Document:

FIRST AMENDMENT TO
                              AMENDED AND RESTATED
                            AGREEMENT OF PARTNERSHIP
                       PW/GEODYNE NPI PARTNERSHIP P-2

       The Amended and  Restated  Agreement of  Partnership  of  PW/Geodyne  NPI
Partnership  P-2 dated  February  9, 1989 (the  "Agreement")  is hereby  amended
effective March 1, 1993, as follows:

       A.  The first  sentence of Section 2.1 is hereby deleted and replaced by
the following provision:

       "The NPI  Partnership  shall be  conducted  under  the name  Geodyne  NPI
Partnership P-2."

       B.  All references in the Agreement to "PW/Geodyne NPI Partnership  P-2"
are hereby changed to "Geodyne NPI Partnership P-2".

       C.  The third  sentence of Section 2.1 is hereby deleted and replaced by
the following provision:

       "The office and principal place of business of the NPI Partnership  shall
be c/o Geodyne Energy Company, Two West Second, Tulsa, Oklahoma 74103."

       D.  The  name of the  "General  Partner"  and the  "Limited  Partnership"
reflected   in  Article   One  has  been   changed   from   "PaineWebber/Geodyne
Institutional/Pension   Energy  Income  P-2  Limited  Partnership"  to  "Geodyne
Institutional/Pension  Energy Income P-2 Limited Partnership." All references in
the Agreement to the name of the "General Partner" and the "Limited Partnership"
are hereby  changed to reflect  this name  change.  This change  reflects a name
change only and not a change of entity.

       In all other respects the Agreement is hereby ratified and affirmed.

 DATED:    February 26, 1993

                                          Managing Partner:

                                          Geodyne Energy Company

                                          /s/ Michael E. Luttrell
                                          -----------------------
                                          Michael E. Luttrell
                                          Executive Vice President

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                                          General Partner:

                                          Geodyne Institutional/Pension
                                          Energy Income P-2
                                          Limited Partnership

                                          By: Geodyne Properties, Inc.,
                                              General Partner

                                          By: /s/ Michael E. Luttrell
                                             ----------------------------
                                              Michael E. Luttrell,
                                              Executive Vice President

                                      -2-SECOND AMENDMENT TO
                              AMENDED AND RESTATED
                            AGREEMENT OF PARTNERSHIP
                          GEODYNE NPI PARTNERSHIP P-2

      This Second Amendment to Amended and Restated  Agreement of Partnership of
PW/Geodyne  NPI  Partnership  P-2 (the  "Partnership")  is  entered  into by and
between  Geodyne  Resources,  Inc.  ("Resources"),  a Delaware  corporation,  as
successor Managing Partner, and Geodyne  Institutional/Pension Energy Income P-2
Limited Partnership ("Geodyne P-2"), as General Partner.

      WHEREAS,  on September 29, 1988,  Geodyne  Energy Company  ("Energy"),  as
Managing Partner, and Geodyne P-2, as General Partner, executed and entered into
that certain  Agreement of Partnership of PW/Geodyne  NPI  Partnership  P-2 (the
"Agreement"); and

      WHEREAS,  on February 9, 1989, Energy and Geodyne P-2 executed and entered
into that certain  Amended and Restated  Agreement of  Partnership of PW/Geodyne
NPI Partnership P-2 (the "Amended Agreement"); and

      WHEREAS,  on February 26, 1993,  but effective  March 1, 1993,  Energy and
Geodyne P-2 executed and entered  into that certain  First  Amendment to Amended
Agreement,  whereby it changed (i) the name of the Partnership  from "PW/Geodyne
NPI Partnership  P-2" to "Geodyne NPI Partnership  P-2", (ii) the address of the
Partnership's  principal  place of  business,  and  (iii)  the  address  for the
Partnership's agent for service of process; and

      WHEREAS,  Section 10.1 of the Amended Agreement provides that the managing
partner of the partnership (the "Managing Partner") may, without prior notice or
consent of any other  Partner (as defined in the Amended  Agreement),  amend any
provision of this Amended Agreement if, in its opinion,  such amendment does not
have a material  adverse effect upon the Limited  Partnership (as defined in the
Amended Agreement); and

      WHEREAS,   Energy  merged  with  and  into  Geodyne   Resources,   Inc.
("Resources"), its parent corporation, effective June 30, 1996; and

      WHEREAS,  Section 6.1 of the Amended Agreement  provides that the Managing
Partner  may assign its  Managing  Partner  Interest  to any entity  which shall
become a successor Managing Partner,  if such assignment is in connection with a
merger; and

      WHEREAS,  as a result of the  merger of  Energy  with and into  Resources,
ownership of the Managing  Partner  Interest in the  Partnership  is assigned to
Resources by operation of law; and

      WHEREAS,  as a result of the  merger of  Energy  with and into  Resources,
Resources  has  now  succeeded  to  the  position  of  Managing  Partner  of the
Partnership; and

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      WHEREAS,  Resources,  as  Managing  Partner,  desires to amend the Amended
Agreement in order to reflect Resources as the new Managing Partner.

      NOW,  THEREFORE,  in  consideration  of  the  covenants,   conditions  and
agreements herein contained, the parties hereto hereby agree as follows:

       All  references in the Amended  Agreement to Geodyne Energy Company as
       Managing  Partner  are hereby  amended to  reflect,  instead,  Geodyne
       Resources, Inc. as Managing Partner.

       IN WITNESS  WHEREOF,  the parties hereto have hereunto set their hands as
of the 1st day of July, 1996.

                                     Geodyne Energy Company
                                     by Geodyne Resources, Inc.
                                     as successor by merger

                                     By:  /s/ Dennis R. Neill
                                          -------------------------------
                                          Dennis R. Neill
                                          President

                                     Geodyne Resources, Inc.
                                     as Managing Partner

                                     By:  /s/ Dennis R. Neill
                                          -------------------------------
                                          Dennis R. Neill
                                          President

                                     Geodyne Institutional/Pension
                                     Energy Income P-2 Limited
                                     Partnership

                                     By:  /s/ Dennis R. Neill
                                          -------------------------------
                                          Dennis R. Neill
                                          President

                                      -2-PW/GEODYNE
                              NPI PARTNERSHIP P-3
                            AGREEMENT OF PARTNERSHIP

       Agreement of  Partnership,  dated as of February 13, 1989,  among Geodyne
Energy   Company,   a   Delaware   corporation,   as   Managing   Partner,   and
PaineWebber/Geodyne Institutional/Pension Energy Income Limited Partnership P-3,
an Oklahoma limited partnership, as General Partner.

       Whereas,  the parties hereto desire to form a general  partnership  under
the Uniform Partnership Act of the State of Oklahoma;

       Now,  Therefore,  in  consideration of the mutual promises and agreements
made  herein,  the  parties,  intending  to be legally  bound,  hereby  agree as
follows:

                                   ARTICLE ONE
                                  Defined Terms

       The  defined  terms used in this  Agreement  shall,  unless  the  context
otherwise  requires,  have the  meanings  specified  in this  Article  One.  The
singular  shall  include the plural and the  masculine  gender shall include the
feminine,  the neuter and vice versa, as the context requires. Any terms used in
this Agreement  which are defined in the Limited  Partnership  Agreement and are
not otherwise defined herein shall have the respective meanings set forth in the
Limited Partnership Agreement.

       "Accountants"  shall mean Arthur Young & Company or such other nationally
recognized firm of independent  certified public accountants as shall be engaged
from time to time by the Managing Partner for the NPI Partnership.

       "Acquisitions  Fee" shall mean the fee paid by the NPI Partnership to the
Managing Partner pursuant to Section 5.2(1) of this Agreement in connection with
the NPI Partnership's acquisition of Net Profits Interests and Royalties and the
conduct of its business operations.

       "Acquisition Reserve Report" shall mean a Hydrocarbon reserve report made
available to the NPI Partnership prepared by a qualified  independent  petroleum
engineering  firm  acceptable  to the Managing  Partner in  connection  with the
proposed  acquisition of a Net Profits Interest or Royalty,  which shall include
statements (i) identifying  reserves of Hydrocarbons  referred to in such report
as Proved Developed Producing Reserves,  Proved Developed Non-Producing Reserves
or  Proved  Undeveloped  Reserves,  as the  case  may be,  and  identifying  all
computations  and  determinations  made for purposes of such report,  including,
without  limitation,  the present  and future  prices for  Hydrocarbons  and the
present and future costs to produce and develop such  Hydrocarbons  used in such
computations and  determinations,  (ii) with respect to the determination of the
nature and extent of the reserves of Hydrocarbons reflected in such report, that
the  collection,  analysis and  evaluation of the basic physical data upon which
such  determination  is  based  were  performed  by  such  qualified   petroleum
engineering  firm or if such data were  collected by another  Person,  that such
qualified petroleum engineering firm has made inquiry with respect

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<PAGE>

to the methods  employed in such  collection,  (iii)  specifying  the respective
amounts of Proved Developed Producing Reserves,  Proved Developed  Non-Producing
Reserves,  or Proved Undeveloped Reserves contained therein, and (iv) indicating
such  qualified  petroleum  engineering  firm's  opinion  as to  the  respective
estimated  present  values of future net  revenues of each  category of reserves
contained  therein  determined in accordance  with criteria  satisfactory to the
Managing Partner and otherwise in accordance with sound engineering and industry
practices,  including  such standards and practices as may be promulgated by the
Society  of  Petroleum  Engineers  of  the  American  Institute  of  Mining  and
Metallurgical Engineers. Any such report may state that such qualified petroleum
engineering  firm  expresses no opinion and makes no warranty or  representation
with respect to the proposed acquisition of such Net Profits Interest or Royalty
and that such  qualified  petroleum  engineering  firm is relying on information
furnished  by  the  Managing  Partner  as  to  the  historical  volumes  of  any
Hydrocarbons  actually produced and as to the proposed ownership interest of the
NPI Partnership in such Net Profits Interest or Royalty.

       "Act" shall mean the Oklahoma  Uniform  Partnership  Act, as amended from
time to time.

       "Activation" or "Activated" shall mean the date on which (i) with respect
to the Limited Partnership, the Depositary, on behalf of the Unit Holders, shall
have contributed the Unit Holders' Subscription to the Limited Partnership,  and
(ii)  with  respect  to the NPI  Partnership,  the  date on  which  the  Limited
Partnership shall have made its Capital Contribution to the NPI Partnership.

       "Affiliate"  shall mean, when used with reference to a specified  Person:
(a) any Person directly or indirectly owning, controlling, or holding with power
to vote  10% or more  of the  outstanding  voting  securities  of the  specified
Person;  (b) any Person 10% or more of whose  outstanding  voting securities are
directly  or  indirectly  owned,  controlled,  or held with power to vote by the
specified Person; (c) any Person directly or indirectly controlling,  controlled
by, or under common control with, the specified Person; (d) any Person who is an
officer,  director,  partner or trustee of, or serves in a similar capacity with
respect to, the specified Person or of which the specified Person is an officer,
director,  partner or trustee,  or with  respect to which the  specified  Person
serves in a similar  capacity;  and (e) any relative or spouse of the  specified
Person.  Notwithstanding  the  foregoing,  no  Person  shall be  deemed to be an
Affiliate  solely by reason of its ownership of  depositary  units of or limited
partnership interests in a limited partnership.

       "Affiliated  Program" shall mean a drilling or income program (whether in
the  form of a  limited  partnership,  general  partnership,  joint  venture  or
otherwise) interests in which were offered (but not necessarily  exclusively) to
persons or entities  not  engaged in a trade or business  within the oil and gas
industry (other than by virtue of its  participation  in an Affiliated  Program)
and of which the  Managing  Partner or an  Affiliate  thereof  serves as general
partner, venturer, sponsor or manager.

      "Agreement"  shall mean this Agreement of Partnership as amended from time
to time.

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       "Capital Account" shall mean, as to any Partner, an account maintained on
the books of the NPI  Partnership  in accordance  with the provisions of Section
5.3D below.

       "Capital  Contribution"  shall mean the total amount of money contributed
to the NPI  Partnership  by all  Partners  or any class of  Partners  or any one
Partner  (or  the  predecessor  holders  of the  Interests  of such  Partner  or
Partners),  as the context requires,  net of any refunds pursuant to Section 3.4
of this Agreement.

       "Code" shall mean the Internal  Revenue Code of 1986,  as amended (or any
corresponding provisions of succeeding law).

       "Consent"  shall  mean the  consent  of a Person,  given as  provided  in
Section 11.1, to do the act or thing for which the consent is solicited,  or the
act of granting such consent, as the context may require.

       "Depositary  Unit"  shall  mean an  increment  of the  attributes  of the
Interest of the  Depositary  as the Limited  Partner of the Limited  Partnership
that is assigned to a Unit Holder.

       "Direct  Administrative Costs" shall mean the actual and necessary direct
costs  attributable to services provided to the NPI Partnership by parties other
than  the  Managing  Partner  or its  Affiliates,  whether  incurred  by the NPI
Partnership  directly  or incurred by the  Managing  Partner or its  Affiliates,
including the annual audit fees, legal fees and expenses, the costs of reviewing
tax returns and  reports,  the cost of reserve  reports  (other than the cost of
Acquisition  Reserve Reports,  Engineering Audit Letters and evaluations thereof
conducted  on behalf of a NPI  Partnership)  prepared by  independent  petroleum
engineering  firms,  and all other such costs  directly  incurred  by or for the
benefit of the NPI Partnership.

       "Distributable  Cash" shall mean,  with respect to the NPI  Partnership's
operations  at any time,  the  amount  of cash  assets on hand at such time less
amounts required to be retained out of such cash assets, in the sole judgment of
the Managing Partner,  to pay costs,  expenses or other obligations whether then
accrued or anticipated to accrue in the future.

       "Engineering  Audit Letter" shall mean a document prepared by a qualified
independent  petroleum  engineering  firm acceptable to the Managing  Partner in
connection with the proposed  acquisition of a Producing  Property,  which shall
include statements indicating that (i) such qualified petroleum engineering firm
has reviewed an oil and gas reserve report prepared by the engineering  staff of
Geodyne Resources,  Inc. or an Affiliate,  (ii) in the opinion of such qualified
petroleum  engineering  firm, the reserve report was prepared in accordance with
sound engineering and industry practices, including such standards and practices
as may be  promulgated  by the Society of  Petroleum  Engineers  of the American
Institute of Mining and Metallurgical  Engineers,  and (iii) with respect to the
determination of the nature and extent of the reserves of Hydrocarbons reflected
in such report, such qualified petroleum  engineering firm has made inquiry with
respect to the methods  employed in the  collection,  analysis and evaluation of
the basic physical data upon which such determination is based.

