Document:

<PAGE>   1
                                                                EXHIBIT(10)(oo)

                        COMMON STOCK PURCHASE AGREEMENT

                                    BETWEEN

                   SOUTH TEXAS DRILLING & EXPLORATION, INC.,

                                   AS SELLER

                                      AND

                         WEDGE ENERGY SERVICES, L.L.C.,
                                  AS PURCHASER

                                  DATED AS OF

                                  MAY 11, 2000

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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                               Page
<S>            <C>                                                                             <C>
       1.      Purchase and Sale ...............................................................1
               1.1    Consideration ............................................................1
               1.2    Delivery of Certificates .................................................1
               1.3    Material Adverse Effect ..................................................1
               1.4    Preemptive Rights ........................................................1
               1.5    Board Seat ...............................................................3
               1.6    Purchase Price Adjustment ................................................3
               1.7    Registration Rights Agreement ............................................3
               1.8    Company Right of First Offer .............................................4

       2.      The Closing .....................................................................4

       3.      Representations and Warranties of the Company ...................................4
               3.1    Organization and Existence ...............................................4
               3.2    Capitalization; Ownership of Stock; Authorization ........................5
               3.3    Enforceability ...........................................................5
               3.4    Securities and Exchange Commission .......................................6
               3.5    Litigation; Contingencies ................................................6
               3.6    No Subsidiaries ..........................................................6
               3.7    Title to Assets (Personal Property) ......................................6
               3.8    Consents .................................................................7
               3.9    Proprietary Rights .......................................................7
               3.10   Disclosure ...............................................................8
               3.11   Financial Statements .....................................................8
               3.12   Compliance with Laws; OSHA ...............................................8
               3.13   Labor Matters ............................................................9
               3.14   ERISA ....................................................................9
               3.15   Environmental Matters ....................................................9
               3.16   Permits and Licenses ....................................................10
               3.17   Insurance ...............................................................10
               3.18   Taxes ...................................................................10
               3.19   Absence of Certain Developments .........................................11
               3.20   Underground Storage Tanks ...............................................11

       4.      Representations and Warranties of the Purchaser ................................11
               4.1    Experience ..............................................................11
               4.2    Restricted Securities ...................................................11
               4.3    Unregistered Stock ......................................................12
</TABLE>

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<TABLE>
<S>            <C>                                                                             <C>
       5.      Conditions to Obligations of the Purchaser .....................................12
               5.1    Company's Representations and Warranties True at Closing ................12
               5.2    Opinion of Counsel for the Company ......................................12
               5.3    Absence of Restraint ....................................................14
               5.4    Company Officers' Certificate ...........................................14
               5.5    No Material Adverse Effect ..............................................14
               5.6    Consents and Other Approvals ............................................14
               5.7    Deliveries ..............................................................14

       6.      Nature and Survival of Representations and Warranties ..........................15
               6.1    Nature of Statements ....................................................15
               6.2    Survival of Representations and Warranties ..............................15
               6.3    Indemnity by the Company ................................................15
               6.4    Indemnity by the Purchaser ..............................................15
               6.5    Limitation of Liability .................................................15

       7.      Miscellaneous ..................................................................16
               7.1    Expenses ................................................................16
               7.2    Notices .................................................................16
               7.3    Post-Closing Actions ....................................................17
               7.4    Assignment ..............................................................17
               7.5    Successors Bound ........................................................17
               7.6    Section and Paragraph Headings ..........................................17
               7.7    Amendment ...............................................................17
               7.8    Entire Agreement ........................................................17
               7.9    Counterparts ............................................................17
               7.10   Governing Law ...........................................................18
               7.11   Arbitration .............................................................18
               7.12   Severability ............................................................18
</TABLE>

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<PAGE>   4

                        COMMON STOCK PURCHASE AGREEMENT

         THIS COMMON STOCK PURCHASE AGREEMENT, dated effective as of May
11, 2000 ("Agreement"), between WEDGE Energy Services, L.L.C., a Delaware
limited liability company (the "Purchaser"), and South Texas Drilling &
Exploration, Inc., a Texas corporation (the "Company").

                                  WITNESSETH:

         WHEREAS, the Purchaser is desirous of acquiring 3,678,161 shares of
the total authorized shares of common stock of the Company (the "Stock"); and

         WHEREAS, the Company desires to sell the Stock to Purchaser on the
terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and covenants herein contained, the parties hereby
agree as follows:

         1.       Purchase and Sale.

                  1.1 Consideration. The Company hereby agrees to deliver to
the Purchaser 3,678,161 shares of the Stock at a price of $2.175 per share. In
consideration for receipt of the Stock, and in reliance upon the
representations and warranties of the Company contained herein, the Purchaser
agrees to deliver to the Company on the Closing Date, cash in the aggregate
amount of $8,000,000, payable by wire transfer of immediately available funds.

                  1.2 Delivery of Certificates. The Company agrees that the
Stock to be delivered to Purchaser shall be duly issued and sealed, and shall
be fully paid, nonassessable and shall not be subject to fees, encumbrances,
pledges or other claims, and upon delivery to Purchaser will vest full, valid
and legal title to the Stock.

                  1.3 Material Adverse Effect. For purposes of this Agreement,
the term "Material Adverse Effect" shall mean an event, circumstance, loss,
development or effect (individually or in the aggregate) when considered in
light of the total operations of the Company, would prohibit the Company from
engaging in any material aspect of its business or result in a material adverse
change in the business, operations, properties, prospects or assets of the
Company, or if measured monetarily, would exceed $100,000.

                  1.4 Preemptive Rights. The Company hereby grants to Purchaser
the preemptive right to acquire a percentage of any additional capital stock of
any class or series, or debt convertible into capital stock, ("Preemptive Right
Securities") the Company may issue equal to the percentage of the Company's
outstanding common stock (assuming the conversion of all outstanding
convertible preferred stock or debt) held by the Purchaser immediately
preceding any such issuance of common stock. This preemptive right shall
terminate in the event Purchaser holds less than 10% of the outstanding common
stock of the Company. This preemptive right shall also terminate four (4) years

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following the date the Company becomes listed on the NASDAQ National Market
List or on a nationally recognized securities exchange; provided, however, in
the event after any such listing the Company shall become not so listed then
the preemptive rights shall be reinstated, subject to any other independent
reason for termination.

                  (a) Issuances for Cash. Purchaser's preemptive rights
         occasioned by the issuance by the Company of Preemptive Right
         Securities in exchange for cash shall include the right to purchase
         such Preemptive Right Securities at the same purchase price and other
         terms as the other purchasers of such Preemptive Right Securities,
         except in the case of an underwritten public offering of securities
         registered under the Securities Act of 1933, as amended, in which case
         Purchaser's purchase price shall be the price at which the Preemptive
         Right Securities are offered to the public. Upon receipt of written
         notice from the Company of its preemptive right to purchase Preemptive
         Right Securities offered for cash Purchaser shall provide notice of
         its intent to exercise or not to exercise its rights to the Company in
         writing within 10 days of its receipt of such notice from the Company
         and failure to provide notice within such 10 days shall be deemed to
         be a waiver of such rights. Any issuance of Preemptive Right
         Securities for cash not completed within 60 days of the date notice is
         provided by the Company to Purchaser as provided in the previous
         sentence hereof shall be deemed to be a new issuance of Preemptive
         Rights Securities to which this subparagraph applies. This preemptive
         right shall not apply to the issuance of capital stock issued pursuant
         to warrants, options, or other rights to acquire capital stock
         currently outstanding or which may be granted by the Company to any
         employee, consultant or director as incentive for any such employee,
         consultant or director to become or remain associated with the Company
         or to provide services to the Company which has been or will be issued
         under the Company's 1995 Stock Option Plan or its 1999 Stock Option
         Plan for shares of common stock which may be issued under such 1999
         Option Plan up to 1,500,000, or any other option plan, option, warrant
         or other rights to acquire capital stock which is or has been approved
         by the shareholders of the Company.

                  (b) Issuances for Other than Cash. Purchaser's preemptive
         rights occasioned by the issuance by the Company of Preemptive Right
         Securities in exchange for assets other than cash shall include the
         right to purchase such Preemptive Right Securities at a cash price per
         share (or other security unit) equal to the value per share (or other
         security unit) received by the Company as consideration for the
         issuance of the Preemptive Right Securities giving rise to Purchaser's
         rights as reflected on the regularly prepared financial statements of
         the Company. Provided, however, that if such Preemptive Right
         Securities are regularly traded, or are convertible into securities
         which are regularly traded, then the purchase price per share (or
         other security unit) shall be no less than the average of the average
         daily trading price of actual trades of such Preemptive Right
         Securities (or regularly trading securities into which such Preemptive
         Right Securities may be converted) for the 30 trading days preceding
         the date on which written notice of Purchaser's preemptive rights is
         delivered to Purchaser according to the following sentence. Upon
         receipt of written notice from the Company of its preemptive right to
         purchase Preemptive Right Securities offered for other than cash

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Purchaser shall provide notice of its intent to exercise or not to exercise its
rights to the Company in writing within 10 days of its receipt of such notice
from the Company and failure to provide notice within such 10 days shall be
deemed to be a waiver of such rights. Any issuance of Preemptive Right
Securities for other than cash not completed within 120 days of the date notice
is provided by the Company to Purchaser as provided in the previous sentence
hereof shall be deemed to be a new issuance of Preemptive Rights Securities to
which this subparagraph applies. All else notwithstanding, Purchaser shall have
no preemptive rights incident to a merger, plan of exchange or other
combination involving the Company requiring the approval of the shareholders of
the Company and regarding which such approval is obtained.

                  1.5 Board Seat. So long as Purchaser shall own at least 10%
of the capital stock of the Company, the Board of Directors agrees to support
and cause to be placed on the ballot at each election of Directors one name
which shall be a nominee to the Board of Directors of the Company (the "WEDGE
Board Nominee"). Additionally, the WEDGE Board Nominee shall be appointed to
serve on the audit committee and compensation committee of the Board of
Directors and such committees must be established within 60 days from the
Closing Date.

