law (including common law), statute, rule, regulation, requirement,
ordinance and any writ, decree, bond, authorization, approval, license, permit,
registration, binding criteria, standard, consent decree, settlement agreement,
judgment, order, directive or binding policy issued by or entered into with a
governmental authority pertaining or relating to: (a) pollution or pollution
control; (b) protection of human health from exposure to Pollutants or
protection of the environment; (c) employee safety in the workplace; or (d) the
management, presence, use, generation, processing, extraction, treatment,
recycling, refining, reclamation, labeling, transport, storage, collection,
distribution, disposal or release or threat of release of Pollutants.
"Environmental Laws" shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
at seq., the Solid Waste Disposal Act (as amended by the Resource Conservation
and Recovery Act), 42 U.S.C. Section 6901 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq., the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq., the Federal Safe Drinking Water Act, 42 U.S.C.
Sections 300f-300, the Federal Air Pollution Control Act, 42 U.S.C. Section
7401 et seq., the Oil Pollution Act, 33 U.S.C. Section 2701 et seq., the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., the
Endangered Species Act and the regulations and orders respectively promulgated
thereunder, each as amended, or any equivalent or analogous state or local
statutes, laws or ordinances, any regulation promulgated thereunder and any
amendments thereto.

                                      -16-

<PAGE>

         "Environmental Threshold" shall mean that the total Environmental
Defect Values for all Environmental Defects reduces the Allocated Value of the
affected Asset(s) by more than $100,000 in the aggregate for all affected
Assets. Buyer shall not be entitled to give notice or to adjustments pursuant to
this Section V unless the Environmental Threshold has been reached or exceeded.

         "Pollutants" shall mean, without limitation, any hazardous substance or
any other substance, material or waste, regardless of its form or nature, the
management, presence, use, generation, processing, extraction, treatment,
recycling, refining, reclamation, labeling, transport, storage, collection,
distribution, disposal or release or threat of release of which is regulated by
Environmental Laws.

         "Remediation" means actions taken to correct an Environmental Defect or
otherwise required to remediate in compliance with applicable law, as
recommended in writing by an Environmental Consultant.

         5.2. Environmental Liabilities and Obligations.

                  (a) Retained Environmental Liabilities. Commencing at Closing,
Seller agrees to retain and pay, perform, fulfill and discharge all claims,
cost, expenses, liabilities and obligations accruing or relating to and release
Buyer (but no other third parties) from all Losses attributable to and relating
to Environmental Defects for which Seller receives (1) a timely Environmental
Defect Notice or (2) a notice from Buyer (containing requirements (i) through
(iv) of an Environmental Defect Notice) at any time within 18 months after
the Closing Date, if such notice satisfies the following conditions precedent
(i) the defect affects proved developed producing Assets (as set forth in the
Reserve Report), (ii) the defect is evidenced by a third party claim (i.e. a
claim made by a party unaffiliated with Buyer), and (iii) the defect is the
result of Seller's ownership or operation of the Assets prior to Closing (with
the matters referred to in (1) and (2) being collectively, "Retained
Environmental Liabilities"). The Environmental Threshold shall apply separately
to Environmental Defects asserted before Closing (set forth in the previous
sentence as item (1)), and Environmental Defects asserted after Closing (set
forth in the previous sentence as item (2)).

                  (b) Assumed Environmental Liabilities. Except for Retained
Environmental Liabilities, commencing at Closing, and subject to the provisions
of Article XIV, Buyer agrees to assume and pay, perform, fulfill and discharge
all claims, cost, expenses, liabilities and obligations accruing or relating to
and release Seller (but no other third parties) from all Losses relating to
environmental conditions in, on or under the Assets attributable to the period
of time after the Effective Time (collectively, "Assumed Environmental
Liabilities").

         5.3. Environmental Defects less than the Environmental Threshold. If
the aggregate Environmental Defect Values of all Environmental Defect Notices
timely delivered to Seller is less than or equals the Environmental Threshold of
$100,000, net to Seller's interest, then the Environmental Defects identified in
such notices will not be Retained Environmental Liabilities; accordingly,
Seller will have no obligation hereunder

                                      -17-

<PAGE>

with respect thereto and Buyer agrees to assume, and release Seller from, the
obligations with respect thereto as part of the Assumed Environmental
Liabilities. The "Environmental Threshold of $100,000, net to Seller's interest"
referenced in the preceding sentence is a threshold and not a deductible.

         5.4. Environmental Defects once the Environmental Threshold is
Exceeded. If the aggregate Environmental Defect Values of all Environmental
Defect Notices timely delivered to Seller exceeds the Environmental Threshold,
then Seller shall be liable for any and all Losses attributable thereto. For
those Environmental Defects not contested by Seller, where the aggregate of
Environmental Defect Values exceeds the Environmental Threshold, Seller shall
elect one of the following options: (i) pay Buyer no later than 10 days
following the delivery of the applicable Environmental Defect Notice(s) (subject
to Section 5.5) Buyer's estimate of the Environmental Defect Value, in which
event Buyer shall release Seller from any further Retained Environmental
Liability relating to the Environmental Defects so satisfied, or (ii) elect to
retain the affected Asset as an Excluded Asset and reduce the Purchase Price by
the affected Asset's Allocated Value. Upon obtaining Buyer's prior written
consent, Seller may elect a third option as follows: (iii) remediate the
condition on the affected Assets comprising the specified Environmental
Defect(s) as promptly as practicable (and retain its obligation to indemnify and
defend Buyer from any Losses relating to such Environmental Defects), such
remediation to be to Buyer's reasonable satisfaction and consistent with
Environmental Laws.

         5.5. Contested Environmental Defects. If Seller contests the existence
of an Environmental Defect or the Environmental Defect Value, Seller shall
notify Buyer in writing on or before Monday March 17, 2003 ("Rejection Notice").
The Rejection Notice shall state with reasonable specificity the basis of the
rejection of the Environmental Defect or the Environmental Defect Value. Within
2 business days of receipt of the Rejection Notice, representatives of Buyer and
Seller knowledgeable in environmental matters shall meet and, either (i)
mutually agree to reject the particular Environmental Defect or (ii) agree on
the validity of such Environmental Defect and the Environmental Defect Value. If
the Parties cannot agree on either options (i) or (ii) in the preceding
sentence, the Environmental Defect and/or the Environmental Defect Value subject
to the Rejection Notice shall be resolved in accordance with the arbitration
procedures set forth in Section 15.7. If Seller fails to timely deliver a
Rejection Notice, Seller shall be deemed to have accepted the validity of the
Environmental Defect and Buyer's estimate of the Environmental Defect Value, and
shall be deemed to have waived its own option to contest the validity of the
Environmental Defect.

         5.6. Exclusive Remedies. The rights and remedies granted each Party in
this Article together with the indemnifications set forth in Article XIV are the
exclusive rights and remedies against the other Party related to any
Environmental Matter or Environmental Defect.

                                   ARTICLE VI
                     SELLER'S REPRESENTATIONS AND WARRANTIES

                                      -18-

<PAGE>

         Seller makes the following representations and warranties to Buyer as
of the date hereof:

         6.1. Organization and Standing.

              (a) IPC is a corporation duly organized, validly existing and
in good standing under the laws of the state of Colorado and is duly qualified
to carry on its business in each state where failure to be so qualified could
materially adversely affect the Assets or consummation of the Transaction.

              (b) Sapphire Bay is a Delaware limited liability company duly
organized, validly existing and in good standing under the laws of the state of
Delaware and is duly qualified to carry on its business in each state where
failure to be so qualified could materially adversely affect the Assets or
consummation of the Transaction.

