**PURCHASE        AND SALE AGREEMENT**

**BY        AND BETWEEN**

**THE        OPERATING CO., et al AS SELLER**

**AND**

**LEGACY        RESERVES OPERATING LP, AS BUYER**

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| 1.  | SALE                      AND PURCHASE OF THE ASSETS.                          | 1  |
|-----|--------------------------------------------------------------------------------|----|
| 1.1 | Acquired                      Assets                                           | 1  |
| 1.2 | Excluded                      Assets.                                          | 2  |
| 1.3 | Assumed                      Liabilities                                       | 2  |
| 2.  | PURCHASE                      PRICE.                                           | 3  |
| 2.1 | Base                      Purchase Price.                                      | 3  |
| 2.2 | Deposit.                                                                       | 3  |
| 2.3 | Adjustments                      to the Base Purchase Price                    | 3  |
| 2.4 | Allocation                                                                     | 4  |
| 3.  | CLOSING.                                                                       | 5  |
| 3.1 | Closing.                                                                       | 5  |
| 3.2 | Delivery                      by Seller                                        | 5  |
| 3.3 | Delivery                      by Buyer                                         | 6  |
| 3.4 | Further                      Cooperation                                       | 6  |
| 4.  | ACCOUNTING                      ADJUSTMENTS.                                   | 6  |
| 4.1 | Closing                      Adjustments.                                      | 6  |
| 4.2 | Strapping                      and Gauging                                     | 6  |
| 4.3 | Taxes                                                                          | 7  |
| 4.4 | Post-Closing                      Adjustments                                  | 7  |
| 4.5 | Suspended                      Funds                                           | 8  |
| 4.6 | Cooperation                                                                    | 8  |
| 5.  | DUE                      DILIGENCE: TITLE MATTERS.                             | 9  |
| 5.1 | General                      Access                                            | 9  |
| 5.2 | Defensible                      Title                                          | 9  |
| 5.3 | Defect                      Letters.                                           | 11 |
| 5.4 | Effect                      of Title Defect                                    | 12 |
| 5.5 | Preferential                      Rights and Consents.                         | 14 |
| 6.  | ENVIRONMENTAL                      ASSESSMENT.                                 | 15 |
| 6.1 | Physical                      Condition of the Assets                          | 15 |
| 6.2 | Inspection                      and Testing.                                   | 16 |
| 6.3 | Notice                      of Adverse Environmental Conditions                | 17 |
| 6.4 | Rights                      and Remedies for Adverse Environmental Conditions. | 17 |
| 6.5 | Remediation                      by Seller                                     | 19 |
| 7.  | REPRESENTATIONS                      AND WARRANTIES OF SELLER.                 | 20 |
| 7.1 | Seller’s                      Representations and Warranties             | 20 |
| 7.2 | Scope                      of Representations of Seller.                       | 22 |
| 8.  | REPRESENTATIONS                      AND WARRANTIES OF BUYER.                  | 23 |
| 8.1 | Buyer’s                      Representations and Warranties              | 23 |
| 9.  | CERTAIN                      AGREEMENTS OF SELLER                              | 24 |
| 9.1 | Maintenance                      of Assets                                     | 24 |
| 9.2 | Records                                                                        | 25 |
| 9.3 | Audit                      Rights.                                             | 25 |

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| 10.   | CERTAIN                        AGREEMENTS OF BUYER                       | 26 |
|-------|--------------------------------------------------------------------------|----|
| 10.1  | Plugging                        Obligation                               | 26 |
| 10.2  | Plugging                        Bond                                     | 26 |
| 10.3  | Seller’s                        Logos                              | 26 |
| 10.4  | Like-Kind                        Exchanges                               | 26 |
| 11.   | CONDITIONS                        PRECEDENT TO OBLIGATIONS OF BUYER      | 26 |
| 11.1  | No                        Litigation                                     | 26 |
| 11.2  | Representations                        and Warranties                    | 26 |
| 12.   | CONDITIONS                        PRECEDENT TO THE OBLIGATIONS OF SELLER | 27 |
| 12.1  | No                        Litigation                                     | 27 |
| 12.2  | Representations                        and Warranties                    | 27 |
| 13.   | TERMINATION.                                                             | 27 |
| 13.1  | Causes                        of Termination                             | 27 |
| 13.2  | Effect                        of Termination.                            | 28 |
| 14.   | INDEMNIFICATION.                                                         | 28 |
| 14.1  | Indemnification                        by Seller                         | 29 |
| 14.2  | Indemnification                        by Buyer                          | 31 |
| 14.3  | Physical                        Inspection                               | 31 |
| 14.4  | Notification                                                             | 31 |
| 15.   | MISCELLANEOUS.                                                           | 32 |
| 15.1  | Casualty                        Loss.                                    | 32 |
| 15.2  | Confidentiality.                                                         | 32 |
| 15.3  | Notices                                                                  | 33 |
| 15.4  | Press                        Releases and Public Announcements           | 33 |
| 15.5  | Compliance                        with Express Negligence Test           | 34 |
| 15.6  | Governing                        Law                                     | 34 |
| 15.7  | Exhibits                                                                 | 34 |
| 15.8  | Fees,                        Expenses, Taxes and Recording.              | 34 |
| 15.9  | Assignment                                                               | 35 |
| 15.10 | Entire                        Agreement                                  | 35 |
| 15.11 | Severability                                                             | 35 |
| 15.12 | Captions                                                                 | 35 |
| 15.13 | Time                        of the Essence                               | 35 |
| 15.14 | Counterpart                        Execution.                            | 35 |
| 15.15 | Preferential                        Right to Purchase                    | 35 |

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| A      | Oil                        and Gas Leases and Land                |
|--------|-------------------------------------------------------------------|
| B      | Wells                        Allocation                           |
| C      | Equipment                                                         |
| D      | Excluded                        Assets                            |
| E      | Form                        of Assignment and Bill of Sale        |
| F      | Services                        Agreement                         |
| G      | Lease                        Agreement                            |
| 7.1(E) | AFE’s                                                       |
| 7.1(G) | Pending                        Litigation                         |
| 7.1(K) | Material                        Agreements                        |
| 7.1(L) | Consents                        and Preferential Purchase Rights  |
| 7.1(P) | Calls                        on                        Production |

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| A. | Seller                  desires to sell to Buyer certain oil, gas and mineral properties                  and other                  assets on the terms and conditions set forth in this                  Agreement. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | Buyer                  desires to purchase from Seller such oil, gas and mineral properties                  and                  other assets on the terms and conditions set forth in this                  Agreement. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | All                  of Seller’s right, title and interest in, to and under the oil, gas and/or                  mineral  leases described on Exhibit A attached hereto                  (the “Leases”), whether or not such interests are accurately or completely                  described on Exhibit A, and all of Seller’s oil and gas leasehold,                  mineral, royalty, overriding royalty, surface or other interests                  in the                  lands covered by the Leases or in the lands described on Exhibit A                  (collectively, the “Land”), together with all the property and rights                  incident thereto, including without limitation Seller’s rights in, to and                  under all operating agreements; pooling, communitization and unitization                  agreements; farmout agreements; joint venture agreements; product                  purchase                  and sale contracts; transportation, processing, treatment or gathering                  agreements; leases; permits (the “Permits”); rights-of-way (the                  “Rights-of-Way”); surface use agreements; surface leases; surface estates;                  easements (the “Easements”); licenses; options; declarations; orders;                  contracts; and instruments in any way relating to the Leases or                  Land; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | All                  of Seller’s right, title and interest in and to the wells situated on or                  used in conjunction with operations on the Leases and/or Land or                  on land                  pooled, communitized or unitized therewith (“Pooled Land”), including,                  without limitation, all producing, non-producing, injection, disposal                  and                  water supply wells and the wells listed on Exhibit B attached                  hereto (collectively, the “Wells”); |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (C) | All                  of Seller’s right, title and interest in and to all of the personal                  property, fixtures, improvements and other property, whether real,                  personal or mixed, now or as of the Effective Time on, appurtenant                  to or                  used or obtained by Seller in connection with the Leases, Land,                  Pooled                  Land or Wells or with the production, injection, treatment, sale                  or                  disposal of hydrocarbons and all other substances produced therefrom                  or                  attributable thereto, including, without limitation, well equipment,                  casing, tubing, tanks, generators, boilers, buildings, pumps, motors,                  machinery, pipelines, gathering systems, power lines, telephone                  and                  telegraph lines, roads, field processing plants, field offices                  and other                  furnishings related thereto, all vehicles, rolling stock, pulling                  units,                  equipment leases, trailers, inventory in storage and storage yards                  located                  thereon or used in connection therewith, all of the equipment and                  other                  personal property described on Exhibit C attached hereto, and all                  other improvements or appurtenances thereunto belonging (collectively,                  the                  “Equipment”); |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | All                  of the oil and gas and associated hydrocarbons (“Oil and Gas”) in and                  under or otherwise attributable to the Leases, Land, and Pooled                  Land or                  produced from the Wells; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (E) | To                  the extent assignable, all governmental permits, licenses and                  authorizations, as well as any applications for the same, related                  to the                  Leases, Land, Pooled Land and Wells or the use thereof;                  and |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (F) | All                  of the files, records, and data of Seller relating to the items                  described                  in subsections (A), (B), (C), (D) and (E) above (the “Records”),                  including, without limitation, lease records, well records, and                  division                  order records; well files and prospect 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; computer data files; micro-fiche data files; geological,                  geophysical and seismic records, interpretations, data, maps and                  information, production records, electric logs, core data, pressure                  data,                  decline curves and graphical production curves; and accounting                  records, to                  the extent only that the Records can be transferred without violation                  of                  any third-party restriction and are not protected by Seller’s                  attorney-client privilege. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (A) | The                  Base Purchase Price shall be adjusted upward                  by: |
|-----|----------------------------------------------------------------------------------------|

