Document:

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                                                                   Exhibit 10.29

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                              AMENDED AND RESTATED
                  MORTGAGE, DEED OF TRUST, ASSIGNMENT, SECURITY
                AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING

                                      FROM

                              CALPINE CORPORATION,
                             a Delaware corporation
                         (Taxpayer I.D. No. 77-0212977),
                              Trustor and Mortgagor

                                       TO

                                  DENIS O'MEARA
                                     Trustee

                                       AND

                                  JAMES TRIMBLE
                                     Trustee

                                       AND

                              THE BANK OF NEW YORK,
        not in its individual capacity but solely as Collateral Trustee,
                         (Taxpayer I.D. No. 13-5160382)
                                 as Beneficiary

                            Dated as of July 16, 2003

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"THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS."

"THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES."

"THOSE PORTIONS OF THE MORTGAGED PROPERTY WHICH ARE AS-EXTRACTED COLLATERAL
(INCLUDING, WITHOUT LIMITATION, OIL AND GAS), AND THE ACCOUNTS RELATING THERETO,
WILL BE FINANCED AT THE WELLHEADS OF THE WELLS LOCATED ON THE PROPERTIES
DESCRIBED IN

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EXHIBIT A HERETO, AND THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG
OTHER PLACES, IN THE REAL ESTATE RECORDS."

"MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH IS
DESCRIBED IN EXHIBIT A HERETO."

"SOME OF THE PERSONAL PROPERTY CONSTITUTING A PORTION OF THE MORTGAGED PROPERTY
IS OR IS TO BE AFFIXED TO THE PROPERTIES DESCRIBED IN EXHIBIT A HERETO AND THIS
FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL
ESTATE RECORDS."

"A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW
THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT
IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS MORTGAGE."

"MORTGAGOR AGREES BY EXPRESS LANGUAGE IN THIS MORTGAGE TO SUBJECT THE TRUST REAL
ESTATE TO THE TERMS OF THE DEED OF TRUST ACT (SECTIONS 48-10-1 THROUGH 21 NMSA
(1978))."

THIS INSTRUMENT WAS PREPARED BY AND
WHEN RECORDED AND/OR FILED
RETURN TO:

MAYER, BROWN, ROWE & MAW LLP
700 Louisiana Street
Suite 3600
Houston, Texas  77002
Attn:  Kevin L. Shaw, Esq.

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                              AMENDED AND RESTATED
                  MORTGAGE, DEED OF TRUST, ASSIGNMENT, SECURITY
                AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING

      THIS AMENDED AND RESTATED MORTGAGE, DEED OF TRUST, ASSIGNMENT, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (this "MORTGAGE"), dated as of
July 16, 2003, is made by CALPINE CORPORATION, a Delaware corporation
("MORTGAGOR"), whose address is 50 West San Fernando Street, San Jose, CA 95113,
to DENIS O'MEARA and JAMES TRIMBLE (whether one or more, collectively called
"TRUSTEE"), and THE BANK OF NEW YORK, a New York banking corporation, not in its
individual capacity but solely as Collateral Trustee under the Collateral Trust
Agreement dated July 16, 2003 (the "COLLATERAL TRUST AGREEMENT") among
Mortgagor, Beneficiary, the 2007 Trustee, the 2010 Trustee, the 2013 Trustee,
Credit Agreement Agent and Term Loan Administrative Agent ("BENEFICIARY"), whose
address is 101 Barclay Street, New York, New York 10286. References to this
"Mortgage" shall mean this instrument and any and all renewals, modifications,
amendments, supplements, extensions, consolidations, substitutions, spreaders,
restatements and replacements of this instrument.

      Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Collateral Trust Agreement.

                                   ARTICLE I.
                            RECITALS AND DEFINITIONS

      1.1 Mortgagor has heretofore executed and delivered to The Bank of Nova
Scotia, for itself and as agent for the Lender Parties (together with its
successors in such capacity, the "CREDIT AGREEMENT AGENT") and John Quick (as
predecessor-in-interest to Denis O'Meara) and Kemp Leonard (as
predecessor-in-interest to James Trimble), as Trustees, that certain mortgage or
deed of trust, dated as of May 1, 2002, as supplemented and amended prior to the
date hereof (as so supplemented and amended, herein called the "EXISTING
MORTGAGE"), to secure (i) payment of indebtedness owed or to be owing to certain
institutional lenders (the "EXISTING 2002 LENDERS") pursuant to the terms of
that certain Credit Agreement, dated as of March 8, 2002 (herein, as the same
may be amended, modified or supplemented from time to time, called the "EXISTING
2002 CREDIT AGREEMENT") pursuant to which the Existing 2002 Lenders made loans
to Mortgagor and issued letters of credit for the benefit of Mortgagor (the
"EXISTING 2002 LETTERS OF CREDIT") in amounts not to exceed at any one time
outstanding $1,600,000,000, and Mortgagor, to evidence its indebtedness to the
Existing 2002 Lenders under the Existing 2002 Credit Agreement, has executed and
delivered to the Existing 2002 Lenders its secured promissory notes to mature
not later than May 24, 2003 (the "EXISTING 2002 LOAN NOTES"), the Existing 2002
Loan Notes being payable to the order of the Existing 2002 Lenders, bearing
interest as provided for therein, and containing provisions for payment of
attorneys' fees and acceleration of maturity in the event of default, as therein
set forth; and (ii) payment of indebtedness owed or to be owing to certain
institutional lenders (the "EXISTING 2000 LENDERS", and together with the
Existing 2002 Lenders, the "EXISTING LENDERS") pursuant to the terms

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of that certain Second Amended and Restated Credit Agreement dated as of May 23,
2000 (herein, as the same may be amended, modified, or supplemented from time to
time, called the "EXISTING 2000 CREDIT AGREEMENT" and together with the Existing
2002 Credit Agreement, collectively, the "EXISTING CREDIT AGREEMENTS") pursuant
to which the Existing 2000 Lenders made loans to Mortgagor and issued letters of
credit for the benefit of Mortgagor (the "EXISTING 2000 LETTERS OF CREDIT") in
amounts not to exceed at any one time outstanding $400,000,000, and Mortgagor,
to evidence its indebtedness to the Existing 2000 Lenders under the Existing
2000 Credit Agreement, has executed and delivered to the Existing 2000 Lenders
its secured promissory notes to mature not later than May 24, 2003 (the
"EXISTING 2000 LOAN NOTES") (the Existing 2000 Loan Notes, together with the
Existing 2002 Loan Notes, collectively, the "EXISTING LOAN NOTES"), the Existing
2000 Loan Notes being payable to the order of the Existing 2000 Lenders, bearing
interest as provided for therein, and containing provisions for payment of
attorney's fees and acceleration of maturity in the event of default, as therein
set forth.

      1.2 The Existing Mortgage, together with other mortgages and deeds of
trust (a) have been filed and recorded, among other places, as set forth in
Schedule I hereto; (b) have been supplemented and amended by various instruments
that have been filed and recorded, among other places, as set forth in Schedule
II hereto; and (c) have been amended and certain items of property mortgaged
thereby have been released by various instruments that have been filed and
recorded, among other places, as set forth in Schedule III hereto.

      1.3 Mortgagor, the Existing Lenders and the Credit Agreement Agent are (i)
terminating the commitments under the Existing 2000 Credit Agreement, and (ii)
amending and restating the Existing 2002 Credit Agreement (as so amended and
restated, and as the same may, from time to time hereafter, be amended,
supplemented, modified or amended and restated, the "AMENDED AND RESTATED CREDIT
AGREEMENT".

      1.4 Mortgagor is also (a) issuing $500,000,000 in aggregate principal
amount of Second Priority Senior Floating Rate Secured Notes due 2007 (the "2007
NOTES") pursuant to the Indenture dated as of July 16, 2003 (the "2007
INDENTURE") between Mortgagor and Wilmington Trust Company, as Trustee (together
with its successors in such capacity, the "2007 TRUSTEE"), (b) issuing
$1,150,000,000 in aggregate principal amount of 8.5% Second Priority Senior
Secured Fixed Rate Notes due 2010 (the "2010 NOTES") pursuant to the Indenture
dated as of July 16, 2003 (the "2010 INDENTURE") between Mortgagor and
Wilmington Trust Company, as Trustee (together with its successors in such
capacity, the "2010 TRUSTEE"), (c) issuing $900,000,000 in aggregate principal
amount of 8.75% Second Priority Senior Secured Fixed Rate Notes due 2013 (the
"2013 NOTES") pursuant to the Indenture dated as of July 16, 2003 (the "2013
INDENTURE") between Mortgagor and Wilmington Trust Company, as Trustee (together
with its successors in such capacity, the "2013 TRUSTEE"), and (d) borrowing
$750,000,000 in Term Loans (the "TERM LOANS") pursuant to a Term Loan Agreement
dated as of July 16, 2003 (the "TERM LOAN AGREEMENT") between Mortgagor and
Goldman Sachs Credit Partners L.P., as Administrative Agent (together with its

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successors in such capacity, the "TERM LOAN ADMINISTRATIVE AGENT"). The proceeds
from the issuance of the 2007 Notes, the 2010 Notes and the 2013 Notes and the
borrowing of the Term Loans will be used to refinance a portion of the loans and
other indebtedness outstanding under the Existing Credit Agreements.

      1.5 As permitted pursuant to the Secured Debt Documents, Mortgagor may
incur future debt which could, together with the obligations under the Amended
and Restated Credit Agreement, constitute Priority Lien Debt and Mortgagor may
incur future debt which could, together with the 2007 Notes, 2010 Notes, the
2013 Notes and the Term Loans, constitute Parity Lien Debt, provided that the
aggregate amount of the Secured Debt to be secured hereby shall not exceed
$4,200,000,000. Mortgagor intends to secure the Indebtedness, including its
obligations (a) under the Amended and Restated Credit Agreement and any future
Priority Lien Debt, equally and ratably, on a priority basis, and, (b) subject
to such priority, under the 2007 Notes, 2010 Notes, 2013 Notes and Term Loans
and any future Parity Lien Debt, equally and ratably, with liens and security
interests in, among other collateral, the Mortgaged Property under the Existing
Mortgage, as contemplated in the Collateral Trust Agreement..

      1.6 Pursuant to the Collateral Trust Agreement and that certain Assignment
of Liens of even date herewith, the Credit Agreement Agent has assigned to
Beneficiary, all of the Credit Agreement Agent's right, title and interest in
and to, and its interest as beneficiary under, the Existing Mortgage. This
Mortgage amends and restates the Existing Mortgage. The Collateral Trust
Agreement sets forth the terms on which the Collateral Trustee, as trustee for
the present and future holders of the Indebtedness, will receive, hold,
maintain, administer, maintain, enforce and distribute this Mortgage and all
interests, rights, powers and remedies of the Collateral Trustee thereunder and
the proceeds thereof.

      1.7 For all purposes of this Mortgage, unless the context otherwise
requires:

                  A. "Actionable Default" is defined in the Collateral Trust
      Agreement.

                  B. "Affiliate" of any Person means any other Person which,
      directly or indirectly, controls, is controlled by or is under common
      control with such Person (excluding any trustee under, or any committee
      with responsibility for administering, any Plan (as defined under ERISA)).
      A Person shall be deemed to be "controlled by" any other Person if such
      other Person possesses, directly or indirectly, power

                  (a) to vote 10% or more of the securities (on a fully diluted
            basis) having ordinary voting power for the election of directors or
            managing general partners; or

                  (b) to direct or cause the direction of the management and
            policies of such Person whether by contract or otherwise.

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                  C. "Applicable Law" means with respect to any Person or
      matter, any federal, state, regional, tribal or local statute, law, code,
      rule, treaty, convention, application, order, decree, consent decree,
      injunction, directive, determination or other requirement (whether or not
      having the force of law) relating to such Person or matter and, where
      applicable, any interpretation thereof by a Governmental Authority having
      jurisdiction with respect thereto or charged with the administration or
      interpretation thereof.

                  D. "Default Interest Rate" means the lesser of (a) ten percent
      (10%), and (b) the Maximum Lawful Rate.

                  E. "Event of Default" means an Actionable Default.

                  F. "Environmental Laws" means any and all present and future
      Applicable Laws issued, promulgated or entered thereunder relating to
      pollution or protection of the environment, including laws relating to
      reclamation of land and waterways and laws relating to emissions,
      discharges, releases or threatened releases of pollutants, contaminants,
      chemicals, or industrial, toxic or hazardous substances or wastes into the
      environment (including, without limitation, ambient air, surface water,
      ground water, land surface or subsurface strata) or otherwise relating to
      the manufacture, processing, distribution, use, treatment, storage,
      disposal, transport or handling of pollutants, contaminants, chemicals, or
      industrial, toxic or hazardous substances or wastes.

                  G. "Governmental Authority" means any and all courts, boards,
      agencies, commissions, offices or authorities of any nature whatsoever for
      any governmental unit (federal, state, county, district, municipal, city,
      tribe or otherwise) whether now or hereafter in existence charged with the
      administration, interpretation or enforcement of any Applicable Law.

                  H. "Hedging Agreements" means: (a) interest rate swap
      agreements, basis swap agreements, interest rate cap agreements, forward
      rate agreements, interest rate floor agreements and interest rate collar
      agreements, and all other agreements or arrangements designed to protect
      such Person against fluctuations in interest rates or currency exchange
      rates, and (b) forward contracts, options, futures contracts, futures
      options, commodity swaps, commodity options, commodity collars, commodity
      caps, commodity floors and all other agreements or arrangements designed
      to protect such Person against fluctuations in the price of commodities.

                  I. "Hedging Obligations" means with respect to any Person, all
      liabilities (including without limitation obligations and liabilities
      arising in connection with or as a result of early or premature
      termination of a Hedging Agreement, whether or not occurring as a result
      of a default thereunder) of such Person under a Hedging Agreement.

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                  J. "Hydrocarbons" means collectively, oil, gas, casinghead
      gas, drip gasoline, natural gasoline, condensate, distillate and all other
      liquid or gaseous hydrocarbons and related minerals and all products
      therefrom, in each case whether in a natural or a processed state.

                  K. "Indebtedness" shall have the meaning set forth in Section
      2.2 of this Mortgage.

                  L. "Indemnification Claim" is defined in Section 4.6(a) of
      this Mortgage.

                  M. "Indemnified Person" is defined in Section 3.10(c) of this
      Mortgage.

                  N. "Joint Operating Agreements" shall mean, with respect to
      the lands described in Exhibit A, the respective operating agreement
      burdening the lands described in Exhibit A.

                  O. "lands described in Exhibit A" shall include the real
      property or other interest in any lands which are either described in
      Exhibit A attached hereto or the description of which is incorporated in
      Exhibit A by reference to an instrument or document containing in, or
      referring to, such a description, and shall also include any lands now or
      hereafter unitized or pooled with lands which are either described in
      Exhibit A or the description of which is incorporated in Exhibit A by
      reference and Fixtures and all rights, titles and interests appurtenant
      thereto. References to Exhibit A shall include, where applicable, Exhibit
      A-1 as well.

                  P. "Leases" means any and all leases (including without
      limitation oil and gas leases and oil, gas and other minerals leases),
      surface leases or easements, subleases, licenses, concessions, operating
      rights or other agreements (written or verbal, now or hereafter in effect)
      which grant a possessory interest in and to, or the right to explore, use,
      lease, license, possess, produce, process, store and transport
      Hydrocarbons from, operate from, or otherwise enjoy, the Mortgaged
      Property, together with all amendments, modifications, extensions and
      renewals thereof.

                  Q. "Legal Requirements" means (i) any and all present and
      future judicial decisions, statutes, rulings, rules, regulations,
      licenses, decisions, orders, injunctions, decrees, permits, certificates
      or ordinances of any Governmental Authority in any way applicable to
      Mortgagor, or the Mortgaged Property, including the ownership, use,
      occupancy, operation, maintenance, repair or reconstruction thereof, and
      any other Applicable Law enacted by any Governmental Authority relating to
      health or the environment, (ii) Mortgagor's presently or subsequently
      effective Organic Documents, (iii) any and all Leases, (iv) any and all
      leases and other contracts (written or oral) of any nature to which
      Mortgagor, or the Mortgaged Property may be bound and (v) any and all

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      restrictions, restrictive covenants or zoning, present and future, as the
      same may apply to the Mortgaged Property.

                  R. "Losses" is defined in Section 3.10(c) of this Mortgage.

                  S. "Maximum Lawful Rate" means the maximum nonusurious rate of
      interest that may be received, charged or contracted for under Applicable
      Law from time to time in effect.

                  T. "Mortgaged Property" means the properties, rights and
      interests hereinafter described in Section 1.8 and defined as the
      Mortgaged Property.

                  U. "Obligations" means any and all of the covenants,
      warranties, representations and other obligations (other than to repay the
      Indebtedness) made or undertaken by Mortgagor or others under any of the
      Secured Debt Documents.

                  V. "oil and gas leases" shall include oil, gas and mineral
      leases, subleases and assignments thereof, operating rights, and shall
      also include subleases and assignments of operating rights.

                  W. "Operating Equipment" means all surface or subsurface
      machinery, goods, equipment, fixtures, inventory, facilities, supplies or
      other property of whatsoever kind or nature (excluding drilling rigs,
      trucks, automotive equipment or other property taken to the premises to
      drill a well or for other similar temporary uses) now or hereafter located
      on or under any of the lands described in Exhibit A which are useful for
      the production, gathering, treatment, processing, storage or
      transportation of Hydrocarbons (together with all accessions, additions
      and attachments to any thereof), including, but not by way of limitation,
      all oil wells, gas wells, water wells, injection wells, casing, tubing,
      tubular goods, rods, pumping units and engines, christmas trees,
      platforms, derricks, separators, compressors, gun barrels, flow lines,
      tanks, gas systems (for gathering, treating and compression), pipelines
      (including gathering lines, laterals and trunklines), chemicals,
      solutions, water systems (for treating, disposal and injection), steam
      generation and injection equipment and systems, power plants, poles,
      lines, transformers, starters and controllers, supervisory control and
      data acquisition systems, machine shops, tools, storage yards and
      equipment stored therein, buildings and camps, telegraph, telephone and
      other communication systems, roads, loading docks, loading racks and
      shipping facilities.

                  X. "Organic Documents" means the Articles of Incorporation,
      Certificate of Incorporation, limited liability company certificate of
      formation and regulations or operating agreement, partnership agreement,
      limited partnership agreement, joint venture agreement, trust agreement or
      other similar documents governing the organization and operation of a
      business association.

                  Y. "Parity Lien Debt" is defined in the Collateral Trust
      Agreement.

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                  Z. "Parity Lien Documents" is defined in the Collateral Trust
      Agreement.

                  AA. "Parity Lien Obligations" means any and all of the
      covenants, warranties, representations and other obligations (other than
      to repay the Indebtedness) made or undertaken by Mortgagor or others under
      any of the Parity Lien Documents.

                  BB. "Permits" means all authorizations, approvals, permits,
      variances, land use entitlements, consents, licenses, franchises and
      agreements issued by or entered into with any Governmental Authority now
      or hereafter required for all stages of exploration, developing,
      operating, and plugging and abandoning oil and gas wells (including,
      without limitation, those shown on Exhibit A) on all or any part of the
      lands described in Exhibit A (or any other lands any production from
      which, or profits or proceeds from such production, is attributed to any
      interest in the lands described in Exhibit A).

                  CC. "Permitted Encumbrances" means the outstanding liens,
      easements, restrictions, exceptions, reservations, conditions,
      limitations, security interests and other matters as permitted by and
      defined in the Secured Debt Documents.

                  DD. "Person" means any natural person, corporation,
      partnership, limited liability company, firm, association, trust,
      government, governmental agency or any other entity, whether acting in an
      individual, fiduciary or other capacity.

                  EE. "Personalty" means all of the right, title and interest of
      Mortgagor now owned or hereafter acquired in and to all furniture,
      furnishings, Equipment, machinery, Goods, General Intangibles, money,
      Accounts, receivables, Contract Rights, Inventory, all refundable,
      returnable or reimbursable fees, deposits or other funds or evidences of
      credit or indebtedness deposited by or on behalf of Mortgagor with any
      Governmental Authority, agencies, boards, corporations, providers of
      utility services, public or private, including specifically, but without
      limitation, all refundable, returnable or reimbursable tap fees, utility
      deposits, commitment fees and development costs, and all other personal
      property (other than the Fixtures) of any kind or character as defined in
      and subject to the provisions of Article 9 of the Uniform Commercial Code,
      now or hereafter located upon, within or about, or used in connection
      with, the lands described in Exhibit A together with all accessories,
      replacements and substitutions thereto or therefor and the Proceeds
      thereof.

                  FF. "Priority Lien Debt" is defined in the Collateral Trust
      Agreement.

                  GG. "Priority Lien Documents" is defined in the Collateral
      Trust Agreement.

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                  HH. "Priority Lien Obligations" means any and all of the
      covenants, warranties, representations and other obligations (other than
      to repay the Indebtedness) made or undertaken by Mortgagor or others under
      any of the Priority Lien Documents.

                  II. "Production Sale Contracts" means contracts now in effect,
      or hereafter entered into by Mortgagor, or entered into by Mortgagor's
      predecessors in interest, for the sale, purchase, exchange, gathering,
      transportation, treating or processing of Hydrocarbons produced from the
      lands described in Exhibit A.

                  JJ. "Rents and Revenues" means all of the rents, revenues,
      income, proceeds, profits and other benefits paid or payable by parties to
      the Leases other than Mortgagor for using, leasing, licensing, possessing,
      operating, selling or otherwise enjoying the Mortgaged Property, including
      the proceeds from the sale of Hydrocarbons.

                  KK. "Secured Debt" is defined in the Collateral Trust
      Agreement.

                  LL. "Secured Debtholder" is defined in the Collateral Trust
      Agreement.

                  MM. "Secured Debt Documents" is defined in the Collateral
      Trust Agreement.

                  NN. "Secured Debt Representative" is defined in the Collateral
      Trust Agreement.

                  OO. "Taxes" means all real property and personal property
      taxes, production taxes, assessments, permit fees, water, gas, sewer,
      electricity and other utility rates and charges, charges for any easement,
      license or agreement maintained for the benefit of the Mortgaged Property,
      and all other taxes, charges and assessments and any interest, costs or
      penalties with respect thereto, of any kind and nature whatsoever which at
      any time prior to or after the execution hereof may be charged, assessed,
      levied or imposed upon the Mortgaged Property or the Rents and Revenues or
      the ownership, use, occupancy or enjoyment thereof.

                  PP. "Transportation Agreements" shall mean any contracts or
      agreements entered into from time to time by Mortgagor, or entered into by
      Mortgagor's predecessors in interest, relating to the transportation of
      Hydrocarbons, as any such agreement or contract may be amended,
      supplemented, restated or otherwise modified from time to time.

                  QQ. "Uniform Commercial Code" means the Uniform Commercial
      Code as in effect from time to time in the State of New York or any other
      applicable state, and the terms "Accounts," "Account Debtor, "As Extracted
      Collateral," "Chattel Paper," "Contract Rights," "Deposit Accounts,"
      "Documents," "Electronic Chattel Paper," "General Intangibles," "Goods,"
      "Equipment,"

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<PAGE>

      "Fixtures," "Inventory," "Instruments," and "Proceeds" shall have the
      respective meanings assigned to such terms in the Uniform Commercial Code.

                  RR. "Water Rights" means (including without limitation those
      described in Exhibit A hereto) all now or hereafter existing or acquired
      water and water rights, reservoirs and reservoir rights, ditches and ditch
      rights, wells and well rights, whether evidenced or initiated by permit,
      decree, well registration, appropriation not decreed, water court
      application, shares of stock or other interests in mutual ditch or
      reservoir companies or carrier ditch or reservoir companies or otherwise,
      appertaining or appurtenant to or beneficially used or useful in
      connection with the lands described in Exhibit A, together with all pumps,
      well casings, wellheads, electrical installations, pumphouses, meters,
      monitoring wells and systems, measuring devices, pipes, pipelines, and
      other structures or personal property which are or may be used to produce,
      regulate, measure, distribute, store, or use water from the said water and
      water rights, reservoirs and reservoir rights, ditches and ditch rights,
      wells and well rights.

      1.8 Grant.

      Grant of Priority Lien

      NOW, THEREFORE, Mortgagor, to secure the full and timely payment of the
Priority Lien Indebtedness and the full and timely performance and discharge of
the Priority Lien Obligations, has granted, bargained, sold, warranted,
mortgaged, assigned, transferred and conveyed, and by these presents does grant,
bargain, sell, warrant, mortgage, assign, pledge and hypothecate, transfer and
convey unto Trustee, IN TRUST, WITH POWER OF SALE, for the use and benefit of
Beneficiary, all Mortgagor's right, title and interest, whether now owned or
hereafter acquired, in and to all of the hereinafter described properties,
rights and interests; and, insofar as such properties, rights and interests
consist of Equipment, General Intangibles, Accounts, As Extracted Collateral,
Contract Rights, Inventory, Fixtures, Proceeds of collateral or any other
personal property of a kind or character defined in, or subject to the
applicable provisions of, the Uniform Commercial Code (as in effect from time to
time in the appropriate jurisdiction with respect to each of said properties,
rights and interests), Mortgagor hereby grants to said Beneficiary, a security
interest therein to the full extent of Mortgagor's legal and beneficial interest
therein, now owned or hereafter acquired, namely:

            (a) the lands described in Exhibit A, and Leases, the fee, mineral,
      overriding royalty, royalty and other interests which are described in
      Exhibit A,

            (b) the presently existing and (subject to the terms of Section 6.1
      hereof) hereafter arising unitization, unit operating, communitization and
      pooling agreements and the properties covered and the units created
      thereby (including, without limitation, all units formed under orders,
      regulations, rules, approvals, decisions or other official acts of any
      Governmental Authority) which are

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<PAGE>

      specifically described in Exhibit A or which relate to any of the
      properties and interests specifically described in Exhibit A,

            (c) the Hydrocarbons which are in, under, upon, produced or to be
      produced from or which are attributed or allocated to the lands described
      in Exhibit A,

            (d) the Production Sale Contracts,

            (e) the Joint Operating Agreements,

            (f) the Transportation Agreements,

            (g) the Operating Equipment,

            (h) the Permits,

            (i) the Water Rights,

            (j) the Hedging Agreements,

            (k) the Leases,

            (l) the Personalty,

            (m) the Rents and Revenues,

            (n) without duplication of any other provision of this granting
      clause, Equipment, Fixtures and other Goods necessary or used in
      connection with, and Inventory, Accounts, As Extracted Collateral, General
      Intangibles, Contract Rights, Chattel Paper, Deposit Accounts, Documents,
      Electronic Chattel Paper, Instruments and Proceeds arising from, or
      relating to, the properties and other interests described in Exhibit A
      (including Exhibit A-1),

            (o) any and all liens and security interests in Hydrocarbons
      securing the payment of proceeds from the sale of Hydrocarbons, including
      but not limited to those liens and security interests provided for in
      Section 48-9-1, et seq. NMSA (1978) or similar statutes of other
      jurisdictions or any successor statutes,

together with any and all corrections or amendments to, or renewals, extensions
or ratifications of, or replacements or substitutions for, any of the same, or
any instrument relating thereto, and all accounts, contracts, contract rights,
options, nominee agreements, unitization or pooling agreements, operating
agreements and unit operating agreements, processing agreements, farmin
agreements, farmout agreements, joint venture agreements, partnership agreements
(including mining partnerships), exploration agreements, bottom hole agreements,
dry hole agreements, support agreements, acreage contribution agreements,
surface use and surface damage agreements, net profits agreements, production
payment agreements, Hedging

                                      -10-
<PAGE>

Agreements, insurance policies, title opinions, title abstracts, title materials
and information, files, records, writings, data bases, information, systems,
logs, well cores, fluid samples, production data and reports, well testing data
and reports, maps, seismic and geophysical, geological and chemical data and
information, interpretative and analytical reports of any kind or nature
(including, without limitation, reserve studies and reserve evaluations),
computer hardware and software and all documentation therefor or relating
thereto (including, without limitation, all licenses relating to or covering
such computer hardware, software and/or documentation), trade secrets,
trademarks, service marks and business names and the goodwill of the business
relating thereto, copyrights, copyright registrations, unpatented inventions,
patent applications and patents, rights-of-way, franchises, bonds, easements,
servitudes, surface leases, permits, licenses, tenements, hereditaments,
appurtenances, concessions, occupancy agreements, privileges, development
rights, condemnation awards, claims against third parties, general intangibles,
rents, royalties, issues, profits, products and proceeds, whether now or
hereafter existing or arising, used or useful in connection with, covering,
relating to, or arising from or in connection with, any of the aforesaid items
(a) through o), inclusive, in this granting clause mentioned, and all other
things of value and incident thereto (including, without limitation, any and all
liens, lien rights, security interests and other properties, rights and
interests) which Mortgagor might at any time have or be entitled to, but
excluding any data or contracts with respect to which mortgaging or granting of
a lien or a security interest is prohibited by existing third party agreements,

all the aforesaid properties, rights and interests, together with any additions
thereto which may be subjected to the lien and security interest of this
Mortgage by means of supplements hereto, being hereinafter, collectively, called
the "Mortgaged Property."

