Document:

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                                                                    EXHIBIT 10.9

                            GAS PURCHASE AGREEMENT

                              DATED JULY 31, 1997

                                 BY AND BETWEEN

                       DOMINION PIPELINE COMPANY, MANAGER
                             BBS-LEGS JOINT VENTURE

                                   ("BUYER")

                                      AND

                           MOOSE OPERATING CO., INC.

                                   ("SELLER")
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                             GAS PURCHASE AGREEMENT

     THIS AGREEMENT; made and entered into as of this _____ day of July, 1997,
by and between DOMINION PIPELINE COMPANY, a Texas corporation, as Manager of the
BBS-LEGS Joint Venture, hereinafter referred to as "BUYER", and MOOSE OPERATING
CO, INC., a Texas corporation, hereinafter referred to as "SELLER," whereby
BUYER and SELLER have agreed, and in consideration of the premises hereof do
hereby agree, to the sale by SELLER and purchase by BUYER of all gas owned or
controlled by SELLER and attributable to the wells with receipt point(s) as
described in Exhibit "A" and located on those lands and leases described in
Exhibit "B" attached hereto and incorporated herein, using commercially
reasonable efforts, subject to the general terms and conditions as follows:

                                I. DEFINITIONS

     The following terms and expressions, when used in these general terms and
conditions and in this Agreement have the following meanings:

     1.1 Day - A period of twenty-four (24) consecutive hours commencing at
seven (7:00) a.m., Central Time, or such other period as the parties may agree
upon.

     1.2 Month - A period commencing on the first day of each calendar month and
ending on the first day of the next following calendar month.

     1.3 Year - A period of three hundred sixty-five (365) consecutive days,
provided that any such year which contains the date of February 29 shall consist
of three hundred sixty-six (366) consecutive days.

     1.4 British thermal unit ("Btu") - One (1) Btu shall mean the quantity of
heat required to raise the temperature of one (1) pound of water from fifty-nine
degrees Fahrenheit (59 degrees F) to sixty degrees Fahrenheit (60 degrees F) at
a constant pressure of fourteen and sixty-five hundredths pounds per square inch
absolute (14.65 psia). Total Btu's shall be determined by multiplying the total
volume of natural gas delivered times the gas heating value expressed in Btu's
per cubic foot of gas adjusted on a dry basis.

     1.5 Heating value - The quantity of heat, measured in Btu's, produced by
combustion in air on one (1) cubic foot of anhydrous gas at a temperature of
sixty degrees Fahrenheit (60 degrees F) at a constant pressure of fourteen and
sixty-five hundredths pounds per square inch absolute (14.65 psia), the air
being at the same temperature and pressure as the gas, after the products of
combustion are cooled to the initial temperature of the gas and air, and after
condensation of the water formed by combustion.

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     1.6 Gas - Natural gas, including gas-well gas, casinghead gas, and/or
residue gas resulting from processing both casinghead gas and gas-well gas, and
shall include liquefied natural gas and synthetic gas in a vaporized state.

     1.7 Mcf - The quantity of natural gas occupying a volume of one thousand
(1,000) cubic feet at a temperature of sixty degrees Fahrenheit (60 degrees F)
and at a pressure of fourteen and sixty-five hundredths pounds per square inch
absolute (14.65 psia).

     1.8 BUYER's Transporter - A third-party natural gas transmission pipeline
system which accepts deliveries of natural gas from BUYER at the first point
downstream of BUYER's pipeline facilities; such third-party system may change
from time to time at BUYER's election to make first deliveries to an alternate
third-party pipeline.

     1.9 GPM - the quantity of natural gas liquids, ethane and heaviers, which
are contained in an Mcf of natural gas, measured as gallons.

     1.10 High CO\\2\\ Gas - Gas otherwise of pipeline quality that is delivered
by SELLER and received by BUYER pursuant to this contract which contains in
excess of 5.5% CO\\2\\ by volume.

                II. POINT(S) OF RECEIPT AND BUYER'S FACILITIES

     2.1 The Point(s) of Receipt of all gas purchased hereunder shall be at a
mutually agreeable point as described in Exhibit "A" attached hereto and
incorporated herein and title to said gas shall pass from SELLER to BUYER at
said Point(s) of Receipt.

     2.2 SELLER, at its own expense, shall construct, maintain and operate all
facilities reasonable and necessary to deliver SELLER's gas to BUYER at the
Point(s) of Receipt.

     2.3 BUYER, shall construct, or cause to be constructed, all facilities
reasonable and necessary to accept SELLER's gas from SELLER at the Point(s) of
Receipt.

     2.4 SELLER shall be in control and possession of the gas sold and purchased
hereunder and responsible for any damage or injury caused thereby until the same
shall have been delivered to BUYER at the Point(s) of Receipt.

     2.5 BUYER, or BUYER's agent, shall be in control and possession of the gas
sold and purchased hereunder and responsible for any damage or injury caused
thereby after the same shall have been delivered at the Point(s) of Receipt.

                                 III. QUANTITY

     Beginning on the date of initial delivery of gas hereunder, and for the
term hereof, SELLER agrees to make available to BUYER 100% of all gas owned or
controlled by SELLER and attributable to those certain leases and lands

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described in Exhibit "B" attached hereto, and limited thereby.  In the event
such volumes available to BUYER from SELLER are less than 250 MCF per day for
more than thirty (30) consecutive days, then BUYER may elect to terminate its
gas purchase obligation hereunder upon giving thirty (30) days prior written
notice to BUYER.  During the primary term hereof, SELLER agrees to deliver to
BUYER a total volume of gas covered by this agreement of not less than 800,000
MMBtu.  In the event that SELLER fails to deliver said volume prior to the
expiration of the primary term of this agreement, then SELLER and BUYER shall in
good faith endeavor to negotiate a mutually agreeable solution to make up the
volume commitment shortfall by SELLER, and in the event BUYER and SELLER are
unable to mutually agree on a solution within thirty (30) days after the
expiration of the primary term hereof, then SELLER shall pay to BUYER a volume
commitment shortfall penalty of an amount equal to the difference between
800,000 MMBtu and the actual MMBtus delivered, multiplied by ten cents ($0.10).

                     IV. MEASUREMENT, QUALITY AND PRESSURE

     4.1 BUYER is not obligated to take any gas unless such gas is economically
merchantable gas which meets all specifications and pressures required by BUYER
or BUYER's Transporter(s). SELLER also agrees that BUYER, at its option, (which
BUYER may exercise at any time and from time to time in its sole discretion) may
either (a) refuse to construct facilities to or accept delivery of any gas that
is not merchantable gas which meets all of the quality specifications of BUYER
or BUYER's Transporter, or (b) waive the provisions of this Article IV by
accepting delivery of such gas. Any such waiver or waivers by BUYER from time to
time shall not be deemed to establish a course of performance or otherwise be
construed as obligating BUYER to continue such waiver or waivers in effect when,
in BUYER's sole judgment, then existing business circumstances indicate to BUYER
that BUYER's best interests would be served by not continuing such waiver or
waivers.

     4.2 Notwithstanding any of the foregoing provisions of Article II and
Paragraph 4.1, SELLER may from time to time deliver gas volumes to BUYER at the
Receipt Point(s) which contain carbon dioxide (CO\\2\\) in excess of two percent
(2%) by volume, but with such CO\\2\\ content not to exceed five and one-half
percent (5.5%) (High CO\\2\\ Gas) at any time. Should SELLER deliver gas volumes
to BUYER that are High CO\\2\\ Gas volumes as defined herein and BUYER agrees to
accept such volumes, then SELLER agrees to pay all reasonable direct charges
incurred by BUYER for treating of such High CO\\2\\ Gas as may be charged by a
third-party treater or the actual costs incurred by BUYER. Such direct charges
shall include fees, fuel and shrinkage paid by BUYER on a dollar for dollar
basis, and shall be deducted from the gross proceeds payable to SELLER under
Articles V and IX hereof. Using standard oilfield operating

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practices for corrosion control, Seller shall provide for the regular injection
of chemical inhibitors at the wellhead or at SELLER's production facilities as a
precaution to protect BUYER's pipeline and measurement facilities from the High
CO\\2\\ Gas produced by SELLER.

     4.3 Gas volumes measured by BUYER with the use of orifice meter(s) shall be
determined in accordance with the provisions of the Gas Measurement Committee
Report No. 3 of the American Gas Association, as revised in 1966, as amended
and/or supplemented from time to time, and gas volumes measured by Buyer with
the use of positive meter(s) shall be determined on the basis of Gas Measurement
Committee Report No. 7 of the American Gas Association, as revised in 1981 and
as may be amended and/or supplemented thereafter from time to time. For the
purpose of measurement, a cubic foot of gas is defined as the volume of gas
contained in one cubic foot of space at a standard pressure base of fourteen and
sixty-five one-hundredths (14.65) pounds per square inch absolute and a standard
temperature base of sixty degrees Fahrenheit (60 degrees F.). For the purposes
of measurement, calculations and meter calibration the atmospheric pressure
shall be assumed to be fourteen and seven-tenths (14.7) pounds per square inch
absolute. Temperature shall be determined by a recording thermometer
continuously used and installed by Buyer so as to record properly the
temperature of the gas being metered, and specific gravity shall be determined
by Buyer by use of a gravity balance of standard make, or, at the option of
Buyer, by such other tests and instruments as may be standard for such purposes
in the gas industry.

     4.4 At quarterly intervals, or more often if required pursuant to paragraph
5.5; Article V hereof, the meters and instruments shall be calibrated and if in
the aggregate they are found to be inaccurate by more than one percent (1%), the
quantities of gas based on such registration shall be corrected at the rate of
inaccuracy for any period which is known or agreed upon.

     4.5 The gross heating value of the gas shall be determined by BUYER or
BUYER's Transporter by taking gas samples and having the British Thermal Unit
content per cubic foot determined in a mutually agreeable laboratory by means of
chromatographic analysis or a calorimeter. The British Thermal Unit content per
cubic foot shall be determined for a cubic foot of gas at a temperature of sixty
degrees Fahrenheit (60 degrees F) at an absolute pressure of fourteen and sixty-
five one hundredths (14.65) pounds per square inch, and corrected to the actual
water vapor content of the gas being delivered.

     4.6 SELLER shall deliver Gas hereunder, or cause Gas to be delivered at
pressures sufficient to cause such Gas to enter BUYER's facilities, but not in
excess of the applicable maximum allowable operating pressure specified in

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the transportation agreement between Buyer and Buyer's Transporter, nor in
excess of BUYER's maximum allowable operating pressure, nor more than 1,050
psig. SELLER shall inform BUYER as often as may be necessary of the delivery
rate and pressure of the Gas delivered hereunder.

     4.7 The foregoing notwithstanding, BUYER and BUYER's Transporter(s) shall
have no obligation at any time to provide gas treating services including but
not limited to compression, separation, dehydration, or processing.

                                   V. PRICE

     5.1 For all gas delivered to BUYER at the Point(s) of Receipt, subject to
all applicable provisions of this Agreement and corrected to the measurement
basis set forth herein, BUYER and SELLER agree that beginning on the date of
initial delivery hereunder and continuing thereafter until redetermined as
provided herein, the price per MMBtu (dry) paid to SELLER shall be as follows:

     (i)   if the commingled stream of SELLER'S gas volumes delivered to BUYER
           contains an average gas liquids content of greater than 4.5 GPM, as
           measured at the Point(s) of Receipt, BUYER shall pay SELLER a price
           equal to the TET Index plus seven (7) cents per MMBtu;

     (ii)  if the commingled stream of SELLER'S gas volumes delivered to BUYER
           contains an average gas liquids content of between 3.51 GPM and 4.5
           GPM, as measured at the Point(s) of Receipt, BUYER shall pay SELLER a
           price equal to the TET Index plus four (4) cents per MMBtu;

     (iii) if the commingled stream of SELLER'S gas volumes delivered to BUYER
           contains an average gas liquids content of between 2.51 and 3.5 GPM,
           as measured at the Point(s) of Receipt, BUYER shall pay SELLER a
           price equal to the TET Index plus two (2) cents per MMBtu;

     (iv)  if the commingled stream of SELLER'S gas volumes delivered to BUYER
           contains an average gas liquids content of between 2.00 and 2.5 GPM,
           as measured at the Point(s) of Receipt, BUYER shall pay SELLER a
           price equal to the TET Index less one (1) cents per MMBtu;

     (v)   if the commingled stream of SELLER'S gas volumes delivered to BUYER
           contains an average gas liquids content of less than 2.00 GPM, then
           SELLER has the right to market to a third party, provided, however,
           BUYER shall have the right to match such third party offers.

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     5.2 The TET Index as referred to hereinabove shall mean the Index Price as
published in the first issue of each production month of Inside FERC's Gas
Market Report under "Prices of Spot Gas Delivered to Pipelines", Texas Eastern
Transmission Corporation (TET, South Texas). If the Inside FERC Price ceases to
exist, the parties shall mutually agree upon a price to be paid hereunder.

     5.3 The price paid hereunder shall be inclusive of and shall not be
increased for all royalties, excess royalties, production or severance taxes, or
any other taxes imposed upon the gas prior to delivery or otherwise borne by
SELLER, and any other costs or charges for which SELLER is liable.

     5.4 For purposes of accounting and determination of the price payable and
total amounts due SELLER hereunder, BUYER and SELLER agree to accept the MCF
volumes as measured at the Point(s) of Receipt and attributable to SELLER and
the Btu and GPM values determined at this point.

     5.5 Notwithstanding any of the foregoing provisions of this Article V, the
price to be paid by BUYER to SELLER as provided herein shall be reduced by fees,
fuel, and shrinkage incurred by BUYER for treating of High CO\\2\\ Gas pursuant
to the foregoing paragraph 4.2 Article IV; the price paid by BUYER shall be
further reduced by any pro rata losses and gas unaccounted for, if any, except
in the case where losses exceed two percent (2%) of all volumes received from
SELLER, as measured on a Btu basis. For purposes of determining pro rata MMBtu
losses and gas unaccounted for if any, BUYER may allocate back to the Point(s)
of Receipt all such losses based on BUYER's total MMBtu deliveries to BUYER's
Transporter of SELLER's gas, as measured at the point of interconnect of BUYER
with BUYER's Transporter. In the event that such losses exceed two percent (2%)
and BUYER or BUYER's Transporter is unable to correct the cause of loss and
BUYER continues to accept deliveries of Gas, then BUYER shall be liable for all
continuing losses exceeding two percent (2%) of the total volumes received from
SELLER. In the event losses of gas exceed one and one-half percent (1.5%) for
two consecutive months, BUYER agrees to undertake audits of all measurement
charts and conduct additional calibrating tests of the measurement facilities in
an effort to identify and correct the causes of such losses. BUYER agrees to
diligently maintain and regularly perform tests on its measurement facilities
and to take all reasonable steps to ensure the accuracy and integrity of its
measurement.

     5.6 SELLER agrees that it shall pay all production and severance taxes and
ad valorem taxes due and payable on the gas produced from the respective
properties covered hereby and does hereby agree to indemnify and hold harmless
BUYER from any liability or obligations pertaining thereto.

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     5.7 Other terms, conditions and provisions notwithstanding, it is agreed
that BUYER and SELLER have entered into this exclusive restricted sales
agreement in its entirety for the term hereof, whereby SELLER agrees to sell and
BUYER agrees to buy the described gas from the respective leases and lands set
forth on Exhibit "B" hereof. This shall be construed as a firm commitment to buy
and sell hereunder the respective quantities of economically merchantable gas
produced by SELLER from the respective properties. SELLER shall not market or
commit the gas hereunder to any third parties in contradiction of BUYER's rights
hereunder.

                                   VI. TERM

     6.1 This agreement shall continue in full force and effect for a primary
term of eighteen (18) months, effective as of the date of initial deliveries
received by BUYER from SELLER. Thereafter, this agreement will continue in full
force and effect on a calendar month to month basis and may be terminated by
either party giving not less than thirty days prior written notice.
Notwithstanding the above, the primary term hereof will be extended for an
amount of time equal to all periods of force majeure as described in Article
XIII hereof.

     6.2 Upon notice of termination of this agreement pursuant to Article 6.1
above, SELLER will convey to Buyer the "right to match" the terms and conditions
of any third-party buyer's bona fide and verifiable offer to purchase the
production covered under this agreement. Such third-party gas purchase offer
shall have a primary term of at least six (6) months. SELLER shall provide BUYER
with a complete and exact copy of such third party offer and BUYER shall have
ten (10) business days from receipt of said offer from SELLER. If BUYER elects
to match the third party offer, BUYER shall continue to gather and purchase
SELLER's gas under such new terms and conditions which shall also incorporate
this paragraph. Should BUYER elect not to match such proposal, or fail to
respond within said ten (10) business day period, then this agreement and the
right to match shall terminate; provided however, should SELLER fail to enter
into a contract with the third party whose offer was basis for the match and
under the terms of such offer, then BUYER's right to match shall be reinstated.