|   | (ii) | Property                  Taxes and Severance Taxes related to the Assets paid by Seller                  for the                  period following the Effective Time as determined pursuant to Section                  4.3; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | an                  amount equal to the costs, expenses and other expenditures (whether                  capitalized or expensed) paid by Seller in accordance with this                  Agreement                  that are attributable to the Assets for the period from and after                  the                  Effective Time; |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | for                  all operated wells, a monthly overhead fee of $400, prorated for                  partial                  months, per active Well while Seller is operating the Assets from                  and                  after the Effective Time; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | an                  amount equal to the amount of proceeds derived from the sale of                  Oil and                  Gas, net of royalties and severance taxes paid by Buyer, actually                  received                  by Buyer and directly attributable to the Wells which are, in accordance                  with generally accepted accounting procedures, attributable to                  the period                  of time prior to the Effective                  Time; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|    | (vi) | an                  amount equal to $7,873 per day for each day from, but not including,                  October 1, 2007 until Closing, representing the daily interest                  accruing on                  the Base Purchase Price less the Deposit, based on a 5% annual                  rate of                  interest; |
|--------------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             (vii) | any                  other amount agreed upon in writing by Seller and                  Buyer. |
|-------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|

| (B) | The                  Base Purchase Price shall be adjusted downward                  by: |
|-----|------------------------------------------------------------------------------------------|

|   | (i) | an                  amount equal to the amount of proceeds derived from the sale of                  Oil and                  Gas, net of royalties and severance taxes paid by Seller, actually                  received by Seller and directly attributable to the Wells which                  are, in                  accordance with generally accepted accounting procedures, attributable                  to                  the period of time from and after the Effective                  Time; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | an                  amount equal to all expenditures, liabilities and costs relating                  to the                  Assets (other than Taxes related to the Assets) that are unpaid                  as of the                  Closing Date and assessed for or attributable to periods of time                  or the                  ownership of production prior to the Effective Time regardless                  how such                  expenditures, liabilities and costs are calculated provided that                  to the                  extent the actual amounts cannot be determined prior to the agreement                  of                  Buyer and Seller with respect to the Closing Adjustment Statement,                  a                  reasonable estimate of such expenditures, liabilities and costs                  shall be                  used; |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | all                  amounts related to Title Defects as determined pursuant to Section                  5.4,                  consents and preferential rights as determined pursuant to Section                  5.6,                  Adverse Environmental Conditions as determined pursuant to Section                  6.4,                  Exclusion Adjustments as determined pursuant to Sections 5.6 or                  6.4, and                  Casualty Losses as determined pursuant to Section                  15.1; |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Property                  Taxes and Severance Taxes related to the Assets to be paid by Seller                  for                  the period prior to the Effective Time as determined pursuant to                  Section                  4.3; |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | the                  amount of the Deposit; and |
|--------|-----|-------------------------------------------------|

| (C) | Seller                  shall have the right to collect any receivable, refund or other                  amounts                  associated with periods prior to the Effective Time.  To the                  extent that Buyer collects any such receivable, refund or other                  amounts,                  then Buyer shall promptly remit any such amounts to                  Seller. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (A) | A                  separate Assignment and Bill of Sale executed by Seller for each                  jurisdiction where the Assets are located, substantially in the                  form                  attached hereto as Exhibit E, effecting the sale, transfer,                  conveyance and assignment of the Assets, with (i) a special warranty                  of the real property title by, through and under Seller but not                  otherwise,                  and (ii) with all personal property and fixtures conveyed “AS IS,                  WHERE IS,” with no warranties whatsoever, express, implied or                  statutory; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Any                  governmental forms required to effect transfer in accordance with                  applicable regulations, including appropriate state and federal                  assignments of record title and operating rights executed by                  Seller; |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | Executed                  letters in lieu of transfer orders instructing purchasers of production                  to                  pay to Buyer the proceeds of sales of Oil and Gas from the                  Assets; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | Executed                  change of operator forms as required by applicable governmental                  regulation; |
|-----|------------------------------------------------------------------------------------------------------------------------|

| (E) | Executed                  releases of any mortgages or financing statements in favor of any                  third                  party that may be currently encumbering the                  Assets; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (F) | An                  executed Closing Adjustment                  Statement; |
|-----|-----------------------------------------------------------------------------|

| (G) | An                  executed Non-Foreign Affidavit of                  Seller; |
|-----|--------------------------------------------------------------------------------|

| (H) | Possession                  of the Records and all other                  Assets; |
|-----|-----------------------------------------------------------------------------------|

| (I) | The                  suspensed funds pursuant to Section                  4.5; |
|-----|--------------------------------------------------------------------------------|

| (J) | Services                  Agreement executed by Seller providing for the contract services                  of  David Smith ($750 per month) and J. D. Carr ($3,000 per                  month) for a period of one year from Closing in the form of Exhibit                  F                  attached hereto (the “Services                  Agreement”); |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (K) | An                  executed Lease Agreement in the form of Exhibit G attached hereto                  covering                  the Office and Yard located at 1211 N. Price Rd, Pampa, Texas,                  as further                  described on Exhibit G attached hereto, providing for a real property                  lease at $4,500 per month for a term of one year (the “Lease Agreement”);                  and |
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| (L) | Shareholder                  or partner resolutions, as applicable, of each Seller, certified                  by the                  secretary or other appropriate officer of each Seller or of its                  general                  partner, authorizing the execution and performance of this Agreement                  and                  the transactions contemplated                  hereby. |
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| (A) | The                  Base Purchase Price set forth in the Closing Adjustment Statement                  by wire                  transfer in immediately available funds, less the                  Deposit; |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (B) | An                  executed Closing Adjustment                  Statement; |
|-----------|-----------------------------------------------------------------------------|

| (C) | Executed                  counterparts of the Assignment and Bill of                  Sale; |
|-----|---------------------------------------------------------------------------------------------|

| (D) | Executed                  counterparts of the Services Agreement;                  and |
|-----|----------------------------------------------------------------------------------------|

| (E) | Executed                  counterparts of the Lease                  Agreement. |
|-----|---------------------------------------------------------------------------------|

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| (A) | Property                  Taxes.  All ad valorem taxes, real property taxes, personal                  property taxes and similar obligations assessed on the Assets (“Property                  Taxes”) shall be apportioned as of the Effective Time between Buyer and                  Seller.  Buyer shall file or cause to be filed all required                     reports and returns incident to Property Taxes which are due                  on or after                  the Closing, and shall pay or cause to be paid to the taxing authorities                  all such taxes reflected on such reports and returns.  The                  Post-Closing Adjustment Statement shall settle all liability for                  Property                  Taxes, using estimates based on previous assessments to the extent                  current                  assessments are not known. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Sales                  Taxes, Filing Fees, Etc. The Base Purchase Price is net of any sales                  taxes or other transfer taxes.  Buyer shall be liable for any                  sales tax or other transfer tax as well as any applicable conveyance,                  transfer and recording fees, and real estate transfer stamp or                  taxes                  imposed upon the sale pursuant to this Agreement.  If Seller is                  required by applicable state law to report and pay these taxes                  or fees,                  Buyer shall promptly reimburse Seller in full payment of the                  invoice. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | Severance                  Taxes.  All production, severance or excise taxes,                  conservation fees and other similar such taxes or fees (other than                  income                  taxes) payable on a current basis with respect to Oil and Gas produced                  and                  sold from the Assets (“Severance Taxes”) shall be borne by Seller to the                  extent the production on which such taxes are based occurs during                  Seller’s                  ownership prior to the Effective Time and shall be borne by Buyer                  to the                  extent such production occurs after the Effective                  Time. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | A                  post-closing adjustment statement (the “Post-Closing Adjustment                  Statement”) based on the actual income and expenses shall be prepared and                  delivered by Seller to Buyer within ninety (90) days after the                  Closing,                  proposing further adjustments to the calculation of the Purchase                  Price                  based on the information then available.  Seller or Buyer, as                  the case may be, shall be given access to and shall be entitled                  to review                  and audit the other Party’s records pertaining to the computation of                  amounts claimed in such Post-Closing Adjustment                  Statement. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Within                  thirty (30) days after receipt of the Post-Closing Adjustment Statement,                  Buyer shall deliver to Seller a written statement describing in                  reasonable                  detail its objections (if any) to any amounts or items set forth                  on the                  Post-Closing Adjustment Statement.  If Buyer does not raise                  objections within such period, then the Post-Closing Adjustment                  Statement                  shall become final and binding upon the Parties at the end of such                  period. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (C) | If                  Buyer raises objections, the Parties shall negotiate in good faith                  to                  resolve any such objections.  If the Parties are unable to                  resolve any disputed item within thirty (30) days after Buyer’s receipt of                  the Post-Closing Adjustment Statement, any disputed accounting                  item shall                  be submitted to a nationally recognized independent accounting                  firm                  mutually agreeable to the Parties who shall be instructed to resolve                  such                  disputed item within thirty (30) days.  The resolution of                  disputes by the accounting firm so selected shall be set forth                  in writing                  and shall be conclusive, binding and non-appealable upon the Parties                  with                  respect to the accounting matters submitted and the Post-Closing                  Adjustment Statement shall become final and binding upon the Parties                  on                  the date of such resolution.  The fees and expenses of such                  accounting firm shall be paid one-half by Buyer and one-half by                  Seller. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | After                  the Post-Closing Adjustment Statement has become final and binding                  on the                  Parties, Seller or Buyer, as the case may be, shall pay to the                  other such                  sums as are due to settle accounts between the Parties due to differences                  between the estimated Purchase Price paid pursuant to the Closing                  Adjustment Statement and the actual Purchase Price set forth on                  the                  Post-Closing Adjustment Statement. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (A) | During                  reasonable business hours, Seller agrees to grant Buyer physical                  access to                  the Assets to allow Buyer to conduct, at Buyer’s sole risk and expense,                  on-site inspections and environmental assessments of the                  Assets.  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 operators of the                  Wells.  If Buyer or its agents prepares an environmental                  assessment of any Asset, Buyer agrees to keep such assessment confidential                  and to furnish copies thereof to Seller.  In connection with                  granting such access, Buyer represents that it is adequately insured                  and                  waives, releases and agrees to indemnify the Seller against all                  claims for                  injury to, or death of, persons or for damage to operations or                  property                  arising in any way from the access afforded to Buyer hereunder                  or the                  activities of Buyer, except to the extent caused by Seller’s gross                  negligence or willful misconduct.  This waiver, release and                  indemnity by Buyer shall survive termination of this                  Agreement. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Upon                  the execution of this Agreement, Seller shall give Buyer and its                  representatives, employees, consultants, independent contractors,                  attorneys and other advisors reasonable access to the Records during                  regular office hours for any and all inspections and                  copying. |
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| (A) | As                  to the Assets, that record title of Seller                  which: |
|-----|----------------------------------------------------------------------------------------|

