Document:

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                                                                    Exhibit 10.4

                             CONTRIBUTION AGREEMENT

                                     Between

                           F-W OIL EXPLORATION L.L.C.

                                       and

                               FWOE PARTNERS L.P.

                                      Dated

                                 August 22, 2005

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
ARTICLE I. DEFINITIONS AND REFERENCES....................................     1
   SECTION 1.1     CERTAIN DEFINED TERMS.................................     1
   SECTION 1.2     REFERENCES, TITLES AND CONSTRUCTION...................     3

ARTICLE II. PROPERTIES TO BE CONTRIBUTED.................................     4
   SECTION 2.1     PROPERTIES TO BE CONTRIBUTED..........................     4
   SECTION 2.2     EXCLUDED PROPERTY.....................................     6

ARTICLE III. AGREED VALUE................................................     6
   SECTION 3.1     AGREED VALUE..........................................     6

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARTNER....................     6
   SECTION 4.1     ORGANIZATION AND EXISTENCE............................     6
   SECTION 4.2     POWER AND AUTHORITY...................................     6
   SECTION 4.3     VALID AND BINDING AGREEMENT...........................     6
   SECTION 4.4     NON-CONTRAVENTION.....................................     6
   SECTION 4.5     APPROVALS.............................................     7
   SECTION 4.6     LITIGATION............................................     7
   SECTION 4.7     BASIC DOCUMENTS.......................................     7
   SECTION 4.8     COMMITMENTS, ABANDONMENTS OR PROPOSALS................     8
   SECTION 4.9     PRODUCTION SALES CONTRACTS............................     8
   SECTION 4.10    AREA OF MUTUAL INTEREST AND OTHER AGREEMENTS; TAX
                   PARTNERSHIPS..........................................     9
   SECTION 4.11    PAYMENT OF EXPENSES...................................     9
   SECTION 4.12    COMPLIANCE WITH LAWS..................................     9
   SECTION 4.13    PLUGGING OBLIGATIONS..................................     9
   SECTION 4.14    GOVERNMENTAL PERMITS..................................    10
   SECTION 4.15    RESERVE REPORT INFORMATION............................    10
   SECTION 4.16    STATE OF REPAIR.......................................    10
   SECTION 4.17    NO ALIENATION.........................................    10
   SECTION 4.18    INFORMATION...........................................    10
   SECTION 4.19    NO ORAL CONTRACTS.....................................    10
   SECTION 4.20    PREFERENTIAL RIGHTS AND CONSENTS TO ASSIGN............    10
   SECTION 4.21    INTENTIONALLY OMITTED.................................    10
   SECTION 4.22    WELL AND PUD LOCATIONS................................    10
   SECTION 4.23    INSURANCE.............................................    11
   SECTION 4.24    EASEMENT RENTALS......................................    11
   SECTION 4.25    INTERCONNECTION CONTRACTS.............................    11
   SECTION 4.26    PLATFORMS.............................................    11
   SECTION 4.27    TAX PARTNERSHIPS......................................    11
   SECTION 4.28    ACCOUNTING OF FUNDS...................................    11
   SECTION 4.29    INTENTIONALLY OMITTED.................................    11
   SECTION 4.30    CONDUCT OF OPERATIONS.................................    11
   SECTION 4.31    RESTRICTIONS ON CERTAIN ACTIONS.......................    12
   SECTION 4.32    PIPELINES.............................................    12
   SECTION 4.33    GAS IMBALANCES........................................    12
   SECTION 4.34    DISCLAIMER OF WARRANTIES..............................    12
   SECTION 4.35    CASUALTY LOSS.........................................    13
</TABLE>

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<TABLE>
<S>                                                                         <C>
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARTNERSHIP.................    13
   SECTION 5.1     ORGANIZATION AND EXISTENCE............................    13
   SECTION 5.2     POWER AND AUTHORITY...................................    13
   SECTION 5.3     VALID AND BINDING AGREEMENT...........................    13
   SECTION 5.4     NON-CONTRAVENTION.....................................    13
   SECTION 5.5     APPROVALS.............................................    14
   SECTION 5.6     PENDING LITIGATION....................................    14

ARTICLE VI. CERTAIN PRE-CLOSING COVENANTS................................    14
   SECTION 6.1     ACCESS TO FILES.......................................    14
   SECTION 6.2     PHYSICAL INSPECTION...................................    14
   SECTION 6.3     EXCULPATION AND INDEMNIFICATION.......................    14
   SECTION 6.4     PAYMENT OF EXPENSES...................................    15
   SECTION 6.5     PREFERENTIAL RIGHTS AND THIRD PARTY CONSENTS..........    15
   SECTION 6.6     RELEASE OF LIENS......................................    15
   SECTION 6.7     BONDS.................................................    15

ARTICLE VII. INTENTIONALLY OMITTED.......................................    15

ARTICLE VIII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES TO
              CLOSE......................................................    15
   SECTION 8.1     CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTNERSHIP
                   TO CLOSE..............................................    15
   SECTION 8.2     CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTNER TO
                   CLOSE.................................................    16

ARTICLE IX. CLOSING OF TRANSACTION.......................................    17
   SECTION 9.1     THE CLOSING...........................................    17
   SECTION 9.2     PARTNER'S CLOSING OBLIGATIONS.........................    17
   SECTION 9.3     DELIVERY OF FILES.....................................    17
   SECTION 9.4     ASSUMPTION OF OBLIGATIONS.............................    17

ARTICLE X. CERTAIN ACCOUNTING ADJUSTMENTS................................    18
   SECTION 10.1    ADJUSTMENTS...........................................    18
   SECTION 10.2    CLOSING AND POST-CLOSING ACCOUNTING SETTLEMENTS.......    19
   SECTION 10.3    NO SALES TAXES........................................    19

ARTICLE XI. ACTIONS......................................................    19
   SECTION 11.1    OPERATIONAL TRANSITION................................    19
   SECTION 11.2    SEISMIC DATA..........................................    20

ARTICLE XII. INDEMNIFICATION.............................................    20
   SECTION 12.1    INDEMNIFICATION OBLIGATIONS...........................    20
   SECTION 12.2    LIMITATIONS ON INDEMNITIES............................    20
   SECTION 12.3    NOTICE OF CLAIM.......................................    21
   SECTION 12.4    PLUGGED WELLS.........................................    21
   SECTION 12.5    EXCLUSIVE REMEDY......................................    21
   SECTION 12.6    RETAINED LIABILITY....................................    21

ARTICLE XIII. CASUALTY LOSS..............................................    22
   SECTION 13.1    CASUALTY LOSS.........................................    22

ARTICLE XIV. NOTICES.....................................................    22
   SECTION 14.1    NOTICES...............................................    22
</TABLE>

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<TABLE>
<S>                                                                         <C>
ARTICLE XV. COMMISSIONS..................................................    23
   SECTION 15.1    COMMISSIONS...........................................    23

ARTICLE XVI. INTENTIONALLY OMITTED.......................................    23

ARTICLE XVII. MISCELLANEOUS MATTERS......................................    23
   SECTION 17.1    SURVIVAL OF PROVISIONS................................    23
   SECTION 17.2    FURTHER ASSURANCES....................................    23
   SECTION 17.3    RECORDING.............................................    23
   SECTION 17.4    BINDING EFFECT; ASSIGNMENT OF AGREEMENT...............    24
   SECTION 17.5    IMBALANCES............................................    24
   SECTION 17.6    EXPENSES..............................................    24
   SECTION 17.7    ENTIRE AGREEMENT - TIME OF THE ESSENCE................    24
   SECTION 17.8    PUBLIC STATEMENTS.....................................    24
   SECTION 17.9    INJUNCTIVE RELIEF; EXCLUSION OF CONSEQUENTIAL AND
                   EXEMPLARY DAMAGES.....................................    24
   SECTION 17.10   AMENDMENTS............................................    25
   SECTION 17.11   GOVERNING LAW.........................................    25
   SECTION 17.12   MULTIPLE COUNTERPARTS; FAX............................    25
   SECTION 17.13   SEVERABILITY..........................................    25
</TABLE>

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                                TABLE OF EXHIBITS

<TABLE>
<S>               <C>
EXHIBIT A         DESCRIPTION OF PROPERTIES
EXHIBIT A-2       EXCLUDED PROPERTY
EXHIBIT B         PIPELINE
EXHIBIT C         WELL AND PUD LOCATIONS
EXHIBIT 1.1(G)    EASEMENTS
EXHIBIT 1.1(I)    OIL AND GAS PROPERTIES CONTRACTS
EXHIBIT 1.1(II)   PIPELINE CONTRACTS
EXHIBIT 4.6       LITIGATION
EXHIBIT 4.6(B)    PERSONNEL WITH KNOWLEDGE--PARTNER
EXHIBIT 4.7       BASIC DOCUMENTS
EXHIBIT 4.8       COMMITMENTS, ABANDONMENTS OR PROPOSALS
EXHIBIT 4.9       SCHEDULE OF PRODUCTION SALES CONTRACTS
EXHIBIT 4.13      SCHEDULE OF PLUGGING OBLIGATIONS
EXHIBIT 4.14      SCHEDULE OF NON-TRANSFERABLE GOVERNMENTAL PERMITS
EXHIBIT 4.15      PRODUCTION DECLINES
EXHIBIT 4.23      INSURANCE
EXHIBIT 4.24      EASEMENT RENTALS
EXHIBIT 4.25      CONTRACTS ALLOWING INTERCONNECT TO PIPELINE
EXHIBIT 4.31      RESTRICTIONS ON CERTAIN ACTIONS
EXHIBIT 6.5       ALLOCATION OF VALUE
EXHIBIT 6.6       LIENS
EXHIBIT 6.7       BONDS
EXHIBIT 9.2(A)    CONVEYANCE
</TABLE>

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                             CONTRIBUTION AGREEMENT

     THIS CONTRIBUTION AGREEMENT dated August 22, 2005 (THE "CLOSING DATE"), is
made by and between F-W OIL EXPLORATION L.L.C., a Delaware limited liability
company ("PARTNER"), and FWOE PARTNERS L.P., a Texas limited partnership
("PARTNERSHIP").

                                   WITNESSETH:

     WHEREAS, Partner desires to contribute, bargain, assign, transfer and
convey to Partnership, and Partnership desires to accept, certain oil and gas
properties and related assets; and

     WHEREAS, Partner and Partnership deem it in their mutual best interests to
execute and deliver this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Partner and Partnership do hereby agree as follows:

                                   ARTICLE I.

                           DEFINITIONS AND REFERENCES

     SECTION 1.1 CERTAIN DEFINED TERMS. When used in this Agreement, the
following terms shall have the respective meanings assigned to them in this
SECTION 1.1 or in the section, subsections or other subdivisions referred to
below:

     "AGREED VALUE" shall have the meaning assigned to such term in SECTION 3.1.

     "AGREEMENT" shall mean this Agreement, as hereafter changed, amended or
modified in accordance with the terms hereof.

     "APPLICABLE ENVIRONMENTAL LAWS" shall have the meaning assigned to that
term in SECTION 4.12.

     "BASIC DOCUMENTS" shall have the meaning assigned to such term in SECTION
4.7.

     "CLOSING" shall have the meaning assigned to such term in SECTION 9.1.

     "CLOSING DATE" shall have the meaning assigned to such term in the opening
paragraph.

     "CLOSING DOCUMENTS" shall mean this Contribution Agreement, the Conveyance,
and the other documents executed and delivered at the Closing pursuant to the
provisions of Article IX.

     "CODE" shall mean the Internal Revenue Code, of 1986, as amended from time
to time, and any successor statute thereto.

     "CONTRACTS" shall have the meaning assigned to such term in SECTION 2.1(I).

     "CONTRIBUTION PERCENTAGE" means 60.08%.

     "CONVEYANCE" shall have the meaning assigned to such term in SECTION
9.2(A).

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     "EASEMENTS" shall have the meaning assigned to such term in SECTION 2.1(G).

     "EFFECTIVE DATE" shall have the meaning assigned to such term in SECTION
9.2(A).

     "EXCLUDED PROPERTY" shall have the meaning assigned to such term in SECTION
2.2.

     "FINAL CLOSING STATEMENT" shall have the meaning assigned to such term in
Section 10.2(b).

     "FINAL SETTLEMENT DATE" shall have meaning assigned to such term in Section
10.2(b).

     "INDEMNIFICATION PERIODS" shall have the meaning assigned to such term in
Section 17.1.

     "INDEMNITEE" shall have the meaning assigned to such term in SECTION 12.2.

     "INSPECTIONS" shall have the meaning assigned to such term in SECTION 6.3.

     "LIMITED PARTNER" shall mean TIFD III-X LLC, a Delaware limited liability
company.

     "LITIGATION CLAIM" shall have the meaning assigned to such term in SECTION
12.6.

     "MATERIAL ADVERSE EFFECT" or any similar phrase, shall mean with respect to
Partnership or the Properties, anything that would reduce the value of any
Properties or impose any obligation, liability or expense upon Partnership, by
an amount greater than $10,000. "MATERIAL" shall mean (a) anything that would
(i) reduce the value of the Properties to Partnership or (ii) impose an
obligation or liability upon Partnership, by an amount greater than $10,000 and
(b) any part of the Properties that has a value greater than $10,000.

     "MMS" shall mean Mineral Management Services of the United States
Department of Interior.

     "OFFSHORE PROPERTIES" shall mean those Properties located in the Outer
Continental Shelf - Gulf of Mexico Region.

     "OIL AND GAS PROPERTIES" shall have the meaning assigned to such term in
SECTION 2.1.

     "OPERATING AGREEMENT PROPERTIES" shall have the meaning assigned to such
term in SECTION 4.28.

     "PARTNERSHIP" shall have the meaning assigned to such term in the opening
paragraph.

     "PARTNERSHIP AGREEMENT" shall mean that certain Amended and Restated
Agreement of Limited Partnership dated as of even date herewith by and between
the Partner and the Limited Partner.

     "PARTNERSHIP'S LOSSES" shall have the meaning assigned to such term in
SECTION 12.1(A).

     "PERMITS" shall have the meaning assigned to such term in SECTION 2.1(F).

     "PIPELINE" shall have the meaning assigned to such term in SECTION 2.1(E).

     "PLUGGING AND ABANDONMENT" shall have the meaning assigned to such term in
SECTION 9.5(B).

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     "PRELIMINARY CLOSING STATEMENT" shall have the meaning assigned to such
terms in Section 10.2(a).

     "PROCEEDINGS" shall have the meaning assigned to such term in SECTION 4.6.

     "PROPERTIES" shall have the meaning assigned to such term in SECTION 2.1.

     "REPRESENTATIVES" shall have the meaning assigned to such term in SECTION
6.1.

     "RESERVE REPORT" shall have the meaning assigned to such term in SECTION
4.15.

     "ROUTINE GOVERNMENTAL APPROVALS" shall have the meaning assigned to such
term in SECTION 4.4.

     "PARTNER" shall have the meaning assigned to such term in the opening.

     "PARTNER'S LOSSES" shall have the meaning assigned to such term in SECTION
12.1(B).

     "SCHEDULED PRODUCTION SALES CONTRACTS" shall have the meaning assigned to
such term in SECTION 4.9 .

     "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and all
rules and regulations under such Act.

     "WARRANTIES" shall have the meaning assigned to such term in SECTION
2.1(H).

     SECTION 1.2 REFERENCES, TITLES AND CONSTRUCTION.

          (a) All references in this Agreement to articles, sections,
     subsections and other subdivisions refer to corresponding articles,
     sections, subsections and other subdivisions of this Agreement unless
     expressly provided otherwise.

          (b) Titles appearing at the beginning of any of such subdivisions are
     for convenience only and shall not constitute part of such subdivisions and
     shall be disregarded in construing the language contained in such
     subdivisions.

          (c) The words "this Agreement," "this instrument," "herein," "hereof,"
     "hereby," "hereunder" and words of similar import refer to this Agreement
     as a whole and not to any particular subdivision unless expressly so
     limited.

          (d) Words in the singular form shall be construed to include the
     plural and vice versa, unless the context otherwise requires. Pronouns in
     masculine, feminine and neuter genders shall be construed to include any
     other gender.

          (e) Unless the context otherwise requires or unless otherwise provided
     herein, the terms defined in this Agreement which refer to a particular
     agreement, instrument or document also refer to and include all renewals,
     extensions, modifications, amendments or restatements of such agreement,
     instrument or document, provided that nothing contained in this subsection
     shall be construed to authorize such renewal, extension, modification,
     amendment or restatement.

          (f) Examples shall not be construed to limit, expressly or by
     implication, the matter they illustrate.

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          (g) The word "or" is not intended to be exclusive and the word
     "includes" and its derivatives means "includes, but is not limited to" and
     corresponding derivative expressions.

          (h) No consideration shall be given to the fact or presumption that
     one party had a greater or lesser hand in drafting this Agreement.

          (i) All references herein to "$" or "dollars" shall refer to U.S.
     Dollars.

          (j) The Exhibits listed in Table of Exhibits are attached hereto. Each
     such Exhibit is incorporated herein by reference for all purposes and
     references to this Agreement shall also include such Exhibit unless the
     context in which used shall otherwise require.

          (k) Anything contemplated, permitted and done pursuant to the terms of
     the Partnership Agreement shall not be deemed a breach of any
     representation or warranty contained herein.

          (l) There is a Purchase and Sale Agreement, dated of even date
     herewith in which Frank C. Wade, F-Wade Holdings, Ltd., and F-W Oil
     Interests, Inc. sold interests in the Properties (defined below) to
     Partnership and anything contemplated, permitted and done pursuant to the
     terms of such purchase and sale agreement shall not be a breach of any
     representation or warranty contained herein.

                                   ARTICLE II.

