Document:

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                                                                    EXHIBIT 10.5

                               SECOND AMENDMENT
                                      TO
                               CREDIT AGREEMENT
                              DATED APRIL 9, 1999
                   BY AND BETWEEN ATP OIL & GAS CORPORATION
                     AND AQUILA ENERGY CAPITAL CORPORATION

     This Second Amendment ("Second Amendment") to the Credit Agreement dated
April 9, 1999, by and between ATP OIL & GAS CORPORATION, a Texas corporation
(the "Borrower") and AQUILA ENERGY CAPITAL CORPORATION, a Delaware corporation
(the "Lender"), is entered into effective on the 3rd day of November, 1999.

                              W I T N E S S E T H:

     A.  Borrower and Lender heretofore entered into a Credit Agreement dated
April 9, 1999, but effective March 31, 1999, as amended by the First Amendment
thereto dated June 23, 1999 (the "Credit Agreement").

     B.  Borrower and Lender hereby desire to further amend the Credit Agreement
subject to the terms and conditions contained herein.

     C.  Capitalized terms used, but not defined herein, shall have the meanings
prescribed therefor in the Credit Agreement.

     NOW THEREFORE, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by Borrower and Lender, and each intending to be legally
bound hereby, the Lender and Borrower agree as follows:

     I.  Specific Amendments to Credit Agreement

     Article I of the Credit Agreement is hereby amended by revising the
following defined terms in their entirety to read as follows:

          "Advancing Note" means the Second Amended and Restated Advancing Note
     attached as Exhibit "B" to the Second Amendment, which amends and restates
     the Amended and Restated Advancing Note executed pursuant to the First
     Amendment, which in turn amended and restated the Advancing Note originally
     described and defined in Section 2.1(a).

          "Loan Termination Date" means the earlier of (a) November 2, 2002, (b)
     the date of payment and performance in full of all the Obligations of
     Borrower under the Loan Documents (other than the Overriding Royalty
     Interest Conveyance), and (c) the date on
<PAGE>

     which Lender notifies Borrower, as provided in Section 10.2, of the
     acceleration of payment of all Obligations because of the occurrence of an
     Event of Default.

          "Note" means the Second Amended and Restated Advancing Note in the
     form attached as Exhibit "B" to the Second Amendment and any amendment,
     restatement, replacement or extension thereof.

          "ORRI" means that overriding royalty interest in Hydrocarbons
     produced, saved and sold or used off the premises of the relevant Lease,
     attributable to the undivided interest of the Borrower constituting each
     Property, conveyed by Borrower to Lender pursuant to the Amended and
     Restated Overriding Royalty Interest Conveyance dated of even date with the
     Second Amendment, which, in part, amends and restates the Overriding
     Royalty Interest Conveyances dated the Closing Date and dated of even date
     with the First Amendment.

          "Overriding Royalty Interest Conveyance" means, collectively, the
     Amended and Restated Overriding Royalty Interest Conveyance and any other
     assignments and any amendment, restatement, replacement or extension
     thereof, in form and substance acceptable to Lender, pursuant to which
     Borrower grants in favor of Lender an overriding royalty interest in the
     Hydrocarbons produced, saved and sold or used off the premises of the
     relevant Lease, attributable to the undivided interest of the Borrower
     constituting each Property, calculated and paid on the same basis as
     royalty payable to the United States Department of Interior, Minerals
     Management Service pursuant to applicable rules and regulations but
     applicable only as to production on and after the applicable Commencement
     Date.  The percentage ORRI granted in favor of Lender described in the
     preceding sentence shall initially equal six and one-fourth percent (6.25%)
     and shall be subject to reduction to three and one-eighth percent (3.125%)
     and further subject to termination, all in accordance with the terms
     specified in the Amended and Restated Overriding Royalty Interest
     Conveyance.

          "Properties" means those certain properties described on the Exhibit
     "A" attached to and incorporated in the Original Agreement, the First
     Amendment and the Second Amendment, respectively, limited, however, to the
     extent of the specified undivided interest of Borrower in each such
     Property as stated therein; provided, however, that the term "Properties,"
     as used in this Agreement (including, but not limited to, for the purposes
     of determining Gross Receipts, Operating Expenses, Direct Taxes and Net
     Revenue), shall not include the Released Properties, except for purposes of
     the ORRI, the Overriding Royalty Interest Conveyance, the Gas Purchase and
     Sale Agreement, Section 7.1(b) hereof, and any Swap Agreement entered into
     by Borrower with reference to gas volumes attributable to any such Released
     Property.

          "Title Opinions" means those certain title opinions addressed to
     Borrower and Lender and dated on or prior to (a) the Closing Date covering
     the Properties described on Exhibit "A" attached to the Original Agreement,
     (b) the date of the First Amendment
<PAGE>

     covering the Properties described on Exhibit "A" attached to the First
     Amendment and (c) the date of the Second Amendment covering the properties
     described on Exhibit "A" attached to the Second Amendment, as the same may
     be or are required to be updated under this Agreement.

     Article I of the Credit Agreement is hereby further amended by adding the
following definitions thereto:

          "Amended and Restated Overriding Royalty Interest Conveyance" means
     the Amended and Restated Overriding Royalty Interest Conveyance executed by
     Borrower in favor of Lender dated of even date with the Second Amendment
     (which amends and restates the Overriding Royalty Interest Conveyances
     dated April 9, 1999 and June 23, 1999 executed by Borrower in favor of
     Lender).

          "Commencement Date" has the meaning assigned to such term in the
     Overriding Royalty Interest Conveyance.

          "Original Agreement" means the Credit Agreement as it existed on the
          Closing Date.

          "Released Properties" means Borrower's right, title and interest in
     and to Brazos Block 544, West Cameron Block 431, West Cameron Block 432 and
     West Cameron Block 263, as such Properties are more fully described on that
     certain Act of Partial Release  executed by Lender dated of even date with
     the Second Amendment.

          "Second Amendment" means that certain Second Amendment to Credit
     Agreement executed by Lender and Borrower effective on November 3, 1999.

          "Second Amendment Facility Fee" means the fee in the amount of
     $177,000.00 owed by Borrower to Lender as consideration, in part, for
     structuring and entering into the transactions contemplated under the
     Second Amendment, as set forth in Section 7.1(z).

     Article I of the Credit Agreement is hereby further amended by modifying
the following definitions in the manner prescribed below:

          The definition of "Gross Receipts" is modified by inserting after the
     term "Swap Settlement Proceeds" in the third line thereof the following
     parenthetical text:

               "(excluding, however, all Swap Settlement Proceeds attributable
               to any Swap Agreement pertaining to Released Properties)"

          The definition of "Net Revenue" is modified by inserting after the
     term "Swap Settlement Payables" in the fifth line thereof the following
     parenthetical text:

                                       3
<PAGE>

               "(except for any Swap Settlement Payables attributable to any
               Swap Agreement pertaining to Released Properties)"

     Section 2.1(b) of the Credit Agreement, as amended by the First Amendment,
is amended by changing the period at the end of the first grammatical paragraph
thereof to a semicolon, and by adding the following text after the semicolon:

     "provided, however, that out of such total, Development Loans in the amount
     of $2,000,000.00, reflected as being discretionary on Supplemental Schedule
     2.1(b) attached to the Second Amendment, shall be made solely in Lender's
     discretion, notwithstanding anything else herein to the contrary.

     Section 2.1(b) of the Credit Agreement, as amended by the First Amendment,
is hereby further amended by replacing the dollar amount "$30,330,000.00" that
appears in the seventh and the last lines thereof with the dollar amount
"$48,030,000.00".

     Section 2.1(b) of the Credit Agreement, as amended by the First Amendment,
is hereby further amended by changing the period at the end of the last line in
subparagraph (ii) thereof to a semicolon, and adding the following text after
the semicolon:

     "and in its sole discretion, Lender may make additional Development Loans
     of up to $2,000,000.00, to fund the discretionary Development Operations
     described on Supplemental Schedule 2.1(b) attached to the Second Amendment.