                                      -3-
<PAGE>

       "Farmout"  shall  mean an  arrangement  whereby  the  owner of a Lease or
Working  Interest agrees to assign his interest in certain  specific  acreage to
the assignee,  retaining some interest such as an overriding  royalty  interest,
oil and gas payment,  offset  acreage or other type of interest,  subject to the
drilling of one or more specific  wells or other  performance  as a condition of
the assignment.

       "Fiscal Year" shall mean the calendar year.

       "General and  Administrative  Costs" shall mean all customary and routine
legal,  accounting,  data  processing,  depreciation  (other  than  depreciation
relating  to real  property),  geological,  engineering,  travel,  office  rent,
telephone, secretarial, employee compensation and benefits, and other items of a
general and administrative nature, whether like or unlike the foregoing, and any
other  incidental  expenses  reasonably  necessary  to the  conduct  of the  NPI
Partnership's  business,  including the  acquisition and  administration  of Net
Profits  Interests and  Royalties,  computed on a cost basis,  determined by the
Managing Partner in accordance with generally accepted accounting principles and
subject  to review by an  independent  public  accountant  or  certified  public
accountant in connection  with the annual audit of the NPI  Partnership  and its
Affiliates.  General  and  Administrative  Costs  shall  not  include  any costs
includable  under the foregoing  but which are included as Property  Acquisition
Costs or Direct Administrative Costs.

       "General  Partner" shall mean  PaineWebber/Geodyne  Institutional/Pension
Energy Income Limited Partnership P-3, an Oklahoma limited  partnership,  acting
in such capacity,  any successor in that capacity, and any other General Partner
admitted to the NPI  Partnership  pursuant to the  provisions of this  Agreement
subsequent to the Activation of the NPI Partnership.

       "Geodyne   Energy"  shall  mean  Geodyne  Energy  Company,   a  Delaware
corporation.

       "Hydrocarbons" shall mean crude oil, natural gas, condensate, natural gas
liquids and other liquid or gaseous hydrocarbons.

       "Incapacity" or "Incapacitated" shall mean the adjudication of bankruptcy
(except that, in the case of the Managing Partner,  the term "bankruptcy"  shall
mean only being  subject to Chapter 7 of the  Federal  Bankruptcy  Reform Act of
1978),  of  interdiction,  of  incompetence,  or  of  insanity,  or  the  death,
dissolution or termination  (other than by merger or  consolidation  under which
the   surviving   entity   agrees  to  assume   all  of  the   obligations   and
responsibilities  of the  merged  or  consolidated  Person  set  forth  in  this
Agreement), as the case may be, of any Person.

       "Income" shall mean the gross income of the NPI  Partnership  (other than
Investment Income) as determined for federal income tax purposes,  including all
capital or Code Section 1231 gains (but not losses) of the NPI Partnership.

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       "Interest"  shall mean the entire  ownership  interest (which may, either
for a Partner's Capital Account or a Partner's Profits interest, be expressed as
a  percentage)  of a Partner  in the NPI  Partnership  at any  particular  time,
including the rights and  obligations  of such Partner under this  Agreement and
the Act.

       "Investment Income" shall mean all interest and dividend income earned on
temporary  investments  of the NPI  Partnership at any time prior to the time at
which an amount equal to the Capital  Contributions  to the NPI  Partnership has
been (1) expended or (ii) returned pursuant to Section 3.4 of this Agreement.

       "Lease"  shall mean a lease,  mineral  interest,  royalty  or  overriding
royalty  covering  Hydrocarbons  (or a  contractual  right  to  acquire  such an
interest),  or an undivided  interest therein or portion thereof,  together with
all easements, permits, licenses, servitudes and rights-of-way situated upon, or
used or held for future use in connection with, the exploration,  development or
operation of such interest.

       "Limited Partners" shall mean Geodyne Institutional Depositary Company or
any substituted limited partners of the Limited Partnership.

       "Limited     Partnership"    shall    mean    the     PaineWebber/Geodyne
Institutional/Pension Energy Income Limited Partnership P-3, an Oklahoma limited
partnership.

       "Limited Partnership  Agreement" shall mean the agreement under which the
Limited Partnership was formed, as amended and restated.

       "Managing   Partner"  shall  mean  Geodyne  Energy  Company,  a  Delaware
corporation, and any other Person admitted as additional or Substituted Managing
Partner pursuant to Article Six of this Agreement.

       "Net  Profits  Interest"  shall mean an interest in a Producing  Property
which  entitles the holder thereof to a share of the gross revenues from oil and
gas  production  from the  Producing  Property less all  operating,  production,
development,  transportation,  transmission and marketing  expenses,  severance,
sales,  ad  valorem  and  excise  taxes  (including  the  windfall  profit  tax)
attributable to such production.

       "Notification" shall mean a writing,  containing the information required
by this Agreement to be  communicated  to any Person,  hand delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, to such
Person at the last  known  address  of such  Person,  the date of the  certified
receipt (or such other  evidence of receipt)  therefor  being deemed the date of
the giving of Notification;  provided,  however,  that any written communication
containing the information sent or delivered to the Person and actually received
by the Person shall constitute Notification for all purposes of this Agreement.

       "NPI Partnership" shall mean the general  partnership  governed under and
pursuant to this Agreement, as said general partnership may from time to time be
constituted.

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       "NPI  Partnership  Account"  shall  mean the  bank  account  or  accounts
maintained by the Managing Partner pursuant to Section 9.3.

       "NPI Partnership Property" shall mean any interest, property and right of
any type owned by the NPI Partnership.

       "NPI  Partnership  Well" shall mean any well in which the NPI Partnership
has an interest.

       "Organization  and  Offering  Costs"  shall  mean all costs and  expenses
incurred by the Managing  Partner in connection with the organization of the NPI
Partnership,  including, without limitation, the legal, printing, accounting and
other costs incurred in connection with the organization of the NPI Partnership,
and costs  incurred in connection  with  preparing,  filing and  recording  this
Agreement.

       "Partner"  shall mean the Managing  Partner or any General Partner of the
NPI Partnership.

       "Payout" shall mean that time at which cash  distributions have been made
by the Limited Partnership to the Unit Holders (together with their predecessors
in  interest)  pursuant  to Section  5.1 of the  Limited  Partnership  Agreement
(together with any distributions to such Unit Holders pursuant to Section 3.3 of
the Limited  Partnership  Agreement),  in an aggregate  amount equal to the Unit
Holders' Subscriptions to the Limited Partnership.

       "Person" shall mean any individual,  partnership,  corporation,  trust or
other entity.

       "Prior NPI Partnership" shall mean a general partnership of which Geodyne
Energy is managing partner, and a limited partnership, of which depositary units
or units of limited  partnership  interest  were  offered  pursuant  to a public
offering  registered with the Securities and Exchange  Commission,  is the other
general partner, formed prior to the Activation of the NPI Partnership.

       "Producing  Property"  shall  mean  any  property  (or  interest  in such
property) with a well or wells capable of producing  Hydrocarbons  in commercial
quantities or properties unitized with such properties or properties adjacent to
such  properties  which are acquired as an incidental part of the acquisition of
such properties. The term also includes well machinery and equipment,  gathering
systems,  storage facilities or processing  installations or other equipment and
property associated with the production of Hydrocarbons.

       "Profits"  and  "Losses"  shall  mean the net income or losses of the NPI
Partnership  for federal  income tax purposes  determined as of the close of the
NPI  Partnership's  Fiscal  Year,  as well as,  when the context  requires,  any
tax-exempt income and nondeductible expenses.

       "Property Acquisition Costs" shall mean, without duplication,  the sum of
(1) the  prices  paid by the  NPI  Partnership  or the  Managing  Partner  or an
Affiliate to acquire a Net Profits  Interest or Royalty  ultimately  sold to the
NPI  Partnership,  including  the price paid to acquire a purchase  option  with
respect to a Net Profits Interest or

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Royalty,  lease  bonuses and equipment  costs  associated  therewith;  (2) title
insurance or examination  costs,  brokers'  commissions and finders fees, filing
fees,  recording  fees,  transfer  taxes, if any, and like charges in connection
with the acquisition of Net Profits  Interest or Royalty;  (3) delay rentals and
ad valorem  taxes paid by the buyer with respect to such property to the date of
its  transfer to the buyer;  (4)  interest  actually  incurred  by the  Managing
Partner or its  Affiliates to acquire or maintain  such Net Profits  Interest or
Royalty prior to its transfer to the NPI  Partnership;  and (5) all  reasonable,
necessary and actual expenses  incurred by the Managing  Partner or an Affiliate
in connection with the  acquisition of Net Profits  Interest or Royalty and paid
to third parties who are not Affiliates for  geological,  geophysical,  seismic,
land,  engineering,   drafting,  accounting,  auditing,  legal  and  other  like
services,  including  the  NPI  Partnership's  costs  incurred  (to  the  extent
consistent with generally  accepted  industry  standards) in connection with the
NPI  Partnership's  review of proposed  acquisitions of Net Profits  Interest or
Royalty, Reports and Engineering Audit Letters, all allocated to the property in
accordance with the allocation  procedures used by the Managing Partner,  any of
its Affiliates or the NPI Partnership; provided that the portion of the Managing
Partner's or  Affiliates'  expenses  allocated to the property,  as set forth in
items (3), (4) and (5),  shall have been  incurred not more than 36 months prior
to the property transaction.

       "Prospect"  shall  mean an  area in  which  the NPI  Partnership  owns or
intends  to own one or  more  oil and gas  interests,  which  is  geographically
defined on the basis of  geological  data by the  Managing  Partner and which is
reasonably  anticipated  by  the  Managing  Partner  to  contain  at  least  one
reservoir.

       "Prospectus"  shall mean the prospectus  pursuant to which the Depositary
Units were offered, and all supplements or amendments thereto, if any.

       "Proved  Reserves" shall mean those  quantities of  Hydrocarbons,  which,
upon analysis of geologic and engineering data, appear with reasonable certainty
to be recoverable in the future from known Hydrocarbon reservoirs under existing
economic  and  operating  conditions.  Proved  reserves  are  limited  to  those
quantities  of  Hydrocarbons  which can be expected,  with little  doubt,  to be
recoverable  commercially at current prices and costs, under existing regulatory
practices  and with  existing  conventional  equipment  and  operating  methods.
Depending  upon their  status of  development,  such  proved  reserves  shall be
subdivided   into  the   following   classifications   and  have  the  following
definitions:

             (a) "Proved  Developed  Reserves"  shall mean proved reserves which
       can be expected to be  recovered  through  existing  wells with  existing
       equipment and operating methods. This classification shall include:

                  (1) "Proved  Developed  Producing  Reserves"  which are proved
             developed  reserves which are expected to be produced from existing
             wells; and

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<PAGE>

                  (2) "Proved Developed Non-Producing Reserves" which are proved
             developed reserves which exist behind the casing of existing wells,
             or at minor  depths below the present  bottom of such wells,  which
             are expected to be produced  through these wells in the predictable
             future,  where  the  cost  of  making  Hydrocarbons  available  for
             production should be relatively small compared to the cost of a new
             well.

             Additional   Hydrocarbons  expected  to  be  obtained  through  the
       application  of  improved  recovery  techniques  are  included as "Proved
       Developed  Reserves"  only after  testing by a pilot project or after the
       operation  of an  installed  program  has  confirmed  through  production
       responses that increased recovery will be achieved.

             (b) "Proved Undeveloped Reserves" shall mean all reserves which are
       expected  to be  recovered  from new wells on  undrilled  acreage or from
       existing  wells where a  relatively  major  expenditure  is required  for
       recompletion.  Such  reserves on  undrilled  acreage are limited to those
       drilling units offsetting  productive units which are reasonably  certain
       of  production  when  drilled;  provided  that proved  reserves for other
       undrilled  units  can  be  claimed  where  it can  be  demonstrated  with
       certainty,  based on accepted  geological,  geophysical  and  engineering
       studies and data, that there is continuity of production from an existing
       productive  formation.  No estimates for Proved Undeveloped  Reserves are
       attributable to any acreage for which improved  recovery is contemplated,
       unless the techniques to be employed have been proved effective by actual
       tests in the same area and reservoir.

       "Remove",  "Removed"  or  "Removal"  shall mean,  with  reference  to the
removal of the Managing  Partner,  the  termination  of the  management  powers,
duties and  responsibilities of the Managing Partner pursuant to Section 6.2 and
the removal of the Managing Partner as a Partner.

       "Royalty"  shall mean an interest,  including an overriding  royalty,  in
gross  production  or the  proceeds  therefrom  which does not require the owner
thereof  to  bear  any of the  cost of  production,  development,  operation  or
maintenance.

       "Sale" shall mean any event or  transaction  that is, for federal  income
tax purposes,  considered a sale, exchange or abandonment by the NPI Partnership
of any NPI Partnership Property.

       "State" shall mean the State of Oklahoma.

       "Substituted   Partner"  shall  mean  any  Person  admitted  to  the  NPI
Partnership as a Partner pursuant to Sections 7.3 and 10.2 of this Agreement.

       "Unit  Holders"  shall mean those persons who hold a Depositary  Unit and
who are reflected on the books and records of Geodyne  Institutional  Depositary
Company,  as  Depositary  of the  Limited  Partnership,  as holders of record of
Depositary Units as of the close of business at the time of reference thereto.

                                      -8-
<PAGE>

       "Unit Holders'  Subscriptions" shall mean the aggregate amount subscribed
for by the initial Unit Holders to acquire their Depositary Units in the Limited
Partnership.

       "Working  Interest"  shall mean the interest  (whether  held  directly or
indirectly)  in a Lease  which is  subject  to some  portion  of the  expense of
production, development, operation or maintenance.

                                   ARTICLE TWO
                   Name, Place of Business and Office; Term

          Section 2.1. Name, Place of Business and Office

       The NPI  Partnership  shall be conducted  under the name  PW/Geodyne  NPI
Partnership P-3. The business of the NPI Partnership may, however,  be conducted
under any other name deemed  necessary or  desirable by the Managing  Partner in
order to comply with applicable laws. The office and principal place of business
of the NPI  Partnership  shall be c/o Geodyne Energy  Company,  320 South Boston
Avenue, The Mezzanine,  Tulsa,  Oklahoma 74103-3708.  The Managing Partner shall
record an assumed name or fictitious  name  certificate in the State and in each
state in which it owns property or transacts  business when deemed  necessary by
the Managing Partner.