         6.2. Power. Each of the companies that comprise Seller has all
requisite power and authority to carry on its business as presently conducted
and to enter into this Agreement. The execution and delivery of this Agreement
and the consummation of the Transaction does not, and the fulfillment of and
compliance with the terms and conditions hereof will not, as of Closing,
violate, or be in conflict with, any material provision of the governing
documents, when applicable, or any material provision of any agreement or
instrument to which the Seller is a party or by which it is bound, or, to the
Seller's knowledge, any judgment, decree, order, statute, rule or regulation
applicable to Seller or the Assets.

         6.3. Authorization and Enforceability. The execution, delivery and
performance of this Agreement and the Transaction have been duly and validly
authorized by all requisite action on Seller's part. This Agreement constitutes
Seller's legal, valid and binding obligation, enforceable in accordance with its
terms, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium and other laws for the protection of creditors, as
well as to general principles of equity, regardless whether such enforceability
is considered in a proceeding in equity or at law.

         6.4. No Liens. The Assets will be conveyed to Buyer at the Closing,
free and clear of all liens, encumbrances and adverse claims of any kind, with a
special warranty of title by, through and under Seller, but not otherwise.
Seller agrees to deliver to Buyer at Closing an executed Release of the Mortgage
in favor of U.S. Bank.

         6.5. Liability for Brokers' Fees. Seller has not incurred any
liability, contingent or otherwise, for brokers' or finders' fees relating to
the Transaction for which Buyer shall have any responsibility whatsoever.

         6.6. No Bankruptcy. There are no bankruptcy proceedings pending, being
contemplated by or, to the knowledge of Seller, threatened against Seller.

                                      -19-

<PAGE>

         6.7. Litigation. Except as set forth in Schedule 6.7 ("Existing Claims
and Litigation") there are no actions, suits or proceedings pending or, to the
knowledge of Seller, threatened in writing against Seller or any of the Assets,
in any court or by or before any federal, state, municipal or other governmental
agency that would materially adversely affect Seller or the Assets, or impair
Seller's ability to consummate the Transaction.

         6.8. Taxes. Seller has paid all Taxes (as defined in Section 9.1) with
respect to the Assets operated by Seller prior to such Taxes becoming
delinquent. Seller has paid all bills for Taxes submitted to it by third party
operators of the Assets prior to such bill becoming delinquent.

         6.9. Wells/Projects in Progress. To Seller's knowledge, Schedule 6.9 is
a list and description of all wells or other specified projects in progress and
associated costs or estimates thereof to the extent such costs or estimates
exceed $25,000 per well or project net to Seller's interest (the "Wells/Projects
in Progress").

         6.10. Material Agreements. The agreements and contracts that are
necessary to Seller's operation of the Assets as currently conducted are listed
on Exhibit C (the "Material Agreements"). The Material Agreements are valid and
in full force and effect and no person has given Seller written notice of any
alleged material default thereunder.

         6.11. Insurance. Seller maintains, and through the Closing Date will
maintain, with respect to the Assets, the insurance coverage described on
Schedule 6.11.

         6.12. Judgments. There are no unsatisfied judgments or injunctions
issued by a court of competent jurisdiction or other governmental agency
outstanding against Seller the Assets that materially interfere with the
operation of the Assets or impair Seller's ability to consummate the
Transaction.

         6.13. Casualty Loss. Between the Effective Time and the date of
execution of this Agreement there have been no uninsured casualty losses or
takings in condemnation of the Assets exceeding $25,000.00 in the aggregate.

         6.14. Accuracy of Information. The Records, data room materials and
other materials made available to Buyer by Seller in its offices in Denver,
Colorado with respect to the Assets may be referred to collectively as the
"Information." The Information include files, or copies thereof, that Seller
has used in its normal course of business and other information about the Assets
that Seller has compiled or generated, including without limitation, information
related to historical production and lease operating expenses. Seller makes no
representations or warranties, express or implied, written or oral, as to the
accuracy or completeness of the Information or any other information relating to
the Assets, furnished or to be furnished to Buyer or its representatives by or
on behalf of Seller, including without limitation (i) any estimate with respect
to the value of the Assets or reserves or any projections as to events that
could or could not occur (ii) indices, compilations or summaries of other
documents;

                                      -20-

<PAGE>

(iii) reserve estimates, engineering, geological or other interpretive
information; or (iv) projections, predictions or other estimation of future
events.

         6.15. Compliance with Law. To Seller's knowledge, the Assets are not
currently in material violation of any statute, law, ordinance, regulation, rule
or order of any foreign, federal, state or local government or any other
governmental department or agency, or any judgment, decree or order of any
court, applicable to its business or operations where such violations would, in
the aggregate, have a material adverse effect on the Assets (taken as a whole).

         6.16. Receipt of Proceeds from the Assets. Seller is receiving the
proceeds of production from the Assets in a timely manner without interruption,
delay, or suspense.

         6.17. Preferential Rights and Required Consents. Except as set forth on
Exhibit H, the Assets are not subject to any preferential rights or Required
Consents and the exclusive remedy for breach of the representation set forth in
this sentence is contained in Section 4.4. All contracts with third parties, if
any such contracts exist, which contain licensing restrictions or other
restrictions on disclosure or transfer (including but not limited to seismic
licenses) are listed on Exhibit H.

         6.18. Audits. Except as set forth in Schedule 6.18, the Assets are not
subject to any pending regulatory, revenue or joint interest billing audits.

         6.19. IPC-Owned CBM Gas Pipeline/Gathering Systems. Except for the
Tripp Surface Use Agreements which have previously been provided to Buyer, the
IPC-Owned CBM Gas Pipeline/Gathering Systems are located on the Leases and/or
on lands covered by Surface Use Agreements with the owner of the surface that
give IPC the right to lay the gathering system and transport the hydrocarbons.
Seller shall not be deemed to have breached this representation unless Buyer
provides Seller with written evidence that a third party has made a claim (or
threatened in writing to make a claim) asserting that Seller does not have the
right to transport the hydrocarbons as represented above.

                                   ARTICLE VII
                     BUYER'S REPRESENTATIONS AND WARRANTIES

         Buyer makes the following representations and warranties to Seller, as
of the date hereof:

         7.1. Organization and Standing. Buyer is a corporation organized,
existing and in good standing under the laws of the state of Delaware and on the
Closing Date will be duly qualified to carry on its business in each state where
failure to be so qualified could adversely affect the Assets or consummation of
the Transaction.

         7.2. Power. Buyer has all requisite power and authority to carry on
its business as presently conducted and to enter into this Agreement and to
consummate

                                      -21-
<PAGE>

the Transaction. The execution and delivery of this Agreement and consummation
of the Transaction and the fulfillment of and compliance with the terms and
conditions hereof will not violate, or be in conflict with, any material
provision of its governing documents or any material provision of any agreement
or instrument to which it is a party or by which it is bound, or, to its
knowledge, any judgment, decree, order, statute, rule or regulation applicable
to it.

         7.3. Authorization and Enforceability. The execution, delivery and
performance of this Agreement and the Transaction have been duly and validly
authorized by all requisite action on behalf of Buyer. This Agreement
constitutes Buyer's legal, valid and binding obligation, enforceable in
accordance with its terms, subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium and similar laws for the protection of
creditors, as well as to general principles of equity, regardless whether such
enforceability is considered in a proceeding in equity or at law.

