Document:

ex_10-1.htm

    Exhibit
      10.1

     

     

     

    
 

    
      
 

      PURCHASE
        AND SALE AGREEMENT

      

      BY
        AND BETWEEN

       

      RAVEN
        RESOURCES, LLC, AS SELLER

       

      AND

       

      LEGACY
        RESERVES OPERATING LP, AS BUYER

       

       

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      TABLE
        OF
        CONTENTS

      

                                                                                                                                                                                                                                                                         
          PAGE

        
          
            
              
                
                  
                    	
                            1.

                          	
                            SALE
                              AND PURCHASE OF THE ASSETS.

                          	
                            1

                          
	
                            1.1

                          	
                            Acquired
                              Assets

                          	
                            1

                          
	
                            1.2

                          	
                            Assumed
                              Liabilities

                          	
                            2

                          
	
                            2.

                          	
                            PURCHASE
                              PRICE.

                          	
                            3

                          
	
                            2.1

                          	
                            Purchase
                              Price

                          	
                            3

                          
	
                            2.2

                          	
                            Deposit.

                          	
                            3

                          
	
                            2.3

                          	
                            Adjustments
                              to the Base Purchase Price

                          	
                            3

                          
	
                            2.4

                          	
                            Allocation

                          	
                            4

                          
	
                            3.

                          	
                            CLOSING.

                          	
                            4

                          
	
                            3.1

                          	
                            Closing

                          	
                            4

                          
	
                            3.2

                          	
                            Delivery
                              by Seller

                          	
                            5

                          
	
                            3.3

                          	
                            Delivery
                              by Buyer

                          	
                            5

                          
	
                            3.4

                          	
                            Further
                              Cooperation

                          	
                            5

                          
	
                            4.

                          	
                            ACCOUNTING
                              ADJUSTMENTS.

                          	
                            6

                          
	
                            4.1

                          	
                            Closing
                              Adjustments

                          	
                            6

                          
	
                            4.2

                          	
                            Strapping
                              and Gauging.

                          	
                            6

                          
	
                            4.3

                          	
                            Taxes

                          	
                            6

                          
	
                            4.4

                          	
                            Post-Closing
                              Adjustments

                          	
                            7

                          
	
                            4.5

                          	
                            Suspended
                              Funds

                          	
                            7

                          
	
                            4.6

                          	
                            Audit
                              Adjustments

                          	
                            8

                          
	
                            4.7

                          	
                            Cooperation

                          	
                            8

                          
	
                            5.

                          	
                            DUE
                              DILIGENCE: TITLE MATTERS.

                          	
                            8

                          
	
                            5.1

                          	
                            General
                              Access

                          	
                            8

                          
	
                            5.2

                          	
                            Defensible
                              Title

                          	
                            8

                          
	
                            5.3

                          	
                            Defect
                              Letters.

                          	
                            10

                          
	
                            5.4

                          	
                            Effect
                              of Title Defect

                          	
                            12

                          
	
                            5.5

                          	
                            Preferential
                              Rights and Consents.

                          	
                            13

                          
	
                            6.

                          	
                            ENVIRONMENTAL
                              ASSESSMENT.

                          	
                            15

                          
	
                            6.1

                          	
                            Physical
                              Condition of the Assets

                          	
                            15

                          
	
                            6.2

                          	
                            Inspection
                              and Testing.

                          	
                            15

                          
	
                            6.3

                          	
                            Notice
                              of Adverse Environmental Conditions

                          	
                            16

                          
	
                            6.4

                          	
                            Rights
                              and Remedies for Adverse Environmental Conditions.

                          	
                            17

                          
	
                            6.5

                          	
                            Remediation
                              by Seller

                          	
                            18

                          
	
                            7.

                          	
                            REPRESENTATIONS
                              AND WARRANTIES OF SELLER.

                          	
                            19

                          
	
                            7.1

                          	
                            Seller’s
                              Representations and Warranties

                          	
                            19

                          
	
                            7.2

                          	
                            Scope
                              of Representations of Seller.

                          	
                            21

                          
	
                            8.

                          	
                            REPRESENTATIONS
                              AND WARRANTIES OF BUYER.

                          	
                            22

                          
	
                            8.1

                          	
                            Buyer’s
                              Representations and Warranties

                          	
                            22

                          
	
                            9.

                          	
                            CERTAIN
                              AGREEMENTS OF SELLER

                          	
                            23

                          
	
                            9.1

                          	
                            Maintenance
                              of Assets

                          	
                            23

                          
	
                            9.2

                          	
                            Records

                          	
                            24

                          
	
                            9.3

                          	
                            Audit
                              Rights.

                          	
                            25

                          

                  

                

                 

                
                  
                     

                  

                  
                    Page
                      i

                    
                      

                    

                  

                  
                     

                  

                

                 

                
                  	
                          10.

                        	
                          CERTAIN
                            AGREEMENTS OF BUYER

                        	
                          25

                        
	
                          10.1

                        	
                          Plugging
                            Obligation

                        	
                          25

                        
	
                          10.2

                        	
                          Plugging
                            Bond

                        	
                          25

                        
	
                          10.3

                        	
                          Seller’s
                            Logos

                        	
                          25

                        
	
                          10.4

                        	
                          Like-Kind
                            Exchanges

                        	
                          26

                        
	
                          11.

                        	
                          CONDITIONS
                            PRECEDENT TO OBLIGATIONS OF BUYER

                        	
                          26

                        
	
                          11.1

                        	
                          No
                            Litigation

                        	
                          26

                        
	
                          11.2

                        	
                          Representations
                            and Warranties

                        	
                          26

                        
	
                          12.

                        	
                          CONDITIONS
                            PRECEDENT TO THE OBLIGATIONS OF SELLER

                        	
                          26

                        
	
                          12.1

                        	
                          No
                            Litigation

                        	
                          26

                        
	
                          12.2

                        	
                          Representations
                            and Warranties

                        	
                          26

                        
	
                          13.

                        	
                          TERMINATION.

                        	
                          26

                        
	
                          13.1

                        	
                          Causes
                            of Termination

                        	
                          26

                        
	
                          13.2

                        	
                          Effect
                            of Termination.

                        	
                          27

                        
	
                          14.

                        	
                          INDEMNIFICATION.

                        	
                          28

                        
	
                          14.1

                        	
                          Indemnification
                            by Seller

                        	
                          28

                        
	
                          14.2

                        	
                          Indemnification
                            by Buyer

                        	
                          30

                        
	
                          14.3

                        	
                          Physical
                            Inspection

                        	
                          30

                        
	
                          14.4

                        	
                          Notification

                        	
                          31

                        
	
                          15.

                        	
                          MISCELLANEOUS.

                        	
                          31

                        
	
                          15.1

                        	
                          Casualty
                            Loss.

                        	
                          31

                        
	
                          15.2

                        	
                          Confidentiality.

                        	
                          32

                        
	
                          15.3

                        	
                          Notices

                        	
                          32

                        
	
                          15.4

                        	
                          Press
                            Releases and Public Announcements

                        	
                          33

                        
	
                          15.5

                        	
                          Compliance
                            with Express Negligence Test

                        	
                          33

                        
	
                          15.6

                        	
                          Governing
                            Law

                        	
                          33

                        
	
                          15.7

                        	
                          Exhibits

                        	
                          33

                        
	
                          15.8

                        	
                          Fees,
                            Expenses, Taxes and Recording.

                        	
                          34

                        
	
                          15.9

                        	
                          Assignment

                        	
                          34

                        
	
                          15.10

                        	
                          Entire
                            Agreement

                        	
                          34

                        
	
                          15.11

                        	
                          Severability

                        	
                          34

                        
	
                          15.12

                        	
                          Captions

                        	
                          35

                        
	
                          15.13

                        	
                          Time
                            of the Essence

                        	
                          35

                        
	
                          15.14

                        	
                          Counterpart
                            Execution

                        	
                          35

                        

                

              

            

          

        

        

        
          
             

          

          
            Page
              ii

            
              

            

          

          
             

          

        

      

    

     

    
      EXHIBITS

      

        
          
            
              	
                      1.1(A)

                    	
                      Oil
                        and Gas Leases and Land

                    
	
                      2.4

                    	
                      Allocation

                    
	
                      3.2(A)

                    	
                      Form
                        of Assignment and Bill of Sale

                    
	
                      7.1(E)

                    	
                      AFE’s

                    
	
                      7.1(G)

                    	
                      Pending
                        Litigation

                    
	
                      7.1(K)

                    	
                      Material
                        Agreements

                    
	
                      7.1(L)

                    	
                      Consents
                        and Preferential Purchase Rights

                    
	
                      7.1(M)

                    	
                      Gas
                        Imbalances

                    

            

          

        

      

    

     

    
      
         

      

      
        Page
          iii

        
          

        

      

      
         

      

    

     

    
      PURCHASE
        AND SALE AGREEMENT

       

      This
        Purchase and Sale Agreement (this “Agreement”) is entered into this 11th day of
        July, 2007,
        but effective as of 7:00 a.m. (Central Time) on July 1, 2007 (the “Effective
        Time”), by and between Raven Resources, LLC, an Oklahoma limited liability
        company, (“Seller”) and Legacy Reserves Operating LP, a Delaware limited
        partnership (“Buyer”), a wholly-owned subsidiary of Legacy Reserves LP, a
        Delaware limited partnership. Buyer and Seller are collectively referred
        to
        herein as the “Parties” and sometimes individually referred to as a
“Party.”

       

      RECITALS:

       

      
        	
                A.

              	
                Seller
                  desires to sell to Buyer certain oil, gas and mineral properties
                  and other
                  assets on the terms and conditions set forth in this
                  Agreement.

              

      

       

      
        	
                B.

              	
                Buyer
                  desires to purchase from Seller such oil, gas and mineral properties
                  and
                  other assets on the terms and conditions set forth in this
                  Agreement.

              

      

       

      WITNESSETH:

       

      In
        consideration of the mutual agreements contained in this Agreement, Buyer
        and
        Seller agree as follows:

       

      1.           SALE
        AND PURCHASE OF THE ASSETS.

       

      1.1           Acquired
        Assets.  Subject
        to the terms and conditions of this Agreement, Seller agrees to sell, convey
        and
        deliver to Buyer and Buyer agrees to purchase, acquire and assume from Seller
        the following (collectively, the “Assets”):

       

      
        	
                (A)

              	
                All
                  of Seller’s right, title, interest and obligations in, to and under the
                  oil and gas leases described in Exhibit 1.1(A) attached hereto (the
                  “Leases”), covering the land described in Exhibit 1.1(A) (the
                  “Land”), whether or not such interests or land are accurately or
                  completely described on Exhibit 1.1(A), and all of Seller’s oil and
                  gas leasehold or other interests in the Lands, together with all
                  the
                  property and rights incident thereto, including without limitation
                  Seller’s rights and obligations in, to and under all operating agreements;
                  pooling, communitization and unitization agreements; farmout agreements;
                  joint venture agreements; product purchase and sale contracts;
                  transportation, processing, treatment or gathering agreements;
                  leases;
                  permits (the “Permits”); rights-of-way (the “Rights-of-Way”); surface use
                  agreements; surface leases; easements (the “Easements”); licenses;
                  options; declarations; orders; contracts; and instruments in any
                  way
                  relating to the Leases;

              

      

       

      
        
           

        

        
          Page
            1

          
            

          

        

        
           

        

      

       

      
        	
                (B)

              	
                All
                  of Seller’s right, title and interest in and to the wells (“Wells”)
                  situated on or used in conjunction with operations on the Leases
                  and Land
                  or on land pooled, communitized or unitized therewith (“Pooled Land”),
                  together with all of Seller’s interests in and to all of the personal
                  property, fixtures, improvements and other property, whether real,
                  personal or mixed, now or as of the Effective Time on, appurtenant
                  to or
                  used or obtained by Seller in connection with the Leases, Land,
                  Pooled
                  Land or Wells or with the production, injection, treatment, sale
                  or
                  disposal of hydrocarbons and all other substances produced therefrom
                  or
                  attributable thereto (collectively, the “Equipment”), including, without
                  limitation, producing and non-producing wells, injection wells,
                  disposal
                  wells, water supply wells, well equipment, casing, tubing, tanks,
                  generators, boilers, buildings, pumps, motors, machinery, pipelines,
                  gathering systems, power lines, telephone and telegraph lines,
                  roads,
                  field processing plants, field offices and other furnishings related
                  thereto, equipment leases, trailers, inventory in storage, storage
                  yards,
                  and all other improvements or appurtenances thereunto
                  belonging;

              

      

       

      
        	
                (C)

              	
                Deleted;

              

      

       

      
        	
                (D)

              	
                All
                  of the oil and gas and associated hydrocarbons (“Oil and Gas”) in and
                  under or otherwise attributable to the Leases, Land, and Pooled
                  Land or
                  produced from the Wells;

              

      

       

      
        	
                (E)

              	
                To
                  the extent assignable, all governmental permits, licenses and
                  authorizations, as well as any applications for the same, related
                  to the
                  Leases, Land, Pooled Land and Wells or the use thereof;
                  and

              

      

       

      
        	
                (F)

              	
                All
                  of the files, records, and data of Seller relating to the items
                  described
                  in subsections (A), (B), (C), (D) and (E) above (the “Records”),
                  including, without limitation, lease records, well records, and
                  division
                  order records; well files and prospect files; title records (including
                  abstracts of title, title opinions and memoranda, and title curative
                  documents related to the Leases and Wells); contracts and contract
                  files;
                  correspondence; computer data files; micro-fiche data files; geological,
                  geophysical and seismic records, interpretations, data, maps and
                  information, production records, electric logs, core data, pressure
                  data,
                  decline curves and graphical production curves; and accounting
                  records, to
                  the extent only that the Records can be transferred without violation
                  of
                  any third-party restriction and are not protected by Seller’s
                  attorney-client privilege.  The Records do not include any
                  appraisals or other evaluation materials related to Seller’s preparation
                  of the Assets for sale hereunder, any reservoir and/or development
                  studies
                  prepared by or on behalf of Seller, nor any of Seller’s income tax returns
                  or files related thereto.

              

      

       

      1.2           Assumed
        Liabilities.  On
        the
        Closing Date, Buyer shall assume and agree to timely and fully pay, perform
        and
        otherwise discharge, without recourse to Seller or its affiliates, all of
        the
        liabilities and obligations of Seller and its affiliates, predecessors,
        successors, assigns or representatives, direct or indirect, known or unknown,
        asserted or unasserted, absolute or contingent, accrued or unaccrued, which
        relate, directly or indirectly, to the Assets, whether such liabilities and
        obligations accrue before, on or after the Effective Time (collectively,
        the
“Assumed Liabilities”).  Notwithstanding the foregoing, Assumed
        Liabilities shall not include, and there is excepted, reserved and excluded
        from
        such liabilities assumed by Buyer, the liabilities and obligations for which
        Seller indemnifies Buyer pursuant to Section 14.1.

       

      
        
           

        

        
          Page
            2

          
            

          

        

        
           

        

      

       

      2.           PURCHASE
        PRICE.

       

      2.1           Purchase
        Price.  The
        purchase price for the Assets is TWENTY MILLION THREE HUNDRED THOUSAND AND
        NO/100 DOLLARS ($20,300,000.00) (the “Base Purchase Price”), subject to the
        adjustments provided for herein.

       

      2.2           Deposit. 
        Within
        three (3) days of the execution of this Agreement, Buyer shall deliver to
        Seller, in cash by wire-transfer in immediately available funds, a Deposit
        in an
        amount equal to ONE MILLION FIFTEEN THOUSAND AND NO/100 DOLLARS
        ($1,015,000.00)  (five percent [5%] of the Base Purchase Price) (the
“Deposit”).  The Deposit shall be distributed to Seller and credited
        to the Base Purchase Price at Closing, or if this Agreement is terminated,
        shall
        be distributed or retained pursuant to Article 13, provided however that
        any interest on the Deposit shall be retained by Seller.  In the event
        the Deposit is not delivered to Seller as prescribed, this Agreement shall
        be
        terminated.

      

      2.3           Adjustments
        to the Base Purchase Price.  At
        Closing, appropriate adjustments to the Base Purchase Price shall be made
        as
        follows in accordance with Section 4.1 (as adjusted, the “Purchase
        Price”):

       

      
        	
                (A)

              	
                The
                  Base Purchase Price shall be adjusted upward
                  by:

              

      

       

                
        (i)            any
        amount determined to be due Seller pursuant to Section 4.2;
 

      
        	
                 

              	
                (ii)

              	
                Property
                  Taxes and Severance Taxes related to the Assets paid by Seller
                  for the
                  period following the Effective Time as determined pursuant to Section
                  4.3;

              

      

      

      
        	
                 

              	
                (iii)

              	
                an
                  amount equal to the costs, expenses and other expenditures (whether
                  capitalized or expensed) paid by Seller in accordance with this
                  Agreement
                  that are attributable to the Assets for the period from and after
                  the
                  Effective Time;

              

      

      

      
        	
                 

              	
                (iv)

              	
                for
                  all operated wells, a monthly rate of $400, prorated if necessary,
                  per
                  active Well, as provided in the applicable operating agreement,
                  for
                  operation and maintenance expenses (excluding workover costs, plugging
                  and
                  abandoning costs, and major costs) incurred by Seller while operating
                  the
                  Assets from and after the Effective
                  Time;

              

      

      

      
        	
                 

              	
                (v)

              	
                an
                  amount equal to the amount of proceeds derived from the sale of
                  Oil and
                  Gas, net of royalties and severance taxes paid by Buyer, actually
                  received
                  by Buyer and directly attributable to the Wells which are, in accordance
                  with generally accepted accounting procedures, attributable to
                  the period
                  of time prior to the Effective
                  Time;

              

      

      

      
        	
                (vi)

              	
                any
                  other amount agreed upon in writing by Seller and
                  Buyer.

              

      

      

      
        	
                (B)

              	
                The
                  Base Purchase Price shall be adjusted downward
                  by:

              

      

       

      
        	
                 

              	
                (i)

              	
                an
                  amount equal to the amount of proceeds derived from the sale of
                  Oil and
                  Gas, net of royalties and severance taxes paid by Seller, actually
                  received by Seller and directly attributable to the Wells which
                  are, in
                  accordance with generally accepted accounting procedures, attributable
                  to
                  the period of time from and after the Effective
                  Time;

              

      

       

      
        
           

        

        
          Page
            3

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (ii)

              	
                an
                  amount equal to all expenditures, liabilities and costs relating
                  to the
                  Assets (other than Taxes related to the Assets) that are unpaid
                  as of the
                  Closing Date and assessed for or attributable to periods of time
                  or the
                  ownership of production prior to the Effective Time regardless
                  how such
                  expenditures, liabilities and costs are calculated provided that
                  to the
                  extent the actual amounts cannot be determined prior to the agreement
                  of
                  Buyer and Seller with respect to the Closing Adjustment Statement,
                  a
                  reasonable estimate of such expenditures, liabilities and costs
                  shall be
                  used (and to such extent Buyer shall assume the liability and
                  responsibility for payment
                  therefor);

              

      

      

      
        	
                 

              	
                (iii)

              	
                all
                  amounts related to Title Defects as determined pursuant to Section
                  5.4,
                  consents and preferential rights as determined pursuant to Section
                  5.6,
                  Adverse Environmental Conditions as determined pursuant to Section
                  6.4,
                  Exclusion Adjustments as determined pursuant to Sections 5.6 or
                  6.4, and
                  Casualty Losses as determined pursuant to Section
                  15.1;

              

      

      

      
        	
                 

              	
                (iv)

              	
                Property
                  Taxes and Severance Taxes related to the Assets to be paid by Seller
                  for
                  the period prior to the Effective Time as determined pursuant to
                  Section
                  4.3; and

              

      

       

                
        (v)          any other amount
        agreed upon in writing by Seller and
        Buyer.               

      
        	
                (C)

              	
                Seller
                  shall have the right to collect any receivable, refund or other
                  amounts
                  associated with periods prior to the Effective Time.  To the
                  extent that Buyer collects any such receivable, refund or other
                  amounts,
                  then Buyer shall promptly remit any such amounts to
                  Seller.

              

      

       

      2.4           Allocation. 
        The
        Base
        Purchase Price shall be allocated to the Assets as set forth in Exhibit
        2.4.  The Parties agree that the values allocated to various portions
        of the Assets, which are set forth on Exhibit 2.4 (singularly with respect
        to
        each item, the “Allocated Value” and collectively, the “Allocated Values”),
        shall be binding on Seller and Buyer and shall be used only for the purposes
        of
        adjusting the Base Purchase Price pursuant to Sections 4.3 (relating to Taxes),
        5.4 (relating to Title Defects), 15.1 (relating to Casualty Losses), and
        6
        (relating to Adverse Environmental Conditions), and are not intended as a
        measure of value for any other purpose.

       

      3.           CLOSING.

       

      3.1           Closing. 
        The
        sale
        and purchase of the Assets (“Closing”) shall be held on or before July 31, 2007
        (“Closing Date”).  Buyer shall have the option to extend the Closing
        Date until August 31, 2007 in order to complete due diligence, title or audit
        work.  In the case of such extension, Buyer shall pay interest at 7%
        per annum on the balance of the purchase price less deposit from August 11th until
        the closing
        date or until August 31st, whichever
        is
        sooner.  The closing will take place at the offices of Legacy Reserves
        LP, in Midland, Texas.

       

      
        
           

        

        
          Page
            4

          
            

          

        

        
           

        

      

       

      3.2           Delivery
        by Seller.  At
        Closing, Seller shall deliver to Buyer:

       

      
        	
                (A)

              	
                A
                  separate Assignment and Bill of Sale executed by each Seller,
                  substantially in the form attached hereto as Exhibit 3.2(A),
                  effecting the sale, transfer, conveyance and assignment of the
                  Assets,
                  with (i) a special warranty of the real property title by, through
                  and under such Seller but not otherwise, and (ii) with all personal
                  property and fixtures conveyed “AS IS, WHERE IS,” with no warranties
                  whatsoever, express, implied or
                  statutory.

              

      

       

      
        	
                (B)

              	
                Any
                  governmental forms required to effect transfer in accordance with
                  applicable regulations;

              

      

       

      
        	
                (C)

              	
                Letters
                  in lieu of transfer orders instructing purchasers of production
                  to pay to
                  Buyer the proceeds of sales of Oil and Gas from the
                  Assets;

              

      

       

      
        	
                (D)

              	
                Executed
                  change of operator forms as required by applicable governmental
                  regulation;

              

      

       

      
        	
                (E)

              	
                Releases
                  of the mortgages in favor of any bank that may be currently encumbering
                  the Assets;

              

      

       

      
        	
                (F)

              	
                The
                  Closing Adjustment Statement;

              

      

       

      
        	
                (G)

              	
                A
                  Non-Foreign Affidavit of each
                  Seller;

              

      

       

      
        	
                (H)

              	
                Possession
                  of the Records and all other
                  Assets.

              

      

       

      
        	
                (I)

              	
                Letters
                  of resignation as operator of these Assets, as appropriate, along
                  with
                  ballot forms to the partners as directed by the operating
                  agreements.

              

      

       

      3.3           Delivery
        by Buyer.  At
        Closing, Buyer shall deliver to Seller or Seller’s designee the Purchase Price
        set forth in the Closing Adjustment Statement by wire transfer in immediately
        available funds, less the Deposit and interest earned on the
        Deposit.  Buyer shall also deliver evidence that it has provided
        replacement instruments for each guaranty, bond, letter of credit or similar
        contingent obligation given by Seller as required by law or the provisions
        of
        any Lease or other agreement along with the appropriate instruments necessary
        to
        receive immediate approval as Operator of these Assets, as appropriate. Buyer
        shall execute and deliver the Assignment and Bill of Sale, Closing Adjustment
        Statement and other closing documents as necessary or appropriate.

       

      3.4           Further
        Cooperation.  At
        the
        Closing and thereafter as may be necessary, Seller and Buyer shall execute
        and
        deliver such other instruments and documents and take such other actions
        as may
        be reasonably necessary to evidence and effectuate the transactions contemplated
        by this Agreement.

