Document:

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                                                                    EXHIBIT 10.9

                                                             [EXECUTION VERSION]

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 31, 1999, by and among Sierra Well Service, Inc., a
Delaware corporation (the "Company") and Joint Energy Development Investments II
Limited Partnership, a Delaware limited partnership (JEDI II").

         This Agreement is made pursuant to the Securities Purchase Agreement
(the "Securities Purchase Agreement") dated as of March 31, 1999, by and among
the Company and JEDI II. In order to induce JEDI II to enter into the Securities
Purchase Agreement, the Company has agreed to provide the registration and other
rights set forth in this Agreement. Pursuant to the Securities Purchase
Agreement, JEDI II will purchase shares of the Company's (i) Series A Cumulative
Preferred Stock, (ii) Series B Convertible Preferred Stock and (iii) Series C
Convertible Preferred Stock. The execution and delivery of this Agreement is a
condition to the Closing (as defined in the Securities Purchase Agreement).

         The parties agree as follows:

                                  ARTICLE 0.01

         Section (i). Definitions. Capitalized terms used herein without
definition shall have the meanings given to them in the Securities Purchase
Agreement. The terms set forth below are used herein as so defined:

                  "Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling, controlled by, or under common
control with the first Person or (ii) that directly or indirectly owns more than
five percent (5%) of any class of the voting securities or capital stock of or
equity interests in such Person. The term "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power either to (i) vote five percent
(5%) or more of the securities or interests having ordinary voting power for the
election of directors (or other comparable controlling body) of such Person or
to (ii) direct or cause the direction of the management or the policies of such
Person, whether through the ownership of voting securities or interests, by
contract or otherwise.

                  "Commission" has the meaning specified therefor in Section
1.02 of this Agreement.

                  "Common Stock" means the common stock, no par value per share,
of the Company.

                  "Conversion Shares" means the shares of Common Stock issuable
on conversion of the Preferred Stock.

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

                  "Holder" means the record holder of any Registrable
Securities.

                  "Inspector" has the meaning specified therefor in Section 2.03
this Agreement.

                  "Losses" has the meaning specified therefor in Section 2.06(a)
of this Agreement.

                  "Other Holders" has the meaning specified therefor in Section
2.01 of this Agreement.

                  "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, business
trust, trust or unincorporated entity.

                  "Preferred Stock" means, either singly or collectively, the
Company's Series A Cumulative Preferred Stock, Series B Convertible Preferred
Stock and Series C Convertible Preferred Stock, issued or received in connection
with the Securities Purchase Agreement, dated March 31, 1999, by and between the
Company and JEDI II.

                  "Records" has the meaning specified therefor in Section 2.03
of this Agreement.

                  "Registrable Securities" means the Conversion Shares and
shares of the Company's Common Stock issued pursuant to the terms and conditions
of the Preferred Stock, until such time as such securities cease to be
Registrable Securities pursuant to Section 1.02 hereof.

                  "Requesting Holder(s)" has the meaning specified therefor in
Section 2.01 of this Agreement.

                  "Request Notice" has the meaning specified therefor in Section
2.01 of this Agreement.

                  "Registration Statement" has the meaning specified therefor in
Section 2.01 of this Agreement.

                  "Reporting Commencement Date" has the meaning specified
therefor in Section 2.01 of this Agreement.

                  "Securities Act" has the meaning specified therefor in Section
1.02 of this Agreement.

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                  "Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a Registration Statement.

         Section 0.02. Registrable Securities. Any Registrable Security will
cease to be a Registrable Security when (i) a Registration Statement covering
such Registrable Security has been declared effective by the Securities and
Exchange Commission (the "Commission") and such Registrable Security has been
sold or disposed of pursuant to such effective Registration Statement; (ii) such
Registrable Security is disposed of pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act of 1933, as amended (the
"Securities Act"); (iii) such Registrable Security is eligible to be, and at the
time of determination can be, disposed of pursuant to paragraph (k) of Rule 144
(or any similar provision then in force) under the Securities Act; or (iv) such
Registrable Security is held by the Company or one of its subsidiaries.

                                   ARTICLE I

         Section 1.01. Demand Registration. (a) Any time after the first date on
which (i) the Common Stock is registered under Section 12 of the Exchange Act or
(ii) the Company is required to file reports with the Commission pursuant to
Section 15(d) of the Exchange Act as a result of the effectiveness of a
registration statement filed by the Company under the Securities Act with
respect to Common Stock (the "Reporting Commencement Date"), any Holder or
Holders who collectively beneficially own at least a majority of the Registrable
Securities may request (a "Request Notice") the Company to register under the
Securities Act all or any portion of the Registrable Securities that are held by
such Holder or Holders (collectively, the "Requesting Holder") for sale in the
manner specified in the Request Notice.

                  (b) Promptly following receipt of a Request Notice, the
Company shall immediately notify each Holder (except the Requesting Holder) of
the receipt of a Request Notice and shall use its best efforts to file a
registration statement under the Securities Act (each such registration
statement is hereinafter referred to as a "Registration Statement") effecting
the registration under the Securities Act, for public sale in accordance with
the method of disposition specified in such Request Notice, of the Registrable
Securities specified in the Request Notice (and in any notices that the Company
receives from other Holders no later than the 15th day after receipt of the
notice sent by the Company) (such other Holders and the Requesting Holder are
hereinafter referred to as the "Requesting Holders"). If such method of
disposition shall be an underwritten public offering, the Requesting Holders
holding a majority of the Registrable Securities to be registered may designate
the managing underwriter of such offering, subject to the approval of the
Company, which approval shall not be withheld unreasonably. The Company shall be
obligated to register Registrable Securities pursuant to this Section 2.01 on
three occasions only. A request pursuant to this Section 2.01 shall be counted
only when the corresponding Registration Statement has been filed and becomes
effective under the Securities Act.

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                  (c) The Company and any Person other than a Holder (the "Other
Holders") who is entitled to piggy-back registration rights may include
securities of the Company in a Registration Statement filed pursuant to Section
2.01, but only to the extent that (i) all of the Registrable Securities
requested by Holders to be included in such Registration Statement have been
included and (ii) in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would not
materially jeopardize the successful marketing of the Registrable Securities to
be sold. If the managing underwriter determines that it is necessary to reduce
the number of securities to be registered on behalf of the Company or such Other
Holders, securities held by such Other Holders shall be excluded first and then
the securities to be registered by the Company shall be excluded. Except as
provided in this subsection (c), the Company will not effect any other
registration of its securities (except with respect to Registration Statements
on Form S-4 or S-8 or any forms succeeding thereto for purposes permissible
under such forms as of the date hereof or filed in connection with an exchange
offer), whether for its own account or that of any Other Holder, from the date
of receipt of a Request Notice related to an underwritten public offering until
the completion of the distribution by the underwriters of all securities
thereunder.

         From and after the date of this Agreement and until no Registrable
Securities remain outstanding, the Company shall not grant registration rights
to any Person unless such rights are consistent with the provisions of this
Agreement.

                  Section 1.02. Piggy-Back Registration. If the Company proposes
to register any of its securities under the Securities Act for sale to the
public for cash, whether for its own account or for the account of Other Holders
or both (except with respect to Registration Statements on Forms S-4 or S-8 or
any forms succeeding thereto for purposes permissible under such forms as of the
date hereof), each such time it will give written notice to all Holders of its
intention to do so no less than 20 days prior to the anticipated filing date.
Upon the written request received by the Company from any Holder no later than
the 15th day after receipt by such Holder of the notice sent by the Company
(which request shall state the intended method of disposition thereof), the
Company will use commercially reasonable efforts to cause the Registrable
Securities as to which registration shall have been so requested to be included
in the securities to be covered by such Registration Statement, all to the
extent requisite to permit the sale or other disposition by each Holder (in
accordance with its written request) of such Registrable Securities so
registered; provided, however, that the Company may at any time prior to the
effectiveness of any such Registration Statement, in its sole discretion and
without the consent of any Holder, abandon any proposed offering by the Company
in which any Holder had requested to participate. The number of Registrable
Securities to be included in such a registration may be reduced or eliminated if
and to the extent, in the case of an underwritten offering, the managing
underwriter shall advise the Company that such inclusion would materially
jeopardize the successful marketing of the securities (including the Registrable
Securities) proposed to be sold therein; provided, however, that (a) in the case
of a Registration Statement filed pursuant to the

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exercise of demand registration rights of any Other Holders, priority shall be
given first to the Other Holders demanding such registration, then to the
Holders, then to the Company and then to Other Holders (other than the Other
Holders demanding such registration) and (b) in the case of a Registration
Statement the filing of which is initiated by the Company, priority shall be
given (A) first to the Company, then (B) to the Holders, then (C) to Other
Holders. Notwithstanding any language to the contrary in this Section 2.02,
however, Registrable Securities may be excluded from a registration statement
only to the extent that securities held by Affiliates of the Company (other than
the Holders) have first been excluded from such registration statement.

