Document:

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                                                                   EXHIBIT 10.20

                                  LIPOMED, INC.

                            2001 STOCK INCENTIVE PLAN
                            -------------------------

1.   Purpose
     -------

     The purpose of this 2001 Stock Incentive Plan (the "Plan") of LipoMed,
Inc., a Delaware corporation (the "Company"), is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders. Except where the context
otherwise requires, the term "Company" shall include any of the Company's
present or future parent or subsidiary corporations as defined in Sections
424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a significant interest, as determined by the Board of
Directors of the Company (the "Board").

2.   Eligibility
     -----------

     All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant."

3.   Administration and Delegation
     -----------------------------

     (a)  Administration by Board of Directors. The Plan will be administered by
          ------------------------------------
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.

     (b)  Appointment of Committees. To the extent permitted by applicable law,
          -------------------------
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officers referred to in Section 3(c), to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officers.

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     (c)  Delegation to Executive Officers. To the extent permitted by
          --------------------------------
applicable law, the Board may delegate to one or more executive officers of the
Company the power to grant Awards to employees of the Company or any of its
present or future subsidiary corporations and to exercise such other powers
under the Plan as the Board may determine; provided that the Board shall fix the
terms of the Awards to be granted by such executive officers (including the
exercise price of such Awards, which may include a formula by which the exercise
price will be determined) and the maximum number of shares subject to Awards
that the executive officer may grant; provided further, however, that no
executive officer shall be authorized to grant Awards to any "executive officer"
of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")).

4.   Stock Available for Awards
     --------------------------

     (a)  Number of Shares. Subject to adjustment under Section 8, Awards may be
          ----------------
made under the Plan for up to the number of shares of common stock, $0.001 par
value per share, of the Company (the "Common Stock") that is equal to the sum
of:

          (1)  6,000,000 shares of Common Stock; plus

          (2)  such additional number of shares of Common Stock (up to 1,750,000
               shares) as is equal to the sum of (x) the number of shares of
               Common Stock reserved for issuance under the Company's Stock
               Option Plan, as amended (the "Existing Plan") that remain
               available for grant under the Existing Plan immediately prior to
               the closing of the Company's initial public offering and (y) the
               number of shares of Common Stock subject to awards granted under
               the Existing Plan which awards expire, terminate or are otherwise
               surrendered, canceled, forfeited or repurchased by the Company at
               their original issuance price pursuant to a contractual
               repurchase right (subject, however, in the case of Incentive
               Stock Options (as hereinafter defined) to any limitations of the
               Code); plus

          (3)  an annual increase to be added on the first day of each of the
               Company's fiscal years during the period beginning in fiscal year
               2002 and ending on the second day of fiscal year 2011 equal to
               the lesser of (i) 1,250,000 shares of Common Stock, (ii) 5% of
               the outstanding shares on such date, or (iii) an amount
               determined by the Board.

     Notwithstanding clause (3) above, in no event shall the number of shares
available under this Plan be increased as set forth in clause (3) to the extent
such increase, in addition to any other increases proposed by the Board in the
number of shares available for issuance under all other employee or director
stock plans, would result in the total number of shares then available for
issuance under all employee and director stock plans exceeding 30% of the
outstanding shares of the Company on the first day of the applicable fiscal
year.

     If any Award expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part (including as
the result of shares of Common Stock subject to such Award being repurchased by
the Company at the original issuance price pursuant

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to a contractual repurchase right) or results in any Common Stock not being
issued, the unused Common Stock covered by such Award shall again be available
for the grant of Awards under the Plan, subject, however, in the case of
Incentive Stock Options, to any limitations under the Code. Shares issued under
the Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.

     (b)  Per-Participant Limit. Subject to adjustment under Section 8, for
          ---------------------
Awards granted after the Common Stock is registered under the Exchange Act, the
maximum number of shares of Common Stock with respect to which Awards may be
granted to any Participant under the Plan shall be 350,000 shares per calendar
year. The per-Participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code ("Section
162(m)").

5.   Stock Options
     -------------

     (a)  General. The Board may grant options to purchase Common Stock (each,
          -------
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option."

     (b)  Incentive Stock Options. An Option that the Board intends to be an
          -----------------------
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company or any of its
present or future parent or subsidiary corporations and shall be subject to and
shall be construed consistently with the requirements of Section 422 of the
Code. The Company shall have no liability to a Participant, or any other party,
if an Option (or any part thereof) which is intended to be an Incentive Stock
Option is not an Incentive Stock Option.

     (c)  Exercise Price. The Board shall establish the exercise price at the
          --------------
time each Option is granted and specify it in the applicable option agreement.

     (d)  Duration of Options. Each Option shall be exercisable at such times
          -------------------
and subject to such terms and conditions as the Board may specify in the
applicable option agreement.

     (e)  Exercise of Option. Options may be exercised by delivery to the
          ------------------
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.

     (f)  Payment Upon Exercise. Common Stock purchased upon the exercise of an
          ----------------------
Option granted under the Plan shall be paid for as follows:

          (1)  in cash or by check, payable to the order of the Company;

          (2)  except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a

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creditworthy broker to deliver promptly to the Company sufficient funds to
pay the exercise price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price and any required tax withholding;

     (3)  when the Common Stock is registered under the Exchange Act, by
delivery of shares of Common Stock owned by the Participant valued at their fair
market value as determined by (or in a manner approved by) the Board in good
faith ("Fair Market Value"), provided (i) such method of payment is then
permitted under applicable law and (ii) such Common Stock, if acquired directly
from the Company, was owned by the Participant at least six months prior to such
delivery;

     (4)  to the extent permitted by applicable law and by the Board, in its
sole discretion by (i) delivery of a promissory note of the Participant to the
Company on terms determined by the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or

     (5)  by any combination of the above permitted forms of payment.

     (g)  Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.

6.   Restricted Stock
     ----------------

     (a)  Grants. The Board may grant Awards entitling recipients to acquire
          ------
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").

     (b)  Terms and Conditions. The Board shall determine the terms and
          --------------------
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.

     (c)  Stock Certificates. Any stock certificates issued in respect of a
          ------------------
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the

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event of the Participant's death (the "Designated Beneficiary"). In the
absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.

7.   Other Stock-Based Awards
     ------------------------

     The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

8.   Adjustments for Changes in Common Stock and Certain Other Events
     ----------------------------------------------------------------

     (a) Changes in Capitalization. In the event of any stock split, reverse
         -------------------------
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.

     (b) Liquidation or Dissolution. In the event of a proposed liquidation or
         --------------------------
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.

     (c) Reorganization and Change in Control Events
         -------------------------------------------

         (1) Definitions
             -----------

             (a) A "Reorganization Event" shall mean:

                 (i)  any merger or consolidation of the Company with or into
                      another entity as a result of which all of the Common
                      Stock of the Company is converted into or exchanged for
                      the right to receive cash, securities or other property;
                      or

                 (ii) any exchange of all of the Common Stock of the Company for
                      cash, securities or other property pursuant to a share
                      exchange transaction.

                                      -5-

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                       (b)  A "Change in Control Event" shall mean:

                            (i)   the acquisition by an individual, entity or
                                  group (within the meaning of Section 13(d)(3)
                                  or 14(d)(2) of the Exchange Act) (a "Person")
                                  of beneficial ownership of any capital stock
                                  of the Company if, after such acquisition,
                                  such Person beneficially owns (within the
                                  meaning of Rule 13d-3 promulgated under the
                                  Exchange Act) 50% or more of either (x) the
                                  then-outstanding shares of common stock of the
                                  Company (the "Outstanding Company Common
                                  Stock") or (y) the combined voting power of
                                  the then-outstanding securities of the Company
                                  entitled to vote generally in the election of
                                  directors (the "Outstanding Company Voting
                                  Securities"); provided, however, that for
                                                --------  -------
                                  purposes of this subsection (i), the following
                                  acquisitions shall not constitute a Change in
                                  Control Event: (A) any acquisition directly
                                  from the Company (excluding an acquisition
                                  pursuant to the exercise, conversion or
                                  exchange of any security exercisable for,
                                  convertible into or exchangeable for common
                                  stock or voting securities of the Company,
                                  unless the Person exercising, converting or
                                  exchanging such security acquired such
                                  security directly from the Company or an
                                  underwriter or agent of the Company), (B) any
                                  acquisition by any employee benefit plan (or
                                  related trust) sponsored or maintained by the
                                  Company or any corporation controlled by the
                                  Company, or (C) any acquisition by any
                                  corporation pursuant to a Business Combination
                                  (as defined below) which complies with clauses
                                  (x) and (y) of subsection (iii) of this
                                  definition; or

                            (ii)  such time as the Continuing Directors (as
                                  defined below) do not constitute a majority of
                                  the Board (or, if applicable, the Board of
                                  Directors of a successor corporation to the
                                  Company), where the term "Continuing Director"
                                  means at any date a member of the Board (x)
                                  who was a member of the Board on the date of
                                  the initial adoption of this Plan by the Board
                                  or (y) who was nominated or elected subsequent
                                  to such date by at least a majority of the
                                  directors who were Continuing Directors at the
                                  time of such nomination or election or whose
                                  election to the Board was recommended or
                                  endorsed by at least a majority of the
                                  directors who were Continuing Directors at the
                                  time of such nomination or election; provided,
                                                                       --------
                                  however, that there shall be excluded from
                                  -------
                                  this clause (y) any individual whose initial
                                  assumption of office occurred as a result of
                                  an actual or threatened election contest with
                                  respect to the election or removal of

                                      -6-

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                                  directors or other actual or threatened
                                  solicitation of proxies or consents, by or on
                                  behalf of a person other than the Board; or

                            (iii) the consummation of a merger, consolidation,
                                  reorganization, recapitalization or share
                                  exchange involving the Company or a sale or
                                  other disposition of all or substantially all
                                  of the assets of the Company (a "Business
                                  Combination"), unless, immediately following
                                  such Business Combination, each of the
                                  following two conditions is satisfied: (x) all
                                  or substantially all of the individuals and
                                  entities who were the beneficial owners of the
                                  Outstanding Company Common Stock and
                                  Outstanding Company Voting Securities
                                  immediately prior to such Business Combination
                                  beneficially own, directly or indirectly, more
                                  than 50% of the then-outstanding shares of
                                  common stock and the combined voting power of
                                  the then-outstanding securities entitled to
                                  vote generally in the election of directors,
                                  respectively, of the resulting or acquiring
                                  corporation in such Business Combination
                                  (which shall include, without limitation, a
                                  corporation which as a result of such
                                  transaction owns the Company or substantially
                                  all of the Company's assets either directly or
                                  through one or more subsidiaries) (such
                                  resulting or acquiring corporation is referred
                                  to herein as the "Acquiring Corporation") in
                                  substantially the same proportions as their
                                  ownership of the Outstanding Company Common
                                  Stock and Outstanding Company Voting
                                  Securities, respectively, immediately prior to
                                  such Business Combination and (y) no Person
                                  (excluding the Acquiring Corporation or any
                                  employee benefit plan (or related trust)
                                  maintained or sponsored by the Company or by
                                  the Acquiring Corporation) beneficially owns,
                                  directly or indirectly, 50% or more of the
                                  then-outstanding shares of common stock of the
                                  Acquiring Corporation, or of the combined
                                  voting power of the then-outstanding
                                  securities of such corporation entitled to
                                  vote generally in the election of directors
                                  (except to the extent that such ownership
                                  existed prior to the Business Combination).

                       (c)  "Good Reason" shall mean any significant diminution
                            in the Participant's title, authority, or
                            responsibilities from and after such Reorganization
                            Event or Change in Control Event, as the case may
                            be, or any reduction in the annual cash compensation
                            payable to the Participant from and after such
                            Reorganization Event or Change in Control Event, as
                            the case may be, or the relocation of

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                            the place of business at which the Participant is
                            principally located to a location that is greater
                            than 50 miles from the current site.

                       (d)  "Cause", as determined by the Board, shall mean any
                            (i) willful failure by the Participant, which
                            failure is not cured within 30 days of written
                            notice to the Participant from the Company, to
                            perform his or her material responsibilities to the
                            Company or (ii) willful misconduct by the
                            Participant which affects the business reputation of
                            the Company.

                  (2)  Effect on Options

                       (a)  Reorganization Event. Upon the occurrence of a
                            --------------------
                            Reorganization Event (regardless of whether such
                            event also constitutes a Change in Control Event),
                            or the execution by the Company of any agreement
                            with respect to a Reorganization Event (regardless
                            of whether such event will result in a Change in
                            Control Event), the Board shall provide that all
                            outstanding Options shall be assumed, or equivalent
                            options shall be substituted, by the acquiring or
                            succeeding corporation (or an affiliate thereof);
                            provided that if such Reorganization Event also
                            -------- ----
                            constitutes a Change in Control Event, except to the
                            extent specifically provided to the contrary in the
                            instrument evidencing any Option or any other
                            agreement between a Participant and the Company,
                            such assumed or substituted options shall become
                            immediately exercisable in full if, on or prior to
                            the eighteen-month anniversary of the date of the
                            consummation of the Reorganization Event, the
                            Participant's employment with the Company or the
                            acquiring or succeeding corporation is terminated
                            for Good Reason by the Participant or is terminated
                            without Cause by the Company or the acquiring or
                            succeeding corporation. For purposes hereof, an
                            Option shall be considered to be assumed if,
                            following consummation of the Reorganization Event,
                            the Option confers the right to purchase, for each
                            share of Common Stock subject to the Option
                            immediately prior to the consummation of the
                            Reorganization Event, the consideration (whether
                            cash, securities or other property) received as a
                            result of the Reorganization Event by holders of
                            Common Stock for each share of Common Stock held
                            immediately prior to the consummation of the
                            Reorganization Event (and if holders were offered a
                            choice of consideration, the type of consideration
                            chosen by the holders of a majority of the
                            outstanding shares of Common Stock); provided,
                            however, that if the consideration received as a
                            result of the Reorganization Event is not solely
                            common stock of the acquiring or succeeding
                            corporation (or an affiliate thereof), the Company
                            may, with the consent of the acquiring or succeeding
                            corporation, provide for the consideration to be
                            received upon the exercise of Options to consist
                            solely of

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                    common stock of the acquiring or succeeding corporation (or
                    an affiliate thereof) equivalent in fair market value to the
                    per share consideration received by holders of outstanding
                    shares of Common Stock as a result of the Reorganization
                    Event.

                         Notwithstanding the foregoing, if the acquiring or
                    succeeding corporation (or an affiliate thereof) does not
                    agree to assume, or substitute for, such Options, then the
                    Board shall, upon written notice to the Participants,
                    provide that all then unexercised Options will become
                    exercisable in full as of a specified time prior to the
                    Reorganization Event and will terminate immediately prior to
                    the consummation of such Reorganization Event, except to the
                    extent exercised by the Participants before the consummation
                    of such Reorganization Event; provided, however, in the
                    event of a Reorganization Event under the terms of which
                    holders of Common Stock will receive upon consummation
                    thereof a cash payment for each share of Common Stock
                    surrendered pursuant to such Reorganization Event (the
                    "Acquisition Price"), then the Board may instead provide
                    that all outstanding Options shall terminate upon
                    consummation of such Reorganization Event and that each
                    Participant shall receive, in exchange therefor, a cash
                    payment equal to the amount (if any) by which (A) the
                    Acquisition Price multiplied by the number of shares of
                    Common Stock subject to such outstanding Options (whether or
                    not then exercisable), exceeds (B) the aggregate exercise
                    price of such Options.

               (b)  Change in Control Event that is not a Reorganization Event.
                    ----------------------------------------------------------
                    Upon the occurrence of a Change in Control Event that does
                    not also constitute a Reorganization Event, except to the
                    extent specifically provided to the contrary in the
                    instrument evidencing any Option or any other agreement
                    between a Participant and the Company, each then-outstanding
                    Option shall continue to become vested in accordance with
                    the original vesting schedule set forth in such Option;
                    provided, however, that each such Option shall become
                    immediately exercisable in full if, on or prior to the
                    eighteen-month anniversary of the date of the consummation
                    of the Change in Control Event, the Participant's employment
                    with the Company or the acquiring or succeeding corporation
                    is terminated for Good Reason by the Participant or is
                    terminated without Cause by the Company or the acquiring or
                    succeeding corporation.

