Document:

WHEN
RECORDED RETURN TO:

    William
W. Kelly, Jr.

    Classic
Oil & Gas Resources, Inc.

    416 W.
Brannon Road

    Nicholasville,
KY  40356

    

    MORTGAGE,
DEED OF TRUST, ASSIGNMENT OF

    PRODUCTION,
SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT

    

    FROM

    

    VELOCITY
ENERGY PARTNERS LP, a Delaware
limited partnership

    

    TO

    R. FORD
FRANCIS, AS TRUSTEE

    

    FOR THE
BENEFIT OF

    

    CLASSIC
OIL & GAS RESOURCES, INC.

    

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

     

    A
CARBON, PHOTOGRAPHIC, FACSIMILE OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
SUFFICIENT AS A FINANCING STATEMENT.

     

    A POWER OF SALE HAS BEEN
GRANTED IN THIS INSTRUMENT.  IN CERTAIN STATES, A POWER OF SALE MAY
ALLOW THE TRUSTEE OR THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR
UNDER THIS INSTRUMENT.

     

    THIS
INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

     

    THIS
INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

     

    THIS
INSTRUMENT COVERS PROCEEDS OF MORTGAGED PROPERTY.

     

    THIS
INSTRUMENT COVERS AS-EXTRACTED COLLATERAL, MINERALS AND OTHER SUBSTANCES OF
VALUE WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL
AND GAS), AND ACCOUNTS RESULTING FROM THE SALE OF AS-EXTRACTED COLLATERAL, AND
WHICH WILL BE FINANCED AT THE WELLHEADS OF THE WELL OR WELLS LOCATED ON THE
PROPERTIES DESCRIBED IN EXHIBIT A
HERETO.  IN ADDITION, PORTIONS OF THE MORTGAGED PROPERTY ARE GOODS
WHICH ARE OR ARE TO BECOME AFFIXED TO OR FIXTURES ON THE LAND DESCRIBED IN OR
REFERRED TO IN EXHIBIT
A HERETO. THIS FINANCING STATEMENT IS TO BE FILED OR FILED FOR RECORD,
AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF THE COUNTY
RECORDERS OF THE COUNTIES LISTED ON EXHIBIT A
HERETO.  THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE
CONCERNED, WHICH INTEREST IS DESCRIBED IN EXHIBIT A ATTACHED
HERETO.  THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF
FINANCING STATEMENTS.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

     

    
      
        
          	
                  ARTICLE
      I

                	 
      	 
      
	 
      	 
      	 
      
	
                  Grant
      of Lien and Indebtedness Secured

                	
                  1

                
	
                  Section
      1.01

                	
                  Grant
      of Liens

                	
                  1

                
	
                  Section
      1.02

                	
                  Grant
      of Security Interest

                	
                  4

                
	
                  Section
      1.03

                	
                  Indebtedness
      Secured

                	
                  5

                
	
                  Section
      1.04

                	
                  Fixture
      Filing, Etc

                	
                  5

                
	
                  Section
      1.05

                	
                  Defined
      Terms

                	
                  6

                
	 
      	 
      	 
      
	
                  ARTICLE
      II

                	 
      	 
      
	 
      	 
      	 
      
	
                  Assignment
      of Production, Accounts and Proceeds

                	
                  6

                
	
                  Section
      2.01

                	
                  Assignment

                	
                  6

                
	
                  Section
      2.02

                	
                  [Reserved].

                	
                  7

                
	
                  Section
      2.03

                	
                  No
      Modification of Payment Obligations

                	
                  7

                
	
                  Section
      2.04

                	
                  Effectuating
      Payment of Production Proceeds to Mortgagee

                	
                  7

                
	
                  Section
      2.05

                	
                  Application
      of Production Proceeds

                	
                  8

                
	
                  Section
      2.06

                	
                  Release
      from Liability; Indemnification

                	
                  8

                
	 
      	 
      	 
      
	
                  ARTICLE
      III

                	 
      	 
      
	 
      	 
      	 
      
	
                  Representations,
      Warranties and Covenants

                	
                  9

                
	
                  Section
      3.01

                	
                  Title

                	
                  9

                
	
                  Section
      3.02

                	
                  Defend
      Title

                	
                  10

                
	
                  Section
      3.03

                	
                  Not
      a Foreign Person

                	
                  10

                
	
                  Section
      3.04

                	
                  Rentals,
      Taxes, Insurance and Fees Paid;  Leases in
Effect

                	
                  10

                
	
                  Section
      3.05

                	
                  Operation
      By Third Parties

                	
                  10

                
	
                  Section
      3.06

                	
                  Failure
      to Perform

                	
                  10

                
	
                  Section
      3.07

                	
                  Sale

                	
                  11

                
	
                  Section
      3.08

                	
                  Sale
      of Production

                	
                  11

                
	
                  Section
      3.09

                	
                  Operation
      of Mortgaged Property

                	
                  12

                
	
                  Section
      3.10

                	
                  Suits
      and Claims

                	
                  13

                
	
                  Section
      3.11

                	
                  Environmental.

                	
                  13

                
	
                  Section
      3.12

                	
                  Not
      Abandon Wells; Participate in Operations

                	
                  15

                
	
                  Section
      3.13

                	
                  Condemnation
      Awards

                	
                  15

                
	
                  Section
      3.14

                	
                  Insurance

                	
                  15

                
	
                  Section
      3.15

                	
                  Compliance
      with Leases

                	
                  16

                
	
                  Section
      3.16

                	
                  Further
      Assurance

                	
                  16

                
	
                  Section
      3.17

                	
                  Name
      and Place of Business

                	
                  16

                
	
                  Section
      3.18

                	
                  Compliance
      with Laws and Agreements

                	
                  17

                
	
                  Section
      3.19

                	
                  Inspection;
      Management

                	
                  17

                
	
                  Section
      3.20

                	
                  Priority
      over Contemporaneous Mortgage

                	
                  17

                
	 
      	 
      	 
      
	
                  ARTICLE
      IV

                	 
      	 
      
	 
      	 
      	 
      
	
                  Rights
      and Remedies

                	
                  18

                
	
                  Section
      4.01

                	
                  Event
      of Default

                	
                  18

                
	
                  Section
      4.02

                	
                  Foreclosure
      and Sale.

                	
                  18

                

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  Section
      4.03

                	
                  Agents

                	
                  20

                
	
                  Section
      4.04

                	
                  Judicial
      Foreclosure; Receivership

                	
                  20

                
	
                  Section
      4.05

                	
                  Foreclosure
      for Installments

                	
                  20

                
	
                  Section
      4.06

                	
                  Separate
      Sales

                	
                  21

                
	
                  Section
      4.07

                	
                  Possession
      of Mortgaged Property

                	
                  21

                
	
                  Section
      4.08

                	
                  Occupancy
      After Foreclosure

                	
                  21

                
	
                  Section
      4.09

                	
                  Remedies
      Cumulative, Concurrent and Nonexclusive

                	
                  22

                
	
                  Section
      4.10

                	
                  No
      Release of Obligations

                	
                  22

                
	
                  Section
      4.11

                	
                  Release
      of and Resort to Collateral

                	
                  22

                
	
                  Section
      4.12

                	
                  Waiver
      of Redemption, Notice and Marshalling of Assets, Etc

                	
                  22

                
	
                  Section
      4.13

                	
                  Discontinuance
      of Proceedings

                	
                  22

                
	
                  Section
      4.14

                	
                  Application
      of Proceeds

                	
                  23

                
	
                  Section
      4.15

                	
                  Resignation
      of Operator

                	
                  23

                
	
                  Section
      4.16

                	
                  Indemnity

                	
                  23

                
	 
      	 
      	 
      
	
                  ARTICLE
      V

                	 
      	 
      
	 
      	 
      	 
      
	
                  Trustee

                	
                  24

                
	
                  Section
      5.01

                	
                  Duties,
      Rights, and Powers of Trustee

                	
                  24

                
	
                  Section
      5.02

                	
                  Successor
      Trustee

                	
                  24

                
	
                  Section
      5.03

                	
                  Retention
      of Monies

                	
                  25

                
	 
      	 
      	 
      
	
                  ARTICLE
      VI

                	 
      	 
      
	 
      	 
      	 
      
	
                  Miscellaneous

                	
                  25

                
	
                  Section
      6.01

                	
                  Instrument
      Construed as Mortgage, Etc

                	
                  25

                
	
                  Section
      6.02

                	
                  Release
      of Mortgage

                	
                  25

                
	
                  Section
      6.03

                	
                  Severability

                	
                  25

                
	
                  Section
      6.04

                	
                  Successors
      and Assigns of Parties

                	
                  25

                
	
                  Section
      6.05

                	
                  Satisfaction
      of Prior Encumbrance

                	
                  26

                
	
                  Section
      6.06

                	
                  Subrogation
      of Trustee

                	
                  26

                
	
                  Section
      6.07

                	
                  Nature
      of Covenants

                	
                  26

                
	
                  Section
      6.08

                	
                  Notices

                	
                  26

                
	
                  Section
      6.09

                	
                  Counterparts

                	
                  26

                
	
                  Section
      6.10

                	
                  Effective
      as a Financing Statement

                	
                  26

                
	
                  Section
      6.11

                	
                  No
      Impairment of Security

                	
                  27

                
	
                  Section
      6.12

                	
                  Acts
      Not Constituting Waiver

                	
                  27

                
	
                  Section
      6.13

                	
                  Mortgagor’s
      Successors

                	
                  27

                
	
                  Section
      6.14

                	
                  Certain
      Consents

                	
                  27

                
	
                  Section
      6.15

                	
                  Governing
      Law

                	
                  28

                
	
                  Section
      6.16

                	
                  Exculpation
      Provisions

                	
                  28

                
	
                  Section
      6.17

                	
                  FINAL
      AGREEMENT

                	
                  28

                
	
                  Section
      6.18

                	
                  Subrogation;
      Prior Mortgages

                	
                  28

                
	
                  Section
      6.19

                	
                  Compliance
      with Usury Laws

                	
                  29

                
	
                  Section
      6.20

                	
                  Certain
      Obligations of Mortgagor

                	
                  29

                
	
                  Section
      6.21

                	
                  Authority
      of Mortgagee

                	
                  29

                

        

      

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    MORTGAGE, DEED OF TRUST,
ASSIGNMENT OF

    PRODUCTION, SECURITY
AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT

     

    This
MORTGAGE, DEED OF TRUST,
ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this “Mortgage”) is entered
into as of the Effective Date (as hereinafter defined) by VELOCITY ENERGY PARTNERS LP, a
Delaware limited partnership, whose address for notice is 523 North Sam Houston
Parkway East, Suite 175, Houston, Texas 77060 (“Mortgagor”), to R.
Ford Francis, as Trustee, whose address for notice is Francis, Nelson &
Brison, 1560 Kanawha Boulevard East, Charleston, WV  25311 (“Trustee”), for the
benefit of CLASSIC OIL &
GAS RESOURCES, INC., a Kentucky corporation, whose address for notice is
416 W. Brannon Road, Nicholasville, KY  40356, and in its capacity as
collateral agent for the benefit of the holders of the Note (as defined below)
(together with its successors and assigns, the “Mortgagee”).

     

    RECITALS:

     

    A.      
    This Mortgage is made pursuant to that certain
Promissory Note dated as of September 1_, 2009 (as amended, restated,
supplemented or otherwise modified from time to time, the “Promissory Note” or
the “Note”),
between Mortgagor and the holder of the Note (together with their respective
successors and assigns, the “Mortgagee”), to
secure the payment of the Note ( as well as the other items constituting “Indebtedness”
pursuant to Section 1.03 hereof) as provided in that certain definitive, legally
Letter of Intent between the Parties hereto dated September 4, 2009, effective
July 1, 2009 (“LOI” or “Purchase Agreement”).

     

    B.           Mortgagor
has agreed that all of the Indebtedness (as defined in Section 1.03 hereof)
is intended to be secured in part by this Mortgage and this Mortgage is to be
recorded in those jurisdictions as set forth on Exhibit A of this
Mortgage.

     

    THEREFORE,
in order to comply with the terms and conditions of the Note and the Purchase
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor hereby agrees with
Trustee and Mortgagee as follows:

     

    ARTICLE
I

    Grant of Lien and
Indebtedness Secured

     

    Section
1.01     Grant of
Liens.  To secure payment of the Indebtedness and the
performance of the covenants and obligations herein contained and contained in
the Note and any other Loan Document to which Mortgagor is a party, Mortgagor
does by these presents hereby GRANT, BARGAIN, SELL, ASSIGN, MORTGAGE, PLEDGE,
HYPOTHECATE, TRANSFER and CONVEY unto Trustee and Trustee’s successors and
substitutes in trust hereunder, WITH A POWER OF SALE, for the use and benefit of
Mortgagee, the real and personal property, rights, titles, interests and estates
described in the following paragraphs (a) through (l) (collectively called the
“Mortgaged
Property”):

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (a)           All
estates now owned or hereafter acquired by Mortgagor in and to the oil and gas
leases and/or oil, gas and other mineral leases, other mineral properties,
mineral servitudes and/or mineral rights, “as extracted collateral” as defined
in the Applicable UCC (as defined in Section 1.02) and
other interests and estates and the lands and premises covered or affected
thereby which are described on Exhibit A hereto
without regard to any limitations as to specific lands or depths that may be set
forth in Exhibit
A (collectively called the “Hydrocarbon
Property”) or which Hydrocarbon Property is otherwise referred to herein,
and specifically, but without limitation, the undivided interests of Mortgagor
which are more particularly described on attached Exhibit
A.

     

    (b)           All
estates now owned or hereafter acquired by Mortgagor in and to (i) the
properties now or hereafter pooled or unitized with any Hydrocarbon Property;
(ii) all presently existing or future unitization, communitization, pooling
agreements and designations, orders or declarations of pooled units and the
units created thereby (including, without limitation, all units created under
orders, regulations, rules or other official acts of any Federal, State or other
governmental body or agency having jurisdiction and any units created solely
among working interest owners pursuant to operating agreements or otherwise)
which may affect all or any portion of the Hydrocarbon Property including,
without limitation, those units which may be described or referred to on
attached Exhibit A;
(iii) all operating agreements, production sales or other contracts,
processing agreements, transportation agreements, gas balancing agreements,
farmout agreements, farm-in agreements, salt water disposal agreements, area of
mutual interest agreements, equipment leases and other agreements described or
referred to in this Mortgage or which relate to any of the Hydrocarbon Property
or interests in the Hydrocarbon Property described or referred to herein or on
attached Exhibit A or to
the production, sale, purchase, exchange, processing, handling, storage,
transporting or marketing of the Hydrocarbons (as defined in Section 1.01(c)
hereof) from or attributable to such Hydrocarbon Property or interests; (iv) all
geological, geophysical, engineering, accounting, title, legal, and other
technical or business data concerning the Hydrocarbon Property, the
Hydrocarbons, or any other item of Hydrocarbon Property which are in the
possession of Mortgagor or in which Mortgagor can otherwise grant a security
interest, and all books, files, records, magnetic media, computer records, and
other forms of recording or obtaining access to such data; and (v) the
Hydrocarbon Property described on attached Exhibit A and
covered by this Mortgage even though Mortgagor’s interests therein be
incorrectly described or a description of a part or all of such Hydrocarbon
Property or Mortgagor’s interests therein be omitted; it being intended by
Mortgagor and Mortgagee herein to cover and affect hereby all interests which
Mortgagor may now own or may hereafter acquire in and to the Hydrocarbon
Property notwithstanding that the interests as specified on Exhibit A may be
limited to particular lands, specified depths or particular types of property
interests.

     

    (c)           All
rights, titles, interests and estates now owned or hereafter acquired by
Mortgagor in and to all oil, gas, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined therefrom and all
other minerals (collectively called the “Hydrocarbons”) in and
under and which may be produced and saved from or attributable to the
Hydrocarbon Property, the lands pooled or unitized therewith and Mortgagor’s
interests therein, including all oil in tanks and all rents, issues, profits,
proceeds, products, revenues and other income from or attributable to the
Hydrocarbons, the Hydrocarbon Property, the lands pooled or unitized therewith
and Mortgagor’s interests therein.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (d)           All
tenements, hereditaments, appurtenances and properties in anywise appertaining,
belonging, affixed or incidental to the Hydrocarbon Property, and estates
described or referred to in paragraphs (a) and (b) above, which are now owned or
which may hereafter be acquired by Mortgagor, including, without limitation, any
and all property, real or personal, now owned or hereafter acquired and situated
upon, used, held for use, or useful in connection with the operating, working,
extraction, treatment, marketing, gathering, transmission or development of any
of such Hydrocarbon Property or the lands pooled or unitized therewith
(excluding drilling rigs, trucks, automotive equipment or other personal
property which may be taken to the premises for the purpose of drilling a well
or for other similar temporary uses) and including any and all oil wells, gas
wells, injection wells or other wells, buildings, structures, field separators,
liquid extraction plants, plant compressors, pumps, pumping units, pipelines,
sales and flow lines, gathering systems, field gathering systems, salt water
disposal facilities, tanks and tank batteries, fixtures, valves, fittings,
machinery and parts, engines, boilers, meters, apparatus, goods, inventory,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements, servitudes, licenses and
other surface and subsurface rights together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing
properties.

     

    (e)           Any
property that may from time to time hereafter, by delivery or by writing of any
kind, be subjected to the lien and security interest hereof by Mortgagor or by
anyone on Mortgagor’s behalf and Trustee or Mortgagee is hereby authorized to
receive the same at any time as additional security hereunder.

     

    (f)           All
of the rights, titles and interests of every nature whatsoever now owned or
hereafter acquired by Mortgagor in and to the Hydrocarbon Property rights,
titles, interests and estates and every part and parcel thereof, including,
without limitation, the Hydrocarbon Property rights, titles, interests and
estates as the same may be enlarged by the discharge of any payments out of
production or by the removal of any charges or Permitted Liens to which any of
the Hydrocarbon Property rights, titles, interests or estates are subject, or
otherwise; all rights of Mortgagor to liens and security interests securing
payment of proceeds from the sale of production from the Mortgaged Property,
including, but not limited to, those liens and security interests provided in
§9.343 of the Applicable UCC, as amended from time to time, any other statute
enacted in the jurisdiction in which the Hydrocarbon Property is located or
statute made applicable to the Hydrocarbon Property under federal law (or some
combination of federal and state law); together with any and all renewals and
extensions of any of the Hydrocarbon Property rights, titles, interests or
estates; all contracts and agreements supplemental to or amendatory of or in
substitution for the contracts and agreements described or mentioned above; and
any and all additional interests of any kind hereafter acquired by Mortgagor in
and to the Hydrocarbon Property rights, titles, interests or
estates.

     

    (g)           All
accounts, contract rights, inventory, choses in action (i.e., rights to enforce
contracts or to bring claims thereunder), commercial tort claims, general
intangibles, insurance contracts and insurance proceeds (regardless of whether
the same arose, and/or the events which gave rise to the same occurred, on or
before or after the date hereof) and all proceeds and products of all such
portions of the Hydrocarbon Property and payments in lieu of production, whether
such proceeds or payments are goods, money, documents, instruments, chattel
paper, securities, accounts, general intangibles, fixtures, real property, or
other assets and regardless of whether such payments accrued, and/or the events
which gave rise to such payments occurred, on or before or after the date
hereof, including, without limitation, “take or pay” payments and similar
payments, payments received in settlement of or pursuant to a judgment rendered
with respect to take or pay or similar obligations or other obligations under a
production sales contract, payments received in buyout or buydown or other
settlement of a production sales contract, and payments received under a gas
balancing or similar agreement as a result of (or received otherwise in
settlement of or pursuant to judgment rendered with respect to) rights held by
Mortgagor as a result of Mortgagor (and/or its predecessors in title) taking or
having taken less gas from lands covered by a Hydrocarbon Property (or lands
pooled or unitized therewith) than its ownership of such Hydrocarbon Property
would entitle it to receive.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (h)           Without
limitation of the generality of the foregoing, any rights and interests of
Mortgagor under any present or future hedge or swap agreements, cap, floor,
collar, exchange, forward or other hedge or protection agreements or
transactions relating to crude oil, natural gas or other Hydrocarbons, or any
option with respect to any such agreement or transaction now existing or
hereafter entered into by or on behalf of Mortgagor.

     

    (i)           All
licenses, permits and other regulatory approvals held by Mortgagor relating to
the Mortgaged Property.

     

    (j)           All
proceeds of all of the rights, titles and interests of Mortgagor described in
the foregoing paragraphs (a) through (i) whether such proceeds or payments are
goods, money, documents, instruments, chattel paper, securities, accounts,
payment intangibles, general intangibles, fixtures, real/immovable property,
personal/movable property or other assets.

     

    (k)           In
addition to the rights granted to Trustee and/or Mortgagee in Section 1.01(f)
of this Mortgage, any and all liens, security interests, financing statements or
similar interests of Mortgagor attributable to its interest in the Hydrocarbons
and proceeds of runs therefrom arising under or created by any statutory
provision, judicial decision or otherwise.

     

    (l)           All
of Mortgagor’s rights and interests pursuant to the provisions of §9.343 of the
Applicable UCC and of any similar state or local jurisdiction statute in any
state wherein the Mortgaged Property is located, hereby vesting in Trustee
and/or Mortgagee all of Mortgagor’s rights as an interest owner to the
continuing security interest in and liens upon the Mortgaged
Property.

     

    Any
fractions or percentages specified on attached Exhibit A in
referring to Mortgagor’s interests are solely for purposes of the warranties
made by Mortgagor pursuant to Sections 3.01
and 3.05 hereof
and shall in no manner limit the quantum of interest affected by this Section 1.01
with respect to any Hydrocarbon Property or with respect to any unit or well
identified on said Exhibit A.

     

    TO HAVE
AND TO HOLD the Mortgaged Property unto Trustee and to its successors and
assigns forever to secure the payment of the Indebtedness and to secure the
performance of the covenants, agreements, and obligations of Mortgagor herein
contained.

     

    Section
1.02       Grant of Security
Interest.  To further secure the Indebtedness, Mortgagor hereby
grants to Mortgagee a security interest in and to the Mortgaged Property
(whether now or hereafter acquired by operation of law or otherwise) insofar as
the Mortgaged Property consists of equipment, accounts, contract rights, general
intangibles, insurance contracts, insurance proceeds, inventory, Hydrocarbons,
fixtures and any and all other personal property of any kind or character
defined in and subject to the provisions of the Uniform Commercial Code
presently in effect in the jurisdiction in which the Mortgaged Property is
situated (“Applicable
UCC”), including the proceeds and products from any and all of such
personal property.  Upon the happening of any of the Events of Default
(as defined in Section
4.01), Mortgagee is and shall be entitled to all of the rights, powers
and remedies afforded a secured party by the Applicable UCC with reference to
the personal property and fixtures in which Mortgagee has been granted a
security interest herein, or Trustee or Mortgagee may proceed as to both the
real and personal property covered hereby in accordance with the rights and
remedies granted under this Mortgage in respect of the real property covered
hereby.  Such rights, powers and remedies shall be cumulative and in
addition to those granted to Trustee or Mortgagee under any other provision of
this Mortgage or under any other security instrument.  Written notice
mailed to Mortgagor as provided herein at least five (5) Business Days prior to
the date of public sale of any part of the Mortgaged Property which is personal
property subject to the provisions of the Applicable UCC, or prior to the date
after which private sale of any such part of the Mortgaged Property will be
made, shall constitute reasonable notice. Except as otherwise expressly provided
in this Mortgage, all terms in this Mortgage relating to the Mortgaged Property
and the grant of the foregoing security interest which are defined in the
Applicable UCC shall have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Applicable UCC, as those
meanings may be amended, revised or replaced from time to
time.  Notwithstanding the foregoing, the parties intend that the
terms used herein which are defined in the Applicable UCC have, at all times,
the broadest and most inclusive meanings possible.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Section
1.03       Indebtedness
Secured.  This Mortgage is executed and delivered by Mortgagor
to secure and enforce the following (the “Indebtedness”):

     

    (a)          Payment
of and performance of any and all indebtedness, obligations and liabilities of
Mortgagor pursuant to the Note.

     

    (b)          Payment
of and performance of any and all other indebtedness, obligations and
liabilities of Mortgagor and any direct or indirect subsidiary of Mortgagor
(collectively, the “Mortgagor Parties”
and each, individually, a “Mortgagor Party”)
pursuant to the Note, this Mortgage and all of the other agreements, documents
and instruments contemplated thereby and executed in connection therewith
(collectively, the “Loan Documents”),
including, without limitation, (i) principal and interest (including without
limitation interest accruing subsequent to the filing of a petition or other
action concerning bankruptcy or other similar proceeding, whether or not an
allowed claim) on the Note, (ii) reimbursement obligations under any letters of
credit, (iii) obligations under any hedging agreements with any Buyer or its
affiliates, and (iv) obligations owing under any other Loan Documents; and all
renewals, extensions, rearrangements and/or other modifications of any of the
foregoing.

     

    (c)          Any
sums which may be advanced or paid by Mortgagee, Trustee or any Buyer under the
terms hereof or under any other Loan Documents on account of the failure of
Mortgagor or any other Mortgagor Party to comply with the covenants contained
herein or in any other Loan Document and all other indebtedness of the Mortgagor
Parties arising pursuant to the provisions of the Loan Documents, this Mortgage
and any other documents or instruments executed in connection
therewith.

     

    (d)          Without
limiting the generality of the foregoing, all post-petition interest, expenses
and other duties and liabilities with respect to indebtedness or other
obligations described above in this Section 1.03, which
would be owed but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar
proceeding.

     

    Section
1.04       Fixture Filing,
Etc.  Without in any manner limiting the generality of any of
the other provisions of this Mortgage: (i) some portions of the goods
described or to which reference is made herein are or are to become fixtures on
the land described or to which reference is made herein or on attached Exhibit A;
(ii) the security interests created hereby under applicable provisions of
the Applicable UCC will attach to Hydrocarbons (minerals including oil and gas),
as extracted collateral or the accounts resulting from the sale thereof at the
wellhead located on the land described or to which reference is made herein;
(iii) this Mortgage is to be filed of record in the real estate records as
a financing statement, and (iv) Mortgagor is the record owner of the real estate
or interests in the real estate comprised of the Mortgaged
Property.

    
      
         

      

      
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    Section
1.05       Defined
Terms.  Any capitalized term used in this Mortgage and not
defined in this Mortgage shall have the meaning assigned to such term in the
Note.

     

    ARTICLE
II

    Assignment of Production,
Accounts and Proceeds

     

    Section
2.01      Assignment.  Mortgagor
does hereby absolutely and unconditionally assign, transfer and convey unto
Mortgagee, its successors and assigns, all of the Hydrocarbons and all products
obtained or processed therefrom, which accrue to Mortgagor’s interest in the
Mortgaged Properties, and the revenues and proceeds now and hereafter
attributable to the Hydrocarbons and said products and all accounts arising
therefrom or in connection therewith and all payments in lieu of the
Hydrocarbons such as “take or pay” payments or settlements (all of the
foregoing, the “Production
Proceeds”), together with the immediate and continuing right after the
occurrence of and during the continuation of an Event of Default, subject to the
remaining provisions of this Section 2.01, to
collect and receive such Production Proceeds. The Hydrocarbons and products are
to be delivered into pipelines connected with the Mortgaged Property, or to the
purchaser thereof, to the credit of Mortgagee (to the extent of the Mortgagor’s
interest therein); and all Production Proceeds shall initially be deposited into
a separate account (the “Deposit
Account”).  No party paying any Production Proceeds shall have
any duty or obligation to inquire into any of the rights of Mortgagee under this
Section 2.01,
what application is made of the Production Proceeds, or as to any other
matter.  Mortgagor directs and instructs any and all purchasers of any
Hydrocarbons to pay to such Deposit Account all of the Production Proceeds
accruing to Mortgagor’s interest until such time as such purchasers have been
furnished with evidence that all Indebtedness has been paid in full in cash and
that this Mortgage has been released.  Mortgagor agrees that no
purchasers of the Hydrocarbons shall have any responsibility for the application
of any funds paid to Mortgagee.  Mortgagor agrees to perform all such
acts, and to execute all such further assignments, transfer orders and division
orders, and other instruments as may be required or desired by Mortgagee or any
party in order to have the Production Proceeds paid to Mortgagee after the
occurrence of and during the continuation of an Event of Default. Upon the
occurrence and during the continuation of an Event of Default, Mortgagee is
fully authorized to receive and receipt for the Production Proceeds; 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 the
Production Proceeds and to hold the Production Proceeds in a bank account as
additional collateral securing the Indebtedness; and to execute transfer and
division orders in the name of Mortgagor, or otherwise, with warranties binding
Mortgagor.  All Production Proceeds received by Mortgagee pursuant to
this Section
2.01 after an Event of Default has occurred shall be applied as provided
herein or, to the extent not inconsistent with this Mortgage, in the other Loan
Documents.  Mortgagee shall not be liable for any delay, neglect or
failure to effect collection of any Production Proceeds or to take any other
action in connection therewith or hereunder; but Mortgagee shall have the right,
exercisable at its election at any time after an Event of Default has occurred
and is continuing, in the name of Mortgagor or otherwise, to prosecute and
defend any and all actions or legal proceedings deemed advisable by Mortgagee in
order to collect such funds and to protect the interests of Mortgagee and/or
Mortgagor, with all reasonable costs, expenses and attorneys’ fees incurred in
connection therewith being paid by Mortgagor and until so paid being a part of
the Indebtedness secured by this Mortgage.  Mortgagor agrees to
perform all such acts, and to execute all such further assignments, transfer
orders and division orders, and other instruments as may be required or desired
by Mortgagee or any party in order to effectuate the provisions contained in
this Section
2.01.  Mortgagor hereby appoints Mortgagee as its
attorney-in-fact to pursue any and all rights of Mortgagor to liens on and
security interests in the Hydrocarbons securing payment to Mortgagee of proceeds
of runs attributable to the Hydrocarbons, provided Mortgagee shall only be
permitted to exercise such power of attorney granted pursuant to this sentence
after the occurrence and during the continuation of an Event of
Default.  The power of attorney granted to Mortgagee in this Section 2.01, being
coupled with an interest, shall be irrevocable so long as the Indebtedness or
any part thereof remains unpaid.

    
      
         

      

      
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    Section
2.02       [Reserved].

     

    Section
2.03      No Modification of Payment
Obligations.  Nothing herein contained shall modify or
otherwise alter, limit or modify the absolute obligation of Mortgagor and the
other Mortgagor Parties to make prompt payment of all principal, interest and
other amounts owing on the Indebtedness when and as the same become due,
regardless of whether the Production Proceeds are sufficient to pay the same,
and the rights provided in accordance with the foregoing assignment provision
shall be cumulative of all other security of any and every character now or
hereafter existing to secure payment of the Indebtedness.

     

    Section
2.04      Effectuating Payment of
Production Proceeds to Mortgagee.   If under any existing
sales agreements, other than division orders or transfer orders, any Production
Proceeds are required to be paid by the purchaser to Mortgagor so that under
such existing agreements payment cannot be made of such Production Proceeds to
Mortgagee, Mortgagor’s interest in all Production Proceeds under such sales
agreements and in all other Production Proceeds which for any reason may be paid
to Mortgagor shall, when received by Mortgagor, constitute trust funds in
Mortgagor’s hands and shall be immediately paid over to Mortgagee after the
occurrence of and during the continuation of an Event of Default as provided in
Section 2.01 above.  Without limitation upon any of the foregoing,
Mortgagor hereby constitutes and appoints Mortgagee as Mortgagor’s special
attorney-in-fact (with full power of substitution, either generally or for such
periods or purposes as Mortgagee may from time to time prescribe) in the name,
place and stead of Mortgagor to do any and every act and exercise any and every
power that Mortgagor might or could do or exercise personally with respect to
all Hydrocarbons and Production Proceeds expressly inclusive, but not limited
to, giving and granting unto said attorney-in-fact full power and authority to
do and perform any and every act and thing whatsoever necessary and requisite to
be done as fully and to all intents and purposes, as Mortgagor might or could do
if personally present (provided such power of attorney granted pursuant to this
sentence shall only be exercisable by Mortgagee upon the occurrence and during
the continuation of an Event of Default) and Mortgagor shall be bound thereby as
fully and effectively as if Mortgagor had personally executed, acknowledged and
delivered any of the foregoing certificates or documents. The powers and
authorities herein conferred upon Mortgagee may be exercised by Mortgagee
through any person who, at the time of the execution of the particular
instrument, is an officer of Mortgagee.  The power of attorney herein
conferred is granted for valuable consideration and hence is coupled with an
interest and is irrevocable so long as the Indebtedness, or any part thereof,
shall remain unpaid or any commitment to lend under the Note remains
outstanding.  All persons dealing with Mortgagee or any substitute
shall be fully protected in treating the powers and authorities conferred by
this paragraph as continuing in full force and effect until advised by Mortgagee
that all the Indebtedness is fully and totally paid.  Mortgagee may,
but shall not be obligated to, in accordance with the provisions of Section 2.01 above,
take such action as it deems reasonably appropriate in an effort to collect the
Production Proceeds and any reasonable expenses (including reasonable attorney’s
fees) so incurred by Mortgagee shall be a demand obligation of Mortgagor and
shall be part of the Indebtedness, and shall bear interest each day, from the
date of such expenditure or payment until paid, at the  interest rate
prescribed in the Note.

    
      
         

      

      
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    Section
2.05       Application of Production
Proceeds.  So long as no Event of Default has occurred, the
Production Proceeds received by Mortgagee shall be paid directly into a Deposit
Account in accordance with Section 2.01 hereof.  After an Event of
Default hereunder has occurred and during the continuation of an Event of
Default, all Production Proceeds from time to time in the hands of Mortgagee
shall be applied to the payment of the Indebtedness at such times and in such
manner and order as Mortgagee determines in Mortgagee’s sole and absolute
discretion.

