Document:

exv4w4

 

Exhibit 4.4

 

 

ENTERPRISE PRODUCTS OPERATING LLC

AS ISSUER,

ENTERPRISE PRODUCTS PARTNERS L.P.

AS PARENT GUARANTOR,

and

WELLS FARGO BANK,

NATIONAL ASSOCIATION,

AS TRUSTEE

 

THIRTEENTH SUPPLEMENTAL INDENTURE

Dated as of April 3, 2008

to

Indenture dated as of October 4, 2004

 

$700,000,000

6.50% Senior Notes due 2019

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE I

	 
	 	 	 	 	 	 
	THE NOTES

	 
	 	 	 	 	 	 
	SECTION 1.1

	 	Form
	 	 	2	 
	SECTION 1.2

	 	Title, Amount and Payment of Principal and Interest
	 	 	2	 
	SECTION 1.3

	 	Registrar and Paying Agent
	 	 	3	 
	SECTION 1.4

	 	Transfer and Exchange
	 	 	3	 
	SECTION 1.5

	 	Guarantee of the Notes
	 	 	3	 
	SECTION 1.6

	 	Defeasance and Discharge
	 	 	3	 
	SECTION 1.7

	 	Amendment to Section 4.12 of the Original Indenture
	 	 	3	 
	SECTION 1.8

	 	Amendment to Section 4.13 of the Original Indenture
	 	 	4	 
	 
	 	 	 	 	 	 
	ARTICLE II

	 
	 	 	 	 	 	 
	REDEMPTION

	 
	 	 	 	 	 	 
	SECTION 2.1

	 	Redemption 	 	 	4	 
	 
	 	 	 	 	 	 
	ARTICLE III

	 
	 	 	 	 	 	 
	MISCELLANEOUS PROVISIONS

	 
	 	 	 	 	 	 
	SECTION 3.1

	 	Table of Contents, Headings, etc.
	 	 	4	 
	SECTION 3.2

	 	Counterpart Originals
	 	 	4	 
	SECTION 3.3

	 	Governing Law
	 	 	5	 
	 
	 	 	 	 	 	 
	Exhibit A

	 	Form of Note
	 	 	A-1	 

i

 

     THIS THIRTEENTH SUPPLEMENTAL INDENTURE dated as of April 3, 2008, is among Enterprise Products
Operating LLC, a Texas limited liability company (the “Issuer”), Enterprise Products Partners L.P.,
a Delaware limited partnership (the “Parent Guarantor”), and Wells Fargo Bank, National
Association, a national banking association, as trustee (the “Trustee”). Each capitalized term
used but not defined in this Thirteenth Supplemental Indenture shall have the meaning assigned to
such term in the Original Indenture (as defined below).

RECITALS:

     WHEREAS, Enterprise Products Operating L.P. and the Parent Guarantor have executed and
delivered to the Trustee an Indenture, dated as of October 4, 2004 (the “Original Indenture”),
providing for the issuance by Enterprise Products Operating L.P. from time to time of its
debentures, notes, bonds or other evidences of indebtedness, issued and to be issued in one or more
series unlimited as to principal amount (the “Debt Securities”), and the guarantee by each
Guarantor of the Debt Securities (the “Guarantee”); and

     WHEREAS, the Issuer and the Parent Guarantor have executed and delivered to the Trustee a
Tenth Supplemental Indenture, dated as of June 30, 2007, providing for the Issuer as the successor
issuer (the Original Indenture together with the Tenth Supplemental Indenture, the “Base
Indenture”); and

     WHEREAS, on or before the date hereof the Issuer has issued several series of Debt Securities
pursuant to previous supplements to the Base Indenture;

     WHEREAS, the Issuer has duly authorized and desires to cause to be issued pursuant to the Base
Indenture and this Thirteenth Supplemental Indenture a new series of Debt Securities designated the
“6.50% Senior Notes due 2019” (the “Notes”), all of such Notes to be guaranteed by the Parent
Guarantor as provided in Article XIV of the Original Indenture;

     WHEREAS, the Issuer desires to cause the issuance of the Notes pursuant to Sections 2.01 and
2.03 of the Original Indenture, which sections permit the execution of indentures supplemental
thereto to establish the form and terms of Debt Securities of any series;

     WHEREAS, pursuant to Section 9.01 of the Original Indenture, the Issuer and the Parent
Guarantor have requested that the Trustee join in the execution of this Thirteenth Supplemental
Indenture to establish the form and terms of the Notes;

     WHEREAS, all things necessary have been done to make the Notes, when executed by the Issuer
and authenticated and delivered hereunder and under the Base Indenture and duly issued by the
Issuer, and the Guarantee of the Parent Guarantor, when the Notes are duly issued by the Issuer,
the valid obligations of the Issuer and the Parent Guarantor, respectively, and to make this
Thirteenth Supplemental Indenture a valid agreement of the Issuer and the Parent Guarantor
enforceable in accordance with its terms.

     NOW, THEREFORE, the Issuer, the Parent Guarantor and the Trustee hereby agree that the
following provisions shall supplement the Base Indenture:

 

 

ARTICLE I

THE NOTES

     SECTION 1.1 Form.

     The Notes and the Trustee’s certificate of authentication shall be substantially in the form
of Exhibit A to this Thirteenth Supplemental Indenture, which is hereby incorporated into
this Thirteenth Supplemental Indenture. The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Thirteenth Supplemental Indenture and to
the extent applicable, the Issuer, the Parent Guarantor and the Trustee, by their execution and
delivery of this Thirteenth Supplemental Indenture, expressly agree to such terms and provisions
and to be bound thereby.

     The Notes shall be issued only as Registered Securities. The Notes shall be issued upon
original issuance in whole in the form of one or more Global Securities (the “Book-Entry Notes”).
Each Book-Entry Note shall represent such of the Outstanding Notes as shall be specified therein
and shall provide that it shall represent the aggregate amount of Outstanding Notes from time to
time endorsed thereon and that the aggregate amount of Outstanding Notes represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Book-Entry Note to reflect the amount, or any increase or decrease in the
amount, of Outstanding Notes represented thereby shall be made by the Trustee in accordance with
written instructions or such other written form of instructions as is customary for the Depositary,
from the Depositary or its nominee on behalf of any Person having a beneficial interest in the
Book-Entry Note.

     The Issuer initially appoints The Depository Trust Company (“DTC”) to act as Depositary with
respect to the Book-Entry Notes.

     SECTION 1.2 Title, Amount and Payment of Principal and Interest.

     The Notes shall be entitled the “6.50% Senior Notes due 2019.” The Trustee shall authenticate
and deliver (i) the Notes for original issue on the date hereof (the “Original Notes”) in the
aggregate principal amount of $700 million and (ii) additional Notes for original issue from time
to time after the date hereof in such principal amounts as may be specified in the Company Order
described in this sentence, provided that no such additional Notes may be issued at a price that
would cause such Notes to have “original issue discount” within the meaning of the Internal Revenue
Code of 1986, as amended, in each case upon a Company Order for the authentication and delivery
thereof and satisfaction of the other provisions of Section 2.05 of the Original Indenture. Such
order shall specify the amount of the Notes to be authenticated, the date on which the original
issue of Notes is to be authenticated, and the name or names of the initial Holder or Holders. The
aggregate principal amount of Notes that may be outstanding at any time may not exceed $700 million
plus such additional principal amounts as may be issued and authenticated pursuant to clause (ii)
of this paragraph (except as provided in Section 2.09 of the Original Indenture).

     The principal amount of each Note shall be payable on January 31, 2019. Each Note shall bear
interest from the date of original issuance, or the most recent date to which interest has

2

 

been paid, at the fixed rate of 6.50% per annum. The dates on which interest on the Notes shall be
payable shall be January 31 and July 31 of each year, commencing July 31, 2008 in the case of the
Original Notes (the “Interest Payment Dates”). The regular record date for interest payable on the
Notes on any Interest Payment Date shall be January 15 or July 15 (the “Regular Record Date”), as
the case may be, next preceding such Interest Payment Date.

     Payments of principal of, premium, if any, and interest due on the Notes representing
Book-Entry Notes on any Interest Payment Date or at maturity will be made available to the Trustee
by 11:00 a.m., New York City time, on such date, unless such date falls on a day which is not a
Business Day, in which case such payments will be made available to the Trustee by 11:00 a.m., New
York City time, on the next Business Day. As soon as possible thereafter, the Trustee will make
such payments to the Depositary.

     SECTION 1.3 Registrar and Paying Agent.

     The Issuer initially appoints the Trustee as Registrar and paying agent with respect to the
Notes. The office or agency in the City and State of New York where Notes may be presented for
registration of transfer or exchange and the Place of Payment for the Notes shall initially be
Wells Fargo Corporate Trust, c/o DTC, 1st Floor, TADS Department, 55 Water Street, New York, New
York 10041.

     SECTION 1.4 Transfer and Exchange.

     The transfer and exchange of Book-Entry Notes or beneficial interests therein shall be
effected through the Depositary, in accordance with Section 2.15 of the Original Indenture and the
rules and procedures of the Depositary therefore.

     SECTION 1.5 Guarantee of the Notes.

     In accordance with Article XIV of the Original Indenture, the Notes will be fully,
unconditionally and absolutely guaranteed on an unsecured, unsubordinated basis by the Parent
Guarantor. Initially, there will be no Subsidiary Guarantors.

     SECTION 1.6 Defeasance and Discharge.

     The Notes shall be subject to satisfaction and discharge and to both legal defeasance and
covenant defeasance as contemplated by Article XI of the Original Indenture.

     SECTION 1.7 Amendment to Section 4.12 of the Original Indenture.

     The last paragraph of Section 4.12 of the Original Indenture is hereby amended and restated in
relation solely to the Notes to read as follows:

     “Notwithstanding the foregoing provisions of this Section, the Parent Guarantor may, and may
permit any Subsidiary to, effect any Sale/Leaseback Transaction that is not excepted by clauses (a)
through (d), inclusive, of this Section, provided that the Attributable Indebtedness from such
Sale/Leaseback Transaction, together with the aggregate principal amount of all other such
Attributable Indebtedness deemed to be outstanding and all outstanding Indebtedness (other

3

 

than the
Debt Securities) secured by liens, other than Permitted Liens, upon Principal Properties or upon
any capital stock of any Restricted Subsidiary, do not exceed 10% of Consolidated Net Tangible
Assets.”

     SECTION 1.8 Amendment to Section 4.13 of the Original Indenture.

     The last sentence of Section 4.13 of the Original Indenture is hereby amended and restated in
relation solely to the Notes to read as follows:

     “Notwithstanding the foregoing, the Parent Guarantor may, and may permit any Subsidiary to,
create, assume, incur or suffer to exist any lien, other than a Permitted Lien, upon any Principal
Property or upon any capital stock of any Restricted Subsidiary to secure Indebtedness of the
Parent Guarantor, the Company or any other Person (other than the Debt Securities), without in any
such case making effective provision whereby all the Debt Securities Outstanding under this
Indenture are secured equally and ratably with, or prior to, such Indebtedness so long as such
Indebtedness is secured; provided that the aggregate principal amount of all Indebtedness then
outstanding secured by such lien and all similar liens, together with the aggregate amount of
Attributable Indebtedness deemed to be outstanding in respect of all Sale/Leaseback Transactions
(exclusive of any such Sale/Leaseback Transactions otherwise permitted under clauses (a) through
(d) of Section 4.12), does not exceed 10% of Consolidated Net Tangible Assets.”

ARTICLE II

REDEMPTION

     SECTION 2.1 Redemption.

     The Issuer shall have no obligation to redeem, purchase or repay the Notes pursuant to any
mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof.
The Issuer, at its option, may redeem the Notes in accordance with the provisions of paragraph 5 of
the Notes and Article III of the Original Indenture.

ARTICLE III

MISCELLANEOUS PROVISIONS

     SECTION 3.1 Table of Contents, Headings, etc.

     The table of contents and headings of the Articles and Sections of this Thirteenth
Supplemental Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms or provisions
hereof.

     SECTION 3.2 Counterpart Originals.

     The parties may sign any number of copies of this Thirteenth Supplemental Indenture. Each
signed copy shall be an original, but all of them together represent the same agreement.

4

 

     SECTION 3.3 Governing Law.

     THIS THIRTEENTH SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

5

 

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

	 	 	 	 	 
	 	ENTERPRISE PRODUCTS OPERATING LLC,

as Issuer

 	 
	 	By:  	 Enterprise Products OLPGP, Inc.
 its sole manager
 	 
	 	 	 
	 	By:  	          /s/ W. Randall Fowler
 	 
	 	 	Name:  	W. Randall Fowler 	 
	 	 	Title:  	Executive Vice President and

Chief Financial Officer 	 
	 
	 	ENTERPRISE PRODUCTS PARTNERS L.P.,

as Parent Guarantor

 	 
	 	By:  	 Enterprise Products GP, LLC
 its General Partner
 	 
	 	 	 
	 	By:  	           /s/ W. Randall Fowler
 	 
	 	 	Name:  	W. Randall Fowler 	 
	 	 	Title:  	Executive Vice President and

Chief Financial Officer 	 
	 
	 	WELLS FARGO BANK,

NATIONAL ASSOCIATION,

as Trustee

 	 
	 	By:  	/s/ Patrick T. Giordano
 	 
	 	 	Name:  	Patrick T. Giordano 	 
	 	 	Title:  	Vice President 	 
	 

Thirteenth Supplemental Indenture Signature Page

6

 

Exhibit A

FORM OF NOTE

[FACE OF SECURITY]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (“DTC”) (55 WATER STREET, NEW YORK, NEW YORK 10041) TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]*

[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO HEREIN.]* 

Principal Amount

			
	No. _________	 	 
	 
	 	$____________, [which amount may be
	 
	 	increased or decreased by the Schedule
	 
	 	of Increases and Decreases in Global Security attached hereto. ]*

ENTERPRISE PRODUCTS OPERATING LLC

6.50% SENIOR NOTE DUE 2019

CUSIP ___________

     ENTERPRISE PRODUCTS OPERATING LLC, a Texas limited liability company (the “Company,” which
term includes any successor under the Indenture hereinafter referred to), for value received,
hereby promises to pay to [Cede & Co.]* or its registered assigns, the principal sum of
____________
($_______ U.S. dollars, [or such greater or lesser principal sum as is shown
on the attached Schedule of Increases and Decreases in Global Security]*, on January 31,
2019 in such coin and currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest at an annual rate of
6.50% payable on January 31 and July 31 of each year, to the person in whose

 

			
	*	 	To be included in a Book-Entry Note.

A-1

 

name the Security (as defined on the reverse side of this security) is registered at the close
of business on the record date for such interest, which shall be the preceding January 15 and July
15 (each, a “Regular Record Date”), respectively, payable commencing on July 31, 2008, with
interest accruing from April 3, 2008, or the most recent date to which interest shall have been
paid.

     Reference is made to the further provisions of this Security set forth on the reverse hereof.
Such further provisions shall for all purposes have the same effect as though fully set forth at
this place.

     The statements in the legends set forth in this Security are an integral part of the terms of
this Security and by acceptance hereof the Holder of this Security agrees to be subject to, and
bound by, the terms and provisions set forth in each such legend.

     This Security is issued in respect of a series of Debt Securities of an initial aggregate of
$700 million in principal amount designated as the 6.50% Senior Notes due 2019 of the Company and
is governed by the Indenture dated as of October 4, 2004 (the “Original Indenture”), duly executed
and delivered by the Company, as issuer, and Enterprise Products Partners L.P., as parent guarantor
(the “Parent Guarantor”), to Wells Fargo Bank, National Association, as trustee (the “Trustee”), as
amended and supplemented by the Tenth Supplemental Indenture, dated as of June 30, 2007, providing
for the Company as the successor issuer (the “Tenth Supplemental Indenture”), and the Thirteenth
Supplemental Indenture dated as of April 3, 2008, duly executed by the Company, the Parent
Guarantor and the Trustee (the “Thirteenth Supplemental Indenture,” and together with the Original
Indenture and the Tenth Supplemental Indenture dated as of June 30, 2007, the “Indenture”). The
terms of the Indenture are incorporated herein by reference. This Security shall in all respects
be entitled to the same benefits as definitive Debt Securities under the Indenture.

     If and to the extent any provision of the Indenture limits, qualifies or conflicts with any
other provision of the Indenture that is required to be included in the Indenture or is deemed
applicable to the Indenture by virtue of the provisions of the Trust Indenture Act of 1939, as
amended (the “TIA”), such required provision shall control.