     6.3 Notwithstanding the foregoing, at SELLER's election, BUYER's right to
match shall be deemed terminated if one of the following events occurs:

     a)  the operatorship of SELLER's producing properties changes to a third-
         party operator owning 25% or more of the working interest in the
         properties; or

     b)  the sale of more than 50% of the working interests of SELLER's
         properties to a third party, or

     c)  a change of ownership control of Moose Oil & Gas Company.

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                                 VII. NOTICES

     Any notice, request, demand or statement provided for in this Agreement
shall be in writing and shall be deemed delivered when mailed to the address of
each of the parties hereto as follows:

BUYER:      DOMINION PIPELINE COMPANY
            1300 Main Street, Suite 1840
            Houston, TX 77002
            FAX: 713/658-0539
            Attn: Joel P.  Sauer

SELLER:     MOOSE OPERATING CO., INC.
            1100 Louisiana, Suite 3420
            Houston, TX 77002
            FAX: 713/650-9358
            Attn: John F.  Terwilliger

or any such other address as SELLER or BUYER shall from time to time designate
by letter properly addressed.

                               VIII. DEDICATION

     8.1 SELLER hereby dedicates to the performance of this Agreement all gas
owned or controlled by SELLER and attributable to lands covered by those leases
and lands designated or described in Exhibit "B" attached hereto, to the depths
described in Exhibit "B", including, without limitation, all additional lands
subsequently pooled or unitized pursuant to the terms of such leases or unit
agreements.

     8.2 SELLER shall maintain its leases and units and shall conduct the
operation of its leases and units as a reasonable, prudent operator and shall
maintain production hereunder at such rates, volumes and pressures as SELLER
deems advisable, subject to all engineering, geological and other factors
affecting production of the field and so long as its leases and units are
capable of producing in commercial quantities.

                                  IX. PAYMENT

     On or before the twentieth (20th) day of the month following production
BUYER shall provide to SELLER a statement setting forth the volumes and price
for gas received by BUYER during the preceding month.  BUYER shall remit to
SELLER all amounts due for the volumes of gas delivered pursuant to this
Agreement no later than the first (1st) day of the second month following
production.  SELLER shall earn interest at the lower rate of a) 8% per annum or
b) the highest rate permitted by applicable law on all undisputed dollar amounts
due SELLER from BUYER and not paid timely as provided hereinabove.

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                          X. SALE AND PASSAGE OF MIX

     Title to the gas shall pass and the sale shall be made from SELLER to BUYER
at the applicable Point(s) of Receipt referred to in Paragraph 2.1 in Article
II.

                             XI. WARRANTY OF TITLE

     SELLER represents and warrants to BUYER that: (i) it has full and
unqualified title and/or authority to sell all gas delivered hereunder, (ii)
such gas is free from all liens and adverse claims attaching prior to its
delivery to BUYER for BUYER's account at the Point(s) of Delivery, and (iii)
SELLER shall, if notified thereof by BUYER, hold BUYER harmless from and against
all claims, suits, actions, damages, losses, costs and expenses of every kind
and character arising from each and every claim of any and all persons against
such gas prior to its delivery for BUYER's account at the Point(s) of Delivery.

                              XII. FORCE MAJEURE

     12.1 The term "force majeure," as employed herein, shall include, without
limitation the following: acts of God and the public enemy, wars, blockades,
civil unrest, rebellion, insurrections, riots, lockouts, strikes or any other
industrial strife, interruption of civil or public service, hurricanes, freezing
of wells or lines of pipe, breakage or failure of wells and equipment or
pipelines, vandalism, inability to obtain, or interruption of, transportation or
necessary gas treatment services, inability to obtain materials, contractors,
supplies, permits or labor and any laws, orders, rules, regulations, acts or
restraints of any governmental authority, whether or not lawfully made, and any
other causes, whether of the kind herein enumerated or within the control of the
party claiming suspension.

     12.2 If either party is rendered unable, wholly or in part, by force
majeure to perform or comply with any obligations or conditions of this
Agreement, upon giving notice in writing and providing reasonably full
particulars to the other party, such obligations or conditions, so far as they
are affected by such force majeure, shall be suspended during the continuance of
any inability so caused but for no longer period, and such party shall be
relieved of liability and shall suffer no prejudice for failure to perform the
same during the period; provided however, that BUYER's obligation to make
payments for gas accepted shall not be suspended and further provided that the
dedication of SELLER's leaseholds and/or wells shall not be waived or suspended.
The force majeure condition shall be remedied so far as practicable with
reasonable dispatch. Settlement of strikes and lockouts shall be wholly within
the discretion of the party having the difficulty.

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     12.3 If at some future date there is change in any law, rule or regulation,
and by such change, a governmental certificate or authorization is required, or
SELLER is prevented, prohibited or frustrated from carrying out the terms of
this Agreement in the manner contemplated hereunder, then this Agreement, at the
sole discretion of SELLER, may be canceled.

                       XIII. GOVERNMENTAL AUTHORIZATIONS

     13.1 This Agreement shall be subject to all valid and applicable laws of
the United States and of the states wherein it is to be performed, and to the
applicable valid rules, regulation or order of any regulatory agency or
governmental authority having jurisdiction, and the parties shall be entitled to
regard all applicable laws, rules and regulations (federal, state or local) as
valid and may act in accordance therewith until such time as the same may be
declared invalid by final judgment of a court of competent jurisdiction.

     13.2 Promptly upon the execution of this Agreement, SELLER and BUYER shall
proceed to obtain such governmental and other regulatory authorizations, if any,
as required for the sale and purchase contemplated herein, provided that each
party reserves the right to file and prosecute applications for such
authorizations, any supplements or amendments thereof, and if necessary, any
court review, in such manner as it deems to be in its best interest, including
the right to withdraw its application.

     13.3 Each party will cooperate, with the other and with any third party
transporting the gas sold hereunder for either party, in obtaining and
maintaining whatever authorizations may be required by such governmental
authorities.

     13.4 In no event shall the volumes of gas that SELLER shall be obligated to
sell or that BUYER shall be obligated to purchase or that BUYER'S Transporter be
obligated to transport under the terms of this Agreement ever exceed the volumes
of gas which can be legally produced under applicable rules and regulations of
the Railroad Commission of Texas in the course of reasonably prudent operations.

     13.5 The performance of this Agreement is conditioned upon the continuing
receipt, by SELLER, BUYER, and any third party providing transportation to
SELLER or BUYER, of all regulatory or other governmental authorizations
necessary for the transportation and sale and purchase hereunder, on terms
acceptable to the party receiving such authorizations.

                             XIV. INDEMNIFICATION

     14.1 BUYER and SELLER shall indemnify, defend and save harmless each other
from and against any and all loss, damage, injury, liability, and claims for
injury to or death of persons (including any employee of BUYER or

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SELLER), or for loss or damage to property (including the property of BUYER or
SELLER, resulting directly or indirectly from either party's performance of its
respective obligations arising pursuant to this Agreement (including the
installation, maintenance and operation of property, equipment and facilities)
or any other operations under this Agreement.

     14.2 Other provisions of this Agreement notwithstanding, neither BUYER or
SELLER shall be liable for any indirect, special, incidental or consequential
damages arising out of or related to this Agreement.

                                XV. ASSIGNMENTS

     15.1 Any successor, representative or assignee which shall succeed by
purchase, merger or consolidation to the properties, substantially as an
entirety, of SELLER or BUYER, as the case may be, shall be entitled to the
rights and shall be subject to the obligations of its predecessor in title under
this Agreement. Either party may assign or pledge this Agreement, in whole or in
part effective the first day of the month in which written notice of assignment
is given to the other party. This Agreement shall be binding on successors and
assigns of the parties.

     15.2 Should SELLER assign this Agreement to another (Assignee), BUYER may
suspend payments for gas hereunder upon notice of such assignment until
execution by Assignee of an agreement under which Assignee assumes SELLER'S
obligations under the contract, and sets out instructions for payment and
indemnifies BUYER against claims resulting from payment to Assignee or any agent
designated by Assignee.

     15.3 Except for the parties hereto, their successors and assigns, no person
shall have the rights as a third party beneficiary or otherwise under this
Agreement.

                              XVI. GOVERNING LAW

     16.1 The interpretation and performance of this Agreement shall be in
accordance with the laws of the State of Texas. Should any legal disputes arise
hereunder, the parties do hereby agree and stipulate that this Agreement was
made and entered into in Harris County, Texas, which shall be the situs of venue
hereunder.

     16.2 BUYER and SELLER hereby agree that any controversy arising between the
parties to this Agreement shall be submitted to non-binding arbitration. The
arbitrator shall be chosen by mutual consent of BUYER and SELLER. In the event
that the parties cannot timely agree upon the selection of an arbitrator, then
BUYER and SELLER shall each promptly select an arbitrator, who shall then
promptly select a third arbitrator. The decision of the majority of the three
(3) arbitrators shall not be binding upon BUYER or SELLER.

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     16.3 Each party hereto shall be responsible for and shall pay its own costs
and expenses arising from arbitration, including attorneys fees, administrative
fees, and arbitration fees.

                              XVII. MISCELLANEOUS

     17.1 No waiver by either party of any one or more defaults by the other in
the performance of any provisions of this Agreement shall operate or be
construed as a waiver of any other default or defaults, whether of a like or of
a different character.

     17.2 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof; supersedes all prior agreements and
understandings, whether oral or written, which the parties may have in
connection herewith and may not be modified except by written agreement of the
parties. The parties and their legal counsel have cooperated in the drafting of
this Agreement and it shall therefore be deemed their joint work product and
shall not be construed against either party by reason of its preparation.

     17.3 Each party shall do all necessary acts and make, execute and deliver
such written instruments as shall from time to time be reasonably required to
carry out the terms of this Agreement.

     17.4 If any provision of this Agreement shall be held invalid, illegal or
unenforceable to any extent and for any reason by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby and
shall be enforceable to the full extent permitted by law.

     17.5 BUYER and SELLER shall have the right, at its sole expenses and during
normal working hours, to audit the accounts and records of the other party to
the extent necessary to verify the volumes and charges pursuant hereto. Such
rights to audit shall be in force during the term of this Agreement and one (1)
year hereafter. No change to any payment or to the volumes or heating values
underlying such payment shall be made more than one (1) years after the making
of such payment, nor shall any suit, action or proceeding be commenced with
respect to any payment of the volumes or heating value underlying such payment
more than one (1) years after the making of such payment, provided that fraud by
either party shall not be waived under any circumstances.

     17.6 The terms of this Agreement, including, but not limited to the price
paid for gas, the identified transporting pipelines (if any) and cost of
transportation, the volumes of gas purchased or sold or to be purchased and
sold, and all other material terms of this Agreement shall be kept confidential
by the parties hereto, except to the extent that any information must be
disclosed to a non-signatory as required by law or for the purpose of
effectuating transportation of the gas subject to this Agreement.

                                       12
<PAGE>

     17.7 This Agreement may be executed in multiple counterparts, each of which
shall constitute an original but all of such counterparts taken together shall
constitute only one Agreement.

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

BUYER:                                         SELLER:

DOMINION PIPELINE COMPANY,                     MOOSE OPERATING CO., INC.
MANAGER, BBS-LEGS JOINT VENTURE

/s/ Joel P. Sauer                              /s/ John F. Terwilliger
--------------------------------               ------------------------------
Joel P. Sauer                                  John F. Terwilliger
President                                      President

                                       13
<PAGE>

STATE OF TEXAS     (S)
                   (S)
COUNTY OF HARRIS   (S)

     BEFORE ME, the undersigned authority, on this day personally appeared, John
F. Terwilliger, President of MOOSE OPERATING CO., INC., a Texas corporation,
known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same as the act and deed
of said corporation for the purposes and consideration therein expressed and in
the capacity therein stated.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this 31st day of July, 1997.

                               /s/ Dana Pickich
                              -------------------------
                              Notary Public in and for
                              The State of Texas

                              My Commission Expires: 10/9/2000

STATE OF TEXAS      (S)
                    (S)
COUNTY OF HARRIS    (S)

     BEFORE ME, the undersigned authority, on this day personally appeared, JOEL
P.  SAUER, President of DOMINION PIPELINE COMPANY, a Texas corporation, Manager,
BBS-LEGS Joint Venture, known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same as the
act and deed of said corporation for the purposes and consideration therein
expressed and in the capacity therein stated.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this 31st day of July, 1997.

                                    /s/ Dana Pickich
                              ----------------------------
                              Notary Public in and for
                              The State of Texas

                              My Commission Expires:10/9/2000

                                       14
<PAGE>

                                  EXHIBIT "A"

                              POINT(S) OF RECEIPT

     Attached to and made part of that certain Natural Gas Purchase Agreement
between DOMINION PIPELINE COMPANY (BUYER) and MOOSE OPERATING CO., INC.,
(SELLER), dated July __, 1997.

     Each of the Point(s) of Receipt will be designated as mutually agreed upon
by the parties hereto.  Such Point(s) of Receipt will be at the production
facilities of SELLER's wells.

                                      A-i
<PAGE>

                                  EXHIBIT "B"

     Lands and leases in Lavaca County, Texas, affected by and included within
the provisions of the attached contract dated July __, 1997 by and between
DOMINION PIPELINE COMPANY (BUYER) and MOOSE OPERATING CO., INC. (SELLER) and
encompassing the Dedication as referred to in Article IX of this Agreement, and
as described below:

     Those lands and leases lying under the following existing wells owned and
operated by SELLER.

     i)    Smothers #1

     ii)   Denney Gas Unit #1

     iii)  Renger Gas Unit #1

Plus

all wells subsequently drilled by SELLER during the term hereof and are drilled
to a depth which reaches the lower Wilcox formations on lands within a radius
of 2 miles of the Smothers #1;

Plus

any other wells which Moose elects to tie into BUYER's existing system servicing
the above-referenced wells, including the Knebel #1 well.

                                      B-i<PAGE>

                                                                   EXHIBIT 10.10

                            A.A.P.L. FORM 610-1982

                         MODEL FORM OPERATING AGREEMENT

                              OPERATING AGREEMENT

                                     DATED

                               December 11, 1997

          OPERATOR       LOUIS DREYFUS NATURAL GAS CORP.

          CONTRACT AREA  SARTWELLE

          COUNTY OR PARISH OF    Lavaca   STATE OF Texas

        COPYRIGHT 1982 - ALL RIGHTS RESERVED AMERICAN ASSOCIATION OF PETROLEUM
        LANDMEN, 2408 CONTINENTAL LIFE BUILDING, FORT WORTH, TEXAS, 76112,
        APPROVED FORM A.A.P.L. NO. 610 - 1982 REVISED
<PAGE>

                              OPERATING AGREEMENT

     THIS AGREEMENT, entered into by and between Louis Dreyfus Natural Gas
Corp., hereinafter designated and referred to as "Operator", and the signatory
party or parties other than Operator, sometimes hereinafter referred to
individually herein as "Non-Operator", and collectively as "Non-Operators".

                              W I T N E S S E T H:

     WHEREAS,  the parties to this agreement are owners of oil and gas leases
and/or oil and gas leases in the land identified in Exhibit "A", and the parties
hereto have reached an agreement to explore and develop these leases and/or oil
and gas interests for the production of oil and gas to the extent and as
hereinafter provided,

     NOW, THEREFORE, it is agreed as follows:

                                   ARTICLE I.
                                  DEFINITIONS

     As used in this agreement, the following words and terms shall have the
meanings here ascribed to them:

     A.   The term "oil and gas" shall mean oil, gas, casinghead gas, gas
condensate, and all other liquid or gaseous hydrocarbons and other marketable
substances produced therewith, unless an intent to limit the inclusiveness of
this term is specifically stated.

     B.   The terms "oil and gas lease", "lease" and "leasehold" shall mean the
oil and gas leases covering tracts of land lying within the Contract Area which
are owned by the Parties to this agreement.

     C.   The term "oil and gas interests" shall mean unleased fee and mineral
interests in tracts of land lying within the Contract Area which are owned by
parties to this agreement.

     D.   The term "Contract Area" shall mean all of the lands, oil and gas
leasehold interests and oil and gas interests intended to be developed and
operated for oil and gas purposes under this agreement.  Such lands, oil and gas
leasehold interests and oil and gas interests are described in Exhibit "A".

     E.   The term "drilling unit" shall mean the area fixed for the drilling of
one well by order or rule of any state or federal body having authority.  If a
drilling unit is not fixed by any such rule or order, a drilling unit shall be
the drilling unit as established by the pattern of drilling in the Contract Area
or as fixed by express agreement of the Drilling Parties.

     F.   The term "drillsite" shall mean the oil and gas lease or interest on
which a proposed well is to be located.

     G.   The terms "Drilling Party" and "Consenting Party" shall mean a party
who agrees to join in and pay its share of the cost of any operation conducted
under the provisions of this agreement.

     H.   The terms "Non-Drilling Party" and "Non-Consenting Party" shall mean a
party who elects not to participate in a proposed operation.