      Grant of Parity Lien

      NOW, THEREFORE, Mortgagor, to secure the full and timely payment of the
Parity Lien Indebtedness and the full and timely performance and discharge of
the Parity Lien Obligations, has granted, bargained, sold, warranted, mortgaged,
assigned, transferred and conveyed, and by these presents does grant, bargain,
sell, warrant, mortgage, assign, pledge and hypothecate, transfer and convey
unto Trustee, IN TRUST, WITH POWER OF SALE, for the use and benefit of
Beneficiary, all Mortgagor's right, title and interest, whether now owned or
hereafter acquired, in and to all of the Mortgaged Property.

      Subject, however, in each case to (i) Permitted Encumbrances (including
without limitation all presently existing royalties, overriding royalties,
payments out of production and other burdens which are referred to in Exhibit A
and which are taken into consideration in computing any percentage, decimal or
fractional interest as set forth in Exhibit A), (ii) the assignment of
production contained in Article IV hereof, but only insofar and so long as said
assignment of production is not inoperative under the provisions of Section 4.5
hereof, and (iii) the condition that none of Trustee, Beneficiary nor any
Secured Debtholder shall be liable in any respect for the performance of any
covenant or obligation (including, without limitation, measures required to
comply with Environmental Laws) of Mortgagor in respect of the Mortgaged
Property.

                                      -11-
<PAGE>

      TO HAVE AND TO HOLD the Mortgaged Property for the benefit of Beneficiary,
and forever to secure the payment of the Indebtedness and to secure the
performance and discharge of the Obligations of Mortgagor herein and therein
contained.

      As set forth in the separate granting clauses above, it is the intent of
Mortgagor that such grants shall create two separate and distinct security
interests in all right, title and interest of Mortgagor in the Mortgaged
Property in favor of (a) the Trustee for the benefit of the Beneficiary, for the
benefit of the holders of the Priority Lien Debt, and (b) the Trustee for the
benefit of the Beneficiary, for the benefit of the holders of the Parity Lien
Debt.

      Notwithstanding (i) anything to the contrary contained in this Mortgage or
any other document, filing or agreement related to the creation, attachment,
perfection or existence of the liens and security interests granted herein, (ii)
the time, place, order or method of attachment or perfection of such liens or
security interests, (iii) the time or order of filing or recording of financing
statements or other documents filed or recorded to perfect such security
interests, and (iv) the rules for determining priority under any law governing
the relative priorities of secured creditors, the lien securing the Parity Lien
Indebtedness is subordinated and junior in priority to the lien securing the
Priority Lien Indebtedness.

      Mortgagor, in consideration of the Secured Debt as set forth above, hereby
covenants and agrees with each of Trustee and Beneficiary:

                                  ARTICLE II.
                              INDEBTEDNESS SECURED

      2.1 Items of Indebtedness Secured. The following items of indebtedness are
secured hereby:

            (a) The Priority Lien Debt (including future advances to be made
      with respect thereto), and all other Obligations of Mortgagor under the
      Priority Lien Documents;

            (b) The Parity Lien Debt (including future advances to be made with
      respect thereto), and all other Obligations of Mortgagor under the Parity
      Lien Documents;

            (c) All Obligations under any other Priority Lien Debt or Parity
      Lien Debt;

            (d) Any sums advanced or expenses or costs incurred by Trustee,
      Beneficiary or any Secured Debtholder, or by any receiver appointed
      hereunder, which are made or incurred pursuant to, or permitted by, the
      terms hereof or the other loan documents, plus interest thereon at the
      rate herein specified or otherwise agreed upon, from the date of the
      advances or the incurring of such expenses or costs until reimbursed;

            (e) Any and all other indebtedness of Mortgagor or any Affiliate of
      Mortgagor to Beneficiary now or hereafter owing, whether direct or
      indirect,

                                      -12-
<PAGE>

      primary or secondary, fixed or contingent, joint or several, regardless of
      how evidenced or arising, where the indebtedness provides that it is
      secured hereby; and

            (f) Any extensions, refinancings, modifications or renewals of all
      such indebtedness described in subparagraphs (a) through (e) above,
      whether or not Mortgagor executes any extension agreement or renewal
      instrument.

      2.2 Indebtedness Defined. All the above items of indebtedness described in
subparagraphs (a) of Section 2.1 and subparagraphs (c) through (f) of Section
2.1 hereof in respect of the Priority Lien Debt, are hereinafter collectively
referred to as the "Priority Lien Indebtedness." And all the above items of
indebtedness described in subparagraphs (b) of Section 2.1 and subparagraphs (c)
through (f) of Section 2.1 hereof in respect of the Parity Lien Debt, are
hereinafter collectively referred to as the "Parity Lien Indebtedness"; the
Priority Lien Indebtedness and the Parity Lien Indebtedness are collectively
referred to as the "Indebtedness".

      2.3 Valid and Subsisting First Lien. Mortgagor hereby acknowledges and
agrees that, except as otherwise provided by the Secured Debt Documents, the
Existing Mortgage constitutes a valid and subsisting first lien on the portion
of the Mortgaged Property encumbered thereby, and that none of the rights and
liens existing thereunder shall be impaired or released hereby, and that the
same as amended and restated hereby shall remain in full force and effect, and
all rights and liens existing and to exist thereunder are renewed, extended,
carried forward, and conveyed to secure all of the Indebtedness hereinabove
mentioned.

      2.4 Amended and Restated Mortgage. The Existing Mortgage is amended and
restated in full hereby in order to, among other things, secure all of the
Indebtedness herein described or referred to as if reference to such
Indebtedness were fully described in the Existing Mortgage. None of the rights,
titles, and interests, existing or to exist under the Existing Mortgage are
hereby released, diminished or impaired.

      2.5 No Impairment or Discharge of Liens. It is the express intention of
all parties hereto that the Secured Debtholders are subrogated to all of the
rights, powers, and equities of the original lenders and beneficiary under the
Existing Mortgage, that the liens created hereby shall relate back to and be
effective as of the effective date of the Existing Mortgage and that nothing
contained herein shall be construed to impair or discharge the liens and
security interests created thereby.

                                  ARTICLE III.
                      PARTICULAR COVENANTS, REPRESENTATIONS
                           AND WARRANTIES OF MORTGAGOR

      3.1 Payment of the Indebtedness and Performance of Obligations. Mortgagor
will duly and punctually pay the Indebtedness, as and when called for in the
Secured Debt Documents and on or before the due dates thereof, and will timely
perform and

                                      -13-
<PAGE>

discharge all of the Obligations in full and on or before the dates same are to
be performed and discharged.

      3.2 Certain Representations and Warranties. Mortgagor represents and
warrants (and with respect to those matters set forth in the following
subsections (b) and (f), as to those portions of the Mortgaged Property that are
operated by persons other than Mortgagor or a Subsidiary of Mortgagor, Mortgagor
makes such representation and warranty to the best of its knowledge) that

            (a) the oil and gas leases described in Exhibit A hereto are valid,
      subsisting leases, superior and paramount to all other oil and gas leases
      respecting the properties to which they pertain,

            (b) all producing wells located on the lands described in Exhibit A
      (including Exhibit A-1) have been drilled, operated and produced in
      conformity with all Applicable Laws of all Governmental Authorities having
      jurisdiction, and are subject to no penalties on account of past
      production, and such wells are in fact bottomed under and are producing
      from, and the well bores are wholly within, the lands described in Exhibit
      A or lands pooled or unitized therewith,

            (c) Mortgagor, to the extent of the interest specified in Exhibit A
      (including Exhibit A-1), has valid and indefeasible title to each property
      right or interest constituting the Mortgaged Property described in Exhibit
      A (including Exhibit A-1) and has a good and legal right to grant and
      convey the same to Trustee; such interest entitles Mortgagor to receive
      not less than the share of Hydrocarbons from such property indicated as
      its net revenue interest or "NRI" share of such Hydrocarbons, and
      obligates Mortgagor to pay for not more than the share of operating and
      other costs, liabilities and expenses associated with such property
      indicated as its working interest or "Wl" share of such costs, liabilities
      and expenses,

            (d) Excepting the Permitted Encumbrances, the Mortgaged Property is
      free from all encumbrances or liens whatsoever,

            (e) Mortgagor is not obligated, by virtue of any prepayment under
      any contract providing for the sale by Mortgagor of Hydrocarbons which
      contains a "take or pay" clause or under any similar arrangement, to
      deliver Hydrocarbons at some future time without then or thereafter
      receiving full payment therefor,

            (f) the Mortgaged Property is currently being operated, maintained
      and developed, in all material respects, in accordance with all applicable
      currently existing Permits, Legal Requirements and all Applicable Laws
      (including, without limitation, Environmental Laws),

            (g) the cover page to this Mortgage lists the correct legal name of
      Mortgagor and Mortgagor has not been known by any legal name different
      from the one set forth on the cover page of this Mortgage,

                                      -14-
<PAGE>

            (h) the execution, delivery, and performance by Mortgagor of this
      Mortgage (i) are within Mortgagor's corporate powers and have been duly
      authorized by Mortgagor's Board of Directors, shareholders and all other
      requisite corporate action, (ii) have received all (if any) requisite
      prior governmental approval and consent in order to be legally binding and
      enforceable in accordance with the terms thereof, and (iii) will not
      violate, be in conflict with, result in a breach or constitute (with due
      notice or lapse of time, or both) a default under, any Legal Requirement
      or result in the creation or imposition of any lien, charge or encumbrance
      of any nature whatsoever upon any of Mortgagor's property or assets,
      except as contemplated by the provisions of the Secured Debt Documents,
      and

            (i) except as permitted by the Secured Debt Documents, there are no
      actions, suits or proceedings pending, or to the knowledge of Mortgagor
      threatened, against or affecting Mortgagor or the Mortgaged Property that
      could materially adversely affect Mortgagor or the Mortgaged Property, or
      involving the validity or enforceability of this Mortgage or the priority
      of the liens and security interests created by the Secured Debt Documents,
      and no event has occurred (including specifically Mortgagor's execution of
      this Mortgage which will violate, be in conflict with, result in the
      breach of, or constitute (with due notice or lapse of time, or both) a
      material default under, any Legal Requirement or result in the creation or
      imposition of any lien, charge or encumbrance of any nature whatsoever
      upon any of Mortgagor's property other than the liens and security
      interests created by the Secured Debt Documents.

      3.3 Further Assurances. Mortgagor will warrant and forever defend the
Mortgaged Property unto Trustee and Beneficiary, as the case may be, against
every person whomsoever lawfully claiming the same or any part thereof, subject
to Permitted Encumbrances, and Mortgagor will maintain and preserve the lien and
security interest hereby created so long as any of the Indebtedness remains
unpaid. Mortgagor will execute and deliver such other and further instruments
and will do such other and further acts as may be required pursuant to the
Collateral Trust Agreement and/or any Secured Debt Documents to carry out more
effectually the purposes of this Mortgage, including, without limiting the
generality of the foregoing, (i) prompt correction of any defect which may
hereafter be discovered in the title to the Mortgaged Property or in the
execution and acknowledgment of this Mortgage, the Secured Debt Documents, or,
immediately upon the occurrence of an Event of Default, any other document
executed in connection herewith, and (ii) at any time a Secured Debt
Representative may request and upon such request, promptly execute all notices
to parties operating, purchasing or receiving proceeds of production of
Hydrocarbons from the Mortgaged Property, and all division orders or transfer
orders needed in order to transfer effectually or to assist in transferring
effectually to the Beneficiary the assigned proceeds of production from the
Mortgaged Property, which notices, division orders and transfer orders shall be
held by such Secured Debt Representative and delivered upon an Event of Default.

                                      -15-
<PAGE>

      3.4 Operation of the Mortgaged Property. So long as the Indebtedness or
any part thereof remains unpaid, and whether or not Mortgagor is the operator of
any particular part of the Mortgaged Property, Mortgagor shall, at Mortgagor's
own expense:

            (a) Do all things necessary to keep unimpaired Mortgagor's rights in
      the Mortgaged Property and not abandon any well or forfeit, surrender or
      release any Lease, except that Mortgagor may, in the ordinary course of
      business, (i) plug and abandon any well no longer capable of producing
      Hydrocarbons in paying quantities, (ii) surrender or release any Lease or
      a portion thereof so long as no well capable of producing Hydrocarbons in
      paying quantities is located on such Lease or a portion thereof or
      production from any such well is attributed to such Lease or a portion
      thereof, (iii) surrender or release any Lease or a portion thereof on
      which no producing well has ever been drilled or which has never been held
      by production from another well unless Proven Reserves (as defined in any
      Secured Debt Document) are attributed to such Lease or a portion thereof
      and (iv) abandon, forfeit, surrender or release any other portion of the
      Mortgaged Property to the extent permitted under the then existing Secured
      Debt Documents;

            (b) Obtain and maintain all required Permits and cause the lands
      described in Exhibit A to be maintained, developed, protected against
      drainage, and operated for the production of Hydrocarbons in a good and
      workmanlike manner as would a prudent operator, and consistent with
      industry practices, Joint Operating Agreements, and all Applicable Laws,
      excepting those being contested in good faith; and plug and abandon wells
      no longer capable of producing Hydrocarbons in paying quantities in
      accordance with all Applicable Laws, Legal Requirements and the terms and
      conditions of applicable Leases; and remediate the lands described in
      Exhibit A and facilities located thereon in accordance with all Applicable
      Laws, Legal Requirements and the terms and conditions of applicable
      Leases;

            (c) Duly pay and discharge, or cause to be paid and discharged,
      promptly as and when due and payable, all rentals and royalties (including
      shut-in royalties) payable in respect of the Mortgaged Property (other
      than rentals under Leases that are surrendered pursuant to the foregoing
      Section 3.4(a)), and all expenses incurred in or arising from the
      operation or development of the Mortgaged Property not later than the due
      date thereof, or the day any fine, penalty, interest or cost may be added
      thereto or imposed, or the day any lien may be filed, for the non-payment
      thereof (if such day is used to determine the due date of the respective
      item) except as to such matters which are being contested by Mortgagor in
      good faith;

            (d) Cause the Operating Equipment to be kept in good and effective
      operating condition, ordinary wear and tear excepted, and all repairs,
      renewals, replacements, additions and improvements thereof or thereto,
      needful to the production of Hydrocarbons from the lands described in
      Exhibit A, to be promptly made;

                                      -16-
<PAGE>

            (e) Not, except as permitted under the Secured Debt Documents,
      create, place or permit to be created or placed, or through any act or
      failure to act, acquiesce in the placing of, or allow to remain, any
      mortgage, pledge, lien (statutory, constitutional or contractual),
      security interest, encumbrance or charge, or conditional sale or other
      title retention agreement, regardless of whether same are expressly
      subordinate to the liens of the Secured Debt Documents, with, respect to
      all or any portion of the Mortgaged Property, the Leases or the Rents and
      Revenues other than (1) the Permitted Encumbrances, (2) Taxes constituting
      a lien but not due and payable, (3) defects or irregularities in title,
      and liens, charges or encumbrances, which are customarily viewed in the
      industry as not interfering materially with the development, operation or
      value of the Mortgaged Property and not such as to affect materially title
      thereto, and (4) those being contested by Mortgagor in good faith in such
      manner as not to jeopardize Beneficiary's rights in and to the Mortgaged
      Property;

            (f) Carry with financially sound and reputable insurance companies
      and in amounts as is customary in the industry or as otherwise required
      pursuant to the Secured Debt Documents, the following insurance: (1)
      workmen's compensation insurance and public liability and property damage
      insurance in respect of all activities in which Mortgagor might incur
      personal liability for the death of or injury to an employee or third
      person, or damage to or destruction of another's property; and (2) to the
      extent such insurance is carried by similar companies engaged in similar
      undertakings in, the same general areas in which the Mortgaged Property,
      is located, insurance in respect of the Operating Equipment, against loss
      or damage by fire, lightning, hail, tornado, explosion and other similar
      risks, hazards, casualties and contingencies (including business
      interruption insurance covering loss of Rents and Revenues); provided,
      that any such insurance may be -------- provided by way of self insurance
      to the extent that similar companies engaged in similar undertakings in
      the same general areas also self-insure. Each insurance policy issued in
      connection therewith shall provide by way of endorsements, riders or
      otherwise that (i) name Beneficiary as a loss payee on all property
      insurance policies and an additional insured on all liability insurance
      policies, and provide that proceeds from property insurance policies will
      be payable to Beneficiary as its interest may appear, which proceeds are
      hereby assigned to Beneficiary, it being agreed by Mortgagor that such
      payments shall be applied A) if there be no Event of Default existing or
      which would exist but for due notice or lapse of time, or both, to the
      restoration, repair or replacement of the Mortgaged Property, or B) if
      there be an Event of Default existing, or which would exist but for due
      notice or lapse of time, or both, in accordance with the provisions of the
      Collateral Trust Agreement, either for the above stated purpose or toward
      the payment of the Indebtedness; (ii) the coverage of Beneficiary shall
      not be terminated, reduced or affected in any manner regardless of any
      breach or violation by Mortgagor of any warranties, declarations or
      conditions in such policy; (iii) no such insurance policy shall be
      canceled, endorsed, altered or reissued to effect a change in coverage for
      any reason and to any extent whatsoever unless such insurer shall have
      first given Beneficiary and each Secured Debt Representative thirty (30)
      days prior written

                                      -17-
<PAGE>

      notice thereof; and (iv) Beneficiary may, but shall not be obligated to,
      make premium payments to prevent any cancellation, endorsement, alteration
      or re-issuance and such payments shall be accepted by the insurer to
      prevent the same. Beneficiary shall be furnished with a certificate
      evidencing such coverage in form and content comparable to coverage
      typically provided in the industry. All policies to be maintained under
      this Mortgage are to be issued on forms and by companies and with
      endorsements as are customary in the industry. Mortgagor shall maintain
      insurance in an amount sufficient to prevent Mortgagor from becoming a
      co-insurer under any policy required hereunder. If Mortgagor fails to
      maintain the level of insurance required under this Mortgage, then
      Mortgagor shall and hereby agrees to indemnify Beneficiary to the extent
      that a casualty occurs and insurance proceeds would have been available
      had such insurance been maintained;

            (g) Furnish to Beneficiary and each Secured Debt Representative, as
      soon as possible and in any event within five (5) days after the
      occurrence from time to time of any change in the address of Mortgagor's
      location (as described on the signature page hereto) or in the name of
      Mortgagor, notice in writing of such change;

            (h) Not initiate or acquiesce in any change in any material zoning
      or other land use or Water Rights classification now or hereafter in
      effect and affecting the Mortgaged Property or any part thereof;

            (i) Notify Beneficiary and each Secured Debt Representative in
      writing, as soon as possible and in any event within five (5) days after
      it shall become aware of the occurrence of any Event of Default or any
      event which, with notice, the passage of time or both would be such an
      Event of Default;

            (j) Appear and defend, and hold Beneficiary and any Secured
      Debtholder harmless from, any action, proceeding or claim affecting the
      Mortgaged Property or the rights and powers of Beneficiary or Secured
      Debtholders under the Secured Debt Documents, and all costs and expenses
      incurred by Beneficiary or any Secured Debtholder in protecting its
      interests hereunder in such an event (including all court costs and
      attorneys' fees) shall be borne by Mortgagor;

            (k) Subject to Mortgagor's right to contest the same, promptly pay
      all Taxes legally imposed upon this instrument or upon the Mortgaged
      Property or upon the income and profits thereof, or upon the interest of
      Beneficiary therein; provided that Mortgagor shall not be liable for taxes
      accruing after a transfer of the Mortgaged Property following a
      foreclosure;

            (l) Comply with, conform to and obey, in all material respects, all
      present and future Legal Requirements and not use, maintain, operate,
      occupy, or allow the use, maintenance, operation or occupancy of, the
      Mortgaged Property in any manner which (a) violates any present and future
      Legal Requirement, (b) may be dangerous unless safeguarded as required by
      Applicable Law, (c) constitutes a

                                      -18-
<PAGE>

      public or private nuisance or (d) makes void, voidable or cancelable, or
      increases the premium of, any insurance then in force with respect
      thereto; and

            (m) Not, except as authorized under the Secured Debt Documents,
      permit any of the Fixtures or Personalty to be removed at any time from
      the lands described in Exhibit A unless (i) the removed item is removed
      temporarily for maintenance and repair, (ii) if removed permanently, is
      replaced by an article of equal suitability and value, owned by Mortgagor,
      free and clear of any lien or security interest or (iii) such Fixtures or
      Personalty are removed in connection with the plugging and abandoning of
      wells, or abandonment of other facilities, in each case as permitted by
      this Mortgage.

      3.5 Performance of Leases. Mortgagor will: (a) duly and punctually perform
and comply with any and all representations, warranties, covenants and
agreements expressed as binding upon it under each of the Leases; (b) subject to
the exceptions provided for in Section 3.4(a), not voluntarily terminate, cancel
or waive its rights or the obligations of any other party under any of the
Leases; (c) subject to the exceptions provided for in Section 3.4(a), use all
reasonable efforts to maintain each of the Leases in force and effect during the
full term thereof, and (d) appear in and defend (or cause its operator to appear
in and defend) any action or proceeding arising under or in any manner connected
with any of the Leases or the representations, warranties, covenants and
agreements of it or the other party or parties thereto.

      3.6 Recording, etc. Mortgagor will promptly, and at Mortgagor's expense,
record, register, deposit and file this and every other instrument in addition
or supplemental hereto in such offices and places and at such times and as often
as may be necessary to preserve, protect and renew the lien and security
interest hereof as a first lien on and prior perfected security interest in real
or personal property, as the case may be, and the rights and remedies of
Beneficiary and Secured Debtholders, and otherwise will do and observe all
things or matters necessary or expedient to be done or observed by reason of any
Applicable Law, for the purpose of effectively creating, maintaining and
preserving the lien and security interest hereof on and in the Mortgaged
Property.

      3.7 Sale or Mortgage of the Mortgaged Property. Except (a) as set forth in
Section 6.1 of this Mortgage; (b) for sales of severed Hydrocarbons in the
ordinary course of Mortgagor's business; (c) for sales of or dispositions of
surplus, obsolete or worn inventory or equipment; (d) for the lien and security
interest created by this Mortgage, (e) for Permitted Encumbrances, and (f) for
sales, exchanges or other dispositions of Mortgaged Property permitted under the
Secured Debt Documents governing Priority Lien Debt and permitted under the
Secured Debt Documents governing Parity Lien Debt, Mortgagor will not sell,
convey, mortgage, pledge, hypothecate, pool, unitize or otherwise dispose of or
encumber the Mortgaged Property nor any portion thereof, nor any of Mortgagor's
right, title or interest therein, and Mortgagor will not enter into any
arrangement with any gas pipeline company or other consumer of Hydrocarbons
regarding the Mortgaged Property whereby said gas

                                      -19-
<PAGE>

pipeline company or consumer may set off any claim against Mortgagor by
withholding payment for any Hydrocarbons actually delivered.

      3.8 Records, Statements and Reports. Mortgagor will keep proper books of
record and account in which complete and correct entries will be made of
Mortgagor's transactions in accordance with generally accepted accounting
principles and will furnish or cause to be furnished to each Secured Debt
Representative such information concerning the business, affairs and financial
condition of Mortgagor as required under the Secured Debt Documents. Without
limiting the generality of the foregoing, Mortgagor shall furnish to Beneficiary
and each Secured Debt Representative, but not more than every six (6) months:
(a) reports prepared by a reputable national independent petroleum engineer
regularly engaged by Mortgagor for such purposes or other engineering firm
acceptable to the Credit Agreement Agent concerning (1) the quantity of
Hydrocarbons recoverable from the Mortgaged Property, (2) the projected income
and expense attributable to the Mortgaged Property, and (3) the expediency of
any change in methods of treatment or operation of all or any wells productive
of Hydrocarbons, any new drilling or development, any method of secondary
recovery by repressuring or otherwise, or any other action with respect to the
Mortgaged Property, the decision as to which may increase or reduce the quantity
of Hydrocarbons ultimately recoverable or the rate of production thereof, and
(b) reports for the prior period showing the gross proceeds from the sale of
Hydrocarbons produced from the lands described in Exhibit A (including any
thereof taken by Mortgagor for Mortgagor's own use), the quantity of such
Hydrocarbons sold, the severance, gross production, occupation, or gathering
taxes deducted from or paid out of such proceeds and the number of wells
operated, drilled or abandoned.

      3.9 Right of Entry.

            (a) Upon at least twenty-four (24) hours notice to Mortgagor,
      Mortgagor will permit Beneficiary, each Secured Debt Representative and/or
      the agents of either of them, at the cost and expense of Mortgagor, to
      enter upon the Mortgaged Property and all parts thereof, for the purpose
      of investigating and inspecting the condition and operation thereof, and
      shall permit reasonable access to the field offices and other offices (to
      the fullest extent that Mortgagor may do so under the terms of the
      applicable Joint Operating Agreements and other applicable agreements
      affecting the Mortgaged Property), including the principal place of
      business, of Mortgagor to inspect and examine the Mortgaged Property and
      to inspect, review and reproduce as necessary any books, records,
      accounts, contracts or other documents of Mortgagor, , it being understood
      that any non-public information obtained in connection therewith shall be
      subject to the relevant confidentiality provisions of the Secured Debt
      Documents then in effect.

            (b) Without limiting the generality of the foregoing, Beneficiary
      shall have the right (but shall not be obligated to), and each Secured
      Debt Representative and its agents shall have the right (to the fullest
      extent that Mortgagor may do so under the terms of the applicable Joint
      Operating Agreements and other

                                      -20-
<PAGE>

      applicable agreements affecting the Mortgaged Property), on twenty-four
      (24) hours prior notice to Mortgagor to enter the Mortgaged Property to
      conduct (at the cost and expense of Mortgagor), or to cause Mortgagor to
      conduct (at the cost and expense of Mortgagor), such tests and
      investigations as may be necessary to determine whether any hazardous
      materials or solid waste is being generated, transported, stored, or
      disposed of in accordance with applicable Environmental Laws. Such tests
      and investigations may include, without limitation, underground borings,
      ground water analyses and borings from the floors, ceilings and walls of
      any improvements located on the Mortgaged Property. This Section 3.9 shall
      not be construed to affect or limit the obligations of Mortgagor pursuant
      to Section 3.4 hereof.

            (c) Neither Beneficiary nor any Secured Debt Representative shall
      have any duty to visit or observe the Mortgaged Property, or to conduct
      tests, and no site visit, observation or testing by any such person (or
      its agents and independent contractors) shall impose any liability on any
      such person nor shall Mortgagor or any other obligor be entitled to rely
      on any such visit, observation or testing in any respect. Beneficiary or a
      Secured Debt Representative may, but shall not be obligated to, disclose
      to Mortgagor or, subject to the relevant confidentiality provisions of the
      Secured Debt Documents then in effect, any other Person, including any
      Governmental Authority, any report or finding made as a result of, or in
      connection with, any site visit, observation or testing. Mortgagor agrees
      that neither Beneficiary nor any Secured Debt Representative makes any
      warranty or representation to Mortgagor or any other obligor regarding the
      truth, accuracy or completeness of any such report or findings that may be
      so disclosed. Mortgagor also acknowledges that, depending upon the results
      of any site visit, observation or testing disclosed to Mortgagor,
      Mortgagor may have a legal obligation to notify one or more Governmental
      Authorities of such results, that such reporting requirements are
      site-specific, and are to be evaluated by Mortgagor without advice or
      assistance from Beneficiary or any Secured Debt Representative.

