Document:

AMENDMENT TO STOCK AGREEMENT

      THIS AMENDMENT TO STOCK AGREEMENT dated as of the 10th day of March 2006
(the "Amendment"), is made and entered into by and among Baseline Oil & Gas
Corp. (f/k/a College Oak Investments, Inc.), a Nevada corporation (the
"Company"), Barrie Damson, an individual residing in the State of Connecticut
("Damson"), Alan Gaines, an individual residing in the State of Connecticut
("Gaines") and those individuals listed as "Acquirers" on the signature pages
hereof.

                                    RECITALS:

      WHEREAS, the Company, Damson, Gaines and the Acquirers are parties to a
Stock Agreement dated as of January 16, 2006 (the "Stock Agreement"), pursuant
to which (i) the Company agreed to issue certain shares of its common stock, par
value $.001 as contemplated therein and (ii) Gaines and Damson agreed to cancel
certain of their stock options as set forth in the Stock Agreement;

      WHEREAS, the Company, Damson, Gaines and the Acquirers desire to amend the
Stock Agreement in certain respects.

      Capitalized terms used herein that are not defined herein shall have the
respective meanings assigned thereto in the Stock Agreement.

      NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, and the receipt of such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

      1. Amendments. The Stock Agreement is hereby amended, effective as of the
date hereof, as follows:

            (a) The third recital of the Stock Agreement is amended by deleting
subclause (ii) thereof, and by substituting therefor the following: "(ii)
concurrently with the closing of the equity financing with respect to the
Closing under the Purchase Agreement, the Company will (A) grant to the
Management Acquirers or their designees, stock options to acquire, in the
aggregate, up to 3,930,750 shares of the Company's Common Stock and (B) issue,
transfer and convey to the Acquirers listed on Exhibit B (which is attached
hereto and made a part hereof) (the "Subsequent Acquirers") shares of Common
Stock, and such Subsequent Acquirers will purchase such shares of Common Stock,
at the same prices and on the same terms as the other investors participating in
such financing."

            (b) Section 1.5 of the Stock Agreement is amended by deleting the
first sentence of subparagraph (a) thereof, and by substituting therefor the
following: "Damson and Gaines each agree that, upon the Effective Option
Cancellation Date (as defined below), each of them shall cancel 3,894,250 shares
of Common Stock underlying their respective stock options."

<PAGE>

            (c) The following words are added to the end of the heading
appearing under "ARTICLE 2": "; GRANT OF STOCK OPTIONS".

            (d) A new Section 2.4 is added to the Stock Agreement as follows:
"2.4 Grant of Stock Options to Management Acquirers. Upon the Closing Date, the
Company shall grant to the Management Acquirers or their designees (such
designees to be designated in writing to the Company at least 10 days prior to
the Closing Date), stock options (the "Management Acquirers Options"),
exercisable in the aggregate, for up to 3,930,750 shares of the Company's Common
Stock. The Management Acquirers Option shall be immediately exercisable at an
exercise price per share equal to the price per share paid by investors in the
Second Equity Round. The Company shall cause the shares of Common Stock
underlying the Management Acquirers Option to be included for sale in the first
registration statement filed by the Company following the Closing Date;
provided, however, that if requested by the Company's Placement Agent in the
Second Equity Round, each recipient of a Management Acquirers Option shall agree
to lock-up all of the shares of Common Stock underlying his/its Management
Acquirers Option for a period not to exceed one (1) year."

      2. Ratification. The Company, Damson, Gaines and the Acquirers do hereby
ADOPT, RATIFY and CONFIRM the Stock Agreement and all of its terms and
provisions, as amended hereby, and declare the Stock Agreement, as so amended,
to be in full force and effect.

      3. Counterparts. This Amendment may be executed and delivered (including
by facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.

      4. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the Commonwealth of Pennsylvania without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Pennsylvania or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Pennsylvania.

                            [Signature Pages Follow]

                                      -2-
<PAGE>

      IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer as of the date first written
above.

                                                  BASELINE OIL & GAS CORP.

                                                  By:    /s/ Carey G. Birmingham
                                                         -----------------------
                                                  Name:  Carey G. Birmingham
                                                  Title: President

                                                  /s/ Barrie Damson
                                                  ------------------------------
                                                  Barrie Damson

                                                  /s/ Alan Gaines
                                                  ------------------------------
                                                  Alan Gaines

                                      -3-
<PAGE>

                                                  ACQUIRERS:

                                                  /s/ Lance T. Shaner
                                                  ------------------------------
                                                  Lance T. Shaner

                                                  /s/ Benjamin W. Hulburt
                                                  ------------------------------
                                                  Benjamin W. Hulburt

                                                  /s/ Thomas F. Shields
                                                  ------------------------------
                                                  Thomas F. Shields

                                                  /s/ Michael S. Carlson
                                                  ------------------------------
                                                  Michael S. Carlson

                                                  /s/ Christopher K. Hulburt
                                                  ------------------------------
                                                  Christopher K. Hulburt

                                                  /s/ Thomas C. Stabley
                                                  ------------------------------
                                                  Thomas C. Stabley

                                      -4-
<PAGE>

                                                                       EXHIBIT D

                   MANAGEMENT ACQUIRERS STOCK OPTION AGREEMENT

      This Stock Option Agreement (this "Agreement") is effective as of
___________ 2006 (the "Option Grant Date") by and between Baseline Oil & Gas
Corp., a Nevada corporation (the "Company") and [ ] an individual residing at
_______________________ (the "Optionee"). The Optionee and the Company hereby
agree as follows:

      1. Grant. The Company hereby grants to the Optionee an option (the
"Option") to purchase up to an aggregate of __________ shares of the Company's
common stock (the "Optioned Shares") at an exercise price of $______ per
Optioned Share (the "Exercise Price").

      2. Term. The Option granted hereby shall terminate no later than at the
close of business on ____________ 2016 (the "Termination Date").

      3. Exercisability. This Option may be exercised in whole or in part, at
any time from and after the Option Grant Date until the Termination Date.

      4. Procedure for Exercise.

            (a) Notice. The Optionee may exercise the Option at any time with
      respect to all or any part of the number of Optioned Shares by giving the
      Secretary of the Company written notice of intent to exercise. The notice
      of exercise shall specify the number of Optioned Shares as to which the
      Option is to be exercised and the date of exercise thereof, which date
      shall be at least five days after the giving of such notice unless an
      earlier time shall have been mutually agreed upon.

