<PAGE>
 
================================================================================


                          WESTERN GAS RESOURCES, INC.



                                  $42,000,000



                               8.02% SENIOR NOTES
                              DUE DECEMBER 1, 2005


                            NOTE PURCHASE AGREEMENT



                         Dated as of November 29, 1995

================================================================================

                                                                   Exhibit 10.52
<PAGE>
 
                                 TABLE OF CONTENTS

                            (Not Part of Agreement)

<TABLE> 
<CAPTION> 
                                                                            Page
                                                                            ----
<S>  <C>                                                                    <C> 
AUTHORIZATION OF ISSUE OF NOTES............................................... 1
     1.   Authorization of Issue of Notes..................................... 1

PURCHASE AND SALE OF NOTES.................................................... 1
     2.   Purchase and Sale of Notes.......................................... 1

CONDITIONS PRECEDENT.......................................................... 2
     3.   Conditions of Closing............................................... 2
     3A.  Certain Documents................................................... 2
     3B.  Representations and Warranties; No Default.......................... 2
     3C.  Purchase Permitted by Applicable Laws............................... 3
     3D.  Legal Matters....................................................... 3
     3E.  Proceedings......................................................... 4
     3F.  Amendment of Other Agreements....................................... 4
     3G.  Consent of Lenders.................................................. 4
     3H.  Fees Payable at Closing............................................. 4
     3I.  Private Placement Number............................................ 4
     3J.  Sale of Notes to Other Purchasers................................... 5

PREPAYMENTS................................................................... 5
     4.   Prepayments......................................................... 5
     4A.  Optional Prepayment With Yield-Maintenance Amount................... 5
     4B.  Notice of Optional Prepayment....................................... 5
     4C.  Application of Prepayments.......................................... 5
     4D.  Retirement of Notes................................................. 5

AFFIRMATIVE COVENANTS......................................................... 6
     5.   Affirmative Covenants............................................... 6
     5A.  Financial Statements................................................ 6
     5B.  Inspection of Property.............................................. 8
     5C.  Covenant to Secure Notes Equally.................................... 8
     5D.  Agreement Assuming Liability on Notes............................... 9
     5E.  Notice of Material Events........................................... 9
     5F.  Maintenance of Properties...........................................10
     5G.  Maintenance of Existence and Qualifications.........................10
     5H.  Insurance...........................................................10
</TABLE> 

                                       i
<PAGE>
 
<TABLE> 
<S>  <C>                                                                      <C> 
     5I.  Compliance with Agreements and Law..................................10
     5J.  Compliance with Environmental Laws..................................10
     5K.  Information Required by Rule 144A...................................11
     5L.  ERISA...............................................................11
     5M.  Guaranties..........................................................11

NEGATIVE COVENANTS............................................................12

     6.   Negative Covenants..................................................12
     6A.  Financial Covenants.................................................12
          6A(1)     Consolidated Tangible Net Worth...........................12
          6A(2)     Current Ratio.............................................12
          6A(3)     Debt Maintenance..........................................12
          6A(4)     Fixed Charge Coverage Ratio...............................12
     6B.  Dividend Limitation.................................................13
     6C.  Lien, Debt, and Other Restrictions..................................13
          6C(1)     Liens.....................................................13
          6C(2)     Debt......................................................14
          6C(3)     Limitation on Investments and New Businesses..............15
          6C(4)     Sale of Stock and Debt of Subsidiaries....................15
          6C(5)     Merger and Sale of Assets.................................16
          6C(6)     Lease Rentals.............................................17
          6C(7)     Limitation on Credit Extensions...........................17
          6C(8)     Contracts; Take-or-Pay Agreements.........................18
          6C(9)     Sale or Discount of Receivables...........................18
          6C(10)    Guaranties................................................18
          6C(11)    Transactions With Affiliates..............................19
          6C(12)    Panhandle Joint Venture Debt..............................19
     6D.  Issuance of Stock by Subsidiaries...................................19
     6E.  Other Agreements....................................................20

EVENTS OF DEFAULT.............................................................20
     7A.  Acceleration........................................................20
     7B.  Rescission of Acceleration..........................................23
     7C.  Notice of Acceleration or Rescission................................24
     7D.  Other Remedies......................................................24

REPRESENTATIONS, COVENANTS AND WARRANTIES.....................................24
     8.   Representations, Covenants and Warranties...........................24
     8A.  Organization........................................................24
     8B.  Financial Statements................................................24
     8C.  Actions Pending.....................................................25
     8D.  Outstanding Debt....................................................25
     8E.  Environmental Compliance............................................25
</TABLE> 

                                      ii
<PAGE>
 
<TABLE> 
<S>  <C>                                                                      <C>
     8F.  Taxes...............................................................26
     8G.  Conflicting Agreements and Other Matters............................26
     8H.  Offering of Notes...................................................26
     8I.  Regulation G, etc...................................................26
     8J.  ERISA...............................................................27
     8K.  Governmental Consent................................................27
     8L.  Title to Properties.................................................28
     8M.  Disclosure..........................................................28
     8N.  Delivery of Other Agreements........................................28
     8O.  Public Utility Holding Company Act; Federal Power Act...............28
     8P.  Investment Company Act..............................................29
     8Q.  Rank of Notes.......................................................29

REPRESENTATIONS OF THE PURCHASERS.............................................29
     9.   Representations of the Purchasers...................................29
     9A.  Nature of Purchase..................................................29
     9B.  Source of Funds.....................................................29

DEFINITIONS...................................................................30
     10.  Definitions.........................................................30
     10A. Yield-Maintenance Terms.............................................30
     10B. Other Terms.........................................................31
     10C. Accounting Terms and Determinations.................................40

MISCELLANEOUS.................................................................40
     11A. Note Payments.......................................................40
     11B. Expenses............................................................41
     11C. Consent to Amendments...............................................42
     11D  Solicitation of Noteholders.........................................43
     11E. Form, Registration, Transfer and Exchange of Notes; Lost Notes......43
     11F. Persons Deemed Owners; Participations...............................44
     11G. Survival of Representations and Warranties; Entire Agreement........44
     11H. Successors and Assigns..............................................44
     11I. Disclosure to Other Persons; Confidentiality........................45
     11J. Notices.............................................................45
     11K. Payments Due on Non-Business Days...................................45
     11L. Satisfaction Requirement............................................46
     11M. GOVERNING LAW.......................................................46
     11N. Limitation on Interest..............................................46
     11O. Severability........................................................46
     11P. Descriptive Headings................................................46
     11Q. Counterparts........................................................46
     11R. Binding Agreement...................................................46
</TABLE> 
 
                                      iii
<PAGE>
 
PURCHASER SCHEDULE
SCHEDULE 6C(2)  EXISTING DEBT
SCHEDULE 6C(8) EXISTING COUNTERPARTIES
SCHEDULE 8A  SUBSIDIARIES
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT C LIST OF AGREEMENTS RESTRICTING DEBT
EXHIBIT D FORM OF CONFIDENTIALITY LETTER
EXHIBIT E FORM OF GUARANTY
EXHIBIT F FORM OF INTERCREDITOR AGREEMENT
EXHIBIT G FORM OF ANNUAL CASH FLOW PROJECTION

                                      iv
<PAGE>
 
                          WESTERN GAS RESOURCES, INC.
                             12200 N. Pecos Street
                                Denver, CO 80234



                                                         As of November 29, 1995


To Each of the Purchasers Identified
on the Signature Pages of this Agreement


                               8.02% SENIOR NOTES

Ladies and Gentlemen:

          The undersigned, Western Gas Resources, Inc. (the "COMPANY"), hereby
agrees with each Purchaser as follows:

PARAGRAPH
1.   AUTHORIZATION OF ISSUE OF NOTES.

          1.    AUTHORIZATION OF ISSUE OF NOTES.  The Company will authorize the
issue of its senior promissory notes (the "NOTES") in the aggregate principal
amount of $42,000,000, to be dated the date of issue thereof, to mature December
1, 2005, to bear interest on the unpaid balance thereof from the date thereof
until the principal thereof shall have become due and payable at the rate of
8.02% per annum and on overdue payments at the rate specified therein, and to be
substantially in the form of EXHIBIT A attached hereto.  The term "NOTES" as
used herein shall include each Note delivered pursuant to any provision of this
Agreement and each Note delivered in substitution or exchange for any such Note
pursuant to any such provision.  CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS
SPECIFIED IN PARAGRAPH 10.

PARAGRAPH 2.    PURCHASE AND SALE OF NOTES.

          2.    PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to
each Purchaser and, subject to the terms and conditions herein set forth, each
Purchaser severally agrees to purchase from the Company, the aggregate principal
amount of Notes set forth opposite such Purchaser's name in the PURCHASER
SCHEDULE attached hereto at 100% of such aggregate principal amount.  The
Company will deliver to each Purchaser, at the offices of Baker & Botts, L.L.P.,
2001 Ross Avenue, Suite 800, Dallas, Texas 75201, one or more Notes registered
in such Purchaser's name or (if so specified) in the name of such Purchaser's
nominee, evidencing the aggregate principal amount of the Notes to be purchased
by such Purchaser and in the denomination or denominations
<PAGE>
 
specified with respect to such Purchaser's in the PURCHASER SCHEDULE attached
hereto, against payment of the purchase price thereof by wire transfer of
immediately available funds for credit to the Company's account #0180352922 at
NationsBank of Texas, N.A., ABA No. 1110-0002-5, 901 Main Street, Dallas, Texas
75202, on the date of closing, which shall be December 1, 1995 (the "CLOSING" or
the "DATE OF CLOSING").

PARAGRAPH 3.    CONDITIONS PRECEDENT.

          3.    CONDITIONS OF CLOSING.  Each Purchaser's obligation to purchase
and pay for the Notes to be purchased by such Purchaser hereunder is subject to
the satisfaction, on or before the Date of Closing, of the following conditions:

          3A. CERTAIN DOCUMENTS.  Each Purchaser shall have received the
following, each dated the Date of Closing unless otherwise indicated:

                (i)       The Notes to be purchased by such Purchaser;

                (ii)      A certificate of the Secretary or Assistant Secretary
          of each of the Company and each Guarantor certifying (a) the
          resolutions of the Board of Directors of each of the Company and the
          Guarantors approving this Agreement, the Notes and the Guaranties,
          respectively, and of all documents evidencing other necessary
          corporate action and governmental approvals, if any, with respect to
          this Agreement, the Notes and the Guaranties, and (b) the names and
          true signatures of the officers of the Company and the Guarantors
          authorized to sign this Agreement, the Notes and the Guaranties,
          respectively, and the other documents to be delivered hereunder;

                (iii)     Certified copies of the Certificate of Incorporation
          and bylaws of each of the Company and each Guarantor;

                (iv)      A favorable opinion of John C. Walter, General Counsel
          of the Company, reasonably satisfactory to such Purchaser and
          substantially in the form of EXHIBIT B attached hereto and as to such
          other matters as such Purchaser may reasonably request. The Company
          hereby directs such counsel to deliver such opinion, and understands
          and agrees that each Purchaser receiving such opinion will and is
          hereby authorized to rely on such opinion;

                (v)       A certified copy of the NationsBank Agreement and all
          amendments, modifications, consents or waivers with respect thereto;

                (vi)      A certified copy of the Master Shelf Agreement and all
          amendments, modifications, consents or waivers with respect thereto;

                                       2
<PAGE>
 
                (vii)     A certified copy of the 1993 Note Purchase Agreement
          and all amendments, modifications, consents or waivers with respect
          thereto;

                (viii)    A certified copy of the Receivables Purchase Agreement
          and all amendments, modifications, consents or waivers with respect
          thereto;

                (ix)      A certified copy of each guaranty or security
          agreement guaranteeing or securing the obligations of the Company
          under the NationsBank Agreement, the Master Shelf Agreement, the 1993
          Note Purchase Agreement or the Receivables Purchase Agreement and all
          amendments, modifications, consents or waivers with respect thereto;

                (x)       A copy of each Guaranty dated the date of issue
          thereof, duly executed by each Guarantor;

                (xi)      A copy of the Intercreditor Agreement dated the date
          of issue thereof, duly executed by each Person that is the beneficiary
          of an Existing Guaranty; and

                (xii)     A letter from NationsBanc Capital Markets, Inc., in
          form, scope and substance satisfactory to such Purchaser, regarding
          the limited nature of the offering of the Notes.

          3B. REPRESENTATIONS AND WARRANTIES; NO DEFAULT.  The representations
and warranties contained in paragraph 8 and in each Guaranty shall be true on
and as of the Date of Closing; there shall exist on the Date of Closing no Event
of Default or Default and no Default or Event of Default would result from the
issuance of the Notes on the Date of Closing; and the Company and each Guarantor
shall have delivered to such Purchaser an Officer's Certificate, dated the Date
of Closing, to both such effects.

          3C. PURCHASE PERMITTED BY APPLICABLE LAWS.  The purchase of and
payment for the Notes to be purchased by such Purchaser on the terms and
conditions herein provided (including the use of the proceeds of such Notes by
the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation G,
T or X of the Board of Governors of the Federal Reserve System) and shall not
subject such Purchaser to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation, and such
Purchaser shall have received such certificates or other evidence as it may
reasonably request to establish compliance with this condition.

          3D. LEGAL MATTERS. Counsel to such Purchaser, including any special
counsel retained in connection with the purchase and sale of the Notes, shall be
satisfied as to all legal matters relating to such purchase and sale, and such
Purchaser shall have received from such counsel favorable opinions as to such
legal matters as such Purchaser may reasonably request.

                                       3
<PAGE>
 
          3E. PROCEEDINGS.  All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in substance and
form to such Purchaser, and such Purchaser shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser may reasonably request.

          3F. AMENDMENT OF OTHER AGREEMENTS.  Neither the NationsBank
Agreement, the Master Shelf Agreement, the 1993 Note Purchase Agreement nor the
Receivables Purchase Agreement shall require (or if so required, such conditions
shall simultaneously terminate) (i) the grant of a Lien on any property of the
Company or any Subsidiary (other than (a) Liens permitted by clauses (vi) and
(vii) of paragraph 6C(1) and (b) in the case of the Receivables Purchase
Agreement, Liens on the Pledged Accounts Receivable (subject to the proviso set
forth in the definition of "Permitted Securitization Program")) or (ii) the
delivery of any security agreement or the guaranty or agreement to provide
guaranties of the obligations of the Company under such agreements other than
(a) any Existing Guaranty which is subject to the Intercreditor Agreement and
for which such Purchaser shall have received a Guaranty from the same Guarantor
and (b) any other guaranty or agreement to provide guaranties of the obligations
of the Company under such agreements delivered after the Closing Date which
becomes subject to the Intercreditor Agreement (as the same may hereafter be
amended or otherwise modified) and for which such Purchaser shall have received
a Guaranty pursuant to paragraph 5M from the same Guarantor.  In addition, such
agreements shall not require that any lender or purchaser party thereto, or an
agent or representative thereof, be named as beneficiary or loss payee on any
insurance policy and all insurance policies of the Company and its Subsidiaries
shall not name any such lender or agent as beneficiary or loss payee.