     Section 2.2 of the Credit Agreement is hereby amended by inserting the
following new text after the second sentence thereof:

     Additional Development Loan proceeds advanced pursuant to the Second
     Amendment may be used by Borrower for the purposes of paying the Second
     Amendment Facility Fee pursuant to Section 7.1(z) hereof.

     Section 2.6 of the Credit Agreement is hereby amended by changing the
period in the fourteenth line thereof after the words "February 1999," to a
semicolon and by adding the following text after the semicolon:

     provided, however, that with respect to: (a) the Properties described on
     Exhibit A to the Second Amendment, the first Gross Receipts to be included
     in the Property Operating Statement shall be those attributable to the
     production of Hydrocarbons during the month of September 1999, and the
     first Operating Expenses, Direct Taxes, royalties, overriding royalty
     interests and other payments out of or measured by production shall be
     those relating to production and operations for the month of August, 1999,
     and (b) the Released Properties, the last Gross Receipts to be included in
     the Property Operating Statement shall be those

                                       4
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     attributable to the production of Hydrocarbons during the month of August
     1999, and the last Operating Expenses, Direct Taxes, royalties, overriding
     royalty interests and other payments out of or measured by production shall
     be those relating to production and operations for the month of July 1999.

     Section 2.6(a) of the Credit Agreement is hereby amended by inserting after
the term "Swap Settlement Payables" appearing in the third line thereof the
following parenthetical text:

     "(except for Swap Settlement Payables attributable to any Swap Agreement
     pertaining to any Released Property)"
     Section 2.6(b) of the Credit Agreement is hereby amended in its entirety to
     read as follows:

          (b) Second, the "Dedication Rate" (as hereinafter defined) times the
     Net Revenue, as reflected in the relevant Property Operating Statement, to
     Lender for payment of amounts which are included within Debt Service and
     other Obligations to Lender for the relevant Interest Period.  The amount
     paid to Lender pursuant to this subpart (b) shall be applied first to any
     interest due on the Advancing Note until all accrued interest is paid in
     full, and any remaining amounts paid to Lender pursuant to this subpart (b)
     shall be applied to remaining principal of the Advancing Note.  The term
     "Dedication Rate" means ninety percent (90%); provided that following the
     occurrence and during the continuation of an Event of Default the
     "Dedication Rate" shall be one hundred percent (100%) until such time as
     Borrower and Lender mutually agree or it has been demonstrated at any time
     to Lender's reasonable satisfaction by Engineers that the net present value
     of the Proved Reserves attributable to Borrower's Net Revenue Interest in
     the Properties, using the parameters set forth in Section 7.1(f),
     multiplied by ninety percent (90%), is greater than one and one-half (1.5)
     times the outstanding principal balance of the Advancing Note, and at such
     point and thereafter the "Dedication Rate" shall be ninety-five percent
     (95%).

     Section 2.6(c) of the Credit Agreement is hereby amended by changing the
period at the end of such Section to a semicolon, and adding the following text
after the semicolon:

     provided, however, that if, subsequent to the date of any payment made by
     Lender to Borrower pursuant to this Section 2.6(c) in the prior calendar
     month, there has accrued any net positive amount that is owed by Lender to
     Borrower with respect to all Swap Settlement Payables and Swap Settlement
     Proceeds that accrued during such period under any Swap Agreement
     pertaining to Released Properties, the net amount due from Lender to
     Borrower shall be paid by Lender to Borrower along with the amounts
     otherwise owed by Lender to Borrower pursuant to this Section 2.6(c); and
     provided, further, that if, subsequent to the date of any payment made by
     Lender to Borrower pursuant to this Section 2.6(c) in the prior calendar
     month, there has accrued any net positive amount that is owed by Borrower
     to Lender with respect to all Swap Settlement Payables and Swap Settlement
     Proceeds that accrued during such period under any Swap Agreement
     pertaining to Released Properties, the net amount due from Borrower to
     Lender shall be deducted by Lender from the amounts

                                       5
<PAGE>

     otherwise owed by Lender to Borrower pursuant to this Section 2.6(c), but
     if the net amount due from Borrower to Lender under all such Swap
     Agreements pertaining to Released Properties exceeds the amounts otherwise
     owed by Lender to Borrower pursuant to this Section 2.6(c), Borrower shall
     pay the amount of such excess to Lender within ten (10) days after receipt
     of Lender's statement detailing the amount due, and, if any such amount is
     not paid when due, at Lender's option any such unpaid amount may be
     included in the outstanding balance of the Loans advanced to Borrower
     hereunder.

                                       6
<PAGE>

     Section 2.10 of the Credit Agreement is hereby amended by adding the
following text at the end of such section:

     Contemporaneously with the execution of the Second Amendment by Borrower
     and Lender, Borrower shall at Lender's discretion enter into an additional
     Swap Agreement.

     Section 3.1 of the Credit Agreement is hereby amended by inserting the
following clause immediately before the parenthetical "(the "Mortgage")": "or
any extension modification, renewal or amendment thereof."

     Section 3.4 of the Credit Agreement is hereby amended by adding the
following new text at the end of that section:

     Borrower shall also use commercially reasonable efforts to assist Lender in
     obtaining, within sixty (60) days after the date of the Second Amendment,
     the agreement of all Purchasers of Hydrocarbons who purchase Hydrocarbons
     from the Properties described on Exhibit "A" to the Second Amendment, to
     remit all proceeds from sales of all production from or allocable to
     Borrower's respective Net Revenue Interests constituting such respective
     Properties to the Cash Collateral Account.

     Section 7.1(z) of the Credit Agreement is hereby amended by replacing the
text therein in its entirety to read as follows:

          (z) Facility Fee.  A Facility Fee in the amount of $465,000.00 was
     paid by Borrower to Lender at Closing out of the advances constituting the
     Initial Loan and the Additional Facility Fee in the amount of $241,300.00
     was paid by Borrower to Lender out of advances constituting the Royalty
     Acquisition Loan.  The amount of the Facility Fee is deemed to have been
     advanced by Lender to Borrower on the Closing Date as a part of the Initial
     Loan, with such advance having been contemporaneously paid by Borrower to
     Lender.  The amount of the Additional Facility Fee is deemed to have been
     advanced by Lender to Borrower contemporaneously with the funding of the
     Royalty Acquisition Loan, with such advance having been contemporaneously
     paid by Borrower to Lender.  The amount of the Second Amendment Facility
     Fee is deemed to have been advanced by Lender to Borrower on the date of
     the Second Amendment, with such advance having been contemporaneously paid
     by Borrower to Lender.  The face amount of the Note is the sum of the
     Initial Loan (which includes the amount of the Facility Fee), the Royalty
     Acquisition Loan (which includes the amount of the Additional Facility
     Fee), the Second Amendment Facility Fee and the maximum amount of the
     Development Loans.

     Section 8.3 of the Credit Agreement is hereby amended by replacing the text
of that section in its entirety with the following text:

                                       7
<PAGE>

     Contemporaneously with the closing of the Second Amendment, Borrower shall
     assign to Lender the ORRI applicable to the Properties described on
     Exhibits "A" attached to this Agreement, to the First Amendment and to the
     Second Amendment by executing and delivering to Lender an Amended and
     Restated Overriding Royalty Interest Conveyance in form and substance
     mutually satisfactory to Lender and Borrower.

     Article IX of the Credit Agreement is hereby amended by adding the
following new Section 9.5:

     9.5  Conditions Precedent in Connection with the Second Amendment. The
obligation of Lender to make the Development Loan advances on or after November
3, 1999, referred to in Section 2.1(b) of this Agreement is subject to
satisfaction of the following conditions precedent:

     (a) Receipt of Second Amended and Restated Advancing Note, Second Amendment
     and Compliance Certificate. Lender shall have received the Second Amended
     and Restated Advancing Note, multiple counterparts of the Second Amendment
     and the Compliance Certificate in the form attached as Exhibit "C" to the
     Second Amendment duly executed by an authorized officer of Borrower.