       

      
        
           

        

        
          Page
            5

          
            

          

        

        
           

        

      

       

      4.           ACCOUNTING
        ADJUSTMENTS.

       

      4.1           Closing
        Adjustments.  With
        respect to matters that can be determined as of the Closing, Seller shall
        prepare, in accordance with the provisions of this Article 4, a statement
        (the
“Closing Adjustment Statement”) with relevant supporting information setting
        forth each adjustment to the Base Purchase Price submitted by
        Seller.  Seller shall submit the Closing Adjustment Statement to
        Buyer, together with all records or data supporting the calculation of amounts
        presented on the Closing Adjustment Statement, no later than three (3) business
        days prior to the scheduled Closing Date.  Prior to the Closing, Buyer
        and Seller shall review the adjustments proposed by Seller in the Closing
        Adjustment Statement.  Agreed adjustments shall be taken into account
        in computing any adjustments to be made to the Base Purchase Price at the
        Closing.  When available, actual figures will be used for the
        adjustments at Closing.  To the extent actual figures are not
        available, estimates shall be used subject to final adjustments as described
        in
        Section 4.4 below.

       

      4.2           Strapping
        and Gauging.  Seller will cause the Oil and Gas in the storage
        facilities located on, or utilized in connection with, the Leases to be
        measured, gauged or strapped as of the Effective Time.  Seller will
        cause the production meter charts (or if such do not exist, the sales meter
        charts) on the pipelines transporting Oil and Gas from the Leases to be read
        as
        of such time.  The Oil and Gas in such storage facilities above six
        inches or through the meters on the pipelines as of the Effective Time shall
        belong to Seller and shall be valued based on the price actually paid for
        Oil
        and Gas produced from the Assets for the month prior to the Effective Time,
        and
        the Oil and Gas placed in such storage facilities after the Effective Time
        and
        production upstream of the aforesaid meters shall belong to Buyer and become
        part of the Assets.  Buyer or Buyer’s representative shall have the
        option to witness the gauging by Seller.  In the event Buyer or
        Buyer’s representative exercising the option to witness the gauging by Seller,
        Buyer agrees that the waiver and release provisions set forth in Section
        5.1(A)
        of this Agreement shall apply thereto.

       

      This
        provision should not apply to any Assets that are not operated by
        Seller.  There shall be no settlement for Stock in Tanks on
        non-operated Assets.

       

      4.3           Taxes

       

      .

      

      
        	
                (A)

              	
                Property
                  Taxes.  All ad valorem taxes, real property taxes, personal
                  property taxes and similar obligations assessed on the Assets (“Property
                  Taxes”) shall be apportioned as of the Effective Time between Buyer and
                  Seller.  Buyer shall file or cause to be filed all required
                  reports and returns incident to Property Taxes which are due on
                  or after
                  the Closing, and shall pay or cause to be paid to the taxing authorities
                  all such taxes reflected on such reports and returns.  The
                  Post-Closing Adjustment Statement shall settle all liability for
                  Property
                  Taxes, using estimates based on previous assessments to the extent
                  current
                  assessments are not known.

              

      

       

      
        	
                (B)

              	
                Sales
                  Taxes, Filing Fees, Etc. The Base Purchase Price is net of any sales
                  taxes or other transfer taxes.  Buyer shall be liable for any
                  sales tax or other transfer tax as well as any applicable conveyance,
                  transfer and recording fees, and real estate transfer stamp or
                  taxes
                  imposed upon the sale pursuant to this Agreement.  If Seller is
                  required by applicable state law to report and pay these taxes
                  or fees,
                  Buyer shall promptly reimburse Seller in full payment of the
                  invoice.

              

      

       

      
        
           

        

        
          Page
            6

          
            

          

        

        
           

        

      

       

      
        	
                (C)

              	
                Severance
                  Taxes.  All production, severance or excise taxes,
                  conservation fees and other similar such taxes or fees (other than
                  income
                  taxes) payable on a current basis with respect to Oil and Gas produced
                  and
                  sold from the Assets (“Severance Taxes”) shall be borne by Seller to the
                  extent the production on which such taxes are based occurs during
                  Seller’s
                  ownership prior to the Effective Time and shall be borne by Buyer
                  to the
                  extent such production occurs after the Effective
                  Time.

              

      

       

      4.4           Post-Closing
        Adjustments

       

      
        	
                (A)

              	
                A
                  post-closing adjustment statement (the “Post-Closing Adjustment
                  Statement”) based on the actual income and expenses shall be prepared and
                  delivered by Seller to Buyer within ninety (90) days after the
                  Closing,
                  proposing further adjustments to the calculation of the Purchase
                  Price
                  based on the information then available.  Seller or Buyer, as
                  the case may be, shall be given access to and shall be entitled
                  to review
                  and audit the other Party’s records pertaining to the computation of
                  amounts claimed in such Post-Closing Adjustment
                  Statement.

              

      

       

      
        	
                (B)

              	
                Within
                  thirty (30) days after receipt of the Post-Closing Adjustment Statement,
                  Buyer shall deliver to Seller a written statement describing in
                  reasonable
                  detail its objections (if any) to any amounts or items set forth
                  on the
                  Post-Closing Adjustment Statement.  If Buyer does not raise
                  objections within such period, then the Post-Closing Adjustment
                  Statement
                  shall become final and binding upon the Parties at the end of such
                  period.

              

      

       

      
        	
                (C)

              	
                If
                  Buyer raises objections, the Parties shall negotiate in good faith
                  to
                  resolve any such objections.  If the Parties are unable to
                  resolve any disputed item within thirty (30) days after Buyer’s receipt of
                  the Post-Closing Adjustment Statement, any disputed accounting
                  item shall
                  be submitted to a nationally recognized independent accounting
                  firm
                  mutually agreeable to the Parties who shall be instructed to resolve
                  such
                  disputed item within thirty (30) days.  The resolution of
                  disputes by the accounting firm so selected shall be set forth
                  in writing
                  and shall be conclusive, binding and non-appealable upon the Parties
                  with
                  respect to the accounting matters submitted and the Post-Closing
                  Adjustment Statement shall become final and binding upon the Parties
                  on
                  the date of such resolution.  The fees and expenses of such
                  accounting firm shall be paid one-half by Buyer and one-half by
                  Seller.

              

      

       

      
        	
                (D)

              	
                After
                  the Post-Closing Adjustment Statement has become final and binding
                  on the
                  Parties, Seller or Buyer, as the case may be, shall pay to the
                  other such
                  sums as are due to settle accounts between the Parties due to differences
                  between the estimated Purchase Price paid pursuant to the Closing
                  Adjustment Statement and the actual Purchase Price set forth on
                  the
                  Post-Closing Adjustment Statement.

              

      

       

      4.5           Suspended
        Funds.  At
        the
        Closing, Seller shall provide to Buyer a listing showing all proceeds from
        production attributable to the Leases which are currently held in suspense
        and
        shall transfer to Buyer all of those suspended proceeds.  Buyer shall
        be responsible for proper distribution of all the suspended proceeds, to
        the
        extent turned over to it by Seller, to the parties lawfully entitled to them
        and
        any claims related thereto, and Buyer hereby agrees to indemnify, defend
        and
        hold harmless Seller from and against any and all claims, liabilities, losses,
        costs and expenses arising out of or relating to those suspended proceeds
        and
        any claims related thereto after the Effective Date.  Seller shall
        remain responsible and liable for any claims, liabilities, losses, costs
        and
        expenses arising out of or relating to those suspended proceeds and any claims
        related thereto through the Closing Date.

       

      
        
           

        

        
          Page
            7

          
            

          

        

        
           

        

      

       

      4.6           Audit
        Adjustments.  Seller
        retains all rights to adjustments resulting from any operating agreement
        and
        other audit claims asserted against third party operators on transactions
        occurring prior to the Effective Time (which includes Buyer, if
        applicable).  Any credit received by Buyer pertaining to such an audit
        claim shall be paid to Seller within thirty (30) days after
        receipt.

       

      4.7           Cooperation. 
        Each
        Party covenants and agrees to promptly inform the other with respect to amounts
        owing under Sections 4.4 and 4.6 hereof.

       

      5.           DUE
        DILIGENCE: TITLE MATTERS.

       

      5.1           General
        Access

      

      
        	
                (A)

              	
                During
                  reasonable business hours, Seller agrees to grant Buyer physical
                  access to
                  the Leases and Wells to allow Buyer to conduct, at Buyer’s sole risk and
                  expense, on-site inspections and environmental assessments of the
                  Leases
                  and Wells. Buyer agrees not to enter onto the Leases or contact
                  field
                  employees without Seller’s prior knowledge. In connection with any such
                  on-site inspections, Buyer agrees not to interfere with the normal
                  operation of the Leases and Wells and agrees to comply with all
                  requirements of the operators of the Wells.  If Buyer or its
                  agents prepares an environmental assessment of any Lease or Well,
                  Buyer
                  agrees to keep such assessment confidential and to furnish copies
                  thereof
                  to Seller.  In connection with granting such access, Buyer
                  represents that it is adequately insured and waives, releases and
                  agrees
                  to indemnify the Seller against all claims for injury to, or death
                  of,
                  persons or for damage to operations or property arising in any
                  way from
                  the access afforded to Buyer hereunder or the activities of
                  Buyer.  This waiver, release and indemnity by Buyer shall
                  survive termination of this
                  Agreement.

              

      

      

      
        	
                (B)

              	
                Upon
                  the execution of this Agreement, Seller shall give Buyer and its
                  representatives, employees, consultants, independent contractors,
                  attorneys and other advisors reasonable access to the Records during
                  regular office hours for any and all inspections and
                  copying.

              

      

      

      5.2           Defensible
        Title.  As
        used
        herein the term Defensible Title shall mean:

       

      
        	
                (A)

              	
                As
                  to the Assets, that record title or operating rights of Seller
                  which:

              

      

       

      
        	
                 

              	
                (i)

              	
                entitles
                  Seller to receive not less than the interests shown in Exhibit
                  2.4 as the
                  “Net Revenue Interest” of all Oil and Gas produced, saved and marketed
                  from or allocated to the formations in the associated Wells which
                  are
                  producing as of the date of this Agreement or which have otherwise
                  been
                  given Allocated Value, all without reduction, suspension or termination
                  except as stated in such Exhibit or otherwise permitted as Permitted
                  Encumbrances; and

              

      

       

      
        
           

        

        
          Page
            8

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (ii)

              	
                obligates
                  Seller to bear a percentage of the costs and expenses relating
                  to the
                  maintenance and development of, and operations relating to, the
                  producing
                  formations in each associated Well not greater than the “Working Interest”
                  shown in Exhibit 2.4 (without a proportionate increase in the Net
                  Revenue
                  Interest), all without increase except as stated in such Exhibit
                  or
                  otherwise permitted as Permitted Encumbrances;
                  and

              

      

      

      
        	
                (B)

              	
                That
                  title of Seller to the Assets is free and clear of liens, encumbrances
                  and
                  defects that materially and adversely affect the ownership, operation
                  or
                  use of the Assets, except for Permitted
                  Encumbrances.

              

      

       

      
        	
                (C)

              	
                As
                  used herein, the term “Permitted Encumbrances” shall mean any one or more
                  of the following:

              

      

       

      

      
        	
                 

              	
                (1)   The
                  provisions of the Leases and any lessor’s royalties, overriding royalties,
                  net profits interests, carried interests, production payments,
                  reversionary interests and similar burdens reflected in the public
                  records
                  or in the Records, if the net cumulative effect of the burdens
                  does not
                  operate to reduce the Net Revenue Interest of Seller below the
                  interests
                  described in Exhibit 2.4;

              

      

      

      
        	
                 

              	
                (2)   Any
                  increase in lessor’s royalty occasioned by the repeal or suspension of any
                  governmental regulation providing for the reduction of royalty
                  for wells
                  producing below defined threshold
                  amounts;

              

      

      

      
        	
                 

              	
                (3)   Division
                  orders and production sales contracts terminable without penalty
                  upon no
                  more than ninety (90) days notice to the
                  purchaser;

              

      

      

      
        	
                 

              	
                (4)   Preferential
                  Rights and required third party consents to assignment and similar
                  agreements with respect to which waivers or consents are obtained
                  from the
                  appropriate parties, or the appropriate time period for asserting
                  any such
                  right has expired without an exercise of the
                  right;

              

      

      

      
        	
                 

              	
                (5)   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
                  obligations that are not delinquent or that will be paid and discharged
                  in
                  the ordinary course of business, or if delinquent, that are being
                  contested in good faith by appropriate action of which Buyer is
                  notified
                  in writing before Closing;

              

      

      

      
        	
                 

              	
                (6)   All
                  rights to consent by, required notices to, filings with, or other
                  actions
                  by governmental entities in connection with the sale or conveyance
                  of oil
                  and gas leases or interests therein if they are routinely obtained
                  subsequent to the sale or
                  conveyance;

              

      

      

      
        	
                 

              	
                (7)   Easements,
                  rights-of-way, servitudes, permits, surface leases and other rights
                  in
                  respect of surface operations that do not materially interfere
                  with the
                  oil and gas operations to be conducted on any Well or
                  Lease;

              

      

      

      
        
           

        

        
          Page
            9

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (8)   All
                  operating agreements, unit agreements, unit operating agreements,
                  pooling
                  agreements and pooling designations affecting the Assets that are
                  either
                  (i) of record in Seller’s chain of title or (ii) reflected or
                  referenced in the Records or (iii) included as Material Agreements on
                  Exhibit 7.1(K);

              

      

       

      
        	
                 

              	
                (9)   Conventional
                  rights of reassignment prior to release or surrender requiring
                  notice
                  to  the holders of the
                  rights;

              

      

      

      
        	
                 

              	
                (10)
                  All rights reserved to or vested in any governmental, statutory
                  or public
                  authority to control or regulate any of the Assets in any manner,
                  and all
                  applicable laws, rules and orders of governmental
                  authority;

              

      

      

      
        	
                 

              	
                (11)
                  Defects that are defensible by possession under applicable statutes
                  of
                  limitation for adverse possession or for prescription;
                  and

              

      

      

      
        	
                 

              	
                (12)
                  All other liens, charges, encumbrances, contracts, agreements,
                  instruments, obligations, defects and irregularities affecting
                  the Assets
                  that individually or in the aggregate are not such as to materially
                  interfere with or affect the operation, value or use of any of
                  the Assets
                  or have not prevented, and cannot reasonably be expected to prevent,
                  Buyer
                  from receiving the proceeds of production from the affected
                  Assets.

              

      

      

      5.3           Defect
        Letters.

       

      
        	
                (A)

              	
                Buyer
                  may from time to time and no later than three (3) business days
                  prior to
                  Closing notify Seller in writing (a “Notice”) of any matter which would
                  cause title to all or part of the Assets not to be Defensible Title
                  (“Title Defect”), provided that no Title Defect shall be deemed to exist
                  unless the Title Defect Value thereof exceeds Ten Thousand Dollars
                  ($10,000.00). Further, there shall be no adjustment to the Base
                  Purchase
                  Price unless the aggregate Title Defect Values of all Title Defects
                  satisfying the condition in clause (i) exceed one percent (1%) of the
                  Base Purchase Price (the “Title Defect Threshold”) (such amount being a
                  threshold, not a deductible).  In order to provide Seller a
                  reasonable opportunity to cure any Title Defects prior to Closing,
                  Buyer
                  shall use reasonable efforts to provide the Notice as soon as reasonably
                  possible after becoming aware of or making its determination of
                  the Title
                  Defect.

              

      

       

      
        	
                (B)

              	
                In
                  the Notice, Buyer must describe with reasonable detail each alleged
                  Title
                  Defect it has discovered and the steps required to cure each Title
                  Defect,
                  include Buyer’s reasonable estimate of the Title Defect Value attributable
                  to each, and include all data and information in Buyer’s possession or
                  control bearing thereon.  Subject to the special warranty in the
                  Assignment and Bill of Sale delivered at Closing, Buyer shall be
                  deemed to
                  have conclusively waived all Title Defects not disclosed to Seller
                  in a
                  Notice before three (3) business days prior to Closing.  Subject
                  to the special warranty in the Assignment and Bill of Sale delivered
                  at
                  Closing, Buyer waives any remedy against Seller for Title Defects
                  that do
                  not exceed the Title Defect Threshold or for which timely notice
                  is not
                  given as provided hereunder or for which adjustment is made as
                  hereafter
                  provided.

              

      

       

      
        
           

        

        
          Page
            10

          
            

          

        

        
           

        

      

       

      
        	
                (C)

              	
                Upon
                  timely delivery of a Notice by
                  Buyer:

              

      

       

      
        	
                 

              	
                (i)    within
                  three (3) business days after Seller’s receipt of the Title Defects
                  Notice, Seller shall notify Buyer whether Seller agrees with Buyer’s
                  claimed Title Defects and/or the proposed Title Defect Values therefor
                  (“Seller’s Response”).  If Seller does not agree with any
                  claimed Title Defect and/or the proposed Title Defect Value therefor,
                  then
                  the Parties shall enter into good faith negotiations and shall
                  attempt to
                  agree on such matters;

              

      

      

      
        	
                 

              	
                (ii)   within
                  one (1) business day after Seller’s notice of its cure of a Title Defect,
                  Buyer shall notify Seller whether Buyer agrees with Seller’s proposed cure
                  of a Title Defect (“Buyer’s Response”).  If Buyer does not agree
                  with any such cure, then the Parties shall enter into good faith
                  negotiations and shall attempt to agree on such
                  matters;

              

      

      

      
        	
                 

              	
                (iii)  if
                  the Parties cannot reach agreement concerning either the existence
                  of a
                  Title Defect, Seller’s proposed cure of a Title Defect, or a Title Defect
                  Value within ten (10) days after Buyer’s receipt of Seller’s Response or
                  Seller’s receipt of Buyer’s Response, as applicable, upon either Party’s
                  request, the Parties shall mutually agree on and employ an attorney
                  experienced in title examination in the state where the Assets
                  are located
                  (“Title Consultant”) to resolve all points of disagreement relating to
                  Title Defects and Title Defect Values; provided that Seller or
                  Buyer may
                  elect not to proceed to Closing with regard to such Assets and
                  adjust the
                  Base Purchase Price in the amount of the Allocated Value and not
                  submit
                  such matter to arbitration;

              

      

      

      
        	
                 

              	
                (iv)   if
                  at any time any Title Consultant so chosen fails or refuses to
                  perform
                  hereunder, a new Title Consultant shall be chosen by the
                  Parties.  The cost of any such Title Consultant shall be borne
                  fifty percent (50%) by Seller and fifty percent (50%) by
                  Buyer.  Each Party shall present a written statement of its
                  position on the Title Defect and/or Title Defect Value in question
                  to the
                  Title Consultant within five (5) days after the Title Consultant
                  is
                  selected, and the Title Consultant shall make a determination of
                  all
                  points of disagreement in accordance with the terms and conditions
                  of this
                  Agreement within ten (10) business days of receipt of such position
                  statements.  The determination by the Title Consultant shall be
                  conclusive and binding on the Parties, and shall be enforceable
                  against
                  any Party in any court of competent jurisdiction.  If necessary,
                  the Closing Date shall be deferred only as to those Assets affected
                  by any
                  unresolved disputes regarding the existence of a Title Defect and/or
                  the
                  Title Defect Value until the Title Consultant has made a determination
                  of
                  the disputed issues with respect thereto and all subsequent dates
                  and
                  required activities with respect to any such Assets having reference
                  to
                  the Closing Date shall be correspondingly deferred; provided, however,
                  that, unless Seller and Buyer mutually agree to the contrary, the
                  Closing
                  Date shall not be deferred in any event for more than thirty (30)
                  days
                  beyond the scheduled Closing Date in Section 3.1.  Once the
                  Title Consultant’s determination has been expressed to both Parties, if
                  applicable, Seller shall have five (5) days in which to advise
                  Buyer in
                  writing which of the options available to Seller under Section
                  5.4 that
                  Seller elects regarding each of the Assets as to which the Title
                  Consultant has made a determination.  In evaluating whether a
                  Title Defect exists, due consideration shall be given to the length
                  of
                  time that the particular Asset has been producing Oil and Gas and
                  whether
                  such fact, circumstance or condition is of the type expected to
                  be
                  encountered in the area involved and is usual and customarily acceptable
                  to reasonable and prudent operators, working interest owners and/or
                  purchasers engaged in the business of the exploration, development,
                  and
                  operation of oil and gas
                  properties.

              

      

       

      
        
           

        

        
          Page
            11

          
            

          

        

        
           

        

      

       

      5.4           Effect
        of Title Defect

       

      
        	
                (A)

              	
                In
                  the event Buyer provides Seller with a timely Notice and the Title
                  Defects
                  are valid and exceed the Title Defect Threshold, for those Title
                  Defects
                  not cured by Closing, Seller may, at its sole
                  discretion:

              

      

       

      
        	
                 

              	
                (i)    adjust
                  the Base Purchase Price in the amount of the Title Defect Value
                  of the
                  Asset to which such Title Defect relates and proceed to Closing
                  on all
                  Assets; provided that Seller shall not be obligated to transfer
                  any Assets
                  for which the Title Defect Value equals or exceeds such Asset’s Allocated
                  Value; or

              

      

      

      
        	
                 

              	
                (ii)   proceed
                  with (a) Closing on those Assets not affected by the valid Title
                  Defects
                  and such Assets to which a Title Defect relates but for which Seller
                  has
                  elected to proceed to Closing with an adjustment of the Base Purchase
                  Price in the amount of the Title Defect Value of such Assets and
                  (b) defer Closing on those other Assets to which a Title Defect
                  relates and for which Seller has elected to attempt to cure such
                  Title
                  Defect and to not proceed to Closing, for which Buyer shall place
                  into
                  escrow an amount equal to the Allocated Values of the Assets affected
                  by
                  the valid Title Defects, which withheld amount shall be paid to
                  Seller
                  when the Asset affected by any valid Title Defect is cured or the
                  Title
                  Defect is waived by Buyer and the affected Asset is conveyed from
                  Seller
                  to Buyer.  If neither of the above occurs and if Seller later
                  determines it will not cure a Title Defect on or before six (6)
                  months
                  from the Closing Date, the amount in the escrow account attributable
                  to
                  such Title Defect will be returned to Buyer and Seller shall retain
                  such
                  Asset affected by such Title
                  Defect.

              

      

      

      
        	
                (B)

              	
                The
                  diminution in value of an Asset attributable to a valid Title Defect
                  (the
                  “Title Defect Value”) notified in a Notice shall be determined by the
                  following:

              

      

       

      
        	
                 

              	
                (i)    if
                  the valid Title Defect asserted is that the actual Net Revenue
                  Interest
                  attributable to the producing or valued formation in any Asset
                  is less
                  than that stated in the applicable Exhibit, then the Title Defect
                  Value is
                  the product of the Allocated Value attributed to the affected formation(s)
                  in such Asset, multiplied by a fraction, the numerator of which
                  is the
                  difference between the Net Revenue Interest set forth in the applicable
                  Exhibit and the actual Net Revenue Interest, and the denominator
                  of which
                  is the Net Revenue Interest stated in the applicable Exhibit;
                  or

              

      

       

      
        
           

        

        
          Page
            12

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (ii)   if
                  the valid Title Defect represents an obligation, encumbrance, burden
                  or
                  charge upon the affected Asset (including any increase in Working
                  Interest
                  for which there is not a proportionate increase in Net Revenue
                  Interest),
                  the amount of the Title Defect Value is to be determined by taking
                  into
                  account the Allocated Value of such Asset, the portion of the Asset
                  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 Asset, and the Title Defect Values placed upon the Title
                  Defect
                  by Buyer and Seller.

              

      

      

      
        	
                 

              	
                (iii)  Notwithstanding
                  the above, in no event shall the total of the Title Defect Values
                  related
                  to a particular Asset exceed the Allocated Value of such
                  Asset.

              

      

      

      
        	
                (C)

              	
                If
                  the aggregate value of (i) the Base Purchase Price adjustment for
                  Title Defect Values plus (ii) the Allocated Value of Assets which are
                  retained in lieu of cure or adjustment equals or exceeds ten percent
                  (10%)
                  of the Base Purchase Price, then by notice delivered prior to the
                  Closing
                  either Party may terminate this Agreement and neither Party shall
                  have any
                  further obligation to conclude the transfer of the Assets under
                  this
                  Agreement.