                          PROPERTIES TO BE CONTRIBUTED

     SECTION 2.1 PROPERTIES TO BE CONTRIBUTED. Partner agrees to contribute, and
Partnership agrees to accept, pursuant to Section 3.1(a) of the Partnership
Agreement, and subject to the terms and provisions herein contained, the
following described properties, rights and interests:

          (a) The Contribution Percentage of the properties, including the
     Contribution Percentage of the working interest and net revenue interest
     percentages therein, all as described on EXHIBIT A attached hereto and made
     a part hereof for all purposes;

          (b) Without limitation of the foregoing, all right, title and interest
     (of whatever kind or character, whether legal or equitable, and whether
     vested or contingent) of Partner in and to the oil, gas and other minerals
     in and under or that may be produced from the lands, leases, and wells
     described in EXHIBIT A hereto (including, without limitation, interests in
     oil, gas and/or mineral leases, overriding royalties, production payments,
     net profits interests, fee mineral interests, fee royalty interests and
     other interests in such oil, gas and other minerals), whether such lands be
     described in the description set forth in EXHIBIT A, or be described in
     such EXHIBIT A by reference to another instrument (and subject to any depth
     limitation that may be set forth in such EXHIBIT A or in any such
     instrument referred to for description);

          (c) All rights, titles and interests of Partner in and to, or
     otherwise derived from, all presently existing and valid oil, gas and/or
     mineral unitization, pooling, and/or communitization agreements,
     declarations, designations and/or orders (including, without limitation,
     those described on EXHIBIT A hereto) and in and to the properties covered
     and the units created thereby (including all units formed under orders,
     rules, regulations, or other official acts of any federal, state, or other
     authority having jurisdiction, and voluntary unitization agreements,
     designations and/or declarations) relating to the properties described in
     subsections (a) and (b) above;

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          (d) All rights, titles and interests of Partner in and to all
     materials, supplies, machinery, equipment, improvements and other personal
     property and fixtures (including, but not by way of limitation, all wells,
     wellhead equipment, pumping units, flowlines, tanks, platforms, buildings,
     saltwater disposal facilities, injection facilities, compression
     facilities, gathering systems, and other equipment) used in connection with
     the exploration, development, operation or maintenance of the properties
     described in subsections (a), (b) and (c) above, and, to the extent
     assignable, in and to all permits and licenses (including, without
     limitation, all environmental and other governmental permits, licenses and
     authorizations), rights of way, easements, and other rights of surface use
     and other rights and interests used in connection with the exploration,
     development, operation or maintenance of the properties described in
     subsections (a), (b) and (c) above;

          (e) All right, title and interest of the Partner in the pipeline and
     appurtenant, equipment, facilities and fixtures which are described on
     EXHIBIT B, attached hereto and made part hereof (the "PIPELINE");

          (f) All right, title and interest of Partner in, to the extent
     assignable, any and all permits, licenses and governmental authorizations
     that are necessary or appropriate for the construction, installation,
     operation, maintenance, repair, replacement and ownership of the Pipeline
     (the "PERMITS");

          (g) All right, title and interest of Partner in the easements,
     right-of-way agreements, surface site leases or other interests described
     on EXHIBIT 1.1(G) attached hereto and made part hereof and any other
     easements, or right-of-way agreements owned by Partner that are used for
     the ownership, operation, maintenance, repair or replacement of the
     Pipeline (the "EASEMENTS");

          (h) All unexpired warranties, claims, rights, or causes of action
     Partner may have against third parties that relate to the Pipeline,
     Easements, and Permits to the extent assignable (the "WARRANTIES");

          (i) All right, title and interest of Partner in and to all presently
     existing and valid production sales contracts, operating agreements, and
     other agreements and contracts which (i) relate to any of the properties
     described in subsections (a), (b) and (c) above; and (ii) are listed on
     EXHIBIT 1.1(I) attached hereto and made a part hereof and further including
     those to construct, maintain and operate the Pipeline listed on EXHIBIT
     1.1(II) (all the foregoing herein collectively called the "CONTRACTS"); and

          (j) All of Partner's lease files, abstracts and title opinions,
     production records, well files, accounting records (but not including
     general financial accounting records), seismic records and surveys to the
     extent such transfer is allowed without breaching of any agreements
     underlying such seismic records and surveys and expressly (not including
     any seismic data), gravity maps, electric logs, geological or geophysical
     data and records, and other files, documents and records of every kind and
     description which relate to the properties described above and that are
     assignable without the payment of additional fees or other charges.

The properties and interests specified in PARAGRAPHS (A), (B) AND (C) are herein
sometimes collectively called the "OIL AND GAS PROPERTIES," and the properties
and interests specified in PARAGRAPHS (A) through (J) of are herein sometimes
collectively called the "PROPERTIES."

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     SECTION 2.2 EXCLUDED PROPERTY. The property, assets, contracts and other
rights in SECTION 2.1 specifically excludes the property, assets, contracts and
other rights described in EXHIBIT A-2 (such excluded property, assets, contracts
and other rights referred to herein as the "EXCLUDED PROPERTY").

                                  ARTICLE III.

                                  AGREED VALUE

     SECTION 3.1 AGREED VALUE. The parties agree that the Properties shall have
a value of $42,957,200.00 (the "AGREED VALUE"). The Agreed Value shall be
adjusted as provided in ARTICLE X (the Agreed Value, as so adjusted, and as the
same may be otherwise adjusted by the mutual agreement of the parties, being
called the "ADJUSTED AGREED VALUE"). The Agreed Value shall be allocated among
the Properties in a manner consistent with Exhibit 6.5. Partner and Partnership
shall report the transactions contemplated hereby on all Federal tax returns
(including information returns and supplements thereto required to be filed by
the parties under Internal Revenue Code) in a manner consistent with such
allocation, with such additional detail as is needed to take into account
equipment included as a part of any particular property identified on Exhibit
6.5.

                                   ARTICLE IV.

                    REPRESENTATIONS AND WARRANTIES OF PARTNER

     Partner represents to Partnership, as of the date of this Agreement that:

     SECTION 4.1 ORGANIZATION AND EXISTENCE. Partner is a limited liability
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Partner is duly qualified to transact business
and is in good standing in the State of Texas. Partner is duly qualified by the
MMS to hold leasehold interests in the Offshore Properties.

     SECTION 4.2 POWER AND AUTHORITY. Partner has the power and authority to
execute, deliver, and perform this Agreement and each other agreement,
instrument, or document executed or to be executed by Partner in connection with
the transactions contemplated hereby to which it is a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery, and
performance by Partner of this Agreement and each other agreement, instrument,
or document executed or to be executed by Partner in connection with the
transactions contemplated hereby to which it is a party, and the consummation by
it of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action of Partner.

     SECTION 4.3 VALID AND BINDING AGREEMENT. This Agreement has been duly
executed and delivered by Partner and constitutes, and each other agreement,
instrument, or document executed or to be executed by Partner in connection with
the transactions contemplated hereby to which it is a party has been, or when
executed will be, duly executed and delivered by Partner and constitutes, or
when executed and delivered will constitute, a valid and legally binding
obligation of Partner, enforceable against it in all material respects in
accordance with their respective terms, except that such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (b) equitable
principles which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.

     SECTION 4.4 NON-CONTRAVENTION. Other than requirements (if any) that there
be obtained consents to assignment (or waivers of preferential rights to
purchase) from third parties, and except for

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approvals ("ROUTINE GOVERNMENTAL APPROVALS") required to be obtained from
governmental entities who are lessors under leases forming a part of the Oil and
Gas Properties (or who administer such leases on behalf of such lessors) which
are customarily obtained post-closing and which Partner has no reason to believe
cannot be obtained, neither the execution, delivery, or performance by Partner
of this Agreement or any of the other Closing Documents nor the consummation by
it of the transactions contemplated hereby and thereby do and will (a) conflict
with or result in a violation of any provision of the charter, bylaws or other
governing instruments of Partner, (b) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, any bond, debenture, note, mortgage or
indenture, or any material lease, contract, agreement, or other instrument or
obligation to which Partner is a party or by which Partner or any of its
properties may be bound that could reasonably be expected to have a Material
Adverse Effect on the ownership, exploration, development, maintenance,
operation, value or use of any of the Properties, (c) result in the creation or
imposition of any lien or other encumbrance upon the Properties, or (d) violate
any applicable law, rule or regulation binding upon Partner or the Properties.

     SECTION 4.5 APPROVALS. Other than requirements (if any) that there be
obtained consents to assignment (or waivers of preferential rights to purchase)
from third parties, and except for approvals required to be obtained from
governmental entities who are lessors under leases forming a part of the Oil and
Gas Properties (or who administer such leases on behalf of such lessors) which
are customarily obtained post-closing and which Partner has no reason to believe
cannot be obtained and except for approvals from the federal government with
respect to the transfer of the federal leases, no consent, approval, order, or
authorization of, or declaration, filing, or registration with, any court or
governmental agency or of any third party is required to be obtained or made by
Partner in connection with the execution, delivery, or performance by Partner of
this Agreement or any of the other Closing Documents.

     SECTION 4.6 LITIGATION. Except as set forth on EXHIBIT 4.6, there are no
suits, actions, claims, notices of violation or other judicial, administrative
or arbitral proceedings (collectively, "PROCEEDINGS") pending or existing with
respect to which Partner has been served or has received notice, and to
Partner's Knowledge (which, as used in this Agreement, shall mean to the actual
knowledge of executive personnel of Partner listed on EXHIBIT 4.6(B), in its
office located at the address set forth in SECTION 14.1), there are no other
Proceedings or investigations pending or threatened against Partner or which
relate to the Properties (including without limitation, Proceedings pursuant to
Applicable Environmental Laws, as defined herein, and Proceedings challenging or
pertaining to Partner's title to any of the Properties), or affecting the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.

     SECTION 4.7 BASIC DOCUMENTS.

          (a) To Partner's Knowledge:

               (i) the following are in full force and effect and constitute
          valid and binding obligations of the parties thereto:

                    (A) the oil, gas and or/or mineral leases, to the extent
               Partner's interest in which comprise parts of the Oil and Gas
               Properties; and

                    (B) the Contracts, Permits and Easements, to the extent
               comprising any part of the Properties.

                                       7

<PAGE>

     (Such leases and all of such Contracts, Permits and Easements are described
in (A) and (B)above are herein called the "BASIC DOCUMENTS");

               (ii) all contracts and agreements which are Basic Documents are
          disclosed on EXHIBIT 4.7.

          (b) To Partner's Knowledge, (i) Partner is not in breach or default
     (and no situation exists which with the passing of time or giving of notice
     would create a breach or default) of its obligations under the Basic
     Documents, and (ii) no breach or default by any third party (or situation
     which with the passage of time or giving of notice would create a breach or
     default) exists, in each case to the extent such breach or default (whether
     by Partner or such a third party) could reasonably be expected to
     materially adversely affect the ownership, exploration, development,
     maintenance, operation, value or use of any of the Property after the
     Effective Date; and

          (c) To Partner's Knowledge, (i) all payments (including all delay
     rentals, royalties, shut-in royalties and valid calls for payment or
     prepayment under operating agreements) due and payable on or before the
     Effective Date by Partner under the Basic Documents have been paid and (ii)
     such payments due and payable by third parties on or before the Effective
     Date where the non-payment of same by a third party could materially and
     adverse affect the ownership, exploration, development, operation,
     maintenance, value or use of any of the Oil and Gas Properties after the
     Effective Date have been paid, in each case except for amounts that are
     being contested in good faith.

     For the purposes of the representations contained in this Section (and
without limitation of such representations), the non-payment of an amount, or
non-performance of an obligation, where such non-payment, or non-performance,
could result in the forfeiture or termination of material rights of Partner
under a Basic Document, shall be considered material.

     SECTION 4.8 COMMITMENTS, ABANDONMENTS OR PROPOSALS. Except as set forth in
EXHIBIT 4.8:

          (a) Partner has incurred no expenses, and has made no commitments to
     make expenditures (including Partner has not entered into any agreements
     that would obligate Partnership to make expenditures), in connection with
     (and no other obligations or liabilities have been incurred which would
     adversely affect) the ownership or operation of the Properties after the
     Effective Date, other than routine expenses incurred in the normal
     operation of the Oil and Gas Properties;

          (b) Partner has not abandoned any wells (or removed any material items
     of equipment, except those replaced by items of materially equal
     suitability) on the Oil and Gas Properties since the date of the Reserve
     Report; and

          (c) no proposals in excess of $25,000 are currently outstanding
     (whether made by Partner or by any other party) to drill additional wells,
     or to deepen, plug back, or rework existing wells, or to conduct other
     operations for which consent is required under the applicable operating
     agreement, or to conduct any other operations, or to abandon any wells, on
     the Oil and Gas Properties.

     SECTION 4.9 PRODUCTION SALES CONTRACTS. There exist no agreements or
arrangements for the sale of production from the Oil and Gas Properties
(including calls on, or other rights to purchase, production, whether or not the
same are currently being exercised) other than (a) production sales contracts
(in this Section, the "SCHEDULED PRODUCTION SALES CONTRACTS") disclosed in
EXHIBIT 4.9 or (b) agreements or arrangements which are cancelable on 90 days
notice or less without penalty or detriment. To Partner's Knowledge, Partner is
presently receiving a price for all production from (or attributable to) each
Oil and Gas

                                       8

<PAGE>

Property covered by a Scheduled Production Sales Contract as computed in
accordance with the terms of such contract, and is not having deliveries of gas
from any Oil and Gas Property subject to a Scheduled Production Sales Contract
curtailed substantially below the contract quantity specified in such Scheduled
Production Sales Contract.

     SECTION 4.10 AREA OF MUTUAL INTEREST AND OTHER AGREEMENTS; TAX
PARTNERSHIPS. No Oil and Gas Property is subject to (or has related to it) any
area of mutual interest agreements. No Oil and Gas Property is subject to (or
has related to it) any farm-out or farm-in agreement under which any party
thereto is entitled to receive assignments not yet made, or could earn
additional assignments after the Effective Date.

     SECTION 4.11 PAYMENT OF EXPENSES. To Partner's Knowledge, all expenses
(including all bills for labor, materials and supplies used or furnished for use
in connection with the Properties, and all severance, production, ad valorem,
windfall profit and other similar taxes) relating to the ownership or operation
of the Properties, have been, and are being, paid (timely, and before the same
become delinquent) by Partner, except such expenses and taxes as are disputed in
good faith by Partner and for which an adequate accounting reserve has been
established by Partner.

     SECTION 4.12 COMPLIANCE WITH LAWS.

          (a) To Partner's Knowledge, the ownership and operation of the
     Properties, has been in conformity, in all material respects, with all
     applicable laws, and all applicable rules, regulations and orders of all
     governmental agencies having jurisdiction, relating to the Properties;

          (b) Without in any way limiting the foregoing representations, to
     Partner's Knowledge, the Properties are not in any material violation of,
     or subject to, any material remedial obligations under, any and all
     applicable laws, rules, regulations, statutes, ordinances, codes or other
     legally enforceable requirements (including, without limitation, common
     law) of any governmental authority regulating, relating to or imposing
     liability or standards of conduct concerning protection of the environment
     or human health and safety or orders pertaining to health or the
     environment (hereinafter collectively called "APPLICABLE ENVIRONMENTAL
     LAWS");

          (c) To Partner's Knowledge, no hazardous substances or solid wastes
     (as defined in the Applicable Environmental Laws) (i) have been generated
     on the Properties and disposed of in violation of Applicable Environmental
     Laws or (ii) have been disposed of or released on or onto the Properties,
     except for immaterial leaks and spills ordinarily encountered in oil and
     gas operations which could not reasonably be expected to give rise to a
     material remedial obligation or which have been cleaned up in accordance
     with customary industry practices;

          (d) Without limitation of the foregoing, as to all Properties, to
     Partner's Knowledge, there are no underground storage tanks,
     polychlorinated biphenyls, products containing polychlorinated biphenyls,
     asbestos or asbestos containing materials other than asbestos or asbestos
     containing materials that do not require immediate remediation or create
     any current liability for its presence; and

          (e) To Partner's Knowledge all oil and gas wells comprising a part of
     the Properties have been drilled and completed within the boundaries of the
     applicable leases or within limits otherwise permitted by a valid and
     enforceable pooling, unit, or other agreement or contract or by applicable
     law.

     SECTION 4.13 PLUGGING OBLIGATIONS. Except for wells listed on EXHIBIT 4.13
which includes shut in wells waiting for pipeline connections, there are no dry
holes, or shut in or otherwise inactive wells,

                                       9

<PAGE>

saltwater disposal wells, or producing wells not listed in the Reserve Report
located on the Oil and Gas Properties or on lands pooled or unitized therewith,
except for wells that have been properly plugged and abandoned.

     SECTION 4.14 GOVERNMENTAL PERMITS. Partner has all governmental licenses or
permits necessary or appropriate to (i) own and operate the Oil and Gas
Properties as presently being owned and operated and (ii) build, install,
operate and maintain the Pipeline and connect any wells owned by Partnership on
the Properties; and such licenses, permits and filings are in full force and
effect (and, except for those permits listed on EXHIBIT 4.14, are transferable
to Partnership), and Partner has not received written notice of any violations
in respect of any such licenses or permits.

     SECTION 4.15 RESERVE REPORT INFORMATION. Except with respect to
projections, estimates and interpretations and pricing with respect to which
Partner makes no representation or warranty, to Partner's Knowledge, all
historical information furnished by Partner, or its representatives, to
Partnership or to Cawley, Gillespie & Associates, Inc. in connection with the
preparation of a reserve report (the "RESERVE REPORT") with respect to the Oil
and Gas Properties dated as of April 1, 2005 are true and correct in all
material respects. From April 1, 2005, until Closing, production has not
decreased, individually on a well-by-well basis or in the aggregate, from
Partner's historical production from the Properties other than (i) normal
decrease in production rates over time, (ii) temporary suspensions of production
due to maintenance or repair operations on any wells, or (iii) as to those wells
set forth on EXHIBIT 4.15.

     SECTION 4.16 STATE OF REPAIR. To Partner's Knowledge, the Properties are in
a state of repair so as to be reasonably adequate for normal operations.

     SECTION 4.17 NO ALIENATION. Except for those Properties ultimately conveyed
to Partnership under the Purchase and Sale Agreement with Frank C. Wade, F-Wade
Holdings, Ltd., and F-W Oil Interests, Inc. of even date herewith, within 120
days of the date hereof, Partner has not sold, assigned, conveyed, or
transferred or contracted to sell, assign, convey or transfer any right or title
to, or interest in, the Properties.

     SECTION 4.18 INFORMATION. Except with respect to projections, estimates and
interpretations and pricing with respect to which Partner makes no
representations, to Partner's Knowledge, all of the information (written or
oral) heretofore or hereafter furnished by Partner taken in the aggregate with
respect to the Properties is true and correct in all material respects, and, to
Partner's Knowledge, does not omit any information that is necessary to prevent
such information in the light of the circumstances under which it was provided
from being misleading in any material respect.

     SECTION 4.19 NO ORAL CONTRACTS. Partner has not entered into any material
oral contract with respect to the Properties which is still in force and effect.

     SECTION 4.20 PREFERENTIAL RIGHTS AND CONSENTS TO ASSIGN. To Partner's
Knowledge, there are no consents to assignment or waivers of preferential rights
to purchase that must be obtained from third parties (which have not been
obtained by the date of this Agreement) in order for Partner to consummate the
transactions contemplated by this Agreement without violating or breaching a
duty or obligation of Partner.