                  Section 1.03. Registration Procedures. If and whenever the
Company is required pursuant to this Agreement to effect the registration of any
of the Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:

                  (a) prepare and file with the Commission a Registration
Statement, on a form available to the Company, with respect to such securities
(which filing shall be made (i) as expeditiously as reasonably possible (but in
no event later than 30 days after the receipt by the Company of a Request
Notice) in the case of a shelf registration if the Company is then eligible to
file a Registration Statement on Form S-3 or (ii) as expeditiously as reasonably
possible (but in no event later than 45 days after the receipt by the Company of
a Request Notice) in the case of any underwritten offering or if the Company is
not eligible to file a Registration Statement on Form S-3; the Company shall
thereafter use commercially reasonable efforts to cause such Registration
Statement to become and remain effective for the period of the distribution
contemplated thereby (determined pursuant to subparagraph (g) below);

                  (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 for
the distribution period (determined pursuant to subparagraph (g) below) and as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;

                  (c) furnish to each Selling Holder and to each underwriter
such number of copies of the Registration Statement and the prospectus included
therein (including each preliminary prospectus and each document incorporated by
reference therein to the extent then required by the rules and regulations of
the Commission) as such Persons may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities covered by
such Registration Statement;

                  (d) if applicable, use commercially reasonable efforts to
register or qualify the Registrable Securities covered by such Registration
Statement under the securities or blue sky laws of such jurisdictions as the
Selling Holders or, in the case of an underwritten public offering,

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the managing underwriter, shall reasonably request, provided that the Company
will not be required to qualify generally to transact business in any
jurisdiction where it is not then required to so qualify or to take any action
that would subject it to general service of process in any such jurisdiction
where it is not then so subject;

                  (e) immediately notify each Selling Holder and each
underwriter, 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 contained in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and amend
or supplement the prospectus or take other appropriate action as promptly as
practicable (but, in any event, no longer than fifteen days) so that the
prospectus does 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 in the light of the circumstances then
existing;

                  (f) in the case of an underwritten public offering enter into
such customary agreements, (including an underwriting agreement), and furnish,
at the request of the underwriters, such opinions of counsel, and "cold comfort"
letters from the independent accountants for the Company as are, in each case,
customary in form and substance;

                  (g) For purposes of subsections (a) and (b) above, the period
of distribution of Registrable Securities in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it (but not more than six
months) and the period of distribution of Registrable Securities in any other
registration shall be deemed to extend until the sale of all Registrable
Securities covered thereby;

                  (h) make available for inspection by one representative of the
Selling Holders designated by a majority thereof, any underwriter participating
in any distribution pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by such representative of the Selling Holders
or underwriter (the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records"),
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; provided that the Company may require the Inspectors to
conduct their investigation in a manner that does not unreasonably disrupt the
Company's operations and to execute such reasonable confidentiality agreements
as the Company may reasonably determine to be advisable.

                  (i) cause the Registrable Securities to be listed on any
national securities exchange or on the NASDAQ National Market if the Common
Stock is or becomes so listed;

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                  (j) use commercially reasonable efforts to keep effective and
maintain for the period specified in subparagraph (g) a registration,
qualification, approval or listing obtained to cover the Registrable Securities
as may be necessary for the Selling Holders to dispose thereof and shall from
time to time amend or supplement any prospectus used in connection therewith to
the extent necessary in order to comply with applicable law;

                  (k) use commercially reasonable efforts to cause the
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 the Selling Holders to
consummate the disposition of such Registrable Securities; and

                  (l) take such other actions as are reasonably requested by the
Selling Holders or the underwriters, if any, in order to expedite, facilitate or
consummate the disposition of such Registrable Securities.

         Each Selling Holder, upon receipt of notice from the Company of the
happening of any event of the kind described in subsection (e) of this Section
2.03, shall forthwith discontinue disposition of the Registrable Securities
until such Selling Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (e) of this Section 2.03 or until it is
advised in writing by the Company that the use of the prospectus may be resumed,
and has received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the Company,
such Selling Holder will, or will request the managing underwriter or
underwriters, if any, to, deliver to the Company (at the Company's expense) all
copies in their possession or control, other than permanent file copies then in
such Selling Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the Company shall
give any such notice, (i) the Company shall comply with its obligation in
subsection (e) to rectify the untrue or omitted statements in the prospectus
within the time periods so specified and (ii) the time periods specified in
subsection (g) of this Section 2.03 shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each Selling Holder shall have received the copies
of the supplemented or amended prospectus contemplated by subsection (e) of this
Section 2.03 hereof or the notice that they may resume use of the prospectus.

         In connection with each registration hereunder with respect to an
underwritten public offering, the Company and each Selling Holder agrees to
enter into a written agreement with the managing underwriter or underwriters
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between underwriters and companies of the Company's size and investment stature,
provided that such agreement shall not contain any such provision applicable to
the Company or the Selling Holders that is inconsistent with the provisions
hereof; and further provided, that the time and place

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of the closing under said agreement shall be as mutually agreed upon among the
Company and the Selling Holders and such managing underwriter. Each Selling
Holder shall supply to the Company the information relating to such Selling
Holder that is required by the Securities Act and the rules and regulations
thereunder to be included in a Registration Statement which registers
Registrable Securities of such Selling Holder and each Selling Holder shall
execute all consents, powers of attorney, registration statements and other
documents reasonably required to be signed by such Selling Holder in order to
effectuate the registration or disposition of Registrable Securities by such
Selling Holder.

         Section 1.04. Restrictions on Public Sale by the Company. To the extent
required by an underwriter in an underwritten public offering, the Company
agrees not to effect on its own behalf any public sale or distribution of any
securities similar to those being registered, or any securities convertible into
or exchangeable or exercisable for such securities, during the 14 days before,
and during the 180-day period beginning on, the effective date of any
Registration Statement in which the Selling Holders of Registrable Securities
are participating, other than pursuant to such Registration Statement or a
Registration Statement on Form S-8 or Form S-4.

         Section 1.05.     Expenses.

                  (a) "Registration Expenses" means all expenses incident to the
Company's performance under or compliance with this Agreement, including without
limitation, all registration and filing fees, blue sky fees and expenses,
printing expenses, listing fees, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and reasonable out-of-pocket expenses, but
excluding any Selling Expenses. "Selling Expenses" means all underwriting fees,
discounts and selling commissions allocable to the sale of the Registrable
Securities, underwriters' counsel fees and expenses in case of any demand
registration under Section 2, and all expenses incurred directly by the Selling
Holders for legal counsel.

                  (b) The Company will pay all Registration Expenses in
connection with each Registration Statement filed pursuant to this Agreement,
whether or not the Registration Statement becomes effective, and the Selling
Holders shall pay all Selling Expenses in connection with any Registrable
Securities registered pursuant to this Agreement.

         Section 1.06. Indemnification. (a) In the event of a registration of
any Registrable Securities under the Securities Act pursuant to this Agreement,
the Company will indemnify and hold harmless each Selling Holder thereunder and
each underwriter, pursuant to the applicable underwriting agreement with such
underwriter, of Registrable Securities thereunder and each Person, if any, who
controls such Selling Holder or underwriter within the meaning of the Securities
Act and the Exchange Act, against any losses, claims, damages or liabilities
(including reasonable attorneys'

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fees) ("Losses"), joint or several, to which such Selling Holder or underwriter
or controlling Person may become subject under the Securities Act, the Exchange
Act or otherwise, insofar as such Losses, (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement under which such
Registrable Securities were registered under the Securities Act pursuant to this
Agreement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each such Selling Holder, each such underwriter and each such
controlling Person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Loss or actions;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by such
Selling Holder, such underwriter or such controlling Person in writing
specifically for use in such Registration Statement or prospectus.

                  (b) Each Selling Holder agrees to indemnify and hold harmless
the Company, its directors, officers, employees and agents and each Person, if
any, who controls the Company within the meaning of the Securities Act or of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Selling Holder, but only with respect to information regarding such Selling
Holder furnished in writing by or on behalf of such Selling Holder expressly for
inclusion in any Registration Statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto; provided,
however, that the liability of such Selling Holder shall not be greater in
amount than the dollar amount of the proceeds (net of any Selling Expenses)
received by such Selling Holder from the sale of the Registrable Securities
giving rise to such indemnification.

                  (c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party under this Section 2.06, unless the indemnifying party
shall have been prejudiced by such failure to give notice, and such failure to
give notice shall not relieve the indemnifying party from any obligation of
indemnification or contribution arising otherwise than under this Section 2.06.
In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 2.07

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for any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof; provided, however, that, (i) if the
indemnifying party has failed to assume the defense and employ counsel or (ii)
if the defendants in any such action include both the indemnified party and the
indemnifying party and counsel to the indemnified party shall have reasonably
concluded that the interests of the indemnified party conflict with the
interests of the indemnifying party, then the indemnified party shall have the
right to select a separate counsel reasonably acceptable to the indemnifying
party and to assume such legal defense and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such separate
counsel and other reasonable expenses related to such participation to be
reimbursed by the indemnifying party as incurred.

                  (d) If the indemnification provided for in this Section 2.06
is unavailable to the Company or the Selling Holders or is insufficient to hold
them harmless in respect of any Losses, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses as between the
Company on the one hand and each Selling Holder on the other, in such proportion
as is appropriate to reflect the relative fault of the Company on the one hand
and of each Selling Holder on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statements of a material fact or
the omission or alleged omission to state a material fact has been made by, or
relates to, information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

                  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who is not guilty of such fraudulent
misrepresentation.

                                   ARTICLE II

         Section 2.01.     Arbitration.