                  1.6 Purchase Price Adjustment. In the event that the book
value of the stockholders' equity of the Company as reflected in the year ended
audited financial statements dated March 31, 2000 is "materially" less than the
book value of the stockholders' equity of the Company as compared to the
Company's unaudited March 31, 2000 financial statements and as represented by
the Company to Purchaser, the number of shares shall be increased in accordance
with the formula set forth hereafter. For purposes of this paragraph 1.6,
"materially" shall mean $50,000 to the extent stockholders' equity is adjusted
as the result of an adjustment to operating revenues or operating expenses and
shall mean $115,000 with regard to any other adjustments to stockholders'
equity. All amounts determined hereunder shall be determined in accordance with
generally accepted accounting principles applied on a consistent basis. The
formula to determine the purchase price adjustment shall be as follows:

                               X-Y    x  .33 =  Z
                               -----
                               2.175

                  X =      Difference between the book value of stockholders'
                           equity as reflected in the year end audited
                           financial statements dated March 31, 2000 and the
                           unaudited book value of stockholders' equity as of
                           March 31, 2000

                  Y =      $50,000 or $115,000 as provided above

                  Z =      Number of additional shares to be issued to
                           Purchaser

                  1.7 Registration Rights Agreement. Simultaneous with the
execution of this Agreement, the Company shall agree to enter into that certain
Registration Rights Agreement, in the

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form and substance of Exhibit "A" attached hereto and incorporated herein for
all purposes, setting forth the relative rights, duties and obligations of
Purchaser and the Company.

                  1.8 Company Right of First Offer. Purchaser agrees that it
will not sell, transfer or otherwise make a disposition of any common stock of
the Company other than into the public trading market under Rule 144 or
incident to any registration right granted by the Company to Purchaser without
first offering the stock Purchaser desires to transfer (the "Disposition
Stock") to the Company in writing (the "Disposition Notice") at the price and
other terms (the "Disposition Terms") under which Purchaser desires to transfer
the Disposition Stock. Upon receipt of any Disposition Notice the Company shall
have the assignable right to acquire the Disposition Stock from Purchaser under
the Disposition Terms at any time within 45 days following the Company's
receipt of the Disposition Notice (the "Company Disposition Period") so long as
the Company shall provide Purchaser with an affirmative written acknowledgment
of its intent to acquire the Disposition Stock within 10 days from the
Disposition Notice. If the Company or its assignee does not tender to Purchaser
everything required to purchase the Disposition Stock under the Disposition
Terms within the Company Disposition Period, Purchaser may complete a
disposition of the Disposition Stock to any third party in a matter conforming
to applicable securities laws during the 45 day period following the end of the
Company Disposition Period, but not thereafter unless the procedures of this
paragraph are again complied with. The requirements of this paragraph shall not
apply to the pledge or gift of the Company's common stock by the Purchaser or a
disposition to an affiliate of Purchaser or to a disposition approved by the
Board of Directors of the Company. Provided, however, any affiliate transferee
or donee of the common stock shall first be required to agree in writing to be
bound by the terms of this paragraph. Purchaser agrees that certificates
representing the common stock of the Company subject to this paragraph may be
legended in order to provide notice of the application of this paragraph to
third parties.

         2. The Closing. The closing of the transactions provided for in
Section 1 of this Agreement (herein called the "Closing") shall take place at
the offices of the Company, 9310 Broadway, Building I, San Antonio, Texas, on
or before May 12, 2000 (the "Closing Date").

         3. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that, as of the date of this
Agreement, and again as of the Closing Date that:

                  3.1 Organization and Existence. The Company is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Texas and has all requisite corporate power to carry on its business
as now conducted and is qualified to do business in those jurisdictions where
such registration is required; its lease of property nor the conduct of its
business requires such qualification under the laws of any other jurisdiction,
except where the failure to do so would not have a Material Adverse Effect on
the financial condition or results of operations of the Company. The Company
has delivered to the Purchaser complete and correct copies of the Articles of
Incorporation and Bylaws of the Company as in effect on the date hereof.

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                  3.2 Capitalization; Ownership of Stock; Authorization. The
Company is a corporation duly organized and validly existing and in good
standing under the laws of the state of Texas and has all requisite corporate
power and authority to carry on its business as now conducted and proposed to
be conducted. The Company has 15,000,000 authorized shares of its common stock
$0.10 par value (the "Common Stock") and 584,615 authorized shares of its
preferred stock (the "Preferred Stock"). As of March 31, 2000, the Company had
(a) 7,274,684 issued and outstanding shares Common Stock; (b) 400,000
authorized shares of Series A Preferred Stock, $200 redemption and liquidation
value, of which 400,000 shares are issued and outstanding; (c) 184,615 shares
of Series B Preferred Stock, $16.25 redemption and liquidation value, of which
184,615 shares are issued and outstanding; and (d) no treasury shares. As of
March 31, 2000, the Company had granted stock options which, if all were
exercised, would equal 1,751,000 shares of Common Stock. Other than the
registration rights granted to Purchaser in accordance with the transactions
contemplated hereby, the Company has only incidental registration rights to two
(2) of its officers and directors, Wm. Stacy Locke and Michael E. Little, and
no other individual or entity has any registration rights of any kind or nature
(other than rights under Form S-8), including incidental or demand registration
rights. Other than items referred to herein, there are no other options,
warrants, rights, conversion rights, phantom rights, preemptive rights or any
other rights by any party to receive equity of the Company. Upon issuance of
the Stock to Purchaser, Purchaser will be the record and beneficial owner of
the Stock and the Stock will be duly authorized, validly issued and
outstanding, fully paid and nonassessable and would have been issued in
accordance with appropriate federal and state securities law. By virtue of the
consummation of the transactions contemplated herein, Purchaser shall receive
good and valid title to the Stock, free and clear of all liens, encumbrances,
pledges, options, claims, assessments and adverse charges. Upon issuance of the
Stock, Purchaser's ownership will constitute 3.9% of the Company's issued and
outstanding shares of capital stock as of the Closing Date. As a result of the
issuance of the Stock, the Company is not, nor will it become, obligated to
issue any additional shares of capital stock (preferred or common) to any
officer, director, shareholder or other party.

         The execution, delivery and performance of this Agreement and the
Registration Rights Agreement will not result in a violation or breach of any
term or provision of or constitute a default or accelerate the performance
required under the Articles of Incorporation or Bylaws of the Company or any
indenture, mortgage, deed of trust or other contract or agreement to which the
Company is a party or by which its assets are bound, or violate any order,
writ, injunction or decree of any court, administrative agency or governmental
body.

                  3.3 Enforceability. The Company has full right, power, legal
capacity and authority to execute, deliver and perform this Agreement and the
Registration Rights Agreement and to consummate the transactions contemplated
hereby and thereby, and this Agreement and the Registration Rights Agreement
are valid and legally binding obligations enforceable in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights, by the availability of injunctive relief or specific performance and by
general principles of equity.

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<PAGE>   9

                  3.4 Securities and Exchange Commission. The Company has filed
all forms, reports and documents required to be filed by the Securities and
Exchange Commission, National Association of Securities Dealers, Inc. and the
state of Texas in order to comply with all applicable laws, rules and
regulations of the Securities Act of 1933, as amended (the "Act"), the
Securities and Exchange Act of 1934, as amended, and the securities laws of the
state of Texas. Notwithstanding the foregoing, Seller has delivered to
Purchaser a copy of that certain "no action" letter dated August 25, 1999 from
the Securities and Exchange Commission regarding Seller's failure to comply
with Regulation S-X of the Act in connection with its acquisition of assets of
Howell Drilling, Inc.

                  3.5 Litigation; Contingencies. Except as described on
Schedule 3.5, there is no action, suit or proceeding pending or, to the
knowledge of the Company, threatened against the Company before any court,
agency or arbitrator which might result in any Material Adverse Effect in the
business, properties or condition (financial or otherwise) of the Company or
which question the validity of any action taken or to be taken pursuant to on
in connection with this Agreement, the Registration Rights Agreement or the
Stock.

                  3.6 No Subsidiaries. Other than subsidiaries that have no
assets, liabilities or operations, the Company has no subsidiaries or any
interests in other corporations, partnerships or joint ventures.

                  3.7 Title to Assets (Personal Property).

                  (a) The Company is the owner of, and has marketable title to,
         all of its assets, free and clear of all liens except those set forth
         on Schedule 3.7(a) hereto and except for those assets leased under
         leases specifically identified on Schedule 3.7(a) hereto. The assets
         referred to in the preceding sentence include, without limitation, all
         assets, properties and rights of the Company shown or reflected on the
         March 31, 2000 Balance Sheet or acquired by the Company since March
         31, 2000, except only for (i) cash expended and (ii) inventories and
         other assets used or sold and receivables collected in the ordinary
         course of business since March 31, 2000. The Company has maintained
         all tangible assets material to the business in good repair, working
         order and operating condition, subject only to ordinary wear and tear,
         and all such tangible assets are suitable for the purposes for which
         they are presently being used.

                  (b) With respect to each lease of real or personal property
         of the Company: (i) the lease is valid and binding on the Company and
         in full force and effect, (ii) no rental payment is in default, (iii)
         the Company is in peaceable possession of the real property or
         personal property which is subject thereto, and (iv) the Company is
         not in default of any material provision thereof, and to the best
         knowledge of the Company, no event has occurred that with the giving
         of notice, the passage of time or both, would become a material
         default under any such lease.

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<PAGE>   10

                  (c) Except as set forth on Schedule 3.7(c), the Company has
         all easements, rights-of-way and similar authorizations required for
         the use of the real property leased by the Company and in the conduct
         of the business as heretofore conducted, excluding immaterial
         easements (the "Easements"). To the best knowledge of the Company, no
         party thereto is in default of any material provision of any easement
         or any material covenant, restriction or other agreement encumbering
         any of the real property, and to the best knowledge of the Company, no
         event that with the giving of notice, the passage of time or both
         would become a material default, has occurred under any easement or
         any material covenant, restriction or other agreement encumbering any
         of the real property. Neither the whole nor any portion of any real
         property occupied by the Company has been condemned or otherwise taken
         by any public authority, and the Company has received no written
         notice that any such condemnation or taking is threatened or
         contemplated.