|   | (i) | entitles                  Seller to receive not less than the interests shown in Exhibit B as                  the “Net Revenue Interest” of all Oil and Gas produced, saved and marketed                  from or allocated to the Wells, all without reduction, suspension                  or                  termination during the life of such Wells except as stated in such                  Exhibit; and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | obligates                  Seller to bear a percentage of the costs and expenses relating                  to the                  maintenance and development of, and operations relating to, the                  Wells not                  greater than the “Working Interest” shown in Exhibit B (without a                  proportionate increase in the Net Revenue Interest), all without                  increase                  during the life of such Wells except as stated in such Exhibit;                  and |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | That                  title of Seller to the Assets is free and clear of liens, encumbrances                  and                  defects that materially and adversely affect the ownership, operation                  or                  use of the Assets, except for Permitted                  Encumbrances. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | As                  used herein, the term “Permitted Encumbrances” shall mean any one or more                  of the following: |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Any                  lessor’s royalties, overriding royalties, net profits interests, carried                  interests, production payments, reversionary interests and similar                  burdens                  reflected in the public records, if the net cumulative effect of                  the                  burdens does not operate to reduce the Net Revenue Interest of                  Seller                  below the interests described in Exhibit                  B; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (2) | Any                  increase in lessor’s royalty occasioned by the repeal or suspension of any                  governmental regulation providing for the reduction of royalty                  for wells                  producing below defined threshold                  amounts; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Division                  orders and production sales contracts terminable without penalty                  upon no                  more than ninety (90) days notice to the                  purchaser; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Preferential                  Rights and required third party consents to assignment and similar                  agreements with respect to which waivers or consents are obtained                  from the                  appropriate parties, or the appropriate time period for asserting                  any such                  right has expired without an exercise of the                  right; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Materialman’s,                  mechanic’s, repairman’s, employee’s, contractor’s, operator’s and other                  similar liens or charges arising in the ordinary course of business                  for                  obligations that are not delinquent and that will be paid and discharged                  in the ordinary course of business, or if delinquent, that are                  being                  contested in good faith by appropriate action of which Buyer is                  notified                  in writing before Closing; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | All                  rights to consent by, required notices to, filings with, or other                  actions                  by governmental entities in connection with the sale or conveyance                  of oil                  and gas leases or interests therein if they are routinely obtained                  subsequent to the sale or                  conveyance; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | Easements,                  rights-of-way, servitudes, permits, surface leases and other rights                  in                  respect of surface operations that do not materially interfere                  with the                  oil and gas operations to be conducted on any Well or                  Lease; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | All                  operating agreements, unit agreements, unit operating agreements,                  pooling                  agreements and pooling designations affecting the Assets that are                  either                  (i) of record in Seller’s chain of title or (ii) reflected or                  referenced in the Records or (iii) included as Material Agreements on                  Exhibit 7.1(K), to the extent the same do not decrease Seller’s Net                  Revenue Interests below the interests set forth on Exhibit B or                  increase Seller’s Working Interests above the interests set forth on                  Exhibit B; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | Conventional                  rights of reassignment prior to release or surrender requiring                  notice to                  the holders of the rights; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (10) | All                  rights reserved to or vested in any governmental, statutory or                  public                  authority to control or regulate any of the Assets in any manner,                  and all                  applicable laws, rules and orders of governmental                  authority; |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (11) | Defects                  that are defensible by possession under applicable statutes of                  limitation                  for adverse possession or for prescription;                  and |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                             (12) | All                  other liens, charges, encumbrances, contracts, agreements, instruments,                  obligations, defects and irregularities affecting the Assets that                  individually or in the aggregate are not such as to materially                  interfere                  with or affect the operation, value or use of any of the Assets                  and have                  not prevented, and cannot reasonably be expected to prevent, Buyer                  from                  receiving the proceeds of production from the affected                  Assets. |
|------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (13)                           Assumed Liabilities of Buyer as set out                  herein. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | Buyer                  may from time to time and no later than three (3) business days                  prior to                  Closing notify Seller in writing (a “Notice”) of any matter which would                  cause title to all or part of the Assets not to be Defensible Title                  (“Title Defect”), provided that no Title Defect shall be deemed to exist                  unless the Title Defect Value thereof exceeds Ten Thousand Dollars                  ($10,000.00). Further, there shall be no adjustment to the Base                  Purchase                  Price unless the aggregate Title Defect Values of all Title Defects                  satisfying the condition in clause (i) exceed one percent (1%) of the                  Base Purchase Price (the “Title Defect Threshold”) (such amount being a                  threshold, not a deductible).  In order to provide Seller a                  reasonable opportunity to cure any Title Defects prior to Closing,                  Buyer                  shall use reasonable efforts to provide the Notice as soon as reasonably                  possible after becoming aware of or making its determination of                  the Title                  Defect. |
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| (B) | In                  the Notice, Buyer must describe with reasonable detail each alleged                  Title                  Defect it has discovered and the steps required to cure each Title                  Defect,                  include Buyer’s reasonable estimate of the Title Defect Value attributable                  to each, and include all data and information in Buyer’s possession or                  control bearing thereon.  Subject to the special warranty in the                  Assignment and Bill of Sale delivered at Closing, Buyer shall be                  deemed to                  have conclusively waived all Title Defects not disclosed to Seller                  in a                  Notice on or before three (3) business days prior to                  Closing. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | Upon                  timely delivery of a Notice by                  Buyer: |
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|   | (i) | within                  three (3) business days after Seller’s receipt of the Title Defects                  Notice, Seller shall notify Buyer whether Seller agrees with Buyer’s                  claimed Title Defects and/or the proposed Title Defect Values therefor                  (“Seller’s Response”).  If Seller does not agree with any                  claimed Title Defect and/or the proposed Title Defect Value therefor,                  then                  the Parties shall enter into good faith negotiations and shall                  attempt to                  agree on such matters; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | within                  one (1) business day after Seller’s notice of its cure of a Title Defect,                  Buyer shall notify Seller whether Buyer agrees with Seller’s proposed cure                  of a Title Defect (“Buyer’s Response”).  If Buyer does not agree                  with any such cure, then the Parties shall enter into good faith                  negotiations and shall attempt to agree on such                  matters; |
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|   | (iii) | if                  the Parties cannot reach agreement concerning either the existence                  of a                  Title Defect, Seller’s proposed cure of a Title Defect, or a Title Defect                  Value within ten (10) days after Buyer’s receipt of Seller’s Response or                  Seller’s receipt of Buyer’s Response, as applicable, upon either Party’s                  request, the Parties shall mutually agree on and employ an attorney                  experienced in title examination in the state where the Assets                  are located                  (“Title Consultant”) to resolve all points of disagreement relating to                  Title Defects and Title Defect Values; provided that Seller or                  Buyer may                  elect not to proceed to Closing with regard to such Assets and                  adjust the                  Base Purchase Price in the amount of the Allocated Value and not                  submit                  such matter to arbitration; |
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|   | (iv) | if                  at any time any Title Consultant so chosen fails or refuses to                  perform                  hereunder, a new Title Consultant shall be chosen by the                  Parties.  The cost of any such Title Consultant shall be borne                  fifty percent (50%) by Seller and fifty percent (50%) by                  Buyer.  Each Party shall present a written statement of its                  position on the Title Defect and/or Title Defect Value in question                  to the                  Title Consultant within five (5) days after the Title Consultant                  is                  selected, and the Title Consultant shall make a determination of                  all                  points of disagreement in accordance with the terms and conditions                  of this                  Agreement within ten (10) business days of receipt of such position                  statements.  The determination by the Title Consultant shall be                  conclusive and binding on the Parties, and shall be enforceable                  against                  any Party in any court of competent jurisdiction.  If necessary,                  the Closing Date shall be deferred only as to those Assets affected                  by any                  unresolved disputes regarding the existence of a Title Defect and/or                  the                  Title Defect Value until the Title Consultant has made a determination                  of                  the disputed issues with respect thereto and all subsequent dates                  and                  required activities with respect to any such Assets having reference                  to                  the Closing Date shall be correspondingly deferred; provided, however,                  that, unless Seller and Buyer mutually agree to the contrary, the                  Closing                  Date shall not be deferred in any event for more than thirty (30)                  days                  beyond the scheduled Closing Date in Section 3.1.  Once the                  Title Consultant’s determination has been expressed to both Parties, if                  applicable, Seller shall have five (5) days in which to advise                  Buyer in                  writing which of the options available to Seller under Section                  5.4 that                  Seller elects regarding each of the Assets as to which the Title                  Consultant has made a determination.  In evaluating whether a                  Title Defect exists, due consideration shall be given to the length                  of                  time that the particular Asset has been producing Oil and Gas and                  whether                  such fact, circumstance or condition is of the type expected to                  be                  encountered in the area involved and is usual and customarily acceptable                  to reasonable and prudent operators, working interest owners and/or                  purchasers engaged in the business of the exploration, development,                  and                  operation of oil and gas                  properties. |
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| (A) | In                  the event Buyer provides Seller with a timely Notice and the Title                  Defects                  are valid and exceed the Title Defect Threshold, for those Title                  Defects                  not cured by Closing, Seller may, at its sole                  discretion: |
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|   | (i) | adjust                  the Base Purchase Price in the amount of the Title Defect Value                  of the                  Asset to which such Title Defect relates and proceed to Closing                  on all                  Assets; or |
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|   | (ii) | proceed                  with (a) Closing on those Assets not affected by the valid Title                  Defects                  and such Assets to which a Title Defect relates but for which Seller                  has                  elected to proceed to Closing with an adjustment of the Base Purchase                  Price in the amount of the Title Defect Value of such Assets and                  (b) defer Closing on those other Assets to which a Title Defect                  relates and for which Seller has elected to attempt to cure such                  Title                  Defect and to not proceed to Closing, for which Buyer shall place                  into                  escrow an amount equal to the Allocated Values of the Assets affected                  by                  the valid Title Defects, which withheld amount shall be paid to                  Seller                  when the Asset affected by any valid Title Defect is cured or the                  Title                  Defect is waived by Buyer and the affected Asset is conveyed from                  Seller                  to Buyer.  If neither of the above occurs and if Seller later                  determines it will not cure a Title Defect on or before thirty                  (30) days                  from the Closing Date, the amount in the escrow account attributable                  to                  such Title Defect will be returned to Buyer and Seller shall retain                  such                  Asset affected by such Title                  Defect. |
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| (B) | The                  diminution in value of an Asset attributable to a valid Title Defect                  (the                  “Title Defect Value”) notified in a Notice shall be determined by the                  following: |
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|   | (i) | if                  the valid Title Defect asserted is that the actual Net Revenue                  Interest                  attributable to the producing or valued formation in any Asset                  is less                  than that stated in the applicable Exhibit, then the Title Defect                  Value is                  the product of the Allocated Value attributed to the affected formation(s)                  in such Asset, multiplied by a fraction, the numerator of which                  is the                  difference between the Net Revenue Interest set forth in the applicable                  Exhibit and the actual Net Revenue Interest, and the denominator                  of which                  is the Net Revenue Interest stated in the applicable Exhibit;                  or |
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|   | (ii) | if                  the valid Title Defect represents an obligation, encumbrance, burden                  or                  charge upon the affected Asset (including any increase in Working                  Interest                  for which there is not a proportionate increase in Net Revenue                  Interest),                  the amount of the Title Defect Value is to be determined by taking                  into                  account the Allocated Value of such Asset, the portion of the Asset                  affected by the Title Defect, the legal effect of the Title Defect,                  the                  potential economic effect of the Title Defect over the life of                  the                  affected Asset, and the Title Defect Values placed upon the Title                  Defect                  by Buyer and Seller. |
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|   | (iii) | Notwithstanding                  the above, in no event shall the total of the Title Defect Values                  related                  to a particular Asset exceed the Allocated Value of such                  Asset. |
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| (C) | If                  the aggregate value of (i) the Base Purchase Price adjustment for                  Title Defect Values plus (ii) the Allocated Value of Assets which are                  retained in lieu of cure or adjustment equals or exceeds ten percent                  (10%)                  of the Base Purchase Price, then by notice delivered prior to the                  Closing                  either Party may terminate this Agreement and neither Party shall                  have any                  further obligation to conclude the transfer of the Assets under                  this                  Agreement. |
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| (A) | Consents.                   Except for consents and approvals which are customarily obtained                  post-Closing, if a necessary consent to assign any Lease has not                  been                  obtained as of the Closing, then (i) the portion of the Assets for                  which such consent has not been obtained shall not be conveyed                  at the                  Closing, (ii) the Allocated Value for that Asset shall not be paid to                  Seller, and (iii) Seller shall use best efforts to obtain such                  consent as promptly as possible following Closing.  If such                  consent has been obtained as of the date on which the Post-Closing                  Adjustment Statement becomes final, 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 received by Seller attributable to the period of time after                  the                  Effective Time (calculated in accordance with Section 2.3).  If                  such consent has not been obtained or has not been waived by Buyer                  as of                  the date on which the Post-Closing Adjustment Statement becomes                  final,                  Seller shall elect either to (i) challenge in court the                  enforceability of such consent right, in which event Seller shall                  retain                  the affected Asset until such legal challenge is finally resolved                  by                  settlement or non-appealable court order, after which either Seller                  shall                  convey the affected Asset to Buyer under the terms of this Agreement                  and                  Buyer shall pay the Allocated Value for such Asset, less any proceeds                  received by Seller attributable to such Asset for the period from                  and                  after the Effective Time (calculated in accordance with Section                  2.3) or                  (ii) retain the affected Asset and the Base Purchase Price shall be                  reduced by an amount equal to the Allocated Value of the retained                  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                  consent. |
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| (B) | Preferential                  Purchase Rights. |