                           (a) Binding Arbitration. On the request of any of the
parties hereto, (whether made before or after the institution of any legal
proceeding), any action, dispute, claim or controversy of any kind now existing
or hereafter arising between any of the parties hereto in any way arising out
of, pertaining to or in connection with this Agreement (a "Dispute") shall be
resolved by binding arbitration in accordance with the terms hereof. Any party
may, by summary proceedings, bring an action in court to compel arbitration of
any Dispute.

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                           (b) Governing Rules. Any arbitration shall be
administered by the American Arbitration Association (the "AAA") in accordance
with the terms of this Section, the Commercial Arbitration Rules of the AAA,
and, to the maximum extent applicable, the Federal Arbitration Act. Judgment on
any award rendered by an arbitrator may be entered in any court having
jurisdiction.

                           (c) Arbitrators. Arbitration hereunder shall be
before a three-person panel of neutral arbitrators, consisting of one person
from each of the following categories: (1) an attorney who has practiced in the
area of commercial law for at least 10 years or a retired judge at the Texas or
United States District Court or an appellate court level: (2) a person with at
least 10 years experience in commercial lending: and (3) a person with at least
10 years experience in the petroleum industry. The AAA shall submit a list of
persons meeting the criteria outlined above for each category of arbitrator, and
the parties shall select one person from each category in the manner established
by the AAA. If the parties cannot agree on an arbitrator within 30 days after
the request for an arbitration, then any party may request the AAA to select an
arbitrator. The arbitrators may engage engineers, accountants or other
consultants that the arbitrator deems necessary to render a conclusion in the
arbitration proceeding.

                           (d) Conduct of Arbitration. To the maximum extent
practicable, an arbitration proceeding hereunder shall be concluded within 180
days of the filing of the Dispute with the AAA. Arbitration proceedings shall be
conducted in Houston, Texas. Arbitrators shall be empowered to impose sanctions
and to take such other actions as the arbitrators deem necessary to the same
extent a judge could impose sanctions or take such other actions pursuant to the
Federal Rules of Civil Procedure and applicable law. At the conclusion of any
arbitration proceeding, the arbitrator shall make specific written findings of
fact and conclusions of law. The arbitrators shall have the power to award
recovery of all costs and fees to the prevailing party. The parties agree to
keep all Disputes and arbitration proceedings strictly confidential except for
disclosure of information required by applicable law.

                           (e) Costs of Arbitration. All fees of the arbitrators
and any engineer, accountant or other consultant engaged by the arbitrators,
shall be paid by the disputing parties equally unless otherwise awarded by the
arbitrators.

         Section 2.02. Communications. All notices and other communications
provided for or permitted hereunder shall be made in writing by telecopy,
courier service or personal delivery:

                  (a) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section 3.02,
which address initially is, with respect to JEDI II, the address set forth in
the Securities Purchase Agreement, and

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                  (b) if to the Company, initially at its address set forth in
the Securities Purchase Agreement, and

                  (c) for each, thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 3.02.

                  All such notices and communications shall be deemed to have
been received at the time delivered by hand, if personally delivered; when
receipt acknowledged, if telecopied; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.

         Section 2.03. Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including subsequent holders of Registrable Securities.

         Section 2.04. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.

         Section 2.05. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

         Section 2.06. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS AGREEMENT WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

         Section 2.07. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.

         Section 2.08. Entire Agreement. This Agreement, together with the
Securities Purchase Agreement and the other Basic Documents (as defined in the
Securities Purchase Agreement) are intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the securities
sold pursuant to the Securities Purchase Agreement. This Agreement, the
Securities Purchase Agreement and the other Basic Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.

                                      -12-
<PAGE>   13

         Section 2.09. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.

         Section 2.10. Amendment. This Agreement may be amended only by means of
a written amendment signed by the Company and by the Holders of a majority of
the Registrable Securities.

         Section 2.11. Registrable Securities Held by the Company or Its
Affiliates. In determining whether the Holders of the required amount of
Registrable Securities have concurred in any direction, amendment, supplement,
waiver or consent, Registrable Securities owned by the Company or one of its
subsidiaries shall be disregarded.

         Section 2.12. Assignment of Rights. The rights of any Holder under this
Agreement may be assigned to any Person who acquires any Registrable Securities.
Any assignment of registration rights pursuant to this Section 3.12 shall be
effective only upon receipt by the Company of written notice from such assigning
Holder stating the name and address of any assignee. The rights of an assignee
under this Section 3.12 shall be the same rights granted to the assigning Holder
under this Agreement. In connection with any such assignment, the term "Holder"
as used herein shall, where appropriate to assign the rights and obligations of
the assigning Holder hereunder to such assignee, be deemed to refer to the
assignee.

                                      -13-
<PAGE>   14

                [SIGNATURE PAGE - REGISTRATION RIGHTS AGREEMENT]

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                       SIERRA WELL SERVICE, INC.

                                       /s/ Bill E. Coggin
                                       -----------------------------------------
                                       Bill E. Coggin
                                       Vice President

                                       JOINT ENERGY DEVELOPMENT
                                       INVESTMENTS II LIMITED PARTNERSHIP

                                       By: Enron Capital Management II Limited
                                           Partnership, its General Partner

                                           By: Enron Capital II Corp., its
                                               General Partner

                                       By: /s/ John D. Curtin III
                                          --------------------------------------
                                          Name: John D. Curtin III
                                          Title: Agent and Attorney-in-fact

                                       S-1<PAGE>   1
                                                                   EXHIBIT 10.10

                                                             [EXECUTION VERSION]

                             STOCKHOLDERS' AGREEMENT

         This Stockholders' Agreement, dated as of March 31, 1999, is by and
among Joint Energy Development Investments II Limited Partnership, a Delaware
limited partnership ("JEDI II"), Sierra Well Service, Inc., a Delaware
corporation (the "Company"), and the Persons designated on the Schedule of
Investors attached hereto as Annex A.

         WHEREAS, the Company and JEDI II have entered into a Securities
Purchase Agreement, dated as of March 31, 1999 (the "Securities Purchase
Agreement"), regarding the sale of, among other investments, shares of the
Company's Preferred Stock; and

         WHEREAS, the parties desire to set forth their agreement with respect
to certain matters relating to the transfer and voting of the shares of Common
Stock held by the Company's Stockholders; and

         WHEREAS, the execution and delivery of this Agreement is a condition to
consummation of the transactions contemplated by the Securities Purchase
Agreement:

         NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

         1. DEFINITIONS.

         Unless the context otherwise requires, capitalized terms used but not
otherwise defined herein shall have the following respective meanings:

         "Acceptance Notice" has the meaning specified therefor in Section 5(b)
of this Agreement.

         "Adoption Agreement" shall mean an agreement in the form attached
hereto as Exhibit "A" and any similar agreement satisfactory in form and
substance to the Company.

         "Affiliate" means, with respect to any specified Person, any other
Person (i) directly or indirectly controlling, controlled by, or under common
control with the first Person or (ii) that directly
or indirectly owns more than five percent (5%) of any class of the voting
securities or capital

<PAGE>   2

stock of or equity interests in such person. The term "control" (including the
terms "controlling," "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power either to (i) vote five percent
(5%) or more of the securities or interests having ordinary voting power for the
election of directors (or other comparable controlling body) of such Person or
to (ii) direct or cause the direction of the management or the policies of such
Person, whether through the ownership of voting securities or interests, by
contract or otherwise.

         "Agreement" shall mean this Agreement as in effect on the date hereof
and as hereafter from time to time amended, modified or supplemented in
accordance with the terms hereof.

         "Appraised Value" shall mean the fair market value of the Company
Securities determined by agreement between the Board of Directors and the
Subject Stockholder (or a representative or designee thereof) or, if such
agreement is not obtained within 30 days after the relevant determination date,
by agreement of two firms qualified to appraise the Company's business, one of
which shall be selected by a majority of the members of the Board of Directors
of the Company and one of which shall be selected by the Subject Stockholder (or
a representative or designee thereof). If the two appraisers' determinations of
fair market value are within 10% of each other, the average of these amounts
shall be the Appraised Value. Otherwise, the two appraisers shall select a
mutually agreeable third appraiser to make a determination of the fair market
value of the Company Securities. The Appraised Value shall then be the average
of: (i) the fair market value as established by such third appraiser and (ii)
the fair market value established by one of the first two appraisers that is
closest to the third appraiser's estimate. For purposes of determining Appraised
Value, the fair market value of the Company Securities shall equal the price
that could be obtained in an open (non-forced) sale of all of such outstanding
securities, with ample time for marketing and closing and assigning equal value
to each share thereof. Each party will bear the cost of its own appraiser and
any such appraiser will, upon providing reasonable notice to the Company, be
given full access to the books, records, properties and employees of the Company
and its subsidiaries during regular business hours. In the event that a third
appraiser is chosen as provided hereunder, the parties will bear the cost of
such appraiser equally.

         "Board of Directors" shall mean the Board of Directors of the Company.

         "Business Day" means a day that is not a Saturday, a Sunday or a day on
which banking institutions in New York, New York are not required to be open for
business.