                  (d) (i) Neither the properties owned or occupied by the
         Company nor the occupancy or operation thereof is in material
         violation of any law or any building, zoning or other ordinance, code
         or regulation; (ii) no notice from any governmental body has been
         served upon the Company or upon any property owned or occupied by the
         Company claiming any material violation of any such law, ordinance,
         code or regulation or requiring, or calling to the attention of the
         Company the need for, any work, repair, construction, alterations or
         installation on or in connection with any such properties which has
         not been complied with; and (iii) there is no material encroachment of
         the improvements located on the real property owned or occupied by the
         Company upon any adjoining property, or of improvements located on any
         adjoining property upon any property owned or occupied by the Company.

                  3.8 Consents.

                  (a) The Company is not required to obtain any consent from or
         approval of any court, governmental entity or any other person in
         connection with the execution, delivery or performance by it of this
         Agreement or the Registration Rights Agreement and the transactions
         contemplated hereby. The consummation of the transactions contemplated
         by this Agreement will not require the approval of any entity or
         person in order to prevent the termination of any material right,
         privilege, license or agreement of the Company.

                  3.9 Proprietary Rights. All patents (pending or issued),
copyrights, trademarks, state, federal and foreign registrations and
applications and trade secrets of the Company are listed in Schedule 3.9 (the
"Proprietary Rights") and are valid and in full force and effect and are not
subject to any taxes, maintenance fees, or extension, renewal or continuation
actions by the Company falling due within 90 days after the date hereof. Except
as disclosed on Schedule 3.9, there have not been any claims, actions or
judicial or other adversary proceedings involving the Company concerning any of
the Proprietary Rights and, no such action or proceeding is threatened. The
Company has the right and authority to use each item of the rights and property
referenced in Schedule 3.9 in connection with the conduct of its business
including all patents, trademarks, computer hardware and software licenses;
such use has not and will not conflict with, infringe upon, or violate any
patent or other

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<PAGE>   11
proprietary right of any other person, and the Company has not infringed and is
not now infringing any proprietary right belonging to any other person. There
are no outstanding nor threatened claims for breach, termination or penalty
payment with respect to any licenses or similar agreements or arrangements
identified in Schedule 3.9. In regard to all issued and pending patents, the
Company is unaware of any third party infringing upon its rights and authority
to fully utilize and protect such proprietary rights.

         3.10 Disclosure. The Company represents and warrants that no
representation or warranty by the Company in this Agreement or in any of
Exhibit or Schedules hereto, or certificate furnished to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby,
contains or will contain any materially untrue statement of a material fact;
and further, no Schedule omits or will omit any material item required to be
included in such Schedule. Any indemnification by the Company hereunder for a
breach of its representation and warranty in this Section 3.10 shall be made in
the manner applicable pursuant to Section 9 hereof to such representation and
warranty or to the provision of this Agreement to which such Exhibit, Schedule
or certificate relates.

         3.11 Financial Statements. The Company has caused to be delivered to
the Purchaser the Financial Statements for the Company. "Financial Statements"
shall mean the unaudited balance sheet and statements of operations, changes in
equity and cash flows for the Company as of and for the fiscal quarter ended
March 31, 2000. Prior to Closing, the Company shall also deliver to the
Purchaser each monthly financial statement that is produced by the Company
during calendar year 2000 in its ordinary course of business and such monthly
financial statements shall be included in this definition of Financial
Statements. The Financial Statements have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent with
prior periods. Except as disclosed on Schedule 3.11, all of the Financial
Statements present fairly the financial position and the results of operations
of the Company on the dates and for the periods shown therein, and to the best
knowledge of the Company, there has been no Material Adverse Effect in the
financial condition of the Company since March 31, 2000.

         Except as disclosed in the Financial Statements or in Schedule 3.11,
the Company has no debt, liability or obligation, contingent or otherwise,
which would have a Material Adverse Effect on the business or the assets of the
Company.

         3.12 Compliance with Laws; OSHA. To the best of the knowledge of the
Company, the Company is in compliance with all applicable laws, ordinances,
statutes, rules, regulations and orders promulgated by any court or federal,
state or local governmental body or agency relating to its assets and business
the failure to comply with which would cause a Material Adverse Effect. Except
as otherwise disclosed in Schedule 3.12, the Company has not received any
notice, citation, claim, assessment or proposed assessment as to or alleging
any violation of any Federal, state or local Occupational Safety and Health
laws and no violations which materially, presently exist.

                                       8
<PAGE>   12
         3.13 Labor Matters. There is no labor strike or labor disturbance
pending, or to the knowledge of the Company threatened, against the Company nor
is any arbitration concerning an employee grievance currently pending against
the Company. The Company has experienced no work stoppage or other material
labor disturbance within the past three years. The Company is not a party to
any collective bargaining agreement with respect to its employees and, to the
knowledge of the Company, there are no current attempts to organize its
employees.

         3.14 ERISA. Schedule 3.14 contains a list of each pension, retirement,
savings, deferred compensation, and profit-sharing plan and each stock option,
stock appreciation, stock purchase, performance share, bonus or other incentive
plan, severance plan, health, group insurance or other welfare plan, or other
similar plan and any "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974 ("ERISA"), under which
the Company has any current or future obligation or liability or under which
any employee or former employee (or beneficiary of any employee or former
employee) of the Company has or may have any current or future right to
benefits on account of employment with the Company (the term "plan" shall
include any contract, agreement, policy or understanding, each such plan being
hereinafter referred to individually as a "Plan"). Each Plan intended to be tax
qualified under Sections 401(a) and 501(a) of the Internal Revenue Code of 1986
(the "Code") is, and has been determined by the IRS to be, tax qualified under
Sections 401(a) and 501(a) of the Code and, since such determination, no
amendments to or failure to amend any such Plan or any other circumstances
adversely affects its tax qualified status. There has been on prohibited
transaction within the meaning of Section 4975 of the Code and Section 406 of
Title I of ERISA with respect to any Plan that is subject to the prohibited
transaction requirements of the Code or ERISA.

         3.15 Environmental Matters. Except as set forth on Schedule 3.15(i)
the Company has obtained all Environmental Permits that are required with
respect to its business, operations and properties, either owned or leased, and
(ii) the Company and its properties are in compliance with all terms and
conditions of all applicable Requirements of Environmental Law and
Environmental Permits, the failure to comply with which would cause a Material
Adverse Affect. Except as would not have a Material Adverse Effect or as
disclosed on Schedule 3.15, there are no Environmental Claims pending, or, to
the knowledge of the Company, threatened, against the Company. The Company has
not received any notice from any governmental authority of any violation or
liability arising under any Requirements of Environmental Law or Environmental
Permit in connection with the assets, the businesses or operations of the
Company.

                  "Environmental Claim" means any third party (including
         governmental agencies and employees) action, lawsuit, claim or
         proceeding (including claims or proceedings under the Occupational
         Safety and Health Act or similar laws relating to safety of employees)
         which seeks to impose liability for (i) pollution or contamination of
         the air, surface water, ground water or land; (ii) solid, gaseous or
         liquid waste generation, handling, treatment, storage, disposal or
         transportation; (iii) exposure to hazardous or toxic substances; (iv)
         the safety or health of employees or (v) the transportation,
         processing, distribution in commerce, use, or storage of hydrocarbons
         or chemical substances. An Environmental Claim includes, but is not

                                       9
<PAGE>   13
         limited to, a common law action, as well as a proceeding to issue,
         modify or terminate an Environmental Permit.

                  "Environmental Permit" means any permit, license, approval or
         other authorization under any applicable law, regulation and other
         requirement of the United States or foreign country or of any state,
         municipality or other subdivision thereof relating to pollution or
         protection of health or the environment, including laws, regulations
         or other requirements relating to emissions, discharges, releases or
         threatened releases of Pollutants, contaminants or hazardous
         substances or toxic materials or wastes into ambient air, surface
         water, ground water or land, or otherwise relating to the manufacture,
         processing, distribution, use, treatment, storage, disposal,
         transportation, or handling of hydrocarbons or chemical substances,
         pollutants, contaminants or hazardous or toxic materials or wastes.

                  "Requirements of Environmental Law" means all requirements in
         effect on the Closing Date imposed by any law, rule, regulation, or
         order of any federal, foreign, state or local executive, legislative,
         judicial, regulatory or administrative agency, board or authority with
         jurisdiction over the Company or its properties or assets which relate
         to (i) pollution or protection of the air, surface water, ground water
         or land; (ii) solid, gaseous or liquid waste generation, treatment,
         storage, disposal or transportation; (iii) exposure to hazardous
         or toxic substances; (iv) the safety or health of employees or (v)
         regulation of the manufacture, processing, distribution in commerce,
         use, or storage of chemical substances.

                  3.16 Permits and Licenses. The Company has all material
licenses, permits and other authorizations necessary for the conduct of its
business as it is currently being conducted. Schedule 3.16 sets forth an
accurate list and summary description of all permits, titles (excluding motor
vehicles, titles and current registrations which have been made available to
the Purchaser), fuel permits, licenses, franchises and certificates (the
"Permits") held by the Company. To the best of the Company's knowledge, all of
such Permits are adequate for the operation of the business of the Company as
it is presently being conducted.

                  3.17 Insurance. All insurance policies (together with all
riders and amendments) relating to the assets or the business of the Company
are sufficient to protect against any material claim for casualty or property
damage. Such insurance policies are in full force and effect, all premiums due
thereon have been paid or accrued on the books of the Company and will not
terminate as of the Closing or the consummation of the transactions
contemplated hereby. The Company has no reason to believe that such insurance
policies will be terminated or subject to non-renewal.