            (b) Payment of Exercise Price. Full payment (in U.S. Dollars) by the
      Optionee of the Exercise Price for the Optioned Shares purchased shall be
      made on or before the exercise date specified in the notice of exercise in
      cash, or, with the prior written consent of the Board, in whole or in part
      through the surrender of previously acquired shares of common stock
      (valued at their fair market value on the exercise date). If the Optionee
      fails to pay for any of the Optioned Shares specified in such notice or
      fails to accept delivery thereof, the Optionee's right to purchase such
      Optioned Shares may be terminated by the Company. The date specified in
      the Optionee's notice as the date of exercise shall be deemed the date of
      exercise of the Option, provided that payment in full for the Optioned
      Shares to be purchased upon such exercise shall have been received by such
      date.

            In addition to the method of payment set forth above, provided that
      the Company's common stock is either registered on a national securities
      exchange or quoted by the NASDAQ at the time of exercise, Optionee shall
      have the right to exercise this Option in full or in part by delivering
      written notice to the Company, and Optionee shall receive the number of
      Optioned Shares equal to the product of (x) the number of Optioned Shares
      as to which this Option is being exercised, multiplied by (y) a fraction,
      the numerator of which is the Market Price (defined below) of the
      Company's common stock minus the Exercise Price of the Optioned Shares and

                                      -5-
<PAGE>

      the denominator of which is the Market Price of the Company's common
      stock. As used in this Agreement, the phrase "Market Price" at any date
      shall be deemed to be the last reported sale price, or, in case no such
      reported sale takes place on such day, the average of the last reported
      sale prices for the last three (3) trading days, in either case as
      officially reported by the principal securities exchange on which the
      Company's common stock is listed or admitted to trading, or, if the common
      stock is not listed or admitted to trading on any exchange, the average
      closing sale price as furnished by the NASD through The NASDAQ Stock
      Market, Inc. ("NASDAQ").

            (c) Other Limitations on Exercise. The obligation of the Company to
      deliver shares of common stock upon the exercise hereof shall be subject
      to the condition that if at any time the Company's Board of Directors
      shall determine in its sole discretion that the listing, registration or
      qualification of the Option or the Optioned Shares upon any securities
      exchange or under any state or federal law, or the consent or approval of
      any governmental regulatory body, is necessary or desirable as a condition
      of, or in connection with, the grant of this Option or the issuance or
      purchase of stock hereunder, then this Option may not be exercised in
      whole or in part unless such listing, registration, qualification, consent
      or approval shall have been effected or obtained free of any conditions
      not acceptable to the Board of Directors.

      5. Adjustment of and Changes in Stock of Company. If the Company at any
time after the Option Grant Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the
number of shares of Common Stock obtainable upon exercise of this Option will be
proportionately increased. If the Company at any time after the Option Grant
Date combines (by combination, reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination will
be proportionately increased and the number of Optioned Shares issuable upon
exercise of this Option will be proportionately decreased. Any adjustment under
this Section 5 shall become effective at the close of business on the date the
subdivision or combination becomes effective.

      6. Non-Transferability of Option. During the Optionee's lifetime, this
Option shall be exercisable only by the Optionee or any guardian or legal
representative of the Optionee, and the Option shall not be transferable except,
in case of the death of the Optionee, by will or the laws of descent and
distribution, nor shall the Option be subject to attachment, execution or other
similar process. In the event of (a) any attempt by the Optionee to alienate,
assign, pledge, hypothecate or otherwise dispose of this Option, except as
provided for herein, or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Company may terminate
the Option by notice to the Optionee and it shall thereupon become null and
void.

                                      -6-
<PAGE>

      7. Restrictions on Underlying Stock. The shares of common stock issuable
upon exercise of this Option may not be sold, pledged, hypothecated, transferred
or assigned in the absence of an effective registration statement for the
securities under the applicable federal and state securities laws or an opinion
of counsel satisfactory to the Company to the effect that such registration is
not required thereunder.

      8. "Piggy-Back" Registration Rights. If at any time commencing on the
Grant Date and expiring five (5) years hereafter, the Company proposes to
register any of its securities under the Securities Act of 1933 (other than in
connection with an initial public offering or in connection with a Form S-8),
then the Company shall afford the Optionee the opportunity to include for sale
in such registration statement, shares of common stock acquired by the Optionee
upon the exercise of this Option, provided however, that if the Board of
Directors of the Company determines in good faith that the number of shares to
be included in such registration is too large, then the Company will include
only such number of Optioned Shares as the Board of Directors shall in good
faith determine.

      9. Nonqualified Option. The Option granted hereby shall be treated as a
nonqualified stock option and not as an incentive stock option under the
Internal Revenue Code.

      10. No Rights as Stockholder. Neither the Optionee nor any personal
representatives shall be, or shall have any of the rights and privileges of, a
stockholder of the Company with respect to any shares of common stock
purchasable or issuable upon the exercise of this Option, in whole or in part,
prior to the date of exercise of this Option in accordance with the provisions
hereof.

      11. Successors and Assigns. This Option shall not be assignable by the
Optionee without the prior consent of the Company, which shall not be
unreasonably withheld. This Option shall be binding upon the successors and
assigns of the Company, and shall be expressly assumed by any successor to the
Company pursuant to a merger in which the Company is not the surviving entity.

      12. Miscellaneous. This Option and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Stock Option Agreement are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof.

<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized representative and the Optionee has hereunto set
his hand as of the Option Grant Date.

                                            BASELINE OIL & GAS CORP.

                                            By :________________________________
                                                Carey Birmingham, President

                                              __________________________________
                                                [Name of Management Acquirer]

                                        2PURCHASE AND SALE AGREEMENT

      This Purchase and Sale Agreement (this "Agreement") dated as of the 3rd
day of March, 2006, is between SOURCE ROCK RESOURCES, INC. a Delaware
corporation with an address at 1301 McKinney, Suite 3175, Houston, Texas 77010
("Seller") and NEW ALBANY-INDIANA, LLC, a Delaware limited liability company
with an address at 1965 Waddle Road, State College, Pennsylvania 16803
("Buyer"). Seller and Buyer are also referred to herein individually as a
"Party" and collectively as the "Parties."

