Document:

PAINEWEBBER/GEODYNE ENERGY INCOME LIMITED PARTNERSHIP III-C
                        AGREEMENT OF LIMITED PARTNERSHIP

        Agreement of Limited Partnership, dated as of February 26, 1990, between
Geodyne Production  Company,  a Delaware  corporation,  as General Partner,  and
Geodyne Depositary Company, a Delaware corporation, as the Limited Partner.

        Whereas, the parties hereto wish to form a limited partnership under the
Oklahoma  Revised Uniform Limited  Partnership Act pursuant to this Agreement of
Limited Partnership;

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

                                   ARTICLE ONE

                                  DEFINED TERMS

        The  defined  terms used in this  Agreement  shall,  unless the  context
otherwise  requires,  have the  meanings  specified  in this  Article  One.  The
singular  shall  include the plural and the  masculine  gender shall include the
feminine, the neuter and vice versa, as the context requires.

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

        "Acquisition  Reserve  Report" shall mean a Hydrocarbon  reserve  report
made available to the Partnership prepared by a qualified petroleum  engineering
firm  acceptable  to  the  General  Partner  in  connection  with  the  proposed
acquisition  of  a  Producing  Property,  which  shall  include  statements  (i)
identifying  reserves  of  Hydrocarbons  referred  to in such  report  as Proved
Developed Producing Reserves,  Proved Developed Non-Producing Reserves or Proved
Undeveloped  Reserves,  as the case may be, and identifying all computations and
determinations made for purposes of such report, including,  without limitation,
the present and future prices for  Hydrocarbons and the present and future costs
to  produce  and  develop  such  Hydrocarbons  used  in  such  computations  and
determinations,  (ii) with respect to the determination of the nature and extent
of

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the reserves of  Hydrocarbons  reflected in such  report,  that the  collection,
analysis and evaluation of the basic physical data upon which such determination
is based were performed by such qualified petroleum engineering firm or, if such
data were collected by another Person, that such qualified petroleum engineering
firm has made inquiry with respect to the methods  employed in such  collection,
(iii) specifying the respective amounts of Proved Developed  Producing Reserves,
Proved  Developed   Non-Producing   Reserves  and  Proved  Undeveloped  Reserves
contained  therein,  and (iv)  indicating such qualified  petroleum  engineering
firm's  opinion  as to the  respective  estimated  present  values of future net
revenues of each category of reserves contained therein determined in accordance
with criteria  satisfactory  to the General  Partner and otherwise in accordance
with sound  engineering  and industry  practices,  including  such standards and
practices as may be  promulgated  by the Society of  Petroleum  Engineers of the
American  Institute of Mining and Metallurgical  Engineers.  Any such report may
state that such qualified  petroleum  engineering  firm expresses no opinion and
makes no warranty or representation with respect to the proposed  acquisition of
such Producing  Property and that such qualified  petroleum  engineering firm is
relying on  information  furnished by the General  Partner as to the  historical
volumes of any Hydrocarbons  actually produced and as to the proposed  ownership
interest of the Partnership in such Producing Property.

        "Acquisitions  and  Operations  Fee"  shall  mean  the  fee  paid by the
Partnership to the General  Partner  pursuant to Section 4.12B of this Agreement
in connection with the Partnership's acquisition of Producing Properties and the
conduct of its business operations.

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

        "Activation" or "Activated" shall mean the date on which the Certificate
of Limited Partnership is filed with the Oklahoma Secretary of State.

        "Affiliate"  shall mean, when used with reference to a specified Person:
(a) any Person directly or indirectly owning, controlling, or holding with power
to vote  10% or more  of the  outstanding  voting  securities  of the  specified
Person;  (b) any Person 10% or more of whose  outstanding  voting securities are
directly  or  indirectly  owned,  controlled,  or held with power to vote by the
specified Person; (c) any Person directly or

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indirectly  controlling,  controlled  by,  or under  common  control  with,  the
specified Person; (d) any Person who is an officer, director, partner or trustee
of, or serves in a similar  capacity with respect to, the specified Person or of
which the specified Person is an officer,  director, partner or trustee, or with
respect to which the specified Person serves in a similar capacity;  and (e) the
spouse or any  relative of the  specified  Person  sharing  the same  household.
Notwithstanding  the  foregoing,  no Person  shall be deemed to be an  Affiliate
solely by reason of its ownership of units or limited partnership interests in a
limited partnership.

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

        "Agreement"  shall  mean  this  Agreement  of  Limited   Partnership  as
originally executed and as amended from time to time.

        "Capital Account" shall mean, as to any Partner,  an account  maintained
on the books of the Partnership in accordance with the provisions of Section 5.4
below.

        "Capital  Contribution" shall mean the cash contribution of a Partner to
the Partnership.

        "Certificate  of  Limited  Partnership"  shall mean the  certificate  of
limited  partnership,  and any  and  all  amendments  thereto  and  restatements
thereof, filed on behalf of the Partnership as required under the Act.

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

        "Commercial  Well" shall mean any  Partnership  Well which is capable of
producing Hydrocarbons in commercial quantities, including those wells which are
shut-in  or  which  have  not  been  abandoned  within  60  days  following  the
commencement of production.  For purposes of this  definition,  production shall
refer to the commencement of the commercial

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marketing of  Hydrocarbons,  and shall not include any spot sales of Hydrocarbon
production as a result of testing procedures.

        "Commissions" shall mean the cash fees payable to the Dealer Manager and
the Selected  Dealers in connection with their  participation in the offering of
Units.

        "Consent"  shall mean the  consent  of a Person,  given as  provided  in
Section 12.1, to do the act or thing for which the consent is solicited,  or the
act of granting such consent, as the context may require.

        "Dealer  Manager"  shall  mean  PaineWebber  Incorporated,   a  Delaware
corporation.

        "Depositary"   shall  mean  Geodyne   Depositary   Company,  a  Delaware
corporation,  as the sole initial  Limited Partner or any Person who at the time
of reference  thereto has been admitted to the  Partnership  with the consent of
the General Partner as a successor to the interest of Geodyne Depositary Company
in the  Partnership,  which will upon the Activation of the Partnership  acquire
and  hold  on  behalf  of  the  Unit  Holders  the  Limited  Partner   interests
attributable to the Units issued to the Unit Holders.

        "Depositary  Receipt" shall mean a document issued in registered form by
the Depositary evidencing the ownership of one or more Units.

        "Development  Drilling"  shall  mean all  drilling  and  completing,  or
plugging and abandoning  (after a determination  that a well is not a Commercial
Well),  of a Partnership  Well drilled to the same  reservoir from which another
well or other  wells on a Lease or an offset  Lease are being  produced,  or the
recompletion  of  an  existing   Partnership  Well;  provided,   however,   that
Development Drilling shall not include any Identified Development Drilling.

        "Direct Administrative Costs" shall mean the actual and necessary direct
costs attributable to services provided to the Partnership by parties other than
the General Partner or its Affiliates, whether incurred by or for the benefit of
the  Partnership  directly or incurred by the General Partner or its Affiliates,
including the annual audit fees, legal fees and expenses,  the cost of reviewing
tax returns and reports, the cost of evaluations prepared by qualified petroleum
engineering firms pursuant to Section 10.4C of this Agreement and all other

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such costs directly  incurred by or for the benefit of the  Partnership.  Direct
Administrative  Costs shall not include any  Organization  and Offering Costs or
any General and Administrative Costs.

        "Eligible  Investor"  shall  mean a person who is  qualified  to hold an
interest in oil and gas Leases on federal lands,  including offshore areas under
federal laws and regulations in effect from time to time. As of the date of this
Agreement,  the term  "Eligible  Investor"  means:  (i) a citizen  of the United
States who has attained the age of majority under the laws of the state in which
he resides,  (ii) an  association  (including a  partnership,  joint  tenancy or
tenancy in common)  organized or existing under the laws of the United States or
any state or territory thereof,  all of the members of which are citizens of the
United  States or (iii) a  corporation  organized  under the laws of the  United
States or any state or territory thereof,  of which corporation,  to the best of
its  knowledge,  not more than 5% of the voting stock,  or of all the stock,  is
owned or controlled by citizens of countries that deny to United States citizens
privileges to own stock in  corporations  holding oil and gas Leases  similar to
the  privileges  of  non-United  States  citizens  to own stock in  corporations
holding an interest in federal Leases, and, in each case, whose interest, direct
or  indirect,  in federal oil and gas Leases,  applications,  offers and options
therefor does not exceed 246,000 acres in the same state,  of which no more than
200,000 acres are under option,  nor does it exceed 300,000 acres in each of the
northern and southern leasing districts of Alaska, of which no more than 200,000
acres are held under option in each of such districts.

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

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evaluation of the basic physical data upon which such determination is based.

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

        "Fiscal Year" shall mean the calendar year.

        "General and Administrative  Costs" shall mean all customary and routine
legal,  accounting,  data  processing,  depreciation  (other  than  depreciation
relating  to real  property),  geological,  engineering,  travel,  office  rent,
telephone, secretarial, employee compensation and benefits, and other items of a
general and administrative nature, whether like or unlike the foregoing, and any
other  incidental   expenses   reasonably   necessary  to  the  conduct  of  the
Partnership's  business,  and generated by the General  Partner or any Affiliate
other than an  Affiliated  Program  computed on a cost basis,  determined by the
General Partner in accordance with generally accepted accounting  principles and
subject to review by the  Accountants in connection with the annual audit of the
Partnership  and its  Affiliates.  General  and  Administrative  Costs shall not
include any Direct  Administrative  Costs or Organization  and Offering Costs of
the Partnership.

        "General  Partner"  shall mean Geodyne  Production  Company,  a Delaware
corporation,  acting in such  capacity,  and any  other  Person  admitted  as an
additional or substituted  General Partner pursuant to the provisions of Article
Six of this Agreement.

        "Hydrocarbons"  shall mean crude oil, natural gas,  condensate,  natural
gas liquids and other liquid or gaseous  hydrocarbons and any minerals  produced
in association therewith.

        "Identified   Development   Drilling"   shall  mean  all   drilling  and
completing, or plugging and abandoning (after a determination that a well is not
a  Commercial  Well),  of a  Partnership  Well  drilled  by or on  behalf of the
Partnership to a reservoir on a Lease or an offset Lease  constituting  all or a
portion of a Producing  Property or the recompletion of an existing  Partnership
Well,  where (i) the drilling or recompletion of such Partnership Well commences
after the

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acquisition of such Producing  Property by the  Partnership  and is conducted in
order to commence  production of Hydrocarbons from Proved  Undeveloped  Reserves
identified  in the  Acquisition  Reserve  Report or  Engineering  Review  Letter
prepared  in  connection  with  such  Producing  Property,  (ii)  the  costs  of
development of the Proved  Undeveloped  Reserves were taken into account in such
Acquisition  Reserve Report or Engineering  Review Letter in valuing such Proved
Undeveloped  Reserves  attributable  to such  Producing  Property,  and  (iii) a
portion  of the cost paid by the  Partnership  for such  Producing  Property  is
attributed by such  Acquisition  Reserve Report or Engineering  Review Letter to
such Proved Undeveloped  Reserves.  The term,  Identified  Development Drilling,
shall also refer to any Partnership  Wells drilled or recompleted on a Producing
Property subsequent to the initial Identified  Development Drilling conducted on
such Producing  Property in order to commence  production of  Hydrocarbons  from
Proved  Undeveloped  Reserves  (in addition to those  identified  in the related
Acquisition  Reserve  Report  or  Engineering  Review  Letter)  which  have been
categorized by the General Partner as such by virtue of production obtained from
prior Identified  Development Drilling conducted on such Producing Property. Any
reference to costs incurred in connection with Identified  Development  Drilling
shall  include the interest,  commitment  fees and other  financing  charges and
expenses of Partnership  borrowings  incurred to finance Identified  Development
Drilling.

        "Improved  Recovery"  shall mean all  methods of  supplementing  natural
forces and mechanisms of primary  recovery or otherwise  increasing the ultimate
recovery  from a  Partnership  Property,  including,  but not limited to,  water
flooding, pressure maintenance,  gas cycling, fluid injection, polymer flooding,
chemical flooding and the use of miscible displacement fluids.

        "Incapacity"  or  "Incapacitated"  shall mean the entry of any order for
relief  under  any  bankruptcy  law  (except  that,  in the case of the  General
Partner, the term "bankruptcy" shall mean only being subject to Chapter 7 of the
Bankruptcy Code of 1984), the adjudication of interdiction,  of incompetence, or
of insanity,  or the death,  dissolution or termination (other than by merger or
consolidation  under  which the  surviving  entity  agrees to assume  all of the
obligations and  responsibilities of the merged or consolidated Person set forth
in this Agreement), as the case may be, of any Person.

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        "Independent  Petroleum  Engineer"  shall mean a Person with no material
relationship  to the General Partner or its Affiliates who is in the business of
rendering  fair  market  value  opinions  regarding  the  value  of oil  and gas
properties  based upon the  evaluation  of all  pertinent  economic,  financial,
geologic and engineering information available to the General Partner.

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

        "I/P  Partnership"  shall  mean a  partnership  formed  as a part of the
program  captioned  "PaineWebber/Geodyne   Institutional/Pension  Energy  Income
Partners" and any subsequent Affiliated Program formed by the General Partner or
any Affiliate for investment primarily by pension and other tax-exempt plans and
accounts.

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

        "Limited Partner" shall mean the Depositary and any  Substituted Limited
Partners.

        "Net Profits  Interest"  shall mean an interest in one or more Producing
Properties  which  entitles the holder  thereof to a share of the gross revenues
from the production of  Hydrocarbons  from the Producing  Property or Properties
less all operating, production,  development,  transportation,  transmission and
marketing  expenses,  and all  severance,  sales,  ad valorem  and excise  taxes
attributable to such production.

        "Notification" shall mean a writing, containing the information required
by this Agreement to be  communicated  to any Person,  hand delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, to such
Person at the last address of such Person  reflected on the official  records of
the Partnership, the date of the certified receipt

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(or such other evidence of receipt) therefor being deemed the date of the giving
of Notification;  provided,  however, that any written communication  containing
the  information  sent or delivered  to the Person and actually  received by the
Person shall constitute Notification for all purposes of this Agreement.

        "Operating Costs" shall mean all expenditures made and costs incurred by
the Partnership with respect to (i) the production and marketing of Hydrocarbons
from completed  Partnership  Wells,  including labor,  fuel,  repairs,  hauling,
materials,  supplies,  utility charges and other costs incident to or therefrom,
costs of  maintaining  inventories  incidental  to the  operations  of Producing
Properties,  costs of making  transfers of lease and well  equipment to and from
Partnership  Wells, ad valorem and severance taxes,  insurance and casualty loss
expense,  and compensation to well operators or others for services  rendered in
conducting such operations; (ii) the interest, commitment fees and other finance
charges and  expenses of  Partnership  borrowings  incurred in  connection  with
Development  Drilling  and  Improved  Recovery  projects;  and (iii)  processing
facilities,  pipelines,  gas sales facilities,  Improved Recovery projects,  and
other procedures and facilities  necessary to produce efficiently and market the
Hydrocarbon reserves from a Producing Property, all to the extent such costs and
expenditures are not Property Acquisition Costs.

        "Organization  and  Offering  Costs"  shall mean all costs and  expenses
incurred  by the General  Partner  and its  Affiliates  in  connection  with the
organization and activation of the Partnership,  including,  without limitation,
the legal, printing,  accounting and other direct and indirect costs incurred in
connection  with preparing this  Agreement and the  preparation  and filing of a
certificate  of limited  partnership,  the costs  incurred  with  respect to the
registration for offer and sale of the Units under applicable  federal and state
securities  laws, the wholesale  offering and marketing fees and expenses of the
Dealer Manager and a subsidiary of Geodyne Resources, Inc. which is a registered
broker-dealer,  and other front-end fees.  Organization and Offering Costs shall
not include  the  Commissions  paid to the Dealer  Manager or  reallowed  to the
Selected  Dealers,  but  shall  include  fees and  expenses  (including  expense
reimbursements)  paid to Persons in connection with the offering and issuance of
Units, including due diligence expenses.

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<PAGE>

        "Partner"  shall mean the General  Partner or any Limited Partner of the
Partnership.

        "Partnership" shall mean the limited partnership formed hereby.

        "Partnership   Account"   shall  mean  the  bank   account  or  accounts
established by the General Partner pursuant to Section 10.3 of this Agreement.

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

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

        "Payout" shall mean that time at which cash distributions have been made
by the  Partnership  to the Unit Holders  (together with their  predecessors  in
interest) in an aggregate  amount equal to $100 for each whole Unit held by each
such Unit Holder.

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

        "Prior Limited Partnership" shall mean any limited partnership activated
prior to the Activation of the Partnership of which depositary units or units of
limited partnership interest were offered and sold pursuant to the Prospectus or
pursuant to the prospectus  prepared for the  PaineWebber/Geodyne  Energy Income
Program   I,  the   PaineWebber/Geodyne   Energy   Income   Program  II  or  the
PaineWebber/Geodyne   Institutional/Pension   Energy  Income   Partners  or  any
subsequent Affiliated Programs pursuant to which I/P Partnerships are formed.

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

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        "Property Acquisition Costs" shall mean, without duplication, the sum of
(i) the prices paid by the Partnership or the General Partner or an Affiliate to
acquire a Producing Property  ultimately sold to the Partnership,  including the
price paid to acquire a purchase  option with  respect to a Producing  Property,
lease bonuses and equipment costs associated therewith;  (ii) title insurance or
examination  costs,   brokers'  commissions  and  finders'  fees,  filing  fees,
recording fees,  transfer taxes, if any, and like charges in connection with the
acquisition  of Producing  Properties;  (iii) delay rentals and ad valorem taxes
paid by the buyer with  respect to such  property to the date of its transfer to
the  Partnership;  (iv)  interest and other  financing  fees and costs  actually
incurred by the General  Partner or its  Affiliates  to acquire or maintain such
Producing  Properties  prior to their transfer to the  Partnership;  and (v) all
reasonable,  necessary and actual expenses incurred by the General Partner or an
Affiliate in connection with the acquisition of Producing Properties and paid to
third parties who are not Affiliates for geological, geophysical, seismic, land,
engineering,  drafting,  accounting,  auditing,  legal and other like  services,
including  the  Partnership's  costs  incurred  (to the extent  consistent  with
generally accepted industry standards) in connection with the review of proposed
acquisitions of Producing Properties whether or not acquired and the preparation
and review of Acquisition  Reserve Reports and Engineering  Review Letters,  all
allocated to the property in accordance  with the allocation  procedures used by
the General Partner,  any of its Affiliates or a Partnership;  provided that the
portion of the  General  Partner's  or  Affiliate's  expenses  allocated  to the
property,  as set forth in items (iii),  (iv) and (v),  shall have been incurred
not more than 36 months prior to the property transaction.

        "Property Investment Period" shall have the meaning set forth in Section
5.2.

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

        "Prospectus" shall mean the prospectus  pursuant to which the Units were
offered,  including  all  supplements  or amendments  thereto  delivered in such
offering, if any.

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<PAGE>

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

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

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

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

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

              (b) "Proved  Undeveloped  Reserves"  shall mean all reserves which
        are expected to be recovered from new wells on undrilled acreage or from
        existing  wells where a  relatively  major  expenditure  is required for
        recompletion.  Such  reserves on undrilled  acreage are limited to those
        drilling units offsetting  productive units which are reasonably certain
        of  production  when drilled;  provided  that Proved  Reserves for other
        undrilled units can be

                                      -12-
<PAGE>

        claimed where it can be demonstrated  with certainty,  based on accepted
        geological,  geophysical and engineering studies and data, that there is
        continuity  of  production  from an existing  productive  formation.  No
        estimates  for  Proved  Undeveloped  Reserves  are  attributable  to any
        acreage  for  which  Improved  Recovery  is  contemplated,   unless  the
        techniques to be employed have been proved  effective by actual tests in
        the same area and reservoir.