         7.4. Liability for Brokers' Fees. Buyer has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees relating to the
Transaction which Seller shall have any responsibility whatsoever.

         7.5. 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 against it before any governmental
authority that impedes or is likely to impede its ability to consummate the
Transaction and to assume the liabilities to be assumed by it under this
Agreement.

         7.6. Financial Resources. Buyer has the financial resources available
to close the Transaction without financing that is subject to any material
contingency.

         7.7. Buyer's Evaluation.

                  (a) Information. Buyer is experienced and knowledgeable in the
oil and gas business and is aware of its risks. Buyer acknowledges that Seller
is making available to it the Information and the opportunity to examine, to the
extent it deems necessary in its sole discretion, all personal property and
equipment associated with the Assets. Except for the representations or
warranties of Seller contained in this Agreement, Buyer acknowledges and agrees
that Seller has not made any representations or warranties, express or implied,
written or oral, as to the accuracy or completeness of the Information or any
other information relating to the Assets furnished or to be furnished to Buyer
or its representatives by or on behalf of Seller, including without limitation
any estimate with respect to the value of the Assets, estimates of reserves,
estimates or any projections as to events that could or could not occur, future
operating expenses, future workover expenses and future cash flow.

                  (b) Independent Investigation. Buyer is experienced and
knowledgeable in the oil and gas business and is aware of its risks. Buyer is
familiar with the development and production of coalbed methane in the Powder
River Basin of

                                      -22-

<PAGE>

Wyoming, including the issues associated with dewatering, produced waters and
transport of the Hydrocarbons to market. Buyer has been afforded the opportunity
to examine the Information. Buyer acknowledges and agrees that Seller has made
no representations or warranties, express or implied, written or oral, as to the
accuracy or completeness of the Information or any other information relating to
the Assets furnished or to be furnished to Buyer or its representatives by or on
behalf of Seller. In entering into this Agreement, Buyer acknowledges and
affirms that it has relied and will rely solely on the terms of this Agreement
and upon its independent analysis, evaluation and investigation of, and judgment
with respect to, the business, economic, legal, tax or other consequences of
this Transaction including its own estimate and appraisal of the extent and
value of the petroleum, natural gas and other reserves of the Assets and the
development potential in the Powder River Basin. Buyer's representatives have
visited the offices of Seller and have been given opportunities to examine the
books and records Seller has made available relating to the Assets. Except as
expressly provided in this Agreement, Seller shall not have any liability to
Buyer or its affiliates, agents, representatives or employees resulting from any
use, authorized or unauthorized, of the Information or other information
relating to the Assets provided by or on behalf of Seller.

                                  ARTICLE VIII
                            COVENANTS AND AGREEMENTS

         8.1. Covenants and Agreements of Seller. Seller covenants and agrees
with Buyer as follows:

                  (a) Operations Prior to Closing.

                           (1) Operations. Except as otherwise consented to in
         writing by Buyer or provided in this Agreement, from the date of
         execution hereof to the Closing, Seller will operate the Assets
         operated by Seller in a good and workmanlike manner consistent with
         past practices. Subject to the provisions of Section 2.4 and
         subsections 8.1(a)(2) through (3), from the date of execution of this
         Agreement to the Closing Date, Seller shall pay or cause to be paid its
         proportionate shares of all Property Expenses incurred in connection
         with such operations and Seller will notify Buyer of ongoing activities
         and major capital expenditures in excess of $25,000 per activity net to
         Seller's interests conducted on the Assets and shall consult with Buyer
         regarding all such matters and operations involving such expenditures.

                           (2) Restrictions. Subject to subsection 8.1(a)(1),
         unless Seller obtains the prior written consent of Buyer to act
         otherwise, during the period from the date of execution of this
         Agreement to the Closing Date, Seller will use good faith efforts
         within the constraints of the applicable operating agreements and other
         applicable agreements to not permit Seller:

                                    (i) to sell, transfer or abandon any part of
                  the Assets (except in the ordinary course of business or the
                  abandonment of leases

                                      -23-

<PAGE>


                  upon the expiration of their respective primary terms or if
                  not capable of production in paying quantities);

                                    (ii) except for operations in connection
                  with the Wells/Projects in Progress which are deemed to be
                  approved, to approve any operations on the properties
                  anticipated in any instance to cost the owner of the Assets
                  more than $25,000 per activity net to Seller's interest
                  (except for emergency operations, operations required under
                  presently existing contractual obligations, ongoing
                  commitments under existing AFE's and operations undertaken to
                  avoid a monetary penalty or forfeiture provision of any
                  applicable agreement or order);

                                    (iii) to enter into any new marketing
                  contracts or agreements providing for the sale or disposition
                  of Hydrocarbons for a term in excess of 90 days; or

                                    (iv) to convey or dispose of any material
                  part of the Assets (other than replacement of equipment or
                  sale of Hydrocarbons produced from the Assets in the regular
                  course of business) or enter into any farmout, except to
                  maintain a lease or fulfill a drilling commitment, or enter
                  into any farmin or other similar contract affecting the Assets
                  if the net expense to Seller's interest will be in excess of
                  $25,000.

         Notwithstanding any provision to the contrary, nothing in this
         subsection 8.1(a) shall require Seller to revise, dishonor or delay
         performance of any obligation under agreements in existence prior to
         the date hereof.

                           (3) Consents. For the purposes of obtaining the
         written consents required in this subsection 8.1(a), this subsection
         8.1(a)(3) shall control over Section 15.3, and Buyer designates the
         following contact person:

                  Bill Barrett Corporation
                  1099 18th Street, Suite 2300
                  Denver, CO 80202
                  Attn: Dominic Bazile
                  Telephone: (303) 293-9100 Fax: (303) 291-0420

                  Such consents may be obtained in writing by overnight courier
or given by telecopy or facsimile transmission.

                  (b) Status. Seller shall maintain the corporate status of
Seller from the date hereof until Closing and to assure that as of the Closing
Date, Seller will not be under any material legal or contractual restriction
that would prohibit or delay the timely consummation of the Transaction.

                  (c) Notices of Claims. Seller shall promptly notify Buyer, if,
between the date of execution of this Agreement and the Closing Date, Seller
receives written

                                      -24-

<PAGE>

notice of any claim, suit, action or other proceeding of the type referred to in
Section 6.7 or written notice of any material default under any of the Material
Agreements.

                  (d) Compliance with Laws. During the period from the date of
execution of this Agreement to the Closing Date, Seller shall use good faith
efforts to comply in all material respects with all applicable statutes,
ordinances, rules, regulations and orders relating to the Assets.

                  (e) Books and Records. During the period from the date of
execution of this Agreement to the Closing Date, Seller will maintain the books
and records related to the Assets in a manner consistent with past practices.

                  (f) Consents of Other; Conditions. Prior to the Closing,
Seller shall use its reasonable efforts (a) to cause Seller to obtain all
authorizations, consents and permits, if any, required of Seller to permit them
to consummate the Transaction and (b) to cause all conditions for Closing set
forth in Section 10.1 to be met.

                  (g) Tripp Surface Use Agreement. On or before Closing, Seller
agrees to record the Tripp Surface Use Agreement in the real property records of
Campbell County Wyoming.

         8.2. Covenants and Agreements of Buyer. Buyer covenants and agrees with
Seller that:

                  (a) Corporate Status. Buyer shall maintain its corporate
status from the date hereof until the post-Closing adjustment, and use all
reasonable efforts to assure that as of the Closing Date it will not be under
any material corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of the Transaction.