                  3.18 Taxes. The Company has filed all tax returns and reports
required by law to be filed, or filed extensions for any period in which a tax
return was due and has paid or accrued on the financial statements provided to
the Purchaser all taxes, assessments and other governmental charges that are
due and payable. The charges, accruals and reserves on the books of the Company
in respect of taxes for all fiscal periods are considered adequate by the
Company, and the Company knows of no assessment for additional taxes for any of
such fiscal years or any basis therefor. All tax

                                      10
<PAGE>   14

returns and reports are complete. No claim has ever been made to the Company's
knowledge that the Company is subject to a tax in any jurisdiction in which the
Company has not filed a return which remains unpaid as of the Closing Date. The
Company has withheld and paid all taxes required to have been withheld or paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party. The Company has not
since 1990 been the subject of an audit and the Company has not waived any
statute of limitations or agreed to an extension of time with respect to a tax
assessment or deficiency.

                  3.19 Absence of Certain Developments. Since March 31, 2000,
there has been no change which would have a Material Adverse Effect,
individually or in the aggregate, in the assets, liabilities, condition
(financial or otherwise), operating results, business or prospects of the
Company, except changes in the ordinary course of business. Except as disclosed
on Schedule 3.19, the Company has not, since the date of the Financial
Statements, directly or indirectly, declared or paid any dividend or ordered or
made any other distribution on account of any shares of any class of the
capital stock of the Company. The Company has not, since such date, directly or
indirectly redeemed, purchased or otherwise acquired any such shares or agreed
to do so or set aside any sum or property for any such purpose. Additionally,
except for the previous sale of common stock of the Company to Purchaser on or
about February 18, 2000, there have been no other sales of securities of any
kind or nature by the Company.

                  3.20 Underground Storage Tanks. There are no underground
storage tanks on any of the Company's owned or leased real property.

         4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company that:

                  4.1 Experience. The Purchaser is an "accredited investor"
within the meaning of Regulation D promulgated by the Securities and Exchange
Commission under the Act, and (by virtue of its experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company) it is capable of evaluating the merits and risks of its
investment in the Company. Purchaser acknowledges that it had the opportunity
to ask questions of the officers of the Company. In reaching the conclusion
that it desires to acquire the Stock, Purchaser has evaluated its financial
resources and investment position and the risks associated with this investment
and acknowledges that it is able to bear the economic risks of this investment.

                  4.2 Restricted Securities. As of the date hereof, Purchaser
represents, warrants and agrees that it is acquiring the Stock solely for its
own account, for investment, and not with a view to the distribution or resale
thereof. Purchaser further represents that its present financial condition is
such that it is not under any present necessity or constraint to dispose of
such Stock to satisfy any existing or contemplated debt or undertaking and that
the investment is suitable for Purchaser upon the basis of Purchaser's other
security holdings, financial situation and needs. The Purchaser acknowledges
and understands that it must bear the economic risk of this investment for an
indefinite period of time because the Stock must be held indefinitely unless
subsequently registered

                                      11
<PAGE>   15

under the Act and applicable state and other securities laws or unless an
exemption from such registration is available.

                  4.3 Unregistered Stock. Purchaser is aware that the Stock has
not been registered under the Act, and that, accordingly, the Stock must be
held unless it is subsequently registered under said Act or unless, in the
opinion of counsel reasonably satisfactory to the Company, a sale or transfer
may be made without registration thereunder. Purchaser agrees that any
certificates evidencing the Stock must bear a standard legend restricting the
transfer thereof consistent with the foregoing and that a notice may be made in
the records of the Company or its transfer agent restricting the transfer of
the Stock in a manner consistent with the foregoing.

         5. Conditions to Obligations of the Purchaser. The obligations of the
Purchaser under Section 1 of this Agreement shall, except as may be waived in
writing Purchaser, be subject to the following conditions:

                  5.1 Company's Representations and Warranties True at Closing.
The Purchaser shall not have discovered any material error, misstatement or
omission in the representations and warranties made by the Company in Section 3
hereof which such error, misstatement or omission remains uncured; and the
Company shall have performed and complied with in all material respects all
agreements and conditions required by this Agreement to be performed or
complied with by it at or prior to the Closing.

                  5.2 Opinion of Counsel for the Company.

                  (a) The Purchaser shall have received an opinion of Matthews
         and Branscomb, counsel for the Company, dated the Closing Date, to the
         effect that, among other things:

                           (i) The Company is a corporation duly incorporated
                  and validly existing and in good standing under the laws of
                  the state of Texas, has all requisite corporate power to own
                  its properties and assets and to carry on its business as now
                  conducted;

                           (ii) The Company is duly qualified to do business
                  and is in good standing in the state of Texas and is not
                  required to be qualified in any foreign jurisdictions;

                           (iii) The authorized capital stock of the Company
                  consists of: (i)________ shares of Common Stock, $_____ par
                  value, of which ______ shares are issued and outstanding and
                  ______ shares of Preferred Stock, $_____ par value, of which
                  ________ shares are issued and outstanding. To the best of
                  such counsel's knowledge, the Stock has been duly and validly
                  authorized and issued, is fully paid and non assessable, was
                  not issued in violation of the preemptive rights, if any,
                  and, to the best of such counsel's knowledge, the Company has
                  outstanding no options, warrants, calls or other commitments
                  of any kind relating to any issued, or authorized but
                  unissued, capital stock of the Company, except as disclosed
                  herein. To the best of

                                      12

<PAGE>   16

                  counsel's knowledge, (A) the issuance of the Stock will not
                  cause an obligation of the Company to issue any additional
                  shares of capital stock (preferred or common) solely as a
                  result of the transactions contemplated hereby, and (B) there
                  are no shareholders who may have any registration rights
                  other than Wm. Stacy Locke and Michael E. Little;

                           (iv) The consummation of the transactions
                  contemplated by this Agreement will not result in the breach
                  of or constitute a default (including with regard to the
                  giving of notice or the passing of time or both) under the
                  Articles of Incorporation or Bylaws of the Company or to the
                  best of such counsel's knowledge, any statute, rule or
                  regulation or, to the best of such counsel's knowledge, any
                  loan, credit or similar agreement or judicial or governmental
                  decree, order or judgment to which the Company is a party or
                  by which the Company or its properties are bound;

                           (v) To the best of such counsel's knowledge, no
                  authorization, approval or consent of or declaration or
                  filing with any governmental authority or regulatory body,
                  Federal, state or local, is necessary or required of the
                  Company in connection with the execution and delivery of this
                  Agreement or the performance by the Company of its
                  obligations hereunder;

                           (vi) To the best of such counsel's knowledge, except
                  as described on Schedule 3.5, there is no outstanding
                  litigation by or against the Company;

                           (vii) This Agreement has been duly authorized,
                  executed and delivered by the Company and constitutes valid
                  and binding obligations of the Company enforceable in
                  accordance with its terms (except as otherwise limited by
                  bankruptcy, insolvency, reorganization, moratorium and
                  similar laws affecting the enforcement of creditors' rights
                  or by general principles of equity, and except that such
                  counsel need not express an opinion as to whether any
                  covenant contained in this Agreement is specifically
                  enforceable);

                           (viii) To the best of such counsel's knowledge, the
                  consummation of the transactions contemplated by this
                  Agreement will not result in the breach of or constitute a
                  default under any statute, rule or regulation applicable to
                  the Company or, to the best of such counsel's knowledge, any
                  loan, credit or similar agreement or judicial or governmental
                  decree, order or judgment to which the Company is a party;

                           (ix) No authorization, approval or consent of or
                  declaration or filing with any governmental authority or
                  regulatory body, federal, state or local, is necessary or
                  required of the Company in connection with the execution and
                  delivery of this Agreement or the performance by the Company
                  of its obligations hereunder; and

                                      13

<PAGE>   17

                           (x) The certificates representing the Stock have
                  been delivered to Purchaser, and such delivery is effective
                  to vest in Purchaser valid, legal and record ownership in the
                  Stock on the share transfer books and the stock ledger of the
                  Company.

                  The opinions referred to in this Section may, as to matters
of fact, be given in reliance upon certificates of officers and directors of
the Company, certificates of the Company and certificates of public officials,
and as to matters of law involving the laws of any jurisdiction other than the
United States or the State of Texas, upon opinions of counsel satisfactory to
the Purchaser and its counsel. Such opinions may contain such exceptions,
qualifications and explanations as shall be reasonably acceptable to the
Purchaser and its counsel.

                  5.3 Absence of Restraint. No order to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions
contemplated hereby shall have been entered; and, on the Closing Date, there
shall not be any pending or threatened litigation in any court, or any
proceeding by or before any governmental commission, board or agency, with a
view to seeking to restrain or prohibit consummation of this Agreement or the
transactions contemplated hereby or in which divestiture, rescission or
significant damages are sought in connection with this Agreement or the
transactions contemplated hereby, and no investigation by any governmental
agency shall be pending or threatened which might result in any such litigation
or other proceeding.

                  5.4 Company Officers' Certificate. The Purchaser shall have
received a certificate, dated the Closing Date, of the president, executive
vice president and financial officers of the Company (the "Officers'
Certificate") to the effect that the representations and warranties relating to
the Company or its business, financial condition, properties or assets are true
in all material respects at and as of the Closing Date or, to the extent such
representations and warranties are made at and as of a specific date, such
representations and warranties were true in all material respects, and as of
such date.

                  5.5 No Material Adverse Effect. No Material Adverse Effect in
the results of operations, financial condition or business of the Company taken
as a whole shall have occurred, and the Company shall not have suffered any
material loss or damages to any of its properties or assets which change, loss
or damage materially affects or impairs the ability of the Company to conduct
its respective businesses.

                  5.6 Consents and Other Approvals. Purchaser shall have
received all consents and other approvals which are necessary or required, if
any, to consummate this Agreement.

                  5.7 Deliveries. Purchaser shall have received (i) stock
certificates reflecting the Stock, (ii) a fully executed Registration Rights
Agreement, and (iii) any other documents which Purchaser may reasonably request
to consummate this Agreement and the transactions contemplated hereby.

