Document:

EXHIBIT 4.6  

PURCHASE AND SALE
AGREEMENT 

        This
PURCHASE AND SALE AGREEMENT (the “AGREEMENT”) is made and entered
into as of the ___ day of June, 2003, by, between and among: (1) CP RESOURCES,
LLC, a Colorado Limited Liability Company (“CPR” and
“Seller”), whose address is 1625 Broadway, Suite 330, Denver, Colorado
80202; and (2) WARREN RESOURCES, INC., a Delaware Corporation
(“WRI” and “Buyer”), whose address is 489 Fifth Avenue,
32nd Floor, New York, New York 10017. 

RECITALS 

        WHEREAS,
CPR owns, either of record or beneficially, certain interests in various oil and gas
properties located in Sweetwater County, Wyoming known as the East Salt Wells Creek
Coalbed Methane Project, which it desires to sell pursuant to the terms and conditions of
this AGREEMENT. 

        WHEREAS,
and pursuant to that certain Letter of Intent and Preliminary Agreement dated and
executed by the Parties on and as of May 6, 2003, CPR has agreed to sell, convey,
transfer, assign and deliver the Assets (as defined below) and the Project
(as defined below) to WRI, and WRI has agreed to purchase and accept, as
hereinafter provided, the same from CPR; all subject to the terms, conditions,
limitations and provisions hereinafter set forth. 

        NOW,
THEREFORE, for and in consideration of the mutual covenants, agreements and
undertakings contained herein, and upon the terms, conditions and provisions set forth
below, the Parties agree as follows: 

ARTICLE I  

“DEFINITIONS”  

        Section
1.1 – Defined Terms. For purposes of this AGREEMENT, the
following defined terms shall have the meanings set forth below: 

	  	A.  	  	“Adjusted
Purchase Price” means the Purchase Price after calculating and
applying the adjustments set forth in elsewhere herein.  

	  	B.  	  	“AFE” means
Authority for Expenditure.  

	  	C.  	  	“Affiliates” means
any Person that directly or indirectly controls, is controlled by or is
under common control with such Person.  

	  	D.  	  	“AGREEMENT” means
this PURCHASE AND SALE AGREEMENT.  

	  	E.  	  	“Assets” means,
subject to the terms and conditions of this AGREEMENT, the undivided
interests more particularly described herein in and to the Assignor’s
right, title and interest in the Project known as the East Salt Wells
Creek Coal Bed Methane Project, including, but not limited to:  

	  	  	 (1)  	  	All
right, title and interest of Assignor in and to all of the oil and gas
leases; oil, gas and mineral leases; subleases and other leaseholds; carried interests;
farmout rights; options; and other lands, properties and interests described on EXHIBIT
“A”, subject to such depth limitations and other restrictions as may be set
forth on EXHIBIT “A”, together with each and every kind and character of right,
title, claim, and interest that Assignor has in and to the leases or lands pooled,
unitized, communitized or consolidated therewith;  

	  	  	(2)  	  	All
right, title and interest of Assignor in and to active oil, gas, water or
injection wells located on the lands, whether producing, shut-in, or
temporarily abandoned, including the interests in the wells shown on EXHIBIT
“A” attached hereto;  

	  	  	(3)  	  	All
leasehold interest of Assignor in or to any areas that have been formally
pooled, unitized, communitized or consolidated and approved by the applicable
Governmental Body with any lands or all or a part of any leases or any wells,
including those pools or units shown on EXHIBIT “A” attached hereto,
including all leasehold interest of Assignor in production from any such units,
whether such unit production comes from wells located on or off of a lease, and
all tenements, hereditaments and appurtenances belonging to the leases and
units;  

	  	  	(4)  	  	All
of Assignor’s interest in, to and under or derived from all contracts,
agreements and instruments by which the Assets are bound, or that relate to or
are otherwise applicable to the Assets, to the extent applicable to the Assets
rather than Assignor’s other properties, including but not limited to,
operating agreements, unitization, pooling and communitization agreements,
declarations and orders, joint venture agreements, farmin and farmout
agreements, water rights agreements, exploration agreements, participation
agreements, exchange agreements, compressor rental agreements, transportation
or gathering agreements, agreements for the sale and purchase of oil, gas,
casinghead gas or processing agreements to the extent applicable to the Assets
or the production of oil and gas and other minerals and products produced in
association therewith, but excluding any contracts, agreements and instruments
to the extent transfer is restricted by third-party agreement or applicable law
and the necessary consents to transfer are not obtained pursuant to the terms
hereof;  

	  	  	(5)  	  	All
right, title and interest of Assignor in or to all easements, permits, water
disposal agreements and permits, agreements with surface owners, surface use
agreements, licenses, servitudes, rights-of-way, surface leases and other
surface rights appurtenant to, and used or held for use primarily in connection
with the Assets, excluding any permits and other appurtenances to the   

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extent
transfer is restricted by third-party agreement or applicable law and the necessary
consents to transfer are not obtained pursuant to the terms hereof; 

	  	  	(6)  	  	All
right, title and interest of Assignor in all equipment, machinery, fixtures and
other tangible personal property and improvements located on the Assets or used
or held for use primarily in connection with the operation of the Assets
including any wells, tanks, boilers, buildings, fixtures, injection facilities,
saltwater disposal facilities, compression facilities, field compressors,
compressor PODs, pumping units and engines, flow lines, pipelines, gathering
systems, gas and oil treating facilities, machinery, power lines, telephone and
telegraph lines, roads, and other appurtenances, improvements and facilities;  

	  	  	(7)  	  	All
right, title, and interest of Assignor in and to all oil, gas, condensate, and
other minerals produced from or attributable to the above-described leases,
lands, and wells from and after the Effective Date and all oil, gas, condensate
and imbalances with co-owners and/or pipelines and all make-up rights with
respect to take-or-pay payments;  

	  	  	(8)  	  	All
right, title, and interest of Assignor in and to all lease files, land files,
well files, gas and oil sales contract files, gas processing files, division
order files, abstracts, title opinions, land surveys, proprietary geologic and
geophysical data which Assignor has a right to license (excluding
interpretations thereof), and if the Assignor does not have the right to
license such data, then the Assignor will grant Assignee access to such data in
order to review the same; non-confidential logs; maps; engineering data and
reports; reserve studies, evaluations and files and all other books, records,
data, files, maps and accounting records related primarily to the Assets, or
used or held for use primarily in connection with the maintenance or operation
thereof, but excluding (i) any books, records, data, files, maps and accounting
records to the extent disclosure or transfer is restricted by third-party
agreement or applicable law and the necessary consents to transfer are not
obtained pursuant to the terms hereof, (ii) computer software (iii) work
product of Assignor’s legal counsel (other than title opinions) and (iv)
records relating to the negotiation and consummation of the sale of the Assets;
provided, however, that Assignor may retain the originals of such files and
other records as Assignor has determined may be required for litigation, Tax,
accounting, and auditing purposes and provide Assignee with copies thereof; and  

	  	  	(9)  	  	The
right to drill and develop the Project pursuant to the terms of two Farmout
Agreements covering the same (being the Stone FOA and the True FOA, both
defined below); and, upon compliance with such Farmout Agreements, the
right to earn 100% of the  

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working
interest in oil and gas leases covering approximately 14,640.64 net acres of land owned
by the farmors named in such agreements (all of which Assets are described in EXHIBIT
“A”attached hereto and incorporated for all purposes by this specific
reference).  

	  	F.  	  	“Assignee” means
WARREN RESOURCES, INC., a Delaware Corporation.  

	  	G.  	  	“Assignor” means
CP RESOURCES, LLC, a Colorado Limited Liability Company.  

	  	H.  	  	“Business
Day” means each calendar day except Saturdays, Sundays, and Federal
holidays.  

	  	I.  	  	“BLM” means
Bureau of land Management.  

	  	J.  	  	“Buyer” means
WARREN RESOURCES, INC., a Delaware Corporation.  

	  	K.  	  	“Cash
Consideration” means the amount of the Purchase Price to be paid in
cash at Closing.  

	  	L.  	  	“Carried
Credits” means the amount of the Purchase Price to be paid by WRI on
CPR’s behalf for the drilling and completion of wells drilled on the
Assets.  

	  	M.  	  	“Closing” means
the actions to be carried out on the Closing Date as provided herein.  

	  	N.  	  	“Closing
Date” means the date and time set for Closing as provided herein.  

	  	O.  	  	“Cure
Period” means the thirty (30) day period after Closing within which
CPR may, but is not obligated to, cure any known title defects.  

	  	P.  	  	“Defensible
Title” means clear, merchantable and marketable title and, except for
and subject to the Permitted Encumbrances (as defined herein), such title
to the Assets as is deducible from the records in the county clerk and
recorder’s office where the records are located and the records of
the applicable BLM, or state land office, as appropriate, and: (i)
entitles Assignor to receive not less than the “Net Revenue Interest” set
forth in EXHIBIT “B” for each interest at all times for the life
of the particular interest; (ii) obligates Assignor to bear costs and
expenses relating to the maintenance, development, operation and
production of hydrocarbons from the interest in an amount not greater than
the “Working Interest” set forth in EXHIBIT “B” for
the life of the particular interest; and (iii) is free and clear of liens,
encumbrances, obligations, security interests, irregularities, pledges and
other reasonable defects; subject to certain changes in the Working
Interest and Net Revenue   

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Interest
that may occur depending on the status of payout. The Before Payout interest and After
Payout interest are set forth on EXHIBIT “B”. 

	  	Q.  	  	“Effective
Date” means June 1, 2003 at 12:01 a.m., Mountain Daylight Savings
Time.  

	  	R.  	  	“Governmental
Authorization” means all federal, state and local governmental
licenses, permits, franchises, orders, exemptions, variances, waivers,
authorizations, certificates, consents, rights, privileges and
applications therefor.  

	  	S.  	  	“Governmental
Body” means any federal, state, local, municipal, or other
governments; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power; and any court or governmental tribunal.  

	  	T.  	  	“Laws” means
all statutes, rules, regulations, ordinances, orders, and codes of
Governmental Bodies.  

	  	U.  	  	“Letter
of Intent” means that certain Letter of Intent and Preliminary
Agreement dated and executed by the Parties on and as of May 6, 2003.  

	  	V.  	  	“Material
Adverse Effect” means any adverse effect on the ownership, operation
or value of the Assets, as currently operated, which: (a) is material to
the ownership, operation or value of the Assets, taken as a whole, for
purposes of determining whether the conditions to Closing have been
satisfied; or (b) exceeds $10,000.00 in value for all other purposes under
this AGREEMENT, provided, however, that “Material Adverse Effect” shall
not include general changes in industry or economic conditions or changes
in laws or in regulatory policies.  

	  	W.  	  	“Net
Revenue Interest” means all of the working interests less all
royalties, overriding royalties, non-participating royalties, net profits
interest or similar burdens on or measured by production of oil and gas.  

	  	X.  	  	“Party” and
“Parties” mean CPR and WRI, individually and collectively.  

	  	Y.  	  	“Permitted
Encumbrances” means any or all of the following:  

	  	  	1.  	  	Lessors’ royalties
and any overriding royalties, reversionary interests and other burdens to
the extent that they do not, individually or in the aggregate, impair
Assignor’s rights to receive proceeds of production from the affected
Assets, reduce Assignor’s Net Revenue Interests below that shown in
EXHIBIT “B” or increase Assignor’s Working Interest above that
shown in EXHIBIT “B” without a corresponding increase in the Net
Revenue Interest;  

5 

	  	  	2.  	  	All
leases, unit agreements, pooling agreements, operating agreements, and
division orders applicable to the Assets, to the extent that they do not,
individually or in the aggregate, reduce Assignor’s Net Revenue
Interests below that shown in EXHIBIT “B” or increase Assignor’s
Working Interest above that shown in EXHIBIT “B” without a
corresponding increase in the Net Revenue Interest;  

	  	  	3.  	  	Preferential
rights to purchase the Assets with respect to which waivers are obtained
by Assignor from the appropriate parties prior to the Closing Date or the
appropriate time period for asserting the right has expired;  

	  	  	4.  	  	Third-party
consent requirements and similar restrictions with respect to which
waivers or consents are obtained by Assignor from the appropriate parties
prior to the Closing Date or the appropriate time period for asserting the
right has expired or which need not be satisfied prior to a transfer;  

	  	  	5.  	  	Liens
for current taxes or assessments not yet delinquent or, if delinquent,
               being contested in good faith by appropriate actions;  

	  	  	6.  	  	Materialman’s,
mechanic’s, repairman’s, employee’s,                contractor’s,
operator’s and other similar liens or charges arising in                the ordinary
course of business for amounts not yet delinquent (including any                amounts
being withheld as provided by law), or if delinquent, being contested in
               good faith by appropriate actions;  

	  	  	7.  	  	All
rights to consents by, required notices to, filings with, or other actions
               by any Governmental Body in connection with the sale or conveyance of oil
and                gas leases or interests therein if they are not required prior to the
sale or                conveyance;  

	  	  	8.  	  	Easements,
rights-of-way, servitudes, permits, surface leases and other rights
regarding surface operations to the extent they do not, individually or in
the aggregate, impair Assignor’s right to receive proceeds of
production from the affected Assets, reduce Assignor’s Net Revenue
Interests below that shown in EXHIBIT “B” or increase Assignor’s
Working Interest above that shown in EXHIBIT “B” without a
corresponding increase in the Net Revenue Interest; and  

	  	  	9.  	  	Validity
of federal leases or beneficial interests in federal lease or non-issuance
of federal leases covering lands on which a party has been successful
bidder at a federal lease sale due to BLM’s failure to comply with
National Environmental Policy Act requirements prior to offering same for
sale.  

	  	Z.  	  	“Person” means
any individual, firm, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated   

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organization,
government or agency or subdivision thereof or any other entity. 

	  	AA.  	  	“Project” means
the East Salt Wells Creek Coalbed Methane Project, including the Assets,
the Stone FOA and the True FOA.  