      3.10 Environmental Laws.

            (a) Mortgagor represents and warrants, to the best of its knowledge
      after due inquiry that:

                  (i) except as permitted by the Secured Debt Documents, the
            Mortgaged Property is in compliance in all material respects with
            all applicable Environmental Laws and there are no conditions
            existing currently which would be likely to subject Mortgagor to
            damages, penalties, injunctive relief or cleanup costs under any
            Environmental Laws or assertions thereof, or which require or are
            likely to require cleanup, removal, remedial action or other
            response pursuant to Environmental Laws by Mortgagor; and all use,
            generation, manufacturing, release, discharge, storage, deposit,
            treatment, recycling or disposal of any materials on, under or at
            the Mortgaged Property or transported to or from

                                      -21-
<PAGE>

            the Mortgaged Property (or tanks or other facilities thereon
            containing such materials) are being and will be conducted in
            accordance, in all material respects, with applicable Environmental
            Laws including without limitation those requiring cleanup, removal
            or any other remedial action,

                  (ii) Mortgagor is not a party to any litigation or
            administrative proceedings, nor so far as is known by Mortgagor is
            any litigation or administrative proceeding threatened against it,
            which asserts or alleges that Mortgagor has violated or is violating
            Environmental Laws or that Mortgagor is required to clean up, remove
            or take remedial or other responsive action due to the disposal,
            depositing, discharge, leaking or other release of any hazardous
            substances or materials; neither the Mortgaged Property nor
            Mortgagor is subject to any judgment, decree, order or citation
            related to or arising out of Environmental Laws and neither has been
            named or listed as a potentially responsible party by any
            Governmental Authority in a matter arising under any Environmental
            Laws; and

                  (iii) Mortgagor has also obtained all Permits required under
            applicable Environmental Laws which are necessary for its current
            exploration, production, transportation, storage, use, and
            development activities at the Mortgaged Property.

            (b) Mortgagor shall not use or permit the Mortgaged Property or any
      part thereof to be used to generate, manufacture, refine, transport,
      treat, store, handle, dispose, transfer, produce or process any hazardous
      materials, except in strict compliance with all applicable Environmental
      Laws, nor shall Mortgagor cause or permit, as a result of any intentional
      or unintentional act or omission on the part of Mortgagor or any tenant or
      subtenant, a release of any hazardous materials onto the Mortgaged
      Property or onto any other property in material violation of any
      applicable Environmental Laws. Mortgagor shall comply, in all material
      respects, with all applicable Environmental Laws and shall obtain and
      comply with any and all registrations or Permits required thereunder. To
      the extent any hazardous materials are released or discharged onto the
      Mortgaged Property on or after the date of this Mortgage, Mortgagor shall
      conduct and complete all investigations, studies, sampling, and testing,
      and all remedial, removal, and other actions necessary to clean up and
      remove all such hazardous materials on, from, or affecting the Mortgaged
      Property or any part thereof (i) in accordance with all applicable
      Environmental Laws; and (ii) in accordance with the orders and directives
      of all Governmental Authorities having jurisdiction over the Mortgaged
      Property. Mortgagor shall promptly notify Beneficiary and each Secured
      Debt Representative of its receipt of any notice of a violation of any
      Environmental Laws.

            (c) Regardless of whether any site assessments are conducted
      pursuant to this Mortgage, and without limiting the liability of Mortgagor
      for the breach of any warranty, representation or covenant contained
      herein or in any Secured

                                      -22-
<PAGE>

      Debt Document, and notwithstanding any limitation of liability contained
      in the Secured Debt Documents, Mortgagor hereby agrees to unconditionally
      and absolutely defend, indemnify and hold harmless Beneficiary, Secured
      Debtholders, Trustee and their respective employees, affiliates, agents
      and attorneys, under the Mortgage and any successors or substitute trustee
      under the Mortgage (any person to be indemnified being herein called the
      "Indemnified Person"), from and against, and be responsible for, any and
      all liabilities (including strict liability), actions, demands, penalties,
      fines, taxes, assessments, losses (including, without limitation,
      diminution in the value of the Mortgaged Property), costs and expenses
      (including, without limitation, attorneys', paralegals', accountants' and
      other experts' and consultants' fees and expenses, and remedial costs,
      including, without limitation, costs of monitoring), suits, damages,
      including, without limitation, punitive damages and foreseeable and
      unforeseeable consequential damages, costs of any settlement or judgment
      and claims (including, without limitation, third-party claims for personal
      injury or real or personal property damage) of any and every kind
      whatsoever (hereinafter, collectively, called the "Losses"), which may now
      or in the future (whether before or after the release, or other
      termination of the Mortgage and the other Secured Debt Documents) be paid,
      imposed upon, incurred or suffered by or asserted or awarded against any
      of the Indemnified Persons or the Mortgaged Property by any person or
      entity or Governmental Authority for, with respect to, arising out of, or
      as a direct or indirect result of, any one or more of the following: (i)
      the presence or suspected presence, release or suspected release of any
      hazardous materials at, upon, under, within, above, from, by or in
      connection with the Mortgaged Property or any portion thereof, or
      elsewhere in connection with the transportation of hazardous materials to
      or from the Mortgaged Property (including, without limitation, in the air,
      soil, groundwater or surface water), or the escape, seepage, leakage,
      spillage, discharge, emission or release from the Mortgaged Property of
      any hazardous materials; (ii) any violations of any Environmental Laws at,
      upon, under, within, from, by or in connection with the Mortgaged
      Property; (iii) the environmental condition of the Mortgaged Property;
      (iv) the imposition by any Governmental Authority of any lien or so-called
      "super priority lien" upon the Mortgaged Property as a result of the
      presence or release of hazardous materials, or any violation of any
      Environmental Laws, at, upon, under, within, from, by or connection with
      the Mortgaged Property; (v) obligations to remediate hazardous materials
      contamination, or to remediate any condition which constitutes a violation
      of any Environmental Laws; (vi) any site assessments of the Mortgaged
      Property; (vii) liability for personal injury or property damage or damage
      to the environment or fines, penalties and punitive damages, resulting
      from the presence or release of hazardous materials or any violations of
      any Environmental Laws, at, upon, under, within, from, by or in connection
      with the Mortgaged Property; and (viii) any environmental matter described
      in this Mortgage, including, without limitation, matters arising out of
      any breach of the covenants, representations and warranties set forth
      herein in each instance described in (i) through (viii) hereof regardless
      of whether any such Losses arise out of or result from any breach of the
      covenants, representations

                                      -23-
<PAGE>

      and warranties pertaining to environmental matters set forth in this
      Mortgage or the other Secured Debt Documents, and regardless of whether or
      not caused by or within the control of Mortgagor or any Indemnified
      Person; or whether any such matters arise before, during or after any
      foreclosure of the Mortgage or other taking of title to all or any portion
      of the Mortgaged Property or the enforcement of any other remedies under
      the Secured Debt Documents (if any such event occurs). WITHOUT LIMITATION,
      THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
      RESPECT TO LOSSES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
      THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE OR THE STRICT LIABILITY OF
      ANY SUCH INDEMNIFIED PERSON, BUT NOT THE GROSS NEGLIGENCE OR WILLFUL
      MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON. THE FOLLOWING SHALL APPLY TO
      THAT PORTION OF THE MORTGAGED PROPERTY LOCATED IN THE STATE OF NEW MEXICO:
      TO THE EXTENT THE FOREGOING INDEMNITY IS GOVERNED BY SECTION 56-7-1 NMSA
      (1978), SAID INDEMNITY SHALL NOT EXTEND TO LIABILITY, CLAIMS, DAMAGES,
      LOSSES OR EXPENSES, INCLUDING ATTORNEYS FEES, ARISING OUT OF (A) THE
      PREPARATION OR APPROVAL OF MAPS, DRAWINGS, OPINIONS, REPORTS, SURVEYS,
      CHANGE ORDERS, DESIGNS OR SPECIFICATIONS BY AN INDEMNIFIED PERSON, OR (B)
      THE GIVING OF OR THE FAILURE TO GIVE DIRECTIONS OR INSTRUCTIONS BY AN
      INDEMNIFIED PERSON WHERE SUCH GIVING OR FAILURE TO GIVE DIRECTIONS OR
      INSTRUCTIONS IS THE PRIMARY CAUSE OF BODILY INJURY TO PERSONS OR DAMAGE TO
      PROPERTY. TO THE EXTENT THE FOREGOING INDEMNITY IS GOVERNED BY SECTION
      56-7-2 NMSA (1978), SAID INDEMNITY SHALL NOT EXTEND TO (A) THE SOLE OR
      CONCURRENT NEGLIGENCE OF AN INDEMNIFIED PERSON, (B) THE SOLE OR CONCURRENT
      NEGLIGENCE OF AN INDEPENDENT CONTRACTOR WHO IS DIRECTLY RESPONSIBLE TO AN
      INDEMNIFIED PERSON, OR (C) AN ACCIDENT THAT OCCURS IN OPERATIONS CARRIED
      ON, AT THE DIRECTION, OR UNDER THE SUPERVISION OF AN INDEMNIFIED PERSON OR
      IN ACCORDANCE WITH METHODS AND MEANS SPECIFIED BY AN INDEMNIFIED PERSON.

            (d) Notwithstanding the foregoing or any contrary provision hereof,
      Mortgagor's indemnification obligations set forth in this Section 3.10
      shall not extend to any such Losses which are attributable solely to
      contamination by hazardous materials first introduced to the Mortgaged
      Property after a foreclosure of this Mortgage or other taking of title to
      the Mortgaged Property by any of Indemnified Persons.

            (e) The indemnification provided in this Section 3.10 shall
      specifically apply to and include claims or actions brought by or on
      behalf of tenants or employees of Mortgagor. Mortgagor hereby expressly
      waives (with respect to any claims of any Indemnified Person arising under
      this Section 3.10) any immunity to which Mortgagor may otherwise be
      entitled under any industrial or worker's compensation laws.

            (f) In the event any of the Indemnified Persons shall suffer or
      incur any such Losses, Mortgagor shall pay to such Indemnified Persons the
      total of all such Losses suffered or incurred within ten (10) days after
      demand therefore.

                                      -24-
<PAGE>

            (g) Mortgagor agrees that the representations, covenants, warranties
      and indemnifications contained in this Mortgage shall survive the release
      of the Mortgage, the foreclosure or the taking of a deed in lieu of
      foreclosure, other termination of the lien of the Mortgage, or the
      exercise by Beneficiary of any other remedies under the Secured Debt
      Documents, the discharge of Mortgagor's Obligations under any of the other
      Secured Debt Documents, or any transfer of the Mortgaged Property, even if
      as a part of such foreclosure, deed in lieu of foreclosure or other
      enforcement action, the Indebtedness is satisfied in full.

      3.11 Corporate Mortgagor. Mortgagor will continue to be duly qualified to
transact business in each state where the conduct of its business requires it to
be qualified, and will not, unless permitted pursuant to the Secured Debt
Documents, consolidate or merge with any other partnership, company, corporation
or other Person.

      3.12 Taxpayer I.D. Number. The taxpayer identification number of Mortgagor
is 77-0212977. The taxpayer identification number of Beneficiary is 13-5160382.

                                   ARTICLE IV.
                            ASSIGNMENT OF PRODUCTION

      4.1 Assignment.

            (a) Mortgagor hereby absolutely and irrevocably (a) transfers,
      assigns, warrants and conveys, to Beneficiary, effective as of July 1,
      2003, at 7:00 A.M., local time, all Hydrocarbons which are thereafter
      produced from and which accrue to the Mortgaged Property, and all proceeds
      therefrom, and (b) gives to and confers upon Beneficiary the right, power
      and authority to collect such Hydrocarbons and proceeds. Subject to the
      terms of Section 4.1 (b), all parties producing, purchasing or receiving
      any such Hydrocarbons, or having such, or proceeds therefrom, in their
      possession for which they or others are accountable to Beneficiary by
      virtue of the provisions of this Article IV, are authorized and directed
      to treat and regard Beneficiary as the assignee and transferee of
      Mortgagor and entitled in Mortgagor's place and stead to receive such
      Hydrocarbons and all proceeds therefrom; and said parties and each of them
      shall be fully protected in so treating and regarding Beneficiary and
      shall be under no obligation to see to the application by Beneficiary of
      any such proceeds or payments received by it; provided, however, that,
      until Beneficiary or any Secured Debt Representative shall have instructed
      such parties that an Event of Default has occurred and to deliver such
      Hydrocarbons and all proceeds therefrom directly to Beneficiary, such
      parties shall be entitled to deliver such Hydrocarbons and all proceeds
      therefrom directly to Mortgagor. So long as no Event of Default shall have
      occurred, Mortgagor shall be entitled to receive directly from such
      parties, and keep and retain, all such proceeds from the sale of such
      Hydrocarbons.

                                      -25-
<PAGE>

            (b) Upon the occurrence of an Event of Default (provided that the
      Secured Debt Representative shall not give such instruction and notice
      under this Article IV unless such Event of Default shall then be
      continuing), any Secured Debt Representative may at any time (and from
      time to time) thereafter give notice thereof to any party producing,
      purchasing or receiving any such Hydrocarbons, or having such, or proceeds
      therefrom, in their possession for which they or others are accountable to
      Beneficiary, directing that said Hydrocarbons and products are to be
      delivered into pipelines connected with the oil and gas leases, or to the
      purchaser thereof, free and clear of all Taxes, and the proceeds from the
      sale of such Hydrocarbons paid directly to Beneficiary in accordance with
      Section 4.5 of this Mortgage. Said parties producing, purchasing or
      receiving any such Hydrocarbons, or having such, or proceeds therefrom, in
      their possession for which they or others are accountable to Beneficiary
      by virtue of the provisions of this Article IV, shall be fully protected
      in relying on any such Secured Debt Representative's determination and
      notice of the occurrence of an Event of Default. Mortgagor agrees to
      perform all such acts, and to execute all such further assignments,
      transfers and division orders, and other instruments as may be required
      pursuant to the Collateral Trust Agreement or any of the Secured Debt
      Documents in order to have said revenues and proceeds so paid to
      Beneficiary, as and when provided in this Article IV. With respect to any
      funds received by Beneficiary, Beneficiary is fully authorized to (but
      shall not be obligated to) receive and give receipt for any such revenues
      and proceeds that are received by Beneficiary; to endorse and cash any and
      all checks and drafts payable to the order of Mortgagor or Beneficiary for
      the account of Mortgagor received from or in connection with said revenues
      or proceeds and apply the proceeds thereof in accordance with Section 4.2
      hereof, and to execute transfer and division orders in the name of
      Mortgagor, or otherwise, with warranties binding Mortgagor. The assignment
      of the Hydrocarbons and proceeds in this Section 4.1 is intended to be an
      absolute assignment from Mortgagor to Beneficiary and not merely the
      passing of a security interest. Such Hydrocarbons and proceeds are hereby
      assigned absolutely by Mortgagor to Beneficiary.

      4.2 Application of Proceeds. All payments received by Beneficiary pursuant
to Section 4.1 hereof shall be placed in a cash collateral account to be applied
in accordance with the provisions of the Collateral Trust Agreement.

      4.3 No Liability of Beneficiary in Collecting. Beneficiary is hereby
absolved from all liability for failure to enforce collection of any proceeds so
assigned (and no such failure shall be deemed to be a waiver of any right of
Beneficiary under this Article IV) and from all other responsibility in
connection therewith, except the responsibility to account to Mortgagor for
funds actually received.

      4.4 Assignment Not a Restriction on Beneficiary's Rights. Nothing herein
contained shall detract from or limit the absolute obligation of Mortgagor to
make payment of the Indebtedness regardless of whether the proceeds assigned by
this Article IV are sufficient to pay the same, and the rights under this
Article IV shall be in

                                      -26-
<PAGE>

addition to all other security now or hereafter existing to secure the payment
of the Indebtedness.

      4.5 Status of Assignment. Notwithstanding the other provisions of this
Article IV and in addition to the other rights hereunder, Beneficiary or any
receiver appointed in judicial proceedings for the enforcement of this Mortgage
shall have the right to receive all of the Hydrocarbons herein assigned and the
proceeds therefrom after the occurrence and during the continuance of any Event
of Default and to apply all of said proceeds as provided in Section 4.2 hereof.
Upon any sale of the Mortgaged Property or any part thereof pursuant to Article
V, the Hydrocarbons thereafter produced from the property so sold, and the
proceeds therefrom, shall be included in such sale and shall pass to the
purchaser free and clear of the assignment contained in this Article IV.

      4.6 Indemnification Obligation. The following provisions shall apply to,
and be deemed in each case to modify, each of the provisions of this Mortgage
(except those set forth in Section 3.10 hereof) and the other Secured Debt
Documents (except to the extent otherwise expressly provided therein) wherein
Mortgagor is obligated to indemnify each of the Indemnified Persons:

            (a) Mortgagor agrees to indemnify Beneficiary, the Secured
      Debtholders, Trustee and their respective employees, affiliates, agents
      and attorneys, under the Mortgage and any successors or substitute trustee
      under the Mortgage, against all legal and administrative proceedings for
      which a claim for indemnification may be made by the Indemnified Person
      (herein, collectively, called "Indemnification Claims") made against or
      incurred by them or any of them as a consequence of the assertion, either
      before or after the payment in full of the Indebtedness, that they or any
      of them received Hydrocarbons herein assigned or the proceeds thereof
      claimed by third persons and Beneficiary, Secured Debtholders, and Trustee
      shall have the right to defend against any such Indemnification Claims,
      employing attorneys therefor, and unless furnished with reasonable
      indemnity, they or any of them shall have the right to pay or compromise
      and adjust all such Indemnification Claims. Mortgagor will indemnify and
      pay to Beneficiary, Secured Debtholders and Trustee any and all such
      amounts as may be paid in respect thereof or as may be successfully
      adjudged against such persons. The obligations of Mortgagor as hereinabove
      set forth in this Section 4.6 shall survive the release termination,
      foreclosure or assignment of this Mortgage or any sale hereunder.

            (b) Mortgagor shall pay when due any judgments with respect to an
      Indemnification Claim against any of the Indemnified Persons and which are
      rendered by a final order or decree of a court of competent jurisdiction
      from which no further appeal may be taken or has been taken within the
      applicable appeal period. In the event that such payment is not made, any
      of the Indemnified Persons at its sole discretion may pay any such
      judgments, in whole or in part, and look to Mortgagor for reimbursement
      pursuant to this Mortgage, or may proceed to file suit against Mortgagor
      to compel such payment.

                                      -27-
<PAGE>

            (c) Any amount which Mortgagor is obligated to pay to or for the
      benefit of an Indemnified Person with respect to an Indemnification Claim,
      but which is not paid when due, shall bear interest at the applicable rate
      set forth under the Secured Debt Documents from the date such amount is
      due until such amount is paid.

      WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO LOSSES WHICH IN WHOLE OR IN PART ARE CAUSED
BY OR ARISE OUT OF THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE OR THE STRICT
LIABILITY OF ANY SUCH INDEMNIFIED PERSON, BUT NOT THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON. THE FOLLOWING SHALL APPLY TO
THAT PORTION OF THE MORTGAGED PROPERTY LOCATED IN THE STATE OF NEW MEXICO: TO
THE EXTENT THE FOREGOING INDEMNITY IS GOVERNED BY SECTION 56-7-1 NMSA (1978),
SAID INDEMNITY SHALL NOT EXTEND TO LIABILITY, CLAIMS, DAMAGES, LOSSES OR
EXPENSES, INCLUDING ATTORNEYS FEES, ARISING OUT OF (A) THE PREPARATION OR
APPROVAL OF MAPS, DRAWINGS, OPINIONS, REPORTS, SURVEYS, CHANGE ORDERS, DESIGNS
OR SPECIFICATIONS BY AN INDEMNIFIED PERSON, OR (B) THE GIVING OF OR THE FAILURE
TO GIVE DIRECTIONS OR INSTRUCTIONS BY AN INDEMNIFIED PERSON WHERE SUCH GIVING OR
FAILURE TO GIVE DIRECTIONS OR INSTRUCTIONS IS THE PRIMARY CAUSE OF BODILY INJURY
TO PERSONS OR DAMAGE TO PROPERTY. TO THE EXTENT THE FOREGOING INDEMNITY IS
GOVERNED BY SECTION 56-7-2 NMSA (1978), SAID INDEMNITY SHALL NOT EXTEND TO (A)
THE SOLE OR CONCURRENT NEGLIGENCE OF AN INDEMNIFIED PERSON, (B) THE SOLE OR
CONCURRENT NEGLIGENCE OF AN INDEPENDENT CONTRACTOR WHO IS DIRECTLY RESPONSIBLE
TO AN INDEMNIFIED PERSON, OR (C) AN ACCIDENT THAT OCCURS IN OPERATIONS CARRIED
ON, AT THE DIRECTION, OR UNDER THE SUPERVISION OF AN INDEMNIFIED PERSON OR IN
ACCORDANCE WITH METHODS AND MEANS SPECIFIED BY AN INDEMNIFIED PERSON.

                                   ARTICLE V.
                           ENFORCEMENT OF THE SECURITY

      5.1 Title Examination. Upon the occurrence of an Event of Default and if
such Event of Default shall be continuing, Beneficiary shall have the right and
power to (but shall not be obligated to) cause to be brought down to date a
title examination and tax histories of the Mortgaged Property, procure title
opinions or title reports or, if necessary, procure new abstracts and tax
histories.

      5.2 Environmental Audit. Upon the occurrence of an Event of Default and if
such Event of Default shall be continuing, Beneficiary shall have the right and
power to (but shall not be obligated to) procure an updated or entirely new
environmental audit of the Mortgaged Property including the lands described in
Exhibit A, buildings, soil, ground water and subsurface investigations; have the
buildings inspected by an engineer or other qualified inspector; enter upon the
Mortgaged Property at any time and from time to time to show the Mortgaged
Property to potential purchasers and potential bidders at foreclosure sale; make
available to potential purchasers and

                                      -28-
<PAGE>

potential bidders all information obtained pursuant to the foregoing and any
other information in the possession of Beneficiary regarding the Mortgaged
Property.

      5.3 Power of Sale of Real Property Constituting a Part of the Mortgaged
Property. Upon the occurrence of an Event of Default and if such Event of
Default shall be continuing, Trustee shall have the right and power to sell, to
the extent permitted by Applicable Law, at one or more sales, as an entirety or
in parcels, as they may elect, the real property constituting a part of the
Mortgaged Property, at such place or places and otherwise in such manner and
upon such notice as may be required by Applicable Law, or, in the absence of any
such requirement, as Trustee may deem appropriate, and to make conveyance to the
purchaser or purchasers; and Mortgagor shall warrant title to such real property
to such purchaser or purchasers. Trustee may postpone the sale of all or any
portion of such real property by public announcement at the time and place of
such sale, and from time to time thereafter may further postpone such sale by
public announcement made at the time of sale fixed by the preceding
postponement. The right of sale hereunder shall not be exhausted by one or any
sale, and Trustee may make other and successive sales until all of the trust
estate be legally sold. With respect to that portion, if any, of the Mortgaged
Property situated in the State of Wyoming, this Mortgage may be foreclosed by
advertisement and sale as provided by applicable Wyoming statutes. With respect
to that portion, if any, of the Mortgaged Property situated in the State of
Oklahoma, the Beneficiary shall have the right and power to (but shall not be
obligated to) declare the Indebtedness secured hereby due and payable and to
sell, or direct Trustee to sell, the "real estate," as such term is defined
under the provisions of 46 O.S. Supp. 1986, Section 42, constituting a part of
the Mortgaged Property, all under the terms of 46 O.S. Supp. 1986, Section 40 et
seq., and shall, to the extent permitted by Applicable Law, have the other
rights conferred on Trustee under the provisions of this Mortgage.

      5.4 Rights of Beneficiary with Respect to Personal Property Constituting a
Part of the Mortgaged Property. Upon the occurrence of an Event of Default and
if such Event of Default shall be continuing, Beneficiary will have all rights
and remedies granted by Applicable Law, and particularly by the Uniform
Commercial Code, including, but not limited to, the right to take possession of
all personal property constituting a part of the Mortgaged Property, and for
this purpose Beneficiary may enter upon any premises on which any or all of such
personal property is situated and take possession of and operate such personal
property (or any portion thereof) or remove it therefrom. Beneficiary may
require Mortgagor to assemble such personal property and make it available to
Beneficiary at a place to be designated by Beneficiary which is reasonably
convenient to all parties. Unless such personal property is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Beneficiary will give Mortgagor reasonable notice of the time
and place of any public sale or of the time after which any private sale or
other disposition of such personal property is to be made. This requirement of
sending reasonable notice will be met if the notice is mailed by first-class
mail, postage prepaid, to Mortgagor at the address shown below the signatures at
the end of this Mortgage at least five (5) days before the time of the sale or
disposition.

                                      -29-
<PAGE>

      5.5 Rights with Respect to Fixtures Constituting a Part of the Mortgaged
Property. Upon the occurrence of an Event of Default and if such Event of
Default shall be continuing, Beneficiary may elect to treat the fixtures
constituting a part of the Mortgaged Property as either real property collateral
or personal property collateral and then proceed to exercise such rights as
apply to such type of collateral.

      5.6 Judicial Proceedings. Upon the occurrence of an Event of Default and
if such Event of Default shall be continuing, Trustee, in lieu of or in addition
to exercising any power of sale hereinabove given, may proceed by a suit or
suits in equity or at law, whether for a foreclosure hereunder for each or upon
credit in one or more parcels or portions under executory or ordinary process,
at Beneficiary's sole option, without appraisement (appraisement being expressly
waived), or for the sale of the Mortgaged Property, or for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for the appointment of a receiver
pending any foreclosure hereunder or the sale of the Mortgaged Property, or for
the enforcement of any other appropriate legal or equitable remedy. Mortgagor
hereby acknowledges the Indebtedness secured hereby, whether now existing or to
arise hereafter, and confesses judgment thereon in the full amount of the
Indebtedness in favor of Beneficiary and any future holder or holders of Secured
Debt if such obligations are not paid at maturity.

      5.7 Possession of the Mortgaged Property. It shall not be necessary for
Trustee or Beneficiary to have physically present or constructively in their
possession at any sale held by Trustee or Beneficiary or by any court, receiver
or public officer any or all of the Mortgaged Property; and Mortgagor shall
deliver to the purchasers at such sale on the date of sale the Mortgaged
Property purchased by such purchasers at such sale, and if it should be
impossible or impracticable for any of such purchasers to take actual delivery
of the Mortgaged Property, then the title and right of possession to the
Mortgaged Property shall pass to such purchaser at such sale as completely as if
the same had been actually present and delivered.

      5.8 Certain Aspects of a Sale. Beneficiary shall have the right to (but
shall not be obligated to) become the purchaser at any sale held by Trustee,
Beneficiary or by any court, receiver or public officer, and Beneficiary shall
have the right to (but shall not be obligated to) credit upon the amount of the
bid made therefor the amount payable out of the net proceeds of such sale to it
Recitals contained in any conveyance made to any purchaser at any sale made
hereunder shall conclusively establish the truth and accuracy of the matters
therein stated, including, without limiting the generality of the foregoing,
nonpayment of the unpaid principal sum of, and the interest accrued on, Secured
Debt after the same have become due and payable, advertisement and conduct of
such sale in the manner provided herein or appointment of any successor Trustee
hereunder.

