Document:

exv10w2

 

Exhibit
10.2

AMENDED AND RESTATED

MANAGEMENT STABILITY AGREEMENT

     This Amended and Restated Management Stability Agreement is dated August 2, 2005, between
Tesoro Corporation, a Delaware corporation (the “Company”), and Daniel J. Porter (“Employee”), and
supersedes and replaces that certain Management Stability Agreement dated as of September 6, 2000.

Recitals:

     WHEREAS, the Board of Directors of the Company has determined that it is in the best interest
of the Company to reduce uncertainty to certain key employees of the Company in the event of
certain fundamental events involving the control or existence of the Company;

     WHEREAS, the Board of Directors of the Company has determined that an agreement protecting
certain interests of key employees of the Company in the event of certain fundamental events
involving the control or existence of the Company is in the best interest of the Company because it
will assist the Company in attracting and retaining key employees such as this Employee; and

     WHEREAS, the Employee is relying on this Agreement and the obligations of the Company
hereunder in continuing to work for the Company.

     NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     1. Termination Following Change of Control.

     Should Employee at any time within two years of a change of control cease to be an employee of
the Company (or its successor), by reason of (i) involuntary termination by the Company (or its
successor) other than for “cause” (following a change of control), “cause” shall be limited to the
conviction of or a plea of nolo contendere to the charge of a felony (which,
through lapse of time or otherwise, is not subject to appeal), a material breach of fiduciary duty
to the Company through the misappropriation of Company funds or property) or (ii) voluntary
termination by Employee for “good reason upon change of control” (as defined below), the Company
(or its successor) shall pay to Employee within ten days of such termination the following
severance payments and benefits:

(a) A lump-sum payment equal to two and one-half times the base salary of
the Employee at the then current rate; and

(b) A lump-sum payment equal to (i) two and one-half times the sum of the
target bonuses under all of the Company’s incentive bonus plans applicable
to the Employee for the year in which the termination occurs or the year in
which the change of control occurred, whichever is greater, and (ii) if
termination occurs in the fourth quarter of a calendar year, the sum of the
target bonuses under all of the Company’s incentive bonus plans applicable
to Employee for the year in which the termination occurs prorated daily
based on the number of days from the beginning of the calendar year in which
the termination occurs to and including the date of termination.

     The Company (or its successor) shall also provide continuing coverage and benefits comparable to
all life, health and disability plans of the Company for a period of 30 months from the date of
termination, and Employee shall receive two and one-half years additional service credit under the
current non-qualified supplemental pension plans, or successors thereto, of the Company applicable
to the Employee on the date of termination.

     For purposes of this Agreement, a “change of control” shall be deemed to have occurred if (i)
there shall be consummated (A) any consolidation or merger of the Company in which the Company is

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     not the continuing or surviving corporation or pursuant to which shares of the Company’s Common
Stock would be converted into cash, securities or other property, other than a merger of the
Company where a majority of the Board of Directors of the surviving corporation are, and for a two
year period after the merger continue to be, persons who were directors of the Company immediately
prior to the merger or were elected as directors, or nominated for election as directors, by a vote
of at least two-thirds of the directors then still in office who were directors of the Company
immediately prior to the merger, or (B) any sale, lease, exchange or transfer (in one transaction
or a series of related transactions) of all or substantially all of the assets of the Company, or
(ii) the shareholders of the Company shall approve any plan or proposal for the liquidation or
dissolution of the Company, or (iii) (A) any “person” (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the
Company or a subsidiary thereof or any employee benefit plan sponsored by the Company or a
subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing 20 percent or more of the combined voting
power of the Company’s then outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of directors, as a result of a
tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, and
(B) at any time during a period of one year thereafter, individuals who immediately prior to the
beginning of such period constituted the Board of Directors of the Company shall cease for any
reason to constitute at least a majority thereof, unless the election or the nomination by the
Board of Directors for election by the Company’s shareholders of each new director during such
period was approved by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.

     For purposes of this Section 1, “good reason upon change of control” shall exist if any of the
following occurs:

(i) without Employee’s express written consent, the assignment to Employee
of any duties inconsistent with the employment of Employee immediately prior
to the change of control, or a significant diminution of Employee’s
positions, duties, responsibilities and status with the Company from those
immediately prior to a change of control or a diminution in Employee’s
titles or offices as in effect immediately prior to a change of control, or
any removal of Employee from, or any failure to reelect Employee to, any of
such positions;

(ii) a reduction by the Company in Employee’s base salary in effect
immediately prior to a change of control;

(iii) the failure by the Company to continue in effect any thrift, stock
ownership, pension, life insurance, health, dental and accident or
disability plan in which Employee is participating or is eligible to
participate at the time of the change of control (or plans providing
Employee with substantially similar benefits), except as otherwise required
by the terms of such plans as in effect at the time of any change of control
or the taking of any action by the Company which would adversely affect
Employee’s participation in or materially reduce Employee’s benefits under
any of such plans or deprive Employee of any material fringe benefits
enjoyed by Employee at the time of the change of control or the failure by
the Company to provide the Employee with the number of paid vacation days to
which Employee is entitled in accordance with the vacation policies of the
Company in effect at the time of a change of control;

(iv) the failure by the Company to continue in effect any incentive plan or
arrangement (including without limitation, the Company’s Incentive
Compensation Plan and similar incentive compensation benefits) in which
Employee is participating at the time of a change of control (or to
substitute and continue other plans or arrangements providing the Employee
with substantially similar benefits), except as otherwise required by the
terms of such plans as in effect at the time of any change of control;

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(v) the failure by the Company to continue in effect any plan or arrangement
with respect to securities of the Company (including, without limitation,
any plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof or to acquire stock
or other securities of the Company) in which Employee is participating at
the time of a change of control (or to substitute and continue plans or
arrangements providing the Employee with substantially similar benefits),
except as otherwise required by the terms of such plans as in effect at the
time of any change of control or the taking of any action by the Company
which would adversely affect Employee’s participation in or materially
reduce Employee’s benefits under any such plan;

(vi) the relocation of the Company’s principal executive offices to a
location outside the San Antonio, Texas, area, or the Company’s requiring
Employee to be based anywhere other than at the location of the Company’s
principal executive offices, except for required travel on the Company’s
business to an extent substantially consistent with Employee’s present
business travel obligations, or, in the event Employee consents to any such
relocation of the Company’s principal executive or divisional offices, the
failure by the Company to pay (or reimburse Employee for) all reasonable
moving expenses incurred by Employee relating to a change of Employee’s
principal residence in connection with such relocation and to indemnify
Employee against any loss (defined as the difference between the actual sale
price of such residence and the higher of (a) Employee’s aggregate
investment in such residence or (b) the fair market value thereof as
determined by a real estate appraiser reasonably satisfactory to both
Employee and the Company at the time the Employee’s principal residence is
offered for sale in connection with any such change of residence;

(vii) any failure by the Company to obtain the assumption of this Agreement
by any successor or assign of the Company;

     In the event of a change of control as “change of control” is defined in any stock option plan
or stock option agreement pursuant to which the Employee holds options to purchase common stock of
the Company, Employee shall retain the rights to all accelerated vesting and other benefits under
the terms thereof.

     The Company shall pay any attorney fees incurred by Employee in reasonably seeking to enforce
the terms of this Paragraph 1.

     2.Complete Agreement.

     This Agreement constitutes the entire agreement between the parties and cancels and supersedes
all other agreements between the parties which may have related to the subject matter contained in
this Agreement.

     3. Modification; Amendment; Waiver.

     No modification, amendment or waiver of any provisions of this Agreement shall be effective
unless approved in writing by both parties. The failure at any time to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of either party thereafter to enforce each and every provision hereof in
accordance with its terms.

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     4. Governing Law; Jurisdiction.

     This Agreement and performance under it, and all proceedings that may ensue from its breach,
shall be construed in accordance with and under the laws of the State of Texas.