     The Company hereby irrevocably undertakes to the Holder hereof to exchange this Security in
accordance with the terms of the Indenture without charge.

     This Security shall not be valid or become obligatory for any purpose until the Trustee’s
Certificate of Authentication hereon shall have been manually signed by the Trustee under the
Indenture.

A-2

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by its sole
manager.

Dated: __________________

	 	 	 	 	 
	 	ENTERPRISE PRODUCTS OPERATING LLC

 	 
	 	By:  	Enterprise Products OLPGP, Inc.
 its sole manager
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION:

     This is one of the Debt Securities of the series designated herein referred to in the
within-mentioned Indenture.

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

 	 
	 	By:  	
 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

A-3

 

	 	 	 	 	 

[REVERSE OF SECURITY]

ENTERPRISE PRODUCTS OPERATING LLC

6.50% SENIOR NOTE DUE 2019

     This Security is one of a duly authorized issue of debentures, notes or other evidences of
indebtedness of the Company (the “Debt Securities”) of the series hereinafter specified, all issued
or to be issued under and pursuant to the Indenture, to which Indenture reference is hereby made
for a description of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company, the Parent Guarantor and the Holders of the Debt
Securities. The Debt Securities may be issued in one or more series, which different series may be
issued in various aggregate principal amounts, may mature at different times, may bear interest (if
any) at different rates, may be subject to different sinking, purchase or analogous funds (if any)
and may otherwise vary as provided in the Indenture. This Security is one of a series designated
as the 6.50% Senior Notes due 2019 of the Company, in initial aggregate principal amount of $700
million (the “Securities”).

1. Interest.

     The Company promises to pay interest on the principal amount of this Security at the rate of
6.50% per annum.

     The Company will pay interest semi-annually on January 31 and July 31 of each year (each an
“Interest Payment Date”), commencing July 31, 2008. Interest on the Securities will accrue from
the most recent date to which interest has been paid or, if no interest has been paid on the
Securities, from April 3, 2008. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. The Company shall pay interest (including post-petition
interest in any proceeding under any applicable bankruptcy laws) on overdue installments of
interest (without regard to any applicable grace period) and on overdue principal and premium, if
any, from time to time on demand at the same rate per annum, in each case to the extent lawful.

2. Method of Payment.

     The Company shall pay interest on the Securities (except Defaulted Interest) to the persons
who are the registered Holders at the close of business on the Regular Record Date immediately
preceding the Interest Payment Date. Any such interest not so punctually paid or duly provided for
(“Defaulted Interest”) may be paid to the persons who are registered Holders at the close of
business on a special record date for the payment of such Defaulted Interest, or in any other
lawful manner not inconsistent with the requirements of any securities exchange on which such
Securities may then be listed if such manner of payment shall be deemed practicable by the Trustee,
as more fully provided in the Indenture. The Company shall pay principal, premium, if any, and
interest in such coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts. Payments in respect of a Global Security
(including principal, premium, if any, and interest) will be made by wire transfer of immediately
available funds to the accounts specified by the Depositary. Payments in respect of Securities in
definitive form (including principal, premium, if any, and interest) will be made at the office or
agency of the Company maintained for such purpose within

A-4

 

The City of New York, which initially will be Wells Fargo Corporate Trust, c/o DTC, 1st Floor,
TADS Department, 55 Water Street, New York, New York 10041, or, at the option of the Company,
payment of interest may be made by check mailed to the Holders on the relevant record date at their
addresses set forth in the Debt Security Register of Holders or at the option of the Holder,
payment of interest on Securities in definitive form will be made by wire transfer of immediately
available funds to any account maintained in the United States, provided such Holder has requested
such method of payment and provided timely wire transfer instructions to the paying agent. The
Holder must surrender this Security to a paying agent to collect payment of principal.

3. Paying Agent and Registrar.

     Initially, Wells Fargo Bank, National Association will act as paying agent and Registrar. The
Company may change any paying agent or Registrar at any time upon notice to the Trustee and the
Holders. The Company may act as paying agent.

4. Indenture.

     This Security is one of a duly authorized issue of Debt Securities of the Company issued and
to be issued in one or more series under the Indenture.

     Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Securities include those stated in the Original Indenture, those made part of the
Indenture by reference to the TIA, as in effect on the date of the Original Indenture, and those
terms stated in the Thirteenth Supplemental Indenture. The Securities are subject to all such
terms, and Holders of Securities are referred to the Original Indenture, the Thirteenth
Supplemental Indenture and the TIA for a statement of them. The Securities of this series are
general unsecured obligations of the Company limited to an initial aggregate principal amount of
$700 million; provided, however, that the authorized aggregate principal amount of such series may
be increased from time to time as provided in the Thirteenth Supplemental Indenture.

5. Optional Redemption.

     The Securities are redeemable, at the option of the Company, at any time in whole, or from
time to time in part, at a redemption price (the “Make-Whole Price”) equal to the greater of: (i)
100% of the principal amount of the Securities to be redeemed; or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest (at the rate in effect on the
date of calculation of the redemption price) on the Securities to be redeemed (exclusive of
interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield plus
25 basis points; plus, in either case, accrued interest to the Redemption Date.

     The actual Make-Whole Price, calculated as provided above, shall be calculated and certified
to the Trustee and the Company by the Independent Investment Banker. For purposes of determining
the Make-Whole Price, the following definitions are applicable:

     “Treasury Yield” means, with respect to any Redemption Date applicable to the Securities, the
rate per annum equal to the semi-annual equivalent yield to maturity (computed as

A-5

 

of the third Business Day immediately preceding such Redemption Date) of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the applicable Comparable Treasury Price for the Redemption Date.

     “Comparable Treasury Issue” means the United States Treasury security selected by the
Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities to be redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining terms of the Securities to be redeemed; provided, however, that if no
maturity is within three months before or after the maturity date for the Securities, yields for
the two published maturities most closely corresponding to such United States Treasury security
will be determined and the treasury rate will be interpolated or extrapolated from those yields on
a straight line basis rounding to the nearest month.

     “Independent Investment Banker” means any of Lehman Brothers Inc., Citigroup Global Markets
Inc., J.P. Morgan Securities Inc., Scotia Capital (USA) Inc. and their respective successors, or,
if no such firm is willing and able to select the applicable Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the Trustee and
reasonably acceptable to the Company.

     “Comparable Treasury Price” means, with respect to any Redemption Date, (a) the average of
four Reference Treasury Dealer Quotations for the Redemption Date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (b) if the Independent Investment Banker obtains
fewer than four Reference Treasury Dealer Quotations, the average of all such quotations.

     “Reference Treasury Dealer” means (a) Lehman Brothers Inc., Citigroup Global Markets Inc.,
J.P. Morgan Securities Inc., Scotia Capital (USA) Inc. and their respective successors, and (b) one
other primary U.S. government securities dealer in New York City selected by the Independent
Investment Banker (each, a “Primary Treasury Dealer”); provided, however, that if either of the
foregoing shall cease to be a Primary Treasury Dealer, the Company will substitute therefor another
Primary Treasury Dealer.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date for the Securities, an average, as determined by an Independent Investment
Banker, of the bid and asked prices for the Comparable Treasury Issue for the Securities (expressed
in each case as a percentage of its principal amount) quoted in writing to an Independent
Investment Banker by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
Business Day preceding such Redemption Date.

     Except as set forth above, the Securities will not be redeemable prior to their Stated
Maturity and will not be entitled to the benefit of any sinking fund.

     Securities called for optional redemption become due on the Redemption Date. Notices of
optional redemption will be mailed at least 30 but not more than 60 days before the Redemption Date
to each Holder of the Securities to be redeemed at its registered address. The

A-6

 

notice of optional redemption for the Securities will state, among other things, the amount of
Securities to be redeemed, the Redemption Date, the method of calculating such redemption price and
the place(s) that payment will be made upon presentation and surrender of Securities to be
redeemed. Unless the Company defaults in payment of the redemption price, interest will cease to
accrue on the Redemption Date with respect to any Securities that have been called for optional
redemption. If less than all the Securities are redeemed at any time, the Trustee will select the
Securities to be redeemed on a pro rata basis or by any other method the Trustee deems fair and
appropriate.

     The Securities may be redeemed in part in multiplies of $1,000 only. Any such redemption will
also comply with Article III of the Indenture.

6. Denominations; Transfer; Exchange.

     The Securities are to be issued in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000 in excess thereof. A Holder may register the transfer of,
or exchange, Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture.

7. Person Deemed Owners.

     The registered Holder of a Security may be treated as the owner of it for all purposes.

8. Amendment; Supplement; Waiver.

     Subject to certain exceptions, the Indenture may be amended or supplemented, and any existing
Event of Default or compliance with any provision may be waived, with the consent of the Holders of
a majority in principal amount of the Outstanding Debt Securities of each series affected. Without
consent of any Holder of a Security, the parties thereto may amend or supplement the Indenture to,
among other things, cure any ambiguity or omission, to correct any defect or inconsistency, or to
make any other change that does not adversely affect the rights of any Holder of a Security. Any
such consent or waiver by the Holder of this Security (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders and owners of this
Security and any Securities which may be issued in exchange or substitution herefor, irrespective
of whether or not any notation thereof is made upon this Security or such other Securities.

9. Defaults and Remedies.

     Certain events of bankruptcy or insolvency are Events of Default that will result in the
principal amount of the Securities, together with premium, if any, and accrued and unpaid interest
thereon, becoming due and payable immediately upon the occurrence of such Events of Default. If
any other Event of Default with respect to the Securities occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the
Securities then Outstanding may declare the principal amount of all the Securities, together with
premium, if any, and accrued and unpaid interest thereon, to be due and payable immediately in the
manner and with the effect provided in the Indenture. Notwithstanding the

A-7

 

preceding sentence, however, if at any time after such a declaration of acceleration has been
made, the Holders of a majority in principal amount of the Outstanding Securities, by written
notice to the Trustee, may rescind such declaration and annul its consequences if the rescission
would not conflict with any judgment or decree of a court already rendered and if all Events of
Default with respect to the Securities, other than the nonpayment of the principal, premium, if
any, or interest which has become due solely by such declaration acceleration, shall have been
cured or shall have been waived. No such rescission shall affect any subsequent default or shall
impair any right consequent thereon. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require indemnity or security
satisfactory to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the Securities then Outstanding
may direct the Trustee in its exercise of any trust or power with respect to the Securities.

10. Trustee Dealings with Company.

     The Trustee under the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates or any subsidiary of
the Company’s Affiliates, and may otherwise deal with the Company or its Affiliates as if it were
not the Trustee.

11. Authentication.

     This Security shall not be valid until the Trustee signs the certificate of authentication on
the other side of this Security.

12. Abbreviations and Defined Terms.

     Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such
as: TEN COM (tenant in common), TEN ENT (tenants by the entireties), JT TEN (joint tenants with
right of survivorship and not as tenants in common), CUST (Custodian), and U/G/M/A (Uniform Gifts
to Minors Act).

13. CUSIP Numbers.

     Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities as a convenience
to the Holders of the Securities. No representation is made as to the accuracy of such number as
printed on the Securities and reliance may be placed only on the other identification numbers
printed hereon.

14. Absolute Obligation.

     No reference herein to the Indenture and no provision of this Security or the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Security in the manner, at the respective
times, at the rate and in the coin or currency herein prescribed.

A-8

 

15. No Recourse.

     The General Partner and the general partner of the Parent Guarantor and their respective
directors, officers, employees and members, as such, shall have no liability for any obligations of
any Guarantor or the Issuer under the Securities, the Indenture or any Guarantee or for any claim
based on, in respect of, or by reason of, such obligations or their creation. Each Holder by
accepting the Securities waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Securities.

16. Governing Law.

     This Security shall be construed in accordance with and governed by the laws of the State of
New York.

17. Guarantee.

     The Securities are fully and unconditionally guaranteed on an unsecured, unsubordinated basis
by the Parent Guarantor as set forth in Article XIV of the Indenture, as noted in the Notation of
Guarantee to this Security, and under certain circumstances set forth in the Original Indenture one
or more Subsidiaries of the Parent Guarantor may be required to join in such guarantee.

18. Reliance.

     The Holder, by accepting this Security, acknowledges and affirms that (i) it has purchased the
Security in reliance upon the separateness of Parent Guarantor and the general partner of Parent
Guarantor from each other and from any other Persons, including EPCO, Inc., and (ii) Parent
Guarantor and the general partner of Parent Guarantor have assets and liabilities that are separate
from those of other Persons, including EPCO, Inc.

A-9

 

NOTATION OF GUARANTEE

     The Parent Guarantor (which term includes any successor Person under the Indenture), has
fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture, the due and punctual payment of the principal of, and
premium, if any, and interest on the Securities and all other amounts due and payable under the
Indenture and the Securities by the Company.

     The obligations of the Parent Guarantor to the Holders of Securities and to the Trustee
pursuant to its Guarantee and the Indenture are expressly set forth in Article XIV of the Indenture
and reference is hereby made to the Indenture for the precise terms of the Guarantee.

	 	 	 	 	 
	 	ENTERPRISE PRODUCTS PARTNERS L.P.

 	 
	 	By:  	Enterprise Products GP, LLC,
 its General Partner
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

A-10

 

	 	 	 	 	 

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to applicable laws or
regulations:

	 	 	 	 	 	 	 	 	 	 	 
	TEN COM

	 	—
	 	as tenants in common
	 	UNIF GIFT MIN ACT —
	 	 

	 	 
	 

	 	 	 	 	 	 	 	(Cust.)	 	 
	TEN ENT

	 	—
	 	as tenants by entireties
	 	Custodian for:
	 	 
	 	 
	 

	 	 	 	 	 	 	 	(Minor)	 	 
	 

	 	 	 	 	 	under Uniform Gifts to	 	 	 	 
	JT TEN

	 	—
	 	as joint tenants
with right of survivorship and
not as tenants in common
	 	Minors Act of
	 	 

(State)	 	 

Additional abbreviations may also be used though not in the above list.

 

ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

     IDENTIFYING NUMBER OF ASSIGNEE

                                                            

 

Please print or type name and address including postal zip code of assignee

 

 

the within Security and all rights thereunder, hereby irrevocably constituting and appointing

 

to transfer said Security on the books of the Company, with full power of substitution in the
premises.

	 	 	 	 	 	 	 
	Dated __________________

	 	 	 	 

Registered Holder
	 	 

A-11

 

SCHEDULE OF INCREASES OR DECREASES

IN GLOBAL SECURITY*

The following increases or decreases in this Global Security have been made:

	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	Amount of	 	Principal Amount	 	 
	 	 	Decrease in	 	Increase in	 	of this Global	 	Signature of
	 	 	Principal	 	Principal Amount of	 	Security following	 	authorized officer
	 	 	Amount of this	 	this	 	such decrease	 	of Trustee or
	Date of Exchange	 	Global Security	 	Global Security	 	(or increase)	 	Depositary
	 
	 	 	 	 	 	 	 	 

 

			
	*	 	To be included in a Book-Entry Note.

