Document:

Guayuyaco Association Contract

 
EXHIBIT 10.41

 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
 CONTRACT Pag. 1

 
ASSOCIATION CONTRACT 
 

	 ASSOCIATE
	  	 :
	  	 ARGOSY ENERGY INTERNATIONAL

	 SECTOR
	  	 :
	  	 GUAYUYACO

	 EFFECTIVE DATE
	  	 :
	  	 September 30, 2002

 
The contracting parties,
namely: on the one hand, Empresa Colombiana de Petróleos, hereinafter ECOPETROL, a State industrial and commercial company, authorized by Law 165 of 1948, currently governed by its by-laws, amended by Decree 1209 of 15 June 1994, and
2933 of 10 December 1997, domiciled in Bogota, represented by VICTOR EDUARDO PEREZ H, of legal age, bearer of Colombian Identity Card No. 19 ́083.549, issued in Bogota, domiciled in Bogota, who states that: 1. In his capacity as
President of ECOPETROL, he acts herein on behalf of said Company and 2. The ECOPETROL Board of Directors authorized him to enter into this Contract, as witnessed by Minutes No. 2263 of 16 November 2001; and on the other hand,
ARGOSY ENERGY INTERNATIONAL, a Limited Partnership established pursuant to the laws of the State of UTAH, with its main domicile in the United States of America, hereinafter THE ASSOCIATE, with a duly established Colombian branch and
its main domicile in Santafe de Bogota, pursuant to Public Deed No. 5323 of 25 October 1983, granted by the Seventh Public Notary (7th) of the Bogota Circle, represented by ALVARO JOSE CAMACHO RODRIGUEZ, of legal age, bearer of Colombian
Identity Card No. 79 ́142.747 issued in Usaquen, who states that: 1. He acts, in his capacity as legal representative of ARGOSY ENERGY INTERNATIONAL, 2. He is fully authorized to execute this contract, as certified by the
certificate of incorporation and legal representation issued by the Chamber of Commerce of Bogota, and 3. THE ASSOCIATE, assures that it has the financial capability, the technical competence, and the necessary professional skills to
perform the activities provided for in this contract. 
 
Based on
the aforementioned conditions, ECOPETROL and THE ASSOCIATE hereby certify that they have reached an agreement, based on the following clauses: 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
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FIRST: That on 27
May 1987, ECOPETROL, ARGOSY ENERGY INTERNATIONAL and NEO ENERGY INC. entered into the Shared Risk Contract for the “SANTANA” sector (hereinafter CPR SANTANA), which was legalized through Public Deed No. 1789 of 3 June 1987, granted
by the Tenth (10th) Notary Public of the Bogota Circle. 
SECOND: That in exercise of the assignment right established in Clause 27 of
the CPR SANTANA, THE ASSOCIATE is currently 100% constituted by ARGOSY ENERGY INTERNATIONAL. 
THIRD: That
ECOPETROL’s Board of Directors, as certified in Minutes 2251 of 9 February 2001, approved a negotiation scheme to enter into new Association Contracts on Contracted Areas, excluding the reservoirs currently producing under the Association
Contracts in force, which meet certain conditions. 
FOURTH: That through its note ECP- 60 dated 6 March 2001, ECOPETROL informed The
Associates of the various Association Contracts in their Development Phase, the approval that is mentioned in the above clause, and they were requested to report to ECOPETROL their interest to enter into a new Association Contract for
Adjacent Prospects. 
FIFTH: That through note No. GIO-56 of 26 April 2001, THE ASSOCIATE of CPR Santana stated its interest to
accept ECOPETROL’s offer for the exploration of adjacent prospects. 
SIXTH: That through note No. GIO-127 of 9 November
2001, THE ASSOCIATE of CPR SANTANA presented the terms of its proposal for the new contract, called “Guayuyaco”. 
SEVENTH: That ECOPETROL and THE ASSOCIATE have visualized the Guayuyaco prospect as an Adjacent prospect. 
EIGHTH: That THE ASSOCIATE has presented the Inchiyaco prospect with the probability of it being considered adjacent. 
NINTH: That ECOPETROL considers that a well on the structure called Inchiyaco by THE ASSOCIATE, has the probability to be considered a development well of the Mary Commercial Field, which is part of the
CPR Santana. 
TENTH: That notwithstanding the above, for both Parties is important to carry out the exploration and development
of the structure called Inchiyaco, and to this effect, they herein establish the conditions under which the wells drilled on such structure shall be 

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	 	 GUAYUYACO ASSOCIATION
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treated, depending if it is confirmed as an adjacent prospect or as a development well of the
commercial reservoirs in the Mary Commercial Field. 
ELEVENTH: That the companies that make up THE ASSOCIATE in this contract
and THE ASSOCIATE in the CPR Santana have agreed that ARGOSY ENERGY INTERNATIONAL shall be the Operator in THE CONTRACT. 
 
In view of the foregoing conditions, ECOPETROL and THE ASSOCIATE hereby declare that they have entered into the contract contained in the
following Clauses: 
 
CHAPTER I - GENERAL
PROVISIONS 
 
CLAUSE 1 - PURPOSE OF THIS CONTRACT

 
1.1    The purpose of this
contract is the exploration of the Contracted Area and the exploitation of Hydrocarbons of Colombian property that may be found in such area, described in Attachment A that is part of this contract. 
1.2    In compliance with Article 1 of Decree 2310 of 1974, the exploration and exploitation of Hydrocarbons of Colombian
property will be carried out by ECOPETROL, a company that may carry out said activities either directly or through contracts with private parties. Based on the aforementioned provision, ECOPETROL has agreed with THE ASSOCIATE to
explore the Contracted Area and exploit the Hydrocarbons that may be found in it, in compliance with the terms and conditions set forth herein, Attachment A, Attachment B (Operations Agreement), and Attachment “C” which become an integral
part of this contract. 
1.3    Without prejudice of the provisions in this contract, it is understood that THE
ASSOCIATE shall have the same rights and obligations before the Colombian law as those who exploit State-owned Hydrocarbons within the country, with regard to the hydrocarbons produced in the Contracted Area and their respective portion.

1.4    ECOPETROL and THE ASSOCIATE agree to carry out Exploration and Exploitation Works on the lands
located in the Contracted Area, according to the terms set forth herein, and to split the costs and risks of same in the proportions and pursuant to that provided herein, and that the Hydrocarbons produced shall belong to each of the Parties as per
shares established herein. 

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	 	 GUAYUYACO ASSOCIATION
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CLAUSE 2 - CONTRACT
APPLICATION 
This contract is applied to the Contracted Volume, identified in Clause 3 and Attachment “A” hereto. 
CLAUSE 3 - CONTRACTED AREA 
The
Contracted Area is called “GUAYUYACO”, with an area of twenty one thousand one hundred ninety-one (21,191) hectares and five thousand eight hundred (5,800) square meters, which coincides with the Contracted Area of the CPR Santana and is
located within the municipal jurisdictions of Villa Garzon, Puerto Guzman, and Mocoa in the Department of Putumayo and Piamonte, in the province of Cauca. The commercial reservoirs of the CPR Santana, Mary, Miraflor, Linda and Toroyaco, are
excluded. 
This area and the commercial reservoirs are described in Attachment “A”, which is part of this contract. 
Paragraph 1.- Should any person file a claim asserting ownership of the Hydrocarbons in the subsurface within the Contracted Area, ECOPETROL
shall deal with the case, assuming such obligations as may arise. 
Paragraph 2.- In the event of discovering hydrocarbons in
the Contracted Area and if, through proven methods in the Oil Industry, it is verified that the discovered reservoirs are an extension of the CPR Santana commercial reservoirs, the Parties agree to implement, prior approval by the Ministry of Mines
and Energy, a unified development plan, which must adhere to the hydrocarbon exploitation engineering techniques, as provided for in Clause l6 of the Contract. The foregoing, without prejudice of the special treatment given in this Contract to the
wells drilled on the structure called Inchiyaco. 
Paragraph 3.- To carry out any activity as the purpose of this contract,
which affects or involves the wells, constructions, pipeline, transfer lines and other assets belonging to the Joint Account of the CPR Santana, THE ASSOCIATE shall inform and request authorization from the CPR Santana Parties to carry out
such activity, as well as agree on the terms under which it will be performed. 
Paragraph 4.- Should the Contracted Area extend into
areas that are or have been reserved and declared as included within the National Parks system, THE ASSOCIATE is committed to accept the conditions imposed by the competent authorities, without considering that this Contract has been amended
and without this allowing for any claim whatsoever against ECOPETROL, as agreed under Clause 30 (number 30.2) herein. 

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	 	 GUAYUYACO ASSOCIATION
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CLAUSE 4 - DEFINITIONS. For purposes of this contract, the terms mentioned below shall
have the following meanings: 
4.1    Contracted Area is the land defined in Clause 3 above, and described in
Attachment “A” hereto. 
4.2    Field: Portion of the Contracted Area where there are one or more
structures and/or totally or partially superimposed stratigraphic traps with one or more producing Reservoirs, or in which the capacity to produce Hydrocarbons in commercial quantities has been proven. Such Reservoirs can be found separated
vertically and/or laterally by geological barriers or impermeable strata, or both. 
4.3    Commercial Field:
It is the Field that ECOPETROL accepts that is capable of producing Hydrocarbons in economically exploitable quantity and quality in one or more Production Targets defined by ECOPETROL upon acceptance of commerciality, without
prejudice of the possibility of other Production Targets being found during the development phase. 
4.4    Gas
Field: The field which, based on the information supplied by THE ASSOCIATE, is designated by ECOPETROL as a non-associated natural gas (or free natural gas) producer, when determining commerciality thereof. 
4.5    Executive Committee: This is the body formed within 30 days following the acceptance of the first Commercial Reservoir
to supervise, monitor, and approve all the operations and actions carried out during the term of the contract. 
4.6    Exploration Direct Costs: Monetary expenses incurred reasonably by THE ASSOCIATE for the acquisition of seismic data and the drilling of Exploratory Wells, and for locations, termination,
equipment and tests for such wells, as well as the costs for workover incurred by THE ASSOCIATE for the exploration of new targets located on the wells of the fields currently being developed within the CPR Santana. The Exploration Direct
Costs do not include either administrative or technical support from the home office or the Company central office. 
4.7    Joint Account: The records to be kept on accounting books, in accordance with Colombian law, to credit or debit the share of each Party their corresponding share in the Joint Operation of each
Commercial Reservoir. 
4.8    Budget Execution: Funds actually spent and/or committed in each of the programs and
projects approved for a specific calendar year. 

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	 	 GUAYUYACO ASSOCIATION
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4.9    Structure: The geometric shape with geological closure (anticlinal,
synclinal, etc.) present in the formations, in which fluid accumulations are found. 
4.10    Effective Date:
The date on which the sixty (60) calendar day term expires, as of the date on which this contract is executed, and starting date for all time limits agreed to herein, regardless of the date of approval thereof, regardless of the date of contract
approval by the Ministry of Mines and Energy. 
4.11    Cash Flow: Represented by the physical currency
transactions (revenue and disbursement) that are to be made by the Joint Account to meet the different obligations acquired by the Association in performance of normal operations. 
4.12    Associated Natural Gas: Blend of light Hydrocarbons that exist as a gas layer or solution state gas in the Reservoir, which is produced jointly with liquid
Hydrocarbons. 
4.13    Non-Associated Natural Gas (Production of): Hydrocarbons produced in gaseous state
on the surface and reported at standard conditions, with average values (weighted by production), with an initial gas/oil ratio greater than 15,000 standard cubic feet of gas per barrel of liquid Hydrocarbon, and a molar heptane plus composition
plus (C7 +) below 4.0%. 
4.14    Direct Costs: All expenditures charged to the Joint Account on account of personnel expenses related to personnel directly hired by the Association, procurement of materials and supplies,
contracting of services with third parties, and other general expenses required by the Joint Operation in the normal development of its activities. 
4.15    Indirect Costs: Expenditures charged to the Joint Account, on account of technical and/or administrative support provided by the Operator thorough its own organization to the Joint Operation.

4.16    Interest in Arrears: When dealing with Colombian pesos, it shall mean the rate for payment in
arrears on the date the of the default; when dealing with Dollars of the United States of America, it shall mean the LIBOR (London Interbank Borrowing Offered Rate) prime rate on three-month term deposits in USA currency, plus four per cent (LIBOR
plus 4%). 
4.17    Participating Interest: It is the share in the obligations and rights acquired by each
of the Parties in the exploration and exploitation of the Contracted Area. 

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	 	 GUAYUYACO ASSOCIATION
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4.18    Development Investment: It refers to the amount of money invested
in assets and equipment, to be capitalized as assets for the Joint Operation in a Commercial Field, once the existence thereof has been accepted by the Parties. 
4.19    Hydrocarbons: All organic compounds, made up mainly by the natural blend of carbon and hydrogen, as well as all other accompanying substances or their by-products, excepting helium and rare
gases. 
4.20    Gaseous Hydrocarbons: All those Hydrocarbons produced in gaseous state on the surface and reported
at standard conditions (1 atmosphere of absolute pressure and a temperature of 60° F degrees). 
4.21    Liquid
Hydrocarbons: Crude oil and condensates, as well as those produced in such state as a result of treating the gas, as necessary, reported at standard conditions. 
4.22    Production Targets: These are the reservoir(s) located within the discovered Commercial Field, and proved as commercial producers. 
4.23    Joint Operation: Activities and works either performed or being performed on behalf and at the expense of the Parties.

4.24    Operator: Person designated by the Parties to directly perform the necessary operations, on their account
and without representing them, to explore and exploit the Hydrocarbons found in the Contracted Area. 
4.25    Parties: As of the Effective Date, ECOPETROL and THE ASSOCIATE. Subsequently, and at any time, ECOPETROL on the one hand, and THE ASSOCIATE and/or its assignees, on the
other. 
4.26    Exploration Period: This is the term that THE ASSOCIATE has to fulfill the
obligations set forth in Clause 5 hereunder, which shall not exceed five and a half (5.5) years as of the Effective Date, except for the events considered in Clauses 5 (Item 5.4), 9 (number 9.3), and 34. 
4.27    Exploitation Period: The period elapsed from the expiration of the Exploration Period, or Retention Period, if any,
until the expiration of this contract. 
4.28    Retention Period: The period that may be requested by THE
ASSOCIATE and granted by ECOPETROL to commence the Exploitation Period of each Gas Field discovered within the Contracted Area, which, due to its specific conditions cannot be 

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	 	 GUAYUYACO ASSOCIATION
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developed in the short term and, therefore, requires an additional period to perform feasibility
studies for the construction of infrastructure and/or market development. 
4.29    Development Plan: This is the
guideline document for carrying out the exploitation of each Field in a technical, efficient, and economic manner, and shall contain, among others, the development strategy, environmental considerations, activities to be performed, short and
medium-term production forecasts, a five-year forecast of investments and expenses and, specifically, a description of the projects, operations program, and the budget for the rest of the current calendar year or the following calendar year, as the
case may be. The guidelines for preparing this Development Plan are described in Annex C of this contract. 
4.30    Exploratory Well: This is the well that has been classified as such by THE ASSOCIATE to be drilled or deepened, sidetracked or re-entered, on its own account in the Contracted Area in search
for new reservoirs, or to prove the extension of a Reservoir, or to determine the stratigraphy of an area. In order to comply with the obligations agreed in Clause 5 of this contract, the relevant Exploratory Well will be previously qualified by
ECOPETROL and THE ASSOCIATE. 
4.31    Discovery Well: Is the Exploratory Well in which the
existence of one or more Reservoirs is discovered or proven, which may require a further evaluation to determine whether such reservoir or reservoirs may be commercially exploited. 
4.32    Exploitation Well (or Development Well): Is the well previously considered as such by the Executive Committee for the production of Hydrocarbons discovered in the
Production Targets within the area of each Commercial Field. 
4.33    Budget: Is the basic planning
instrument, through which resources are allocated to specific projects, to be applied within one calendar year or part of it, to meet the targets and objectives proposed by THE ASSOCIATE or the Operator. 
4.34    Long-Term Tests: Are operations performed in one or several producer Exploratory Wells, in order to evaluate the
production conditions and reservoir behavior, with temporary production facilities. 
4.35    Reimbursement: Is the
payment of thirty percent (30%) of the Direct Exploration Costs incurred by THE ASSOCIATE. 
4.36    Exploration
Works: Are operations performed by THE ASSOCIATE in regard to the prospecting and discovery of Hydrocarbons in the Contracted Area. 

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	 	 GUAYUYACO ASSOCIATION
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4.37    Reservoir: Is any rock beneath the surface, in which Hydrocarbons
are accumulated in the pore or fractured spaces, which is producing, or able to produce Hydrocarbons, and which behaves as an independent unit as to its petrophysical and fluid properties, and has a common pressure system throughout its entire
expanse. 
4.38    Commercial Field: Is the Reservoir that ECOPETROL accepts that is able to produce
Hydrocarbons in economically profitable quantity and quality, as defined by ECOPETROL in the moment of accepting commerciality. 
 
CHAPTER II - EXPLORATION 
 
CLAUSE 5 - TERMS AND CONDITIONS 
5.1    THE ASSOCIATE is committed to carry out Exploration Works in accordance with modern standards and practices commonly accepted and used by the international oil industry and in compliance with all
legal and regulatory provisions in force. The Exploration Period shall last two and a half (2.5) years, commencing as of the Effective Date and will be divided in two Phases. The first Phase will last twelve (12) months, and the second Phase will
commence on the calendar day immediately subsequent to the termination of the first Phase for an eighteen (18) month term. 
During the
Exploration Period, THE ASSOCIATE is committed to perform, at least, the following Exploration Works, in which the new targets will be entirely independent from the Commercial Reservoirs in the CPR Santana, and can be located on sectors
adjacent thereto (deeper, shallower, or lateral), taking into account their interpretation or the existing geological model, jointly validated by THE ASSOCIATE and ECOPETROL on the date of execution of this contract. 
The approval, terms and conditions for the use of the wells drilled in performance of the Guayuyaco contract to exploit the commercial reservoirs of the
CPR Santana, shall be subjected exclusively to the previous decision of the CPR Santana Executive Committee. Should the new reservoir be derived from a workover on a well that is producing from the CPR Santana commercial reservoirs, THE
ASSOCIATE shall establish a differentiated measurement system, accepted by the Oil Industry and previously approved by the Ministry of Mines and Energy. 

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During the initial exploration phase (hereinafter “the First Phase”), THE ASSOCIATE
is committed to perform, at least, the drilling of one Exploratory Well until penetrating and, as the case may be, proving the formation likely to produce hydrocarbons in the Area. 
Upon completion of the First Phase, THE ASSOCIATE will have an option to withdraw from the CONTRACT, after having fulfilled the agreed exploratory commitments. During the Second Phase,
whose term is eighteen (18) months, THE ASSOCIATE shall perform the drilling on one Exploratory Well until penetrating and, as the case may be, proving the formations likely to produce hydrocarbons in the Area. 
Upon completion of the Second Phase, the CONTRACT shall come to an end, if its extension has not been requested by THE ASSOCIATE and
authorized by ECOPETROL, pursuant to number 5.2 in this Clause, or no reservoir has been discovered. 
5.2    If THE ASSOCIATE has satisfactorily fulfilled the obligations set forth in Clause 5.1, ECOPETROL, upon request by THE ASSOCIATE, shall extend yearly, for up to three (3)
additional years, the Exploration Period; for such purpose, THE ASSOCIATE, shall report its intention to continue exploring the contracted block with an anticipation of not less than thirty (30) calendar days prior to the date of termination
of the Exploration period, attaching to this request the proposed schedule for the Exploration Work to be performed in each extension period. Within the thirty (30) calendar days following the date of receipt by ECOPETROL of THE
ASSOCIATE’s request, the Parties may agree the Exploration Work program to be performed during these extensions. In the absence of an agreement, THE ASSOCIATE shall be committed to perform Exploration Work in the Contracted Area,
comprising the drilling of one Exploratory Well until penetrating and, if applicable, test the formations likely to produce hydrocarbons in the Contracted Area per year. At the end of each extension, each for a one-year term, THE ASSOCIATE
shall have the option to rescind the Association Contract, after fulfilling the exploratory commitments agreed for each of them. 
Upon
expiration of the Exploration Period, the contract will come to an end, if no Reservoir has been discovered. 
Paragraph: Taking into
account the whereas clauses Eighth, Ninth and Tenth, THE ASSOCIATE, in order to comply with that set forth in this clause, shall be enabled to drill the Inchiyaco well, which will initially be considered an exploratory well. Nevertheless,

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the Parties hereby commit to verify as soon as it is technically possible, the commercial independence
of the commercial reservoirs of the Mary field from the Inchiyaco well reservoirs. In the event of proving, through methods accepted within the Petroleum Industry, that any of the Inchiyaco well reservoirs are an extension of the commercial
reservoirs of the May Commercial Field in the CPR Santana, these reservoirs shall be subject to the conditions set forth in the CPR Santana, including without limitation, the fact that its production shall be part of the CPR Santana, and the
reimbursement that is to be made by ECOPETROL shall be paid in cash, as per the conditions established in the CPR Santana. Notwithstanding the above, this well shall comply with the conditions established herein. 
5.3    THE ASSOCIATE may, at its discretion and at its own expense and risk, carry out additional Exploration Work,
beyond that agreed for the phase of the ongoing Exploration Period. Nevertheless, if THE ASSOCIATE wishes such additional Exploration Work to be credited to compliance with exploratory commitments of the following phase in the Exploration
Period, it must request the appropriate approval from ECOPETROL. If the request is accepted by ECOPETROL, the latter shall determine how and in what amount the transfer of the mentioned obligations shall be made. 
5.4    If at the end of the five and a half (5.5) year Exploration Period, THE ASSOCIATE has drilled one or several
Discovery Wells that may indicate the possible existence of a Commercial Field, upon written request from THE ASSOCIATE, ECOPETROL may authorize the extension of the Exploration Period for a term not exceeding two (2) years, in order for
THE ASSOCIATE to have the opportunity to prove the existence of such Commercial Field. In order to enforce the provisions contained herein, prior to the termination of the Exploration Period and, simultaneously with its request, THE
ASSOCIATE shall supply ECOPETROL with the maps and other descriptions of the area that THE ASSOCIATE may consider capable of producing Hydrocarbons, the Exploration Work program, as well as that of other operations to be carried
out by THE ASSOCIATE, and the budget for carrying out such work at its own expense and risk, to determine the extension of the Reservoir or Reservoirs that have been discovered and to prove the existence of a Commercial Field. If the proposed
work program meets international standards and is aimed at proving the commerciality of the Reservoirs 

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discovered within the agreed term, ECOPETROL shall grant its authorization to perform this
program. 
5.5    Throughout the term of this Contract and pursuant to provisions in Clause 7 herein, THE
ASSOCIATE may conduct Exploration Works and THE ASSOCIATE shall be exclusively responsible for the risks and costs of these activities and, thus, it shall have the full and exclusive control of such activities, without changing the
maximum term of the contract for this reason. 
 
CLAUSE 6 -
SUPPLY OF INFORMATION DURING EXPLORATION 
6.1    ECOPETROL will supply THE ASSOCIATE, with all
the information available it possesses on the Contracted Area, when THE ASSOCIATE so requests. The costs incurred in the reproduction and delivery of said information shall be borne by THE ASSOCIATE. 
6.2    During the Exploration Period, THE ASSOCIATE shall provide ECOPETROL, as it obtains it, and in accordance
with ECOPETROL’s information provision manual, all geological and geophysical information, cores, edited magnetic tapes, process seismic sections, and all support field information, magnetic and gravimetric profiles, all in reproducible
originals, copies of geophysical reports, reproducible originals of all well logs of the wells drilled by THE ASSOCIATE, including a final composite log of each well and copies of the final drilling report, including core sample analysis,
results of production tests and any other information related to the drilling, the study or interpretation of any nature performed by THE ASSOCIATE on the Contracted Area, without any limitation. ECOPETROL is entitled, at all times, to
use the procedures it deems appropriate, to witness all operations and verify all the above mentioned data. 
6.3    The Parties hereby agree that all geological, geophysical and engineering information obtained in the Contracted Area in performance of this contract will be strictly confidential during the three
(3) years following the acquisition date or upon termination of the contract, whatever occurs first. The information released comprises, without limitation, seismic information, potential methods, remote sensors, geochemistry, along with their
corresponding supports, surface and subsurface cartography, well reports, electric logs, formation tests, biostratigraphic, petrophysical and fluid analyses, and production records. In spite of confidentiality stated herein, the Parties agree that
in 

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each case they may exchange such information with companies that are or not associated with
ECOPETROL. It is understood that all that is agreed to herein will take place without prejudice to the obligation to submit to the Ministry of Mines and Energy all the information requested by the latter in compliance with the legal and
regulatory provisions in force. However, it is hereby understood and agreed that the Parties may supply, as they may deem appropriate, all the information that their affiliates, consultants, contractors, and financial entities may request, required
by the relevant authorities having jurisdiction over the Parties or their affiliates, or by regulations from any stock exchange in which the shares of the Parties or related corporations are registered. 
6.4    Within the ninety (90) calendar days following completion of the drilling operations of each Exploratory Well, THE
ASSOCIATE shall advise ECOPETROL in writing on the status of the respective well, its classification derived from the results obtained (Dry or Discovery) and the type of fluids produced, if any. 
 
CLAUSE 7 - BUDGET AND EXPLORATION PROGRAMS 
According to the provisions of this contract, THE ASSOCIATE shall be responsible for preparing the programs, activity schedule, and budget to be
executed in the short term (the following calendar year), and the plan for the following two (2) years, under the estimated budget, to carry out the exploration in the Contracted Area. Said plan, programs, schedule, and budget shall be submitted to
ECOPETROL, for the first time, within the sixty (60) calendar days following the execution of this contract and, subsequently, no later than 15 December every year. Every six months, THE ASSOCIATE shall deliver to ECOPETROL a
technical and financial report listing the different exploratory activities performed, the area’s prospects based on information acquired, the allocated Budget and the exploration costs incurred up to the date of the report, along with the
comments on the reasons for any deviations. At ECOPETROL’s request, THE ASSOCIATE will provide explanations on the report at meetings summoned to this end. The information presented by THE ASSOCIATE in the reports and
aforementioned explanations shall, in no case, be understood as accepted by ECOPETROL. The financial information will be subject to auditing by ECOPETROL 

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within the terms established in Clause 22 of Annex “B” (Operation Agreement) of this
contract. 
 