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|   |  (i) | If                  any preferential right to purchase any portion of the Assets is                  exercised                  prior to the Closing Date, or if the time frame for the exercise                  of such                  preferential purchase rights has not expired and Seller has not                  received                  notice of an intent not to exercise or waiver of the preferential                  purchase                  right, that portion of the Assets affected by such preferential                  purchase                  right shall be excluded from the Assets and the Base Purchase Price                  shall                  be adjusted downward by an amount equal to the Allocated Value                  of such                  affected Assets without the requirement for Buyer to give notice                  (with                  such adjustment being an “Exclusion Adjustment”). Notwithstanding any                  other provision in this Agreement, if a preferential purchase right                  subject to this Agreement is exercised, Buyer has the right, at                  its sole                  discretion, to terminate this Agreement, provided that the Allocated                  Value                  of all preferential rights exercised is equal to or exceeds ten                  percent                  (10%) of the Base Purchase Price. |
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|   | (ii) | If                  a third party exercises its preferential right to purchase, but                  fails to                  consummate the purchase prior to the Closing, Seller shall retain                  the                  affected Assets and the Base Purchase Price shall be adjusted downward                  by                  an amount equal to the Allocated Value of such affected Assets                  (with such                  adjustment being an “Exclusion                  Adjustment”). |
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|   | (iii) | If                  a third party exercises its preferential right to purchase, but                  does not                  consummate the purchase within the time frame specified in the                  preferential purchase right, Seller agrees to convey the affected                  Asset to                  Buyer effective as of the Effective Time, and Buyer agrees to pay                  Seller                  the Allocated Value of the Affected                  Asset. |
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|   | (iv) | If                  a preferential purchase right is not discovered prior to Closing,                  and the                  affected Asset is conveyed to Buyer at Closing, and the preferential                  purchase right is exercised and subsequently consummated after                  Closing,                  Buyer agrees to convey such affected Assets to the party exercising                  such                  right on the same terms and conditions under which Seller conveyed                  such                  Assets to Buyer and retain all amounts paid by the party exercising                  such                  preferential right to purchase.  In the event of such exercise,                  Buyer shall prepare, execute and deliver a form of conveyance of                  such                  Asset to such exercising party, such conveyance to be in form and                  substance as provided in this Agreement, and Seller agrees to hold                  harmless and indemnify Buyer from any and all liabilities and obligations                  associated with such conveyed Asset, and to reimburse Buyer for                  reasonable                  expenses incurred by Buyer relating to the conveyed                  Asset. |
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| (C) | Exclusive                  Remedy. |
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|   |   The                  remedies set forth in this Section 5.5 are the exclusive remedies                  under                  this Agreement for exercised preferential purchase rights and required                  consents to assign the Assets. |
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| (A) | Buyer                  acknowledges that the Assets have been used for oil and gas drilling                  and                  production operations and possibly for the storage and disposal                  of waste                  materials or hazardous substances related to standard oil field                  operations.  Physical changes in or under the Assets or adjacent                  lands may have occurred as a result of such uses.  The Assets                  also may contain previously plugged and abandoned wells, buried                  pipelines,                  storage tanks and other equipment, whether or not of a similar                  nature, the                  locations of which may not now be known by Seller or be readily                  apparent                  by a physical inspection of the Assets.  Buyer understands that                  Seller does not have the requisite information with which to determine                  the                  exact nature or condition of the Assets nor the effect any such                  use has                  had on the physical condition of the Assets.  Pursuant to the                  Safe Water Drinking and Toxic Enforcement Act of 1986, Buyer is                  hereby                  notified and assumes the risk that detectable amounts of chemicals                  known                  to cause cancer, birth defects and other reproductive harm may                  be found                  in, on or around the Assets.  Upon consummation of the Closing                  Buyer shall be deemed to have assumed the risk of expense, claim,                  damage                  or liability arising from any such matter referred to in this section,                  including without limitation the risk that the Assets may contain                  waste or                  contaminants and that adverse physical conditions, including the                  presence                  of waste or contaminants, may not have been revealed by Buyer’s                  investigation.  Consummation of the Closing shall transfer all                  responsibility and liability related to disposal, spills, waste                  or                  contamination on or below the Assets from Seller to                  Buyer. |
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| (B) | In                  addition, Buyer acknowledges that some oil field production equipment                  located on the Assets may contain asbestos and/or naturally-occurring                  radioactive material (“NORM”).  In this regard, Buyer expressly                  understands that NORM may affix or attach itself to inside of wells,                  materials and equipment as scale or in other forms, and that wells,                  materials and equipment located on the Assets described herein                  may contain                  NORM and that NORM-containing materials may be buried or have been                  otherwise disposed of on the Assets.  Buyer also expressly                  understands that special procedures may be required for the removal                  and                  disposal of asbestos and NORM from the Assets where it may be found,                  and                  that upon consummation of the Closing Buyer shall be deemed to                  have                  assumed all liability when such activities are                  performed. |
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| (A) | Prior                  to Closing, Buyer shall have the right, at its sole cost and risk,                  to                  review Seller’s Phase I environmental assessments of the Assets, if any                  exist, and to conduct any further environmental assessment of the                  Assets                  it deems appropriate, to the extent that Seller has the authority                  to grant                  such right to Buyer.  Buyer shall immediately provide to Seller                  any data obtained from such assessments, including any reports                  and                  conclusions.  Seller and Buyer shall keep all information                  relating to such assessments strictly confidential whether or not                  Closing                  occurs, except as may be required pursuant to any Environmental                  Laws. |
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| (B) | Buyer                  waives and releases all claims against Seller, its affiliates,                  and each of                  their respective directors, officers, employees, agents, and other                  representatives and their successors and assigns (collectively,                  the                  “Seller’s Group”), for injury to or death of persons, or damage to                  property, arising in any way from the exercise of rights granted                  to Buyer                  hereby or the activities of Buyer or its employees, agents or contractors                  on the Assets.  EXCEPT TO THE EXTENT CAUSED BY THE GROSS                  NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SELLER’S GROUP, BUYER SHALL                  INDEMNIFY THE SELLER’S GROUP AGAINST AND HOLD THE MEMBERS OF THE SELLER’S                  GROUP HARMLESS FROM ANY AND ALL LOSS, COST, DAMAGE, EXPENSE OR                  LIABILITY,                  INCLUDING REASONABLE ATTORNEY’S FEES, WHATSOEVER ARISING OUT OF (I) ANY                  AND ALL STATUTORY OR COMMON LAW LIENS OR OTHER ENCUMBRANCES FOR                  LABOR OR                  MATERIALS FURNISHED IN CONNECTION WITH SUCH TESTS, SAMPLINGS, STUDIES                  OR                  SURVEYS AS BUYER MAY CONDUCT WITH RESPECT TO THE ASSETS; AND (II) ANY                  INJURY TO OR DEATH OF PERSONS OR DAMAGE TO PROPERTY OCCURRING IN,                  ON OR                  ABOUT THE ASSETS AS A RESULT OF SUCH EXERCISE OR                  ACTIVITIES. |
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| (C) | “Environmental                  Laws” means all applicable local, state, and federal laws, rules,                  regulations, and orders regulating or otherwise pertaining to:                  (i) the use, generation, migration, storage, removal, treatment,                  remedy, discharge, release, transportation, disposal, or cleanup                  of                  pollutants, contamination, hazardous wastes, hazardous substances,                  hazardous materials, toxic substances or toxic pollutants;                  (ii) surface waters, ground waters, ambient air and any other                  environmental medium on or off any Lease; or (iii) the environment,                  habitat protection or health and safety-related matters; including                  the                  following as from time to time amended and all others whether similar                  or                  dissimilar: the Comprehensive Environmental Response, Compensation,                  and                  Liability Act of 1980, as amended by the Superfund Amendments and                  Reauthorization Act of 1986, the Resource Conservation and Recovery                  Act of                  1976, as amended by the Used Oil Recycling Act of 1980, the Solid                  Waste                  Disposal Act Amendments of 1980, and the Hazardous and Solid Waste                  Amendments of 1984, the Hazardous Materials Transportation Act,                  the Toxic                  Substance Control Act, the Clean Air Act, the Clean Water Act,                  the Safe                  Drinking Water Act, the National Environmental Policy Act, the                  Endangered                  Species Act, the Oil Pollution Act of 1990, and all regulations                  promulgated pursuant thereto. |
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| (A) | With                  respect to any Adverse Environmental Conditions affecting one or                  more of                  the Assets which exceed the Environmental Defect Threshold, Seller                  may on                  an Asset-by-Asset basis (i) Remediate the Adverse Environmental                  Conditions prior to Closing, but Seller shall have no obligation                  to do so,                  and proceed to Closing with no adjustment of the Base Purchase                  Price;                  (ii) proceed to Closing and adjust the Base Purchase Price in an                  amount equal to the applicable Environmental Defect Value; or                  (iii) retain the affected Asset and reduce the Base Purchase Price by                  the Allocated Value of the affected Asset (“Exclusion                  Adjustment”). |
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| (B) | Buyer                  waives any Adverse Environmental Condition for which Buyer has                  received an                  adjustment to the Base Purchase Price in accordance with Section                  6.4(A). |
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| (C) | If                  Buyer delivers a valid Environmental Defect Notice to Seller and                  if the                  aggregate of the Environmental Defects claimed is less than or                  equals the                  Environmental Defect Threshold, Buyer will be deemed to have accepted                  the                  Assets “where-is, as-is” with respect to all Adverse Environmental                  Conditions in, on or under the Assets and the Adverse Environmental                  Condition(s) in, on and under the Assets will be deemed to be part                  of the                  Assumed Liabilities.  The Environmental Defect Threshold is a                  threshold and not a deductible.  The Environmental Defect                  Threshold and the Title Defect Threshold are separate and distinct                  and                  operate independently. |
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| (D) | If                  the aggregate value of (i) the Base Purchase Price adjustment for                  Adverse Environmental Conditions plus (ii) any Exclusion Adjustments                  in lieu of Remediating any Adverse Environmental Conditions equals                  or                  exceeds ten percent (10%) of the Base Purchase Price, either Party                  may                  terminate this Agreement and neither Party shall have any further                  obligation to conclude the transfer of the Assets under this                  Agreement. |
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| (E) | The                  term “Remediate” or “Remediation” means, with respect to any valid Adverse                  Environmental Condition, the undertaking and completion of those                  actions                  and activities necessary to eliminate or correct such Adverse                  Environmental Condition to the degree sufficient that such Adverse                  Environmental Condition no longer constitutes an Adverse Environmental                  Condition as defined above.  Seller shall promptly notify Buyer                  at such time as it believes that it has Remediated an Adverse                  Environmental Condition.  Buyer shall promptly notify Seller                  whether it agrees such condition is Remediated.  If Buyer fails                  to notify Seller of its determination with respect to such Remediation                  within ten (10) business days following Seller’s notice, such Adverse                  Environmental Condition shall be deemed                  Remediated. |
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| (F) | If                  Seller and Buyer are unable to agree on the amount of the Environmental                  Defect Value within ten (10) business days after Seller’s receipt of the                  Environmental Defect Notice or that an Adverse Environmental Condition                  exists, has been Remediated or is required to be Remediated, then                  the                  dispute will be submitted to a mutually acceptable company with                  recognized                  expertise in the oil and gas environmental remediation and regulation                  field (the “Environmental Consultant”) whose determination shall be final                  and binding upon the Parties.  Seller and Buyer shall each bear                  their respective costs and expenses incurred in connection with                  any such                  dispute, and one-half (1/2) of the fees, costs and expenses charged                  by the                  Environmental Consultant.  Each Party shall present a written                  statement of its position on the Adverse Environmental Condition                  and/or                  the Environmental Defect Value in question to the Environmental                  Consultant                  within five (5) business days after the Environmental Consultant                  is                  selected, and the Environmental Consultant shall make a determination                  of                  all points of disagreement in accordance with the terms and conditions                  of                  this Agreement within ten (10) business days of receipt of such                  position                  statements.  If necessary, the Closing Date shall be deferred                  only as to those Assets affected by any unresolved disputes regarding                  the                  existence of an Adverse Environmental Condition and/or the Environmental                  Defect Value until the Environmental Consultant has made a determination                  of the disputed issues with respect thereto and all subsequent                  dates and                  required activities with respect to any such Assets having reference                  to                  the Closing Date shall be correspondingly deferred; provided, however,                  that, unless Seller and Buyer mutually agree to the contrary, the                  Closing                  Date shall not be deferred in any event for more than thirty (30)                  days                  beyond the scheduled Closing Date in Section 3.1.  All Assets as                  to which no such dispute(s) exist shall be conveyed to Buyer subject                  to                  the terms of this Agreement at Closing.  Once the Environmental                  Consultant’s determination has been expressed to both Parties, if                  applicable, Seller shall have five (5) business days in which to                  advise                  Buyer in writing which of the options available to Seller under                  Section                  6.4(A) Seller elects regarding each of the Assets as to which the                  Environmental Consultant has made a                  determination. |
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| (A) | Seller                  shall be responsible for all negotiations and contacts with federal,                  state, and local agencies and authorities.  Buyer may not make                  any independent contacts with any agency, authority, or other third                  party                  with respect to the Adverse Environmental Condition or Remediation                  and                  shall keep all information regarding the Adverse Environmental                  Condition                  and Remediation confidential, except in each instance to the extent                  required by applicable law. |
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| (B) | Seller                  shall Remediate the Adverse Environmental Condition to the level                  agreed                  upon by Seller and Buyer (or failing such agreement to the level                  determined by the Environmental Consultant), but in no event shall                  Seller                  be required to Remediate the Adverse Environmental Condition beyond                  the                  level required by the applicable Environmental Laws, Lease or agreement                  in                  effect at the Effective Time. |
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| (C) | Buyer                  shall grant and warrant access and entry to the Assets after Closing                  to                  Seller and third parties conducting assessments or Remediation,                  to the                  extent and as long as necessary to conduct and complete the assessment                  or                  Remediation work, to remove equipment and facilities, and to perform                  any                  other activities reasonably necessary in connection with assessment                  or                  Remediation. |
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| (D) | Buyer                  shall facilitate Seller’s ingress and egress or assessment or Remediation                  activities after the Closing.  Seller shall make reasonable                  efforts to perform the work so as to minimize disruption to Buyer’s                  business activities. |
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| (E) | Seller                  shall continue Remediation of the Adverse Environmental Condition                  until                  the first of the following occurs: |
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|   | (i) | the                  appropriate governmental authorities provide notice to Seller or                  Buyer                  that no further Remediation of the Adverse Environmental Condition                  is                  required; or |
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|   | (ii) | the                  Adverse Environmental Condition has been Remediated to the level                  required                  by the applicable Environmental Laws, Lease or agreement, or as                  agreed by                  the Parties. |