     5. Severability.

     Whenever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

     6. Assignment.

     The rights and obligations of the parties under this Agreement shall be binding upon and inure
to the benefit of their respective successors, assigns, executors, administrators and heirs,
provided, however, that the Company may not assign any duties under this Agreement without the
prior written consent of the Employee.

     7. Limitation.

     This Agreement shall not confer any right or impose any obligation on the Company to continue
the employment of Employee in any capacity, or limit the right of the Company or Employee to
terminate Employee’s employment.

     8. Notices.

     All notices and other communications under this Agreement shall be in writing and shall be
given in person or by telegraph, facsimile or first class mail, certified or registered with return
receipt requested, and shall be deemed to have been duly given when delivered personally or three
days after mailing or one day after transmission of a telegram or facsimile, as the case may be, to
the representative persons named below:

	 	 	 	 	 
	 

	 	If to the Company:
	 	Corporate Secretary

Tesoro Corporation

300 Concord Plaza Drive

San Antonio, Texas 78216-6999
	 
	 	 	 	 
	 

	 	If to the Employee:
	 	Daniel J. Porter
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	TESORO CORPORATION
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/
Bruce A. Smith 

	 

	 	 	 	 	 	Bruce A. Smith
	 

	 	 	 	 	 	Chairman of the Board of Directors,
	 

	 	 	 	 	 	President and Chief Executive Officer
	 
	 

	 	EMPLOYEE:	 	 	 	/s/
Daniel J. Porter 

	 

	 	 	 	 	 	Daniel J. Porter

Page5exv10w1

 

Execution Copy

$300,000,000

ENCORE ACQUISITION COMPANY

6.0% Senior Subordinated Notes due 2015

PURCHASE AGREEMENT

June 30, 2005

Credit Suisse First Boston LLC

Eleven Madison Avenue

New York, New York 10010

Dear Sirs:

     1. Introductory. Encore Acquisition Company, a Delaware corporation (the “Company”),
proposes, subject to the terms and conditions stated herein, to issue and sell to Credit Suisse
First Boston LLC (“CSFB”) as the sole initial purchaser (the “Purchaser”) U.S.$300,000,000
principal amount of its 6.0% Senior Subordinated Notes due 2015 (“Offered Securities”) to be issued
under an indenture, to be dated as of July 13, 2005 (the “Indenture”), among the Company, the
subsidiary guarantors named therein (the “Subsidiary Guarantors”) and Wells Fargo Bank, National
Association, as Trustee. The Offered Securities will be guaranteed (the “Subsidiary Guarantees”) by
the Subsidiary Guarantors. The United States Securities Act of 1933, as amended, is herein referred
to as the “Securities Act.”

     The holders of the Offered Securities will be entitled to the benefits of a Registration
Rights Agreement among the Company, the Subsidiary Guarantors and the Purchaser (the “Registration
Rights Agreement”), pursuant to which the Company and the Subsidiary Guarantors agree to file a
registration statement with the Securities and Exchange Commission (the “Commission”) registering,
under the Securities Act, notes (the “Exchange Securities”) identical in all material respects to
the Offered Securities to be offered in exchange for the Offered Securities.

     The Company will use the net proceeds of the Offered Securities to (A) to repay outstanding
indebtedness under the Company’s U.S.$500,000,000 senior revolving credit facility (the “Senior
Credit Facility”), (B) to redeem $150 million aggregate principal amount of the Company’s 8.375%
Senior Subordinated Notes due 2012, notice of which shall be given at or prior to the Closing, (C)
to pay transaction costs relating to the issue and sale of the Offered Securities and (D) for
general corporate purposes.

     The Company hereby agrees with the Purchaser as follows:

     2. Representations and Warranties of the Company. The Company and the Subsidiary Guarantors
represent and warrant to, and agree with, the Purchaser that:

     (a) An offering circular relating to the Offered Securities to be offered by the
Purchaser has been prepared by the Company. Such offering circular (the “Offering
Circular”), as supplemented as of the date of this Agreement, together with all documents
incorporated by reference therein are hereinafter collectively referred to as the “Offering
Document”. On the date of this Agreement, the Offering Document does not include any untrue
statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or omissions from the
Offering Document in reliance upon and in conformity with information furnished to the
Company in

 

 

writing by or through CSFB specifically for use in the Offering Document. Except as
disclosed in the Offering Document, on the date of this Agreement, the Company’s Annual
Report on Form 10-K most recently filed with the Commission and all subsequent reports
(collectively, the “Exchange Act Reports”) which have been filed by the Company with the
Commission or sent to stockholders pursuant to the Securities Exchange Act of 1934 (the
“Exchange Act”) do not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Such documents, when they were filed with the
Commission, conformed in all material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder; and any further documents so filed
and incorporated by reference in the Offering Document, when such documents become effective

or are filed with the Commission will conform in all material respects to the requirements
of the Exchange Act and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

     (b) The Company has been duly incorporated and is an existing corporation in good
standing under the laws of the State of Delaware, with power and authority (corporate and
other) to own its properties and conduct its business as described in the Offering Document;
and the Company is duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so qualified would,
individually or in the aggregate, not have a material adverse effect on the condition
(financial or other), business, properties, earnings, assets, stockholders’ equity,
prospects or results of operations of the Company and its subsidiaries taken as a whole (a
“Material Adverse Effect”).

     (c) Each subsidiary of the Company has been duly incorporated or organized and is an
existing corporation, limited partnership or limited liability company in good standing
under the laws of the jurisdiction of its incorporation or organization, with power and
authority (corporate and other) to own its properties and conduct its business as described
in the Offering Document; and each subsidiary of the Company is duly qualified to do
business as a foreign corporation, limited partnership or limited liability company in good
standing in all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect; all outstanding shares of capital stock
of each Subsidiary Guarantor that is a corporation have been duly and validly authorized and
issued and are fully paid and non-assessable, and the limited partnership agreements or
limited liability company agreements governing all outstanding limited partnership interests
or limited liability company interests of each Subsidiary Guarantor that is a limited
partnership or limited liability company, as the case may be, have been validly executed and
delivered, and all capital contributions required under such limited partnership agreements
or limited liability company agreements have been paid in full; and the capital stock,
limited partnership interests or limited liability company interests of each subsidiary
owned by the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects, except for liens under or permitted by the Senior Credit Facility.
The Subsidiary Guarantors are the only direct or indirect subsidiaries of the Company.

     (d) This Agreement has been duly authorized, executed and delivered by the Company and
the Subsidiary Guarantors.

     (e) The Registration Rights Agreement has been duly authorized, and when the
Registration Rights Agreement has been duly executed and delivered, the Registration Rights
Agreement will be a valid and binding agreement of the Company, enforceable against the
Company in accordance with their respective terms, subject to (i) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equitable principles regardless of
whether enforcement is sought in law or equity and (ii) limitations on indemnification and
contribution under federal or state securities laws. On the Closing Date (as defined below),
the Registration Rights Agreement will, in all material respects, conform to the description
thereof in the Offering Document.

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     (f) The Indenture has been duly authorized by the Company and each Subsidiary
Guarantor; the Offered Securities have been duly authorized by the Company; each Subsidiary
Guaranty has been duly authorized by each respective Subsidiary Guarantor; and when the
Offered Securities are delivered and paid for pursuant to this Agreement and executed and
authenticated by the trustee in accordance with the provisions of the Indenture on the
Closing Date (as defined below), (i) the Indenture will have been duly executed and
delivered by the Company and will conform in all material respects to the description
thereof contained in the Offering Document, (ii) such Offered Securities will have been duly
executed, authenticated, issued and delivered and will conform in all material respects to
the description thereof contained in the Offering Document and (iii) the Indenture, the
Subsidiary Guarantees and such Offered Securities will constitute valid and legally binding
obligations of the Company and the Subsidiary Guarantors, enforceable against the Company or
the Subsidiary Guarantors, as the case may be, in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights and to
general equitable principles regardless of whether enforcement is sought in law or equity.

