Document:

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                                                                    EXHIBIT 10.2

                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

     WILLIAMS PRODUCTION RMT COMPANY AND WILLIAMS PRODUCTION COMPANY, L.L.C.

                                   AS SELLER,

                                       AND

                                 XTO ENERGY INC.

                                    AS BUYER

                              DATED: APRIL 9, 2003

                                  CONFIDENTIAL

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                                TABLE OF CONTENTS

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<S>                                                                                                                 <C>
ARTICLE 1         PURCHASE AND SALE..............................................................................    1

         1.1      Purchase and Sale..............................................................................    1
         1.2      Assets.........................................................................................    1
         1.3      Excluded Properties............................................................................    3
         1.4      Effective Time.................................................................................    3

ARTICLE 2         PURCHASE PRICE.................................................................................    3

         2.1      Purchase Price.................................................................................    3
         2.2      Deposit........................................................................................    3
         2.3      Adjustments to Purchase Price..................................................................    4
         2.4      Allocated Values...............................................................................    6

ARTICLE 3         DUE DILIGENCE INSPECTION.......................................................................    6

         3.1      Access to Records..............................................................................    6
         3.2      No Representation or Warranty..................................................................    6
         3.3      Access to the Assets and Indemnity.............................................................    7

ARTICLE 4         TITLE MATTERS..................................................................................    7

         4.1      Defensible Title...............................................................................    7
         4.2      Permitted Encumbrances.........................................................................    7
         4.3      Title Defect...................................................................................    8
         4.4      Notice of Title Defects........................................................................    9
         4.5      Seller's Right to Cure.........................................................................    9
         4.6      Remedies for Title Defects.....................................................................    9
         4.7      Title Thresholds...............................................................................    9
         4.8      Title Dispute Resolution......................................................................    10
         4.9      Depletion and Depreciation of Personal Property...............................................    11
         4.10     Consents......................................................................................    11
         4.11     Preferential Purchase Rights..................................................................    11
         4.12     Casualty Loss.................................................................................    12

ARTICLE 5         ENVIRONMENTAL MATTERS.........................................................................    12

         5.1      Definitions...................................................................................    12
         5.2      Spills and NORM...............................................................................    13
         5.3      Environmental Assessment......................................................................    13
         5.4      Notice of Environmental Defects...............................................................    13
         5.5      Remedies for Environmental Defects............................................................    14
         5.6      Environmental Thresholds......................................................................    14
         5.7      Environmental Dispute Resolution..............................................................    14
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<S>                                                                                                                 <C>
         5.8      "As Is, Where Is" Purchase....................................................................    16
         5.9      Disposal of Materials, Substances and Wastes..................................................    16
         5.10     Buyer's Indemnity.............................................................................    16

ARTICLE 6         SELLER'S REPRESENTATIONS AND WARRANTIES.......................................................    17

         6.1      Existence.....................................................................................    17
         6.2      Power.........................................................................................    17
         6.3      Authorization.................................................................................    17
         6.4      Execution and Delivery........................................................................    17
         6.5      Liabilities for Brokers' Fees.................................................................    17
         6.6      Litigation....................................................................................    17
         6.7      Liens.........................................................................................    18
         6.8      Taxes.........................................................................................    18
         6.9      Plains Petroleum..............................................................................    18
         6.10     Assets of Plains Petroleum Gathering Company..................................................    18
         6.11     Environmental Orders..........................................................................    18
         6.12     Leases........................................................................................    18

ARTICLE 7         BUYER'S REPRESENTATIONS AND WARRANTIES........................................................    18

         7.1      Existence.....................................................................................    19
         7.2      Power and Authority...........................................................................    19
         7.3      Authorization.................................................................................    19
         7.4      Execution and Delivery........................................................................    19
         7.5      Liabilities for Brokers' Fees.................................................................    19
         7.6      Litigation....................................................................................    19
         7.7      Independent Evaluation........................................................................    19
         7.8      Qualification.................................................................................    19
         7.9      Funds.........................................................................................    20

ARTICLE 8         COVENANTS AND AGREEMENTS......................................................................    20

         8.1      Covenants and Agreements......................................................................    20

ARTICLE 9         CONDITIONS TO CLOSING.........................................................................    21

         9.1      Seller's Conditions...........................................................................    21
         9.2      Buyer's Conditions............................................................................    22
         9.3      Escrow Account................................................................................    22

ARTICLE 10        RIGHT OF TERMINATION AND ABANDONMENT..........................................................    23

         10.1     Termination...................................................................................    23
         10.2     Liabilities Upon Termination..................................................................    23

ARTICLE 11        CLOSING.......................................................................................    23

         11.1     Date of Closing...............................................................................    23
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<S>                                                                                                                 <C>
         11.2     Closing Obligations...........................................................................    23

ARTICLE 12        POST-CLOSING OBLIGATIONS......................................................................    25

         12.1     Post-Closing Adjustments......................................................................    25
         12.2     Dispute Resolution............................................................................    25
         12.3     Records.......................................................................................    25
         12.4     Seller's Employees............................................................................    25
         12.5     Further Assurances............................................................................    26
         12.6     Disclaimers of Representations and Warranties.................................................    26
         12.7     Suspense Funds................................................................................    26

ARTICLE 13        TAXES.........................................................................................    27

         13.1     Apportionment of Ad Valorem and Property Taxes................................................    27
         13.2     Transfer Taxes and Recording Fees.............................................................    27
         13.3     Other Taxes...................................................................................    28
         13.4     Tax Reports and Returns.......................................................................    28

ARTICLE 14        ASSUMPTION AND RETENTION OF OBLIGATIONS; INDEMNIFICATION......................................    28

         14.1     Buyer's Assumption of Liabilities and Obligations.............................................    28
         14.2     Seller's Retention of Liabilities and Obligations.............................................    28
         14.3     Buyer's Plugging and Abandonment Obligations..................................................    29
         14.4     Indemnification...............................................................................    29
         14.5     Procedure.....................................................................................    30
         14.6     No Insurance; Subrogation.....................................................................    31
         14.7     Reservation as to Non-Parties.................................................................    31

ARTICLE 15        MISCELLANEOUS.................................................................................    31

         15.1     Exhibits......................................................................................    31
         15.2     Expenses......................................................................................    31
         15.3     Notices.......................................................................................    31
         15.4     Amendments....................................................................................    32
         15.5     Assignment....................................................................................    32
         15.6     Confidentiality...............................................................................    33
         15.7     Press Releases................................................................................    33
         15.8     Headings......................................................................................    33
         15.9     Counterparts..................................................................................    33
         15.10    References....................................................................................    33
         15.11    Governing Law.................................................................................    33
         15.12    Removal of Signs..............................................................................    33
         15.13    Binding Effect................................................................................    33
         15.14    Survival......................................................................................    33
         15.15    No Third-Party Beneficiaries..................................................................    33
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<S>                                                                                                                 <C>
         15.16    Limitation on Damages.........................................................................    34
         15.17    Severability..................................................................................    34
         15.18    Knowledge.....................................................................................    34
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<CAPTION>
                                                                                        Section
Exhibit                          Description                                         Where Defined
-------                          -----------                                         -------------
<S>              <C>                                                                 <C>
  A-1            Leases, Fee Interests and Lands                                          1.2.a

  A-2            Wells                                                                    1.2.b

  A-3            Equipment and Facilities                                                 1.2.e

  A-4            Units                                                                    1.2

   B             Material Agreements                                                      1.2.d

   C             Well Imbalances                                                          2.3.c

   D             Allocated Values                                                         2.4

   E             Form of Assignment and Bill of Sale                                     11.2.a

   F             Form of Assignment and Assumption Agreement                             11.2.a

   G             Seller's Officer's Certificate                                          11.2.f

   H             Buyer's Officer's Certificate                                           11.2.g

   I             Excluded Properties                                                      1.3

   J             Seller's Employee Severance Policy                                      12.4

   K             Temporary Access Agreement                                               3.3

   L             Transition Services Agreement                                           11.2i
</TABLE>

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<TABLE>
<CAPTION>
                                                                                    Section Where
Schedule                       Description                                             Defined
-------                        -----------                                          -------------
<S>              <C>                                                                <C>
  6.6            Litigation                                                               6.6

  6.7            Liens                                                                    6.7

  6.10           Plains Petroleum Gathering Company Liens                                6.10

  6.11           Environmental Order                                                     6.11

  6.12           Leases                                                                  6.12

 15.18           Seller's Knowledge                                                     15.18
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                                  DEFINED TERMS

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<S>                                                                                                                        <C>
Actual Environmental Defect Value......................................................................................    13

Actual Title Defect Value..............................................................................................     9

Additional Overproduced Gas............................................................................................     6

Additional Underproduced Gas...........................................................................................     5

As is, Where is........................................................................................................    15

Assets.................................................................................................................     1

Assumed Liabilities....................................................................................................    27

Buyer..................................................................................................................     1

Buyer's Plugging and Abandonment Obligations...........................................................................    27

Casualty Loss..........................................................................................................    11

Claim Notice...........................................................................................................    29

Claim..................................................................................................................    29

Closing Amount.........................................................................................................     4

Closing or Closing Date................................................................................................    20

Council of Petroleum Account Societies of North America ("COPAS")......................................................     4

Defensible Title.......................................................................................................     7

Deposit................................................................................................................     3

Disputed Environmental Matters.........................................................................................    14

Disputed Title Matters.................................................................................................    10

Effective Time.........................................................................................................     3

Environmental Arbiter..................................................................................................    14

Environmental Assessment...............................................................................................    13

Environmental Defect ..................................................................................................    12

Environmental Defect Value.............................................................................................    12

Environmental Law......................................................................................................    12

Environmental Purchase Price Adjustment................................................................................    14
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<TABLE>
<S>                                                                                                                        <C>
Environmental Threshold Amount.........................................................................................    14

Excluded Properties....................................................................................................     3

Fee Interests..........................................................................................................     1

Final Purchase Price...................................................................................................    24

Final Settlement Date..................................................................................................    24

Final Settlement Statement.............................................................................................    24

Hydrocarbons...........................................................................................................     2

Indemnified Party......................................................................................................    29

Indemnifying Party.....................................................................................................    29

Knowledge, best knowledge, best of Seller's knowledge..................................................................    32

Lands..................................................................................................................     1

Leases.................................................................................................................     1

Losses.................................................................................................................    28

Material Agreements....................................................................................................     2

Net Casualty Loss......................................................................................................    11

Norm...................................................................................................................    12

Notice of Environmental Defects........................................................................................    13

Notice of Title Defects................................................................................................     9

NRI....................................................................................................................     7

Obligations............................................................................................................    23

Permitted Encumbrances.................................................................................................     7

Preliminary Settlement Statement.......................................................................................     6

Property Expenses......................................................................................................     4

Property Taxes.........................................................................................................    26

Purchase Price.........................................................................................................     3

Qualifying Title Defect................................................................................................     9

Records................................................................................................................     3
</TABLE>

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<TABLE>
<S>                                                                                                                        <C>
Remediation Costs......................................................................................................    12

Remediation or Remidiate ..............................................................................................    12

Retained Liabilities...................................................................................................    24

Revised Seller Property Tax............................................................................................    25

Seller.................................................................................................................     1

Seller Property Tax....................................................................................................    25

Shares.................................................................................................................     2

Single Environmental Incident Threshold................................................................................    12

Single Title Incident Threshold........................................................................................     8

Suspense Funds.........................................................................................................    26

Temporary Access Agreement.............................................................................................    15

Term Royalty Interest..................................................................................................     1

Title Arbiter..........................................................................................................    10

Title Defect ..........................................................................................................     8

Title Defect Value.....................................................................................................     9

Title Purchase Price Adjustment........................................................................................     9

Title Threshold Amount.................................................................................................     9

Transfer Taxes.........................................................................................................    26

Wells..................................................................................................................     2

WI.....................................................................................................................     7
</TABLE>

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                           PURCHASE AND SALE AGREEMENT

         This PURCHASE AND SALE AGREEMENT ("Agreement"), dated April 9, 2003, is
by and between Williams Production RMT Company, a Delaware corporation, and
Williams Production Company, L.L.C., a Delaware limited liability company whose
address is One Williams Center, Tulsa, Oklahoma 74172 ("SELLER") and XTO Energy
Inc., a Delaware corporation, whose address is 810 Houston Street, Fort Worth,
Texas 76102 ("BUYER").

                                    RECITALS

         A.       Seller owns and desires to sell certain real and personal
property interests located in Finney, Grant, Hamilton, Haskell, Kearney, Morton,
Seward and Stanton Counties, Kansas and in Las Animas County, Colorado; and in
San Juan and Rio Arriba Counties, New Mexico and La Plata County, Colorado as
well as its ownership interest in Plains Petroleum Gathering Company, all as
more fully described in Section 1.2 below (collectively referred to herein as
the "ASSETS").

         B.       Buyer desires to purchase the Assets upon the terms and
conditions set forth in 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, Seller and Buyer agree as follows:

                                   ARTICLE 1
                                PURCHASE AND SALE

         1.1      PURCHASE AND SALE. Seller agrees to sell and convey to Buyer,
and Buyer agrees to purchase and receive from Seller, all of Seller's right,
title and interest in the Assets, pursuant to the terms and conditions of this
Agreement.