      In consideration of the mutual promises contained herein, the benefits to
be derived by each Party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:

                                    ARTICLE 1
                                PURCHASE AND SALE

      1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller agrees to sell and convey and Buyer agrees to purchase and pay
for all of Seller's right, title and interest in and to the Interests (as
hereinafter defined).

      1.2 Interests. For purposes of this Agreement, the term "Interests" shall
be defined as an undivided 45.00% working interest (37.125% net revenue
interest) in and to all of the following interests (of whatever kind or
character, whether legal or equitable and whether vested or unvested or
contingent), less and except for the Reserved Interests (as hereinafter
defined):

            (a) All of Seller's right, title and interest in and to the oil, gas
and mineral leases located in Sullivan and Knox Counties, Indiana, as more
particularly described on Exhibit "A" attached hereto (collectively, the
"Leases");

            (b) Originals or copies of all computer tapes and discs, files,
records, information, instruments, documents, agreements or data relating to the
Interests in the possession of Seller, including, without limitation, title
records (including abstracts of title, title opinions, certificate of title and
title curative documents), accounting records and files, contracts,
correspondence, regulatory reports, seismic and geophysical data, tapes and
records, and all related materials, INSOFAR AND ONLY INSOFAR as the foregoing
items constitute materials that may be lawfully conveyed to Buyer (i.e., the
materials are not subject to an agreement precluding their transfer to Buyer),
and, to the extent transferable, all other contract rights, intangible rights,
inchoate rights, choses in action, rights under warranties made by prior owners,
manufacturers, vendors or other third parties, and rights accruing under
applicable statutes of limitation or prescription, attributable to the
Interests.

      1.3 Reserved Interests. Notwithstanding any provision of this Agreement to
the contrary, Seller shall retain following the Closing, a five percent (5.0%)
overriding royalty interest attributable to, or associated with, the Leases (the
"Reserved Interests"), thus delivering an 82.5% to the 8/8ths revenue interest
to Buyer in and to the Leases, proportionately reduced. The Reserved Interests

<PAGE>

shall bear its pro-rata share of the actual costs and expenses of all
transportation fees, Carbon Dioxide, Hydrogen Sulfide, Nitrogen and any other
contaminate removal treatments required for the marketability of production, and
production taxes. Buyer hereby acknowledges and agrees that the Reserved
Interests shall be retained by Seller following the Closing and shall not be
included in the Interests.

                                    ARTICLE 2
                                 PURCHASE PRICE

      2.1 Purchase Price. In consideration for the purchase of the Interests and
in payment of bonuses and leasing fees as of the date hereof, Buyer shall pay to
Seller at Closing, to an account designated by Seller, in cash or immediately
available funds, the sum of Seven Hundred Thirty Six Thousand Four Hundred
Seventy Six Dollars ("$736,476.00") (the "Purchase Price"), calculated in the
manner set forth and in the amounts shown on the attached Schedule 2.1.

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer the following:

            (a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Seller is duly qualified
to carry on its business and is in good standing in the State of Indiana and in
each other state where the Interests are located.

            (b) Seller has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, and to perform
its obligations hereunder. The execution and delivery of this Agreement by
Seller does not, and the consummation of the transactions contemplated by this
Agreement shall not: (i) violate, conflict with, or require the consent of any
person or entity under any provision of Seller's Articles or Certificate of
Incorporation, as the case may be, or Bylaws or other governing documents, (ii)
conflict with, result in a breach of, constitute a default (or an event that
with the lapse of time or notice or both would constitute a default) or require
any consent, authorization or approval under any agreement or instrument to
which Seller is a party, (iii) violate any provision of or require any consent,
authorization, or approval under any judgment, decree, judicial or
administrative order, award, writ, injunction, statute, rule, or regulation
applicable to Seller, or (iv) result in the creation of any lien, charge, or
encumbrances on any of the Interests.

            (c) The execution and delivery of this Agreement has been, and the
performance of this Agreement and the transactions contemplated by this
Agreement shall be at the time required to be performed, duly and validly
authorized by all requisite corporate action on the part of Seller. The
transactions contemplated by this Agreement do not constitute the sale of all or
substantially all of the assets of Seller.

            (d) This Agreement has been duly executed and delivered on behalf of
Seller and constitutes the legal and binding obligation of Seller enforceable in
accordance with its terms, except as enforceability may be limited by applicable

                                      -2-
<PAGE>

bankruptcy, reorganization, or moratorium statutes, equitable principles, or
other similar laws affecting the rights of creditors generally ("Equitable
Limitations"). At Closing, all documents and instruments required to be executed
and delivered by Seller shall be duly executed and delivered and shall
constitute legal, valid, enforceable, and binding obligations of Seller, except
as enforceability may be limited by Equitable Limitations.

            (e) Seller has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.

            (f) During the period of Seller's ownership of the Interests, Seller
has properly paid all ad valorem, property, production, severance, excise and
similar taxes and assessments based on or measured by the ownership of property
on the Interests that have become due and payable before the Closing Date.

            (g) No suit, action or other proceeding is pending or, to the best
of Seller's Knowledge, threatened before any court, arbitration panel or
governmental agency which relates to the Interests and which might result in a
material loss of Seller's title to any portion of the Interests, or a material
diminution of the value of any of the Interests, or that might materially hinder
or impede the operation of the Interests. No written or oral notice from any
governmental agency or any other person has been received by Seller: (i)
claiming any violation or repudiation of all or any part of the Interests or any
violation of any law or any environmental, conservation or other ordinance,
code, rule or regulation or (ii) requiring or calling attention to the need for
any work, repairs, construction, alterations, or installations on or in
connection with the Interests, with which Seller has not complied.

            (h) There is no investigation, proceeding, action, suit or other
legal proceeding pending, or to the Knowledge of Buyer, threatened to which
Seller or any affiliate of Seller is a party which seeks to prevent the
consummation by Seller of the transactions contemplated by this Agreement, or
which, individually or in the aggregate with other such actions, is reasonably
likely to materially impair Seller's ability to perform its obligations under
this Agreement.

            (i) Seller has not provided any information to Buyer with respect to
the Interests that Seller knows to be false or inaccurate. To the best of
Seller's Knowledge, all information furnished to Buyer by Seller with respect to
the Interests has been and will be true and accurate in all material respects.