       The Managing  Partner may change the principal  place of business and the
location of such office and may establish  such  additional  offices as it deems
advisable from time to time; provided,  however, that in the event the principal
place of business of the NPI Partnership shall be changed,  the Managing Partner
shall give written notice thereof to the Unit Holders.

       Section 2.2.  Purpose

       The business and purpose of the NPI Partnership shall be to acquire, own,
hold,  manage,  trade,  sell and exchange  Hydrocarbon  properties and interests
therein of all kinds  onshore and  offshore in the  continental  United  States,
including,  without limitation, Net Profits Interests,  Royalties,  interests in
general or limited partnerships,  joint ventures and other entities that hold or
are formed to acquire  interests in such  properties or interests;  to purchase,
lease,  own,  hold,  operate,  sell  and  exchange  all  equipment,   machinery,
facilities, systems and plans necessary or appropriate for such purposes; and to
do any and all things  necessary or proper in connection with or incident to the
foregoing activities.

       The NPI Partnership shall continue in force and effect until December 31,
2005,  provided  that the  Managing  Partner may extend such term for up to five
periods of two years each, or until  dissolution  prior thereto  pursuant to the
provisions hereof.

                                      -9-
<PAGE>

                                  ARTICLE THREE
                              Partners and Capital

       Section 3.1.  Managing Partner

       A. The name, address and Capital Contribution of the Managing Partner are
set forth in  Schedule  A  attached  hereto  and are  incorporated  herein.  The
Managing Partner shall not be required to make any Capital  Contribution  except
as set forth in Sections 3.1B, 3.4 and 8.2C.

       B.  The  Managing  Partner  shall  also  contribute  an  amount  of  cash
sufficient to pay its share of costs  allocated to it pursuant to Section 5.3 of
this  Agreement to the extent that the amount of Income  allocated to it (and/or
the amount of NPI Partnership borrowings incurred on its behalf) is insufficient
to pay such costs.

       Section 3.2.  Other General Partner

       The name, address and Capital Contribution of the Limited Partnership are
set forth in Schedule A attached hereto and are hereby incorporated herein.

       Section 3.3.  Application of Capital Contributions

       The Managing  Partner  shall deposit in the NPI  Partnership  Account the
Capital  Contributions  of the Limited  Partnership and the Managing Partner and
apply such Capital  Contributions  to the payment of the  Acquisitions  Fee. The
balance  of such  Capital  Contributions  shall  be held in the NPI  Partnership
Account to be applied to the payment of Property  Acquisition  Costs and, to the
extent not payable out of Income or  Investment  Income,  Direct  Administrative
Costs and other NPI Partnership costs (except General and Administrative  Costs)
allocable to the Limited Partnership;  provided, however, that such funds may be
temporarily  invested  prior to the  payment  of such costs in  accordance  with
Section 9.3.

       Section 3.4.  Certain Returns of Capital

       Any  portion  of the  Capital  Contribution  of the  Limited  Partnership
(except for necessary  operating  capital) that has not been expended or that is
not, or in the determination of the Managing Partner,  will not be committed for
expenditure by the second  anniversary of the Activation of the NPI  Partnership
will promptly be refunded to the Limited  Partnership as a return of part of its
Capital  Contribution  at the  earlier  of  such  determination  or  the  second
anniversary of the Activation of the NPI Partnership.  In addition, the Managing
Partner shall contribute cash to the NPI Partnership  (with respect to which its
Capital  Accounts will be credited) in an amount equal to the amount paid to the
Managing  Partner  in  respect  of  the  Acquisitions  Fee  attributable  (on  a
proportionate  basis) to the  unexpended  amount  of  Capital  Contributions  so
refunded,  which cash shall be refunded to the Limited Partnership together with
the unexpended  Capital  Contributions so refunded.  Geodyne Production shall be
responsible for the obligation of the Managing Partner to contribute

                                      -10-
<PAGE>

cash to the NPI  Partnership  pursuant  to this  Section  3.4.  All  amounts  so
refunded to the Limited  Partnership  shall reduce dollar for dollar its Capital
Account.

       Section 3.5 NPI Partnership Capital

       A. No Partner shall be paid interest on any Capital  Contribution  to the
NPI  Partnership  or on such  Partner's  Capital  Account,  notwithstanding  any
disproportion therein as between Partners.

       B. The NPI Partnership shall not redeem any Partner's Interest. Except as
provided in Sections  3.4,  6.1, 6.2 and 8.2, no Partner shall have the right to
withdraw or receive any return of the Capital Contribution.  Under circumstances
involving a return of any Capital Contribution,  no Partner shall have the right
to receive any property other than cash,  except as may otherwise be provided in
Sections 6.1, 6.2 and 8.2.

       Section 3.6.  Liability of Partners

       Each  Partner  signatory  hereto  or  subsequently  admitted  to the  NPI
Partnership  agrees that it shall remain  generally liable for any obligation or
recourse liability of the NPI Partnership incurred during the period in which it
is a Partner.  However,  all  present  and future  Partners  hereby  agree among
themselves  to  contribute  to each  other  the  amount  of funds  necessary  to
effectuate  a  sharing  of  such  NPI   Partnership   obligations  and  recourse
liabilities  in  proportion  to each  Partner's  share of such  obligations  and
liabilities at the time of their accrual.

                                  ARTICLE FOUR
                          Rights, Powers and Duties of
                              The Managing Partner

       Section 4.1.   Management and Control of the NPI Partner

       A. Subject to the Consent of the Limited Partnership as and when required
by this  Agreement,  the Managing  Partner,  within the authority  granted to it
under and in accordance  with the provisions of this  Agreement,  shall have the
full and  exclusive  right to manage and control the business and affairs of the
NPI  Partnership  and to make all  decisions  regarding  the business of the NPI
Partnership  and shall  have all of the  rights,  powers  and  obligations  of a
managing general partner of a general  partnership  under the laws of the State.
The Managing  Partner shall  exercise those powers as a fiduciary to the Limited
Partnership.

       B. No other Partner shall  participate  in the  management of or have any
control over the NPI Partnership's business nor shall any other Partner have the
power to represent,  act for,  sign for or bind the Managing  Partner or the NPI
Partnership.  The Limited  Partnership  hereby  Consents to the  exercise by the
Managing Partner of the powers conferred on it by this Agreement.

                                      -11-
<PAGE>

       Section 4.2.  Authority of the Managing Partner

       A. In addition to any other rights and powers which the Managing  Partner
may possess under this Agreement and the Act, the Managing Partner shall, except
and subject to the extent otherwise provided or limited in this Agreement,  have
all specific  rights and powers required or appropriate to its management of the
NPI  Partnership's  business  which,  by way of  illustration  but not by way of
limitation, shall include the following rights and powers to:

             (i) expend the Capital  Contributions of the Partners and apply NPI
       Partnership  revenues,  subject to  Section  4.3C of this  Agreement,  in
       furtherance of the business of the NPI Partnership;

             (ii) acquire and manage Net Profits Interests and Royalty interests
       in Hydrocarbon properties and hold all such property and interests in the
       name of the  NPI  Partnership;  provided,  however,  that  in  connection
       therewith,  the  Managing  Partner  shall,   contemporaneously  with  the
       acquisition  of an  interest  in a  Producing  Property,  or as  soon  as
       practicable  thereafter,  file or cause to be filed  for  recordation  an
       appropriate  conveyance  or agreement  evidencing  the NPI  Partnership's
       interest  in such  Producing  Property  in the  jurisdiction  where  such
       Producing  Property is located  pursuant to such  jurisdiction's  Uniform
       Commercial  Code  and/or  in the real  property  records  of the clerk or
       recorder of the county in which the Producing Property is situated;  and,
       provided,  further,  that filings of such conveyances or agreements shall
       also be made as the Managing Partner believes  necessary to establish the
       NPI Partnership's priority of interest; and, provided, further, Producing
       Properties  may be held in the name of a nominee for the NPI  Partnership
       if such action is deemed  necessary by the Managing Partner to facilitate
       the acquisition and  administration  of such interest and if such nominee
       record holder conducts no other business or operations other than holding
       record title to interests in properties;

            (iii) execute such  instruments and agreements,  to do such acts, to
      employ  such  persons and to contract  for such  services as the  Managing
      Partner  determines  are  necessary  or  appropriate  to  conduct  the NPI
      Partnership's  business,   including  the  entering  into  management  and
      advisory contracts;

            (iv) enter into any partnership agreement,  sharing arrangement,  or
      joint venture with any Person acceptable to the Managing Partner and which
      is engaged in any business or transaction in which the NPI  Partnership is
      authorized  to  engage,  provided  that the NPI  Partnership  shall not be
      deemed  thereby  to  be  an  "investment  company"  for  purposes  of  the
      Investment Company Act of 1940, as amended;

            (v) subject to Section  4.3B,  abandon or  otherwise  dispose of any
      interest in Hydrocarbon  properties  acquired for the NPI Partnership upon
      such  terms  and  for  such  consideration  as the  Managing  Partner  may
      determine;

                                      -12-
<PAGE>

            (vi) sell production  payments payable out of all or any part of any
      one or more of the Producing  Properties  acquired by the NPI  Partnership
      and to devote  and  expend  the  proceeds  of any such sale for any of the
      purposes of the NPI  Partnership  for which the proceeds of borrowings may
      be applied;

            (vii) borrow  monies from time to time,  for the purpose and subject
      to the limitations  stated in Section 4.3C of this Agreement,  in the form
      of recourse or nonrecourse borrowings, or otherwise to draw, make, execute
      and  issue   promissory   notes  and  other  negotiable  or  nonnegotiable
      instruments and evidences of  indebtedness,  and to secure the payments of
      the sums so borrowed  and to mortgage,  pledge,  or assign in trust all or
      any part of NPI Partnership Property,  including Net Profits Interests and
      Royalties,  production and proceeds of production, or to assign any monies
      owing or to be owing to the NPI  Partnership,  and to  engage in any other
      means of financing customary in the petroleum industry; provided, however,
      that a creditor who makes a nonrecourse loan to the NPI Partnership  shall
      not have or  acquire,  at any time as a result  of making  the  loan,  any
      direct or indirect  interest in the profits,  capital,  or property of the
      NPI Partnership other than as a secured creditor;

            (viii)   invest   Capital   Contributions    temporarily   in   the
      investments set forth in Section 9.3;

            (ix)  employ  on behalf of the NPI  Partnership  agents,  employees,
      accountants,  lawyers, geologists,  geophysicists,  landpersons,  clerical
      help,  and such other  assistance and consulting and other services as may
      deem necessary or convenient and to pay therefor such  remuneration as the
      Managing Partner may deem reasonable and appropriate;

            (x) incur expenses for travel, telephone,  telegraph, insurance, and
      for such other things,  whether  similar or  dissimilar,  as may be deemed
      necessary or  appropriate  for carrying on and  performing the business of
      the NPI Partnership;

            (xi) enter into such  agreements and contracts with such parties and
      to give such receipts,  releases,  and discharges  with respect to any and
      all of the  foregoing  and any matters  incident  thereto as the  Managing
      Partner may deem advisable or appropriate;

            (xii)  guarantee  the  payment of money or the  performance  of any
      contract or obligation by any person,  firm, or  corporation on behalf of
      the NPI Partnership;

            (xiii)  sue and be sued,  complain  and  defend  in the name and on
      behalf of the NPI Partnership;

            (xiv) make such  classifications  and determinations as the Managing
      Partner  deems  advisable,  having due regard for any  relevant  generally
      accepted accounting principles and oil and gas industry practices;

                                      -13-
<PAGE>

            (xv)  purchase  insurance,  or extend the Managing  Partner's or its
      Affiliates'  insurance,  at the NPI Partnership's  expense, to protect the
      NPI Partnership  Property and the business of the NPI Partnership  against
      loss,  and to protect the  Managing  Partner  against  liability  to third
      parties arising out of NPI Partnership activities, such insurance to be in
      such limits,  to be subject to such deductibles and to cover such risks as
      the Managing Partner deems appropriate;

            (xvi) pay all ad valorem  taxes  levied or assessed  against the NPI
      Partnership  Properties,  all taxes upon or measured by the  production of
      Hydrocarbons  therefrom,  and all other taxes  (other  than income  taxes)
      directly related to operations conducted by the NPI Partnership;

            (xvii) enter into agreements on behalf of the NPI  Partnership  with
      Affiliates subject to the limitations set forth in Section 4.3C;

            (xviii) sell a portion or all or substantially all of the properties
      and  other  assets  of  the  NPI  Partnership  to  itself,  or  any of its
      Affiliates or  Affiliated  Programs or any other person and to receive for
      the NPI Partnership  consideration  consisting of cash, securities,  other
      property or any other form of consideration,  or any combination  thereof,
      at such prices and for such forms of consideration as it deems in the best
      interests of the Unit Holders; provided,  however, that no such sale shall
      be  consummated  without  the prior  Consent  of the  Limited  Partnership
      pursuant to the provisions of Section 4.4B of this Agreement. In the event
      of the dissolution of the NPI Partnership followed by any such sale of the
      NPI  Partnership's  assets,  the Managing  Partner  shall,  subject to the
      provisions of Section 8.2 of this Agreement,  be appointed the liquidating
      agent for the NPI Partnership;

             (xix) make,  exercise or deliver  any  general  assignment  for the
       benefit  of the NPI  Partnership's  creditors,  but only  upon the  prior
       Consent of the Limited Partnership  pursuant to the provisions of Section
       4.4B;

             (xx) take such other  action and perform  such other acts as may be
       deemed appropriate to carry out the business of the NPI Partnership; and

             (xxi) inform each other Partner of all  administrative and judicial
       proceedings  for  an  adjustment  at  the  NPI   Partnership   level  for
       partnership tax items and forward to each other Partner within 30 days of
       receipt all notices received from the Internal Revenue Service  regarding
       the  commencement  of a  partnership  level audit or a final  partnership
       administrative  judgment, and Geodyne Production shall perform all duties
       imposed by Sections  6221  through  6232 of the Code as the "tax  matters
       partner"  of the NPI  Partnership,  including,  but not  limited  to, the
       following:  (a) the power to conduct all audits and other  administrative
       proceedings  (including  windfall  profit tax audits) with respect to NPI
       Partnership items; the power to extend the statute of limitations for all
       Partners with respect to NPI Partnership tax items;  and (b) the power to
       file a petition with an  appropriate  federal court for review of a final
       partnership administrative adjustment.