         1.2      ASSETS. The "ASSETS" are all of Seller's right, title, and
interest in and to the real and personal property interests described in Section
1.2(a) through 1.2(h) below, located in the following counties: Finney, Grant,
Hamilton, Haskell, Kearney, Morton, Seward and Stanton Counties, Kansas; Las
Animas County, Colorado; and San Juan and Rio Arriba Counties, New Mexico and La
Plata County, Colorado (except for the Excluded Properties) as well as all of
Seller's right, title and interest in and to the shares of Plains Petroleum
Gathering Company described in Section 1.2.g.

                  a. The interests in the oil and gas leases as limited and
described on EXHIBIT A-1 (the "LEASES"), and the interests in the fee mineral
interests as limited and described on EXHIBIT A-1 (the "FEE INTERESTS"), and
with respect to the Leases and Fee Interests located in San Juan and Rio Arriba
Counties, New Mexico and La Plata County, Colorado, insofar and only insofar as
such Leases and Fee Interests cover the interests in the lands located in such
counties and specifically described on EXHIBIT A-1 (the "LANDS"); the term
royalty interest described on Exhibit A-1 (the "TERM ROYALTY INTEREST")and the
oil, gas and all other hydrocarbons

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("HYDROCARBONS"), in, on or under or that may be produced from the Leases and
the Fee Interests; provided that with respect to the Leases and Fee Interests
located in San Juan and Rio Arriba Counties, New Mexico and La Plata County,
Colorado only the Hydrocarbons in, on or under or that may be produced from the
Lands located in such counties covered by such Leases and Fee Interests as
limited and specifically described on Exhibit A-1.

                  b. The oil and gas wells located on the Leases, Fee Interests
and Lands, or lands pooled or unitized therewith, including without limitation
the oil and gas wells described on EXHIBIT A - 2 (the "WELLS"), all injection
and disposal wells on the Leases, Fee Interests or Lands, and all personal
property and equipment connected to the Wells as of the Closing Date.

                  c. The rights and obligations, to the extent transferable, in
and to all existing and effective unitization, pooling and communitization
agreements, declarations and orders, but only to the extent of the interests
therein that relate to or affect any of the interests described in Sections
1.2.a. and 1.2.b. or the post-Effective Time production of Hydrocarbons from
such interests.

                  d. The rights and obligations, to the extent transferable, in
and to Hydrocarbon sales, purchase, gathering, transportation and processing
contracts, operating agreements, balancing agreements, joint venture agreements,
partnership agreements, farmout agreements, net profits agreements and other
contracts, agreements and instruments, but only to the extent of the interests
therein that relate to the interests described in Sections 1.2.a., 1.2.b. and
1.2.c, including without limitation the agreements described on Exhibit B (the
"MATERIAL AGREEMENTS").

                  e. All of the personal property, vehicles, fixtures,
improvements (including communication tower(s) located on the Lands and the
computer aided telemetry principally used in connection with the Fee Interests
and the Leases, including to the extent transferable software), tanks, boilers,
buildings, improvements, injection facilities, saltwater disposal facilities,
compression facilities, gathering systems, other appurtenances and facilities
(including without limitation the Weston Easement and Gathering Line and other
equipment and facilities described on Exhibit A-3) located on and used in
connection with or otherwise principally related to the exploration for or
production, gathering, treatment, processing, storing, sale or disposal of
Hydrocarbons or water produced from the Assets as limited and described in
Sections 1.2.a. through 1.2.c.

                  f. The rights and obligations, to the extent transferable, in
all permits, licenses, approvals, servitudes, rights of way, easements, surface
leases and other surface rights, but only to the extent of the interests therein
that relate to the interests described in Sections 1.2.a. through 1.2.e.

                  g. The issued and outstanding shares of Plains Petroleum
Gathering Company (the "SHARES").

                  h. Seller's files, records, data and information relating to
the Assets described in Sections 1.2.a. through 1.2.g., provided, however, the
foregoing shall not include any files, records, data or information which is
attorney work product or subject to attorney

                                     - 2 -

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client privilege or any files, records, data or information which by agreement
Seller is required to keep confidential except and to the extent a waiver in
writing is obtained of any such confidentiality requirements (the "RECORDS").
Notwithstanding the foregoing, Seller shall retain the original versions of the
Records relating to the Assets located in San Juan and Rio Arriba County, New
Mexico and La Plata County, Colorado and shall provide complete copies of same
to Buyer in the same format as such Records exist in Seller's files; provided
that the original of such Records will be delivered to Buyer as to any Lease,
Well or other Asset in which Seller is not retaining an interest as to Lands or
formations.

         It is the intent of the Parties that, except for the Excluded
Properties, the Assets include all of Seller's right, title and interest in and
to (i) any oil and gas leases, fee mineral interests and royalty interests owned
by Seller which are located in Finney, Grant, Hamilton, Haskell, Kearney,
Morton, Seward and Stanton Counties, Kansas and Las Animas County, Colorado and
all wells located on such leases and fee interests or lands pooled or unitized
therewith and (ii) the oil and gas units described on Exhibit A-4, but only to
the extent Seller's interests in such units pertain to the formations specified
in such Exhibit A-4 for such units (with Seller's interests in such units in all
other formations not intended to be a part of the Assets).

         1.3      EXCLUDED PROPERTIES. All of Seller's right, title and interest
in the items set forth on Exhibit I (collectively the "EXCLUDED PROPERTIES") are
excepted and excluded from this Agreement.

         1.4      EFFECTIVE TIME. The purchase and sale of the Assets shall be
effective as of April 1, 2003 at 7:00 a.m., where the Assets are located, except
that the purchase and sale of the Assets located in Finney, Grant, Hamilton,
Haskell, Kearny, Morton, Seward and Stanton Counties, Kansas shall be effective
as of March 1, 2003 at 7:00 a.m., local time where such Assets are located. (the
"EFFECTIVE TIME").

                                   ARTICLE 2
                                 PURCHASE PRICE

         2.1      PURCHASE PRICE. The purchase price for the Assets shall be
four hundred million dollars ($400,000,000) (the "PURCHASE Price"). At Closing,
Buyer shall pay Seller the Purchase Price as adjusted pursuant to Sections 2.2
and 2.3 below by wire transfer of immediately available funds to the following
two accounts: Bank One, Chicago, Illinois, ABA # 071000013, Williams Production
RMT Company, Account 1098250 and Bank One, Chicago, Illinois, ABA#071000013,
Williams Production Company, L.L.C., Account 9403908 ,in amounts to be specified
by Seller prior to Closing.

         2.2      DEPOSIT. No later than 3:00 p.m. Central Time on the day of
execution of this Agreement by all parties, Buyer will deliver by wire transfer
of immediately available funds ten percent (10%) of the Purchase Price to Seller
as a deposit (the "DEPOSIT"), to be held by Seller and either (i) applied
against the Purchase Price (without interest) in the event the Closing is
consummated, (ii) returned to Buyer (without interest) if Seller fails to close
after all conditions specified in Section 9.1 have been satisfied or waived and
Buyer certifies to Seller in writing that it is ready, willing and able to
perform under Article 11, or (iii) retained by Seller if all

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conditions specified in Section 9.2 have been satisfied and Seller certifies to
Buyer in writing that Seller is ready, willing and able to perform under Article
11, but Buyer fails to close.

         2.3      ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be
adjusted according to this Section without duplication. For all adjustments
known as of Closing, the Purchase Price shall be adjusted at Closing pursuant to
a "PRELIMINARY SETTLEMENT STATEMENT" prepared by Seller and provided to Buyer on
or before Closing. A draft of the Preliminary Settlement Statement will be
prepared by Seller and provided to Buyer two (2) business days prior to Closing.
The Preliminary Settlement Statement shall set forth the Purchase Price as
adjusted as provided in this Section using the best information available at the
Closing Date which amount shall be paid at Closing and is referred to as the
"CLOSING AMOUNT." The Closing Amount shall be paid at Closing by wire transfer
of immediately available funds in accordance with the wiring instructions set
forth in Section 2.1. After Closing, final adjustments to the Purchase Price
shall be made pursuant to the Final Settlement Statement to be delivered
pursuant to Section 12.1. For the purposes of this Agreement, the term "PROPERTY
EXPENSES" shall mean all capital expenses, joint interest billings, lease
operating expenses, lease rental and maintenance costs, taxes (as defined and
apportioned as of the Effective Time pursuant to Article 13), 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
Petroleum Accountant Societies of North America ("COPAS")that are attributable
to the maintenance and operation of the Assets during the period in question.
Seller and Buyer agree that the Purchase Price reflects the gas imbalance
volumes attributable to the Wells that are set forth on EXHIBIT C. If the actual
imbalance volumes as of the Effective Time are different than those set forth on
Exhibit C, the Purchase Price will be adjusted in accordance with Sections
2.3.a.(vi) and 2.3.b.(v), as applicable and will be subject to adjustment and
confirmation in connection with preparation of the Final Settlement Statement.

                  a. Upward Adjustments. The Purchase Price shall be adjusted
upward by the following:

                           (i)      An amount equal to all (x) Property
         Expenses, including prepaid expenses, attributable to the Assets for
         the period after the Effective Time through May 31, 2003 that are to be
         paid by Seller (all to be apportioned as of the Effective Time except
         as otherwise provided), including without limitation, prepaid insurance
         costs, prepaid utility charges, prepaid rentals, including lease
         rentals, and prepaid drilling and completion costs (to be apportioned
         as of the Effective Time based on drilling days), and (y) all other
         costs and expenses attributable to the ownership or operation of the
         Assets after the Effective Time that are paid by Seller, but in the
         case of both (x) and (y) excluding any administrative overhead charges
         by Seller or any of its affiliates. To the extent the actual Property
         Expenses or such other costs and expenses are not known at Closing, the
         adjustment will be made utilizing the estimate of Seller (based upon
         prior months history of expenses for the Assets where appropriate),
         after approval of such estimate by Buyer (with such approval not to be
         unreasonably withheld); provided, however, for all such Property
         Expenses and other costs and expenses for which Seller receives an
         upward adjustment to the Purchase Price which have not been paid at
         Closing, Seller shall be responsible for paying such Property Expenses
         and such other costs and expenses after Closing.

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                           (ii)     The proceeds of production attributable to
         the Assets occurring before the Effective Time and received by Buyer,
         net of royalties and taxes measured by production.

                           (iii)    An amount equal to production from the
         Assets that occurred before the Effective Time but, because such
         production is in processing, had not been sold as of the Effective Time
         times the price for which production from the Assets was sold
         immediately prior to the Effective Time; and

                           (iv)     To the extent that there are any pipelines
         imbalances, if the net of such imbalances is an overdelivery imbalance
         (that is, at the Effective Time, Seller has delivered more gas to the
         pipeline than the pipeline has redelivered for Seller), the Purchase
         Price shall be adjusted upward by the product of the price received by
         Seller for the month prior to the month in which the Effective Time
         occurs times the net overdelivery imbalance in MMbtus.

                           (v)      An amount equal to the value, based upon the
         price received for Seller's share of any oil or condensate in tanks or
         storage facilities produced from or credited to the Leases, Fee
         Interests and Lands prior to the Effective Time based upon the saleable
         quantities in oil or condensate tanks or storage facilities as measured
         by and reflected in Seller's records.

                           (vi)     To the extent that the gas imbalance
         quantities attributable to the Wells set forth on EXHIBIT C, in the
         aggregate, reflect less than the actual quantity of gas in MMbtus which
         Seller is entitled to take in excess of its fractional interest in the
         Wells as a result of underproduction by Seller from the Wells as of the
         Effective Time (such additional quantity of underproduced gas being the
         "ADDITIONAL UNDERPRODUCED GAS"), the Purchase Price shall be adjusted
         upward by an amount equal to the product of $2.00 times the Additional
         Underproduced Gas.

                           (vii)    Any other amount provided in this Agreement
         or agreed upon by Seller and Buyer.

                  b. Downward Adjustments. The Purchase Price shall be adjusted
downward by the following:

                           (i)      An amount equal to the Title Purchase Price
         Adjustment, as defined in Section 4.7;

                           (ii)     An amount equal to the Environmental
         Purchase Price Adjustment as defined in Section 5.6;

                           (iii)    The proceeds of production attributable to
         the Assets occurring on or after the Effective Time to be received by
         Seller attributable to the period from the Effective Time to May 31,
         2003, net of royalties and taxes measured by production, provided that,
         to the extent the actual proceeds of production are not known at
         Closing, the adjustment will be made utilizing the estimate of Seller
         (based upon prior months history of production from the Assets where
         appropriate), after approval of such estimate

                                     - 5 -

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         by Buyer (with such approval not to be unreasonably withheld);
         provided, however, for all such proceeds of production for which Buyer
         receives a downward adjustment of the Purchase Price which have not
         been received by Seller at Closing, if following Closing, such proceeds
         are received by Buyer they shall be promptly paid over to Seller.

                           (iv)     To the extent that there are any pipelines
         imbalances, if the net of such imbalances is an underdelivery imbalance
         (that is, at the Effective Time, Seller has delivered less gas to the
         pipeline than the pipeline has redelivered for Seller), the Purchase
         Price shall be adjusted downward by the product of the price received
         by Seller for the month prior to the month in which the Effective Time
         occurs times the net underdelivery balance in MMbtus;

                           (v)      To the extent that the gas imbalance
         quantities attributable to the Wells set forth on Exhibit C, in the
         aggregate, reflect less than the actual quantities of gas in MMbtus
         which Seller is obligated to deliver in excess of its fractional
         interest in the wells as a result of overproduction by Seller from the
         Wells as of the Effective Time (such additional quantities of
         overproduced gas being the "ADDITIONAL OVERPRODUCED GAS"), the Purchase
         Price shall be adjusted downward by an amount equal to the product of
         $2.00 times the Additional Overproduced Gas;

                           (vi)     An amount equal to the Seller Property Tax,
         as defined in Section 13.1;

                           (vii)    Any other amount provided in this Agreement
         or agreed upon by Seller and Buyer.

         2.4      ALLOCATED VALUES The Purchase Price shall be allocated among
the Assets as set forth in EXHIBIT D.

                                   ARTICLE 3
                            DUE DILIGENCE INSPECTION

         3.1      ACCESS TO RECORDS. Subject to the provisions of the
Confidentiality Agreement dated March 20, 2003 between Seller and Buyer, upon
the execution of this Agreement, Seller will disclose and make available to
Buyer and its representatives at Seller's or Seller's agent's office and during
Seller's normal business hours, all Records in Seller's possession relating to
the Assets for the purpose of permitting Buyer to perform its due diligence
review including, but not limited to, all well, leasehold, unit and title files
and title opinions. Seller agrees to cooperate with Buyer in Buyer's efforts to
obtain, at Buyer's sole expense, such additional information relating to the
Assets as Buyer may reasonably desire. Buyer may inspect the Records only to the
extent it may do so without violating any obligation, confidence or contractual
commitment of Seller to a third party. Seller shall use reasonable efforts to
obtain the necessary consents to allow Buyer's examination of any confidential
information that is material to this transaction.

         3.2      NO REPRESENTATION OR WARRANTY. Seller makes no representation
or warranty as to the accuracy or completeness of the records, files, data or
information maintained by Seller

                                     - 6 -

<PAGE>

and made available to Buyer. Buyer agrees that any conclusions drawn from such
records, files, data or information shall be the result of its own independent
review and judgment.