         "Change in Control" shall mean the occurrence with respect to any
Stockholder of any of the following events; provided, however, that a Change of
Control shall not be deemed to have occurred (x) if any of the events described
in subsections (i) or (ii) below directly results from a Preferred Holder
exercising its rights pursuant to this Agreement or (y) if, after any of the
events described in subsections (i) or (ii) below, the voting securities or
assets of the Stockholder are held by a Person, entity or group that was a
subsidiary of the Stockholder prior to the date hereof:

                                       2

<PAGE>   3

         (i) any Person, entity or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act) shall purchase securities pursuant to a tender offer
or exchange offer to acquire any securities for cash, securities or any other
consideration, provided that after consummation of the offer, the Person, entity
or group in question is the beneficial owner (as such term is defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of 50%
percent or more of the combined voting power of the then outstanding securities
of such Stockholder;

         (ii) the stockholders of such Stockholder shall approve: (i) any
merger, consolidation, or reorganization of such Stockholder; (a) in which such
Stockholder is not the continuing or surviving corporation or (b) pursuant to
which shares of outstanding voting securities of such Stockholder would be
converted into cash, securities or other property; (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of such Stockholder; or
(iii) any liquidation or dissolution of such Stockholder;

         (iii) during any period of two consecutive years, the individuals who
at the beginning of such period constituted the board of directors of such
Stockholder cease for any reason to constitute a majority of such board, unless
the election or nomination for election by such Stockholder's stockholders of
each new director during any such two-year period was approved by the vote of
two-thirds of the directors then still in office who were directors at the
beginning of such two-year period; or

         (iv) The substitution of any general partner of any Stockholder that is
a partnership or a Change of Control shall occur with respect to the general
partner of any Stockholder that is a partnership

         "Common Stock" shall mean the common stock, no par value, of the
Company and all equity securities received in connection with any stock split,
stock dividend, reorganization, recapitalization, merger or consolidation of the
Company with or into another entity or a similar event. All references herein to
Common Stock owned by a Stockholder shall include: (i) the community interest or
similar marital property interest, if any, of a spouse of such Stockholder in
such Common Stock; and (ii) all of the equity interests and voting rights in the
Company which are reflected by Common Stock ownership.

         "Common Stock Equivalent" means any right, warrant or option to
purchase shares of Common Stock of the Company or any other security convertible
into or exchangeable for shares of Common Stock of the Company.

         "Company" has the meaning specified therefor in the preamble of this
Agreement.

         "Company Offer" has the meaning specified therefor in Section 5(a) of
this Agreement.

                                       3

<PAGE>   4

         "Company Offered Securities" has the meaning specified therefor in
Section 5(a) of this Agreement.

         "Company Securities" shall mean all of the capital stock of the
Company, including, but not limited to, any Common Stock, Common Stock
Equivalents, any securities convertible into or exchangeable for such
securities, and any options, warrants or other rights to purchase such
securities.

         "Conversion Shares" means the shares of Common Stock and other
securities, property or cash receivable upon conversion of the Preferred Stock.

         "Dispute" has the meaning specified therefor in Section 12(d)(i) of
this Agreement.

         "Effective Date" has the meaning specified therefor in Section 2 of
this Agreement.

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

         "Exempt Issuance" shall mean (i) the sale or issuance of Common Stock
by the Company in a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act, (ii) shares of Common
Stock sold or issued upon conversion of shares of the Preferred Stock, (iv)
Common Stock issued pursuant to any merger or acquisition by the Company that is
approved by the Board of Directors, and (vi) Common Stock issued pursuant to
stock splits, stock dividends and other distributions to Stockholders.

         "Fully Diluted" shall mean the total number of shares of Common Stock
outstanding assuming the exercise of all outstanding warrants, stock options or
similar rights to acquire shares of Common Stock and the conversion of all
evidences of indebtedness, shares (other than Common Stock) and other securities
convertible into or exchangeable for shares of Common Stock; provided, the total
number of shares of Common Stock outstanding shall not include any shares
thereof then directly or indirectly owned or held by or for the account of the
Corporation or its subsidiaries.

         "JEDI Affiliates" has the meaning specified therefor in Section 10(a)
of this Agreement.

         "JEDI II" has the meaning specified therefor in preamble of this
Agreement.

         "Liens" means mortgages, liens, security interests, pledges, voting
trusts, restrictions, encumbrances, preferential purchase rights and claims of
every kind.

         "Option" has the meaning specified therefor in Section 7(b) of this
Agreement.

                                       4
<PAGE>   5

         "Option Purchase Price" has the meaning specified therefor in Section
7(a) of this Agreement.

         "Option Shares" has the meaning specified therefor in Section 7(c) of
this Agreement.

         "Participation Notice" has the meaning specified therefor in Section
4(iii) of this Agreement.

         "Person" means any natural person, partnership, corporation, and any
other form of business or legal entity.

         "Positions" has the meaning specified therefor in Section 10(a) of this
Agreement.

         "Preferred Holder" shall mean the Persons listed as Preferred Holders
on Annex B to this Agreement, the holders of the Conversion Shares issued
pursuant to the conversion of the Preferred Stock and any transferees of any
such Persons.

         "Preferred Stock" means, either singly or collectively, shares of the
Company's: (i) Series A Preferred; (ii) Series B Preferred; and (iii) Series C
Preferred.

         "Pro Rata Portion," with respect to a Preferred Holder, means a
fraction, the numerator of which shall equal the total number of shares of
Common Stock then held by such Preferred Holder (assuming conversion of all of
such holder's shares of Preferred Stock) and the denominator of which shall
equal the sum of all shares of Common Stock then held by all Preferred Holders
(assuming conversion of all outstanding shares of Preferred Stock).

         "Proposed Sale Price" has the meaning specified therefor in Section
4(i) of this Agreement.

         "Purchase Notice" has the meaning specified therefor in Section 4(ii)
of this Agreement.

         "Purchasing Investor" has the meaning specified therefor in Section
5(e) of this Agreement.

         "Qualified Transferee" means a Person that is an "accredited investor,"
as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

         "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

         "Securities Purchase Agreement" has the meaning specified therefor in
the recitals of this Agreement.

         "Securityholders" means anyone owning any shares of the capital stock
of the Company.

                                       5
<PAGE>   6

         "Selling Stockholder" has the meaning specified therefor in Section
4(i) of this Agreement.

         "Senior Facility" means the Company's $24,408,000 Senior Credit
Facility, dated March 31, 1999.

         Series A Holder" has the meaning specified therefor in Section 9(a) of
this Agreement.

         "Series A Preferred" means the Company's Series A Cumulative Preferred
Stock.

         Series B Holder" has the meaning specified therefor in Section 7(b) of
this Agreement.

         "Series B Preferred" means the Company's Series B Convertible Preferred
Stock.

         "Series C Call Option" has the meaning specified therefor in Section
6(a) of this Agreement.

         "Series C Holder" has the meaning specified therefor in Section 6(b) of
this Agreement.

         "Series C Preferred" means the Company's Series C Convertible Preferred
Stock.

         "Stockholder" shall mean each Person listed as a Stockholder on Annex A
to this Agreement, any Transferee (other than a Preferred Holder) of any such
Person and any person who signs an Adoption Agreement in accordance with Section
3(c).

         "Subject Shares" has the meaning specified therefor in Section 4(i) of
this Agreement.

         "Subject Stockholder" has the meaning specified therefor in Section
4(vi) of this Agreement.

         "Subordinated Facility" means the Company's $25 million Senior
Subordinated Credit Facility, dated March 31, 1999.

         "Transfer" shall mean any direct or indirect transfer, assignment,
donation, devise, sale, gift, pledge, hypothecation, encumbrance, or other
disposition of any security, or any interest therein, whether voluntary or
involuntary, including without limitation any disposition or transfer as a part
of any liquidation of assets or any reorganization pursuant to the United
States' or any other jurisdiction's bankruptcy law or other similar debtor
relief laws. The term "Transfer," shall also include a transaction involving a
change of ownership interest or voting power of a Stockholder entered into for
the purpose or with the effect of avoiding the restrictions on the Transfer of
the Company Securities provided herein or other any other provision hereof
governing Transfers.

         "Transfer Notice" has the meaning specified therefor in Section 4(i) of
this Agreement.

                                       6
<PAGE>   7

         "Transferee" shall mean any Person who acquires Company Securities from
a Stockholder (other than a Preferred Holder).

         "Voting Power" shall mean, with respect to a Securityholder, the total
number of votes that could be cast by such Securityholder in a matter for which
holders of Common Stock are entitled to vote, other than the election of
directors, without giving effect to any cumulative voting rights.

         2. EFFECTIVE DATE. The restrictions, obligations and rights of the
parties hereto imposed by Sections 3 through 9 of this Agreement shall become
effective concurrently with the Closing (as defined therein) of the Securities
Purchase Agreement (the "Effective Date"). The Company and each Stockholder
covenants and agrees that, from the date hereof until the Effective Date, such
Stockholder will not Transfer any shares of Common Stock or Company Securities
or any interest therein.

         3. GENERAL RESTRICTION ON TRANSFERS.

                  (a) General Rule; Ownership. Each of the Stockholders agrees
         that until the redemption of all outstanding shares of the Series A
         Preferred in accordance with its terms, no Stockholder may effect any
         Transfer of any shares of Company Securities owned by such Stockholder
         without the prior written consent of holders representing a majority of
         the outstanding shares of the Series A Preferred. Thereafter,
         Stockholders may only Transfer Company Securities in strict compliance
         with the provisions of this Agreement. Each Stockholder represents and
         warrants to the Preferred Holders that such Stockholder beneficially
         owns all of the Company Securities, and no other securities, set forth
         opposite its name on Annex A to this Agreement, free and clear of all
         Liens (except as otherwise specified on Annex A) and that such shares
         are held of record in the name set forth on Annex A.