     (g) On the Closing Date (as defined below), the Exchange Securities will have been duly
authorized by the Company; and when the Exchange Securities are issued, executed and
authenticated in accordance with the terms of the Exchange Offer (as defined in the
Registration Rights Agreement) and the Indenture, the Exchange Securities and the Subsidiary
Guarantees will be entitled to the benefits of the Indenture and will be the valid and
legally binding obligations of the Company and the Subsidiary Guarantors, enforceable
against the Company or the Subsidiary Guarantors, as the case may be, in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting creditors’
rights and to general equitable principles regardless of whether enforcement is sought in
law or equity.

     (h) On the Closing Date (as defined below) the Subsidiary Guaranty of each Subsidiary
Guarantor will conform in all material respects to the description thereof contained in the
Offering Document. When the Exchange Securities have been issued, executed and authenticated
in accordance with the terms of the Exchange Offer (as defined in the Registration Rights
Agreement) and the Indenture, the Subsidiary Guaranty of each Subsidiary Guarantor will
constitute valid and legally binding obligations of such Subsidiary Guarantor, enforceable
against the Subsidiary Guarantor in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equitable principles
regardless of whether enforcement is sought in law or equity.

     (i) Except as disclosed in the Offering Document, there are no contracts, agreements or
understandings between the Company or any Subsidiary Guarantor and any person that would
give rise to a valid claim against the Company, any Subsidiary Guarantor or any Purchaser
for a brokerage commission, finder’s fee or other like payment with respect to the offer and
sale of the Offered Securities.

     (j) No consent, approval, authorization, or order of, or filing with, any governmental
agency or body or any court is required for the consummation of the transactions
contemplated by (i) this Agreement or the Registration Rights Agreement in connection with
the issuance and sale of the Offered Securities, or (ii) the issuance of the Subsidiary
Guarantees by the Subsidiary Guarantors, except as may be required under applicable state
securities laws.

     (k) The execution, delivery and performance by the Company and the Subsidiary
Guarantors of the Indenture, this Agreement and the Registration Rights Agreement, the
issuance and sale of the Offered Securities, and the consummation of the transactions
contemplated herein and in the Offering Circular (including the use of proceeds from the
sale of the Offered Securities as described in the Offering Circular), and compliance with
the terms and provisions thereof do not and will not (i) conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company or any such
subsidiary is a party or by which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is

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subject, except for such breaches, violations and defaults as would not have a Material
Adverse Effect, or (ii) result in any violation of the charter or by-laws of the Company or
any such subsidiary, and the Company has full power and authority to authorize, issue and
sell the Offered Securities, and each Subsidiary Guarantor has full power and authority to
authorize, offer and sell its respective Subsidiary Guaranty.

     (l) The Company and its subsidiaries have (1) good and indefeasible title to all of
their interests in the oil and gas properties described in the Offering Document, (2) good
and indefeasible title in fee simple to all other real property owned by the Company or any
of its subsidiaries and (3) good title to all personal property owned by the Company or any
of its subsidiaries, in each case, free and clear of all liens, encumbrances and defects,
except (i) as described in the Offering Document, (ii) liens securing taxes and other
governmental charges, or claims of materialmen, mechanics and similar persons, not yet due
and payable, (iii) liens and encumbrances under oil and gas leases, options to lease,
operating agreements, utilization and pooling agreements, participation and drilling
concessions agreements and gas sales contracts, securing payment of amounts not yet due and
payable and of a scope and nature customary in the oil and gas industry, (iv) liens arising
under or permitted by the Senior Credit Facility or (v) liens, encumbrances and defects that
do not, individually or in the aggregate, materially affect the value of such properties or
materially interfere with the use made or proposed to be made of such properties by the
Company or the Subsidiary Guarantors; except as described in the Offering Document, the
leases, options to lease, drilling concessions or other arrangements held by the Company and
its subsidiaries reflect in all material respects the right of the Company and its
subsidiaries to explore the unexplored and undeveloped acreage described in the Offering
Document, and the care taken by the Company and its subsidiaries with respect to acquiring
or otherwise procuring such leases, options to lease, drilling concessions and other
arrangements was generally consistent with standard industry practices for acquiring or
procuring leases to explore acreage for hydrocarbons; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such real property and buildings by
the Company or its subsidiaries.

     (m) The Company and its subsidiaries carry, or are covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of their business and the
value of their respective properties as is customary for companies engaged in similar
businesses in similar industries; and neither the Company nor any of its subsidiaries has
(i) received notice from any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to continue such insurance
or (ii) any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage at reasonable cost
from similar insurers as may be necessary to continue its business.

     (n) Except as disclosed in the Offering Document, no relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company or any of its
subsidiaries on the other hand, that would be required by the Securities Act to be described
in the Offering Document if the Offering Document were a prospectus included in a
registration statement on Form S-1 filed with the Commission.

     (o) The Company and its subsidiaries possess all licenses, franchises, certificates,
permits, approvals, consents and other authorizations (collectively, “Governmental
Licenses”) issued by and have made all declarations and filings with, the appropriate
federal, state, local or foreign governmental or regulatory authorities that are necessary
for the ownership or lease of their respective properties or the conduct of their respective
businesses as described in Offering Document except where the failure to possess such
Governmental Licenses or make such declaration and filings would not, individually or in the
aggregate, have a Material Adverse Effect. The Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses except where the
failure to so comply would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect; all of such Governmental Licenses are valid and in full
force and effect, except where the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect; and neither

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the Company nor any of its subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit or authorization or has any reason to
believe that any such Governmental Licenses will not be renewed in the ordinary course,
except for notices, modifications or non-renewals as would not, individually or in the
aggregate, have a Material Adverse Effect.

     (p) No labor disturbance or dispute with employees of the Company or any of its
subsidiaries exists or, to the best knowledge of the Company, is contemplated or threatened,
which disturbance or dispute would have a Material Adverse Effect.

     (q) The Company and its subsidiaries own, possess or can acquire on reasonable terms
adequate trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property (collectively,
“intellectual property rights”) necessary to conduct the business now operated by them, or
presently employed by them, except where the failure to own, possess or acquire such
intellectual property rights would not, individually or in the aggregate, have a Material
Adverse Effect, and have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.

     (r) Except as disclosed in the Offering Document, neither the Company nor any of its
subsidiaries is in violation of any statute, any rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances (collectively,
“environmental laws”), owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim would individually or
in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending
investigation which might lead to such a claim.

     (s) Except as disclosed in the Offering Document, there are no pending actions, suits
or proceedings against or affecting the Company, any of its subsidiaries or any of their
respective properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to perform its obligations
under the Indenture, this Agreement or the Registration Rights Agreement, or which are
otherwise material in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are, to the Company’s knowledge, threatened or contemplated.

     (t) The financial statements and the notes related thereto of the Company and its
consolidated subsidiaries included or incorporated by reference in the Offering Document
present fairly in all material respects the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates shown and their results of operations and
changes in their consolidated cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis; the assumptions used in
preparing any pro forma financial data included in the Offering Document provide a
reasonable basis for presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma data therein reflect the proper application
of those adjustments to the corresponding historical financial statement amounts; and the
other financial information included or incorporated by reference in the Offering Document,
including oil and gas production information, has been derived from the accounting records
of the Company and its subsidiaries and presents fairly in all material respects the
information shown thereby.

     (u) Except as disclosed in the Offering Document, since the date of the latest audited
financial statements included in the Offering Document there has been no material adverse
change, nor any development or event involving a prospective material adverse change, in the
condition (financial or other), business or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Offering
Document, there has been no dividend or distribution of any

5

 

kind declared, paid or made by the Company on any class of its capital stock (other
than the stock dividend declared on June 15, 2005).

     (v) Ernst & Young LLP, who has certified certain financial statements of the Company,
is the independent registered public accounting firm with respect to the Company as required
by the Securities Act.