     

    Section
2.06       Release from Liability;
Indemnification.  Mortgagee and its successors and assigns are
hereby released and absolved from all liability for failure to enforce
collection of the Production Proceeds and from all other responsibility in
connection therewith, except the responsibility to account to Mortgagor for
funds actually received.  Mortgagor agrees to indemnify and hold
harmless Mortgagee (for purposes of this paragraph, the term “Mortgagee” shall
include the directors, officers, partners, employees and agents of Mortgagee and
any persons or entities owned or controlled by or affiliated with Mortgagee and
any other Indemnified Party as defined in Section 4.16 hereof)
from and against all claims, demands, liabilities, losses, damages (including
without limitation consequential damages), causes of action, judgments,
penalties, costs and expenses (including without limitation reasonable
attorneys’ fees and expenses) imposed upon, asserted against or incurred or paid
by Mortgagee by reason of the assertion that Mortgagee received, either before
or after payment in full of the Indebtedness, funds from the production of oil,
gas, other hydrocarbons or other minerals claimed by third persons (and/or funds
attributable to sales of production which were made in violation of laws, rules,
regulations and/or orders governing such sales), and Mortgagee shall have the
right to defend against any such claims or actions, employing attorneys of its
own selection, and if not furnished with indemnity satisfactory to it, Mortgagee
shall have the right to compromise and adjust any such claims, actions and
judgments, and in addition to the rights to be indemnified as herein provided,
all amounts paid by Mortgagee in compromise, satisfaction or discharge of any
such claim, action or judgment, and all court costs, reasonable attorneys’ fees
and other expenses of every character expended by Mortgagee pursuant to the
provisions of this section shall be a demand obligation (which obligation
Mortgagor hereby expressly promises to pay) owing by Mortgagor to Mortgagee and
shall bear interest, from the date expended until paid at the interest rate
prescribed in the Note.  The foregoing indemnities shall not terminate
upon the release, foreclosure or other termination of this Mortgage, but will
survive the release, foreclosure of this Mortgage or conveyance in lieu of
foreclosure, and the repayment of the Indebtedness and the discharge and release
of this Mortgage and the other documents evidencing and/or securing the
Indebtedness.  WITHOUT LIMITATION, IT IS THE
INTENTION OF MORTGAGOR, AND MORTGAGOR AGREES THAT THE FOREGOING RELEASES AND
INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO ALL CLAIMS,
DEMANDS, LIABILITIES, LOSSES, DAMAGES (INCLUDING, WITHOUT LIMITATION,
CONSEQUENTIAL DAMAGES), CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND
EXPENSES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE
OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY, EXCLUDING THE GROSS NEGLIGENCE AND
WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.  However, such
indemnities shall not apply to any particular indemnified party (but shall apply
to the other indemnified parties) to the extent the subject of the
indemnification is caused by or arises out of the gross negligence or willful
misconduct of such particular indemnified party.

    
      
         

      

      
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    ARTICLE
III

    Representations, Warranties
and Covenants

     

    Mortgagor
hereby covenants with the Mortgagee, and represents and warrants to the
Mortgagee that:

     

    Section
3.01       Title.  Mortgagor
has good and defensible title to the Mortgaged Property. With respect to each
Mortgaged Property, the ownership of Mortgagor in such Mortgaged Property does
and will, (i) with respect to each tract of land described in Exhibit A
hereto, (whether described directly in such Exhibit A or
described by reference to another instrument) in connection with such Mortgaged
Property, (A) entitle Mortgagor to receive (subject to the terms and
provisions of this Mortgage) a decimal or percentage share of the oil, gas and
other hydrocarbons produced from, or allocated to, such tract equal to not less
than the percentage share set forth in Exhibit A in
connection with such tract in the column headed “NRI”, (B) cause Mortgagor to be
obligated to bear a percentage share of the cost of exploration, development and
operation of such tract of land not greater than the percentage share set forth
in Exhibit A in
connection with such tract in the column headed “WI”, and (ii) if such Mortgaged
Property is shown on Exhibit A to be
subject to a unit or units, with respect to each such unit, (A) entitle
Mortgagor to receive (subject to the terms and provisions of this Mortgage) a
percentage share of all substances covered by such unit which are produced from,
or allocated to, such unit equal to not less than the percentage share set forth
in Exhibit A in
connection with such Mortgaged Property in connection with such tract in the
column headed “NRI” (and if such Mortgaged Property is subject to more than one
unit, words identifying such interest with such unit), and (B) obligate
Mortgagor to bear a percentage share of the cost of exploration, development and
operation of such unit not greater than the percentage share set forth in Exhibit A in
connection with such tract in the column headed “WI” (and if such Mortgaged
Property is subject to more than one unit, words identifying such interest with
such unit).  With respect to each Mortgaged Property described in
Exhibit A
hereto (or in any of the instruments described or referred to in Exhibit A) which is
subject to a voluntary or involuntary pooling, unitization or communitization
agreement and/or order, the term "tract of land" as used in this Section 3.01 shall
mean the pooled, unitized or communitized area as an entirety and shall not be
deemed to refer to any individual tract committed to said pooled, unitized or
communitized area.  Without limitation of the foregoing, the ownership
by Mortgagor of the Mortgaged Properties does and will, with respect to each
well or unit identified on Exhibit A attached
hereto and made a part hereof, entitle Mortgagor to receive (subject to the
terms and provisions of this Mortgage) a percentage share of the oil, gas and
other hydrocarbons produced from, or allocated to, such well or unit equal to
not less than the percentage share set forth, for such well or unit, in the
column headed "NRI" on Exhibit A, and cause
Mortgagor to be obligated to bear a percentage share of the cost of operation of
such well or unit equal to not more than the decimal or percentage share set
forth, for such well or unit, in the column headed "WI" on Exhibit
A.  The above-described shares of production which Mortgagor is
entitled to receive and shares of expenses which Mortgagor is obligated to bear
are not and will not be subject to change (other than changes which arise
pursuant to non-consent provisions of operating agreements described in Exhibit A in
connection with operations hereafter proposed), except, and only to the extent
that, such changes are reflected in Exhibit A.  Any
fractional, percentage or decimal interests specified in Exhibit A in referring
to Mortgagor’s interest in the Mortgaged Property are solely for the purposes of
the representations and warranties set forth herein and shall in no manner limit
the quantum of the interests of the Mortgagor or the Mortgagee in the Mortgaged
Property mortgaged and pledged by the Mortgagor hereunder.  The
Mortgaged Property is free and clear of all Liens other than the encumbrances
set forth in Exhibit A (the “Permitted
Liens”).

    
      
         

      

      
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    Section
3.02       Defend Title.  This
Mortgage is and will be a direct first Lien and security interest upon the
Mortgaged Property, subject only to Permitted Liens, so long as the Indebtedness
under the Note remains unpaid.  This Mortgage will always be kept as a
direct first Lien and security interest upon the Mortgaged Property, and
Mortgagor will not grant, incur or create or suffer to be created or permit to
exist any Lien, security interest or charge prior or junior to or on a parity
with the Lien and security interest of this Mortgage upon the Mortgaged Property
or any part thereof or upon the rents, issues, revenues, profits and other
income therefrom, other than Permitted Liens.  Mortgagor will warrant
and defend the title to the Mortgaged Property against the claims and demands of
all other persons whomsoever and will maintain and preserve the Lien created
hereby so long as any of the Indebtedness secured hereby remains
unpaid.  Should an adverse claim be made against or a cloud develop
upon the title to any part of the Mortgaged Property, other than Permitted
Liens, Mortgagor agrees it will timely defend against such adverse claim or take
appropriate action to remove such cloud at Mortgagor’s cost and expense, and
Mortgagor further agrees that Trustee and/or Mortgagee may take such other
action as they deem reasonably advisable to protect and preserve their interests
in the Mortgaged Property, and in such event Mortgagor will indemnify Trustee
and Mortgagee against any and all cost, attorney’s fees and other expenses which
they may incur in defending against any such adverse claim or taking action to
remove any such cloud.

     

    Section
3.03       Not a Foreign
Person.  Mortgagor is not a “foreign person” within the meaning
of the Internal Revenue Code of 1986, as amended (i.e. Mortgagor is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder).

     

    Section
3.04       Rentals, Taxes, Insurance
and Fees Paid;  Leases in Effect.  All rentals and
royalties due and payable in accordance with the terms of any leases or
subleases comprising a part of the Hydrocarbon Property and all severance and
production taxes payable with respect to the production therefrom have been duly
paid or provided for and all leases or subleases comprising a part of the
Hydrocarbon Property are in full force and effect.  In addition to the
foregoing, Mortgagor shall or shall cause to be paid when due, all taxes,
permits, licenses, insurance premiums and other similar amounts with respect to
the Mortgaged Property, the Hydrocarbon Property and the
Hydrocarbons.

     

    Section
3.05      Operation By Third
Parties.   As to any part of the Mortgaged Property which
is not a working interest (if any), Mortgagor agrees to take all such action and
to exercise all rights and remedies as are reasonably available to Mortgagor to
cause the owner or owners of the working interest in such properties to comply
with the covenants and agreements contained herein; and as to any part of the
Mortgaged Property which is a working interest but which is operated by a party
other than Mortgagor, Mortgagor agrees to take all such action and to exercise
all rights and remedies as are reasonably available to Mortgagor (including, but
not limited to, all rights under any operating agreement) to cause the party who
is the operator of such property to comply with the covenants and agreements
contained herein.

     

    Section
3.06      Failure to
Perform.  Mortgagor agrees that if Mortgagor fails to perform
any act or to take any action which Mortgagor is required to perform or take
hereunder or pay any money which Mortgagor is required to pay hereunder, each of
Mortgagee and Trustee in Mortgagor’s name or its or their own name may, but
shall not be obligated to, perform or cause to be performed such act or take
such action or pay such money, and any expenses so incurred by either of them
and any money so paid by either of them shall be a demand obligation owing by
Mortgagor to Mortgagee or Trustee, as the case may be, and each of Mortgagee and
Trustee, upon making such payment, shall be subrogated to all of the rights of
the Person receiving such payment.  Each amount due and owing by
Mortgagor to each of Mortgagee and Trustee pursuant to this Mortgage shall bear
interest from the date of such expenditure or payment or other occurrence which
gives rise to such amount being owed to such Person until paid at the Applicable
Interest Rate, and all such amounts together with such interest thereon shall be
a part of the Indebtedness described in Section 1.03
hereof.

    
      
         

      

      
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    Section
3.07       Sale of Mortgaged
Property.  Mortgagor shall, except after the occurrence and
during the continuation of an Event of Default, be permitted to (i) sell
Hydrocarbons in the ordinary course of business in compliance with the terms of
this Mortgage and (ii) sell or otherwise dispose of obsolete or worn out
equipment or personal property which is replaced with property of equal or
greater value in the ordinary course of business; otherwise, any proposed sale,
transfer, farm-out, assignment or other disposition of the Mortgaged Property by
the Mortgagor during such time as any Indebtedness under the Note remains unpaid
shall be subject to the advance written consent of the Mortgagee.

     

    Section
3.08       Sale of
Production.  No Mortgaged Property is or will become subject to
any contractual or other arrangement (a) whereby payment for production is or
can be deferred for a substantial period after the month in which such
production is delivered (i.e., in the case of oil, not in excess of sixty (60)
days, and in the case of gas, not in excess of ninety (90) days) or (b) whereby
payments are made to Mortgagor other than by checks, drafts, wire transfer
advises or other similar writings, instruments or communications for the
immediate payment of money.  Except for transportation, gathering,
processing, compression or dehydration agreements (or other agreements relating
to the marketing of Hydrocarbons), and, with respect to the immediately
succeeding clause (i), except for agreements entered into by Mortgagor in the
ordinary course of business consistent with prudent customs and practices in the
industry in which Mortgagor operates, (i) no Mortgaged Property is or will
become subject to any contractual or other arrangement for the sale, processing
or transportation of production (or otherwise related to the marketing of
Hydrocarbons) which cannot be cancelled on 120 days (or less) notice and (ii)
all contractual or other arrangements for the sale, processing or transportation
of Hydrocarbons (or otherwise related to the marketing of Hydrocarbons) shall be
bona fide arm’s length transactions and shall be at generally prevailing market
prices.  Mortgagor is presently receiving a price for all production
from (or attributable to) each Mortgaged Property covered by a production sales
contract disclosed in writing to Mortgagee as computed in accordance with the
terms of such contract, and is not having deliveries of production from such
Mortgaged Property curtailed substantially below such property’s delivery
capacity.  Neither Mortgagor nor, to the best of Mortgagor’s
knowledge, any of its predecessors in title, has received prepayments
(including, but not limited to, payments for gas not taken pursuant to “take or
pay” or other similar arrangements) for any Hydrocarbons produced or to be
produced from the Mortgaged Properties after the date hereof, and Mortgagor
hereby covenants not to enter into any such advance or prepayment arrangements
whereby it accepts consideration for Hydrocarbons not yet
produced.  No Mortgaged Property is or will become subject to any
“take or pay” or other similar arrangement (y) which can be satisfied in whole
or in part by the production or transportation of gas from other properties or
(z) as a result of which production from the Mortgaged Properties may be
required to be delivered to one or more third parties without payment (or
without full payment) therefor as a result of payments made, or other actions
taken, with respect to other properties.  There is no Mortgaged
Property with respect to which Mortgagor, or, to the best of Mortgagor’s
knowledge, its predecessors in title, has, prior to the date hereof, taken more
(“overproduced”), or
less (“underproduced”), gas
from the lands covered thereby (or pooled or unitized therewith) than its
ownership interest in such Mortgaged Property would entitle it to take, except
in the ordinary course of business consistent with prudent customs and practices
in the industry in which Mortgagor operates.  Mortgagor will not after
the date hereof become “overproduced” (as above defined) with respect to any
well on the Mortgaged Property (or on any unit in which the Mortgaged Property
participate), in an amount in excess of Mortgagor’s share of gas produced from
such well, except in the ordinary course of business consistent with prudent
customs and practices in the industry in which Mortgagor operates.  No
Mortgaged Property is or will become subject to a gas balancing arrangement
under which one or more third parties may take a portion of the production
attributable to such Mortgaged Property without payment (or without full
payment) therefor as a result of production having been taken from, or as a
result of other actions or inactions with respect to, other properties, except
for any such gas balancing arrangement entered into in the ordinary course of
business consistent with prudent customs and practices in the industry in which
Mortgagor operates.  No Mortgaged Property is subject at the present
time to any regulatory refund obligation and, to the best of Mortgagor’s
knowledge, no facts exist which might cause the same to be
imposed.

    
      
         

      

      
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    Section
3.09       Operation of Mortgaged
Property.  The Mortgagor will promptly pay and discharge or cause to
be paid and discharged all rentals, delay rentals, royalties and indebtedness
accruing under, and perform or cause to be performed each and every act, matter
or thing required by, each and all of the assignments, deeds, subject leases,
sub-leases, contracts and agreements described or referred to herein or
affecting the Mortgagor’s interests in the Mortgaged Property and will do or
cause to be done all other things reasonably necessary to keep unimpaired the
Mortgagor’s rights with respect thereto and prevent any intentional forfeiture
thereof or default with respect thereto, other than a default which might occur
as a result of cessation of production thereunder.  Except as could
not reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect, the Mortgaged Property (and
properties unitized therewith) is being (and, to the extent the same could
adversely affect the ownership or operation of such Mortgaged Property after the
date hereof, have in the past been), and hereafter will be maintained,
operated and
developed in a good
and workmanlike manner in accordance with
customary industry
standards and in conformity with all applicable laws and all rules, regulations
and orders of all duly constituted authorities having jurisdiction and in
conformity with all oil, gas and/or other mineral leases and other agreements
forming part of the Mortgaged Property and in conformity with all Permitted
Liens; specifically in this connection, (i) no Mortgaged Property is subject to
having allowable production after the date hereof reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior to
the date hereof and (ii) none of the wells located on the Mortgaged Property (or
properties unitized therewith) are or will be deviated from the vertical more
than the maximum permitted by applicable laws, regulations, rules and orders,
and such wells are, and will remain, bottomed under and producing from, with the
well bores wholly within, the Mortgaged Property (or, in the case of wells
located on properties unitized therewith, such unitized
properties).  With respect to any Mortgaged Property in which
Mortgagor is the operator in connection therewith or in which Mortgagor has a
majority working interest (and to the best of Mortgagor’s knowledge with respect
to any Mortgaged Property in which Mortgagor has a minority working interest and
is not an operator in connection therewith), there are no dry holes, or
otherwise inactive wells, located on any Mortgaged Property or on lands pooled
or unitized therewith (including, without limitation, any wells which would, if
located in West Virginia, require compliance with Railroad Commission Rule
14(b)(2)), except for wells that have been properly plugged and abandoned or
inactive and being maintained in accordance with local, state and federal
law.  The Mortgagor has, and will in the future, possess all
certificates, authorizations, approvals, licenses and permits issued by the
appropriate federal, state or foreign regulatory authorities (collectively,
“Permits”)
necessary to produce, extract, transport and sell the oil, gas, minerals and/or
other Hydrocarbons in that portion of the Mortgaged Property that is producing
oil, gas, minerals and/or other Hydrocarbons.  Except Mortgagor has no
reason to believe that it will not be able to obtain Permits as and when
necessary to enable the Mortgagor to produce, extract, transport and sell the
oil, gas, minerals and other Hydrocarbons in the Mortgaged
Property.  Mortgagor has not received notice of any violations in
respect of any such licenses or permits described in the foregoing provisions of
this Section
3.09, except for notices of violations received prior to the date hereof
that have been remedied by Mortgagor.  The Mortgagor will operate the
Mortgaged Property in a careful and efficient manner in accordance with the
practices of the industry and in compliance with all applicable contracts and
agreements and in compliance with all applicable spacing, proration and
conservation laws of the jurisdiction in which the Mortgaged Property is
situated, and all applicable laws, rules and regulations of every other agency
and authority from time to time constituted to regulate the development and
operation of the Mortgaged Property and the production and sale of Hydrocarbons
and other minerals produced therefrom, except as could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.  The Mortgagor will do or cause to be done, or shall
participate in, such development work as may be reasonably necessary to the
prudent and economical operation of the Mortgaged Property in accordance with
the approved practices of prudent operators in the industry, including, without
limitation, all to be done that may be appropriate to protect from diminution
the productive capacity of the Mortgaged Property and each producing well
thereon.  Upon the reasonable request of the Mortgagee, and at
reasonable times and intervals, the Mortgagor will (a) permit the Mortgagee and
its respective designated representatives to enter upon any part of the
Mortgaged Property under the control of the Mortgagor, and (b) cause the
operator of any part of the Mortgaged Property not under the control of the
Mortgagor to permit the Mortgagee and its designated representatives to enter
upon the same (to the extent and subject to the conditions under which the
Mortgagor may so enter), for the purposes of inspecting the condition and
operation thereof.

    
      
         

      

      
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    Section
3.10      Suits and
Claims.  There are no suits, actions, claims, investigations,
inquiries, proceedings or demands pending (or, to Mortgagor’s knowledge,
threatened) which affect the Mortgaged Property (including, without limitation,
any which challenge or otherwise pertain to Mortgagor’s title to the Mortgaged
Property) and no judicial or administrative actions, suits or proceedings
pending (or, to Mortgagor’s knowledge, threatened) against
Mortgagor.

     

    Section
3.11       Environmental.

    (a)          Current
Status.  Neither Mortgagor nor Mortgagee knows, nor does
Mortgagor or Mortgagee have reason to know, of any violations of Applicable
Environmental Laws relating to the Mortgaged Property or operations involving
the Mortgaged Property. “Applicable Environmental
Laws” shall mean any applicable
laws, orders, rules, or regulations pertaining to safety, health or the
environment, as such laws, orders, rules or regulations now exist or are
hereafter enacted and/or amended (including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (as
amended, hereinafter called “CERCLA”), the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, hereinafter called
“RCRA”) and
applicable state and local law).  Mortgagor undertook, at the time of
acquisition of the Mortgaged Property, all appropriate inquiry into the previous
ownership and uses of the Mortgaged Property consistent with good commercial or
customary practice.  Mortgagor has taken reasonable steps necessary,
consistent with customary practice in the industry in which it operates its
business, to determine and has determined that no hazardous substances or solid
wastes have been disposed of or otherwise released at, into, upon or under the
Mortgaged Property except in accordance with Applicable
Environmental Laws.  The use which Mortgagor makes and intends to make
of the Mortgaged Property will not result in the use, treatment, storage or
disposal or other release of any hazardous substance or solid waste at, into,
upon or under the Mortgaged Property, except such usage, and temporary storage
in anticipation of usage, as is in the ordinary course of business and in
compliance with Applicable Environmental Laws.  The terms “hazardous substance”
and “release”
as used in this Mortgage shall have the meanings specified in CERCLA, and the
terms “solid
waste” and “disposal” (or “disposed”) shall have
the meanings specified in RCRA; provided, in the event 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 that the laws of the states in which the
Mortgaged Properties are located 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.  The “Associated Property”
(as such term is hereinafter defined) is not in violation of any Applicable
Environmental Laws for which Mortgagor or its predecessors in title to the Mortgaged
Property would be responsible (to the best of Mortgagor’s knowledge with respect
to Associated Property not owned or operated by Mortgagor).  The term
“Associated
Property” as used in this Mortgage shall mean any and all interests in
and to (and/or carved out of) the lands which are described or referred to in
Exhibit A
hereto, or which are otherwise described in any of the oil, gas and/or mineral
leases or other instruments described in or referred to in such Exhibit A,
whether or not such property interests are owned by Mortgagor.

     

    
      
        
        

      

      
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    (b)          Future
Performance.  Except as could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, Mortgagor will operate
each Mortgaged  Property in a careful and efficient manner in
accordance with the practices of the industry so as not to cause or permit such
Mortgaged Property or Mortgagor to be in violation of, and Mortgagor shall not
do anything or permit anything to be done which will subject such
Mortgaged  Property or any Associated Property to any remedial
obligations under, or result in noncompliance with applicable permits and
licenses under, any Applicable Environmental Laws, assuming disclosure to the
applicable governmental authorities of all relevant facts, conditions and
circumstances, if any, pertaining to the Mortgaged Property or any Associated
Property and Mortgagor will promptly notify Mortgagee in writing of any
existing, pending or, to the best knowledge of Mortgagor, threatened
investigation, claim, suit or inquiry by any governmental authority or any
person in connection with any Applicable Environmental Laws.  Except
as could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, Mortgagor will take
steps necessary to determine that no hazardous substances or solid wastes have
been disposed of or otherwise released on or to the Mortgaged Property or any
Associated Property.  Except as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, Mortgagor will not cause
or permit the disposal or other release of any hazardous substance or solid
waste at, into, upon or under the Mortgaged Property or any Associated
Property.  Mortgagor covenants and agrees to keep or cause the
Mortgaged Property to be kept free of any hazardous substance or solid waste
(except such use, and temporary storage in anticipation of use, as is required
in the ordinary course of business, all while in compliance with Applicable
Environmental Laws), and to remove the same (or if removal is prohibited by law,
to take whatever action is required by law), promptly upon discovery at its sole
expense.  Upon Mortgagee’s reasonable request, at any time and from
time to time during the existence of this Mortgage, but not more often than once
every calendar year (so long as no Event of Default has occurred), Mortgagor
will provide at Mortgagor’s sole expense an inspection or audit of each
Mortgaged Property from an engineering or consulting firm approved by Mortgagee,
indicating the presence or absence of hazardous substances and solid waste on
such Mortgaged Property and compliance with Applicable Environmental
Laws.

    
      
         

      

      
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    Section
3.12       Not Abandon Wells;
Participate in Operations; Non-Operated Interests.  Mortgagor
will not, without prior written consent of Mortgagee, which consent shall not be
unreasonably conditioned, withheld, or delayed, abandon, or consent to the
abandonment of, any well producing from the Mortgaged Property (or properties
unitized therewith) so long as such well is capable (or is subject to being made
capable through drilling, reworking or other operations which it would be
commercially feasible to conduct) of producing oil, gas, or other Hydrocarbons
or other minerals in commercial quantities (as determined without considering
the effect of this Mortgage), except in the ordinary course of business
consistent with prudent customs and practices in the industry in which Mortgagor
operates.  Mortgagor will not, without prior written consent of
Mortgagee, which consent shall not be unreasonably conditioned, withheld, or
delayed, elect not to participate in a proposed operation on the Mortgaged
Properties where the effect of such election would be the forfeiture either
temporarily (i.e., until a certain sum of money is received out of the forfeited
interest) or permanently of any interest in the Mortgaged
Properties.  All or portions of the Mortgaged Property may be
comprised of interests in the Hydrocarbon Property or lands pooled or unitized
therewith which are other than working interests or which may be operated by a
party or parties other than the Mortgagor and with respect to all such portions
of the Mortgaged Property, the Mortgagor’s covenants and agreements as expressed
in this Article
III are modified to require that the Mortgagor use its commercially
reasonable efforts to cause compliance with such covenants and agreements by the
working interest owners or the operator or operators of such Hydrocarbon
Properties.

     

    Section
3.13      Condemnation
Awards.  If at any time all or any portion of the Mortgaged
Property shall be taken or damaged under the power of eminent domain, the award
received by condemnation proceedings for any property so taken or any payment
received in lieu of such condemnation proceedings shall be paid directly to
Mortgagee as agent for Mortgagor and all or any portion of such award or
payment, at the option of Mortgagee, shall be applied to the Indebtedness in
payment of the last maturing installments of the Indebtedness or paid over,
wholly or in part, to Mortgagor for any purpose or object satisfactory to
Mortgagee; provided that Mortgagee shall not be obligated to see to the
application of any amount paid over to Mortgagor.  Mortgagor
immediately upon obtaining knowledge of the institution of any proceedings or
negotiations for the condemnation of the Mortgaged Property, or any portion
thereof, will notify Mortgagee of the pendency of such negotiations or
proceedings.  Mortgagee may participate in any such negotiations or
proceedings, and Mortgagor from time to time will execute and deliver to
Mortgagee all instruments requested by Mortgagee to permit such
participation.

     

    Section
3.14       Insurance.  Mortgagor
will maintain with financially sound and reputable insurance companies insurance
on all its property in at least such amounts and against at least such risks
(but including in any event general liability) as are usually insured against in
the same general area by companies engaged in the same or a similar business and
in any case no less comprehensive in scope than that maintained by the Mortgager
as of the date hereof.  In the event of any loss under any insurance
policies so carried by Mortgagor, Mortgagee shall have the right (but not the
obligation) to make proof of loss and collect the same, and all amounts so
received shall be applied toward costs, charges and expenses (including
reasonable attorneys’ fees), if any, incurred in the collection thereof, then to
the payment, in the order determined by Mortgagee in its own discretion, of the
Indebtedness, and any balance remaining shall be subject to the order of
Mortgagor.  Mortgagee is hereby authorized but not obligated to
enforce in its name or in the name of Mortgagor payment of any or all of said
policies or settle or compromise any claim in respect thereof, and to collect
and make receipts for the proceeds thereof and Mortgagee is hereby appointed
Mortgagor’s agent and attorney-in-fact to endorse any check or draft payable to
Mortgagor in order to collect the proceeds of insurance (provided Mortgagee
shall only be entitled to enforce the power of attorney provided in this
sentence after the occurrence and during the continuation of an Event of
Default).  In the event of foreclosure of this Mortgage, or other
transfer of title to the Mortgaged Property in extinguishment in whole or in
part of the Indebtedness, all right, title and interest of Mortgagor in and to
such policies then in force concerning the Mortgaged Property and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
other transferee in the event of such other transfer of title.

    
      
         

      

      
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    Section
3.15       Compliance
with Leases.  Mortgagor (i) will observe and comply with
all of the terms and provisions, express or implied, of the oil, gas and mineral
leases covered by this Mortgage, and any other agreements or instruments
applicable thereto; and, (ii) except with the prior written consent of
Mortgagee, which consent shall not be unreasonably conditioned, withheld, or
delayed, will not amend or terminate (in any manner adverse to Mortgagor,
Mortgagee, or Mortgagor’s or Mortgagee’s interest in the Mortgaged Property or
in any manner that could reasonably be expected to result in a Material Adverse
Effect) any of such agreements or surrender, abandon or release any of such
leases in whole or in part so long as any well situated thereon, or located on
any unit containing all or any part of such leases, is capable of producing oil,
gas, casinghead gas or other hydrocarbons in paying
quantities.  Mortgagor will cause all obligations to the holders of
royalty interests and all other interests in the Mortgaged Properties to be
promptly discharged and all covenants and conditions, express or implied,
imposed upon the original lessee or his assigns by every such lease and every
other agreement relative thereto to be fully and promptly performed and to cause
all acts necessary or proper to accomplish the foregoing and prevent the breach
or forfeiture of any such lease to be fully and promptly
performed.  Mortgagor will furnish to Mortgagee a ten (10) day advance
written notice of any intention not to pay (or immediately at such time that it
anticipates that it will be unable to pay) any delay rentals on the due date
thereof under any such lease.

     

    Section
3.16      Further
Assurance.  Mortgagor will, on request of Mortgagee, (i)
promptly correct any defect, error or omission which may be discovered in the
contents of this Mortgage, or in any other document or instrument executed in
connection with any of the Loan Documents, or in the execution or acknowledgment
of this Mortgage or any other document; (ii) execute, acknowledge, deliver and
record and/or file such further instruments (including, without limitation,
further deeds of trust, mortgages, security agreements, financing statements,
continuation statements, and assignments of production, accounts, funds,
contract rights, general intangibles, and proceeds) and do such further acts as
may be necessary, desirable or proper to carry out more effectively the purposes
of this Mortgage and to more fully identify and subject to the liens and
security interests hereof any property intended to be covered hereby, including
specifically, but without limitation, any renewals, additions, substitutions,
replacements, or appurtenances to the Mortgaged Property; and (iii) execute,
acknowledge, deliver, and file and/or record any document or instrument
(including specifically any financing statement) desired by Mortgagee to protect
the lien or the security interest hereunder against the rights or interests of
third persons.  Mortgagor shall pay all reasonable costs connected
with any of the foregoing.

     

    Section
3.17       Name and Place of
Business.  Except as disclosed in writing to Mortgagee,
Mortgagor has not during the preceding five (5) years been known by or used any
other corporate or partnership, trade or fictitious name.  Mortgagor
will not cause or permit any change to be made in its name, identity, state of
formation or corporate or partnership structure, or its federal employer
identification number unless Mortgagor shall have notified Mortgagee of such
change at least thirty (30) days prior to the effective date of such change, and
shall have first taken all action required by Mortgagee for the purpose of
further perfecting or protecting the liens and security interests in the
Mortgaged Property created hereby.  Mortgagor’s exact name is the name
set forth in this Mortgage.  Mortgagor is organized under the laws of
one of the states comprising the United States (e.g. corporation, limited
partnership, registered limited liability partnership or limited liability
company).  Mortgagor is located (as determined pursuant to the UCC) in
the state under which it is organized, which is as set forth in the preamble to
this Mortgage.  Mortgagor’s principal place of business and chief
executive office, and the place where Mortgagor keeps its books and records
concerning the Mortgaged Property (including, particularly, the records with
respect to Production Proceeds from the Mortgaged Property) has for the
preceding four months, been, and will continue to be (unless Mortgagor notifies
Mortgagee of any change in writing at least thirty (30) days prior to the date
of such change), the address set forth on the signature page of this
Mortgage.

    
      
         

      

      
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    Section
3.18       Compliance with Laws and
Agreements.  Mortgagor is in compliance with all governmental
requirements applicable to it or its property, including, without limitation,
all FERC regulations and the USA Patriot Act, and all indentures, agreements and
other instruments binding upon it or its property the failure with which to
comply would have a Material Adverse Effect on Mortgagor or the Mortgaged
Property.  The execution and performance of the Loan Documents, this
Mortgage and the other documents and instruments contemplated hereby and thereby
will not violate the Trading with the Enemy Act, as amended, any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto, the Executive Order referred to in the following
sentence or the U.S. Bank Secrecy Act (31 U.S.C. §§ 5311 et
seq.).  Mortgagor is not a Person described by section 1 of Executive
Order 13224 of September 24, 2001 entitled Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism,
66 Fed. Reg. 49,079 (2001), as amended, and Mortgagor does not engage in any
transactions or dealings, or is otherwise associated with any such
Persons.  Mortgagor is not bound by any agreement, document,
instrument, judgment, decree, order, statute, law, rule or regulation that
limits or could reasonably be expected to limit its performance under the Loan
Documents or this Mortgage.

     

    Section
3.19       Inspection;
Management.  Mortgagee and any persons authorized by Mortgagee
shall have the right to enter and inspect the Mortgaged Property at all
reasonable times.  If, at any time after an Event of Default by
Mortgagor, the management or maintenance of the Mortgaged Property is determined
by Mortgagee to be unsatisfactory and is not corrected within thirty (30) days
after notice to Mortgagor, Mortgagor will, to the extent Mortgagor is entitled
under third party agreements affecting the same, employ, for the duration of
such Event of Default, as managing agent of the Mortgaged Property, any person
from time to time designated or approved by Mortgagee.

     

    Section
3.20       Priority over
Contemporaneous Mortgage.   Mortgagor acknowledges and
warrants that while it is entering into a Mortgage, Deed of Trust, Assignment of
Production, Security Agreement, Fixture Filing and Financing Statement for the
benefit of Summerline Asset Management Services, LLC, a Delaware limited
liability company (the “Summerline Mortgage”) contemporaneous with this
Mortgage,  also covering the Mortgaged Property, (i) the intent is
that this Mortgage and the liens and encumbrances created hereunder be senior
and prior to the Summerline Mortgage and the liens and encumbrances created
thereunder for so long as any Indebtedness shall remain outstanding, (ii) the
Summerline Mortgage will contain language acknowledging this, and (iii)
Mortgagor shall not take any action, as long as Indebtedness shall remaining
outstanding hereunder, to amend the Summerline Mortgage to remove such
acknowledgment or so as to otherwise remove or diminish the seniority and
priority of this Mortgage to the Summerline Mortgage.   In
addition, Mortgagor agrees to take any steps reasonably requested by Mortgagee
as shall be deemed reasonably necessary by Mortgagee to affirm, perfect or
preserve such seniority and priority of this Mortgage.