     SECTION 4.21 INTENTIONALLY OMITTED.

     SECTION 4.22 WELL AND PUD LOCATIONS. To Partner's Knowledge, the location
of each well and PUD (if drilled) listed on EXHIBIT C complies in all material
respects with (or in the case of a PUD would comply with) all applicable laws
and all applicable rules, regulations and orders of governmental agencies having
jurisdiction.

                                       10

<PAGE>

     SECTION 4.23 INSURANCE. As of the Effective Date, and as shown on EXHIBIT
4.23 Partner has insurance covering the Properties, in the amounts and scope
shown on such Exhibit.

     SECTION 4.24 EASEMENT RENTALS. Except for those listed on EXHIBIT 4.24,
none of the Easements require the payment of a rental or other periodic fee in
order to maintain them in full force and effect. All such rentals or other
periodic fees due prior to the Effective Date under the Easements have been paid
in full, except for funds in suspense accounts, and all taxes due and owing in
respect thereof have been paid in full.

     SECTION 4.25 INTERCONNECTION CONTRACTS. Except for those Contracts listed
on EXHIBIT 4.25, none of the Contracts obligate Partner to use the Property to
transport, gather or compress gas, or give any party the right to interconnect
pipeline or other facilities with the Pipeline.

     SECTION 4.26 PLATFORMS. All platforms, governed by the MMS, which are
included in the Properties have satisfactorily passed their most recent MMS
annual platform surveys, and there are no unresolved incidents of noncompliance.

     SECTION 4.27 TAX PARTNERSHIPS. None of the Properties are subject to a tax
partnership, including, without limitation, any of the Properties that are
subject to any operating agreement or other arrangement under which the parties
thereto have not made an effective election pursuant to Section 761 of the
Internal Revenue Code of 1986 (herein called the "INTERNAL REVENUE CODE") and
the Treasury Regulations promulgated thereunder, to be excluded from the
application of Subchapter K, Chapter 1, Subtitle A, of the Code.

     SECTION 4.28 ACCOUNTING OF FUNDS. There are no Oil and Gas Properties where
(i) parties other than Partner own working interests in the lands and depths
covered by such Oil and Gas Properties (or in the units in which such Oil and
Gas Properties participate) and (ii) Partner serves as operator, for itself and
such other parties (herein sometimes called "NON-OPERATORS"), of such lands and
depths (or units) (such lands and depths, and units, are herein called the
"OPERATING AGREEMENT PROPERTIES").

     SECTION 4.29 INTENTIONALLY OMITTED.

     SECTION 4.30 CONDUCT OF OPERATIONS.

          (a) With respect to Properties on which Partner is not an operator, to
     Partner's Knowledge, during the period of time beginning on the Effective
     Date and ending on the Closing Date the operator (i) continued the routine
     operation of the Properties in the ordinary course of business as would a
     prudent operator, (ii) in all material respects, operated the Properties in
     conformity with all applicable law, and all applicable rules, regulations
     and orders of all governmental agencies having jurisdiction, (iii) in all
     material respects, acted in conformity with all oil, gas and/or mineral
     leases, and in conformity with all Basic Documents other than such leases,
     and (iv) in all material respects, fulfilled all obligations (including all
     obligations to make payments under leases or other Basic Documents) under
     such leases, and under such other Basic Documents and under such laws,
     rules, regulations and orders (without limitation of the foregoing, the
     failure to perform an obligation, when such failure could result in
     forfeiture or termination of rights of Partner under a Basic Document,
     shall be considered material);

          (b) With respect to Properties on which Partner is the operator,
     during the period of time beginning on the Effective Date and ending on the
     Closing Date Partner (a) continued the routine operation of the Properties
     in the ordinary course of business as would a prudent operator, (b) in all
     material respects, operated the Properties in conformity with all
     applicable law, and all applicable

                                       11

<PAGE>

     rules, regulations and orders of all governmental agencies having
     jurisdiction, (c) in all material respects, acted in conformity with all
     oil, gas and/or mineral leases, and in conformity with all Basic Documents
     other than such leases, and (d) in all material respects, fulfilled all
     obligations (including all obligations to make payments under leases or
     other Basic Documents) under such leases, and under such other Basic
     Documents and under such laws, rules, regulations and orders (without
     limitation of the foregoing, the failure to perform an obligation, when
     such failure could result in forfeiture or termination of rights of Partner
     under a Basic Document, shall be considered material).

     SECTION 4.31 RESTRICTIONS ON CERTAIN ACTIONS. During the period of time
beginning on the Effective Date and ending on the Closing Date, except as set
forth on EXHIBIT 4.31, Partner has not:

          (a) expended any funds, or made any commitments to expend funds
     (including entering into new agreements which would obligate Partner to
     expend funds), or otherwise incurred any other obligations or liabilities,
     in connection with the ownership or operation of the Properties after the
     Effective Date, other than routine expenses incurred in the normal
     operation of the Oil and Gas Properties, except in the event of an
     emergency requiring immediate action to protect life or preserve the
     Properties; or

          (b) except where necessary to prevent the termination of an oil and
     gas lease or other material agreement governing Partner's interest in the
     Properties, proposed the drilling of any additional wells, or proposed the
     deepening, plugging back or reworking of any existing wells, or proposed
     the conducting of any other operations which require consent under the
     applicable operating agreement, or proposed the conducting of any other
     operations other than the normal operation of the Oil and Gas Properties,
     or proposed the abandonment of any wells on the Oil and Gas Properties.

     SECTION 4.32 PIPELINES. To Partner's knowledge, Partner has obtained all
required permits and approvals for the construction and operation of the
Pipeline and has no reason to believe the required permits or approvals that are
not yet due cannot be obtained without causing any material delay in the
construction and use of the Pipeline. Partner believes the planned capacity
available on the Pipeline would be adequate to accommodate production of the
proved reserves in the Reserve Report based on usual or customary production for
any wells as reflected in such report.

     SECTION 4.33 GAS IMBALANCES. As of the Effective Date there does not exist
any material gas imbalances (production, gathering, processing, transportation
or otherwise) which are associated with the Properties.

     SECTION 4.34 DISCLAIMER OF WARRANTIES. Other than those representations and
warranties expressly set out in this Agreement and the Conveyance to be
delivered at Closing, Partner hereby expressly disclaims any and all
representations or warranties with respect to the Properties or the transaction
contemplated hereby, and Partnership agrees that the Properties are being sold
by Partner "where is" and "as is", with all faults. Specifically as a part of
(but not in limitation of) the foregoing, Partnership acknowledges that, other
than those representations and warranties expressly set out in this Agreement
and the Conveyance to be delivered at Closing, Partner has not made, and Partner
hereby expressly disclaims, any representation or warranty (express, implied,
under common law, by statute or otherwise) with respect to the Properties
INCLUDING (WITHOUT LIMITATION) TITLE TO THE PROPERTIES, THE TITLE OR CONDITION
OF THE PROPERTIES, THE ESTIMATED AMOUNT OF ANY PROVED, PROBABLE OR POSSIBLE
RESERVES, PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, FUTURE
OIL OR GAS PRICES, FUTURE CAPITAL COSTS, FUTURE OPERATING COSTS, FUTURE TAXES,
RATES OF RETURN OR FACTS RELATING TO INDUSTRY-WIDE RISKS NORMALLY ASSOCIATED

                                       12

<PAGE>

WITH THE OIL AND GAS BUSINESS AND PARTNER DISCLAIMS ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS. All of the disclaimers of warranties or other
matters in this section are subject to the representations and warranties in
Article IV and are not meant to constitute a waiver of limitation of any claim
against Partner for fraud.

     SECTION 4.35 CASUALTY LOSS. No event of any material damage by fire or
other casualty to the Properties has occurred on or after the Effective Date
which is not completely covered and remedied by insurance procured by Partner.

                                   ARTICLE V.

                  REPRESENTATIONS AND WARRANTIES OF PARTNERSHIP

     Partnership represents to Partner, as of the date of this Agreement, that:

     SECTION 5.1 ORGANIZATION AND EXISTENCE. Partnership is a limited
partnership duly organized, legally existing and in good standing under the laws
of Texas. The Partnership has submitted to the MMS the documentation required to
establish its qualifications to hold interests in the Offshore Properties and
believes in good faith that such qualifications will be approved by the MMS.

     SECTION 5.2 POWER AND AUTHORITY. Partnership has full partnership power and
partnership authority to execute, deliver, and perform this Agreement and each
other agreement, instrument, or document executed or to be executed by
Partnership in connection with the transactions contemplated hereby to which it
is a party and to consummate the transactions contemplated hereby and thereby.
The execution, delivery, and performance by Partnership of this Agreement and
each other agreement, instrument, or document executed or to be executed by
Partnership in connection with the transactions contemplated hereby to which it
is a party, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary partnership action of
Partnership.

     SECTION 5.3 VALID AND BINDING AGREEMENT. This Agreement has been duly
executed and delivered by Partnership and constitutes, and each other agreement,
instrument, or document executed or to be executed by Partnership in connection
with the transactions contemplated hereby to which it is a party has been, or
when executed will be, duly executed and delivered by Partnership and
constitutes, or when executed and delivered will constitute, a valid and legally
binding obligation of Partnership, enforceable against it in accordance with
their respective terms, except that such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and (b) equitable principles which may
limit the availability of certain equitable remedies (such as specific
performance) in certain instances.

     SECTION 5.4 NON-CONTRAVENTION. The execution, delivery, and performance by
Partnership of this Agreement and each other agreement, instrument, or document
executed or to be executed by Partnership in connection with the transactions
contemplated hereby to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby do not and will not (a) conflict
with or result in a violation of any provision of the partnership agreement or
other governing instruments of Partnership, (b) conflict with or result in a
violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage, indenture, lease, contract, agreement, or other instrument or
obligation to which Partnership is a party or by which Partnership or any of its
properties may be bound, (c) result in the creation or imposition of any lien or

                                       13

<PAGE>

other encumbrance upon the properties of Partnership, or (d) violate any
applicable law, rule or regulation binding upon Partnership.

     SECTION 5.5 APPROVALS. No consent, approval, order, or authorization of, or
declaration, filing, or registration with, any court or governmental agency or
of any third party is required to be obtained or made by Partnership in
connection with the execution, delivery, or performance by Partnership of this
Agreement and each other agreement, instrument, or document executed or to be
executed by Partnership in connection with the transactions contemplated hereby
to which it is a party or the consummation by it of the transactions
contemplated hereby and thereby, other the approval by the MMS of the
Partnership's qualifications to hold interests in the Offshore Properties and
the approval by the MMS of the transfers of the Offshore Properties to the
Partnership.

     SECTION 5.6 PENDING LITIGATION. There are no pending suits, actions, or
other proceedings in which Partnership is a party which affect the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.

                                   ARTICLE VI.

                          CERTAIN PRE-CLOSING COVENANTS

     From the Effective Date until Closing or as otherwise indicated,

     SECTION 6.1 ACCESS TO FILES. Partner shall give, and has given,
Partnership, the attorneys, Thompson & Knight L.L.P., and other representatives
of all of the above (collectively, the "REPRESENTATIVES"), access during
reasonable times during normal business hours, and upon reasonable advance
notice, from before the date hereof until the Closing to the Properties and to
any contract files, lease or other title files, production files, well files and
other title files, marketing files, ownership maps and surveys relating to the
Properties; copies or originals of all Easements, Contracts and Permits; all
other files of Partner pertaining to the ownership and/or operation of the
Properties, or to any liability assumed by Partnership and Partner has used its
reasonable efforts to arrange for Partnership, and its Representatives to have
access to any such files in the office of Partner. Partner is not obligated to
provide Partnership with access to any records or data which Partner can not
provide to Partnership without, in its reasonable opinion, breaching
confidentiality agreements with other parties or that are subject to legal
privilege. If Partner fails to provide any records or data because of any such
confidentiality agreements, Partner shall identify, in writing, the information
not provided to the extent it could do so without violating such agreement and
identify the person or persons whose consent was necessary in order for Partner
to disclose such records and data. All information obtained by Partnership and
the Representatives shall be maintained in strict confidence, for use solely in
connection with its evaluation of the Properties, and shall not be disclosed to
any other party without Partner's prior written consent.

     SECTION 6.2 PHYSICAL INSPECTION. Partner shall give, and has given,
Partnership or its Representatives, at reasonable times before the date of this
Agreement, physical access to the Properties operated by such Partner (and shall
make a good faith effort to give access to non-operated Properties) for the
purpose of inspecting same. Partnership recognizes that some or all of the
Properties may be operated by parties other than Partners and that each
Partner's ability to obtain access to such Properties, and the manner and extent
of such access, is subject to such third parties.

     SECTION 6.3 EXCULPATION AND INDEMNIFICATION. If Partnership exercises
rights of access or conducts examinations or inspections (collectively the
"INSPECTIONS") under SECTION 6.1 or SECTION 6.2, then (A) the Inspections shall
be at Partnership's sole risk, cost and expense and Partnership waives and
releases

                                       14

<PAGE>

all claims against Partner (its affiliates and its and their respective
directors, officers, employees, attorneys, contractors and agents) or in any way
connected with the Inspections or arising in connection with the conduct of
Partnership's directors, officers, employees, attorneys, contractors and agents
in connection with the Inspections and (B) Partnership shall indemnify, defend
and hold harmless Partner (and its affiliates and its and their respective
officers, directors, employees, attorneys, contractors and agents) from any and
all claims, actions, causes of action, liabilities, damages, losses, costs or
expenses (including, without limitation, court costs and attorneys fees), or
liens or encumbrances for labor or materials, caused by the Inspections. THE
FOREGOING RELEASE AND INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH CLAIMS,
ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE
OUT OF NEGLIGENCE OF PARTNER, OR ANY OTHER INDEMNIFIED PARTY (INCLUDING WITHOUT
LIMITATION SOLE NEGLIGENCE, SINGLE NEGLIGENCE, CONCURRENT NEGLIGENCE, OR ACTIVE
OR PASSIVE NEGLIGENCE); PROVIDED, THAT THE FOREGOING INDEMNIFICATION SHALL NOT
APPLY TO THE EXTENT THAT THE ACT OR OMISSION GIVING RISE TO THE CLAIM FOR
INDEMNIFICATION AROSE OUT OF ANY PARTNER'S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE.

     SECTION 6.4 PAYMENT OF EXPENSES. Partner shall cause all expenses
(including all bills for labor, materials and supplies used or furnished for use
in connection with the Property and all severance, production, windfall profit
and similar taxes) relating to the ownership or operation of the Properties
prior to the date of Closing to be promptly paid and discharged (on behalf of
Partnership if attributable to the period after the Effective Date), except for
expenses disputed in good faith.

     SECTION 6.5 PREFERENTIAL RIGHTS AND THIRD PARTY CONSENTS. Partner has
requested, from the appropriate parties (and in accordance with the documents
creating such rights and/or requirements), waivers of the preferential rights to
purchase, or requirements that consents to assignment be obtained. Partner shall
have no obligation hereunder other than to so request such waivers (i.e.,
Partner shall have no obligation to assure that such waivers are obtained). Upon
the arrival of any exercise of additional preferential rights after the Closing
Date, Partnership will tender the required interest in the Property affected by
such unwaived preferential right, at the allocated portion of the Agreed Value
set forth on EXHIBIT 6.5 for such affected Property (or portion thereof) to the
holder, or holders, of such right. In return for tendering the Property to such
holder(s), Partnership shall collect and retain such amount from such purchaser.

     SECTION 6.6 RELEASE OF LIENS. To Partner's Knowledge, all liens burdening
the Properties are set forth on EXHIBIT 6.6 and Partner will cause all such
liens, other than the liens created pursuant to the terms of the operating
agreements, to be released before or at Closing.

     SECTION 6.7 BONDS. Attached hereto as EXHIBIT 6.7 is a list of all bonds
placed by Partner with the applicable authorities for the ownership and
operation of the Properties.

                                  ARTICLE VII.

                              INTENTIONALLY OMITTED

                                  ARTICLE VIII.

         CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES TO CLOSE

     SECTION 8.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTNERSHIP TO
CLOSE. The obligations of Partnership under this Agreement are subject to each
of the following conditions being met:

                                       15

<PAGE>

          (a) Except for representations qualified by "material" or
     "materiality" in which case such representations must be true and accurate
     in all respects at and as of the time of Closing, each and every
     representation of Partner under this Agreement shall be true and accurate
     in all material respects at and as of the time of Closing.

          (b) Except for covenants, agreements and conditions qualified by
     "material" or "materiality" in which case compliance must be performed and
     complied with in all respects by Partner prior to or at the Closing,
     Partner shall have performed and complied in all material respects with (or
     compliance therewith shall have been waived by Partnership) each and every
     covenant, agreement and condition required by this Agreement to be
     performed or complied with by Partner prior to or at the Closing.

          (c) Partner shall have delivered a certificate executed by the
     president of Partner dated the Closing Date, representing and certifying in
     such detail as Partnership may reasonably request that the conditions set
     forth in SUBSECTIONS (A) and (B) above have been fulfilled.

          (d) No suit, action or other proceedings shall, on the date of
     Closing, be pending or threatened before any court or governmental agency
     seeking to restrain, prohibit, or obtain damages or relief in connection
     with the consummation of the transactions contemplated by this Agreement.

          (e) All necessary waivers of preferential rights have been obtained or
     adequate notice has been given and the period to exercise such rights
     expired before the Closing Date.

          (f) The Partner and the Limited Partner shall have executed and
     delivered the Partnership Agreement.

     SECTION 8.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTNER TO CLOSE.
The obligations of Partner to consummate the transactions contemplated by this
Agreement are subject to each of the following conditions being met:

          (a) Except for representations qualified by "material" or
     "materiality" in which case such representations must be true and accurate
     in all respects at and as of the time of Closing, each and every
     representation of Partnership under this Agreement shall be true and
     accurate in all material respects at and as of the time of Closing

          (b) Except for covenants, agreements and conditions qualified by
     "material" or "materiality" in which case compliance must be performed and
     complied with in all respects by Partnership prior to or at the Closing,
     Partnership shall have performed and complied in all material respects with
     (or compliance therewith shall have been waived by Partner) each and every
     covenant, agreement and condition required by this Agreement to be
     performed or complied with by Partnership prior to or at the Closing.

          (c) No suit, action or other proceedings shall, on the date of
     Closing, be pending or threatened before any court or governmental agency
     seeking to restrain, prohibit, or obtain damages or other relief in
     connection with the consummation of the transactions contemplated by this
     Agreement.