CLAUSE 8—RETENTION PERIOD 
8.1    If THE ASSOCIATE has discovered a Gas Field and submits the request for commerciality for such Field mentioned in
Clause 9, number 9.1, it may simultaneously request ECOPETROL to grant a Retention Period, fully supporting the reasons for the approval of such Period. 
8.2    The Retention Period shall be requested by THE ASSOCIATE and granted by ECOPETROL. Should the Retention Period be granted, it is understood that the term foreseen in Clause 9 (number
9.1) for ECOPETROL to decide whether it accepts or not the existence of a Gas Commercial Field, shall be postponed for the same term of the Retention Period. 
8.3    The Retention Period shall not exceed four (4) years. Should the term initially granted as a Retention Period be insufficient, ECOPETROL, prior written and duly supported request by
THE ASSOCIATE, may extend the Retention Period for an additional term, without the addition of the initial retention period and the extensions thereof exceeding four (4) years. The Retention Period applies exclusively to the Gas Field area
that ECOPETROL in principle determines as able to produce Hydrocarbons. 
 
CHAPTER III - EXPLOITATION 
 
CLAUSE 9—TERMS AND CONDITIONS 
9.1    To initiate the Joint Operation under
the terms and conditions of this contract, it is understood that the Exploitation Work will begin once the Parties recognize the existence of the first Commercial Field or upon compliance with the provisions of Clause 9 (Item 9.5). The existence of
a Commercial Field will be determined by the drilling, carried out by THE ASSOCIATE in the proposed Commercial Field, of a sufficient number of Exploratory Wells so as to allow to reasonably define the area capable of producing Hydrocarbons
and the commercial nature of the Field. If, after evaluating the results obtained from the Discovery Wells, THE ASSOCIATE considers that it has discovered a Commercial Field, it shall inform ECOPETROL in writing, providing it with

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the studies on which it has based the conclusion, as well as the relevant Development Plan.
ECOPETROL, within a ninety (90) calendar day period, starting on the date on which THE ASSOCIATE supplies all the support documentation and makes a technical presentation to ECOPETROL, the latter must accept or reject the
existence of the Commercial Field. ECOPETROL may request all the additional information deemed necessary within the thirty (30) days following the date of submission of the first support documentation. 
9.2.    Should ECOPETROL accept the existence of the Commercial Field, it shall inform THE ASSOCIATE thereof,
within the period specified in Clause 9, (Item 9.1) and shall specify the area and the Commercial Field, and begin to participate in the exploitation of the Commercial Field discovered by THE ASSOCIATE, as per the terms established
herein. 
9.2.1    ECOPETROL shall reimburse THE ASSOCIATE for thirty percent (30%) of the Direct
Exploration Costs incurred by THE ASSOCIATE, at its own risk and expense, within the Contracted Area and prior to the date of acceptance of commerciality by ECOPETROL for each new Commercial Field discovered, as established in item 9.1
of this Clause, provided such expenses have not been charged previously to another Field. 
9.2.2    The amount of
these costs will be determined in United States dollars, using as a reference date, the date on which THE ASSOCIATE has made the relevant disbursements; therefore, costs incurred in Colombian currency will be calculated at the representative
market exchange rate prevailing on the date established herein and certified by the Banking Superintendence or its substitute agency.  
Paragraph: Once the amount of the Direct Exploration Costs to be reimbursed in USA currency has been determined, such amount will be updated monthly according to the average consumer price index of industrialized countries, as
of the date of disbursement, in constant U.S. dollars at the rate prevailing on the date on which ECOPETROL disburses as provided for in the Operation Agreement (Attachment B) of this contract. Balances to be reimbursed shall also be updated
up to the date in which ECOPETROL reimburses its total share in the respective Commercial Field. 
9.2.3    Reimbursement of Direct Exploration Costs, according to Clause 9 (Item 9.2.1) will be made by ECOPETROL to THE ASSOCIATE as of the date on which the Commercial Field is put on line by
the Operator, through payment of the dollar equivalent to fifty 

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percent (50%) of its direct share in the total production of the Commercial Field, after deducting the
corresponding royalties. 
Paragraph: If dealing with a Commercial Gas Field, such reimbursement shall be made by ECOPETROL to
THE ASSOCIATE, as of the date on which the Commercial Field is put on line by the Operator, through payment of the dollar equivalent to one hundred percent (100%) of its direct share in the total production of the respective Commercial Field,
after deducting the corresponding royalties. 
9.3    Should ECOPETROL, based on the information
supplied, not accept the existence of the Commercial Field as stated in Clause 9 (Item 9.1), it may request that THE ASSOCIATE to submit and carry out an additional work program, to demonstrate Field commerciality. Such work shall be
performed at THE ASSOCIATE’S risk and expense and its duration may not exceed two (2) years. In such case, the Exploration Period for the Contracted Area will be automatically extended for a period equal to that agreed between the
Parties as required for performing the additional work provided for in this Clause. THE ASSOCIATE may submit and carry out a work program that complies with the requested objective, or request the opinion of an expert, according to Clause 28
of this contract, upon request for additional information. Should the expert opinion favor ECOPETROL, THE ASSOCIATE shall meet the requirements and, once again, submit the commerciality studies and a revised Development Plan to
ECOPETROL’s consideration. Should the expert opinion favor THE ASSOCIATE, it shall be understood that ECOPETROL has the necessary information and, hence, the ninety (90) calendar day term, as provided for in Clause 9.1, to
accept or reject the existence of the Commercial Field, shall begin to count as of the date in which ECOPETROL is provided with the expert’s decision. 
9.4    If, after performance of the additional works or if the disagreement has been resolved by an expert, as mentioned in the previous number herein, ECOPETROL accepts the existence of the
Commercial Field referred to in Clause 9 (Item 9.1), it shall commence participating in the Commercial field development operations, as per the terms established herein, and shall reimburse THE ASSOCIATE as provided for in Clause 9 (items
9.2.2 and 9.2.3), thirty percent (30%) of the cost of the additional work requested, referred to in Clause 9 (Item 9.3), and the works performed shall become property of the Joint Account. 

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9.5    Sole Risk Method: If ECOPETROL does not accept the existence
of a Commercial Field, even after the additional work described in Clause 9 (Item 9.3) has been completed, THE ASSOCIATE shall be entitled to perform, at its own account and risk, the work deemed necessary for the exploitation of said Field,
according to the Development Plan presented to ECOPETROL and following good practices of the international petroleum industry, and to recover the cost of such works, and the Direct Exploration Costs incurred by THE ASSOCIATE prior to
the date in which ECOPETROL takes a decision with respect to the commerciality of the respective Field, that have not been charged previously to another Field. For purposes of this Clause, the recovery of the aforementioned costs will be
achieved through THE ASSOCIATE’s participation in the Hydrocarbons produced in the respective Field, minus the royalties referred to in Clause 13, as provided in Clause 14 (Item 14.2.3) of this contract for exploitation under the sole
risk method. 
9.5.1.1.1.1    For purposes of calculating the dollar amount of disbursements made in pesos, the
representative market rate of exchange will be used, as certified by the Bank Superintendence or the agency replacing it, on the date on which THE ASSOCIATE made the disbursements. For purposes of this clause, the value of each barrel of
Hydrocarbon produced in said Field during a calendar month shall be the price of reference agreed on by the Parties. If THE ASSOCIATE wishes to use the right to develop the Reservoir under the sole risk method, it should expressly state so at
the latest during the one hundred and twenty (120) calendar days following the date in which ECOPETROL informs about the non-acceptance of the Commercial Field existence. Should THE ASSOCIATE fail to use this right, the Field and its reserve
zone shall be subjected to the contractual conditions of the CPR Santana. 
9.6    In order to define the limits of
a Commercial Field, all geological, geophysical and data related to wells drilled in said Field, or related thereto, will be taken into consideration. 
9.7    If upon acceptance of one or more Commercial Fields, or after having commenced the sole risk method as per Clause 9 number 9.5, THE ASSOCIATE continues fulfilling its exploratory obligations
agreed in Clause 5, it may simultaneously exploit such Fields before the end of the Exploration Period defined in Clause 4, but the Exploitation Period shall not be considered to have commenced until the expiration date of the former. If 

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dealing with Gas Fields on which ECOPETROL has granted a Retention Period, the Exploitation
Period for each Field shall commence as of the expiration date of the respective Retention Period. 
9.8    If, as
a result of the drilling of Exploration Wells after a decision has been made regarding the existence of a Commercial Field, THE ASSOCIATE proves the presence of additional Hydrocarbon accumulations associated with such Field, it must request
that ECOPETROL expand the Commercial Field area and its commerciality, following the procedure provided for in Clause 9 (Item 9.1). If ECOPETROL accepts commerciality, it shall reimburse THE ASSOCIATE thirty percent (30%) of the
Direct Exploration Costs exclusively related to the expansion of the Commercial Field area, under the terms provided for in items 9.2.2 and 9.2.3. If ECOPETROL does not accept the existence of a Commercial Field, THE ASSOCIATE shall be
entitled to a reimbursement of up to two hundred percent (200%) of the total cost of the work performed at its own account and risk for the exploitation of the Exploratory Wells classified as producers, and up to thirty percent (30%) of the Direct
Exploration Costs incurred by THE ASSOCIATE, related exclusively to the upgrade of the requested area prior to the date in which ECOPETROL makes a decision in this regard. Such reimbursement shall be effected through the production from
Exploratory Wells classified as producers, minus the royalty, following the procedure established in Clause 21 (Item 21.2) up to the percentages stipulated herein. 
 
CLAUSE 10 - OPERATOR 
10.1    The Parties hereby agree that ARGOSY ENERGY INTERNATIONAL is the Operator and, as such, and with the limitations contained herein, shall have full control of all operations and activities
deemed necessary for the technical, efficient, and economic exploitation of the Hydrocarbons that may be found in the area of the Commercial Field. They further agree that, despite the fact that this Contract—entered into for the commercial
purposes provided in Clause 1—ARGOSY ENERGY INTERNATIONAL is the Operator, it is hereby understood by the Parties who have so decided, that for all legal purposes of a labor nature, ARGOSY ENERGY INTERNATIONAL does not act as a
representative of the Parties, but rather as the sole and true employer of the workers it contracts for the operation of a commercial field and, 

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consequently, it shall be responsible for all labor obligations arising from the associated relations
or labor contracts, such as payment of wages and fringe benefits, parafiscal contributions, affiliation and payments on account of pensions, health, and professional risks to the Social Security Integral System as provided for in Law 100 of 1993 and
its regulatory decrees or other regulations which may substitute or amend it. 
10.2    The Operator is committed
to carry out all development and production operations in compliance with the known standards and practices, to which end it shall use the best technical methods and systems required for the economic and efficient exploitation of the Hydrocarbons
and to apply all relevant legal and regulatory provisions. Likewise, it shall, in a timely manner, provide the Parties with the reports and documents set forth in the contract, as well as any other information required by the Executive Committee
with regard to the Joint Account and/or Operation. 
10.3    In view of the above and, considering that for the
performance of and compliance with the Commercial Field operation, ARGOSY ENERGY INTERNATIONAL will perform all its activities using its own resources, with technical and administrative autonomy, such Operator shall be considered an entity
different from the Parties for all purposes of this contract, as well as for the application of civil, labor, and administrative law, and for its relations with the personnel hired in accordance with Clause 32. 
10.4    The Operator shall have the right to resign from its position, by means of a written notice given to the Parties at
least six (6) months prior to its effective date of resignation. The Executive Committee shall designate the new Operator in compliance with Clause 19 (Item 19.3.5). In the event that the Operator designated by the Executive Committee were a third
party, other than the Parties hereto, a contract must be executed between the Parties and the new Operator. 
10.5    The Operator shall carry out the operations provided for in this contract in a diligent, responsible, efficient, technically and economically appropriate, whereby it is understood that it shall, in
no way be responsible for errors of judgment, or losses or damage not resulting from the Operator’s gross negligence. 
10.6    The Operator shall be entitled to perform any work through a contractor, subject to the powers of the Executive Committee, according to Clause 11 (Item 11.1). For purposes of compliance herewith,
the Operator shall enter into contracts following the procedure described in Attachment B, and subject to the principles of good faith, 

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transparency, economy, equity, responsibility, planning, quality, expeditiousness, and social and
environmental responsibility that should govern all contracting. 
10.7    THE ASSOCIATE shall have the option to
agree with ECOPETROL the conditions for providing its services for the operation of the fields and facilities returned in the CPR Santana, after its termination date. 
 
CLAUSE 11 - EXPLOITATION PROGRAMS AND BUDGETS 
11.1    Within three (3) months following the acceptance of a Commercial Field in the Contracted Area, the Operator shall submit to the Parties the proposed projects,
programs, and Budget for the Development Plan of the Commercial Field, for the rest of the respective calendar year, to be approved by the Executive Committee. In the event that less than six and a half (61⁄2) months remain before the end of said
year, the Operator shall prepare and submit the proposed projects, programs, and budget for the following calendar year, within a three-month period. 
11.1.1.    The projects, programs and Budget contained in the Development Plan for the Commercial Field shall be reviewed and revised annually, and submitted to the Parties by the Operator during the month
of May, each calendar year, to which end, the Operator shall submit its proposal within the first ten (10) days of May. Within twenty (20) days following the receipt of the proposed projects, programs, and Budget of the Development Plan for the
Commercial Field, the Parties shall inform in writing to the Operator in regards to the changes they wish to propose. When this occurs, the Operator shall take into consideration the remarks and amendments proposed by the Parties in the preparation
of the revised Development Plan that will be submitted to the Executive Committee for final approval in the ordinary meeting of July of each year. In case that the total budget of the Commercial Field has not been approved before July, those aspects
of the Budget on which an agreement has been reached will be approved by the Executive Committee, and those aspects not approved will be immediately submitted to the Parties for further approval and final decision as provided for in Clause 20.

11.2    The Parties may propose additions or revisions to the projects, programs, and annual budget approved for
every Commercial Field, but except for emergency cases, they should not be suggested with a frequency less than three (3) months. The 

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Executive Committee will decide about the additions and revisions proposed in a meeting, which will be
summoned within the 30 days following the submission of the proposals. 
11.3    The main objectives of projects,
programs, and budgets are the following: 
11.3.1    To determine the operations to be carried out, and the
expenses and investments (Budget), which the Operator is authorized to execute in each Commercial Field during the following calendar year. 
11.3.2    To keep a mid and long-term view on the development of every Field. 
11.4    The projects, programs, and annual budget approved by the Executive Committee and contemplated in the Development Plan are the scheduled working plan, as well as the estimated expenses and
investments to be made by the Operator in the different aspects of the operation, such as: 
11.4.1    Capital
investment for production: Reservoir development drilling, reconditioning or workover of wells, and specific production facilities. 
11.4.2    General construction and equipment: industrial and camp facilities, transportation and construction equipment, drilling and production equipment. Other construction and equipment. 
11.4.3    Maintenance and operating expenses: production, geological, and administrative operating expenses. 
11.4.4    Working capital requirements 
11.4.5    Contingency funds 
11.5    The Operator shall incur
all expenses and investments and shall carry out all development and production operations in accordance with the project, programs and the annual budget approved in the Development Plan for each Commercial Field to which Clause 11 (Item 11.1),
refers, as per the Operating Agreement (Attachment B) that is an integral part of this Contract, without exceeding the total Budget for each year, except for authorization from the parties in special cases. 
11.6    The Operator is fully authorized to make disbursements which are not expressly included in each Commercial Field’s
Budget and charge them to the Joint Account without the Executive Committee’s prior authorization, in the event of emergency measures intended to protect the Parties’ personnel or property; emergency expenses caused by fires, floods,
storms or other disasters; emergency expenses considered 

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essential to the operation and maintenance of production facilities, including all maintenance works
for producing wells to work with maximum efficiency; emergency expenses essential to the protection and preservation of materials and equipment required in the operations. In such cases, the Operator must summon, as soon as possible, a special
Executive Committee meeting, to obtain its approval of carrying on with the emergency measures. 
11.7    The Operator shall be solely responsible for the expenses incurred and the contracts executed by the Operator for amounts above the Annual Budget not timely authorized by the Executive Committee for
each Commercial Field, in accordance with Clause 19 (Item 19.3.9) except for the assumptions regulated by Clause 11 (Item 11.6). Therefore, the Operator shall assume the corresponding total value at its sole expense. When the Executive Committee
ratifies such expense or contract, the Operator will be reimbursed with the corresponding value, in accordance with the guidelines to be approved by the Executive Committee. In the event that the expenditure or the contract are not approved by the
Executive Committee, the Operator, whenever it is possible, will be entitled to withdraw the asset by reimbursing the Parties for any expenditure that its withdrawal may cause. In the event that the Operator cannot withdraw such asset, or if he
decides not to do so, the benefit or patrimony increase resulting from such expenditures or contracts will become the property of the Parties in a proportion equal to their share in the operation. 
 
CLAUSE 12 - PRODUCTION 
12.1    Subject to the approval of the Executive Committee, the Operator will determine with the necessary frequency, the
Maximum Efficiency Rate (MER) for each Commercial Field. This Maximum Efficiency Rate (MER) for each producing well will be the hydrocarbon maximum production rate that can be extracted from a reservoir to obtain the maximum economic benefit in the
final recovery of reserves, in accordance with the economic and engineering principles and the practices and procedures generally employed and in use within the international petroleum industry, under conditions and circumstances similar to the
activities performed under this contract. The estimated production shall be adjusted as necessary to compensate the actual or anticipated 

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operational conditions, such as wells being repaired that are not producing, capacity limitations in
collecting lines, pumps, separators, tanks, pipelines, and other facilities. 
12.2    The Operator will
determine periodically, at least once a year, upon approval of the Executive Committee, the area considered capable of producing hydrocarbons in commercial quantities in each Commercial Field. 
12.3    The Operator shall prepare and deliver to each of the Parties, at regular three (3) month intervals, a program
indicating each Party’s share of production, and another one indicating the share of production for each Party for the following six (6) months. The production forecast will be based on the Maximum Efficiency Rate (MER) as stipulated in Clause
12 (Item 12.1) and adjusted to the rights of each Party, in accordance with this contract. The production sharing program will be determined based on the periodic request of each Party, and in accordance with Clause 14 (Item 14.2) with the necessary
corrections to ensure that none of the Parties, entitled to a share, will receive less than the amount it is entitled to in accordance with the provisions in Clause 14, and without prejudice to the provisions in Clauses 21 (Item 21.2), and 22 (Item
22.5). 
12.4    If any of the Parties foresees a reduction in its capacity to lift hydrocarbons with
respect to the forecast submitted to the Operator, it must so inform him as soon as possible, and if such reduction is due to an emergency situation, it shall notify the Operator within twelve (12) hours immediately following the event causing the
reduction. Consequently, said Party will submit the new lift program taking into account the pertinent reduction. 
12.5    The Operator may use the hydrocarbons that are necessary in performance of production operations in the Contracted Area, and such consumption shall be exempt from the royalties mentioned in Clause
13 (number 13.1). 
 
CLAUSE 13. ROYALTIES

13.1    For purposes of paying royalties for the exploitation of State-owned Hydrocarbons, the Operator shall
pay ECOPETROL a production percentage as determined by Law, which will be measured in accordance with the oil industry practice and previously accepted by the Ministry of Mines and Energy The delivery of said production shall take place at
the same point and in the same moment in which the Parties distribute their production share pursuant to Clause 14 herein. In the case of Fields being exploited 

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under the Sole Risk method, THE ASSOCIATE will deliver to ECOPETROL the percentage of
production corresponding to royalties at the point agreed by the Parties. 
13.2    From the percentage of
production delivered to ECOPETROL under the above numbered terms, ECOPETROL, in the manner and under the terms established by Law, shall pay to those agencies established by Law, the royalties caused in favor of the State over the
Field’s total production and, in no event, will THE ASSOCIATE be responsible for any payment to such agencies. 
 
CLAUSE 14 - HYDROCARBON DISTRIBUTION AND AVAILABILITY 
14.1    The Hydrocarbons produced, excepting those which may have been used in benefit of the operations under this contract, and those which will inevitably be wasted throughout the operation, will be
transported to the jointly owned tanks of the Parties or to other measuring facilities agreed by the Parties. Should no agreement be reached, it shall be the metering location nearest to the inspection site determined by the Ministry of Mines and
Energy. Hydrocarbons will be measured in compliance with the standards and methods accepted by the petroleum industry and, based on such measurement, the volumes referred to in Clause 13 will be determined. As of that moment, the remaining
Hydrocarbons will be the property of each Party, in the proportions specified in this contract. 
14.2    Production
Distribution 
14.2.1 After deducting the percentage that corresponds to royalties, the rest of the hydrocarbons produced from each
Commercial Reservoir is the property of the Parties in a proportion of thirty per cent (30%) for ECOPETROL and seventy per cent (70%) for THE ASSOCIATE, until the time in which the audited accumulated production in the respective
Commercial Reservoir reaches an amount of five (5) million barrels of standard condition liquid hydrocarbons or seventy-five (75) cubic giga feet of standard condition gaseous hydrocarbons, whatever occurs first. (1 cubic giga feet =
1x109 cubic feet). For Reservoirs exploited under the Sole Risk mechanism, the distribution of the production, after
deducting the royalty percentage, is the property of the Parties in a proportion of (100%) for THE ASSOCIATE and zero per cent (0%) for ECOPETROL, until the audited accumulated production from the respective Reservoir first reaches
either one of the aforementioned production limits. 

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14.2.2 Regardless of the classification of the Commercial Reservoir granted by ECOPETROL
upon declaring commerciality, above the limits defined in number 14.2.1 hereunder, the distribution of the production in each Commercial Reservoir (after deducting the percentage that corresponds to royalties) is the property of the Parties in the
proportion resulting from applying the Factor R, as explained herein below: 
14.2.2.1 If the Hydrocarbon that first reached the limit
stated in number 14.2.1 in this Clause was the liquid hydrocarbon, the following table will apply: 
 

	 R Factor
	    	 Production Distribution after Royalties (%)

	 	    	 THE ASSOCIATE
	    	 ECOPETROL

	 0.0 to 1.0
	    	 70
	    	 30

	 1.0 to 2.0
	    	 70 / R
	    	 100 - (70 / R)

	 2.0 or more
	    	 35
	    	 65

 
14.2.2.2 If the
Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the gaseous hydrocarbon, the following table will apply: 
 

	 R Factor
	    	 Production Distribution after Royalties (%)

	 	    	 THE ASSOCIATE
	  	 ECOPETROL

	 0.0 to 1.5
	    	 70
	  	 30

	 1.5 to 2.5
	    	 70 / (R - 0.5)
	  	 100 -[70 /(R - 0.5)]

	 2.5 or more
	    	 35
	  	 65

 
14.2.3 Regardless
of the classification of the Reservoir granted by ECOPETROL when the commerciality is defined, above the limits set in number 14.2.1 hereunder, the production from each Commercial Reservoir exploited under the Sole Risk mechanism, as per
Clause 9 (number 9.5), after deducting the percentage that corresponds to royalties, is the property of the Parties in the proportion resulting from applying the R Factor, as explained herein below: 

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14.2.3.1 If the Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause
was the liquid hydrocarbon, the following table will apply: 
 

	 R Factor
	    	 Production Distribution after Royalties (%)

	 	    	 THE ASSOCIATE
	  	 ECOPETROL

	 0.0 to 1.5
	    	 100
	  	 0

	 1.5 to 2.5
	    	 197.5 - (65R)
	  	 100 - [197.5 - (65R)]

	 2.5 or over
	    	 35
	  	 65

 
14.2.3.2 If the
Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the gaseous hydrocarbon, the following table will apply 
 

	 R Factor
	    	 Production Distribution after Royalties (%)

	 	    	 THE ASSOCIATE
	  	 ECOPETROL

	 0.0 to 2.0
	    	 100
	  	 0

	 2.0 to 3.0
	    	 230 - (65R)
	  	 100 - [230 - (65R)]

	 3.0 or over
	    	 35
	  	 65

 
14.2.4 For
purposes of the above tables, R Factor shall be defined as the relation of accumulated income expressed in constant terms, over accumulated expenses, also expressed in constant terms, which correspond to THE ASSOCIATE for every Commercial
Field in the following terms: 
 

	 R =
	    	 IA

	 	    	 ID + A - B + GO

 
For calculating
accumulated Income and Expenses per reservoir, the PARTIES shall agree the procedure to follow in accordance with the Petroleum Industry techniques. Where: 

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IA (THE ASSOCIATE’s ACCUMULATED INCOME): This is the valuation of the accumulated income
corresponding to THE ASSOCIATE’s Hydrocarbons produced after royalties, at the reference price agreed between the Parties except for Hydrocarbons reinjected in the Fields of the Contracted Area, those consumed in the operation, and the
burned gas. 
Hydrocarbons average price will be mutually agreed between the Parties. 
Monthly income will be the basis to determine the accumulated income that will be determined as the result of multiplying the average monthly reference
price for the monthly production, in accordance with the forms that have been issued by the Ministry of Mines and Energy for such purpose. 
ID (Accumulated Development Investments): Seventy percent (70%) of the accumulated Development Investments approved by the Association’s Executive Committee for each Commercial Field. 
A: These are the Exploration Direct Costs incurred by THE ASSOCIATE, in accordance with Clause 9 of this contract and adjusted in accordance
to Clause 9 (Item 9.2.2), Paragraph. 
B: This is the accumulated reimbursement of the aforementioned exploration direct costs,
according to Clause 9 of this contract. 
GO (Accumulated Operation Expenses): These are the accumulated operation expenses approved by
the Association’s Executive Committee, in the proportion that corresponds to THE ASSOCIATE, plus THE ASSOCIATE’s accumulated transportation expenses. It is understood as transportation costs the investment and operation costs
of Hydrocarbons produced in the Commercial Fields located in the Contracted Area, from the Contracted Area to the exportation port or the place that has been agreed to use the IA income calculation. The Parties will agree such transportation
costs by mutual consent upon commencement of the development phase of the Reservoirs, whose commerciality has been accepted by ECOPETROL. 
Special contributions or the like that can be applied over Hydrocarbons production in the Contracted Area are included in the operation’s expenses. 
 