	  	BB.  	  	“Purchase
Price” has the meaning more particularly set forth in ARTICLE III
hereof.  

	  	CC.  	  	“Seller” means
CP RESOURCES, LLC, a Colorado Limited Liability Company.  

	  	DD.  	  	“Stone
FOA” means that certain Farmout Agreement dated October 29, 2001,
between Stone Energy, L.L.C., as Farmor, and O’Neal Resources
Corporation, as Farmee (the predecessor in interest to CPR), pursuant to
which CPR has the right to earn 100% of the working interest “before
payout” and an undivided 70% of 100% working interest “after
payout” in oil and gas leases covering approximately 4,799.28 net
acres of land, more or less in the Project, subject to depth limitations
more particularly described therein; a photocopy of which is attached
hereto as EXHIBIT “C” and incorporated herein for all purposes
by this specific reference.  

	  	EE.  	  	“Taxes” means
all federal, state, local, and foreign income, profits, franchise, sales,
use, ad valorem, property, severance, production, excise, stamp,
documentary, real property transfer or gain, gross receipts, goods and
services, registration, capital, transfer, or withholding taxes or other
governmental fees or charges imposed by any taxing authority, including
any interest, penalties or additional amounts which may be imposed with
respect thereto.  

	  	FF.  	  	“Title
Arbitrator” means a title attorney with at least 10 years’ experience
in oil and gas titles in the State of Wyoming as selected by mutual
agreement of CPR and WRI within fifteen (15) days after the end of the
Cure Period and absent such agreement, by the Houston office of the
American Arbitration Association.  

	  	GG.  	  	“Title
Claim Date” means the date three Business Days prior to the date of
Closing by which all claims for title defects are due to be reported.  

	  	HH.  	  	“Title
Defect” means any lien, charge, encumbrance, obligation (including
contract obligation), encroachment, irregularity, defect in, other matter
(including without limitation a discrepancy in Net Revenue Interest or
Working Interest) or objection to Assignor’s title to the Assets
(expressly excluding Permitted Encumbrances), that alone or in combination
with other Title Defects renders Assignor’s title to the Assets less
than Defensible Title.  

	  	II.  	  	“Title
Defect Amount” has the meaning more particularly set forth in ARTICLE
VI hereof.  

7 

	  	JJ.  	  	“Title
Defect Notice” means a written claim for a Title Defect.  

	  	KK.  	  	“Title
Defect Property” means all or that portion of the Assets affected by
a Title Defect Notice.  

	  	LL.  	  	“True
FOA” means that certain Farmout Agreement dated November 8, 2002,
between True Oil Company, et. al., as Farmors, and O’Neal Resources
Corporation, et. al., as Farmees (the predecessors in interest to CPR),
pursuant to which CPR has the right to earn 100% of the working interest
in oil and gas leases covering approximately 9,841.36 net acres of land,
more or less, in the Project, subject to depth limitations more
particularly described therein; a photocopy of which is attached hereto as
EXHIBIT “D” and incorporated herein for all purposes by this
specific reference. This asset shall be subject to and conditioned on the
True FOA being amended to delete all references contained therein to the
term “payout”, and to provide that the net revenue interest to
be acquired thereunder shall be no less than 80% of 8/8ths of all
production obtained from the lands and leases covered thereby; however,
both parties agree to use their best efforts to increase the net revenue
interest to an amount greater than 80%;  

	  	MM.  	  	“Wells” means
the True Federal No. 31-1 Well located on lands covered by the True FOA
which CPR has drilled, but not completed or equipped, and the State No.
1-36 Well located on lands covered by the Stone FOA, which CPR has
drilled, but not completed or equipped.  

        Section
1.2 – Construction.   Whenever the context requires, the gender of all words used in
this AGREEMENT includes the masculine, feminine and neuter. All references to Articles and
Sections refer to articles and sections of this AGREEMENT; and all references to Exhibits,
if any, are Exhibits attached hereto, if any, each of which is made a part hereof for all
purposes.  

ARTICLE II  

“CONDITION OF
ASSETS AND DUE DILIGENCE”  

        The
Parties agree that, prior to Closing, the Assignee will be afforded adequate opportunity
to inspect the Assets during normal and regular business hours, including all books,
records, instruments, agreements and materials related thereto. By accepting the Assets
from the Assignor, the Assignee hereby acknowledges that it has or will have inspected and
examined the Assets and is or will be fully acquainted with the condition thereof. The
Assignee specifically acknowledges and agrees that it has had the opportunity to ask
questions of and receive answers from the Assignor regarding the Assets by the Assignor,
and the Assignee is fully acquainted with the same. Subject to the provisions of this
AGREEMENT, the Assignee accepts the Assets “as is”, “where is”,
“with all faults” and in their present condition; and   

8 

acknowledges that, except for the
express representations and warranties of the Assignor in this AGREEMENT,
the Assignor has made no warranties, representations and covenants of any kind or
type, either express or implied, with respect to the operating or useful condition
thereof or the fitness for a particular purpose thereof in connection with the Assets. 

ARTICLE III 

“PURCHASE PRICE
AND PAYMENT TERMS”  

        
Section
3.1 — Purchase Price and Payment Terms. At Closing, and subject to the terms and
conditions of this AGREEMENT, Assignor agrees to and shall transfer, convey and assign the
undivided interests in the Assets described below to Assignee and Assignee agrees to
accept the same. As consideration and payment for the transfer and conveyance of the
undivided interests in the Assets described below, WRI agrees to and shall pay to CPR
$1,125,000.00 (the “Purchase Price”) for: (i) an undivided 80% of 100% working
interest in the True FOA, including all Assets associated therewith and covered thereby,
and (ii) an undivided 80% of 100% working interest “before payout” and an
undivided 80% of 70% of 100% working interest “after payout” in the Stone FOA,
including all Assets associated therewith and covered thereby. The Purchase Price shall be
paid at Closing as follows:  

          		
        A.       
The Parties specifically acknowledge and agree that a refundable earnest money
deposit in the amount of $62,500.00 was paid by WRI to CPR at the time the
Letter of Intent was executed by the Parties; and said sum shall be credited
against and reduce the cash portion of the Purchase Price payable at Closing
from $625,000.00 down to $562,500.00.  

               

          		        B.       
$562,500.00 of the Purchase Price will be paid by WRI to CPR at the Closing in
immediately verifiable funds, such as a cashier’s check or wire transfer.  

               

          		        C.       
The remaining $500,000 of the Purchase Price represents Carried Credits that
shall be paid by WRI on behalf of CPR to cover CPR’s retained 20% share of
the drilling and completion costs through the wellhead on future wells to be
drilled by WRI on the Assets. Such Carried Credits shall not cover or include
any portion of CPR’s 20% share of the surface facilities equipment or
installation costs beyond the wellhead of any wells that may be drilled in the
future; including, but not limited to: gathering lines, compression, sales
meters, sales lines, transportation lines, flow lines to injection wells,
buildings, electricity or any other surface infrastructure that must be
installed beyond the wellhead in order to make such wells productive. At such
time as WRI has paid a total of $500,000.00 of Carried Credits on behalf of CPR,
then WRI’s monetary obligations shall cease.  

               

        Of
the $625,000.00 cash portion of the Purchase Price paid pursuant to Paragraphs A and B
above, $25,000.00 will be allocated to land costs and   

9 

$600,000.00 will be allocated to an
undivided 80% of 100% working interest in the two existing Wells. 

        Section
3.2 – Adjustments to Purchase Price.   The Purchase Price for the Assets shall be
adjusted in accordance with the provisions set forth below. All adjustments shall be
determined in accordance with generally accepted accounting principles and COPAS
standards, and shall be applied to the cash portion of the Purchase Price first and then
to the Carried Credits. The Purchase Price shall be:  

          		        A.       
Reduced by the aggregate amount of the following proceeds received by CPR
between the Effective Date and the Closing Date (with the period between the
Effective Date and the Closing Date referred to as the “Adjustment
Period”): (i) eighty percent (80%) of the proceeds from the sale of
Hydrocarbons (net of any royalties, overriding royalties or other burdens on or
payable out of production, gathering, processing and transportation costs and
any production, severance, sales or excise Taxes not reimbursed to CPR by the
purchaser of production) produced from or attributable to the Properties during
the Adjustment Period, and (ii) eighty percent (80%) of any other proceeds
earned with respect to the Assets during the Adjustment Period;  

               

          		        B.       
Reduced by the Title Defect Amount as a result of Title Defects for which the
Title Defect Amount has been determined prior to Closing;  

               

          		        C.       
Reduced by a mutually agreed upon Title Defect Amount in the event the True FOA
cannot be amended, as provided for in ARTICLE IV.  

               

ARTICLE IV  

"ADDITIONAL TERMS, CONDITIONS AND
PROVISIONS"  

        Section
4.1 – General Terms.   CPR represents that both of the Farmout Agreements have been
perpetuated to a current date and are currently in full force and effect. In addition, the
Farmout Agreements and CPR’s title to the Assets are subject to the following
provisions:  

          		        A.       
CPR (including any other working interest owners or related parties) is
obligated to convey clear, merchantable and marketable title, with special
warranty covenants, to WRI of the above-described undivided working interests in
the Project, owned by CPR as of the date of closing or as may be earned
thereafter under the True FOA and Stone FOA, without reservation of any
overriding royalty interest or other lease burden. At the Closing, CPR shall
immediately transfer and assign to WRI: (a) an undivided 80% of 100% working
interest in all oil and gas leases covering the lands comprising the spacing
units for the two wells previously drilled on the Project by CPR; (b) an
undivided 80% of 100% working interest in all oil and gas leases previously
earned and then owned by CPR; (c) an undivided 80% of 100% working interest in
the True FOA; and (d) an undivided 80% of 100% working interest “before
payout” and an undivided 80% of 70% of 100% working interest “after
payout” in the Stone FOA.  

               

10 

          		        B.       
This AGREEMENT is subject to and conditioned on the True FOA being: (i)
extended, transferred and assigned by CPR and all other Farmees named therein to
and in favor of WRI; and (ii) amended to delete all references contained therein
to the term “payout”, and to provide that the net revenue interest to
be acquired thereunder shall be no less than 80% of 8/8ths of all production
obtained from the lands and leases covered thereby; however, the Parties agree
to use their best efforts to increase the net revenue interest to an amount
greater than 80%.  

               

          		        C.       
This AGREEMENT is subject to and conditioned on the Stone FOA being: (i)
extended, transferred and assigned by CPR and all other Farmees named therein to
and in favor of WRI; and (ii) amended to allow unitization of the lands covered
thereby, and in such other respects as may be mutually agreed upon by WRI and
CPR.  

               

        Section
4.2 – Operating Agreements.   The Parties agree to and shall enter into model form
and/or unit operating agreements containing clauses substantially similar to the following
provisions:  

          		        A.       
Such agreements shall provide that WRI has a right of first refusal and/or
preferential right to purchase CPR’s remaining 20% working interest in the
Assets in the event CPR is desirous of selling the same to a third party or in
the event CPR receives an offer to purchase the same from a third party.  

               

          		        B.       
Subject to reasonable non-consent and forfeiture penalties contained in any
applicable operating agreement covering all or any portion of the Assets, this
AGREEMENT provides, and such operating agreements shall provide, that WRI has
the following-described options to purchase CPR’s remaining 20% working
interest in the Assets:  

               

		         1.         Until
WRI has paid the full amount of the Carried Credits described herein, WRI shall
not have an option to purchase CPR’s 20% retained working interest in the
Assets, and CPR shall not sell, offer to sell or accept any offer to sell its
20% retained working interest in the Assets to or from any third party.  

		        2.        If,
at any time during a period of 3 years after WRI has paid in full the
$500,000.00 of Carried Credits described herein CPR is unable to pay its 20%
share of costs, then WRI shall have the option to purchase CPR’s 20%
retained working interest for the sum of: (i) the amount of CPR’s 20%
share of costs actually paid by CPR prior to the date of WRI’s exercise of
the above-described option, less CPR’s 20% share of the net revenues and
proceeds of production, if any, received by or payable to CPR prior to the date
of WRI’s exercise of the above-described option; and (ii) 105% of the
Purchase Price, proportionately reduced to CPR’s 20% working interest. In
the event CPR’s 20% share of revenues and proceeds exceeds its 20% share
of the costs, then WRI shall not be obligated to reimburse or pay any of CPR’s
costs described in clause (i) above.  

11 

        Section
4.3 – Operations.   This AGREEMENT and any model form and/or unit operating agreement
shall provide for or contain the following provisions:  

          		        A.       
CPR agrees to and shall resign as the operator of any and all oil and gas leases
covering the Project, including the Wells located thereon. WRI will become the
operator of the Project, as well as any unit agreements covering all or any
portion of the Assets. As the operator, WRI shall have the right to propose the
formation (or expansion) of federal units (divided or undivided) covering all or
any portion of the Project, and shall become the designated unit operator under
such unit agreements, including companion unit operating agreements, as well as
any other model form operating agreements covering all or any portion of the
Project that is not covered by a unit agreement.  

               

          		        B.       
All operations to be conducted on the Project after Closing and until the
formation of any federal units shall be conducted pursuant to a model form
operating agreement which designates WRI, or one of its wholly-owned operating
affiliates, as operator.  

               

ARTICLE V  

“EFFECTIVE DATE;
PRORATION OF COSTS AND REVENUES”  

        Section
5.1 — Effective Date.   The effective date of this AGREEMENT shall be June 1, 2003, at
12:01 a.m., Mountain Daylight Savings Time, for all purposes, including the apportionment
of revenues, expenses and production (hereinafter referred to as the “Effective
Date”).  