A-12exv10w1

 

Exhibit
10.1

Purchase, Sale and Exploration Agreement

By and Between

Shelby Resources LLC 

as Seller

and

Teton Energy Corporation

as Buyer

Dated March 24, 2008

 

 

EXHIBIT LIST

	 	 	 
	EXHIBIT A

	 	Producing Properties
	EXHIBIT B

	 	Undeveloped Properties
	EXHIBIT C

	 	Wells/WI/NRI/Allocated Values
	EXHIBIT D

	 	Material Agreements
	EXHIBIT E

	 	Intentionally Omitted
	EXHIBIT F

	 	Gas Imbalance Schedule
	EXHIBIT G

	 	Preferential Rights and Required Consents
	EXHIBIT H

	 	Pending Litigation
	EXHIBIT I

	 	Notices of Potential Non-Compliance
	EXHIBIT J

	 	List of AFEs and Invoices
	EXHIBIT K

	 	Hedges
	EXHIBIT L

	 	Liens and Encumbrances
	EXHIBIT M

	 	Plugging and Abandonment Obligations
	EXHIBIT N

	 	Assignment, Bill of Sale and Conveyance
	EXHIBIT O

	 	Buyer’s Certificate
	EXHIBIT P

	 	Seller’s Certificate
	EXHIBIT Q

	 	FIRPTA Certificate
	EXHIBIT R

	 	Form of Warrants
	EXHIBIT S

	 	Registration Rights Agreement
	EXHIBIT T

	 	AAPL 1989 Model Form Operating Agreement

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1 PURCHASE AND SALE
	 	 	1	 
	1.1 Purchase and Sale
	 	 	1	 
	1.2 Excluded Assets
	 	 	1	 
	1.3 Effective Time
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 PURCHASE PRICE
	 	 	1	 
	2.1 Purchase Price
	 	 	1	 
	2.2 Deposit
	 	 	1	 
	2.3 Allocation of the Purchase Price
	 	 	1	 
	2.4 Adjustments to Purchase Price
	 	 	1	 
	A. Settlement Statements
	 	 	1	 
	B. Property Expenses
	 	 	1	 
	C. Effective Time Apportionment of
Property Expenses and Revenues
	 	 	1	 
	D. Upward Adjustments
	 	 	1	 
	E. Downward Adjustments
	 	 	1	 
	F. Gas Imbalances
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 3 BUYER’S INSPECTION
	 	 	1	 
	3.1 Access to the Records
	 	 	1	 
	3.2 Disclaimer
	 	 	1	 
	3.3 Physical Access to the Leases, Lands and Wells
	 	 	1	 
	3.4 Buyer’s Agents
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 4 TITLE MATTERS
	 	 	1	 
	4.1 Permitted Encumbrances
	 	 	1	 
	4.2 Purchase Price Adjustments for Title Matters
	 	 	1	 
	4.3 Casualty Loss
	 	 	1	 
	4.4 Preferential Rights and Required Consents
	 	 	1	 
	A. Required Consents
	 	 	1	 
	B. Preferential Rights
	 	 	1	 
	C. Exclusive Remedy
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 5 ENVIRONMENTAL MATTERS
	 	 	1	 
	5.1 Definitions
	 	 	1	 
	5.2 Physical Condition of the Assets
	 	 	1	 
	5.3 Environmental Representations
	 	 	1	 
	5.4 Environmental Liabilities and Obligations
	 	 	1	 
	A. Assumed Environmental Liabilities
	 	 	1	 
	B. Retained Environmental Liabilities
	 	 	1	 
	5.5 Contested Environmental Defects
	 	 	1	 
	5.6 Exclusive Remedies
	 	 	1	 

 

 

	 	 	 	 	 
	ARTICLE 6 SELLER’S REPRESENTATIONS
	 	 	1	 
	6.1 Company Representations
	 	 	1	 
	A. Corporate Representations
	 	 	1	 
	B. Seller
	 	 	1	 
	C. No Violation
	 	 	1	 
	6.2 Authorization and Enforceability
	 	 	1	 
	6.3 Liability for Brokers’ Fees
	 	 	1	 
	6.4 No Bankruptcy
	 	 	1	 
	6.5 Litigation
	 	 	1	 
	6.6 Judgments
	 	 	1	 
	6.7 Compliance with Law
	 	 	1	 
	6.8 Material Agreements
	 	 	1	 
	6.9 Hydrocarbon Sales Contracts
	 	 	1	 
	6.10 Area of Mutual Interest and Other Agreements
	 	 	1	 
	6.11 Imbalance Volumes
	 	 	1	 
	6.12 Property Expenses
	 	 	1	 
	6.13 Leases
	 	 	1	 
	6.14 Receipt of Proceeds
	 	 	1	 
	6.15 Accuracy of Information
	 	 	1	 
	6.16 Permits
	 	 	1	 
	6.17 Outstanding Commitments, AFEs and Invoices
	 	 	1	 
	6.18 Taxes
	 	 	1	 
	6.19 Hedging Arrangements
	 	 	1	 
	6.20 Surface Use Agreements
	 	 	1	 
	6.21 Liens and Encumbrances
	 	 	1	 
	6.22 Plugging and Abandonment Obligations
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 7 BUYER’S REPRESENTATIONS
	 	 	1	 
	7.1 Corporate Representations
	 	 	1	 
	7.2 Authorization and Enforceability
	 	 	1	 
	7.3 Liability for Brokers’ Fees
	 	 	1	 
	7.4 Litigation
	 	 	1	 
	7.5 Financial Resources
	 	 	1	 
	7.6 Buyer’s Evaluation
	 	 	1	 
	A. Records
	 	 	1	 
	B. Independent Evaluation
	 	 	1	 
	7.7 SEC Filings; Financial Statements
	 	 	1	 
	7.8 Valid Issuance of Teton Shares
	 	 	1	 
	7.9 Capitalization
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 8 COVENANTS AND AGREEMENTS
	 	 	1	 
	8.1 Covenants and Agreements of Seller
	 	 	1	 
	A. Operations Prior to Closing
	 	 	1	 
	B. Restriction on Operations
	 	 	1	 
	C. Notification of Claims
	 	 	1	 
	D. Existing Relationships
	 	 	1	 
	E. Buyer as Successor Operator
	 	 	1	 

-ii- 

 

	 	 	 	 	 
	8.2 Covenants and Agreements of Buyer
	 	 	1	 
	A. Replacement Bonds and Instruments
	 	 	1	 
	8.3 Confidentiality
	 	 	1	 
	A. Information
	 	 	1	 
	B. Return of Information
	 	 	1	 
	C. Injunctive Relief
	 	 	1	 
	8.4 Notice of Breach
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 9 TAX MATTERS
	 	 	1	 
	9.1 Apportionment of Tax Liability
	 	 	1	 
	9.2 Tax Reports and Returns
	 	 	1	 
	9.3 Sales Taxes
	 	 	1	 
	9.4 Tax Information
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 10 CONDITIONS PRECEDENT TO CLOSING
	 	 	1	 
	10.1 Seller’s Conditions Precedent
	 	 	1	 
	10.2 Buyer’s Conditions Precedent
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 11 RIGHT OF TERMINATION AND ABANDONMENT
	 	 	1	 
	11.1 Termination
	 	 	1	 
	11.2 Liabilities Upon Termination
	 	 	1	 
	A. Buyer’s Breach
	 	 	1	 
	B. Seller’s Breach
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 12 CLOSING
	 	 	1	 
	12.1 Date of Closing
	 	 	1	 
	12.2 Place of Closing
	 	 	1	 
	12.3 Closing Obligations
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 13 POST-CLOSING OBLIGATIONS
	 	 	1	 
	13.1 Post-Closing Adjustments
	 	 	1	 
	A. Final Settlement Statement
	 	 	1	 
	B. Dispute Resolution
	 	 	1	 
	13.2 Records
	 	 	1	 
	13.3 Further Assurances
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 14 ASSUMPTION AND RETENTION OF OBLIGATIONS AND INDEMNIFICATION
	 	 	1	 
	14.1 Buyer’s Assumption of Liabilities and Obligations
	 	 	1	 
	14.2 Seller’s Retention of Liabilities and Obligations
	 	 	1	 
	14.3 Suspended Funds
	 	 	1	 
	14.4 Proceeds and Invoices for Property Expenses
Received After the Settlement Date
	 	 	1	 
	B. Property Expenses
	 	 	1	 
	14.5 Indemnification
	 	 	1	 
	A. Survival; Termination of Indemnification
	 	 	1	 
	B. Indemnification Provisions for Buyer’s Benefit
	 	 	1	 

-iii- 

 

	 	 	 	 	 
	C. Indemnification Provisions for Seller’s Benefit
	 	 	1	 
	D. Exclusive Remedy
	 	 	1	 
	14.6 Indemnification Procedure
	 	 	1	 
	14.7 Dispute Resolution
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 15 FUTURE OPERATIONS
	 	 	1	 
	15.1 Joint Operations
	 	 	1	 
	15.2 Area of Mutual Interest
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 16 MISCELLANEOUS
	 	 	1	 
	16.1 Expenses
	 	 	1	 
	16.2 Notices
	 	 	1	 
	16.3 Amendments/Waiver
	 	 	1	 
	16.4 Assignment
	 	 	1	 
	16.5 Announcements
	 	 	1	 
	16.6 Counterparts/Fax Signatures
	 	 	1	 
	16.7 Governing Law
	 	 	1	 
	16.8 Entire Agreement
	 	 	1	 
	16.9 Knowledge
	 	 	1	 
	16.10 Binding Effect
	 	 	1	 
	16.11 Survival
	 	 	1	 
	16.12 Limitation on Damages
	 	 	1	 
	16.13 No Third-Party Beneficiaries
	 	 	1	 
	16.14 Condition Precedent
	 	 	1	 
	16.15 References, Titles and Construction
	 	 	1	 

-iv- 

 

PURCHASE, SALE AND EXPLORATION AGREEMENT

     This Purchase, Sale and Exploration Agreement (this “Agreement”), dated March 24, 2008
(“Execution Date”), is by and between Shelby Resources LLC, a Colorado limited liability company,
1658 Cole Boulevard, Suite 205, Lakewood, CO 80401 (“Shelby” or “Seller”) and Teton Energy
Corporation, a Delaware corporation, 410 17th Street, Suite 1850, Denver, CO 80202
(“Teton” or “Buyer”). The transaction contemplated by this Agreement may be referred to as the
“Transaction.” Seller and Buyer may be referred to individually as a “Party” or collectively as
the “Parties.”

RECITALS

     A. Seller owns and desires to sell all of its interests in certain oil and gas properties
located in Barber, Barton, Ellis, Graham, Rooks, Rush and Stafford Counties, Kansas, and 60% of its
interest in certain other lands, all as more particularly described in Article 1 and Exhibits
A and B.

     B. Buyer desires to purchase Seller’s interest in the assets referenced in Paragraph A above
pursuant to the terms of this Agreement.

     C. To accomplish the foregoing, the Parties wish to enter into this Agreement.

AGREEMENT

     In consideration of the mutual promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree
as follows:

ARTICLE 1

PURCHASE AND SALE

     1.1 Purchase and Sale. Seller agrees to sell and Buyer agrees to purchase (i) all of
Seller’s right, title and interest in the properties described on Exhibits A and C
(“Producing Properties”) and (ii) an undivided sixty percent (60%) of Seller’s right, title, and
interest in the properties described on Exhibit B (“Undeveloped Properties”), all pursuant
to the terms of this Agreement, including Seller’s right, title and interest in the following
(collectively, the “Assets”):

     A. The oil, gas and/or mineral leases and fee mineral interests specifically described in
Exhibits A and B (the “Leases”), including without limitation all leasehold estates
and interests, all royalty, overriding royalty, production payment, reversionary, net profit,
contractual working interests and other similar rights and estates therein, the lands described in
Exhibits A and B (the “Lands”), and the oil, gas and other hydrocarbons
(“Hydrocarbons”) attributable to the Leases or Lands, including all rights in any pooled, unitized
or communitized acreage by virtue of the Lands or Leases being a part thereof and all Hydrocarbons
produced from the pool or unit allocated to any such Lands or Leases;

 

 

     B. The wells specifically described in Exhibit C (the “Wells”), together with all
other oil and gas wells and all water, injection and disposal wells on the Lands or on lands
pooled, communitized or unitized therewith, and all personal property, equipment, fixtures,
improvements, permits, water discharge permits, rights-of-way and easements located on the Lands or
used in connection with the production, gathering, treatment, processing, storing, transportation,
sale or disposal of Hydrocarbons or water produced from the properties and interests described in
Section 1.1 A.;

     C. The unitization, pooling and communitization agreements, declarations and orders, and the
units created thereby, all operating agreements and unit operating agreements and all other such
agreements relating to the properties and interests described in Sections 1.1 A. and B. and to the
production of Hydrocarbons, if any, attributable to said properties and interests, including those
which are described in Exhibit D;

     D. All existing and effective sales, purchase, exchange, gathering and service agreements and
other contracts, agreements and instruments which relate, and only insofar as they relate, to the
properties and interests described in Sections 1.1 A. through C.;

     E. All original files, records and data, including without limitation lease and well files,
logs, seismic data, abstracts, title reports, memoranda and opinions, relating to the items
described in Sections 1.1 A. through 1.1 D. maintained by Seller, but excluding Seller’s (i) 
company files, financial records, and tax related records (including income tax returns and files
related thereto) to the extent not relevant to the Assets and (ii) records and data to the extent
transfer thereof is prohibited by unaffiliated third party contractual restrictions on transfer or
protected by Seller’s attorney-client privilege. To the extent that any of the Records contain
interpretations of Seller, Buyer agrees to rely on such interpretations at its own risk.

     1.2 Excluded Assets. Seller is selling its interest in the Assets, but is not selling
and is retaining its interest in and to the Excluded Assets. As used herein, the term “Excluded
Assets” refers to all of Seller’s right, title, and interest in and to the following:

          A. All of Seller’s (i) company files, financial records, and tax related records (including
income tax returns and files related thereto), to the extent not relevant to the Assets and (ii)
records and data to the extent transfer thereof is prohibited by unaffiliated third party
contractual restrictions on transfer or protected by Seller’s attorney-client privilege;

          B. Any Asset excluded from this Agreement pursuant to Section 4.4 of this Agreement; and

          C. An undivided forty percent (40%) of Seller’s right, title and interest in the Undeveloped
Properties.

     1.3 Effective Time. The purchase and sale of the Assets shall be effective as of
March 1, 2008, at 12:01 a.m. local time at the location of the Assets (the “Effective Time”).

ARTICLE 2

PURCHASE PRICE

     2.1 Purchase Price. The purchase price (“Purchase Price”) for the Assets shall be:

-2-

 

     A. $27,780,683.00 in cash (“Cash Portion”), as adjusted pursuant to Section 2.4 and Section
13.1;

     B. A number of shares of Teton’s common stock, par value $0.001, (“Common Stock”) with a value
of $10,437,814.00. The number of shares of Common Stock to be delivered as part of the Purchase
Price will be determined by dividing (i) $10,437,814.00 by (ii) the average closing trading price
of the Common Stock (as adjusted for stock splits, stock combinations or any similar adjustments
prior to the Closing Date) for the period from and including February 25, 2008 to and including the
second trading day before the Closing Date (as defined below) (the “Initial Issue Price”), with the
resulting quotient being rounded up to the nearest whole number of shares of Common Stock; and

     C. Warrants to acquire an additional 490,499 shares of Common Stock (as adjusted for stock
splits, stock combination or any similar adjustments prior to the Closing Date) with an exercise
price of $6.00 per share (“Warrants”) and an expiration date two years from the Closing Date.

     2.2 Deposit. Buyer has segregated the amount of $1,000,000.00 (the “Deposit”) in a
separate bank account (the “Segregated Account”), to be distributed by Buyer as set forth in
Articles 11 and 12 of this Agreement.

     2.3 Allocation of the Purchase Price. Buyer and Seller have allocated the Purchase
Price among the Assets as set forth on Exhibit C. The value so allocated to a particular
Asset may be referred to as the “Allocated Value” for that Asset. The undeveloped locations
specifically described on Exhibit C shall be included in the term “Assets.”

     2.4 Adjustments to Purchase Price. All adjustments to the Cash Portion of the
Purchase Price shall be made (i) according to the factors described in this Section 2.4, (ii) in
accordance with generally accepted accounting principles as consistently applied in the oil and gas
industry, and (iii) without duplication.

          A. Settlement Statements. The Cash Portion of the Purchase Price shall be adjusted at
Closing pursuant to a preliminary settlement statement (the “Preliminary Settlement Statement”)
prepared by Seller and submitted to Buyer on or before five business days prior to Closing for
Buyer’s comment and review. The Preliminary Settlement Statement shall set forth all adjustments
to the Cash Portion of the Purchase Price, the Closing Amount resulting from such adjustments and
all associated calculations. The term “Closing Amount” means the Cash Portion of the Purchase
Price, as adjusted as provided in this Section 2.4, using reasonable estimates as agreed to by the
Parties if actual numbers are not available. After Closing, the Cash Portion of the Purchase Price
shall be further adjusted pursuant to the Final Settlement Statement (as defined below) delivered
pursuant to Section 13.1.

          B. Property Expenses. For the purposes of this Agreement, the term “Property
Expenses” shall mean all capital expenses, joint interest billings, lease operating expenses,
royalties, overriding royalties, Taxes (as defined and apportioned as of the Effective Time
pursuant to Article 9), drilling expenses, workover expenses, geological, geophysical and any other
exploration or development expenditures chargeable under applicable operating agreements or other
agreements consistent with the standards established by the Council of

-3-

 

Petroleum Accountant Societies of North America that are attributable to the maintenance and
operation of the Assets during the period in question.