          (3)  Effect on Restricted Stock Awards
               ---------------------------------

               (a)  Reorganization Event that is not a Change in Control Event.
                    ----------------------------------------------------------
                    Upon the occurrence of a Reorganization Event that is not a
                    Change in Control Event, the repurchase and other rights of
                    the Company under each outstanding Restricted Stock Award
                    shall inure to the

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<PAGE>

                    benefit of the Company's successor and shall apply to the
                    cash, securities or other property which the Common Stock
                    was converted into or exchanged for pursuant to such
                    Reorganization Event in the same manner and to the same
                    extent as they applied to the Common Stock subject to such
                    Restricted Stock Award.

               (b)  Change in Control Event. Upon the occurrence of a Change in
                    -----------------------
                    Control Event (regardless of whether such event also
                    constitutes a Reorganization Event), except to the extent
                    specifically provided to the contrary in the instrument
                    evidencing any Restricted Stock Award or any other agreement
                    between a Participant and the Company, each then-outstanding
                    Restricted Stock Award shall continue to become free from
                    conditions or restrictions in accordance with the original
                    schedule set forth in such Restricted Stock Award; provided
                    however, that each such Restricted Stock Award shall
                    immediately become free from all conditions or restrictions
                    if, on or prior to the eighteen-month anniversary of the
                    date of the consummation of the Change in Control Event, the
                    Participant's employment with the Company or the acquiring
                    or succeeding corporation is terminated for Good Reason by
                    the Participant or is terminated without Cause by the
                    Company or the acquiring or succeeding corporation.

          (4)  Effect on Other Awards
               ----------------------

               (a)  Reorganization Event that is not a Change in Control Event.
                    ----------------------------------------------------------
                    The Board shall specify the effect of a Reorganization Event
                    that is not a Change in Control Event on any other Award
                    granted under the Plan at the time of the grant of such
                    Award.

               (b)  Change in Control Event. Upon the occurrence of a Change in
                    -----------------------
                    Control Event (regardless of whether such event also
                    constitutes a Reorganization Event), except to the extent
                    specifically provided to the contrary in the instrument
                    evidencing any other Award or any other agreement between a
                    Participant and the Company, each such then-outstanding
                    Award shall continue to become exercisable, realizable,
                    vested or free from conditions or restrictions in accordance
                    with the original schedule set forth in such Award;
                    provided, however, that each such Award shall immediately
                    become fully exercisable, realizable, vested or free from
                    conditions or restrictions if, on or prior to the
                    eighteen-month anniversary of the date of the consummation
                    of the Change in Control Event, the Participant's employment
                    with the Company or the acquiring or succeeding corporation
                    is terminated for Good Reason by the Participant or is
                    terminated without Cause by the Company or the acquiring or
                    succeeding corporation.

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<PAGE>

9.   General Provisions Applicable to Awards
     ---------------------------------------

     (a)  Transferability of Awards. Except as the Board may otherwise determine
          -------------------------
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.

     (b)  Documentation. Each Award shall be evidenced in such form (written,
          -------------
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

     (c)  Board Discretion. Except as otherwise provided by the Plan, each Award
          ----------------
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.

     (d)  Termination of Status. The Board shall determine the effect on an
          ---------------------
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

     (e)  Withholding. Each Participant shall pay to the Company, or make
          -----------
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may satisfy such tax obligations in whole or in part by delivery of
shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their Fair Market Value; provided, however, that the
total tax withholding where stock is being used to satisfy such tax obligations
cannot exceed the Company's minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income). The Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to a Participant.

     (f)  Amendment of Award. The Board may amend, modify or terminate any
          ------------------
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

     (g)  Conditions on Delivery of Stock. The Company will not be obligated to
          -------------------------------
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all

                                      -11-

<PAGE>

other legal matters in connection with the issuance and delivery of such shares
have been satisfied, including any applicable securities laws and any applicable
stock exchange or stock market rules and regulations, and (iii) the Participant
has executed and delivered to the Company such representations or agreements as
the Company may consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.

     (h)  Acceleration. The Board may at any time provide that any Award shall
          ------------
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.

10.  Miscellaneous
     -------------

     (a)  No Right To Employment or Other Status. No person shall have any claim
          --------------------------------------
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

     (b)  No Rights As Stockholder. Subject to the provisions of the applicable
          ------------------------
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

     (c)  Effective Date and Term of Plan. The Plan shall become effective on
          -------------------------------
the date on which the Securities and Exchange Commission declares the
registration statement on Form S-1 for the initial public offering of the
Company's Common Stock effective (the "Effective Date"). No Awards shall be
granted under the Plan after the completion of ten years from the earlier of (i)
the Effective Date or (ii) the effective date of the approval of the Plan by the
Company's stockholders, but Awards previously granted may extend beyond that
date.

     (d)  Amendment of Plan. The Board may amend, suspend or terminate the Plan
          -----------------
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).

     (e)  Authorization of Sub-Plans. The Board may from time to time establish
          --------------------------
one or more sub-plans under the Plan for purposes of satisfying applicable blue
sky, securities or tax

                                      -12-

<PAGE>

laws of various jurisdictions. The Board shall establish such sub-plans by
adopting supplements to this Plan containing (i) such limitations on the Board's
discretion under the Plan as the Board deems necessary or desirable or (ii) such
additional terms and conditions not otherwise inconsistent with the Plan as the
Board shall deem necessary or desirable. All supplements adopted by the Board
shall be deemed to be part of the Plan, but each supplement shall apply only to
Participants within the affected jurisdiction and the Company shall not be
required to provide copies of any supplement to Participants in any jurisdiction
which is not the subject of such supplement.

     (f)  Governing Law. The provisions of the Plan and all Awards made
          -------------
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

                                   Adopted by the Board of Directors on
                                   September 27, 2001, to be effective as of the
                                   Effective Date (as defined herein)

                                   Approved by the stockholders on
                                   November 15, 2001, to be effective as of the
                                   Effective Date (as defined herein)

                                      -13-

<PAGE>

                                 FIRST AMENDMENT
                              OF LIPOSCIENCE, INC.

                            2001 STOCK INCENTIVE PLAN

     THIS FIRST AMENDMENT ("First Amendment") of LipoScience, Inc. 2001 Stock
Incentive Plan (the "Plan") is effective as of the Effective Date of the Plan
(as defined in the Plan).

     WHEREAS, the Board of Directors of LipoScience, Inc., a Delaware
corporation (the "Company") has adopted and the stockholders of the Company have
approved the Plan; and

     WHEREAS, pursuant to Section 10(d) of the Plan, the Board of Directors
deems it to be in the best interest of the Company to amend the Plan to permit
the transfer of certain Awards (as defined in the Plan) to certain permitted
transferees as approved by the Board, the Compensation Committee of the Board or
other duly appointed committee of the Board.

     NOW, THEREFORE, the Plan shall be amended as follows:

     1.       Paragraph 9(a) shall be deleted in its entirety and the following
substituted in lieu thereof:

                  (a) Transferability of Awards. Except as otherwise provided in
                  this paragraph 9(a), no Award shall be transferable or
                  assignable except by will or by the laws of descent and
                  distribution and the Award shall be exercisable, during the
                  Participant's lifetime, only by the Participant. Subject to
                  the approval of the Board or a Committee, a Participant may
                  transfer Nonstatutory Stock Options granted hereunder for no
                  consideration to or for the benefit of a Permitted Transferee,
                  subject to such limits as the Board or the Committee may
                  establish. For the purposes of this paragraph 9(a), Permitted
                  Transferee shall mean any child, stepchild, grandchild,
                  parent, stepparent, grandparent, spouse, former spouse,
                  sibling, niece, nephew, mother-in-law, father-in-law,
                  son-in-law, daughter-in-law, brother-in-law or sister-in-law,
                  including adoptive relationships, any person sharing the
                  Participant's household (other than a tenant or employee), a
                  trust in which any of the foregoing persons have more than
                  fifty percent of the beneficial interest, a foundation in
                  which any of the foregoing persons or the Participant control
                  the management of the assets, any other entity in which any of
                  the foregoing persons or the Participant own more than fifty
                  percent of the voting interests. All references to a
                  Participant, to the extent relevant in the context, shall
                  include references to Permitted Transferees.

     2.       Except as herein  amended,  the terms and  provisions of the Plan
shall remain in full force and effect as originally adopted and approved.

<PAGE>

         IN WITNESS WHEREOF, the undersigned hereby certifies that this First
Amendment was duly adopted by the Board of Directors, this the 25th day of
April, 2002, to become effective as of the Effective Date of the Plan.

                                                LIPOSCIENCE, INC.
[CORPORATE SEAL]
                                                By:      /s/ F. Ronald Stanton
                                                      --------------------------
ATTEST:                                             F. Ronald Stanton, President

By:      /s/ Holly A. Coldiron
       --------------------------
 Holly A. Coldiron, Assistant Secretary

                                      -2-PURCHASE AND SALE AGREEMENT

         THIS  AGREEMENT,  made and entered into this 28th day of June,  2002 by
and between  AMERICAN  RESOURCES  OFFSHORE,  INC.,  whose  address is 801 Travis
Street,  Suite 2100,  Houston,  TX 77002  ("Seller"),  and NEWFIELD  EXPLORATION
COMPANY ("Buyer"), whose address is 363 N. Sam Houston Parkway East, Suite 2020,
Houston, Texas, 77060.

                                    ARTICLE 1
                                    ---------

                                PURCHASE AND SALE

         1.01 Purchase and Sale. Subject to the terms of this Agreement,  Seller
agrees to sell the hereinafter  described Interests to Buyer and Buyer agrees to
purchase the Interests from Seller.

         1.02 Interests. The following items comprise the Interests:

                  (a) the interest in the oil and gas leases and lands described
         in Exhibit A hereof and in the wells located in and on such oil and gas
         leases  including,  without  limitation,  operating  rights  and record
         title, working,  leasehold,  mineral, royalty,  overriding royalty, net
         revenue, net profits or reversionary  interests and any other interests
         of  a  similar  nature  expressed,  as  a  percentage,   on  Exhibit  A
         ("Leases");

                  (b) all of Seller's  right,  title and  interest in all wells,
         equipment,  fixtures,  platforms,  personal  property and  improvements
         (including, without limitation, materials, plants, pipelines, gathering
         and  processing  systems  and salt water  disposal  systems)  which are
         located on,  appurtenant to or used in connection  with the Leases now,
         as of the Effective Time or as of the Closing Date ("Equipment");

                  (c)  all  of  Seller's  right,  title  and  interests  in  all
         contracts, escrowed funds for the abandonment of Interests, agreements,
         instruments,   payout   balances,   commitments,   licenses,   permits,
         easements,  rights-of-way  and other  rights of Seller  relating to the
         items  described in this Section  1.02,  together  with all of Seller's
         rights,  claims and causes of action under such items arising after the
         Effective Time ("Contracts");

                  (d) all of Seller's  right,  title and  interest in oil,  gas,
         condensate,  related  hydrocarbons and other minerals produced from the
         Leases after the Effective Time ("Substances");

                  (e)  all  accounts   including   Seller's  share  of  any  gas
         imbalance, makeup obligations, abandonment escrow account, instruments,
         general intangibles, liens and security interests arising from the sale
         or other  disposition of the items described in this Section 1.02 on or
         after the Effective Time ("Accounts").

                                       1
<PAGE>

                  (f) all of Seller's  information  relating  to the  Interests,
         reservoir,   land,  operation  and  production  files  and  other  data
         including  geological,  engineering  and proprietary  geophysical  data
         (both "2-D" and "3-D"),  maps,  logs, core analysis,  formation  tests,
         production  records and legal,  title,  accounting and contract  files.
         ("Technical Files")

         1.03 Effective  Time.  The purchase and sale of the Interests  shall be
effective for all purposes on July 1, 2002, at 7:00 a.m.,  Central Standard Time
("Effective Time").

                                    ARTICLE 2
                                    ---------

                                 PURCHASE PRICE

         2.01 Purchase  Price.  The purchase price for the Interests is U.S. TWO
MILLION, THREE HUNDRED THOUSAND DOLLARS ($2,300,000.00) (the "Purchase Price").

         2.02 Deposit. Intentionally omitted.

         2.03  Adjustments  to  Purchase  Price.  The  Purchase  Price  shall be
adjusted as provided in this  Section  2.03 and the  resulting  amount  shall be
referred to as the "Adjusted  Purchase Price". Not less than five (5) days prior
to the  Closing  Date,  Seller  shall  deliver  to Buyer a  Preliminary  Closing
Statement,  substantially in the form attached hereto as Schedule 2.03,  setting
forth  adjustments  to the  Purchase  Price  using  the  best  information  then
available and prepared in accordance with customary  accounting  principles used
in the oil and gas industry.

                  (a) The Purchase Price shall be increased by the following:

                           (1) an amount equal to the  quantity of  merchantable
                  oil produced  from the Leases and in storage at the  Effective
                  Time, and not sold or disposed of prior to Closing, multiplied
                  by the market price for such oil at the Effective Time, net of
                  all taxes and gravity adjustments and transportation  expenses
                  necessary to market such production.

                           (2)  the  amount  of  the   operating   and   capital
                  expenditures   together  with  any  lease  operating  expenses
                  charged under applicable  operating agreements and general and
                  administrative   costs  charged  as  overhead   charges  under
                  applicable operating agreements,  that are (i) attributable to
                  the Interests during the period between the Effective Time and
                  Closing,  (ii) incurred and paid by Seller,  including without
                  limitation  capital  expenditures  approved in accordance with
                  Section  4.01  or  otherwise  made  in  compliance  with  this
                  Agreement.

                                       2
<PAGE>

                           (3) taxes  paid by Seller  for  assessments  based on
                  ownership  of the  Interests  after the  Effective  Time,  the
                  production  of  hydrocarbons  therefrom,  or  the  receipt  of
                  proceeds  attributable  thereto (excluding income taxes) after
                  the Effective Time.

                           (4)  an  amount   equal  to  all   prepaid   expenses
                  attributable to the Interests paid by Seller and  attributable
                  to the period  from and after the  Effective  Time,  including
                  without  limitation  prepaid insurance and prepaid ad valorem,
                  property,  production  and other taxes accruing to the benefit
                  of Buyer subsequent to the Effective Time.

                  (b) The Purchase Price shall be decreased by the following:

                           (1) the Deposit;

                           (2)  the  amount  of  net  proceeds  or  other  value
                  received by Seller for the sale or  disposition of Substances,
                  as defined  herein,  including  net proceeds  from the sale of
                  liquids and other constituents  removed in gas plants or other
                  processing  facilities  for  production  occurring  after  the
                  Effective Time;

                           (3) the amount of proceeds or other value received by
                  Seller for the sale or disposition after the Effective Time of
                  any portion of the Interests;

                           (4) an amount equal to the value of all uncured Title
                  Defects as determined under Section 5.08; and

                           (5) the  amount of all unpaid  taxes and  assessments
                  based  on  the  ownership  of  property,   the  production  of
                  hydrocarbons  or the  receipt of  proceeds,  excluding  income
                  taxes,  accruing to the Interests  prior to the Effective Time
                  and  for  the  payment  of  which  Buyer   assumes   liability
                  subsequent to Closing.  If possible,  this adjustment shall be
                  computed  using the tax rate and  values for the tax period in
                  question.  If this is not possible,  the  adjustment  shall be
                  based on the taxes assessed for the immediately  preceding tax
                  period.  If taxes  assessed for the  preceding  tax period are
                  determined  to be more or less  than  the  actual  taxes,  the
                  difference  shall be a  Post-Closing  Adjustment or Subsequent
                  Adjustment under Sections 9.01 and 9.02.

         2.04 Payment of Adjusted  Purchase Price.  At Closing,  Buyer shall pay
Seller an amount equal to the Adjusted  Purchase Price in immediately  available
funds.