        
Section
5.2 — Proration of Costs And Revenues.   Assignee shall be entitled to 80% of all
production from or attributable to the Assets at and after the Effective Date (and all
products and proceeds attributable thereto), and 80% of all other income, proceeds,
receipts and credits earned with respect to the Assets at or after the Effective Date, and
shall be responsible for (and entitled to any refunds with respect to) all Property Costs
(as hereinafter defined) incurred at and after the Effective Date. Assignor shall be
entitled to all production from or attributable the Assets prior to the Effective Date
(and all products and proceeds attributable thereto), and to all other income, proceeds,
receipts and credits earned with respect to the Assets prior to the Effective Date, and
shall be responsible for (and entitled to any refunds with respect to) all Property Costs
incurred prior to the Effective Date. “Earned” and “incurred”, as used
in this Section 5.2, shall be interpreted in accordance with generally accepted accounting
principles and the Council of Petroleum Accountants Society (COPAS) standards.
“Property Costs”, as used in this Section 5.2, means all operating expenses
(including without limitation costs of insurance and ad valorem, property, severance,
production and similar Taxes based upon or measured by the ownership or operation of the
Assets or the production of hydrocarbons therefrom, but excluding any other Taxes) and
capital expenditures incurred in the ownership and operation of the Assets in the ordinary
course of business; and, where applicable, in accordance with the relevant operating or
unit agreement, if any, all overhead costs charged to the Assets under the relevant
operating agreement or unit agreement, if any, except as   

12 

otherwise specifically provided
herein with respect to liabilities, losses, costs and expenses attributable to: (i)
claims, investigations, administrative proceedings or litigation directly or
indirectly arising out of or resulting from actual or claimed personal injury or death,
property damage or violation of any Law, (ii) obligations to plug wells, dismantle
facilities, close pits and restore the surface around such wells, facilities and pits, (iii)
obligations to remediate any contamination of groundwater, surface water, soil or
equipment under applicable Environmental Laws, (iv) obligations to furnish make-up
gas according to the terms of applicable gas sales, gathering or transportation
contracts, (v) gas balancing obligations, and (vi) obligations to pay
working interests, royalties, overriding royalties or other interests held in suspense.
For purposes of allocating production (and accounts receivable with respect thereto)
under this Section 5.2: (i) liquid hydrocarbons shall be deemed to be “from
or attributable to” the Assets when they pass through the pipeline connecting
into the storage facilities into which they are run, and (ii) gaseous hydrocarbons
shall be deemed to be “from or attributable to” the Assets when they
pass through the delivery point sales meters on the pipelines through which they are
transported. Taxes, right-of-way fees, insurance premiums and other Property Costs that
are paid periodically shall be prorated based on the number of days in the applicable
period falling before and after, respectively, the Effective Date, except that
production, severance and similar Taxes shall be prorated based on the number of units
actually produced, purchased or sold or proceeds of sale, as applicable, before, and at
or after, the Effective Date. In each case, Assignee shall be responsible
for the portion allocated to the period at and after the Effective Date, limited
to its proportionate share thereof, and Assignor shall be responsible for the
portion allocated to the period before the Effective Date. 

ARTICLE VI  

“TITLE
MATTERS”  

        Section
6.1 — Assignor’s Title.  

          		        A.       
Assignor represents and warrants to Assignee that Assignor owns and can convey
to Assignee Defensible Title to the interests in the Assets shown on EXHIBIT
“B” as of the Effective Date without reservation of any overriding
royalty interest or other lease burden.  

               

          		        B.       
Assignor (including any other working interest owners or related parties) is
obligated to convey clear, merchantable and marketable title, with special
warranty covenants as described below, to WRI of CPR’s undivided working
interests in the Assets that are owned by CPR as of the date of closing or as
may be earned thereafter under the True FOA and Stone FOA, without reservation
of any overriding royalty interest or other lease burden.  

               

          		        C.       
The conveyance to be delivered by CPR, as Assignor, to WRI, as the Assignee,
shall be substantially similar to the form of EXHIBIT “E” attached
hereto and incorporated herein for all purposes by this specific reference and
shall contain a special warranty of title by, through and under Assignor to the
Assets, subject to the Permitted Encumbrances. Such   

               

13 

	  	
conveyance
shall also transfer to Assignee all rights or actions on title warranties given or
made by Assignor’s predecessors to the extent Assignor may legally
transfer such rights. 

        
Section
6.2 — Title Notice and Defect Remedies.  

          		        A.       
In order for Assignee to assert a claim arising out of a breach of ARTICLE VI,
Assignee must deliver a Title Defect Notice on or before the Title Claim Date,
except as otherwise provided under Sections 6.3 or 6.4. Each Title Defect Notice
shall be in writing and shall include: (i) a description of the alleged Title
Defect(s); (ii) a description of the Title Defect Property and/or the interest
affected by the Title Defect; and (iii) supporting documents reasonably
necessary for Assignor (as well as any title attorney or examiner hired by
Assignor) to verify the existence of the alleged Title Defect(s).  

               

          		        B.       
Assignor shall have the right, but not the obligation, to attempt, at its sole
cost, to cure or remove at any time during the Cure Period, any Title Defects of
which it has been advised by Assignee unless the Parties otherwise extend such
period by mutual written agreement.  

               

          		        C.       
Remedies for Title Defects.  

               

		        (i)                In
the event that any Title Defect with respect to the Assets is not waived by WRI
or cured on or before expiration of the Cure Period, CPR shall reduce the
Purchase Price by an amount agreed upon the Title Defect Amount pursuant to
Section 6.3D by CPR and WRI as being the value of such Title Defect, taking
into consideration the value and portion of the Asset subject to the Title
Defect, and the legal effect of such Title Defect on the Asset affected
thereby.  

		        (ii)                In
the event any Title Defect with respect to the Assets is not waived by WRI or
cured on or before expiration of the Cure Period, CPR shall retain the Property
that is subject to such Title Defect and substitute therefor other properties
of like value agreed upon by CPR and WRI (which agreement CPR and WRI shall use
good faith efforts to reach).  

		        D.               The
Title Defect Amount resulting from a Title Defect shall be determined as
follows:  

		        (i)        If
CPR and WRI mutually agree on the Title Defect Amount (which they both shall be
obligated to attempt to do in good faith), then that amount shall be the Title
Defect Amount.  

		        (ii)        If
the Title Defect is a lien, encumbrance or other charge which is undisputed and
liquidated in amount, then the Title Defect Amount shall be the amount
necessary to be paid to remove the Title Defect from the Title Defect Property.  

		        (iii)        If
the Title Defect represents a discrepancy between: (A) the Net Revenue Interest
for any Title Defect Property, and (B) the Net  

14 

	  	
Revenue
Interest or percentage stated on EXHIBIT “B”, then the Title Defect
Amount shall be the product of the value of such Title Defect Property multiplied
by a fraction, the numerator of which is the Net Revenue Interest or percentage ownership
decrease and the denominator of which is the Net Revenue Interest or percentage ownership
stated on EXHIBIT “B”. 

		        (iv)        If
the Title Defect represents an obligation, encumbrance, burden or charge upon
or other defect in title to the Title Defect Property of a type not described
in subsections (i), (ii) or (iii) above, then the Title Defect Amount shall be
determined by taking into account the value of the Title Defect Property, the
portion of the Title Defect Property affected by the Title Defect, the legal
effect of the Title Defect, the potential economic effect of the Title Defect
over the life of the Title Defect Property, the values placed upon the Title
Defect by WRI and CPR and such other factors as are necessary to make a proper
evaluation.  

		        E.              CPR and
WRI shall be mutually obligated to attempt to agree on all Title Defect  Amounts
prior to expiration of the Cure Period. If CPR and WRI are unable to
agree prior to expiration of the Cure                Period, then the Title
Defect Amounts in dispute shall be exclusively                and finally resolved by
arbitration pursuant to this Section 6.2E. The                arbitration
proceeding shall be held at a mutually agreeable geographical                location,
and shall be conducted in accordance with the Commercial Arbitration                Rules
of the American Arbitration Association, to the extent such rules do not
               conflict with the terms of this Section. The Title Arbitrator’s
determination shall be made within 20 days after submission of the matters
               in dispute and shall be final and binding upon the Parties, without
any                right of appeal. In making his determination, the Title Arbitrator shall
               be bound by the rules set forth in Section 6.2D and may consider
such                other matters as in the opinion of the Title Arbitrator are
necessary or                helpful to make a proper determination. Additionally, the Title
               Arbitrator may consult with and engage disinterested third parties to
advise                the arbitrator, including without limitation petroleum engineers,
accountants,                attorneys and land personnel. The Title Arbitrator shall
act as an expert                for the limited purpose of determining the specific
disputed Title Defect                Amounts submitted by either Party and
may not award damages, interest                or penalties to either Party with
respect to any matter. WRI and CPR shall each bear its own legal fees and
other costs of presenting its                case and each Party shall bear
one-half of the costs and expenses of the Title Arbitrator.  

        Section
6.3 — Consents to Assignment and Preferential Rights to Purchase.
Assignor shall promptly prepare and send: (i) notices to the holders of any
required consents to assignment of all or any portion of the Assets requesting such
consents and (ii) notices to the holders of any applicable preferential rights to
purchase all or any portion of the Assets requesting waivers of such preferential
rights to purchase. The consideration payable under this AGREEMENT for any
particular Assets for purposes of preferential purchase right notices for such
Assets shall be agreed to by Assignor and Assignee prior to sending
such notices. Assignor shall use commercially reasonable efforts to cause such
consents and waivers of preferential . 

15 

rights to purchase (or the exercise
thereof) to be obtained and delivered prior to Closing  

          		        A.       
               Assignor shall notify Assignee at least three (3) Business Days
               prior to Closing of all required third-party consents to the assignment
               of the Assets to Assignee which have not been obtained and the
               specific Assets to which they pertain. In no event shall there be
               included in the conveyances at Closing any Assets subject to a
               consent requirement that provides that transfer of the Assets without
               consent will result in a termination or other material impairment of any rights
               in relation to such Assets. In cases where the Assets subject to
               such a requirement is a contract and Assignee is assigning the
               Assets to which the contract relates, but the contract is not transferred
               to Assignee due to the unwaived consent requirement, then the
               Assignor shall continue after Closing to use commercially
               reasonable efforts to obtain such consent so that such contract can be
               transferred to Assignee upon receipt of such consent. In cases where a
               third-party consent to the sale and transfer of the Assets is not
               obtained prior to expiration of the Cure Period, Assignee may
               elect to treat the unsatisfied consent requirement as a Title Defect by
               giving Assignor notice thereof in accordance with Section 6.2,
               except that such notice must be given at least one (1) Business Day prior
               to expiration of the Cure Period. If an unsatisfied consent requirement
               with respect to which an adjustment is made under Section 6.2 is
               satisfied, then Assignor shall be paid the amount of the previous
               reduction and the provisions of this Section shall no longer apply. 

               

          		        B.       
               If any preferential rights to purchase any Assets are exercised prior to
               expiration of the Cure Period, those Assets transferred to a third
               party as a result of the exercise of such preferential rights shall be treated
               as a Title Defect resulting in the complete loss of title and the
               Purchase Price shall be reduced under Section 6.3D by the value
               for such Property. Assignor shall retain the consideration paid by the
               third party. 

               

        Section
6.4 — Casualty or Condemnation Loss. If, after the date of this
AGREEMENT but prior to the Closing Date, any portion of the
Assets is destroyed by fire or other casualty, or is taken in condemnation or under
right of eminent domain, Assignor shall immediately notify Assignee.
Assignee shall have the option to either proceed with closing or treat the loss as
a Title Defect and proceed in accordance with Section 6.2. If
Assignee elects to proceed with Closing, Assignor shall, at
Closing, pay to Assignee all sums paid to Assignor by third parties
by reason of such casualty or taking and shall assign, transfer and convey to
Assignee all of Assignor’s right, title and interest (if any) in
insurance claims, unpaid awards, and other rights against third parties (other than
Assignor’s directors, officers, employees and agents) arising out of the
casualty or taking. 

ARTICLE VII  

“INDEMNIFICATION/LIABILITIES”  

16 

        Section
7.1 – Assignee’s Obligations. Unless otherwise provided for
herein, the Assignee agrees that the Assignor shall not be responsible for
Assignee’s share of any debts, obligations or liabilities of any kind or type
incurred by the Assignee in connection with the ownership and operation of the
Assets from and after the Effective Date (collectively the
“Assignee’s Liabilities”), including, without limitation: (1)
claims for injury to a person or property; (2) any federal, state or local income
or other tax payable with respect to the Assets, including any sales or other
transfer taxes resulting from the consummation of this transaction, which will be the
responsibility of the Assignee; (3) liabilities or obligations arising after
the Closing Date or as a result of the Closing to any employees, agents or
independent contractors of the Assignee; and (4) any and all other
obligations of the Assignee, including those assumed by the Assignee in this
AGREEMENT. In the event any claim is made by any person against the Assignor
relating to the Assignee’s percentage ownership or operation of the
Assets for periods from and after the Effective Date, or regarding any of
the Assignee’s Liabilities, then the Assignee shall defend the
Assignor against that claim and hold the Assignor harmless from any and all
loss, liability and expense reasonably incurred in connection therewith, including
attorneys’ fees. 

        Section
7.2 – Assignor’s Obligations. Unless otherwise provided for
herein, the Assignor agrees that the Assignee shall not be responsible for
any debts, obligations or liabilities incurred by the Assignor in connection with
the ownership and operation of the Assets prior to the Effective Date or for
Assignor’s share of the same after the Effective Date (collectively the
“Retained Liabilities”), including, without limitation: (1) claims
for injury to a person or property; (2) any Taxes payable with respect to
the Assets, save and except any sales or other transfer taxes resulting from the
consummation of this transaction, which will be the responsibility of the Assignee;
(3) liabilities or obligations arising prior to the Effective Date or as a
result of the Closing to any employees, agents or independent contractors of the
Assignor; and (4) any and all other obligations of the Assignor that
are not expressly assumed by the Assignee in this AGREEMENT. In the event
any claim is made by any person against the Assignee as a result of or arising out
of the Assignor’s ownership or operation of the Assets prior to the
Effective Date, or regarding any of the Retained Liabilities, then the
Assignor shall defend the Assignee against that claim and hold the
Assignee harmless from any and all loss, liability and expense reasonably incurred
in connection therewith, including attorneys’ fees. The indemnities of the
Parties under this ARTICLE VII shall survive the Closing without time
limitation. 