      5.9 Receipt to Purchaser. Upon any sale, whether made under the power of
sale herein granted and conferred or by virtue of judicial proceedings, the
receipt of Trustee, Beneficiary or of the officer making sale under judicial
proceedings, shall be sufficient discharge to the purchaser or purchasers at any
sale for his or their purchase

                                      -30-
<PAGE>

money, and such purchaser or purchasers, or his or their assigns or personal
representatives, shall not, after paying such purchase money and receiving such
receipt of Trustee, Beneficiary, or of such officer therefor, be obliged to see
to the application of such purchase money, or be in anywise answerable for any
loss, misapplication or nonapplication thereof.

      5.10 Effect of Sale. Any sale or sales of the Mortgaged Property, whether
under the power of sale herein granted and conferred or by virtue of judicial
proceedings, shall operate to divest all right, title, interest, claim and
demand whatsoever either at law or in equity, of Mortgagor of, in and to the
premises and the property sold, and shall be a perpetual bar, both at law and in
equity, against Mortgagor, and Mortgagor's successors or assigns, and against
any and all persons claiming or who shall thereafter claim all or any of the
property sold from, through or under Mortgagor or Mortgagor's successors or
assigns. Nevertheless, Mortgagor, shall join in the execution and delivery of
all proper conveyances, assignments and transfers of the properties so sold.

      5.11 Application of Proceeds. The proceeds of any sale of, and the Rents
and Revenues and other amounts generated by the holding, leasing, operation or
other use of, the Mortgaged Property shall be applied in accordance with the
provisions of the Collateral Trust Agreement.

      5.12 Mortgagor's Waiver of Appraisement, Marshalling and Other Rights.
Mortgagor agrees, to the full extent that Mortgagor may lawfully so agree, that
Mortgagor will not at any time insist upon or plead or in any manner whatever
claim the benefit of any appraisement, valuation, stay, extension or redemption
law now or hereafter in force, in order to prevent or hinder the enforcement or
foreclosure of this Mortgage or the absolute sale of the Mortgaged Property or
the possession thereof by any purchaser at any sale made pursuant to any
provision hereof, or pursuant to the decree of any court of competent
jurisdiction; but Mortgagor, for Mortgagor and all who may claim through or
under Mortgagor, so far as Mortgagor or those claiming through or under
Mortgagor now or hereafter lawfully may, hereby waives the benefit of all such
laws. Mortgagor, for Mortgagor and all who may claim through or under Mortgagor,
waives, to the extent that Mortgagor may lawfully do so, any and all right to
have the Mortgaged Property marshalled upon any foreclosure of the lien hereof,
or sold in inverse order of alienation, and agrees that Trustee, Beneficiary or
any court having jurisdiction to foreclose such lien may sell the Mortgaged
Property as an entirety. Mortgagor, for Mortgagor and all who may claim through
or under Mortgagor, further waives, to the full extent that Mortgagor may
lawfully do so, any requirement for posting a receiver's bond or replevin bond
or other similar type of bond if Trustee or Beneficiary commence an action for
appointment of a receiver or an action for replevin to recover possession of any
of the Mortgaged Property. If any law in this paragraph referred to and now in
force, of which Mortgagor or Mortgagor's successor or successors might take
advantage despite the provisions hereof, shall hereafter be repealed or cease to
be in force, such law shall not thereafter be deemed to, constitute any part of
the contract herein contained or to preclude the operation or application of the
provisions of this paragraph. Pursuant to Section 39-5-19, New Mexico Statutes,
Annotated, 1978 Comp., as amended, Mortgagor agrees that as to the Mortgaged
Property situated in

                                      -31-
<PAGE>

the State of New Mexico, the redemption period shall be shortened to one (1)
month. If Mortgagor is an individual, Mortgagor waives and releases all rights
of dower, courtesy and homestead in the Mortgaged Property insofar as such
rights may in any way affect the purposes of this Mortgage.

      5.13 Costs and Expenses. All costs and expenses (including attorneys'
fees) incurred by Trustee or Beneficiary in protecting and enforcing their
rights hereunder shall constitute a demand obligation owing by Mortgagor to the
party incurring such costs and expenses and shall draw interest at Default
Interest Rate, all of which shall constitute a portion of the Indebtedness.

      5.14 Intentionally Omitted.

      5.15 Intentionally Omitted.

      5.16 Operation of the Mortgaged Property by Beneficiary. Upon the
occurrence of an Event of Default and during the continuance of such Event of
Default and in addition to all other rights herein conferred on Beneficiary,
Beneficiary (or any person, firm or corporation designated by Beneficiary) shall
have the right and power, but shall not be obligated, to enter upon and take
possession of any of the Mortgaged Property, and to exclude Mortgagor, and
Mortgagor's agents or servants, wholly therefrom, and to hold, use, administer,
manage and operate the same to the extent that Mortgagor shall be at the time
entitled and in its place and stead. Beneficiary, or any person, firm or
corporation designated by Beneficiary, may operate the same without any
liability to Mortgagor in connection with such operations, except to use
ordinary care in the operation of such properties, and Beneficiary or any
person, firm or corporation designated by Beneficiary, shall have the right to
(but shall not be obligated to) collect, receive and receipt for all
Hydrocarbons produced and sold from said properties, to make repairs, purchase
machinery and equipment, conduct work-over operations, drill additional wells
and to exercise every power, right and privilege of Mortgagor with respect to
the Mortgaged Property. When and if the expenses of such operation and
development (including costs of unsuccessful work-over operations or additional
wells) paid by Beneficiary or attributable to Mortgagor's undivided interest
therein and withheld, or offset against, by an operator or other party have been
paid or reimbursed in full by Mortgagor and the Indebtedness paid, said
properties shall, if there has been no sale or foreclosure, be returned to
Mortgagor.

      5.17 Separate Sales. The Mortgaged Property may be sold in one or more
parcels and it being expressly understood and agreed that the right of sale
arising out of any Event of Default shall not be exhausted by any one or more
sales but other and successive sales may be made until all of the Mortgaged
Property has been sold or until the Indebtedness has been fully satisfied.

      5.18 Remedies Cumulative, Concurrent and Non-Exclusive. Beneficiary shall
have all rights, remedies and recourses granted in the Secured Debt Documents
and available at law or equity (including specifically those granted by the
Uniform Commercial Code in effect and applicable to the Mortgaged Property, or
any portion

                                      -32-
<PAGE>

thereof), and the same (a) shall be cumulative and concurrent, (b) may be
pursued separately, successively or concurrently against any one or more of
Mortgagor, any Guarantor, or others obligated under the Secured Debt Documents,
or against the Mortgaged Property, pursuant to the Collateral Trust Agreement
and any Secured Debt Documents, (c) may be exercised as often as occasion
therefor shall arise, it being agreed by Mortgagor that the exercise or failure
to exercise any of same shall in no event be construed as a waiver or release
thereof or of any other right, remedy or recourse, and (d) are intended to be,
and shall be, non-exclusive.

      5.19 Release of and Resort to Collateral. Beneficiary may release,
regardless of consideration, any part of the Mortgaged Property without, as to
the remainder, in any way impairing, affecting, subordinating or releasing the
lien or security interests created in or evidenced by the Secured Debt Documents
or their stature as a first and prior lien and security interest in and to the
Mortgaged Property. For payment of the Indebtedness, Beneficiary may resort to
any other security therefor held in such order and manner as Beneficiary may
elect.

      5.20 Discontinuance of Proceedings. In case Beneficiary shall have
proceeded to invoke any right, remedy or recourse permitted under the Secured
Debt Documents and shall thereafter elect to discontinue or abandon same for any
reason, Beneficiary shall have the unqualified right so to do and, in such an
event, Mortgagor and Beneficiary shall be restored to their former positions
with respect to the Indebtedness, the Obligations, the Secured Debt Documents,
the Mortgaged Property and otherwise, and the rights, remedies, recourses and
powers of Beneficiary shall continue as if same had never been invoked.

      5.21 Uniform Commercial Code Remedies. Beneficiary shall have all the
rights, remedies and recourses with respect to the Personalty, Fixtures, Leases
and Rents and Revenues afforded a Secured Party by the aforesaid Uniform
Commercial Code (being Chapter 9 of the Texas Business and Commerce Code, as to
property within the scope thereof and situated in the State of Texas) in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded Beneficiary by the Secured Debt Documents.

      5.22 No Obligation of Trustee or Beneficiary. The assignment and security
interest herein granted shall not be deemed or construed (a) to constitute
Trustee or Beneficiary as a trustee in possession of the Mortgaged Property or,
(b) to obligate Trustee or Beneficiary to (i) lease the Mortgaged Property or
attempt to do same, (ii) take any action, (iii) incur any expenses or perform or
discharge any obligation, duty or liability whatsoever under any of the Leases
or otherwise.

                                  ARTICLE VI.
                            MISCELLANEOUS PROVISIONS

      6.1 Pooling and Unitization. Mortgagor shall have the right, and is hereby
authorized, to pool or unitize all or any part of the lands described in Exhibit
A, insofar as relates to the Mortgaged Property, with adjacent lands, leaseholds
and other

                                      -33-
<PAGE>

interests, when, in the reasonable judgment of Mortgagor, it is necessary or
advisable to do so in order to form a drilling and/or production unit to
facilitate the orderly development of that part of the Mortgaged Property
affected thereby, or to comply with the requirements of any Applicable Law or
governmental order or regulation relating to the spacing of wells or proration
of the production therefrom; provided, however, that any unit so formed for the
production of oil shall not substantially exceed 160 acres, and any unit so
formed for the production of gas shall not substantially exceed 640 acres,
unless a larger area is required to conform to an Applicable Law or governmental
order or regulation relating to the spacing of wells or to obtain the maximum
allowable production under any Applicable Law or governmental order or
regulation relating to the proration of production therefrom; and further
provided that the Hydrocarbons produced from any unit so formed shall be
allocated among the separately owned tracts or interests comprising the unit in
a uniform manner consistently applied; and further provided that all interests
owned by Mortgagor in such unit shall be included within the Mortgaged Property.
Any unit so formed may relate to one or more zones or horizons, and a unit
formed for a particular zone or horizon need not conform in area to any other
unit relating to a different zone or horizon, and a unit formed for the
production of oil need not conform in area with any unit formed for the
production of gas. Promptly after formation of any such unit, Mortgagor shall
furnish to Beneficiary and each Secured Debt Representative a true copy of the
pooling agreement, declaration of pooling or other instrument creating such
unit. The interest in any such unit attributable to the Mortgaged Property (or
any part thereof) included therein shall become a part of the Mortgaged Property
and shall be subject to the lien hereof in the same manner and with the same
effect as though such unit and the interest of Mortgagor therein were
specifically described in Exhibit A. Mortgagor is further authorized to amend,
modify or terminate any pooling or unitization agreement or order to which
Mortgagor is a party or the Mortgaged Property is subject, provided that such
action does not conflict with the provisions of this Mortgage, including this
Section 6.1. Mortgagor may enter into, or amend, modify or terminate, pooling or
unitization agreements not hereinabove authorized only as permitted under the
Secured Debt Documents.

      6.2 No Liability. None of Beneficiary, Trustee, any Secured Debt
Representative or any of their agents shall be liable for any error of judgment
or act done in good faith, or be otherwise responsible or accountable under any
circumstances whatsoever, except for their gross negligence or willful
misconduct. None of Beneficiary, Trustee, any Secured Debt Representative or any
of their agents shall be personally liable in case of entry by them, or anyone
entering by virtue of the powers herein granted them, upon the Mortgaged
Property for debts contracted or liability or damages incurred in the management
or operation of the Mortgaged Property. Such persons shall have the right to
rely on any instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by them hereunder, believed by them in good
faith to be genuine. Beneficiary, Trustee, any Secured Debt Representative or
any of their agents shall be entitled to reimbursement for expenses incurred by
them in the performance of their duties hereunder and to reasonable compensation
for such of their services hereunder as shall be rendered. Mortgagor will, from
time to time, pay the compensation due hereunder and reimburse such parties for,

                                      -34-
<PAGE>

and save them harmless against, any and all liability and expenses which may be
incurred by them in the performance of their duties.

      6.3 Successor Trustee. Any Trustee may resign in writing addressed to
Beneficiary or may be removed at any time with or without cause by an instrument
in writing duly executed by Beneficiary. In case of the death, resignation or
removal of a Trustee, one or more successor Trustee may be appointed by
Beneficiary by instrument of substitution complying with any applicable
requirements of Applicable Law, and in the absence of any such requirement
without formality other than appointment and designation in writing. Such
appointment and designation shall be full evidence of the right and authority to
make the same and of all facts therein recited, and upon the making of any such
appointment and designation this conveyance shall vest in the named successor
Trustee or Trustee, all the estate and title of the prior Trustee in all of the
Mortgaged Property, and he or they shall thereupon succeed to all the rights,
powers, privileges, immunities and duties hereby conferred upon the prior
Trustee. All references herein to Trustee shall be deemed to refer to Trustee
from time to time acting hereunder.

      6.4 Actions or Advances by Beneficiary or Trustee. Each and every covenant
herein contained shall be performed and kept by Mortgagor solely at Mortgagor's
expense. If Mortgagor shall fail to perform or keep any of the covenants of
whatsoever kind or nature contained in this Mortgage, Beneficiary, or Trustee or
any receiver appointed hereunder or under Applicable Law, may, but shall not be
obligated to, take action and/or make advances to perform the same in
Mortgagor's behalf; provided, however, that concurrently with the taking of such
action or making such advances, Beneficiary, Trustee or any Secured Debt
Representative shall deliver notice to Mortgagor. Mortgagor hereby agrees to
repay the expense of such action (including all court costs and attorneys' fees)
and such advances upon demand plus interest as set forth in the Collateral Trust
Agreement. No such advance or action by Beneficiary, Trustee or any receiver
appointed hereunder shall be deemed to relieve Mortgagor from any default
hereunder.

      6.5 No Waiver. Any failure by Trustee or Beneficiary to insist, or any
election by Trustee or Beneficiary not to insist, upon strict performance by
Mortgagor of any of the terms, provisions or conditions of the Collateral Trust
Agreement or any Secured Debt Documents shall not be deemed to be a waiver of
same or of any other term, provision or condition thereof, and Trustee and
Beneficiary shall have the right at any time or times thereafter to insist upon
strict performance by Mortgagor of any and all of such terms, provisions and
conditions.

      6.6 Defense of Claims. Mortgagor will notify Beneficiary and each Secured
Debt Representative, in writing, promptly of the commencement of any legal
proceedings affecting the lien or security interest hereof or the Mortgaged
Property, or any part thereof, and will take such action, employing attorneys as
set forth in Section 3.4(j), as may be necessary or appropriate to preserve
Mortgagor's or Beneficiary's rights affected thereby and/or to hold harmless
Beneficiary in respect of such proceedings; and should Mortgagor fail or refuse
to take any such action, Beneficiary

                                      -35-
<PAGE>

may, upon giving prior written notice thereof to Mortgagor, take such action in
behalf and in the name of Mortgagor and at Mortgagor's expense. Moreover,
Beneficiary may take such independent action in connection therewith as it may
in its discretion deem proper, Mortgagor hereby agreeing that all sums advanced
or all expenses incurred in such actions (including all court costs and
attorneys' fees) plus interest thereon at the Default Interest Rate, will, on
demand, be reimbursed, as appropriate, to Beneficiary or any receiver appointed
hereunder or under Applicable Law. The obligations of Mortgagor as hereinabove
set forth in this Section 6.6 shall survive the release, termination,
foreclosure or assignment of this Mortgage or any sale hereunder.

      6.7 The Mortgaged Property to Revert; Release. If the Indebtedness shall
be fully paid and the covenants herein contained shall be well and truly
performed, then all of the Mortgaged Property shall revert to Mortgagor and the
entire estate, right, title and interest of Trustee and Beneficiary shall
thereupon cease; and Trustee and Beneficiary in such case shall, upon the
request of Mortgagor and at Mortgagor's cost and expense, deliver to Mortgagor
proper instruments acknowledging satisfaction of this Mortgage and the release
or reconveyance of the lien hereof in accordance with Applicable Law.
Notwithstanding anything contained herein to the contrary, the Mortgaged
Property, or any part thereof, shall, upon the written request of Mortgagor, be
released from the lien of this Mortgage, in accordance with the provisions of
the Collateral Trust Agreement, when such a release is permitted by the
Collateral Trust Agreement and the other Secured Debt Documents.

      6.8 Covenants Running with the Land. All Obligations contained in this
Mortgage are intended by the parties to be, and shall be construed as, covenants
running with the Mortgaged Property.

      6.9 Renewals, Amendments and Other Security. Renewals and extensions of
the Indebtedness and modifications of any kind of the Obligations may be given
at any time and amendments may be made to agreements with third parties relating
to any part of such Indebtedness or the Mortgaged Property and Trustee and
Beneficiary may take or may now hold other security from others for the
Indebtedness, all without notice to or consent of Mortgagor. Beneficiary may
resort first to such other security or any part thereof or first to the security
herein given or any part thereof, or from time to time to either or both, even
to the partial or complete abandonment of either security, and such action shall
not be a waiver of any rights conferred by this Mortgage, which shall continue
as a first lien upon and prior perfected security interest in the Mortgaged
Property not expressly released until the Secured Debt and all other
Indebtedness secured hereby are fully paid.

      6.10 Mortgage, Assignment, etc. This Mortgage shall be deemed to be and
may be enforced from time to time as an assignment, chattel mortgage, contract,
deed of trust, financing statement, real estate mortgage, or security agreement,
and from time to time as any one or more thereof.

      6.11 Limitation on Interest. No provision of this Mortgage or the Secured
Debt Documents shall require the payment or permit the collection of interest in
excess of the

                                      -36-
<PAGE>

Maximum Lawful Rate or which is otherwise contrary to Applicable Law. If any
excess of interest in such respect is in the Secured Debt Documents or otherwise
herein provided for, or shall be adjudicated to be so provided for herein or in
the Secured Debt Documents, Mortgagor shall not be obligated to pay such excess.

      6.12 Severability. The Secured Debt Documents are intended to be performed
in accordance with, and only to the extent permitted by, all applicable Legal
Requirements. If any provision of any of the Secured Debt Documents or the
application thereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, neither the remainder of the instrument
in which such provision is contained nor the application of such provision to
other persons or circumstances nor the other instruments referred to hereinabove
shall be affected thereby, but rather shall be enforced to the greatest extent
permitted by Applicable Law. It is hereby expressly stipulated and agreed to be
the intent of Mortgagor and Beneficiary at all times to comply with the usury,
and all other, laws relating to the Secured Debt Documents. If, at any time, the
applicable Legal Requirements render usurious any amount called for in any
Security Document, then it is Mortgagor's, Trustee's and Secured Debtholders'
express intent that such document be immediately deemed reformed and the amounts
collectible reduced, without the necessity of the execution of any new document,
so as to comply with the then Applicable Law but so as to permit the recovery of
the fullest amount otherwise called for in such Secured Debt Documents.

      6.13 Waiver by Trustee and Beneficiary. Any and all covenants in this
Mortgage may from time to time by instrument in writing signed by Trustee and
Beneficiary be waived to such extent and in such manner as Trustee and
Beneficiary may desire, but no such waiver shall ever affect or impair either
Trustee's or Beneficiary's rights or liens or security interests hereunder,
except to the extent specifically stated in such written instrument.

      6.14 No Partnership. Nothing contained in this Mortgage is intended to, or
shall be construed as, creating to any extent and in any manner whatsoever, any
partnership, joint venture, or association among Mortgagor, Trustee, Beneficiary
and their respective Affiliates, or in any way as to make Beneficiary or
Trustee's co-principals with Mortgagor with reference to the Mortgaged Property,
and any inferences to the contrary are hereby expressly negated.

      6.15 Successors and Assigns. This Mortgage is binding upon Mortgagor,
Mortgagor's successors and assigns, and shall inure to the benefit of
Beneficiary, its successors and assigns, and the provisions hereof shall
likewise be covenants running with the land.

      6.16 Article and Section Headings. The article and section headings in
this Mortgage are inserted for convenience of reference and shall not be
considered a part of this Mortgage or used in its interpretation.

      6.17 Execution in Counterparts. This Mortgage may be executed in any
number of counterparts, each of which shall for all purposes be deemed to be an
original and all

                                      -37-
<PAGE>

of which are identical, except that, to facilitate recordation or filing, in any
particular counterpart portions of Exhibit A hereto which describe properties
situated in parishes or counties other than the parish or county in which such
counterpart is to be recorded or filed may have been omitted.

      6.18 Special Filing as Financing Statement. This Mortgage shall likewise
be a Security Agreement and a Financing Statement. This Mortgage shall be filed
for record, among other places, in the real estate records of each county or
parish in which any portion of the real property covered by the oil and gas
leases described in Exhibit A hereto is situated, and, when filed in such
counties or parishes shall be effective as a financing statement covering
Fixtures located on oil and gas properties, which oil and gas properties (and
accounts arising therefrom) are to be financed at the wellheads of the wells
located on the lands described in Exhibit A. A carbon, photographic or other
reproduction of this Mortgage or of any financing statement covering the
Mortgaged Property or any portion thereof shall be sufficient as a financing
statement and may be filed as such. Mortgagor agrees that any Secured Debt
Representative may, in such manner, on such terms and at such times as may be
elected by such Secured Debt Representative, and without demand or notice to, or
the consent or signature of, Mortgagor, file and/or record such UCC financing
statements, fixture filings, and/or amendments to or continuations of any
financing statements or fixture filings to evidence, perfect and/or continue the
perfection of, any security interests created or to be created pursuant to this
Mortgage or any of the other Secured Debt Documents.

      6.19 Notices. Except as otherwise required by Sections 5.4 and 5.14
hereof, any notice, request or demand which may be required or permitted to be
given or served upon Mortgagor shall be sufficiently given when given or made
pursuant to (a) the terms of the Collateral Trust Agreement, or (b) such other
means and manner of giving of notice as may be required by Applicable Law.

      6.20 Reliance. Notwithstanding any reference herein to the Secured Debt
Documents, no party shall have any obligation to inquire into the terms or
conditions of any such documents and all parties shall be fully authorized to
rely upon any statement, certificate, or affidavit of Beneficiary or any future
holder of any portion of the Indebtedness as to the occurrence of any event such
as the occurrence of any event of default.

      6.21 Beneficiary as Agent for the Secured Debt Debtholders. As described
above, certain Affiliates of Beneficiary and the Secured Debt Representatives
are or may become parties to certain Hedging Agreements with Mortgagor and/or
Affiliates of Mortgagor. This Mortgage secures the obligations of Mortgagor and
such Affiliates, as the case may be, under such Hedging Agreements, and the
parties acknowledge for all purposes that Beneficiary acts for itself and as
agent on behalf of such Affiliates of Beneficiary and the Secured Debtholders
which are so entitled to share in the rights and benefits accruing to
Beneficiary under this Mortgage in respect of the Mortgaged Property.

                                      -38-
<PAGE>

      6.22 Applicable Law. As to any tract or parcel of land comprising a
portion of the Mortgaged Property, this Mortgage shall be governed by and
construed according to the Applicable Laws of the State where such tract or
parcel of land is situated.

      6.23 Subrogation. If any or all of the proceeds of Secured Debt have been
used to extinguish, extend or renew any indebtedness heretofore existing against
the Mortgaged Property, then, to the extent of such funds so used, the
Indebtedness and this Mortgage shall be subrogated to all of the rights, claims,
liens, titles and interests heretofore existing against the Mortgaged Property
to secure the indebtedness so extinguished, extended or renewed and the former
rights, claims, liens, titles and interests, if any, are not waived but rather
are continued in full force and effect in favor of Beneficiary and are merged
with the lien and security interest created herein as cumulative security for
the repayment of the Indebtedness and the satisfaction of the Obligations.

      6.24 Fixture Filing. Portions of the Mortgaged Property are or are to
become fixtures relating to the above described real estate, and Mortgagor
herein expressly covenants and agrees that the filing of this Mortgage in the
Real Estate Records in the county where the Mortgaged Property is located shall
also operate from the time of filing therein as a financing statement filed as a
fixture filing in accordance with Section 9.502(c) of the Uniform Commercial
Code - Secured Transactions of the State of New Mexico.

                                      -39-
<PAGE>

      IN WITNESS WHEREOF, Mortgagor has executed or caused to be executed this
Amended and Restated Mortgage, Deed of Trust, Assignment, Security Agreement,
Financing Statement and Fixture Filing in the presence of the undersigned Notary
Public on this 14th day of July, 2003.

                              MORTGAGOR AND DEBTOR

                                              CALPINE CORPORATION, a Delaware
                                              corporation

                                              By:
                                                      --------------------------
                                              Title:  Executive Vice President
                                              Printed Name:   B.A. Berilgen

ATTEST:

----------------------------
Printed Name:

The name and mailing address of Mortgagor is:

Calpine Corporation
1000 Louisiana Street, Suite 800
Houston, TX 77002

<PAGE>

STATE OF TEXAS          )
                        )  SS.
COUNTY OF HARRIS        )

      BE IT REMEMBERED that I, Suzanne B. Snow, a Notary Public duly qualified,
commissioned, sworn and acting in and for the County and State aforesaid, hereby
certify that, on this 14th day of July, 2003, there appeared before me severally
each of the following persons, each being either a Trustee or else the
designated officer of the corporation or association set opposite his name, and
each such Trustee, corporation and association being a party to the foregoing
instrument:

      B.A. Berilgen, the Executive Vice President, and Michael H. Hickey, the
Vice President-Managing Counsel, of Calpine Corporation, a Delaware corporation,
which has no corporate seal, whose address is 1000 Louisiana Street, Suite 800,
Houston, TX 77002;

ARKANSAS          Before me on this day appeared in person the aforementioned
                  persons, to me personally well known, who stated that they
                  held the offices in the corporation or association set forth
                  opposite their names above (or, in the case of the Trustees,
                  were validly appointed Trustees) and were duly authorized in
                  their respective capacities to execute the foregoing
                  instrument for and in the name and on behalf of said
                  corporation or association (or as Trustees, as the case may
                  be), and further stated and acknowledged that they had so
                  signed, executed and delivered said foregoing instrument for
                  the consideration, uses and purposes therein mentioned and set
                  forth.

COLORADO(1)       The foregoing instrument was acknowledged before me this day
                  by each such person on behalf of said corporation or
                  association, or himself, as a Trustee, as the case may be.

KANSAS            On this day before me personally appeared the aforementioned
                  persons, who acknowledged themselves to hold the offices in
                  the corporation set forth opposite their names above (or, in
                  the case of the Trustees, were validly appointed Trustees) and
                  as such officers or Trustees, hereby authorized to do so,
                  executed the foregoing instrument for the purposes therein
                  contained.

MISSISSIPPI       Personally appeared before me, the undersigned authority in
                  and for the said county and state, on this 14th day of July,
                  2003, within my jurisdiction the within named B.A. Berilgen
                  who acknowledged that he is the Executive Vice President of
                  CALPINE Corporation, a Delaware corporation, and that for and
                  on behalf of said corporation

----------
(1)   Add blocks for Kansas and Montana.

<PAGE>

                  and as its act and deed he executed the above and foregoing
                  instrument after first having been duly authorized by said
                  corporation so to do.

MONTANA           On this day before me personally appeared each such person,
                  each of whom is known to me to be the officer of the
                  corporation that executed the within instrument (or a Trustee,
                  as the case may be), and acknowledged to me that such
                  corporation (or Trustee, as the case may be) executed the
                  same.

NEBRASKA          The foregoing instrument was acknowledged before me this day
  and             by each such person as the designated officers of the
NEW MEXICO        corporation or association set opposite their names (or as
                  Trustees, as the case may be) on behalf of said corporation or
                  association, or himself as a Trustee, as the case may be.

OKLAHOMA          Before me on this day personally appeared the aforementioned
                  persons, to me known to be the identical persons who
                  subscribed the names of the respective makers thereof to the
                  foregoing instrument in the capacities set forth opposite the
                  names of such persons above, and each such person acknowledged
                  to me that he executed the same as his free and voluntary act
                  and deed and as the free and voluntary act and deed of the
                  corporation or association set opposite his name (or of
                  himself as Trustee, as the case may be) for the uses and
                  purposes therein set forth.

