Document:

Exhibit
10.2

 

11/9/04

 

AMENDED AND
RESTATED 

ADMINISTRATIVE SERVICES AGREEMENT

 

This
Amended and Restated Administrative Services Agreement (“Agreement”) is entered
into effective as of July 1, 2004, by and between 4R Oil and Gas, LLC, a
Texas limited liability company (“4R”), with its principal office at 10375
Richmond, Suite 2100, Houston, Texas 77042, Rock Energy Partners LP, a
Delaware limited partnership (“Trading”), and Rock Energy Partners Operating LP
(“Operating”) (Trading and Operating are collectively referred to as the “Partnerships”).

 

WITNESSETH:

 

WHEREAS, effective as of April 16,
2004, 4R and Rocky V. Emery formed the Partnerships, and in connection
therewith adopted those certain Agreements of Limited Partnership (the “Partnership
Agreements”), for the purpose of owning and investing in other Persons;
purchasing and owning property; exploring for oil, gas and related hydrocarbons
and minerals; owning, managing, selling, exploiting, marketing and operating
oil, gas, hydrocarbon and mineral containing or producing properties and for
such other purposes as are permitted by the Partnership Agreement; and

 

WHEREAS, 4R is the
General Partner of the Partnerships and has been granted with the authority to
manage the business and affairs of the Partnerships as set forth in the
Partnership Agreements; and

 

WHEREAS,
in addition to its duties and responsibilities as the General Partner of the
Partnerships, the Partnerships desire to obtain from 4R and 4R desires to
provide to the Partnerships, certain administrative support services upon the
terms and conditions set forth herein; and

 

WHEREAS,
4R and the Partnerships entered into that certain Administrative Services
Agreement effective as of April 16, 2004 (the “Original Agreement”) and
the same parties now agree to amend and restate the terms of the Original
Agreement;

 

NOW,
THEREFORE, for and in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, the parties hereto, subject to
the terms and conditions hereinafter set forth, hereby agree as follows:

 

1. Defined Terms.
Defined terms used herein but not defined shall have the meaning defined in the
Partnership Agreements.

 

2. Performance
of Services. 4R shall provide the Services, as defined in Section 3
hereof, for the Partnerships. 4R shall provide the Services in the manner set
forth herein in a timely manner and in a quality fashion.

 

3. Services. The term
“Services” as used herein shall mean routine accounting, legal, bookkeeping and
other administrative services and reports arising in the Partnerships’ ordinary
course of business and necessary in the conduct of its business operations,
including without limitation, payment of office space rent, office management
services, secretarial and administrative, mailing, filing, computer data
processing, fax and long-distance communications, human resources, information
technology, management of various oil and gas contracts and

 

 

clerical and administrative services, and as otherwise may be
reasonably requested by Partnerships and agreed to by 4R. “Services” hereunder
shall not include (A) litigation, audit or tax related support services, (B) the
preparation of any filings on behalf of the Partnerships with respect to any
governmental agencies, (C) any other services to be performed by or at the
direction of the General Partner on behalf of the Partnerships pursuant to the
Partnership Agreements other than as contemplated herein, or (D) services
necessary for the Partnerships to comply with any applicable laws, rules or
Partnership Agreements or with any contractual obligations.

 

4. Administrative
Services Fee. In consideration of the satisfactory performance of the
Services on the part of 4R, the Partnerships shall pay 4R, commencing July 1,
2004 and for each month thereafter throughout the existence of the
Partnerships, the Administrative Services Fee. The “Administrative Services Fee”
shall be equal to $150,000 per month and shall be adjusted annually each January 1
thereafter (beginning January 1, 2005) based upon the change in the
Producer’s Price Index as published by the Department of Labor, Bureau of Labor
Statistics, or if such Index is replaced or discontinued, any successor index
published by such governmental agency; provided however, all parties hereto approve
any costs for Services in an amount up to 110% of the Administrative Services
Fee. The Administrative Services Fee shall be paid on the first business day
following each completed month for the Services performed during the prior
month. Payment shall be made in cash via wire transfer or check payable to 4R.
The Administrative Services Fee is payable only out of the assets of the
Partnerships and neither the General Partner nor any limited partner of the
Partnerships shall be liable therefor. 4R shall not be required to submit any
invoices to receive payment of the Administrative Services Fee. The amount of
the Administrative Services Fee may also be amended from time to time via written
agreement executed by 4R and Partnerships.

 

5. Term of Agreement: Proration of Fee.
This Agreement shall continue in force until the dissolution of the
Partnerships. The Agreement shall be binding on the Partnerships, its
successors and assigns. The Administrative Services Fee shall be prorated for
any partial month based on the number of days in such month that 4R provided
Services.

 

6. Assignment. 4R may assign to any of
its Affiliates, in whole or in part, any of the rights, obligations or benefits
of this Agreement without the prior written consent of the Partnerships. The
Partnerships may assign this Agreement to any successor in interest of the
Partnerships without the prior written consent of 4R. Otherwise neither party
shall assign, in whole or in part, any of the rights, obligations or benefits
of this Agreement without the prior written consent of the other party.

 

7. Indemnification; No
Consequential Damages. 4R, its officers, manager, members, directors,
agents, employees and Affiliates shall not be liable to the Partnerships, the
General Partner, or Limited Partners for claims demands, damages, losses,
liabilities, costs or expenses (including, without limitation, reasonable
attorneys’ fees and other costs and expenses incident to any suit, proceeding
or investigation of any claim) arising out of the rendering of the Services by
4R hereunder except that 4R shall be liable for willful misconduct in the
rendering of the Services. 4R shall be indemnified by and reimbursed by the
Partnership to the same extent as the Partnerships are obligated to indemnify
and reimburse the General Partner pursuant to the Partnership Agreements. Under
no circumstances shall 4R be liable for any consequential,

 

 

speculative, indirect, special, exemplary or punitive damages, or for
lost profits or lost business revenues.

 

8. Governing Law.
This Agreement shall be construed in accordance with, and all disputes
hereunder shall be governed by, the laws of the State of Texas without regard
to the conflict of laws provisions thereof. Venue shall lie for any and all
purposes with the federal and states courts located in Houston, Harris County,
Texas.

 

9. Notices. Any and all notices or
demands permitted or required to be given under this Agreement shall be in
writing and shall be validly given or made if (a) personally delivered, (b) delivered
and confirmed by facsimile or like instantaneous transmission service, or by
Federal Express or other overnight courier delivery service, which shall be
effective as of confirmation of the successful transmission of the facsimile or
like instantaneous transmission or confirmation of delivery by the courier at
the address for notice hereinafter stated or (c) deposited in the United
States mail, first class, postage prepaid, certified or registered, return
receipt requested, addressed as follows:

 

	
  4R:

  	
   

  	
  4R Oil and Gas,
  LLC

  
	
   

  	
   

  	
  103 75 Richmond,
  Suite 2100

  
	
   

  	
   

  	
  Houston, Texas
  77042

  
	
   

  	
   

  	
  Attention:
  Manager

  
	
   

  	
   

  	
   

  
	
  Partnerships:

  	
   

  	
  Rock Energy
  Partners LP and Rock Energy Partners Operating LP

  
	
   

  	
   

  	
  10375 Richmond,
  Suite 2100

  
	
   

  	
   

  	
  Houston, Texas
  77042

  
	
   

  	
   

  	
  Attention:
  General Partner

  

 

Notice which is mailed in the manner specified shall be conclusively
deemed given three (3) days after the date postmarked or upon receipt,
whichever is sooner. Any party may change its address or facsimile number for
purposes of this paragraph by giving the other party hereto written notice of
the new address or facsimile number in the manner set forth above.

 

10. Amendment. No modification or
amendment of this Agreement shall be binding upon any party unless in writing
and signed by the party against which the modification or amendment is
asserted.

 

11. Entire Agreement.
This Agreement constitutes the entire understanding between the parties with
respect to the subject matter hereof, superseding all negotiations, prior
discussions and preliminary agreements, if any. The Original Agreement is
hereby amended and superseded in its entirety by this Agreement.

 

12. Arbitration. THE PARTIES TO THIS
AGREEMENT AGREE THAT ANY DISPUTE, CONTROVERSY OR CLAIM THAT MAY ARISE
BETWEEN OR AMONG 4R (ON THE ONE HAND) AND THE PARTNERSHIPS (ON THE OTHER HAND)
IN CONNECTION WITH OR OTHERWISE RELATING TO THIS AGREEMENT OR ANY PROVISION OF
THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, CLAIMS BASED ON CONTRACT, TORT
OR STATUTE), SHALL BE FINALLY, CONCLUSIVELY AND EXCLUSIVELY SETTLED BY BINDING
ARBITRATION IN HOUSTON, TEXAS IN

 

 

ACCORDANCE WITH THE RULES
OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES (THE
“RULES”) OF JUDICIAL ARBITRATION & MEDIATION SERVICES, INC. OR ANY
SUCCESSOR THERETO (“JAMS”) THEN IN EFFECT. THE PARTIES TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING WITHOUT
LIMITATION, THE RIGHT TO TRIAL BY JURY, WITH RESPECT TO ANY MATTER SUBJECT TO
ARBITRATION PURSUANT TO THIS SECTION 12. ANY PARTY TO THIS AGREEMENT MAY BRING
AN ACTION, INCLUDING, WITHOUT LIMITATION, A SUMMARY OR EXPEDITED PROCEEDING, IN
ANY COURT HAVING JURISDICTION, TO COMPEL ARBITRATION OF ANY DISPUTE,
CONTROVERSY OR CLAIM TO WHICH THIS SECTION 12 APPLIES. EXCEPT WITH RESPECT TO
THE FOLLOWING PROVISIONS (THE “SPECIAL PROVISIONS”) WHICH SHALL APPLY WITH
RESPECT TO ANY ARBITRATION PURSUANT TO THIS SECTION 12, THE INITIATION AND
CONDUCT OF ARBITRATION SHALL BE AS SET FORTH IN THE RULES, WHICH RULES ARE
INCORPORATED IN THIS AGREEMENT BY REFERENCE WITH THE SAME EFFECT AS IF THEY
WERE SET FORTH IN THIS AGREEMENT:

 

(a) In the event of any
inconsistency between the Rules and the Special Provisions, the Special
Provisions shall control. References in the Rules to a sole arbitrator
shall be deemed to refer to the tribunal of arbitrators provided for under
subparagraph (c) below in this Section 12.

 

(b) The arbitration shall be
administered by JAMS. If JAMS is unable or legally precluded form administering
the arbitration, then the American Arbitration Association or any successor
thereto shall serve and the Rules shall be deemed to be the Commercial
Arbitration Rules of the American Arbitration Association then in effect,
but giving effect to the Special Provisions set forth in this Section 12.

 

(c) The arbitration shall be conducted
by a tribunal of three arbitrators. Within ten days after arbitration is
initiated pursuant to the Rules, the initiating party or parties (the “Claimant”)
shall send written notice to the other party or parties (the “Respondent”),
with a copy to the Houston office of JAMS, designating the first arbitrator
(who shall not be a representative or an Affiliate of any party but may or may
not be a JAMS panel member and, in any case, shall be reasonably believed by
the Claimant to possess the requisite experience, education and expertise in
respect of the matters to which the claim relates to enable such Person to
competently perform arbitral duties). Within ten days after receipt of such
notice, the Respondent shall send written notice to the Claimant, with a copy
to the Houston office of JAMS and to the first arbitrator, designating the
second arbitrator (who shall not be a representative or an Affiliate of any
party but may or may not be a JAMS panel member and, in any case, shall be
reasonably believed by the Respondent to possess the requisite experience,
education and expertise in respect of the matters to which the claim relates to
enable such Person to competently perform arbitral duties). Within ten days
after such notice from the Respondent is received by the Claimant, the
Respondent and the Claimant shall cause their respective designated arbitrators
to select any mutually agreeable JAMS panel member as the third arbitrator. If
the respective designated arbitrators of the Respondent and the Claimant cannot
so agree within said ten day period, then the third arbitrator will be
determined pursuant to the Rules. For purposes of this Section 12, 4R (on
the one

 

 

hand) and the Partnerships (on the other hand) shall
each be entitled to the selection of one (1) arbitrator. Prior to
commencement of the arbitration proceeding each arbitrator shall have provided
the parties with a resume outlining such arbitrator’s background and
qualifications and shall certify that such arbitrator is not a representative
or Affiliate of any of the parties. If any arbitrator shall die, fail to act,
resign, become disqualified or otherwise cease to act, then the arbitration
proceeding shall be delayed for fifteen days and the party by or on behalf of whom
such arbitrator was appointed shall be entitled to appoint a substitute
arbitrator (meeting the qualifications set forth in this Section 12)
within such fifteen day period; provided,
however, that if the party by or on behalf of whom such arbitrator was
appointed shall fail to appoint a substitute arbitrator within such fifteen day
period, the substitute arbitrator shall be a neutral arbitrator appointed by
the JAMS arbitrator within fifteen days thereafter.

 

(d) All arbitration hearings shall be
commenced within ninety days after arbitration is initiated pursuant to the
Rules, unless, upon a showing of good cause by a party to the arbitration, the
tribunal of arbitrators permits the extension of the commencement of such
hearing, provided, however, that
any such extension shall not be longer than sixty days.

 

(e) All claims
presented for arbitration shall be particularly identified and the parties to
the arbitration shall each prepare a statement of their position with
recommended courses of action. These statements of position and recommended
courses of action shall be submitted to the tribunal of arbitrators chosen as
provided hereinabove for binding decision. The tribunal of arbitrators shall
not be empowered to make decisions beyond the scope of the position papers.

 

(f) The arbitration proceeding will be
governed by the substantive laws of the State of Texas and will be conducted in
accordance with such procedures as shall be fixed for such purpose by the
tribunal of arbitrators, except that (i) discovery in connection with any
arbitration proceeding shall be conducted in accordance with the Federal Rules of
Civil Procedure and applicable case law, (ii) the tribunal of arbitrators
shall have the power to compel discovery and (iii) unless the parties otherwise
agree and except as may be provided in this Section 12, the arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, to
the exclusion of any provision of state law or other applicable law or
procedure inconsistent therewith or which would product a different result. The
parties shall preserve their right to assert and to avail themselves of the
attorney-client and attorney-work-product privileges, and any, other privileges
to which they may be entitled pursuant to applicable law. No party to the
arbitration or any arbitrator may compel or require mediation and/or settlement
conferences without the prior written consent of all such parties and the
tribunal of arbitrators.

 

(g) The tribunal of
arbitrators shall make an arbitration award as soon as possible after the later
of the close of evidence or the submission of final briefs, and in all cases
the award shall be made not later than thirty days following submission of the
matter. The finding and decision of a majority of the arbitrators shall be
final and shall be binding upon the parties. Judgment upon the arbitration
award or decision may be entered in any court having jurisdiction thereof or
application may be made to any such court for a judicial acceptance of the award
and an order of enforcement, as the case may

 

 

be. The tribunal of arbitrators shall have the
authority to assess liability for pre-award and post-award interest on the
claims, attorneys’ fees, expert witness fees and all other expenses of
arbitration as such arbitrators shall deem appropriate based on the outcome of
the claims arbitrated. Unless otherwise agreed by the parties to the
arbitration in writing, the arbitration award shall include findings of fact
and conclusions of law.

 

(h) Nothing in this Section 12
shall be deemed to (i) limit the applicability of any otherwise applicable
statute of limitations or repose or any waivers contained in this Agreement or (ii) constitute
a waiver by any party hereto of the protections afforded by 12 U.S.C. § 91 or
any successor statute thereto or any substantially equivalent state law.

 

(i) Notwithstanding any
provision in this Section 12 to the contrary, this Section 12 shall
not be construed to require arbitration of a claim or dispute brought by any
Person, including, without limitation, any Limited Partner (whether in his own
right or through a derivative action in the right of the Partnership), who is
not a party to this Agreement.

 

[The
remainder of this page is intentionally left blank. The signature page follows.]

 

 

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

	
   

  	
   

  	
  4R Oil and Gas, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rocky Emery

  	
   

  
	
   

  	
   

  	
  Rocky Emery Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ROCK ENERGY PARTNERS LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  4R
  Oil and Gas, LLC, its sole-general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Rocky Emery 

  	
   

  
	
   

  	
   

  	
   

  	
  Rocky
  Emery Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ROCK
  ENERGY PARTNERS OPERATING LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  4R Oil and Gas, LLC, its sole-general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Rocky Emery

  	
   

  
	
   

  	
   

  	
   

  	
  Rocky Emery, ManagerExhibit 10.3

 

BASE

AGREEMENT

 

This Base Agreement dated as of December 1, 2007 is between Rock
Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia
Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC.

 

ARTICLE I

 

Definitions

 

The following terms, as used in this Agreement, shall have the meanings
indicated below unless the context otherwise requires:

 

1.1.         “APO Working
Interest” shall mean the Working Interest after payout is achieved in
accordance with the Payout Computation Procedures.

 

1.2.         “Agreement”
shall mean this agreement, all exhibits and schedules attached hereto and
referenced herein and any and all properly executed amendments hereto that
expressly provide that they are to supplement, amend or revise this agreement.

 

1.3.         “AMI”
shall mean the area of mutual interest
described in Section 11.1.

 

1.4.         “Approved
Development Operations” shall mean the operations (i) actually funded
by the Carry Obligation, and (ii) that are described in Exhibit A as
same may in the future be amended by SMP based on operational results.  SMP may amend Exhibit A provided that
SMP’s estimate of the cost of all substituted operations does not exceed by one
hundred fifteen percent (115%) SMP’s estimate of the cost of all replaced
operations.

 

1.5.         “BPO Working
Interest” shall mean the Working Interest before payout is achieved in
accordance with the Payout Computation Procedures.

 

1.6.         “Carry
Obligation” shall mean the obligation of REP to pay one hundred percent
(100%) of the costs and expenses attributable to one hundred percent (100%) of
the Working Interest in the Orcutt Leases and the NW Casmalia Leases with
respect to (i) Approved Development Operations pursuant to this Agreement
and the Development Agreement, and (ii) any additional operations on the
Orcutt Leases and NW Casmalia Leases after performance of the Approved
Development Operations in the event that the actual ultimate cost of the
Approved Development Operations is less than $10,220,000.

 

1.7.         “Carry
Obligation Beneficiaries” shall mean all Working Interest owners of the
Orcutt Leases and NW Casmalia Leases and their respective assignees other than
REP or its assignees.

 

 

1.8.         “Closing”
shall mean the occurrence of the events necessary to consummate a sale by
Seller to Purchaser pursuant to one or more of the Transaction Documents.

 

1.9.         “Closing
Date” shall mean the date as of which a Closing actually takes place
pursuant to one or more of the Transaction Documents.

 

1.10.       “Confidentiality
Agreement” shall mean the agreement between REP and SMP dated November 21,
2005.

 

1.11.       “Development
Committee” shall mean the committee
provided for in Section 7.2.

 

1.12.       “Development
Agreement” shall mean an agreement in the form of Exhibit B attached
hereto.

 

1.13.       “Direct
Cost” shall have the meaning ascribed to that term by COPAS under the
applicable Operating Agreement at the time in question.

 

1.14.       “Effective
Date” (i) with respect to the purchase and sale of the Initial Orcutt
Interests shall mean 7:00 a.m. Pacific Time, December 1, 2007, (ii) with
respect to the purchase and sale of the Second Orcutt Interests shall mean 7:00 a.m.
Pacific Time, December 1, 2007, and (iii) with respect to any
conveyance pursuant to the Development Agreement or Purchase Option Agreement
shall be 7:00 a.m. Pacific Time on the dates specified therein.

 

1.15.       “Excluded
Properties” shall mean the following, each of which are expressly excepted
and excluded from the Purchased Property, and reserved to each Seller:

 

(i)            All rights and choses in
action, arising, occurring or existing in favor of such Seller prior to the
Effective Date or arising out of the operation of or production from the
Purchased Property prior to the Effective Date (including, but not limited to,
any and all contract rights, claims, receivables, revenues, recoupment rights,
recovery rights, accounting adjustments, mis-payments, erroneous payments or
other claims of any nature in favor of Seller and relating and accruing to any
time period prior to the Effective Date);

 

(ii)           All corporate, partnership,
financial, tax and legal (other than copies of title) records of Seller;

 

(iii)          All contracts of insurance
or indemnity as to the Purchased Property relating to periods prior to the
Effective Date;

 

(iv)          All hydrocarbon production
from or attributable to the Purchased Property with respect to all periods
prior to the Effective Date, and all proceeds attributable thereto;

 

(v)           Any refund of costs, taxes
or expenses borne by Seller attributable to 

 

2

 

the
period prior to the Effective Date;

 

(vi)          All files, geological,
geophysical and seismic data, documents, reports, analyses and records;

 

(vii)         All deposits, cash, checks,
funds, accounts payable and accounts receivable or receivables attributable to
such Seller’s interests in the Purchased Property with respect to any period of
time prior to the Effective Date;

 

(viii)        All computer or
communications software or intellectual property (including tapes, data and
program documentation and all tangible manifestations and technical information
relating thereto) licensed to Seller; and

 

(ix)          The Shell Lease.

 

1.16.       “GTL”
shall mean Gitte-Ten, LLC.

 

1.17.       “GTL
Adjustment ORRI” shall mean a .037478% of 100% overriding royalty interest
in the Orcutt GTL Leases (other than the Shell Lease) proportionately reduced
to the Orcutt GTL Purchased Interest.

 

1.18.       “Initial
Orcutt GTL Interest” shall mean (i) a 1.65893% BPO Working Interest
and a 1.49304% APO Working Interest in the Orcutt GTL Leases, excluding the
Shell Lease, and (ii) a 1.496% BPO Working Interest and a 1.346% APO
Working Interest in the Orcutt GTL Property Rights.  The parties have intentionally excluded the
Shell Lease.  The Initial Orcutt GTL
Interest shall be subject to and burdened by the GTL Adjustment ORRI.

 

1.19.       “Initial
Orcutt Interests” shall mean the Initial Orcutt PEL Interest, Initial
Orcutt GTL Interest and the Initial Orcutt OPL Interest.

 

1.20.       “Initial
Orcutt OPL Interest” shall mean (i) a 1.496% BPO Working Interest and
a 1.346% APO Working Interest in the Orcutt OPL Leases, and (ii) a 1.496%
BPO Working Interest and a 1.346% APO Working Interest in the Orcutt OPL
Property Rights.

 

1.21.       “Initial
Orcutt PEL Interest” shall mean (i) a 1.496% BPO Working Interest and
a 1.346% APO Working Interest in the Orcutt PEL Leases, and (ii) a 1.496%
BPO Working Interest and a 1.346% APO Working Interest in the Orcutt PEL
Property Rights.

 

1.22.       “Lands”
means the lands covered by the Leases or included in Units with which the
Leases may have been pooled or unitized.

 

1.23.       “Leases”
means the NW Casmalia Leases and the Orcutt Leases.

 

1.24.       “Net
Revenue Interest” shall mean the fractional interest in hydrocarbons
produced from or allocated to a Well, Unit, or Lease that a working interest
owner is entitled 

 

3

 

to receive, after deduction of all royalties,
overriding royalties, production payments, carried interests, reversionary
interests, and other burdens upon and payments out of production that burden
the interest.

 

1.25.       “NW
Casmalia Leases” shall mean the oil and gas leases described in Exhibit C
attached hereto.

 

1.26.       “NW
Casmalia Operating Agreement” shall mean an agreement in the form of Exhibit D
designating SMP as operator.

 

1.27.       “NW
Casmalia Property” shall mean the NW Casmalia Leases and the NW Casmalia
Property Rights with respect to the NW Casmalia Leases.

 

1.28.       “NW
Casmalia Property Rights” shall mean the Subject Property Rights with
respect to the NW Casmalia Lease.

 

1.29.       “NWCP”
shall mean NW Casmalia Properties, LLC.

 

1.30.       “OPL”
shall mean Orcutt Properties, LLC.

 

1.31.       “Operating
Agreements” shall mean the Orcutt Diatomite Operating Agreement, the Orcutt
Non-Diatomite Operating Agreements and the NW Casmalia Operating Agreement.

 

1.32.       “Orcutt
Diatomite Operating Agreement” shall mean an agreement in the form of Exhibit E
designating SMP as operator of the Orcutt OPL Leases.

 

1.33.       “Orcutt
GTL Leases” shall mean the oil and gas leases described in Exhibit F
attached hereto.

 

1.34.       “Orcutt
GTL Property” shall mean the Orcutt GTL Leases (excluding the Shell Lease)
and the Orcutt GTL Property Rights.

 

1.35.       “Orcutt
GTL Property Rights” shall mean the Subject Property Rights with respect to
the Orcutt GTL Leases.

 

1.36.       “Orcutt
GTL Purchased Interest” shall mean collectively the (i) Initial Orcutt
GTL Interest and the Second Orcutt GTL Interest, and (ii) any additional
interest in the Orcutt GTL Property acquired by REP from the SMP Parties
pursuant to the Transaction Documents.

 

1.37.       “Orcutt
Leases” shall mean the Orcutt GTL Leases, the Orcutt PEL Leases and the
Orcutt OPL Leases.

 

1.38.       “Orcutt
Non-Diatomite Operating Agreements” shall mean agreements in the form of Exhibit G
designating PEL as operator of the Orcutt PEL Leases and Exhibit H 

 

4

 

designating GTL as operator of the Orcutt GTL
Leases.  It is understood that PEL and
GTL may after the Closings on the Initial Orcutt Interests and the Second
Orcutt Interests (i) consolidate operations into PEL, (ii) transfer
operations to SMP, or (iii) do one of the above and the other
subsequently.  REP consents to both the
consolidation of operations into PEL and/or the substitution of SMP as
operator.

 

1.39.       “Orcutt
OPL Leases” shall mean the oil and gas leases described in Exhibit I
attached hereto.

 

1.40.       “Orcutt
OPL Property” shall mean the Orcutt OPL Leases and the Orcutt OPL Property
Rights.

 

1.41.       “Orcutt
OPL Property Rights” shall mean the Subject Property Rights with respect to
the Orcutt OPL Leases.

 

1.42.       “Orcutt
PEL Leases” shall mean the oil and gas leases described in Exhibit J
attached hereto.

 

1.43.       “Orcutt
PEL Property” shall mean the Orcutt PEL Leases and the Orcutt PEL Property
Rights.

 

1.44.       “Orcutt
PEL Property Rights” shall mean the Subject Property Rights with respect to
the Orcutt PEL Leases.

 

1.45.       “Orcutt
Property” shall mean the Orcutt GTL Property, the Orcutt PEL Property and
the Orcutt OPL Property.

 

1.46.       “Pacific
Time” shall mean either Pacific Standard Time or Pacific Daylight Savings
Time depending on which time is in effect on the date in question.

 

1.47.       “Payout
Computation Procedures” shall mean the procedures set forth in Exhibit K.

 

1.48.       “PEL”
shall mean Phoenix Energy, LLC.

