Document:

Exhibit 10.1

                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

                          CABOT OIL & GAS CORPORATION,

                                    AS SELLER

                                       AND

                            WHITTIER ENERGY COMPANY,

                                  AS PURCHASER

                           Executed on March 28, 2002

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                                TABLE OF CONTENTS

                                                                          Page

ARTICLE 1 PURCHASE AND SALE..................................................1
         Section 1.1       Purchase and Sale.................................1
         Section 1.2       Section 1.2 Assets................................1
         Section 1.3       Effective Time; Proration of Costs
                            and Revenues.....................................2
         Section 1.4       Delivery and Maintenance of Records...............4

ARTICLE 2 PURCHASE PRICE.....................................................5
         Section 2.1       Purchase Price....................................5
         Section 2.2       Adjustments to Purchase Price.....................5
         Section 2.3       Allocation of Purchase Price......................6

ARTICLE 3 TITLE MATTERS AND ENVIRONMENTAL DEFECTS............................7
         Section 3.1       Seller's Title....................................7
         Section 3.2       Definition of Defensible Title....................7
         Section 3.3       Definition of Permitted Encumbrances..............8
         Section 3.4       Notice of Title Defects...........................9
         Section 3.5       Notice of Environmental Defects..................12
         Section 3.6       Determination of Defects or Title Benefits.......13
         Section 3.7       Adjustments for Defects and Title Benefits.......14
         Section 3.8       Casualty or Condemnation Loss....................15
         Section 3.9       Limitations on Applicability of
                            Sections 3.1 and 3.5(e).........................15

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER..........................15
         Section 4.1       Disclaimers......................................15
         Section 4.2       Existence and Qualification......................17
         Section 4.3       Power............................................17
         Section 4.4       Authorization and Enforceability.................17
         Section 4.5       No Conflicts.....................................17
         Section 4.6       Liability for Brokers' Fees......................18
         Section 4.7       Litigation.......................................18
         Section 4.8       Taxes and Assessments,...........................18
         Section 4.9       Compliance with Laws.............................18
         Section 4.10      Contracts........................................18
         Section 4.11      Consents and Preferential Purchasing Rights......19
         Section 4.12      Outstanding Authorities for Expenditure..........19
         Section 4.13      Prepayments......................................19
         Section 4.14      Imbalances.......................................19
         Section 4.15      Scope of Assets..................................19

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................19
         Section 5.1       Existence and Qualification......................19

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         Section 5.2       Power............................................20
         Section 5.3       Authorization and Enforceability.................20
         Section 5.4       No Conflicts.....................................20
         Section 5.5       Liability for Brokers' Fees......................20
         Section 5.6       Litigation.......................................20
         Section 5.7       Financing........................................21
         Section 5.8       Independent Investigation........................21
         Section 5.9       Consents, Approvals or Waivers...................21

ARTICLE 6 COVENANTS OF THE PARTIES..........................................21
         Section 6.1       Access...........................................21
         Section 6.2       Confidentiality Oblieations......................22
         Section 6.3       Notification of Breaches. Until the Closing,.....22
         Section 6.4       Public Announcements.............................22
         Section 6.5       Operation of Business............................23
         Section 6.6       Indemnity Regarding Access.......................23
         Section 6.7       Assumption of Obligations........................24
         Section 6.8       Tax Matters......................................24
         Section 6.9       Further Assurances...............................24
         Section 6.10      Environmental Insurance..........................24

ARTICLE 7 CONDITIONS TO CLOSING.............................................25
         Section 7.1       Conditions of Seller to Closing..................25
         Section 7.2       Conditions of Purchaser to Closing ..............25

ARTICLE 8 CLOSING...........................................................26
         Section 8.1       Time and Place of Closing .......................26
         Section 8.2       Obli2ations of Seller at Closing.................26
         Section 8.3       Obligations of Purchaser at Closing..............27
         Section 8.4       Closing Payment and Post-Closing
                            Purchase Price Adjustments......................27

ARTICLE 9 TERMINATION AND AIVIENDMENT.......................................28
         Section 9.1       Termination......................................28
         Section 9.2       Effect of Termination............................29

ARTICLE 10 INDEMNIFICATION; LIMITATIONS.....................................29
         Section 10.1      Indemnification..................................29
         Section 10.2      Indemnification Actions..........................31
         Section 10.3      Limitation on Actions............................33
         Section 10.4      Recording........................................34

ARTICLE 11 MISCELLANEOUS....................................................34
         Section 11.1      Receipts.........................................34
         Section 11.2      Expenses.........................................35
         Section 11.3      Counterparts.....................................35
         Section 11.4      Notice...........................................35

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         Section 11.5      Sales or Use Tax, Recording Fees
                            and Similar Taxes and Fees......................36
         Section 11.6      Expenses.........................................36
         Section 11.7      Replacement of Bonds, Letters of
                            Credit and Guarantees...........................36
         Section 11.8      Governing Law; Submission to Jurisdiction........36
         Section 11.9      Captions.........................................36
         Section 11.10     Waivers..........................................37
         Section 11.11     Assignment.......................................37
         Section 11.12     Entire Agreement.................................37
         Section 11.13     Amendment........................................37
         Section 11.14     No Third-Party Beneficiaries.....................37
         Section 11.15     References.......................................37
         Section 11.16     Construction.....................................38
         Section 11.17     Limitation on Damnes.............................38

ARTICLE 12 DEFINITIONS......................................................38

EXHIBITS:

         Exhibit A.........         -       Leases
         Exhibit A-1.......         -       Interests in Wells
         Exhibit B.........         -       Form of Conveyance
         Exhibit C.........         -       Form of Indemnity

SCHEDULES:

         Schedule 2.3......         -       Allocated Values
         Schedule 4.7......         -       Litigation
         Schedule 4.8......         -       Taxes
         Schedule 4.9......         -       Compliance with law Issues
         Schedule 4.10.....         -       Contract Matters
         Schedule 4.11.....         -       Consents
         Schedule 4.12.....         -       Outstanding Expenditures
         Schedule 4.13.....         -       Prepayments
         Schedule 4.14.....         -       Imbalances
         Schedule 6.5......         -       Permitted Activities

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                           PURCHASE AND SALE AGREEMENT

     This Purchase and Sale Agreement (the "Agreement"), is executed on March
28, 2002, by and between Cabot Oil & Gas Corporation, a Delaware corporation
("Seller"), and Whittier Energy Company, a Nevada corporation ("Purchaser").
Seller and Purchaser are sometimes referred to individually as a "Party" and
collectively as the "Parties."

                                    RECITALS:

     WHEREAS, Seller owns certain interests in oil and gas properties, rights
and related assets that are defined and described herein; and

     WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller the properties and rights of Seller hereafter described, in
the manner and upon the terms and conditions hereafter set forth; and

     WHEREAS, capitalized terms used herein shall have the meanings ascribed to
them in this Agreement as such terms are defined in Article 12 hereof.

     NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto, intending to be
legally bound by the terms hereof, agree as follows:

                                    ARTICLE 1
                                PURCHASE AND SALE

     Section 1.1 Purchase and Sale.
                 -----------------

     At the Closing, and upon the terms and subject to the conditions of this
Agreement, Seller agrees to sell and convey to Purchaser and Purchaser agrees to
purchase, accept and pay for the Assets (as defined in Section 1.2).

     Section 1.2 Section 1.2 Assets. ------------------ As used herein, the term
"Assets" means all of Seller's right, title, and interest in and to the
following:

          (a) The oil and gas leases, oil, gas and mineral leases, subleases and
     other leaseholds, royalties, overriding royalties, net profits interests,
     mineral fee interests, carried interests, and other properties and
     interests described on Exhibit A (collectively, the "Leases"), and any and
     all oil, gas, water, CO2 or injection wells thereon, including the
     interests in the wells shown on Exhibit A-1 attached hereto (the "Wells");

          (b) All pooled, communitized or unitized acreage which includes all or
     a part of any Lease or includes any Well (the "Units"), and all tenements,
     hereditaments and appurtenances belonging to the Leases and Units;

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          (c) All gas gathering systems and facilities, including but not
     limited to the Beaver Dam Creek gas plant and all equipment associated
     therewith (the "Gathering Systems" and, together with the Units, Leases and
     Wells, the "Properties");

          (d) All presently existing contracts, agreements and instruments by
     which the Assets are bound, to the extent applicable to the Properties,
     including but not limited to, operating agreements, unitization, pooling
     and communitization agreements, declarations and orders, area of mutual
     interest agreements, joint venture agreements, farmin and farmout
     agreements, exchange agreements, transportation agreements, agreements for
     the sale and purchase of Hydrocarbons and processing agreements, to the
     extent applicable to the Properties or the production of Hydrocarbons from
     the Properties, but excluding any contracts, agreements and instruments to
     the extent transfer is restricted by third-party agreement or applicable
     law and provided that "Contracts" shall not include the instruments
     constituting Seller's chain of title to the Leases (subject to such
     exclusion and provison, the "Contracts");

          (e) All surface fee interests, easements, permits, licenses,
     servitudes, rights-of-way, surface leases and other surface rights
     appurtenant to, and used or held for use solely in connection with, the
     Properties, but excluding any permits and other appurtenances to the extent
     transfer is restricted by third-party agreement or applicable law;

          (f) All equipment, machinery, fixtures and other tangible personal
     property and improvements located on the Properties or used or held for use
     solely in connection with the operation of the Properties (the
     "Equipment"); and

          (g) All books, records, data, files, maps, and accounting records
     related solely to the Assets, or used or held for use solely in connection
     with the maintenance or operation thereof, but excluding (i) any books,
     records, data, files, maps, and accounting records which are not
     transferable or cannot be disclosed under the terms of a third Person
     agreement or applicable Law or for which a transfer fee or similar payment
     will be incurred upon a sale of the Assets (unless Purchaser agrees to pay
     any such fees), (ii) any computer software that is proprietary to Seller or
     to any Affiliate of Seller, (iii) work product of legal counsel for Seller
     or any Affiliate of Seller other than Contracts and correspondence with
     Persons, including Governmental Bodies, who are not employed by or acting
     for such Affiliates or counsel for such Affiliates, and (iv) records
     relating to the sale of the Assets, including bids received from and
     records of negotiations with third Persons (the "Excluded Records")
     (subject to such exclusions, the "Records").

     Section 1.3 Effective Time; Proration of Costs and Revenues.
                 -----------------------------------------------

          (a) Possession of the Assets shall be transferred from Seller to
     Purchaser at the Closing, but certain financial benefits and burdens of the
     Assets shall be transferred effective as of 12:01 a.m., local time, where
     the respective Assets are located, on February 1, 2002 (the "Effective
     Time"), as described below.

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          (b) Purchaser shall be entitled to all production of Hydrocarbons from
     or attributable to the Leases, Units and Wells at and after the Effective
     Time (and all products and proceeds attributable thereto), and to all other
     income, proceeds, receipts and credits earned with respect to the Assets at
     or after the Effective Time, and shall be responsible for (and entitled to
     any refunds with respect to) all Property Costs incurred at and after the
     Effective Time. Seller shall be entitled to all production of Hydrocarbons
     from or attributable to Leases, Units and Wells prior to the Effective Time
     (and all products and proceeds attributable thereto), and to all other
     income, proceeds, receipts and credits earned with respect to the Assets
     prior to the Effective Time, and shall be responsible for (and entitled to
     any refunds with respect to) all Property Costs incurred prior to the
     Effective Time. "Earned" and "incurred", as used in this Agreement, shall
     be interpreted in accordance with generally accepted accounting principles
     and Council of Petroleum Accountants Society (COPAS) standards, and
     expenditures which are cash-called or advanced pursuant to a joint
     operating agreement, unit agreement or similar agreement shall be deemed
     incurred when expended by the operator of the applicable Lease, Unit or
     Well, in accordance with Seller's current practice.

          (c) "Property Costs" means all operating expenses (including without
     limitation costs of insurance, rentals, shut-in payments, title examination
     and curative actions, and ad valorem, property, severance, production and
     similar Taxes based upon or measured by the ownership or operation of the
     Assets or the production of Hydrocarbons therefrom, but excluding any other
     Taxes) and capital expenditures (including without limitation bonuses,
     broker's fees, and other lease acquisition costs, costs of drilling and
     completing wells and costs of acquiring equipment) incurred in the
     ownership and operation of the Assets in the ordinary course of business,
     and overhead costs charged to the Assets under the applicable operating
     agreement or if none, charged to the Assets on the same basis as charged on
     the date of this Agreement, but excluding without limitation liabilities,
     losses, costs, and expenses attributable to:

          (i)  claims, investigations, administrative proceedings or litigation
               directly or indirectly arising out of or resulting from actual or
               claimed personal injury or death, property damage or violation of
               any Law,

          (ii) obligations to plug wells, dismantle facilities, close pits and
               restore the surface around such wells, facilities and pits,

          (iii) obligations to remediate any contamination of groundwater,
               surface water, soil or Equipment under applicable Environmental
               Laws,

          (iv) obligations to furnish make-up Hydrocarbons according to the
               terms of applicable Hydrocarbon sales, gathering, processing or
               transportation contracts,

          (v)  gas balancing and other production balancing obligations,

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          (vi) obligations to pay revenues, royalties or other amounts payable
               to third Persons with respect to the Properties but held in
               suspense, and

          (vii) any claims for indemnification, contribution or reimbursement
               from any third Person with respect to liabilities, losses, costs
               and expenses of the type described in preceding clauses (i)
               through (vi), whether such claims are made pursuant to contract
               or otherwise.

          (d) For purposes of allocating production (and accounts receivable
     with respect thereto), under this Section 1.3, (i) liquid hydrocarbons
     shall be deemed to be "from or attributable to" the Leases, Units and Wells
     when they pass through the pipeline connecting into the storage facilities
     into which they are run or, if there are no such storage facilities, when
     they pass through the LACT meters or similar meters at the point of entry
     into the pipelines through which they are transported from the field, and
     (ii) gaseous hydrocarbons shall be deemed to be "from or attributable to"
     the Leases, Units and Wells when they pass through the delivery point sales
     meters on the pipelines through which they are transported. Seller shall
     utilize reasonable interpolative procedures to arrive at an allocation of
     production when exact meter readings or gauging and strapping data is not
     available. Seller shall provide to Purchaser, no later than ten (10)
     Business Days prior to Closing, evidence of all meter readings and all
     gauging and strapping procedures conducted on or about the Effective Time
     in connection with the Assets, together with all data necessary to support
     any estimated allocation, for purposes of establishing the adjustment to
     the Purchase Price pursuant to Section 2.2 hereof. Taxes that are included
     in Property Costs, right-of-way fees, insurance premiums and other Property
     Costs that are paid periodically shall be prorated based on the number of
     days in the applicable period failing before and the number of days in the
     applicable period falling at or after the Effective Time, except that
     production, severance and similar Taxes measured by the quantity of or the
     value of production shall be prorated based on the number of units or value
     of production actually produced and sold, as applicable, before, and at or
     after, the Effective Time. In each case, Purchaser shall be responsible for
     the portion allocated to the period at and after the Effective Time and
     Seller shall be responsible for the portion allocated to the period before
     the Effective Time.

          (e) Possession of and responsibility for (i) any funds received from
     co-owners and held by Seller as operator with respect to the Properties and
     (ii) any amounts held in suspense or other third-Person funds held by
     Seller as operator with respect to the Properties, except for funds being
     held in suspense by Seller relating to any Property prior to the Effective
     Time to which Seller is entitled as a working interest owner, shall be
     transferred by Seller to Purchaser at Closing.

     Section 1.4  Delivery and Maintenance of Records.
                  -----------------------------------

          (a) Seller, at Purchaser's cost, shall deliver the Records to
     Purchaser within ten (10) days following Closing. Seller may retain the
     originals of such Records as Seller has determined may be required for
     litigation, Tax, accounting, and auditing purposes and provide Purchaser
     with copies thereof and may retain copies of any Records.

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          (b) Purchaser, for a period of seven (7) years following Closing, will
     (i) retain the Records, (ii) provide Seller, its Affiliates, and its and
     their officers, employees and representatives with access to the Records
     during normal business hours and upon reasonable advance notice for review
     and copying at Seller's expense and (iii) provide Seller, its Affiliates,
     and its and their officers, employees and representatives with access,
     during normal business hours and upon reasonable advance notice, to (A)
     materials received or produced after Closing relating to any claim for
     indemnification made under Section 10.1 of this Agreement (excluding,
     however, attorney work product and attorney-client communications with
     respect to any such claim being brought by Purchaser under this Agreement)
     for review and copying at Seller's expense, and (B) Purchaser's and its
     Affiliates' officers, employees and representatives for the purpose of
     discussing any such claim, provided that Purchaser shall have the right to
     have its own representatives present during any such meeting.

                                   ARTICLE 2
                                 PURCHASE PRICE

     Section 2.1 Purchase Price.
                 -------------

     The purchase price for the Assets (the "Purchase Price") shall be Three
Million Four Hundred Thousand Dollars ($3,400,000), which shall be adjusted as
provided in Section 2.2.

     Section 2.2 Adjustments to Purchase Price.
                 -----------------------------

     The Purchase Price for the Assets shall be adjusted as follows with all
such amounts being determined in accordance with generally accepted accounting
principles, consistently applied, and COPAS standards:

          (a) Reduced by the aggregate amount of the following proceeds received
     by Seller between the Effective Time and the Closing Date (with the period
     between the Effective Time and the Closing Date referred to as the
     "Adjustment Period"): (i) proceeds from the sale of Hydrocarbons (net of
     any (A) royalties, overriding royalties or other burdens on or payable out
     of production in effect as of the Effective Time, (B) gathering, processing
     and transportation costs not included in "Property Costs" and any (C)
     production, severance, sales or excise Taxes not reimbursed to Seller by
     the purchaser of production) produced from or attributable to the
     Properties during the Adjustment Period, and (ii) other proceeds earned
     with respect to the Assets during the Adjustment Period, including receipts
     by Seller, as operator of the Leases and/or Units, of overhead charges
     received from other third-party working interest owners in the Leases
     and/or Units pursuant to the applicable operating agreements (provided that
     for purposes of this adjustment, "proceeds" shall not be considered to
     include funds received by Seller for the account of third Persons, such as
     those referenced in Section 1.3(e));

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          (b) Reduced as a result of Title Defects by the amount determined
     under Section 3.4(g), 3.6 and Section 3.7 and increased as a result of
     Title Benefits by the amounts determined under Section 3.4(h), 3.6 and
     Section 3.7;

          (c) Reduced as a result of Environmental Defects by the amount
     determined under Section 3.5(d) and Section 3.7;

          (d) Increased by the amount of all Property Costs and other costs
     attributable to the ownership and operation of the Assets which are paid by
     Seller and incurred at or after the Effective Time, except any Property
     Costs and other such costs already deducted in the determination of
     proceeds in Section 2.2(a)(i);

          (e) Increased by the amount of all prepaid expenses (including cash
     calls and advances to third Person operators for expenses not yet incurred)
     paid by Seller with respect to the ownership or operation of the Assets and
     not yet applied as of the Closing Date; and vi) Increased by the amount of
     $9,334.00 for each month (prorated as to the month of Closing) after the
     Effective Time, which amount reflects the total monthly overhead charge
     paid to Seller, as operator of the Leases and/or Units, under the
     applicable operating agreements.