All values included in the equation to determine R Factor will be taken in constant terms and to such effect they will be
updated monthly with the average consumer index prices 

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in industrialized countries as of its execution date to the last day of the month to which the R
Factor is being applied. For the monthly update, 1/12 of the value resulting of averaging the annual percentage variation during the last two years of the consumer index prices in industrialized countries will be used, taken from “International
Financial Statistics” of the International Money Market Fund (page S63 or its substitute), or in absence thereof, the publication agreed by the Parties. 
To such effect, expenses in Colombian currency must be exchanged to U.S. dollars at the representative rate in the market, duly approved by the Banking Superintendence, or its substitute, that is in force on the date that
the respective reimbursements are made. 
Paragraph:    For Fields exploited under the Sole Risk method, according
to Clause 9 (Item 9.5) of this contract, for purposes of applying the equation to calculate factor R, the following will be considered: 
The
ID corresponds to 100% of the accumulated development investment made by THE ASSOCIATE. 
The value of the accumulated Reimbursement of
the Exploration Direct costs (B) will equal zero (0). 
The GO refers to accumulated operation expenses incurred by THE ASSOCIATE,
including the transport costs incurred by THE ASSOCIATE for the transport of Hydrocarbons produced in the Field to the export port or the place where it is agreed to take the price to be used in calculating the IA income. 
Calculation of R Factor : The distribution of production based on R Factor will start being applied as of the first day in the third calendar month
following that in which the accumulated production of the respective Commercial Reservoir reached (5) million barrels of liquid hydrocarbon or an amount of seventy-five (75) cubic giga feet gaseous hydrocarbon, at standard conditions, as per above
number 14.2.1. 
The calculation of the R Factor in the respective Commercial Reservoir shall be based on the accounting close corresponding
to the calendar month in which the audited accumulated production of five (5) million barrels of liquid hydrocarbon or the amount of seventy five cubic giga feet, at standard conditions, as per above number 14.2.1. 
Resulting production distribution will be applied until June 30th of the next year. From that moment on, production distribution to which R Factor has been applied will be made for one-year terms (from July 1st to June 30th) over R
factor’s liquidation based on the 

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accumulated values as of December 31st of the previous year, in accordance with the corresponding accounting closing term. 
Provisions contained herein also apply for the Fields developed under the Sole Risk method. 
14.3    In addition to the tanks and other jointly-owned facilities, each Party will be entitled to build its own production facilities in the Contracted Area for its own and exclusive use, previous
fulfilling of legal regulations. Transportation and delivery of Hydrocarbons by each Party to the pipeline and other receivers different from the jointly owned ones will be made on the sole account and risk of the Party receiving the Hydrocarbons.

14.4    In case that production is obtained in places not connected to pipelines, the Parties will be able to
agree the installation of pipelines up to a hydrocarbon point of sale, or to a location connected to the pipeline. If the Parties agree to the construction of such pipelines, they shall enter into the contracts they deem appropriate to this end, and
shall designate the Operator in keeping with the legal provisions in force. 
14.5    Each Party will be the owner
of the Hydrocarbons that have been yielded and stored as a result of the Operation and that have been made available to it, as provided for herein, and, at its expense, it should receive them in kind, sell them, or dispose of them separately,
pursuant to Clause 14 (Item 14.3). 
14.6    If any of the Parties, for any reason, cannot dispose of separately or
withdraw from the Joint Account’s tanks, partially or totally, its share of the Hydrocarbons, the following procedure will apply, pursuant to this Contract: 
14.6.1 1 If ECOPETROL is the party that cannot withdraw, partially or totally, its Hydrocarbon share (share plus royalties), according to Clause 12 (Item 12.3), the Operator will be able to go ahead with the
Field’s production and deliver to THE ASSOCIATE in addition to the portion represented by THE ASSOCIATE’s share in the operation, based on one hundred percent (100%) of the MER, all those Hydrocarbons that THE ASSOCIATE
opts for and is capable of withdrawing up to a limit of one hundred per cent (100%) of the Maximum Efficiency Rate and crediting ECOPETROL, for further delivery, the amount of Hydrocarbons that ECOPETROL was entitled to withdraw
but did not. However, with regard to the amount of not-withdrawn Hydrocarbons corresponding to ECOPETROL’s monthly royalties, the ASSOCIATE, 

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upon request from ECOPETROL, shall pay to ECOPETROL, in U.S. Dollars, the difference between the
volume of Hydrocarbons it is entitled to on account of royalties, to which Clause 13 refers to and the amount of Hydrocarbons that, on account of royalties, ECOPETROL has withdrawn, it being understood that any withdrawal made by ECOPETROL
shall apply, in the first place, to the payment of the royalties in kind and, when it has been canceled, the additional Hydrocarbon withdrawals will be applied to its corresponding share, according to Clause 14 (Item 14.2). 
14.6.2. In the event that THE ASSOCIATE is the Party which cannot take all or part of its share designated under Clause 12 (Item 12.3), the
Operator shall deliver to ECOPETROL, on the basis of one hundred percent (100%) of the MER, not only its own share and quota, but also all the hydrocarbons that ECOPETROL is capable of taking up to a limit of one hundred percent (100%)
of the MER, crediting THE ASSOCIATE for later delivery, with the portion that corresponds to its quota and that it has not been able to take. 
14.7    When both Parties are able to take the hydrocarbons designated as per Clause 12 (Item 12.3), the Operator will deliver to the Party that has previously been unable to take its share of the
production, and upon its request, and in addition to its participation in the operation, a minimum of ten percent (10%) per month of the production belonging to the other Party, and by mutual agreement, until one hundred percent (100%) of the quota
not taken, up to the point in which the total amount that had been credited to the Party that was unable to take its hydrocarbon share has been canceled. 
14.8    Without prejudice of legal regulations on the subject, each Party shall be free, at any time, to sell or export its share of the hydrocarbons obtained, according to this contract, or dispose of same
in any manner. 
 
CLAUSE 15 - UTILIZATION OF ASSOCIATED NATURAL
GAS 
In the event that one or more Associated Natural Gas Fields are discovered, the Operator within the three (3) years following the
date of commencement of Field exploitation as defined by the Ministry of Mines and Energy, shall submit a project for utilization of Natural Gas for the benefit of the Joint Operation. The Executive Committee will decide on the project, and if that
is the case, it shall determine the timing for execution of same. If the Operator does not submit any project within the three (3) years 

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or does not perform the project approved in the terms determined by the Executive Committee,
ECOPETROL may take, gratuitously, all the Associated Natural Gas available from the Reservoirs being developed, as long as it is not required for the efficient development of the field. 
 
CLAUSE 16 - UNIFICATION 
When an economically exploitable field extends continuously into another area or areas out of the Contracted Area, the Operator, in agreement with the
Parties, and other interested Parties, subject to prior approval of the Ministry of Mines and Energy, shall formulate a unified exploitation plan, which must conform to the engineering techniques for hydrocarbon exploitation, applying without
limitation thereto, any of the following methods: 
 

	·	 	Definition among the Parties of a basic production curve for the affected CPR Santana commercial field and, in the event of the production decreasing below this
curve, it shall be replaced with production from the new prospect. 

 

	·	 	Distribution of production in proportion to the reservoir yield corresponding to the area on surface of each field.  

 
CLAUSE 17 - INFORMATION SUPPLY AND INSPECTION DURING EXPLOITATION

17.1    The Operator shall deliver to the Parties, as they are obtained, reproducible originals (sepias) and
copies of the drilled wells’ electric, radioactive, and sonic logs, history, core analyses, cores, production tests, reservoir studies, and other relevant technical data, as well as routine data produced or received in relation with the
operations and activities performed in the Contracted Area. 
17.2    Each of the Parties, at its own risk and
expense, shall be entitled, through authorized representatives, to inspect the wells and facilities in the Contracted Area, as well as all the activities related thereto. Such representatives shall have the right to examine cores, samples, maps,
records of drilled wells, surveys, books, and any other source of information related to performance of this contract. 

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17.3    In order for ECOPETROL to comply with the provisions of Clause 29, the Operator shall prepare and deliver to ECOPETROL all the reports required by the National Government.

17.4    All information and data related to exploitation works must be held as confidential pursuant to the same
conditions of Clause 6 (Item 6.3) of this contract. 
 
CHAPTER IV - EXECUTIVE COMMITTEE 
 
CLAUSE 18. CONSTITUTION 
18.1    Within the first thirty (30) calendar days following the
acceptance of the first Commercial Field, each Party must appoint a representative and its respective first and second alternates, to form the Executive Committee and shall notify the other Party in writing the names and addresses of its
representative and alternates. The Parties may change their representative or alternates at any time, but must so advise the other Party in writing. The vote or decision of each Party representative is binding on said Party. Should the main
representative of one of the Parties not be able to attend a Committee meeting, his first or second alternates, in order, may attend and will have the same authority as the principal. 
18.2    The Executive Committee shall hold ordinary meetings in the months of March, July, and November, at which the
Operator’s development program, development plan, and immediate plans will be reviewed. Annually, in the ordinary meeting held in July, the Operator shall submit to the Executive Committee for its approval, the annual operations program and the
expense and investment Budget for each Commercial Field for the next calendar year, and if such is the case, the reviewed Development Plan. 
18.3    The Parties and the Operator may request special meetings of the Executive Committee, to analyze specific operating conditions. The representative of the interested Party shall notify ten (10)
calendar days in advance about the date of the meeting and the topics that will be dealt in them. Any matter not included in the meeting agenda may be dealt during such meeting, after acceptance by the representatives of the Parties in the
Committee. 
18.4    The representative of each of the Parties will have a right to vote equivalent to the
percentage of his total interest in the Joint Operation when discussing all matters 

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discussed in the Executive Committee. However, Executive Committee’s decisions related to items
contained in clauses 19.3.4 to 19.3.9 herein, will be adopted by unanimous vote of the Parties. 
All Executive Committee’s decisions, in
accordance with the aforementioned procedure, will be mandatory and final for the Parties and for the Operator. 
 
CLAUSE 19 - FUNCTIONS 
19.1    The representatives of the Parties will form the Executive Committee, having full authority and responsibility to set and adopt exploitation, development, operations and budgets related to this
contract. One representative of the Operator will attend the meetings of the Executive Committee. 
19.2    The
Executive Committee will appoint a Secretary for every session. This Secretary will draft the corresponding Minutes containing a summary of all the discussions and determinations adopted by the Committee. The Minutes must be approved and signed by
the representatives of the Parties within ten (10) working days following the closing of the meeting and delivered to them as soon as possible. 
19.3    The functions of the Executive Committee are, among others, the following: 
19.3.1
Adopt its own regulations. 
19.3.2 Decide about the matters submitted by the Operator for its consideration. 
19.3.3 Supervise the operation of the Joint Account and the Joint Operation. 
19.3.4 Create the subcommittees deemed necessary and assign their functions under its direction. 
19.3.5 Appoint the Operator in case of resignation or removal, and write the regulations to be followed by the Operator, when it is a third party other than the Parties, indicating in detail the reasons for his
removal. 
19.3.6 Appoint the external auditor of the Joint Account. 
19.3.7 Approve or reject development plans, and any subsequent change or revision. 
19.3.8 Determine the expense regulations and policies. 
19.3.9 Approve or reject projects, programs and annual
Budgets of each Commercial Field and authorize extra expenses that have not been included in the approved Budgets. 

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19.3.10 In general,
perform all the functions authorized by this contract and not corresponding to the Operator or another entity or individual, based on an express clause or by legal or regulatory provision. 
19.3.11 Determine the economic limits of the new Reservoirs discovered. 
 
CLAUSE 20 - DECISION IN CASE OF DISAGREEMENT IN OPERATION 
20.1.    Any disagreement that cannot be resolved in the Executive Committee will be directly submitted to the highest executive of each of the Parties who resides in Colombia, so as to take a
joint decision. If in the sixty (60) calendar days following the submission of the consultation, the parties agree on a decision in regards to the matter in question, they will so inform the Operator, who should call for an extraordinary meeting of
the Executive Committee, within the fifteen (15) calendar days following the receipt of the communication, where the agreement or decision will be approved. 
20.2    If within sixty (60) calendar days following the date of consultation to the highest executive of each of the Parties who resides in Colombia, an agreement is not reached, the procedure will be as
provided for in Clause 28 of this contract, except for differences related to the operations, in which case they could be executed in accordance with Clause 21. 
 
CLAUSE 21. OPERATIONS AT THE RISK OF ONE OF THE PARTIES 
21.1    If at any time one of the Parties wishes to drill a Development Well not approved in the operating program, it shall notify the other Party in writing, at least
thirty (30) calendar days prior to the following meeting of the Executive Committee, of its desire to drill such well and include information, such as location, drilling recommendation, depth and estimated costs. The Operator shall include this
proposal among the items to be discussed at the following Executive Committee meeting. Should the proposal be approved by the Executive Committee, said well will be drilled with charge to the Joint Account. Should the proposal not be accepted by the
Executive Committee, the Party wishing to drill such well, hereinafter the “Participating Party”, shall have the right to drill, 

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complete, produce, or
abandon such well at its own risk and expense. The Party not wishing to participate in the above-mentioned operation shall be known as the “Non Participating Party”. The Participating Party must commence drilling of the well within one
hundred eighty (180) days following the refusal of the Executive Committee. Should drilling not be commenced within this period, it must be submitted to the Executive Committee’s consideration once again. At the request of the Participating
Party, the Operator shall drill the aforementioned well at the risk and expense of the Participating Party, provided that in the Operator’s opinion, such operation does not interfere with the normal operation of the Field, whereby the
Participating Party shall have advanced to the Operator the amount that the Operator deems necessary to drill the well. In the event that such well cannot be drilled by the Operator without interfering with the normal operation of the field, the
Participating Party shall have the right to drill such well by itself, or through a service company that is competent and, in such event, the Participating Party shall be responsible for such operation, without interfering with the normal
development of field operations. 
21.2    Should the well referred to in Clause 21 (Item 21.1), be
completed as producer, it shall be administered by the Operator and the production from such well, after deducting the royalties referred to in Clause 13, shall be the property of the Participating Party, which will bear all costs of operating such
well until the net value of production, after deducting production, collection, storage, transport and other similar costs, as well as the cost of sale, equal to two hundred percent (200%) of the costs of drilling and completing such well. As of
that moment, and for the purposes of this contract, such well shall become the property of the Joint Account holders, in the proportion established, as though it had been drilled with the approval of the Executive Committee at the Parties’ risk
and expense. To this effect, the investments made and costs incurred in the development of this well shall be part of the R Factor of the Commercial Field. For purposes of this clause, the value of each barrel of Hydrocarbon produced from such well,
during a calendar month, before deducting the aforementioned costs, shall be the reference price agreed on by the Parties. 
21.3    If at any time, one of the Parties wishes to workover, deepen to reach the production targets, or plug a well that is not producing commercial quantities, or if that is a dry hole that was drilled
by the Joint Account, and if such operations have not been 

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included in a program
approved by the Executive Committee, such Party must notify the other Party of its intention to workover, deepen, or plug such well. Should there be no equipment on site, the procedure described in Clause 21 (Items 21.1 and 21.2) shall be followed.
Should there be adequate equipment to conduct the proposed operations at the wellsite, the Party receiving the notice of the operations that the other Party wishes to conduct, shall have forty-eight (48) hours, as of the time it received the notice,
within which to approve or disapprove the operation and, if during this term no reply is received, it is understood that the operation will be carried out at the risk and expense of the Joint Account. Should the proposed work be carried out at the
sole risk and expense of a Participating Party, the well shall be managed subject to Clause 21 (Item 21.2). 
21.4    If at any time, one of the Parties wishes to build new facilities for the extraction of gaseous Hydrocarbon liquids and for the transport and export of the Hydrocarbons produced, hereinafter
additional facilities, said Party shall notify the other Party in writing and provide the following information: 
21.4.1 General
description, design, specifications, and estimated costs of the additional facilities. 
21.4.2 Projected capacity 
21.4.3 Approximate date of commencement of the construction and duration thereof. Within ninety (90) days starting on the date of notification, the
other Party shall have the right to decide whether it intends to participate in the projected additional facilities, by giving written notice. In the event that such Party should elect to not participate in the additional facilities, or does not
reply to the Participating Party’s proposal, hereinafter “the Constructing Party”, the latter may proceed with the additional facilities and will instruct the Operator to build, operate, and maintain such facilities at the exclusive
risk and expense of the Constructing Party, without prejudice to the normal development of the Joint Operation. The Constructing Party may negotiate the use of such facilities for the Joint Operations, with the other Party. During the time the
facilities are operated at the risk and expense of the Constructing Party, the Operator shall charge such Party for all operating and maintenance costs of the additional facilities, in accordance with generally accepted accounting practices.

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CHAPTER
V - JOINT ACCOUNT 
 
CLAUSE 22. MANAGEMENT 
22.1    Without prejudice to the provisions of other clauses in this contract, the expenses attributable to exploration works
will be at the risk and expense of THE ASSOCIATE. 
22.2    From the moment ECOPETROL accepts the
existence of a Commercial Field and subject to the provisions of Clause 5 (Item 5.2) and of Clause 13 (Items 13.1 and 13.2), the ownership of the rights or interests in the Contracted Area shall be divided as follows: ECOPETROL, thirty
percent (30%), THE ASSOCIATE, seventy percent (70%). From that point on, all the expenses, payments, investments, costs, and obligations performed and assumed for development of the Joint Operation, in compliance with this contract, shall be
charged to the Joint Account and the Exploration Direct Costs incurred by THE ASSOCIATE before and after acceptance of the existence of each Commercial Field and its extensions, in compliance with Clause 9 (Item 9.8), shall be entered into
the Joint Account. Except as provided for in Clauses 14 (Item 14.3) and 21, all the property acquired or used from that moment on for the fulfillment of operating activities of the Commercial Field, shall be paid for and belong to the Parties, in
the same proportions described in this clause. 
22.3    Within the first five (5) days of each month, the
Parties shall tender to the Operator in the Joint Account’s banking account their corresponding share of each Commercial field Budget, as needed and in the same currency in which the expenses must be made, that is, in Colombian pesos, or in USA
dollars, as requested by the Operator, in accordance with the programs and budgets approved by the Executive Committee. When THE ASSOCIATE does not have the necessary pesos to cover its portion of this currency, ECOPETROL shall have
the right to furnish such pesos and be credited for the contribution that is to be made in dollars, converted at the official rate for purchase of exchange certified by the Banking Superintendence, or the official agency in charge, on the day in
which ECOPETROL should make the corresponding contribution, provided such transaction does not violate any legal provision. 
22.4    The Operator shall submit to the Parties, within the ten (10) calendar days following the end of each month, a monthly statement showing the anticipated amounts, the expenses made, the outstanding
obligations, and a report of all charges and credits to 

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the Joint Account. Such
report shall be prepared in compliance with Attachment B and in a separate attachment, the parameters and R Factor calculation referred to in Clause 14 (Items 14.2.4 and 14.2.5). If the payments referred to in Clause 22 (Item 22.3) are not made
within the agreed term and the Operator decides to make them, the delinquent Party shall pay the commercial interest, in the same currency during the delinquency period. 
22.5    Should one of the Parties fail to pay to the Joint Account the corresponding amounts on time, from that date on said Party shall be considered a Delinquent Party and
the other Party the Performing Party. If the Performing Party should make the payment belonging to the Delinquent Party, in addition to its own, said party shall have the right, after sixty (60) calendar days of delinquency, to have the Operator
deliver to it the total of the Delinquent Party’s participation in the Contracted Area (excluding the percentage corresponding to royalties), up to a production amount such that permits the Performing Party a net income from the sales made
equal to the amount the Delinquent Party failed to pay, plus an annual interest equal to the Commercial Interest for Payment in Arrears on the initial date of the delinquency. “Net income” is understood as the difference between the sale
price of the Hydrocarbons taken by the Performing Party, less the cost of transport, storage, loading and other reasonable expenses incurred by the Performing Party from the sale of the products taken. The right of the Performing Party may be
exercised at any time thirty (30) calendar days after written notification to the Delinquent Party of its intention to take part or all of the production corresponding to the Delinquent Party. 
22.6    Direct and Indirect costs 
22.6.1 All Direct Costs of the Joint Operation shall be charged to the Parties in the same proportion that the production is allocated after royalties. 
22.6.2 Indirect Costs shall be charged to the Parties in the same proportion that has been established for Direct Costs in Item 22.6.1 of this Clause. The amount of such costs shall be the
result of taking the total annual investment value and direct expenses (excepting technical and administrative support) and applying the equation “a + m (X-b)” In such equation, “X” is the total value for investments and annual
expenses and “a”, “m”, and “b” are constants whose values are indicated in the following table in relation with the amount of investment and annual expenses: 

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	 INVESTMENT AND EXPENSES
	  	 VALUE OF THE CONSTANTS

	 “X” (US$)
	  	 “a” (US$)
	  	 m (fracc.)
	  	 “b” (US$)

	 1.
	  	 0
	  	 to   25,000,000
	  	 0
	  	 0.10
	  	 0

	 2.
	  	   25,000,001
	  	 to   50,000,000
	  	   2,500,000
	  	 0.08
	  	   25,000,000

	 3.
	  	   50,000,001
	  	 to 100,000,000
	  	   4,500,000
	  	 0.07
	  	   50,000,000

	 4.
	  	 100,000,001
	  	 to 200,000,000
	  	   8,000,000
	  	 0.06
	  	 100,000,000

	 5.
	  	 200,000,001
	  	 to 300,000,000
	  	 14,000,000
	  	 0.04
	  	 200,000,000

	 6.
	  	 300,000,001
	  	 to 400,000,000
	  	 18,000,000
	  	 0.02
	  	 300,000,000

	 7.
	  	 400,000,001
	  	 and over
	  	 20,000,000
	  	 0.01
	  	 400,000,000

 
The equation will be
applied once a year in each case with the value of the constants corresponding to the total value of annual investment and expenses. 
22.7    The monthly statements referred to in Clause 22 (Item 22.4) may be reviewed or objected to by either of the Parties from the moment they receive them, up to two (2) years after the end of the
calendar year to which they pertain, specifying clearly the entries corrected or objected to and the reason therefor. Any account that has not been corrected or objected to within such period shall be considered final and correct.

22.8    The Operator shall keep accounting records, vouchers and reports for the Joint Account in Colombian pesos
in accordance with Colombian law, and all charges and credits to the Joint Account shall be made following the accounting procedure described in Attachment B, which is part of this contract. In the event of discrepancy between such Accounting
Procedure and the provisions of this contract, the provisions of the latter shall prevail. 
22.9    The
Operator may perform sales of materials or equipment during the first twenty (20) years of the Exploitation Period, or the first twenty-eight (28) years of the Exploitation Period, in the case of a Gas Field, for the benefit of the Joint Account,
when the value of the sold items does not exceed five thousand USA dollars (US$5,000) or its equivalent in Colombian pesos. This type of operation, per calendar year, may not exceed fifty thousand USA dollars (US$50,000) or its equivalent in
Colombian pesos. The sales exceeding these amounts or those of real estate property are subject to the 

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Executive Committee’s
approval. The sale of such materials or equipment will be made at a reasonable commercial price in accordance with the conditions of use of the item. 
22.10    All the machinery, equipment, or other goods or property acquired by the Operator for the execution of this contract and charged to the Joint Account, will be the property of the Parties in equal
shares, in the same proportion of their share in the operation. However, in the event that one of the Parties should decide to terminate its interest in the contract before the end of the first seventeen (17) years of the Exploitation Period, except
as foreseen in Clause 25, said Party agrees to sell to the other Party, either its interest in said assets, at a reasonable commercial price or their book value, whichever is lower. In the event that the other Party does not wish to buy such assets
within ninety (90) days following the formal offer to sell, the Party wishing to withdraw shall have the right to assign to a third party the interest corresponding it in such machinery, equipment and items. If THE ASSOCIATE decides to
withdraw after seventeen (17) years of the Exploitation Period, its right in the Joint Operations will pass free of charge to ECOPETROL upon its acceptance. 
 
CHAPTER VI - DURATION OF THE CONTRACT 
 
CLAUSE 23 - MAXIMUM TERM 
This contract shall have a maximum term, as of its Effective Date, of twenty-seven and a half (27.5) years, distributed as follows: up to five and a half (5.5) years as the Exploration Period, pursuant to Clause 5 without prejudice
of that stipulated in Clause 5 (number 5.4) and Clause 9 (number 9.3); and up to twenty-two (22) years as the Development Period, as of the date of expiration of the Exploration Period. Nevertheless, the Development Period will end before the 22
years if the new Commercial Fields discovered reach their economic limit, as decided by the Executive Committee, pursuant to number 19.3.11. of Clause 19 in this contract. It is understood that the events contemplated hereunder, in which the
Exploration Period is extended, shall not extend the total twenty-seven and a half (27.5) year total term. 
Paragraph 1: The
Exploitation Period for the Gas Fields discovered within the Contracted Area shall have a maximum duration of thirty (30) years as of the date of expiration of the Exploration Period or Retention Period granted. Nevertheless, the 

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Development Period will
end before the 30 years if the new Commercial Reservoir discovered reaches its economic limit, as decided by the Executive Committee, pursuant to number 19.3.11 in Clause 19 hereunder. Anyhow, the total contract term for such Reservoirs shall not
exceed thirty-nine and a half (39.5) years, as of the Effective Date. 
Paragraph 2: Notwithstanding the above, ECOPETROL and
THE ASSOCIATE, with no less than five (5) years in advance of the expiration date of the Development Period of each Reservoir, if the economic limit of the new field discovered has not been reached before the end of the 22 years, or 30 years
when dealing with Gas fields, will undertake the study of conditions to continue exploitation thereof after the expiration mentioned in this Clause. Should the Parties agree to pursue such development, they shall define the terms and conditions for
performance thereof. 
 