          C.
Effective Time Apportionment of Property Expenses and
Revenues. 

     Buyer and Seller
agree that all revenues, costs and expenses (both operating and capital), including Property
Expenses arising from the Assets will be apportioned between Buyer and Seller as of the Effective
Time. Accordingly, (i) Seller shall be entitled to any production revenues or other amounts
realized from or accruing to the Assets attributable to the period of time before the Effective
Time, and shall be liable for the payment of all costs and expenses, including Property Expenses,
royalties, overriding royalties, lease rental and maintenance costs and leasehold payments
attributable to the Assets for the period of time before the Effective Time (but subject to the
limitations set forth in Section 14.2); and (ii) Buyer shall be entitled to any production revenues
or other amounts realized from and accruing to the Assets attributable to the period of time after
the Effective Time, and shall be liable for the payment of all costs and expenses, including
Property Expenses, royalties, overriding royalties, lease rental and maintenance costs and
leasehold payments attributable to the Assets for the period of time after the Effective Time
(subject to the provisions of Section 14.2).

          D. Upward Adjustments. The Cash Portion of the Purchase Price, and therefore the
Purchase Price, each shall be adjusted upward by the following:

               1. An amount equal to all proceeds, receivables and other assets (net of royalty and Taxes not
otherwise accounted for hereunder) received and retained by Buyer from the sale of all Hydrocarbons
produced from, credited to or arising from the Assets prior to the Effective Time;

               2. An amount equal to all direct and actual expenses attributable to the Assets, including,
without limitation, the Property Expenses, incurred and paid by Seller that are attributable to the
period after the Effective Time;

               3. To the extent not covered in the preceding paragraph, an amount equal to all prepaid
expenses attributable to the Assets after the Effective Time that were paid by or on behalf of
Seller, including without limitation, prepaid drilling and/or completion costs and prepaid utility
charges;

               4. An amount equal to the value (net of applicable Taxes) of Seller’s share of all oil in
storage tanks above the load line and gas through the meters on the pipeline at the Effective Time
to be calculated as follows: The value shall be the product of (i) the volume in each storage tank
(attributable to Seller’s interest) as of the Effective Time as shown by the actual gauging reports
or gas through the meters on the pipeline (attributable to Seller’s interest) as of the Effective
Time, multiplied by (ii) the EDQ price posted by Plains Marketing LP for March 2008 production
together with any bonus provided for under Seller’s contract with Plains Marketing LP; provided,
however, that the adjustment contemplated by this subsection shall be made only to the extent that
Seller does not receive and retain the proceeds, or portion thereof, attributable to the
pre-Effective Time merchantable oil in the storage tanks above the load line or gas through the
meters on the pipeline; and

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               5. Any other amount agreed to by Buyer and Seller.

          E. Downward Adjustments. The Cash Portion of the Purchase Price, and therefore the
Purchase Price, each shall be adjusted downward by the following:

               1. An amount equal to all proceeds (net of royalty and Taxes not otherwise accounted for
hereunder) received and retained by Seller that are attributable to production from the Assets
after the Effective Time;

               2. The amount of all direct and actual expenses attributable to the Assets, including, without
limitation, the Property Expenses, that (i) remain unpaid by Seller and are assumed by Buyer, or
(ii) have been paid by Buyer, in each case that are attributable to the period prior to the
Effective Time;

               3. An amount equal to adjustments for Casualty Losses and Exclusion Adjustments, and other
adjustments as set forth in this Agreement; and

               4. Any other amount agreed to by Buyer and Seller.

          F. Gas Imbalances. In addition to the foregoing, the Cash Portion of the Purchase
Price shall be adjusted downward or upward, as appropriate, by an amount equal to $8.00 per MCF for
the well and pipeline gas imbalances existing as of the Effective Time, as further outlined on
Exhibit F (the “Gas Imbalance Schedule”). The Cash Portion of the Purchase Price, and
therefore the Purchase Price, each shall be adjusted in the Preliminary Settlement Statement with
respect to the imbalance volumes.

ARTICLE 3

BUYER’S INSPECTION

     3.1 Access to the Records. Prior to Closing and subject to Section 8.3, Seller will
make the Records available to Buyer for inspection, copying, and review at Seller’s offices during
normal business hours to permit Buyer to perform its due diligence review. Subject to the consent
and cooperation of third parties, Seller will assist Buyer in Buyer’s efforts to obtain, at Buyer’s
expense, such additional information from such parties as Buyer may reasonably desire. Buyer may
inspect the Records and such additional information only to the extent it may do so without
violating any obligation of confidence or contractual commitment of Seller to a third party.

     3.2 Disclaimer. Except for the representations contained in this Agreement, Seller
makes no representation of any kind as to the Records or any information contained therein. Buyer
agrees that any conclusions drawn from the Records shall be the result of its own independent
review and judgment. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN THIS
AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY OR IMPLIED, AS TO (i) THE
PRESENCE, QUALITY AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE ASSETS,
INCLUDING WITHOUT LIMITATION SEISMIC DATA AND SELLER’S INTERPRETATION AND OTHER ANALYSIS THEREOF;
(ii) THE ABILITY OF THE ASSETS TO PRODUCE HYDROCARBONS, INCLUDING WITHOUT

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LIMITATION PRODUCTION RATES, DECLINE RATES AND RECOMPLETION OPPORTUNITIES; (iii) ALLOWABLES OR
OTHER REGULATORY MATTERS; (iv) THE PRESENT OR FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS OR
PROFITS, IF ANY, TO BE DERIVED FROM THE ASSETS; (v) THE ENVIRONMENTAL CONDITION OF THE ASSETS; (vi)
ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR; and (vii) THE TAX ATTRIBUTES OF ANY
ASSET. Buyer agrees that it has, or by Closing will have, made its own independent investigation,
analysis and evaluation of the Assets and the Transaction, including Buyer’s own estimate and
appraisal of the extent and value of Seller’s Hydrocarbon reserves attributable to the Assets.

     3.3 Physical Access to the Leases, Lands and Wells. Upon reasonable notice and during
normal business hours, Seller agrees to grant Buyer physical access to the Leases, Lands and Wells
to allow Buyer to conduct, at Buyer’s sole risk and expense, on-site inspections and environmental
assessments of the Leases, Lands and Wells. In connection with any such on-site inspections and
assessments, Buyer agrees not to interfere with the normal operation of the Leases and Wells and
agrees to comply with all operational and safety requirements of the operators of the Wells. If
Buyer or its agents prepares an environmental assessment of any Lease, Lands or Well, Buyer agrees
to keep such assessment confidential and to furnish copies thereof to Seller. Such information
shall be held confidential but may be disclosed to Buyer or Buyer’s affiliates, attorneys,
officers, employees and consultants used in Buyer’s evaluation of Seller’s properties.
Furthermore, Buyer’s obligations of confidentiality shall not apply to information (i) required to
be disclosed by legal process, order, regulation, or rule, or (ii) available to the public, or
(iii) acquired from third parties not known by Buyer to have confidentiality obligations to Seller.
In connection with granting such access, Buyer represents that it is adequately insured and
waives, releases and agrees to indemnify Seller, and its managers, directors, officers, members,
shareholders, employees, agents and representatives against all claims for injury to, or death of,
persons or for damage to property arising as a result of any act or omission committed by Buyer or
its employees, agents, contractors or representatives in conducting Buyer’s on-site inspections and
environmental assessments of the Leases, Lands and Wells or otherwise arising out of such
inspections and assessments. This waiver, release and indemnity by Buyer shall survive termination
of this Agreement.

     3.4 Buyer’s Agents. To the extent that Buyer uses agents to conduct its due diligence
activities, either in Seller’s offices or on the Lands, Buyer agrees to (i) make such agents aware
of the terms and conditions set forth in this Article 3 and the confidentiality provisions of
Article 8, and (ii) ensure that such agents agree to be bound by the terms of this Article 3 and
the confidentiality provisions of Article 8, and shall be responsible and liable for the actions of
its agents.

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ARTICLE 4

TITLE MATTERS

     4.1 Permitted Encumbrances. The term “Permitted Encumbrances” shall mean:

               1. lessors’ royalties, overriding royalties, net profits interests, production payments,
reversionary interests and similar burdens (payable or in suspense) if the net cumulative effect of
such burdens does not operate to reduce the net revenue interest set forth on Exhibit C
(“NRI”);

               2. liens for Taxes, or assessments not yet due and delinquent;

               3. all rights to consent by, required notices to, filings with, or other actions by federal,
state, or local governmental bodies, in connection with the conveyance of the applicable Asset if
the same are customarily obtained after such conveyance (“Routine Consents”);

               4. rights of reassignment upon the surrender or expiration of any Lease;

               5. the terms and conditions of the Material Agreements to the extent such do not decrease the
NRI for the affected Asset below that shown on Exhibit C or increase the working interest
set forth in Exhibit C (“WI”) for such Asset above that shown on Exhibit C without
a corresponding proportionate increase in the NRI for such Asset either as of Closing or at some
time thereafter;

               6. easements, rights-of-way, servitudes, permits, surface leases and other rights with respect
to surface operations, on, over or in respect of any of the Assets or any restriction on access
thereto so long as the same do not materially interfere with the operation of the affected Asset as
has been conducted in the past and do not materially affect the value thereof;

               7. materialmen’s, mechanics’, operators’ or other similar liens arising in the ordinary course
of business incidental to operation of the Assets if such liens and charges have not been filed
pursuant to law and the time for filing such liens and charges has expired; and

               8. all other contracts, agreements, instruments, obligations, defects and irregularities
affecting an Asset that individually or in the aggregate are not such as to materially interfere
with the operation, value or use of the affected Asset or have not prevented Seller from receiving,
and cannot reasonably be expected to prevent Buyer from receiving, the proceeds of production from
the affected Asset.

     4.2 Purchase Price Adjustments for Title Matters. 

     Prior to the Execution Date hereof, the Parties have agreed separately in writing (“Title
Agreement”) regarding the disposition of any title defects pertaining to the Assets other than with
respect to (a) the Carmichael Well and the Carmichael #1 ARB Well and associated Leases located in
Section 11, Township 11 South, Range 18 West, Ellis County, Kansas (collectively

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“Carmichael Wells”) and (b) the Bartos A Well and associated Leases located in Section 15,
Township 9 South, Range 19 West, Rooks County, Kansas (“Bartos Well”). Other than as provided in
the Title Agreement, Buyer will assume at Closing (subject to Seller’s special warranty of title
contained in the Assignment, Bill of Sale and Conveyance) the risk of and liability for title
defects affecting any of the Assets other than the Carmichael Well and the Bartos Well. Buyer
shall have until March 1, 2009 in which to advise Seller of any claim to an interest in the
Carmichael Well or the Bartos Well asserted by either (x) any third party other than Buyer or those
third parties reflected in Seller’s current division orders for such wells or (y) any party
reflected in Seller’s current division orders claiming an interest in such well in an amount
greater than that reflected in Seller’s current division orders (“Title Defect Notice”). The Title
Defect Notice shall be in writing and must describe the claim asserted by the third party. Seller
shall have thirty (30) days from its receipt of the Title Defect Notice in which to elect either
(i) to cure the claimed title defect to Buyer’s reasonable satisfaction within ninety (90) days
thereafter or (ii) to accept reassignment of the Well (limited to the Carmichael Well and the
Bartos Well) from Buyer. If Seller elects to take reassignment of the Carmichael Well and/or the
Bartos Well, Seller shall pay Buyer the Allocated Value for the affected Well(s), less all net
profits accruing to the affected Well(s) from and after the Effective Time to the date of
reassignment. Buyer shall reassign to Seller with special warranty of title the entire interests
in the affected Well(s) previously assigned by Seller to Buyer hereunder, and Seller shall
thereafter assume all liability associated with such reassigned Well(s). The remedy set forth in
this Section 4.2 is Buyer’s sole and exclusive remedy for any claimed title defects in the Assets.

     4.3 Casualty Loss. After the Effective Time and prior to Closing, if a
portion of the Assets is destroyed by fire or other casualty, or is taken or threatened to be taken
in condemnation or under the right of eminent domain, (with such event being a “Casualty Loss”),
Buyer shall purchase the Asset at Closing for the Allocated Value of the Asset reduced by the
estimated cost to repair or replace such Asset (with equipment of similar utility). At its sole
option, Seller may elect to cure such Casualty Loss. If Seller elects to cure such Casualty Loss,
Seller may replace any personal property that is the subject of a Casualty Loss with equipment of
similar grade and utility and Seller shall be entitled to keep all associated insurance proceeds,
if any. If Seller cures the Casualty Loss to Buyer’s reasonable satisfaction, Buyer shall purchase
the affected Asset at Closing for the Allocated Value thereof without any Purchase Price adjustment
for such Casualty Loss.

     4.4 Preferential Rights and Required Consents. Other than Routine Consents
and those shown on Exhibit G, there are no preferential rights to purchase the Assets
(“Preferential Rights”) and no consents to the assignment thereof that are required to be obtained
in connection with the consummation of the Transaction (“Required Consents”). If there are
Preferential Rights or Required Consents, the provisions of this Section shall apply. If either
Party discovers Assets affected by Preferential Rights or Required Consents, Seller shall use its
commercially reasonable efforts to give the notices required in connection with the Preferential
Rights in sufficient time prior to Closing to permit the lapse of the period of time in which to
exercise such Preferential Rights prior to Closing and shall use its commercially reasonable
efforts to obtain such Required Consents prior to Closing, provided that Seller shall not be
required to expend any funds or make any other type of financial commitment as a condition to
obtaining such Required Consent.

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          A. Required Consents. If a Required Consent has not been obtained as of the Closing,
then (i) the portion of the Assets for which such Required Consent has not been obtained shall not
be conveyed at the Closing, (ii) the Allocated Value for that Asset shall not be paid to Seller,
and (iii) Seller shall use its reasonable efforts to obtain such Required Consent as promptly as
possible following Closing. If a Required Consent has been obtained as of the Final Settlement
Date, Seller shall convey the affected Asset to Buyer effective as of the Effective Time and Buyer
shall pay Seller the Allocated Value of the affected Asset, reduced by the amount of any net
proceeds from the affected Asset attributable to the period of time after the Effective Time with
Seller retaining such net proceeds attributable to the period of time after the Effective Time
until the affected Asset is assigned, and with Seller bearing all attendant costs in connection
therewith, including Property Expenses, royalties and overriding royalties, lease rental and
maintenance costs and leasehold payments for the affected Asset accruing during this period of
time. If such Required Consent has not been obtained as of the Settlement Date, the affected Asset
shall be deemed to be an Excluded Asset and Seller shall retain such Asset and the Purchase Price
shall be deemed to be reduced by an amount equal to the Allocated Value of the particular Asset
(with such adjustment being an “Exclusion Adjustment”). Buyer shall reasonably cooperate with
Seller in obtaining any Required Consent including providing assurances of reasonable financial
conditions, but Buyer shall not be required to expend funds or make any other type of financial
commitments as a condition of obtaining such consent.

          B. Preferential Rights. 1. If any Preferential Right affecting any portion of the
Assets is exercised and consummated prior to the Closing Date, that portion of the Assets affected
by such Preferential Right shall be deemed to be Excluded Assets and the Purchase Price shall be
adjusted downward by an amount equal to the Allocated Value of such affected Assets without the
requirement for Buyer to give notice (with such adjustment being an “Exclusion Adjustment”).

               2. If by Closing, the time frame for the exercise of such Preferential Rights has not expired
and Seller has not received notice of an intent not to exercise or a waiver of the Preferential
Right, that portion of the Assets affected by such Preferential Right shall be included in the
Assets and assigned to Buyer at Closing. If such Preferential Right is exercised, the provisions
of Section 4.4.B.3 shall apply.

               3. If the affected Asset has been conveyed to Buyer at Closing, and a Preferential Right
affecting the Asset is consummated after Closing, Buyer agrees to convey such affected Asset to the
party exercising such Preferential Right on the same terms and conditions under which Seller
conveyed such Assets to Buyer and retain all amounts paid by the party exercising such Preferential
Right. In the event of such exercise, Buyer shall prepare, execute and deliver a form of
conveyance of such Asset to such exercising party, such conveyance to be in form and substance as
provided in this Agreement, and Seller agrees to hold harmless and indemnify Buyer from any and all
liabilities and obligations associated with such conveyed Asset.

          C. Exclusive Remedy. The remedies set forth in this Section 4.4 are the exclusive
remedies under this Agreement for Preferential Rights and Required Consents.