ARTICLE VIII  

“ENVIRONMENTAL
MATTERS, ASSUMPTIONS AND INDEMNITIES”  

      Section
8.1 — Disposal, Well Plugging, Lease Abandonment and Indemnity  

17 

         A.       
          Assignor will remain liable for the assessment, remediation, removal,
          transportation, and disposal of wastes, asbestos, hazardous substances and
          naturally occurring radioactive material (“NORM”) from the
          Assets in existence prior to the Closing Date. As of the
          Closing Date, Assignor and Assignee will be liable
          commensurate with the interests owned by Assignor and Assignee in
          the Assets for the assessment, remediation, removal, transportation, and
          disposal of wastes, asbestos, hazardous substances and NORM from the
          Assets and associated activities occurring after the Closing Date. 

         B.       
          Subject to Section 8.2 below, as of the Closing Date,
          Assignee shall assume liability for and agrees to comply with all laws
          and governmental regulations with respect to abandonment of wells and/or
          abandonment of the Assets limited to the interests conveyed at
          Closing including, where applicable, the plugging of wells, the
          compliance with laws or rules regarding inactive or unplugged wells, including
          bonding requirements, and restoration as specified in the leases. 

         C.       
          EXCEPT AS OTHERWISE PROVIDED IN SECTION 8.2 BELOW, THE PARTIES AGREE TO
          RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD EACH OTHER, THEIR PARENT
          CORPORATIONS, SUBSIDIARIES AND AFFILIATES AND ALL OF THEIR DIRECTORS, OFFICERS,
          EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS FREE AND HARMLESS FROM AND
          AGAINST ANY AND ALL COSTS, EXPENSES, CLAIMS, DEMANDS, AND CAUSES OF ACTION OF
          EVERY KIND AND CHARACTER ARISING OUT OF, INCIDENT TO, OR IN CONNECTION WITH THE
          ABANDONMENT OF WELLS AND/OR ABANDONMENT OF AND PROPER DISPOSITION OF ANY ASSETS
          ON OR AFTER THE CLOSING DATE, LIMITED TO THE INTERESTS CONVEYED AT CLOSING,
          INCLUDING, WITHOUT LIMITATION, THE LEASES, PLATFORMS, STRUCTURES, PIPELINES,
          MATERIALS, LAND, WELLS, CASING, EQUIPMENT, AND OTHER PERSONAL PROPERTY, PLUGGING
          REQUIREMENTS OR EXCEPTIONS THERETO, INCLUDING BONDING REQUIREMENTS, REGARDLESS
          OF WHETHER THE LIABILITY THEREFOR IS BASED IN WHOLE OR IN PART UPON SOME ALLEGED
          ACT, NEGLIGENCE OR OMISSION OF ASSIGNOR, OR OF THE ASSIGNEE, OR OF SOME OTHER
          PARTY. 

      
Section
8.2 – Environmental Indemnification.  

        ASSIGNOR
HEREBY AGREES TO RELEASE, PROTECT, INDEMNIFY AND DEFEND ASSIGNEE, ITS PARENT CORPORATION,
SUBSIDIARIES AND AFFILIATES AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
HARMLESS FROM AND AGAINST ALL CLAIMS, DAMAGES, COSTS, DEMANDS, CAUSES OF ACTION, FINES,
PENALTIES, AND LOSSES (“CLAIMS”) (INCLUDING REASONABLE ATTORNEY’S FEES),
LIMITED TO THE INTERESTS CONVEYED AT CLOSING, BROUGHT BY ANY PERSONS, INCLUDING, WITHOUT
LIMITATION, ASSIGNEE’S AND ASSIGNOR’S, AND EITHER’S AFFILIATES’,
EMPLOYEES, AGENTS, OR REPRESENTATIVES AND ANY PRIVATE CITIZENS, PERSONS, ORGANIZATIONS,
AND ANY AGENCY, BRANCH OR REPRESENTATIVE OF FEDERAL, STATE OR LOCAL GOVERNMENT, ON ACCOUNT
OF ANY PERSONAL INJURY OR DEATH OR DAMAGE, DESTRUCTION, OR LOSS OF  

18 

PROPERTY, CONTAMINATION OF NATURAL
RESOURCES (INCLUDING WITHOUT LIMITATION, SOIL, AIR, SURFACE WATER OR GROUND WATER)
RESULTING FROM OR ARISING OUT OF ANY LIABILITY OR OBLIGATION, ON OR BEFORE THE CLOSING
DATE, CAUSED BY OR CONNECTED WITH ENVIRONMENTAL CONDITIONS, WHETHER OR NOT ATTRIBUTABLE
TO ASSIGNOR’S ACTIVITIES OR THE ACTIVITIES OF ASSIGNOR’S OFFICERS, EMPLOYEES,
OR AGENTS OR TO THE ACTIVITIES OF THIRD PARTIES, AND REGARDLESS OF WHETHER OR NOT
ASSIGNOR WAS OR IS AWARE OF SUCH ACTIVITIES AND REGARDLESS OF WHETHER THE MATERIAL OR
SUBSTANCE NOW EXISTS OR IS PRESENT ON THE ASSETS, OR HAS BEEN RELEASED, DISCHARGED, OR
DISPOSED FROM THE ASSETS PRIOR TO ASSIGNMENT TO ASSIGNEE. THIS INDEMNIFICATION SHALL
APPLY TO LIABILITY FOR VOLUNTARY ENVIRONMENTAL RESPONSE ACTIONS UNDERTAKEN PURSUANT
EITHER TO THE COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY ACT (“CERCLA”),
AS SUCH MAY BE AMENDED FROM TIME TO TIME, OR TO ANY OTHER FEDERAL, STATE OR LOCAL LAW OR
REGULATION.  

ARTICLE IX  

REPRESENTATIONS,
WARRANTIES AND COVENANTS OF CPR  

        The
Assignor hereby represents, warrants and covenants to the Assignee, which
representations, warranties and covenants shall survive the Closing, as follows: 

          		        A.       
               Power and Authority. The Assignor has full power and
               authority to enter into, execute and perform this AGREEMENT; to make any
               representation, warranty, covenant or agreement contained herein; to perform
               every act and execute and deliver any and all documents, instruments or
               agreements necessary or appropriate to consummate the transactions contemplated
               by this AGREEMENT. All actions on the part of the Assignor
               necessary to consummate the transactions contemplated by this AGREEMENT
               have been duly taken as required by applicable law, the governing documents of
               the Assignor and any applicable agreements. This AGREEMENT has
               been, and other agreements, documents and instruments required to be executed
               and delivered by the Assignor in accordance with the provisions hereof,
               have been or will be duly executed and delivered by the Assignor and
               constitute (or will at Closing  constitute) the legal, valid and binding
               obligations of the Assignor, enforceable against the Assignor  in
               accordance with their terms. 

               

          		        B.       
               Organization. The Assignor represents to the
               Assignee that the Assignor is a duly organized and validly
               existing limited liability company under the laws of the State of Colorado, in
               good standing in all applicable jurisdictions, with full power and authority to
               enter into this AGREEMENT and carry out the terms, conditions and provisions
               hereof. 

               

19 

          		        C.       
               Ownership of Property. The Assignor has and can
               convey, at the Closing, good, merchantable and marketable title to the
               Assets, free and clear of all Liens, unless otherwise provided for herein
               and authorized hereby; and the Assignor is duly authorized to sell,
               transfer and assign all of the same to the Assignee. 

               

          		        D.       
               Litigation. There is no litigation, proceeding or
               governmental investigation pending or threatened in any court, arbitration
               board, administrative agency or tribunal against or relating to the
               Assignor that would prevent or impede the consummation of this
               AGREEMENT by the Assignor. The Assignor does not know of
               and has no reasonable ground to know of any basis for any such litigation,
               proceeding or investigation, and the execution and performance of this
               AGREEMENT by it will not result in a default with respect to any
               judgment, order, writ, injunction, decree, rule or regulation of any applicable
               court or administrative agency. 

               

          		        E.       
               Consents and Filings. There is no requirement applicable to the
               Assignor to obtain any consent, approval or authorization of, or to make
               or effect any declaration, filing or registration with, any governmental
               authority for the valid execution and delivery by the Assignor of this
               AGREEMENT, the due performance by the Assignor of its obligations
               hereunder or the lawful consummation of the transactions contemplated hereby. 

               

          		        F.       
               Liabilities. Unless otherwise authorized hereby, all
               liabilities, trade creditors’ bills, suppliers’ bills, advertising
               fees, vendors’ charges and license fees have been paid or provided for, or
               otherwise disclosed in writing to the Assignee, and there is no threat by
               any person, including any governmental body, to impose a lien upon the
               Assets, or any portion thereof for any purpose. 

               

          		        G.       
               Insurance. The Assignor has had in effect and will keep in
               full force and effect prior to the Closing Date of this AGREEMENT
               adequate insurance policies and bonds covering the Assets  issued by
               financially responsible insurers at no less than existing levels of coverage. 

               

          		        H.       
               Liens and Encumbrances. On and as of the Closing
               Date, there will be no liens, encumbrances, mortgages, deeds of trust or
               security interests in and to, or affecting title to the Assets, and no
               person will have a right to claim a lien upon the same. 

               

          		        I.       
               Leases, Contracts and Other Agreements. The Assignor
               has incurred no liability, made no contract or agreement, nor entered into any
               written or oral arrangements whatsoever which would impose or result in any
               obligations upon the Assignee as a result of or at the Closing of
               this AGREEMENT, except for the Contracts which will be
               specifically assumed and  

               

20 

	  	
performed
by the Assignee  pursuant to this AGREEMENT on, as of and after the Closing
Date. The Assignor has not entered into any agreement or agreements, either
written or oral,                under which it is or could be obligated to sell or
transfer all or any portion                of the Assets or rights under this AGREEMENT,
and agrees not to                enter into or negotiate any such agreement or
agreements. Assignor has                paid its share of all costs payable by it
under the Stone FOA, the True FOA and any other contracts affecting the Assets,
except                those being contested in good faith. Assignor is not in
default under the Stone FOA, the True FOA or any other contract affecting
the Assets except such defaults as would not, individually or in the
               aggregate, have a Material Adverse Effect. EXHIBIT “F” sets
               forth all of the contracts, agreements, and commitments to which any of
the Assets will be bound as of the Closing, including: (i) any
               agreement with any Affiliate; (ii) any agreement or contract for
the                sale, exchange, or other disposition of hydrocarbons produced from or
               attributable to Assignor’s interest in the Assets that
is not                cancelable without penalty or other material payment on not more
than 30 days                prior written notice; (iii) any agreement of or
binding upon Assignor to sell, lease, farmout, or otherwise dispose of any
interest in                any of the Assets after the date hereof, other than
conventional rights                of reassignment arising in connection with Assignor’s surrender
or                release of any of the Assets; and (iv) any tax
partnership                agreement of or binding upon Assignor affecting any of
the Assets. 

          		        J.       
               Taxes. All ad-valorem and other personal property taxes for
               2003 and prior years assessed against the Assets, and all state and
               federal taxes assessed against the Assignor’s employees’ wages
               have been paid or provided for, or the Assignor will make sure the same
               will be paid and provided for as of the Closing Date of this
               AGREEMENT; and no legal, governmental or administrative action is pending
               or threatened with regard to any such taxes or assessments. 

               

          		        K.       
               Absence of Violation or Conflict. The execution, delivery and
               performance of the transactions contemplated by this AGREEMENT by the
               Assignor do not and will not violate, conflict with or result in the
               breach of any term, condition or provision of or require the consent of any
               other person under: (i) any law, ordinance or governmental rule or
               regulation known to the Assignor and to which the Assignor or the
               Assets is subject; (ii) the governing documents of or any
               securities issued by the Assignor; or (iii) any mortgage,
               indenture or other instrument to which the Assignor is a party or by
               which any of the Assets may be bound or effected. No authorization,
               approval or consent of and no registration or filing with any governmental or
               regulatory body or any other third party is required in connection with the
               execution, delivery and performance of this AGREEMENT by the Assignor. 

               

          		        L.       
               Conforming Use. The Assignor has used the
               Assets for the purposes for which such property was intended, and has
               abided by, conformed 

               

21 

	  	
to
and caused others to abide by and conform to all laws,                ordinances, orders,
rules, regulations and statutes of national, state,                municipal or county
governmental authorities that are now existing or may                hereinafter be
enacted and that are controlling or in manner affecting the use                and
operation by the Assignor of Assets. 

          		        M.       
               Payments for Production All rentals, royalties, excess
               royalty, overriding royalty interests, production payments, and other payments
               due and/or payable by Assignor to mineral and royalty holders and other
               interest owners, if any, on or prior to the Closing Date with respect to
               the Assets  and the hydrocarbons produced therefrom or attributable
               thereto, have been or will be properly and timely paid in the ordinary course of
               business, and Assignor is not obligated under any contract or agreement
               for the sale of gas from the Assets containing a take-or-pay, advance
               payment, prepayment, or similar provision, or under any gathering, transmission,
               or any other contract or agreement with respect to any of the Assets to
               gather, deliver, process, or transport any gas without then or thereafter
               receiving full payment therefor. 

               

          		        N.       
               Title. At the Closing and as of the Effective
               Date, the Assignee will be vested absolutely with
               ownership of and good and merchantable title to the Assets. 

               

          		        O.       
               Accuracy and Completeness of Information. No written
               statement, representation, warranty or other information provided or furnished
               by or on behalf of the Assignor to the Assignee in this
               AGREEMENT or otherwise in connection with this transaction contains any
               untrue statement of a material fact or omits to state any material fact
               necessary to make the statements herein or therein not misleading. 