            (j) The Interests are not subject to any agreement or arrangement
regarding the sale of the production of hydrocarbons from the Interests.

            (k) To the Knowledge of Seller, the Interests are not subject to (i)
any preferential right to purchase, (ii) any requirement that consent to
assignment be obtained, or (iii) any farm-out agreement.

                                      -3-
<PAGE>

            (l) To the Knowledge of Seller, all royalties, overriding royalties
and other leasehold burdens, if any, have been paid by Seller or other parties
and will have been paid by Seller or other parties up to the Closing Date and
Seller has no Knowledge of any claims, demands or causes of action asserted by
any owners of royalty, overriding royalty or other leasehold burdens affecting
the Interests.

            (m) There are no bankruptcy, reorganization or receivership
proceedings pending against, contemplated by, or, to the Knowledge of Seller,
threatened against Seller or any affiliate of Seller. Seller is not now
insolvent and will not be rendered insolvent by any of the transactions
contemplated by this Agreement. The term "insolvent" shall mean that the sum of
the debts and other probable liabilities of Seller exceeds the present saleable
value of the Seller's assets.

            (n) No representation or warranty by Seller in this Agreement or any
agreement or document delivered by Seller pursuant to this Agreement contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in any representation or warranty, in light of
the circumstances under which it was made, not misleading.

            (o) Seller has engaged the services of PLS, Inc. (the "Broker") as
its broker in the contemplated transaction. Seller acknowledges and agrees that
any commissions or compensations of any kind due to the broker, if any, shall be
the sole expense and obligation of Seller.

      3.2 Representations and Warranties of Buyer. Buyer represents and warrants
to Seller the following:

            (a) Buyer is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer is
duly qualified to carry on its business and in good standing in the State of
Indiana.

            (b) Buyer has all requisite power and authority to carry on its
business as presently conducted and has all requisite power and authority to
enter into this Agreement, and to purchase the Interests on the terms described
in this Agreement and perform its other obligations under this Agreement. Except
as provided in Schedule 3.2, the execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions contemplated by this
Agreement will not: (i) violate, conflict with, or require the consent of any
person or entity under any provision of Buyer's Certificate of Formation,
limited liability company agreement or other governing documents, (ii) conflict
with, result in a breach of, constitute a default (or an event that with the
lapse of time or notice or both would constitute a default) or require any
consent, authorization or approval under any agreement or instrument to which
Buyer is a party or (iii) violate any provision of or require any consent,
authorization or approval under any agreement, judgment, judicial or
administrative order, award, writ, injunction, statute, rule or regulation
applicable to Buyer.

            (c) The execution and delivery of this Agreement has been, and the
performance of this Agreement and the transactions contemplated by this
Agreement shall be at the time required to be performed, duly and validly
authorized by all requisite company action on the part of Buyer.

                                      -4-
<PAGE>

            (d) This Agreement has been duly executed and delivered on behalf of
Buyer and constitutes the legal and binding obligation of Buyer enforceable in
accordance with its terms, except as enforceability may be limited by Equitable
Limitations. At Closing, all documents and instruments required to be executed
and delivered by Buyer shall be duly executed and delivered and shall constitute
legal, valid, enforceable, and binding obligations of Buyer, except as
enforceability may be limited by Equitable Limitations.

            (e) Buyer has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Seller shall have any responsibility
whatsoever.

            (f) Buyer has sufficient funds, available lines of credit or other
sources of immediately available funds sufficient to enable the payment to
Seller, by wire transfer, of the Purchase Price at Closing and to otherwise
perform Buyer's obligations under this Agreement, the Exploration Agreement and
the Joint Operating Agreement executed contemporaneously herewith.

            (g) There are no bankruptcy, reorganization or receivership
proceedings pending against, contemplated by, or, to the Knowledge of Buyer,
threatened against Buyer or any affiliate of Buyer.

            (h) There is no investigation, proceeding, action, suit or other
legal proceeding pending, or to the Knowledge of Buyer, threatened to which
Buyer or any affiliate of Buyer is a party which seeks to prevent the
consummation by Buyer of the transactions contemplated by this Agreement, or
which, individually or in the aggregate with other such actions, is reasonably
likely to materially impair Buyer's ability to perform its obligations under
this Agreement.

            (i) No representation or warranty by Buyer in this Agreement or any
agreement or document delivered by Buyer pursuant to this Agreement contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in any representation or warranty, in light of
the circumstances under which it was made, not misleading.

                                    ARTICLE 4
                                     CLOSING

      4.1 Date of Closing. The purchase and sale of the Interests pursuant to
this Agreement (the "Closing") shall occur on the date of the due execution of
this Agreement by all Parties hereto (the "Closing Date").

      4.2 Closing Obligations. At the Closing, the following documents shall be
delivered and the following events shall occur, each being deemed to have
occurred simultaneously with the others:

            (a) Seller shall execute and deliver: (1) an Assignment and Bill of
Sale conveying the Interests to Buyer with covenants of special warranty of
title, and free and clear of all liens, security interests and other
encumbrances, other than the Permitted Encumbrances, in form and substance
reasonably satisfactory to Seller and Buyer (the "Assignment"), a copy of which
is attached hereto as Schedule 4.2(a); (2) such other instruments as may be
required to fully convey the Interests to Buyer and otherwise effectuate the

                                      -5-
<PAGE>

transactions contemplated by this Agreement, in form and substance reasonably
satisfactory to Seller and Buyer, (3) a certified copy of resolutions of the
Board of Directors of Seller authorizing the execution and delivery of this
Agreement and the delivery of all instruments or documents contemplated herein,
(4) certified copies of good standing certificates of the Seller, issued not
earlier than ten (10) days prior to the Closing Date, by the Secretary of State
of Delaware and the Secretary of State of Indiana, (5) an incumbency and
specimen signature certificate with respect to the officers of Seller executing
this Agreement and any instruments or documents contemplated hereby and (6) a
closing certificate duly executed by an authorized officer of Seller pursuant to
which Seller represents and warrants to Buyer that Seller's representations and
warranties to Buyer are true and correct in all material respects as of the
Closing Date as if then originally made, that all covenants required by the
terms of this Agreement to be performed by Seller on or before the Closing Date,
to the extent not waived by Buyer in writing, have been so performed, and that
all documents to be executed and delivered by Seller at Closing have been
executed by duly authorized officers of Seller.