          3G. CONSENT OF LENDERS. The Company shall have received any consents
required in connection with the execution, delivery and performance of this
Agreement, the Notes and the Guaranties by the NationsBank Agreement, the Master
Shelf Agreement, the 1993 Note Purchase Agreement or the Receivables Purchase
Agreement and shall have delivered to such Purchaser a copy thereof and a copy
of any amendment thereto (which must be satisfactory to such Purchaser) that is
entered into in connection with the transactions contemplated hereby.

          3H. FEES PAYABLE AT CLOSING.  Without limiting the generality of
paragraph 11B, the Company shall have paid on or before the Date of Closing the
fees, charges and disbursements of such Purchaser's special counsel referred to
in paragraph 3D to the extent reflected in a statement of such counsel rendered
to the Company at least three Business Days prior to the Closing.

          3I. PRIVATE PLACEMENT NUMBER.  The Company shall have obtained or
caused to be obtained a private placement number for the Notes from the CUSIP
Service Bureau of Standard & Poor's Corporation and such Purchaser shall have
been informed of such private placement numbers.

                                       4
<PAGE>
 
          3J. SALE OF NOTES TO OTHER PURCHASERS.  The Company shall have sold
to the other Purchasers the Note(s) to be purchased by them at the Closing and
shall have received payment in full therefor.

PARAGRAPH 4.    PREPAYMENTS.

          4.    PREPAYMENTS.  The Notes shall be subject to prepayment only with
respect to the optional prepayments permitted by paragraph 4A.

          4A. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT.  The Notes
shall be subject to prepayment on any Business Day on or after 90 days from the
date of issuance thereof, in whole at any time or from time to time in part (in
multiples of $1,000,000), at the option of the Company, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date and the Yield-
Maintenance Amount, if any, with respect to each such Note.

          4B. NOTICE OF OPTIONAL PREPAYMENT.  The Company shall give the
holder of each Note to be prepaid pursuant to paragraph 4A irrevocable written
notice of such prepayment not less than 30 days, and not more than 60 days,
prior to the prepayment date (which shall be a Business Day), specifying such
prepayment date, specifying the aggregate principal amount of the Notes to be
prepaid on such date, identifying each Note held by such holder, and the
principal amount of each such Note, to be prepaid on such date, providing an
estimate (utilizing a Reinvestment Yield calculated as if the date of such
notice were the Settlement Date) of the Yield-Maintenance Amount, if any, to
become due on such prepayment date and the calculation of such estimate, and
stating that such prepayment is to be made pursuant to paragraph 4A.  Notice of
prepayment having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the prepayment date
and together with the Yield-Maintenance Amount, if any, herein provided, shall
become due and payable on such prepayment date and, on the Business Day next
preceding such prepayment date, the Company shall transmit by facsimile and by
overnight courier to the holder of each Note to be so prepaid the calculation of
the Yield-Maintenance Amount, if any, to be due on such prepayment date.

          4C. APPLICATION OF PREPAYMENTS.  In the case of each partial
prepayment pursuant to paragraph 4A of all outstanding Notes, the principal
amount to be prepaid shall be allocated to all Notes at the time outstanding
(including, for the purpose of this paragraph 4C only, all Notes prepaid or
otherwise retired or purchased or otherwise acquired by any Subsidiaries or
Affiliates of the Company other than by prepayment pursuant to paragraph 4A) in
proportion to the respective outstanding principal amounts thereof.

          4D. RETIREMENT OF NOTES.  The Company shall not, and shall not
permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in
whole or in part prior to their final maturities (other than by prepayment
pursuant to paragraph 4A or upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder unless the Company or such Subsidiary or Affiliate shall have
offered to prepay

                                       5
<PAGE>
 
or otherwise retire or purchase or otherwise acquire, as the case may be, the
same proportion of the aggregate principal amount of Notes held by each other
holder of Notes at the time outstanding upon the same terms and conditions.  Any
Notes so prepaid or otherwise retired or purchased or otherwise acquired by the
Company or any of its Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement, except as provided in
paragraph 4C.

PARAGRAPH 5.    AFFIRMATIVE COVENANTS.

          5.    AFFIRMATIVE COVENANTS.  So long as any Note shall remain unpaid,
the Company covenants that:

          5A. FINANCIAL STATEMENTS.  The Company will deliver to the holder of
each Note in duplicate:

                (i)      as soon as practicable and in any event within 45 days
          after the end of each quarterly period (other than the last quarterly
          period) in each fiscal year, a consolidating and consolidated
          statement of operations and statement of cash flows of the Company and
          its Subsidiaries for such quarterly period and for the period from the
          beginning of the current fiscal year to the end of such quarterly
          period, and a consolidating and consolidated balance sheet of the
          Company and its Subsidiaries as at the end of such quarterly period,
          setting forth in each case in comparative form figures for the
          corresponding period in the preceding fiscal year, all in reasonable
          detail and certified by an authorized financial officer of the
          Company, subject to changes resulting from year-end adjustments;
          PROVIDED, however, that delivery pursuant to clause (iv) below of
          copies of the Quarterly Report on Form 10-Q of the Company for such
          quarterly period filed with the Securities and Exchange Commission
          shall be deemed to satisfy the requirements of this clause (i) with
          respect to consolidated financial statements if such Quarterly Report
          contains such financial statements;

                (ii)     as soon as practicable and in any event within 90 days
          after the end of each fiscal year, a consolidating and consolidated
          statement of operations and statement of cash flows of the Company and
          its Subsidiaries for such year, and a consolidating and consolidated
          balance sheet of the Company and its Subsidiaries as at the end of
          such year, setting forth in each case in comparative form
          corresponding consolidated figures from the preceding annual audit,
          all in reasonable detail and reasonably satisfactory in scope to the
          Required Holder(s) and, as to the consolidated statements, certified
          to the Company by independent public accountants of recognized
          national standing selected by the Company whose certificate shall be
          in scope and substance reasonably satisfactory to the Required
          Holder(s) and, as to the consolidating statements, certified by an
          authorized financial officer of the Company; PROVIDED, however, that
          delivery pursuant to clause (iv) below of copies of the Annual Report
          on Form 10-K of the Company for such fiscal year filed with the

                                       6
<PAGE>
 
          Securities and Exchange Commission shall be deemed to satisfy the
          requirements of this clause (ii) with respect to consolidated
          financial statements if such Annual Report contains such financial
          statements;

                (iii)    as soon as practicable, and in any event within 105
          days after the end of each fiscal year of MIGC, complete consolidated
          and consolidating (if applicable) financial statements of each of
          MIGC, MGTC and any other Subsidiary that owns or operates pipelines
          subject to state or federal rate regulation and has annual revenues in
          excess of $5,000,000, together with all notes thereto, prepared in
          reasonable detail in accordance with regulations promulgated by the
          Federal Energy Regulatory Commission in the case of MIGC and
          regulations promulgated by the Wyoming Public Service Commission in
          the case of MGTC, together with an opinion regarding MIGC, based on
          audits using generally accepted auditing standards, of independent
          certified public accountants of recognized national standing stating
          that such consolidated financial statements have been so prepared;
          such consolidated financial statements shall contain a balance sheet
          as of the end of such fiscal year and statements of operations and
          cash flows, and of changes in stockholders' equity for such fiscal
          year, each setting forth in comparative form the corresponding figures
          for the preceding fiscal year;

                (iv)     promptly upon transmission thereof, copies of all such
          financial statements, proxy statements, press releases, notices and
          reports as it shall send to its public stockholders and copies of all
          registration statements (without exhibits) and all reports which it
          files with the Securities and Exchange Commission (or any governmental
          body or agency succeeding to the functions of the Securities and
          Exchange Commission);

                (v)      prior to April 30 in each year, a projection of the
          consolidated cash flows of the Company, its Subsidiaries and the joint
          ventures in which the Company or its Subsidiaries has an investment
          for the current fiscal year, in the form of EXHIBIT G attached hereto;

                (vi)     as soon as delivered to such Persons, all other
          reports, statements and notices delivered to (a) the agent, or the
          other lenders under the NationsBank Agreement or (b) if the
          NationsBank Agreement is no longer in effect, the lenders under the
          Company's major bank credit facility; and

                (vii)    as soon as practicable after receipt thereof, a copy of
          each other report submitted to the Company by independent accountants
          in connection with any annual, interim or special audit made by them
          of the books of the Company at any time during which the Company is
          not required to file periodic reports with the Securities and Exchange
          Commission pursuant to section 13 or 15(d) of the Exchange Act; and

                                       7
<PAGE>
 
                (viii)   with reasonable promptness, such other information as
          the holder of any Note may reasonably request.

Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to the holder of each Note an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraphs 6A(l), 6A(2),
6A(3), 6A(4), 6B, 6C(l), 6C(2), 6C(3), 6C(4), 6C(5), 6C(6), and 6C(7) and
stating that there exists no Event of Default or Default, or, if any Event of
Default or Default exists, specifying the nature and period of existence thereof
and what action the Company proposes to take with respect thereto.  Together
with each delivery of financial statements required by clause (ii) above, the
Company will deliver to the holder of each Note a certificate of such
accountants stating that, in making the audit necessary to the certification of
such financial statements, they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any Event of Default
or Default, specifying the nature and period of existence thereof.  Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards.

          The Company also covenants that forthwith upon the chief executive
officer, chief financial officer, Vice President-Finance, Executive Vice
President-General Counsel, Treasurer or President of the Company obtaining
knowledge of an Event of Default or Default, it will deliver to the holder of
each Note an Officer's Certificate specifying the nature and period of existence
thereof and what action the Company proposes to take with respect thereto.

          5B. INSPECTION OF PROPERTY.  The Company will permit any Person
designated by the holder of any Note in writing, at such holder's expense, to
visit and inspect any of the properties of the Company and its Subsidiaries
while accompanied by personnel of the Company or a Subsidiary, to examine the
corporate books and financial records of the Company and its Subsidiaries and
make copies thereof or extracts therefrom and to discuss the affairs, finances
and accounts of any of such corporations with the principal officers of the
Company and its independent public accountants, all at such reasonable times and
as often as such holder may reasonably  request, PROVIDED, that each Person so
designated by any holder to visit and inspect any properties shall, by virtue of
such designation, be deemed to have agreed to comply with the Company's on-site
safety procedures that are applicable to such properties.  If at the time of any
such inspection a Default or an Event of Default exists, the Company shall pay
all reasonable out of pocket costs incurred by each holder in connection with
such inspection.

          5C. COVENANT TO SECURE NOTES EQUALLY.  The Company covenants that,
if it or any Subsidiary shall create or assume any Lien upon any of its property
or assets, whether now owned or hereafter acquired, other than Liens permitted
by the provisions of paragraph 6C(l) (unless prior written consent to the
creation or assumption thereof shall have been obtained pursuant to paragraph
11C), it will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all other Debt
thereby secured so long as any

                                       8
<PAGE>
 
such other Debt shall be so secured pursuant to such agreements and instruments
as shall be approved by the Required Holder(s), and the Company will cause to be
delivered to each holder of a Note an opinion of independent counsel to the
effect that such agreements and instruments are enforceable in accordance with
their terms, and in any such case the Notes shall have the benefit, to the full
extent that, and with such priority as, the holders of Notes may be entitled
under applicable law, of an equitable Lien on such property or assets securing
the Notes.  A violation of paragraph 6C(1) will constitute an Event of Default
hereunder, whether or not any such provision is made pursuant to this paragraph
5C.

          5D. AGREEMENT ASSUMING LIABILITY ON NOTES.  The Company covenants
that, if at any time any Person should become liable (as co-obligor, endorser,
guarantor or surety), on any other obligation of the Company or any obligation
of any Subsidiary (other than (i) obligations incurred in the ordinary course of
business evidencing guaranties of gas purchases, transportation fees and
construction contracts, (ii) surety bonds, appeal bonds and construction bonds
(including bonds necessary for right-of-way condemnation and bonds issuable upon
appeals of judgments or in relation to injunctions or temporary restraining
orders) incurred in the ordinary course of business, (iii) letter of credit
reimbursement obligations with respect to letters of credit issued in the
ordinary course of business but not for borrowed money, and (iv) endorsements of
negotiable instruments for collection in the ordinary course of business), the
Company will, at the same time, cause such Person to deliver to each holder of
Notes an agreement as shall be approved by Required Holder(s) pursuant to which
such Person becomes similarly liable on the Notes.

          5E. NOTICE OF MATERIAL EVENTS.  The Company will promptly notify the
holder of each Note of (i) any material adverse change in the Company's
business, property or assets, financial condition or results of operations or
the Company's consolidated business, property or assets, financial condition or
results of operations, (ii) the acceleration of the maturity of any Debt owed by
the Company or any of its Subsidiaries or any default by the Company or any of
its Subsidiaries under any indenture, mortgage, agreement, contract or other
instrument to which any of them is a party or by which any of them or any of
their properties is bound, if such acceleration or default would have a material
adverse effect upon the Company's consolidated business, property or assets,
financial condition or results of operations, (iii) any material adverse claim
(or any claim of $5,000,000 or more) asserted against the Company or any of its
Subsidiaries or with respect to the Company's or any Subsidiary's properties,
(iv) the occurrence of any Termination Event or of any event or condition known
to the Company which might adversely affect the enforceability of this Agreement
or any Note and (v) the filing of any suit or proceeding against the Company or
any of its Subsidiaries in which an adverse decision could have a material
adverse effect upon the Company's or any Subsidiary's business, property or
assets, financial condition, or results of operations. Upon the occurrence of
any of the foregoing the Company will, and will cause each such Subsidiary to,
take all necessary or appropriate steps to remedy promptly any such material
adverse change, Default, Event of Default or default, to protect against any
such adverse claim, to defend any such suit or proceeding, to remedy any such
Termination Event or event affecting enforceability, and to resolve all
controversies on account of any of the foregoing.

                                       9
<PAGE>
 
          5F. MAINTENANCE OF PROPERTIES.  The Company will, and will cause
each of its Subsidiaries to, maintain, preserve, protect and keep all material
property used or useful in the conduct of its business in good condition and in
compliance with all applicable laws, rules and regulations and will from time to
time make all repairs, renewals and replacements needed to enable the business
and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.