        "Revenues"  are the  Partnership's  gross  revenues  from  all  sources,
including interest income, proceeds from sales of production,  the Partnership's
share of revenues from  partnerships  or joint ventures of which it is a member,
proceeds from sales or other  dispositions  of  Hydrocarbon  properties or other
Partnership  assets,  provided that contributions to Partnership  capital by the
Partners  and  the  proceeds  of any  Partnership  borrowings  are  specifically
excluded.

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

        "Selected  Dealer"  shall mean a member in good standing of the National
Association  of Securities  Dealers,  Inc. which has been selected by the Dealer
Manager to offer and sell the Units.

        "State" shall mean the State of Oklahoma.

        "Subscription  Agreement" shall mean the  Subscription  Agreement in the
form attached to the Prospectus as Exhibit B.

        "Subsequent  Limited  Partnership"  shall mean any  limited  partnership
activated after the Activation of the Partnership of which Units are offered and
sold pursuant to the Prospectus.

        "Substituted Limited Partner" shall mean any Unit Holder admitted to the
Partnership as a Substituted Limited Partner pursuant to Section 7.3 or Sections
8.1 and 8.2 of this Agreement.

                                      -13-
<PAGE>

        "Unit" shall mean an increment  of the  attributes  of the interest as a
Limited  Partner that is either (i) assigned to a Unit Holder by the  Depositary
and is evidenced by a  Depositary  Receipt or (ii) unless the context  otherwise
requires, is held directly by a Substituted Limited Partner and, in either case,
which increment represents a subscription amount of $100.

        "Unit  Holders" shall mean any Person who holds  Depositary  Receipts in
accordance with Section 7.1 or Section 8.1 hereof as reflected in the records of
the Partnership and the Depositary and, unless the context  otherwise  requires,
any Person who becomes a Substituted Limited Partner.

        "Unit  Holders'  Subscriptions"  shall mean the aggregate  dollar amount
(initially  subscribed for by Unit Holders) determined by multiplying the number
of Units issued to the Unit Holders by $100.

        "Working  Interest"  shall mean the interest  (whether  held directly or
indirectly) in a Lease which is burdened with the obligation to pay some portion
of the expense of production,  development,  operation or maintenance. A Working
Interest does not include a Net Profits Interest.

                                   ARTICLE TWO
                    NAME, PLACE OF BUSINESS AND OFFICE; TERM

        Section 2.1  Name, Place of Business and Office, Agent
        ------------------------------------------------------

        The Partnership shall be conducted under the name  PaineWebber/  Geodyne
Energy Income Limited  Partnership  III-C.  The business of the Partnership may,
however,  be conducted under any other name deemed necessary or desirable by the
General  Partner  in order to  comply  with  applicable  laws.  The  office  and
principal place of business of the Partnership  shall be c/o Geodyne  Production
Company, 320 South Boston Avenue, The Mezzanine, Tulsa, Oklahoma 74103-3708. The
agent for  service  of process on the  Partnership  shall be Geodyne  Production
Company, 320 South Boston Avenue, The Mezzanine, Tulsa, Oklahoma 74103-3708. The
General  Partner may change the principal  place of business and the location of
such office and may establish such additional offices as it deems advisable from
time to time;  provided,  however,  that in the  event  the  principal  place of
business of the Partnership shall be changed, the General

                                      -14-
<PAGE>

Partner shall  provide  Notification  thereof to the Unit  Holders.  The General
Partner shall not be obligated to provide a copy of the  certificate  of limited
partnership  as filed with the Oklahoma  Secretary of State to the Depositary or
Unit  Holders.  A Unit Holder may obtain a copy of such  certificate  of limited
partnership by making a written request therefor to the General Partner.

        Section 2.2  Purpose
        --------------------

        The business and purpose of the  Partnership  shall be to acquire,  own,
hold, operate, explore, develop, trade, sell and exchange Hydrocarbon properties
and  interests  therein of all kinds  onshore and  offshore  in the  continental
United States,  including,  without limitation,  interests in general or limited
partnerships,  joint  ventures  and other  entities  that hold or are  formed to
acquire  interests in such  properties  or interests;  to engage in  Development
Drilling,   Identified   Development   Drilling  or  other  drilling  operations
specifically  authorized by this  Agreement,  and enhanced  recovery  operations
thereon;  to produce,  transport,  market,  purchase and trade  Hydrocarbons and
products thereof; to purchase,  lease, own, hold, operate, sell and exchange all
equipment, machinery, facilities, systems and plans necessary or appropriate for
such  purposes;  and to do any and all things  necessary or proper in connection
with or incident to the foregoing activities.

        Section 2.3  Term
        -----------------

        The  Partnership  shall continue in force and effect for a period of ten
(10) years from the date of its  Activation,  provided that the General  Partner
may extend the term of the  Partnership for up to five periods of two years each
if it believes each such extension is in the best interests of the Unit Holders,
or until dissolution prior thereto pursuant to the provisions hereof.

                                      -15-
<PAGE>

                                  ARTICLE THREE

                              PARTNERS AND CAPITAL

      Section 3.1 General Partner
      ---------------------------

        A. The  name,  address and Capital  Contribution of  the General Partner
are set forth in Schedule A which is attached hereto and  incorporated herein by
reference.

        B. The General  Partner  shall not be  required  to make any  additional
Capital  Contribution  except as set forth in the next  sentence and in Sections
3.4 and 9.2C. The General Partner shall  contribute an amount of cash sufficient
to pay its  share of costs  allocated  to it  pursuant  to  Section  5.1 of this
Agreement  as such costs are  incurred to the extent that the amount of Revenues
allocated  to it (and/or the amount of  Partnership  borrowings  incurred on its
behalf) is insufficient to pay such costs.

        Section 3.2  Limited Partner and Unit Holders
        ---------------------------------------------

        A. The name,  address  and Capital  Contribution  of the  Depositary  as
Limited  Partner  are set  forth in  Schedule  A which is  attached  hereto  and
incorporated herein by reference.

        B. Neither the Depositary  nor any Unit Holder shall be required to make
any additional Capital Contribution to the Partnership.

        C. The Depositary  shall engage in no business  activity and shall incur
no liabilities  other than acting as Depositary for the Partnership or any other
limited  partnership  that is an Affiliated  Program.  The Depositary  shall not
amend its Certificate of  Incorporation  or By-laws without the prior Consent of
the Unit Holders holding a majority of the outstanding Units.

        Section 3.3  Application of Capital Contributions
        -------------------------------------------------

        The General Partner shall deposit in the Partnership Account the Capital
Contributions  and apply such  Capital  Contributions  to (i) pay to the General
Partner the aggregate

                                      -16-
<PAGE>

amount due pursuant to Section 4.12B in consideration  of the General  Partner's
payment of Organization and Offering Costs, (ii) pay Commissions,  and (iii) pay
to the General Partner the  Acquisitions and Operations Fee. The balance of such
Capital  Contributions shall be held in the Partnership Account to be applied to
the payment of Property  Acquisition Costs and, to the extent not payable out of
Revenues or  Investment  Income,  Operating  Costs,  General and  Administrative
Costs,  Direct  Administrative  Costs and  other  Partnership  costs;  provided,
however,  that such funds may be  temporarily  invested  prior to the payment of
such costs in accordance with Section 10.3.

        Section 3.4  Certain Returns of Capital
        ---------------------------------------

        Any portion of the Capital  Contribution of the Partnership  (except for
necessary  operating  capital)  that has not been expended or that is not, or in
the determination of the General Partner,  will not be committed for expenditure
by the second  anniversary of the Activation of the Partnership will promptly be
refunded to the Unit Holders as a return of part of their Capital  Contributions
at the earlier of such determination or the second anniversary of the Activation
of the  Partnership.  In addition,  the General Partner shall contribute cash to
the Partnership  (with respect to which its Capital Account will be credited) in
an  amount  equal to that  portion  of the total of (i) the  amount  paid to the
General  Partner in respect of the  Acquisitions  and  Operations  Fee, (ii) the
amount  paid to the  General  Partner  in  consideration  of its  payment of the
Organization  and  Offering  Costs,   and  (iii)  the  Commissions,   which  are
attributable  (on a  proportionate  basis) to the  unexpended  amount of Capital
Contributions  so  refunded,  which cash shall be refunded  to the Unit  Holders
together with the unexpended Capital  Contributions so refunded.  All amounts so
refunded  to the Unit  Holders  shall  reduce  dollar for dollar  their  Capital
Accounts.

        Section 3.5  Partnership Capital
        --------------------------------

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

                                      -17-
<PAGE>

        B. Except as provided in Sections  3.4,  6.1 and 9.2 of this  Agreement,
neither the General Partner nor any Unit Holder shall have the right to withdraw
from the  Partnership  or to  withdraw  or  receive  any  return of its  Capital
Contribution.   Under   circumstances   involving   a  return  of  any   Capital
Contribution,  no Unit Holder shall have priority over any other Unit Holder nor
shall any Unit Holder have the right to receive  any  property  other than cash,
except as may otherwise be provided in this Agreement.

        Section 3.6  Liability of Partners
        ----------------------------------

        A. Except as provided in the Act,  neither the  Depositary  nor the Unit
Holders  shall be  personally  liable for any debts,  liabilities,  contracts or
obligations of the Partnership. To the extent that any distribution is deemed to
constitute a return of capital under the Act, the General Partner shall not seek
to recover any  distribution  unless the  General  Partner has applied all other
available  Partnership  assets to the payment of liabilities of the  Partnership
and the liabilities of the  Partnership,  other than to Partners,  have not been
fully paid,  satisfied,  assumed or  discharged.  The Unit  Holders that are not
Substituted  Limited  Partners  shall  have no  obligation  to return  any funds
distributed to them by the Partnership  that are later determined to be a return
of the  Capital  Contributions.  In no event  shall the  Depositary  or any Unit
Holder be obligated to make any  contribution to the Partnership for any purpose
whatsoever other than Capital  Contributions of the Depositary  representing the
proceeds of the offering of Units.

      B. Each of the General  Partner and any  successor or  additional  General
Partner  subsequently  admitted to the  Partnership  agrees that it shall remain
liable for any  obligation  or recourse  liability of the  Partnership  incurred
during  the  period  in which it is a  General  Partner  and to the  extent  the
Partnership has incurred liability.

                                      -18-
<PAGE>

                                  ARTICLE FOUR

                                   MANAGEMENT

       Section 4.1  Management and Control of the Partnership
       ------------------------------------------------------

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

      B. The Depositary and the Unit Holders,  as such, shall not participate in
the management of or have any control over the Partnership's  business nor shall
the Depositary or the Unit Holders,  as such,  have the power to represent,  act
for, sign for or bind the General Partner or the Partnership. The Depositary and
each of the Unit Holders hereby  Consent to the exercise by the General  Partner
of the powers conferred on it by this Agreement.

       Section 4.2  Authority of the General Partner
       ---------------------------------------------

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

                (i)  expend  the  Capital Contributions  of  the  Partners   and
      apply  Partnership  Revenues  in   furtherance  of  the  business  of  the
      Partnership;

                (ii) acquire,  explore,  develop, manage and operate Hydrocarbon
      properties and interests therein (including  interests in corporations and
      partnerships

                                      -19-
<PAGE>

      owning  Hydrocarbon  properties if in the General Partner's  judgment such
      purchase  is a necessary  or  advisable  step in  acquiring  interests  in
      Producing   Properties  held  by  any  such  corporation  or  partnership,
      provided,  no such  purchase will be made for the purpose of investment in
      the securities of any such  corporation or  partnership,  the  Partnership
      will not conduct or  participate  in a hostile  tender offer,  and no such
      purchase will be made unless there is assurance that sufficient control of
      the corporation or partnership can be obtained in the initial  acquisition
      to  liquidate  it, and it is  determined  the  purchase  would not thereby
      render the  Partnership  an investment  company  within the meaning of the
      Investment  Company Act of 1940,  and provided  further the  Partnership's
      interest in the underlying  assets of any such  corporation or partnership
      is  distributed  as soon as practical  thereafter  to the  Partnership  in
      redemption  for  the   Partnership's   interest  in  such  corporation  or
      partnership) of all kinds and hold all such property,  interests and units
      in the name of the  Partnership;  provided,  however,  that in  connection
      therewith,   the  General  Partner  shall,   contemporaneously   with  the
      acquisition of a Producing Property, or as soon as practicable thereafter,
      file or cause to be filed for  recordation  an  appropriate  conveyance or
      agreement evidencing the Partnership's interest in such Producing Property
      in the jurisdiction  where such Producing  Property is located pursuant to
      such jurisdiction's  Uniform Commercial Code (or comparable law) and/or in
      the real property  records of the clerk or recorder of the county in which
      the Producing Property is situated;  and, provided,  further, that filings
      of such  conveyances  or  agreements  shall  also  be made as the  General
      Partner  believes  necessary to establish  the  Partnership's  priority of
      interest; and, provided,  further, Producing Properties may be held in the
      name of a  nominee  for the  Partnership  if such  action is deemed by the
      General  Partner to be necessary or beneficial to the  Partnership and the
      nominee holding title conducts no other business or operations;

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

                                      -20-
<PAGE>

               (iv) execute,  in the name of the Partnership,  contracts for the
      sale of Hydrocarbons  and division orders and transfer orders as necessary
      or incident to the sale of production on behalf of the Partnership;

                (v) produce,  treat, transport and market Hydrocarbons,  execute
      processing contracts and transportation contracts and enter into contracts
      for the marketing or sale of Hydrocarbons  and other marketing  agreements
      in the name of the  Partnership,  whether or not extending beyond the term
      of the Partnership;

               (vi)  execute  offers for United  States and any state  Leases on
      behalf of the  Partnership;  execute  and file  requests  for  approval of
      assignments  of interests in United States and any state Leases,  together
      with any and all contracts for the option, sale or purchase of such Leases
      or the sale or purchase of any  products  therefrom;  execute any plans of
      development  under unit  agreements,  conveyances,  subleases,  mortgages,
      deeds of trust, affidavits or reports concerning the drilling of wells and
      production,  designations of operator,  Lease bonds,  operator's bonds and
      consents of surety; and in general do all things necessary or desirable on
      behalf of the  Partnership  regarding any United States or state Leases or
      offers therefor;

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

            (viii)   enter  into  and  execute   drilling   contracts,   Farmout
      agreements,   operating  agreements,   unitization   agreements,   pooling
      agreements,  unit or pooling designations,  recycling contracts, dry hole,
      bottom hole and acreage contribution letters and agreements, participation
      agreements,   agreements   and   conveyances   respecting   rights-of-way,
      agreements  respecting  surface  and  subsurface  storage  and  any  other
      agreements  customarily employed in the oil and gas industry in connection
      with the acquisition,  exploration,  development, operation or abandonment
      of any Leases, and any and all other

                                      -21-
<PAGE>

      instruments or documents considered by the General Partner to be necessary
      or appropriate to conduct the business of the Partnership;

               (ix)  pay or  elect  not  to pay  delay  rentals  on  Partnership
      Properties as appropriate in the judgment of the General Partner, it being
      understood that the General Partner will not be liable for failure to make
      correct or timely  payments of delay  rentals if such  failure were due to
      any reason other than negligence or lack of good faith;

                (x) abandon or otherwise  dispose of any interest in Hydrocarbon
      properties  acquired  for the  Partnership  upon  such  terms and for such
      consideration as the General Partner may determine;

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

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

            (xiii)  invest  Capital Contributions and  other  Partnership  funds
      temporarily in the investments set forth in Section 10.3;

                                      -22-
<PAGE>

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

               (xv) purchase, lease, rent or otherwise acquire or obtain the use
      of machinery,  equipment,  tools, materials, and all other kinds and types
      of real or  personal  property  that may in any way be  deemed  necessary,
      convenient or advisable in connection with carrying on the business of the
      Partnership,  purchase and establish adequate inventories of equipment and
      material  required  or expected  to be  required  in  connection  with its
      operations,  dispose of tangible  lease and well equipment for use or used
      in connection with  Partnership  Property,  and incur expenses for travel,
      telephone, telegraph, insurance and for such other things, whether similar
      or dissimilar,  as may be deemed  necessary or appropriate for carrying on
      and performing the business of the Partnership;

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

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

           (xviii) sue and  be  sued,  pursue  and  participate  in  arbitration
      proceedings,  complain  and defend and  settle  and  compromise  claims or
      causes of action in the name and on behalf of the Partnership;

                                      -23-
<PAGE>

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

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

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

            (xxii)  enter  into  agreements on  behal of  the  Partnership  with
      Affiliates;

            (xxiii) sell or otherwise  dispose of for value all or substantially
      all of the properties  and other assets of the  Partnership to the General
      Partner  or any of its  Affiliates  or  Affiliated  Programs  or any other
      Person and receive for the Partnership  consideration  consisting of cash,
      securities,  other  property  or any other form of  consideration,  or any
      combination  thereof, at such prices and in such forms of consideration as
      it deems in the best  interests of the Unit  Holders;  provided,  however,
      that no such sale shall be  consummated  without the prior  Consent of the
      Unit Holders pursuant to the provisions of Section 4.5D of this Agreement.
      In the event of the  dissolution of the  Partnership  followed by any such
      sale of the Partnership's  assets,  the General Partner shall,  subject to
      the  provisions  of  Section  9.2 of  this  Agreement,  be  appointed  the
      Liquidating Agent for the Partnership;

            (xxiv)  make,  exercise or deliver any  general  assignment  for the
      benefit of the Partnership's creditors, but only upon the prior Consent of
      the Unit Holders pursuant to the provisions of Section 4.5D;

                                      -24-
<PAGE>

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

            (xxvi)  perform all duties  imposed by Sections 6221 through 6232 of
      the  Code  on  the  General  Partner  as  "tax  matters  partner"  of  the
      Partnership,  including (but not limited to) the following:  (a) the power
      to conduct all audits and other administrative proceedings with respect to
      Partnership tax items;  (b) the power to extend the statute of limitations
      for all Partners with respect to Partnership  tax items;  (c) the power to
      file a petition  with an  appropriate  federal court for review of a final
      Partnership  administrative  adjustment; and (d) the power to enter into a
      settlement  with the  Internal  Revenue  Service on behalf of, and binding
      upon,  each of the Unit Holders having less than a 1% interest in Revenues
      unless such Unit Holder  notifies  the  Internal  Revenue  Service and the
      General Partner that the General Partner may not act on its behalf; and

            (xxvii) cause the Partnership to redeem or repurchase the Units held
      by a Unit Holder at a purchase price  determined by the General Partner if
      at any time the  Partnership  or General  Partner  receives  an opinion of
      counsel that there exists  substantial risks of cancellation or forfeiture
      of any property in which the  Partnership  has an interest  because of the
      citizenship or other status of that Unit Holder.

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

      Section 4.3       Sales, Purchases and Operation of Producing Properties;
                        Additional Financing
      -------------------------------------------------------------------------

      A.  Producing  Properties  whose  purchase  price  exceeds 10% of the Unit
Holders' Subscriptions may be acquired by the Partnership only if an Acquisition
Reserve Report or an  Engineering  Review Letter has been received and evaluated
by the General Partner with respect thereto.