              

      

       

      5.5           Preferential
        Rights and Consents.  Seller
        shall use its best efforts to obtain all required consents and to give notices
        required in connection with preferential purchase rights, so that the third
        party election date to exercise the preferential right will occur at least
        seven
        (7) business days prior to Closing.  If Buyer discovers other affected
        Assets during the course of Buyer’s due diligence activities, Buyer shall notify
        Seller immediately and Seller shall use its best efforts to obtain such consents
        and to give the notices required in connection with the preferential rights
        prior to Closing.

      

      
        	
                (A)

              	
                Consents.

              

      

       

      
        	
                 

              	
                Except
                  for consents and approvals which are customarily obtained post-Closing
                  and
                  those consents which would not invalidate the conveyance of the
                  Assets, if
                  a necessary consent to assign any Lease has not been obtained as
                  of the
                  Closing that would invalidate the conveyance of the Asset, then
                  (i) the portion of the Assets for which such consent has not been
                  obtained shall not be conveyed at the Closing, (ii) the Allocated
                  Value for that Asset shall not be paid to Seller, and (iii) Seller
                  shall use best efforts to obtain such consent as promptly as possible
                  following Closing.  If such consent has been obtained as of the
                  date on which the Post-Closing Adjustment Statement becomes final,
                  Seller
                  shall convey the affected Asset to Buyer effective as of the Effective
                  Time and Buyer shall pay Seller the Allocated Value of the affected
                  Asset,
                  less any proceeds from the affected Asset received by Seller attributable
                  to the period of time after the Effective Time (calculated in accordance
                  with Section 2.3).  If such consent has not been obtained or has
                  not been waived by Buyer as of the date on which the Post-Closing
                  Adjustment Statement becomes final, Seller shall elect either to
                  (i) challenge in court the enforceability of such consent right, in
                  which event Seller shall retain the affected Asset until such legal
                  challenge is finally resolved by settlement or non-appealable court
                  order,
                  after which either Seller shall convey the affected Asset to Buyer
                  under
                  the terms of this Agreement and Buyer shall pay the Allocated Value
                  of the
                  Purchase Price for such Asset, less any proceeds received by Seller
                  attributable to such Asset for the period from and after the Effective
                  Time (calculated in accordance with Section 2.3) or (ii) retain the
                  affected Asset and the Purchase Price shall be reduced by an amount
                  equal
                  to the Allocated Value of the retained Asset (with such adjustment
                  being
                  an “Exclusion Adjustment”).  Buyer shall reasonably cooperate
                  with Seller in obtaining any required consent including providing
                  assurances of reasonable financial conditions, but Buyer shall
                  not be
                  required to expend funds or make any other type of financial commitments
                  a
                  condition of obtaining such
                  consent.

              

      

       

      
        
           

        

        
          Page
            13

          
            

          

        

        
           

        

      

       

      
        	
                (B)

              	
                Preferential
                  Purchase Rights.

              

      

       

      
        	
                 

              	
                 (i)    If
                  any preferential right to purchase any portion of the Assets is
                  exercised
                  prior to the Closing Date, or if the time frame for the exercise
                  of such
                  preferential purchase rights has not expired and Seller has not
                  received
                  notice of an intent not to exercise or waiver of the preferential
                  purchase
                  right, that portion of the Assets affected by such preferential
                  purchase
                  right shall be excluded from the Assets and the Purchase Price
                  shall be
                  adjusted downward by an amount equal to the Allocated Value of
                  such
                  affected Assets without the requirement for Buyer to give notice
                  (with
                  such adjustment being an “Exclusion Adjustment”). Notwithstanding any
                  other provision in this Agreement, if a preferential purchase right
                  subject to this Agreement is exercised, Buyer has the right, at
                  its sole
                  discretion, to terminate this Agreement, provided that the allocated
                  value
                  of all preferential rights exercised is equal to or exceeds ten
                  percent
                  (10%) of the Base Purchase Price.

              

      

      

      
        	
                 

              	
                (ii)   If
                  a third party exercises its preferential right to purchase, but
                  fails to
                  consummate the purchase prior to the Closing, Seller shall retain
                  the
                  affected Assets and the Purchase Price shall be adjusted downward
                  by an
                  amount equal to the Allocated Value of such affected Assets (with
                  such
                  adjustment being an “Exclusion
                  Adjustment”).

              

      

      

      
        	
                 

              	
                (iii)  If
                  a third party exercises its preferential right to purchase, but
                  does not
                  consummate the purchase within the time frame specified in the
                  preferential purchase right, Seller agrees to convey the affected
                  Asset to
                  Buyer effective as of the Effective Time, and Buyer agrees to pay
                  Seller
                  the Allocated Value of the Affected
                  Asset.

              

      

      

      
        	
                 

              	
                (iv)   If
                  a preferential purchase right is not discovered prior to Closing,
                  and the
                  affected Asset is conveyed to Buyer at Closing, and the preferential
                  purchase right is exercised and subsequently consummated after
                  Closing,
                  Buyer agrees to convey such affected Assets to the party exercising
                  such
                  right on the same terms and conditions under which Seller conveyed
                  such
                  Assets to Buyer and retain all amounts paid by the party exercising
                  such
                  preferential right to purchase.  In the event of such exercise,
                  Buyer shall prepare, execute and deliver a form of conveyance of
                  such
                  Asset to such exercising party, such conveyance to be in form and
                  substance as provided in this Agreement, and Seller agrees to hold
                  harmless and indemnify Buyer from any and all liabilities and obligations
                  associated with such conveyed Asset, and to reimburse Buyer for
                  reasonable
                  expenses incurred by Buyer relating to the conveyed
                  Asset.

              

      

       

      
        
           

        

        
          Page
            14

          
            

          

        

        
           

        

      

       

      
        	
                (C)

              	
                Exclusive
                  Remedy.  The remedies set forth in this Section 5.5 are the
                  exclusive remedies under this Agreement for exercised preferential
                  purchase rights and required consents to assign the
                  Assets.

              

      

      
6.           ENVIRONMENTAL
        ASSESSMENT.

       

      6.1           Physical
        Condition of the Assets

       

      .

       

      
        	
                (A)

              	
                Buyer
                  acknowledges that the Assets have been used for oil and gas drilling
                  and
                  production operations and possibly for the storage and disposal
                  of waste
                  materials or hazardous substances related to standard oil field
                  operations.  Physical changes in or under the Assets or adjacent
                  lands may have occurred as a result of such uses.  The Assets
                  also may contain previously plugged and abandoned wells, buried
                  pipelines,
                  storage tanks and other equipment, whether or not of a similar
                  nature, the
                  locations of which may not now be known by Seller or be readily
                  apparent
                  by a physical inspection of the Assets.  Buyer understands that
                  Seller does not have the requisite information with which to determine
                  the
                  exact nature or condition of the Assets nor the effect any such
                  use has
                  had on the physical condition of the Assets.  Pursuant to the
                  Safe Water Drinking and Toxic Enforcement Act of 1986, Buyer is
                  hereby
                  notified and assumes the risk that detectable amounts of chemicals
                  known
                  to cause cancer, birth defects and other reproductive harm may
                  be found
                  in, on or around the Assets.  Upon consummation of the Closing
                  Buyer shall be deemed to have assumed the risk of expense, claim,
                  damage
                  or liability arising from any such matter referred to in this section,
                  including without limitation the risk that the Assets may contain
                  waste or
                  contaminants and that adverse physical conditions, including the
                  presence
                  of waste or contaminants, may not have been revealed by Buyer’s
                  investigation.  Consummation of the Closing shall transfer all
                  responsibility and liability related to disposal, spills, waste
                  or
                  contamination from, on or below the Assets from Seller to
                  Buyer.

              

      

       

      
        	
                (B)

              	
                In
                  addition, Buyer acknowledges that some oil field production equipment
                  located on the Assets may contain asbestos and/or naturally-occurring
                  radioactive material (“NORM”).  In this regard, Buyer expressly
                  understands that NORM may affix or attach itself to inside of wells,
                  materials and equipment as scale or in other forms, and that wells,
                  materials and equipment located on the Assets described herein
                  may contain
                  NORM and that NORM-containing materials may be buried or have been
                  otherwise disposed of on the Assets.  Buyer also expressly
                  understands that special procedures may be required for the removal
                  and
                  disposal of asbestos and NORM from the Assets where it may be found,
                  and
                  that upon consummation of the Closing Buyer shall be deemed to
                  have
                  assumed all liability when such activities are
                  performed.

              

      

       

      6.2           Inspection
        and Testing.

       

      
        	
                (A)

              	
                Prior
                  to Closing, Buyer shall have the right, at its sole cost and risk,
                  to
                  review Seller’s Phase I environmental assessments of the Assets, if any
                  exist, and to conduct any further environmental assessment of the
                  Assets
                  it deems appropriate, to the extent that Seller has the authority
                  to grant
                  such right to Buyer; provided that Seller shall have the right
                  to review
                  and approve any plan to conduct such an environmental assessment,
                  with
                  such approval not to be unreasonably withheld, delayed or conditioned
                  by
                  Seller.  Buyer shall immediately provide to Seller any data
                  obtained from such assessments, including any reports and
                  conclusions.  Seller and Buyer shall keep all information
                  relating to such assessments strictly confidential whether or not
                  Closing
                  occurs, except as may be required pursuant to any Environmental
                  Laws.

              

      

       

      
        
           

        

        
          Page
            15

          
            

          

        

        
           

        

      

       

      
        	
                (B)

              	
                Buyer
                  waives and releases all claims against Seller, its affiliates,
                  and each of
                  their respective directors, officers, employees, agents, and other
                  representatives and their successors and assigns (collectively,
                  the
                  “Seller’s Group”), for injury to or death of persons, or damage to
                  property, arising in any way from the exercise of rights granted
                  to Buyer
                  hereby or the activities of Buyer or its employees, agents or contractors
                  on the Assets.  BUYER SHALL INDEMNIFY THE SELLER’S GROUP AGAINST
                  AND HOLD THE MEMBERS OF THE SELLER’S GROUP HARMLESS FROM ANY AND ALL LOSS,
                  COST, DAMAGE, EXPENSE OR LIABILITY, INCLUDING REASONABLE ATTORNEY’S FEES,
                  WHATSOEVER ARISING OUT OF (I) ANY AND ALL STATUTORY OR COMMON LAW
                  LIENS OR
                  OTHER ENCUMBRANCES FOR LABOR OR MATERIALS FURNISHED IN CONNECTION
                  WITH
                  SUCH TESTS, SAMPLINGS, STUDIES OR SURVEYS AS BUYER MAY CONDUCT
                  WITH
                  RESPECT TO THE ASSETS; AND (II) ANY INJURY TO OR DEATH OF PERSONS OR
                  DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT THE ASSETS AS A RESULT
                  OF
                  SUCH EXERCISE OR ACTIVITIES.

              

      

       

      
        	
                (C)

              	
                “Environmental
                  Laws” means all applicable local, state, and federal laws, rules,
                  regulations, and orders regulating or otherwise pertaining to:
                  (i) the use, generation, migration, storage, removal, treatment,
                  remedy, discharge, release, transportation, disposal, or cleanup
                  of
                  pollutants, contamination, hazardous wastes, hazardous substances,
                  hazardous materials, toxic substances or toxic pollutants;
                  (ii) surface waters, ground waters, ambient air and any other
                  environmental medium on or off any Lease; or (iii) the environment,
                  habitat protection or health and safety-related matters; including
                  the
                  following as from time to time amended and all others whether similar
                  or
                  dissimilar: the Comprehensive Environmental Response, Compensation,
                  and
                  Liability Act of 1980, as amended by the Superfund Amendments and
                  Reauthorization Act of 1986, the Resource Conservation and Recovery
                  Act of
                  1976, as amended by the Used Oil Recycling Act of 1980, the Solid
                  Waste
                  Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
                  Amendments of 1984, the Hazardous Materials Transportation Act,
                  the Toxic
                  Substance Control Act, the Clean Air Act, the Clean Water Act,
                  the Safe
                  Drinking Water Act, the National Environmental Policy Act, the
                  Endangered
                  Species Act, the Oil Pollution Act of 1990, and all regulations
                  promulgated pursuant thereto.

              

      

       

      6.3           Notice
        of Adverse Environmental Conditions.  No
        later than three (3) business days prior to Closing, Buyer shall notify Seller
        in writing of any Adverse Environmental Condition with respect to the
        Assets.  Such notice shall describe in reasonable detail the Adverse
        Environmental Condition and include the estimated Environmental Defect Value
        attributable thereto (the “Environmental Defect Notice”) based on a verifiable
        estimate of the cost to Remediate the Adverse Environmental
        Condition.  No Adverse Environmental Condition shall be deemed to
        exist unless the Environmental Defect Value exceeds Ten Thousand Dollars
        ($10,000.00) in each individual case.  Further, there shall be no
        adjustment to the Base Purchase Price unless the aggregate Environmental
        Defect
        Values of all Adverse Environmental Conditions satisfying the condition in
        clause (i) exceeds one percent (1%) of the Base Purchase Price (the
“Environmental Defect Threshold”) (such amount being a threshold, not a
        deductible).  The “Environmental Defect Value” attributable to any
        Adverse Environmental Condition shall be the estimated amount (net to Seller’s
        interest) of all reasonable costs and claims necessary to Remediate the Adverse
        Environmental Conditions, as reasonably determined and estimated by
        Buyer.  The term “Adverse Environmental Condition” means (i) the
        failure of the Assets to be in material compliance with all applicable
        Environmental Laws; (ii) the Assets being subject to any agreements,
        consent orders, decrees or judgments currently in existence based on any
        Environmental Laws that negatively and materially impact the future use of
        any
        portion of the Assets or that require any material change in the present
        conditions of any of the Assets; or (iii) the Assets being subject to any
        material uncured notices of violations of or non-compliance with any applicable
        Environmental Laws or any claim of material violation of any Environmental
        Laws
        to the extent not disclosed to Buyer prior to execution of this
        Agreement.  Buyer shall be deemed to have conclusively waived
        (i) all Adverse Environmental Conditions not contained in an Environmental
        Defect Notice delivered to Seller at least three (3) business days prior
        to
        Closing and (ii) any remedy against Seller for Adverse Environmental
        Conditions that do not exceed the Environmental Defect Threshold.

       

      
        
           

        

        
          Page
            16

          
            

          

        

        
           

        

      

       

      6.4           Rights
        and Remedies for Adverse Environmental Conditions.

       

      
        	
                (A)

              	
                With
                  respect to any Adverse Environmental Conditions affecting one or
                  more of
                  the Assets which exceed the Environmental Defect Threshold, Seller
                  may on
                  an Asset-by-Asset basis (i) Remediate the Adverse Environmental
                  Conditions prior to Closing, but Seller shall have no obligation
                  to do so,
                  and proceed to Closing with no adjustment of the Base Purchase
                  Price;
                  (ii) proceed to Closing and adjust the Base Purchase Price in an
                  amount equal to the applicable Environmental Defect Value; or
                  (iii) retain the affected Asset and reduce the Base Purchase Price by
                  the Allocated Value of the affected Asset (“Exclusion
                  Adjustment”).

              

      

       

      
        	
                (B)

              	
                Buyer
                  waives any Adverse Environmental Condition for which Buyer has
                  received an
                  adjustment to the Base Purchase Price in accordance with Section
                  6.4(A).

              

      

       

      
        	
                (C)

              	
                If
                  Buyer delivers a valid Environmental Defect Notice to Seller and
                  if the
                  aggregate of the Environmental Defects claimed is less than or
                  equals the
                  Environmental Defect Threshold, Buyer will be deemed to have accepted
                  the
                  Assets “where-is, as-is” with respect to all Adverse Environmental
                  Conditions in, on or under the Assets and the Adverse Environmental
                  Condition(s) in, on and under the Assets will be deemed to be part
                  of the
                  Assumed Liabilities.  The Environmental Defect Threshold is a
                  threshold and not a deductible.  The Environmental Defect
                  Threshold and the Title Defect Threshold are separate and distinct
                  and
                  operate independently.

              

      

       

      
        	
                (D)

              	
                If
                  the aggregate value of (i) the Base Purchase Price adjustment for
                  Adverse Environmental Conditions plus (ii) any Exclusion Adjustments
                  in lieu of Remediating any Adverse Environmental Conditions equals
                  or
                  exceeds ten percent (10%) of the Base Purchase Price, either Party
                  may
                  terminate this Agreement and neither Party shall have any further
                  obligation to conclude the transfer of the Assets under this
                  Agreement.

              

      

       

      
        
           

        

        
          Page
            17

          
            

          

        

        
           

        

      

       

      
        	
                (E)

              	
                The
                  term “Remediate” or “Remediation” means, with respect to any valid Adverse
                  Environmental Condition, the undertaking and completion of those
                  actions
                  and activities necessary to eliminate or correct such Adverse
                  Environmental Condition to the degree sufficient that such Adverse
                  Environmental Condition no longer constitutes an Adverse Environmental
                  Condition as defined above.  Seller shall promptly notify Buyer
                  at such time as it believes that it has Remediated an Adverse
                  Environmental Condition.  Buyer shall promptly notify Seller
                  whether it agrees such condition is Remediated.  If Buyer fails
                  to notify Seller of its determination with respect to such Remediation
                  within ten (10) business days following Seller’s notice, such Adverse
                  Environmental Condition shall be deemed
                  Remediated.

              

      

       

      
        	
                (F)

              	
                If
                  Seller and Buyer are unable to agree on the amount of the Environmental
                  Defect Value within ten (10) business days after Seller’s receipt of the
                  Environmental Defect Notice or that an Adverse Environmental Condition
                  exists, has been Remediated or is required to be Remediated, then
                  the
                  dispute will be submitted to a mutually acceptable company with
                  recognized
                  expertise in the oil and gas environmental remediation and regulation
                  field (the “Environmental Consultant”) whose determination shall be final
                  and binding upon the Parties.  Seller and Buyer shall each bear
                  their respective costs and expenses incurred in connection with
                  any such
                  dispute, and one-half (1/2) of the fees, costs and expenses charged
                  by the
                  Environmental Consultant.  Each Party shall present a written
                  statement of its position on the Adverse Environmental Condition
                  and/or
                  the Environmental Defect Value in question to the Environmental
                  Consultant
                  within five (5) business days after the Environmental Consultant
                  is
                  selected, and the Environmental Consultant shall make a determination
                  of
                  all points of disagreement in accordance with the terms and conditions
                  of
                  this Agreement within ten (10) business days of receipt of such
                  position
                  statements.  If necessary, the Closing Date shall be deferred
                  only as to those Assets affected by any unresolved disputes regarding
                  the
                  existence of an Adverse Environmental Condition and/or the Environmental
                  Defect Value until the Environmental Consultant has made a determination
                  of the disputed issues with respect thereto and all subsequent
                  dates and
                  required activities with respect to any such Assets having reference
                  to
                  the Closing Date shall be correspondingly deferred; provided, however,
                  that, unless Seller and Buyer mutually agree to the contrary, the
                  Closing
                  Date shall not be deferred in any event for more than thirty (30)
                  days
                  beyond the scheduled Closing Date in Section 3.1.  All Assets as
                  to which no such dispute(s) exist shall be conveyed to Buyer subject
                  to
                  the terms of this Agreement at Closing.  Once the Environmental
                  Consultant’s determination has been expressed to both Parties, if
                  applicable, Seller shall have five (5) business days in which to
                  advise
                  Buyer in writing which of the options available to Seller under
                  Section
                  6.4(A) Seller elects regarding each of the Assets as to which the
                  Environmental Consultant has made a
                  determination.

              

      

       

      6.5           Remediation
        by Seller.  If
        Seller elects to Remediate an Adverse Environmental Condition or is required
        by
        a governmental or regulatory agency to Remediate an Adverse Environmental
        Condition, the following will govern the Remediation:

       

      
        
           

        

        
          Page
            18

          
            

          

        

        
           

        

      

       

      
        	
                (A)

              	
                Seller
                  shall be responsible for all negotiations and contacts with federal,
                  state, and local agencies and authorities.  Buyer may not make
                  any independent contacts with any agency, authority, or other third
                  party
                  with respect to the Adverse Environmental Condition or Remediation
                  and
                  shall keep all information regarding the Adverse Environmental
                  Condition
                  and Remediation confidential, except in each instance to the extent
                  required by applicable law.

              

      

       

      
        	
                (B)

              	
                Seller
                  shall Remediate the Adverse Environmental Condition to the level
                  agreed
                  upon by Seller and Buyer (or failing such agreement to the level
                  determined by the Environmental Consultant), but in no event shall
                  Seller
                  be required to Remediate the Adverse Environmental Condition beyond
                  the
                  level required by the Environmental Laws in effect at the Effective
                  Time.

              

      

       

      
        	
                (C)

              	
                Buyer
                  shall grant and warrant access and entry to the Assets after Closing
                  to
                  Seller and third parties conducting assessments or Remediation,
                  to the
                  extent and as long as necessary to conduct and complete the assessment
                  or
                  Remediation work, to remove equipment and facilities, and to perform
                  any
                  other activities reasonably necessary in connection with assessment
                  or
                  Remediation.

              

      

       

      
        	
                (D)

              	
                Buyer
                  shall facilitate Seller’s ingress and egress or assessment or Remediation
                  activities after the Closing.  Seller shall make reasonable
                  efforts to perform the work so as to minimize disruption to Buyer’s
                  business activities.

              

      

       

      
        	
                (E)

              	
                Seller
                  shall continue Remediation of the Adverse Environmental Condition
                  until
                  the first of the following occurs:

              

      

       

      
        	
                 

              	
                (i)    the
                  appropriate governmental authorities provide notice to Seller or
                  Buyer
                  that no further Remediation of the Adverse Environmental Condition
                  is
                  required; or

              

      

      

      
        	
                 

              	
                (ii)

              	
                the
                  Adverse Environmental Condition has been Remediated to the level
                  required
                  by the Environmental Laws or as agreed by the
                  Parties.

              

      

      

      
        	
                 

              	
                  Upon
                  the occurrence of either (i) or (ii) above, Seller shall notify
                  Buyer that
                  Remediation of the Adverse Environmental Condition is complete
                  and provide
                  a copy of the notification described in (i) above, if
                  applicable.  Upon delivery of said notice, Seller shall be
                  released from all liability and have no further obligations under
                  any
                  provisions of this Agreement in connection with an Adverse Environmental
                  Condition.

              

      

       

      
        	
                (F)

              	
                Until
                  Seller completes Remediation of an Adverse Environmental Condition,
                  Seller
                  and Buyer shall each notify the other of any pending or threatened
                  claim,
                  action, or proceeding by any authority or private party that relates
                  to or
                  would affect the environmental condition, the assessment, or the
                  Remediation of the Assets.

              

      

       

      7.           REPRESENTATIONS
        AND WARRANTIES OF SELLER.

       

      7.1           Seller’s
        Representations and Warranties.  Except
        as set forth in the exhibits to this Agreement or as otherwise disclosed
        to
        Buyer by Seller in connection with preparation of Buyer’s offer to purchase the
        Assets, Seller represents and warrants the following as of the date of execution
        of this Agreement and the Closing:

       

      
        
           

        

        
          Page
            19

          
            

          

        

        
           

        

      

       

      
        	
                (A)

              	
                Status.  Raven
                  Resources, LLC is a limited liability company duly organized, legally
                  existing and in good standing under the laws of the State of
                  Oklahoma.

              

      

       

      
        	
                (B)

              	
                Authority.  Seller
                  owns the Assets and has the requisite power and authority to enter
                  into
                  this Agreement, to carry out the transactions contemplated hereby,
                  to
                    transfer the Assets in the manner contemplated by this Agreement,
                  and to
                  undertake all of the obligations of Seller set forth in this
                  Agreement.

              

      

       

      
        	
                (C)

              	
                Validity
                  of Obligations.  This Agreement and any documents or
                  instruments delivered by Seller at the Closing shall constitute
                  legal,
                  valid and binding obligations of Seller enforceable in accordance
                  with
                  their terms subject, however, to the effects of bankruptcy, insolvency,
                  reorganization, moratorium and other laws for the protection of
                  creditors,
                  as well as to general principles of equity, regardless of whether
                  such
                  enforceability is considered in a proceeding in equity or at
                  law.