          5G. MAINTENANCE OF EXISTENCE AND QUALIFICATIONS.  The Company
will, and will cause each of its Subsidiaries to, maintain and preserve its
corporate existence and its rights and franchises in full force and effect and
will qualify to do business as a foreign corporation in all states or
jurisdictions where required by applicable law, except where the failure so to
qualify will not have any material adverse effect on the business, property or
assets, financial condition or result of operations of the Company and its
Subsidiaries, taken as a whole.

          5H. INSURANCE.  The Company will, and will cause each of its
Subsidiaries and each of its Affiliates that is controlled by the Company or its
Subsidiaries to, maintain insurance with responsible and reputable insurance
companies or associations in such amounts covering such risks as is usually
carried by companies of similar size as the Company engaged in similar
businesses and owning similar properties in the same general areas in which the
Company or such Subsidiary or Affiliate operates.

          5I. COMPLIANCE WITH AGREEMENTS AND LAW.  The Company will, and will
cause each of its Subsidiaries and each of its Affiliates that is controlled by
the Company or its Subsidiaries to, perform all material obligations it is
required to perform under the terms of each indenture, mortgage, deed of trust,
security agreement, lease, franchise, agreement, contract or other instrument or
obligation to which it is a party or by which it or any of its properties is
bound. The Company will, and will cause each of its Subsidiaries and each of its
Affiliates that is controlled by the Company or its Subsidiaries to, conduct its
business and affairs in compliance with all laws, regulations, and orders
applicable thereto, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles except
where noncompliance would not materially adversely affect the business, property
or assets, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.

          5J. COMPLIANCE WITH ENVIRONMENTAL LAWS.  The Company will, and will
cause each of its Subsidiaries and each of its Affiliates that is controlled by
the Company or its Subsidiaries to, comply in a timely fashion with, or operate
pursuant to valid waivers of the provisions of, all applicable federal, state
and local environmental, or pollution-control laws, regulations, orders and
decrees governing, without limitation, the emission of wastewater effluent,
solid and hazardous waste and air pollution, and setting forth general
environmental conditions together with any other applicable requirements for
conducting, on a timely basis, periodic tests and monitoring for contamination
of ground water, surface water, air and land and for biological toxicity of the
aforesaid,

                                      10
<PAGE>
 
and diligently comply with the applicable regulations (except to the extent such
regulations are waived by appropriate governmental authorities) of the
Environmental Protection Agency or other relevant federal, state or local
governmental authority except where noncompliance would not materially adversely
affect the business, property or assets, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole.  The Company
shall not be deemed to have breached or violated the preceding sentence of this
paragraph 5J if the Company, any Subsidiary or any Affiliate of the Company is
challenging in good faith by appropriate proceedings diligently pursued the
application or enforcement of any such governmental requirements for which
adequate reserves have been established in accordance with generally accepted
accounting principles.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
COMPANY AGREES TO INDEMNIFY AND HOLD EACH HOLDER OF NOTES AND THEIR RESPECTIVE
OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM ANY LOSS, LIABILITY, CLAIM OR
EXPENSES THAT SUCH HOLDER OR ANY SUCH OFFICER, AGENT OR EMPLOYEE MAY INCUR OR
SUFFER AS A RESULT OF A BREACH BY THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES,
AS THE CASE MAY BE, OF THIS COVENANT.

          5K. INFORMATION REQUIRED BY RULE 144A.  The Company will, upon the
request of the holder of any Note, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at such times as
the Company is subject to and in compliance with the reporting requirements of
section 13 or 15(d) of the Exchange Act. For the purpose of this paragraph 5K,
the term "qualified institutional buyer" shall have the meaning specified in
Rule 144A under the Securities Act.

          5L. ERISA.  The Company will promptly pay and discharge, and will
cause its Subsidiaries promptly to pay and discharge, all obligations and
liabilities arising under ERISA of a character which if unpaid or unperformed
might result in the imposition of a lien against any of its property and will
promptly notify the holder of each Note of (i) the occurrence of any reportable
event (as defined in ERISA) which might result in the termination by the PBGC of
any Plan covering any officers or employees of the Company or of any Subsidiary,
any benefits of which are, or are required to be, guaranteed by the PBGC, (ii)
receipt of any notice from the PBGC of its intention to seek termination of any
such Plan or appointment of a trustee therefor, and (iii) its intention to
terminate or withdraw from any Plan. The Company will not, and will not permit
any Subsidiary to, terminate any such Plan or withdraw therefrom unless it shall
be in compliance with all of the terms and conditions of this Agreement after
giving effect to any liability to the PBGC resulting from such termination or
withdrawal.

          5M. GUARANTIES.  The Company shall require each Subsidiary that
guarantees any obligations of the Company under the NationsBank Agreement, the
Master Shelf Agreement, the 1993 Note Purchase Agreement or the Receivables
Purchase Agreement to immediately execute and deliver to any holder of Notes a
Guaranty.  The Company will cause each such Subsidiary to deliver

                                      11
<PAGE>
 
to each holder of the Notes, simultaneously with its delivery of such a
Guaranty, written evidence satisfactory to the Required Holder(s) and their
counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such Guaranty and other documents which it is required to execute.

PARAGRAPH 6.    NEGATIVE COVENANTS.

          6.    NEGATIVE COVENANTS.  So long as any Note shall remain unpaid,
the Company covenants that:

          6A. FINANCIAL COVENANTS.  The Company will not permit:

                6A.(1) CONSOLIDATED TANGIBLE NET WORTH.  Consolidated Tangible
Net Worth at any time to be less than $340,000,000 plus an amount equal to 50%
of Consolidated Net Earnings subsequent to June 30, 1995 (but only to the extent
such amount is a positive number) plus an amount equal to 75 % of the net cash
proceeds received by the Company from the sale by the Company of any shares of
its stock after June 30, 1995;

                6A.(2) CURRENT RATIO.  The ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.0 to 1.0 at any
time. For the purposes of determining compliance with this paragraph 6A(2), (x)
"Consolidated Current Liabilities" will be calculated without including any
payments of principal of any Funded Debt of the Company which are required to be
repaid within one year from the time of calculation and (y) "Consolidated
Current Assets" shall include the amount of funds that are available to be
borrowed under the Revolving Loan Agreement, where "available" means, as of the
date of determination, the banks parties to the Revolving Loan Agreement are
committed to advance such funds, no default exists under the Revolving Loan
Agreement and all conditions to such banks advancing such funds would be
satisfied. The Purchasers acknowledge that the Company currently calculates the
current ratio only as of the end of each calendar month;

                6A.(3) DEBT MAINTENANCE.  Adjusted Consolidated Debt at any
time to exceed (i) from the Date of Closing through October 31, 1996, 60% of
Consolidated Net Tangible Assets, (ii) from November 1, 1996 through October 31,
1997, 57.5% of Consolidated Net Tangible Assets, and (iii) at any time after
October 31, 1997, 55% of Consolidated Net Tangible Assets. In any event, for
purposes of determining compliance with this paragraph 6A(3), Adjusted
Consolidated Debt shall include without limitation all indebtedness included in
determining compliance with the similar covenant in the NationsBank Agreement;
and

                6A.(4) FIXED CHARGE COVERAGE RATIO.  For any fiscal
quarter, the ratio of (i) the sum of (a) the Consolidated Net Earnings of the
Company for the four immediately preceding fiscal quarters of the Company PLUS
(b) the Company's consolidated interest expense, provision for income taxes,
depreciation and amortization for the four immediately preceding fiscal quarters
of the Company that were taken into account in determining such consolidated
earnings PLUS (c) for each

                                      12
<PAGE>
 
calculation that includes the Company's fiscal quarter ending June 30, 1995,
that certain $2,000,000 restructuring charge taken by the Company in its fiscal
quarter ending June 30, 1995 as a result of the Company's general and
administrative reductions, TO (ii) the Company's accrued consolidated interest
expense for the four immediately preceding fiscal quarters, to be less than (x)
3.00 to 1.00 for the period commencing on the Date of Closing and ending on
October 31, 1996, (y) 3.25 to 1.00 for the period commencing November 1, 1996
and ending October 31,  1997 and (z) 3.75 to 1.00 at any time after October 31,
1997.

          6B. DIVIDEND LIMITATION.  The Company will not make any Restricted
Payment except out of Consolidated Net Earnings Available for Restricted
Payments and unless no Default or Event of Default exists before such Restricted
Payment is made and no Default or Event of Default would exist immediately after
such Restricted Payment is made.

          6C. LIEN, DEBT, AND OTHER RESTRICTIONS.  The Company will not and
will not permit any Subsidiary to:

                6C.(1) LIENS.  Create, assume or suffer to exist any
Lien upon any of its properties or assets, whether now owned or hereafter
acquired (whether or not provision is made for the equal and ratable securing of
the Notes in accordance with the provisions of Paragraph 5C), EXCEPT

                (i)      Liens for taxes not yet due or which are being actively
          contested in good faith by appropriate proceedings,

                (ii)     other statutory Liens incidental to the conduct of its
          business or the ownership of its property and assets (including
          landlord liens) that are not incurred in connection with the borrowing
          of money or the obtaining of advances or credit or guaranteeing the
          obligations of a Person, and which do not in the aggregate materially
          detract from the value of its property or assets or materially impair
          the use thereof in the operation of its business,

                (iii)    Liens on property or assets of a Subsidiary to secure
          obligations of such Subsidiary to the Company or a Wholly Owned
          Subsidiary,

                (iv)     existing Liens on property of the Company or any
          Subsidiary described in SCHEDULE 6C(2) attached hereto and securing
          Debt permitted by subclause (a) of clause (ii) of paragraph 6C(2),

                (v)      in the case of transactions that occur after the date
          hereof, Liens existing on any real property of any corporation at the
          time it becomes a Subsidiary, or existing prior to the time of
          acquisition upon any property acquired by the Company or any
          Subsidiary through purchase, merger or consolidation or otherwise,
          whether or not assumed by the Company or such Subsidiary, or placed on
          property

                                      13
<PAGE>
 
          at the time of acquisition by the Company or any Subsidiary to secure
          all or a portion of (or to secure Debt incurred to pay all or a
          portion of) the purchase price thereof, PROVIDED that (a) such
          property is not or shall not thereby become encumbered in any amount
          in excess of the lesser of the cost thereof or Fair Market Value
          thereof and (b) any such Lien shall not encumber any other property of
          the Company or such Subsidiary,

                (vi)     Liens on deposit and other bank accounts of the Company
          created by the right of a lender party to the NationsBank Agreement to
          offset obligations of the Company owing thereunder against such
          accounts, if, and only if, there is no agreement between any such
          lender and the Company which requires the Company to maintain any
          deposit or other funds in any account with such lender other than as
          provided in clause (vii) below,

                (vii)    Liens on deposits of the Company under the NationsBank
          Agreement to secure the face amount of outstanding letters of credit
          issued pursuant to the NationsBank Agreement,

                (viii)   Liens on the Pledged Accounts Receivable securing sales
          or transfers of accounts receivable pursuant to the Permitted
          Securitization Program, and

                (ix)     other Liens on the property of the Company,

PROVIDED that the aggregate amount of Debt secured by Liens permitted by clauses
(iv), (v), (viii) (to the extent of the Over-Collateralization Amount) and (ix),
together with the amount of undrawn letters of credit subject to the obligation
to provide deposits referred to in clause (vii), whether or not such deposits
have been provided, does not exceed at any time an amount in excess of 5% of
Consolidated Tangible Net Worth.

                6C.(2) DEBT.  Create, incur, assume or suffer to exist any
Debt, EXCEPT

                (i)      Debt of the Company represented by the Notes,

                (ii)     (a) Debt of the Company or any Subsidiary to third
     parties described in SCHEDULE 6C(2) attached hereto which shall not be
     renewed, extended or permitted to remain outstanding after the stated
     maturities thereof, (b) Debt of the Company or any Subsidiary to third
     parties secured by Liens permitted by the provisions of clauses (v), (viii)
     (to the extent of the Over-Collateralization Amount) and (ix) of paragraph
     6C(l) and (c) the amount of undrawn letters of credit permitted by clause
     (vii) of paragraph 6C(1), PROVIDED that the aggregate amount of the Debt
     described in this clause (ii) of paragraph 6C(2) does not exceed at any
     time an amount equal to 5% of Consolidated Tangible Net Worth.

                                      14
<PAGE>
 
                (iii)    Debt of any Subsidiary to the Company or any other
          Wholly Owned Subsidiary, and Debt of the Company to any Subsidiary, in
          each case arising from an extension of credit, advance or loan
          permitted by clause (ii) of paragraph 6C(7),

                (iv)     other Debt of the Company not prohibited by 6A(3), and

                (v)      Debt of the Guarantors represented by the Existing
          Guaranties and the Guaranties.

          6C.(3)       LIMITATION ON INVESTMENTS AND NEW BUSINESSES.  (i) Make
any expenditure or commitment or incur any obligation or enter into or engage in
any transaction except in the ordinary course of business (which shall be deemed
to include expenditures, commitments, obligations and transactions permitted by
clause (iii) or clause (iv) of this paragraph 6C(3)); (ii) engage directly or
indirectly in any business or conduct any operations except in connection with
or incidental to its present businesses and operations (which shall be deemed to
include electric power generation and marketing and expenditures, commitments,
obligations and transactions permitted by clause (iii) or clause (iv) of this
paragraph 6C(3)); (iii) make any acquisitions of, capital contributions to, or
other investments in, any Persons which exceed in the aggregate $500,000 other
than (a) capital contributions to and investments in Wholly Owned Subsidiaries,
(b) acquisitions of equity in corporations or partnerships having as their
primary business gas processing, transmission and gathering, oil and gas
production and storage or gas marketing and related activities or electric power
generation and marketing which do not exceed in the aggregate 10% of
Consolidated Net Tangible Assets and (c) deposits with, investments in,
obligations of and time deposits in any domestic bank or domestic branches of
foreign banks which, at the time such deposit or investment is made, are rated A
or better by Standard & Poor's or Moody's or B or better by Thompson Bank Watch
and investments maturing within one year from the date of acquisition in direct
obligations of or obligations supported by, the full faith and credit of, the
United States of America; or (iv) make any acquisition or investment in any
properties other than gas processing, transmission and gathering facilities,
domestic oil and gas properties, gas storage facilities, gas inventory and
electric power generation facilities which exceeds $5,000,000; PROVIDED,
however, that the loans referred to in paragraph 6C(7) may be outstanding.