     The adjustment described in Section 2.2(a) shall serve to satisfy, up to
the amount of the adjustment, Purchaser's entitlement under Section 1.3 to
Hydrocarbon production from or attributable to the Leases, Units and Wells
during the Adjustment Period, and to the value of other income, proceeds,
receipts and credits earned with respect to the Assets during the Adjustment
Period, and Purchaser shall not have any separate rights to receive any
production or income, proceeds, receipts and credits with respect to which an
adjustment has been made. Similarly, the adjustment described in Section 2.2(e)
shall serve to satisfy, up to the amount of the adjustment, Purchaser's
obligation under Section 1.3 to pay Property Costs and other costs attributable
to the ownership and operation of the Assets which are incurred during the
Adjustment Period, and Purchaser shall not be separately obligated to pay for
any Property Costs or other such costs with respect to which an adjustment has
been made.

     The Purchase Price, adjusted as set forth in (a) through (e), shall be the
"Adjusted Purchase Price."

     Section 2.3  Allocation of Purchase Price.
                  ----------------------------

     Schedule 2.3 sets forth the agreed allocation of the unadjusted Purchase
Price among each of the Assets, which has been made in compliance with the
principles of Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury regulations thereunder. The "Allocated Value" for any
Asset equals the portion of the unadjusted Purchase Price allocated to such
Asset on Schedule 2.3, increased or decreased as described in this Section. Any
adjustments to the Purchase Price pursuant to Sections 2.2(a) through (e) shall
be applied to the amounts set forth in Schedule 2.3 for the particular affected

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Assets. Seller has accepted such Allocated Values for purposes of this Agreement
and the transactions contemplated hereby, but otherwise make no representation
or warranty as to the accuracy of such values. Seller and Purchaser agree (i)
that the Allocated Values shall be used by Seller and Purchaser as the basis for
reporting asset values and other items for purposes of all federal, state, and
local Tax returns, including without limitation Internal Revenue Service Form
8594 and (ii) that neither they nor their Affiliates will take positions
inconsistent with the Allocated Values in notices to government authorities, in
audit or other proceedings with respect to Taxes, or in other documents or
notices relating to the transactions contemplated by this Agreement.

                                   ARTICLE 3
                     TITLE MATTERS AND ENVIRONMENTAL DEFECTS

     Section 3.1  Seller's Title
                  --------------

          (a) Seller represents and warrants to Purchaser that Seller's title to
     the Properties shown on Exhibit A-1 is Defensible Title as defined in
     Section 3.2.

          (b) The conveyance to be delivered by Seller to Purchaser shall be
     substantially in the form of Exhibit B hereto (the "Conveyance") and
     contain a special warranty of title by, through and under Seller to
     Seller's interest in the Properties shown as owned by Seller on Exhibit
     A-1, subject to the Permitted Encumbrances, but shall otherwise be without
     warranty of title, express, implied or statutory, except that such
     conveyance shall transfer to Purchaser all rights or actions on title
     warranties given or made by Seller's predecessors (other than Affiliates of
     Seller), to the extent Seller may legally transfer such rights.

          (c) This Article 3 shall provide Purchaser's exclusive remedy in
     respect of Title Defects reported in accordance with this Article 3, and
     Purchaser shall not be entitled to protection under Seller's special
     warranty of title in the Conveyance against any Title Defect reported under
     this Article 3.

     Section 3.2  Definition of Defensible Title
                  ------------------------------

      As used in this Agreement, the term "Defensible Title" means that title
of Seller which, subject to Permitted Encumbrances:

          (a) Entitles Seller to receive throughout the duration of the
     productive life of any Property (after satisfaction of all royalties,
     overriding royalties, nonparticipating royalties, net profits interests or
     other similar burdens on or measured by production of Hydrocarbons in
     effect as of the Effective Time), not less than the "net revenue interest"
     share shown in Exhibit A-1 of all Hydrocarbons produced, saved and marketed
     from such Property, except decreases (i) in connection with those
     operations in which Seller may be a nonconsenting co-owner, (ii) resulting
     from the reversion of interests to co-owners with respect to operations in
     which such co-owners elected not to consent, (iii) resulting from the
     establishment or amendment of pools or units, and (iv) required to allow
     co-owners to make up past underproduction or pipelines to make up past
     underdeliveries, and except as stated in such Exhibit A-1;

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          (b) Obligates Seller to bear a percentage of the costs and expenses
     for the maintenance and development of, and operations relating to, any
     Property not greater than the "working interest" shown in Exhibit A-1
     without increase throughout the productive life of such Property, except as
     stated in Exhibit A-1 and except increases (i) resulting from contribution
     requirements with respect to defaulting co-owners under applicable
     operating agreements or applicable Law and (ii) that are accompanied by at
     least a proportionate increase in Seller's net revenue interest; and

          (c) Is free and clear of all Encumbrances other than Permitted
     Encumbrances.

     As used in this Agreement, the term "Encumbrance" means any lien, charge,
encumbrance, obligation, or other defect (including a discrepancy in net revenue
interest or working interest as set forth in Exhibit A-1), and the term "Title
Defect" means any Encumbrance, other than a Permitted Encumbrance, that causes a
breach of Seller's representation and warranty in Section 3.1. As used in this
Agreement, the term "Title Benefit" shall mean any right, circumstance or
condition that operates to increase the net revenue interest of Seller in any
Property above that shown on Exhibit A-1, without causing a greater than
proportionate increase in Seller's working interest above that shown in Exhibit
A-1.

     Section 3.3.  Definition of Permitted Encumbrances.
                   ------------------------------------

     As used herein, the term "Permitted Encumbrances" means any or all of the
following:

          (a) Lessors' royalties and any overriding royalties, reversionary
     interests and other burdens in effect as of the Effective Time to the
     extent that they do not, individually or in the aggregate, reduce Seller's
     net revenue interests below that shown in Exhibit A-1 or increase Seller's
     working interest above that shown in Exhibit A-1 without a corresponding
     increase in the net revenue interest;

          (b) All Contracts, to the extent that they do not, individually or in
     the aggregate, reduce Seller's net revenue interests below that shown in
     Exhibit A-1 or increase Seller's working interest above that shown in
     Exhibit A-1 without a corresponding increase in the net revenue interest;

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

          (d) Liens for current Taxes or assessments not yet delinquent or, if
     delinquent, being contested in good faith by appropriate actions;

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

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          (f) All rights to consent, by required notices to, filings with, or
     other actions by Governmental. Bodies in connection with the sale or
     conveyance of oil and gas leases or interests therein if they are
     customarily obtained subsequent to the sale or conveyance;

          (g) Rights of reassignment arising upon final intention to abandon or
     release the Assets, or any of them;

          (h) Easements, rights-of-way, servitudes, permits, surface leases and
     other rights in respect of surface operations;

          (i) Calls on production under existing Contracts at prices which are
     not less than the then current market price;

          (j) All rights reserved to or vested in any Governmental Body to
     control or regulate any of the Assets in any manner and all obligations and
     duties under all applicable laws, rules and orders of any such Governmental
     Body or under any franchise, grant, license or permit issued by any such
     Governmental Body;

          (k) Any Encumbrance on or affecting the Assets which is expressly
     assumed, bonded or paid by Purchaser at or prior to Closing or which is
     discharged by Seller at or prior to Closing;

          (l) The litigation matters described in Schedule 4.7, if any;

          (m) Any matters shown on Exhibit A-1; and

          (n) Any other Encumbrances which do not, individually or in the
     aggregate, materially detract from the value of or materially interfere
     with the use or ownership of the Assets subject thereto or affected thereby
     (as currently used or owned) and which would be accepted by a reasonably
     prudent purchaser engaged in the business of owning and operating oil and
     gas properties in similar geographic locations.

     Section 3.4  Notice of Title Defects.
                  -----------------------

          (a) To assert a claim arising out of a breach of Section 3.1,
     Purchaser must deliver a claim notice to Seller promptly after becoming
     aware of a Title Defect but in any event no later than four (4) Business
     Days prior to the Closing Date (the "Claim Date"), except as otherwise
     provided under Section 3.8. Such notice shall be in writing and shall
     include (i) a specific description of the alleged Title Defect(s), (ii) the
     Properties affected, (iii) the Allocated Values of the Properties subject
     to the alleged Title Defect(s), (iv) supporting documents reasonably
     necessary for Seller (as well as any title attorney or examiner hired by
     Seller) to verify the existence of the alleged Title Defect(s) and (v) the
     amount by which Purchaser reasonably believes the Allocated Values of those
     Properties are reduced by the alleged Title Defect(s) and the computations
     and information upon which Purchaser's belief is based. Purchaser shall be
     deemed to have waived all breaches of Section 3.1 of which Seller has not
     been given notice on or before the Claim Date.

                                       9

<PAGE>

          (b) Should Purchaser discover any Title Benefit on or before the Claim
     Date, Purchaser shall as soon as practicable, but in any case by the Claim
     Date, deliver to Seller a notice including (i) a specific description of
     the Title Benefit, (ii) the Properties affected, (iii) the Allocated Values
     of the Properties subject to such Title Benefit and (iv) the amount by
     which the Purchaser reasonably believes the Allocated Value of those
     Properties is increased by the Title Benefit, and the computations and
     information upon which Purchaser's belief is based. Seller shall have the
     right, but not the obligation, to deliver to Purchaser a similar notice on
     or before the Claim Date with respect to each Title Benefit discovered by
     Seller.

          (c) Seller shall have the right, but not the obligation, to attempt,
     at its sole cost, to cure or remove on or before the Closing Date any Title
     Defects of which it has been advised by Purchaser.

          (d) With respect to each Property affected by Title Defects reported
     under Section 3.4(a) and not cured during the period permitted under
     Section 3.4(c), Seller's interest in the Property shall be assigned at
     Closing subject to all such uncured Title Defects and any reductions to the
     Purchase Price shall be determined in the manner provided for in Section
     3.6 and Section 3.7 hereof Notwithstanding the foregoing provisions of this
     Section 3.4(d), no reduction shall be made in the Purchase Price with
     respect to any Title Defect for which Seller at its election executes and
     delivers to Purchaser a written indemnity agreement in a form substantially
     similar to Exhibit C attached hereto under which Seller agrees to fully,
     unconditionally and irrevocably indemnify and hold harmless Purchaser and
     its successors and assigns from any and all Damages arising out of or
     resulting from such Title Defect.

          (e) With respect to each Property affected by Title Benefits reported
     under Section 3.4(b) (or of which Purchaser had knowledge and should have
     reported under Section 3.4(b)), any increases in the Purchase Price shall
     be determined in the manner provided for in Section 3.6 and Section 3.7
     hereof.

          (f) Section 3.4(d) shall, to the fullest extent permitted by
     applicable law, be the exclusive right and remedy of Purchaser with respect
     to Seller's breach of its warranty and representation in Section 3. 1.

          (g) The reduction in the Allocated Value resulting from a Title Defect
     (the "Title Defect Amount") shall be determined as follows:

          (i)  if Purchaser and Seller agree on the Title Defect Amount, that
               amount shall be the Title Defect Amount;

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

                                       10

<PAGE>

          (iii) if the Title Defect represents a discrepancy between (A) the net
               revenue interest for any Property and (B) the net revenue
               interest stated on Exhibit A-1, then the Title Defect Amount
               shall be the product of the Allocated Value of such Property
               multiplied by a fraction, the numerator of which is the net
               revenue interest decrease and the denominator of which is the net
               revenue interest stated on Exhibit A-1, provided that if the
               Title Defect is not effective or does not affect a Property
               throughout its entire term, the Title Defect Amount determined
               under this Section 3.4(g)(iii) shall be reduced accordingly;

          (iv) if the Title Defect represents an Encumbrance of a type not
               described in subsections (i), (ii) or (iii) above, the Title
               Defect Amount shall be determined by taking into account the
               Allocated Value of the Property so affected, the portion of
               Seller's interest in the Property affected by the Title Defect,
               the legal effect of the Title Defect, the potential economic
               effect of the Title Defect over the life of the affected
               Property, the values placed upon the Title Defect by Purchaser
               and Seller and such other factors as are necessary to make a
               proper evaluation;

          (v)  if a Title Defect is reasonably susceptible of being cured, the
               Title Defect Amount determined under subsections (iii) or (iv)
               above shall not be greater than the lesser of (A) the reasonable
               cost and expense of curing such Title Defect or (B) the share of
               such curative work cost and expense which is allocated to such
               Property pursuant to subsection (vii) below; and

          (vi) the Title Defect Amount with respect to a Property shall be
               determined without duplication of any costs or losses (A)
               included in another Title Defect Amount hereunder, (B) included
               in a casualty loss under Section 3.8, or (C) for which Purchaser
               otherwise receives credit in the calculation of the Adjusted
               Purchase Price. To the extent that the cost to cure any Title
               Defect will result in the curing of all or a part of one or more
               other Title Defects, such cost of cure shall be allocated for
               purposes of Section 3.4(g)(v) among the Properties so affected on
               a fair and reasonable basis.

          (h) The "Title Benefit Amount" for any Title Benefit shall be the
     product of the Allocated Value of the affected Property multiplied by a
     fraction, the numerator of which is the net revenue interest increase and
     the denominator of which is the net revenue interest stated on Exhibit A-1,
     provided that if the Title Benefit is not effective or does not affect a
     Property throughout the entire life of the Property, the Title Benefit
     Amount determined under this Section 3.4(h) shall be reduced accordingly.

                                       11

<PAGE>

     Section 3.5  Notice of Environmental Defects.
                  -------------------------------

          (a) To assert a claim for an adjustment to the Purchase Price for an
     Environmental Defect, Purchaser must deliver a claim notice to Seller
     promptly after becoming aware of an Environmental Defect but in any event
     no later than the Claim Date. Such notice shall be in writing and shall
     include (i) a specific description of the alleged Environmental Defect(s),
     (ii) the Properties affected, (iii) the Lowest Cost Response to cure such
     Environmental Defect(s), and (iv) supporting documents reasonably necessary
     for Seller (as well as any consultant hired by Seller) to verify the
     existence and Lowest Cost Response of such alleged Environmental Defect(s).
     Subject to the provisions of Section 4.9, Purchaser shall be deemed to have
     waived all claims for any Environmental Defects of which Seller has not
     been given notice on or before the Claim Date.

          (b) Seller shall have the right, but not the obligation to attempt, at
     its sole cost, to cure or remove on or before the Closing Date any
     Environmental Defect, at the Lowest Cost Response for such Environmental
     Defect, of which it has been advised by Purchaser, and for which an
     adjustment to the Purchase Price shall not be made pursuant to Section 3.7
     for any Environmental Defect so cured.

          (c) With respect to each Property affected by Environmental Defects
     reported under Section 3.5(a) and not cured during the period permitted
     under Section 3.5(b), Seller's interest in the Property shall be assigned
     at Closing subject to all such uncured Environmental Defects and any
     reduction to the Purchase Price shall be determined in the manner provided
     for in Section 3.6 and Section 3.7 hereof. Notwithstanding the foregoing
     provisions of this Section 3.5(c), no reduction shall be made in the
     Purchase Price with respect to any Environmental Defect for which Seller at
     its election executes and delivers to Purchaser a written indemnity
     agreement in a form substantially similar to Exhibit C attached hereto
     under which Seller agrees to fully, unconditionally and irrevocably
     indemnify and hold harmless Purchaser and its successors and assigns from
     any and all Damages arising out of or resulting from such Environmental
     Defect.

          (d) The reduction in the Allocated Value for any Property affected by
     an Environmental Defect with respect to an adjustment to the Purchase Price
     as provided for in Section 3.7 shall be equal to the Lowest Cost Response
     for such Environmental Defect, or such other amount that is mutually agreed
     to by the Parties (the "Environmental Defect Amount").

          (e) Notwithstanding anything contained herein to the contrary, Seller
     represents that Seller is not in breach or violation of any provision of
     any Lease with respect to or in connection with the Oil Spill, and
     Purchaser's sole and exclusive remedy for Seller's breach of its
     representation contained in this Section 3.5(e) is to give Seller written
     notice of any such breach no later than the Claim Date. If Purchaser fails
     to give notice of Seller's breach of this Section 3.5(e) by the Claim Date,

                                       12

<PAGE>

     Purchaser shall be deemed to have waived any claim relating to or arising
     out of any such breach. If Purchaser does assert a valid and timely claim
     for Seller's breach of this Section 3.5(e), the indemnification provisions
     and procedures of Article 10 shall apply to resolve such claim.

     Section 3.6  Determination of Defects or Title Benefits.
                  ------------------------------------------

          (a) Seller and Purchaser shall attempt to agree on the validity of any
     Title Defects or Environmental Defects (collectively, "Defects"), as well
     as all Title Defect Amounts or Environmental Defect Amounts thereof
     (collectively, "Defect Amounts"), and any Title Benefits, as well as the
     Title Benefit Amounts thereof, within one (1) Business Day prior to the
     Closing Date. If Seller and Purchaser are unable to agree by that date,
     Seller's estimate shall be used to determine the Closing Payment pursuant
     to Section 8.4(a), and the Defects, Defect Amounts, Title Benefits or Title
     Benefit Amounts in dispute shall be exclusively and finally resolved by
     arbitration pursuant to this Section 3.4(i). During the 10-day period
     following the Closing Date, Defects, Defect Amounts, Title Benefits or
     Title Benefit Amounts in dispute shall be submitted to a title attorney
     with at least 10 years' experience in oil and gas titles or an
     environmental consultant with at least 10 years' experience in oil and gas
     environmental matters, as the case may be, and as selected by (A) mutual
     agreement of Purchaser and Seller or (B) absent such agreement during the
     10-day period, by the Houston office of the American Arbitration
     Association (the "Arbitrator"). The Arbitrator shall not have had an
     affiliation with any Party or their Affiliates within the seven (7) year
     period preceding the arbitration, or have any financial interest in the
     dispute, controversy, or claim. The arbitration proceeding shall be held in
     Houston, Texas and shall be conducted in accordance with the Commercial
     Arbitration Rules of the American Arbitration Association, to the extent
     such rules do not conflict with the terms of this Section. The Arbitrator's
     determination shall be made within 30 days after submission of the matters
     in dispute and shall be final and binding upon all Parties, without right
     of appeal. In making his determination, the Arbitrator shall be bound by
     the rules set forth in Sections 3.4(g) and 3.4(h) and Section 3.5(d) and
     may consider such other matters as in the opinion of the Arbitrator are
     necessary or helpful to make a proper determination. Additionally, the
     Arbitrator may consult with and engage disinterested third parties to
     advise the Arbitrator, including without limitation title attorneys from
     other states, petroleum engineers and environmental consultants. In no
     event shall any Defect Amount exceed the estimate given by Purchaser in its
     claim notice delivered in accordance with the provisions of this Agreement
     and in no event shall any Title Benefit Amount exceed any estimate given by
     Seller in a claim notice delivered in accordance with the provisions of
     this Agreement. The Arbitrator shall act as an expert for the limited
     purpose of determining the specific disputed Defects, Defect Amounts, Title
     Benefit or Title Benefit Amounts submitted by either Party and may not
     award damages, interest or penalties to either Party with respect to any
     matter. Seller and Purchaser shall bear its own legal fees and other costs
     of presenting its case. Seller shall bear one-half and Purchasers shall
     bear one-half of the costs and expenses of the Arbitrator and any
     consultant retained by the Arbitrator in accordance with the provisions of
     this Section 3.6(a).

          (b) Seller may at its option and sole cost continue after Closing but
     prior to the date of the final adjustment to the Purchase Price under
     Section 8.4(b) to attempt to cure or remove any Title Defects or

                                       13

<PAGE>

     Environmental Defects, as provided for herein. If any Title Defect or
     Environmental Defect for which a Purchase Price adjustment is made or
     indemnity given under Section 3.4(d) or Section 3.5(c) is cured or removed
     by Seller prior to the date of the final adjustment to the Purchase Price
     under Section 8.4(b), (i) Seller shall be reimbursed in that final
     adjustment for the amount of any previous deduction from the Purchase Price
     with respect to such Title Defect or Environmental Defect or (ii) such
     indemnity shall be deemed terminated without further action on the part of
     any Party, as applicable.