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|   |  Upon                  the occurrence of either (i) or (ii) above, Seller shall notify                  Buyer that                  Remediation of the Adverse Environmental Condition is complete                  and provide                  a copy of the notification described in (i) above, if                  applicable.  Upon delivery of said notice, Seller shall be                  released from all liability and have no further obligations under                  any                  provisions of this Agreement in connection with an Adverse Environmental                  Condition. |
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| (F) | Until                  Seller completes Remediation of an Adverse Environmental Condition,                  Seller                  and Buyer shall each notify the other of any pending or threatened                  claim,                  action, or proceeding by any authority or private party that relates                  to or                  would affect the environmental condition, the assessment, or the                  Remediation of the Assets. |
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| (A) | Status.  The                  Operating Co, Nova Oil & Gas, Inc., and X-Pert Corporation are each                  corporations duly organized, legally existing and in good standing                  under                  the laws of the State of Texas.   The 195 AF, Ltd, Cowboy                  Crude Oil & Gas, F.L.P., and Cottonhead, Ltd., are each limited                  partnerships duly organized, legally existing and in good standing                  under                  the laws of the State of Texas. |
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| (B) | Authority.  Seller                  owns the Assets and has the requisite power and authority to enter                  into                  this Agreement, to carry out the transactions contemplated hereby,                  to                  transfer the Assets in the manner contemplated by this Agreement,                  and to                  undertake all of the obligations of Seller set forth in this                  Agreement. |
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| (C) | Validity                  of Obligations.  The execution, delivery and performance of                  this Agreement and the transactions contemplated hereby have been                  duly and                  validly authorized by all requisite action on the part of Seller                  as                  required under its formation documents.  This Agreement and any                  documents or instruments delivered by Seller at the Closing shall                  constitute legal, valid and binding obligations of Seller enforceable                  in                  accordance with their 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 of whether such enforceability is considered in a proceeding                  in                  equity or at law. |
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| (D) | No                  Violation.  The execution and delivery of this Agreement                  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 provision of Seller’s governing documents, or any statute, rule                  or regulation applicable to Seller or any agreement or instrument                  to which                  Seller is a party or by which it is bound, or, to Seller’s knowledge,                  violate, or be in conflict with any judgment, decree or order applicable                  to Seller or require the approval or consent of any third party                  (subject                  to governmental consents and approvals customarily obtained after                  the                  Closing). |
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| (E) | AFE’s.  With                  respect to the joint, unit or other operating agreements relating                  to the                  Assets, except as set forth in Exhibit 7.1(E), there are no                  outstanding calls or payments under authorities for expenditures                  for                  payments relating to the Assets which are due or which Seller has                  committed to make which have not been                  made. |
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| (F) | Contractual                  Restrictions.  Seller has not entered into any contracts for                  or received prepayments, take-or-pay arrangements, buydowns, buyouts                  for                  Oil and Gas, or storage of the same relating to the Assets which                  Buyer                  shall be obligated to honor and make deliveries of Oil and Gas                  without                  receiving full payment therefor or pay refunds of amounts previously                  paid                  under such contracts or                  arrangements. |
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| (G) | Litigation.  Except                  as set forth in Exhibit 7.1(G), there is no suit, action or                  proceeding pending or, to Seller’s knowledge, threatened against Seller or                  the Assets that could have an adverse affect upon the ownership,                  operation                  or value of any of the Assets. |
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| (H) | Permits                  and Consents.  With respect to Assets for which Seller is                  the operator, Seller has (i) acquired all material permits, licenses,                  approvals and consents from appropriate governmental bodies, authorities                  and agencies to conduct operations on the Assets in compliance                  with                  applicable laws, rules, regulations, ordinances and orders; and                  (ii) is in material compliance with all such permits, licenses,                  approvals and consents. |
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| (I) | Broker’s                  Fees.  Seller has incurred no obligation or liability,                  contingent or otherwise, for brokers’ or finders’ fees in respect of the                  matters provided for in this Agreement for which Buyer shall have                  any                  responsibility. |
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| (J) | Taxes.  (i) Seller                  has filed (with respect to the Assets) all material returns for                  Property                  Taxes and Severance Taxes that are due, (ii) all payments (with                  respect to the Assets) shown to be due on such returns have been                  paid, and                  (iii) there is no material dispute or claim concerning any Property                  Tax or Severance Tax liability of the Seller (with respect to the                  Assets)                  claimed or raised by any tax authority in                  writing. |
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| (K) | Material                  Agreements.  To the best of Seller’s knowledge, all                  agreements material to the ownership, operation or value of the                  Assets are                  listed in Exhibit 7.1(K) (“Material Agreements”).  The                  Material Agreements are in full force and effect and Seller is                  not in                  default with respect to any of its material obligations                  thereunder. |
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| (L) | Consents                  and Preferential Purchase Rights.  To the best of Seller’s                  knowledge, Exhibit 7.1(L) lists all consents and preferential                  purchase rights contained in the Leases or Material                  Agreements. |
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| (M) | Gas                  Imbalances.  There are no gas imbalances with respect to the                  Assets as of the Effective Time. |
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| (N) | Royalties.  All                  rentals, royalties and other payments due under the Leases have                  been                  properly paid, except those amounts properly being held in                  suspense. |
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| (O) | Production                  Sales Contracts.  There are no production sales contracts                  pertaining to the Assets that provide for a fixed price and that                  cannot be                  cancelled at any time upon ninety (90) days (or less) prior                  notice. |
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| (P) | Calls                  on Production.  Except as set forth on Exhibit 7.1(P), there                  are no calls on production pertaining to the Assets that provide                  for                  payment at less than applicable current market                  prices. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Q) | Compliance                  with Laws.  To Seller’s knowledge, Seller’s ownership and                  operation of the Assets has been in compliance with all applicable                  statutes, laws, rules and regulations, except to the extent any                  non-compliance would not have a material adverse affect on the                  ownership,                  value or operation of the Assets. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | Information                  About the Assets.  Except as expressly set forth in this                  Agreement or in the Assignment and Bill of Sale, Seller disclaims                  all                  liability and responsibility for any representation, warranty,                  statements                  or communications (orally or in writing) to Buyer, including any                  information contained in any opinion, information or advice that                  may have                  been provided to Buyer by any employee, officer, director, agent,                  consultant, engineer or engineering firm, representative, partner,                  member,                  beneficiary, owner or contractor of Seller wherever and however                  made,                  including those made in any data room or internet site and any                  supplements                  or amendments thereto or during any negotiations with respect to                  this                  Agreement or any confidentiality agreement previously executed                  by the                  Parties with respect to the Asset.  EXCEPT AS SET FORTH IN                  ARTICLE 7 OF THIS AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION,                  EXPRESS, STATUTORY OR IMPLIED, AS TO (i) THE ACCURACY, COMPLETENESS                  OR MATERIALITY OF ANY DATA, INFORMATION OR RECORDS FURNISHED TO                  BUYER IN                  CONNECTION WITH THE ASSETS OR OTHERWISE CONSTITUTING A PORTION                  OF THE                  ASSETS; (ii) THE PRESENCE, QUALITY AND QUANTITY OF HYDROCARBON                  RESERVES                  (IF ANY) ATTRIBUTABLE TO THE ASSETS, INCLUDING WITHOUT LIMITATION                  SEISMIC                  DATA AND SELLER’S INTERPRETATION AND OTHER ANALYSIS THEREOF;                  (iii) THE ABILITY OF THE ASSETS TO PRODUCE HYDROCARBONS, INCLUDING                  WITHOUT LIMITATION PRODUCTION RATES, DECLINE RATES AND RECOMPLETION                  OPPORTUNITIES; (iv) IMBALANCE OR PAYOUT ACCOUNT INFORMATION,                  ALLOWABLES, OR OTHER REGULATORY MATTERS; (v) THE PRESENT OR FUTURE                  VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS, IF ANY, TO BE                  DERIVED                  FROM THE ASSETS; (vi) THE ENVIRONMENTAL CONDITION OF THE ASSETS;                  (vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR;                  (viii) THE TAX ATTRIBUTES OF ANY ASSET; (ix) ANY OTHER MATTERS                  CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL FURNISHED                  TO                  BUYER BY SELLER OR OTHERWISE CONSTITUTING A PORTION OF THE ASSETS;                  AND,                  (x) THE COMPLETENESS OR ACCURACY OF THE INFORMATION CONTAINED IN                  ANY                  EXHIBIT HERETO.  ANY DATA, INFORMATION OR OTHER RECORDS                  FURNISHED BY SELLER ARE PROVIDED TO BUYER AS A CONVENIENCE AND                  BUYER’S                  RELIANCE ON OR USE OF THE SAME IS AT BUYER’S SOLE                  RISK. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (B) | Independent                  Investigation.  Buyer agrees that it has, or by Closing will                  have, made its own independent investigation, analysis and evaluation                  of                  the Assets and the transaction contemplated by this Agreement (including                  Buyer’s own estimate and appraisal of the extent and value of Seller’s Oil                  and Gas reserves attributable to the Assets and an independent                  assessment                  and appraisal of the environmental risks and liabilities associated                  with                  the acquisition of the Assets).  Buyer agrees that it has had,                  or will have prior to Closing, access to all information necessary                  to                  perform its investigation and has not relied and will not rely                  on any                  representations by Seller other than those expressly set forth                  in this                  Agreement |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (A) | Status.                    Buyer is a limited partnership duly organized, validly existing                    and in                    good standing under the laws of the State of                    Delaware. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Authority.                    Buyer has the power and authority to enter into this Agreement,                    to carry                    out the transactions contemplated hereby and to undertake all                    of the                    obligations of Buyer set out in this                    Agreement. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | Validity                    of Obligations.  The consummation of the transactions                    contemplated by this Agreement will not in any respect violate,                    nor be in                    conflict with, any provision of Buyer’s partnership agreement or other                    governing documents, or any agreement or instrument to which                    Buyer is a                    party or is bound, or any judgment, decree, order, statute, rule                    or                    regulation applicable to Buyer (subject to governmental consents                    and                    approvals customarily obtained after the Closing).  This                    Agreement and the documents executed and delivered by Buyer in                    connection                    with the Closing shall constitute legal, valid and binding obligations                    of                    Buyer, enforceable in accordance with their 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 of whether such enforceability                    is                    considered in a proceeding in equity or at                    law. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | Qualification                  and Bonding.  Buyer is, or will be on the Closing Date, in                  compliance with the bonding and liability insurance requirements                  of all                  applicable state or federal laws or regulations that could affect                  Buyer’s                  ability or authority to own and operate the Assets and is qualified                  to own                  any federal, Indian or state oil and gas leases that constitute                  part of                  the Assets. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (E) | Non-Security                  Acquisition.  Buyer intends to acquire the Assets for its                  own benefit and account and is not acquiring the Assets with the                  intent of                  distributing fractional undivided interests thereof such as would                  be                  subject to regulation by federal or state securities laws, and                  if, in the                  future, it should sell, transfer or otherwise dispose of the Assets                  or                  fractional undivided interests therein, it will do so in compliance                  with                  any applicable federal and state securities                  laws. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (F) | Evaluation.  By                  reason of Buyer’s knowledge and experience in the evaluation, acquisition                  and operation of oil and gas properties, Buyer has evaluated the                  merits                  and risks of purchasing the Assets from Seller and has formed an                  opinion                  based solely upon Buyer’s knowledge and experience and not upon any                  representations or warranties by                  Seller. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (G) | Financing.  Buyer                  has sufficient cash, available lines of credit or other sources                  of                  immediately available funds to enable it to pay the Purchase Price                  to                  Seller at the Closing. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (H) | Broker’s                  Fees.  Buyer has incurred no obligation or liability,                  contingent or otherwise, for brokers’ or finders’ fees in respect of the                  matters provided for in this Agreement for which Seller shall have                  any                  responsibility. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | Administer                  and operate the operated Assets in a good and workmanlike manner                  and in                  accordance with the applicable operating                  agreements. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Not                  introduce any new methods of management, operation or accounting                  with                  respect to any or all of the                  Assets. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | Use                  commercially reasonable efforts to maintain and keep the Assets                  in full                  force and effect; and fulfill all contractual or other covenants,                  obligations and conditions imposed upon Seller with respect to                  the Assets,                  including, but not limited to, payment of royalties, delay rentals,                  shut-in gas royalties and any and all other required                  payments. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | Except                  to the extent necessary or advisable to avoid forfeiture or penalties,                  not                  enter into agreements to drill new wells or to rework, plug back,                  deepen,                  plug or abandon any Well, nor commence any drilling, reworking                  or                  completing or other operations on the Leases which requires estimated                  expenditures exceeding Ten Thousand Dollars ($10,000.00), net to                  the                  working interest of Seller, for each operation (except for emergency                  operations and operations required under presently existing contractual                  obligations) without obtaining the prior written consent of Buyer                  (which                  consent shall not be unreasonably withheld, delayed or conditioned);                  provided that the terms of this paragraph (D) shall not apply to                  any                  expenditures of Seller which will not be charged to                  Buyer. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (E) | Not                  voluntarily relinquish its position as operator to anyone other                  than Buyer                  with respect to any of the operated Assets or voluntarily abandon                  any of                  the Wells other than as required pursuant to the terms of a Lease                  or by                  regulation. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (F) | Not,                  without the prior written consent of Buyer (which consent shall                  not be                  unreasonably withheld, delayed or conditioned), (i) enter into any                  agreement or arrangement (other than one constituting a Permitted                  Encumbrance) transferring, selling or encumbering any of the Assets                  (other                  than in the ordinary course of business, including ordinary course                  sales                  of production, inventory or salvage); (ii) grant any preferential or                  other right to purchase or agree to require the consent of any                  party not                  otherwise required to consent to the transfer and assignment of                  the Assets                  to Buyer; (iii) enter into any new sales contracts, transportation                  contract or supply contracts which cannot be cancelled upon thirty                  (30)                  days or less prior notice; or (iv) incur or agree to incur any                  contractual obligation  (absolute or contingent) with respect to                  the Assets except as otherwise provided herein (including ordinary                  course                  sales of production, inventory or salvage or pursuant to any disclosed                  AFEs covering the Assets). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (G) | To                  the extent known to Seller, provide Buyer with prompt written notice                  of                  (i) any claims, demands, suits or actions made against Seller which                  materially affect the Assets; or (ii) any proposal from a third party                  to engage in any material transaction (e.g., a farmout) with respect                  to                  the Assets. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| (A) | At                  any time by mutual consent of the                  Parties. |
|-----|---------------------------------------------------------------------------------|