              

      

       

      
        	
                (D)

              	
                No
                  Violation.  The execution and delivery of this Agreement
                  does not, and the fulfillment of and compliance with the terms
                  and
                  conditions hereof will not, as of Closing, violate, or be in conflict
                  with, any provision of Seller’s governing documents, or any statute, rule
                  or regulation applicable to Seller or any agreement or instrument
                  to which
                  Seller is a party or by which it is bound, or, to Seller’s knowledge,
                  violate, or be in conflict with any judgment, decree or order applicable
                  to Seller or require the approval or consent of any third party
                  (subject
                  to governmental consents and approvals customarily obtained after
                  the
                  Closing).

              

      

       

      
        	
                (E)

              	
                AFE’s.  With
                  respect to the joint, unit or other operating agreements relating
                  to the
                  Assets, except as set forth in Exhibit 7.1(E), there are no
                  material outstanding calls or payments under authorities for expenditures
                  for payments relating to the Assets which are due or which Seller
                  has
                  committed to make which have not been
                  made.

              

      

       

      
        	
                (F)

              	
                Contractual
                  Restrictions.  Except to the extent otherwise permitted by
                  this Agreement, Seller has not entered into any contracts for or
                  received
                  prepayments, take-or-pay arrangements, buydowns, buyouts for Oil
                  and Gas,
                  or storage of the same relating to the Assets which Buyer shall
                  be
                  obligated to honor and make deliveries of Oil and Gas or pay refunds
                  of
                  amounts previously paid under such contracts or
                  arrangements.

              

      

       

      
        	
                (G)

              	
                Litigation.  Except
                  as set forth in Exhibit 7.1(G), there is no suit or action pending,
                  arising out of, or to Seller’s knowledge threatened that would have a
                  material adverse affect upon the ownership, operation or value
                  of the
                  Assets.

              

      

       

      
        	
                (H)

              	
                Permits
                  and Consents.  To Seller’s knowledge, with respect to Assets
                  for which Seller is the operator, Seller has (i) acquired all
                  material permits, licenses, approvals and consents from appropriate
                  governmental bodies, authorities and agencies to conduct operations
                  on the
                  Assets in compliance with applicable laws, rules, regulations,
                  ordinances
                  and orders; and (ii) is in material compliance with all such permits,
                  licenses, approvals and consents.

              

      

       

      
        
           

        

        
          Page
            20

          
            

          

        

        
           

        

      

       

      
        	
                (I)

              	
                Broker’s
                  Fees.  Seller has incurred no obligation or liability,
                  contingent or otherwise, for brokers’ or finders’ fees in respect of the
                  matters provided for in this Agreement for which Buyer shall have
                  any
                  responsibility.

              

      

       

      
        	
                (J)

              	
                Taxes.  (i) Seller
                  has filed (with respect to the Assets) all material returns for
                  Property
                  Taxes and Severance Taxes that are due, (ii) all payments (with
                  respect to the Assets) shown to be due on such returns have been
                  paid, and
                  (iii) there is no material dispute or claim concerning any Property
                  Tax or Severance Tax liability of the Seller (with respect to the
                  Assets)
                  claimed or raised by any tax authority in
                  writing.

              

      

       

      
        	
                (K)

              	
                Material
                  Agreements.  To the best of Seller’s knowledge, all
                  agreements material to the ownership, operation or value of the
                  Assets are
                  listed in Exhibit 7.1(K) (“Material
                  Agreements”).

              

      

       

      
        	
                (L)

              	
                Consents
                  and Preferential Purchase Rights.  To the best of Seller’s
                  knowledge, Exhibit 7.1(L) lists all consents and preferential
                  purchase rights contained in the Leases or Material
                  Agreements.

              

      

       

      
        	
                (M)

              	
                Gas
                  Imbalances.  To the best of Seller’s knowledge, Exhibit
                  7.1(M) lists all gas imbalances with respect to the Assets as of
                  the
                  Effective Time.

              

      

       

      
        	
                (N)

              	
                Royalties.  All
                  rentals, royalties and other payments due under the Leases have
                  been paid,
                  except those amounts properly being held in
                  suspense.

              

      

       

      
        	
                (O)

              	
                Production
                  Sales Contracts.  There are no production sales contracts
                  pertaining to the Assets that provide for a fixed price and that
                  cannot be
                  cancelled at any time upon ninety (90) days (or less) prior
                  notice.

              

      

      

      
        	
                (P)

              	
                Calls
                  on Production.  There are no calls on production pertaining
                  to the Assets that provide for payment at less than applicable
                  current
                  market prices.

              

      

      

      7.2           Scope
        of Representations of Seller.

       

      
        	
                (A)

              	
                Information
                  About the Assets.  Except as expressly set forth in this
                  Agreement, Seller disclaims all liability and responsibility for
                  any
                  representation, warranty, statements or communications (orally
                  or in
                  writing) to Buyer, including any information contained in any opinion,
                  information or advice that may have been provided to Buyer by any
                  employee, officer, director, agent, consultant, engineer or engineering
                  firm, representative, partner, member, beneficiary, owner or contractor
                  of
                  Seller wherever and however made, including those made in any data
                  room or
                  internet site and any supplements or amendments thereto or during
                  any
                  negotiations with respect to this Agreement or any confidentiality
                  agreement previously executed by the Parties with respect to the
                  Asset.  EXCEPT AS SET FORTH IN ARTICLE 7 OF THIS AGREEMENT,
                  SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY
                  OR IMPLIED,
                  AS TO (i) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY DATA,
                  INFORMATION OR RECORDS FURNISHED TO BUYER IN CONNECTION WITH THE
                  ASSETS OR
                  OTHERWISE CONSTITUTING A PORTION OF THE ASSETS; (ii) THE PRESENCE,
                  QUALITY
                  AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE
                  ASSETS,
                  INCLUDING WITHOUT LIMITATION SEISMIC DATA AND SELLER’S INTERPRETATION AND
                  OTHER ANALYSIS THEREOF; (iii) THE ABILITY OF THE ASSETS TO PRODUCE
                  HYDROCARBONS, INCLUDING WITHOUT LIMITATION PRODUCTION RATES, DECLINE
                  RATES
                  AND RECOMPLETION OPPORTUNITIES; (iv) IMBALANCE OR PAYOUT ACCOUNT
                  INFORMATION, ALLOWABLES, OR OTHER REGULATORY MATTERS; (v) THE PRESENT
                  OR FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS, IF
                  ANY, TO BE
                  DERIVED FROM THE ASSETS; (vi) THE ENVIRONMENTAL CONDITION OF THE
                  ASSETS; (vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT
                  OCCUR; (viii) THE TAX ATTRIBUTES OF ANY ASSET; (ix) ANY OTHER
                  MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL
                  FURNISHED
                  TO BUYER BY SELLER OR OTHERWISE CONSTITUTING A PORTION OF THE ASSETS;
                  AND,
                  (x) THE COMPLETENESS OR ACCURACY OF THE INFORMATION CONTAINED IN
                  ANY
                  EXHIBIT HERETO.  ANY DATA, INFORMATION OR OTHER RECORDS
                  FURNISHED BY SELLER ARE PROVIDED TO BUYER AS A CONVENIENCE AND
                  BUYER’S
                  RELIANCE ON OR USE OF THE SAME IS AT BUYER’S SOLE
                  RISK.

              

      

       

      
        
           

        

        
          Page
            21

          
            

          

        

        
           

        

      

       

      
        	
                (B)

              	
                Independent
                  Investigation.  Buyer agrees that it has, or by Closing will
                  have, made its own independent investigation, analysis and evaluation
                  of
                  the Assets and the transaction contemplated by this Agreement (including
                  Buyer’s own estimate and appraisal of the extent and value of Seller’s Oil
                  and Gas reserves attributable to the Assets and an independent
                  assessment
                  and appraisal of the environmental risks and liabilities associated
                  with
                  the acquisition of the Assets).  Buyer agrees that it has had,
                  or will have prior to Closing, access to all information necessary
                  to
                  perform its investigation and has not relied and will not rely
                  on any
                  representations by Seller other than those expressly set forth
                  in this
                  Agreement

              

      

       

      8.           REPRESENTATIONS
        AND WARRANTIES OF BUYER.

       

      8.1           Buyer’s
        Representations and Warranties.  Buyer
        represents and warrants as follows as of the date hereof and the
        Closing:

       

      
        
          	
                   

                	
                  (A)

                	
                  Status.  Buyer
                    is a limited partnership duly organized, validly existing and
                    in good
                    standing under the laws of the State of
                    Delaware.

                

        

         

        
          	
                  (B)

                	
                  Authority.  Buyer
                    has the power and authority to enter into this Agreement, to
                    carry out the
                    transactions contemplated hereby and to undertake all of the
                    obligations
                    of Buyer set out in this Agreement.

                

        

         

        
          	
                  (C)

                	
                  Validity
                    of Obligations.  The consummation of the transactions
                    contemplated by this Agreement will not in any respect violate,
                    nor be in
                    conflict with, any provision of Buyer’s charter, by-laws or other
                    governing documents, or any agreement or instrument to which
                    Buyer is a
                    party or is bound, or any judgment, decree, order, statute, rule
                    or
                    regulation applicable to Buyer (subject to governmental consents
                    and
                    approvals customarily obtained after the Closing).  This
                    Agreement and the documents executed and delivered by Buyer in
                    connection
                    with the Closing shall constitute legal, valid and binding obligations
                    of
                    Buyer, enforceable in accordance with their terms, subject, however,
                    to
                    the effects of bankruptcy, insolvency, reorganization, moratorium
                    and
                    other laws for the protection of creditors, as well as to general
                    principles of equity, regardless of whether such enforceability
                    is
                    considered in a proceeding in equity or at
                    law.

                

        

         

        
          
             

          

          
            Page
              22

            
              

            

          

          
             

          

        

         

      

      
        	
                (D)

              	
                Qualification
                  and Bonding.  Buyer is in compliance with the bonding and
                  liability insurance requirements of all applicable state or federal
                  laws
                  or regulations that could affect Buyer’s ability or authority to own and
                  operate the Assets and is qualified to own any federal, Indian
                  or state
                  oil and gas leases that constitute part of the
                  Assets.

              

      

       

      
        	
                (E)

              	
                Non-Security
                  Acquisition.  Buyer intends to acquire the Assets for its
                  own benefit and account and is not acquiring the Assets with the
                  intent of
                  distributing fractional undivided interests thereof such as would
                  be
                  subject to regulation by federal or state securities laws, and
                  if, in the
                  future, it should sell, transfer or otherwise dispose of the Assets
                  or
                  fractional undivided interests therein, it will do so in compliance
                  with
                  any applicable federal and state securities
                  laws.

              

      

       

      
        	
                (F)

              	
                Evaluation.  By
                  reason of Buyer’s knowledge and experience in the evaluation, acquisition
                  and operation of oil and gas properties, Buyer has evaluated the
                  merits
                  and risks of purchasing the Assets from Seller and has formed an
                  opinion
                  based solely upon Buyer’s knowledge and experience and not upon any
                  representations or warranties by
                  Seller.

              

      

       

      
        	
                (G)

              	
                Financing.  Buyer
                  has sufficient cash, available lines of credit or other sources
                  of
                  immediately available funds to enable it to pay the Purchase Price
                  to
                  Seller at the Closing.

              

      

       

      
        	
                (H)

              	
                Broker’s
                  Fees.  Buyer has incurred no obligation or liability,
                  contingent or otherwise, for brokers’ or finders’ fees in respect of the
                  matters provided for in this Agreement, and, if any such obligation
                  or
                  liability exists, it shall remain an obligation of Buyer, and Seller
                  shall
                  have no responsibility therefor.

              

      

       

      
        	
                (I)

              	
                No
                  Knowledge of Seller’s Breach.  As of the date of execution
                  of this Agreement, Buyer has no knowledge of any breach by Seller
                  of any
                  representation or warranty of Seller, or of any other fact, event,
                  condition or circumstance that would excuse Buyer from the timely
                  performance of its obligations
                  hereunder.

              

      

       

      9.           CERTAIN
        AGREEMENTS OF SELLER.  Seller
        agrees and covenants that, unless Buyer shall have otherwise agreed in writing,
        the following provisions shall apply:

       

      9.1           Maintenance
        of Assets.  From
        the Effective Time until Closing, Seller agrees that, for those Assets which
        it
        operates, it shall:

       

      
        	
                (A)

              	
                Administer
                  and operate the Assets in accordance with the applicable operating
                  agreements.

              

      

       

      
        
           

        

        
          Page
            23

          
            

          

        

        
           

        

      

       

      
        	
                (B)

              	
                Not
                  introduce any new methods of management, operation or accounting
                  with
                  respect to any or all of the
                  Assets.

              

      

       

      
        	
                (C)

              	
                Use
                  commercially reasonable efforts to maintain and keep the Assets
                  in full
                  force and effect; and fulfill all contractual or other covenants,
                  obligations and conditions imposed upon Seller with respect to
                  the Assets,
                  including, but not limited to, payment of royalties, delay rentals,
                  shut-in gas royalties and any and all other required
                  payments.

              

      

       

      
        	
                (D)

              	
                Except
                  to the extent necessary or advisable to avoid forfeiture or penalties,
                  not
                  enter into agreements to drill new wells or to rework, plug back,
                  deepen,
                  plug or abandon any Well, nor commence any drilling, reworking
                  or
                  completing or other operations on the Leases which requires estimated
                  expenditures exceeding Ten Thousand Dollars ($10,000.00), net to
                  the
                  working interest of Seller, for each operation (except for emergency
                  operations and operations required under presently existing contractual
                  obligations) without obtaining the prior written consent of Buyer
                  (which
                  consent shall not be unreasonably withheld, delayed or conditioned);
                  provided that the terms of this paragraph (D) shall not apply to
                  any
                  expenditures of Seller which will not be charged to
                  Buyer.

              

      

       

      
        	
                (E)

              	
                Not
                  voluntarily relinquish its position as operator to anyone other
                  than Buyer
                  with respect to any of the Assets or voluntarily abandon any of
                  the Wells
                  other than as required pursuant to the terms of a Lease or by
                  regulation.

              

      

       

      
        	
                (F)

              	
                Not,
                  without the prior written consent of Buyer (which consent shall
                  not be
                  unreasonably withheld, delayed or conditioned), (i) enter into any
                  agreement or arrangement (other than one constituting a Permitted
                  Encumbrance) transferring, selling or encumbering any of the Assets
                  (other
                  than in the ordinary course of business, including ordinary course
                  sales
                  of production, inventory or salvage; (ii) grant any preferential or
                  other right to purchase or agree to require the consent of any
                  party not
                  otherwise required to consent to the transfer and assignment of
                  the Assets
                  to Buyer; (iii) enter into any new sales contracts or supply
                  contracts which cannot be cancelled upon thirty (30) days prior
                  notice; or
                  (iv) incur or agree to incur any contractual
                  obligation  (absolute or contingent) with respect to the Assets
                  except as otherwise provided herein (including ordinary course
                  sales of
                  production, inventory or salvage or pursuant to any disclosed AFEs
                  covering the Assets).

              

      

       

      
        	
                (G)

              	
                To
                  the extent known to Seller, provide Buyer with written notice of
                  (i) any claims, demands, suits or actions made against Seller which
                  materially affect the Assets; or (ii) any proposal from a third party
                  to engage in any material transaction (e.g., a farmout) with respect
                  to
                  the Assets.

              

      

       

      9.2           Records.  Seller
        shall have the right to make and retain copies of the Records as Seller may
        desire prior to the delivery of the Records to Buyer.  Buyer, for a
        period of seven (7) years after the Closing Date, shall make available to
        Seller
        (at the location of such Records in Buyer’s organization) access to such Records
        as Buyer may have in its possession (or to which it may have access) upon
        written request of Seller, during normal business hours; provided, however,
        that
        Buyer shall not be liable to Seller for the loss of any Records by reason
        of
        clerical error or inadvertent loss or destruction of Records.

       

      
        
           

        

        
          Page
            24

          
            

          

        

        
           

        

      

       

      9.3           Audit
        Rights.  Seller
        agrees to make available to Buyer prior to and for a period of twelve months
        following Closing any and all existing information and documents in the
        possession of Seller that Buyer may reasonably require to comply with Buyer’s
        tax and financial reporting requirements and audits.  Without limiting
        the generality of the foregoing, Seller will use its commercially reasonable
        efforts after execution of this Agreement and for twelve months following
        Closing to cooperate with the independent auditors chosen by Buyer (“Buyer’s
        Auditor”) in connection with their audit of any annual revenue and expenses
        statements of the Assets that Buyer or any of its Affiliates requires to
        comply
        with their tax and financial reporting requirements, and their review of
        any
        interim quarterly revenue and expense statements of the Assets that Buyer
        requires to comply with such reporting requirements.  Buyer’s
        cooperation will include (i) such reasonable access to Seller’s employees who
        were responsible for preparing the revenue and expense statements and work
        papers and other supporting documents used in the preparation of such financial
        statements as may be required by Buyer’s Auditor to perform an audit in
        accordance with generally accepted auditing standards, and (ii) delivery
        of one
        or more customary representation letters (in substantially the form previously
        approved by Seller and Buyer) from Seller to Buyer’s Auditor that are requested
        by Buyer to allow such auditors to complete an audit (or review of any interim
        quarterly financials), and to issue an opinion that in Buyer’s experience is
        acceptable with respect to an audit or review of those revenue and expense
        statements required pursuant to this Section.  Buyer will reimburse
        Seller, within three (3) business days after demand therefore, for any
        reasonable out-of-pocket and overhead costs with respect to any costs incurred
        by Seller in complying with the provisions of this Section.  In the
        event that Buyer’s Auditors determine that any of the Assets are not auditable
        due to insufficient financial records, or for any reason determined by Auditors,
        then the unauditable Assets will be excluded from this sale and the purchase
        price will be reduced by the value of said Assets pursuant to the allocated
        value as seen in Exhibit 2.4.

       

      10.           CERTAIN
        AGREEMENTS OF BUYER.  Buyer
        agrees and covenants that unless Seller shall have consented otherwise in
        writing, the following provisions shall apply:

       

      10.1           Plugging
        Obligation.
        Upon
        consummation of the Closing, Buyer shall perform and assume all liability
        for
        the necessary and proper plugging and abandonment of all Wells and all surface
        restoration and reclamation required by law or the Leases.

       

      10.2           Plugging
        Bond.  Buyer
        shall post, prior to Closing, the necessary bonds or letters of credit as
        required by the state in which the Leases are located for the plugging of
        all
        Wells, and provide Seller with a copy of same, and provide proof satisfactory
        to
        Seller that the applicable state has accepted such bonds or letters of credit
        as
        sufficient assurance to cover the plugging of all Wells and related
        matters.  Further, Buyer shall provide to Seller copies of the
        approval by any applicable regulatory agencies concerning change of operatorship
        of the Assets if Buyer is duly elected Operator.

       

      10.3           Seller’s
        Logos.  Commencing
        no later than thirty (30) days after Closing, Buyer shall promptly cover
        or
        cause to be covered by decals or new signage any names and marks used by
        Seller,
        and all variations and derivatives thereof and logos relating thereto, from
        the
        Assets and shall not thereafter make any use whatsoever of such names, marks
        and
        logos.

       

      
        
           

        

        
          Page
            25

          
            

          

        

        
           

        

      

       

      10.4           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 1.1031(k)-1(g)(4)(v) of the Treasury Regulations), or to its Qualified
        Exchange Accommodation Titleholder (as that term is defined in Rev. Proc.
        2000-37), in connection with effectuation of a like-kind
        exchange.  However, Seller and Buyer acknowledge and agree that any
        assignment of this Agreement to a Qualified Intermediary or to a Qualified
        Exchange Accommodation Titleholder 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.

       

      11.           CONDITIONS
        PRECEDENT TO OBLIGATIONS OF BUYER.  All
        obligations of Buyer under this Agreement are, at Buyer’s election, subject to
        the fulfillment, prior to or at the Closing, of each of the following
        conditions:

       

      11.1           No
        Litigation.  At
        the Closing, no suit, action or other proceeding shall be pending before
        any
        court or governmental agency which attempts to prevent the occurrence of
        the
        transactions contemplated by this Agreement.

       

      11.2           Representations
        and Warranties.  All
        representations and warranties of Seller contained in this Agreement shall
        be
        true in all material aspects as of the Closing as if such representations
        and
        warranties were made as of the Closing Date (except for those representations
        or
        warranties that are expressly made only as of another specific date, which
        representations and warranties shall be true in all material respects as
        of such
        other date) and Seller shall have performed and satisfied in all material
        respects all covenants and fulfilled all conditions required by this Agreement
        to be performed and satisfied by Seller at or prior to the Closing.

       

      12.           CONDITIONS
        PRECEDENT TO THE OBLIGATIONS OF SELLER.  All
        obligations of Seller under this Agreement are, at Seller’s election, subject to
        the fulfillment, prior to or at the Closing, of each of the following
        conditions:

       

      12.1           No
        Litigation.  At
        the Closing, no suit, action or other proceeding shall be pending before
        any
        court or governmental agency which attempts to prevent the occurrence of
        the
        transactions contemplated by this Agreement.

       

      12.2           Representations
        and Warranties.  All
        representations and warranties of Buyer contained in this Agreement shall
        be
        true in all material aspects as of the Closing, as if such representations
        and
        warranties were made as of the Closing Date (except for those representations
        or
        warranties that are expressly made only as of another specific date, which
        representations and warranties shall be true in all material respects as
        of such
        other date) and Buyer shall have performed and satisfied in all material
        respects all covenants and fulfilled all conditions required by this Agreement
        to be performed and satisfied by Buyer at or prior to the Closing.

       

      13.           TERMINATION.

       

      13.1           Causes
        of Termination.  This
        Agreement and the transactions contemplated herein may be
        terminated:

       

      
        	
                (A)

              	
                At
                  any time by mutual consent of the
                  Parties.

              

      

       

      
        
           

        

        
          Page
            26

          
            

          

        

        
           

        

      

       

      
        	
                (B)

              	
                By
                  either Party as provided in Sections 5.4(C), 5.5(B) or 6.4(D) pertaining
                  to Title Defects, preferential rights or Adverse Environmental
                  Conditions,
                  respectively.

              

      

       

      
        	
                (C)

              	
                By
                  Buyer if, on the Closing Date, any of the conditions set forth
                  in Article
                  11 hereof shall not have been satisfied or waived; provided, however,
                  that
                  Seller shall have the right to satisfy such condition for a period
                  of
                  twenty (20) days following delivery of notice from Buyer regarding
                  such
                  failure or, if such condition cannot reasonably be satisfied within
                  such
                  20-day period, Seller shall have the right to commence the actions
                  necessary to satisfy such condition within such 20-day period and
                  thereafter to diligently continue such actions beyond such period
                  until
                  such satisfaction has been
                  effected.

              

      

       

      
        	
                (D)

              	
                By
                  Seller if, on the Closing Date, any of the conditions set forth
                  in Article
                  12 hereof shall not have been satisfied or waived; provided, however,
                  that
                  with respect to any condition other than a material failure of
                  Buyer to
                  perform its obligations under Section 3.2, as to which the granting
                  of any
                  cure period shall be entirely within Seller’s sole and absolute
                  discretion, Buyer shall have the right to satisfy such condition
                  for a
                  period of twenty (20) days following delivery of notice from Seller
                  regarding such failure or, if such condition cannot reasonably
                  be
                  satisfied within such 20-day period, Buyer shall have the right
                  to
                  commence the actions necessary to satisfy such condition within
                  such
                  20-day period and thereafter to diligently continue such actions
                  beyond
                  such period until such satisfaction has been
                  effected.

              

      

       

      13.2           Effect
        of Termination.

       

      
        	
                (A)

              	
                Buyer’s
                  Breach.  If Closing does not occur because Buyer wrongfully
                  fails to tender performance at Closing or otherwise breaches this
                  Agreement prior to Closing, and Seller is ready to close and is
                  not in
                  material breach of this Agreement, Seller shall have the right
                  to
                  terminate this Agreement and retain the Deposit, together with
                  interest
                  thereon, as liquidated damages.  Buyer’s failure to close shall
                  not be considered wrongful if (i) conditions to Buyer’s obligation to
                  close under Article 11 are not satisfied through no fault of Buyer
                  and are
                  not waived, or (ii) Buyer has terminated this Agreement as of right
                  under Section 13.1.  The remedy set forth herein shall be
                  Seller’s sole and exclusive remedy for Buyer’s wrongful failure to close
                  hereunder and Seller expressly waives any and all other remedies,
                  legal
                  and equitable, that it otherwise may have for Buyer’s failure to
                  close.