TEXAS             This instrument was acknowledged before me on this day by each
                  such person as the designated officer of the corporation or
                  association set opposite his name (or a Trustee, as the case
                  may be), on behalf of said corporation or association set
                  opposite his name (or of himself as Trustee, as the case may
                  be).

WYOMING           The foregoing instrument was acknowledged before me by the
                  above individuals on this day.

                       Witness my hand and official seal.

                                       -----------------------------------------
                                       Notary Public
                                       Residing at Houston, Harris County, Texas

My commission expires:

12/21/2006

<PAGE>

     EXHIBIT A To Amended and Restated Mortgage, Deed of Trust, Assignment,
        Security Agreement, Financing Statement and Fixture Filing, dated
                     July 16, 2003, from CALPINE CORPORATION
                       to Denis O'Meara and James Trimble
                            and THE BANK OF NEW YORK

                               List of Properties

1. Depth limitations, unit designations, unit tract descriptions and
descriptions (including percentages, decimals or fractions) of undivided
leasehold interests, well names, "Operating Interests," "Working Interests" and
"Net Revenue Interests" contained in this Exhibit A and the listing of any
percentage, decimal or fractional interest in this Exhibit A shall not be deemed
to limit or otherwise diminish the interests being subjected to the lien,
security interest and encumbrance of this Mortgage.

2. Some of the land descriptions in this Exhibit A may refer only to a portion
of the land covered by a particular lease. This Mortgage is not limited to the
land described in Exhibit A but is intended to cover the entire interest of
Mortgagor in any lease described in Exhibit A even if such interest relates to
land not described in Exhibit A. Reference is made to the land descriptions
contained in the documents of title recorded as described in this Exhibit A. To
the extent that the land descriptions in this Exhibit A are incomplete,
incorrect or not legally sufficient, the land descriptions contained in the
documents so recorded are incorporated herein by this reference.

3. References in Exhibit A to instruments on file in the public records are made
for all purposes. Unless provided otherwise, all recording references in Exhibit
A are to the official real property records of the county or counties (or parish
or parishes) in which the mortgaged property is located and in which records
such documents are or in the past have been customarily recorded, whether Deed
Records, Oil and Gas Records, Oil and Gas Lease Records or other records.

4. A statement herein that a certain interest described herein is subject to the
terms of certain described or referred to agreements, instruments or other
matters shall not operate to subject such interest to any such agreement,
instrument or other matter except to the extent that such agreement, instrument
or matter is otherwise valid and presently subsisting nor shall such statement
be deemed to constitute a recognition by the parties hereto that any such
agreement, instrument or other matter is valid and presently subsisting.

[Do not detach this page]

                                      A-1
<PAGE>

                                   Schedule I

Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and
Fixture Filing (New Mexico) from Calpine Corporation, a Delaware corporation,
Trustor and Mortgagor to Kemp Leonard, Trustee, John Quick, Trustee and The Bank
of Nova Scotia, for itself and as Agent, Beneficiary, filed as follows::

<TABLE>
<CAPTION>
         JURISDICTION                FILE NO.                  FILE DATE
         ------------                --------                  ---------
<S>                             <C>                            <C>
San Juan County, NM                  200208710                 5/17/2002
                                Book 1342, Page 580
</TABLE>

UCC-1 Financing Statement regarding Multi-State Mortgage, naming Calpine
Corporation as debtor and The Bank of Nova Scotia, as Agent, as secured party,
filed as follows:

<TABLE>
<CAPTION>
         JURISDICTION                FILE NO.                  FILE DATE
         ------------                --------                  ---------
<S>                                <C>                         <C>
New Mexico Secretary of State      2002050903023               5/9/2002
</TABLE>

                                  Schedule I-1

<PAGE>

                                   Schedule II

First Supplemental Mortgage, Deed of Trust, Assignment, Security Agreement,
Financing Statement and Fixture Filing (New Mexico) from Calpine Corporation, a
Delaware corporation, Trustor and Mortgagor to Dennis O'Meara, Trustee, James
Trimble, Trustee and The Bank of Nova Scotia, for itself and as Agent,
Beneficiary, filed as follows:

<TABLE>
<CAPTION>
     JURISDICTION                    FILE NO.                   FILE DATE
     ------------                    --------                   ---------
<S>                            <C>                              <C>
San Juan County, NM            Book 1353, Page 489              11/27/02
</TABLE>

                                  Schedule II-1

<PAGE>

                                  Schedule III

                                       N/A

                                 Schedule III-1<PAGE>
                                                                   Exhibit 10.30

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

                              AMENDED AND RESTATED
                         MORTGAGE, ASSIGNMENT, SECURITY
                        AGREEMENT AND FINANCING STATEMENT

                                      FROM

                              CALPINE CORPORATION,
                                  as Mortgagor
                         (Taxpayer I.D. No. 77-0212977),

                                       TO

                              THE BANK OF NEW YORK,
        not in its individual capacity but solely as Collateral Trustee,
                         (TAXPAYER I.D. NO. 13-5160382)
                                  as Mortgagee

                            Dated as of July 16, 2003

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

"THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES."

"THIS FINANCING STATEMENT COVERS AS-EXTRACTED COLLATERAL WHICH WILL BE FINANCED
AT THE WELLHEADS OF THE WELLS LOCATED ON THE PROPERTIES DESCRIBED IN EXHIBIT A
HERETO."

"MORTGAGOR HAS AN INTEREST OF RECORD IN THE IMMOVABLE PROPERTY CONCERNED, WHICH
IS DESCRIBED IN EXHIBIT A HERETO."

"SOME OF THE PERSONAL PROPERTY CONSTITUTING A PORTION OF THE MORTGAGED PROPERTY
IS OR IS TO BE AFFIXED TO THE PROPERTIES DESCRIBED IN EXHIBIT A HERETO AND THIS
FINANCING STATEMENT IS TO BE FILED AS A FIXTURE FILING AS DEFINED IN LA. REV.
STAT. SECTION 10:9-102(a)(40)."

THIS INSTRUMENT WAS PREPARED BY:

Kevin L. Shaw, Esq.
Mayer, Brown, Rowe & Maw LLP
700 Louisiana Street, 36th Floor
Houston, Texas  77002

<PAGE>

AMENDED AND RESTATED                           *
MORTGAGE, ASSIGNMENT,
SECURITY AGREEMENT                             *
AND FINANCING STATEMENT                               UNITED STATES OF AMERICA
                                               *
                          BY                          STATE OF TEXAS
                                               *
CALPINE CORPORATION,                                  COUNTY OF HARRIS
A DELAWARE CORPORATION                         *
IN FAVOR OF
THE BANK OF NEW YORK,                          *
A NEW YORK BANKING CORPORATION,                       STATE OF NEW YORK
NOT INDIVIDUALLY, BUT SOLELY AS                *
COLLATERAL TRUSTEE                                    COUNTY OF NEW YORK

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *  *

      BE IT KNOWN, that on this 14th day of July, 2003, before me, the
undersigned Notary Public duly commissioned and qualified in and for the State
and County first written above, and in the presence of the undersigned witnesses
personally came and appeared:

CALPINE CORPORATION, a Delaware corporation having a mailing address of 1000
Louisiana Street, Suite 800, Houston TX 77002, and a federal taxpayer
identification number of 77-0212977, appearing herein through B.A. Berilgen, its
Executive Vice President, duly authorized by resolutions of the Board of
Directors of said corporation, a certified copy of which is attached hereto as
Exhibit B (herein called "MORTGAGOR"), who declared that Mortgagor does by these
presents declare and acknowledge an indebtedness unto The Bank of New York (as
hereinafter defined).

      BE IT KNOWN, that on this 14th day of July, 2003, before me, the
undersigned Notary Public duly commissioned and qualified in and for the State
and County second written above, and in the presence of the undersigned
witnesses personally came and appeared:

      THE BANK OF NEW YORK, a New York banking corporation, not in its
individual capacity, but solely as Collateral Trustee under that certain
Collateral Trust Agreement (defined below) ("MORTGAGEE"), having a mailing
address of 101 Barclay Street, 8 Floor West, New York, New York 10286, and a
federal taxpayer identification number of 13-5160382, appearing herein through
its undersigned representative, duly authorized hereunto

Mortgagor and Mortgagee declares as follows:

                                      -1-
<PAGE>

                                    RECITALS

Mortgagor has heretofore executed and delivered to The Bank of Nova Scotia, for
itself and as agent for the Lender Parties (together with its successors in such
capacity, the "CREDIT AGREEMENT AGENT"), that certain Mortgage, Assignment,
Security Agreement and Financing Statement, dated as of May 1, 2002, as
recorded, supplemented, amended, and partially released prior to the date hereof
as indicated on Schedules I, II and III hereto (as so supplemented and amended,
herein called the "EXISTING MORTGAGE"), to secure (i) payment of indebtedness
owed or to be owing to certain institutional lenders (the "EXISTING 2002
Lenders") pursuant to the terms of that certain Credit Agreement, dated as of
March 8, 2002 (herein, as the same may be amended, modified or supplemented from
time to time, called the "EXISTING 2002 CREDIT AGREEMENT") pursuant to which the
Existing 2002 Lenders made loans to Mortgagor and issued letters of credit for
the benefit of Mortgagor (the "EXISTING 2002 LETTERS OF CREDIT") in amounts not
to exceed at any one time outstanding $1,600,000,000, and Mortgagor, to evidence
its indebtedness to the Existing 2002 Lenders under the Existing 2002 Credit
Agreement, has executed and delivered to the Existing 2002 Lenders its secured
promissory notes to mature not later than May 24, 2003 (the "EXISTING 2002 LOAN
NOTES"), the Existing 2002 Loan Notes being payable to the order of the Existing
2002 Lenders, bearing interest as provided for therein, and containing
provisions for payment of attorneys' fees and acceleration of maturity in the
event of default, as therein set forth; and (ii) payment of indebtedness owed or
to be owing to certain institutional lenders (the "EXISTING 2000 LENDERS", and
together with the Existing 2002 Lenders, the "EXISTING LENDERS") pursuant to the
terms of that certain Second Amended and Restated Credit Agreement dated as of
May 23, 2000 (herein, as the same may be amended, modified, or supplemented from
time to time, called the "EXISTING 2000 CREDIT AGREEMENT" and together with the
Existing 2002 Credit Agreement, collectively, the "EXISTING CREDIT AGREEMENTS")
pursuant to which the Existing 2000 Lenders made loans to Mortgagor and issued
letters of credit for the benefit of Mortgagor (the "EXISTING 2000 LETTERS OF
CREDIT") in amounts not to exceed at any one time outstanding $400,000,000, and
Mortgagor, to evidence its indebtedness to the Existing 2000 Lenders under the
Existing 2000 Credit Agreement, has executed and delivered to the Existing 2000
Lenders its secured promissory notes to mature not later than May 24, 2003 (the
"EXISTING 2000 LOAN NOTES") (the Existing 2000 Loan Notes, together with the
Existing 2002 Loan Notes, collectively, the "EXISTING LOAN NOTES"), the Existing
2000 Loan Notes being payable to the order of the Existing 2000 Lenders, bearing
interest as provided for therein, and containing provisions for payment of
attorney's fees and acceleration of maturity in the event of default, as therein
set forth.

Mortgagor, the Existing Lenders and the Credit Agreement Agent are (i)
terminating the commitments under the Existing 2000 Credit Agreement, and (ii)
amending and restating the Existing 2002 Credit Agreement (as so amended and
restated, and as the same may, from time to time hereafter, be amended,
supplemented, modified or amended and restated, the "AMENDED AND RESTATED CREDIT
AGREEMENT."

                                      -2-
<PAGE>

Mortgagor is also (a) issuing $500,000,000 in aggregate principal amount of
Second Priority Senior Floating Rate Secured Notes due 2007 (the "2007 NOTES")
pursuant to the Indenture dated as of July 16, 2003 (the "2007 INDENTURE")
between Mortgagor and Wilmington Trust Company, as Trustee (together with its
successors in such capacity, the "2007 TRUSTEE"), (b) issuing $1,150,000,000 in
aggregate principal amount of 8.5% Second Priority Senior Secured Fixed Rate
Notes due 2010 (the "2010 NOTES") pursuant to the Indenture dated as of July 16,
2003 (the "2010 INDENTURE") between Mortgagor and Wilmington Trust Company, as
Trustee (together with its successors in such capacity, the "2010 TRUSTEE"), (c)
issuing $900,000,000 in aggregate principal amount of 8.75% Second Priority
Senior Secured Fixed Rate Notes due 2013 (the "2013 NOTES") pursuant to the
Indenture dated as of July 16, 2003 (the "2013 INDENTURE") between Mortgagor and
Wilmington Trust Company, as Trustee (together with its successors in such
capacity, the "2013 TRUSTEE"), and (d) borrowing $750,000,000 in Term Loans (the
"TERM LOANS") pursuant to a Term Loan Agreement dated as of July 16, 2003 (the
"TERM LOAN AGREEMENT") between Mortgagor and Goldman Sachs Credit Partners L.P.,
as Administrative Agent (together with its successors in such capacity, the
"TERM LOAN ADMINISTRATIVE AGENT"). The proceeds from the issuance of the 2007
Notes, the 2010 Notes and the 2013 Notes and the borrowing of the Term Loans
will be used to refinance a portion of the loans and other indebtedness
outstanding under the Existing Credit Agreements.

As permitted pursuant to the Secured Debt Documents, Mortgagor may incur future
debt which could, together with the obligations under the Amended and Restated
Credit Agreement, constitute Priority Lien Debt and Mortgagor may incur future
debt which could, together with the 2007 Notes, the 2010 Notes, the 2013 Notes
and the Term Loans, constitute Parity Lien Debt, provided that the aggregate
amount of the Secured Debt to be secured hereby shall not exceed $4,200,000,000.
Mortgagor intends to secure the Indebtedness, including its obligations (a)
under the Amended and Restated Credit Agreement and any future Priority Lien
Debt, equally and ratably, on a priority basis, and, (b) subject to such
priority, under the 2007 Notes, 2010 Notes, 2013 Notes and Term Loans and any
future Parity Lien Debt, equally and ratably, with liens and security interests
in, among other collateral, the Mortgaged Property under the Existing Mortgage,
as contemplated in that certain Collateral Trust Agreement of even date
herewith, by Mortgagor, Mortgagee and the other parties thereto (the "COLLATERAL
TRUST AGREEMENT").

Pursuant to the Collateral Trust Agreement and that certain Assignment of Liens
of even date herewith, the Credit Agreement Agent has assigned to Mortgagee, all
of the Credit Agreement Agent's right, title and interest in and to, and its
interest as mortgagee under, the Existing Mortgage. This Mortgage amends and
restates the Existing Mortgage. The Collateral Trust Agreement sets forth the
terms on which the Collateral Trustee, as trustee for the present and future
holders of the Indebtedness, will receive, hold, maintain, administer, maintain,
enforce and distribute this Mortgage and all interests, rights, powers and
remedies of the Collateral Trustee thereunder and the proceeds thereof.

                                      -3-
<PAGE>

Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Collateral Trust Agreement.

For all purposes of this instrument, unless the context otherwise requires:

                  A. "Actionable Default" is defined in the Collateral Trust
      Agreement.

                  B. "Affiliate" of any Person means any other Person which,
      directly or indirectly, controls, is controlled by or is under common
      control with such Person (excluding any trustee under, or any committee
      with responsibility for administering, any Plan (as defined under ERISA)).
      A Person shall be deemed to be "controlled by" any other Person if such
      other Person possesses, directly or indirectly, power

                        (a) to vote 10% or more of the securities (on a fully
                  diluted basis) having ordinary voting power for the election
                  of directors or managing general partners; or

                        (b) to direct or cause the direction of the management
                  and policies of such Person whether by contract or otherwise.

                  C. "Applicable Law" means with respect to any Person or
      matter, any federal, state, regional, tribal or local statute, law, code,
      rule, treaty, convention, application, order, decree, consent decree,
      injunction, directive, determination or other requirement (whether or not
      having the force of law) relating to such Person or matter and, where
      applicable, any interpretation thereof by a Governmental Authority having
      jurisdiction with respect thereto or charged with the administration or
      interpretation thereof.

                  D. "Default Interest Rate" means the lesser of (a) ten percent
      (10%), or (b) the Maximum Lawful Rate.

                  E. "Event of Default" means an Actionable Default as defined
      under the Collateral Trust Agreement.

                  F. "Environmental Laws" shall mean any and all present and
      future United States federal, state and local laws or regulations, codes,
      plans, orders, decrees, judgments, injunctions and lawfully imposed
      requirements issued, promulgated or entered thereunder relating to
      pollution or protection of the environment, including laws relating to
      reclamation of land and waterways and laws relating to emissions,
      discharges, releases or threatened releases of pollutants, contaminants,
      chemicals, or industrial, toxic or hazardous substances or wastes into the
      environment (including, without limitation, ambient air, surface water,
      ground water, land surface or subsurface strata) or otherwise relating to
      the manufacture, processing, distribution, use, treatment, storage,
      disposal, transport or handling of pollutants, contaminants, chemicals, or
      industrial, toxic or hazardous substances or wastes.

                                      -4-
<PAGE>

                  G. "Governmental Authority" means any and all courts, boards,
      agencies, commissions, offices or authorities of any nature whatsoever for
      any governmental unit (federal, state, county, district, municipal, city,
      tribe or otherwise) whether now or hereafter in existence charged with the
      administration, interpretation or enforcement of any Applicable Law.

                  H. "Hedging Agreements" means: (a) interest rate swap
      agreements, basis swap agreements, interest rate cap agreements, forward
      rate agreements, interest rate floor agreements and interest rate collar
      agreements, and all other agreements or arrangements designed to protect
      such Person against fluctuations in interest rates or currency exchange
      rates, and (b) forward contracts, options, futures contracts, futures
      options, commodity swaps, commodity options, commodity collars, commodity
      caps, commodity floors and all other agreements or arrangements designed
      to protect such Person against fluctuations in the price of commodities.

                  I. "Hedging Obligations" means with respect to any Person, all
      liabilities (including without limitation obligations and liabilities
      arising in connection with or as a result of early or premature
      termination of a Hedging Agreement, whether or not occurring as a result
      of a default thereunder) of such Person under a Hedging Agreement.

                  J. "Hydrocarbons" means collectively, oil, gas, casinghead
      gas, drip gasoline, natural gasoline, condensate, distillate and all other
      liquid or gaseous hydrocarbons and related minerals and all products
      therefrom, in each case whether in a natural or a processed state.

                  K. "Indebtedness" shall have the respective meanings set forth
      in Section 1.2 of this instrument.

                  L. "Indemnification Claim" is defined in Section 3.6(a) of
      this instrument.

                  M. "Indemnified Person" means Mortgagee and each of the
      Secured Debtholders, their respective employees, affiliates, agents and
      attorneys, and any other Person to be indemnified under this instrument.

                  N. "Joint Operating Agreements" shall mean, with respect to
      the lands described in Exhibit A, the respective operating agreement
      burdening the lands described in Exhibit A.

                  O. "lands described in Exhibit A" shall include the real
      property or other interest in any lands which are either described in
      Exhibit A attached hereto or the description of which is incorporated in
      Exhibit A by reference to an instrument or document containing in, or
      referring to, such a description, and shall also include any lands now or
      hereafter unitized or pooled with lands which are either described in
      Exhibit A or the description of which is incorporated in Exhibit A by
      reference and Fixtures and all rights, titles and interests appurtenant

                                      -5-
<PAGE>

      thereto. References to Exhibit A shall include, where applicable, Exhibit
      A-1 as well.

                  P. "Leases" means any and all leases (including without
      limitation oil and gas leases and oil, gas and other minerals leases),
      surface leases or easements, subleases, licenses, concessions, operating
      rights or other agreements (written or verbal, now or hereafter in effect)
      which grant a possessory interest in and to, or the right to explore, use,
      lease, license, possess, produce, process, store and transport
      Hydrocarbons from, operate from, or otherwise enjoy, the Mortgaged
      Property, together with all amendments, modifications, extensions and
      renewals thereof.

                  Q. "Legal Requirements" means (i) any and all present and
      future judicial decisions, statutes, rulings, rules, regulations,
      licenses, decisions, orders, injunctions, decrees, permits, certificates
      or ordinances of any Governmental Authority in any way applicable to
      Mortgagor, or the Mortgaged Property, including the ownership, use,
      occupancy, operation, maintenance, repair or reconstruction thereof, and
      any other Applicable Law enacted by any Governmental Authority relating to
      health or the environment, (ii) Mortgagor's presently or subsequently
      effective Organic Documents, (iii) any and all Leases, (iv) any and all
      leases and other contracts (written or oral) of any nature to which
      Mortgagor, or the Mortgaged Property may be bound and (v) any and all
      restrictions, restrictive covenants or zoning, present and future, as the
      same may apply to the Mortgaged Property.

                  R. "Maximum Lawful Rate" means the maximum nonusurious rate of
      interest that may be received, charged or contracted for under Applicable
      Law from time to time in effect.

                  S. "Mortgaged Property" means the properties, rights and
      interests hereinafter described and defined as the Mortgaged Property.

                  T. "Obligations" means any and all of the covenants,
      warranties, representations and other obligations (other than to repay the
      Indebtedness) made or undertaken by Mortgagor or others under any of the
      Secured Debt Documents.

                  U. "oil and gas leases" shall include oil, gas and mineral
      leases, subleases and assignments thereof, operating rights, and shall
      also include subleases and assignments of operating rights.

                  V. "Operating Equipment" means all surface or subsurface
      machinery, goods, equipment, fixtures, movable property attached to
      immovable property and other movable property, inventory, facilities,
      supplies or other property of whatsoever kind or nature (excluding
      drilling rigs, trucks, automotive equipment or other property taken to the
      premises to drill a well or for other similar temporary uses) now or
      hereafter located on or under any of the lands

                                      -6-
<PAGE>

      described in Exhibit A which are useful for the production, gathering,
      treatment, processing, storage or transportation of Hydrocarbons (together
      with all accessions, additions and attachments to any thereof), including,
      but not by way of limitation, all oil wells, gas wells, water wells,
      injection wells, casing, tubing, tubular goods, rods, pumping units and
      engines, christmas trees, platforms, derricks, separators, compressors,
      gun barrels, flow lines, tanks, gas systems (for gathering, treating and
      compression), pipelines (including gathering lines, laterals and
      trunklines), chemicals, solutions, water systems (for treating, disposal
      and injection), steam generation and injection equipment and systems,
      power plants, poles, lines, transformers, starters and controllers,
      supervisory control and data acquisition systems, machine shops, tools,
      storage yards and equipment stored therein, buildings and camps,
      telegraph, telephone and other communication systems, roads, loading
      docks, loading racks and shipping facilities.

                  W. "Organic Documents" means the Articles of Incorporation,
      Certificate of Incorporation, limited liability company certificate of
      formation and regulations or operating agreement, partnership agreement,
      limited partnership agreement, joint venture agreement, trust agreement or
      other similar documents governing the organization and operation of a
      business association.

                  X. "Parity Lien Debt" is defined in the Collateral Trust
      Agreement.

                  Y. "Parity Lien Documents" is defined in the Collateral Trust
      Agreement.

                  Z. "Parity Lien Obligations" means any and all of the
      covenants, warranties, representations and other obligations (other than
      to repay the Indebtedness) made or undertaken by Mortgagor or others under
      any of the Parity Lien Documents.

                  AA. "Permits" means all authorizations, approvals, permits,
      variances, land use entitlements, consents, licenses, franchises and
      agreements issued by or entered into with any Governmental Authority now
      or hereafter required for all stages of exploration, developing,
      operating, and plugging and abandoning oil and gas wells (including,
      without limitation, those shown on Exhibit A) on all or any part of the
      lands described in Exhibit A (or any other lands any production from
      which, or profits or proceeds from such production, is attributed to any
      interest in the lands described in Exhibit A).

                  BB. "Permitted Encumbrances" means the outstanding liens,
      easements, restrictions, exceptions, reservations, conditions,
      limitations, security interests and other matters as permitted by and
      defined in the Secured Debt Documents.

                                      -7-
<PAGE>

                  CC. "Person" means any natural person, corporation,
      partnership, limited liability company, firm, association, trust,
      government, governmental agency or any other entity, whether acting in an
      individual, fiduciary or other capacity.

                  DD. "Personalty" means all of the right, title and interest of
      Mortgagor now owned or hereafter acquired in and to all furniture,
      furnishings, Equipment, machinery, Goods, General Intangibles, money,
      Accounts, receivables, Contract Rights, Inventory, all refundable,
      returnable or reimbursable fees, deposits or other funds or evidences of
      credit or indebtedness deposited by or on behalf of Mortgagor with any
      Governmental Authority, agencies, boards, corporations, providers of
      utility services, public or private, including specifically, but without
      limitation, all refundable, returnable or reimbursable tap fees, utility
      deposits, commitment fees and development costs, and all other personal
      property (other than the Fixtures) of any kind or character as defined in
      and subject to the provisions of Article 9 of the Uniform Commercial Code,
      now or hereafter located upon, within or about, or used in connection
      with, the lands described in Exhibit A together with all accessories,
      replacements and substitutions thereto or therefor and the Proceeds
      thereof.

                  EE. "Priority Lien Debt" is defined in the Collateral Trust
      Agreement.

                  FF. "Priority Lien Documents" is defined in the Collateral
      Trust Agreement.

                  GG. "Priority Lien Obligations" means any and all of the
      covenants, warranties, representations and other obligations (other than
      to repay the Indebtedness) made or undertaken by Mortgagor or others under
      any of the Priority Lien Documents.

                  HH. "Production Sale Contracts" means contracts now in effect,
      or hereafter entered into by Mortgagor, or entered into by Mortgagor's
      predecessors in interest, for the sale, purchase, exchange, gathering,
      transportation, treating or processing of Hydrocarbons produced from the
      lands described in Exhibit A.

                  II. "Rents and Revenues" means all of the rents, revenues,
      income, proceeds, profits and other benefits paid or payable by parties to
      the Leases other than Mortgagor for using, leasing, licensing, possessing,
      operating, selling or otherwise enjoying the Mortgaged Property, including
      the proceeds from the sale of Hydrocarbons.

                  JJ. "Secured Debt" is defined in the Collateral Trust
      Agreement.

                  KK. "Secured Debtholder" is defined in the Collateral Trust
      Agreement.

                                      -8-
<PAGE>

                  LL. "Secured Debt Documents" is defined in the Collateral
      Trust Agreement.

                  MM. "Secured Debt Representative" is defined in the Collateral
      Trust Agreement.

                  NN. "Taxes" means all real property and personal property
      taxes, production taxes, assessments, permit fees, water, gas, sewer,
      electricity and other utility rates and charges, charges for any easement,
      license or agreement maintained for the benefit of the Mortgaged Property,
      and all other taxes, charges and assessments and any interest, costs or
      penalties with respect thereto, of any kind and nature whatsoever which at
      any time prior to or after the execution hereof may be charged, assessed,
      levied or imposed upon the Mortgaged Property or the Rents and Revenues or
      the ownership, use, occupancy or enjoyment thereof.

                  OO. "Transportation Agreements" shall mean any contracts or
      agreements entered into from time to time by Mortgagor, or entered into by
      Mortgagor's predecessors in interest, relating to the transportation of
      Hydrocarbons, as any such agreement or contract may be amended,
      supplemented, restated or otherwise modified from time to time.

                  PP. "Uniform Commercial Code" shall mean the Uniform
      Commercial Code as in effect from time to time in the State of Louisiana
      (Louisiana Commercial Laws - Louisiana Revised Statutes Title 10) or any
      other applicable state, and the terms "Accounts", "Account Debtor", "As
      Extracted Collateral", "Deposit Account", "Chattel Paper", "Documents",
      "General Intangibles", "Goods", "Equipment", "Fixtures", "Inventory",
      "Instruments", and "Proceeds" shall have the respective meanings assigned
      to such terms in the Uniform Commercial Code.