          6C.(4)       SALE OF STOCK AND DEBT OF SUBSIDIARIES.  Sell or
otherwise dispose of, or part with control of, any shares of stock or Debt of
any Subsidiary, except to the Company or another Wholly Owned Subsidiary, and
except that all shares of stock and Debt of any Subsidiary at the time owned by
or owed to the Company and all Subsidiaries may be sold as an entirety for a
cash consideration which represents the fair value (as determined in good faith
by the Board of Directors of the Company) at the time of sale of the shares of
stock and Debt so sold, PROVIDED that (i) the assets of such Subsidiary together
with (ii) the assets of all other Subsidiaries the stock or Debt of which was
sold or otherwise disposed of in the preceding 12-month period and (iii) the
assets of the Company and its Subsidiaries sold, leased, transferred or
otherwise disposed of pursuant to clause (v) of paragraph 6C(5) in the preceding
12-month period (in each transaction measured by the greater of book value or
Fair Market Value), do not represent more than 15% of Consolidated Net Tangible

                                      15
<PAGE>
 
Assets as reflected on the most recent annual or quarterly consolidated balance
sheet, and PROVIDED FURTHER that, at the time of such sale, such Subsidiary
shall not own, directly or indirectly, any shares of stock or Debt of, or any
other continuing investment in, any other Subsidiary (unless all of the shares
of stock and Debt of such other Subsidiary owned, directly or indirectly, by the
Company and all Subsidiaries are simultaneously being sold as permitted by this
paragraph 6C(4)), or any shares of stock or Debt of the Company.

          6C.(5)       MERGER AND SALE OF ASSETS.  Merge or consolidate with
or into any other Person or sell, convey, lease, transfer or otherwise dispose
of all or any part of its assets, EXCEPT that:

                (i)      (a) any Subsidiary may merge with the Company
          (PROVIDED, that the Company shall be the continuing or surviving
          corporation) and (b) any Subsidiary may merge with a Wholly Owned
          Subsidiary (PROVIDED that the Wholly Owned Subsidiary shall be the
          continuing or surviving corporation),

                (ii)     any Subsidiary may sell, lease, transfer or otherwise
          dispose of any of its assets to the Company or to a Wholly Owned
          Subsidiary,

                (iii)    the Company may merge with any other corporation,
          PROVIDED that (a) the Company shall be the continuing or surviving
          corporation, and (b) immediately after giving effect to such merger no
          Event of Default or Default shall exist,

                (iv)     any non Wholly Owned Subsidiary may merge or
          consolidate with any other corporation, PROVIDED, that immediately
          after giving effect to such merger or consolidation (a) the continuing
          or surviving corporation of such merger or consolidation shall
          constitute a Subsidiary, and (b) no Event of Default or Default shall
          exist,

                (v)      the Company or any Subsidiary may sell, lease, transfer
          or otherwise dispose of any of its assets to any Person, PROVIDED,
          that (a) such assets together with (b) all other assets of the Company
          and its Subsidiaries sold, leased, transferred or otherwise disposed
          of during the preceding 12 month period, and (c) the assets of all
          Subsidiaries the stock or Debt of which has been sold or otherwise
          disposed of during the preceding 12-month period pursuant to the first
          proviso of paragraph 6C(4) (in each transaction measured by the
          greater of book value or Fair Market Value), do not represent more
          that 15% of Consolidated Net Tangible Assets as reflected on the most
          recent annual or quarterly consolidated balance sheet,

                                      16
<PAGE>
 
                (vi)     the Company may merge into or consolidate with any
          solvent corporation if (x) the surviving corporation is a corporation
          organized under the laws of any State of the United States of America,
          (y) such corporation shall expressly assume by an agreement
          satisfactory in substance and form to the Required Holder(s) (which
          agreement may require the delivery in connection with such assumption
          of such opinions of counsel as the Required Holder(s) may reasonably
          require), all of the obligations of the Company under this Agreement
          and the Notes, including all covenants herein and therein contained,
          and such successor or acquiring corporation shall succeed to and be
          substituted for the Company with the same effect as if it had been
          named herein as a party hereto (it being agreed that such assumption
          shall, upon the request of the holder of any outstanding Note and at
          the expense of such successor corporation, be evidenced by the
          exchange of such Note for another Note executed by such successor
          corporation, with such changes in phraseology and form as may be
          appropriate but in substance of like terms as the Note surrendered for
          such exchange and of like unpaid principal amount, and that each Note
          executed pursuant to paragraph 11E after such assumption shall be
          executed by and in the name of such successor corporation) and (z)
          after giving effect to such merger or consolidation no Event of
          Default or Default shall exist,

                (vii)    the Company and any Subsidiary may sell or otherwise
          dispose of property (including inventory) in the ordinary course of
          business, and

                (viii)   the Company may sell Pledged Accounts Receivable
          pursuant to the Permitted Securitization Program in an aggregate
          amount not to exceed $75,000,000.

                6C.(6) LEASE RENTALS.  Except for oil, gas and mineral leases
or permits or similar agreements entered into in the ordinary course of
business, and except for leases for transportation equipment, including 
over-the-road trucks and tankers, data processing and other office equipment
used in the ordinary course of business, enter into or permit to remain in
effect, any agreements to rent or lease (as lessee) any real or personal
property for terms (including options to renew or extend any term, whether or
not exercised) of more than three years if after giving effect thereto the
aggregate amount of all sums payable in any fiscal year by the Company and all
Subsidiaries under all such leases would exceed $4,000,000.

                6C.(7) LIMITATION ON CREDIT EXTENSIONS.  Extend credit, make
advances or make loans other than (i) normal and prudent extensions of credit in
the ordinary course of business, which extensions shall not be for longer
periods than those extended by similar businesses operated in a normal and
prudent manner, (ii) loans from Wholly Owned Subsidiaries to the Company, and
loans from Wholly Owned Subsidiaries or the Company to any Subsidiary, in each
case made in the ordinary course of business and, in the case of loans from
Wholly Owned Subsidiaries that have not executed a Guaranty which are made to
the Company or to a Subsidiary that has executed a Guaranty, subordinated to the
principal of, interest on and Yield-Maintenance Amount, if any, with respect to
the Notes, and (iii) loans made by the Company to its employees pursuant to

                                      17
<PAGE>
 
the Stock Option Agreements; PROVIDED that the aggregate amount of all such
loans permitted by this clause (iii) outstanding at any time shall not exceed
$10,000,000.

                6C.(8) CONTRACTS; TAKE-OR-PAY AGREEMENTS.  Enter into any
"take-or-pay" contract or other contract which requires it to pay for oil, gas,
other hydrocarbons or other minerals prior to taking delivery thereof, PROVIDED
that the Company may enter into such contracts so long as the aggregate maximum
direct and contingent liability of the Company under such contracts does not
exceed $500,000 at any one time, and PROVIDED FURTHER that the Company may enter
into contracts with gas producers requiring the Company to make payments if the
Company has not connected the producer's well to the Company's gathering system
within a specified period of time, so long as the maximum direct or contingent
liability of the Company under such contract does not exceed $500,000. The
Company and its Subsidiaries may enter into: (a) Short Hedge Futures to sell
natural gas or liquid hydrocarbons or to offset a Long Hedge Future; and (b)
Long Hedge Futures to purchase natural gas or liquid hydrocarbons or to offset a
Short Hedge Future; PROVIDED, however, that at the time of entering into a Short
Hedge Future, the Company shall own and have available to it sufficient amounts
of natural gas or liquid hydrocarbons, as the case may be, or shall own pursuant
to firm contracts to deliver natural gas or liquid hydrocarbons, as the case may
be, pursuant to such Short Hedge Future; PROVIDED, further, that at the time of
entering into a Long Hedge Future, the Company shall have sufficient agreements
from Counterparties to purchase natural gas or liquid hydrocarbons, as the case
may be, from the Company so that the Company can resell natural gas or liquid
hydrocarbons, as the case may be, delivered pursuant to such Long Hedge Future.

                6C.(9) SALE OR DISCOUNT OF RECEIVABLES.  Sell with recourse,
or discount (other than to the extent of finance and interest charges included
therein) or otherwise sell for less than face value thereof, any of its notes or
accounts receivable EXCEPT (i) notes or accounts receivable the collection of
which is doubtful in accordance with generally accepted accounting principles
and (ii) pursuant to the Permitted Securitization Program; PROVIDED, however,
that the Company and its Subsidiaries may not have more than one Permitted
Securitization Program outstanding at any time.

                6C.(10)     GUARANTIES.  Enter into or be party to:

                (i)      any contract for the purchase of materials, supplies or
          other property or services if such contract (or any related document)
          requires that payment for such materials, supplies or other property
          or services shall be made regardless of whether or not delivery of
          such materials, supplies or other property or services is ever made or
          tendered, or

               (ii)      any contract to rent or lease (as lessee) any real or
          personal property if such contract (or any related document) provides
          that the obligation to make payments thereunder is absolute and
          unconditional under conditions not customarily found in commercial
          leases then in general use or requires that the lessee purchase or
          otherwise acquire securities or obligations of the lessor, or

                                      18
<PAGE>
 
                (iii)    any contract for the sale or use of materials, supplies
          or other property, or the rendering of services, if such contract (or
          any related document) requires that payment for such materials,
          supplies or other property, or the use thereof, or payment for such
          services, shall be subordinated to any indebtedness (of the purchaser
          or user of such materials, supplies or other property or the Person
          entitled to the benefit of such services) owed or to be owed to any
          Person, or

                (iv)     any other contract that is a guaranty, an endorsement
          or another form of contingent liability in respect of the obligations,
          stock or dividends of any Person or that, in economic effect, is
          substantially equivalent to a guaranty (other than the guaranties
          permitted by clause (v) of paragraph 6C(2)); provided, that the
                                                       --------          
          foregoing provisions shall not apply to endorsements of negotiable
          instruments for collection in the ordinary course of business;

PROVIDED, that, notwithstanding the foregoing, any contract of the type
specified in any of the provisions of this paragraph 6C(10) shall be permitted
if the obligations of the Company thereunder constitute Debt of the type
described in clause (iv) of the definition thereof and such Debt were permitted
by the Debt limitations contained in paragraph 6A(3).

                6C.(11)     TRANSACTIONS WITH AFFILIATES.  Directly or
indirectly, purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or otherwise deal with, in the ordinary course of
business or otherwise (i) any Affiliate, (ii) any Person owning, beneficially or
of record, directly or indirectly, either individually or together with all
other Persons to whom such Person is related by blood, adoption or marriage,
stock of the Company (of any class having ordinary voting power for the election
of directors) aggregating 5% or more of such voting power or (iii) any Person
related by blood, adoption or marriage to any Person described or coming within
the provisions of clause (i) or (ii) of this paragraph 6C(11), PROVIDED that the
Company may sell to, or purchase (within the limitations of paragraph 6B) from,
any such Person shares of the Company's stock and except for transactions that
are otherwise permitted by this Agreement and that are in the ordinary course of
the Company's or a Subsidiary's business, and are also upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than it would obtain
in a comparable arm's-length transaction with a Person not an Affiliate.

                6C.(12)     PANHANDLE JOINT VENTURE DEBT.  Permit the
Panhandle Joint Venture to create, incur, assume or suffer to exist any Debt.

          6D. ISSUANCE OF STOCK BY SUBSIDIARIES.  The Company covenants
that it will not permit any Subsidiary to issue, sell or dispose of any shares
of its stock of any class except to the Company or a Wholly Owned Subsidiary,
and except to the extent that holders of minority interests may be entitled to
purchase stock by reason of preemptive rights.

                                      19
<PAGE>
 
          6E.  OTHER AGREEMENTS.  Without the prior written consent of the
Required Holder(s), the Company will not amend, modify or waive (i) any
provision of the Term Loan Agreement which would shorten the maturity or average
life of any loan thereunder, (ii) any provision of the Revolving Loan Agreement
which would shorten any commitment thereunder, or (iii) any provision of the
Master Shelf Agreement or the 1993 Note Purchase Agreement which would shorten
the maturity or average life of any note issued thereunder.

PARAGRAPH 7.    EVENTS OF DEFAULT.

          7A. ACCELERATION.  If any of the following events shall occur for
any reason whatsoever and be continuing (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):

                (i)      the Company defaults in the payment of any principal of
          or Yield Maintenance Amount payable with respect to any Note when the
          same shall become due, either by the terms thereof or otherwise as
          herein provided; or

                (ii)     the Company defaults in the payment of any interest on
          any Note for more than 10 Business Days after the date due; or

                (iii)    the Company or any Subsidiary defaults (whether as
          primary obligor or as guarantor or other surety) in any payment of
          principal of or interest on any other Debt beyond any period of grace
          provided with respect thereto, or the Company or any Subsidiary fails
          to perform or observe any other agreement, term or condition contained
          in any agreement under which any such obligation is created (or if any
          other event thereunder or under any such agreement shall occur and be
          continuing) and the effect of such failure or other event is to cause,
          or to permit the holder or holders of such obligation (or a trustee on
          behalf of such holder or holders) to cause, such obligation to become
          due (or to be repurchased by the Company or any Subsidiary) prior to
          any stated maturity, PROVIDED that the aggregate amount of all
          obligations as to which such a payment default shall occur and be
          continuing or such a failure or other event causing or permitting
          acceleration (or resale to the Company or any Subsidiary) shall occur
          and be continuing exceeds $10,000,000; or

                (iv)     any representation or warranty made by the Company
          herein, by any Guarantor in a Guaranty or by the Company, any
          Guarantor or any of their respective officers in any writing furnished
          in connection with or pursuant to this Agreement shall be false in any
          material respect on the date as of which made; or

               (v)  the Company fails to perform or observe any term, covenant
          or agreement contained in paragraph 6; or

                                      20
<PAGE>
 
                (vi)     the Company fails to perform or observe any other
          agreement, covenant, term or condition contained herein and such
          failure shall not be remedied within 30 days after the Chief Executive
          Officer, President, Chief Financial Officer, Vice President-Finance,
          Treasurer or the Executive Vice President-General Counsel of the
          Company obtains actual knowledge thereof; or

               (vii)     the Company or any Subsidiary makes an assignment for
          the benefit of creditors or is generally not paying its debts as such
          debts become due; or

               (viii)    any decree or order for relief in respect of the
          Company or any Subsidiary is entered under any bankruptcy,
          reorganization, compromise, arrangement, insolvency, readjustment of
          debt, dissolution or liquidation or similar law, whether now or
          hereafter in effect (herein called the "BANKRUPTCY LAW"), of any
          jurisdiction; or

               (ix)      the Company or any Subsidiary petitions or applies to
          any tribunal for, or consents to, the appointment of, or taking
          possession by, a trustee, receiver, custodian, liquidator or similar
          official of the Company or any Subsidiary, or of any substantial part
          of the assets of the Company or any Subsidiary, or commences a
          voluntary case under the Bankruptcy Law of the United States of
          America or any proceedings (other than proceedings for the voluntary
          liquidation and dissolution of a Subsidiary) relating to the Company
          or any Subsidiary under the Bankruptcy Law of any other jurisdiction;
          or