              

      

       

      
        
          	
                  (B)

                	
                  Seller’s
                    Breach.  If Closing does not occur because Seller wrongfully
                    fails to tender performance at Closing or otherwise breaches
                    this
                    Agreement prior to Closing, and Buyer is ready to close and is
                    not in
                    material breach of this Agreement, Buyer may terminate this Agreement,
                    in
                    which event Seller will return the Deposit, together with interest
                    thereon, to Buyer immediately after the determination that the
                    Closing
                    will not occur.  If Buyer elects not to terminate this Agreement
                    upon any such breach by Seller, Buyer shall retain all legal
                    remedies for
                    Seller’s breach of this Agreement, including, without limitation, specific
                    performance of this Agreement; provided, however, that in any
                    suit for
                    damages by Buyer against Seller for any such breach (i) Buyer’s total
                    damages arising out of or related to Seller’s breach of any provision of
                    this Agreement shall be limited to the amount of the Deposit,
                    and
                    (ii) Seller shall not have any liability to Buyer for consequential,
                    special, punitive or exemplary damages arising out of or related
                    to
                    Seller’s breach of any provision of this Agreement.  The
                    foregoing limitations on damages shall not preclude Buyer from
                    seeking
                    specific performance of this Agreement.  Seller’s failure to
                    close shall not be considered wrongful if (i) conditions to Seller’s
                    conditions to close under Article 12 are not satisfied through
                    no fault of
                    Seller and are not waived; or (ii) Seller has terminated this
                    Agreement as of right under Section
                    13.1.

                

        

         

        
          
             

          

          
            Page
              27

            
              

            

          

          
             

          

        

         

        
          	
                  (C)

                	
                  Termination
                    Pursuant to Section 13.1.  If Buyer or Seller terminates
                    this Agreement pursuant to Section 13.1 in the absence of a breach
                    by the
                    other Party, Seller shall return the Deposit to Buyer and neither
                    Buyer
                    nor Seller shall have any liability to the other Party for termination
                    of
                    this Agreement.  If Buyer or Seller terminates this Agreement
                    pursuant to Section 13.1 and asserts that a breach of this Agreement
                    has
                    occurred, the notice of termination shall include a statement
                    describing
                    the nature of the alleged breach together with supporting
                    documentation.

                

        

         

        
          	
                  (D)

                	
                  Effect
                    of Termination.  In the event of the termination of this
                    Agreement pursuant to the provisions of this Article 13 or elsewhere
                    in
                    this Agreement, this Agreement shall become void and have no
                    further force
                    and effect and, except as provided in this Article 13, for the
                    indemnities
                    provided for in Sections 6.2(B) and 14.3, any breach of this
                    Agreement
                    prior to such termination and any continuing confidentiality
                    requirement,
                    neither Party shall have any further right, duty or liability
                    to the other
                    hereunder.  Upon termination, Buyer agrees to return to Seller
                    or destroy all materials, documents and copies thereof provided,
                    obtained
                    or discovered in the course of any due diligence investigations
                    of the
                    Assets.

                

        

         

      

      14.           INDEMNIFICATION.

       

      14.1           Indemnification
        by Seller.  UPON
        CLOSING, SELLER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND,
        INDEMNIFY, AND HOLD HARMLESS BUYER, ITS AFFILIATES, AND EACH OF THEIR RESPECTIVE
        DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND OTHER REPRESENTATIVES (COLLECTIVELY
        THE “BUYER GROUP”) FROM AND AGAINST THE FOLLOWING:

       

      
        	
                (A)

              	
                MISREPRESENTATIONS.  ALL
                  CLAIMS, DEMANDS, LIABILITIES, JUDGMENTS, LOSSES AND REASONABLE
                  COSTS,
                  EXPENSES AND ATTORNEYS’ FEES (INDIVIDUALLY A “LOSS” AND COLLECTIVELY, THE
                  “LOSSES”) ARISING FROM THE BREACH BY SELLER OF ANY REPRESENTATION OR
                  WARRANTY SET FORTH IN THIS AGREEMENT THAT SURVIVES
                  CLOSING;

              

      

       

      
        	
                (B)

              	
                BREACH
                  OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY SELLER
                  OF ANY COVENANT SET FORTH IN THIS AGREEMENT;
                  AND

              

      

       

      
        	
                (C)

              	
                OWNERSHIP
                  AND OPERATION.  ALL LOSSES ARISING FROM SELLER’S OWNERSHIP
                  AND OPERATION OF THE ASSETS PRIOR TO THE EFFECTIVE TIME DIRECTLY
                  ASSOCIATED WITH THE FOLLOWING
                  MATTERS:

              

      

       

      
        
           

        

        
          Page
            28

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (i)    DAMAGES
                  TO PERSONS OR PROPERTY FOR CLAIMS ASSERTED BY ANY THIRD PARTY AND
                  ACCRUING
                  PRIOR TO THE EFFECTIVE TIME;

              

      

      

      
        	
                 

              	
                (ii)   THE
                  VIOLATION BY SELLER OF THE TERMS OF ANY AGREEMENT BINDING UPON
                  SELLER;
                  AND

              

      

      

      
        	
                 

              	
                (iii)  CLAIMS
                  AGAINST SELLER BY CO-OWNERS, PARTNERS, JOINT VENTURERS AND OTHER
                  PARTICIPANTS IN THE WELLS.

              

      

      

      
        	
                (D)

              	
                Notwithstanding
                  the above, the following limitations shall apply to Seller’s
                  indemnification obligations:

              

      

       

      
        	
                 

              	
                (i)    Seller
                  shall not be obligated to indemnify Buyer for any Loss unless Buyer
                  has
                  delivered a written notice of such Loss within the Survival Period
                  (as
                  defined below) applicable to such Loss.  Any Loss for which
                  Seller does not receive written notice before the end of the Survival
                  Period shall be deemed to be an Assumed Liability.  The
                  “Survival Period” applicable to Losses shall
                  mean:

              

      

      

      
        	
                 

              	
                (1)

              	
                With
                  regard to a breach of representations and warranties contained
                  in Sections
                  7.1(A), (B), (C) and (D), for a period of one (1) year following
                  the
                  Closing;

              

      

       

      
        	
                 

              	
                (2)

              	
                All
                  of the other representations and warranties by Seller in this Agreement
                  for a period of six (6) months following the
                  Closing;

              

      

       

      
        	
                 

              	
                (3)

              	
                With
                  regard to a breach of covenants, an indefinite period following
                  the
                  Closing;

              

      

       

      
        	
                 

              	
                (4)

              	
                With
                  regard to the matters covered by Section 14.1 (C), for a period of six
                  months after the Closing.

              

      

       

      
        	
                 

              	
                (ii)   The
                  indemnification obligations of Seller pursuant to this Agreement
                  shall be
                  limited to actual Losses and shall not include incidental, consequential,
                  indirect, punitive, or exemplary Losses or
                  damages;

              

      

      

      
        	
                 

              	
                (iii)  Seller’s
                  aggregate liabilities and obligations under this Article 14 shall
                  not
                  exceed ten percent (10%) of the Base Purchase
                  Price;

              

      

      

      
        	
                 

              	
                (iv)  Seller
                  shall have no liability or obligation for any Losses, unless and
                  until and
                  only to the extent that the aggregate Losses for which Buyer is
                  entitled
                  to recover under this Agreement exceeds one percent (1%) of the
                  Base
                  Purchase Price (the “Indemnity Deductible”) (such amount being a
                  deductible and not a threshold).

              

      

      

      
        	
                 

              	
                (v)   Seller
                  shall have no liability in excess of the Allocated Value, less
                  any prior
                  adjustments to the Base Purchase Price, for any Losses associated
                  with the
                  claim that Seller does not have Defensible Title associated with
                  a
                  particular Asset;

              

      

       

      
        
           

        

        
          Page
            29

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (vi)  The
                  amount of Losses required to be paid by Seller to indemnify Buyer
                  pursuant
                  to this Agreement shall be reduced to the extent of any amounts
                  actually
                  received by Buyer pursuant to the terms of the insurance policies
                  (if any)
                  covering such claim and any tax benefits received by
                  Buyer.

              

      

      

      
        	
                 

              	
                (vii)
                  Seller’s indemnification obligations shall not cover any liabilities,
                  duties and obligations relating to properly plugging and abandoning
                  wells,
                  restoring and reclaiming the surface, removal of all pipelines,
                  equipment,
                  and related facilities now or hereafter located on the Assets,
                  and
                  cleaning up, restoring and Remediation of the Assets in accordance
                  with
                  the Environmental Laws and the relevant Leases, or any other violation
                  or
                  claimed violation of Environmental Laws (including but not limited
                  to the
                  payment of fines, penalties, monetary sanctions or other civil
                  liabilities) or the presence, disposal, release or threatened release
                  of
                  any hazardous substance or hazardous waste from the Assets into
                  the
                  atmosphere or into or upon land or any water course or body of
                  water,
                  including groundwater, whether or not attributable to Seller’s activities
                  or the activities of third parties.  All such matters are
                  covered exclusively by Article 6 of this
                  Agreement.

              

      

      

      
        	
                 

              	
                (viii)
                  Buyer acknowledges and agrees that the indemnification provisions
                  in this
                  Article 14 and the termination rights in Article 13 shall be the
                  exclusive
                  remedies of Buyer with respect to the transactions contemplated
                  by this
                  Agreement.

              

      

      

      14.2           Indemnification
        by Buyer.  UPON
        CLOSING, BUYER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND,
        INDEMNIFY, AND HOLD HARMLESS SELLER’S GROUP FROM AND AGAINST THE
        FOLLOWING:

       

      
        	
                (A)

              	
                MISREPRESENTATIONS.  ALL
                  LOSSES ARISING FROM THE BREACH BY BUYER OF ANY REPRESENTATION OR
                  WARRANTY
                  SET FORTH IN THIS AGREEMENT THAT SURVIVES
                  CLOSING;

              

      

       

      
        	
                (B)

              	
                BREACH
                  OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY BUYER
                  OF ANY COVENANT SET FORTH IN THIS
                  AGREEMENT;

              

      

       

      
        	
                (C)

              	
                ASSUMED
                  LIABILITIES.  ALL LOSSES ARISING FROM OR COMPRISING THE
                  ASSUMED LIABILITIES.

              

      

       

      14.3           Physical
        Inspection.  BUYER
        INDEMNIFIES AND AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS THE
        SELLER’S GROUP FROM AND AGAINST ANY AND ALL CLAIMS ARISING FROM BUYER’S
        INSPECTING AND OBSERVING THE ASSETS, INCLUDING (A) CLAIMS FOR PERSONAL
        INJURIES TO OR DEATH OF EMPLOYEES OF THE BUYER, ITS CONTRACTORS, AGENTS,
        CONSULTANTS AND REPRESENTATIVES, AND DAMAGE TO THE PROPERTY OF BUYER OR OTHERS
        ACTING ON BEHALF OF BUYER; AND (B) CLAIMS, DEMANDS, LOSSES, DAMAGES,
        LIABILITIES, JUDGMENTS, CAUSES OF ACTION, COSTS OR EXPENSES FOR PERSONAL
        INJURIES TO OR DEATH OF EMPLOYEES OF THE SELLER’S GROUP OR THIRD PARTIES, AND
        DAMAGE TO THE PROPERTY OF THE SELLER’S GROUP OR THIRD PARTIES.  THE
        FOREGOING INDEMNITY INCLUDES, AND THE PARTIES INTEND IT TO INCLUDE, AN
        INDEMNIFICATION OF THE SELLER’S GROUP FROM AND AGAINST CLAIMS ARISING OUT OF OR
        RESULTING, IN WHOLE OR PART, FROM THE CONDITION OF THE ASSETS OR THE SELLER’S
        GROUP’S SOLE, JOINT, COMPARATIVE, OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR
        FAULT BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER’S
        GROUP.

       

      
        
           

        

        
          Page
            30

          
            

          

        

        
           

        

      

       

      14.4           Notification.  As
        soon as reasonably practical after obtaining knowledge thereof, the indemnified
        Party shall notify the indemnifying Party of any claim or demand which the
        indemnified Party has determined has given or could give rise to a claim
        for
        indemnification under this Article 14.  Such notice shall specify the
        agreement, representation or warranty with respect to which the claim is
        made,
        the facts giving rise to the claim and the alleged basis for the claim, and
        the
        amount (to the extent then determinable) of liability for which indemnity
        is
        asserted.  In the event any action, suit or proceeding is brought with
        respect to which a Party may be liable under this Article 14, the defense
        of the
        action, suit or proceeding (including all settlement negotiations and
        arbitration, trial, appeal, or other proceeding) shall be at the discretion
        of
        and conducted by the indemnifying Party.  If an indemnified Party
        shall settle any such action, suit or proceeding without the written consent
        of
        the indemnifying Party (which consent shall not be unreasonably withheld),
        the
        right of the indemnified Party to make any claim against the indemnifying
        Party
        on account of such settlement shall be deemed conclusively denied.  An
        indemnified Party shall have the right to be represented by its own counsel
        at
        its own expense in any such action, suit or proceeding, and if an indemnified
        Party is named as the defendant in any action, suit or proceeding, it shall
        be
        entitled to have its own counsel and defend such action, suit or proceeding
        with
        respect to itself at its own expense.  Subject to the foregoing
        provisions of this Article 14, neither Party shall, without the other Party’s
        written consent, settle, compromise, confess judgment or permit judgment
        by
        default in any action, suit or proceeding if such action would create or
        attach
        any liability or obligation to the other Party.  The Parties agree to
        make available to each other, and to their respective counsel and accountants,
        all information and documents reasonably available to them which relate to
        any
        action, suit or proceeding, and the Parties agree to render to each other
        such
        assistance as they may reasonably require of each other in order to ensure
        the
        proper and adequate defense of any such action, suit or proceeding.

       

      15.           MISCELLANEOUS.

       

      15.1           Casualty
        Loss.

       

      
        	
                (A)

              	
                An
                  event of casualty means volcanic eruptions, acts of God, fire,
                  explosion,
                  earthquake, wind storm, flood, drought, condemnation, the exercise
                  of any
                  right of eminent domain, confiscation and seizure (a
                  “Casualty”).  A Casualty does not include depletion due to
                  normal production and depreciation or failure of equipment or
                  casing.

              

      

       

      
        	
                (B)

              	
                If,
                  prior to the Closing, a Casualty occurs (or Casualties occur) which
                  results in a reduction in the value of any of the Assets in excess
                  of
                  twenty-five percent (25%) of the Allocated Value of the affected
                  Assets
                  (“Casualty Loss”), (i) Seller may retain such Asset and such Asset
                  shall be the subject of an adjustment to the Base Purchase Price
                  in the
                  same manner set forth in Section 5.4 hereof, or (ii) at the Closing,
                  Seller shall assign to Buyer the right to receive all insurance
                  proceeds
                  or other sums payable to Seller by reason of such Casualty Loss,
                  the Base
                  Purchase Price shall not be adjusted by reason of such payment,
                  and Seller
                  shall convey the affected Assets to
                  Buyer.

              

      

       

      
        
           

        

        
          Page
            31

          
            

          

        

        
           

        

      

       

      
        	
                (C)

              	
                For
                  purposes of determining the diminution in value of an Asset as
                  a result of
                  a Casualty Loss, the Parties shall use the same methodology as
                  applied in
                  determining the diminution in value of an Asset as a result of
                  a Title
                  Defect as set forth in Section 5.4.

              

      

       

      15.2           Confidentiality.

       

      
        	
                (A)

              	
                Prior
                  to Closing, to the extent not already public, Buyer shall not disclose
                  to
                  any party that it is conducting negotiations with Seller or has
                  entered
                  into this Agreement other than as expressly permitted in the
                  confidentiality agreement executed by Buyer in Seller’s favor prior to the
                  execution of this Agreement, which shall continue to apply until
                  the
                  Closing and thereafter in the event of termination of this Agreement
                  prior
                  to the Closing. Buyer shall exercise all due diligence in safeguarding
                  and
                  maintaining secure all engineering, geological and geophysical
                  data,
                  seismic data, reports and maps, the results and findings of Buyer
                  with
                  regard to its due diligence associated with the Assets (including
                  without
                  limitation with regard to due diligence associated with environmental
                  and
                  title matters) and other data relating to the Assets (collectively,
                  the
                  “Confidential Information”).  Buyer acknowledges that, prior to
                  Closing, all Confidential Information shall be treated as confidential.
                  Notwithstanding the foregoing, Seller understands that Buyer has
                  public
                  reporting obligations that may require public announcement of certain
                  information relating to this Agreement.  Seller and Buyer shall
                  consult with each other with regard to all publicity and other
                  releases at
                  or prior to the Closing concerning this Agreement and the transaction
                  contemplated hereby and, except as required by applicable law or
                  other
                  applicable rules or regulations of any governmental body or stock
                  exchange, neither party shall issue any publicity or other release
                  without
                  the prior written consent of the other party, such consent not
                  to be
                  unreasonably withheld.

              

      

       

      
        	
                (B)

              	
                In
                  the event of termination of this Agreement for any reason, Buyer
                  shall not
                  use or knowingly permit others to use such Confidential Information
                  in a
                  manner detrimental to Seller, and will not disclose any such Confidential
                  Information to any person, firm, corporation, association or other
                  entity
                  for any reason or purpose whatsoever, except to Seller or to a
                  governmental agency pursuant to a valid subpoena or other order
                  or
                  pursuant to applicable governmental regulations, rules or
                  statutes.

              

      

       

      
        	
                (C)

              	
                The
                  undertaking of confidentiality shall not diminish or take precedence
                  over
                  any separate confidentiality agreement between the
                  Parties.  Should this Agreement terminate, such separate
                  confidentiality agreement shall remain in full force and
                  effect.

              

      

       

      15.3           Notices.  Any
        notice, request, demand, or consent required or permitted to be given hereunder
        shall be in writing and delivered in person or by certified letter, with
        return
        receipt requested, or by facsimile addressed to the Party for whom intended
        at
        the following addresses:

       

      
        
           

        

        
          Page
            32

          
            

          

        

        
           

        

      

       

      SELLER:

       

      Raven
        Resources, LLC

      13220
        North MacArthur

      Oklahoma
        City, Oklahoma 73142

      Attn:                      Mr.
        Michael Lee

      Tel:  (405)
        773-7340

      Fax:  (405)
        773-7488

      

      

      BUYER:

       

      Legacy
        Reserves Operating
        LP

      303
        West Wall, Suite 1600

      Midland,
        Texas 79701

      Attn:                      Mr.
        Kyle A. McGraw

      Tel:
        (432) 682-2516

      Fax:
        (432) 684-3774

      

      With
        copy
        to:  Cotton, Bledsoe, Tighe & Dawson

      500
        W.
        Illinois, Suite 300

      Midland,
        Texas   79701

      Attention:  Bill
        Howard

      

      or
        at
        such other address as any of the above shall specify by like notice to the
        other.

       

      15.4           Press
        Releases and Public Announcements.  Purchaser
        is permitted to issue a press release and filing on Form 8-K with the Securities
        and Exchange Commission related to the acquisition.  Notwithstanding
        the foregoing, no press release or any public announcement shall identify
        Seller
        or the principals of Seller without Seller’s prior written consent, which
        consent shall not be unreasonably withheld.

       

      15.5           Compliance
        with Express Negligence Test.  THE
        PARTIES AGREE THAT THE INDEMNIFICATION OBLIGATIONS OF THE INDEMNIFYING PARTY
        SHALL BE WITHOUT REGARD TO THE NEGLIGENCE (EXCLUDING GROSS NEGLIGENCE) OR
        STRICT
        LIABILITY OF THE INDEMNIFIED PERSON(S), WHETHER THE NEGLIGENCE OR STRICT
        LIABILITY IS ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE.

       

      15.6           Governing
        Law.  This
        Agreement is governed by and must be construed according to the laws of the
        State of Texas, excluding any conflicts-of-law rule or principle that might
        apply the law of another jurisdiction.  All disputes related to this
        Agreement shall be submitted exclusively to the jurisdiction of the courts
        of
        the State of Texas and venue shall be in the civil district courts of Midland,
        Midland County, Texas.

       

      15.7           Exhibits.  The
        Exhibits attached to this Agreement are incorporated into and made a part
        of
        this Agreement.

       

      
        
           

        

        
          Page
            33

          
            

          

        

        
           

        

      

       

      15.8           Fees,
        Expenses, Taxes and Recording.

       

      
        	
                (A)

              	
                Each
                  Party shall be solely responsible for all costs and expenses incurred
                  by
                  it in connection with this transaction (including, but not limited
                  to fees
                  and expenses of its counsel and accountants) and shall not be entitled
                  to
                  any reimbursements from the other Party, except as otherwise provided
                  in
                  this Agreement.

              

      

       

      
        	
                (B)

              	
                Buyer
                  shall file all necessary Tax returns and other documentation with
                  respect
                  to all transfer, documentary, sales, use, stamp, registration and
                  other
                  similar Taxes and fees, and, if required by applicable law, Seller
                  shall
                  join in the execution of any such Tax returns and other
                  documentation.  Notwithstanding anything set forth in this
                  Agreement to the contrary, Buyer shall pay any transfer, documentary,
                  sales, use, stamp, registration and other similar Taxes and fees
                  incurred
                  in connection with this Agreement and the transactions contemplated
                  hereby.  Buyer shall also pay any equipment lease transfer fees
                  or other fees or expenses incurred in connection with transfer
                  of the
                  Assets to Buyer except as otherwise provided by this
                  Agreement.

              

      

       

      
        	
                (C)

              	
                Buyer
                  shall, at its own cost, immediately record all instruments of conveyance
                  and sale in the appropriate office of the state and county in which
                  the
                  lands covered by such instrument are located.  Buyer shall
                  immediately file for and obtain the necessary approval of all federal,
                  Indian, tribal or state government agencies to the assignment of
                  the
                  Assets.  The assignment of any state, federal or Indian tribal
                  oil and gas leases shall be filed in the appropriate governmental
                  offices
                  on a form required and in compliance with the applicable rules
                  of the
                  applicable government agencies.  Buyer shall supply Seller with
                  a true and accurate photocopy reflecting the recording information
                  of all
                  the recorded and filed assignments within a reasonable period of
                  time
                  after their recording and filing.  In the event that Seller
                  undertakes to record and/or file the conveyance instruments and
                  other
                  documents associated with this transfer of interest, Buyer shall
                  reimburse
                  Seller for all associated fees at Post
                  Closing.

              

      

       

      15.9           Assignment.  Subject
        to Section 10.5, this Agreement or any part hereof may not be assigned by
        either
        Party without the prior written consent of the other Party; provided, however,
        upon notice to the other Party, either Party shall have the right to assign
        all
        or part of its rights (but none of its obligations) under this Agreement
        in
        order to qualify transfer of the Assets as a “like-kind” exchange for federal
        tax purposes.  Subject to the foregoing, this Agreement is binding
        upon the Parties hereto and their respective successors and
        assigns.

       

      15.10         Entire
        Agreement.  This
        Agreement constitutes the entire agreement reached by the Parties with respect
        to the subject matter hereof, superseding all prior negotiations, discussions,
        agreements and understandings, whether oral or written, relating to such
        subject
        matter.

       

      15.11         Severability.  In
        the event that any one or more covenants, clauses or provisions of this
        Agreement shall be held invalid or illegal, such invalidity or unenforceability
        shall not affect any other provisions of this Agreement.

       

      
        
           

        

        
          Page
            34

          
            

          

        

        
           

        

      

       

      15.12         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.

       

      15.13         Time
        of the Essence.  The
        parties recognize and agree that time is of the essence of this
        Agreement.

      

      15.14         Counterpart
        Execution.  This
        Agreement may be executed in any number of counterparts, and each counterpart
        hereof shall be effective as to each Party that executes the same whether
        or not
        all such Parties execute the same counterpart.  If counterparts of
        this Agreement are executed, the signature pages from various counterparts
        may
        be combined into one composite instrument for all purposes.  All
        counterparts together shall constitute only one Agreement but each counterpart
        shall be considered an original.

       

      Executed
        as of the day and year first above written.