                  (b) Prohibited Transfers are Void. Attempts by Stockholders to
         Transfer Company Securities that do not comply with the terms of this
         Agreement shall be void and of no effect and the Company shall hold and
         refuse to effectuate such Transfer. The Company shall give effect to
         the transfer restrictions imposed by this Agreement by placing an
         "issuer hold" on the Company Securities owned by the Stockholders and
         it will not release such issuer hold except in accordance with the
         terms hereof. Each Stockholder consents to the Company making a
         notation on its records and giving instructions to any transfer agent
         of the Company in order to implement the restrictions on transfer
         established in this Agreement. The Company shall keep a copy of this
         Agreement (as it may be amended from time to time) at its principal
         place of business and shall make such Agreement subject to the same
         right of examination by Securityholders of the Company, in person or by
         agent, attorney or accountant, as are the books and records of the
         Company by any stockholder generally. The Company's duty to prohibit
         Transfers that do not comply with the terms of this Agreement is
         additional to, and without prejudice to, the rights and remedies that
         may be otherwise available to the parties. Each party: (i) acknowledges
         that remedies at law for any breach or any attempted breach hereof
         would be inadequate; (ii) agrees that each other

                                       7
<PAGE>   8

         party shall be entitled to specific performance and injunctive relief
         and other equitable relief in case of such a breach or attempted
         breach; and (iii) agrees to waive any requirement for notice prior to
         obtaining injunctive or equitable relief in such circumstances.

                  (c) Adoption Agreement. The Company shall not issue or
         Transfer Company Securities, nor shall any Stockholder Transfer any
         Company Securities, unless the intended Transferee (other than a
         Preferred Holder) first executes an Adoption Agreement and delivers it
         to the Company, whereupon such Transferee shall be deemed a
         "Stockholder" and shall have the rights and obligations of a
         Stockholder under this Agreement and the Company Securities held by any
         such Person shall be subject to the provisions hereof.

         4. RIGHT OF FIRST REFUSAL AND TAG-ALONG RIGHT ON STOCKHOLDER TRANSFERS.

         Each of the Stockholders agrees that it will not Transfer any shares of
Company Securities to any Person without first providing the Company the right
to purchase the shares to be Transferred and the Preferred Holders (i) the right
to purchase the shares to be Transferred or (ii) the right to participate in the
Stockholder's proposed Transfer, in accordance with the following provisions:

                           (i) Proposed Transfer. If any Stockholder (a "Selling
                  Stockholder") desires to Transfer Company Securities it shall
                  deliver to the Company and to JEDI II or its designees a
                  written notice (a "Transfer Notice") which shall specify the
                  proposed Transferee, the number and kind of Company Securities
                  to be Transferred (the "Subject Shares"), the proposed
                  consideration to be paid per share therefor (the "Proposed
                  Sale Price"), and other material terms of the proposed
                  Transfer (which terms shall not limit the ability of the
                  Company or the Preferred Holders to exercise their rights to
                  acquire the securities hereunder), and which notice shall
                  include a copy of any agreement with respect to the proposed
                  Transfer. No Stockholder may Transfer Company Securities to a
                  non-Preferred Holder for consideration other than cash.

                           (ii) Right of First Refusal.

                                    (1) The Company shall have the right, for a
                           period of thirty days following its receipt of a
                           Transfer Notice to elect to acquire the Company
                           Securities specified in the Transfer Notice at a cash
                           price equal to the Proposed Sale Price. The Company
                           may exercise the foregoing right by delivering to the
                           Selling Stockholders, within thirty days after
                           receipt of the Transfer Notice, written notice (a
                           "Purchase Notice") of its intention to purchase the
                           Subject Shares. The closing of any acquisition of
                           Subject Shares by the Company shall be consummated
                           within five Business Days following delivery of the
                           Purchase Notice, at the principal offices of the
                           Company (unless otherwise mutually agreed), at which
                           time the Proposed Sale Price (in the form of a wire
                           transfer to an account designated by the

                                       8
<PAGE>   9

                           Selling Stockholder) shall be delivered to the
                           Selling Stockholder or its representative and Selling
                           Stockholder shall deliver to the Company certificates
                           representing the Subject Shares, duly endorsed for
                           transfer or accompanied by duly executed stock
                           powers.

                                    (2) If the Company does not elect to acquire
                           any or all of the Subject Shares, each of the
                           Preferred Holders shall have the right to elect to
                           acquire any Subject Shares not purchased by the
                           Company at the Proposed Sale Price. The Preferred
                           Holders may exercise the foregoing right by
                           delivering to the Selling Stockholder a Purchase
                           Notice of their intention to purchase the Subject
                           Shares within (x) sixty days following receipt of a
                           Transfer Notice or (y) thirty days after written
                           notification by the Company that it will not acquire
                           all of the Subject Shares, whichever is earlier. The
                           closing of any acquisition of Subject Shares by the
                           Preferred Holders shall be consummated within five
                           Business Days following delivery of the Purchase
                           Notice, at the principal offices of JEDI II (unless
                           otherwise mutually agreed), at which time the
                           purchase price (in the form of a wire transfer to an
                           account designated by the Selling Stockholder or, if
                           other than cash, in a form reasonably acceptable to
                           the Selling Stockholder) shall be delivered to the
                           Selling Stockholder or its representative and the
                           Selling Stockholder shall deliver to the Preferred
                           Holders certificates representing the Subject Shares,
                           duly endorsed for transfer or accompanied by duly
                           executed stock powers. Unless otherwise agreed among
                           the Preferred Holders who have exercised their
                           election to acquire the Subject Shares, the Subject
                           Shares so purchased shall be allocated among such
                           Preferred Holders in proportion to their Pro Rata
                           Portion.

                           (iii) Tag-Along Right. Each of the Preferred Holders
                  shall have the right, for a period of thirty days following
                  receipt of a Transfer Notice, to elect to participate in the
                  sale to the Selling Stockholder's proposed Transferee of the
                  Subject Shares on substantially the same terms as the proposed
                  Transferee could acquire the Subject Shares from the Selling
                  Stockholder. A Preferred Holder shall exercise the foregoing
                  right by delivering to the Selling Stockholder, within thirty
                  days after receipt of the Transfer Notice, written notice of
                  its intention to participate in the sale to the Transferee (a
                  "Participation Notice"), specifying the amount of shares the
                  Preferred Holder desires to sell to the proposed Transferee
                  (such amount being equal to or less than its Pro Rata Portion
                  of the Subject Shares). The closing of any tag-along sale by
                  the Preferred Holders shall be consummated within five
                  Business Days following delivery of the Participation Notice,
                  at the principal offices of JEDI II (unless otherwise mutually
                  agreed), at which time the purchase price (in the form of a
                  wire transfer to an account designated by the Preferred
                  Holders) shall be delivered to the Preferred Holders or their
                  representatives and the Preferred Holders shall deliver to

                                       9
<PAGE>   10

                  the third-party Transferee certificates representing the
                  shares they are selling, duly endorsed for transfer or
                  accompanied by duly executed stock powers.

                           (iv) Lapse. If the Preferred Holders shall (i) fail
                  to give either a Purchase Notice or a Participation Notice
                  within the applicable time period specified in paragraph
                  (ii)(2) above, or (ii) notify the Selling Stockholder in
                  writing of the waiver of their "first-refusal" and "tag-along"
                  rights given in subparagraphs (ii) and (iii) above with
                  respect to the Subject Shares, whichever is earlier, then the
                  Selling Stockholder shall have the right, for a period of 30
                  calendar days to sell to any Qualified Transferee the Subject
                  Shares remaining unsold at a price not less than the Proposed
                  Sale Price and on terms substantially the same as set forth in
                  the Selling Stockholder's Transfer Notice delivered pursuant
                  to subparagraph (i) above.

                           (v) Waiting Period with Respect to Subsequent
                  Transfers. In the event that the Preferred Holders do not
                  exercise their "first-refusal" and "tag-along" rights given in
                  subparagraphs (ii) and (iii) above with respect to the Subject
                  Shares and the Selling Stockholder shall not have sold the
                  Subject Shares to a Qualified Transferee before the expiration
                  of the 30-day period set forth in subparagraph (iv), then such
                  Selling Stockholder shall not propose another Transfer of
                  Company Securities for a period of 60 calendar days after the
                  last day of such 30-day period.

                           (vi) Change in Control Option.

                                    (1) If any Stockholder undergoes a Change in
                           Control, or in the event of the death or divorce of
                           any individual Stockholder (each a "Subject
                           Stockholder"), the Company shall have the option to
                           purchase all (but not less than all) of the Subject
                           Stockholder's Company Securities. The price per share
                           at which such Company Securities shall be purchased
                           shall be the Appraised Value and shall be payable in
                           cash. Such option must be exercised within 30 days
                           after the date on which the Company receives written
                           notice of the Change in Control, death or divorce of
                           the Subject Stockholder.