                                      -14-
<PAGE>

       B. No person,  firm or corporation dealing with the NPI Partnership shall
be required to inquire into the  authority  of the  Managing  Partner to take or
refrain from taking any action or make or refrain from making any decision,  but
any person so  inquiring  shall be  entitled to rely upon a  certificate  of the
Managing Partner as to its due authorization.

       Section 4.3.  Sales,  Purchases and Management of Net Profits  Interests
and Royalties; Additional Financing

       A.  The  provisions  of  Section  4.3C  notwithstanding,  if one or  more
Affiliated  Programs intends to acquire Working  Interests,  acquisitions of Net
Profits  Interests by the NPI  Partnership  may be made in connection  with such
Affiliated  Program's  acquisitions of Working Interests.  Net Profits Interests
acquired  by the NPI  Partnership  may either be  carved-out  of the  Affiliated
Program's Working Interests or reserved from the limited partnership Affiliate's
Working  Interests by the sellers of such Working Interests on such basis as the
Managing  Partner  determines.  Any  Net  Profits  Interest  acquired  by an NPI
Partnership may not exceed 75% of the net profits  attributable to the aggregate
Working  Interests in the Producing  Properties  acquired by the NPI Partnership
and Affiliated  Program together.  The primary factor in determining the sharing
of net profits between the Working Interests  acquired by the Affiliated Program
and the Net Profits Interest  acquired by the NPI Partnership will be the amount
of money  contributed  to each  acquisition  by each  purchaser.  In fixing such
sharing percentages, the Managing Partner need not give special consideration to
risks  associated  with the  ownership  of the Working  Interests or to costs of
equipment  which will be owned by the  Affiliated  Program  as Working  Interest
owners if such costs  will be  amortized  against  the  proceeds  of oil and gas
production  in  arriving  at the  amount  of net  profits  from  which  the  NPI
Partnership's   (as  Net  Profits   Interest  holder)  share  of  production  is
determined.  If the NPI Partnership  acquires a Royalty  interest in a Producing
Property in which a Working Interest is acquired by the Affiliated Program, each
participant's  portion of the purchase  price will be determined on the basis of
an appraisal by the Managing Partner's  petroleum reservoir engineer of the fair
market values of the respective interests in the property being acquired (taking
into account the tax consequences  applicable to the several  participants).  If
the Managing  Partner or an Affiliate other than an Affiliated  Program acquires
an interest in any such property  acquisition,  such appraisal will be performed
by an independent  petroleum  engineer and if the aggregate  revenue interest of
the Managing Partner and its Affiliates in any Affiliated Program participant in
such a property  acquisition is greater than their aggregate revenue interest in
the NPI Partnership, then with respect to the property interests so acquired the
greater  aggregate  revenue  interest  shall be  reduced so as not to exceed the
lesser revenue interest.

       B. Net Profits  Interests and Royalties  whose purchase price exceeds 10%
of the Unit Holders' Subscriptions to the Limited Partnership may be acquired by
the NPI  Partnership  only if an  Acquisition  Reserve  Report or an Engineering
Audit Letter has been prepared and evaluated with respect thereto.

                                      -15-
<PAGE>

       C. Neither the Managing Partner nor any Affiliate shall sell, transfer or
convey any or all of its  interest in a Producing  Property  (including  any Net
Profits  Interests and any Royalty  interest  therein) to the NPI Partnership or
purchase  or  acquire  any oil and  gas  properties  or  interest  from  the NPI
Partnership,  directly or indirectly,  except pursuant to transactions  that are
fair and reasonable to the Limited  Partnership  under the  circumstances at the
time such transaction is consummated. Such transactions shall be further subject
to the following restrictions:

             (i)  Prior to the  date on  which  the NPI  Partnership  has  fully
       expended  that  portion of its  Capital  Contribution  available  for the
       acquisition of Net Profits Interests and Royalties,  neither the Managing
       Partner  nor  any  Affiliate  of the  Managing  Partner  (other  than  an
       Affiliated  Program) shall acquire an interest in any Producing  Property
       after the Activation of the NPI Partnership  unless prior thereto the NPI
       Partnership  shall have been  offered the right to acquire an interest in
       such Producing Property, or an interest therein, and the Managing Partner
       shall  have  determined  that  the  acquisition  of an  interest  in such
       Producing Property is not in the best interests of the NPI Partnership;

             (ii) Any  purchase or sale of an  interest in a Producing  Property
       from or to the  Managing  Partner or any  Affiliate  shall be made at the
       Property  Acquisition Cost for an interest in such Producing  Property as
       adjusted for intervening operations,  unless the Managing Partner or such
       Affiliate has reasonable  grounds to believe that cost is materially more
       or less than the fair market value of such  property,  in which case such
       sale or purchase  shall be made at a price equal to the fair market value
       thereof as determined by an independent petroleum engineer;

             (iii) If the Managing Partner or its Affiliates sells, transfers or
       conveys any oil, gas or other  mineral  interests or property  (including
       Net Profits Interests and Royalties) to the NPI Partnership,  it must, at
       the  same  time,  sell  to the NPI  Partnership  an  equal  proportionate
       interest  in all its  other  property  in the  same  Prospect.  A Sale or
       conveyance  to the NPI  Partnership  of less  than the  entire  ownership
       interest of the Managing  Partner or any Affiliate is only  permitted if:
       (a) the  interests  retained  or  obtained  by the  Managing  Partner  or
       Affiliate   and   acquired  by  the  NPI   Partnership   are  either  (x)
       proportionate,  uniform  and  undivided  Net  Profits  Interests  if  the
       interest in a Producing Property acquired by the NPI Partnership is a Net
       Profits  Interest or (y)  proportionate,  uniform and  undivided  Royalty
       interests  if the  interest in a Producing  Property  acquired by the NPI
       Partnership is a Royalty, (b) the respective  obligations of the Managing
       Partner or Affiliate and the NPI Partnership are  substantially the same,
       and (c) the interest of the Managing Partner or its Affiliate in revenues
       does not exceed the amount  proportionate  to its interest.  The Managing
       Partner and its Affiliate may not retain or obtain any overrides or other
       burdens on the  interest  obtained  by the NPI  Partnership,  and may not
       enter into any Farmouts with respect to its retained interest,  except to
       nonaffiliated third parties or to an Affiliated Program;

                                      -16-
<PAGE>

            (iv) In the event the Managing Partner or any Affiliate  proposes to
      acquire an  interest  in a Prospect  in which the NPI  Partnership  has an
      interest or in a Prospect abandoned by the NPI Partnership within one year
      preceding  such proposed  acquisition,  the Managing  Partner or Affiliate
      shall offer the interest to the NPI Partnership;  and if cash or financing
      is not available to the NPI Partnership to purchase such interest, neither
      the  Managing  Partner  nor  Affiliate  shall  acquire an interest in such
      Prospect.  The term "abandon" for the purpose of this  subparagraph  shall
      mean the  termination,  either  voluntary  or by operation of the Lease or
      otherwise,  of all of the NPI Partnership's interest in the Prospect. This
      subsection shall not apply after the lapse of five years of the Activation
      of the NPI Partnership or to any Affiliated  Program where the interest of
      the Managing Partner or an Affiliate is less than or equal to its interest
      in the NPI  Partnership,  there are no duplication of fees to the Managing
      Partner or an Affiliate, and the Managing Partner or an Affiliate does not
      obtain a greater  benefit from purchase of the interest by the  Affiliated
      Program  than  it  would  if  the  interest  were  purchased  by  the  NPI
      Partnership;

            (v) During the  existence of the NPI  Partnership  and before it has
      ceased  operations,   neither  the  Managing  Partner  nor  any  Affiliate
      (excluding  any  Affiliated  Program  where the  interest of the  Managing
      Partner or an  Affiliate  is less than or equal to its interest in the NPI
      Partnership)  shall  acquire,  retain or drill for its own account any oil
      and gas interest in any Prospect upon which the NPI Partnership  possesses
      an interest,  except for transactions which comply with Section 4.3C(iii).
      The geological limits of a Prospect shall be enlarged or contracted on the
      basis of  subsequently  acquired  geological data to define the productive
      limits of a reservoir and shall  include all of the acreage  determined by
      the subsequent data to be encompassed by such reservoir. If the geological
      limits of a Prospect,  as so enlarged,  encompass any interest held by the
      Managing  Partner or an Affiliate of the Managing  Partner  (excluding  an
      Affiliated  Program  where the  interest  of the  Managing  Partner  or an
      Affiliate   is  identical  to  or  less  than  its  interest  in  the  NPI
      Partnership), such a Net Profits Interest therein shall be sold to the NPI
      Partnership in accordance with the provisions of Section  4.3C(iv) and any
      net income previously  received by the Managing Partner or Affiliate shall
      be  paid  over to the  NPI  Partnership.  If the  Managing  Partner  or an
      Affiliate  acquires  additional  acreage or interests in a Prospect of the
      NPI  Partnership,  it  must  sell  such  to  the  NPI  Partnership  and is
      prohibited from retaining any such interest, except as may be permitted by
      Section 4.3C.  Notwithstanding the foregoing,  neither the NPI Partnership
      nor the Limited Partnership will be required to expend additional funds to
      acquire any such  interest  unless  funds are  available  from the Capital
      Contributions of the Partners;

             (vi)  If a  Net  Profits  Interest  or  Royalty  held  by  the  NPI
       Partnership  burdens  undeveloped  acreage in which an Affiliated Program
       owns an interest,  the owner of such undeveloped leasehold interest shall
       have the right to farm out all or a portion of the

                                      -17-
<PAGE>

      Working Interest constituting such undeveloped leasehold interest,  and if
      the  Working  Interest   remaining  or  reverting  to  the  owner  of  the
      undeveloped leasehold interest is reduced by such Farmout, the Net Profits
      Interest  or Royalty  shall be  proportionately  reduced,  but shall share
      proportionately in any benefits derived from such Farmout.  In the event a
      Net  Profits  Interest  does  not,  by its  terms,  provide  the  specific
      consequences  of a  Farmout  of the  Working  Interest  constituting  such
      undeveloped  leasehold interest and if such undeveloped leasehold interest
      is farmed out to an Affiliate,  the Managing  Partner may  subordinate the
      NPI Partnership's Net Profits Interest to such Farmout,  provided that the
      Net Profits  Interest shall burden any Working  Interest or other interest
      retained  by,  or which  may  revert  to,  the  owner  of the  undeveloped
      leasehold interest pursuant to any such Farmout.  The terms of the Farmout
      will be consistent with and no less favorable to the NPI Partnership  than
      the  terms of  Farmouts  prevalent  in the  geographic  area  for  similar
      arrangements.

             (vii) Any  operating  agreements  pursuant  to which  the  Managing
       Partner  or any  Affiliate  acts  as  operator  of  Producing  Properties
       burdened with a Net Profits Interest owned by the NPI Partnership,  shall
       be of a nature  customary  in the  industry  and payments to the Managing
       Partner  or any  Affiliate  for acting as  operator  shall not exceed the
       compensation  which would be paid by  unaffiliated  third  parties in the
       same geographic area for similar goods and services. Reimbursement of the
       Managing Partner's overhead pursuant to such operating agreement will not
       be duplicative of any reimbursement of General and  Administrative  Costs
       made pursuant to Section 5.2; and

             (viii) To the extent the Managing Partner or any Affiliate acquires
       an interest in a Producing Property in which the NPI Partnership acquires
       an interest,  the Managing  Partner or Affiliate  shall pay its allocable
       portion of the cost of the preparation of the Acquisition  Reserve Report
       or  Engineering  Audit  Letter,  as the  case  may  be,  respecting  such
       Producing Property.

       D. If the  Managing  Partner  determines  that funds in  addition  to the
Capital Contributions to the NPI Partnership are required for the payment of NPI
Partnership costs (other than Property  Acquisition Costs), the Managing Partner
may apply or reserve  Income or  Investment  Income for the  payment of such NPI
Partnership  costs and/or the Managing  Partner may cause the NPI Partnership to
borrow  funds  for the  payment  of such  costs;  provided,  however,  that  the
aggregate  outstanding  principal amount of such borrowings shall not at any one
time  exceed an amount  equal to 5% of the Unit  Holders'  Subscriptions  to the
Limited Partnership.

       E. The Managing Partner shall have the authority to secure the payment of
borrowings  incurred  by it for its own  account or for  purposes  of paying its
allocable share of NPI Partnership  costs by assigning to lenders all or part of
its interest in Profits and  Distributable  Cash;  provided,  however,  that the
Managing  Partner,  shall retain  unencumbered at least a 1% interest in Profits
and  Distributable  Cash.  Notwithstanding  anything  to the  contrary  in  this
Agreement,  in the event of any sale or  foreclosure  of the Managing  Partner's
interest

                                      -18-
<PAGE>

in full or partial satisfaction of such borrowings:  (i) appropriate adjustments
shall be made in the Capital Accounts of the Partners and in the method by which
Income  and costs are  allocated  to the  Partners  to assure  that the  Limited
Partnership  will  not  bear  any of the  costs  attributable  to  such  sold or
foreclosed  interest and that the Managing Partner will not share or participate
in any of the capital, Income, costs or distributions  attributable to such sold
or  foreclosed  interest  except  to the  extent  of the  unencumbered  interest
retained by the Managing Partner;  and (ii) the Limited  Partnership's  share of
General and Administrative  Costs and Direct  Administrative  Costs shall not be
increased as a result of such sale or  foreclosure.  The Managing  Partner shall
indemnify the Limited  Partnership against any expenses resulting from a sale or
foreclosure of the Managing Partner's interest.