                (x)      any such petition or application is filed, or any such
          proceedings are commenced, against the Company or any Subsidiary and
          the Company or such Subsidiary by any act indicates its approval
          thereof, consent thereto or acquiescence therein, or an order,
          judgment or decree is entered appointing any such trustee, receiver,
          custodian, liquidator or similar official, or approving the petition
          in any such proceedings, and such order, judgment or decree remains
          unstayed and in effect for more than 30 days; or

                (xi)     any order, judgment or decree is entered in any
          proceedings against the Company decreeing the dissolution of the
          Company and such order, judgment or decree remains unstayed and in
          effect for more than 60 days; or

                (xii)    any order, judgment or decree is entered in any
          proceedings against the Company or any Subsidiary decreeing a split-up
          of the Company or such Subsidiary which requires the divestiture of
          assets representing a substantial part, or the divestiture of the
          stock of a Subsidiary whose assets represent a substantial part, of
          the consolidated assets of the Company and its Subsidiaries
          (determined in accordance with generally accepted accounting
          principles) or which requires the divestiture of assets, or stock of a
          Subsidiary, which shall have contributed a

                                      21
<PAGE>
 
          substantial part of the Consolidated Net Earnings of the Company and
          its Subsidiaries (determined in accordance with generally accepted
          accounting principles) for any of the three fiscal years then most
          recently ended, and such order, judgment or decree remains unstayed
          and in effect for more than 60 days; or

                (xiii)   any judgment or order, or series of judgments or
          orders, for the payment of money in an amount in excess of $5,000,000
          is rendered against the Company or any Subsidiary and either (i)
          enforcement proceedings have been commenced by any creditor upon such
          judgment or order or (ii) within 30 days after entry thereof, such
          judgment is not discharged or execution thereof stayed pending appeal,
          or within 30 days after the expiration of any such stay, such judgment
          is not discharged; or

                (xiv)    (a) the Company or any other Person who is a member of
          the Company's "control group" (as such term is defined under ERISA)
          fails to make all or any portion of a required installment payment
          under 29 U.S.C. (S)1082(e) with respect to any Plan, (b) the aggregate
          unpaid balance of such installment together with the unpaid balance of
          all prior installments and other payments due under 29 U.S.C. (S)1082
          (including any accrued interest on such amounts) exceeds $1,000,000,
          and (c) such amounts remain unpaid for more than 30 days after the due
          date of the installment referred to in clause (a); or

                (xv)     the Company or any of its Affiliates as employer under
          a Multiemployer Plan shall have made a complete or partial withdrawal
          from such Multiemployer Plan and the plan sponsor of such
          Multiemployer Plan shall have notified such withdrawing employer that
          such employer has incurred a withdrawal liability in an annual amount
          exceeding $1,000,000; or

                (xvi)    the Company or any Affiliate breaches or defaults in
          the performance of any agreement or instrument creating or evidencing
          any Permitted Securitization Program or breaches or defaults in the
          performance of any prefunding facility associated therewith, and any
          such breach or default continues beyond any applicable period of grace
          provided therefor, or any early or accelerated amortization of any
          obligations or rights commences to occur under any such facility
          without a replacement facility (on terms consistent with those set
          forth in paragraph 6C(9)) being effective to provide for replacement
          funding therefor;

then (a) if such event is an Event of Default specified in clause (viii), (ix)
     ---                                                                      
or (x) of this paragraph 7A with respect to the Company, all of the Notes at the
time outstanding shall automatically become immediately due and payable together
with interest accrued thereon and, to the extent permitted by applicable law,
the Yield-Maintenance Amount, if any, with respect to each such Note, without
presentment, demand, protest or notice of any kind (including, without
limitation, notice of intent to accelerate and notice of acceleration of
maturity), all of which are hereby waived by the Company,

                                      22
<PAGE>
 
(b) if such event is an Event of Default specified in clause (i) or (ii) of this
---                                                                             
paragraph 7A, the holder of any Note (other than the Company or any of its
Subsidiaries or Affiliates) as to which such an Event of Default shall have
occurred may at its option during the continuance of such Event of Default, by
notice in writing to the Company, declare such Note to be, and such Note shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with, to the extent permitted by applicable law,
the Yield-Maintenance Amount, if any, with respect to each such Note, without
presentment, demand, protest or notice of any kind (including, without
limitation, notice of intent to accelerate), all of which are hereby waived by
the Company, (c) if such event is any other Event of Default, the Required
             ---                                                          
Holder(s) may at its or their option during the continuance of such Event of
Default, by notice in writing to the Company, declare all of the Notes to be,
and all of the Notes shall thereupon be and become, immediately due and payable
together with interest accrued thereon and together with, to the extent
permitted by applicable law, the Yield-Maintenance Amount, if any, with respect
to each Note, without presentment, demand, protest or notice of any kind
(including, without limitation, notice of intent to accelerate), all of which
are hereby waived by the Company, and (d) if any Note shall have been declared
                                      ---                                     
to be due and payable pursuant to clause (b) above, any holder of any other Note
may at any time thereafter, so long as the Event of Default described in clause
(b) above shall at such time be continuing, by notice in writing to the Company,
declare all of the Notes held by such holder to be, and all of the Notes held by
such holder shall thereupon be and become, immediately due and payable together
with interest accrued thereon and together with, to the extent permitted by
applicable law, the Yield-Maintenance Amount, if any, with respect to each such
Note, without presentment, demand, protest or notice of any kind (including,
without limitation, notice of intent to accelerate), all of which are hereby
waived by the Company.  The Company acknowledges and the parties hereto agree,
that the holder of each Note has the right to maintain its investment in the
Notes free from repayment by the Company (except as herein specifically provided
for) and the provisions for payment of the Yield-Maintenance Amount by the
Company in the event that the Notes are prepaid or are accelerated as a result
of an Event of Default, are intended to provide compensation for the deprivation
of such right under such circumstances.

          7B. RESCISSION OF ACCELERATION.  At any time after any or all of the
Notes are declared immediately due and payable and have not been paid in full,
the Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company has paid all
overdue interest on the Notes, the principal of and Yield-Maintenance Amount, if
any, payable with respect to any Notes which have become due otherwise than by
reason of such declaration, and interest on such overdue interest and overdue
principal and Yield-Maintenance Amount at the rate specified in the Notes, (ii)
all Events of Default and Defaults, other than non-payment of amounts which have
become due solely by reason of such declaration have been cured or waived
pursuant to paragraph 11C, and (iii) no judgment or decree has been entered for
the payment of any monies due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.

                                      23
<PAGE>
 
          7C.  NOTICE OF ACCELERATION OR RESCISSION.  Whenever any Note shall
be declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.

          7D.  OTHER REMEDIES.  If any Event of Default or Default shall occur
and be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.

PARAGRAPH 8.    REPRESENTATIONS, COVENANTS AND WARRANTIES.

          8.    REPRESENTATIONS, COVENANTS AND WARRANTIES.  The Company
represents, covenants and warrants as of the date hereof as follows:

          8A. ORGANIZATION.  The Company is a corporation duly organized and
existing in good standing under the laws of the State of Delaware, each
Subsidiary is duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated, and the Company has and each
Subsidiary has the corporate power to own its respective property and to carry
on its respective business as now being conducted. The execution, delivery and
performance by the Company of this Agreement and the Notes are within the
Company's corporate powers and have been duly authorized by all necessary
corporate action, and the execution, delivery and performance by each Guarantor
of its respective Guaranty are within such Guarantor's corporate powers and have
been duly authorized by all necessary corporate action. SCHEDULE 8A attached
hereto sets forth the name and jurisdiction of incorporation of each Subsidiary
and the percentage of the Company's ownership interest in each such Subsidiary
and identifies each Subsidiary that is a Guarantor, all as of the Date of
Closing.

          8B. FINANCIAL STATEMENTS.  The Company has furnished each Purchaser
with the following financial statements, identified by a principal financial
officer of the Company: (i) a consolidated balance sheet of the Company and its
Subsidiaries as at December 31 in each of the four fiscal years of the Company
most recently completed and consolidated statements of operations and cash flows
of the Company and its Subsidiaries for each of the five fiscal years of the
Company most recently completed, all certified by Price Waterhouse L.L.P.; and
(ii) consolidated balance sheets of the Company and its Subsidiaries as at the
end of the quarterly period ended September 30, 1995 and the comparable
quarterly period in the preceding fiscal year and consolidated statements of
operations and cash flows for the periods from the beginning of the fiscal years
in which such quarterly periods are included to the end of such quarterly
periods, prepared by the Company. Such financial

                                      24
<PAGE>
 
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
(except as set forth in the notes thereto if consistent with generally accepted
accounting principles and generally accepted auditing standards) throughout the
periods involved and show all liabilities, direct and contingent, of the Company
and its Subsidiaries required to be shown in accordance with such principles.
The balance sheets fairly present the consolidated financial condition of the
Company and its Subsidiaries as at the dates thereof, and the statements of
operations and cash flows fairly present the results of the consolidated
operations of the Company and its Subsidiaries for the periods indicated.  There
has been no material adverse change in the business, property or assets,
financial condition or results of operations (financial or otherwise) of the
Company and its Subsidiaries taken as a whole since December 31, 1994.

          8C. ACTIONS PENDING.  There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company, any of its Subsidiaries, any of its Affiliates that is controlled by
the Company or any joint venture in which the Company or any of its Subsidiaries
has an investment, or any properties or rights of the Company, any of its
Subsidiaries, any of its Affiliates that is controlled by the Company or any
joint venture in which the Company or any of its Subsidiaries has an investment,
by or before any court, arbitrator or administrative or governmental body which
is reasonably likely to result in any material adverse change in the business,
property or assets, financial condition or results of operations of the Company
and its Subsidiaries taken as a whole. There is no action, suit, investigation
or proceeding pending or threatened against the Company or any of its
Subsidiaries, any of its Affiliates that is controlled by the Company or any
joint venture in which the Company or any of its Subsidiaries has an investment
which purports to affect the validity or enforceability of this Agreement, any
Note or any Guaranty.

          8D. OUTSTANDING DEBT.  Neither the Company nor any of its
Subsidiaries has outstanding any Debt except as permitted by paragraph 6C(2).
There exists no default (and no waiver of any default that is conditional or is
limited in duration) under the provisions of any instrument evidencing such
Debt, or any Debt of any joint venture in which the Company or any Subsidiary
has an investment, or of any agreement relating thereto.

          8E. ENVIRONMENTAL COMPLIANCE.  The Company, each of its
Subsidiaries, each of its Affiliates that is controlled by the Company and each
joint venture in which the Company or any of its Subsidiaries has an investment
and all of their respective properties and facilities have complied at all times
and in all respects with all federal, state, local and regional statutes, laws,
ordinances and judicial and administrative orders, judgments, rulings and
regulations relating to protection of the environment except, in any such case,
where failure to comply would not result in a material adverse effect on the
business, property or assets, financial condition or results of operations
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.

                                      25
<PAGE>
 
          8F. TAXES.  The Company has and each of its Subsidiaries has filed
all Federal, State and other income tax returns which, to the best knowledge of
the officers of the Company and its Subsidiaries, are required to be filed, and
each has paid all taxes as shown on such returns and on all assessments received
by it to the extent that such taxes have become due, except such taxes as are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with generally accepted accounting
principles.  The Federal income tax liabilities of the Company and its
Subsidiaries have been determined by the Internal Revenue Service (or the
applicable statute of limitations has run) and such liabilities have been paid
for all fiscal years up to and including the fiscal year ended December 31,
1989.

          8G. CONFLICTING AGREEMENTS AND OTHER MATTERS.  Neither the
Company nor any of its Subsidiaries is a party to any contract or agreement or
subject to any charter or other corporate restriction which materially and
adversely affects its business, property or assets, or financial condition.
Neither the execution nor delivery of this Agreement, the Notes or the
Guaranties, nor the offering, issuance and sale of the Notes, nor fulfillment of
nor compliance with the terms and provisions hereof and of the Notes will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries pursuant to, the charter or by-laws of the Company or any of
its Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the Company or any of its Subsidiaries is subject.
Neither the Company nor any of its Subsidiaries is a party to, or otherwise
subject to any provision contained in, any instrument evidencing indebtedness of
the Company or such Subsidiary, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of the Company of the
type to be evidenced by the Notes or the Guaranties except as set forth in the
agreements listed in EXHIBIT C attached hereto.

          8H. OFFERING OF NOTES.  Neither the Company nor any agent acting on
its behalf has, directly or indirectly, offered the Notes or any similar
security of the Company for sale to, or solicited any offers to buy the Notes or
any similar security of the Company from, or otherwise approached or negotiated
with respect thereto with, any Person other than the Purchasers and not more
than 80 other institutional investors, and neither the Company nor any agent
acting on its behalf has taken or will take any action which would subject the
issuance or sale of the Notes to the provisions of Section 5 of the Securities
Act or to the registration, prospectus delivery or similar provisions of any
securities or Blue Sky law of any applicable jurisdiction.

          8I. REGULATION G, ETC.  The proceeds of the sale of the Notes will
be used to refinance existing indebtedness under the Revolving Loan Agreement.
None of the proceeds of the sale of any Notes will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock" as defined in Regulation G (12 C.F.R.
Part 207) of the Board of Governors of the Federal Reserve System (herein called
"margin stock") or for the purpose of maintaining, reducing or retiring any
indebtedness which was originally incurred to

                                      26
<PAGE>
 
purchase or carry any stock that is then currently a margin stock or for any
other purpose which might constitute the purchase of such Notes a "purpose
credit" within the meaning of such Regulation G.  After applying the proceeds of
the sale of the Notes, not more than 25% of the value of the assets subject to
the terms of paragraph 5C, 6C(l), 6C(4) or 6C(5) will be "margin stock." Neither
the Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation G,
Regulation T, Regulation X or any other regulation of the Board of Governors of
the Federal Reserve System or to violate the Exchange Act, in each case as in
effect now or as the same may hereafter be in effect.