         3.3      ACCESS TO THE ASSETS AND INDEMNITY. Prior to Closing, Seller
shall permit Buyer, and the officers, employees, agents and advisors of Buyer,
to have reasonable access to the Assets pursuant to the terms of a Temporary
Access Agreement to be executed between the parties, in the form attached herein
as Exhibit K.

                                    ARTICLE 4
                                  TITLE MATTERS

         4.1      DEFENSIBLE TITLE. The term "DEFENSIBLE TITLE" means such title
of Seller in and to the Assets that, subject to and except for the Permitted
Encumbrances: (i) entitles Seller to receive not less than the net revenue
interest described on Exhibit A-2 ("NRI"); (ii) obligates Seller to bear costs
and expenses relating to the Assets in an amount not greater than the working
interest described on Exhibit A-2 ("WI") without a corresponding increase in the
NRI; and (iii) is free and clear of liens, taxes, encumbrances, mortgages,
claims and production payments and any defects in title that would create a
material impairment of use and enjoyment of or loss of interest in the affected
Asset.

         4.2      PERMITTED ENCUMBRANCES. The term "PERMITTED ENCUMBRANCES"
shall mean:

                  a. Royalties, overriding royalties, production payments,
reversionary interests and similar burdens if the net cumulative effect of such
burdens does not operate to reduce the NRIs below those set forth on Exhibit
A-2.

                  b. Net profits interests in connection with those specific
properties identified on Exhibit A-2 as being subject to any net profits
interests;

                  c. Any required third-party consents to assignment of Leases
and contracts (including the Material Agreements), and preferential purchase
rights which shall be handled exclusively under Sections 4.10 and 4.11 below;

                  d. Liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are being contested in good faith in the
normal course of business;

                  e. All rights to consent by, required notices to, filings
with, or other actions by federal, state, local governmental entities or tribal
entities in connection with the sale or conveyance of the Assets if the same are
customarily obtained subsequent to such sale or conveyance;

                  f. Rights of reassignment, to the extent any exist as of the
date of this Agreement, upon the surrender or expiration of any lease;

                  g. Easements, rights-of-way, servitudes, permits, surface
leases and other rights with respect to surface operations, pipelines, grazing,
logging, canals, ditches, reservoirs or the like, and easements for streets,
alleys, highways, pipelines, telephone lines, power lines, railway and other
easements and rights of way, on, over or in respect of any of the properties or
any

                                     - 7 -

<PAGE>

restriction on access thereto and that do not materially interfere with the
operation of the affected property;

                  h. Materialmen's, mechanics', repairmen's, employees',
contractors', operators' or other similar liens or charges arising in the
ordinary course of business incidental to construction, maintenance or operation
of the Assets (i) if they have not been filed pursuant to law and the time for
filing them has expired, (ii) if filed, they have not yet become due and payable
or payment is being withheld as provided by law, or (iii) if their validity is
being contested in good faith by appropriate action; provided that, in any event
the payment of such liens and charges to the extent attributable to the period
prior to the Effective Time shall remain the obligation of Seller;

                  i. Rights reserved to or vested in any municipality or
governmental, statutory, public or tribal authority to control or regulate any
of the Assets in any manner; and all applicable laws, rules, regulations and
orders of general applicability in the area;

                  j. Liens arising under operating agreements, unitization and
pooling agreements and production sales contracts securing amounts not yet due
or, if due, being contested in good faith in the ordinary course of business;

                  k. The terms of the Material Agreements and any and all other
agreements that are ordinary and customary in the oil, gas, sulfur and other
mineral exploration, development or extraction business, or in the business of
processing of gas and gas condensate for the extraction of products therefrom.
For the avoidance of doubt, however, if the net cumulative effect of any such
agreement operates to (i) reduce the NRI of a property described on Exhibit A-2
below the NRI for such property set forth on Exhibit A-2 or (ii) increase the WI
of a property described on Exhibit A-2 above the WI for such property set forth
on Exhibit A-2 without a corresponding increase in the NRI, such reduction in
the NRI or increase in the WI shall be considered a Title Defect under Section
4.3;

                  l. Such Title Defects or other defects as Buyer may waive;

                  m. Mortgage, Deed of Trust, Security Agreement, Assignment of
Production and Financing Statement from Williams Production RMT Company to
Lehman Commercial Paper, Inc., as Administrative Agent, dated July 30, 2002, as
subsequently amended or supplemented which will, as to the Assets, be released
at Closing, as a condition of Closing;

                  n. Statutory liens securing the payment of production proceeds
to persons entitled thereto not yet due or if due, being contested in good faith
in the ordinary course of business.

         4.3      TITLE DEFECT. The term "TITLE DEFECT" means any encumbrance,
encroachment, irregularity, defect in or objection to real property title,
excluding Permitted Encumbrances, that alone or in combination with other
defects:

                  a. Renders title to an Asset less than Defensible Title;
and/or

                                     - 8 -

<PAGE>

                  b. Reduces, impairs or prevents Buyer from receiving payment
from the purchasers of production from an Asset;

         4.4      NOTICE OF TITLE DEFECTS. Buyer shall deliver to Seller a
written "NOTICE OF TITLE DEFECTS" with respect to any Title Defect which is a
Qualifying Title Defect (as defined below) promptly upon learning of same, but
no later than May 23, 2003 , 5:00 p.m., Central Time. The Notice of Title
Defects shall (i) describe the Title Defect, (ii) describe the basis of the
Title Defect and (iii) describe Buyer's good faith estimate of the reduction in
the Asset's Allocated Value caused by the Title Defect ("TITLE DEFECT VALUE"),
and contain all calculations and documentation substantiating the existence of
the Title Defect. Buyer will be deemed to have conclusively waived any Title
Defect about which it fails to so notify Seller in writing prior to May 23, 2003
at 5:00 p.m. Central Time. Seller may contest the Title Defect or the Title
Defect Value by so notifying Buyer. The agreement of Seller and Buyer (or, if
applicable, the decision of the Title Arbiter) as to the Title Defect Value
shall result in the "ACTUAL TITLE DEFECT VALUE".

         4.5      SELLER'S RIGHT TO CURE. Seller shall have the option, but not
the obligation, to attempt to cure any Title Defects. Seller shall notify Buyer
prior to Closing of its election to cure any Title Defect, and shall thereafter,
provide to Buyer as soon as practicable prior to Closing evidence that any such
Title Defect is cured.

         4.6      REMEDIES FOR TITLE DEFECTS. In the event that any Title Defect
is not cured on or before Closing, Seller shall, at its sole election, elect one
of the following by so notifying Buyer not later than two (2) business days
prior to Closing (except for any Disputed Title Matters which are not resolved
by May 30, 2003 which shall be governed by Section 4.8 below):

                  a. Credit Buyer with the amount of the Actual Title Defect
Value for a Qualifying Title Defect, in which event the parties shall proceed to
Closing and the Asset that is subject to such Title Defect shall be conveyed by
Seller to Buyer subject to such Title Defect and Buyer shall pay to Seller the
Purchase Price as so adjusted;

                  b. Retain the Asset subject to such Title Defect and reduce
the Purchase Price by an amount equal to the Allocated Value of such Asset, in
which event the parties shall proceed to Closing and the Asset that is subject
to such Title Defect shall be retained by Seller and Buyer shall pay to Seller
the Purchase Price as so adjusted.

         4.7      TITLE THRESHOLDS. Seller shall have no obligation under
Section 4.6 and there shall be no reduction to the Purchase Price under Sections
4.6.a or 4.6.b unless the Actual Title Defect Value as to any single Title
Defect incident would exceed Ten Thousand Dollars ($10,000) ( a "QUALIFYING
TITLE DEFECT"). For the purposes of application of the foregoing threshold,
"single Title Defect incident" shall be a Title Defect applicable on a well by
well or property by property basis. In addition, in no event shall there be a
reduction to the Purchase Price under Sections 4.6.a and 4.6.b until such time
as the total of these amounts for Qualifying Title Defects exceeds one percent
(1%) of the Purchase Price (the "TITLE THRESHOLD AMOUNT"), and, in such event,
the Purchase Price reductions shall exclude the Title Threshold Amount. The
amount by which the total Purchase Price reductions under Section 4.6.a. and
4.6.b. exceed the Title Threshold Amount is the "TITLE PURCHASE PRICE
ADJUSTMENT."

                                     - 9 -

<PAGE>

         4.8      TITLE DISPUTE RESOLUTION. (a) Seller and Buyer agree to
resolve disputes concerning the following matters pursuant to this Section: (i)
the existence and scope of a Title Defect, (ii) the Title Defect Value of that
portion of the Asset affected by a Title Defect, (iii) the adequacy of Seller's
Title Defect curative materials (the "DISPUTED TITLE MATTERS"). The parties
agree to attempt to initially resolve all Disputed Title Matters through good
faith negotiations. If the parties cannot resolve such disputes by May 30, 2003,
the Disputed Title Matters shall be finally determined pursuant to Section
4.8(b) by a mutually agreeable law firm(s) (the "TITLE ARBITER"), taking into
account the factors set forth in this Agreement. In such event, the Closing
shall not be delayed due to such unresolved Disputed Title Matters and the
Assets subject to such unresolved Disputed Title Matters shall be assigned and
transferred to Buyer at Closing without any reduction to the Purchase Price.

         (b) For any Disputed Title Matters not resolved by May 30, 2003, Buyer
and Seller shall, on or before June 11, 2003, present their respective positions
in writing to the Title Arbiter, together with such evidence as each party deems
appropriate. The Arbiter shall be instructed to resolve the dispute through a
final decision by June 30, 2003. The costs incurred in employing the Arbiter
shall be borne equally by Seller and Buyer. The Title Arbiter's final decision
shall be binding on the parties. Within five (5) business days following
Seller's receipt of the Title Arbiter's final written decision, Seller shall,
subject to Section 4.8(c) and at its sole election, elect one of the following
with respect to the Asset that is the subject of such decision of the Title
Arbiter by so notifying Buyer:

                  (i.)     Pay to Buyer, within three (3) days of such election,
         the amount of the Actual Title Defect Value determined in the Title
         Arbiter's decision for the Qualifying Title Defect which was the
         subject of such decision, in which event, upon such payment, Seller
         shall have no further obligation or liability relating to such
         Qualifying Title Defect or

                  (ii.)    Have Buyer reconvey to Seller the interest in the
         Asset acquired by Buyer (including a special warranty from Buyer) to
         which the Qualifying Title Defect pertains which was the subject of the
         Title Arbiter's decision and concurrent with such reconveyance Seller
         shall pay to Buyer the Allocated Value of such Asset. Such reconveyance
         shall occur within three (3) days of Buyer's receipt of Seller's
         election notice, but shall be effective as of the Effective Time.

         (c)      Notwithstanding the other provisions of this Section 4.8,
Seller shall not be obligated to elect either of the remedies set forth in
Section 4.8(b) above for any Disputed Title Matter unless the Title Arbiter
finds such Disputed Title Matter to be a Qualifying Title Defect, and then only
to the extent the sum of all Actual Title Defect Values of all Qualifying Title
Defects established before and after Closing exceeds the Title Threshold Amount.
If the sum of all Actual Title Defect Values of all Qualifying Title Defects
does not exceed the Title Threshold Amount, then Buyer shall retain the
interests in the Assets subject to all Title Defects and Seller shall have no
further obligation or liability relating to any Title Defects. If the sum of all
Actual Title Defect Values of all Qualifying Title Defects exceeds the Title
Threshold Amount, then (i) Seller shall only be obligated to elect the remedies
set forth in Section 4.8(b) for that portion of such sum of all Actual Title
Defect Values in excess of the Title Threshold Amount and (ii) Buyer shall
retain the interests in the Assets subject to all Qualifying Title Defects the
sum of

                                     - 10 -

<PAGE>

whose Actual Title Defect Values is less than or equal to the Title Threshold
Amount and Seller shall have no further obligation or liability relating to all
such Qualifying Title Defects.

         4.9      DEPLETION AND DEPRECIATION OF PERSONAL PROPERTY. Buyer shall
assume all risk of loss with respect to, and any change in the condition of, the
Assets from the Effective Time until Closing for production of oil, gas and/or
other hydrocarbons through depletion (including the watering-out of any well,
collapsed casing or sand infiltration of any well) and the depreciation of
personal property due to ordinary wear and tear.

         4.10     CONSENTS. Seller shall use reasonable efforts to obtain all
required consents to assignment of Leases and contracts (including the Material
Agreements). If Buyer discovers properties for which consents to assign are
applicable during the course of Buyer's due diligence activities, Buyer shall
notify Seller immediately and Seller shall use reasonable efforts to obtain such
consents prior to Closing. Except for consents and approvals which are
customarily obtained post-Closing (including without limitation federal, state
or other governmental approvals) and those consents which would not invalidate
the conveyance of the Assets, if a necessary consent to assign any Asset has not
been obtained as of the Closing, then (i) the portion of the Assets for which
such consent has not been obtained shall be included with the Assets at the
Closing, and the Purchase Price for that Asset shall be included in the
Preliminary Settlement Statement, (ii) Seller shall employ reasonable efforts to
obtain such consent as promptly as possible following Closing, and (iii) if such
consent has not been obtained as of the Final Settlement Date, unless the Seller
and Buyer otherwise mutually agree in writing, the Allocated Value of the Asset
shall be a downward adjustment to the Purchase Price on the Final Settlement
Statement and Buyer shall reassign such Asset to Seller, effective as of the
Effective Time. Buyer shall reasonably cooperate with Seller in obtaining any
required consent including providing assurances of reasonable financial
conditions.