CLAUSE 24 - TERMINATION

This contract shall terminate in each of the following cases on which THE ASSOCIATE’s rights contained within this contract
shall cease, either in its capacity as ASSOCIATE or as Operator, provided both mentioned capacities concur at the termination time: 
24.1    Upon expiration of the Exploration Period if THE ASSOCIATE has not discovered a Commercial Field, except as provided in Clauses 5 (Item 5.4), 9 (Item 9.5), and 34. 
24.2    When the contract term established in Clause 23 expires. 
24.3    At any time and at THE ASSOCIATE’s will, after having complied with its obligations referred to in Clause 5, and the other obligations acquired in
compliance with this contract up to the date of termination. 
24.4    Should THE ASSOCIATE assign this
contract, in whole or in part, without complying with the provisions in Clause 27. 
24.5    Due to breach of the
obligations assumed by THE ASSOCIATE in accordance with this contract. 
24.5.1 ECOPETROL shall not be able to terminate this
contract until sixty (60) calendar days after having notified THE ASSOCIATE or its assignees in writing, clearly specifying the causes for making such a declaration and only if the other Party has not submitted explanations that are
satisfactory to ECOPETROL, or if THE ASSOCIATE has not corrected the fault in complying with the contract, without prejudice to THE ASSOCIATE’s right to file the legal actions it deems convenient. 

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24.5.2 If, within
the period mentioned above, THE ASSOCIATE submits explanations that are satisfactory to ECOPETROL and in the remaining term for completing the period of sixty (60) days it is insufficient to meet the obligations pending according to
good petroleum industry practice, the Parties may agree to an additional term to allow said compliance, without prejudice to ECOPETROL’s right to demand the guarantees necessary for backing it. If, after this time has elapsed, all of the
works agreed to have still not been performed, ECOPETROL shall terminate the contract. 
24.6    At any time
upon mutual agreement between the Parties. 
24.7    Due to the unilateral termination causes contemplated in
Clause 25. 
Paragraph: Upon termination of the contract for any of the reasons mentioned in this clause, except for number 24.5, the
Contract areas shall be under the application of the CPR Santana. 
 
CLAUSE 25 - CAUSES OF UNILATERAL TERMINATION 
25.1    Unilaterally, ECOPETROL may
terminate this contract at any time before the period agreed in Clause 23 expires, in the following cases: 
25.1.1 Death or permanent
physical disability or legal interdiction of THE ASSOCIATE in the case of an individual. 
25.1.2 Due to initiation of a wind-up
process of THE ASSOCIATE, if it is a company. 
25.1.3 Due to legal embargo of THE ASSOCIATE that seriously affects
contract performance. 
25.1.4 When THE ASSOCIATE is made up of several companies and/or individuals, the reasons given
in items 25.1.1 and 25.1.2 shall be applied when they seriously affect contract performance. 
25.2    In the event
of a declaration of unilateral termination, the rights of THE ASSOCIATE stated in this contract shall cease, not only as an ASSOCIATE, but also as Operator, if at the moment of the declaration of unilateral termination, THE
ASSOCIATE acts in both capacities. 
Paragraph: Upon termination of the Contract, for any of the reasons mentioned in this clause,
ECOPETROL shall have the right to carry out the exploration and production activities, whether directly or with a third party other than THE ASSOCIATE, in order to make the Guayuyaco prospect viable. 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 43

 

 
CLAUSE 26 - OBLIGATIONS
IN CASE OF TERMINATION 
26.1    If the contract is terminated as per the provisions in Clause 24, during its
Exploration, Retention, or Exploitation Period, THE ASSOCIATE shall leave in production those wells which on that date are producing and shall deliver the facilities, pipelines, transfer lines and other real estate property belonging to the
Joint Account (located in the Contracted Area), all of which shall pass, free of charge, to ECOPETROL’s ownership, together with the rights of way and assets acquired exclusively for the benefit of the contract, regardless of whether or
not these assets are located outside the Contracted Area. 
26.2    If the contract is terminated for any reason
after the first seventeen (17) years of its Exploitation Period, all of THE ASSOCIATE’s machinery, equipment or other assets or items used or acquired by THE ASSOCIATE or by the Operator in performance of this contract shall pass,
free of charge, to ECOPETROL. 
26.3    If the contract is terminated before the end of the seventeen (17)
year Exploitation Period, the provisions of Clause 22 (Item 22.10) shall apply. 
26.4    If the contract is
terminated through a declaration of unilateral termination issued at any time, all current assets and fixed assets acquired for the exclusive benefit of the Joint Account, shall pass, free of charge, to ECOPETROL’s ownership.

26.5    If the contract is terminated for any reason and at any time, ECOPETROL will be the sole owner of
all Environmental Impact Studies, Environmental Management Plans, Environmental Diagnoses, and any other document, study and/or social nature study and/or environmental study prepared in performance of the contract. As of that moment, it is
understood that THE ASSOCIATE transfers at once all the intellectual property rights, or those of any other nature, to ECOPETROL on the aforementioned documents, without requiring any additional process. Without prejudice of the
foregoing, THE ASSOCIATE commits to undertake any action that, from an operational or juridical standpoint, would be required to fully consolidate those rights in ECOPETROL. Anyhow, THE ASSOCIATE shall continue to be responsible
to fulfill any obligation derived form the Environmental License, until the ownership title of same has been changed by the Ministry of the Environment. 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 44

 

26.6    Once this contract is terminated for any reason and at any time,
the Parties are committed to fulfill satisfactorily their legal obligations, both mutually and before third parties, as well as those acquired hereunder. 
 
CHAPTER VII - MISCELLANEOUS PROVISIONS 
 
CLAUSE 27 - ASSIGNMENT RIGHTS 
27.1    Upon prior written authorization from ECOPETROL,THE ASSOCIATE is entitled to assign or transfer, either partially or totally, its interests, rights and obligations in this contract to
another individual, company or group that has the economic capacity, the technical competence, the professional skills necessary, and the legal capacity to operate in Colombia. 
For such purpose, THE ASSOCIATE shall submit a written request to ECOPETROL, indicating the main elements of the negotiation, such as the name of the possible assignee, information on its
legal, financial, technical, and operational capacities, value of the rights and obligations to be assigned, scope of the operation, etc. Within sixty (60) workdays following receipt of the complete request, ECOPETROL shall exercise the
discretional faculty of analyzing the information furnished by THE ASSOCIATE, after which it shall make its decision, without the obligation of expressing its reasons for it. 
Should THE ASSOCIATE, or any of its individual members be subjected to a merger, take-over, split or corporate transformation process of a different nature, it shall not require prior
authorization from ECOPETROL. In any event, ECOPETROL reserves the right to assess the new conditions of THE ASSOCIATE, or of any of its members, regarding their economic capacity, technical competence, professional skills
required, and the legal capacity to operate, and if deemed necessary, it shall apply the provisions in Clause 39. 
The actions taken to
develop this clause that might be taxable, according to the Colombian tax legislation, shall cause payment of the corresponding taxes. 
Paragraph 1: If as the result of any partial or total assignment of interests, rights and obligations in this contract, THE ASSOCIATE is different than THE ASSOCIATE of the CPR Santana, THE ASSOCIATE is
thus committed to agree with THE ASSOCIATE of the CPR Santana on a plan and program for the performance of exploration and/or 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 45

 

 
development activities on
the surface of the Contracted Area, to allow for the regular performance of their operations, without any mutual interference. 
 
CLAUSE 28 - DISAGREEMENTS 
28.1    In any case where a discrepancy or contradiction arises in the interpretation of the clauses of this Contract relative to the contents in Attachment B called “Operation Agreement”, or in
Attachment “C” called “Guidelines for the Preparation of the Development Plan”, the stipulations of the former shall prevail. Likewise, should a conflict arise between the terms of Attachment B and Attachment C, the terms of the
former shall prevail. 
28.2    Disagreements between the Parties as to legal matters related to the interpretation
and performance of the contract, which cannot be resolved amicably, shall be submitted for examination and determination by the proper Colombian legal public authority. 
28.3    Any factual or technical difference between the Parties, related to the interpretation and application of this contract, which cannot be resolved amicably, shall be
submitted to the final decision of experts in the following manner: each Party shall appoint an expert representative, one for each Party, and a third one mutually agreed by the main experts appointed. If they cannot agree as to the naming of the
third expert, the Board of Directors of the “Colombian Association of Engineers—SCI,” with headquarters in Bogota, will choose the third candidate, upon the request by either Party. 
28.4    Any difference concerning the accounting which may arise between the Parties by reason of the interpretation and
performance of this contract, which cannot be resolved amicably, shall be submitted to a decision taken by experts. Such experts shall be sworn Certified Public Accountants, and shall be appointed as follows: one by each of the Parties and a third
one mutually agreed by the two main experts. Upon failure of the former two to reach an agreement and, at the request of either of the Parties, said third expert shall be appointed by the Central Board of Accountants (Junta Central de Contadores) in
Bogota. 
28.5    Both parties accept that the decision of the experts shall have the same effect as a transaction
between themselves and, consequently, said decision shall be binding. 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 46

 

 
28.6    In the event of a disagreement between the Parties concerning the technical, accounting or legal aspects of the controversy, said disagreement shall be considered legal and Clause 28 (Item 28.2)
shall apply. 
 
CLAUSE 29. LEGAL REPRESENTATION

Without prejudice to the rights that THE ASSOCIATE may legally have, as a consequence of legal regulations or pursuant to the
provisions of this contract, ECOPETROL shall represent the Parties before the Colombian authorities with respect to the exploitation of the Contracted Area as required, and it shall submit to governmental officials and entities all the data
and information which may be legally required. The Operator shall be obliged to prepare and furnish ECOPETROL with the pertinent information. Any expense that ECOPETROL may incur pursuant to any matter referred to herein, shall be at
the expense of the Joint Account, and when such expenses exceed five thousand USA dollars (US$5,000) or its equivalent in Colombian pesos, THE ASSOCIATE or Operator prior approval shall be required. The Parties declare that, insofar as any
relationship with third Parties is concerned, neither the conditions of this clause nor of any other clause hereunder, shall imply the granting of a General Power of Attorney, or that the Parties have established a joint civil or commercial venture
or other relationship under which any of the Parties may be considered jointly and severally responsible for the other Party’s acts or omissions, or to have the power or mandate which could commit the other Party with regard to any obligation
whatsoever. This contract refers to operations within the territory of the Republic of Colombia, and even though ECOPETROL is a Colombian State-owned industrial and commercial company, the parties agree that THE ASSOCIATE, if
necessary, may elect to be excluded from the application of all the provisions in Subchapter K, entitled PARTNERS AND PARTNERSHIPS of the Internal Revenue Code of the United States of America. THE ASSOCIATE shall make this election on its
behalf in a proper manner. 
 
CLAUSE 30. RESPONSIBILITIES

30.1    The responsibilities acquired by ECOPETROL and THE ASSOCIATE in connection with this
contract before third parties shall not be joint liabilities and, therefore, each 

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 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
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Party shall be solely
responsible for its share of the expenses, investment, and obligations derived from such responsibilities. 
30.2    Environmental Management: THE ASSOCIATE or the Operator, in performance of all contract activities, must timely comply with that set forth in the National Code of Renewable Natural Resources and
Protection of the Environment and other legal provisions on the subject. Likewise, they shall promote amongst their contractors, suppliers, intermediaries and/or workers working in benefit of the contract, the conservation of a healthy environment,
taking the necessary precautions to protect the environment, human life and property of others and prevent contamination of the Contracted Area. As of contract initiation, THE ASSOCIATE shall prepare a general diagnosis of the environmental
and social reality of the zones where the Exploration Works shall be performed, and shall establish the communication channels with the local authorities and communities. 
THE ASSOCIATE agrees to implement a permanent plan, of a preventive nature, to ensure the conservation and restoration of the natural resources within the zones where the Exploration,
exploitation and transportation works that are the subject-matter of this contract are performed. 
THE ASSOCIATE must convey said
plans and programs to the communities and national and regional order agencies that are related to this subject. 
Likewise, specific
contingency plans must be established to take care of the emergencies that may arise and to perform the remedying actions called for. For such purpose, THE ASSOCIATE must coordinate said plans and actions with the competent agencies.

THE ASSOCIATE, in accordance with the pertinent Clauses of this contract, must prepare the respective plans and budgets.

All costs caused shall be borne by THE ASSOCIATE during the Exploration Period and Exploitation under the Sole Risk method, and by
both Parties, charged to the Joint Account in the Exploitation Period. 
 
CLAUSE 31. TAXES, LIENS, AND OTHERS 
All taxes and liens caused after establishing the Joint Account and before the
Parties receive their production shares in and that are chargeable to oil exploitation, shall be 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 48

 

 
charged to the Joint
Account. The income and complementary taxes, or presumed income taxes, will be solely at the expense of each of the Parties, accordingly. 
 
CLAUSE 32. PERSONNEL 
32.1    When THE ASSOCIATE is the Operator, the Operator Manager’s appointment will be consulted previously with ECOPETROL. 
32.2    Pursuant to the terms of this contract and subject to the regulations established herein, the Operator, as the sole and actual employer, shall have autonomy to
designate personnel required for the operations under this contract, and may establish their salaries, functions, categories, and conditions. The Operator will adequately and diligently train the Colombian personnel required to substitute the
foreign personnel that the Operator may consider required for the performance of the operations of this contract. In all cases, the Operator shall comply with any legal provisions that set forth the proportion of local and expatriate employees and
workers. 
32.3    TECHNOLOGY TRANSFER 
THE ASSOCIATE agrees to implement, at its expense, a training program for ECOPETROL professionals in areas related to the development of the contract. 
For compliance with this obligation in the Exploration Period, training may be, among others, in the areas of geology, geophysics and related areas,
evaluation and definition of characteristics of reservoirs, drilling and production. Training shall take place throughout the two and a half (2.5) years Exploration Period and extensions thereof, through the integration of the professionals
appointed by ECOPETROL to the work group THE ASSOCIATE organizes for the Contracted Area or for other similar activities of THE ASSOCIATE. 
To opt for the waiver mentioned in Clause 5 of this contract, THE ASSOCIATE must have previously complied with the training programs provided for hereunder. 
In the Exploitation Period, the scope, duration, place, participants, training conditions, and other aspects shall be established by the Association’s Executive Committee. 
All of the costs of supervised training, with the exception of labor-related ones caused in favor of the professionals who receive said training, shall be
borne by THE ASSOCIATE 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
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in the Exploration Period and by both Parties charged to the Joint Account in the Exploitation
Period.  
PARAGRAPH: For fulfillment of obligations regarding Technology Transfer, as per provisions contained herein, THE
ASSOCIATE hereby commits to carry out training programs directed to ECOPETROL officials for a value up to twenty five thousand U.S. Dollars (US$25,000.oo), for each phase of the Exploration Period. The subject and type of program shall be
agreed in advance between ECOPETROL and THE ASSOCIATE. Should the Exploration period be extended, the supervised training shall consist in programs similar to the one foreseen herein for each extended year. 
 
CLAUSE 33. INSURANCE 
THE ASSOCIATE or the Operator will take all the insurance policies required by the Colombian laws. Likewise, it will require each contractor
performing any job in performance of this contract to acquire and keep in effect all the insurance policies that the Operator may consider necessary. Also the Operator will take all the insurance policies that the Executive Committee may consider
advisable. 
Upon termination of this contract, at any time during the Exploitation period or due to expiration of the term set forth in
Clause 23, the Operator and/or THE ASSOCIATE shall take out an insurance policy to guarantee payment of salaries, benefits and indemnities and other labor obligations due to eventual legal sentences derived from claims from the workers hired
by the Operator in its condition as their sole and true employer and during the time of operation of the Commercial Field. The policy term shall not be less than three (3) years counted as of the date of termination of the Association Contract and
the insured value shall be defined by the Executive Committee, subject to that set forth in the labor provisions applicable to the respective employment contracts. 
 
CLAUSE 34 - FORCE MAJEURE OR ACTS OF GOD 
The obligations of this contract shall be suspended for as long as the Parties are unable to fulfill them totally or partially, due to unforeseen events that constitute force majeure or acts of God
such as strikes, shutdowns, war, earthquakes, floods or other catastrophes, governmental laws, regulations or decrees that prevent obtainment of essential material and, in general, any non-financial cause which may actually obstruct 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 50

 

 
the works, even if not
mentioned above, but affecting the Parties beyond their control. If one of the Parties is not able, due to force majeure or acts of God, to fulfill its obligations under this contract, it must immediately notify the other Party for its
consideration, specifying the causes of such impediment. In no event shall the occurrences of force majeure or acts of God extend the total Exploration and Exploitation Periods beyond of the maximum term of the contract, as per provisions in Clause
23, but any impediment due to force majeure during the two and a half (2.5) year Exploration Period mentioned in Clause 5, which lasts longer than sixty (60) consecutive days, will extend this two and a half (2.5) year period for the same period
that the impediment lasts. 
 
CLAUSE 35 - APPLICATION OF
COLOMBIAN LAW 
For all the purposes of this contract, the Parties set as their domicile the city of Bogota, Republic of Colombia. This
contract is fully in force under Colombian Law and THE ASSOCIATE is subject to the jurisdiction of the Colombian Courts and waives any attempt to make any diplomatic claim in regards to the rights and obligations arising from this contract,
except in the event that justice is denied. It is understood that justice will not be denied when THE ASSOCIATE, in its capacity as Operator or Party, has exhausted all the resources and actions that, in compliance with Colombian Law, may be
used before Colombian legal authorities. 
 
CLAUSE 36. NOTICES

The services or communications between the Parties in regards to this contract will require to be valid, the mention of the relevant
clauses, and should be sent to the representatives or delegates designated by the Parties to the following addresses: 
 
To ECOPETROL: Cra 13 #36-24, Santa Fe de Bogota, D.C., Colombia. To THE ASSOCIATE: Diagonal 108 No. 7—54, Bogota, D.C., Colombia Any
change of address and representatives should be duly notified in advance to the other Party. 
 
CLAUSE 37. HYDROCARBON VALUATION 
The payments or reimbursements referred to in
Clauses 9 (Items 9.2 and 9.4) and 22 (Item 22.5), will be made in USA dollars, or in Hydrocarbon, based on its current market 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 51

 

 
price and the limitations
established by Colombian Law for the sale of the portion payable in USA dollars, of Hydrocarbons coming from the Contracted Area to be used in refining in the Colombian territory. 
 
CLAUSE 38. HYDROCARBON PRICES 
38.1    The Hydrocarbons corresponding to THE ASSOCIATE in performance of this contract, destined to the refinery or to domestic supply, shall be paid placed at the refinery that must
process them or at the receiving station agreed to by the Parties, in accordance with the governmental provisions or rules in force, or those that replace them. 
38.2 The differences arising from the application of this clause will be settled in the manner provided for in this contract. 
 
CLAUSE 39. PERFORMANCE BOND 
At
ECOPETROL ́s discretion, in order to ensure completion of the Exploration Works corresponding to each phase of the Exploration Period, in accordance with Clause 5, THE ASSOCIATE, at its expense, agrees to submit in favor of
ECOPETROL one or more irrevocable Stand-By Letters of Credit or Bank Bonds issued by a financial corporation acceptable to ECOPETROL, for an amount in dollars of the United States of America equal to one hundred per cent (100%) of the
value of works to be guaranteed, according to ECOPETROL’s opinion, with a validity to cover the estimated time for performance of the guaranteed work, and ninety (90) calendar days more, counted as of the date on which it is issued.
Should ECOPETROL request the bond, THE ASSOCIATE shall present it within fifteen (15) workdays counted as of the date of ECOPETROL’s communication making such request. Upon request of THE ASSOCIATE, the value of this
bond may be reduced every six (6) months, in proportion to the value of the guaranteed Works actually performed, as agreed to in Clause 5. 
Should ECOPETROL request such bond, THE ASSOCIATE may substitute it by establishing a trust fund for an amount in USA dollars equivalent to one hundred per cent (100%) of the works value. The trust contract shall be
previously approved by ECOPETROL and shall provide for disbursements to be made upon obtaining approval 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 52

 

 
from ECOPETROL for
the activity timetable and the mechanism approved by the Parties at that time. 
 
CLAUSE 40. DELEGATION AND ADMINISTRATION 
The President of EMPRESA COLOMBIANA DE
PETROLEOS—ECOPETROL—delegates to the Exploration and Production Vice-President the administration of this contract, according to ECOPETROL’s standards and regulatory provisions, empowering him to execute all
transactions and processes inherent in Contract performance. The Vice-President of Exploration and Production may exercise this delegation through the Joint Exploration and Production Vice-Presidents. 
 
CLAUSE 41. LANGUAGE 
For all purposes and actions regarding this contract, the official language is Spanish. 
 
CLAUSE 42. VALIDITY 
This contract requires approval from the Ministry of Mines and Energy . 
 
In witness whereof, this is signed in Bogota, D.C., in the presence of witnesses, on the second (2) day of the month of August of the year two thousand two (2002). 
 
EMPRESA COLOMBIANA DE PETROLEOS 
ECOPETROL 
 
/s/ Victor Eduardo Perez H. 
VICTOR EDUARDO PEREZ H. 
PRESIDENT IN CHARGE 

	 EMPRESA COLOMBIANA DE PETROLEOS
 ECOPETROL
	 	 GUAYUYACO ASSOCIATION
  CONTRACT Pag.
 53

 

 
ARGOSY
ENERGY INTERNATIONAL 
 
/s/ Alvaro Jose
Camacho Rodriquez 
ALVARO JOSE CAMACHO RODRIQUEZ 
LEGAL REPRESENTATIVE 
 
Witnesses 
 
/s/ Edgar L. Dyes 
 
/s/ R. Suttill 
 
/s/ Victor Hugo Franco 
 
/s/ (Illegible Signature) 
 
This is a fair and accurate English translation of the original document which is in the Colombian language (Spanish). 
 
/s/ James L. Busby 
James L. Busby 
Secretary and Treasurer 
of Aviva Petroleum Inc.<PAGE>

                                                                     EXHIBIT 4.2

================================================================================

                          FIRST SUPPLEMENTAL INDENTURE

                                     between

                                 XTO ENERGY INC.

                                       and

                              THE BANK OF NEW YORK,

                                   as Trustee

                                _______________

                                 April 23, 2002

                          7 1/2% Senior Notes due 2012

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
ARTICLE 1 THE 2012 NOTES....................................................   2
  SECTION 1.1. Designation of 2012 Notes; Establishment of Form.............   2
  SECTION 1.2. Amount.......................................................   2
  SECTION 1.3. Redemption and Repurchase....................................   2
  SECTION 1.4. Conversion...................................................   3
  SECTION 1.5. Maturity.....................................................   3
  SECTION 1.6. OTHER TERMS OF 2012 NOTES....................................   3

ARTICLE 2 AMENDMENTS TO THE INDENTURE.......................................   3
  SECTION 2.1. Definitions..................................................   3
  SECTION 2.2. Consolidation, Merger and Sale...............................  18
  SECTION 2.3. Events of Default............................................  18
  SECTION 2.4. Supplemental Indentures without Consent of Holders...........  21
  SECTION 2.5. Supplemental Indenture with Consent of Holders...............  22
  SECTION 2.6. Covenants....................................................  22
  SECTION 2.7. Redemption...................................................  35
  SECTION 2.8. Defeasance and Covenant Defeasance...........................  35
  SECTION 2.9. Guarantees...................................................  39

ARTICLE 3 MISCELLANEOUS PROVISIONS..........................................  42
  SECTION 3.1. Integral Part................................................  42
  SECTION 3.2. Rules of Construction........................................  42
  SECTION 3.3. Adoption, Ratification and Confirmation......................  42
  SECTION 3.4. Counterparts.................................................  42
  SECTION 3.5. Benefits of Indenture........................................  43
  SECTION 3.6. Governing Law................................................  43
  SECTION 3.7. Supplemental Indenture Controls..............................  43

EXHIBIT A  FORM OF 2012 NOTE................................................ A-1
</TABLE>

                                       i

<PAGE>

                          FIRST SUPPLEMENTAL INDENTURE

         THIS FIRST SUPPLEMENTAL INDENTURE, dated as of April 23, 2002 (this
"First Supplemental Indenture"), between XTO Energy Inc., a Delaware corporation
(the "Company"), and The Bank of New York, a New York banking corporation (the
"Trustee"),

                              W I T N E S S E T H:

     WHEREAS, the Company has heretofore executed and delivered to the Trustee
an Indenture, dated as of April 23, 2002 (the "Original Indenture" and, as
amended and supplemented by this First Supplemental Indenture, the "Indenture"),
providing for the issuance from time to time of one or more series of the
Company's Securities;

     WHEREAS, Section 8.1(k) of the Indenture provides that the Company and the
Trustee may from time to time enter into one or more indentures supplemental
thereto to establish the form or terms of Securities of a new series;

     WHEREAS, Sections 8.1(b) and 8.1(c) of the Indenture permit the execution
of supplemental indentures without the consent of any Holders to add to the
covenants of the Company for the benefit of, and to add any additional Events of
Default with respect to, all or any series of Securities;

     WHEREAS, Section 8.1(h) of the Indenture permits the execution of
supplemental indentures without the consent of any Holders to add to, change or
eliminate any of the provisions of the Indenture with respect to all or any
series of Securities, provided that, among other things, such addition, change
or elimination does not apply to any outstanding Security of any series created
prior to the execution of such supplemental indenture;

     WHEREAS, Sections 2.1 and 2.2 of the Indenture provide that the Company may
enter into supplemental indentures to establish the form, terms and provisions
of a series of Securities issued pursuant to the Indenture;

     WHEREAS, the Company desires to issue 7 1/2% Senior Notes due 2012 (the
"2012 Notes"), a new series of Securities, the issuance of which was authorized
by or pursuant to resolution of the Board of Directors of the Company;

     WHEREAS, the Company, pursuant to the foregoing authority, proposes in and
by this First Supplemental Indenture to supplement and amend the Indenture
insofar as it will apply only to the 2012 Notes in certain respects; and

     WHEREAS, all things necessary have been done to make the 2012 Notes, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
First Supplemental Indenture a valid agreement of the Company, in accordance
with their and its terms;

                                       1

<PAGE>

     NOW, THEREFORE:

     In consideration of the premises provided for herein, the Company and the
Trustee mutually covenant and agree for the equal and proportionate benefit of
all Holders of the 2012 Notes as follows:

                                   ARTICLE 1

                                 THE 2012 Notes

     SECTION 1.1. Designation of 2012 Notes; Establishment of Form.

     There shall be a series of Securities designated "7 1/2% Senior Notes due
2012" of the Company (the "2012 Notes"), and the form thereof shall be
substantially as set forth in Exhibit A hereto, which is incorporated into and
shall be deemed a part of this First Supplemental Indenture, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by the Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently with the Indenture, be determined by the officers of the
Company executing such 2012 Notes, as evidenced by their execution of the 2012
Notes.