            (b) Buyer shall execute and deliver: (1) a certified copy of
resolutions of the Manager of Buyer authorizing the execution and delivery of
this Agreement and the delivery of all instruments or documents contemplated
herein, (2) certified copies of good standing certificates of the Buyer, issued
not earlier than ten (10) days prior to the Closing Date, by the Secretary of
State of Delaware and by the Secretary of State of Indiana, (3) an incumbency
and specimen signature certificate with respect to the officers of Buyer
executing this Agreement and any instruments or documents contemplated hereby
and (4) a closing certificate duly executed by an authorized officer of Buyer
pursuant to which Buyer represents and warrants to Seller that Buyer's
representations and warranties to Seller are true and correct in all material
respects as of the Closing Date as if then originally made, that all covenants
required by the terms of this Agreement to be performed by Buyer on or before
the Closing Date, to the extent not waived by Seller in writing, have been so
performed, and that all documents to be executed and delivered by Buyer at
Closing have been executed by duly authorized officers of Buyer.

            (c) Buyer shall deliver to Seller or to Seller's account by wire
transfer the Purchase Price.

            (d) Buyer and Seller shall execute and deliver the Exploration
Agreement, a copy of which is attached hereto as Exhibit B, and the Joint
Operating Agreement, a copy of which is attached hereto as Exhibit C.

      4.3 Records. In addition to the obligations set forth under Section 4.2
above, Seller shall deliver within 10 business days of Closing to Buyer
originals of land files in its possession or to which it has access with respect
to the Interests. Seller shall be entitled to retain copies of all original
records affecting the Interests assigned to Buyer pursuant to the terms of this
Agreement.

                                    ARTICLE 5
                              POST-CLOSING MATTERS

      5.1 Further Assurances. After Closing, Seller and Buyer shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such

                                      -6-
<PAGE>

instruments and take such other action as may be necessary or advisable to carry
out their obligations under this Agreement and under any exhibit, document,
certificate or other instrument delivered pursuant hereto, and to fully transfer
the Interests to the Buyer.

                                    ARTICLE 6
                         INVESTIGATION AND TITLE MATTERS

      6.1 Investigation; Access to Title and Other Documents.

            (a) Prior to Closing, Buyer and each representative of Buyer were
given the right to conduct a review of the Interests. In connection with such
review, Buyer and each representative of Buyer were granted full access to the
records and documents concerning the Interests in the possession or under the
control of the Seller.

            (b) Seller has made available to Buyer and to its representatives
(such representatives to include employees, consultants, independent
contractors, attorneys and other advisors of Buyer) for Buyer's copying and/or
inspection (at Buyer's cost and expense), at Seller's offices such of the
following documents as are in Seller's possession or under its control (if any):

                        (i)         All abstracts of title, title opinions,
                                    title curative materials, ownership reports,
                                    bills of sale, other documents evidencing
                                    transfers of title, tax receipts, and
                                    licenses and registrations pertaining to the
                                    Interests.

                        (ii)        All of the lease records, lease files,
                                    leases, conveyances and assignments of
                                    interest in the Interests; contracts; orders
                                    of applicable regulatory authorities or
                                    administrative agencies; mortgages, deeds of
                                    trust, security agreements, and financing
                                    statements; and all other contracts,
                                    agreements and documents affecting the
                                    Interests.

                        (iii)       Instruments and documents concerning proper
                                    payment of all general and special
                                    assessments, ad valorem and property taxes,
                                    and similar taxes and assessments based on
                                    or measured by the ownership of the
                                    Interests for 2005 and years prior for which
                                    the applicable statute of limitations has
                                    not expired.

                        (iv)        All geological maps, geophysical surveys as
                                    to which Seller has the right to show Buyer
                                    and engineering studies, ownership maps,
                                    reserve reports, logs, core studies, and
                                    surveys relating to the Interests.

                        (v)         All bonds, leases, permits, easements,
                                    licenses, orders, saltwater disposal
                                    agreements, agreements with pumpers and
                                    other agreements in any way relating to the
                                    Interests or the operation thereof.

                        (vi)        All environmental reports, assessments and
                                    studies relating to any of the Interests.

                                      -7-
<PAGE>

            (c) Following the title investigation provided for in Section 6.1(a)
and (b) above, Buyer presented to Seller a schedule of Title Defects, and Buyer
and Seller have either cured or waived such Title Defects to the satisfaction of
Buyer, or have agreed on a reduction in the purchase price, which reduction, if
any, is reflected in the Purchase Price set forth in Article 2.1. Title Defects
(except for Title Defects created by, through, or under Seller) not presented to
Seller shall be deemed to be Permitted Encumbrances. A "Title Defect" shall mean
any lien, encumbrance or defect in title that would affect the value of the
Interests, or diminish the Buyer's use or enjoyment of the Interests.

      6.2 Seller's Special Warranty of Title; The Assignment.

            (a) Seller represents and warrants that Seller shall convey to Buyer
at Closing all of Seller's right, title and interest in and to the Interests,
free and clear of all liens, security interests and other encumbrances created
by, through or under Seller, but not otherwise, subject only to the Permitted
Encumbrances. Seller hereby represents and warrants to Buyer that it has done
nothing to encumber title to the Interests and warrants title as against all
persons claiming by, through or under Seller, but not otherwise, Seller further
agreeing that Buyer shall have the benefit of all prior warranties in the chain
of title to the Interests. The Assignment shall provide for a special warranty
of title consistent with this Section 6.2.

            (b) Seller will cooperate with Buyer in requesting approvals,
consents and waivers from governmental authorities or third parties having the
right to approve the assignment of any Interest covered hereby.

      6.3 Permitted Encumbrances. As used in this Agreement, the term "Permitted
Encumbrances" shall mean the following, provided that the same shall not operate
to reduce the net revenue interest or increase the gross working interest of an
Interest beyond that shown on Exhibit "A":

            (a) Lessors' royalties, non-participating royalties, overriding
royalties, division orders, reversionary interests, and similar burdens.

            (b) Liens for taxes or assessments not yet due or delinquent or, if
delinquent, that are being contested in good faith in the normal course of
business.