       

      
        	 	
                SELLER:

                 

                RAVEN RESOURCES

              	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ David
                Stewart	 
	 	 	David
                Stewart	 
	 	 	Managing
                Member	 
	 	 	 	 

      

    

     

    
      	 	
              BUYER:

               

              LEGACY RESERVES OPERATING LP

              By: LEGACY RESERVES OPERATING GP LLC, its general
                partner

            	 
	 	 	 	 
	
              Date

            	
              By:
                

            	/s/ Kyle
              A. McGraw	 
	 	 	Kyle
              A. McGraw	 
	 	 	Vice
              President, Business Development and Land	 
	 	 	 	 

    

     

    
      
         

      

      
        Page
          35ex_10-3.htm

    Exhibit
      10.3

     

     

     

    
      

      PURCHASE
        AND SALE AGREEMENT

      

      

      This
        Purchase and Sale Agreement
        (referred to herein as the “Agreement”) is between SUMMIT PETROLEUM
        MANAGEMENT CORPORATION, a Texas corporation whose address is 550 West
        Texas, Suite 700, Midland, Texas 79701, SUMMIT
        PETROLEUM LLC, a Texas limited liability corporation whose address is
        550 West Texas, Suite 700, Midland, Texas 79701 (all of which
        are collectively referred to herein as the “Seller(s)”) and LEGACY
        RESERVES OPERATING LP, a Delaware limited partnership whose address is
­­­­­­­­­­­­­­­­­­303
        West Wall, Suite 1600, Midland, Texas 79701, (referred to herein as the “Buyer”)
        is made and entered August 28, 2007, to be effective for all intents and
        purposes as of the Effective Time designated herein.

      

      Seller
        and Buyer for and in
        consideration of the mutual promises and covenants under this Agreement,
        the
        benefits to be derived by each party, and for other good and valuable
        consideration, the receipt and sufficiency of which are hereby acknowledged,
        agree as follows:

      

      

      ARTICLE
        1

      RECITALS

      

      Seller
        desires to sell to Buyer, and
        Buyer desires to purchase from Seller, certain oil and gas properties and
        related Properties on the terms and conditions set forth in this
        Agreement.

      

      Seller
        and Buyer for and in
        consideration of the mutual promises and covenants under this Agreement,
        the
        benefits to be derived by each party, and for other good and valuable
        consideration, the receipt and sufficiency of which are hereby acknowledged,
        agree as follows:

      

      

      ARTICLE
        2

      PURCHASE
        AND SALE

      

      2.1           Purchase
        and Sale.  Seller agrees to sell and convey all of its right,
        title and interest in and to the Property or Properties (as defined in Article
        2.2) and Buyer agrees to purchase the Property or Properties (as defined
        in
        Article 2.2), subject to the terms and conditions of this
        Agreement.

      

      2.2           Properties
        Defined.  The undivided interest described as follows and on
        Exhibit “A” (hereafter called the “Property or Properties”), except as excluded
        in Article 2.2(e):

      

      
        	
                 

              	
                (a)

              	
                Leases,
                  Lands, Wells and Pooling and Unitization Agreements.  All of
                  Seller’s right, title, and interest of whatever nature in all leasehold
                  and other interests in; (i) the oil, gas and mineral leases limited
                  to
                  those portions described on Exhibit “A” and including the working and net
                  revenue interests set forth therein (the “Leases”), insofar and only
                  insofar as said Leases include and pertain to and cover the lands
                  and
                  depths as specifically described herein on attached Exhibit “A” (the
                  “Lands”); (ii) the oil and gas wells located on the Leases or on Lands
                  pooled or unitized therewith (the “Wells”) including those listed on
                  Exhibit “A”; and (iii) the units, pooled acreage, spacing or proration
                  units or other allocation of acreage applicable to the Wells established
                  by or in accordance with the applicable state, federal or local
                  law;

              

      

      

      
        	
                 

              	
                (b)

              	
                Production.  Hydrocarbons
                  produced from or allocable to the Wells for periods on or after
                  the
                  Effective Time (as defined in Section 2.3) and the proceeds
                  therefrom;

              

      

      

      
        	
                 

              	
                (c)

              	
                Equipment.  Personal
                  property, equipment, fixtures, and improvements appurtenant to
                  or located
                  on the Leases or the Lands, or used or obtained in connection with
                  the
                  ownership or operation of the Properties,
                  and

              

      

      

      
        	
                 

              	
                (d)

              	
                Easements,
                  Contracts, Land Files and Records.  (i) appurtenances,
                  surface leases, easements, permits, licenses, servitudes and
                  rights-of-way; (ii) all leases, farmout agreements, unitization
                  agreements, pooling agreements, unit declarations, division orders,
                  transfer orders, joint interest billings, accounting, production
                  payment/payout records, operating contracts, excluding drilling
                  rig
                  contracts which are proprietary and non-assignable and any other
                  applicable agreements and instruments, including to the extent
                  assignable
                  all applicable production sales agreements, the existing electric
                  supply
                  agreement and water disposal agreements (except as to the Windham
                  14 (STA)
                  SWD System will be assigned to Buyer only to the extent that Buyer’s
                  disposal volume needs are subordinate to Seller’s disposal volume needs on
                  the Windham 14 SWD System), and (iii) all Records as are defined
                  in
                  Section 7.4 (b); however Seller retains such rights under this
                  Section
                  2.2(d) to the extent necessary to enjoy the use and access to its
                  other
                  properties, leases and lands.

              

      

       

      
        
           

        

        
          Page
            1of 18

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (e)

              	
                Excluded
                  Properties.   Seller’s interest in these Properties has
                  been collectively referred to  as “Property or Properties”,
                  provided, however, the Property or Properties shall not include
                  and there
                  is excepted, reserved  and excluded from this
                  Agreement  the produced water disposal system(s) and its
                  associated facilities and
                  equipment.

              

      

      

      2.3           Effective
        Time.                                           The
        transfer of the Properties shall occur at Closing, which is defined in Article
        7.1, effective as of 12:01 a.m., local time, September 1, 2007, (the “Effective
        Time”) on the Properties as described herein.

      

      2.4           Oil
        in Storage.  All oil in storage at the Effective Time, including
        working inventory, belongs to Seller.  “Oil in Storage” for purposes
        of this Agreement, will mean all oil which was produced from the Properties
        and
        which was, on the Effective Time, stored in tanks located on the Properties
        (or
        located elsewhere but used by Seller to store oil produced from the Properties
        prior to delivery to oil purchasers) and above pipeline connections shall
        be
        deemed to have been produced before the Effective Time. Oil inventories will
        be
        valued based on the realized price received by Seller for oil sales, from
        the
        Properties on the Effective Date.

      

      

      

      ARTICLE
        3

      PURCHASE
        PRICE

      

      3.1           Purchase
        Price; Allocations.

      

      
        	
                 

              	
                (a)

              	
                Amount.

              	
                The
                  Purchase
                  Price of the Properties shall be a consideration equal
                  to   FIFTEEN MILLION THREE HUNDRED THOUSAND ($15,300,000)
                  (Subject to
                  adjustment only as hereinafter provided).
                  

              

      

      

      
        	
                 

              	
                (b)

              	
                Allocation.  Buyer
                  has allocated the Purchase Price among the Properties including
                  the
                  undeveloped locations and behind pipe intervals, as set forth on
                  Exhibit
                  “A-1” attached hereto for the purpose of (1) establishing a basis for
                  certain taxes, and (2) giving notices of value to the owners of
                  any
                  preferential rights to purchase the Properties, (3) determining
                  the value
                  of a Title Defect(s) and/or Environmental Defect(s), if any and
                  (4)
                  allocation of the Purchase Price to each individual
                  Seller.

              

      

      

      
        	
                 

              	
                (c)

              	
                All
                  amounts required under this Article 3 to be paid by Buyer to Seller
                  shall
                  be made by wire transfer of immediately available funds to an account(s)
                  designated by Seller which designation shall be made on or before
                  the date
                  said payment is due.  These amounts are subject to further
                  adjustment after the Closing as provided in this
                  Agreement.  Seller may delay or refuse to proceed with the
                  Closing should Buyer refuse or fail to comply with payment provisions
                  as
                  set forth by Seller.  This right on the part of Seller is in
                  addition to all other rights and remedies Seller may have under
                  this
                  Agreement, at law, or in equity.

              

      

      

      
        	
                 

              	
                (d)

              	
                Buyer
                  and Seller hereby agree that Seller, in lieu of the sale of the
                  Properties
                  to Buyer for the cash consideration provided herein, shall have
                  the right
                  at any time prior to the Closing to assign all or a portion of
                  its rights
                  under this Agreement to a qualified intermediary, in order to accomplish
                  the transaction in a manner that will comply, either in whole or
                  in part
                  with the requirements of a like kind exchange pursuant to §1031 of the
                  Internal Revenue Code of 1986, as amended.  In the event Seller
                  does assign its rights under this Agreement pursuant to this Article
                  3.1(d), Seller agrees to notify Buyer in writing of such assignment
                  not
                  less than seven (7) days before Closing.  If Seller assigns its
                  rights under this Agreement, Buyer (i) consents to Seller's assignment
                  of
                  its rights in this Agreement, and (ii) deposit the Purchase Price
                  with the
                  qualified escrow or qualified trust account at the
                  Closing.

              

      

       

      
        
           

        

        
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            2of 18

          
            

          

        

        
           

        

      

       

      
        	
                 

              	
                (e)

              	
                Buyer
                  has deposited with Seller, and Seller acknowledges receipt of,
                  a
                  performance deposit in an amount which represents ten percent (10%)
                  of the
                  Purchase Price (the "Deposit"), which amount shall be held by Seller
                  and
                  distributed as follows:

              

      

      

      
        	
                 

              	
                (i)

              	
                if
                  this Agreement is terminated by mutual consent of the parties as
                  provided
                  in Article 8.1, the Deposit shall be returned by Seller to Buyer,
                  without
                  interest;

              

      

      

      
        	
                 

              	
                (ii)

              	
                if
                  this Agreement is terminated by either party pursuant to the termination
                  right provided in Article 8.1 and at such time all of Buyer's conditions
                  to Closing as set forth in Article 7.3 have not been satisfied
                  (and such
                  failure is not due to a breach by Buyer of its obligations hereunder),
                  the
                  Deposit shall be returned by Seller to Buyer
                  without  interest;

              

      

      

      
        	
                 

              	
                (iii)

              	
                if
                  this Agreement is terminated by either party pursuant to the termination
                  right provided in Article 8.1 and at such time all of Buyer's conditions
                  to Closing as set forth in Article 7.3 have been satisfied, the
                  Deposit
                  shall be retained by Seller, and such shall constitute liquidated
                  damages
                  and Seller’s sole damages for any breach by Buyer of this Agreement
                  causing its termination as set forth in this section;
                  and

              

      

      

      
        	
                 

              	
                (iv)

              	
                if
                  Closing occurs, Seller shall apply the Deposit towards the Purchase
                  Price.

              

      

      

      
        	
                 

              	
                (v)

              	
                the
                  Deposit shall be sent by wire transfer by end of business on August
                  31,
                  2007, as instructed by Seller.

              

      

      

         At
        Closing, Buyer shall pay to Seller the total Purchase Price set forth in
        Article
        3.1(a) less an amount equal to the Deposit set forth in Article 3.1(e) and
        less
        any adjustments as set forth in Article 7.5

      

      

      ARTICLE
        4

      TITLE
        & ENVIRONMENTAL

      

      4.1           General
        Access.  Immediately upon execution of this Agreement and prior to
        Closing, Seller will provide Buyer, at Buyer’s sole risk, cost and expense,
        access at all reasonable times to the Properties and to the files, records,
        contracts, correspondence, maps, data, reports, plats, title opinions and
        title
        reports and other documents of Seller pertaining to the Properties for purposes
        of conducting due diligence to determine the existence of any Title Defects
        and/or Environmental Defects.

      

      4.2           Seller’s
        Title.  Each Seller hereby warrants and represents by through and
        under each Seller, but not otherwise, to Buyer that each Seller's title to
        the
        Properties as of the Effective Time is (and as of the Closing will be) free
        of
        "Title Defects", as defined below.

      

      4.3           Title
        Defect. The term “Title Defect” as used herein shall mean any encumbrance,
        encroachment, irregularity, defect in or objection to Seller’s title to the
        Properties (except Permitted Encumbrances) that alone or in combination with
        other defects renders Seller’s title to the Properties less than Defensible
        Title, as defined in Article 5.1(d) below, including; (i) liens securing
        unpaid
        indebtedness or taxes; (ii) preferential rights, consents to assignment and
        similar provisions of the type commonly encountered in the oil and gas industry;
        (iii) matters indicating that Buyer, or Buyer's successor could not successfully
        defend against a claim by any person or entity that a defect exists as to
        any
        Property; (iv) differences between the net revenue interest or the working
        interest as set out on Exhibit “A-1”, and the net revenue interest and working
        interest determined by Buyer pursuant to its review of title; (v) obligations
        to
        deliver production at a future date without payment for the production; and/or
        (vi) a default by Seller under some material provision of a lease, farmout
        agreement or agreement affecting any Property.

       

      
        
           

        

        
          Page
            3of 18

          
            

          

        

        
           

        

      

       

      4.4           Permitted
        Encumbrances.  “Permitted Encumbrances” shall mean: (i) minor
        defects in title which do not require the payment of money and otherwise
        do not
        have a material adverse effect on the value or operation of the affected
        portion
        of the Properties; (ii) liens for labor, services, materials or supplies
        furnished to the Properties which are not delinquent and which will be paid
        or
        discharged in the ordinary course of business; (iii) liens for taxes or
        assessments not yet due and not delinquent; (iv)  Lessor’s royalties,
        overriding royalties, division orders and similar burdens if the net cumulative
        effect of such burdens does not operate to reduce the net revenue interest
        from
        that set forth on Exhibit “A-1”;and (v) production sale contracts, so long as
        the prices payable under the contracts are representative of general arms
        length
        market prices being paid for similar production in the area, unitization
        and
        pooling declarations and agreements and any operating agreements, insofar
        as
        such contracts and agreements do not operate to increase the working interest
        or
        decrease the net revenue interest of Buyer from that stipulated on Exhibit
“A-1”
attached hereto; (vi) preferential rights to purchase and required third
        party
        consents to assignments and similar agreements with respect to which, prior
        to
        Closing, (A) waivers or consents are obtained from the appropriate parties,
        (B)
        the appropriate time period for asserting such rights has expired without
        an
        exercise of such rights, or (C) with respect to consent, failure to obtain
        consent does not affect the validity of an assignment to Buyer; (vii) 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 the same are customarily obtained subsequent
        to
        such sale or conveyance; (viii) rights reserved to or vested in any municipality
        or governmental, statutory, or public authority to control or regulate any
        of
        the Properties in any manner, and all applicable laws, rules and orders of
        any
        governmental authority; (ix) such Title Defects as Buyer shall have waived;
        and
        (x) liens released at Closing.

      

      4.5           Notice
        of Title Defects.  Buyer shall give Seller notice of any Title
        Defects as soon as practicable.  The notice shall:

      

      
        	
                 

              	
                (a)

              	
                be
                  in writing;

              

      

      

      
        	
                 

              	
                (b)

              	
                describe
                  in sufficient detail the nature of Title Defect and include appropriate
                  evidence to substantiate the Title
                  Defect;

              

      

      

      
        	
                 

              	
                (c)

              	
                describe
                  the steps and actions (in reasonable detail) which are necessary
                  in
                  Buyer’s opinion for the curing of identified Title
                  Defects;

              

      

      

      
        	
                 

              	
                (d)

              	
                be
                  delivered to Seller as soon as possible, but no later than September
                  24,
                  2007

              

      

      

      Buyer
        shall be deemed to have waived all Title Defects of which Seller has not
        been
        given the notice described in this Article 4.5.

      

      4.6           Remedies
        for Title Defects.  Seller shall have until Closing (after receipt
        of Buyer’s notification as to a specific Title Defect) in which to provide Buyer
        written evidence that the subject Title Defect has been either cured or
        removed.  Should Seller fail or be unable to provide evidence of Title
        Defect curative or removal then Buyer may at its option:

      

      
        	
                 

              	
                (a)

              	
                waive
                  such Title Defect; or

              

      

      

      
        	
                 

              	
                (b)

              	
                In
                  the event the Seller and Buyer cannot mutually agree on a purchase
                  price
                  adjustment for an alleged Title Defect, Buyer shall have the right
                  to (i)
                  proceed to Closing and accept the Interest with no purchase price
                  adjustment, or (ii)terminate this Agreement as to the Properties
                  affected
                  by the alleged Title Defect and receive a Purchase Price adjustment
                  for
                  such Properties as set forth in the allocation of value set forth
                  in
                  Exhibit “A-1”, or , where feasible, the proportionate allocated value;
                  or.

              

      

      

      
        	
                 

              	
                (c)

              	
                Buyer
                  and Seller may proceed to Closing without any adjustment to the
                  Purchase
                  Price and Seller will have until the Post-Closing to provide evidence
                  of
                  cure of any such Title Defect. If Seller is unable to cure under
                  this
                  Section 4.6(c), Buyer shall be entitled to an adjustment at Post-Closing
                  in accordance with Section 4.6(b).

              

      

       

      
        
           

        

        
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      If
        the reduction in the Purchase Price
        from an aggregate total of all Title Defect adjustments does not exceed One
        Hundred Thousand Dollars ($100,000), then there shall be no adjustment to
        the
        Purchase Price. However, if the aggregate total of all Title Defects exceeds
        One
        Hundred Thousand Dollars ($100,000), then the Purchase Price shall be adjusted
        by the total amount of such Title Defects.

      

      Should
        Seller be unable to provide
        evidence of Title Defect curative or desire to not make adjustment to the
        Purchase Price and it is determined by Seller that such Title Defect will
        materially and adversely reduce the net value of the Properties affected
        by an
        amount equal to or greater than ten percent (10%) of the Purchase Price,
        either
        Seller or Buyer may terminate this Agreement.  In such event, the
        Deposit shall be promptly returned to Buyer, without interest.

      

      If
        Buyer notifies Seller of a Title
        Defect, as provided for in Section 4.5 which Buyer desires to have cured
        and for
        which an adjustment to the Purchase Price has been made in accordance with
        the
        terms of this Agreement, Seller agrees to cooperate with Buyer prior to or
        after
        the Closing in endeavoring to cure any such defects (but Seller shall have
        no
        obligation to pay money or to undertake any legal obligation in this
        regard).  Buyer agrees to bear the cost of examining the title data
        furnished by Seller as curative hereunder, if any, or obtained by
        Buyer.

      

       

      4.7                      Environmental
        Defects. Buyer is aware that the interests and property have been used for
        exploration, development, and production of oil and gas and that there may
        be
        petroleum, produced water, wastes, or other materials located on or under
        the
        Property or associated with the interests. Equipment and sites included in
        the
        interests or property may contain asbestos, hazardous substances, or NORM.
        Notwithstanding anything to the contrary in this Agreement (including, without
        limitation, the provisions of Section 5.1(r) hereof), (a) this Section 4.7
        and
        Section 10.3 contains all representations and warranties with regard to any
        Environmental Laws (as hereinafter defined) and, except as expressly set
        forth
        in this Section 4.7 and Section 10.3, SELLER EXPRESSLY DISCLAIMS ANY
        REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING OR IN ANY WAY RELATING
        TO OBLIGATIONS OR LIABILITIES UNDER ANY ENVIRONMENTAL LAWS OR THE ENVIRONMENTAL
        CONDITION OF THE PROPERTIES, and (b) it makes no representation or
        warranty of any kind whatsoever regarding the presence or absence of any
        naturally occurring radioactive materials ("NORMs") on or near any of the
        Properties, and Buyer shall not be entitled to any adjustment to the Purchase
        Price or any other remedy or settlement of any kind whatsoever except as
        provided for in this Section 4.7, and it shall have no obligation or liability
        of any kind whatsoever to Buyer or any of its successors or assigns, with
        respect to any NORMs. To the best of Seller’s knowledge, (i) neither the
        Properties nor the operation thereof are in violation of any Environmental
        Laws
        in any material respect and (ii) it has not received any notice from any
        Governmental Authority (as hereinafter defined) of any violation of any
        Environmental Laws. For purposes of this Agreement, the term "Environmental
        Laws" shall mean, as to any given Property, all laws, statutes, ordinances,
        rules and regulations of any Governmental Authority pertaining to protection
        of
        the environment in effect as of the Effective Time and as interpreted by
        court
        decisions or administrative orders as of the Effective Time in the jurisdiction
        in which such Property is located. For purposes of this Section 4.7 the term
        "Governmental Authority" shall mean, as to any given Property, the United
        States
        and the state, county, parish, city and political subdivisions in which such
        Property is located and which exercises jurisdiction over such Property,
        and any
        agency, department, board or other instrumentality thereof that exercises
        jurisdiction over such Property.

       

      Upon
        Closing, Buyer will assume all liability for the assessment, remediation,
        removal, transportation, and disposal of wastes, asbestos, hazardous substances,
        and NORM from the interests and property and associated activities and will
        conduct these activities in accordance with all applicable laws and regulations,
        including the Environmental Laws.

       

      Buyer
        will have until September 24, 2007 to notify Seller of any material adverse
        environmental condition associated with the Property that Buyer finds
        unacceptable and that has an estimated cost net to the Property greater than
        One
        Hundred Thousand Dollars ($100,000) and is documented by third party evidence
        of
        said condition for which remediation is required under any Environmental
        Law.
        Upon Seller’s receipt of such notification, Seller will have until two (2) days
        before the Closing Date in which to elect to:

       

      
        
           

        

        
          Page
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                (a)

              	
                proceed
                  with Closing and either elect to remedy the condition or account
                  for said
                  costs for the remediation of the condition contained in Buyer’s
                  notification as a normal pre-Effective Time operating expense item
                  in the
                  Post Closing Adjustment, or

              

      

       

       

      
        	
                 

              	
                 (b)

              	
                remove
                  the subject Property from this Agreement and adjust the Purchase
                  Price
                  based upon the allocation of value set forth in Exhibit A-1,
                  or

              

      

       

       

      
        	
                 

              	
                (c)    terminate
                  this Agreement if the total cost to remediate all Environmental
                  Matters
                  will exceed  ten percent (10%) of the Purchase
                  Price.

              

      

       

       

      Should
        Seller elect to remedy the condition set forth in Section 4.7 (a) above,
        Seller
        shall remain as operator of the Property and continue remediation of the
        condition until the first of the following occur:

       

       

      
        	
                 

              	
                (I)

              	
                the
                  appropriate governmental authorities provide written notice to
                  Seller or
                  Buyer that no further remediation of the condition is required
                  to comply
                  with the applicable Environmental Laws;
                  or

              

      

       

       

      
        	
                 

              	
                (II)

              	
                An
                  independent third party determines to Seller’s and Buyer’s reasonable
                  satisfaction that the condition has been remediated to the level
                  required
                  by the Environmental Laws or as mutually agreed to by Buyer and
                  Seller.

              

      

       

       

      Upon
        the
        occurrence of either (I) or (II) above, Seller will notify Buyer that
        remediation of the condition is complete and provide a copy of the notification
        provided in (I) above, if applicable. Upon delivery of Seller’s notice, Seller
        will be released from all liability and have no further obligations under
        Section 4.7 and Section 10.3 of this Agreement.

       

       

      Buyer,
        for that period of time for which Buyer is operator of the Properties, Buyer
        will store, handle, transport, and dispose of or discharge all materials,
        substances, and wastes from the interests and property (including produced
        water, drilling fluids, NORM, and other wastes), whether present before or
        after
        the Effective Time, in accordance with applicable local, state, and federal
        laws
        and regulations. Buyer will keep records of the types, amounts, and location
        of
        materials, substances, and wastes that are transported, handled, discharged,
        released, or disposed of onsite and offsite.

       

       

      Notwithstanding
        any other provision within this Section 4.7, Buyer shall have the right to
        waive
        all such Environmental Matters and proceed with Closing.

       

      

      

      ARTICLE
        5

      REPRESENTATIONS
        AND WARRANTIES

      

      5.1           Seller’s
        Representations and Warranties.  Each Seller represents and
        warrants, with respect to such Seller, to Buyer as follows:

      

      
        	
                 

              	
                (a)

              	
                Description
                  and Title.  Seller represents and warrants that Exhibit “A”
                  sets forth a true, complete and legally sufficient description
                  of the
                  Properties.  It is understood that pursuant to this Agreement,
                  Seller warrants title to the Properties as set forth on Exhibit
“A” by,
                  through and under Seller only, but not
                  otherwise.