                  QQ. "Water Rights" means (including without limitation those
      described in Exhibit A hereto) all now or hereafter existing or acquired
      water and water rights, reservoirs and reservoir rights, ditches and ditch
      rights, wells and well rights, whether evidenced or initiated by permit,
      decree, well registration, appropriation not decreed, water court
      application, shares of stock or other interests in mutual ditch or
      reservoir companies or carder ditch or reservoir companies or otherwise,
      appertaining or appurtenant to or beneficially used or useful in
      connection with the lands described in Exhibit A, together with all pumps,
      well casings, wellheads, electrical installations, pumphouses, meters,
      monitoring wells and systems, measuring devices, pipes, pipelines, and
      other structures or personal property which are or may be used to produce,
      regulate, measure, distribute, store, or use water from the said water and
      water rights, reservoirs and reservoir rights, ditches and ditch rights,
      wells and well rights.

                                      -9-
<PAGE>

                                      GRANT

      Grant of Priority Lien

      NOW, THEREFORE, Mortgagor, for and in consideration of the premises and as
security for the Priority Lien Indebtedness as described below by these presents
does specially mortgage, collaterally assign, pledge, affect and hypothecate,
unto and in favor of Mortgagee, all Mortgagor's right, title and interest,
whether now owned or hereafter acquired, in and to all of the hereinafter
described properties, rights and interests; and, insofar as such properties,
rights and interests consist of Equipment, General Intangibles, Accounts,
Deposit Accounts, As-Extracted Collateral, Contract Rights, Inventory, Fixtures,
Proceeds of collateral or any other personal property of a kind or character
defined in or subject to the applicable provisions of the Uniform Commercial
Code (as in effect from time to time in the appropriate jurisdiction with
respect to each of said properties, rights and interests), Mortgagor hereby
grants to Mortgagee, a continuing security interest therein; namely:

            (a) the lands described in Exhibit A, and Leases, the fee, mineral,
overriding royalty, royalty and other interests which are described in Exhibit
A,

            (b) the presently existing and (subject to the terms of Section 5.1
hereof) hereafter arising unitization, unit operating, communitization and
pooling agreements and the properties covered and the units created thereby
(including, without limitation, all units formed under orders, regulations,
rules, approvals, decisions or other official acts of any Governmental
Authority) having jurisdiction which are specifically described in Exhibit A or
which relate to any of the properties and interests specifically described in
Exhibit A,

            (c) the Hydrocarbons which are in, under, upon, produced or to be
produced from or which are attributed or allocated to the lands described in
Exhibit A,

            (d) the Production Sale Contracts,

            (e) the Joint Operating Agreements,

            (f) the Transportation Agreements,

            (g) the Operating Equipment,

            (h) the Permits,

            (i) the Water Rights,

            (j) the Hedging Agreements,

            (k) the Leases,

            (l) the Personalty,

                                      -10-
<PAGE>

            (m) the Rents and Revenues,

            (n) without duplication of any other provision of this granting
clause, all of Mortgagor's now owned or hereafter arising or acquired Equipment,
Fixtures and other Goods necessary or used in connection with, and Inventory,
Accounts, As Extracted Collateral, Deposit Accounts, General Intangibles,
Contract Rights, Chattel Paper, Electronic Chattel Paper, Documents, Instruments
and Proceeds arising from, or relating to, the properties and other interests
described in Exhibit A (including Exhibit A-1),

together with any and all corrections or amendments to, or renewals, extensions
or ratifications of, or replacements or substitutions for, any of the same, or
any instrument relating thereto, and all accounts, contracts, contract rights,
"take-or-pay" settlements, buy-outs or buy-downs, gas balancing claims, options,
nominee agreements, unitization or pooling agreements, operating agreements and
unit operating agreements, processing agreements, salt water disposal
agreements, farmin agreements, farmout agreements, joint venture agreements,
partnership agreements (including mining partnerships), exploration agreements,
bottom hole agreements, dry hole agreements, support agreements, acreage
contribution agreements, surface use and surface damage agreements, net profits
agreements, production payment agreements, Hedging Agreements, insurance
policies, title opinions, title abstracts, title materials and information,
files, records, writings, data bases, information, systems, logs, well cores,
fluid samples, production data and reports, well testing data and reports, maps,
seismic and geophysical, geological and chemical data and information,
interpretative and analytical reports of any kind or nature (including, without
limitation, reserve studies and reserve evaluations), computer hardware and
software and all documentation therefor or relating thereto (including, without
limitation, all licenses relating to or covering such computer hardware,
software and/or documentation), trade secrets, trademarks, service marks and
business names and the goodwill of the business relating thereto, copyrights,
copyright registrations, unpatented inventions, patent applications and patents,
accounting records, rights-of-way, franchises, bonds, easements, servitudes,
surface leases, permits, licenses, tenements, hereditaments, appurtenances,
concessions, occupancy leases, privileges, development rights, condemnation
awards, claims against third parties, general intangibles, rents, royalties,
issues, profits, products and proceeds, whether now or hereafter existing or
arising, used or useful in connection with, covering, relating to, or arising
from or in connection with, any of the aforesaid items (a) through (o),
inclusive, in this granting clause mentioned, and all other things of value and
incident thereto (including, without limitation, any and all liens, lien rights,
security interests and other properties, rights and interests) which Mortgagor
might at any time have or be entitled to, but excluding any data or contracts
with respect to which mortgaging or granting of a lien or a security interest is
prohibited by existing third party agreements,

all the aforesaid properties, rights and interests, together with any additions
thereto which may be subjected to the lien and security interest of this
instrument by means of supplements hereto, being hereinafter, collectively,
called the "MORTGAGED PROPERTY."

                                      -11-
<PAGE>

      Grant of Parity Lien

      NOW, THEREFORE, Mortgagor, for and in consideration of the premises and as
security for the Parity Lien Indebtedness as described below by these presents
does specially mortgage, collaterally assign, pledge, affect and hypothecate,
unto and in favor of Mortgagee, all Mortgagor's right, title and interest,
whether now owned or hereafter acquired, in and to all of the Mortgaged
Property; and, insofar as such properties, rights and interests consist of
Equipment, General Intangibles, Accounts, Deposit Accounts, As-Extracted
Collateral, Contract Rights, Inventory, Fixtures, Proceeds of collateral or any
other personal property of a kind or character defined in or subject to the
applicable provisions of the Uniform Commercial Code (as in effect from time to
time in the appropriate jurisdiction with respect to each of said properties,
rights and interests), Mortgagor hereby grants to Mortgagee, a continuing
security interest therein.

      Subject, however, in each case to (i) Permitted Encumbrances (including
without limitation all presently existing royalties, overriding royalties,
payments out of production and other burdens which are referred to in Exhibit A
and which are taken into consideration in computing any percentage, decimal or
fractional interest as set forth in Exhibit A), (ii) the assignment of
production contained in Article III hereof, but only insofar and so long as said
assignment of production is not inoperative under the provisions of Section 3.5
hereof, and (iii) the condition that neither Mortgagee nor any Secured
Debtholder shall be liable in any respect for the performance of any covenant or
obligation (including, without limitation, measures required to comply with
Environmental Laws) of Mortgagor in respect of the Mortgaged Property.

      The Mortgaged Property is to remain so specially mortgaged, affected and
hypothecated unto and in favor of Mortgagee to secure the payment of the
Indebtedness (including the performance of the obligations of Mortgagor herein
contained) until the full and final payment or discharge of the Indebtedness,
and Mortgagor is herein and hereby bound and obligated not to sell or alienate
the Mortgaged Property to the prejudice of this act.

      As set forth in the separate granting clauses above, it is the intent of
Mortgagor that such grants shall create two separate and distinct mortgage liens
and security interests in all right, title and interest of Mortgagor in the
Mortgaged Property in favor of (a) the Mortgagee, for the benefit of the holders
of the Priority Lien Debt, and (b) the Mortgagee, for the benefit of the holders
of the Parity Lien Debt.

      Notwithstanding (i) anything to the contrary contained in this Mortgage or
any other document, filing or agreement related to the creation, attachment,
perfection or existence of the liens and security interests granted herein, (ii)
the time, place, order or method of attachment or perfection of such liens or
security interests, (iii) the time or order of filing or recording of financing
statements or other documents filed or recorded to perfect such security
interests, and (iv) the rules for determining priority under any law governing
the relative priorities of secured creditors, the lien securing the Parity Lien

                                      -12-
<PAGE>

Indebtedness is subordinated and junior in priority to the lien securing the
Priority Lien Indebtedness.

      Mortgagor, in consideration of the Secured Debt as set forth above, hereby
covenants and agrees with Mortgagee:

                                   ARTICLE I

                              INDEBTEDNESS SECURED

            1.1 Items of Indebtedness Secured. The following items of
indebtedness are secured hereby:

                  (a) The Priority Lien Debt (including future advances to be
      made with respect thereto), and all other Obligations of Mortgagor under
      the Priority Lien Documents;

                  (b) The Parity Lien Debt (including future advances to be made
      with respect thereto), and all other Obligations of Mortgagor under the
      Parity Lien Documents;

                  (c) All Obligations under any other Priority Lien Debt or
      Parity Lien Debt;

                  (d) Any sums advanced or expenses or costs incurred by
      Mortgagee or any Secured Debtholder, or by any receiver appointed
      hereunder, which are made or incurred pursuant to, or permitted by, the
      terms hereof, plus interest thereon at the rate herein specified or
      otherwise agreed upon, from the date of the advances or the incurring of
      such expenses or costs until reimbursed;

                  (e) Any and all other indebtedness of Mortgagor or any
      Affiliate of Mortgagor to Mortgagee now or hereafter owing, whether direct
      or indirect, primary or secondary, fixed or contingent, joint or several,
      regardless of how evidenced or arising, where the indebtedness provides
      that it is secured hereby; and

                  (f) Any extensions, refinancings, modifications or renewals of
      all such indebtedness described in subparagraphs (a) through (e) above,
      whether or not Mortgagor executes any extension agreement or renewal
      instruments. The indebtedness secured hereby further continues with
      respect to any new obligation arising from any novation (subjective or
      objective) of the foregoing indebtedness as permitted by Louisiana Civil
      Code Article 1884. Pursuant to Louisiana Revised Statutes 9:5390, this
      instrument shall automatically secure payment of any renewal or
      refinancing note or notes delivered in substitution for or exchange of the
      note or notes then secured by this instrument evidencing any part of the
      Indebtedness.

                                      -13-
<PAGE>

            1.2 Indebtedness Defined. All the above items of indebtedness
described in subparagraphs (a) of Section 1.1 and subparagraphs (c) through (f)
of Section 1.1 hereof in respect of the Priority Lien Debt, are hereinafter
collectively referred to as the "Priority Lien Indebtedness." And all the above
items of indebtedness described in subparagraphs (b) of Section 1.1 and
subparagraphs (c) through (f) of Section 1.1 hereof in respect of the Parity
Lien Debt, are hereinafter collectively referred to as the "Parity Lien
Indebtedness"; the Priority Lien Indebtedness and the Parity Lien Indebtedness
are collectively referred to as the "Indebtedness".

            1.3 Maximum Amount. The maximum amount of the Indebtedness that may
be outstanding at any time and from time to time that this instrument secures,
including without limitation as a mortgage and as a collateral assignment, and
including without limitation any expenses, advances or costs incurred by the
Mortgagee and all other amounts included within the Indebtedness, is Six Billion
($6,000,000,000.00) dollars.

            1.4 Valid and Subsisting First Lien. Mortgagor hereby acknowledges
and agrees that, except as otherwise provided by the Secured Debt Documents, the
Existing Mortgage constitutes a valid and subsisting first lien on the portion
of the Mortgaged Property encumbered thereby, and that none of the rights and
liens existing thereunder shall be impaired or released hereby, and that the
same as amended and restated hereby shall remain in full force and effect, and
all rights and liens existing and to exist thereunder are renewed, extended,
carried forward, and conveyed to secure all of the Indebtedness hereinabove
mentioned.

            1.5 Amended and Restated Mortgage. The Existing Mortgage is amended
and restated in full hereby in order to, among other things, secure all of the
Indebtedness herein described or referred to as if reference to such
Indebtedness were fully described in the Existing Mortgage. None of the rights,
titles, and interests, existing or to exist under the Existing Mortgage are
hereby released, diminished or impaired.

            1.6 No Impairment or Discharge of Liens. It is the express intention
of all parties hereto that the Secured Debtholders are subrogated to all of the
rights, powers, and equities of the original lenders and beneficiary under the
Existing Mortgage, that the liens created hereby shall relate back to and be
effective as of the effective date of the Existing Mortgage and that nothing
contained herein shall be construed to impair or discharge the liens and
security interests created thereby.

            1.7 No Paraph. Mortgagor and Mortgagee acknowledge that no note or
other evidence of Indebtedness has been paraphed for identification with this
instrument.

                                   ARTICLE II

                    PARTICULAR COVENANTS, REPRESENTATIONS AND
                             WARRANTIES OF MORTGAGOR

                                      -14-
<PAGE>

            2.1 Payment of the Indebtedness and Performance of Obligations.
Mortgagor will duly and punctually pay the Indebtedness, as and when called for
in the Secured Debt Documents and on or before the due dates thereof, and will
timely perform and discharge all of the Obligations in full and on or before the
dates same are to be performed and discharged.

            2.2 Certain Representations and Warranties. Mortgagor represents and
warrants (and with respect to those matters set forth in the following
subsections (b) and (f), as to those portions of the Mortgaged Property that are
operated by persons other than Mortgagor or a Subsidiary of Mortgagor, Mortgagor
makes such representation and warranty to the best of its knowledge) that

                  (a) the oil and gas leases described in Exhibit A hereto are
      valid, subsisting leases, superior and paramount to all other oil and gas
      leases respecting the properties to which they pertain,

                  (b) all producing wells located on the lands described in
      Exhibit A (including Exhibit A-1) have been drilled, operated and produced
      in conformity with all Applicable Laws of all Governmental Authorities
      having jurisdiction, and are subject to no penalties on account of past
      production, and such wells are in fact bottomed under and are producing
      from, and the well bores are wholly within, the lands described in Exhibit
      A or lands pooled or unitized therewith,

                  (c) Mortgagor, to the extent of the interest specified in
      Exhibit A (including Exhibit A-1), has valid and indefeasible title to
      each property right or interest constituting the Mortgaged Property
      described in Exhibit A (including Exhibit A-1) and has a good and legal
      right to grant and convey the same to Mortgagee; such interest entitles
      Mortgagor to receive not less than the share of Hydrocarbons from such
      property indicated as its net revenue interest or "NRI" share of such
      Hydrocarbons, and obligates Mortgagor to pay for not more than the share
      of operating and other costs, liabilities and expenses associated with
      such property indicated as its working interest or "Wl" share of such
      costs, liabilities and expenses,

                  (d) excepting the Permitted Encumbrances, the Mortgaged
      Property is free from all encumbrances or liens whatsoever,

                  (e) Mortgagor is not obligated, by virtue of any prepayment
      under any contract providing for the sale by Mortgagor of Hydrocarbons
      which contains a "take or pay" clause or under any similar arrangement, to
      deliver Hydrocarbons at some future time without then or thereafter
      receiving full payment therefor,

                  (f) the Mortgaged Property is currently being operated,
      maintained and developed, in all material respects, in accordance with all
      applicable currently existing Permits, Legal Requirements and all
      Applicable Laws (including, without limitation, Environmental Laws),

                                      -15-
<PAGE>

                  (g) the cover page to this instrument lists the correct legal
      name of Mortgagor and Mortgagor has not been known by any legal name
      different from the one set forth on the cover page of this instrument,

                  (h) the execution, delivery, and performance by Mortgagor of
      this instrument (i) are within Mortgagor's corporate powers and have been
      duly authorized by Mortgagor's Board of Directors, shareholders and all
      other requisite corporate action, (ii) have received all (if any)
      requisite prior governmental approval and consent in order to be legally
      binding and enforceable in accordance with the terms thereof, and (iii)
      will not violate, be in conflict with, result in a breach or constitute
      (with due notice or lapse of time, or both) a default under, any Legal
      Requirement or result in the creation or imposition of any lien, charge or
      encumbrance of any nature whatsoever upon any of Mortgagor's property or
      assets, except as contemplated by the provisions of the Secured Debt
      Documents, and

                  (i) except as permitted by the Secured Debt Documents, there
      are no actions, suits or proceedings pending, or to the knowledge of
      Mortgagor threatened, against or affecting Mortgagor or the Mortgaged
      Property that could materially adversely affect Mortgagor or the Mortgaged
      Property, or involving the validity or enforceability of this instrument
      or the priority of the liens and security interests created by the Secured
      Debt Documents, and no event has occurred (including specifically
      Mortgagor's execution of this instrument which will violate, be in
      conflict with, result in the breach of, or constitute (with due notice or
      lapse of time, or both) a material default under, any Legal Requirement or
      result in the creation or imposition of any lien, charge or encumbrance of
      any nature whatsoever upon any of Mortgagor's property other than the
      liens and security interests created by the Secured Debt Documents.

            2.3 Further Assurances. Mortgagor will warrant and forever defend
the Mortgaged Property unto Mortgagee; as the case may be, against every person
whomsoever lawfully claiming the same or any part thereof, subject to Permitted
Encumbrances, and Mortgagor will maintain and preserve the lien and security
interest hereby created so long as any of the Indebtedness remains unpaid.
Mortgagor will execute and deliver such other and further instruments and will
do such other and further acts as may be required pursuant to the Collateral
Trust Agreement and/or any Secured Debt Documents to carry out more effectually
the purposes of this instrument, including, without limiting the generality of
the foregoing, (i) prompt correction of any defect which may hereafter be
discovered in the title to the Mortgaged Property or in the execution and
acknowledgment of this instrument, the Secured Debt Documents, or, immediately
upon the occurrence of an Event of Default, any other document executed in
connection herewith, and (ii) at any time a Secured Debt Representative may
request and upon such request, promptly execute all notices to parties
operating, purchasing or receiving proceeds of production of Hydrocarbons from
the Mortgaged Property, and all division orders or transfer orders needed in
order to transfer effectually or to assist in transferring effectually to the
Mortgagee the assigned proceeds of production from the

                                      -16-
<PAGE>

Mortgaged Property, which notices, division orders and transfer orders shall be
held by such Secured Debt Representative and delivered upon an Event of Default.

            2.4 Operation of the Mortgaged Property. So long as the Indebtedness
or any part thereof remains unpaid, and whether or not Mortgagor is the operator
of any particular part of the Mortgaged Property, Mortgagor shall, at
Mortgagor's own expense:

                  (a) Do all things necessary to keep unimpaired Mortgagor's
      rights in the Mortgaged Property and not abandon any well or forfeit,
      surrender or release any Lease, except that Mortgagor may, in the ordinary
      course of business, (i) plug and abandon any well no longer capable of
      producing Hydrocarbons in paying quantities, (ii) surrender or release any
      Lease or a portion thereof so long as no well capable of producing
      Hydrocarbons in paying quantities is located on such Lease or a portion
      thereof or production from any such well is attributed to such Lease or a
      portion thereof, (iii) surrender or release any Lease or a portion thereof
      on which no producing well has ever been drilled or which has never been
      held by production from another well unless Proven Reserves (as defined in
      any Secured Debt Document) are attributed to such Lease or a portion
      thereof and (iv) abandon, forfeit, surrender or release any other portion
      of the Mortgaged Property to the extent permitted under all of the then
      existing Secured Debt Documents;

                  (b) Obtain and maintain all required Permits and cause the
      lands described in Exhibit A to be maintained, developed, protected
      against drainage, and operated for the production of Hydrocarbons in a
      good and workmanlike manner as would a prudent operator, and consistent
      with industry practices, Joint Operating Agreements, and all Applicable
      Laws, excepting those being contested in good faith; and plug and abandon
      wells no longer capable of producing Hydrocarbons in paying quantities in
      accordance with all Applicable Laws, Legal Requirements and the terms and
      conditions of applicable Leases; and remediate the lands described in
      Exhibit A and facilities located thereon in accordance with all Applicable
      Laws, Legal Requirements and the terms and conditions of applicable
      Leases;

                  (c) Duly pay and discharge, or cause to be paid and
      discharged, promptly as and when due and payable, all rentals and
      royalties (including shut-in royalties) payable in respect of the
      Mortgaged Property (other than rentals under Leases that are surrendered
      pursuant to the foregoing Section 2.4(a)), and all expenses incurred in or
      arising from the operation or development of the Mortgaged Property not
      later than the due date thereof, or the day any fine, penalty, interest or
      cost may be added thereto or imposed, or the day any lien may be filed,
      for the non-payment thereof (if such day is used to determine the due date
      of the respective item) except as to such matters which are being
      contested by Mortgagor in good faith;

                  (d) Cause the Operating Equipment to be kept in good and
      effective operating condition, ordinary wear and tear excepted, and all
      repairs,

                                      -17-
<PAGE>

      renewals, replacements, additions and improvements thereof or thereto,
      needful to the production of Hydrocarbons from the lands described in
      Exhibit A, to be promptly made;

                  (e) Not, except as permitted under the Secured Debt Documents,
      create, place or permit to be created or placed, or through any act or
      failure to act, acquiesce in the placing of, or allow to remain, any
      mortgage, pledge, lien (statutory, constitutional or contractual),
      security interest, encumbrance or charge, or conditional sale or other
      title retention agreement, regardless of whether same are expressly
      subordinate to the liens of the Secured Debt Documents, with, respect to
      all or any portion of the Mortgaged Property, the Leases or the Rents and
      Revenues other than (1) the Permitted Encumbrances, (2) Taxes constituting
      a lien but not due and payable, (3) defects or irregularities in title,
      and liens, charges or encumbrances, which are customarily viewed in the
      industry as not interfering materially with the development, operation or
      value of the Mortgaged Property and not such as to affect materially title
      thereto, and (4) those being contested by Mortgagor in good faith in such
      manner as not to jeopardize Mortgagee's rights in and to the Mortgaged
      Property;

                  (f) Carry with financially sound and reputable insurance
      companies and in amounts as is customary in the industry or as otherwise
      required pursuant to the Secured Debt Documents, the following insurance:
      (1) workmen's compensation insurance and public liability and property
      damage insurance in respect of all activities in which Mortgagor might
      incur personal liability for the death of or injury to an employee or
      third person, or damage to or destruction of another's property; and (2)
      to the extent such insurance is carried by similar companies engaged in
      similar undertakings in, the same general areas in which the Mortgaged
      Property, is located, insurance in respect of the Operating Equipment,
      against loss or damage by fire, lightning, hail, tornado, explosion and
      other similar risks, hazards, casualties and contingencies (including
      business interruption insurance covering loss of Rents and Revenues);
      provided, that any such insurance may be provided by way of self insurance
      to the extent that similar companies engaged in similar undertakings in
      the same general areas also self-insure. Each insurance policy issued in
      connection therewith shall provide by way of endorsements, riders or
      otherwise that (i) name Mortgagee as a loss payee on all property
      insurance policies and an additional insured on all liability insurance
      policies, and provide that proceeds from property insurance policies will
      be payable to Mortgagee as its interest may appear, which proceeds are
      hereby assigned to Mortgagee, it being agreed by Mortgagor that such
      payments shall be applied A) if there be no Event of Default existing or
      which would exist but for due notice or lapse of time, or both, to the
      restoration, repair or replacement of the Mortgaged Property, or B) if
      there be an Event of Default existing, or which would exist but for due
      notice or lapse of time, or both, in accordance with the provisions of the
      Collateral Trust Agreement, either for the above stated purpose or toward
      the payment of the Indebtedness; (ii) the coverage of Mortgagee shall not
      be terminated, reduced or affected in any

                                      -18-
<PAGE>

      manner regardless of any breach or violation by Mortgagor of any
      warranties, declarations or conditions in such policy; (iii) no such
      insurance policy shall be canceled, endorsed, altered or reissued to
      effect a change in coverage for any reason and to any extent whatsoever
      unless such insurer shall have first given Mortgagee and each Secured Debt
      Representative thirty (30) days prior written notice thereof; and (iv)
      Mortgagee may, but shall not be obligated to, make premium payments to
      prevent any cancellation, endorsement, alteration or re-issuance and such
      payments shall be accepted by the insurer to prevent the same. Mortgagee
      and each Secured Debt Representative shall be furnished with a certificate
      evidencing such coverage in form and content comparable to coverage
      typically provided in the industry. All policies to be maintained under
      this instrument are to be issued on forms and by companies and with
      endorsements as are customary in the industry. Mortgagor shall maintain
      insurance in an amount sufficient to prevent Mortgagor from becoming a
      co-insurer under any policy required hereunder. If Mortgagor fails to
      maintain the level of insurance required under this instrument, then
      Mortgagor shall and hereby agrees to indemnify Mortgagee to the extent
      that a casualty occurs and insurance proceeds would have been available
      had such insurance been maintained;

                  (g) Furnish to Mortgagee and each Secured Debt Representative,
      as soon as possible and in any event within five (5) days after the
      occurrence from time to time of any change in the address of Mortgagor's
      location (as described on the signature page hereto) or in the name of
      Mortgagor, notice in writing of such change;

                  (h) Not initiate or acquiesce in any change in any material
      zoning or other land use or Water Rights classification now or hereafter
      in effect and affecting the Mortgaged Property or any part thereof;

                  (i) Notify Mortgagee and each Secured Debt Representative in
      writing, as soon as possible and in any event within five (5) days after
      it shall become aware of the occurrence of any Event of Default or any
      event which, with notice, the passage of time or both would be such an
      Event of Default;

                  (j) Appear and defend, and hold Mortgagee and any Secured
      Debtholder harmless from, any action, proceeding or claim affecting the
      Mortgaged Property or the rights and powers of Mortgagee or Secured
      Debtholders under the Secured Debt Documents, and all costs and expenses
      incurred by Mortgagee or any Secured Debtholder in protecting its
      interests hereunder in such an event (including all court costs and
      attorneys' fees) shall be borne by Mortgagor;

                  (k) Subject to Mortgagor's right to contest the same, promptly
      pay all Taxes legally imposed upon this instrument or upon the Mortgaged
      Property or upon the income and profits thereof, or upon the interest of

                                      -19-
<PAGE>

      Mortgagee therein; provided that Mortgagor shall not be liable for taxes
      accruing after a transfer of the Mortgaged Property following a
      foreclosure;

                  (l) Comply with, conform to and obey, in all material
      respects, all present and future Legal Requirements and not use, maintain,
      operate, occupy, or allow the use, maintenance, operation or occupancy of,
      the Mortgaged Property in any manner which (a) violates any present and
      future Legal Requirement, (b) may be dangerous unless safeguarded as
      required by Applicable Law, (c) constitutes a public or private nuisance
      or (d) makes void, voidable or cancelable, or increases the premium of,
      any insurance then in force with respect thereto; and

                  (m) Not, except as authorized under the Secured Debt
      Documents, permit any of the Fixtures or Personalty to be removed at any
      time from the lands described in Exhibit A unless (i) the removed item is
      removed temporarily for maintenance and repair, (ii) if removed
      permanently, is replaced by an article of equal suitability and value,
      owned by Mortgagor, free and clear of any lien or security interest or
      (iii) such Fixtures or Personalty are removed in connection with the
      plugging and abandoning of wells, or abandonment of other facilities, in
      each case as permitted by this instrument.

            2.5 Performance of Leases. Mortgagor will: (a) duly and punctually
perform and comply with any and all representations, warranties, covenants and
agreements expressed as binding upon it under each of the Leases; (b) subject to
the exceptions provided for in Section 2.4(a), not voluntarily terminate, cancel
or waive its rights or the obligations of any other party under any of the
Leases; (c) subject to the exceptions provided for in Section 2.4(a), use all
reasonable efforts to maintain each of the Leases in force and effect during the
full term thereof, and (d) appear in and defend (or cause its operator to appear
in and defend) any action or proceeding arising under or in any manner connected
with any of the Leases or the representations, warranties, covenants and
agreements of it or the other party or parties thereto.