         4.11     PREFERENTIAL PURCHASE RIGHTS. Seller shall send notice of this
Agreement to all persons holding preferential purchase rights in any portion of
the Assets offering to sell to each such person that portion of the Assets for
which such a preferential right is held for an amount equal to the Allocated
Values of such Assets and subject to all other applicable terms and conditions
of this Agreement. If, prior to Closing, any person asserting a preferential
purchase right notifies Seller that it intends to consummate the purchase of
that portion of the Assets to which it holds a preferential purchase right
pursuant to the terms and conditions of such notice and this Agreement, then
such Assets shall be excluded from the Assets identified in this Agreement and
the Purchase Price shall be reduced by the Allocated Values of such Assets.
However, at Seller's option, if the holder of such preferential right has not
purchased such Assets prior to the Closing Date, then Seller shall promptly so
notify Buyer, and Seller shall sell to Buyer, and Buyer shall purchase from
Seller, the Assets to which the preferential purchase right was asserted for the
Allocated Values of such Assets. If Seller does not sell to Buyer such Assets
because of the exercise of such preferential right and the sale of such Assets
to such preferential right holder has not been consummated within sixty (60)
days of Closing, such Assets shall be sold by Seller and purchased by Buyer at
the Allocated Value for such Assets as of the Effective Time. All Assets for
which a person asserting a preferential purchase right has not notified Seller
that it intends to consummate the purchase of that portion of the Assets to
which it holds a preferential purchase right pursuant to the terms and
conditions of such notice and this Agreement prior to Closing, shall also be
sold to, and purchased by, Buyer at Closing

                                     - 11 -
<PAGE>

pursuant to the provisions of this Agreement at the Allocated Values for such
Assets. For any Assets so transferred to Buyer, whether at Closing or
thereafter, Buyer shall perform all valid preferential purchase right
obligations, if any, of Seller relating to such holders and Buyer shall be
entitled to receive (and Seller hereby assigns to Buyer all of Seller's rights
to) all proceeds received from such holders in connection with such preferential
purchase rights. Buyer assumes all risk, liability and obligations, and shall
defend, indemnify, and hold harmless Seller from and against all Losses (as
defined in Section 14.4), which arise from or in connection with any Assets
transferred to Buyer pursuant to this Section.

         4.12     CASUALTY LOSS. Prior to Closing, if any of the Assets is
destroyed by fire or other casualty or if any of the Assets is taken or
threatened to be taken in condemnation or under the right of eminent domain
("CASUALTY LOSS"), Buyer shall not be obligated to purchase such Asset if it
provides written notice to Seller prior to Closing of Buyer's election not to
purchase such Asset. If Buyer so elects not to purchase such Asset, the Purchase
Price shall be adjusted as agreed to by Buyer and Seller. If Buyer elects to
purchase such Asset, the Purchase Price shall be reduced by the estimated cost
to repair such Asset (with equipment of similar utility) as agreed to by Buyer
and Seller (the reduction being the "NET CASUALTY LOSS"). The Net Casualty Loss
shall not, however, exceed the Allocated Value of such Asset. Seller, at its
sole option, may elect to cure such Casualty Loss. Notwithstanding the other
provisions of this Section 4.12, 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, or replace any real property with
real property of similar nature and kind if such real property is acceptable to
Buyer. If Seller elects to cure the Casualty Loss, the Asset subject to such
Casualty Loss shall be purchased by Buyer and there shall be no adjustment to
the Purchase Price.

                                   ARTICLE 5
                              ENVIRONMENTAL MATTERS

         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 the Assets
(including, without limitation, air, land, soil, surface and subsurface strata,
surface water, ground water, or sediments) that causes an Asset to be in
violation of an Environmental Law or a condition that can reasonably be expected
to give rise to costs or liability under applicable Environmental Laws. NORM
(defined in Section 5.2), contaminated pipe, meters, tubing and wellheads shall
not be an Environmental Defect.

         "ENVIRONMENTAL DEFECT VALUE" means the cost to Remediate an
Environmental Defect. The Environmental Defect Value shall be limited to the
value of the most cost effective means to achieve the Remediation required by
applicable federal, state or local law or other governmental or judicial
directive and not for any other cost.

         "ENVIRONMENTAL LAW" means any statute, rule, regulation, code or order,
issued by any federal, state, or local governmental entity in effect on or
before the Effective Time (collectively, "LAWS") relating to the protection of
the environment or the release or disposal of waste materials.

                                     - 12 -

<PAGE>

         "REMEDIATION" or "REMEDIATE" means actions taken to correct an
Environmental Defect and "REMEDIATION COSTS" means the actual, or good faith
estimates of the, costs to conduct such Remediation.

         5.2      SPILLS AND NORM. Buyer acknowledges that in the past there may
have been spills of wastes, crude oil, condensate, produced water, or other
materials (including, without limitation, any toxic, hazardous or extremely
hazardous substances) onto or from the Assets or the Lands. In addition, some
production equipment may contain asbestos and/or Naturally Occurring Radioactive
Material ("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, that said wells, materials and equipment located on the Lands
or included in the Assets described herein may contain NORM and that
NORM-containing material may have been buried or otherwise disposed of on the
Lands. Buyer also expressly understands that special procedures may be required
for the remediation, removal, transportation and disposal of asbestos or NORM
from the Assets and Lands where such material may be found and that Buyer
assumes all liability for or in connection with the assessment, containment,
removal, remediation, transportation and disposal of any such materials, in
accordance with all past, present and future applicable laws, rules, regulations
and other requirements of any governmental or judicial entities having
jurisdiction and also with the terms and conditions of all applicable leases and
other contracts.

         5.3      ENVIRONMENTAL ASSESSMENT. Prior to Closing, Buyer may conduct
an on-site inspection, environmental assessment and compliance audit of the
Assets (an "ENVIRONMENTAL ASSESSMENT") at Buyer's cost and expense. Such
Environmental Assessment shall be conducted in accordance with the Temporary
Access Agreement between Buyer and Seller of even date herewith (the "TEMPORARY
ACCESS AGREEMENT"). Seller shall provide Buyer with access to the Assets and
shall make available to Buyer all present personnel who would reasonably be
expected to have knowledge or information regarding the environmental status or
condition of the Assets, all in accordance with the Temporary Access Agreement.
Buyer shall provide Seller five (5) days prior written notice of any proposed
environmental inspections and tests, including the scope of same, and Buyer
shall give Seller the opportunity to participate in all such inspections and
tests. Buyer shall promptly provide Seller, at no cost to Seller, all reports
and other written documentation pertaining to all such environmental inspections
and tests, provided that all such reports and documentation shall be deemed to
be confidential and subject to the Confidentiality Agreement dated March 20,
2003 between Seller and Buyer and the Temporary Access Agreement. Buyer agrees
to release, indemnify, defend, and hold harmless Seller against all Losses (as
defined in Section 14.4) arising from or related to the activities of Buyer, its
employees, agents, contractors and other representatives in connection with
Buyer's Environmental Assessment regardless of the negligence or strict
liability of Seller.

         5.4      NOTICE OF ENVIRONMENTAL DEFECTS. Buyer shall deliver to Seller
a written "NOTICE OF ENVIRONMENTAL DEFECTS" with respect to any Environmental
Defect which is a Qualifying Environmental Defect promptly upon learning of same
but in any event no later than May 23, 2003, 5:00 p.m., Central Time. The Notice
of Environmental Defects shall (i) describe the Environmental Defect, (ii)
provide evidence of the Environmental Defect and all documentation in Buyer's
possession pertaining to such Environmental Defect and, (iii) describe Buyer's
good faith estimate of the Remediation Costs associated with the Environmental
Defect.

                                     - 13 -

<PAGE>

Buyer will be deemed to have conclusively waived any Environmental Defect for
which it fails to provide Seller a Notice of Environmental Defects prior to May
23, 2003 at 5:00 p.m., Central Time. Seller may contest the existence and scope
of the Environmental Defect or the Environmental Defect Value by so notifying
Buyer. The agreement of Seller and Buyer (or, if applicable, the decision of the
Environmental Arbiter) as to the Environmental Defect Value shall result in the
"ACTUAL ENVIRONMENTAL DEFECT VALUE".

         5.5      REMEDIES FOR ENVIRONMENTAL DEFECTS. Upon the receipt by Seller
of notice from Buyer pursuant to Section 5.4 of any Environmental Defect, Seller
shall have the option, but not the obligation, to attempt to Remediate any
Environmental Defect. In the event that any such Environmental Defect has not
been Remediated by Seller such that the applicable Asset(s) will not be brought
into compliance with the applicable Environmental Laws on or before Closing,
Seller shall, at its sole election, elect one of the following by so notifying
Buyer not later than two (2) business days prior to Closing (except for any
Disputed Environmental Matters which are not resolved by May 30, 2003 which
shall be governed by Section 5.7 below):

                  a.       Credit Buyer with the amount of the Actual
Environmental Defect Value for a Qualifying Environmental Defect, in which event
the parties shall proceed to Closing and the Asset that is subject to such
Environmental Defect shall be conveyed by Seller to Buyer subject to such
Environmental Defect and Buyer shall pay to Seller the Purchase Price as so
adjusted; or

                  b.       Retain the Asset subject to such Environmental Defect
and reduce the Purchase Price by an amount equal to the Allocated Value of such
Asset, in which event the parties shall proceed to Closing and the Asset that is
subject to such Environmental Defect shall be retained by Seller and Buyer shall
pay to Seller the Purchase Price as so adjusted.

         5.6      ENVIRONMENTAL THRESHOLDS. Seller shall have no obligation and
there shall be no reduction to the Purchase Price under Sections 5.5.a or 5.5.b
unless Seller's share of the Actual Environmental Defect Value as to any single
Environmental Defect incident would exceed Ten Thousand Dollars ($10,000) ( a
"QUALIFYING ENVIRONMENTAL DEFECT"). For the purposes of application of the
foregoing threshold, "single Environmental Defect incident" shall be an
Environmental Defect applicable on a well by well or property by property basis.
In addition, there shall be no reduction to the Purchase Price under Sections
5.5.a or 5.5.b until such time as Seller's share of the total of these amounts
for Qualifying Environmental Defects exceeds one percent (1%) of the Purchase
Price (the "ENVIRONMENTAL THRESHOLD AMOUNT") , and, in such event, the Purchase
Price reductions shall exclude the Environmental Threshold Amount. The amount by
which the total Purchase Price reductions under Sections 5.5.a and 5.5.b exceed
the Environmental Threshold Amount is the "ENVIRONMENTAL PURCHASE PRICE
ADJUSTMENT."

         5.7      ENVIRONMENTAL DISPUTE RESOLUTION. (a) The parties agree to
resolve disputes concerning the following matters pursuant to this Section: (i)
the existence and scope of an Environmental Defect, (ii) the Environmental
Defect Value of an Environmental Defect and Seller's share of same and (iii) the
effectiveness of Seller's Remediation (the "DISPUTED ENVIRONMENTAL MATTERS").
The parties agree to attempt to initially resolve all Disputed Environmental
Matters through good faith negotiations. If the parties cannot resolve such
disputes by May 30, 2003, the Disputed Environmental Matters shall be finally
determined pursuant to Section 5.7(b) by a mutually agreeable environmental
consulting firm(s) (the

                                     - 14 -

<PAGE>

"ENVIRONMENTAL ARBITER"), taking into account the factors set forth in this
Agreement. The Closing shall not be delayed due to such unresolved Disputed
Environmental Matters and the Assets subject to such unresolved Disputed
Environmental Matters shall be assigned and transferred to Buyer at Closing
without any reduction to the Purchase Price.

         (b) For any Disputed Environmental Matters not resolved by May 30,
2003, Buyer and Seller shall, on or before June 11, 2003, present their
respective positions in writing to the Environmental Arbiter, together with such
evidence as each party deems appropriate. The Environmental Arbiter, shall be
instructed to resolve the dispute through a final decision by June 30, 2003. The
costs incurred in employing the Environmental Arbiter shall be borne equally by
Seller and Buyer. The Environmental Arbiter's final decision shall be binding
upon the parties. Within five (5) business days following Seller's receipt of
the Environmental Arbiter's final written decision, Seller shall, subject to
Section 5.7(c) and at its sole election, elect one of the following with respect
to the Asset that is the subject of such decision of the Environmental Arbiter
by so notifying Buyer:

                  (i.)     Pay to Buyer, within three (3) days of such election,
         the amount of Seller's share of the Actual Environmental Defect Value
         determined in the Environmental Arbiter's decision for the Qualifying
         Environmental Defect which was the subject of such decision, in which
         event Seller shall have no further obligation or liability relating to
         such Qualifying Environmental Defect or

                  (ii.)    Have Buyer reconvey to Seller the interest in the
         Asset acquired by Buyer (including a special warranty from Buyer) to
         which the Qualifying Environmental Defect pertains which was the
         subject of the Environmental Arbiter's decision and concurrent with
         such reconveyance Seller shall pay to Buyer the Allocated Value of such
         Asset. Such reconveyance shall occur within three (3) days of Buyer's
         receipt of Seller's election notice, but shall be effective as of the
         Effective Time.

         (c)      Notwithstanding the other provisions of this Section 5.7,
Seller shall not be obligated to elect either of the remedies set forth in
Section 5.7(b) above for any Disputed Environmental Matter unless the
Environmental Arbiter finds such Disputed Environmental Matter to be a
Qualifying Environmental Defect, and then only to the extent the sum of Seller's
share of all Actual Environmental Defect Values of all Qualifying Environmental
Defects established before and after Closing exceeds the Environmental Threshold
Amount. If the sum of Seller's share of all Actual Environmental Defect Values
of all Qualifying Environmental Defects does not exceed the Environmental
Threshold Amount, then Buyer shall retain the interests in the Assets subject to
all Environmental Defects and Seller shall have no further obligation or
liability relating to any Environmental Defects. If the sum of Seller's share of
all Actual Environmental Defect Values of all Qualifying Environmental Defects
exceeds the Environmental Threshold Amount, then (i) Seller shall only be
obligated to elect the remedies set forth in Section 5.7(b) for that portion of
such sum of Seller's share of all Actual Environmental Defect Values in excess
of the Environmental Threshold Amount and (ii) Buyer shall retain the interests
in the Assets subject to all Qualifying Environmental Defects the sum of
Seller's share of the Actual Environmental Defect Values of which is less than
or equal to the Environmental Threshold Amount and Seller shall have no further
obligation or liability relating to all such Qualifying Environmental Defects.

                                     - 15 -

<PAGE>

         5.8      "AS IS, WHERE IS" PURCHASE. Buyer shall acquire the Assets
(including Assets for which a notice was given under Section 5.4 above) in an
"AS IS, WHERE IS" condition and shall assume all risks that the Assets may
contain waste materials (whether toxic, hazardous, extremely hazardous or
otherwise) or other adverse physical conditions, including, but not limited to,
the presence of unknown abandoned oil and gas wells, water wells, sumps, pits,
pipelines or other waste or spill sites which may not have been revealed by
Buyer's investigation. On and after the Effective Time, all responsibility and
liability related to all such conditions, whether known or unknown, fixed or
contingent, will be transferred from Seller to Buyer.