       Section 4.4.  Prohibited Transactions

       A.  Notwithstanding  any  other  provision  of  this  Agreement  to  the
contrary, the following transactions are expressly prohibited:

             (i) the NPI  Partnership  shall not make any loans to the Managing
       Partner or any Affiliate;

             (ii) neither the Managing  Partner nor any Affiliate shall make any
       loans to the NPI  Partnership  except at a rate of interest not in excess
       of the interest  cost  incurred by the Managing  Partner or Affiliates or
       the amount of  interest  that  would be  charged  to the NPI  Partnership
       (without  regard  to the  Managing  Partner's  or  Affiliate's  financial
       abilities or guarantees) by unrelated  banks on comparable  loans for the
       same purpose, whichever is lower, and the Managing Partner and Affiliates
       shall not receive points or financing  charges or fees  regardless of the
       amount;

             (iii) except as expressly  contemplated hereby, no agent, attorney,
       accountant or other  independent  consultant  or  contractor  who is also
       employed on a full-time  basis by the Managing  Partner or any  Affiliate
       shall be compensated by the NPI Partnership for his or her services;

             (iv)  other  than  those  received  for  the  account  of  the  NPI
       Partnership,  no rebates may be received by the  Managing  Partner or any
       Affiliate in connection with NPI Partnership  operations or expenditures,
       nor  may  the  Managing  Partner  or  any  Affiliate  participate  in any
       reciprocal  business   arrangement  that  would  circumvent  any  of  the
       provisions of this Agreement;

             (v) on a monthly  basis,  costs paid and  revenues  received by the
       Managing  Partner or an Affiliate for the account of the NPI  Partnership
       shall be  determined  and the net  amount  resulting  from  such  monthly
       settlement shall be deposited into a NPI Partnership Account and no funds
       which, after such monthly  settlement,  are determined to be held for the
       account of the NPI Partnership  shall be kept in any account other than a
       NPI Partnership  Account,  and the Managing Partner shall not employ,  or
       permit any other  Person to employ,  such funds in any manner  except for
       the benefit of the NPI Partnership; it being understood that the Managing
       Partner may invest NPI Partnership funds temporarily in

                                      -19-
<PAGE>

      the investments  set forth in Section 9.3 of this Agreement  pending their
      use by the NPI Partnership. After such monthly settlement, NPI Partnership
      funds may not be commingled with separate funds of the Managing Partner or
      any other entity; and

             (vi) the Limited  Partnership shall not make any advance payment to
       the Managing Partner or its Affiliates.

       B. Notwithstanding any other provision of this Agreement to the contrary,
without the prior  Consent of the Limited  Partnership  granted  pursuant to the
provisions of Article Eleven of this Agreement and the provisions of the Limited
Partnership Agreement, the Managing Partner shall not:

             (i) lease,  sell,  or dispose of all or  substantially  all of the
       NPI Partnership's assets;

             (ii) make,  exercise  or deliver any  general  assignment  for the
       benefit of the NPI Partnership's creditors;

             (iii) except as set forth in Section  10.1A,  amend any  provision
       of this Agreement; or

             (iv) dissolve the NPI Partnership.

       Section 4.5  Other Agreements of the Managing Partner

       Anything in this Agreement to the contrary notwithstanding,  it is agreed
that:

             (i) the  Managing  Partner  and its  Affiliates  shall not take any
       action  with  respect to the assets or  property  of the NPI  Partnership
       which does not benefit exclusively the NPI Partnership, including:

                  (a)   the   utilization   of   NPI   Partnership   funds   as
             compensating  balances for the benefit of the Managing  Partner or
             an Affiliate of the Managing Partner; and

                  (b)   the commitment of future production;

             (ii)   all   benefits   from   marketing   arrangements   or  other
       relationships affecting property of the Managing Partner or its Affiliate
       and the  NPI  Partnership  shall  be  fairly  and  equitably  apportioned
       according to the respective interests of each;

       Section  4.6.       Contracts    with   the    Managing    Partner   and
Affiliates

       All services  provided to the NPI Partnership by the Managing  Partner or
any  Affiliate  for  which it is  compensated  shall be  embodied  in a  written
contract   precisely   setting  forth  the  services  to  be  rendered  and  the
compensation to be paid. Each contract relating to a transaction between the NPI
Partnership and the Managing  Partner or any Affiliate shall contain a provision
which shall permit  termination of the contract by the NPI  Partnership  without
penalty on 30 days' prior

                                      -20-
<PAGE>

written  notice.  The  Limited  Partnership  shall have the power to  terminate,
without cause or penalty, any such contract on behalf of the NPI Partnership.

       Section 4.7.    Other Operations

       The Managing  Partner shall devote such time to the NPI Partnership as is
reasonably required to carry on the NPI Partnership  business,  and the Managing
Partner  and  its  Affiliates  shall  at  all  times  be  free,  subject  to any
restrictions  contained herein, to engage in all aspects of the Hydrocarbons and
natural  resources  business  for their own  accounts  and for the  accounts  of
others. The Managing Partner will meet all fiduciary obligations that it owes to
the Limited Partnership and the Unit Holders. Without limiting the generality of
the foregoing,  the Managing  Partner and its Affiliates shall have the right to
organize and operate  other  partnerships,  joint  ventures or other oil and gas
investment programs similar to the Limited Partnership and the NPI Partnership.

       Section  4.8.       Prosecution,   Defense  and  Settlement  of  Claims;
Indemnification

       A. The Managing  Partner shall arrange to  prosecute,  defend,  settle or
compromise  actions at law or in equity at the expense of the NPI Partnership as
may be necessary to enforce or protect the interests of the NPI Partnership. The
Managing  Partner shall satisfy any judgment,  decree,  decision or  settlement,
first, out of any insurance  proceeds available  therefor,  next, out of the NPI
Partnership assets and Income,  and, finally,  out of the assets of the Managing
Partner and the general partner of the Limited Partnership.

       B. The Managing Partner and its Affiliates shall have no liability to the
NPI  Partnership  or to any Partner or Unit Holders for any loss suffered by the
NPI  Partnership  which  arises out of any action or  inaction  of the  Managing
Partner or its Affiliates if the Managing  Partner and its  Affiliates,  in good
faith,  determined  that such course of conduct was in the best interests of the
NPI  Partnership  and such course of conduct did not  constitute  negligence  or
misconduct of the Managing  Partner or its Affiliates.  The Managing Partner and
its Affiliates  shall be indemnified by the NPI Partnership  against any losses,
judgments,  liabilities,  expenses and amounts paid in  settlement of any claims
sustained by them in connection with the NPI Partnership, provided that the same
were not the result of  negligence  or  misconduct  on the part of the  Managing
Partner or its Affiliates.  Any indemnification  under this Section 4.8 shall be
satisfied  solely  out of the  Assets  and  Income of the NPI  Partnership.  All
amounts  payable  under  this  Section  4.8  shall  be a  liability  of the  NPI
Partnership only and no Unit Holders or Limited Partners will have any liability
therefor.

       C. Notwithstanding the above, the Managing Partner and its Affiliates and
any Person acting as a  broker-dealer  shall not be indemnified  for liabilities
arising  under  federal  and state  securities  laws unless (1) there has been a
successful  adjudication  on the merits of each count  involving  securities law
violations and the court approves such  indemnification and the litigation costs
thereof;  or (2) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction and the court approves such indemnification

                                      -21-
<PAGE>

and the litigation  costs thereof.  In any such case, the Managing Partner shall
apprise the court of the current  published  positions,  if any, of the federal,
the  Massachusetts  State Securities  Administrators  and other applicable state
securities administrators regarding indemnification of program sponsors prior to
obtaining court approval of any such indemnification.

       D. The NPI  Partnership  shall not incur  the  costs of that  portion  of
insurance  which insures the Managing  Partner for any liability as to which the
Managing Partner is prohibited from being indemnified under Section 4.8.

       E. For purposes of this Section 4.8,  the term  Affiliate  shall  include
only those Affiliates, as defined in Article I, performing services on behalf of
the NPI Partnership.

                                  ARTICLE FIVE
                       Distributions, Fees and Allocations

       Section 5.1.  Distributions of NPI Partnership Funds

       The  Distributable  Cash  of the NPI  Partnership  shall  be  distributed
simultaneously  to the Limited  Partnership  and the Managing  Partner within 45
days after the close of each calendar quarter. Each Partner's share of each such
distribution of Distributable Cash other than as specified in Section 5.3G shall
be based on the ratio of their  respective  positive  Capital Account  balances,
such balances being  determined after giving effect to the allocations set forth
in Sections  5.3 and 5.4 for such period.  All  distributions  of  Distributable
Cash,   including  sales  proceeds   pursuant  to  Section  5.3G,  shall  reduce
dollar-for-dollar the balances of the Partners' Capital Accounts.

       Section 5.2.       Fees and  Reimbursement  of Expenses to the  Managing
Partner

       Geodyne Energy shall receive as Managing  Partner (1) upon Activation and
on a nonrecurring  basis, the Acquisitions Fee in an amount equal to 3.5% of the
Unit Holders'  Subscriptions;  and (2) reimbursement  for Direct  Administrative
Costs  billed  directly to the Managing  Partner and General and  Administrative
Costs incurred by the Managing  Partner or its  Affiliates  allocable to the NPI
Partnership,  except to the extent that the Managing Partner or its Affiliate is
otherwise  reimbursed for such costs through the payment of Property Acquisition
Costs or otherwise.  The aggregate  amount of General and  Administrative  Costs
allocable to the  accounts of the Unit  Holders for which the  Managing  Partner
will be reimbursed by the NPI Partnership and the General Partner by the Limited
Partnership will not (a) in the first 12 months following  Activation of the NPI
Partnership,  exceed an amount equal to 2.5% of the Unit Holders' Subscriptions,
and (b) in any  succeeding 12 month period,  exceed an amount equal to 1% of the
Unit Holders' Subscriptions.

                                      -22-
<PAGE>

       Section  5.3.   Allocation   of  Income,   Investment   Income,   Gains,
Losses, Deductions and Credits

       A. The Income, Investment Income, gains, losses, deductions,  credits and
costs of the NPI  Partnership  shall be determined and allocated with respect to
each Fiscal Year of the NPI  Partnership  as of and within 75 days after the end
of such Fiscal Year.

       B. Except as otherwise provided in this Article Five

         (i)   100% of Investment Income,  Property  Acquisition Costs, and the
               Acquisitions  Fee  referred  to in Section  5.2(1)  shall all be
               allocated  to, and borne by, the  Limited  Partnership.  100% of
               Organization  and  Offering  Costs  shall be  allocated  to, and
               borne by, the Managing  Partner.  Except as  otherwise  provided
               in  this  Section  5.3B(i)  and  Sections  5.3B(ii)  and  (iii),
               Income,  gain,  General  and  Administrative  Costs,  and Direct
               Administrative  Costs and other losses,  deductions  and credits
               shall be  allocated  among,  and borne by, the  Partners  in the
               following percentages:

               (a)  Until Payout:
                    Limited Partnership                     95.9596%

                    Geodyne Energy                           4.0404%

               (b)  After Payout:
                    Limited Partnership                     85.8586%

                    Geodyne Energy                          14.1414%

         (ii)  As used in this  subsection,  the  "Property  Investment  Period"
               shall mean that  period  which  begins  with the first day of the
               calendar quarter following either (i) the calendar quarter during
               which  90%  of  the  NPI  Partnership's   capital  available  for
               purchasing  Net  Profits  Interests  and  Royalties  has  been so
               expended,  or (ii) the  calendar  quarter in which 50% of the NPI
               Partnership's   capital  available  for  purchasing  Net  Profits
               Interests  and  Royalties  has been so expended,  as the Managing
               Partner shall elect,  and  terminates at Payout.  Notwithstanding
               anything to the contrary  contained  herein,  if, at Payout,  the
               total amount of cash distributions by the Limited  Partnership to
               the Unit Holders from the commencement of the Property Investment
               Period have  averaged on a  twelve-month  basis an amount that is
               less than 12% of the Unit Holders' Subscriptions,  the percentage
               of Income,  and costs which are shared in the same proportions as
               Income,  allocated  to the  Managing  and General  Partners  will
               increase to only 10% and the Unit Holders  will be allocated  90%
               thereof until such time, if ever, that the  distributions  to the
               Unit Holders  from the  commencement  of the Property  Investment
               Period  reaches a  twelve-month  average equal to at least 12% of
               the Unit Holders'  Subscriptions,  at which time Income, gain and
               costs and other losses, deductions and credits shared in the same
               proportions as Income will be allocated  14.1414% to the Managing
               Partner and 85.8586% to the Limited Partnership.

                                      -23-
<PAGE>

          (iii)For purposes of the allocations set forth in Section  5.3B(ii) of
               this  Agreement,  the amount of cash  distributed  to the Limited
               Partnership  for purposes of  determining  the return on the Unit
               Holders'  Subscriptions  to the  Limited  Partnership  shall  not
               include any amounts attributable to the NPI Partnership's payment
               of any windfall profits tax.

         (iv)  Notwithstanding anything to the contrary contained herein, if and
               to the  extent  the NPI  Partnership  sells  any  Royalty  or Net
               Profits  Interest and applies any portion of the proceeds thereof
               to  the  purchase  of any  additional  Royalties  or Net  Profits
               Interests,  the  Property  Acquisition  Costs  of the  additional
               Producing  Property shall be allocated to and considered  charged
               to the  Managing  Partner  and  Limited  Partnership  in the same
               proportions  that such portion of sale  proceeds  would have been
               distributed to them, had the sale proceeds been distributed.

       C. All items of Income, gain, loss, expense, deduction and credit and all
recapture of any such  deductions  and credits shall be allocated and charged or
credited to the Partners in the same manner that the revenues, costs or expenses
giving  rise to such  items of  income,  gain,  loss,  deduction  and credit are
allocated  and charged.  Federal  income tax  deductions  for cost or percentage
depletion  with respect to any  Producing  Property  shall be  determined at the
Partner level and shall be determined in the case of percentage depletion on the
same basis that the Income from the Producing Property is allocated; and the NPI
Partnership  shall  allocate,  under  Section  613A(c)(7)(D)  of the  Code,  its
adjusted basis in each  Producing  Property to the Partners in proportion to the
interest of each in the NPI Partnership  capital ultimately used to acquire that
property. If such allocation of basis is not permitted under the Code, the basis
of each such  property  shall be  allocated  in the  manner  which the  Managing
Partner deems will most closely achieve the result intended above.

       D. Capital  Accounts shall be established and maintained for each Partner
in accordance with tax accounting  principles and with valid regulations  issued
by the U.S.  Treasury  Department under subsection  704(b) of the Code (the "704
Regulations").  To the  extent  that  tax  accounting  principles  and  the  704
Regulations  may conflict,  the latter shall  control.  In  connection  with the
establishment and maintenance of such Capital Accounts, the following provisions
shall apply:

            (i) Each  Partner's  Capital  Account  shall be (i) increased by the
      amount of its  Capital  Contribution,  the fair  market  value of property
      contributed by it to the NPI Partnership (net of liabilities securing such
      contributed  property that the NPI  Partnership is considered to assume or
      take subject to under  section 752 of the Code) and  allocations  to it of
      Income and gain  (except to the extent such Income or gain has  previously
      been  reflected in its Capital  Account by  adjustments  thereto) and (ii)
      decreased by the amount of  Distributable  Cash  including  sales proceeds
      distributed to it, the fair market value of property  distributed to it by
      the NPI Partnership (net of liabilities

                                      -24-
<PAGE>

      securing  such  distributed  property  that such Partner is  considered to
      assume or take subject to under  section 752 of the Code) and  allocations
      to it of NPI Partnership  loss,  deduction (except to the extent such loss
      or deduction  has  previously  been  reflected  in its Capital  Account by
      adjustments thereto) and expenditures described in section 705(a)(2)(B) of
      the Code.