         2.05 Allocation of Purchase  Price/Tangibles-Intangibles.  The Purchase
Price  shall  be  allocated  among  tangibles  and  intangibles  comprising  the
Interests as follows:  Ninety (90%) of the Purchase Price shall be attributed to
the Leases and associated  Contracts and Ten Percent (10%) of the Purchase Price
shall be attributed to Equipment and other personal  property.  Buyer and Seller
agree to be bound by the  allocation of the Purchase  Price among  tangibles and
intangibles  set forth  herein for all  purposes;  to  consistently  report such
allocations for all federal,  state and local income tax purposes; and to timely
file all reports  required by the  Internal  Revenue  Code of 1986,  as amended,
concerning the Purchase Price allocation.

                                       3
<PAGE>

                                    ARTICLE 3
                                    ---------

                         REPRESENTATIONS AND DISCLAIMERS

         3.01 Seller's Representations. Seller represents to Buyer that:

                  (a) Seller is a  corporation  organized,  existing and in good
         standing under the laws of the State of Delaware and is qualified to do
         business  in, and is in good  standing  under the laws of the States of
         Louisiana  and Texas.  Seller is  qualified  under  applicable  law and
         regulation to own the Interests.  With respect to all persons  claiming
         by through or under  Seller but not  otherwise,  Seller  has,  and will
         convey to Buyer, Defensible Title (as defined in Section 5.06 below) to
         the  Interests.  Seller  warrants  and  agrees to  defend  title to the
         Interests against the lawful claims of all persons claiming by, through
         or under Seller, but not otherwise.

                  (b)  Seller  has the  authority  to carry on its  business  as
         presently  conducted,  to enter into this  Agreement and to perform its
         obligations under this Agreement.

                  (c) The  execution  and delivery of this  Agreement  have been
         authorized by all necessary  action,  corporate and  otherwise,  on the
         part of Seller.  Execution and delivery of this Agreement does not, and
         the  consummation  of the  transactions  contemplated by this Agreement
         will not,  violate or be in conflict  with any  agreement,  instrument,
         judgment, order, decree, law or regulation by which Seller is bound.

                  (d) Subject to laws and  equitable  principles  affecting  the
         rights of creditors,  this Agreement is a binding  obligation of Seller
         enforceable according to its terms.

                  (e) Except as set forth on Schedule  3.01(e),  no suit, claim,
         demand or  investigation,  of which  Seller  has  received  notice,  is
         pending or, to the best of Seller's  knowledge,  threatened  that might
         result in impairment  or loss or  diminution  of Seller's  title to the
         Interests or otherwise  adversely  affect the Interests in any material
         respect. There are no bankruptcy or reorganization  proceedings pending
         or  threatened  against  Seller.  As  used in this  Section  3.01,  the
         expression "best of Seller's knowledge" means actual knowledge acquired
         by the  management  of Seller in the ordinary  course and  operation of
         Seller's business without special or particular investigation or review
         of  Seller's  business  affairs  in  connection  with  the  transaction
         contemplated herein or otherwise.

                  (f)  Contracts  which burden or will burden or encumber or are
         otherwise material to the ownership,  use or operation of the Interests
         are  described  on Exhibit A hereof,  were entered into in the ordinary
         course of business  and, if executed by Seller,  were duly executed and
         delivered by Seller and are in force according to their terms.  Neither
         Seller, nor any other party to Seller's knowledge,  is in breach of any
         obligation  which might adversely  affect the Interests in any material
         respect.

                                       4
<PAGE>

                  (g) This section is intentionally omitted.

                  (h) This section is intentionally omitted.

                  (i) This section is intentionally omitted.

                  (j) To the  best  of  Seller's  knowledge  taxes  based  on or
         measured by the  ownership of property,  the  production  or removal of
         hydrocarbons  and the receipt of proceeds which are due and relating to
         the Interests have been properly paid,  subject to possible  adjustment
         for volume or price corrections.

                  (k) Seller is timely  receiving its share of proceeds from the
         sale  of  hydrocarbons  produced  from  the  Leases  without  suspense,
         counterclaim or set-off. To the best of Seller's  knowledge,  there has
         been no  production  of  hydrocarbons  from the Leases in excess of the
         allowable  production  established  pursuant  to  applicable  state  or
         federal  law or  regulation  that  would  result  in a  restriction  on
         production from the Leases subsequent to the Effective Time.

                  (l) This section is intentionally omitted.

                  (m) Seller has incurred no liability  for brokers' or finders'
         fees related to the  transactions  contemplated  by this  Agreement for
         which Buyer shall be liable.

                  (n)  To  the  best  of  Seller's   knowledge,   there  are  no
         outstanding  authorities  for  expenditures  or  any  oral  or  written
         commitments or proposals to conduct  operations on the Leases which are
         required  to be  approved  by  non-operators  under  the  terms  of the
         applicable joint operating agreement.

                  (o)  Except  as  set  forth  on  Schedule  3.01(o),  as of the
         Effective  Time,  no portion of the Interests is over  produced,  under
         produced or otherwise  subject to an imbalance in respect of substances
         produced from the Leases.

         3.02 Buyer's Representations. Buyer represents to Seller as follows:

                  (a) Buyer is a  corporation  organized,  existing  and in good
         standing under the laws of the State of Delaware and is qualified to do
         business and is in good standing  under the laws of the States of Texas
         and Louisiana.  Buyer is qualified under  applicable law and regulation
         to own the  Interests  and, in  particular,  Buyer is  qualified  to do
         business in each of the States and on the  Continental  Shelf,  Gulf of
         Mexico,  in which the  Interests  are located to the extent the laws of
         such place require Buyer to so qualify.

                  (b)  Buyer  has the  authority  to  carry on its  business  as
         presently  conducted,  to enter into this  Agreement and to perform its
         obligations under this Agreement.

                                       5
<PAGE>

                  (c) The  execution  and  delivery of this  Agreement  has been
         authorized by all necessary  action,  corporate and  otherwise,  on the
         part of Buyer.  Execution and delivery of this  Agreement does not, and
         the  consummation  of the  transactions  contemplated by this Agreement
         will not,  violate or be in conflict  with any  agreement,  instrument,
         judgment, order, decree, law or regulation by which Buyer is bound.

                  (d) Subject to laws and  equitable  principles  affecting  the
         rights of creditors,  this  Agreement is a binding  obligation of Buyer
         enforceable  according  to  its  terms.  There  are no  bankruptcy  nor
         reorganization proceedings pending or, to Buyer's knowledge, threatened
         against Buyer.

                  (e) Buyer has incurred no  liability  for brokers' or finders'
         fees related to the  transactions  contemplated  by this  Agreement for
         which Seller shall be liable.

                  (f) There are no pending suits,  actions or other  proceedings
         in which  Buyer is a party (or, to Buyer's  knowledge,  which have been
         threatened to be instituted  against  Buyer) which affect the execution
         and delivery of this Agreement or the  consummation of the transactions
         contemplated hereby.

                  (g) Buyer is a knowledgeable purchaser,  owner and operator of
         oil and gas  properties,  has the ability to evaluate the Interests for
         purchase,  and is acquiring  the  Interests for its own account and not
         with the intent to make a  distribution  in violation of the Securities
         Act of 1933 as amended.

                                    ARTICLE 4
                                    ---------

                                    COVENANTS

         4.01  Seller's  Covenants.  Seller  covenants  and agrees with Buyer as
follows:

                  (a) Following  execution of this  Agreement and until Closing,
         Seller  shall  (i)  continue  to  operate  the  Interests  or cause the
         Interests  to be  operated,  in a good  and  workmanlike  manner;  (ii)
         maintain  insurance now in force with respect to the  Interests;  (iii)
         notify Buyer of any suit,  claim or demand  within  Seller's  knowledge
         which might  adversely  affect the  Interests;  (iv) pay or cause to be
         paid all costs,  taxes and expenses which Seller is obligated to pay in
         connection  with the  Interests as they become due; (v) pay or cause to
         be paid all rentals and other payments necessary to maintain the Leases
         in force  according  to their  terms and comply  with all  express  and
         implied covenants  contained in the Leases or Contracts;  (vi) exercise
         due  diligence  in  safeguarding  the  Interests  and  maintaining  the
         confidentiality  of all  data and  other  confidential  or  proprietary
         materials relating to the Interests; (vii) promptly notify Buyer of all
         significant   operations   which  are  proposed  with  respect  to  the
         Interests;  and  (viii)  use  efforts,  consistent  with the  standards
         expected of a reasonably prudent operator but without any obligation to

                                       6
<PAGE>

         pay  money  to  obtain  any  consents,  waivers  (including  waiver  of
         preferential  purchase rights) and approvals  required of third parties
         or  governmental  authorities in connection  with  consummation  of the
         transactions  contemplated by this Agreement.  Buyer  acknowledges that
         Seller  owns  undivided  interests  in the  Leases  and  that  acts  or
         omissions of other  owners of  undivided  interests in the Leases shall
         not be a breach of any covenant in this Agreement.  Seller shall not be
         obligated  to perform  any act which  would be in breach of a provision
         in, or its duties under, a Lease,  Contract or applicable  law, rule or
         regulation.

                  (b) Following  execution of this Agreement,  Seller shall not,
         without  Buyer's  consent;  (i) abandon any well capable of  commercial
         production; (ii) release all or a portion of a Lease; (iii) commence or
         consent to an  operation  estimated  to cost an amount in excess of the
         amount an operator is entitled to expend without non-operator  approval
         under  the  applicable  operating  agreement(s)   (excluding  emergency
         operations and  operations  undertaken to avoid a penalty or forfeiture
         provision of any  applicable  agreement or order);  (iv) create a lien,
         security  Interest or other  encumbrance on the Interests;  (v) sell or
         dispose of the Interests (except in connection with preferential rights
         to purchase)  other than  Interests  sold,  consumed or produced in the
         ordinary course of business;  (vi) amend a Lease or amend a Contract or
         Account or enter into new contracts  affecting the Interests other than
         in the ordinary course of business;  (vii) waive,  compromise or settle
         any claim that diminishes or adversely burdens an Interests.

                  (c)  Following  the  execution  of this  Agreement  and  until
         Closing,  Seller  will  provide  Buyer  and its  attorneys,  employees,
         accountants,    engineers,   consultants   and   agents   (collectively
         "representatives"),  at Buyer's sole expense, risk and cost, reasonable
         access,  during  business  hours, to the Contracts and other records of
         Seller  pertaining  to the ownership  and/or  operation of the Interest
         (including,  without limitation, title files, division order files, and
         production,  severance  and ad valorem tax  records) for the purpose of
         Buyer's  conducting a due diligence review of the Interests  insofar as
         the same are in Seller's  possession  or control,  or insofar as Seller
         has access to the same,  and to the extent,  in each case,  that Seller
         may do so without  violating legal constraints or any legal obligation.
         Seller shall not be obligated to furnish any updated  abstracts,  title
         opinions or additional title  information  which are not in Seller's or
         its attorney's  possession,  but shall  cooperate with Buyer in Buyer's
         efforts  to  obtain  (at  Buyer's   expense)  such   additional   title
         information as Buyer may reasonably require.

         BUYER  RECOGNIZES AND AGREES THAT ALL MATERIALS MADE AVAILABLE TO BUYER
         AND ITS REPRESENTATIVES IN CONNECTION WITH THE TRANSACTION CONTEMPLATED
         HEREBY,  WHETHER MADE AVAILABLE  PURSUANT TO THIS SECTION OR OTHERWISE,
         ARE  MADE  AVAILABLE  TO  BUYER  AS  AN   ACCOMMODATION,   AND  WITHOUT
         REPRESENTATION  OR  WARRANTY  OF  ANY  KIND  AS  TO  THE  ACCURACY  AND
         COMPLETENESS  OF SUCH  MATERIALS.  NO  WARRANTY  OF ANY KIND IS MADE BY
         SELLER AS TO THE  INFORMATION  SUPPLIED TO BUYER OR WITH RESPECT TO THE
         INTERESTS TO WHICH THE INFORMATION  RELATES, AND BUYER EXPRESSLY AGREES
         THAT ANY  CONCLUSIONS  DRAWN  THEREFROM  SHALL BE THE RESULT OF ITS OWN
         INDEPENDENT REVIEW AND JUDGMENT.

                                       7
<PAGE>

                  (d) Seller will identify,  with respect to all Interests,  (A)
         all preferential rights to purchase ("Preferential Rights") which would
         be applicable to the transaction  contemplated hereby and (B) the names
         and addresses of parties  holding such rights (it being agreed that, in
         attempting  to identify  such  Preferential  Rights,  and the names and
         addresses  of such  parties  holding  the  same,  Seller  shall  not be
         obligated to go beyond its own  records),  and (ii)  request,  from the
         parties so identified  (and in accordance  with the documents  creating
         such  rights),   execution  of  waivers  of   Preferential   Rights  so
         identified.  Seller shall have no  obligation  other than to attempt to
         identify  such  Preferential  Rights and to so request  such waivers of
         Preferential Rights (including,  without limitation,  Seller shall have
         no  obligation to assure that such waivers of  Preferential  Rights are
         obtained).  Except to the extent that Buyer can  establish  that Seller
         failed to fulfill  the  obligations  set forth  above in this  Section,
         Buyer shall  indemnify  and hold Seller (and its  officers,  directors,
         employees, attorneys, contractors and agents) harmless from and against
         all claims, actions, causes of action,  liabilities,  damages,  losses,
         costs or  expenses  (including,  without  limitation,  court  costs and
         attorney's  fees)  whatsoever  that arise out of the  failure to obtain
         consent or waivers of  Preferential  Rights with  respect to any of the
         Interests.  If a party  from whom a waiver of a  Preferential  Right is
         requested refuses to give such waiver, Seller will tender to such party
         the  required  Interest  (at a price equal to the amount  specified  in
         Exhibit  A  hereto  for  such  Interest,   reduced  appropriately,   as
         determined  by mutual  agreement of Buyer and the Seller,  if less than
         the entire  Interest  must be  tendered),  and to the extent  that such
         Preferential  Right is  exercised by such party,  and such  Interest is
         actually  sold to such party so  exercising  such right,  such Interest
         will be  excluded  from the  transaction  contemplated  hereby  and the
         Purchase Price will be adjusted downward by the amount actually paid to
         Seller by the party exercising such right.

         If the  holder of  Preferential  Rights  fails to fully  exercise  such
         rights and purchase the  Interests,  or part  thereof,  pursuant to the
         terms of this Agreement within 30 days of the Closing Date provided for
         herein  then  Buyer  will   purchase   such   Interests  as  originally
         contemplated  herein  before  the  holder of such  Preferential  Rights
         failed to consummate the purchase transaction.

         4.02  Buyer's  Covenants.  Buyer  covenants  and agrees  with Seller as
follows:

                  (a) Buyer and  Seller,  and their  respective  representatives
         shall keep confidential all terms and provisions of this Agreement, the
         transaction  contemplated  by this  Agreement,  and all information and
         data concerning the Interests, Seller's and Buyer's business, financial
         condition, operations, strategies and prospects.

                  (b) Buyer shall take or cause to be taken all such  actions as
         may be  necessary or advisable to  consummate  and make  effective  the
         purchase of the Interests  and the  transactions  contemplated  by this
         Agreement  and to  assure  that as of the  Closing  Date it will not be
         under any material  corporate,  legal or contractual  restriction  that
         would prohibit or delay the timely consummation of such transactions.

                                       8
<PAGE>

                  (c) Buyer shall cause all the  representations  and warranties
         of Buyer  contained in this  Agreement to be true and correct on and as
         of the Closing  Date.  To the extent the  conditions  precedent  to the
         obligations  of Seller  are within the  control of Buyer,  Buyer  shall
         cause such  conditions  to be satisfied on or prior to the Closing Date
         and,  to the extent the  conditions  precedent  to the  obligations  of
         Seller are not within the  control of Buyer,  Buyer shall take or cause
         to be  taken  all  such  commercially  reasonable  actions  as  may  be
         necessary to cause such  conditions  to be satisfied on or prior to the
         Closing Date.

                  (d)  Buyer   shall   promptly   notify   Seller   (i)  if  any
         representation  or warranty of Buyer  contained  in this  Agreement  is
         discovered to be or becomes  untrue,  or (ii) if Buyer fails to perform
         or comply with any covenant or agreement contained in this Agreement or
         it is  reasonably  anticipated  that Buyer will be unable to perform or
         comply with any covenant or agreement contained in this Agreement.