         5.9      DISPOSAL OF MATERIALS, SUBSTANCES AND WASTES. Buyer shall
properly handle, remove, transport and dispose of any material, substance or
waste (whether toxic, hazardous, extremely hazardous or otherwise) from the
Assets or Lands (including, but not limited to, produced water, drilling fluids
and other associated wastes), whether present before or after the Effective
Time, in accordance with applicable local, state and federal laws and
regulations. Buyer shall keep records of the types, amounts and location of
materials, substances and wastes which are transported, handled, discharged,
released or disposed onsite and offsite. When and if any Lease is terminated,
Buyer shall take whatever additional testing, assessment, closure, reporting or
remedial action with respect to the Assets or Lands as is necessary to meet any
local, state, federal or tribal requirements directed at protecting human health
or the environment in effect at that time.

         5.10     BUYER'S INDEMNITY.

                  a.       Upon Closing, Buyer shall indemnify, hold harmless,
release and defend Seller from and against all damages, losses, claims, demands,
causes of action, judgments and other costs (including but not limited to any
civil fines, penalties, costs of assessment, clean-up, removal and remediation
of pollution or contamination, and expenses for the modification, repair or
replacement of facilities on the Lands) brought by any and all persons and any
agency or other body of federal, state, local, or tribal government, on account
of any personal injury, illness or death, any damage to, destruction or loss of
property, and any contamination or pollution of natural resources (including
soil, air, surface water or groundwater) to the extent any of the foregoing
directly or indirectly is caused by or otherwise involves any environmental
condition of the Assets or Lands, whether created or existing before, on or
after the Effective Time, including, but not limited to, the presence, disposal
or release of any material (whether hazardous, extremely hazardous, toxic or
otherwise) of any kind in, on, under or from the Assets or the Lands.

                  b.       Buyer's indemnification obligations shall extend to
and include, but not be limited to (i) the negligence or other fault of Seller,
Buyer and third parties, whether such negligence is active or passive, gross,
joint, sole or concurrent, (ii) Seller's or Buyer's strict liability, and (iii)
Seller's or Buyer's liabilities or obligations under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Sections 9601 et seq.), the Resource Conservation and Recovery Act of
1976 (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Sections
466 et seq.), the Safe Drinking Water Act (14 U.S.C. Sections 1401-1450), the
Hazardous Materials Transportation Act (49 U.S.C. Sections. 1801 et seq.), the
Toxic Substances Control Act (15 U.S.C. Sections 2601-2629), the Clean Air Act
(42 U.S.C. Section 7401 et seq.)

                                     - 16 -

<PAGE>

as amended, the Clean Air Act Amendments of 1990 and all state and local laws
and any replacement or successor legislation or regulation thereto. This
indemnification shall be in addition to any other indemnity provisions contained
in this Agreement, and it is expressly understood and agreed that any terms of
this Section shall control over any conflicting or contradicting terms or
provisions contained in this Agreement.

                                   ARTICLE 6
                     SELLER'S REPRESENTATIONS AND WARRANTIES

         Seller makes the following representations and warranties as of the
date of this Agreement:

         6.1      EXISTENCE. Seller is a corporation duly organized and validly
existing under the laws of the State of Delaware.

         6.2      POWER. Seller has all requisite corporate power and authority
to carry on its business as presently conducted, to enter into this Agreement
and each of the documents contemplated to be executed by Seller at Closing, and
to perform its obligations under this Agreement and under such documents. To
Seller's knowledge (except for any consents which are the subject of Section
4.10 or which are customarily obtained after Closing), the consummation of the
transaction contemplated by this Agreement and each of the documents
contemplated to be executed by Seller at Closing will not violate, nor be in
conflict with, (i) any provision of Seller's organizational or governing
documents, (ii) any agreement or instrument to which Seller is a party or is
bound, or (iii) any judgment, decree, order, statute, rule or regulation
applicable to Seller.

         6.3 AUTHORIZATION. The execution, delivery and performance of this
Agreement and each of the documents contemplated to be executed by Seller at
Closing and the contemplated transaction has been duly and validly authorized by
approval of Seller's Board of Directors, and any other requisite corporate and
shareholder action on the part of Seller.

         6.4      EXECUTION AND DELIVERY. This Agreement has been duly executed
and delivered on behalf of Seller, and at the Closing all documents and
instruments required hereunder to be executed and delivered by Seller will be
duly executed and delivered. This Agreement does, and such documents and
instruments shall, constitute legal, valid and binding obligations of Seller
enforceable in accordance with their terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application with respect to creditors, (ii) general principles of equity
and (iii) the power of a court to deny enforcement of remedies generally based
upon public policy.

         6.5      LIABILITIES FOR BROKERS' FEES. Seller has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating to
the transaction contemplated by this Agreement for which Buyer shall have any
responsibility whatsoever.

         6.6      LITIGATION. To Seller's knowledge, except as set forth on
Schedule 6.6, (i) there is no action, suit, proceeding, claim or investigation
by any person, entity, administrative agency

                                     - 17 -

<PAGE>

or governmental body pending or, to Seller's knowledge, threatened, against
Seller before any governmental authority that impedes or is likely to impede
Seller's ability to consummate the transaction contemplated by this Agreement
and to assume the liabilities to be assumed by Seller under this Agreement, and
(ii) there is no litigation pending to which Seller is a party involving the
Assets. .

         6.7      LIENS. To Seller's knowledge, except as set forth on Schedule
6.7 and except for Permitted Encumbrances, the Assets are free and clear of all
liens.

         6.8      TAXES. To Seller's knowledge, all taxes and assessments
pertaining to the Assets based on or measured by the ownership of property 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 that could result in a lien or other claim against any of the Assets
have been properly paid, unless contested in good-faith by appropriate
proceeding.

         6.9      PLAINS PETROLEUM GATHERING COMPANY. Plains Petroleum Gathering
Company is a corporation duly organized and validly existing under the Laws of
the State of Delaware and has all requisite corporate power and authority to
carry on its business as presently conducted. Seller is beneficial and legal
owner of the Shares. Upon transfer of the Shares to Buyer at the Closing, Buyer
will own the Shares free and clear of any liens or encumbrances, except for (i)
any lien or encumbrance created by or through Buyer, (ii) the provisions of
Plains Petroleum's Articles of Incorporation and By-Laws and (iii) any
restriction on transferability of the Shares arising under applicable securities
Laws.

         6.10     ASSETS OF PLAINS PETROLEUM GATHERING COMPANY. To Seller's
knowledge, except as set forth on Schedule 6.10 and except for Permitted
Encumbrances, the assets and equipment of Plains Petroleum Gathering Company are
free and clear of any liens, taxes, encumbrances, mortgages or claims of any
third party or governmental authorities.

         6.11     ENVIRONMENTAL ORDERS. To Seller's knowledge, except as set
forth on Schedule 6.11, there are no written orders, decrees or judgments issued
by governmental authorities against Seller, or written agreements between Seller
and any governmental authorities, with respect to the Assets regarding previous
violations of Environmental Law which (i) specifically relate to the future use
of the Assets, or (ii) specifically require any remediation activities with
respect to the Assets other than such orders, decrees or judgments that relate
to the oil and gas business in general.

         6.12     LEASES. To Seller's knowledge, except as set forth on Schedule
6.12, Seller has not received written notice of any material default or claimed
material default under the terms and provisions of any of the Leases or the
Material Agreements, that could reasonably result in termination or cancellation
of any of the Leases or the Material Agreements.

                                   ARTICLE 7
                     BUYER'S REPRESENTATIONS AND WARRANTIES

         Buyer makes the following representations and warranties as of the date
of this Agreement:

                                     - 18 -

<PAGE>

         7.1      EXISTENCE. Buyer is a corporation, duly organized, validly
existing and formed under the laws of the State of Delaware, and Buyer is duly
qualified and in good standing in the States of Kansas, Colorado and New Mexico.

         7.2      POWER AND AUTHORITY. Buyer has all requisite corporate power
and authority to carry on its business as presently conducted, to enter into
this Agreement and each of the documents contemplated to be executed by Buyer at
Closing, and to perform its obligations under this Agreement and under such
documents. The consummation of the transaction contemplated by this Agreement
and each of the documents contemplated to be executed by Buyer at Closing will
not violate, nor be in conflict with, (i) any provision of Buyer's
organizational or governing documents, (ii) any agreement or instrument to which
Buyer is a party or is bound, or (iii) any judgment, decree, order, statute,
rule or regulation applicable to Buyer.

         7.3      AUTHORIZATION. The execution, delivery and performance of this
Agreement and each of the documents contemplated to be executed by Buyer at
Closing and the contemplated transaction has been duly and validly authorized by
approval of Buyer's Board of Directors and any other requisite action on the
part of Buyer.

         7.4      EXECUTION AND DELIVERY. This Agreement has been duly executed
and delivered on behalf of Buyer, and at the Closing all documents and
instruments required hereunder to be executed and delivered by Buyer will be
duly executed and delivered. This Agreement does, and such documents and
instruments shall, constitute legal, valid and binding obligations of Buyer
enforceable in accordance with their terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application with respect to creditors, (ii) general principles of equity
and (iii) the power of a court to deny enforcement of remedies generally based
upon public policy.

         7.5      LIABILITIES FOR BROKERS' FEES. Buyer has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating to
the transaction contemplated by this Agreement for which Seller shall have any
responsibility whatsoever.

         7.6      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 in writing, against Buyer before
any governmental authority that impedes or is likely to impede Buyer's ability
to consummate the transactions contemplated by this Agreement and to assume the
liabilities to be assumed by Buyer under this Agreement.

         7.7      INDEPENDENT EVALUATION. Buyer is an experienced and
knowledgeable investor in the oil and gas business. Buyer has been advised by
and has relied solely upon its own expertise and its own legal, tax, reservoir
engineering and other professional counsel, concerning this transaction, the
Assets and the value thereof.

         7.8      QUALIFICATION. Buyer is now or at Closing will be and
thereafter will continue to be qualified to own and operate the Assets
(including any oil and gas lease that constitutes part of the Assets), including
meeting all bonding requirements.

                                     - 19 -

<PAGE>

         7.9      FUNDS. Buyer has commenced making arrangements to have
available by the Closing Date, and will by the Closing Date have available
sufficient funds to enable Buyer to pay in full the Purchase Price and otherwise
perform its obligations under this Agreement.

                                   ARTICLE 8
                            COVENANTS AND AGREEMENTS

         8.1      COVENANTS AND AGREEMENTS. As to the period of time from the
execution hereof until Closing, Seller and Buyer agree as follows:

                  a.       Operation Prior to Closing. Except as otherwise
consented to in writing by Buyer or provided in this Agreement, from the date of
execution hereof to the Closing, Seller shall maintain and operate the Assets in
a good and workmanlike manner in accordance with Seller's past practices.
Subject to the provisions of Section 2.3, Seller shall pay or cause to be paid
its proportionate share of all costs and expenses incurred in connection with
such operations. To the extent Seller receives written AFEs or actual notice of
such, Seller shall notify Buyer of ongoing activities and major capital
expenditures in excess of $25,000 per activity net to Seller's interest
conducted on the Assets and shall consult with Buyer regarding all such matters
and operations.

                  b.       Restriction on Operations. Subject to Section 8.1.a.,
unless Seller obtains the prior written consent of Buyer to act otherwise,
Seller will use good-faith efforts within the constraints of the applicable
operating agreements and other applicable agreements not to (i) abandon any part
of the Assets (except in the ordinary course of business or the abandonment of
leases upon the expiration of their respective primary terms or if not capable
of production in paying quantities), (ii) except for capital projects which are
deemed to be approved, approve any operations on the Assets anticipated in any
instance to cost the owner of the Assets more than $25,000 per activity net to
Seller's interest (excepting emergency operations, operations required under
presently existing contractual obligations, ongoing commitments under existing
AFEs and operations undertaken to avoid a monetary penalty or forfeiture
provision of any applicable agreement or order), (iii) convey or dispose of any
part of the Assets (other than replacement of equipment or sale of oil, gas, and
other liquid products produced from the Assets in the regular course of
business) or enter into any farmout, farmin or other similar contract affecting
the Assets (iv) let lapse any insurance now in force with respect to the Assets,
or (v) materially modify or terminate any contract included in the Assets.

                  c.       Legal Status. Seller and Buyer shall use all
reasonable efforts to maintain their respective legal statuses from the date
hereof until the Final Settlement Date and to assure that as of the Closing Date
they will not be under any material corporate, legal or contractual restriction
that would prohibit or delay the timely consummation of the transaction
contemplated hereby.

                  d.       Notices of Claims. Seller shall promptly notify Buyer
and Buyer shall promptly notify Seller, if, between the date hereof and the
Closing Date, Seller or Buyer, as the case may be, receives notice of any claim,
suit, action or other proceeding of the type referred to in Sections 6.6 and
7.6.

                                     - 20 -

<PAGE>

                  e.       Compliance with Laws. During the period from the date
of this Agreement to the Closing Date, Seller shall attempt in good faith to
comply in all material respects with all applicable statutes, ordinances, rules,
regulations and orders relating to the ownership and operation of the Assets.

                  f.       Government Reviews and Filings. Before and after the
Closing, Buyer and Seller shall cooperate to provide requested information, make
required filings with, prepare applications to and conduct negotiations with
each governmental agency as required to consummate the transaction contemplated
hereby. Each party shall make any governmental filings occasioned by its
ownership or structure. Buyer shall make all filings after the Closing at its
expense with governmental agencies necessary to transfer title to the Assets or
to comply with laws and shall indemnify and hold harmless Seller from and
against all claims, costs, expenses, liabilities and actions arising out of
Buyer's holding of such title after the Closing and prior to the securing of any
necessary governmental approvals of the transfer.

                  g.       Confidentiality. Confidentiality is governed by the
terms of the Confidentiality Agreement dated March 20, 2003 between Seller and
Buyer and Section 15.6 of this Agreement. The terms of the Confidentiality
Agreement dated March 20, 2003 between Seller and Buyer shall survive
termination of this Agreement pursuant to Article 10 for the term set forth in
the Confidentiality Agreement.

                  h.       Supplementing Schedules. Seller may, from time to
time, by written notice to Buyer at any time prior to the Closing Date,
supplement or amend the Schedules to this Agreement to correct any matter that
would constitute a breach of any representation or warranty of Seller contained
herein, but only to the extent that the matter which is the subject of such
supplement or amendment is included in the Retained Liabilities (as defined in
Section 14.2).