            (ii) In the event  NPI  Partnership  Property  is  distributed  to a
      Partner,  then,  before the Capital Account of such Partner is adjusted as
      required by clause (I) of this Section 5.3D,  the Capital  Accounts of the
      Partners  shall be adjusted to reflect the manner in which the  unrealized
      Income, gain, loss and deduction inherent in such NPI Partnership Property
      (that has not been reflected in such Capital Accounts previously) would be
      allocated  among the Partners if there were a taxable  disposition of such
      NPI  Partnership  Property  for  its  fair  market  value  on the  date of
      distribution.

            (iii) If,  pursuant to this Agreement,  NPI Partnership  Property is
      reflected on the books of the NPI Partnership at a book value that differs
      from the adjusted  tax basis of such NPI  Partnership  Property,  then the
      Partners'  Capital  Accounts shall be adjusted in accordance  with the 704
      Regulations  for allocations to the Partners of  depreciation,  depletion,
      amortization,  and gain or loss,  as  computed  for  book  purposes,  with
      respect to such NPI Partnership Property.

            (iv) The Partners'  Capital Accounts shall be reduced by a simulated
      depletion  allowance computed on each oil or gas property using either the
      cost depletion  method or the percentage  depletion method (without regard
      to the  limitations  under  the Code  which  could  apply to less than all
      Partners);  provided,  however, that the choice between the cost depletion
      method  and  the   percentage   depletion   method  shall  be  made  on  a
      property-by-property  basis and such  choice  shall be binding for all NPI
      Partnership taxable years during which such oil or gas property is held by
      the NPI  Partnership.  Such  reductions for depletion shall not exceed the
      aggregate  adjusted basis  allocated to the Partners and Unit Holders with
      respect to such oil or gas property.  Such  reductions for depletion shall
      be allocated among the Partners'  Capital Accounts in the same proportions
      as the  adjusted  basis in the  particular  property is  allocated to each
      Partner. Upon the taxable disposition of an oil or gas property by the NPI
      Partnership,  the  NPI  Partnership's  simulated  gain or  loss  shall  be
      determined by subtracting its simulated adjusted basis (aggregate adjusted
      tax basis of the Partners less  simulated  depletion  allowances)  in such
      property from the amount  realized on such  disposition  and the Partners'
      Capital Accounts shall be increased or reduced, as the case may be, by the
      amount of the simulated gain or loss on such  disposition in proportion to
      the  Partners'  allocable  shares of the  total  amount  realized  on such
      disposition.

             (v) For purposes of determining  the Capital Account balance of any
       Partner as of the end of any NPI Partnership taxable year for purposes of
       Subsection 5.3I hereto,  such Partner's  Capital Account shall be reduced
       by:

                                      -25-
<PAGE>

                  (a) Adjustments  that, as of the end of such year,  reasonably
             are expected to be made to such Partner's  Capital Account pursuant
             to paragraph  (b)(2)(iv)(k)  of the 704  Regulations  for depletion
             allowances  with  respect  to oil  and  gas  properties  of the NPI
             Partnership, and

                  (b) Distributions that, as of the end of such year, reasonably
             are  expected to be made to such  Partner  pursuant to Code section
             704(e)(2), Code section 706(d), and paragraph (b)(2)(ii) of section
             1.751-1 of regulations promulgated under the Code, and

                  (c) Distributions that, as of the end of such year, reasonably
             are  expected to be made to such  Partner to the extent they exceed
             offsetting   increases  to  such  Partner's  Capital  Account  that
             reasonably  are  expected  to occur  during  (or  prior to) the NPI
             Partnership  taxable years in which such distributions are expected
             to be made.

       E. The Capital  Accounts  of those  Partners  which are  charged  with an
expense  of the NPI  Partnership  shall be  credited  with any  portion  of that
expense  which is finally  determined,  judicially  or  administratively,  to be
nondeductible  for  federal  income  tax  purposes,  less  any  amortization  or
depreciation thereof incurred prior to the date that the credit is made.

       F. In allocating  Income and costs for any Fiscal Year in which the ratio
for  sharing  Income  and  costs  changes  pursuant  to  Section  5.3B(i),   the
allocations  of  Income  and  costs  shall  be  made,  and the  books of the NPI
Partnership  shall be  closed,  as soon as  practicable  after  the date  Payout
occurs,  to determine  each Partner's  share of pre-change  Income and costs and
each Partner's share of post-change Income and costs for that Fiscal Year.

       G. Proceeds  received from the Sale or transfer of all or any part of the
NPI Partnership's Net Profits Interest or Royalties shall be distributed 100% to
the  Limited  Partnership  to the extent of its  adjusted  basis in such sold or
transferred NPI Partnership Property. Proceeds in excess of said amount shall be
distributed  100% in  accordance  with the  percentages  set  forth  in  Section
5.3B(i)(a) and (b), except that,  notwithstanding the provisions of Section 5.3F
and solely for purposes of this Section 5.3G,  where the proceeds from such Sale
are  distributed  to  the  Partners  and a  portion  of the  Distributable  Cash
attributable  to such Sale  proceeds is  sufficient in amount to cause Payout to
occur in  accordance  with the  allocation  percentages  in effect until Payout,
Payout  shall be  deemed  to occur  such  that  Income  and  Distributable  Cash
attributable  to the  portion of such Sale  proceeds in excess of the portion of
Sales proceeds  sufficient in amount to cause Payout to occur shall be allocated
in accordance with the allocation percentages in effect after Payout.

       H.  Notwithstanding any other provision of this Agreement,  if, under any
provision of this  Agreement,  the Capital Account of any Partner is adjusted to
reflect  the  difference  between  the  basis  to  the  NPI  Partnership  of NPI
Partnership Property and such NPI Partnership Property's fair market value, then
all items of Income, gain, loss, and

                                      -26-
<PAGE>

deduction with respect to such NPI Partnership Property shall be allocated among
the  Partners so as to take account of the  variation  between the basis of such
NPI Partnership Property and its fair market value at the time of the adjustment
to such  Partner's  Capital  Account  in  accordance  with the  requirements  of
subsection  704(c)  of the  Code,  or in  the  same  manner  as  provided  under
subsection 704(c) of the Code.

       I. Notwithstanding anything to the contrary stated herein,

             (i) Subject only to the provisions of Section 5.3J,  there shall be
       allocated to the Managing Partner, any item of loss, deduction, credit or
       allowance  that, but for this Section 5.3I,  would have been allocated to
       the other  General  Partner that is not  obligated to restore any deficit
       balance in such Partner's Capital Account and would have thereupon caused
       or increased a deficit  balance in such Partner's  Capital  Account as of
       the end of the NPI  Partnership's  taxable year to which such  allocation
       related  (after taking into  consideration  the  provisions of Subsection
       5.3D(v) hereof);

             (ii) Any  General  Partner  that is not  obligated  to restore  any
       deficit  balance  in such  Partner's  Capital  Account  who  unexpectedly
       receives  an  adjustment,   allocation  or   distribution   specified  in
       Subsection  5.3D(v) hereof shall be allocated items of Income and gain in
       an amount and manner  sufficient  to eliminate  such  deficit  balance as
       quickly as possible; and

             (iii) In the event any  allocations of loss,  deduction,  credit or
       allowance are made to the Managing Partner pursuant to clause (i) of this
       Subsection 5.3I, the Managing Partner shall be subsequently allocated all
       items of Income and gain until the aggregate  amount of such  allocations
       of  Income  and  gain  is  equal  to the  aggregate  amount  of any  such
       allocations  of loss,  deduction,  credit or allowance  allocated to such
       Partners pursuant to clause (1) of this Subsection 5.3I.

       J. In the event there is a net  decrease in the  "minimum  gain," as that
term is defined in the 704  Regulations,  of the NPI  Partnership  during an NPI
Partnership  taxable year, all Partners with deficit Capital Account balances at
the end of such year shall be  allocated,  before any other  allocation  is made
under this Article Five, Income and gain of the NPI Partnership for such taxable
year (and, if necessary,  subsequent  years) in the amount and in the proportion
necessary to eliminate  such  deficits as quickly as possible.  The  allocations
required by this  Section  5.3J shall be made as  required by and in  accordance
with Section  l.704-1(b)(4)(iv)(e)  of the 704 Regulations.  It is intended that
the  provision  set forth in this Section 5.3J will  constitute a "minimum  gain
chargeback" as described in Section 1.704-l(b)(4)(iv)(e) of the 704 Regulations.
The 704  Regulations  shall control in the case of any conflict  between the 704
Regulations and this Section 5.3J.

                                      -27-
<PAGE>

       Section 5.4.   Determinations of Allocations and Distributions

       Distributable Cash, Income, Investment Income, costs, deductions, Profits
and Losses  allocable to the Partners shall be distributed or allocated,  as the
case may be, to the Persons who were Partners,  as of the last day of the fiscal
period for which the  distribution  or allocation is to be made,  except that in
any fiscal period in which a Partner sells, assigns or transfers all or any part
of such  Partner's  Interest  to any Person  who  during  the  fiscal  period is
admitted as a Substituted  Partner,  the Distributable Cash, Income,  Investment
Income,  costs,  deductions,  Profits and Losses attributable to the Interest so
sold, assigned or transferred shall, subject to the provisions of Section 7.3 of
this  Agreement,  be allocated  between the transferor and the transferee on the
basis of the number of days in the fiscal  period before the  admission,  and on
and after the admission,  of the transferee as a Substituted Partner;  provided,
however,  that the  Distributable  Cash  attributable to a Sale of a Net Profits
Interest or Royalty shall be  distributed  to those Partners who are Partners on
the day the distribution of such Distributable Cash occurs. The Managing Partner
shall inform the other  Partners of the occurrence and terms of any such Sale by
the NPI Partnership as soon as practicable after such Sale has been consummated.

                                   ARTICLE SIX
                   Withdrawal or Removal of Managing Partner

       Section 6.1.  Transferability of Managing Partner's Interest

       A. Upon 120 days Notification to all other Partners, the Managing Partner
may retire or withdraw from the NPI Partnership as Managing Partner,  subject to
its obligation to pay all costs and expenses  incurred by the NPI Partnership by
virtue of such retirement or withdrawal.  In addition,  there may be substituted
in its stead as Managing  Partner any entity that has, by merger,  consolidation
or otherwise,  acquired  substantially  all of the Managing  Partner's assets or
capital stock and continued its business.

       B.  Subject to Section  11.1 of this  Agreement,  upon the Consent of the
Limited Partnership,  which shall be given if the Consent of Unit Holders owning
more than 50% of the  outstanding  Depositary  Units is  obtained,  the Managing
Partner may assign or transfer its Managing Partner Interest; provided, however,
that no such  consent  shall be required in  connection  with an  assignment  or
transfer   pursuant  to  the  merger,   consolidation  or  transfer  of  all  or
substantially all of the assets of the Managing Partner.

       C. The Managing  Partner may, upon at least 90 days'  Notification to the
Limited  Partnership,  cause  the NPI  Partnership  to  distribute,  in  partial
liquidation  of its Interest in the NPI  Partnership,  to the  Managing  Partner
fractional,  undivided  interests in the Net Profits  Interests and Royalties of
the NPI  Partnership  (such  interest of the  Managing  Partner in a Net Profits
Interest or Royalty  distributed is hereinafter  referred to as the "Distributed
Interest") up to an aggregate interest equal in value to 75% of the value of the
Net Profits  Interests and Royalties of the NPI  Partnership  that it would have
been entitled to upon a hypothetical  liquidation of the NPI  Partnership  after
application  of the  provisions  of Section  8.2 (the  interest in a Net Profits
Interest or Royalty of the Managing  Partner  retained in the NPI Partnership is
hereinafter referred to as the "Retained Interest");  provided, however, that no
such distribution

                                      -28-
<PAGE>

shall occur (i) more than once,  (ii) prior to seven years after the  Activation
of the NPI Partnership and (iii) unless the Managing  Partner obtains an opinion
of counsel to the NPI Partnership to the effect that such  distribution will not
result  in  any  material   adverse  tax   consequence   to  the  Unit  Holders.
Notwithstanding  anything to the contrary in this  Agreement,  in the event that
any such distribution is made, the Managing Partner shall:

       (1)   make  appropriate  adjustments  in  the  Capital  Accounts  of  the
             Partners and in the allocation of NPI Partnership  Income and costs
             to assure that the Managing  Partner will not share or  participate
             in any of the capital, costs, Income, or distributions attributable
             to the Net Profits  Interests and Royalties of the NPI  Partnership
             except  to the  extent of the  Retained  Interest  of the  Managing
             Partner;

       (2)   not voluntarily or otherwise  dispose of its  Distributed  Interest
             unless the undivided  interest of the NPI  Partnership  in such Net
             Profits  Interests  and Royalties is also sold or disposed of for a
             proportionately equivalent consideration;

       (3)   ensure  that  the  Limited   Partnership's  share  of  General  and
             Administrative  Costs  and  Direct  Administrative  Costs  does not
             increase as a result of such withdrawal; and

       (4)   indemnify the Limited  Partnership  against any expenses  resulting
             from such withdrawal.

       Section 6.2. Removal of the Managing Partner

       The power  shall be vested in the  Limited  Partnership  to remove at any
time the Managing Partner.  The power shall be vested in the Limited Partnership
to consent to the  admission  of a  successor  Managing  Partner  following  the
removal of the Managing Partner by the Limited Partnership. A successor Managing
Partner  shall be selected  pursuant to the  provisions  of Section 6.3C of this
Agreement.

       Section 6.3.  Successor Managing Partner

       A. (i) If the Managing  Partner is Removed or  withdraws  and a successor
       Managing Partner is to be admitted to the NPI Partnership,  the departing
       Managing  Partner  shall not  withdraw  or be Removed  until a  successor
       Managing  Partner has been  admitted to the NPI  Partnership  pursuant to
       Article Ten of this Agreement.