     (w) Miller and Lents, Ltd. (the “Engineer”), whose reserve evaluations are referenced
or appear, as the case may be, in the Offering Document were, as of December 31, 2002,
December 31, 2003 and December 31, 2004, and are, as of the date hereof, independent
engineers with respect to the Company; and the historical information underlying the
estimates of the reserves of the Company supplied by the Company to the Engineer for the
purposes of preparing the reserve reports of the Company referenced in the Offering Document
(the “Reserve Reports”), including, without limitation, production volumes, sales prices for
production, contractual pricing provisions under oil or gas sales or marketing contracts or
under hedging arrangements, costs of operations and development, and working interest and
net revenue information relating to the Company’s ownership interests in properties, was
true and correct in all material respects on the date of each such Reserve Report was
prepared in all material respects in accordance with customary industry practices.

     (x) The Company is subject to the reporting requirements of either Section 13 or
Section 15(d) of the Exchange Act and files reports with the Commission on the Electronic
Data Gathering, Analysis, and Retrieval (EDGAR) system.

     (y) On the Closing Date (as defined below), the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as amended (the “TIA” or
“Trust Indenture Act”), and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.

     (z) Neither the Company nor any Subsidiary Guarantor is an open-end investment company,
unit investment trust or face-amount certificate company that is or is required to be
registered under Section 8 of the United States Investment Company Act of 1940 (the
“Investment Company Act”); and neither the Company nor any Subsidiary Guarantor is or, after
giving effect to the offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Document, will be an “investment company” as
defined in the Investment Company Act.

     (aa) No securities of the same class (within the meaning of Rule 144A(d)(3) under the
Securities Act) as the Offered Securities or the Subsidiary Guarantees are listed on any
national securities exchange registered under Section 6 of the Exchange Act or quoted in a
U.S. automated inter-dealer quotation system.

     (bb) Assuming the accuracy of the representations of the Purchaser set forth in Section
4 and the performance by the Purchaser of its obligations hereunder, the offer and sale of
the Offered Securities and Subsidiary Guarantees in the manner contemplated by this
Agreement will be exempt from the registration requirements of the Securities Act by reason
of Section 4(2) thereof; and it is not necessary to qualify an indenture in respect of the
Offered Securities under the Trust Indenture Act.

     (cc) No “nationally recognized statistical rating organization” as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act has notified the Company that it is
considering (i) the downgrading, suspension or withdrawal of, or any review for a possible
change that does not indicate the direction of the possible change in, any rating assigned
to the Company or any securities of the Company or (ii) any change with negative
implications in the outlook for any rating of the Company or any securities of the Company.

     (dd) None of the Company or any Subsidiary Guarantor, nor any of their affiliates, nor
any person acting on its or their behalf (i) has, within the six-month period prior to the
date hereof, offered or sold in the United States or to any U.S. person (as such terms are
defined in Regulation S under the Securities Act (“Regulation S”)) the Offered Securities,
the Subsidiary Guarantees or any security of the same class or

6

 

series as the Offered Securities or the Subsidiary Guarantees, other than pursuant to
this Agreement, or (ii) has offered or will offer or sell the Offered Securities or the
Subsidiary Guarantees (A) in the United States by means of any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the Securities Act or (B)
with respect to any such securities sold in reliance on Rule 903 of Regulation S, by means
of any directed selling efforts within the meaning of Rule 902(c) of Regulation S. The
Company, its affiliates and any person acting on its or their behalf have complied and will
comply with the offering restrictions requirement of Regulation S. The Company has not
entered and will not enter into any contractual arrangement with respect to the distribution
of the Offered Securities or the Subsidiary Guarantees except for this Agreement and the
Registration Rights Agreement.

     (ee) The Company and its subsidiaries maintain systems of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii) access to assets
is permitted only in accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any differences.

     (ff) Nothing has come to the attention of the Company that has caused the Company to
believe that the statistical and market-related data included in the Offering Document is
not based on or derived from sources that are reliable and accurate in all material
respects.

     (gg) The Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company’s principal
executive officer and its principal financial officer by others within those entities, and
such disclosure controls and procedures are effective at the reasonable assurance level to
perform the functions for which they were established; the Company’s auditors and the Audit
Committee of the Board of Directors have been advised of: (i) any significant deficiencies
and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the Company’s ability to record,
process, summarize, and report financial information; and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting; since the date of the most recent
evaluation of such disclosure controls and procedures, there has not been any change in the
Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial
reporting; the principal executive officer and principal financial officer of the Company
have made all certifications required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”) and any related rules and regulations promulgated by the Commission, and the
statements contained in any such certification are complete and correct; and the Company is
otherwise in compliance with all applicable provisions of the Sarbanes-Oxley Act that are
effective.

     (hh) Neither the Company nor any of its subsidiaries is in violation of its respective
charter or by-laws or in default in the performance of any obligation, agreement, covenant
or condition contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or their respective property is bound except where
such violations or defaults would not have a Material Adverse Effect.

     (ii) There are no contracts, agreements or understandings between the Company or any
subsidiary and any person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities of the
Company (except as disclosed in the Offering Document) or to require the Company to include
such securities with the Offered Securities registered pursuant to any registration
statement.

     (jj) Neither the Company nor any of its subsidiaries has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the Offered
Securities to violate

7

 

Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System. The Company does not own, and none of the proceeds from the offering of the
Offered Securities will be used directly or indirectly to purchase or carry any “margin
stock” as defined in Regulation U.

     (kk) Neither the Company nor any of its subsidiaries has distributed or, prior to the
later to occur of (A) the Closing Date (as defined below) and (B) completion of the
distribution of the Offered Securities, will distribute any material in connection with the
offering and sale of the Offered Securities other than the Offering Document or other
material, if any, not prohibited by the Securities Act and the Financial Services and
Markets Act 2000 of the United Kingdom (“FSMA”) (or regulations promulgated under the
Securities Act or the FSMA) and approved by the Purchaser, such approval not to be
unreasonably withheld or delayed.

     (ll) The Company and its subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed through the date hereof to the
extent that such taxes have become due and are not being contested in good faith with such
exceptions as would not singly or in the aggregate result in a Material Adverse Effect; and
except as otherwise disclosed in the Offering Document, there is no tax deficiency that has
been asserted against the Company or any of its subsidiaries or any of their respective
properties or assets which has had, nor does the Company have any knowledge of any tax
deficiency, which if determined adversely to the Company or its subsidiaries might have, a
Material Adverse Effect

     (mm) Except as described in the Offering Document, no subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other instrument to
which it is a party or is subject, from paying any dividends to the Company, from making any
other distribution to the Company on such subsidiary’s capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from transferring any
of such subsidiary’s properties or assets to the Company or any other subsidiary of the
Company.

     3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the
Company, at a purchase price (the “Purchase Price”) of 98.00% of the principal amount thereof plus
accrued interest from July 13, 2005 to the Closing Date (as hereinafter defined), the Offered
Securities.

     The Company will deliver against payment of the Purchase Price the Offered Securities in the
form of one or more permanent global securities in definitive form (the “Global Securities”)
deposited with the Trustee as custodian for The Depository Trust Company (“DTC”) and registered in
the name of Cede & Co., as nominee for DTC. Interests in any permanent Global Securities will be
held only in book-entry form through DTC, except in the limited circumstances described in the
Offering Document. The Purchaser shall make payment of the Purchase Price for the Offered
Securities in Federal (same day) funds by official check or checks or wire transfer to the bank
account designated by the Company at the office of Baker Botts L.L.P. at 9:00 A.M. (Houston, Texas
time), on July 13, 2005, or at such other time not later than seven full business days thereafter
as CSFB and the Company determine, such time being herein referred to as the “Closing Date”,
against delivery to the Trustee as custodian for DTC of the Global Securities representing all of
the Offered Securities. The Global Securities will be made available for checking at the above
office of Baker Botts L.L.P. at least 24 hours prior to the Closing Date.