                                   ARTICLE 9
                              CONDITIONS TO CLOSING

         9.1      SELLER'S CONDITIONS. The obligations of Seller at the Closing
are subject, at the option of Seller, to the satisfaction at or prior to Closing
of the following conditions precedent:

                  a.       Representations, Warranties and Covenants. All
representations and warranties of Buyer contained in Article 7 of this Agreement
shall be true and correct in all material respects on and as of the Closing, and
Buyer shall 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; provided, however, if all conditions to
Seller's obligation to close the transaction contemplated hereunder have been
satisfied except for the conditions set forth in this Section 9.1.a., Seller
shall be obligated to close the transaction contemplated hereunder unless the
total of (i) all expected Losses to Seller due to breaches of such
representations and warranties of Buyer, (ii) all expected Losses to Seller due
to nonperformance and failure to satisfy such covenants and agreements by Buyer
and (iii) the Title Purchase Price Adjustment and the Environmental Purchase
Price Adjustment collectively exceed ten percent (10%) of the Purchase Price.

                                     - 21 -

<PAGE>

                  b.       Closing Documents. Buyer shall have executed and
delivered the documents which are contemplated to be executed and delivered by
it pursuant to Article 11 of this Agreement prior to or on the Closing Date.

                  c.       No Action. No order shall have been entered by any
court or governmental agency having jurisdiction over the parties or the subject
matter of this Agreement that restrains or prohibits the purchase and sale
contemplated by this Agreement and which remains in effect at the time of
Closing or seeks to recover damages from Seller resulting therefrom.

         9.2      BUYER'S CONDITIONS. The obligations of Buyer at the Closing
are subject, at the option of Buyer, to the satisfaction on or prior to the
Closing of the following conditions precedent:

                  a.       Representations, Warranties and Covenants. The
representations and warranties of Seller contained in Article 6 of this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, and Seller shall 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; provided, however, if all
conditions to Buyer's obligation to close the transaction contemplated hereunder
have been satisfied except for the conditions set forth in this Section 9.2.a.,
Buyer shall be obligated to close the transaction contemplated hereunder unless
the total of (i) all expected Losses to Buyer due to breaches of representations
and warranties of Seller, (ii) all expected Losses to Buyer due to
nonperformance and failure to satisfy such covenants and agreements by Seller
and (iii) the Title Purchase Price Adjustment and the Environmental Purchase
Price Adjustment collectively exceed ten percent (10%) of the Purchase Price;

                  b.       Closing Documents. Seller shall have executed and
delivered the documents which are contemplated to be executed and delivered by
it pursuant to Article 11 of this Agreement prior to or on the Closing Date;

                  c.       No Action. No order shall have been entered by any
court or governmental agency having jurisdiction over the parties or the subject
matter of this Agreement that restrains or prohibits the purchase and sale
contemplated by this Agreement and which remains in effect at the time of
Closing or seeks to recover damages from Buyer resulting therefrom.

         9.3      ESCROW ACCOUNT. If Closing would not occur, but for the
language commencing with the phrase "provided, however," at the end of Section
9.2.a., then a portion of the Purchase Price equal to the expected Losses to
Buyer due to (i) the breaches of representations and warranties of Seller
contained in Article 6 of this Agreement and (ii) nonperformance and failure to
satisfy the covenants and agreements of Seller specified in Section 9.2.a.
above, shall be placed into an interest bearing escrow account at Closing with a
mutually agreeable, nationally recognized and financially sound banking
institution until the issue of any such breaches, nonperformance or failure to
satisfy are finally resolved (provided if there is more than one such claimed
breach, nonperformance or failure to satisfy, the amount in escrow for each such
breach, nonperformance or failure to satisfy (together with interest earned
under such escrow) shall be released from escrow to the party entitled thereto
upon the final resolution of such breach, nonperformance or failure to satisfy).

                                     - 22 -

<PAGE>

                                   ARTICLE 10
                      RIGHT OF TERMINATION AND ABANDONMENT

         10.1     TERMINATION. This Agreement may be terminated in accordance
with the following provisions:

                  a.       by Seller if the conditions set forth in Section 9.1
are not satisfied, through no fault of Seller, or waived by Seller in writing,
as of the Closing Date and Seller is not obligated to close the transaction
contemplated hereunder as set forth in Section 9.1.a.; or

                  b.       by Buyer if the conditions set forth in Section 9.2
are not satisfied, through no fault of Buyer, or waived by Buyer in writing, as
of the Closing Date and Buyer is not obligated to close the transaction
contemplated hereunder as set forth in Section 9.2.a.

                  c.       by Seller or Buyer if the aggregate of the Title
Purchase Price Adjustment and the Environmental Purchase Price Adjustment
exceeds ten 10% of the Purchase Price.

         10.2     LIABILITIES UPON TERMINATION.

                  a.       Buyer's Default. If the transactions contemplated by
this Agreement are not consummated on or before the date specified in Section
11.1 by reason of Buyer's wrongful failure to tender performance at Closing, and
if Seller is not in material default under the terms of this Agreement and is
ready, willing and able to Close, Seller shall be entitled, at Seller's
election, to (i) enforce specific performance of this Agreement or (ii)
terminate this Agreement and retain the Deposit, and any accrued interest.

                  b.       Seller's Default. If the transactions contemplated by
this Agreement are not consummated on or before the date specified in Section
11.1 by reason of Seller's wrongful failure to tender performance at Closing and
if Buyer is not in material default under this Agreement and is ready, willing
and able to Close, Buyer shall be entitled to either (i) terminate this
Agreement and receive a prompt refund from Seller of the Deposit (without
interest); or (ii) enforce specific performance of this Agreement.

                  c.       Other Termination. If Seller and Buyer agree to
terminate this Agreement, each party shall release the other party from any and
all liability for termination of this Agreement, and Seller shall refund the
Deposit without interest.

                                   ARTICLE 11
                                    CLOSING

         11.1     DATE OF CLOSING. The closing of the transaction contemplated
by this Agreement ("CLOSING" or "CLOSING DATE") shall be held on or before June
6, 2003 at Seller's office in Tulsa, Oklahoma , at 8:30 a.m. or at such other
time and place as the parties may agree in writing.

         11.2     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:

                                     - 23 -

<PAGE>

                  a.       Assignment. Seller and Buyer shall execute,
acknowledge and deliver to Buyer an Assignment and Bill of Sale of the Assets
effective as of the Effective Time (in sufficient counterparts to facilitate
filing and recording) (i) substantially in the form of Exhibit E with no
warranty of title other than a special warranty of title, by, through and under
Seller with respect to the period from the Effective Time through the Closing,
and with no warranties, express or implied, as to the personal property,
fixtures or condition of the Assets which are conveyed "as is, where is;" (ii)
such other assignments, bills of sale, or deeds necessary to transfer the Assets
to Buyer, including without limitation any conveyances on official forms and
related documentation necessary to transfer the Assets to Buyer in accordance
with requirements of state and federal governmental regulations; and (iii) an
Assignment and Assumption Agreement in the form of Exhibit F under which Seller
assigns various contractual interests included in the Assets and under which
Buyer assumes the obligations thereunder in accordance with the terms of this
Agreement.

                  b.       Release of Lehman Mortgage. Seller shall deliver to
Buyer a recordable release by Lehman Commercial Paper, Inc., as Administrative
Agent, of Mortgage, Deed of Trust, Security Agreement, Assignment of Production
and Financing Statement from Williams Production RMT Company to Lehman
Commercial Paper, Inc., as Administrative Agent, dated July 30, 2002, as
supplemented or amended, with respect to the Assets.

                  c.       Preliminary Settlement Statement. Seller shall
deliver to Buyer, and Seller and Buyer shall execute, the Preliminary Settlement
Statement.

                  d.       Purchase Price. Buyer shall deliver to Seller the
Closing Amount by wire transfer of immediately available funds.

                  e.       Letters in Lieu, etc. Seller and Buyer shall execute
and deliver all necessary letters in lieu of transfer orders directing all
purchasers of production to pay Buyer the proceeds attributable to production
from the Assets from and after May 31, 2003. Likewise, Seller shall execute and
deliver to Buyer letters to the operators of the Assets, notifying of the change
of ownership, as well as all required change of operator forms (on those
properties operated by Seller) to be filed with any governmental agencies having
authority over the Assets; provided, however, Seller makes no representation or
guaranty that Buyer shall be able to retain operator status on any of the
properties included in the Assets which are operated by Seller.

                  f.       Seller's Officer's Certificate. Seller shall execute
and deliver to Buyer an officer's certificate in form and substance similar to
EXHIBIT G, stating that all conditions precedent to Closing have been satisfied.

                  g.       Buyer's Officer's Certificate. Buyer shall execute
and deliver to Seller an officer's certificate in form and substance similar to
EXHIBIT H, stating that all conditions precedent to Closing have been satisfied.

                  h.       Bonds. Buyer shall deliver to Seller proof that it
has posted and/or obtained all necessary surety and bonds with respect to the
Assets.

                                     - 24 -

<PAGE>

                  i.       Seller and Buyer shall executed a Transition Services
Agreement in the form of EXHIBIT L.

                                   ARTICLE 12
                            POST-CLOSING OBLIGATIONS

         12.1     POST-CLOSING ADJUSTMENTS. As soon as practicable after the
Closing, but on or before one hundred twenty (120) days after Closing, Seller,
with the assistance of Buyer's staff and with access to such records as
necessary, shall prepare and deliver to Buyer a final settlement statement (the
"FINAL SETTLEMENT STATEMENT") setting forth each adjustment or payment hereunder
that was not finally determined as of the Closing and showing the calculation of
such adjustment and the resulting final purchase price (the "FINAL PURCHASE
PRICE"). As soon as practicable after receipt of Seller's proposed Final
Settlement Statement, but on or before sixty (60) days after receipt of Seller's
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 changes to the proposed 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 endeavor to agree with respect to the changes
proposed by Buyer, if any, no later than thirty (30) days after receipt by
Seller of Buyer's comments to the proposed Final Settlement Statement. The date
upon which such agreement is reached or upon which the Final Purchase Price is
established shall be called the "FINAL SETTLEMENT DATE." If the Final Purchase
Price is more than the Closing Amount, Buyer shall pay Seller the amount of such
difference. If the Final Purchase Price is less than the Closing Amount, Seller
shall pay to Buyer the amount of such difference. Any payment by Buyer or Seller
shall be by wire transfer in immediately available funds. Any such payment shall
be made within five (5) days of the Final Settlement Date.

         12.2     DISPUTE RESOLUTION. If the parties are unable to resolve
disputes concerning the Final Settlement Statement or Final Purchase Price on or
before thirty (30) days after the Final Settlement Statement is received by
Buyer, such disputes shall be resolved in accordance with Section 14.5.d.

         12.3     RECORDS. Seller shall make the Records available for pick up
by Buyer at a mutually agreeable time. Seller may retain copies of the Records;
provided however Seller shall retain originals of the Records relating to the
Assets located in San Juan and Rio Arriba Counties, New Mexico and La Plata
County, Colorado. Buyer shall make the Records available to Seller for review
and copying during normal business hours. Buyer agrees not to destroy or
otherwise dispose of the Records for a period of six (6) years after the Closing
without giving Seller reasonable notice and an opportunity to copy the Records.

         12.4     SELLER'S EMPLOYEES. For all of Seller's employees hired by
Buyer in connection with Buyer's acquisition, ownership and operation of the
Assets, if Buyer terminates any such employee(s) within two (2) years of Closing
under circumstances that would have entitled such employee(s) to a severance
benefit under Seller's employee severance policy in effect for such employee(s)
on the Effective Date (a copy of which is attached as Exhibit J to this
Agreement), Buyer shall pay such employee(s) severance based on such Seller's
employee severance policy

                                     - 25 -

<PAGE>

based upon years of experience with Seller (and its Affiliates) and Buyer.
However, in no event shall Buyer's termination of any employee for cause create
any obligation under this provision.

         12.5     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
more effectively to assure to the other the full beneficial use and enjoyment of
the Assets in accordance with the provisions of this Agreement and otherwise to
accomplish the purposes of the transaction contemplated by this Agreement.

         12.6     DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES. The express
representations and warranties of Seller contained in this Agreement are
exclusive and are in lieu of all other representations and warranties, express,
implied or statutory. BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER
HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY EXPRESSLY WAIVES, ANY
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR
OTHERWISE RELATING TO (A) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE
RATES, (GAS BALANCING INFORMATION (PROVIDED, THAT THE PURCHASE PRICE SHALL BE
ADJUSTED FOR GAS IMBALANCES AS SET FORTH IN SECTION 2.3.A.(VI) AND B.(V)) OR THE
QUALITY, QUANTITY OR VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY,
ATTRIBUTABLE TO THE ASSETS, (B) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY
INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR
HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF OF SELLER, (C) EXCEPT AS SET FORTH
IN SECTION 6.11, THE ENVIRONMENTAL CONDITION OF THE ASSETS, THEIR COMPLIANCE
WITH ENVIRONMENTAL LAWS, AND THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES OR
NATURALLY OCCURRING RADIOACTIVE MATERIALS, (D) ANY IMPLIED OR EXPRESS WARRANTY
OF MERCHANTABILITY, (E) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, (F) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS
OR SAMPLES OF MATERIALS, (G) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE STATUTES
TO CLAIM DIMINUTION OF CONSIDERATION, (H) ANY CLAIMS BY BUYER FOR DAMAGES
BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN AS OF THE EFFECTIVE TIME OR THE
CLOSING DATE, AND (I) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE
LAW, IT BEING THE EXPRESS INTENTION OF BOTH BUYER AND SELLER THAT THE ASSETS
WILL BE CONVEYED TO BUYER IN THEIR PRESENT CONDITION AND STATE OF REPAIR, "AS
IS" AND "WHERE IS" WITH ALL FAULTS AND THAT BUYER HAS MADE OR CAUSED TO BE MADE
SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. THE PARTIES AGREE THAT THIS SECTION
12.6 CONSTITUTES A CONSPICUOUS LEGEND.