          (c) Notwithstanding anything to the contrary in this Article 3, if a
     Title Defect or an Environmental Defect is asserted by Purchaser hereunder
     with respect to a Property or Properties, Seller shall have the right to
     withdraw from this Agreement any or all of the affected Properties as an
     Asset prior to Closing, and the Purchase Price paid by Purchaser hereunder
     shall be reduced by the amount of the Allocated Value of the affected
     Property which is withdrawn.

     Section 3.7  Adjustments for Defects and Title Benefits.
                  ------------------------------------------

          (a) The following provisions shall govern the manner in which the
     Purchase Price shall be adjusted as a result of Defects (including
     casualties or losses treated as Title Defects under Section 3.8 hereunder):

           (i) A Defect shall not be taken into consideration for any purpose
               unless the Defect Amount therefor exceeds $50,000; and

          (ii) No adjustments shall be made to the Purchase Price for Defects
               unless the aggregate Defect Amount for all such Defects exceeds
               5% of the Purchase Price and then only to the extent that the
               aggregate Defect Amount for all such Defects exceeds 5% of the
               Purchase Price.

          (b) The following provisions shall govern the manner in which the
     Purchase Price shall be adjusted as a result of Title Benefits;

          (i)  A Title Benefit shall not be taken into consideration for any
               purpose unless the Title Benefit Amount therefor exceeds $50,000,
               and

          (ii) No adjustment shall be made to the Purchase Price for Title
               Benefits unless the aggregate Title Benefit Amount for all such
               Title Benefits exceeds 5% of the Purchase Price and then only to
               the extent that the aggregate Title Benefit Amount for all such
               Title Benefits exceeds 5% of the Purchase Price.

          (c) In the event that there are both Title Defects and Title Benefits
     that affect the same Property or Properties, the amounts of such Title
     Defects and Title Benefits shall be offset against each other to determine

                                       14

<PAGE>

     the net Title Defect Amount or Title Benefit Amount, as the case may be,
     attributable to such Property or Properties.

          (d) Notwithstanding anything to the contrary in this Article 3, the
     aggregate Defect Amounts attributable to the effects of all Defects upon
     any given Property shall not exceed the Allocated Value of such Property.

     Section 3.8  Casualty or Condemnation Loss.
                  -----------------------------

     If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain, Purchaser shall nevertheless be
required to close and Seller shall elect by written notice to Purchaser prior to
Closing either (i) to cause the Assets affected by any casualty to be repaired
or restored, at Seller's sole cost, as promptly as reasonably practicable (which
work may extend after the Closing Date), (ii) to indemnify Purchaser through a
document reasonably acceptable to Seller and Purchaser against any costs or
expenses that Purchaser reasonably incurs to repair the Assets subject to any
casualty or (iii) to treat such casualty or taking as a Title Defect with
respect to the affected Property or Properties under Section 3.4. In each case,
Seller shall retain all rights to insurance and other claims against third
parties with respect to the casualty or taking except to the extent the Parties
otherwise agree in writing.

     Section 3.9 Limitations on Applicability of Sections 3.1 and 3.5(e).
                 -------------------------------------------------------

     The representations and warranties contained in Sections 3.1 and 3.5(e)
shall terminate as of the Claim Date and shall have no further force and effect
thereafter, provided there shall be no termination of Purchaser's or Seller's
rights under (i) Section 3.4 with respect to any bona fide Title Defect or Title
Benefit claim or (ii) Section 3.5(e) with respect to any breach by Seller of
Section 3.5(e), which is properly reported on or before the Claim Date.
Thereafter, Purchaser's sole and exclusive rights and remedies with regard to
title to the Assets shall be as set forth in the Conveyance transferring the
Assets from Seller to Purchaser.

                                   ARTICLE 4
                    REPRESENTATIONS AND WARRANTIES OF SELLER

     Section 4.1  Disclaimers.
                  -----------

          (a) Except as and to the extent expressly set forth in Articles 3 and
     4 of this Agreement or in the certificate of Seller to be delivered
     pursuant to Section 8.2(c) or in the Conveyance to be delivered by Seller
     to Purchaser hereunder, (i) Seller makes no representations or warranties,
     express or implied, and (ii) Seller expressly disclaims all liability and
     responsibility for any statement or information made or communicated
     (orally or in writing) to Purchaser or any of its Affiliates, employees,
     agents, consultants or representatives (including, without limitation, any
     opinion, information, projection or advice that may have been provided to
     Purchaser by any officer, director, employee, agent, consultant,
     representative or advisor of Seller or any of its Affiliates).

                                       15

<PAGE>

          (b) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 3 OR THIS
     ARTICLE 4, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER
     EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
     ORAL OR WRITTEN, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS,
     CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF ANY
     PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR
     INTERPRETATION, RELATING TO THE ASSETS, (III) THE QUANTITY, QUALITY OR
     RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS, (IV) ANY ESTIMATES OF
     THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE
     PRODUCTION OF PETROLEUM SUBSTANCES FROM THE ASSETS, OR WHETHER PRODUCTION
     HAS BEEN CONTINUOUS, OR IN PAYING QUANTITIES, (VI) THE MAINTENANCE, REPAIR,
     CONDITION QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, OR
     (VII) ANY OTHER MATERIALS OR INFORMATION THAT MAY RAVE BEEN MADE AVAILABLE
     OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
     AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE
     TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
     PRESENTATION RELATING THERETO, AND FURTHER DISCLAIM ANY REPRESENTATION OR
     WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
     PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT,
     IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT
     PURCHASER SHALL BE DEEMED TO BE OBTAINING EQUIPMENT AND OTHER TANGIBLE
     PROPERTY IN ITS PRESENT STATUS, CONDITION AND STATE OF REPAIR, "AS IS" AND
     "WHERE IS" WITH ALL FAULTS AND THAT PURCHASER HAS MADE OR CAUSED TO BE MADE
     SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.

          (c) PURCHASER (I) EXPRESSLY WAIVES THE PROVISIONS OF CHAPTER XVII,
     SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION
     17.555, WHICH IS NOT WAIVED), VERNON'S TEXAS CODE ANNOTATED, BUSINESS AND
     COMMERCE CODE, THE "DECEPTIVE TRADE PRACTICES ACT"; (II) ACKNOWLEDGES THAT
     THE EXPRESS WAIVERS CONTAINED IN THIS SECTION 4.1(c) SHALL BE CONSIDERED A
     MATERIAL AND INTEGRAL PART OF THE TRANSACTIONS CONTEMPLATED BY THIS
     AGREEMENT AND THE CONSIDERATION THEREOF; AND (III) ACKNOWLEDGES THAT THESE
     WAIVERS HAVE BEEN BROUGHT TO THE ATTENTION OF PURCHASER AND EXPLAINED IN
     DETAIL AND THAT PURCHASER HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THESE
     WAIVERS.

          (d) Any representation "to the knowledge of Seller" or "to Seller's
     knowledge" is limited to matters within the actual conscious awareness of
     Seller's current directors or officers.

                                       16

<PAGE>

          (e) Inclusion of a matter on a Schedule attached hereto with respect
     to a representation or warranty which addresses matters having a Material
     Adverse Effect shall not be deemed an indication that such matter does, or
     may, have a Material Adverse Effect. Matters may be disclosed on a Schedule
     to this Agreement for purposes of information only.

          (f) Subject to the foregoing provisions of this Section 4.1, and the
     other terms and conditions of this Agreement, Seller represents and
     warrants to Purchaser the matters set out in Sections 4.2 through 4.15.

     Section 4.2  Existence and Qualification.
                  ---------------------------

     Seller is a corporation duly organized and validly existing under the laws
of the State of Delaware and is duly qualified to do business as a foreign
corporation in Texas and is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the Assets are
located.

     Section 4.3 Power.
                 -----

     Seller has the corporate power to enter into and perform this Agreement
(and all documents required to be executed and delivered by Seller at Closing)
and consummate the transactions contemplated by this Agreement (and such
documents).

     Section 4.4 Authorization and Enforceability.
                 --------------------------------

     The execution, delivery and performance of this Agreement (and all
documents required to be executed and delivered by Seller at Closing), and the
performance of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of Seller.
This Agreement has been duly executed and delivered by Seller (and all documents
required hereunder to be executed and delivered by Seller at Closing will be
duly executed and delivered by Seller) and this Agreement constitutes, and at
the Closing such documents will constitute, the valid and binding obligations of
Seller, enforceable in accordance with their terms except as such enforceability
may be limited by applicable bankruptcy or other similar laws affecting the
rights and remedies of creditors generally as well as by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).

     Section 4.5 No Conflicts.
                 ------------

     The execution, delivery and performance of this Agreement by Seller, and
the transactions contemplated by this Agreement will not (i) violate any
provision of the certificate of incorporation or bylaws of Seller, (ii) result
in default (with due notice or lapse of time or both) or the creation of any
lien or encumbrance or give rise to any right of termination, cancellation or
acceleration under any material note, bond, mortgage, indenture, license or
agreement to which Seller is a party or which affects Seller's Assets, (iii)
violate any judgment, order, ruling, or decree applicable to Seller as a party

                                       17

<PAGE>

in interest, or (iv) violate any Laws applicable to Seller or any of Seller's
Assets, except any matters described in clauses (ii), (iii) or (iv) above which
would not have a Material Adverse Effect.

     Section 4.6 Liability for Brokers' Fees.
                 ---------------------------

     Purchaser shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of Seller, for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or any agreement or transaction
contemplated hereby.

     Section 4.7 Litigation.
                 ----------

     Except as set forth on Schedule 4.7, there are no actions, suits or
proceedings pending, or to Seller's knowledge threatened in writing, before any
Governmental Body with respect to the Assets. There are no actions, suits or
proceedings pending, or to Seller's knowledge, threatened in writing, before any
Governmental Body against Seller which are reasonably likely to impair
materially Seller's ability to perform its obligations under this Agreement or
any document required to be executed and delivered by Seller at Closing.

     Section 4.8 Taxes and Assessments.
                 ---------------------

     To Seller's knowledge, Seller has filed all material Tax returns required
to be filed by Seller with respect to the Assets. Except as disclosed on
Schedule 4.8, to Seller's knowledge, Seller has paid or caused to be paid all ad
valorem, property, production, severance and similar Taxes based upon or
measured by the ownership of or the production of Hydrocarbons from Seller's
Assets required to be shown on such returns, except those being contested in
good faith. Except as disclosed on Schedule 4.8, Seller has not received written
notice of any pending claim against Seller from any applicable taxing authority
for assessment of Taxes with respect to Seller's Assets.

     Section 4.9 Compliance with Laws.
                 --------------------

     Excluding any claim or breach pursuant to the representation contained in
Section 3.5(e) which shall be addressed solely therein, and except as otherwise
disclosed on Schedule 4.9, to Seller's knowledge, Seller has complied with and
Seller's Properties have been operated in compliance with all applicable Laws,
including Environmental Laws.

     Section 4.10 Contracts.
                  ---------

     Neither Seller, nor to the knowledge of Seller, any other party is in
default under any Contract except as disclosed on Schedule 4.10. Except as
disclosed in Schedule 4.10, there are no Contracts with Affiliates of Seller
which will be binding on the Assets after Closing. Except as disclosed on
Schedule 4.10, to Sellers knowledge, the contractually binding arrangements
under the Contracts that will be assumed by Purchaser on the Closing Date are of
the type generally found in the oil and gas industry.

                                       18

<PAGE>

     Section 4.11 Consents and Preferential Purchasing Rights.
                  -------------------------------------------

     Except as expressly set forth in Schedule 4.11, none of Seller's
Properties, or any portion thereof, is subject to any preferential rights to
purchase or required third-party consents to assignment which may be applicable
to the transactions contemplated by this Agreement, except consents and
approvals of assignments by Governmental Bodies that are customarily obtained
after Closing.

     Section 4.12 Outstanding Authorities for Expenditure.
                  ---------------------------------------

     Except as expressly set forth in Schedule 4.12, Seller has not received any
authority for expenditure for or approved any material expenditures relating to
the Assets that have not been fully paid by Seller.

     Section 4.13 Prepayments.
                  -----------

     Except as expressly set forth on Schedule 4.13, there are no prepayments,
advance payments, take-or-pay payments or similar payments requiring the
delivery of gas from the Properties without then or thereafter receiving payment
at current prices.

     Section 4.14 Imbalances.
                  ----------
     Except as expressly set forth on Schedule 4.14 there are no production
imbalances or pipeline imbalances relating to or affecting the Properties that
would require delivery of gas from the Properties subsequent to the Effective
Time without then or thereafter receiving payment at current prices.

     Section 4.15 Scope of Assets.
                  ---------------

     The Assets include all equipment, materials, contracts, Records and other
property necessary for the conduct of Seller's operations in a manner consistent
with its recent practices.

                                   ARTICLE 5
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser represents and warrants to Seller the following:

     Section 5.1 Existence and Qualification.
                 ---------------------------

     Purchaser is a corporation duly organized and validly existing under the
laws of the State of Nevada; and Purchaser is duly qualified to do business as a
foreign company in every jurisdiction in which it is required to qualify in
order to conduct its business except where the failure to so qualify would not
have a material adverse effect on Purchaser or its properties; and Purchaser is
duly qualified to do business as a foreign company in Texas.

                                       19

<PAGE>

     Section 5.2 Power.
                 -----

     Purchaser has the corporate power to enter into and perform this Agreement
(and all documents required to be executed and delivered by Purchaser at
Closing) and consummate the transactions contemplated by this Agreement (and
such documents).

     Section 5.3 Authorization and Enforceability.
                 --------------------------------

     The execution, delivery and performance of this Agreement (and all
documents required to be executed and delivered by Purchaser at Closing), and
the performance of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser. This Agreement has been duly executed and delivered by Purchaser (and
all documents required hereunder to be executed and delivered by Purchaser at
Closing will be duly executed and delivered by Purchaser) and this Agreement
constitutes, and at the Closing such documents will constitute, the valid and
binding obligations of Purchaser, enforceable in accordance with their terms
except as such enforceability may be limited by applicable bankruptcy or other
similar laws affecting the rights and remedies of creditors generally as well as
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

     Section 5.4 No Conflicts.
                 ------------

     The execution, delivery and performance of this Agreement by Purchaser, and
the transactions contemplated by this Agreement will not (i) violate any
provision of the certificate of incorporation or bylaws of Purchaser, (ii)
result in a material default (with due notice or lapse of time or both) or the
creation of any lien or encumbrance or give rise to any right of termination,
cancellation or acceleration under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license or agreement to which Purchaser is
a party, (iii) violate any, judgment, order, ruling, or regulation applicable to
Purchaser as a party in interest, or (iv) violate any Laws applicable to
Purchaser or any of its assets, except any matters described in clauses (ii),
(iii), or (iv) above which would not have a material adverse effect on
Purchaser.

     Section 5.5 Liability for Brokers' Fees.
                 ---------------------------

     Seller shall not directly or indirectly have any responsibility, liability
or expense, as a result of undertakings or agreements of Purchaser, for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or any agreement or transaction
contemplated hereby.

     Section 5.6 Litigation.
                 ----------

         There are no actions, suits or proceedings pending, or to Purchaser's
knowledge, threatened in writing before any Governmental Body against Purchaser
which are reasonably likely to impair materially Purchaser's ability to perform
its obligations under this Agreement or any document required to be executed and
delivered by Purchaser at Closing.

                                       20

<PAGE>

     Section 5.7 Financing.
                 ---------

     Purchaser has sufficient cash, available lines of credit or other sources
of immediately available funds (in United States dollars) to enable it to pay
the Closing Payment to Seller at the Closing.

     Section 5.8 Independent Investigation.
                 -------------------------

     Purchaser acknowledges and affirms that (i) it has completed its
independent investigation, verification, analysis and evaluation of the Assets
and (ii) subject to its rights under Article 3 and Article 10 hereof, it has
made all such reviews and inspections of the Assets as it has deemed necessary
or appropriate. Except for the representations and warranties expressly made by
Seller in Articles 3 and 4 of this Agreement, or in any certificate furnished or
to be furnished to Purchaser pursuant to this Agreement, Purchaser acknowledges
that there are no representations or warranties, express or implied, as to the
Assets or prospects thereof, and that in making its decision to enter into this
Agreement and to consummate the transactions contemplated hereby, Purchaser has
relied solely upon its own independent investigation, verification, analysis and
evaluation.

     Section 5.9 Consents, Approvals or Waivers.
                 ------------------------------

     Purchaser's execution, delivery and performance of this Agreement (and any
document required to be executed and delivered by Purchaser at Closing) is not
and will not be subject to any consent, approval, or waiver from any
Governmental Body or other third Person, except (i) consents and approvals of
assignments by Governmental Bodies that are customarily obtained after Closing
and (ii) as set forth on Schedule 5.9.

                                   ARTICLE 6
                            COVENANTS OF THE PARTIES

     Section 6.1 Access.

     Between the date of execution of this Agreement and the Closing Date,
Seller will give Purchaser and its representatives access to the Assets and
access to and the right to copy, at Purchaser's expense, the Records in Seller's
possession, for the purpose of conducting an investigation of the Assets, but
only to the extent that Seller may do so without violating any obligations to
any third party and to the extent that Seller has authority to grant such access
without breaching any restriction binding on Seller. Such access by Purchaser
shall be limited to Seller's normal business hours, and Purchaser's
investigation shall be conducted in a manner that minimizes interference with
the operation of the Assets. Purchaser at its option may conduct a phase I
environmental audit of any or all of the Assets, to the extent Seller has
authority to permit such an audit, provided that neither Purchaser nor its
representatives shall conduct any testing or sampling on or with respect to the
Assets prior to Closing.

                                       21

<PAGE>

     Section 6.2 Confidentiality Obligations.
                 ---------------------------

     Seller and Purchaser shall each keep confidential and cause their
respective Affiliates, and their respective officers, directors, employees and
representatives to keep confidential all information relating to the Assets,
except as required by applicable Law, administrative process or the applicable
rules of any stock exchange to which Seller or Purchaser or their respective
Affiliates are subject and except for information which is available to the
public on the date hereof or thereafter becomes available to the public other
than as a result of a breach by Seller, Purchaser or any such other Person of
this Section 6.2. With respect to Seller only, the covenant contained in this
Section 6.2 shall survive the Closing for a period of one (1) year from the
Closing Date, provided, however, that notwithstanding the termination of the
covenant set forth in this Section 6.2, any confidentiality provision in any
Contract which is binding on Seller, Purchaser or any such other Person shall
remain in full force and effect in accordance with its terms.

     Section 6.3 Notification of Breaches. Until the Closing,

          (a) Purchaser shall notify Seller promptly after Purchaser obtains
     actual knowledge that any representation or warranty of Seller contained in
     this Agreement is untrue in any material respect or will be untrue in any
     material respect as of the Closing Date or that any covenant or agreement
     to be performed or observed by Seller prior to or on the Closing Date has
     not been so performed or observed in any material respect.

          (b) Seller shall notify Purchaser promptly after Seller obtains actual
     knowledge that any representation or warranty of Purchaser contained in
     this Agreement is untrue in any material respect or will be untrue in any
     material respect as of the Closing Date or that any covenant or agreement
     to be performed or observed by Purchaser prior to or on the Closing Date
     has not been so performed or observed in a material respect.