                                      -25-
<PAGE>

      B. Neither the General  Partner,  Geodyne  Resources,  Inc. nor any Person
controlled by Geodyne Resources,  Inc. shall sell, transfer or convey any or all
of its  interest  in  Producing  Properties  to the  Partnership  or purchase or
acquire any oil and gas properties or interest from the Partnership, directly or
indirectly,  except pursuant to transactions that are fair and reasonable to the
Unit  Holders  under  the  circumstances  at the time any  such  transaction  is
consummated.   Except  as  otherwise   provided  in  Section  4.3E  below,  such
transactions shall be further subject to the following restrictions:

                (i) Prior to the date on which the  Partnership has acquired its
      final Producing Property,  neither the General Partner, Geodyne Resources,
      Inc. nor any Person controlled by Geodyne  Resources,  Inc. (other than an
      Affiliated  Program)  shall  acquire  any  Producing  Property  after  the
      Activation  of the  Partnership  unless  the  General  Partner  shall have
      determined  that the  acquisition  by the  Partnership  of such  Producing
      Property,  or an interest  therein,  would not be in the best interests of
      the Partnership;

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

               (iii) If the General Partner sells, transfers or conveys any oil,
      gas or other mineral interest or property to the Partnership,  it must, at
      the same time, sell the Partnership an equal proportionate interest in all
      its other property in the same Prospect. A sale, transfer or conveyance to
      the Partnership of less than the entire ownership  interest of the General
      Partner or any Affiliate is only permitted if: (a) the interests  retained
      or  obtained  by the  General  Partner or  Affiliate  and  acquired by the
      Partnership are either (x)  proportionate,  uniform and undivided  Working
      Interests  if the  Producing  Property  acquired by the  Partnership  is a
      Working  Interest  or (y)  proportionate,  uniform and  undivided  Royalty
      Interests if

                                      -26-
<PAGE>

      the Producing  Property acquired by the Partnership is a Royalty,  (b) the
      respective  obligations  of the  General  Partner  or  Affiliate  and  the
      Partnership  are  substantially  the  same,  and (c) the  interest  of the
      General  Partner or its  Affiliate in revenues  does not exceed the amount
      proportionate  to its interest.  The General Partner and its Affiliate may
      not  retain or obtain  any  overrides  or other  burdens  on the  interest
      obtained  by the  Partnership,  and may not enter into any  Farmouts  with
      respect to its retained interest, except to nonaffiliated third parties or
      to an Affiliated Program;

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

            (v) During the existence of the Partnership and before it has ceased
      operations,  neither the General Partner nor any Affiliate  (excluding any
      Affiliated  Program where the interest of the General Partner is less than
      or equal to its  interest in the  Partnership)  shall  acquire,  retain or
      drill for its own account any oil and gas  interest in any  Prospect  upon
      which the Partnership possesses an interest, except for transactions which
      comply  with  Section  4.3B(iii)  or 4.8.  In the  event  the  Partnership
      abandons its interest in a Prospect,  this restriction  shall continue for
      one year following abandonment.  The geological limits of a Prospect owned
      by the  Partnership  shall  be  enlarged  or  contracted  on the  basis of
      subsequently acquired geological

                                      -27-
<PAGE>

      data to define the  productive  limits of a reservoir and must include all
      of the acreage determined by the subsequent data to be encompassed by such
      reservoir.  If, during the period of five years from the Activation of the
      Partnership,  the  geological  limits  of  a  Prospect,  as  so  enlarged,
      encompass any interest held by the General  Partner or an Affiliate of the
      General Partner (excluding an Affiliated Program where the interest of the
      General  Partner  is  identical  to or  less  than  its  interest  in  the
      Partnership), such interest shall be sold to the Partnership in accordance
      with the  provisions  of Section  4.3B(iv)  and any net income  previously
      received by the  General  Partner or  Affiliate  shall be paid over to the
      Partnership.  If  the  General  Partner  acquires  additional  acreage  or
      interests  in a  Prospect  of the  Partnership,  it must  sell such to the
      Partnership and is prohibited from retaining any such interest,  except as
      may be permitted  by Section  4.3B.  Notwithstanding  the  foregoing,  the
      Partnership will not be required to expend additional funds to acquire any
      such interest unless funds are available from the Capital Contributions of
      the Partners;

               (vi) Producing  Properties  may be sold,  Farmed-out or otherwise
      transferred from or to an Affiliated Program only pursuant to transactions
      that comply with Sections  4.3B(iii),  4.3B(iv) or 4.8,  provided that the
      compensation  arrangement  or any other  interest  or right of the General
      Partner or any  Affiliate is the same in the  Partnership  and  Affiliated
      Program,  or, if different,  the  compensation of the General Partner does
      not exceed the lower of the  compensation  it would have  received  in the
      Partnership or the Affiliated Program;

                (vii)  Any  sale  of  inventory   or  other   materials  by  the
      Partnership  to the  General  Partner  or  Affiliate  shall be made at the
      applicable  rates  set  forth  in the  standard  form  of  the  accounting
      procedure  then  recommended  by  the  Council  of  Petroleum  Accountants
      Societies of North America;

               (viii) Any  operating  agreements  pursuant  to which the General
      Partner or any Affiliate acts as operator of Producing Properties shall be
      of a nature  customary in the industry and payments to the General Partner
      or any Affiliate for acting as operator shall not exceed the  compensation
      which would be paid by  unaffiliated  third parties in the same geographic
      area for similar goods and

                                      -28-
<PAGE>

      services. Reimbursement of the General Partner's overhead pursuant to such
      operating  agreement  will  not be  duplicative  of any  reimbursement  of
      General and Administrative Costs made pursuant to Section 4.12; and

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

      C. The General Partner may not expend any amount of Partnership funds over
the term of the  Partnership  for the payment of  Partnership  costs (other than
recompletion  costs)  incurred  in  connection  with  Development  Drilling  and
Identified  Development  Drilling in excess of 10% of the sum of: (i) the amount
of the Unit  Holders'  Subscriptions,  plus (ii) the  Partnership's  permissible
borrowings.  If the  General  Partner  determines  that funds in addition to the
Capital  Contributions  are required for the payment of Partnership costs (other
than  Property  Acquisition  Costs),  the  General  Partner may apply or reserve
Revenues or Investment  Income for the payment of such Partnership  costs and/or
the General Partner may cause the Partnership to borrow funds for the payment of
Partnership costs incurred in connection with Development  Drilling,  Identified
Development Drilling and Improved Recovery operations;  provided,  however, that
the aggregate  outstanding  principal amount of such borrowings shall not at any
one time exceed an amount equal to 20% of the Unit  Holders'  Subscriptions.  No
creditor who makes a nonrecourse loan to the Partnership may have or acquire, at
any time as a result of making the loan, any direct or indirect  interest in the
profits,  capital  or  property  of the  Partnership  other  than  as a  secured
creditor.

      D. The General  Partner  shall have the authority to secure the payment of
borrowings  incurred  by it for its own  account or for  purposes  of paying its
allocable share of Partnership  costs by assigning to lenders all or part of its
rights to receive  distributions of Partnership  Revenues,  and by granting such
lenders  a  security  interest  or  mortgage  in an  undivided  interest  in any
Partnership  Property  not  to  exceed  its  percentage  interest  in  Revenues;
provided, however, that the General Partner shall retain unencumbered at least a
1% interest in each item of Partnership  Property,  and each item of Partnership
Revenues, gain, loss, deduction and credit. Notwithstanding

                                      -29-
<PAGE>

anything  to the  contrary  in  this  Agreement,  in the  event  of any  sale or
foreclosure of the General Partner's interest in full or partial satisfaction of
such borrowings,  appropriate  adjustments shall be made in the Capital Accounts
of the General  Partner and Unit Holders and in the method by which Revenues and
costs are  allocated to the General  Partner and Unit Holders to assure that the
Partnership  will  not  bear  any of the  costs  attributable  to  such  sold or
foreclosed  interest and that the General  Partner will not share or participate
in any of the capital,  Revenues,  costs or  distributions  attributable to such
sold or foreclosed  interest except to the extent of the  unencumbered  interest
retained by the  General  Partner.  The  General  Partner  shall  indemnify  the
Partnership and the Unit Holders  against any expenses  resulting from a sale or
foreclosure of the General Partner's interest.

      E. The  provisions  of Section 4.3B  notwithstanding,  if the  Partnership
intends to acquire Working  Interests,  acquisitions of Net Profits Interests by
one or more I/P  Partnerships  may be made in connection with the  Partnership's
acquisitions  of Working  Interests.  Net Profits  Interests  acquired by an I/P
Partnership  may either be carved-out of the Working  Interests or reserved from
the Working  Interests by the sellers of such Working Interests on such basis as
the General  Partner  determines.  The Net Profit  Interests  acquired by an I/P
Partnership may not exceed 75% of the net profits  attributable to the aggregate
Working  Interests  in  all  of  the  Producing   Properties   acquired  by  the
Partnerships  together.  The primary  factor in  determining  the sharing of net
profits  between the Working  Interests  acquired by the Partnership and the Net
Profits  Interest  acquired by the I/P  Partnership  will be the amount of money
contributed  to each  acquisition  by each  purchaser.  In fixing  such  sharing
percentages,  the General Partner need not give special  consideration  to risks
associated with the ownership of the Working  Interests or to costs of equipment
which will be owned by the Partnership as a Working Interest owner if such costs
will be amortized  against the proceeds of oil and gas production in arriving at
the amount of net  profits  from  which the I/P  Partnership's  (as Net  Profits
Interest  holder)  share of  production  is  determined.  If the amount of money
contributed by each purchaser ever is not the primary factor in determining such
sharing of net  profits,  then the sharing will be based upon a valuation of the
respective  interests  made by an  Independent  Petroleum  Engineer.  If the I/P
Partnership  acquires a Royalty  Interest  in a  Producing  Property  in which a
Working Interest is acquired by the Partnership,  each participant's  portion of
the purchase price will be

                                      -30-
<PAGE>

determined on the basis of an appraisal by an Independent  Petroleum Engineer of
the fair  market  values  of the  respective  interests  in the  property  being
acquired  (taking into account the tax  consequences  applicable  to the several
participants).  If the General  Partner or an Affiliate other than an Affiliated
Program  acquires an interest in any such property  acquisition,  such appraisal
will be  performed by an  Independent  Petroleum  Engineer and if the  aggregate
revenue  interest of the General  Partner and its  Affiliates in any  Affiliated
Program  participating  in such a property  acquisition  is  greater  than their
aggregate  revenue  interest in the I/P  Partnership,  then with  respect to the
property  interests so acquired the greater  aggregate revenue interest shall be
reduced so as not to exceed the lesser revenue interest.

      F. The General  Partner may cause the  Partnership to acquire assets which
may  otherwise  not be  considered  suitable for  investment or operation by the
Partnership  if they are acquired as part of a package  consisting  primarily of
Producing Properties;  provided,  however, that in the event any such assets are
acquired by the  Partnership,  the General Partner shall use its best efforts to
sell or otherwise  dispose of such assets for value as soon as practical and any
proceeds  realized from such sale or  disposition  shall be allocated  among the
General  Partner  and the Unit  Holders  in the same  proportions  as the  costs
thereof were charged to their respective accounts.

      Section 4.4  Prohibited Transactions
      ------------------------------------

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

                (i) the Partnership shall not make any loans to  or  purchase  a
      production payment from the General Partner or any Affiliate;

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

                                      -31-
<PAGE>

      points or financing charges or fees regardless of the amount;

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

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

                (v) on a monthly basis,  costs paid and revenues received by the
      General Partner or an Affiliate for the account of the  Partnership  shall
      be determined and the net amount  resulting  from such monthly  settlement
      shall be deposited  into a Partnership  Account and no funds which,  after
      such monthly settlement,  are determined to be held for the account of the
      Partnership shall be kept in any account other than a Partnership Account,
      and the General  Partner  shall not employ,  or permit any other Person to
      employ,   such  funds  in  any  manner  except  for  the  benefit  of  the
      Partnership;  it being  understood  that the  General  Partner  may invest
      Partnership funds temporarily in the investments set forth in Section 10.3
      of this Agreement pending their use by the Partnership. After such monthly
      settlement, Partnership funds may not be commingled with separate funds of
      the General Partner or any other Person; and

                (vi) the  Partnership  shall not make any advance payment to the
      General  Partner or its  Affiliates,  except where necessary to secure tax
      benefits of prepaid drilling costs.

                                      -32-
<PAGE>

      Section 4.5  Restrictions on the Authority of the General Partner
      -----------------------------------------------------------------

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

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

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

                  (b) the commitment  of  future  production  from   Partnership
            Properties;

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

            (iii)  neither  the  General  Partner  nor any  Affiliate may profit
      itself  by  Development  Drilling,   Identified  Development  Drilling  or
      Improved Recovery operations in contravention of its fiduciary  obligation
      to the Partnership; and

            (iv)  neither  the  General  Partner  nor any Affiliate shall render
      to the Partnership any oil field, equipage, drilling or other services nor
      sell or lease to the Partnership any equipment or supplies unless:

                  (a) such Person is engaged,  independently  of the Partnership
            and  as an  ordinary  and  ongoing  business,  in  the  business  of
            rendering  such  services or selling or leasing such  equipment  and
            supplies to a substantial extent to other Persons in the oil and gas
            industry in addition  to drilling  and income  programs in which the
            General Partner and its Affiliates have an interest;

                                      -33-
<PAGE>

                  (b) the compensation,  price or rental therefor is competitive
            with the compensation,  price or rental of other Persons in the area
            engaged in the business of rendering  comparable services or selling
            or leasing comparable  equipment and supplies which could reasonably
            be made available to the Partnership; and

                  (c) the drilling services are billed on either a per foot, per
            day or per hour rate, or some combination thereof; provided that, if
            such  Person is not  engaged  in a business  within  the  meaning of
            subdivision  (a), then such  compensation,  price or rental shall be
            the cost of such  services,  equipment or supplies to such Person or
            the competitive rate which could be obtained in the area,  whichever
            is less.

      B.   The General Partner shall not have the authority to:

                  (i) do any act in  contravention  of this  Agreement  or which
            would make it  impossible  to carry on the ordinary  business of the
            Partnership;

                  (ii) confess a judgment against the Partnership;

                  (iii)  possess  Partnership  Property  or  assign,  pledge  or
            hypothecate rights in specific Partnership Property for other than a
            Partnership purpose except as otherwise permitted in Section 4.3D;

                  (iv)  admit a Person as a  General  Partner  or a  Substituted
            Limited  Partner or permit any transfer of Units except as otherwise
            provided herein; or

                  (v)  knowingly  perform any act which would  result in loss of
            the  Depositary's or any Substituted  Limited  Partner's status as a
            limited  partner  under the Act or the laws of the State or the loss
            of limited  liability  under the laws of any other  jurisdiction  in
            which  the  Partnership  is doing  business,  or would  subject  the
            Depositary  or any Unit Holder to liability as a general  partner in
            any  jurisdiction  including  use  of  the  Depositary's  or a  Unit
            Holder's name in conducting the business of the Partnership.

                                      -34-
<PAGE>

      C. The General Partner shall not lease, sell, abandon or otherwise dispose
of  any  assets  of the  Partnership  to the  General  Partner  or to any of its
Affiliates, except as otherwise permitted by this Agreement;  provided, however,
that if the  Partnership  should  own any  inventory  or other  materials,  such
inventory or materials may be transferred  to the General  Partner or any of its
Affiliates at the applicable  rates set forth in the standard form of accounting
procedure then recommended by the Council of Petroleum  Accountants Societies of
North America.

      D.  Notwithstanding any other provision of this Agreement to the contrary,
without the prior Consent of Unit Holders owning 50% or more of the  outstanding
Units granted  pursuant to the provisions of Article  Twelve of this  Agreement,
the General Partner shall not:

            (i)  lease,  sell  or  dispose  of all or  substantially  all of the
      Partnership's assets except pursuant to Article Nine of this Agreement;

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

            (iii)  except as set  forth in  Sections  8.1F or  11.lA,  amend any
      provision of this Agreement.

       Section 4.6  Construction of Gas Gathering Lines
       ------------------------------------------------

      The General  Partner may cause the  Partnership to construct gas gathering
lines  if, in the  opinion  of the  General  Partner,  it would be  economically
feasible and otherwise  consistent with prudent operating practice to do so. The
costs of any such gathering lines will be deemed to be Operating Costs and shall
be charged to the accounts of the General  Partner and Unit Holders as such. The
General Partner may, in its discretion,  construct, or cause an Affiliate of the
General Partner or other person to construct,  gathering lines from  Partnership
Wells to gas transmission systems.  Whenever the General Partner constructs,  or
causes an Affiliate of the General Partner to construct, a gathering line from a
Partnership Well to a gas  transmission  system,  the Partnership  shall pay the
General  Partner  or such  Affiliate  an  amount  that is not  greater  than the
compensation that an unrelated party could have reasonably

                                      -35-
<PAGE>

charged in an  arm's-length  transaction  for similar  services in the area as a
transmission fee for the transmission of all gas through the gathering system so
constructed,  and no other transmission fee shall be paid to the General Partner
or to any Affiliate.

      Section 4.7 Contracts with the General Partner and Affiliates
      -------------------------------------------------------------

      All services  (other than services  provided  pursuant to this  Agreement)
provided to the Partnership by the General Partner or any Affiliate for which it
is compensated  shall be embodied in a written contract  precisely setting forth
the  services to be rendered  and the  compensation  to be paid.  Each  contract
relating to a transaction between the Partnership and the General Partner or any
Affiliate  shall  contain a provision  which  shall  permit  termination  of the
contract by the  affirmative  vote of Unit  Holders  owning more than 50% of the
outstanding Units without penalty on 30 days' prior written notice.

      Section 4.8  Farmouts
      ---------------------

      The General Partner may dispose of Producing Properties by sale or Farmout
when it, exercising the standard of a prudent operator,  determines that (a) the
Partnership lacks sufficient funds to conduct Development  Drilling,  Identified
Development  Drilling or Improved  Recovery  operations  on the  properties  and
cannot obtain  suitable  alternative  financing for such  Development  Drilling,
Identified  Development  Drilling  or  Improved  Recovery  operations;  (b)  the
properties  have been  downgraded by events  occurring  after  assignment to the
Partnership  to the  point  that  additional  Development  Drilling,  Identified
Development Drilling, Improved Recovery operations or continued production would
no longer be desirable to the Partnership; (c) Development Drilling,  Identified
Development  Drilling or Improved  Recovery  operations on the properties  would
result  in an  excessive  concentration  of  Partnership  funds  on a  Producing
Property  creating,  in the  opinion of the General  Partner,  undue risk to the
Partnership; or (d) the best interests of the Partnership would be served by the
sale or Farmout.  The Partnership  shall not conduct any drilling of wells other
than  Development  Drilling  and  Identified  Development  Drilling;   provided,
however, that the drilling of

                                      -36-
<PAGE>

wells other than Development Drilling and Identified Development Drilling may be
performed  on  behalf  of the  Partnership  pursuant  to  Farmouts  or when such
drilling  may be deemed  necessary  or  appropriate  to  preserve or protect the
Partnership's interest in or the production from a Producing Property. Any sale,
Farmout or similar  agreement  between the Partnership and the General  Partner,
Affiliate or Affiliated  Program will be permitted  under the  restrictions  set
forth in this Article Four and will be subject to the following conditions:

                (i) the General  Partner,  exercising  the standard of a prudent
      operator,  shall determine that the sale,  Farmout or similar agreement is
      in the best interests of the Partnership; and

                (ii) the terms of the sale,  Farmout  or similar  agreement  are
      consistent  with and in any case no less  favorable than those utilized in
      the same geographic area for similar arrangements.