          (d) The Limited Partner shall have executed and delivered the
     Partnership Agreement.

                                       16

<PAGE>

                                   ARTICLE IX.

                             CLOSING OF TRANSACTION

     SECTION 9.1 THE CLOSING. The closing (herein called the "CLOSING") of the
transaction contemplated hereby shall take place in the offices of Vinson &
Elkins LLP Houston, Texas simultaneously with the execution of this Agreement.

     SECTION 9.2 PARTNER'S CLOSING OBLIGATIONS. At the Closing, Partner shall:

          (a) execute, acknowledge and deliver to Partnership a conveyance of
     the Properties (the "CONVEYANCE"), in the form attached hereto as EXHIBIT
     9.2(A), effective as to runs of oil and deliveries of gas as of 9:00 a.m.,
     Central Daylight Time on April 1, 2005 (the "EFFECTIVE DATE");

          (b) deliver a copy of the resolutions adopted by the members of
     Partner authorizing Partner to execute and deliver this Agreement and all
     related documents and instruments and to perform its obligations hereunder
     and thereunder, which copy shall be certified by the secretary or assistant
     secretary of Partner;

          (c) deliver to Partnership a certificate of existence and good
     standing issued by the Secretary of State of Delaware and dated no earlier
     than five business days prior to the Closing Date;

          (d) to the extent requested by Partnership, execute and deliver to
     Partnership (i) letters in lieu of transfer orders (or similar
     documentation), in form acceptable to both parties and (ii) an affidavit or
     other certification (as permitted by such code) that Partner is not a
     "foreign person" within the meaning of Section 1445 (or similar provisions)
     of the Internal Revenue Code of 1986 as amended (i.e., Partner is not a
     non-resident alien, foreign corporation, foreign partnership, foreign trust
     or foreign estate as those terms are defined in such code and regulations
     promulgated thereunder); and

          (e) Partner shall execute, acknowledge and deliver to Partnership
     forms of conveyance or assignment as required by the applicable authorities
     for transfers of interests in state or federal leases included in the
     Properties.

     SECTION 9.3 DELIVERY OF FILES. At Closing, Partner shall deliver to the
general partner of the Partnership such of Partner's contract files, lease and
other title files, production files, well files and other files pertaining to
the ownership and/or operation of the Properties as Partnership may request.

     SECTION 9.4 ASSUMPTION OF OBLIGATIONS. Upon Closing, Partnership agrees to
assume and perform:

          (a) all liabilities, duties, and obligations of Partner that arise out
     of, relate to or are caused by the ownership or operation of the Properties
     after the Effective Date;

          (b) all liabilities and obligations with respect to Plugging and
     Abandonment after the Effective Date. "PLUGGING AND ABANDONMENT" means all
     plugging, replugging and abandonment associated with the Properties,
     including but not limited to, all plugging and abandonment, associated
     removal, disposal or restoration of the surface, site clearance and
     disposal of all wells, structures or personal property located on or
     associated with the Properties, the removal or capping and burying all

                                       17

<PAGE>

     associated flowlines, the recontouring of the surface and any disposal of
     related waste materials after the Effective Date;

          (c) all duties, liabilities and obligations that arise on or after the
     Effective Date under the Basic Documents;

          (d) all duties, liabilities and obligations to post surety bonds,
     performance bonds or guarantees related to the Properties, including those
     required by governmental authorities; and

          (e) all other duties, liabilities and obligations assumed by
     Partnership under this Agreement or the Conveyance.

                                   ARTICLE X.

                         CERTAIN ACCOUNTING ADJUSTMENTS

     SECTION 10.1 ADJUSTMENTS. Appropriate adjustments shall be made between
Partnership and Partner so that (a) all expenses (including all drilling costs,
all capital expenditures, and all overhead charges under applicable operating
agreements, and all other overhead charges actually charged by third parties)
which are incurred in the operation of the Properties after the Effective Date
will be borne by Partnership, and all proceeds (net of applicable production,
severance, and similar taxes) from the sale of oil, gas and/or other minerals
produced from the Oil and Gas Properties or any existing or future well bore
described in SECTION 2.1(B)(V) after the Effective Date will be received by
Partnership, and (b) all expenses which are incurred in the operation of the
Properties before the Effective Date will be borne by Partner and all proceeds
(net of applicable production, severance, and similar taxes) from the sale of
oil, gas and/or other minerals produced therefrom before the Effective Date will
be received by Partner. It is agreed that, in making such adjustments: (i) oil
which was produced from the Oil and Gas Properties and which was, on the
Effective Date, stored in tanks located on the Oil and Gas Properties (or
located elsewhere but used to store oil produced from the Oil and Gas Properties
prior to delivery to oil purchasers) and above pipeline connections shall be
deemed to have been produced before the Effective Date (it is recognized that
such tanks were not gauged on the Effective Date for the purposes of this
Agreement and that determination of the volume of such oil in storage will be
based on the best available data, which may include estimates), and (ii) ad
valorem taxes assessed with respect to a period which the Effective Date splits
shall be prorated based on the number of days in such period which fall on each
side of the Effective Date (with the day on which the Effective Date falls being
counted in the period after the Effective Date), and (iii) no consideration
shall be given to the local, state or federal income tax liabilities of any
party.

                                       18

<PAGE>

     SECTION 10.2 CLOSING AND POST-CLOSING ACCOUNTING SETTLEMENTS.

          (a) At or before Closing, the parties shall determine, based upon the
     best information reasonably available to them, the amount of the
     adjustments provided for in SECTION 10.1. Such adjustments shall be set
     forth in the Preliminary Closing Statement that shall be mutually agreed
     upon and executed by the parties at the Closing. If the amount of
     adjustments so determined which would result in a credit to Partnership
     exceed the amount of adjustments so determined which would result in a
     credit to Partner, the Agreed Value shall be decreased by the amount of
     such excess at Closing, and, if the converse is true, the Agreed Value
     shall be increased by the amount of such excess at Closing. Such
     adjustments shall constitute adjustments to the Agreed Value pursuant to
     SECTION 3.1 and the Adjusted Agreed Value shall take into account such
     adjustments.

          (b) On or before 90 days after Closing (the "FINAL SETTLEMENT DATE"),
     Partnership and Partner shall review any additional information which may
     then be available pertaining to the adjustments provided for in SECTION
     10.1, shall determine if any additional adjustments to the Agreed Value
     (whether the same be made to account for expenses or revenues not
     considered in making the adjustments made at Closing, or to correct errors
     made in such adjustments) should be made beyond those made at Closing. Such
     additional adjustments shall be set forth in a Final Closing Statement that
     shall be mutually agreed upon and executed by the parties on or before the
     Final Settlement Date.

          (c) Should any additional items which would be the subject to
     adjustments provided for in SECTION 10.1 above come to the attention of
     Partnership or Partner after the Final Settlement Date, appropriate
     adjustments shall be made to the Limited Partner's capital contribution
     pursuant to Section 3.2(a) of the Partnership Agreement and the special
     distribution to the general partner of the Partnership under Section 4.3(b)
     of the Partnership Agreement.

     SECTION 10.3 NO SALES TAXES. No sales, transfer or similar tax will be
collected at Closing from Partnership in connection with this transaction. If,
however, this transaction is later deemed to be subject to sales, transfer or
similar tax, at any time, for any reason, Partner agrees to be solely
responsible, and shall indemnify and hold Partnership and its affiliates, and
its and their directors, officers, employees, attorneys, contractors and agents
harmless, for any and all sales, transfer or other similar taxes (including
related penalty, interest or legal costs) due by virtue of this transaction on
the Properties transferred pursuant hereto and the Partner shall remit such
taxes at that time. Partner and Partnership agree to cooperate with each other
in demonstrating that the requirements for any exemption from such taxes have
been met.

                                   ARTICLE XI.

                                     ACTIONS

     SECTION 11.1 OPERATIONAL TRANSITION. It is understood between the parties
that Partner conveyed a portion of those properties that would meet the
description of Oil and Gas Properties to Frank C. Wade, F-Wade Holdings, Ltd.,
and F-W Oil Interests, Inc. who are sellers under the Purchase and Sale
Agreement with Partnership of even date herewith ("PSA"). Pursuant to the
Agreement of Limited Partnership, Partner will continue as operator of those of
the Oil and Gas Properties conveyed to Partnership in which Partner owned all of
the working interest in the lands and depths covered hereby both on behalf of
Partner (and the sellers described in the preceding sentence) until all
transfers of operations to Partnership are approved and in effect, and
thereafter on behalf of Partnership. As a result, Partner shall continue to
serve as

                                       19

<PAGE>

operator for the interests conveyed to Partnership from the sellers described in
the first sentence of this section.

     SECTION 11.2 SEISMIC DATA. To the extent Partner has access to any seismic
data relating to the Properties and can share such information with Partnership
without breaching the underlying seismic agreement, Partner will provide
Partnership a general description of the Properties for which such information
is available and permit the Partnership to review such information in Partner's
offices upon written request from Partnership for same. Partner will, or will
use reasonable efforts customary in the oil and gas industry to cause an
affiliate to, approve the transfer of the seismic data related to the Properties
to any purchaser from Partnership pursuant to the terms of the license
agreements relating to such seismic data and at a fee to be paid by such
purchaser that would be customarily charged for the transfer or license of such
seismic data. Partner shall never be obligated to pay third parties or incur
obligations to pay others in order to comply with the terms of this Section
11.2. In the event of conflict between the terms of this Section 11.2 and the
Partnership Agreement, the Partnership Agreement shall control.

                                  ARTICLE XII.

                                 INDEMNIFICATION

     SECTION 12.1 INDEMNIFICATION OBLIGATIONS.

          (a) Partner shall, on the date of Closing, agree (and, upon delivery
     to Partnership of the Conveyance and Assignment, shall be deemed to have
     agreed), subject to the limitations and procedures contained in this
     ARTICLE XII and in SECTION 17.1, following the Closing, to remain
     responsible for and indemnify and hold Partnership, its affiliates harmless
     from and against any and all claims, obligations, actions, liabilities,
     damages, costs or expenses, except any punitive or exemplary damages
     (including court costs and attorney's fees) (collectively, "PARTNERSHIP'S
     LOSSES"), (i) resulting from any misrepresentation or breach of any
     warranty, covenant or agreement of Partner contained in this Agreement or
     any certificate delivered by Partner at the Closing, (ii) arising out of
     and relating to the ownership or operation of the Properties before the
     Effective Date, or (iii) arising out of, related to or caused by, any
     personal injury (including death) on or in connection with the Properties
     prior to Closing.

          (b) Partnership shall, on the date of Closing, agree (and, upon
     delivery to Partnership of the Conveyance and Assignment, shall be deemed
     to have agreed), subject to the limitations and procedures contained in
     this ARTICLE XII and in SECTION 17.1, following the Closing, to indemnify
     and hold Partner harmless from and against any and all claims, obligations,
     actions, liabilities, damages, costs or expenses, except any punitive or
     exemplary damages (collectively, "PARTNER'S LOSSES"), (i) resulting from
     any misrepresentation or breach of any warranty, covenant or agreement of
     Partnership contained in this Agreement or any certificate delivered by
     Partnership at the Closing, or (ii) arising out of and relating to or
     caused by the ownership or operation of the Properties after the Effective
     Date including but not limited to all matters relating to the environmental
     and physical condition of the Properties on the Closing Date, including all
     obligations to plug, abandon and remediate the Properties.

     SECTION 12.2 LIMITATIONS ON INDEMNITIES

     After Closing, any assertion by Partnership that Partner is liable under
the terms of the indemnities provided by Section 12.1 must be made by
Partnership in accordance with Section 12.3 and must be given to

                                       20

<PAGE>

Partner (or not at all) on or prior to the expiration of the applicable
Indemnification Period. Partner shall be liable for all claims made under
Section 12.1 hereunder and under Section 12.1 in the PSA ("CLAIMS") to the
extent all Claims exceed one hundred fifty thousand dollars ($150,000) in the
aggregate and the Partner shall only be liable for the amount that such
aggregate Claims exceed one hundred fifty thousand dollars ($150,000).
Notwithstanding anything to the contrary contained herein, in no event shall
Partner's aggregate liability under or in connection with this Agreement and the
PSA exceed forty million dollars ($40,000,000) in the aggregate.

     SECTION 12.3 NOTICE OF CLAIM. If indemnification pursuant to SECTION
12.1(A) or 12.1(B) is sought, the party seeking indemnification (the
"INDEMNITEE") shall give written notice to the indemnifying party of an event
giving rise to the obligation to indemnify, describing in reasonable detail the
factual basis for such claim, and shall allow the indemnifying party to assume
and conduct the defense of the claim or action with counsel reasonably
satisfactory to the Indemnitee, and cooperate with the indemnifying party in the
defense thereof; provided, however, that the omission to give such notice to the
indemnifying party shall not relieve the indemnifying party from any liability
which it may have to the Indemnitee, except to the extent that the indemnifying
party is prejudiced by the failure to give such notice. The Indemnitee shall
have the right to employ separate counsel to represent the Indemnitee if the
Indemnitee is advised by counsel that an actual conflict of interest makes it
advisable for the Indemnitee to be represented by separate counsel and the
reasonable expenses and fees of such separate counsel shall be paid by the
indemnifying party.

     SECTION 12.4 PLUGGED WELLS. Notwithstanding any provisions in this
Agreement to the contrary, Partner shall retain all liability and indemnify and
hold Partnership harmless from and against any and all claims, obligations,
actions, liabilities, damages or expenses arising out of or relating to wells
which are inactive or plugged as of the Effective Date (except to the extent
such claims, obligations, actions, liabilities, damages or expenses arise from
the operation of the Properties by Partnership after the Effective Date) and not
listed on EXHIBIT 4.13.

     SECTION 12.5 EXCLUSIVE REMEDY. If the Closing occurs, the sole and
exclusive remedy of Partnership with respect to the Properties shall be pursuant
to this Agreement except in the case of fraud or willful misconduct. Without
limitation of the foregoing, the sole and exclusive remedy of Partnership for
any and all (a) claims relating to any representation, warranties, covenants and
agreements contained in this Agreement that survive Closing, (b) claims pursuant
to or in connection with this Agreement and (c) other claims relating to the
Properties and the purchase and sale thereof shall be (x) the right to seek
injunctive relief, rescission (only in the case of fraud) or specific
performance of or as to any obligations under this Agreement and (y) any right
to indemnification set forth in this ARTICLE XII, and in furtherance of the
foregoing, each party hereby waives and releases each other party from, to the
fullest extent permitted under any applicable law, any and all claims it may
have against each other party except as provided in this SECTION 12.4.

     SECTION 12.6 RETAINED LIABILITY. Partner hereby retains all liability
relating to the Excluded Property and for any and all claims that may arise out
of the facts or circumstances surrounding or arising in connection with the
litigation set forth in Exhibit 4.6 ("Litigation Claim"). Partner shall, on the
date of Closing, agree (and, upon delivery to Partnership of the Conveyance and
Assignment, shall be deemed to have agreed), without limitation of any kind, to
indemnify and hold Partnership harmless from and against any and all claims,
obligations, actions, liabilities, damages, costs or expenses relating to the
Excluded Property or Litigation Claim.

                                       21

<PAGE>

                                  ARTICLE XIII.

                                  CASUALTY LOSS

     SECTION 13.1 CASUALTY LOSS. In the event any material damage by fire or
other casualty to the Properties occurs after the Effective Date and prior to
the Closing that is covered by insurance, Partner shall, at Partnership's
election and expense, either collect (and when collected pay over to
Partnership), or assign to Partnership, such claims.

                                  ARTICLE XIV.

                                     NOTICES

     SECTION 14.1 NOTICES. All notices and other communications required under
this Agreement shall (unless otherwise specifically provided herein) be in
writing and be delivered personally, by recognized commercial courier or
delivery service (which provides a receipt), by telecopier (with receipt
acknowledged), or by registered or certified mail (postage prepaid), at the
following addresses:

     If to Partner:       F-W Oil Exploration L.L.C.
                          9821 Katy Freeway
                          Suite 1050
                          Houston, Texas 77024
                          Attention: Jim Brock
                          Fax No.: (713) 461-9321

     If to Partnership:   FWOE Partners L.P.
                          9821 Katy Freeway
                          Suite 1050
                          Houston, Texas 77024
                          Attention: Jim Brock
                          Fax No.: (713) 461-9321

     With a copy to:      Arthur J. Wright
                          Thompson & Knight L.L.P.
                          1700 Pacific Avenue, Suite 3300
                          Dallas, TX 75201
                          Fax No.: (214) 969-1751

and shall be considered delivered on the date of receipt. Any party may specify
as its proper address any other post office address within the continental
limits of the United States by giving notice to the other party, in the manner
provided in this Article, at least ten (10) days prior to the effective date of
such change of address.

                                       22

<PAGE>

                                   ARTICLE XV.

                                   COMMISSIONS

     SECTION 15.1 COMMISSIONS.

          (a) Partner agrees to indemnify and hold harmless Partnership from and
     against any and all claims, obligations, actions, liabilities, losses,
     damages, costs or expenses (including court costs and attorneys fees) of
     any kind or character arising out of or resulting from any agreement,
     arrangement or understanding alleged to have been made by, or on behalf of,
     Partner with any broker or finder in connection with this Agreement or the
     transaction contemplated hereby.

          (b) Partnership agrees to indemnify and hold harmless Partner from and
     against any and all claims, obligations, actions, liabilities, losses,
     damages, costs or expenses (including court costs and attorneys fees) of
     any kind or character arising out of or resulting from any agreement,
     arrangement or understanding alleged to have been made by, or on behalf of,
     Partnership with any broker or finder in connection with this Agreement or
     the transaction contemplated hereby.

                                  ARTICLE XVI.

                              INTENTIONALLY OMITTED

                                  ARTICLE XVII.

                              MISCELLANEOUS MATTERS

     SECTION 17.1 SURVIVAL OF PROVISIONS. All representations and warranties of
Partner or Partnership contained in this Agreement, any Exhibit or in any
certificate delivered at the Closing shall survive the Closing as follows (the
applicable "INDEMNIFICATION PERIODS"): (a) the special warranty of title
contained in the Conveyance shall survive until expiration of the applicable
statute of limitations, and (b) all other representations and warranties of
Partner shall only survive for twenty-four (24) months following the Closing.
Any claim for indemnification for a breach of representation or warranty of
Partner must be made prior to the expiration of the applicable Indemnification
Period. Notwithstanding the foregoing, the obligation of each party hereto to
indemnify any other party hereto shall continue after the expiration of the
Indemnification Period with respect to any matter of which the party seeking
indemnity hereunder shall have given the other party written notice as provided
herein prior to the expiration of the Indemnification Period.