            2.6 Recording, etc. Mortgagor will promptly, and at Mortgagor's
expense, record, register, deposit and file this and every other instrument in
addition or supplemental hereto in such offices and places and at such times and
as often as may be necessary to preserve, protect and renew the lien and
security interest hereof as a first lien on and prior perfected security
interest in real or personal property, as the case may be, and the rights and
remedies of Mortgagee and Secured Debtholders, and otherwise will do and observe
all things or matters necessary or expedient to be done or observed by reason of
any Applicable Law, for the purpose of effectively creating, maintaining and
preserving the lien and security interest hereof on and in the Mortgaged
Property.

            2.7 Sale or instrument of the Mortgaged Property. Except (a) as set
forth in Section 5.1 of this instrument; (b) for sales of severed Hydrocarbons
in the ordinary course of Mortgagor's business; (c) sales of or dispositions of
surplus, obsolete or worn inventory or equipment; and (d) the lien and security
interest created by this

                                      -20-
<PAGE>

instrument; (e) for Permitted Encumbrances; and (f) for sales, exchanges or
other dispositions of Mortgaged Property permitted under the Secured Debt
Documents governing Priority Lien Debt and permitted under the Secured Debt
Documents governing Parity Lien Debt, Mortgagor will not sell, convey, mortgage,
pledge, hypothecate, pool, unitize or otherwise dispose of or encumber the
Mortgaged Property nor any portion thereof, nor any of Mortgagor's right, title
or interest therein, and Mortgagor will not enter into any arrangement with any
gas pipeline company or other consumer of Hydrocarbons regarding the Mortgaged
Property whereby said gas pipeline company or consumer may set off any claim
against Mortgagor by withholding payment for any Hydrocarbons actually
delivered.

            2.8 Records, Statements and Reports. Mortgagor will keep proper
books of record and account in which complete and correct entries will be made
of Mortgagor's transactions in accordance with generally accepted accounting
principles and will furnish or cause to be furnished to each Secured Debt
Representative such information concerning the business, affairs and financial
condition of Mortgagor as required under the Secured Debt Documents. Without
limiting the generality of the foregoing, Mortgagor shall furnish to Mortgagee
and each Secured Debt Representative, but not more than every six (6) months:
(a) reports prepared by a reputable national independent petroleum engineer
regularly engaged by Mortgagor for such purposes or other engineering firm
acceptable to the Credit Agreement Agent concerning (1) the quantity of
Hydrocarbons recoverable from the Mortgaged Property, (2) the projected income
and expense attributable to the Mortgaged Property, and (3) the expediency of
any change in methods of treatment or operation of all or any wells productive
of Hydrocarbons, any new drilling or development, any method of secondary
recovery by repressuring or otherwise, or any other action with respect to the
Mortgaged Property, the decision as to which may increase or reduce the quantity
of Hydrocarbons ultimately recoverable or the rate of production thereof, and
(b) reports for the prior period showing the gross proceeds from the sale of
Hydrocarbons produced from the lands described in Exhibit A (including any
thereof taken by Mortgagor for Mortgagor's own use), the quantity of such
Hydrocarbons sold, the severance, gross production, occupation, or gathering
taxes deducted from or paid out of such proceeds and the number of wells
operated, drilled or abandoned.

            2.9 Right of Entry.

                  (a) Upon at least twenty-four (24) hours notice to Mortgagor,
      Mortgagor will permit Mortgagee, each Secured Debt Representative and/or
      the agents of either of them, at the cost and expense of Mortgagor, to
      enter upon the Mortgaged Property and all parts thereof, for the purpose
      of investigating and inspecting the condition and operation thereof, and
      shall permit reasonable access to the field offices and other offices (to
      the fullest extent that Mortgagor may do so under the terms of the
      applicable Joint Operating Agreements and other applicable agreements
      affecting the Mortgaged Property), including the principal place of
      business, of Mortgagor to inspect and examine the Mortgaged Property and
      to inspect, review and reproduce as necessary any books, records,
      accounts, contracts or other documents of Mortgagor, it being understood
      that

                                      -21-
<PAGE>

      any non-public information obtained in connection therewith shall be
      subject to the relevant confidentiality provisions of the Secured Debt
      Documents then in effect.

                  (b) Without limiting the generality of the foregoing,
      Mortgagee shall have the right (but shall not be obligated to), and each
      Secured Debt Representative and its agents shall have the right (to the
      fullest extent that Mortgagor may do so under the terms of the applicable
      Joint Operating Agreements and other applicable agreements affecting the
      Mortgaged Property), on twenty-four (24) hours prior notice to Mortgagor
      to enter the Mortgaged Property to conduct (at the cost and expense of
      Mortgagor), or to cause Mortgagor to conduct (at the cost and expense of
      Mortgagor), such tests and investigations as may be necessary to determine
      whether any hazardous materials or solid waste is being generated,
      transported, stored, or disposed of in accordance with applicable
      Environmental Laws. Such tests and investigations may include, without
      limitation, underground borings, ground water analyses and borings from
      the floors, ceilings and walls of any improvements located on the
      Mortgaged Property. This Section 2.9 shall not be construed to affect or
      limit the obligations of Mortgagor pursuant to Section 2.4 hereof.

                  (c) Neither Mortgagee nor any Secured Debt Representative
      shall have any duty to visit or observe the Mortgaged Property, or to
      conduct tests, and no site visit, observation or testing by any such
      person (or its agents and independent contractors) shall impose any
      liability on any such person nor shall Mortgagor or any other obligor be
      entitled to rely on any such visit, observation or testing in any respect.
      Mortgagee or a Secured Debt Representative may, but shall not be obligated
      to, disclose to Mortgagor or, subject to the relevant confidentiality
      provisions of the Secured Debt Documents then in effect, any other Person,
      including any Governmental Authority, any report or finding made as a
      result of, or in connection with, any site visit, observation or testing.
      Mortgagor agrees that neither Mortgagee nor any Secured Debt
      Representative makes any warranty or representation to Mortgagor or any
      other obligor regarding the truth, accuracy or completeness of any such
      report or findings that may be so disclosed. Mortgagor also acknowledges
      that, depending upon the results of any site visit, observation or testing
      disclosed to Mortgagor, Mortgagor may have a legal obligation to notify
      one or more Governmental Authorities of such results, that such reporting
      requirements are site-specific, and are to be evaluated by Mortgagor
      without advice or assistance from Mortgagee or any Secured Debt
      Representative.

            2.10 Taxes. Subject to Mortgagor's right to contest the same,
Mortgagor will promptly pay all taxes, assessments and governmental charges
legally imposed upon this instrument or upon the Mortgaged Property, or upon the
interest of Mortgagee therein, or upon the income and profits thereof.

            2.11 No Governmental Approvals. Mortgagor represents and warrants
that (a) no approval or consent of any regulatory or administrative commission
or

                                      -22-
<PAGE>

authority, or of any other governmental body, is necessary to authorize the
execution and delivery of this instrument, or to authorize the observance or
performance by Mortgagor of the covenants herein contained, or that such
approvals as are required have been obtained or will be obtained promptly and
(b) Mortgagor has obtained all Permits which are necessary for the operation of
the Mortgaged Property.

            2.12 Environmental Laws.

                  (a) Mortgagor represents and warrants, to the best of its
      knowledge after due inquiry that: except as permitted by the Secured Debt
      Documents the Mortgaged Property is in compliance with all applicable
      Environmental Laws; there are no conditions existing currently which would
      be likely to subject Mortgagor to damages, penalties, injunctive relief or
      cleanup costs under any Environmental Laws or assertions thereof, or which
      require or are likely to require cleanup, removal, remedial action or
      other response pursuant to Environmental Laws by Mortgagor; Mortgagor is
      not a party to any litigation or administrative proceedings, nor so far as
      is known by Mortgagor is any litigation or administrative proceeding
      threatened against it, which asserts or alleges that Mortgagor has
      violated or is violating Environmental Laws or that Mortgagor is required
      to clean up, remove or take remedial or other responsive action due to the
      disposal, depositing, discharge, leaking or other release of any hazardous
      substances or materials; neither Mortgaged Property nor Mortgagor is
      subject to any judgment, decree, order or citation related to or arising
      out of Environmental Laws and neither has been named or listed as a
      potentially responsible party by any governmental body or agency in a
      matter arising under any Environmental Laws. Mortgagor has also obtained
      all permits, licenses or approvals required under applicable Environmental
      Laws which are necessary for its current exploration, use, and development
      activities at the Mortgaged Property; and to Mortgagor's knowledge after
      reasonable investigation all use, generation, manufacturing, release,
      discharge, storage, deposit, treatment, recycling or disposal of any
      materials on, under or at the Mortgaged Property or transported to or from
      the Mortgaged Property (or tanks or other facilities thereon containing
      such materials) are being and will be conducted in accordance, in all
      material respects, with applicable Environmental Laws including without
      limitation those requiring cleanup, removal or any other remedial action.

            2.13 Corporate Mortgagor. Mortgagor will continue to be duly
qualified to transact business in each state where the conduct of its business
requires it to be qualified, and will not, unless permitted pursuant to the
Secured Debt Documents, consolidate or merge with any other partnership,
company, corporation or other Person.

            2.14 Taxpayer I.D. Number. The taxpayer identification number of
Mortgagor is 77-0212977. The taxpayer identification number of Mortgagee is
13-5160382.

                                      -23-
<PAGE>

                                  ARTICLE III

                            ASSIGNMENT OF PRODUCTION

            3.1 Assignment.

                  (a) Mortgagor hereby absolutely and irrevocably (a) transfers,
      assigns, warrants and conveys, to Mortgagee, effective as of July 1, 2003,
      at 7:00 A.M., local time, all Hydrocarbons which are thereafter produced
      from and which accrue to the Mortgaged Property, and all proceeds
      therefrom, and (b) gives to and confers upon Mortgagee the right, power
      and authority to collect such Hydrocarbons and proceeds. Subject to the
      terms of Section 3.1 (b), all parties producing, purchasing or receiving
      any such Hydrocarbons, or having such, or proceeds therefrom, in their
      possession for which they or others are accountable to Mortgagee by virtue
      of the provisions of this Article III, are authorized and directed to
      treat and regard Mortgagee as the assignee and transferee of Mortgagor and
      entitled in Mortgagor's place and stead to receive such Hydrocarbons and
      all proceeds therefrom; and said parties and each of them shall be fully
      protected in so treating and regarding Mortgagee and shall be under no
      obligation to see to the application by Mortgagee of any such proceeds or
      payments received by it; provided, however, that, until Mortgagee or any
      Secured Debt Representative shall have instructed such parties that an
      Event of Default has occurred and to deliver such Hydrocarbons and all
      proceeds therefrom directly to Mortgagee, such parties shall be entitled
      to deliver such Hydrocarbons and all proceeds therefrom directly to
      Mortgagor. So long as no Event of Default shall have occurred, Mortgagor
      shall be entitled to receive directly from such parties, and keep and
      retain, all such proceeds from the sale of such Hydrocarbons.

                  (b) Upon the occurrence of an Event of Default (provided that
      the Secured Debt Representative shall not give such instructions and
      notice under this Article III unless such Event of Default shall be
      continuing), any Secured Debt Representative may at any time (and from
      time to time) thereafter give notice thereof any party producing,
      purchasing or receiving any such Hydrocarbons, or having such, or proceeds
      therefrom, in their possession for which they or others are accountable to
      Mortgagee, directing that said Hydrocarbons and products are to be
      delivered into pipelines connected with the oil and gas leases, or to the
      purchaser thereof, free and clear of all Taxes, and the proceeds from the
      sale of such Hydrocarbons paid directly to Mortgagee in accordance with
      Section 3.5 of this instrument. Said parties producing, purchasing or
      receiving any such Hydrocarbons, or having such, or proceeds therefrom, in
      their possession for which they or others are accountable to Mortgagee by
      virtue of the provisions of this Article III, shall be fully protected in
      relying on any such Secured Debt Representative's determination and notice
      of the occurrence of an Event of Default. Mortgagor agrees to perform all
      such acts, and to execute all such further assignments, transfers and
      division orders, and other instruments as may be required pursuant to the
      Collateral Trust

                                      -24-
<PAGE>

      Agreement or any of the Secured Debt Documents in order to have said
      revenues and proceeds so paid to Mortgagee, as and when provided in this
      Article III. With respect to any funds received by Mortgagee, Mortgagee is
      fully authorized to (but shall not be obligated to) receive and give
      receipt for any such revenues and proceeds that are received by Mortgagee;
      to endorse and cash any and all checks and drafts payable to the order of
      Mortgagor or Mortgagee for the account of Mortgagor received from or in
      connection with said revenues or proceeds and apply the proceeds thereof
      in accordance with Section 3.2 hereof, and to execute transfer and
      division orders in the name of Mortgagor, or otherwise, with warranties
      binding Mortgagor. The assignment of the Hydrocarbons and proceeds in this
      Section 3.1 is intended to be an absolute assignment from Mortgagor to
      Mortgagee and not merely the passing of a security interest. Such
      Hydrocarbons and proceeds are hereby assigned absolutely by Mortgagor to
      Mortgagee.

            3.2 Application of Proceeds. All payments received by Mortgagee
pursuant to Section 3.1 hereof shall be placed in a cash collateral account to
be applied in accordance with the provisions of the Collateral Trust Agreement.

            3.3 No Liability of Mortgagee in Collecting. Mortgagee is hereby
absolved from all liability for failure to enforce collection of any proceeds so
assigned (and no such failure shall be deemed to be a waiver of any right of
Mortgagee under this Article III) and from all other responsibility in
connection therewith, except the responsibility to account to Mortgagor for
funds actually received.

            3.4 Assignment Not a Restriction on Mortgagee's Rights. Nothing
herein contained shall detract from or limit the absolute obligation of
Mortgagor to make payment of the Indebtedness regardless of whether the proceeds
assigned by this Article III are sufficient to pay the same, and the rights
under this Article III shall be in addition to all other security now or
hereafter existing to secure the payment of the Indebtedness.

            3.5 Status of Assignment. Notwithstanding the other provisions of
this Article III and in addition to the other rights hereunder, Mortgagee or any
receiver or keeper appointed in judicial proceedings for the enforcement of this
instrument shall have the right to receive all of the Hydrocarbons herein
assigned and the proceeds therefrom after the occurrence and during the
continuance of any Event of Default and to apply all of said proceeds as
provided in Section 3.2 hereof. Upon any sale of the Mortgaged Property or any
part thereof pursuant to Article IV, the Hydrocarbons thereafter produced from
the property so sold, and the proceeds therefrom, shall be included in such sale
and shall pass to the purchaser free and clear of the assignment contained in
this Article III.

            3.6 Indemnification Obligations. The following provisions shall
apply to, and be deemed in each case to modify, each of the provisions of this
instrument (except those set forth in Section 2.12 and 5.11 hereof) and the
other Secured Debt Documents

                                      -25-
<PAGE>

(except to the extent otherwise expressly provided therein) wherein Mortgagor is
obligated to indemnify each of the Indemnified Persons:

                  (a) Mortgagor agrees to indemnify Mortgagee, the Secured
      Debtholders, and their respective employees, affiliates, agents and
      attorneys, under the instrument and any successors or substitute trustee
      under the instrument, against all legal and administrative proceedings for
      which a claim for indemnification may be made by the Indemnified Person
      (herein, collectively, called "Indemnification Claims") made against or
      incurred by them or any of them as a consequence of the assertion, either
      before or after the payment in full of the Indebtedness, that they or any
      of them received Hydrocarbons herein assigned or the proceeds thereof
      claimed by third persons and Mortgagee and Secured Debtholders shall have
      the right to defend against any such Indemnification Claims, employing
      attorneys therefor, and unless furnished with reasonable indemnity, they
      or any of them shall have the right to pay or compromise and adjust all
      such Indemnification Claims. Mortgagor will indemnify and pay to Mortgagee
      and Secured Debtholders any and all such amounts as may be paid in respect
      thereof or as may be successfully adjudged against such persons. The
      obligations of Mortgagor as hereinabove set forth in this Section 3.6
      shall survive the release termination, foreclosure or assignment of this
      instrument or any sale hereunder.

                  (b) Mortgagor shall pay when due any judgments with respect to
      an Indemnification Claim against any of the Indemnified Persons and which
      are rendered by a final order or decree of a court of competent
      jurisdiction from which no further appeal may be taken or has been taken
      within the applicable appeal period. In the event that such payment is not
      made, any of the Indemnified Persons at its sole discretion may pay any
      such judgments, in whole or in part, and look to Mortgagor for
      reimbursement pursuant to this instrument, or may proceed to file suit
      against Mortgagor to compel such payment.

                  (c) Any amount which Mortgagor is obligated to pay to or for
      the benefit of an Indemnified Person with respect to an Indemnification
      Claim, but which is not paid when due, shall bear interest at the
      applicable interest rate set forth under the Secured Debt Documents from
      the date such amount is due until such amount is paid.

                                   ARTICLE IV

                           ENFORCEMENT OF THE SECURITY

            4.1 Rights of Mortgagee with Respect to Personal Property
Constituting a Part of the Mortgaged Property. Upon the occurrence of an Event
of Default and if such Event of Default shall be continuing, Mortgagee will have
all rights and remedies granted by law, and particularly by the Uniform
Commercial Code, including, but not limited to, the right to take possession of
all personal property constituting a part of the Mortgaged Property, and for
this purpose Mortgagee may enter upon any premises on

                                      -26-
<PAGE>

which any or all of such personal property is situated and take possession of
and operate such personal property (or any portion thereof) or remove it
therefrom. Mortgagee may require Mortgagor to assemble such personal property
and make it available to Mortgagee at a place to be designated by Mortgagee
which is reasonably convenient to all parties. Unless such personal property is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Mortgagee will give Mortgagor reasonable notice of
the time and place of any public sale or of the time after which any private
sale or other disposition of such personal property is to be made. This
requirement of sending reasonable notice will be met if the notice is mailed by
first-class mail, postage prepaid, to Mortgagor at the address shown below the
signatures at the end of this instrument at least five (5) days before the time
of the sale or disposition. Further, Mortgagee shall have the right to utilize
executory process, as more fully set forth in Section 4.4 hereof and the right
to appointment of a keeper, as set forth in Section 4.3 hereof.

            4.2 Rights of Mortgagee with Respect to Fixtures Constituting a Part
of the Mortgaged Property. Upon the occurrence of an Event of Default and if
such Event of Default shall be continuing, Mortgagee may elect to treat the
fixtures constituting a part of the Mortgaged Property as either real property
collateral or personal property collateral and then proceed to exercise such
rights as apply to such type of collateral.

            4.3 Judicial Proceedings. Upon the occurrence of an Event of Default
and if such Event of Default shall be continuing, Trustee, in lieu of or in
addition to exercising any power of sale hereinabove given, may proceed by a
suit or suits in equity or at law, whether for a foreclosure hereunder for cash
or upon credit in one or more parcels or portions under executory or ordinary
process, at Mortgagee's sole option, without appraisement, appraisement being
expressly waived, or for the specific performance of any covenant or agreement
herein contained or in aid of the execution of any power herein granted, or for
the appointment of a receiver pending any foreclosure hereunder or the sale of
the Mortgaged Property, or for the enforcement of any other appropriate legal or
equitable remedy.

            4.4 Other Remedies. Mortgagor hereby acknowledges the Indebtedness
secured hereby, whether now existing or to arise hereafter, and, for the purpose
of foreclosure under Louisiana's executory process procedures, confesses
judgment thereon in the full amount of the Indebtedness in favor of Mortgagee
and any future holder or holders of the Indebtedness if such obligations are not
paid at maturity. Mortgagor in accordance with the terms hereof and the Secured
Debt Documents does by these presents consent, agree and stipulate that, upon
the occurrence of an Event of Default hereunder or under the Secured Debt
Documents, Mortgagee or any future holder or holders of any of the Indebtedness,
at its (or their) option, without making demand and without notice or putting in
default, the same being hereby expressly waived, may cause all and singular the
property of Mortgagor herein mortgaged to be seized and sold by executory
process issued by any competent court, or to proceed with the enforcement of
this instrument and pledge of production in any manner prescribed by law,
Mortgagor hereby waiving notice of demand or delay stipulated in Article 2639 of
the Code of Civil Procedure of Louisiana and the benefit of any laws, or

                                      -27-
<PAGE>

parts of laws, relating to the appraisement of the property seized and sold
under executory process or other legal process, and consenting that the
Mortgaged Property situated in the State of Louisiana be sold without
appraisement to the highest bidder for cash.

            4.5 Certain Aspects of a Sale. Mortgagee shall have the right to
become the purchaser at any sale held by Mortgagee or by any court, receiver or
public officer, and Mortgagee shall have the right to credit upon the amount of
the bid made therefor the amount payable out of the net proceeds of such sale to
it. Recitals contained in any conveyance made to any purchaser at any sale made
hereunder shall conclusively establish the truth and accuracy of the matters
therein stated, including, without limiting the generality of the foregoing,
nonpayment of the unpaid principal sum of, and the interest accrued on, Secured
Debt after the same have become due and payable, advertisement and conduct of
such sale in the manner provided herein.

            4.6 Receipt to Purchaser. Upon any sale, the receipt of Mortgagee or
the officer making sale under judicial proceedings, shall be sufficient
discharge to the purchaser or purchasers at any sale for his or their purchase
money, and such purchaser or purchasers, or his or their assigns or personal
representatives, shall not, after paying such purchase money and receiving such
receipt of Mortgagee, or of such officer therefor, be obliged to see to the
application of such purchase money, or be in anywise answerable for any loss,
misapplication or nonapplication thereof.

            4.7 Effect of Sale. Any sale or sales of the Mortgaged Property,
shall operate to divest all right, title, interest, claim and demand whatsoever
either at law or in equity, of Mortgagor of, in and to the premises and the
property sold, and shall be a perpetual bar, both at law and in equity, against
Mortgagor, and Mortgagor's successors or assigns, and against any and all
persons claiming or who shall thereafter claim all or any of the property sold
from, through or under Mortgagor or Mortgagor's successors or assigns.
Nevertheless, Mortgagor, shall join in the execution and delivery of all proper
conveyances, assignments and transfers of the properties so sold.

            4.8 Application of Proceeds. The proceeds of any sale of the
Mortgaged Property, or any part thereof, whether under the power of sale herein
granted and conferred or by virtue of judicial proceedings, shall be applied in
accordance with the provisions of the Collateral Trust Agreement.

            4.9 Mortgagor's Waiver of Appraisement, Marshalling and Other
Rights. Mortgagor agrees, to the full extent that Mortgagor may lawfully so
agree, that Mortgagor will not at any time insist upon or plead or in any manner
whatever claim the benefit of any appraisement, valuation, stay, extension or
redemption law now or hereafter in force, in order to prevent or hinder the
enforcement or foreclosure of this instrument or the absolute sale of the
Mortgaged Property or the possession thereof by any purchaser at any sale made
pursuant to any provision hereof, or pursuant to the decree of any court of
competent jurisdiction; but Mortgagor, for Mortgagor and all who may claim
through or under Mortgagor, so far as Mortgagor or those claiming through or
under Mortgagor now or hereafter lawfully may, hereby waives the benefit of all
such

                                      -28-
<PAGE>

laws. Mortgagor, for Mortgagor and all who may claim through or under Mortgagor,
waives, to the extent that Mortgagor may lawfully do so, any and all right to
have the Mortgaged Property marshalled upon any foreclosure of the lien hereof,
or sold in inverse order of alienation, and agrees that Mortgagee or any court
having jurisdiction to foreclose such lien may sell the Mortgaged Property as an
entirety. Mortgagor, for Mortgagor and all who may claim through or under
Mortgagor, further waives, to the full extent that Mortgagor may lawfully do so,
any requirement for posting a receiver's bond or replevin bond or other similar
type of bond if Mortgagee commence an action for appointment of a receiver or an
action for replevin to recover possession of any of the Mortgaged Property. If
any law in this paragraph referred to and now in force, of which Mortgagor or
Mortgagor's successor or successors might take advantage despite the provisions
hereof, shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to, constitute any part of the contract herein contained or
to preclude the operation or application of the provisions of this paragraph. If
Mortgagor is an individual, Mortgagor waives and releases all rights of dower,
courtesy and homestead in the Mortgaged Property insofar as such rights may in
any way affect the purposes of this instrument.

            4.10 Costs and Expenses. All costs and expenses (including
attorneys' fees) incurred by Mortgagee in protecting and enforcing their rights
hereunder shall constitute a demand obligation owing by Mortgagor to the party
incurring such costs and expenses and shall draw interest at the Default
Interest Rate, all of which shall constitute a portion of the Indebtedness.

            4.11 Operation of the Mortgaged Property by Mortgagee. Upon the
occurrence of an Event of Default and during the continuance of such Event of
Default and in addition to all other rights herein conferred on Mortgagee,
Mortgagee (or any person, firm or corporation designated by Mortgagee) shall
have the right and power, but shall not be obligated, to enter upon and take
possession of any of the Mortgaged Property, and to exclude Mortgagor, and
Mortgagor's agents or servants, wholly therefrom, and to hold, use, administer,
manage and operate the same to the extent that Mortgagor shall be at the time
entitled and in its place and stead. Mortgagee, or any person, firm or
corporation designated by Mortgagee, may operate the same without any liability
to Mortgagor in connection with such operations, except to use ordinary care in
the operation of such properties, and Mortgagee or any person, firm or
corporation designated by Mortgagee, shall have the right to (but shall not be
obligated to) collect, receive and receipt for all Hydrocarbons produced and
sold from said properties, to make repairs, purchase machinery and equipment,
conduct work-over operations, drill additional wells and to exercise every
power, right and privilege of Mortgagor with respect to the Mortgaged Property.
When and if the expenses of such operation and development (including costs of
unsuccessful work-over operations or additional wells) paid by Mortgagee or
attributable to Mortgagor's undivided interest therein and withheld, or offset
against, by an operator or other party have been paid or reimbursed in full by
Mortgagor and the Indebtedness paid, said properties shall, if there has been no
sale or foreclosure, be returned to Mortgagor. Further, in the event that any of
the Mortgaged Property is seized as an incident to an action for the recognition
or the enforcement of this instrument, whether by executory process, ordinary
process,

                                      -29-
<PAGE>

writ of fieri facias, sequestration, or otherwise, the court issuing the order
under which the seizure is to be effected shall, if such order is petitioned for
by the holder or holders of the Secured Debt or other Indebtedness, direct the
sheriff or other officer making the seizure to appoint as keeper of the
Mortgaged Property, in accordance with Louisiana Revised Statutes 9:5131 through
5135 and/or 9:5136 through 5140.2, as the same may be amended, such person as
may be named by Mortgagee at the time the seizure is effected.

                                   ARTICLE V

                            MISCELLANEOUS PROVISIONS

            5.1 Pooling and Unitization. Mortgagor shall have the right, and is
hereby authorized, to pool or unitize all or any part of the lands described in
Exhibit A, insofar as relates to the Mortgaged Property, with adjacent lands,
leaseholds and other interests, when, in the reasonable judgment of Mortgagor,
it is necessary or advisable to do so in order to form a drilling and/or
production unit to facilitate the orderly development of that part of the
Mortgaged Property affected thereby, or to comply with the requirements of any
Applicable Law or governmental order or regulation relating to the spacing of
wells or proration of the production therefrom; provided, however, that any unit
so formed for the production of oil shall not substantially exceed 160 acres,
and any unit so formed for the production of gas shall not substantially exceed
640 acres, unless a larger area is required to conform to an Applicable Law or
governmental order or regulation relating to the spacing of wells or to obtain
the maximum allowable production under any Applicable Law or governmental order
or regulation relating to the proration of production therefrom; and further
provided that the Hydrocarbons produced from any unit so formed shall be
allocated among the separately owned tracts or interests comprising the unit in
a uniform manner consistently applied. Any unit so formed may relate to one or
more zones or horizons, and a unit formed for a particular zone or horizon need
not conform in area to any other unit relating to a different zone or horizon,
and a unit formed for the production of oil need not conform in area with any
unit formed for the production of gas. Promptly after formation of any such
unit, Mortgagor shall furnish to Mortgagee and each Secured Debt Representative
a true copy of the pooling agreement, declaration of pooling or other instrument
creating such unit. The interest in any such unit attributable to the Mortgaged
Property (or any part thereof) included therein shall become a part of the
Mortgaged Property and shall be subject to the lien hereof in the same manner
and with the same effect as though such unit and the interest of Mortgagor
therein were specifically described in Exhibit A. Mortgagor is further
authorized to amend, modify or terminate any pooling or unitization agreement or
order to which Mortgagor is a party or the Mortgaged Property is subject,
provided that such action does not conflict with the provisions of this
Mortgage, including this Section 5.1. Mortgagor may enter into, or amend, modify
or terminate, pooling or unitization agreements not hereinabove authorized only
as permitted under the Secured Debt Documents.