                  (b) Consents of Others; Condition. Prior to Closing, Buyer
shall use its reasonable efforts (a) to obtain all authorizations, consents and
permits, if any, required of Buyer to permit it to consummate the Transaction
and (b) to cause all conditions for Closing set forth in Section 10.2 to be met.

                  (c) Replacement Bonds and Instruments. At Closing, Buyer shall
provide replacement instruments for each bond or similar contingent obligation
given by Seller securing its obligations relating to the Assets (collectively,
the "Instruments"). As soon as practical after Closing, Buyer (with reasonable
assistance of Seller as requested by Buyer) shall use its best efforts to obtain
the release of the Assets and/or Seller from the Instruments.

                  (d) Employment Offers. Buyer (or Buyer's independent
contractor, Trinity Petroleum Management) will offer full-time employment to at
least 70 percent (70%) of the employees of Seller as of January 1, 2003, not
including Mr. Bill Cagle. Such offer will be made at the employees' current
salaries. Upon acceptance of an offer, each former employee of Seller will
become an employee of Buyer, subject to all

                                      -25-

<PAGE>

terms and conditions of employment normally applicable to Buyer's employees.
Provided, however, that Buyer will not terminate any former employees of Seller,
except for cause, prior to the expiration of nine (9) months from commencement
of employment. For each employee of Seller to whom Buyer does not offer
employment or for each employee that rejects Buyer's employment offer, with the
exception of Mr. Bill Cagle, Buyer will reimburse Seller for a severance payment
to be made to each such employee, if such employee was an employee on January 1,
2003, in the amount of fifty percent (50%) of such employee's base annual
salary, as of January 1, 2003, excluding any bonuses; provided however, that,
for each employee to whom Buyer does not offer employment or that rejects
Buyer's employment offer, Buyer shall be liable to reimburse Seller for
severance payments to all of the Gillette IPC employees and to reimburse Seller
for severance payments to eight of the originally listed Denver IPC Employees
and one out of the two of the "additional" Denver IPC Employees."

         8.3. Covenants and Agreements of the Parties.

                  (a) Confidentiality. In connection with reviewing Data Room
materials and other information during the bid process, Buyer executed a
"Confidentiality Agreement." Nothing herein shall be deemed to terminate the
Confidentiality Agreement and Buyer and Seller agrees that the Confidentiality
Agreement shall continue in full force and effect with the following
modifications: (i) if Closing occurs, Buyer's obligations under the
Confidentiality Agreement thereafter terminate; (ii) if Closing does not occur,
the Confidentiality Agreement shall remain in effect until November 1, 2004;
(iii) the term "Disclosing Party" as used in the Confidentiality Agreement shall
include Seller and is representatives; (iv) the term "Confidential Information"
as used in the Confidentiality Agreement shall also include the Information and
any other documents and information made available to Buyer in the Data Room or
under the terms of this Agreement and (v) all rights, powers and remedies
provided for therein and herein are cumulative, and not exclusive, of any and
all rights, powers and remedies existing at law or in equity, and Seller shall,
in addition to the rights, powers and remedies herein conferred and conferred in
the Confidentiality Agreement, be entitled to avail itself of all such other
rights, powers and remedies as may now or hereafter exist.

                  (b) Communication Between The Parties. If Buyer has reason to
believe that Seller has breached a representation or warranty under this
Agreement, Buyer shall inform Seller of such potential breach as soon as
possible, but in any event, at or prior to Closing.

                  (c) Cure Period for Breach. If a Party believes the other
Party has breached the terms of this Agreement, the Party who believes the
breach has occurred shall give written notice to the breaching Party of the
nature of the breach and give that Party 48 hours to cure. Notwithstanding the
foregoing, this subsection 8.3(c) shall not apply to breach of the Parties'
obligations at Closing and shall not operate to delay Closing.

                                      -26-

<PAGE>

                                   ARTICLE IX
                                  TAX MATTERS

         9.1. Apportionment of Tax Liability. "Taxes" shall mean all ad valorem,
severance, property, production, excise, net proceeds, and all other taxes and
similar obligations assessed against the Assets or based upon or measured by the
ownership of the Assets or the production of Hydrocarbons or the receipt of
proceeds therefrom, other than income taxes. With respect to the Assets, all
Taxes based on or attributable to the ownership of, or based on production of
hydrocarbons shall be deemed attributable to the period during which such
production occurred, and not attributable to the period during which such Taxes
are assessed. The apportionment of Taxes between the Parties shall take place in
the Preliminary Settlement Statements and Settlement Statement, using estimates
of such Taxes if actual numbers are not available. Subject to the provisions of
Section 13.3, Taxes are considered part of the Property Expenses.

         9.2. Calculation of Tax Liability. Consistent with Section 9.1, and
based on the best current information available as of Closing, the proration of
Taxes shall be made between the Parties as an adjustment to the Purchase Price
pursuant to Sections 2.4 and 13.1 and thereafter pursuant to the provisions of
Section 13.3.

         9.3. Tax Reports and Returns.

                  (a) Consistent with Section 9.1, the Parties shall promptly
forward to each other any such tax reports and returns received after Closing
and provide each other with appropriate information on a timely basis which is
necessary 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
are required to be filed after the Closing, and remit all required Taxes payable
with respect to the Assets subject to the provisions of Sections 9.1 and 13.3.
Accordingly, the Parties agrees as follows:

                           (1) Tax Year 2002 - Production Year 2001. Seller
         agrees to retain the responsibility to remit the ad valorem taxes and
         other Taxes due with respect to the Assets for tax year 2002 (i.e., the
         period based on production which occurred during 2001).

                           (2) Tax Year 2003 - Production Year 2002. Buyer
         agrees to assume the responsibility to remit the ad valorem taxes and
         other Taxes due with respect to the Assets for tax year 2003 (i.e., for
         ad valorem taxes, the period based on production which occurred during
         2002). With respect to ad valorem Taxes payable for the tax year 2003
         (based on 2002 production), any Taxes withheld by Seller, which are
         attributable to the production revenues of Seller or any third party
         shall be transferred and assigned to Buyer at Closing (together with
         appropriate documentation) and said transfer shall be reflected in the
         Preliminary Settlement Statement and Settlement Statement. Buyer shall
         assume responsibility for remitting such Taxes to the State of Wyoming
         Department of Revenue, and Buyer agrees to indemnify, hold harmless and

                                      -27-

<PAGE>

         defend Seller, without limitation as to time or amount, from and
         against all Losses incurred by Seller if and to the extent that Buyer
         breaches the provisions of this Section.

                           (3) Tax Year 2004 - Production Year 2003 and Beyond.
         Consistent with the previous subsection (2), Buyer agrees to assume the
         responsibility to remit the ad valorem taxes and other Taxes due with
         respect to the Assets for tax year 2003 and thereafter, Buyer agrees to
         assume the responsibility to remit the ad valorem taxes and other Taxes
         due with respect to the Assets commencing with tax year 2004 (i.e., the
         period based on production which occurred during 2003), and all
         subsequent years.

         9.4. Sales Taxes. Buyer shall be liable for and shall indemnify Seller
for, any sales and use taxes, conveyance, transfer and recording fees and real
estate transfer stamps or taxes that may be imposed on any transfer of the
Assets pursuant to this Agreement. If required by applicable law, Seller shall
calculate and remit any sales or similar taxes that are required to be paid as a
result of the transfer of the Assets to Buyer and Buyer shall promptly reimburse
Seller therefor. If Seller receives notice that any sales and/or use taxes are
due, Seller shall promptly forward such notice to Buyer for handling.