     SECTION 17.2 FURTHER ASSURANCES. As to those Properties described in
EXHIBIT A, Partner intended to convey each property described therein subject to
the Excluded Property. In order to effectuate and provide Partnership with the
benefits of the transactions contemplated hereby, after the Closing, Partner
shall execute and deliver, and shall otherwise cause to be executed and
delivered, from time to time, such further instruments, notices, division
orders, transfer orders and other documents, and do such other and further acts
and things, as may be reasonably necessary to more fully and effectively grant,
convey and assign the Properties to Partnership, including, but not limited to
the execution of additional agreed instruments as may be required by the MMS to
reflect a transfer of title in any federal leases subject hereto.

     SECTION 17.3 RECORDING. Immediately after Closing, Partnership shall, at
Partnership's expense, file the Conveyance for recordation in the Official
Public Records of Real Property of Aransas County, Texas.

                                       23

<PAGE>

Thereafter the Partnership shall submit a certified copy of the recorded
Conveyance to the General Land Office of the State of Texas. In addition to the
foregoing promptly after the qualifications of the Partnership to hold interests
in the Offshore Properties are approved by the MMS, the Partner and the
Partnership will execute an assignments of operating rights and an assignment of
right of way covering the Offshore Properties on forms that comply with the
applicable rules of the MMS and submit the same to the MMS for approval. The
Partnership shall supply Partner with a true and accurate photocopy of the
recorded and filed Conveyance within a reasonable period of time after the
recording and filing thereof and shall supply the Partner with a true and
accurate photocopy of the approved assignments of operating rights and right of
way within a reasonable period of time after approval thereof is received from
the MMS.

     SECTION 17.4 BINDING EFFECT; ASSIGNMENT OF AGREEMENT. Neither party shall
have the right to assign its rights under this Agreement, without the prior
written consent of the other party first having been obtained. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

     SECTION 17.5 IMBALANCES. On the date of Closing (and, upon the delivery to
Partnership of the Conveyances and Assignments), Partnership shall succeed to
the position of Partner with respect to all gas imbalances. As a result of such
succession Partnership shall (i) be entitled to receive any and all benefits,
including payments of proceeds of production in excess of amounts which it would
otherwise be entitled to produce and receive by virtue of ownership of the Oil
and Gas Properties, which Partner would have been entitled to receive by virtue
of such positions and (ii) shall be obligated to suffer any detriments (whether
the same be in the form of obligations to deliver production which would have
otherwise been attributable to its ownership of the Oil and Gas Properties
without receiving full payment therefor, or be in the form of the obligation to
make payment in cash) which Partner would have been obligated to suffer by
virtue of such positions.

     SECTION 17.6 EXPENSES. Each party shall bear and pay all expenses incurred
by it in connection with the transaction contemplated by this Agreement.

     SECTION 17.7 ENTIRE AGREEMENT - TIME OF THE ESSENCE. This Agreement and all
related and referenced agreements and exhibits contain the entire understanding
of the parties hereto with respect to subject matter hereof and supersedes all
prior agreements, understandings, negotiations, and discussions among the
parties with respect to such subject matter. Time is of the essence in this
Agreement.

     SECTION 17.8 PUBLIC STATEMENTS. Partner and Partnership shall consult with
each other with regard to all publicity and other releases at or prior to
Closing concerning this Agreement and the transactions contemplated hereby and,
except as required by applicable law or the applicable rules or regulations of
any governmental body or stock exchange, neither party shall issue any publicity
or other release without the prior consent of the other party.

     SECTION 17.9 INJUNCTIVE RELIEF; EXCLUSION OF CONSEQUENTIAL AND EXEMPLARY
DAMAGES. The parties hereto acknowledge and agree that irreparable damage would
occur in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement, and shall
be entitled to enforce specifically the provisions of this Agreement, in any
court of the United States or any state thereof having jurisdiction, in addition
to any other remedy to which the parties may be entitled under this Agreement or
at law or in equity. Neither of the parties shall have any liability to the
other, and each of the parties expressly waives any right it might otherwise
have to recover from the other any consequential or exemplary damages as a
result of any breach of this Agreement.

                                       24

<PAGE>

     SECTION 17.10 AMENDMENTS. This Agreement may be amended, modified,
supplemented, restated or discharged (and provisions hereof may be waived) only
by an instrument in writing signed by the party against whom enforcement of the
amendment, modification, supplement, restatement or discharge (or waiver) is
sought.

     SECTION 17.11 GOVERNING LAW. This Agreement and the rights and obligations
of the parties hereto shall be governed, construed and enforced in accordance
with the internal laws of the State of Texas, applicable to contracts made and
to be performed in such state, except when it is legally required that the laws
of another jurisdiction governs. The parties agree that any litigation relating
directly or indirectly to this Agreement must be brought before and determined
by a court of competent jurisdiction within the State of Texas.

     SECTION 17.12 MULTIPLE COUNTERPARTS; FAX. This instrument may be executed
in a number of identical counterparts, each of which for all purposes is to be
deemed an original, and all of which constitute collectively, one instrument. It
is not necessary that each party hereto execute the same counterpart so long as
identical counterparts are executed by each such party hereto. This instrument
may be validly executed and delivered by facsimile or other electronic
transmission.

     SECTION 17.13 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced under any
applicable rule or law, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transaction contemplated hereby is not affected in a
materially adverse manner with respect to either party.

                                       25

<PAGE>

     IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on the
date set forth above.

                                        PARTNER:

                                        F-W OIL EXPLORATION L.L.C.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        PARTNERSHIP:

                                        FWOE PARTNERS L.P.

                                        BY: F-W OIL EXPLORATION L.L.C.
                                            ITS GENERAL PARTNER

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       26

<PAGE>

                                    EXHIBIT A

                                  (Page 1 of 3)

                            Description of Properties

OPERATED PROPERTIES

PN-996 - OIL AND GAS LEASE NO. OCS-G 23130 dated effective December 1, 2001, by
and between the United States of America, as Lessor, and F-W Oil Interests,
Inc., as Lessee, covering all of Block 996, North Padre Island Area, East
Addition, OCS Leasing Map, Texas Map No. 2A, containing 5,760 acres, more or
less. (100.000% Working Interest; 78.1905% Net Revenue Interest) This lease is
subject to the following document(s):

TRANSFERRING SHAREHOLDERS AGREEMENT dated October 9, 2002 between F-W Oil
Exploration L.L.C. and the Transferring Shareholders.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

PS-1145 - OIL AND GAS LEASE NO. OCS-G 24304 dated effective November 1, 2002, by
and between the United States of America, as Lessor, and F-W Oil Exploration
L.L.C., as Lessee, covering all of Block 1145, South Padre Island Area, OCS
Leasing Map, Texas Map No. 1, containing 5,760 acres, more or less. (100.000%
Working Interest; 80.333% Net Revenue Interest) This lease is subject to the
following document(s):

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

PS-1152 - OIL AND GAS LEASE NO. OCS-G 24306 dated effective November 1, 2002, by
and between the United States of America, as Lessor, and F-W Oil Exploration
L.L.C., as Lessee, covering all of Block 1152, South Padre Island Area, OCS
Leasing Map, Texas Map No. 1, containing 5,760 acres, more or less. (100.000%
Working Interest; 80.333% Net Revenue Interest) This lease is subject to the
following document(s):

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

PS-1166 - OIL AND GAS LEASE NO. OCS-G 24307 dated effective November 1, 2002, by
and between the United States of America, as Lessor, and F-W Oil Exploration
L.L.C., as Lessee, covering that portion of Block 1166, South Padre Island Area,
OCS Leasing Map, Texas Map No. 1, seaward of the 3 Marine League Line,
containing 3,254.81 acres, more or less. (100.000% Working Interest; 80.333% Net
Revenue Interest) This lease is subject to the following document(s):

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

MI-526 - OIL AND GAS LEASE NO. OCS-G 24330 dated effective October 1, 2002, by
and between the United States of America, as Lessor, and F-W Oil Exploration
L.L.C., as Lessee, covering that portion of Block 526, Matagorda Island Area,
OCS Leasing Map, Texas Map No. 4, seaward of the 3 Marine League Line,
containing 1,328.89 acres, more or less insofar and only insofar as the lease
covers and affects rights above the stratigraphic equivalent of 12,200 feet
measured depth in the ELF OCS-G 4137 #A-4 or 10,700 feet true vertical depth,
whichever is the lesser. (100.000% Working Interest; 77.000% Net Revenue
Interest) This lease is subject to the following document(s):

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

<PAGE>

                                    EXHIBIT A

                                  (Page 2 of 3)

ASSIGNMENT OF OVERRIDING ROYALTY INTEREST dated March 5, 2003 between F-W Oil
Exploration L.L.C. and Stanley Lindsey and Richard Smith

LIKE KIND EXCHANGE AGREEMENT dated August 1, 2003, between F-W Oil Exploration
L.L.C. and PetroCorp Incorporated

NON-OPERATED PROPERTIES

MI-721-L (S/2 OF NE/4) - AN UNDIVIDED 12.5% INTEREST IN OIL AND GAS LEASE NO.
M-102165 dated effective October 2, 2001, by and between The State of Texas, as
Lessor, in favor of Gryphon Exploration Company and F-W Oil Exploration L.L.C.,
as Lessees, covering 720 acres, being the South One-Half of the Northeast
Quarter (S/2 of NE/4) of Tract 721-L, Gulf of Mexico, Aransas County, Texas,
recorded under File #244820, of the Official Public Records of Aransas County,
Texas. (12.500% Working Interest; 9.000% Net Revenue Interest) This lease is
subject to the following document(s):

PARTICIPATION AGREEMENT dated October 1, 2001 and between Gryphon Exploration
and F-W Oil Exploration L.L.C.

JOINT OPERATING AGREEMENT dated October 2, 2001, between Gryphon Exploration and
F-W Oil Exploration L.L.C.

TRANSFERRING SHAREHOLDERS AGREEMENT dated October 9, 2002 between F-W Oil
Exploration L.L.C. and the Transferring Shareholders.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

MI-721-L (S/2 OF NW/4) - AN UNDIVIDED 12.5% INTEREST OIL AND GAS LEASE NO.
M-102166 dated effective October 2, 2001, by and between The State of Texas, as
Lessor, in favor of Gryphon Exploration Company and F-W Oil Exploration L.L.C.,
as Lessees, covering 720 acres, being the South One-Half of the Northwest
Quarter (S/2 of NW/4) of Tract 721-L, Gulf of Mexico, Aransas County, Texas,
recorded under File #244821, of the Official Public Records of Aransas County,
Texas. (12.500% Working Interest; 9.000% Net Revenue Interest) This lease is
subject to the following document(s):

PARTICIPATION AGREEMENT dated October 1, 2001 and between Gryphon Exploration
and F-W Oil Exploration L.L.C.

JOINT OPERATING AGREEMENT dated October 2, 2001, between Gryphon Exploration and
F-W Oil Exploration L.L.C.

TRANSFERRING SHAREHOLDERS AGREEMENT dated October 9, 2002 between F-W Oil
Exploration L.L.C. and the Transferring Shareholders.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

<PAGE>

                                    EXHIBIT A

                                  (Page 3 of 3)

BS-41 - AN UNDIVIDED 12.5% INTEREST IN OIL AND GAS LEASE NO. OCS-G 21142 dated
effective May 1, 1999, by and between the United States of America, as Lessor,
and Case-Pomeroy Oil Corporation, as Lessee, covering all of Block 41, Breton
Sound Area, OCS Leasing Map, Louisiana Map No. 10B, containing 4994.55 acres,
more or less, insofar and only insofar as the lease covers and affects rights
below 10,000 feet subsea true vertical depth. (12.500% Working Interest; 9.417%
Net Revenue Interest) This lease is subject to the following document(s):

PARTICIPATION AGREEMENT dated November 25, 2002 between NCX Company, L.L.C. and
F-W Oil Exploration L.L.C.

JOINT OPERATING AGREEMENT dated January 1, 2002 between NCX Company, L.L.C. and
F-W Oil Exploration L.L.C.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

TRANSFERRING SHAREHOLDERS AGREEMENT dated October 9, 2002 between F-W Oil
Exploration L.L.C. and the Transferring Shareholders.

<PAGE>

                                   EXHIBIT A-2

                                Excluded Property

1.   All facilities, equipment and personal property not located on the
     properties described in Exhibit A (or on properties unitized, pooled or
     communitized therewith) or on the properties described in Exhibit B or on
     the Easements described in Exhibit 1.1(g), including without limitation
     office facilities and equipment, vehicles and boats.

2.   Master Geophysical Data Use License [Number FWO-20021115] effective
     November 11, 2002, by and between Multi-Klient Invest AS and F-W Oil
     Exploration L.L.C.

3.   Master License Agreement for Multi-client Seismic Data effective November
     27, 2001, by and between WesternGeco L.L.C. and F-W Oil Exploration L.L.C.

4.   Master License Agreement for Geohysical Data effective September 26, 2001
     by and between TGS-NOPEC Geophysical Company and F-W Oil Exploration L.L.C.

5.   All permits, licenses and governmental authorizations held by F-W Oil
     Exploration L.L.C. that are used in connection with the exploration,
     development, operations and maintenance of the Oil & Gas Properties.

6.   All office leases entered into by F-W Oil Explorations L.L.C.

7.   Any seismic data or licenses thereto that cannot be assigned or transferred
     without the payment of additional fees or other charges.

8.   The following overriding royalty interests in the following Oil and Gas
     Properties:

<TABLE>
<CAPTION>
                            LEASE                                      OPI
                            -----                                      ---
<S>                                                             <C>
(i)   PN-996 - Oil and Gas Lease No. OCS-G 23130                2.5714% of 8/8ths
(ii)  MI-721-L (S/2 of NE/4) - Oil and Gas Lease No. M-102165   0.3750% of 8/8ths
(iii) MI-721-L (S/2 of NW/4) - Oil and Gas Lease No. M-102166   0.3750% of 8/8ths
</TABLE>

<PAGE>

                                    EXHIBIT B

                                    Pipeline

PIPELINE SEGMENT NUMBER: 15073; One 12 3/4 -inch pipeline, approximately 47.46
miles in length, under construction to gather and transport natural gas and
condensate from South Padre Island Block 1166 "A" Platform through South Padre
Island Blocks 1151, 1152, 1145, 1132, 1124, 1112, 1103, 1092, 1083, 1072, 1061,
1052, 1040, 1031, and North Padre Blocks 1018, 1011 to a 6-inch subsea tie-in in
North Padre Island Block 996.

ASSIGNED RIGHT-OF-WAY NUMBER: 15073; A 200-foot wide right-of-way to install,
operate and maintain Pipeline Segment Number 15073.

PIPELINE SEGMENT NUMBER: 14516; One 6 -inch pipeline, approximately 13.14 miles
in length, to gather and transport natural gas and condensate from the SSTI
(subsea tie-in) assembly North Padre Island Block 996 to the 10-inch SSTI North
Padre Island Block 967.

ASSIGNED RIGHT-OF-WAY NUMBER: 25340; A 200-foot wide right-of-way to install,
operate and maintain Pipeline Segment Number 14516.

<PAGE>

                                    EXHIBIT C

                             Well and PUD Locations

NON-OPERATED PROPERTIES

     -    Breton Sound B-2 Sidetrack

     -    Breton Sound B-3 Sidetrack

     -    Breton Sound B-6 Field extension well located due east of the #5 well
          and spud on August 2, 2005.

     -    Breton Sound B-7 PUD Location located north of the #5 well and south
          of the #4 well.

<PAGE>

                                 EXHIBIT 1.1(G)

                                   Easements

ASSIGNED RIGHT-OF-WAY NUMBER: 15073; A 200-foot wide right-of-way to install,
operate and maintain Pipeline Segment Number 15073.

ASSIGNED RIGHT-OF-WAY NUMBER: 25340; A 200-foot wide right-of-way to install,
operate and maintain Pipeline Segment Number 14516.

<PAGE>

                                  EXHIBIT 1.1I

                                  (Page 1 of 3)

                                    Contracts

OPERATED PROPERTIES

NORTH PADRE ISLAND BLOCK 996

TRANSFERRING SHAREHOLDERS AGREEMENT dated October 9, 2002 between F-W Oil
Exploration L.L.C. and the Transferring Shareholders.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

PARTICIPATION AND JOINT OPERATING AGREEMENTS dated June 20, 2002, between F-W
Oil Exploration L.L.C., Manti Resources, Inc. and Amorah L.L.C..

TRANSFERRING SHAREHOLDERS AGREEMENT dated October 9, 2002 between F-W Oil
Exploration L.L.C. and the Transferring Shareholders.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

PURCHASE AGREEMENT dated November 14, 2003 between Walter Oil & Gas Corporation
and F-W Oil Exploration L.L.C.

ASSIGNMENT AND BILL OF SALES AGREEMENT effective November 14, 2003, between
Walter Oil & Gas Corporation et al and F-W Oil Exploration L.L.C.

INJECTED CONDENSATE TRANSPORTATION AGREEMENT dated November 21, 2003 between
Williams Field Services Company and F-W Oil Exploration L.L.C.

LATERAL LINE INTERCONNECT AND REIMBURSEMENT AGREEMENT dated November 13, 2003
between Williams Field Services Company and F-W Oil Exploration L.L.C.

MEASUREMENT, REIMBURSEMENT AND OPERATING AGREEMENT dated October 13, 2003
between Williams Field Services Company and F-W Oil Exploration L.L.C.

SOUTH PADRE ISLAND 1145

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

SOUTH PADRE ISLAND 1152

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

SOUTH PADRE ISLAND 1166

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

MEASUREMENT, REIMBURSEMENT, CONSTRUCTION, AND OPERATING AGREEMENT dated June 16,
2005 between Transcontinental Gas Pipeline Corporation and F-W Oil Exploration
L.L.C.

<PAGE>

                                  EXHIBIT 1.1I

                                  (Page 2 of 3)

ENGINEERING AGREEMENT for New Receipt Point dated May 27, 2005 between
Transcontinental Gas Pipeline Corporation and F-W Oil Exploration L.L.C.

MATAGORDA ISLAND 526

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

ASSIGNMENT OF OVERRIDING ROYALTY INTEREST dated March 5, 2003 between F-W Oil
Exploration L.L.C. and Stanley Lindsey and Richard Smith

LIKE KIND EXCHANGE AGREEMENT dated August 1, 2003, between F-W Oil Exploration
L.L.C. and PetroCorp Incorporated

NON-OPERATED PROPERTIES

MATAGORDA ISLAND 721

PARTICIPATION AGREEMENT dated October 1, 2001 and between Gryphon Exploration
and F-W Oil Exploration L.L.C.