                                    ARTICLE 5
                                    ---------

                            Buyer's REVIEW AND TITLE

         5.01 Due Diligence. Buyer may, prior to Closing and at its cost, review
data  and   information,   title   examination   and  other   examinations   and
investigations in respect of the Interests.  Should, as a result of examinations
and investigations,  or otherwise, one or more matters come to Buyer's attention
which would  constitute a Title Defect,  as described below, and should there be
one or more of such Title  Defects  which Buyer is  unwilling to waive and close
the transaction  contemplated  herein  notwithstanding  the fact that such Title
Defects  exist,  Buyer shall notify  Seller in writing of such Title  Defects as
soon as the same are  identified  by Buyer,  but in no event  later than 10 days
prior to the Closing  Date.  Such  notification  shall include for each asserted
Title Defect (i) a description  of the Title Defect and the Interest to which it
applies;  (ii) an  explanation  of the basis for the claim of a Title Defect and
(iii) the amount by which Buyer would  propose to adjust the  Purchase  Price in
view of such Title  Defect.  Buyer's  failure to give  notice of a Title  Defect
within the time and in the manner required by this Section 5.01 shall constitute
a waiver by Buyer of the Title  Defect and the Title Defect will be treated as a
Permitted Encumbrance as set forth below.

         5.02 Access to Interests. Following the execution of this Agreement and
until  Closing,  subject to the consent and  cooperation  of operators and other
third parties,  Seller shall provide Buyer and its representatives access to the
Interests  and the right to observe  operations  and  inspect any and all of the
Interests,  Equipment,  improvements and fixtures included in the Interests,  to
the extent that  Seller has the legal right to grant such access and right.  All
visits to Seller's facilities by Buyer, and on Buyer's behalf, will be scheduled
by mutual consent of the Parties,  subject to Buyer's  providing Seller at least
five days  written  notice of the  locations  that Buyer wishes to visit and the
proposed times. Seller may accompany Buyer and its representatives  during their
site  visits.  Entry onto the  Interests  will (i) subject  Buyer to third party
restrictions,  if any, and to Seller's industrial safety,  hygiene, and drug and
alcohol requirements and (ii) be at Buyer's sole risk and expense.

                                       9
<PAGE>

         5.03  Environmental  Assessment.  Buyer may  conduct  an  environmental
assessment of the Interests,  including  investigations to identify wetlands and
sensitive  and  protected   habitats.   If  Buyer  undertakes  an  environmental
assessment,  both the consultant (if  consultants are employed) and the scope of
the proposed  assessment,  including  testing  protocols,  must be acceptable to
Seller  before the work may begin.  If Buyer and Seller  cannot agree on Buyer's
proposed  environmental  assessment  plan,  then Seller may at its sole  option,
withdraw from this Agreement any of the Interests that Buyer proposes to assess,
or all of the  Interests,  and the  Purchase  Price  will be  adjusted  for each
withdrawn  Interest.  If Seller  withdraws  all the  Interests  pursuant to this
Section,  this Agreement will  terminate,  and Seller will refund the Deposit to
Buyer.

If Buyer takes samples from the Interests,  Seller may require splitting of each
sample. Buyer will deliver copies of all draft and final reports, results, data,
and analyses of site visits, inspections,  and assessments to Seller within five
days  of  Buyer's  receipt  of  them,  at  Buyer's  cost.  Seller  will  have no
confidentiality  obligation with regard to this  information and may disclose it
to third parties or use it for any purpose.

Notwithstanding  anything in the foregoing that may appear to the contrary,  the
presence  of  naturally  occurring   radioactive  materials  ("NORM")  will  not
constitute a Title Defect (hereinafter defined). IT IS EXPRESSLY RECOGNIZED THAT
THE LANDS AND/OR WATER  BOTTOMS  ALONG WITH SURFACE  FACILITIES  AND  PRODUCTION
EQUIPMENT  LOCATED  THEREON,  HAVING  BEEN USED IN  CONNECTION  WITH OIL AND GAS
PRODUCTION  ACTIVITIES,  MAY  CONTAIN  NORM AS A  RESULT  OF  THESE  OPERATIONS.
ACCORDINGLY,   LANDS  AND/OR  WATER  BOTTOMS,   THE  WELLS,  AND  THE  EQUIPMENT
TRANSFERRED  HEREIN ARE TRANSFERRED  WITH THE RESTRICTION THAT THEY WILL BE USED
ONLY IN CONNECTION  WITH OIL AND GAS PRODUCING  ACTIVITIES  ASSOCIATED  WITH THE
LEASES, AND WILL NOT BE SUBSEQUENTLY TRANSFERRED FOR UNRESTRICTED USE UNLESS THE
CONCENTRATIONS  OF NORM ASSOCIATED  THEREWITH ARE BELOW THE LEVELS  SPECIFIED AS
ALLOWABLE FOR UNRESTRICTED TRANSFER AS SET FORTH IN ANY AND ALL APPLICABLE LAWS,
ORDERS,  RULES  OR  REGULATIONS  OF ANY  GOVERNMENTAL  AGENCY  OR  COURT  HAVING
JURISDICTION.  ADDITIONALLY,  BUYER AGREES TO COMPLY WITH ALL PROVISIONS OF SUCH
LAWS, ORDERS RULES OR REGULATIONS APPLICABLE TO SAID LANDS AND/OR WATER BOTTOMS,
THE WELLS,  AND THE  PERSONAL  PROPERTY.  BUYER  FURTHER  AGREES TO INCLUDE  THE
PROVISIONS OF THIS CLAUSE IN ANY  SUBSEQUENT  SALE OR ASSIGNMENT OF ANY INTEREST
THEREIN TRANSFERRED.

         5.04 Gas Imbalance. Upon the occurrence of Closing, but effective as of
the  Effective  Time,  Buyer shall  succeed to and assume the position of Seller
with  respect  to all gas  imbalances  and  make-up  obligations  related to the
Interests (regardless of whether such imbalances or make-up obligations arise at
the  wellhead,  pipeline,  gathering  system or other level,  and  regardless of
whether  the same  arise  under  contract  or  otherwise).  As a result  of such
succession,  Buyer shall (i) be entitled to receive any and all  benefits  which
Seller  would  have  been  entitled  to  receive  by  virtue  of  such  position

                                       10
<PAGE>

(including,  without  limitation,  rights to  produce  and  receive  volumes  of
production in excess of volumes which it would  otherwise be entitled to produce
and  receive by virtue of  ownership  of the  Interest  rights to  receive  cash
balancing payments), and (ii) be obligated to suffer any detriments which Seller
would  have been  obligated  to suffer  by virtue of such  position  (including,
without limitation, the obligation to deliver to others production volumes which
would have otherwise  been  attributable  to its ownership of the Interests,  to
deliver production to purchasers hereof without receiving full payment therefor,
or to make cash  balancing  payments or to repay take or pay payments) and (iii)
shall be responsible  for any and all royalty  obligations  with respect to such
imbalances  (including,  without  limitation,  any of the  same  arising  out of
royalties having been paid on an  "entitlements"  basis rather than a "receipts"
basis).

         5.05 Title Defects. "Title Defect" means any encumbrance,  irregularity
or defect in Seller's title to an Interest which , alone or in combination  with
other defects,  causes  Seller's title to be less than Defensible  Title.  Title
Defects  shall  include a Casualty  Loss treated as a Title Defect under Section
5.07.

         5.06 Defensible Title.

                  (a)  "Defensible  Title"  means such right,  title or interest
         held by Seller that (i) will entitle Buyer, as Seller's  successor,  to
         receive not less than the Net Revenue Interests  described in Exhibit A
         of all oil, gas,  condensate,  related  hydrocarbons and other minerals
         produced under the terms of the Leases (or other  property  denominated
         in Exhibit A); (ii) will obligate Buyer, as Seller's  successor to bear
         a  percentage  of  costs  and  expenses  related  to  the  maintenance,
         operation and development of the Leases (or other property  denominated
         in Exhibit A) not  greater  than the  Working  Interest  (or  Operating
         Rights  interest,  as the case may be) shown in Exhibit  A,  unless the
         circumstances causing the Working Interest to be greater will cause the
         corresponding  Net Revenue interest to increase in the same proportion;
         and (iii) is free of all liens,  security  interests,  encumbrances and
         defects, except for Permitted Encumbrances.

                  (b) "Permitted Encumbrances" are:

                           (1)   lessor's   royalties,   overriding   royalties,
                  production  payments,  net  profits,  interests,  reversionary
                  interests and similar  burdens on production  that do not, and
                  will not, reduce the Interests more particularly  described in
                  the  Assignments  of Record  Title,  Assignments  of Operating
                  Rights  and  Assignments  of  Overriding   Royalty   Interests
                  attached hereto as Exhibits B-1 through B-12;

                           (2)  preferential  rights to purchase and third party
                  consents with respect to which, prior to Closing,  (i) waivers
                  or consents are obtained from the appropriate  parties or (ii)
                  the  time  for  asserting  such  rights  has  expired  without
                  exercise;

                           (3) mechanics',  materialmen's,  operators',  tax and
                  similar  liens or charges  arising in the  ordinary  course of
                  business related to an Interest, if such liens secure payments
                  not yet due;

                                       11
<PAGE>

                           (4) all consents  from,  notices to,  approvals by or
                  other actions by  governmental  authority in  connection  with
                  sale or transfer of  properties  such as the Interests if such
                  matters are customarily and  appropriately  obtained after the
                  sale or transfer;

                           (5) liens,  security  interests or other encumbrances
                  to be released at or prior to Closing;

                           (6)  rights of a  governmental  entity to  control or
                  regulate the  Interests,  together with all  applicable  laws,
                  rules and regulations;

                           (7)  easements,  rights-of-way,  surface  leases  and
                  other surface use restrictions if such  restrictions  will not
                  materially adversely affect the use, value or operation of the
                  Interests;

                           (8)  title  matters  waived or deemed to be waived by
                  Buyer and described on Schedule 5.06(b)(8);

                           (9) the presence of NORM; and

                           (10) the Contracts

         5.07  Casualty  Loss.  If,  prior to Closing,  all or any portion of an
Interest  is  destroyed  or taken under the right of eminent  domain  ("Casualty
Loss"), Buyer may elect (i) to treat the Casualty Loss as a Title Defect or (ii)
purchase the affected  Interest  notwithstanding  the Casualty Loss. If Buyer so
purchases  the  affected  Interest,  there shall be no reduction of the Purchase
Price and Seller shall,  at Closing,  pay to Buyer all sums paid to Seller which
are associated  with the Casualty Loss and shall assign to Buyer all of Seller's
interest in any unpaid payments or causes of action associated with the Casualty
Loss.  Prior to Closing,  Seller shall not  compromise or settle a Casualty Loss
without Buyer's consent.

         5.08 Disposition of Title Defects. In the event that Buyer gives Seller
notice of Title Defects:

                  (a) Seller may (but shall have no  obligation  to)  attempt to
         cure, prior to Closing, Title Defects.

                  (b)  Whether or not  Seller has then begun to, or ever  begins
         to, cure  asserted  Title  Defects,  Seller may postpone the Closing by
         designating  a new  Closing  Date to be a date not  later  than 30 days
         after  Seller's  receipt of a Defect notice.  Notwithstanding  any such
         election to postpone  Closing,  there shall still be no  obligation  to
         cure Title Defects.

                                       12
<PAGE>

                  (c) Notwithstanding any other election made under this Section
         (without  limitation,  it being  expressly  recognized that attempts to
         cure asserted  Title Defects may continue  while the parties are acting
         under this  election),  Seller  may elect to have one or more  asserted
         Title Defects handled under the following Section.

         5.09 Purchase Price Adjustments.

                  (a) Except as provided in Section  5.09(b) below, in the event
         that,  as a part of Buyer's due  diligence  review,  Title  Defects are
         presented  to Seller and Seller is unable (or  unwilling)  to cure such
         Title Defects prior to Closing, then:

                           (i) Buyer and  Seller  shall,  with  respect  to each
                  Interests  affected by such matters,  attempt to agree upon an
                  appropriate  adjustment  of the Purchase  Price to account for
                  such matters; and

                           (ii) with  respect to Interests as to which Buyer and
                  Seller are unable to agree upon an adjustment  for an asserted
                  Title  Defect,  such  Interests  will  be  excluded  from  the
                  transaction contemplated hereby and the Purchase Price will be
                  reduced by the amount  attributed  to such Interest on Exhibit
                  A; provided,  however, in the event an adjustment is required,
                  pursuant  to  this  paragraph,  but  such  Interest  is  to be
                  excluded  as  provided   herein,   Seller  may,  at  its  sole
                  discretion,  elect to not  close  and such  election  shall be
                  considered  as a failure to close that is permitted in Section
                  6.01 hereof.

                  (b) If an asserted Title Defect reflects (or Seller  otherwise
         determines)  that Seller's share of Substances  produced and saved from
         the Leases  comprising an Interest is less than,  or greater than,  the
         decimal  share set forth as the Net  Revenue  Interest  in Exhibit A or
         causes  Seller to be  obligated  to pay a share of costs of  operations
         greater  than the  percentage  share of Working  Interest  set forth on
         Exhibit A hereof  (without  at least a  proportionate  increase  in the
         corresponding  Net Revenue  Interest)  then the Purchase  Price for the
         Interest  shall be  adjusted  downward,  or  upward as the case may be,
         proportionately,  by multiplying  such Purchase Price by a fraction (A)
         the numerator of which is the amount of the actual Net Revenue Interest
         and (B) the  denominator of which is the Net Revenue  Interest shown on
         Exhibit A.

                  (c) If the aggregate  Purchase  Price  reduction (or increase)
         with  respect to a Title  Defect,  which  would  result  from the above
         provided for procedure does not exceed $5,000,  no adjustment  shall me
         made for such Title Defects,  and the Interests  affected  thereby will
         not be excluded as a result of the existence of such Title  Defect.  If
         the Purchase Price  reduction (or increase) which would result from the
         above provided for procedure, as applied to all Title Defects for which
         an adjustment  is to be made,  does not exceed five percent (5%) of the
         Purchase  Price,  then no adjustment of the Purchase Price shall occur,
         and none of the  Interests  which would be  otherwise  excluded by such
         procedure  shall be  excluded.  If the  Purchase  Price  reduction  (or
         increase)  which would  result from the above  provided  for  procedure
         exceeds five percent (5%) of the  Purchase  Price,  the Purchase  Price
         shall be adjusted by the amount by which such  reduction  (or increase)
         exceeds five percent (5%).

                                       13
<PAGE>

         5.10 NO WARRANTY OF  MERCHANTABILITY  OR FITNESS.  EXCEPT AS  OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER MAKES NO WARRANTIES, EXPRESS OR
IMPLIED,  INCLUDING THE WARRANTY OF MERCHANTABILITY  AND THE IMPLIED WARRANTY OF
FITNESS  FOR A  PARTICULAR  PURPOSE,  REGARDING  THE  EQUIPMENT  AND OTHER  LIKE
PERSONAL PROPERTY LOCATED ON OR INCLUDED IN THE INTERESTS AND THE SAME ARE TO BE
SOLD ON AN "AS IS, WHERE IS" BASIS AND CONDITION.

         5.11 WAIVER OF CONSUMER RIGHTS. BUYER WAIVES ITS RIGHTS UNDER THE TEXAS
DECEPTIVE TRADE PRACTICES-CONSUMER  PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS
BUSINESS  &  COMMERCE  CODE,  A LAW THAT  GIVES  CONSUMERS  SPECIAL  RIGHTS  AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BUYER'S OWN SELECTION, BUYER
VOLUNTARILY  CONSENTS TO THIS WAIVER.  IN ORDER TO EVIDENCE ITS ABILITY TO GRANT
SUCH WAIVER, BUYER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT BUYER (I) IS IN
THE BUSINESS OF SEEKING OR  ACQUIRING,  BY PURCHASE OR LEASE,  GOODS OR SERVICES
FOR  COMMERCIAL OR BUSINESS USE, (II) HAS KNOWLEDGE AND  EXPERIENCE IN FINANCIAL
AND  BUSINESS  MATTERS  THAT ENABLE IT TO  EVALUATE  THE MERITS AND RISKS OF THE
TRANSACTION  CONTEMPLATED  HEREBY  AND (III) IS NOT IN  SIGNIFICANTLY  DISPARATE
BARGAINING POSITION.