8

 

     4. Representations by Purchaser; Resale by Purchaser.

     (a) The Purchaser represents and warrants to the Company and the Subsidiary Guarantors
that it is an institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act.

     (b) The Purchaser acknowledges that the Offered Securities and the Subsidiary
Guarantees have not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S or pursuant to an exemption from the registration requirements
of the Securities Act. The Purchaser represents and agrees that it has offered and sold the
Offered Securities and the Subsidiary Guarantees, and will offer and sell the Offered
Securities and the Subsidiary Guarantees (i) as part of its distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 or Rule 144A under the Securities Act (“Rule
144A”). Accordingly, neither such Purchaser nor its affiliates, nor any persons acting on
its or their behalf, have engaged or will engage in any directed selling efforts with
respect to the Offered Securities or the Subsidiary Guarantees, and such Purchaser, its
affiliates and all persons acting on its or their behalf have complied and will comply with
the offering restrictions requirement of Regulation S. The Purchaser agrees that, at or
prior to confirmation of sale of the Offered Securities, other than a sale pursuant to Rule
144A, such Purchaser will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases the Offered Securities from it
during the restricted period a confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the “Securities Act”) and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the date of the commencement of the
offering and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act. Terms
used above have the meanings given to them by Regulation S.”

     Terms used in this subsection (b) have the meanings given to them by Regulation S.

     (c) The Purchaser agrees that it and each of its affiliates has not entered and will
not enter into any contractual arrangement with respect to the distribution of the Offered
Securities except with the prior written consent of the Company.

     (d) The Purchaser represents and warrants that it has not offered or sold, and agrees
that it will not offer or sell, the Offered Securities or the Subsidiary Guarantees as part
of the initial offering thereof, except (1) within the United States of America to persons
whom it reasonably believes to be “qualified institutional buyers” (as defined in Rule 144A)
and in connection with each such sale, it has taken or will take reasonable steps to ensure
that the purchaser of the Offered Securities and the Subsidiary Guarantees is aware that
such sale is being made in reliance on Rule 144A or (2) in offshore transactions in
compliance with the offering restrictions requirement of Regulation S.

     (e) The Purchaser agrees that it and each of its affiliates will not offer or sell the
Offered Securities or the Subsidiary Guarantees in the United States by means of any form of
general solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act, including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or broadcast over
television or radio, or (ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. The Purchaser agrees, with respect to resales
made in reliance on Rule 144A of any of the Offered Securities or the Subsidiary Guarantees,
to deliver either with the confirmation of such resale or otherwise prior to settlement of
such resale a notice to the effect that the resale of such Offered Securities and the
Subsidiary Guarantees has been made in reliance upon the exemption from the registration
requirements of the Securities Act provided by Rule 144A.

9

 

     (f) The Purchaser represents and agrees that (i) it has not offered or sold and, prior
to the expiry of a period of six months from the Closing Date will not offer or sell any
Offered Securities or Subsidiary Guarantees to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii)
it has only communicated or caused to be communicated any invitation or inducement to engage
in investment activity (within the meaning of Section 21 of the Financial Services and
Markets Act 2000 (“FSMA”) received by it in connection with the issue or sale of any Offered
Securities in circumstances in which Section 21(1) does not apply to the Company; and (iii)
it has complied and will comply with all applicable provisions of the FSMA with respect to
anything done by it in relation to the Offered Securities and the Subsidiary Guarantees in,
from or otherwise involving the United Kingdom.

     5. Certain Agreements of the Company. The Company agrees with the Purchaser that:

     (a) The Company will advise CSFB promptly of any proposal to amend or supplement the
Offering Document which shall not be disapproved by CSFB promptly after reasonable notice
thereof. If, at any time prior to the completion of the resale of the Offered Securities by
the Purchaser, any event occurs as a result of which the Offering Document as then amended
or supplemented would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or, if it is necessary at any such
time to amend or supplement the Offering Document to comply with any applicable law, the
Company promptly will notify CSFB of such event and promptly will prepare, at its own
expense, an amendment or supplement which will correct such statement or omission or effect
such compliance. Neither CSFB’s consent to, nor the Purchaser’s delivery to offerees or
investors of, any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.

     (b) The Company will furnish to CSFB copies of any Offering Document and all amendments
and supplements to such documents, in each case as soon as available and in such quantities
as CSFB requests, and if, at any time prior to the expiration of six months after the date
of the Offering Circular, any event shall have occurred as a result of which the Offering
Circular as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made when such Offering Circular is
delivered, not misleading, or, if for any other reason it shall be necessary or desirable
during such same period to amend or supplement the Offering Circular, to notify you and upon
your request to prepare and furnish without charge to each Purchaser and to any dealer in
securities as many written and electronic copies as you may from time to time reasonably
request of an amended Offering Circular or a supplement to the Offering Circular which will
correct such statement or omission or effect such compliance. At any time when the Company
is not subject to Section 13 or 15(d) of the Exchange Act, the Company will promptly furnish
or cause to be furnished to CSFB and, upon request of holders and prospective purchasers of
the Offered Securities, to such holders and purchasers, copies of the information required
to be delivered to holders and prospective purchasers of the Offered Securities pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to
permit compliance with Rule 144A in connection with resales by such holders of the Offered
Securities. The Company will pay the expenses of printing and distributing to the Purchaser
all such documents.

     (c) The Company will arrange for the qualification of the Offered Securities for sale
and the determination of their eligibility for investment under the laws of such
jurisdictions in the United States and Canada as CSFB designates and will continue such
qualifications in effect so long as required for the resale of the Offered Securities by the
Purchaser, provided that the Company will not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such jurisdiction.

     (d) During the period of five years after the Closing Date, the Company will furnish or
will make generally available via the EDGAR System to CSFB promptly upon their becoming
available, copies of (i) all reports or other publicly available information that the
Company shall mail or otherwise make available to its public stockholders and (ii) all
reports, financial statements and proxy or information statements filed

10

 

by the Company with the Commission or any national securities exchange and such other
publicly available information concerning the Company and its subsidiaries including,
without limitation, press releases, as the Purchaser may reasonably request.

     (e) During the period of two years after the Closing Date, the Company will, upon
request, furnish to CSFB and any holder of Offered Securities a copy of the restrictions on
transfer applicable to the Offered Securities.

     (f) During the period of two years after the Closing Date, the Company will not, and
will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to,
resell any of the Offered Securities that have been reacquired by any of them.

     (g) During the period of two years after the Closing Date, neither the Company nor any
Subsidiary Guarantor will be or become, an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act.

     (h) The Company will pay all expenses incidental to the performance of its obligations
under this Agreement, the Indenture, and the Registration Rights Agreement, including (i)
the fees and expenses of the Trustee and its professional advisers; (ii) all expenses in
connection with the execution, issue, authentication, packaging and initial delivery of the
Offered Securities and, as applicable, the Exchange Securities (as defined in the
Registration Rights Agreement), the preparation and printing of this Agreement, the
Registration Rights Agreement, the Offered Securities, the Indenture, the Offering Document
and amendments and supplements thereto, and any other document relating to the issuance,
offer, sale and delivery of the Offered Securities and as applicable, the Exchange
Securities; (iii) the cost of qualifying the Offered Securities for trading in The
PortalSM Market (“PORTAL”) and any expenses incidental thereto; (iv) the cost of
any advertising approved by the Company in connection with the issue of the Offered
Securities; (v) any expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities or the Exchange Securities for sale
under the laws of such jurisdictions in the United States and Canada as CSFB designates and
the printing of memoranda relating thereto, (vi) any fees charged by investment rating
agencies for the rating of the Offered Securities or the Exchange Securities; and (vii)
expenses incurred in distributing the Offering Document (including any amendments and
supplements thereto) to the Purchaser. The Company will also pay or reimburse the Purchaser
(to the extent incurred by it) for all travel expenses of the Purchaser and the Company’s
officers and employees and any other expenses of the Purchaser and the Company in connection
with attending or hosting meetings with prospective purchasers of the Offered Securities
from the Purchaser.