Except as required by Section  4.3B(iii) or (iv), a  Partnership  shall  acquire
only  those  Leases  that are  reasonably  required  for the  operations  of the
Partnership,  and no Leases shall be acquired for the purpose of subsequent sale
or Farmout,  unless such Leases are a part of an acquisition  which is sold as a
package only, or unless the acquisition of undeveloped Leases by the Partnership
is made  after a well has  been  drilled  nearby  by  third  parties  to a depth
sufficient to indicate that such an  acquisition is in the best interests of the
Partnership.

       Section 4.9  Other Operations
       -----------------------------

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

                                      -37-
<PAGE>

      Section 4.10  Prosecution, Defense and Settlement of Claims;
                    Indemnification
      ------------------------------------------------------------

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

      B. The General  Partner shall have no liability to the  Partnership  or to
any Partner for any loss  suffered by the  Partnership  which  arises out of any
action or inaction of the General Partner if the General Partner, in good faith,
determined  that  such  course  of  conduct  was in the  best  interests  of the
Partnership  and  such  course  of  conduct  did not  constitute  negligence  or
misconduct of the General  Partner.  The General Partner shall be indemnified by
the Partnership against any losses, judgments, liabilities, expenses and amounts
paid  in  settlement  of any  claims  sustained  by it in  connection  with  the
Partnership,  provided  that  the same  were not the  result  of  negligence  or
misconduct on the part of the General Partner.  Any  indemnification  under this
Section  4.10 shall be  satisfied  solely out of the assets and  Revenues of the
Partnership. All amounts payable under this Section 4.10 shall be a liability of
the  Partnership  only and the Unit Holders and the Depositary will not have any
liability therefor.

      C. Notwithstanding the above, the General Partner shall not be indemnified
for liabilities arising under federal and state securities laws unless (1) there
has  been a  successful  adjudication  on the  merits  of each  count  involving
securities law violations  and the court approves such  indemnification  and the
litigation costs thereof;  or (2) such claims have been dismissed with prejudice
on the merits by a court of competent  jurisdiction  and the court approves such
indemnification  and the litigation costs thereof. In any such case, the General
Partner shall apprise the court of the current published  positions,  if any, of
the Securities  and Exchange  Commission,  the  Massachusetts  State  Securities
Administrator  and other applicable state  securities  administrators  regarding
indemnification  of program  sponsors  prior to obtaining  court approval of any
such indemnification.

                                      -38-
<PAGE>

      D. The Partnership  shall not incur the costs of that portion of insurance
which  insures the General  Partner  for any  liability  as to which the General
Partner is prohibited from being indemnified under this Section 4.10.

      Section 4.11  Duties and Obligations of the General Partner
      -----------------------------------------------------------

      The General Partner shall:

                (i)  use its  best  efforts  to take  all  actions  that  may be
      necessary or appropriate for the continuation of the  Partnership's  valid
      existence as a limited  partnership or partnership in commendam  under the
      laws of the  State  and the laws of any  other  jurisdiction  in which the
      Partnership is doing business;

                (ii) devote to the Partnership the time that it shall deem to be
      necessary  to conduct the  Partnership's  business and affairs in the best
      interests of the Partnership;

               (iii) be under a  fiduciary  duty and  obligation  to conduct the
      affairs  of the  Partnership  in the best  interests  of the  Partnership,
      including  the  safekeeping  and use of all  Partnership  funds and assets
      (whether  or not in the  immediate  possession  or control of the  General
      Partner) and the use thereof for the benefit of the Partnership;

               (iv) at all times act with integrity and good faith and  exercise
      due diligence in all activities relating to the conduct of the business of
      the Partnership and in resolving conflicts of interest;

                 (v) prepare or cause to be prepared and shall file on or before
      the due date (or any  extension  thereof) any federal,  state or local tax
      returns required to be filed by the Partnership;

                (vi) cause  the  Partnership  to  pay any  taxes payable  by the
      Partnership;

               (vii) use its best efforts to cause the Partnership to be formed,
      reformed,  qualified to do business,  or registered  under any  applicable
      assumed or fictitious name statute or similar law in any state in

                                      -39-
<PAGE>

      which the Partnership  then owns property or transacts  business,  if such
      formation,  reformation,  qualification  or  registration  is necessary or
      advisable in its counsel's opinion to protect the limited liability of the
      Depositary and the Unit Holders or to permit the  Partnership  lawfully to
      own property or transact business;

            (viii) cause to be filed the  Certificate of Limited  Partnership as
      required by the Act and any  necessary  amendments to the  Certificate  of
      Limited  Partnership and other similar  documents that are required by law
      to be filed and recorded for any reason, in the office or offices that are
      required  under  the laws of the  State or any  other  state in which  the
      Partnership is then formed or qualified;

               (ix) do all other acts and things (including making  publications
      or  periodic  filings  of this  Agreement  or  amendments  hereto or other
      similar documents without the necessity of mailing or delivering copies of
      them to each  Unit  Holder)  that may now or  hereafter  be  deemed by the
      General Partner to be necessary,

                  (a)  for  the  perfection  and  continued  maintenance  of the
            Partnership as a limited partnership under the laws of the State,

                  (b) to protect the limited liability of the Depositary and the
            Unit Holders under the laws of the State and other  jurisdictions in
            which the Partnership is doing business, and

                  (c) to cause this  Agreement,  certificates or other documents
            to reflect  accurately  the  agreement  of the Partners and the Unit
            Holders,  the identity of the Depositary as the sole initial Limited
            Partner  and the  amount  of the  Capital  Contribution  made by the
            Depositary on behalf of the Unit Holders;

                (x) from time to time submit to any appropriate state securities
      administrator all documents, papers, statistics and reports required to be
      filed with or submitted to such state securities administrator; and

                                      -40-
<PAGE>

                (xi) inform each Unit Holder of all  administrative and judicial
      proceedings for an adjustment at the Partnership level for partnership tax
      items and  forward  to each Unit  Holder  within  30 days of  receipt  all
      notices  received  from  the  Internal   Revenue  Service   regarding  the
      commencement  of  a  partnership   level  audit  or  a  final  partnership
      administrative  adjustment,  and  perform  all  other  duties  imposed  by
      Sections  6221  through  6232 of the Code on the  General  Partner as "tax
      matters partner" of the Partnership,  including those set forth in Section
      4.2A (xxvi) of this Agreement.

       Section 4.12  Compensation of the General Partner
       -------------------------------------------------

      A. Except as provided in Articles Four and Five, the General Partner shall
not,  either in its capacity as General  Partner or in its individual  capacity,
receive any salary, fees or profits from the Partnership.

      B. In consideration of its payment of Organization and Offering Costs, the
General  Partner  shall  be paid  by the  Partnership  an  amount  equal  to the
aggregate of: (i) 3.5% of individual Unit Holders'  Subscriptions  for less than
10,000 Units,  (ii) 2.5% of individual  Unit Holders'  Subscriptions  for 10,000
Units or more but less than 20,000 Units, (iii) 1.5% of individual Unit Holders'
Subscriptions for 20,000 Units or more but less than 30,000 Units, and (iv) 1.0%
of  individual  Unit  Holders'  Subscriptions  for 30,000 Units or more,  and in
consideration  of its services  rendered in  connection  with the  Partnership's
acquisition of Producing  Properties and the conduct of its business operations,
the General  Partner shall be paid the  Acquisitions  and  Operations  Fee in an
amount equal to 3.5% of the Unit Holders' Subscriptions.

      C. The General  Partner shall be reimbursed by the Partnership for General
and  Administrative  Costs and Direct  Administrative  Costs  incurred  by it on
behalf of the Partnership,  and such costs shall be allocated among the Partners
as set forth in Section 5.1 of this Agreement.  The aggregate  amount of General
and Administrative Costs allocable to the accounts of the Unit Holders for which
the General  Partner  will be  reimbursed  will not,  (i) in the first 12 months
following  Activation of the Partnership,  exceed an amount equal to 2.5% of the
Unit Holders' Subscriptions,  and (ii) in any succeeding 12-month period, exceed
an amount equal to 1% of the

                                      -41-
<PAGE>

Unit  Holders'  Subscriptions;   provided,  however,  that  notwithstanding  the
foregoing,  the amount of such General and Administrative Costs allocated to the
Unit  Holders  during  each of the  third and  subsequent  12-month  periods  of
Partnership  operations  shall not  exceed an  amount  equal to 15% of  Revenues
allocable to their accounts.  All General and Administrative  Costs allocable to
the accounts of the Unit  Holders will be paid solely out of Revenues  allocable
to the Unit  Holders.  To the extent that the General  Partner  determines  that
Revenues are  insufficient to permit  reimbursement  in full of such General and
Administrative Costs in the period in which they are incurred or accrued (or the
General  Partner  elects to receive  less than the full amount  payable in order
that  funds may be  available  for  distribution  to Unit  Holders  or any other
reason) or the amounts actually  reimbursed by the Partnership do not exceed the
foregoing limitations, such unpaid or unused General or Administrative Costs may
be carried  forward or backwards and increase the maximum amount of reimbursable
General and Administrative Costs for any other period.

      Section 4.13  Dealer Manager
      ----------------------------

      The Dealer Manager shall have no duties,  responsibilities  or obligations
to the Partnership,  the General Partner, the Depositary or any Unit Holder as a
consequence of its right to receive  Commissions,  except to the extent provided
under the  Securities  Act of 1933,  as  amended.  The  Dealer  Manager  has not
assumed, and will not assume, any responsibility with respect to the Partnership
nor  will  it be  permitted  by  the  General  Partner  to  assume  any  duties,
responsibilities or obligations  regarding the management,  operations or any of
the  business  affairs of the  Partnership  subsequent  to the date on which the
Partnership is Activated.

                                  ARTICLE FIVE

                          ALLOCATIONS AND DISTRIBUTIONS

      Section 5.1  Allocation of Costs and Expenses
      ---------------------------------------------

      All fees and payments to the General  Partner  required by Section  4.12B,
Commissions  and  costs  incurred  in  connection  with  Identified  Development
Drilling (including any interest, commitment fees and other finance charges with
respect to

                                      -42-
<PAGE>

borrowing incurred in connection  therewith) and Property Acquisition Costs will
be  charged  99%  to  the  Unit  Holders  and 1% to  the  General  Partner.  All
Organization  and Offering Costs will be charged entirely to the General Partner
(in  consideration of which the General Partner will be paid the amount provided
in the first sentence of Section  4.12B).  Except as otherwise  provided in this
Article  Five,  Operating  Costs,  costs and expenses of  Development  Drilling,
General and  Administrative  Costs,  Direct  Administrative  Costs and all other
Partnership  costs and  expenses  will be charged to the accounts of the General
Partner and the Unit  Holders in the same  proportions  that  Revenues are being
allocated  to  them  at  the  time  such  costs  and   expenses  are   incurred.
Notwithstanding  anything to the contrary contained herein, if and to the extent
the  Partnership  sells any  Producing  Property  and applies any portion of the
proceeds  thereof to the purchase of any additional  Producing  Properties,  the
Property  Acquisition Costs of the additional Producing Properties shall, to the
extent of the amount of such proceeds,  be allocated to and borne by the General
Partner and the Unit  Holders in the same  proportions  that such sale  proceeds
were allocated and credited to them.

      Section 5.2  Allocation of Revenues
      -----------------------------------

      A.  Investment  Income will be allocated 99% to the Unit Holders and 1% to
the General  Partner.  Except as otherwise  provided in this Article Five and in
Section 4.3F, until Payout, all other Partnership Revenues will be allocated 95%
to the Unit Holders and 5% to the General Partner.  After Payout,  Revenues will
be allocated 85% to the Unit Holders and 15% to the General  Partner;  provided,
however,  that if, at  Payout,  the  total  amount  of cash  distributed  by the
Partnership to the Unit Holders from the commencement of the Property Investment
Period has averaged on a  twelve-month  basis an amount that is less than 12% of
the Unit Holders'  Subscriptions,  the  percentage of Revenues  allocated to the
General Partner will increase to only 10% and the Unit Holders will be allocated
90% thereof until such time, if ever, that the distributions to the Unit Holders
from the commencement of the Property  Investment  Period reaches a twelve-month
average equal to at least 12% of the Unit Holders' Subscriptions,  at which time
Revenues will  thereafter be allocated 15% to the General Partner and 85% to the
Unit Holders.  As used herein the "Property  Investment  Period" shall mean that
period which begins with the first day of the calendar quarter  following either
(i) the calendar quarter during which 90% of the Partnership's capital available
for purchasing

                                      -43-
<PAGE>

Producing Properties has been so expended, or (ii) the calendar quarter in which
50% of the Partnership's  capital available for purchasing  Producing Properties
has been so expended,  as the General  Partner shall elect.  Where proceeds from
the  Sale  of all or any  part of the  Partnership's  Producing  Properties  are
distributed  to  the  Partners  and  a  portion  of  the  distributable   amount
attributable  to such Sale  proceeds is  sufficient in amount to cause Payout to
occur in  accordance  with the  allocation  percentages  in effect until Payout,
Payout  shall  be  deemed  to  occur  such  that  Revenues  attributable  to the
distributed  portion  of such Sale  proceeds  in excess of the  portion of Sales
proceeds  sufficient  in amount to cause  Payout to occur shall be  allocated in
accordance with the allocation percentages in effect after Payout.

      B.  Notwithstanding the other provisions of this Section 5.2 and except as
provided in Section 4.3F, if the  allocation of Revenues  realized from the sale
of any  Hydrocarbon  property  would result in the  recognition  of a "simulated
loss", as such term is defined in Treasury  Regulation Sec.  1.704-1(b),  by the
Partnership,  then such  Revenues  shall,  to the  extent  of the  amount of the
"simulated  adjusted tax basis", as such term is defined in Treasury  Regulation
Sec.  1.704-1(b),  of such  Hydrocarbon  property,  be  allocated to the General
Partner and the Unit Holders in the same proportions that the aggregate adjusted
tax basis of such  property  was  allocated  to them (or their  predecessors  in
interest) pursuant to Section 5.5(u).

      Section 5.3  Allocations Among Unit Holders
      -------------------------------------------

      A.  Allocations of costs,  expenses and Revenues to the Unit Holders other
than  Substituted  Limited  Partners  herein shall be actually  allocated to the
Depositary for the account of the Unit Holders.  All profits and losses and each
item of Revenues,  gain, loss,  cost,  deduction or credit allocated to the Unit
Holders,  as a class,  shall be  allocated to each Unit Holder in the ratio that
(i) the number of Units  held of record by each Unit  Holder as of the first day
of each month  during  the  period  ("Monthly  Record  Date")  bears to (ii) the
aggregate  number  of  Units  outstanding  on each  such  Monthly  Record  Date.
Distributions  pursuant to Section  5.7 hereof  will be made to Unit  Holders of
record on the  first  day of the  calendar  quarter  to which  the  distribution
relates in the ratio  which (x) the number of Units owned of record by each Unit
Holder on such date bears to (y) the aggregate  number of Units  outstanding  on
such date. Such payment shall constitute full payment and

                                      -44-
<PAGE>

satisfaction  of  the  Partnership's   liability  in  respect  of  such  payment
regardless  of any claim of any Person who may have an interest in such  payment
by reason of an assignment or otherwise.

      B. Except as  provided in  subsections  (i) through  (iv) of this  Section
5.3B,  in the case of a change in a Unit  Holder's  interest in the  Partnership
during a taxable year of the Partnership,  all Partnership Revenues, gain, loss,
deduction or credit allocable to the Unit Holders shall be allocated pursuant to
Section  5.3A above to the  Persons who were Unit  Holders  during the period to
which such item is attributable  in accordance with the Unit Holders'  interests
in the  Partnership  during such period  regardless of when such item is paid or
received by the Partnership.

                (i) With  respect to certain  "allocable  cash basis  items" (as
      such term is defined in the Code) of  Partnership  Revenues,  gain,  loss,
      deduction or credit,  if, during any taxable year of the Partnership there
      is change in any Unit Holder's  interest in the Partnership,  then, except
      to the extent provided in regulations  prescribed under Section 706 of the
      Code,  each Unit Holder's  allocable  share of any  "allocable  cash basis
      item" shall be determined by (i) assigning the appropriate portion of each
      such item to each day in the period to which it is attributable,  and (ii)
      allocating the portion  assigned to any such day among the Unit Holders in
      proportion to their interests in the Partnership at the close of such day.

                (ii) If, by adhering to the method of  allocation  described  in
      the  immediately  preceding  subsection of this Section 5.3B, a portion of
      any "allocable  cash basis item" is  attributable to any period before the
      beginning of the  Partnership  taxable year in which such item is received
      or paid,  such  portion  shall be (a)  assigned  to the  first  day of the
      taxable year in which it is received or paid, and (b) allocated  among the
      persons  who were Unit  Holders  in the  Partnership  during the period to
      which such portion is  attributable  in accordance with their interests in
      the Partnership during such period.

               (iii) If any portion of any  "allocable  cash basis item" paid or
      received by the  Partnership in a taxable year is attributable to a period
      after the close of that taxable  year,  such portion shall be (a) assigned
      to the last day of the taxable year in which it is paid or  received,  and
      (b)

                                      -45-
<PAGE>

      allocated  among the persons who are Unit Holders in  proportion  to their
      interests in the Partnership at the close of such day.

               (iv) If any deduction is allocated to a person with respect to an
      "allocable cash basis item"  attributable to a period before the beginning
      of the  Partnership  taxable  year and such person is not a Unit Holder of
      the  Partnership on the first day of the  Partnership  taxable year,  such
      deduction  shall be  capitalized  by the  Partnership  and  treated in the
      manner provided for in Section 755 of the Code.

       Section 5.4  Capital Accounts
       -----------------------------

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

                (i) The General Partner's or Unit Holder's Capital Account shall
      be (x) increased by the amount of cash  contributed by or on behalf of the
      General  Partner  or Unit  Holder,  the  fair  market  value  of  property
      contributed by it or on its behalf to the Partnership  (net of liabilities
      securing such  contributed  property that the Partnership is considered to
      assume or take subject to under  section 752 of the Code) and  allocations
      to it of income and gain  (except to the  extent  such  income or gain has
      previously been reflected in its Capital  Account by adjustments  thereto)
      and (y) decreased by the amount of cash distributed to the General Partner
      or Unit  Holder,  the fair  market  value of property  distributed  to the
      General  Partner or Unit  Holder by the  Partnership  (net of  liabilities
      securing such distributed property that the General Partner or Unit Holder
      is  considered to assume or take subject to under section 752 of the Code)
      and allocations to it of Partnership loss, deduction (except to the extent
      such loss or  deduction  has  previously  been  reflected  in its  Capital
      Account by  adjustments  thereto)  and  expenditures  described in section
      705(a)(2)(B) of the Code.

                                      -46-
<PAGE>

                (ii) In the event  Partnership  Property is  distributed  to the
      General  Partner or Unit Holder,  then,  before the Capital Account of the
      General  Partner or Unit  Holder is  adjusted as required by clause (i) of
      this  Section 5.4,  the Capital  Accounts of the General  Partner and Unit
      Holders  shall be adjusted  to reflect the manner in which the  unrealized
      income,  gain, loss and deduction  inherent in such  Partnership  Property
      (that has not been reflected in such Capital Accounts previously) would be
      allocated  among the  General  Partner  and Unit  Holders  if there were a
      taxable disposition of such Partnership Property for its fair market value
      on the date of distribution.