         9.5. Tax Forms.

                  (a) The Parties shall file all tax forms and reports
consistent with the Exhibit B and B-1 Allocated Values. Buyer and Seller shall
cooperate, in the manner set forth in this Section 9.5, to comply with all
substantive and procedural requirements of Sections 755 and 1060 of the Code and
Regulations thereunder, including without limitation, the filing by Buyer and
Seller of IRS Form 8594 with their federal income tax returns for the taxable
year in which the Closing occurs. Buyer and Seller agree that each will not take
for income tax purposes, or permit any affiliate to take, any position
inconsistent with the allocation of the Purchase Price.

                  (b) On or before Tuesday, May 20, 2003, Buyer will provide to
Seller copies of Internal Revenue Service Form 8594 and all other related
documents the Code and applicable United States Treasury regulations require
(the "Asset Acquisition Statement") with Buyer's proposed allocation of the
Purchase Price (together with any Assumed Obligations), such allocation to be
made in accordance with the Code and applicable Regulations thereunder. Within
30 days after the receipt of such Asset Acquisition Statement, Seller will
propose to Buyer any changes to such Asset Acquisition Statement. If Seller
proposes no such changes in writing to Buyer within that 30-day period, Seller
will have agreed to, and accepted, the Asset Acquisition Statement. Buyer and
Seller will try to resolve any differences with respect to the Asset Acquisition
Statement within 30 days after Buyer's receipt of written notice of objection
from Seller.

                                      -28-

<PAGE>

                  (c) If Seller withholds its consent to the allocation shown in
the Asset Acquisition Statement, and Buyer and Seller have acted in good faith
to resolve any differences with respect to items on the Asset Acquisition
Statement and are unable to resolve any differences, then KPMG (the "Accounting
Firm") will conclusively resolve all remaining disputed matters. The Accounting
Firm shall be instructed to resolve such disputes within 30 days after its
receipt of the information necessary to make such a determination. No later than
30 days after its receipt of the information necessary to make such a
determination, the Accounting Firm shall determine (based solely on
presentations by Seller and Buyer and not by independent review) only those
matters in dispute and will issue a written report about the disputed matters
and the resulting allocation of Purchase Price (together with any Assumed
Liabilities). The report shall be conclusive and binding upon the Buyer and
Seller. Subject to the requirements of any applicable tax law or election, Buyer
and Seller shall file all tax returns and reports consistently with the
allocation provided in the Asset Acquisition Statement or, if applicable, the
determination of the Accounting Firm. Seller and Buyer shall share equally the
fees charged by and expenses of the Accounting Firm. Any adjustment to the
Purchase Price (together with Assumed Liabilities) shall be allocated in
accordance with the Code and applicable Regulations thereunder.

                                    ARTICLE X
                         CONDITIONS PRECEDENT TO CLOSING

         10.1. Seller's Conditions Precedent. The obligations of Seller at the
Closing are subject, at the option of Seller, to the satisfaction or waiver at
or prior to the Closing of the following conditions precedent:

                  (a) All representations and warranties of Buyer contained in
this Agreement are true in all material respects (considering the Transaction as
a whole) at and as of the Closing in accordance with their terms as if such
representations and warranties were remade at and as of the Closing, and Buyer
has 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 and Buyer shall deliver a certificate to Buyer confirming
the foregoing in the form attached as Exhibit E; and

                  (b) No order has 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 Transaction and that remains in effect
at the time of Closing.

                  (c) The aggregate sum of Title Defect adjustments and
adjustments for Adverse Environmental Conditions shall not exceed 10% of the
Purchase Price.

         10.2. Buyer's Conditions. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction or waiver at or prior to
the Closing of the following conditions precedent:

                                      -29-

<PAGE>

                  (a) All representations and warranties of Seller contained in
this Agreement are true in all material respects (considering the Transaction as
a whole) at and as of the Closing in accordance with their terms as if such
representations were remade at and as of the Closing, and Seller has performed
and satisfied all covenants and agreements required by this Agreement to be
performed and satisfied by Seller at or prior to the Closing in all material
respects and Seller shall deliver a certificate to Buyer confirming the
foregoing in the form attached as Exhibit F; and

                  (b) No order has 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 Transaction and that remains in effect
at the time of Closing.

                  (c) The aggregate sum of Title Defect adjustments and
adjustments for Adverse Environmental Conditions shall not exceed 10% of the
Purchase Price.

                                   ARTICLE XI
                      RIGHT OF TERMINATION AND ABANDONMENT

         11.1. Termination. This Agreement may be terminated in accordance with
the following provisions:

                  (a) by Seller if Seller's conditions set forth in Section 10.1
are not satisfied through no fault of Seller, or are not waived by Seller, as of
the Closing Date;

                  (b) by Buyer if Buyer's conditions set forth in Section 10.2
are not satisfied through no fault of Buyer, or are not waived by Buyer, as of
the Closing Date;

                  (c) by Seller if, through no fault of Seller, the Closing does
not occur on or before the Closing Date;

                  (d) by Buyer if, through no fault of Buyer, the Closing does
not occur on or before the Closing Date; or

                  (e) by Buyer or Seller if the aggregate of Defect Adjustments
(including those amounts that are considered Defect Adjustments solely for
purposes of determining the Closing Amount) and Exclusion Adjustments exceeds
10% of the Purchase Price.

         11.2. Liabilities Upon Termination.

                  (a) Buyer's Breach. If Closing does not occur because Buyer
wrongfully fails to tender performance at Closing or otherwise breaches this
Agreement prior to Closing, Seller shall retain the Deposit, plus all accrued
interest, and Seller shall retain any legal or equitable remedies for Buyer's
breach of this Agreement, including but not limited to specific performance;
provided, however, that Buyer shall not have any liability to Seller for
consequential, special, punitive or exemplary damages arising out of or related
to Buyer's breach of any provision of this Agreement. Buyer's failure to

                                      -30-

<PAGE>

close shall not be considered wrongful if (i) Buyer's conditions under Section
10.2 are not satisfied through no fault of Buyer and are not waived, or (ii)
Buyer has terminated this Agreement as of right under Section 11.1.

                  (b) Seller's Breach. If Closing does not occur because Seller
wrongfully fails to tender performance at Closing or otherwise breach this
Agreement prior to Closing, Seller will return the Deposit, plus all accrued
interest, immediately after the Closing Date and Buyer shall retain any legal or
equitable remedies for Seller's breach of this Agreement, including but not
limited to specific performance; provided, however, that Seller shall not have
any liability to Buyer for consequential, special, punitive or exemplary damages
arising out of or related to Seller's breach of any provision of this Agreement.
Seller's failure to close shall not be considered wrongful if (i) Seller's
conditions under Section 10.1 are not satisfied through no fault of Seller and
are not waived; or (ii) Seller has terminated this Agreement as of right under
Section 11.1.

                  (c) Termination Pursuant to Section 11.1. If Buyer or Seller
terminates this Agreement pursuant to Section 11.1 in the absence of a breach by
the other Party, Seller shall distribute the funds in the Deposit, plus all
accrued interest, to Buyer and neither Buyer nor Seller shall have any liability
to the other Party for termination of this Agreement. If Buyer or Seller
terminates this Agreement and asserts that a breach of this Agreement has
occurred, the notice of termination shall include a statement describing the
nature of the alleged breach.

                                   ARTICLE XII
                                     CLOSING

         12.1. Date of Closing. The consummation of the Transaction (the
"Closing") shall be held on a mutually acceptable date on or before Thursday
March 20, 2003 (the "Closing Date").