     If any of Purchaser's or Seller's representations or warranties is untrue
or shall become untrue in any material respect between the date of execution of
this Agreement and the Closing Date, or if any of Purchaser's or Seller's
covenants or agreements to be performed or observed prior to or on the Closing
Date shall not have been so performed or observed in any material respect, but
if such breach of representation, warranty, covenant or agreement shall (if
curable) be cured by the Closing (or, if the Closing does not occur, by the date
set forth in Section 9.1), then such breach shall be considered not to have
occurred for all purposes of this Agreement.

     Section 6.4 Public Announcements.
                 --------------------

     No Party shall make any press release or other public announcement
regarding the existence of this Agreement, the contents hereof or the
transactions contemplated hereby without the prior written consent of the other;
provided, however, the foregoing shall not restrict disclosures by Purchaser or
Seller (i) that are required by applicable securities or other laws or
regulations or the applicable rules of any stock exchange having jurisdiction
over the disclosing Party or its Affiliates, or (ii) to Governmental Bodies
having rights of consent that may be applicable to the transactions contemplated
by this Agreement, as reasonably necessary to obtain such consents.

                                       22
<PAGE>

     Section 6.5 Operation of Business.
                 ---------------------

     In addition to matters set forth on Schedule 6.5, until the Closing, Seller
(i) will have the right to continue to conduct its business related to the
Assets in the ordinary course consistent with its past exploration and drilling
program and other past practices, including but not limited to incurring
expenditures associated with lease acquisitions, landmen, independent
contractors, vendors, title opinions, curative material, road, drillsite and
pipeline construction, acquisition of road and pipeline right-of-ways, drilling,
and completing wells, construction of gathering, compression and treating
facilities, and marketing costs, (ii) will furnish Purchaser for approval with
copies of all third party and Seller-generated drilling, completion and workover
AFEs within five (5) Business Days of receipt of third party AFEs or prior to
the submission of Seller generated AFEs, (iii) will maintain insurance coverage
on the Assets presently furnished by nonaffiliated third parties in the amounts
and of the types presently in force, (iv) will use commercially reasonable
efforts to maintain in full force and effect all Leases that are presently
producing in paying quantities, (v) will maintain all material governmental
permits and approvals affecting the Assets, (vi) will not transfer, sell,
hypothecate, encumber or otherwise dispose of any material Properties or
Equipment except for sales and dispositions of Equipment made in the ordinary
course of business consistent with past practices, (vii) not waive, compromise
or settle any material right or claim if such waiver, compromise or settlement
would adversely affect the value, use, ownership or operation of the Assets from
and after the Effective Time, (viii) will perform all of its material
obligations under Contracts relating to or affecting the Assets, (ix) will
exercise due diligence, consistent with its past practices, in safeguarding and
maintaining secure and confidential all geological and geophysical maps,
confidential reports and all other confidential data in its possession relating
in any way to the Properties, and (x) not enter into or assume any contract,
agreement or commitment which is not in the ordinary course of business as
previously conducted on the Properties. Purchaser's approval of any action
restricted by this Section 6.5 shall be considered granted within 10 days
(unless a shorter time is reasonably required by the circumstances and such
shorter time is specified in the applicable Seller's notice) of the applicable
Seller's notice to Purchaser requesting such consent unless Purchaser notifies
Seller to the contrary during that period. In the event of an emergency, Seller
may take such action as a prudent operator would take and shall notify Purchaser
of such action promptly thereafter.

     Section 6.6 Indemnity Regarding Access.
                 --------------------------

     Purchaser agrees to indemnify, defend and hold harmless Seller, its
Affiliates, the other owners of interests in the Properties, and all such
Persons' directors, officers, employees, agents and representatives from and
against any and all claims, liabilities, losses, costs and expenses (including
court costs and reasonable attorneys' fees), including claims, liabilities,
losses, costs and expenses attributable to personal injury, death, or property
damage, arising out of or relating to access to the Assets and to the Records
and other related information prior to the Closing by Purchaser, its Affiliates,
or its or their directors, officers, employees, agents or representatives, even
if caused in whole or in part by the negligence (whether sole, joint or
concurrent), strict liability or other legal fault of any indemnified Person but
excluding, however, the gross negligence or willful misconduct of an indemnified
party.

                                       23

<PAGE>

     Section 6.7 Assumption of Obligations.
                 -------------------------
     By the consummation of the transactions contemplated by this Agreement at
Closing, and without limiting the indemnification obligations of any Party under
Article 10, Purchaser assumes and agrees to pay, perform and discharge all
obligations of Seller accruing from and after the Effective Time under the
Leases, Contracts and applicable Law with respect to the Assets, including (i)
obligations to furnish makeup Hydrocarbons according to the terms of applicable
sales, gathering, processing, or transportation contracts or in response to
Hydrocarbon production imbalances, (ii) obligations to pay revenues, royalties
or other amounts payable to third Persons with respect to the Properties but
held in suspense, and (iii) obligations to plug wells, dismantle facilities,
close pits and restore the surface around such wells, facilities and pits.

     Section 6.8 Tax Matters.
             ---------------

     Subject to the provisions of Section 11.5, Seller shall be responsible for
all Taxes (other than ad valorem, property, severance, production and similar
Taxes based upon or measured by the ownership or operation of the Assets or the
production of Hydrocarbons therefrom, which are addressed in Section 1.3)
attributable to any period of time at or prior to Closing, including without
limitation income Taxes arising as a result of the gain recognized on the
transfer of the Assets, and Purchaser shall be responsible for all such Taxes
attributable to any period of time after Closing. Regardless of which Party is
responsible, Seller shall handle payment to the appropriate Governmental Body of
all Taxes with respect to the Assets which are required to be paid prior to
Closing (and shall file all returns with respect to such Taxes.

     Section 6.9 Further Assurances.
                 ------------------

     At and after Closing, Seller and Purchaser agree to take such further
actions and to execute, acknowledge and deliver all such further documents as
are reasonably requested by the other Party for carrying out the purposes of
this Agreement or of any document delivered pursuant to this Agreement.

     Section 6.10 Environmental Insurance.
                  -----------------------

     From and after Closing, Purchaser agrees to maintain and keep in force
liability insurance for any and all environmental liabilities arising out of,
related to, or in connection with the Assets for a period of three (3) years
after the Closing Date (the "Environmental Insurance Policy"). The aggregate
limits under such Environmental Insurance shall not be less than $5,000,000. In
addition, a waiver of subrogation shall be provided on the policy to include
Seller and its Affiliates, and any of their officers, employees, agents,
servants, invitees, independent contractors or representatives. Purchaser shall
furnish Seller with a certificate of insurance at Closing and annually for the
period of time that the insurance policy is to be maintained.

                                       24

<PAGE>

                                   ARTICLE 7
                              CONDITIONS TO CLOSING

     Section 7.1 Conditions of Seller to Closing.
                 -------------------------------

     The obligations of Seller to consummate the transactions contemplated by
this Agreement are subject, at the option of Seller, to the satisfaction on or
prior to Closing of each of the following conditions:

          (a) Representations. The representations and warranties of Purchaser
     set forth in Article 5 shall be true and correct in all material respects
     as of the date of this Agreement and as of the Closing Date as though made
     on and as of the Closing Date except for such breaches, if any, as would
     not have a Material Adverse Effect;

          (b) Performance. Purchaser shall have performed and observed, in all
     material respects, all covenants and agreements to be performed or observed
     by it under this Agreement prior to or on the Closing Date;

          (c) Pending Litigation. On the Closing Date, no suit, action or other
     proceeding by a third party (including any Governmental Body) seeking to
     restrain, enjoin or otherwise prohibit the consummation of the transactions
     contemplated by this Agreement, or seeking substantial damages in
     connection therewith, shall be pending before any Governmental Body;

          (d) Deliveries. Purchaser shall have delivered to Seller duly executed
     counterparts of the Conveyance and the other documents and certificates to
     be delivered by Purchaser under Section 8.3;

          (e) Payment. Purchaser shall have paid the Closing Payment.

          Section 7.2 Conditions of Purchaser to Closing.
                      ----------------------------------

     The obligations of Purchaser to consummate the transactions contemplated by
this Agreement are subject, at the option of Purchaser, to the satisfaction on
or prior to Closing of each of the following conditions:

          (a) Representations. The representations and warranties of Seller set
     forth in Article 4 shall be true and correct as of the date of this
     Agreement and as of the Closing Date as though made on and as of the
     Closing Date (other than representations and warranties that refer to a
     specified date which need only be true and correct on and as of such
     specified date), except for such breaches, if any, as would not have a
     material adverse effect;

          (b) Performance. Seller shall have performed and observed, in all
     material respects, all covenants and agreements to be performed or observed
     by it under this Agreement prior to or on the Closing Date;

                                       25

<PAGE>

          (c) Pending Litigation. On the Closing Date, no suit, action or other
     proceeding by a third party (including any Governmental Body) seeking to
     restrain, enjoin or otherwise prohibit the consummation of the transactions
     contemplated by this Agreement, or seeking substantial damages in
     connection therewith, shall be pending before any Governmental Body;

          (d) Deliveries. Seller shall have delivered to Purchaser duly executed
     counterparts of the Conveyance and the other documents and certificates to
     be delivered by Seller under Section 8.2; and

          (e) Operatorship. Purchaser shall have received reasonably
     satisfactory evidence that Purchaser will be elected successor operator to
     Seller under the applicable operating agreements for the Leases and/or
     Units after Closing.

          (f) Consents. All of the consents and approvals listed on Schedule
     4.11 shall have been granted by the appropriate Persons, or the relevant
     time periods for such Persons to give such consents or approvals shall have
     expired.

                                    ARTICLE 8
                                     CLOSING

          Section 8.1 Time and Place of Closing.
                      -------------------------

          (a) Consummation of the purchase and sale transaction as contemplated
     by this Agreement (the "Closing"), shall, unless otherwise agreed to in
     writing by Purchaser and Seller, take place at the offices of Baker Botts
     L.L.P., counsel to Seller, located at 910 Louisiana, Houston, Texas 77002,
     at 10:00 a.m., local time, on April 5, 2002, or if all conditions in
     Article 7 to be satisfied prior to Closing have not yet been satisfied or
     waived, as soon thereafter as such conditions have been satisfied or
     waived, subject to the rights of the Parties under Article 9.

          (b) The date on which the Closing occurs is herein referred to as the
     "Closing Date."

     Section 8.2 Obligations of Seller at Closing.
                 --------------------------------

     At the Closing, upon the terms and subject to the conditions of this
Agreement, and subject to the simultaneous performance by Purchaser of its
obligations pursuant to Section 8.3, Seller shall deliver or cause to be
delivered to Purchaser, among other things, the following:

          (a) the Conveyance, in sufficient duplicate originals to allow
     recording in all appropriate jurisdictions and offices, duly executed by
     Seller;

          (b) letters-in-lieu of transfer orders covering the Assets, duly
     executed by Seller;

                                       26

<PAGE>

          (c) a certificate duly executed by an authorized corporate officer of
     Seller or its general partner, dated as of Closing, certifying on behalf of
     Seller that the conditions set forth in Sections 7.2(a) and 7.2(b) have
     been fulfilled;

          (d) an executed statement described in Treasury Regulation ss.
     1.1445-2(b)(2) certifying that Seller is not a foreign person within the
     meaning of the Code; and

          (e) evidence reasonably satisfactory to Purchaser that Purchaser will
     be elected successor operator to Seller under the applicable operating
     agreements for the Leases and/or Units after Closing.

          Section 8.3 Obligations of Purchaser at Closing.
                      -----------------------------------

     At the Closing, upon the terms and subject to the conditions of this
Agreement, and subject to the simultaneous performance by Seller of its
obligations pursuant to Section 8.2, Purchaser shall deliver or cause to be
delivered to Seller, among other things, the following:

          (a) a wire transfer of the Closing Payment in same-day funds;

          (b) the Conveyance, duly executed by Purchaser;

          (c) letters-in-lieu of transfer orders covering the Assets, duly
     executed by Purchaser;

          (d) a certificate by an authorized corporate officer of Purchaser,
     dated as of Closing, certifying on behalf of Purchaser that the conditions
     set forth in Sections 7.1(a) and 7.1(b) have been fulfilled; and

          (e) documentation showing that the Environmental Insurance Policy is
     in place and in full force and effect as provided for in Section 6.10.

     Section 8.4 Closing Payment and Post-Closing Purchase Price Adjustments.
                 -----------------------------------------------------------

          (a) Not later than one (1) Business Days prior to the Closing Date,
     Seller shall prepare and deliver to Purchaser, using and based upon the
     best information available to Seller, a preliminary settlement statement
     estimating the Adjusted Purchase Price after giving effect to all Purchase
     Price adjustments set forth in Section 2.2. The estimate delivered in
     accordance with this Section 8.4(a) shall constitute the dollar amount to
     be paid by Purchaser to Seller at the Closing (the "Closing Payment").

          (b) As soon as reasonably practicable after the Closing but not later
     than the 60th day following the Closing Date, Seller shall prepare and
     deliver to Purchaser a statement setting forth the final calculation of the
     Adjusted Purchase Price and showing the calculation of each adjustment,
     based, to the extent possible on actual credits, charges, receipts and
     other items before and after the Effective Time. Seller shall at
     Purchaser's request supply reasonable documentation available to support
     any credit, charge, receipt or other item. As soon as reasonably
     practicable but not later than the 15th day following receipt of Seller's

                                       27

<PAGE>

     statement hereunder, Purchaser shall deliver to Seller a written report
     containing any changes that Purchaser proposes be made to such Statement.
     The Parties shall undertake to agree on the final statement of the Adjusted
     Purchase Price no later than 90 days after the Closing Date. In the event
     that the Parties cannot reach agreement within such period of time, either
     Party may refer the remaining matters in dispute to PriceWaterhouseCoopers,
     or if PriceWaterhouseCoopers is unable or unwilling to perform its
     obligations under this Section, such other nationally-recognized
     independent accounting firm as may be accepted by Purchaser and Seller, for
     review and final determination. The accounting firm shall conduct the
     arbitration proceedings in Houston, Texas in accordance with the Commercial
     Arbitration Rules of the American Arbitration Association, to the extent
     such rules do not conflict with the terms of this Section. The accounting
     firm's determination shall be made within 30 days after submission of the
     matters in dispute and shall be final and binding on both Parties, without
     right of appeal. In determining the proper amount of any adjustment to the
     Purchase Price, the accounting firm shall not increase the Purchase Price
     more than the increase proposed by Seller nor decrease the Purchase Price
     more than the decrease proposed by Purchaser, as applicable. The accounting
     firm shall act as an expert for the limited purpose of determining the
     specific disputed matters submitted by either Party and may not award
     damages or penalties to either Party with respect to any matter. Seller and
     Purchaser shall bear its own legal fees and other costs of presenting its
     case. Seller shall bear one-half and Purchaser shall bear one-half of the
     costs and expenses of the accounting firm. Within 10 days after the earlier
     of (i) the expiration of Purchaser's 60-day review period without delivery
     of any written report or (ii) the date on which the Parties or the
     accounting firm, as applicable, finally determines the disputed matters,
     (x) Purchaser shall pay to Seller the amount by which the Adjusted Purchase
     Price exceeds the Closing Payment or (y) Seller shall pay to Purchaser the
     amount by which the Closing Payment exceeds the Adjusted Purchase Price, as
     applicable. Any post-closing payment pursuant to this Section 8.4 shall
     bear interest from the Closing Date to the date of payment at the Agreed
     Interest Rate.

          (c) All payments made or to be made under this Agreement to Seller
     shall be made by electronic transfer of immediately available funds to
     JPMorganChase Bank, ABA# 021-000-021, Acct.# 323-205-925, for the credit of
     Seller. All payments made or to be made hereunder to Purchaser shall be by
     electronic transfer of immediately available funds to a bank and account
     specified by Purchaser in writing to Seller.

                                   ARTICLE 9
                           TERMINATION AND AIVIENDMENT

     Section 9.1 Termination.
                 -----------

     This Agreement may be terminated at any time prior to Closing: (i) by the
mutual prior written consent of Seller and Purchaser, (ii) by either Seller or
Purchaser, without liability as to the other, if there has been a Material
Impairment, or (iii) by either. Purchaser or Seller, if Closing has not occurred
on or before May 1, 2002, provided, however, that no Party shall be entitled to
terminate this Agreement under this Section 9.1(iii) if the Closing has failed
to occur because such Party negligently or willfully failed to perform or
observe in any material respect its covenants and agreements hereunder.
                                       28

<PAGE>

     Section 9.2 Effect of Termination.
                 ---------------------
     If this Agreement is terminated pursuant to Section 9.1, this Agreement
shall become void and of no further force or effect (except for the provisions
of Sections 4.6, 5.5, 6.2, 6.4, 6.6, 11.6, 11.9, 11.16 and 11.17) and Seller
shall be free immediately to enjoy all rights of ownership of the Assets and to
sell, transfer, encumber or otherwise dispose of the Assets to any party without
any restriction under this Agreement. Notwithstanding anything to the contrary
in this Agreement, the termination of this Agreement under Section 9.1(iii)
shall not relieve any Party from liability (including liability for
consequential damages) for any willful or negligent failure to perform or
observe in any material respect any of its agreements or covenants contained
herein which are to be performed or observed at or prior to Closing. In the
event this Agreement terminates under Section 9.1(iii) and any Party has
willfully or negligently failed to perform or observe in any material respect
any of its agreements or covenants contained herein which are to be performed at
or prior to Closing, then the other Party shall be entitled to all remedies
available at law or in equity and shall be entitled to recover court costs and
attorneys' fees in addition to any other relief to which such Party maybe
entitled.

                                   ARTICLE 10
                          INDEMNIFICATION; LIMITATIONS

     Section 10.1 Indemnification.
                  ---------------

          (a) From and after Closing, Purchaser shall indemnify, defend and hold
     harmless Seller from and against all Damages incurred or suffered by
     Seller:

               (i)  (x) caused by or arising out of or resulting from the
                    ownership, use or operation of the Assets from and after the
                    Effective Time, including but not limited to any
                    environmental liabilities or matters, and (y) subject to and
                    excluding those matters for which Purchaser is entitled to
                    indemnity under subparagraph 10.1(b) hereof, caused by or
                    arising out of or resulting from the ownership, use or
                    operation of the Assets prior to the Effective Time,

               (ii) caused by or arising out of or resulting from Purchaser's
                    breach of any of Purchaser's covenants or agreements
                    contained in Article 6, or

              (iii) caused by or arising out of or resulting from any breach of
                    any representation or warranty made by Purchaser contained
                    in Article 5 of this Agreement or in the certificate
                    delivered by Purchaser at Closing pursuant to Section
                    8.3(d),

     even if such Damages are caused in whole or in part by the negligence
     (whether sole, joint or concurrent), strict liability or other legal fault
     of any Indemnified Person, but excluding, however, the gross negligence or
     willful misconduct of an Indemnified Person.

                                       29

<PAGE>

          (b) From and after Closing, Seller shall indemnify, defend and hold
     harmless Purchaser against and from all Damages incurred or suffered by
     Purchaser:

               (i)  attributable to or arising out of the actions, suits, or
                    proceedings set forth on Schedule 4.7,

               (ii) caused by or arising out of or resulting from Seller's
                    breach of any of Seller's covenants or agreements contained
                    in Article 6, or

               (iii) caused by or arising out of or resulting from any breach of
                    any representation or warranty made by Seller contained in
                    Article 4 of this Agreement, or in the certificate delivered
                    by Seller at Closing pursuant to Section 8.2(c),

even if such Damages are caused in whole or in part by the negligence (whether
sole, joint or concurrent), strict liability or other legal fault of any
Indemnified Person, but excluding, however, the gross negligence or willful
misconduct of an Indemnified Person.