    
      
         

      

      
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    ARTICLE
IV

    Rights and
Remedies

     

    Section
4.01       Event of
Default.  As used in this Mortgage, an “Event of Default”
means (i) the earlier to occur of (A) the failure by Mortgagor for ten (10) days
from the date of receipt by Mortgagor of notice from Mortagee of such failure to
comply with any covenant, agreement, warranty or condition herein required to be
observed, kept or performed or (B) ten (10) days after any executive officer of
Mortgagor obtains actual knowledge of such failure, or (ii) the occurrence of an
“Event of Default” as defined under the Note.

     

    Section
4.02       Foreclosure and
Sale.

     

    (a)          If
an Event of Default shall occur and be continuing, Mortgagee shall have the
right and option to proceed with foreclosure by directing Trustee, or his
successors or substitutes in trust, to proceed with foreclosure and to sell, to
the extent permitted by law, all or any portion of the Mortgaged Property at one
or more sales, as an entirety or in parcels, at such place or places in
otherwise such manner and upon such notice as may be required by law, or, in the
absence of any such requirement, as Trustee may deem appropriate, and to make
conveyance to the purchaser or purchasers.  Where the Mortgaged
Property is situated in more than one jurisdiction, notice as above provided
shall be posted and filed in all such jurisdictions (if such notices are
required by law), and all such Mortgaged Property may be sold in any such
jurisdiction and any such notice shall designate the jurisdiction where such
Mortgaged Property is to be sold.  Cumulative of the foregoing and the
other provisions of this Section 4.02 as to any portion of the Mortgaged
Properties located in the State of West Virginia, such sales of all or any part
of such Mortgaged Properties shall be conducted at the courthouse of any county
(whether or not the counties in which such Mortgaged Properties are located are
contiguous) in the State of West Virginia in which any part of such Mortgaged
Properties is situated as provided by the statutes of the State of West Virginia
then in force governing sales of real estate under powers conferred by deed of
trust, after having given notice of such sale in accordance with such statutes.
Nothing contained in this Section 4.02 shall be
construed so as to limit in any way Trustee’s rights to sell the Mortgaged
Property, or any portion thereof, by private sale if, and to the extent that,
such private sale is permitted under the laws of the applicable jurisdiction or
by public or private sale after entry of a judgment by any court of competent
jurisdiction so ordering.  Mortgagor hereby irrevocably appoints
Trustee to be the attorney of Mortgagor and in the name and on behalf of
Mortgagor to execute and deliver any deeds, transfers, conveyances, assignments,
assurances and notices which Mortgagor ought to execute and deliver and do and
perform any and all such acts and things which Mortgagor ought to do and perform
under the covenants herein contained and generally, to use the name of Mortgagor
in the exercise of all or any of the powers hereby conferred on
Trustee.  At any such sale: (i) whether made under the power
herein contained or any other legal enactment, or by virtue of any judicial
proceedings or any other legal right, remedy or recourse, it shall not be
necessary for Trustee to have physically present, or to have constructive
possession of, the Mortgaged Property (Mortgagor hereby covenanting and agreeing
to deliver to Trustee any portion of the Mortgaged Property not actually or
constructively possessed by Trustee immediately upon demand by Trustee) and the
title to and right of possession of any such property shall pass to the
purchaser thereof as completely as if the same had been actually present and
delivered to purchaser at such sale, (ii) each instrument of conveyance
executed by Trustee shall contain a general warranty of title, binding upon
Mortgagor and its successors and assigns, (iii) each and every recital
contained in any instrument of conveyance made by Trustee shall conclusively
establish the truth and accuracy of the matters recited therein, including,
without limitation, nonpayment of the Indebtedness, advertisement and conduct of
such sale in the manner provided herein and otherwise by law and appointment of
any successor Trustee hereunder, (iv) any and all prerequisites to the
validity thereof shall be conclusively presumed to have been performed,
(v) the receipt of Trustee or of such other party or officer making the
sale shall be a sufficient discharge to the purchaser or purchasers for its
purchase money and no such purchaser or purchasers, or its assigns or personal
representatives, shall thereafter be obligated to see to the application of such
purchase money, or be in any way answerable for any loss, misapplication or
nonapplication thereof, (vi) to the fullest extent permitted by law,
Mortgagor shall be completely and irrevocably divested of all of its right,
title, interest, claim and demand whatsoever, either at law or in equity, in and
to the property sold and such sale shall be a perpetual bar both at law and in
equity against Mortgagor, and against any and all other persons claiming or to
claim the property sold or any part thereof, by, through or under Mortgagor, and
(vii) to the extent and under such circumstances as are permitted by law,
Mortgagee may be a purchaser at any such sale, and shall have the right, after
paying or accounting for all costs of said sale or sales, to credit the amount
of the bid upon the amount of the Indebtedness (in the order of priority set
forth in Section
4.14 hereof) in lieu of cash payment.

    
      
         

      

      
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    (b)         With
respect to that portion, if any, of the Mortgaged Property situated in the State
of West Virginia, this instrument may be foreclosed by advertisement and sale as
provided by applicable West Virginia statutes, and after such sale to execute
and deliver to the purchaser or purchasers good and sufficient deeds and
assignments, conveying such property so sold to the purchaser or purchasers with
general warranty of title made on behalf of Mortgagor.  The Trustee,
or his successor or substitute, is hereby authorized and empowered to appoint
any one or more persons or entities as his attorneys-in-fact or agents to act as
Trustee under him and in his name, place and stead, such appointment to be
evidenced by a written instrument executed by the Trustee, or his successor or
substitute, to perform any one or more act or acts necessary or incident to any
sale under the power of sale hereunder, including, without limitation, the
posting and filing of any notices, the conduct of the sale and the execution and
delivery of any instruments conveying the Mortgaged Property as a result of the
sale, but in the name and on behalf of the Trustee, or his successor or
substitute; and all acts done or performed by such attorneys-in-fact or agents
shall be valid, lawful and binding as if done or performed by the Trustee, or
his successor substitute.

     

    (c)         Upon
the occurrence of an Event of Default, Mortgagee may exercise its rights of
enforcement with respect to the Mortgaged Properties or any part thereof under
the Applicable UCC of any State where any portion of the Mortgaged Properties
are located or under any other statute in force in any state to the extent the
same is applicable law.  Cumulative of the foregoing and the other
provisions of this Section 4.02: (i) to
the extent permitted by law, upon the occurrence and during the continuation of
an Event of Default Mortgagee may enter upon the Mortgaged Properties or
otherwise upon Mortgagor’s premises to take possession of, assemble and collect
the personal property portion of the Mortgaged Properties or to render it
unusable; (ii) upon the occurrence and during the continuation of an Event of
Default Mortgagee may require Mortgagor to assemble the personal property and
make it available at a place Mortgagee designates which is mutually convenient
to allow Mortgagee to take possession or dispose of the personal property;
(iii)  written notice mailed to Mortgagor as provided herein at least
five (5) business days prior to the date of public sale of the personal property
or prior to the date after which private sale of the personal property will be
made shall constitute reasonable notice; (iv) in the event of a foreclosure of
the liens, privileges and/or security interests evidenced hereby, the personal
property, or any part thereof, and the Mortgaged Properties, or any part
thereof, may, at the option of Mortgagee, be sold, as a whole or in parts,
together or separately (including, without limitation, where a portion of the
Mortgaged Properties is sold, the personal property related thereto may be sold
in connection therewith); (v) upon the occurrence and during the continuation of
an Event of Default, Mortgagee or the Trustee may, to the extent permitted under
applicable law, elect to treat the fixtures included in the Mortgaged Properties
either as real property or as personal property, or both, and proceed to
exercise such rights as apply thereto; and (vi) with respect to any sale of real
property included in the Mortgaged Properties made under the powers of sale
herein granted and conferred, Mortgagee or the Trustee may, to the extent
permitted by applicable law, include in such sale any personal property and
fixtures included in the Mortgaged Properties and relating to such real
property.

    
      
         

      

      
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    Section
4.03       Agents.  Trustee
or his successor or substitute may appoint or delegate any one or more persons
as agent to perform any act or acts necessary or incident to any sale held by
Trustee, including the posting of notices and the conduct of sale, but in the
name and on behalf of Trustee, his successor or substitute.  If
Trustee or his successor or substitute shall have given notice of sale
hereunder, any successor or substitute trustee thereafter appointed may complete
the sale and the conveyance of the property pursuant thereto as if such notice
had been given by the successor or substitute trustee conducting the
sale.

     

    Section
4.04       Judicial Foreclosure;
Receivership.  If any of the Indebtedness shall become due and
payable and shall not be promptly paid, Trustee or Mortgagee shall have the
right and power to proceed by a suit or suits in equity or at law, whether for
the specific performance of any covenant or agreement herein contained or in aid
of the execution of any power herein granted, or for any foreclosure hereunder
or for the sale of the Mortgaged Property under the judgment or decree of any
court or courts of competent jurisdiction or for the enforcement of any other
appropriate legal or equitable remedy.  In addition to all other
remedies herein provided for, Mortgagor agrees that, upon the occurrence of an
Event of Default or any event or circumstance which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default hereunder,
Mortgagee shall as a matter of right be entitled to the appointment of a
receiver or receivers for all or any part of the Mortgaged Property, whether
such receivership be incident to a proposed sale (or sales) of such property or
otherwise, and without regard to the value of the Mortgaged Property or the
solvency of any person or persons liable for the payment of the Indebtedness
secured hereby, and Mortgagor does hereby consent to the appointment of such
receiver or receivers, waives any and all defenses to such appointment, and
agrees not to oppose any application therefor by Mortgagee, and agrees that such
appointment shall in no manner impair, prejudice or otherwise affect the rights
of Mortgagee under Article II
hereof.  Mortgagor expressly waives notice of a hearing for
appointment of a receiver and the necessity for bond or an accounting by the
receiver.  Nothing herein is to be construed to deprive Mortgagee of
any other right, remedy or privilege it may now or hereafter have under the law
to have a receiver appointed.  Any money advanced by Trustee and/or
Mortgagee in connection with any such receivership shall be a demand obligation
(which obligation Mortgagor hereby expressly promises to pay) included in the
Indebtedness owing by Mortgagor to the Trustee and/or Mortgagee and shall bear
interest from the date of making such advance by Trustee and/or Mortgagee until
paid at the then applicable interest rate under the Note (the “Applicable
Rate”).

     

    Section
4.05       Foreclosure for
Installments.  Mortgagee shall also have the option to proceed
with foreclosure in satisfaction of any installments of the Indebtedness which
have not been paid when due either through the courts or by directing Trustee or
his successors in trust to proceed with foreclosure in satisfaction of the
matured but unpaid portion of the Indebtedness as if under a full foreclosure,
conducting the sale as herein provided and without declaring the entire
principal balance and accrued interest due; such sale may be made subject to the
unmatured portion of the Indebtedness, and any such sale shall not in any manner
affect the unmatured portion of the Indebtedness, but as to such unmatured
portion of the Indebtedness, this Mortgage shall remain in full force and effect
just as though no sale had been made hereunder.  It is further agreed
that several sales may be made hereunder without exhausting the right of sale
for any unmatured part of the Indebtedness, it being the purpose hereof to
provide for a foreclosure and sale of the security for any matured portion of
the Indebtedness without exhausting the power to foreclose and sell the
Mortgaged Property for any subsequently maturing portion of the
Indebtedness.

    
      
         

      

      
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    Section
4.06       Separate
Sales.  The Mortgaged Property may be sold in one or more
parcels and in such manner and order as Mortgagee, in its sole discretion, may
elect, 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.

     

    Section
4.07      Possession of Mortgaged
Property.  Mortgagor agrees to the full extent that it lawfully
may, that, in case one or more of the Events of Default shall have occurred and
shall not have been remedied, then, and in every such case, Trustee or Mortgagee
shall have the right and power to enter into and upon and take possession of all
or any part of the Mortgaged Property in the possession of Mortgagor, its
successors or assigns, or its or their agents or servants, and may exclude
Mortgagor, its successors or assigns, and all persons claiming under Mortgagor,
and its or their agents or servants wholly or partly therefrom; and, holding the
same, Trustee may use, administer, manage, operate and control the Mortgaged
Property and conduct the business thereof to the same extent as Mortgagor, its
successors or assigns, might at the time do and may exercise all rights and
powers of Mortgagor, in the name, place and stead of Mortgagor, or otherwise as
Trustee shall deem best.  All reasonable costs, expenses and
liabilities of every character incurred by Trustee and/or Mortgagee in
administering, managing, operating, and controlling the Mortgaged Property shall
constitute a demand obligation (which obligation Mortgagor hereby expressly
promises to pay) owing by Mortgagor to Trustee and/or Mortgagee and shall bear
interest from date of expenditure until paid at the Applicable Rate, all of
which shall constitute a portion of the Indebtedness and shall be secured by
this Mortgage and all other security instruments.

     

    Section
4.08       Occupancy After
Foreclosure.  In the event there is a foreclosure sale
hereunder and at the time of such sale Mortgagor or Mortgagor’s representatives,
successors or assigns or any other person claiming any interest in the Mortgaged
Property by, through or under Mortgagor, are occupying or using the Mortgaged
Property or any part thereof, each and all shall immediately become the tenant
of the purchaser at such sale, which tenancy shall be a tenancy from day to day,
terminable at the will of either the landlord or tenant, or at a reasonable
rental per day based upon the value of the property occupied, such rental to be
due daily to the purchaser; to the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein apparently to
the contrary, have the sole option to demand immediate possession following the
sale or to permit the occupants to remain as tenants at will.  In the
event the tenant fails to surrender possession of said property upon demand, the
purchaser shall be entitled to institute and maintain a summary action for
possession of the Mortgaged Property (such as an action for forcible entry and
detainer) in any court having jurisdiction.

     

    Section
4.09       Remedies Cumulative,
Concurrent and Nonexclusive.  Every right, power and remedy
herein given to Trustee or Mortgagee shall be cumulative and in addition to
every other right, power and remedy herein specifically given or now or
hereafter existing in equity, at law or by statute (including specifically those
granted by the Applicable UCC in effect and applicable to the Mortgaged Property
or any portion thereof) 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 Trustee or
Mortgagee, 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 Trustee or 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.

    
      
         

      

      
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    Section
4.10       No Release of
Obligations.  Neither Mortgagor, any other Mortgagor Party, any
guarantor nor any other person hereafter obligated for payment of all or any
part of the Indebtedness shall be relieved of such obligation by reason of (a)
the failure of Trustee to comply with any request of Mortgagor, or any guarantor
or any other person so obligated to foreclose the lien of this Mortgage or to
enforce any provision hereunder or under the any of the Loan Documents; (b) the
release, regardless of consideration, of the Mortgaged Property or any portion
thereof or interest therein or the addition of any other property to the
Mortgaged Property; (c) any agreement or stipulation between any subsequent
owner of the Mortgaged Property and Mortgagee extending, renewing, rearranging
or in any other way modifying the terms of this Mortgage without first having
obtained the consent of, given notice to or paid any consideration to Mortgagor,
any other Mortgagor Party, any guarantor or such other person, and in such event
Mortgagor, the Mortgagor Parties, guarantor and all such other persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by Mortgagee; or (d) by any other act or occurrence, save and except the
complete payment of the Indebtedness and the complete fulfillment of all
obligations hereunder or under the Loan Documents.

     

    Section
4.11      Release of and Resort to
Collateral.  Mortgagee 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
interest created in or evidenced by this Mortgage or its stature as a first and
prior lien and security interest in and to the Mortgaged Property, and without
in any way releasing or diminishing the liability of any person or entity liable
for the repayment of the Indebtedness.  For payment of the
Indebtedness, Mortgagee may resort to any other security therefor held by
Mortgagee or Trustee in such order and manner as Mortgagee may
elect.

     

    Section
4.12       Waiver of Redemption, Notice
and Marshalling of Assets, Etc.  To the fullest extent
permitted by law, Mortgagor hereby irrevocably and unconditionally waives and
releases: (a) all benefits that might accrue to Mortgagor by virtue of any
present or future moratorium law or other law exempting the Mortgaged Property
from attachment, levy or sale on execution or providing for any appraisement,
valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment; provided, however, that if the laws of any state
do not permit the redemption period to be waived, the redemption period is
specifically reduced to the minimum amount of time allowable by statute; (b) all
notices of any Event of Default or of Mortgagee’s intention to accelerate
maturity of the Indebtedness or of Trustee’s election to exercise or his actual
exercise of any right, remedy or recourse provided for hereunder or under the
Loan Documents; and (c) any right to a marshalling of assets or a sale in
inverse order of alienation.  If any law referred to in this Mortgage
and now in force, of which Mortgagor or its successor or successors might take
advantage despite the provisions hereof, shall hereafter be repealed or cease to
be in force, such law shall thereafter be deemed not to constitute any part of
the contract herein contained or to preclude the operation or application of the
provisions hereof.

     

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

    
      
         

      

      
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    Section
4.14       Application of
Proceeds.  The proceeds of any sale of the Mortgaged Property
or any part thereof and all other monies received by Trustee or Mortgagee in any
proceedings for the enforcement hereof or otherwise, whose application has not
elsewhere herein been specifically provided for, shall be applied:

     

    (a)         first,
to the payment of all costs and expenses incurred by Trustee or Mortgagee
incident to the enforcement of this Mortgage, the Loan Documents or any of the
Indebtedness (including, without limiting the generality of the foregoing,
expenses of any entry or taking of possession, of any sale, of advertisement
thereof, and of conveyances, and court costs, compensation of agents and
employees, legal fees and a reasonable commission to Trustee acting in
connection herewith or hereunder), and to the payment of all other charges,
expenses, liabilities and advances incurred or made by Trustee or Mortgagee
under this Mortgage or in executing any trust or power hereunder;

     

    (b)         second,
to payment of the Indebtedness in such order and manner as Mortgagee may elect
in Mortgagee’s sole discretion; and

     

    (c)         third,
to Mortgagor or such other persons as may be entitled thereto by law or as
otherwise required by any court of competent jurisdiction.

     

    Section
4.15       Resignation of
Operator.  In addition to all rights and remedies under this
Mortgage, at law and in equity, if any Event of Default shall occur and Trustee
or Mortgagee shall exercise any remedies under this Mortgage with respect to any
portion of the Mortgaged Property (or Mortgagor shall transfer any Mortgaged
Property “in lieu of” foreclosure), Mortgagee or Trustee shall have the right to
request that any operator of any Mortgaged Property which is either Mortgagor or
any affiliate of Mortgagor to resign as operator under the joint operating
agreement applicable thereto, and no later than 60 days after receipt by
Mortgagor of any such request, Mortgagor shall resign (or cause such other party
to resign) as operator of such Mortgaged Property.

     

    Section
4.16       Indemnity.  In
connection with any action taken by Trustee and/or Mortgagee pursuant to this
Mortgage, Trustee and/or Mortgagee and their officers, directors, Partners,
Members, Investors, Equity Holders, employees, representatives, agents,
advisors, attorneys, accountants and experts and any persons or entities owned
or controlled by Trustee, or Mortgagee or any such other person or entity
(“Indemnified
Parties”) shall not be liable for any loss sustained by Mortgagor
resulting from an assertion that Mortgagee has received funds from the
production of Hydrocarbons claimed by third persons or any act or omission of
any Indemnified Party in administering, managing, operating or controlling the
Mortgaged Property, including such loss which may result from the ordinary
negligence of an Indemnified Party, unless such loss is caused by the gross
negligence or willful misconduct of an Indemnified Party, nor shall Trustee
and/or Mortgagee be obligated to perform or discharge any obligation, duty or
liability of Mortgagor. Mortgagor shall and does hereby agree to indemnify each
Indemnified Party for, and to hold each Indemnified Party harmless from, any and
all liability, loss or damage which may or might be incurred by any Indemnified
Party by reason of this Mortgage or the exercise of rights or remedies
hereunder; should Trustee and/or Mortgagee make any expenditure on account of
any such liability, loss or damage, the amount thereof, including reasonable
costs and expenses and reasonable attorneys’ fees, shall be a demand obligation
(which obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor
to Trustee and/or Mortgagee and shall bear interest from the date expended until
paid at the applicable interest rate, shall be a part of the Indebtedness and
shall be secured by this Mortgage and any other Security
Instrument.  Mortgagor hereby assents to, ratifies and confirms any
and all actions of Trustee and/or Mortgagee with respect to the Mortgaged
Property taken under this Mortgage.  The liabilities of Mortgagor as
set forth in this Section 4.16 shall
survive the termination of this Mortgage.

    
      
         

      

      
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    ARTICLE
V

    Trustee

     

    Section
5.01      Duties, Rights, and Powers
of Trustee.  It shall be no part of the duty of Trustee to see
to any recording, filing or registration of this Mortgage or any other
instrument in addition or supplemental thereto, or to give any notice thereof,
or to see to the payment of or be under any duty in respect of any tax or
assessment or other governmental charge which may be levied or assessed on the
Mortgaged Property, or any part thereof, or against Mortgagor, or to see to the
performance or observance by Mortgagor of any of the covenants and agreements
contained herein.  Trustee shall not be responsible for the execution,
acknowledgment or validity of this Mortgage or of any instrument in addition or
supplemental hereto or for the sufficiency of the security purported to be
created hereby, and makes no representation in respect thereof or in respect of
the rights of Mortgagee.  Trustee shall have the right to seek advice
of counsel of his choice upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of
counsel.  Trustee shall not incur any personal liability hereunder,
except for Trustee’s own willful misconduct; and Trustee shall have the right to
rely on any instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by him hereunder, believed by him in good
faith to be genuine.

     

    Section
5.02      Successor
Trustee.  Trustee may resign by written notice addressed to
Mortgagee or be removed at any time with or without cause by an instrument in
writing duly executed on behalf of Mortgagee.  In case of the death,
resignation or removal of Trustee, a successor trustee may be appointed by
Mortgagee by instrument of substitution complying with any applicable
requirements of law, or, in the absence of any such requirement, without other
formality than appointment and designation in writing (“Successor
Trustee”).  Written notice of such appointment and designation
shall be given by Mortgagee to Mortgagor, but the validity of any such
appointment shall not be impaired or affected by failure to give such notice or
by any defect therein.  Such appointment and designation shall be full
evidence of the right and authority to make the same and of all the facts
therein recited, and, upon the making of any such appointment and designation,
this Mortgage shall vest in the Successor Trustee all the estate and title in
and to all of the Mortgaged Property, and the Successor Trustee shall thereupon
succeed to all of the rights, powers, privileges, immunities and duties hereby
conferred upon Trustee named herein, and one such appointment and designation
shall not exhaust the right to appoint and designate a Successor Trustee
hereunder but such right may be exercised repeatedly as long as any Indebtedness
remains unpaid hereunder.  To facilitate the administration of the
duties hereunder, Mortgagee may appoint multiple Successor Trustees to serve in
such capacity or in such jurisdictions as Mortgagee may
designate.

    
      
         

      

      
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    Section
5.03       Retention of
Monies.  All monies received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other monies
(except to the extent required by law), and Trustee shall be under no liability
for interest on any monies received by him hereunder.

     

    ARTICLE
VI

    Miscellaneous

     

    Section
6.01       Instrument Construed as
Mortgage, Etc.  With respect to any portions of the Mortgaged
Property located in any state or other jurisdiction the laws of which do not
provide for the use or enforcement of a deed of trust or the office, rights and
authority of Trustee as herein provided, the general language of conveyance
hereof to Trustee is intended and the same shall be construed as words of
mortgage unto and in favor of Mortgagee and the rights and authority granted to
Trustee herein may be enforced and asserted by Mortgagee in accordance with the
laws of the jurisdiction in which such portion of the Mortgaged Property is
located and the same may be foreclosed at the option of Mortgagee as to any or
all such portions of the Mortgaged Property in any manner permitted by the laws
of the jurisdiction in which such portions of the Mortgaged Property is
situated.  This Mortgage may be construed as a mortgage, deed of
trust, chattel mortgage, conveyance, assignment, security agreement, pledge,
financing statement, hypothecation or contract, or any one or more of them, in
order fully to effectuate the lien hereof and the purposes and agreements herein
set forth.

     

    Section
6.02       Release of
Mortgage.  At such time, if any, as (i) all Indebtedness under
the Note secured hereby shall be finally and irrevocably paid in full in cash,
(ii) the Note no longer remains outstanding, (iii) all commitments to lend under
the Note shall have terminated and (iv) there shall exist no other outstanding
payment or reimbursement obligations (other than contingent indemnification
obligations for which no claims shall have been asserted) of the Mortgagor to
the Mortgagee under any of the documents underlying the transactions of which
the Loan Documents are an integral part (the “Transaction
Documents”), Mortgagee shall forthwith cause satisfaction and discharge
of this Mortgage to be entered upon the record at the expense of Mortgagor and
shall execute and deliver or cause to be executed and delivered such instruments
of satisfaction and reassignment as may be appropriate.  Otherwise,
this Mortgage shall remain and continue in full force and effect.

     

    Section
6.03       Severability.  If
any provision hereof is invalid or unenforceable in any jurisdiction, the other
provisions hereof shall remain in full force and effect in such jurisdiction and
the remaining provisions hereof shall be liberally construed in favor of Trustee
and Mortgagee in order to effectuate the provisions hereof, and the invalidity
or unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of any such provision in any other
jurisdiction.

     

    Section
6.04       Successors and Assigns of
Parties.  The term “Mortgagee” as used herein shall mean and
include any legal owner, holder, assignee or pledgee of any of the Indebtedness
secured hereby.  The terms used to designate Trustee, Mortgagee and
Mortgagor shall be deemed to include the respective successors and assigns of
such parties.

    
      
         

      

      
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    Section
6.05       Satisfaction of Prior
Encumbrance.  To the extent that proceeds of the Note are used
to pay indebtedness secured by any outstanding lien, security interest, charge
or prior encumbrance against the Mortgaged Property, such proceeds have been
advanced by Mortgagee at Mortgagor’s request, and Mortgagee shall be subrogated
to any and all rights, security interests and liens owned by any owner or holder
of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by Mortgagee, Mortgagor hereby waives and
releases all demands and causes of action for offsets and payments to, upon and
in connection with the said indebtedness.

     

    Section
6.06       Subrogation of
Trustee.  This Mortgage is made with full substitution and
subrogation of Trustee and his successors in this trust and his and their
assigns in and to all covenants and warranties by others heretofore given or
made in respect of the Mortgaged Property or any part thereof.

     

    Section
6.07       Nature of
Covenants.  The covenants and agreements herein contained shall
constitute covenants running with the land and interests covered or affected
hereby and shall be binding upon the heirs, legal representatives, successors
and assigns of the parties hereto.

     

    Section
6.08       Notices.  Whenever
this Mortgage requires or permits any consent, approval, notice, request, or
demand from one party to another, the consent, approval, notice, request, or
demand must be in writing to be effective and shall be deemed to have been given
on the day personally delivered or, if mailed, on the day it is enclosed in an
envelope, properly stamped, sealed and deposited in a post office or official
depository maintained by the United States Postal Service, certified mail,
return receipt requested, addressed to the party to be notified at the address
set forth on the signature page of this Mortgage (or if none, to the address set
forth in the introductory paragraph of this Mortgage or at such other address as
may have been designated by written notice).

     

    Section
6.09       Counterparts.  This
Mortgage is being executed in several counterparts, all of which are
identical, except that to facilitate recordation, if the Mortgaged Property is
situated in more than one jurisdiction, descriptions of only those portions of
the Mortgaged Property located in, and descriptions of the Prior Mortgages (as
defined herein) for, the jurisdiction in which a particular counterpart is
recorded shall be attached as Exhibit A
thereto. An Exhibit A
containing a
description of all Mortgaged Property wheresoever situated will be attached to
that certain counterpart to be attached to a Financing Statement and filed with
the Secretary of State of each of Delaware, Texas, and West Virginia in their
respective Uniform Commercial Code Records.  Each of such counterparts
shall for all purposes be deemed to be an original and all such counterparts
shall together constitute but one and the same instrument, provided that a
facsimile signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an
original signature, not a facsimile signature.

     

    Section
6.10       Effective as a Financing
Statement.  This Mortgage, among other things, covers goods
which are or are to become fixtures on the real property described herein and
covers as-extracted collateral related to the real/immovable property described
herein.  This Mortgage shall be effective as a financing statement (i)
filed as a fixture filing with respect to all fixtures included within the
Mortgaged Property, (ii) covering as-extracted collateral with respect to all
as-extracted collateral included within the Mortgaged Property (including,
without limitation, all oil, gas, other minerals and other substances of value
which may be extracted from the earth at the wellhead or minehead) and (iii)
covering all other Mortgaged Property.  This Mortgage is to be filed
for record in the real/immovable property records of each county where any part
of the Mortgaged Property is situated and may also be filed in the offices of
any relevant state agency (or any successor agencies).  The mailing
address of Mortgagor is the address of Mortgagor set forth at the end of this
Mortgage and the address of Mortgagee from which information concerning the
security interests hereunder may be obtained is the address of Mortgagee set
forth at the end of this Mortgage.  Nothing contained in this
paragraph shall be construed to limit the scope of this Mortgage nor its
effectiveness as a financing statement covering any type of
property.  A carbon, photographic, facsimile or other reproduction of
this Mortgage or of any financing statement relating to this Mortgage shall be
sufficient as a financing statement for any of the purposes referred to this
Section.  Without limiting any other provision herein, Mortgagor
hereby authorizes Mortgagee to file, in any filing or recording office, one or
more financing statements and any renewal or continuation statements
thereof.

    
      
         

      

      
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    Section
6.11       No Impairment of
Security.  To the extent allowed by applicable law, the lien,
privilege, security interest and other security rights hereunder shall not be
impaired by any indulgence, moratorium or release which may be granted
including, but not limited to, any renewal, extension or modification which may
be granted with respect to any secured obligations, or any surrender,
compromise, release, renewal, extension, exchange or substitution which may be
granted in respect of the Mortgaged Property (including, without limitation,
Production Proceeds), or any part thereof or any interest therein, or any
release or indulgence granted to any borrower, endorser, guarantor or surety of
any Indebtedness.

     

    Section
6.12       Acts Not Constituting
Waiver.  Any default may be waived without waiving any other
prior or subsequent default.  Any default may be remedied without
waiving any other default.  Neither the failure to exercise, nor any
delay in exercising, any right, power or remedy upon any default shall be
construed as a waiver of such default or as a waiver of the right to exercise
any such right, power or remedy at a later date.  No single or partial
exercise of any right, power or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right, power or
remedy hereunder may be exercised at any time and from time to
time.  No modification or waiver of any provision hereof nor consent
to any departure by Mortgagor therefrom shall in any event be effective unless
the same shall be in writing and signed by Mortgagee and then such waiver or
consent shall be effective only in the specific instances, for the purpose for
which given, and to the extent therein specified.  No notice or demand
on Mortgagor in any case shall in and of itself entitle Mortgagor to any other
or further notice or demand in similar or other
circumstances.  Acceptance of any payment in an amount less than the
amount then due on any Indebtedness shall be deemed an acceptance on account
only and shall not in any way excuse the existence of default
hereunder.

     

    Section
6.13      Mortgagor’s
Successors.  In the event the ownership of any Mortgaged
Property or any part thereof becomes vested in a person other than Mortgagor,
then, without further notice to Mortgagor, such successor or successors in
interest may be dealt with, in reference to this Mortgage and to the obligations
secured hereby, in the same manner as with Mortgagor, without in any way
vitiating or discharging Mortgagor’s liability hereunder or for the payment of
the Indebtedness or performance of the obligations secured hereby.  No
transfer of any Mortgaged Property, no forbearance, and no extension of the time
for the payment of any Indebtedness secured hereby shall operate to release,
discharge, modify, change or affect, in whole or in part, the liability of
Mortgagor hereunder or for the payment of the Indebtedness or performance of the
obligations secured hereby, or the liability of any other person hereunder or
for the payment of the Indebtedness.

     

    Section
6.14       Certain
Consents.  Except where otherwise expressly provided herein, in
any instance hereunder where the approval, consent or the exercise of judgment
of Mortgagee is required, the grant or denial of such approval or consent and
the exercise of such judgment shall be within the sole discretion of Mortgagee,
and Mortgagee shall not, for any reason or to any extent, be required to grant
such approval or consent or to exercise such judgment in any particular manner,
regardless of the reasonableness of either the request or the judgment of such
party.

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    Section
6.15      Governing
Law.  WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, THIS
MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF WEST VIRGINIA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE AND THE FEDERAL LAWS OF THE UNITED STATES
OF AMERICA, EXCEPT THAT TO THE EXTENT THAT THE LAW OF A STATE IN WHICH A PORTION
OF THE MORTGAGED PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A
PORTION OF THE MORTGAGED PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF THE
MORTGAGEE, APPROPRIATELY GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE
MATTERS RELATING TO THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS,
PRIVILEGES, SECURITY INTERESTS AND OTHER RIGHTS AND REMEDIES OF THE TRUSTEE OR
MORTGAGEE GRANTED HEREIN, THE LAW OF SUCH STATE SHALL APPLY AS TO THAT PORTION
OF THE MORTGAGED PROPERTY LOCATED IN (OR WHICH IS OTHERWISE SUBJECT TO THE LAWS
OF) SUCH STATE.

     

    Section
6.16       Exculpation
Provisions.  Each
of the parties hereto specifically agrees that it has a duty to read this
Mortgage; and agrees that it is charged with notice and knowledge of the terms
of this Mortgage; that it has in fact read this Mortgage and is fully informed
and has full notice and knowledge of the terms, conditions and effects of this
Mortgage; that it has been represent­ed by independent legal counsel of its
choice throughout the negotiations preceding its execution of this Mortgage; and
has received the advice of its attorney in entering into this Mortgage; and that
it recognizes that certain of the terms of this Mortgage MAY result in one party
assuming the liability inherent in some aspects of the transaction and relieving
the other party of its responsibility for such liability.  Each party
hereto agrees and covenants that it will not contest the validity or
enforceability of any exculpatory provision of this Mortgage on the basis that
the party had no notice or knowledge of such provision or that the provision is
not “conspicuous.”