     Unless the context otherwise clearly indicates, words used in the singular
include the plural, the plural includes the singular, and the neuter gender
includes the masculine and the feminine.

                                  ARTICLE II.
                                    EXHIBITS

     The following exhibits, as indicated below and attached hereto, are
incorporated in and made a part hereof:

[X]       A. Exhibit "A" shall include the following information:

          (1) Identification of lands subject to this agreement,
          (2) Restrictions, if any, as to depths, formation, or substances,
          (3) Percentages or fractional interests of parties to this agreement,
          (4) Oil and gas leases and/or oil and gas interests subject to this
              agreement,
          (5) Addresses of parties for notice purposes.

[ ]       B.  Exhibit "B", Form of Lease.

[X]       C.  Exhibit "C", Accounting Procedure.

                                       1
<PAGE>

[X]       D.  Exhibit "D", Insurance.

[X]       E.  Exhibit "E", Gas Balancing Agreement.

[X]       F.  Exhibit "F", Non-Discrimination and Certification of Non-
              Segregated Facilities.

[ ]       G.  Exhibit "G", Tax Partnership.

                                  ARTICLE III.
                              INTERESTS OF PARTIES

A. [INTENTIONALLY DELETED]

B. INTERESTS OF PARTIES IN COSTS AND PRODUCTION:

     Unless changed by other provisions, all costs and liabilities incurred in
operations under this agreement shall be borne and paid, and all equipment and
materials acquired in operations on the Contract Area shall be owned, by the
parties as their interests are set forth in Exhibit "A". In the same manner, the
parties shall also own all production of oil and gas from the Contract Area
subject to the payment of royalties to the extent of their interests which shall
be borne as hereinafter set forth.

     Regardless of which party has contributed the lease(s) and/or oil and gas
interest(s) hereto on which royalty is due and payable, each party entitled to
receive a share of production of oil and gas from the Contract Area shall bear
and shall pay or deliver, or cause to be paid or delivered, to the extent of its
interest in such production, the royalty amount stipulated hereinabove and shall
hold the other parties free from any liability therefor.  No party shall ever be
responsible, however, on a price basis higher than the price received by such
party, to any other party's lessor or royalty owner, and if any such other
party's lessor or royalty owner should demand and receive settlement on a higher
price basis, the party contributing the affected lease shall bear the additional
royalty burden attributable to such higher price.

     Nothing contained in this Article III.B. shall be deemed an assignment or
crossassignment of interests covered hereby.

C. EXCESS ROYALTIES, OVERRIDING ROYALTIES AND OTHER PAYMENTS:

     Unless changed by other provisions, if the interest of any party in any
lease covered hereby is subject to any royalty, overriding royalty, production
payment or other burden on production in excess of the amount stipulated in
Article III.B., such party so burdened shall assume and alone bear all such
excess obligations and shall indemnify and hold the other parties hereto
harmless from any and all claims and demands for payment asserted by owners of
such excess burden.

D. SUBSEQUENTLY CREATED INTERESTS:

     If any party should hereafter create an overriding royalty, production
payment or other burden payable out of production attributable to its working
interest hereunder, or if such a burden existed prior to this agreement and is
not set forth in Exhibit "A", or was not disclosed in writing to all other
parties prior to the execution of this agreement by all parties, or is not a
jointly acknowledged and accepted obligation of all parties (any such interest
being hereinafter referred to as "subsequently created interest" irrespective of
the timing of its creation and the party out of whose working interest the
subsequently created interest is derived being hereinafter referred to as
"burdened party"), and:

     1.   If the burdened party is required under this agreement to assign or
          relinquish to any other party, or parties, all or a portion of its
          working interest and/or the production attributable thereto, said
          other party, or parties, shall receive said assignment and/or
          production free and clear of said subsequently created interest and
          the burdened party shall indemnify and save said other party, or
          parties, harmless from any and all claims and demands for payment
          asserted by owners of the subsequently created interest; and,

     2.   If the burdened party fails to pay, when due, its share of expenses
          chargeable hereunder, all provisions of Article VII.B. shall be
          enforceable against the subsequently created interest in the same
          manner as they arc enforceable against the working interest of the
          burdened party.

                                       2
<PAGE>

                                  ARTICLE IV.
                                     TITLES

A. TITLE EXAMINATION:

     Title examination shall be made on the drillsite of any proposed well prior
to commencement of drilling operations or, if the Drilling Parties so request,
title examination shall be made on the leases and/or oil and gas interests
included, or planned to be included, in the drilling unit around such well.  The
opinion will include the ownership of the working interest, minerals, royalty,
overriding royalty and production payments under the applicable leases.  At the
time a well is proposed, each party contributing leases and/or oil and gas
interests to the drillsite, or to be included in such drilling unit, shall
furnish to Operator all abstracts (including federal lease status reports),
title opinions, title papers and curative material in its possession free of
charge.  All such information not in the possession of or made available to
Operator by the parties, but necessary for the examination of the title, shall
be obtained by Operator.  Operator shall cause title to be examined by attorneys
on its staff or by outside attorneys.  Copies of all title opinions shall be
furnished to each party hereto.  The cost incurred by Operator in this title
program shall be borne as follows:

[ ]   Option No. 1:  [INTENTIONALLY DELETED]

[X]   Option No. 2:  Costs incurred by Operator in procuring abstracts and
fees paid outside attorneys for title examination (including preliminary,
supplemental, shut-in gas royalty opinions and division order title opinions)
shall be borne by the Drilling Parties in the proportion that the interest of
each Drilling Party bears to the total interest of all Drilling Parties as such
interests appear in Exhibit "A".  Operator shall make no charge for services
rendered by its staff attorneys or other personnel in the performance of the
above functions.

     Each party, or Operator at its election, shall be responsible for securing
curative matter and pooling amendments or agreements required in connection with
leases or oil and gas interests contributed by such party.  Operator shall be
responsible for the preparation and recording of pooling designations or
declarations as well as the conduct of hearings before governmental agencies for
the securing of spacing or pooling orders.  This shall not prevent any party
from appearing on its own behalf at any such hearing.

     No well shall be drilled on the Contract Area until after (1) the title to
the drillsite or drilling unit has been examined as above provided, and (2) the
title has been approved by the examining attorney or title has been accepted by
all of the parties who are to participate in the drilling of the well.

B. LOSS OF TITLE:

     1.   [INTENTIONALLY DELETED]

     2.   [INTENTIONALLY DELETED]

     3.   Other Losses:  All losses incurred shall be joint losses and shall be
borne by all parties in proportion to their interests. There shall be no
readjustment of interests in the remaining portion of the Contract Area.

                                   ARTICLE V.
                                    OPERATOR

A. DESIGNATION AND RESPONSIBILITIES OF OPERATOR:

     Louis Dreyfus Natural Gas Corp. shall be the Operator of the Contract Area,
and shall conduct and direct and have full control of all operations on the
Contract Area as permitted and required by, and within the limits of this
agreement.  It shall conduct all such operations in a good and workmanlike
manner, but it shall have no liability as Operator to the other parties for
losses sustained or liabilities incurred, except such as may result from gross
negligence or willful misconduct.

B. RESIGNATION OR REMOVAL OF OPERATOR AND SELECTION OF SUCCESSOR:

     1.   Resignation or Removal of Operator:  Operator may resign at any time
by giving written notice thereof to Non-Operators.  If Operator terminates its
legal existence, no longer owns an interest hereunder in the Contract Area, or
is no longer capable of serving as Operator, Operator shall be deemed to have
resigned without any action by Non-Operators, except the selection of a
successor.  Operator may be removed if it fails or refuses to carry out its
duties hereunder, or becomes insolvent, bankrupt or is placed in receivership,
by the affirmative vote of two (2) or more Non-Operators owning a majority
interest based on ownership as shown on Exhibit "A" remaining after excluding
the voting interest of Operator.  Such resignation or removal shall not become
effective until 7:00 o'clock A.M. on the first day of the calendar month
following the expiration of ninety (90) days after the giving of notice of
resignation by Operator or

                                       3
<PAGE>

action by the Non-Operators to remove Operator, unless a successor Operator has
been selected and assumes the duties of Operator at an earlier date. Operator,
after effective date of resignation or removal, shall be bound by the terms
hereof as a Non-Operator. A change of a corporate name or structure of Operator
or transfer of Operator's interest to any single subsidiary, parent or successor
corporation shall not be the basis for removal of Operator.

     2.   Selection of Successor Operator:  Upon the resignation or removal of
Operator, a successor Operator shall be selected by the parties.  The successor
Operator shall be selected from the parties owning an interest in the Contract
Area at the time such successor Operator is selected.  The successor Operator
shall be selected by the affirmative vote of two (2) or more parties owning a
majority interest based on ownership as shown on Exhibit "A"; provided, however,
if an Operator which has been removed fails to vote or votes only to succeed
itself, the successor Operator shall be selected by the affirmative vote of two
(2) or more parties owning a majority interest based on ownership as shown on
Exhibit "A" remaining after excluding the voting interest of the Operator that
was removed.

C. EMPLOYEES:

     The number of employees used by Operator in conducting operations
hereunder, their selection, and the hours of labor and the compensation for
services performed shall be determined by Operator, and all such employees shall
be the employees of Operator.

D. DRILLING CONTRACTS:

     All wells drilled on the Contract Area shall be drilled on a competitive
contract basis at the usual rates prevailing in the area.  If it so desires,
Operator may employ its own tools and equipment in the drilling of wells, but
its charges therefor shall not exceed the prevailing rates in the area and the
rate of such charges shall be agreed upon by the parties in writing before
drilling operations are commenced, and such work shall be performed by Operator
under the same terms and conditions as are customary and usual in the area in
contracts of independent contractors who are doing work of a similar nature.

                                  ARTICLE VI.
                            DRILLING AND DEVELOPMENT

A. INITIAL WELL:

On or before the 1st day of February, 1998, Operator shall commence the drilling
of a well for oil and gas at the following location:

     ON THE SARTWELLE LEASE

and shall thereafter continue the drilling of the well with due diligence to
test the Lower Wilcox Formation unless granite or other practically impenetrable
substance or condition in the hole, which renders further drilling impractical,
is encountered at a lesser depth, or unless all parties agree to complete or
abandon the well at a lesser depth.

     Operator shall make reasonable tests of all formations encountered during
drilling which give indication of containing oil and gas in quantities
sufficient to test, unless this agreement shall be limited in its application to
a specific formation or formations, in which event Operator shall be required to
test only the formation or formations to which this agreement may apply.

     If, in Operator's judgment, the well will not produce oil or gas in paying
quantities, and it wishes to plug and abandon the well as a dry hole, the
provisions of Article VI.E.1 shall thereafter apply.

B. SUBSEQUENT OPERATIONS:

     1.   Proposed Operations:  Should any party hereto desire to drill any well
on the Contract Area other than the well provided for in Article VI.A., or to
rework, deepen or plug back a dry hole drilled at the joint expense of all
parties or a well jointly owned by all the parties and not then producing in
paying quantities, the party desiring to drill, rework, deepen or plug back such
a well shall give the other parties written notice of the proposed operation,
specifying the work to be performed, the location, proposed depth, objective
formation and the estimated cost of the operation.  The parties receiving such a
notice shall have thirty (30) days after receipt of the notice within which to
notify the party wishing to do the work whether they elect to participate in the
cost of the proposed operation.  If a drilling rig is on location, notice of a
proposal to rework, plug back or drill deeper may be given by telephone and the
response period shall be limited to forty-eight (48) hours, exclusive of
Saturday, Sunday, and legal holidays.  Failure of a party receiving such notice
to reply within the period above fixed shall constitute an election by that
party not to participate in the cost of the proposed operation.  Any notice or
response given by telephone shall be promptly confirmed in writing.

                                       4
<PAGE>

     If all parties elect to participate in such a proposed operation, Operator
shall, within ninety (90) days after expiration of the notice period of thirty
(30) days (or as promptly as possible after the expiration of the forty-eight
(48) hour period when a drilling rig is on location, as the case may be),
actually commence the proposed operation and complete it with due diligence at
the risk and expense of all parties hereto; provided, however, said commencement
date may be extended upon written notice of same by Operator to the other
parties, for a period of up to thirty (30) addition days if, in the sole opinion
of Operator , such additional time is reasonably necessary to obtain permits
from governmental authorities, surface rights (including rights-of-way) or
appropriate drilling equipment, or to complete title examination or curative
matter required for title approval or acceptance.  Notwithstanding the force
majeure provisions of Article XI, if the actual operation has not been commenced
within the time provided (including any extension thereof as specifically
permitted herein) and if any party hereto still desires to conduct said
operation, written notice proposing same must be resubmitted to the other
parties in accordance with the provisions hereof as if no prior proposal had
been made.

     2.   Operations by Less than all Parties:  If any party receiving such
notice as provided in Article VI.B.1. or VII.D.1. (Option No. 2) elects not to
participate in the proposed operation, then, in order to be entitled to the
benefits of this Article, the party or parties giving the notice and such other
parties as shall elect to participate in the operation shall, within ninety (90)
days after the expiration of the notice period of thirty (30) days (or as
possible after the expiration of the forty-eight (48) hour period when a
drilling rig is on location, as the case may be) actually commence the proposed
operation and complete it with due diligence.  Operator shall perform all work
for the account of the Consenting Parties; provided, however, if no drilling rig
or other equipment is on location, and if Operator is a Non-Consenting Party,
the Consenting Parties shall either: (a) request Operator to perform the work
required by such proposed operation for the account of the Consenting Parties,
or (b) designate one (1) of the Consenting Parties as Operator to perform such
work.  Consenting Parties, when conducting operations on the Contract Area
pursuant to this Article VI.B.2., shall comply with all terms and conditions of
this agreement.

     If less than all parties approve any proposed operation, the proposing
party, immediately after the expiration of the applicable notice period, shall
advise the Consenting Parties of the total interest of the parties approving
such operation and its recommendation as to whether the Consenting Parties
should proceed with the operation as proposed.  Each Consenting Party, within
forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays) after
receipt of such notice, shall advise the proposing party of its desire to (a)
limit participation to such party's interest as shown on Exhibit "A" or (b)
carry its proportionate part of Non-Consenting Parties' interests, and failure
to advise the proposing party shall be deemed an election under (a).  In the
event a drilling rig is on location, the time permitted for such a response
shall not exceed a total of forty-eight (48) hours (exclusive of Saturday,
Sunday and legal holidays).  The proposing party, at its election, may withdraw
such proposal if there is insufficient participation and shall promptly notify
all parties of such decision.

     The entire cost and risk of conducting such operations shall be borne by
the Consenting Parties in the proportions they have elected to bear same under
the terms of the preceding paragraph.  Consenting Parties shall keep the
leasehold estates and oil and gas interests involved in such operations free and
clear of all liens and encumbrances of every kind created by or arising from the
operations of the Consenting Parties.  If such an operation results in a dry
hole, the Consenting Parties shall plug and abandon the well and restore the
surface location at their sole cost, risk and expense.  If any well drilled,
reworked, deepened or plugged back under the provisions of this Article results
in a producer of oil and/or gas in paying quantities, the Consenting Parties
shall complete and equip the well to produce at their sole cost and risk, and
the well shall then be turned over to Operator and shall be operated by it at
the expense and for the account of the Consenting Parties.  Upon commencement of
operations for the drilling, reworking, deepening or plugging back of any such
well by Consenting Parties in accordance with the provisions of this Article,
each Non-Consenting Party shall be deemed to have relinquished to Consenting
Parties, and the Consenting Parties shall own and be entitled to receive, in
proportion to their respective interests, all of such Non-Consenting Party's
interest in the well and share of production therefrom until the proceeds of the
sale of such share, calculated at the well, or market value thereof if such
share is not sold, (after deducting production taxes, excise taxes, royalty,
overriding royalty and other interests not excepted by Article III.D. payable
out of or measured by the production from such well accruing with respect to
such interest until it reverts) shall equal the total of the following:

     (a) 100% of each such Non-Consenting Party's share of the cost of any newly
acquired surface equipment beyond the wellhead connections (including, but not
limited to, stock tanks, separators, treaters, pumping equipment and piping),
plus 100% of each such Non-Consenting Party's share of the cost of operation of
the well commencing with first production and continuing until each such Non-
Consenting Party's relinquished interest shall revert to it under other
provisions of this Article, it being agreed that each Non-Consenting Party's
share of such costs and equipment will be that interest which would have been
chargeable to such Non-Consenting Party had it participated in the well from the
beginning of the operations, and

                                       5
<PAGE>

     (b) 400 % of that portion of the costs and expenses of drilling, reworking,
deepening, plugging back, testing and completing, after deducting any cash
contributions received under Article VIII.C., and 400 % of that portion of the
cost of newly acquired equipment in the well (to and including the wellhead
connections), which would have been chargeable to such Non-Consenting Party if
it had participated therein.