          (c) Notwithstanding anything to the contrary contained in this
     Agreement, this Section 10.1 contains the Parties' exclusive remedy against
     each other with respect to breaches of the representations, warranties,
     covenants and agreements of the Parties contained in Articles 4 and 5 and
     Sections 6.1, 6.3, 6.4, 6.5 and 6.9 and the affirmations of such
     representations, warranties, covenants and agreements contained in the
     certificate delivered by each Party at Closing pursuant to Sections 8.2(c)
     or 8.3(d), as applicable. Except for the remedies contained in this Section
     10.1, and any other remedies available to the Parties at law or in equity
     for breaches of provisions of this Agreement other than Articles 4 and 5
     and Sections 6.1, 6.3, 6.4, 6.5 and 6.9, Seller and Purchaser each release,
     remise and forever discharge the other and its or their Affiliates and all
     such Parties' stockholders, officers, directors, employees, agents,
     advisors and representatives from any and all suits, legal or
     administrative proceedings, claims, demands, damages, losses, costs,
     liabilities, interest, or causes of action whatsoever, in law or in equity,
     known or unknown, which such Parties might now or subsequently may have,
     based on, relating to or arising out of this Agreement, Seller's ownership,
     use or operation of the Assets, or the condition, quality, status or nature
     of the Assets, including, without limitation, rights to contribution under
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, or any other Environmental Law, breaches of statutory
     or implied warranties, nuisance or other tort actions, rights to punitive
     damages and common law rights of contribution, rights under agreements
     between Seller and any Persons who are Affiliates of Seller, and rights
     under insurance maintained by Seller or any Person who is an Affiliate of
     Seller, even if caused in whole or in part by the negligence (whether sole,
     joint or concurrent), strict liability or other legal fault of any released
     Person, excluding, however, any existing contractual rights between (i)
     Purchaser or any of Purchaser's Affiliates and (ii) Seller or any of
     Seller's Affiliates under contracts between them relating to the Assets.

                                       30

<PAGE>

          (d) Claims for Property Costs shall be exclusively handled pursuant to
     the Purchase Price adjustments in Section 2.2, and pursuant to Section
     11.2, and shall not be subject to indemnification under this Section 10.1.

          (e) "Damages", for purposes of this Article 10, shall mean the amount
     of any actual liability, loss, cost, expense, claim, award or judgment
     incurred or suffered by any Indemnified Person arising out of or resulting
     from the indemnified matter, whether attributable to personal injury or
     death, property damage, contract claims, torts, or otherwise, including
     reasonable fees and expenses of attorneys, consultants, accountants or
     other agents and experts reasonably incident to matters indemnified
     against, and the costs of investigation and/or monitoring of such matters,
     and the costs of enforcement of the indemnity; provided, however, that
     Purchaser and Seller shall not be entitled to indemnification under this
     Section 10.1 for, and "Damages" shall not include, (i) loss of profits or
     other consequential damages suffered by the Party claiming indemnification,
     or any punitive damages, (ii) any liability, loss, cost, expense, claim,
     award or judgment that does not individually exceed $50,000, and (iii) any
     liability, loss, cost, expense, claim, award or judgment to the extent
     resulting from or increased by the actions or omissions of any Indemnified
     Person after the Closing Date.

          (f) The indemnity of each Party provided in this Section 10.1 shall be
     for the benefit of and extend to such Party's present and former
     Affiliates, and its and their directors, officers, employees, and agents.
     Any claim for indemnity under this Section 10.1 by any such Affiliate,
     director, officer, employee, or agent must be brought and administered by
     the applicable Party to this Agreement. No Indemnified Person other than
     Seller and Purchaser shall have any rights against either Seller or
     Purchaser under the terms of this Section 10.1 except as may be exercised
     on its behalf by Purchaser or Seller, as applicable, pursuant to this
     Section 10.1(f). Seller and Purchaser may elect to exercise or not exercise
     indemnification rights under this Section on behalf of the other
     Indemnified Parties affiliated with it in its sole discretion and shall
     have no liability to any such other Indemnified Party for any action or
     inaction under this Section.

     Section 10.2 Indemnification Actions.
                  -----------------------

     All claims for indemnification under Section 10.1 shall be asserted and
resolved as follows:

          (a) For purposes of this Article 10, the term "Indemnifying Person"
     when used in connection with particular Damages shall mean the Person or
     Persons having an obligation to indemnify another Person or Persons with
     respect to such Damages pursuant to this Article 10, and the term
     "Indemnified Person" when used in connection with particular Damages shall
     mean the Person or Persons having the right to be indemnified with respect
     to such Damages by another Person or Persons pursuant to this Article 10.

                                       31
<PAGE>

          (b) To make claim for indemnification under Section 10.1, an
     Indemnified Person shall notify the Indemnifying Person of its claim under
     this Section 10.2, including the specific details of and specific basis
     under this Agreement for its claim (the "Claim Notice"). In the event that
     the claim for indemnification is based upon a claim by a third party
     against the Indemnified Person (a "Claim"), the Indemnified Person shall
     provide its Claim Notice promptly after the Indemnified Person has actual
     knowledge of the Claim and shall enclose a copy of all papers (if any)
     served with respect to the Claim; provided that the failure of any
     Indemnified Person to give notice of a Claim as provided in this Section
     10.2 shall not relieve the Indemnifying Person of its obligations under
     Section 10.1 except to the extent such failure results in insufficient time
     being available to permit the Indemnifying Person to effectively defend
     against the Claim or otherwise prejudices the Indemnifying Person's ability
     to defend against the Claim. In the event that the claim for
     indemnification is based upon an inaccuracy or breach of a representation,
     warranty, covenant or agreement, the Claim Notice shall specify the
     representation, warranty, covenant or agreement which was inaccurate or
     breached.

          (c) In the case of a claim for indemnification based upon a Claim, the
     Indemnifying Person shall have 30 days from its receipt of the Claim Notice
     to notify the Indemnified Person whether it admits or denies its liability
     to defend the Indemnified Person against such Claim under this Article 10.
     If the Indemnifying Person does not notify the Indemnified Person within
     such 30-day period whether the Indemnifying Person admits or denies its
     obligation to defend the Indemnified Person, it shall be conclusively
     deemed obligated to provide such indemnification hereunder. The Indemnified
     Person is authorized, prior to and during such 30-day period, to file any
     motion, answer or other pleading that it shall deem necessary or
     appropriate to protect its interests or those of the Indemnifying Person
     and that is not prejudicial to the Indemnifying Person.

          (d) If the Indemnifying Person admits its obligation, it shall have
     the right and obligation to diligently defend, at its sole cost and
     expense, the Claim. The Indemnifying Person shall have full control of such
     defense and proceedings, including any compromise or settlement thereof. If
     requested by the Indemnifying Person, the Indemnified Person agrees to
     cooperate in contesting any Claim which the Indemnifying Person elects to
     contest (provided, however, that the Indemnified Person shall not be
     required to bring any counterclaim or cross-complaint against any Person).
     The Indemnified Person may at its own expense participate in, but not
     control, any defense or settlement of any Claim controlled by the
     Indemnifying Person pursuant to this Section 10.2(d). An Indemnifying
     Person shall not, without the written consent of the Indemnified Person,
     settle any Claim or consent to the entry of any judgment with respect
     thereto which (i) does not result in a final resolution of the Indemnified
     Person's liability with respect to the Claim (including, in the case of a
     settlement, an unconditional written release of the Indemnified Person) or
     (ii) may materially and adversely affect the Indemnified Person (other than
     as a result of money damages covered by the indemnity).

          (e) If the Indemnifying Person does not admit its obligation or admits
     its obligation but fails to diligently defend or settle the Claim, then the
     Indemnified Person shall have the right to defend against the Claim (at the
     sole cost and expense of the Indemnifying Person, if the Indemnified Person

                                       32

<PAGE>

     is entitled to indemnification hereunder), with counsel of the Indemnified
     Person's choosing, subject to the right of the Indemnifying Person to admit
     its obligation and assume the defense of the Claim at any time prior to
     settlement or final determination thereof. If the Indemnifying Person has
     not yet admitted its obligation to provide indemnification with respect to
     a Claim, the Indemnified Person shall send written notice to the
     Indemnifying Person of any proposed settlement and the Indemnifying Person
     shall have the option for 10 days following receipt of such notice to (i)
     admit in writing its obligation to provide indemnification with respect to
     the Claim and (ii) if its obligation is so admitted, reject, in its
     reasonable judgment, the proposed settlement. If the Indemnified Person
     settles any Claim over the objection of the Indemnifying Person after the
     Indemnifying Person has timely admitted its obligation in writing and
     assumed the defense of the Claim, the Indemnified Person shall be deemed to
     have waived any right to indemnity therefor.

          (f) In the case of a claim for indemnification not based upon a Claim,
     the Indemnifying Person shall have 30 days from its receipt of the Claim
     Notice to (i) cure the Damages complained of, (ii) admit its obligation to
     provide indemnification with respect to such Damages or (iii) dispute the
     claim for such Damages. If the Indemnifying Person does not notify the
     Indemnified Person within such 30 day period that it has cured the Damages
     or that it disputes the claim for such Damages, the Indemnifying Person
     shall be conclusively deemed obligated to provide such indemnification
     hereunder.

     Section 10.3 Limitation on Actions.
                  ---------------------

          (a) The representations and warranties of the Parties in Articles 4
     and 5 and the covenants and agreements of the Parties in Sections 6.1, 6.3,
     6.4, 6.5 and 6.9, and the corresponding representations and warranties
     given in the certificates delivered at Closing pursuant to Sections 8.2(c)
     and 8.3(d), as applicable, shall survive the Closing for a period of sixty
     (60) days (unless a shorter period is expressly provided within the
     applicable section). The representations and warranties of Seller in
     Sections 3.1 and 3.5(e) shall terminate as of the Claim Date. The remainder
     of this Agreement shall survive the Closing without time limit except as
     may otherwise be expressly provided herein. Representations, warranties,
     covenants and agreements shall be of no further force and effect after the
     date of their expiration, provided that there shall be no termination of
     any bona fide claim asserted pursuant to this Agreement with respect to
     such a representation, warranty, covenant or agreement prior to its
     expiration date.

          (b) The indemnities in Sections 10.1(a)(ii), 10.1(a)(iii), 10.1(b)(ii)
     and 10.1(b)(iii) shall terminate as of the termination date of each
     respective representation, warranty, covenant or agreement that is subject
     to indemnification thereunder, except in each case as to matters for which
     a specific written claim for indemnity has been delivered to the
     Indemnifying Person on or before such termination date. The indemnity in
     Sections 10.1(a)(i) and 10.1(b)(i) shall continue without time limit.

                                       33

<PAGE>

          (c) Neither Seller nor Purchaser shall have any liability for any
     indemnification for a claim under Section 10.1 to the other Party until and
     unless the amount of the liability for Damages for such claim exceeds
     $50,000, and then only to the extent such Damages exceed $50,000, provided,
     however, that this Section 10.3(c) shall not limit Purchaser's or Seller's
     liability under Sections 10.1(a)(ii), 10.1(b)(i) or 10.1(b)(ii). The
     adjustments to the Purchase Price under Section 2.2, any further
     adjustments with respect to production, income, proceeds, receipts and
     credits under Section 11.1, any further adjustments with respect to
     Property Costs under Section 11.2 and any payments in respect of any of the
     preceding shall not be limited by this Section.

          (d) Notwithstanding anything to the contrary contained elsewhere in
     this Agreement, neither Seller nor Purchaser shall collectively be required
     to indemnify the other Party under this Article 10 for aggregate Damages in
     excess of the Purchase Price.

          (e) The amount of any Damages for which an Indemnified Person is
     entitled to indemnity under this Article 10 shall be reduced by the amount
     of insurance proceeds realized by the Indemnified Person or its Affiliates
     with respect to such Damages (net of any collection costs, and excluding
     the proceeds of any insurance policy issued or underwritten by the
     Indemnified Person or its Affiliates).

     Section 10.4 Recording.
                  ---------

     As soon as practicable after Closing, Purchaser shall record the Conveyance
and other assignments delivered at Closing in the appropriate jurisdictions as
well as with the appropriate governmental agencies and provide Seller with
copies of all recorded or approved instruments.

                                   ARTICLE 11
                                  MISCELLANEOUS

     Section 11.1 Receipts.
                  --------

     Except as otherwise provided in this Agreement, any production from or
attributable to the Assets (and all products and proceeds attributable thereto)
and any other income, proceeds, receipts and credits attributable to the Assets
which are not reflected in the adjustments to the Purchase Price following the
final adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
production of Hydrocarbons from or attributable to the Assets (and all products
and proceeds attributable thereto) and all other income, proceeds, receipts and
credits earned with respect to the Assets to which Purchaser is entitled under
Section 1.4 shall be the sole property and entitlement of Purchaser, and, to the
extent received by Seller, Seller shall fully disclose, account for and remit
the same promptly to Purchaser, and (b) all production of Hydrocarbons from or
attributable to the Assets (and all products and proceeds attributable thereto)
and all other income, proceeds, receipts and credits earned with respect to the
Assets to which Seller is entitled under Section 1.3 shall be the sole property
and entitlement of Seller and, to the extent received by Purchaser, Purchaser
shall fully disclose, account for and remit the same promptly to Seller.

                                       34

<PAGE>

     Section 11.2 Expenses.
                  --------

     Except as otherwise provided in this Agreement, any Property Costs which
are not reflected in the adjustments to the Purchase Price following the final
adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
Property Costs for which Seller is responsible under Section 1.4 shall be the
sole obligation of Seller and Seller shall promptly pay, or if paid by
Purchaser, promptly reimburse Purchaser for and hold Purchaser harmless from and
against same; and (b) all Property Costs for which Purchaser is responsible
under Section 1.4 shall be the sole obligation of Purchaser and Purchaser shall
promptly pay, or if paid by Seller, promptly reimburse Seller for and hold
Seller harmless from and against same. Seller is entitled to resolve all joint
interest audits and other audits of Property Costs covering periods for which
Seller is in whole or in part responsible, provided that Seller shall not agree
to any adjustments to previously assessed costs for which Purchaser is liable
without the prior written consent of Purchaser, such consent not to be
unreasonably withheld. Seller shall provide Purchaser with a copy of all
applicable audit reports and written audit agreements received by Seller and
relating to periods for which Purchaser is partially responsible.

     Section 11.3 Counterparts.
                  ------------

     This Agreement may be executed in counterparts, each of which shall be
deemed an original instrument, but all such counterparts together shall
constitute but one agreement.

     Section 11.4 Notice.
                  ------

     All notices which are required or may be given pursuant to this Agreement
shall be sufficient in all respects if given in writing and delivered
personally, by telecopy or by registered or certified mail, postage prepaid, as
follows:

                  If to Seller:

                  Cabot Oil & Gas Corporation
                  1200 Enclave Parkway
                  Houston, Texas 77077-1607
                  Attention: Vice President - Land
                  Telephone: 281-589-4862
                  Telecopy: 281-589-4839

                  If to Purchaser:

                  Whittier Energy Company
                  7770 El Camino Real
                  Carlsbad, California 92009
                  Attention: Bryce Rhodes
                  Telephone: 760-943-3959
                  Telecopy: 760-943-3939

                                       35

<PAGE>

     Either Party may change its address for notice by notice to the other in
the manner set forth above. All notices shall be deemed to have been duly given
at the time of receipt by the Party to which such notice is addressed.

     Section 11.5 Sales or Use Tax, Recording Fees and Similar Taxes and Fees.
                  -----------------------------------------------------------

     Purchaser shall bear any sales, use, excise, real property transfer, gross
receipts, goods and services, registration, capital, documentary, stamp or
transfer Taxes, recording fees and similar Taxes and fees incurred and imposed
upon, or with respect to, the property transfers or other transactions
contemplated hereby. If such transfers or transactions are exempt from any such
taxes or fees upon the filing of an appropriate certificate or other evidence of
exemption, Purchaser will timely furnish to Seller such certificate or evidence.

     Section 11.6 Expenses.
                  --------

     Except as provided in Section 11.5, all expenses incurred by Seller in
connection with or related to the authorization, preparation or execution of
this Agreement, the Conveyance and the Exhibits and Schedules hereto and
thereto, and all other matters related to the Closing, including without
limitation, all fees and expenses of counsel, accountants and financial advisers
employed by Seller, shall be borne solely and entirely by Seller, and all such
expenses incurred by Purchaser shall be borne solely and entirely by Purchaser

     Section 11.7 Replacement of Bonds, Letters of Credit and Guarantees.
                  ------------------------------------------------------

     The Parties understand that none of the bonds, letters of credit and
guarantees, if any, posted by Seller with Governmental Bodies and relating to
the Assets will be transferred to Purchaser. Promptly following Closing,
Purchaser shall obtain, or cause to be obtained in the name of Purchaser,
replacements for such bonds, letters of credit and guarantees, to the extent
such replacements are necessary to permit the cancellation of the bonds, letters
of credit and guarantees posted by Seller or to consummate the transactions
contemplated by this Agreement.

     Section 11.8 Governing Law; Submission to Jurisdiction.
                  -----------------------------------------

     This Agreement and the legal relations between the Parties shall be
governed by and construed in accordance with the laws of the state of Texas
without regard to principles of conflicts of laws otherwise applicable to such
determinations, except that the Conveyance delivered hereunder shall be governed
by the laws of the state of Louisiana where the transferred Assets are located.
Each Party submits to the exclusive jurisdiction of the state and federal courts
located in the state of Texas for purposes of resolving any dispute, claim or
controversy arising out of, in relation to or in connection with this Agreement.

     Section 11.9 Captions.
                  --------
     The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.

                                       36

<PAGE>

     Section 11.10 Waivers.
                   -------
     Any failure by any Party or Parties to comply with any of its or their
obligations, agreements or conditions herein contained may be waived by the
Party or Parties to whom such compliance is owed by an instrument signed by such
Party or Parties and expressly identified as a waiver, but not in any other
manner. No waiver of, or consent to a change in, any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.

     Section 11.11 Assignment.
                   ----------

     No Party shall assign all or any part of this Agreement, nor shall any
Party assign or delegate any of its rights or duties hereunder, without the
prior written consent of the other Party and any assignment or delegation made
without such consent shall be void. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and assigns.

     Section 11.12 Entire Agreement.
                   ----------------

     This Agreement and the documents to be executed hereunder and the Exhibits
and Schedules attached hereto constitute the entire agreement between the
Parties pertaining to the subject matter hereof, and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to the subject matter hereof.

     Section 11.13 Amendment.
                   ---------

     This Agreement may be amended or modified only by an agreement in writing
executed by all Parties and expressly identified as an amendment or
modification.

     Section 11.14 No Third-Party Beneficiaries.
                   ----------------------------
     Nothing in this Agreement shall entitle any Person other than Purchaser and
Seller to any claims, cause of action, remedy or right of any kind, except the
rights expressly provided to the Persons described in Section 10.1(f).

     Section 11.15 References.
                   ----------

     In this Agreement:

          (a) References to any gender includes a reference to all other
     genders;

          (b)) References to the singular includes the plural, and vice versa;

          (c) Reference to any Article or Section means an Article or Section of
     this Agreement;

                                       37

<PAGE>

          (d) Reference to any Exhibit or Schedule means an Exhibit or Schedule
     to this Agreement, all of which are incorporated into and made a part of
     this Agreement;

          (e) Unless expressly provided to the contrary, "hereunder", "hereof",
     "herein" and words of similar import are references to this Agreement as a
     whole and not any particular Section or other provision of this Agreement;
     and

          (f) "Include" and "including" shall mean include or including without
     limiting the generality of the description preceding such term.