             (ii) In the event the Managing  Partner  withdraws or is Removed by
       the  Limited  Partnership  and  a  successor  Managing  Partner  is to be
       admitted,  the  incoming  Managing  Partner  and the  departing  Managing
       Partner  shall,  by mutual  agreement,  select an  independent  petroleum
       consultant to value the departing Managing

                                      -29-
<PAGE>

      Partner's Interest in the NPI Partnership.  If no agreement can be reached
      on the selection of a qualified consultant, the departing Managing Partner
      and incoming  Managing Partner shall each select an independent  petroleum
      consultant,  who together shall select a third  consultant,  and the three
      consultants  shall  together  determine  a value of the  interests  of the
      departing  Managing Partner.  The incoming  Managing  Partner,  or the NPI
      Partnership,  shall  have the  option  to  purchase  at  least  20% of the
      Interest of the departing Managing Partner for the value determined by the
      independent  appraisal.  The departing  Managing Partner's Interest in the
      NPI Partnership  shall be transferred to the successor  Managing  Partner,
      and the successor  Managing Partner shall assign to the departing Managing
      Partner a portion of NPI Partnership Income,  costs and Distributable Cash
      as and when such items are allocated or  distributed,  as the case may be,
      by the NPI Partnership  equal to the percentage  interest of the departing
      Managing  Partner in the NPI  Partnership  prior to withdrawal or Removal,
      less the portion  purchased by the successor  Managing  Partner or the NPI
      Partnership.

       B. Notwithstanding  Section 3.6, the Managing Partner, upon withdrawal or
removal  shall be  released by the other  Partners  from all  liability  for NPI
Partnership  debts and obligations  incurred by the NPI Partnership prior to the
date of such withdrawal or Removal.

       C. Under circumstances in which the Limited  Partnership  Consents to the
admission  of a successor  Managing  Partner,  such  admission  shall not become
effective  unless the NPI  Partnership  shall have received a certificate,  duly
executed  by or on behalf of such  proposed  successor  Managing  Partner to the
effect  that  it is  experienced  in  the  performance  (or  employs  sufficient
personnel who are experienced in performing) of functions of the type then being
performed by the departing Managing Partner.

                                  ARTICLE SEVEN
          Transferability of Limited Partnership's Interest

       Section  7.1.  Transferability  of  Limited  Partnership's Interest.

       No Sale,  exchange,  transfer or assignment of the Limited  Partnership's
Interest may be made if, in the opinion of counsel to the NPI Partnership,  such
Sale, exchange, transfer or assignment,  would cause the NPI Partnership to lose
its status as a partnership  for federal income tax purposes.  In addition,  the
Managing   Partner  may  require  an  opinion  of  the   transferor's   counsel,
satisfactory  to the Managing  Partner,  that such Sale,  exchange,  transfer or
assignment  would not violate the  Securities  Act of 1933,  as amended,  or any
state securities or "blue sky" laws.

       Section 7.2.  Incapacity of Partners

       If a Partner (including the Managing Partner) becomes Incapacitated,  the
Person  who is its legal  representative  shall have all the rights of a Partner
for the  purpose  of  settling  or  managing  its  estate  and such power as the
Incapacitated Partner possessed to assign all or any part of its Interest and to
join with such assignee

                                      -30-
<PAGE>

in  satisfying  conditions  precedent to such  assignee  becoming a  Substituted
Partner. The Incapacity of a Partner shall not dissolve the NPI Partnership.

       Section 7.3. Assignees and Substituted Partners

       A. The NPI Partnership  shall not recognize for any purpose any purported
sale,  assignment  or  transfer of all or any  fraction  of the  Interest of the
Limited  Partnership  unless  the  provisions  of  Section  7.1 shall  have been
complied  with and there shall have been filed with the NPI  Partnership a dated
Notification of such sale, assignment or transfer,  executed and acknowledged by
both  the  seller,  assignor  or  transferor  and  the  purchaser,  assignee  or
transferee and such  Notification  (i) contains the acceptance by the purchaser,
assignee or transferee of all of the terms and  provisions of this Agreement and
(ii)  represents  that such sale,  assignment or transfer was made in accordance
with all applicable laws and regulations. Any sale, assignment or transfer shall
be  recognized  by the  NPI  Partnership  as  effective  on  the  date  of  such
Notification  if the date of such  Notification is within 30 days of the date on
which such  Notification is filed with the NPI Partnership,  and otherwise shall
be recognized as effective on the date such  Notification  is filed with the NPI
Partnership.

       B.  If  the  Limited  Partnership  assigns  all of  its  Interest  to an
assignee, the Limited Partnership shall cease to be a Partner.

       C. A Person who is the assignee of all or any fraction of the Interest of
the Limited  Partnership  shall be subject to all the provisions of this Article
Seven to the same  extent  and in the same  manner  as the  Limited  Partnership
desiring to make an assignment of its Interest.

       D. Any purchaser,  assignee,  transferee,  donee,  heir, legatee or other
recipient  of an  Interest  shall  be  admitted  to  the  NPI  Partnership  as a
Substituted  Partner only with the Consent of the other Partners,  which Consent
may be  granted  or  withheld  by such  Partners  at  their  sole  and  absolute
discretion.  The  admission  of such Person as a  Substituted  Partner  shall be
evidenced  by the  execution  by the Partners of a  certificate  evidencing  the
admission  of such  Person  as a  Partner  and an  amendment  to this  Agreement
executed by the Managing Partner on its own behalf, as well as on behalf of each
other  Partner,  pursuant to the power of attorney  granted  pursuant to Section
12.5.

       E. No Person shall become a  Substituted  Partner until such Person shall
have satisfied the requirements of Section 10.2; provided, however, that for the
purpose of allocating Income,  Investment Income,  Profits,  Losses,  costs, and
Distributable Cash, a Person shall be treated as having become, and as appearing
in the  records of the NPI  Partnership  as, a Partner on such date as the sale,
assignment  or  transfer to such Person was  recognized  by the NPI  Partnership
pursuant to Section 7.3A.

                                      -31-
<PAGE>

       Section 7.4.  Incapacity of the Limited Partnership

       Upon the  Incapacity of the Limited  Partnership or upon the seizure of a
Limited  Partnership's  Interest in the NPI  Partnership,  the successor to such
Limited Partnership's Interest ("Successor") shall be deemed an assignee of such
Limited  Partnership's  Interest  in the NPI  Partnership  and  neither  the NPI
Partnership nor the Successor shall have the right to demand immediate valuation
and payment of such Limited Partnership's Interest.

                                  ARTICLE EIGHT
                   Dissolution, Liquidation and Termination
                             of the NPI Partnership

       Section 8.1.  Events Causing Dissolution

       A.    The NPI  Partnership  shall be dissolved upon the happening of any
of the following events:

             (i) the  expiration  of its term,  unless its term shall have been
       extended by the Managing Partner pursuant to Section 2.3;

             (ii) the  Incapacity  of the  Managing  Partner.  However,  within
       ninety days thereafter the remaining  Partners may elect to reconstitute
       the NPI Partnership  prior to application of the liquidation  provisions
       of Section 8.2;

             (iii)  the  Sale  or  other  disposition  at  one  time  of all or
       substantially  all of the assets of the NPI Partnership  existing at the
       time of such Sale;

             (iv)  the  election  to  dissolve  the NPI  Partnership  (a) by the
       Managing  Partner  (which  election  shall be Consented to by the Limited
       Partnership),  or (b) by the  Consent  of all  Partners  other  than  the
       Managing Partner;

             (v) ninety days after the Removal or withdrawal (unless the Limited
       Partnership  Consents  to a  Successor  pursuant  to Section  6.2) of the
       Managing Partner;

             (vi) the  happening of any other event causing the  dissolution  of
       the  NPI  Partnership  under  the  laws of the  State,  except  that  the
       Incapacity  of any Partner  (other than the Managing  Partner)  shall not
       dissolve  the NPI  Partnership  and the  seizure of the  Interest  of any
       Partner shall not dissolve the NPI Partnership.

       B.  Dissolution of the NPI  Partnership  shall be effective on the day on
which the event occurs giving rise to the  dissolution,  but the NPI Partnership
shall  not  terminate  until  the  Managing  Partner  has  recorded  a notice of
dissolution of the NPI Partnership in the proper records of any  jurisdiction in
which this  Agreement has been recorded and shall have complied with the laws of
the states in which it does business and the assets of the NPI Partnership  have
been distributed as provided in Section 8.2.

                                      -32-
<PAGE>

       C. Nothing  contained in this Agreement  shall impair,  restrict or limit
the rights and powers of the Partners under the laws of the State of Oklahoma or
any other  jurisdiction in which the NPI Partnership is doing business to reform
and reconstitute  themselves as a general partnership  following  dissolution of
the NPI Partnership either under provisions  identical to those set forth herein
or under any other provisions.

       Section  8.2.  Liquidation  of the  NPI  Partnership;  Liquidation  of a
Partner's Interest

       A. Upon dissolution of the NPI Partnership, its liabilities shall be paid
in the order provided herein.  The Managing  Partner shall either  distribute in
kind or sell the NPI  Partnership's  property so that such disposition is in the
best  interests of the Limited  Partnership,  and shall  execute all  amendments
terminating the NPI Partnership.  In connection with any such Sale, the Managing
Partner shall attempt to obtain the best prices for such property.  Pending such
Sales,  the  Managing  Partner  shall have the right to  continue  to manage and
otherwise  to  deal  with  NPI  Partnership  property.  In  the  event  the  NPI
Partnership is dissolved on account of the Incapacity or Removal of the Managing
Partner,  the NPI Partnership  shall elect, in accordance with the provisions of
Article Eleven, a person (the "Liquidating  Agent") to perform the function of a
Managing Partner in liquidating the assets of the NPI Partnership and winding up
its affairs,  and shall pay to such  Liquidating  Agent its reasonable  fees and
expenses  incurred in connection  therewith.  In the event of a distribution  in
kind of any NPI  Partnership  Property  (including  a Net Profits  Interest  and
Royalty), each Partner's Capital Account shall first be credited or debited with
its share of the  unrealized  appreciation  of  depreciation  in the fair market
value of such NPI Partnership Property.  Each Partner's share of said unrealized
appreciation  or  depreciation  shall  be  equivalent  to its  share  (allocated
pursuant to Sections  5.3 and 5.4) of the gain or loss on an actual Sale of such
NPI  Partnership  Property.  The Capital  Account of each  Partner to whom a NPI
Partnership  Property is distributed shall be debited with the fair market value
of the NPI Partnership  Property  distributed to it. The Capital Account of each
Partner to whom an  interest in a Producing  Property  is  distributed  shall be
debited  with the fair  market  value of the  interest  distributed  to it.  Any
liquidation  of the NPI  Partnership  shall take place out of court and  without
application  being  made  therefor  to the  Secretary  of State of the  State of
Oklahoma.

       B.  In  settling  accounts  after  dissolution,  the  assets  of the  NPI
Partnership  shall  be paid  out in the  following  order:  (i) to  third  party
creditors,  in the order or priority as  provided by law;  (ii) to the  Managing
Partner and any Liquidating  Agent for any expenses of the NPI Partnership  paid
by or payable to them to the extent they are entitled to reimbursement there-for
pursuant  to this  Agreement;  (iii) to the  Limited  Partnership  in the amount
equivalent to the amount of its positive  Capital Account  balances (as adjusted
pursuant  to Section  8.2A) on the date of  distribution;  (iv) to the  Managing
Partner in the amount equivalent to the amount of its positive Capital Account

                                      -33-
<PAGE>

balances (as adjusted pursuant to Section 8.2A) on the date of distribution; and
(v) the balance shall be paid to the Partners in proportion to and to the extent
of the positive balances in the Partners' Capital Accounts.

       C. If the Managing  Partner has a deficit  balance in its Capital Account
following the distribution(s)  provided for in Section 8.2B above, as determined
after taking into account all adjustments to its Capital Account for the taxable
year of the NPI Partnership  during which such  distribution(s)  occur, it shall
restore the amount of such deficit balance to the NPI Partnership within 90 days
and such amount shall be distributed  to the other  Partners in accordance  with
their positive Capital Account balances.

       D. Upon the liquidation or partial  liquidation of the Managing Partner's
Interest  pursuant to Article  Six  hereof,  any  distribution  to the  Managing
Partner  shall be made pro rata to such  Partner in  accordance  with and to the
extent of its positive  Capital  Account  balance  after the  Partners'  Capital
Accounts are adjusted as if all of the NPI Partnership's  property had been sold
at its fair market value  immediately prior to such distribution and the gain or
loss realized on such Sale charged or credited to the Partners' Capital Accounts
in accordance  with the  provisions of Article Five hereof,  provided,  however,
that if such Partner has a deficit balance in its Capital Account following such
distribution  (or adjustment of such Partner's  Capital Account pursuant to this
Section 8.2D),  such Partner shall restore the amount of such deficit balance to
the NPI Partnership by the later of the end of the NPI Partnership  taxable year
in which the liquidation of such Partner's  Interest occurs or 90 days after the
date of such liquidation.

                                  ARTICLE NINE
          Books and Records; Accounting; Tax Elections; etc.

       Section 9.1.  Books and Records

       The books  and  records  of the NPI  Partnership,  including  information
relating  to the sale by the  Managing  Partner  or any  Affiliates  of goods or
services  to the NPI  Partnership,  and a list of the  names and  addresses  and
Interests of all Partners,  shall be  maintained by the Managing  Partner at the
principal office of the NPI Partnership for a period of five years following the
close of the  Fiscal  Year to which  they  relate  and  shall be  available  for
examination  there  by  any  Partner  or  Unit  Holder  or its  duly  authorized
representatives  at any and all reasonable times. Any Partner or Unit Holder, or
its duly  authorized  representatives,  upon  paying  the  costs of  collection,
duplication  and mailing,  shall be entitled for any proper purpose to a copy of
the  list  of  names  and  addresses  and  Interests  of the  Partners.  The NPI
Partnership  may  maintain  such other books and  records  and may provide  such
financial or other  statements as the Managing  Partner in its discretion  deems
advisable.

                                      -34-
<PAGE>

       Section 9.2.  Accounting  Basis for Tax and Reporting  Purposes;  Fiscal
Year

       The  books and  records  of the NPI  Partnership  for tax  purposes,  for
purposes of this  agreement and for the purpose of reports to the Partners shall
be kept on the accrual basis.  The Fiscal Year of the NPI  Partnership  shall be
the calendar year to the extent  permissible and the Managing  Partner shall use
its best efforts to obtain any necessary approvals therefor.