     An election not to participate in the drilling or the deepening of a well
shall be deemed an election not to participate in any reworking or plugging back
operation proposed in such a well, or portion thereof, to which the initial Non-
Consent election applied that is conducted at any time prior to full recovery by
the Consenting Parties of the Non-Consenting Party's recoupment account.  Any
such reworking or plugging back operation conducted during the recoupment period
shall be deemed part of the cost of operation of said well and there shall be
added to the sums to be recouped by the Consenting Parties one hundred percent
(100%) of that portion of the costs of the reworking or plugging back operation
which would have been chargeable to such Non-Consenting Party had it
participated therein.  If such a reworking or plugging back operation is
proposed during such recoupment period, the provisions of this Article VI.B.
shall be applicable as between said Consenting Parties in said well.

     During the period of time Consenting Parties are entitled to receive Non-
Consenting Party's share of production, or the proceeds therefrom, Consenting
Parties shall be responsible for the payment of all production, severance,
excise, gathering and other taxes, and all royalty, overriding royalty and other
burdens applicable to Non-Consenting Party's share of production not excepted by
Article III.D.

     In the case of any reworking, plugging back or deeper drilling operation,
the Consenting Parties shall be permitted to use, free of cost, all casing,
tubing and other equipment in the well, but the ownership of all such equipment
shall remain unchanged; and upon abandonment of a well after such reworking,
plugging back or deeper drilling, the Consenting Parties shall account for all
such equipment to the owners thereof, with each party receiving its
proportionate part in kind or in value, less cost of salvage and less the
proportionate share of plugging and abandoning which each party would have paid
if the well had been plugged at the time each party last participated in
Operations on the well.

     Within sixty (60) days after the completion of any operation under this
Article, the party conducting the operations for the Consenting Parties shall
furnish each Non-Consenting Party with an inventory of the equipment in and
connected to the well, and an itemized statement of the cost of drilling,
deepening, plugging back, testing, completing, and equipping the well for
production; or, at its option, the operating party, in lieu of an itemized
statement of such costs of operation, may submit a detailed statement of monthly
billings.  Each month thereafter, during the time the Consenting Parties are
being reimbursed as provided above, the party conducting the operations for the
Consenting Parties shall furnish the Non-Consenting Parties with an itemized
statement of all costs and liabilities incurred in the operation of the well,
together with a statement of the quantity of oil and gas produced from it and
the amount of proceeds realized from the sale of the well's working interest
production during the preceding month.  In determining the quantity of oil and
gas produced during any month, Consenting Parties shall use industry accepted
methods such as, but not limited to, metering or periodic well tests.  Any
amount realized from the sale or other disposition of equipment newly acquired
in connection with any such operation which would have been owned by a Non-
Consenting Party had it participated therein shall be credited against the total
unreturned costs of the work done and of the equipment purchased in determining
when the interest of such Non-Consenting Party shall revert to it as above
provided; and if there is a credit balance, it shall be paid to such Non-
Consenting Party.

     If and when the Consenting Parties recover from a Non-Consenting Party's
relinquished interest the amounts provided for above, the relinquished interests
of such Non-Consenting Party shall automatically revert to it, and, from and
after such reversion, such Non-Consenting Party shall own the same interest in
such well, the material and equipment in or pertaining thereto, and the
production therefrom as such Non-Consenting Party would have been entitled to
had it participated in the drilling, reworking, deepening or plugging back of
said well.  Thereafter, such Non-Consenting Party shall be charged with and
shall pay its proportionate part of the further costs of the operation of said
well in accordance with the terms of this agreement and the Accounting Procedure
attached hereto.

     Notwithstanding the provisions of this Article VI.B.2., it is agreed that
without the mutual consent of all parties, no wells shall be completed in or
produced from a source of supply from which a well located elsewhere on the
Contract Area is producing, unless such well conforms to the then existing well
spacing pattern for such source of supply.

     The provisions of this Article shall have no application whatsoever to the
drilling of the initial well described in Article VI.A. except (a) as to Article
VII.D.1. (Option No. 2), if selected, or (b) as to the reworking, deepening and
plugging back of such initial well after if has been drilled to the depth
specified in Article VI.A. if it shall thereafter prove to be a dry hole or, if
initially completed for production, ceases to produce in paying quantities.

     3.   Stand-By Time:  When a well which has been drilled or deepened has
reached its authorized depth and all tests have been completed, and the results
thereof furnished to the parties, standby costs incurred pending response to

                                       6
<PAGE>

a party's notice proposing a reworking, deepening, plugging back or completing
operation in such a well shall be charged and borne as part of the drilling or
deepening operation just completed. Standby costs subsequent to all parties
responding, or expiration of the response time permitted, whichever first
occurs, and prior to agreement as to the participating interests of all
Consenting Parties pursuant to the terms of the second grammatical paragraph of
Article VI.B.2., shall be charged to and borne as part of the proposed
operation, but if the proposal is subsequently withdrawn because of insufficient
participation, such standby costs shall be allocated between the Consenting
Parties in the proportion each Consenting Party's interest as shown on Exhibit
"A" bears to the total interest as shown on Exhibit "A" of all Consenting
Parties.

     4.   Sidetracking:  Except as hereinafter provided, those provisions of
this agreement applicable to a "deepening" operation shall also be applicable to
any proposal to directionally control and intentionally deviate a well from
vertical so as to change the bottom hole location (herein call "sidetracking"),
unless done to straighten the hole or to drill around junk in the hole or
because of other mechanical difficulties.  Any party having the right to
participate in a proposed sidetracking operation that does not own an interest
in the affected well bore at the time of the notice shall, upon electing to
participate, tender to the well bore owners its proportionate share (equal to
its interest in the sidetracking operation) of the value of that portion of the
existing well bore to be utilized as follows:

     (a) If the proposal is for sidetracking an existing dry hole, reimbursement
shall be on the basis of the actual costs incurred in the initial drilling of
the well down to the depth at which the sidetracking operation is initiated.

     (b) If the proposal is for sidetracking a well which has previously
produced, reimbursement shall be on the basis of the well's salvable materials
and equipment down to the depth at which the sidetracking operation is
initiated, determined in accordance with the provisions of Exhibit "C", less the
estimated cost of salvaging and the estimated cost of plugging and abandoning.

     In the event that notice for a sidetracking operation is given while the
drilling rig to be utilized is on location, the response period shall be limited
to forty-eight (48) hours, exclusive of Saturday, Sunday and legal holidays;
provided, however, any party may request and receive up to eight (8) additional
days after expiration of the forty-eight (48) hours within which to respond by
paying for all standby time incurred during such extended response period.  If
more than one party elects to take such additional time to respond to the
notice, standby costs shall be allocated between the parties taking additional
time to respond on a day-to-day basis in the proportion each electing party's
interest as shown on Exhibit "A" bears to the total interest as shown on Exhibit
"A" of all the electing parties. In all other instances the response period to a
proposal for sidetracking shall be limited to thirty (30) days.  Failure to
timely respond shall be deemed an election not to participate in the proposed
operation.

C. TAKING PRODUCTION IN KIND:

     Each party shall have the right to take in kind or separately dispose of
its proportionate share of all oil and gas produced from the Contract Area,
exclusive of production which may be used in development and producing
operations and in preparing and treating oil and gas for marketing purposes and
production unavoidably lost.  Any extra expenditure incurred in the taking in
kind or separate disposition by any party of its proportionate share of the
production shall be borne by such party.  Any party taking its share of
production in kind shall be required to pay for only its proportionate share of
such part of Operator's surface facilities which it uses.

     Each party shall execute such division orders and contracts as may be
necessary for the sale of its interest in production from the Contract Area,
and, except as provided in Article VII.B., shall be entitled to receive payment
directly from the purchaser thereof for its share of all production.

     In the event any party shall fail to make the arrangements necessary to
take in kind or separately dispose of its proportionate share of the oil
produced from the Contract Area, Operator shall have the right, subject to the
revocation at will by the party owning it, but not the obligation, to purchase
such oil or sell it to others at any time and from time to time, for the account
of the non-taking party at the best price obtainable in the area for such
production.  Any such purchase or sale by Operator shall be subject always to
the right of the owner of the production to exercise at any time its right to
take in kind, or separately dispose of, its share of all oil not previously
delivered to a purchaser.  Any purchase or sale by Operator of any other party's
share of oil shall be only for such reasonable periods of time as are consistent
with the minimum needs of the industry under the particular circumstances, but
in no event for a period in excess of one (1) year.

     In the event one or more parties' separate disposition of its share of the
gas causes split-stream deliveries to separate pipelines and/or deliveries which
on a day-to-day basis for any reason are not exactly equal to a party's
respective proportionate share of total gas sales to be allocated to it, the
balancing or accounting between the respective accounts of the parties shall be
in accordance with the gas balancing agreement attached hereto as Exhibit "E".

                                       7
<PAGE>

D. ACCESS TO CONTRACT AREA AND INFORMATION:

     Each party shall have access to the Contract Area at all reasonable times,
at its sole cost and risk to inspect or observe operations, and shall have
access at reasonable times to information pertaining to the development or
operation thereof, including Operator's books and records relating thereto.
Operator, upon request, shall furnish each of the other parties with copies of
all forms or reports filed with governmental agencies, daily drilling reports,
well logs, tank tables, daily gauge and run tickets and reports of stock on hand
at the first of each month, and shall make available samples of any cores or
cuttings taken from any well drilled on the Contract Area.  The cost of
gathering and furnishing information to Non-Operator, other than that specified
above, shall be charged to the Non-Operator that requests the Information.

E. ABANDONMENT OF WELLS:

     1.   Abandonment of Dry Holes:  Except for any well drilled or deepened
pursuant to Article VI.B.2., any well which has been drilled or deepened under
the terms of this agreement and is proposed to be completed as a dry hole shall
not be plugged and abandoned without the consent of all parties.  Should
Operator, after diligent effort, be unable to contact any party, or should any
party fail to reply within forty-eight (48) hours (exclusive of Saturday, Sunday
and legal holidays) after receipt of notice of the proposal to plug and abandon
such well, such party shall be deemed to have consented to the proposed
abandonment.  All such wells shall be plugged and abandoned in accordance with
applicable regulations and at the cost, risk and expense of the parties who
participated in the cost of drilling or deepening such well.  Any party who
objects to plugging and abandoning such well shall have the right to take over
the well and conduct further operations in search of oil and/or gas subject to
the provisions of Article VI.B.

     2.   Abandonment of Wells that have Produced:  Except for any well in which
a Non-Consent operation has been conducted hereunder for which the Consenting
Parties have not been fully reimbursed as herein provided, any well which has
been completed as a producer shall not be plugged and abandoned without the
consent of all parties.  If all parties consent to such abandonment, the well
shall be plugged and abandoned in accordance with applicable regulations and at
the cost, risk and expense of all the parties hereto.  If, within thirty (30)
days after receipt of notice of the proposed abandonment of any well, all
parties do not agree to the abandonment of such well, those wishing to continue
its operation from the interval(s) of the formation(s) then open to production
shall tender to each of the other parties its proportionate share of the value
of the well's salvable material and equipment determined in accordance with the
provisions of Exhibit "C", less the estimated cost of salvaging and the
estimated cost of plugging and abandoning (should operator be unable to contact
any party or should any party fail to reply, such party shall be deemed to have
consented to the proposed abandonment.  All such wells approved for abandonment
shall be P & A in accordance with applicable regulations and at sole cost, risk,
and expense of the parties who participated in the cost of drilling or deepening
such well). Each abandoning party shall assign the non-abandoning parties,
without warranty, express or implied, as to title or as to quantity, or fitness
for use of the equipment and material, all of its interest in the well and
related equipment, together with its interest in the leasehold estate as to, but
only as to, the interval or intervals of the formation or formations then open
to production.  If the interest of the abandoning party is or includes an oil
and gas interest, such party shall execute and deliver to the non-abandoning
party or parties an oil and gas lease, limited to the interval or intervals of
the formation then open to production, for a term of one (1) year and so long
thereafter as oil and/or gas is produced from the interval or intervals of the
formation or formations covered thereby.  The assignments or leases so limited
shall encompass the "drilling unit" upon which the well is located.  The
payments by, and the assignments or leases to, the assignees shall be in a ratio
based upon the relationship of their respective percentage of participation in
the Contract Area to the aggregate of the percentages of participation in the
Contract Area of all assignees.  There shall be no readjustment of interests in
the remaining portion of the Contract Area.

     Thereafter, abandoning parties shall have no further responsibility,
liability, or interest in the operation of or production from the well in the
interval or intervals then open other than the royalties retained in any lease
made under the terms of this Article.  Upon request, Operator shall continue to
operate the assigned well for the account of the non-abandoning parties at the
rates and charges contemplated by this agreement, plus any additional cost and
charges which may arise as the result of the separate ownership of the assigned
well.  Upon proposed abandonment of the producing interval(s) assigned or
leased, the assignor or lessor shall then have the option to repurchase its
prior interest in the well (using the same valuation formula) and participate in
further operations therein subject to the provisions hereof.

     3.   Abandonment of Non-Consent Operations:  The provisions of Article
VI.E.1. or VI.E.2 above shall be applicable as between Consenting Parties in the
event of the proposed abandonment of any well excepted from said Articles;
provided, however, no well shall be permanently plugged and abandoned unless and
until all parties having the right to conduct further operations therein have
been notified of the proposed abandonment and afforded the opportunity to elect
to take over the well in accordance with the provisions of this Article VI.E.
Any response to a notice of proposal to plug and abandon a well other than
notice to take over the well herein provided shall be deemed to be a consent by
such responding party to the proposed abandonment.

                                       8
<PAGE>

                                  ARTICLE VII.
                     EXPENDITURES AND LIABILITY OF PARTIES

A. LIABILITY OF PARTIES:

     The liability of the parties shall be several, not joint or collective.
Each party shall be responsible only for its obligations, and shall be liable
only for its proportionate share of the costs of developing and operating the
Contract Area.  Accordingly, the liens granted among the parties in Article
VII.B. are given to secure only the debts of each severally.  It is not the
intention of the parties to create, nor shall this agreement be construed as
creating, a mining or other partnership or association, or to render the parties
liable as partners.

B. LIENS AND PAYMENT DEFAULTS:

     Each Non-Operator grants to Operator a lien upon its oil and gas rights in
the Contract Area, and a security interest in its share of oil and/or gas when
extracted and its interest in all equipment, to secure payment of its share of
expense, together with interest thereon at the rate provided in Exhibit "C".  To
the extent that Operator has a security interest under the Uniform Commercial
Code of the state, Operator shall be entitled to exercise the rights and
remedies of a secured party under the Code.  The bringing of a suit and the
obtaining of judgment by Operator for the secured indebtedness shall not be
deemed an election of remedies or otherwise affect the lien rights or security
interest as security for the payment thereof.  In addition, upon default by any
Non-Operator in the payment of its share of expense, Operator shall have the
right, without prejudice to other rights or remedies, to collect from the
purchaser the proceeds from the sale of such Non-Operator's share of oil and/or
gas until the amount owed by such Non-Operator, plus interest, has been paid.
Each purchaser shall be entitled to rely upon Operator's written statement
concerning the amount of any default.  Operator grants a like lien and security
interest to the Non-Operators to secure payment of Operator's proportionate
share of expense.

C. PAYMENTS AND ACCOUNTING:

     Except as herein otherwise specifically provided, Operator shall promptly
pay and discharge expenses incurred in the development and operation of the
Contract Area pursuant to this agreement and shall charge each of the parties
hereto with their respective proportionate shares upon the expense basis
provided in Exhibit "C".  Operator shall keep an accurate record of the joint
account hereunder, showing expenses incurred and charges and credits made and
received.

     Operator, at its election, shall have the right from time to time to demand
and receive from the other parties payment in advance of their respective shares
of the estimated amount of the expense to be incurred in operations hereunder
during the next succeeding month, which right may be exercised only by
submission to each such party of an itemized statement of such estimated
expense, together with an invoice for its share thereof.  Each such statement
and invoice for the payment in advance of estimated expense shall be submitted
on or before the 20th day of the next preceding month.  Each party shall pay to
Operator its proportionate share of such estimate within fifteen (15) days after
such estimate and invoice is received.  If any party fails to pay its share of
said estimate within said time, the amount due shall bear interest as provided
in Exhibit "C" until paid.  Proper adjustment shall be made monthly between
advances and actual expense to the end that each party shall bear and pay its
proportionate share of actual expenses incurred, and no more.