 

1.49.       “Permitted
Encumbrance” shall mean:

 

(i)            All assignments
to REP subsequent to the assignments of the Initial Orcutt GTL Interest,
Initial Orcutt OPL Interest and Initial Orcutt PEL Interest shall be subject to
and encumbered by the Sector Mortgage Indebtedness;

 

(ii)           All agreements,
instruments, documents, liens, encumbrances,
and other matters, and the terms and provisions thereof, described or referred
to in Exhibit L hereto, but limited in all respects to the
Purchased Property to which each applies;

 

5

 

(iii)          Any materialman’s,
mechanics’, repairman’s, employees’, contractors’, operators’, or other similar
liens, security interests or charges for liquidated amounts arising in the
ordinary course of business incidental to construction, maintenance,
development, production or operation of the Purchased Property, or the
production or processing of hydrocarbons therefrom, that are not delinquent at
the particular time in question or, if delinquent, are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established by Seller;

 

(iv)          Production sales contracts;
division orders; contracts for sale, purchase, exchange, refining, processing
or fractionating of hydrocarbons; compression agreements;
equipment leases; surface leases; unitization and pooling designations,
declarations, orders and agreements; processing agreements; plant
agreements; pipeline, gathering, and transportation
agreements; injection, repressuring, and recycling agreements; salt water or
other disposal agreements; seismic or geophysical permits or agreements;
and any and all other agreements which are ordinary and customary in the oil
and gas exploration, development, or extraction
business, or in the business of processing of gas and gas condensate production
for the extraction of products therefrom;

 

(v)           Any liens for taxes not yet
delinquent at the particular time in question or, if delinquent, that are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established by Seller;

 

(vi)          Any liens or security
interests created by law or reserved in any Leases
for royalty, bonus or rental or for compliance with the terms of any
Purchased Property only to the extent such liens or security interests are
inchoate and the amounts secured thereby are not delinquent at the particular
time in question, or if delinquent, are being contested in good faith and for
which adequate reserves have been established by Seller;

 

(vii)         Any easements, rights-of-way,
servitudes, permits, licenses, surface leases and other rights with respect to
surface operations, to the extent such matters do not interfere in any material respect with Seller’s operation of the
portion of the Purchased Property burdened thereby;

 

(viii)        All royalties, overriding
royalties, net profits interests, carried interests, reversionary interests and
other burdens, to the extent that the net cumulative effect of such burdens, as
to a particular Purchased Property, does not operate to reduce the Net Revenue
Interest of REP in such Purchased Property per each one percent (1%) of Working
Interest below that set forth in Exhibit M;

 

(ix)          Conventional rights of
reassignment arising upon surrender or abandonment of any Purchased Property;

 

(x)           Rights reserved to or vested
in any governmental authority to control or regulate any of the Wells, Units or
Leases included in the Purchased Property pursuant to applicable valid and
subsisting laws and all valid, subsisting and applicable rules, regulations 

 

6

 

and orders of such authorities so long as the same
have not been applied to reduce the Net Revenue Interest in such Purchased
Property per each one percent (1%) of Working Interest below that set forth in Exhibit M;

 

(xi)          Preferential rights to
purchase and consents (A) the operation of which is not triggered or which
are otherwise not applicable to the transactions contemplated hereby or (B) with
respect to which waivers or consents have been obtained from the appropriate
owner or holder thereof or the appropriate time period for asserting the right
has expired without an exercise of the rights, in each case, prior to the
Closing;

 

(xii)         Any other defects and
irregularities affecting the Purchased Property which individually or in the
aggregate are not such as to interfere materially with the operation, value or
use of the Purchased Property, taken as a whole or reduce the Net Revenue
Interest of REP in the Purchased Property per each one percent (1%) Working
Interest below that set forth in Exhibit M; and

 

(xiii)        All matters visible and
apparent on the ground or that would be revealed by a true and correct survey.

 

1.50.       “Prior
Agreements” shall mean (i) the Option Agreement dated April 24,
2007 between REP, NWCP and SMP with respect the NW Casmalia Project, (ii) the
Letter Agreement dated July 23, 2007 between REP, NWCP and SMP superceding
the April 24, 2007 Option Agreement with respect to the NW Casmalia
Project, (iii) Letter Agreement dated April 24, 2007 between REP,
SMP, GTL, PEL and OPL pertaining to the Orcutt Project, (iv) Letter
Agreement dated May 4, 2007 between REP, GTL, PEL, OPL and SMP, (v) Letter
Agreement dated July 23, 2007 between REP, SMP, GTL, PEL and OPL
superceding the April 24, 2007 Letter Agreement pertaining to the Orcutt
Project, (vi) Non-Binding Letter of Intent dated September 5, 2007
between REP and SMP, (vii) Letter Agreement dated June 10, 2006
between REP and SMP with respect to future SMP Projects, (viii) the Letter
Agreement dated July 24, 2006 between REP and SMP amending the June 10,
2006 Letter Agreement with respect to Future SMP Projects (ix) the Letter
Agreement dated June 10, 2006 between REP and SMP with respect to NW
Casmalia, (x) the Letter Agreement dated July 24, 2006 amending the June 10,
2006 Letter Agreement with respect to NW Casmalia, and (xi) any other agreement
between the SMP Parties and REP entered into prior to the date of this
Agreement.

 

1.51.       “Purchase
Option Agreement” shall mean an Agreement in the form of Exhibit N
attached hereto.

 

1.52.       “Purchased
Property” shall mean collectively, (i) the Initial Orcutt Interests
and the Second Orcutt Interests, and (ii) any additional Orcutt Property
and NW Casmalia Property, acquired by REP from the SMP Parties pursuant to the
terms of the Transaction Documents.

 

1.53.       “Release
Agreement” shall mean an agreement in the form of Exhibit O.

 

7

 

1.54.       “REP”
shall mean Rock Energy Partners, LP and authorized assignees of Rock Energy
Partners, LP that comply with Section 13.6 of this Agreement.

 

1.55.       “Second
Orcutt GTL Interest” shall mean (i) a 2.03374% BPO Working Interest
and a 1.83037% APO Working Interest in the Orcutt GTL Leases, other than the
Shell Lease, and (ii) a 1.834% BPO Working Interest and a 1.6506% APO
Working Interest in the Orcutt GTL Property Rights.  The parties have intentionally excluded the
Shell Lease.  The Second Orcutt GTL
Interest shall be subject to and burdened by the GTL Adjustment ORRI.

 

1.56.       “Second
Orcutt Interests” shall mean the Second Orcutt GTL Interest, the Second
Orcutt PEL Interest and the Second Orcutt OPL Interest.

 

1.57.       “Second
Orcutt OPL Interest” shall mean (i) a 1.834% BPO Working Interest and
a 1.6506% APO Working Interest in the Orcutt OPL Leases, and (ii) a 1.834%
BPO Working Interest and a 1.6506% APO Working Interest in the Orcutt OPL
Property Rights.

 

1.58.       “Second
Orcutt PEL Interest” shall mean (i) a 1.834% BPO Working Interest
and a 1.6506% APO Working Interest in the Orcutt PEL Leases, and (ii) a
1.834% BPO Working Interest and a 1.6506% APO Working Interest in the Orcutt
PEL Property Rights.

 

1.59.       “Sector
Mortgage Indebtedness” shall mean the indebtedness of Seller to Sector
Capital Corporation for advances pursuant to a Loan Agreement dated March 23,
2007, as amended.

 

1.60.       “Seller”
shall mean (i) GTL or its assignee with respect to any Orcutt GTL
Property, (ii) PEL or its assignee with respect to any Orcutt PEL
Property, (iii) OPL or its assignee with respect to any Orcutt OPL
Property, and (iv) NWCP or its assignee with respect to any NW Casmalia
Property.

 

1.61.       “Shell
Lease” shall mean the oil and gas lease dated October 22, 1975, the
short form of which was recorded May 21, 1976 in Book 2613, Page 1562
by and between Shell Oil Company, as Lessor, and Montara Petroleum, as Lessee,
in the Official Records of Santa Barbara County, California.

 

1.62.       “SMP”
shall mean Santa Maria Pacific, LLC.

 

1.63.       “SMP
Parties” shall mean SMP, GTL, PEL and OPL.

 

1.64.       “Subject
Property Rights” shall mean the Purchased Property rights and interests
specified in subsections (i) through (vi) below, except for the
Excluded Properties.

 

(i)            All presently existing and
valid oil, gas and/or mineral unitization, pooling, and/or communalization
agreements, declarations and/or orders including, without limitation, all
Units, to the extent that they relate to the Leases;

 

8

 

(ii)           The Wells;

 

(iii)          Seller’s interest in all
equipment, facilities, flow lines, pipelines, gathering systems (other than gas
plant gathering systems), Well pads, tank batteries, improvements, fixtures,
inventory, spare parts, tools, abandoned property and junk and other personal
property on the Lands or directly used in developing or operating the Leases
and Wells or producing, treating, store, compressing, processing or
transporting hydrocarbons on the Lands;

 

(iv)          To the extent assignable or
transferable, Seller’s interest in all easements, rights-of-way, licenses, permits,
servitudes, surface leases, surface use agreements, and similar rights and
interests to the extent applicable to or used in operating the Leases; and

 

(v)           To the extent assignable or
transferable, Seller’s interest in all agreements, contracts and contractual
rights, obligations and interests insofar only as they cover and are
attributable to the property described in subsections (i) through (v) above.

 

1.43        “Title
Opinions” shall mean (i) the opinion dated June 25, 2007 prepared
by Rod C. Reynolds with respect to the Orcutt PEL Leases, and (ii) the
opinion dated December 12, 2007 prepared by Rod C. Reynolds with respect
to the Orcutt GTL Leases.

 

1.44        “Transaction
Documents” shall mean this Agreement, the Development Agreement and the
Purchase Option Agreement, together with all exhibits and schedules attached to
each and referenced therein and any and all properly executed amendments to any
thereof that expressly provide that they are to supplement, amend or revise one
or more of the Transaction Documents.

 

1.45        “Units” shall mean all unitization,
communitization and pooling agreements and orders covering the Lands and/or the
Leases, or any portion thereof, and the pooled, unitized, and/or communitized
areas created thereby.

 

1.46        “Wells”
shall mean all oil, gas and condensate wells (whether producing, not producing
or abandoned), water source, water injection and other injection or disposal
wells and systems located on the Leases or Lands unitized or pooled with the
Leases.

 

1.47        “Working
Interest” shall mean the interest in a Well, Unit, or Lease that is
burdened with the obligation to bear a fractional share of the costs and
expenses associated with the exploration, development and operation of such
Well, Unit, or Lease.

 

Any
term defined in other provisions of this Agreement shall have the meanings set
out therein unless the context requires otherwise.

 

9

 

ARTICLE II

 

Initial Purchase And Sale

 

2.1          Property Sold and
Purchased.  Seller agrees to sell and REP agrees to
purchase the Initial Orcutt Interests for the consideration hereinafter set
forth and subject to the terms and provisions herein contained.

 

2.2          Purchase Price.  The purchase price for the
Initial Orcutt Interests shall be (i) the aggregate sum of all
consideration paid by REP to the SMP Parties as of November 1, 2007,
pursuant to the Prior Agreements (which is Four Million Seven Hundred Eighty
Thousand and 00/100 Dollars ($4,780,000)), and (ii) the contractual
undertakings pursuant to the Transaction Documents.

 

2.3          Closing.  The Closing of the purchase
and sale of the Initial Orcutt Interests contemplated hereby shall take place
in the office of SMP (2400 Professional Parkway, Suite 205, Santa Maria,
California 93455-6814) on December 14, 2007 at 10:00 a.m. Pacific
Time.

 

2.4          Delivery at Closing.  At the Closing, the
following events shall occur, and each event shall be deemed to occur
simultaneously with each other event.

 

2.4.1       Delivery
by REP to Seller.

 

(a)           The duly executed Orcutt
Non-Diatomite Operating Agreement (GTL operator).

 

(b)           The duly executed Orcutt
Non-Diatomite Operating Agreement (PEL operator).

 

(c)           The duly executed Orcutt
Diatomite Operating Agreement.

 

(d)           The duly executed Release
Agreement.

 

2.4.2       Delivery
by Seller to REP.

 

(a)           An assignment of the Initial
Orcutt GTL Interest executed by GTL.

 

(b)           An assignment of the Initial
Orcutt PEL Interest executed by PEL.

 

(c)           An assignment of the Initial
Orcutt OPL Interest executed by OPL.

 

(d)           The duly executed Release
Agreement.

 

10

 

(e)           A duly executed partial
release of the Sector Mortgage Indebtedness solely as it relates to the Initial
Orcutt Interests.

 

ARTICLE III

 

Second Purchase And Sale

 

3.1          Property Sold and
Purchased.  Seller agrees to sell and
REP agrees to purchase the Second Orcutt Interests for the consideration
hereinafter set forth and subject to the terms and provisions herein contained.

 

3.2          Purchase Price.  The purchase price for the
Second Orcutt Interests shall be (i) the sum of One Million and 00/100
Dollars ($1,000,000.00), and (ii) the contractual undertakings pursuant to
this Agreement.

 

3.3          Closing.  The Closing of the purchase and
sale of the Second Orcutt Interests contemplated hereby shall take place in the
office of SMP on December 14, 2007 at 10:00 a.m. Pacific Time.

 

3.4          Delivery at Closing.

 

3.4.1       Delivery by REP to Seller.

 

(a)           REP shall deliver by
transfer of immediately available funds to an account designated by Seller One
Million and 00/100 Dollars.

 

(b)           The duly executed
Development Agreement.

 

(c)         The duly executed Purchase
Option Agreement.

 

3.4.2       Delivery by Seller to REP.

 

(a)           An assignment of the Second
Orcutt GTL Interest duly executed by GTL.

 

(b)           An assignment of the Second
Orcutt PEL Interest duly executed by PEL.

 

(c)           An assignment of the Second
Orcutt OPL Interest duly executed by OPL.

 

(d)           The duly executed
Development Agreement.

 

11

 

(e)           The duly executed Purchase
Option Agreement.

 

3.5          Effect of Failure to
Timely Close.  In the event that REP fails to deliver the
cash purchase price as provided in Section 3.4 on December 14, 2007,
all rights to acquire (i) the Second Orcutt Interests, (ii) any
interest in the Orcutt Property (other than as previously assigned), and (iii) any
interest in the NW Casmalia Property shall automatically terminate.

 

3.6          Application of Funds.  The $1,000,000 payment delivered to Seller at
Closing shall be dedicated to Direct Costs of Approved Development Operations
with respect to the Orcutt Leases in the manner set forth in Section 7.3.

 

ARTICLE IV

 

Representations And Warranties Applicable

To All Purchases And Sales

 

4.1          Reciprocal
Representations and Warranties.  Seller and REP each represent and warrant that
the following statements are true and accurate as to itself as of the (i) execution
date of the Transaction Documents, and (ii) on each Closing Date that the
following statements are true and accurate as to itself.

 

4.1.1       Authority.  It is duly
organized and in good standing under the laws of the state of formation, is
duly qualified to carry on its business in California and has all the requisite power and authority to enter into and
perform the Transaction Documents.

 

4.1.2       Requisite
Approvals.  It has taken all necessary actions to fully authorize the
execution and delivery of the Transaction Documents.  It will have taken prior to any Closing all
necessary actions to fully authorize execution and delivery of any transaction
documents related to the Transaction
Documents; and (ii) the consummation of the transactions contemplated
by the Transaction Documents associated with such Closing.

 

4.1.3       Validity
of Obligation.  This Agreement and all other
Transaction Documents it is to execute and
deliver under this Agreement on or before each Closing Date (i) have been
duly executed by its authorized representatives; (ii) constitute
its valid and legally binding obligations; and (iii) are enforceable
against it in accordance with their respective terms except as enforceability
may be limited by application of bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally.

 

4.1.4       No
Violation of Contractual Restrictions.  Its execution, delivery and performance of the Transaction Documents and all
other transaction documents it is to execute on or before each Closing Date do
not conflict with or violate any agreement or instrument to which it is
a party or by which it is bound. 
Notwithstanding the foregoing, at least one and perhaps more of the
leases contain a provision requiring consent to assignment.  Seller will endeavor in good faith to obtain
any required consent.  No representation
is made as to 

 

12

 

whether such consent will be
obtained.

 

4.1.5       No
Violation of Other Legal Restrictions.  Its execution, delivery and
performance of the Transaction Documents and
all other transaction documents it is to execute on or before each Closing Date
do not violate any law, rule, regulation, ordinance, judgment, decree or
order to which it or the Purchased Property is subject.

 

4.1.6       Bankruptcy.  There are no
bankruptcy, reorganization or receivership proceedings pending, or to its
actual knowledge being contemplated by or, threatened against it.

 

4.1.7       Brokers
Fees.  It has not
incurred any obligation for brokers, finders or similar fees for which the
other party would be liable.

 

4.1.8       No
Restraining Litigation.  To its knowledge, other than
as described in Exhibit P, there is no action, suit, proceeding, claim or
investigation by any person, entity, administrative agency or governmental body
pending or, to its knowledge, threatened, against it before any court or
governmental agency that seeks substantial damages in connection with, or seeks
to restrain, enjoin, materially impair or prohibit the consummation of all or
part of the transactions contemplated in the Transaction Documents or
associated with any Closing provided for hereunder except as otherwise
disclosed prior to the applicable Closing Date.

 

4.1.9       Subject Claims.  There has been no assignment or conveyance,
in whole or in part of the Subject Claims.

 

4.2          Seller’s Representations and Warranties.  Seller makes no warranty as to its
ownership of the Purchased Property, however, Seller agrees to defend title to
the Net Revenue Interest per Working Interest percentage in the Purchased
Property set forth in Exhibit M against the claims and demands (other than
the Permitted Encumbrances) of all persons claiming the same or any part
thereof by, through or under Seller but not otherwise.  It is understood that any title failure not
arising by, through or under Seller shall reduce the Net Revenue Interest of
REP on a proportionate basis.

 

4.3          Purchaser’s Representations and Warranties.  By its execution of the
Transaction Documents, Purchaser represents and warrants to Seller that the
following statements are true and accurate, as of the execution date of the
Transaction Documents.  In addition, REP
shall represent and warrant on each Closing Date that the following statements
are true and accurate.

 

4.3.1         Independent Evaluation.  REP is an
experienced and knowledgeable investor in the oil and gas business. In making
the decision to enter into the Transaction Documents, REP has been advised by and has relied solely on its own expertise and
legal, tax, reservoir engineering and other professional counsel
concerning this transaction, the Purchased Property and the value thereof.

 

13

 

4.3.2         Securities
Laws and REP’s Other Dealings.  REP has complied with all
federal and state securities laws applicable to the purchase of the Purchased
Property and will comply with such laws if
it subsequently disposes of all or any part of the Purchased Property. REP
is acquiring the Purchased Property for its own account and not with a view to,
or for offer of resale in connection with, a distribution thereof, within the
meaning of the Securities Act of 1933, 15 U.S.C. § 77(a) et seq., and any
other rules, regulations, and laws pertaining to the distribution of
securities.  REP has fully disclosed the
terms of this Agreement and the Prior Agreements to all partners, investors and
financial institutions.  REP has not
disclosed to the SMP Parties the source of REP’s funding for the purchase price
of the Purchased Property.  REP has not
involved the SMP Parties in the process of providing information pertaining to
the Orcutt Property, NW Casmalia Property or any other oil and gas properties
to any partners, investors or financial institutions.  REP has not disclosed to the SMP Parties the
terms of any agreement between REP and any investor, partner or financial
institution.

 

4.3.3         Knowledge and Experience.  REP has (and had prior to negotiations regarding the Purchased Property)
such knowledge and experience in the ownership and operation of oil and gas
properties and financial and business matters as to be able to evaluate the
merits and risks of an investment in the Purchased Property.  REP is able to bear the risks of an
investment in the Purchased Property and understand the risks of, and other
considerations relating to, the purchase of the type of assets that comprise
the Purchased Property.

 

4.3.4         Opportunity
to Verify Information.  As of each
Closing Date, REP has been furnished with materials relating to the Purchased
Property requested by REP under the Transaction Documents and has been afforded
the opportunity to ask questions of the Seller (or a person or persons acting
on its behalf) concerning the Purchased Property.  REP has made its own independent
investigation of the Purchased Property to the extent necessary to evaluate the
Purchased Property.  At Closing, REP
shall be deemed to have knowledge of all facts contained in all materials,
documents and other information which REP has been furnished or to which REP
has been given access.

 

4.3.5       Merits and Risks of an Investment in the
Purchased Property.  REP understands and acknowledges
that:  (i) an investment in the
Purchased Property involves certain risk; (ii) neither the United States
Securities and Exchange Commission nor any federal, state or foreign agency has
passed upon the Purchased Property or made any finding or determination as to
the fairness of an investment in the Purchased Property or the accuracy or
adequacy of the disclosures made to REP.

 

4.3.6       Equipment and Well Condition and Operations.  REP
has been given the opportunity to inspect the Wells, equipment and facilities
on the Lands.  REP is fully aware that (i) some
of the equipment and facilities on the Lands need immediate repair, (ii) the
records for the Wells are incomplete and accordingly it is not possible to
predict what operations can be successfully performed within any particular
Well, (iii) it is not possible to determine with certainty how much each
Well produces due to lack of proper gauging and accordingly it is not possible
to determine with certainty whether a particular Well is economic or
non-economic, and (iv) an affiliate of Breitburn Energy has recently
indicated an interest in constructing 

 

14

 

residential units on a
portion of the Lands with the Orcutt Leases.

 

4.3.7       Environmental Matters.  REP has
inspected the property subject to the Transaction Documents. REP is fully aware
that (i) oil and gas operations have been conducted upon the Orcutt Leases
and Lands since approximately 1900, (ii) a significant number of Wells may
need to be plugged and abandoned, (iii) significant environmental
remediation will be required, (iv) the SMP Parties alleged in litigation
styled  Phoenix Energy, Inc.
v. Careaga Hydrocarbons, Inc., under Case No. 1230506, in
the Superior Court of California, County of Santa Barbara, Cook Division, that
the property was not operated in compliance with all environmental regulations
and statutes, and (v) significant additional expenditures will in the
future be required with respect to environmental remediation which may affect
the development potential of the Purchased Property.

 

4.4          Notice of Changes.  Prior to Closing, Seller and
REP will each give the other prompt written
notice of any matter materially affecting any of their representations or
warranties under this Article IV or rendering any such warranty or
representation untrue or inaccurate.

 

4.5          Representations and Warranties
Exclusive.  All representations and
warranties contained in the Transaction Documents (including without limitation
those in this Article IV) are exclusive, and are given in lieu of all
other representations and warranties, express or implied.

 

4.6          Operating
Agreements.  REP understands that (i) all operations
will be conducted pursuant to the terms of the applicable Operating Agreement, (ii) it
will be responsible for timely payment of it’s share of the expenses pursuant
to the terms of the applicable Operating Agreement, (iii) it’s interest
will be subject to an operator’s lien pursuant to the applicable Operating
Agreement, and (iv) nothing in the Transaction Documents alters or
otherwise impairs any operator’s lien rights.

 

ARTICLE V

 

Disclaimer Of Warranties Applicable

To All Purchases And Sales

 

5.1          TITLE AND  ENCUMBRANCES.  SELLER CONVEYS THE PURCHASED PROPERTY TO REP  SUBJECT TO THE PERMITTED ENCUMBRANCES
WITHOUT WARRANTY OF TITLE, EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE
EASEMENTS, RIGHTS-OF-WAY AND PERMITS FOR THE
PIPELINES COMPRISING A PART OF THE PURCHASED PROPERTY, SELLER EXPRESSLY DISCLAIMS, AND REP HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT SELLER OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; THAT THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE  ASSIGNED; THAT THEY ARE CONTIGUOUS; THAT THE
PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT 

 

15

 

TO LAY,
MAINTAIN, REPAIR, REPLACE, OPERATE, CONSTRUCT, OR REMOVE THE  PIPELINES. SELLER EXPRESSLY DISCLAIMS, AND REP
HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT THERE ARE ANY EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN
FORCE AND EFFECT WITH RESPECT TO THE PIPELINES.  NO DUTY IS OWED BY THE SMP PARTIES TO REP
WITH RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN
ARTICLE VIII.  THE SMP PARTIES SHALL HAVE
NO LIABILITY TO REP AS A RESULT OF ANY DEFAULT BY THE SMP PARTIES WITH RESPECT
TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY ACTION TAKEN BY SECTOR CAPITAL
CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

5.2          CONDITION AND FITNESS OF THE PURCHASED PROPERTY.  EXCEPT AS EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS, SELLER CONVEYS THE PURCHASED PROPERTY TO REP WITHOUT ANY EXPRESS,
STATUTORY OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND RELATING TO (i) THE
CONDITION OR MERCHANTABILITY OF THE PURCHASED PROPERTY, OR (ii) THE
FITNESS OF THE PURCHASED PROPERTY FOR A
PARTICULAR PURPOSE. REP HAS INSPECTED, OR BEFORE CLOSING WILL INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT, THE
PURCHASED PROPERTY AND IS SATISFIED AS TO THE PHYSICAL, OPERATING, REGULATORY
COMPLIANCE, SAFETY AND ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE) OF THE PURCHASED PROPERTY AND ACCEPTS THE PURCHASED PROPERTY
“AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” AND
IN ITS PRESENT CONDITION AND STATE OF REPAIR. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO (i) THE
VALUE, QUALITY, QUANTITY, VOLUME OR DELIVERABILITY OF ANY OIL, GAS OR OTHER.
MINERALS OR RESERVES (IF ANY) IN, UNDER OR ATTRIBUTABLE TO THE PURCHASED
PROPERTY (INCLUDING WITHOUT LIMITATION PRODUCTION RATES, DECLINE RATES AND
RECOMPLETION OR DRILLING OPPORTUNITIES), (ii) ALLOWABLES, OR OTHER
REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE,
SAFETY OR ENVIRONMENTAL CONDITION OF THE PURCHASED PROPERTY, (iv) PROJECTIONS
AS TO EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL OR
ENGINEERING CONDITION OF THE PURCHASED PROPERTY OR ANY VALUE THEREOF.

 

5.3          INFORMATION ABOUT THE PURCHASED PROPERTY.  EXCEPT AS EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS,
THE SMP PARTIES DISCLAIM ALL LIABILITY AND RESPONSIBILITY FOR ANY
REPRESENTATION, WARRANTY, STATEMENTS OR COMMUNICATIONS (ORALLY OR IN WRITING)
TO REP (INCLUDING, BUT NOT LIMITED TO, ANY INFORMATION CONTAINED IN ANY OPINION, INCLUDING THE TITLE OPINIONS,
INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO ANY SUCH
PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT, CONSULTANT, ENGINEER OR
ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER, BENEFICIARY, STOCKHOLDER OR
CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT TO THE 

 

16

 

PURCHASED
PROPERTY. THE SMP PARTIES MAKE NO WARRANTY
OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE  ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION OR
RECORDS FURNISHED TO REP IN CONNECTION WITH
THE PURCHASED PROPERTY. ANY DATA, INFORMATION OR OTHER RECORDS FURNISHED
BY THE SMP PARTIES ARE PROVIDED TO REP AS A
CONVENIENCE AND REP’S RELIANCE ON OR USE OF THE SAME IS AT REP’S SOLE
RISK.  REP RECOGNIZES AND AGREES THAT ALL
MATERIALS, DOCUMENTS, AND OTHER INFORMATION, MADE AVAILABLE TO IT AT ANY TIME
IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY, WHETHER MADE AVAILABLE
PURSUANT TO THIS SECTION OR OTHERWISE, ARE MADE AVAILABLE TO IT AS AN
ACCOMMODATION, AND WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER
EXPRESS, IMPLIED OR STATUTORY, AS TO THE ACCURACY AND COMPLETENESS OF SUCH
MATERIALS, DOCUMENTS, AND OTHER INFORMATION. 
REP EXPRESSLY AGREES THAT ANY RELIANCE UPON OR CONCLUSIONS DRAWN
THEREFROM SHALL BE AT REP’S RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW AND
SHALL NOT GIVE RISE TO ANY LIABILITY OF OR AGAINST THE SMP PARTIES.  REP HEREBY WAIVES AND RELEASES ANY CLAIMS
ARISING UNDER THE TRANSACTION DOCUMENTS, COMMON LAW OR ANY STATUTE ARISING OUT
OF ANY MATERIALS, DOCUMENTS OR INFORMATION PROVIDED TO REP.

 

5.4          UNLEASED INTERESTS.  THERE ARE UNLEASED UNDIVIDED INTERESTS IN THE
LANDS COVERED BY THE ORCUTT GTL LEASES AND THE ORCUTT OPL LEASES.  ATTACHED AS EXHIBIT Q IS A LIST OF THE
UNLEASED INTERESTS.

 

5.5          LEASE EXPIRATION.  NO REPRESENTATION IS MADE BY THE SMP PARTIES
AS TO THE PERIOD OF TIME THAT THE ORCUTT LEASES AND NW CASMALIA LEASES WILL
REMAIN IN FORCE AND EFFECT SUBSEQUENT TO THE CLOSING WITH RESPECT TO THE SECOND
ORCUTT INTERESTS.  THE DEVELOPMENT
AGREEMENT AND THE PURCHASE OPTION AGREEMENT SHALL NOT BE APPLICABLE TO ANY LEASE
WHICH TERMINATES PRIOR TO THE EXERCISE OF AN OPTION THEREUNDER.

 

5.6          OPERATIONS.  NO REPRESENTATION EXPRESS OR
IMPLIED IS MADE BY THE SMP PARTIES AS TO (i) WHAT OPERATIONS WILL BE
PERFORMED AND EXPENDITURES INCURRED IN ADDITION TO THE APPROVED DEVELOPMENT
OPERATIONS, (ii) THE TIME AT WHICH OPERATIONS IN ADDITION TO THE APPROVED
DEVELOPMENT OPERATIONS WILL BE PERFORMED, (iii) WHETHER ALL APPROVED
DEVELOPMENT OPERATIONS WILL BE PERFORMED, OR (iv) THE ACTUAL ULTIMATE COST
OF ANY OPERATION, INCLUDING THE APPROVED DEVELOPMENT OPERATIONS.  REP UNDERSTANDS THAT THERE MAY BE
SIGNIFICANT EXPENSES IN EXCESS OF THE ESTIMATED COSTS OF OPERATIONS, INCLUDING
WITH RESPECT TO THE APPROVED DEVELOPMENT OPERATIONS WHICH WOULD RESULT IN
REMAINING APPROVED DEVELOPMENT 

 

17

 

OPERATIONS
NOT BEING PERFORMABLE WITHOUT FUNDS IN ADDITION TO THE CARRY OBLIGATION.  THIS AGREEMENT DOES NOT LIMIT THE OPERATOR’S
RIGHT TO PROPOSE AND PERFORM OPERATIONS PURSUANT TO THE APPLICABLE
OPERATING AGREEMENT THAT WILL REQUIRE EXPENDITURES IN ADDITION TO THE CARRY
OBLIGATION.