     (b) Receipt of Additional Loan Documents.  Lender shall have received the
     Mortgages,  Security Agreement, Letters in Lieu of Transfer Orders and
     Notices of Assignment of Proceeds (or any amendments, extensions, renewals
     or restatements thereof), all duly executed and, where appropriate,
     acknowledged by Borrower, in form and substance acceptable to Lender,
     covering the Properties described on Exhibit "A" attached to the Second
     Amendment, and the Amended and Restated Overriding Royalty Interest
     Conveyance covering all of the Properties, duly executed and acknowledged
     by Borrower.

     (c) Second Amendment Facility Fee. Lender shall have received the Second
     Amendment Facility Fee.

     (d) Receipt of Certified Copy of Corporate Proceedings and Certificate of
     Incumbency. Lender shall have received from Borrower copies of the
     resolutions of the board of directors authorizing the transactions set
     forth in the Second Amendment and the execution of the Second Amendment and
     the other Loan Documents contemplated thereby, such copy or copies to be
     certified by the secretary or an assistant secretary of Borrower as being
     true and correct and in full force and effect as of the date of such
     certificate.  In addition, Lender shall have received from Borrower a
     certificate of incumbency signed by the secretary or an assistant secretary
     of Borrower setting for (a) the names of the officers executing the Second
     Amendment and the other Loan Documents contemplated thereby, (b) the
     office(s) to which such persons have been elected and in which they
     presently serve and (c) an original specimen signature of each such person.

                                       8
<PAGE>

     (e) Accuracy of Representations and Warranties and No Event of Default. The
     representations and warranties contained in Article IV of the Credit
     Agreement shall be true and correct in all material aspects on the date of
     such advances with the same effect as though such representations and
     warranties had been made on such date; and no Event of Default shall have
     occurred and be continuing or will have occurred at the completion of the
     making of such Loan.

     (f) Legal Matters Satisfactory to Special Counsel to Bank. All legal
     matters incident to the consummation of the transactions contemplated by
     the Second Amendment shall be satisfactory to the firm of Porter & Hedges,
     L.L.P., special counsel for Lender.  Borrower shall have paid to Porter &
     Hedges, L.L.P., on the date of the Second Amendment, a deposit for
     estimated recording fees in the amount of $4,000.00; and not later than
     thirty (30) days after receipt of such counsel's invoice therefor, Borrower
     shall pay all of Lender's legal fees and expenses (less the recording fee
     deposit paid at the closing of the Second Amendment) incurred to Porter and
     Hedges, L.L.P. in connection with the Second Amendment and related Loan
     Documents.

     (g) Partial Prepayment.  Lender shall have received from Borrower a partial
     prepayment in the amount of $4,000,000.00 to be applied against the
     outstanding principal balance of the Loans and accrued unpaid interest
     thereon.

     (h) No Material Adverse Change. No material adverse change shall have
     occurred since the date of this Agreement in the condition, financial or
     otherwise, of Borrower.

     Exhibit "A" to the Credit Agreement, as amended by the First Amendment, is
hereby further amended by adding thereto the schedule of the Properties that
appear on Exhibit "A" to this Second Amendment.

     Exhibit "B" to the Credit Agreement, as replaced pursuant to the First
Amendment,  is hereby replaced with Exhibit "B" to the Second Amendment.

     Schedule 2.1(b), of the Credit Agreement is hereby supplemented with
Supplemental Schedule 2.1(b), Development Operations, attached to the Second
Amendment.

     Schedule 2.8, of the Credit Agreement is hereby supplemented with
Supplemental Schedule 2.8, Purchasers of Production, attached to the Second
Amendment.

     II.  Lender's Release of the Released Properties.  Upon the satisfaction of
all of the conditions precedent to the effectiveness of the Second Amendment, as
set forth in Section 9.5 of the Credit Agreement (as added by this Second
Amendment) Lender shall execute, acknowledge and deliver to Borrower an Act of
Partial Release, effective September 1, 1999, a corresponding UCC-3 Partial
Release, and other documents as reasonably requested by Borrower  pursuant to
which the Released Properties are released from all liens and security interests
of Lender that exist pursuant to the Mortgage, the Security Agreement, other
applicable Security Documents and the Notice of

                                       9
<PAGE>

Assignment of Proceeds, and letters pursuant to which the Purchasers of
Hydrocarbons from or attributable to the Released Properties are directed to
make future remittances directly to Borrower. In addition, Lender acknowledges
and agrees that the Released Properties are no longer subject to the Lockbox
Agreement or the Cash Collateral Account Agreement.

     III.  Reaffirmation of Representations and Warranties. To induce Lender to
enter into this Second Amendment, Borrower hereby reaffirms, as of the date
hereof, its representations and warranties contained in Article IV of the Credit
Agreement and in all other documents executed pursuant thereto, and additionally
represents and warrants as follows:

          A.  The execution and delivery of this Second Amendment and the
     performance by Borrower of its obligations under this Second Amendment are
     within Borrower's power, have been duly authorized by all necessary
     corporate action, have received all necessary governmental approval (if any
     shall be required), and do not and will not contravene or conflict with any
     provision of law or of the Articles of Incorporation or Bylaws of Borrower
     or of any agreement binding upon Borrower.

          B.  The Credit Agreement as amended by this Second Amendment,
     represents the legal, valid and binding obligations of Borrower,
     enforceable against Borrower in accordance with its terms, subject as to
     enforcement only to bankruptcy, insolvency, reorganization, moratorium or
     other similar laws affecting the enforcement of creditors' rights
     generally.

          C.  No Event of Default has occurred and is continuing as of the date
     hereof.

     IV.  Defined Terms. Except as amended hereby, terms used herein that are
defined in the Credit Agreement shall have the same meanings herein.

     V.  Reaffirmation of Loan Agreement. This Second Amendment shall be deemed
to be an amendment to the Credit Agreement, and the Credit Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Credit Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the
Credit Agreement as amended hereby.

     VI.  Entire Agreement. The Credit Agreement, as hereby amended, embodies
the entire agreement between Borrower and Lender and supersedes all prior
proposals, agreements and understandings relating to the subject matter hereof.
Borrower certifies that it is relying on no representation, warranty, covenant
or agreement except for those set forth in the Credit Agreement as hereby
amended and the other documents previously executed or executed of even date
herewith.

     VII.  Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. This Second Amendment

                                       10
<PAGE>

has been entered into in Harris County, Texas and shall be performable for all
purposes in Harris County, Texas. Courts within the State of Texas shall have
jurisdiction over any and all disputes between Borrower and Lender, whether in
law or equity, including, but not limited to, any and all disputes arising out
of or relating to this Second Amendment or any other Loan Document.

     VIII.  Severability. Whenever possible, each provision of this Second
Amendment shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Second Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Second Amendment.

     IX.  Section Captions. Section captions used in this Second Amendment are
for convenience of reference only, and shall not affect the construction of this
Second Amendment.

     X.  Successors and Assigns. This Second Amendment shall be binding upon
Borrower and Lender and their respective successors and assigns, and shall inure
to the benefit of Borrower and Lender, and the respective successors and assigns
of Lender.

     XI.  Non-Application of Chapter 346 of Texas Finance Codes. In no event
shall Chapter 346 of the Texas Finance Code (which regulates certain revolving
loan accounts and revolving tri-party accounts) apply to this Credit Agreement
as hereby amended or any other Loan Documents or the transactions contemplated
hereby.

     XII.  Notice. THIS SECOND AMENDMENT, TOGETHER WITH THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed as of the day and year first above written.

                              BORROWER:

                              ATP Oil & Gas Corporation

                              By: _____________________________
                                    T. Paul Bulmahn
                                    President

                                       11
<PAGE>

                              LENDER:

                              Aquila Energy Capital Corporation

                              By: ____________________________
                                    Kenneth F. Wyatt
                                    Vice President

                                  EXHIBIT "A"

                                  PROPERTIES

                                       12
<PAGE>

                                  EXHIBIT "B"

                  SECOND AMENDED AND RESTATED ADVANCING NOTE

                                       1
<PAGE>

                                  EXHIBIT "C"

                        FORM OF COMPLIANCE CERTIFICATE

                                       1
<PAGE>

                         SUPPLEMENTAL SCHEDULE 2.1(B)

                       ADDITIONAL DEVELOPMENT OPERATIONS

                                       2
<PAGE>

                           SUPPLEMENTAL SCHEDULE 2.8

                          PURCHASERS OF HYDROCARBONS

          NONE.