D. LIMITATION OF EXPENDITURES:

     1.   Drill or Deepen:  Without the consent of all parties, no well shall be
drilled or deepened, except any well drilled or deepened pursuant to the
provisions of Article VI.B.2. of this agreement.  Consent to the drilling or
deepening shall include:

[ ]  Option No. 1:  [INTENTIONALLY DELETED]

[X]  Option No. 2: All necessary expenditures for the drilling or deepening and
testing of the well. When such well has reached its authorized depth, and all
tests have been completed, and the results thereof furnished to the parties,
Operator shall give immediate notice to the Non-Operators who have the right to
participate in the completion costs. The parties receiving such notice shall
have forty-eight (48) hours (exclusive) of Saturday, Sunday and legal holidays)
in which to elect to participate in the setting of casing and the completion
attempt. Such election, when made, shall include consent to all necessary
expenditures for the completing and equipping of such well, including necessary
tankage and/or surface facilities. Failure of any party receiving such notice to
reply within the period above fixed shall constitute an election by that party
not to participate in the cost of the completion attempt. If one or more, but
less than all of the parties, elect to set pipe and to attempt a completion, the
provisions of Article VI.B.2. hereof (the phrase "reworking, deepening or
plugging back" as contained in Article VI.B.2. shall be deemed to include
"completing") shall apply to the operations thereafter conducted by less than
all parties.

                                       9
<PAGE>

     2.   Rework or Plug Back:  Without the consent of all parties, no well
shall be reworked or plugged back except a well reworked or plugged back
pursuant to the provisions of Article VI.B.2. of this agreement.  Consent to the
reworking or plugging back of a well shall include all necessary expenditures in
conducting such operations and completing and equipping of said well, including
necessary tankage and/or surface facilities.

     3.   Other Operations:  Without the consent of all parties, Operator shall
not undertake any single project reasonably estimated to require an expenditure
in excess of Fifteen Thousand Dollars ($15,000) except in connection with a
well, the drilling, reworking, deepening, completing, recompleting, or plugging
back of which has been previously authorized by or pursuant to this agreement;
provided, however, that, in case of explosion, fire, flood or other sudden
emergency, whether of the same or different nature, Operator may take such steps
and incur such expenses as in its opinion are required to deal with the
emergency to safeguard life and property but Operator, as promptly as possible,
shall report the emergency to the other parties.  If Operator prepares an
authority for expenditure (AFE) for its own use, Operator shall furnish any Non-
Operator so requesting an information copy thereof for any single project
costing in excess of Ten Thousand Dollars ($10,000) but less than the amount
first set forth above in this paragraph.

E. RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES:

     Rentals, shut-in well payments and minimum royalties which may be required
under the terms of any lease shall be paid by the Operator and billed to the
Joint Account.  In the event two or more parties own and have contributed
interests in the same lease to this agreement, such parties may designate one of
such parties to make said payments for and on behalf of all such parties.  Any
party may request and shall be entitled to receive, 15 days prior to due date,
proper evidence of all such payments.  In the event of failure to make proper
payment of any rental, shut-in well payment or minimum royalty through mistake
or oversight where such payment is required to continue the lease in force, any
loss which results from such non-payment shall be borne in accordance with the
provisions of Article IV.B.3.

     Operator shall notify Non-Operator of the anticipated completion of a
shutting gas well, or the shutting in or return to production of a producing gas
well, at least five (5) days (excluding Saturday, Sunday and legal holidays), or
at the earliest opportunity permitted by circumstances, prior to taking such
action, but assumes no liability for failure to do so.  In the event of failure
by Operator to so notify Non-Operator, the loss of any lease contributed hereto
by Non-Operator for failure to make timely payments of any shut-in well payment
shall be borne jointly by the parties hereto under the provisions of Article
IV.B.3.

F. TAXES:

     Beginning with the first calendar year after the effective date hereof,
Operator shall render for ad valorem taxation all property subject to this
agreement which by law should be rendered for such taxes, and it shall pay all
such taxes assessed thereon before they become delinquent.  Prior to the
rendition date, each Non-Operator shall furnish Operator information as to
burdens (to include, but not be limited to, royalties, overriding royalties and
production payments) on leases and oil and gas interests contributed by such
Non-Operator.  If the assessed valuation of any leasehold estate is reduced by
reason of its being subject to outstanding excess royalties, overriding
royalties or production payments, the reduction in ad valorem taxes resulting
therefrom shall inure to the benefit of the owner or owners of such leasehold
estate, and Operator shall adjust the charge to such owner or owners so as to
reflect the benefit of such reduction.  If the ad valorem taxes are based in
whole or in part upon separate valuations of each party's working interest, then
notwithstanding anything to the contrary herein, charges to the joint account
shall be made and paid by the parties hereto in accordance with the tax value
generated by each party's working interest.  Operator shall bill the other
parties for their proportionate shares of all tax payments in the manner
provided in Exhibit "C".

     If Operator considers any tax assessment improper, Operator may, at its
discretion, protest within the time and manner prescribed by law, and prosecute
the protest to a final determination, unless all parties agree to abandon the
protest prior to final determination.  During the pendency of administrative or
judicial proceedings, Operator may elect to pay, under protest, all such taxes
and any interest and penalty.  When any such protested assessment shall have
been finally determined, Operator shall pay the tax for the joint account,
together with any interest and penalty accrued, and the total cost shall then be
assessed against the parties, and be paid by them, as provided in Exhibit "C".

     Each party shall pay or cause to be paid all production, severance, excise,
gathering and other taxes imposed upon or with respect to the production or
handling of such party's share of oil and/or gas produced under the terms of
this agreement.

G. INSURANCE:

     At all times while operations are conducted hereunder, Operator shall
comply with the workmen's compensation law of the state where the operations are
being conducted; provided, however, that Operator may be self-insurer for
liability under said compensation laws in which event the only charge that shall
be made to the joint account

                                       10
<PAGE>

shall be as provided in Exhibit "C". Operator shall also carry or provide
insurance for the benefit of the joint account of the parties as outlined in
Exhibit "D", attached to and made a part hereof. Operator shall require all
contractors engaged in work on or for the Contract Area to comply with the
workmen's compensation law of the state where the operations are being conducted
and to maintain such other insurance Operator may require.

     In the event automobile public liability insurance is specified in said
Exhibit "D", or subsequently receives the approval of the parties, no direct
charge shall be made by Operator for premiums paid for such insurance for
Operator's automotive equipment.

                                 ARTICLE VIII.
                ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST

A. SURRENDER OF LEASES:

     The leases covered by this agreement, insofar as they embrace acreage in
the Contract Area, shall not be surrendered in whole or in part unless all
parties consent thereto.

     However, should any party desire to surrender its interest in any lease or
in any portion thereof, and the other parties do not agree or consent thereto,
the party desiring to surrender shall assign, without express or implied
warranty of title, all of its interest in such lease, or portion thereof, and
any well, material and equipment which may be located thereon and any rights in
production thereafter secured, to the parties not consenting to such surrender.
Upon such assignment or lease, the assigning party shall be relieved from all
obligations thereafter accruing, but not theretofore accrued, with respect to
the interest assigned or leased and the operation of any well attributable
thereto, and the assigning party shall have no further interest in the assigned
or leased premises and its equipment and production other than the royalties
retained in any lease made under the terms of this Article.  The party assignee
or lessee shall pay to the party assignor or lessor the reasonable salvage value
of the latter's interest in any wells and equipment attributable to the assigned
or leased acreage. The value of all material shall be determined in accordance
with the provisions of Exhibit "C", less the estimated cost of salvaging and the
estimated cost of plugging and abandoning. If the assignment or lease is in
favor of more than one party, the interest shall be shared by such parties in
the proportions that the interest of each bears to the total interest of all
such parties.

     Any assignment, lease or surrender made under this provision shall not
reduce or change the assignor's, lessor's or surrendering party's interest as it
was immediately before the assignment, lease or surrender in the balance of the
Contract Area; and the acreage assigned, leased or surrendered, and subsequent
operations thereon, shall not thereafter be subject to the terms and provisions
of an agreement, identical to this Agreement.

B. RENEWAL OR EXTENSION OF LEASES:

     If any party secures a renewal of any oil and gas lease subject to this
agreement, all other parties shall be notified promptly, and shall have the
right for a period of thirty (30) days following receipt of such notice in which
to elect to participate in the ownership of the renewal lease, insofar as such
lease affects lands within the Contract Area, by paying to the party who
acquired it their several proper proportionate shares of the acquisition cost
allocated to that part of such lease within the Contract Area, which shall be in
proportion to the interests held at that time by the parties in the Contract
Area.

     If some, but less than all, of the parties elect to participate in the
purchase of a renewal lease, it shall be owned by the parties who elect to
participate therein, in a ratio based upon the relationship of their respective
percentage of participation in the Contract Area to the aggregate of the
percentages of participation in the Contract Area of all parties participating
in the purchase of such renewal lease. Any renewal lease in which less than all
parties elect to participate shall not be subject to this agreement.

     Each party who participates in the purchase of a renewal lease shall be
given an assignment of its proportionate interest therein by the acquiring
party.

     The provisions of this Article shall apply to renewal leases whether they
are for the entire interest covered by the expiring lease or cover only a
portion of its area or an interest therein. Any renewal lease taken before the
expiration of its predecessor lease, or taken or contracted for within six (6)
months after the expiration of the existing lease shall be subject to this
provision, but any lease taken or contracted for more than six (6) months after
the expiration of an existing lease shall not be deemed a renewal lease and
shall not be subject to the provisions of this agreement.

     The provisions in this Article shall also be applicable to extensions of
oil and gas leases.

                                       11
<PAGE>

C. ACREAGE OR CASH CONTRIBUTIONS:

     While this agreement is in force, if any party contracts for a contribution
of cash towards the drilling of a well or any other operation on the Contract
Area, such contribution shall be paid to the party who conducted the drilling or
other operation and shall be applied by it against the cost of such drilling or
other operation. If the contribution be in the form of acreage, the party to
whom the contribution is made shall promptly tender an assignment of the
acreage, without warranty of title, to the Drilling Parties in the proportions
said Drilling Parties shared the cost of drilling the well. Such acreage shall
become a separate Contract Area and, to the extent possible, be governed by
provisions identical to this agreement. Each party shall promptly notify all
other parties of any acreage or cash contributions it may obtain in support of
any well or any other operation on the Contract Area. The above provisions shall
also be applicable to optional rights to cam acreage outside the Contract Area
which are in support of a well drilled inside the Contract Area.

     If any party contracts for any consideration relating to disposition of
such party's share of substances produced hereunder, such consideration shall
not be deemed a contribution as contemplated in this Article VIII.C.

D. MAINTENANCE OF UNIFORM INTERESTS:

     Every such sale, encumbrance, transfer or other disposition made by any
party shall be made expressly subject to this agreement and shall be made
without prejudice to the right of the other parties.

     If, at any time the interest of any party is divided among and owned by
four or more co-owners, Operator, at its discretion, may require such co-owners
to appoint a single trustee or agent with full authority to receive notices,
approve expenditures, receive billings for and approve and pay such party's
share of the joint expenses, and to deal generally with, and with power to bind,
the co-owners of such party's interest within the scope of the operations
embraced in this agreement; however, all such co-owners shall have the right to
enter into and execute all contracts or agreements for the disposition of their
respective shares of the oil and gas produced from the Contract Area and they
shall have the right to receive, separately, payment of the sale proceeds
thereof.

E. WAIVER OF RIGHTS TO PARTITION:

     If permitted by the laws of the state or states in which the property
covered hereby is located, each party hereto owning an undivided interest in the
Contract Area waives any and all rights it may have to partition and have set
aside to it in severalty its undivided interest therein.

F. [INTENTIONALLY DELETED]

                                  ARTICLE IX.
                         INTERNAL REVENUE CODE ELECTION

     This agreement is not intended to create, and shall not be construed to
create, a relationship of partnership or an association for profit between or
among the parties hereto. Notwithstanding any provision herein that the rights
and liabilities hereunder are several and not joint or collective, or that this
agreement and operations hereunder shall not constitute a partnership, if, for
federal income tax purposes, this agreement and the operations hereunder are
regarded as a partnership, each party hereby affected elects to be excluded from
the application of all of the provisions of Subchapter "K", Chapter 1, Subtitle
"A", of the Internal Revenue Code of 1986, as permitted and authorized by
Section 761 of the Code and the regulations promulgated thereunder. Operator is
authorized and directed to execute on behalf of each party hereby affected such
evidence of this election as may be required by the Secretary of the Treasury of
the United States or the Federal Internal Revenue Service, including
specifically, but not by way of limitation, all of the returns, statements, and
the data required by Federal Regulations 1.761. Should there be any requirement
that each party hereby affected give further evidence of this election, each
such party shall execute such documents and furnish such other evidence as may
be required by the Federal Internal Revenue Service or as may be necessary to
evidence this election. No such party shall give any notices or take any other
action inconsistent with the election made hereby. If any present or future
income tax laws of the state or states in which the Contract Area is located or
any future income tax laws of the United States contain provisions similar to
those in Subchapter "K", Chapter 1, Subtitle "A", of the Internal Revenue Code
of 1986, under which an election similar to that provided by Section 761 of the
Code is permitted, each party hereby affected shall make such election as may be
permitted or required by such laws. In making the foregoing election, each such
party states that the income derived by such party from operations hereunder can
be adequately determined without the computation of partnership taxable income.

                                       12
<PAGE>

                                   ARTICLE X.
                              CLAIMS AND LAWSUITS

     Operator may settle any single uninsured third party damage claim or suit
arising from operations hereunder if the expenditure does not exceed Twenty-Five
Thousand Dollars ($25,000) and if the payment is in complete settlement of such
claim or suit. If the amount required for settlement exceeds the above amount,
the parties hereto shall assume and take over the further handling of the claim
or suit, unless such authority is delegated to Operator. All costs and expenses
of handling, settling, or otherwise discharging such claim or suit shall be at
the joint expense of the parties participating in the operation from which the
claim or suit arises. If a claim is made against any party or if any party is
sued on account of any matter arising from operations hereunder over which such
individual has no control because of the rights given Operator by this
agreement, such party shall immediately notify all other parties, and the claim
or suit shall be treated as any other claim or suit involving operations
hereunder.

                                  ARTICLE XI.
                                 FORCE MAJEURE

     If any party is rendered unable, wholly or in part, by force majeure to
carry out its obligations under this agreement, other than the obligation to
make money payments, that party shall give to all other parties prompt written
notice of the force majeure with reasonably full particulars concerning it;
thereupon, the obligations of the party giving the notice, so far as they are
affected by the force majeure, shall be suspending during, but no longer than,
the continuance of the force majeure. The affected party shall use all
reasonable diligence to remove the force majeure situation as quickly as
practicable.

     The requirement that any force majeure shall be remedied with all
reasonable dispatch shall not require the settlement of strikes, lockouts, or
other labor difficulty by the party involved, contrary to its wishes, how all
such difficulties shall be handled shall be entirely within the discretion of
the party concerned.

     The term "force majeure", as here employed, shall mean an act of God,
strike, lockout, or other industrial disturbance, act of the public enemy, war,
blockade, public riot, lightning, fire, storm, flood, explosion, governmental
action, governmental delay, restraint or inaction, unavailability of equipment,
and any other cause, whether of the kind specifically enumerated above or
otherwise, which is not reasonably within the control of the party claiming
suspension.

                                  ARTICLE XII.
                                    NOTICES

     All notices authorized or required between the parties and required by any
of the provisions of this agreement, unless otherwise specifically provided,
shall be given in writing by mail or telegram, postage or charges prepaid, or by
telex or telecopier and addressed to the parties to whom the notice is given at
the addresses listed on Exhibit "A". The originating notice given under any
provision hereof shall be deemed given only when received by the party to whom
such notice is directed, and the time for such party to give any notice in
response thereto shall run from the date the originating notice is received. The
second or any responsive notice shall be deemed given when deposited in the mail
or with the telegraph company, with postage or charges prepaid, or sent by telex
or telecopier. Each party shall have the right to change its address at any
time, and from time to time, by giving written notice thereof to all other
parties.

                                 ARTICLE XIII.
                               TERM OF AGREEMENT

     This agreement shall remain in full force and effect as to the oil and gas
leases and/or oil and gas interests subject hereto for the period of time
selected below; provided, however, no party hereto shall ever be construed as
having any right, title or interest in or to any lease or oil and gas interest
contributed by any other party beyond the term of this agreement.

[X]  Option No. 1: So long as that portion of the oil and gas leases subject to
this agreement remain or are continued in force as to any part of the Contract
Area, whether by production, extension, renewal, or otherwise.

[ ]  Option No. 2: In the event the well described in Article VI.A., or any
subsequent well drilled under any provision of this agreement, results in
production of oil and/or gas in paying quantities, this agreement shall continue
in force so long as any such well or wells produce, or are capable of
production, and for an additional period of _____ days from cessation of all
production; provided, however, if, prior to the expiration of such additional
period, one or more of the parties hereto are engaged in drilling, reworking,
deepening, plugging back, testing or attempting to complete a well or wells
hereunder, this agreement shall continue in force until such operations have
been completed and if production

                                       13
<PAGE>

results therefrom, this agreement shall continue in force as provided herein. In
the event the well described in Article VI.A., or any subsequent well drilled
hereunder, results in a dry hole, and no other well is producing, or capable of
producing oil and/or gas from the Contract Area, this agreement shall terminate
unless drilling, deepening, plugging back or reworking operations are commenced
within ___ days from the date of abandonment of said well.