          8J. ERISA.  No accumulated funding deficiency (as defined in section
302 of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the PBGC
has been or is expected by the Company to be incurred with respect to any Plan
(other than a Multiemployer Plan) by the Company or any of its Subsidiaries
which is or would be materially adverse to the business, property or assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any of its Subsidiaries has incurred
or presently expects to incur any withdrawal liability under Title IV of ERISA
with respect to any Multiemployer Plan which is or would be materially adverse
to the business, property or assets, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole. No Plan
providing welfare benefits to retired former employees of the Company or any of
its Subsidiaries has been established or is maintained for which the present
value of future benefits payable, in excess of irrevocably designated funds for
such purpose, is materially adverse to the business, property or assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole. The purchase of Notes by the Purchasers will not constitute a
"prohibited transaction" (as such term is defined in section 406 of ERISA or
section 4975 of the Code). The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the accuracy of the
representations of the Purchasers in paragraph 9B. Neither the Company or any
ERISA Affiliate, nor any "employee benefit plan" (as such term is defined in
section 3 of ERISA) of the Company or any ERISA Affiliate or any trust created
thereunder or any trustee or administrator thereof, has engaged in any
"prohibited transaction" that could subject any such Person, or any other party
dealing with such employee benefit plan or trust, to such penalty or tax.

          8K. GOVERNMENTAL CONSENT.  Neither the nature of the Company or of
any Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or administrative or
governmental or regulatory body (other than routine filings after the Date of
Closing with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement or
any Guaranty, the offering, issuance, sale or delivery of the Notes or
fulfillment of or compliance with the terms and provisions hereof, of any
Guaranty or of the Notes.

                                      27
<PAGE>
 
          8L. TITLE TO PROPERTIES.  The Company has and each of its
Subsidiaries has good and defensible title to its respective real properties
(other than properties which it leases) and good title to all of its other
respective properties and assets, including the properties and assets reflected
in the most recent audited balance sheet referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by paragraph 6C(1) except that (i)
with respect to easements and rights of way associated with the Company's gas
gathering systems: (a) the Company has such title as is customary and
appropriate in accordance with applicable industry standards and (b) the costs
of curing defects in such title, if any, would not exceed $10,000,000 in the
aggregate, (ii) no representation or warranty is made with respect to any gas or
mineral property or interest to which no proved oil or gas reserves are properly
attributed and (iii) with respect to Western Gas Resources Storage, Inc.'s Katy
Hub and Gas Storage Facility:  (a) the condemnation process relating to certain
storage rights, rights-of-way and well easements has not been completed and
therefore, as of the Closing Date, Western Gas Resources Storage, Inc. has, with
respect to such storage rights, rights-of-way and well easements, only the right
to the possession thereof (such right to possession being sufficient to enable
Western Gas Resources Storage, Inc. to conduct its business and operations at
the Katy Hub and Gas Storage Facility as currently conducted and as proposed to
be conducted) and (b) when such condemnation process is completed and Western
Gas Storage, Inc. has paid all amounts determined to be due to the condemnee
with respect thereto, Western Gas Storage, Inc. will obtain good and defensible
title to said storage rights, rights-of-way and well easements.  All leases
necessary in any material respect for the conduct of the respective businesses
of the Company and its Subsidiaries are valid and subsisting and are in full
force and effect.

          8M. DISCLOSURE.  Neither this Agreement nor the Private Placement
Memorandum nor any other document, certificate or statement furnished to the
Purchasers by or on behalf of the Company or any Guarantor in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. There is no fact peculiar to the Company or any of its
Subsidiaries which materially adversely affects or in the future is reasonably
likely (so far as the Company can now foresee) to materially adversely affect
the business, property or assets, financial condition or results of operations
of the Company and its Subsidiaries taken as a whole and which has not been set
forth in this Agreement or in the Private Placement Memorandum. The financial
projections provided to the Purchasers prior to the Date of Closing are
reasonable based on the assumptions stated therein and the best information
available to the officers of the Company.

          8N. DELIVERY OF OTHER AGREEMENTS.  The Company has delivered to
each Purchaser prior to the date hereof a true, correct and complete copy of
each of the NationsBank Agreement, the Master Shelf Agreement, the 1993 Note
Purchase Agreement and the Receivables Purchase Agreement,  including all
amendments and waivers of any provision thereof.

          8O. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT.
Neither the Company nor any Subsidiary is a "holding company" or a "subsidiary
company" of a "holding company" or a "public utility company" as such terms are
defined in the Public Utility Holding

                                      28
<PAGE>
 
Company Act of 1935, as amended, or, except for Western Gas Resources Power
Marketing, Inc., a "public utility" as such term is defined in the Federal Power
Act, as amended.

          8P. INVESTMENT COMPANY ACT.  Neither the Company nor any Subsidiary
is, or is directly or indirectly controlled by, or acting on behalf of any
Person that is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

          8Q. RANK OF NOTES.  The Notes rank at least pari passu in right of
payment with all other senior unsecured Debt of the Company, including without
limitation the Debt with respect to the NationsBank Agreement, the Master Shelf
Agreement and the 1993 Note Purchase Agreement.

PARAGRAPH 9.    REPRESENTATIONS OF THE PURCHASERS.

          9.    REPRESENTATIONS OF THE PURCHASERS.  Each Purchaser severally
represents to the Company as of the date hereof as follows:

          9A. NATURE OF PURCHASE.  Such Purchaser is not acquiring the
Notes to be purchased by it hereunder with a view to or for sale in connection
with any distribution thereof within the meaning of the Securities Act, provided
that the disposition of the property of such Purchaser shall at all times be and
remain within its control.

          9B. SOURCE OF FUNDS. Such Purchaser represents that at least one of
the following statements concerning each source of funds to be used by it to
purchase any Notes (respectively, the "SOURCE") is accurate as of the Date of
Closing with respect to such Notes:

                (i)      The Source is not an "employee benefit plan" as defined
          in Title 1, Section 3(3) of ERISA;

                (ii)     the Source is a "governmental plan" as defined in Title
          I, Section 3(32) of ERISA;

                (iii)    the Source is the general account of such Purchaser,
          and all requirements for an exemption under PTE 95-60 (issued July 12,
          1995) have been satisfied; provided, that in making such
          representation such Purchaser is relying on the Company's
          representations set forth in paragraph 8J;

                (iv)     the Source is either (a) an insurance company pooled
          separate account, and the purchase is exempt in accordance with PTE 
          90-1 (issued January 29, 1990), or (b) an insurance company
          "guaranteed contract separate account" entitled to the exemption
          granted by PTE 81-82 (issued September 18, 1981) and described in
          Department of Labor Advisory Opinion F2584A (issued September 21,
          1983);

                                      29
<PAGE>
 
                (v)      the Source is an "investment fund" managed by a
          "qualified professional asset manager" or "QPAM" (as defined in Part V
          of PTE 84-14, issued March 13, 1984), and the purchase is exempt under
          PTE 84-14; provided that no other party to the transactions described
          in this Agreement and no "affiliate" of such other party (as defined
          in Section V(c) of PTE 84-14) has at this time, and during the
          immediately preceding one year, exercised the authority to appoint or
          terminate said QPAM as manager of the assets of any plan identified to
          the Company in writing pursuant to this clause (v) or to negotiate the
          terms of said QPAM's management agreement on behalf of any such
          identified plans; or

                (vi)     the Source is a plan or a separate account comprised of
          plans identified in writing by such Purchaser to the Company pursuant
          to this clause (vi).

PARAGRAPH 10.   DEFINITIONS.

          10.   DEFINITIONS.  For the purpose of this Agreement, the terms
defined in the introductory sentence and in paragraphs 1 and 2 shall have the
respective meanings specified therein, and the following terms shall have the
meanings specified with respect thereto below (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          10A.YIELD-MAINTENANCE TERMS.

          "CALLED PRINCIPAL" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4A or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.

          "DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on a quarterly
basis) equal to the Reinvestment Yield with respect to such Called Principal.

          "REINVESTMENT YIELD" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (a) the yields reported, as of
                                              ---                           
10:00 A.M. (New York City local time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 500" on the Telerate Service (or such other display as may replace page
500 on the Telerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, plus 0.50%, or if such yields shall not be reported as of
such time or the yields reported as of such time shall not be ascertainable, (b)
                                                                             ---
the Treasury Constant Maturity Series yields reported, for the latest day for
which such yields shall have been so reported as of the Business Day next
preceding the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant

                                      30
<PAGE>
 
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, plus 0.50%.  All implied yields under either clause (a) or (b)
of this definition shall be determined, (i) if necessary, by (x) converting U.S.
                                                             ---                
Treasury bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (y) interpolating linearly between yields reported for
                       ---                                                   
various maturities, and (ii) by converting all such implied yields to a
quarterly payment basis in accordance with accepted financial practice.

          "REMAINING AVERAGE LIFE" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum
                                   ---                            ----        
of the products obtained by multiplying (a) each Remaining Scheduled Payment of
                                        ---                                    
such Called Principal (but not of interest thereon) by (b) the number of years
                                                       ---                    
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.

          "REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest that
would accrue thereon on or after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date.

          "SETTLEMENT DATE" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4A or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.

          "YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over such Called Principal.  The Yield-Maintenance Amount
shall in no event be less than zero.

          10B. OTHER TERMS.

          "ADJUSTED CONSOLIDATED DEBT" shall mean Consolidated Debt (excluding
Debt in the amount of the Receivables Investment relating to the Permitted
Securitization Program) PLUS Excess Working Capital Deficit.

          "AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary.  A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.

          "AUTHORIZED OFFICER" shall mean, in the case of the Company, its Chief
Executive Officer, its Chief Financial Officer, its Treasurer, its President or
the Executive Vice President-General Counsel or the Vice President-Finance of
the Company.  Any action taken under this Agreement on behalf of the Company by
any individual who on or after the date of this Agreement

                                      31
<PAGE>
 
shall have been an Authorized Officer of the Company and whom any holder of a
Note in good faith believes to be an Authorized Officer of the Company at the
time of such action shall be binding on the Company even though such individual
shall have ceased to be an Authorized Officer of the Company.

          "BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.

          "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or authorized to be
closed.

          "CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be,
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expenses) in accordance
with such principles.

          "CLOSING" shall have the meaning specified in paragraph 2.

          "CODE" shall mean the Internal Revenue Code of 1986, as amended.

          "CONFIDENTIAL INFORMATION" shall mean any material non-public
information regarding the Company and its Subsidiaries that is provided to any
holder of any Note, any Person who purchases a participation in a Note and any
offeree of a Note or participation therein pursuant to this Agreement other than
information (i) which was publicly known or otherwise known to such holder, such
Person or such offeree at the time of disclosure, (ii) which subsequently
becomes publicly known through no act or omission of such holder, such Person or
such offeree or (iii) which otherwise becomes known to such holder, such Person
or such offeree, other than through disclosure by the Company or any Subsidiary.

          "CONSOLIDATED CURRENT ASSETS" shall mean the consolidated current
assets of the Company and its Subsidiaries, as determined in accordance with
generally accepted accounting principles.

          "CONSOLIDATED CURRENT LIABILITIES" shall mean the consolidated current
liabilities (including, without limitation, the Debt in respect of the Permitted
Securitization Program) of the Company and its Subsidiaries, as determined in
accordance with generally accepted accounting principles.

          "CONSOLIDATED DEBT" shall mean the consolidated Debt of the Company
and its Subsidiaries, determined in accordance with generally accepted
accounting principles.

                                      32
<PAGE>
 
          "CONSOLIDATED NET EARNINGS" shall mean consolidated gross revenues of
the Company and its Subsidiaries including any gains (net of expenses and taxes
applicable thereto) resulting from the sale, conversion or other disposition of
capital assets (i.e., assets other than current assets), LESS all operating and
non-operating expenses of the Company and its Subsidiaries including all losses
resulting from the sale, conversion or other disposition of capital assets (i.e.
assets other than current assets) and all charges of a proper character
(including current and deferred taxes on income, provision for taxes on
unremitted foreign earnings that are included in gross revenues, and current
additions to reserves), but not including in gross revenues any gains resulting
from the write-up of assets, any equity of the Company or any Subsidiary in the
unremitted earnings of any Person that is not a Subsidiary, any earnings of any
Person acquired by the Company or any Subsidiary through purchase, merger or
consolidation or otherwise for any period prior to the time of acquisition, or
any deferred credit representing the excess of equity in any Subsidiary at the
date of acquisition over the cost of the investment in such Subsidiary, all
determined in accordance with generally accepted accounting principles.

          "CONSOLIDATED NET EARNINGS AVAILABLE FOR RESTRICTED PAYMENTS" shall
mean an amount equal to (1) the sum of $50,000,000 PLUS (2) 50% (or minus 100%
in case of a deficit) of Consolidated Net Earnings for the period commencing on
July 1, 1995 and terminating at the end of the last fiscal quarter preceding the
date of any proposed Restricted Payment (taken as one accounting period), LESS
(3) the sum of all Restricted Payments made or declared after June 30, 1995,
plus (4) the aggregate amount received by the Company after June 30, 1995, as
the net cash proceeds of the sale of any shares of its stock.  There shall not
be included in Restricted Payments or in any computation of Consolidated Net
Earnings Available for Restricted Payments (x) dividends paid, or distributions
made, in stock of the Company; or (y) exchanges of stock of one or more classes
of the Company, except to the extent that cash or other value is involved in
such exchange.  The term "stock" as used in this definition and in the
definition of "Restricted Payments" shall include warrants or options to
purchase stock.

          "CONSOLIDATED NET TANGIBLE ASSETS" shall mean the consolidated assets
of the Company and its Subsidiaries, LESS, without duplication, (i) Consolidated
Current Liabilities MINUS  Excess Working Capital Deficit, (ii) asset,
liability, contingency and other reserves of the Company and its Subsidiaries,
including reserves for depreciation and for deferred income taxes, (iii) all
other liabilities of the Company and its Subsidiaries, except liabilities for
Funded Debt of the types described in clauses (i), (ii) and (iii) of the
definition of Debt, and (iv) treasury stock, unamortized debt discount and
expense, goodwill, trademarks, brand names, patents, organizational expenses and
any other intangible assets of the Company and its Subsidiaries, and any write-
up of the value of any assets after June 30, 1991, all as determined in
accordance with generally accepted accounting principles; PROVIDED, HOWEVER,
that the term "Consolidated Net Tangible Assets" shall include the book value of
long-term gas contracts with producers that the Company assumes in connection
with acquisitions and that are reflected on the books of the Company as assets.

                                      33
<PAGE>
 
          "CONSOLIDATED TANGIBLE NET WORTH" shall mean consolidated
stockholders' equity of the Company and its Subsidiaries, less goodwill,
trademarks, brand names, patents, organizational expenses and any other
intangible assets of the Company and its Subsidiaries, all as determined in
accordance with generally accepted accounting principles; PROVIDED, HOWEVER,
that the term "Consolidated Tangible Net Worth" shall include the book value of
long-term gas contracts with producers that the Company assumes in connection
with acquisitions and that are reflected on the books of the Company as assets.