            (c) All rights to consent by, required notices to, filing with, or
other actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests therein, if the same are customarily obtained
subsequent to such sale or conveyance and neither Seller nor Buyer has reason to
believe they cannot be obtained.

            (d) Rights reserved to or vested in any governmental authority.

                                      -8-
<PAGE>

            (e) Easements, conditions, covenants, restrictions, servitudes,
permits, rights-of-way, surface leases and other rights in the Interests for the
purpose of surface operations, roads, alleys, highways, railways, pipelines,
transmission lines, transportation lines, distribution lines, power lines,
telephone lines, and removal of timber or coal, grazing, logging operations,
canals, ditches, reservoirs and other like purposes, or for the joint or common
use of real estate, rights-of-way, facilities and equipment which do not
materially impair the rights held by Seller or the use and enjoyment of the
Interests.

            (f) Defects, irregularities and deficiencies in title to any
rights-of-way, easements, surface lease or other rights which in the aggregate
do not materially impair the use of such right-of-way, easements, surface leases
or other rights for the purpose of which such rights will be held by Buyer.

            (g) Zoning, planning and environmental laws and ordinances and
municipal regulations.

            (h) Vendors, carriers, warehousemen, repairmen, mechanics, workmen,
materialmen, construction or other like liens arising by operation of law in the
ordinary course of business or incident to the construction or improvement of
any property in respect of obligations which are not yet due, or which are being
contested in good faith by appropriate proceedings by or on behalf of Seller,
and not reasonably likely to materially reduce the value of the Interests and
for which Seller and Buyer agree at Closing to provide proper credits or escrow
of funds for any liability that might arise after Closing.

      6.4 Waiver. Except for matters covered by the Special Warranty of Title
set forth in Section 6.2 or in the Assignment, and matters arising out of or
relating to Seller's breach of any representations or warranties in this
Agreement, upon Closing Buyer shall be deemed to have waived all Title Defects
or objections that relate to the Interests and shall have no right to seek
reimbursement or indemnification from Seller for such Title Defects or
objections.

                                    ARTICLE 7
                                 INDEMNIFICATION

      7.1 Definitions. The following terms contained in this Article 7 shall
have for purposes of this Agreement the meaning given to such terms as provided
below:

            (a) "Claims Period" shall mean the period beginning on the Closing
Date and ending twelve (12) months following the Closing Date.

            (b) "Losses" shall mean all losses, liabilities, deficiencies,
damages (including without limitation indirect or consequential damages),
encumbrances, fines, penalties, claims, costs and expenses (including, without
limitation all fines, penalties and other amounts paid pursuant to a judgment,
compromise or settlement), court costs and reasonable legal and accounting fees
and disbursements.

      7.2 Survival of Representations, Warranties, Covenants and Agreements.

                                      -9-
<PAGE>

            (a) All representations and warranties of Seller contained in this
Agreement shall survive the Closing Date for the duration of the Claims Period;
except that the representations and warranties in Section 6.2 (Title) shall
survive the Closing indefinitely. Any claim made by Buyer with respect to the
representations and warranties of Seller contained in this Agreement must be
initiated by Buyer during the Claims Period by written notice to Seller that is
received within the Claims Period, except that there shall be no time limit on
when claims may be initiated with respect to the representations and warranties
in Section 6.2 (Title). All of the representations and warranties of Seller
contained in this Agreement shall in no respect be limited or diminished by any
past or future inspection, investigation, examination or possession on the part
of Buyer or its Representatives. All covenants and agreements made by Seller
contained in this Agreement shall survive the Closing Date until fully performed
or discharged.

            (b) All representations and warranties of Buyer contained in this
Agreement shall survive the Closing Date for the duration of the Claims Period.
Any claim made by Seller with respect to the representations and warranties of
Buyer contained in this Agreement must be initiated during the Claims Period by
written notice to Buyer that is received within the Claims Period. All of the
representations and warranties of Buyer contained in this Agreement shall in no
respect be limited or diminished by any past or future inspection,
investigation, examination or possession on the part of Seller or its
Representatives. All covenants and agreements made by Buyer contained in this
Agreement shall survive the Closing Date until fully performed or discharged.

      7.3 Indemnification by Seller. Except as otherwise specifically provided
in this Agreement, Seller shall indemnify and hold harmless Buyer and its
subsidiaries, affiliates, and parents, and its and their employees,
representatives, officers, directors, attorneys and agents from and against:

            (a) any and all Losses suffered or incurred by any of them by reason
of any breached or untrue representation or warranty of Seller contained in this
Agreement, but only if a claim is initiated by Buyer by written notice to Seller
that is received within the Claims Period, unless the claim is attributable to a
breach by Seller of Section 6.2 (Title);

            (b) any and all Losses suffered or incurred by any of them by reason
of the non-fulfillment of any covenant or agreement by Seller contained in this
Agreement; and

            (c) any and all Losses suffered or incurred by any of them resulting
from, related to, on account of, and proximately caused by Seller during its
ownership, management or control of the Interests prior to the Closing Date.

      7.4 Indemnification by Buyer. Except as otherwise specifically provided in
this Agreement, Buyer shall indemnify and hold harmless Seller and its
subsidiaries, affiliates, and parents, and its and their employees,
representatives, officers, directors, attorneys and agents from and against:

                                      -10-
<PAGE>

            (a) any and all Losses suffered or incurred by any of them by reason
of any breached or untrue representation or warranty of Buyer contained in this
Agreement, but only if a claim is initiated by Seller by written notice to Buyer
that is received within the Claims Period; and

            (b) any and all Losses suffered or incurred by any of them by reason
of the non-fulfillment of any covenant or agreement by Buyer contained in this
Agreement.