     It is agreed, however, that the termination of this agreement shall not
relieve any party hereto from any liability which has accrued or attached prior
to the date of such termination.

                                  ARTICLE XIV.
                      COMPLIANCE WITH LAWS AND REGULATIONS

A. LAWS, REGULATIONS AND ORDERS:

     This agreement shall be subject to the conservation laws of the state in
which the Contract Area is located, to the valid rules, regulations, and orders
of any duly constituted regulatory body of said state, and to all other
applicable federal, state, and local laws, ordinances, rules, regulations, and
orders.

B. GOVERNING LAW:

     This agreement and all matters pertaining hereto, including, but not
limited to, matters of performance, non-performance, breach, remedies,
procedures, rights, duties, and interpretation or construction, shall be
governed and determined by the law of the state in which the Contract Area is
located. If the Contract Area is in two or more states, the law of the state of
Texas shall govern.

C. REGULATORY AGENCIES:

     Nothing herein contained shall grant, or be construed to grant, Operator
the right or authority to waive or release any rights, privileges, or
obligations which Non-Operators may have under federal or state laws or under
rules, regulations or orders promulgated under such laws in reference to oil,
gas and mineral operations, including the location, operation, or production of
wells, on tracts offsetting or adjacent to the Contract Area.

     With respect to operations hereunder, Non-Operators agree to release
Operator from any and all losses, damages, injuries, claims and causes of action
arising out of, incident to or resulting directly or indirectly from Operator's
interpretation or application of rules, rulings, regulations or orders of the
Department of Energy or predecessor or successor agencies to the extent such
interpretation or application was made in good faith. Each Non-Operator further
agrees to reimburse Operator for any amounts applicable to such Non-Operator's
share of production that Operator may be required to refund, rebate or pay as a
result of such an incorrect interpretation or application, together with
interest and penalties thereon owing by Operator as a result of such incorrect
interpretation or application.

     Non-Operators authorize Operator to prepare and submit such documents as
may be required to be submitted to the purchaser of any crude oil sold hereunder
or to any other person or entity pursuant to the requirements of the "Crude Oil
Windfall Profit Tax Act of 1980", as same may be amended from time to time
("Act"), and any valid regulations or rules which may be issued by the Treasury
Department from time to time pursuant to said Act. Each party hereto agrees to
furnish any and all certifications or other information which is required to be
furnished by said Act in a timely manner and in sufficient detail to permit
compliance with said Act.

                                  ARTICLE XV.
                                OTHER PROVISIONS

A. EQUAL EMPLOYMENT OPPORTUNITY AND NON-DISCRIMINATION:

     In connection with the performance of work under this agreement, the
Operator agrees to comply with all of the provisions of Section 202 (10 to (7)
inclusive, of Executive Order 11246 (30 F.R. 12319), as amended.

B. PRIORITY OF OPERATIONS:

     If at any time there is more than one operation proposed in connection with
any well subject to this agreement, THEN UNLESS ALL PARTICIPATING PARTIES AGREE
ON THE SEQUENCE OF SUCH OPERATIONS, such operations shall have the following
order of priority:

      1.  Additional testing, coring or logging;

      2.  Attempt completions, in ascending order;

                                       14
<PAGE>

      3.  Plug back and attempt completions, in ascending order;

      4.  Sidetrack the well to reach any zones not below original authorized
          objectives; and

      5.  Deepen the well, in descending order;

so that the operations having the highest priority will be performed unless
parties owning two-thirds or more of the working interest agree that such
operation will not be performed.  In this event, the operation having the next
priority will be performed unless eliminated in like manner.

C. WELL PROPOSALS:

     It is hereby further agreed that no party hereto can propose the drilling
of a subsequent well under Paragraph VI.B.1 above while a well is being drilled
within the Contract Area unless the drilling of such subsequent well is
necessary to prevent the termination of a lease.  However, if all parties hereto
should agree then a subsequent well may be commenced at any time.  Ho party will
be required to consent to the drilling of more than one well at a time, except
as provided for above.

D. SIDETRACKING NOT A NECESSARY EXPENSE:

     "Necessary expenditures" as used in Article VII D.1, of this Operating
Agreement shall not include sidetracking operations unless covered specifically
in an AFE approved by the participating parties.

                                  ARTICLE XVI.
                                 MISCELLANEOUS

     This agreement shall be binding upon and shall inure to the benefit of the
parties hereto and to their respective heirs, devisees, legal representatives,
successors and assigns.

     This instrument may be executed in any number of counterparts, each of
which shall be considered an original for all purposes.

     IN WITNESS WHEREOF, this agreement shall be effective as of the 16th day of
December, 1997.

                                O P E R A T O R

                                    Louis Dreyfus Natural Gas Corp.

                                    /s/ J. C. Welch
-----------------------------       --------------------------------
                                    J. C. Welch
                                    Vice-President-Land

                           N O N - O P E R A T O R S

                                    Seisgen Exploration, Inc.

                                    -------------------------------
                                    William A. Hall

                                    MOOSE OIL & GAS

                                    /s/ John F. Terwilliger
-----------------------------       --------------------------------
                                    John F. Terwilliger

                                       15
<PAGE>

                                  EXHIBIT "A"

  ATTACHED TO AND MADE A PART OF THAT CERTAIN JOINT OPERATING AGREEMENT DATED
DECEMBER 11, 1997, BETWEEN LOUIS DREYFUS NATURAL GAS CORP. (LDNGC), AS OPERATOR,
        AND SEISGEN EXPLORATION, INC., ET AL, (SEISGEN) AS NON-OPERATOR

                    SARTWELLE PROSPECT, LAVACA COUNTY, TEXAS

1.   Land and Leases subject to Agreement:

     The lands and leases described and set forth in that certain Working
     Interest Unit Agreement dated December 11, 1997, between LDNGC and Seisgen.

2.   Restrictions as to Depth, Formation or Substances:

     As set forth in said Letter Agreement.

3.   Percentage of working interest:

          Louis Dreyfus Natural Gas Corp.    63.4375%
          Seisgen Exploration, Inc.           9.0625%
          Moose Oil and Gas                  27.5000%

4.   Addresses of Parties:

          Louis Dreyfus Natural Gas Corp.
          1331 Lamar Street, Suite 900
          Houston, Texas 77010-3088
          Attention:    Ronnie C. Van Winkle
                        District Landman
          Telephone:    (713) 756-6325
          Facsimile:    (713) 756-6002

          Seisgen Exploration, Inc.
          1010 Lamar, Suite 1250
          Houston, Texas 77002
          Telephone:    (713) 654-1205
          Facsimile:    (713) 654-7070

          Moose Oil and Gas
          1100 Louisiana, Suite 3420
          Houston, Texas 77002
          Telephone:    (713) 650-0633
          Facsimile:    (713) 650-9358

                                      A-1
<PAGE>

                   THERE IS NO EXHIBIT "B" TO THIS AGREEMENT

                                      B-1
<PAGE>

                                  EXHIBIT "C"

Attached to and made a part of that certain Joint Operating Agreement dated
December 11, 1997, between Louis Dreyfus Natural Gas Corp. (LDNGC), as Operator,
and Seisgen Exploration, Inc., et al (Seisgen), as Non-Operator Sartwelle
Prospect, Lavaca County, Texas

                              ACCOUNTING PROCEDURE
                                JOINT OPERATIONS

                             I. GENERAL PROVISIONS

1.   DEFINITIONS

     "Joint Property" shall mean the real and personal property subject to the
     agreement to which this Accounting Procedure is attached.

     "Joint Operations" shall mean all operations necessary or proper for the
     development, operation, protection and maintenance of the Joint Property.

     "Joint Account" shall mean the account showing the charges paid and credits
     received in the conduct of the Joint Operations and which are to be shared
     by the Parties.

     "Operator" shall mean the party designated to conduct the Joint Operations.

     "Non-Operators" shall mean the Parties to this agreement other than the
     Operator.

     "Parties" shall mean Operator and Non-Operators.

     "First Level Supervisors" shall mean those employees whose primary function
     in Joint Operations is the direct supervision of other employees and/or
     contract labor directly employed on the Joint Property in a field operating
     capacity.

     "Technical Employees" shall mean those employees having special and
     specific engineering, geological or other professional skills, and whose
     primary function in Joint Operations is the handling of specific operating
     conditions and problems for the benefit of the Joint Property.

     "Personal Expenses" shall mean travel and other reasonable reimbursable
     expenses of Operator's employees.

     "Material" shall mean personal property, equipment or supplies acquired or
     held for use on the Joint Property.

     "Controllable Material" shall mean Material which at the time is so
     classified in the Material Classification Manual as most recently
     recommended by the Council or Petroleum Accountants Societies.

2.   STATEMENT AND BILLINGS

     Operator shall bill Non-Operators on or before the last day of each month
     for their proportionate share of the Joint Account for the preceding month.
     Such bills will be accompanied by statements which identify the authority
     for expenditure, lease or facility, and all charges and credits summarized
     by appropriate classifications of investment and expense except that items
     of Controllable Material and unusual charges and credits shall be
     separately identified and fully described in detail.

3.   ADVANCES AND PAYMENTS BY NON-OPERATORS

     A.   Unless otherwise provided for in the agreement, the Operator may
          require the Non-Operators to advance their share of estimated cash
          outlay for the succeeding month's operation within fifteen (15) days
          after receipt of the billing or by the first day of the month for
          which the advance is required, whichever is later. Operator shall
          adjust each monthly billing to reflect advances received from the Non-
          Operators.

     B.   Each Non-Operator shall pay its proportion of all bills within fifteen
          (15) days after receipt. If payment is not made within such time, the
          unpaid balance shall bear interest monthly at the prime rate in effect
          at ___________________________ on the first day of the month in which
          delinquency occurs plus 1% or the maximum contract rate permitted by
          the applicable usury laws in the state in which the Joint Property is
          located, whichever is the lesser, plus attorney's fees, court costs,
          and other costs in connection with the collection of unpaid amounts.

                                      C-1
<PAGE>

4.   ADJUSTMENTS

     Payment of any such bills shall not prejudice the right of any Non-Operator
     to protest or question the correctness thereof; provided, however, all
     bills and statements rendered to Non-Operators by Operator during any
     calendar year shall conclusively be presumed to be true and correct after
     twenty-four (24) months following the end of any such calendar year, unless
     within the said twenty-four (24) month period a Non-Operator takes written
     exception thereto and makes claim on Operator for adjustment.  No
     adjustment favorable to Operator shall be made unless it is made within the
     same prescribed period.  The provisions of this paragraph shall not prevent
     adjustments resulting from a physical inventory of Controllable Material as
     provided for in Section V.

5.   AUDITS

     A.   A Non-Operator, upon notice in writing to Operator and all other Non-
          Operators, shall have the right to audit Operator's accounts and
          records relating to the Joint Account for any calendar year within the
          twenty-four (24) month period following the end of such calendar year;
          provided, however, the making of an audit shall not extend the time
          for the taking of written exception to and the adjustments of accounts
          as provided for in Paragraph 4 of this Section I.  Where there are two
          or more Non-Operators, the Non-Operators shall make every reasonable
          effort to conduct a joint audit in a manner which will result in a
          minimum of inconvenience to the Operator.  Operator shall bear no
          portion of the Non-Operators' audit cost incurred under this paragraph
          unless agreed to by the Operator.  The audits shall not be conducted
          more than once each year without prior approval of Operator, except
          upon the resignation or removal of the Operator, and shall be made at
          the expense of those Non-Operators approving such audit.

     B.   The Operator shall reply in writing to an audit report within 180 days
          after receipt of such report.

6.   APPROVAL BY NON-OPERATORS

     Where an approval or other agreement of the Parties or Non-Operators is
     expressly required under other sections of this Accounting Procedure and if
     the agreement to which this Accounting Procedure is attached contains no
     contrary provisions in regard thereto, Operator shall notify all Non-
     Operators of the Operator's proposal, and the agreement or approval of a
     majority in interest of the Non-Operators shall be controlling on all Non-
     Operators.

                              II.  DIRECT CHARGES

Operator shall charge the Joint Account with the following items:

1.   ECOLOGICAL AND ENVIRONMENTAL

     Costs incurred for the benefit of the Joint Property as a result of
     governmental or regulatory requirements to satisfy environmental
     considerations applicable to the Joint Operations. Such costs may include
     surveys of an ecological or archaeological nature and pollution control
     procedures as required by applicable laws and regulations

2.   RENTALS AND ROYALTIES

     Lease rentals and royalties paid by Operator for the Joint Operations

3.   LABOR

     A.   (1)  Salaries and wages of Operator's field employees directly
               employed on the Joint Property in the conduct of Joint Operations

          (2)  Salaries of First Level Supervisors in the field,

          (3)  Salaries and wages of Technical Employees directly employed on
               the Joint Property if such charges are excluded from the overhead
               rates

          (4)  Salaries and wages of Technical Employees either temporarily or
               permanently assigned to and directly employed in the operation of
               the Joint Property if such charges are excluded from the overhead
               rates.

     B.   Operator's cost of holiday, vacation, sickness and disability benefits
          and other customary allowances paid to employees whose salaries and
          wages are chargeable to the Joint Account under Paragraph 3A of this
          Section II. Such costs under this Paragraph 3B may be charged on a
          "when and as paid basis"

                                      C-2
<PAGE>

          or by "percentage assessment" on the amount of salaries and wages
          chargeable to the Joint Account under Paragraph 3A of this Section II.
          If percentage assessment is used, the rate shall be based on the
          Operator's cost experience.

     C.   Expenditures or contributions made pursuant to assessments imposed by
          governmental authority which are applicable to Operator's costs
          chargeable to the Joint Account under Paragraphs 3A and 3B of this
          Section II.

     D.   Personal Expenses of those employees whose salaries and wages are
          chargeable to the Joint Account under Paragraphs 3A and 3B of this
          Section II.

4.   EMPLOYEE BENEFITS

     Operator's current costs or established plans for employees' group life
     insurance, hospitalization, pension, retirement, stock purchase. thrift,
     bonus, and other benefit plans of a like nature, applicable to Operator's
     labor cost chargeable to the Joint Account under Paragraphs 3A and 3B of
     this Section II shall be Operator's actual cost not to exceed the percent
     most recently recommended by the Council of Petroleum Accountants
     Societies.

5.   MATERIAL

     Material purchased or furnished by Operator for use on the Joint Property
     as provided under Section IV. Only such Material shall be purchased for or
     transferred to the Joint Property as may be required for immediate use and
     is reasonably practical and consistent with efficient and economical
     operations. The accumulation of surplus stocks shall be avoided.

6.   TRANSPORTATION

     Transportation of employees and Material necessary for the Joint Operations
     but subject to the following limitations:

     A.   If Material is moved to the Joint Property from the Operator's
          warehouse or other properties, no charge shall be made to the Joint
          Account for a distance greater than the distance from the nearest
          reliable supply store where like material is normally available or
          railway receiving point nearest the Joint Property unless agreed to by
          the Parties.

     B.   If surplus Material is moved to Operator's warehouse or other storage
          point, no charge shall be made to the Joint Account for a distance
          greater than the distance to the nearest reliable supply store where
          like material is normally available, or railway receiving point
          nearest the Joint Property unless agreed to by the Parties.  No charge
          shall be made to the Joint Account for moving Material to other
          properties belonging to Operator, unless agreed to by the Parties.

     C.   In the application of subparagraphs A and B above, the option to
          equalize or charge actual trucking cost is available when the actual
          charge is $400 or less excluding accessorial charges.  The $400 will
          be adjusted to the amount most recently recommended by the Council of
          Petroleum Accountants Societies.

7.   SERVICES

     The cost of contract services, equipment and utilities provided by outside
     sources, except services excluded by Paragraph 10 of Section II and
     Paragraph i, ii, and iii, of Section III. The cost of professional
     consultant services and contract services of technical personnel directly
     engaged on the Joint Property if such charges are excluded from the
     overhead rates. The cost of professional consultant services or contract
     services of technical personnel not directly engaged on the Joint Property
     shall not be charged to the Joint Account unless previously agreed to by
     the Parties.

8.   EQUIPMENT AND FACILITIES FURNISHED BY OPERATOR

     A.   Operator shall charge the Joint Account for use of Operator owned
          equipment and facilities at rates commensurate with costs of ownership
          and operation. Such rates shall include costs of maintenance, repairs,
          other operating expense, insurance, taxes, depreciation, and interest
          on gross investment less accumulated depreciation not to exceed the
          Prime Rate of interest in effect at Chase Manhattan Bank of New York
          on the first day of the month in which usage occurs, plus 2% per
          annum.  Such rates shall not exceed average commercial rates currently
          prevailing in the immediate area of the Joint Property.

                                      C-3
<PAGE>

     B.   In lieu of charges in Paragraph 8A above, Operator may elect to use
          average commercial rates prevailing in the immediate area of the Joint
          Property less 20%. For automotive equipment, Operator may elect to use
          rates published by the Petroleum Motor Transport Association.