         5.12 WAIVER OF LOUISIANA RIGHTS IN REDHIBITION.  BUYER EXPRESSLY WAIVES
THE WARRANTY OF FITNESS FOR INTENDED  PURPOSES OR  GUARANTEE  AGAINST  HIDDEN OR
LATENT  REDHIBITORY  VICES UNDER LOUISIANA LAW,  INCLUDING  LOUISIANA CIVIL CODE
ARTICLES 2520 (1870) THROUGH 2548, AND THE WARRANTY  IMPOSED BY LOUISIANA  CIVIL
CODE ARTICLES 2476; WAIVES ALL RIGHTS IN REDHIBITION PURSUANT TO LOUISIANA CIVIL
CODE  ARTICLES  2520,  ET SEQ.; OR FOR  RESTITUTION  OR OTHER  DIMINUTION OF THE
PURCHASE  PRICE;  ACKNOWLEDGES  THAT THIS EXPRESS  WAIVER SHALL BE  CONSIDERED A
MATERIAL  AND  INTEGRAL  PART OF THIS SALE AND THE  CONSIDERATION  THEREOF;  AND
ACKNOWLEDGES  THAT THIS WAIVER HAS BEEN  BROUGHT TO THE  ATTENTION  OF BUYER AND
EXPLAINED IN DETAIL AND THAT BUYER HAS  VOLUNTARILY  AND KNOWINGLY  CONSENTED TO
THIS WAIVER OF WARRANTY OF FITNESS AND/OR WARRANTY AGAINST REDHIBITORY VICES AND
DEFECTS FOR THE  INTERESTS.  SELLER  MAKES THIS SALE OF THE  INTERESTS  TO BUYER
WITHOUT ANY WARRANTY AS TO THE CONDITION OF THE INTERESTS,  INCLUDING ABSENCE OF
VICES  OR  DEFECTS  (WHETHER  APPARENT  OR  LATENT,  KNOWN  OR  UNKNOWN,  EASILY
DISCOVERABLE  OR  HIDDEN),  FITNESS  FOR ANY  ORDINARY  USE,  OR FITNESS FOR ANY
INTENDED USE OR PARTICULAR PURPOSE, EVEN FOR RETURN OR REDUCTION OF THE PURCHASE
PRICE OR OTHERWISE,  IT BEING  UNDERSTOOD THAT BUYER TAKES THE INTERESTS "AS IS"
AND "WHERE IS"; BUYER HEREBY ACKNOWLEDGING RELIANCE SOLELY ON ITS OWN INSPECTION

                                       14
<PAGE>

OF THE INTERESTS,  AND NOT ON ANY WARRANTIES OR REPRESENTATIONS FROM SELLER WITH
RESPECT TO THE CONDITION OF THE INTERESTS. IN ADDITION,  BUYER ACKNOWLEDGES THAT
SELLER  HAS MADE NO  REPRESENTATIONS  OR  WARRANTIES  OF ANY KIND OR  CHARACTER,
EXPRESS OR IMPLIED,  WITH RESPECT TO THE CONDITION OF THE INTERESTS,  INCLUDING,
WITHOUT LIMITATION,  ANY WARRANTIES OR REPRESENTATIONS AS TO ABSENCE OF VICES OR
DEFECTS (WHETHER APPARENT OR LATENT,  KNOWN OR UNKNOWN,  EASILY  DISCOVERABLE OR
HIDDEN),  FITNESS  FOR  ANY  ORDINARY  USE,  FITNESS  FOR  ANY  INTENDED  USE OR
PARTICULAR PURPOSE, TAX CONSEQUENCES,  ENVIRONMENTAL  CONDITION.  ALL WARRANTIES
WITH RESPECT TO THE CONDITION OF THE  INTERESTS ARE HEREBY  DISCLAIMED BY SELLER
AND  EXPRESSLY  WAIVED BY BUYER.  BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND
SELLER  IS NOT  LIABLE  FOR OR BOUND  BY,  AN  EXPRESS  OR  IMPLIED  WARRANTIES,
GUARANTIES,  STATEMENTS,   REPRESENTATIONS  OR  INFORMATION  PERTAINING  TO  THE
CONDITION OF THE INTERESTS OR RELATING THERETO MADE OR FURNISHED BY SELLER,  ANY
PARTY  ACTING  OR  PURPORTING  TO  ACT  FOR  SELLER,  OR  ANY  BROKER  OR  AGENT
REPRESENTING  OR  PURPORTING  TO REPRESENT  SELLER,  TO WHOMEVER  MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING.

                                    ARTICLE 6
                                    ---------

                              CONDITIONS TO CLOSING

         6.01 Seller's  Conditions.  Seller's obligations at Closing are subject
to the satisfaction at or prior to Closing of the following conditions:

                  (a) Buyer's  representations  under Section 3.02 shall be true
         in all  material  respects  on the  date  of this  Agreement  and as of
         Closing.

                  (b) Buyer shall have  performed in all  material  respects the
         covenants and agreements which Buyer was required to perform or satisfy
         at or prior to Closing.

                  (c) Except  for  matters  not  customarily  and  appropriately
         obtained  prior to  Closing,  Seller  has  received  evidence,  in form
         reasonably  satisfactory  to its counsel,  that all permits,  consents,
         approvals, licenses, qualifications and orders required by governmental
         authority,  or the  terms of the  Interests,  to be  obtained  prior to
         Closing have been obtained or waived.

                  (d) The aggregate downward adjustment (if any) of the Purchase
         Price which results from the  procedures set forth in Section 5.09 does
         not exceed ten percent (10%) of the Purchase Price.

                  (e) There is no action or  proceeding  pending  or  threatened
         before  a  court,  arbitrator  or  governmental  authority  seeking  to
         restrain or prohibit the consummation of the transactions  contemplated
         by this Agreement or to obtain substantial  damages from Seller related
         to this Agreement.

         6.02 Buyer's Conditions.  Buyer's obligations at Closing are subject to
the satisfaction at or prior to Closing of the following conditions:

                  (a) Seller's  representations under Section 3.01 shall be true
         in all  material  respects  on the  date  of this  Agreement  and as of
         Closing.

                  (b) Seller shall have  performed in all material  respects the
         covenants  and  agreements  which  Seller  was  required  to perform or
         satisfy at or prior to Closing.

                  (c) Except  for  matters  not  customarily  and  appropriately
         obtained  prior  to  Closing,  Buyer  has  received  evidence,  in form
         reasonably  satisfactory  to its counsel,  that all permits,  consents,
         approvals, licenses, qualifications and orders required by governmental
         authority,  or the  terms of the  Interests,  to be  obtained  prior to
         Closing have been obtained or waived.

                  (d) The aggregate  upward  adjustment (if any) of the Purchase
         Price which results from the  procedures  set forth in and Section 5.09
         does not exceed ten percent (10%) of the Purchase Price.

                  (e) There is no action or  proceeding  pending  or  threatened
         before  a  court,  arbitrator  or  governmental  authority  seeking  to
         restrain or prohibit the consummation of the transactions  contemplated
         by this Agreement or to obtain  substantial  damages from Buyer related
         to this Agreement.

                                       15
<PAGE>

                                    ARTICLE 7
                                    ---------

                                     CLOSING

         7.01  Closing  Date.  Subject  to the  terms  of  this  Agreement,  the
consummation of the  transactions  contemplated  by this Agreement  ("Closing"),
shall occur at Seller's  office listed above (or at such other place and time as
the  Parties  may  agree) on or before  July 31,  2002 at 10:00  a.m.  ("Closing
Date").

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

                  (a) Seller  shall  execute  and  deliver to Buyer  assignments
         conveying  the  Interests  to  Buyer  in the  forms  attached  to  this
         Agreement as Exhibits B-1 through  B-12.  Seller shall also execute and
         deliver such other  assignments on appropriate forms as may be required
         by governmental authority, subject to the terms of the assignment forms
         attached as Exhibits B-1 thru B-12.

                                       16
<PAGE>

                  (b) Seller and Buyer  shall  execute and deliver to each other
         the Preliminary Closing Statement.

                  (c) Buyer shall deliver the Adjusted  Purchase Price to Seller
         by direct bank or wire transfer, as directed by Seller.

                  (d) Seller shall deliver to Buyer possession of the Interests.

                  (e) Seller shall execute transfer orders or letters-in-lieu on
         forms  prepared  by  Buyer,  and  reasonably  satisfactory  to  Seller,
         directing  purchasers  of  production  to  make  payment  to  Buyer  as
         contemplated by this Agreement.

                  (f) Seller  shall  deliver  releases  of all  liens,  security
         interests  and  encumbrances  affecting the interests to be released at
         Closing.

                  (g)  Seller  and  Buyer  will  coordinate  the  filing  and/or
         recording of assignment and  conveyancing  documents in the appropriate
         governmental  records.  The recording party (Buyer) will provide either
         the original or photocopies of the filed and/or  recorded  documents as
         agreed by the parties, to the non-recording party. All costs of filing,
         recording and other reasonable fees will be borne by Buyer.

                                    ARTICLE 8
                                    ---------

                                   TERMINATION

         8.01 Termination.  This Agreement and the transactions  contemplated by
this Agreement may be terminated in the following situations:

                  (a) by Seller or Buyer if Closing  does not occur on or before
         the Closing Date provided, however, that a party cannot so terminate if
         it is in breach of this Agreement;

                  (b) by Seller if the conditions  contained in Section 6.01 are
         not satisfied or waived as of the Closing Date;

                  (c) by Buyer if the  conditions  contained in Section 6.02 are
         not satisfied or waived as of the Closing Date; and

                  (d) by Seller and Buyer pursuant to written Agreement.

         8.02 Liabilities Upon Termination.

         If this Agreement is terminated for any reason or is breached,  nothing
contained  herein  shall be  construed  to limit  Seller's  or Buyer's  legal or
equitable  remedies,  including  damages  for  the  breach  of  failure  of  any
representation, warranty covenant or agreement contained herein and the right to
enforce specific performance of this Agreement.

                                       17
<PAGE>

                                   ARTICLE 9
                                   ---------

                            OBLIGATIONS AFTER CLOSING

         9.01  Post-Closing  Adjustments.  Seller and Buyer acknowledge that the
amount of all  adjustments  under  Section  2.03 may not be  available  prior to
Closing.  As soon as practicable after Closing,  Seller shall prepare and submit
to Buyer a statement  containing  adjustments  contemplated by Section 2.03 that
were not finally determined as of Closing ("Final Settlement Statement"). Seller
shall promptly notify Buyer of any changes Seller proposes and the parties shall
negotiate in good faith to agree on these  adjustments  within  ninety (90) days
after the Closing Date.  Payment to the  appropriate  party shall be made within
five (5) days after agreement is reached ("Final Settlement Date").

         9.02  Subsequent  Adjustments.  Seller and Buyer  recognize that either
party may receive funds or pay expenses  after the Final  Settlement  Date which
are properly the property or obligation of the other party.  Upon receipt of net
proceeds or net expenses due to or payable by the other party,  whichever occurs
first,  such party  shall  submit a  statement  showing  the items of income and
expense.  Payment by the appropriate party shall be made within ten (10) days of
receipt of the statement.

         9.03  Reservation  of Claims.  Except as  provided  in this  Agreement,
Seller is entitled to all claims related to the Interests prior to the Effective
Time  regardless of when payment is made.  Except as provided in this Agreement,
Buyer is entitled to all claims  related to the Interests  which arise after the
Effective Time.

         9.04 Files and Records.  Upon Closing,  Seller shall permit  Buyer,  at
Buyer's expense, to take possession of originals of all files,  records and data
in Seller's possession relating to the Interests. Seller shall have the right to
copy (at Buyer's expense) and retain a copy of all such files, records and data.

         9.05  Further  Assurances.  After  Closing,  Seller and Buyer  agree to
execute  and  deliver  such  instruments  and take such  other  action as may be
necessary or advisable to carry out their obligations under this Agreement.

         9.06 Survival and Indemnity.

                  (a) The representations, covenants, agreements and indemnities
         (the  "obligations")  of or by  Seller  and  Buyer  shall  survive  the
         Closing.

                                       18
<PAGE>

                  (b) Allocation of Liability.

                           (i)  Liabilities.   Buyer  agrees  to  assume,   pay,
                  perform,  fulfill,  discharge  and be liable  for all  Assumed
                  Liabilities,  and  Seller  agrees  to  retain,  pay,  perform,
                  fulfill,  discharge  and be and remain liable for all Retained
                  Liabilities.

                           (ii)  Definitions.  The  term  "Assumed  Liabilities"
                  shall mean and include:

                                    (x) all  costs,  expenses,  liabilities  and
                           obligations assumed or otherwise agreed to be paid by
                           Buyer pursuant to the terms of this Agreement; and

                                    (y) all costs, expenses, liabilities, claims
                           and obligations  arising out of, in connection  with,
                           or  resulting   directly  or   indirectly   from  the
                           ownership or operation  of the  Interests,  including
                           environmental  cleanup  liabilities  and plugging and
                           abandonment    liabilities    for   existing   wells,
                           platforms,  facilities,  or pipelines arising out of,
                           in  connection   with,   or  resulting   directly  or
                           indirectly  from the  ownership  or  operation of the
                           Interests (the "Abandonment and Clean-up  Liability")
                           but excluding Retained Liabilities.

                  The term "Retained Liabilities" shall mean and include:

                           (x) all costs, expenses,  liabilities and obligations
                  assumed or otherwise  agreed to be paid by Seller  pursuant to
                  the terms of this Agreement; and

                           (y) all  costs,  expenses,  liabilities,  claims  and
                  obligations  (except  Abandonment  and Clean-up  Liability and
                  related costs, expenses,  liabilities, claims and obligations)
                  arising out of, in connection  with, or resulting  directly or
                  indirectly   from   production   or   sale   of   hydrocarbons
                  attributable  to the  Interests  or the proper  accounting  or
                  payment to parties for their interest  therein insofar as such
                  claims relate to periods of time prior to the Effective Time.

                  (c) In the event  that the  Closing  occurs,  (i) Buyer  shall
         protect,  defend,  indemnify and hold Seller  harmless from any and all
         damages,   claims,  losses,  demands,   fines,   penalties,   judgments
         (including interest), costs, expenses,  environmental liabilities,  and
         other  liabilities,   direct,   contingent,  or  otherwise,   including
         consulting and attorneys' fees and costs of court  ("Damages")  arising
         or accruing  with  respect to the Assumed  Liabilities  and (ii) Seller
         shall  protect,  defend,  indemnify  and hold Buyer  harmless  from any
         Damages  arising or accruing with respect to the Retained  Liabilities.
         The term  "Damages,"  as used herein,  shall not include (i) any amount

                                       19
<PAGE>

         which was taken into account as an  adjustment  to the  Purchase  Price
         pursuant to this Agreement or (ii) either party's costs and expenses as
         described in Section 10.02.  Buyer and Seller agree that their sole and
         exclusive remedies with respect to claims arising, after closing, under
         this Agreement,  shall be limited to remedies set forth in this Section
         9.06.

         9.07 CONSPICUOUSNESS/EXPRESS  NEGLIGENCE. THE DEFENSE,  INDEMNIFICATION
AND HOLD HARMLESS  PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE
WHETHER OR NOT THE DAMAGES, LOSSES, INJURIES,  LIABILITIES, COSTS OR EXPENSES IN
QUESTION  AROSE  SOLELY  OR IN PART  FROM  THE  ACTIVE,  PASSIVE  OR  CONCURRENT
NEGLIGENCE,   OR  OTHER  FAULT  OF  ANY  INDEMNIFIED  PARTY.  BUYER  AND  SELLER
ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS
CONSPICUOUS.

         9.08 Allocation of Proceeds. Seller shall receive all proceeds from the
sale of Substances physically produced or allocable to the Interest prior to the
Effective  Time.  Buyer shall  receive all proceeds  from the sale of Substances
physically produced or allocable to the Interest on or after the Effective Time.