         12.7     SUSPENSE FUNDS. The Purchase Price shall be adjusted downward
by an amount equal to the amount of the Suspense Funds held by Seller, being
those funds which Seller is holding as of the Closing Date which are owing to
third party owners of royalty, overriding royalty, working or other interests in
respect of past production of oil, gas or other hydrocarbons attributable to the
Assets. Seller covenants to deliver to Buyer, within thirty (30) days after

                                     - 26 -

<PAGE>

Closing, in a mutually agreeable electronic format, the following information
with respect to such Suspense Funds: owner name, owner number, owner social
security number (if known to Seller), reason for suspense, and the amount of
suspense funds payable for each entry, together with monthly line item
production detail for all suspense entries. Upon receipt of such information,
Buyer (i) shall administer all such accounts and assume all payment obligations
relating to the Suspense Funds in accordance with all applicable laws, rules and
regulations, and shall be liable for the payment thereof to the proper parties
and (ii) indemnify and hold Seller harmless from Buyer's failure to comply with
Buyer's obligations under the preceding item (i); provided that, Seller will
retain all responsibility and liability for (x) statutory penalties and
interest, if any, owing to any interest owner attributable to the Suspense Funds
accruing prior to the Effective Time and (y) penalties and interest, if any,
attributable to the Suspense Funds accruing prior to the Effective Time, payable
to any state under existing escheat or unclaimed property statutes. In the event
any such penalties or interest are due to the respective suspense account owner
or any state under such statutes and Seller fails to promptly reimburse such
sums to Buyer, upon Buyer's written request for same, then Buyer shall return to
Seller the Suspense Funds in such account that existed as of the Effective Time,
and Seller shall undertake the final payment and settlement of any such claims
and accompanying Suspense Funds. Notwithstanding the foregoing, Seller shall be
obligated to reimburse Buyer for any interest or penalties attributable to the
Suspense Funds accruing prior to the Effective Time only with respect to written
Claims for same asserted by Buyer to Seller (with appropriate documentation
supporting the amount of penalties and interest due) not later than three (3)
years after the Closing Date.

                                   ARTICLE 13
                                      TAXES

         13.1     APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES. All ad valorem
taxes, real property taxes, personal property taxes and similar obligations (the
"PROPERTY TAXES") attributable to the Assets with respect to the tax period in
which the Effective Time occurs shall be apportioned as of the Effective Time
between Seller and Buyer. Prior to Closing, Seller shall determine an estimate
of the portion of the Property Taxes (based on the latest information then
available), for the period in which the Effective Time occurs attributable to
the period prior to the Effective Time (the "Seller Property Tax"). Seller shall
credit to Buyer, through a downward adjustment to the Purchase Price, the amount
of the Seller Property Tax. Buyer shall file or cause to be filed all required
reports and returns incident to the Property Taxes and shall pay or cause to be
paid to the taxing authorities all Property Taxes relating to the tax period in
which the Effective Time occurs. If the Property Taxes used in determining the
Seller Property Tax are not the actual Property Taxes for the tax period in
which the Effective Time occurs, then upon the determination of the actual
Property Taxes for such period, the Seller Property Tax shall be recalculated
based upon such actual Property Taxes (the "Revised Seller Property Tax") and
(i) if the Revised Seller Property Tax is greater than the Seller Property Tax,
Seller shall promptly pay Buyer the difference between such amounts or (ii) if
the Revised Seller Property Tax is less than the Seller Property Tax, Buyer
shall promptly pay Seller the difference between such amounts.

         13.2     TRANSFER TAXES AND RECORDING FEES. The Purchase Price
excludes, and Buyer shall be liable for, any Transfer Taxes (as defined below)
required to be paid in connection with the sale or transfer of the Assets
pursuant to this Agreement. "TRANSFER Taxes" mean any sales,

                                     - 27 -

<PAGE>

use, stock, stamp, documentary, transfer, filing, licensing, processing,
recording authorization and similar taxes, fees and charges.

         13.3     OTHER TAXES. All severance, production, excise and
conservation taxes shall be apportioned between the Seller and Buyer as of the
Effective Time. All such taxes that have accrued with respect to the period
prior to the Effective Time have been or will be properly paid or withheld by
Seller, and all statements, returns, and documents pertinent thereto have been
or will be properly filed. Buyer shall be responsible for paying or withholding
or causing to be paid or withheld all such taxes that accrue after the Effective
Time and for filing all statements, returns, and documents incident thereto.

         13.4     TAX REPORTS AND RETURNS. For tax periods in which the
Effective Time occurs, Seller agrees to immediately forward to Buyer copies of
any tax reports and returns received by Seller after Closing and provide Buyer
with any information Seller has that is necessary for Buyer to file any required
tax reports and returns related to the Assets. Buyer agrees to file all tax
returns and reports applicable to the Assets that Buyer is required to file
after the Closing.

                                   ARTICLE 14
                           ASSUMPTION AND RETENTION OF
                          OBLIGATIONS; INDEMNIFICATION

         14.1     BUYER'S ASSUMPTION OF LIABILITIES AND OBLIGATIONS. Upon
Closing, Buyer shall assume and pay, perform, fulfill and discharge all claims,
costs, expenses, liabilities and obligations ("OBLIGATIONS") 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 from and after the Effective Time, including, without limitation, the
payment of Property Expenses, the obligation to plug and abandon all wells
located on the Lands and reclaim all well sites located on the Lands regardless
of when the plugging, abandonment and reclamation obligations arose, the make-up
and balancing obligations for overproduction of gas from the Wells, all
liability for royalty and overriding royalty payments made and Taxes paid with
respect to the Assets, (ii) the environmental condition of the Assets and (iii)
all Obligations accruing or relating to the ownership or operation of the Assets
before the Effective Time for which Seller is not liable pursuant to the
provisions of Section 14.2 (collectively, the "ASSUMED LIABILITIES").

         14.2     SELLER'S RETENTION OF LIABILITIES AND OBLIGATIONS. Upon
Closing Seller shall retain and pay (i) all Property Expenses of Seller relating
to Seller's ownership and operation of the Assets and the producing,
transporting and marketing of Hydrocarbons from the Assets by Seller prior to
the Effective Time, and (ii) all liability for taxes paid by Seller prior to the
Effective Time with respect to the Assets, (iii) all liability for
non-affiliate, third party Claims relating solely to Seller's ownership and
operations of the Assets and the producing, transporting and marketing of
Hydrocarbons from the Assets by Seller prior to the Effective Time, (except for
any such liability arising out of or relating to Title Defects and those matters
which are the subject of Sections 5.8, 5.10 and 14.3 which shall not be included
in this Section 14.2), but with respect to each of (i), (ii) and (iii) above
only as to Claims for which Buyer submits a Claim Notice to Seller under Section
14.5.c before three years after the Closing Date; provided, however, there shall
be no such three (3) year limitation for third party Claims regarding the

                                     - 28 -

<PAGE>

improper calculation or payment of royalties, overriding royalties or net
profits interests with respect to the period prior to the Effective Time and
pertaining to the Assets (collectively, the "RETAINED LIABILITIES").

         14.3     BUYER'S PLUGGING AND ABANDONMENT OBLIGATIONS. In addition to
the Assumed Liabilities, upon Closing Buyer assumes full responsibility and
liability for the following plugging and abandonment obligations related to the
Assets ("BUYER'S PLUGGING AND ABANDONMENT OBLIGATIONS"), regardless of whether
they are attributable to the ownership or operation of the Assets before or
after the Effective Time. All operations by Buyer under this Section shall be
conducted in a good and workmanlike manner and in compliance with all applicable
laws and regulations.

                  a.       The necessary and proper plugging, replugging and
abandonment of all wells on the Assets;

                  b.       The necessary and proper removal, abandonment and
disposal of all structures, pipelines, equipment, abandoned property, trash,
refuse and junk located on or comprising part of the Assets;

                  c.       The necessary and proper capping and burying of all
associated flow lines located on or comprising part of the Assets;

                  d.       The necessary and proper restoration of the surface
and subsurface to the condition required by applicable laws, regulations or
contract;

                  e.       All obligations relating to the items described in
Section 14.3.a. through Section 14.3.d. arising from contractual requirements
and demands made by courts, authorized regulatory bodies or parties claiming a
vested interest in the Assets; and

                  f.       Obtaining and maintaining all bonds, or supplemental
or additional bonds, that may be required contractually or by governmental
authorities.

         14.4     INDEMNIFICATION. "LOSSES" shall mean any actual losses, costs,
expenses (including court costs, reasonable fees and expenses of attorneys,
technical experts and expert witnesses and the costs 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; excluding however any special,
consequential, punitive or exemplary damages, diminution of value of an Asset,
loss of profits incurred by a party hereto or Loss incurred as a result of the
indemnified party indemnifying a third party; provided, however, if Seller
pursuant to Section 10.2(a), or Buyer pursuant to Section 10.2(b), is entitled
to and elects the remedy of enforcing specific performance of this Agreement as
set forth in such sections, and despite Seller's or Buyer's, as applicable, good
faith efforts to enforce specific performance of this Agreement a court of
competent jurisdiction refuses to do so, then in such event, and only in such
event, Losses shall also include loss of profits for failure to consummate the
transactions contemplated by this Agreement.

         After the Closing, Buyer and Seller shall indemnify each other as
follows:

                                     - 29 -

<PAGE>

                  a.       Seller's Indemnification of Buyer. Seller assumes all
risk, liability, obligation and Losses in connection with, and shall defend,
indemnify, and save and hold harmless Buyer, its officers, directors, employees
and agents, from and against all Losses which arise from or in connection with
(i) the Retained Liabilities, (ii) any material breach of any representation or
warranty made by Seller, (iii) any matter for which Seller has agreed to
indemnify Buyer under this Agreement, and (iv) any material breach by Seller of
this Agreement.

                  b.       Buyer's Indemnification of Seller. Buyer assumes all
risk, liability, obligation and Losses in connection with, and shall defend,
indemnify, and save and hold harmless Seller, Seller's officers, directors,
employees and agents, from and against all Losses which arise from or in
connection with (i) the Assumed Liabilities, (ii) any material breach of any
representation or warranty made by Buyer, (iii) any matter for which Buyer has
agreed to indemnify Seller under this Agreement, and (iv) any material breach by
Buyer of this Agreement.

         14.5     PROCEDURE. The indemnifications contained in Section 14.4
shall be implemented as follows:

                  a.       Coverage. Such indemnity shall extend to all Losses
suffered or incurred by the Indemnified Party, as defined below.

                  b.       Claim Notice. The party seeking indemnification under
the terms of this Agreement ("INDEMNIFIED PARTY") shall submit a written "CLAIM
NOTICE" to the other party ("INDEMNIFYING PARTY") which, to be effective, must
state: (i) the amount (if known) of each payment claimed by an Indemnified Party
to be owing, (ii) the basis for such claim, with supporting documentation, and
(iii) a list identifying to the extent reasonably possible each separate item of
Loss for which payment is so claimed. The amount claimed shall be paid by the
Indemnifying Party to the extent required herein within ten (10) days after
receipt of the Claim Notice, or after the amount of such payment has been
finally established, whichever last occurs.

                  c.       Information. Within twenty (20) days after the
Indemnified Party receives notice of a claim or legal action that may result in
a Loss for which indemnification may be sought under this Article 14 ("CLAIM"),
the Indemnified Party shall give a Claim Notice to the Indemnifying Party. If
the Indemnifying Party or its counsel so requests, the Indemnified Party shall
furnish the Indemnifying Party with copies of all pleadings and other
information with respect to such Claim. At the election of the Indemnifying
Party made within sixty (60) days after receipt of the Claim Notice, the
Indemnified Party shall permit the Indemnifying Party to assume control of such
Claim (to the extent only that such Claim, legal action or other matter relates
to a Loss for which the Indemnifying Party is liable), including the
determination of all appropriate actions, the negotiation of settlements on
behalf of the Indemnified Party, and the conduct of litigation through attorneys
of the Indemnifying Party's choice; provided, however, that no such settlement
can result in any liability or cost to the Indemnified Party for which it is
entitled to be indemnified hereunder without its consent. If the Indemnifying
Party elects to assume control, (i) any expense incurred by the Indemnified
Party thereafter for investigation or defense of the matter shall be borne by
the Indemnified Party, and (ii) the Indemnified Party shall give all reasonable
information and assistance, other than pecuniary, that the Indemnifying Party
shall deem necessary to the proper defense of such Claim, legal action, or other
matter. In the absence of such an election, the Indemnified Party will use its
best efforts to defend, at the

                                     - 30 -

<PAGE>

Indemnifying Party's expense, any claim, legal action or other matter to which
such other party's indemnification under this Article 14 applies until the
Indemnifying Party assumes such defense, and, if the Indemnifying Party fails to
assume such defense within the time period provided above, settle the same in
the Indemnified Party's reasonable discretion at the Indemnifying Party's
expense. If such a Claim requires immediate action, both the Indemnified Party
and the Indemnifying Party will cooperate in good faith to take appropriate
action so as not to jeopardize defense of such Claim or either party's position
with respect to such Claim.

                  d.       Dispute Resolution. If the existence of a valid Claim
or amount to be paid by an Indemnifying Party is in dispute, the parties agree
to submit determination of the existence of a valid Claim or the amount to be
paid pursuant to the Claim Notice to binding arbitration. The arbitration shall
be before a three person panel of neutral arbitrators, consisting of one person
each to be selected by Seller and Buyer, and the third to be selected by the
arbitrators selected by Seller and Buyer. The arbitrators shall conduct a
hearing no later than sixty (60) days after submission of the matter to
arbitration, and a written decision shall be rendered by the arbitrators within
thirty (30) days of the hearing. Any payment due pursuant to the arbitration
shall be made within fifteen (15) days of the arbitrators' decision. This
Section excludes those matters addressed in Sections 4.8 and 5.7 of this
Agreement.

         14.6     NO INSURANCE; SUBROGATION. The indemnifications provided in
this Article 14 shall not be construed as a form of insurance. Seller and Buyer
waive for themselves, their successors or assigns, including without limitation,
any insurers, any rights to subrogation for Losses for which each of them is
respectively liable or against which each respectively indemnifies the other,
and, if required by applicable policies, Seller and Buyer shall obtain waiver of
such subrogation from their respective insurers.