9.   DAMAGES AND LOSSES TO JOINT PROPERTY

     All costs or expenses necessary for the repair or replacement of Joint
     Property made necessary because of damages or losses incurred by fire,
     flood, storm, theft, accident, or other cause, except those resulting from
     Operator's gross negligence or willful misconduct. Operator shall furnish
     Non-Operator written notice of damages or losses incurred as soon as
     practicable after a report thereof has been received by Operator.

10.  LEGAL EXPENSE

     Expense of handling, investigating and settling litigation or claims,
     discharging of liens, payment of judgments and amounts paid for settlement
     of claims incurred in or resulting from operations under the agreement or
     necessary to protect or recover the Joint Property, except that no charge
     for services of Operator's legal staff or fees or expense of outside
     attorneys shall be made unless previously agreed to by the Parties. All
     other legal expense is considered to be covered by the overhead provisions
     of Section III unless otherwise agreed to by the Parties, except as
     provided in Section I, Paragraph 3.  No legal expense shall be incurred in
     excess of $50,000 unless previously agreed to in writing by the parties.

11.  TAXES

     All taxes of every kind and nature assessed or levied upon or in connection
     with the Joint Property, the operation thereof, or the production
     therefrom, and which taxes have been paid by the Operator for the benefit
     of the Parties. If the ad valorem taxes are based in whole or in part upon
     separate valuations of each party's working interest, then notwithstanding
     anything to the contrary herein, charges to the Joint Account shall be made
     and paid by the Parties hereto in accordance with the tax value generated
     by each party's working interest.

12.  INSURANCE

     Net premiums paid for insurance required to be carried for the Joint
     Operations for the protection of the Parties. In the event Joint Operations
     are conducted in a state in which Operator may act as self-insurer for
     Worker's Compensation and/or Employers Liability under the respective
     state's laws, Operator may, at its election, include the risk under its
     self-insurance program and in that event, Operator shall include a charge
     at Operator's cost not to exceed manual rates.

13.  ABANDONMENT AND RECLAMATION

     Costs incurred for abandonment of the Joint Property, including costs
     required by governmental or other regulatory authority.

14.  COMMUNICATIONS

     Cost of acquiring, leasing, installing, operating, repairing and
     maintaining communication systems, including radio and microwave facilities
     directly serving the Joint Property. In the event communication
     facilities/systems serving the Joint Property are Operator owned, charges
     to the Joint Account shall be made as provided in Paragraph 8 of this
     Section II.

15.  OTHER EXPENDITURES

     Any other expenditure not covered or dealt with in the foregoing provisions
     of this Section II, or in Section III and which is of direct benefit to the
     Joint Property and is incurred by the Operator in the necessary and proper
     conduct of the Joint Operations.

                                 III.  OVERHEAD

1.   OVERHEAD-DRILLING AND PRODUCING OPERATIONS

     i.   As compensation for administrative, supervision, office services and
          warehousing costs, Operator shall charge drilling and producing
          operations on either:

          (X) Fixed Rate Basis, Paragraph 1A, or
          ( ) [INTENTIONALLY DELETED]

                                      C-4
<PAGE>

          Unless otherwise agreed to by the Parties, such charge shall be in
          lieu of costs and expenses of all offices and salaries or wages plus
          applicable burdens and expenses of all personnel, except those
          directly chargeable under Paragraph 3A, Section II. The cost and
          expense of services from outside sources in connection with matters of
          taxation, traffic, accounting or matters before or involving
          governmental agencies shall be considered as included in the overhead
          rates provided for in the above selected Paragraph of this Section III
          unless such cost and expense are agreed to by the Parties as a direct
          charge to the Joint Account.

     ii.  The salaries, wages and Personal Expenses of Technical Employees
          and/or the cost of professional consultant services and contract
          services of technical personnel directly employed on the Joint
          Property:

          ( )  INTENTIONALLY DELETED]
          (X)  shall not be covered by the overhead rates.

     iii.  The salaries, wages and Personal Expenses of Technical Employees
          and/or costs of professional consultant services and contract services
          of technical personnel either temporarily or permanently assigned to
          and directly employed in the operation of the Joint Property:

          ( ) [INTENTIONALLY DELETED]
          (X) shall not be covered by the overhead rates.

     A.   Overhead-Fixed Rate Basis

          (1) Operator shall charge the Joint Account at the following rates per
              well per month:

               Drilling Well Rate $7,200 ($4,500 if 6,000' or less)
                    (Prorated for less than a full month)

               Producing Well Rate $720 ($450 if 6,000' or less)

          (2) Application of Overhead-Fixed Rate Basis shall be as follows:

               (a)  Drilling Well Rate

                    (1)  Charges for drilling wells shall begin on the date the
                         well is spudded and terminate on the date the drilling
                         rig, completion rig, or other units used in completion
                         of the well is released, whichever is later, except
                         that no charge shall be made during suspension of
                         drilling or completion operations for fifteen (15) or
                         more consecutive calendar days.

                    (2)  Charges for wells undergoing any type of workover or
                         recompletion for a period of five (5) consecutive work
                         days or more shall be made at the drilling well rate.
                         Such charges shall be applied for the period from date
                         workover operations, with rig or other units used in
                         workover, commence through date of rig or other unit
                         release, except that no charge shall be made during
                         suspension of operations for fifteen (15) or more
                         consecutive calendar days.

               (b)  Producing Well Rates

                    (1)  An active well either produced or injected into for any
                         portion of the month shall be considered as a one-well
                         charge for the entire month.

                    (2)  Each active completion in a multi-completed well in
                         which production is not commingled down hole shall be
                         considered as a one-well charge providing each
                         completion is considered a separate well by the
                         governing regulatory authority.

                    (3)  An inactive gas well shut in because of overproduction
                         or failure of purchaser to take the production shall be
                         considered as a one-well charge providing the gas well
                         is directly connected to a permanent sales outlet.

                    (4)  A one-well charge shall be made for the month in which
                         plugging and abandonment operations are completed on
                         any well. This one-well charge

                                      C-5
<PAGE>

                         shall be made whether or not the well has produced
                         except when drilling well rate applies.

                    (5)  All other inactive wells (including but not limited to
                         inactive wells covered by unit allowable, lease
                         allowable, transferred allowable, etc.) shall not
                         qualify for an overhead charge.

          (3)  The well rates shall be adjusted as of the first day of April
               each year following the effective date of the agreement to which
               this Accounting Procedure is attached. The adjustment shall be
               computed by multiplying the rate currently in use by the
               percentage increase or decrease in the average weekly earnings of
               Crude Petroleum and Gas Production Workers for the last calendar
               year compared to the calendar year preceding as shown by the
               index of average weekly earnings of Crude Petroleum and Gas
               Production Workers as published by the United States Department
               of Labor, Bureau or Labor Statistics, or the equivalent Canadian
               index as published by Statistics Canada, as applicable. The
               adjusted rates shall be the rates currently in use, plus or minus
               the computed adjustment.

               B.  [INTENTIONALLY DELETED]

2.   OVERHEAD - MAJOR CONSTRUCTION

     To compensate Operator for overhead costs incurred in the construction and
     installation of fixed assets, the expansion of fixed assets, and any other
     project clearly discernible as a fixed asset required for the development
     and operation of the Joint Property, Operator shall either negotiate a rate
     prior to the beginning of construction, or shall charge the Joint Account
     for overhead based on the following rates for any Major Construction
     project in excess of $25,000:

     A.     5% of first $100,000 or total cost if less, plus

     B.     3% of costs in excess of $100,000 but less than $1,000,000, plus

     C.     2% of costs in excess of $1,000,000.

     Total cost shall mean the gross cost of any one project. For the purpose of
     this paragraph, the component parts of a single project shall not be
     treated separately and the cost of drilling and workover wells and
     artificial lift equipment shall be excluded.

3.   CATASTROPHE OVERHEAD

     To compensate Operator for overhead costs incurred in the event of
     expenditures resulting from a single occurrence due to oil spill, blowout.
     explosion, fire, storm, hurricane, or other catastrophes as agreed to by
     the Parties, which are necessary to restore the Joint Property to the
     equivalent condition that existed prior to the event causing the
     expenditures, Operator shall either negotiate a rate prior to charging the
     Joint Account or shall charge the Joint Account for overhead based on the
     following rates:

     A. 5% of total costs through $100,000; plus

     B. 3% of total costs in excess of $100,000 but less than $1,000,000, plus

     C. 2% of costs in excess of $1,000,000.

     Expenditures subject to the overheads above will not be reduced by
     insurance recoveries, and no other overhead provisions of this Section III
     shall apply.

4.   AMENDMENT OF RATES

     The overhead rates provided for in this Section III may be amended from
     time to time only by mutual agreement between the Parties hereto if, in
     practice, the rates are found to be insufficient or excessive.

                IV. PRICING OF JOINT ACCOUNT MATERIAL PURCHASES,
                           TRANSFERS AND DISPOSITIONS

Operator is responsible for Joint Account Material and shall make proper and
timely charges and credits for all Material movements affecting the Joint
Property. Operator shall provide all Material for use on the Joint Property;
however, at Operator's option, such Material may be supplied by the Non-
Operator. Operator shall make timely disposition of idle and/or surplus
Material, such disposal being made either through sale to Operator or Non-
Operator, division in kind, or sale to outsiders. Operator may purchase, but
shall be under no obligation to purchase, interest of Non-Operators in

                                      C-6
<PAGE>

surplus condition A or B Material. The disposal of surplus Controllable Material
not purchased by the Operator shall be agreed to by the Parties.

1.   PURCHASES

     Material purchased shall be charged at the price paid by Operator after
     deduction of all discounts received. In case of Material found to be
     defective or returned to vendor for any other reasons, credit shall be
     passed to the Joint Account when adjustment has been received by the
     Operator.

2.   TRANSFERS AND DISPOSITIONS

     Material furnished to the Joint Property and Material transferred from the
     Joint Property or disposed of by the Operator, unless otherwise agreed to
     by the Parties, shall be priced on the following basis exclusive of cash
     discounts:

     A.  New Material (Condition A)

          (1) Tubular Goods Other than Line Pipe

               (a)  Tubular goods, sized 2-3/8 inches OD and larger, except line
                    pipe, shall be priced at Eastern mill published carload base
                    prices effective as of date of movement plus transportation
                    cost using the 80,000 pound carload weight basis to the
                    railway receiving point nearest the Joint Property for which
                    published rail rates for tubular goods exist. If the 80,000
                    pound rail rate is not offered, the 70,000 pound or 90,000
                    pound rail rate may be used. Freight charges for tubing will
                    be calculated from Lorain, Ohio and casing from Youngstown,
                    Ohio.

               (b)  For grades which are special to one mill only, prices shall
                    be computed at the mill base of that mill plus
                    transportation cost from that mill to the railway receiving
                    point nearest the Joint Property as provided above in
                    Paragraph 2.A.(1)(a). For transportation cost from points
                    other than Eastern mills, the 30,000 pound Oil Field Haulers
                    Association interstate truck rate shall be used.

               (c)  Special end finish tubular goods shall be priced at the
                    lowest published out-of-stock price, f.o.b. Houston, Texas,
                    plus transportation cost, using Oil Field Haulers
                    Association interstate 30,000 pound truck rate, to the
                    railway receiving point nearest the Joint Property.

               (d)  Macaroni tubing (size less than 2-3/8 inch OD) shall be
                    priced at the lowest published out-of-stock prices f.o.b.
                    the supplier plus transportation costs, using the Oil Field
                    Haulers Association interstate truck rate per weight of
                    tubing transferred, to the railway receiving point nearest
                    the Joint Property.

          (2)  Line Pipe

               (a)  Line pipe movements (except size 24 inch OD and larger with
                    walls  3/4 inch and over) 30,000 pounds or more shall be
                    priced under provisions of tubular goods pricing in
                    Paragraph A.(1)(a) as provided above.  Freight charges shall
                    be calculated from Lorain, Ohio.

               (b)  Line Pipe movements (except size 24 inch OD) and larger with
                    walls  3/4 inch and over) less than 30,000 pounds shall be
                    priced at Eastern mill published carload base prices
                    effective as of date of shipment, plus 20 percent, plus
                    transportation costs based on freight rates as set forth
                    under provisions of tubular goods pricing in Paragraph
                    A.(l)(a) as provided above. Freight charges shall be
                    calculated from Lorain, Ohio.

               (c)  Line pipe 24 inch OD and over and  3/4 inch wall and larger
                    shall be priced f.o.b. the point of manufacture at current
                    new published prices plus transportation cost to the railway
                    receiving point nearest the Joint Property.

               (d)  Line pipe, including fabricated line pipe, drive pipe and
                    conduit not listed on published price lists shall be priced
                    at quoted prices plus freight to the railway receiving point
                    nearest the Joint Property or at prices agreed to by the
                    Parties.

                                      C-7
<PAGE>

          (3)  Other Material shall be priced at the current new price, in
               effect at date of movement, as listed by a reliable supply store
               nearest the Joint Property, or point of manufacture, plus
               transportation costs, if applicable, to the railway receiving
               point nearest the Joint Property.

          (4)  Unused new Material, except tubular goods, moved from the Joint
               Property shall be priced at the current new price, in effect on
               date of movement, as listed by a reliable supply store nearest
               the Joint Property, or point of manufacture, plus transportation
               costs, if applicable, to the railway receiving point nearest the
               Joint Property. Unused new tubulars will be priced as provided
               above in Paragraph 2.A.(l) and (2).

     B.  Good Used Material (Condition B)

          Material in sound and serviceable condition and suitable for reuse
          without reconditioning:

          (1) Material moved to the Joint Property

               At seventy-five percent (75%) of current new price, as determined
               by Paragraph A.

          (2) Material used on and moved from the Joint Property

               (a)  At seventy-five percent (75%) of current new price, as
                    determined by Paragraph A, if Material was originally
                    charged to the Joint Account as new Material or

               (b)  At sixty-five percent (65%) of current new price, as
                    determined by Paragraph A, if Material was originally
                    charged to the Joint Account as used Material

          (3) Material not used on and moved from the Joint Property

               At seventy-five percent (75%) of current new price as determined
               by Paragraph A.

          The cost of reconditioning, if any, shall be absorbed by the
          transferring property.

     C.  Other Used Material

          (1)  Condition C

               Material which is not in sound and serviceable condition and not
               suitable for its original function until after reconditioning
               shall be priced at fifty percent (50%) of current new price as
               determined by Paragraph A. The cost of reconditioning shall be
               charged to the receiving property, provided Condition C value
               plus cost of reconditioning does not exceed Condition B value.

          (2)  Condition D

               Material, excluding junk, no longer suitable for its original
               purpose, but usable for some other purpose shall be priced on a
               basis commensurate with its use. Operator may dispose of
               Condition D Material under procedures normally used by Operator
               without prior approval of Non-Operators.

               (a)  Casing, tubing, or drill pipe used as line pipe shall be
                    priced as Grade A and B seamless line pipe of comparable
                    size and weight. Used casing, tubing or drill pipe utilized
                    as line pipe shall be priced at used line pipe prices.

               (b)  Casing, tubing or drill pipe used as higher pressure service
                    lines than standard line pipe, e.g. power oil lines, shall
                    be priced under normal pricing procedures for casing,
                    tubing, or drill pipe. Upset tubular goods shall be priced
                    on a non upset basis.

          (3)  Condition E

               Junk shall be priced at prevailing prices. Operator may dispose
               of Condition E Material under procedures normally utilized by
               Operator without prior approval of Non-Operators.

     D.  Obsolete Material

          Material which is serviceable and usable for its original function but
          condition and/or value of such Material is not equivalent to that
          which would justify a price as provided above may be specially priced
          as agreed to by the Parties. Such price should result in the Joint
          Account being charged with the value of the service rendered by such
          Material.

                                      C-8
<PAGE>

     E.  Pricing Conditions

          (1)  Loading or unloading costs may be charged to the Joint Account at
               the rate of twenty-five cents (25c) per hundred weight on all
               tubular goods movements, in lieu of actual loading or unloading
               costs sustained at the stocking point. The above rate shall be
               adjusted as of the first day of April each year following January
               1, 1985 by the same percentage increase or decrease used to
               adjust overhead rates in Section III, Paragraph 1.A.(3). Each
               year, the rate calculated shall be rounded to the nearest cent
               and shall be the rate in effect until the first day of April next
               year. Such rate shall be published each year by the Council of
               Petroleum Accountants Societies.

          (2)  Material involving erection costs shall be charged at applicable
               percentage of the current knocked-down price of new Material.