                                      14
<PAGE>   18

         6. Nature and Survival of Representations and Warranties.

                  6.1 Nature of Statements. All statements contained in any
Exhibit or schedule hereto or in any certificate or other instrument delivered
by or on behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties by the Company.

                  6.2 Survival of Representations and Warranties. All
covenants, agreements, representations and warranties made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby
shall survive the Closing. Generally, all covenants, representations and
warranties shall remain effective for a period of 24 months from the date of
closing. The representations and warranties of the Company with respect to
litigation, ERISA and environmental matters shall remain effective for a period
of 48 months from the Closing Date. The representations and warranties of the
Company with respect to taxes and title to Stock shall survive for the
applicable limitations period established by law. Notwithstanding the foregoing,
any bona fide claim which shall have been asserted during any such survival
period and the obligation to indemnify for such claim shall continue in effect
until such time as such claim shall have been resolved or settled.

                  6.3 Indemnity by the Company. The Company shall indemnify and
hold harmless Purchaser and the officers, directors, managers, agents,
affiliates and representatives of Purchaser or any of them (the "Purchaser
Indemnitees") from and against, and shall reimburse the Purchaser Indemnitees
from any loss, liability, damage or expense, including reasonable attorneys'
fees and costs of investigation incurred as a result thereof, that the
Purchaser Indemnitees shall incur or suffer (collectively, the "Purchaser
Recoverable Losses"), arising out of or resulting from (a) any
misrepresentation by the Company, or (b) breach by the Company of any (i)
representation or warranty contained in Article 3 hereof, (ii) agreement or
covenant under or pursuant to this Agreement, including the Registration Rights
Agreement, or (iii) document, certificate, schedule or instrument delivered by
or on behalf of the Company pursuant hereto.

                  6.4 Indemnity by the Purchaser. Purchaser shall indemnify and
hold harmless the Company and the officers, directors, agents, affiliates and
representatives of the Company or any of them (the "Company Indemnitees") from
and against, and shall reimburse the Company Indemnitees for any loss,
liability, damage or expense, including reasonable attorneys' fees and cost of
investigation incurred as a result thereof, that the Company Indemnitees shall
incur or suffer (collectively, the "Company's Recoverable Losses") resulting
from (a) any misrepresentation by Purchaser, or (b) breach by Purchaser of any
(i) representation or warranty contained in Article 4 hereof, (ii) agreement or
covenant under or pursuant to this Agreement, or (iii) document, certificate,
schedule or instrument delivered by or on behalf of Purchaser in connection
herewith.

                  6.5 Limitation of Liability. Notwithstanding any liability
which the Company or the Purchaser may incur in Sections 6.3 and 6.4,
respectively, above, the Company shall not be obligated for a Purchaser's
Recoverable Loss, and the Purchaser shall not be obligated for a Company's
Recoverable Loss, unless and until such loss, individually, or in the
aggregate, shall have exceeded $100,000, in which case such liability shall be
for all amounts in excess thereof

                                      15
<PAGE>   19

         7. Miscellaneous.

                  7.1 Expenses. Each of the parties will pay their respective
costs and expenses (including legal fees) in connection with this Agreement and
the Registration Rights Agreement and all filing requirements of Purchaser as a
result of the transactions contemplated hereby.

                  7.2 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been given if
personally delivered or mailed, registered or certified mail, postage prepaid,
or by facsimile with confirmation of sending such communication by the party
giving notice:

                     (a)     if to the Company, to:

                                      South Texas Drilling & Exploration, Inc.
                                      9310 Broadway, Building I
                                      San Antonio, Texas 78217
                                      Attention: Wm. Stacy Locke
                                      Fax No.: 210-828-8228

                             with copy to:

                                      Matthews and Branscomb
                                      106 South St. Mary's Street
                                      Suite 700
                                      San Antonio, Texas 78205
                                      Attention: John D. Fisch
                                      Fax No.: 210-226-0521

                     (b)     if to the Purchaser, to.

                                      WEDGE Energy Services, L.L.C.
                                      1415 Louisiana, Suite 3000
                                      Houston, Texas 77002
                                      Attention: President
                                      Fax No.: 713-524-3586

                             with copy to:

                                      WEDGE Group, Inc.
                                      1415 Louisiana, Suite 3000
                                      Houston, Texas 77002
                                      Attention: Richard E. Blohm, Jr.
                                      Fax No.: 713-524-3586

                                      16
<PAGE>   20

                             with an additional copy to:

                                      DiCecco, Fant & Burman, L.L.P.
                                      1900 West Loop South, Suite 1100
                                      Houston, Texas 77027
                                      Attention: Darryl M. Burman
                                      Fax No.: 713-961-3938

or at such other address as shall be given in writing by either party to the
other.

                  7.3 Post-Closing Actions. Each party hereto hereby agrees
to deliver or cause to be delivered to the requesting party on the Closing
Date, and at such other subsequent times and places as shall be reasonably
agreed on, such additional instruments as the requesting party may reasonably
request for the purpose of carrying out this Agreement. Prior to the Closing
Date, the Company will cooperate and use its reasonable efforts to have the
present officers, directors and employees of the Company cooperate with the
Purchaser in furnishing information, and other assistance in connection with
any actions, proceedings, arrangements or disputes of any nature with respect
to matters pertaining to all periods prior to the Closing Date.

                  7.4 Assignment. This Agreement may be assigned at any time,
by Purchaser to an Affiliate, without the prior consent of the other party so
long as the party to whom this Agreement is assigned to agrees to be bound by
all terms and conditions contained herein.

                  7.5 Successors Bound. Subject to the provisions of Section
7.4, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective predecessors, successors and assigns.

                  7.6 Section and Paragraph Headings. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

                  7.7 Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.

                  7.8 Entire Agreement. This Agreement, the exhibits, annexes
and schedules hereto and the documents specifically referred to herein or
executed contemporaneously herewith constitute the entire agreement,
understanding, representations and warranties of the parties hereto.

                  7.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                                      17
<PAGE>   21
                  7.10 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Texas. Any dispute
hereunder shall be resolved through arbitration and may be brought in Houston,
Harris County, Texas.

                  7.11 Arbitration.

                  (a) Negotiation Period. Any dispute, controversy or claim
         arising out of or relating to this Agreement, or any alleged breach
         hereof, will be subject to binding arbitration in accordance with this
         Section 7.11. If such a dispute, controversy or claim exists, the
         parties shall attempt for a 30-day period (the "Negotiation Period")
         from the date any party gives any one or more of the other parties
         notice (a "Dispute Notice") pursuant to this Section, to negotiate in
         good faith, a resolution of the dispute. The Dispute Notice shall set
         forth with specificity the basis of the dispute. During the Negotiation
         Period, representatives of each party involved in the dispute who have
         authority to settle the dispute shall meet at mutually convenient times
         and places and use their best efforts to resolve the dispute.

                  (b) Commencement of Arbitration. If a resolution is not
         reached by the parties prior to the end of the Negotiation Period,
         either party may provide a written request to the American Arbitration
         Association within ten (10) days from the end of such period requesting
         the selection of three (3) arbitrators (the "Panel") to arbitrate the
         parties' respective rights and obligations with respect to the matters
         set forth in the Dispute Notice. Each arbitrator on the Panel shall be
         experienced in the arbitration of complex commercial disputes.

                  (c) Discovery. Each party to an arbitration shall be entitled
         to such discovery as the Panel shall determine is appropriate.

                  (d) Expenses of Arbitration. The expenses of the Panel shall
         be paid by the party that does not substantially prevail on the merits
         in the arbitration (as determined by the award of the Panel).

                  (e) Location of Arbitration. The arbitration shall take place
         in Houston, Texas.

                  (f) AAA Rules. Except as expressly provided in this Section
         7.11, the Arbitration shall be conducted in accordance with the
         Commercial Rules of the America Arbitration Association as then in
         effect.

                  (g) Attorneys' Fees and Expenses. The party that substantially
         prevails on the merits of the arbitration (as defined by the Panel)
         shall be entitled to reasonable attorneys' fees, costs, expenses, and
         necessary disbursements in addition to any other relief to which such
         party may be entitled.

                  7.12 Severability. If any term or provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this

                                       18

<PAGE>   22

Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

                                       19

<PAGE>   23

         IN WITNESS WHEREOF, this Agreement has been duly executed by the
Company and by the Purchaser by their respective officers duly authorized
effective as of the date first above written.

                                        THE COMPANY:

                                        SOUTH TEXAS DRILLING & EXPLORATION, INC.

                                        By: /s/ Wm. STACY LOCKE
                                           -------------------------------------
                                           Wm. Stacy Locke, President

                                        PURCHASER:

                                        WEDGE ENERGY SERVICES, L.L.C.

                                        By: /s/ BILL WHITE
                                           -------------------------------------
                                           William H. White, President

                                       20<PAGE>   1
                                                                EXHIBIT (10)(pp)

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into effective as of the 10th day of May, 2000, by and among SOUTH TEXAS
DRILLING & EXPLORATION, INC., a Texas corporation (the "Company"), and WEDGE
ENERGY SERVICES, L.L.C., a Delaware limited liability company (such entity being
referred to herein as the "Investor").

                                   WITNESSETH:

         WHEREAS, Investor is acquiring 3,678,161 of the $0.10 par value common
stock of the Company (the "Common Stock") in accordance with a Common Stock
Purchase Agreement dated May 10, 2000 (the "Stock Purchase Agreement") and has
previously acquired 1,153,846 shares of Common Stock in accordance with a
Subscription Agreement dated February 28, 2000 (the "Subscription Agreement");
and

         WHEREAS, the Company has agreed to provide the Investor with certain
registration rights with respect to the Registrable Securities (as defined
herein).

         WHEREAS, the parties desire that this Agreement supercede in every way
that certain Registration Rights Agreement between them entered into incident to
the Subscription Agreement, which Registration Rights Agreement is hereby
canceled and rendered a nullity by agreement of the parties.

         NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
hereby agree as follows:

         Section 1. Certain Definitions. As used in this Agreement, the
following definitions shall apply:

                  "Affiliate" means a Person who directly or indirectly
controls, is controlled by, or is under common control with, the Person referred
to. For this purpose, "control" means the ability to direct or cause the
direction of the management or affairs of a Person, whether through the
ownership of voting securities, by contract or otherwise.

                  "Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

                  "Holder" means any holder of outstanding Registrable
Securities.

                  "Person" means any natural Person, any unincorporated
organization or association, and any partnership, limited liability company,
corporation, estate, trust, nominee, custodian or other individual or entity.

                  The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments thereto
filed or required to be filed), and the declaration or ordering of the
effectiveness of such registration statement.

                  "Registrable Securities" means: (i) the Common Stock held by
the Investor issued pursuant to the Subscription Agreement or the Stock Purchase
Agreement, (ii) any Common Stock hereafter acquired by the Investor, and (ii)
any securities of the Company held by the Investor that are or were issued or
issuable, directly or indirectly, in respect of or by way of exchange for such
Common Stock or any capital stock into which such Common Stock may be converted,
together with any other securities which are issued with respect thereto by way
of any stock split, stock dividend, recapitalization, reorganization, or similar
event; provided, however, that Registrable Securities shall not include any
Registrable Securities which have previously been registered or sold to the
public.

<PAGE>   2

                  "Registration Expenses" means all expenses incurred by the
Company in complying with registration obligations hereunder, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of not more than one counsel chosen by the
Holders who are the holders of a majority of Registrable Securities being
registered, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company). Registration Expenses shall not include fees of counsel for the
Holders other than of one counsel as set forth above or Selling Expenses as
defined below.

                  "Requisite Holders" means Holders of not less than 50% of the
Registrable Securities who are also holders of at least 2% of the then
outstanding equity securities of the Company.

                  "Requisite Securities" means Registrable Securities equal to
no less than 5% of the then outstanding equity securities of the Company.

                  "Restricted Securities" means the securities of the Company
required to bear the legend set forth in Section 2 hereof.

                  "Rule 144" means Rule 144 promulgated under the Securities
Act, or any similar successor rule, as the same shall be in effect from time to
time.

                  "Rule 145" means Rule 145 promulgated under the Securities
Act, or any similar successor rule, as the same shall be in effect from time to
time.

                  "Rule 415" means Rule 415 promulgated under the Securities
Act, or any similar successor rule, as the same shall be in effect from time to
time.

                  "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of
Registrable Securities.

                  "Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.

                  "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules, regulations and interpretations promulgated
thereunder.

         Section 2. Demand Registrations.

                  (a) Request for Registration. If, at any time after November
10, 2000, the Company shall receive from the Requisite Holders a written request
that the Company effect the registration under the Securities Act of the resale
of Registrable Securities held by such Requisite Holders (a "Demand
Registration"), then the Company shall:

                           (i) promptly give written notice of the proposed
registration to all other Holders;

                           (ii) use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of the Registrable
Securities which the Company has been so requested to register, together with
all or such portion of the Registrable Securities of any Holders joining in such
request as are specified in a written request received by the Company within 20
days after the Company mails such written notice in accordance with the
registration procedures set forth in Section 6 hereof and to keep effective for
120 days after the effective date;

provided, however, that the Company shall not be obligated to take any action to
effect any such registration under the Securities Act:

                                    PAGE -2-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   3

                                (A) after the Company has effected three such
registrations pursuant to this Section 2 which have been declared or ordered
effective and pursuant to which securities have been sold; or

                                (B) If less than the Requisite Securities are
requested to be included in the registration.

                           (iii) the Holder shall be entitled to make a request
for one shelf registration pursuant to Rule 415 of the Securities Act, which
request may be for a shelf registration of not more than 12 month duration. This
shall count as one Demand Registration under Section 2(a)(ii)(A).

Subject to the foregoing clauses 2(a)(ii)(A), 2(a)(ii)(B) and 2(a)(iii) the
Company shall file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable, and in any event within 90
days, after receipt of the request or requests of the Requisite Holders;
provided, however, that if the Company shall within five days of such demand
furnish to such Holder a certificate signed by the president of the Company
stating that in the good faith judgment of the board of directors of the
Company, it would be detrimental to the Company or its shareholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore essential to defer the filing of such registration
statement, the Company shall have the right to defer such filing for a
reasonable period not to exceed 90 days from receipt of such Holder's request.
The Company's right to delay such registration as set forth in the previous
sentence may only be exercised one time during any twelve month period.

                  (b) Underwritten Demand Registrations. The offering of the
Registrable Securities pursuant to such Demand Registration shall be in the form
of an underwritten offering except for one such Demand Registration which may be
for a shelf registration in compliance with the provisions of this Section 2. In
the event the managing underwriter or underwriters of the Demand Registration
advise the Company and the Requisite Holders in writing that the total amount of
Registrable Securities requested to be included in such offering would exceed
the maximum amount of securities which can be marketed at a price reasonably
related to the current fair market value of such securities without adversely
affecting such offering (the "Underwriters Maximum Number"), the Company will be
required to include in such registration to the extent of the Underwriters
Maximum Number: first, all of the Registrable Securities requested to be
included in such registration by the Holders thereof, allocated pro rata among
such Holders on the basis of the number of Registrable Securities requested to
be included therein by each such Holder, and second, any equity securities
requested to be included in such registration by the Company and any other
holders of such securities, allocated as determined by the Company subject to
any agreements between the Company and any such holders.

                  (c) Selection of Underwriters. The managing underwriter or
underwriters to be used in connection with such registration shall be selected
by the Requisite Holders holding a majority of the Registrable Securities being
registered. The Company shall have the right to approve the selection of any
such underwriters, which approval shall not be unreasonably withheld.

                  (d) Underwriting Agreements. The Company shall (together with
all Holders selling Registrable Securities) enter into an underwriting,
agreement in customary form with the managing underwriter selected for such
underwriting by a majority in interest of the Requisite Holders, and each Holder
selling Registrable Securities shall participate in such underwriting.

                  (e) Withdrawal from Underwriting. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the Company, the managing underwriter
and the Requisite Holders. The Registrable Securities and/or other securities so
withdrawn shall also be withdrawn from registration, and such Registrable
Securities shall not be transferred in a public distribution prior to 60 days
after the effective date of such registration, or such other shorter period of
time as the underwriters may require. If by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion and manner used in determining the
underwriter limitation in this Section 2.

                                    PAGE -3-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   4

                  (f) Inclusion as a Demand Registration. For purposes of this
Section 2, a registration will not count as a Demand Registration until it has
become effective; provided, however, if the Requisite Holders withdraw their
Registrable Securities (whether before or after the effectiveness of such
registration) such demand will count as a Demand Registration for purposes of
this Section 2 unless the Requisite Holders pay all of the Registration Expenses
associated with such attempted registration. Notwithstanding the foregoing, the
failure of a Demand Registration to become effective as a direct or indirect
result of wrongful actions by the Company, or if such Demand Registration does
not occur as a result of any action by the managing underwriters or
underwriters, then such registration will not count as a Demand Registration.

         Section 3. Piggyback Registration.

                  (a) Right to Include Registrable Securities. Whenever the
Company proposes to register the sale of any of its equity securities under the
Securities Act other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any similar form then in effect, the Company shall give
written notice thereof to each Holder as soon as practicable (but in any event
at least 30 days before such filing), offering such Holder the opportunity to
register on such registration statement such number of Registrable Securities as
such Holder may request in writing, subject to the provisions of section 3(b),
not later than 20 days after the date of the giving of such notice (a "Piggyback
Registration"). Upon receipt by the Company of any such request, the Company
shall use reasonable efforts to, or in the case of an underwritten offering, to
cause the managing underwriter or underwriters to, include such Registrable
Securities in such registration statement (or in a separate registration
statement concurrently filed) and to cause such registration statement to become
effective with respect to such Registrable Securities in accordance with the
registration procedures set forth in Section 6 hereof. If the Company's
registration is to be effected pursuant to an underwritten offering, Registrable
Securities registered pursuant to this Section 3 shall be distributed in
accordance with such offering. Notwithstanding the foregoing, if at any time
after giving written notice of its intention to register its equity securities
and before the effectiveness of the registration statement filed in connection
with such registration, the Company determines for any reason either not to
effect such registration or to delay such registration, the Company may, at its
election, by delivery of written notice to each Holder (A) in the case of a
determination not to effect registration, relieve itself of its obligation to
register the Registrable Securities in connection with such registration or (B)
in the case of a determination to delay registration, delay the registration of
such Registrable Securities for the same period as the delay in the registration
of such other equity securities. Each Holder requesting inclusion in a
registration pursuant to this Section 3 may, at any time before the effective
date of the registration statement relating to such registration, revoke such
request by delivering written notice of such revocation to the Company (which
notice shall be effective only upon receipt by the Company); provided, however,
that if the Company, in consultation with its financial and legal advisors,
determines that such revocation would materially delay the registration or
otherwise require a recirculation of the prospectus contained in the
registration statement, then such holder shall have no right to so revoke its
request

                  (b) Priority in Piggyback Registration. Notwithstanding the
foregoing, with respect to a Piggyback Registration that is underwritten and
with respect to which the managing underwriter or underwriters advise the
Company of an Underwriters Maximum Number, then the Company will so notify all
Holders requesting inclusion in such registration and will be required to
include in such registration, to the extent of the Underwriters Maximum Number:
first, any equity securities that the Company proposes to sell for its own
account; second, the Registrable Securities requested by Holders to be included
in such registration allocated pro rata with Wm. Stacy Locke and Michael E.
Little, the only other holders of equity securities who may have piggyback
registration rights as of the date hereof on the basis of the number of
securities requested to be included therein by each such holder, provided,
however, in no event will the number of shares to be included by the Holder be
reduced to less than 25% of the total shares available to be requested; and
third, to the extent that the Underwriters Maximum Number has not been filled
by the application of the preceding clauses, any further equity securities that
the Company proposes to sell for its own account and/or any equity securities
requested to be included in such registration by other holders of such
securities, allocated as determined by the Company subject to agreements between
the Company and any such holders.