                                       1<PAGE>
                                                                    EXHIBIT 10.6

                             GAS SERVICE AGREEMENT

     THIS GAS SERVICE AGREEMENT (the "Agreement") is made and entered into this
31st day of December, 1998 by and between AMERICAN CITIGAS COMPANY, a Nevada
corporation (hereinafter referred to as "Company"), and ATP ENERGY, INC., a
Texas corporation (hereinafter referred to as "Customer").

                                  WITNESSETH:

     That in consideration of the mutual benefits accruing and to accrue by
virtue of this Agreement, the parties do hereby agree and covenant as follows:

     1. This Agreement shall be for an original term of ten (10) years from the
first day of the month next succeeding that month in which gas commences to flow
to Customer and thereafter shall renew from year to year. This Agreement may be
terminated effective at the expiration of the original term or any yearly
renewal thereof, by either party giving the other party not less than six (6)
months written notice.

     2. The Gas to be furnished hereunder shall be delivered at the following
described Point(s) of Delivery:

     a) inlet side of pipeline meter of Sabine Pipeline's meter at tailgate of
Texaco's plant at Henry Hub, Louisiana or

     b) any mutually agreeable delivery point.

     3. Customer agrees to purchase, take and pay for one hundred percent (100%)
of the Daily Contract Quantities ("DCQ") subject to the terms herein. Company
agrees to sell and tender delivery of the Daily Contract Quantities subject to
the terms herein. The Daily Contract Quantity shall be nine thousand (9,000)
mmBtu of Gas per day during the first year of the term of this Agreement and
five thousand (5,000) mmBtu of Gas per day during the balance of the term.
Customer may take in excess of the Daily Contract Quantities if advance approval
by Company is obtained.

     4. The Gas furnished herein is in accordance with Appendix A attached
hereto and made a part hereof and in accordance with the additional terms and
conditions set forth in Appendix B attached hereto and made a part hereof.
<PAGE>

     IN WITNESS WHEREOF; the parties hereto have subscribed their names on the
day and year first above written.

                                        "Customer"

WITNESS:                                ATP ENERGY, INC.
                                        a Texas corporation

/s/ Albert Reese Jr.                    /s/ T. Paul Bulmahn
-------------------------               ----------------------------
                                        T. Paul Bulmahn
/s/ Peggy N. Shaddix                    President
-------------------------

                                        "Company"

WITNESS:                                AMERICAN CITIGAS COMPANY,
                                        a Nevada corporation

-------------------------               By: -------------------------
                                            Robert S. Silverthorn
-------------------------                   President

<PAGE>

     IN WITNESS WHEREOF; the parties hereto have subscribed their names on the
day and year first above written.

                                        "Customer"

WITNESS:                                ATP ENERGY, INC.
                                        a Texas corporation

/s/ Albert Reese, Jr.                   By: /s/ T. Paul Bulmahn
----------------------------            -----------------------------
                                        T. Paul Bulmahn
/s/ Peggy M. Shaddix                    President
----------------------------

                                        "Company"

WITNESS:                                AMERICAN CITIGAS COMPANY,
                                        a Nevada corporation

/s/ [signature]                         By: /s/ Robert S. Silverthorn
----------------------------            -----------------------------
                                        Robert S. Silverthorn
/s/ [signature]                         President
----------------------------

STATE OF NEVADA   )
                     SS:
COUNTY OF CLARK   )

On this 31st day of December, 1998, personally appeared Robert S. Silverthorn
before me a Notary Public, who acknowledged that he executed the within
instrument freely and voluntarily.

/s/ BERYL HAYAT                         Notary Public-State of Nevada
---------------------------             County of Clark
OFFICIAL HAND AND SEAL:                 BERYL HAYAT
                                        My Appointment Expires
                                        October 3, 2001

                                       2
<PAGE>

                                  APPENDIX A

     Attached to and made a part of Gas Service Agreement (the "Agreement")
dated 31st day of December, 1998 between AMERICAN CITIGAS COMPANY ("Company")
and ATP ENERGY, INC. ("Customer").

                       Section 1. AVAILABILITY AND RATE

1.1 AVAILABILITY

     The sale and delivery of Gas by Company under the Agreement is subject to
economic availability of supply and transportation. Customer acknowledges that
supply and transportation may be procured from others and will be subject to
curtailment or interruption. Notwithstanding provisions of the Agreement or its
appendices to the contrary, Company may interrupt its performance at any time
for any reason whether or not caused by Force Majeure, with no liability except
it shall be responsible for any Imbalance Charges as set forth in Section 4.1,
Appendix B related to its interruption after a nomination is made to the
Transporter and until the change in deliveries and/or receipts is confirmed by
the Transporter.

1.2 RATE

     The base charge for recorded consumption of Gas at the point of delivery
in any month is as follows:

     Four hundred fifty cents (450 cents) per mmBtu.

                     Section 2. ADJUSTMENT FOR COST OF GAS

2.1 (a) The base charge in Section 1.2 hereof shall be adjusted automatically on
        a monthly basis (the "Adjusted Base Charge") cent for cent (unrounded)
        to the extent the average daily midpoint price of gas for the month of
        delivery at Henry Hub, Louisiana as published in the Regional Price
        Sampler of Gas Daily is greater than or less than the average daily
        midpoint price of gas for September, 1998 at Henry Hub, Louisiana as
        published in the October, 1998 Regional Price Sampler of Gas Daily. For
        example, the base charge for gas deliveries in January, 1999 shall be
        adjusted to the extent (a) the average daily midpoint price of gas for
        January, 1999 at Henry Hub, Louisiana as published in the Regional Price
        Sampler in February, 1999 is (b) greater than or less than the average
        daily midpoint price of gas for September, 1998 at Henry Hub, Louisiana.
        In the event the average daily midpoint price of gas is no longer
        published by Gas Daily then the parties shall negotiate in good faith to
        identify and use a similar price index.

                                  Appendix A
                                   Page A-1

<PAGE>

     (b) To the price determined for each month under Section 1.2 herein shall
         be added any new or increased taxes, fees or charges, except income
         taxes, whether measured by or imposed upon the production, severance,
         gathering, transportation, metering, delivery, purchase or sale of gas
         that may be levied or charged after the date first above written
         against the Company either directly or indirectly by duly constituted
         governmental authorities having jurisdiction therof; and (2) any new or
         increased costs due to transportation tariff rates, charges or
         provisions imposed after the date first above written which have been
         approved by duly constituted governmental authorities having
         jurisdiction thereof that may be allocated to the gas sold and
         delivered hereunder; such costs to be allocated on the basis of the
         weighted average cost of gas.

                    Section 3. PREMIUM PAYMENT TRANSACTION

3.1 Simultaneously with the execution hereof, the Company shall deliver the
following to Customer (collectively, the "Premium Payment"):

    (i)  $6,000,000.00 (the "Initial Payment") in immediately available funds to
         be paid by wire transfer; and

    (ii) $33,600,000.00 payable in 120 monthly installments bearing interest at
         6.0% per annum to be evidenced by a Non-Negotiable Promissory Note to
         be in form and content mutually agreeable to the parties hereto (the
         "Promissory Note") which is incorporated by reference herein.

3.2 $2,000,000.00 of the Premium Payment shall be deemed earned by Customer upon
the execution of this Agreement.

3.3 Customer herby represents and warrants that Customer is a wholly owned
subsidiary of ATP Oil & Gas Corporation, a Texas corporation ("ATP Oil").
Simultaneous with the execution hereof, ATP Oil shall execute and deliver to
Company an irrevocable Guaranty Agreement guaranteeing Customer's obligations
under this Agreement and any security agreements all to be in form and content
acceptable to Company.