     The 2012 Notes will initially be issued in permanent global form,
substantially in the form set forth in Exhibit A hereto, as a Global Security.

     The Company initially appoints the Trustee to act as Paying Agent and
Security Registrar with respect to the 2012 Notes.

     SECTION 1.2. Amount.

     The Trustee shall authenticate and deliver 2012 Notes for original issue in
an aggregate principal amount of up to $350,000,000 upon Company Order for the
authentication and delivery of 2012 Notes, without any further action by the
Company. The authorized aggregate principal amount of 2012 Notes may be
increased at any time hereafter and the series may be reopened for issuances of
additional Securities as provided in the last paragraph of Section 2.2 of the
Original Indenture, subject to compliance with Section 9.14 of the Indenture.
The 2012 Notes issued on the date hereof and any such additional 2012 Notes that
may be issued hereafter shall be part of the same series of Securities.

     SECTION 1.3. Redemption and Repurchase.

     (a) There shall be no sinking fund for the retirement of the 2012 Notes or
other mandatory redemption obligation.

     (b) The Company, at its option, may redeem the 2012 Notes in accordance
with the provisions of the 2012 Notes and the Indenture, including, without
limitation, Section 10.9.

                                       2

<PAGE>

     (c) The Company, at the option of the Holders thereof, shall repurchase the
2012 Notes in accordance with the provisions of and at the Change of Control
Purchase Price or the Offered Price, as the case may be, set forth in the 2012
Notes and in accordance with the provisions of the Indenture, including, without
limitation, Sections 9.15 and 9.16.

     SECTION 1.4. Conversion.

     The 2012 Notes shall not be convertible into any other securities.

     SECTION 1.5. Maturity.

     The Stated Maturity of the 2012 Notes shall be April 15, 2012.

     SECTION 1.6. Other Terms of 2012 Notes.

     Without limiting the foregoing provisions of this Article 1, the terms of
the 2012 Notes shall be as provided in the form of 2012 Notes set forth in
Exhibit A hereto and as provided in the Indenture.

                                   ARTICLE 2

                           AMENDMENTS TO THE INDENTURE

     The amendments and supplements contained herein shall apply to 2012 Notes
only and not to any other series of Securities issued under the Indenture and
any covenants provided herein are expressly being included solely for the
benefit of the 2012 Notes. These amendments and supplements shall be effective
for so long as there remains any 2012 Notes outstanding.

     SECTION 2.1. Definitions.

     Section 1.1 of the Original Indenture is amended and supplemented by
inserting or restating, as the case may be, in their appropriate alphabetical
position, the following definitions:

     "Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
amount by which the fair value of the Properties of such Subsidiary Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
the Subsidiary Guarantee of such Subsidiary Guarantor at such date.

     "Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or any Restricted Subsidiary shall be merged with
or into the Company or any Restricted Subsidiary or (b) the acquisition by the
Company or any Restricted Subsidiary of the assets of any Person which
constitute all or substantially all of the assets of such Person or any division
or line of business of such Person.

     "Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without

                                       3

<PAGE>

limitation, by way of a Production Payment or by way of merger or consolidation)
(collectively, for purposes of this definition, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary held by the Company or any Restricted Subsidiary;
(b) all or substantially all of the properties and assets of any division or
line of business of the Company or any of its Restricted Subsidiaries; or (c)
any other properties or assets of the Company or any of its Restricted
Subsidiaries other than any abandonment, farm-in, farm-out, lease or sublease of
Oil and Gas Properties in the ordinary course of business or any disposition of
hydrocarbons or other mineral products in the ordinary course of business. For
the purposes of this definition, the term "Asset Sale" shall not include (i) any
transfer of properties or assets that is governed by, and made in accordance
with, the provisions of Article VII hereof; (ii) any transfer of properties or
assets to an Unrestricted Subsidiary, if such transfer is made in compliance
with Section 9.13 hereof; (iii) any trade or exchange of Oil and Gas Properties
or Capital Stock in any corporation or royalty trust in the Oil and Gas Business
owned by the Company or any Restricted Subsidiary for Oil and Gas Properties
owned or held by another Person provided that (x) the Fair Market Value of the
Properties or Capital Stock traded or exchanged by the Company or such
Restricted Subsidiary (including any cash or Cash Equivalents, not to exceed 15%
of such Fair Market Value, to be delivered by the Company or such Restricted
Subsidiary) is reasonably equivalent to the Fair Market Value of the Properties
(together with any cash or Cash Equivalents, not to exceed 15% of such Fair
Market Value) to be received by the Company or such Restricted Subsidiary as
determined in good faith by (A) any Officer of the Company if such Fair Market
Value is less than $5,000,000 and (B) the Board of Directors of the Company as
evidenced by a Board Resolution if such Fair Market Value is equal to or in
excess of $5,000,000, provided that if such resolution indicates that such Fair
Market Value is equal to or in excess of $10,000,000 such resolution shall be
accompanied by a written appraisal by a nationally recognized investment banking
firm or appraisal firm, in each case specializing or having a specialty in Oil
and Gas Properties, and (y) such exchange is approved by a majority of the
Disinterested Directors of the Company; (iv) Sale/Leaseback Transactions in
compliance with Section 9.19; or (v) any transfer of Properties having a Fair
Market Value of less than $2,000,000.

     "Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d)(3) or
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50%
of the total voting power of the outstanding Voting Stock of the Company; (b)
the Company, either individually or in conjunction with one or more Restricted
Subsidiaries, sells, conveys, transfers or leases, or the Restricted
Subsidiaries sell, convey, transfer or lease, all or substantially all of the
assets of the Company and the Restricted Subsidiaries, taken as a whole (either
in one transaction or a series of related transactions), including Capital Stock
of the Restricted Subsidiaries, to any Person (other than the Company or a
Wholly Owned Restricted Subsidiary); (c) during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority

                                       4

<PAGE>

of the Board of Directors of the Company then in office; or (d) the liquidation
or dissolution of the Company.

     "Change of Control Notice" has the meaning specified in Section 9.15(c).

     "Change of Control Offer" has the meaning specified in Section 9.15(a).

     "Change of Control Purchase Date" has the meaning specified in Section
9.15(c).

     "Change of Control Purchase Price" has the meaning specified in Section
9.15(a).

     "Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of (a) the sum of Consolidated Net Income, Consolidated Interest Expense,
Consolidated Income Tax Expense and Consolidated Non-cash Charges deducted in
computing Consolidated Net Income, in each case, for such period, of the Company
and its Restricted Subsidiaries on a consolidated basis, all determined in
accordance with GAAP, decreased (to the extent included in determining
Consolidated Net Income) by the sum of (x) the amount of deferred revenues that
are amortized during such period and are attributable to reserves that are
subject to Volumetric Production Payments and (y) amounts recorded in accordance
with GAAP as repayments of principal and interest pursuant to Dollar-Denominated
Production Payments, to (b) the sum of such Consolidated Interest Expense for
such period; provided that (i) in making such computation, the Consolidated
Interest Expense attributable to interest on any Indebtedness required to be
computed on a pro forma basis in accordance with clause (x) of Section 9.14
hereof and bearing a floating interest rate shall be computed as if the rate in
effect on the date of computation had been the applicable rate for the entire
period, (ii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
required to be computed on a pro forma basis in accordance with clause (x) of
Section 9.14 hereof shall be computed based upon the average daily balance of
such Indebtedness during the applicable period, provided that such average daily
balance shall be reduced by the amount of any repayment of Indebtedness under a
revolving credit facility during the applicable period, which repayment
permanently reduced the commitments or amounts available to be reborrowed under
such facility, (iii) notwithstanding clauses (i) and (ii) of this proviso,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations, shall be deemed to have accrued at the rate per annum resulting
after giving effect to the operation of such agreements and (iv) in making such
calculation, Consolidated Interest Expense shall exclude interest attributable
to Dollar-Denominated Production Payments.

     "Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes (including franchise taxes based
on income) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.

     "Consolidated Interest Expense" means, for any period, without duplication,
the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i)

                                       5

<PAGE>

any amortization of debt discount, (ii) the net cost under Interest Rate
Protection Obligations (including any amortization of discounts), (iii) the
interest portion of any deferred payment obligation, (iv) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and (v) all accrued interest, in each case to the
extent attributable to such period, (b) to the extent any Indebtedness of any
Person (other than the Company or a Restricted Subsidiary) that is guaranteed by
the Company or any Restricted Subsidiary is in default, the aggregate amount of
interest paid or accrued by such other Person during such period attributable to
any such Indebtedness, in each case to the extent attributable to that period,
(c) the aggregate amount of the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP and (d) the aggregate amount of
dividends paid or accrued on Redeemable Capital Stock of the Company and its
Restricted Subsidiaries, to the extent such Redeemable Capital Stock is owned by
Persons other than Restricted Subsidiaries.

     "Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto), (b)
net after-tax effect of changes on or after January 1, 2001, in accounting
principles, (c) net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (d) the net income (or net loss)
of any Person (other than the Company or any of its Restricted Subsidiaries or
any oil and gas royalty trust), in which the Company or any of its Restricted
Subsidiaries has an ownership interest, except to the extent of the amount of
dividends or other distributions actually paid to the Company or its Restricted
Subsidiaries in cash by such other Person during such period (regardless of
whether such cash dividends, distributions or interest on indebtedness is
attributable to net income (or net loss) of such Person during such period or
during any prior period), (e) the net income of any Restricted Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary is not at the date of determination permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (f)
income resulting from transfers of assets received by the Company or any
Restricted Subsidiary from an Unrestricted Subsidiary, (g) any write-downs of
non-current assets; provided, however, that any ceiling limitation write-downs
under SEC guidelines shall be treated as capitalized costs, as if such
write-downs had not occurred and (h) any unrealized non-cash gains or losses in
respect of hedge or non-hedge derivatives (including those resulting from the
application of Financial Accounting Standards Board Statement No. 133).

     "Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization (including, without limitation,
amortization of capitalized debt issuance costs), impairment and other non-cash
expenses (including any exploration expense) of the Company and its Restricted
Subsidiaries reducing Consolidated Net Income for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such non-cash charge
which requires an accrual of or reserve for cash charges for any future period).

     "Covenant Termination Date" has the meaning specified in Section 9.21.

                                       6

<PAGE>

     "Excess Proceeds" has the meaning specified in Section 9.16(b).

     "Existing Subordinated Notes" means all or any of (i) the Company's 9 1/4%
Senior Subordinated Notes due 20007 issued in the original aggregate principal
amount of $125,000,000 and outstanding at the Issue Date and (ii) the Company's
8 3/4% Senior Subordinated Notes due 2009 issued in the original aggregate
principal amount of $175,000,000 and outstanding at the Issue Date.

     "Funding Guarantor" has the meaning specified in Section 14.5.

     "Guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or any
part of such obligation, including, without limiting the foregoing, the payment
of amounts drawn down by letters of credit. When used as a verb, "guarantee"
shall have a corresponding meaning.

     "Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade accounts payable and other
accrued current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
Person in connection with any letters of credit, bankers' acceptance or other
similar credit transaction and in connection with any agreement to purchase,
redeem, exchange, convert or otherwise acquire for value any Capital Stock of
such Person, or any warrants, rights or options to acquire such Capital Stock,
now or hereafter outstanding, if, and to the extent, any of the foregoing would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (c) all Indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) the Attributable Indebtedness (in excess of any
related Capitalized Lease Obligations) related to any Sale/Leaseback Transaction
of such Person (unless such Sale/Leaseback Transaction has been entered into in
reliance upon, and complies with, clause (ii) of Section 9.19), (f) all
Indebtedness referred to in the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness (the amount of
such obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (g) all guarantees by such
Person of Indebtedness referred to in this definition (including, with respect
to any Production Payment, any warranties or guaranties of production or payment
by such Person with respect to such Production Payment but excluding other
contractual obligations of such Person with respect to

                                       7

<PAGE>

such Production Payment), (h) all Redeemable Capital Stock of such Person valued
at the greater of its voluntary or involuntary maximum fixed repurchase price
plus accrued dividends, (i) all net obligations of such Person under or in
respect of currency exchange contracts, Interest Rate Protection Obligations and
Oil and Gas Hedging Contracts and (j) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any liability of such Person of the
types referred to in clauses (a) through (i) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to this Indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Redeemable Capital Stock, such Fair Market Value shall
be determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock, provided, however, that if such Redeemable Capital
Stock is not at the date of determination permitted or required to be
repurchased, the "maximum fixed repurchase price" shall be the book value of
such Redeemable Capital Stock. Subject to clause (g) of the first sentence of
this definition, neither Dollar-Denominated Production Payments nor Volumetric
Production Payments shall be deemed to be Indebtedness.

     "Interested Person" has the meaning set forth in Section 9.17.

     "Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other property or assets to
others or any payment for property, assets or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the Fair
Market Value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary becomes an Unrestricted Subsidiary shall be deemed to
be an "Investment" made by the Company in such Unrestricted Subsidiary at such
time. "Investments" shall exclude (a) extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and (b) Interest Rate
Protection Obligations entered into in the ordinary course of business or as
required by any Permitted Indebtedness or any Indebtedness incurred in
compliance with Section 9.14 hereof, but only to the extent that the notional
principal amount of such Interest Rate Protection Obligations does not exceed
105% of the principal amount of such Indebtedness to which such Interest Rate
Protection Obligations relate and (c) bonds, notes, debentures or other
securities or evidences of Indebtedness received as a result of Asset Sales
permitted under Section 9.16 hereof.

     "Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's and equal to or higher than BBB- (or the equivalent)
by S&P.

     "Issue Date" means the date of original issuance of the 2012 Notes.

     "Liquid Securities" means securities of an issuer that is not an Affiliate
of the Company, that are publicly traded on a national securities exchange or
the Nasdaq Stock Market and upon which the Company does not have any selling
restrictions. The Company or any Restricted Subsidiary shall not be deemed to
have selling restrictions with respect to any securities under the Securities
Act if it has registration rights with respect to such securities.

                                       8

<PAGE>

     "Make-Whole Amount" with respect to a 2012 Note means an amount equal to
the excess, if any, of (i) the present value of the remaining interest, premium
and principal payments due on such 2012 Note (excluding any portion of such
payments of interest accrued as of the Redemption Date), computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (ii) the
outstanding principal amount of such 2012 Note. As used herein, "Treasury Rate"
is defined as the yield to maturity (calculated on a semi-annual bond equivalent
basis) at the time of the computation of United States Treasury securities with
a constant maturity (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15 (510), which has become publicly available at
least two Business Days prior to the date of the redemption notice or, if such
Statistical Release is no longer published, any publicly available source of
similar market data) most nearly equal to the then remaining maturity of the
2012 Notes; provided, however, that if the Make-Whole Average Life of such 2012
Note is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Make-Whole Average Life of such
2012 Note is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used. As used herein, "Make-Whole Average Life" means the number of
years (calculated to the nearest one-twelfth) between the Redemption Date and
the Stated Maturity of the 2012 Notes.

     "Make-Whole Price" means the sum of the outstanding principal amount of the
2012 Notes to be redeemed plus the Make-Whole Amount of such 2012 Notes.

     "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary), net of (a) brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel and investment banks) related to such Asset Sale, (b) provisions for all
taxes payable as a result of such Asset Sale, (c) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (d) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve required in accordance with GAAP consistently applied
against any liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee; provided,
however, that any amounts remaining after adjustments, revaluations or
liquidations of such reserves shall constitute Net Cash Proceeds.

     "Net Proceeds Deficiency" has the meaning specified in Section 9.16(c).

     "Net Proceeds Offer" has the meaning specified in Section 9.16(c).

                                       9

<PAGE>

     "Note Obligations" means any principal of, premium, if any, and interest
on, and any other amounts (including, without limitation, any payment
obligations with respect to the 2012 Notes as a result of any Asset Sale, Change
of Control or redemption) owing in respect of, the 2012 Notes payable pursuant
to the terms of the 2012 Notes or this Indenture or upon acceleration of the
2012 Notes.

     "Offered Price" has the meaning specified in Section 9.16(c).

     "Pari Passu Indebtedness Amount" has the meaning specified in Section
9.16(c).

     "Pari Passu Offer" has the meaning specified in Section 9.16(c).

     "Payment Amount" has the meaning specified in Section 9.16(c).

     "Permitted Indebtedness" means any of the following:

     (a)  Indebtedness of the Company under one or more bank credit or revolving
credit facilities in an aggregate principal amount at any one time outstanding
under this clause (a) not to exceed the greater of (i) $850 million and (ii) an
amount equal to the sum of (A) $400 million and (B) 25% of Adjusted Consolidated
Net Tangible Assets determined as of the date of the incurrence of such
Indebtedness (plus interest and fees under such facilities), less any amounts
derived from Asset Sales and applied to the required permanent reduction of Pari
Passu Indebtedness (and a permanent reduction of the related commitment to lend
or amount available to be reborrowed in the case of a revolving credit facility)
under such credit facilities as contemplated by Section 9.16(b)(i) (the "Maximum
Credit Amount") (with the Maximum Credit Amount to be an aggregate maximum
amount for the Company and all Restricted Subsidiaries, pursuant to clause (a)
of the definition of "Permitted Subsidiary Indebtedness"), and any renewals,
amendments, extensions, supplements, modifications, deferrals, refinancings or
replacements (each, for purposes of this clause, a "refinancing") thereof by the
Company, including any successive refinancings thereof by the Company, so long
as the aggregate principal amount of any such new Indebtedness, together with
the aggregate principal amount of all other Indebtedness outstanding pursuant to
this clause (a) (and clause (a) of the definition of "Permitted Subsidiary
Indebtedness"), shall not at any one time exceed the Maximum Credit Amount;

     (b)  Indebtedness of the Company under the 2012 Notes issued on the Issue
Date;

     (c)  Indebtedness of the Company outstanding on the date of this Indenture
(and not repaid or defeased with the proceeds of the 2012 Notes);

     (d)  obligations of the Company pursuant to Interest Rate Protection
Obligations, but only to the extent such obligations do not exceed 105% of the
aggregate principal amount of the Indebtedness covered by such Interest Rate
Protection Obligations; and obligations under currency exchange contracts and
Oil and Gas Hedging Contracts entered into in the ordinary course of business;

     (e)  Indebtedness of the Company to any Restricted Subsidiaries;

                                       10

<PAGE>

     (f)  in-kind obligations relating to net gas balancing positions arising in
the ordinary course of business and consistent with past practice;

     (g)  Indebtedness in respect of bid, performance or surety bonds issued for
the account of the Company or any Restricted Subsidiary in the ordinary course
of business, including guarantees and letters of credit supporting such bid,
performance, surety or other reimbursement obligations (in each case other than
an obligation for money borrowed);

     (h)  any renewals, extensions, substitutions, refinancings or replacements
(each, for purposes of this clause, a "refinancing") by the Company of any
Indebtedness of the Company incurred in compliance with clauses (i) and (ii) of
the proviso to the first sentence of Section 9.14 or pursuant to clause (b),
(c), (h) or (j) of this definition, including any successive refinancings by the
Company, so long as (i) any such new Indebtedness shall be in a principal amount
that does not exceed the principal amount (or, if such Indebtedness being
refinanced provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration thereof, such lesser amount
as of the date of determination) so refinanced plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
the Indebtedness refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing, plus the amount of
expenses of the Company incurred in connection with such refinancing, and (ii)
in the case of any refinancing of Subordinated Indebtedness, such new
Indebtedness is made subordinate to the 2012 Notes at least to the same extent
as the Indebtedness being refinanced and (iii) such new Indebtedness has an
Average Life equal to or longer than the Average Life of the Indebtedness being
refinanced and a final Stated Maturity equal to or later than the final Stated
Maturity of the Indebtedness being refinanced;

     (i)  Non-Recourse Indebtedness;

     (j)  Purchase Money Indebtedness of the Company in an aggregate principal
amount (when added to (1) all refinancings thereof pursuant to clause (h) of
this definition plus (2) Purchase Money Indebtedness incurred by all Restricted
Subsidiaries pursuant to clause (k) of the definition of Permitted Subsidiary
Indebtedness and all refinancings thereof pursuant to clause (l) of such
definition) not in excess of $50,000,000 at any one time outstanding; and

     (k)  other Indebtedness of the Company in an aggregate principal amount not
in excess of $50,000,000 at any one time outstanding.

     "Permitted Investments" means any of the following: (a) Investments in Cash
Equivalents; (b) Investments in the Company or any of its Restricted
Subsidiaries; (c) Investments in an amount not to exceed 10% of Adjusted
Consolidated Net Tangible Assets determined as of the date of the making or
incurrence of such Permitted Investment at any one time outstanding; (d)
Investments by the Company or any of its Restricted Subsidiaries in another
Person, if as a result of such Investment (i) such other Person becomes a
Restricted Subsidiary of the Company or (ii) such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its assets to, the Company or a Restricted Subsidiary; (e) entry into operating
agreements, joint ventures, partnership agreements, limited liability company
agreements, working interests, royalty interests, mineral leases, processing

                                       11

<PAGE>

agreements, farm-out agreements, contracts for the sale, transportation or
exchange of oil and natural gas, unitization agreements, pooling arrangements,
area of mutual interest agreements or other similar or customary agreements,
transactions or arrangements, and Investments, contributions of Property and
expenditures in connection therewith or pursuant thereto, in each case made or
entered into in the ordinary course of the Oil and Gas Business; (f) entry into
any Oil and Gas Hedging Contracts in the ordinary course of business; (g)
Investments in Capital Stock of any oil and gas royalty trust; (h) entry into a
joint venture or partnership agreement in connection with ownership and
operation of office and building real estate and related assets owned by the
Company or any Restricted Subsidiary and contribution of such assets to such
entity; or (i) loans and advances to employees of the Company or any Restricted
Subsidiary in an amount not to exceed $2,000,000 at any one time outstanding.

     "Permitted Liens" means the following types of Liens:

     (a)  Liens existing as of the Issue Date;

     (b)  Liens securing the 2012 Notes;

     (c)  Liens in favor of the Company or a Subsidiary Guarantor;

     (d)  Liens securing refinancings, as defined in clause (h) of the
definition of Permitted Indebtedness of secured Indebtedness; provided that such
Liens extend only to cover the Property currently securing the Indebtedness
being refinanced;

     (e)  Liens for taxes, assessments and governmental charges or claims either
(i) not delinquent or (ii) contested in good faith by appropriate proceedings
and as to which the Company or its Restricted Subsidiaries shall have set aside
on their books such reserves as may be required pursuant to GAAP;

     (f)  statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof;

     (g)  Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the payment or performance of tenders, statutory
or regulatory obligations, surety and appeal bonds, bids, leases, government
contracts and leases, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money but
including lessee or operator obligations under statutes, governmental
regulations or instruments related to the ownership, exploration and production
of oil, gas and minerals on state, federal or foreign lands or waters);

     (h)  judgment Liens not giving rise to an Event of Default so long as any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment shall not

                                       12

<PAGE>

have been finally terminated or the period within which such proceeding may be
initiated shall not have expired;

     (i)  easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering in any material respect with the ordinary conduct
of the business of the Company or any of its Restricted Subsidiaries;

     (j)  any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;

     (k)  Liens resulting from the deposit of funds or evidences of Indebtedness
in trust for the purpose of defeasing Indebtedness of the Company or any of its
Restricted Subsidiaries;

     (l)  Liens securing obligations under Oil and Gas Hedging Contracts;

     (m)  Liens upon specific items of inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers' acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;

     (n)  Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;

     (o)  Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of the Company or its Restricted
Subsidiaries relating to such property or assets;

     (p)  Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company or
any of its Restricted Subsidiaries, including rights of offset and set-off;

     (q)  Liens securing Interest Rate Protection Obligations which Interest
Rate Protection Obligations relate to Indebtedness that is secured by Liens
otherwise permitted under this Indenture;

     (r)  Liens on, or related to, properties or assets to secure all or part of
the costs incurred in the ordinary course of business for the exploration,
drilling, development or operation thereof;

     (s)  Liens on pipeline or pipeline facilities which arise out of operation
of law;

     (t)  Liens arising under operating agreements, joint venture agreements,
partnership agreements, oil and gas leases, farm-out agreements, division
orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and

                                       13

<PAGE>

agreements, area of mutual interest agreements and other agreements which are
customary in the Oil and Gas Business;

     (u)  Liens reserved in oil, gas and mineral leases for bonus or rental
payments, and for compliance with the terms of such leases;

     (v)  Liens constituting survey exceptions, encumbrances, easements, or
reservations of, or rights to others for, rights-of-way, zoning or other
restrictions as to the use of real properties, and minor defects of title which,
in the case of any of the foregoing, were not incurred or created to secure the
payment of borrowed money or the deferred purchase price of Property or
services, and in the aggregate do not materially adversely affect the value of
Property of the Company and the Restricted Subsidiaries, taken as a whole, or
materially impair the use of such Properties for the purposes for which such
Properties are held by the Company or any Restricted Subsidiaries;

     (w)  Liens securing Non-Recourse Indebtedness; provided, however, that the
related Non-Recourse Indebtedness shall not be secured by any property or assets
of the Company or any Restricted Subsidiary other than the property and assets
acquired by it with the proceeds of such Non-Recourse Indebtedness;

     (x)  Liens securing Indebtedness incurred under one or more bank credit or
revolving credit facilities in compliance with Section 9.14, including
Indebtedness incurred in accordance with clause (a) of the definition of
Permitted Indebtedness and/or clause (a) of the definition of Permitted
Subsidiary Indebtedness;

     (y)  (i) Liens upon any Property of any Person existing at the time of
acquisition thereof by the Company or a Restricted Subsidiary, (ii) Liens upon
any Property of a Person existing at the time such Person is merged or
consolidated with the Company or any Restricted Subsidiary or existing at the
time of the sale or transfer of any such Property of such Person to the Company
or any Restricted Subsidiary, or (iii) Liens upon any Property of a Person
existing at the time such Person becomes a Restricted Subsidiary; provided that
in each case such Lien has not been created in contemplation of such sale,
merger or consolidation, transfer or acquisition, and provided that, in each
such case no such Lien shall extend to or cover any Property of the Company or
any Restricted Subsidiary other than the Property being acquired and
improvements thereon;

     (z)  purchase money Liens granted or assumed in connection with the
acquisition of assets in the ordinary course of business and consistent with
past practices; provided, that (A) such Liens attach only to the property so
acquired with the Purchase Money Indebtedness secured thereby and (B) such Liens
secure only Indebtedness that is not in excess of 100% of the purchase price of
such assets;

     (aa) other Liens of the Company that, at the date incurred, when taken
together with all other Liens theretofore incurred in reliance upon this clause
(aa), secure Indebtedness in an aggregate principal amount not in excess of 10%
of Adjusted Consolidated Net Tangible Assets; and

                                       14

<PAGE>

     (bb) any Lien that is deemed to arise as a result of the sale or transfer
of a Production Payment that does not involve the creation of a guaranty of the
type described in clause (g) of the definition of "Indebtedness."