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ARTICLE 5

ENVIRONMENTAL MATTERS

     The provisions of this Article apply only to the environmental matters associated with the
Assets as the result of oil and gas operations on the Lands.

     5.1 Definitions. For the purposes of the Agreement, the following terms shall have
the following meanings:

     “Environmental Defect” means a condition in, on or under an Asset (including, without
limitation, air, land, soil, surface and subsurface strata, surface water and ground water or
sediments) that causes an Asset to be in violation of an Environmental Law. It is understood and
agreed that matters of an essentially similar nature such as, but not limited to, oil spills,
chemical barrels or equipment containing NORM found at a single site shall be deemed a single
incident or condition. The Parties agree that each Environmental Defect will be addressed as a
single incident or condition, and that Environmental Defects will not be aggregated on a per
condition basis or otherwise (i.e., chemical barrels found at all of the Well sites shall not be
aggregated, but instead, shall be evaluated on a site by site basis).

     “Environmental Law” means any law, statute, rule, regulation, code, ordinance or order issued
by any federal, state, or local governmental entity as of the Execution Date regulating or imposing
liability or standards of conduct concerning protection of the environment or human health and
safety or the release or disposal of waste or hazardous materials.

     “NORM” means naturally occurring radioactive material.

     “Remediation” and “Remediate” mean actions taken, or to take actions, to correct an
Environmental Defect or otherwise required to remediate in compliance with applicable Environmental
Law.

     5.2 Physical Condition of the Assets.

     A. Buyer acknowledges that the Assets have been used for oil and gas drilling and production
operations and possibly for the storage and disposal of waste materials or hazardous substances
related to standard oil field operations. Physical changes in or under the Assets or adjacent
lands may have occurred as a result of such uses. The Assets also may contain previously plugged
and abandoned wells, buried pipelines, storage tanks and other equipment, whether or not of a
similar nature, the locations of which may not now be known by Seller or be readily apparent by a
physical inspection of the Assets. Buyer understands that Seller does not have the requisite
information with which to determine the exact nature or condition of the Assets nor the effect any
such use has had on the physical condition of the Assets. Pursuant to the Safe Drinking Water and
Toxic Enforcement Act of 1986, Buyer is hereby notified and assumes the risk that detectable
amounts of chemicals known to cause cancer, birth defects and other reproductive harm may be found
in, on or around the Assets. Subject to Section 5.4 B, upon consummation of the Closing, Buyer
shall be deemed to have assumed the risk of expense, claim, damage or liability arising from any
such matter referred to in this section, including without limitation the risk that the Assets may
contain waste or contaminants and that adverse physical conditions, including the presence of waste
or contaminants, may not have been

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revealed by Buyer’s investigation. Subject to Section 14.2, consummation of the Closing shall
transfer all responsibility and liability related to the disposal, spills, waste or contamination
from, on or below the Assets from Seller to Buyer.

     B. In addition, Buyer acknowledges that some oil field production equipment located on the
Assets may contain asbestos and/or NORM. In this regard, Buyer expressly understands that NORM may
affix or attach itself to the inside of wells, materials and equipment as scale or in other forms,
and that wells, materials and equipment located on the Assets described herein may contain NORM and
that NORM-containing materials may be buried or have been otherwise disposed of on the Assets.
Buyer also expressly understands that special procedures may be required for the removal and
disposal of asbestos and NORM from the Assets where it may be found, and that, subject to Section
5.4 B, upon consummation of the Closing, Buyer shall be deemed to have assumed all liability when
such activities are performed.

     5.3 Environmental Representations. With respect to the Assets operated by Seller, to
Seller’s knowledge, Seller has been in material compliance with and has not been and is not in any
material respect in violation of or liable under, any Environmental Law. With respect to the
Assets, Seller has not received any actual or threatened order, notice or other communication of
any actual or potential violation or failure to comply with any Environmental Law.

     5.4 Environmental Liabilities and Obligations.

          A. Assumed Environmental Liabilities. Subject to Section 5.4 B, Buyer shall assume
and pay, perform, fulfill and discharge and release Seller from all Losses relating to
environmental conditions in, on or under the Assets attributable to the period of time before and
after the Effective Time, including without limitation any and all liability for (i) ground water
contamination, (ii) NORM, (iii) man-made material fibers, or (iv) the obligation to plug and
abandon all of the wells located on the Lands and reclamation of existing well sites on the Lands
(collectively, the “Assumed Environmental Liabilities”).

          B. Retained Environmental Liabilities.

     The terms “Retained Environmental Liability” and “Retained Environmental Liabilities” refer to
any Environmental Defects that satisfy all of the terms and conditions of this Section 5.4 B.
Notwithstanding the provisions of Section 5.4 A above, if Buyer discovers or a third party asserts
an Environmental Defect arising from an act, omission or other event which occurred prior to the
Effective Time and the out-of-pocket cost of resolving such Environmental Defect, including the
cost to Remediate in accordance with applicable Environmental Law, or damages incurred with respect
thereto, exceeds $10,000.00, Buyer may notify Seller in writing as soon as possible after such
discovery or claim but in no event later than December 31, 2008, to assume such Environmental
Defect relating to such Environmental Defect in accordance with the terms of this Section 5.4 B.
Such written notice shall describe the details known to Buyer of the Environmental Defect relating
to such environmental liability and Buyer shall concurrently furnish to Seller all information
available to Buyer related to such Environmental Defect. If Buyer timely notifies Seller of such
Environmental Defects on or before December 31, 2008, then Seller shall retain the risk, cost,
expense and liability related to such Environmental Defect. If Buyer fails to notify Seller in
writing of any Environmental Defect on or before December 31, 2008, Buyer shall have waived and
forfeited Buyer’s right to require Seller to retain the risk,

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cost, expense and/or liability relating to such Environmental Defect. With respect to any
Environmental Defect of which Buyer timely notifies Seller, Seller shall have the option to (i)
Remediate such Environmental Defect to Buyer’s reasonable satisfaction or (ii) reacquire the Asset
affected by such Environmental Defect. If Seller elects to reacquire the affected Asset, Seller
shall pay Buyer the Allocated Value of such Asset (reduced by the amount of net income, if any,
from the affected Asset from the Effective Time to the date of reassignment) and Buyer shall
reassign to Seller with special warranty of title the entire interests in the affected Asset
previously assigned by Seller to Buyer hereunder, effective as of the Effective Time.
Notwithstanding the provisions of this Section 5.4 B, Seller shall have no obligation under this
Section 5.4 B unless the aggregate cost to Remediate all Environmental Defects exceeds $500,000.00,
which amount is a threshold, not a deductible, and if such threshold is exceeded, the obligations
provided in this Section 5.4 B shall be from the first dollar.

     5.5 Contested Environmental Defects. If Seller contests the existence of an
Environmental Defect Seller shall notify Buyer in writing within five (5) days of its receipt of
(“Rejection Notice”). The Rejection Notice shall state with reasonable specificity the basis of
the rejection of the Environmental Defect. Within three business days of receipt of the Rejection
Notice, representatives of Buyer and Seller knowledgeable in environmental matters shall meet and,
either (i) mutually agree to reject the particular Environmental Defect or (ii) agree on the
validity of such Environmental Defect. If the Parties cannot agree on either options (i) or (ii)
in the preceding sentence, the Environmental Defect subject to the Rejection Notice shall be
resolved in accordance with the arbitration procedures set forth in Section 14.7. If Seller fails
to timely deliver a Rejection Notice, Seller shall be deemed to have accepted the validity of the
Environmental Defect, and shall be deemed to have waived its own option to contest the
Environmental Defect pursuant to this Section.

     5.6 Exclusive Remedies. The rights and remedies granted each Party in this Article,
together with the indemnifications set forth in Article 14, are the exclusive rights and remedies
against the other Party related to any Environmental Defect or other environmental matters.

ARTICLE 6

SELLER’S REPRESENTATIONS

     The Parties’ agreement with respect to Title Matters and Environmental Matters is set forth in
Articles 4 and 5 respectively, and the provisions of those Articles set forth Seller’s
representations with respect to Title Matters and Environmental Matters. Seller makes the
following representations and warranties as of the execution of this Agreement and as of Closing:

     6.1 Company Representations.

          A. Corporate Representations. Seller is a Colorado limited liability company duly
organized and validly existing and in good standing under the laws of the State of Colorado and is
qualified to conduct business in the State of Kansas.

          B. Seller. Seller has all requisite power and authority to own the Assets, to carry
on its business as presently conducted and to execute, deliver, and perform this Agreement and each
other document executed or to be executed by Seller in connection with the

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Transaction. The execution, delivery, and performance by Seller of this Agreement and each
other document executed or to be executed by Seller in connection with the Transaction and the
consummation of the Transaction have been duly authorized by all necessary company action of
Seller.

          C. No Violation. The execution and delivery of this Agreement does not (i) create a
lien or encumbrance on the Assets that will remain in existence after Closing, (ii) violate or
conflict with any provision of the governing documents of Seller, or any provision of any statute,
rule or regulation applicable to Seller or the Assets or any material lease, contract, agreement,
instrument or obligation to which Seller is a party or by which Seller or the Assets are bound, or
(iii) violate or conflict with any judgment, decree or order applicable to Seller.

     6.2 Authorization and Enforceability. This Agreement constitutes, and each other
document executed and delivered by Seller in connection with the Transaction will constitute,
Seller’s legal, valid and binding obligation, enforceable in accordance with its respective terms,
subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and other
laws for the protection of creditors and equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.

     6.3 Liability for Brokers’ Fees. Seller has not incurred any liability, contingent or
otherwise, for brokers’ or finders’ fees relating to this Transaction for which Buyer shall have
any responsibility whatsoever.

     6.4 No Bankruptcy. There are no bankruptcy proceedings pending, being contemplated by
or, to the knowledge of Seller, threatened against Seller by any third party.

     6.5 Litigation. Other than the matters listed in Exhibit H, Seller has not
received a written claim or written demand notice that has not been resolved that would adversely
affect any of the Assets. There are no actions, suits, ongoing governmental investigations,
written governmental inquiries or proceedings pending or, to the knowledge of Seller, threatened in
writing against Seller or any of the Assets, in any court or by or before any federal, state,
municipal or other governmental agency that relate to any of the Assets, or that would affect the
Seller’s ability to execute and deliver this Agreement or to consummate this Transaction.

     6.6 Judgments. There are no unsatisfied judgments or injunctions issued by a court of
competent jurisdiction or other governmental agency outstanding against Seller related to the
Assets.

     6.7 Compliance with Law. Other than the matters listed on Exhibit I, Seller
has not received a written notice of a material violation of any statute, law, ordinance,
regulation, permit, rule or order of any federal, state, tribal or local government or any other
governmental department or agency, or any judgment, decree or order of any court, applicable to the
Assets or operations on the Assets, which remains uncured.

     6.8 Material Agreements. Exhibit D is a list of all agreements, other than
the Leases, that are material to the ownership and operation of the Assets (the “Material
Agreements”). Seller has made available to Buyer all of the Material Agreements and Leases in
Seller’s

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possession. Seller has not received and has not given written notice of any material default
under any of the Material Agreements that remains uncured.

     6.9 Hydrocarbon Sales Contracts. Except as set forth on Exhibit D, no
Hydrocarbons from the Assets are subject to a sales contract (other than division orders or spot
sales agreements terminable on no more than 30 days notice) and no person has any call upon, option
to purchase or similar rights with respect to the production from the Assets. Proceeds from the
sale of oil, condensate, and gas from the Assets are being received in all material respects by
Seller in a timely manner and are not being held in suspense for any reason.

     6.10 Area of Mutual Interest and Other Agreements. To Seller’s knowledge, and except
as listed on Exhibit D, no Asset is subject to (or has related to it) any area of mutual
interest agreements or any farm-out or farm-in agreement under which any party thereto is entitled
to receive assignments not yet made, or could earn additional assignments after the Effective Time.

     6.11 Imbalance Volumes. There do not exist any gas imbalances other than those listed
in Exhibit F (i) which are with gatherers, processors, or transporters or with co-tenants
or working interest owners in a well, unit, or field, (ii) which are associated with the Assets,
and (iii) where Seller has received a quantity of gas prior to the Effective Time for which Buyer
will have a duty after the Effective Time to deliver an equivalent quantity of gas or pay a sum of
money.

     6.12 Property Expenses. In the ordinary course of business, Seller has paid all
Property Expenses attributable to the Assets as such Property Expenses become due, and such
Property Expenses are being paid in a timely manner before the same become delinquent, except such
Property Expenses as are disputed in good faith by Seller in a timely manner and for which Seller
shall retain responsibility.

     6.13 Leases. Seller has not received a written notice of termination of any of the
Leases or written notice of material default under the terms of any Lease that remains uncured.

     6.14 Receipt of Proceeds. Seller is currently receiving payment from all purchasers
of production from the Assets in a timely manner, without suspense or any indemnity other than the
normal division order warranty of title.

     6.15 Accuracy of Information. All Records and other documents relating to the Assets
made available by Seller to Buyer are true and correct copies of documents contained in Seller’s
files. All historical information and data reflecting volumes of oil and gas production from the
Assets, and all historical lease operating expense, capital cost and revenue information and data,
furnished by Seller to Buyer are true and correct, except for such inaccuracies as would not have a
material adverse effect on the value of the Assets taken as a whole. The representations and
warranties contained in this Section 6.15 shall not be construed to be representations and
warranties with respect to the accuracy of any estimates, forecasts or conclusions contained in any
document.

     6.16 Permits. To Seller’s knowledge, Seller possesses all permits required to be
obtained for conducting its business with respect to the Assets as presently conducted, and with

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respect to each such permit: Seller has not received written notice (i) of any violations of
such permits that remains uncured or (ii) that such permit will not be renewed.

     6.17 Outstanding Commitments, AFEs and Invoices. Except (i) as currently reflected in
the books and records of Seller and as will be reflected in the Preliminary Settlement Statement or
(ii) as otherwise set forth in Exhibit J, (a) Seller has incurred no expenses, and has
made no commitments to make expenditures (including any agreements that would obligate Buyer to
make expenditures) in connection with the ownership or operation of the Assets after the Effective
Time, other than with respect to routine operations performed in the ordinary course of operating
the existing wells on the Assets, which operations are, individually, estimated to cost $25,000.00
or less, net to Seller’s interest, and (b) no proposals or authorities for expenditures (AFEs) are
currently outstanding (whether made by Seller or by any other party) to drill additional wells, or
to deepen, plug back, or rework existing wells, or to conduct other operations on the Assets for
which consent is required under the applicable operating or unitization agreement, or to abandon
any wells on the Assets, or to conduct any other operation on the Assets for which the estimated
cost exceeds $25,000.00 net to Seller’s interest.

     6.18 Taxes. All taxes and assessments pertaining to the Leases based on ownership of
the Leases for all taxable periods prior to the taxable period in which this Agreement is executed
have been properly paid. All income taxes and obligations relating thereto prior to the Effective
Time that could reasonably be expected to result in a lien or other claim against any of the Leases
have been properly paid, unless contested in good-faith by appropriate proceeding.

     6.19 Hedging Arrangements. Except as set forth on Exhibit K, the Leases are
not subject to any gas sales, gathering or transportation contracts which include provisions for
hedging, price risk management or other such financial arrangements or transactions, which will
affect or burden the Leases from and after the Closing Date.

     6.20 Surface Use Agreements. With the exception of Lease provisions, including
provisions set forth in recorded addendums to Leases, there are no surface use agreements to which
Seller is a party covering any portion of the Lands with the exception of the surface use
agreements described on Exhibit D.

     6.21 Liens and Encumbrances. Except for the burdens and obligations created by or
arising under the Leases and Permitted Encumbrances or as otherwise set forth on Exhibit L,
there are no loan agreements, promissory notes, pledges, mortgages, guaranties, or liens which were
secured by or constitute a lien or encumbrance on the Assets.

     6.22 Plugging and Abandonment Obligations. With the exception of the wells identified
on Exhibit M, to Seller’s knowledge there are no wells which are required to be plugged and
abandoned at the present time under applicable governmental laws, rules and regulations or the
terms of any Lease or agreement to which Seller is a party.

ARTICLE 7

BUYER’S REPRESENTATIONS

     Buyer makes the following representations and warranties to Seller as of the execution of this
Agreement and as of Closing:

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     7.1 Corporate Representations.

          A. Buyer is a Delaware corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware and its designee,
Teton North America LLC, is duly qualified, or as of Closing will be duly qualified, to carry on
its business in the State of Kansas.