               

          		        P.       
               Governmental Authorizations. Assignor has obtained
               and is maintaining all Governmental Authorizations that are presently
               necessary or required for the ownership and operation of the Assets as
               currently owned and operated (including, but not limited to, those required
               under Environmental Laws), the loss of which would, individually or in the
               aggregate, have a Material Adverse  Effect. Assignor has
               operated the Assets in accordance with the conditions and provisions of
               such Governmental Authorizations and no notices of violation have been
               received by Assignor, and no proceedings are pending or, to
               Assignor’s knowledge, threatened in writing that might result in any
               modification, revocation, termination or suspension of any such Governmental
               Authorizations or which would require any corrective or remediation action
               by Assignor. 

               

          		        Q.       
               Equipment. The Wells and equipment therein currently
               in use or necessary for the current production or operation of the Assets
               is in good working order, ordinary wear and tear excepted, and has been
               constructed in accordance with standard oilfield operating practices. All
               Wells and equipment are located on the Assets and Assignor
               owns such Wells and equipment. Subject to the foregoing,
               Assignee’s acquisition of Assignor’s interest in and to
 

               

22 

	  	
the
Wells and equipment is on a “WHERE IS, AS IS BASIS”               and
ASSIGNORMAKES NO WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE
               PHYSICAL CONDITION OF THE ASSETS OR EQUIPMENT LOCATED THEREON,
QUALITY,                VALUE, FITNESS FOR PURPOSE, MERCHANTABILITY OR OTHERWISE.  

          		        R.       
               Consents and Preferential Purchase Rights. None of the
               Assets, or any portion thereof, is subject to any preferential rights to
               purchase or restrictions on assignment or required third-party consents to
               assignment, which may be applicable to the transactions contemplated by this
               AGREEMENT, except for (i) governmental consents and approvals of
               assignments that are customarily obtained after Closing, (ii)
               preferential rights, consents and restrictions contained in easements,
               rights-of-way or equipment leases and (iii) preferential rights, consents
               and restrictions contained in any contracts (including the Stone FOA and
               the True FOA) affecting the Assets. 

               

          		        S.       
               Continuation of Representations. The representations,
               warranties and covenants of the Assignor shall be in full force and
               effect as of the Closing Date, and shall, except as otherwise provided
               herein, survive the Closing only for a period of three (3) years from and
               after the Closing  Date, unless written notice of a claim is given to the
               Assignor within such three year period, in which event, the claims
               identified within such notice shall survive without time limitation (but subject
               to any statutes of limitation applicable thereto under governing law). 

               

          		        T.       
               Indemnification. The Assignor agrees to and shall
               indemnify and hold the Assignee  harmless from any loss, liability or
               expense, including attorneys’ fees, arising out of the breach of any
               representation, covenant or warranty made by it hereunder. 

               

ARTICLE X  

“REPRESENTATIONS,
WARRANTIES AND COVENANTS OF WRI”  

        The
Assignee hereby represents, warrants and covenants to the Assignor, which
representations, warranties and covenants shall survive the Closing, as follows: 

          		        A.       
               Power and Authority. The Assignee has full power and
               authority to enter into, execute and perform this AGREEMENT; to make any
               representation, warranty, covenant or agreement contained herein; to perform
               every act and execute and deliver any and all documents, instruments or
               agreements necessary or appropriate to consummate the transactions contemplated
               by this AGREEMENT. All actions on the part of the Assignee
               necessary to consummate the transactions contemplated by this AGREEMENT
               have been duly taken as required by applicable law, the governing documents of
               the Assignee and any applicable agreements. This AGREEMENT has
               been,  

               

23 

	  	
and
other agreements, documents and instruments required to be executed                and
delivered by the Assignee in accordance with the provisions hereof,
               have been or will be duly executed and delivered by the Assignee and
               constitute (or will at Closing  constitute) the legal, valid and
binding                obligations of the Assignee, enforceable against the Assignee
 in                accordance with their terms. 

          		        B.       
               Organization. The Assignee represents to the
               Assignor that the Assignee is a duly organized and validly
               existing corporation under the laws of the State of Delaware, in good standing
               in all applicable jurisdictions, with full power and authority to enter into
               this AGREEMENT and carry out the terms, conditions and provisions hereof. 

               

          		        C.       
               Litigation. There is no litigation, proceeding or
               governmental investigation pending or threatened in any court, arbitration
               board, administrative agency or tribunal against or relating to the
               Assignee that would prevent or impede the consummation of this
               AGREEMENT by the Assignee. The Assignee does not know of
               and has no reasonable ground to know of any basis for any such litigation,
               proceeding or investigation and the execution and performance of this
               AGREEMENT by it will not result in the default with respect to any
               judgment, order, writ, injunction, decree, rule or regulation of any applicable
               court or administrative agency. 

               

          		        E.       
               Continuation of Representations. The representations,
               warranties and covenants of the Assignee shall be in full force and
               effect as of the Effective Date, and shall, except as otherwise provided
               herein, survive the Closing hereof only for a period of three (3) years
               from and after the Closing Date, unless written notice of a claim is
               given to the Assignee within such three year period, in which event, the
               claims identified within such notice shall survive without time limitation (but
               subject to any statutes of limitation applicable thereto under governing law). 

               

          		        F.       
               Indemnification. The Assignee agrees to and shall
               indemnify and hold the Assignor  harmless from any loss, liability or
               expense, including attorneys’ fees, arising out of the breach of any
               representation, covenant or warranty made by it hereunder. 

               

ARTICLE XI  

“CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF WRI”  

        All
obligations of the Assignee under this AGREEMENT are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions, any
of which may be waived by the Assignee: 

24 

		    A.        Accuracy
of Covenants. Each and every covenant,                representation and
warranty of the Assignor under this AGREEMENT               shall be true
and accurate as of the date when made, shall be deemed to be made                again at
and as of the time of the Closing, and shall then be true and
               accurate in all respects on and as of the Effective Date.  

		    B.        Performance
of Covenants. The Assignor has performed                and
complied with, in all respects, each and every covenant, agreement and
               condition required by this AGREEMENT to be performed or complied
with                prior to or at the Closing and will continue to perform and
comply with                the same thereafter.  

		    C.        Power
and Authority. The Assignor has full power and
               authority to enter into this AGREEMENT and to carry out the
transactions                contemplated hereby.  

		    D.        Binding
Effect. This AGREEMENT is legally binding                upon the
Assignor and is enforceable in accordance with its terms,                subject
only to the usual exceptions thereto relating to bankruptcy and                equitable
principles.  

		    E.        Statutory
Requirements. All applicable and necessary                statutory and
other legal requirements for the valid consummation of the                transactions
contemplated by this AGREEMENT (including, but not limited                to,
compliance with any laws protecting creditors of the Assignor) shall
               have been fulfilled, and any and all necessary third party and regulatory
               approvals, licenses and permits shall have been obtained.  

		    F.        Litigation.
There shall not be any actual or threatened                litigation to restrain or
invalidate the transactions contemplated by this AGREEMENT. No proceedings shall
have been instituted or been threatened                against the Assignor for
the protection of creditors or otherwise for the                relief of the Assignor.  

ARTICLE XII  

“CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF CPR”  

        All
obligations of the Assignor under this AGREEMENT are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions, any
of which may be waived by the Assignor: 

		    A.        Accuracy
of Covenants. Each and every covenant,                representation and
warranty of the Assignee under this AGREEMENT               shall be true
and accurate as of the date when made, shall be deemed to be made                again   

25 

	  	
at
and as of the time of the Closing, and shall then be true and
               accurate in all respects and shall survive the Closing. 

		    B.        Performance
of Covenants. The Assignee has performed                and
complied with, in all respects, each and every covenant, agreement and
               condition required by this AGREEMENT to be performed or complied
with                prior to or at the Closing and will continue to perform and
comply with                the same thereafter.  

		    C.        Power
and Authority. The Assignee has full power and
               authority to enter into this AGREEMENT and to carry out the
transactions                contemplated hereby.  

		    D.        Binding
Effect. This AGREEMENT is legally binding                upon the
Assignee and is enforceable in accordance with its terms,                subject
only to the usual exceptions thereto relating to bankruptcy and                equitable
principles.  

		    E.        Statutory
Requirements. All statutory and other legal                requirements
for the valid consummation of the transactions contemplated by this AGREEMENT (including,
but not limited to, compliance with any laws                protecting creditors of the
Assignee) shall have been fulfilled, and any                and all necessary
third party and regulatory approvals, licenses and permits                shall have been
obtained.  

		    F.        Litigation.
There shall not be any actual or threatened                litigation to restrain or
invalidate the transactions contemplated by this AGREEMENT. No proceedings shall
have been instituted or been threatened                against the Assignee for
the protection of creditors or otherwise for the                relief of the Assignee.  

ARTICLE XIII  

“USE AND
OPERATION OF THE ASSETS BETWEENTHE 
EFFECTIVE DATE AND CLOSING”  

        The
Assignor represents to the Assignee that, as of the Effective Date
and prior to the Closing, the Assets have been used and operated by the
Assignor and will be used and operated as follows: 

		    A.        Property.
The Assignor will use commercially                reasonable efforts to use and
operate the Assets in the ordinary course                of business and cause the
Assets to be kept and maintained in their                current operating
condition and repair, with the exception of reasonable wear,                tear and
obsolescence.  

26 

		    B.        Governmental
Reports. The Assignor will use its best                efforts to duly and
timely file all reports required to be filed with any and                all governmental
authorities, and has and will duly observe and conform to all                laws, rules,
regulations, ordinances, codes, orders, licenses and permits                relating to
or affecting in any material way the Assets.  

		    C.        Liens/Security
Interests. Unless otherwise authorized hereby or                provided for
herein, the Assignor shall not enter into, create, assume or                allow
to exist any new security agreement, lien, encumbrance, mortgage, deed of
               trust, pledge, conditional sale or other title retention agreement,
easement,                covenant, restriction or other burden upon the Assets.  

		    D.        Sales/Transfers.
The Assignor will not sell, lease,                abandon, assign, transfer,
license or otherwise dispose of all or any portion of                the Assets.  

		    E.        Contracts/Agreements.
The Assignor will not enter, assume,                amend, change or modify
any Contract or other agreement, arrangement,                commitment, instrument or
obligation materially relating to or affecting in any                way the Assets or
the Assignor’s ownership thereof.  

		    F.        Defaults.
The Assignor will use its best efforts to                not be in default under
or become in breach of any term or provision of, or                suffer or permit to
exist any condition or event which, after notice or lapse of                time or both,
would constitute a breach of or default under any of the Assignor’s agreements
which would give any other party thereto the                right terminate the same,
claim damages thereunder or impose a lien upon all or                any portion of the
Assets.  

		    G.        Accounting
Matters.Assignee and Assignor               acknowledge and agree
that, notwithstanding the Effective  Date of this                transaction: (i)Assignor shall
continue to possess, operate,                maintain and utilize the Assets between the
Effective Date and the Closing Date, but shall do so in strict accordance
with this AGREEMENT; and (ii)Assignor, as compensation for its
               management of the Assets during such period, shall be entitled to
receive                all revenues, if any, generated by or derived from the ownership
or operation of                the Assets during the period between the Effective
Date and the Closing Date, but shall be solely responsible for any and all
obligations                or liabilities arising from or in connection with the
ownership or operation of                the Assets during the period between the
Effective Date and Closing Date.  

ARTICLE XIV  

“CLOSING”  

        Section
14.1 — Date and Place of Closing. The Closing shall, unless
otherwise agreed to in writing by the Parties, take place on or before July 3,
2003, or such other

27 

date as the Parties hereto
may mutually agree upon (the “Closing Date”) at the offices of WRI in
Casper, Wyoming. 

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

		    A.        Assignor shall
execute, acknowledge and deliver conveyance documents                substantially in the
form set forth in EXHIBIT “E” attached                hereto, and such
other instruments of transfer and assignment necessary to                convey to Assignee the
Assets in the manner contemplated by this AGREEMENT.  

		    B.        WRI shall
wire transfer the Purchase Price (as may be adjusted                pursuant to
the provisions of this AGREEMENT), pursuant to CPR’s instructions.  

		    C.                       The
Assignor shall deliver to Assignee possession of the Assets conveyed
hereunder as provided for in this AGREEMENT and Assignee shall take
possession of such Assets as of the Closing                Date.  

		    D.        Assignor agrees
to and shall resign as the operator of any and all oil                and gas leases
covering the Assets, including wells located thereon. Assignee will become the
operator of the Assets, as well as any                unit agreements covering all
or any portion of the same.  

		    E.        Assignor and
Assignee shall execute, acknowledge, and deliver                transfer orders or
letters in lieu thereof directing all purchasers of                production to make
payments of proceeds attributable to production from the                interest in the
Assets conveyed hereunder to Assignee.  

		    F.                       Not
later than three (3) Business Days prior to Closing Date, CPR shall
prepare and deliver to WRI, based upon the best                information
available to CPR, a preliminary settlement statement                estimating the
Purchase Price after calculating and applying the                adjustments
provided for herein. Assignor and Assignee  shall                execute
such preliminary settlement statement, and the Adjusted Purchase                Price delivered
in accordance therewith shall constitute the dollar amount                to be paid by
Assignee to Assignor at Closing  (the                “ClosingPayment”).  

		    G.        Assignor shall
execute and deliver to Assignee an affidavit of                non-foreign status.  

		    H.        Assignor shall,
at or as promptly as reasonably possible after Closing, provide Assignee with
copies, or originals of relevant                oil and gas leases, contracts,
amendments, opinions, non-compliance notices and                correspondence that are
found in Assignor’s files, and the                operational, engineering,
geological, environmental and marketing files                pertaining to the Assets.
Assignor shall have no obligation to                furnish Assignee any
data or information which is proprietary to third                parties or which Assignor cannot
provide Assignee because of                third-party restrictions on Assignor or
which does not directly pertain                to the Assets. All information and
data shall be furnished 

28 

	  	
as
a matter of                convenience only to Assignee and Assignee’s
reliance on same                shall be at Assignee’s sole risk.  