                                    (2) If the Company elects not to purchase
                           all of the Subject Stockholder's Company Securities,
                           the Preferred Holders shall have the right to acquire
                           all, but not less than all, of such securities. The
                           price per share at which such Company Securities
                           shall be purchased shall be the Appraised Value and
                           shall be payable in cash. Such option must be
                           exercised within (x) 60 days after the date on which
                           the Preferred Holders receive written notice of the
                           Change in Control, death or divorce of the Subject
                           Stockholder or (y) 30 days after written notification
                           by the Company that it will not acquire all of the
                           Subject Stockholder's Company Securities, whichever
                           is earlier. If any Preferred Holder elects to
                           purchase less than its Pro Rata Portion of the
                           Subject Stockholder's Company Securities, then such
                           Preferred Holder shall

                                       10
<PAGE>   11

                           be allocated and shall purchase the amount of such
                           securities it elected to purchase and the other
                           Preferred Holders shall be allocated and shall
                           purchase the balance of the Subject Stockholder's
                           Securities.

                                    (3) To the extent not exercised by the
                           Company or the Preferred Holders, the option to
                           acquire the Subject Stockholder's Company Securities
                           will expire and be of no further force and effect.
                           Each Subject Stockholder agrees to provide prompt
                           written notice to each Preferred Holder and the
                           Company of the occurrence of any Change in Control or
                           upon the occurrence of any divorce of such Subject
                           Stockholder.

         5. PREEMPTIVE RIGHT ON COMPANY ISSUES.

                  (a) Company Offer. The Company shall give the Preferred
Holders thirty (30) days' prior written notice (the "Company Offer"), delivered
or mailed as provided in Section 12(k), of the Company's intention to sell or
issue any Company Securities, other than an Exempt Issuance (the "Company
Offered Securities"), stating the intended date and material proposed terms of
such sale or issuance and the respective record ownership of Company Securities
and Voting Power of each Securityholder immediately before and after giving
effect to the proposed issuance. Such notice shall include a representation to
the Preferred Holders that the Company has a good faith intention to sell such
Company Securities on the terms specified in the Company Offer. A Company Offer
shall constitute an offer by the Company, irrevocable for thirty (30) days, to
sell or issue all or any portion of the Company Offered Securities to the
Preferred Holders on the same terms as specified in the Company Offer or, if
such terms provide for consideration other than cash, for cash in an amount
equal to the fair market value of such non-cash consideration. The fair market
value of such non-cash consideration shall be determined in good faith by a
majority of the Board of Directors.

                  (b) Acceptance of Company Offer. Within thirty (30) days after
receipt of a Company Offer, each Preferred Holder shall give an irrevocable
written notice to the Company (an "Acceptance Notice") that (a) such Preferred
Holder has elected to purchase all or a stated portion of the Company Offered
Securities without regard to the other Preferred Holders' election or (b) such
Preferred Holder has elected to purchase all or a stated portion of the Company
Offered Securities only if the other Preferred Holders elect to purchase all or
a stated portion of the Company Offered Securities. If any Preferred Holder does
not give an Acceptance Notice by the end of such thirty (30) day period, such
Preferred Holder shall be deemed to have elected not to purchase any of the
Company Offered Securities.

                  (c) Allocation of Company Offered Securities. If the Preferred
Holders elect to purchase, in the aggregate, either all or more than all of the
Company Offered Securities, the Company Offered Securities shall be allocated as
follows:

                           (i) If any Preferred Holder elects to purchase less
than its Pro Rata Portion of the Offered Securities, then such Preferred Holder
shall be allocated and shall purchase the

                                       11
<PAGE>   12

amount of Company Offered Securities it elected to purchase and the other
Preferred Holders electing to purchase the Company Offered Securities shall be
allocated and shall purchase the balance of the Company Offered Securities;
provided, however, that, no such Preferred Holder shall be obligated to purchase
an amount of Company Offered Securities in excess of the amount set forth in its
Acceptance Notice; and

                           (ii) Otherwise, each Preferred Holder electing to
purchase the Company Offered Securities shall be allocated and shall purchase
its Pro Rata Portion of the Company Offered Securities.

                  (d) Rejection of Company Offer. If the Preferred Holders do
not elect to purchase all of the Company Offered Securities, the Company shall
have the right, exercisable not later than one hundred twenty (120) days after
the giving of the Company Offer, to issue the Company Offered Securities not
purchased by the Preferred Holders on substantially the same terms as, and in
any case, no more favorable to the purchaser than, those set forth in the
Company Offer.

                  (e) Closing. The closing of any sale or issue of Company
Offered Securities to a Preferred Holder pursuant to this Section 5, (a
"Purchasing Investor") shall take place on such date, within thirty (30) days of
the date of the Acceptance Notice (subject to extension to comply with any
applicable law), as shall be agreed by the Company and the Purchasing Investor.
At any such closing, the Company shall deliver to each Purchasing Investor
certificates representing the Company Offered Securities being issued,
registered in the name of such Purchasing Investor or its nominee, against
payment of the applicable purchase price by wire transfer of same day funds or
check as deemed acceptable to the Company.

         6. OPTION TO PURCHASE SERIES C PREFERRED.

                  (a) Stockholders' Call Option. Beginning on the date hereof
and ending on June 30, 2004, the Stockholders shall have the option to purchase
the outstanding shares of the Company's Series C Preferred At the price and upon
the terms as set forth herein (the "Series C Call Option"); provided, however,
that the Stockholders may not exercise such option unless and until the
company's Series a Preferred has been redeemed in full.

                  (b) Notice of Exercise. The Series C Call Option Set forth in
this Section 6 may be exercised by the action of Stockholders representing, in
the aggregate, at least a majority in interest of the then outstanding shares of
Common Stock, giving 15 days' prior written notice to the holder of the Series C
Preferred (the "Series C Holder") in accordance with Section 12(k) hereof.

                  (c) Purchase price. The total purchase price for the Series C
Preferred Shall be that amount which would yield to JEDI II An eighteen percent
(18%) annual internal rate of return (compounded quarterly) on the aggregate of
all investments made by JEDI II and its Affiliates in the Company (excluding in
such calculation the Series B Preferred issued to JEDI and its affiliates
pursuant to the Securities Purchase Agreement), calculated from the date on
which the respective

                                       12
<PAGE>   13

investments were made (less any cash received) to the date of exercise of the
Series C Call Option, as set forth on Annex C hereto.

                  (d) Closing. The closing of the purchase and sale of shares of
the Series C Preferred pursuant to this Section 6 shall take place at the
principal office of the Company on the date specified in the notice of exercise.
At such closing, the Series C Holder shall deliver the certificate representing
the Series C Preferred, duly endorsed or assigned to the purchasers or in blank,
against payment of the applicable purchase price by wire transfer of same day
funds or check as deemed acceptable to the Series C Holder. The Series C
Preferred shall be free and clear of any and all claims, charges, security
interests or other encumbrances of any nature whatsoever.

         7. OPTION TO REDEEM COMMON STOCK.

                  (a) Company's Call Option. Each Stockholder agrees that the
Company shall have the exclusive option, commencing June 30, 2004 and ending 30
days thereafter, to purchase all or part of the shares of Common Stock owned by
such Stockholder for a purchase price equal to $1.00 per share (the "Option
Purchase Price"); provided, however, that such option may only be exercised if,
prior to the date of exercise, one or more shares of the Series A Preferred
remain outstanding.

                  (b) Series B Holders' Call Option. Each Stockholder agrees
that if the Company does not elect to purchase all of such Stockholder's shares
of Common Stock pursuant to subsection (a), the holders of the Series B
Preferred (the "Series B Holders") shall have the option to purchase all or part
of the shares of Common Stock owned by such Stockholder at the Option Purchase
Price; provided, however, that such option may only be exercised if, prior to
the date of exercise, one or more shares of the Series A Preferred remain
outstanding. Collectively, the Company's call option provided in subsection (a)
above and the Series B Holders' call option provided in this subsection (b) are
referred to as the "Option."

                  (c) Adjustment of Option Purchase Price. The Option Purchase
Price shall be subject to adjustment from time to time on and after the date
hereof as provided in this Section 7(c). In case the Company shall at any time
after the date hereof (i) pay a dividend of shares of Common Stock or make a
distribution of shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock into a larger number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock or (iv) issue any shares of its capital stock or other assets in a
reclassification or reorganization of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity), then the Option Purchase Price shall be
adjusted to equal the Option Purchase Price immediately prior to the adjustment
multiplied by a fraction, (A) the numerator of which is the number of shares of
Common Stock for which this Option is exercisable immediately prior to the
adjustment, and (B) the denominator of which is the number of shares of Common
Stock for which this Option is exercisable immediately after such adjustment.
The adjustments made pursuant to this Section 7(c) shall become effective
immediately after the effective date of the event creating such right of
adjustment, retroactive to the record date, if any, for such event. Any Option
Shares

                                       13
<PAGE>   14

purchasable as a result of such adjustment shall not be issued prior to the
effective date of such event.

                  (d) Adjustment Notices. Upon any increase or decrease in the
Option Purchase Price the Company shall, within 30 days thereafter, deliver
written notice thereof to all Series B Holders, which notice shall state the
adjusted Option Purchase Price, setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based.

                  (e) Notice of Exercise.

                           (i) The Company's Option set forth in subsection
         7(a)(i) may be exercised by action of a majority of the members of the
         Board of Directors of the Company by delivery to the Stockholder of
         written notice of such exercise no less than 15 days in advance of the
         date of exercise pursuant to the notice requirements of Section 12(k).