          "COUNTERPARTY" shall mean (i) those Persons listed on SCHEDULE 6C(8)
attached hereto, (ii) any Person that is not an Affiliate of the Company and
that has senior debt securities rated at least A by Standard & Poor's or Moody's
or whose obligations in respect of agreements described in the final proviso to
paragraph 6C(8) or in the definition of Long Hedge Future or Short Hedge Future,
as the case may be, are fully guaranteed by an affiliate of such Person whose
senior debt securities are so rated, and (iii) any other Person that is not an
Affiliate of the Company and with whom the Company has agreements of the nature
described in the final proviso to paragraph 6C(8) or in the definition of Long
Hedge Future or Short Hedge Future, so long as (a) the aggregate amount of all
such agreements with such Person outstanding at any time shall not exceed
$1,000,000, and (b) the Company has such agreements outstanding with no more
than nine other such Persons at any time.

          "DATE OF CLOSING" shall have the meaning specified in paragraph 2.

          "DEBT" shall mean, without duplication:

                (i)      any obligation that, under generally accepted
          accounting principles, is shown on the balance sheet as a liability
          (including, without limitation, any obligation for borrowed money, any
          notes payable and drafts accepted representing extensions of credit,
          whether or not representing obligations for borrowed money, and
          Capitalized Lease Obligations but excluding accounts payable and
          accrued expenses in the ordinary course of business, reserves for
          deferred income taxes and other reserves to the extent that such
          reserves do not constitute an obligation),

                (ii)     any obligation secured by a Lien on, or payable out of
          the proceeds of production from, property, whether or not the
          obligation secured thereby shall have been assumed by the owner of
          such property,

                (iii)    liabilities in respect of unfunded vested benefits
          under Plans and liabilities in respect of postretirement benefits
          that, under generally accepted accounting principles in effect at the
          time in question, are shown on the balance sheet as a liability, and

                (iv)     any obligation described in paragraph 6C(10) for which
          a maximum amount is quantifiable.

                                      34
<PAGE>
 
          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

          "ERISA AFFILIATE" shall mean any corporation or trade or business
that:

                (i)      is a member of the same controlled group of
          corporations (within the meaning of Section 414(b) of the Code) as the
          Company, or

                (ii)     is under common control (within the meaning of Section
          414(c) of the Code) with the Company.

          "EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.

          "EXCESS WORKING CAPITAL DEFICIT" shall mean (i) if the Company's
Working Capital is greater than or equal to negative $10,000,000, zero, or (ii)
if the Company's Working Capital is less than negative $10,000,000, the product
of (A) the amount of such Working Capital PLUS $10,000,000 MULTIPLIED BY (B)
negative one (for example, if Working Capital equals negative $15,000,000, the
Excess Working Capital Deficit would equal $5,000,000).  For purposes of this
definition, "WORKING CAPITAL" means the remainder of the Company's Consolidated
Current Assets MINUS the Company's Consolidated Current Liabilities, excluding
current maturities of Funded Debt.

          "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

          "EXISTING GUARANTY" shall mean each guaranty of a Guarantor in favor
of the banks parties to the NationsBank Agreement or the purchasers parties to
the Master Shelf Agreement or the 1993 Note Purchase Agreement for which a
similar guaranty shall have been issued to each holder of Notes.

          "FAIR MARKET VALUE" shall mean, at any time with respect to any
property of any kind or character, the sale value of such property that would be
realized in an arm's length sale at such time between an informed and willing
buyer and an informed and willing seller, under no compulsion to buy or sell,
respectively.

          "FUNDED DEBT" shall mean any Debt payable more than one year from the
date of creation thereof.

          "GUARANTOR" shall mean each of Western Gas Resources Storage, Inc., a
Texas corporation; Western Gas Resources - Texas, Inc., a Texas corporation;
Western Gas Resources -Oklahoma, Inc., a Delaware corporation; Mountain Gas
Resources, Inc., a Delaware corporation,

                                      35
<PAGE>
 
MGTC, MIGC and each other Subsidiary of the Company that issues a Guaranty to
all of the holders of Notes.

          "GUARANTY" shall mean each guaranty of a Guarantor in substantially
the form of EXHIBIT E hereto.

          "INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement
substantially in the form of EXHIBIT F hereto.

          "LIEN" shall mean any mortgage, pledge, priority, security interest,
encumbrance, deposit arrangement, lien (statutory or otherwise) or charge of any
kind (including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.

          "LONG HEDGE FUTURE" shall mean an agreement, purchased on a
commodities exchange or entered into with a Counterparty, that obligates the
Company to purchase natural gas or liquid hydrocarbons, as the case may be, at a
pre-determined price at a pre-determined time.

          "MGTC" shall mean MGTC, Inc., a Wyoming corporation.

          "MIGC" shall mean MIGC, Inc., a Delaware corporation.

          "MASTER SHELF AGREEMENT" shall mean that certain Amended and Restated
Master Shelf Agreement dated as of December 19, 1991, between the Company and
The Prudential Insurance Company of America, as the provisions thereof have
heretofore been amended or waived or may be from time to time amended or waived
in compliance with paragraph 6E.

          "MOODY'S" shall mean Moody's Investors Service, Inc.

          "MULTIEMPLOYER PLAN" shall mean any plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).

          "NATIONSBANK" shall mean NationsBank of Texas, N.A., and its
successors and assigns.

          "NATIONSBANK AGREEMENT" shall mean, collectively, the Revolving Loan
Agreement and the Term Loan Agreement, as the provisions thereof have been or
may be from time to time amended or waived in compliance with paragraph 6E.

                                      36
<PAGE>
 
          "NATURAL GAS INVENTORY" shall mean at the time in question, the
Company's and its Subsidiaries' inventory of natural gas in storage.

          "1993 NOTE PURCHASE AGREEMENT" shall mean, collectively, those certain
separate Note Purchase Agreements each dated as of April 1, 1993, between the
Company and each of the purchasers listed on Annex 1 thereto, respectively, as
the provisions thereof have heretofore been amended or waived or may be from
time to time amended or waived in compliance with paragraph 6E.

          "NOTES" shall have the meaning specified in paragraph 1.

          "OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by an Authorized Officer of the Company.

          "OVER-COLLATERALIZATION AMOUNT" shall have the meaning specified in
the definition of "Permitted Securitization Program."

          "PANHANDLE JOINT VENTURE" shall mean the joint venture formed between
the Company and Panhandle Eastern Pipe Line Company.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor entity serving a similar function.

          "PERMITTED SECURITIZATION PROGRAM" shall mean a transaction or series
of transactions executed pursuant to documentation that contemplates a
commitment which is for a period of not more than 364 days and which is not
extendible at the option of the Company or any of its Subsidiaries and pursuant
to which each of the following conditions is satisfied:

                (a)      the Company and the Subsidiaries sell, transfer or
          otherwise dispose of, at not less than face value, on a revolving
          basis, an undivided interest in a pool of the Company's and the
          Subsidiaries' accounts receivable to a special purpose entity (the
          "SPECIAL PURPOSE ENTITY"), in an amount not to exceed, at any time
          $75,000,000 and grants a security interest in connection therewith
          with respect to such accounts receivable which secures an amount not
          greater than 10% of the aforesaid amount sold or transferred at such
          time for the purpose of providing the purchaser with over-
          collateralization (the "OVER-COLLATERALIZATION AMOUNT"); and, as a
          part of such transaction,

                (b)      the Company and the Subsidiaries grant a security
          interest (the "SECURITY INTEREST") in all or a portion of their
          accounts receivable (the "PLEDGED ACCOUNTS RECEIVABLE") to the Special
          Purpose Entity for the purpose of providing the Special Purpose Entity
          with a basis of recourse for its investment (i.e., the

                                      37
<PAGE>
 
          aforesaid amount not to exceed $75,000,000) in the Pledged Accounts
          Receivable (the "RECEIVABLES INVESTMENT"), PROVIDED that:

                    (i)    the maximum recourse to the Pledged Accounts
               Receivable shall be equal to the purchase price of the
               Receivables Investment plus 10%, in an aggregate amount not to
               exceed Eighty-Two Million Five Hundred Thousand Dollars
               ($82,500,000) (the "RECOURSE AMOUNT");

                    (ii)   the Security Interest shall apply to each Pledged
               Account Receivable in an amount not to exceed the proportion that
               the Recourse Amount bears to the face value of the Pledged
               Accounts Receivable; and

                    (iii)  the Company and the Subsidiaries shall be entitled to
               share (with the Special Purpose Entity), on a pari passu and pro
               rata basis (based upon the Special Purpose Entity's share
               described in clause (ii)), all proceeds (if any) derived from
               each Pledged Account Receivable.

          "PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.

          "PLAN" shall mean an "employee pension benefit plan" (as defined in
section 3 of ERISA) that is or has been established or maintained, or to which
contributions are or have been made, by the Company or by any trade or business,
whether or not incorporated, that, together with the Company, is under common
control, as described in section 414(b) or (c) of the Code.

          "PLEDGED ACCOUNTS RECEIVABLE" shall have the meaning specified in the
definition of "Permitted Securitization Program."

          "PRIVATE PLACEMENT MEMORANDUM" shall mean the Private Placement
Memorandum dated September 1995, relating to the offering of the Notes, prepared
by the Company and NationsBanc Capital Markets, Inc.

          "PURCHASERS" shall mean the purchasers of the Notes identified on the
signature pages hereof.

          "RECEIVABLES INVESTMENT" shall have the meaning specified in the
definition of "Permitted Securitization Program."

          "RECEIVABLES PURCHASE AGREEMENT" shall mean that certain Receivables
Purchase Agreement dated as of February 28, 1995, among the Company, Receivables
Capital Corporation and Bank of America National Trust and Savings Association,
as the provisions thereof have heretofore been amended or waived or may be from
time to time amended or waived.

                                      38
<PAGE>
 
          "REQUIRED HOLDER(S)" shall mean, with respect to the Notes, at any
time, the holder or holders of at least 66 2/3% of the aggregate principal
amount of the Notes outstanding at such time.

          "RESTRICTED PAYMENT" shall mean (a) any dividend paid or declared by
the Company or any Subsidiary on any class of the Company's stock (other than a
dividend payable in shares of stock of the Company), or any other distribution
made by the Company or any Subsidiary on account of any class of the Company's
stock, or (b) any cash or other consideration applied, directly or indirectly,
by the Company or any Subsidiary to the redemption, purchase or other
acquisition of any shares of the Company's capital stock or (c) any payment of
principal of, or retirement, redemption, purchase or other acquisition of any
subordinated debt.

          "REVOLVING LOAN AGREEMENT" shall mean that certain First Restated Loan
Agreement (Revolver) dated as of September 2, 1994, among the Company, its
Subsidiaries, NationsBank, as Agent, and the lenders parties thereto, as the
provisions thereof have heretofore been amended or waived or may be from time to
time amended or waived in compliance with paragraph 6E.

          "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

          "SHORT HEDGE FUTURE" shall mean an agreement, purchased on a
commodities exchange or entered into with a Counterparty, that obligates the
Company to sell natural gas or liquid hydrocarbons, as the case may be, at a
pre-determined price at a pre-determined time.

          "STANDARD & POOR'S"  shall mean Standard & Poor's Ratings Group.

          "STOCK OPTION AGREEMENTS" shall mean, collectively those certain
Agreements to Provide Loan(s) to exercise key employees' Stock Options by and
among the Company and certain key employees.

          "SUBSIDIARY" shall mean any corporation organized under the laws of
any state of the United States of America, Canada, or any province of Canada,
which conducts the major portion of its business in and makes the major portion
of its sales to Persons located in the United States of America or Canada, and
at least a majority of the combined voting power of all classes of Voting Stock
of which shall, at the time as of which any determination is being made, be
owned by the Company either directly or through Subsidiaries.  A "WHOLLY OWNED
SUBSIDIARY" shall be a Subsidiary all of the stock of every class of which,
except directors' qualifying shares shall, at the time at which any
determination is being made, be owned by the Company either directly or through
wholly owned subsidiaries.

          "TERMINATION EVENT" shall mean (i) a "reportable event" described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
reportable event not subject to the provision for 30-day notice to the PBGC
under such regulations), or (ii) the withdrawal of the

                                      39
<PAGE>
 
Company or any of its ERISA Affiliates from a Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or
(iii) the filing of a notice of intent to terminate a Plan or the treatment of a
Plan amendment as a termination under Section 4041 of ERISA, or (iv) the
institution of proceedings to terminate a Plan by the PBGC, or (v) any other
event or condition that might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan.

          "TERM LOAN AGREEMENT" shall mean that certain Third Restated Loan
Agreement (Term) dated as of August 31, 1993, among the Company, its
Subsidiaries, NationsBank, as Agent and the lenders parties thereto, as the
provisions thereof have heretofore been amended or waived or may be from time to
time amended or waived in compliance with paragraph 6E.

          "TRANSFEREE" shall mean any direct or indirect transferee of all or
any part of any Note purchased by any Purchaser under this Agreement.

          "VOTING STOCK" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).

          "WHOLLY OWNED SUBSIDIARY" shall have the meaning specified in the
definition of "Subsidiary."

          1.10C. ACCOUNTING TERMS AND DETERMINATIONS.  All references in this
Agreement to "generally accepted accounting principles" shall be deemed to refer
to generally accepted accounting principles in effect in the United States at
the time of application thereof, subject to the next sentence. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, applied on a basis consistent with the
audited consolidated financial statements of the Company and its Subsidiaries
delivered pursuant to clause (ii) of paragraph 5A or, if no such statements have
been delivered, the most recent audited financial statements referred to in
clause (i) of paragraph 8B.

PARAGRAPH 11.     MISCELLANEOUS.

          11A.  NOTE PAYMENTS.  The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of, interest
on and any Yield-Maintenance Amount payable with respect to such Note, which
comply with the terms of this Agreement, by wire transfer of immediately
available funds for credit (not later than 12:00 noon, New York City time, on
the date due) to each Purchaser's account or accounts, if any, as are specified
in the PURCHASER SCHEDULE attached hereto, or, in the case any Purchaser wishes
to change the account specified for such Purchaser in the PURCHASER SCHEDULE
such account or accounts in the United States as such

                                      40
<PAGE>
 
Purchaser may from time to time designate in writing, notwithstanding any
contrary provision herein or in any Note with respect to the place of payment.
Each Purchaser agrees that, before disposing of any Note, such Purchaser will
make a notation thereon (or on a schedule attached thereto) of all principal
payments previously made thereon and of the date to which interest thereon has
been paid. The Company agrees to afford the benefits of this paragraph 11A to
any Transferee which shall have made the same agreement as the Purchasers have
made in this paragraph 11A.