      7.5 Notification and Defense of Claims or Actions.

            (a) As used in this Article 7, any party seeking indemnification
pursuant to this Article 7 is referred to as an "indemnified party" and any
party from whom indemnification is sought pursuant to this Article 7 is referred
to as an "indemnifying party." An indemnified party which proposes to assert the
right to be indemnified under this Article 7 shall submit a written demand for
indemnification within fifteen (15) business days of becoming aware of such
potential claim setting forth in summary form the facts as then known which form
the basis for the claim for indemnification; provided, however, that the failure
to give such notice will not affect such claim of indemnification except to the
extent of actual prejudice to the indemnifying party. With respect to claims
based on actions by third parties, an indemnified party shall, within fifteen
(15) business days after the receipt of notice of the commencement of any
Proceeding against it in respect of which a claim for indemnification is to be
made against an indemnifying party, notify the indemnifying party in writing of
the commencement of such Proceeding, enclosing a copy of all papers served;
provided, however, that the failure to so notify the indemnifying party of any
such Proceeding shall not relieve the indemnifying party from any liability
which it may have to the indemnified party, except to the extent that the
indemnifying party is prejudiced thereby. Thereafter, the indemnified party
shall deliver to the indemnifying party, within fifteen (15) days after receipt
by the indemnified party, copies of all further notices relating to such claim.

            (b) If an indemnified party gives notice to the indemnifying party
pursuant to Section 7.5(a) of the assertion of a third-party claim, the
indemnifying party shall be entitled to participate in the defense of such
third-party claim and, to the extent that it wishes, to assume the defense of
such third-party claim with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such third-party claim, the indemnifying party
shall not, so long as it diligently conducts such defense, be liable to the
indemnified party under this Article 7 for any fees of other counsel or any
other expenses with respect to the defense of such third-party claim, in each
case subsequently incurred by the indemnified party in connection with the
defense of such third-party claim, other than reasonable costs of investigation.
If the indemnifying party assumes the defense of a third-party claim, (i) such
assumption will conclusively establish for purposes of this Agreement that the
claims made in that third-party claim are within the scope of and subject to
indemnification, and (ii) no compromise or settlement of such third-party claims
may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of law or
governmental rule or regulation or any violation of the rights of any person or
entity; (B) the sole relief provided is monetary damages that are paid in full
by the indemnifying party; and (C) the indemnified party shall have no liability
with respect to any compromise or settlement of such third-party claims effected
without its consent. If notice is given to an indemnifying party of the

                                      -11-
<PAGE>

assertion of any third-party claim and the indemnifying party does not, within
ten (10) days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such third-party
claim, the indemnifying party will be bound by any determination made in such
third-party claim or any compromise or settlement effected by the indemnified
party. Any control of the defense of a third-party claim given to an
indemnifying party pursuant to this Section 7.5(b) shall, upon notice from the
indemnified party, be reversed and given back to the indemnified party if, at
any point during the course of such third-party claim the conditions necessary
to have been met to allow such indemnifying party to so control such defense are
no longer true whether because all unsatisfied claims increase in amount or
because any other factors arise.

            (c) In the event that any claim for indemnification is made with
respect to any third-party claim pursuant to this Article 7, (i) the party
assuming primary responsibility for the defense of such claim shall at all times
keep the other party reasonably informed as to the status of such claim and (ii)
the party not primarily responsible for the defense of such claim shall
cooperate fully with the other party in connection with such defense.

      7.6 Sole Remedy. The sole remedy of the Parties for any and all claims
against the other Party with respect to this Agreement shall be a claim for
indemnification under this Article 7 on the terms and subject to the conditions
of this Agreement, except for claims of willful or intentional misconduct or
fraud.

      7.7 General Liability Limitation. Notwithstanding anything contained in
this Agreement to the contrary, Seller shall not be required to indemnify or
otherwise compensate Buyer for aggregate Losses in excess of the Purchase Price;
provided, however, that such limitation of Seller's liability shall not apply to
claims resulting from Seller's gross negligence, willful misconduct or fraud.

                                    ARTICLE 8
                                  MISCELLANEOUS

      8.1 Fees and Taxes. Except as otherwise specifically provided, all fees,
costs and expense incurred by Buyer or Seller in negotiating this Agreement or
in consummating the transactions contemplated by this Agreement shall be paid by
the Party incurring the same, including, without limitation, legal and
accounting fees, costs and expenses. All required documentary, filing and
recording fees for the assignments, conveyance or other instruments required to
convey title to the Interests to Buyer shall be borne by Buyer. In addition, the
liability for any sales, use, transfer or similar tax associated with the sale
and/or transfer of the Interests shall be the liability of, and for the account
of, the Buyer.

      8.2 Notices. Unless otherwise provided in this Agreement, any agreement,
notice, request, instruction or other communication to be given hereunder by any
Party to the other shall be in writing and (i) delivered personally (such
delivered notice to be effective on the date it is delivered), (ii) mailed by
certified mail, postage prepaid (such mailed notice to be effective four (4)
days after the date it is mailed), (iii) deposited with a reputable overnight
courier service (such couriered notice to be effective one (1) day after the
date it is mailed), or (iv) sent by facsimile transmission (such facsimile
notice to be effective on the date that confirmation of such facsimile
transmission is received), with a confirmation sent by way of one of the above
methods, as follows:

                                      -12-
<PAGE>

                  If to Seller addressed to:

                  Source Rock Resources, Inc.
                  1301 McKinney
                  Suite 3175
                  Houston, Texas 77010
                  Attention:  Bill Boss
                  Telecopier: (713) 654-1501

                  If to Buyer, addressed to:

                  New Albany-Indiana, LLC
                  c/o Rex Energy Operating Corp.
                  1965 Waddle Road
                  State College, Pennsylvania 16803
                  Attention:  Benjamin W. Hulburt
                  Telecopier: (814) 278-7286

Any Party may designate in a writing to any other Party any other address or
telecopy number to which, and any other person to whom or which, a copy of any
such notice, request, instruction or other communication should be sent.

      8.3 Amendments. This Agreement may not be amended except by an instrument
in writing signed by Buyer and Seller.

      8.4 Preparation of Agreement. Both Seller and Buyer and their respective
counsel participated in the preparation of this Agreement. In the event of any
ambiguity in this Agreement, no presumption shall arise based on the identity of
the draftsman of this Agreement.

      8.5 Headings. The headings of the articles and sections of this Agreement
are for guidance and convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions of this Agreement.

      8.6 Counterparts; Facsimile Signature. This Agreement may be executed by
Buyer and Seller in any number of counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute but one and the
same instrument. Any Party may execute this Agreement by facsimile signature and
the other Party will be entitled to rely on such facsimile signature as evidence
that this Agreement has been duly executed by such Party. Any Party executing
this Agreement by facsimile signature will promptly forward to the other Party
an original signature page by overnight courier.