     

    Section
6.17       FINAL
AGREEMENT.    THE TRANSACTION DOCUMENTS, THIS
MORTGAGE AND THE LOAN DOCUMENTS AND THE OTHER WRITTEN DOCUMENTS EXECUTED IN
CONNECTION THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

     

    Section
6.18       Subrogation; Prior
Mortgages.  To the extent that proceeds of the Indebtedness are
used to pay obligations secured by any outstanding lien, privilege, security
interest, charge or prior encumbrance against any Mortgaged Property (“Prior Mortgages”),
such proceeds have been advanced at Mortgagor's request, and the Trustee for the
benefit of the Mortgagee or the Mortgagee as agent for the party or parties
advancing the same shall be subrogated to any and all rights, security interests
and liens owned by any owner or holder of such Prior Mortgages, privileges,
security interests, charges or encumbrances, irrespective of whether said liens,
privileges, security interests, charges or encumbrances are released, and it is
expressly understood that, in consideration of the payment of such obligations,
Mortgagor hereby waives and releases all demands and causes of action for
offsets and payments to, upon and in connection with the said
obligations.  Mortgagor and Mortgagee acknowledge that this Mortgage
amends, restates and consolidates the Prior Mortgages, and all liens, claims,
rights, titles, interests and benefits created and granted by the Prior
Mortgages shall continue to exist, remain valid and subsisting, shall not be
impaired or released hereby, shall remain in full force and effect and are
hereby renewed, extended, carried forward and conveyed as security for the
Indebtedness.

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    Section
6.19       Compliance with Usury
Laws.  It is the intent of Mortgagor, Mortgagee and all other
parties to the Transaction Documents to contract in strict compliance with
applicable usury law from time to time in effect.  In furtherance
thereof, it is stipulated and agreed that none of the terms and provisions
contained herein or in the other Transaction Documents shall ever be construed
to create a contract to pay, for the use, forbearance or detention of money,
interest in excess of the maximum amount of interest permitted to be collected,
charged, taken or received by applicable law from time to time in
effect.

     

    Section
6.20       Certain Obligations of
Mortgagor.  Without limiting Mortgagor's obligations hereunder,
Mortgagor's liability hereunder and the obligations secured hereby shall extend
to and include all post-petition interest, expenses and other duties and
liabilities with respect to Mortgagor's obligations hereunder which would be
owed, but for the fact that the same may be unenforceable due to the existence
of a bankruptcy, reorganization or similar proceeding.

     

    Section
6.21       Authority of
Mortgagee.  The holders of the Indebtedness secured hereby may,
by agreement among them, provide for and regulate the exercise of rights and
remedies hereunder, but, unless and until modified to the contrary in writing
signed by all such persons and recorded in the same counties as this Mortgage is
recorded, (i) all persons other than Mortgagor and its affiliates shall be
entitled to rely on the releases, waivers, consents, approvals, notifications
and other acts (including, without limitation, or the appointment or
substitution of trustees hereunder and the bidding in of all or any part of the
Indebtedness held by any one or more persons, whether the same be conducted
under the provisions hereof or otherwise) of Mortgagee, without inquiry into any
such agreements or the existence of required consent or approval of any holders
of Indebtedness and without the joinder of any party other than Mortgagee in
such releases, waivers, consents, approvals, notifications or other acts and
(ii) all notices, requests, consents, demands and other communications required
or permitted to be given hereunder may be given to Mortgagee.

     

    [rest of
page intentionally left blank; signature page follows]

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    WITNESS
THE EXECUTION HEREOF, this 2nd day of October, 2009, to be effective as of said
date (the “Effective
Date”).

     

    
      
        	
                MORTGAGOR:

              
	 
      
	
                VELOCITY ENERGY PARTNERS
      LP, a Delaware limited partnership, By It’s General Partner,
      VELOCITY ENERGY LIMITED LLC, a Texas limited liability
    company

              
	 
      
	
                By:

              	
                /s/ D. E. Vandenberg

              
	 
      	
                Name:     D.E.
      Vandenberg

              
	 
      	
                Title:       President

              

      

    

    

    
      The name
and address of the Debtor/Mortgagor is:

    

    

    
      	
               
      

            	
              523
      N. Sam Houston Parkway. East, Suite
175

            

    

    Houston,
TX 77060

     

    
      The name
and address of the Secured Party/Mortgagee is:

    

    

    
      	
               
      

            	
              Classic
      Oil & Gas Resources, Inc.

            

    

    
      	
               
      

            	
              416
      W. Brannon Road

            

    

    Nicholasville,
KY  40356

    Attention:  William
W. Kelly, Jr.

    Fax:  (859)
201-1159

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    
       

      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  	
                                                          WELL

                                                        	 
      	
                                                          LEASE

                                                        	 
      	 
      	 
      	 
      	 
      	
                                                          LEASE

                                                        	 
      	
                                                          LEASE

                                                        	 
      	
                                                          RECORDING

                                                        	 
      	
                                                          BPO

                                                        	 
      	
                                                          BPO

                                                        	 
      	
                                                          APO

                                                        	 
      	
                                                          APO

                                                        	 
	
                                                          NAME

                                                        	 
      	
                                                          NAME

                                                        	 
      	
                                                          PROSPECT

                                                        	 
      	
                                                          COUNTY

                                                        	 
      	
                                                          DATE

                                                        	 
      	
                                                          ACRES

                                                        	 
      	
                                                          BOOK

                                                        	 
      	
                                                          PAGE

                                                        	 
      	
                                                          WI

                                                        	 
      	
                                                          NRI

                                                        	 
      	
                                                          WI

                                                        	 
      	
                                                          NRI

                                                        	 
	
                                                          ADKINS
      #1 PDP

                                                        	 
      	
                                                          Adkins,
      Artimus & Glenna E.

                                                        	 
      	
                                                          INDIAN
      CREEK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          02/01/99

                                                        	 
      	
                                                          7.71

                                                        	 
      	
                                                          399

                                                        	 
      	
                                                          733

                                                        	 
      	
                                                          15.000

                                                        	 
      	
                                                          12.825

                                                        	 
      	
                                                          15.000

                                                        	 
      	
                                                          12.825

                                                        	 
	
                                                          AUREDNICK
      #1 PDP

                                                        	 
      	
                                                          Aurednick,
      Robert

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          04/07/05

                                                        	 
      	
                                                          8.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          906

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.450

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.450

                                                        	 
	
                                                          BOBO
      #1 PDP

                                                        	 
      	
                                                          Bobo,
      Mildred Vance & Charles R.

                                                        	 
      	
                                                          GILBERT
      CREEK

                                                        	 
      	
                                                          MINGO

                                                        	 
      	
                                                          02/15/62

                                                        	 
      	
                                                          60.00

                                                        	 
      	
                                                          BCL
      43

                                                        	 
      	
                                                          294

                                                        	 
      	
                                                          75.000

                                                        	 
      	
                                                          66.250

                                                        	 
      	
                                                          75.000

                                                        	 
      	
                                                          66.250

                                                        	 
	
                                                          BOLEN#1
      PDP

                                                        	 
      	
                                                          Bolen,
      Norvel & Darlene

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          10/12/05

                                                        	 
      	
                                                          15.00

                                                        	 
      	
                                                          437

                                                        	 
      	
                                                          721

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          1.119

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          1.119

                                                        	 
	
                                                          BROWNING
      #1 PDP

                                                        	 
      	
                                                          Browning,
      Emmett & Deborah

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          04/23/05

                                                        	 
      	
                                                          15.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          903

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.470

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.470

                                                        	 
	
                                                          BRYANT
      #1 PDP

                                                        	 
      	
                                                          Bryant,
      Johnny, Jr.

                                                        	 
      	
                                                          OCEANA

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          05/12/07

                                                        	 
      	
                                                          6.00

                                                        	 
      	
                                                          437

                                                        	 
      	
                                                          691

                                                        	 
      	
                                                          4.000

                                                        	 
      	
                                                          3.300

                                                        	 
      	
                                                          4.000

                                                        	 
      	
                                                          3.300

                                                        	 
	
                                                          CHAMBERS
      #1 PDP

                                                        	 
      	
                                                          Chambers,
      Watson; Post, Mary Jo & Jack

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          09/23/03

                                                        	 
      	
                                                          186.00

                                                        	 
      	
                                                          417

                                                        	 
      	
                                                          971

                                                        	 
      	
                                                          1.500

                                                        	 
      	
                                                          1.670

                                                        	 
      	
                                                          1.500

                                                        	 
      	
                                                          1.670

                                                        	 
	
                                                          CNB
      748 PDP

                                                        	 
      	
                                                          Charleston
      National Bank (assignment)

                                                        	 
      	
                                                          BOONE
      COUNTY

                                                        	 
      	
                                                          BOONE

                                                        	 
      	
                                                          10/01/77

                                                        	 
      	
                                                          WELLBORE

                                                        	 
      	
                                                          O&G
      23

                                                        	 
      	
                                                          775

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          80.280

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          80.280

                                                        	 
	
                                                          CLINE,
      B.  #1 PDNP

                                                        	 
      	
                                                          Cline,
      Bobby & Yvonne

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          04/09/05

                                                        	 
      	
                                                          31.94

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          922

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.550

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.550

                                                        	 
	
                                                          CLINE,
      ELMER #1 PDP

                                                        	 
      	
                                                          Cline,
      Elmer et al.

                                                        	 
      	
                                                          GILBERT
      CREEK

                                                        	 
      	
                                                          MINGO

                                                        	 
      	
                                                          10/09/61

                                                        	 
      	
                                                          113.00

                                                        	 
      	
                                                          BCL
      42

                                                        	 
      	
                                                          331

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          87.500

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          87.500

                                                        	 
	
                                                          CLINE,
      ELMER #2 PDP

                                                        	 
      	
                                                          Cline,
      Elmer et al.

                                                        	 
      	
                                                          GILBERT
      CREEK

                                                        	 
      	
                                                          MINGO

                                                        	 
      	
                                                          10/09/61

                                                        	 
      	
                                                          113.00

                                                        	 
      	
                                                          BCL
      42

                                                        	 
      	
                                                          331

                                                        	 
      	
                                                          15.500

                                                        	 
      	
                                                          15.250

                                                        	 
      	
                                                          15.500

                                                        	 
      	
                                                          15.250

                                                        	 
	
                                                          CLINE,
      R. S. #1 PDP

                                                        	 
      	
                                                          Cline,
      R. S. & Sadie

                                                        	 
      	
                                                          ELK
      LICK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          02/01/98

                                                        	 
      	
                                                          88.00

                                                        	 
      	
                                                          393

                                                        	 
      	
                                                          920

                                                        	 
      	
                                                          30.000

                                                        	 
      	
                                                          27.650

                                                        	 
      	
                                                          30.000

                                                        	 
      	
                                                          27.650

                                                        	 
	
                                                          COOK
      #1 PDP

                                                        	 
      	
                                                          Cook,
      George R.

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          03/27/06

                                                        	 
      	
                                                          30.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          950

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
	
                                                          COOK
      #1 PDP

                                                        	 
      	
                                                          Cook,
      Larry W.

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          03/27/06

                                                        	 
      	
                                                          30.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          948

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
	
                                                          COOK
      #2 PDP

                                                        	 
      	
                                                          Cook,
      George R.

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          03/27/06

                                                        	 
      	
                                                          30.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          950

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          0.857

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          0.857

                                                        	 

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        
          	
                  COOK
      #2 PDP

                	 
      	
                  Cook,
      Larry W.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  03/27/06

                	 
      	
                  30.00

                	 
      	
                  433

                	 
      	
                  948

                	 
      	
                  1.039

                	 
      	
                  0.857

                	 
      	
                  1.039

                	 
      	
                  0.857

                	 
	
                  COOKE,
      H. #1 PDP

                	 
      	
                  Cooke,
      Harry G. Jr. & Lillian et al.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  12/06/05

                	 
      	
                  68.90

                	 
      	
                  433

                	 
      	
                  958

                	 
      	
                  5.000

                	 
      	
                  4.300

                	 
      	
                  5.000

                	 
      	
                  4.300

                	 
	
                  CRAIG
      #1 PDP

                	 
      	
                  Craig,
      Carol

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/22/05

                	 
      	
                  8.53

                	 
      	
                  433

                	 
      	
                  899

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
	
                  DAVIS
      #1 PDP

                	 
      	
                  Davis,
      Leonard

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/08/05

                	 
      	
                  84.00

                	 
      	
                  433

                	 
      	
                  928

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  ELLIS
      #1 PDP

                	 
      	
                  Goad,
      Conley

                	 
      	
                  GILBERT
      CREEK

                	 
      	
                  MINGO

                	 
      	
                  02/15/62

                	 
      	
                  94.90

                	 
      	
                  47

                	 
      	
                  331

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
	
                  ELLIS
      #2 PDP

                	 
      	
                  Goad,
      Conley

                	 
      	
                  GILBERT
      CREEK

                	 
      	
                  MINGO

                	 
      	
                  02/15/62

                	 
      	
                  94.90

                	 
      	
                  47

                	 
      	
                  331

                	 
      	
                  19.500

                	 
      	
                  18.670

                	 
      	
                  19.500

                	 
      	
                  18.670

                	 
	
                  FIELDS,
      BOB #1 PDNP

                	 
      	
                  Fields,
      Bobby (Fields Furn. & Appliance)

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  05/03/06

                	 
      	
                  16.348

                	 
      	
                  433

                	 
      	
                  946

                	 
      	
                  4.000

                	 
      	
                  3.280

                	 
      	
                  4.000

                	 
      	
                  3.280

                	 
	
                  FOX
      #1 PDP

                	 
      	
                  Fox,
      William L.

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  12/02/06

                	 
      	
                  23.33

                	 
      	
                  437

                	 
      	
                  712

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
	
                  FOX
      #1 PDNP (BP)

                	 
      	
                  Fox,
      William L.

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  12/02/06

                	 
      	
                  23.33

                	 
      	
                  437

                	 
      	
                  712

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
	
                  FOX
      #2 PDP

                	 
      	
                  Fox,
      William L.

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  12/02/06

                	 
      	
                  18.50

                	 
      	
                  437

                	 
      	
                  714

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
	
                  HATFIELD
      #1 PDP

                	 
      	
                  Hatfield,
      Wayne, Jr. (C. R. Rentals)

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  03/21/06

                	 
      	
                  5.50

                	 
      	
                  433

                	 
      	
                  916

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 
	
                  HUGHES
      #1 PDP

                	 
      	
                  Hughes,
      Bobby et al

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/26/05

                	 
      	
                  39.00

                	 
      	
                  433

                	 
      	
                  924

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
	
                  JACKSON
      #1 PDP

                	 
      	
                  Jackson,
      Gerald R. & Geraldine et al.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  12/30/06

                	 
      	
                  10.00

                	 
      	
                  437

                	 
      	
                  707

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
	
                  JACKSON
      #1 PDNP (BP)

                	 
      	
                  Jackson,
      Gerald R. & Geraldine et al.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  12/30/06

                	 
      	
                  10.00

                	 
      	
                  437

                	 
      	
                  707

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
	
                  JEWELL
      #1 PDP

                	 
      	
                  Jewell,
      Harry & Donna Sue III

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  07/05/06

                	 
      	
                  13.00

                	 
      	
                  433

                	 
      	
                  920

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                LAMB
      #1 PDP

              	 
      	
                Lamb,
      Alfred Neale

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                971

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LAMB
      #1 PDP

              	 
      	
                Lamb,
      Wilda Faye

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                973

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LAMB
      #1 PDNP

              	 
      	
                Lamb,
      Alfred Neale

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                971

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LAMB
      #1 PDNP

              	 
      	
                Lamb,
      Wilda Faye

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                973

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LANDIS
      #1 PDP

              	 
      	
                Landis,
      Todd et al

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/27/05

              	 
      	
                750.00

              	 
      	
                433

              	 
      	
                936

              	 
      	
                1.500

              	 
      	
                1.670

              	 
      	
                1.500

              	 
      	
                1.670

              	 
	
                LANDIS
      #2 PDP

              	 
      	
                Landis,
      Todd et al

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/27/05

              	 
      	
                750.00

              	 
      	
                433

              	 
      	
                936

              	 
      	
                1.500

              	 
      	
                1.670

              	 
      	
                1.500

              	 
      	
                1.670

              	 
	
                LANDIS
      #3 PDP

              	 
      	
                Landis,
      Todd et al

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/27/05

              	 
      	
                750.00

              	 
      	
                433

              	 
      	
                936

              	 
      	
                2.500

              	 
      	
                2.470

              	 
      	
                2.500

              	 
      	
                2.470

              	 
	
                McGRAW
      #1 PDP

              	 
      	
                McGraw,
      Minnie  Heirs

              	 
      	
                PECKS
      MILL - LF

              	 
      	
                LOGAN

              	 
      	
                03/01/02

              	 
      	
                63.54

              	 
      	
                38

              	 
      	
                175

              	 
      	
                10.000

              	 
      	
                9.000

              	 
      	
                10.000

              	 
      	
                9.000

              	 
	
                MEADOWS
      #1 PDP

              	 
      	
                Meadows,
      Gerald

              	 
      	
                BRENTON

              	 
      	
                WYOMING

              	 
      	
                12/14/99

              	 
      	
                5.35

              	 
      	
                403

              	 
      	
                646

              	 
      	
                100.000

              	 
      	
                87.500

              	 
      	
                100.000

              	 
      	
                87.500

              	 
	
                NLC
      CHURCH #1 PDP

              	 
      	
                New
      Life Community Church

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                12/05/05

              	 
      	
                2.30

              	 
      	
                433

              	 
      	
                954

              	 
      	
                5.000

              	 
      	
                4.850

              	 
      	
                5.000

              	 
      	
                4.850

              	 
	
                NLC
      #1 PDNP (BP)

              	 
      	
                New
      Life Community Church

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                05/01/07

              	 
      	
                1.31

              	 
      	
                442

              	 
      	
                337

              	 
      	
                5.000

              	 
      	
                4.850

              	 
      	
                5.000

              	 
      	
                4.850

              	 
	
                OWENS
      #1 PDP

              	 
      	
                Owens,
      Glenetta

              	 
      	
                GARDEN
      GAP

              	 
      	
                WYOMING

              	 
      	
                07/02/98

              	 
      	
                62.00

              	 
      	
                397

              	 
      	
                773

              	 
      	
                20.000

              	 
      	
                18.300

              	 
      	
                20.000

              	 
      	
                18.300

              	 
	
                PCHC
      1309 B PDP

              	 
      	
                Spears,
      Denvil

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                06/30/06

              	 
      	
                614.68

              	 
      	
                433

              	 
      	
                991

              	 
      	
                1.813

              	 
      	
                1.523

              	 
      	
                1.813

              	 
      	
                1.523

              	 
	
                PCHC
      1309 B PDP

              	 
      	
                Spears,
      Eula

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                06/30/06

              	 
      	
                614.68

              	 
      	
                433

              	 
      	
                993

              	 
      	
                1.813

              	 
      	
                1.523

              	 
      	
                1.813

              	 
      	
                1.523

              	 
	
                PCT
      #115 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        
          	
                  PCT
      #128 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  1.500

                	 
      	
                  1.230

                	 
      	
                  0.775

                	 
      	
                  0.635

                	 
	
                  PCT
      #129 PDP (APO)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #130 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #131 PDP (APO)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.410

                	 
      	
                  1.155

                	 
	
                  PCT
      #132 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #133 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.000

                	 
      	
                  1.640

                	 
      	
                  1.035

                	 
      	
                  0.850

                	 
	
                  PCT
      #134 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.000

                	 
      	
                  4.100

                	 
      	
                  2.585

                	 
      	
                  2.120

                	 
	
                  PCT
      #134 PDNP (BP)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.000

                	 
      	
                  4.100

                	 
      	
                  2.585

                	 
      	
                  2.120

                	 
	
                  PCT
      #135 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #136 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  12.500

                	 
      	
                  10.025

                	 
      	
                  6.465

                	 
      	
                  5.300

                	 
	
                  PCT
      #137 PDP (APO)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #138 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.290

                	 
      	
                  1.060

                	 
	
                  PCT
      #140 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  1.500

                	 
      	
                  1.230

                	 
      	
                  0.775

                	 
      	
                  0.635

                	 
	
                  PCT
      #141 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #142 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  0.500

                	 
      	
                  0.410

                	 
      	
                  0.260

                	 
      	
                  0.215

                	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                PCT
      #143 PDP (APO)

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #145 PDNP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                3.000

              	 
      	
                2.460

              	 
      	
                1.274

              	 
      	
                1.554

              	 
	
                PCT
      #146 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                1.500

              	 
      	
                1.230

              	 
      	
                0.775

              	 
      	
                0.635

              	 
	
                PCT
      #149 PDNP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.292

              	 
      	
                1.059

              	 
	
                PCT
      #150 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.290

              	 
      	
                1.060

              	 
	
                PCT
      #152 PDP (APO)

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.290

              	 
      	
                1.060

              	 
	
                PCT
      #153 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.290

              	 
      	
                1.060

              	 
	
                PCT
      #154 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                18.500

              	 
      	
                15.170

              	 
      	
                9.565

              	 
      	
                7.845

              	 
	
                PCT
      #156 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                1.500

              	 
      	
                1.230

              	 
      	
                0.775

              	 
      	
                0.635

              	 
	
                PCT
      #157 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.410

              	 
      	
                1.155

              	 
	
                PCT
      #160 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.410

              	 
      	
                1.155

              	 
	
                PCT
      #161 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #162 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #163 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #164 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,809.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        
          	
                  PCT
      #166 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - N

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #167 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.410

                	 
      	
                  1.155

                	 
	
                  PCT
      #168 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  9.000

                	 
      	
                  7.380

                	 
      	
                  4.655

                	 
      	
                  3.815

                	 
	
                  PCT
      #169 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  1.500

                	 
      	
                  1.230

                	 
      	
                  0.775

                	 
      	
                  0.635

                	 
	
                  PCT
      #173 PDNP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.844

                	 
      	
                  2.332

                	 
	
                  PCT
      #175 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.410

                	 
      	
                  1.155

                	 
	
                  PCT
      #176 PDNP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  12.500

                	 
      	
                  10.250

                	 
      	
                  6.465

                	 
      	
                  5.300

                	 
	
                  PENNINGTON
      #1 PDP

                	 
      	
                  Pennington,
      Chauncey Greg & Verna

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  07/29/05

                	 
      	
                  1.00

                	 
      	
                  433

                	 
      	
                  942

                	 
      	
                  2.500

                	 
      	
                  2.550

                	 
      	
                  2.500

                	 
      	
                  2.550

                	 
	
                  PENN
      VA. #920 PDP

                	 
      	
                  Rayland
      (wellbore assignment)

                	 
      	
                  ANAWALT

                	 
      	
                  McDOWELL

                	 
      	
                  11/14/96

                	 
      	
                  WELLBORE

                	 
      	
                  470

                	 
      	
                  754

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
	
                  SHORT,
      A. #1 PDP

                	 
      	
                  Short,
      Agnes

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  05/04/06

                	 
      	
                  10.92

                	 
      	
                  433

                	 
      	
                  938

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  SHORT,
      A. #1 PDP

                	 
      	
                  Childress,
      Glenna Sue

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  05/04/05

                	 
      	
                  10.00

                	 
      	
                  433

                	 
      	
                  897

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  SHORT,
      A. #1 PDP

                	 
      	
                  Short,
      Roy & Elga

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/26/05

                	 
      	
                  4.00

                	 
      	
                  433

                	 
      	
                  895

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  SMITH
      #1 PDP

                	 
      	
                  Smith,
      Byron & Reba

                	 
      	
                  GILBERT
      CREEK

                	 
      	
                  MINGO

                	 
      	
                  01/01/98

                	 
      	
                  36.70

                	 
      	
                  91

                	 
      	
                  301

                	 
      	
                  20.000

                	 
      	
                  19.100

                	 
      	
                  20.000

                	 
      	
                  19.100

                	 
	
                  SPEARS
      #1 PDP

                	 
      	
                  Spears,
      Denvil

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  06/30/06

                	 
      	
                  95.00

                	 
      	
                  433

                	 
      	
                  991

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 
	
                  SPEARS
      #1 PDP

                	 
      	
                  Spears,
      Eula

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  06/30/06

                	 
      	
                  95.00

                	 
      	
                  433

                	 
      	
                  993

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                STEPP
      #1 PDP

              	 
      	
                Stepp,
      Grover C. & Madeleen C.

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                03/10/06

              	 
      	
                4.00

              	 
      	
                433

              	 
      	
                910

              	 
      	
                6.500

              	 
      	
                5.500

              	 
      	
                6.500

              	 
      	
                5.500

              	 
	
                STEPP
      #1 PDNP (BP)

              	 
      	
                Stepp,
      Grover C. & Madeleen C.

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                03/10/06

              	 
      	
                4.00

              	 
      	
                433

              	 
      	
                910

              	 
      	
                6.500

              	 
      	
                5.500

              	 
      	
                6.500

              	 
      	
                5.500

              	 
	
                TINSLEY
      #1 PDNP

              	 
      	
                Tinsley,
      Rhein

              	 
      	
                GILBERT
      CREEK

              	 
      	
                MINGO

              	 
      	
                04/15/02

              	 
      	
                180.47

              	 
      	 
      	 
      	 
      	 
      	
                100.000

              	 
      	
                77.500

              	 
      	
                100.000

              	 
      	
                77.500

              	 
	
                TOLER,
      C. #1 PDP

              	 
      	
                Toler,
      Cordie Lee

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/09/05

              	 
      	
                42.20

              	 
      	
                433

              	 
      	
                908

              	 
      	
                1.500

              	 
      	
                1.670

              	 
      	
                1.500

              	 
      	
                1.670

              	 
	
                TOLER,
      D. #1 PDP

              	 
      	
                Toler,
      Danny Lee & Rita Fay

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                08/01/02

              	 
      	
                44.50

              	 
      	
                433

              	 
      	
                893

              	 
      	
                25.374

              	 
      	
                20.568

              	 
      	
                25.374

              	 
      	
                20.568

              	 
	
                TOLER,
      D.R. #1 PDP

              	 
      	
                Toler,
      Dewey Ray

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                04/04/06

              	 
      	
                0.07

              	 
      	
                433

              	 
      	
                952

              	 
      	
                4.000

              	 
      	
                3.280

              	 
      	
                4.000

              	 
      	
                3.280

              	 
	
                TOLER,
      D.R. #1 PDNP (BP)

              	 
      	
                Toler,
      Dewey Ray

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                04/04/06

              	 
      	
                0.07

              	 
      	
                433

              	 
      	
                952

              	 
      	
                4.000

              	 
      	
                3.280

              	 
      	
                4.000

              	 
      	
                3.280

              	 
	
                TOLER,
      J. #1 PDP

              	 
      	
                Toler,
      Daniel D. & Rosana

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                09/13/05

              	 
      	
                19.00

              	 
      	
                433

              	 
      	
                964

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                TOLER,
      J. #1 PDP

              	 
      	
                Toler,
      Danny Lee & Rita Fay

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/15/05

              	 
      	
                4.00

              	 
      	
                433

              	 
      	
                891

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                TOLER,
      K. #1 PDP

              	 
      	
                Toler,
      Kenneth E. & Shirley A.

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/09/05

              	 
      	
                19.00

              	 
      	
                433

              	 
      	
                901

              	 
      	
                43.500

              	 
      	
                35.940

              	 
      	
                43.500

              	 
      	
                35.940

              	 
	
                TOLER,
      M. #1 PDP

              	 
      	
                Toler,
      Marian

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/20/05

              	 
      	
                25.00

              	 
      	
                433

              	 
      	
                918

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                TOLER,
      T. #1 PDP

              	 
      	
                Toler,
      Tommy & Leda

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/09/05

              	 
      	
                10.79

              	 
      	
                433

              	 
      	
                926

              	 
      	
                2.000

              	 
      	
                2.225

              	 
      	
                2.000

              	 
      	
                2.225

              	 
	
                WEST,
      S. #1 PDP

              	 
      	
                West,
      Stanley D. & Patricia K.

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                01/17/03

              	 
      	
                11.30

              	 
      	
                433

              	 
      	
                930

              	 
      	
                27.675

              	 
      	
                25.009

              	 
      	
                27.675

              	 
      	
                25.009

              	 
	
                WEST,
      S. #2 PDNP

              	 
      	
                Davis,
      Leonard (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/05/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                981

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                WEST,
      S. #2 PDNP

              	 
      	
                Laughlin,
      James H.  (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/02/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                983

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                WEST,
      S. #2 PDNP

              	 
      	
                West,
      Stanley D. & Patricia K. (1/7 interest)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/27/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                979

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                WEST,
      S. #2 PDNP

              	 
      	
                Zupanick,
      Joe (5/7 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                09/30/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                977

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                Davis,
      Leonard (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/05/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                981

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                Laughlin,
      James H.  (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/02/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                983

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                West,
      Stanley D. & Patricia K. (1/7 interest)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/27/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                979

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                Zupanick,
      Joe (5/7 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                09/30/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                977

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST
      ET AL #1 PDP

              	 
      	
                West,
      Stanley, Smith, Joyce, West, Oscar

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/17/05

              	 
      	
                2.00

              	 
      	
                433

              	 
      	
                975

              	 
      	
                2.000

              	 
      	
                2.225

              	 
      	
                2.000

              	 
      	
                2.225

              	 
	
                WRIGHT,
      B. #1 PDP

              	
                  

              	
                Wright,
      Brian H.

              	
                  

              	
                KIMBALL

              	
                  

              	
                WYOMING

              	
                  

              	
                12/02/05

              	
                  

              	
                9.355

              	
                  

              	
                513

              	
                  

              	
                104

              	
                  

              	
                4.500

              	
                  

              	
                3.715

              	
                  

              	
                4.500

              	
                  

              	
                3.715Unassociated Document

     

    
      	
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ASSET MANAGEMENT, LLC

    

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

     

    A
CARBON, PHOTOGRAPHIC, FACSIMILE OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
SUFFICIENT AS A FINANCING STATEMENT.

     

    A POWER OF SALE HAS BEEN
GRANTED IN THIS INSTRUMENT.  IN CERTAIN STATES, A POWER OF SALE MAY
ALLOW THE TRUSTEE OR THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR
UNDER THIS INSTRUMENT.

     

    THIS
INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

     

    THIS
INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

     

    THIS
INSTRUMENT COVERS PROCEEDS OF MORTGAGED PROPERTY.

     

    THIS
INSTRUMENT COVERS AS-EXTRACTED COLLATERAL, MINERALS AND OTHER SUBSTANCES OF
VALUE WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL
AND GAS), AND ACCOUNTS RESULTING FROM THE SALE OF AS-EXTRACTED COLLATERAL, AND
WHICH WILL BE FINANCED AT THE WELLHEADS OF THE WELL OR WELLS LOCATED ON THE
PROPERTIES DESCRIBED IN EXHIBIT A
HERETO.  IN ADDITION, PORTIONS OF THE MORTGAGED PROPERTY ARE GOODS
WHICH ARE OR ARE TO BECOME AFFIXED TO OR FIXTURES ON THE LAND DESCRIBED IN OR
REFERRED TO IN EXHIBIT
A HERETO.  THIS FINANCING STATEMENT IS TO BE FILED OR FILED FOR
RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF THE
COUNTY RECORDERS OF THE COUNTIES LISTED ON EXHIBIT A
HERETO.  THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE
CONCERNED, WHICH INTEREST IS DESCRIBED IN EXHIBIT A ATTACHED
HERETO.  THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF
FINANCING STATEMENTS.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
        
          
            
              
                	
                        TABLE OF CONTENTS

                      	 
	 	 
	
                        ARTICLE
      I

                      	 
	 
      	 
      	 	 	 
	
                         
      Grant of Lien and Indebtedness Secured

                      	 	 	2	 
	
                        Section
      1.01

                      	
                        Grant
      of Liens

                      	 	 	2	 
	
                        Section
      1.02

                      	
                        Grant
      of Security Interest

                      	 	 	5	 
	
                        Section
      1.03

                      	
                        Indebtedness
      Secured

                      	 	 	5	 
	
                        Section
      1.04

                      	
                        Fixture
      Filing, Etc

                      	 	 	6	 
	
                        Section
      1.05

                      	
                        Defined
      Terms

                      	 	 	6	 
	 	 
	
                        ARTICLE
      II

                      	 
	 
      	 
      	 	 	 	 
	
                          Assignment
      of Production, Accounts and Proceeds

                      	 	 	6	 
	
                        Section
      2.01

                      	
                        Assignment

                      	 	 	6	 
	
                        Section
      2.02

                      	
                        [Reserved].

                      	 	 	7	 
	
                        Section
      2.03

                      	
                        No
      Modification of Payment Obligations

                      	 	 	7	 
	
                        Section
      2.04

                      	
                        Effectuating
      Payment of Production Proceeds to Mortgagee

                      	 	 	7	 
	
                        Section
      2.05

                      	
                        Application
      of Production Proceeds

                      	 	 	8	 
	
                        Section
      2.06

                      	
                        Release
      from Liability; Indemnification

                      	 	 	8	 
	 	 
	
                        ARTICLE
      III

                      	 
	 
      	 
      	 	 	 	 
	
                         
      Representations, Warranties and Covenants

                      	 	 	9	 
	
                        Section
      3.01

                      	
                        Title

                      	 	 	9	 
	
                        Section
      3.02

                      	
                        Defend
      Title

                      	 	 	10	 
	
                        Section
      3.03

                      	
                        Not
      a Foreign Person

                      	 	 	10	 
	
                        Section
      3.04

                      	
                        Rentals,
      Taxes, Insurance and Fees Paid;  Leases in
Effect

                      	 	 	10	 
	
                        Section
      3.05

                      	
                        Operation
      By Third Parties

                      	 	 	10	 
	
                        Section
      3.06

                      	
                        Failure
      to Perform

                      	 	 	11	 
	
                        Section
      3.07

                      	
                        Sale

                      	 	 	11	 
	
                        Section
      3.08

                      	
                        Sale
      of Production

                      	 	 	11	 
	
                        Section
      3.09

                      	
                        Operation
      of Mortgaged Property

                      	 	 	12	 
	
                        Section
      3.10

                      	
                        Suits
      and Claims

                      	 	 	13	 
	
                        Section
      3.11

                      	
                        Environmental.