                            Section 4. CURTAILMENT

4.1 Whenever, in Company's opinion, it is necessary to curtail deliveries on all
or part of Company's system, service to customers on this rate schedule in the
areas affected shall be immediately reduced or totally discontinued to all
customers on a prorated basis. To the extent Company fails to tender delivery of
the DCQ on any day for any reason, Customer shall remain obligated to pay an
amount equal to the difference between the then Adjusted Base Charge and the
then Fair Market Price (defined in Appendix B) for such undelivered quantity
which shall be payable when it would have been due if such gas had been
delivered. Company shall have the right to subsequently overdeliver to make up
for such under delivery(ies). Such make up over deliveries may extend up to
twelve (12) calendar months beyond the termination of the Agreement. Customer
will

                                  Appendix A
                                   Page A-2

<PAGE>

receive a credit against payment for such overdeliveries to the extent of
payments made by Customer pursuant to the previous provisions of this Section
4.1.

                 Section 5. MISCELLANEOUS TERMS AND CONDITIONS

5.1 MEASUREMENT

     The parties agree that the measurement of Gas purchased hereunder shall be
performed in accordance with the established procedures by the Transporter. BTU
and volume measurements shall be made in accordance with the provisions of such
pipeline's then effective F.E.R.C. Gas Tariff, or in the event such pipeline is
not subject to F.E.R.C. regulation, the applicable gas transportation
regulations or contract provisions of such pipeline.

                               End of Appendix A

                                  Appendix A
                                   Page A-3
<PAGE>

                                  APPENDIX B

                        ADDITIONAL TERMS AND CONDITIONS

     Attached hereto and made a party of Gas Service Agreement dated the 31st
day of December, 1998, between AMERICAN CITIGAS COMPANY ("Company") and ATP
ENERGY, INC. ("Customer").

                          1. PURPOSES AND PROCEDURES

1.1 The parties desire to set forth certain terms and conditions applicable to
the Transaction(s) contemplated by the Agreement.

                                2. DEFINITIONS

2.1 "EFP" shall mean the purchase, sale or exchange of Gas as the "physical"
side of an exchange for physical Transaction involving gas Futures Contracts.

2.2 "Business Day" shall mean any day except Saturday, Sunday, or Federal
Reserve Bank holidays.

2.3 "Day" shall mean the period of time defined as "day" or "daily" in the
effective tariff or other operating rules, policies or procedures of the
Transporter applicable to transportation service.

2.4 "Delivery Point(s)" shall mean the point(s) at which title to the Gas,
possession and risk of loss transfers from Company to Customer.

2.5 "Eligible Collateral" shall mean (i) cash, or (ii) a Letter of Credit from a
financial institution acceptable by the Beneficiary Party (defined below), or
(iii) acceptable cash equivalents subject to a security interest.

2.6 "Fair Market Price" shall mean the midpoint price of gas for the day at
Henry Hub, Louisiana as published in Gas Daily. In the event the midpoint price
of gas is no longer published by Gas Daily then the parties shall negotiate in
good faith to identify and use a similar price index.

2.7 "Force Majeure" shall mean any event beyond the reasonable control of the
party in question which prevents, in whole or in part, that party's performance
of obligations.

2.8 "Futures Contract" shall mean the standardized contract for the purchase or
sale of Gas that is traded for future delivery under the applicable trading
board's regulations.

2.9 "Gas" shall mean and include all vapor phase hydrocarbons and gaseous
substances consisting primarily of methane.

                                  Appendix B
                                   Page B-1
<PAGE>

2.10 "Imbalance Charges" shall mean any fees, penalties, costs or charges (in
cash or in kind) assessed by a Transporter for failure to satisfy the
Transporter's balance and/or nomination requirements.

2.11 "Material Adverse Change" shall mean that Customer and its consolidated
subsidiaries and parent shall have Total Assets below $50,000,000.00 or a
consolidated Net Worth below $20,000,000.00.

2.12 "Minimum Delivery Amount" shall mean as (i) with respect to Company
$100,000.00 and (ii) with respect to Customer $100,000.00.

2.13 "Month" shall mean the period of time defined as "month" in the effective
tariff or other operating rules, policies or procedures of the Transporter
applicable to transportation service.

2.14 "mmBtu" shall mean the unit of measurement for payment purposes expressed
as one million (1,000,000) BTU, measured on a dry basis.

2.15 "Net Worth" shall mean Total Assets (exclusive of intangible assets,
deferred tax benefits, and intercompany notes receivable), minus total
liabilities, each as would be reflected on a balance sheet of the subject party
prepared in accordance with Generally Accepted Accounting Principles ("GAAP").

2.16 "NYMEX" shall mean the New York Mercantile Exchange.

2.17 "Pledgor" shall mean Customer, if it (i) receives a demand for or is
required to provide Eligible Collateral or (ii) has provided Eligible
Collateral.

2.18 "Point of Delivery" shall have the same meaning as Delivery Point(s);
however, specified as in the Agreement.

2.19 "Primary in-path" shall mean firm transportation service obtained directly
from the respective Transporter. This term specifically excludes "secondary"
and/or "released" firm transportation, as those terms are commonly used in the
natural gas industry.

2.20 "Tax" shall mean any tax levied, assessed or claimed to be due by any
Federal, State, County, Tribal, or Municipal Government or any other
governmental agency having jurisdiction to do so.

2.21 "Termination Payment Threshold" shall mean (i) with respect to the Company
$250,000.00 and (ii) with respect to Customer $250,000.00.

2.22 "Total Assets" means total assets (exclusive of intangible assets, deferred
tax benefits, and intercompany notes receivables), including deferred income
based on income tax return.

2.23 "Transaction" shall mean a particular, specifically agreed-to purchase or
sale of Gas for delivery or receipt to be performed under the Agreement and all
obligations related thereto including, without limitation, the transaction
contemplated in Appendix A and the Promissory Note.

2.24 "Transporter" shall mean the pipeline(s) or gathering line(s) designated by
the Company to deliver Gas to the Delivery Point(s).

                                  Appendix B
                                   Page B-2
<PAGE>

                           3. QUANTITY AND DELIVERY

3.1 Company shall notify Customer of its nomination(s), from time to time, with
prior notice of at least twenty-four (24) hours and/or within the Transporter's
pipeline's deadline date for making changes in nominations to be effective the
next Day at 7:00 a.m. Customer shall be responsible for compliance with the
effective nominations given within the Transporter's pipeline's deadline date
for changes.

                        4. TRANSPORTATION AND IMBALANCE

4.1 Company shall be responsible for all arrangements necessary to deliver Gas
sold hereunder to the Delivery Point(s) and Customer shall be responsible for
all arrangements necessary to receive Gas at the Delivery Point(s). In the event
Company delivers more or less than the DCQ, and as a result thereof, Customer is
assessed imbalance penalties, fees, or charges, Company shall reimburse Customer
for same within ten (10) days of Company's receipt of Customer's invoice
therefor. In the event Customer takes delivery of more or less than the DCQ, and
as a result thereof, Company is assessed imbalance penalties, fees, or charges,
Customer shall reimburse Company for same within ten (10) days of Customer's
receipt of Company's invoice therefor.

                               5. DELIVERY POINT

5.1 The Delivery Point(s) for all Gas delivered hereunder shall be set out in
the Agreement. All rights, title, interest and risk of loss to all Gas purchased
hereunder shall pass to Customer upon the receipt of such Gas by Customer or
Customer's designee at the Delivery Point(s). Company shall have possession of
the Gas and shall arrange for all necessary transportation of the Gas from
Company's source(s) of such Gas to the Delivery Point(s).