 

5.7          NORM. REP ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT OIL AND GAS PRODUCING
FORMATIONS CAN CONTAIN NATURALLY OCCURRING RADIOACTIVE MATERIAL. SCALE
FORMATION OR SLUDGE DEPOSITS CAN CONCENTRATE LOW LEVELS OF NORM ON EQUIPMENT,
MATERIALS AND OTHER PURCHASED PROPERTY. SOME OR ALL OF THE EQUIPMENT, MATERIALS
AND OTHER PURCHASED PROPERTY SUBJECT TO THE TRANSACTION DOCUMENTS MAY HAVE
LEVELS OF NORM ABOVE BACKGROUND LEVELS. A HEALTH HAZARD MAY EXIST IN
CONNECTION WITH THE EQUIPMENT, MATERIALS AND OTHER PURCHASED PROPERTY BY REASON
THEREOF. THEREFORE, REP MAY NEED TO FOLLOW
SAFETY PROCEDURES WHEN HANDLING THE EQUIPMENT, MATERIALS AND OTHER
PURCHASED PROPERTY.

 

5.8          DISCLAIMERS DEEMED CONSPICUOUS.  TO THE EXTENT REQUIRED TO BE OPERATIVE, REP HEREBY AGREES THAT THE
DISCLAIMERS OF WARRANTIES CONTAINED IN THE TRANSACTION DOCUMENTS ARE
CONSPICUOUS DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW, RULE OR ORDER.

 

ARTICLE VI

 

Relation Of Parties And Acknowledgments

 

6.1          No Partnership.  The parties acknowledge that
the Transaction Documents, and the activities which may be under or pursuant
hereto are not intended, and shall not be construed, to create a partnership, a
joint venture, agency relationship, or other fiduciary relationship among the
parties hereto within the meaning of the federal common law nor under the
applicable laws of any state nor under the laws of the state of which either
party is incorporated, organized or conducting business.

 

6.2          Non-Affiliation.  The SMP Parties have no ownership interest in
REP.  REP has no ownership interest in
the SMP Parties.  There is no agreement
pursuant to which any SMP Party would merge or consolidate with REP.  The Transaction Documents, upon execution
(and the agreements provided for herein), will be the only agreements between
the parties.

 

18

 

ARTICLE VII

 

Operations

 

7.1           Operating Agreement. 
All operations will be conducted in accordance with the applicable
Operating Agreement.  REP consents to PEL
or SMP service as operator.

 

7.2           Development Committee.  A
committee composed of representatives of Seller and REP shall meet quarterly to
discuss the status of operations.  The
purpose of the meeting shall be to share information.  All decisions with respect to operations will
be made pursuant to the terms of the applicable Operating Agreement.

 

7.3           Carry
Obligation.  The funds paid to Seller at the Closing
conducted with respect to the Purchase of the Second Orcutt Interests and each
subsequent Closing pursuant to the Development Agreement shall be applied to
satisfy the Carry Obligation. Any expenditure that is included in the Approved
Development Operations that is made by the Carry Obligation Beneficiaries in
advance of the receipt of the (i) payment pursuant to Section 3.2, or
(ii) any option exercise payments by REP pursuant to the Development Agreement
shall be repaid to the Carry Obligation Beneficiaries out of such funds upon
receipt, so long as such expenditures were made by the Carry Obligation
Beneficiaries as Direct Costs of Approved Development Operations out of funds
owned and held by the Carry Obligation Beneficiaries.

 

ARTICLE VIII

 

Partial Lien Release

 

REP may, at its option, cause the Sector Mortgage Indebtedness to be
released as to REP’s interest by payment to SMP of REP’s proportionate share of
the Sector Mortgage Indebtedness.  For
purposes of calculating the amount of REP’s payment, the Sector Mortgage
Indebtedness will be fixed at the lesser of (i) $7,500,000, and (ii) the
outstanding balance thereof as of the partial release payment date.  REP’s proportionate share shall be its
Working Interest percentage in the subject property (with respect to the Orcutt
GTL Property using the Orcutt GTL Property Rights Working Interest in place of
the Orcutt GTL Lease Working Interest). 
Even though the Initial Orcutt Interests are not burdened by the Sector
Mortgage, following the Closing on the second purchase and sale in accordance
with Article III of this Agreement and prior to the exercise of any option
under the Development Agreement, REP’s proportionate share would nonetheless be
3.333% of the Sector Mortgage Indebtedness, not to exceed $250,000 (3.333% of
$7,500,000).  The scope of the partial
release would be limited to the Initial Orcutt Interests and the Second Orcutt
Interests.  Any additional interest in
the Orcutt Property acquired by REP after a partial release payment shall be
subject to and burdened by the Sector Mortgage Indebtedness unless and until
REP causes same to be released by payment of the proportionate share of the
Sector Mortgage Indebtedness attributable thereto.  Upon SMP’s receipt of the partial release
payment from REP, SMP will 

 

19

 

deliver same to Sector Capital Corporation in exchange for the partial
release.

 

ARTICLE IX

 

Indemnities

 

9.1           Definition of Claims.  As
used in this Article, the term “Claims” means any and all losses, liabilities,
damages, punitive damages, obligations, expenses, fines, penalties, costs,
claims, causes of action and judgments for: (a) breaches of contract; (b) loss
or damage to property, injury to or death of persons (including illness and
disease), and other tortious injury; and (c) violations of applicable
laws, rules, regulations, orders or any other legal right or duty actionable at
law or equity. The term “Claims” also includes reasonable attorney’s fees,
court costs, and other reasonable costs resulting from the investigation or
defense of any Claim within the scope of the indemnities in this Agreement.

 

9.2           Application of
Indemnities.

 

9.2.1        Covered Claims and Parties.  All
indemnities set forth in this Agreement extend to the officers, directors,
employees and affiliates of the party indemnified. The indemnities set forth in
this Agreement do not extend to any party of an indemnified Claim that (a) is
the result of the gross negligence, willful misconduct or fraud of the
indemnified party, (b) is the result of the imposition of punitive damages
on the indemnified party arising from the acts or omissions of the indemnified
party, or (c) is the result of the imposition of civil or criminal fines
or penalties by any court or regulatory authority on the indemnified party due
to the indemnified party’s failure to comply with applicable laws, regulations
or orders.

 

9.2.2        Express Negligence Disclosure.  UNLESS
THIS AGREEMENT EXPRESSLY PROVIDES TO
THE CONTRARY, THE INDEMNITY, RELEASE, WAIVER AND ASSUMPTION PROVISIONS SET FORTH IN THIS AGREEMENT APPLY REGARDLESS
OF WHETHER THE INDEMNIFIED PARTY (OR ITS EMPLOYEES, AGENTS, CONTRACTORS,
SUCCESSORS OR ASSIGNS) CAUSES, IN WHOLE OR PART, AN INDEMNIFIED CLAIM, INCLUDING WITHOUT LIMITATION INDEMNIFIED  CLAIMS
ARISING OUT OF OR RESULTING, IN WHOLE OR IN PART, FROM, OUT OF OR IN CONNECTION WITH THE CONDITION OF THE
PURCHASED PROPERTY OR THE INDEMNIFIED PARTY’S (OR ITS EMPLOYEES’, AGENTS’,
REPRESENTATIVES’, CONTRACTORS’, SUCCESSORS’ OR ASSIGNS’) SOLE OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR FAULT. REP AND SELLER ACKNOWLEDGE THAT THIS
STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

 

9.2.3        Other Limitations.  The
indemnities in this Agreement do not relieve the parties to this Agreement from
any obligations to third parties. The indemnities of the parties in this
Agreement do not relieve the indemnified party from any obligations of
the indemnified party under the terms of any operating agreement or other
cost-sharing arrangement which is applicable. There will be no upward or
downward adjustment in the purchase price as
a result 

 

20

 

of any matter for which REP or Seller
is indemnified under this Agreement.

 

9.3         REP
Indemnity.  REP SHALL INDEMNIFY, DEFEND AND HOLD THE SMP PARTIES HARMLESS from and against any
and all Claims caused by, resulting from or incidental to:

 

9.3.1        Any obligations for
brokerage or finder’s fee or commission incurred by REP in connection with its
acquisition of the Purchased Property;

 

9.3.2        Any violation by REP of
state or federal securities laws or REP’s dealings (including any dealings in
breach of REP’s warranties and representations in Sections 4.1 and 4.3) with
its partners, investors, financial institutions, or other third parties in
connection with (i) the Prior Agreements, (ii) the Transaction
Documents, (iii) acquisition of the Purchased Property, or (iv) any
subsequent sale or other disposition of the Purchased Property (or portion
thereof) by REP, or its affiliates;

 

9.3.3        Any Claim by a partner, investor, financial
institution or other third party arising under or related to any agreement
between REP and such partner, investor, financial institution or other third
party;

 

9.3.4        Any Claim by a partner, investor, financial
institution or other third party based upon a representation made by REP,
directly or indirectly, relating to the Prior Agreements, the Transaction
Documents, the NW Casmalia Property, the Orcutt Property, any other oil and gas
property, or any development operations with respect to any oil and gas
property; or

 

9.3.5        Any Claim by a third party based upon a breach
by REP of any covenant, representation or warranty provided for in the Transaction
Documents.

 

9.4           SMP Parties Indemnity.  The SMP
Parties shall indemnify, defend and hold harmless REP from any and all Claims
caused by, resulting from or incidental to:

 

9.4.1        Any
obligation for brokerage or finder’s fee or commission incurred by the SMP
Parties in connection with the sale of the Purchased Property;

 

9.4.2        Any Claim by
a third party based upon a breach of an SMP Party’s covenant, representation or
warranty provided for in the Transaction Documents; or

 

9.4.3        Any lien or
Claim with respect to the Sector Mortgage Indebtedness solely as it relates to
the Initial Orcutt Interests.

 

9.4.4        Any lien or
Claim with respect to the Sector Mortgage Indebtedness solely as it relates to
the Initial Orcutt Interests or any interest as to which a partial release has
been purchased by REP in accordance with Article VIII.  In other words, the indemnity pursuant to
this provision is limited to REP’s interest in the subject property 

 

21

 

for which REP timely paid its proportionate share of the Sector
Mortgage Indebtedness in accordance with Article VIII.

 

9.5           Notices and Defense of
Indemnified Claims.  Each party shall immediately notify the other
party of any Claim of which it becomes aware and for which it is entitled to
indemnification from the other party under the Transaction Documents. The
indemnifying party shall be obligated to defend at the indemnifying party’s
sole expense any litigation or other administrative or adversarial proceeding
against the indemnified party relating to any Claim for which the indemnifying
party has agreed to indemnify and hold the indemnified party harmless under the
Transaction Documents. However, the indemnified party shall have the right to
participate with the indemnifying party in the defense of any such Claim at its
own expense.

 

ARTICLE X

 

Alterative Dispute Resolution

 

10.1         Alternative
Dispute Resolution.  This Article shall not be
applicable to enforcement of any provision of the Operating Agreements. The
rights of the parties under the Operating Agreements shall be enforced in
accordance with the terms of the Operating Agreements.  For the limited purpose of this Article the
term “Transaction Documents” shall not include the Operating Agreements.  Compliance with this Article shall constitute a condition precedent to either party
seeking judicial enforcement of any provisions of the Transaction
Documents.  Any dispute concerning the
Transaction Documents shall be resolved under the mediation and binding
arbitration procedures of this Article X. Upon the occurrence of any
dispute between REP and Seller in connection
‘with their rights and obligations under the Transaction Documents,
REP and Seller will first attempt in good faith to resolve all disputes by negotiations between management level persons
who have authority to settle the controversy. If either party believes
further negotiations are futile, such party may initiate the mediation process by so notifying the other party in
writing. Both parties shall then attempt in good faith to resolve the
dispute by mediation in Santa Maria, California, employing management level
persons with authority to settle the dispute, in accordance with the Center for
Public Resources Model Procedure for
Mediation of Business Disputes, as such procedure may be modified by agreement
of the parties. The parties shall share the cost of the mediator equally. If
the dispute has not been resolved pursuant
to mediation within sixty (60) days after initiating the mediation process,
the dispute shall be finally resolved through binding arbitration, as follows:

 

(a)           If
any dispute or controversy shall arise between the parties out of the
Transaction Documents, the alleged breach thereof or any tort in connection
therewith, or out of the refusal to perform the whole or any part thereof, and
the parties shall be unable to agree with respect to the matter or matters in
dispute or controversy, the same shall be submitted to arbitration before a
panel of arbitrators in accordance with the Federal Arbitration Act and the
Commercial Arbitration Rules of the American Arbitration Association, to
the extent that such Rules do not conflict with the terms of such Act or
the terms of the Transaction Documents.  The panel of arbitrators shall be chosen as
follows: Upon the written demand of either party 

 

22

 

and within ten (10) working days from the date of such demand, each party shall
name an arbitrator and these two so named shall promptly thereafter
choose a third. If either party shall fail to name an arbitrator within ten (10) working
days from such demand, the other party shall name the second arbitrator as well
as the first, or if the two arbitrators shall fail within ten (10) working
days from their appointment to agree upon and appoint the third arbitrator,
then upon written application by either party such third arbitrator may be
appointed by the then presiding judge of the Superior Court of the State of
California in and for the County of Santa Barbara, acting as an
individual.  The party making the
application shall give the other party ten (10) day’s notice of the
application.  All arbitrators selected to act hereunder shall be qualified by
education, experience, and training to pass upon the particular matter or
matters in dispute.  All arbitrators
selected under the Transaction Documents shall have at least fifteen (15) years
professional experience in the oil and gas exploration and development industry
and shall not previously have been employed by either party and shall not have
a direct or indirect interest in either party or the subject matter of the
arbitration.

 

(b)           The
panel of arbitrators so chosen shall proceed promptly to hear and determine the matter or matters in dispute,
after giving the parties due notice of hearing. 
Unless otherwise determined by the arbitrators, the hearing and
presentations of the parties shall not exceed five (5) days cumulative.
The location of all arbitration proceedings hereunder shall be Santa Barbara
County, California. The award of the
panel of arbitrators or a majority thereof shall be made within forty-five (45)
days after the appointment of the third arbitrator, subject to any reasonable
delay due to unforeseen circumstances. In
the event of the panel or a majority thereof failing to make an award
within sixty (60) days after the appointment of the third arbitrator, new
arbitrators may at the election of either party be chosen in like manner as if
none had been previously selected.

 

(c)           The award of the arbitrators, or a majority
thereof, shall be in writing, determined in accordance with the substantive
laws of the State of California, and shall be final and binding on the parties
as to the question or questions submitted, and the parties shall abide by such award
and perform the conditions thereof. The award of the arbitrators shall be based
on the applicable law and facts, the merits of the parties’ positions in the
controversy or dispute, and the arbitrators’ assessment of the fairness and
reasonableness of any settlement proposal of
any party. The award shall not provide or create any rights or benefits in any
person  or entity which is not a party
to the Transaction Documents, as the Transaction Documents and any arbitration
thereunder shall not be construed as a third party beneficiary contract.
Unless otherwise determined by the arbitrators,
all expenses in connection with such arbitration shall be divided equally
between the  parties thereto, except
that the expenses of counsel, witnesses, and employees of each party shall
be borne solely by the party incurring them,
and the compensation of any arbitrator named by a party shall be borne
solely by such party; provided that if court proceedings to stay litigation or
compel arbitration are necessary, the party who unsuccessfully opposes such
proceedings shall pay all reasonable associated costs, expenses and attorney’s
fees of such court proceedings.

 

(d)         The arbitrators shall not
be required to explain reasons for the award. No transcript or other recording
shall be made of the arbitration proceedings. Except (i) in 

 

23

 

connection with a suit for
enforcement of the award, (ii) as required by law, court order or
regulation, (iii) when reasonably necessary to explain the terms and
conditions of the award to outside
attorneys, auditors, and insurers, or (iv) as part of good faith
compliance with disclosure  obligations
under applicable law, the arbitration proceedings, the award, and the parties’
actions  in connection with the
arbitration are confidential and shall not be disclosed to third parties, and
no disclosure of or reference to the
arbitration, the award, or of the parties’ statements or actions  in connection with the arbitration shall be made
to any third party. All offers, promises, conduct,  statements, and evidence, whether oral or written,
made in the course of the arbitration by any of  the parties, their agents, employees, experts, or attorneys are
confidential. Such offers, promises, conduct, statements, and evidence
shall be considered inadmissible under Rule 408 of the Federal Rules of
Evidence and any similar state provisions, and shall be inadmissible for any purpose, including impeachment. However,
evidence that is otherwise admissible shall not be rendered inadmissible as a
result of its use in the arbitration.

 

(e)          The award of the panel
of arbitrators and the obligation to abide by same
and perform the conditions thereof shall not be appealable and shall be
enforceable in any state district court for Santa Barbara County,
California or the federal court for the Central District of California having jurisdiction. Each party shall bear its own
attorneys’ fees in connection with any enforcement of an arbitration
award, or in any other court litigation arising out of the Transaction
Documents.

 

(f)          The provisions of Article X
shall not limit the obligation of a party to defend, indemnify or hold harmless
the other party against Claims as provided in Article IX .

 

ARTICLE XI

 

Area of Mutual Interest

 

11.1         Area.  REP and Seller agree to an
AMI.  Up to December 14, 2009, the
AMI shall be Santa Barbara County, California. 
During the period December 14, 2009 through December 14, 2012,
the AMI shall be limited to the area within one half mile of the boundary of
any oil and gas lease within the pre-December 14, 2009 AMI, as to which
both Seller and REP own a Working Interest.

 

11.2         Notice.  If during the term of the AMI,
any party should acquire by purchase, assignment or otherwise an interest in
any oil and gas lease, lease or seismic option, mineral interests, royalty
interests, farmout, or any other interests in the mineral estate, including any
contractual rights to acquire such interest, which gives the owner thereof the
right to explore, drill for, and/or participate in the production of oil, gas
or other hydrocarbons and constitute elements thereof or produced there from (“Mineral
Interests”), the party acquiring the rights (“Acquiring Party”) shall within 5
Business Days thereafter notify in writing the other parties hereto (“Offeree”)
of such acquisition.  Such notice shall
include a copy of all instruments of acquisition including, by way of example
but not of limitation, copies of the leases, assignments, subleases, farmouts,
or other contracts affecting the Mineral Interests, a plat of 

 

24

 

the lands covered by the Mineral
Interests, any title information and workpapers available relevant to the
acquisition, evidence of payments made (i.e., paid drafts, brokers’ invoices,
etc.) and an itemized statement of Leasehold Acquisition Costs.  For purposes of this Article the term “Leasehold
Acquisition Costs” shall mean all direct costs incurred in connection with
acquiring the Mineral Interests, including, but not limited to, bonuses and
other consideration paid for such Mineral Interests and the expenses and per
diems of third parties excluding, however, costs and expenses of its own
personnel.

 

11.3         Acquisition Right.  Each
Offeree shall have the right but not the obligation to acquire its share in the
proportion to which its interest in the AMI bears to the aggregate interest in
the AMI of the Acquiring Party and all other non-acquiring party(s) who
have elected not to acquire an interest in the Mineral Interests so offered.

 

11.4         Exercise Deadline. 
Offeree shall have thirty (30) days after receipt of such offer, or
within five (5) days when there is a Well drilling in the area which, in
the opinion of the Acquiring Party could reasonably affect the value of the Mineral
Interests, within which to elect to purchase such interest by notifying the
Acquiring Party, in writing of its election to acquire its percentage share of
such Mineral Interests.  Failure of
Offeree to notify the Acquiring Party within such time period shall be deemed
an election by Offeree not to acquire an interest in such Mineral
Interests.  If an Offeree elects not to
participate in the acquisition of Mineral Interests, then such Offeree shall
forfeit the right to participate in the renewal or extension of such Mineral
Interests.  Those party(s) which
elect to acquire their proportionate share of such Mineral Interests are
hereinafter referred to as the “Participating Party(s)”.

 

11.5         Payment and Default. 
Promptly after the notice and election period have expired, the
Acquiring Party shall invoice each Participating Party for its proportionate
part of the Lease Acquisition Costs. 
Each Participating Party shall immediately reimburse the Acquiring Party
for its share of the Lease Acquisition Costs. 
If the Acquiring Party does not receive the amount from the
Participating Party within ten (10) days after the receipt by such party
of the invoice for its share of the Lease Acquisition Costs, the Acquiring
Party may, at its election, give written demand notice to such delinquent party
that the failure of the Acquiring Party to receive the amount due within
forty-eight (48) hours after receipt of such demand notice by the delinquent
Participating Party shall constitute a withdrawal by the delinquent party of
its former election to acquire the Mineral Interests, and such delinquent
Participating Party shall forfeit the right to participate in the acquisition
of the Mineral Interests.

 

11.6         Assignment.  Upon receipt of said payment,
the Acquiring Party shall execute and deliver to each Participating Party an
appropriate assignment.  The assignment
will be on the same terms and with the same effective date as that obtained by
the Acquiring Party.  Acquiring Party
shall place no additional burdens against such lease other than those directly
associated with the acquisition of such Mineral Interests.  The assignment will (to the extent permitted
under the underlying documents) assign rights with respect to warranties which
Acquiring Party may have received.  No
warranty of title whether expressed or implied shall be made by Acquiring Party
except by, through and under it.

 

25

 

11.7         Operating Agreement.  SMP
or its designee shall serve as operator of any property acquired within the
AMI.  The operating agreement will be in
a form that is identical to the NW Casmalia Operating Agreement insofar as
diatomite operations are concerned and identical to the Orcutt Non-Diatomite
Operating Agreement insofar as non-diatomite operations are concerned except
for the lands and parties subject to the agreement.

 

ARTICLE XII

 

Notices

 

12.1         Notices.  All notices and other
communications required under the Transaction Documents shall (unless otherwise
specifically provided herein) be in writing and be delivered personally, by
recognized commercial courier or delivery service which provides a receipt, by
telecopier (with receipt acknowledged), or by registered or certified mail
(postage prepaid), at the following addresses:

 

If to REP:                       Rock Energy Partners, L.P.

10375 Richmond Ave., Suite 2100

Houston, Texas  77042

Attention:  Rocky Emery

Phone:  (713) 954-3600

Fax:  (713) 954-3601

Email:  Emeryrocky1@aol.com

 

Rock Energy Partners, L.P.

10375 Richmond Ave., Suite 2100

Houston, Texas  77042

Attention:  Tom Elliott

Phone:  (713) 954-3600

Fax:  (713) 954-3601

Email: 
tom.elliott@rockenergypartners.com

 

If to SMP:                      Santa Maria Pacific, LLC

Post Office Box 7202

Santa Maria, California  93456-7202

Phone:  (805) 938-3320

Fax:      (805)
938-3340

Email:  davidlpratt@sbcglobal.net

 

If to PEL:                        Phoenix Energy, LLC

Post Office Box 7202

Santa Maria, California 
93456-7202

Phone:  (805) 938-3320

Fax:      (805) 938-3340

 

26

 

Email:  davidlpratt@sbcglobal.net

 

If to NWCP:                  NW Casmalia Properties, LLC

Post Office Box 7202

Santa Maria, California 
93456-7202

Phone:  (805) 938-3320

Fax:      (805) 938-3340

Email:  davidlpratt@sbcglobal.net

 

 

If to OPL:                       Orcutt Properties, LLC

Post Office Box 7202

Santa Maria, California 
93456-7202

Phone:  (805) 938-3320

Fax:      (805) 938-3340

Email:  davidlpratt@sbcglobal.net

 

If to GTL:                       Gitte-Ten, LLC

Post Office Box 7202

Santa Maria, California 
93456-7202

Phone:  (805) 938-3320

Fax:      (805) 938-3340

Email:  davidlpratt@sbcglobal.net

 

or such other street address within the
continental limits of the United States as a party may designate for itself by
giving notice to the other party, in the manner provided in this Section, at
least 10 days prior to the effective date of such change of address.  All notices given by personal delivery,
courier or mail shall be effective on the date of actual receipt at the
appropriate address as provided above. 
Notices given by telecopier, if receipt is confirmed by the transmitting
device, shall be effective upon actual receipt if received during recipient’s
normal business hours or at the beginning of the next business day after
receipt if received after the recipient’s normal business hours.  Delivery by email shall not satisfy the
formal notice requirements of the Transaction Documents.

 

ARTICLE XIII

 

Miscellaneous

 

13.1         Form of Assignment.  All
assignments to be delivered pursuant to the Transaction Documents shall be
substantially in the form of Exhibit R.

 

13.2         Further Assurances.  After the Closing, Seller
shall execute and deliver, and shall otherwise cause to be executed and
delivered, from time to time, such further instruments, notices, division
orders, transfer orders and other documents, and do such other and further acts
and things, as may be reasonably necessary to more fully and effectively grant,
convey and assign the Purchased Property to REP.

 

27

 

13.3         Survival of Representations and Warranties.  All
of the representations and warranties made by the parties in this Agreement
will survive the Closing, the execution and delivery of the assignment
documents and other instruments under this Agreement, and the transfer of the Purchased Property between the
parties and they shall not be merged into or superseded by  the assignment documents or other documents
delivered at Closing. A Claim by REP based upon an alleged breach of a
representation with respect to title to the Initial Orcutt Interests and the
Second Orcutt Interests is waived and released unless REP notifies Seller of
that Claim in writing on or before August 31, 2008.  A Claim by REP based upon an alleged breach
of a representation with respect to title to any interest acquired pursuant to
the Development Agreement, Purchase Option Agreement or Article XI (AMI)
is waived and released unless REP notifies Seller of that claim within 60 days
of the applicable Closing Date.

 

13.4         No
Sales Taxes.  No
sales, transfer or similar tax will be collected at Closing from REP in
connection with this transaction.  If,
however, this transaction is later deemed to be subject to sales, transfer or
similar tax, for any reason, REP agrees to be solely responsible, and shall
indemnify and hold Seller (and its affiliates, and its and their directors,
officers, employees, attorneys, contractors and agents) harmless, for any and
all sales, transfer or other similar taxes (including related penalty, interest
or legal costs) due by virtue of this transaction on the Purchased Property
transferred pursuant hereto and REP shall remit such taxes at that time.  Seller and REP agree to cooperate with each
other in demonstrating that the requirements for exemptions from such taxes
have been met.

 

13.5         Entire Agreement and Amendment.  The
Transaction Documents, together with any relevant
Confidentiality Agreement and the exhibits thereto, and the documents executed
and delivered at each Closing constitute the entire understanding  between the parties, replacing and superseding all
prior negotiations, discussions, arrangements,  agreements and understandings between the parties regarding the subject
transaction and subject matter hereof (whether written or oral),
excepting any written agreements that may be executed by the parties
concurrently or after the execution of the Transaction Documents that expressly
refer to one or more of the Transaction Documents. No other agreement,
statement, or promise made by any party, or to any employee, officer or agent
of any party, which is not contained in the Transaction Documents shall be
binding or valid. The Transaction Documents may be amended, modified, altered, supplemented, or revoked only by written
agreement expressly referring to one or more of the Transaction Documents and
providing for amendment or modification thereof and signed by duly
authorized representatives of the parties hereto.

 

13.6         Assignment Restriction.  REP
is prohibited from assigning any right under the Transaction Documents unless
the proposed assignee executes and delivers to the SMP Parties (i) a ratification
of the Transaction Documents (in a form acceptable to the SMP Parties), that
specifically provide that the proposed assignee on its own behalf makes the
representations of the type provided in Section 4.3, (ii) a release
of the SMP Parties identical in form to the release provided by REP in this
Agreement, and (iii) an indemnity agreement in favor of the SMP Parties
identical in form to the indemnity provided by REP in this Agreement.  REP
is prohibited prior to December 14, 2009 from assigning any Purchased
Property unless the 

 

28

 

proposed
assignee executes and delivers to the SMP Parties (i) a ratification of
the Transaction Documents (in a form acceptable to the SMP Parties), that
specifically provide that the proposed assignee on its own behalf makes the
representations of the type provided in Section 4.3, (ii) a release
of the SMP Parties identical in form to the release provided by REP in this
Agreement, and (iii) an indemnity agreement in favor of the SMP Parties
identical in form to the indemnity provided by REP in this Agreement.  Any transfer in absence of such consent shall be null and void and shall
result in the automatic termination of the assigning party’s, its successors
and assigns then exercising rights under the Transaction Documents.  This section shall be applicable to any
approved Assignee of REP.  The approved
Assignee’s right to assign will be restricted in the same manner as provided
herein with respect to REP.