     (i) In connection with the offering, until CSFB shall have notified the Company and the
other Purchaser of the completion of the resale of the Offered Securities, neither the
Company nor any of its affiliates has or will, either alone or with one or more other
persons, bid for or purchase for any account in which it or any of its affiliates has a
beneficial interest any Offered Securities or attempt to induce any person to purchase any
Offered Securities; and neither it nor any of its affiliates will make bids or purchases for
the purpose of creating actual, or apparent, active trading in, or of raising the price of,
the Offered Securities.

     (j) For a period of 90 days after the date of the initial offering of the Offered
Securities by the Purchaser, the Company will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any United States dollar-denominated debt
securities, other than the Exchange Securities, issued or guaranteed by the Company and
having a maturity of more than one year from the date of issue. The Company will not at any
time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
any securities under circumstances where such offer, sale, pledge, contract or disposition
would cause the exemption afforded by Section 4(2) of the Securities Act or the safe harbor
of Regulation S thereunder to cease to be applicable to the offer and sale of the Offered
Securities.

     6. Conditions of the Obligations of the Purchaser. The obligations of the Purchaser to
purchase and pay for the Offered Securities will be subject to the accuracy of the representations
and warranties on the part of the

11

 

Company herein, to the accuracy of the statements of officers of the Company made pursuant to
the provisions hereof, to the performance by the Company of its obligations hereunder and to the
following additional conditions precedent:

     (a) The Purchaser shall have received a letter, dated the date of this Agreement, of
Ernst & Young LLP in agreed form confirming that they are the independent registered public
accounting firm of the Company within the meaning of the Securities Act and the applicable
published rules and regulation thereunder (“Rules and Regulations”) and to the effect that:

     (i) in their opinion the financial statements examined by them and included in
the Offering Document and in the Exchange Act Reports comply as to form in all
material respects with the applicable accounting requirements of the Securities Act
and the related published Rules and Regulations;

     (ii) on the basis of the review referred to in clause (ii) above, a reading of
the latest available interim financial statements of the Company, inquiries of
officials of the Company who have responsibility for financial and accounting
matters and other specified procedures, nothing came to their attention that caused
them to believe that:

     (A) the unaudited financial statements included in the Offering
Document or in the Exchange Act Reports do not comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the related published Rules and Regulations or any
material modifications should be made to such unaudited financial statements
for them to be in conformity with generally accepted accounting principles;

     (B) at the date of the latest available balance sheet read by such
accountants, or at a subsequent specified date not more than three business
days prior to the date of this Agreement, there was any change in the
capital stock or any increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such accountants, there was any
decrease in consolidated net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in the Offering Document;
or

     (C) for the period from the closing date of the latest income statement
included in the Offering Document to the closing date of the latest
available income statement read by such accountants there were any
decreases, as compared with the corresponding period of the previous year
and with the period of corresponding length ended the date of the latest
income statement included in the Offering Document, in consolidated net
sales, net operating income, income before extraordinary items or
consolidated net income or in the ratio of earnings to fixed charges;

except in all cases set forth in clauses (B) and (C) above for changes, increases or
decreases which are described in such letter; and

     (iii) they have compared specified dollar amounts (or percentages derived from
such dollar amounts) and other financial information contained in the Offering
Document and the Exchange Act Reports (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the general
accounting records of the Company and its subsidiaries subject to the internal
controls of the Company’s accounting system or are derived directly from such
records by analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise specified in
such letter.

12

 

     (b) Subsequent to the execution and delivery of this Agreement, there shall not have
occurred (i) any change, or any development or event involving a prospective change, in the
condition (financial or other), business, properties or results of operations of the Company
and its subsidiaries taken as one enterprise which, in the judgment of CSFB, is material and
adverse and makes it impractical or inadvisable to proceed with completion of the offering
or the sale of and payment for the Offered Securities; (ii) any downgrading in the rating of
any debt securities of the Company by any “nationally recognized statistical rating
organization” (as defined for purposes of Rule 436(g) under the Securities Act), or any
public announcement that any such organization has under surveillance or review its rating
of any debt securities of the Company (other than an announcement with positive implications
of a possible upgrading, and no implication of a possible downgrading, of such rating) or
any announcement that the Company has been placed on negative outlook; (iii) any change in
U.S. or international financial, political or economic conditions or currency exchange rates
or exchange controls as would, in the judgment of CSFB, be likely to prejudice materially
the success of the proposed issue, sale or distribution of the Offered Securities, whether
in the primary market or in respect of dealings in the secondary market, (iv) any material
suspension or material limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such exchange, or any suspension
of trading of any securities of the Company on any exchange or in the over-the-counter
market; (v) any banking moratorium declared by U.S. Federal or New York authorities; (vi)
any major disruption of settlements of securities or clearance services in the United States
or (vii) any attack on, outbreak or escalation of hostilities or act of terrorism involving
the United States, any declaration of war by Congress or any other national or international
calamity or emergency if, in the judgment of CSFB, the effect of any such attack, outbreak,
escalation, act, declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the offering or sale of and payment for the Offered Securities.

     (c) The Purchaser shall have received an opinion, dated the Closing Date, of Baker
Botts L.L.P., counsel for the Company, that:

     (i) The Company and each of its subsidiaries have been duly organized and are
validly existing and in good standing under the laws of their respective
jurisdictions of organization. The Company and its subsidiaries have all corporate,
partnership or limited liability company power and authority necessary to own or
hold their respective properties and to conduct their respective businesses as
described in the Offering Document.

     (ii) All the outstanding shares of capital stock of the Company have been duly
and validly authorized and issued and are fully paid and nonassessable; and all the
outstanding shares of capital stock or other equity interests of each subsidiary of
the Company have been duly and validly authorized and issued, are fully paid (in the
case of limited partnership or limited liability company interests, to the extent
required under the respective partnership or limited liability company agreements)
and non-assessable (in the case of limited partnership or limited liability company
interests, except as such non-assessability may be limited by the limited
partnership or limited liability company statute of the jurisdiction of organization
of such entity) and are owned by the Company, free and clear of all liens,
encumbrances, equities or claims, except as otherwise described in the Offering
Document or as set forth in or permitted by the Senior Credit Facility.

     (iii) The Company has the corporate power and authority to execute and deliver
this Agreement, the Indenture and the Registration Rights Agreement and to incur and
perform all of its obligations thereunder (including the use of proceeds from the
sale of the Offered Securities as described in the Offering Document); and all
action required to be taken by the Company for the due and proper authorization,
execution and delivery of each of this Agreement, the Indenture and the Registration
Rights Agreement and the consummation of the transactions contemplated thereby
(including the use of proceeds from the sale of the Offered Securities as described
in the Offering Document) have been duly and validly taken or, in connection with
the redemption of the Company’s 8.375% Senior Subordinated Notes due 2012,
authorized.

     (iv) This Agreement has been duly authorized, executed and delivered by the
Company and the Subsidiary Guarantors.

13

 

     (v) The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and the Subsidiary Guarantors. The Registration Rights
Agreement is a valid and binding agreement of the Company and the Subsidiary
Guarantors, enforceable against the Company and the Subsidiary Guarantors in
accordance with their respective terms, subject to (i) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equitable
principles regardless of whether enforcement is sought in law or equity and (ii)
limitations on indemnification and contribution under Federal or state securities
laws.

     (vi) The Indenture has been duly authorized, executed and delivered by the
Company and each Subsidiary Guarantor; the Offered Securities have been duly
authorized, executed, issued and delivered, and assuming the Offered Securities have
been duly executed and authenticated by the Trustee and paid for by the Purchaser in
accordance with the terms of this Agreement, each of the Indenture and the Offered
Securities constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their respective terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights and
to general equitable principles regardless of whether enforcement is sought in law
or equity.