| (B) | By                  either Party as provided in Sections 5.4(C), 5.5(B) or 6.4(D) pertaining                  to Title Defects, preferential rights or Adverse Environmental                  Conditions,                  respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | By                  Buyer if, on the Closing Date, any of the conditions set forth                  in Article                  11 hereof shall not have been satisfied or waived; provided, however,                  that                  Seller shall have the right to satisfy such condition for a period                  of                  twenty (20) days following delivery of notice from Buyer regarding                  such                  failure. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | By                  Seller if, on the Closing Date, any of the conditions set forth                  in Article                  12 hereof shall not have been satisfied or waived; provided, however,                  that                  with respect to any condition other than a material failure of                  Buyer to                  perform its obligations under Section 3.2, as to which the granting                  of any                  cure period shall be entirely within Seller’s sole and absolute                  discretion, Buyer shall have the right to satisfy such condition                  for a                  period of twenty (20) days following delivery of notice from Seller                  regarding such failure. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (E) | By                  Seller or Buyer if Closing has not occurred on or before October                  15,                  2007. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (F) | Notwithstanding                  anything contained herein, a Party shall not have the right to                  terminate                  this Agreement pursuant to clause (C), (D) or (E) above if such                  Party is                  at such time in material breach of any provision of this                  Agreement. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (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, and Seller is ready to close and is                  not in                  material breach of this Agreement, Seller shall have the right                  to                  terminate this Agreement and retain the Deposit, together with                  interest                  thereon, as liquidated damages.  Buyer’s failure to close shall                  not be considered wrongful if (i) conditions to Buyer’s obligation to                  close under Article 11 are not satisfied through no fault of Buyer                  and are                  not waived, or (ii) Buyer has terminated this Agreement as of right                  under Section 13.1.  The remedy set forth herein shall be                  Seller’s sole and exclusive remedy for Buyer’s wrongful failure to close                  hereunder and Seller expressly waives any and all other remedies,                  legal                  and equitable, that it otherwise may have for Buyer’s failure to                  close. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Seller’s                  Breach.  If                  Closing does not occur because Seller wrongfully fails to tender                  performance at Closing or otherwise breaches this Agreement prior                  to                  Closing, and Buyer is ready to close and is not in material breach                  of this                  Agreement, Buyer may terminate this Agreement, in which event Seller                  will                  return the Deposit, together with interest thereon, to Buyer immediately                  after the determination that the Closing will not occur.  If                  Buyer elects not to terminate this Agreement upon any such breach                  by                  Seller, Buyer shall retain all legal remedies for Seller’s breach of this                  Agreement, including, without limitation, specific performance                  of this                  Agreement.  Seller’s failure to close shall not be considered                  wrongful if (i) conditions to Seller’s conditions to close under                  Article 12 are not satisfied through no fault of Seller and are                  not                  waived; or (ii) Seller has terminated this Agreement as of right                  under Section 13.1. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | Termination                  Pursuant to Section 13.1.  If                  Buyer or Seller terminates this Agreement pursuant to Section 13.1                  in the                  absence of a breach by the other Party, Seller shall return the                  Deposit                  and all accrued interest thereon 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                  pursuant to Section 13.1 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 together with supporting                  documentation. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | Effect                  of Termination.  In                  the event of the termination of this Agreement pursuant to the                  provisions                  of this Article 13 or elsewhere in this Agreement, this Agreement                  shall                  become void and have no further force and effect and, except as                  provided                  in this Article 13, for the indemnities provided for in Sections                  6.2(B)                  and 14.3, any breach of this Agreement prior to such termination                  and any                  continuing confidentiality requirement, neither Party shall have                  any                  further right, duty or liability to the other hereunder.  Upon                  termination, Buyer agrees to return to Seller or destroy all materials,                  documents and copies thereof provided, obtained or discovered in                  the                  course of any due diligence investigations of the                  Assets. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (A) | MISREPRESENTATIONS.  ALL                  CLAIMS, DEMANDS, LIABILITIES, JUDGMENTS, LOSSES AND REASONABLE                  COSTS,                  EXPENSES AND ATTORNEYS’ FEES (INDIVIDUALLY A “LOSS” AND COLLECTIVELY, THE                  “LOSSES”) ARISING FROM THE BREACH BY SELLER OF ANY REPRESENTATION OR                  WARRANTY SET FORTH IN THIS AGREEMENT THAT SURVIVES                  CLOSING; |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | BREACH                  OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY SELLER                  OF ANY COVENANT SET FORTH IN THIS AGREEMENT;                  AND |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | OWNERSHIP                  AND OPERATION.  ALL LOSSES ARISING FROM SELLER’S OWNERSHIP                  OR OPERATION OF THE ASSETS PRIOR TO THE EFFECTIVE TIME DIRECTLY                  ASSOCIATED                  WITH THE FOLLOWING MATTERS, EXCLUDING ANY ONSITE ENVIRONMENTAL                  CLAIMS NOT                  RAISED BY BUYER PRIOR TO CLOSING: |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | DAMAGES                  TO PERSONS OR PROPERTY, OR DEATH, FOR CLAIMS ASSERTED BY ANY THIRD                  PARTY                  AND ACCRUING PRIOR TO THE EFFECTIVE                  TIME; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | THE                  VIOLATION BY SELLER OF THE TERMS OF ANY AGREEMENT BINDING UPON                  SELLER; |
|--------|------|--------------------------------------------------------------------------------------------------------------|