     "Permitted Subsidiary Indebtedness" means any of the following:

     (a)  Indebtedness of any Restricted Subsidiary under one or more bank
credit or revolving credit facilities (and "refinancings" thereof) in an amount
at any one time outstanding not to exceed the Maximum Credit Amount (in the
aggregate for all Restricted Subsidiaries and the Company, pursuant to clause
(a) of the definition of "Permitted Indebtedness");

     (b)  Indebtedness of any Restricted Subsidiary outstanding on the Issue
Date;

     (c)  obligations of any Restricted Subsidiary pursuant to Interest Rate
Protection Obligations, but only to the extent such obligations do not exceed
105% of the aggregate principal amount of the Indebtedness covered by such
Interest Rate Protection Obligations, and obligations under any Oil and Gas
Hedging Contracts that any Restricted Subsidiary enters into in the ordinary
course of business;

     (d)  the Subsidiary Guarantees (and any assumption of the obligations
guaranteed thereby);

     (e)  Indebtedness of any Restricted Subsidiary relating to guarantees by
such Restricted Subsidiary of Permitted Indebtedness pursuant to clause (a) of
the definition of "Permitted Indebtedness;"

     (f)  in-kind obligations relating to net gas balancing positions arising in
the ordinary course of business and consistent with past practice;

     (g)  Indebtedness in respect of bid, performance or surety bonds or other
reimbursement obligations issued for the account of any Restricted Subsidiary in
the ordinary course of business, including guarantees and letters of credit
supporting such bid, performance, surety bonds or other reimbursement
obligations (in each case other than for an obligation for money borrowed);

     (h)  Indebtedness of any Restricted Subsidiary to any other Restricted
Subsidiary or to the Company;

     (i)  Indebtedness relating to guarantees by any Restricted Subsidiary
permitted to be incurred pursuant to Section 9.12(a) hereof;

     (j)  Non-Recourse Indebtedness;

     (k)  Purchase Money Indebtedness of any Restricted Subsidiary in an
aggregate principal amount (when added to (1) Purchase Money Indebtedness of all
other Restricted Subsidiaries under this clause (k) and all refinancings thereof
pursuant to clause (l) of this definition plus (2) Purchase Money Indebtedness
of the Company under clause (j) of the

                                       15

<PAGE>

definition of Permitted Indebtedness and all refinancings thereof pursuant to
clause (h) of such definition) not in excess of $50,000,000 at any one time
outstanding;

     (l)  any renewals, extensions, substitutions, refinancings or replacements
(each, for purposes of this clause, a "refinancing") by any Restricted
Subsidiary of any Indebtedness of such Restricted Subsidiary incurred in
compliance with clauses (i) and (ii) of the proviso to the first sentence of
Section 9.14 or pursuant to clause (b) or (k) of this definition, including any
successive refinancings by such Restricted Subsidiary, so long as (i) any such
new Indebtedness shall be in a principal amount that does not exceed the
principal amount (or, if such Indebtedness being refinanced provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of the date of
determination) so refinanced plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined by such Restricted
Subsidiary as necessary to accomplish such refinancing, plus the amount of
expenses of such Restricted Subsidiary incurred in connection with such
refinancing and (ii) such new Indebtedness has an Average Life equal to or
longer than the Average Life of the Indebtedness being refinanced and a final
Stated Maturity equal to or later than the final Stated Maturity of the
Indebtedness being refinanced; and

     (m)  other Indebtedness of the Restricted Subsidiaries in an aggregate
principal amount not in excess of $50,000,000 at any one time outstanding.

     "Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of this Indenture, including, without limitation, all classes and
series of preferred or preference stock of such Person.

     "Public Market" exists at any time with respect to the Qualified Capital
Stock of the Company if such Qualified Capital Stock of the Company is then (a)
registered with the Commission pursuant to Section 12(b) or 12(g) of the
Exchange Act and (b) traded either on a national securities exchange or on the
Nasdaq Stock Market.

     "Purchase Notice" has the meaning set forth in Section 9.16(c).

     "Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.

     "Qualified Redemption Transaction" means a call for redemption of any
Capital Stock or Subordinated Indebtedness (including any Subordinated
Indebtedness accounted for as a minority interest of the Company that is held by
a Subsidiary that is a business trust or similar entity formed for the primary
purpose of issuing preferred securities the proceeds of which are loaned to the
Company or a Restricted Subsidiary) that by its terms is convertible into Common
Stock of the Company if on the date of notice of such call for redemption (a) a
Public Market exists in the shares of Common Stock of the Company and (b) the
average closing price on the Public Market for shares of Common Stock of the
Company for the twenty trading days immediately preceding the date of such
notice exceeds 120% of the conversion price per share of

                                       16

<PAGE>

Common Stock of the Company issuable upon conversion of the Capital Stock or
Subordinated Indebtedness called for redemption.

     "Rating Agency" means each of S&P and Moody's, or if S&P or Moody's or both
shall not make a rating on the 2012 Notes publicly available, a nationally
recognized statistical rating agency or agencies, as the case may be, selected
by the Company (as evidenced by a Board Resolution of the Board of Directors of
the Company) which shall be substituted for S&P or Moody's, or both, as the case
may be.

     "Regular Record Date" for the interest payable on any Interest Payment Date
means the April 1 or October 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.

     "Restricted Payment" has the meaning specified in Section 9.13.

     "Subordinated Indebtedness" means Indebtedness of the Company that is
expressly subordinated in right of payment to the 2012 Notes, including the
Existing Subordinated Notes.

     "Subsidiary Guarantee" means any guarantee of the 2012 Notes by (i) any
Subsidiary Guarantor in accordance with the provisions of Section 14.1 hereof
and (ii) any Restricted Subsidiary in accordance with the provisions of Section
9.12.

     "Subsidiary Guarantor" means (a) each of the Company's Restricted
Subsidiaries that becomes a guarantor of the Securities in compliance with the
provisions of Section 9.12 or Section 14.1 hereof and (b) each of the Company's
Subsidiaries executing a supplemental indenture in which such Subsidiary agrees
to be bound by the terms of this Indenture and to guarantee the payment of the
2012 Notes pursuant to the provisions of Article XIV hereof.

     "Terminated Covenants" has the meaning specified in Section 9.21.

     "Trigger Date" has the meaning specified in Section 9.16(c).

     "Unrestricted Subsidiary" means (a) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below, Hugoton Royalty Trust and
any other oil and gas royalty trust Subsidiary of the Company that meets the
criteria set forth in clauses (i) through (iv) of the second sentence of this
definition, and (b) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Subsidiary of the Company as an
Unrestricted Subsidiary so long as (i) neither the Company nor any Restricted
Subsidiary is directly or indirectly liable pursuant to the terms of any
Indebtedness of such Subsidiary, (ii) no default with respect to any
Indebtedness of such Subsidiary would permit (upon notice, lapse of time or
otherwise) any holder of any other Indebtedness of the Company or any Restricted
Subsidiary to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity, (iii) neither
the Company nor any Restricted Subsidiary has made an Investment in such
Subsidiary unless such Investment was made pursuant to, and in accordance with,
Section 9.13 hereof (other than Investments of the type described in clause (d)
of the definition of Permitted Investments), and (iv) such designation shall not
result in the creation or imposition of any Lien on any of the Properties of the
Company

                                       17

<PAGE>

or any Restricted Subsidiary (other than any Permitted Lien or any Lien the
creation or imposition of which shall have been in compliance with Section 9.10
hereof); provided, however, that with respect to clause (i), the Company or a
Restricted Subsidiary may be liable for Indebtedness of an Unrestricted
Subsidiary if (A) such liability constituted a Permitted Investment or a
Restricted Payment permitted by Section 9.13 hereof, in each case at the time of
incurrence, or (B) the liability would be a Permitted Investment at the time of
designation of such Subsidiary as an Unrestricted Subsidiary. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing a Board Resolution with the Trustee giving effect to such
designation. The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after giving
effect to such designation, (x) no Default or Event of Default shall have
occurred and be continuing, (y) the Company could incur $1.00 of additional
Indebtedness (not including the incurrence of Permitted Indebtedness) under the
first paragraph of Section 9.14 hereof and (z) if any of the Properties of the
Company or any of its Restricted Subsidiaries would upon such designation become
subject to any Lien (other than a Permitted Lien), the creation or imposition of
such Lien shall have been in compliance with Section 9.10 hereof.

     "2012 Notes" means the 7 1/2% Senior Notes due 2012 of the Company to be
issued pursuant to this Indenture. For purposes of this Indenture, the term
"2012 Notes" shall, except where the context otherwise requires, include the
Subsidiary Guarantees, if any.

     SECTION 2.2. Consolidation, Merger and Sale.

     The Original Indenture shall be amended and supplemented by (i)
redesignating clause (d) of Section 7.1 as clause (f) and (ii) inserting the
following new clauses (d) and (e) in Section 7.1:

     "(d) except in the case of the consolidation or merger of any Restricted
Subsidiary with or into the Company, immediately after giving effect to such
transaction or transactions on a pro forma basis (on the assumption that the
transaction or transactions occurred on the first day of the period of four full
fiscal quarters ending immediately prior to the consummation of such transaction
or transactions with the appropriate adjustments with respect to the transaction
or transactions being included in such pro forma calculation) the Company (or
the Surviving Entity if the Company is not the continuing obligor under this
Indenture) could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) under Section 9.14 hereof;

     (e)  if the Company is not the continuing obligor under this Indenture,
then each Subsidiary Guarantor, unless it is the party to the transactions
described above, shall have by supplemental indenture confirmed that its
Subsidiary Guarantee shall apply to such Person's obligations under this
Indenture and the 2012 Notes; and".

     SECTION 2.3. Events of Default.

     (a)  The following Events of Default shall be substituted for those in
clauses (a)-(j) of Section 4.1 of the Original Indenture insofar as they relate
to the 2012 Notes:

                                       18

<PAGE>

     "(a) default in the payment of the principal of or premium, if any, on any
of the 2012 Notes, whether such payment is due at Stated Maturity, upon
redemption, upon repurchase pursuant to a Change of Control Offer or a Net
Proceeds Offer, upon acceleration or otherwise; or

     (b)  default in the payment of any installment of interest on any of the
2012 Notes, when it becomes due and payable, and the continuance of such default
for a period of 30 days; or

     (c)  default in the performance or breach of the provisions of Article VII
hereof, the failure to make or consummate a Change of Control Offer in
accordance with Section 9.15 hereof or the failure to make or consummate a Net
Proceeds Offer in accordance with the provisions of Section 9.16 hereof; or

     (d)  the Company or any Subsidiary Guarantor shall fail to perform or
observe any other term, covenant or agreement (not theretofore terminated
pursuant to Section 9.21 hereof) contained in the 2012 Notes, any Subsidiary
Guarantee or this Indenture (other than a default specified in (a), (b) or (c)
above) for a period of 30 days after written notice of such failure requiring
the Company to remedy the same shall have been given (i) to the Company by the
Trustee or (ii) to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the 2012 Notes then Outstanding; or

     (e)  the occurrence and continuation beyond any applicable grace period of
any default in the payment of the principal of (or premium, if any, on) or
interest on any Indebtedness of the Company (other than the 2012 Notes) or any
Restricted Subsidiary for money borrowed when due, or any other default causing
acceleration of any Indebtedness of the Company or any Restricted Subsidiary for
money borrowed; provided that the aggregate principal amount of such
Indebtedness shall exceed $10,000,000; provided further that if any such default
is cured or waived or any such acceleration rescinded, or such debt is repaid,
within a period of 10 days from the continuation of such default beyond the
applicable grace period or the occurrence of such acceleration, as the case may
be, such Event of Default under this Indenture and any consequential
acceleration of the 2012 Notes shall be automatically rescinded, so long as such
rescission does not conflict with any judgment or decree; or

     (f)  the commencement of proceedings, or the taking of any enforcement
action (including by way of set-off), by any holder of at least $10,000,000 in
aggregate principal amount of Indebtedness of the Company or any Restricted
Subsidiary, after a default under such Indebtedness, to retain in satisfaction
of such Indebtedness or to collect or seize, dispose of or apply in satisfaction
of such Indebtedness, property or assets of the Company or any Restricted
Subsidiary having a Fair Market Value in excess of $10,000,000 individually or
in the aggregate; provided that if any such proceedings or actions are
terminated or rescinded, or such Indebtedness is repaid, such Event of Default
under this Indenture and any consequential acceleration of the Securities shall
be automatically rescinded, so long as (i) such rescission does not conflict
with any judgment or decree and (ii) the holder of such Indebtedness shall not
have applied any such property or assets in satisfaction of such Indebtedness;
or

                                       19

<PAGE>

     (g)  any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to be,
in full force and effect, enforceable in accordance with its terms (except
pursuant to the release of any such Subsidiary Guarantee in accordance with this
Indenture); or

     (h)  if (i) any material "accumulated funding deficiency" (as defined in
Section 302 of ERISA or Section 412 of the Code), shall exist with respect to
any PBGC Plan or Multiple Employer Plan (unless a waiver or extension is
obtained under Section 412(d) or (e) of the Code and Sections 303 and 304 of
ERISA), if such accumulated funding deficiency would give rise to a material
liability of the Company, (ii) a Reportable Event shall occur with respect to
any PBGC Plan or Multiple Employer Plan, which Reportable Event is likely to
result in the termination of such PBGC Plan or Multiple Employer Plan for
purposes of Title IV of ERISA and to give rise to a material liability of the
Company, (iii) proceedings to have a trustee appointed shall commence, or a
trustee shall be appointed to terminate or administer a PBGC Plan or Multiple
Employer Plan, which proceeding is likely to result in the termination of such
PBGC Plan or Multiple Employer Plan and to give rise to a material liability of
the Company with respect to such termination, (iv) a notice of intent to
terminate a PBGC Plan or Multiple Employer Plan in a distress termination under
Section 4041(c) of ERISA is furnished to participants, (v) any Multiemployer
Plan is in reorganization or is insolvent and the circumstances are such that
such reorganization or insolvency will likely result in a material liability to
the Company, (vi) there is a complete or partial withdrawal from a Multiemployer
Plan under circumstances that would likely subject the Company to material
liability, or (vii) any event or condition described in (i) through (vi) above
(determined without regard to whether the event or condition taken alone would
or could result in a material liability) shall occur or exist with respect to a
PBGC Plan, Multiple Employer Plan or Multiemployer Plan which in combination
with one or more of any events described in (i) through (vi) above (determined
without regard to whether the event or condition taken alone would or could
result in a material liability) that has occurred or exists, would likely
subject the Company, any Subsidiary Guarantor or any other Restricted Subsidiary
to any material tax, penalty or other liability (for purposes of this paragraph
(h) the term "material" and "material liability" shall mean any tax, penalty or
liability in excess of $10,000,000); or

     (i)  final judgments or orders rendered against the Company or any
Restricted Subsidiary that are unsatisfied and that require the payment in
money, either individually or in an aggregate amount, that is more than
$10,000,000 over the coverage under applicable insurance policies and either (i)
commencement by any creditor of an enforcement proceeding upon such judgment
(other than a judgment that is stayed by reason of pending appeal or otherwise)
or (ii) the occurrence of a 60-day period during which a stay of such judgment
or order, by reason of pending appeal or otherwise, was not in effect; or

     (j)  the entry of a decree or order by a court having jurisdiction in the
premises (i) for relief in respect of the Company or any Restricted Subsidiary
in an involuntary case or proceeding under the Federal Bankruptcy Code or any
other applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or (ii) adjudging the Company or any Restricted Subsidiary
bankrupt or insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of the Company or a Restricted Subsidiary
under the

                                       20

<PAGE>

Federal Bankruptcy Code or any other applicable federal or state law, or
appointing under any such law a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any Subsidiary
Guarantor or any other Restricted Subsidiary or of a substantial part of their
consolidated assets, or ordering the winding up or liquidation of their affairs,
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive days; or

     (k)  the commencement by the Company or any Restricted Subsidiary of a
voluntary case or proceeding under the Federal Bankruptcy Code or any other
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or any other case or proceeding to be adjudicated bankrupt or
insolvent, or the consent by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary to the entry of a decree or order for relief in
respect thereof in an involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary of a petition or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it under any such law to the filing of any such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of any of the
Company or any Subsidiary Guarantor or any other Restricted Subsidiary or of any
substantial part of their consolidated assets, or the making by it of an
assignment for the benefit of creditors under any such law, or the admission by
it in writing of its inability to pay its debts generally as they become due or
taking of corporate action by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary in furtherance of any such action."

     (b)  The references in Sections 4.2 and 5.6 of the Original Indenture to
clause (i) or (j) of Section 4.1 shall be deemed to be references to clause (j)
or (k) of Section 4.1 in relation to the 2012 Notes.

     SECTION 2.4. Supplemental Indentures without Consent of Holders.

     Section 8.1 of the Original Indenture shall be amended and supplemented by
(i) inserting the words "any Subsidiary Guarantors, when authorized by a Board
Resolution," after the words "Board Resolution," in the first paragraph thereof,
(ii) deleting the period at the end of paragraph (k) and substituting therefor
"; or" and (iii) inserting the following paragraphs:

     "(l) to add any Person as a Subsidiary Guarantor as provided in Section
     14.1 hereof or as contemplated by the definition of "Permitted Subsidiary
     Indebtedness" to evidence the succession of another Person to any
     Subsidiary Guarantor and the assumption by any such successor of the
     covenants and agreements of such Subsidiary Guarantor contained herein, in
     the 2012 Notes and in the Subsidiary Guarantee; or

     (m)  to release a Subsidiary Guarantor from its Subsidiary Guarantee
     pursuant to Section 9.12 hereof."

                                       21

<PAGE>

     SECTION 2.5. Supplemental Indenture with Consent of Holders.

     Section 8.2 of the Original Indenture shall be amended and supplemented by
(i) inserting the words "any Subsidiary Guarantors, when authorized by a Board
Resolution," after the words "Board Resolution," in the first paragraph thereof,
(ii) deleting the period at the end of paragraph (c) and substituting therefor
"; or" and (iii) inserting the following paragraphs:

     "(d) modify Section 9.12 hereof or any provisions of this Indenture
relating to any Subsidiary Guarantees in a manner adverse to the Holders
thereof; or

     (e)  amend, change or modify the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control, or to
make and consummate a Net Proceeds Offer with respect to any Asset Sale or
modify any of the provisions or definitions with respect thereto."

     SECTION 2.6. Covenants.

     (a)  Article IX of the Original Indenture shall be amended and supplemented
by inserting the following in substitution for Section 9.9:

     "SECTION 9.9 Reports.

     The Company shall file on a timely basis with the Commission, to the extent
such filings are accepted by the Commission and whether or not the Company has a
class of securities registered under the Exchange Act, the annual reports,
quarterly reports and other documents that the Company would be required to file
if it were subject to Section 13 or 15(d) of the Exchange Act). The Company will
also be required to file with the Trustee copies of such reports and documents
within 15 days after the date on which the Company files such reports and
documents with the Commission or the date on which the Company would be required
to file such reports and documents if the Company were so required. The Company
also will furnish at its cost copies of such reports and documents to any holder
of 2012 Notes promptly upon written request, irrespective of whether or not the
Company files any such report or document with the Commission. The Company and
each Subsidiary Guarantor also shall comply with other provisions of TIA Section
314(a).

     Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates)."

     (b)  Article IX of the Original Indenture shall be further amended and
supplemented by inserting the following in substitution for Section 9.11:

     "SECTION 9.11 Waiver of Certain Covenants.

     The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 9.5 through 9.10, Sections 9.13 and
9.14 and Sections 9.17

                                       22

<PAGE>

through 9.20 hereof if, before or after the time for such compliance, the
Holders of at least a majority in principal amount of the Outstanding 2012 Notes
and the Subsidiary Guarantors, by act of such Holders and written agreement of
the Subsidiary Guarantors, waive such compliance in such instance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect."

     (c)  Article IX of the Original Indenture shall be further amended and
supplemented by inserting the following new sections in their entirety:

     "SECTION 9.12 Limitation on Non-Guarantor Restricted Subsidiaries.

     (a)  The Company shall not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor to guarantee the payment of any Indebtedness of the Company
unless (i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a Subsidiary Guarantee of
the 2012 Notes by such Restricted Subsidiary; (ii) such Restricted Subsidiary
waives, and agrees not in any manner whatsoever to claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any other
rights against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Subsidiary Guarantee until such
time as the obligations guaranteed thereby are paid in full; and (iii) such
Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the
effect that such supplemental indenture has been duly executed and authorized
and such Subsidiary Guarantee constitutes a valid, binding and enforceable
obligation of such Restricted Subsidiary, except insofar as enforcement thereof
may be limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; provided that
this paragraph (a) shall not be applicable to (x) any guarantee of any
Restricted Subsidiary that (1) existed at the time such Person became a
Restricted Subsidiary of the Company and (2) was not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary of
the Company or (y) any guarantee of any Restricted Subsidiary of Indebtedness of
the Company described in clause (a) of the definition of Permitted Indebtedness.

     (b)  The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, transfer any assets, businesses, divisions, real property or
equipment to any Restricted Subsidiary (other than sales of oil and natural gas
production in the ordinary course of business at prices under contracts in
existence as of the date of this Indenture or on terms not less favorable to the
Subsidiary than would be obtainable at the time in comparable transactions
through arms-length dealings with Persons other than Affiliates of the Company
or any transfer that results in Permitted Subsidiary Indebtedness) or acquire
Capital Stock of a new Restricted Subsidiary that in either case is not a
Subsidiary Guarantor unless (i) such transferee or new Restricted Subsidiary
enters into a Subsidiary Guarantee by complying with Section 9.12(a) hereof or
(ii) the aggregate Fair Market Value at the time of such proposed transfer or
acquisition, of such assets, businesses, divisions, real property or equipment
proposed to be transferred or Capital Stock of a new Restricted Subsidiary
proposed to be acquired, together with the aggregate Fair Market Value of all
assets, businesses, divisions, real property or equipment previously

                                       23

<PAGE>

transferred pursuant to this clause (ii) and Capital Stock previously acquired
pursuant to this clause (ii) (in each case valued at the time of transfer or
acquisition) does not exceed (x) the greater of $50,000,000 and 5% of Adjusted
Consolidated Net Tangible Assets less (y) the book value of total combined
assets of all Subsidiaries of the Company at December 31, 2001, as reflected in
a consolidating balance sheet of the Company prepared in accordance with GAAP
(exclusive, in the case of each of clauses (x) and (y), of intercompany
receivables and liabilities due from the Company and assets subject to any
Sale/Leaseback Transaction treated as an operating lease in the consolidated
financial statements of the Company); provided that, in the case of clause (ii),
if the Restricted Subsidiary to which such transfer was made or whose Capital
Stock was acquired subsequently enters into a Subsidiary Guarantee, such
transfer or acquisition shall be treated as having been made pursuant to clause
(i).

     (c)  Notwithstanding the foregoing and the other provisions of this
Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant
to this Section 9.12 shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person that is not an Affiliate of the Company, of all of the
Company's Capital Stock in such Restricted Subsidiary (which sale, exchange or
transfer is not prohibited by this Indenture), (ii) the merger of such
Restricted Subsidiary into the Company or any other Restricted Subsidiary or the
liquidation and dissolution of such Restricted Subsidiary (in each case to the
extent not prohibited by this Indenture), or (iii) (x) the release or discharge
of all guarantees by such Restricted Subsidiary of any Indebtedness other than
Note Obligations, except a discharge or release by or as a result of payment
under such guarantees and (y) after giving effect to the proposed release and
discharge, the aggregate total combined assets of all Restricted Subsidiaries
that are not Subsidiary Guarantors (exclusive of intercompany receivables and
liabilities due from the Company and assets subject to any Sale/Leaseback
Transaction treated as an operating lease in the consolidated financial
statements of the Company) do not exceed the greater of $50,000,000 and 5% of
Adjusted Consolidated Net Tangible Assets."

     "SECTION 9.13 Limitation on Restricted Payments.