		    I.                       At
or as promptly as reasonably possible after the Closing, Assignor shall
provide to Assignee a listing showing all proceeds                from production
attributable to the Assets that are held in suspense and                shall
transfer to Assignee all such suspended proceeds. Thereafter, Assignee shall
be responsible for such suspended proceeds.  

        Section
14.3 — Further Assurances. After Closing, Assignor and
Assignee shall execute, acknowledge and deliver all such further conveyances,
transfer orders, notices, assumptions and releases and such other instruments, and shall
take such further actions, as may be necessary or appropriate to assure fully to
Assignee and its successors and assigns all of the Assets and to assure
fully to Assignor and its successors and assigns the assumption of liabilities and
obligations of Assignor by Assignee. Assignee agrees that it will
comply with any and all applicable rules and regulations of any governmental authority
having jurisdiction over the Assets including any such rules and regulations
requiring Assignee to obtain supplemental bonding, letters of credit or other
financial security relating to Assignee’s undivided ownership of the
Assets, whether as operator or non-operator of said Assets, and
Assignee agrees that it shall indemnify and hold Assignor harmless from any
liability resulting from Assignee’s failure to so comply with any such rule or
regulation. 

        Section
14.4 – Recording. Assignee shall, at its own cost, immediately
record the conveyance documents in the appropriate office of the state in which the lands
covered by the conveyance are located, as well as the BLM, and shall immediately
file for and obtain the approval of any federal or state government agencies to the
assignment of the Assets. Assignee shall supply Assignor with a true
and accurate photocopy of the recorded and filed assignment within a reasonable period of
time after its recording and filing. 

        Section
14.5 — Preservation of Books and Records. For a period of five (5)
years after the Closing Date, the party in possession of the originals will retain
the original books, records and files pertaining to this transaction, and will make such
books, records and files available to the other party upon reasonable notice at the
headquarters of the party in possession, at reasonable times and during regular office
hours. 

ARTICLE XV  

“TERMINATION OF
AGREEMENT”  

        This
AGREEMENT may be terminated at any time on or prior to the Closing Date:
(i) by a Party if, at the Closing Date, a Condition to Closing
has not been met or waived pursuant to the terms hereof ; however, a Party may not
terminate under this ARTICLE unless the terminating party has met all Conditions to
Closing contained herein , or any conditions which have not been met have been
waived, and stands ready to Close; or (ii) by mutual agreement. In either event,
the refundable earnest money deposit shall be returned to WRI. In addition and in
the event Closing  

29 

does not occur because of an event
identified in subsection (i) then the terminating party hereunder shall be entitled to
all remedies available at law or in equity, specifically including but not limited to
specific performance, and shall be entitled to recover court costs and attorney’s
fees in addition to any other relief to which such party may be entitled. 

ARTICLE XVI  

“GENERAL
MATTERS”  

        Section
16.1 – Notices. All notices, disclosures or other communications
which are required or permitted hereunder shall be in writing and shall be delivered as
follows:  

	  	
CP RESOURCES, LLC  

Attn: Lynn Peterson, Manager 

1625 Broadway, Suite 330 

Denver, CO 80202 

Phone: (303) 592-8070 

Fax: (303) 592-8071  

	  	
WARREN RESOURCES, INC. 

Attn: Norman F. Swanton, Chief Executive Officer

489 Fifth Avenue, 32nd Floor 

New York, New York 10017 

Phone: (214) 697-9660

Fax: (214) 697-9466 

        Section
16.2 – Survival. All of the representations, warranties, and
agreements contained herein of or by the Parties shall survive the delivery of the
conveyances, without limitation. 

        Section
16.3 – Assignment. Except as otherwise stated herein, this
AGREEMENT and the rights and obligations hereunder shall not be assignable by
either party without prior written consent of the other Party, which shall not be
unreasonably withheld unless the assignment occurs by, merger, reorganization or sale of
all of the Party’s assets. 

        Section
16.4 — Entirety of AGREEMENT and Amendment. This AGREEMENT,
together with all Exhibits that are attached hereto and incorporated herein, constitutes
the entire understanding between the Parties with respect to the subject matter
hereof, superseding all negotiations, prior discussions, representations, and prior
agreements and understandings relating to such subject matter. This AGREEMENT may
be amended, modified, and supplemented only in writing duly executed by Assignor
and Assignee. 

30 

        Section
16.5 – Severability. If any term or other provision of this
AGREEMENT is held invalid, illegal or incapable of being enforced under any rule of
law, all other conditions and provisions of this AGREEMENT shall nevertheless
remain in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in a materially adverse manner with
respect to either party. 

        Section
16.6 — Successors and Assigns. This AGREEMENT shall be binding
upon and shall inure to the benefit of the Parties, and except as otherwise
prohibited, their respective designees, successors and assigns, and nothing contained in
this AGREEMENT, express or implied, is intended to confer upon any other person or
entity any benefits, rights or remedies. 

        Section
16.7 — Governing Law. This AGREEMENT and the legal relations
between the Parties shall be governed by and construed in accordance with the laws
of the State of Wyoming without regard to principle of conflicts of laws otherwise
applicable to such determinations. 

        Section
16.8 — Event of Conflict. In the event of any conflict or
inconsistency between the provisions of this AGREEMENT and those of the Exhibits,
the provisions of this AGREEMENT shall prevail. 

        Section
16.9 — Additional Instruments. The Parties agree to execute any
and all additional instruments, documents and agreements deemed necessary or advisable to
fully effectuate their intent and the purposes of this AGREEMENT. 

        Section
16.10 — Time of The Essence. Time shall be of the essence in the
performance by the Parties of all the terms, conditions and provisions of this
AGREEMENT. 

        Section
16.11 — Waivers. One or more waivers of any covenant, term, condition
or provision of this AGREEMENT shall not be construed as a waiver of a subsequent
breach of the same covenant, term, condition or provision. The consent or approval by any
one of the Parties to or of any act by the other Party requiring such
consent or approval shall not be deemed to waive or render unnecessary the consent to or
approval of any subsequent or similar act. 

        Section
16.12 — Pronouns. All pronouns used in this AGREEMENT shall
include the masculine, feminine and neuter genders, and shall include the singular and
plural, and the context of this AGREEMENT shall be read accordingly, if so
required. 

        Section
16.13 — Headings/Captions. Any title, caption or heading contained in
this AGREEMENT is used for convenience only, shall not be deemed to be a part of
the context of this AGREEMENT, and shall not explain, modify or interpret any of
the terms, conditions or provisions contained herein. 

31 

        Section
16.14 — Amendments. This AGREEMENT shall not be deemed or
construed to be modified, amended, superseded, canceled, altered or waived, in whole or in
part, except by a written instrument or amendment signed by the Parties. 

        Section
16.15 — Counterparts. This AGREEMENT may be executed in
multiple counterparts by each Party and each counterpart shall be identical and
deemed to be an original for all purposes, and all counterparts together shall constitute
one (1) and the same original document. The Assignee is hereby authorized to
assemble the separate counterparts into one (1) document. 

        Section
16.16 — Binding Effect. The terms, conditions and provisions of this
AGREEMENT, and all amendments hereto, if any, shall be binding upon and inure to
the benefit of the Parties, and except otherwise prohibited, their respective
heirs, successors, administrators, personal representatives, executors and assignees. 

        EXECUTED
on the date first set forth above and effective as of the Effective Date upon final
execution. 

	
CP RESOURCES, LLC, a Colorado 

Limited Liability Company

By:  /s/ Lynn A. Peterson
            
       

LYNN A. PETERSON, Manager

Tax ID No. _________________ 
	
WARREN RESOURCES, INC., a 

Delaware Corporation 

By:  
/s/ Ellis G. Vickers          
                        

ELLIS G. VICKERS, Senior Vice President - 

Land Management & Regulatory Affairs

Tax ID No.  ___________________EXHIBIT 4.7  

PURCHASE AND SALE
AGREEMENT 

        This
PURCHASE AND SALE AGREEMENT (“Agreement”), dated this 6th day of December, 2005
by and between Fancher Resources, LLC whose address is 1801 Broadway, Suite 720,
Denver, Colorado 80202 (“Seller”) and Kodiak Oil & Gas (USA), Inc.
whose address is 1625 Broadway, Suite 330, Denver, Colorado 80202 (“Buyer”). 

RECITALS 

        A.              Buyer
and Seller have entered into discussions regarding the sale and purchase           of
Seller’s real and personal property interests in the oil and gas
          properties as more fully described in Section 2 below (the “Assets”).
          Seller owns and desires to sell the Assets to Buyer pursuant to the terms of
          this Agreement.  

        B.              Buyer
has conducted an independent investigation of the nature and extent of the
          Assets and desires to purchase the Assets pursuant to the terms of this
          Agreement.  

AGREEMENT 

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

        1.        Agreement
to Sell and Buy. Seller agrees to sell and convey to Buyer,           and Buyer
agrees to purchase and receive from Seller, the Assets as defined           below.  

        2.    Assets.
The “Assets” are all of Seller’s right, title, and interest
in and to the following:  

          		        a.    
               The oil and gas leases and other leasehold interests described in Exhibit A (the
               “Leases”), all right, title and interest in and to the oil, gas and
               all other hydrocarbons, whether liquid or gaseous (the
               “Hydrocarbons”), in, on or under or that may be produced from the
               lands covered by the Leases (the “Lands”) after the Effective Time and
               all other minerals of whatever nature in, on or under the Leases and Lands. 

               

1 

		        b.     
oil and gas wells located on the Leases and Lands, or lands pooled or
               unitized therewith which include the oil and gas wells described in
Exhibit B                (the “Wells”), all injection and disposal wells on the
Leases or                Lands, and all personal property and equipment associated with
the Wells as of                the Closing Date.  

		        c.                    The
rights, to the extent applicable and transferable, in and to all existing
               and effective unitization, pooling and communitization agreements,
declarations                and orders, to the extent that they relate to or affect any
of the interests                described in Sections 2.a. and b. or the post-Effective
Time production of                Hydrocarbons from the Leases and Lands.  

		        d.                    The
rights, to the extent applicable and transferable, in and to Hydrocarbon
               sales, purchase, gathering, transportation and processing contracts,
operating                agreements, partnership agreements, farmout agreements and other
contracts,                agreements and instruments relating to the interests described
in Sections 2.a.,                b. and c., including without limitation the “Material
Agreements”,                excluding however, any insurance contracts.  

		        e.                   All
of the personal property, fixtures, improvements, permits, licenses,
               approvals, servitudes, rights-of-way, easements and other surface rights
located                on or used in connection with the properties and interests
described in Sections                2.a. through d. to the extent that they are located
on the Leases or Lands and                used in association with the Wells as of the
Closing Date.  

		        f.                    The
files, records, data and information relating to the items described in
               Sections 2.a. through e. maintained by Seller (the “Records”),
but                excluding the following:    (i)  
               all of Seller’s internal appraisals and interpretive data related to the
               Leases and Lands,  (ii)   
               all information and data under contractual restrictions on assignment,  (iii)  all
               information subject to a privilege, (iv)  Seller’s corporate financial,
               employee and general tax records that do not relate to the Assets, and (v) all
               accounting files that do not relate to the Assets. 

               

        3.    Buyer’s
Due Diligence. Subject to Buyer’s agreement to                maintain the
confidentiality of all data and information related to the Assets                and/or
this Agreement, Buyer may commence its “due diligence”               inspection
of the Assets and of Seller’s files (including title and                contract
files, well files, and production files) immediately upon the execution                of
this Agreement.  

        4.    Effective
Time. The purchase and sale of the Assets shall be                effective as of
November 1, 2005 at 7:00 a.m. local time at the site of the                Assets (the
“Effective Time”).  

        5.    Purchase
Price. The purchase price for the Assets shall be                $1,450,000.00
(the “Purchase Price”), payable by Buyer to Seller at                Closing by
cashier’s check or by wire transfer of immediately available                funds.  

		        a.          Deposit.
Upon execution of this Agreement, Buyer shall deliver to Seller                a
deposit, in cash or its equivalent, of $145,000.00 (10% of the Purchase Price)
               (the “Deposit”). The Deposit shall be credited to the Purchase
Price                at Closing, or if the transaction contemplated by this Agreement
does not Close                on or before January 6, 2006, or  

2 

	  	
a
later date mutually agreed upon by Buyer and Seller, (i) and Seller is in default
hereunder and Buyer is in compliance with the terms hereof and has tendered performances
at Closing or Buyer terminates this Agreement as permitted under this Agreement, Seller
shall return the Deposit to Buyer and Buyer shall waive all other legal and/or equitable
remedies for Seller’s default; (ii) and Buyer is in default hereunder and Seller is
in compliance with the terms hereof and has tendered performance at Closing, Seller shall
be entitled to keep the Deposit as liquidated damages and Seller shall waive all other
legal and/or equitable remedies for Buyer’s default. 

		        b.     
Adjustments
to Purchase Price. The Purchase Price shall be adjusted for the
customary pre- and post-Effective Time production revenues and
expenditures attributable to the Assets, including adjustments for
production in tanks at the Effective Time (using the daily gauging reports
prepared by Buyer if Buyer operates the Assets), “take-or-pay” make-up
rights, prepaid expenses, taxes (apportioned as set forth in Section 9),
all revenues received by Buyer or Seller from the sale of oil and gas from
the Assets, all normal and customary costs and burdens associated with the
ownership and operation of the Assets, and such other adjustments as are
usual or customary in the purchase and sale of producing oil and gas
properties, or as are agreed upon by the parties. In addition, at Closing,
the Purchase Price shall be adjusted for the Deposit and may be adjusted
pursuant to Section 6.d. for Title Defects and non-Permitted Encumbrances
discovered in Buyer’s “due diligence” review (the “Closing
Amount”).  

		        c.
    