          B. Buyer has or will have all requisite power and authority to own the Assets after Closing,
to carry on its business as presently conducted and to execute, deliver, and perform this Agreement
and each other document executed in connection with the Transaction. The execution, delivery, and
performance by Buyer of this Agreement and each other document executed by Buyer in connection with
the Transaction, and the consummation of the Transaction, have been duly authorized by all
necessary corporate action of Buyer.

          C. The execution and delivery of this Agreement does not (i) violate or conflict with any
provision of Buyer’s governing documents, or any provision of any statute, rule or regulation
applicable to Buyer or any material lease, contract, agreement, instrument or obligation to which
Buyer is a party or by which Buyer is bound, or (ii) violate or conflict with any judgment, decree
or order applicable to Buyer.

     7.2 Authorization and Enforceability. This Agreement constitutes, and each other
document executed and delivered by Buyer in connection with the Transaction will constitute,
Buyer’s legal, valid and binding obligation, enforceable in accordance with their respective terms,
subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws for the protection of creditors and equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.

     7.3 Liability for Brokers’ Fees. Buyer has not incurred any liability, contingent or
otherwise, for brokers’ or finders’ fees relating to this Transaction for which Seller shall have
any responsibility whatsoever.

     7.4 Litigation. There is no action, suit, proceeding, claim or investigation by any
person, entity, administrative agency or governmental body pending or, to Buyer’s knowledge,
threatened against it before any governmental authority that impedes or is likely to impede Buyer’s
ability to consummate this Transaction and to assume the liabilities to be assumed by Buyer under
this Agreement, including without limitation, the Assumed Liabilities.

     7.5 Financial Resources. Buyer has, and as of the Closing Date will have, sufficient
cash available or borrowing capacity under its credit facility to pay in full the Cash Portion of
the Purchase Price.

     7.6 Buyer’s Evaluation.

          A. Records. Buyer is experienced and knowledgeable in the oil and gas business and is
aware of its risks. Buyer acknowledges that Seller is making available to it the Records and the
opportunity to examine, to the extent it deems necessary in its sole discretion, all real property,
personal property and equipment associated with the Assets. Except for the representations of
Seller contained in this Agreement, Buyer acknowledges and agrees that Seller

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has not made any representations or warranties, express or implied, written or oral, as to the
accuracy or completeness of the Records or any other information relating to the Assets furnished
or to be furnished to Buyer or its representatives by or on behalf of Seller, including without
limitation any estimate with respect to the value of the Assets, estimates or any projections as to
reserves and/or events that could or could not occur, future operating expenses, future workover
expenses and future cash flow.

          B. Independent Evaluation. In entering into this Agreement, Buyer acknowledges and
affirms that it has relied and will rely solely on the terms of this Agreement and upon its
independent analysis, evaluation and investigation of, and judgment with respect to, the business,
economic, legal, tax or other consequences of this Transaction including its own estimate and
appraisal of the extent and value of the petroleum, natural gas and other reserves of the Assets,
the value of the Assets and future operation, maintenance and development costs associated with the
Assets. Except as expressly provided in this Agreement, Seller shall not have any liability to
Buyer or its affiliates, agents, representatives or employees resulting from any use, authorized or
unauthorized, of the Records or other information relating to the Assets provided by or on behalf
of Seller.

     7.7 SEC Filings; Financial Statements.

     Buyer has filed all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the “SEC”) since January 1, 2005 through the date of this
Agreement (collectively, the “Buyer SEC Reports”). As of the respective dates they were filed (and
if amended or superseded by a filing prior to the date of this Agreement, then on the date of such
filing), the Buyer SEC Reports complied in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as the case
may be. None of the Buyer SEC Reports (including any financial statements or schedules included or
incorporated by reference therein) filed since January 1, 2005, contained or will contain, as the
case may be, when filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively) any untrue statement of a material
fact or omitted or omits or will omit, as the case may be, to state a material fact required to be
stated or incorporated by reference therein or necessary to make the statements therein, in the
light of the circumstances under which they were or are made, not misleading. Each of the
consolidated financial statements (including, in each case, any notes thereto) contained in the
Buyer SEC Reports was prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
or 8-K promulgated by the SEC) and each presented fairly, in all material respects, the
consolidated financial position of Buyer and its consolidated subsidiaries as at the respective
dates thereof and for the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end adjustments).

     7.8 Valid Issuance of Teton Shares. 

     The shares of Common Stock to be issued pursuant to this Agreement, the Warrants and the
shares of Common Stock to be issued upon the exercise of the Warrants (assuming the
payment of the applicable exercise price therefore) will, when issued, be duly authorized,
validly

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issued, fully paid and non-assessable, and issued in compliance with all applicable federal
and state securities laws. The shares of Common Stock to be issued pursuant to this Agreement, the
Warrants and the shares of Common Stock to be issued upon the exercise of the Warrants will not be
subject to any preemptive rights or similar rights of any holders of any security of Buyer.

     7.9 Capitalization. 

     The authorized capital stock of Buyer consists of (i) 250,000,000 shares of Common Stock, of
which 17,810,534 shares of Common Stock were issued and outstanding as of date of this Agreement,
and (ii) 25,000,000 shares of preferred stock, par value $0.001 per share, none of which shares of
preferred stock have been designated or are issued and outstanding. All issued and outstanding
securities of Buyer have been duly authorized and validly issued and the outstanding Common Stock
is fully paid and non-assessable; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of Buyer.

ARTICLE 8

COVENANTS AND AGREEMENTS

     8.1 Covenants and Agreements of Seller. Seller covenants and agrees with Buyer with
respect to the conduct of Seller’s business between the Execution Date and the Closing Date as
follows:

          A. Operations Prior to Closing. Seller will operate the Assets in a good and
workmanlike manner and consistent with past practices, but Seller will not have any liability to
Buyer for any loss or damage relating to its operations of the Assets except to the extent directly
caused by the gross negligence or willful misconduct of Seller. Seller agrees to maintain the
insurance now in effect with respect to the Assets through the date of Closing. Seller shall pay
or cause to be paid its proportionate shares of all Property Expenses incurred in connection with
the ownership or operations of the Assets. Seller will timely notify Buyer of proposed activities
and major capital expenditures that could reasonably be expected to cost in excess of $25,000.00
per activity net to Seller’s interests conducted on the Assets and will keep Buyer timely informed
of all material developments affecting any of the Assets.

          B. Restriction on Operations. Except in the case of an emergency, Seller will
promptly inform Buyer of all requests for commitments to expend funds in excess of $25,000.00 with
respect to the Assets. Without the prior written consent of Buyer, Seller shall not, except in
connection with Seller’s ordinary course of business:

               1. enter into any new agreements or commitments with respect to the Assets which extend beyond
the Closing;

               2. commit to or incur any expenditures in excess of $25,000.00 (net to Seller’s interest) with
respect to any part of the Assets;

               3. make any nonconsent elections with respect to operations affecting the Assets;

               4. abandon any Well or release (or permit to terminate), or modify or reduce its rights under
all or any portion of any of the Leases;

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               5. modify or terminate any of the Material Agreements or waive or relinquish any right
thereunder;

               6. agree to any renegotiated price, take or other terms under existing gas purchase
agreements;

               7. agree to any credit or prepayment arrangement that would reduce the share of oil or gas
deliverable with respect to the Assets following the Closing;

               8. enter into any agreement or instrument for the sale, treatment, or transportation of
production from the Assets (except for sales agreements terminable on no more than 30 days’
notice);

               9. create any material gas imbalance affecting the Assets; or

               10. encumber, sell or otherwise dispose of any of the Assets, other than personal property
that is replaced by equivalent property or consumed in the normal operation of the Assets or sales
of Hydrocarbons in the ordinary course of business.

     For the purposes of obtaining the written consents required in this Section 8.1, Buyer
designates the person set forth in Section 16.2. Such consents may be obtained in writing in
accordance with Section 16.2.

          C. Notification of Claims. Seller shall promptly notify Buyer of any suit, action or
other proceeding before any court or governmental agency of which Seller receives written notice
that relates to the Assets or that would reasonably be expected, in Seller’s judgment, to result in
material impairment or loss of Seller’s title to any portion of the Assets or the value thereof or
that would reasonably be expected, in Seller’s judgment, to materially hinder or impede the
operation of the Leases, arising or threatened in writing prior to the Closing.

          D. Existing Relationships. Seller shall not introduce any new method of management,
operation or accounting with respect to the Assets and shall use all reasonable efforts to preserve
its relationships with customers, suppliers, distributors, contractors, operators, non-operators,
royalty owners, and others having business dealings with it in connection with the Assets.

          E. Buyer as Successor Operator. Seller shall use its commercially reasonable efforts to obtain sufficient consents of working
interest owners prior to the Closing to cause Buyer to be elected as successor operator of the
Assets currently operated by Seller.

     8.2 Covenants and Agreements of Buyer. Buyer covenants and agrees with Seller as
follows:

          A. Replacement Bonds and Instruments. At Closing or as soon as practical thereafter,
Buyer shall provide replacement instruments for each bond or similar contingent obligation given by
Seller securing its, or its contract operator’s, obligations relating to the Assets.

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     8.3 Confidentiality.

          A. Information. All data and information, whether written or oral, obtained from
Seller in connection with this Transaction, including the Records, whether obtained by Buyer before
or after the execution of this Agreement (collectively, the “Information”) is deemed by the Parties
to be confidential and proprietary to Seller. From the Closing Date (and until one year from the
Execution Date if Closing should not occur for any reason), except as required by law or applicable
stock exchange rule, Buyer and its officers, agents and representatives will hold in strict
confidence the terms of this Agreement, all Information, except any Information which: (i) at the
time of disclosure to Buyer by Seller is in the public domain; (ii) after disclosure to Buyer by
Seller becomes part of the public domain by publication or otherwise, except by breach of this
commitment by Buyer; (iii) Buyer can establish by competent proof was rightfully in Buyer’s
possession at the time of disclosure to Buyer by Seller; (iv) Buyer rightfully receives from third
parties free of any obligation of confidence; or (v) is developed independently by Buyer without
the Information, provided that the person or persons developing the data shall not have had access
to the Information. Upon Closing, the terms set forth in this Section 8.3 shall fully and finally
supersede and replace the terms of that certain Confidentiality Agreement dated January 22, 2008,
by and between Seller and Buyer.

          B. Return of Information. If this Transaction does not close on or before the date
set for Closing, or such later date as agreed to by the Parties, Buyer shall (i) upon written
request by Seller, return to Seller all copies of the Information in possession of Buyer obtained
pursuant to any provision of this Agreement; (ii) not utilize or permit utilization of the
Information to compete directly or indirectly with Seller; and (iii) destroy any and all notes,
reports, studies or analyses and all data and information generated by Buyer to the extent based on
or incorporating the Information. The terms of Sections 8.3.A., B., and C. shall survive
termination of this Agreement.

          C. Injunctive Relief. Buyer agrees that Seller will not have an adequate remedy at
law if Buyer violates any of the terms of Sections 8.3 A. and/or B. In such event, Seller will
have the right, in addition to any
other it may have, to obtain injunctive relief to restrain any breach or threatened breach of
the terms of Sections 8.3.A. and/or B., or to obtain specific enforcement of such terms.

     8.4 Notice of Breach. If either Seller or Buyer develops or possesses information
that leads it to believe that the other Party may have breached a representation or warranty under
this Agreement, that Party shall promptly inform the other Party of such potential breach so that
it may attempt to remedy or cure such breach prior to Closing.

ARTICLE 9

TAX MATTERS

     9.1 Apportionment of Tax Liability. “Taxes” shall mean all ad valorem, property,
production, excise, net proceeds, severance and all other taxes and similar obligations assessed
against the Assets or based upon or measured by the ownership of the Assets or the production of
Hydrocarbons or the receipt of proceeds therefrom, other than income taxes. The apportionment of
Taxes between the Parties shall take place as an adjustment to the Purchase Price pursuant to
Section 2.4 in the Preliminary Settlement Statement for Taxes for which information is available at
Closing and pursuant to Section 13.1 in the Final Settlement Statement for all remaining

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Taxes, using estimates of such Taxes if actual numbers are not available. Notwithstanding the foregoing,
the Parties agree that ad valorem taxes assessed against the Assets for the 2007 tax year shall be
paid by Seller in the amount to be estimated in the Final Settlement Statement (if the actual
amount is not known at that time) pursuant to Section 13.1, and 2/12 of the ad valorem taxes
assessed against the Assets for the 2008 tax year shall be paid by Seller in an amount to be
estimated in the Final Settlement Statement pursuant to Section 13.1. Seller shall have no further
liability for ad valorem taxes assessed against the Assets beyond that specified in the preceding
sentence.

     9.2 Tax Reports and Returns. Seller agrees to file all Tax returns and reports
applicable to the Assets for the period of time prior to the Closing Date. Buyer agrees to file
all Tax returns and reports applicable to the Assets for the period of time after the Closing Date.
The Party not filing any Tax return or report agrees to provide the Party filing the return or
report with appropriate information which is necessary to file any required Tax reports and returns
related to the Assets.

     9.3 Sales Taxes. Buyer shall be liable for and shall indemnify Seller for any sales
and use taxes, conveyance, transfer and recording fees and real estate transfer stamps or taxes
that may be imposed on any transfer of the Assets pursuant to this Agreement. If required by
applicable law, Seller shall, in accordance with applicable law, calculate and remit any sales or
similar taxes that are required to be paid as a result of the transfer of the Assets to Buyer and
Buyer shall promptly reimburse Seller therefor. If Seller receives notice that any sales and/or
use taxes are due, Seller shall promptly forward such notice to Buyer for handling.

     9.4 Tax Information. Within 30 days following the Closing Date, Buyer shall declare to Seller a proposed allocation
of the consideration for the Assets. Within 30 days thereafter, Seller shall provide Buyer with
any proposed changes to such allocation. Buyer and Seller shall attempt, in good faith, to resolve
any disputes with respect to the proposed allocation within 15 days after Seller’s delivery of any
disputed items. Buyer and Seller agree that they will each prepare and file an Internal Revenue
Service Form 8594 reflecting their respective allocation of the consideration to be paid by Buyer
to Seller hereunder to the Assets. The parties shall provide each other a completed copy of their
respective Internal Revenue Service Form 8594 with respect to this transaction prior to filing such
form with the Internal Revenue Service.

ARTICLE 10

CONDITIONS PRECEDENT TO CLOSING

     10.1 Seller’s Conditions Precedent. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction or waiver at or prior to the Closing of the
following conditions precedent:

          A. All representations and warranties of Buyer contained in this Agreement are true in all
material respects (considering this Transaction as a whole) at and as of the Closing in accordance
with their terms as if such representations and warranties were remade at and as of the Closing.
Buyer has or will have performed and satisfied all covenants and agreements required by this
Agreement to be performed and satisfied by Buyer at or prior to the Closing in all material
respects (except those covenants and agreements that have been waived by Seller)

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and Buyer shall
deliver a certificate to Buyer confirming the foregoing (the “Buyer Officer’s Certificate) and;

          B. No order has been entered by any court or governmental agency having jurisdiction over the
Parties or the subject matter of this Agreement that restrains or prohibits this Transaction and
that remains in effect at the time of Closing.

     10.2 Buyer’s Conditions Precedent. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction or waiver at or prior to the Closing of the
following conditions precedent:

          A. All representations and warranties of Seller contained in this Agreement are true in all
material respects (considering the Transaction as a whole) at and as of the Closing in accordance
with their terms as if such representations were remade at and as of the Closing. Seller has or
will have performed and satisfied all covenants and agreements required by this Agreement to be
performed and satisfied by Seller at or prior to the Closing in all material respects (except those
covenants and agreements that have been waived by Buyer) and Seller shall deliver a certificate to
Buyer confirming the foregoing (the “Seller Manager’s Certificate”); and

          B. No order has been entered by any court or governmental agency having jurisdiction over the
Parties or the subject matter of this Agreement that restrains or prohibits this Transaction and
that remains in effect at the time of Closing.