     (vii) The Exchange Securities have been duly authorized by the Company; and
when the Exchange Securities are issued, executed and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, the Exchange Securities will
be entitled to the benefits of the Indenture and will be the valid and legally
binding obligations of the Company and the Subsidiary Guarantors, enforceable
against the Company and the Subsidiary Guarantors in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general equitable principles regardless of
whether enforcement is sought in law or equity.

     (viii) Each Subsidiary Guaranty has been duly authorized by the relevant
Subsidiary Guarantor. When the Offered Securities have been issued, executed and
authenticated in accordance with the Indenture and delivered to and paid for by the
Purchaser in accordance with the terms of this Agreement, the Subsidiary Guaranty of
each Subsidiary Guarantor endorsed thereon will be a valid and legally binding
obligation of such Subsidiary Guarantor, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws relating to or affecting the enforcement of creditors’ rights
generally and to general equitable principles regardless of whether enforcement is
sought in law or equity.

     (ix) The execution, delivery and performance by the Company and the Subsidiary
Guarantors of the Indenture, this Agreement and the Registration Rights Agreement,
the issuance and sale of the Offered Securities being delivered on the Closing Date,
and the consummation of the transactions contemplated thereunder (including the use
of proceeds from the sale of the Offered Securities as described in the Offering
Document) will not (i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any agreement or instrument set
forth on Exhibit A to such counsel’s opinion (to be limited to documents filed as
exhibits to the Company’s Form 10-K for the fiscal year ended December 31, 2004 and
any filings since such Form 10-K made by the Company with the Commission), (ii)
result in any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or any of its subsidiaries or (iii) result
in the violation of any law or statute or any judgment, order or regulation of any
court or governmental or regulatory authority except, in the case of clauses (i) and
(iii) above, for such conflicts, breaches or violations that would not, individually
or in the aggregate, have a Material Adverse Effect and, with respect to the
Registration Rights Agreement, except for limitations of indemnification and
contribution under Federal or state securities laws.

14

 

     (x) No consent, approval, authorization, order, registration or qualification
of or with any court or governmental or regulatory authority of the United States of
America, the State of Delaware (solely with respect to the Delaware General
Corporation Law) or the State of Texas is required for the execution, delivery and
performance by the Company of the Indenture, this Agreement and the Registration
Rights Agreement, the issuance and sale of the Offered Securities being delivered on
the Closing Date, and the consummation of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations, orders and registrations
or qualifications as may be required under applicable state securities laws in
connection with the purchase and distribution of the Offered Securities by the
Purchaser.

     (xi) To the knowledge of such counsel, except as described in the Offering
Document, there are no legal, governmental or regulatory investigations, actions,
suits or proceedings pending to which the Company or any of its subsidiaries is or
may be a party or to which any property of the Company or any of its subsidiaries is
or may be the subject which, individually or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be expected to
have a Material Adverse Effect; and to the knowledge of such counsel, no such
investigations, actions, suits or proceedings are threatened or contemplated by any
governmental or regulatory authority or threatened by others.

     (xii) The Company is not and, after giving effect to the offering and sale of
the Offered Securities and the application of the proceeds thereof as described in
the Offering Document, will not be an “investment company” within the meaning of the
Investment Company Act.

     (xiii) The documents incorporated by reference in the Offering Document or any
further amendment or supplement thereto made by the Company prior to the Closing
Date, (other than the financial statements and related schedules, other financial
data and oil and gas reserve and production data therein, as to which such counsel
need express no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.

     (xiv) The statements in the Offering Circular under the caption “Certain United
States Federal Income Tax Considerations,” insofar as they refer to statements of
law or legal conclusions, fairly summarize the matters referred to therein in all
material respects, subject to the qualifications and assumptions stated therein.

     (xv) The statements in the Offering Circular under the captions “Description of
Other Indebtedness,” and “Description of Notes” insofar such statements purport to
summarize certain provisions of documents referred to therein and reviewed by such
counsel, fairly summarize such provisions in all material respects, subject to the
qualifications and assumptions stated therein.

     (xvi) Assuming the accuracy of the representations and warranties of the
Company and the Purchaser as to matters of fact of the parties contained in this
Agreement, the performance by them of the agreements contained therein and
compliance with the procedures set forth in the Offering Circular, it is not
necessary in connection with (i) the offer, sale and delivery of the Offered
Securities and of the Subsidiary Guarantees by the Company and the Subsidiary
Guarantors to the Purchaser pursuant to this Agreement or (ii) the initial resales
of the Offered Securities by the Purchaser in the manner contemplated by this
Agreement, to register the Offered Securities or the Subsidiary Guarantees under the
Securities Act or to qualify the Indenture under the Trust Indenture Act, it being
understood that no opinion is expressed as to any subsequent resale of the Offered
Securities or the Subsidiary Guarantees.

     Such counsel shall also state that they have participated in conferences with officers
and representatives of the Company, and with representatives of its independent registered
public accounting firm and reserve engineer and with the Purchaser and its counsel at which
the contents of the Offering

15

 

Document and related matters were discussed and, although such counsel assumes no
responsibility for the accuracy, completeness or fairness of the statements contained in the
Offering Document (except as expressly provided above), no facts have come to the attention
of such counsel to lead such counsel to believe that the Offering Document (other than (i)
the financial statements or schedules included or incorporated by reference therein,
including the notes thereto and the auditors’ reports thereon, (ii) the estimated oil and
natural gas reserve evaluations and related calculations of Miller and Lents, Ltd.,
independent petroleum engineers, (iii) the other information of a financial or reserve
nature (including production data) included or incorporated by reference therein, and (iv)
the exhibits thereto, as to which such counsel need not comment), as of its date or as of
the Closing Date contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

     (d) The Purchaser shall have received from Andrews Kurth LLP, counsel for the
Purchaser, such opinion or opinions, dated the Closing Date, with respect to the
incorporation of the Company, the validity of the Offered Securities, the Offering Circular,
the exemption from registration for the offer and sale of the Offered Securities and the
Subsidiary Guarantees by the Company and the Subsidiary Guarantors to the Purchaser and the
resales by the Purchaser as contemplated hereby and other related matters as CSFB may
require, and the Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.

     (e) The Purchaser shall have received a certificate, dated the Closing Date, of the
President or any Vice President and a principal financial or accounting officer of the
Company in which such officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of the Company in this
Agreement are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date, and that, subsequent to the date of the most recent financial statements
in the Offering Document there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the Offering Document or as
described in such certificate.

     (f) The Engineer shall have delivered to the Purchaser on the Closing Date, a letter in
form and substance reasonably satisfactory to the Purchaser, stating, as of the date hereof
and as of the Closing Date (or, with respect to matters involving changes or developments
since the respective dates as of which specified information with respect to the oil and gas
reserves is given or incorporated in the Offering Circular as of the date not more than five
days prior to the date of such letter), the conclusions and findings of such firm with
respect to the oil and gas reserves of the Company.

     (g) The Purchaser shall have received a letter, dated the Closing Date, of Ernst &
Young LLP which meets the requirements of subsection (a) of this Section, except that the
specified date referred to in such subsection will be a date not more than three days prior
to the Closing Date for the purposes of this subsection.

     (h) The Purchaser shall have received on the Closing Date, and dated a date as of or
not more than three (3) business days prior to the Closing Date (five (5) business days in
the case of evidence of good standing in foreign jurisdictions), satisfactory evidence of
the good standing of the Company and its subsidiaries in their respective jurisdictions of
organization and their good standing as foreign entities in such other jurisdictions as the
Purchaser may reasonably request, in each case in writing or in any standard form of
telecommunication from the appropriate Governmental Authorities of such jurisdictions.

     (i) The Company shall have delivered to Wells Fargo Bank, National Association, as
trustee of the Company’s 8 3/8% Senior Subordinated Notes due 2014, an irrevocable notice of
redemption of such securities pursuant to the terms of the indenture governing such
securities.