                      	 	 	13	 
	
                        Section
      3.12

                      	
                        Not
      Abandon Wells; Participate in Operations

                      	 	 	15	 
	
                        Section
      3.13

                      	
                        Condemnation
      Awards

                      	 	 	15	 
	
                        Section
      3.14

                      	
                        Insurance

                      	 	 	16	 
	
                        Section
      3.15

                      	
                        Compliance
      with Leases

                      	 	 	16	 
	
                        Section
      3.16

                      	
                        Further
      Assurance

                      	 	 	16	 
	
                        Section
      3.17

                      	
                        Name
      and Place of Business

                      	 	 	17	 
	
                        Section
      3.18

                      	
                        Compliance
      with Laws and Agreements

                      	 	 	17	 
	
                        Section
      3.19

                      	
                        Inspection;
      Management

                      	 	 	17	 
	 	 
	
                        ARTICLE
      IV

                      	 
	 
      	 
      	 	 	 	 
	
                         
      Rights and Remedies

                      	 	 	17	 
	
                        Section
      4.01

                      	
                        Event
      of Default

                      	 	 	17	 
	
                        Section
      4.02

                      	
                        Foreclosure
      and Sale.

                      	 	 	18	 
	
                        Section
      4.03

                      	
                        Agents

                      	 	 	20	 
	
                        Section
      4.04

                      	
                        Judicial
      Foreclosure; Receivership

                      	 	 	20	 

              

            

          

        

      

    

    
      
         

      

      
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      Section 4.05

                    	
                      Foreclosure
      for Installments

                    	 	 	21	 
	
                       
      Section 4.06

                    	
                      Separate
      Sales

                    	 	 	21	 
	
                       
      Section 4.07

                    	
                      Possession
      of Mortgaged Property

                    	 	 	21	 
	
                       
      Section 4.08

                    	
                      Occupancy
      After Foreclosure

                    	 	 	21	 
	
                       
      Section 4.09

                    	
                      Remedies
      Cumulative, Concurrent and Nonexclusive

                    	 	 	22	 
	
                       
      Section 4.10

                    	
                      No
      Release of Obligations

                    	 	 	22	 
	
                       
      Section 4.11

                    	
                      Release
      of and Resort to Collateral

                    	 	 	22	 
	
                       
      Section 4.12

                    	
                      Waiver
      of Redemption, Notice and Marshalling of Assets, Etc

                    	 	 	22	 
	
                       
      Section 4.13

                    	
                      Discontinuance
      of Proceedings

                    	 	 	23	 
	
                       
      Section 4.14

                    	
                      Application
      of Proceeds

                    	 	 	23	 
	
                       
      Section 4.15

                    	
                      Resignation
      of Operator

                    	 	 	23	 
	
                       
      Section 4.16

                    	
                      Indemnity

                    	 	 	23	 
	 	 	 	 	 	 
	
                      ARTICLE
      V

                    	 
      	 	 	 	 
	 
      	 
      	 	 	 	 
	
                       
      Trustee

                    	 	 	24	 
	
                       
      Section 5.01

                    	
                      Duties,
      Rights, and Powers of Trustee

                    	 	 	24	 
	
                       
      Section 5.02

                    	
                      Successor
      Trustee

                    	 	 	24	 
	
                       
      Section 5.03

                    	
                      Retention
      of Moneys

                    	 	 	25	 
	 	 
	
                      ARTICLE
      VI

                    	 
	 
      	 
      	 	 	 	 
	
                       
      Miscellaneous

                    	 	 	25	 
	
                       
      Section 6.01

                    	
                      Instrument
      Construed as Mortgage, Etc

                    	 	 	25	 
	
                       
      Section 6.02

                    	
                      Release
      of Mortgage

                    	 	 	25	 
	
                       
      Section 6.03

                    	
                      Severability

                    	 	 	25	 
	
                       
      Section 6.04

                    	
                      Successors
      and Assigns of Parties

                    	 	 	25	 
	
                       
      Section 6.05

                    	
                      Satisfaction
      of Prior Encumbrance

                    	 	 	25	 
	
                       
      Section 6.06

                    	
                      Subrogation
      of Trustee

                    	 	 	26	 
	
                       
      Section 6.07

                    	
                      Nature
      of Covenants

                    	 	 	26	 
	
                       
      Section 6.08

                    	
                      Notices

                    	 	 	26	 
	
                       
      Section 6.09

                    	
                      Counterparts

                    	 	 	26	 
	
                       
      Section 6.10

                    	
                      Effective
      as a Financing Statement

                    	 	 	26	 
	
                       
      Section 6.11

                    	
                      No
      Impairment of Security

                    	 	 	27	 
	
                       
      Section 6.12

                    	
                      Acts
      Not Constituting Waiver

                    	 	 	27	 
	
                       
      Section 6.13

                    	
                      Mortgagor’s
      Successors

                    	 	 	27	 
	
                       
      Section 6.14

                    	
                      Certain
      Consents

                    	 	 	27	 
	
                       
      Section 6.15

                    	
                      Governing
      Law

                    	 	 	27	 
	
                       
      Section 6.16

                    	
                      Exculpation
      Provisions

                    	 	 	28	 
	
                       
      Section 6.17

                    	
                      FINAL
      AGREEMENT

                    	 	 	28	 
	
                       
      Section 6.18

                    	
                      Subrogation;
      Prior Mortgages

                    	 	 	28	 
	
                       
      Section 6.19

                    	
                      Compliance
      with Usury Laws

                    	 	 	28	 
	
                       
      Section 6.20

                    	
                      Certain
      Obligations of Mortgagor

                    	 	 	29	 
	
                       
      Section 6.21

                    	
                      Authority
      of Mortgagee

                    	 	 	29	 

            

          

        

      

    

     

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    MORTGAGE, DEED OF TRUST,
ASSIGNMENT OF

    PRODUCTION, SECURITY
AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT

     

    This
MORTGAGE, DEED OF TRUST,
ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this “Mortgage”) is entered
into as of the Effective Date (as hereinafter defined) by VELOCITY ENERGY PARTNERS LP, a
Delaware limited partnership, whose address for notice is 523 North Sam Houston
Parkway East, Suite 175, Houston, Texas (“Mortgagor”), to ANTHONY J. SPARACINO JR., as
Trustee, whose address for notice is 117 Appalachian Drive, Beckley, WV 
25801  (“Trustee”), for the
benefit of SUMMERLINE ASSET
MANAGEMENT, LLC, a Delaware limited liability company, 70 West Red Oak
Lane, 4th Floor, White Plains, New York  10604, on its own behalf and
in its capacity as collateral agent for the benefit of the holders of the Notes
(as defined below) (together with its successors and assigns, the “Mortgagee”).

     

    RECITALS:

     

    A.          Pursuant
to that certain Securities Purchase Agreement dated as of November 13, 2008 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Purchase
Agreement”), among Sonterra Resources, Inc., a Delaware corporation (the
“Company”), and
the investors listed on the Schedule of Buyers thereto, each of which is a
holder of a Note (together with their respective successors and assigns, the
“Buyers”), each
individual Buyer made loans and certain other financial accommodations
(collectively, the “Loans”) to the
Company, as evidenced by those certain senior secured notes in an original
aggregate principal amount of $8,875,000 (such notes, together with any
promissory notes or other securities issued in exchange or substitution therefor
or replacement thereof, and as any of the same may be amended, supplemented,
restated or modified and in effect from time to time, the “Notes”).

     

    B.           Mortgagor
is an affiliate of the Company and, as such, will continue to derive substantial
benefit and advantage from the continued financial accommodations to the Company
set forth in the Purchase Agreement and the Notes, and it will be to Mortgagor’s
direct interest and economic benefit to assist the Company in procuring the
continuation of said financial accommodations from Buyers.

     

    C.           Mortgagor
has guaranteed the Indebtedness (as hereinafter defined) of the Company pursuant
to the terms of that certain Guaranty dated as of November 13, 2008 (as the same
may be amended, restated, modified or supplemented and in effect from time to
time, the “Guaranty”) by the
Mortgagor and the other Persons from time to time party thereto as “Guarantors”
in favor of the Mortgagee (on its behalf and on behalf of the
Buyers).

     

    D.           Mortgagor
has agreed that all of the Indebtedness (as defined in Section 1.03 hereof)
is intended to be secured in part by this Mortgage and this Mortgage is to be
recorded in those jurisdictions as set forth on Exhibit A of this
Mortgage.

     

    E.           Each
Buyer has conditioned its obligation to continue to make the loans and other
financial accommodations under the Purchase Agreement and the Notes upon the
execution and delivery by Mortgagor of this Mortgage, and Mortgagor has agreed
to enter into this Mortgage.

    
      
         

      

      
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    F.           Mortgagee
understands that this Mortgage and the rights of Mortgagee hereunder are subject
and subordinate to that certain Mortgage, Deed of Trust, Assignment of
Production, Security Agreement, Fixture Filing and Filing and Financing
Statement dated as of September ___, 2009 by Mortgagor in favor of Classic Oil
& Gas Resources, Inc. (together with its successors and permitted assigns,
“Classic Oil”) (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, hereinafter, the “Classic
Oil Mortgage”), under which the Mortgagor has granted to the Mortgagee a
first and prior mortgage in and to the Mortgaged Property.

     

    THEREFORE,
in order to comply with the terms and conditions of the Purchase Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Mortgagor hereby agrees with Trustee and Mortgagee as
follows:

     

    ARTICLE
I

    Grant of Lien and
Indebtedness Secured

     

    Section
1.01     Grant of
Liens.  To secure payment of the Indebtedness and the
performance of the covenants and obligations herein contained and contained in
the Guaranty and any other Loan Document to which Mortgagor is a party,
Mortgagor does by these presents hereby GRANT, BARGAIN, SELL, ASSIGN, MORTGAGE,
PLEDGE, HYPOTHECATE, TRANSFER and CONVEY unto Trustee and Trustee’s successors
and substitutes in trust hereunder, WITH A POWER OF SALE, for the use and
benefit of Mortgagee, the real and personal property, rights, titles, interests
and estates described in the following paragraphs (a) through (l) (collectively
called the “Mortgaged
Property”):

     

    (a)           All
estates now owned or hereafter acquired by Mortgagor in and to the oil and gas
leases and/or oil, gas and other mineral leases, other mineral properties,
mineral servitudes and/or mineral rights, “as extracted collateral” as defined
in the Applicable UCC (as defined in Section 1.02) and
other interests and estates and the lands and premises covered or affected
thereby which are described on Exhibit A hereto
without regard to any limitations as to specific lands or depths that may be set
forth in Exhibit
A (collectively called the “Hydrocarbon
Property”) or which Hydrocarbon Property is otherwise referred to herein,
and specifically, but without limitation, the undivided interests of Mortgagor
which are more particularly described on attached Exhibit
A.

     

    (b)           All
estates now owned or hereafter acquired by Mortgagor in and to (i) the
properties now or hereafter pooled or unitized with any Hydrocarbon Property;
(ii) all presently existing or future unitization, communitization, pooling
agreements and designations, orders or declarations of pooled units and the
units created thereby (including, without limitation, all units created under
orders, regulations, rules or other official acts of any Federal, State or other
governmental body or agency having jurisdiction and any units created solely
among working interest owners pursuant to operating agreements or otherwise)
which may affect all or any portion of the Hydrocarbon Property including,
without limitation, those units which may be described or referred to on
attached Exhibit A;
(iii) all operating agreements, production sales or other contracts,
processing agreements, transportation agreements, gas balancing agreements,
farmout agreements, farm-in agreements, salt water disposal agreements, area of
mutual interest agreements, equipment leases and other agreements described or
referred to in this Mortgage or which relate to any of the Hydrocarbon Property
or interests in the Hydrocarbon Property described or referred to herein or on
attached Exhibit A or to
the production, sale, purchase, exchange, processing, handling, storage,
transporting or marketing of the Hydrocarbons (as defined in Section 1.01(c)
hereof) from or attributable to such Hydrocarbon Property or interests; (iv) all
geological, geophysical, engineering, accounting, title, legal, and other
technical or business data concerning the Hydrocarbon Property, the
Hydrocarbons, or any other item of Hydrocarbon Property which are in the
possession of Mortgagor or in which Mortgagor can otherwise grant a security
interest, and all books, files, records, magnetic media, computer records, and
other forms of recording or obtaining access to such data; and (v) the
Hydrocarbon Property described on attached Exhibit A and
covered by this Mortgage even though Mortgagor’s interests therein be
incorrectly described or a description of a part or all of such Hydrocarbon
Property or Mortgagor’s interests therein be omitted; it being intended by
Mortgagor and Mortgagee herein to cover and affect hereby all interests which
Mortgagor may now own or may hereafter acquire in and to the Hydrocarbon
Property notwithstanding that the interests as specified on Exhibit A may be
limited to particular lands, specified depths or particular types of property
interests.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (c)           All
rights, titles, interests and estates now owned or hereafter acquired by
Mortgagor in and to all oil, gas, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined therefrom and all
other minerals (collectively called the “Hydrocarbons”) in and
under and which may be produced and saved from or attributable to the
Hydrocarbon Property, the lands pooled or unitized therewith and Mortgagor’s
interests therein, including all oil in tanks and all rents, issues, profits,
proceeds, products, revenues and other income from or attributable to the
Hydrocarbons, the Hydrocarbon Property, the lands pooled or unitized therewith
and Mortgagor’s interests therein.

     

    (d)           All
tenements, hereditaments, appurtenances and properties in anywise appertaining,
belonging, affixed or incidental to the Hydrocarbon Property, and estates
described or referred to in paragraphs (a) and (b) above, which are now owned or
which may hereafter be acquired by Mortgagor, including, without limitation, any
and all property, real or personal, now owned or hereafter acquired and situated
upon, used, held for use, or useful in connection with the operating, working,
extraction, treatment, marketing, gathering, transmission or development of any
of such Hydrocarbon Property or the lands pooled or unitized therewith
(excluding drilling rigs, trucks, automotive equipment or other personal
property which may be taken to the premises for the purpose of drilling a well
or for other similar temporary uses) and including any and all oil wells, gas
wells, injection wells or other wells, buildings, structures, field separators,
liquid extraction plants, plant compressors, pumps, pumping units, pipelines,
sales and flow lines, gathering systems, field gathering systems, salt water
disposal facilities, tanks and tank batteries, fixtures, valves, fittings,
machinery and parts, engines, boilers, meters, apparatus, goods, inventory,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements, servitudes, licenses and
other surface and subsurface rights together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing
properties.

     

    (e)           Any
property that may from time to time hereafter, by delivery or by writing of any
kind, be subjected to the lien and security interest hereof by Mortgagor or by
anyone on Mortgagor’s behalf and Trustee or Mortgagee is hereby authorized to
receive the same at any time as additional security hereunder.

     

    (f)           All
of the rights, titles and interests of every nature whatsoever now owned or
hereafter acquired by Mortgagor in and to the Hydrocarbon Property rights,
titles, interests and estates and every part and parcel thereof, including,
without limitation, the Hydrocarbon Property rights, titles, interests and
estates as the same may be enlarged by the discharge of any payments out of
production or by the removal of any charges or Permitted Liens to which any of
the Hydrocarbon Property rights, titles, interests or estates are subject, or
otherwise; all rights of Mortgagor to liens and security interests securing
payment of proceeds from the sale of production from the Mortgaged Property,
including, but not limited to, those liens and security interests provided in
§9.343 of the Applicable UCC, as amended from time to time, any other statute
enacted in the jurisdiction in which the Hydrocarbon Property is located or
statute made applicable to the Hydrocarbon Property under federal law (or some
combination of federal and state law); together with any and all renewals and
extensions of any of the Hydrocarbon Property rights, titles, interests or
estates; all contracts and agreements supplemental to or amendatory of or in
substitution for the contracts and agreements described or mentioned above; and
any and all additional interests of any kind hereafter acquired by Mortgagor in
and to the Hydrocarbon Property rights, titles, interests or
estates.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (g)           All
accounts, contract rights, inventory, choses in action (i.e., rights to enforce
contracts or to bring claims thereunder), commercial tort claims, general
intangibles, insurance contracts and insurance proceeds (regardless of whether
the same arose, and/or the events which gave rise to the same occurred, on or
before or after the date hereof) and all proceeds and products of all such
portions of the Hydrocarbon Property and payments in lieu of production, whether
such proceeds or payments are goods, money, documents, instruments, chattel
paper, securities, accounts, general intangibles, fixtures, real property, or
other assets and regardless of whether such payments accrued, and/or the events
which gave rise to such payments occurred, on or before or after the date
hereof, including, without limitation, “take or pay” payments and similar
payments, payments received in settlement of or pursuant to a judgment rendered
with respect to take or pay or similar obligations or other obligations under a
production sales contract, payments received in buyout or buydown or other
settlement of a production sales contract, and payments received under a gas
balancing or similar agreement as a result of (or received otherwise in
settlement of or pursuant to judgment rendered with respect to) rights held by
Mortgagor as a result of Mortgagor (and/or its predecessors in title) taking or
having taken less gas from lands covered by a Hydrocarbon Property (or lands
pooled or unitized therewith) than its ownership of such Hydrocarbon Property
would entitle it to receive.

     

    (h)           Without
limitation of the generality of the foregoing, any rights and interests of
Mortgagor under any present or future hedge or swap agreements, cap, floor,
collar, exchange, forward or other hedge or protection agreements or
transactions relating to crude oil, natural gas or other Hydrocarbons, or any
option with respect to any such agreement or transaction now existing or
hereafter entered into by or on behalf of Mortgagor.

     

    (i)           All
licenses, permits and other regulatory approvals held by Mortgagor relating to
the Mortgaged Property.

     

    (j)           All
proceeds of all of the rights, titles and interests of Mortgagor described in
the foregoing paragraphs (a) through (i) whether such proceeds or payments are
goods, money, documents, instruments, chattel paper, securities, accounts,
payment intangibles, general intangibles, fixtures, real/immovable property,
personal/movable property or other assets.

     

    (k)           In
addition to the rights granted to Trustee and/or Mortgagee in Section 1.01(f)
of this Mortgage, any and all liens, security interests, financing statements or
similar interests of Mortgagor attributable to its interest in the Hydrocarbons
and proceeds of runs therefrom arising under or created by any statutory
provision, judicial decision or otherwise.

     

    (l)           All
of Mortgagor’s rights and interests pursuant to the provisions of §9.343 of the
Applicable UCC and of any similar state or local jurisdiction statute in any
state wherein the Mortgaged Property is located, hereby vesting in Trustee
and/or Mortgagee all of Mortgagor’s rights as an interest owner to the
continuing security interest in and liens upon the Mortgaged
Property.

     

    Any
fractions or percentages specified on attached Exhibit A in
referring to Mortgagor’s interests are solely for purposes of the warranties
made by Mortgagor pursuant to Sections 3.01
and 3.05 hereof
and shall in no manner limit the quantum of interest affected by this Section 1.01
with respect to any Hydrocarbon Property or with respect to any unit or well
identified on said Exhibit A.

     

    TO HAVE
AND TO HOLD the Mortgaged Property unto Trustee and to its successors and
assigns forever to secure the payment of the Indebtedness and to secure the
performance of the covenants, agreements, and obligations of Mortgagor herein
contained.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Section
1.02     Grant of Security
Interest.  To further secure the Indebtedness, Mortgagor hereby
grants to Mortgagee a security interest in and to the Mortgaged Property
(whether now or hereafter acquired by operation of law or otherwise) insofar as
the Mortgaged Property consists of equipment, accounts, contract rights, general
intangibles, insurance contracts, insurance proceeds, inventory, Hydrocarbons,
fixtures and any and all other personal property of any kind or character
defined in and subject to the provisions of the Uniform Commercial Code
presently in effect in the jurisdiction in which the Mortgaged Property is
situated (“Applicable
UCC”), including the proceeds and products from any and all of such
personal property.  Upon the happening of any of the Events of Default
(as defined in Section
4.01), Mortgagee is and shall be entitled to all of the rights, powers
and remedies afforded a secured party by the Applicable UCC with reference to
the personal property and fixtures in which Mortgagee has been granted a
security interest herein, or Trustee or Mortgagee may proceed as to both the
real and personal property covered hereby in accordance with the rights and
remedies granted under this Mortgage in respect of the real property covered
hereby.  Such rights, powers and remedies shall be cumulative and in
addition to those granted to Trustee or Mortgagee under any other provision of
this Mortgage or under any other security instrument.  Written notice
mailed to Mortgagor as provided herein at least five (5) Business Days prior to
the date of public sale of any part of the Mortgaged Property which is personal
property subject to the provisions of the Applicable UCC, or prior to the date
after which private sale of any such part of the Mortgaged Property will be
made, shall constitute reasonable notice.  Except as otherwise
expressly provided in this Mortgage, all terms in this Mortgage relating to the
Mortgaged Property and the grant of the foregoing security interest which are
defined in the Applicable UCC shall have the meanings assigned to them in
Article 9 (or, absent definition in Article 9, in any other Article) of the
Applicable UCC, as those meanings may be amended, revised or replaced from time
to time.  Notwithstanding the foregoing, the parties intend that the
terms used herein which are defined in the Applicable UCC have, at all times,
the broadest and most inclusive meanings possible.

     

    Section
1.03     Indebtedness
Secured.  This Mortgage is executed and delivered by Mortgagor
to secure and enforce the following (the “Indebtedness”):

     

    (a)           Payment
of and performance of any and all indebtedness, obligations and liabilities of
Mortgagor pursuant to the Guaranty.

     

    (b)           Payment
of and performance of any and all other indebtedness, obligations and
liabilities of the Company and any direct or indirect subsidiary of Company
(collectively, the “Mortgagor Parties”
and each, individually, a “Mortgagor Party”)
pursuant to the Purchase Agreement, the Notes, this Mortgage, the other Security
Documents (as defined in the Notes) and all of the other agreements, documents
and instruments contemplated thereby and executed in connection therewith
(collectively, the “Loan Documents”),
including, without limitation, (i) principal and interest (including without
limitation interest accruing subsequent to the filing of a petition or other
action concerning bankruptcy or other similar proceeding, whether or not an
allowed claim) on the Notes, (ii) reimbursement obligations under any letters of
credit, (iii) obligations under any hedging agreements with any Buyer or its
affiliates, and (iv) obligations owing under any other Loan Document; and all
renewals, extensions, rearrangements and/or other modifications of any of the
foregoing.

     

    (c)           Any
sums which may be advanced or paid by Mortgagee, Trustee or any Buyer under the
terms hereof or under any other Loan Document on account of the failure of
Mortgagor or any other Mortgagor Party to comply with the covenants contained
herein or in any other Loan Document and all other indebtedness of the Mortgagor
Parties arising pursuant to the provisions of the Loan Documents, this Mortgage
and any other documents or instruments executed in connection
therewith.

    
      
         

      

      
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    (d)           Without
limiting the generality of the foregoing, all post-petition interest, expenses
and other duties and liabilities with respect to indebtedness or other
obligations described above in this Section 1.03, which
would be owed but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar
proceeding.

     

    Section
1.04     Fixture Filing,
Etc.  Without in any manner limiting the generality of any of
the other provisions of this Mortgage: (i) some portions of the goods
described or to which reference is made herein are or are to become fixtures on
the land described or to which reference is made herein or on attached Exhibit A;
(ii) the security interests created hereby under applicable provisions of
the Applicable UCC will attach to Hydrocarbons (minerals including oil and gas),
as extracted collateral or the accounts resulting from the sale thereof at the
wellhead or minehead located on the land described or to which reference is made
herein; (iii) this Mortgage is to be filed of record in the real estate
records as a financing statement, and (iv) Mortgagor is the record owner of the
real estate or interests in the real estate comprised of the Mortgaged
Property.

     

    Section
1.05     Defined
Terms.  Any capitalized term used in this Mortgage and not
defined in this Mortgage shall have the meaning assigned to such term in the
Purchase Agreement.

     

    ARTICLE
II

    Assignment of Production,
Accounts and Proceeds

     

    Section
2.01     Assignment.  Mortgagor
does hereby absolutely and unconditionally assign, transfer and convey unto
Mortgagee, its successors and assigns, all of the Hydrocarbons and all products
obtained or processed therefrom, which accrue to Mortgagor’s interest in the
Mortgaged Properties, and the revenues and proceeds now and hereafter
attributable to the Hydrocarbons and said products and all accounts arising
therefrom or in connection therewith and all payments in lieu of the
Hydrocarbons such as “take or pay” payments or settlements (all of the
foregoing, the “Production
Proceeds”), together with the immediate and continuing right, subject to
the remaining provisions of this Section 2.01 and of
Section 4(r) of
the Purchase Agreement, to collect and receive such Production
Proceeds.  The Hydrocarbons and products are to be delivered into
pipelines connected with the Mortgaged Property, or to the purchaser thereof, to
the credit of Mortgagee (to the extent of the Mortgagor’s interest therein); and
all Production Proceeds shall initially be deposited into a Deposit Account (as
defined in the Security Agreement) subject to an Account Control Agreement (as
defined in the Security Agreement).  No party paying any Production
Proceeds shall have any duty or obligation to inquire into any of the rights of
Mortgagee under this Section 2.01, what
application is made of the Production Proceeds, or as to any other
matter.  Mortgagor directs and instructs any and all purchasers of any
Hydrocarbons to pay to such Deposit Accounts all of the Production Proceeds
accruing to Mortgagor’s interest until such time as such purchasers have been
furnished with evidence that all Indebtedness has been paid in full in cash and
that this Mortgage has been released.  Mortgagor agrees that no
purchasers of the Hydrocarbons shall have any responsibility for the application
of any funds paid to Mortgagee.  Mortgagor agrees to perform all such
acts, and to execute all such further assignments, transfer orders and division
orders, and other instruments as may be required or desired by Mortgagee or any
party in order to have the Production Proceeds paid to Mortgagee.  Without limiting the generality of the
foregoing, upon the occurrence and during the continuation of an Event of
Default, Mortgagee is fully authorized to receive and receipt for the Production
Proceeds; 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 the Production Proceeds and, in accordance with Section 4.5(b) of the
Security Agreement, to hold the Production Proceeds in a bank account as
additional collateral securing the Indebtedness; and to execute transfer and
division orders in the name of Mortgagor, or otherwise, with warranties binding
Mortgagor.  All Production Proceeds received by Mortgagee pursuant to
this Section
2.01 after an Event of Default has occurred shall be applied as provided
in the other Loan Documents.  Mortgagee shall not be liable for any
delay, neglect or failure to effect collection of any Production Proceeds or to
take any other action in connection therewith or hereunder; but Mortgagee shall
have the right, exercisable at its election at any time after an Event of
Default has occurred and is continuing, in the name of Mortgagor or otherwise,
to prosecute and defend any and all actions or legal proceedings deemed
advisable by Mortgagee in order to collect such funds and to protect the
interests of Mortgagee and/or Mortgagor, with all reasonable costs, expenses and
attorneys’ fees incurred in connection therewith being paid by Mortgagor and
until so paid being a part of the Indebtedness secured by this
Mortgage.  Mortgagor agrees to perform all such acts, and to execute
all such further assignments, transfer orders and division orders, and other
instruments as may be required or desired by Mortgagee or any party in order to
effectuate the provisions contained in this Section
2.01.  Mortgagor hereby appoints Mortgagee as its
attorney-in-fact to pursue any and all rights of Mortgagor to liens on and
security interests in the Hydrocarbons securing payment of proceeds of runs
attributable to the Hydrocarbons, provided Mortgagee shall only be permitted to
exercise such power of attorney granted pursuant to this sentence after the
occurrence and during the continuation of an Event of Default.  The
power of attorney granted to Mortgagee in this Section 2.01, being
coupled with an interest, shall be irrevocable so long as the Indebtedness or
any part thereof remains unpaid.

    
      
         

      

      
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    Section
2.02     [Reserved].

     

    Section
2.03     No Modification of Payment
Obligations.  Nothing herein contained shall modify or
otherwise alter, limit or modify the absolute obligation of Mortgagor and the
other Mortgagor Parties to make prompt payment of all principal, interest and
other amounts owing on the Indebtedness when and as the same become due,
regardless of whether the Production Proceeds are sufficient to pay the same and
the rights provided in accordance with the foregoing assignment provision shall
be cumulative of all other security of any and every character now or hereafter
existing to secure payment of the Indebtedness.

     

    Section
2.04     Effectuating Payment of
Production Proceeds to Mortgagee.   If under any existing
sales agreements, other than division orders or transfer orders, any Production
Proceeds are required to be paid by the purchaser to Mortgagor so that under
such existing agreements payment cannot be made of such Production Proceeds to
Mortgagee, Mortgagor’s interest in all Production Proceeds under such sales
agreements and in all other Production Proceeds which for any reason may be paid
to Mortgagor shall, when received by Mortgagor, constitute trust funds in
Mortgagor’s hands and shall be immediately paid over to
Mortgagee.  Without limitation upon any of the foregoing, Mortgagor
hereby constitutes and appoints Mortgagee as Mortgagor’s special
attorney-in-fact (with full power of substitution, either generally or for such
periods or purposes as Mortgagee may from time to time prescribe) in the name,
place and stead of Mortgagor to do any and every act and exercise any and every
power that Mortgagor might or could do or exercise personally with respect to
all Hydrocarbons and Production Proceeds expressly inclusive, but not limited
to, giving and granting unto said attorney-in-fact full power and authority to
do and perform any and every act and thing whatsoever necessary and requisite to
be done as fully and to all intents and purposes, as Mortgagor might or could do
if personally present (provided such power of attorney granted pursuant to this
sentence shall only be exercisable by Mortgagee upon the occurrence and during
the continuation of an Event of Default) and Mortgagor shall be bound thereby as
fully and effectively as if Mortgagor had personally executed, acknowledged and
delivered any of the foregoing certificates or documents.  The powers
and authorities herein conferred upon Mortgagee may be exercised by Mortgagee
through any person who, at the time of the execution of the particular
instrument, is an officer of Mortgagee.  The power of attorney herein
conferred is granted for valuable consideration and hence is coupled with an
interest and is irrevocable so long as the Indebtedness, or any part thereof,
shall remain unpaid or any commitment to lend under the Purchase Agreement
remains outstanding.  All persons dealing with Mortgagee or any
substitute shall be fully protected in treating the powers and authorities
conferred by this paragraph as continuing in full force and effect until advised
by Mortgagee that all the Indebtedness is fully and totally
paid.  Mortgagee may, but shall not be obligated to, in accordance
with the provisions of Section 2.01 above,
take such action as it deems reasonably appropriate in an effort to collect the
Production Proceeds and any reasonable expenses (including reasonable attorney’s
fees) so incurred by Mortgagee shall be a demand obligation of Mortgagor and
shall be part of the Indebtedness, and shall bear interest each day, from the
date of such expenditure or payment until paid, at the Applicable Interest Rate
(as defined in the Notes).

    
      
         

      

      
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    Section
2.05     Application of Production
Proceeds.  So long as no Event of Default has occurred, the
Production Proceeds received by Mortgagee shall be paid directly into a Deposit
Account in accordance with Section 2.01 hereof.  After an Event of
Default hereunder has occurred, all Production Proceeds from time to time in the
hands of Mortgagee shall be applied to the payment of the Indebtedness at such
times and in such manner and order as Mortgagee determines in Mortgagee’s sole
and absolute discretion.

     

    Section
2.06     Release from Liability;
Indemnification.  Mortgagee and its successors and assigns are
hereby released and absolved from all liability for failure to enforce
collection of the Production Proceeds and from all other responsibility in
connection therewith, except the responsibility to account to Mortgagor for
funds actually received.  Mortgagor agrees to indemnify and hold
harmless Mortgagee (for purposes of this paragraph, the term “Mortgagee” shall
include the directors, officers, partners, employees and agents of Mortgagee and
any persons or entities owned or controlled by or affiliated with Mortgagee and
any other Indemnified Party as defined in Section 4.16 hereof)
from and against all claims, demands, liabilities, losses, damages (including
without limitation consequential damages), causes of action, judgments,
penalties, costs and expenses (including without limitation reasonable
attorneys’ fees and expenses) imposed upon, asserted against or incurred or paid
by Mortgagee by reason of the assertion that Mortgagee received, either before
or after payment in full of the Indebtedness, funds from the production of oil,
gas, other hydrocarbons or other minerals claimed by third persons (and/or funds
attributable to sales of production which were made in violation of laws, rules,
regulations and/or orders governing such sales), and Mortgagee shall have the
right to defend against any such claims or actions, employing attorneys of its
own selection, and if not furnished with indemnity satisfactory to it, Mortgagee
shall have the right to compromise and adjust any such claims, actions and
judgments, and in addition to the rights to be indemnified as herein provided,
all amounts paid by Mortgagee in compromise, satisfaction or discharge of any
such claim, action or judgment, and all court costs, reasonable attorneys’ fees
and other expenses of every character expended by Mortgagee pursuant to the
provisions of this section shall be a demand obligation (which obligation
Mortgagor hereby expressly promises to pay) owing by Mortgagor to Mortgagee and
shall bear interest, from the date expended until paid at the Applicable
Interest Rate (as defined in the Notes).  The foregoing indemnities
shall not terminate upon the release, foreclosure or other termination of this
Mortgage, but will survive the release, foreclosure of this Mortgage or
conveyance in lieu of foreclosure, and the repayment of the Indebtedness and the
discharge and release of this Mortgage and the other documents evidencing and/or
securing the Indebtedness.  WITHOUT LIMITATION, IT IS THE
INTENTION OF MORTGAGOR, AND MORTGAGOR AGREES THAT THE FOREGOING RELEASES AND
INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO ALL CLAIMS,
DEMANDS, LIABILITIES, LOSSES, DAMAGES (INCLUDING, WITHOUT LIMITATION,
CONSEQUENTIAL DAMAGES), CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND
EXPENSES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE
OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY, EXCLUDING THE GROSS NEGLIGENCE AND
WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.  However, such
indemnities shall not apply to any particular indemnified party (but shall apply
to the other indemnified parties) to the extent the subject of the
indemnification is caused by or arises out of the gross negligence or willful
misconduct of such particular indemnified party.