                                   6. PRICE

6.1 Customer shall pay Company, for all quantities of Gas delivered for
Customer's account hereunder, the price per mmBtu set forth in Appendix A of the
Agreement. Such price will be inclusive of all royalties, taxes, transportation
charges, expenses and costs applicable to the Gas prior to receipt by Customer
at the Delivery Point(s). In the event Customer should be required, by the laws
of any governmental body having jurisdiction hereunder, to pay any such costs or
charges for which Company is liable, then Customer shall have the right to
reduce the amount payable hereunder by an amount equal to such costs or charges.
In the event Company should be required, by the laws of any governmental body
having jurisdiction hereunder, to pay any such costs or charges for which
Customer is liable, then Customer shall reimburse Company for same within ten
(10) days of Customer's receipt of Company's invoice therefor.

6.2 Company may offer a temporary user allowance ("TUA") as a discount on the
price of gas provided for in the Agreement.

                                  Appendix B
                                   Page B-3
<PAGE>

                             7. FAILURE TO PERFORM

7.1 If on any Day, Customer fails to accept tender of delivery of the DCQ,
Company shall have the right to sell to a third party purchaser during the then
current Month the difference between the quantity actually accepted by Customer
on such Day and such DCQ. Company shall be entitled to reimbursement from
Customer for an amount calculated by multiplying the quantity of Gas not
purchased times the difference between:

     (i) The then Adjusted Base Charge provided in Section 2.1(a), Appendix A,
         less

    (ii) The then Fair Market Price adjusted for commercially reasonable
         differences in transportation costs to or from the Delivery Point(s).
         Any payments due Company by Customer under this paragraph shall be made
         in the Month following the Month Company sells such Gas to a third
         party purchaser; provided, however, Company first provides Customer
         with information and documentation supporting Company's claim for
         reimbursement.

7.2 If on any Day, Company fails to tender delivery of the DCQ, Customer shall
have the right to purchase from a third party supplier during the then current
Month the difference between the amount actually delivered by Company on such
Day and such DCQ. Customer shall be entitled to recover from Company an amount
calculated by multiplying the quantity of Gas not delivered times the difference
between:

     (i) The then Adjusted Base Charge; and

    (ii) The then Fair Market Price adjusted for commercially reasonable
         differences in transportation costs to or from the Delivery Point(s).
         Any reduction in the payment due to Company shall be made in the Month
         following the Month in which the failure to deliver Customer's
         nominated quantity occurred; provided, however, Customer shall first
         provide Company with information and documentation supporting the
         reduction.

                     8. DEFAULT, REMEDIES, AND TERMINATION

8.1 If a Triggering Event, as defined in Section 8.2 below, occurs with respect
to either party at any time during the term of the Agreement, the other party
(the "Notifying Party") may (i) upon two (2) Business Days written notice to the
first party (the "Affected Party"), which notice shall be given no later than
sixty (60) days after the discovery of the occurrence of the Triggering Event,
establish a date on which any or all Transactions pursuant to the Agreement will
terminate ("Early Termination Date"), and (ii) withhold any payments due in
respect of such Transactions; provided, upon the occurrence of any Triggering
Event listed in item (iv) of Section 8.2 as it may apply to any party, the
Agreement shall automatically terminate, without notice, as if an Early
Termination Date had been immediately declared. If an Early Termination Date
occurs, the Notifying Party shall in good faith calculate its damages, including
its associated costs and attorneys' fees, resulting from the termination of the
terminated Transactions (the "Termination Payment").

The Termination Payment will be determined by: (i) comparing the value of (a)
the remaining term, quantities and prices and any loan payments under each such
Transaction had it not been terminated to (b) the equivalent quantities and
relevant market prices for the remaining term either quoted by a bona fide third
party offer, or which are reasonably expected to be available in the market
under a replacement contract for each such Transaction; and (ii) ascertaining
the associated costs and attorney's fees. To

                                  Appendix B
                                   Page B-4
<PAGE>

ascertain the market prices of a replacement contract the Notifying Party may
consider, among other valuations, including but not limited to, any or all of
the settlement prices of NYMEX (or applicable futures trading board) gas Futures
Contracts, quotations from leading dealers in Gas swap contracts and other bona
fide third party offers, all adjusted for the length of the remaining term and
the basis differential.

All terminated Transactions under any provision herein shall be netted against
each other and upon the netting of all terminated Transactions, if the
calculation of the Termination Payment does not result in damages to the
Notifying Party, the Termination Payment shall be zero. The Notifying Party
shall give the Affected Party written notice of the amount of the Termination
Payment, inclusive of a statement showing its determination. The Affected Party
shall pay the Termination Payment within ten (10) days of receipt of such
notice. At the time for payment of any amount due under this provision, each
party shall pay to the other party all additional amounts payable by it pursuant
to this Agreement, but all such amounts shall be netted and aggregated with any
Termination Payment payable hereunder. If the Affected Party disagrees with the
calculation of the Termination Payment, the issue shall be submitted to
arbitration pursuant to this Agreement and the resulting Termination Payment
shall be due and payable within three (3) Business Days after the award.

8.2     "Triggering Event" shall mean, with respect to a party (the "Affected
Party"): (i) the failure by the Affected Party to make, when due, any payment
required under the Agreement if such failure is not remedied within five (5)
Business Days after written notice of such failure is given to the Affected
Party; or (ii) any representation or warranty made by the Affected Party in this
Agreement shall prove to have been false or misleading in any material respect
when made or deemed effective; or (iii) the failure by the Affected Party to
perform any covenant set forth in the Agreement and such failure is not excused
by Force Majeure or cured within five (5) Business Days after written notice
thereof to the Affected Party; or (iv) the Affected Party shall (a) make an
assignment or any general arrangement for the benefit of creditors, (b) file a
petition or otherwise commence, authorize or acquiesce in the commencement of a
proceeding or cause under any bankruptcy or similar law for the protection of
creditors, or have such petition filed against it, (c) otherwise become bankrupt
or insolvent (however evidenced) or (d) be unable to pay its debts as they fall
due; or (v) the occurrence of a Material Adverse Change of the Affected Party;
provided, such Material Adverse Change shall not be considered if the Affected
Party establishes, and maintains throughout the term hereof, Eligible Collateral
in amount equal to the sum of (a) the Notifying Party's Termination Payment plus
(b) if the Notifying Party is Company, the aggregate of the amounts Company is
entitled to receive under each Transaction; (vi) the Affected Party fails to
establish, maintain, extend or increase Eligible Collateral when required
pursuant to the Agreement, or (vii) the Affected Party shall have defaulted on
any indebtedness to a third party resulting in an acceleration of obligations in
excess of the greater of $250,000.00 or three percent (3%) of the Affected
Party's Net Worth.

8.3     If at any time and from time to time during the term of this Agreement
(and notwithstanding whether a Triggering Event has occurred) the Termination
Payment that would be owed to a party in respect of all Transactions then
outstanding should exceed the Pledgor's Termination Payment Threshold, such
party as the "Beneficiary Party" may request the Pledgor to deliver Eligible
Collateral in an amount at least equal to the Termination Payment minus the
Pledgor's Termination Payment Threshold in increments equal to the Minimum
Delivery Amount. Eligible Collateral must be delivered within two (2) Business
Days of the date of such notice provided that notice be given before 9:00 a.m.
Central Time. On any subsequent Business Day, the Pledgor may be requested to
deliver additional Eligible Collateral

                                  Appendix B
                                   Page B-5
<PAGE>

to the Beneficiary Party in excess of any additional uncollateralized
Termination Payment in increments equal to the Minimum Delivery Amount.

8.4     Notwithstanding any provision in the Agreement to the contrary, each
party reserves to itself all rights, setoffs, counterclaims and other remedies
and defenses consistent with Article 16 which such party has or may be entitled
to arising from or out of this Agreement. All outstanding Transactions and the
obligations to make payment in connection therewith or under this Agreement may
be offset against each other, setoff, or recouped therefrom.

                            9. QUALITY AND PRESSURE

9.1     Gas tendered for sale hereunder shall meet the quality and pressures
specifications of the pipeline system and/or facilities which shall receive the
Gas at the Delivery Point(s) set forth in the Agreement.