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

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

                                      -47-
<PAGE>

      (aggregate  adjusted tax basis of the General Partner and the Unit Holders
      less  simulated  depletion  allowances)  in such  property from the amount
      realized on such  disposition and the General  Partner's and Unit Holders'
      Capital Accounts shall be increased or reduced, as the case may be, by the
      amount of the simulated gain or loss on such  disposition in proportion to
      the General  Partner's  and Unit  Holders'  allocable  shares of the total
      amount realized on such disposition.

                 (v) For purposes of determining  the Capital Account balance of
      the General  Partner and any Unit Holder as of the end of any  Partnership
      taxable year, the General Partner's and such Unit Holder's Capital Account
      shall be reduced by:

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

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

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

               (vi) The Capital Accounts of the General Partner and Unit Holders
      which are charged with an item of  Partnership  expense  shall be credited
      with any portion of that expense which is finally  determined,  judicially
      or administratively,  to be nondeductible for federal income tax purposes,
      less any  amortization or depreciation  thereof incurred prior to the date
      that the credit is made.

                                      -48-
<PAGE>

            (vii)  In allocating  income and  costs for any Fiscal Year in which
      the ratio for sharing and costs  changes  pursuant  to Section  5.2A,  the
      allocations  of  income  and  costs  shall be made,  and the  books of the
      Partnership  shall be closed, as soon as practicable after the date Payout
      occurs, to determine the General Partner's and each Unit Holder's share of
      pre-change  income  and  costs  and the  General  Partner's  and each Unit
      Holder's share of post-change income and costs for that Fiscal Year.

            (viii)  Notwithstanding any other provision of this Agreement to the
      contrary,  if, under any provision of this Agreement,  the Capital Account
      of the  General  Partner or any Unit  Holder is  adjusted  to reflect  the
      difference  between the basis to the  Partnership of Partnership  Property
      and such  Partnership  Property's  fair  market  value,  then all items of
      income, gain, loss and deduction with respect to such Partnership Property
      shall be allocated among the General Partner and the Unit Holders so as to
      take  account  of the  variation  between  the  basis of such  Partnership
      Property  and its fair market value at the time of the  adjustment  to the
      General Partner's or such Unit Holder's Capital Account in accordance with
      the  requirements of subsection  704(c) of the Code, or in the same manner
      as provided under subsection 704(c) of the Code.

            (ix) Subject only to the provisions of Subsection 5.4(x),

                      (a) There shall be allocated to the General  Partner,  any
            item of loss,  deduction,  credit or  allowance  that,  but for this
            Subsection 5.4(ix) would have been allocated to any Unit Holder that
            is not  obligated  to  restore  any  deficit  balance  in such  Unit
            Holder's   Capital  Account  and  would  have  thereupon  caused  or
            increased a deficit balance in such Unit Holder's Capital Account as
            of  the  end  of  the  Partnership's  taxable  year  to  which  such
            allocation  related (after taking into  consideration the provisions
            of Subsection 5.4(v) hereof);

                                      -49-
<PAGE>

                      (b) Any Unit Holder that is not  obligated  to restore any
            deficit   balance  in  such  Unit  Holder's   Capital   Account  who
            unexpectedly  receives an  adjustment,  allocation  or  distribution
            specified in Subsection  5.4(v)  hereof shall be allocated  items of
            income and gain in an amount and manner sufficient to eliminate such
            deficit balance as quickly as possible; and

                      (c) In the  event  any  allocations  of  loss,  deduction,
            credit or  allowance  are made to the  General  Partner  pursuant to
            clause (a) of this Subsection 5.4(ix),  the General Partner shall be
            subsequently  allocated  all  items of  income  and gain  until  the
            aggregate  amount of such allocations of income and gain is equal to
            the aggregate  amount of any such  allocations  of loss,  deduction,
            credit or  allowance  allocated to the General  Partner  pursuant to
            clause (a) of this Subsection 5.4(ix)

            (x) In the event there is a  net decrease in  the "minimum gain," as
      such  term  is defined in the 704 Regulations,  of the  Partnership during
      a Partnership  taxable year, the General Partner and all Unit Holders with
      deficit  Capital  Account  balances  at the  end of  such  year  shall  be
      allocated,  before any other  allocation  is made under this Article Five,
      income  and  gain of the  Partnership  for  such  taxable  year  (and,  if
      necessary, subsequent years) in the amount and in the proportion necessary
      to  eliminate  such  deficits  as quickly  as  possible.  The  allocations
      required  by this  Subsection  5.4(x)  shall be made as required by and in
      accordance with Section l.704-1(b)(4)(iv)(e) of the 704 Regulations. It is
      intended  that the  provision  set forth in this  Subsection  5.4(x)  will
      constitute   a  "minimum   gain   chargeback"   as  described  in  Section
      1.704-1(b)(4)(iv)(e)  of the 704  Regulations.  The 704 Regulations  shall
      control in the case of any conflict  between the 704  Regulations and this
      Subsection 5.4(x).

       Section 5.5  Allocations for Federal Income Tax Purposes
       --------------------------------------------------------

      With respect to the various  allocations  of Partnership  Revenues,  gain,
loss, deduction and credit for federal income tax purposes,  it is hereby agreed
as follows:

                                      -50-
<PAGE>

                (i) To the extent permitted by law, all charges,  deductions and
      losses  shall be  allocated  for federal  income tax  purposes in the same
      manner as the costs in  respect  of which  such  charges,  deductions  and
      losses are charged to the General Partner and Unit Holders,  respectively.
      The General  Partner and Unit Holders  bearing the costs shall be entitled
      to  the  deductions   (including,   without   limitation,   cost  recovery
      allowances,   depreciation  and  cost  depletion)  and  credits  that  are
      attributable to such costs.

                (ii) The  Partnership  shall allocate to the General Partner and
      each Unit  Holder its  portion of the  adjusted  basis in each  depletable
      Partnership  Property  as required  by Section  613A(c)(7)(D)  of the Code
      based upon the interest of the General  Partner or such Unit Holder in the
      capital  of the  Partnership  as of the  time of the  acquisition  of such
      Partnership Property. To the extent permitted by the Code, such allocation
      shall be based upon the General  Partner's or said Unit Holder's  interest
      (x) in the Partnership capital used to acquire the property, or (y) in the
      adjusted basis of the property if it is contributed to the Partnership. If
      such  allocation of basis is not permitted under the Code, then basis will
      be allocated in the  permissible  manner which the General  Partner  deems
      will most closely achieve the result intended above.

            (iii) Partnership Revenues shall be allocated for federal income tax
      purposes  in the same  manner  as they  are  allocated  to the  respective
      accounts of the General Partner and Unit Holders pursuant to Sections 5.2,
      5.3 and 5.4 above.

            (iv) Depreciation or cost recovery allowance recapture and recapture
      of intangible  drilling and development  costs, if any, due as a result of
      sales or  dispositions of assets shall be allocated in the same proportion
      that the depreciation, cost recovery allowances or intangible drilling and
      development costs being restored or recaptured were allocated.

                                      -51-
<PAGE>

      Section 5.6  Minimum Interest of General Partner
      ------------------------------------------------

      Notwithstanding  anything to the contrary that may be expressed or implied
in this  Agreement,  the  aggregate  interest  of the  General  Partner  in each
material item of Partnership Revenues,  gain, loss, deduction or credit shall be
equal  to at least  one  percent  of each  such  item at all  times  during  the
existence of the Partnership.  In determining the General Partner's  interest in
such items, Units owned by the General Partner shall not be taken into account.

      Section 5.7  Distributions
      --------------------------

      The  Partnership's  cash available for distribution will be distributed to
the  Unit  Holders  and  the  General  Partner  in  the  same  proportions  that
Partnership Revenues have been allocated to them after giving effect to previous
distributions  and to portions of such Revenues  theretofore used or retained to
pay  costs  incurred  or  expected  to be  incurred  in  conducting  Partnership
operations  or to repay  borrowings  theretofore  or expected  to be  thereafter
obtained by the  Partnership.  Amounts which  otherwise  would  constitute  cash
available  for  distribution  and which  consist  of  proceeds  from the sale of
Producing  Properties may be used or committed to acquire  additional  Producing
Properties at any time within 36 months of the  Activation  of the  Partnership.
Within 50 days after the end of each calendar quarter,  the General Partner will
determine the amount of cash available for distribution and will distribute such
amount,  if any,  to the  Unit  Holders  and the  General  Partner  as  promptly
thereafter as reasonably  possible.  The General Partner's  determination of the
cash  available  for  distribution  will be  conclusive  and  binding  upon  all
Partners. In no event, however, shall funds be advanced or borrowed for purposes
of  distributions,  if  the  amount  of  such  distributions  would  exceed  the
Partnership's  accrued and received  Revenues from the previous  four  quarters,
less paid and accrued Operating Costs with respect to such Revenues.

                                      -52-
<PAGE>

                                   ARTICLE SIX

                    WITHDRAWAL OR REMOVAL OF GENERAL PARTNER
             OR GENERAL PARTNER'S INTEREST IN PARTNERSHIP PROPERTIES

      Section  6.1  Withdrawal of General Partner or General Partner's
                    Interest in Partnership Properties
      ----------------------------------------------------------------

      A. The General  Partner  (including  by definition  any successor  General
Partner) shall have the right to retire or withdraw upon 120 days'  Notification
to the Unit  Holders,  subject to its  obligation  to pay all costs and expenses
incurred  by the  Partnership  by  virtue  of  such  retirement  or  withdrawal;
provided,  however,  that no such  retirement or  withdrawal  shall be permitted
before the fifth  anniversary of the Activation of the  Partnership  without the
Consent of the Unit Holders owning 50% or more of the outstanding Units.

      B. The General  Partner may,  from time to time and upon at least 90 days'
Notification to the Unit Holders and without  withdrawing  from or resigning its
position as General  Partner,  cause the  Partnership to distribute,  in partial
liquidation  of  its  interest  in  the  Partnership,  to  the  General  Partner
fractional,  undivided interests in the Producing  Properties of the Partnership
(such  interest of the General  Partner in a Producing  Property  distributed is
hereinafter  referred  to as  the  "Distributed  Interest")  up to an  aggregate
interest  equal in value to 80% of the value of the Producing  Properties of the
Partnership that it would have been entitled to upon a hypothetical  liquidation
of the  Partnership  after  application  of the  provisions  of Section 9.2 (the
interest  in a  Producing  Property  of  the  General  Partner  retained  in the
Partnership is hereinafter  referred to as the "Retained  Interest");  provided,
however,  that no such  distribution  shall  occur  unless the  General  Partner
obtains  an  opinion of  counsel  to the  Partnership  to the  effect  that such
distribution will not result in any material adverse tax consequence to the Unit
Holders or the  Partnership.  Notwithstanding  anything to the  contrary in this
Agreement,  in the event that any such distribution is made, the General Partner
shall:

                                      -53-
<PAGE>

                 (1) make appropriate  adjustments in the Capital Account of the
      General  Partner and in the allocation of Partnership  Revenues,  expenses
      and costs to assure that the General Partner will not share or participate
      in any of the capital,  costs,  Revenues or distributions  attributable to
      the Producing  Properties of the  Partnership  except to the extent of the
      Retained Interest of the General Partner;

                 (2) not  voluntarily  or otherwise  dispose of its  Distributed
      Interest  unless  the  undivided  interest  of  the  Partnership  in  such
      Producing  Properties  is also sold or disposed  of for a  proportionately
      equivalent consideration;

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

                 (4) indemnify the Unit Holders  against any expenses  resulting
      from such withdrawal.

      Section 6.2  Assignment of General Partner Interest
      ---------------------------------------------------

      Subject to Section 12.3 and Section  6.5B,  upon  obtaining the Consent of
Unit Holders owning more than 50% of the outstanding  Units, the General Partner
may assign or transfer  its  General  Partner  interest to a Person  which shall
become a successor  General  Partner;  provided,  however,  that no such Consent
shall be required in connection  with an assignment or transfer  pursuant to the
merger,  consolidation or transfer of all or substantially  all of the assets of
the General Partner.

      Section 6.3  Removal of General Partner
      ---------------------------------------

      A. Subject to Section 12.3,  the Unit Holders  owning more than 50% of the
outstanding  Units,  shall have the authority to, and shall,  remove the General
Partner.

      B.  (i) If the Unit  Holders  elect  to  remove  the  General  Partner  as
permitted under this Section,  and further elect to continue the business of the
Partnership  with one or more successor  General  Partners,  the removed General
Partner shall not be removed until a successor General Partner has been selected
by the Unit Holders and admitted to the Partnership pursuant to Section 11.2.

                                      -54-
<PAGE>

      (ii) Notwithstanding  Section 3.6B, any General Partner who shall withdraw
or be removed shall be released and indemnified by any successor General Partner
from and against all liability for Partnership debts and obligations incurred by
the Partnership prior to the time of such removal.

      Section 6.4  Option to Purchase Interest from Former General Partner
      --------------------------------------------------------------------

      In the event the General  Partner  withdraws or is removed and a successor
General  Partner is selected,  the incoming  General  Partner and the  departing
General  Partner shall,  by mutual  agreement,  select an independent  petroleum
consultant to value the departing General Partner's interest in the Partnership.
The  incoming  General  Partner,  or the  Partnership,  shall have the option to
purchase  at  least  20%  of  the  interest  of the  departing  General  Partner
(including any Distributed Interests distributed to the General Partner pursuant
to Section 6.1B) for the value  determined  by the  independent  appraisal.  The
departing General Partner's  interest in the Partnership shall be transferred to
the successor General Partner, and the successor General Partner shall assign to
the  departing  General  Partner a portion of  Partnership  Revenues,  costs and
rights to receive Partnership distributions as and when such items are allocated
or distributed,  as the case may be, by the Partnership  equal to the percentage
interest of the departing  General Partner in the Partnership  prior to removal,
less the portion purchased by the successor General Partner or the Partnership.

      Section 6.5  Power to Admit Successor General Partner

      A. If the General  Partner has  withdrawn  or been  removed,  Unit Holders
owning more than 50% of the outstanding Units shall have the right and authority
to appoint and admit a successor  General  Partner  meeting the  requirements of
Section 6.5B to take the place of the departing General Partner.

      B. If there is admitted to the  Partnership a successor  General  Partner,
such admission shall not become effective unless (a) the Partnership  shall have
received a certificate, duly executed by or on behalf of such proposed successor
General  Partner,  to the effect that:  (i) it is  experienced in performing (or
employs sufficient personnel who are experienced in performing) functions of the
type then being performed by the

                                      -55-
<PAGE>

departing General Partner, (ii) it has a net worth sufficient to satisfy the net
worth  requirements  of the Code,  Treasury  Regulations,  the Internal  Revenue
Service or the courts  applicable to a general partner in a limited  partnership
in order to  ensure  that the  Partnership  will not fail to be  classified  for
federal  income tax purposes as a  partnership  and (iii) such Person,  if other
than an  individual,  has the  authority to become a successor  General  Partner
under  the  terms of this  Agreement;  and (b) the  proposed  successor  General
Partner  shall  have (i)  become a party to,  and  adopted  all of the terms and
conditions  of this  Agreement  and (ii) paid all  reasonable  legal fees of the
Partnership  and filing and  publication  costs in connection with such Person's
becoming a successor  General  Partner.  The Certificate of Limited  Partnership
shall be amended to reflect the withdrawal of the former General Partner and the
admission of the successor General Partner.

      Section 6.6  Incapacity of the General Partner
      ----------------------------------------------

      A. In the event of the Incapacity of the General Partner,  the Partnership
shall be dissolved.  However,  within 90 days thereafter the Unit Holders owning
more than 50% of the outstanding Units may elect to reconstitute the Partnership
prior to application of the liquidation provisions of Section 9.2.

      B. Upon the Incapacity of the General Partner, the Person who is its legal
representative shall have all the rights of a General Partner for the purpose of
settling  or  managing  its estate and such power as the  Incapacitated  General
Partner  possessed  to assign all or any part of its  interest  and to join with
such assignee in satisfying  conditions  precedent to such assignees  becoming a
substituted General Partner.

      Section 6.7  Termination of Contracts with General Partner
      ----------------------------------------------------------

      Subject to and upon  fulfilling  the conditions of Section 12.3, the power
shall be  vested in the Unit  Holders  owning  more than 50% of the  outstanding
Units to  terminate  any or all  contracts  between the  General  Partner or any
Affiliate and the Partnership, and select a replacement Person therefor.

                                      -56-
<PAGE>

                                  ARTICLE SEVEN

             ASSIGNMENT OF LIMITED PARTNER INTERESTS TO UNIT HOLDERS

      Section 7.1  Assignments of the Interests of Depositary
      -------------------------------------------------------

      A. Pursuant to Sections 7.1B and 13.1, the Depositary  shall issue to each
Person purchasing one or more Units a Depositary  Receipt evidencing such Units.
The Partnership  shall  recognize as a Unit Holder,  for the number of Units for
which the Partnership has received proceeds,  each Person to whom the Depositary
issues a Depositary Receipt as of the date provided in Section 13.1 or otherwise
as the General Partner shall determine in accordance with the provisions of this
Agreement.

      B. The Depositary, by the execution of this Agreement, irrevocably assigns
to the Unit  Holders  all of the  Depositary's  beneficial  (but not the record)
rights and  interest in and to the  Partnership,  except as  otherwise  provided
herein, as of the date of Activation of the Partnership. The rights and interest
so transferred and assigned shall include, without limitation, the following:

            (i) all  rights  to  receive  distributions  of  uninvested  Capital
      Contributions  pursuant to Section 3.4 and the right to receive rebates of
      Commissions and Organization and Offering Costs pursuant to Section 3.4;

            (ii) all rights to receive  distributions  of  Partnership  funds or
      assets under the terms of this Agreement or under the Act;

            (iii) all rights in respect of allocations of each item of Revenues,
      gain, loss, deduction and credit pursuant to Article Five;

            (iv) all  rights in  respect  of  allocations  to  Capital  Accounts
      pursuant to Section 5.4;

            (v) all  rights  to  receive  any  proceeds  of  liquidation  of the
      Partnership pursuant to Section 9.2;

            (vi) all rights to inspect books and records and to receive  reports
      pursuant to Article Ten;

                                      -57-
<PAGE>

            (vii) the right to bring derivative  actions pursuant to the Act (in
      the event any such action must be brought in the name of the Depositary as
      a Limited  Partner,  the  Depositary  agrees to bring such action,  at the
      expense of the Unit Holder(s) requesting such action); and

            (viii)  all  rights  which the  Depositary  has,  or may have in the
      future,  under this  Agreement or the Act,  except as  otherwise  provided
      herein.

      C. The  General  Partner,  by the  execution  of this  Agreement,  and any
Substituted  Limited  Partner,  by its adoption of this  Agreement,  pursuant to
Section 7.3,  irrevocably  consents to and  acknowledges  that (i) the foregoing
assignment pursuant to Section 7.lB by the Depositary to the Unit Holders of the
Depositary's  beneficial rights and interest in the Partnership is effective and
(ii) the Unit Holders are intended to be third-party beneficiaries of all rights
and  privileges  of the  Depositary  hereunder.  The  General  Partner  and  any
Substituted  Limited  Partner  covenant and agree that, in  accordance  with the
foregoing  transfer and assignment,  all the Depositary's  beneficial rights and
privileges  hereunder may be exercised by the Unit Holders,  including,  without
limitation, those listed in Section 7.lB.

      D. The Depositary, by execution of this Agreement,  irrevocably commits to
exercise its rights to vote and Consent as a Limited  Partner in accordance with
directions it receives from the Unit Holders as provided herein.

      E. The  Depositary  may transfer its interest as the Depositary to another
Person only with the Consent of the General  Partner and Unit Holders other than
Substituted Limited Partners owning more than 50% of the outstanding Units.