    
      
         

      

      
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    ARTICLE
III

    Representations, Warranties
and Covenants

     

    Mortgagor
hereby covenants with the Mortgagee, and represents and warrants to the
Mortgagee that:

     

    Section
3.01     Title.  Mortgagor has good and defensible title to the Mortgaged
Property.  With respect to each Mortgaged Property, the
ownership of Mortgagor in such Mortgaged Property does and will, (i) with
respect to each tract of land described in Exhibit A
hereto, (whether described directly in such Exhibit A or
described by reference to another instrument) in connection with such Mortgaged
Property, (A) entitle Mortgagor to receive (subject to the terms and
provisions of this Mortgage) a decimal or percentage share of the oil, gas and
other hydrocarbons produced from, or allocated to, such tract equal to not less
than the percentage share set forth in Exhibit A in
connection with such tract in the column headed “NRI”, (B) cause Mortgagor to be
obligated to bear a percentage share of the cost of exploration, development and
operation of such tract of land not greater than the percentage share set forth
in Exhibit A in
connection with such tract in the column headed “WI”, and (ii) if such Mortgaged
Property is shown on Exhibit A to be
subject to a unit or units, with respect to each such unit, (A) entitle
Mortgagor to receive (subject to the terms and provisions of this Mortgage) a
percentage share of all substances covered by such unit which are produced from,
or allocated to, such unit equal to not less than the percentage share set forth
in Exhibit A in
connection with such Mortgaged Property in connection with such tract in the
column headed “NRI” (and if such Mortgaged Property is subject to more than one
unit, words identifying such interest with such unit), and (B) obligate
Mortgagor to bear a percentage share of the cost of exploration, development and
operation of such unit not greater than the percentage share set forth in Exhibit A in
connection with such tract in the column headed “WI” (and if such Mortgaged
Property is subject to more than one unit, words identifying such interest with
such unit).  With respect to each Mortgaged Property described in
Exhibit A
hereto (or in any of the instruments described or referred to in Exhibit A) which is
subject to a voluntary or involuntary pooling, unitization or communitization
agreement and/or order, the term "tract of land" as used in this Section 3.01 shall
mean the pooled, unitized or communitized area as an entirety and shall not be
deemed to refer to any individual tract committed to said pooled, unitized or
communitized area.  Without limitation of the foregoing, the ownership
by Mortgagor of the Mortgaged Properties does and will, with respect to each
well or unit identified on Exhibit A attached
hereto and made a part hereof, entitle Mortgagor to receive (subject to the
terms and provisions of this Mortgage) a percentage share of the oil, gas and
other hydrocarbons produced from, or allocated to, such well or unit equal to
not less than the percentage share set forth, for such well or unit, in the
column headed "NRI" on Exhibit A, and cause
Mortgagor to be obligated to bear a percentage share of the cost of operation of
such well or unit equal to not more than the decimal or percentage share set
forth, for such well or unit, in the column headed "WI" on Exhibit
A.  The above-described shares of production which Mortgagor is
entitled to receive and shares of expenses which Mortgagor is obligated to bear
are not and will not be subject to change (other than changes which arise
pursuant to non-consent provisions of operating agreements described in Exhibit A in
connection with operations hereafter proposed), except, and only to the extent
that, such changes are reflected in Exhibit A.  Any fractional, percentage or decimal interests
specified in Exhibit A in referring to Mortgagor’s interest in the Mortgaged
Property are solely for the purposes of the representations and warranties set
forth herein and shall in no manner limit the quantum of the interests of the
Mortgagor or the Mortgagee in the Mortgaged Property mortgaged and pledged by
the Mortgagor hereunder.  The Mortgaged Property is free and clear of
all Liens other than (i) Permitted Liens, (ii) the Classic Oil Mortgage, or any
financing statement related thereto, to the extent such Classic Oil Mortgage or
financing statements are filed and recorded, and (iii) the other encumbrances
set forth in Exhibit A.   By execution hereof, the Mortgagee
hereby acknowledges and agrees that, the mortgagee under the Classic Oil
Mortgage shall have the right to record the Classic Oil Mortgage and any
financing statements related thereto prior to the recording of this mortgage and
any financing statements related thereto, but if Classic Oil Mortgage and any
financing statements related thereto are recorded subsequent to this mortgage
and any financing statements related hereto, the Mortgagee nevertheless
recognizes that the Classic Oil Mortgage and any rights of the mortgagee or
trustee thereunder are senior to and have priority over those under this
Mortgage and any rights of the Mortgagee or Trustee hereunder, and Mortgagee or
Trustee shall take any reasonable steps required of the Classic Oil Mortgage
mortgagee or trustee to evidence such priority.

    
      
         

      

      
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    Section
3.02     Defend
Title.  This Mortgage is a direct Lien, and security interest
upon the Mortgaged Property, subject only to Permitted Liens and to the extent
filed and recorded, the Classic Oil Mortgage.  This Mortgage will always be kept as a
direct second Lien and security interest upon the Mortgaged Property (subject
only to the Classic Oil Mortgage), and Mortgagor will not grant, incur or
create or suffer to be created or permit to exist any Lien, security interest or
charge prior or junior to or on a parity with the Lien and security interest of
this Mortgage upon the Mortgaged Property or any part thereof or upon the rents,
issues, revenues, profits and other income therefrom, other than the Classic Oil
Mortgage, and to the extent applicable, other  Permitted
Liens.  Mortgagor will warrant and defend the title to the Mortgaged
Property against the claims and demands of all other persons whomsoever and will
maintain and preserve the Lien created hereby so long as any of the Indebtedness
secured hereby remains unpaid.  Should an adverse claim be made
against or a cloud develop upon the title to any part of the Mortgaged Property,
other than the Classic Oil Mortgage or Permitted Liens, Mortgagor agrees it will
timely defend against such adverse claim or take appropriate action to remove
such cloud at Mortgagor’s cost and expense, and Mortgagor further agrees that
Trustee and/or Mortgagee may take such other action as they deem reasonably
advisable to protect and preserve their interests in the Mortgaged Property, and
in such event Mortgagor will indemnify Trustee and Mortgagee against any and all
cost, attorney’s fees and other expenses which they may incur in defending
against any such adverse claim or taking action to remove any such
cloud.

     

    Section
3.03     Not a Foreign
Person.  Mortgagor is not a “foreign person” within the meaning
of the Internal Revenue Code of 1986, as amended (i.e. Mortgagor is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder).

     

    Section
3.04     Rentals, Taxes, Insurance
and Fees Paid;  Leases in Effect.  All rentals and
royalties due and payable in accordance with the terms of any leases or
subleases comprising a part of the Hydrocarbon Property and all severance and
production taxes payable with respect to the production therefrom have been duly
paid or provided for and all leases or subleases comprising a part of the
Hydrocarbon Property are in full force and effect.  In addition to the
foregoing, Mortgagor shall or shall cause
to be paid when due, all taxes, permits, licenses, insurance premiums and other
similar amounts with respect to the Mortgaged Property, the Hydrocarbon Property
and the Hydrocarbons.

     

    Section
3.05     Operation By Third
Parties.   As to any part of the Mortgaged Property which
is not a working interest (if any), Mortgagor agrees to take all such action and
to exercise all rights and remedies as are reasonably available to Mortgagor to
cause the owner or owners of the working interest in such properties to comply
with the covenants and agreements contained herein; and as to any part of the
Mortgaged Property which is a working interest but which is operated by a party
other than Mortgagor, Mortgagor agrees to take all such action and to exercise
all rights and remedies as are reasonably available to Mortgagor (including, but
not limited to, all rights under any operating agreement) to cause the party who
is the operator of such property to comply with the covenants and agreements
contained herein.

    
      
         

      

      
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    Section
3.06     Failure to
Perform.  Mortgagor agrees that if Mortgagor fails to perform
any act or to take any action which Mortgagor is required to perform or take
hereunder or pay any money which Mortgagor is required to pay hereunder, each of
Mortgagee and Trustee in Mortgagor’s name or its or their own name may, but
shall not be obligated to, perform or cause to be performed such act or take
such action or pay such money, and any expenses so incurred by either of them
and any money so paid by either of them shall be a demand obligation owing by
Mortgagor to Mortgagee or Trustee, as the case may be, and each of Mortgagee and
Trustee, upon making such payment, shall be subrogated to all of the rights of
the Person receiving such payment.  Each amount due and owing by
Mortgagor to each of Mortgagee and Trustee pursuant to this Mortgage shall bear
interest from the date of such expenditure or payment or other occurrence which
gives rise to such amount being owed to such Person until paid at the Applicable
Interest Rate, and all such amounts together with such interest thereon shall be
a part of the Indebtedness described in Section 1.03
hereof.

     

    Section
3.07     Sale of Mortgaged
Property.  Any proposed sale, transfer, farm-out, assignment or
other disposition of the Mortgaged Property by the Mortgagor shall be governed
by the provisions of Section 5(f) of the
Purchase Agreement; provided, that
Mortgagor shall, except after the occurrence and during the continuation of an
Event of Default, be permitted to (i) sell Hydrocarbons in the ordinary course
of business in compliance with the terms of this Mortgage and (ii) sell or
otherwise dispose of obsolete or worn out equipment or personal property which
is replaced with property of equal or greater value in the ordinary course of
business.

     

    Section
3.08     Sale of
Production.  No Mortgaged Property is or will become subject to
any contractual or other arrangement (a) whereby payment for production is or
can be deferred for a substantial period after the month in which such
production is delivered (i.e., in the case of oil, not in excess of sixty (60)
days, and in the case of gas, not in excess of ninety (90) days) or (b) whereby
payments are made to Mortgagor other than by checks, drafts, wire transfer
advises or other similar writings, instruments or communications for the
immediate payment of money.  Except for transportation, gathering,
processing, compression or dehydration agreements (or other agreements relating
to the marketing of Hydrocarbons), and, with respect to the immediately
succeeding clause (i), except for agreements entered into by Mortgagor in the
ordinary course of business consistent with prudent customs and practices in the
industry in which Mortgagor operates, (i) no Mortgaged Property is or will
become subject to any contractual or other arrangement for the sale, processing
or transportation of production (or otherwise related to the marketing of
Hydrocarbons) which cannot be cancelled on 120 days (or less) notice and (ii)
all contractual or other arrangements for the sale, processing or transportation
of Hydrocarbons (or otherwise related to the marketing of Hydrocarbons) shall be
bona fide arm’s length transactions and shall be at generally prevailing market
prices.  Mortgagor is presently receiving a price for all production
from (or attributable to) each Mortgaged Property covered by a production sales
contract disclosed in writing to Mortgagee as computed in accordance with the
terms of such contract, and is not having deliveries of production from such
Mortgaged Property curtailed substantially below such property’s delivery
capacity.  Neither Mortgagor nor, to the best of Mortgagor’s
knowledge, any of its predecessors in title, has received prepayments
(including, but not limited to, payments for gas not taken pursuant to “take or
pay” or other similar arrangements) for any Hydrocarbons produced or to be
produced from the Mortgaged Properties after the date hereof, and Mortgagor
hereby covenants not to enter into any such advance or prepayment arrangements
whereby it accepts consideration for Hydrocarbons not yet
produced.  No Mortgaged Property is or will become subject to any
“take or pay” or other similar arrangement (y) which can be satisfied in whole
or in part by the production or transportation of gas from other properties or
(z) as a result of which production from the Mortgaged Properties may be
required to be delivered to one or more third parties without payment (or
without full payment) therefor as a result of payments made, or other actions
taken, with respect to other properties.  There is no Mortgaged
Property with respect to which Mortgagor, or, to the best of Mortgagor’s
knowledge, its predecessors in title, has, prior to the date hereof, taken more
(“overproduced”), or
less (“underproduced”), gas
from the lands covered thereby (or pooled or unitized therewith) than its
ownership interest in such Mortgaged Property would entitle it to take, except
in the ordinary course of business consistent with prudent customs and practices
in the industry in which Mortgagor operates.  Mortgagor will not after
the date hereof become “overproduced” (as above defined) with respect to any
well on the Mortgaged Property (or on any unit in which the Mortgaged Property
participate), in an amount in excess of Mortgagor’s share of gas produced from
such well, except in the ordinary course of business consistent with prudent
customs and practices in the industry in which Mortgagor operates.  No
Mortgaged Property is or will become subject to a gas balancing arrangement
under which one or more third parties may take a portion of the production
attributable to such Mortgaged Property without payment (or without full
payment) therefor as a result of production having been taken from, or as a
result of other actions or inactions with respect to, other properties, except
for any such gas balancing arrangement entered into in the ordinary course of
business consistent with prudent customs and practices in the industry in which
Mortgagor operates.  No Mortgaged Property is subject at the present
time to any regulatory refund obligation and, to the best of Mortgagor’s
knowledge, no facts exist which might cause the same to be
imposed.

    
      
         

      

      
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    Section
3.09      Operation of Mortgaged
Property.  The Mortgagor will
promptly pay and discharge or cause to be paid and discharged all rentals, delay
rentals, royalties and indebtedness accruing under, and perform or cause to be
performed each and every act, matter or thing required by, each and all of the
assignments, deeds, subject leases, sub-leases, contracts and agreements
described or referred to herein or affecting the Mortgagor’s interests in the
Mortgaged Property and will do or cause to be done all other things reasonably necessary to keep unimpaired the Mortgagor’s rights with
respect thereto and prevent any intentional forfeiture thereof or default with
respect thereto, other than a default which might occur as a result of cessation
of production thereunder.  Except as could not reasonably be expected, either individually or
in the aggregate, to have a Material Adverse Effect, the Mortgaged Property (and
properties unitized therewith) is being (and, to the extent the same could
adversely affect the ownership or operation of such Mortgaged Property after the
date hereof, have in the past been), and hereafter will be maintained, operated and developed in a good and
workmanlike manner in accordance with customary industry standards and
in conformity with all applicable laws and all rules, regulations and orders of
all duly constituted authorities having jurisdiction and in conformity with all
oil, gas and/or other mineral leases and other agreements forming part of the
Mortgaged Property and in conformity with all Permitted Liens; specifically in
this connection, (i) no Mortgaged Property is subject to having allowable
production after the date hereof reduced below the full and regular allowable
(including the maximum permissible tolerance) because of any overproduction
(whether or not the same was permissible at the time) prior to the date hereof
and (ii) none of the wells located on the Mortgaged Property (or properties
unitized therewith) are or will be deviated from the vertical more than the
maximum permitted by applicable laws, regulations, rules and orders, and such
wells are, and will remain, bottomed under and producing from, with the well
bores wholly within, the Mortgaged Property (or, in the case of wells located on
properties unitized therewith, such unitized properties).  With respect to any Mortgaged
Property in which Mortgagor is the operator in connection therewith or in which
Mortgagor has a majority working interest (and to the best of Mortgagor’s
knowledge with respect to any Mortgaged Property in which Mortgagor has a
minority working interest and is not an operator in connection therewith), there
are no dry holes, or otherwise inactive wells, located on any Mortgaged Property
or on lands pooled or unitized therewith (including, without limitation, any
wells which would, if located in West Virginia, require compliance with the West
Virginia Department of Environmental Protection (“WVDEP”) in accordance
with the West Virginia Abandoned Well Act, W. Va. Code Sec. 22-10-1 et seq.,
except for wells that have been properly plugged and abandoned or inactive and
being maintained in accordance with local, state and federal
law.  Except as disclosed in Schedule 3(s) to the
Purchase Agreement, the Mortgagor has, and will in the future, possess all
certificates, authorizations, approvals, licenses and permits issued by the
appropriate federal, state or foreign regulatory authorities (collectively,
“Permits”)
necessary to produce, extract, transport and sell the oil, gas, minerals and/or
other Hydrocarbons in that portion of the Mortgaged Property that is producing
oil, gas, minerals and/or other Hydrocarbons.  Except as disclosed in
Schedule 3(s)
to the Purchase Agreement, Mortgagor has no reason to believe that it will not
be able to obtain Permits as and when necessary to enable the Mortgagor to
produce, extract, transport and sell the oil, gas, minerals and other
Hydrocarbons in the Mortgaged Property.  Mortgagor has not received
notice of any violations in respect of any such licenses or permits described in
the foregoing provisions of this Section 3.09, except
for notices of violations received prior to the date hereof that have been
remedied by Mortgagor.  The Mortgagor
will operate the Mortgaged Property in a careful and efficient manner in
accordance with the practices of the industry and in compliance with all
applicable contracts and agreements and in compliance with all applicable spacing, proration and conservation laws of the jurisdiction in
which the Mortgaged Property is situated, and all applicable laws, rules and
regulations of every other agency and authority from time to time constituted to
regulate the development and operation of the Mortgaged Property and the production and sale of Hydrocarbons and other
minerals produced therefrom, except as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.  The Mortgagor will do or cause to be done, or shall
participate in, such development work as may be reasonably necessary to the
prudent and economical operation of the Mortgaged Property in accordance with
the approved practices of prudent operators in the industry, including, without
limitation, all to be done that may be appropriate to protect from diminution
the productive capacity of the Mortgaged Property and each producing well
thereon.  Upon the reasonable request of the Mortgagee, and at
reasonable times and intervals, the Mortgagor will (a) permit the Mortgagee and
its respective designated representatives to enter upon any part of the
Mortgaged Property under the control of the Mortgagor, and (b) cause the
operator of any part of the Mortgaged Property not under the control of the
Mortgagor to permit the Mortgagee and its designated representatives to enter
upon the same (to the extent and subject to the conditions under which the
Mortgagor may so enter), for the purposes of inspecting the condition and
operation thereof.

     

    
      
         

      

      
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    Section
3.10      Suits and
Claims.  Except to the extent disclosed in the Schedules to the
Purchase Agreement, there are no suits, actions, claims, investigations,
inquiries, proceedings or demands pending (or, to Mortgagor’s knowledge,
threatened) which affect the Mortgaged Property (including, without limitation,
any which challenge or otherwise pertain to Mortgagor’s title to the Mortgaged
Property) and no judicial or administrative actions, suits or proceedings
pending (or, to Mortgagor’s knowledge, threatened) against
Mortgagor.

     

    Section
3.11      Environmental.

     

    (a)           Current
Status.  The representations and warranties in Section 3(p) of
the Purchase Agreement are true and correct as of the date hereof (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such date).

    
      
         

      

      
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    (b)           Definitions.  “Applicable Environmental
Laws” shall mean any applicable laws, orders, rules, or regulations
pertaining to safety, health or the environment, as such laws, orders, rules or
regulations now exist or are hereafter enacted and/or amended (including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (as amended, hereinafter called “CERCLA”), the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, hereinafter called
“RCRA”) and
applicable state and local law).  Mortgagor undertook, at the time of
acquisition of the Mortgaged Property, all appropriate inquiry into the previous
ownership and uses of the Mortgaged Property consistent with good commercial or
customary practice.  Mortgagor has taken reasonable steps necessary,
consistent with customary practice in the industry in which it operates its
business, to determine and has determined that no hazardous substances or solid
wastes have been disposed of or otherwise released at, into, upon or under the
Mortgaged Property except in accordance with Applicable Environmental
Laws.  The use which Mortgagor makes and intends to make of the
Mortgaged Property will not result in the use, treatment, storage or disposal or
other release of any hazardous substance or solid waste at, into, upon or under
the Mortgaged Property, except such usage, and temporary storage in anticipation
of usage, as is in the ordinary course of business and in compliance with
Applicable Environmental Laws.  The terms “hazardous substance”
and “release”
as used in this Mortgage shall have the meanings specified in CERCLA, and the
terms “solid
waste” and “disposal” (or “disposed”) shall have
the meanings specified in RCRA; provided, in the event 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 that the laws of the states in which the
Mortgaged Properties are located 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.  The “Associated Property”
(as such term is hereinafter defined) is not in violation of any Applicable
Environmental Laws for which Mortgagor or its predecessors in title to the
Mortgaged Property would be responsible (to the best of Mortgagor’s knowledge
with respect to Associated Property not owned or operated by
Mortgagor).  The term “Associated Property”
as used in this Mortgage shall mean any and all interests in and to (and/or
carved out of) the lands which are described or referred to in Exhibit A hereto, or
which are otherwise described in any of the oil, gas and/or mineral leases or
other instruments described in or referred to in such Exhibit A,
whether or not such property interests are owned by Mortgagor.

     

    (c)           Future
Performance.  Except as could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, Mortgagor will operate each Mortgaged  Property in a careful
and efficient manner in accordance with the practices of the industry so
as not to cause or permit such Mortgaged  Property or Mortgagor
to be in violation of, and Mortgagor shall not do anything or permit anything to
be done which will subject such Mortgaged  Property or any Associated
Property to any remedial obligations under, or result in noncompliance with
applicable permits and licenses under, any Applicable Environmental Laws,
assuming disclosure to the applicable governmental authorities of all relevant
facts, conditions and circumstances, if any, pertaining to the Mortgaged
Property or any Associated Property and Mortgagor will promptly notify Mortgagee
in writing of any existing, pending or, to the best knowledge of Mortgagor,
threatened investigation, claim, suit or inquiry by any governmental authority
or any person in connection with any Applicable Environmental
Laws.  Except as could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect, Mortgagor will take
steps necessary to determine that no hazardous substances or solid wastes have
been disposed of or otherwise released on or to the Mortgaged Property or any
Associated Property.  Except as could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, Mortgagor will not cause
or permit the disposal or other release of any hazardous substance or solid
waste at, into, upon or under the Mortgaged Property or any Associated
Property.  Mortgagor covenants and agrees to keep or cause the
Mortgaged Property to be kept free of any hazardous substance or solid waste
(except such use, and temporary storage in anticipation of use, as is required
in the ordinary course of business, all while in compliance with Applicable
Environmental Laws), and to remove the same (or if removal is prohibited by law,
to take whatever action is required by law), promptly upon discovery at its sole
expense.  Upon Mortgagee’s reasonable request, at any time and from
time to time during the existence of this Mortgage, but not more often than once
every calendar year (so long as no Event of Default has occurred), Mortgagor
will provide at Mortgagor’s sole expense an inspection or audit of each
Mortgaged  Property from an engineering or consulting firm approved by
Mortgagee, indicating the presence or absence of hazardous substances and solid
waste on such Mortgaged  Property and compliance with Applicable
Environmental Laws.

     

    
      
         

      

      
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    Section
3.12      Not Abandon Wells;
Participate in Operations; Non-Operated Interests.  Mortgagor
will not, without prior written consent of Mortgagee, which consent shall not be
unreasonably conditioned, withheld, or delayed, abandon, or consent to the
abandonment of, any well producing from the Mortgaged Property (or properties
unitized therewith) so long as such well is capable (or is subject to being made
capable through drilling, reworking or other operations which it would be
commercially feasible to conduct) of producing oil, gas, or other Hydrocarbons
or other minerals in commercial quantities (as determined without considering
the effect of this Mortgage), except in the ordinary course of business
consistent with prudent customs and practices in the industry in which Mortgagor
operates.  Mortgagor will not, without prior written consent of
Mortgagee, which consent shall not be unreasonably conditioned, withheld, or
delayed, elect not to participate in a proposed operation on the Mortgaged
Properties where the effect of such election would be the forfeiture either
temporarily (i.e. until a certain sum of money is received out of the forfeited
interest) or permanently of any interest in the Mortgaged
Properties.  All or portions of the
Mortgaged Property may be comprised of interests in the Hydrocarbon Property or
lands pooled or unitized therewith which are other than working interests or
which may be operated by a party or parties other than the Mortgagor and with
respect to all such portions of the Mortgaged Property, the Mortgagor’s
covenants and agreements as expressed in this Article III are modified to require that the Mortgagor use its
commercially reasonable efforts to cause compliance with such covenants and
agreements by the working interest owners or the operator or operators of such
Hydrocarbon Properties.

     

    Section
3.13     Condemnation
Awards.  If at any time all or any portion of the Mortgaged
Property shall be taken or damaged under the power of eminent domain, the award
received by condemnation proceedings for any property so taken or any payment
received in lieu of such condemnation proceedings shall be paid directly to
Mortgagee as agent for Mortgagor and all or any portion of such award or
payment, at the option of Mortgagee, shall be applied to the Indebtedness in
payment of the last maturing installments of the Indebtedness or paid over,
wholly or in part, to Mortgagor for any purpose or object satisfactory to
Mortgagee; provided that Mortgagee shall not be obligated to see to the
application of any amount paid over to Mortgagor.  Mortgagor
immediately upon obtaining knowledge of the institution of any proceedings or
negotiations for the condemnation of the Mortgaged Property, or any portion
thereof, will notify Mortgagee of the pendency of such negotiations or
proceedings.  Mortgagee may participate in any such negotiations or
proceedings, and Mortgagor from time to time will execute and deliver to
Mortgagee all instruments requested by Mortgagee to permit such
participation.

    
      
         

      

      
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    Section
3.14      Insurance.  Mortgagor
will maintain with financially sound and reputable insurance companies insurance
on all its property in at least such amounts and against at least such risks
(but including in any event general liability) as are usually insured against in
the same general area by companies engaged in the same or a similar business and
in any case no less comprehensive in scope than that maintained by the Mortgager
as of the date hereof.  In the event of any loss under any insurance
policies so carried by Mortgagor, Mortgagee shall have the right (but not the
obligation) to make proof of loss and collect the same, and all amounts so
received shall be applied toward costs, charges and expenses (including
reasonable attorneys’ fees), if any, incurred in the collection thereof, then to
the payment, in the order determined by Mortgagee in its own discretion, of the
Indebtedness, and any balance remaining shall be subject to the order of
Mortgagor.  Mortgagee is hereby authorized but not obligated to
enforce in its name or in the name of Mortgagor payment of any or all of said
policies or settle or compromise any claim in respect thereof, and to collect
and make receipts for the proceeds thereof and Mortgagee is hereby appointed
Mortgagor’s agent and attorney-in-fact to endorse any check or draft payable to
Mortgagor in order to collect the proceeds of insurance (provided Mortgagee
shall only be entitled to enforce the power of attorney provided in this
sentence after the occurrence and during the continuation of an Event of
Default). In the event of foreclosure
of this Mortgage, or other transfer of title to the Mortgaged Property in
extinguishment in whole or in part of the Indebtedness, all right, title and
interest of Mortgagor in and to such policies then in force concerning the
Mortgaged Property and all proceeds payable thereunder shall thereupon vest in
the purchaser at such foreclosure or other transferee in the event of such other
transfer of title.

     

    Section
3.15      Compliance
with Leases.  Mortgagor (i) will observe and comply with
all of the terms and provisions, express or implied, of the oil, gas and mineral
leases covered by this Mortgage, and any other agreements or instruments
applicable thereto; and, (ii) except with the prior written consent of
Mortgagee, which consent shall not be unreasonably conditioned, withheld, or
delayed, will not amend or terminate (in any manner adverse to Mortgagor,
Mortgagee, or Mortgagor’s or Mortgagee’s interest in the Mortgaged Property or
in any manner that could reasonably be expected to result in a Material Adverse
Effect) any of such agreements or surrender, abandon or release any of such
leases in whole or in part so long as any well situated thereon, or located on
any unit containing all or any part of such leases, is capable of producing oil,
gas, casinghead gas or other hydrocarbons in paying
quantities.  Mortgagor will cause all obligations to the holders of
royalty interests and all other interests in the Mortgaged Properties to be
promptly discharged and all covenants and conditions, express or implied,
imposed upon the original lessee or his assigns by every such lease and every
other agreement relative thereto to be fully and promptly performed and to cause
all acts necessary or proper to accomplish the foregoing and prevent the breach
or forfeiture of any such lease to be fully and promptly
performed.  Mortgagor will furnish to Mortgagee ten (10) day advance
written notice of any intention not to pay (or immediately at such time that it
anticipates that it will be unable to pay) any delay rentals on the due date
thereof under any such lease.

     

    Section
3.16     Further
Assurance.  Mortgagor will, on request of Mortgagee, (i)
promptly correct any defect, error or omission which may be discovered in the
contents of this Mortgage, or in any other document or instrument executed in
connection with any of the Loan Documents, or in the execution or acknowledgment
of this Mortgage or any other document; (ii) execute, acknowledge, deliver and
record and/or file such further instruments (including, without limitation,
further deeds of trust, mortgages, security agreements, financing statements,
continuation statements, and assignments of production, accounts, funds,
contract rights, general intangibles, and proceeds) and do such further acts as
may be necessary, desirable or proper to carry out more effectively the purposes
of this Mortgage and to more fully identify and subject to the liens and
security interests hereof any property intended to be covered hereby, including
specifically, but without limitation, any renewals, additions, substitutions,
replacements, or appurtenances to the Mortgaged Property; and (iii) execute,
acknowledge, deliver, and file and/or record any document or instrument
(including specifically any financing statement) desired by Mortgagee to protect
the lien or the security interest hereunder against the rights or interests of
third persons.  Mortgagor shall pay all reasonable costs connected
with any of the foregoing.

    
      
         

      

      
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    Section
3.17      Name and Place of
Business.  Except as disclosed in writing to Mortgagee,
Mortgagor has not during the preceding five (5) years been known by or used any
other corporate or partnership, trade or fictitious name.  Mortgagor
will not cause or permit any change to be made in its name, identity, state of
formation or corporate or partnership structure, or its federal employer
identification number unless Mortgagor shall have notified Mortgagee of such
change at least thirty (30) days prior to the effective date of such change, and
shall have first taken all action required by Mortgagee for the purpose of
further perfecting or protecting the liens and security interests in the
Mortgaged Property created hereby.  Mortgagor’s exact name is the name
set forth in this Mortgage.  Mortgagor is organized under the laws of
one of the states comprising the United States (e.g. corporation, limited
partnership, registered limited liability partnership or limited liability
company).  Mortgagor is located (as determined pursuant to the UCC) in
the state under which it is organized, which is as set forth in the preamble to
this Mortgage.  Mortgagor’s principal place of business and chief
executive office, and the place where Mortgagor keeps its books and records
concerning the Mortgaged Property (including, particularly, the records with
respect to Production Proceeds from the Mortgaged Property) has for the
preceding four months, been, and will continue to be (unless Mortgagor notifies
Mortgagee of any change in writing at least thirty (30) days prior to the date
of such change), the address set forth on the signature page of this
Mortgage.

     

    Section
3.18      Compliance with Laws and
Agreements.  Mortgagor is in compliance with all governmental
requirements applicable to it or its property, including, without limitation,
all FERC regulations and the USA Patriot Act, and all indentures, agreements and
other instruments binding upon it or its property the failure with which to
comply would have a Material Adverse Effect on Mortgagor or the Mortgaged
Property.  The execution and performance of the Loan Documents, this
Mortgage and the other documents and instruments contemplated hereby and thereby
will not violate the Trading with the Enemy Act, as amended, any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto, the Executive Order referred to in the following
sentence or the U.S. Bank Secrecy Act (31 U.S.C. §§ 5311 et
seq.).  Mortgagor is not a Person described by section 1 of Executive
Order 13224 of September 24, 2001 entitled Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism,
66 Fed. Reg. 49,079 (2001), as amended, and Mortgagor does not engage in any
transactions or dealings, or is otherwise associated with any such
Persons.  Mortgagor is not bound by any agreement, document,
instrument, judgment, decree, order, statute, law, rule or regulation that
limits or could reasonably be expected to limit its performance under the Loan
Documents or this Mortgage.

     

    Section
3.19      Inspection;
Management.  Mortgagee and any persons authorized by Mortgagee
shall have the right to enter and inspect the Mortgaged Property at all
reasonable times.  If, at any time after an Event of Default by
Mortgagor, the management or maintenance of the Mortgaged Property is determined
by Mortgagee to be unsatisfactory and is not corrected within thirty (30) days
after notice to Mortgagor, Mortgagor will, to the extent Mortgagor is entitled
under third party agreements affecting the same, employ, for the duration of
such Event of Default, as managing agent of the Mortgaged Property, any person
from time to time designated or approved by Mortgagee.

     

    ARTICLE
IV

    Rights and
Remedies

     

    Section
4.01      Event of
Default.  As used in this Mortgage, an “Event of Default”
means (i) the earlier to occur of (A) the failure by Mortgagor for ten (10) days
from the date of receipt by Mortgagor of notice from Mortgagee of such failure
to comply with any covenant, agreement, warranty or condition herein required to
be observed, kept or performed or (B) ten (10) days after any executive officer
of Mortgagor obtains actual knowledge of such failure, or (ii) the occurrence of
an “Event of Default”, as defined under the Notes.

    
      
         

      

      
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    Section
4.02      Foreclosure and
Sale.