JOINT OPERATING AGREEMENT dated October 2, 2001, between Gryphon Exploration and
F-W Oil Exploration L.L.C.

TRANSFERRING SHAREHOLDERS AGREEMENT dated October 9, 2002 between F-W Oil
Exploration L.L.C. and the Transferring Shareholders.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

OPTION AGREEMENT FOR 8" PIPELINE OF COPANO FIELD SERVICES dated September 6,
2002 between Bass Enterprises Production Co. and Gryphon Exploration Company.

RIGHT-OF-WAY EASEMENT AGREEMENT dated March 23, 2003 between Bass Enterprises
Production Co. and Gryphon Exploration Company.

FACILITIES AND PIPELINE OPERATING AGREEMENT dated September 6, 2002 between Bass
Enterprises Production Co. and Gryphon Exploration Company.

GAS PURCHASE / GAS TRANSPORTATION AGREEMENT dated November 27, 2003 between
Copano Field Services/Copano Bay, LP and Gryphon Exploration Company.

BRETON SOUND 41

PARTICIPATION AGREEMENT dated November 25, 2002 between NCX Company, L.L.C. and
F-W Oil Exploration L.L.C.

<PAGE>

                                  EXHIBIT 1.1I

                                  (Page 3 of 3)

JOINT OPERATING AGREEMENT dated January 1, 2002 between NCX Company, L.L.C. and
F-W Oil Exploration L.L.C.

SUBSCRIPTION AGREEMENT dated August 27, 2003 between PrimeEnergy Corporation and
F-W Oil Exploration L.L.C.

LIMITED PIPELINE CAPACITY LEASE, TIE-IN & PLATFORM USE AGREEMENT dated effective
July 1, 2004 between Chevron U.S.A. Inc. and NCX Company L.L.C.

PLATFORM USE AND ACCESS AGREEMENT dated June 25, 2004 between Chevron Texaco and
NCX Company L.L.C.

OPERATION AND MAINTENANCE AGREEMENT dated June 25, 2004 between Duke Energy
Operating Company, L.L.C. and NCX Company, L.L.C.

TARRIFF AGREEMENT dated June 25, 2004 between Chevron Pipe Line Company and NCX
Company L.L.C.

FACILITIES INTERCONNECT AND REIMBURSEMENT AGREEMENT dated April 28, 2004 between
Texas Eastern Transmission, LP and NCX Company, L.L.C.

MONTH-TO-MONTH CONDENSATE SALES AGREEMENT dated May 11, 2005 between F-W Oil
Exploration L.L.C. and Pacific Summit Energy LLC

MONTH-TO-MONTH BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS dated March
25, 2005 between F-W Oil Exploration L.L.C. and Pacific Summit Energy LLC

<PAGE>

                                  EXHIBIT 1.1II

                               Pipeline Contracts

EXECUTED AWARD LETTER dated May 18, 2005 between F-W Oil Exploration L.L.C. and
Horizon Offshore Contractors, Inc.

MASTER SERVICE AGREEMENT dated October 2, 2003 between F-W Oil Exploration
L.L.C. and Horizon Offshore Contractors, Inc.

TRANSCONTINENTAL GAS PIPE LINE CORPORATION MEASUREMENT, REIMBURSEMENT,
CONSTRUCTION, AND OPERATING AGREEMENT dated June 16, 2005 between
Transcontinental Gas Pipeline Corporation and F-W Oil Exploration L.L.C.

ASSIGNED RIGHT-OF-WAY NUMBER: 15073; A 200-foot wide right-of-way to install,
operate and maintain Pipeline Segment Number 15073.

ASSIGNED RIGHT-OF-WAY NUMBER: 25340; A 200-foot wide right-of-way to install,
operate and maintain Pipeline Segment Number 14516.

<PAGE>

                                   EXHIBIT 4.6

                                   Litigation

In June of 2004, F-W Oil Exploration L.L.C. was notified of a claim (Cause No.
2004-17179) being assessed against FWOE by a former employee, Mr. Charles Kana,
alleging that FWOE failed to assign to him promised overriding royalty interest.

<PAGE>

                                 EXHIBIT 4.6(B)

                               Executive Personnel

JAMES R. BROCK, President and Chief Financial Officer

DOUGLAS C. NESTER, Chief Operating Officer

<PAGE>

                                   EXHIBIT 4.7

                                 Basic Documents

Refer to Exhibits A, 1.1i and 1.1ii for all Basic Documents associated with this
Transaction.

<PAGE>

                                   EXHIBIT 4.8

                      Commitments, Abandonment or Proposals

BS-41 FIELD

     -    AFE # WO 5008 DATED 7/26/05, NET AMOUNT $861,138 (GROSS $6,889,100)

          This request for the B-2 ST will serve to document the costs required
          to fish 3-1/2" production tbg, P&A existing completion, set 7-5/8"
          whipstock @ 12,800', directionally drill to 15,154' MD/12,639' TVD,
          log & evaluate, run 5-1/2" production liner, perforate Tex-W sand and
          Frac-Pack as primary single, Run 2/7/8" production tubing. Flow back
          and clean up.

     -    AFE # PO 5002 DATED 6/21/05, NET AMOUNT $265,000 (GROSS $2,120,000)

          10 3/4" gas pipeline was moved during Hurricane Ivan. AFE cost is for
          replacing and covering 3100' of pipeline and covering the portion of
          the pipeline that was uncovered during the storm.

     -    AFE # WO 5004 DATED 6/21/05, NET AMOUNT $32,500 (GROSS $260,000)

          Run production logs on well #'s 2, 3, 4, and 5 during shut in period
          while pipeline is being repaired

     -    AFE # DO 5009 DATED 7/10/05, NET AMOUNT $1,207,987.50 (GROSS
          $9,663,900)

          This request for AFE will serve to document the costs required to
          drill the B-6 directional hole to 14,700' MD/ 12,750' TVD or
          sufficient depth to evaluate the Tex W sands. Completion costs will be
          presented under a separate AFE after final evaluations.

SPI BLOCK 1166/1145 FIELD AREA

     -    AFE # P-SPI 51705 DATED 5/17/05, NET AMOUNT $29,669,733 (GROSS
          $29,669,733)

          Installation of South Padre Island 12 and 6" pipelines

     -    AFE # F-SPI 51705 DATED 5/17/05, NET AMOUNT $8,643,682 (GROSS
          $8,643,682)

          Construction and installation of Block 1166 4-Pile platform and
          facilities

     -    AFE # F-SPI 1145-51705 DATED 5/17/05, NET AMOUNT $1,814,472 (GROSS
          $1,814,472)

          Construction and installation of Block 1145 Braced Caisson platform
          and facilities

MI 526

     -    FRACTURE STIMULATION PROPOSAL dated February 23, 2005 from Halliburton
          to F-W Oil Exploration L.L.C. for an estimated cost of $541,000. Total
          estimated project cost for these operations is $700,000.

<PAGE>

                                   EXHIBIT 4.9

                      Scheduled Production Sales Contracts

There exist no agreements or arrangements for the sale of production which are
not cancelable on 90 days notice or less without penalty or detriment.

<PAGE>

                                  EXHIBIT 4.13

                              Plugging Obligations

<TABLE>
<S>                                                       <C>
OPERATED PROPERTIES

     -    Matagorda Island 557 #1                         Shut-in

     -    North Padre Island 996 #1                       Producing

     -    South Padre Island 1166 A-1                     Shut-in

     -    South Padre Island 1166 A-2                     Shut-in

     -    South Padre Island 1166 A-3                     Shut-in

     -    South Padre Island 1152 A-1                     Shut-in

NON-OPERATED PROPERTIES

     -    Breton Sound B-2                                Shut-in

     -    Breton Sound B-3                                Producing

     -    Breton Sound B-4                                Producing

     -    Breton Sound B-5                                Producing

     -    Breton Sound B-6                                Drilling

     -    Matagorda Island 721 #1 (old, Lease M-102166)   Shut-in

     -    Matagorda Island 721 #1 (new, Lease M-102165)   Producing
</TABLE>

<PAGE>

                                  EXHIBIT 4.14

                            Non-Transferring Permits

There are no permits to be transferred into the Partnership.

<PAGE>

                                  EXHIBIT 4.15

                           Reserve Report Information

BS-41 B-2, This well began to produce sand after a recent acid stimulation
operation which has resulted in the well being incapable of production. Prior to
this event, the well was producing at gross rates between 3 and 5 MMCFPD. The
operator has since proposed a sidetracking of this well and issued AFE # WO 5008
to complete this work. F-W has executed this AFE and the rig is presently on
location and will begin this work after completion of the B-6 drilling
operations. It is anticipated that the proposed sidetrack operation will return
the B-2 well to production at rates comparable or exceeding those prior to the
well becoming incapable of production.

BS-41 B-2, B-3, B-4 AND B-5, During Hurricane Ivan in 2004, the 10" gas pipeline
running from the Breton Sound 41 "B" platform to the Texas Eastern 24" pipeline
was uncovered and moved out of its right-of-way (ROW). The Operator has proposed
and issued AFE # PO 5002 to replace, re-route and bury the eastern 3130 feet of
this line and to also re-bury the remaining portion of this line. The Operator
estimates that the work which is anticipated to take place in the 3rd or 4th
quarter of 2005 will result in the shut-in of production from the BS 41 "B"
platform for potentially 10-14 days.

<PAGE>

                                  EXHIBIT 4.23
                                  (Page 1 of 3)

                                    Insurance

                            F-W Oil Exploration, LLC
                           2004-05 Insurance Schedule

<TABLE>
<S>                      <C>
COMMERCIAL GENERAL LIABILITY
St. Paul Surplus Lines Ins. Co.
Policy No. MU05534748
Effective: November 1, 2004-05
Limits:    $ 1,000,000   General Aggregate
           $ 1,000,000   Products and Completed Operations Aggregate
           $ 1,000,000   Personal Injury - each person
           $ 1,000,000   Advertising Injury - each person
           $ 1,000,000   Sudden & Accidental Pollution incident
           $ 1,000,000   Each Event
           $   100,000   Premises Liability
           $     5,000   Medical Payments - per person
           $ 1,000,000   Hired & Non-Owned Auto Liability - CSL

OIL SPILL FINANCIAL RESPONSIBILITY
Underwriters at Lloyd's, London
Policy No. JHBAK04003973506
Effective: November 1, 2004-05
Limits:    $35,000,000   Combined Limit for all scheduled offshore
                         facilities

NON-OWNED AIRCRAFT LIABILITY
United States Aviation Underwriters, Inc.
Policy No. 360AC-056325
Effective: September 17, 2004-05
Limits:    $ 5,000,000   Combined Bodily Injury & Property Damage - Each
Occurrence
           $ 5,000,000   Personal Injury - Per Occurrence and in
                         Aggregate
           $     3,000   Medical Coverage - each person

WORKERS COMPENSATION
Texas Mutual Insurance Company
Policy No. SBP-0001110426
Effective: November 1, 2004-05
Limits:    Statutory     Workers Compensation
           $ 1,000,000   Employers Liability - Bodily Injury by
                         Accident
           $ 1,000,000   Employers Liability - Bodily Injury by Disease - each
employee
           $ 1,000,000   Employers Liability - Bodily Injury by Disease
                         - policy limit
           Statutory     United States Longshoreman & Harborworkers Act
           Statutory     Outer Continental Shelf Lands Act

MARITIME EMPLOYERS LIABILITY
Underwriters at Lloyd's, London
Policy No. LM002930T
Effective: November 1, 2004-05
Limits:    $ 1,000,000   Bodily Injury by Accident/Disease - any one
                         person/accident
</TABLE>

<PAGE>

                                  EXHIBIT 4.23
                                  (Page 2 of 3)

<TABLE>
<S>                   <C>
UMBRELLA LIABILITY
St. Paul Surplus Lines Insurance Co.
Policy No. MU05573184
Effective: November 1, 2004-05
Limits: $25,000,000   General Total Limit
        $25,000,000   Products and Completed Operations Total Limit
        $25,000,000   Personal Injury each person
        $25,000,000   Advertising Injury each person
        $25,000,000   Sudden & Accidental Pollution - each incident
        $25,000,000   Each Event
        EXCESS        Scheduled Underlying

EXCESS LIABILITY
Gotham Insurance Company
Policy No. MMO-26388ML204
Effective: November 2004-05
Limits: $10,000,000   General Total Limit
        $10,000,000   Products and Completed Operations Total Limit
        $10,000,000   Personal Injury each person
        $10,000,000   Advertising Injury each person
        $10,000,000   Sudden & Accidental Pollution - each incident
        $10,000,000   Each Event
        EXCESS        $25,000,000 and Scheduled Underlying

ENERGY PACKAGE
Underwriters at Lloyd's, London & Certain Companies
Policy No. JHB2M040072
Effective: November 1, 2004/05
Limits: SECTION 1     Control of Well & Extra Expense
        $20,000,000   Any One Occurrence - Area 1 and Area 2 Land
        $35,000,000   Any One Occurrence - Area 2 Wet and Area 3
        $ 1,000,000   Care Custody & Control

        SECTION 2     Offshore Property
        $ 3,143,000   Platform Schedule as of 5/17/05
        $ 6,104,000   Pipeline Schedule as of 11/1/04
                 25%  Removal of Debris

        SECTION 3     Onshore Property
        $   100,000   Schedule as of 11/1/04

        SECTION 4     Builder Risk as of 6/17/05
        $ 8,246,767   Platform - South Padre Island 1166 - ECV
        $ 1,641,992   Platform - South Padre Island 1145 - ECV
        $13,782,500   Pipeline - ECV
                 25%  Removal of Debris
</TABLE>

<PAGE>

                                  EXHIBIT 4.23
                                  (Page 3 of 3)

<TABLE>
<S>                   <C>
OFFICE CONTENTS
Hartford Lloyds Insurance Company
Policy No. 61 SBA NL9977
Effective: September 17, 2004-05
Limits: $   587,100   Business Personal Property
        $    10,000   Money & Securities - Inside
        $     5,000   Money & Securities - Outside
        12 Months     Business Interruption
</TABLE>

<PAGE>

                                  EXHIBIT 4.24

                                Easement Rentals

MATAGORDA ISLAND BLOCK 721, Bass Right-of-Way yearly rental of $3,125.00,
($25,000.00 gross)

<PAGE>

                                  EXHIBIT 4.25

                           Interconnection Agreements

BRETON SOUND 41

LIMITED PIPELINE CAPACITY LEASE, TIE-IN & PLATFORM USE AGREEMENT dated effective
July 1, 2004 between Chevron U.S.A. Inc. and NCX Company L.L.C.

OPERATION AND MAINTENANCE AGREEMENT between Duke Energy Operating Company,
L.L.C. dated June 25, 2004 for M&R 73420, Breton Sound 41 production.

TARRIFF AGREEMENT with Chevron Pipe Line Company pertaining to the
transportation and gathering of crude petroleum from Breton Sound 41 "B"
Platform to Main Pas22 127.

FACILITIES INTERCONNECT AND REIMBURSEMENT AGREEMENT dated April 28, 2004 between
Texas Eastern Transmission, LP and NCX Company, L.L.C.

MATAGORDA ISLAND 721

OPTION AGREEMENT FOR 8" PIPELINE OF COPANO FIELD SERVICES dated September 6,
2002 between Bass Enterprises Production Co. and Gryphon Exploration Company.

RIGHT-OF-WAY EASEMENT AGREEMENT dated March 23, 2003 between Bass Enterprises
Production Co. and Gryphon Exploration Company.

FACILITIES AND PIPELINE OPERATING AGREEMENT dated September 6, 2002 between Bass
Enterprises Production Co. and Gryphon Exploration Company.

GAS PURCHASE / GAS TRANSPORTATION AGREEMENT dated November 27, 2003 between
Copano Field Services/Copano Bay, LP and Gryphon Exploration Company.

NORTH PADRE ISLAND 996

INJECTED CONDENSATE TRANSPORTATION AGREEMENT dated November 21, 2003 between
Williams Field Services Company and F-W Oil Exploration L.L.C.

LATERAL LINE INTERCONNECT AND REIMBURSEMENT AGREEMENT dated November 13, 2003
between Williams Field Services Company and F-W Oil Exploration L.L.C.

MEASUREMENT, REIMBURSEMENT AND OPERATING AGREEMENT dated October 13, 2003
between Williams Field Services Company and F-W Oil Exploration L.L.C.

SOUTH PADRE ISLAND BLOCKS 1166, 1152 AND 1145

TRANSCONTINENTAL GAS PIPE LINE CORPORATION MEASUREMENT, REIMBURSEMENT,
CONSTRUCTION, AND OPERATING AGREEMENT dated June 16, 2005 between
Transcontinental Gas Pipeline Corporation and F-W Oil Exploration L.L.C.

ENGINEERING AGREEMENT FOR NEW RECEIPT POINT dated May 27, 2005 between
Transcontinental Gas Pipeline Corporation and F-W Oil Exploration L.L.C.

<PAGE>

                                  EXHIBIT 4.31

                           Commitments to Expend Funds

BS-41 FIELD

     -    AFE # WO 5008 DATED 7/26/05, NET AMOUNT $861,138 (GROSS $6,889,100)

          This request for the B-2 ST will serve to document the costs required
          to fish 3-1/2" production tbg, P&A existing completion, set 7-5/8"
          whipstock @ 12,800', directionally drill to 15,154' MD/12,639' TVD,
          log & evaluate, run 5-1/2" production liner, perforate Tex-W sand and
          Frac-Pack as primary single, Run 2/7/8" production tubing. Flow back
          and clean up.

     -    AFE # PO 5002 DATED 6/21/05, NET AMOUNT $265,000 (GROSS $2,120,000)

          10 3/4" gas pipeline was moved during Hurricane Ivan. AFE cost is for
          replacing / covering 3100' of pipeline and covering the portion of the
          pipeline that was uncovered during the storm.

     -    AFE # WO 5004 DATED 6/21/05, NET AMOUNT $32,500 (GROSS $260,000)

          Run production logs on well #'s 2, 3, 4, and 5 during shut in period
          while pipeline is being repaired

     -    AFE # D05009 DATED 7/10/05, NET AMOUNT $1,207,987.50 (GROSS
          $9,663,900)

          This request for AFE will serve to document the costs required to
          drill a directional B-6 hole to 14,700' MD/ 12,750' TVD or sufficient
          depth to evaluate the Tex W sands. Completion costs will be presented
          under a separate AFE after final evaluations.