ARTICLE 11

RIGHT OF TERMINATION AND ABANDONMENT

     11.1 Termination. This Agreement may be terminated in accordance with the following
provisions:

          A. by Seller if the conditions set forth in Section 10.1 are not satisfied through no fault of
Seller, or are not waived by Seller, as of the Closing Date;

          B. by Buyer if the conditions set forth in Section 10.2 are not satisfied through no fault of
Buyer, or are not waived by Buyer, as of the Closing Date; or

          C. Upon the mutual written consent of both Seller and Buyer.

     11.2 Liabilities Upon Termination.

          A. Buyer’s Breach. If Closing does not occur because Buyer wrongfully fails to tender
performance at Closing or otherwise breaches this Agreement prior to Closing, and Seller is ready
to close, Buyer shall disburse the Deposit to Seller, together with interest thereon, and Seller
shall also have all other remedies available to it for Buyer’s wrongful failure to close hereunder.
Buyer’s failure to close shall not be considered wrongful if Buyer has terminated this Agreement
as of right under Section 11.1.

          B. Seller’s Breach. If Closing does not occur because Seller wrongfully fails to
tender performance at Closing or otherwise breaches this Agreement prior to Closing,

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and Buyer is
ready and otherwise able to close, Buyer shall be entitled to desegregate and keep the Deposit,
together with interest thereon, immediately, or Buyer may pursue specific performance, and in any
event Buyer shall have all other remedies available to it for Seller’s wrongful failure to close
hereunder. Seller’s failure to close shall not be considered wrongful if Seller has terminated this
Agreement as of right under Section 11.1.

ARTICLE 12

CLOSING

     12.1 Date of Closing. The “Closing” of this Transaction shall be held on or before
April 25, 2008. The date the Closing actually occurs is called the “Closing Date.”

     12.2 Place of Closing. The Closing shall be held at the offices of Hogan & Hartson
LLP, 1200 17th Street, Suite 1500, Denver, Colorado, 80202 at 9:00 a.m. Mountain Time or
at such other time and place as Buyer and Seller may agree in writing.

     12.3 Closing Obligations. At Closing, the following events shall occur, each being a
condition precedent to the others and each being deemed to have occurred simultaneously with the
others:

          A. Seller shall execute, acknowledge and deliver to Buyer’s designee, Teton North America LLC,
an Assignment, Bill of Sale and Conveyance with a special warranty of title by, through and under
Seller in the form attached as Exhibit N conveying the Assets to Buyer as of the Effective
Time.

          B. Seller shall execute, acknowledge and deliver to Buyer, assignments on the required
governmental forms if necessary to convey any of the Assets to Buyer.

          C. Seller and Buyer shall execute and deliver the Preliminary Settlement Statement.

          D. Buyer shall deliver the Closing Amount less the amount contained in the Segregated Account
and less the amount to be wired to American National Bank as provided in Section 12.3 F. below, to
the account at the bank designated by Seller in writing, by wire transfer in immediately available
funds, or by such other method as agreed to by the Parties.

          E. Buyer shall wire the funds in the Segregated Account to Seller.

          F. Buyer shall wire to American National Bank the amount specified in writing by Seller and
such Bank as necessary to fully discharge the mortgages encumbering any of the Assets.

          G. Seller shall deliver to Buyer a fully executed and acknowledged release of all mortgages
encumbering any of the Assets in sufficient number to be recorded in each county in which any of
the encumbered Assets are located and all other documents necessary to terminate the security
interests and liens referred to in Exhibit L.

          H. Buyer shall deliver to Seller’s members in the amounts set forth below certificates for the
number of shares of Common Stock calculated in accordance with Section 2.1

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B, and the Parties agree
that the certificates delivered at closing shall have such restrictions as necessary to conform to
applicable regulations. 

	 	 	 	 	 
	 	 	Value of Stock Calculated Per
	Member	 	Section 2.1 B
	James A. Waechter III
	 	$	1,445,637	 
	C. Roxanne Waechter
	 	$	1,445,637	 
	Jay W. Decker
	 	$	3,559,817	 
	Jonathan Linker
	 	$	3,559,817	 
	Chris Gottschalk
	 	$	189,968	 
	Brian Karlin
	 	$	189,968	 
	George Mallon III
	 	$	46,970	 
	Total
	 	$	10,437,814	 

          I. Buyer shall deliver to Seller the Buyer Officer’s Certificate in form and substance as set
forth in Exhibit O.

          J. Seller shall deliver to Buyer the Seller Manager’s Certificate in form and substance as set
forth in Exhibit P.

          K. Seller shall execute and deliver to Buyer an affidavit of non-foreign status and no
requirement for withholding under Section 1445 of the Code in the form attached as Exhibit
Q.

          L. Seller shall prepare, execute and deliver to Buyer appropriate letters-in-lieu of transfer
orders.

          M. Buyer and Seller shall execute all documents necessary to transfer operations on the Seller
operated Assets to Buyer or Buyer’s designated operator.

          N. [Intentionally omitted.]

          O. Buyer shall execute and deliver to Seller’s members in the amounts set forth below Warrant
Agreements representing the Warrants, in form and substance as set forth in Exhibit R. The
Warrants may not be exercised until after the ninetieth (90th) day following the Closing
Date.

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	Member	 	Number of Warrants
	James A. Waechter III
	 	 	67,934	 
	C. Roxanne Waechter
	 	 	67,934	 
	Jay W. Decker
	 	 	167,285	 
	Jonathan Linker
	 	 	167,285	 
	Chris Gottschalk
	 	 	8,927	 
	Brian Karlin
	 	 	8,927	 
	George Mallon III
	 	 	2,207	 
	Total
	 	 	490,499	 

          P. Buyer and Seller’s members designated above as the recipients of the shares of Common Stock
pursuant to Section 12.3 H. and the Warrants pursuant to Section 12.3 O. shall execute and deliver
a Registration Rights Agreement, generally in form and substance as set forth in Exhibit S,
and providing that Seller’s members agree to a six (6) month lock-up restriction on their ability
to sell all securities received under this Agreement; provided, further, that beginning in the
seventh month and for nine (9) months thereafter, Seller’s members agree to limit any sales, other
than privately negotiated block sales, to no more than 15% of the shares held each month.

          Q. Buyer’s designee, Teton North America LLC, and Seller shall execute and deliver the JOA (as
defined below).

ARTICLE 13

POST-CLOSING OBLIGATIONS

     13.1 Post-Closing Adjustments.

          A. Final Settlement Statement. As soon as practicable after the Closing, but in no
event later than 90 days after Closing, Seller, with assistance from Buyer, will prepare and
deliver to Buyer, in accordance with the principles set forth in Section 2.4, a final settlement
statement (the “Final Settlement Statement”) setting forth each adjustment to each amount included
in the Preliminary Settlement Statement, showing the calculation of such adjustment or payment and
the resulting final closing amount (the “Final Closing Amount”). As soon as practicable after
receipt of the Final Settlement Statement, but in no event later than 30 days after Buyer’s receipt
of the proposed Final Settlement Statement, Buyer shall deliver to Seller a written report
containing any changes that Buyer proposes to make to the Final Settlement Statement. Buyer’s
failure to deliver to Seller a written report detailing proposed changes to the Final Settlement
Statement by that date shall be deemed an acceptance by Buyer of the Final Settlement Statement as
submitted by Seller. The Parties shall in good faith, try to resolve any differences with respect
to the changes proposed by Buyer, if any, no later than 45 days after

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Buyer’s receipt of the
proposed Final Settlement Statement. The date upon which such agreement is reached or upon which
the Final Closing Amount is established following submission to binding arbitration shall be herein
called the “Final Settlement Date.” If the Final Closing Amount is more than the Closing Amount,
Buyer shall pay Seller the amount of such difference. If the Final Closing Amount is less than the
Closing Amount, Seller shall pay to Buyer the amount of such difference. Any payment by Buyer or
Seller, as the case may be, shall be made by wire transfer of immediately available funds within
five days of the Final Settlement Date.

          B. Dispute Resolution. If the Parties are unable to resolve a dispute as to the Final
Closing Amount by 45 days after Buyer’s receipt of Seller’s proposed Final Settlement Statement,
the Parties shall submit the dispute to determine the Final Closing Amount to binding arbitration
to be conducted pursuant to Section 14.7.

     13.2 Records. Seller shall make the Records available for pick up by Buyer at Closing to the extent
possible, but in any event, within five business days after Closing. Seller may retain copies of
the Records and Seller shall have the right to review and copy the Records during standard business
hours upon reasonable notice for so long as Buyer retains the Records. Buyer agrees that the
Records will be maintained in compliance with all applicable laws governing document retention.
Buyer will not destroy or otherwise dispose of Records for a period of six (6) years after Closing,
unless Buyer first gives Seller reasonable notice and an opportunity to copy the Records to be
destroyed.

     13.3 Further Assurances. From time to time after Closing, Seller and Buyer shall each
execute, acknowledge and deliver to the other such further instruments and take such other action
as may be reasonably requested in order to effect the Transaction.

ARTICLE 14

ASSUMPTION AND RETENTION OF OBLIGATIONS AND INDEMNIFICATION

     14.1 Buyer’s Assumption of Liabilities and Obligations. Upon Closing, and except for
Retained Liabilities (as defined below) and subject to Section 14.5, Buyer shall assume and pay,
perform, fulfill and discharge all claims, costs, expenses, liabilities and obligations with
respect to the Assets (it being understood that the term “Assets” means an undivided sixty percent
(60%) interest in the Undeveloped Properties), including, but not limited to, those accruing or
relating to (i) the owning, developing, exploring, operating or maintaining of the Assets or the
producing, transporting and marketing of Hydrocarbons from the Assets for the period from and after
the Effective Time unless specifically stated otherwise below, including, without limitation, the
obligations arising under the Material Agreements; (ii) the Assumed Environmental Liabilities;
(iii) the obligation to plug and abandon all Wells and reclaim all well sites located on the Lands
regardless of when the obligations arose; and (iv) any breach of any representation, warranty,
covenant or agreement of Buyer contained in this Agreement (collectively, the “Assumed
Liabilities”).

     14.2 Seller’s Retention of Liabilities and Obligations. Upon Closing and subject to
Section  14.5, Seller retains all claims, costs, expenses, liabilities and obligations accruing or
relating to (i) the Property Expenses (other than royalties, overriding royalties and Taxes)
arising from or related to operation of the Assets prior to the Effective Time but only for the
period from

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the Effective Time until March 1, 2009 at which time such liabilities become Assumed
Liabilities; (ii) the payment of royalties, overriding royalties and Taxes attributable to the
period of time prior to the Effective Time but only for the period from the Effective Time through
December 31, 2008 at which time such liabilities become Assumed Liabilities; (iii) the Retained
Environmental Liabilities; (iv) any injury or death to a human being attributable to the Assets and
attributable to the period of time prior to, and including, the Closing Date; (v) employee-related
claims of Seller attributable to the period of time prior to the Closing Date; and (vi) any breach
of any representation, warranty, covenant or agreement of Seller contained in this Agreement
(subject to the limitations set forth in this Agreement) (collectively, the “Retained
Liabilities”).

     14.3 Suspended Funds. At Closing Seller will transfer to Buyer all funds, if any,
held by Seller in suspense owing to third parties on account of production from the Assets,
together with identification of those funds on a well-by-well, and owner-by-owner basis, based on
the information in Seller’s files. Buyer shall assume responsibility for the payment thereof to
third parties entitled to the same, to the extent of the funds transferred, and shall indemnify and
hold Seller harmless for claims related to or arising out of Buyer’s payment, mispayment or failure
to make payment of such funds.

     14.4 Proceeds and Invoices for Property Expenses Received After the Settlement Date.
After the Settlement Date, those proceeds attributable to the Assets received by a Party or
invoices received for or Property Expenses paid by one Party for or on behalf of the other Party
with respect to the Assets which were not already included in the Settlement Statement shall be
settled as follows:

          A. Proceeds. Proceeds received by Buyer with respect to sales of Hydrocarbons from
the Producing Properties produced prior to the Effective Time shall be remitted or forwarded to
Seller. Proceeds received by Seller with respect to sales of Hydrocarbons from the Producing
Properties produced after the Effective Time shall be forwarded to Buyer.

          B. Property Expenses. Invoices for Property Expenses received by Buyer that relate to
operations on the Assets prior to the Effective Time shall be forwarded to Seller by Buyer, or if
already paid by Buyer, invoiced by Buyer to Seller, but only if such invoice is received by Seller
prior to March 1, 2009. Invoices for Property Expenses received by Seller that relate to
operations on the Assets after the Effective Time shall be forwarded to Buyer by Seller, or if
already paid by Seller, invoiced by Seller to Buyer.

     14.5 Indemnification.

          A. Survival; Termination of Indemnification. The representations, warranties,
covenants and obligations of the Parties contained in this Agreement, or any Exhibit hereto, or
other certificate or document delivered pursuant to this Agreement, shall survive the Closing
hereunder and continue in full force and effect, all as set forth below. The obligations to
indemnify and hold harmless any indemnified party pursuant to Sections 14.5 B and 14.5 C shall
terminate when the representation or warranty that is the subject of the indemnification claim
terminates. The representations and warranties contained in this Agreement shall terminate on the

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twelve (12) month anniversary of the Closing Date except (i) the agreements contain in Section 4.2
(as to title to Bartos and Carmichael Wells) which shall survive until March 1, 2009; (ii) the
representations, warranties and agreements contained in Article 5 (Environmental Matters) which
shall survive as provided therein through December 31, 2008; (iii) the representations and
warranties contained in Sections 6.1 through 6.6 and Sections 7.1 through 7.9, which shall survive
until the expiration of the applicable statute of limitations; (iv) Seller’s obligation for
pre-Effective Time Property Expenses which shall terminate March 1, 2009 (other than for royalties
and overriding royalties and Taxes); (v) Seller’s obligation for pre-Effective Time royalties,
overriding royalties and Taxes which shall survive until December 31, 2008; and (vi) any
representation or warranty as to which an Indemnified Party (as defined below) shall have, before
the expiration of the applicable period, made a claim in accordance with this Section 14.5.

          B. Indemnification Provisions for Buyer’s Benefit. In the event (i) Seller breaches
any of its representations or warranties contained in this Agreement or (ii) Seller breaches any of
its covenants or obligations under this Agreement (including, but not limited to, its obligations
with respect to the Retained Liabilities in Section 14.2) and in each case provided that Buyer
makes a written claim for indemnification against and to Seller pursuant to Section 16.2 within any
applicable survival period pursuant to Section 14.5 A, then in each case Seller shall be obligated
to indemnify, defend and hold harmless Buyer and its affiliates, managers, directors, officers,
stockholders, members and employees (collectively, the “Buyer Indemnitees”) from and against any
and all Losses (as defined below) any Buyer Indemnitee may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the breach; provided, however, that (a) Seller shall
not have any obligation to indemnify the Buyer Indemnitees from and against any Losses resulting
from, arising out of, relating to, in the nature of, or caused by the breach of any representation
or warranty contained in this Agreement until the Buyer Indemnitees have suffered Losses by reason
of all such breaches in excess of a $400,000.00 aggregate deductible (after which point Seller will
be obligated only to indemnify the Buyer Indemnitees from and against further such Losses), and (b)
there will be a $7,500,000.00 aggregate ceiling on the obligation of Seller to indemnify the Buyer
Indemnitees from and against Losses resulting from, arising out of, relating to, in the nature of,
or caused by breaches by Seller of this Agreement. The term “Losses” shall mean any actual losses,
reasonable costs, reasonable expenses (including court costs, reasonable fees and expenses of
attorneys, technical experts and expert witnesses and the cost of investigation), liabilities,
damages, demands, suits, claims, and sanctions of every kind and character (including civil fines)
arising from, related to or reasonably incident to matters indemnified against, but excluding any
lost or prospective profits, special, consequential, punitive, exemplary or indirect damages.

          C. Indemnification Provisions for Seller’s Benefit. In the event (i) Buyer breaches
any of its representations or warranties contained in this Agreement or (ii) Buyer breaches any of
its covenants or obligations under this Agreement (including, but not limited to, its obligations
with respect to the Assumed Liabilities in Section 14.1), and in each case provided that Seller
makes a written claim for indemnification against and to Buyer pursuant to Section 16.2 below
within any applicable survival period pursuant to Section 14.5 A, then in each case Buyer shall be
obligated to indemnify, defend and hold harmless Seller and its affiliates, managers, directors,
officers, stockholders, members and employees (collectively the “Seller Indemnitees”) from and
against any and all Losses any Seller Indemnitee may suffer resulting

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from, arising out of,
relating to, in the nature of, or caused by the breach; provided, however, that (a) Buyer shall not
have any obligation to indemnify the Seller Indemnitees from and against any Losses resulting from,
arising out of, relating to, in the nature of, or caused by the breach of any representation or
warranty contained in this Agreement until the Seller Indemnitees have suffered Losses by reason of
all such breaches in excess of a $400,000.00 aggregate deductible (after which point Buyer will be
obligated only to indemnify
the Seller Indemnitees from and against further such Losses), and (b) there will be a
$7,500,000.00 aggregate ceiling on the obligation of Buyer to indemnify the Seller Indemnitees from
and against the Losses resulting from, arising out of, relating to, in the nature of, or caused by
breaches by Buyer of this Agreement.