     

    (a)           If
an Event of Default shall occur and be continuing, Mortgagee shall have the
right and option to proceed with foreclosure by directing Trustee, or his
successors or substitutes in trust, to proceed with foreclosure and to sell, to
the extent permitted by law, all or any portion of the Mortgaged Property at one
or more sales, as an entirety or in parcels, at such place or places in
otherwise such manner and upon such notice as may be required by law, or, in the
absence of any such requirement, as Trustee may deem appropriate, and to make
conveyance to the purchaser or purchasers.  Where the Mortgaged
Property is situated in more than one jurisdiction, notice as above provided
shall be posted and filed in all such jurisdictions (if such notices are
required by law), and all such Mortgaged Property may be sold in any such
jurisdiction and any such notice shall designate the jurisdiction where such
Mortgaged Property is to be sold.  Cumulative of the foregoing and the
other provisions of this Section 4.02 as to any portion of the Mortgaged
Properties located in the State of West Virginia (or within the offshore area
over which the United States of America asserts jurisdiction and to which the
laws of such state are applicable with respect to this Mortgage and/or the liens
or security interests created hereby), such sales of all or any part of such
Mortgaged Properties shall be conducted at the courthouse of any county (whether
or not the counties in which such Mortgaged Properties are located are
contiguous) in the State of West Virginia in which any part of such Mortgaged
Properties is situated or which lies shoreward of any Mortgaged Property (i.e.,
to the extent a particular Mortgaged Property lies offshore within the
reasonable projected seaward extension of the relevant county boundary) as
provided by the statutes of the State of West Virginia then in force governing
sales of real estate under powers conferred by deed of trust, after having given
notice of such sale in accordance with such statutes. Nothing contained in this
Section 4.02
shall be construed so as to limit in any way Trustee’s rights to sell the
Mortgaged Property, or any portion thereof, by private sale if, and to the
extent that, such private sale is permitted under the laws of the applicable
jurisdiction or by public or private sale after entry of a judgment by any court
of competent jurisdiction so ordering.  Mortgagor hereby irrevocably
appoints Trustee to be the attorney of Mortgagor and in the name and on behalf
of Mortgagor to execute and deliver any deeds, transfers, conveyances,
assignments, assurances and notices which Mortgagor ought to execute and deliver
and do and perform any and all such acts and things which Mortgagor ought to do
and perform under the covenants herein contained and generally, to use the name
of Mortgagor in the exercise of all or any of the powers hereby conferred on
Trustee.  At any such sale: (i) whether made under the power
herein contained or any other legal enactment, or by virtue of any judicial
proceedings or any other legal right, remedy or recourse, it shall not be
necessary for Trustee to have physically present, or to have constructive
possession of, the Mortgaged Property (Mortgagor hereby covenanting and agreeing
to deliver to Trustee any portion of the Mortgaged Property not actually or
constructively possessed by Trustee immediately upon demand by Trustee) and the
title to and right of possession of any such property shall pass to the
purchaser thereof as completely as if the same had been actually present and
delivered to purchaser at such sale, (ii) each instrument of conveyance
executed by Trustee shall contain a general warranty of title, binding upon
Mortgagor and its successors and assigns, (iii) each and every recital
contained in any instrument of conveyance made by Trustee shall conclusively
establish the truth and accuracy of the matters recited therein, including,
without limitation, nonpayment of the Indebtedness, advertisement and conduct of
such sale in the manner provided herein and otherwise by law and appointment of
any successor Trustee hereunder, (iv) any and all prerequisites to the
validity thereof shall be conclusively presumed to have been performed,
(v) the receipt of Trustee or of such other party or officer making the
sale shall be a sufficient discharge to the purchaser or purchasers for its
purchase money and no such purchaser or purchasers, or its assigns or personal
representatives, shall thereafter be obligated to see to the application of such
purchase money, or be in any way answerable for any loss, misapplication or
nonapplication thereof, (vi) to the fullest extent permitted by law,
Mortgagor shall be completely and irrevocably divested of all of its right,
title, interest, claim and demand whatsoever, either at law or in equity, in and
to the property sold and such sale shall be a perpetual bar both at law and in
equity against Mortgagor, and against any and all other persons claiming or to
claim the property sold or any part thereof, by, through or under Mortgagor, and
(vii) to the extent and under such circumstances as are permitted by law,
Mortgagee may be a purchaser at any such sale, and shall have the right, after
paying or accounting for all costs of said sale or sales, to credit the amount
of the bid upon the amount of the Indebtedness (in the order of priority set
forth in Section
4.14 hereof) in lieu of cash payment.

     

    
      
         

      

      
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    (b)           With
respect to that portion, if any, of the Mortgaged Property situated in the State
of West Virginia, this instrument may be foreclosed by advertisement and
sale as provided by applicable West
Virginia statutes, and after such sale to
execute and deliver to the purchaser or purchasers good and sufficient deeds and
assignments, conveying such property so sold to the purchaser or purchasers with
general warranty of title made on behalf of Mortgagor. In such
regard, the Trustee shall publish a notice of a trustee's sale as a Class II
legal advertisement in compliance with the provisions of W. Va. Code Sec. 38-1-4 et. seq. and W. Va. Code Sec. 59-3-1,
et. seq.  The publication area
for such publication shall be the county where the property is
located.  In all cases, a copy of such notice shall be served on the
Mortgagor, by certified mail, return receipt requested, directed to the address
of the Mortgagor set forth in this Mortgage or such other address given to the
Mortgagee or said Mortgagee's agent or assignee in writing by the said Mortgagor
subsequent to the execution and delivery of this Mortgage and notice shall be
deemed complete when such notice is mailed to the aforesaid address,
notwithstanding the fact that such mail may be returned as refused or
undeliverable and shall be served by certified mail, at least twenty days prior
to the sale, upon any subordinate lienholder who has previously notified the
primary lienholder by certified mail of the existence of a subordinate
lien.  The Trustee, or his
successor or substitute, is hereby authorized and empowered to appoint any one
or more persons or entities as his attorneys-in-fact or agents to act as Trustee
under him and in his name, place and stead, such appointment to be evidenced by
a written instrument executed by the Trustee, or his successor or substitute, to
perform any one or more act or acts necessary or incident to any sale under the
power of sale hereunder, including, without limitation, the posting and filing
of any notices, the conduct of the sale and the execution and delivery of any
instruments conveying the Mortgaged Property as a result of the sale, but in the
name and on behalf of the Trustee, or his successor or substitute; and all acts
done or performed by such attorneys-in-fact or agents shall be valid, lawful and
binding as if done or performed by the Trustee, or his successor
substitute.

     

    (c)           Upon
the occurrence of an Event of Default, Mortgagee may exercise its rights of
enforcement with respect to the Mortgaged Properties or any part thereof under
the Applicable UCC of any State where any portion of the Mortgaged Properties
are located or under any other statute in force in any state to the extent the
same is applicable law.  Cumulative of the foregoing and the other
provisions of this Section 4.02: (i) to
the extent permitted by law, upon the occurrence and during the continuation of
an Event of Default Mortgagee may enter upon the Mortgaged Properties or
otherwise upon Mortgagor’s premises to take possession of, assemble and collect
the personal property portion of the Mortgaged Properties or to render it
unusable; (ii) upon the occurrence and during the continuation of an Event of
Default Mortgagee may require Mortgagor to assemble the personal property and
make it available at a place Mortgagee designates which is mutually convenient
to allow Mortgagee to take possession or dispose of the personal property;
(iii)  written notice mailed to Mortgagor as provided herein at least
five (5) business days prior to the date of public sale of the personal property
or prior to the date after which private sale of the personal property will be
made shall constitute reasonable notice; (iv) in the event of a foreclosure of
the liens, privileges and/or security interests evidenced hereby, the personal
property, or any part thereof, and the Mortgaged Properties, or any part
thereof, may, at the option of Mortgagee, be sold, as a whole or in parts,
together or separately (including, without limitation, where a portion of the
Mortgaged Properties is sold, the personal property related thereto may be sold
in connection therewith); (v) upon the occurrence and during the continuation of
an Event of Default, Mortgagee or the Trustee may, to the extent permitted under
applicable law, elect to treat the fixtures included in the Mortgaged Properties
either as real property or as personal property, or both, and proceed to
exercise such rights as apply thereto; and (vi) with respect to any sale of real
property included in the Mortgaged Properties made under the powers of sale
herein granted and conferred, Mortgagee or the Trustee may, to the extent
permitted by applicable law, include in such sale any personal property and
fixtures included in the Mortgaged Properties and relating to such real
property.

    
      
         

      

      
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    (d)           Notwithstanding
anything herein to the contrary, in the event that any provision in this
Mortgage shall be inconsistent with any provision of West Virginia law regarding
foreclosure (the “West Virginia Foreclosure Law”), the provisions of the West
Virginia Foreclosure Law shall take precedence over the provisions of this
Mortgage, but shall not invalidate or render unenforceable any other provision
of this Mortgage that can be construed in a manner consistent with West Virginia
Foreclosure Law; and if any provision of this Mortgage shall grant to Mortgagee
(including Mortgagee acting as a mortgagee-in-possession) or a receiver
appointed pursuant to the provisions of this Mortgage, any remedies upon or
following the occurrence of an Event of Default which are more limited than the
rights that would otherwise be vested in Mortgagee or such receiver under the
West Virginia Foreclosure Law in the absence of said provision, Mortgagee and
such receiver shall be vested with the remedies granted under the West Virginia
Foreclosure Law to the full extent permitted by law.

     

    Section
4.03      Agents.  Trustee
or his successor or substitute may appoint or delegate any one or more persons
as agent to perform any act or acts necessary or incident to any sale held by
Trustee, including the posting of notices and the conduct of sale, but in the
name and on behalf of Trustee, his successor or substitute.  If
Trustee or his successor or substitute shall have given notice of sale
hereunder, any successor or substitute trustee thereafter appointed may complete
the sale and the conveyance of the property pursuant thereto as if such notice
had been given by the successor or substitute trustee conducting the
sale.

     

    Section
4.04      Judicial Foreclosure;
Receivership.  If any of the Indebtedness shall become due and
payable and shall not be promptly paid, Trustee or Mortgagee shall have the
right and power to proceed by a suit or suits in equity or at law, whether for
the specific performance of any covenant or agreement herein contained or in aid
of the execution of any power herein granted, or for any foreclosure hereunder
or for the sale of the Mortgaged Property under the judgment or decree of any
court or courts of competent jurisdiction or for the enforcement of any other
appropriate legal or equitable remedy.  In addition to all other
remedies herein provided for, Mortgagor agrees that, upon the occurrence of an
Event of Default or any event or circumstance which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default hereunder,
Mortgagee shall as a matter of right be entitled to the appointment of a
receiver or receivers for all or any part of the Mortgaged Property, whether
such receivership be incident to a proposed sale (or sales) of such property or
otherwise, and without regard to the value of the Mortgaged Property or the
solvency of any person or persons liable for the payment of the Indebtedness
secured hereby, and Mortgagor does hereby consent to the appointment of such
receiver or receivers, waives any and all defenses to such appointment, and
agrees not to oppose any application therefor by Mortgagee, and agrees that such
appointment shall in no manner impair, prejudice or otherwise affect the rights
of Mortgagee under Article II
hereof.  Mortgagor expressly waives notice of a hearing for
appointment of a receiver and the necessity for bond or an accounting by the
receiver.  Nothing herein is to be construed to deprive Mortgagee of
any other right, remedy or privilege it may now or hereafter have under the law
to have a receiver appointed.  Any money advanced by Trustee and/or
Mortgagee in connection with any such receivership shall be a demand obligation
(which obligation Mortgagor hereby expressly promises to pay) included in the
Indebtedness owing by Mortgagor to the Trustee and/or Mortgagee and shall bear
interest from the date of making such advance by Trustee and/or Mortgagee until
paid at the then applicable interest rate under the Note (the “Applicable
Rate”).

    
      
         

      

      
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    Section
4.05      Foreclosure for
Installments.  Mortgagee shall also have the option to proceed
with foreclosure in satisfaction of any installments of the Indebtedness which
have not been paid when due either through the courts or by directing Trustee or
his successors in trust to proceed with foreclosure in satisfaction of the
matured but unpaid portion of the Indebtedness as if under a full foreclosure,
conducting the sale as herein provided and without declaring the entire
principal balance and accrued interest due; such sale may be made subject to the
unmatured portion of the Indebtedness, and any such sale shall not in any manner
affect the unmatured portion of the Indebtedness, but as to such unmatured
portion of the Indebtedness, this Mortgage shall remain in full force and effect
just as though no sale had been made hereunder.  It is further agreed
that several sales may be made hereunder without exhausting the right of sale
for any unmatured part of the Indebtedness, it being the purpose hereof to
provide for a foreclosure and sale of the security for any matured portion of
the Indebtedness without exhausting the power to foreclose and sell the
Mortgaged Property for any subsequently maturing portion of the
Indebtedness.

     

    Section
4.06      Separate
Sales.  The Mortgaged Property may be sold in one or more
parcels and in such manner and order as Mortgagee, in its sole discretion, may
elect, 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.

     

    Section
4.07      Possession of Mortgaged
Property.  Mortgagor agrees to the full extent that it lawfully
may, that, in case one or more of the Events of Default shall have occurred and
shall not have been remedied, then, and in every such case, Trustee or Mortgagee
shall have the right and power to enter into and upon and take possession of all
or any part of the Mortgaged Property in the possession of Mortgagor, its
successors or assigns, or its or their agents or servants, and may exclude
Mortgagor, its successors or assigns, and all persons claiming under Mortgagor,
and its or their agents or servants wholly or partly therefrom; and, holding the
same, Trustee may use, administer, manage, operate and control the Mortgaged
Property and conduct the business thereof to the same extent as Mortgagor, its
successors or assigns, might at the time do and may exercise all rights and
powers of Mortgagor, in the name, place and stead of Mortgagor, or otherwise as
Trustee shall deem best.  All reasonable costs, expenses and
liabilities of every character incurred by Trustee and/or Mortgagee in
administering, managing, operating, and controlling the Mortgaged Property shall
constitute a demand obligation (which obligation Mortgagor hereby expressly
promises to pay) owing by Mortgagor to Trustee and/or Mortgagee and shall bear
interest from date of expenditure until paid at the Applicable Rate, all of
which shall constitute a portion of the Indebtedness and shall be secured by
this Mortgage and all other security instruments.

     

    Section
4.08      Occupancy After
Foreclosure.  In the event there is a foreclosure sale
hereunder and at the time of such sale Mortgagor or Mortgagor’s representatives,
successors or assigns or any other person claiming any interest in the Mortgaged
Property by, through or under Mortgagor, are occupying or using the Mortgaged
Property or any part thereof, each and all shall immediately become the tenant
of the purchaser at such sale, which tenancy shall be a tenancy from day to day,
terminable at the will of either the landlord or tenant, or at a reasonable
rental per day based upon the value of the property occupied, such rental to be
due daily to the purchaser; to the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein apparently to
the contrary, have the sole option to demand immediate possession following the
sale or to permit the occupants to remain as tenants at will.  In the
event the tenant fails to surrender possession of said property upon demand, the
purchaser shall be entitled to institute and maintain a summary action for
possession of the Mortgaged Property (such as an action for forcible entry and
detainer) in any court having jurisdiction.

    
      
         

      

      
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    Section
4.09      Remedies Cumulative,
Concurrent and Nonexclusive.  Every right, power and remedy
herein given to Trustee or Mortgagee shall be cumulative and in addition to
every other right, power and remedy herein specifically given or now or
hereafter existing in equity, at law or by statute (including specifically those
granted by the Applicable UCC in effect and applicable to the Mortgaged Property
or any portion thereof) 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 Trustee or
Mortgagee, 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 Trustee or 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.

     

    Section
4.10      No Release of
Obligations.  Neither Mortgagor, any other Mortgagor Party, any
guarantor nor any other person hereafter obligated for payment of all or any
part of the Indebtedness shall be relieved of such obligation by reason of (a)
the failure of Trustee to comply with any request of Mortgagor, or any guarantor
or any other person so obligated to foreclose the lien of this Mortgage or to
enforce any provision hereunder or under the any of the Loan Documents; (b) the
release, regardless of consideration, of the Mortgaged Property or any portion
thereof or interest therein or the addition of any other property to the
Mortgaged Property; (c) any agreement or stipulation between any subsequent
owner of the Mortgaged Property and Mortgagee extending, renewing, rearranging
or in any other way modifying the terms of this Mortgage without first having
obtained the consent of, given notice to or paid any consideration to Mortgagor,
any other Mortgagor Party, any guarantor or such other person, and in such event
Mortgagor, the Mortgagor Parties, guarantor and all such other persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by Mortgagee; or (d) by any other act or occurrence, save and except the
complete payment of the Indebtedness and the complete fulfillment of all
obligations hereunder or under the Loan Documents.

     

    Section
4.11      Release of and Resort to
Collateral.  Mortgagee 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
interest created in or evidenced by this Mortgage or its stature as a lien and
security interest in and to the Mortgaged Property (subject to the Classic Oil
Mortgage as otherwise delineated herein so long as same remains in force in
effect), and without in any way releasing or diminishing the liability of any
person or entity liable for the repayment of the Indebtedness.  For
payment of the Indebtedness, Mortgagee may resort to any other security therefor
held by Mortgagee or Trustee in such order and manner as Mortgagee may
elect.

     

    Section
4.12      Waiver of Redemption, Notice
and Marshalling of Assets, Etc.  To the fullest extent
permitted by law, Mortgagor hereby irrevocably and unconditionally waives and
releases (a) all benefits that might accrue to Mortgagor by virtue of any
present or future moratorium law or other law exempting the Mortgaged Property
from attachment, levy or sale on execution or providing for any appraisement,
valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment; provided, however, that if the laws of any state
do not permit the redemption period to be waived, the redemption period is
specifically reduced to the minimum amount of time allowable by statute; (b) all
notices of any Event of Default or of Mortgagee’s intention to accelerate
maturity of the Indebtedness or of Trustee’s election to exercise or his actual
exercise of any right, remedy or recourse provided for hereunder or under the
Loan Documents; and (c) any right to a marshalling of assets or a sale in
inverse order of alienation.  If any law referred to in this Mortgage
and now in force, of which Mortgagor or its successor or successors might take
advantage despite the provisions hereof, shall hereafter be repealed or cease to
be in force, such law shall thereafter be deemed not to constitute any part of
the contract herein contained or to preclude the operation or application of the
provisions hereof.

    
      
         

      

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

     

    Section
4.14      Application of
Proceeds.  Subject to the terms and provisions of the Classic
Oil Mortgage, the proceeds of any sale of the Mortgaged Property or any part
thereof and all other monies received by Trustee or Mortgagee in any proceedings
for the enforcement hereof or otherwise, whose application has not elsewhere
herein been specifically provided for, shall be applied:

     

    (a)           first,
to the payment of all costs and expenses incurred by Trustee or Mortgagee
incident to the enforcement of this Mortgage, the Loan Documents or any of the
Indebtedness (including, without limiting the generality of the foregoing,
expenses of any entry or taking of possession, of any sale, of advertisement
thereof, and of conveyances, and court costs, compensation of agents and
employees, legal fees and a reasonable commission to Trustee acting in
connection herewith or hereunder), and to the payment of all other charges,
expenses, liabilities and advances incurred or made by Trustee or Mortgagee
under this Mortgage or in executing any trust or power hereunder;

     

    (b)           second,
to payment of the Indebtedness in such order and manner as Mortgagee may elect
in Mortgagee’s sole discretion; and

     

    (c)           third,
to Mortgagor or such other persons as may be entitled thereto by law or as
otherwise required by any court of competent jurisdiction.

     

    Section
4.15     Resignation of
Operator.  In addition to all rights and remedies under this
Mortgage, at law and in equity, if any Event of Default shall occur and Trustee
or Mortgagee shall exercise any remedies under this Mortgage with respect to any
portion of the Mortgaged Property (or Mortgagor shall transfer any Mortgaged
Property “in lieu of” foreclosure), Mortgagee or Trustee shall have the right to
request that any operator of any Mortgaged Property which is either Mortgagor or
any affiliate of Mortgagor to resign as operator under the joint operating
agreement applicable thereto, and no later than 60 days after receipt by
Mortgagor of any such request, Mortgagor shall resign (or cause such other party
to resign) as operator of such Mortgaged Property.

     

    Section
4.16     Indemnity.  In
connection with any action taken by Trustee and/or Mortgagee pursuant to this
Mortgage, Trustee and/or Mortgagee and their officers, directors, Partners,
Members, Investors, Equity Holders, employees, representatives, agents,
advisors, attorneys, accountants and experts and any persons or entities owned
or controlled by Trustee, or Mortgagee or any such other person or entity
(“Indemnified
Parties”) shall not be liable for any loss sustained by Mortgagor
resulting from an assertion that Mortgagee has received funds from the
production of Hydrocarbons claimed by third persons or any act or omission of
any Indemnified Party in administering, managing, operating or controlling the
Mortgaged Property, including such loss which may result from the ordinary
negligence of an Indemnified Party, unless such loss is caused by the gross
negligence or willful misconduct of an Indemnified Party, nor shall Trustee
and/or Mortgagee be obligated to perform or discharge any obligation, duty or
liability of Mortgagor. Mortgagor shall and does hereby agree to indemnify each
Indemnified Party for, and to hold each Indemnified Party harmless from, any and
all liability, loss or damage which may or might be incurred by any Indemnified
Party by reason of this Mortgage or the exercise of rights or remedies
hereunder; should Trustee and/or Mortgagee make any expenditure on account of
any such liability, loss or damage, the amount thereof, including reasonable
costs and expenses and reasonable attorneys’ fees, shall be a demand obligation
(which obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor
to Trustee and/or Mortgagee and shall bear interest from the date expended until
paid at the applicable interest rate, shall be a part of the Indebtedness and
shall be secured by this Mortgage and any other Security
Instrument.  Mortgagor hereby assents to, ratifies and confirms any
and all actions of Trustee and/or Mortgagee with respect to the Mortgaged
Property taken under this Mortgage.  The liabilities of Mortgagor as
set forth in this Section
4.16 shall survive the termination of this
Mortgage.

    
      
         

      

      
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    ARTICLE
V

    Trustee

     

    Section
5.01     Duties, Rights, and Powers
of Trustee.  It shall be no part of the duty of Trustee to see
to any recording, filing or registration of this Mortgage or any other
instrument in addition or supplemental thereto, or to give any notice thereof,
or to see to the payment of or be under any duty in respect of any tax or
assessment or other governmental charge which may be levied or assessed on the
Mortgaged Property, or any part thereof, or against Mortgagor, or to see to the
performance or observance by Mortgagor of any of the covenants and agreements
contained herein.  Trustee shall not be responsible for the execution,
acknowledgment or validity of this Mortgage or of any instrument in addition or
supplemental hereto or for the sufficiency of the security purported to be
created hereby, and makes no representation in respect thereof or in respect of
the rights of Mortgagee.  Trustee shall have the right to advise with
counsel upon any matters arising hereunder and shall be fully protected in
relying as to legal matters on the advice of counsel.  Trustee shall
not incur any personal liability hereunder, except for Trustee’s own willful
misconduct; and Trustee shall have the right to rely on any instrument, document
or signature authorizing or supporting any action taken or proposed to be taken
by him hereunder, believed by him in good faith to be genuine.

     

    Section
5.02      Successor
Trustee.  Trustee may resign by written notice addressed to
Mortgagee or be removed at any time with or without cause by an instrument in
writing duly executed on behalf of Mortgagee.  In case of the death,
resignation or removal of Trustee, a successor trustee may be appointed by
Mortgagee by instrument of substitution complying with any applicable
requirements of law, or, in the absence of any such requirement, without other
formality than appointment and designation in writing.  Written notice
of such appointment and designation shall be given by Mortgagee to Mortgagor,
but the validity of any such appointment shall not be impaired or affected by
failure to give such notice or by any defect therein.  Such
appointment and designation shall be full evidence of the right and authority to
make the same and of all the facts therein recited, and, upon the making of any
such appointment and designation, this Mortgage shall vest in the successor
trustee all the estate and title in and to all of the Mortgaged Property, and
the successor trustee shall thereupon succeed to all of the rights, powers,
privileges, immunities and duties hereby conferred upon Trustee named herein,
and one such appointment and designation shall not exhaust the right to appoint
and designate a successor trustee hereunder but such right may be exercised
repeatedly as long as any Indebtedness remains unpaid hereunder.  To
facilitate the administration of the duties hereunder, Mortgagee may appoint
multiple trustees to serve in such capacity or in such jurisdictions as
Mortgagee may designate.

    
      
         

      

      
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    Section
5.03      Retention of
Moneys.  All moneys received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other moneys
(except to the extent required by law), and Trustee shall be under no liability
for interest on any moneys received by him hereunder.

     

    ARTICLE
VI

    Miscellaneous

     

    Section
6.01      Instrument Construed as
Mortgage, Etc.  With respect to any portions of the Mortgaged
Property located in any state or other jurisdiction the laws of which do not
provide for the use or enforcement of a deed of trust or the office, rights and
authority of Trustee as herein provided, the general language of conveyance
hereof to Trustee is intended and the same shall be construed as words of
mortgage unto and in favor of Mortgagee and the rights and authority granted to
Trustee herein may be enforced and asserted by Mortgagee in accordance with the
laws of the jurisdiction in which such portion of the Mortgaged Property is
located and the same may be foreclosed at the option of Mortgagee as to any or
all such portions of the Mortgaged Property in any manner permitted by the laws
of the jurisdiction in which such portions of the Mortgaged Property is
situated.  This Mortgage may be construed as a mortgage, deed of
trust, chattel mortgage, conveyance, assignment, security agreement, pledge,
financing statement, hypothecation or contract, or any one or more of them, in
order fully to effectuate the lien hereof and the purposes and agreements herein
set forth.

     

    Section
6.02      Release of
Mortgage.  At such time, if any, as (i) all Indebtedness under
the Notes secured hereby shall be finally and irrevocably paid in full in cash,
(ii) no Notes shall remain outstanding, (iii) all commitments to lend under the
Purchase Agreement shall have terminated and (iv) there shall exist no other
outstanding payment or reimbursement obligations (other than contingent
indemnification obligations for which no claims shall have been asserted) of the
Mortgagor or any of its Subsidiaries to the Mortgagee under any of the
Transaction Documents, Mortgagee shall forthwith cause satisfaction and
discharge of this Mortgage to be entered upon the record at the expense of
Mortgagor and shall execute and deliver or cause to be executed and delivered
such instruments of satisfaction and reassignment as may be
appropriate.  Otherwise, this Mortgage shall remain and continue in
full force and effect.

     

    Section
6.03      Severability.  If
any provision hereof is invalid or unenforceable in any jurisdiction, the other
provisions hereof shall remain in full force and effect in such jurisdiction and
the remaining provisions hereof shall be liberally construed in favor of Trustee
and Mortgagee in order to effectuate the provisions hereof, and the invalidity
or unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of any such provision in any other
jurisdiction.

     

    Section
6.04      Successors and Assigns of
Parties.  The term “Mortgagee” as used herein shall mean and
include any legal owner, holder, assignee or pledgee of any of the Indebtedness
secured hereby.  The terms used to designate Trustee, Mortgagee and
Mortgagor shall be deemed to include the respective successors and assigns of
such parties.

     

    Section
6.05      Satisfaction of Prior
Encumbrance.  To the extent that proceeds of the Notes are used
to pay indebtedness secured by any outstanding lien, security interest, charge
or prior encumbrance against the Mortgaged Property, such proceeds have been
advanced by Mortgagee at Mortgagor’s request, and Mortgagee shall be subrogated
to any and all rights, security interests and liens owned by any owner or holder
of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by Mortgagee, Mortgagor hereby waives and
releases all demands and causes of action for offsets and payments to, upon and
in connection with the said indebtedness.

     

    
      
         

      

      
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    Section
6.06     Subrogation of
Trustee.  This Mortgage is made with full substitution and
subrogation of Trustee and his successors in this trust and his and their
assigns in and to all covenants and warranties by others heretofore given or
made in respect of the Mortgaged Property or any part thereof.

     

    Section
6.07      Nature of
Covenants.  The covenants and agreements herein contained shall
constitute covenants running with the land and interests covered or affected
hereby and shall be binding upon the heirs, legal representatives, successors
and assigns of the parties hereto.

     

    Section
6.08      Notices.  All
notices, requests, consents, demands and other communications required or
permitted hereunder shall be given or furnished in accordance with the terms of
the Purchase Agreement relating to the giving of notices (it being agreed to and
understood that delivery to Mortgagor of any such notice, request, consent,
demand or other communication shall be deemed delivery to
Mortgagor).

     

    Section
6.09     Counterparts.  This
Mortgage is being executed in several counterparts, all of which are identical,
except that to facilitate recordation, if the Mortgaged Property is situated in
more than one jurisdiction, descriptions of only those portions of the Mortgaged
Property located in, and descriptions of the Prior Mortgages (as defined herein)
for, the jurisdiction in which a particular counterpart is recorded shall be
attached as Exhibit
A thereto.  An Exhibit A containing
a description of all Mortgaged Property wheresoever situated will be attached to
that certain counterpart to be attached to a Financing Statement and filed with
the Secretary of State of Delaware and West Virginia in their respective Uniform
Commercial Code Records.  Each of such counterparts shall for all
purposes be deemed to be an original and all such counterparts shall together
constitute but one and the same instrument provided that a facsimile
signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.

     

    Section
6.10     Effective as a Financing
Statement.  This Mortgage, among other things, covers goods
which are or are to become fixtures on the real property described herein and
covers as-extracted collateral related to the real/immovable property described
herein.  This Mortgage shall be effective as a financing statement (i)
filed as a fixture filing with respect to all fixtures included within the
Mortgaged Property, (ii) covering as-extracted collateral with respect to all
as-extracted collateral included within the Mortgaged Property (including,
without limitation, all oil, gas, other minerals and other substances of value
which may be extracted from the earth at the wellhead or minehead) and (iii)
covering all other Mortgaged Property.  This Mortgage is to be filed
for record in the real/immovable property records of each county where any part
of the Mortgaged Property is situated and may also be filed in the offices of
any relevant state agency (or any successor agencies).  The mailing
address of Mortgagor is the address of Mortgagor set forth at the end of this
Mortgage and the address of Mortgagee from which information concerning the
security interests hereunder may be obtained is the address of Mortgagee set
forth at the end of this Mortgage.  Nothing contained in this
paragraph shall be construed to limit the scope of this Mortgage nor its
effectiveness as a financing statement covering any type of
property.  A carbon, photographic, facsimile or other reproduction of
this Mortgage or of any financing statement relating to this Mortgage shall be
sufficient as a financing statement for any of the purposes referred to this
Section.  Without limiting any other provision herein, Mortgagor
hereby authorizes Mortgagee to file, in any filing or recording office, one or
more financing statements and any renewal or continuation statements
thereof.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    Section
6.11      No Impairment of
Security.  To the extent allowed by applicable law, the lien,
privilege, security interest and other security rights hereunder shall not be
impaired by any indulgence, moratorium or release which may be granted
including, but not limited to, any renewal, extension or modification which may
be granted with respect to any secured obligations, or any surrender,
compromise, release, renewal, extension, exchange or substitution which may be
granted in respect of the Mortgaged Property (including, without limitation,
Production Proceeds), or any part thereof or any interest therein, or any
release or indulgence granted to any borrower, endorser, guarantor or surety of
any Indebtedness.

     

    Section
6.12       Acts Not Constituting
Waiver.  Any default may be waived without waiving any other
prior or subsequent default.  Any default may be remedied without
waiving any other default.  Neither failure to exercise, nor delay in
exercising, any right, power or remedy upon any default shall be construed as a
waiver of such default or as a waiver of the right to exercise any such right,
power or remedy at a later date.  No single or partial exercise of any
right, power or remedy hereunder shall exhaust the same or shall preclude any
other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time.  No
modification or waiver of any provision hereof nor consent to any departure by
Mortgagor therefrom shall in any event be effective unless the same shall be in
writing and signed by Mortgagee and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which given and to
the extent therein specified.  No notice nor demand on Mortgagor in
any case shall of itself entitle Mortgagor to any other or further notice or
demand in similar or other circumstances.  Acceptance of any payment
in an amount less than the amount then due on any Indebtedness shall be deemed
an acceptance on account only and shall not in any way excuse the existence of
default hereunder.

     

    Section
6.13      Mortgagor’s
Successors.  In the event the ownership of any Mortgaged
Property or any part thereof becomes vested in a person other than Mortgagor,
then, without notice to Mortgagor, such successor or successors in interest may
be dealt with, with reference to this Mortgage and to the obligations secured
hereby, in the same manner as with Mortgagor, without in any way vitiating or
discharging Mortgagor’s liability hereunder or for the payment of the
Indebtedness or performance of the obligations secured hereby.  No
transfer of any Mortgaged Property, no forbearance, and no extension of the time
for the payment of any Indebtedness secured hereby, shall operate to release,
discharge, modify, change or affect, in whole or in part, the liability of
Mortgagor hereunder or for the payment of the Indebtedness or performance of the
obligations secured hereby, or the liability of any other person hereunder or
for the payment of the Indebtedness.

     

    Section
6.14      Certain
Consents.  Except where otherwise expressly provided herein, in
any instance hereunder where the approval, consent or the exercise of judgment
of Mortgagee is required, the granting or denial of such approval or consent and
the exercise of such judgment shall be within the sole discretion of Mortgagee,
and Mortgagee shall not, for any reason or to any extent, be required to grant
such approval or consent or exercise such judgment in any particular manner,
regardless of the reasonableness of either the request or the judgment of such
party.

     

    Section
6.15     Governing
Law.  WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, THIS
MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE AND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT THAT TO THE EXTENT THAT THE LAW OF A STATE IN WHICH A PORTION OF THE
MORTGAGED PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A PORTION OF
THE MORTGAGED PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF THE MORTGAGEE,
APPROPRIATELY GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS
RELATING TO THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, PRIVILEGES,
SECURITY INTERESTS AND OTHER RIGHTS AND REMEDIES OF THE TRUSTEE OR MORTGAGEE
GRANTED HEREIN, THE LAW OF SUCH STATE SHALL APPLY AS TO THAT PORTION OF THE
MORTGAGED PROPERTY LOCATED IN (OR WHICH IS OTHERWISE SUBJECT TO THE LAWS OF)
SUCH STATE.

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    Section
6.16      Exculpation
Provisions.  Each
of the parties hereto specifically agrees that it has a duty to read this
Mortgage; and agrees that it is charged with notice and knowledge of the terms
of this Mortgage; that it has in fact read this Mortgage and is fully informed
and has full notice and knowledge of the terms, conditions and effects of this
Mortgage; that it has been represented by independent legal counsel of its
choice throughout the negotiations preceding its execution of this Mortgage; and
has received the advice of its attorney in entering into this Mortgage; and that
it recognizes that certain of the terms of this Mortgage result in one party
assuming the liability inherent in some aspects of the transaction and relieving
the other party of its responsibility for such liability.  Each party
hereto agrees and covenants that it will not contest the validity or
enforceability of any exculpatory provision of this Mortgage on the basis that
the party had no notice or knowledge of such provision or that the provision is
not “conspicuous.”