      F.  All  Persons  becoming  Unit  Holders  will by their  payment  for and
acceptance  of  Depositary  Receipts  agree to  comply  with and be bound by the
terms,  conditions and obligations of and will be entitled to all rights of Unit
Holders under this Agreement.

      G. Other than  pursuant to Sections  7.lB,  7.lE and 7.2,  the  Depositary
shall not transfer,  assign, encumber, pledge or hypothecate any of its interest
in the Partnership.

                                      -58-
<PAGE>

      Section 7.2  Rights of Unit Holders
      -----------------------------------

      A. In  accordance  with the transfer and  assignment  described in Section
7.1B, it is the intention of the parties  hereto that,  except to the extent set
forth in Section 3.6B,  Unit Holders shall have the same rights and  obligations
that Limited Partners have under this Agreement and under the Act. The fiduciary
duties and obligations of the General Partner to Limited  Partners under the Act
and this Agreement shall extend to the Unit Holders.

      B. Without  limiting the  generality of Section  7.2A,  persons who become
Limited  Partners  pursuant  to Section 7.3 below and other Unit  Holders  shall
share pari passu on the basis of one Limited Partner  interest for one Unit, and
shall be  considered  a single  class,  with  respect  to all  rights to receive
distributions and allocations pursuant to this Agreement.

      C.  Subject to Section  12.2,  Unit  Holders  shall vote on all matters in
respect of which they are  entitled to vote (either in person,  by proxy,  or by
written  consent),  as a single  class,  with  each Unit  entitled  to one vote;
provided,  however,  that the  Depositary  shall  vote on  behalf of and only as
directed by the Unit Holders who are not Substituted Limited Partners.

      Section  7.3  Conversion of Units into Limited Partner Interests
      ----------------------------------------------------------------

      Subject to the  consent  of the  General  Partner,  which  consent  may be
granted or withheld in its absolute  discretion,  any Unit Holder who desires to
convert his Units into an equal number of Limited Partner interests (which shall
be included  in the  meaning of "Units" as such term is used in this  Agreement)
may  do so  following  Activation  of  the  Partnership  by  delivering  to  the
Depositary an executed  subscription  agreement and transfer  application (which
are available  upon request from the General  Partner),  accompanied  by written
instructions  which  set forth an  intention  to  become a  Substituted  Limited
Partner and request  admission as such to the  Partnership,  together  with such
other instruments or documents as the General Partner or the Depositary may deem
necessary or desirable,  including the written  acceptance  and adoption by such
Unit  Holder  of  the   provisions  of  this   Agreement   and  the   execution,
acknowledgement

                                      -59-
<PAGE>

and delivery to the General Partner of a special power of attorney, the form and
content  of which are  reasonably  satisfactory  to the  General  Partner.  Such
executed  documents shall be accompanied by a payment to the Partnership by such
Unit Holder of a fee (not to exceed $100) for legal and administrative costs and
recording  fees.  Unit Holders  becoming  Substituted  Limited  Partners will be
admitted to the  Partnership  quarterly,  or as  promptly as possible  after the
commencement  of the next calendar  quarter.  Persons who effect such conversion
will  thereafter  be deemed to have an equal  number of Units of  interest  as a
Limited  Partner  and  the  Substituted  Limited  Partner  will  not be  able to
re-exchange such units of Limited Partner interests for Units.

                                  ARTICLE EIGHT

                            TRANSFERABILITY OF UNITS

      Section 8.1  Assignments of Units
      ---------------------------------

      A.  Subject to the  provisions  of Section 8.4, no Unit Holder may assign,
sell,  transfer  or  exchange  his Units  without  the  approval  of the General
Partner.  In exercising  its  obligations  under this Section 8.1A,  the General
Partner  shall use its best effort to ensure that the terms of transfer  are not
in  contravention  of any of the  provisions  of this  Agreement  and  shall not
approve any transfer:

                 (i)  to a Person who makes a market in the Units;

                (ii)  which is  effected  through a  matching  agent  unless the
      procedures  of such  matching  agent with respect to the transfer of Units
      have been  approved  by the  General  Partner as not being  incident  to a
      public  trading of such  securities  within the  meaning of Code  Sections
      7704, 469(k) or 512(c);

              (iii) if such sale,  assignment,  transfer or exchange would be in
      violation of any applicable  federal or state  securities  laws (including
      any applicable  suitability  standard and the restrictions on transfer set
      forth in Rule  260.141.ll  of Title  10 of the  California  Administrative
      Code) or would cause the Partnership to be taxed as an entity other than a
      partnership under the Code;

                                      -60-
<PAGE>

             (iv)  if  such  sale,  assignment,   transfer  or  exchange,   when
      aggregated  with all other  transfers  during the same taxable year of the
      Partnership,  would result in both (a) the transfer of more than 5% of the
      Units (excluding Permitted Transfers) and (b) the transfer of more than 2%
      of the Units (excluding  Permitted  Transfers and transfers made through a
      Matching  Service),  unless the  General  Partner  shall have  received an
      opinion of counsel that such sale, assignment, transfer or exchange may be
      made without material  adverse tax  consequences to the Unit Holders.  For
      purposes of this  subsection,  the "Permitted  Transfers"  shall mean: (1)
      transfers  in which the basis of the Units in the hands of the  transferee
      is determined, in whole or in part, by reference to its basis in the hands
      of the  transferor  or is determined  under  Section 732 of the Code;  (2)
      transfers at death; (3) transfers  between members of a family (as defined
      in Section  267(c)(4)  of the Code);  (4) the  issuance  of Units by or on
      behalf of the Partnership in exchange for cash, property or services;  (5)
      distributions from a retirement plan qualified under Section 401(a) of the
      Code;  and (6)  Block  Transfers.  The term  "Block  Transfer"  means  the
      transfer  by a Unit Holder in one or more  transactions  during any thirty
      consecutive day period of Units representing in the aggregate more than 5%
      of the  total  interests  in  Partnership  capital  or  profits.  The term
      "Matching  Service" has the meaning and the conditions to sale ascribed to
      it in Internal  Revenue  Service  Notice 88-75.  For purposes of the above
      limitations,  the  percentage of Units  transferred  during a taxable year
      shall equal the sum of the monthly  percentage of Units  transferred.  The
      monthly  percentage  of  Units  transferred  in  any  month  shall  be the
      percentage  equal to a fraction  the  numerator  of which is the number of
      Units  transferred  during such month and the  denominator of which is the
      number of Units  outstanding on the last day of such month,  provided that
      the  denominator  shall not include Units owned by the General  Partner or
      any Person related to the General  Partner  (within the meaning of Section
      267(b) or 707(b)(1) of the Code);

             (v) except  for  transfers  by  gift or  inheritance,  intra-family
      transfers,  transfers  resulting  from family  dissolutions,  transfers to
      Affiliates or transfers of such  transferor's  entire remaining holding of
      Units,  any sale,  assignment,  transfer  or  exchange of Units that would
      result in the transferors' holding less than ten (10) Units;

                                      -61-
<PAGE>

             (vi)  except  as provided  in  Section  8.3  unless  and  until the
      transferee  has  certified  to  the  Partnership  that  he is an  Eligible
      Investor; or

             (vii) to  any entity  exempt from federal  income tax under Section
      501 of the Code, to any Person  defined in Section  168(h)(2) of the Code,
      to any Individual  Retirement  Account as defined in Section 408(a) of the
      Code,  to any  Keogh  Plan,  to any  nonresident  alien or to any  foreign
      Entity. The General Partner shall give Notification to all Unit Holders in
      the event that sales,  exchanges,  transfers or assignments have generally
      been suspended.

      B. Any attempted sale,  assignment,  transfer or exchange in contravention
of the provisions of this Section 8.1 shall, unless otherwise  determined by the
General Partner in its sole discretion, be void and deemed ineffectual and shall
not bind or be recognized by the Partnership.

      C. The  Partnership  need not recognize for any purpose any  assignment of
Units  unless there shall have been filed with the  Partnership  and recorded on
the  Partnership's  books  a  duly  executed  and  acknowledged   instrument  of
assignment, and such instrument evidences the written acceptance by the assignee
of all of the terms  and  provisions  of this  Agreement,  represents  that such
assignment was made in accordance  with all applicable  laws and regulations and
in all other  respects  is  satisfactory  in form and  substance  to the General
Partner.

      D. The Partnership need not (but, at least in the case of (i) below,  may,
in its sole  discretion,  do so) recognize  for any purpose any purported  sale,
assignment  or  transfer  of all or part of the  Units,  if, in the  opinion  of
counsel:

                 (i)  such  sale,   assignment  or  transfer   would  cause  the
      Partnership to be treated as an association  taxable as a corporation  for
      federal  income  tax  purposes,  or,  when added to the total of all other
      sales or  exchanges  of interests  within the  preceding 12 months,  would
      result in the Partnership's being considered to have terminated within the
      meaning of Section 708 of the Code;  and the General  Partner is expressly
      authorized to enforce this  provision by suspending  transfers if and when
      any  such  transfer   would  result  in  transfers  of  interests  in  the
      Partnership which represent in the aggregate 50% (or such lower percentage
      as  may  be  deemed  prudent  by  the  General  Partner)  or  more  of all
      Partnership interests;

                                      -62-
<PAGE>

             (ii) such sale,  transfer  or  assignment  would  violate any state
      securities  or "blue  sky"  laws  (including  any  applicable  suitability
      standards) applicable to the Partnership or the Units to be transferred or
      assigned,  except  in the case of  transfers  upon  the  death of the Unit
      Holder (by bequest or inheritance) or by operation of law; or

              (iii)  such  sale,   transfer  or   assignment   might  cause  the
      Partnership to be classified as a publicly traded  partnership  within the
      meaning of Code Sections 7702, 469(k) or 512(c).

      E. Unless otherwise provided by the General Partner, any sale,  assignment
or transfer  of Units shall be  recognized  by the  Partnership  as of the first
business day of the calendar  quarter  following the approval of such assignment
or transfer by the General  Partner,  or as soon thereafter as practicable.  The
General  Partner  shall  not  approve  sales,   assignments  or  transfers  more
frequently  than quarterly  unless it receives a written opinion of counsel that
more frequent  approvals shall not jeopardize the  Partnership's  federal income
tax status as a partnership.  The  Partnership  and the General Partner shall be
entitled to treat the  assignor of such Units as the absolute  owner  thereof in
all respects, and shall incur no liability for any allocation of Revenues, costs
or expenses,  distribution  or transmittal  of reports or notice  required to be
given to Unit  Holders  hereunder  which is made in good faith to such  assignor
until such time as the written instrument of assignment has been received by the
Partnership and recorded on its books.

      F. The General Partner may reasonably interpret,  and is hereby authorized
to take such action as it deems necessary or desirable to effect,  the foregoing
provisions  of this  Section 8.1.  The General  Partner  may, in its  reasonable
discretion and without the approval of the Unit Holders, amend the provisions of
this  Agreement  in such manner as may be necessary or desirable to (i) preserve
the  tax  status  of  the   Partnership   as  a  partnership  or  (ii)  avoid  a
classification  of the Partnership as a publicly traded  partnership  within the
meaning of Code Sections 7704, 469(k) or 512(c). The General Partner may, in its
reasonable  discretion and without the approval of the Unit Holders,  also amend
the   provisions  of  this  Agreement  to  include   provisions   governing  the
transferability  of interests in the Partnership which may be approved in future
legislation,   Treasury   Regulations,    administrative   rulings   and   other
pronouncements or judicial decisions. The Unit Holders shall be

                                      -63-
<PAGE>

given prompt Notification of any amendments permitted by this Section 8.1F.

      G. No purported  sale,  assignment  or transfer by a  transferor  of Units
shall be recognized  unless (i) the transferor  shall have represented that such
transfer  (x) was  effected  through a  broker-dealer  or  matching  agent whose
procedures  with  respect to the  transfer  of Units have been  approved  by the
General Partner as not being incident to a public trading market and not through
any other  broker-dealer  or matching  agent or (y)  otherwise  was not effected
through a broker-dealer or matching agent which makes a market in Units or which
provides a readily  available,  regular  and ongoing  opportunity  to holders of
Units to sell or exchange  their Units  through a public  means of  obtaining or
providing  information  of offers to buy,  sell or  exchange  Units and (ii) the
General Partner determines that the circumstances  described in Section 8.lA(iv)
have not occurred and will not occur and that otherwise such sale, assignment or
transfer  would not, by itself or together  with any other  sales,  transfers or
assignments,  be likely to result in the  Partnership's  being  classified  as a
publicly traded partnership.

      H. Unit Holders who are residents of the State of California must meet the
restrictions  on  transfers  set  forth in Rule  260.141-.11  of Title 10 of the
California Administrative Code.

      I.  Except as  provided  in  Section  8.4,  no  transfer  of Units will be
recorded or  otherwise  recognized  by the  Depositary  or  Partnership  for any
purpose  whatsoever  unless  and  until  the  transferee  has  certified  to the
Depositary  that he is an Eligible  Investor  and,  unless the transfer is among
members  of the  immediate  family of the  transferor  Unit  Holder,  has paid a
transfer  fee to  reimburse  the  Depositary  for  all  actual,  reasonable  and
necessary  expenses (not to exceed $50 per  transaction)  incurred in connection
with the transfer.

      J.  A  transferee who has accepted an assignment of  Units shall be deemed
to have agreed to comply with and be bound by all of the terms and conditions of
this Agreement.

                                      -64-
<PAGE>

       Section 8.2  Substituted Limited Partners
       -----------------------------------------

      A. The  Consent  of the  General  Partner  shall be  required  before  the
assignee of any Units shall be admitted as a Substituted Limited Partner,  which
Consent  may be  withheld  in the sole and  absolute  discretion  of the General
Partner.

      B. No person shall have the right to become a Substituted  Limited Partner
in place of his  assignor  unless  all of the  following  conditions  are  first
satisfied:

                 (1) a duly  executed and  acknowledged  written  instrument  of
      assignment  complying  with  Section  8.1 shall  have been  filed with the
      Partnership and recorded on its books,  which instrument shall specify the
      Units being  assigned and set forth the intention of the assignor that the
      assignee  succeed to the  assignor's  interest  as a  Substituted  Limited
      Partner in his place;

                 (2) the  transferor  and his assignee  shall have  executed and
      acknowledged  such  other  instruments  as the  General  Partner  may deem
      necessary or desirable to effect such substitution,  including the written
      acceptance  and  adoption  by the  assignee  of  the  provisions  of  this
      Agreement  as the same may be amended,  his  agreement  to be bound by the
      terms  hereof,  and his  execution,  acknowledgment  and  delivery  to the
      General  Partner of a special  power of attorney,  the form and content of
      which are reasonably satisfactory to the General Partner; and

                 (3) a transfer fee sufficient to cover all reasonable  expenses
      connected with such  substitution (not to exceed $50) shall have been paid
      to the Partnership.

      C.  By  executing  or  adopting  this  Agreement,  the  Depositary,   each
Substituted  Limited  Partner and, by the  purchase of a Unit,  each Unit Holder
hereby consents to the admission of Substituted  Limited Partners by the General
Partner in accordance with the foregoing.

                                      -65-
<PAGE>

       Section 8.3  Eligible Investors
       -------------------------------

      A. If the General Partner determines that a Unit Holder is not an Eligible
Investor  then the Unit Holder  shall  immediately  be divested of its rights to
Consent on matters  submitted to Unit Holders (and no such Units shall be deemed
outstanding for purposes of Consents of Unit Holders under this  Agreement).  At
any time after it can and does certify that it has become an Eligible  Investor,
a Unit Holder may, upon  application to the General  Partner,  retain all of the
rights and benefits attributable to his Units.

      B.  If at any  time  (i)  the  Partnership,  the  General  Partner  or the
Depositary  receives an opinion of counsel to the effect that the citizenship or
other status of a Unit Holder may result in the forfeiture or  cancellation of a
federal Lease or otherwise  affects the  eligibility of the  Partnership to hold
federal Leases or (ii) the  Partnership or the General  Partner is named a party
in any judicial or  administrative  proceeding  that seeks the  cancellation  or
forfeiture of any property in which the Partnership  has an interest  because of
the  citizenship  (or any other status that subjects the Partnership to the risk
of losing its eligibility to acquire or hold interests in federal Leases) of any
one or more Unit  Holders,  the  General  Partner may notify the Unit Holder and
purchase the Units of such Unit Holder for its own account, at such time and for
such amount as the General Partner may determine in its sole discretion. Nothing
in this  Section 8.3 shall  prevent a Unit Holder  from  transferring  his Units
prior to the date set for such purchase by the General Partner.

       Section 8.4  Death, Incompetency or Dissolution of a Unit Holder
       ----------------------------------------------------------------

      If a Unit  Holder  who is an  individual  dies  or a  court  of  competent
jurisdiction  adjudges  him  to be  incompetent  to  manage  his  person  or his
property, such Unit Holder's executor,  administrator,  guardian, conservator or
other legal representative may exercise all of such Unit Holder's rights for the
purpose of settling his estate or  administering  his  property,  including  any
power under this Agreement of an assignee to become a Unit Holder or Substituted
Limited Partner. If a Unit Holder is a corporation, trust or other

                                      -66-
<PAGE>

entity and is  dissolved  or  terminated,  the powers of such Unit Holder may be
exercised by its legal representative or successor.

                                  ARTICLE NINE

           DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP

     Section 9.1  Events Causing Dissolution
     -----------------------------------------

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

            (i) the expiration of its term, without any continuation  thereof as
      set forth in Section 2.3;

            (ii) the  Incapacity  of the  General  Partner;  provided,  however,
      within ninety (90) days  thereafter  the Unit Holders owning more than 50%
      of the outstanding  Units may elect to reconstitute the Partnership  prior
      to application of the liquidation provisions of Section 9.2;

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

            (iv) the  election to dissolve  the  Partnership  (a) by the General
      Partner (which election shall be Consented by the Unit Holders owning more
      than 50% of the outstanding  Units), or (b) by the Consent of Unit Holders
      owning more than 50% of the outstanding Units;

            (v) ninety  (90) days after the  removal or  withdrawal  of the sole
      General Partner  (unless a successor is elected  pursuant to Section 6.5);
      or

            (vi) the happening of any other event causing the dissolution of the
      Partnership under the laws of the State, except that the Incapacity of the
      Depositary or any Unit Holder shall not dissolve the  Partnership  and the
      seizure  of  the  interest  of  the  Depositary  shall  not  dissolve  the
      Partnership.

                                      -67-
<PAGE>

      B.  Dissolution of the Partnership  shall be effective on the day on which
the event occurs giving rise to the dissolution,  but the Partnership  shall not
terminate  until the General Partner has recorded a notice of dissolution of the
Partnership  with the  office of the  Secretary  of State of the State and shall
have  complied  with the laws of the other states in which it does  business and
the assets of the Partnership have been distributed as provided in Section 9.2.

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

      D. If the  Partnership  is  dissolved as a result of an event set forth in
Sections  9.1A(ii) or (v), Unit Holders owning more than 50% of the  outstanding
Units may appoint an interim manager of the Partnership,  who shall have and may
exercise only the rights,  powers and duties of a general  partner  necessary to
preserve  Partnership  assets,  until (i) a successor General Partner is elected
pursuant  to Section  6.5,  if the  Partnership  is  reconstituted,  or (ii) the
Partnership is liquidated pursuant to Section 9.2. The interim manager shall not
be liable as a general  partner to the  Depositary  or Unit  Holders  and shall,
while acting in such capacity, be entitled to the same indemnification rights as
are set forth in Section 4.10.