                  (c) Selection of Underwriters. If any Piggyback Registration
is in the form of an underwritten offering, the managing underwriter or
underwriters and any additional investment bankers and managers to be used in
connection with such registration shall be selected by the Company (subject to
any separate agreement with the holders on behalf of which a secondary
underwritten offering is being made).

                                    PAGE -4-    WEDGE - REGISTRATION RIGHTS AGMT

<PAGE>   5

                  (d) Underwriting Agreements. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company, and each
Holder selling Registrable Securities shall participate in such underwriting.

                  (e) Withdrawal from Underwriting. If any Holder or other
holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to 180 days after the effective date of the registration
statement relating thereto, or such other shorter period of time as the
underwriters may require. Sales under Rule 144 shall not be considered a public
distribution for purposes of this paragraph.

                  (f) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.

         Section 4. Market Standoff. If the Company at any time shall register
the offer and sale of shares of Common Stock to the public under the Securities
Act (including any registration pursuant to Sections 2 or 3), the Holders shall
not sell publicly, make any short sale of, grant any option for the purchase of,
or otherwise dispose publicly of, any Registrable Securities (other than those
shares of Common Stock included in such registration pursuant to Sections 2 or
3) without the prior written consent of the Company for a period designated by
the Company in writing to the Holders, which period shall begin not more than 10
days prior to the effectiveness of the registration statement pursuant to which
such public offering shall be made and shall not last more than 120 days after
the effective date of such registration statement. The Company shall obtain the
agreement of any person permitted to sell shares of stock in a registration to
be bound by and to comply with this Section 4 as if such person was a Holder
hereunder.

         Section 5. Expenses of Registration. All Registration Expenses incurred
in connection with the Demand Registrations and the Piggyback Registrations
shall be borne by the Company. All Selling Expenses relating to securities so
registered as well as all Registration Expenses relating to Demand Registrations
and Piggyback Registrations not required to be borne by the Company shall be
borne by the holders of such securities pro rata on the basis of the number of
shares of securities so registered on their behalf.

         Section 6. Registration Procedures. If and whenever the Company is
required by the provisions of Section 2 or 3 hereof to use its best efforts to
effect promptly the registration of Registrable Securities, the Company shall:

                  (a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become and remain effective as provided
herein;

                  (b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current and to comply with the provisions of the Securities Act with respect to
the sale of or other disposition of all Registrable Securities covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition of the prospective
seller or sellers of such Registrable Securities, but for no longer than one
hundred twenty (120) days subsequent to the effective date of such registration;
provided, however, that (i) such period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such period shall be extended, if necessary, to
keep the registration statement effective until all such Registrable Securities
are sold, provided that Rule 415 permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective

                                    PAGE -5-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   6

amendment that (I) includes any prospectus required by Section 10(a)(3) of the
Securities Act or (II) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement.
The incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;

                  (c) Furnish to each prospective seller of Registrable
Securities such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities of such
seller;

                  (d) Notify each seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;

                  (e) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or approved for quotation on
any inter-dealer quotation system on which similar securities issued by the
Company are then listed or quoted;

                  (f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
of all such Registrable Securities, in each case not later than the effective
date of such registration;

                  (g) Use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any Holder may reasonably request and do any and all other acts
and things which may be reasonably necessary or advisable to enable any Holder
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder provided, however, that the Company will not be
required to qualify generally to do business, subject itself to general taxation
or consent to general service of process in any jurisdiction where it would not
otherwise be required to do so but for this paragraph (g);

                  (h) Use its best efforts to cause such Registrable Securities
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company to enable each Holder holding such Registrable Securities to consummate
the disposition of such Registrable Securities;

                  (i) Subject to the execution of confidentiality agreements in
form and substance satisfactory to the Company, make available upon reasonable
notice and during normal business hours, for inspection by each Holder holding
such Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any Holder or underwriter (collectively, the "Inspectors"),
all pertinent financial and other records, pertinent corporate documents and
properties of the Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such registration statement;

                  (j) Use its best efforts to obtain from its independent
certified public accountants "cold comfort" letters in customary form and at
customary times and covering matters of the type customarily covered by cold
comfort letters;

                  (k) Use its best efforts to obtain from its counsel an opinion
or opinions in customary form;

                                    PAGE -6-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   7

                  (l) Issue to any underwriter to which any Holder holding such
Registrable Securities may sell shares in such offering certificates evidencing
such Registrable Securities;

                  (m) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;

                  (n) In connection with any offering pursuant to a registration
statement filed pursuant to Section 2 hereof, enter into an underwriting
agreement reasonably necessary to effect the sale of the Common Stock, provided
such underwriting agreement contains customary underwriting provisions; and
provided further that if the underwriter so requests, the underwriting agreement
will contain a customary contribution provision; and

                  (o) Use its best efforts to take all other steps necessary to
effect the registration of such Registrable Securities contemplated hereby.

         Section 7. Indemnification. In the event any of the Registrable
Securities are included in a registration statement under this Section:

                  (a) The Company will indemnify each Holder, each of such
Holder's officers and directors and partners (and each partner's officers,
directors and partners) and such Holder's separate legal counsel and independent
accountants, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, and each underwriter, if any, and each person
who controls any underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained, on the
effective date thereof; in any registration statement, any prospectus contained
therein, or any amendment or supplement thereto, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, each of its officers, directors and partners (and each partner's
officers, directors and partners) and such Holders' separate legal counsel and
independent accountants and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.

                  (b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained, on the effective date thereof, in any such registration
statement, any prospectus contained therein, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission

                                    PAGE -7-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   8
(or alleged omission) is made in such registration statement or prospectus in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of any
such Holder hereunder shall be limited to an amount equal to the proceeds to
each such Holder of Registrable Securities sold as contemplated herein.

          (c) Each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 7 to the extent such failure is not
prejudicial. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

          (d) If the indemnification provided for in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying the Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party with
respect to such loss, liability, claim, damage or expense in the proportion that
is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or the omission
(or alleged omission) to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party, and the parties, relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     Section 8. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section.

     Section 9. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company shall use its best efforts to:

          (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning 90 days
after (i) the Registration Date, or (ii) the Company issues an offering circular
meeting the requirements of Regulation A under the Securities Act;

          (b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act (at any time after it has become subject to such reporting
requirements); and

          (c) Furnish to any Holder promptly upon request a written statement as
to its compliance with the reporting requirements of Rule 144 and the Securities
Act and the Securities Exchange Act, a copy of the most recent annual or
quarterly report of the Company and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.

                                    PAGE -8-    WEDGE - REGISTRATION RIGHTS AGMT

<PAGE>   9

     Section 10. Assignment of Registration Rights. The rights to cause the
Company to register securities granted under this Agreement may be assigned to a
transferee or assignee in connection with the transfer assignment of shares of
Registrable Securities (i) to Affiliates of the Holder, (ii) to the Company,
(iii) to Persons to whom the Registrable Securities are transferred by reason of
the Holder's death or involuntarily by operation of law, (iv) pursuant to a
transfer approved by the Company in its sole and absolute discretion, or (v) to
Persons to whom the Registrable Securities are transferred in accordance with
the transfer restriction provisions, if any, in the Subscription Agreement,
articles of incorporation, bylaws, any Shareholder's Agreement among the
Holders, the Company and other holders of capital stock of the Company or other
documents or agreements of Holder, provided, however, that the Company is given
written notice thereof.

     Section 11. Subsequent Purchasers. Without the affirmative vote of the
Holders of at least 66-2/3% of the Registrable Securities, the Company shall not
grant to any purchaser of the Company's securities any demand registration
rights, or any piggyback registration rights that would provide any rights
greater than those granted to the Investor or that would be inconsistent or in
conflict with the provisions hereof. Moreover, for so long as the Holders of
the Registrable Securities are entitled to exercise the registration rights
described herein, they shall receive the benefit of any and all registration
rights granted by the Company to any other person who is as of the date of this
Agreement securities holder in the Company (or any affiliate of such existing
securities holder) which are more favorable than the registration rights granted
to the Investor herein.

     Section 12. Term. This Agreement and all rights granted to the Investor
hereunder shall expire on the fifteenth anniversary of the date hereof.

     Section 13. Miscellaneous.

          (a) Notices. Any notice or other communications required or permitted
hereunder shall be deemed to be sufficient if contained in a written instrument
delivered in person or by nationally-recognized overnight courier or duly sent
by First Class certified mail, postage prepaid, or by telecopy addressed to such
party at the address or telecopy number set forth below or such other address or
telecopy number as may hereafter be designated in writing by the addressee to
the address or listing all parties:

           If to the Company:    South Texas Drilling & Exploration, Inc.
                                         9310 Broadway, Bldg. 1
                                         San Antonio, Texas 78217
                                         ATTN: Wm. Stacy Locke

           If to the Investor:        WEDGE Energy Services, L.L.C.
                                         1415 Louisiana Street, Suite 3000
                                         Houston, Texas 77002
                                         ATTN: President

          (b) Entire Agreement: Amendments. This Agreement represents the entire
agreement of the parties hereto, and supersedes any other agreements among the
parties with respect to the subject matter hereof. The terms and provisions of
this Agreement may not be modified or amended, or any of the provisions hereof
waived, except pursuant to the written consent of the Company and holders of a
majority of the Registrable Securities.

          (c) Assignment. This Agreement may not be assigned by any party
without the prior written consent of the other parties, except by a Holder in
accordance with Section 10 above. Any assignment which contravenes this Section
shall be void ab initio.

          (d) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

          (e) Headings; Interpretations. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement. Whenever the context requires,
references in this Agreement to the singular number shall include the

                                    PAGE -9-    WEDGE - REGISTRATION RIGHTS AGMT

<PAGE>   10

plural and, likewise, the plural number shall include the singular, and words
denoting gender shall include the masculine, feminine and neuter.