         12.2. Place of Closing. The Closing shall be held at the offices of
Hale, Hackstaff, Tymkovich, LLP in Denver, Colorado at 10:00 a.m. or at such
other time and place as Buyer and Seller may agree in writing.

         12.3. 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) Seller shall execute, acknowledge and deliver to Buyer, an
Assignment, Bill of Sale and Conveyance in the form attached as Exhibit G,
conveying the Assets to Buyer as of the Effective Time, with (i) a special
warranty of the real property title by, through and under Seller but not
otherwise (as described in Section 13.4), and (ii) with all personal property
and fixtures conveyed "AS IS, WHERE IS," with no warranties whatsoever, express,
implied or statutory;

                                      -31-

<PAGE>

                  (b) Seller and Buyer shall execute and deliver the Preliminary
Settlement Statement;

                  (c) Buyer shall deliver to Seller the Closing Amount by wire
transfer of immediately available funds to an account or the accounts designated
by Seller;

                  (d) Buyer shall deliver to Seller Buyer's Officers Certificate
and Seller shall deliver to Buyer Seller's Officers Certificate.

                  (e) Seller shall deliver to Buyer a Release of Mortgage, in
recordable form, of the Mortgage in favor of U.S. Bank;

                  (f) Buyer shall deliver to Seller evidence that it has
complied with the provisions of Section 8.2(c) by providing evidence of the
bonds and other similar obligations replacing the Instruments;

                  (g) Seller shall transfer to Buyer all funds and detail
information, if any, held by Seller in suspense owing to third parties on
account of production from the Properties and in such event Buyer shall assume
responsibility for the payment thereof to third, parties entitled to the same;
and

                  (h) Seller and Buyer shall take such other actions and deliver
such other documents as are contemplated by this Agreement.

                                  ARTICLE XIII
                            POST-CLOSING OBLIGATIONS

         13.1. Post-Closing Adjustments. As soon as practicable after the
Closing, but on or before Tuesday June 17, 2003, Seller, with assistance from
Buyer's staff, will prepare and deliver to Buyer, in accordance with customary
industry accounting practices and the terms of this Agreement, (i) the
settlement statement (the "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"), if applicable. As soon as practicable after receipt of
the Settlement Statement, but in no event later than on or before 20 days after
receipt of Seller's proposed Settlement Statement, Buyer shall deliver to Seller
a written report containing any changes that Buyer proposes to make to the
Settlement Statement. Buyer's failure to deliver to Seller a written report
detailing proposed changes to the Settlement Statement by that date shall be
deemed an acceptance by Buyer of the Settlement Statement as submitted by
Seller. The Parties shall agree with respect to the changes proposed by Buyer,
if any, no later than 30 days after receipt of Seller's proposed Settlement
Statement. The date upon which such agreement is reached or upon which the Final
Purchase Price is established shall be herein called the "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. In
either

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<PAGE>

event, payment shall be made by wire transfer in immediately available funds.
Payment by Buyer or Seller, as the case may be, shall be within five days of the
Settlement Date.

         13.2. Records. Seller may retain copies of the Records and Seller shall
have the right to review and copy the Records during standard business hours
upon reasonable notice for so long as Buyer retains the Records. Buyer agrees
that the Records will be maintained in compliance with all applicable laws
governing document retention. Buyer will not destroy or otherwise dispose of
Records for a period of six years after Closing, unless Buyer first gives Seller
reasonable notice and an opportunity to copy the Records to be destroyed.

         13.3. Proceeds, Accounts Receivable and Invoices For Property Expenses
Received After Closing. After the Settlement Date, those proceeds or accounts
receivable attributable to the Assets received by a Party, or invoices for
Property Expenses, or invoices paid by one Party for or on behalf of the other
Party which were not already included as a Purchase Price adjustment at Closing,
shall be handled as follows:

                  (a) Proceeds/Accounts Receivable. Proceeds from the sales of
Hydrocarbons produced prior to the Effective Time and/or accounts receivable
attributable to the period of time before the Effective Time, received by Buyer
shall be immediately remitted or forwarded to Seller. Proceeds from the sales of
Hydrocarbons produced after the Effective Time and/or accounts receivable
attributable to the period of time after the Effective Time, received by Seller,
if any, shall be immediately forwarded to Buyer. Buyer agrees to use all
reasonable business efforts to attempt to collect all accounts receivable
attributable to the period of time prior to the Effective Time in its normal
course of business.

                  (b) Property Expenses. Invoices for Property Expenses received
by Buyer which relate to operations on the Assets prior to the Effective Time
shall be forwarded to Seller by Buyer, or if already paid by Buyer, invoiced by
Buyer to Seller. Invoices for Property Expenses received by Seller which relate
to operations on the Assets after the Effective Time shall be immediately
forwarded to Buyer by Seller, or if already paid by Seller, invoiced by Seller
to Buyer.

                  (c) Duration. The provisions of this Section shall apply until
December 31, 2003, after which time, except for the liability for royalty and
overriding royalty payments and Taxes made or payable with respect to the Assets
and attributable to the period of time prior to the Effective Time ("Retained
Royalties and Taxes"), Buyer shall assume, pay, perform, fulfill and discharge
responsibility for the payment of all Property Expenses attributable to the
period of time before and after the Effective Time, and such retention shall
become part of the Assumed Liabilities.

         13.4. Limited Warranty of Title. Seller agrees to convey the Assets to
Buyer with a special warranty of title against all persons claiming by, through
or under Seller, but not otherwise. This special warranty of title shall expire
one year after the Effective Time; provided, however, that Seller shall have no
liability to Buyer under this special

                                      -33-

<PAGE>

warranty for (i) any matter disclosed in or ascertainable from the Material
Agreements or (ii) any matter for which a Defect Adjustment has been made and/or
(iii) any amount in excess of the Allocated Value for a particular Asset,
reduced by the value of production from the affected Asset after the Effective
Time, net of lease operating expenses attributable to the Asset for the same
period. Seller's indemnification obligations hereunder are subject to the
procedures set forth below in Article XIV.

         13.5. Insurance and Bonds. Seller currently carries certain liability
policies covering the Assets. At and after Closing, Buyer agrees to have the
appropriate insurance policies and performance bonds in place.

         13.6. Further Assurances. 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
to accomplish more effectively the purposes of the Transaction.

                                   ARTICLE XIV
                                 INDEMNIFICATION

         This Article XIV addresses assumption and retention of liabilities and
obligations by Buyer and Seller related to the Assets and indemnification for
such liabilities and obligations. For the purposes of this Agreement, "Losses"
shall mean any actual loss, cost, expense, liability, damage, demands, suits,
sanctions of every kind and character including reasonable fees and expenses of
attorneys, technical experts and expert witnesses reasonably incident to matters
indemnified against; excluding, however, any loss incurred as a result of the
indemnified Party indemnifying a third party and further excluding any special,
consequential, punitive or exemplary damages except to the extent recovered
against the Indemnified Party by a third-party claimant other than Seller, or
any agent, officer, employee, successor, assign, affiliate or party related, by
ownership or control, to the Indemnified Party.