16

 

     The Company will furnish the Purchaser with such conformed copies of such opinions,
certificates, letters and documents as the Purchaser reasonably requests. CSFB may in its sole
discretion waive as the Purchaser compliance with any conditions to the obligations of the
Purchaser hereunder.

     7. Indemnification and Contribution. (a) Each of the Company and the Subsidiary Guarantors,
jointly and severally, will indemnify and hold harmless the Purchaser, its partners, directors and
officers and each person, if any, who controls such Purchaser within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities to which such Purchaser may
become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in the Offering
Document, or any amendment or supplement thereto, or the Exchange Act Reports, or arise out of or
are based upon the omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not
misleading, including any losses, claims, damages or liabilities arising out of or based upon the
Company’s failure to perform its obligations under Section 5(a) of this Agreement, and will
reimburse each Purchaser for any legal or other expenses reasonably incurred by such Purchaser in
connection with investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company and the Subsidiary Guarantors will
not be liable in any such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with written information
furnished to the Company by or through CSFB specifically for use therein.

     (b) The Purchaser will indemnify and hold harmless the Company, the Subsidiary Guarantors,
their respective directors and officers and each person, if any, who controls the Company or any
Subsidiary Guarantor within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company or any Subsidiary Guarantor
may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact contained in the
Offering Document, or any amendment or supplement thereto, or any related offering circular, or
arise out of or are based upon the omission or the alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by or through CSFB
specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by
the Company or a Subsidiary Guarantor in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred.

     (c) Promptly after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party otherwise than under
subsection (a) or (b) above. In case any such action is brought against any indemnified party and
it notifies the indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in respect of which
any indemnified party is or could have been a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement includes (i) an unconditional release of such
indemnified party from all liability on any claims that are the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability or failure to act by
or on behalf of any indemnified party.

17

 

     (d) If the indemnification provided for in this Section is unavailable or insufficient to hold
harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the Subsidiary
Guarantors on the one hand and the Purchaser on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the Subsidiary Guarantors on the
one hand and the Purchaser on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Subsidiary Guarantors on the
one hand and the Purchaser on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the Company and the
Subsidiary Guarantors bear to the total discounts and commissions received by the Purchaser from
the Company under this Agreement. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Company or any
Subsidiary Guarantor or the Purchaser and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to
in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subsection (d). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute
any amount in excess of the amount by which the total discounts, fees and commissions received by
such Purchaser exceeds the amount of any damages which such Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

     (e) The obligations of the Company and the Subsidiary Guarantors under this Section shall be
in addition to any liability which the Company and the Subsidiary Guarantors may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the
Purchaser under this Section shall be in addition to any liability which the Purchaser may
otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who
controls the Company or any Subsidiary Guarantor within the meaning of the Securities Act or the
Exchange Act.

     8. Default of Purchaser. [INTENTIONALLY OMITTED].

     9. Survival of Certain Obligations. If for any reason the Securities are not delivered by or
on behalf of the Company as provided herein, the Company will reimburse the Purchaser through you
for all out-of-pocket expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Purchaser in making preparations for the purchase, sale and
delivery of the Securities, but the Company shall then be under no further liability to any
Purchaser except as provided in Sections 5(h) and 7 hereof.

     10. Notices. All communications hereunder will be in writing and, if sent to the Purchaser
will be mailed, delivered or telegraphed and confirmed to Credit Suisse First Boston LLC, Eleven
Madison Avenue, New York, New York 10010, Attention: Investment Banking Services, with a copy to:
Andrews Kurth LLP, 600 Travis Street, Suite 4200, Houston, Texas 77002 (fax: (713) 220-4285),
Attention: David C. Buck, or if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at 777 Main Street, Suite 1400, Fort Worth, Texas 76102 (fax: (817) 339-0933);
Attention: I. Jon Brumley, with a copy to: Baker Botts L.L.P., One Shell Plaza, 910 Louisiana,
Houston, Texas 77002 (fax: (713) 229-7868), Attention: Sean T. Wheeler; provided, however, that any
notice to a Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed
to such Purchaser.

     11. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

18

 

     12. Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together constitute one and the
same Agreement.

     13. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:

     (a) The Purchaser has been retained solely to act as the initial purchaser in
connection with the sale of the Company’s securities and no fiduciary, advisory or agency
relationship between the Company and the Purchaser has been created in respect of any of the
transactions contemplated by this Agreement, irrespective of whether the Purchaser has
advised or is advising the Company on other matters;

     (b) the price of the securities set forth in this Agreement was established by the
Company following discussions and arms-length negotiations with the Purchaser, and the
Company is capable of evaluating and understanding and understands and accepts the terms,
risks and conditions of the transactions contemplated by this Agreement;

     (c) it has been advised that the Purchaser and its affiliates are engaged in a broad
range of transactions which may involve interests that differ from those of the Company and
that the Purchaser has no obligation to disclose such interests and transactions to the
Company by virtue of any fiduciary, advisory or agency relationship; and

     (d) it waives, to the fullest extent permitted by law, any claims it may have against
the Purchaser for breach of fiduciary duty or alleged breach of fiduciary duty with respect
to the transactions contemplated by this Agreement, the process leading thereto and any
previous transactions in which the Purchaser and the Company were both involved and agrees
that the Purchaser shall have no liability (whether direct or indirect) to the Company with
respect thereto.

19

 

     If the foregoing is in accordance with the Purchaser’s understanding of our agreement, kindly
sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement
between the Company and the Purchaser in accordance with its terms.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	ENCORE ACQUISITION COMPANY
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Roy W. Jageman
	 	 	 	 	 
	 	 	 	 	Name:	 	Roy W. Jageman	 	 
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial	 	 
	 	 	 	 	 	 	Officer and Corporate Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	EAP ENERGY, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Roy W. Jageman
	 	 	 	 	 
	 	 	 	 	Name:	 	Roy W. Jageman	 	 
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial	 	 
	 	 	 	 	 	 	Officer and Corporate Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	EAP ENERGY SERVICES, L.P.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	EAP Energy, Inc.,
	 	 	 	 	its general partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/ Roy W. Jageman	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	Roy W. Jageman	 	 
	 

	 	 	 	 	 	Title:
	 	Executive Vice President, Chief	 	 
	 

	 	 	 	 	 	 	 	Financial Officer and	 	 
	 

	 	 	 	 	 	 	 	Corporate Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	EAP OPERATING, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Roy W. Jageman
	 	 	 	 	 
	 	 	 	 	Name:	 	Roy W. Jageman	 	 
	 	 	 	 	Title:	 	Executive Vice President, Chief Financial	 	 
	 	 	 	 	 	 	Officer and Corporate Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	EAP PROPERTIES, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Robert A. Sagedy
	 	 	 	 	 
	 	 	 	 	Name:	 	Robert A. Sagedy	 	 
	 	 	 	 	Title:	 	Vice President	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	ENCORE OPERATING, L.P.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	EAP Operating, Inc.,
	 	 	 	 	 	 	its general partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	/s/ Roy W. Jageman
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:
	 	Roy W. Jageman
	 

	 	 	 	 	 	 	 	Title:
	 	Executive Vice President, Chief
	 

	 	 	 	 	 	 	 	 	 	Financial Officer, and
	 

	 	 	 	 	 	 	 	 	 	Corporate Secretary
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	ENCORE OPERATING LOUISIANA LLC
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Tom Olle
	 	 	 	 	 
	 	 	 	 	Name: Tom Olle
	 	 	 	 	Title: President

 

 

The foregoing Purchase Agreement

is hereby confirmed and accepted

as of the date first above written.

	 	 	 
	 

	 	Credit Suisse First Boston LLC
	 
	 	 
	 

	 	          /s/ Phil Z. Pace
	 

	 	 
	 

	 	     Phil Z. Pace
	 

	 	     Managing Director

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