     Section 11.16 Construction.

     Purchaser is a party capable of making such investigation, inspection,
review and evaluation of the Assets as a prudent purchaser would deem
appropriate under the circumstances including with respect to all matters
relating to the Assets, their value, operation and suitability. Seller and
Purchaser have had the opportunity to exercise business discretion in relation
to the negotiation of the details of the transaction contemplated hereby. This
Agreement is the result of arm's-length negotiations from equal bargaining
positions.

     Section 11.17 Limitation on Damages.
                   ---------------------

     Notwithstanding anything to the contrary contained herein, none of
Purchaser, Seller or any of their respective Affiliates shall be entitled to
punitive damages in connection with this Agreement and the transactions
contemplated hereby and Purchaser and Seller, for themselves and on behalf of
their Affiliates, hereby expressly waive any right to punitive damages in
connection with this Agreement and the transactions contemplated hereby.
Additionally, not withstanding anything to the contrary contained herein, none
of Purchaser, Seller or any of their respective Affiliates, shall ever be
entitled to collect Damages hereunder for any indemnity, breach of warranty or
breach of covenant in an amount, which when aggregated with all prior Damages
collected by such party would exceed the Purchase Price.

                                   ARTICLE 12
                                   DEFINITIONS

     "Adjustment Period" has the meaning set forth in Section 2.2(a).

     "Adjusted Purchase Price" has the meaning set forth in Section 2.2.

     "Affiliate" with respect to any Person, means any person that directly or
indirectly controls, is controlled by or is under common control with such
Person, with control in such context meaning the ability to direct the
management and policies of a Person through ownership of voting shares or other
equity rights, pursuant to a written agreement, or otherwise.

     "Agreed Interest Rate" means the lesser of (i) the published or quoted
prime or base rate of The Chase Manhattan Bank, National Association in effect
as of the Closing Date plus two percent (2%) or (ii) the maximum rate allowed by
applicable law.

                                       38

<PAGE>

     "Agreement" has the meaning set forth in the first paragraph of this
Agreement.

     "Allocated Value" has the meaning set forth in Section 2.3.

     "Arbitrator" has the meaning set forth in Section 3.6(a).

     "Assets" has the meaning set forth in Section 1.2.

     "Business Day" means each calendar day except Saturdays, Sundays, and
Federal holidays.

     "Claim" has the meaning set forth in Section 10.2(b).

     "Claim Date" has the meaning set forth in Section 3.4(a).

     "Claim Notice" has the meaning set forth in Section 10.2(b).

     "Closing" has the meaning set forth in Section 8.1(a).

     "Closing Date" has the meaning set forth in Section 8.1(b).

     "Closing Payment" has the meaning set forth in Section 8.4(a).

     "Code" has the meaning set forth in Section 2.3.

     "Contracts" has the meaning set forth in Section 1.2(d).

     "Conveyance" has the meaning set forth in Section 3.1(b).

     "Defects" has the meaning set forth in Section 3.6(a).

     "Defect Amounts" has the meaning set forth in Section 3.6(a).

     "Damages" has the meaning set forth in Section 10.1(e).

     "Defensible Title" has the meaning set forth in Section 3.2.

     "Effective Time" has the meaning set forth in Section 1.3(a).

     "Encumbrance" has the meaning set forth in Section 3.2.

     "Environmental Defect" means any circumstance or condition relating to,
affecting or burdening the Assets that constitutes a violation of any
Environmental Law as of the Effective Date or the Closing Date.

     "Environmental Defect Amount" has the meaning set forth in Section 3.5(d).

     "Environmental Insurance Policy" has the meaning set forth in Section 6.10.

                                       39

<PAGE>

     "Environmental Laws" means any and all laws, statutes, regulations, rules,
orders, ordinances, permits or determinations of any governmental agency
pertaining to the environment in effect in any jurisdiction in which the Assets
are located, including, without limitation, the Clean Air Act as amended, the
Federal Water Pollution Control Act, as amended, the Rivers and Harbors Act of
1899, as amended, the Safe Drinking Water Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Hazardous and Solid Waste
Amendments Act of 1984, as amended, the Toxic Substances Control Act, as
amended, the Occupational Safety and Health Act, as amended, the Oil Pollution
Act of 1990 and other federal, state and local laws whose purpose is to conserve
or protect health, the environment, wildlife or natural resources.

     "Equipment" has the meaning set forth in Section 1.2(f).

     "Excluded Records" has the meaning set forth in Section 1.2(g).

     "Gathering Systems" has the meaning set forth in Section 1.2(c).

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

     "Hydrocarbons" means oil, gas, condensate and other gaseous and liquid
hydrocarbons or any combination thereof and sulphur extracted from hydrocarbons.

     "Indemnified Person" has the meaning set forth in Section 10.2(a).

     "Indemnifying Person" has the meaning set forth in Section 10.2(a).

     "Laws" means all statutes, rules, regulations, ordinances, orders, and
codes of Governmental Bodies.

     "Leases" has the meaning set forth in Section 1.2(a).

     "Lowest Cost Response" means the response required or allowed under
Environmental Laws that addresses the condition present at (x) the lowest cost
(considered as a whole taking into consideration any negative impact such
response may have on the operations related to the Assets and any potential
additional costs or liabilities that may arise as a result of such response) as
compared to any other response that is consistent with Environmental Laws and
(y) consistent with the policies of Purchaser to address similar conditions
present, if any, at Purchaser's properties. Taking no action shall constitute
the Lowest Cost Response if, after investigation, taking no action is determined
to be consistent with Environmental Laws, any requirements of contracts, leases
or other agreements binding on the property, and any requirements of any
Governmental Authority with jurisdiction (collectively, the "Environmental
Requirements"). If taking no action is not consistent with the Environmental
Requirements, the least costly nonpermanent remedy (such as mechanisms to
contain or stabilize hazardous substances, including caps, dikes, encapsulation,

                                       40

<PAGE>

leachate collection systems, etc.) shall be the Lowest Cost Response, provided
that such non-permanent remedy is consistent with the Environmental Requirements
and any less costly permanent remedy.

     "Material Adverse Effect" means any material adverse effect on the
ownership, operation or value of the Assets, as currently operated, taken as a
whole, provided, however, that "Material Adverse Effect" shall not include
material adverse effects resulting from general changes in Hydrocarbon prices,
general changes in industry, economic or political conditions or general changes
in Laws or in regulatory policies.

     "Material Impairment" means either (a) Defects have been asserted by
Purchaser, which based upon Purchaser's estimates, will result in Adjustments to
the Purchase Price under Section 3.7 hereof in excess of $340,000, or (b) a
casualty or condemnation loss occurs under Section 3.8 hereof which adversely
affects the value of the Assets by an amount which exceeds $510,000.

     "Oil Spill" means that certain release of approximately 100 barrels of
crude oil from the Beaver Dam Creek Facility occurring on October 7, 2001. The
release occurred due to a carryover of production from a heater-treater vessel,
and resulted in production ultimately being diverted to a 500 barrel slop-tank
that caused such slop-tank to overflow. The crude oil escaped the containment
berm and flowed into an adjacent creek. Seller responded and recovered
approximately 1280 barrels of total liquids and 15 yards of contaminated debris.

     "Party" and "Parties" have the meanings set forth in the preamble.

     "Permitted Encumbrances" has the meaning set forth in Section 3.3.

         "Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, Government Body or any other entity.

     "Properties" has the meaning set forth in Section 1.2(c).

     "Property Costs" has the meaning set forth in Section 13(c).

     "Purchase Price" has the meaning set forth in Section 2.1.

     "Purchaser" has the meaning set forth in the preamble.

     "Records" has the meaning set forth in Section 1.2(g).

     "Seller" has the meaning set forth in the preamble

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

                                       41

<PAGE>

     "Title Benefit" has the meaning set forth in Section 3.2.

     "Title Benefit Amount" has the meaning set forth in Section 3.4(h).

     "Title Defect" has the meaning set forth in Section 3.2.

     "Title Defect Amount" has the meaning set forth in Section 3.4(g).

     "Units" has the meaning set forth in Section 1.2(b).

     "Wells" has the meaning set forth in Section 1.2(a).

                                       42

<PAGE>

     IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties
hereto on the date first above written.

                                     SELLER:

                                     CABOT OIL & GAS CORPORATION

                                     By:
                                        ---------------------------------------
                                        J. Scott Arnold
                                        Vice President

                                     PURCHASER:

                                     WHITTIER ENERGY COMPANY

                                     By:
                                        ---------------------------------------
                                        Bryce Rhodes
                                        Vice President

                                       43EXHIBIT 10.2
                           PURCHASE AND SALE AGREEMENT

     This Purchase and Sale Agreement (the "Agreement") is made and entered into
as of the 20th day of June, 2002, by and between SUE-ANN Operating, L.C.
("Seller"), a Texas limited liability corporation, whose address is P. 0. Box
3910, Victoria, Texas 77903-3910, and Whittier Energy Company ("Buyer"), a
Nevada corporation, whose address is 7770 El Camino Real, Carlsbad, California
92009.

                              W I T N E S S E T H:

     WHEREAS, Seller owns interests in certain producing properties, and related
facilities, equipment and contractual rights, located in the Big Wells Field
area, Dimmit County Texas, which are more completely described in this
Agreement; and

     WHEREAS, Seller desires to sell, and Buyer desires to purchase, such
properties, facilities, equipment and contractual rights as herein provided.

     NOW, THEREFORE, in consideration of the premises, Seller and Buyer agree as
follows:

1.   Sale and Purchase. Subject to the terms and conditions and for the
consideration herein set forth, Seller agrees to sell and deliver to Buyer, and
Buyer agrees to purchase, receive, pay for and accept from Seller at the
Closing, as defined in Section 6.1, but effective as of 7:00 a.m. on June 1,
2002 (the "Effective Date"), all of Seller's right, title and interest in and to
the following properties, all of which are in, or related to, the Big Wells
Field area, Dimmit County, Texas (the "Properties"):

     1.1 Oil and Gas Properties. The oil and gas properties described on Exhibit
"A" attached hereto, regardless of whether such properties are in the nature of
fee interests, leasehold interests, licenses, concessions, working interests,
farmout rights, royalty, overriding royalty or other non-working or carried
interests, operating rights or other mineral rights of every nature in all
properties and lands pooled, unitized, communitized or consolidated with such
properties (the "Oil and Gas Properties").

     1.2 Wells. All oil, condensate or natural gas wells, water wells and
injection wells, regardless of whether located on the Oil and Gas Properties or
held for use in connection with the Oil and Gas Properties, and regardless of
whether producing, operating, shut-in or temporarily or permanently abandoned
(the "Wells"), all as more fully described on Exhibit "A".

     1.3 Gas Gathering System. All gas gathering and pipeline facilities and
appurtenances thereto (the "Gas Gathering System") located in the Big Wells
Field area and which are used or available for use to handle gas produced from
the Wells.

     1.4 Surface Contracts. All leases, easements, privileges, right-of-way
agreements, licenses or other agreements relating to the use or ownership of
surface or subsurface properties used in connection with operations on or of the
Oil and Gas Properties, the Wells or the Gas Gathering System (the "Surface
Contracts"), all as more fully described on Exhibit "A".

                                       1
<PAGE>

     1.5 Equipment. All physical facilities or interests therein, including but
not limited to platforms, tanks and tank batteries, gas plants, disposal
facilities, storage facilities, buildings, structures, field separators and
liquid extractors, compressors, pumps, pumping units, valves, fittings,
machinery and parts, engines, boilers, meters, implements, tools, appliances,
cables, wires, towers, casing, tubing and rods, wellheads, Christmas trees,
pumping units, gas treating or processing facilities, compression facilities,
field offices and the furniture and fixtures contained therein, and all other
fixtures and equipment of every type and description, excluding vehicles, to the
extent that the same are used or held for use in connection with the operation
of the Oil and Gas Properties, the Wells or the Gas Gathering System (the
"Equipment").

     1.6 Contracts. All contracts, commitments, agreements or arrangements that
relate to the Oil and Gas Properties, the Wells, the Gas Gathering System, the
Surface Contracts or the Equipment, including the production, storage,
treatment, gathering, transportation, processing, purchase, sale or other
disposal of substances therefrom or in connection therewith (the "Contracts"),
all as more fully described on Exhibit "A".

     1.7 Reservation of Oil and Gas Produced Prior to the Effective Date. Seller
specifically reserves and excepts from this Agreement all oil in tanks above the
pipeline connections as of the Effective Date, and said oil shall remain the
property of Seller and shall be sold for the account of Seller. All gas produced
and the proceeds of gas produced prior to the Effective Date shall likewise not
be a part of this Agreement but shall remain the property of Seller. At its sole
option and election, Seller shall either account for the ending oil tank
inventories at the Closing and receive payment therefor from Buyer at the value
provided in the next succeeding sentence, or shall invoice Buyer for the ending
oil tank inventories at such value and Buyer shall pay such invoice within ten
days of receipt. Seller shall value the ending oil inventory, and Buyer agrees
to pay Seller, based on the value Seller would have received if the oil had been
sold to Seller's oil purchaser on the Effective Date.

2.   Purchase Price.

     2.1 Basic Amount. The purchase price for the Properties shall be $1,650,000
(the "Purchase Price"). There will be no adjustment to the Purchase Price except
as provided in Sections 1.7, 2.2, 2.3, 10 and 12.4.

     2.2 Price Adjustment. The Purchase Price shall be adjusted if valid title
objections raised by Buyer are not cured by Seller or waived by Buyer in
accordance with the terms of this Agreement. If neither occurs, the Properties
with objectionable title shall be excluded from the sale, and the Purchase Price
shall bell adjusted based on the value allocations set forth in Exhibit "A"
attached hereto. If the parties cannot mutually agree upon the total adjustment,
then either party may terminate this Agreement within 5 days prior to the
Closing without further liability to the other; provided, however, that
immediately upon such termination, Seller shall return the Earnest Money to
Buyer.

     2.3 Closing Statement. Not less than one business day before the Closing
Date, as hereinafter defined, Seller shall deliver to Buyer a statement (the
"Closing Statement") setting forth any credits or offsets to which either party
is entitled under the provisions of this Agreement. The Closing Statement shall
be prepared in accordance with customary accounting principles used in the oil
and gas industry and shall cover the transactions during the Closing Period as
if the Closing Period were a separate and distinct accounting period. Seller
shall invoice Buyer for any items of cost or expense paid by Seller and not
included in the Closing Statement if such items of cost or expense are
obligations of Buyer pursuant to Section 10.3 or other provisions of this
Agreement, and Buyer shall pay such invoice within ten days of receipt.

                                       2
<PAGE>

3.   Earnest Money. Contemporaneously with the execution of this Agreement,
Buyer shall pay and deliver to Seller, by Cashier's Check, or bank wire
transfer, an amount as Earnest Money equal to five percent of Purchase Price.
Said Earnest Money will be deducted from the Purchase Price at the time of the
Closing for the purpose of determining the funds owed by Buyer at the Closing.

4.   Information and Access. Seller shall give Buyer and Buyer's authorized
representatives, at any reasonable time before Closing, access free of cost (i)
to the Wells, Gas Gathering System and Equipment included in the Properties for
the purpose of inspecting same at Buyer's sole risk, and (ii) to all geological,
geophysical, production, engineering and other technical data and records, and
to all contracts, land and lease records, to the extent such data and records
are in Seller's possession or control and relate to the Properties. NO WARRANTY
OF ANY KIND IS MADE BY SELLER AS TO THE INFORMATION SO SUPPLIED, AND BUYER
AGREES THAT ANY CONCLUSIONS MADE FROM SUCH INFORMATION SHALL BE THE RESULT OF
ITS OWN INDEPENDENT REVIEW AND JUDGMENT.

5.   Title. At Closing, Seller will warrant that title to the Oil and Gas
Properties, the Wells and the Gas Gathering System will be free and clear of
claims, liens and encumbrances arising from acts done by, through or under
Seller, but not otherwise (the "Limited Warranty"). Except for such Limited
Warranty, Buyer will be solely responsible for investigating and determining the
quality of Seller's title to the Properties. In the event a Title Defect, as
herein defined, is determined to exist, the parties hereto will proceed as
follows:

     5.1 Definition of Title Defect. For the purpose of this Agreement, the term
"Title Defect" means one or more deficiencies to the title to the Oil and Gas
Properties, the Wells or the Gas Gathering System (the 'Warranted Properties")
in one or more of the following respects, to-wit:

     (a)  Seller's title at the Closing Date, as to one or more interests
          comprising the Warranted Properties, is subject to an outstanding
          mortgage, deed of trust, lien, encumbrance, (except as listed on
          Exhibit A) or other adverse claim; or

     (b)  Seller owns less than th4 net revenue interests shown for the Oil and
          Gas Properties and Wells listed on Exhibit "A" attached hereto; or

     (c)  Seller's rights and interests to the Warranted Properties are subject
          to being reduced by the exercise by a third party of a reversionary,
          back-in, preferential or other similar right; or

     (d)  Seller is in default under or has breached some material provision of
          a lease, farmout agreement or other contract or agreement affecting
          the Warranted Properties.

                                       3
<PAGE>

     5.2 Notice of Title Defects. If Buyer discovers a Title Defect affecting
the Properties, Buyer shall notify Seller in writing prior to the Closing Date.
Such notice from Buyer to Seller shall include a notice letter from Buyer's
counsel substantiating said defects. Any matters that may otherwise constitute a
Title Defect but that are not specifically raised in writing by Buyer prior to
the Closing Date, and which are not covered by the Limited Warranty, shall be
deemed to have been waived by Buyer.

     5.3 Remedies For Title Defects. At its sole option, Seller may have thirty
days from and after the date it receives written notice from Buyer of a Title
Defect within which to try to cure the Title Defect. If necessary, Seller, at
its sole option, may extend the Closing Date for a thirty day period. In the
event that any Title Defect is not cured on or before the Closing Date, or the
extended Closing Date if applicable, Buyer may, at its sole option, either (i)
waive the Title Defect and close on the Properties or (ii) terminate this
Agreement by giving written notice of termination to Seller. In the event of
termination as provided for in this Section 5.3, Seller shall return to Buyer
the sums of money paid by Buyer to Seller as Earnest Money pursuant to Section 3
hereof. The return of funds from Seller to Buyer shall be in complete
satisfaction and accord of any and all claims Buyer may have against Seller, and
Buyer waives any other claims or causes of action, at law or in equity, that it
might have against Seller arising out of or connected with a Title Defect.
Following termination and the return by Seller of the Earnest Money to Buyer,
neither party shall have any further obligation or liability to the other under
this Agreement.

6.   Closing.

     6.1 Place, Time and Documents. The Closing shall be held on or before July
18, 2002 (the "Closing Date"), at 9:00 a.m. at the offices of Seller at 1908 N.
Laurent Street, Suite 250, Victoria, Texas, or at such other time and place as
Seller and Buyer may mutually agree in writing, subject to the extension
provided in Section 5.3. At the Closing the following will occur:

     (a)  Seller shall execute, acknowledge and deliver an Assignment and Bill
          of Sale, substantially in the form and substance of Exhibit "B"
          attached hereto, covering all of the Properties.

     (b)  Buyer shall deliver to Seller by either cashier's check or wire
          transfer of cash the balance of the Purchase Price (as adjusted in
          accordance with the terms of this Agreement) and all other amounts to
          be paid to Seller pursuant to the provision hereof.