              

      

      

      
        	
                 

              	
                (b)

              	
                Organization,
                  Standing and Power.  To the extent that each Seller is a
                  corporation, partnership or similar entity, the affected Seller
                  is validly
                  existing and in good standing under the laws of the State
                  of  Texas and has all requisite powers and authority to own,
                  lease, operate, sell and convey the Properties and to carry on
                  its
                  business as is now being conducted.

              

      

      

      
        	
                 

              	
                (c)

              	
                Authority
                  and Enforceability.  The execution and delivery of this
                  Agreement, and the consummation of the transactions contemplated
                  hereby,
                  have been duly and validly authorized by all necessary action on
                  the part
                  of each party constituting Seller.  This Agreement is the valid
                  and binding obligation of Seller, enforceable against each Seller
                  in their
                  respective proportionate ownership share in accordance with its
                  terms.  Neither the execution and delivery by Seller of this
                  Agreement nor the consummation of the transactions contemplated
                  hereby nor
                  the compliance by Seller with any of the provisions hereof will
                  conflict
                  with or result in a breach of any provision of Seller's organization
                  documents or by-laws.  The execution and delivery hereof by
                  Seller does not, and the fulfillment and compliance with the terms
                  and
                  conditions hereof, and the consummation of the transactions contemplated
                  hereby, will not result in the creation or imposition of any lien,
                  charge
                  or other encumbrance on the
                  Properties.

              

      

       

      
        
           

        

        
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                (d)   Seller's
                  Title to Properties.  Seller has Defensible Title to the
                  Properties.  The
                  term         “Defensible
                  Title” shall mean in the case of the leasehold interests listed on Exhibit
                  “A”, such right, title and interest (owned beneficially or of record)
                  that, except for Permitted
                  Encumbrances:

              

      

      

      
        	
                 

              	
                (i)

              	
                is
                  free from reasonable doubt that a prudent person engaged in the
                  business
                  of purchasing and owning, developing and operating producing oil
                  and gas
                  properties with knowledge of all of the facts and their legal effect
                  would
                  be willing to accept the title;

              

      

      

      
        	
                 

              	
                (ii)

              	
                entitles
                  Seller to receive not less than the interest set forth in Exhibit
“A-1” as
                  the net revenue interest with respect to all of the oil, gas, and
                  hydrocarbon minerals produced, saved and marketed from each unit
                  or well,
                  as the case may be, that relates to Seller’s producing interval in the
                  lands and depths included within each property identified in Exhibit
                  “A-1”;

              

      

      

      
        	
                 

              	
                (iii)

              	
                obligates
                  Seller to pay costs and expenses relating to the operations on
                  and the
                  maintenance and development of each unit or well, as the case may
                  be, that
                  relates to Seller’s producing interval in the lands and depths included
                  within each property, in an amount not greater than the working
                  interest
                  set forth in Exhibit “A-1”;

              

      

      

      
        	
                 

              	
                (iv)

              	
                is
                  free and clear of any mortgages, pledges, deeds of trust, hypothecations
                  and production payments, except for the DML Properties which currently
                  partially secures a line of Credit between WM. Mark Cranmer, Trustee
                  and
                  JPMorgan Chase Bank N.A. as Lender and Summit Petroleum LLC, et
                  al as
                  borrower (recorded May 14, 2007, INS. No. 101006, Vol. 82, Page
                  346 in the
                  Official Public Records of Reagan County, Texas, which will be
                  released no
                  later than 5 days prior to Closing;

              

      

      

      For
        purposes of this Article 5.1(d), “owned beneficially or of record” means
        Seller’s ownership interest reflected of record in the office of the county
        clerk in the county where the relevant lands are located, ownership interests
        reflected with respect to federal or state owned lands, in the office of
        the
        federal or state agency having jurisdiction, subject to and as impacted by
        the
        terms and provisions of the Permitted Encumbrances.

      

      
        	
                 

              	
                (e)

              	
                Liability
                  for Brokers’ Fees.  Seller has not incurred any liability,
                  contingent or otherwise, for brokers’ or finders’ fees relating to this
                  Transaction for which Buyer shall have any responsibility
                  whatsoever.

              

      

      

      
        	
                 

              	
                (f)

              	
                Insurance.  Seller
                  shall maintain through the Closing with respect to the Properties
                  its
                  existing insurance coverage.

              

      

      

      
        	
                 

              	
                (g)

              	
                Compliance
                  with Law.  Seller has not received a written notice of a
                  material violation of any statute, law, ordinance, regulation,
                  permit,
                  rule or order of any federal, state, tribal or local government
                  or any
                  other governmental department or agency, or any judgment, decree
                  or order
                  of any court, applicable to the Properties or operations on the
                  Properties, which remains uncured.

              

      

      

      
        	
                 

              	
                (h)

              	
                Plugging
                  Obligations.  To the best of Seller’s knowledge, except for
                  the Nordic B No. 4 Well , there are no dry holes or shut-in or
                  otherwise
                  inactive wells, located on the Properties on lands pooled or unitized
                  therewith that Seller has the current obligation to plug and
                  abandon.

              

      

       

      
        
           

        

        
          Page
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                (i)

              	
                Governmental
                  Permits.  To the best of Seller’s knowledge, Seller has all
                  governmental licenses, filings and permits (including, without
                  limitation,
                  permits, licenses, approval registrations, notifications, exemptions
                  and
                  any other authorizations pursuant to Law) necessary or appropriate
                  to own
                  and operate the Properties as presently being owned and
                  operated.  To the best of Seller’s knowledge, Seller has not
                  received written notice of any violations in respect of any such
                  licenses
                  or permits that remains uncured.

              

      

      

      
        	
                 

              	
                (j)

              	
                Personal
                  Property and Equipment.  Seller has not removed any personal
                  property, equipment and fixtures from the Wells, unless it has
                  been
                  replaced with personal property, equipment and fixtures of similar
                  grade
                  and utility.  Unless removed, repaired or replaced with personal
                  property, equipment and fixtures or similar grade and utility,
                  the
                  personal property, equipment and fixtures currently attendant to
                  the Wells
                  was the equipment historically used on the Wells to produce the
                  Hydrocarbons prior to the execution of this
                  Agreement.  

              

      

      

      
        	
                 

              	
                (k)

              	
                No
                  Alienation.  Within 120 days of the date hereof, Seller has
                  not sold, assigned, conveyed, or transferred or contracted to sell,
                  assign, convey or transfer any right or title to, or interest in,
                  the
                  Properties other than (i) production sold in the ordinary course
                  of
                  Seller’s business and (ii) equipment which was worthless, obsolete or
                  replaced by equipment of equal suitability and
                  value.

              

      

      

      
        	
                 

              	
                (l)

              	
                Property
                  Expenses.  In the ordinary course of business, Seller has
                  paid all costs and expenses attributable to the period of time
                  prior to
                  the Effective Time as such costs and expenses become due, and such
                  costs
                  and expenses are being paid in a timely manner before the same
                  become
                  delinquent, except such costs and expenses as are disputed in good
                  faith
                  by Seller in a timely manner and for which Seller shall retain
                  responsibility.

              

      

      

      
        	
                 

              	
                (m)

              	
                Records.   Seller
                  makes no representations regarding the accuracy of any of the Records;
                  provided, however, Seller does represent that (i) all of the Records
                  are
                  files, or copies thereof, that Seller has used in the ordinary
                  course of
                  operating and owning the Properties, (ii) Seller has not intentionally
                  withheld any material information from the Records or (iii) Seller
                  has not
                  intentionally misrepresented any material information in the
                  Records.  Except as set forth in this Section 5.1, no
                  representation or warranty of any kind is made by Seller as to
                  the
                  information or with respect to the Properties to which the information
                  relates and Buyer expressly agrees that any conclusions drawn therefrom
                  shall be the result of its own independent review and judgment.
                  The
                  representations contained in this paragraph shall apply only to
                  matters of
                  fact, and shall not apply to any information, data, printouts,
                  extrapolations, projections, documentation, maps, graphs, charts,
                  or
                  tables which reflect, depict, present, portray, or represent, or
                  which are
                  based upon or derived from, in whole or in part, interpretation
                  of the
                  information including, but not limited to, matters of geological,
                  geophysical, engineering, or scientific
                  interpretation.

              

      

      

      
        	
                 

              	
                (p)

              	
                Gas
                  Imbalances.  To the best of Seller’s knowledge, no gas
                  imbalance exists with respect to the
                  Properties.

              

      

      

      
        	
                 

              	
                (q)

              	
                Leases.  To
                  the best of Seller's knowledge, the Leases have been maintained
                  according
                  to their material terms, in compliance with the agreements to which
                  the
                  Leases are subject, and are presently in full force and
                  effect.  To the best of Seller's knowledge, there has not
                  occurred any event, fact or circumstance which with the lapse of
                  time or
                  the giving of notice, or both, would constitute such a material
                  breach or
                  default on behalf of Seller under the provisions of the
                  Leases.

              

      

      

      
        	
                 

              	
                (r)

              	
                Litigation.  To
                  the best of Seller’s knowledge, there are no actions, suits, claims,
                  proceedings, agency enforcement actions or investigations pending,
                  or to
                  the best knowledge of Seller, threatened against or affecting the
                  Properties.  There is no suit, action, claim, investigation or
                  inquiry by any person or entity or by any administrative agency
                  or
                  governmental body and no legal, administrative or arbitration proceeding
                  pending, or, to the best knowledge of Seller threatened against
                  Seller
                  which has affected or could affect Seller's ability to consummate
                  the
                  transaction contemplated by this
                  Agreement.

              

      

      

      
        
           

        

        
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      5.2           Buyer’s
        Representations and Warranties.  Buyer represents and warrants to
        Seller as follows:

      

      
        	
                 

              	
                (a)

              	
                Organization,
                  Standing and Power.  Buyer is a limited partnership duly
                  organized, validly existing and in good standing under the laws
                  of the
                  State of Delaware and has all requisite powers and authority to
                  own, lease
                  and operate the Properties and to carry on its business as is now
                  being
                  conducted in the jurisdictions where the nature of its properties
                  or
                  business so requires such
                  qualification.

              

      

      

      
        	
                 

              	
                (b)

              	
                Authority
                  and Enforceability.  The execution and delivery of this
                  Agreement, and the consummation of the transactions contemplated
                  hereby,
                  have been duly and validly authorized by all necessary corporate
                  action on
                  the part of Buyer.  This Agreement is the valid and binding
                  obligation of Buyer, enforceable against Buyer in accordance with
                  its
                  terms.  Neither the execution and delivery by Buyer of this
                  Agreement nor the consummation of the transactions contemplated
                  hereby nor
                  the compliance by Buyer with any of the provisions hereof will
                  conflict
                  with or result in a breach of any provision of Buyer's articles
                  and
                  by-laws.  The execution and delivery hereof by Buyer does not,
                  and the fulfillment and compliance with the terms and conditions
                  hereof
                  and the consummation of the transactions contemplated hereby will
                  not,
                  result in the creation or imposition of any lien, charge or other
                  encumbrance on the Properties.

              

      

      

      
        	
                 

              	
                (c)

              	
                Warranty
                  Maintenance.  Buyer shall cause all the representations and
                  warranties of Buyer contained in this Agreement to be true and
                  correct on
                  and as of the Closing Date.

              

      

      

      
        	
                 

              	
                (d)

              	
                Buyer
                  represents that it did not solely rely upon representations or
                  materials
                  provided to Buyer by Seller or Seller’s marketing agents in evaluating the
                  Properties, but rather has also relied upon its individual evaluations
                  and
                  due diligence.

              

      

      

      
        	
                 

              	
                (e)     Buyer
                  represents that it has sufficient funds on hand or commitments
                  from one or
                  more  banking institutions to fund payment of the Purchase Price
                  at the Closing.

              

      

      

      

      5.3           Liability
        Regarding Access.  In connection with Buyer’s access to the
        Properties prior to Closing for due diligence review, Buyer waives and releases
        all claims, whether known or unknown, against Seller, Seller’s partners,
        Seller’s and each partner’s parent, subsidiary companies or other affiliates,
        and directors, officers, employees, consultants or agents of such parties,
        respectively, for injury to, or death of persons or for damage to property
        suffered by Buyer’s employees, agents, representatives, consultants or
        contractors arising in any way from the conduct of Buyer’s investigations and
        examinations of the Properties or the exercise of such rights of
        access.  Buyer shall indemnify Seller, Seller’s partners, Seller’s and
        each such partner’s parent and subsidiary companies and other affiliates, and
        directors, officers, employees, consultants and agents of such parties,
        respectively, from and against any and all claims, actions, liabilities,
        losses,
        damages, costs or expenses (including, but not limited to court costs and
        attorney’s fees) whatsoever suffered or incurred by
        Buyer’s  employees, agents, representatives, consultants or
        contractors arising out of the exercise of such rights of investigation and
        examination (or exercise of such right of access).

      

      

      ARTICLE
        6

      COVENANTS

      

      6.1           Covered
        Area.  This Agreement is limited to the Properties.

      

      6.2           Existing
        Agreements, Assignments and Conveyances.  This Agreement and the
        Assignment of Oil and Gas Leases are further subject to the terms and conditions
        of all existing agreements, assignments and conveyances.

       

      
        
           

        

        
          Page
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      6.3           New
        Agreements and Sales.  Unless this Agreement is terminated as
        provided for herein, Buyer and/or Seller will not, without the prior written
        consent of the other: a) enter into any new agreements or commitments with
        respect to the Properties which extend beyond the Effective Time; b) except
        as
        set forth in Schedule 6.3, drill any new wells, abandon any existing wells
        or
        release or abandon all or any portion of the lands included within any lease
        or
        modify or terminate any contracts and agreements affecting the Properties
        and
        sell or otherwise dispose of any of the Properties or any part thereof, other
        than personal property and equipment unless it is replaced with personal
        property and equipment of equivalent quality and value.  From the date
        hereof until the Closing, Seller shall maintain the Properties in a good
        and
        workmanlike manner consistent with past practice.

      

      6.4           Maintenance
        of Seller's Business.  Seller shall carry on the business of
        Seller with respect to the Properties in substantially the same manner as
        Seller
        has heretofore and shall not introduce any new method of management, operation
        or accounting with respect to the Properties.

      

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

      

      

      

      ARTICLE
        7

      CLOSING

      

      7.1   Date
        and Place of Closing  The purchase by Buyer and the sale by Seller
        of the Properties as contemplated by this Agreement (the "Closing") shall
        be
        held on or before October 1, 2007 (the “Closing Date”), at the offices of
        Summit Petroleum LLC in Midland, Texas.  However, Buyer may, at its
        option and upon approval by Seller, accelerate the date of the Closing upon
        giving Seller three (3) business days prior written notice, if, on or before
        the
        date of such notice, Buyer has also notified Seller of any Title Defects
        and any
        Environmental Defects as provided for herein.  Additionally, the
        parties may mutually agree in writing on a different date and place for the
        Closing.

      

      

      7.2           Conditions
        of Closing by Seller.  The obligation of Seller to close is
        subject to the satisfaction of the following conditions:

      

      
        	
                 

              	
                (a)

              	
                All
                  representations and warranties of Buyer contained in this Agreement
                  shall
                  be true, correct, and not misleading in all material respects,
                  and Buyer
                  shall have performed and satisfied all agreements and covenants
                  in all
                  material respects required by this Agreement to be performed and
                  satisfied
                  by Buyer; and

              

      

      

      
        	
                 

              	
                (b)

              	
                No
                  suit or other proceeding shall be pending or threatened before
                  any court
                  or governmental agency seeking to restrain, prohibit, or declare
                  illegal,
                  or seeking substantial damages in connection with the transaction
                  contemplated hereby.

              

      

      

      
        	
                 

              	
                (c)

              	
                Should
                  there be downward adjustments to the Purchase Price in excess of
                  ten
                  percent (10%) of the Purchase Price, due to asserted Title Defects
                  and
                  Environmental Defects; Seller has the option to terminate this
                  Agreement
                  with no liability to Buyer other than return of the
                  Deposit.

              

      

      

      7.3           Conditions
        of Closing by Buyer.  The obligation of Buyer to close is subject
        to the satisfaction of the following conditions:

      

      
        	
                 

              	
                (a)

              	
                All
                  representations and warranties of Seller contained in this Agreement
                  shall
                  be true, correct, and not misleading in all material respects,
                  and Seller
                  shall have performed and satisfied all agreements and covenants
                  in all
                  material respects required by this Agreement to be performed and
                  satisfied
                  by Seller;

              

      

       

      
        
           

        

        
          Page
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                (b)

              	
                No
                  suit or other proceeding shall be pending or threatened before
                  any court
                  or governmental agency seeking to restrain, prohibit, or declare
                  illegal,
                  or seeking substantial damages in connection with the transaction
                  contemplated hereby; and

              

      

      

      
        	
                 

              	
                (c)

              	
                Should
                  there be downward adjustments to the Purchase Price in excess of
                  ten
                  percent (10%) of the Purchase Price, due to asserted Title Defects
                  and
                  Environmental Defects; Buyer has the option to terminate this Agreement
                  with no liability to Buyer other than return of the
                  Deposit.

              

      

      

      
        	
                 

              	
                (d)

              	
                No
                  material adverse change in the condition of or title to the Properties
                  shall have occurred subsequent to the Effective Time, except depletion
                  through normal production within authorized allowables, ordinary
                  changes
                  in rates of production, and depreciation of equipment through ordinary
                  wear and tear.

              

      

      

      7.4           Closing
        Obligations.  At the Closing, the following shall
        occur:

      

      
        	
                 

              	
                (a)

              	
                Seller
                  shall execute, acknowledge and deliver to Buyer, the original Assignment
                  of Oil and Gas Leases and Bill of Sale attached hereto as Exhibit
“B” (the
                  “Assignment”), conveying title to the Properties to Buyer, as well as such
                  certificates or other documents as are required to effect the transfer
                  of
                  the Properties.

              

      

      

      
        	
                 

              	
                (b)

              	
                All
                  books, records and files  in the possession of Seller pertaining
                  to the Properties, including, without limitation, the following,
                  if and to
                  the extent that such files exist: all books, records, reports,
                  manuals,
                  files, title documents, including correspondence, records of production
                  and maintenance, revenue, sales, expenses, warranties, lease files,
                  land
                  files, well files, title opinions and title reports, abstracts,
                  division
                  order files, assignments, contract files, operations files, copies
                  of tax
                  and accounting records (but excluding Federal and state income
                  tax returns
                  and records) and files, maps, core data, hydrocarbon analysis,
                  well logs,
                  mud logs, field studies together with other files, contracts and
                  other
                  records and data including all geological, geophysical (including
                  any
                  micro seismic) and engineering information, except for that data
                  prohibited by third party confidentiality agreements (the “Records”),
                  shall be made available for delivery to Buyer, at Buyer’s cost, at
                  Seller’s offices where currently maintained, within fifteen (15) business
                  days after the Closing.  Seller shall have the right to retain
                  copies of the Records (and receive from Buyer, at Seller’s expense, copies
                  of Records requested by Seller from Buyer in the future) and to
                  retain
                  canceled checks and general ledger, purchasing and other general
                  accounting records of Seller.  Buyer’s reliance on same shall be
                  at Buyer’s sole risk.

              

      

      

                     
        (c)           Seller
        shall deliver to Buyer exclusive possession of the Exhibit “A”
interests.

      

      
        	
                 

              	
                (d)

              	
                Seller
                  and Buyer shall execute, acknowledge and deliver such transfer
                  orders or
                  letters in lieu thereof as Buyer may request, directing all purchasers
                  of
                  production to make payment of proceeds attributable to production
                  from the
                  Properties after the Effective Time to
                  Buyer.

              

      

      

      
        	
                 

              	
                (e)

              	
                Buyer
                  shall deliver the cash consideration of the total Purchase Price
                  to Seller
                  by Wire Transfer on the date of Closing as adjusted to reflect
                  the Deposit
                  and matters described in Article 7.5. To the extent that actual
                  amounts
                  are not available, the parties will use reasonable estimates of
                  such
                  amounts less any adjustments due to Title Defects and/or Environmental
                  Matters as applicable as set out in Article
                  4.

              

      

      

      
        	
                 

              	
                (f)

              	
                Seller
                  will provide such reasonable assistance to Buyer as Buyer may request
                  in
                  order for Buyer to prepare its required SEC
                  filings.

              

      

      

      
        	
                 

              	
                (g)

              	
                Seller
                  will provide Buyer with executed assignments of assignable contracts
                  which
                  relate to the Properties.

              

      

      

      
        
           

        

        
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      7.5           Adjustments
        and Accounting.  Any adjustments pursuant to this Article will be
        made at Closing, utilizing estimates where necessary. Seller will prepare
        and
        deliver to Buyer not less than three (3) days before Closing a preliminary
        Closing settlement Statement reflecting the adjustments called for in this
        Article 7.5. The parties shall sign the agreed upon settlement statement
        at
        Closing. Seller shall prepare a final Post Closing settlement statement
        containing adjustments, including but not limited to the following, and will
        be
        made within, and only within, ninety (90) days of Closing.

      (a)                 Upward
        Adjustments.  The Purchase Price shall be adjusted upward by the
        following:

      

      
        	
                 

              	
                (i)

              	
                The
                  amount of all direct costs and expenditures chargeable to Seller's
                  interest incurred and paid by
                  Seller:

              

      

      

      
        	
                 

              	
                (A)

              	
                that
                  are attributable to the drilling, completion, recompletion, reworking,
                  operation and maintenance of the Properties on and after the Effective
                  Time;

              

      

      
        	
                 

              	
                (B)

              	
                bonuses,
                  lease rentals and shut-in payments due after (and expressly excluding
                  those due before) the Effective
                  Time;

              

      

      
        	
                 

              	
                (C)

              	
                ad
                  valorem, property and other taxes that are allocated to the Buyer
                  pursuant
                  to Article 7.5(d) herein below; and

              

      

      
        	
                 

              	
                (D)

              	
                amounts
                  relating to obligations arising under the Contracts relating to
                  the
                  Properties with respect to operations or production after the Effective
                  Time;

              

      

      

      
        	
                 

              	
                (ii)

              	
                The
                  value of all Hydrocarbons, which have been produced and are merchantable,
                  and are in storage and/or credited to the Properties as of the
                  Effective
                  Time, net of all severance taxes, and less an appropriate deduction
                  based
                  on industry practice for basic sediment, water and other non-merchantable
                  liquids; and

              

      

      

      
        	
                 

              	
                (iii)

              	
                Any
                  other amount agreed upon by Seller and
                  Buyer

              

      

      

            
        (b)           Downward
        Adjustments.  The Purchase Price shall be adjusted downward by the
        following:

      

      
        	
                 

              	
                (i)

              	
                The
                  amount of all proceeds received by Seller that are attributable
                  to its
                  ownership and the operation of the Properties on or after the Effective
                  Time;

              

      

      

      
        	
                 

              	
                (ii)

              	
                The
                  following amounts to the extent paid by
                  Buyer:

              

      

      

      
        	
                 

              	
                (A)

              	
                all
                  direct unrelated costs and expenditures chargeable to Seller's
                  interest
                  that are attributable to the drilling, completion, recompletion,
                  reworking, operation and maintenance of the Properties prior to
                  the
                  Effective Time;

              

      

      

      
        	
                 

              	
                (B)

              	
                all
                  bonuses, lease rentals and shut-in payments due prior to the Effective
                  Time; and

              

      

      

      

                    
        (iii)           Those
        amounts resulting from Title Defects and/or Environmental Defects, as provided
        in Article 4; and

      

                    
        (iv)           Any other
        amount agreed upon by Seller and Buyer.

      

      (c)                 Seller
        shall be entitled to all proceeds and shall be responsible for all expenses
        accruing to the Properties prior to the Effective Time and Buyer shall be
        entitled to all proceeds and shall be responsible for all expenses accruing
        to
        the Properties, including plugging of the wells, after the Effective
        Time.

      

      (d)                 All
        taxes, real property taxes and similar obligations for the current year shall
        be
        prorated based upon the prior year’s tax rates if tax statements for the current
        year have not been received by Seller within ninety (90) days following
        Closing.

      

      
        
           

        

        
          Page
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      The
        parties have determined that the Hart-Scott-Rodino Antitrust Improvements
        Act of
        1976 does not apply to this transaction.