 

13.7         Successors and Assigns.  Subject to the limitation
on assignment contained in Section 13.6 above, the Transaction Documents
shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns.

 

13.8         Third Party Beneficiaries.  It
is understood and agreed that there shall be no third party beneficiary of the Parties with respect to the Transaction
Documents, and that the provisions hereof do not impart enforceable benefits,
rights, or remedies in anyone who is not a party or a successor of REP as a
party hereto.

 

13.9         Severability.  If
any provision of the Transaction Documents is found by a court of competent jurisdiction to be invalid or unenforceable, that
provision will be deemed modified to the extent necessary to make it valid and
enforceable and if it cannot be so modified, it shall be deemed deleted and the
remainder of the Agreement shall continue and remain in full force and effect.

 

13.10       Time of Essence. 
Time is of the essence in the Transaction Documents.

 

13.11       Counterparts.  This
Agreement may be executed in counterparts, each of which shall constitute an
original and all of which shall constitute one document.

 

13.12       Governing Law and Venue.  THIS
AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF CALIFORNIA, EXCLUDING ANY CONFLICTS-OF-LAW RULE OR PRINCIPLE THAT MIGHT
APPLY THE LAW OF ANOTHER JURISDICTION.  In the event that mandatory arbitration
provided in Article X is waived by the parties or is determined to be
inapplicable, venue for any suit relating directly or indirectly to the
Transaction Documents or the Purchased Property shall be in the State Court for
Santa Barbara County, California or the Federal District Court for the Central
District of California.

 

13.13       Seller’s Obligations Several Not Joint. 
Anything to the contrary notwithstanding, the obligations and liability
of each Seller, arising under and in connection with the Transaction Documents
shall be several and not joint.  All
representations, warranties, and covenants of “Seller” under the Transaction
Documents relating to the Purchased Property, are made by each party, severally
with respect only to the interest owned 

 

29

 

by each, in the Purchased Property, if
any.  The representations, warranties,
and covenants relating to the organization of “Seller”, are made individually
by each party only as to its business organization.

 

13.14       Exhibits.  The Exhibits and
Schedules attached to this Agreement are incorporated into and made a part of
this Agreement for all purposes. In the event of a conflict or inconsistency
between the provisions of the Exhibits, Schedules or the executed assignment
documents and the foregoing provisions of this Agreement, the provisions of
this Agreement shall take precedence. In the event of a conflict or
inconsistency between the provisions of the pro
forma assignment documents and other transaction documents attached to this
Agreement as Exhibits or Schedules and the assignment documents and
other transaction documents actually
executed by the parties, the provisions of the executed assignment documents
and other executed transaction documents shall take precedence.

 

13.15       Waiver of Consequential and Punitive Damages.  NEITHER
REP NOR SELLER SHALL BE ENTITLED TO
RECOVER FROM THE OTHER, RESPECTIVELY,
AND EACH PARTY RELEASES THE OTHER PARTY FROM, ANY LOSSES, COSTS, EXPENSES, OR DAMAGES ARISING UNDER THE
TRANSACTION DOCUMENTS OR IN CONNECTION
WITH OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED IN THE TRANSACTION
DOCUMENTS ANY AMOUNT IN EXCESS OF THE ACTUAL COMPENSATORY DAMAGES, COURT COSTS
AND REASONABLE ATTORNEY’S FEES, SUFFERED BY SUCH PARTY. REP AND SELLER BOTH
WAIVE, AND RELEASE THE OTHER FROM ANY RIGHT TO RECOVER PUNITIVE, SPECIAL, EXEMPLARY
AND CONSEQUENTIAL DAMAGES ARISING IN
CONNECTION WITH OR WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED IN THE TRANSACTION DOCUMENTS; PROVIDED, HOWEVER, ANY SUCH DAMAGES RECOVERED BY A THIRD
PARTY (OTHER THAN SUBSIDIARIES,
AFFILIATES OR PARENTS OF A PARTY) FOR WHICH A PARTY OWES THE OTHER PARTY AN INDEMNITY UNDER THIS
ARTICLE VIII SHALL NOT BE WAIVED. REP
hereby fully and unconditionally releases  Seller and their affiliates and
subsidiaries and their officer, directors and employees, from any and all claims,
causes of action or damages, if any, arising in favor of REP in connection with
its sale of the Purchased Property.

 

13.16       Waiver of Consumer Rights.  REP hereby waives it rights under the Texas
Deceptive Trade Practices — Consumer Protection Act, Section 17.41 et seq., Business and Commerce Code, a
law that gives consumers special rights and protections, and any similar law in
any other state to the extent such Act or similar law would otherwise
apply.  After consultation with an
attorney of REP’s own selection, REP voluntarily consents to this waiver.  To evidence REP’s ability to grant such
wavier, REP represents to Seller that it (a) is in the business of seeking
or acquiring, by purchase or lease, goods or services for commercial or
business use, (b) has knowledge and experience in financial and business
matters that enable it to evaluate the merits and risks of the transactions
contemplated hereby, (c) is not in a significantly disparate bargaining
position, and (d) has consulted with, and is represented by, an attorney
of REP’s own selection in connection with this transaction, and such attorney
was not directly or indirectly identified, suggested or selected by Seller or
an agent of Seller.

 

30

 

13.17       WAIVER OF RIGHT TO JURY TRIAL.  THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED
THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY, AND CERTIFIES THAT
NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK OR ENFORCE THE WAIVERS IN THIS PARAGRAPH.

 

13.18       Waiver of Agreement
Terms. Any of the terms, provisions, covenants,
representations, warranties or conditions hereof may be waived only by a
written instrument executed by the party waiving compliance. Except as
otherwise expressly provided in the Transaction Documents, the failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect such party’s right to enforce the same. No waiver by any
party of any condition, or of the breach of any term, provision, covenant,
representation or warranty contained in the Transaction Documents, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such condition or breach or a waiver
of any other condition or of the breach of any other term, provision, covenant,
representation or warranty.

 

13.19       Interpretation.  The
parties stipulate and agree that the Transaction Documents shall be deemed and
considered for all purposes to have been jointly prepared by the parties, and
shall not be construed against any one party
(nor shall any inference or presumption be made) on the  basis of who drafted the Transaction Documents or
any particular provision hereof, who supplied the form of  Agreement, or any other event of the negotiation,
drafting or execution of the Transaction Documents. Each party agrees
that the Transaction Documents has been purposefully drawn and correctly
reflects its understanding of the transaction that it contemplates. In
construing the Transaction Documents, the following principles will apply.

 

(a)           The omission of certain
provisions of this Agreement from the assignment
documents does not constitute a conflict or inconsistency between this
Agreement  and the assignment
documents, and will not effect a merger of the omitted provisions. To the
fullest extent permitted by law, all
provisions of this Agreement are hereby deemed incorporated into the
assignment documents by reference.

 

(b)           The Articles, Sections,
Exhibits and Schedules referenced in this Agreement refer to the Articles,
Sections, Exhibits and Schedules of this Agreement. The headings and titles in this Agreement are for convenience only and shall
have no significance in interpreting or otherwise affect the meaning of
this Agreement.

 

31

 

(c)           The term “knowledge,”
as applied to either party, shall mean the actual knowledge of such party’s (i) general
partners in the case of a limited partnership, or (ii) managers in the
case of a limited liability company.

 

IN
WITNESS WHEREOF, the authorized representatives of the
parties executing this Agreement on the dates stated below.

 

	
   

  	
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:      4R Oil & Gas, LLC,
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rocky V. Emery

  	
   

  
	
   

  	
  Name:

  	
  Rocky V. Emery

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
  Date:

  	
  12-12-07

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SANTA MARIA PACIFIC, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Pratt

  	
   

  
	
   

  	
  Name:

  	
  David Pratt

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
  Date:

  	
  12-12-07

  	
   

  
	
   

  	
   

  
	
   

  	
  GITTE-TEN, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Pratt

  	
   

  
	
   

  	
  Name:

  	
  David Pratt

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
  Date:

  	
  12-12-07

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NW CASMALIA PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Pratt

  	
   

  
	
   

  	
  Name:

  	
  David Pratt

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
  Date:

  	
  12-12-07

  	
   

  
							

 

32

 

	
   

  	
  PHOENIX ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Pratt

  	
   

  
	
   

  	
  Name:

  	
  David Pratt

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
  Date:

  	
  12-12-07

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ORCUTT PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Pratt

  	
   

  
	
   

  	
  Name:

  	
  David Pratt

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
  Date:

  	
  12-12-07

  	
   

  
					

 

33

 

INDEX OF EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Approved Development Operations

  
	
  Exhibit B

  	
   

  	
  Development Agreement

  
	
  Exhibit C

  	
   

  	
  NW Casmalia Leases

  
	
  Exhibit D

  	
   

  	
  NW Casmalia Operating Agreement

  
	
  Exhibit E

  	
   

  	
  Orcutt Diatomite Operating Agreement

  
	
  Exhibit F

  	
   

  	
  Orcutt GTL Leases

  
	
  Exhibit G

  	
   

  	
  Orcutt Non-Diatomite Operating Agreement (PEL)

  
	
  Exhibit H

  	
   

  	
  Orcutt Non-Diatomite Operating Agreement (GTL)

  
	
  Exhibit I

  	
   

  	
  Orcutt OPL Leases

  
	
  Exhibit J

  	
   

  	
  Orcutt PEL Leases

  
	
  Exhibit K

  	
   

  	
  Payout Computation Procedures

  
	
  Exhibit L

  	
   

  	
  Permitted Encumbrances

  
	
  Exhibit M

  	
   

  	
  Net Revenue Interest Per Working Interest Percentage

  
	
  Exhibit N

  	
   

  	
  Purchase Option Agreement

  
	
  Exhibit O

  	
   

  	
  Release Agreement

  
	
  Exhibit P

  	
   

  	
  Litigation

  
	
  Exhibit Q

  	
   

  	
  Unleased Interests

  
	
  Exhibit R

  	
   

  	
  Form of Assignment

  

 

34

 

Exhibit C

 

CONSENT LEASES

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated April 19, 2000, by and between Richard Maretti, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065245, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129189; and as further
amended in that certain unrecorded Amendment of Oil, Gas and Mineral Lease
executed October 26, 2006.

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 16, 2000, by and between Clarence Minetti Family
Partnership, as Lessor, and Fuller Oil Company, as Lessee, recorded on October 25,
2000, as Document Number 2000-0065244, covering 289.45 acres, more or less,
being the Northwest Quarter of the Northeast Quarter, the Southeast Quarter of
the Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129188; and as further
amended in that certain unrecorded Amendment of Oil, Gas and Mineral Lease
executed November 14, 2006.

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated June 2, 2000, by and between Marlene Torres, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065246, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129190; and as further
amended in that certain unrecorded Amendment of Oil, Gas and Mineral Lease
executed October 31, 2006.

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 31, 2000, by and between Wilma R. Maretti,
Trustee of the Wilma R. Maretti Trust, as Lessor, and Fuller Oil Company, as
Lessee, recorded on October 25, 2000, as Document Number 2000-0065243,
covering 289.45 acres, more or less, being the Northwest Quarter of the
Northeast Quarter, the Southeast Quarter of the Northeast Quarter and Lots 2,
3, 4, 5, 6, and 7 of Section 9; the Southwest Quarter of the Southeast
Quarter of Section 4 all in Township 9 North, Range 35 West, S. B. B. &
M., County of Santa Barbara, State of California and shown as Santa Barbara County
Assessor’s Parcel # APN 113-220-07; as Amended in that certain Amendment of Oil
and Gas Lease recorded on December 8, 2004, as Document Number
2004-0129186.

 

1

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 31, 2000, by and between Mark J. Maretti, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065242, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129187.

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:   Oil, Gas and
Mineral Lease Agreement dated May 31, 2000, by and between Charles
Maretti, as Lessor, and Fuller Oil Company, as Lessee, recorded on October 25,
2000, as Document Number 2000-0065241, covering 289.45 acres, more or less,
being the Northwest Quarter of the Northeast Quarter, the Southeast Quarter of
the Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129185.

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 31, 2000, by and between Ruthanne M. Gamble, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065240, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129191.

 

•                                          The transfer of
a working interest to REP requires the prior consent of the lessor pursuant to
the following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated March 23, 1998, effective March 30, 1999 and
extended by Daystar Resources, Ltd. letter dated January 17, 2000, by and
between Ernest E. Righetti, II, Et Al, as Lessor, and Viking Exploration, Inc.,
as Lessee, recorded on January 13, 2000, as Document Number 2000-0005842,
of the Official Records, County of Santa Barbara, State of California, covering
2,928.28 acres, more or less, being Unincorporated Subdivision Lots 121, 122,
123, and 124 of the Rancho Guadalupe, as shown on the Subdivision Map filed in
Book B at Page 422 of the Miscellaneous Records in the office of the
County Recorder of the County of Santa Barbara, State of California and shown
as Santa Barbara County Assessor’s Parcels # APN 113-200-07, APN 113-200-17,
APN 113-200-06, APN 113-230-01, and APN 113-190-05; Subdivision #13 and O. C.
Field Parcel of the Rancho Punta De La Laguna as shown on the Subdivision Map
filed in Book 1 at Page 19 of the Miscellaneous Map Records in the office
of the County Recorder of the County of Santa Barbara, State of California and
shown as Santa Barbara County Assessor’s Parcels APN 113-230-07 and APN
113-200-08; as Amended by that Addenda To Oil, Gas and Mineral Lease Agreement,
dated September 30, 2000, adding 315.42 acres of land, more or less, out
of a 395.42 acre tract of the Rancho Punta De La Laguna as shown on the
Subdivision Map filed in Book 1 at Page 19 of the Miscellaneous Map
Records in the office of the County Recorder of Santa Barbara County,

 

2

 

California and shown as
Santa Barbara County Assessor Parcel No. 113-230-06, Less and Except that
80 acres under lease to Unocal; as Amended in that certain Amendment of Oil and
Gas Lease recorded on December 8, 2004, as Document Number 2004-0129192 of
the Official Records, County of Santa Barbara, State of California.

 

3

 

Exhibit K

 

PAYOUT COMPUTATION PROCEDURES

 

Section 1.  Application.
Payout for purposes of the Transaction Documents and all assignments by the SMP
Parties to REP pursuant to the Transaction Documents shall be computed in
accordance with this Payout Computation Procedures.

 

Section 2.  Payout.  Payout with respect to the NW Casmalia
Purchased Property shall occur at the point in time that the total cumulative
NW Casmalia Purchased Property Gross Proceeds equals the total cumulative NW
Casmalia Property Debits.  Payout with
respect to the Orcutt Purchased Property shall occur at the point in time that
the total cumulative Orcutt Purchased Property Gross Proceeds equals the total
cumulative Orcutt Property Debits.

 

Section 3.  Definitions.
The definitions of the terms contained in the Base Agreement are
incorporated herein.  Unless otherwise
defined herein, all terms defined in the this Payout Computation Procedures
shall have the meanings assigned to them in the sections and subsections
referred to below:

 

3.1          “Base
Agreement” shall mean the Base Agreement by and between Rock Energy
Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties,
LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC dated as of December 1,
2007.

 

3.2          “Debits” shall mean the
following:

 

(a)           All Direct
Costs incurred after the relevant Effective Date and actually paid by REP,
including but not limited to the following: 
(i) drilling, completing, testing, equipping, plugging back,
reworking, recompleting and plugging and abandoning any well), whether or not
such well is a producer or is abandoned as a dry hole or junked, (ii) constructing
gathering facilities, tanks and other production and delivery facilities), (iii) for
secondary recovery, pressure maintenance, repressuring, recycling and other
operations conducted for the purpose of enhancing production), (iv) labor
(including fringe benefits) and other services necessary for developing,
operating, producing, reworking and maintaining, (v) dehydration,
compression, separation, transportation and marketing of the hydrocarbons, and (vi) materials,
supplies, equipment and other personal property and fixtures purchased for use
on, or in connection with operations;

 

(b)           All taxes
(except income, transfer, inheritance, estate, franchise and like taxes)
incurred after the relevant Effective Date and actually paid by REP, including
without limitation production, severance, and/or excise and other taxes
assessed against, and/or measured by, the production of (or the proceeds or
value of production of) hydrocarbons, occupation taxes, sales and use taxes,
and ad valorem taxes assessed equipment located an any of the property;

 

(c)           All amounts
incurred after the relevant Effective Date and actually paid by REP and
consisting of (i) rent and other consideration paid for the use or damage
to the surface and (ii) rentals, shut-in gas well royalties, minimum
royalties and similar

 

1

 

payments payable pursuant to the provisions of
agreements in force and effect before the Effective Date;

 

(d)           The Prior
Agreements Payments; and

 

(e)           The Purchase
Option Payments.

 

3.3          “Gross Proceeds” shall mean
all consideration received, directly or indirectly, for sales or other
dispositions of hydrocarbons produced subsequent to the relevant Effective
Date.  If any proceeds are withheld from
the Working Interest owner for any reason (other than at its request or due to
its negligence), such proceeds shall not be considered to be Gross Proceeds
until such proceeds are actually received. 
Gross Proceeds shall not include any amounts for hydrocarbons
unavoidably lost in production or used in conformity with good oil field
practices for development drilling and production operations (including without
limitation gas injection, fuel, secondary or tertiary recovery, pressure
maintenance, repressuring or recycling operations) conducted solely for the
purpose of producing hydrocarbons from the Subject Interest, but only so long
as such hydrocarbons are so used.

 

3.4          “NW Casmalia Carry Obligation
Debits” shall mean Debits attributable to (i) Working Interests in the
NW Casmalia Leases that are not owned by REP, and (ii) which were incurred
by REP solely as a consequence of its Carry Obligation under the Base
Agreement.

 

3.5          “NW Casmalia Payout Account “
shall mean the accounting of NW Casmalia Property Gross Proceeds and NW
Casmalia Property Debits.

 

3.6          “NW Casmalia Property Debits”
shall mean the sum of (i) NW Casmalia Carry Obligation Debits, (ii) NW
Casmalia Purchased Property Debits, and (iii) fifty percent (50%) of the
amount of any Purchase Option Payment.

 

3.7          “NW Casmalia Purchased Property
Debits” shall mean Debits of the type described in Section 3.2(a), (b) and
(c) that are attributable to the NW Casmalia Purchased Property.

 

3.8          “NW Casmalia Purchased Property
Gross Proceeds” shall mean the Gross Proceeds attributable to the NW
Casmalia Purchased Property.

 

3.9          “NW Casmalia Purchased Property”
shall mean any NW Casmalia Property acquired by REP from the SMP Parties
pursuant to the terms of the Transaction Documents.

 

3.10        “Orcutt Carry Obligation Debits”
shall mean Debits attributable to (i) Working Interests in the Orcutt
Leases that are not owned by REP, and (ii) which were incurred by REP
solely as a consequence of its Carry Obligation under the Base Agreement.

 

2

 

3.11        “Orcutt Property Debits”
shall mean the sum of (i) Orcutt Carry Obligation Debits, (ii) Orcutt
Purchased Property Debits, (iii) the Prior Agreements Payments, and (iv) fifty
percent (50%) of the amount of any Purchase Option Payments.

 

3.12        “Orcutt Purchased Property”
shall mean the Initial Orcutt Interests, the Second Orcutt Interests and any
additional Orcutt Property acquired by REP from the SMP Parties pursuant to the
terms of the Transaction Documents.

 

3.13        “Orcutt Purchased Property Debits”
shall mean Debits of the type described in Section 3.2(a), (b) and (c) that
are attributable to the Orcutt Purchased Property.

 

3.14        “Orcutt Purchased Property Gross
Proceeds” shall mean the Gross Proceeds attributable to the Orcutt
Purchased Property.

 

3.14        “Prior Agreements Payments”
shall mean the sum of Four Million Seven Hundred Eighty Thousand and 00/100
($4,780,000.00) paid by REP to the SMP Parties pursuant to the Prior
Agreements.

 

3.15        “Purchase Option Payments”
shall mean the sum of payments (if any) made by REP pursuant to the Purchase
Option Agreement to exercise options granted thereunder.

 

3.15        “REP” shall mean  Rock Energy Partners, L.P. and its assignees.

 

3

 

EXHIBIT L

 

PERMITTED ENCUMBRANCES

 

·                                          The Sector
Mortgage Indebtedness.

 

·                                          All agreements, instruments,
documents, liens, encumbrances, and other matters, and the terms and provisions
thereof described or referred to in the Title Opinions.

 

·                                          On November 13, 2007,
Hunter Dos Tres (“Hunter”) filed an action for declaratory relief against
Orcutt Properties, LLC et al in connection with Oil, Gas and Mineral Lease
titled “Oil, Gas and Mineral Lease; Hunter/CHI Careaga Version” dated November 1,
2003 by and between Hunter Dos Tres Corporation and Careaga Hydrocarbons, Inc.
recorded on November 6, 2003 as Document Number 2003-0153072 in the
Official Records of the County of Santa Barbara, State of California (the “Hunter
Lease”).  Hunter alleges that the Hunter Lease has terminated due to the
defendants’ failure to produce hydrocarbons in paying quantities as required by
the Lease.  A response to the complaint is due on or before December 19,
2007.  Orcutt Properties, LLC disputes all claims and is in the process of
negotiating a settlement with Hunter, which includes a ratification of the
Hunter Lease.

 

·                                          Orcutt Properties, LLC has
received notice of a potential default under that certain Oil, Gas and Mineral
Lease dated August 18, 2005 by and between Breitburn Energy Company, L.P.
(“Breitburn”) and Daystar Resources, Ltd. recorded on September 2, 2005 as
Document Number 2005-0086090 in the Official Records of the County of Santa
Barbara, State of California (“Breitburn Lease”).  Breitburn alleges that
it was not given the right to consent to the transfer of operating rights from
Daystar Resources, Ltd to Santa Maria Pacific, LLC as required by Section 23
of the Breitburn Lease.  Orcutt Properties, LLC disputes this claim as
notice was provided to Breitburn and consent obtained in March 2007.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by Gitte-Ten, LLC: 
Oil and Gas Lease dated October 22, 1975, the Short Form of
which was recorded May 21, 1976 in Book 2613, Page 1562 by and
between SHELL OIL COMPANY as Lessor, and MONTARA PETROLEUM COMPANY as Lessee,
Official Records of Santa Barbara County, California.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated April 19, 2000, by and between Richard Maretti, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065245, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129189; and as further
amended in that certain unrecorded Amendment of Oil, Gas and Mineral Lease
executed October 26, 2006.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 16, 2000, by and between Clarence Minetti Family
Partnership, as Lessor, and Fuller Oil 

 

1

 

Company,
as Lessee, recorded on October 25, 2000, as Document Number 2000-0065244,
covering 289.45 acres, more or less, being the Northwest Quarter of the
Northeast Quarter, the Southeast Quarter of the Northeast Quarter and Lots 2,
3, 4, 5, 6, and 7 of Section 9; the Southwest Quarter of the Southeast
Quarter of Section 4 all in Township 9 North, Range 35 West, S. B. B. &
M., County of Santa Barbara, State of California and shown as Santa Barbara
County Assessor’s Parcel # APN 113-220-07; as Amended in that certain Amendment
of Oil and Gas Lease recorded on December 8, 2004, as Document Number
2004-0129188; and as further amended in that certain unrecorded Amendment of
Oil, Gas and Mineral Lease executed November 14, 2006.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated June 2, 2000, by and between Marlene Torres, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065246, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129190; and as further
amended in that certain unrecorded Amendment of Oil, Gas and Mineral Lease
executed October 31, 2006.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 31, 2000, by and between Wilma R. Maretti,
Trustee of the Wilma R. Maretti Trust, as Lessor, and Fuller Oil Company, as
Lessee, recorded on October 25, 2000, as Document Number 2000-0065243,
covering 289.45 acres, more or less, being the Northwest Quarter of the
Northeast Quarter, the Southeast Quarter of the Northeast Quarter and Lots 2, 3,
4, 5, 6, and 7 of Section 9; the Southwest Quarter of the Southeast
Quarter of Section 4 all in Township 9 North, Range 35 West, S. B. B. &
M., County of Santa Barbara, State of California and shown as Santa Barbara
County Assessor’s Parcel # APN 113-220-07; as Amended in that certain Amendment
of Oil and Gas Lease recorded on December 8, 2004, as Document Number
2004-0129186.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 31, 2000, by and between Mark J. Maretti, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065242, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129187.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:   Oil, Gas and
Mineral Lease Agreement dated May 31, 2000, by and between Charles
Maretti, as Lessor, and Fuller Oil Company, as Lessee, recorded on October 25,
2000, as Document Number 2000-0065241, covering 289.45 acres, more or less,
being the Northwest Quarter of the Northeast Quarter, the Southeast Quarter of
the Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County 

 

2

 

of
Santa Barbara, State of California and shown as Santa Barbara County Assessor’s
Parcel # APN 113-220-07; as Amended in that certain Amendment of Oil and Gas
Lease recorded on December 8, 2004, as Document Number 2004-0129185.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated May 31, 2000, by and between Ruthanne M. Gamble, as
Lessor, and Fuller Oil Company, as Lessee, recorded on October 25, 2000,
as Document Number 2000-0065240, covering 289.45 acres, more or less, being the
Northwest Quarter of the Northeast Quarter, the Southeast Quarter of the
Northeast Quarter and Lots 2, 3, 4, 5, 6, and 7 of Section 9; the
Southwest Quarter of the Southeast Quarter of Section 4 all in Township 9
North, Range 35 West, S. B. B. & M., County of Santa Barbara, State of
California and shown as Santa Barbara County Assessor’s Parcel # APN
113-220-07; as Amended in that certain Amendment of Oil and Gas Lease recorded
on December 8, 2004, as Document Number 2004-0129191.

 

·                                          The transfer of a working
interest to REP requires the prior consent of the lessor pursuant to the
following lease held by NW Casmalia, LLC Et Al:  Oil, Gas and Mineral
Lease Agreement dated March 23, 1998, effective March 30, 1999 and
extended by Daystar Resources, Ltd. letter dated January 17, 2000, by and
between Ernest E. Righetti, II, Et Al, as Lessor, and Viking Exploration, Inc.,
as Lessee, recorded on January 13, 2000, as Document Number 2000-0005842,
of the Official Records, County of Santa Barbara, State of California, covering
2,928.28 acres, more or less, being Unincorporated Subdivision Lots 121, 122,
123, and 124 of the Rancho Guadalupe, as shown on the Subdivision Map filed in
Book B at Page 422 of the Miscellaneous Records in the office of the
County Recorder of the County of Santa Barbara, State of California and shown
as Santa Barbara County Assessor’s Parcels # APN 113-200-07, APN 113-200-17,
APN 113-200-06, APN 113-230-01, and APN 113-190-05; Subdivision #13 and O. C.
Field Parcel of the Rancho Punta De La Laguna as shown on the Subdivision Map
filed in Book 1 at Page 19 of the Miscellaneous Map Records in the office
of the County Recorder of the County of Santa Barbara, State of California and
shown as Santa Barbara County Assessor’s Parcels APN 113-230-07 and APN
113-200-08; as Amended by that Addenda To Oil, Gas and Mineral Lease Agreement,
dated September 30, 2000, adding 315.42 acres of land, more or less, out
of a 395.42 acre tract of the Rancho Punta De La Laguna as shown on the
Subdivision Map filed in Book 1 at Page 19 of the Miscellaneous Map
Records in the office of the County Recorder of Santa Barbara County, California
and shown as Santa Barbara County Assessor Parcel No. 113-230-06, Less and
Except that 80 acres under lease to Unocal; as Amended in that certain
Amendment of Oil and Gas Lease recorded on December 8, 2004, as Document
Number 2004-0129192 of the Official Records, County of Santa Barbara, State of
California.

 

3

 

Exhibit O

 

RELEASE
AGREEMENT

 

This Release Agreement (“Agreement”) is made as of December 14,
2007 by and between Rock Energy Partners, LP, Rock Energy Partners Operating,
LP, 4R Oil and Gas, LLC, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia
Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC.