3.   PREMIUM PRICES

     Whenever Material is not readily obtainable at published or listed prices
     because of national emergencies, strikes or other unusual causes over which
     the Operator has no control, the Operator may charge the Joint Account for
     the required Material at the Operator's actual cost incurred in providing
     such Material, in making it suitable for use, and in moving it to the Joint
     Property; provided notice in writing is furnished to Non-Operators of the
     proposed charge prior to billing Non-Operators for such Material. Each Non-
     Operator shall have the right, by so electing and notifying Operator within
     ten days after receiving notice from Operator, to furnish in kind all or
     part of his share of such Material suitable for use and acceptable to
     Operator.

4.   WARRANTY OR MATERIAL FURNISHED BY OPERATOR

     Operator does not warrant the Material furnished. In case of defective
     Material, credit shall not be passed to the Joint Account until adjustment
     has been received by Operator from the manufacturers or their agents.

                                V.  INVENTORIES

Operator shall maintain detailed records of Controllable Material.

1.   PERIODIC INVENTORIES, NOTICE AND REPRESENTATION

     At reasonable intervals, inventories shall be taken by Operator of the
     Joint Account Controllable Material. Written notice of intention to take
     inventory shall be given by Operator at least thirty (30) days before any
     inventory is to begin so that Non-Operators may be represented when any
     inventory is taken. Failure of Non-Operators to be represented at an
     inventory shall bind Non-Operators to accept the inventory taken by
     Operator.

2.   RECONCILIATION AND ADJUSTMENT OF INVENTORIES

     Adjustments to the Joint Account resulting from the reconciliation of a
     physical inventory shall be made within six months following the taking of
     the inventory. Inventory adjustments shall be made by Operator to the Joint
     Account for overages and shortages, but, Operator shall be held accountable
     only for shortages due to lack of reasonable diligence.

3.   SPECIAL INVENTORIES

     Special inventories may be taken whenever there is any sale, change of
     interest, or change of Operator in the Joint Property. It shall be the duty
     of the party selling to notify all other Parties as quickly as possible
     after the transfer of interest takes place. In such cases, both the seller
     and the purchaser shall be governed by such inventory. In cases involving a
     change of Operator, all Parties shall be governed by such inventory.

4.   EXPENSE OF CONDUCTING INVENTORIES

     A.   The expense of conducting periodic inventories shall not be charged to
          the Joint Account unless agreed to by the Parties.

     B.   The expense of conducting special inventories shall be charged to the
          Parties requesting such inventories, except inventories required due
          to change of Operator shall be charged to the Joint Account.

                                      C-9
<PAGE>

                                  EXHIBIT "D"

                                   INSURANCE

     As to all operations hereunder, Operator shall obtain and carry for the
benefit and protection of the parties hereto, insurance, if same is obtainable,
as follows:

     A.  Workman's Compensation Insurance in an amount as required by the
         appropriate state law;

     B.  Employer's Liability Insurance in an amount of not less than $100,000
         for all damages from one or more claims arising from each accident;

     C.  Comprehensive General Liability Insurance with minimum limits of
         $500,000 bodily injury and property damage each occurrence/$5,000,000
         aggregate, and $100,000 property damage each occurrence/$100,000
         aggregate;

     D.  Umbrella Excess Liability Insurance with minimum limits of $5,000,000
         bodily injury and property damage each occurrence/$5,000,000 aggregate;

     E.  Comprehensive Automobile Liability Insurance covering owned, non-owned
         and hired automobiles and automotive equipment with minimum limits of
         $300,000 bodily injury or death each person/$300,000 each accident, and
         $100,000 property damage each accident;

     F.  Operator's Extra Expense Insurance covering well control and pollution
         liability with minimum limits of $10,000,000 each occurrence above
         15,000'; $20,000,000 each occurrence below 15,000'; and

     G.  Care, Custody and Control Insurance covering rented equipment, other
         than rig itself, within minimum limits of $500,000 each occurrence.

NON OPERATOR ELECTION

We do [X] do no ___ elect to participate in the Operators Insurance as to the
drilling of the wells under the terms of this Agreement. (Non-electing party to
supply proof of insurance.)

I/We do [X] do no ___ elect to participate in the Operators Insurance at such
time as a well is producing under the terms of this Agreement.

                                    Name:
                                    Title:

                                    Company: Seisgen Exploration, Inc.

                                    Name:   /s/ John F. Terwilliger
                                    Title:  President

                                    Company:  Moose Oil and Gas

                                      D-1
<PAGE>

                                  EXHIBIT "E"

                             GAS BALANCE AGREEMENT

I.  DEFINITIONS

For the purposes of this Agreement, the terms set forth below shall be defined
as follows:

     a.  "Operator" is the Operator so designated under the terms of the
         Operating Agreement.

     b.  "Party" or "Parties" are the entities which have executed this
         Agreement and have a working interest ownership in the Gas rights
         underlying the area covered by the Operating Agreement.

     c.  "Gas" includes casinghead Gas (which is all Gas produced with crude
         oil) and natural Gas from Gas wells, but shall not include liquid
         hydrocarbons recovered by lease equipment.

     d.  "Balance" is the condition occurring when a Party has utilized or sold
         the same percentage of the cumulative Gas production from a particular
         Well (exclusive of gas used in lease operations, vented or lost) as
         such Party's Percentage Ownership (as described in Paragraph II below).

     e.  "Overproduced" is the condition occurring when a Party has utilized or
         sold a greater volume of Gas from a particular Well at any given time
         (individually or through its Gas purchaser) than if such Party were in
         Balance.

     f.  "Underproduced" is the condition occurring when a Party has utilized or
         sold a lesser volume of Gas from a particular Well at any given time
         (individually or through its Gas purchaser) than if such Party were in
         Balance.

     g.  "Well" is defined as each Well subject to the Operating Agreement that
         also produces Gas or is allocated a share of Gas production. If a
         single Well is completed in two or more reservoirs, such Well will be
         considered a separate Well with respect to, but only to, each reservoir
         from which the Gas production is not commingled in the wellbore. If
         this Agreement covers a fieldwide unit, "Well" for the purposes of this
         Agreement shall refer to gas production from the unit separately
         accounted for by NGPA category. If this Agreement covers a property
         (other than a fieldwide unit) having casinghead Gas production that is
         not taken or marketed by each Party in volumes proportionate to each
         Party's percentage ownership in the property, and if the property is in
         a State where the applicable State regulatory body does not require
         reporting of casinghead Gas production on an individual well level,
         "Well" for the purposes of this Agreement shall refer to the smallest
         area from which production is required to be reported by Operator to
         said regulatory authority.

II.  PERCENTAGE OWNERSHIP OF PARTIES

The Parties to the Operating Agreement own the working interest in the Gas
rights underlying the area covered by the Operating Agreement in accordance with
the percentages or shares of participation ("Percentage Ownership") as set forth
in the Operating Agreement.

III.  RIGHT TO PRODUCE AND MARKET GAS; EFFECTIVE DATE OF THIS AGREEMENT

In accordance with the terms of the Operating Agreement, each Party thereto has
specific rights relating to the taking and disposition of Gas produced,
including the right to take in kind its share of Gas produced from the
applicable area and to market or otherwise dispose of same.  In the event any
Party is not at any time taking or marketing its share of Gas, or has contracted
to sell its share thereof to a purchaser which does not at any time while said
Operating Agreement is in effect take the full share of Gas attributable to the
Percentage Ownership of such contracting Party, then the terms of this Agreement
shall automatically become effective.  If an Operating Agreement is already in
place, the effective date shall be the date of first Gas sale(s) by any Party
from any Well(s) in the applicable area.

IV.  OVERPRODUCTION

During any period when any Party hereto is not marketing or otherwise disposing
of or utilizing its Percentage Ownership of Gas produced from any Well within
the applicable area, the other Parties hereto shall be entitled to produce, in
addition to their own Percentage Ownership of production, that portion of such
other Party's Percentage Ownership of production which said Party is not
marketing or otherwise disposing of, and shall be entitled to take such Gas
production and deliver same to its or their purchaser(s) in accordance with
Paragraph VI below; however, if one or

                                      E-1
<PAGE>

more Underproduced Parties has/have a Gas market and upon concurrence of the
Underproduced Party's Percentage Ownership of the recoverable reserves of the
Well. All the Parties shall share in and own the liquid hydrocarbons recovered
from such Gas by lease equipment in accordance with their respective Percentage
Ownership and subject to the Operating Agreement to which this Agreement is
attached, but the Party or Parties taking such Gas shall own all of the Gas
delivered to its or their Gas purchaser(s) or taken for their own use subject to
the terms of this Agreement.

V.  ACCOUNTING FOR OVERPRODUCTION AND UNDERPRODUCTION

Each Party taking Gas shall furnish or cause to be furnished to the Operator a
monthly statement of all Gas volumes taken from each Well or NGPA category as
applicable and the disposition of those volumes (contract purchases, spot sales,
own use, other).  The Operator under said Operating Agreement will establish and
maintain a current Gas account to show the Gas balance which exists
between/among all the Parties and will furnish each of these Parties a monthly
statement showing the total quantity of Gas produced, vented or lost, the
quantity taken by any Party for its own use, the quantity of gas delivered by
any Party to market and the monthly and cumulative over and under account of
each Party.  The monthly statement shall clearly and accurately specify the
monthly and cumulative quantity of Gas each Party is Underproduced or
Overproduced, or shall clearly and accurately specify if any Party is in
Balance.

VI.  RIGHT OF UNDERPRODUCED PARTY TO MAKE UP PRODUCTION

After reasonable notice to the Operator, any Party at any time may begin
marketing or otherwise disposing of its full Percentage Ownership of the Gas
produced from a Well with respect to which it is Underproduced.  In addition to
such Percentage Ownership, said Party, until it has balanced the Gas account as
to its Percentage Ownership, shall be entitled to take additional quantities of
Gas provided that the right to take such greater amount shall be in the
proportion that its Percentage Ownership bears to the total Percentage Ownership
of all Underproduced Parties desiring to take more than their proportionate
share of Gas produced from the Well.  Each Overproduced Party shall reduced its
respective share of production in the proportion that such Party's Percentage
Ownership bears to the total Percentage Ownership of all Overproduced Parties,
but in no event shall any Overproduced Party be required to reduced its share to
less than fifty percent (50%) of such Overproduced Party's proportionate share
of the well's current production (unless the terms of Paragraph IV regarding
cumulative production by an Overproduced Party are applicable).  Notwithstanding
the foregoing provisions of this paragraph, an underproduced party shall not be
entitled to make up underproduction during the winter months of November,
December, January and February unless such party has elected to make up its
underproduction on a continuous basis until such underproduced party is in
balance.

VII.  SETTLEMENT WHEN PRODUCTION IS PERMANENTLY DISCONTINUED

When production from a Well is permanently discontinued, the Operator will
furnish to all the Parties: (1) notice that production from the Well is
permanently discontinued, and (2) a final statement showing the Gas balance
which exists between/among all the Parties, and there shall be a cash settlement
between/among the Parties hereto for the volume of Gas, if any, remaining in
imbalance.  In making such cash settlement, each Overproduced Party shall remit
to the Operator, within ninety (90) days after the receipt from Operator of: (1)
notice that production from a Well is permanently discontinued and (2) the final
Gas balance statement for the well, a sum of money attributable to the amount
actually or constructively received by such Overproduced Party from the sale or
utilization of overproduction which remains accrued to such Party, less
applicable taxes and other payments in fact paid on the overproduced volume on
behalf of the Underproduced Parties by such Overproduced Party.  The Operator
shall distribute within thirty (30) days after the end of above referenced
ninety (90) day remittance period the total of such amounts so collected during
said remittance period among Underproduced Parties in the proportion of such
latter Parties' underproduction.  Furthermore, the Operator shall distribute any
additional remittance collected from Overproduced Parties subsequent to the end
of the ninety (90) day remittance period among Underproduced Parties in the
proportion of such latter Parties' underproduction within thirty (30) days after
receipt by Operator of such remittance.  Operator shall not be liable for non
payment by any overproduced party.  If remittance by an Overproduced Party or
distribution of amounts collected by the Operator in conjunction with a cash
settlement for the volume of Gas, if any, remaining in imbalance is not made
within the time limits specified in this paragraph, the unpaid or undistributed
balance will bear interest monthly at the prime rate in effect at The Chase
Manhattan Bank on the first day of the month in which delinquency occurs plus
1%, or the maximum contract rate permitted by the applicable usury laws in the
state in which the Well is located, whichever is the lesser, plus attorney's
fees, court costs, and other costs in connection with the collection of unpaid
or undistributed amounts.  It is recognized that there may have been some
changes in the price received by Overproduced Party shall be applied against
such Party's overproduction on a first in - first out basis and valued at the
price in effect at the time such overproduction occurred.  If a portion of a
Party's Gas is taken for its own use and a portion thereof is sold from the
Well.  During periods I which a Party is taking Gas for its own use and making
no sales, Gas so taken will be valued at the maximum

                                      E-2
<PAGE>

price which such Party could have received for such Gas if actually delivered
under such Party's contract, or, if none, the weighted average price received
simultaneously by all other Parties for Gas sold from all wells. In either such
instance the value so determined for Gas so used will be deemed to have been
constructively received by such using Party. In the event refunds are later
required by any governmental authority, each party shall be accountable for such
refunds on the basis of its share of Gas produced and finally balanced
hereunder.

VIII.  AUDITS

Notwithstanding any provision to the contrary in this or any other Agreement,
any Underproduced Party shall have the right for a period of two (2) years after
the date that Gas accounts are settled, to audit any Underproduced Party's
records as to volumes.

IX.  PAYMENT OF ROYALTIES; INDEMNITY FOR ROYALTY SETTLEMENTS

Unless otherwise provided in the Operating Agreement (or otherwise required in
lease agreements), each Party will make settlement or cause settlement to be
made with respective royalty owners to whom said Party is accountable, based
upon the volume of gas it is actually taking for its own use or selling for its
account.  Each Party agrees to indemnify and hold each and every other Party
harmless from any and all claims for royalty payments asserted by royalty owners
to whom each indemnifying Party is accountable.  The term "royalty owner" shall
include owners of standard royalties, excess royalties, overriding royalties,
production payments and similar interests.

X.  PAYMENT OF PRODUCTION TAXES

Unless otherwise provided in the Operating Agreement (or otherwise required in
lease agreements), each Party producing and taking, delivering to its Gas
purchaser or otherwise disposing of Gas, shall pay or cause to be paid any and
all production taxes due on such Gas.

XI.  DELIVERABILITY TESTS

Nothing herein contained shall be construed as denying any Party the right, from
time to time, and with at least twenty (20) days written notice to Operator,
subject to the concurrence of all Gas purchasers, to take or deliver to its
purchasers its full share of the allowable Gas production to meet the
deliverability tests required by its Gas Purchaser.

XII.  EFFECT ON OPERATING AGREEMENT

Nothing herein contained shall, among other things, change or affect the
obligations of each Party to bear and pay its proportionate share of all costs,
expenses, and liabilities incurred as provided in the Operating Agreement.

XIII.  NEGOTIATED CASH BALANCE

Nothing herein contained shall be construed as precluding cash balancing at any
time as negotiated among Parties.

XIV.  SCOPE AND TERM OF AGREEMENT

This Agreement shall constitute a separate agreement as to each Well within the
applicable area of the Operating Agreement.  It shall inure to the benefit of
and be binding upon the Parties hereto, their successors, legal representatives
and assigns.  It shall become effective in accordance with its terms and shall
remain in force and effect as long as the Operating Agreement to which it is
attached remains in effect or until all Gas imbalances within the Operating
Agreement's contract are settled, whichever date is later.  This Agreement shall
be binding on all Parties who approve it, regardless of whether it is approved
by any of the other Parties.

                                      E-3
<PAGE>

                                  EXHIBIT "F"

                      NON-DISTRIMINATION AND CERTIFICATION
                          ON NON-SEGREGATED FACILITIES

     During the performance of this Agreement, the Operator shall be bound by
and comply with all terms and provisions of Section 202 of Executive Order 11246
of September 24, 1965, all of which are incorporated herein by reference to the
same regulations and relevant orders adopted pursuant to such Executed Order.

     Operator assures Non-Operator that it does not and will not maintain or
provide for its employees any segregated facilities at any of its
establishments, and that it does not and will not permit its employees to
perform their services at any location, under its control, where segregated
facilities are maintained.  For this purpose, it is understood that the phrase
"segregated facilities" includes facilities which are in fact segregated on the
basis of color, religion, or national origin, because of habit, local custom or
otherwise.  It is further understood and agreed that maintaining or providing
segregated facilities for its employees or permitting its employees to perform
their services at any location under its control where segregated facilities are
maintained is a violation of the equal opportunity clause required by Executive
Order 11246 of September 24, 1965.  Operator further understands and agrees that
a breach of the assurance herein contained subjects it to the provisions of the
Order at 41 CFR Chapter 60 of the Secretary of Labor dated May 21, 1968, and the
provisions of the equal opportunity clause enumerated in contracts between the
United States of America and Non-Operator.

                                      F-1
<PAGE>

                   THERE IS NO EXHIBIT "G" TO THIS AGREEMENT

                                      G-1

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