Preliminary
Settlement Statement. The Purchase Price shall be adjusted at Closing
pursuant to the “Preliminary Settlement Statement” prepared by
Seller and submitted to Buyer on or before five days prior to the Closing
Date for Buyer’s comment and approval. The Preliminary Settlement
Statement shall set forth the Closing Amount and all Purchase Price
adjustments and associated calculations. Buyer shall assume all gas
imbalances and there shall be no adjustment to the Purchase Price for such
imbalances.  

		        
d.      Final
Settlement Statement.  After Closing, the Purchase Price shall be
adjusted pursuant to a Final Settlement Statement prepared by Seller and
delivered by Seller to Buyer on or before 60 days following the Closing
Date, setting forth each adjustment or payment that was not finally
determined as of the Closing and showing the calculation of such
adjustment and the resulting Purchase Price. On or before 15 days after
Buyer’s receipt of Seller’s proposed Final Settlement Statement,
Buyer shall deliver to Seller a “written report” containing Buyer’s
proposed changes to the Final Settlement Statement. Buyer’s failure
to timely deliver to Seller the “written report” shall be deemed
an acceptance by Buyer of the Final Settlement Statement as submitted by
Seller. The parties shall agree with respect to the changes proposed by
Buyer no later than 15 days after receipt of Buyer’s “written
report,” and the date on which the Final Purchase Price is
established shall be called the “Final Settlement Date,” which
in no event shall be later than 90 days after Closing. Any payments due
from one party to the other as a result of the Final Settlement Statement
shall be made within five days of the Final Settlement Date.  

        6.    Title
Matters. The term “Defensible Title” to the           Assets
means such title of Seller that, subject to and except for the Permitted
          Encumbrances: (i) entitles Seller to receive an interest in  

3 

production from the Wells not less
than the net revenue interest (“NRI”) and bear expenses attributable to the
Wells of not more than the working interest (“WI”), all as set forth on Exhibit
B, as to the interest in the properties subject thereto. The allocated value of each of
the Wells relative to the Purchase Price is set forth on Exhibit B. 

		        a.          Permitted
Encumbrances. The Assets shall be transferred to Buyer free and                clear
of all royalties, overriding royalties, production payments, debts, liens,
               mortgages, security interests, contract obligations, claims, and
encumbrances                (“Encumbrances”), except the following (the “Permitted
               Encumbrances”):  

		        i.                         liens
securing amounts not yet owing for taxes and for services of mechanics and
                    materialmen or liens that are being contested in good faith by
Seller;  

		        ii.                         liens
of a form and scope customary in the oil and gas industry under operating
                    agreements and other similar instruments and agreements;  

		        iii.                         operating
agreements, oil and gas sales contracts, the Material Agreements, and
                    other contracts that are usual and customary in the industry;  

		        iv.                         royalties,
overriding royalties, production payments, and other burdens on
                    production from the Assets and in existence on the date of the
assignments from                     Seller’s predecessors in title to Seller or
acquisition of the Asset; and  

		        v.                         other
reasonable Encumbrances agreed to by the parties.  

        b.    Defective
Interest. “Defective Interests” means such Asset                affected by
a Title Defect that reduces the value allocated to the Asset                (“Allocated
Value”) by more than $5,000.00 (net to the Seller’s                interest).
Any defect or contractual condition or event causing Seller’s                title
not to be Defensible Title shall be a “Title Defect.”               Notwithstanding
the foregoing, the following shall not be considered Title                Defects:  

		        i.                   defects
based on failure to record leases issued by the United States of America
               or any state, or any assignments of record title or operating rights in
such                leases, in the real property or other county records of the county in
which such                Asset is located; and  

4 

		        ii.                   defects
asserting a change in WI/NRI based on a change in drilling and spacing
               units, tract allocation or changes in participating areas effective after
               Seller’s acquisition of the affected Asset or an after payout
decrease in                WI or NRI pursuant to a farmin, farmout, or other agreement.  

		        c.     
Notice of Defective Interest. Buyer shall deliver Seller a written “Notice
of Defective Interests” on or before ten days prior to the Closing
Date at 5:00 p.m. at the location of Seller’s offices. Such notice
shall be effective only if it includes a description of and documentation
supporting the basis for the Defective Interest and the value of the
defect and associated computations.  

		        
d.      Defect
Adjustments. If an Asset is affected by Defective Interests, the
Purchase Price shall be reduced by the value of the defect in excess of
the amount determined in Section 6.b. (which amount is a deductible, not a
threshold) (which reduction shall be called a “Defect Adjustment”)
unless, at Seller’s election, (i) the basis for treating such
property as a Defective Interest has been removed by Seller at its sole
cost and expense prior to Closing, or (ii) Buyer agrees to waive the
relevant Title Defect, or (iii) Seller elects to cure such Title Defects
no later than 60 days after Closing. The value of the defect shall be
based on the allocated values set forth in Exhibit B. In no event shall
the total value of the defects for a given Well exceed the allocated value
set forth on Exhibit B for such Well.  

        7.    Closing.
The closing of the transaction contemplated by           this Agreement
(the “Closing” or “Closing Date”) shall be           held on or
before January 6, 2006 at Seller’s offices at 9:00 a.m. or at           such other
time and place as the parties may agree in writing. At Closing, the           following
events shall occur, each being a condition precedent to the others and           each
being deemed to have occurred simultaneously with the others:  

		        a.     
Assignment.
 Seller shall execute, acknowledge and deliver to Buyer an Assignment,
Bill of Sale and Conveyance, a form of which is attached as Exhibit C,
effective as of the Effective Time to Buyer conveying the Assets with no
representations of warranties, express, implied or statutory, except
warranty of title by, through and under Seller, but not otherwise. All
personal property and fixtures are conveyed “AS IS, WHERE IS.” In
addition, Seller shall deliver to Buyer such other assignments, bills of
sale, or deeds necessary to transfer the Assets to Buyer, including any
conveyances on official forms and related documentation necessary to
transfer the Assets to Buyer in accordance with requirements of
governmental regulations.  

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

		        c.     
Purchase
Price.  Buyer shall deliver to Seller the Closing Amount by cashier’s
check or by wire transfer of immediately available funds.  

5 

		        d.     
Letters
in Lieu.  Seller and Buyer shall execute and deliver letters in lieu
directing all purchasers of production to pay Buyer the proceeds
attributable to production from the Assets from and after the Effective
Time.  

		        e.     
Insurance
and Bonding. Buyer shall deliver to Seller evidence of appropriate
State, federal, tribal and local bonds relating to ownership of the Assets
after the Closing and certificates of insurance evidencing that Buyer has
obtained appropriate insurance covering the Assets.  

		        
f.      Operations.
 On all Assets operated by Seller, Seller shall resign as operator of
the Assets and vote for Buyer as the operator of the Assets as of the
Effective Time and provide Buyer evidence of such at Closing.  

        8.    Apportionment
of Production Revenues and Expenses. For the purposes                of the
Preliminary Settlement Statement and the Final Settlement Statement, all
               revenues, obligations, liabilities and expenses associated with the Assets
shall                be apportioned as of the Effective Time between Buyer and Seller,
with Buyer                assuming all post-Effective Time revenues and expenses and
Seller retaining all                pre-Effective Time revenues and expenses. The Final
Settlement Statement shall                be the final settlement of all revenue and
expense matters between the parties.                Accordingly, after the date of the
Final Settlement Statement, Buyer expressly                assumes all obligations and
liabilities for all production, revenues, costs,                expenses and taxes
attributable to the Assets post-Effective Time.  

        9.    Taxes.
All “Taxes” (including ad valorem, property, production,
               excise, net proceeds, severance and other similar obligations assessed
against                the Assets or based on or measured by the ownership of the Assets
or production                therefrom) shall be prorated between Seller and Buyer as of
the Effective Time;                provided, however, that any Taxes determined by the
value of any production                shall be deemed to be attributable to the period
during which such Taxes are                assessed and not attributable to the year in
which the production occurred.  

        10.    Buyer’s
Investigation of the Assets. Buyer represents that it is                familiar
with the aspects of owning oil and gas properties and conducting
               operations on such properties. Buyer will conduct an independent
investigation                of the nature and extent of the Assets and the Lands where
the Assets are                located and satisfy itself as to their physical and
environmental condition,                both surface and subsurface. Buyer acknowledges
that the Assets have been                utilized for the purpose of exploration,
production and development of oil and                gas, and that Buyer has been
informed and is aware that oil and gas producing                formations can contain
naturally occurring radioactive material                (“NORM”) and that some
oil field production equipment and/or                facilities may contain asbestos
and/or NORM. If Buyer determines from the                results of said inspection, and
based on credible and probative evidence                substantiated in good faith by
Buyer’s environmental experts, that the                physical or environmental
condition of the Assets are not in compliance with                applicable
Environmental Laws (as defined hereafter) and are in access of                $25,000.00,
net to Seller’s account, Buyer or Seller may terminate this                Agreement
as to that particular Asset, by giving the other party written notice
               within five (5) days prior to Closing. If Buyer determines that such
               non-compliance is more than $12,500.00, net to Seller’s account,
Seller                shall either correct the condition to bring the Asset into
compliance with                applicable Environmental Laws or deduct the cost to bring
the Asset into                compliance from the Purchase Price.  

6 

        Buyer
acknowledges that the Assets are subject to certain Environmental Laws regarding the
environmental condition of the Lands. For purposes of this Agreement “Environmental
Laws” shall mean all existing federal, state or local laws, rules, orders, directives
or regulations, including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Resources Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
1980, and the Hazardous and Solid Waste Amendments of 1984. 

        11.    Assumption
of Liabilities and Obligations by Buyer. Upon Closing,           Buyer shall
assume and pay, perform, fulfill and discharge all claims, costs,           expenses,
liabilities and obligations accruing or relating to the owning,           developing,
exploring, operating or maintaining of the Assets or the producing,
          transporting and marketing of Hydrocarbons from the Assets, relating to periods
          before, on and after the Effective Time, including without limitation,
          environmental obligations and liabilities, the obligation to plug and abandon
          all Wells and reclaim all Well sites, all obligations arising under the
Material           Agreements and other agreements covering or relating to the Assets
          (collectively, the “Assumed Liabilities”). With the exception of
          environmental obligations and liabilities, Seller shall remain responsible and
          liable for said Assumed Liabilities for a period of 180 days after the Closing
          Date.  

        12.    Buyer’s
Indemnification and Release of Seller. Buyer shall           defend, indemnify,
save and hold harmless Seller, its officers, directors,           shareholders,
employees, representatives, agents, successors and assigns,           forever, from and
against all Losses which arise from or in connection with the           Assumed
Liabilities or Buyer’s ownership or operation of the Assets before,           on and
after the Effective Time. However, this indemnity does not apply for 180           days
after the Closing Date for Losses connected with Buyer’s Assumed
          Liabilities before the Effective Time where Seller remains liable.
          “Losses” shall mean any actual loss, cost, expense, liability,
damage,           demands, suits, sanctions of every kind and character including
reasonable fees           and expenses of attorneys, technical experts and expert
witnesses reasonably           incident to matters indemnified against. Buyer shall be
deemed to have released           Seller at the Closing from any Losses for which Buyer
has agreed to indemnify           Seller hereunder.  

7 

        13.
    Miscellaneous.  

                
a.     Seller’s
Representation.  Recognizing that Seller in certain circumstances is a
non-operating working interest owner of some of the Assets, (i) to the best of
Seller’s knowledge, Seller has not received written notice of any
proceeding, action, suit or claim before any court or government agency
involving Seller and the Assets, pending or threatened, that if adversely
determined would, individually or in the aggregate, have a material adverse
effect on the Assets, or that would materially prohibit the consummation of the
transaction contemplated by this Agreement; and (ii) to the best of
Seller’s knowledge, there are no proceedings, actions, suits or claims
before any court or agency involving Seller or the Assets, that if adversely
determined would, individually or in the aggregate, have a material adverse
effect on the Assets; (iii) to the best of Seller’s knowledge the Assets
are not subject to any preferential rights to purchase; (iv) to the best of
Seller’s knowledge all royalties and other payments due on Seller’s
interest have been paid, and; (v) to the best of Seller’s knowledge, there
are no environmental violations, including without limitation the disposal,
discharge or existence of solid wastes, pollutants, hazardous substances or oil
spills on the Assets.  

                
b.     Survival
of Provisions.  The representations and warranties contained in this
Agreement shall survive Closing for a period of 180 days.  

                
c.     Expenses.
 Except as otherwise specifically provided, all fees, costs and expenses
incurred by Buyer or Seller in negotiating this Agreement or in consummating
the transactions contemplated by this Agreement shall be paid by the party
incurring the same.  

                
d.     Notices.
 All notices under this Agreement shall be in writing and addressed as set
forth below. 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 mailed, three business days after mailing,
certified mail, return receipt requested, or (iii) if sent by overnight
courier, one day after sending. All notices shall be addressed as follows:  

	  	
If to Seller: 

Fancher Resources, LLC 

1801 Broadway, Suite 720 

Denver, Colorado 80202

Attn: George H. Fancher, Jr. 

Telephone: 303-296-6600 

Fax: 303-296-2433 

	  	
If to Buyer:

Kodiak Oil & Gas (USA), Inc. 