          D. Exclusive Remedy. Except with respect to fraud by or on behalf of Buyer or
Seller, Buyer and Seller acknowledge and agree that the foregoing indemnification provisions in
this Section 14.5 shall be the exclusive remedy of Buyer and Seller with respect to breaches under
this Agreement; provided, however, that nothing stated in this Section 14.5 shall in any way limit
or foreclose the availability to the Parties of specific performance or other equitable remedies.

          E. Determination of Adverse Consequences. The Parties shall make appropriate
adjustments for the amount of any tax benefits and insurance coverage that may be available to any
Indemnified Party with respect to an Indemnification Claim in determining the amount of any Losses
and the amounts payable hereunder for purposes of this Section 14.5. All indemnification payments
under this Section 14.5 shall be deemed adjustments to the Purchase Price.

     14.6 Indemnification Procedure. The indemnifications contained in this Agreement
shall be implemented as follows:

     A. If any Buyer Indemnitee or Seller Indemnitee (an “Indemnified Party”) believes that it has
suffered or incurred, or will suffer or incur, any Losses with respect to any matter (an
“Indemnification Claim”) which may give rise to a claim for indemnification under Section 14.5, the
Indemnified Party shall promptly notify the Party or Parties from whom indemnification is being
claimed (the “Indemnifying Party”) in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is
prejudiced.

     B. Any Indemnifying Party will have the right to assume the defense of the Indemnification
Claim with counsel of his, her or its choice reasonably satisfactory to the Indemnified Party at
any time within 30 days after the Indemnified Party has given written notice to the Indemnifying
Party of the Indemnification Claim; provided, however, that the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in the defense of the
Indemnification Claim. Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled, except with the consent of the Indemnified Party, to take any of the actions referred to
the previous sentence unless: (i) the principal relief sought under the Indemnification Claim
shall be monetary in nature; (ii) the Indemnifying Party shall have expressly agreed in writing
that, as between the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall be
solely obligated to satisfy and discharge such Indemnification Claim; and (iii) if reasonably

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requested to do so by the Indemnified Party, the Indemnifying Party shall have made reasonably
adequate provision to ensure the Indemnified Party of the financial ability of the Indemnifying
Party to satisfy the full amount of any adverse monetary judgment that may reasonably be expected
to result from such Indemnification Claim.

     C. So long as the Indemnifying Party has assumed and is conducting the defense of the
Indemnification Claim in good faith and in accordance with the terms of Section 14.6 B (i) the
Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with
respect to the Indemnification Claim without the prior written consent of the Indemnified Party
(not to be unreasonably withheld or delayed), unless the judgment or proposed settlement involves
only the payment of money damages by one or more of the Indemnifying Parties and does not impose an
injunction or other equitable relief upon the Indemnified Party (in which case the consent of the
Indemnified Party shall not be required), and (ii) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect to the Indemnification Claim
without the prior written consent of the Indemnifying Party (not to be unreasonably withheld or
delayed).

     D. In the event none of the Indemnifying Parties assumes and conducts the defense of the
Indemnification Claim in accordance with Section 14.6 C, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any settlement with respect
to, the Indemnification Claim in any manner he, she or it reasonably may deem appropriate (but the
Indemnified Party still shall obtain any consent from any Indemnifying Party in connection
therewith) and (ii) the Indemnifying Parties will remain responsible for any Losses the Indemnified
Party may suffer (including reasonable attorneys fees and expenses) resulting from, arising out of,
relating to, in the nature of, or caused by the Indemnification Claim to the extent provided in
Section 14.5.

     E. Regardless of which party assumes the defense of the Indemnification Claim, the Parties
shall reasonably cooperate with one another in connection therewith.

     14.7 Dispute Resolution. The Parties agree to resolve all disputes concerning this
Agreement pursuant to the provisions of this Section 14.7.

          A. Mediation 

               1. If a dispute arises out of or in connection with this Agreement or the alleged breach
thereof, and if the dispute cannot be settled through negotiation, the Parties hereby agree to
submit all controversies, claims and matters of difference to mandatory mediation under the
Commercial Mediation Rules of the American Arbitration Association. The party desiring mediation
shall so notify the other party identifying in reasonable detail the matters to be mediated and the
relief sought.

               2. The Parties agree to use a mediator provided by JAMS of Denver, Colorado. The mediator
shall be entitled to a fee commensurate with his or her fees for professional services requiring
similar time and effort. Each party shall be required to share the cost of the mediator and to
bear their own costs of mediation, irrespective of the total amount of their Membership Interest.
All matters mediated hereunder shall be mediated in Denver, Colorado; shall be governed by Colorado
law, without reference to any choice of law rules; and

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shall be conducted in accordance with the
Commercial Mediation Rules of the AAA. The mediator shall conduct the mediation no later than
sixty (60) days after submission of the matter
to mediation. Any agreement reached in the mediation shall be memorialized in writing and signed
by both Parties.

          B. Arbitration. If mediation is unsuccessful, the Parties agree to submit all
Disputes to binding arbitration in Denver, Colorado, such arbitration to be conducted pursuant to
the American Arbitration Association commercial rules (but need not be administered by the American
Arbitration Association). The arbitration shall be governed by Colorado law and shall be held in
Denver, Colorado. The arbitration shall be before a three-person panel of neutral arbitrators,
consisting of one person picked by each side, and the two arbitrators so selected picking the third
(with the panel so picked being the “Arbitrators”). Any disputes over the scope of discovery shall
be determined by the Arbitrators. The Arbitrators shall conduct a hearing no later than 60 days
after submission of the matter to arbitration, and the Arbitrators shall render a written decision
within 30 days of the hearing. At the hearing, the Parties shall present such evidence and
witnesses as they may choose, with or without counsel. Adherence to formal rules of evidence shall
not be required but the Arbitrators shall consider any evidence and testimony that they determine
to be relevant, in accordance with procedures that they determine to be appropriate. Any award
entered in the arbitration shall be made by a written opinion stating the reasons and basis for the
award made and any payment due pursuant to the arbitration shall be made within 15 days of the
decision by the Arbitrators. The final decision shall be binding on the Parties, final and
non-appealable, and may be filed in a court of competent jurisdiction and may be enforced by any
Party as a final judgment of such court. Each Party shall bear its own costs and expenses of the
arbitration, provided, however, that the costs of employing the Arbitrators shall be borne 50% by
Seller and 50% by Buyer. However, the Arbitrators may, in their discretion, award fees (including
reasonable attorneys fees) and costs to the prevailing party.

     14.8 Reservation as to Non-Parties. 

     Nothing herein is intended to limit or otherwise waive any recourse Buyer or Seller may have
against any non-Party for any obligations or liabilities that may be incurred with respect to the
Assets.

ARTICLE 15

FUTURE OPERATIONS

     15.1 Joint Operations.

     The Parties agree to conduct all operations on the Undeveloped Properties and any other
jointly owned lands within the area of mutual interest discussed in Section 15.2 below pursuant to
the terms of the AAPL 1989 Model Form Operating Agreement in the form attached as Exhibit T
(the “JOA”). The JOA will name Teton North America LLC as the operator.

     15.2 Area of Mutual Interest.

     Effective as of the Closing Date, the Parties agree to create an area of mutual interest
(“AMI”) comprised of the following lands located in the State of Kansas:

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          A. all of Barton County;

          B. all of Stafford County;

          C. the north half of Barber County;

          D. all of Rooks County;

          E. all of Graham County;

          F. all of Ellis County; and

          G. the north quarter of Rush County.

The AMI shall remain in force and effect as to all lands included within the AMI, for a period of
30 months commencing March 1, 2008. As used herein, a renewal or extension of any Lease means any
renewal lease, extension or new lease covering all or any portion of, or any interest in, the area
covered by an expiring lease taken before, or taken or contracted for within one year after, the
expiration of the predecessor lease.

               During the term of the AMI and regarding lands within the area of the AMI, if any Party
(“Acquiring Party”) acquires, renews or extends any oil and gas lease or any interest therein or
acquires any royalties, overriding royalties, minerals, leased mineral interest or any farmout or
other contract with respect thereto which affects lands lying within the AMI (Oil and Gas
Interests), the Acquiring Party shall, in writing, advise the non-acquiring Party (“Offeree”) of
such acquisition. The notice shall include a copy of all instruments of acquisition including,
without limitation, copies of the leases, assignments, sub-leases, title reports and run sheets,
farmouts or other contracts affecting the Oil and Gas Interest. The Acquiring Party shall also
enclose an itemized statement of the actual out-of-pocket cost of the acquisition (“Acquisition
Cost”). The Parties shall have the right to participate in Oil and Gas Interests on the basis of
60% to Buyer and 40% to Seller. It is the intent of the Parties with respect to the operation of
Oil and Gas Interests within the AMI that Seller shall be primarily responsible for exploration,
land acquisition, and seismic activities, with Buyer to have a reasonable right of input regarding
each of these categories. It is further the intent of the Parties that Buyer shall consult with
Seller as provided under the terms of the JOA.

               The Offeree shall have a period of 30 days after receipt of the notice within which to furnish
the Acquiring Party written notice of its election to acquire its proportionate interest in the
offered Oil and Gas Interest. However, if a well in search of oil or gas is being drilled by a
third party within three miles of the offered Oil and Gas Interest, the Offeree shall have 10 days
after hand delivery and personal receipt of the notice within which to elect to acquire its
proportionate interest in the offered Oil and Gas Interest. In addition thereto, the Acquiring
Party shall also furnish the Offeree with the approximate location of the well then being drilled
and the name of the operator or drilling contractor drilling the well and specifically advise the
Offeree that the Offeree shall have 10 days within which to elect to acquire an interest in the
offered Oil and Gas Interest.

               If the Acquiring Party has not received actual written notice of election from the Offeree to
acquire its proportionate interest within the 30-day or 10-day period, as

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applicable, such failure shall constitute an election by the Offeree not to acquire its interest in the Oil and Gas
Interest. Promptly after the time for the election expires, the Acquiring Party shall
invoice the Offeree electing to acquire an interest with its proportionate share of the Acquisition
Cost. The Offeree shall promptly reimburse the Acquiring Party for its share of the Acquisition
Cost as reflected by the invoice. Upon receipt of such reimbursement, the Acquiring Party shall
execute and deliver an appropriate assignment to the Offeree of its proportionate interest in the
Oil and Gas Interest, with special warranty of title, reserving no overriding royalty interest or
other burdens other than those existing at the time of the acquisition by the Acquiring Party.

               If the Oil and Gas Interest covers lands both inside and outside the AMI, the Acquiring Party
must only offer the Oil and Gas Interest inside the AMI to the Offeree. If both Parties do not
acquire their proportionate interest in the Oil and Gas Interest, the Oil and Gas Interest so
acquired shall not be subject to the terms of this Agreement. If two or more separate Oil and Gas
Interests are included in the same notice, the Offeree shall have a separate right of election as
to each separate Oil and Gas Interest.

ARTICLE 16

MISCELLANEOUS

     16.1 Expenses. All fees, costs and expenses incurred by Buyer or Seller in
negotiating this Agreement or in consummating this Transaction shall be paid by the Party incurring
the same, including, without limitation, engineering, land, title, legal and accounting fees, costs
and expenses.

     16.2 Notices. All notices and communications required or permitted under this
Agreement shall be in writing and addressed as set forth below. Any communication or delivery
hereunder shall be deemed to have been made and the receiving Party charged with notice when
received whether by (i) personal delivery, (ii) telecopy or facsimile transmission, (iii) mail or
(iv) overnight courier. All notices shall be addressed as follows:

If to Seller:

Shelby Resources LLC

1658 Cole Boulevard, Suite 205

Lakewood, CO 80401

Attention: James A. Waechter III

Telephone: 720-274-4682

Fax: 720 274-4685

with a copy (which shall not constitute notice) to:

Hogan & Hartson LLP

1200 17th Street, Suite 1500

Denver, CO 80202

Attention: Mark Heimlich, Esq.

Telephone: 303-899-7300

Fax: 303-899-7333

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If to Buyer:

Teton Energy Corporation

410 17th Street, Suite 1850

Denver, CO 80202

Attention: Mr. Dominic Bazile

Telephone: (303) 565-4600

Fax: (303) 565-4606

     Any Party may, by written notice so delivered to the other Party, change the address or
individual to which delivery shall thereafter be made.

     16.3 Amendments/Waiver. Except for waivers specifically provided for in this
Agreement, this Agreement may not be amended nor any rights hereunder waived except by an
instrument in writing signed by the Party to be charged with such amendment or waiver and delivered
by such Party to the Party claiming the benefit of such amendment or waiver.

     16.4 Assignment. If either Party assigns all or a portion of its rights and
obligations under this Agreement, such Party shall remain responsible for all of its obligations
under this Agreement, including without limitation, its indemnity obligations. No such assignment
or obligation shall increase the burden on the non-assigning Party or impose any duty on the
non-assigning Party to communicate with or report to any transferee, and the non-assigning Party
may continue to look to the assigning Party for all purposes under this Agreement.

     16.5 Announcements. Seller and Buyer shall consult with each other with regard to all
press releases and other announcements issued after the date of execution of this Agreement and
prior to the Closing Date concerning this Agreement or this Transaction and, except as may be
required by applicable laws or the applicable rules and regulations of any governmental agency or
stock exchange, Buyer or Seller shall not issue any such press release or other publicity without
the prior written consent of the other Party, which consent shall not be unreasonably withheld.

     16.6 Counterparts/Fax Signatures. The Parties may execute this Agreement in any
number of counterparts, each of which shall be deemed an original instrument, but all of which
together shall constitute one instrument. Facsimile and PDF signatures are binding.

     16.7 Governing Law. This Agreement and any arbitration or dispute resolution
conducted pursuant hereto shall be construed in accordance with, and governed by, the laws of the
State of Colorado without regard to any conflict of law provisions thereof.

     16.8 Entire Agreement. This Agreement, together with the Exhibits attached hereto and
the Confidentiality Agreement, constitutes the entire understanding among the Parties, their
respective members, shareholders, officers, directors and employees with respect to the subject
matter hereof, superseding all prior written or oral negotiations and discussions, and prior
agreements and understandings relating to such subject matter.

     16.9 Knowledge. The “knowledge of a Party” shall mean for purposes of this Agreement,
the actual, conscious knowledge of the Party at the time the assertion regarding

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knowledge is made.
If the Party is a corporation, or other entity other than a natural person, such actual, conscious
knowledge must be on the part of an officer of the corporation or other entity.

     16.10 Binding Effect. This Agreement shall be binding upon, and shall inure to the
benefit of, the Parties hereto, and their respective successors and assigns.

     16.11 Survival. Delivery of the Assignment, Bill of Sale and Conveyance at the
Closing will not constitute a merger of this Agreement with such Assignment, Bill of Sale and
Conveyance.

     16.12 Limitation on Damages. The Parties shall not have any liability to each other
for any lost or prospective profits, special, consequential, punitive, exemplary or indirect
damages arising out of or related to a Party’s acts or omissions.

     16.13 No Third-Party Beneficiaries. This Agreement is intended to benefit only the
Parties hereto and their respective permitted successors and assigns. There are no third party
beneficiaries to this Agreement.

     16.14 Condition Precedent. A condition precedent to the effectiveness of this
Agreement is signature by both Buyer and Seller. Unless and until both Buyer and Seller have
executed this Agreement, the Agreement will not be legally binding.

     16.15 References, Titles and Construction. A. All references in this Agreement to
Articles, Sections, Subsections and other subdivisions refer to corresponding Articles, Sections,
Subsections and other subdivisions of this Agreement unless expressly provided otherwise.

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

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

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

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

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

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          G. The word “or” is not intended to be exclusive and the word “includes” and its derivatives
mean “includes, but is not limited to” and corresponding derivative expressions.

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

          I. All references herein to “$” or “dollars” shall refer to U.S. Dollars.

          J. This Agreement shall be null and void and of no effect unless it is signed by both Parties
on or before March 28, 2008.

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