                                   ARTICLE 10
                                   ----------

                                  MISCELLANEOUS

         10.01 Notices.  All notices  required or permitted under this Agreement
shall be effective upon receipt if personally delivered, if mailed by registered
or certified mail,  postage  prepaid,  or if delivered by telegram,  telecopy or
facsimile if directed to the parties as follows:

         TO BUYER:                             TO SELLER:

         Newfield Exploration Company          American Resources Offshore, Inc.
         363 N. Sam Houston Pkwy. E,           801 Travis Street, 2100
         Suite 2020                            Houston, TX  77002
         Houston, Texas 77060                  Telephone: 713-227-7218, ext. 129
         Telephone:  (713) 847-6000            Fax:  713-227-7626
         Fax: (713) 847-6006                   Attn:  John P. Atwood
         Attn.: Land Department

Any party may give written  notice of a change in the address or  individual  to
whom delivery shall be made.

         10.02 Expenses.  Except as otherwise  provided in this  Agreement,  all
fees,  costs and expenses  incurred by the parties in negotiating this Agreement
or in consummating the transactions contemplated by this Agreement shall be paid
by the party incurring them.

                                       20
<PAGE>

         10.03 Amendment.  This Agreement may not be altered or amended, nor any
rights  waived,  except  by a  written  instrument  executed  by the party to be
charged  with the  amendment  or  waiver.  No  waiver of any  provision  of this
Agreement shall be construed as a continuing waiver of the provision.

         10.04  Assignment.  Buyer shall not have the right to assign its rights
and delegate its duties under this Agreement without written consent of Seller.

         10.05  Conditions.  The  inclusion in this  Agreement of  Conditions to
Seller's and Buyer's  obligations  at Closing shall not, in and of itself,  be a
covenant  of  either  party to  satisfy  the  conditions  to the  other  party's
obligations at Closing.

         10.06 Headings.  The headings are for convenience only and do not limit
or otherwise affect the provisions of this Agreement.

         10.07  Counterparts.  This  Agreement may be executed in  counterparts,
each of which shall be an original and which,  taken together,  shall constitute
the same instrument.

         10.08  References.  References,  including  use  of  a  pronoun,  shall
include, where applicable,  masculine,  feminine, singular or plural individuals
or legal entities.

         10.09 Governing Law. This Agreement and the  transactions  contemplated
by this  Agreement  shall be  governed  and  construed  in  accordance  with the
internal laws of the State of Texas without  giving effect to any  principles of
conflicts of laws.

         10.10  Announcements.  Notwithstanding  the  other  provisions  of this
Agreement,   except  as  otherwise   provided  for  herein  or  as  required  by
governmental  agency or law,  prior to Closing,  neither  Seller nor Buyer shall
announce or otherwise publicize this Agreement or the transactions  contemplated
by this Agreement without the prior written consent of the other party.

         10.11 Entire  Agreement.  This  Agreement  is the entire  understanding
between Seller and Buyer  concerning the subject matter of this Agreement.  This
Agreement  supersedes  all  negotiations,  discussions,  representations,  prior
agreements and understandings, whether oral or written.

         10.12  Parties in  Interest.  This  Agreement is binding upon and shall
inure to the benefit of Seller and Buyer and,  except  where  prohibited,  their
heirs,  successors,  representatives  and assigns. No other party is intended to
have any  benefits,  rights  or  remedies  under  this  Agreement.  There are no
third-party beneficiaries.

         10.13 Exhibits.  All Exhibits and Schedules  attached to this Agreement
are incorporated into this Agreement for all purposes.

                                       21
<PAGE>

         10.14  Severance.  If any  provision  of this  Agreement is found to be
illegal or  unenforceable,  the other terms of this  Agreement  shall  remain in
effect and this Agreement shall be construed as if the illegal or  unenforceable
provision had not been included.

BUYER:                                        SELLER:

NEWFIELD EXPLORATION COMPANY                  AMERICAN RESOURCES OFFSHORE, INC.

By: ________________________________          By: ______________________________
Name: ______________________________          Name: ____________________________
Its: _______________________________          Its: _____________________________

                                       22
<PAGE>

                                   EXHIBIT "A"
                                   -----------
                   Attached to and made apart of that certain
                        Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

                                        I

                                      LEASE

OCS-G 1898,  Oil and Gas Lease  dated  effective  March 1, 1969,  granted by the
United States of America,  as Lessor,  in favor of  Continental  Oil Company and
Cities  Service Oil Company,  as Lessee,  covering  Block 148, West Half,  South
Timbalier  Area,  as shown on OCS  Official  Leasing Map,  Louisiana  Map No. 6,
containing approximately 2,500 acres.

                                       II

                                INTEREST CONVEYED

The  Interest  conveyed by American  Resources  Offshore,  Inc.,  as Seller,  to
Newfield  Exploration  Company,  as  Buyer,  in the  Lease  described  above and
pursuant to this Purchase and Sale Agreement,  is more particularly described in
the Assignments of Record Title, Assignments of Operating Rights and Assignments
of Overriding  Royalty Interests attached to said Purchase and Sale Agreement as
Exhibits B-1 through B-12, inclusive.

                                       III

                                    CONTRACTS

         a)       The Lease;

         b)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         c)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         d)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G l898;

                                Exhibit A Page 1
<PAGE>

         e)       Farmout Agreement dated June 21, 1994 between Century Offshore
                  Management   Corporation  and  Settle  Oil  and  Gas  Company,
                  regarding OCS-G 1898;

         f)       Farmout  Agreement  dated June 13, 1991 by and between  Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         g)       Farmout  Agreement  dated  June 13,  1991 by and  between  OXY
                  U.S.A.  Inc,  and  Century  Offshore  Management   Corporation
                  covering OCS-G 1898;

         h)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation.,  et al (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         i)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         j)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         k)       Agreement   dated  June  21,   1994  by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G 1898;

         l)       Participation  Agreement  dated  effective as of September 27,
                  1993 by and among Newfield Exploration Company, Settle Oil and
                  Gas Company and Century Management  Corporation covering OCS-G
                  1898;

         m)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         n)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         o)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         p)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         q)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

                                Exhibit A Page 2
<PAGE>

         r)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions.

         t)       Agreement  dated  effective  February  1, 1997 by and  between
                  Newfield Exploration Company and Southern Gas Co. of Delaware,
                  Inc.  covering the drilling of and ownership in the OCS-G 1898
                  #D-4 well.

                                Exhibit A Page 3

<PAGE>

                                  EXHIBIT "B-1"
                                  -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"

                                       and

                    Newfield Exploration Company, as "Buyer"

                           ASSIGNMENT OF RECORD TITLE

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                           ASSIGNMENT OF RECORD TITLE
                           --------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss. KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.
SOUTH TIMBALIER AREA       ss.

         This  Assignment  of Record  Title  ("Assignment")  is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to Assignee,  subject to the further provisions hereof, all of Assignor's right,
title and interest, being an undivided 1.00000% record title interest ("Assigned
Interests") in the following described oil and gas lease:

                                                              Exhibit B-1 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the NE/4 of the NW/4 of the SW/4;  SE/4 of the NW/4 of the SW/4;
         NE/4 of the SW/4 of the  SW/4;  and the SW/4 of the NE/4 of the SW/4 of
         the Block 148, South Timbalier Area (the "Lease");

         and all right, title and interest in and to the following;

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all   agreements,   operating   agreements,
                           participation    agreements,    unit,   pooling   and
                           communitization     agreement    and    declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-1 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For  purposes of this  Assignment  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

                                                              Exhibit B-1 page 8
<PAGE>

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement, dated effective July 1, 1996, by
                  and between Century Offshore Management Corporation (seller)
                  and Southern Gas Company of Delaware, Inc. (buyer), covering
                  the sale of interest in OCS-G 1898, Block 148 W/2, South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990, executed by and between Oxy U.S.A., Inc. and
                  Century Offshore Management Corporation,  covering OCS-G l898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil

                                                              Exhibit B-1 page 4
<PAGE>

                  Company and Century Offshore Management Corporation,  covering
                  OCS-G l898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions.

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR

                                                              Exhibit B-1 page 5
<PAGE>

OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

This Assignment is
made in accordance with the PSA and all provisions of said PSA are  incorporated
herein by reference for all purposes as if copied in extenso.  In the event of a
conflict  between the terms of this Assignment and the PSA, the terms of the PSA
shall control.  T

his  Assignment may be executed in any number of  counterparts,
all of which taken  together  shall  constitute  one and the same  instrument by
signing  any such  counterpart.

This  Assignment  shall  bind and  inure to the
benefit  of and be binding  upon  Assignor  and  Assignee  and their  respective
successors and assigns.

IN WITNESS WHEREOF,  this Assignment is executed before
the  undersigned  competent  witnesses  by the parties on the dates set forth in
their respective  acknowledgements  hereinbelow,  but shall be effective for all
purposes  on the 1st day of July,  2002,  at 7:00  a.m.  Central  Standard  Time
("Effective Date").

                                               ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-1 page 6
<PAGE>

                                               ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-1 page 7
<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of ________, 2002.

                                     ___________________________________________
                                     Notary Public, State of Texas
                                     My Commission Expires:_____________________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRISss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                     Notary Public, State of Texas
                                     My Commission Expires:_____________________

                                                              Exhibit B-1 page 8
<PAGE>

                                  EXHIBIT "B-2"
                                  -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------
                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                           ASSIGNMENT OF RECORD TITLE
                           --------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss. KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.
SOUTH TIMBALIER AREA       ss.

         This  Assignment  of Record  Title  ("Assignment")  is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH

         In consideration of One Hundred Dollars ($100.00) and other good and
         valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to Assignee, subject to the further provisions hereof, all of Assignor's right,
title and interest, being an undivided 4.50000% record title interest ("Assigned
Interests") in the following described oil and gas lease:

                                                              Exhibit B-2 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the NW/4 of the Block 148, South Timbalier Area (the "Lease");

         and all right, title and interest in and to the following;

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all contracts and agreements (other than the Lease) to the
                  extent transferable that are attributable to the ownership or
                  operation of the Assigned Interests, including, without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all   agreements,   operating   agreements,
                           participation    agreements,    unit,   pooling   and
                           communitization     agreement    and    declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

                                                              Exhibit B-2 page 2
<PAGE>

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For  purposes of this  Assignment  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

                                                              Exhibit B-2 page 3
<PAGE>

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990, executed by and between Oxy U.S.A., Inc. and
                  Century Offshore Management Corporation,  covering OCS-G l898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G l898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions.

                                                              Exhibit B-2 page 4
<PAGE>

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR
OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF

                                                              Exhibit B-2 page 5
<PAGE>

ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow, but shall be effective for all purposes on the 1st
day of July,  2002,  at 7:00 a.m.  Central  Standard  Time  ("Effective  Date").

                                               ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-2 page 6

<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-2 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of _________, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002..

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-2 page 8
<PAGE>

                                  EXHIBIT "B-3"
                                  -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                           ASSIGNMENT OF RECORD TITLE
                           --------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss. KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.
SOUTH TIMBALIER AREA       ss.

         This  Assignment  of Record  Title  ("Assignment")  is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to Assignee,  subject to the further provisions hereof, all of Assignor's right,
title and interest, being an undivided 2.00000% record title interest ("Assigned
Interests") in the following described oil and gas lease:

                                                              Exhibit B-3 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the NW/4 of the NW/4 of the SW/4;  NW/4 of the NE/4 of the SW/4;
         NW/4 of the SE/4 of the SW/4 of Block 148,  South  Timbalier  Area (the
         Lease");

         and all right, title and interest in and to the following;

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all   agreements,   operating   agreements,
                           participation    agreements,    unit,   pooling   and
                           communitization     agreement    and    declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-3 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For  purposes of this  Assignment  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

                                                              Exhibit B-3 page 3
<PAGE>

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990, executed by and between Oxy U.S.A., Inc. and
                  Century Offshore Management Corporation,  covering OCS-G l898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G l898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions.

                                                              Exhibit B-3 page 4
<PAGE>

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR
OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF

                                                              Exhibit B-3 page 5
<PAGE>

ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow, but shall be effective for all purposes on the 1st
day of July,  2002,  at 7:00 a.m.  Central  Standard  Time  ("Effective  Date").

                                               ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-3 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-3 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of _________, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-3 page 8
<PAGE>

                                  EXHIBIT "B-4"
                                  -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                           ASSIGNMENT OF RECORD TITLE
                           --------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss. KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.
SOUTH TIMBALIER AREA       ss.

         This  Assignment  of Record  Title  ("Assignment")  is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to Assignee,  subject to the further provisions hereof, all of Assignor's right,
title and interest, being an undivided 9.00000% record title interest ("Assigned
Interests") in the following described oil and gas lease:

                                                              Exhibit B-4 page 1

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers  the E/2 of the NE/4 of the  SW/4;  E/2 of the SE/4 of the SW/4;
         SW/4 of the SE/4 of the SW/4; S/2 of the SW/4 of the SW/4;  NW/4 of the
         SW/4 of the  SW/4;  SW/4 of the NW/4 of the SW/4 of  Block  148,  South
         Timbalier Area (the "Lease");

         and all right, title and interest in and to the following;

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all   agreements,   operating   agreements,
                           participation    agreements,    unit,   pooling   and
                           communitization     agreement    and    declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-4 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For  purposes of this  Assignment  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G l898;

         f)       Farmout Agreement dated June 21, 1994 between Century Offshore
                  Management   Corporation  and  Settle  Oil  and  Gas  Company,
                  regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991 by and between  Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated  June 13,  1991 by and  between  OXY
                  U.S.A.  Inc,  and  Century  Offshore  Management   Corporation
                  covering OCS-G 1898;

                                                              Exhibit B-4 page 3
<PAGE>

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield  ExplorationCompany  (Operator), and Century Offshore
                  Management Corporation.,  et al (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         1)       Agreement   dated  June  21,   1994  by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G 1898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993 by and among Newfield Exploration Company, Settle Oil and
                  Gas Company and Century Management  Corporation covering OCS-G
                  1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

                                                              Exhibit B-4 page 4
<PAGE>

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions;

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)

                                                              Exhibit B-4 page 6
<PAGE>

ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR
OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow, but shall be effective for all purposes on the 1st
day of July, 2002, at 7:00 a.m. Central Standard Time ("Effective Date").

                                                ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-4 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-4 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of _________, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-4 page 8

<PAGE>

                                  EXHIBIT "B-5"
                                  -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                         ASSIGNMENT OF OPERATING RIGHTS
                         ------------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss.     KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.
SOUTH TIMBALIER AREA       ss.

         This Assignment of Operating Rights  ("Assignment") is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH
                                   ----------

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to  Assignee,  subject  to the  further  provisions  hereof,  all of  Assignor's
operating rights interest, being an undivided 9.00000% operating rights interest
("Assigned Interests"), in the following described oil and gas lease:

                                                              Exhibit B-5 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the operating  rights of NW/4 of the NE/4 of the SW/4 Block 148,
         and further  limited to those  depths  from the surface  down to 14,000
         feet SUBSEA (the "Lease");

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all  contracts  and  agreements,  operating
                           agreements,  participation agreements,  unit, pooling
                           and   communitization   agreement  and  declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-5 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For purposes of this  Assignment,  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

                                                              Exhibit B-5 page 3
<PAGE>

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

                                                              Exhibit B-5 page 4
<PAGE>

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions;

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR

                                                              Exhibit B-5 page 9
<PAGE>

OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow; but shall be effective for all purposes on the 1st
day of July 2002,  at 7:00  a.m.,  Central  Standard  Time  ("Effective  Date").

                                                ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-5 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-5 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of _________, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-5 page 8

<PAGE>

                                  EXHIBIT "B-6"
                                  -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                         ASSIGNMENT OF OPERATING RIGHTS
                         ------------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss.      KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.

SOUTH TIMBALIER AREA       ss.

         This Assignment of Operating Rights  ("Assignment") is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH
                                   ----------

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to  Assignee,  subject  to the  further  provisions  hereof,  all of  Assignor's
operating rights interest, being an undivided 1.00000% operating rights interest
("Assigned Interests"), in the following described oil and gas lease:

                                                              Exhibit B-6 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the operating  rights of NW/4 of the NW/4 of the SW/4 Block 148,
         and  further  limited to those  depths  below  14,000  feet SUBSEA (the
         "Lease").