      Section 9.2  Liquidation
      ------------------------

      A.  Subject to Section  9.1,  upon  dissolution  of the  Partnership,  its
liabilities  shall be paid in the order  provided  herein.  The General  Partner
shall sell or otherwise dispose of the  Partnership's  Property and other assets
and shall execute all amendments terminating the Partnership. In connection with
any such sale,  the General  Partner shall attempt to obtain the best prices for
such property.  Pending such sales,  the General Partner shall have the right to
continue to operate and  otherwise  to deal with  Partnership  property.  In the
event the  Partnership  is dissolved on account of the  Incapacity or removal of
the General  Partner,  the  Partnership  shall  elect,  in  accordance  with the
provisions of Article Twelve, a Person (the "Liquidating Agent") to perform the

                                      -68-
<PAGE>

function of the General Partner in liquidating the assets of the Partnership and
winding up its affairs,  and shall pay to such Liquidating  Agent its reasonable
fees and expenses incurred in connection therewith. Gain or loss realized on the
sale or other  disposition of the  Partnership's  assets will be credited to (in
the case of gain) or charged against (in the case of loss) the General Partner's
and each Unit Holder's  Capital  Account to the extent  allocable to the General
Partner and such Unit Holder under Sections 5.1 and 5.2. Any  liquidation of the
Partnership  shall take place out of court and  without  application  being made
therefor to the Secretary of State of the State.

      The  Liquidating  Agent shall  agree not to resign at any time  without 15
days' prior  Notification and (if other than the General Partner) may be removed
at any time, with or without cause, by Notification of removal  approved by Unit
Holders owning more than 50% of the outstanding Units. Upon dissolution, removal
or resignation of the Liquidating Agent, a successor and substitute  Liquidating
Agent  (who  shall  have and  succeed  to all  rights,  powers and duties of the
original  Liquidating  Agent) shall,  within 30 days thereafter,  be selected by
Unit Holders owning more than 50% of the outstanding Units. The right to appoint
a successor or substitute  Liquidating Agent in the manner provided herein shall
be recurring  and  continuing  for so long as the  functions and services of the
Liquidating  Agent are authorized to continue under the provisions  hereof,  and
every reference herein to the Liquidating Agent shall be deemed to refer also to
any such  successor  or  substitute  Liquidating  Agent  appointed in the manner
herein  provided.  The  Liquidating  Agent shall have and may exercise,  without
further authorization or Consent of any of the parties hereto, all of the powers
conferred  upon the  General  Partner  under  the terms of this  Agreement  (but
subject to all of the applicable  limitations,  contractual and otherwise,  upon
the exercise of such  powers,  other than the  limitation  on sales set forth in
Section 4.5C) to the extent necessary or desirable in the good faith judgment of
the  Liquidating  Agent to carry out the duties and functions of the Liquidating
Agent  hereunder  for and  during  such  period  of time as shall be  reasonably
required in the good faith  judgment of the  Liquidating  Agent to complete  the
winding-up and liquidation of the Limited Partnership as provided for herein.

                                      -69-
<PAGE>

      Notwithstanding   the   provisions   of  Section  9.1  which  require  the
liquidation  of the  assets  of the  Partnership,  but  subject  to the order of
priorities set forth herein,  if on dissolution of the Partnership,  the General
Partner or Liquidating Agent determines that an immediate sale of part or all of
the Partnership's assets would be impracticable or would cause undue loss to the
Unit  Holders,  the General  Partner or  Liquidating  Agent may, in its absolute
discretion,  defer for a reasonable  time the  liquidation  of any assets except
those necessary to satisfy  liabilities of the Partnership  (other than those to
the General  Partner and Unit  Holders) or place those  assets in a  liquidating
trust to hold  until such time as the  assets  are sold or  depleted;  provided,
however,  that such assets will be  transferred  to a liquidating  trust only if
before the transfer the General Partner or Liquidating Agent shall have received
the opinion of counsel to the Partnership that the operation of such liquidating
trust  pursuant  to its terms will not result in such  liquidating  trust  being
treated  as an  association  taxable as a  corporation  for  federal  income tax
purposes.  Furthermore,  if the  dissolution  of the  Partnership is effected by
virtue  of a merger  or  combination  with  another  entity  or by  virtue  of a
transfer,  sale or exchange  of all or  substantially  all of the  Partnership's
assets for which at least a portion of the consideration  consists of securities
of another entity, such securities may be distributed to the General Partner and
Unit  Holders  in kind and there  shall be no  obligation  to sell or  otherwise
dispose of such  securities  for cash or to place them in a  liquidating  trust;
provided,  however,  that no such  securities  shall be  distributed to the Unit
Holders upon  liquidation  unless (i) the securities are readily  marketable and
(ii) pro rata amounts of such  securities (to the extent such  securities may be
divided in equal pro rata amounts) are distributed to each Unit Holder.

      B. In settling accounts after  dissolution,  the assets of the Partnership
shall be paid out in the following order: (i) to third-party  creditors,  in the
order or  priority  as  provided  by law;  (ii) to the  General  Partner and any
Liquidating Agent for any expenses of the Partnership paid by or payable to them
to the extent  they are  entitled  to  reimbursement  therefor  pursuant to this
Agreement;  (iii) to all of the Unit  Holders  in the amount  equivalent  to the
amount of their  positive  Capital  Account  balances (as  adjusted  pursuant to
Section 9.2A) on the date of  distribution;  (iv) to the General  Partner in the
amount  equivalent  to the amount of its positive  Capital  Account  balance (as
adjusted pursuant to Section 9.2A) on the date of

                                      -70-
<PAGE>

distribution;  and (v) the balance, if any, shall be paid to the General Partner
and Unit Holders in the manner in which Revenues are then being allocated.

      C. If the  General  Partner has a deficit  balance in its Capital  Account
following the distribution(s)  provided for in Section 9.2B above, as determined
after taking into account all adjustments to its Capital Account for the taxable
year of the  Partnership  during  which  such  distribution(s)  occur,  it shall
restore the amount of such deficit balance to the Partnership within 90 days and
such amount shall be  distributed  to the Unit Holders in accordance  with their
positive Capital Account balances.

      D. Upon the  liquidation or partial  liquidation of the General  Partner's
interest pursuant to Article Six hereof, any distribution to the General Partner
shall be made pro rata in  accordance  with and to the  extent  of its  positive
Capital  Account balance after the General  Partner's and Unit Holders'  Capital
Accounts are adjusted as if all of the  Partnership's  Property had been sold at
its fair market value  immediately  prior to such  distribution  and the gain or
loss realized on such sale charged or credited to the General Partner's and Unit
Holders'  Capital  Accounts in accordance with and to the extent of its positive
Capital  Account balance after the General  Partner's and Unit Holders'  Capital
Accounts are adjusted as if all of the  Partnership's  Property had been sold at
its fair market value  immediately  prior to such  distribution  and the gain or
loss realized on such sale charged or credited to the General Partner's and Unit
Holders'  Capital  Accounts in  accordance  with the  provisions of Article Five
hereof; provided,  however, that if the General Partner has a deficit balance in
its Capital Account  following such  distribution  (or adjustment of the General
Partner's  Capital Account  pursuant to this Section 9.2D),  the General Partner
shall restore the amount of such deficit balance to the Partnership by the later
of the end of the  Partnership  taxable  year in which  the  liquidation  of the
General Partner's Interest occurs or 90 days after the date of such liquidation.

      E.  Notwithstanding  anything to the contrary in this Agreement,  upon the
dissolution  and  termination  of the  Partnership,  the  General  Partner  will
contribute  to the  Partnership  the lesser of: (a) the  deficit  balance in its
Capital  Account;  or (b)  the  excess  of 1.01  percent  of the  total  Capital
Contributions of the Unit Holders over the capital previously contributed by the
General Partner.

                                      -71-
<PAGE>

                                   ARTICLE TEN

               BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS; ETC.

      Section 10.1  Books and Records
      -------------------------------

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

      Section 10.2 Accounting Basis for Tax and Reporting Purposes; Fiscal Year
      -------------------------------------------------------------------------

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

      Section 10.3  Bank Accounts
      ---------------------------

      The General Partner shall maintain a bank account or accounts on behalf of
the Partnership with any bank in the United States having total assets in excess
of $100,000,000.  The General Partner shall not deposit  Partnership funds in an
account  with any bank in an  aggregate  amount in  excess of 5% of such  bank's
total assets. Withdrawals shall be made only in the

                                      -72-
<PAGE>

regular course of the Partnership's  business on such signature or signatures as
the General  Partner may  determine.  All deposits and other funds not needed in
the  operation of the business  may be deposited in  interest-bearing  accounts,
certificates of deposit, money market funds (including those managed or marketed
by the Dealer Manager or its Affiliates) or invested in short term United States
Government   obligations   maturing  within  one  year,   commercial   paper  of
corporations  organized  under the laws of any state of the United States or the
District  of  Columbia  having  the  highest  credit  rating  granted by Moody's
Investors  Service,  Inc. or  Standard & Poor's  Corporation,  or other  similar
highly liquid investment.

      Section 10.4  Reports
      ---------------------

      A. The  General  Partner  shall close the  Partnership's  books of account
promptly  at the  close of each  Fiscal  Year and an annual  examination  of the
Partnership's  financial  statements  shall be  performed  at the expense of the
Partnership by the  Accountants.  The General  Partner shall furnish to the Unit
Holders an annual  report within 120 days after the close of each Fiscal Year of
the  Partnership  commencing  with the Fiscal Year in which the  Partnership was
Activated. If requested by a Unit Holder, the General Partner shall also furnish
such Unit  Holder  with a report  within 75 days  after the end of the first six
months of the Fiscal  Year in which  such  request  was made,  or within 75 days
after the request is made, whichever is later. Such report will contain at least
the following information:

                (i)  Financial   statements  for  the  Partnership's   accounts,
      including a balance  sheet,  statement of income,  statement of changes in
      partners'  capital and statement of cash flow prepared on an accrual basis
      in  accordance   with  generally   accepted   accounting   principles  and
      accompanied  by a report of the  Accountants  together  with their opinion
      thereon,  except that the  semi-annual  financial  statements  need not be
      audited;

                (ii) A summary itemization,  by type and/or  classification,  of
      the total fees and compensation,  including any General and Administrative
      Cost reimbursement, paid by the Partnership or indirectly on their behalf,
      to the General Partner and any Affiliate;

                                      -73-
<PAGE>

               (iii) A  description  of  each  Producing  Property  acquisition,
      including the costs therefor,  in which the Partnership  owns an interest,
      except  succeeding  reports need contain only material changes  (including
      all material farmouts,  development drilling, improved recovery operations
      and abandonments), if any, regarding Producing Properties already reported
      upon. In the case of wells that have been abandoned  after  production has
      commenced,  a statement  justifying such abandonment  shall be included if
      the General  Partner or an Affiliate is the operator.  With respect to all
      material  Farmouts,  the statement  shall include a  justification  of the
      Farmout,  location, time, to whom made and a general description of terms;
      and

            (iv) A  schedule  reflecting  a  list  of  the  wells drilled by the
      Partnership and the costs thereof.

      B. Within 60 days after the end of each fiscal  quarter,  each Unit Holder
will receive an "investor  statement"  which  summarizes his current quarter and
cumulative cash distributions in the Partnership.

      C. Within 120 days after the end of the Fiscal Year  following  the Fiscal
Year in which Activation of the Partnership occurs, and annually thereafter, the
General Partner shall furnish to the Unit Holders a computation as of the end of
the immediately  preceding Fiscal Year, based upon engineering  reports prepared
by one or more qualified independent petroleum engineering firms with respect to
Producing  Properties  containing  Proved  Reserves equal to at least 80% of the
Proved  Reserves of the  Partnership  (with the computation as to any balance of
the Partnership's Proved Reserves being based upon petroleum engineering reports
prepared by the General Partner or an Affiliate),  of the total estimated Proved
Developed Producing Reserves,  Proved Developed NonProducing Reserves and Proved
Undeveloped  Reserves  owned by the  Partnership,  the  estimated  dollar  value
thereof stated in then existing prices and escalated  prices (as provided by the
General Partner). In addition,  the computation shall include an estimate of the
time required for the  extraction of such reserves and the present worth of such
reserves and the  estimate  shall  contain a statement  that because of the time
period  required to extract such  reserves  the present  value of revenues to be
obtained in the future is less than if immediately receivable.

                                      -74-
<PAGE>

      D. In addition to the report described in Section 10.4C of this Agreement,
if an event  occurs to the  knowledge of the General  Partner or its  Affiliates
leading to a reduction or an increase of such Proved  Reserves of more than 10%,
excluding reduction as a result of normal production,  an additional computation
and estimate  similar to that  described in Section  10.4C shall be sent to each
Unit Holder as soon as possible.

      E. By March 15 of each year, the General  Partner will furnish a report to
each Unit Holder  containing such  information as is pertinent for completion of
his respective federal, state and other income tax returns.

      F. The General  Partner  shall file on a timely basis with the  Securities
and  Exchange  Commission  all filings  required  to be made by the  Partnership
pursuant to the Securities Act of 1933, the Securities  Exchange Act of 1934 and
the rules and regulations promulgated thereunder. The General Partner shall make
available  to any Unit  Holder  upon the Unit  Holder's  request,  copies of any
report filed by or on behalf of the Partnership with the Securities and Exchange
Commission.  The General  Partner  shall cause a copy of any reports sent to the
Unit Holders under  paragraphs A, C, D and E hereof to be sent to the California
Commissioner of Corporations.

      G.  The  General  Partner  agrees  to  make  all  relevant  financial  and
engineering  reports  available  for  review by a Unit  Holder on request at the
offices of the Partnership.

      Section 10.5  Elections
      -----------------------

      The General  Partner  shall cause the  Partnership  to make all  elections
required  or  permitted  to be made by the  Partnership  under  the Code and not
otherwise  expressly  provided  for in this  Agreement,  in the manner  that the
General Partner believes will be most  advantageous to the Unit Holders,  except
that (i) the General  Partner  shall not be  required to make an election  under
Section 754 of the Code or  corresponding  provisions of applicable state income
tax laws,  and (ii) the General  Partner  shall make the election  under Section
263(c) of the Code to expense all intangible  drilling and development  costs in
the initial  Partnership  federal income tax return filed for the Fiscal Year in
which such costs are incurred.

                                      -75-
<PAGE>

                                 ARTICLE ELEVEN

                               AMENDMENTS; MERGER

      Section 11.1  Proposal and Adoption of Amendments Generally
      -----------------------------------------------------------

      A.  Notwithstanding  anything to the contrary herein,  the General Partner
may, without prior notice or Consent of any Unit Holder,  amend any provision of
this Agreement (including an amendment to admit an additional General Partner or
a successor  General  Partner in the event of the  withdrawal  or removal of the
General  Partner) if, in its opinion,  such  amendment  does not have a material
adverse  effect upon the Unit Holders or otherwise is permitted by Section 8.1F.
Amendments  to this  Agreement  to reflect  the  addition or  substitution  of a
Limited Partner or the admission of a successor General Partner shall be made at
the time and in the manner  referred to in Section 11.2. Any other  amendment to
this Agreement may be proposed by the General Partner or holders of at least 10%
of the outstanding  Units. The Person or Persons  proposing such amendment shall
submit  a  Notification  containing  (a) the text of such  amendment,  and (b) a
statement of the purpose of such amendment. The General Partner shall, within 15
days after receipt of any proposal under this Section 11.lA,  give  Notification
to the  Depositary  and all Unit  Holders of such  proposed  amendment,  of such
statement of purpose and of such opinion of counsel, together, in the case of an
amendment  proposed by any Unit Holders,  with the views, if any, of the General
Partner with respect to such proposed amendment.

      B.  Amendments to this  Agreement  shall be adopted if: (i) in the case of
amendments referred to in Section 11.2, the conditions specified in Section 6.5B
shall have been satisfactorily completed and the Partnership shall not have been
furnished with an opinion of counsel to the  Partnership to the effect that such
amendment  will  adversely  affect the  classification  of the  Partnership as a
partnership  for federal  income tax  purposes;  (ii) in the case of  amendments
referred to in Section 8.lF, the conditions specified in said Section shall have
been  satisfactorily  completed;  or (iii) in the case of all other  amendments,
such amendment shall have been Consented to by Unit Holders owning more than 50%
of the  outstanding  Units  (unless  such  Consent is not  required  pursuant to
Section 1l.1A of this Agreement); provided, however, that no such amendment may:
(a) enlarge the obligations of the General Partner or any

                                      -76-
<PAGE>

Unit Holder under this Agreement or convert the interest of any Unit Holder into
the  interest of a General  Partner or modify the limited  liability of any Unit
Holder without the Consent of such Partner or Unit Holder; (b) modify the method
provided in Article Five of determining and allocating or  distributing,  as the
case may be, each item of income,  gain, loss, cost, deduction or credit without
the Consent of the  General  Partner if it would be  adversely  affected by such
modification,  and any Unit  Holder  which may be  adversely  affected,  by such
modification;  (c) amend  Sections 4.9,  4.10,  6.1, 6.2, 6.3 or 6.4 without the
Consent of the General Partner;  or (d) amend Sections 2.3, 4.2, 4.4, 4.5, 4.11,
this  Article  Eleven or Section  12.3  unless the  Consent of the Unit  Holders
owning at least two-thirds of the outstanding Units is obtained.

      C. Upon the adoption of any  amendment to this  Agreement,  the  amendment
shall  be  executed  by the  General  Partner  (both  on its own  behalf  and as
attorney-in-fact  for any Substituted  Limited Partners) and the Depositary and,
if  necessary  or  appropriate,  shall be recorded in the proper  records of the
State and any other state in which the Partnership is then doing business.

      Section 11.2  Amendments on Admission or Removal of Partner
      -----------------------------------------------------------

      If this  Agreement  or the  Certificate  of Limited  Partnership  shall be
amended to reflect  the  withdrawal  or removal of the  General  Partner and the
continuation of the business of the Partnership,  such amendment shall be signed
by the  remaining  or  successor  General  Partner  and by the  removed  General
Partner.

      Section 11.3  Merger
       --------------------

      The Partnership may merge or consolidate  with or into one or more limited
partnerships,   general   partnerships,   corporations,   business   trusts   or
associations,  or  unincorporated  businesses if (i) Consented to by the General
Partner and by Unit Holders  owning more than 50% of the  Outstanding  Units and
(ii)  such  merger  or  consolidation  is  permitted  under the Act or any other
applicable law.