       Section 9.3.  Bank Accounts

       The Managing  Partner shall maintain a bank account or accounts on behalf
of the NPI Partnership with any bank in the United States having total assets in
excess of  $100,000,000.  The Managing Partner shall not deposit NPI Partnership
funds in an account with any bank in an aggregate amount in excess of 5% of such
bank's total assets. Withdrawals shall be made only in the regular course of the
NPI  Partnership's  business on such  signature  or  signatures  as the Managing
Partner may determine.  All deposits and other funds not needed in the operation
of the business may be deposited in interest-bearing  accounts,  certificates of
deposit,  money market funds  (including those managed or marketed by the Dealer
Manager or its  Affiliates) or invested in short-term  United States  Government
obligations  maturing  within  one  year,  commercial  paper  of  United  States
corporations  having the  highest  credit  rating  granted by Moody's  Investors
Services,  Inc. or Standard & Poors Corporation,  or other similar highly liquid
investments.

       Section 9.4.  Reports

       A.  The  Managing  Partner  shall  furnish  to  the  Limited  Partnership
sufficient information and data with respect to the properties and operations of
the NPI  Partnership  in order to permit the Limited  Partnership to satisfy its
reporting obligations under Section 10.4 of the Limited Partnership Agreement.

       B. The Managing  Partner shall file on a timely basis with the Securities
and Exchange  Commission all filings  required to be made by the NPI Partnership
pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934, and
the rules and regulations promulgated thereunder.

       Section 9.5.  Elections

       The  Managing  Partner  shall  cause  the NPI  Partnership  to  make  all
elections required or permitted to be made by the NPI Partnership under the Code
and not otherwise  expressly provided for in this Agreement,  in the manner that
the  Managing  Partner  believes  will  be  most  advantageous  to  the  Limited
Partnership,  except that the Managing  Partner shall not be required to make an
election under Section 754 of the Code or corresponding provisions of applicable
state income tax laws.

                                      -35-
<PAGE>

                                   ARTICLE TEN
                                   Amendments

       Section 10.1.  Proposal and Adoption of Amendments Generally

       A.  Notwithstanding  anything  to  the  contrary  contained  herein,  the
Managing  Partner may,  without  prior  notice or consent of any other  Partner,
amend any  provision  of this  Agreement  (including  an  amendment  to admit an
additional or successor  Managing  Partner) if, in its opinion,  such  amendment
does not have a material  adverse  effect  upon the  Limited  Partnership.  Such
amendment shall  thereafter be disclosed to the Unit Holders within a reasonable
time  thereafter.  Amendments  to this  Agreement  to reflect  the  addition  or
substitution of a Partner or the admission of a successor Managing Partner shall
be made at the time and in the manner  referred  to in Section  10.2.  Any other
amendment  to this  Agreement  may be  proposed by the  Managing  Partner or the
Limited  Partnership.  The Partner or Partners  proposing such  amendment  shall
submit  a  Notification  containing  (i)  the  text of  such  amendment,  (ii) a
statement  of the  purpose  of such  amendment,  and (iii) an opinion of counsel
obtained by the Partner or Partners  proposing such amendment to the effect that
such amendment is permitted by the Act, will not impair the limited liability of
the Unit  Holders,  and will not  adversely  affect  the  classification  of the
Limited  Partnership or the NPI Partnership as  partnerships  for federal income
tax purposes.  The Managing  Partner shall,  within 15 days after receipt of any
proposal under this Section  10.1A,  give  Notification  to all Partners of such
proposed amendment, of such statement of purpose and of such opinion of counsel,
together,  in the case of an  amendment  proposed  by other  Partners,  with the
views, if any, of the Managing Partner with respect to such proposed amendment.

       B.  Amendments to this Agreement  shall be adopted if: (i) in the case of
amendments referred to in Section l0.2A, the conditions specified in Section 7.3
shall have been satisfactorily completed and the NPI Partnership shall have been
furnished  with an opinion of counsel to the NPI  Partnership to the effect that
such  amendment  will not  adversely  affect the  classification  of the Limited
Partnership  or the NPI  Partnership  as  partnerships  for  federal  income tax
purposes;  (ii) in the case of  amendments  referred  to in Section  10.2B,  the
conditions specified in Section 6.3 shall have been satisfactorily completed; or
(iii) in the case of all  other  amendments,  such  amendment  shall  have  been
Consented  to by the Limited  Partnership  (unless  such Consent is not required
pursuant to Section 10.1A);  provided,  however, that no such amendment may: (i)
enlarge the obligations of any Partner under this Agreement  without the Consent
of such Partner;  (ii) modify the method provided in Article Five of determining
and allocating or distributing,  as the case may be, Income,  Investment Income,
Profits, Losses, Distributable Cash or costs and expenses without the Consent of
each Partner adversely affected by such modification;  (iii) amend Sections 6.1,
6.2 or 6.3 without the Consent of all the Partners;  or (iv) amend Sections 2.3,
4.3,  4.4,  4.5,  4.7,  4.8 or this  Article  Ten without the Consent of all the
Partners.

                                      -36-
<PAGE>

       C. Upon the adoption of any  amendment to this  Agreement,  the amendment
shall be executed by the Managing  Partner and all other Partners,  and shall be
recorded in the proper records of the State and any other state in which the NPI
Partnership is then doing business.

       Section  10.2.  Amendments  on  Admission,   Withdrawal  or  Removal  of
Partners

       A. If this  Agreement  shall be  amended  to  reflect  the  admission  or
substitution of a Partner, the amendment to this Agreement may be adopted by the
Managing  Partner,  the Person to be  substituted  or added,  and the  assigning
Partner.  Any such amendment shall be executed on behalf of all Partners but may
be executed by the substituted or added Partner,  the assigning Partner, and the
Managing  Partner,  individually  and on  behalf  of all of the  other  Partners
pursuant to the power of attorney granted in Section 12.5.

       B. If this  Agreement  shall be  amended  to reflect  the  withdrawal  or
Removal of the Managing  Partner and the continuation of the business of the NPI
Partnership,  such amendment shall be signed by the successor  Managing  Partner
and by the departing Managing Partner.

       C. No Person shall become a Partner,  unless such Person shall have:  (i)
become a party  to,  and  adopted  all of the  terms  and  conditions  of,  this
Agreement;  (ii) if such  Person  is other  than an  individual,  provided  upon
request the Managing  Partner with evidence  satisfactory to counsel for the NPI
Partnership  of such Person's  authority to become a Partner under the terms and
provisions of this  Agreement;  and (iii) paid all reasonable  legal fees of the
NPI  Partnership and the Managing  Partner and filing and  publication  costs in
connection with such Person's becoming a Partner.

                                 ARTICLE ELEVEN
                          Consents, Voting and Meetings

       Section 11.1.  Method of Giving Consent

       Any  Consent  required  by this  Agreement  may be given by a Partner  as
follows:  (1) at a meeting,  in  person,  by a written  proxy or signed  writing
directing  the manner in which it desires that its vote be cast,  which  writing
must be received by the Managing Partner prior to such meeting, or (2) without a
meeting,  by a signed writing  directing the manner in which it desires that its
vote be cast,  which  writing must be received by the Managing  Partner prior to
the date upon which the vote of  Partners  are to be  counted.  Any  Partner may
waive notice of or  attendance  at any meeting of the Partners and may execute a
signed  written  consent.  Only the votes of  Partners  of record on the date of
Notification,  whether at a meeting or otherwise,  shall be counted. The laws of
the State  pertaining to the validity and use of corporate  proxies shall govern
the validity and use of proxies given by Partners.

                                      -37-
<PAGE>

       Section 11 .2. Meeting of Partners

       The  Managing  Partner may at any time call a meeting of the  Partners or
for a vote,  without a  meeting,  of the  Partners  on  matters  upon  which the
Partners  are  entitled to vote,  and shall call for such a meeting or vote upon
receipt of a Notification therefor of the Limited Partnership. Within 15 days of
the receipt of the Notification,  the Managing Partner shall notify all Partners
of  record  as of the date of the  Notification  as to the time and place of the
meeting,  if called,  and the general  nature of the  business to be  transacted
thereat,  or if no such meeting has been called,  of the matter or matters to be
voted  upon  and  the  date  upon  which  the  votes  will be  counted.  Any NPI
Partnership meeting or the date upon which such votes,  without a meeting,  will
be counted  (regardless  of whether  the  Managing  Partner  has called for such
meeting or vote upon the request of Limited  Partnership  or have initiated such
event  without  such  request)  shall be not less  than 30 or more  than 60 days
following  mailing of the  Notification  thereof by the  Managing  Partner.  All
expenses of the meetings, voting and such Notification shall be borne by the NPI
Partnership.

       Section 11.3.  Submissions to Other Partners

       The Managing  Partner shall give all the other Partners  Notification  of
any proposal or other matter  required by any provisions of this Agreement or by
law to be submitted for the  consideration  and approval of the other  Partners.
Such  Notification  shall  include  any  information  required  by the  relevant
provision of the Agreement or by law.

       Section 11.4  Limited Partnership Consent

       To the extent allowed in the Limited Partnership Agreement and subject to
Section 10.1, the Limited  Partnership,  by and through Unit Holders owning more
than 50% of the Depositary  Units,  may without the  concurrence of the Managing
Partner:

        (i)   amend the NPI Partnership Agreement;

        (ii)  dissolve the NPI Partnership;

       (iii) remove the Managing Partner and elect a new one;

        (iv) approve or disapprove the sale of all or substantially  all of the
assets of the NPI Partnership; and

        (v)  cancel or amend the terms of any  contract  for  services  with the
Managing Partner or any Affiliate thereof without penalty upon 30 days' notice.

                                      -38-
<PAGE>

                                 ARTICLE TWELVE
                            Miscellaneous Provisions

       Section 12.1.     Notification  to the NPI  Partnership  or the Managing
Partner

       Any  Notification to the NPI Partnership or the Managing Partner shall be
sent to the  principal  office  of the NPI  Partnership,  as set  forth  in this
Agreement.  Except as provided  herein,  any  Notification to a Partner shall be
sent to its last known address.

       Section 12.2.  Binding Provisions

       The covenants and agreements  contained  herein shall be binding upon and
inure to the benefit of the heirs,  executors,  administrators,  successors  and
assigns of the respective parties hereto.

       Section 12.3.  Applicable Law

       This  Agreement  shall be construed and enforced in  accordance  with the
laws of the State applicable to contracts made and to be performed wholly within
the State.

       Section 12.4.  Separability of Provisions

       If for any  reason  any  provision  or  provisions  hereof  which are not
material to the purposes or business of the NPI  Partnership or of the Partners'
Interests  are  determined  to be invalid and contrary to any existing or future
law, such invalidity  shall not impair the operation of or affect those portions
of this Agreement that are valid.

       Section  12.5.  Appointment of the Managing Partner as Attorney- in-Fact

       A.  Each  Partner,  by  the  execution  of  this  Agreement,  irrevocably
constitutes  and appoints the  Managing  Partner,  its true and lawful agent and
attorney-in-fact  with full power and authority in its name,  place and stead to
execute,  acknowledge,  deliver,  swear to,  file and record at the  appropriate
public offices such documents, instruments and conveyances that may be necessary
or  appropriate  to carry out the  provisions  or  purposes  of this  Agreement,
including  without  limitation:  (i)  all  certificates  and  other  instruments
(including counterparts of this Agreement), and any amendment thereof, including
any  amendment   substituting  a  Partner,   that  the  Managing  Partner  deems
appropriate to form,  reform,  qualify or continue the NPI Partnership (or a new
partnership with  substantially the same provisions as the NPI Partnership) as a
partnership  in the  jurisdiction  in  which  the NPI  Partnership  may  conduct
business;  (ii) all amendments and other instruments necessary to admit into the
NPI  Partnership  additional or substituted  Partners  pursuant to Section 10.2;
(iii) all instruments that the Managing  Partner deems  appropriate to reflect a
change or  modification  of the NPI  Partnership in accordance with the terms of
this Agreement (including those necessary to reflect any additional

                                      -39-
<PAGE>

Capital Contributions);  and (iv) all conveyances and other instruments that the
Managing  Partner deem appropriate to reflect the dissolution and termination of
the NPI Partnership.

       B. The  appointment by all Partners of the Managing  Partner as agent and
attorney-in-fact  shall be deemed  irrevocable and to be a power coupled with an
interest,  in  recognition  of the fact that  each of the  Partners  under  this
Agreement  will be  relying  upon the power of the  Managing  Partner  to act as
contem-- plated by this Agreement in any filing and other action by it on behalf
of the NPI  Partnership,  and shall survive the  Incapacity of any Person hereby
giving  such  power and the  transfer  or  assignment  of all or any part of the
Interest of such person; provided, however, that in the event of the transfer by
a Partner  of all of its  Interest,  the  foregoing  powers of  attorney  of the
transferor  Partner  shall  survive  such  transfer  only until such time as the
transferee  shall have been  admitted to the NPI  Partnership  as a  Substituted
Partner  and all  required  documents  and  instruments  shall  have  been  duly
executed, filed and recorded to effect such substitution.

       Section 12.6.  Entire Agreement

       This Agreement  constitutes the entire agreement among the parties.  This
Agreement  supersedes any prior agreement or understanding among the parties and
may not be modified or amended in any manner other than as set forth herein.

       Section 12.7  Paragraph Titles

       Article and section  titles are for  descriptive  purposes only and shall
not control or alter the meaning of this Agreement as set forth in the text.

       Section 12.8.  Counterparts

       This  Agreement  may be  executed in several  counterparts,  all of which
together  shall  constitute  one  agreement   binding  on  all  parties  hereto,
notwithstanding that all the parties have not signed the same counterpart except
that no counterpart shall be binding unless signed by the Partners.

                                      -40-
<PAGE>

                                       GEODYNE ENERGY COMPANY

                                       By:/s/ Michael W. Tomasso
                                          --------------------------------
                                          Michael W. Tomasso
                                          President

                                       PAINEWEBBER/GEODYNE
                                       INSTITUTIONAL/PENSION ENERGY
                                       INCOME P-3 LIMITED PARTNERSHIP

                                       By:  GEODYNE PROPERTIES, INC.
                                            General Partner

                                       By:  /s/ Michael E. Luttrell
                                            -------------------------------
                                            Michael E. Luttrell,
                                            Executive Vice President

                                      -41-
<PAGE>

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