                           (ii) The Series B Holders' Option set forth in
         subsection 7(a)(ii) may be exercised by any Series B Holder upon
         delivery to the Stockholder of written notice of such exercise no less
         than 15 days in advance of the date of exercise pursuant to the notice
         requirements of Section 12(k). If more than one Series B Holder elects
         to exercise its Option set forth in subsection 7(a)(ii) with respect to
         the same share or shares of Common Stock, such share or shares will be
         allocated among such Series B Holders to the extent of their Pro Rata
         Portion or as otherwise agreed.

                  (f) Closing. The closing of the purchase and sale of shares of
Common Stock pursuant to this Section 7 shall take place at the principal office
of the Company on the date specified in the notice of exercise. At such closing,
the Company or Series B Holders, as the case may be, shall deliver payment of
the purchase price in the form of a check or wire transfer to the holder or
holders of the shares of Common Stock purchased, against delivery of the
certificate or certificates representing such shares, duly endorsed or assigned
to the Company or the Series B Holders, as the case may be, or in blank, free
and clear of any and all claims, charges, security interests or other
encumbrances of any nature whatsoever.

         8. BRING ALONG/COME-ALONG RIGHTS. If Preferred Holders owning 10% or
more of the shares of Common Stock (calculated on a Fully Diluted Basis) make a
determination to sell their interest to a third party (excluding subsidiaries of
the Preferred Holders), such Preferred Holders shall have the right to require
all of the Stockholders of the Company to participate in such sale at the same
price and on the same terms as the other Stockholders.

                                       14
<PAGE>   15

         9. CORPORATE GOVERNANCE MATTERS.

                  (a) Designation and Removal of Directors. The Company and the
Stockholders agree that, so long as shares of Series A are outstanding, the
holders of Series A Preferred (the "Series A Holders") shall be entitled to
designate and remove members of the Company's Board of Directors in accordance
with the Company's Certificate of Designations for the Series A.

                  (b) Stockholder Action. Each Stockholder hereby agrees to vote
its shares of Common Stock (and to execute any requested written consent in lieu
of a meeting) from time to time as may be necessary to elect the Series A
Holders' designees to the Board of Directors and to take any other action
necessary to accomplish the purposes of this Section.

                  (c) Action by Preferred Holders. Each Preferred Holder hereby
agrees, so long as the Series A Holders' designees to the Board of Directors
have been elected as provided in this Section 9, to vote its shares of Preferred
Stock (and execute any requested written consent in lieu of a meeting) in any
election for the remaining members (if any) of the Board of Directors in the
same proportion as the Stockholders, so that the percentage of votes cast by the
Preferred Holders for any candidate shall equal the percentage of votes cast by
the Stockholders for such candidate.

                  (d) Committee Representation. At the election of the holders
of the Series A Preferred, any or all of the designees of the Series A Holders
serving on the Board of Directors pursuant to this Section 9 shall be members of
any executive committee or compensation committee, and, except for any
environmental committee, each other committee of the Board of Directors of the
Company.

         10. CORPORATE OPPORTUNITIES.

                  (a) The Stockholders and the Company recognize that JEDI II,
its Affiliates (other than the directors elected or appointed to the Board of
Directors by JEDI II) and assigns (collectively, the "JEDI Affiliates") and the
directors elected or appointed to the Board of Directors of the Company by the
JEDI Affiliates (i) may have participated, directly or indirectly, and may
continue to participate in venture capital and other direct investments in
corporations, partnerships, joint ventures, limited liability companies and
other entities and other similar transactions, (ii) may have interests in,
participate with, and maintain seats on the board of directors of other such
entities and (iii) may develop opportunities for such entities. Specifically,
such directors elected or appointed to the Board of Directors by JEDI II may be
directors or employees of the JEDI Affiliates or directors or advisors of
entities in which the JEDI Affiliates have invested or may invest (collectively,
the "Positions"). In such Positions, such directors elected or appointed by the
JEDI Affiliates may encounter business opportunities that the Company or its
Stockholders may desire to pursue. The Stockholders and the Company recognize
that such opportunities may include, but shall not be limited to, identifying,
pursuing and investing in entities, financing entities, acquiring property or
other assets of entities, engaging investment banking firms or other
underwriters for access to public and private securities markets, and obtaining
investment funds from institutional and private

                                       15
<PAGE>   16

investors or others, and agree that, to the fullest extent permitted by law, the
JEDI Affiliates and the directors elected or appointed to the Board of Directors
by the JEDI Affiliates shall not be expressly or implicitly restricted or
proscribed from engaging in any of the foregoing activities, regardless of
whether such business activity is (or such business entity engages in businesses
that are) in direct or indirect competition with the business or activities of
the Company and its Affiliates.

                  (b) The Stockholders and the Company agree that the JEDI
Affiliates and the directors elected or appointed by the JEDI Affiliates shall
have no obligation to the Company, the Stockholders of the Company or to any
other person or entity to present any such business opportunity to the Company
before presenting and allowing time to develop such opportunity to any other
entities, other than such opportunities presented to him or her solely in, and
as a direct result of, his or her capacity as a director of the Company;
provided, that this paragraph shall in no way allow a director to usurp a
corporate opportunity solely for his or her benefit without first presenting and
allowing time to the entities set forth above to develop such opportunity.
However, if an opportunity is separately presented by a person other than such
director of the Company to such entity, including the JEDI Affiliates, such
entity shall be free to pursue such opportunity even if it came to the
director's attention solely as a result of and in his or her capacity as a
director of the Company.

         11. LEGEND ON CERTIFICATES; STOP TRANSFER ORDERS. The Stockholders
agree to the placement of a conspicuous legend on all certificates representing
shares of Company Securities or Common Stock Equivalents indicating that such
securities may not be Transferred except in accordance with this Agreement and
to the entry of a stop transfer order with the transfer agent for such
securities against the transfer of such securities except in accordance with
this Agreement. Such legend shall be substantially in the following form:

                   BY THE TERMS OF A STOCKHOLDERS' AGREEMENT DATED MARCH 31,
         1999 AMONG CERTAIN STOCKHOLDERS AND THE COMPANY (THE "STOCKHOLDERS'
         AGREEMENT"), CERTAIN RESTRICTIONS HAVE BEEN PLACED ON THE TRANSFER AND
         VOTING OF THE SHARES REPRESENTED BY THIS CERTIFICATE. NEITHER THESE
         SECURITIES NOR ANY INTEREST HEREIN MAY BE TRANSFERRED, BY MEANS OF A
         DIRECT OR INDIRECT SALE, ASSIGNMENT, DONATION, TRANSFER, DEVISE,
         PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER DISPOSITION OF LEGAL TITLE
         OR BENEFICIAL INTEREST HEREIN, EXCEPT IN ACCORDANCE WITH THE
         STOCKHOLDERS' AGREEMENT. A COPY OF THE STOCKHOLDERS' AGREEMENT HAS BEEN
         PLACED ON FILE BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR
         REGISTERED OFFICE AND IS AVAILABLE FOR INSPECTION.

Each Stockholder holding Company Securities issued prior to the Effective Date
of this Agreement agrees to surrender all certificates representing such
securities for endorsement as indicated above.

                                       16
<PAGE>   17

         12. MISCELLANEOUS.

                  (a) Action by Preferred Holders. Where consent, approval or a
designation by the Preferred Holders is contemplated by this Agreement, such
consent, approval or designation shall be deemed given, unless otherwise
specified by this Agreement, if (i) JEDI II shall evidence in writing its
consent, approval or designation, provided JEDI II and its Affiliates then own
beneficially at least 10% of the outstanding shares of Preferred Stock or (ii)
if JEDI II and its Affiliates own beneficially less than 10% of the outstanding
shares of Preferred Stock, the Persons beneficially owning over 50% of the
outstanding shares of Preferred Stock evidence such consent, approval or
designation in one or more signed writings in each case. Where any action by the
Preferred Holders is contemplated by this Agreement, each Preferred Holder may
independently exercise its respective rights. Shares of Preferred Stock or
Conversion Shares held by the Company or any subsidiary of the Company shall not
be deemed to be outstanding and neither the Company nor any subsidiary may
exercise any rights as a Preferred Holder.

                  (b) Determination of Beneficial Ownership. For purposes of
this Agreement, the determination of beneficial ownership of Company Securities
shall be made in accordance with Rule 13d-3 under the Exchange Act.

                  (c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto.

                  (d) Arbitration.

                           (i) On the request of any of the parties hereto,
(whether made before or after the institution of any legal proceeding), any
action, dispute, claim or controversy of any kind now existing or hereafter
arising between any of the parties hereto in any way arising out of, pertaining
to or in connection with this Agreement (a "Dispute") shall be resolved by
binding arbitration in accordance with the terms hereof. Any of the parties may,
by summary proceedings, bring an action in court to compel arbitration of any
Dispute.

                           (ii) Any arbitration shall be administered by the
American Arbitration Association (the "AAA") in accordance with the terms of
this Section, the Commercial Arbitration Rules of the AAA, and, to the maximum
extent applicable, the Federal Arbitration Act. Judgment on any award rendered
by an arbitrator may be entered in any court having jurisdiction.