 

R E C I T A L S:

 

WHEREAS, certain of the Parties entered into the Prior Agreements
(defined below);

 

WHEREAS,
disputes have arisen between the REP Parties (defined below) and the SMP
Parties (defined below) relating to the Prior Agreements;

 

WHEREAS,
the Parties have entered into the Base Agreement (defined below);

 

WHEREAS,
the Parties have consulted with their respective counsel and have been informed
of and understand the costs, burdens, risks, and uncertainties that exist with
respect to continued pursuit of their disputes;

 

WHEREAS, in order to avoid
the costs, inconvenience, burdens, and uncertainties associated with continuing
these disputes, among other things, the Parties desire to settle all claims and
causes of action, whether known or unknown, currently existing between them as
set forth below;

 

NOW, THEREFORE, for and in consideration of
the recitals set forth above and the agreements, promises, releases, covenants,
representations, and warranties made by the Parties in this Agreement and the
Base Agreement, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Parties hereby mutually agree as
follows:

 

ARTICLE I

 

Definitions

 

The definitions of the terms contained in the Base Agreement are
incorporated herein.  All terms defined
in the Base Agreement will have the same meaning when employed in this
Agreement.  The following additional
terms as used in this Agreement shall have the meanings indicated below unless
the context otherwise requires:

 

1.1.         “4R”
shall mean 4R Oil & Gas, LLC.

 

1.2.         “Base
Agreement” shall mean the Agreement
dated December 1, 2007 between Rock
Energy Partners, LP, Rock Energy Partners Operating, LP, 4R Oil and Gas, LLC,
Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix
Energy, LLC, and Orcutt Properties, LLC.

 

 

1.3.         “Confidentiality
Agreement” shall mean the agreement between REP and SMP dated November 21,
2005.

 

1.4.         “GTL”
shall mean Gitte-Ten, LLC.

 

1.5.         “Parties”
shall mean collectively the SMP Parties and the REP Parties.

 

1.6.         “PEL”
shall mean Phoenix Energy, LLC.

 

1.7.         “Prior
Agreements” shall mean (i) the Option Agreement dated April 24,
2007 between REP, NWCP and SMP with respect the NW Casmalia Project, (ii) the
Letter Agreement dated July 23, 2007 between REP, NWCP and SMP superceding
the April 24, 2007 Option Agreement with respect to the NW Casmalia
Project, (iii) Letter Agreement dated April 24, 2007 between REP,
SMP, GTL, PEL and OPL pertaining to the Orcutt Project, (iv) Letter
Agreement dated May 4, 2007 between REP, GTL, PEL, OPL and SMP, (v) Letter
Agreement dated July 23, 2007 between REP, SMP, GTL, PEL and OPL
superceding the April 24, 2007 Letter Agreement pertaining to the Orcutt
Project, (vi) Non-Binding Letter of Intent dated September 5, 2007
between REP and SMP, (vii) Letter Agreement dated June 10, 2006
between REP and SMP with respect to future SMP Projects, (viii) the Letter
Agreement dated July 24, 2006 between REP and SMP amending the June 10,
2006 Letter Agreement with respect to Future SMP Projects (ix) the Letter
Agreement dated June 10, 2006 between REP and SMP with respect to NW
Casmalia, (x) the Letter Agreement dated July 24, 2006 amending the June 10,
2006 Letter Agreement with respect to NW Casmalia, and (xi) any other agreement
between the SMP Parties and the REP Parties entered into prior to the date of
this Agreement.

 

1.8.         “REP”
shall mean Rock Energy Partners, LP.

 

1.9.         “REPO”
shall mean Rock Energy Partners Operating, LP.

 

1.10.       “REP
Parties” shall mean REP,  REPO
and 4R.

 

1.11.       “SMP”
shall mean Santa Maria Pacific, LLC.

 

1.12.       “SMP
Parties” shall mean SMP, GTL, PEL and OPL.

 

1.13.       “Subject
Claims” shall mean any and all claims, demands, and causes of action of
whatever kind or character which the releasing party has or may have in the
future based on any actions, failure to act, or events that have occurred prior
to the date of this Agreement which in any way relates to or are based upon any
of the following:

 

(i)            The Prior Agreements;

 

(ii)           Any other transactions of
any kind among the SMP Parties and the REP Parties; or

 

(iii)          any actual or alleged
negotiations, discussions, representations, warranties, 

 

 

provisions
or other undertakings by any SMP Party or REP Party in connection with any of
the foregoing prior to the date of this Agreement.

 

ARTICLE II

 

Acknowledgement

 

The REP Parties acknowledge
that (i) the REP Parties defaulted under the Prior Agreements, (ii) the
Prior Agreements were terminated by the SMP Parties, (iii) based upon the
REP Parties’ performance under the Prior Agreements, only a 1.496% Working
Interest assignment in the Orcutt Property was earned by REP, (iv) based
upon the REP Parties’ performance under the Prior Agreements, no interest was
earned by REP in the NW Casmalia Property, (v) the SMP Parties performed
their respective obligations under the Prior Agreements, and (vi) the SMP
Parties have incurred additional project expenses and delays as a consequence
of the REP Parties’ non-performance.

 

ARTICLE III

 

Termination

 

All Prior Agreements except the Confidentiality
Agreement are hereby terminated and of no further force and effect.

 

ARTICLE
IV

 

Release
by REP Parties

 

The REP
Parties on behalf of themselves and to the extent they are permitted by law or
otherwise on behalf of all partners, members, shareholders and investors —
hereby generally release and forever discharge the (i) SMP Parties, (ii) all
officers, partners, managers, members, employees, representatives, and agents
of the SMP Parties (expressly including, but not limited to, Ray Powell, Mark
Harrington, David Pratt, Jack Piedmont, Mike Prats, Bill Dell Orfano, Bill
Boss, Snow Fogel Spence LLP, and Ramon Elias), from any and all Subject Claims.  THIS RELEASE IS TO BE CONSTRUED AS THE
BROADEST TYPE OF GENERAL RELEASE AND COVERS AND RELEASES ANY AND ALL SUBJECT
CLAIMS, WHETHER KNOWN OR UNKNOWN, AND HOWEVER OR WHENEVER ARISING, WHETHER BY
CONTRACT OR AGREEMENT, AT LAW OR UNDER ANY STATUTE (INCLUDING WITHOUT LIMITATION
ANY LAW OR STATUTE PERTAINING TO NEGLIGENCE, GROSS NEGLIGENCE, STRICT
LIABILITY, FRAUD, DECEPTIVE TRADE PRACTICES, NEGLIGENT REPRESENTATION,
SECURITIES VIOLATIONS, BREACH OF FIDUCIARY DUTY, BREACH OF CONTRACT, TRADE
REGULATION, REGULATION OF BUSINESS OR COMPETITION, CONSPIRACY OR RACKETEERING),
OR OTHERWISE ARISING, AND EXPRESSLY INCLUDING ANY CLAIMS FOR PUNITIVE OR
EXEMPLARY DAMAGES, ATTORNEYS’ FEES, OR PENALTIES.  THE REP PARTIES CERTIFY THAT THEY HAVE READ,
UNDERSTAND AND EXPRESSLY WAIVE THE FOLLOWING PROVISIONS OF CALIFORNIA CIVIL
CODE SECTION 1542:

 

 

“A general release does not extend to claims which
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”

 

THE REP PARTIES UNDERSTAND AND ACKNOWLEDGE THAT THE
SIGNIFICANCE AND CONSEQUENCE OF THIS WAIVER OF CALIFORNIA CIVIC CODE SECTION 1542 IS THAT EVEN IF ONE OF THEM SHOULD
EVENTUALLY SUFFER ADDITIONAL DAMAGES OR LOSSES FROM THEIR PRIOR INTERACTIONS,
OR SHOULD THERE EXIST OTHER UNDISCLOSED OBLIGATIONS OR LIABILITIES EXISTING
BETWEEN THEM, INCLUDING THEIR ASSIGNEES, THE REP PARTIES WILL NOT BE ABLE TO
MAKE ANY CLAIM FOR THOSE DAMAGES, LOSSES OR OBLIGATIONS.  FURTHERMORE, THE REP PARTIES ACKNOWLEDGE THAT
THEY INTEND THESE CONSEQUENCES EVEN AS TO CLAIMS FOR DAMAGES, LOSSES OR
OBLIGATIONS THAT MAY EXIST AS OF THE DATE OF THIS AGREEMENT BUT WHICH THE
REP PARTIES DO NOT KNOW EXIST, AND WHICH, IF KNOWN, WOULD MATERIALLY AFFECT
THEIR DECISION, EITHER SINGULARLY OR COLLECTIVELY, TO EXECUTE THIS AGREEMENT,
REGARDLESS OF THE CAUSE OF THEIR LACK OF KNOWLEDGE.  IT IS UNDERSTOOD THAT THIS RELEASE DOES NOT
EXTEND TO THE OBLIGATIONS OF THE SMP PARTIES UNDER THE BASE AGREEMENT AND THE
TRANSACTION DOCUMENTS EXECUTED IN CONNECTION THEREWITH.

 

ARTICLE V

 

Release by SMP Parties

 

The SMP Parties on behalf of themselves and to the extent
they are permitted by law or otherwise on behalf of all partners, members,
shareholders and investors — hereby generally release and forever discharge the
(i) REP Parties, (ii) all officers, partners, members, employees,
representatives, and agents of the REP Parties (expressly including, but not
limited to, Rocky Emery, Tom Elliot and Baker Hostetler, LLP), from any and all Subject Claims (except any
claim based on breach of the Confidentiality Agreement).  THIS RELEASE IS TO BE CONSTRUED AS THE
BROADEST TYPE OF GENERAL RELEASE AND COVERS AND RELEASES ANY AND ALL SUBJECT
CLAIMS, WHETHER KNOWN OR UNKNOWN, AND HOWEVER OR WHENEVER ARISING, WHETHER BY
CONTRACT OR AGREEMENT, AT LAW OR UNDER ANY STATUTE (INCLUDING WITHOUT
LIMITATION ANY LAW OR STATUTE PERTAINING TO NEGLIGENCE, GROSS NEGLIGENCE,
STRICT LIABILITY, FRAUD, DECEPTIVE TRADE PRACTICES, NEGLIGENT REPRESENTATION,
SECURITIES VIOLATIONS, BREACH OF FIDUCIARY DUTY, BREACH OF CONTRACT, TRADE
REGULATION, REGULATION OF BUSINESS OR COMPETITION, CONSPIRACY OR RACKETEERING),
OR OTHERWISE ARISING, AND EXPRESSLY INCLUDING ANY CLAIMS FOR PUNITIVE OR
EXEMPLARY DAMAGES, ATTORNEYS’ FEES, OR PENALTIES.  THE SMP PARTIES CERTIFY THAT THEY HAVE READ,
UNDERSTAND AND EXPRESSLY WAIVE THE FOLLOWING PROVISIONS OF CALIFORNIA CIVIL
CODE SECTION 1542:

 

 

“A general release does not extend to claims which
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”

 

THE SMP PARTIES UNDERSTAND AND ACKNOWLEDGE THAT THE
SIGNIFICANCE AND CONSEQUENCE OF THIS WAIVER OF CALIFORNIA CIVIC CODE SECTION 1542
IS THAT EVEN IF ONE OF THEM SHOULD EVENTUALLY SUFFER ADDITIONAL DAMAGES OR
LOSSES FROM THEIR PRIOR INTERACTIONS, OR SHOULD THERE EXIST OTHER UNDISCLOSED
OBLIGATIONS OR LIABILITIES EXISTING BETWEEN THEM, INCLUDING THEIR ASSIGNEES,
THE SMP PARTIES WILL NOT BE ABLE TO MAKE ANY CLAIM FOR THOSE DAMAGES, LOSSES OR
OBLIGATIONS.  FURTHERMORE, THE SMP
PARTIES ACKNOWLEDGE THAT THEY INTEND THESE CONSEQUENCES EVEN AS TO CLAIMS FOR
DAMAGES, LOSSES OR OBLIGATIONS THAT MAY EXIST AS OF THE DATE OF THIS AGREEMENT
BUT WHICH THE REP PARTIES DO NOT KNOW EXIST, AND WHICH, IF KNOWN, WOULD
MATERIALLY AFFECT THEIR DECISION, EITHER SINGULARLY OR COLLECTIVELY, TO EXECUTE
THIS AGREEMENT, REGARDLESS OF THE CAUSE OF THEIR LACK OF KNOWLEDGE.  IT IS UNDERSTOOD THAT THIS RELEASE DOES NOT
EXTEND TO THE OBLIGATIONS OF THE REP PARTIES UNDER THE BASE AGREEMENT AND THE
INSTRUMENTS EXECUTED IN CONNECTION THEREWITH.

 

ARTICLE VI

 

Miscellaneous

 

6.1.         The Parties expressly acknowledge and understand
that they may hereafter discover facts in addition to or different from those
that they now believe to be true with respect to the subject matter of the
matters released herein.  But the Parties
expressly agree that they have taken these possibilities into account in
electing to execute this Agreement, and that the releases set forth herein
shall be and remain in effect as full and complete releases notwithstanding the
discovery or existence of any such additional or different facts, as to which
the Parties expressly assume the risk.

 

6.2.         The Parties each REPRESENT, WARRANT and ACKNOWLEDGE
that they have been given a reasonable period of time to consider this
Agreement and that they have thoroughly reviewed it and agreed to its terms
with the advice and counsel of their respective attorneys.  Each of the Parties warrants that in
executing this Agreement they did not rely, and have not relied upon, any
representation or statement made by any other party or their agents, employees,
representatives or attorneys, with regard to facts underlying the subject
matter, basis or effect of this Agreement or as to any other facts or issues
which might be deemed material to their decision to enter into this Agreement,
other than as specifically stated in this Agreement.  Each of the Parties further warrants and
recognizes that this paragraph is binding, as a matter of law and fact, and
shall preclude them from asserting that they were wrongfully induced to enter 

 

 

into
this Agreement by any representation, promise or agreement, or statement of a
past or existing fact, which is not found in the four corners of this
Agreement.

 

6.3.         None of the Parties is
relying upon a legal duty, if one exists, on the part of any other party (or
their officers, directors, employees, agents, representatives or attorneys, past
or present) to disclose any information in connection with the execution of
this Agreement or its preparation (other than as specifically stated in this
Agreement), it being expressly understood that none of the Parties shall ever
assert any failure to disclose information on the part of any other party as a
ground for challenging this Agreement.

 

6.4.         Each of the Parties hereto
represents and warrants that it has not assigned or conveyed, in whole or in
part, to any other person or entity any claim, or part thereof, which such
Party has or had against a released party or which is released in this
Agreement, and that it owns the claims released in this Agreement and has the
authority to execute this Agreement and grant the releases herein.  Each person who is a signatory hereto
warrants and represents that such person is authorized to sign this Agreement
and has full authority to bind the Party on whose behalf such person has signed
this Agreement.

 

6.5.         If any provision of this
Agreement is held unenforceable, the remaining provisions of this Agreement
will nevertheless continue in full force and effect without being impaired or
invalidated in any way.

 

6.6.         It is expressly understood
and agreed that the terms hereof are contractual and not mere recitals.

 

6.7.         The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction shall be applied
against any party, as all parties or their attorneys participated in the preparation
of this Agreement.

 

6.8.         No provision of this Agreement shall be deemed
waived unless such waiver is made expressly and in writing.

 

6.9.         This Agreement may be modified or amended only by a
writing signed by all Parties to this Agreement or their respective authorized
representatives, successors, or assigns.

 

6.10.       This Agreement is fully and
voluntarily entered into by the Parties hereto. 
Each party states that it has read this Agreement, has obtained advice
of counsel if it so desired, understands all of this Agreement, and executes
this Agreement voluntarily and of its own free will and accord with full
knowledge of the legal significance and consequences of this Agreement.  CAUTION: READ THIS DOCUMENT CAREFULLY BEFORE
SIGNING IT.  IT IS A LEGAL AND BINDING
CONTRACT AND MATERIALLY AFFECTS YOUR LEGAL RIGHTS.  BY SIGNING THIS AGREEMENT, YOU ACKNOWLEDGE
THAT YOU HAVE READ THIS ENTIRE AGREEMENT AND THE RELEASES CONTAINED HEREIN AND
THAT YOU FULLY UNDERSTAND AND AGREE TO ALL TERMS HEREIN.

 

 

6.11.       This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which shall constitute one document.

 

6.12.       The
Arbitration provisions set forth in Article X of the Base Agreement are
incorporated herein.

 

6.13.       THIS AGREEMENT SHALL BE
GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF CALIFORNIA, EXCLUDING ANY CONFLICTS-OF-LAW RULE OR PRINCIPLE THAT MIGHT
APPLY THE LAW OF ANOTHER JURISDICTION.  In the event that mandatory arbitration
provided in Article X of the Base Agreement is waived by the Parties or is
determined to be inapplicable, venue for any suit relating directly or
indirectly to this Agreement shall be in the State Court for Santa Barbara
County, California or the Federal District Court for the Central District of
California.

 

IN WITNESS WHEREOF, the Parties have executed
this Agreement in duplicate originals, on this the 14th day of December, 2007.

 

	
   

  	
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R
  Oil & Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROCK
  ENERGY PARTNERS OPERATING, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R
  Oil & Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  4R
  OIL AND GAS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

	
   

  	
  SANTA MARIA PACIFIC, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GITTE-TEN, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NW
  CASMALIA PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PHOENIX
  ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ORCUTT
  PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

EXHIBIT Q

 

UNLEASED INTEREST

 

·                                          Orcutt GTL Leases:

 

·                                          An unleased and open mineral
interest owned by Breitburn Energy Company, LP. representing an approximate
4.545454% undivided interest out of the Gitte-Ten, LLC Leasehold acreage 
The remaining interests and the lands covered thereby are described in those
certain Oil, Gas and Mineral Lease Agreements and descriptions
set forth in Exhibit F to the Base Agreement.

 

·                                          Orcutt OPL Leases:

 

·                                          An unleased and open mineral
interest owned by Breitburn Energy Company, LP. representing an approximate
4.545454% undivided interest out of the Northern 1,000 acres, more or less, of
the Orcutt Properties, LLC Leasehold acreage  The remaining interests and
the lands covered thereby are described in those certain Oil, Gas and
Mineral Lease Agreements and descriptions set forth in Exhibit I
to the Base Agreement.

 

·                                          An unleased and open mineral
interest owned by the Raymond J. MacDonald Trust representing approximately
0.757576% of the Orcutt Properties, LLC Leasehold acreage  The remaining
interests and the lands covered thereby are described in those certain Oil, Gas and
Mineral Lease Agreements and descriptions set forth in Exhibit I
to the Base Agreement.

 

·                                          New Casmalia Leases:

 

·                                          An unleased and open mineral
interest owned by the California Polytechnic State University representing an
approximate 10% undivided interest out of 426.41 acres, more or less.  The
remaining interests and the lands covered thereby are described in those
certain Oil, Gas and Mineral Lease Agreements and descriptions listed under the
leases attributable to the Testamentary Trust created under the Last
Will and Testament of Rosario Andrea Curletti, deceased set forth in Exhibit C
to the Base Agreement.

 

EXHIBIT R

 

ASSIGNMENT AND BILL OF SALE

 

	
  STATE
  OF CALIFORNIA

  	
  §

  
	
   

  	
  §

  
	
  COUNTY
  OF SANTA BARBARA

  	
  §

  

 

This Assignment and Bill of Sale is executed and delivered by
                                                        
(“ASSIGNOR”) to Rock Energy Partners, LP
(“ASSIGNEE”) pursuant to the terms of the Base Agreement dated December 1, 2007 between Rock
Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia
Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC (the “Base Agreement”).

 

ARTICLE 1. CONVEYANCE

 

1.1                               Capitalized
Terms. Each capitalized term used in this Assignment that is not otherwise
defined herein shall have the meaning for such capitalized term as defined in
the Base Agreement, which terms are incorporated herein by such  reference.

 

1.2                               Description of
the Property. Subject to the terms of the Base Agreement and this
Assignment, ASSIGNOR hereby TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS to ASSIGNEE a
                  
percent (       %) BPO Working Interest reducing
to a
                        
percent (      %) APO Working Interest in the
following described property rights:

 

1.2.1                     The oil, gas
and mineral lease(s), and any ratifications or amendments to such leases
described in Exhibit A, INSOFAR AND ONLY INSOFAR AS those interests, rights and leases cover and include the lands,
depths and rights described in Exhibit A attached hereto and made a
part hereof for all purposes (the “Leases”);

 

1.2.2                     All presently existing and
valid oil, gas and/or mineral unitization, pooling, and/or communalizations
agreements, declarations and/or orders (including, without limitation, all
Units to the extent that they relate to the Leases;

 

1.2.3                     All oil, gas and condensate
wells (whether producing, not producing or abandoned), water source, water
injection and other injection or disposal wells and systems located on the
Leases or lands unitized or pooled with the Leases (the “Wells”);

 

1.2.4                     ASSIGNOR’S interest in all
equipment, facilities, flow lines, pipelines, gathering systems (other than gas
plant gathering systems), Well pads, tank batteries, improvements, fixtures,
inventory, spare parts, tools, abandoned property and junk and other personal
property on the Leases or directly used in developing or operating the Leases
and Wells or producing, treating, store, compressing, processing or
transporting hydrocarbons on the Leases or lands included in Units with which
the Leases may have been pooled or unitized;

 

1

 

1.2.5                     To the extent assignable or
transferable, ASSIGNOR’S interest in all easements, rights-of-way, licenses,
permits, servitudes, surface leases, surface use agreements, and similar rights
and interests to the extent applicable to or used in operating the Leases; and

 

1.2.6                     To the extent assignable or
transferable, ASSIGNOR’S interest in all agreements, contracts and contractual
rights, obligations and interests INSOFAR ONLY as they cover and are
attributable to the property described in Sections 1.2.1 through 1.2.5 above.

 

The
              
percent (       %) BPO Working Interest and                         
percent (      %) APO Working Interest in
the above-described property rights and interests which is hereby assigned is
hereafter referred to as the “Property”.

 

1.3                               Agreement. This Assignment is made and
accepted subject to all of  the terms of the Base Agreement, which are hereby deemed incorporated
by  reference
into this Assignment to the fullest extent permitted by law. In the event of a  conflict between the provisions of this Assignment
and the provisions of the Base Agreement, the
provisions of the Base Agreement shall take
precedence.

 

ARTICLE 2. DISCLAIMER OF
WARRANTIES AND TITLE DEFENSE

 

2.1                               DISCLAIMER OF TITLE WARRANTY AND ENCUMBRANCES. ASSIGNOR CONVEYS THE PURCHASED
PROPERTY TO ASSIGNEE  SUBJECT
TO THE PERMITTED ENCUMBRANCES WITHOUT WARRANTY OF
TITLE, EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE EASEMENTS,
RIGHTS-OF-WAY AND PERMITS FOR THE PIPELINES
COMPRISING A PART OF THE PURCHASED PROPERTY, ASSIGNOR EXPRESSLY DISCLAIMS, AND ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT ASSIGNOR OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; THAT THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE  ASSIGNED; THAT THEY ARE CONTIGUOUS; THAT THE
PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT TO LAY,
MAINTAIN, REPAIR, REPLACE, OPERATE, CONSTRUCT, OR REMOVE THE  PIPELINES. ASSIGNOR EXPRESSLY DISCLAIMS, AND
ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT THERE ARE ANY EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN
FORCE AND EFFECT WITH RESPECT TO THE PIPELINES.   NO DUTY IS OWED BY ASSIGNOR TO ASSIGNEE WITH
RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN ARTICLE
VIII OF THE BASE AGREEMENT.  ASSIGNOR
SHALL HAVE NO LIABILITY TO ASSIGNEE AS A RESULT OF ANY DEFAULT BY ASSIGNOR WITH
RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY ACTION TAKEN BY SECTOR
CAPITAL CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

2

 

2.2                               Defense of Title.  To the limited extent provided in the Base
Agreement, ASSIGNOR agrees to defend title to the Property against the claims
and demands (other than the Permitted Encumbrances as defined in the Base
Agreement) of all persons claiming the same or any part thereof by, through or
under ASSIGNOR but not otherwise.  Any
title failure not arising by through or under ASSIGNOR shall reduce the Net
Revenue Interest of ASSIGNEE on a proportionate basis.

 

2.3                               CONDITION AND FITNESS OF THE PROPERTY.  EXCEPT
AS EXPRESSLY SET FORTH IN THE BASE AGREEMENT,
ASSIGNOR CONVEYS THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY OR
IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND INCLUDING WARRANTIES RELATING TO
(i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY, OR (ii) THE
FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE.
ASSIGNEE HAS INSPECTED, OR BEFORE CLOSING WILL
INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT, THE PROPERTY AND IS
SATISFIED AS TO THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE, SAFETY AND
ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE)
OF THE PROPERTY AND ACCEPTS THE PROPERTY “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” AND IN ITS PRESENT CONDITION AND STATE OF
REPAIR. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ASSIGNOR MAKES NO
REPRESENTATION OR WARRANTY AS TO (i) THE VALUE, QUALITY, QUANTITY, VOLUME
OR DELIVERABILITY OF ANY OIL, GAS OR OTHER. MINERALS OR RESERVES (IF
ANY) IN, UNDER OR ATTRIBUTABLE TO THE PROPERTY (INCLUDING WITHOUT LIMITATION
PRODUCTION RATES, DECLINE RATES AND RECOMPLETION OR DRILLING OPPORTUNITIES), (ii) ALLOWABLES,
OR OTHER REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING, REGULATORY
COMPLIANCE, SAFETY OR ENVIRONMENTAL CONDITION OF THE PROPERTY, (iv) PROJECTIONS
AS TO EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL OR
ENGINEERING CONDITION OF THE PROPERTY OR ANY VALUE THEREOF.

 

2.4                               INFORMATION ABOUT THE PROPERTY.  EXCEPT
AS EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS, ASSIGNOR
DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY,
STATEMENTS OR COMMUNICATIONS (ORALLY OR IN WRITING) TO ASSIGNEE (INCLUDING, BUT
NOT LIMITED TO, ANY INFORMATION CONTAINED IN ANY OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO ANY
SUCH PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT, CONSULTANT, ENGINEER OR
ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER, BENEFICIARY, STOCKHOLDER OR
CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT TO THE PROPERTY. ASSIGNOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
AS TO THE  ACCURACY, COMPLETENESS, OR
MATERIALITY OF ANY DATA, 

 

3

 

INFORMATION
OR  RECORDS FURNISHED TO ASSIGNEE IN
CONNECTION WITH THE PROPERTY. ANY DATA, INFORMATION OR OTHER RECORDS
FURNISHED BY ASSIGNOR ARE PROVIDED TO
ASSIGNEE AS A CONVENIENCE AND ASSIGNEE’S RELIANCE ON OR USE OF THE SAME
IS AT ASSIGNEE’S SOLE RISK.  ASSIGNEE
RECOGNIZES AND AGREES THAT ALL MATERIALS, DOCUMENTS, AND OTHER INFORMATION,
MADE AVAILABLE TO IT AT ANY TIME IN CONNECTION WITH THE TRANSACTION
CONTEMPLATED HEREBY, WHETHER MADE AVAILABLE PURSUANT TO THIS SECTION OR
OTHERWISE, ARE MADE AVAILABLE TO IT AS AN ACCOMMODATION, AND WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY,
AS TO THE ACCURACY AND COMPLETENESS OF SUCH MATERIALS, DOCUMENTS, AND OTHER
INFORMATION.  ASSIGNEE EXPRESSLY AGREES
THAT ANY RELIANCE UPON OR CONCLUSIONS DRAWN THEREFROM SHALL BE AT ASSIGNEE’S
RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW AND SHALL NOT GIVE RISE TO ANY LIABILITY
OF OR AGAINST ASSIGNOR.  ASSIGNEE HEREBY
WAIVES AND RELEASES ANY CLAIMS ARISING UNDER THE BASE AGREEMENT, THIS
ASSIGNMENT, COMMON LAW OR ANY STATUTE ARISING OUT OF ANY MATERIALS, DOCUMENTS
OR INFORMATION PROVIDED TO ASSIGNEE.

 

2.5                               ASSIGNEE is prohibited from assigning any interest in the Property
except in accordance with the terms of the Base Agreement.  Any purported transfer in contravention of
the Base Agreement is null and void.

 

ARTICLE 3. OTHER PROVISIONS

 

3.1                               Further Assurances.
ASSIGNOR and ASSIGNEE will do, execute, acknowledge and deliver all further
acts, conveyances and instruments as may be reasonably necessary or appropriate
to carry out the intent of this Assignment and to more fully and accurately
assign and convey the Property to ASSIGNEE.

 

3.2                               Successors and Assigns. The
provisions of this Assignment shall be covenants running with the land, and
this Assignment shall extend to, be binding upon, and inure to the benefit of
ASSIGNOR and ASSIGNEE, and their respective successors and assigns.