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all  contracts  and  agreements,  operating
                           agreements,  participation agreements,  unit, pooling
                           and   communitization   agreement  and  declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-6 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For purposes of this  Assignment,  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

                                                              Exhibit B-6 page 3
<PAGE>

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

                                                              Exhibit B-6 page 4
<PAGE>

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions;

This  Assignment  is made  without any  warranty of title,  express,  implied or
statutory,  even for return of any  consideration  paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR

                                                              Exhibit B-6 page 5
<PAGE>

OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow; but shall be effective for all purposes on the 1st
day of July 2002, at 7:00 a.m., Central Standard Time ("Effective Date").

                                                ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-6 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-6 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-6 page 8

<PAGE>

                                  EXHIBIT "B-7"
                                  -------------
  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                         ASSIGNMENT OF OPERATING RIGHTS
                         ------------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss.      KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.

SOUTH TIMBALIER AREA       ss.

         This Assignment of Operating Rights  ("Assignment") is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH
                                   ----------

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to  Assignee,  subject  to the  further  provisions  hereof,  all of  Assignor's
operating rights interest, being an undivided 9.00000% operating rights interest
("Assigned Interests"), in the following described oil and gas lease:

                                                              Exhibit B-7 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR as it
         covers the NW/4 SE/4 SW/4 of Block 148,  and  further  limited to those
         depths below 14,000 feet SUBSEA (the "Lease").

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all  contracts  and  agreements,  operating
                           agreements,  participation agreements,  unit, pooling
                           and   communitization   agreement  and  declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-7 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For purposes of this  Assignment,  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

                                                              Exhibit B-7 page 3
<PAGE>

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

                                                              Exhibit B-7 page 4
<PAGE>

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions;

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR

                                                              Exhibit B-7 page 5
<PAGE>

OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow; but shall be effective for all purposes on the 1st
day of July 2002, at 7:00 a.m., Central Standard Time ("Effective Date").

                                                ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-7 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-7 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-7 page 8

<PAGE>

                                  EXHIBIT "B-8"
                                  -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                         ASSIGNMENT OF OPERATING RIGHTS
                         ------------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss.      KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.

SOUTH TIMBALIER AREA       ss.

         This Assignment of Operating Rights  ("Assignment") is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH
                                   ----------

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to  Assignee,  subject  to the  further  provisions  hereof,  all of  Assignor's
operating rights interest, being an undivided 9.00000% operating rights interest
("Assigned Interests"), in the following described oil and gas lease:

                                                              Exhibit B-8 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR as it
         covers the NW/4 SE/4 SW/4 of Block 148,  and  further  limited to those
         depths from the surface down to 14,000 feet SUBSEA (the "Lease").

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all  contracts  and  agreements,  operating
                           agreements,  participation agreements,  unit, pooling
                           and   communitization   agreement  and  declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-8 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For purposes of this  Assignment,  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

                                                              Exhibit B-8 page 3
<PAGE>

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation Agreement dated effective as of September 27,
                  1993, by and among Newfield Exploration Company, Settle Oil
                  and Gas Company and Century Management Corporation covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

                                                              Exhibit B-8 page 4
<PAGE>

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions;

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR

                                                              Exhibit B-8 page 5
<PAGE>

OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow; but shall be effective for all purposes on the 1st
day of July 2002, at 7:00 a.m., Central Standard Time ("Effective Date").

                                                ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-8 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-8 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-8 page 8
<PAGE>

                                 EXHIBIT "B-9"
                                 -------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                         ASSIGNMENT OF OPERATING RIGHTS
                         ------------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss.      KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.

SOUTH TIMBALIER AREA       ss.

         This Assignment of Operating Rights  ("Assignment") is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH
                                   ----------

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to  Assignee,  subject  to the  further  provisions  hereof,  all of  Assignor's
operating rights interest, being an undivided 9.00000% operating rights interest
("Assigned Interests"), in the following described oil and gas lease:

                                                              Exhibit B-9 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the operating  rights of NW/4 of the NE/4 of the SW/4 Block 148,
         and  further  limited to those  depths  below  14,000  feet SUBSEA (the
         "Lease").

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all  contracts  and  agreements,  operating
                           agreements,  participation agreements,  unit, pooling
                           and   communitization   agreement  and  declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                              Exhibit B-9 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For purposes of this  Assignment,  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

                                                              Exhibit B-9 page 3
<PAGE>

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

                                                              Exhibit B-9 page 4
<PAGE>

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions;

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR

                                                              Exhibit B-9 page 5
<PAGE>

OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow; but shall be effective for all purposes on the 1st
day of July 2002, at 7:00 a.m., Central Standard Time ("Effective Date").

                                                ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                              Exhibit B-9 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                              Exhibit B-9 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                              Exhibit B-9 page 8
<PAGE>

                                 EXHIBIT "B-10"
                                 --------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                         ASSIGNMENT OF OPERATING RIGHTS
                         ------------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss.      KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.

SOUTH TIMBALIER AREA       ss.

         This Assignment of Operating Rights  ("Assignment") is made by AMERICAN
RESOURCES OFFSHORE,  INC., a Delaware  corporation,  whose address is 801 Travis
Street, Suite 2100, Houston, Texas 77002 (hereinafter referred to as "Assignor")
in favor of NEWFIELD EXPLORATION COMPANY, a Delaware corporation,  whose address
is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060  (hereinafter
referred to as "Assignee").

                                   WITNESSETH
                                   ----------

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to  Assignee,  subject  to the  further  provisions  hereof,  all of  Assignor's
operating rights interest, being an undivided 1.00000% operating rights interest
("Assigned Interests"), in the following described oil and gas lease:

                                                             Exhibit B-10 page 1
<PAGE>

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the operating  rights of NW/4 of the NW/4 of the SW/4 Block 148,
         and further  limited to those  depths  from the surface  down to 14,000
         feet SUBSEA (the "Lease").

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

         a)       all  platforms  that are  located  on,  or  presently  used in
                  connection  with the drilling for, or  operation,  production,
                  treatment or transportation of gas, oil,  casinghead gas, drip
                  gasoline,  natural  gasoline  and all other liquid and gaseous
                  hydrocarbons from the Lease (the "Platforms");

         b)       all  wells,  wellbores,  pipes,  pipelines,  gathering  lines,
                  compressors,  materials,  inventory,  facilities, supplies and
                  equipment and any and all other  personal,  real,  movable and
                  immovable property, fixtures or equipment that are located on,
                  or presently  used in  connection  with,  the drilling for, or
                  operation,   production,   treatment  or  transportation   of,
                  Hydrocarbons from the Lease, and any replacements, attachments
                  or  accessories  now or hereafter  attached,  added or affixed
                  (the "Equipment");

         c)       all  Hydrocarbons   attributable  to  the  Assigned  Interests
                  produced  on and  after the  Effective  Date,  as  hereinafter
                  defined ("Production");

         d)       all  contracts  and  agreements  (other than the Lease) to the
                  extent  transferable that are attributable to the ownership or
                  operation  of  the  Assigned  Interests,   including,  without
                  limitation, the following (collectively, the "Contracts"):

                  (i)      any  and  all  contracts  and  agreements,  operating
                           agreements,  participation agreements,  unit, pooling
                           and   communitization   agreement  and  declarations,
                           hydrocarbon  purchase and sale agreements,  farmin or
                           farmout    agreements,    bottom-hole    contribution
                           agreements,    balancing    agreements,    processing
                           agreements,    gathering   agreements,    compression
                           agreements,   transportation  agreements,   gathering
                           agreements,  compression  agreements,  transportation
                           agreements,  and any other  contracts and  agreements
                           that are  attributable  to the ownership or operation
                           of the Assigned Interests;

         e)       all orders, permits and easements that are attributable to the
                  Assigned Interests ("Permits");

                                                             Exhibit B-10 page 2
<PAGE>

         f)       all other rights, privileges, benefits, powers and obligations
                  conferred  or  imposed  upon  Assignor  as  the  owner  of the
                  Assigned Interests ("Rights"); and

         g)       to the extent  attributable to the Assigned  Interests and not
                  prohibited  by law or an  agreement  to  which  Assignor  is a
                  party, the rights to the original records in the possession of
                  Assignor:  (i) lease and land  records,  (ii)  geological  and
                  geophysical   records,   (iii)   operations,   production  and
                  engineering records, (iv) accounting records, and (v) facility
                  and well records (collectively the "Records").

         For purposes of this  Assignment,  the Assigned  Interests,  Platforms,
Equipment,  Production,  Contracts, Permits, Rights and Records are collectively
referred to as the "Assets".

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease;

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         c)       Declaration of Rights III dated effective  September 27, 1993,
                  by and between  Settle Oil and Gas Company,  Century  Offshore
                  Management  Corporation,  PNC  Bank  National  Associates  and
                  Newfield Exploration Company, regarding OCS-G 1898;

         d)       Declaration  of Rights dated  effective  July 1, 1993,  by and
                  between   Settle  Oil  and  Gas  Company,   Century   Offshore
                  Management  Corporation,   BMO  Financial  Inc.  and  Bank  of
                  Montreal, regarding OCS-G 1898;

         e)       Declaration of Rights II dated effective November 22, 1993, by
                  and  between  Settle  Oil and Gas  Company,  Century  Offshore
                  Management  Corporation,  BMO Financial Inc., Bank of Montreal
                  and Newfield Exploration Company, regarding OCS-G 1898;

         f)       Farmout  Agreement  dated  June  21,  1994,   between  Century
                  Offshore  Management   Corporation  and  Settle  Oil  and  Gas
                  Company, regarding OCS-G 1898;

         g)       Farmout  Agreement  dated June 13, 1991, by and between Conoco
                  Inc.  and Century  Offshore  Management  Corporation  covering
                  OCS-G 1898;

         h)       Farmout  Agreement  dated June 13,  1991,  by and  between OXY
                  U.S.A.,  Inc.  and  Century  Offshore  Management  Corporation
                  covering OCS-G 1898;

                                                             Exhibit B-10 page 3
<PAGE>

         i)       Joint  Operating  Agreement  dated  August  1,  1994,  between
                  Newfield Exploration Company (Operator),  and Century Offshore
                  Management Corporation,  et al. (Non-Operators),  covering W/2
                  Block 148, South Timbalier Area, Offshore, Louisiana;

         j)       Operating  Agreement  dated  January 1, 1989,  by and  between
                  Conoco Inc. and OXY U.S.A.,  Inc. covering the West-half (1/2)
                  of South Timbalier Block 148;

         k)       Ownership and Operating  Agreement dated November 25, 1980, by
                  and between Conoco Inc., OXY U.S.A., Inc. and Texaco Producing
                  Company   covering  South   Timbalier   Field  176  production
                  facilities;

         l)       Agreement   dated  June   21,1994,   by  and  among   Newfield
                  Exploration  Company,  Settle Oil and Gas  Company and Century
                  Offshore Management Corporation, regarding OCS-G l898;

         m)       Participation  Agreement  dated  effective as of September 27,
                  1993, by and among Newfield  Exploration  Company,  Settle Oil
                  and Gas Company and Century  Management  Corporation  covering
                  OCS-G 1898;

         n)       Letter  Agreement  entered into March 25, 1988, by and between
                  Conoco Inc. and OXY U.S., addressing OXY's approval to utilize
                  gas produced  from South  Timbalier  Block 146 "A" platform to
                  provide Gas-Lift gas to South Timbalier 148 "A" platform;

         o)       Letter  Agreement  entered  into July 7, 1983,  by and between
                  Conoco  Inc.,  Texaco  Producing  Co.,  and OXY  U.S.A.,  Inc.
                  regarding Texaco's use of the 4 1/2" OD pipeline;

         p)       Crude  Oil   Contract   with   Cities   Service  Oil  and  Gas
                  Corporation,  as Seller, and Citgo Petroleum  Corporation,  as
                  Buyer, effective September 1, 1983, and covering oil and field
                  separated liquids;

         q)       Operating  Agreement  effective  September  1,  1972,  by  and
                  between Amoco Production Company,  Conoco Inc. and OXY U.S.A.,
                  Inc.  regarding that 4 1/2" OD pipeline  commencing at Amoco's
                  South  Timbalier  Block 161 "A" Platform and  extending to and
                  tied into Chevron's 10" pipeline in South Timbalier Block 161;

         r)       Purchase and Sale Agreement,  dated effective July 1, 1996, by
                  and between Century Offshore Management  Corporation  (seller)
                  and Southern Gas Company of Delaware,  Inc. (buyer),  covering
                  the sale of  interest  in OCS-G  1898,  Block  148 W/2,  South
                  Timbalier Area, Offshore Louisiana;

         s)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between Oxy U.S.A. Inc. and
                  Century Offshore Management Corporation,  covering OCS-G 1898,
                  in which a preferential right to purchase the liquids from the
                  lease  was  reserved,  and  which  contains  a  limitation  on
                  assignment provisions;

                                                             Exhibit B-10 page 4
<PAGE>

         t)       Purchase  and Sale  Agreement  dated May 31,  1991,  effective
                  November 1, 1990,  executed by and between  Cities Service Oil
                  Company and Century Offshore Management Corporation,  covering
                  OCS-G 1898,  in which a  preferential  right to  purchase  the
                  liquids  from the lease was  reserved,  and which  contains  a
                  limitation on assignment provisions;

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that subject to the permitted  encumbrances (if any), Assignor shall warrant and
defend  title  against all claims and demands of all persons  whomever  claiming
title  to the  Assigned  Interests  by,  through  or  under  Assignor,  but  not
otherwise,  and only to the extent set forth in the PSA.  Assignee  acknowledges
that (i) it has had access to the Assets and the  employees  of Assignor and the
opportunity to inspect the Assets, and (ii) in making its decision to enter into
the PSA and  consummate  the  transactions  contemplated  thereby,  Assignee has
relied solely on the basis of its own  independent  investigation  of the Assets
and upon the representations and warranties of Assignor set forth in the PSA and
the special warranty of title made herein.  Accordingly,  Assignee  acknowledges
that Assignor has not made, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY REPRESENTATION OR WARRANTY,  EXPRESSED (ORALLY OR IN WRITING),  IMPLIED,  AT
COMMON LAW, BY STATUTE,  OR  OTHERWISE,  OR OTHER RIGHT OF RECOURSE  (EVEN AS TO
RETURN OF THE  PURCHASE  PRICE)  RELATING  TO (A) THE  CONDITION  OF THE  ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  ABSENCE OF LATENT  DEFECTS  OR  REDHIBITORY  VICES,  OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL  CONDITION),  (B)
ANY  INFRINGEMENT  BY ASSIGNOR OF ANY PATENT OR  PROPRIETARY  RIGHT OF ANY THIRD
PARTY, AND (C) ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR

                                                             Exhibit B-10 page 5
<PAGE>

OTHER  MATERIALS  (WRITTEN  OR ORAL)  FURNISHED  TO  ASSIGNEE BY OR ON BEHALF OF
ASSIGNOR (INCLUDING WITH RESPECT TO RESERVE MATTERS, SUCCESS OF WELLS (INCLUDING
WELLS  THAT ARE  DRILLED  AFTER  THE  EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,
ENVIRONMENTAL CONDITIONS AND OTHER MATTERS); IT BEING AGREED BY ASSIGNEE THAT IT
IS ACQUIRING THE ASSETS "AS-IS," "WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow; but shall be effective for all purposes on the 1st
day of July 2002, at 7:00 a.m., Central Standard Time ("Effective Date").

                                                ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                                             Exhibit B-10 page 6
<PAGE>

                                                ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                             Exhibit B-10 page 7

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                             Exhibit B-10 page 8
<PAGE>

                                 EXHIBIT "B-11"
                                 --------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                      and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                    ASSIGNMENT OF OVERRIDING ROYALTY INTEREST
                    -----------------------------------------

UNITED STATES OF AMERICA   ss.
OUTER CONTINENTAL SHELF    ss.   KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA         ss.
SOUTH TIMBALIER AREA       ss.

         This Assignment of Overriding  Royalty Interest  ("Assignment") is made
by AMERICAN RESOURCES OFFSHORE,  INC., a Delaware corporation,  whose address is
801 Travis Street, Suite 2100, Houston,  Texas 77002 (hereinafter referred to as
"Assignor") in favor of NEWFIELD  EXPLORATION  COMPANY, a Delaware  corporation,
whose address is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060
(hereinafter referred to as "Assignee").