     

    Section
6.17     FINAL
AGREEMENT.    THE TRANSACTION DOCUMENTS, THIS
MORTGAGE AND THE SECURITY DOCUMENTS AND THE OTHER WRITTEN DOCUMENTS EXECUTED IN
CONNECTION THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

     

    Section
6.18      Subrogation; Prior
Mortgages.  To the extent that proceeds of the Indebtedness are
used to pay obligations secured by any outstanding lien, privilege, security
interest, charge or prior encumbrance against any Mortgaged Property (“Prior Mortgages”),
such proceeds have been advanced at Mortgagor's request, and the Trustee for the
benefit of the Mortgagee or the Mortgagee as agent for the party or parties
advancing the same shall be subrogated to any and all rights, security interests
and liens owned by any owner or holder of such Prior Mortgages, privileges,
security interests, charges or encumbrances, irrespective of whether said liens,
privileges, security interests, charges or encumbrances are released, and it is
expressly understood that, in consideration of the payment of such obligations,
Mortgagor hereby waives and releases all demands and causes of action for
offsets and payments to, upon and in connection with the said
obligations.  Mortgagor and Mortgagee acknowledge that this Mortgage
amends, restates and consolidates the Prior Mortgages, and all liens, claims,
rights, titles, interests and benefits created and granted by the Prior
Mortgages shall continue to exist, remain valid and subsisting, shall not be
impaired or released hereby, shall remain in full force and effect and are
hereby renewed, extended, carried forward and conveyed as security for the
Indebtedness.

     

    Section
6.19      Compliance with Usury
Laws.  It is the intent of Mortgagor, Mortgagee and all other
parties to the Transaction Documents to contract in strict compliance with
applicable usury law from time to time in effect.  In furtherance
thereof, it is stipulated and agreed that none of the terms and provisions
contained herein or in the other Transaction Documents shall ever be construed
to create a contract to pay, for the use, forbearance or detention of money,
interest in excess of the maximum amount of interest permitted to be collected,
charged, taken or received by applicable law from time to time in
effect.  The parties expressly agree that the laws of the state of the
location of payment (the State of New York) and not the laws of the State of
West Virginia govern the applicable interest rates.

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    Section
6.20      Certain Obligations of
Mortgagor.  Without limiting Mortgagor's obligations hereunder,
Mortgagor's liability hereunder and the obligations secured hereby shall extend
to and include all post petition interest, expenses and other duties and
liabilities with respect to Mortgagor's obligations hereunder which would be
owed but for the fact that the same may be unenforceable due to the existence of
a bankruptcy, reorganization or similar proceeding.

     

    Section
6.21      Authority of
Mortgagee.  The holders of the Indebtedness secured hereby may,
by agreement among them, provide for and regulate the exercise of rights and
remedies hereunder, but, unless and until modified to the contrary in writing
signed by all such persons and recorded in the same counties as this Mortgage is
recorded, (i) all persons other than Mortgagor and its affiliates shall be
entitled to rely on the releases, waivers, consents, approvals, notifications
and other acts (including, without limitation, or the appointment or
substitution of trustees hereunder and the bidding in of all or any part of the
Indebtedness held by any one or more persons, whether the same be conducted
under the provisions hereof or otherwise) of Mortgagee, without inquiry into any
such agreements or the existence of required consent or approval of any holders
of Indebtedness and without the joinder of any party other than Mortgagee in
such releases, waivers, consents, approvals, notifications or other acts and
(ii) all notices, requests, consents, demands and other communications required
or permitted to be given hereunder may be given to Mortgagee.

     

    [rest of
page intentionally left blank; signature page follows]

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    WITNESS
THE EXECUTION HEREOF, this 2nd day of
October, 2009, to be effective as of said date (the “Effective
Date”).

     

    
      
        	 
      	
                MORTGAGOR:

              
	 
      	 
      
	 
      	
                VELOCITY ENERGY PARTNERS
      LP, a Delaware Limited Partnership

              
	 
      	 
      
	 
      	
                By:
      Velocity Energy Limited LLC, a Texas Limited Liability Company, It’s
      General Partner

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ D. E. Vandenberg

              
	 
      	 
      	
                Name:  D.
      E. Vandenberg

              
	 
      	 
      	
                Its:       President

              

      

    

    

    
      The name
and address of the Debtor/Mortgagor is:

    

    

    
      	
               
      

            	
              523
      N. Sam Houston Parkway. East, Suite
175

            

    

    Houston,
TX 77060

     

    
      The name
and address of the Secured Party/Mortgagee is:

    

    

    
      	
               
      

            	
              Summerline
      Asset Management, LLC

            

    

    
      	
               
      

            	
              70
      West Red Oak Lane, 4th Floor

            

    

    White
Plains, New York  10604

    Attention:  Robert
J. Brantman

    Telecopy:  (914)
697-4767

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
        	
                STATE
      OF TEXAS

              	
                )

              
	 
      	
                )

              
	
                COUNTY
      OF HARRIS

              	
                )

              
	 
      	
                )

              
	
                CITY
      OF HOUSTON

              	
                )

              

      

    

     

    
      	
               
      

            	
              The
      foregoing instrument was acknowledged before me this 1st day of
      October, 2009, by D. E. Vandenberg, as President of Velocity Energy
      Limited LLC, a Texas limited liability company, as General Partner of
      Velocity Energy Partners, LP, a Delaware limited partnership, on behalf of
      said partnership.

            

    

     

    Witness
my hand and official seal.

     

    My
Commission Expires:      1/19/11                                             

     

    
      
        
          
            	 
      	 
      
	 
      	/s/
      Pamela Denise Lee
	 
      	
                    Notary
      Public

                  
	 	 
	
                    [STAMP]

                  	 

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  	
                                                          WELL

                                                        	 
      	
                                                          LEASE

                                                        	 
      	 
      	 
      	 
      	 
      	
                                                          LEASE

                                                        	 
      	
                                                          LEASE

                                                        	 
      	
                                                          RECORDING

                                                        	 
      	
                                                          BPO

                                                        	 
      	
                                                          BPO

                                                        	 
      	
                                                          APO

                                                        	 
      	
                                                          APO

                                                        	 
	
                                                          NAME

                                                        	 
      	
                                                          NAME

                                                        	 
      	
                                                          PROSPECT

                                                        	 
      	
                                                          COUNTY

                                                        	 
      	
                                                          DATE

                                                        	 
      	
                                                          ACRES

                                                        	 
      	
                                                          BOOK

                                                        	 
      	
                                                          PAGE

                                                        	 
      	
                                                          WI

                                                        	 
      	
                                                          NRI

                                                        	 
      	
                                                          WI

                                                        	 
      	
                                                          NRI

                                                        	 
	
                                                          ADKINS
      #1 PDP

                                                        	 
      	
                                                          Adkins,
      Artimus & Glenna E.

                                                        	 
      	
                                                          INDIAN
      CREEK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          02/01/99

                                                        	 
      	
                                                          7.71

                                                        	 
      	
                                                          399

                                                        	 
      	
                                                          733

                                                        	 
      	
                                                          15.000

                                                        	 
      	
                                                          12.825

                                                        	 
      	
                                                          15.000

                                                        	 
      	
                                                          12.825

                                                        	 
	
                                                          AUREDNICK
      #1 PDP

                                                        	 
      	
                                                          Aurednick,
      Robert

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          04/07/05

                                                        	 
      	
                                                          8.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          906

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.450

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.450

                                                        	 
	
                                                          BOBO
      #1 PDP

                                                        	 
      	
                                                          Bobo,
      Mildred Vance & Charles R.

                                                        	 
      	
                                                          GILBERT
      CREEK

                                                        	 
      	
                                                          MINGO

                                                        	 
      	
                                                          02/15/62

                                                        	 
      	
                                                          60.00

                                                        	 
      	
                                                          BCL
      43

                                                        	 
      	
                                                          294

                                                        	 
      	
                                                          75.000

                                                        	 
      	
                                                          66.250

                                                        	 
      	
                                                          75.000

                                                        	 
      	
                                                          66.250

                                                        	 
	
                                                          BOLEN#1
      PDP

                                                        	 
      	
                                                          Bolen,
      Norvel & Darlene

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          10/12/05

                                                        	 
      	
                                                          15.00

                                                        	 
      	
                                                          437

                                                        	 
      	
                                                          721

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          1.119

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          1.119

                                                        	 
	
                                                          BROWNING
      #1 PDP

                                                        	 
      	
                                                          Browning,
      Emmett & Deborah

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          04/23/05

                                                        	 
      	
                                                          15.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          903

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.470

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.470

                                                        	 
	
                                                          BRYANT
      #1 PDP

                                                        	 
      	
                                                          Bryant,
      Johnny, Jr.

                                                        	 
      	
                                                          OCEANA

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          05/12/07

                                                        	 
      	
                                                          6.00

                                                        	 
      	
                                                          437

                                                        	 
      	
                                                          691

                                                        	 
      	
                                                          4.000

                                                        	 
      	
                                                          3.300

                                                        	 
      	
                                                          4.000

                                                        	 
      	
                                                          3.300

                                                        	 
	
                                                          CHAMBERS
      #1 PDP

                                                        	 
      	
                                                          Chambers,
      Watson; Post, Mary Jo & Jack

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          09/23/03

                                                        	 
      	
                                                          186.00

                                                        	 
      	
                                                          417

                                                        	 
      	
                                                          971

                                                        	 
      	
                                                          1.500

                                                        	 
      	
                                                          1.670

                                                        	 
      	
                                                          1.500

                                                        	 
      	
                                                          1.670

                                                        	 
	
                                                          CNB
      748 PDP

                                                        	 
      	
                                                          Charleston
      National Bank (assignment)

                                                        	 
      	
                                                          BOONE
      COUNTY

                                                        	 
      	
                                                          BOONE

                                                        	 
      	
                                                          10/01/77

                                                        	 
      	
                                                          WELLBORE

                                                        	 
      	
                                                          O&G
      23

                                                        	 
      	
                                                          775

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          80.280

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          80.280

                                                        	 
	
                                                          CLINE,
      B.  #1 PDNP

                                                        	 
      	
                                                          Cline,
      Bobby & Yvonne

                                                        	 
      	
                                                          CLEAR
      FORK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          04/09/05

                                                        	 
      	
                                                          31.94

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          922

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.550

                                                        	 
      	
                                                          2.500

                                                        	 
      	
                                                          2.550

                                                        	 
	
                                                          CLINE,
      ELMER #1 PDP

                                                        	 
      	
                                                          Cline,
      Elmer et al.

                                                        	 
      	
                                                          GILBERT
      CREEK

                                                        	 
      	
                                                          MINGO

                                                        	 
      	
                                                          10/09/61

                                                        	 
      	
                                                          113.00

                                                        	 
      	
                                                          BCL
      42

                                                        	 
      	
                                                          331

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          87.500

                                                        	 
      	
                                                          100.000

                                                        	 
      	
                                                          87.500

                                                        	 
	
                                                          CLINE,
      ELMER #2 PDP

                                                        	 
      	
                                                          Cline,
      Elmer et al.

                                                        	 
      	
                                                          GILBERT
      CREEK

                                                        	 
      	
                                                          MINGO

                                                        	 
      	
                                                          10/09/61

                                                        	 
      	
                                                          113.00

                                                        	 
      	
                                                          BCL
      42

                                                        	 
      	
                                                          331

                                                        	 
      	
                                                          15.500

                                                        	 
      	
                                                          15.250

                                                        	 
      	
                                                          15.500

                                                        	 
      	
                                                          15.250

                                                        	 
	
                                                          CLINE,
      R. S. #1 PDP

                                                        	 
      	
                                                          Cline,
      R. S. & Sadie

                                                        	 
      	
                                                          ELK
      LICK

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          02/01/98

                                                        	 
      	
                                                          88.00

                                                        	 
      	
                                                          393

                                                        	 
      	
                                                          920

                                                        	 
      	
                                                          30.000

                                                        	 
      	
                                                          27.650

                                                        	 
      	
                                                          30.000

                                                        	 
      	
                                                          27.650

                                                        	 
	
                                                          COOK
      #1 PDP

                                                        	 
      	
                                                          Cook,
      George R.

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          03/27/06

                                                        	 
      	
                                                          30.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          950

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
	
                                                          COOK
      #1 PDP

                                                        	 
      	
                                                          Cook,
      Larry W.

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          03/27/06

                                                        	 
      	
                                                          30.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          948

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
      	
                                                          5.526

                                                        	 
      	
                                                          4.560

                                                        	 
	
                                                          COOK
      #2 PDP

                                                        	 
      	
                                                          Cook,
      George R.

                                                        	 
      	
                                                          OCEANA
      EAST

                                                        	 
      	
                                                          WYOMING

                                                        	 
      	
                                                          03/27/06

                                                        	 
      	
                                                          30.00

                                                        	 
      	
                                                          433

                                                        	 
      	
                                                          950

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          0.857

                                                        	 
      	
                                                          1.039

                                                        	 
      	
                                                          0.857

                                                        	 

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        
          	
                  COOK
      #2 PDP

                	 
      	
                  Cook,
      Larry W.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  03/27/06

                	 
      	
                  30.00

                	 
      	
                  433

                	 
      	
                  948

                	 
      	
                  1.039

                	 
      	
                  0.857

                	 
      	
                  1.039

                	 
      	
                  0.857

                	 
	
                  COOKE,
      H. #1 PDP

                	 
      	
                  Cooke,
      Harry G. Jr. & Lillian et al.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  12/06/05

                	 
      	
                  68.90

                	 
      	
                  433

                	 
      	
                  958

                	 
      	
                  5.000

                	 
      	
                  4.300

                	 
      	
                  5.000

                	 
      	
                  4.300

                	 
	
                  CRAIG
      #1 PDP

                	 
      	
                  Craig,
      Carol

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/22/05

                	 
      	
                  8.53

                	 
      	
                  433

                	 
      	
                  899

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
	
                  DAVIS
      #1 PDP

                	 
      	
                  Davis,
      Leonard

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/08/05

                	 
      	
                  84.00

                	 
      	
                  433

                	 
      	
                  928

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  ELLIS
      #1 PDP

                	 
      	
                  Goad,
      Conley

                	 
      	
                  GILBERT
      CREEK

                	 
      	
                  MINGO

                	 
      	
                  02/15/62

                	 
      	
                  94.90

                	 
      	
                  47

                	 
      	
                  331

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
	
                  ELLIS
      #2 PDP

                	 
      	
                  Goad,
      Conley

                	 
      	
                  GILBERT
      CREEK

                	 
      	
                  MINGO

                	 
      	
                  02/15/62

                	 
      	
                  94.90

                	 
      	
                  47

                	 
      	
                  331

                	 
      	
                  19.500

                	 
      	
                  18.670

                	 
      	
                  19.500

                	 
      	
                  18.670

                	 
	
                  FIELDS,
      BOB #1 PDNP

                	 
      	
                  Fields,
      Bobby (Fields Furn. & Appliance)

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  05/03/06

                	 
      	
                  16.348

                	 
      	
                  433

                	 
      	
                  946

                	 
      	
                  4.000

                	 
      	
                  3.280

                	 
      	
                  4.000

                	 
      	
                  3.280

                	 
	
                  FOX
      #1 PDP

                	 
      	
                  Fox,
      William L.

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  12/02/06

                	 
      	
                  23.33

                	 
      	
                  437

                	 
      	
                  712

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
	
                  FOX
      #1 PDNP (BP)

                	 
      	
                  Fox,
      William L.

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  12/02/06

                	 
      	
                  23.33

                	 
      	
                  437

                	 
      	
                  712

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
      	
                  5.000

                	 
      	
                  4.850

                	 
	
                  FOX
      #2 PDP

                	 
      	
                  Fox,
      William L.

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  12/02/06

                	 
      	
                  18.50

                	 
      	
                  437

                	 
      	
                  714

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
	
                  HATFIELD
      #1 PDP

                	 
      	
                  Hatfield,
      Wayne, Jr. (C. R. Rentals)

                	 
      	
                  OCEANA

                	 
      	
                  WYOMING

                	 
      	
                  03/21/06

                	 
      	
                  5.50

                	 
      	
                  433

                	 
      	
                  916

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 
	
                  HUGHES
      #1 PDP

                	 
      	
                  Hughes,
      Bobby et al

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/26/05

                	 
      	
                  39.00

                	 
      	
                  433

                	 
      	
                  924

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
      	
                  2.500

                	 
      	
                  2.450

                	 
	
                  JACKSON
      #1 PDP

                	 
      	
                  Jackson,
      Gerald R. & Geraldine et al.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  12/30/06

                	 
      	
                  10.00

                	 
      	
                  437

                	 
      	
                  707

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
	
                  JACKSON
      #1 PDNP (BP)

                	 
      	
                  Jackson,
      Gerald R. & Geraldine et al.

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  12/30/06

                	 
      	
                  10.00

                	 
      	
                  437

                	 
      	
                  707

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
      	
                  4.000

                	 
      	
                  3.300

                	 
	
                  JEWELL
      #1 PDP

                	 
      	
                  Jewell,
      Harry & Donna Sue III

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  07/05/06

                	 
      	
                  13.00

                	 
      	
                  433

                	 
      	
                  920

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 
      	
                  1.039

                	 
      	
                  1.119

                	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                LAMB
      #1 PDP

              	 
      	
                Lamb,
      Alfred Neale

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                971

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LAMB
      #1 PDP

              	 
      	
                Lamb,
      Wilda Faye

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                973

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LAMB
      #1 PDNP

              	 
      	
                Lamb,
      Alfred Neale

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                971

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LAMB
      #1 PDNP

              	 
      	
                Lamb,
      Wilda Faye

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                10/12/05

              	 
      	
                8.14

              	 
      	
                433

              	 
      	
                973

              	 
      	
                1.039

              	 
      	
                1.119

              	 
      	
                1.039

              	 
      	
                1.119

              	 
	
                LANDIS
      #1 PDP

              	 
      	
                Landis,
      Todd et al

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/27/05

              	 
      	
                750.00

              	 
      	
                433

              	 
      	
                936

              	 
      	
                1.500

              	 
      	
                1.670

              	 
      	
                1.500

              	 
      	
                1.670

              	 
	
                LANDIS
      #2 PDP

              	 
      	
                Landis,
      Todd et al

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/27/05

              	 
      	
                750.00

              	 
      	
                433

              	 
      	
                936

              	 
      	
                1.500

              	 
      	
                1.670

              	 
      	
                1.500

              	 
      	
                1.670

              	 
	
                LANDIS
      #3 PDP

              	 
      	
                Landis,
      Todd et al

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/27/05

              	 
      	
                750.00

              	 
      	
                433

              	 
      	
                936

              	 
      	
                2.500

              	 
      	
                2.470

              	 
      	
                2.500

              	 
      	
                2.470

              	 
	
                McGRAW
      #1 PDP

              	 
      	
                McGraw,
      Minnie  Heirs

              	 
      	
                PECKS
      MILL - LF

              	 
      	
                LOGAN

              	 
      	
                03/01/02

              	 
      	
                63.54

              	 
      	
                38

              	 
      	
                175

              	 
      	
                10.000

              	 
      	
                9.000

              	 
      	
                10.000

              	 
      	
                9.000

              	 
	
                MEADOWS
      #1 PDP

              	 
      	
                Meadows,
      Gerald

              	 
      	
                BRENTON

              	 
      	
                WYOMING

              	 
      	
                12/14/99

              	 
      	
                5.35

              	 
      	
                403

              	 
      	
                646

              	 
      	
                100.000

              	 
      	
                87.500

              	 
      	
                100.000

              	 
      	
                87.500

              	 
	
                NLC
      CHURCH #1 PDP

              	 
      	
                New
      Life Community Church

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                12/05/05

              	 
      	
                2.30

              	 
      	
                433

              	 
      	
                954

              	 
      	
                5.000

              	 
      	
                4.850

              	 
      	
                5.000

              	 
      	
                4.850

              	 
	
                NLC
      #1 PDNP (BP)

              	 
      	
                New
      Life Community Church

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                05/01/07

              	 
      	
                1.31

              	 
      	
                442

              	 
      	
                337

              	 
      	
                5.000

              	 
      	
                4.850

              	 
      	
                5.000

              	 
      	
                4.850

              	 
	
                OWENS
      #1 PDP

              	 
      	
                Owens,
      Glenetta

              	 
      	
                GARDEN
      GAP

              	 
      	
                WYOMING

              	 
      	
                07/02/98

              	 
      	
                62.00

              	 
      	
                397

              	 
      	
                773

              	 
      	
                20.000

              	 
      	
                18.300

              	 
      	
                20.000

              	 
      	
                18.300

              	 
	
                PCHC
      1309 B PDP

              	 
      	
                Spears,
      Denvil

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                06/30/06

              	 
      	
                614.68

              	 
      	
                433

              	 
      	
                991

              	 
      	
                1.813

              	 
      	
                1.523

              	 
      	
                1.813

              	 
      	
                1.523

              	 
	
                PCHC
      1309 B PDP

              	 
      	
                Spears,
      Eula

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                06/30/06

              	 
      	
                614.68

              	 
      	
                433

              	 
      	
                993

              	 
      	
                1.813

              	 
      	
                1.523

              	 
      	
                1.813

              	 
      	
                1.523

              	 
	
                PCT
      #115 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        
          	
                  PCT
      #128 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  1.500

                	 
      	
                  1.230

                	 
      	
                  0.775

                	 
      	
                  0.635

                	 
	
                  PCT
      #129 PDP (APO)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #130 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #131 PDP (APO)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.410

                	 
      	
                  1.155

                	 
	
                  PCT
      #132 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #133 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.000

                	 
      	
                  1.640

                	 
      	
                  1.035

                	 
      	
                  0.850

                	 
	
                  PCT
      #134 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.000

                	 
      	
                  4.100

                	 
      	
                  2.585

                	 
      	
                  2.120

                	 
	
                  PCT
      #134 PDNP (BP)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.000

                	 
      	
                  4.100

                	 
      	
                  2.585

                	 
      	
                  2.120

                	 
	
                  PCT
      #135 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #136 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  12.500

                	 
      	
                  10.025

                	 
      	
                  6.465

                	 
      	
                  5.300

                	 
	
                  PCT
      #137 PDP (APO)

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #138 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.290

                	 
      	
                  1.060

                	 
	
                  PCT
      #140 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  1.500

                	 
      	
                  1.230

                	 
      	
                  0.775

                	 
      	
                  0.635

                	 
	
                  PCT
      #141 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #142 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,808.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  0.500

                	 
      	
                  0.410

                	 
      	
                  0.260

                	 
      	
                  0.215

                	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                PCT
      #143 PDP (APO)

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #145 PDNP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                3.000

              	 
      	
                2.460

              	 
      	
                1.274

              	 
      	
                1.554

              	 
	
                PCT
      #146 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                1.500

              	 
      	
                1.230

              	 
      	
                0.775

              	 
      	
                0.635

              	 
	
                PCT
      #149 PDNP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.292

              	 
      	
                1.059

              	 
	
                PCT
      #150 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.290

              	 
      	
                1.060

              	 
	
                PCT
      #152 PDP (APO)

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.290

              	 
      	
                1.060

              	 
	
                PCT
      #153 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.290

              	 
      	
                1.060

              	 
	
                PCT
      #154 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                18.500

              	 
      	
                15.170

              	 
      	
                9.565

              	 
      	
                7.845

              	 
	
                PCT
      #156 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                1.500

              	 
      	
                1.230

              	 
      	
                0.775

              	 
      	
                0.635

              	 
	
                PCT
      #157 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - S

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.410

              	 
      	
                1.155

              	 
	
                PCT
      #160 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                2.500

              	 
      	
                2.050

              	 
      	
                1.410

              	 
      	
                1.155

              	 
	
                PCT
      #161 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #162 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #163 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,808.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 
	
                PCT
      #164 PDP

              	 
      	
                R&B
      Petroleum (farmout)

              	 
      	
                YUKON
      - N

              	 
      	
                McDOWELL

              	 
      	
                08/01/03

              	 
      	
                7,809.50

              	 
      	
                513

              	 
      	
                9

              	 
      	
                5.500

              	 
      	
                4.510

              	 
      	
                2.955

              	 
      	
                2.425

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        
          	
                  PCT
      #166 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - N

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.955

                	 
      	
                  2.425

                	 
	
                  PCT
      #167 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.410

                	 
      	
                  1.155

                	 
	
                  PCT
      #168 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  9.000

                	 
      	
                  7.380

                	 
      	
                  4.655

                	 
      	
                  3.815

                	 
	
                  PCT
      #169 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  1.500

                	 
      	
                  1.230

                	 
      	
                  0.775

                	 
      	
                  0.635

                	 
	
                  PCT
      #173 PDNP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  5.500

                	 
      	
                  4.510

                	 
      	
                  2.844

                	 
      	
                  2.332

                	 
	
                  PCT
      #175 PDP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  2.500

                	 
      	
                  2.050

                	 
      	
                  1.410

                	 
      	
                  1.155

                	 
	
                  PCT
      #176 PDNP

                	 
      	
                  R&B
      Petroleum (farmout)

                	 
      	
                  YUKON
      - S

                	 
      	
                  McDOWELL

                	 
      	
                  08/01/03

                	 
      	
                  7,809.50

                	 
      	
                  513

                	 
      	
                  9

                	 
      	
                  12.500

                	 
      	
                  10.250

                	 
      	
                  6.465

                	 
      	
                  5.300

                	 
	
                  PENNINGTON
      #1 PDP

                	 
      	
                  Pennington,
      Chauncey Greg & Verna

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  07/29/05

                	 
      	
                  1.00

                	 
      	
                  433

                	 
      	
                  942

                	 
      	
                  2.500

                	 
      	
                  2.550

                	 
      	
                  2.500

                	 
      	
                  2.550

                	 
	
                  PENN
      VA. #920 PDP

                	 
      	
                  Rayland
      (wellbore assignment)

                	 
      	
                  ANAWALT

                	 
      	
                  McDOWELL

                	 
      	
                  11/14/96

                	 
      	
                  WELLBORE

                	 
      	
                  470

                	 
      	
                  754

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
      	
                  100.000

                	 
      	
                  87.500

                	 
	
                  SHORT,
      A. #1 PDP

                	 
      	
                  Short,
      Agnes

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  05/04/06

                	 
      	
                  10.92

                	 
      	
                  433

                	 
      	
                  938

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  SHORT,
      A. #1 PDP

                	 
      	
                  Childress,
      Glenna Sue

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  05/04/05

                	 
      	
                  10.00

                	 
      	
                  433

                	 
      	
                  897

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  SHORT,
      A. #1 PDP

                	 
      	
                  Short,
      Roy & Elga

                	 
      	
                  CLEAR
      FORK

                	 
      	
                  WYOMING

                	 
      	
                  04/26/05

                	 
      	
                  4.00

                	 
      	
                  433

                	 
      	
                  895

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
      	
                  2.000

                	 
      	
                  2.225

                	 
	
                  SMITH
      #1 PDP

                	 
      	
                  Smith,
      Byron & Reba

                	 
      	
                  GILBERT
      CREEK

                	 
      	
                  MINGO

                	 
      	
                  01/01/98

                	 
      	
                  36.70

                	 
      	
                  91

                	 
      	
                  301

                	 
      	
                  20.000

                	 
      	
                  19.100

                	 
      	
                  20.000

                	 
      	
                  19.100

                	 
	
                  SPEARS
      #1 PDP

                	 
      	
                  Spears,
      Denvil

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  06/30/06

                	 
      	
                  95.00

                	 
      	
                  433

                	 
      	
                  991

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 
	
                  SPEARS
      #1 PDP

                	 
      	
                  Spears,
      Eula

                	 
      	
                  OCEANA
      EAST

                	 
      	
                  WYOMING

                	 
      	
                  06/30/06

                	 
      	
                  95.00

                	 
      	
                  433

                	 
      	
                  993

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 
      	
                  4.500

                	 
      	
                  3.690

                	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                STEPP
      #1 PDP

              	 
      	
                Stepp,
      Grover C. & Madeleen C.

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                03/10/06

              	 
      	
                4.00

              	 
      	
                433

              	 
      	
                910

              	 
      	
                6.500

              	 
      	
                5.500

              	 
      	
                6.500

              	 
      	
                5.500

              	 
	
                STEPP
      #1 PDNP (BP)

              	 
      	
                Stepp,
      Grover C. & Madeleen C.

              	 
      	
                OCEANA

              	 
      	
                WYOMING

              	 
      	
                03/10/06

              	 
      	
                4.00

              	 
      	
                433

              	 
      	
                910

              	 
      	
                6.500

              	 
      	
                5.500

              	 
      	
                6.500

              	 
      	
                5.500

              	 
	
                TINSLEY
      #1 PDNP

              	 
      	
                Tinsley,
      Rhein

              	 
      	
                GILBERT
      CREEK

              	 
      	
                MINGO

              	 
      	
                04/15/02

              	 
      	
                180.47

              	 
      	 
      	 
      	 
      	 
      	
                100.000

              	 
      	
                77.500

              	 
      	
                100.000

              	 
      	
                77.500

              	 
	
                TOLER,
      C. #1 PDP

              	 
      	
                Toler,
      Cordie Lee

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/09/05

              	 
      	
                42.20

              	 
      	
                433

              	 
      	
                908

              	 
      	
                1.500

              	 
      	
                1.670

              	 
      	
                1.500

              	 
      	
                1.670

              	 
	
                TOLER,
      D. #1 PDP

              	 
      	
                Toler,
      Danny Lee & Rita Fay

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                08/01/02

              	 
      	
                44.50

              	 
      	
                433

              	 
      	
                893

              	 
      	
                25.374

              	 
      	
                20.568

              	 
      	
                25.374

              	 
      	
                20.568

              	 
	
                TOLER,
      D.R. #1 PDP

              	 
      	
                Toler,
      Dewey Ray

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                04/04/06

              	 
      	
                0.07

              	 
      	
                433

              	 
      	
                952

              	 
      	
                4.000

              	 
      	
                3.280

              	 
      	
                4.000

              	 
      	
                3.280

              	 
	
                TOLER,
      D.R. #1 PDNP (BP)

              	 
      	
                Toler,
      Dewey Ray

              	 
      	
                OCEANA
      EAST

              	 
      	
                WYOMING

              	 
      	
                04/04/06

              	 
      	
                0.07

              	 
      	
                433

              	 
      	
                952

              	 
      	
                4.000

              	 
      	
                3.280

              	 
      	
                4.000

              	 
      	
                3.280

              	 
	
                TOLER,
      J. #1 PDP

              	 
      	
                Toler,
      Daniel D. & Rosana

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                09/13/05

              	 
      	
                19.00

              	 
      	
                433

              	 
      	
                964

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                TOLER,
      J. #1 PDP

              	 
      	
                Toler,
      Danny Lee & Rita Fay

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/15/05

              	 
      	
                4.00

              	 
      	
                433

              	 
      	
                891

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                TOLER,
      K. #1 PDP

              	 
      	
                Toler,
      Kenneth E. & Shirley A.

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/09/05

              	 
      	
                19.00

              	 
      	
                433

              	 
      	
                901

              	 
      	
                43.500

              	 
      	
                35.940

              	 
      	
                43.500

              	 
      	
                35.940

              	 
	
                TOLER,
      M. #1 PDP

              	 
      	
                Toler,
      Marian

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/20/05

              	 
      	
                25.00

              	 
      	
                433

              	 
      	
                918

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                TOLER,
      T. #1 PDP

              	 
      	
                Toler,
      Tommy & Leda

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/09/05

              	 
      	
                10.79

              	 
      	
                433

              	 
      	
                926

              	 
      	
                2.000

              	 
      	
                2.225

              	 
      	
                2.000

              	 
      	
                2.225

              	 
	
                WEST,
      S. #1 PDP

              	 
      	
                West,
      Stanley D. & Patricia K.

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                01/17/03

              	 
      	
                11.30

              	 
      	
                433

              	 
      	
                930

              	 
      	
                27.675

              	 
      	
                25.009

              	 
      	
                27.675

              	 
      	
                25.009

              	 
	
                WEST,
      S. #2 PDNP

              	 
      	
                Davis,
      Leonard (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/05/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                981

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                WEST,
      S. #2 PDNP

              	 
      	
                Laughlin,
      James H.  (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/02/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                983

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A  ALL WELLS

      CLASSIC
OIL & GAS

      RESOURCES,
INC.

       

    

    
      	
              WELL

            	 
      	
              LEASE

            	 
      	 
      	 
      	 
      	 
      	
              LEASE

            	 
      	
              LEASE

            	 
      	
              RECORDING

            	 
      	
              BPO

            	 
      	
              BPO

            	 
      	
              APO

            	 
      	
              APO

            	 
	
              NAME

            	 
      	
              NAME

            	 
      	
              PROSPECT

            	 
      	
              COUNTY

            	 
      	
              DATE

            	 
      	
              ACRES

            	 
      	
              BOOK

            	 
      	
              PAGE

            	 
      	
              WI

            	 
      	
              NRI

            	 
      	
              WI

            	 
      	
              NRI

            	 

    

    
      
        	
                WEST,
      S. #2 PDNP

              	 
      	
                West,
      Stanley D. & Patricia K. (1/7 interest)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/27/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                979

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                WEST,
      S. #2 PDNP

              	 
      	
                Zupanick,
      Joe (5/7 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                09/30/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                977

              	 
      	
                2.500

              	 
      	
                2.550

              	 
      	
                2.500

              	 
      	
                2.550

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                Davis,
      Leonard (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/05/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                981

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                Laughlin,
      James H.  (1/14 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/02/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                983

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                West,
      Stanley D. & Patricia K. (1/7 interest)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                04/27/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                979

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST,
      S. #3 PDP

              	 
      	
                Zupanick,
      Joe (5/7 int)

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                09/30/05

              	 
      	
                196.74

              	 
      	
                433

              	 
      	
                977

              	 
      	
                5.000

              	 
      	
                4.125

              	 
      	
                5.000

              	 
      	
                4.125

              	 
	
                WEST
      ET AL #1 PDP

              	 
      	
                West,
      Stanley, Smith, Joyce, West, Oscar

              	 
      	
                CLEAR
      FORK

              	 
      	
                WYOMING

              	 
      	
                05/17/05

              	 
      	
                2.00

              	 
      	
                433

              	 
      	
                975

              	 
      	
                2.000

              	 
      	
                2.225

              	 
      	
                2.000

              	 
      	
                2.225

              	 
	
                WRIGHT,
      B. #1 PDP

              	
                  

              	
                Wright,
      Brian H.

              	
                  

              	
                KIMBALL

              	
                  

              	
                WYOMING

              	
                  

              	
                12/02/05

              	
                  

              	
                9.355

              	
                  

              	
                513

              	
                  

              	
                104

              	
                  

              	
                4.500

              	
                  

              	
                3.715

              	
                  

              	
                4.500

              	
                  

              	
                3.715

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]