 

3.3                               Assumption
of Obligations. By its acceptance of this Assignment,
ASSIGNEE shall comply with and do hereby assume and agree to perform ASSIGNEE’S
proportionate part of all express and implied covenants, obligations and
reservations contained in the Leases and to which the Property is subject and
shall bear its proportionate share of all existing burdens on the Leases, all
to the extent provided in the Base Agreement.

 

3.4                               Counterparts. This
Assignment may be executed in multiple counterparts, each of which  shall
for all purposes constitute one and the same instrument; provided, that, to
facilitate recordation, in any particular counterpart portions of the Exhibits
and Schedules attached hereto which describe Property situated in states and
counties other than the state and county in which such counterpart is to be
recorded may have been omitted.

 

4

 

3.5                               Alternate Dispute
Resolution. It is agreed, as a severable and independent
arbitration agreement separately enforceable from the remainder of this
Assignment, that if the parties hereto are unable to amicably resolve any
dispute or difference arising under or out
of, in relation to or in any way connected with this Assignment (whether
contractual, tortious, equitable, statutory or otherwise), such matter
shall be finally and exclusively referred to
and settled by mediation or arbitration in accordance with the alternate
dispute resolution provisions set forth in the Base Agreement, the terms
and provisions of which are incorporated by reference herein.

 

3.6                               Attachments. The Exhibits attached to this
Assignment to which reference is herein made are incorporated herein by
reference and made a part hereof for all purposes.

 

3.7                               Governing Law.  This Assignment is governed by and must be construed according to the
laws of the State of California, excluding
any conflicts-of-law rule or principle that might apply the law of
another jurisdiction.

 

3.8                               Severability. If any
provision of this Assignment is found by a court of competent jurisdiction to
be invalid or unenforceable, that provision will be deemed modified to the
extent necessary to make it valid and enforceable and if it cannot be so modified, it shall be deemed deleted and the
remainder of the Assignment shall continue and remain in full force and
effect.

 

The authorized representatives
of ASSIGNOR and ASSIGNEE execute this Assignment on the dates set forth in their respective acknowledgements
hereto, but this Assignment shall be effective for all purposes as of
                                    ,
200    , at 7:00 a.m. Pacific Time.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  ROCK
  ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  
									

 

5

 

Corporate Acknowledgment:

 

	
  THE STATE OF

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

BEFORE ME, the undersigned authority,
on this day personally appeared
                                                                      ,
the                                                                     
of                                                                     ,
known to me to be the person whose name is subscribed to the foregoing
instrument, and swore to me that he executed the same for the purposes and
consideration therein expressed, in the capacity therein stated, and as the act
and deed of said
                                                                      .

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
             day of
                             ,
2007.

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Notary
  Public in and for

  
	
   

  	
   

  	
   

  	
  the
  State of

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

6

 

Partnership Acknowledgment:

 

	
  THE STATE OF

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

BEFORE ME, the undersigned authority,
on this day personally appeared
                                                                      ,
the                                       
partner on behalf of                                                                     ,
a partnership, known to me to be the person whose name is subscribed to the
foregoing instrument, and swore to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated,
and as the act and deed of said                                                                       ,
a partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
             day of
                                  ,
2007.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for

  
	
   

  	
  the
  State of

  	
   

  	
   

  
	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

7

 

ASSIGNMENT AND BILL OF SALE

(Initial Orcutt GTL Interest)

 

	
  STATE
  OF CALIFORNIA

  	
  §

  
	
   

  	
  §

  
	
  COUNTY
  OF SANTA BARBARA

  	
  §

  

 

This Assignment and Bill of Sale is executed and delivered by
Gitte-Ten, LLC (“ASSIGNOR”) to Rock Energy Partners, LP (“ASSIGNEE”) pursuant to the terms of the Base Agreement dated December 1, 2007 between Rock
Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia
Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC (the “Base Agreement”).

 

ARTICLE 1. CONVEYANCE

 

1.1                               Capitalized
Terms. Each capitalized term used in this Assignment that is not otherwise
defined herein shall have the meaning for such capitalized term as defined in
the Base Agreement, which terms are incorporated herein by such  reference.

 

1.2                               Description of
the Property. Subject to the terms of the Base Agreement and this
Assignment, ASSIGNOR hereby TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS to ASSIGNEE a 1.65893% BPO Working Interest
reducing to a 1.49304% APO Working Interest in the oil, gas and mineral
lease(s), and any ratifications or amendments to such leases described in Exhibit A,
INSOFAR AND ONLY INSOFAR AS those interests,
rights and leases cover and include the lands, depths and rights
described in Exhibit A attached hereto and made a part hereof for all
purposes (the “Leases”).  In addition,
subject to the terms of the Base Agreement and this Assignment, Assignor hereby
TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS a 1.496% BPO Working Interest reducing to a 1.346% APO Working Interest in the
following:

 

1.2.1                     All presently existing and
valid oil, gas and/or mineral unitization, pooling, and/or communalizations
agreements, declarations and/or orders (including, without limitation, all
Units to the extent that they relate to the Leases;

 

1.2.2                     All oil, gas and condensate
wells (whether producing, not producing or abandoned), water source, water
injection and other injection or disposal wells and systems located on the
Leases or lands unitized or pooled with the Leases (the “Wells”);

 

1.2.3                     ASSIGNOR’S interest in all
equipment, facilities, flow lines, pipelines, gathering systems (other than gas
plant gathering systems), Well pads, tank batteries, improvements, fixtures,
inventory, spare parts, tools, abandoned property and junk and other personal
property on the Leases or directly used in developing or operating the Leases
and Wells or producing, treating, store, compressing, processing or
transporting hydrocarbons on the Leases on lands included in Units with which
the Leases may have been pooled or unitized;

 

 

1.2.4                     To the extent assignable or
transferable, ASSIGNOR’S interest in all easements, rights-of-way, licenses,
permits, servitudes, surface leases, surface use agreements, and similar rights
and interests to the extent applicable to or used in operating the Leases; and

 

1.2.5                     To the extent assignable or
transferable, ASSIGNOR’S interest in all agreements, contracts and contractual
rights, obligations and interests INSOFAR ONLY as they cover and are
attributable to the property described in Sections 1.2.1 through 1.2.4 above.

 

The Working Interests hereby assigned are hereafter referred to as the “Property”.

 

1.3          Agreement.
This Assignment is made and accepted subject to all of the terms of the Base
Agreement, which are hereby deemed incorporated by reference into this
Assignment to the fullest extent permitted by law. In the event of a conflict
between the provisions of this Assignment and the provisions of the Base
Agreement, the provisions of the Base Agreement shall take precedence.

 

ARTICLE 2. DISCLAIMER OF
WARRANTIES AND TITLE DEFENSE

 

2.1                               DISCLAIMER OF TITLE WARRANTY AND ENCUMBRANCES. ASSIGNOR CONVEYS THE PURCHASED
PROPERTY TO ASSIGNEE  SUBJECT
TO THE PERMITTED ENCUMBRANCES WITHOUT WARRANTY OF
TITLE, EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE EASEMENTS,
RIGHTS-OF-WAY AND PERMITS FOR THE PIPELINES
COMPRISING A PART OF THE PURCHASED PROPERTY, ASSIGNOR EXPRESSLY DISCLAIMS, AND ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT ASSIGNOR OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; THAT THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE  ASSIGNED; THAT THEY ARE CONTIGUOUS; THAT THE
PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT TO LAY,
MAINTAIN, REPAIR, REPLACE, OPERATE, CONSTRUCT, OR REMOVE THE  PIPELINES. ASSIGNOR EXPRESSLY DISCLAIMS, AND
ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT THERE ARE ANY EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN
FORCE AND EFFECT WITH RESPECT TO THE PIPELINES.   NO DUTY IS OWED BY ASSIGNOR TO ASSIGNEE WITH
RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN ARTICLE
VIII OF THE BASE AGREEMENT.  ASSIGNOR
SHALL HAVE NO LIABILITY TO ASSIGNEE AS A RESULT OF ANY DEFAULT BY ASSIGNOR WITH
RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY ACTION TAKEN BY SECTOR
CAPITAL CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

2.2                               Defense of Title.  To the limited extent provided in the Base
Agreement, ASSIGNOR 

 

2

 

agrees
to defend title to the Property against the claims and demands (other than the
Permitted Encumbrances as defined in the Base Agreement) of all persons
claiming the same or any part thereof by, through or under ASSIGNOR but not
otherwise.  Any title failure not arising
by through or under ASSIGNOR shall reduce the Net Revenue Interest of ASSIGNEE
on a proportionate basis.

 

2.3                               CONDITION AND FITNESS OF THE PROPERTY.  EXCEPT
AS EXPRESSLY SET FORTH IN THE BASE AGREEMENT,
ASSIGNOR CONVEYS THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY OR
IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND INCLUDING WARRANTIES RELATING TO
(i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY, OR (ii) THE
FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE.
ASSIGNEE HAS INSPECTED, OR BEFORE CLOSING WILL
INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT, THE PROPERTY AND IS
SATISFIED AS TO THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE, SAFETY AND
ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE)
OF THE PROPERTY AND ACCEPTS THE PROPERTY “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” AND IN ITS PRESENT CONDITION AND STATE OF
REPAIR. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ASSIGNOR MAKES NO
REPRESENTATION OR WARRANTY AS TO (i) THE VALUE, QUALITY, QUANTITY, VOLUME
OR DELIVERABILITY OF ANY OIL, GAS OR OTHER. MINERALS OR RESERVES (IF
ANY) IN, UNDER OR ATTRIBUTABLE TO THE PROPERTY (INCLUDING WITHOUT LIMITATION
PRODUCTION RATES, DECLINE RATES AND RECOMPLETION OR DRILLING OPPORTUNITIES), (ii) ALLOWABLES,
OR OTHER REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING, REGULATORY
COMPLIANCE, SAFETY OR ENVIRONMENTAL CONDITION OF THE PROPERTY, (iv) PROJECTIONS
AS TO EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL OR
ENGINEERING CONDITION OF THE PROPERTY OR ANY VALUE THEREOF.

 

2.4                               INFORMATION ABOUT THE PROPERTY.  EXCEPT
AS EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS, ASSIGNOR
DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY,
STATEMENTS OR COMMUNICATIONS (ORALLY OR IN WRITING) TO ASSIGNEE (INCLUDING, BUT
NOT LIMITED TO, ANY INFORMATION CONTAINED IN ANY OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO ANY
SUCH PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT, CONSULTANT, ENGINEER OR
ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER, BENEFICIARY, STOCKHOLDER OR
CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT TO THE PROPERTY. ASSIGNOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, AS TO THE  ACCURACY,
COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION OR  RECORDS FURNISHED TO ASSIGNEE IN CONNECTION WITH
THE PROPERTY. ANY DATA, INFORMATION OR OTHER RECORDS 

 

3

 

FURNISHED BY ASSIGNOR ARE PROVIDED TO ASSIGNEE AS A CONVENIENCE AND
ASSIGNEE’S RELIANCE ON OR USE OF THE SAME IS AT ASSIGNEE’S SOLE
RISK.  ASSIGNEE RECOGNIZES AND AGREES
THAT ALL MATERIALS, DOCUMENTS, AND OTHER INFORMATION, MADE AVAILABLE TO IT AT
ANY TIME IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY, WHETHER MADE
AVAILABLE PURSUANT TO THIS SECTION OR OTHERWISE, ARE MADE AVAILABLE TO IT
AS AN ACCOMMODATION, AND WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND,
WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO THE ACCURACY AND COMPLETENESS OF
SUCH MATERIALS, DOCUMENTS, AND OTHER INFORMATION.  ASSIGNEE EXPRESSLY AGREES THAT ANY RELIANCE
UPON OR CONCLUSIONS DRAWN THEREFROM SHALL BE AT ASSIGNEE’S RISK TO THE MAXIMUM
EXTENT PERMITTED BY LAW AND SHALL NOT GIVE RISE TO ANY LIABILITY OF OR AGAINST
ASSIGNOR.  ASSIGNEE HEREBY WAIVES AND
RELEASES ANY CLAIMS ARISING UNDER THE BASE AGREEMENT, THIS ASSIGNMENT, COMMON
LAW OR ANY STATUTE ARISING OUT OF ANY MATERIALS, DOCUMENTS OR INFORMATION
PROVIDED TO ASSIGNEE.

 

2.5                               ASSIGNEE is prohibited from assigning any interest in the Property
except in accordance with the terms of the Base Agreement.  Any purported transfer in contravention of
the Base Agreement is null and void.

 

ARTICLE 3. OTHER PROVISIONS

 

3.1                               Retained Overriding Royalty Interest.  Assignor retains and excludes from this
Assignment an overriding royalty interest equal to the GTL Adjustment ORRI.

 

3.2                               Further Assurances.
ASSIGNOR and ASSIGNEE will do, execute, acknowledge and deliver all further
acts, conveyances and instruments as may be reasonably necessary or appropriate
to carry out the intent of this Assignment and to more fully and accurately
assign and convey the Property to ASSIGNEE.

 

3.3                               Successors and Assigns. The
provisions of this Assignment shall be covenants running with the land, and
this Assignment shall extend to, be binding upon, and inure to the benefit of
ASSIGNOR and ASSIGNEE, and their respective successors and assigns.

 

3.4                               Assumption
of Obligations. By its acceptance of this Assignment,
ASSIGNEE shall comply with and do hereby assume and agree to perform ASSIGNEE’S
proportionate part of all express and implied covenants, obligations and
reservations contained in the Leases and to which the Property is subject and
shall bear its proportionate share of all existing burdens on the Leases, all
to the extent provided in the Base Agreement.

 

3.5                               Counterparts. This
Assignment may be executed in multiple counterparts, each of which  shall
for all purposes constitute one and the same instrument; provided, that, to
facilitate recordation, in any particular counterpart portions of the Exhibits
and Schedules attached hereto which describe Property situated in states and
counties other than the state and county in which such counterpart is to be
recorded may have been 

 

4

 

omitted.

 

3.6                               Alternate Dispute
Resolution. It is agreed, as a severable and independent
arbitration agreement separately enforceable from the remainder of this
Assignment, that if the parties hereto are unable to amicably resolve any
dispute or difference arising under or out
of, in relation to or in any way connected with this Assignment (whether
contractual, tortious, equitable, statutory or otherwise), such matter
shall be finally and exclusively referred to
and settled by mediation or arbitration in accordance with the alternate
dispute resolution provisions set forth in the Base Agreement, the terms
and provisions of which are incorporated by reference herein.

 

3.7                               Attachments. The Exhibits attached to this
Assignment to which reference is herein made are incorporated herein by
reference and made a part hereof for all purposes.

 

3.8                               Governing Law.  This Assignment is governed by and must be construed according to the
laws of the State of California, excluding
any conflicts-of-law rule or principle that might apply the law of
another jurisdiction.

 

3.9                               Severability. If any
provision of this Assignment is found by a court of competent jurisdiction to
be invalid or unenforceable, that provision will be deemed modified to the
extent necessary to make it valid and enforceable and if it cannot be so modified, it shall be deemed deleted and the
remainder of the Assignment shall continue and remain in full force and
effect.

 

The authorized representatives
of ASSIGNOR and ASSIGNEE execute this Assignment on the dates set forth in their respective acknowledgements
hereto, but this Assignment shall be effective for all purposes as of December 1,
2007, at 7:00 a.m. Pacific Time.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  GITTE-TEN,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

5

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  ROCK
  ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R
  Oil & Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

6

 

	
  THE STATE OF CALIFORNIA

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  

 

BEFORE ME, the undersigned authority,
on this day personally appeared
                                                                      ,
the                                                                     
of Gitte-Ten, LLC, known to me to be the person whose name is subscribed to the
foregoing instrument, and swore to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated,
and as the act and deed of said limited liability company.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
             day of
December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for

  
	
   

  	
  the
  State of California

  
	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

7

 

	
  THE STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF HARRIS

  	
  §

  

 

BEFORE ME, the undersigned authority,
on this day personally appeared
                                                                          ,
the                                                   
of 4R Oil & Gas, LLC, the general partner on behalf of Rock Energy
Partners, LP, a partnership, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
             day of
December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for

  
	
   

  	
  the
  State of Texas

  
	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

8

 

ASSIGNMENT AND BILL OF SALE

(Initial Orcutt PEL Interest)

 

	
  STATE
  OF CALIFORNIA

  	
  §

  
	
   

  	
  §

  
	
  COUNTY
  OF SANTA BARBARA

  	
  §

  

 

This Assignment and Bill of Sale is executed and delivered by Phoenix
Energy, LLC (“ASSIGNOR”) to Rock Energy Partners, LP (“ASSIGNEE”) pursuant to the terms of the Base Agreement dated December 1, 2007 between Rock
Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia
Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC (the “Base Agreement”).

 

ARTICLE 1. CONVEYANCE

 

1.1                               Capitalized
Terms. Each capitalized term used in this Assignment that is not otherwise
defined herein shall have the meaning for such capitalized term as defined in
the Base Agreement, which terms are incorporated herein by such  reference.

 

1.2                               Description of
the Property. Subject to the terms of the Base Agreement and this
Assignment, ASSIGNOR hereby TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS to ASSIGNEE a 1.496% BPO Working Interest
reducing to a 1.346% APO Working Interest in the following described property
rights:

 

1.2.1                     The oil, gas
and mineral lease(s), and any ratifications or amendments to such leases
described in Exhibit A, INSOFAR AND ONLY INSOFAR AS those interests, rights and leases cover and include the lands,
depths and rights described in Exhibit A attached hereto and made a
part hereof for all purposes (the “Leases”);

 

1.2.2                     All presently existing and
valid oil, gas and/or mineral unitization, pooling, and/or communalizations
agreements, declarations and/or orders (including, without limitation, all
Units to the extent that they relate to the Leases;

 

1.2.3                     All oil, gas and condensate
wells (whether producing, not producing or abandoned), water source, water
injection and other injection or disposal wells and systems located on the
Leases or lands unitized or pooled with the Leases (the “Wells”);

 

1.2.4                     ASSIGNOR’S interest in all
equipment, facilities, flow lines, pipelines, gathering systems (other than gas
plant gathering systems), Well pads, tank batteries, improvements, fixtures,
inventory, spare parts, tools, abandoned property and junk and other personal
property on the Leases or directly used in developing or operating the Leases
and Wells or producing, treating, store, compressing, processing or
transporting hydrocarbons on the Leases or lands included in Units with which
the Leases may have been pooled or unitized;

 

1

 

1.2.5                     To the extent assignable or
transferable, ASSIGNOR’S interest in all easements, rights-of-way, licenses,
permits, servitudes, surface leases, surface use agreements, and similar rights
and interests to the extent applicable to or used in operating the Leases; and

 

1.2.6                     To the extent assignable or
transferable, ASSIGNOR’S interest in all agreements, contracts and contractual
rights, obligations and interests INSOFAR ONLY as they cover and are
attributable to the property described in Sections 1.2.1 through 1.2.5 above.

 

The 1.496% BPO Working Interest and 1.346% APO Working Interest in the above-described property rights and
interests which is hereby assigned is hereafter referred to as the “Property”.

 

1.3          Agreement.
This Assignment is made and accepted subject to all of the terms of the Base
Agreement, which are hereby deemed incorporated by reference into this
Assignment to the fullest extent permitted by law. In the event of a conflict
between the provisions of this Assignment and the provisions of the Base
Agreement, the provisions of the Base Agreement shall take precedence.

 

ARTICLE 2. DISCLAIMER OF WARRANTIES
AND TITLE DEFENSE

 

2.1                               DISCLAIMER OF TITLE WARRANTY AND ENCUMBRANCES. ASSIGNOR CONVEYS THE PURCHASED
PROPERTY TO ASSIGNEE  SUBJECT
TO THE PERMITTED ENCUMBRANCES WITHOUT WARRANTY OF
TITLE, EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE EASEMENTS,
RIGHTS-OF-WAY AND PERMITS FOR THE PIPELINES
COMPRISING A PART OF THE PURCHASED PROPERTY, ASSIGNOR EXPRESSLY DISCLAIMS, AND ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT ASSIGNOR OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; THAT THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE  ASSIGNED; THAT THEY ARE CONTIGUOUS; THAT THE
PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT TO LAY,
MAINTAIN, REPAIR, REPLACE, OPERATE, CONSTRUCT, OR REMOVE THE  PIPELINES. ASSIGNOR EXPRESSLY DISCLAIMS, AND
ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT THERE ARE ANY EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN
FORCE AND EFFECT WITH RESPECT TO THE PIPELINES.   NO DUTY IS OWED BY ASSIGNOR TO ASSIGNEE WITH
RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN ARTICLE
VIII OF THE BASE AGREEMENT.  ASSIGNOR
SHALL HAVE NO LIABILITY TO ASSIGNEE AS A RESULT OF ANY DEFAULT BY ASSIGNOR WITH
RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY ACTION TAKEN BY SECTOR
CAPITAL CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

2

 

2.2                               Defense of Title.  To the limited extent provided in the Base
Agreement, ASSIGNOR agrees to defend title to the Property against the claims
and demands (other than the Permitted Encumbrances as defined in the Base
Agreement) of all persons claiming the same or any part thereof by, through or
under ASSIGNOR but not otherwise.  Any
title failure not arising by through or under ASSIGNOR shall reduce the Net
Revenue Interest of ASSIGNEE on a proportionate basis.

 

2.3                               CONDITION AND FITNESS OF THE PROPERTY.  EXCEPT
AS EXPRESSLY SET FORTH IN THE BASE AGREEMENT,
ASSIGNOR CONVEYS THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY OR
IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND INCLUDING WARRANTIES RELATING TO
(i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY, OR (ii) THE
FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE.
ASSIGNEE HAS INSPECTED, OR BEFORE CLOSING WILL
INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT, THE PROPERTY AND IS
SATISFIED AS TO THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE, SAFETY AND
ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE)
OF THE PROPERTY AND ACCEPTS THE PROPERTY “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” AND IN ITS PRESENT CONDITION AND STATE OF
REPAIR. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ASSIGNOR MAKES NO
REPRESENTATION OR WARRANTY AS TO (i) THE VALUE, QUALITY, QUANTITY, VOLUME
OR DELIVERABILITY OF ANY OIL, GAS OR OTHER. MINERALS OR RESERVES (IF
ANY) IN, UNDER OR ATTRIBUTABLE TO THE PROPERTY (INCLUDING WITHOUT LIMITATION
PRODUCTION RATES, DECLINE RATES AND RECOMPLETION OR DRILLING OPPORTUNITIES), (ii) ALLOWABLES,
OR OTHER REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING, REGULATORY
COMPLIANCE, SAFETY OR ENVIRONMENTAL CONDITION OF THE PROPERTY, (iv) PROJECTIONS
AS TO EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL OR
ENGINEERING CONDITION OF THE PROPERTY OR ANY VALUE THEREOF.

 

2.4                               INFORMATION ABOUT THE PROPERTY.  EXCEPT
AS EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS, ASSIGNOR
DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY,
STATEMENTS OR COMMUNICATIONS (ORALLY OR IN WRITING) TO ASSIGNEE (INCLUDING, BUT
NOT LIMITED TO, ANY INFORMATION CONTAINED IN ANY OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO ANY
SUCH PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT, CONSULTANT, ENGINEER OR
ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER, BENEFICIARY, STOCKHOLDER OR
CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT TO THE PROPERTY. ASSIGNOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, AS TO THE  ACCURACY,
COMPLETENESS, OR MATERIALITY OF ANY DATA, 

 

3

 

INFORMATION
OR  RECORDS FURNISHED TO ASSIGNEE IN
CONNECTION WITH THE PROPERTY. ANY DATA, INFORMATION OR OTHER RECORDS
FURNISHED BY ASSIGNOR ARE PROVIDED TO
ASSIGNEE AS A CONVENIENCE AND ASSIGNEE’S RELIANCE ON OR USE OF THE SAME
IS AT ASSIGNEE’S SOLE RISK.  ASSIGNEE
RECOGNIZES AND AGREES THAT ALL MATERIALS, DOCUMENTS, AND OTHER INFORMATION,
MADE AVAILABLE TO IT AT ANY TIME IN CONNECTION WITH THE TRANSACTION
CONTEMPLATED HEREBY, WHETHER MADE AVAILABLE PURSUANT TO THIS SECTION OR
OTHERWISE, ARE MADE AVAILABLE TO IT AS AN ACCOMMODATION, AND WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY,
AS TO THE ACCURACY AND COMPLETENESS OF SUCH MATERIALS, DOCUMENTS, AND OTHER
INFORMATION.  ASSIGNEE EXPRESSLY AGREES
THAT ANY RELIANCE UPON OR CONCLUSIONS DRAWN THEREFROM SHALL BE AT ASSIGNEE’S
RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW AND SHALL NOT GIVE RISE TO ANY
LIABILITY OF OR AGAINST ASSIGNOR. 
ASSIGNEE HEREBY WAIVES AND RELEASES ANY CLAIMS ARISING UNDER THE BASE
AGREEMENT, THIS ASSIGNMENT, COMMON LAW OR ANY STATUTE ARISING OUT OF ANY
MATERIALS, DOCUMENTS OR INFORMATION PROVIDED TO ASSIGNEE.

 

2.5                               ASSIGNEE is prohibited from assigning any interest in the Property
except in accordance with the terms of the Base Agreement.  Any purported transfer in contravention of
the Base Agreement is null and void.

 

ARTICLE 3. OTHER PROVISIONS

 

3.1                               Further Assurances.
ASSIGNOR and ASSIGNEE will do, execute, acknowledge and deliver all further
acts, conveyances and instruments as may be reasonably necessary or appropriate
to carry out the intent of this Assignment and to more fully and accurately
assign and convey the Property to ASSIGNEE.

 

3.2                               Successors and Assigns. The
provisions of this Assignment shall be covenants running with the land, and
this Assignment shall extend to, be binding upon, and inure to the benefit of
ASSIGNOR and ASSIGNEE, and their respective successors and assigns.

 

3.3                               Assumption
of Obligations. By its acceptance of this Assignment,
ASSIGNEE shall comply with and do hereby assume and agree to perform ASSIGNEE’S
proportionate part of all express and implied covenants, obligations and
reservations contained in the Leases and to which the Property is subject and
shall bear its proportionate share of all existing burdens on the Leases, all
to the extent provided in the Base Agreement.

 

3.4                               Counterparts. This
Assignment may be executed in multiple counterparts, each of which  shall
for all purposes constitute one and the same instrument; provided, that, to
facilitate recordation, in any particular counterpart portions of the Exhibits
and Schedules attached hereto which describe Property situated in states and
counties other than the state and county in which such counterpart is to be
recorded may have been omitted.

 

4

 

3.5                               Alternate Dispute
Resolution. It is agreed, as a severable and independent
arbitration agreement separately enforceable from the remainder of this
Assignment, that if the parties hereto are unable to amicably resolve any
dispute or difference arising under or out
of, in relation to or in any way connected with this Assignment (whether
contractual, tortious, equitable, statutory or otherwise), such matter
shall be finally and exclusively referred to
and settled by mediation or arbitration in accordance with the alternate
dispute resolution provisions set forth in the Base Agreement, the terms
and provisions of which are incorporated by reference herein.

 

3.6                               Attachments. The Exhibits attached to this
Assignment to which reference is herein made are incorporated herein by
reference and made a part hereof for all purposes.

 

3.7                               Governing Law.  This Assignment is governed by and must be construed according to the
laws of the State of California, excluding
any conflicts-of-law rule or principle that might apply the law of
another jurisdiction.

 

3.8                               Severability. If any
provision of this Assignment is found by a court of competent jurisdiction to
be invalid or unenforceable, that provision will be deemed modified to the
extent necessary to make it valid and enforceable and if it cannot be so modified, it shall be deemed deleted and the
remainder of the Assignment shall continue and remain in full force and
effect.

 

The authorized representatives
of ASSIGNOR and ASSIGNEE execute this Assignment on the dates set forth in their respective acknowledgements
hereto, but this Assignment shall be effective for all purposes as of December 1,
2007, at 7:00 a.m. Pacific Time.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  PHOENIX
  ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

5

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  ROCK
  ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R
  Oil & Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

6

 

	
  THE STATE OF CALIFORNIA

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  

 

BEFORE ME, the undersigned authority,
on this day personally appeared
                                                                      ,
the                                                                     
of Phoenix Energy, LLC, known to me to be the person whose name is subscribed
to the foregoing instrument, and swore to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated,
and as the act and deed of said limited liability company.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
             day of
December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for

  
	
   

  	
  the
  State of California

  
	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

7

 

	
  THE STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF HARRIS

  	
  §

  

 

BEFORE ME, the undersigned authority,
on this day personally appeared
                                                                          ,
the
                                                  
of 4R Oil & Gas, LLC, the general partner on behalf of Rock Energy
Partners, LP, a partnership, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
             day of
December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for

  
	
   

  	
  the
  State of Texas

  
	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

8

 

ASSIGNMENT AND BILL OF SALE

(Initial Orcutt OPL Interest)

 

	
  STATE OF CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  	
   

  

 

This Assignment and Bill of Sale is executed and delivered by Orcutt
Properties, LLC (“ASSIGNOR”) to Rock Energy Partners, LP (“ASSIGNEE”) pursuant to the terms of the Base Agreement dated December 1,
2007 between Rock Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties,
LLC (the “Base Agreement”).