          (f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without regard to the
principles of conflicts of law thereof.

          (g) Separability. In case any one or more of the provisions contained
in this Agreement or any application thereof shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and other applications thereof shall not
in any way be affected or impaired thereby.

                                    PAGE -10-   WEDGE - REGISTRATION RIGHTS AGMT

<PAGE>   11

     IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed the day and date above written.

                                        SOUTH TEXAS DRILLING & EXPLORATION, INC.

                                        By:   /s/ WM. STACY LOCKE
                                              ----------------------------------
                                        Name:  Wm. Stacy Locke
                                              ----------------------------------
                                        Title: President
                                              ----------------------------------

                                        WEDGE ENERGY SERVICES, LLC.

                                        By:   /s/ WILLIAM H. WHITE
                                              ----------------------------------
                                        Name: William H. White
                                              ----------------------------------
                                        Title: President
                                              ----------------------------------

                                    PAGE -11-   WEDGE - REGISTRATION RIGHTS AGMT

<PAGE>   12
                         IRI INTERNATIONAL CORPORATION
                              TERMS AND CONDITIONS

1.   GENERAL: The Terms and Conditions outlined herein shall apply to the sale
by IRI International Corporation (hereinafter referred to as Company) of
products, equipment and parts relating thereto (hereinafter referred to as
Equipment). Unless prior written agreement is reached, it shall be understood
that: the Company's proceeding with any work shall be in accordance with the
Terms and Conditions outlined herein.

     The Company will comply with all Federal, State and local laws and
regulations as they may apply to manufacturing facilities. Such compliance
shall not include the use and/or operation of the Equipment nor its
installation and use in conjunction with other equipment or apparatus.

2.   TITLE AND RISK OF LOSS: The legal title, right to possession and control,
beneficial ownership, risk of loss and all other incidents of ownership of the
Equipment (herein referred to as Title and Risk of Loss) sold hereunder shall
remain in Company until the shipment is delivered on board the vessel at the
port of shipment (the Passage of Title point) notwithstanding how the Equipment
sold hereunder is consigned, how payment is effectuated, the place where
shipping documents are endorsed, the form of shipping documents utilized, or
prices stated. Terms such as FOB, FAS, CIF and C&F are intended only as price
terms and any presumption as to the intention respecting the Passage of Title to
the Equipment otherwise than expressed in this Article which might arise from
the use of such terms is hereby specifically negated. Risk of Loss shall pass to
Purchaser at the Passage of Title point and if the Equipment does not reach such
point, there is no sale. If the Company insures the shipment, it is agreed that
the insurance policy shall cover the Purchaser as its interest may appear. If
the Purchaser insures the shipment, it is agreed that the insurance policy will
cover and protect the interests of the Company as legal owner of the goods until
the Passage of title. "Ownership," "legal title," or "title" as used herein
means full beneficial ownership of the merchandise and not bare legal title
retained for security purposes.

3.   ASSIGNMENT: Neither party shall assign or transfer this contract (except to
their own affiliated company) without the prior written consent of the other
party. As a condition to any such written consent, such assignment shall be
subject to the Terms and Conditions herein and no greater rights or remedies
shall be available to the assignee.

4.   DELIVERY AND DELAYS: Delivery dates shall be quoted by the Company. Such
dates shall be interpreted as estimated and in no event shall such dates be
construed as falling within the meaning of "time is of the essence." The Company
shall not be liable for loss, damage, detention or delay due to war, riots,
civil insurrection or acts of the common enemy, fire, flood, strikes or other
labor difficulty, acts of civil or military authority, including governmental
laws, orders, priorities or regulation, acts of the Purchaser, embargo, car
shortage, wrecks or delay in transportation, inability to obtain necessary
labor, materials or manufacturing facilities from usual sources, faulty forgings
or casings, or other causes beyond the reasonable control of the Company. In the
event of delay in performance due to any such cause, the date of delivery or
time for completion will be adjusted to reflect the actual length of time lost
by reason of such delay. The Purchaser's receipt of Equipment shall constitute a
waiver of any claim for delay.

5.   TAXES: The price does not include any property, license, privilege, sales,
use, excise, gross receipts, value added, duties, or other like taxes which may
be now or hereafter applicable to, measured by, or imposed upon or with respect
to this transaction, the Equipment, its sale, its value or its use, or any
services performed in connection therewith, imposed by any governmental
authority in the country of destination. If any such taxes are required to be
paid by the Company, they shall be added to the prices herein and shall be paid
to the Company by the Purchaser.

6.   SETOFFS: Neither Purchaser nor any affiliated company or assignee shall
have the right to claim compensation or setoff against any amounts which
become payable to the Company under this contract, or otherwise.

7.   PATENTS: The Company shall defend any suit or proceeding brought against
the Purchaser and shall pay any adverse judgment entered therein so far as
such suit or proceeding is based upon a claim that the use of the Equipment or
any part thereof manufactured by Company and furnished under this contract
constitutes infringement of any patent of a country where the Equipment is sold
or of a country where the Company is aware at the date of the sale that the
Equipment will be used, providing the Company is promptly notified in writing
and given authority, information and assistance for defense of same, and the
Company shall, at its option, procure for the Purchaser the right to continue
to use said Equipment, or to modify it so that it becomes non-infringing, or to
replace the same with non-infringing equipment, or to remove said Equipment and
to refund the purchase price. The foregoing shall not be construed to include
any agreement by the Company to accept any liability whatsoever in respect to
patents for inventions including more than the Equipment furnished hereunder,
or in respect of patents for methods and processes to be carried out with the
aid of said Equipment, except those which are inherent in the Equipment as
furnished. The foregoing states the entire liability of Company with regard to
patent infringement. If any Equipment shall be sold by Company to meet
Purchaser's specifications or requirements and is not a part of Company's
standard line offered by it to the trade generally in the usual course of
Company's business. Purchaser agrees to defend, protect, indemnify and save
harmless Company from any loss, damage or injury arising out of a claim, suit
or action at law or in equity for actual or alleged infringement because of the
sale of such Equipment, and to defend any such suits or actions which may be
brought against the Company.

8.   WARRANTY: The Company warrants that the Equipment manufactured by and
delivered hereunder will be free of defects in material and workmanship for a
period of six (6) months from the date of placing the Equipment in operation,
and/or twelve (12) months from date of shipment from U.S. whichever comes
first. Should any failure to conform to this warranty be reported in writing
to the Company within said period, the Company shall, at its option, correct
such nonconformity by suitable repair to such Equipment, or furnish a
replacement part FOB point of shipment, provided the purchaser has stored,
installed, maintained and operated such Equipment in accordance with good
industry practices and has complied with specific recommendations of the
Company. Accessories or equipment furnished by the Company, but manufactured by
others, shall carry whatever warranty the manufacturers have conveyed to the
Company and which can be passed on to the Purchaser. The Company shall not be
liable for any repairs, replacements or adjustments to the Equipment or any
costs of labor performed by the Purchaser or others without the Company's prior
written approval.

     The effects of corrosion, erosion and normal wear and tear are
specifically stated within the Company's warranty. Performance warranties are
limited to those specifically excluded from the Company's proposal. Unless
responsibility for meeting such performance warranties are limited to specified
shop or field tests, the Company's obligation shall be to correct in the manner
and for the period of time provided above.

     THE COMPANY MAKES NO OTHER WARRANTY OR REPRESENTATION OF ANY KIND
WHATSOEVER, EXPRESSED OR IMPLIED, EXCEPT THAT OF TITLE, AND ALL IMPLIED
WARRANTIES, INCLUDING ANY WARRANTY OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.

     Correction by the Company of nonconformities, whether patent or latent, in
the manner and for the period of time provided above, shall constitute
fulfillment of all liabilities of the Company for such nonconformities, whether
based on contract, warranty, negligence, indemnity, strict liability, or
otherwise, with respect to or arising out of such Equipment.

9.   LIMITATION OF LIABILITY: The remedies of the Purchaser set forth herein
are exclusive and the total liability of the Company with respect to this
contract, or the Equipment and services furnished hereunder, in connection with
the performance or breach thereof, or from the manufacture, sale, delivery,
installation, repair or technical direction covered by or furnished under this
contract, whether based on contract, warranty, negligence, indemnity, strict
liability, or otherwise, shall not exceed the purchase price of the equipment.
Company shall in no event be liable to Purchaser, any successors in interest or
any beneficiary or assignee of this contract for any consequential, incidental,
indirect, special or punitive damages arising out of this contract, or any
breach thereof or any defect in, or failure of, or malfunction of the Equipment
hereunder, whether based upon loss of use, lost profits or revenue, interest,
lost goodwill, work stoppage, impairment of other goods, loss by reason of
shutdown or nonoperation, increased expenses of operation, cost of purchase of
replacement power or claims of Purchaser or customers of Purchaser for service
interruption whether or not such loss or damage is based on contract, warranty
negligence, indemnity, strict liability or otherwise.

10.  GOVERNING LAW: The rights and obligations of Purchaser and Company shall
be governed by the laws of the State of Texas, U.S.A.

11.  VIOLATIONS OF LAW: The Company shall not be bound by or required to adhere
to any form or provision of a purchase order, quotation, bid, letter of credit
or like document, or any provision of law, regulation or custom, which would
cause the Company or any of its parents or affiliates to be in violation of the
export laws, taxing statutes or regulations of the country wherein the goods
are manufactured or from which they are exported or are otherwise subject to
jurisdiction.

12.  EXECUTION: The Company shall not be bound by any contract until approved in
writing by an authorized representative of the Company. The contract, when so
approved, shall supersede all previous communications, either oral or written.
No modification shall be binding upon the parties unless such modification shall
be in writing, duly executed by the Purchaser and approved by an authorized
representative of the Company.

                                                        [INITIALS]    [INITIALS]

                                                               IRI INTERNATIONAL

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