|   | (iii) | CLAIMS                  AGAINST SELLER BY CO-OWNERS, PARTNERS, JOINT VENTURERS AND OTHER                  PARTICIPANTS IN THE WELLS; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | THE                  IMPROPER PAYMENT OF ROYALTIES, RENTALS AND SIMILAR PAYMENTS BY                  SELLER                  UNDER THE LEASES PRIOR TO THE EFFECTIVE                  TIME; |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | THE                  LITIGATION MATTERS SET FORTH ON EXHIBIT                  7.1(G); |
|--------|-----|---------------------------------------------------------------------------------------|

|   | (vi) | AD                  VALOREM, PROPERTY, SEVERANCE AND SIMILAR TAXES ATTRIBUTABLE TO                  THE PERIOD                  OF TIME PRIOR TO THE EFFECTIVE TIME;                  AND |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | ANY                  CONTAMINATION OR CONDITION THAT IS THE RESULT OF ANY OFF-SITE DISPOSAL                  BY                  SELLER OR ITS AFFILIATES OF ANY POLLUTANTS, CONTAMINANTS OR HAZARDOUS                  MATERIAL ON, IN OR BELOW ANY PROPERTIES NOT INCLUDED IN THE ASSETS                  PRIOR                  TO THE EFFECTIVE TIME. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (D) | Notwithstanding                  the above, the following limitations shall apply to Seller’s                  indemnification obligations: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | Seller                  shall not be obligated to indemnify Buyer for any Loss unless Buyer                  has                  delivered a written notice of such Loss within the Survival Period                  (as                  defined below) applicable to such Loss.  Any Loss for which                  Seller does not receive written notice before the end of the Survival                  Period shall be deemed to be an Assumed Liability.  The                  “Survival Period” applicable to Losses shall                  mean: |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | With                  regard to a breach of representations and warranties contained                  in Sections                  7.1(A), (B), (C) and (D), for four (4) year  period following                  the Closing; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | With                  regard to a breach of all of the other representations and warranties                  by                  Seller in this Agreement for a period of one (1) year following                  the                  Closing; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | With                  regard to a breach of a covenant by Seller, for a period equal                  to the                  lesser of the applicable statute of limitations period or four                  (4) years                  following the Closing; and |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | With                  regard to the matters covered by Section 14.1 (C), for a four (4)                  year                  period following the Closing. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Seller                  shall have no liability or obligation for any Losses, unless and                  until and                  only to the extent that the aggregate Losses for which Buyer is                  entitled                  to recover under this Agreement exceeds one percent (1%) of the                  Base                  Purchase Price (the “Indemnity Deductible”) (such amount being a                  deductible and not a threshold). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | The                  amount of Losses required to be paid by Seller to indemnify Buyer                  pursuant                  to this Agreement shall be reduced to the extent of any amounts                  actually                  received by Buyer pursuant to the terms of the insurance policies                  (if any)                  covering such claim and any tax benefits received by                  Buyer. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Except                  as specifically provided in Section 14.1(C)), Seller’s indemnification                  obligations shall not cover any liabilities, duties and obligations                  relating to properly plugging and abandoning wells, restoring and                  reclaiming the surface, removal of all pipelines, equipment, and                  related                  facilities now or hereafter located on the Assets, and cleaning                  up,                  restoring and Remediation of the Assets in accordance with the                  Environmental Laws and the relevant Leases, or any other violation                  or                  claimed violation of Environmental Laws (including but not limited                  to the                  payment of fines, penalties, monetary sanctions or other civil                  liabilities) or the presence, disposal, release or threatened release                  of                  any hazardous substance or hazardous waste from the Assets into                  the                  atmosphere or into or upon land or any water course or body of                  water,                  including groundwater, whether or not attributable to Seller’s activities                  or the activities of third parties.  All such matters are                  covered exclusively by Article 6 of this                  Agreement. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (A) | MISREPRESENTATIONS.  ALL                  LOSSES ARISING FROM THE BREACH BY BUYER OF ANY REPRESENTATION OR                  WARRANTY                  SET FORTH IN THIS AGREEMENT THAT SURVIVES                  CLOSING; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | BREACH                  OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY BUYER                  OF ANY COVENANT SET FORTH IN THIS                  AGREEMENT; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | ASSUMED                  LIABILITIES.  ALL LOSSES ARISING FROM OR COMPRISING THE                  ASSUMED LIABILITIES. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