 

ARTICLE 1. CONVEYANCE

 

1.1                               Capitalized Terms.
Each capitalized term used in this Assignment that is not otherwise defined
herein shall have the meaning for such capitalized term as defined in the Base
Agreement, which terms are incorporated herein by such  reference.

 

1.2                               Description of the
Property. Subject to the terms of the Base Agreement and this Assignment,
ASSIGNOR hereby TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS to ASSIGNEE a
1.496% BPO Working Interest reducing to a 1.346% APO Working Interest in the
following described property rights:

 

1.2.1                     The oil, gas and mineral lease(s),
and any ratifications or amendments to such leases described in Exhibit A,
INSOFAR AND ONLY INSOFAR AS those interests, rights and leases cover and
include the lands, depths and rights described in Exhibit A attached
hereto and made a part hereof for all purposes (the “Leases”);

 

1.2.2                     All presently existing and valid
oil, gas and/or mineral unitization, pooling, and/or communalizations
agreements, declarations and/or orders (including, without limitation, all
Units to the extent that they relate to the Leases;

 

1.2.3                     All oil, gas and condensate wells
(whether producing, not producing or abandoned), water source, water injection
and other injection or disposal wells and systems located on the Leases or
lands unitized or pooled with the Leases (the “Wells”);

 

1.2.4                     ASSIGNOR’S interest in all
equipment, facilities, flow lines, pipelines, gathering systems (other than gas
plant gathering systems), Well pads, tank batteries, improvements, fixtures,
inventory, spare parts, tools, abandoned property and junk and other personal
property on the Leases or directly used in developing or operating the Leases
and Wells or producing, treating, store, compressing, processing or
transporting hydrocarbons on the Leases or lands included in Units with which
the Leases may have been pooled or unitized;

 

1

 

1.2.5                     To the extent assignable or
transferable, ASSIGNOR’S interest in all easements, rights-of-way, licenses,
permits, servitudes, surface leases, surface use agreements, and similar rights
and interests to the extent applicable to or used in operating the Leases; and

 

1.2.6                     To the extent assignable or
transferable, ASSIGNOR’S interest in all agreements, contracts and contractual
rights, obligations and interests INSOFAR ONLY as they cover and are
attributable to the property described in Sections 1.2.1 through 1.2.5 above.

 

The 1.496% BPO Working Interest and 1.346%
APO Working Interest in the above-described property rights and interests which
is hereby assigned is hereafter referred to as the “Property”.

 

1.3                               Agreement. This
Assignment is made and accepted subject to all of the terms of the Base
Agreement, which are hereby deemed incorporated by reference into this
Assignment to the fullest extent permitted by law. In the event of a conflict
between the provisions of this Assignment and the provisions of the Base
Agreement, the provisions of the Base Agreement shall take precedence.

 

ARTICLE 2. DISCLAIMER OF WARRANTIES AND TITLE
DEFENSE

 

2.1                               DISCLAIMER OF TITLE
WARRANTY AND ENCUMBRANCES. ASSIGNOR CONVEYS THE PURCHASED PROPERTY TO
ASSIGNEE SUBJECT TO THE PERMITTED ENCUMBRANCES WITHOUT WARRANTY OF TITLE,
EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE EASEMENTS, RIGHTS-OF-WAY
AND PERMITS FOR THE PIPELINES COMPRISING A PART OF THE PURCHASED PROPERTY,
ASSIGNOR EXPRESSLY DISCLAIMS, AND ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT ASSIGNOR OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; THAT
THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE ASSIGNED; THAT THEY ARE
CONTIGUOUS; THAT THE PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT TO LAY, MAINTAIN, REPAIR, REPLACE,
OPERATE, CONSTRUCT, OR REMOVE THE PIPELINES. ASSIGNOR EXPRESSLY DISCLAIMS, AND
ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND REPRESENTATIONS THAT THERE ARE ANY
EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN FORCE AND EFFECT WITH RESPECT TO THE
PIPELINES. NO DUTY IS OWED BY ASSIGNOR TO ASSIGNEE WITH RESPECT TO THE SECTOR
MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN ARTICLE VIII OF THE BASE
AGREEMENT. ASSIGNOR SHALL HAVE NO LIABILITY TO ASSIGNEE AS A RESULT OF ANY
DEFAULT BY ASSIGNOR WITH RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY
ACTION TAKEN BY SECTOR CAPITAL CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

2

 

2.2                               Defense
of Title. To the limited extent provided in the Base Agreement, ASSIGNOR
agrees to defend title to the Property against the claims and demands (other
than the Permitted Encumbrances as defined in the Base Agreement) of all
persons claiming the same or any part thereof by, through or under ASSIGNOR but
not otherwise. Any title failure not arising by through or under ASSIGNOR shall
reduce the Net Revenue Interest of ASSIGNEE on a proportionate basis.

 

2.3                               CONDITION AND FITNESS
OF THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THE BASE AGREEMENT,
ASSIGNOR CONVEYS THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY OR
IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND INCLUDING WARRANTIES RELATING TO
(i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY, OR (ii) THE
FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE. ASSIGNEE HAS INSPECTED, OR
BEFORE CLOSING WILL INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT,
THE PROPERTY AND IS SATISFIED AS TO THE PHYSICAL, OPERATING, REGULATORY
COMPLIANCE, SAFETY AND ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE) OF
THE PROPERTY AND ACCEPTS THE PROPERTY “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS”
AND IN ITS PRESENT CONDITION AND STATE OF REPAIR. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, ASSIGNOR MAKES NO REPRESENTATION OR WARRANTY AS TO
(i) THE VALUE, QUALITY, QUANTITY, VOLUME OR DELIVERABILITY OF ANY OIL, GAS
OR OTHER. MINERALS OR RESERVES (IF ANY) IN, UNDER OR ATTRIBUTABLE TO
THE PROPERTY (INCLUDING WITHOUT LIMITATION PRODUCTION RATES, DECLINE RATES AND
RECOMPLETION OR DRILLING OPPORTUNITIES), (ii) ALLOWABLES, OR OTHER
REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE,
SAFETY OR ENVIRONMENTAL CONDITION OF THE PROPERTY, (iv) PROJECTIONS AS TO
EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL OR ENGINEERING
CONDITION OF THE PROPERTY OR ANY VALUE THEREOF.

 

2.4                               INFORMATION
ABOUT THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THE TRANSACTION
DOCUMENTS, ASSIGNOR DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY
REPRESENTATION, WARRANTY, STATEMENTS OR COMMUNICATIONS (ORALLY OR IN WRITING)
TO ASSIGNEE (INCLUDING, BUT NOT LIMITED TO, ANY INFORMATION CONTAINED IN ANY
OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO ANY SUCH
PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT, CONSULTANT, ENGINEER OR
ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER, BENEFICIARY, STOCKHOLDER OR
CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT TO THE PROPERTY. ASSIGNOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE ACCURACY,
COMPLETENESS, OR MATERIALITY OF ANY DATA, 

 

3

 

INFORMATION OR
RECORDS FURNISHED TO ASSIGNEE IN CONNECTION WITH THE PROPERTY. ANY DATA,
INFORMATION OR OTHER RECORDS FURNISHED BY ASSIGNOR ARE PROVIDED TO ASSIGNEE AS
A CONVENIENCE AND ASSIGNEE’S RELIANCE ON OR USE OF THE SAME IS AT ASSIGNEE’S
SOLE RISK. ASSIGNEE RECOGNIZES AND AGREES THAT ALL MATERIALS, DOCUMENTS, AND
OTHER INFORMATION, MADE AVAILABLE TO IT AT ANY TIME IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED HEREBY, WHETHER MADE AVAILABLE PURSUANT TO THIS SECTION OR
OTHERWISE, ARE MADE AVAILABLE TO IT AS AN ACCOMMODATION, AND WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY,
AS TO THE ACCURACY AND COMPLETENESS OF SUCH MATERIALS, DOCUMENTS, AND OTHER
INFORMATION. ASSIGNEE EXPRESSLY AGREES THAT ANY RELIANCE UPON OR CONCLUSIONS
DRAWN THEREFROM SHALL BE AT ASSIGNEE’S RISK TO THE MAXIMUM EXTENT PERMITTED BY
LAW AND SHALL NOT GIVE RISE TO ANY LIABILITY OF OR AGAINST ASSIGNOR. ASSIGNEE
HEREBY WAIVES AND RELEASES ANY CLAIMS ARISING UNDER THE BASE AGREEMENT, THIS
ASSIGNMENT, COMMON LAW OR ANY STATUTE ARISING OUT OF ANY MATERIALS, DOCUMENTS
OR INFORMATION PROVIDED TO ASSIGNEE.

 

2.5                               ASSIGNEE
is prohibited from assigning any interest in the Property except in accordance
with the terms of the Base Agreement. Any purported transfer in contravention
of the Base Agreement is null and void.

 

ARTICLE 3. OTHER PROVISIONS

 

3.1                               Further Assurances.
ASSIGNOR and ASSIGNEE will do, execute, acknowledge and deliver all further
acts, conveyances and instruments as may be reasonably necessary or appropriate
to carry out the intent of this Assignment and to more fully and accurately
assign and convey the Property to ASSIGNEE.

 

3.2                               Successors
and Assigns. The provisions of this Assignment shall be covenants running
with the land, and this Assignment shall extend to, be binding upon, and inure
to the benefit of ASSIGNOR and ASSIGNEE, and their respective successors and
assigns.

 

3.3                               Assumption
of Obligations. By its acceptance of this Assignment, ASSIGNEE shall comply
with and do hereby assume and agree to perform ASSIGNEE’S proportionate part of
all express and implied covenants, obligations and reservations contained in
the Leases and to which the Property is subject and shall bear its
proportionate share of all existing burdens on the Leases, all to the extent
provided in the Base Agreement.

 

3.4                               Counterparts.
This Assignment may be executed in multiple counterparts, each of which  shall
for all purposes constitute one and the same instrument; provided, that, to
facilitate recordation, in any particular counterpart portions of the Exhibits
and Schedules attached hereto which describe Property situated in states and
counties other than the state and county in which such counterpart is to be
recorded may have been omitted.

 

4

 

3.5                               Alternate Dispute
Resolution. It is agreed, as a severable and independent arbitration
agreement separately enforceable from the remainder of this Assignment, that if
the parties hereto are unable to amicably resolve any dispute or difference
arising under or out of, in relation to or in any way connected with this
Assignment (whether contractual, tortious, equitable, statutory or otherwise),
such matter shall be finally and exclusively referred to and settled by
mediation or arbitration in accordance with the alternate dispute resolution
provisions set forth in the Base Agreement, the terms and provisions of which
are incorporated by reference herein.

 

3.6                               Attachments. The
Exhibits attached to this Assignment to which reference is herein made are
incorporated herein by reference and made a part hereof for all purposes.

 

3.7                               Governing Law.
This Assignment is governed by and must be construed according to the laws of
the State of California, excluding any conflicts-of-law rule or principle
that might apply the law of another jurisdiction.

 

3.8                               Severability. If
any provision of this Assignment is found by a court of competent jurisdiction
to be invalid or unenforceable, that provision will be deemed modified to the
extent necessary to make it valid and enforceable and if it cannot be so
modified, it shall be deemed deleted and the remainder of the Assignment shall
continue and remain in full force and effect.

 

The authorized representatives of ASSIGNOR
and ASSIGNEE execute this Assignment on the dates set forth in their respective
acknowledgements hereto, but this Assignment shall be effective for all
purposes as of December 1, 2007, at 7:00 a.m. Pacific Time.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  ORCUTT PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

5

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R Oil & Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

6

 

	
  THE STATE OF CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                      ,
the                                                                     
of Orcutt Properties, LLC, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said limited liability company.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for

  
	
   

  	
  the State of California

  
	
   

  	
   

  
	
  My Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

7

 

 

	
  THE STATE OF TEXAS

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF HARRIS

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                          ,
the
                                                  
of 4R Oil & Gas, LLC, the general partner on behalf of Rock Energy
Partners, LP, a partnership, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for

  
	
   

  	
  the State of Texas

  
	
   

  	
   

  
	
  My Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

8

 

ASSIGNMENT AND BILL OF SALE

(Second Orcutt GTL Interest)

 

	
  STATE OF CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  	
   

  

 

This Assignment and Bill of Sale is executed and delivered by
Gitte-Ten, LLC (“ASSIGNOR”) to Rock Energy Partners, LP (“ASSIGNEE”) pursuant to the terms of the Base Agreement dated December 1,
2007 between Rock Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties,
LLC (the “Base Agreement”).

 

ARTICLE 1. CONVEYANCE

 

1.1                               Capitalized Terms.
Each capitalized term used in this Assignment that is not otherwise defined
herein shall have the meaning for such capitalized term as defined in the Base
Agreement, which terms are incorporated herein by such  reference.

 

1.2                               Description of the
Property. Subject to the terms of the Base Agreement and this Assignment,
ASSIGNOR hereby TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS to ASSIGNEE a
2.03374% BPO Working Interest reducing to a 1.83037 % APO Working Interest in
the oil, gas and mineral lease(s), and any ratifications or amendments to such
leases described in Exhibit A, INSOFAR AND ONLY INSOFAR AS those
interests, rights and leases cover and include the lands, depths and rights
described in Exhibit A attached hereto and made a part hereof for all
purposes (the “Leases”). In addition, subject to the terms of the Base
Agreement and this Assignment, Assignor hereby TRANSFERS, GRANTS, SELLS,
CONVEYS and ASSIGNS a 1.834% BPO Working Interest reducing to a 1.6506% APO
Working Interest in the following:

 

1.2.1                     All presently existing and valid
oil, gas and/or mineral unitization, pooling, and/or communalizations
agreements, declarations and/or orders (including, without limitation, all
Units to the extent that they relate to the Leases;

 

1.2.2                     All oil, gas and condensate wells
(whether producing, not producing or abandoned), water source, water injection
and other injection or disposal wells and systems located on the Leases or
lands unitized or pooled with the Leases (the “Wells”);

 

1.2.3                     ASSIGNOR’S interest in all
equipment, facilities, flow lines, pipelines, gathering systems (other than gas
plant gathering systems), Well pads, tank batteries, improvements, fixtures,
inventory, spare parts, tools, abandoned property and junk and other personal
property on the Leases or directly used in developing or operating the Leases
and Wells or producing, treating, store, compressing, processing or
transporting hydrocarbons on the Leases on lands included in Units with which
the Leases may have been pooled or unitized;

 

 

1.2.4                     To the extent assignable or
transferable, ASSIGNOR’S interest in all easements, rights-of-way, licenses,
permits, servitudes, surface leases, surface use agreements, and similar rights
and interests to the extent applicable to or used in operating the Leases; and

 

1.2.5                     To the extent assignable or
transferable, ASSIGNOR’S interest in all agreements, contracts and contractual
rights, obligations and interests INSOFAR ONLY as they cover and are
attributable to the property described in Sections 1.2.1 through 1.2.4 above.

 

The Working Interests hereby assigned are
hereafter referred to as the “Property”.

 

1.3                               Agreement. This
Assignment is made and accepted subject to all of the terms of the Base
Agreement, which are hereby deemed incorporated by reference into this
Assignment to the fullest extent permitted by law. In the event of a conflict
between the provisions of this Assignment and the provisions of the Base
Agreement, the provisions of the Base Agreement shall take precedence.

 

ARTICLE 2. DISCLAIMER OF WARRANTIES AND TITLE
DEFENSE

 

2.1                               DISCLAIMER OF TITLE
WARRANTY AND ENCUMBRANCES. ASSIGNOR CONVEYS THE PURCHASED PROPERTY TO
ASSIGNEE SUBJECT TO THE PERMITTED ENCUMBRANCES WITHOUT WARRANTY OF TITLE,
EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE EASEMENTS, RIGHTS-OF-WAY
AND PERMITS FOR THE PIPELINES COMPRISING A PART OF THE PURCHASED PROPERTY,
ASSIGNOR EXPRESSLY DISCLAIMS, AND ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT ASSIGNOR OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS;
THAT THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE ASSIGNED; THAT THEY
ARE CONTIGUOUS; THAT THE PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT TO LAY, MAINTAIN, REPAIR, REPLACE,
OPERATE, CONSTRUCT, OR REMOVE THE PIPELINES. ASSIGNOR EXPRESSLY DISCLAIMS, AND
ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND REPRESENTATIONS THAT THERE ARE ANY
EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN FORCE AND EFFECT WITH RESPECT TO THE
PIPELINES. NO DUTY IS OWED BY ASSIGNOR TO ASSIGNEE WITH RESPECT TO THE SECTOR
MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN ARTICLE VIII OF THE BASE
AGREEMENT. ASSIGNOR SHALL HAVE NO LIABILITY TO ASSIGNEE AS A RESULT OF ANY
DEFAULT BY ASSIGNOR WITH RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY
ACTION TAKEN BY SECTOR CAPITAL CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

2.2                               Defense
of Title. To the limited extent provided in the Base Agreement, ASSIGNOR 

 

2

 

agrees to
defend title to the Property against the claims and demands (other than the
Permitted Encumbrances as defined in the Base Agreement) of all persons
claiming the same or any part thereof by, through or under ASSIGNOR but not
otherwise. Any title failure not arising by through or under ASSIGNOR shall
reduce the Net Revenue Interest of ASSIGNEE on a proportionate basis.

 

2.3                               CONDITION AND FITNESS
OF THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THE BASE AGREEMENT,
ASSIGNOR CONVEYS THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY OR
IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND INCLUDING WARRANTIES RELATING TO
(i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY, OR (ii) THE
FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE. ASSIGNEE HAS INSPECTED, OR
BEFORE CLOSING WILL INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT,
THE PROPERTY AND IS SATISFIED AS TO THE PHYSICAL, OPERATING, REGULATORY
COMPLIANCE, SAFETY AND ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE) OF
THE PROPERTY AND ACCEPTS THE PROPERTY “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS”
AND IN ITS PRESENT CONDITION AND STATE OF REPAIR. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, ASSIGNOR MAKES NO REPRESENTATION OR WARRANTY AS TO
(i) THE VALUE, QUALITY, QUANTITY, VOLUME OR DELIVERABILITY OF ANY OIL, GAS
OR OTHER. MINERALS OR RESERVES (IF ANY) IN, UNDER OR ATTRIBUTABLE TO
THE PROPERTY (INCLUDING WITHOUT LIMITATION PRODUCTION RATES, DECLINE RATES AND
RECOMPLETION OR DRILLING OPPORTUNITIES), (ii) ALLOWABLES, OR OTHER
REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE,
SAFETY OR ENVIRONMENTAL CONDITION OF THE PROPERTY, (iv) PROJECTIONS AS TO
EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL OR ENGINEERING
CONDITION OF THE PROPERTY OR ANY VALUE THEREOF.

 

2.4                               INFORMATION
ABOUT THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THE TRANSACTION
DOCUMENTS, ASSIGNOR DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY
REPRESENTATION, WARRANTY, STATEMENTS OR COMMUNICATIONS (ORALLY OR IN WRITING)
TO ASSIGNEE (INCLUDING, BUT NOT LIMITED TO, ANY INFORMATION CONTAINED IN ANY
OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO ANY SUCH
PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT, CONSULTANT, ENGINEER OR
ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER, BENEFICIARY, STOCKHOLDER OR
CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT TO THE PROPERTY. ASSIGNOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE ACCURACY,
COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION OR RECORDS FURNISHED TO
ASSIGNEE IN CONNECTION WITH THE PROPERTY. ANY DATA, INFORMATION OR OTHER
RECORDS 

 

3

 

FURNISHED BY
ASSIGNOR ARE PROVIDED TO ASSIGNEE AS A CONVENIENCE AND ASSIGNEE’S RELIANCE ON
OR USE OF THE SAME IS AT ASSIGNEE’S SOLE RISK. ASSIGNEE RECOGNIZES AND AGREES
THAT ALL MATERIALS, DOCUMENTS, AND OTHER INFORMATION, MADE AVAILABLE TO IT AT
ANY TIME IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY, WHETHER MADE
AVAILABLE PURSUANT TO THIS SECTION OR OTHERWISE, ARE MADE AVAILABLE TO IT
AS AN ACCOMMODATION, AND WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND,
WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO THE ACCURACY AND COMPLETENESS OF
SUCH MATERIALS, DOCUMENTS, AND OTHER INFORMATION. ASSIGNEE EXPRESSLY AGREES
THAT ANY RELIANCE UPON OR CONCLUSIONS DRAWN THEREFROM SHALL BE AT ASSIGNEE’S
RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW AND SHALL NOT GIVE RISE TO ANY
LIABILITY OF OR AGAINST ASSIGNOR. ASSIGNEE HEREBY WAIVES AND RELEASES ANY
CLAIMS ARISING UNDER THE BASE AGREEMENT, THIS ASSIGNMENT, COMMON LAW OR ANY
STATUTE ARISING OUT OF ANY MATERIALS, DOCUMENTS OR INFORMATION PROVIDED TO
ASSIGNEE.

 

2.5                               ASSIGNEE
is prohibited from assigning any interest in the Property except in accordance
with the terms of the Base Agreement. Any purported transfer in contravention
of the Base Agreement is null and void.

 

ARTICLE 3. OTHER PROVISIONS

 

3.1                               Retained Overriding
Royalty Interest. Assignor retains and excludes from this Assignment an
overriding royalty interest equal to the GTL Adjustment ORRI.

 

3.2                               Further Assurances.
ASSIGNOR and ASSIGNEE will do, execute, acknowledge and deliver all further
acts, conveyances and instruments as may be reasonably necessary or appropriate
to carry out the intent of this Assignment and to more fully and accurately assign
and convey the Property to ASSIGNEE.

 

3.3                               Successors
and Assigns. The provisions of this Assignment shall be covenants running
with the land, and this Assignment shall extend to, be binding upon, and inure
to the benefit of ASSIGNOR and ASSIGNEE, and their respective successors and
assigns.

 

3.4                               Assumption
of Obligations. By its acceptance of this Assignment, ASSIGNEE shall comply
with and do hereby assume and agree to perform ASSIGNEE’S proportionate part of
all express and implied covenants, obligations and reservations contained in
the Leases and to which the Property is subject and shall bear its
proportionate share of all existing burdens on the Leases, all to the extent
provided in the Base Agreement.

 

3.5                               Counterparts.
This Assignment may be executed in multiple counterparts, each of which  shall
for all purposes constitute one and the same instrument; provided, that, to
facilitate recordation, in any particular counterpart portions of the Exhibits
and Schedules attached hereto which describe Property situated in states and
counties other than the state and county in which such counterpart is to be
recorded may have been 

 

4

 

omitted.

 

3.6                               Alternate Dispute
Resolution. It is agreed, as a severable and independent arbitration
agreement separately enforceable from the remainder of this Assignment, that if
the parties hereto are unable to amicably resolve any dispute or difference
arising under or out of, in relation to or in any way connected with this Assignment
(whether contractual, tortious, equitable, statutory or otherwise), such matter
shall be finally and exclusively referred to and settled by mediation or
arbitration in accordance with the alternate dispute resolution provisions set
forth in the Base Agreement, the terms and provisions of which are incorporated
by reference herein.

 

3.7                               Attachments. The
Exhibits attached to this Assignment to which reference is herein made are
incorporated herein by reference and made a part hereof for all purposes.

 

3.8                               Governing Law.
This Assignment is governed by and must be construed according to the laws of
the State of California, excluding any conflicts-of-law rule or principle
that might apply the law of another jurisdiction.

 

3.9                               Severability. If
any provision of this Assignment is found by a court of competent jurisdiction
to be invalid or unenforceable, that provision will be deemed modified to the
extent necessary to make it valid and enforceable and if it cannot be so
modified, it shall be deemed deleted and the remainder of the Assignment shall
continue and remain in full force and effect.

 

The authorized representatives of ASSIGNOR
and ASSIGNEE execute this Assignment on the dates set forth in their respective
acknowledgements hereto, but this Assignment shall be effective for all
purposes as of December 1, 2007, at 7:00 a.m. Pacific Time.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  GITTE-TEN, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

5

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R Oil & Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

6

 

	
  THE STATE OF CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                      ,
the                                                                     
of Gitte-Ten, LLC, known to me to be the person whose name is subscribed to the
foregoing instrument, and swore to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated,
and as the act and deed of said limited liability company.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for

  
	
   

  	
  the State of California

  
	
   

  	
   

  
	
  My Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

7

 

	
  THE STATE OF TEXAS

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF HARRIS

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                          ,
the                                                   
of 4R Oil & Gas, LLC, the general partner on behalf of Rock Energy
Partners, LP, a partnership, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for

  
	
   

  	
  the State of Texas

  
	
   

  	
   

  
	
  My Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

8

 

ASSIGNMENT AND BILL OF SALE

(Second Orcutt PEL Interest)

 

	
  STATE OF CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  	
   

  

 

This Assignment and Bill of Sale is executed and delivered by Phoenix
Energy, LLC (“ASSIGNOR”) to Rock Energy Partners, LP (“ASSIGNEE”) pursuant to the terms of the Base Agreement dated December 1,
2007 between Rock Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties,
LLC (the “Base Agreement”).

 

ARTICLE 1. CONVEYANCE

 

1.1                               Capitalized Terms.
Each capitalized term used in this Assignment that is not otherwise defined
herein shall have the meaning for such capitalized term as defined in the Base
Agreement, which terms are incorporated herein by such  reference.

 

1.2                               Description of the
Property. Subject to the terms of the Base Agreement and this Assignment,
ASSIGNOR hereby TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS to ASSIGNEE a
1.834% BPO Working Interest reducing to a 1.6506% APO Working Interest in the
following described property rights:

 

1.2.1                     The oil, gas and mineral lease(s),
and any ratifications or amendments to such leases described in Exhibit A,
INSOFAR AND ONLY INSOFAR AS those interests, rights and leases cover and
include the lands, depths and rights described in Exhibit A attached
hereto and made a part hereof for all purposes (the “Leases”);

 

1.2.2                     All presently existing and valid
oil, gas and/or mineral unitization, pooling, and/or communalizations
agreements, declarations and/or orders (including, without limitation, all
Units to the extent that they relate to the Leases;

 

1.2.3                     All oil, gas and condensate wells
(whether producing, not producing or abandoned), water source, water injection
and other injection or disposal wells and systems located on the Leases or
lands unitized or pooled with the Leases (the “Wells”);

 

1.2.4                     ASSIGNOR’S interest in all
equipment, facilities, flow lines, pipelines, gathering systems (other than gas
plant gathering systems), Well pads, tank batteries, improvements, fixtures,
inventory, spare parts, tools, abandoned property and junk and other personal
property on the Leases or directly used in developing or operating the Leases
and Wells or producing, treating, store, compressing, processing or
transporting hydrocarbons on the Leases or lands included in Units with which
the Leases may have been pooled or unitized;

 

1

 

1.2.5                     To the extent assignable or
transferable, ASSIGNOR’S interest in all easements, rights-of-way, licenses,
permits, servitudes, surface leases, surface use agreements, and similar rights
and interests to the extent applicable to or used in operating the Leases; and

 

1.2.6                     To the extent assignable or
transferable, ASSIGNOR’S interest in all agreements, contracts and contractual
rights, obligations and interests INSOFAR ONLY as they cover and are
attributable to the property described in Sections 1.2.1 through 1.2.5 above.

 

The 1.834% BPO Working Interest and 1.6506%
APO Working Interest in the above-described property rights and interests which
is hereby assigned is hereafter referred to as the “Property”.

 

1.3                               Agreement. This
Assignment is made and accepted subject to all of the terms of the Base
Agreement, which are hereby deemed incorporated by reference into this
Assignment to the fullest extent permitted by law. In the event of a conflict
between the provisions of this Assignment and the provisions of the Base
Agreement, the provisions of the Base Agreement shall take precedence.