     (a)  The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, take the following actions:

          (i)   declare or pay any dividend on, or make any distribution to
     holders of, any shares of the Company's Capital Stock (other than dividends
     or distributions payable solely in shares of Qualified Capital Stock of the
     Company, options, warrants or other rights to purchase Qualified Capital
     Stock of the Company);

          (ii)  purchase, redeem or otherwise acquire or retire for value any
     Capital Stock of the Company or any Affiliate thereof (other than any
     Restricted Subsidiary of the Company) or any options, warrants or other
     rights to acquire such Capital Stock; provided, however, that the Company
     may purchase, redeem or otherwise retire common stock of the Company in an
     amount not to exceed $10,000,000 in the aggregate for all such transactions
     after the Issue Date, and; provided, further, that the Company may make any
     payment of the applicable redemption price in connection with a Qualified
     Redemption Transaction;

                                       24

<PAGE>

               (iii)  make any principal payment on or repurchase, redeem,
         defease or otherwise acquire or retire for value, prior to any
         scheduled principal payment, scheduled sinking fund payment or
         maturity, any Subordinated Indebtedness, provided, however, that the
         Company may make any payment of the applicable redemption price in
         connection with a Qualified Redemption Transaction;

               (iv)   declare or pay any dividend on, or make any distribution
         to the holders of, any shares of Capital Stock of any Restricted
         Subsidiary of the Company (other than to the Company or any of its
         Restricted Subsidiaries) or purchase, redeem or otherwise acquire or
         retire for value any Capital Stock of any Restricted Subsidiary or any
         options, warrants or other rights to acquire any such Capital Stock
         (other than with respect to any such Capital Stock held by the Company
         or any Wholly Owned Restricted Subsidiary of the Company);

               (v)    make any Investment (other than a Permitted Investment);
         or

               (vi)   incur any guarantee of Indebtedness of any Affiliate
         (other than (A) guarantees of Indebtedness of any Restricted Subsidiary
         by the Company or (B) guarantees of Indebtedness of the Company by any
         Restricted Subsidiary, in each case in accordance with the terms of
         this Indenture);

         (such payments or other actions described in (but not excluded from)
         clauses (i) through (vi) are collectively referred to as "Restricted
         Payments"), unless at the time of and after giving effect to the
         proposed Restricted Payment (with the amount of any such Restricted
         Payment, if other than cash, being the amount determined by the Board
         of Directors of the Company, whose determination shall be conclusive
         and evidenced by a Board Resolution), (1) no Default or Event of
         Default shall have occurred and be continuing, (2) the Company could
         incur $1.00 of additional Indebtedness (excluding Permitted
         Indebtedness) in accordance with Section 9.14 hereof and (3) the
         aggregate amount of all Restricted Payments declared or made after
         April 1, 1997, shall not exceed the sum (without duplication) of the
         following:

                      (I)   50% of the aggregate cumulative Consolidated Net
               Income of the Company accrued on a cumulative basis during the
               period beginning on May 1, 1997, and ending on the last day of
               the Company's last fiscal quarter ending prior to the date of
               such proposed Restricted Payment (or, if such aggregate
               cumulative Consolidated Net Income shall be a loss, minus 100% of
               such loss), plus

                      (II)  the aggregate net cash proceeds received after April
               1, 1997, by the Company as capital contributions to the Company
               (other than from any Restricted Subsidiary), plus

                      (III) the aggregate net cash proceeds, and the Fair Market
               Value at the date of acquisition of Property other than cash or
               Cash Equivalents, received after April 1, 1997 by the Company
               from or as the result of the issuance or sale (other

                                       25

<PAGE>

               than to any of its Restricted Subsidiaries) of shares of
               Qualified Capital Stock of the Company or any options, warrants
               or rights to purchase such shares of Qualified Capital Stock of
               the Company, plus

                      (IV)  the aggregate net cash proceeds received after April
               1, 1997 by the Company (other than from any of its Restricted
               Subsidiaries) upon the exercise of any options, warrants or
               rights to purchase shares of Qualified Capital Stock of the
               Company, plus

                      (V)   the aggregate net cash proceeds, and the Fair Market
               Value at the date of acquisition of Property other than cash or
               Cash Equivalents, received after April 1, 1997 by the Company
               from or as the result of the issuance or sale (other than to any
               of its Restricted Subsidiaries) of debt securities or shares of
               Redeemable Capital Stock that have been converted into or
               exchanged for Qualified Capital Stock of the Company, together
               with the aggregate cash and the Fair Market Value at the date of
               acquisition of Property other than cash or Cash Equivalents
               received by the Company at the time of such conversion or
               exchange, plus

                      (VI)  To the extent not otherwise included in the
               Company's Consolidated Net Income, the net reduction in
               Investments in Unrestricted Subsidiaries resulting from the
               payments of interest on Indebtedness, dividends, repayments of
               loans or advances, or other transfers of assets, in each case to
               the Company or a Restricted Subsidiary after April 1, 1997 from
               any Unrestricted Subsidiary or from the redesignation of an
               Unrestricted Subsidiary as a Restricted Subsidiary (valued in
               each case as provided in the definition of "Investment"), not to
               exceed in the case of any Unrestricted Subsidiary the total
               amount of Investments (other than Permitted Investments) in such
               Unrestricted Subsidiary made by the Company and its Restricted
               Subsidiaries in such Unrestricted Subsidiary after April 1, 1997,
               plus

                      (VII) $50,000,000.

         (b)   Notwithstanding paragraph (a) above, the Company and its
Restricted Subsidiaries may take the following actions so long as (in the case
of clauses (ii), (iii), (iv) and (vi) below) no Default or Event of Default
shall have occurred and be continuing:

               (i)   the payment of any dividend within 60 days after the date
         of declaration thereof, if at such declaration date such declaration
         complied with the provisions of paragraph (a) above (and such payment
         shall be deemed to have been paid on such date of declaration for
         purposes of any calculation required by the provisions of paragraph (a)
         above);

               (ii)  the repurchase, redemption or other acquisition or
         retirement of any shares of any class of Capital Stock of the Company
         or any Restricted Subsidiary, in exchange for, or out of the aggregate
         net cash proceeds of, a substantially concurrent issue and sale

                                       26

<PAGE>

         (other than to a Restricted Subsidiary) of shares of Qualified Capital
         Stock of the Company;

               (iii)  the purchase, redemption, repayment, defeasance or other
         acquisition or retirement for value of any Subordinated Indebtedness
         (other than Redeemable Capital Stock) in exchange for or out of the
         aggregate net cash proceeds of a substantially concurrent issue and
         sale (other than to a Restricted Subsidiary) of shares of Qualified
         Capital Stock of the Company;

               (iv)   (A) the purchase, redemption, repayment, defeasance or
         other acquisition or retirement for value of any Existing Subordinated
         Notes or (B) the purchase, redemption, repayment, defeasance or other
         acquisition or retirement for value of any other Subordinated
         Indebtedness (other than Redeemable Capital Stock) in exchange for, or
         out of the aggregate net cash proceeds of, a substantially concurrent
         incurrence (other than to a Restricted Subsidiary) of Subordinated
         Indebtedness of the Company so long as (x) the principal amount of such
         new Indebtedness does not exceed the principal amount (or, if such
         Subordinated Indebtedness being refinanced pursuant to this subclause
         (B) provides for an amount less than the principal amount thereof to be
         due and payable upon a declaration of acceleration thereof, such lesser
         amount as of the date of determination) of the Subordinated
         Indebtedness being so purchased, redeemed, repaid, defeased, acquired
         or retired pursuant to this subclause (B), plus the amount of any
         premium required to be paid in connection with such refinancing
         pursuant to the terms of the Subordinated Indebtedness refinanced
         pursuant to this subclause (B) or the amount of any premium reasonably
         determined by the Company as necessary to accomplish such refinancing,
         plus the amount of expenses of the Company incurred in connection with
         such refinancing, (y) such new Subordinated Indebtedness is
         subordinated to the 2012 Notes at least to the same extent as such
         Subordinated Indebtedness so purchased, redeemed, repaid, defeased,
         acquired or retired pursuant to this subclause (B), and (z) such new
         Subordinated Indebtedness has an Average Life to Stated Maturity that
         is longer than the Average Life to Stated Maturity of the 2012 Notes
         and such new Subordinated Indebtedness has a Stated Maturity for its
         final scheduled principal payment that is at least 91 days later than
         the Stated Maturity for the final scheduled principal payment of the
         2012 Notes;

               (v)    repurchases, acquisitions or retirements of shares of
         Qualified Capital Stock of the Company deemed to occur upon the
         exercise of stock options or similar rights issued under employee
         benefit plans of the Company if such shares represent all or a portion
         of exercise price or are surrendered in connection with satisfying any
         federal income tax obligation; or

               (vi)   repurchases, redemptions, other acquisitions or
         retirements for value of Capital Stock of the Company held by employees
         of the Company or any Restricted Subsidiary in an amount not to exceed
         $2,000,000 in the aggregate during any calendar year.

                                       27

<PAGE>

         The actions described in clauses (i), (ii), (iii) and (vi) of this
         paragraph (b) shall be Restricted Payments that shall be permitted to
         be taken in accordance with this paragraph (b) but shall reduce the
         amount that would otherwise be available for Restricted Payments under
         clause (3) of paragraph (a) (provided that any dividend paid pursuant
         to clause (i) of this paragraph (b) shall reduce the amount that would
         otherwise be available under clause (3) of paragraph (a) when declared,
         but not also when subsequently paid pursuant to such clause (i)), and
         the actions described in clauses (iv) and (v) of this paragraph (b)
         shall be Restricted Payments that shall be permitted to be taken in
         accordance with this paragraph and shall not reduce the amount that
         would otherwise be available for Restricted Payments under clause (3)
         of paragraph (a).

         (c)   In computing Consolidated Net Income of the Company under
paragraph (a) above, (i) the Company shall use audited financial statements for
the portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (ii) the Company shall be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of this Indenture, such
Restricted Payment shall be deemed to have been made in compliance with this
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the Company
for any period.

         SECTION 9.14   Limitation on Indebtedness.

         The Company shall not, and shall not permit any Restricted Subsidiary
to, create, incur, issue, assume, guarantee or in any manner become directly or
indirectly liable for the payment of (collectively "incur") any Indebtedness
(including any Acquired Indebtedness), other than Permitted Indebtedness and
Permitted Subsidiary Indebtedness, as the case may be; provided, however, that
the Company and its Restricted Subsidiaries that are Subsidiary Guarantors may
incur additional Indebtedness if (i) the Company's Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately preceding the
incurrence of such Indebtedness (and for which financial statements are
available), taken as one period (at the time of such incurrence, after giving
pro forma effect to: (x) the incurrence of such Indebtedness and (if applicable)
the application of the net proceeds therefrom, including to refinance other
Indebtedness or to acquire producing oil and natural gas Properties, as if such
Indebtedness had been incurred and the application of such proceeds had occurred
at the beginning of such four-quarter period; (y) the incurrence, repayment or
retirement of any other Indebtedness (including Permitted Indebtedness) by the
Company or its Restricted Subsidiaries since the first day of such four-quarter
period (including any other Indebtedness to be incurred concurrently with the
incurrence of such Indebtedness) as if such Indebtedness had been incurred,
repaid or retired at the beginning of such four-quarter period; and (z) the
acquisition (whether by purchase, merger or otherwise) or disposition (whether
by sale, merger or otherwise) of any Person acquired or disposed of by the
Company or its Restricted Subsidiaries, as the case may be, since the first day
of such four-quarter period, as if such acquisition or disposition had occurred
at the beginning of such four-quarter period), would have been equal to at least
2.50 to 1.0 and (ii) no Default or

                                       28

<PAGE>

Event of Default shall have occurred and be continuing at the time such
additional Indebtedness is incurred or would occur as a consequence of the
incurrence of the additional Indebtedness.

         For purposes of determining compliance with this Section 9.14, in the
event that an item of Indebtedness (including Acquired Indebtedness) meets the
criteria of more than one of the categories of Permitted Indebtedness or
Permitted Subsidiary Indebtedness, as applicable, or is entitled to be incurred
pursuant to clauses (i) and (ii) of the proviso to the first sentence of the
preceding paragraph of this Section 9.14, the Company may, in its sole
discretion, classify (or later reclassify) in whole or in part such item of
Indebtedness in any manner that complies with this Section 9.14 and such item of
Indebtedness or a portion thereof may be classified (or later reclassified) in
whole or in part as having been incurred under more than one of the applicable
clauses of Permitted Indebtedness or Permitted Subsidiary Indebtedness or
pursuant to clauses (i) and (ii) of the proviso to the first sentence of the
preceding paragraph hereof. Accrual of interest, the accretion of accreted value
and the payment of interest in the form of additional Indebtedness will not be
deemed to be an incurrence of Indebtedness for purposes of this covenant.

         SECTION 9.15  Change of Control.

         (a)   Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase (a "Change of Control Offer") all of the
then Outstanding 2012 Notes, in whole or in part, from the Holders of such 2012
Notes in integral multiples of $1,000, at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the aggregate principal amount of such
2012 Notes, plus accrued and unpaid interest to the Change of Control Purchase
Date (as defined below), in accordance with the procedures set forth in
paragraphs (b), (c) and (d) of this Section. The Company shall, subject to the
provisions described below, be required to purchase all 2012 Notes properly
tendered into the Change of Control Offer and not withdrawn. The Company will
not be required to make a Change of Control Offer upon a Change of Control if a
third party makes the Change of Control Offer at the same purchase price, at the
same times and otherwise in substantial compliance with the requirements
applicable to a Change of Control Offer made by the Company and purchases all
2012 Notes validly tendered and not withdrawn under such Change of Control
Offer.

         (b)   The Change of Control Offer is required to remain open for at
least 20 Business Days and until the close of business on the fifth Business Day
prior to the Change of Control Purchase Date.

         (c)   Not later than the 30th day following any Change of Control, the
Company shall give to the Trustee in the manner provided in Section 13.4 and
each Holder of the 2012 Notes in the manner provided in Section 13.5, a notice
(the "Change of Control Notice") stating:

               (1)   that a Change in Control has occurred and that such Holder
         has the right to require the Company to repurchase such Holder's 2012
         Notes, or portion thereof, at the Change of Control Purchase Price;

                                       29

<PAGE>

               (2)  any information regarding such Change of Control required to
         be furnished pursuant to Rule 14e-1 under the Exchange Act and any
         other securities laws and regulations thereunder;

               (3)  a purchase date (the "Change of Control Purchase Date")
         which shall be on a Business Day and no earlier than 30 days nor later
         than 70 days from the date the Change of Control occurred;

               (4)  that any 2012 Note, or portion thereof, not tendered or
         accepted for payment will continue to accrue interest;

               (5)  that unless the Company defaults in depositing money with
         the Paying Agent in accordance with the last paragraph of paragraph (d)
         of this Section 9.15, or payment is otherwise prevented, any 2012 Note,
         or portion thereof, accepted for payment pursuant to the Change of
         Control Offer shall cease to accrue interest after the Change of
         Control Purchase Date; and

               (6)  the instructions a Holder must follow in order to have its
         2012 Notes repurchased in accordance with paragraph (d) of this
         Section.

         (d)   Holders electing to have 2012 Notes purchased will be required to
surrender such 2012 Notes to the Company at the address specified in the Change
of Control Notice at least five Business Days prior to the Change of Control
Purchase Date. Holders will be entitled to withdraw their election if the
Company receives, not later than three Business Days prior to the Change of
Control Purchase Date, a facsimile transmission or letter setting forth the name
of the Holder, the certificate number(s) and principal amount of the 2012 Notes
delivered for purchase by the Holder as to which his election is to be withdrawn
and a statement that such Holder is withdrawing his election to have such 2012
Notes purchased. Holders whose 2012 Notes are purchased only in part will be
issued new 2012 Notes equal in principal amount to the unpurchased portion of
the 2012 Notes surrendered.

         On the Change of Control Purchase Date, the Company shall (i) accept
for payment all 2012 Notes or portions thereof tendered pursuant to a Change of
Control Offer; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all 2012 Notes or portions thereof so tendered; and (iii)
deliver or cause to be delivered to the Trustee the 2012 Notes so accepted. The
Paying Agent shall promptly mail or deliver to Holders of the 2012 Notes so
accepted payment in an amount equal to the purchase price, and the Company shall
execute and the Trustee will promptly authenticate and mail or make available
for delivery to such Holders a new 2012 Note equal in principal amount to any
unpurchased portion of the 2012 Note which any Holder did not surrender for
purchase. Any 2012 Notes not so accepted will be promptly mailed or delivered to
the Holder thereof. The Company shall announce the results of a Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date. For purposes of this Section 9.15, the Trustee will act as the Paying
Agent.

         SECTION 9.16  Limitation on Disposition of Proceeds of Asset Sales.

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<PAGE>

         (a)   The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the Properties sold
or otherwise disposed of pursuant to the Asset Sale and (ii) the Fair Market
Value of all forms of consideration other than cash, Cash Equivalents and Liquid
Securities received with respect to any Asset Sale, when taken together with the
Fair Market Value of all consideration other than cash, Cash Equivalents and
Liquid Securities received by the Company and its Restricted Subsidiaries with
respect to all other Asset Sales since the Issue Date, shall not exceed an
aggregate amount equal to 10% of Adjusted Consolidated Net Tangible Assets at
the date of each determination.

         (b)   If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may either (i) apply the Net Cash Proceeds thereof to
permanently reduce Pari Passu Indebtedness, or (ii) invest all or any part of
the Net Cash Proceeds thereof, within 365 days after such Asset Sale, in Oil and
Gas Properties, (iii) apply the Net Cash Proceeds thereof to acquire a
controlling interest in a Person that is primarily engaged in the Oil and Gas
Business or (iv) apply the Net Cash Proceeds thereof to develop or exploit the
Company's Oil and Gas Properties. The amount of such Net Cash Proceeds not
applied or invested as provided in this paragraph constitutes "Excess Proceeds,"
subject to disposition as provided below.

         (c)   When the aggregate amount of Excess Proceeds equals or exceeds
$15,000,000 (the "Trigger Date"), the Company shall make an offer to purchase,
from all Holders of the 2012 Notes then Outstanding and any then outstanding
Pari Passu Indebtedness required to be repurchased or repaid on a permanent
basis in connection with an Asset Sale, an aggregate principal amount of 2012
Notes and any then outstanding Pari Passu Indebtedness equal to such Excess
Proceeds as follows:

               (i)    (A) No later than the 30th day following the Trigger Date,
         the Company shall give to the Trustee in the manner provided in Section
         13.4 hereof and each Holder of the 2012 Notes in the manner provided in
         Section 13.5 hereof, notice (a "Purchase Notice") offering to purchase
         (a "Net Proceeds Offer") from all Holders of the 2012 Notes the maximum
         principal amount (expressed as a multiple of $1,000) of 2012 Notes that
         may be purchased out of an amount (the "Payment Amount") equal to the
         product of such Excess Proceeds multiplied by a fraction, the numerator
         of which is the outstanding principal amount of the 2012 Notes and the
         denominator of which is the sum of the outstanding principal amount of
         the 2012 Notes and such Pari Passu Indebtedness, if any (subject to
         proration in the event such amount is less than the aggregate Offered
         Price of all 2012 Notes tendered), and (B) to the extent required by
         such Pari Passu Indebtedness and provided there is a permanent
         reduction in the principal amount of such Pari Passu Indebtedness, the
         Company shall make an offer to purchase Pari Passu Indebtedness (a
         "Pari Passu Offer") in an amount (the "Pari Passu Indebtedness Amount")
         equal to the excess of the Excess Proceeds over the Payment Amount.

               (ii)   The offer price for the 2012 Notes shall be payable in
         cash in an amount equal to 100% of the principal amount of the 2012
         Notes tendered pursuant to a Net Proceeds Offer, plus accrued and
         unpaid interest to the date such Net Proceeds Offer is consummated (the
         "Offered Price"), in accordance with paragraph (d) of this Section. To

                                       31

<PAGE>

         the extent that the aggregate Offered Price of the 2012 Notes tendered
         pursuant to a Net Proceeds Offer is less than the Payment Amount
         relating thereto or the aggregate amount of the Pari Passu Indebtedness
         that is purchased or repaid pursuant to the Pari Passu Offer is less
         than the Pari Passu Indebtedness Amount (such shortfall constituting a
         "Net Proceeds Deficiency"), the Company may use such Net Proceeds
         Deficiency, or a portion thereof, for general corporate purposes,
         subject to the limitations of Section 9.13 hereof.

               (iii)  If the aggregate Offered Price of 2012 Notes validly
         tendered and not withdrawn by Holders thereof exceeds the Payment
         Amount, 2012 Notes to be purchased will be selected on a pro rata
         basis. Upon completion of such Net Proceeds Offer and Pari Passu Offer,
         the amount of Excess Proceeds shall be reset to zero.

               (iv)   The Purchase Notice shall set forth a purchase date (the
         "Net Proceeds Payment Date"), which shall be on a Business Day no
         earlier than 30 days nor later than 70 days from the Trigger Date. The
         Purchase Notice shall also state (A) that a Trigger Date with respect
         to one or more Asset Sales has occurred and that such Holder has the
         right to require the Company to repurchase such Holder's Securities at
         the Offered Price, subject to the limitations described in the forgoing
         paragraph (iii), (B) any information regarding such Net Proceeds Offer
         required to be furnished pursuant to Rule 14e-1 under the Exchange Act
         and any other securities laws and regulations thereunder, (C) that any
         2012 Note, or portion thereof, not tendered or accepted for payment
         will continue to accrue interest, (D) that, unless the Company defaults
         in depositing money with the Paying Agent in accordance with the last
         paragraph of paragraph (d) of this Section 9.16, or payment is
         otherwise prevented, any 2012 Note, or portion thereof, accepted for
         payment pursuant to the Net Proceeds Offer shall cease to accrue
         interest after the Net Proceeds Payment Date, and (E) the instructions
         a Holder must follow in order to have its Securities repurchased in
         accordance with paragraph (d) of this Section.

         (d)   Holders electing to have 2012 Notes purchased will be required to
surrender such 2012 Notes to the Company at the address specified in the
Purchase Notice at least five Business Days prior to the Net Proceeds Payment
Date. Holders will be entitled to withdraw their election if the Company
receives, not later than three Business Days prior to the Net Proceeds Payment
Date, a facsimile transmission or letter setting forth the name of the Holder,
the certificate number(s) and principal amount of the 2012 Notes delivered for
purchase by the Holder as to which his election is to be withdrawn and a
statement that such Holder is withdrawing his election to have such 2012 Notes
purchased. Holders whose 2012 Notes are purchased only in part will be issued
new 2012 Notes equal in principal amount to the unpurchased portion of the 2012
Notes surrendered.

         On the Net Proceeds Payment Date, the Company shall (i) accept for
payment 2012 Notes or portions thereof tendered pursuant to a Net Proceeds Offer
in an aggregate principal amount equal to the Payment Amount or such lesser
amount of 2012 Notes as has been tendered, (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all 2012 Notes or portions thereof
so tendered in an aggregate principal amount equal to the Payment Amount or such
lesser amount and (iii) deliver or cause to be delivered to the Trustee the 2012
Notes so accepted. The Paying Agent shall promptly mail or deliver to Holders of
the 2012 Notes so accepted payment in an amount equal to the purchase price, and
the Company shall execute and

                                       32

<PAGE>

the Trustee will promptly authenticate and mail or make available for delivery
to such Holders a new 2012 Note equal in principal amount to any unpurchased
portion of the 2012 Note which any such Holder did not surrender for purchase.
Any 2012 Notes not so accepted will be promptly mailed or delivered to the
Holder thereof. The Company shall announce the results of a Net Proceeds Offer
on or as soon as practicable after the Net Proceeds Payment Date. For purposes
of this Section 9.16, the Trustee will act as the Paying Agent.

         (e)   The Company shall not permit any Subsidiary to enter into or
suffer to exist any agreement that would place any restriction of any kind
(other than pursuant to law or regulation) on the ability of the Company to make
a Net Proceeds Offer following any Asset Sale.

         SECTION 9.17  Limitation on Transactions with Affiliates.

         The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or the rendering of any
services) with, or for the benefit of, any Affiliate of the Company other than a
Restricted Subsidiary (each, other than a Restricted Subsidiary, being an
"Interested Person"), unless (a) such transaction or series of transactions is
on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that would be available in a
comparable arm's length transaction with unrelated third parties who are not
Interested Persons, (b) with respect to any one transaction or series of
transactions involving aggregate payments in excess of $5,000,000, the Company
delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (a) above and such
transaction or series of transactions has been approved by the Board of
Directors of the Company and (c) with respect to any one transaction or series
of transactions involving aggregate payments in excess of $25,000,000, the
Officers' Certificate referred to in clause (b) above also certifies that such
transaction or series of transactions has been approved by a majority of the
Disinterested Directors or, in the event there are no such Disinterested
Directors, that the Company has obtained a written opinion from an independent
nationally recognized investment banking firm or appraisal firm, in either case
specializing or having a specialty in the type and subject matter of the
transaction or series of transactions at issue, which opinion shall be to the
effect set forth in clause (a) above or shall state that such transaction or
series of transactions is fair from a financial point of view to the Company or
such Restricted Subsidiary; provided, however, that this covenant will not
restrict the Company from (i) paying reasonable and customary regular
compensation and fees to directors of the Company who are not employees of the
Company or any Restricted Subsidiary or (ii) paying dividends on, or making
distributions with respect to, shares of Capital Stock of the Company on a pro
rata basis to the extent permitted by Section 9.13 hereof.

         SECTION 9.18  Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.

         The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise,
or make any other distributions on or in respect of its Capital

                                       33

<PAGE>

Stock to the Company or any Restricted Subsidiary, (b) pay any Indebtedness owed
to the Company or any Restricted Subsidiary, (c) make an Investment in the
Company or any Restricted Subsidiary or (d) transfer any of its properties or
assets to the Company or any Restricted Subsidiary, except for such encumbrances
or restrictions (i) pursuant to an agreement in effect or entered into on the
date of this Indenture, (ii) any agreement or other instrument of a Person
acquired by the Company or any Restricted Subsidiary in existence at the time of
such acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any other Person, or the properties or
assets of any other Person, other than the Person, or the property or assets of
the Person, so acquired or (iii) existing under any agreement that extends,
renews, refinances or replaces the agreements containing the restrictions in the
foregoing clauses (i) and (ii), provided that the terms and conditions of any
such restrictions are not materially less favorable to the Holders of the
Securities than those under or pursuant to the agreement evidencing the
Indebtedness so extended, renewed, refinanced or replaced.

         SECTION 9.19  Limitation on Sale/Leaseback Transactions.

         The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale/Leaseback Transaction with any Person
(other than the Company or any Wholly Owned Restricted Subsidiary) unless either
(i) the Company or such Restricted Subsidiary, as the case may be, at the date
of determination would be able to incur Indebtedness secured by a Lien on the
Property subject to such Sale/Leaseback Transaction without equally and ratably
securing the 2012 Notes or (ii) the Company, within six months after such
transaction, applies an amount equal to the Attributable Indebtedness of such
transaction in the same manner and to the same extent as Net Cash Proceeds from
an Asset Sale are applied pursuant to Section 9.16.

         SECTION 9.20  Limitation on Conduct of Business.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the Oil and
Gas Business, except that the Company and the Restricted Subsidiaries may engage
in any business other than the Oil and Gas Business, provided that the
consolidated assets of the Company and the Restricted Subsidiaries used in such
business shall not exceed, at any time, 10% of Adjusted Consolidated Net
Tangible Assets.

         SECTION 9.21  Termination of Covenants.