         14.1. Buyer's Assumption of Liabilities and Obligations. Upon Closing
and except for Retained Liabilities and subject to the provisions of Section
13.3, Buyer shall assume and pay, perform, fulfill and discharge all claims,
costs, expenses, liabilities and obligations accruing or relating to the owning,
developing, exploring, operating or maintaining of the Assets or the producing,
transporting and marketing of Hydrocarbons from the Assets for the periods
before and after the Effective Time, including, without limitation, (i) the
Material Contracts, (ii) claims asserted by Seller's former employees that are
hired by Buyer, but only to the extent such Losses arise from acts of Buyer
after the effective date of such former employees employment by Buyer ("Buyer
Employee Matters") and (iii) the Assumed Environmental Liabilities, and the
obligation to plug and abandon all wells located on the Lands and reclaim all
well sites located on the Lands (collectively, the "Assumed Liabilities").

         14.2. Seller's Retention of Liabilities and Obligations. Upon Closing
and subject to the provisions of Section 13.3, and subject to the limitations
set forth in Section 14.7,

                                      -34-

<PAGE>

Seller retains all claims, costs, expenses, liabilities and obligations accruing
or relating to (i) any breach by Seller of the special warranty of title
contained in Section 13.4, (ii) claims asserted by Seller's former employees
that are hired by Buyer, to the extent such Losses arise from acts of Seller or
other events occurring prior to the effective date of such former employees'
employment by Buyer ("Seller Employee Matters"), (iii) the litigation and claims
identified in Schedule 6.7 as Retained Litigation ("Retained Litigation"), (iv)
Retained Environmental Liabilities and (v) Retained Royalties and Taxes
(collectively, the "Retained Liabilities").

         14.3. 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, its parent and affiliates
respective officers, directors, members, employees and agents, from and against
all Losses which arise from or in connection with (i) the Assumed Liabilities,
(ii) any matter for which Buyer has agreed to indemnify Seller under this
Agreement and (iii) any breach by Buyer of this Agreement.

         14.4. 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 other matter for which Seller has agreed
to indemnify Buyer under this Agreement and (iii) any breach by Seller of this
Agreement. This indemnification shall not apply to the extent that the liability
for which such indemnification is sought is increased by acts or omissions of
any party other than Seller after the Effective Time.

         14.5. Release. Buyer shall be deemed to have released Seller and its
parent, affiliates, predecessors, successors and assigns at the Closing from any
Losses for which Buyer has agreed to indemnify Seller hereunder, and Seller
shall be deemed to have released Buyer at the Closing from any Losses for which
Seller has agreed to indemnify Buyer hereunder.

         14.6. Procedure. The indemnifications contained in Article XIV shall
be implemented as follows:

                  (a) Coverage. Subject to the limits set forth in this Article
XIV, such indemnity shall extend to all Losses suffered or incurred by the
indemnified party other than (i) insured or otherwise compensated Losses,
including insured workman's compensation, unemployment and other
government-maintained insurance or compensation programs, and (ii) Losses
arising from liabilities or obligation for which the Parties have adjusted the
Purchase Price.

                  (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, to the extent then quantifiable, (ii) the basis for such claim, with
supporting documentation (iii) a list identifying to the

                                      -35-

<PAGE>

extent reasonably possible each separate item of Loss for which payment is so
claimed. The amount claimed shall be paid by such Indemnifying Party as and to,
and only to, the extent required herein within 30 days after receipt of the
Claim Notice or after the amount of such payment has been finally established,
whichever last occurs.

                  (c) Information. Within 60 days after notification to an
Indemnified Party of a claim or legal action or other matter that may result in
a Loss for which indemnification may be sought under this Article XIV (the
"Claim"), but in time sufficient for the Indemnifying Party to contest any
action, claim, proceeding or other matter that has become the subject of
proceedings before any court or tribunal, the Indemnified Party shall give
written notice of the Claim to the Indemnifying Party. Thereafter, at the
request of the Indemnifying Party, the Indemnified Party shall furnish the
Indemnifying Party (or its counsel) with copies of all pleadings and other
information with respect to the Claim. At the election of the Indemnifying Party
made within 60 days after receipt of such notice, the Indemnified Party shall
permit the Indemnifying Party to assume control of the Claim (to the extent only
that such Claim 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. If the Indemnifying Party
elects to settle the Claim, the settlement, without the Indemnified Party's
prior written consent, can not result in any liability or cost to the
Indemnified Party for which it is not entitled to be indemnified hereunder, or
subject the Indemnified Party to any declaratory, injunctive or other equitable
relief or to regulatory sanctions or restrictions. If the Indemnifying Party
elects to assume control: (i) any expense incurred by the Indemnified Party
thereafter for investigation or defense of the Claim 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. In the absence of such
an election, the Indemnified Party will use reasonable efforts to defend, at the
Indemnifying Party's expense, the Claim to which the Indemnifying Party's
indemnification under this Article XIV applies until the Indemnifying Party
assumes such defense. If the Indemnifying Party fails to assume such defense
within the time period provided above, the Indemnified Party may settle the
Claim in the Indemnified Party's reasonable discretion at the Indemnifying
Party's expense.

                  (d) Dispute. 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 in Denver, Colorado such
arbitration to be conducted as set forth in Section 15.17.

         14.7. Limitation on Seller's Indemnity Obligation.

                  (a) Receipt of Claim Notices. Seller's indemnity obligation
under this Article XIV shall only extend to Losses for which valid Claim Notices
are received by Seller on or before 12 months after Closing; provided, however,
that the 12-month limit will not apply to Retained Royalties and Taxes, the
Retained Litigation, Retained

                                      -36-

<PAGE>

Environmental Liabilities, and Seller Employee Matters. Seller shall have no
obligation to indemnify Buyer under this Agreement for Claims not properly and
timely raised as set forth herein and Buyer hereby releases Seller from and
indemnifies Seller against all liability with respect to such Losses for such
Claims not properly and timely raised. If a valid Claim Notice is timely given,
the indemnification obligations hereunder shall remain in effect for the period
of time required to cover the potential Loss under such Claim or for the full
period during which the Claim is pending or until it is otherwise resolved.

                  (b) Remedies. The remedies set forth in Articles IV, V, XI and
XIV of this Agreement shall be the exclusive remedies for the specific matters
addressed in those respective Sections and Articles and the indemnification
obligations set forth in Article IV, V and this Article XIV shall, after the
Closing, be the sole and exclusive remedies of Seller and Buyer with respect to
the specific matters addressed in such indemnities.

         14.8. No Insurance or Subrogation. The indemnifications provided in
this Article XIV shall not be construed as a form of insurance. Seller and Buyer
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 indemnifies the
other, and, if required by applicable policies, Seller and Buyer shall obtain
waiver of such subrogation from their respective insurers.

         14.9. Reservation as to Non-Parties. Nothing herein is intended to
limit or otherwise waive any recourse Buyer or Seller may have against any
non-party for any obligations or liabilities which may be incurred with respect
to the Assets.

                                   ARTICLE XV
                                  MISCELLANEOUS

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

         15.2. Expenses. Except as otherwise specifically provided, all fees,
costs and expenses incurred by Buyer or Seller in negotiating this Agreement or
in consummating the Transaction shall be paid by the Party incurring the same,
including, without limitation, engineering, land, title, legal, and accounting
fees, costs and expenses.