     (c)  Seller and Buyer shall execute P-4 forms for all wells operated by
          Seller as required by the Railroad Commission of Texas (the "TRC") to
          effect a change of status of operator for the Properties. Buyer and
          Seller will cooperate in filing the P-4 forms with the TRC immediately
          after the Closing.

     (d)  With respect to any inactive, unplugged well that is located on the
          premises that form a part of the subject matter of this Agreement and
          that is disclosed in writing by Seller to Buyer on or before the date
          of this Agreement, then on or before the Closing Date Buyer shall
          furnish Seller with an executed application for an extension to the
          well plugging requirements of the TRC's Statewide Rule 14(b)(2) and a
          letter of credit or evidence of bond acceptable to the TRC to include
          all such inactive, unplugged wells.

                                       4
<PAGE>

     (e)  If requested by Buyer, Seller shall deliver letters-in-lieu of
          transfer orders addressed to each purchaser of oil and gas produced
          from the Oil and Gas Properties.

     (f)  Seller shall deliver the originals (or copies where originals do not
          exist in Sellers files) of all files, documents, data and information
          in Seller's possession or control concerning the Properties.

     (g)  Seller shall deliver to Buyer exclusive possession of the Properties.

     6.2 Conditions of Closing. The following conditions must be satisfied or
waived before the respective party has an obligation to complete the Closing
contemplated herein.

     (a)  Buyer's Conditions. The obligations of Buyer at Closing are subject,
          at the option of Buyer, to the reasonable satisfaction prior to
          Closing of the following conditions:

          (i)  The representations and warranties of Seller contained herein
               shall have been true in all material respects when made and shall
               be true in all materials respects at and as of the Closing Date
               as though such representations and warranties were made at and as
               of the Closing Date.

          (ii) All matters and instruments to be delivered at the Closing by
               Seller are available complete in effective form for delivery at
               Closing.

          (iii) Seller shall have performed and satisfied all matters,
               undertakings and agreements required by this Agreement to be
               performed and satisfied by Seller at or prior to Closing.

          (iv) Buyer shall not have terminated this Agreement pursuant to its
               option provided in Section 5.3 hereof.

          (v)  Buyer shall not have terminated this Agreement pursuant to its
               option provided in Section 12.4 hereof.

          (vi) Seller shall deliver to Buyer evidence that the Required Consent
               (as defined in Section 7(j) below) has been obtained.

          (vii) Buyer shall have obtained, and be reasonably satisfied with the
               results of, a third party environmental evaluation and audit of
               the Properties.

          (viii) After the date of this Agreement and prior to the Closing,
               there shall not have been any material adverse change in the
               condition of the Properties.

                                       5
<PAGE>

     (b)  Seller's Conditions. The obligations of Seller at Closing are subject,
          at the option of Seller, to the reasonable satisfaction prior to
          Closing of the following conditions.

          (i)  The representatives and warranties of Buyer contained herein
               shall have been true in all material respects when made and shall
               be true in all material respects at and as of the Closing Date as
               though such representations and warranties were made at and as of
               the Closing Date.

          (ii) All matters and instruments to be delivered at the Closing by
               Buyer are available and complete in effective form for delivery
               at Closing.

          (iii) Buyer shall have performed and satisfied all matters,
               undertakings and agreements required by this Agreement to be
               performed and satisfied by Buyer at or prior to Closing.

          (iv) Seller shall not have terminated this Agreement pursuant to its
               option provided in Section 12.4 hereof.

7.   Seller's Representations and Warranties. Seller represents and warrants to
Buyer that:

     (a)  Seller has all requisite power and authority to enter into and perform
          this Agreement and to convey the Properties to Buyer on the terms
          described in this Agreement and to perform all obligations undertaken
          in this Agreement.

     (b)  The consummation of this Agreement will not violate or conflict with
          any governmental order, judgment or decree applicable to Seller.

     (c)  This Agreement has been duly executed and delivered on behalf of
          Seller, and at the Closing, all documents and instruments required
          hereunder to be executed and delivered by Seller will be duly
          authorized, executed and delivered.

     (d)  The Oil and Gas Properties are not overproduced under State
          allowables; there are no imbalances in gas production with other
          working interest owners and no quantities of gas have been paid for,
          but not taken by gas purchasers; there is no existing obligation to
          make up gas for the account of any other person or for cash refunds
          due for any imbalance; Seller has not received any prices that are
          subject to refund.

     (e)  Seller is not in material breach of any leases or other contracts and
          agreements affecting the Properties.

     (f)  The Equipment in the aggregate is in reasonable working condition.

     (g)  The Properties are free and clear of all past or presently asserted
          litigation which is pending or threatened as of the Closing Date.

     (h)  Seller has complied in all material respects with all laws, rules,
          regulations, ordinances, codes and orders ("Laws") affecting or
          relating to any of the Properties, including, without limitation all
          Laws affecting or relating to the plugging and abandonment of wells
          located on the lands included in or covered by the Properties.

                                       6
<PAGE>

     (i)  No party is entitled to a right of first refusal or preferential right
          to purchase or similar right with respect to any of the Properties.

     (j)  Except for the consent of the lessor under the lease described in
          Exhibit "A" (the "Required Consent"), there is no consent, waiver or
          other prior action of any third party required in connection with the
          consummation of the transactions contemplated by this Agreement.

     (k)  To the best of Seller's knowledge, there are no unpaid invoices for
          services provided or materials furnished which relate to the
          Properties and which are attributable to the period before the
          Effective Date.

     (l)  The documents and agreements set forth in Exhibit "A" constitute all
          contractually binding arrangements to which the Properties may be
          subject and which will be binding on the Properties or Buyer after
          Closing.

     (m)  All ad valorem, property and similar taxes and assessments based on or
          measured by the ownership of the Properties for all years prior to
          2002 have been properly paid.

     (n)  There are no bankruptcy, reorganization or similar proceedings
          pending, being contemplated by, or threatened against Seller.

     (o)  To Seller's knowledge, no actions have been taken, no events have
          occurred and no conditions exist or have existed with respect to or
          affecting the Properties which will or could result in any material
          liability or expense to Seller (or Buyer after Closing) (1) for costs
          recoverable under any federal, state, or local laws, regulations or
          orders, to remedy environmental contamination, (2) for damages to
          persons or property resulting from environmental contamination, or (3)
          incurred in responding to, defending or participating in any
          governmental or regulatory proceeding relating to alleged
          environmental contamination.

     The representations and warranties set forth herein shall survive the
Closing for a period of one year.

8.   Buyers Representations and Warranties. Buyer represents and warrants to
Seller that:

     (a)  Buyer has all requisite power and authority to enter into this
          Agreement to purchase the Properties on the terms described in this
          Agreement and to perform all obligations undertaken in this Agreement.

     (b)  The consummation of this Agreement will not violate or conflict with
          any governmental order, judgment or decree applicable to Buyer.

                                       7
<PAGE>

     (c)  This Agreement has been duly executed and delivered on behalf of
          Buyer, and at the Closing, all documents and instruments required
          hereunder to be executed and delivered by Buyer will be duly
          authorized, executed and delivered.

     The representations and warranties set forth herein shall survive the
Closing for a period of one year.

9.   LIABILITIES AND INDEMNITIES. AS USED IN THIS SECTION 9, THE WORD "CLAIMS"
INCLUDES CLAIMS, DEMANDS, CAUSES OF ACTION, LIABILITIES, DAMAGES, PENALTIES AND
JUDGMENTS OF ANY KIND OR CHARACTER AND ALL COSTS AND EXPENSES, INCLUDING
REASONABLE ATTORNEY'S FEES AND COURT COSTS INCURRED IN DEFENDING AGAINST SAME OR
TO ENFORCE A PARTYS OBLIGATION TO INDEMNIFY AGAINST SAME, IN CONNECTION
THEREWITH.

     (a)  EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 9(C), 9(D) AND (E) BELOW,
          FROM AND AFTER THE CLOSING DATE, BUYER SHALL ASSUME, BE RESPONSIBLE
          FOR AND COMPLY WITH ALL DUTIES AND OBLIGATIONS OF SELLER, EXPRESS OR
          IMPLIED, WITH RESPECT TO THE PROPERTIES INCLUDING, WITHOUT LIMITATION,
          THOSE ARISING UNDER OR BY VIRTUE OF ANY LEASE, ASSIGNMENT OF LEASE,
          CONTRACT, AGREEMENT, DOCUMENT, PERMIT, APPLICABLE STATUTE OR RULE,
          REGULATION OR ORDER OF ANY GOVERNMENTAL AUTHORITY, SPECIFICALLY
          INCLUDING, WITHOUT LIMITATION, ANY GOVERNMENTAL REQUEST OR REQUIREMENT
          TO PLUG, RE-PLUG AND/OR ABANDON ANY WELL OF WHATSOEVER TYPE, STATUS OR
          CLASSIFICATION, OR TO TAKE ANY CLEAN-UP, POLLUTION, ENVIRONMENTAL, OR
          OTHER ACTION WITH RESPECT TO THE PROPERTIES, AND SHALL DEFEND,
          INDEMNIFY AND HOLD SELLER AND ITS PARENT, AFFILIATES, SUBSIDIARIES,
          DIRECTORS, OFFICERS, AGENTS, EMPLOYEES AND CONTRACTORS HARMLESS FROM
          ANY AND ALL CLAIMS IN FAVOR OF ANY PERSON OR ENTITY (INCLUDING WITHOUT
          LIMITATION EMPLOYEES OF BUYER) IN CONNECTION THEREWITH REGARDLESS OF
          WHEN THE DUTY OR OBLIGATION AROSE.

     (b)  EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 9(C), 9(D) AND 9(E) BELOW,
          BUYER SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, INDEMNIFY AND HOLD
          SELLER AND ITS PARENT, AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS,
          AGENTS, EMPLOYEES AND CONTRACTORS HARMLESS FROM ANY AND ALL CLAIMS
          ARISING, DIRECTLY OR INDIRECTLY IN FAVOR OF ANY PERSON OR ENTITY
          (INCLUDING WITHOUT LIMITATION EMPLOYEES OF BUYER AND GOVERNMENTAL
          ENTITIES) OUT OF OR IN CONNECTION WITH THE OPERATIONS ON OR PERTAINING
          TO THE PROPERTIES AFTER THE CLOSING DATE FOR PERSONAL INJURY OR DEATH
          OR DAMAGE TO PROPERTY, OR FOR ANY OTHER RELIEF (INCLUDING CLAIMS
          RELATED TO POLLUTION OR ENVIRONMENTAL HAZARDS AND LIABILITIES ARISING
          PRIOR TO OR AFTER THE CLOSING DATE), ARISING DIRECTLY OR INDIRECTLY
          FROM, 0: INCIDENT TO, THE USE, OCCUPATION, OPERATION, MAINTENANCE OR
          ABANDONMENT OF ANY PART OR ALL OF THE PROPERTIES, WHETHER LATENT OR
          PATENT, AND WHETHER ARISING FROM OR CONTRIBUTED TO BY THE SOLE OR
          CONCURRENT NEGLIGENCE, FAULT BY STATUTE, RULE OR REGULATION, STRICT
          LIABILITY, OR OTHER FAULT OF SELLER OR ITS PARENT, AFFILIATES,
          SUBSIDIARIES, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES OR CONTRACTORS
          AND ASSERTED AGAINST BUYER AN:!D/OR SELLER (OR SELLER'S PARENT,
          AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES OR
          CONTRACTORS).

                                       8
<PAGE>

     (c)  SELLER SHALL BE RESPONSIBLE FOR AND SHALL DEFEND, INDEMNIFY AND
          HOLDBUYER AND ITS AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS,
          PARTNERS, AGENTS, EMPLOYEES, AND CONTRACTORS HARMLESS FROM ANY AND ALL
          CLAIMS ARISING DIRECTLY OR INDIRECTLY IN FAVOR OF ANY PERSON OR ENTITY
          (INCLUDING, WITHOUT LIMITATION, EMPLOYEES OF SELLER AND GOVERNMENTAL
          ENTITIES) OUT OF OR IN CONNECTION WITH (i) THE OPERATIONS ON OR
          PERTAINING TO THE PROPERTIES PRIOR TO THE CLOSING DATE FOR PERSONAL
          INJURY OR DEATH OR DAMAGE TO PROPERTY (EXCLUDING CLAIMS RELATED TO
          POLLUTION OR ENVIRONMENTAL HAZARDS AND LIABILITIES WHICH ARE COVERED
          BY THE PROVISIONS OF SECTIONS 9(A), (B), (D) and (E) HEREOF), ARISING
          DIRECTLY OR INDIRECTLY FROM, OR INCIDENT TO, THE USE, OCCUPATION,
          OPERATION, MAINTENANCE OR ABANDONMENT OF ANY PART OR ALL OF THE
          PROPERTIES, WHETHER LATENT OR PATENT, AND WHETHER ARISING FROM OR
          CONTRIBUTED TO BY THE SOLE OR CONCURRENT NEGLIGENCE, FAULT BY STATUTE,
          RULE OR REGULATION, STRICT PABILITY, OR OTHER FAULT OF SELLER OR ITS
          PARENT, AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS, AGENTS,
          EMPLOYEES OR CONTRACTORS AND ASSERTED AGAINST BUYER AND/OR SELLER (OR
          BUYER'S PARENT, AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS, AGENTS,
          EMPLOYEES OR CONTRACTORS), AND (ii) THE PRODUCTION OR SALE OF
          HYDROCARBONS FROM THE PROPERTIES OR INVOLVING THE PROPER ACCOUNTING OR
          PAYMENT TO PARTIES FOR THEIR INTERESTS THEREIN, INSOFAR AS SUCH CLAIMS
          RELATE TO PERIODS: OF TIME PRIOR TO THE CLOSING DATE. BUYER SHALL BE
          RESPONSIBLE FOR ALL OF SAID TYPES OF CLAIMS UNDER CLAUSE (ii) INSOFAR
          AS THEY RELATE TO PERIODS OF TIME FROM AND AFTER THE CLOSING DATE, AND
          BUYER SHALL DEFEND INDEMNIFY AND HOLD SELLER HARMLESS FROM ANY AND ALL
          OF SUCH CLAIMS.

     (d)  NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS SECTION 9,
          BUYER DOES NOT ASSUME ANY LIABILITY FOR (OR INDEMNIFY SELLER FOR) ANY
          PERSONAL INJURY, WRONGFUL DEATH OR DAMAGE TO PERSONS ARISING OUT OF
          ANY EVENT OR CONDITION (INCLUDING, WITHOUT LIMITATION, ANY POLLUTION
          OR ENVIRONMENTAL CONDITION) EXISTING PRIOR TO CLOSING.

                                       9
<PAGE>

     (e)  NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS SECTION 9,
          SELLER AGREES TO ACCEPT AND BE RESPONSIBLE FOR, FULFILL, PAY AND
          DISCHARGE, AND DEFEND, INDEMNIFY AND HOLD BUYER HARMLESS FROM, ANY
          CLAIMS RELATING TO POLLUTION OR ENVIRONMENTAL HAZARDS AND
          ENVIRONMENTAL LIABILITIES ARISING OUT OF OR IN CONNECTION WITH THE
          PROPERTIES WHICH ARE ATTRIBUTABLE TO THE PERIOD PRIOR TO THE EFFECTIVE
          DATE SO LONG AS BUYER DELIVERS NOTICE TO SELLER OF THE EXISTENCE OR
          ASSERTION OF SUCH CLAIMS, AND AS EVIDENCED BY A FORMAL CLAIM,
          COMPLAINT OR ACTION BY A STATE OR FEDERAL ENTITY OR COURT OF
          JURISDICTION OR ANY CONDITIONS, EVENTS OR CIRCUMSTANCES WHICH BASED
          UPON A WRITTEN REPORT FROM A REPUTABLE THIRD PARTY ENVIRONMENTAL
          CONSULTING FIRM COULD REASONABLY BE EXPECTED TO RESULT IN SUCH A
          FORMAL CLAIM, COMPLAINT OR ACTION.

     (f)  ALL AGREEMENTS AND INDEMNITIES SET FORTH IN THIS SECTION 9 SHALL
          SURVIVE THE EXECUTION AND DELIVERY OF THE ASSIGNMENTS AND BILLS OF
          SALE CONTEMPLATED HEREBY AND THE CLOSING FOR A PERIOD OF SIX (6)
          MONTHS FROM CLOSING AND SHALL BE LIMITED TO THE PURCHASE PRICE AS
          PROVIDED FOR HEREIN.

10.  Closing Adjustments.

     10.1 Apportionment of Property Taxes. All ad valorem taxes, real property
taxes and similar obligations (the "Taxes") with respect to the tax period in
which the Effective Date occurs ("current tax period") shall be apportioned
between Seller and Buyer as of 12:00 a.m. Central Time on the Effective Date
based on the immediately preceding tax period assessment. Buyer shall receive a
credit at Closing for the amount of such Taxes owed by Seller for that portion
of the current tax period prior to the Effective Date. Buyer shall pay, and
defend and hold Seller harmless with respect to payment of, all Taxes on the
Properties for the current tax period and thereafter, together with any interest
or penalties assessed thereon.

     10.2 Sales of Production. All proceeds, including proceeds held in suspense
or escrow, from the sale of production actually produced by Seller prior to the
Effective Date attributable to the Properties shall belong to Seller. All
proceeds from the sale of production actually produced, sold and delivered on
and after the Effective Date attributable to the Properties shall belong to
Buyer. Seller shall deliver to Buyer a listing of all suspended or escrowed
revenues and agrees to hold Buyer harmless against any liabilities which may
arise as a result of the suspension or escrowing of such funds prior to the
Effective Date. In addition, all oil, condensate and/or liquid hydrocarbons in
storage above the pipeline connection shall be gauged and all gas meter charts

                                       10
<PAGE>

shall be replaced on the Effective Date with Buyer having the right to have a
representative present. Adjustments for oil in tanks as of the Effective Date
will be made in accordance with Section 1.7, If either party comes into
possession after the Closing Date of proceeds due the other party as allocated
hereunder, the party receiving the proceeds shall immediately pay such proceeds
to the other party. Buyer hereby consents and agrees to any prices received by
Seller for the sale of the production during the period between the Effective
Date and the Closing Date.

     10.3 Operating Costs. Except as otherwise specifically provided in this
Agreement, all costs, expenses and obligations relating to the operation of the
Properties which accrue prior to the Effective Date shall be paid and discharged
by Seller, and all costs, expenses and obligations relating to the operation of
the Properties which accrue after the Effective Date shall be paid and
discharged by Buyer. After the Closing Date, Seller will pay only that portion
of invoices received that are applicable to work performed or material received
in the period prior to the Closing Date; other charges and invoices will be
returned to the vendor for rebilling to Buyer. Similarly, after the Closing
Date, Buyer will pay only that portion of invoices received that are applicable
to work performed or material received in the period subsequent to the Closing
Date; other charges and invoices will be returned to the vendor for rebilling to
Seller. Appropriate adjustments will be made at the Closing. If either party
pays any costs, expenses or obligations allocated hereunder to the other party
and the parties do not have adequate information on which to make adjustments
therefor at the Closing, then the other party shall promptly reimburse the
paying party therefor upon receipt of the paying party's invoice.

     10.4 Accounts Receivable. Seller shall retain all rights and obligations
regarding outstanding accounts receivable pertaining to the Properties for
periods prior to the Effective Date. In the event Seller is unsuccessful in
collecting all or any portion of said receivables, Seller shall so advise Buyer
and Buyer shall reasonably cooperate with Seller in attempting to collect the
receivables.