            5.2 Actions or Advances by Mortgagee. Each and every covenant herein
contained shall be performed and kept by Mortgagor solely at Mortgagor's

                                      -30-
<PAGE>

expense. If Mortgagor shall fail to perform or keep any of the covenants of
whatsoever kind or nature contained in this instrument, Mortgagee, any keeper or
any receiver appointed hereunder or under Applicable Law, may, but shall not be
obligated to, take action and/or make advances to perform the same in
Mortgagor's behalf; provided, however, that concurrently with the taking of such
action or making such advances, Mortgagee or any Secured Debt Representative
shall deliver notice to Mortgagor. Mortgagor hereby agrees to repay the expense
of such action and such advances upon demand plus interest as set forth in the
Collateral Trust Agreement. No such advance or action by Mortgagee, any keeper
or any receiver appointed hereunder shall be deemed to relieve Mortgagor from
any default hereunder.

            5.3 Defense of Claims. Mortgagor will notify Mortgagee and each
Secured Debt Representative, in writing, promptly of the commencement of any
legal proceedings affecting the lien or security interest hereof or the
Mortgaged Property, or any part thereof, and will take such action, employing
attorneys as set forth in Section 2.4(j), as may be necessary or appropriate to
preserve Mortgagor's or Mortgagee's rights affected thereby and/or to hold
harmless Mortgagee in respect of such proceedings; and should Mortgagor fail or
refuse to take any such action, Mortgagee may (but shall not be obligated to),
upon giving prior written notice thereof to Mortgagor, take such action in
behalf and in the name of Mortgagor and at Mortgagor's expense. Moreover,
Mortgagee may (but shall not be obligated to) take such independent action in
connection therewith as it may deem proper, Mortgagor hereby agreeing that all
sums advanced or all expenses incurred in such actions plus interest thereon at
the Default Interest Rate, will, on demand, be reimbursed, as appropriate, to
Mortgagee or any keeper or receiver appointed hereunder. The obligations of
Mortgagor as hereinabove set forth in this Section 5.3 shall survive the
release, termination, foreclosure or assignment of this instrument or any sale
hereunder.

            5.4 The Mortgaged Property to Revert; Release. If the Indebtedness
shall be fully paid and the covenants herein contained shall be well and truly
performed, then all of the Mortgaged Property shall revert to Mortgagor and the
entire estate, right, title and interest of Mortgagee shall thereupon cease; and
Mortgagee in such case shall, upon the request of Mortgagor and at Mortgagor's
cost and expense, deliver to Mortgagor proper instruments acknowledging
satisfaction of this Mortgage and the release or reconveyance of the lien hereof
in accordance with Applicable Law; Notwithstanding anything contained herein to
the contrary, the Mortgaged Property, or any part thereof, shall, upon the
written request of Mortgagor, be released from the lien of this Mortgage in
accordance with the provisions of the Collateral Trust Agreement, when such a
release is permitted by the Collateral Trust Agreement and the other Secured
Debt Documents.

            5.5 Renewals, Amendments and Other Security. Renewals and extensions
of the Indebtedness and modifications of any kind of the Obligations may be
given at any time and amendments may be made to agreements with third parties
relating to any part of such Indebtedness or the Mortgaged Property and
Mortgagee may take or may now hold other security from others for the
Indebtedness, all without notice to or consent of Mortgagor. Mortgagee may
resort first to such other security or

                                      -31-
<PAGE>

any part thereof or first to the security herein given or any part thereof, or
from time to time to either or both, even to the partial or complete abandonment
of either security, and such action shall not be a waiver of any rights
conferred by this instrument, which shall continue as a first lien upon and
prior perfected security interest in the Mortgaged Property not expressly
released until the Secured Debt and all other Indebtedness secured hereby are
fully paid.

            5.6 Instrument, Assignment, etc. This instrument shall be deemed to
be and may be enforced from time to time as an assignment, chattel mortgage,
contract, financing statement, real estate (immovable property) mortgage, or
security agreement, and from time to time as any one or more thereof.

            5.7 Limitation on Interest. No provision of this instrument or the
Secured Debt Documents shall require the payment or permit the collection of
interest in excess of the Maximum Lawful Rate or which is otherwise contrary to
Applicable Law. If any excess of interest in such respect is in the Secured Debt
Documents or otherwise herein provided for, or shall be adjudicated to be so
provided for herein or in the Secured Debt Documents, Mortgagor shall not be
obligated to pay such excess.

            5.8 Unenforceable or Inapplicable Provisions. If any provision
hereof or of the Secured Debt Documents is invalid or unenforceable in any
jurisdiction, the other provisions hereof or of the Secured Debt Documents shall
remain in full force and effect in such jurisdiction, and the remaining
provisions hereof shall be liberally construed in favor of Mortgagee in order to
effectuate the provisions hereof, and the invalidity of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of any such
provision in any other jurisdiction. Any reference herein contained to a statute
or law of a state in which no part of the Mortgaged Property is situated shall
be deemed inapplicable to, and not used in, the interpretation hereof.

            5.9 Rights Cumulative. Each and every right, power and remedy herein
given to Mortgagee shall be cumulative and not exclusive; and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and so often and in such order as may be
deemed expedient by Mortgagee, as the case may be, and the exercise, or the
beginning of the exercise, of any such right, power or remedy shall not be
deemed a waiver of the right to exercise, at the same time or thereafter, any
other right, power or remedy. No delay or omission by Mortgagee in the exercise
of any right, power or remedy shall impair any such right, power or remedy or
operate as a waiver thereof or of any other right, power or remedy then or
thereafter existing.

            5.10 Waiver by Mortgagee. Any and all covenants in this instrument
may from time to time by instrument in writing signed by Mortgagee be waived to
such extent and in such manner as Mortgagee may desire, but no such waiver shall
ever affect or impair either Mortgagee's rights or liens or security interests
hereunder, except to the extent specifically stated in such written instrument.

                                      -32-
<PAGE>

            5.11 Environmental Indemnification. Mortgagor will indemnify and
hold Mortgagee harmless from and against and reimburse Mortgagee with respect
to, any and all claims, demands, causes of action, losses, damages, liabilities,
costs and expenses (including reasonable attorneys' fees and court costs) of any
and every kind or character, known or unknown, fixed or contingent,
out-of-pocket or consequential, asserted against or by Mortgagee at any time and
from time to time by reason of or arising out of any violation of any
Environmental Laws applicable to Mortgagor and/or the Mortgaged Property and any
and all matters arising out of any act, omission, event or circumstance existing
or occurring (including, without limitation, the presence on the Mortgaged
Property or release from the Mortgaged Property of hazardous substances or solid
waste disposed of or otherwise released), regardless of whether the act,
omission, event or circumstance constituted a violation of any Environmental Law
at the time of its existence or occurrence. The terms "hazardous substance" and
"release" shall have the meanings specified in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as subsequently
modified, supplemented or amended (herein called "CERCLA"), and for purposes of
RCRA (as defined below) compliance the terms "solid waste" and "disposed" shall
have the meanings specified in the Federal Resource Conservation and Recovery
Act of 1976, as subsequently modified, supplemented or amended (herein called
"RCRA"); provided, in the event that either CERCLA or RCRA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment and provided further,
to the extent the laws of any jurisdiction where the Mortgaged Property is
located on the date hereof or on any subsequent date establish a meaning for
"hazardous substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning shall apply.
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, Mortgagor hereby agrees to make the maximum contribution to the payment
and satisfaction of the indemnified claims, demands, causes of action, losses,
damages, liabilities, costs, expenses and fees which is permissible under
applicable law. The obligations of Mortgagor as hereinabove set forth in this
Section 5.11 shall survive the release, termination, foreclosure or assignment
of this instrument or any sale hereunder.

            5.12 No Partnership. Nothing contained in this instrument is
intended to, or shall be construed as, creating to any extent and in any manner
whatsoever, any partnership, joint venture, or association among Mortgagor,
Mortgagee and their respective Affiliates, or in any way as to make Mortgagee or
a co-principal with Mortgagor with reference to the Mortgaged Property, and any
inferences to the contrary are hereby expressly negated.

            5.13 Successors and Assigns. This instrument is binding upon
Mortgagor, Mortgagor's successors and assigns, and shall inure to the benefit of
Mortgagee, its successors and assigns, and the provisions hereof shall likewise
be covenants running with the land.

                                      -33-
<PAGE>

            5.14 Article and Section Headings. The article and section headings
in this instrument are inserted for convenience of reference and shall not be
considered a part of this instrument or used in its interpretation.

            5.15 Execution in Counterparts. This instrument may be executed in
any number of counterparts, each of which shall for all purposes be deemed to be
an original and all of which are identical, except that, to facilitate
recordation or filing, in any particular counterpart portions of Exhibit A
hereto which describe properties situated in parishes or counties other than the
parish or county in which such counterpart is to be recorded or filed may have
been omitted.

            5.16 Special Filing as Financing Statement. This instrument shall
likewise be a Security Agreement and a Financing Statement. This instrument
shall be filed for record, among other places, in the real estate records and in
the Uniform Commercial Code records of each parish in which any portion of the
immovable property covered by the oil and gas leases described in Exhibit A
hereto is situated, and, when filed in such parishes shall be effective as a
financing statement covering Fixtures located on oil and gas properties and
as-extracted collateral, which as-extracted collateral are to be financed at the
wellheads of the wells located on the lands described in Exhibit A. A carbon,
photographic or other reproduction of this instrument or of any financing
statement covering the Mortgaged Property or any portion thereof shall be
sufficient as a financing statement and may be filed as such. Mortgagor agrees
that Secured Debt Representative may, in such manner, on such terms and at such
times as may be elected by Secured Debt Representative, and without demand or
notice to, or the consent or signature of, Mortgagor, file and/or record such
UCC financing statements, fixture filings, and/or amendments to or continuations
of any financing statements or fixture filings to evidence, perfect and/or
continue the perfection of, any security interests created or to be created
pursuant to this Mortgage or any of the other Secured Debt Documents.

            5.17 Notices. Except as otherwise required by Section 4.1 hereof,
any notice, request or demand which may be required or permitted to be given or
served upon Mortgagor shall be sufficiently given when given or made pursuant to
(a) the terms of the Collateral Trust Agreement, or (b) such other means and
manner of giving of notice as may be required by Applicable Law.

            5.18 Waivers. The parties hereto expressly waive the production of
mortgage, conveyance, tax research or other certificates and hereby release and
hold the Notary Public whose name is hereunder signed harmless for and by reason
of the nonproduction and nonannexation thereof to this instrument. Mortgagor
waives in favor of Mortgagee any and all homestead exemptions and other
exemptions of seizure or otherwise to which Mortgagor is or may be entitled
under the constitution and statutes of the State of Louisiana insofar as the
Mortgaged Property is concerned. Mortgagor further waives: (a) the benefit of
appraisement as provided in Louisiana Code of Civil Procedure Articles 2332,
2336, 2723 and 2724, and all other laws conferring the same; (b) the demand and
three days delay accorded by Louisiana Code of Civil Procedure Articles 2639 and
2721; (c) the notice of seizure required by Louisiana Code of Civil

                                      -34-
<PAGE>

Procedure 2293 and 2721; (d) the three days delay provided by Louisiana Code of
Civil Procedure Articles 2331 and 2722; and (e) the benefit of the other
provisions of Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723,
not specifically mentioned above.

            5.19 Transfer of the Notes without Notarial Act. The parties hereto
agree that the Secured Debt may be transferred without the necessity for a
notarial act of transfer thereof, and that any such transfer without notarial
act shall carry with it into the hands of any future holder or holders of the
Secured Debt full and entire subrogation of title in and to the Secured Debt to
any and all rights and privileges under this instrument herein granted to the
Secured Debtholders. This instrument is for the benefit of Mortgagee, Secured
Debtholders and for such other person or persons as may from time to time become
or be the holders of any of the Indebtedness, and this instrument shall be
transferable and negotiable, with the same force and effect and to the same
extent as the Indebtedness may be transferable, it being understood that, upon
the transfer or assignment by Mortgagee of any of the Indebtedness, the legal
holder of such Indebtedness shall have all of the rights granted to Mortgagee
under this instrument. Mortgagor specifically agrees that upon any transfer of
all or any portion of the Indebtedness, this instrument shall secure with
retroactive rank the then existing Indebtedness of Mortgagor to the transferee
and any and all Indebtedness to such transferee thereafter arising.

            5.20 Authentic Evidence. Any and all declarations of facts made by
authentic act before a notary public in the presence of two witnesses by a
person declaring that such facts lie within his knowledge, shall constitute
authentic evidence of such facts for the purpose of executory process. Mortgagor
specifically agrees that such an affidavit by a representative of Mortgagee as
to the existence, amount, terms and maturity of the Indebtedness and of a
default thereunder shall constitute authentic evidence of such facts for the
purpose of executory process.

            5.21 Reliance. Notwithstanding any reference herein to the Secured
Debt Documents, no party shall have any obligation to inquire into the terms or
conditions of any such documents and all parties shall be fully authorized to
rely upon any statement, certificate, or affidavit of Mortgagee or any future
holder of any portion of the Indebtedness as to the occurrence of any event such
as the occurrence of any event of default.

            5.22 Governing Law. THIS INSTRUMENT IS MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF AMERICA AND THE
STATE OF LOUISIANA.

            5.23 Acceptance. Pursuant to Louisiana Civil Code Article 3289,
Mortgagor acknowledges that this instrument need not be signed by Mortgagee,
whose consent is presumed and is hereby acknowledged by Mortgagor.

            5.24 No Liability. Mortgagee shall not be liable for any error of
judgment or act done by Mortgagee in good faith, or be otherwise responsible or
accountable

                                      -35-
<PAGE>

under any circumstances whatsoever, except for their gross negligence or willful
misconduct. Mortgagee shall not be personally liable in case of entry by it, or
anyone entering by virtue of the powers herein granted them, upon the Mortgaged
Property for debts contracted or liability or damages incurred in the management
or operation of the Mortgaged Property. Mortgagee shall have the right to rely
on any instrument, document or signature authorizing or supporting any action
taken or proposed to be taken by them hereunder, believed by it in good faith to
be genuine. Mortgagor will, from time to time, pay the compensation due to
Mortgagee hereunder and reimburse Mortgagee for, and save it harmless against,
any and all liability and expenses which may be incurred by it in the
performance of its duties.

            5.25 Covenants Running with the Land. All Obligations contained in
this instrument are intended by the parties to be, and shall be construed as,
real rights and covenants running with the Mortgaged Property.

            5.26 Mortgagee as Agent for the Secured Debtholders. As described
above, certain Affiliates of Mortgagee and the Secured Debtholders are or may
become parties to certain Hedging Agreements with Mortgagor and/or Affiliates of
Mortgagor. This instrument secures the obligations of Mortgagor and such
Affiliates, as the case may be, under such Hedging Agreements, and the parties
acknowledge for all purposes that Mortgagee acts for itself and as agent on
behalf of such Affiliates of Mortgagee and the Secured Debtholders which are so
entitled to share in the rights and benefits accruing to Mortgagee under this
instrument in respect of the Mortgaged Property.

            5.27 Subrogation. If any or all of the proceeds of Secured Debt have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Mortgaged Property, then, to the extent of such funds so used, the
Indebtedness and this instrument shall be subrogated to all of the rights,
claims, liens, titles and interests heretofore existing against the Mortgaged
Property to secure the indebtedness so extinguished, extended or renewed and the
former rights, claims, liens, titles and interests, if any, are not waived but
rather are continued in full force and effect in favor of Mortgagee and are
merged with the lien and security interest created herein as cumulative security
for the repayment of the Indebtedness and the satisfaction of the Obligations.

                                      -36-
<PAGE>

      THUS DONE AND PASSED IN MULTIPLE ORIGINALS on the 14th day of July, 2003,
effective as of the 16thday of July 2003, in the presence of the undersigned
competent witnesses, who hereunto sign their names, together with Mortgagor and
me, Notary, after due reading of the whole.

                                       CALPINE CORPORATION,
                                       a Delaware corporation

                                       By:______________________________________
                                       Title:  Executive Vice President
                                       Printed Name:  B.A. Berilgen

The name and address of
the Mortgagor and Debtor is:

Calpine Corporation
1000 Louisiana Street, Suite 800
Houston, TX 77002

WITNESSES TO SIGNATURE:

_________________________________

_________________________________

                                       _________________________________________
                                       NOTARY PUBLIC
                                       Residing at Houston, Harris County, Texas

                                       My Commission Expires 12/21/2006

                                                                   [LA Mortgage]

<PAGE>

THUS DONE AND PASSED IN MULTIPLE ORIGINALS on the ____ day of July, 2003 in the
presence of the undersigned competent witnesses, who hereunto sign their names,
together with Mortgagee and me, Notary, after due reading of the whole.

                                             THE BANK OF NEW YORK, as Collateral
                                             Trustee

                                             By:________________________________
                                             Title:_____________________________
                                             Printed Name:______________________

The name and mailing address of
the Secured Party and Agent is:

The Bank of New York
101 Barclay Street, 8 Floor West
New York, New York 10286

WITNESSES TO SIGNATURE:

_________________________________

_________________________________

                                             ___________________________________
                                             NOTARY PUBLIC
                                             Residing at________________________
                                             My Commission Expires______________

                                                                   [LA Mortgage]

<PAGE>

             EXHIBIT A To Amended and Restated Mortgage, Assignment,
                   Security Agreement and Financing Statement,
                              dated July 16, 2003,
                  from CALPINE CORPORATION to BANK OF NEW YORK

                               List of Properties

      1. Depth limitations, unit designations, unit tract descriptions and
descriptions (including percentages, decimals or fractions) of undivided
leasehold interests, well names, "Operating Interests", "Working Interests" and
"Net Revenue Interests" contained in this Exhibit A and the listing of any
percentage, decimal or fractional interest in this Exhibit A shall not be deemed
to limit or otherwise diminish the interests being subjected to the lien,
security interest and encumbrance of this instrument.

      2. Some of the land descriptions in this Exhibit A may refer only to a
portion of the land covered by a particular lease. This instrument is not
limited to the land described in Exhibit A but is intended to cover the entire
interest of the Mortgagor in any lease described in Exhibit A even if such
interest relates to land not described in Exhibit A. Reference is made to the
land descriptions contained in the documents of title recorded as described in
this Exhibit A. To the extent that the land descriptions in this Exhibit A are
incomplete, incorrect or not legally sufficient, the land descriptions contained
in the documents so recorded are incorporated herein by this reference.

      3. References in Exhibit A to instruments on file in the public records
are made for all purposes. Unless provided otherwise, all recording references
in Exhibit A are to the official real property records of the parish or parishes
in which the mortgaged property is located and in which records such documents
are or in the past have been customarily recorded, whether Conveyance Records,
Oil and Gas Records, Oil and Gas Lease Records or other records.

      4. A statement herein that a certain interest described herein is subject
to the terms of certain described or referred to agreements, instruments or
other matters shall not operate to subject such interest to any such agreement,
instrument or other matter except to the extent that such agreement, instrument
or matter is otherwise valid and presently subsisting nor shall such statement
be deemed to constitute a recognition by the parties hereto that any such
agreement, instrument or other matter is valid and presently subsisting.

                                                       [Do not detach this page]

                                      A-1
<PAGE>

             EXHIBIT B To Amended and Restated Mortgage, Assignment,
                   Security Agreement and Financing Statement,
                              dated July 16, 2003,
                  from CALPINE CORPORATION to BANK OF NEW YORK

                         Certified Copies of Resolutions

                                   [Attached]

                                      B-1
<PAGE>

                                   Schedule I

<TABLE>
<CAPTION>
      JURISDICTION                                    FILE NO.                             FILE DATE
      ------------                                    --------                             ---------
<S>                                         <C>                                            <C>
Acadia Parish, LA                             Original Act No. 699419                      5/15/2002
(Conveyance Records)                             COB W58, Page 589

Acadia Parish, LA                             Original Act No. 699419                      5/15/2002
(Mortgage Records)                               MOB 627, Page 849

Bienville Parish, LA                          Registry No. 2002-1571                       5/15/2002
(Conveyance Records)                             COB 943, Page 217

Bienville Parish, LA                          Registry No. 2002-1570                       5/15/2002
(Mortgage Records)                               MOB 361, Page 100

Calcasieu Parish, LA                                  2584415                              5/15/2002
(Conveyance Records)

Calcasieu Parish, LA                                  2584415                              5/15/2002
(Mortgage Records)

Cameron Parish, LA                                    275522                               5/07/2002
(offshore only)                                       COB 948
(Conveyance Records)

Cameron Parish, LA                                    275522                               5/07/2002
(offshore only)                                      MOB 269
(Mortgage Records)

Cameron Parish, LA                                    275730                               5/16/2002
(Conveyance Records)                                  COB 949

Cameron Parish, LA                                    275730                               5/16/2002
(Mortgage Records)                                    MOB 269

Claiborne Parish, LA                                  404351                               5/15/2002
(Conveyance Records)                             COB 1283, Page 76

Claiborne Parish, LA                                  404351                               5/15/2002
(Mortgage Records)                               MOB 429, Page 29

East Baton Rouge Parish, LA                 Original #393, Bundle 11347                    5/15/2002
(Conveyance Records)

East Baton Rouge Parish, LA                 Original #393, Bundle 11347                    5/15/2002
(Mortgage Records)

East Feliciana Parish, LA                             170667                               5/16/2002
(Conveyance Records)
</TABLE>

                                      B-1
<PAGE>

<TABLE>
<CAPTION>
      JURISDICTION                                    FILE NO.                             FILE DATE
      ------------                                    --------                             ---------
<S>                                            <C>                                         <C>
East Feliciana Parish, LA                             170667                               5/16/2002
(Mortgage Records)

Iberia Parish, LA                              COB 1237, Entry #02-                        5/15/2002
(Conveyance Records)                                   6520

Iberia Parish, LA                              MOB A890, Entry #02-                        5/15/2002
(Mortgage Records)                                     6520

Lafayette Parish, LA                                 02-022356                             5/20/2002
(Conveyance Records)

Lafayette Parish, LA                                 02-022356                             5/20/2002
(Mortgage Records)

Lincoln Parish, LA                               Entry No. 038312                          5/16/2002
(Conveyance Records)                             COB 1132, Page 85

Lincoln Parish, LA                               Entry No. 038312                          5/16/2002
(Mortgage Records)                               MOB 782, Page 615

Livingston Parish, LA                           Entry No. 00493865                         5/20/2002
(Conveyance Records)                             COB 806, Page 237

Livingston Parish, LA                           Entry No. 00493865                         5/20/2002
(Mortgage Records)                               MOB 786, Page 164

Plaquemines Parish, LA                          COB 1022, Folio 370                        5/17/2002
(Conveyance Records)

Plaquemines Parish, LA                          MOB 338, Folio 344                         5/17/2002
(Mortgage Records)

St. Bernard Parish, LA                                398-029                              5/17/2002
(Conveyance Records)                            COB 717, Folio 754

St. Bernard Parish, LA                                398-029                              5/17/2002
(Mortgage Records)                              MOB 1082, Folio 515

St. Martin Parish, LA                            Entry No. 339381                          5/16/2002
(Conveyance Records)                            COB 1365, Folio 740

St. Martin Parish, LA                            Entry No. 339382                          5/16/2002
(Mortgage Records)                               MOB 903, Page 394

St. Mary Parish, LA                             COB 45-A, Page 666                         5/16/2002
(Conveyance Records)                             Entry No. 277,321

St. Mary Parish, LA                              MOB 912, Page 144                         5/16/2002
(Mortgage Records)                               Entry No. 251,035

Terrebonne Parish, LA                           COB 1775, Entry No.                        5/7/2002
(Conveyance Records)                                  1119792
</TABLE>

                                      B-2
<PAGE>

<TABLE>
<CAPTION>
      JURISDICTION                                    FILE NO.                           FILE DATE
      ------------                                    --------                           ---------
<S>                                             <C>                                      <C>
Terrebonne Parish, LA                           MOB 1448, Entry No.                      5/7/2002
(Mortgage Records)                                    1119792

Vermilion Parish, LA                            Entry No. 20205877                       5/16/2002
(Conveyance Records)

Vermilion Parish, LA                            Entry No. 20205877                       5/16/2002
(Mortgage Records)

Webster Parish, LA                              Registry No. 453232                      5/20/2002
(Conveyance Records)                             COB 937, Page 816

Webster Parish, LA                              Registry No. 453232                      5/20/2002
(Mortgage Records)                               MOB 519, Page 587

West Feliciana Parish, LA                       Original No. 83976                       5/17/2002
(Conveyance Records)                             COB 145, Page 877

West Feliciana Parish, LA                       Original No. 83976                       5/17/2002
(Mortgage Records)                              MOB 117A, Page 691

Minerals Management                                   n/a                                5/08/2002
Service Gulf of Mexico
OCS Region
(Cameron Parish, LA)

Minerals Management                                   n/a                                5/08/2002
Service Gulf of Mexico
OCS Region
(Terrebonne Parish, LA)
</TABLE>

UCC-1 Financing Statement regarding Louisiana Mortgage, naming Calpine
Corporation as debtor and The Bank of Nova Scotia, as Agent, as secured party,
filed as follows:

<TABLE>
<CAPTION>
             JURISDICTION                            FILE NO.                              FILE DATE
             ------------                            --------                              ---------
<S>                                                  <C>                                   <C>
Jefferson Parish, LA                                 26262652                              5/7/2002

Minerals Management                                      n/a                               5/08/2002
Service Gulf of
Mexico OCS Region
</TABLE>

                                      B-3
<PAGE>

                                   Schedule II

                                       N/A

                                      B-1
<PAGE>

                                  Schedule III

Partial Release by The Bank of Nova Scotia in favor of Calpine Corporation
(Louisiana-Mortgage) filed as follows:

<TABLE>
<CAPTION>
                                                                                PARTIAL                PARTIAL
                                       ORIGINAL             ORIGINAL          RELEASE FILE           RELEASE FILE
         JURISDICTION                  FILE NO.            FILE DATE              NO.                   DATE
         ------------                  --------            ---------          ------------           -----------
<S>                                  <C>                   <C>             <C>                       <C>
Cameron Parish, LA                   275522; COB            5/7/02              277541;                9/13/02
(Offshore Only)                      948, MOB 269                              COB 955,
                                                                            Folio 447; MOB
                                                                             272, Folio 412

Plaquemines Parish, LA                COB 1022,             5/17/02              Entry                11/13/02
(Drakes Bay)                          Folio 370;                               02006812,
                                       MOB 338,                                COB 1034,
                                      Folio 344                               Folio 794;
                                                                            Entry 2006813,
                                                                               MOB 349,
                                                                               Folio 815
</TABLE>

UCC-3 Financing Statement Amendment relating to the Partial Release-Louisiana
mortgage naming Calpine Corporation as Debtor and The Bank of Nova Scotia, as
Agent, as Secured Party, filed as follows:

<TABLE>
<CAPTION>
                                                                                PARTIAL                PARTIAL
                                  ORIGINAL              ORIGINAL              RELEASE FILE          RELEASE FILE
   JURISDICTION                   FILE NO.              FILE DATE                  NO.                  DATE
   ------------                   --------              ---------             ------------          ------------
<S>                            <C>                       <C>                <C>                     <C>
Jefferson Parish,                 26262652               5/7/02                26267302               11/13/02
LA (Drakes Bay)

Jefferson Parish,                 26262652               5/7/02                26265933                9/13/02
LA (OCS-0935 &
OCS-14357)

MMS (OCS-0935                  No file number            5/8/02             no file number             9/13/02
& OCS-14357)
</TABLE>

                                      B-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]