                                      -77-
<PAGE>

      Section 11.4  Exchange Offers
      -----------------------------

      Neither the General  Partner nor its  Affiliates  will make or cause to be
made any offer to a Unit Holder to exchange his Units for a security unless:

            (a) such offer is made after the  expiration  of two years after the
      Partnership commenced operations;

            (b) such offer is made to all Unit Holders;

            (c) such  offer is on a basis no more  advantageous  to the  General
      Partner, exchange offeror or underwriter of the offer and their respective
      affiliates,  than to Unit Holders,  provided,  however, that the foregoing
      clause  shall  not  prohibit,  if  permitted  under  applicable  state and
      self-regulatory  organization guidelines:  (i) compensation (including the
      issuance of  securities)  to such  persons in exchange  for such  persons'
      other balance sheet assets (nonPartnership interests) for inclusion of the
      General  Partner in the exchange  offer or tender of other  balance  sheet
      assets of the General Partner, underwriter or their affiliates, based upon
      exchange  valuation  principles  consistent  with these  guidelines;  (ii)
      compensation  to an underwriter  for services in connection with the offer
      provided, however, that no compensation shall be payable to an underwriter
      for the tender of interests by the exchange offeror, its affiliates or the
      underwriter;   and  (iii)   compensation   that  may  be  permitted  under
      subparagraph (g) below;

            (d) payments for services  rendered by any Person in connection with
      the exchange are fully supportable, actual and necessary;

            (e) in computing the exchange  ratio,  the value of reserves used is
      supported by an appraisal prepared by an independent  petroleum consultant
      as of the most current  feasible date, and the value of all other material
      balance sheet assets,  including  undeveloped  acreage,  is at fair market
      value as determined by an independent qualified appraiser;

            (f) the  offer is made  pursuant  to all  registration  requirements
      under both federal and state laws;

                                      -78-
<PAGE>

            (g) if the exchange  offeror is a corporation,  the offer is made in
      compliance with applicable NASAA  Guidelines for corporate  securities and
      may not allow a security with different rights and privileges to be issued
      to the General  Partner or its  Affiliates  unless there is  justification
      therefor;

            (h)  the  offer  does  not  allow  for an  accelerated  reversionary
      interest to the General  Partner  without  regard to the  existing  payout
      provisions;

            (i)  additional  shares  or units to be  issued  pursuant  to future
      reevaluation of properties include reevaluation of similar properties held
      by Unit Holders;

            (j) there will be no  overrides  newly  established  to the  General
      Partner,  exchange  offeror,  or  affiliates  on  leases to be part of the
      exchange and any overrides to be  established  to  non-affiliates  on such
      leases and the basis therefor are disclosed in detail;

            (k) all  properties  to be exchanged are to be evaluated on the same
      basis or standard of evaluation; and

            (1) material  properties of the General Partner or its Affiliates to
      be exchanged have complete cost disclosure;  provided,  however,  that the
      General  Partner may avoid any of such  conditions  and  restrictions  for
      which waivers or consents are obtained from  appropriate  state securities
      administrators  or agencies.  Notwithstanding  the foregoing,  neither the
      General  Partner nor its Affiliates  shall have any obligation to make any
      exchange offer to Unit Holders.

                                 ARTICLE TWELVE

                          CONSENTS, VOTING AND MEETINGS

      Section 12.1  Methods of Giving Consent
      ---------------------------------------

      Any Consent of a Unit Holder  required by this Agreement may be given by a
Unit  Holder as  follows:  (i) at a meeting,  in person,  by a written  proxy or
signed writing directing the

                                      -79-
<PAGE>

manner in which it desires that its vote be cast, which writing must be received
by the General  Partner prior to such meeting,  or (ii) without a meeting,  by a
signed  writing  directing the manner in which it desires that its vote be cast,
which  writing  must be received by the General  Partner  prior to the date upon
which the votes of Unit  Holders  are to be  counted.  Any Unit Holder may waive
notice of or  attendance  at any  meeting of the Unit  Holders and may execute a
signed written consent. Only the votes of Unit Holders of record on the date set
by the General  Partner  (which date shall be not less than 10 days and not more
than 60 days  prior to the date set for the  meeting or  consent),  whether at a
meeting or otherwise,  shall be counted.  Units held by the General  Partner and
its Affiliates  which, as a result thereof,  cannot be voted, will not be deemed
outstanding  for purposes of  calculating  whether a sufficient  number of Units
have  consented.  The laws of the State  pertaining  to the  validity and use of
corporate proxies shall govern the validity and use of proxies given by the Unit
Holders.

      Section 12.2  Meetings of Unit Holders
      --------------------------------------

      The General  Partner may at any time call a meeting of the Unit Holders or
for a vote,  without a meeting,  of the Unit  Holders on matters  upon which the
Unit Holders are entitled to provide  their  Consent,  and shall call for such a
meeting or vote upon receipt by the General  Partner of a request  therefor made
by Unit Holders owning at least 10% of the  outstanding  Units as of the date of
receipt  of such  request.  Within 15 days of the  receipt of the  request,  the
General  Partner  shall  notify all Unit Holders of record as of the date set by
the General Partner (which date shall be not less than 10 days and not more than
60 days  prior to the date set for the  meeting or  consent)  as to the time and
place of the meeting,  if called,  and the general  nature of the business to be
transacted  thereat,  or if no such  meeting has been  called,  of the matter or
matters to be voted upon and the date upon which the votes will be counted.  The
date of any meeting of Unit Holders or the date upon which such votes, without a
meeting,  will be counted  (regardless of whether the General Partner has called
for such meeting or vote upon the request of Unit Holders or has initiated  such
event  without  such  request)  shall be not less  than 30 or more  than 60 days
following mailing of the Notification thereof by the General Partner. Units held
by the General Partner and its Affiliates may not be voted by them. All expenses
of the meetings, voting and such Notification shall be borne by the Partnership.

                                      -80-
<PAGE>

      Section 12.3  Limitations on Requirements for Consents
      ------------------------------------------------------

      Notwithstanding  anything to the contrary contained in this Agreement, the
powers of the Unit Holders set forth in Sections 4.5D,  6.3A,  6.6A,  6.7, l1.lA
and 12.5 shall not be deemed to be granted to the Unit Holders or exercisable by
them if counsel for the Partnership or counsel designated by Unit Holders owning
at least 10% of the outstanding  Units renders an opinion to the effect that the
grant or the exercise of those powers or the result thereof is prohibited by the
Act, will impair the limited  liability of the Depositary or the Unit Holders or
will affect the  classification  of the Partnership as a partnership for federal
income tax purposes.

      Section 12.4  Submissions to Unit Holders
      -----------------------------------------

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

      Section 12.5  Acting Without Concurrence of General Partner
      -----------------------------------------------------------

      Except as limited by Sections  12.3 and 11.lB,  Unit  Holders  owning more
than 50% of the outstanding Units,  without the necessity for concurrence by the
General Partner may vote to:

            (a) amend the Agreement;

            (b) dissolve the Partnership;

            (c) remove the General Partner and elect a new General Partner;

            (d) approve or disapprove  the sale of all or  substantially  all of
      the assets of the Partnership; or

            (e) cancel or amend the terms of any contract for services  with the
      General Partner or any Affiliate which shall be without penalty,  provided
      30 days' written notice is given.

                                      -81-
<PAGE>

                                ARTICLE THIRTEEN

                                 THE DEPOSITARY

      Section 13.1  Depositary Receipts
      ---------------------------------

      A. Within 45 days of the  Activation of the  Partnership,  the  Depositary
will execute and forward to each Unit Holder Depositary  Receipts evidencing the
ownership  by the Unit Holder as of the date of  Activation  the Units for which
such Unit Holder subscribed.

      B.  Pursuant  to the terms of  Section  8.1,  upon  receipt  of a properly
executed  application for transfer,  the Depositary  shall within three business
days execute and forward Depositary Receipts to the respective transferees.

      C. Depositary Receipts may be endorsed with, have incorporated in the text
thereof or be accompanied  by such legends or recitals,  attachments or changes,
not  inconsistent  with the provisions of this Agreement,  as may be required to
comply with any applicable law or regulation,  or to conform with any usage with
respect thereto,  or to indicate any special  limitation or restriction to which
any particular Unit may be subject,  or as may for any other reason be required.
Each  Depositary  Receipt shall be duly executed on behalf of the  Depositary by
the  manual  or  facsimile  signature  of  a  duly  authorized  officer  of  the
Depositary.  No  Depositary  Receipt shall be entitled to any benefit under this
Agreement or be valid for any purpose unless it bears such signature.

      D. All Depositary  Receipts  executed by the Depositary  shall be numbered
consecutively.  The Unit Holder of each  numbered  Depositary  Receipt  shall be
registered on the books of the Depositary maintained pursuant to Section 13.3A.

      E. Upon  surrender  by the Unit  Holder  in  person or by duly  authorized
attorney  of one or  more  Depositary  Receipts  at the  Depositary's  principal
office, or at any other office it may designate for the purpose, for split-up or
combination,  the Depositary shall,  subject to the terms and conditions of this
Agreement  and the  Depositary  Receipt,  execute  and  deliver  one or more new
Depositary  Receipts in authorized  denominations  as requested,  evidencing the
same  aggregate  number  of  Units as  evidenced  by the  Depositary  Receipt(s)
surrendered.

                                      -82-
<PAGE>

      F. If any Depositary Receipt is mutilated,  destroyed, lost or stolen, the
Depositary shall execute and deliver a Depositary Receipt in like form and tenor
in  exchange  and  substitution  for the  mutilated,  destroyed,  lost or stolen
Depositary Receipt; provided, that the Depositary may require the Unit Holder to
(i) surrender any mutilated  Depositary Receipt,  (ii) file with the Depositary,
in a form and  manner  satisfactory  to it,  proof of the  destruction,  loss or
theft, and of such Unit Holder's ownership,  of the Depositary Receipt and (iii)
furnish to the Depositary  reasonable  indemnification  (including posting of an
indemnity bond) satisfactory to the Depositary.

      G. As a condition  precedent  to the  execution  and  delivery,  transfer,
split-up,  combination,  surrender,  conversion  or exchange  of any  Depositary
Receipt,  the Depositary may require (i) payment of any fee required  hereby and
payment of a sum sufficient for  reimbursement of any tax or other  governmental
charge with respect thereto,  (ii) production of proof  satisfactory to it as to
the identity and  genuineness  of any signature or  endorsement or as to the due
authorization  of the action,  (iii) filing of such information and execution of
such  documents by the  transferor  and/or the  transferee as may be required by
this  Agreement or the  Depositary  Receipt or otherwise is deemed  necessary or
appropriate by the Depositary and (iv) compliance with such other  conditions as
may be imposed under  applicable laws and  regulations.  The Depositary shall be
entitled to rely upon, and shall not have any liability to the Partnership,  the
General Partner, any Unit Holder or any other Person with respect to the content
of any proof  submitted to it pursuant to this Section 13.lG,  and shall have no
obligation to inquire as to the truth and accuracy  thereof  (except for acts or
omissions resulting from the Depositary's gross negligence).

      H.  All  Depositary  Receipts  surrendered  to  the  Depositary  shall  be
canceled. The Depositary shall retain all canceled Depositary Receipts and other
instruments,   documents  and  records  in  accordance  with  the  policies  and
regulations  of the  Depositary,  federal  securities  laws  and the  rules  and
regulations  of any  securities  exchange  or market  upon which the  Depositary
Receipts may be listed or quoted.

                                      -83-
<PAGE>

      Section 13.2  Depositary or Affiliate as Transfer Agent and Registrar
      ---------------------------------------------------------------------

      The  Depositary  or an  Affiliate  shall  also be the  transfer  agent and
registrar for the Depositary  Receipts unless  prohibited by law,  regulation or
any applicable rule of a securities exchange or market. In its capacity as such,
subject to the terms and  conditions of this  Agreement,  the Depositary or such
Affiliate shall transfer record  ownership of the Units by bookkeeping  entry on
the books and records maintained pursuant to Section 13.3A.

      Section 13.3  Duties of Depositary
      ----------------------------------

      A.   In performing its duties hereunder the Depositary shall:

                (i) maintain at its principal  office a current list of the full
      name and last known home or  business  address  of each Unit  Holder,  set
      forth in alphabetical  order which list shall be available during ordinary
      business hours for examination and copying at the reasonable request,  and
      at the expense, of any Unit Holder or his duly authorized  representative,
      or copies of such list may be requested in writing for any proper  purpose
      by any Unit Holder or his duly  authorized  representative;  provided that
      the  reasonable  costs  of  fulfilling  such  request,  including  copying
      expenses,  shall  be paid by the  Unit  Holder  making  such  request.  In
      addition, the Depositary shall, as required, furnish to the Securities and
      Exchange  Commission,  any report,  financial  statement or  communication
      received  from  the  Partnership  or the  General  Partner  that  is  made
      generally available to Unit Holders;

                (ii)  keep all  records  required  to be kept,  for the  periods
      specified,  and shall file with the Securities and Exchange Commission all
      materials  required to be so filed,  under the Securities  Exchange Act of
      1934, by virtue of its status as Depositary.  A copy of any material filed
      by the Depositary with the Securities and Exchange  Commission  shall also
      be provided to the Partnership  within two business days after its filing.
      To  the  extent  that  any  such  filing  requires  information  from  the
      Partnership or the

                                      -84-
<PAGE>

      General Partner,  such information shall be furnished to the Depositary by
      the  General  Partner in  sufficient  quantity  and a  sufficient  time in
      advance  of the date the  filing  is  required  to be made to  enable  the
      Depositary to comply with such requirements; and

               (iii) keep books at its  corporate  office  for the  transfer  of
      Depositary Receipts.  The books shall be open during normal business hours
      for inspection by the Unit Holders. The Depositary may, however, close the
      transfer books, at any time or from time to time, when deemed expedient by
      it in connection with the performance of its duties hereunder.

      B. Upon the request of the  Partnership,  the Depositary shall as promptly
as  practicable  furnish to the  Partnership a list, as of the date specified in
such  request,  of  the  names,   addresses  and  social  security  or  taxpayer
identification numbers of all Unit Holders.

       Section 13.4  Depositary Not a Trustee, Issuer, etc.
       ----------------------------------------------------

      The Depositary is not a trustee and it is intended that the Depositary, in
its  capacity  as  depositary,  shall  not  be  deemed  to  be  an  "issuer"  or
"underwriter"  of  securities  under the federal  securities  laws or applicable
state  securities  laws;  it being  expressly  understood  and  agreed  that the
Depositary,  in its capacity as a Limited Partner of the Partnership,  is acting
only in a ministerial capacity.

      Section 13.5  Indemnification of the Depositary
      -----------------------------------------------

      The Depositary  shall be indemnified by the Partnership to the same extent
and subject to the same conditions and  restrictions as provided in Section 4.10
of this Agreement with respect to the indemnification of the General Partner.

      Section 13.6  Limitation of Expense Reimbursements
      --------------------------------------------------

      The  expenses of the  Depositary  otherwise  reimbursable  to it under the
terms of this  Agreement  and the fees payable to it hereunder  shall not exceed
the lesser of (i) an amount equal to 90% of the competitive price which would be
charged by nonaffiliated persons rendering similar services in the same or

                                      -85-
<PAGE>

comparable  geographic location or (ii) the costs and expenses of the Depositary
incurred in rendering such services.

                                ARTICLE FOURTEEN

                            MISCELLANEOUS PROVISIONS

      Section 14.1  Notification to the Partnership or the General Partner
      --------------------------------------------------------------------

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

      Section 14.2  Binding Provisions
      --------------------------------

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

      Section 14.3  Applicable Law
      ----------------------------

      This Agreement shall be construed and enforced in accordance with the laws
of the State.

      Section 14.4  Separability of Provisions
      ----------------------------------------

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

                                      -86-
<PAGE>

      Section 14.5 Appointment of the General Partner as Attorney-in-Fact
      -------------------------------------------------------------------

      The  Depositary,   by  the  execution  of  this   Agreement,   irrevocably
constitutes  and appoints  the General  Partner as its true and lawful agent and
attorney-in-fact  with full power and authority in its name,  place and stead to
execute,  acknowledge,  deliver,  swear to,  file and record at the  appropriate
public offices such documents, instruments and conveyances that may be necessary
or  appropriate  to carry out the  provisions  or  purposes  of this  Agreement,
including  without  limitation:  (i) the Certificate of Limited  Partnership and
other certificates and instruments  (including  counterparts of this Agreement),
and any  amendment  thereof,  including  any  amendment  substituting  a Limited
Partner  pursuant to Section 8.2, that the General Partner deems  appropriate to
form,  reform,  qualify or continue the Partnership  (or a new partnership  with
substantially  the same provisions as the Partnership) as a limited  partnership
(or a partnership in which the Partners will have limited  liability  comparable
to that provided by the Act) in the  jurisdiction  in which the  Partnership may
conduct  business;  (ii) all  amendments to the foregoing and to this  Agreement
necessary  to admit  into the  Partnership  additional  or  substituted  General
Partners  pursuant  to Section  11.2;  (iii) all  instruments  that the  General
Partner deems appropriate to reflect a change or modification of the Partnership
in accordance  with the terms of this Agreement  (including  those  necessary to
reflect  additional Capital  Contributions);  and (iv) all conveyances and other
instruments   that  the  General  Partner  deems   appropriate  to  reflect  the
dissolution and termination of the Partnership.

      Section 14.6  Entire Agreement
      ------------------------------

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

                                      -87-
<PAGE>

      Section 14.7  Paragraph Titles
      ------------------------------

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

      Section 14.8  Counterparts
      --------------------------

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

                               GEODYNE PRODUCTION COMPANY,
                               as General Partner

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

                               GEODYNE DEPOSITARY COMPANY,
                               as the Limited Partner

                               By:  // Michael E. Luttrell //
                                    -----------------------------
                                      Michael E. Luttrell
                                      Executive Vice PresidentFIRST AMENDMENT TO
                     CERTIFICATE OF LIMITED PARTNERSHIP AND
                               FIRST AMENDMENT TO
                       AGREEMENT OF LIMITED PARTNERSHIP OF
                        PAINEWEBBER/GEODYNE ENERGY INCOME
                            LIMITED PARTNERSHIP III-A

      The undersigned,  desiring to amend its certificate of limited partnership
pursuant to the Oklahoma  Revised Uniform Limited  Partnership  Act, as amended,
Okla.  Stat.,  tit. 54, Section 301 et seq. (1991) (the "Act"), do hereby state,
and   desiring   to   amend   the   Agreement   of   Limited    Partnership   of
PaineWebber/Geodyne Energy Income Limited Partnership III-A dated as of November
20, 1989, do hereby agree:

      1. The name of the  limited  partnership  is  "Painewebber/Geodyne  Energy
Income Limited Partnership III-A."

The date of  filing  of the  original  Certificate  of  Limited  Partnership  is
November 22, 1989.

      2. The Certificate of Limited  Partnership is hereby revised to change the
name of the Limited Partnership to the following:

             Geodyne Energy Income Limited Partnership III-A

      3. (a) The Certificate of Limited  Partnership is hereby revised to change
the  address of the limited  partnership,  which is the same  address  where the
records of the limited  partnership are kept, to Two West Second Street,  Tulsa,
Oklahoma 74103.

         (b) The Certificate of Limited Partnership is hereby  revised to change
the name and address for the registered agent for  service of process to Geodyne
Production Company, Two West Second Street, Tulsa, OK 74103.

      4. The Certificate of Limited  Partnership is hereby revised to change the
name, mailing address, and business address of the general partner as follows:

                         Geodyne Production Company
                         Two West Second Street
                         Tulsa, OK  74103.

      5. The latest day upon which the  limited  partnership  is to  dissolve is
November 20, 2009.

                                      -1-
<PAGE>

      6. The Agreement of Limited  Partnership  is hereby revised to replace the
first sentence of Section 2.1 with the following:

             The Limited  Partnership  shall be conducted under the name Geodyne
             Energy Income Limited Partnership III-A.

      7. The Agreement of Limited  Partnership  is hereby revised to replace the
third and fourth sentences of Section 2.1 with the following:

             The  office  and  principal   place  of  business  of  the  Limited
             Partnership  shall  be c/o  Geodyne  Production  Company,  Two West
             Second  Street,  Tulsa,  Oklahoma  74103.  The agent for service of
             process on the  Limited  Partnership  shall be  Geodyne  Production
             Company, Two West Second Street, Tulsa, OK 74103.

      8. In all other respects,  the Agreement of Limited  Partnership is hereby
ratified and confirmed.

DATED:    February 24, 1993
                                         GENERAL PARTNER:

                                         Geodyne Production Company

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

                                         Geodyne Production Company
                                         Attorney-in-fact for any
                                         Substituted Limited Partners

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

                                         LIMITED PARTNER:
                                         Geodyne Depositary Company

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

                                      -2-

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