11.  Taxes.

     11.1 Sales Tax. The Purchase Price provided for herein excludes any sales
taxes or other taxes levied or assessed in connection with the sale of the
Properties pursuant to this Agreement because the parties believe that this sale
is exempt from such taxes. If a determination is ever made that a sales tax or
other transfer tax applies, Buyer shall be solely liable for such tax as well as
any applicable conveyance, transfer and recording fees, and real estate transfer
stamps or taxes imposed on any transfer of property pursuant to this Agreement.
Buyer shall defend, indemnify and hold Seller harmless with respect to the
payment of such taxes, if any, including any interest or penalties assessed
thereon.

     11.2 Production Taxes. All taxes, other than ad valorem and income taxes,
which are imposed on or with respect to the production of oil, natural gas or
other hydrocarbons or minerals or the receipt of proceeds therefrom, including,
but not limited to, severance, production, excise and windfall profit taxes,
shall be apportioned between the parties based upon the respective shares of
production taken by the parties. Payment or withholding of all such taxes which
accrue from and after the Effective Date and the filing of all statements,
returns and documents incident thereto shall be the responsibility of Buyer.

12.  Subsequent Operations.

                                       11
<PAGE>

     12.1 Major Activities. After the execution of this Agreement and prior to
the delivery of the Properties to Buyer, Seller shall not, without Buyer's prior
written consent, propose or conduct any operation for the drilling, completing,
reworking, re-completing, sidetracking, deepening, plugging back or plugging and
abandoning of any Well included in the Properties except in the case of an
emergency.

     12.2 Routine Operations. As to the Properties it now operates, Seller shall
continue to operate the same until the Closing Date, when such operation shall
be turned over to, and shall become the responsibility of, Buyer; provided,
however, Buyer shall bear all costs thereof accruing after the Effective Date in
accordance with other provisions of this Agreement.

     12.3 Standard of Care. In all of its operations after execution of this
Agreement, Seller shall exercise the same standard of care as an ordinary
prudent operator would exercise under the same or similar circumstances.

     12.4 Casualty Loss. If prior to the Closing Date any facility or equipment
included within the Properties is damaged or destroyed by fire, flood, storm or
other casualty ("Casualty Loss"), Seller shall immediately notify Buyer and the
Purchase Price shall be reduced by an amount estimated by Seller, and as agreed
to by Buyer, to be equal to the repair or replacement cost of the facility or
equipment. Any insurance proceeds payable to Seller with respect to the Casualty
Loss shall be retained by Seller. In the event Seller and Buyer are unable to
agree upon the value of the estimated damage, then either Seller or Buyer shall
have the right to terminate this Agreement by giving written notice to the other
party prior to the Closing Date, in which event Seller shall immediately return
the Earnest Money to Buyer. After termination and the return of the Earnest
Money by Seller to Buyer, neither party shall have any further liability or
responsibility to the other under this Agreement.

13.  Expenses and Fees.

     13.1 Broker's Fees. Seller represents and warrants to Buyer that Seller has
incurred no liability, contingent or otherwise, for broker's or finders fees in
respect of this Agreement or the transactions contemplated hereby for which
Buyer shall have any responsibility whatsoever. Buyer represents and warrants to
Seller that Buyer has incurred no liability, contingent or otherwise, for
broker's or finder's fees in respect of this Agreement or the transactions
contemplated hereby for which Seller shall have any responsibility whatsoever.

     13.2 Transaction Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, each of the parties hereto shall pay the fees
and expenses of its respective counsel, accountants and other experts incident
to the negotiation and preparation of this Agreement and the consummation of the
transactions contemplated hereby.

14.  Notices. All communications required or permitted under this Agreement
shall be in writing. Any communication or delivery hereunder shall be deemed to
have been fully made on the day of receipt if delivered in person, by messenger
or by facsimile, or if mailed by regular or certified mail, postage prepaid,
return receipt requested, to the address as set forth below:

                                       12
<PAGE>

SELLER                                      BUYER
------                                      -----

SUE-ANN Operating, L.C.                     WHITTIER ENERGY COMPANY
11908 N. Laurent Street, Suite 570          7770 El Camino Real
P.O. Box 9310                               Carlsbad, California 92009
Victoria, Texas 77903-3910                  Attn: Bryce Rhodes
Attn: John R. Gayle, Manager

Phone No.: (361) 576-6090 Ext. 222          Phone No.: (760) 943-3959
Fax No.: (361) 576-6099                     Fax No.: (760) 943-3938

15.  Further Assurances. After the Closing, each of the parties shall execute,
acknowledge and deliver to the other such further instruments, and shall take
such other actions, as may be reasonably necessary to carry out the provisions
of this Agreement. However, Buyer shall assume all responsibility for notifying
the purchasers of oil and gas production from the Properties, and such other
designated persons who may be responsible for disbursing payments for the
purchase of such production, of the change of ownership of the Properties. Buyer
shall take all actions necessary to effectuate the transfer of such payments to
Buyer as of the Effective Date. Seller shall have no responsibility or liability
for the proper payment of proceeds attributable to production from and after the
Effective Date.

16.  WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT, THE CONVEYANCE OF THE PROPERTIES SHALL BE MADE, AND ANY ASSIGNMENT
AND BILL OF SALE EXECUTED PURSUANT HERETO SHALL BE EXECUTED, WITH A LIMITED
WARRANTY OF TITLE AS DEFINED IN SECTION 5 ABOVE; WITHOUT ANY EXPRESS, IMPLIED OR
STATUTORY WARRANTY OR REPRESENTATION AS TO THE MERCHANTABILITY OF ANY PERSONAL
PROPERTY, SUCH PERSONAL PROPERTY'S FITNESS FOR ANY PURPOSE, THE VALIDITY,
EXISTENCE OR EFFECTIVENESS OF ANY LEASE OR LEASEHOLD ESTATE COVERED HEREBY,
SELLER'S PREDECESSORS' COMPLIANCE WITH ANY OF THE OBLIGATIONS OR COVENANTS,
EXPRESS, IMPLIED OR STATUTORY, UNDER ANY LEASE OR LEASEHOLD ESTATE COVERED
HEREBY, OR A ' NY OTHER EXPRESS, IMPLIED OR STATUTORY WARRANTY OR REPRESENTATION
WHATSOEVER, IN ADDITION, SELLER SHALL MAKE NO WARRANTY OR REPRESENTATION,
EXPRESS, IMPLIED OR STATUTORY, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA,
INFORMATION OR MATERIALS HERETOFORE OR HEREAFTER FURNISHED BUYER IN CONNECTION
WITH THE PROPERTIES, OR AS TO THE QUALITY OR QUANTITY OF HYDROCARBON RESERVES
(IF ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OF THE PROPERTIES TO
PRODUCE HYDROCARBONS. ANY AND ALL SUCH DATA, INFORMATION AND OTHER MATERIALS
FURNISHED BY SELLER ARE PROVIDED TO BUYER AS A CONVENIENCE, AND ANY RELIANCE ON
OR USE OF THE SAME SHALL BE AT BUYER'S SOLE RISK. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED FOR IN THIS AGREEMENT, BUYER ACCEPTS THE PROPERTIES N THEIR "AS IS,
WHERE IS" CONDITION WITH ALL FAULTS.

17.  TEXAS DECEPTIVE TRADE PRACTICES ACT. BUYER EXPRESSLY WAIVES THE PROVISIONS
OF CHAPTER XVII, SUSCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER
THAN SECTION 17.55A, WHICH IS NOT WAIVED) VERNON'S TEXAS CODE ANNOTATED,
BUSINESS AND COMMERCE CODE. IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH
WAIVER, BUYER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT BUYER (1) IS IN THE
BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS OR SERVICES FOR
COMMERCIAL OR BUSINESS USE, (11) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE
TRANSACTION CONTEMPLATED HEREBY AND (111) IS NOT IN A SIGNIFICANTLY DISPARATE
BARGAINING POSITION.

                                       13
<PAGE>

18.  Default.

     18.1 Buyer's Default. If the transactions contemplated by this Agreement
are not consummated because Buyer has defaulted under or breached this Agreement
in a material way including, but not limited to, Buyer's absence at the
designated time for the Closing, Seller's sole remedy and recourse shall be to
terminate this Agreement and to retain the Earnest Money payment made pursuant
to Section 3 hereof as liquidated damages and not as a penalty, and following
such termination neither party shall have any further liability or
responsibility to the other under this Agreement. Further, Seller shall be
immediately free to sell the Properties to any third party without any
restriction under or by reason of this Agreement.

     18.2 Seller's Default. If the transactions contemplated by this Agreement
are not consummated for any reason other than the reasons set forth in Section
18.1 above (including without limitation because Seller has defaulted under or
breached this Agreement in a material way including, but not limited to, Sellers
absence at the designated time for the Closing), Seller shall immediately return
the Earnest Money to Buyer, and following Seller's return of the Earnest Money
to Buyer, neither party shall have any further liability or responsibility to
the other under this Agreement.

19.  Entire Agreement. This instrument states the entire agreement between the
parties and may be supplemented, altered, amended, modified or revoked only by
an instrument in writing signed by both parties.

20.  Governing Law. This Agreement shall be governed by and construed under the
laws of the State of Texas.

21.  Successors and Assigns. The terms and conditions hereof shall be binding
upon and shall inure to the benefit of the parties hereto, and their respective
successors and assigns.

22.  Headings. The titles and headings that appear in this Agreement have been
included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.

23.  Waiver. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce same. A waiver by any party of any condition, or a breach
of any covenant, agreement or representation contained in this Agreement, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or a breach or waiver of any other condition or of any breach of any
other covenant, agreement or representation.

                                       14
<PAGE>

24.  Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable, and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof. In such event, the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement.

25.  Confidentiality. Buyer acknowledges that all information furnished or
disclosed pursuant hereto or contained herein must remain confidential prior to
the Closing. Prior to Closing, Buyer may not disclose such -information unless
otherwise agreed to in writing by Seller, except to Buyer's subsidiaries or
affiliates, agents, advisors or representatives (herein "Representatives") who
have agreed in writing prior to being given access to such information to be
bound by the terms of this Agreement. An original signed agreement of said
Representatives will be furnished by Buyer to Seller upon request. In the event
this Agreement is terminated, Buyer shall promptly return to Seller any and! all
of its documents (and copies thereof) that relate directly or indirectly to this
Agreement 6 on Seller's written request. After Closing, Seller shall exercise
all due diligence in safeguarding and maintaining the confidentiality of all
data and information regarding the Properties.

26.  Multiple Originals. This Agreement may be executed in multiple originals.

27.  Survival of Provisions. The terms and provisions, of this Agreement, and
the obligations, representations and indemnities of the parties, shall except as
otherwise provided for in this Agreement, survive and continue in effect for
five years after the Closing, except any representations which are expressly
made through the Closing Date or for any other period.

28.  Recording. After the Closing, Buyer shall immediately record the
Assignments and Bills of Sale with the appropriate officer of the state and
county in which the lands covered by this Agreement are located. Buyer shall
supply Seller with a certified copy of the recorded Assignments and Bills of
Sale within a reasonable time after its recording.

29.  Like-Kind Exchanges. Each party consents to the other party's assignment of
its rights and obligations under this Agreement to its Qualified Intermediary
(as that term is defined in Section 1.103(k)-1(g)(4)(v) of the Treasury
Regulations) in connection with effectuation of a like-kind exchange. However,
Seller arid Buyer acknowledge and agree that any assignment of this Agreement to
a Qualified Intermediary does not release either party from any of their
respective liabilities and obligations to each other under the Agreement. Each
party agrees to cooperate with the other to attempt to structure the transaction
as a like-kind exchange.

30.  Knowledge. Wherever the word knowledge is used in this Agreement, it shall
be deemed to refer to Actual Knowledge only.

                                       15
<PAGE>

EXECUTED as of the date first above set forth.

SELLER:

SUE-ANN Operating, L.C.

By: /s/ John R. Gayle
---------------------------------
Name: John R. Gayle
Title: Manager

BUYER:

WHITTIER ENERGY COMPANY

By: /s/ Bryce W. Rhodes
---------------------------------
Name: Bryce W. Rhodes
Title: Vice President

                                       16
<PAGE>

                                   EXHIBIT"A"

                           The Oil and Gas Properties

Attached to and made a part of that certain Purchase and Sale Agreement by and
between SUEANN LC., a Texas Limited Liability Corporation C'SUE-ANN"), and
WHITTIER ENERGY COMPANY, a Nevada corporation ("WHITTIER!') dated this 2 1 " day
of June, 2002.

--------------------------------------------------------------------------------
All of Sue-Ann's right, title and interest by through and under that certain Oil
and Gas Lease dated September 11, 2000, by and between Frost National Bank, as
Trustee under Account Nos. F0103507, F0119507, F0175107, F0210707, F0240307 and
F0282507 ("Lessor") and Sue-Ann Operating, L.C. ("Lessee"), and as recorded in
that certain Memorandum of Lease in Volume 146, Pages 41 - 62 of the Official
Records of Dimmit County, Texas.
--------------------------------------------------------------------------------

                                List of Contracts
                                -----------------

     That certain Gas Purchase Contract No. CGM-P-R-347, dated September 1,
  2000, by and between Cerrito Gas Marketing, Ltd. And Sue-Ann Operating, L.C.

                            List of Surface Contracts
                            -------------------------

                                      None

                 List of Tracts subject to the Oil and Gas Lease
                 -----------------------------------------------

                                                     WI       NRI     Allocated
         Tract                Acreage     Wells      (%)      (%)       Value
         -----                -------     -----      ---      ---       -----

McLean Bowman "A" Lease      560 acres      3      100.00    75.00     $265,000
o        Well No. 2
o        Well No. 7
o        Well No. 8

McLean Bowman "B" Lease      1280 acres     8      100.00    75.00    $1,240,000
o        Well No. 1
o        Well No. 2
o        Well No. 5
o        Well No. 7
o        Well No. 10
o        Well No. 12
o        Well No. 15
o        Well No. 17

F.N.B.T."A" Lease            160 acres      2      100.00    75.00     $35,000
o        Well No. 1
o        Well No. 2

F.N.B.T. "North" Lease       80 acres       1      100.00    75.00     $35,000
o        Well No. 1

F.N.B.T. "Tr. B" Lease       80 acres       1      100.00    75.00     $75,000
o        Well No. 2

<PAGE>

                     ASSIGNMENT, CONVEYANCE AND HILL OF SALE
                     ---------------------------------------

STATE OF TEXAS           ss.
                         ss. KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DIMMIT         ss.

     Sue-Ann Operating, L.C., a Texas limited liability company, whose address
is P.O. Box 3910, Victoria, Texas, 77903-3910 ("Assignor"), for adequate
consideration, the receipt and sufficiency of which is acknowledged, does hereby
sell, assign, transfer, convey and deliver unto Whittier Energy Company, a
Nevada corporation, whose address is 7770 El Camino Real, Carlsbad, California,
92009 ("Assignee"), all of Assignor's rights, titles and interests in and to the
following described property and interests (collectively the "Properties"):

     1. The oil, gas and mineral leases and the operating rights, working
interests, overriding royalty interests, rights of assignment and reassignment,
payments out of production, and interests and rights to explore for and produce
oil, gas or other minerals which are described in Exhibit "A" to this Assignment
(the "Leases");

     2. All rights and interests in or derived from unit agreements, orders and
decisions of state and federal regulatory authorities establishing or relating
to units, unit operating agreements, enhanced recovery and injection agreements,
gas purchase agreements, farmout and farmin agreements (and any leasehold
interest, working interest, royalty interest, or other interest acquired or
reserved), assignments of operating rights, working interests and subleases, all
other contracts, agreements, leases, licenses, permits, easements, servitudes,
notes and orders in any way relating to the Leases and the operations conducted
or to be conducted on the Leases, or the production, treatment, sale or disposal
of hydrocarbons or water produced relating to any of the leases;

     3. All wells (including, but not limited to those described on Exhibit "B"
attached hereto), personal property, fixtures (including, without: limitation,
plants and pipelines), real estate, equipment, and improvements located on or
otherwise pertaining to the Leases of lands pooled or unitized with the Leases
or used or obtained in connection with the Leases or with their operation or
maintenance, or with the production, treatment, sale, or disposal of
hydrocarbons or water produced; and

     TO HAVE AND TO HOLD all of the Properties to Assignee, subject to and in
accordance with all terms and provisions of the Leases, contracts and
agreements.

     This Assignment, Conveyance and Bill of Sale is subject to that certain
Purchase and Sale Agreement between Assignor and Assignee, effective June 1,
2002.

     TO THE EXTENT THAT THE INTERESTS ASSIGNED INCLUDE INTERESTS IN PERSONAL
PROPERTY, MOVABLE PROPERTY, AND FIXTURES, TIES ASSIGNMENT IS MADE WITHOUT
WARRANTIES, EITHER STATUTORY, EXPRESS OR IMPLIED, AND SPECIFICALLY WITHOUT
WARRANTY AS TO THE MERCHANTABILITY, QUALITY OR FITNESS FOR A PARTICULAR PURPOSE.
ALL OF THE INTERESTS AND PERSONAL PROPERTY AND FIXTURES ARE ASSIGNED AND
ACCEPTED ON A "WHERE IS" AND "AS IS" BASIS. ASSIGNOR EXPRESSLY WAIVES ANY
STATUTORY WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTY AGAINST HIDDEN
OR LATENT DEFECTS AND ACKNOWLEDGES THIS EXPRESS WAIVER SHALL BE CONSIDERED A
MATERIAL AND INTEGRAL PART OF THIS ASSIGNMENT, SALE, AND THE CONSIDERATION AND
ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT TO THE ATTENTION OF ASSIGNEE,
EXPLAINED IN DETAIL, AND ASSIGNEE HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO
THIS WAIVER OF WARRANTY OF FITNESS AND/OR WARRANTY AGAINST DEFECTS OF THE
INTERESTS AND ASSETS.

<PAGE>

     Except as provided for herein, this Assignment is made by Assignor and
accepted by Assignee with special warranty of title, by, though or under
Assignor, but not otherwise. However, Assignee shall be subrogated to all of the
rights of Assignor and Assignor hereby assigns and conveys to Assignee all of
Assignor's rights to specifically enforce each of the terms and covenants
contained herein. The provisions hereof shall be covenants running with the land
and shall be binding upon and inure to the benefit of the parties hereto, their
respective successors and assigns.

     This Assignment is effective for all purposes as of ____________ 2002 (the
"Effective Date").

                                              ASSIGNOR:

                                              SUE-ANN OPERATING, L.C.

                                              ----------------------------------
                                              John R_ Gayle, Manager

                                              ASSIGNEE:

                                              WHITTIER ENERGY COMPANY

                                              By:
                                                  ------------------------------
                                              Its:
                                                   -----------------------------

<PAGE>

STATE OF TEXAS           ss.
                         ss.
COUNTY OF VICTORIA       ss.

     This instrument was acknowledged before me on 2002, by John R. Gayle,
Manager of Sue-Ann Operating, L.C., a Texas limited liability company, on behalf
of said limited liability company.

                                              By:
                                              ----------------------------------
                                              Notary Public in and for
                                              The State of TEXAS

STATE OF TEXAS           ss.
                         ss.
COUNTY OF VICTORIA       ss.

     This instrument was acknowledged before me on , 2002, by , of Whittier
Energy Company, a Nevada corporation, on behalf of said corporation.

                                              By:
                                              ----------------------------------
                                              Notary Public in and for
                                              The State of TEXA S

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