                            10. BILLING AND PAYMENT

10.1    Company shall invoice Customer by the tenth (10th) day of the calendar
month for Gas delivered to Customer during the preceding Month. Company shall
render to Customer a statement showing the quantity of Gas delivered at the
Delivery Point(s) and the amount due therefor. Customer shall make payment to
Company, by wire transfer, as provided for in Company's invoice, on or before
the twenty-fifth (25th) day of the Month following the delivery Month. In the
event Customer has obtained a statement of actual volumes received for
Customer's account from the party responsible for measurement at the Delivery
Point(s), then Customer shall adjust the amounts due on Company's next invoice
and shall make payment to Company of the adjusted amount. In such event,
Customer shall promptly provide Company with a third party measurement statement
sufficiently supporting Customer's adjustment.

10.2    If there is a bona fide dispute with regard to any amount billed,
Customer shall nevertheless pay the total amount when due and if such dispute is
settled in Customer's favor, the refund to Customer from Company shall include
interest as hereinafter defined. If any amount billed hereunder is not paid by
Customer when due, interest shall accrue on the unpaid amount from the due date
until paid at the prime commercial rate charged by CitiBank N.A. New York, New
York, plus two (2) percent or the maximum legal rate, whichever is less.

10.3    Either party may withhold payment of amounts due hereunder to offset an
equivalent amount due such party under this or any other agreement between the
parties so long as the payment withheld is due to a netting of payments which
are due on the same calendar day, in which case the party owing the greater
aggregate amount shall pay to the other party the difference in the amounts
owed.

10.4    If any overcharges or undercharges in any form whatsoever shall be found
within one (1) year of occurrence and the bill therefore has been paid, Company
shall refund the amount of overcharges received by Company and Customer shall
pay the amount of undercharges within thirty (30) days after final determination
thereof.

                                  Appendix B
                                   Page B-6
<PAGE>

                                   11. TAXES

11.1    As between the parties, Company will pay, or cause to be paid, all Taxes
or other sums due on production, gathering, processing or severance of the Gas
prior to delivery to Customer at the Delivery Point(s). All such Taxes shall be
paid by Company directly to the taxing authority unless Customer is required by
law to collect and remit such Taxes, in which event Customer shall withhold from
payments to Company an amount required to be collected and remitted by Customer.
If any such Tax is claimed, assessed or levied on Customer, then Company shall
reimburse Customer for the amount of such Tax. Customer will pay or cause to be
paid, all Taxes upon and after delivery to Customer (including, without
limitation, sales, use or gross receipts Taxes) unless Customer furnishes
Company with applicable exemption certificates. In the event a national energy,
BTU, consumption, or use tax shall be imposed, both Customer and Company shall
work to reasonably apportion said Tax, taking into account the ability of either
party to pass through all or a part of such tax; provided, however, that not
Tax, whether existing or future, shall render either party economically
incapable of continuing its performance hereunder.

                       12. TITLE, WARRANTY AND INDEMNITY

12.1    Unless otherwise specifically agreed, title to the Gas shall pass from
Company to Customer at the Delivery Point(s). Company shall have responsibility
for and assume any liability with respect to the Gas prior to its delivery to
Customer at the specified Delivery Point(s). Customer shall have responsibility
for and assume any liability with respect to said Gas after its delivery to
Customer at the Delivery Point(s).

12.2    Company warrants that it will have good and merchantable title to or
will have the right to deliver all Gas sold hereunder and delivered by it to
Customer, free and clear of all liens, encumbrances, and claims.

12.3    Company agrees to indemnify Customer and save it harmless from all
losses, liabilities or claims, including attorneys' fees and costs of court
("Claims"), arising from or out of claims of title, personal injury or property
damage from any or all persons to said Gas or other charges thereon which attach
before title passes to Customer. Customer agrees to indemnify Company and save
it harmless from all Claims arising from or out of claims regarding payment,
personal injury or property damage from said Gas or other charges thereon which
attach after title passes to Customer.

12.4    Notwithstanding the other provisions of this Section 12 as between
Company and Customer, Company will be liable for all Claims to the extent that
such Claims arise from the failure of Gas delivered by Company to meet the
quality requirements of Section 9.1.

12.5    In the event of any claim or litigation, at any time, concerning
Company's title to the Gas sold hereunder or the proceeds from the sale thereof,
Customer shall be entitled to suspend payments to Company until such claims or
litigation of title is resolved to Customer's reasonable satisfaction.

                               13. FORCE MAJEURE

13.1    Nonperformance of any obligation hereunder, other than the obligation to
make payment for Gas previously delivered under this Agreement, or Imbalance
Charges under Section 4.1, shall be excused

                                  Appendix B
                                   Page B-7
<PAGE>

if rendered commercially impractical by an occurrence of Force Majeure, but only
for so long as performance is prevented by such Force Majeure. The party
claiming excuse shall promptly advise the other party of such Force Majeure
event and shall, as soon as commercially reasonable, seek to remedy the
occurrence. The party claiming Force Majeure shall not be excused from its
responsibility for Imbalance Charges. Additionally, in the event Customer is the
party claiming Force Majeure, Customer shall remain obligated, notwithstanding
anything contained in the Agreement to the contrary, to pay an amount equal to
the difference between the Adjusted Base Charge and the Fair Market Price for
the amount of gas not accepted during the duration of Force Majeure.

13.2    The party whose performance is rendered commercially impracticable by
Force Majeure must provide notice as soon as reasonably practical to the other
party. Initial notice may be given orally; however, written notification with
reasonably full particulars of the event or occurrence is required as soon as
reasonably possible. Upon providing written notification of Force Majeure to the
other party, the Affected Party will be relieved of its obligation to make or
accept delivery of Gas as applicable to the extent and for the duration of Force
Majeure, and neither party shall be deemed to have failed in such obligations to
the other during such occurrence or event. In the event of a Force Majeure, the
non-claiming party may declare an extension to each contract year of the
Agreement to the extent that the Force Majeure condition exists.

13.3    Force Majeure shall include, but not be limited to, the following: (i)
physical events such as acts of God, landslides, lightning, earthquakes, fires
hurricanes, tornadoes, storms or storm warnings which result in evacuation of
the affected area, floods, washouts, explosions, breakage or accident or
necessity of repairs to machinery or equipment or lines of pipe; (ii) weather
related events affecting an entire geographic region, such as hurricanes, or
freezing or failure of wells or lines of pipe; (iii) acts of others such as
strikes, riots, sabotage, insurrections or wars; (iv) governmental actions such
as necessity for compliance with any court order, law, statute, ordinance, or
regulation promulgated by a governmental authority having jurisdiction; and (v)
any other causes, whether of the kind herein enumerated or otherwise, not
reasonably within the control of the affected party. Company and Customer shall
make reasonable efforts to avoid the adverse impacts of a Force Majeure and to
resolve the event or occurrence once it has occurred in order to resume
performance. Notwithstanding anything to the contrary herein, the parties agree
that the settlement of strikes, lockouts or other industrial disturbances shall
be entirely within the sole discretion of the party experiencing such
disturbance.

13.4    Force Majeure shall also include the inability to transact futures
trading for any reason beyond the reasonable control of Customer, including,
without limitation, closing of the NYMEX or applicable futures trading board,
any refusal by the NYMEX or applicable futures trading board to allow trading
during normal trading hours; failure of telecommunications lines or of computer
or other equipment utilized in trading; and other such causes.

13.5    The term Force Majeure as used herein specifically EXCLUDES the
following occurrences or events: (i) the loss, interruption, or curtailment of
interruptible transportation on any Transporter necessary to make or accept
delivery of Gas hereunder, unless and to the extent the same event also curtails
Primary in-path, firm transportation at the same point; and (ii) loss of markets
or either party's inability to economically use or resell Gas purchased under
this Agreement.

                                  Appendix B
                                   Page B-8
<PAGE>

                                  14. NOTICE

14.1    Any notice, demand, or statement or payment, other than nominations
provided for herein, shall be in writing and shall be deemed delivered three (3)
Business Days after posting when mailed, postage prepaid, return receipt
requested, by United States mail to the address of the party to receive same as
set forth below; but actual notice or demand, however given or received, shall
always be effective.