                           (iii) Arbitration hereunder shall be before a
three-person panel of neutral arbitrators, consisting of one person from each of
the following categories: (1) an attorney who has practiced in the area of
commercial law for at least 10 years or a retired judge at the Texas or United
States District Court or an appellate court level: (2) a person with at least 10
years experience in commercial lending: and (3) a person with at least 10 years
experience in the petroleum industry. The AAA shall submit a list of persons
meeting the criteria outlined above for each category of arbitrator, and the
parties shall select one person from each category in the manner established by
the AAA. If the parties cannot agree on an arbitrator within 30 days after the
request for an arbitration, then any party may request the AAA to select an
arbitrator. The arbitrators may engage

                                       17
<PAGE>   18

engineers, accountants or other consultants that the arbitrator deems necessary
to render a conclusion in the arbitration proceeding.

                           (iv) To the maximum extent practicable, an
arbitration proceeding hereunder shall be concluded within 180 days of the
filing of the Dispute with the AAA. Arbitration proceedings shall be conducted
in Houston, Texas. Arbitrators shall be empowered to impose sanctions and to
take such other actions as the arbitrators deem necessary to the same extent a
judge could impose sanctions or take such other actions pursuant to the Federal
Rules of Civil Procedure and applicable law. At the conclusion of any
arbitration proceeding, the arbitrator shall make specific written findings of
fact and conclusions of law. The arbitrators shall have the power to award
recovery of all costs and fees to the prevailing party. Each of the parties
agrees to keep all Disputes and arbitration proceedings strictly confidential
except for disclosure of information required by applicable law.

                           (v) All fees of the arbitrators and any engineer,
accountant or other consultant engaged by the arbitrators, shall be paid by the
disputing parties equally unless otherwise awarded by the arbitrators.

                  (e) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement.

                  (f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  (g) Choice of Law. The laws of the State of Delaware shall
govern this Agreement without regard to principles of conflict of laws.

                  (h) Saving Clause. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting or impairing the
validity or enforceability of such provision in any other jurisdiction.

                  (i) Integrated Agreement. This Agreement, together with the
Securities Purchase Agreement and the documents and instruments to be executed
in connection therewith, is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement, the Securities Purchase Agreement and
the documents and instruments to be executed in connection therewith supersede
all prior agreements and understandings between the parties with respect to such
subject matter.

                  (j) Amendment. This Agreement may be amended only by means of
a written amendment signed by all of the parties hereto.

                                       18
<PAGE>   19

                  (k) Notices. All notices provided for hereunder shall be in
writing by registered or certified mail, return receipt requested, telex,
telegram, telecopy, air courier guaranteeing overnight delivery or personal
delivery to the following addresses:

         to the Company:

         Sierra Well Service, Inc.
         406 N. Big Spring
         Midland, Texas 79702-0460
         Attention:
         Telecopier:

         to JEDI II:

         Joint Energy Development Investments II Limited Partnership
         c/o Enron Corp.
         1400 Smith Street
         Houston, Texas  77002
         Attention:
         Telecopier:  (713) 646-4039

         to the Stockholders:

         At the addresses set forth on Annex A

         with a copy to:

         Baker, Donelson, Bearman & Caldwell
         1800 Republic Centre
         633 Chestnut Street
         Chattanooga, Tennessee 37450-1800
         Attention: J. Porter Durham, Jr.
         Telecopier: (423) 756-3447

or to such other address as any such party may designate by notice in the manner
provided above. All such notices and communications and all notices and
communications shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; four days after being sent by certified mail,
return receipt requested, if mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied; and on the next Business Day if timely
delivered to an air courier guaranteeing overnight delivery.

                  (l) Authority. Each signatory hereto signing in a
representative capacity represents and warrants to every party that his
principal has duly authorized him to execute this Agreement on its behalf and
that he has the power to bind his principal to this Agreement by such signature.

                                       19
<PAGE>   20

                  (m) Reliance. Each Stockholder acknowledges that JEDI II, in
making the investment described in the Securities Purchase Agreement, is relying
on the representations, warranties and covenants of the Stockholders as set
forth in this Agreement.

                                       20
<PAGE>   21

                   [SIGNATURE PAGE - STOCKHOLDERS' AGREEMENT]

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.

                              SIERRA WELL SERVICE, INC.

                              /s/ Bill E. Coggin
                              ---------------------------------------------
                              Bill E. Coggin
                              Vice President

                              JOINT ENERGY DEVELOPMENT
                              INVESTMENTS II LIMITED PARTNERSHIP

                              By:  Enron Capital Management II Limited
                                   Partnership, its General Partner

                                   By: Enron Capital II Corp., its
                                       General Partner

                              By: /s/ John D. Curtin III
                                 --------------------------------------------
                                 Name:  John D. Curtin III
                                 Title:  Agent and Attorney-in-Fact

                              STOCKHOLDERS:

                              SOUTHWEST ROYALTIES, INC.

                              By: /s/ Bill E. Coggin
                                 --------------------------------------------
                              Name: Bill E. Coggin
                              Title: Vice President

                                       S-1

<PAGE>   22

                   [SIGNATURE PAGE - STOCKHOLDERS' AGREEMENT]

                              SOUTHWEST PARTNERS II, L.P.

                              By: /s/ Bill E. Coggin
                                 --------------------------------------------
                              Name: Bill E. Coggin
                              Title: Vice President

                              SOUTHWEST PARTNERS III, L.P.

                              By: /s/ Bill E. Coggin
                                 --------------------------------------------
                              Name: Bill E. Coggin
                              Title: Vice President

                              /s/ Joey D. Fields
                              -----------------------------------------------
                              Joey D. Fields

                              /s/ Dub W. Harrison
                              -----------------------------------------------
                              Dub W. Harrison

                                       S-2
<PAGE>   23

                            SIERRA WELL SERVICE, INC.
                                 SPOUSAL CONSENT

         The undersigned spouse of hereby joins the Stockholders' Agreement
dated as of March __, 1999 (the "Stockholders' Agreement"), among Sierra Well
Service, Inc., a Delaware corporation (the "Company"), and its Stockholders and
Preferred Holders, a copy of which has been reviewed by such spouse. The
undersigned executes this Consent to evidence this act with respect to any
community property interest or other marital interest such spouse may hold in
the Company Securities held by . Initially capitalized terms used but not
defined herein have the meanings given to them in the Stockholders' Agreement.

WITNESS:                                       SPOUSE:

---------------------------                    --------------------------------
Name:                                          Name:
Date:                                          Date:

<PAGE>   24

                                     ANNEX A

<TABLE>
<CAPTION>

            Name of Stockholder               Number of Shares of Common Stock
            -------------------               --------------------------------

<S>                                                        <C>
         Southwest Partners III, L.P.                      2,009.71
         Southwest Royalties Holdings, Inc.                1,260.00
         Southwest Partners II, L.P.                       1,071.00
         Joey D. Fields                                       20.00
         Dub W. Harrison                                      10.00
</TABLE>

<PAGE>   25

                                     ANNEX B

<TABLE>
<CAPTION>

      Name of Preferred Holder           Series and Number of Preferred Shares
      ------------------------           -------------------------------------

<S>                                        <C>                  <C>
            JEDI II                         Series A            500
            JEDI II                         Series B           1000
            JEDI II                         Series C              1
</TABLE>

<PAGE>   26

                   [SIGNATURE PAGE - STOCKHOLDERS' AGREEMENT]

                                    EXHIBIT A

                               ADOPTION AGREEMENT

         This Adoption Agreement ("Agreement") is executed by the person or
entity named as "Transferee" below pursuant to the terms of the Stockholders'
Agreement dated as of March __, 1999 ("Stockholders' Agreement") relating to
restrictions imposed on the Stockholders of Sierra Well Service, Inc., a
Delaware corporation (the "Company"). Initially capitalized terms used but not
otherwise defined herein, shall have the meanings ascribed to them in the
Stockholders' Agreement.

         1. Acknowledgment. The Transferee acknowledges receipt of a copy of the
Stockholders' Agreement. Transferee further acknowledges that Transferee's
acquisition of Company Securities (or any interest therein) is subject to the
terms and conditions of the Stockholders' Agreement.

         2. Agreement. The Transferee hereby adopts the Stockholders' Agreement
and agrees that, so long as the Transferee holds Company Securities, the
Transferee shall be bound by and subject to the terms of the Stockholders'
Agreement with the same force and effect as if Transferee were a
"Securityholder" thereunder.

         3. Notice. Any notice required or permitted by the Stockholders'
Agreement shall be given to Transferee at the address listed below Transferee's
signature.

         4. Joinder. The spouse of Transferee, if applicable, executes this
Agreement to acknowledge that it is fair and in such spouse's best interests and
to bind such spouse's community interest, if any, in the securities acquired by
Transferee to the terms of the Stockholders' Agreement.

<PAGE>   27

                   [SIGNATURE PAGE - STOCKHOLDERS' AGREEMENT]

      This Agreement is executed by Transferee on               .
                                                  --------------

TRANSFEREE:                                 SPOUSE (if applicable):

--------------------------                  -------------------------------
Signature                                   Signature

--------------------------                  -------------------------------
Print Name                                  Print Name

--------------------------

--------------------------
Address

                                                SIERRA WELL SERVICE, INC.

                                                -------------------------------
                                                Bill E. Coggin
                                                Vice President

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