      

      

      ARTICLE
        8

      TERMINATION

      

      8.1           Termination.  This
        Agreement and the transactions contemplated may be terminated in the following
        instances:

      

      
        	
                 

              	
                (a)

              	
                by
                  Buyer or Seller in accordance with Article 4.6 concerning Remedies
                  for
                  Title Defects and Article 4.7 Remedies for Environmental
                  Defects;

              

      

      

      
        	
                 

              	
                (b)

              	
                by
                  Buyer if the conditions set forth in Article 5.1 and/or Article
                  7.3 are
                  not satisfied in all

              

      

      material
        respects or waived prior to the Closing, and notwithstanding any other
        provisions of   this Agreement to the contrary, by Buyer if the
        Buyer is not in default hereunder and the Closing has not occurred on or
        before
        October 8, 2007;

      

      
        	
                 

              	
                (c)

              	
                by
                  Seller if the conditions set forth in Article 5.2 and/or Article
                  7.2 are
                  not satisfied in all material respects or waived prior to the Closing
                  Date, and notwithstanding any other provisions of this Agreement
                  to the
                  contrary, by the Seller if the Seller is not in default hereunder
                  and the
                  Closing has not occurred on or before October 8, 2007;
                  or

              

      

      

      (d)           by
        the mutual written agreement of Buyer and Seller

      

      8.2           Remedies.  If
        Closing does not occur on the Closing Date, as that may be extended by Seller
        and Buyer hereunder, due to Seller's breach of the terms of this Agreement,
        then
        Buyer may either declare this Agreement terminated and of no further force
        or
        effect and receive the prompt return of the Deposit or seek specific performance
        of this Agreement. If Closing does not occur due to Buyer's breach of the
        terms
        of this Agreement, Seller may declare this Agreement terminated and of no
        further force or effect and retain the Deposit as liquidated damages and
        not as
        a penalty for such breach. It is agreed that actual damages would be difficult
        to ascertain and that the amount of the liquidated damages is reasonable.
        Upon
        termination of this Agreement, Seller shall be free immediately to enjoy
        all
        rights of ownership of the Properties and to sell, transfer, encumber or
        otherwise dispose of the Properties to any party without any restriction
        under
        this Agreement.

      

      

      

      

      

      ARTICLE
        9

      DISCLAIMER

      

      ANY
        ASSIGNMENT AND BILL OF SALE EXECUTED PURSUANT HERETO SHALL BE EXECUTED WITHOUT
        ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION AS TO THE MERCHANTABILITY
        OF
        ANY OF THE WELLS OR EQUIPMENT OR THEIR FITNESS FOR ANY PURPOSE, AND WITHOUT
        ANY
        OTHER EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION WHATSOEVER EXCEPT AS
        EXPRESSLY SET FORTH IN SAID ASSIGNMENT AND BILL OF SALE.  IT IS
        UNDERSTOOD AND AGREED THAT BUYER SHALL HAVE INSPECTED THE PROPERTY AND PREMISES
        AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH
        SURFACE AND SUBSURFACE, AND THAT BUYER SHALL ACCEPT ALL OF THE SAME IN THEIR
“AS
        IS, WHERE IS” CONDITION.  IN ADDITION NEITHER, SELLER, NOR SELLER’S
        REPRESENTATIVE (SUMMIT PETROLEUM LLC), MAKES ANY WARRANTY OR REPRESENTATION,
        EXPRESS OR IMPLIED, 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 AND SELLER’S REPRESENTATIVE IS PROVIDED BUYER AS A
        CONVENIENCE AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER’S SOLE
        RISK.  BUYER 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”).

      

      
        
           

        

        
          Page
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      ARTICLE
        10

      ASSUMPTIONS
        AND INDEMNIFICATION

      

      10.1
        BUYER’S ASSUMPTION AND INDEMNIFICATION; POTENTIAL THIRD PARTY
        LIABILITIES.  EXCEPT AS OTHERWISE PROVIDED IN
        THIS AGREEMENT, BUYER AGREES UPON THE OCCURRENCE OF CLOSING (I) TO ASSUME,
        AND
        TIMELY PAY AND PERFORM, ALL DUTIES, OBLIGATIONS AND LIABILITIES RELATED TO
        THE
        OWNERSHIP AND/OR OPERATION OF THE PROPERTIES, INSOFAR AND ONLY INSOFAR AS
        SUCH
        DUTIES, OBLIGATIONS AND LIABILITIES ARISE AND ARE ATTRIBUTABLE TO PERIODS
        FROM
        AND AFTER THE EFFECTIVE TIME AND LIMITED (AND ATTRIBUTABLE) TO THE INTERESTS
        INTHE PROPERTIES ASSIGNED TO BUYER BY SELLER (COLLECTIVELY, THE ASSUMED
        LIABILITIES) INCLUDING , WITHOUT LIMITATION, THOSE ARISING UNDER THE CONTRACTS
        AND AGREEMENTS DESCRIBED IN ARTICLE 2.2, AND (II) TO INDEMNIFY AND HOLD SELLER,
        ITS RELATED ENTITIES AND AFFILIATES, AND THE DIRECTORS, OFFICERS , EMPLOYEES
        CONSULTANTS AND AGENTS OF SUCH PARTIES, RESPECTIVELY HARMLESS FROM AND AGAINST
        ANY AND ALL CLAIMS, ACTIONS, LIABILITIES, LOSSES, DAMAGES, COSTS OR EXPENSES
        (INCLUDING COURT COSTS AND ATTORNEYS’ FEES) OF ANY KIND OR CHARACTER ARISING OUT
        OF OR OTHERWISE RELATING TO THE ASSUMED LIABILITIES. IN CONNECTION WITH (BUT
        NOT
        IN LIMITATION OF) THE FOREGOING, BUT SUBJECT TO THE OTHER PROVISIONS OF THIS
        AGREEMENT, IT IS SPECIFICALLY UNDERSTOOD AND AGREED THAT ASSUMED LIABILITIES
        SHALL INCLUDE ALL OBLIGATIONS TO PROPERLY PLUG AND ABANDON, OR RE-PLUG AND
        RE-ABANDON, ANY WELLS PRODUCING, SHUT-IN, OR DRILLED ON OR AFTER THE EFFECTIVE
        DATE AND LOCATED ON THE PROPERTIES. HOWEVER, EXCEPT FOR BUYER’S OBLIGATIONS SET
        FORTH UNDER ARTICLE 10.3, BUYER SHALL NOT INDEMNIFY OR HOLD SELLER HARMLESS
        FOR
        CLAIMS, COSTS, EXPENSES AND LIABILITIES INCURRED BY SELLER WITH RESPECT TO
        THE
        SALE OF THE PROPERTIES TO BUYER, OR THE NEGOTIATIONS LEADING TO SUCH SALE,
        OR
        THOSE THAT RESULT FROM OR ARE ATTRIBUTABLE TO ANY REPRESENTATION OF SELLER
        CONTAINED IN THIS AGREEMENT BEING UNTRUE OR A BREACH OF ANY WARRANTY OR COVENANT
        OF SELLER CONTAINED IN THIS AGREEMENT.

      

      10.2 LIMITATIONS
        ON DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
        THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
        EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE
        DAMAGES OF  ANY OTHER PARTY ARISING OUT OF OR RELATING TO, IN ANY
        MANNER, THIS AGREEMENT, THE TRANSACTION CONTEMPLATED HEREUNDER, OR THE
        PROPERTIES; PROVIDED, HOWEVER THAT THIS WAIVER SHALL NOT AFFECT OR RELEASE
        ANY
        CLAIMS OF THIRD PARTIES (BEING PERSONS, ENTITIES OR GOVERNMENTAL AUTHORITIES
        WHO
        ARE NOT THE BUYER AND NOT THE SELLER) FOR WHICH A PARTY IS OBLIGATED TO
        INDEMNIFY THE OTHER UNDER THIS AGREEMENT.

      

      

      10.3  Assumption
        and Indemnification of Environmental
        Matters. Buyer agrees
        and acknowledges that (i) it has had, or prior to the
        Closing will have access to and the opportunity to inspect the Properties
        for
        all purposes, including without limitation, for the purposes of detecting
        the
        presence of hazardous or toxic substances, pollutants or other contaminants,
        environmental hazards, naturally occurring radioactive materials (NORM) and
        produced water contamination of the surface and/or subsurface, (ii) it has,
        or
        prior to the Closing will have, satisfied itself as to the physical and
        environmental condition of the Properties, both surface and subsurface, and
        their method of operation and except as set forth herein, agrees to accept
        an
        assignment of the Properties at Closing on an “AS IS, WHERE IS” BASIS,
“WITH ALL FAULTS”,  and (iii) in making the decision to enter
        into this Agreement and consummate the transactions contemplated hereby,
        Buyer
        has relied solely on the basis of its own independent investigation of the
        Properties and the records related thereto.

       

      
        
           

        

        
          Page
            14of 18

          
            

          

        

        
           

        

      

       

      UPON
        CLOSING, BUYER HEREBY ASSUMES AND SHALL BE RESPONSIBLE FOR AND AGREES TO
        INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER FROM AND AGAINST ANY AND ALL CLAIMS,
        LIABILITY OR LOSSES, (INCLUDING, WITHOUT LIMITATION, LOSSES FROM DAMAGE TO
        PROPERTY, ALLEGED GROUNDWATER CONTAMINATION, INJURY TO OR DEATH OF PERSONS
        OR
        OTHER LIVING THINGS, NATURAL RESOURCE DAMAGES, CERCLA RESPONSE COSTS,
        ENVIRONMENTAL REMEDIATION AND RESTORATION COSTS OR FINES) OR PENALTIES ARISING
        OUT OF OR ATTRIBUTABLE TO, IN WHOLE OR IN PART BY A VIOLATION OF, FAILURE
        TO
        FULFILL DUTIES IMPOSED BY OR INCURRENCE OF LIABILITY UNDER ANY COMMON LAW
        RELATING TO HUMAN HEALTH, SAFETY OR THE ENVIRONMENT OR ANY ENVIRONMENTAL
        LAWS
        (AN “ENVIRONMENTAL MATTER”) OCCURRING AT ANY TIME BEFORE, AT OR AFTER THE
        EFFECTIVE TIME WITHOUT REGARD TO THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE,
        STRICT LIABLITY OR OTHER FAULT OF THE SELLER, REGARDLESS OF WHEN THE EVENTS
        THAT
        CAUSED SUCH CONDITION TO EXIST OR THE OBLIGATION TO ARISE, 
        PROVIDED, HOWEVER, THAT SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
        THE
        BUYER FROM AND AGAINST ANY AND ALL LOSSES RESULTING FROM ANY ENVIRONMENTAL
        MATTER OCCURRING AT ANY TIME PRIOR TO THE EFFECTIVE TIME TO THE EXTENT THAT
        SUCH
        LOSSES RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER OR
        THAT
        HAVE BEEN ASSERTED IN A THIRD-PARTY LAWSUIT OR ADMINISTRATIVE PROCEEDING
        OR
        ORDER THAT IS FILED, ISSUED OR COMMENCED AGAINST SELLER OR HAS BEEN DOCUMENTED
        BY BUYER TO SELLER IN WRITING ON OR BEFORE THE CLOSING
        DATE.

      

      

      10.4   Occasional
        Sale.  Since this transaction is an isolated or occasional sale,
        no tax will be collected from Buyer. If, however, this transaction is later
        deemed to be other than an occasional sale, Buyer agrees to be responsible,
        and
        shall indemnify and hold Seller harmless, for any and all sales or transfer
        taxes or fees (including related penalty, interest or legal costs) due by
        virtue
        of this transaction on the Properties assigned and conveyed, and the Buyer
        shall
        remit such sales or transfer taxes at that time. Seller and Buyer agree to
        reasonably cooperate with each other in demonstrating that the requirements
        for
        an occasional or isolated sale or any other sales tax exemption have been
        met.

      

      

      ARTICLE
        11

      ARBITRATION
        AND MEDIATION

      

      In
        case
        of a disagreement between the Parties to this Agreement as to any right,
        obligation, term or provision hereof or involving a total disputed amount
        or
        claim(s) equal to or greater than $25,000.00, the Parties shall make an earnest
        effort to settle such disagreement to their mutual satisfaction.  If
        any such dispute regarding this Agreement cannot be reconciled by the Parties
        to
        this Agreement, then any Party may provide notice to the other specifying
        with
        particularity the items of disagreement and a request that the matter be
        resolved by mediation.  Such notice shall include the name of a
        mediator acceptable to the Party requesting mediation.  If the dispute
        is not resolved by mediation to the satisfaction of the Parties, or if the
        Parties are unable to agree upon a mediator, within thirty (30) days after
        receipt of such written notice, then any such dispute shall be settled by
        arbitration and the results of such arbitration shall be binding upon all
        Parties to this Agreement in all respects as set forth below. Arbitration
        may be
        initiated by written notice from any Party to this Agreement to the other
        that
        the previously noticed dispute has not been resolved by mediation and is
        being
        submitted to arbitration under the terms of this Agreement.  A single
        arbitrator shall be chosen by the Parties to the dispute by submitting names
        of
        eleven (11) arbitrators experienced in the area of the dispute from a listing
        of
        twenty (20) arbitrators supplied by the American Arbitration
        Association.  Said selection by both Parties shall take place within
        ten (10) days after the Parties have received the listing from the American
        Arbitration Association.  The lists of the Parties shall be compared
        and the first name to appear on both lists shall be the arbitrator of the
        dispute.  Should either Party fail or refuse to submit a list of
        eleven arbitrators then the other Party shall select an arbitrator who shall
        be
        the sole arbitrator and shall resolve the dispute as set out
        herein.  All arbitrators shall be individuals who have had prior
        experience in oil and gas exploration and production and shall function as
        independent and neutral arbitrators.  In the selection of arbitrators,
        the Parties shall take into consideration the nature of the matter submitted
        for
        arbitration.  (Thus, for example, professional engineers should be
        selected to arbitrate issues which are primarily engineering in nature and
        accountants who are members of the Council of Petroleum Accountants Societies
        should be selected to arbitrate matters which are primarily accounting in
        nature.)  Arbitrations under this paragraph shall be conducted under
        the Texas Arbitration Statute (Vernon’s Ann. Tex. Civ. St. Arts. 224 to 238-6)
        and shall apply Texas law.  All matters concerning the conduct of the
        arbitrators shall be governed by the provisions of the American Arbitration
        Association.  No dispute related to this Agreement shall be brought
        before any court of law or equity; however, judgment upon the award or decision
        rendered by the arbitrators may be entered in any court having
        jurisdiction.

      

      
        
           

        

        
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      ARTICLE
        12

      MISCELLANEOUS

      

      12.1                      Notices.  All
        notices required or permitted under this Agreement shall be in writing, and
        any
        notice hereunder shall be deemed to have been made when delivered whether
        by:
        (i) hand; (ii) overnight delivery service; (iii) telecopy; (iv) electronic
        or
        (v) first class certified mail, postage prepaid, with return receipt requested,
        to the address as set forth below.  Either party may, by written
        notice deliver to the other, change the address to which notices shall be
        delivered.

      

        Legacy
        Reserves Operating
        LP

      
        	
                 

              	
                  303
                  West Wall, Suite 1600

              

      

      
        	
                 

              	
                  Midland,
                  Texas 79702

              

      

      
        	
                 

              	
                Fax:
                  (432) 684-3774

              

      

      
        	
                 

              	
                Phone:
                  (432) 682-2516

              

      

      
        	
                 

              	
                kmcgraw@legacylp.com

              

      

      
        	
                 

              	
                Attention:
                  Mr. Kyle A. McGraw

              

      

      

      
        	
                 

              	
                Summit
                  Petroleum Management Corporation

              

      

      
        	
                 

              	
                550
                  West Texas, Suite 700

              

      

      
        	
                 

              	
                Midland,
                  Texas 79701

              

      

      

      
        	
                 

              	
                Fax:
                  (432) 682-9809

              

      

      Phone:  (432)
        682-9800

      jbehrmann@summitpetroleumllc.com

      Attention:  Mr.
        James J.
        Behrmann

      

      

      12.2           Reservations
        and Exceptions.  Sale and purchase of the Properties is made
        subject to all reservations, exceptions, limitations, contracts and other
        burdens or instruments which are of record or of which Buyer has actual or
        constructive notice, including any matter included or referenced in the
        materials made available by Seller to Buyer.

      

      12.3           Entire
        Agreement.  This instrument states the entire agreement between
        Buyer and Seller and supersedes all other agreements, either written or oral,
        between Seller and Buyer concerning the sale and purchase of the
        Properties.  This Agreement may be supplemented, altered, amended,
        modified or revoked in writing only, signed by all of the parties.  No
        material representation, warranty, covenant, agreement, promise, inducement
        or
        statement, whether oral or written, has been made by Seller or Buyer and
        relied
        upon by the other that is not set forth in this Agreement or in the instruments
        referred to herein, and neither Seller nor Buyer shall be bound by or liable
        for
        any alleged representation, warranty, covenant, agreement, promise, inducement
        or statement not so set forth.

       

      
        
           

        

        
          Page
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      12.4           Survival.  All
        representations, warranties and covenants made herein by Buyer and Seller
        shall
        be continuing and shall be true and correct on and as of the Closing Date
        with
        the same force and effect as if made at that time and all such representations,
        warranties and covenants shall, subject to the limitations set forth below,
        survive the Closing and deliverance of the Assignment for a period of six
        (6)
        months.   Notwithstanding the foregoing, the representations and
        warranties of Seller under Article 5.1(d) shall terminate immediately upon
        Closing and any liability of Seller (or any party claimed to be liable by,
        through or under Seller) for damages, losses or costs alleged to arise from
        the
        breach, falsity, failure or violation of the representations and warranties
        under Article 5 shall be limited to the allocated Purchase Price for the
        affected Property or Properties.

      

      12.5           Assignability.  This
        Agreement shall be binding upon and shall inure to the benefit of the parties
        and their respective successors and assigns; provided, however, neither Buyer
        or
        Seller may, prior to the Closing, assign its rights or delegate its duties
        or
        obligations under this Agreement without the prior written consent of the
        other
        party.

      

      12.6           Publicity.   Seller
        and Buyer shall consult with each other with regard to all publicity and
        other
        releases at or prior to the Closing concerning this Agreement and the
        transaction contemplated hereby and except as required by applicable law
        or
        other applicable rules or regulations of any governmental body or stock
        exchange, neither party shall issue any publicity, public notice concerning
        the
        Purchase Price or other release without the prior written consent of the
        other
        party.

      

      12.7           Further
        Assurance.  After Closing each of the parties shall execute,
        acknowledge and deliver to the other such further instruments, and 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 purchaser 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.  Seller shall take all actions necessary to effectuate the
        transfer of such payments to Buyer as of the Effective Time.

      

      12.8           Destruction.  For
        a period of five (5) years after the Closing Date (or for such longer period
        as
        may be required by law or governmental regulation), Buyer shall not
        intentionally destroy or give up possession of any original or final copy
        of the
        documents delivered by Seller to Buyer hereunder without first offering Seller
        the opportunity (by delivery of written notice to Seller), at Seller’s expense
        (without any payment to Buyer), to obtain such original or final copy or
        a copy
        thereof.

      

      12.9           Headings.  The
        headings are for guidance only and shall have no significance in the
        interpretations of this Agreement.

      

      12.10                      Counterpart
        Execution.  This Agreement may be executed by Buyer and Seller in
        any number of counterparts, no one of which need be executed by all
        parties.  Each of such counterparts shall be deemed an original
        instrument, and all counterparts shall together constitute but one and the
        same
        instrument.  This agreement shall become operative when each party has
        executed at least one counterpart. The return of executed documents by facsimile
        or electronic transmission shall be effective between the parties and shall
        be
        followed by the return of executed originals.

      

      12.11                      Severance.  If
        any provision of this Agreement shall be determined void, illegal or
        unenforceable, all of the other provisions of this Agreement shall remain
        in
        full force and effect, and the provision or provisions that are determined
        to be
        void, illegal or unenforceable shall be limited so that they shall remain
        in
        effect to the extent permitted by law.

      

      12.12        
         Relationship of the Parties.   This Agreement does
        not create and shall not be construed to create a partnership, association,
        joint venture or a fiduciary relationship of any kind or character between
        any
        parties to this Agreement (including one individual Seller to another Seller
        or
        Seller to Buyer) and shall not be construed to impose any duty, obligation
        or
        liability arising from such a relationship by or with respect to any party
        to
        this Agreement.

      

      12.13                      No
        Third-Party Beneficiaries.  This Agreement is not intended to
        confer upon any person not a party hereto any rights or remedies hereunder,
        and
        no person other than the parties hereto is entitled to rely on any
        representation, covenant or agreement contained herein.

       

      
        
           

        

        
          Page
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      12.14     Governing
        Law.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
        HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
        OF
        THE STATE OF TEXAS WITHOUT REFERENCE TO CONFLICT OF LAWS.  THE PARTIES
        AGREE THAT ANY LITIGATION RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT
        MUST
        BE BROUGHT BEFORE AND DETERMINED BY A COURT OF COMPETENT JURISDICTION IN
        MIDLAND
        COUNTY, TEXAS.

       

      12.15   Audit
        Rights.

       

      Seller
        agrees to make available to Buyer prior to and for a period of twelve months
        following Closing any and all existing information and documents in the
        possession of Seller that Buyer may reasonably require to comply with Buyer’s
        tax and financial reporting requirements and audits.  Without limiting
        the generality of the foregoing, Seller will use its commercially reasonable
        efforts after execution of this Agreement and for twelve months following
        Closing to cooperate with the independent auditors chosen by Buyer (“Buyer’s
        Auditor”) in connection with their audit of any annual revenue and expenses
        statements of the Assets that Buyer or any of its Affiliates requires to
        comply
        with their tax and financial reporting requirements, and their review of
        any
        interim quarterly revenue and expense statements of the Assets that Buyer
        requires to comply with such reporting requirements.  Buyer’s
        cooperation will include (i) such reasonable access to Seller’s employees who
        were responsible for preparing the revenue and expense statements and work
        papers and other supporting documents used in the preparation of such financial
        statements as may be required by Buyer’s Auditor to perform an audit in
        accordance with generally accepted auditing standards, and (ii) delivery
        of one
        or more customary representation letters (in substantially the form previously
        approved by Seller and Buyer) from Seller to Buyer’s Auditor that are requested
        by Buyer to allow such auditors to complete an audit (or review of any interim
        quarterly financials), and to issue an opinion that in Buyer’s experience is
        acceptable with respect to an audit or review of those revenue and expense
        statements required pursuant to this Section.  Buyer will reimburse
        Seller, within three (3) business days after demand therefore, for any
        reasonable out-of-pocket and overhead costs with respect to any costs incurred
        by Seller in complying with the provisions of this Section 12.15.

      

      12.16  Board
        Approval.      This Agreement is expressly
        subject to Buyer obtaining approval of the board of directors of its general
        partner, which approval shall be obtained on or before August 31, 2007.  In
        the event Buyer does not notify Seller of such board approval on or before
        5:00
        pm Central Standard Time, August 31, 2007, this Agreement shall terminate
        and be
        of no further force and effect.

      

      EXECUTED
        this 28th day
        of August, 2007.

      

        	 	
                SELLER:

                 

                SUMMIT PETROLEUM MANAGEMENT
                  CORPORATION

              	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Dennis
                R.
                Johnson	 
	 	 	Dennis
                R.
                Johnson	 
	 	 	President
&
                CEO	 
	 	 	 	 

      

    

    	 	SUMMIT
            PETROLEUM LLC	 
	 	 	 	 
	
             

          	
            By:
              

          	/s/ Dennis
            R. Johnson	 
	 	 	Dennis
            R. Johnson	 
	 	 	President
            & CEO	 
	 	 	 	 

     

    
      	 	
              BUYER:

               

              LEGACY RESERVES OPERATING LP,
                a

              Delaware limited
                partnership

              BY: Legacy Reserves Operating GP LLC,
                its

              general partner

              By: Legacy Reserves LP, its sole
                member

              By: Legacy Reserves GP, LLC, its general
                partner 

            	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Kyle
              A. McGraw	 
	 	 	Kyle
              A. McGraw	 
	 	 	Executive
              Vice President Business Development and Land	 
	 	 	 	 

    

     

    
      
         

      

      
        Page
          18of 18

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