SPI BLOCK 1166/1145 FIELD AREA

     -    AFE # P-SPI 51705 DATED 5/17/05, NET AMOUNT $29,669,733 (GROSS
          $29,669,733)

          Installation of South Padre Island 12 and 6" pipelines

     -    AFE # F-SPI 51705 DATED 5/17/05, NET AMOUNT $8,643,682 (GROSS
          $8,643,682)

          Construction and installation of Block 1166 4-Pile platform and
          facilities

     -    AFE # F-SPI 1145-51705 DATED 5/17/05, NET AMOUNT $1,814,472 (GROSS
          $1,814,472)

          Construction and installation of Block 1145 Braced Caisson platform
          and facilities

<PAGE>

                         EXHIBIT 6.5 - VALUE ALLOCATION
                    F-W OIL EXPLORATION L.L.C. - CONTRIBUTOR

<TABLE>
<CAPTION>
         FIELD NAME                  LEASE NAME               COUNTY         STATE   MAJOR   RSV_CAT   $ VALUE ALLOCATION
         ----------                  ----------         ------------------   -----   -----   -------   ------------------
<S>                            <C>                      <C>                  <C>     <C>     <C>       <C>
BRETON SOUND BLOCK 41          BS41-21141-B2            OFFSHORE             LA      GAS     PDP           1,514,954.65
BRETON SOUND BLOCK 41          BS41-21141-B3            OFFSHORE             LA      GAS     PDP               1,443.44
BRETON SOUND BLOCK 41          BS41-21141-B3-ST         OFFSHORE             LA      GAS     PUD             425,657.37
BRETON SOUND BLOCK 41          BS41-21141-B4            OFFSHORE             LA      GAS     PDP           1,484,034.71
BRETON SOUND BLOCK 41          BS41-21141-B5            OFFSHORE             LA      GAS     PDP           7,631,204.69
MATAGORDA ISLAND 526           OCS-G-24330 NO. 1        OFFSHORE MATAGORDA   TX      GAS     PDBP          1,353,138.93
MATAGORDA ISLAND 526           OCS-G-24330 NO. 1        OFFSHORE             TX      GAS     PDSI          1,604,422.50
MATAGORDA ISLAND 721           MI721-SLM102165-2(NEW)   CALHOUN              TX      GAS     PDP              10,046.48
NORTH PADRE ISLAND 996         OCS-G-23130 NO. 1        OFFSHORE             TX      GAS     PDP           2,437,568.07
SOUTH PADRE ISLAND 1166/1145   OCS-G-24306 NO. 1        OFFSHORE             TX      GAS     PDSI          5,922,377.74
SOUTH PADRE ISLAND 1166/1145   OCS-G-24307 NO. 1        OFFSHORE             TX      GAS     PDSI         10,023,926.10
SOUTH PADRE ISLAND 1166/1145   OCS-G-24307 NO. 2        OFFSHORE             TX      GAS     PDSI         10,023,926.10
SOUTH PADRE ISLAND 1166/1145   OCS-G-24307 NO. 3        OFFSHORE             TX      GAS     PDSI            524,499.22
                                                                                                          -------------
TOTAL ALLOCATED VALUE                                                                                     42,957,200.00
                                                                                                          =============
</TABLE>

                                   Page 1 of 1

<PAGE>

                                   EXHIBIT 6.6

                                      Liens

Pursuant to the following Agreements, all assets listed in Exhibit A have a lien
held by Guaranty Bank, FSB whose address is 333 Clay Street, Suite 4400 Houston,
Texas 77002. The Trustee of these Agreements is Arthur R. Gralla Jr.

MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT
OF PRODUCTION dated April 27, 2005 between Guaranty Bank, FSB and F-W Oil
Exploration L.L.C. for South Padre Island Block 1152 and 1145.

MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT
OF PRODUCTION dated March 15, 2005 between Guaranty Bank, FSB and F-W Oil
Exploration L.L.C. for South Padre Island Block 1166.

CREDIT AGREEMENT dated December 28, 2004 between Guaranty Bank, FSB and F-W Oil
Exploration L.L.C. for North Padre Island Block 996, Breton Sound Block 41 and
Matagorda Island Leases in 721-L.

<PAGE>

                                   EXHIBIT 6.7

                                      BONDS

<TABLE>
<CAPTION>
                                                                    TERM
                                                           ----------------------
AREA    POLICY #     AMOUNT        TYPE / DESCRIPTION      EFFECTIVE   EXPIRATION
----   ----------   --------   -------------------------   ---------   ----------
<S>    <C>          <C>        <C>                         <C>         <C>
AREAWIDE - GOM
       RLB0004939   $300,000   Areawide - Lease Holdings     9/24/04     9/24/05

NORTH PADRE 996
       RLB0004501    150,000   Supplemental Plugging         5/05/05     5/05/06
       RLB0004628    500,000   Development                   6/19/05     6/19/06
       RLB0004671    800,000   Supplemental Plugging         7/01/05     7/01/06

MATAGORDA ISLAND 526
       RLB0006842    500,000   Development                   1/20/05     1/20/06
       RLB0007013    300,000   Supplemental Plugging         3/18/05     3/18/06

SOUTH PADRE 1166
       RLB0007516    200,000   Lease Exploration             8/17/04     8/17/05
       B001240       900,000   Supplemental Plugging        10/26/04    10/26/05

SOUTH PADRE 1152
       RLB0007517    200,000   Lease Exploration             8/18/04     8/18/05
       B001241       150,000   Supplemental Plugging        10/26/04    10/26/05

SOUTH PADRE 1145
       RLB0007540    200,000   Lease Exploration             8/30/04     8/30/05
       B001239       400,000   Supplemental Plugging        10/26/04    10/26/05

PADRE ISLAND PIPELINE
       RLB0007116    300,000   Pipeline Right of Way         4/19/05     4/19/06
</TABLE>

<PAGE>

                                 EXHIBIT 9.2(A)

NOTICE OF CONFIDENTIALITY RIGHTS; IF YOU ARE A NATURAL PERSON YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER

          CONVEYANCE OF OIL, GAS AND MINERAL INTERESTS AND BILL OF SALE

                                      FROM

                           F-W OIL EXPLORATION L.L.C.

                                       TO

                               FWOE PARTNERS L.P.

                                       1

<PAGE>

          CONVEYANCE OF OIL, GAS AND MINERAL INTERESTS AND BILL OF SALE

          F-W Oil Exploration L.L.C. (herein called "Grantor") does hereby
GRANT, BARGAIN, SELL, CONVEY, ASSIGN, TRANSFER, SET OVER, and DELIVER unto FWOE
Partners L.P. (herein called "Grantee"), whose address is 9821 Katy Freeway,
Suite 1050, Houston, Texas 77024, in satisfaction of Grantor's obligation to
contribute and assign such interest under the Agreement of Limited Partnership
between Grantor and Grantee, dated August 22, 2005, the "Subject Properties"
which are, collectively, all of the following described properties, rights and
interests, but specifically excluding the Excluded Properties (hereinafter
defined):

          (a) An undivided 60.08% of the interests set forth in EXHIBIT A in the
     properties described therein, including 60.08% of the working interest and
     net revenue interest percentages set forth in EXHIBIT A in each such
     property.

          (b) Without limitation of the foregoing, all other right, title and
     interest (of whatever kind or character, whether legal or equitable, and
     whether vested or contingent) of Grantor in and to the oil, gas and other
     minerals in and under or that may be produced from the lands and wells
     described in EXHIBIT A hereto (including, without limitation, interests in
     oil, gas and/or mineral leases, overriding royalties, production payments,
     net profits, fee mineral interests, fee royalty interests and other
     interests in such oil, gas and other minerals), whether such lands be
     described in a description set forth in such EXHIBIT A or be described in
     such EXHIBIT A by reference to another instrument (and subject to any depth
     limitations that may be set forth in such EXHIBIT A or in any such
     instrument so referred to for description);

          (c) All rights, titles and interests of Grantor in and to, or
     otherwise derived from, all presently existing and valid oil, gas and/or
     mineral unitization, pooling, and/or communitization agreements,
     declarations, designations and/or orders (including, without limitation,
     those described on Exhibit A hereto) and in and to the properties covered
     and the units created thereby (including all units formed under orders,
     rules, regulations, or other official acts of any federal, state, or other
     authority having jurisdiction, and voluntary unitization agreements,
     designations and/or declarations) relating to the properties described in
     SUBPARAGRAPHS (A) and (B) above;

          (d) All rights, titles and interests of Grantor in and to all
     materials, supplies, machinery, equipment, improvements and other personal
     property and fixtures (including but not by way of limitation, all wells,
     wellhead equipment, pumping units, flowlines, tanks, platforms, buildings,
     salt water disposal facilities, injection facilities, compression
     facilities, gathering systems, and other equipment), used in connection
     with the exploration, development, operation or maintenance of the
     properties described in paragraphs (a), (b) and (c) above, and, to the
     extent assignable, in and to all permits and licenses (including, without
     limitation, all environmental and other governmental permits, licenses and
     authorizations), rights of way, easements, and other rights of surface use
     and other rights and interests used in connection with the exploration,
     development, operation or maintenance of any of the properties described in
     SUBPARAGRAPHS (A), (B) and (C) above;

          (e) All right, title and interest of the Grantor in the pipeline and
     appurtenant, equipment, facilities and fixtures which are described on
     EXHIBIT B, attached hereto and made part hereof (the "PIPELINE");

                                       2

<PAGE>

          (f) All right, title and interest of Grantor in, to the extent
     assignable, any and all permits, licenses and governmental authorizations
     that are necessary or appropriate for the construction, installation,
     operation, maintenance, repair, replacement and ownership of the Pipeline
     (the "PERMITS");

          (g) All right, title and interest of Grantor in the easements,
     right-of-way agreements, surface site leases or other interests described
     on EXHIBIT 1.1(G) attached hereto and made part hereof and any other
     easements, or right-of-way agreements owned by Grantor that are used for
     the ownership, operation, maintenance, repair or replacement of the
     Pipeline (the "EASEMENTS");

          (h) All unexpired warranties, claims, rights, or causes of action
     Grantor may have against third parties that relate to the Pipeline,
     Easements, and Permits to the extent assignable;

          (i) All right, title and interest of Grantor in and to all presently
     existing and valid production sales contracts, operating agreements, and
     other agreements and contracts which (i) relate to any of the properties
     described in SUBPARAGRAPHS (A), (B) and (C) above; and (ii) are listed on
     EXHIBIT 1.1(I) attached hereto and made a part hereof and further including
     those to construct, maintain and operate the Pipeline listed on EXHIBIT
     1.1(II); and

          (j) All of Grantor's lease files, abstracts and title opinions,
     production records, well files, accounting records (but not including
     general financial accounting records), seismic records and surveys (to the
     extent such transfer is allowed without breaching of any agreements
     underlying such seismic records and surveys and expressly not including any
     seismic data), gravity maps, electric logs, geological or geophysical data
     and records, and other files, documents and records of every kind and
     description which relate to the properties described above and that are
     assignable without payment of additional fees or charges.

     NOTWITHSTANDING THE FOREGOING, the Subject Properties specifically do not
include and expressly exclude the property, assets, contracts and other rights
described in EXHIBIT A-2, attached hereto and made a part hereof for all
purposes (the "Excluded Properties"), TO HAVE AND TO HOLD the Subject Properties
unto Grantee, its successors and assigns, forever.

     GRANTOR BINDS ITSELF AND ITS SUCCESSORS AND ASSIGNS TO WARRANT AND FOREVER
DEFEND TITLE TO THE SUBJECT PROPERTIES (INCLUDING, BUT NOT LIMITED TO, THOSE
WORKING INTERESTS AND NET REVENUE INTERESTS DESCRIBED IN EXHIBIT A HERETO) UNTO
GRANTEE, ITS SUCCESSORS AND ASSIGNS AGAINST EVERY PERSON LAWFULLY CLAIMING OR TO
CLAIM ALL OR ANY PART OF THE SUBJECT PROPERTIES BY, THROUGH AND UNDER GRANTOR
BUT NOT OTHERWISE; PROVIDED, HOWEVER, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT
THIS CONVEYANCE IS MADE SUBJECT TO (A) ALL EASEMENTS, EXCEPTIONS, COVENANTS,
CONDITIONS, RESTRICTIONS, RESERVATIONS, AND RIGHTS APPEARING OF RECORD AND (B)
EASEMENTS, OPERATING AGREEMENTS, AND OTHER USUAL AND CUSTOMARY OIL AND GAS
AGREEMENTS WHICH ARE TYPICALLY NOT RECORDED, ALL EXCEPT FOR ANY SUCH EASEMENT,
AGREEMENT OR OTHER CONDITION DESCRIBED IN THE IMMEDIATELY PRECEDING CLAUSES (A)
AND (B) THAT WOULD RESULT IN GRANTEE RECEIVING LESS THAN AN UNDIVIDED 60.08% OF
THE NET REVENUE INTEREST PERCENTAGES SET FORTH ON EXHIBIT A IN AND TO ALL
HYDROCARBONS PRODUCED FROM THE SUBJECT PROPERTIES AND WOULD OBLIGATE GRANTEE TO
BEAR COSTS AND EXPENSES RELATING TO THE MAINTENANCE, DEVELOPMENT AND OPERATIONS
OF THE SUBJECT PROPERTIES GREATER

                                       3

<PAGE>

THAN AN UNDIVIDED 60.08% OF THE WORKING INTEREST PERCENTAGES SET FORTH ON
EXHIBIT A.

     OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET OUT IN THE
CONTRIBUTION AGREEMENT (DESCRIBED BELOW) AND IN THIS CONVEYANCE, GRANTOR HEREBY
EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS OR WARRANTIES WITH RESPECT TO
THE SUBJECT PROPERTIES OR THE TRANSACTION CONTEMPLATED HEREBY, AND GRANTEE
AGREES THAT THE SUBJECT PROPERTIES ARE BEING SOLD BY GRANTOR "WHERE IS" AND "AS
IS", WITH ALL FAULTS. SPECIFICALLY AS A PART OF (BUT NOT IN LIMITATION OF) THE
FOREGOING, GRANTEE ACKNOWLEDGES THAT, OTHER THAN THOSE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET OUT IN THE CONTRIBUTION AGREEMENT AND IN THIS
CONVEYANCE, GRANTOR HAS NOT MADE, AND GRANTOR HEREBY EXPRESSLY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY (EXPRESS, IMPLIED, UNDER COMMON LAW, BY STATUTE OR
OTHERWISE) AS TO THE TITLE OR CONDITION OF THE SUBJECT PROPERTIES (INCLUDING
WITHOUT LIMITATION, GRANTOR DISCLAIMS ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS).

     Grantor agrees to execute and deliver to Grantee, from time to time, such
other and additional instruments, notices, division orders, transfer orders and
other documents, and to do all such other and further acts and things as may be
necessary to more fully and effectively grant, convey and assign to Grantee the
Subject Properties. Without limitation of the foregoing, separate assignments of
the Subject Properties or portions thereof may be executed on separate forms by
Grantor to Grantee in order to satisfy applicable statutory and/or governmental
regulatory requirements (including, but not limited to, requirements of the
Minerals Management Service, U.S. Department of the Interior). Such assignments
shall be deemed to contain all of the rights, titles, interests, estates,
warranties, powers and privileges set forth herein as fully as though the same
were set forth in each such assignment. In the event that any conflict or
ambiguity exists between this Conveyance and any such assignment filed in
accordance with statutory and/or governmental regulatory requirements, the terms
and provisions of the latter such assignment(s) shall govern and control. The
properties, rights, titles interests and estates conveyed by any such assignment
are included among, and not in addition to, the Subject Properties conveyed
herein.

     This Conveyance is being executed in several original counterparts, all of
which are identical except that, to facilitate filing and recording,
counterparts to be filed and recorded in the appropriate records of each county
or parish have included in the Exhibits only the parts thereof containing the
specific descriptions of the property located in said county or parish. Every
counterpart of this Conveyance shall be deemed to be an original for all
purposes, and all of the counterparts together shall constitute one and the same
instrument. Notwithstanding the foregoing, a counterpart of this Conveyance with
the complete Exhibits thereto will be recorded in the appropriate records of
Aransas County, Texas. Each counterpart of this Conveyance containing less than
all of the specific descriptions in the Exhibits include the omitted
descriptions by reference to counterparts of the Conveyance containing all of
the specific descriptions in the Exhibits.

     The validity of this Conveyance with respect to title to real (immovable)
property shall be governed by and construed in accordance with the laws of the
jurisdiction in which such property is located. All other matters with respect
to this Conveyance, including, without limitation, the warranties contained
herein and the remedies arising from such warranties, shall be governed by and
construed in accordance with the laws of the State of Texas, excluding any
conflicts-of-law rule or principle which might refer same to another
jurisdiction.

     This Conveyance is made subject to that certain Contribution Agreement
between Grantor and Grantee dated August 22, 2005. Such agreement contains
certain representations, warranties, covenants and agreements

                                       4

<PAGE>

between the parties, which survive the delivery of this Conveyance, as more
particular provided for therein, BUT THIRD PARTIES MAY CONCLUSIVELY RELY ON THIS
CONVEYANCE TO VEST TITLE TO THE SUBJECT PROPERTIES IN GRANTEE.

     IN WITNESS WHEREOF this Conveyance has been executed by Grantor on the date
of its acknowledgment effective as to runs of oil and deliveries of gas, and for
all other purposes, as of 9:00 a.m. Central Daylight Time on April 1, 2005.

                                        F-W OIL EXPLORATION L.L.C.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

STATE OF TEXAS        )
                      )
COUNTY OF _________   )

     The foregoing instrument was acknowledged before me this ____ day of
_____________, 2005, by ____________________________.

                                        ----------------------------------------
                                        Notary Public in and for the State of
                                        Texas

                                       5<PAGE>

                                                                    EXHIBIT 10.1

                       UNITED DEVELOPMENT FUNDING [LOGO]

                            FORM OF ESCROW AGREEMENT

Coppermark Bank
3333 Northwest Expressway
Oklahoma City, Oklahoma  73112

      Re:   United Development Funding III, L.P.