         11B. EXPENSES.

         (I)    GENERALLY.  Whether or not the transactions contemplated
     hereby shall be consummated, the Company will promptly (and in any event
     within thirty (30) days after receiving any statement or invoice therefor)
     pay, and save each Purchaser and any Transferee harmless against liability
     for the payment of, all reasonable fees, expenses and costs relating
     hereto, including, but not limited to:

               (a)  the cost of reproducing this Agreement and the Notes;

               (b)  the fees and disbursements of any special counsel engaged
          by the Purchasers;

               (c)  the cost of delivering to each Purchaser's home office or
          custodian bank, insured to such Purchaser's satisfaction, the Notes
          purchased by such Purchaser at the Closing;

               (d)  the fees, expenses and costs incurred complying with each
          of the conditions to closing set forth in paragraph 3 hereof
          (including, without limitation the fees, expenses and costs incurred
          obtaining a Private Placement Number for the Notes);

               (e)  the fees, expenses and costs of NationsBanc Capital
          Markets, Inc. and any other broker or investment banker, if any,
          incurred by the Company in connection with the offer, issuance, sale
          and delivery of the Notes or the transactions contemplated hereby;

               (f)  the fees, expenses and costs relating to the consideration,
          negotiation, preparation, duplication or execution of any amendments,
          waivers or consents pursuant to the provisions hereof (including,
          without limitation, fees and disbursements of any special counsel or
          other professional advisors engaged by such Purchaser and the
          allocated cost of each Purchaser's or Transferee's counsel who are
          such Purchaser's or such Transferee's employees or such Purchaser's or
          such Transferee's affiliates' employees), whether or not any such
          amendments, waivers or consents are executed; and

                                      41
<PAGE>
 
                (g)  the fees, expenses and costs incurred by any Purchaser or
          any Transferee in enforcing (or determining whether or how to enforce)
          any rights under this Agreement, the Notes or the Guaranties or in
          responding to any subpoena or other legal process or informal
          investigative demand issued in connection with this Agreement or the
          transactions contemplated hereby or by reason of any Purchaser's or
          any Transferee's having acquired any Note (other than costs and
          expenses incurred in acquiring or merely holding a Note or interest
          therein), including without limitation fees, expenses and costs
          incurred in any bankruptcy case.

          (II)  COUNSEL.  Without limiting the generality of the foregoing, it
     is agreed and understood that the Company will pay, at the time of the
     execution of this Agreement, the statement, rendered as set forth in
     paragraph 3H, for reasonable fees and disbursements of any special counsel
     engaged by the Purchasers incurred up to that time, and the Company will
     also pay, upon receipt of any statement thereof, each additional statement
     for reasonable fees and disbursements of any special counsel engaged by the
     Purchasers rendered at and after the Closing in connection with the
     issuance of the Notes or the matters referred to in paragraphs 11B(i)(f) or
     11B(i)(g) hereof.

          (III) SURVIVAL.  The obligations of the Company under this paragraph
     11B and under the final sentence of paragraph 5J shall survive the transfer
     of any Note or portion thereof or interest therein by any Purchaser or any
     Transferee, the payment or prepayment of the Notes and the termination
     hereof.

          11C. CONSENT TO AMENDMENTS.  This Agreement may be amended, and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the Required Holder(s)
of the Notes except that, (i) with the written consent of the holders of all
Notes at the time outstanding (and not without such written consents), the Notes
may be amended or the provisions thereof waived to change the maturity thereof,
to change the principal thereof, or to change the rate or time of payment of
interest on or any Yield-Maintenance Amount payable with respect to the Notes,
and (ii) without the written consent of the holder or holders of all Notes at
the time outstanding, no amendment to or waiver of the provisions of this
Agreement shall change the provisions of paragraph 7A or this paragraph 11C
insofar as such provisions relate to proportions of the principal amount of the
Notes, or the rights of any individual holder of Notes, required with respect to
any declaration of Notes to be due and payable or with respect to any consent.
Each holder of any Note at the time or thereafter outstanding shall be bound by
any consent authorized by this paragraph 11C, whether or not such Note shall
have been marked to indicate such consent, but any Notes issued thereafter may
bear a notation referring to any such consent.  No course of dealing between the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note.  As used herein and in the Notes, the term "THIS AGREEMENT"
and references thereto shall mean this Note Purchase Agreement as it may from
time to time be amended or supplemented.

                                      42
<PAGE>
 
         11D. SOLICITATION OF NOTEHOLDERS.

                (i)      SOLICITATION.  Neither the Company nor any Guarantor
     shall solicit, request or negotiate for or with respect to any proposed
     waiver or amendment of any of the provisions hereof or of the Notes or the
     Guaranties unless each holder of the Notes (irrespective of the amount of
     Notes then owned by it) shall be informed thereof by the Company with
     sufficient information to enable it to make an informed decision with
     respect thereto. Executed or true and correct copies of any waiver or
     consent effected pursuant to the provisions of this paragraph 11D shall be
     delivered by the Company to each holder of outstanding Notes forthwith
     following the date on which the same shall have been executed and delivered
     by all holders of outstanding Notes required to consent or agree to such
     waiver or consent.

                (ii)     PAYMENT.  Neither the Company nor any Guarantor shall,
     directly or indirectly, pay or cause to be paid any remuneration, whether
     by way of supplemental or additional interest, fee or otherwise, or grant
     any security, to any holder of Notes as consideration for or as an
     inducement to the entering into by any holder of Notes of any waiver or
     amendment of any of the terms and provisions hereof or of the Notes or the
     Guaranties unless such remuneration is concurrently paid, or security is
     concurrently granted, on the same terms, ratably to the holders of all
     Notes then outstanding.

                (iii)    SCOPE OF CONSENT.  Any consent made pursuant to this
     paragraph 11D by a holder of Notes that has transferred or has agreed to
     transfer its Notes to the Company, any Subsidiary or any Affiliate and has
     provided or has agreed to provide such written consent as a condition to
     such transfer shall be void and of no force and effect except solely as to
     such holder, and any amendments effected or waivers granted or to be
     effected or granted that would not have been or would not be so effected or
     granted but for such consent (and the consents of all other holders of
     Notes that were acquired under the same or similar conditions) shall be
     void and of no force and effect, retroactive to the date such amendment or
     waiver initially took or takes effect, except solely as to such holder.
 
          11E. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Notes are issuable as registered notes without coupons in denominations of
at least $500,000, except as may be necessary to reflect any principal amount
not evenly divisible by $100,000. The Company shall keep at its principal office
a register in which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of transfer of any Note
at the principal office of the Company, the Company shall, at its expense,
execute and deliver one or more new Notes of like tenor and of an aggregate
principal amount, registered in the name of such transferee or transferees;
PROVIDED that the Company shall not be required to register any transfer that
was made in violation of the legend appearing on such Note. At the option of the
holder of any Note, such Note may be exchanged for other Notes of like tenor and
of any authorized denominations, of a like aggregate principal amount, upon
surrender of the Note to be exchanged at the principal office of the Company.
Whenever any Notes are so surrendered for exchange, the

                                      43
<PAGE>
 
Company shall, at its expense, execute and deliver the Notes which the holder
making the exchange is entitled to receive.  Each installment of principal
payable on each installment date upon each new Note issued upon any such
transfer or exchange shall be in the same proportion to the unpaid principal
amount of such new Note as the installment of principal payable on such date on
the Note surrendered for registration of transfer or exchange bore to the unpaid
principal amount of such Note. No reference need be made in any such new Note to
any installment or installments of principal previously due and paid upon the
Note surrendered for registration of transfer or exchange.  Every Note
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed, by the holder
of such Note or such holder's attorney duly authorized in writing.  Any Note or
Notes issued in exchange for any Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange.  Upon receipt of written notice from
the holder of any Note of the loss, theft, destruction or mutilation of such
Note and, in the case of any such loss, theft or destruction, upon receipt of
such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.

          11F. PERSONS DEEMED OWNERS; PARTICIPATIONS.  Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of and interest on and any Yield-
Maintenance Amount payable with respect to such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue, and the Company shall not
be affected by notice to the contrary. Subject to the preceding sentence, the
holder of any Note may from time to time grant participations in all or any part
of such Note to any Person on such terms and conditions as may be determined by
such holder in its sole and absolute discretion.

          11G.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of any Purchaser or any
Transferee.  Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.

          11H.    SUCCESSORS AND ASSIGNS.  All covenants and other agreements
in this Agreement contained by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.

                                      44
<PAGE>
 
          11I.  DISCLOSURE TO OTHER PERSONS; CONFIDENTIALITY.  EXCEPT AS
PROVIDED IN THIS PARAGRAPH 11I, EACH HOLDER AND EACH PERSON WHO PURCHASES A
PARTICIPATION IN A NOTE OR ANY PART THEREOF AGREES THAT, PRIOR TO THE OCCURRENCE
OF A DEFAULT, IT WILL USE ITS BEST EFFORTS TO HOLD IN CONFIDENCE AND NOT TO
DISCLOSE THE CONFIDENTIAL INFORMATION.  The Company acknowledges that the holder
of any Note may deliver copies of any financial statements and other documents
delivered to such holder, and disclose any other information disclosed to such
holder, by or on behalf of the Company or any Subsidiary in connection with or
pursuant to this Agreement to (i) such holder's directors, officers, employees,
agents and professional consultants, (ii) any other holder of any Note, (iii)
any Person to which such holder offers to sell such Note or any part thereof,
(iv) any Person to which such holder sells or offers to sell a participation in
all or any part of such Note, (v) any federal or state regulatory authority
having jurisdiction over such holder, (vi) the National Association of Insurance
Commissioners or any similar organization or (vii) any other Person to which
such delivery or disclosure may be necessary or appropriate (a) in compliance
with any law, rule, regulation or order applicable to such holder, (b) in
response to any subpoena or other legal process or informal investigative
demand, (c) in connection with any litigation to which such holder is a party or
(d) in order to protect such holder's investment in such Note; PROVIDED THAT
                                                               --------     
PRIOR TO DISCLOSING CONFIDENTIAL INFORMATION TO ANY OFFEREE REFERRED TO IN
CLAUSES (III) AND (IV) ABOVE, SUCH HOLDER WILL USE ITS BEST EFFORTS TO HAVE SUCH
OFFEREE DELIVER TO THE COMPANY A CONFIDENTIALITY AGREEMENT SUBSTANTIALLY IN THE
FORM OF EXHIBIT D HERETO.

          11J. NOTICES.  All written communications provided for hereunder
shall be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) and (i) if to any Purchaser, addressed to such Purchaser at the
address specified for such communications in the PURCHASER SCHEDULE, or at such
other address as such Purchaser shall have specified in writing to the Person
sending such communication, and (ii) if to any other holder of any Note,
addressed to it at such address as it shall have specified in writing to the
Person sending such communication or, if any such holder shall not have so
specified an address, then addressed to such holder in care of the last holder
of such Note which shall have so specified an address to the Person sending such
communication, and (iii) if to the Company, addressed to it at 12200 N. Pecos
Street, Denver, Colorado 80234, Attention: John C. Walter, Executive Vice
President-General Counsel, Telecopy No. (303) 252-3362 or at such other address
as the Company shall have specified to the holder of each Note in writing;
PROVIDED, however, that any such communication to the Company may also, at the
option of the Person sending such communication, be delivered by any other means
either to the Company at its address specified above or to any Authorized
Officer of the Company.

          11K.    PAYMENTS DUE ON NON-BUSINESS DAYS.  Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or interest on any Note that is due on a date other than a Business Day shall
be made on the next succeeding Business Day.  If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation of
the interest payable on such Business Day.

                                      45
<PAGE>
 
          11L. SATISFACTION REQUIREMENT.  If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Purchaser, to any holder of Notes
or to the Required Holder(s), the determination of such satisfaction shall be
made by such Purchaser, such holder or the Required Holder(s), as the case may
be, in the sole and exclusive judgment (exercised in good faith) of the Person
or Persons making such determination.

          11M.    GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED AND
                  -------------                                        
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK.

          11N. LIMITATION ON INTEREST.  The Company and the Purchasers
specifically intend and agree to limit contractually the amount of interest
payable in connection with this Agreement and the Notes to the maximum amount of
interest lawfully permitted to be charged under applicable law. Therefore, none
of the terms of this Agreement or the Notes shall ever be construed to create a
contract to pay interest at a rate in excess of the maximum rate permitted to be
charged under applicable law, and neither the Company nor any Guarantor nor any
other party liable or to become liable hereunder or under the Notes shall ever
be liable for interest in excess of the amount determined at such maximum rate.

          11O.    SEVERABILITY.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          11P. DESCRIPTIVE HEADINGS.  The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.

          11Q.    COUNTERPARTS.  This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.

          11R. BINDING AGREEMENT.  When this Agreement is executed and
delivered by the Company and each Purchaser, it shall become a binding agreement
between the Company and the Purchasers.

     [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.  SIGNATURE PAGES FOLLOW.]

                                      46
<PAGE>
 
          If all of the Purchasers are in agreement with the foregoing, please
sign the form of acceptance on the enclosed counterparts of this letter and
return the same to the Company, whereupon this letter shall become a binding
agreement between the Company and the Purchasers effective as of November 29,
1995.

                                        Very truly yours,

                                        WESTERN GAS RESOURCES, INC.


                                        /s/ WILLIAM J. KRYSIAK
                                        ----------------------
                                        Vice President-Finance

The foregoing Agreement is
hereby accepted as of the
date first above written.

THE VARIABLE ANNUITY
LIFE INSURANCE COMPANY


By: /s/ THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
    -----------------------------------------------
     [Title]


AMERICAN GENERAL LIFE
INSURANCE COMPANY


By: /s/ AMERICAN GENERAL LIFE INSURANCE COMPANY
    -------------------------------------------
     [Title]


GULF LIFE INSURANCE COMPANY


By: /s/ GULF LIFE INSURANCE COMPANY
    -------------------------------
     [Title]


                                      47
<PAGE>
 
FIRST ALLMERICA FINANCIAL 
LIFE INSURANCE COMPANY

By: /s/ FIRST ALLMERICA FINANCIAL
        LIFE INSURANCE COMPANY
    -----------------------------
     [Title]


ALLMERICA FINANCIAL LIFE
INSURANCE AND ANNUITY COMPANY

By: /s/ ALLMERICA FINANCIAL LIFE
        INSURANCE AND ANNUITY COMPANY
    ---------------------------------
     [Title]


THE MUTUAL LIFE INSURANCE 
COMPANY OF NEW YORK

By: /s/ THE MUTUAL LIFE INSURANCE
        COMPANY OF NEW YORK
    -----------------------------
     [Title]

                                      48