ATP ENERGY, INC.                               AMERICAN CITIGAS COMPANY
NOTICE/BILLING                                 NOTICE/BILLING
ADDRESS    4600 Post Oak Place, Suite 230      ADDRESS  4055 South Spencer St.
           Houston, Texas 77056                         Suite 204 P.O. Box 70540
ATTN       President                                    Las Vegas, NV 89170-0540
                                               ATTN     Gas Administration
TELEPHONE  (713)622-3311
FACSIMILE  (713)622-5101                       PAYMENT ADDRESS:
                                               For Wire Transfer: US Bank

                                                        For the account of
                                                        AMERICAN CITIGAS COMPANY
                                                        ABA# 1212-01694
                                                        ACCT# 15370034 6213

                                               TELEPHONE: (702)737-7319
                                               FACSIMILE: (702)737-7539

or to such other address as either party may from time to time designate by
certified or registered mail addressed to the other party at the then effective
address of that party.

                            15. ARBITRATION CLAUSE

15.1    Any controversy or claim arising out of or relating to the Agreement or
the breach thereof shall be settled by binding arbitration by one (1) arbitrator
in Houston, Texas, in accordance with the American Arbitration Association
Commercial Arbitration rules. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
prevailing party shall be entitled to its reasonable attorneys' fees. Any
monetary award shall accrue interest from the date of the breach to the date of
any judgment entered on the award at the prime commercial rate charged on the
date of the breach by CitiBank, N.A. New York, New York plus two (2) percent or
at the maximum legal rate, whichever is less. If a party files a complaint in
any court with respect to any matter subject to arbitration hereunder, the
defendant in such court action shall be entitled to recover its reasonable
attorneys' fees in connection with the court action. This arbitration provision
shall survive termination of the Agreement.

                          16. LIMITATION ON LIABILITY

16.1    NOTWITHSTANDING ANY OTHER PROVISIONS HEREIN, THE PARTIES HERETO WAIVE
ANY AND ALL RIGHTS, CLAIMS OR CAUSES OR ACTION ARISING UNDER THIS

                                  Appendix B
                                   Page B-9
<PAGE>

AGREEMENT FOR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES. THIS PROVISION
SHALL SURVIVE ANY TERMINATION OF THE AGREEMENT.

                         17. DECEPTIVE TRADE PRACTICES

17.1    COMPANY AND CUSTOMER CERTIFY THAT THEY ARE NOT "CONSUMERS" WITHIN THE
MEANING OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT,
SUBCHAPTER E OF CHAPTER 17, SECTIONS 17.41 ET SEQ., AMENDED (THE "DTPA"). THE
PARTIES COVENANT, FOR THEMSELVES THAT IF DTPA IS APPLICABLE, (A) THE PARTIES ARE
"BUSINESS CONSUMERS" THEREUNDER, (B) EACH PARTY HEREBY WAIVES AND RELEASES ALL
OF ITS RIGHTS AND REMEDIES THEREUNDER (OTHER THAN SECTION 17.5555, TEXAS
BUSINESS AND COMMERCE CODE) AS APPLICABLE TO THE OTHER PARTY AND ITS SUCCESSORS
AND ASSIGNS, AND (C) EACH PARTY SHALL DEFEND AND INDEMNIFY THE OTHER FROM AND
AGAINST ANY AND ALL OF THEIR AFFILIATES BASED IN WHOLE OR IN PART ON THE DTPA,
ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTIONS FORTH IN THIS AGREEMENT.

                         18. FINANCIAL RESPONSIBILITY

18.1    When reasonable grounds for insecurity of payment or title to the Gas
arise, either party may demand adequate assurance of performance. Adequate
assurance shall mean sufficient security in the form and for the term reasonably
specified by the party demanding assurance, including, but not limited to, a
standby irrevocable letter of credit, a prepayment, a security interest in an
asset acceptable to the demanding party or a performance bond or guarantee by a
creditworthy entity. In the event either party shall: (i) make an assignment or
any general arrangement for the benefit or creditors; or (ii) default in the
payment obligation to the other party; or (iii) file a petition or otherwise
commence, authorize, or acquiesce in the commencement of a proceeding or cause
under any bankruptcy or similar law for the protection of creditors or have such
petition filed or proceeding commenced against it; or (iv) otherwise become
bankrupt or insolvent (however evidenced); or (v) be unable to pay its debts as
they fall due; or (vi) fail to give adequate assurance of its ability to perform
its obligations under the Agreement within two (2) Business Days of a reasonable
request by the other party, then the other party shall have the right to either
withhold and/or suspend deliveries or payment, or terminate the Agreement
without prior notice, in addition to any and all other remedies available
hereunder. Company may immediately suspend deliveries to Customer hereunder in
the event Customer has not paid any amount due Company hereunder on or before
the fifth (5th) Business Day following the date such payment is due.

                               19. MISCELLANEOUS

19.1    Audit. Each party shall have the right, at its own expense, at
reasonable hours and reasonable notice to examine the records of the other party
to the extent necessary to verify the accuracy of any statement or other data
that may reasonably have a bearing on or pertain to any business conducted
hereunder between the parties; provided, however, that the auditing party does
not have the right to examine any record relating to Transactions that occurred
more than two (2) years before the date of the

                                  Appendix B
                                   Page B-10
<PAGE>

audit. In the event of any inaccuracy, any necessary adjustments in the billing
shall be made within thirty (30) days after the determination thereof. This
provision shall survive any termination of this Agreement.

19.2    DISCLAIMER OF WARRANTIES. THERE ARE NO WARRANTIES WHICH EXTEND BEYOND
EXPRESS WARRANTY OF TITLE SET FORTH HEREIN. IN PARTICULAR, THERE ARE NO OTHER
EXPRESS WARRANTIES AND NO IMPLIED WARRANTIES, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

19.3    Assignments. The Agreement may not be assigned by either party without
the prior written consent of the other party. Additionally, neither party may
pledge, mortgage or assign its rights hereunder as security for any
indebtedness. The Agreement extends to and will be binding upon the respective
successors and permitted assigns of Customer and Company.

19.4    APPLICABLE LAW. THE AGREEMENT AND ALL DOCUMENTS EXECUTED SIMULTANEOUSLY
HEREWITH SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT RECOURSE
TO THE RULES OF CONFLICT OF LAWS. THIS PROVISION SHALL SURVIVE ANY TERMINATION
OF THE AGREEMENT.

19.5    Entire Agreement. This document, including the Agreement and Appendix A
thereof, and all documents executed simultaneously herewith including, without
limitation, the Promissory Note, constitute the entire agreement between the
parties with respect to the subject matter hereof. No promises, agreements or
warranties additional to this Agreement will be deemed to be a part hereof, nor
will any alteration, amendment or modification hereof, be effective unless
mutually agreed in writing by the parties hereto.

19.6    Confidentiality. The terms of the Agreement and any transaction thereof
shall not be disclosed to any person or party except when the disclosure is (i)
required by law; (ii) requested by Customer's or Company's independent public
accountants; (iii) required pursuant to a loan agreement; (iv) required to be
disclosed in connection with the prosecution or defense of any litigation; or
(v) is otherwise agreed in writing to be disclosed.

19.7    Severability. If any provision in this Agreement is determined to be
invalid, void or unenforceable by any court having jurisdiction, such
determination shall not invalidate, void, or make unenforceable any other
provision, agreement or covenant of this Agreement.

19.8    Waiver. A waiver by either party of any provision hereof shall not be
construed to constitute a continuing waiver hereunder by such party, and
furthermore, a waiver by either party of any one or more defaults by the other
party in performance of any provisions of this Agreement shall not operate or be
construed as a waiver of any future default or defaults, whether of a like or
different character.

19.9    Captions. Captions used herein are for convenience only and shall not be
used to construe this Agreement.

                               End of Appendix B

                                  Appendix B
                                   Page B-11

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