         14.7     RESERVATION AS TO NON-PARTIES. Nothing in this Agreement is
intended to limit or otherwise waive any recourse Seller or Buyer may have
against any non-party for any obligations or liabilities that may be incurred
with respect to the Assets.

                                   ARTICLE 15
                                  MISCELLANEOUS

         15.1     EXHIBITS. The Exhibits referred to in this Agreement are
hereby incorporated in this Agreement by reference and constitute a part of this
Agreement.

         15.2     EXPENSES. Except as otherwise specifically provided herein,
all fees, costs and expenses incurred by Seller or Buyer in negotiating this
Agreement or in consummating the transaction contemplated by this Agreement
shall be paid by the party incurring same, including, without limitation, legal
and accounting fees, costs and expenses.

         15.3     NOTICES. All notices and communications required or permitted
under this Agreement shall be in writing and addressed as follows:

If to Seller:              Williams Production RMT Company
                           One Williams Center, 26th Floor
                           Tulsa, Oklahoma 74172

                                     - 31 -

<PAGE>

                           Telephone: (918) 573-3866
                           Facsimile:  (918) 573-1324
                           Attention: Neal Buck

                                         and

                           Williams Production RMT Company
                           One Williams Center, MD41-3
                           Tulsa, Oklahoma 74172
                           Telephone: (918) 573-4850
                           Facsimile:  (918) 573-4190
                           Attention: Exploration and Production Legal Counsel

If to Buyer:               XTO Energy Inc.
                           810 Houston Street
                           Fort Worth, Texas 76102
                           Telephone: (817) 885-2334
                           Facsimile:  (817) 870-0379
                           Attention: Vaughn O. Vennerberg, II

                                   and

                           XTO Energy Inc.
                           810 Houston Street
                           Fort Worth, Texas 76102
                           Telephone: (817) 885-2336
                           Facsimile:  (817) 885-2224
                           Attention: Win Ryan

          Any communication or delivery hereunder shall be deemed to have been
duly made and the receiving party charged with notice (i) if personally
delivered, when received, (ii) if faxed, when received if receipt is confirmed
by telephone by the sender, (iii) if mailed, certified mail, return receipt
requested, on the date set forth on the return receipt or (iv) if sent by
overnight courier, one day after sending. Any party may, by written notice so
delivered to the other party, change the address or individual to which delivery
shall thereafter be made.

         15.4     AMENDMENTS. 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.

         15.5     ASSIGNMENT. Neither party shall assign all or any portion of
its respective rights or delegate all or any portion of its respective duties or
obligations hereunder without the prior written consent of the other party.

                                     - 32 -

<PAGE>

         15.6     CONFIDENTIALITY. Seller and Buyer agree the provisions of this
Agreement shall be kept confidential except as disclosure may be required by
applicable law, rules and regulations of governmental agencies or stock
exchanges. Buyer shall inform Seller of all such disclosures by Buyer.

         15.7     PRESS RELEASES. Seller and Buyer agree that prior to making
any press releases or other public announcements concerning this Agreement and
the transactions contemplated hereby, the party desiring to make such public
announcement shall obtain the consent of the other party with such consent not
to be unreasonably withheld. Nothing herein shall preclude Buyer from making
such disclosures deemed necessary by Buyer's counsel under any federal
securities laws or New York Stock Exchange rule.

         15.8     HEADINGS. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.

         15.9     COUNTERPARTS. This Agreement may be executed by Seller and
Buyer in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute one and the same
instrument. Execution can be evidenced by fax signatures with original signature
pages to follow in due course.

         15.10    REFERENCES. References made in this Agreement, including use
of a pronoun, shall be deemed to include, where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in this
Agreement, "person" shall mean any natural person, corporation, partnership,
limited liability company, court, agency, government, board, commission, trust,
estate or other entity or authority.

         15.11    GOVERNING LAW. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by, the
laws of the State of Oklahoma without regard to principles of conflicts of law.
The validity of the various conveyances affecting the title to real property
Assets shall be governed by and construed in accordance with the laws where such
real property Assets are located. The parties subject themselves to the sole and
exclusive jurisdiction of the Federal or State courts of Tulsa, Oklahoma for
resolution of any dispute related to this Agreement.

         15.12    REMOVAL OF SIGNS. Buyer shall remove all of Seller's well and
lease signs within thirty (30) days of the Closing Date.

         15.13    BINDING EFFECT. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto, and their respective
successors and assigns.

         15.14    SURVIVAL. The following shall survive Closing: (i) all
post-closing obligations and indemnities of Seller and Buyer subject to the
limitations set forth herein, (ii) Seller's representations and warranties in
Article 6 and, (iii) Buyer's representations and warranties in Article 7.

         15.15    NO THIRD-PARTY BENEFICIARIES. This Agreement is intended only
to benefit the parties hereto and their respective permitted successors and
assigns.

                                     - 33 -

<PAGE>

         15.16    LIMITATION ON DAMAGES. Consistent with Article 14, the parties
hereto expressly waive any and all rights to consequential, special, incidental,
punitive or exemplary damages, or loss of profits resulting from breach of this
Agreement; provided, however, if Seller pursuant to Section 10.2(a), or Buyer
pursuant to Section 10.2(b), is entitled to and elects the remedy of enforcing
specific performance of this Agreement as set forth in such sections, and
despite Seller's or Buyer's, as applicable, good faith efforts to enforce
specific performance of this Agreement a court of competent jurisdiction refuses
to do so, then in such event, and only in such event, Losses shall also include
loss of profits for failure to consummate the transactions contemplated by this
Agreement.

         15.17    SEVERABILITY. It is the intent of the parties that the
provisions contained in this Agreement shall be severable. Should any
provisions, in whole or in part, be held invalid as a matter of law, such
holding shall not affect the other portions of this Agreement, and such portions
that are not invalid shall be given effect without the invalid portion.

         15.18    KNOWLEDGE. As used throughout this Agreement, the term
"KNOWLEDGE" or "BEST KNOWLEDGE" or "BEST OF SELLER'S KNOWLEDGE," whether or not
such term is written in lower or upper case, means the actual knowledge of the
officers of Seller, and of the employees of Seller specified on Schedule 15.18.

         Executed on the dates set forth in the acknowledgments below.

                                SELLER:

                                WILLIAMS PRODUCTION RMT COMPANY

                                By:         /s/_Ralph A. Hill
                                   ---------------------------------------
                                      Ralph A. Hill, Vice President

                                WILLIAMS PRODUCTION COMPANY, L.L.C.

                                By:         /s/ Ralph A. Hill
                                   ---------------------------------------
                                      Ralph A. Hill, Vice President

                                BUYER:

                                XTO ENERGY INC.

                                By:         /s/ Vaughn O. Vennerberg, II
                                   ---------------------------------------
                                      Vaughn O. Vennerberg, II
                                      Executive Vice President - Administration

                                     - 34 -<PAGE>

                                                                    EXHIBIT 10.3

                                                                  EXECUTION COPY

                          THE WILLIAMS COMPANIES, INC.
                              L/C CREDIT AGREEMENT

                               CONSENT AND WAIVER
                          DATED AS OF JANUARY 22, 2003

                  This CONSENT AND WAIVER, dated as of January 22, 2003, under
(a) the Amended and Restated Credit Agreement dated as of October 31, 2002 (the
"Credit Agreement"), among The Williams Companies, Inc., a Delaware corporation
(the "Borrower"), Citicorp USA, Inc., as agent and collateral agent (the
"Agent"), Bank of America N.A. as Syndication Agent, Citibank, N.A., Bank of
America N.A. and The Bank of Novia Scotia as issuing banks and the various
lenders and other Persons from time to time party thereto (collectively, the
"Banks") and (b) the Collateral Trust Agreement, dated as of July 31, 2002,
among TWC and certain of its Subsidiaries in favor of Citibank, N.A., as
collateral trustee (the "Collateral Trustee") for the benefit of the holders of
the Secured Obligations (as defined therein), as amended by that First Amendment
to Collateral Trust Agreement dated October 31, 2002 (such agreement, as
amended, being referred to herein as the "Collateral Trust Agreement").
Capitalized terms used without definition in this Consent and Waiver shall have
the meanings provided in the Credit Agreement and the Collateral Trust
Agreement. Any amendment to the definition of any term provided in the Credit
Agreement shall promptly be provided in writing to the Collateral Trustee and
shall have no effect hereunder unless consented to by the Collateral Trustee.

                              W I T N E S S E T H:

                  WHEREAS, pursuant to Section 5.1(e) of the Credit Agreement,
TWC is required to grant an Acceptable Security Interest over any portion of the
Refinery located in Alaska owned by TWC or any of its Subsidiaries within 15
Business Days of December 31, 2002;

                  WHEREAS, TWC was recently informed by its local counsel that
Alaska regulations require additional provisions (the "Regulatory Provisions")
be added to the pledge of certain of the real property interests related to the
Refinery located in Alaska (the "Alaska Refinery")

                  WHEREAS, pursuant to that certain notice letter dated January
22, 2003 (the "Notice Letter"), delivered by TWC, TWC has requested that the
Banks consent to an extension of the time period for granting an Acceptable
Security Interest in the Alaska Refinery; and

                  WHEREAS, the Banks party hereto are willing to grant the
requests of TWC;

<PAGE>

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and subject to the
terms and conditions hereof, the parties hereto agree as follows:

                  SECTION 1. Consent and Waiver. Subject to the occurrence of
the Effective Date (as defined herein), the Banks agree as follows:

                  (a) The Banks party hereto, each as holders of the Secured
         Obligations, consent to an extension of the time period with respect to
         the requirement to grant an Acceptable Security Interest in the Alaska
         Refinery to April 25, 2003.

                  (b) The Banks hereby instruct the Collateral Agent to
         undertake any and all actions as the Collateral Agent reasonably
         determines are necessary or desirable to ascertain the possible effect
         of the Regulatory Provisions.

                  SECTION 2. Conditions to Effectiveness. The provisions of this
Consent and Waiver shall become effective as of the date first above written
(the "Effective Date") when, and only when, the Agent or Collateral Trustee, as
applicable, shall have received counterparts of this Consent and Waiver duly
executed by each of the Borrowers and Banks constituting, in the aggregate, the
Majority Banks.

                  SECTION 3. Reference to and Effect on the Transaction
Documents.

                  (a) On and after the effectiveness of this Consent and Waiver,
         each reference in the Credit Agreement to "hereunder", "hereof' or
         words of like import referring to the Credit Agreement and each
         reference in the other Transaction Documents (as defined below) to the
         "Credit Agreement", "thereunder", "thereof' or words of like import
         referring to the Credit Agreement, shall mean and be a reference to the
         Credit Agreement as modified by this Consent and Waiver.

                  (b) The Credit Agreement and each of the L/C Collateral
         Documents (together, the "Transaction Documents"), as specifically
         modified by this Consent and Waiver, are and shall continue to be in
         full force and effect and are hereby in all respects ratified and
         confirmed.

                  (c) The execution, delivery and effectiveness of this Consent
         and Waiver shall not, except as expressly provided herein, operate as a
         waiver of any right, power or remedy of any Bank, the Agent, the
         Collateral Agent or the Collateral Trustee under any of the Transaction
         Documents, nor constitute a waiver of any provision of any of the
         Transaction Documents.

                  SECTION 4. Execution in Counterparts. This Consent and Waiver
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Consent and Waiver by telecopier shall be effective as delivery of a manually
executed counterpart of this Consent and Waiver.

                                       2
<PAGE>

                  SECTION 5. Governing Law. This Consent and Waiver shall be
governed by, and construed in accordance with, the laws of the State of New York
and shall be subject to the jurisdictional and service provisions of the Credit
Agreement, as if this were a part of the Credit Agreement.

                  SECTION 6. Entire Agreement; Modification. This Consent and
Waiver constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof, there being no other agreements or understandings,
oral, written or otherwise, respecting such subject matter, any such agreement
or understanding being superseded hereby, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, and
may not be amended, extended or otherwise modified, except in a writing executed
in whole or in counterparts by each party hereto.

                  SECTION 7. Waiver Provisions. This Consent and Waiver is
subject to the provisions of Section 9.1 of the Credit Agreement.

                              [Signatures follow.]

                                       3
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                CITICORP USA, INC , as Agent, Collateral Agent
                                and Bank

                                By:  /s/   Lydia G. Junek
                                   --------------------------------------------
                                   Name:   Lydia G. Junek
                                   Title:  Attorney-in-Fact

<PAGE>

                                 CITIBANK, N.A., as Issuing Bank

                                 By:  /s/   Lydia G. Junek
                                    -------------------------------------------
                                 Name:   Lydia G. Junek
                                 Title:  Attorney-in-Fact

<PAGE>

                                   BANK OF AMERICA N.A.,
                                   as Issuing Bank and Bank

                                   By:  /s/   Claire M. Liu
                                       ----------------------------------------
                                       Name:  Claire M. Liu
                                       Title: Managing Director

<PAGE>

                                      JPMORGAN CHASE BANK, as Bank

                                      By:   /s/   Thomas T. How
                                         --------------------------------------
                                      Name:  Thomas T. How
                                      Title: Vice President

<PAGE>

                                        THE BANK OF NOVA SCOTIA as
                                        Bank only and not as
                                        Issuing Bank or Canadian
                                        Issuing Bank

                                        By:  /s/   V. Gibson
                                           ------------------------------------
                                        Name:   V. Gibson
                                        Title: Assistant Agent

<PAGE>

                                   LEHMAN COMMERCIAL PAPER INC., as Bank

                                   By: /s/  Suzanne Flynn
                                       ----------------------------------------
                                   Name:   Suzanne Flynn
                                   Title:  Authorized Signatory

<PAGE>

                                CREDIT LYONNAIS NEW YORK BRANCH,
                                As Bank

                                By:  /s/   Phillippe Soustra
                                  ---------------------------------------------
                                Name:  Phillippe Soustra
                                Title: Executive Vice President

<PAGE>

                                 TORONTO DOMINION (TEXAS), INC., as Bank

                                 By:  /s/   Jill Hall
                                    -------------------------------------------
                                 Name:   Jill Hall
                                 Title:  Vice President

<PAGE>

Acknowledged and Agreed:

THE WILLIAMS COMPANIES, INC.

By:   /s/   James G. Ivey
   --------------------------------------------------
Name:  James G. Ivey
Title: Treasurer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}]]