         15.3. Notices. Except as provided in subsection 8.1(a)(3), all notices
and communications required or permitted under this Agreement ("Notices") shall
be in writing, addressed as set forth below, and be given in the following
manner: (i) personal delivery, (ii) telecopy or facsimile transmission, (iii)
mailed, certified mail, return receipt requested, or (iv) overnight courier. Any
communication or delivery hereunder shall be deemed to have been duly made and
the receiving Party charged with notice when the receiving Party actually
receives the Notice. All Notices shall be addressed as follows:

                                      -37-

<PAGE>

         If to Seller:

                  Independent Production Company, Inc.
                  Sapphire Bay LLC
                  410 17th Street, Suite 570
                  Denver, Colorado 80202
                  Telephone: (303) 595 8829
                  Fax: (303) 595 3653
                  Attention: Bill Cagle

         With a copy to:

                  Hale, Hackstaff Tymkovich, LLP
                  1430 Wynkoop, Suite 300
                  Denver, Colorado 80202
                  Attention: Kurt M. Petersen
                  Telephone: (720) 904 6026
                  Fax: (720) 904 6006

         If to Buyer:

                  Bill Barrett Corporation
                  1099 18th Street, Suite 2300
                  Denver, CO 80203
                  Attn: J. Frank Keller
                  Telephone: (303) 293-9100
                  Fax: (303) 291-0420

         With a copy to:

                  Patton Boggs LLP
                  1660 Lincoln Street, Suite 1900
                  Denver, CO 80264
                  Attention: David E. Brody
                  Telephone: (303) 830-1776
                  Fax: (303) 894-9239

Any Party may, by a 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.

                                      -38-

<PAGE>

         15.5. Assignment. Buyer shall not assign all or any portion of its
respective rights or delegate all or any portion of its respective duties
hereunder unless it continues to remain liable for the performance of its
obligations hereunder; provided that, Buyer may not assign the benefits of
Seller's indemnities given pursuant to this Agreement and any permitted
assignment shall not include such benefits. No such assignment or obligation
shall increase the burden on Seller or impose any duty on Seller to communicate
with or report to any transferee, and Seller may continue to look to Buyer for
all purposes under this Agreement.

         15.6. Announcements. Seller and Buyer shall consult with each other
with regard to all press releases and other announcements issued after the date
of execution of this Agreement and prior to the Closing Date concerning this
Agreement or the Transaction. Except as may be required by applicable laws or
the applicable rules and regulations of any governmental agency or stock
exchange, neither Buyer nor Seller shall issue any such press release or other
publicity without the prior written consent of the other Party, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, any press
release shall not contain the name of Seller without Seller's consent.

         15.7. 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.

         15.8. Counterparts/Facsimile Signatures. This Agreement may be executed
by Buyer and Seller in any number of counterparts, each of which shall be deemed
an original instrument, but all of which together shall constitute but one and
the same instrument. Facsimile signatures are considered binding.

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

         15.10. Governing Law. This Agreement and the Transaction and any
arbitration or dispute resolution conducted pursuant hereto shall be construed
in accordance with, and governed by, the laws of the State of Colorado.

         15.11. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire understanding among the Parties, their
respective partners, members, trustees, shareholders, officers, directors and
employees with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and understandings relating
to such subject matter.

                                      -39-

<PAGE>


         15.12. Best Knowledge and Reasonable and Good Faith Efforts. The
knowledge or best knowledge of a Party, or similar phrases, shall mean for
purposes of this Agreement, the actual, conscious knowledge of the Party at the
time the assertion regarding knowledge is made. If the Party is a corporation or
other entity other than a natural person, such actual, conscious knowledge must
be on the part of the person having supervising management authority over the
matters to which such knowledge pertains. Any Claim based on the existence of a
Party's knowledge must establish the existence of such knowledge by clear and
convincing documentary evidence. Reasonable or good faith efforts as used in
this Agreement does not include the obligation to pay consideration.

         15.13. Binding Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, the Parties and their respective successors and
assigns.

         15.14. Survival. The representations and warranties contained in this
Agreement shall not survive the Closing except to the extent necessary to give
post-closing effect to the indemnities set forth in this Agreement.

         15.15. No Third-Party Beneficiaries. This Agreement is intended to
benefit only the Parties and their respective permitted successors and assigns.

         15.16. Waiver of Compliance with Bulk Transfer Laws. Buyer waives
compliance with any applicable bulk transfer laws relating to the Transaction.

         15.17. Dispute Resolution.

                  (a) Disputes Arising Prior to Closing. With respect to any
dispute that arises prior to Closing, either Party may deliver a notice by
facsimile or hand delivery to the other Party describing the dispute and the
nature of the disagreement. If such notice is delivered, then the Chief
Operating Officer of Buyer and the President and/or Vice President of Seller
agree to meet regularly as necessary but at least once each day following
receipt of such notice and use reasonable efforts to reach an agreement on the
disputed items or amounts. If within 10 days following receipt of such notice
the Parties have not reached an agreement, either Party may submit the matter to
Arbitration in accordance with Section 15.17(b).

                  (b) Disputes Arising at or After Closing. The Parties agrees
to resolve all "Disputes" concerning this Agreement that arise after the Closing
pursuant to the provisions of this Section, such disputes to include without
limitation (i) the existence and scope of a Title Defect or Interest Addition,
(ii) the Title Defect Value of that portion of the Asset affected by a Title
Defect, (iii) the Value of an Interest Addition, (iv) the adequacy of Seller's
Title Defect curative materials submitted pursuant to Section 4.2, (v) the
Imbalance Volumes, or (vi) disputes concerning a Claim or amount to be paid by
an Indemnifying Party. The Parties agree to submit all Disputes to binding
arbitration in Denver, Colorado such arbitration to be conducted as follows: The
arbitration proceeding shall be governed by Colorado law and shall be conducted
in

                                      -40-

<PAGE>

accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), with discovery to be conducted in accordance with the
Federal Rules of Civil Procedure, and with any disputes over the scope of
discovery to be determined by the arbitrators. The arbitration shall be before a
three-person panel of neutral arbitrators, consisting of one person picked by
each side, and the two arbitrators so selected picking the third (with the panel
so picked being the "Arbitrators"). The Arbitrators shall conduct a hearing no
later than 90 days after submission of the matter to arbitration, and a written
decision shall be rendered by the Arbitrators within 30 days of the hearing. At
the hearing, the Parties shall present such evidence and witnesses as they may
choose, with or without counsel. Adherence to formal rules of evidence shall not
be required but the arbitration panel shall consider any evidence and testimony
that it determines to be relevant, in accordance with procedures that it
determines to be appropriate. Any award entered in the arbitration shall be made
by a written opinion stating the reasons and basis for the award made and the
prevailing party shall be awarded all or a portion of its costs and fees,
including attorney's fees, incurred in connection with the arbitration, such
apportionment to be made by the Arbitrators. Any payment due pursuant to the
arbitration shall be made within 15 days of the Arbitrators' decision. The final
decision may be filed in a court of competent jurisdiction and may be enforced
by any Party as a final judgment of such court. Except as provided above, each
party shall bear its own costs and expenses of the arbitration; provided,
however, the costs of employing the Arbitrators shall be borne 50% by the Seller
and 50% by the Buyer.

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

         15.19. No Recording. Seller and Buyer agree not to record all or any
portion of this Agreement in any county or other public records.

                                      -41-

<PAGE>

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

                                    BUYER:

                                    Bill Barrett Corporation

                                    By: /s/ J. Frank Keller
                                        ----------------------------------------
                                        J. Frank Keller, Chief Operating Officer

                                    SELLER:

                                    Independent Production Company, Inc.

                                    By: /s/ Bill Cagle
                                        ----------------------------------------
                                        Bill Cagle, President

                                    Sapphire Bay, LLC
                                    By its Managing Member,
                                    Independent Production Company, Inc.

                                    By: /s/ Bill Cagle
                                        ----------------------------------------
                                        Bill Cagle, President

                                      -42-