      8.7 References. References made in this Agreement, including use of a
pronoun, shall be deemed to include, where applicable, masculine, feminine,
singular or plural, individuals or corporations. As used in this Agreement,
"person" shall mean any natural person, corporation, partnership, trust, estate
or other entity.

                                      -13-
<PAGE>

      8.8 Governing Law. This Agreement and the transactions contemplated hereby
shall be construed in accordance with, and governed by, the laws of the State of
Indiana without giving effect to the conflicts of law rules thereof.

      8.9 Assignment. Neither this Agreement nor the rights and obligations
hereunder may be assigned or delegated by either Party without the prior written
consent of the other Party, which consent shall not be unreasonably withheld,
and any assignment or delegation made without such consent shall be void;
provided, however, Buyer shall have the right to assign this Agreement and to
delegate its obligations under this Agreement to any entity that (i) Buyer
controls, (ii) controls Buyer or (iii) is under common control with Buyer,
subject to the assumption of all obligations by any such entity. In the event of
any assignment, this Agreement shall be binding upon said party the same as if
it had been the original party hereto. Subject to the foregoing, the terms and
conditions of this Agreement shall be binding on the Parties' successors and
assigns.

      8.10 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding between the Parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and prior
agreements and understanding relating to such subject matter.

      8.11 Parties in Interest. This Agreement shall be binding upon, and shall
inure to the benefit of, the Parties and their respective successors and
assigns.

      8.12 Further Cooperation. After the Closing, Buyer and Seller shall
execute and deliver, or shall caused to be executed and delivered from time to
time, such further instruments of conveyance and transfer and shall take such
other action as any Party may reasonably request to convey and deliver the
Interests to Buyer, to accomplish the orderly transfer of the Interests to
Buyer, or to otherwise effectuate the transactions contemplated by this
Agreement. If either Party hereto receives monies belonging to the other, such
amount shall immediately be paid over to the proper Party. If an invoice or
other evidence of an obligation is received by a Party, which is partially an
obligation of both Seller and Buyer, then the Parties shall consult with each
other and each shall promptly pay its portion of such obligation to the obligee.

      8.13 Waiver. No failure of any Party to this Agreement to require, and no
delay by any Party to this Agreement in requiring, any other Party to comply
with any provision of this Agreement shall constitute a waiver of the right to
require such compliance. No failure of any Party to this Agreement to exercise,
and no delay by any Party to this Agreement in exercising, any right or remedy
under this Agreement shall constitute a waiver of such right or remedy. No
waiver by any Party to this Agreement of any right or remedy under this
Agreement shall be effective unless made in writing. Any waiver by any Party to
this Agreement of any right or remedy under this Agreement shall be limited to
the specific instance and shall not constitute a waiver of such right or remedy
in the future.

      8.14 Press Release. Neither Party shall make any press release or other
announcement in connection with the execution of this Agreement without the
express written consent of the other Party. Neither Party shall make any press
release or other announcement in connection with the Closing of this Agreement
without first consulting with the other Party. Following such consultation and

                                      -14-
<PAGE>

good faith attempt to make reasonable accommodations, either Party may make any
announcement or press release regarding the Closing that it believes is either
required by applicable law or is advisable in connection with such Party's
interest (or the interest of Baseline Oil & Gas Corp., a member of Buyer) in
providing public disclosure regarding its activities. This provision shall not
apply to any filing with any governmental body or any stock exchange required by
law, rule or regulation.

      8.15 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement or any other such instrument.

      8.16 Knowledge. For purposes of this Agreement, "knowledge", "information"
or "belief" shall mean (except as otherwise provided in this sentence) the
actual knowledge, information or belief, as appropriate to the context of the
statement in which the term is used, of any principal shareholder or of any
officer or director of the relevant Party, or the knowledge, information or
belief which such individual would have after (a) having made a review of
documents of a date not more than three (3) years old in files under their
immediate personal control and (b) having made reasonable inquiry of those
executive, management or supervisory employees under their direct supervision,
with respect to the matters which are relevant to the representation, warranty,
covenant or agreement being made or given.

                                    ARTICLE 9
                                   ARBITRATION

      9.1 Selection of Arbitrators. Any controversy between the Parties hereto
arising under this Agreement, and not resolved by negotiation and agreement,
shall be determined by a board of arbitration upon notice of submission given by
either Party to the other, which notice shall name a qualified, independent
arbitrator. Within ten (10) days after the receipt of such notice, the other
Party shall name a qualified, independent arbitrator, or failing to do so, the
Party giving notice shall name the second. The two arbitrators so appointed
shall name the third qualified, independent arbitrator. Any board of arbitration
called pursuant to this section shall take place in Houston, Texas.

      9.2 Determination. The arbitrators selected to act hereunder shall be
qualified by education and experience to pass on the particular question in
dispute. The arbitrators shall promptly hear and determine (after due notice of
hearing and giving the parties a reasonable opportunity to be heard) the
questions submitted, and shall render their decision within sixty (60) days
after appointment of the third arbitrator. If within said period a decision is
not rendered by the board, or majority thereof, new arbitrators may be named and
shall act hereunder at the election of either Buyer or Seller in like manner as
if none had been previously named.

      9.3 Decision Binding. The decision of the arbitrators, or the majority
thereof, made in writing shall be final and binding upon the Parties hereto as

                                      -15-
<PAGE>

to the questions submitted, and Buyer and Seller will abide by and comply with
such decision. The prevailing Party shall be entitled to recoup all of the
expenses of arbitration, including reasonable compensation to the arbitrators,
expenses of counsel, witnesses, and employees.

        [Remainder of page intentionally left blank. Signatures follow.]

                                      -16-
<PAGE>

      IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.

                                            SELLER:

                                            SOURCE ROCK RESOURCES, INC.

                                            By:    /s/ Michael B. Smith
                                                   -----------------------------
                                            Name:  Michael B. Smith
                                            Title: President

                                            BUYER:

                                            NEW ALBANY-INDIANA, LLC
                                            By: REX ENERGY WABASH, LLC,
                                                Its Manager

                                            By:    /s/ Benjamin W. Hulburt
                                                   -----------------------------
                                            Name:  Benjamin W. Hulburt
                                            Title: President

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