Ladies and Gentlemen:

      United Development Funding III, L.P., a Delaware limited partnership (the
"Partnership"), will issue in a public offering (the "Offering") units of its
limited partnership interests (the "Units") pursuant to a Registration Statement
on Form S-11 filed by the Partnership with the Securities and Exchange
Commission. The units will be offered by select members of the National
Association of Securities Dealers, Inc. (NASD) on a "best efforts" basis (each
being referred to herein as a "Dealer" and collectively as the "Dealers"). The
Partnership is entering into this Escrow Agreement (the "Agreement") to set
forth the terms on which Coppermark Bank (the "Escrow Agent"), will hold and
disburse the proceeds from subscriptions for the purchase of the Units in the
Offering until such time as the Partnership has received subscriptions for Units
resulting in total minimum capital raised of $1,000,000 (the "Required Capital")
and, thereafter, until otherwise directed by the Partnership.

      The Partnership hereby appoints Coppermark Bank as Escrow Agent for
purposes of holding the proceeds from the subscriptions for the Units, on the
terms and conditions hereinafter set forth:

      1. Persons subscribing to purchase the Units (the "Subscribers") will be
instructed by the Dealers to remit the purchase price in the form of checks,
drafts, wires, Automated Clearing House (ACH) or money orders (hereinafter
referred to as "Instruments of Payment") payable to the order of "United
Development Funding III, L.P. Escrow Account" (the "Escrow Account"). Any
Instruments of Payment made payable to a party other than the Escrow Agent shall
be returned to the Dealer who submitted such Instrument of Payment. Within one
business day after receipt of any Instruments of Payment, a Dealer will (a) send
to the Escrow Agent each Subscriber's name, address, executed IRS Form W-9,
number of Units purchased and purchase price remitted (the "Subscription
Materials"), and (b) send to the Escrow Agent such Instrument of Payment unless
such Subscription Materials were previously sent to the Escrow Agent. The Escrow
Agent shall cause funds received to be held in the Escrow Account as provided
herein until such Escrow Account has closed pursuant to paragraph 3(a) hereof.
The Escrow Agent shall notify the Partnership from time to time during the term
of this Agreement of the names of any Subscribers for whom the Escrow Agent has
not received a properly executed IRS Form W-9.

      2. The Escrow Agent will promptly process for collection the Instruments
of Payment upon deposit into the Escrow Account. Deposits will be held in the
Escrow Account until such funds are disbursed in accordance with paragraph 3
hereof. Prior to disbursement of the funds deposited in the Escrow Account, such
funds will not be subject to claims by creditors of the Company, any Dealer or
any of their affiliates. If any of the Instruments of Payment are returned to
the Escrow Agent for nonpayment prior to the receipt of the Required Capital,
the Escrow Agent shall promptly notify the submitting Dealer and the Partnership
in writing via mail, email or facsimile of such nonpayment, and is authorized to
debit

<PAGE>

the Escrow Account in the amount of such returned payment as well as any
interest earned on the amount of such payment.

      3. (a) Subject to the provisions of subparagraphs 3(b)-3(d) below, once
collected funds in the Escrow Account are an amount equal to or greater than the
Required Capital, the Escrow Agent shall promptly notify the Partnership and,
upon receiving written instruction from the Partnership, (i) disburse to the
Partnership, by check, ACH or wire transfer, the funds in the Escrow Account
representing the gross purchase price for the Units, and (ii) disburse to the
Subscribers or the Partnership, as applicable, any interest thereon pursuant to
the provisions of subparagraph 3(d). For purposes of this Agreement, the term
"collected funds" shall mean all funds received by the Escrow Agent that have
cleared normal banking channels and are in the form of cash or a cash
equivalent. After such time, the Escrow Account shall remain open and the
Partnership shall continue to cause subscriptions for the Units to be deposited
therein until the Partnership informs the Escrow Agent in writing to close the
Escrow Account. Thereafter, any subscription documents and instruments of
payment received by the Escrow Agent from Subscribers shall be forwarded
directly to the Partnership.

            (b) At the close of business on ___________ ___, 2006, which is one
year from the effective date of the Offering (the "Expiration Date"), the Escrow
Agent shall promptly notify the Partnership (the "Expiration Notice") if it is
not in receipt of Subscription Materials received on or before the Expiration
Date and Instruments of Payment dated not later than the Expiration Date for the
purchase of Units providing for total purchase proceeds that equal or exceed the
Required Capital (from all sources but exclusive of any funds received from
subscriptions for Units from entities for which the Partnership has notified the
Escrow Agent are affiliated with the Partnership). Following the tenth calendar
day after the date of the Expiration Notice, the Escrow Agent shall promptly
return directly to each Subscriber the collected funds deposited in the Escrow
Account on behalf of such Subscriber, or shall return the Instruments of Payment
delivered, but not yet processed for collection prior to such time, together
with interest in the amounts calculated pursuant to paragraph 6 for each
Subscriber at the address provided in the Subscription Materials. However, the
Escrow Agent shall not be required to remit any payments until funds represented
by such payments have been collected.

            (c) If the Partnership notifies the Escrow Agent that it rejects any
subscription for which the Escrow Agent has collected funds, the Escrow Agent
shall promptly issue a refund to the rejected Subscriber. If the Partnership
rejects any subscription for which the Escrow Agent has not yet collected funds
but has submitted the Subscriber's check for collection, the Escrow Agent shall
promptly return the funds in the amount of the Subscriber's check to the
rejected Subscriber after such funds have been collected. If the Escrow Agent
has not yet submitted a rejected Subscriber's check for collection, the Escrow
Agent shall promptly remit the Subscriber's check directly to the Subscriber.

            (d) At any time after funds are disbursed upon the Partnership's
instructions pursuant to subparagraph 3(a) above, on the tenth day following the
date of receipt of such instruction, the Escrow Agent shall promptly provide
directly to each Subscriber the amount of the interest payable to the
Subscribers. However, the Escrow Agent shall not be required to remit any
payments until the Escrow Agent has collected funds represented by such
payments. The forgoing notwithstanding, interest, if any, earned on accepted
subscription proceeds will be payable to a Subscriber only if the Subscriber's
funds have been held in escrow by the Escrow Agent for at least 35 days.
Interest, if any, earned on accepted subscription proceeds of Subscribers' funds
held less than 35 days will be paid to the Partnership. The Escrow Agent may use
such reasonable allocation methods as it determines to be equitable in
allocating interest income among Subscribers and as between the Subscribers and
the Partnership if the funds bear interest at multiple rates during the escrow
period.

            (e) After the Required Capital has been received and the proceeds of
the Escrow Account have been distributed to the Partnership, any Instruments of
Payment received by the Escrow Agent shall be deposited in the Escrow Account
within one business day. Upon receiving written

                                      -2-
<PAGE>

instruction from the Partnership, the Escrow Agent shall (i) disburse to the
Partnership, by check, ACH or wire transfer, the funds in the Escrow Account,
and (ii) disburse to the Subscribers or the Partnership, as applicable, any
interest thereon pursuant to the provisions of subparagraph 3(d). In the event
that any Instruments of Payment are returned for nonpayment, the Escrow Agent is
authorized to debit the Escrow Account in accordance with paragraph 2 hereof.

            (f) Any disbursement of funds by the Escrow Agent to Subscribers
shall be made to the persons named in the Subscription Materials at the address
stated therein by cashiers' check mailed by United States mail.

            (e) If at the time of any required disbursement of interest to a
Subscriber, the Escrow Agent has not received a properly executed IRS Form W-9,
the Escrow Agent shall withhold from any interest distribution such amount as
may be required to be withheld by law and remit such withheld amounts to the
Internal Revenue Service in timely fashion.

      4. Prior to the disbursement of funds deposited in the Escrow Account in
accordance with the provisions of paragraph 3 hereof, the Escrow Agent shall
invest all of the funds deposited as well as earnings and interest derived
therefrom in the Escrow Account in the "Short-Term Investments" specified below,
unless the costs to the Partnership for the making of such investment are
reasonably expected to exceed the anticipated interest earnings from such
investment, in which case the funds and interest thereon shall remain in the
respective escrow account until the balance in the respective escrow account
reaches the minimum amount necessary for the anticipated interest earnings from
such investment to exceed the costs to the Partnership for the making of such
investment, as determined by the Partnership based upon applicable interest
rates.

            "Short-Term Investments" include obligations of, or obligations
      guaranteed by, the United States government or bank money-market accounts
      or certificates of deposit of national or state banks that have deposits
      insured by the Federal Deposit Insurance Corporation (including
      certificates of deposit of any bank acting as a depository or custodian
      for any such funds) that mature on or before the Expiration Date, unless
      such instrument cannot be readily sold or otherwise disposed of for cash
      by the Expiration Date without any dissipation of the offering proceeds
      invested. Without limiting the generality of the foregoing, Exhibit A
      hereto sets forth specific Short-Term Investments that shall be deemed
      permissible investments hereunder.

      The following securities are not permissible investments:

            (a)   money market mutual funds;

            (b)   corporate equity or debt securities;

            (c)   repurchase agreements;

            (d)   bankers' acceptances;

            (e)   commercial paper; and

            (f)   municipal securities.

      It is hereby expressly agreed and stipulated by the parties hereto that
the Escrow Agent shall not be required to exercise any discretion hereunder and
shall have no investment or management responsibility and, accordingly, shall
have no duty to, or liability for its failure to, provide investment
recommendations or investment advice to the parties hereto. It is the intention
of the parties hereto that the Escrow Agent will never be required to use,
advance or risk its own funds or otherwise incur financial liability in the
performance of any of its duties or the exercise of any of its rights and powers
hereunder.

      5. The Escrow Agent is entitled to rely upon written instructions received
from the Partnership, unless the Escrow Agent has actual knowledge that such
instructions are not valid or genuine; provided that, if in the Escrow Agent's
opinion, any instructions from the Partnership are

                                      -3-
<PAGE>

unclear, the Escrow Agent may request clarification from the Partnership prior
to taking any action, and if such instructions continue to be unclear, the
Escrow Agent may rely upon written instructions from the Partnership's legal
counsel in distributing or continuing to hold any funds. However, the Escrow
Agent shall not be required to disburse any funds attributable to Instruments of
Payment that have not been processed for collection, until such funds are
collected and then shall disburse such funds in compliance with the disbursement
instructions from the Partnership.

      6. If the Offering terminates prior to receipt of the Required Capital,
interest income earned on subscription proceeds deposited in the Escrow Account
(the "Escrow Income") shall be remitted to Subscribers, or to the Partnership if
the applicable Subscriber's funds have been held in escrow by the Escrow Agent
for less than 35 days, in accordance with paragraph 3. For each Subscriber who
has invested funds that have been held in escrow by the Escrow Agent for at
least 35 days, such Subscriber's pro rata portion of Escrow Income shall be
determined as follows: the total amount of Escrow Income minus interest earned
on accepted subscription proceeds held by the Escrow Agent for less than 35 days
shall be multiplied by a fraction, (a) the numerator of which is determined by
multiplying the number of Units purchased by the Subscriber times the number of
days the Subscriber's proceeds were held in the Escrow Account prior to the date
of disbursement, and (b) the denominator of which is the total of the numerators
for all Subscribers in such account who have invested funds that have been held
in escrow by the Escrow Agent for at least 35 days. The Partnership shall
reimburse the Escrow Agent for all escrow expenses. The Escrow Agent shall remit
all such Escrow Income in accordance with paragraph 3. If the Partnership
chooses to leave the Escrow Account open after receiving the Required Capital,
then it shall make regular acceptances of subscriptions therein, but no less
frequently than monthly, and the Escrow Income from the last such acceptance
shall be calculated and remitted to the Subscribers or the Partnership, as
applicable, pursuant to the provisions of paragraph 3(d).

      7. The Escrow Agent shall receive compensation from the Partnership and
reimbursement of expenses as set forth in Exhibit B attached hereto.

      8. The Escrow Agent will be liable as a depository only and will not be
responsible for the sufficiency or accuracy of the form, execution or validity
of any check or any other document delivered to the Escrow Agent hereunder or
any description of the property or other thing contained therein or the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any such document. The Escrow Agent's duties
hereunder are limited to the safekeeping of the assets, instruments or other
documents received and the delivery of the same in accordance with this
Agreement. The Escrow Agent will not be liable for any act or omission done in
good faith, or for any claim, demand, loss or damage made or suffered by any
party to this Agreement, excepting such as may arise through or be caused by the
Escrow Agent's willful misconduct, breach of trust or gross negligence. The
Escrow Agent is authorized to rely on any document believed by the Escrow Agent
to be authentic in making any delivery of funds or property hereunder.

      9. In accepting any funds or documents delivered hereunder, it is agreed
and understood by the undersigned that the Escrow Agent will not be called on to
construe any contract or instrument deposited herewith, and in the event of a
dispute will be required to act in respect to the deposit herein made only on
the consent in writing of the undersigned. In the failure of such consent, the
Escrow Agent reserves the right to hold any money in its possession, and all
papers in connection with or concerning this escrow, until a mutual agreement in
writing has been reached between all of said parties and delivered to the Escrow
Agent or until delivery is legally authorized and ordered by final judgment or
decree of a court of competent jurisdiction. If the Escrow Agent obeys or
complies with any judgment, order or decree of a court of competent
jurisdiction, the Escrow Agent will not be liable to any of the parties hereto
nor to any other person, firm or corporation by reason of such compliance,
notwithstanding any such judgment, order or decree being subsequently reversed,
modified, annulled, set aside or vacated.

                                      -4-
<PAGE>

      10. In addition to Escrow Agent's other rights herein, in the event any
contest, dispute or litigation arises or exists between the Partnership, then in
such event, Escrow Agent may, in its discretion, continue to retain the funds as
Escrow Agent during the pendency of any such contest, dispute or litigation,
provided that both the Partnership consents to Escrow Agent retaining such
funds. However, if the Partnership does not consent to Escrow Agent retaining
the Escrow Funds during the pendency of any contest, dispute or litigation, then
in such event, Escrow Agent may, in its discretion, interplead the Escrow Funds
into the office of the court clerk of Dallas County, State of Texas, in which
event, Escrow Agent shall be entitled to be repaid its expenses, including court
costs and attorney fees that it incurs as a result thereof, and in which event
this Escrow Agreement shall be deemed terminated.

      11. All communications and notices required or permitted by this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or by messenger or by overnight delivery service or when received via
telecopy or other electronic transmission, in all cases addressed to the person
for whom it is intended at such person's address set forth below or to such
other address as a party shall have designated by notice in writing to the other
party in the manner provided by this paragraph:

            (a) if to the Partnership:

            United Development Funding III, L.P.
            1702 N. Collins Boulevard
            Suite 100
            Richardson, Texas  75080
            Attention:  Cara Obert

            (b) if to the Escrow Agent:

            Coppermark Bank
            3333 Northwest Expressway
            Oklahoma City, Oklahoma  73112
            Attn: Corporate Services

Each party hereto may, from time to time, change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other parties.

      12. This Agreement shall be governed by the laws of the State of Oklahoma
as to both interpretation and performance without regard to the conflict of laws
rules thereof.

      13. The provisions of this Agreement shall be binding upon the legal
representatives, successors, and assigns of the parties hereto.

      14. The Partnership hereby acknowledges that Coppermark Bank. is serving
as Escrow Agent only for the limited purposes herein set forth, and hereby
agrees that it will not represent or imply that, by serving as Escrow Agent
hereunder or otherwise, has investigated the desirability or advisability of
investment in the Partnership or has approved, endorsed or passed upon the
merits of the Units or the Partnership or has in any way reviewed or endorsed
any disclosures made by the Partnership relating thereto. A statement to this
effect shall be included in the Prospectus relating to the sale of the Units.

      15. This Agreement and any amendment hereto may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed to be an
original.

                                      -5-
<PAGE>

      16. The Escrow Agent shall be bound only by the terms of this Agreement
and shall not be bound by or incur any liability with respect to any other
agreements or understanding between any other parties, whether or not the Escrow
Agent has knowledge of any such agreements or understandings.

      17. Indemnification provisions set forth herein shall survive the
termination of this Agreement.

      18. In the event that any part of this Agreement is declared by any court
or other judicial or administrative body to be null, void, or unenforceable,
said provision shall survive to the extent it is not so declared, and all of the
other provisions of this Agreement shall remain in full force and effect.

      19. Unless otherwise provided in this Agreement, final termination of this
Agreement shall occur on the date that all funds held in the Escrow Account are
distributed either (a) to the Partnership or to Subscribers and the Partnership
has informed the Escrow Agent in writing to close the Escrow Account pursuant to
paragraph 3 hereof or (b) to a successor escrow agent upon written instructions
from the Partnership.

      20. This Agreement shall not be modified, revoked, released or terminated
unless reduced to writing and signed by all parties hereto, subject to the
following paragraph.

      21. The Escrow Agent may resign at any time from its obligations under
this Agreement by providing written notice to the Partnership. Such resignation
shall be effective on the date specified in such notice, which shall be not less
than thirty days after such written notice has been given. The Escrow Agent
shall have no responsibility for the appointment of a successor escrow agent.

      22. The Escrow Agent may be removed for cause by the Partnership by
written notice to the Escrow Agent effective on the date specified in such
written notice. The removal of the Escrow Agent will not deprive the Escrow
Agent of its compensation earned prior to such removal.

                            [Signature page follows]

                                      -6-
<PAGE>

            Agreed to as of the ____ day of ____________, 2005.

                                       UNITED DEVELOPMENT FUNDING III, L.P.

                                       By:  UMTH Land Development, L.P.
                                            Its General Partner

                                            By:  UMT Services, Inc.
                                                 Its General Partner

                                       By: _____________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

The terms and conditions contained above are hereby accepted and agreed to by:

COPPERMARK BANK, AS ESCROW AGENT

By: __________________________________
Name: ________________________________
Title: _______________________________

                      [Signature Page to Escrow Agreement]

<PAGE>

                                   EXHIBIT A

                         PERMISSIBLE ESCROW INVESTMENTS

(i)   obligations issued or guaranteed by the United States or by any person
      controlled or supervised by or acting as an instrumentality of the United
      States pursuant to authority granted by Congress, or an investment fund
      consisting of such obligations;

(ii)  obligations issued or guaranteed by any state or political subdivision
      thereof rated either: AA or higher or MIG 1 or higher, by Moody's
      Investors Service, Inc.; or AA or higher or an equivalent, by Standard &
      Poor's Corporation, both of New York, New York, or their successors;

(iii) commercial or finance paper which is rated either: Prime-1 or higher, or
      an equivalent by Moody's Investors Service, Inc.; or A-1 or higher or any
      equivalent by Standard & Poor's Corporation, both of New York, New York,
      or their successors; or

(iv)  certificates of deposit or time deposits or other interest bearing
      deposits of banks or trust companies, organized under the laws of the
      United States or any state.

                                      A-1

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