----

| (A) | An                  event of casualty means volcanic eruptions, acts of God, fire,                  explosion,                  earthquake, wind storm, flood, drought, condemnation, the exercise                  of any                  right of eminent domain, confiscation and seizure (a                  “Casualty”).  A Casualty does not include depletion due to                  normal production and depreciation or failure of equipment or                  casing. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | If,                  prior to the Closing, a Casualty occurs (or Casualties occur) which                  results in a reduction in the value of any of the Assets (“Casualty                  Loss”), (i) Seller shall retain such Asset and such Asset shall be                  the subject of an adjustment to the Base Purchase Price in the                  same manner                  set forth in Section 5.4 hereof, or (ii) at the Closing, Seller shall                  assign to Buyer the right to receive all insurance proceeds or                  other sums                  payable to Seller by reason of such Casualty Loss, the Base Purchase                  Price                  shall not be adjusted by reason of such payment, and Seller shall                  convey                  the affected Asset to Buyer.  In the event a Casualty Loss                  results in a five percent (5%) or greater reduction in the value                  of an                  affected Asset, Buyer shall have the right to exclude such Asset                  from the                  sale and receive a reduction of the Base Purchase Price based on                  the                  Allocated Value of such Asset. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | For                  purposes of determining the diminution in value of an Asset as                  a result of                  a Casualty Loss, the Parties shall use the same methodology as                  applied in                  determining the diminution in value of an Asset as a result of                  a Title                  Defect as set forth in Section 5.4. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | Prior                  to Closing, to the extent not already public, Buyer shall not disclose                  to                  any party that it is conducting negotiations with Seller or has                  entered                  into this Agreement other than as expressly permitted in the                  confidentiality agreement executed by Buyer in Seller’s favor prior to the                  execution of this Agreement, which shall continue to apply until                  the                  Closing and thereafter in the event of termination of this Agreement                  prior                  to the Closing. Buyer shall exercise all due diligence in safeguarding                  and                  maintaining secure all engineering, geological and geophysical                  data,                  seismic data, reports and maps, the results and findings of Buyer                  with                  regard to its due diligence associated with the Assets (including                  without                  limitation with regard to due diligence associated with environmental                  and                  title matters) and other data relating to the Assets (collectively,                  the                  “Confidential Information”).  Buyer acknowledges that, prior to                  Closing, all Confidential Information shall be treated as confidential.                  Notwithstanding the foregoing, Seller understands that Buyer has                  public                  reporting obligations that may require public announcement of certain                  information relating to this Agreement.  Seller and Buyer shall                  consult with each other with regard to all publicity and other                  releases at                  or prior to the Closing concerning this Agreement and the transaction                  contemplated hereby and, except as required by applicable law or                  other                  applicable rules or regulations of any governmental body or stock                  exchange, neither party shall issue any publicity or other release                  without                  the prior written consent of the other party, such consent not                  to be                  unreasonably withheld. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (B) | In                  the event of termination of this Agreement for any reason, Buyer                  shall not                  use or knowingly permit others to use such Confidential Information                  in a                  manner detrimental to Seller, and will not disclose any such Confidential                  Information to any person, firm, corporation, association or other                  entity                  for any reason or purpose whatsoever, except to Seller or to a                  governmental agency pursuant to a valid subpoena or other order                  or                  pursuant to applicable governmental regulations, rules or                  statutes. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | The                  undertaking of confidentiality shall not diminish or take precedence                  over                  any separate confidentiality agreement between the                  Parties.  Should this Agreement terminate, such separate                  confidentiality agreement shall remain in full force and                  effect. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**SELLER:**

**BUYER:**

----

| (A) | Each                  Party shall be solely responsible for all costs and expenses incurred                  by                  it in connection with this transaction (including, but not limited                  to fees                  and expenses of its counsel and accountants) and shall not be entitled                  to                  any reimbursements from the other Party, except as otherwise provided                  in                  this Agreement. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Buyer                  shall file all necessary Tax returns and other documentation with                  respect                  to all transfer, documentary, sales, use, stamp, registration and                  other                  similar Taxes and fees, and, if required by applicable law, Seller                  shall                  join in the execution of any such Tax returns and other                  documentation.  Notwithstanding anything set forth in this                  Agreement to the contrary, Buyer shall pay any transfer, documentary,                  sales, use, stamp, registration and other similar Taxes and fees                  incurred                  in connection with this Agreement and the transactions contemplated                  hereby.  Buyer shall also pay any equipment lease transfer fees                  or other fees or expenses incurred in connection with transfer                  of the                  Assets to Buyer except as otherwise provided by this                  Agreement. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | Buyer                  shall, at its own cost, promptly record all instruments of conveyance                  and                  sale in the appropriate office of the state and county in which                  the lands                  covered by such instrument are located.  Buyer shall immediately                  file for and obtain the necessary approval of all federal, Indian,                  tribal                  or state government agencies to the assignment of the                  Assets.  The assignment of any state, federal or Indian tribal                  oil and gas leases shall be filed in the appropriate governmental                  offices                  on a form required and in compliance with the applicable rules                  of the                  applicable government agencies.  Buyer shall supply Seller with                  a true and accurate photocopy reflecting the recording information                  of all                  the recorded and filed assignments within a reasonable period of                  time                  after their recording and filing.  In the event that Seller                  undertakes to record and/or file the conveyance instruments and                  other                  documents associated with this transfer of interest, Buyer shall                  reimburse                  Seller for all associated fees at Post                  Closing. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | **SELLER:** **The Operating Co.** |                                                   |
|--------|----------------------------------------|--------------------------------------------------------|
|   |                                   |                                                   |   |
|   | By:                                    | /s/ Alfred                J.                Smith |   |
|   |                                   | Alfred                J.                Smith          |   |
|   |                                   | President                                              |   |
|   |                                   |                                                   |   |

|   | **Nova            Oil & Gas, Inc.** |                                |
|--------|-----------------------------------------|-------------------------------------|
|   |                                    |                                |   |
|   | By:                                     | /s/ Alfred            J. Smith |   |
|   |                                    | Alfred            J. Smith          |   |
|   |                                    | President                           |   |
|   |                                    |                                |   |

|   | **X-Pert            Corporation** |                                |
|--------|-----------------------------------|-------------------------------------|
|   |                              |                                |   |
|   | By:                               | /s/ Alfred            J. Smith |   |
|   |                              | Alfred            J. Smith          |   |
|   |                              | President                           |   |
|   |                              |                                |   |

|   | **The              195 AF, Ltd.****By: O&G Service Company, LLC,              its****general partner** |                                |
|--------|------------------------------------------------------------------------------------------------------------|-------------------------------------|
|   |                                                                                                       |                                |   |
|   | By:                                                                                                        | /s/ Alfred            J. Smith |   |
|   |                                                                                                       | Alfred            J. Smith          |   |
|   |                                                                                                       | President                           |   |
|   |                                                                                                       |                                |   |

|   | **Cowboy              Crude Oil & Gas, F.L.P.****By: Six S Energy, Inc., its general              partner** |                               |
|--------|-----------------------------------------------------------------------------------------------------------------|------------------------------------|
|   |                                                                                                            |                               |   |
|   | By:                                                                                                             | /s/ David            H. Smith |   |
|   |                                                                                                            | David            H. Smith          |   |
|   |                                                                                                            | President                          |   |
|   |                                                                                                            |                               |   |

|   | **Cottonhead,            Ltd.** |                           |
|--------|---------------------------------|--------------------------------|
|   |                            |                           |   |
|   | By:                             | /s/ J.            D. Carr |   |
|   |                            | J.            D. Carr          |   |
|   |                            | General            Partner     |   |
|   |                            |                           |   |

----

|   | **BUYER:** **LEGACY RESERVES OPERATING                LP****By:  LEGACY RESERVES OPERATING GP LLC, ITS                GENERAL PARTNER****By:  LEGACY RESERVES LP, ITS SOLE                MEMBER****By:  LEGACY RESERVES GP, LLC, ITS GENERAL                PARTNER** |                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                       |                                              |   |
|   | By:                                                                                                                                                                                                                                                                                        | /s/ Cary              D. Brown               |   |
|   |                                                                                                                                                                                                                                                                                       | Cary              D. Brown                        |   |
|   |                                                                                                                                                                                                                                                                                       | Chairman              and Chief Executive Officer |   |
|   |                                                                                                                                                                                                                                                                                       |                                              |   |

----