1625 Broadway, Suite 330 

Denver, Colorado 80202 

Attn: Lynn A. Peterson

Telephone: 
303-592-8075 

Fax: 303-592-8071 

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

                
e.     Amendments.
 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.  

                
f.     Assignment.
 Buyer shall not assign all or any portion of its respective rights or
delegate all or any portion of its respective duties hereunder unless it
continues to remain primarily liable for the performance of its obligations
hereunder.  

                
g.     Announcements.
 Seller and Buyer shall consult with each other with regard to all press
releases and other announcements issued after the date of this Agreement and
prior to the Closing Date concerning this Agreement or the transactions
contemplated hereby and, except as may be required by applicable laws or the
applicable rules and regulations of any governmental agency or stock exchange,
neither Buyer nor Seller shall issue any such press release or other publicity
without the prior written consent of the other party, which consent shall not
be unreasonably withheld.  

                
h.     Governing
Law.  This Agreement and the transactions contemplated hereby and any
arbitration or dispute resolution conducted pursuant hereto shall be construed
in accordance with, and governed by, the laws of the State of Colorado.  

                
i.     Entire
Agreement.  This Agreement constitutes the entire understanding among the
parties, their respective partners, shareholders, officers, directors and
employees with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and understandings
relating to such subject matter.  

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

9 

                
k.    Disclaimer
of Representations and Warranties.  The parties hereto each           disclaim all
liability and responsibility for any other representation,           warranty, statements
or communications (orally or in writing) to any other party           wherever and
however made, including, but not limited to, those made during any
          negotiations. Without limiting the generality of the foregoing, neither party
          makes any representation or warranty as to (a) the amount, value, quality or
          deliverability of petroleum, natural gas or other reserves attributable to the
          Assets or (b) any geological, engineering or other interpretations of economic
          valuation. THE ASSETS ARE SOLD WITHOUT ANY WARRANTY, EXPRESS, IMPLIED OR
          STATUTORY, EXCEPT WARRANTY OF TITLE BY, THROUGH AND UNDER SELLER. ALL TANGIBLE
          PERSONAL PROPERTY INCLUDED IN THE ASSETS IS SOLD “AS IS, WHERE IS,”          AND
SELLER MAKES NO, AND DISCLAIMS ANY, REPRESENTATION OR WARRANTY, WHETHER           EXPRESS
OR IMPLIED, AND WHETHER BY COMMON LAW, STATUTE, OR OTHERWISE, AS TO (i)
          MERCHANTABILITY, (ii) FITNESS FOR ANY PARTICULAR PURPOSE, (iii) CONFORMITY TO
          MODELS OR SAMPLES OF MATERIALS AND (iv) CONDITION. The parties agree that
          the preceding disclaimers of warranty are “conspicuous” disclaimers
          for purposes of any applicable law, rule or order.  

                
1.    1031
Exchange.  Seller reserves the right, at or prior to Closing, to           assign its
rights under this Agreement with respect to all or a portion of the           Purchase
Price, and that portion of the Assets associated therewith (“1031           Assets”),
to a Qualified Intermediary (“QI”) (as that term is           defined in
Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations) to           accomplish this
Closing, in whole or in part, in a manner that will comply with           the
requirements of a like-kind exchange (“Like-Kind Exchange”)           pursuant
to Section 1031 of the Internal Revenue Code of 1986, as amended           (“Code”).
If Seller so elects, Seller may assign its rights under this           Agreement to the
1031 Assets to the QI. Buyer hereby (i) consents to           Seller’s assignment of
its rights in this Agreement with respect to the           1031 Assets, and (ii) if such
assignment is made, agrees to all or a portion of           the Purchase Price into the
qualified trust account at Closing as directed in           writing by Seller. Seller and
Buyer acknowledge and agree that a whole or           partial assignment of this
Agreement to a QI shall not release either Party from           any of its respective
liabilities and obligations to each other or expand any           such respective
liabilities or obligations under this Agreement. Neither Party           represents to
the other that any particular tax treatment will be given to           either Party as a
result of the Like-Kind Exchange. Buyer shall not be obligated           to pay any
additional costs or incur any additional obligations in its sale of           the Assets
if such costs are the result of the other Seller’s Like-Kind           Exchange, and
Seller shall hold harmless and indemnify the Buyer from and           against all claims,
losses and liabilities, if any resulting from a Like-Kind           Exchange.  

10 

       Executed this 7th day of
December, 2005. 

	  	
SELLER:

FANCHER RESOURCES, LLC 

/s/ George H. Fancher

George H. Fancher, Jr. Manager 

	  	
BUYER

KODIAK OIL & GAS (USA), INC. 

/s/ Lynn A. Peterson

Lynn A. Peterson President  

	
STATE OF COLORADO

         CITY AND

COUNTY OF DENVER
	
)

)

)	

ss.

 

        The
foregoing instrument was acknowledged before me this 7th day of December, 2005
by George H. Fancher, Jr., as Manager of Fancher Resources, LLC, a Colorado limited
liability company, on behalf of the company. 

        Witness
my hand and official seal. 

        My
commission expires: ______________________________ 

____________________________

Notary Public

	
STATE OF COLORADO

         CITY AND

COUNTY OF DENVER
	
)

)

)	

ss.

 

        The
foregoing instrument was acknowledged before me this 7thn day of December, 2005
by Lynn A. Peterson as President of Kodiak Oil & Gas (USA), Inc., a Colorado
corporation, on behalf of the company. 

        Witness
my hand and official seal. 

        My
commission expires: ______________________________ 

____________________________

Notary Public

EXHIBIT C 

ASSIGNMENT, BILL OF
SALE AND CONVEYANCE 

        THIS
ASSIGNMENT, BILL OF SALE AND CONVEYANCE (“Assignment”), dated effective
November 1, 2005 at 7:00 a.m. local time (the “Effective Time”), is from
Fancher Resources, LLC, a Colorado limited liability company whose address is 1801
Broadway, Suite 720, Denver, Colorado 80202 (“Assignor”) to Kodiak Oil
& Gas (USA), Inc., a Colorado Corporation, whose address is 1625
Broadway, Suite 330, Denver, Colorado 80202 (“Assignee”). 

        For
$10.00 and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Assignor hereby sells, assigns, transfers, grants, bargains, conveys
to Assignee all of Assignor’s right, title and interest, in and to the following (all
of which are called the “Assets”): 

     
                1.    
          The oil and gas leases and other leasehold interests described in Exhibit A (the
          “Leases”), all right, title and interest in and to the oil, gas and
          all other hydrocarbons, whether liquid or gaseous (the
          “Hydrocarbons”), in, on or under or that may be produced from the
          lands covered by the Leases (the “Lands”) after the Effective Time and
          all other minerals of whatever nature in, on or under the Leases and Lands, or
          described in Exhibit A. 

     
                2.    
          The oil and gas wells located on the Leases and Lands, or lands pooled or
          unitized therewith which include the oil and gas wells (the “Wells”),
          all injection and disposal wells on the Leases or Lands, and all personal
          property and equipment associated with the Wells as of the Effective Time. 

     
                3.    
          The rights, to the extent transferable, in and to all existing and effective
          unitization, pooling and communitization agreements, declarations and orders, to
          the extent that they relate to or affect any of the interests described in
          Paragraphs 1 and 2 or the post-Effective Time production of Hydrocarbons from
          the Leases and Lands. 

     
                4.    
          The rights, to the extent transferable, in and to Hydrocarbon sales, purchase,
          gathering, transportation and processing contracts, operating agreements,
          partnership agreements, farmout agreements and other contracts, agreements and
          instruments relating to the interests described in Paragraphs 1, 2 and 3,
          excluding however, any insurance contracts. 

     
                5.    
          All of the personal property, fixtures, improvements, permits, licenses,
          approvals, servitudes, rights-of-way, easements and other surface rights located
          on or used in connection with the properties and interests described in
          Paragraphs 1 through 4, to the extent that they are located on the Leases or
          Lands and used in association with the Wells as of the Effective Time. 

     
                6.    
          The files, records, data and information relating to the items described in
          Paragraphs 1 through 5, maintained by Assignor (the “Records”), but
          excluding the following:   (i) 
          all of Assignor’s internal appraisals and interpretive data related to the
          Leases, Lands and Wells, (ii) 
          all information and data under contractual restrictions on assignment, (iii) all
          information subject 

1 

to a privilege, (iv)  Assignor’s
corporate financial, employee and general tax records that do not relate to the Assets,
and (v) all accounting files that do not relate to the Assets. 

        TO
HAVE AND TO HOLD the Assets unto Assignee and its successors and assigns forever. 

        This
Assignment is made and accepted expressly subject to the following terms and conditions: 

     
                a.    
          THIS ASSIGNMENT IS MADE WITHOUT WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
          STATUTORY, EXCEPT WARRANTY OF TITLE BY, THROUGH AND UNDER ASSIGNOR. ASSIGNOR
          EXPRESSLY DISCLAIMS AND NEGATES ANY WARRANTY AS TO THE CONDITION OF ANY PERSONAL
          PROPERTY, EQUIPMENT, FIXTURES AND ITEMS OF MOVABLE PROPERTY COMPRISING ANY PART
          OF THE ASSETS, INCLUDING (i) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY
          OR CONDITION, (ii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR
          PURPOSE, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR
          SAMPLES OF MATERIALS, (iv) ANY RIGHTS OF ASSIGNEE UNDER APPLICABLE STATUTES TO
          CLAIM DIMINUTION OF CONSIDERATION, AND (v) ANY CLAIM BY ASSIGNEE FOR DAMAGES
          BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, IT BEING EXPRESSLY UNDERSTOOD BY
          ASSIGNEE THAT SAID PERSONAL PROPERTY, FIXTURES, EQUIPMENT, AND ITEMS ARE BEING
          CONVEYED TO ASSIGNEE “AS IS,” “WHERE IS,” WITH ALL FAULTS,
          AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR; PROVIDED, HOWEVER, THIS
          PARAGRAPH a SHALL NOT LIMIT ANY OF ASSIGNOR’S INDEMNITY OBLIGATIONS OR
          ASSIGNOR’S REPRESENTATIONS UNDER THE PURCHASE AND SALE AGREEMENT DATED
          EFFECTIVE NOVEMBER 1, 2005 BETWEEN ASSIGNOR AND ASSIGNEE AND THE AGREEMENTS AND
          DOCUMENTS EXECUTED PURSUANT THERETO (COLLECTIVELY, THE “PURCHASE
          AGREEMENT”). 

     
                b.    
          To the extent permitted by law, Assignee shall be subrogated to Assignor’s
          rights in and to representations, warranties and covenants given with respect to
          the Assets. Assignor hereby grants and transfers to Assignee, its successors and
          assigns, to the extent so transferable and permitted by law, the benefit of and
          the right to enforce the covenants, representations and warranties, if any,
          which Assignor is entitled to enforce with respect to the Assets, but only to
          the extent not enforced by Assignor. Assignee shall assume all past and future
          rights of Assignor for any gas imbalances. 

                     c.    
          Assignee assumes and agrees to pay, perform, fulfill and discharge all claims,
          costs, expenses, liabilities and obligations accruing or relating to the owning,
          developing, exploring, operating or maintaining of the Assets or the producing,
          transporting and marketing of Hydrocarbons from the Assets, relating to periods
          before, on and after the Effective Time, including, without limitation,
          environmental obligations and liabilities, the obligation to plug and abandon
          all Wells and reclaim all Well sites, and all obligations arising under the
          Material Agreements and other agreements covering or relating to the Assets, all
          as more particularly set forth in the Purchase 

2 

Agreement and subject to
Assignee’s obligations, including without limitation, Assignee’s indemnity
obligations under the Purchase Agreement. With the exception of environmental obligations
and liabilities, Assignor shall remain responsible and liable for said liabilities for a
period of 180 days after the Closing Date. 

                     d.    
          The references herein to liens, encumbrances, burdens, defects and other matters
          shall not be deemed to ratify or create any rights in third parties or merge
          with, modify or limit the rights of Assignor or Assignee, as between themselves,
          as set forth in the Purchase Agreement or other documents executed in connection
          therewith. 

                     e.    
          Unless provided otherwise, all recording references in the Exhibits hereto are
          to the official real property records of the county in which the Assets are
          located. 

                     f.    
          Separate governmental form assignments of the Assets may be executed on
          officially approved forms by Assignor to Assignee, in sufficient counterparts to
          satisfy applicable statutory and regulatory requirements. Those assignments
          shall be deemed to contain all of the exceptions, reservations, warranties,
          rights, titles, power and privileges set forth herein as fully as though they
          were set forth in each such assignment. The interests conveyed by such separate
          assignments are the same, and not in addition to, the interest in the Assets
          conveyed herein. 

                     g.    
          This Assignment binds and inures to the benefit of Assignor and Assignee and
          their respective successors and assigns. 

                     h.    
          This Assignment may be executed in any number of counterparts, and by different
          parties in separate counterparts, each of which shall be deemed to be an
          original instrument, but all of which together shall constitute but one
          instrument. 

3 

        EXECUTED
on the dates contained in the acknowledgment of this instrument, to be effective for all
purposes as of the Effective Time. 

	  	
ASSIGNOR

FANCHER RESOURCES, LLC 

__________________________

George H. Fancher, Jr.

Manager

ASSIGNEE

KODIAK OIL & GAS (USA), INC. 

__________________________
Lynn A. Peterson

President 

4 

Acknowledgments  

	
STATE OF COLORADO

         CITY AND

COUNTY OF DENVER
	
)

)

)	

ss.

 

        The
foregoing instrument was acknowledged before me this 7th day of December, 2005
by George H. Fancher, Jr., as Manager of Fancher Resources, LLC, a Colorado limited
liability company, on behalf of the company. 

        Witness
my hand and official seal. 

        My
commission expires: ____________________________ 

____________________________

Notary Public

	
STATE OF COLORADO

         CITY AND

COUNTY OF DENVER
	
)

)

)	

ss.

 

        The
foregoing instrument was acknowledged before me this 7thn day of December, 2005
by Lynn A. Peterson as President of Kodiak Oil & Gas (USA), Inc., a Colorado
corporation, on behalf of the company. 

        Witness
my hand and official seal. 

        My
commission expires: ____________________________ 

____________________________

Notary Public

LIST OF EXHIBITS  

	
Exhibit A 	
Leases 

	
Exhibit B 	
Wells and Allocated Values

	
Exhibit C 	
Form of Assignment

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