         From and after the time that the 2012 Notes have received an Investment
Grade Rating from both Rating Agencies (the "Covenant Termination Date"), so
long as no Default has occurred and is continuing, upon delivery to the Trustee
of notice to such effect the Company and the Restricted Subsidiaries shall no
longer be subject to Sections 9.12, 9.13, 9.14, 9.16 (except for purposes of
clause (ii) of Section 9.19), 9.17, 9.18 and 9.20 and clause (d) of Section 7.1
(collectively, the "Terminated Covenants"); provided, however, that all other
provisions of this Indenture shall continue to be in full force and effect. From
and after the Covenant Termination Date, solely for purposes of Section 9.10,
the Permitted Liens described in clauses (x) and (bb) of that definition shall
be Permitted Liens only to the extent that they secure Indebtedness not
exceeding, at the time of determination, 10% of Adjusted Consolidated Net
Tangible Assets.

                                       34

<PAGE>

         SECTION 2.7.  Redemption.

         Article X of the Original Indenture shall be amended and supplemented
by inserting the following new section in its entirety:

         SECTION 10.9  Optional Redemption at Make-Whole Price.

         At any time and from time to time, the Company may, at its option,
redeem all or any portion of the 2012 Notes at the Make-Whole Price plus accrued
and unpaid interest on the 2012 Notes so redeemed to the Redemption Date. Any
redemption pursuant to this Section 10.9 shall be made, to the extent
applicable, pursuant to the provisions of Sections 10.2 through 10.7 hereof.

         SECTION 2.8.  Defeasance and Covenant Defeasance.

         Article XI of the Original Indenture shall be amended and supplemented
by inserting the following in substitution therefor:

                                   "ARTICLE XI

                       DEFEASANCE AND COVENANT DEFEASANCE

         SECTION 11.1  Company's Option to Effect Defeasance or Covenant
Defeasance.

         The Company may, at its option by Board Resolution, at any time, with
respect to the 2012 Notes, elect to have either Section 11.2 or Section 11.3
hereof be applied to all Outstanding 2012 Notes upon compliance with the
conditions set forth below in this Article XI.

         SECTION 11.2  Defeasance and Discharge.

         Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.2, the Company shall be deemed to have been
discharged from its obligations with respect to all Outstanding 2012 Notes on
the date the conditions set forth in Section 11.4 hereof are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance means
that the Company and the Subsidiary Guarantors shall be deemed (a) to have paid
and discharged their respective obligations under the Outstanding 2012 Notes;
provided, however that the 2012 Notes shall continue to be deemed to be
"Outstanding" for purposes of Section 11.5 hereof and the other Sections of this
Indenture referred to in clauses (i) and (ii) below, and (b) to have satisfied
all their other obligations under such 2012 Notes and this Indenture insofar as
such 2012 Notes are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of Outstanding 2012 Notes to receive,
solely from the trust fund described in Section 11.4 hereof and as more fully
set forth in such Section, payments in respect of the principal of (and premium,
if any, on) and interest on such 2012 Notes when such payments are due (or at
such time as the 2012 Notes would be subject to redemption at the option of the
Company in accordance with this Indenture), (ii) the respective obligations of
the Company and any Subsidiary Guarantors under Sections 2.4,

                                       35

<PAGE>

2.5, 2.6, 2.7, 2.8, 2.9, 4.8, 4.14, 5.6, 5.9, 5.10, 9.1, 9.2, 9.3, 9.4, 14.1 (to
the extent it relates to the foregoing Sections and Article XI hereof), 14.4 and
14.5 hereof, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, and (iv) the obligations of the Company and any Subsidiary
Guarantors under this Article XI. Subject to compliance with this Article XI,
the Company may exercise its option under this Section 11.2 notwithstanding the
prior exercise of its option under Section 11.3 hereof with respect to the
Securities.

         SECTION 11.3  Covenant Defeasance.

         Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.3, the Company shall be released from its
obligations under any covenant contained in Article VII and in Sections 9.5
through 9.20 hereof with respect to the Outstanding 2012 Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the 2012 Notes shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent, declaration or
other Act of Holders (and the consequences of any thereof) in connection with
such covenants, but shall continue to be deemed "Outstanding" for all other
purposes hereunder. For this purpose, such covenant defeasance means that, with
respect to the Outstanding 2012 Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Sections 4.1(c) or 4.1(d) hereof, but, except as specified above, the
remainder of this Indenture and such 2012 Notes shall be unaffected thereby.

         SECTION 11.4  Conditions to Defeasance or Covenant Defeasance.

         The following shall be the conditions to application of either Section
11.2 or Section 11.3 hereof to the Outstanding 2012 Notes:

         (a)   The Company or any Subsidiary Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 5.7 hereof who shall agree to comply with
the provisions of this Article XI applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such 2012 Notes, (i)
cash in U.S. Dollars in an amount, or (ii) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, the principal of (and premium,
if any, on) and interest on the Outstanding 2012 Notes on the Stated Maturity
(or Redemption Date, if applicable) of such principal (and premium, if any) or
installment of interest; provided that the Trustee shall have been irrevocably
instructed in writing by the Company to apply such money or the proceeds of such
U.S. Government Obligations to said payments with respect to the 2012 Notes.
Before such a deposit, the Company may give to the Trustee, in accordance with
Section 10.2 hereof, a notice of its

                                       36

<PAGE>

election to redeem all of the Outstanding 2012 Notes at a future date in
accordance with Article X hereof, which notice shall be irrevocable. Such
irrevocable redemption notice, if given, shall be given effect in applying the
foregoing. For this purpose, "U.S. Government Obligations" means securities that
are (x) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.

         (b)   No Default or Event of Default with respect to the 2012 Notes
shall have occurred and be continuing on the date of such deposit.

         (c)   Such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest under this Indenture or the Trust
Indenture Act with respect to any securities of the Company.

         (d)   Such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under any other material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound, as evidenced to the Trustee in an Officers'
Certificate delivered to the Trustee concurrently with such deposit.

         (e)   In the case of an election under Section 11.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable federal income tax laws; in either case providing that
the Holders of the Outstanding 2012 Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such legal defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such legal defeasance had
not occurred (it being understood that (x) such Opinion of Counsel shall also
state that such ruling or applicable law is consistent with the conclusions
reached in such Opinion of Counsel and (y) the Trustee shall be under no
obligation to investigate the basis of correctness of such ruling).

         (f)   In the case of an election under Section 11.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding 2012 Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had not
occurred.

                                       37

<PAGE>

         (g)   The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the legal defeasance under Section
11.2 hereof or the covenant defeasance under Section 11.3 (as the case may be)
have been complied with.

         SECTION 11.5  Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.

         Subject to the provisions of the last paragraph of Section 9.3 hereof,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee--collectively for
purposes of this Section 11.5, the "Trustee") pursuant to Section 11.4 hereof in
respect of the Outstanding 2012 Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such 2012 Notes of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.

         The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 11.4 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Securities.

         Anything in this Article XI to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 11.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal defeasance or covenant
defeasance, as applicable, in accordance with this Article.

         SECTION 11.6  Reinstatement.

         If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 11.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and the Subsidiary Guarantors' obligations
under this Indenture and the 2012 Notes shall be revived and reinstated as
though no deposit had occurred pursuant to Section 11.2 or 11.3 hereof, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 11.5 hereof; provided, however,
that if the Company or any Subsidiary Guarantor makes any payment of principal
of (or premium, if any, on) or interest on any 2012 Note following the
reinstatement of its obligations, the Company or such Subsidiary Guarantor shall
be subrogated to the rights of the Holders of such 2012 Notes to receive such
payment from the money held by the Trustee or Paying Agent."

                                       38

<PAGE>

         SECTION 2.9.  Guarantees.

         The Original Indenture shall be amended and supplemented by inserting
the following new article in its entirety:

                                  "ARTICLE XIV

                                   GUARANTEES

         SECTION 14.1  Unconditional Guarantee.

         Each Restricted Subsidiary that hereafter becomes a Subsidiary
Guarantor shall unconditionally, jointly and severally, guarantee (each such
guarantee to be referred to herein as a "Subsidiary Guarantee," with all such
guarantees being referred to herein as the "Subsidiary Guarantees") to each
Holder of 2012 Notes authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, the full and prompt performance of the
Company's obligations under this Indenture and the 2012 Notes and that:

         (a)   the principal of (or premium, if any, on) and interest on the
2012 Notes will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the 2012 Notes, if any, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and

         (b)   in case of any extension of time of payment or renewal of any
2012 Notes or of any such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise;

subject, however, in the case of clauses (a) and (b) above, to the limitations
set forth in Section 14.4 hereof.

         Failing payment when due of any amount so guaranteed or any performance
so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and
severally obligated to pay the same immediately. The obligations of each
Subsidiary Guarantor hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the 2012 Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the 2012 Notes with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Subsidiary Guarantor shall waive diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and shall
covenant that its Subsidiary Guarantee will not be discharged except by complete
performance of the obligations contained in the 2012 Notes, this Indenture and
in the Subsidiary Guarantee. If any Holder or the Trustee is required by any
court or otherwise to return to the Company, any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the

                                       39

<PAGE>

Company or any Subsidiary Guarantor, any amount paid by the Company or any
Subsidiary Guarantor to the Trustee or such Holder, the Subsidiary Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
No Subsidiary Guarantor shall be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed by the
Subsidiary Guarantee until payment in full of all obligations guaranteed
thereby. Each Subsidiary Guarantor shall further agree that, as between each
Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (i) the maturity of the obligations guaranteed by the Subsidiary
Guarantee may be accelerated as provided in Article IV hereof for the purposes
of the Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed by the Subsidiary Guarantee, and (ii) in the event of any
acceleration of such obligations as provided in Article IV hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Subsidiary Guarantor for the purpose of the Subsidiary
Guarantee.

         SECTION 14.2  Subsidiary Guarantors May Consolidate, etc. on Certain
Terms.

         (a)   Except as set forth in Articles VII and IX hereof, nothing
contained in this Indenture or in any of the 2012 Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
assets of a Subsidiary Guarantor as an entirety or substantially as an entirety,
to the Company or another Subsidiary Guarantor.

         (b)   Except as set forth in Articles VII and IX hereof, nothing
contained in this Indenture or in any of the 2012 Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into a Person or
Persons other than the Company or a Subsidiary Guarantor (whether or not
affiliated with the Subsidiary Guarantor), or successive consolidations or
mergers in which a Subsidiary Guarantor or its successor or successors shall be
a party or parties, or shall prevent any sale or conveyance of the Properties of
a Subsidiary Guarantor as an entirety or substantially as an entirety, to a
Person other than the Company or another Subsidiary Guarantor (whether or not
Affiliated with the Subsidiary Guarantor) authorized to acquire and operate the
same; provided, however, that, subject to Sections 14.2(a) and 14.3 hereof, (A)
immediately after such transaction, and giving effect thereto, no Default or
Event of Default shall have occurred as a result of such transaction and be
continuing, (B) such transaction shall not violate any of the covenants in
Sections 9.1 through 9.20 hereof, and (C) each Subsidiary Guarantor shall
covenant and agree that, upon any such consolidation or merger, such Subsidiary
Guarantor's Subsidiary Guarantee set forth in this Article XIV, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by such Subsidiary Guarantor, shall be expressly
assumed (in the event that the Subsidiary Guarantor is not the surviving Person
in the merger), by supplemental indenture satisfactory in form to the Trustee,
executed and delivered to the Trustee, by such Person formed by such
consolidation, or into which the Subsidiary Guarantor shall have merged (except
to the extent the following Section 14.3 would result in the release of such
Subsidiary Guarantee in which case such surviving Person does not have to
execute any such supplemental indenture). In the case of any such consolidation
or merger, and upon the assumption by the successor Person, by supplemental
indenture executed and delivered to the Trustee and satisfactory in form to the
Trustee of the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Subsidiary Guarantor, such
successor Person shall succeed to

                                       40

<PAGE>

and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor.

         SECTION 14.3  Release of a Subsidiary Guarantor.

         The Subsidiary Guarantee of any Restricted Subsidiary may be released
upon the terms and subject to the conditions set forth in Section 9.12(c)
hereof. Each Subsidiary Guarantor that is designated as an Unrestricted
Subsidiary in accordance with the provisions of this Indenture shall be released
from all of its Subsidiary Guarantee and related obligations set forth in this
Indenture for so long as it remains an Unrestricted Subsidiary. The Trustee
shall deliver an appropriate instrument evidencing such release upon receipt of
a Company Request accompanied by an Officers' Certificate and an Opinion of
Counsel certifying that such sale or other disposition was made by the Company
in accordance with the provisions of this Indenture. Any Subsidiary Guarantor
not so released remains liable for the full amount of principal of (and premium,
if any, on) and interest on the 2012 Notes as provided in this Article XIV.

         SECTION 14.4  Limitation of Subsidiary Guarantor's Liability.

         Each Subsidiary Guarantor shall confirm, and by its acceptance hereof
each Holder hereby confirms, that it is the intention of all such parties that
the Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee
not constitute a fraudulent transfer or conveyance for purposes of any federal
or state law. To effectuate the foregoing intention, the Holders hereby
irrevocably agree, and each Subsidiary Guarantor shall irrevocably agree, that
the obligations of each Subsidiary Guarantor under its Subsidiary Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under its Subsidiary Guarantee or pursuant to Section 14.5 hereof,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law. This Section 14.4 is for the benefit of the creditors of
each Subsidiary Guarantor.

         SECTION 14.5  Contribution.

         In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors shall agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (if
any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the 2012 Notes or any other Subsidiary Guarantor's
obligations with respect to its Subsidiary Guarantee.

         SECTION 14.6  Execution and Delivery of Evidence of Subsidiary
Guarantee.

          To evidence the Subsidiary Guarantee set forth in Section 14.1 hereof,
the Company shall cause this Indenture or a supplemental indenture to be
executed on behalf of each Subsidiary

                                       41

<PAGE>

Guarantor by its President or one of its Vice Presidents and attested to by one
of its Secretaries or Assistant Secretaries.

         SECTION 14.7  Severability.

         In case any provision of the Subsidiary Guarantee shall be invalid,
illegal or unenforceable, that portion of such provision that is not invalid,
illegal or unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

         SECTION 14.8  Payment.

         For purposes of this Article XIV, a payment with respect to any
Subsidiary Guarantee or with respect to principal of or interest on any 2012
Note or any Subsidiary Guarantee shall include, without limitation, payment of
principal of and interest on any 2012 Note, any depositing of funds under
Article III, IV or XI hereof, any payment on account of any repurchase or
redemption of any 2012 Note and any payment or recovery on any claim (whether
for rescission or damages and whether based on contract, tort, duty imposed by
law, or any other theory of liability) relating to or arising out of the offer,
sale or purchase of any 2012 Note."

                                   ARTICLE 3

                            MISCELLANEOUS PROVISIONS

         SECTION 3.1.  Integral Part.

         This First Supplemental Indenture constitutes an integral part of the
Indenture.

         SECTION 3.2.  Rules of Construction.

         For all purposes of this First Supplemental Indenture:

         (a)   capitalized terms used herein without definition shall have the
meanings specified in the Original Indenture; and

         (b)   the terms "herein," "hereof," "hereunder" and other words of
similar import refer to this First Supplemental Indenture.

         SECTION 3.3.  Adoption, Ratification and Confirmation.

         The Original Indenture, as supplemented and amended by this First
Supplemental Indenture, is in all respects hereby adopted, ratified and
confirmed.

         SECTION 3.4.  Counterparts.

         This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed an original; and
all such counterparts shall together constitute but one and the same instrument.

                                       42

<PAGE>

         SECTION 3.5.  Benefits of Indenture.

         Nothing in this First Supplemental Indenture or in the 2012 Notes,
express or implied, shall give to any Person (other than the parties hereto, any
Paying Agent, any Securities Registrar and their successors hereunder, the
Holders and, to the extent set forth in Section 14.4 hereof, creditors of
Subsidiary Guarantors) any benefit or any legal or equitable right, remedy or
claim under the Indenture.

         SECTION 3.6.  Governing Law.

         THIS FIRST SUPPLEMENTAL INDENTURE, THE 2012 NOTES AND THE SUBSIDIARY
GUARANTEES, IF ANY, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THE TRUST INDENTURE ACT IS
APPLICABLE. THE COMPANY WILL CAUSE EACH SUBSIDIARY GUARANTOR, IF ANY, TO
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE
INDENTURE, THE 2012 NOTES OR A SUBSIDIARY GUARANTEE, AND THE COMPANY WILL CAUSE
EACH SUBSIDIARY GUARANTOR TO IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED BY ANY SUCH COURT.

         SECTION 3.7.  Supplemental Indenture Controls.

         In the event there is any conflict or inconsistency between the
Original Indenture and this First Supplemental Indenture, the provisions of this
First Supplemental Indenture shall control.

                                       43

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first written
above.

                                                XTO ENERGY INC.

                                                By:            JOHN M. O'REAR
                                                     ---------------------------
                                                     John M. O'Rear
                                                     Vice President

                                                THE BANK OF NEW YORK, as Trustee

                                                By:            REMO REALE
                                                     ---------------------------
                                                     Name:    Remo Reale
                                                     ---------------------------
                                                     Title:   Vice President
                                                     ---------------------------

                                       44

<PAGE>

                                    EXHIBIT A
                           [FORM OF FACE OF 2012 NOTE]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]/1/

__________________________
/1/ These paragraphs should be included only if the Security is a Global
Security.

                                      A-1

<PAGE>

                                 XTO ENERGY INC.

                           7 1/2% SENIOR NOTE DUE 2012

No. _____                                                           $___________

                                                           CUSIP No. 98385X AA 4

         XTO Energy Inc., a Delaware corporation (herein called the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
________________________ or registered assigns the principal sum of
_______________ Dollars on April 15, 2012 [or such greater or lesser amount as
is indicated on the Schedule of Exchanges of Securities attached hereto]/2/, at
the office or agency of the Company referred to below, and to pay interest
thereon, commencing on October 15, 2002 and continuing semiannually thereafter,
on April 15 and October 15 of each year, from April 23, 2002 or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, at the rate of 7 1/2% per annum, until the principal hereof is paid or duly
provided for, and (to the extent lawful) to pay on demand, interest on any
overdue interest at the rate borne by the Securities from the date on which such
overdue interest becomes payable to the date payment of such interest has been
made or duly provided for. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the April 1 or October 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date and may be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture. Interest on the
Securities of this series shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.

         Payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City of New York, or at such other office or agency of the
Company as may be maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided however, that payment of interest may be
made at the option of the Company (i) by check mailed to Holders at their
respective addresses as shown in the Security Register or (ii) with respect to
any Holder owning Securities in the principal amount of $500,000 or more, by
wire transfer to an account maintained by the Holder located in the United
States, as specified in a written notice to the Trustee (received prior to the
relevant record date) by any such Holder requesting payment by wire transfer and
specifying the account to

_______________________
/2/ This clause should be included only if the Security is a Global Security.

                                      A-2

<PAGE>

which transfer is requested. Notwithstanding the foregoing, so long as this
Security is registered in the name of a Depositary or its nominee, all payments
hereon shall be made by wire transfer of immediately available funds to the
account of such Depositary or its nominee. The Holder must surrender this
Security to a Paying Agent to collect payment of principal.

         Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

[SEAL]

                                               XTO ENERGY INC.

                                               By:  ____________________________
                                                    Name:_______________________
                                                    Title:______________________

Attest:

_______________________
Secretary

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated herein and referred to in
the within-mentioned Indenture.

Dated: _________                               THE BANK OF NEW YORK, as Trustee

                                               By ______________________________
                                                       Authorized Signatory

                                      A-3

<PAGE>

                         [Form of Reverse OF 2012 NOTE]

         This Security is one of a duly authorized issue of the series of
securities of the Company designated as its 7 1/2% Senior Notes due 2012 (herein
called the "Securities"), which is issued under, with securities of one or more
additional series that may be issued under, the Indenture dated as of April 23,
2002, between the Company and The Bank of New York, as trustee (herein called
the "Trustee," which term includes any successor trustee under the Indenture),
as amended and supplemented by the First Supplemental Indenture of even date
(such Indenture, as so amended and supplemented, being called the "Indenture"),
to which Indenture and all future indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.

         The Securities are subject to redemption at the option of the Company,
in whole or in part, at any time and from time to time, upon not less than 30 or
more than 60 days' notice, at a Redemption Price of 100% of their principal
amount plus a Make-Whole Amount, together in the case of any such redemption
with accrued and unpaid interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), all as
provided in the Indenture.

         In the case of any redemption of Securities, interest installments
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. At the option of the Holder and subject to
the terms and conditions of the Indenture, the Company shall become obligated to
purchase all or any part specified by the Holder (so long as the principal
amount of such part is $1,000 or an integral multiple of $1,000 in excess
thereof) of the Securities held by such Holder on a Business Day selected by the
Company no earlier than 30 days nor later than 70 days after the occurrence of a
Change of Control, at a purchase price equal to 101% of the principal amount
thereof together with accrued and unpaid interest to the Change of Control
Purchase Date. The Holder shall have the right to withdraw any Change of Control
Notice (in whole or in a portion thereof that is $1,000 or an integral multiple
of $1,000 in excess thereof) at any time prior to the close of business on the
third Business Day next preceding the Change of Control Purchase Date by
delivering a written notice of withdrawal to the Company in accordance with the
terms of the Indenture.

         In the event of redemption or purchase of this Security in part only, a
new Security or Securities for the unredeemed or unpurchased portion hereof
shall be issued in the name of the Holder hereof upon the cancellation hereof.

         The Securities do not have the benefit of any sinking fund obligations.

                                      A-4

<PAGE>

         As set forth in the Indenture, an Event of Default is generally: (a)
failure to pay principal upon Stated Maturity, redemption or otherwise; (b)
default for 30 days in payment of interest on any of the Securities; (c) default
in the performance of agreements relating to mergers, consolidations and sales
of all or substantially all assets; (d) failure for 30 days after notice to
comply with any other covenants in the Indenture or the Securities; (e) certain
payment defaults under, the acceleration prior to the maturity of, and the
exercise of certain enforcement rights with respect to, certain Indebtedness of
the Company or any Restricted Subsidiary in an aggregate principal amount in
excess of $10,000,000; (f) cessation, or assertion thereof by the Company or any
Subsidiary Guarantor, of any Subsidiary Guarantee to be fully effective; (g)
certain events giving rise to ERISA liability; (h) certain final judgments
against the Company or any Restricted Subsidiary in an aggregate amount of
$10,000,000 or more which remain unsatisfied and either become subject to
commencement or enforcement proceedings or remain unstayed for a period of 60
days; and (i) certain events of bankruptcy, insolvency or reorganization of the
Company or any Restricted Subsidiary.

         If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in aggregate principal amount of the Outstanding
Securities may declare the principal amount of all the Securities to be due and
payable immediately, except that (i) in the case of an Event of Default arising
from certain events of bankruptcy, insolvency or reorganization of the Company
or any Restricted Subsidiary, the principal amount of the Securities will become
due and payable immediately without further action or notice and (ii) in the
case of an Event of Default which relates to certain payment defaults,
acceleration or the exercise of certain enforcement rights with respect to
certain Indebtedness, any acceleration of the Securities will be automatically
rescinded if any such Indebtedness is repaid or if the default relating to such
Indebtedness is cured or waived and if the holders thereof have accelerated such
Indebtedness then such holders have rescinded their declaration of acceleration
or if in certain circumstances the proceedings or enforcement action with
respect to the Indebtedness that is the subject of such Event of Default is
terminated or rescinded.

         No Holder may pursue any remedy under the Indenture unless the Trustee
shall have failed to act after notice of an Event of Default and written request
by Holders of at least 25% in principal amount of the Outstanding Securities,
and the offer to the Trustee of indemnity reasonably satisfactory to it;
however, such provision does not affect the right to sue for enforcement of any
overdue payment on a Security by the Holder thereof. Subject to certain
limitations, Holders of a majority in principal amount of the Outstanding
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders notice of any continuing default (except
default in payment of principal, premium or interest) if it determines in good
faith that withholding the notice is in the interest of the Holders. The Company
is required to file quarterly reports with the Trustee as to the absence or
existence of defaults.

         Under the circumstances set forth in the Indenture, the Company's
payment obligations under the Securities may be jointly and severally guaranteed
by existing or future Restricted Subsidiaries of the Company as Subsidiary
Guarantors.

         The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of the Company and any Subsidiary Guarantor on this Security
and (ii) certain

                                      A-5

<PAGE>

restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by or on behalf of the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security. Without the consent of any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Securities in
addition to or in place of Definitive Securities and to make certain other
specified changes and other changes that do not adversely affect the rights of
any Holder in any material respect.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

         The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

         A director, officer, employee or stockholder of the Company shall not
have any personal liability under this Security or the Indenture by reason of
his or its status as such director, officer,

                                      A-6

<PAGE>

employee or stockholder. Each Holder, by accepting this Security, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Security.

         Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this Security is overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.

         All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture. The Company will
furnish to any Holder upon written request and without charge a copy of the
Indenture. Requests may be made to the Company, 810 Houston Street, Fort Worth,
Texas 76102.

         Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders thereof. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identifying information
printed hereon.

         This Security shall be governed by and construed in accordance with the
laws of the State of New York, except to the extent that the Trust Indenture Act
is applicable.

                                      A-7

<PAGE>

                                 ASSIGNMENT FORM

(I) or (we) assign and transfer this Security to

 ______________________________________________________________________________
             (Insert assignee's social security or tax I.D. number)

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
             (Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
as agent to transfer this Security on the Security Register of the Company. The
agent may substitute another to act for him.

Dated: _____________                     Signature:_____________________________
                                                   (Sign exactly as name appears
                                                   on the face of this Security)

                                         Name:__________________________________
                                         Address:_______________________________
                                                 _______________________________
                                         Phone No.:_____________________________

Signature Guarantee

By:_______________________________
Signature guarantor must be an
eligible guarantor institution - a
bank or trust company or broker or
dealer which is a member of a
registered exchange or the NASD.

                                      A-8

<PAGE>

                     SCHEDULE OF EXCHANGES OF SECURITIES/3/

The following exchanges, redemptions or repurchases of a part of this Global
Security have been made:

<TABLE>
<CAPTION>
         Principal Amount
     of this Global Security        Authorized                                          Amount of
          Following Such           Signatory of        Amount of Decrease in           Increase in
          Decrease Date         Trustee or Security        Principal Amount         Principal Amount
    of Exchange (or Increase)        Custodian        of this Global Security   of this Global Security
   --------------------------- --------------------- ------------------------- -------------------------
   <S>                         <C>                   <C>                       <C>
</TABLE>

______________________________
/3/ This schedule should be included only if the Security is a Global Security.

                                      A-9

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