                                   WITNESSETH

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to Assignee,  subject to the further  provisions  hereof,  an undivided  0.2500%
Overriding Royalty Interest  ("Assigned  Interests") in the following  described
oil and gas lease:

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it

                                                             Exhibit B-11 page 1
<PAGE>

         covers the NE/4 of the NW/4 of the SW/4,  SE/4 of the NW/4 of the SW/4,
         NE/4 of the  SW/4 of the  SW/4  and SW/4 of the SW/4 of the NE/4 of the
         SW/4 of Block  148,  South  Timbalier  Area,  Offshore  Louisiana  (the
         "Lease");

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

                  (a)      all   Hydrocarbons   attributable   to  the  Assigned
                           Interests  produced on and after the Effective  Date,
                           as hereinafter defined ("Production").

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease; and

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that  subject  to the  permitted  encumbrances  (if any) as  defined in the PSA,
Assignor  shall  warrant and defend title  against all claims and demands of all
persons whomever  claiming title to the Assigned  Interests by, through or under
Assignor,  but not  otherwise,  and  only to the  extent  set  forth in the PSA.
Assignee acknowledges that (i) it has had access to the Assets and the employees
of Assignor and the  opportunity  to inspect the Assets,  and (ii) in making its
decision  to enter into the PSA and  consummate  the  transactions  contemplated
thereby,  Assignee  has  relied  solely  on the  basis  of its  own  independent
investigation  of the  Assets and upon the  representations  and  warranties  of
Assignor  set forth in the PSA and the special  warranty  of title made  herein.
Accordingly,  Assignee  acknowledges  that  Assignor has not made,  AND ASSIGNOR
HEREBY  EXPRESSLY  DISCLAIMS  AND  NEGATES,   ANY  REPRESENTATION  OR  WARRANTY,
EXPRESSED  (ORALLY OR IN  WRITING),  IMPLIED,  AT COMMON  LAW,  BY  STATUTE,  OR

                                                             Exhibit B-11 page 2
<PAGE>

OTHERWISE,  OR OTHER RIGHT OF RECOURSE (EVEN AS TO RETURN OF THE PURCHASE PRICE)
RELATING TO (A) THE CONDITION OF THE ASSETS  (INCLUDING ANY IMPLIED OR EXPRESSED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ABSENCE OF LATENT
DEFECTS  OR  REDHIBITORY  VICES,  OR OF  CONFORMITY  TO  MODELS  OR  SAMPLES  OF
MATERIALS, OR ENVIRONMENTAL CONDITION),  (B) ANY INFRINGEMENT BY ASSIGNOR OF ANY
PATENT OR PROPRIETARY  RIGHT OF ANY THIRD PARTY, AND (C) ACCURACY,  COMPLETENESS
OR MATERIALITY OF ANY  INFORMATION,  DATA OR OTHER  MATERIALS  (WRITTEN OR ORAL)
FURNISHED  TO ASSIGNEE BY OR ON BEHALF OF ASSIGNOR  (INCLUDING  WITH  RESPECT TO
RESERVE  MATTERS,  SUCCESS OF WELLS  (INCLUDING WELLS THAT ARE DRILLED AFTER THE
EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,  ENVIRONMENTAL  CONDITIONS  AND OTHER
MATTERS);  IT BEING AGREED BY ASSIGNEE THAT IT IS ACQUIRING THE ASSETS  "AS-IS,"
"WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

                                                             Exhibit B-11 page 3
<PAGE>

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow, but shall be effective for all purposes on the 1st
day of July  2002,  at 7:00  a.m.  Central  Standard  Time  ("Effective  Date").

                                               ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                               ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                             Exhibit B-11 page 4

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                             Exhibit B-11 page 5

<PAGE>

                                 EXHIBIT "B-12"
                                 --------------

  Attached to and made apart of that certain Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

--------------------------------------------------------------------------------

                                                  South Timbalier Area Block 148
                                                                      OCS-G 1898

                    ASSIGNMENT OF OVERRIDING ROYALTY INTEREST

UNITED STATES OF AMERICA     ss.
OUTER CONTINENTAL SHELF      ss.    KNOW ALL MEN BY THESE PRESENTS:
OFFSHORE LOUISIANA           ss.
SOUTH TIMBALIER AREA         ss.

         This Assignment of Overriding  Royalty Interest  ("Assignment") is made
by AMERICAN RESOURCES OFFSHORE,  INC., a Delaware corporation,  whose address is
801 Travis Street, Suite 2100, Houston,  Texas 77002 (hereinafter referred to as
"Assignor") in favor of NEWFIELD  EXPLORATION  COMPANY, a Delaware  corporation,
whose address is 363 N. Sam Houston Pkwy.  E. Suite 2020,  Houston,  Texas 77060
(hereinafter referred to as "Assignee").

                                   WITNESSETH
                                   ----------

         In  consideration  of One Hundred Dollars  ($100.00) and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Assignor by these presents does hereby CONVEY, TRANSFER and ASSIGN
to Assignee,  subject to the further  provisions  hereof,  an  undivided  0.800%
Overriding Royalty Interest  ("Assigned  Interests") in the following  described
oil and gas lease:

         OCS-G 1898, Oil and Gas Lease dated effective March 1, 1969, granted by
         the  United  States   Department  of  the  Interior,   Bureau  of  Land
         Management,  as Lessor,  in favor of Continental Oil Company and Cities
         Service Oil Company,  as Lessee,  covering Block 148, West Half,  South
         Timbalier Area, as shown on OCS Official Leasing Map, Louisiana Map No.
         6, containing approximately 2,500 acres, INSOFAR AND ONLY INSOFAR AS it
         covers the NW/4 of the NW/4 of the SW/4 (the "Lease");

                                                             Exhibit B-12 page 1
<PAGE>

         and a like interest in and to the  following,  insofar and only insofar
         as same pertains to the Assigned Interests:

                  (b)      all   Hydrocarbons   attributable   to  the  Assigned
                           Interests  produced on and after the Effective  Date,
                           as hereinafter defined ("Production").

         By acceptance of this Assignment,  Assignee  acknowledges the existence
of, and agrees to be bound by all of the terms and  conditions  contained in the
following:

         a)       The Lease; and

         b)       Purchase and Sale Agreement  dated June 28, 2002 and effective
                  July 1,  2002 at  7:00  a.m.  Central  Standard  Time,  by and
                  between  American  Resources  Offshore,  Inc., as Seller,  and
                  Newfield Exploration Company, as Buyer (the "PSA");

         This Assignment is made without any warranty of title, express, implied
or statutory, even for return of any consideration paid therefor;  provided only
that  subject  to the  permitted  encumbrances  (if any) as  defined in the PSA,
Assignor  shall  warrant and defend title  against all claims and demands of all
persons whomever  claiming title to the Assigned  Interests by, through or under
Assignor,  but not  otherwise,  and  only to the  extent  set  forth in the PSA.
Assignee acknowledges that (i) it has had access to the Assets and the employees
of Assignor and the  opportunity  to inspect the Assets,  and (ii) in making its
decision  to enter into the PSA and  consummate  the  transactions  contemplated
thereby,  Assignee  has  relied  solely  on the  basis  of its  own  independent
investigation  of the  Assets and upon the  representations  and  warranties  of
Assignor  set forth in the PSA and the special  warranty  of title made  herein.
Accordingly,  Assignee  acknowledges  that  Assignor has not made,  AND ASSIGNOR
HEREBY  EXPRESSLY  DISCLAIMS  AND  NEGATES,   ANY  REPRESENTATION  OR  WARRANTY,
EXPRESSED  (ORALLY OR IN  WRITING),  IMPLIED,  AT COMMON  LAW,  BY  STATUTE,  OR
OTHERWISE,  OR OTHER RIGHT OF RECOURSE (EVEN AS TO RETURN OF THE PURCHASE PRICE)

                                                             Exhibit B-12 page 2
<PAGE>

RELATING TO (A) THE CONDITION OF THE ASSETS  (INCLUDING ANY IMPLIED OR EXPRESSED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ABSENCE OF LATENT
DEFECTS  OR  REDHIBITORY  VICES,  OR OF  CONFORMITY  TO  MODELS  OR  SAMPLES  OF
MATERIALS, OR ENVIRONMENTAL CONDITION),  (B) ANY INFRINGEMENT BY ASSIGNOR OF ANY
PATENT OR PROPRIETARY  RIGHT OF ANY THIRD PARTY, AND (C) ACCURACY,  COMPLETENESS
OR MATERIALITY OF ANY  INFORMATION,  DATA OR OTHER  MATERIALS  (WRITTEN OR ORAL)
FURNISHED  TO ASSIGNEE BY OR ON BEHALF OF ASSIGNOR  (INCLUDING  WITH  RESPECT TO
RESERVE  MATTERS,  SUCCESS OF WELLS  (INCLUDING WELLS THAT ARE DRILLED AFTER THE
EFFECTIVE  DATE),  COMPLIANCE  WITH  LAWS,  ENVIRONMENTAL  CONDITIONS  AND OTHER
MATTERS);  IT BEING AGREED BY ASSIGNEE THAT IT IS ACQUIRING THE ASSETS  "AS-IS,"
"WHERE-IS", WITH ALL FAULTS.

         This  Assignment is made in accordance  with the PSA and all provisions
of said PSA are  incorporated  herein by reference for all purposes as if copied
in extenso.  In the event of a conflict between the terms of this Assignment and
the PSA, the terms of the PSA shall control.

         This Assignment may be executed in any number of  counterparts,  all of
which taken together shall constitute one and the same instrument by signing any
such counterpart.

         This  Assignment  shall bind and inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors and assigns.

                                                             Exhibit B-12 page 3
<PAGE>

         IN WITNESS WHEREOF,  this Assignment is executed before the undersigned
competent  witnesses  by the parties on the dates set forth in their  respective
acknowledgements hereinbelow, but shall be effective for all purposes on the 1st
day of July 2002, at 7:00 a.m. Central Standard Time ("Effective Date").

                                               ASSIGNOR:

WITNESSES:                                     AMERICAN RESOURCES OFFSHORE, INC.
                                               GOM No. 1937

                                               By: _____________________________
_____________________________                  Name:____________________________
                                               Title:___________________________

_____________________________

                                               ASSIGNEE:

WITNESSES:                                     NEWFIELD EXPLORATION COMPANY
                                               GOM No. 1364

                                               By: _____________________________
_____________________________                         W. M. Blumenshine
                                                      Attorney in Fact

_____________________________

                                                             Exhibit B-12 page 4

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
__________________, known to me to be the person whose name is subscribed to the
foregoing instrument as _______________ of AMERICAN RESOURCES OFFSHORE,  INC., a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

STATE OF TEXAS           ss.
                         ss.
COUNTY OF HARRIS         ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
W. M. Blumenshine,  known to me to be the person whose name is subscribed to the
foregoing  instrument  as Attorney in Fact of NEWFIELD  EXPLORATION  COMPANY,  a
Delaware  corporation,  and acknowledged to me that he executed the same for and
on  behalf of said  corporation,  for the  purposes  and  consideration  therein
expressed, and in the capacity therein stated.

         GIVEN under my hand and seal of office this ___ day of July, 2002.

                                              __________________________________
                                              Notary Public, State of Texas
                                              My Commission Expires:____________

                                                             Exhibit B-12 page 5

<PAGE>

                                  Schedule 2.03

                   Attached to and made apart of that certain
                        Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

                                   PRELIMINARY
                                CLOSING STATEMENT
                   AMERICAN RESOURCES OFFSHORE INC. / NEWFIELD

1.       AGREEMENT               Purchase and Sale Agreement dated June 28, 2002
         ---------               by and between American Resources Offshore Inc.
                                 as Seller and Newfield  Exploration  Company as
                                 Buyer (the "Agreement")

2.       ASSETS SOLD             All of Seller's  right,  title and  interest in
         -----------             and to Oil and Gas  Lease  dated  March 1, 1969
                                 pertaining  to OCS-G  1898 at  South  Timbalier
                                 Block 148 and other property (the  "Interests")
                                 more particularly described in the Agreement.

3.       EFFECTIVE TIME          July 1, 2002 at 7:00 a.m. C.S.T.
         --------------

4.       PURCHASE PRICE          Section 2.01                   $   2,300,000.00
         --------------
         Section 2.03(a)(1)      Value of oil in storage at            (1)
                                 Effective Time...............  ----------------

                                                PLUS
         Section 2.03(a)(2)

                                 Post   Effective  Time  operating
                                 and  capital expenditures paid
                                 by Seller....................         (1)
                                                                ----------------
                                                PLUS
         Section 2.03(a)(3)      Post Effective Time Taxes paid
                                 by Seller....................         (1)
                                                                ----------------
                                                PLUS
         Section 2.03(a)(4)      Post Effective Time prepaid
                                 expenses paid by Seller......         (1)
                                                                ----------------
                                                LESS
         Section 2.03(b)(1)      The Deposit..................         -0-
                                                                ----------------

                                               LESS
         Section 2.03(b)(2)      Proceeds received by Seller
                                 from the sale of substances
                                 produced after the Effective
                                 Time.........................         (1)
                                                                ----------------

                                                            Schedule 2.03 page 1
<PAGE>

                                                LESS
         Section 2.03(b)(3)      Proceeds received by Seller
                                 from the sale of Interests
                                 after the Effective Time.....         (1)
                                                                ----------------

                                                LESS
         Section 2.03(b)(4)      Value of uncured Title
                                 Defects .....................         -0-
                                                                ----------------
                                                LESS
         Section 2.03(b)(5)      Pre-Effective Time Taxes on
                                 production to be paid by
                                 Buyer .......................         -0-
                                                                ----------------

         Section 2.04            ADJUSTED PURCHASE PRICE        $2,300,000.00(2)
                                                                ----------------

(1)        Estimate  subject to confirmation on a post closing basis pursuant to
           Section 1.05
(2)        To Be Paid by Wire Transfer:

5.         The wiring instructions for American Resources Offshore Inc.:

              Bank:                             Bank One
              Transit Routing Number (ABA):     111000614
              Bank Account Number:              157-183-4629
              Bank Account Name:                American Resources Offshore Inc.

6.         DOCUMENTS TO BE SIGNED AND DELIVERED
           BY SELLER AND BUYER AT CLOSING

           7.02(a) Four Assignments of Record Title              1788,1800,1802,
                                                                 1803
                   Six Assignments of Operating Rights           1786,1804,1805
                                                                 1806,1807,1808
                   Two Assignments of Overriding
                   Royalty Interest                              1781, 1809

           7.02(f) Partial Release of Mortgages and Security
                   Interests

                   UCC Release

           Such  other  instruments  as  are  reasonably  necessary  to
           effectuate the conveyance of the Properties to the Buyer

BUYER    SELLER

NEWFIELD EXPLORATION COMPANY                AMERICAN RESOURCES OFFSHORE INC.

By:   _______________________________       By:  _______________________________

Its:  _______________________________       Its:   _____________________________

U.S. Tax ID No.: ____________________       U.S. Tax ID No.: ___________________
363 N. Sam Houston Pkwy E., Suite 2020      801 Travis Street, Suite 2100
                                            Houston, TX 77060 Houston, TX 77002

                                                            Schedule 2.03 page 2
<PAGE>

                                Schedule 3.01(e)

                   Attached to and made apart of that certain
                        Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

                    Suits, Claims, Demands or Investigations
                    ----------------------------------------

                                      None

                                                       Schedule 3.01(e) - Page 1
<PAGE>

                                Schedule 3.01(n)
                   Attached to and made apart of that certain
                        Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

                        Outstanding AFE's and Commitments
                        ---------------------------------

                                      None

                                                       Schedule 3.01(n) - Page 1
<PAGE>

                                Schedule 3.01(o)

                   Attached to and made apart of that certain
                        Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

                                 Gas Imbalances
                                 --------------

                                      None

<PAGE>

                               Schedule 5.06(b)(8)

                   Attached to and made apart of that certain
                        Purchase and Sale Agreement among
                 American Resources Offshore, Inc., as "Seller"
                                       and
                    Newfield Exploration Company, as "Buyer"

                              Title Matters Waived
                              --------------------

                                      None

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