 

ARTICLE 2. DISCLAIMER OF WARRANTIES AND TITLE
DEFENSE

 

2.1                               DISCLAIMER OF TITLE
WARRANTY AND ENCUMBRANCES. ASSIGNOR CONVEYS THE PURCHASED PROPERTY TO
ASSIGNEE SUBJECT TO THE PERMITTED ENCUMBRANCES WITHOUT WARRANTY OF TITLE,
EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE EASEMENTS, RIGHTS-OF-WAY
AND PERMITS FOR THE PIPELINES COMPRISING A PART OF THE PURCHASED PROPERTY,
ASSIGNOR EXPRESSLY DISCLAIMS, AND ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT ASSIGNOR OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS;
THAT THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE ASSIGNED; THAT THEY
ARE CONTIGUOUS; THAT THE PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT TO LAY, MAINTAIN, REPAIR, REPLACE,
OPERATE, CONSTRUCT, OR REMOVE THE PIPELINES. ASSIGNOR EXPRESSLY DISCLAIMS, AND
ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND REPRESENTATIONS THAT THERE ARE ANY
EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN FORCE AND EFFECT WITH RESPECT TO THE
PIPELINES. NO DUTY IS OWED BY ASSIGNOR TO ASSIGNEE WITH RESPECT TO THE SECTOR
MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN ARTICLE VIII OF THE BASE
AGREEMENT. ASSIGNOR SHALL HAVE NO LIABILITY TO ASSIGNEE AS A RESULT OF ANY
DEFAULT BY ASSIGNOR WITH RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY
ACTION TAKEN BY SECTOR CAPITAL CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

2

 

2.2                               Defense
of Title. To the limited extent provided in the Base Agreement, ASSIGNOR
agrees to defend title to the Property against the claims and demands (other
than the Permitted Encumbrances as defined in the Base Agreement) of all
persons claiming the same or any part thereof by, through or under ASSIGNOR but
not otherwise. Any title failure not arising by through or under ASSIGNOR shall
reduce the Net Revenue Interest of ASSIGNEE on a proportionate basis.

 

2.3                               CONDITION AND FITNESS
OF THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THE BASE AGREEMENT,
ASSIGNOR CONVEYS THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY OR
IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND INCLUDING WARRANTIES RELATING TO
(i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY, OR (ii) THE
FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE. ASSIGNEE HAS INSPECTED, OR
BEFORE CLOSING WILL INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT,
THE PROPERTY AND IS SATISFIED AS TO THE PHYSICAL, OPERATING, REGULATORY
COMPLIANCE, SAFETY AND ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE) OF
THE PROPERTY AND ACCEPTS THE PROPERTY “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS”
AND IN ITS PRESENT CONDITION AND STATE OF REPAIR. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, ASSIGNOR MAKES NO REPRESENTATION OR WARRANTY AS TO
(i) THE VALUE, QUALITY, QUANTITY, VOLUME OR DELIVERABILITY OF ANY OIL, GAS
OR OTHER. MINERALS OR RESERVES (IF ANY) IN, UNDER OR ATTRIBUTABLE TO
THE PROPERTY (INCLUDING WITHOUT LIMITATION PRODUCTION RATES, DECLINE RATES AND
RECOMPLETION OR DRILLING OPPORTUNITIES), (ii) ALLOWABLES, OR OTHER
REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE,
SAFETY OR ENVIRONMENTAL CONDITION OF THE PROPERTY, (iv) PROJECTIONS AS TO
EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL OR ENGINEERING
CONDITION OF THE PROPERTY OR ANY VALUE THEREOF.

 

2.4                               INFORMATION
ABOUT THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THE TRANSACTION
DOCUMENTS, ASSIGNOR DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY
REPRESENTATION, WARRANTY, STATEMENTS OR COMMUNICATIONS (ORALLY OR IN WRITING)
TO ASSIGNEE (INCLUDING, BUT NOT LIMITED TO, ANY INFORMATION CONTAINED IN ANY
OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO ANY SUCH
PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT, CONSULTANT, ENGINEER OR
ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER, BENEFICIARY, STOCKHOLDER OR
CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT TO THE PROPERTY. ASSIGNOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE ACCURACY,
COMPLETENESS, OR MATERIALITY OF ANY DATA, 

 

3

 

INFORMATION OR
RECORDS FURNISHED TO ASSIGNEE IN CONNECTION WITH THE PROPERTY. ANY DATA,
INFORMATION OR OTHER RECORDS FURNISHED BY ASSIGNOR ARE PROVIDED TO ASSIGNEE AS
A CONVENIENCE AND ASSIGNEE’S RELIANCE ON OR USE OF THE SAME IS AT ASSIGNEE’S
SOLE RISK. ASSIGNEE RECOGNIZES AND AGREES THAT ALL MATERIALS, DOCUMENTS, AND
OTHER INFORMATION, MADE AVAILABLE TO IT AT ANY TIME IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED HEREBY, WHETHER MADE AVAILABLE PURSUANT TO THIS SECTION OR
OTHERWISE, ARE MADE AVAILABLE TO IT AS AN ACCOMMODATION, AND WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY,
AS TO THE ACCURACY AND COMPLETENESS OF SUCH MATERIALS, DOCUMENTS, AND OTHER
INFORMATION. ASSIGNEE EXPRESSLY AGREES THAT ANY RELIANCE UPON OR CONCLUSIONS
DRAWN THEREFROM SHALL BE AT ASSIGNEE’S RISK TO THE MAXIMUM EXTENT PERMITTED BY
LAW AND SHALL NOT GIVE RISE TO ANY LIABILITY OF OR AGAINST ASSIGNOR. ASSIGNEE
HEREBY WAIVES AND RELEASES ANY CLAIMS ARISING UNDER THE BASE AGREEMENT, THIS
ASSIGNMENT, COMMON LAW OR ANY STATUTE ARISING OUT OF ANY MATERIALS, DOCUMENTS
OR INFORMATION PROVIDED TO ASSIGNEE.

 

2.5                               ASSIGNEE
is prohibited from assigning any interest in the Property except in accordance
with the terms of the Base Agreement. Any purported transfer in contravention
of the Base Agreement is null and void.

 

ARTICLE 3. OTHER PROVISIONS

 

3.1                               Further Assurances.
ASSIGNOR and ASSIGNEE will do, execute, acknowledge and deliver all further
acts, conveyances and instruments as may be reasonably necessary or appropriate
to carry out the intent of this Assignment and to more fully and accurately
assign and convey the Property to ASSIGNEE.

 

3.2                               Successors
and Assigns. The provisions of this Assignment shall be covenants running
with the land, and this Assignment shall extend to, be binding upon, and inure
to the benefit of ASSIGNOR and ASSIGNEE, and their respective successors and
assigns.

 

3.3                               Assumption
of Obligations. By its acceptance of this Assignment, ASSIGNEE shall comply
with and do hereby assume and agree to perform ASSIGNEE’S proportionate part of
all express and implied covenants, obligations and reservations contained in
the Leases and to which the Property is subject and shall bear its
proportionate share of all existing burdens on the Leases, all to the extent
provided in the Base Agreement.

 

3.4                               Counterparts.
This Assignment may be executed in multiple counterparts, each of which  shall
for all purposes constitute one and the same instrument; provided, that, to
facilitate recordation, in any particular counterpart portions of the Exhibits
and Schedules attached hereto which describe Property situated in states and
counties other than the state and county in which such counterpart is to be
recorded may have been omitted.

 

4

 

3.5                               Alternate Dispute
Resolution. It is agreed, as a severable and independent arbitration
agreement separately enforceable from the remainder of this Assignment, that if
the parties hereto are unable to amicably resolve any dispute or difference
arising under or out of, in relation to or in any way connected with this
Assignment (whether contractual, tortious, equitable, statutory or otherwise),
such matter shall be finally and exclusively referred to and settled by
mediation or arbitration in accordance with the alternate dispute resolution
provisions set forth in the Base Agreement, the terms and provisions of which
are incorporated by reference herein.

 

3.6                               Attachments. The
Exhibits attached to this Assignment to which reference is herein made are
incorporated herein by reference and made a part hereof for all purposes.

 

3.7                               Governing Law.
This Assignment is governed by and must be construed according to the laws of
the State of California, excluding any conflicts-of-law rule or principle
that might apply the law of another jurisdiction.

 

3.8                               Severability. If
any provision of this Assignment is found by a court of competent jurisdiction
to be invalid or unenforceable, that provision will be deemed modified to the
extent necessary to make it valid and enforceable and if it cannot be so
modified, it shall be deemed deleted and the remainder of the Assignment shall
continue and remain in full force and effect.

 

The authorized representatives of ASSIGNOR
and ASSIGNEE execute this Assignment on the dates set forth in their respective
acknowledgements hereto, but this Assignment shall be effective for all
purposes as of December 1, 2007, at 7:00 a.m. Pacific Time.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  PHOENIX ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

5

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R Oil & Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

6

 

	
  THE STATE OF CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                      ,
the                                                                     
of Phoenix Energy, LLC, known to me to be the person whose name is subscribed
to the foregoing instrument, and swore to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated,
and as the act and deed of said limited liability company.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for

  
	
   

  	
  the State of California

  
	
   

  	
   

  
	
  My Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

7

 

	
  THE STATE OF TEXAS

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF HARRIS

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                          ,
the
                                                  
of 4R Oil & Gas, LLC, the general partner on behalf of Rock Energy
Partners, LP, a partnership, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for

  
	
   

  	
  the State of Texas

  
	
   

  	
   

  
	
  My Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

8

 

ASSIGNMENT AND BILL OF SALE

(Second Orcutt OPL Interest)

 

	
  STATE OF
  CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY
  OF SANTA BARBARA

  	
  §

  	
   

  

 

This
Assignment and Bill of Sale is executed and delivered by Orcutt Properties, LLC
(“ASSIGNOR”) to Rock Energy Partners, LP
(“ASSIGNEE”) pursuant to the terms of the Base Agreement dated December
1, 2007 between Rock Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties,
LLC (the “Base Agreement”).

 

ARTICLE 1. CONVEYANCE

 

1.1          Capitalized
Terms. Each capitalized term used in this Assignment that is not otherwise
defined herein shall have the meaning for such capitalized term as defined in
the Base Agreement, which terms are incorporated herein by such  reference.

 

1.2          Description
of the Property. Subject to the terms of the Base Agreement and this
Assignment, ASSIGNOR hereby TRANSFERS, GRANTS, SELLS, CONVEYS and ASSIGNS to
ASSIGNEE a 1.834% BPO Working Interest reducing to a 1.6506% APO Working
Interest in the following described property rights:

 

1.2.1       The
oil, gas and mineral lease(s), and any ratifications or amendments to such
leases described in Exhibit A, INSOFAR AND ONLY INSOFAR AS those interests,
rights and leases cover and include the lands, depths and rights described in
Exhibit A attached hereto and made a part hereof for all purposes (the “Leases”);

 

1.2.2       All
presently existing and valid oil, gas and/or mineral unitization, pooling,
and/or communalizations agreements, declarations and/or orders (including,
without limitation, all Units to the extent that they relate to the Leases;

 

1.2.3       All
oil, gas and condensate wells (whether producing, not producing or abandoned),
water source, water injection and other injection or disposal wells and systems
located on the Leases or lands unitized or pooled with the Leases (the “Wells”);

 

1.2.4       ASSIGNOR’S
interest in all equipment, facilities, flow lines, pipelines, gathering systems
(other than gas plant gathering systems), Well pads, tank batteries,
improvements, fixtures, inventory, spare parts, tools, abandoned property and
junk and other personal property on the Leases or directly used in developing
or operating the Leases and Wells or producing, treating, store, compressing,
processing or transporting hydrocarbons on the Leases or lands included in
Units with which the Leases may have been pooled or unitized;

 

1

 

1.2.5       To
the extent assignable or transferable, ASSIGNOR’S interest in all easements,
rights-of-way, licenses, permits, servitudes, surface leases, surface use
agreements, and similar rights and interests to the extent applicable to or
used in operating the Leases; and

 

1.2.6       To
the extent assignable or transferable, ASSIGNOR’S interest in all agreements, contracts
and contractual rights, obligations and interests INSOFAR ONLY as they cover
and are attributable to the property described in Sections 1.2.1 through 1.2.5
above.

 

The 1.834% BPO Working Interest and 1.6506% APO Working Interest in the
above-described property rights and interests which is hereby assigned is
hereafter referred to as the “Property”.

 

1.3          Agreement.
This Assignment is made and accepted subject to all of the terms of the Base
Agreement, which are hereby deemed incorporated by reference into this
Assignment to the fullest extent permitted by law. In the event of a conflict
between the provisions of this Assignment and the provisions of the Base
Agreement, the provisions of the Base Agreement shall take precedence.

 

ARTICLE 2. DISCLAIMER OF WARRANTIES AND TITLE
DEFENSE

 

2.1          DISCLAIMER
OF TITLE WARRANTY AND ENCUMBRANCES. ASSIGNOR CONVEYS THE PURCHASED PROPERTY
TO ASSIGNEE SUBJECT TO THE PERMITTED ENCUMBRANCES WITHOUT WARRANTY OF TITLE,
EXPRESS OR IMPLIED. SPECIFICALLY WITH RESPECT TO THE EASEMENTS, RIGHTS-OF-WAY
AND PERMITS FOR THE PIPELINES COMPRISING A PART OF THE PURCHASED PROPERTY,
ASSIGNOR EXPRESSLY DISCLAIMS, AND ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND
REPRESENTATIONS THAT ASSIGNOR OWNS THE EASEMENTS, RIGHTS-OF-WAY AND PERMITS; THAT
THEY ARE IN FORCE AND EFFECT; THAT THEY MAY BE ASSIGNED; THAT THEY ARE
CONTIGUOUS; THAT THE PIPELINES LIE WITHIN THE EASEMENTS, RIGHTS-OF-WAY AND
PERMITS; OR THAT THEY GRANT THE RIGHT TO LAY, MAINTAIN, REPAIR, REPLACE,
OPERATE, CONSTRUCT, OR REMOVE THE PIPELINES. ASSIGNOR EXPRESSLY DISCLAIMS, AND
ASSIGNEE HEREBY WAIVES, ALL WARRANTIES AND REPRESENTATIONS THAT THERE ARE ANY
EASEMENTS, RIGHTS-OF-WAY, OR PERMITS IN FORCE AND EFFECT WITH RESPECT TO THE
PIPELINES. NO DUTY IS OWED BY ASSIGNOR TO ASSIGNEE WITH RESPECT TO THE SECTOR
MORTGAGE INDEBTEDNESS OTHER THAN AS SET FORTH IN ARTICLE VIII OF THE BASE
AGREEMENT. ASSIGNOR SHALL HAVE NO LIABILITY TO ASSIGNEE AS A RESULT OF ANY
DEFAULT BY ASSIGNOR WITH RESPECT TO THE SECTOR MORTGAGE INDEBTEDNESS OR ANY
ACTION TAKEN BY SECTOR CAPITAL CORPORATION AS A CONSEQUENCE OF SUCH DEFAULT.

 

2

 

2.2          Defense of Title. To the limited
extent provided in the Base Agreement, ASSIGNOR agrees to defend title to the
Property against the claims and demands (other than the Permitted Encumbrances
as defined in the Base Agreement) of all persons claiming the same or any part
thereof by, through or under ASSIGNOR but not otherwise. Any title failure not
arising by through or under ASSIGNOR shall reduce the Net Revenue Interest of
ASSIGNEE on a proportionate basis.

 

2.3          CONDITION
AND FITNESS OF THE PROPERTY. EXCEPT AS EXPRESSLY SET FORTH IN THE BASE
AGREEMENT, ASSIGNOR CONVEYS THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS,
STATUTORY OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND INCLUDING
WARRANTIES RELATING TO (i) THE CONDITION OR MERCHANTABILITY OF THE PROPERTY, OR
(ii) THE FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE. ASSIGNEE HAS
INSPECTED, OR BEFORE CLOSING WILL INSPECT OR WILL HAVE BEEN GIVEN THE
OPPORTUNITY TO INSPECT, THE PROPERTY AND IS SATISFIED AS TO THE PHYSICAL,
OPERATING, REGULATORY COMPLIANCE, SAFETY AND ENVIRONMENTAL CONDITION (BOTH
SURFACE AND SUBSURFACE) OF THE PROPERTY AND ACCEPTS THE PROPERTY “AS IS,” “WHERE
IS,” AND “WITH ALL FAULTS” AND IN ITS PRESENT CONDITION AND STATE OF REPAIR.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ASSIGNOR MAKES NO
REPRESENTATION OR WARRANTY AS TO (i) THE VALUE, QUALITY, QUANTITY, VOLUME OR
DELIVERABILITY OF ANY OIL, GAS OR OTHER. MINERALS OR RESERVES (IF
ANY) IN, UNDER OR ATTRIBUTABLE TO THE PROPERTY (INCLUDING WITHOUT LIMITATION
PRODUCTION RATES, DECLINE RATES AND RECOMPLETION OR DRILLING OPPORTUNITIES),
(ii) ALLOWABLES, OR OTHER REGULATORY MATTERS, (iii) THE PHYSICAL, OPERATING,
REGULATORY COMPLIANCE, SAFETY OR ENVIRONMENTAL CONDITION OF THE PROPERTY, (iv)
PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR, OR (v) THE GEOLOGICAL
OR ENGINEERING CONDITION OF THE PROPERTY OR ANY VALUE THEREOF.

 

2.4          INFORMATION ABOUT THE PROPERTY. EXCEPT
AS EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS, ASSIGNOR DISCLAIMS ALL
LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENTS OR
COMMUNICATIONS (ORALLY OR IN WRITING) TO ASSIGNEE (INCLUDING, BUT NOT LIMITED
TO, ANY INFORMATION CONTAINED IN ANY OPINION, INFORMATION, OR ADVICE THAT MAY
HAVE BEEN PROVIDED TO ANY SUCH PARTY BY ANY EMPLOYEE, OFFICER, DIRECTOR, AGENT,
CONSULTANT, ENGINEER OR ENGINEERING FIRM, REPRESENTATIVE, PARTNER, MEMBER,
BENEFICIARY, STOCKHOLDER OR CONTRACTOR) WHEREVER AND HOWEVER MADE WITH RESPECT
TO THE PROPERTY. ASSIGNOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, AS TO THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY DATA,

 

3

 

INFORMATION OR RECORDS FURNISHED TO ASSIGNEE
IN CONNECTION WITH THE PROPERTY. ANY DATA, INFORMATION OR OTHER RECORDS
FURNISHED BY ASSIGNOR ARE PROVIDED TO ASSIGNEE AS A CONVENIENCE AND ASSIGNEE’S
RELIANCE ON OR USE OF THE SAME IS AT ASSIGNEE’S SOLE RISK. ASSIGNEE RECOGNIZES
AND AGREES THAT ALL MATERIALS, DOCUMENTS, AND OTHER INFORMATION, MADE AVAILABLE
TO IT AT ANY TIME IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY,
WHETHER MADE AVAILABLE PURSUANT TO THIS SECTION OR OTHERWISE, ARE MADE
AVAILABLE TO IT AS AN ACCOMMODATION, AND WITHOUT REPRESENTATION OR WARRANTY OF
ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO THE ACCURACY AND
COMPLETENESS OF SUCH MATERIALS, DOCUMENTS, AND OTHER INFORMATION. ASSIGNEE
EXPRESSLY AGREES THAT ANY RELIANCE UPON OR CONCLUSIONS DRAWN THEREFROM SHALL BE
AT ASSIGNEE’S RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW AND SHALL NOT GIVE
RISE TO ANY LIABILITY OF OR AGAINST ASSIGNOR. ASSIGNEE HEREBY WAIVES AND
RELEASES ANY CLAIMS ARISING UNDER THE BASE AGREEMENT, THIS ASSIGNMENT, COMMON
LAW OR ANY STATUTE ARISING OUT OF ANY MATERIALS, DOCUMENTS OR INFORMATION
PROVIDED TO ASSIGNEE.

 

2.5          ASSIGNEE is prohibited from assigning any
interest in the Property except in accordance with the terms of the Base
Agreement. Any purported transfer in contravention of the Base Agreement is
null and void.

 

ARTICLE 3. OTHER PROVISIONS

 

3.1          Further
Assurances. ASSIGNOR and ASSIGNEE will do, execute, acknowledge and deliver
all further acts, conveyances and instruments as may be reasonably necessary or
appropriate to carry out the intent of this Assignment and to more fully and
accurately assign and convey the Property to ASSIGNEE.

 

3.2          Successors and Assigns. The provisions
of this Assignment shall be covenants running with the land, and this
Assignment shall extend to, be binding upon, and inure to the benefit of
ASSIGNOR and ASSIGNEE, and their respective successors and assigns.

 

3.3          Assumption of Obligations. By its
acceptance of this Assignment, ASSIGNEE shall comply with and do hereby assume
and agree to perform ASSIGNEE’S proportionate part of all express and implied
covenants, obligations and reservations contained in the Leases and to which
the Property is subject and shall bear its proportionate share of all existing
burdens on the Leases, all to the extent provided in the Base Agreement.

 

3.4          Counterparts. This Assignment may be
executed in multiple counterparts, each of which  shall for
all purposes constitute one and the same instrument; provided, that, to
facilitate recordation, in any particular counterpart portions of the Exhibits
and Schedules attached hereto which describe Property situated in states and
counties other than the state and county in which such counterpart is to be
recorded may have been omitted.

 

4

 

3.5          Alternate
Dispute Resolution. It is agreed, as a severable and independent
arbitration agreement separately enforceable from the remainder of this
Assignment, that if the parties hereto are unable to amicably resolve any
dispute or difference arising under or out of, in relation to or in any way
connected with this Assignment (whether contractual, tortious, equitable,
statutory or otherwise), such matter shall be finally and exclusively referred
to and settled by mediation or arbitration in accordance with the alternate
dispute resolution provisions set forth in the Base Agreement, the terms and
provisions of which are incorporated by reference herein.

 

3.6          Attachments.
The Exhibits attached to this Assignment to which reference is herein made are
incorporated herein by reference and made a part hereof for all purposes.

 

3.7          Governing
Law. This Assignment is governed by and must be construed according to the
laws of the State of California, excluding any conflicts-of-law rule or
principle that might apply the law of another jurisdiction.

 

3.8          Severability.
If any provision of this Assignment is found by a court of competent
jurisdiction to be invalid or unenforceable, that provision will be deemed
modified to the extent necessary to make it valid and enforceable and if it
cannot be so modified, it shall be deemed deleted and the remainder of the
Assignment shall continue and remain in full force and effect.

 

The authorized representatives of ASSIGNOR and ASSIGNEE execute this
Assignment on the dates set forth in their respective acknowledgements hereto,
but this Assignment shall be effective for all purposes as of December 1, 2007,
at 7:00 a.m. Pacific Time.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  ORCUTT
  PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

5

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  ROCK ENERGY
  PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  4R Oil &
  Gas, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

6

 

	
  THE STATE OF CALIFORNIA

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF SANTA BARBARA

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                      ,
the                                                                     
of Orcutt Properties, LLC, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said limited liability company.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for

  
	
   

  	
  the State of
  California

  
	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

7

 

	
  THE STATE OF TEXAS

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF HARRIS

  	
  §

  	
   

  

 

BEFORE ME, the
undersigned authority, on this day personally appeared
                                                                          ,
the
                                                  
of 4R Oil & Gas, LLC, the general partner on behalf of Rock Energy
Partners, LP, a partnership, known to me to be the person whose name is
subscribed to the foregoing instrument, and swore to me that he executed the
same for the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE,
this             
day of December, 2007.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for

  
	
   

  	
  the State of
  Texas

  
	
   

  	
   

  
	
  My
  Commission expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

8

 

REAFFIRMATION
AND RELEASE

(SMP
Parties)

 

This Reaffirmation and Release dated
                              ,
200     is executed by Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties,
LLC (the “SMP Parties”).

 

WHEREAS, a Base Agreement dated December 1,
2007 was entered into by and between the Rock Energy Partners, LP and the SMP
Parties (“Base Agreement”). Rock Energy Partners, LP, is hereinafter referred
to as “REP”;

 

WHEREAS, pursuant to the terms of the Base
Agreement, a Development/Earn-In Agreement dated effective December 14,
2007 was entered into by and between REP and the SMP Parties (“Development/Earn-In
Agreement”);

 

WHEREAS, pursuant to the terms of the Base
Agreement, a Purchase Option Agreement dated effective December 14, 2007
was entered into by and between REP and the SMP Parties (“Purchase Option
Agreement”);

 

WHEREAS, the SMP Parties are tendering this
Reaffirmation and Release in connection with their exercise of Option
       pursuant to the
                            
Agreement to acquire the following interest: 
[INSERT DESCRIPTION OF INTEREST] (“Subject Interest”);

 

WHEREAS, this Reaffirmation and Release is
executed as of the closing conducted with respect to Option
       pursuant to the
                        
Agreement; and

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged:

 

1.             The
definitions of the terms contained in the Base Agreement are incorporated
herein. All terms defined in the Base Agreement will have the same meaning when
employed in this Agreement.

 

2.             Seller
hereby affirms that the representations set forth in Section 4.1 of the
Base Agreement are true and accurate as of the date hereof.

 

3.             The
SMP Parties on behalf of themselves and, to the extent permitted by law or
otherwise, on behalf of all partners, members, shareholders and investors,
hereby waive and release claims based upon or arising out of alleged (i) breach
by REP of the Base Agreement during the period December     ,
2007 through the date hereof, (ii) breach by REP of the
Development/Earn-In Agreement during the period December     ,
2007 through the date hereof, and (iii) breach by REP of the Purchase
Option Agreement during the period December     , 2007
through the date hereof. THIS RELEASE COVERS CLAIMS BASED UPON OR ARISING OUT
OF THE THREE ITEMS LISTED IN THIS PARAGRAPH REGARDLESS OF WHETHER KNOWN OR
UNKNOWN, AND HOWEVER OR WHENEVER ARISING. THE SMP
PARTIES CERTIFY 

 

 

THAT THEY HAVE READ, UNDERSTAND AND EXPRESSLY
WAIVE THE FOLLOWING PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542:

 

“A general release does not extend to claims
which creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”

 

THE SMP PARTIES UNDERSTAND AND ACKNOWLEDGE THAT THE SIGNIFICANCE AND
CONSEQUENCE OF THIS WAIVER OF CALIFORNIA CIVIL CODE SECTION 1542 IS THAT
EVEN IF ONE OF THEM SHOULD EVENTUALLY SUFFER ADDITIONAL DAMAGES OR LOSSES FROM
THEIR PRIOR INTERACTIONS, OR SHOULD THERE EXIST OTHER UNDISCLOSED OBLIGATIONS
OR LIABILITIES EXISTING BETWEEN THEM, INCLUDING THEIR ASSIGNEES, THE SMP
PARTIES WILL NOT BE ABLE TO MAKE ANY CLAIM FOR THOSE DAMAGES, LOSSES OR
OBLIGATIONS. FURTHERMORE, THE SMP PARTIES ACKNOWLEDGE THAT THEY INTEND THESE
CONSEQUENCES, EVEN AS TO CLAIMS FOR DAMAGES, LOSSES OR OBLIGATIONS THAT MAY EXIST
AS OF THE DATE OF THIS AGREEMENT, BUT WHICH THE SMP PARTIES DO NOT KNOW EXIST,
AND WHICH, IF KNOWN, WOULD MATERIALLY AFFECT THEIR DECISION, EITHER SINGULARLY
OR COLLECTIVELY, TO EXECUTE THIS AGREEMENT, REGARDLESS OF THE CAUSE OR THEIR
LACK OF KNOWLEDGE. REP IS NOT RELEASED HEREBY FROM (I) ANY OBLIGATION OR
LIABILITY UNDER THE OPERATING AGREEMENTS, OR (II) ANY CLAIMS BASED UPON A
BREACH OF ANY REPRESENTATION WHICH WAS AFFIRMED IN THE REP REAFFIRMATION AND
RELEASE DATED
                                ,
200      .

 

	
   

  	
  SANTA MARIA PACIFIC, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GITTE-TEN, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
										

 

2

 

	
   

  	
  NW CASMALIA PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PHOENIX ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ORCUTT PROPERTIES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
										

 

3

 

REAFFIRMATION
AND RELEASE

(REP)

 

This Reaffirmation and Release is dated
                  ,
200     executed by Rock Energy Partners, LP ( “REP”).

 

WHEREAS, a Base Agreement dated December 1,
2007 was entered into by and between REP and Santa Maria Pacific, LLC,
Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt
Properties, LLC (the “Base Agreement”). Santa Maria Pacific, LLC, Gitte-Ten,
LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt Properties,
LLC are hereinafter referred to as the “SMP Parties”;

 

WHEREAS, pursuant to the terms of the Base
Agreement, a Development/Earn-In Agreement dated effective December 14,
2007 was entered into by and between REP and the SMP Parties (“Development/Earn-In
Agreement”);

 

WHEREAS, pursuant to the terms of the Base
Agreement, a Purchase Option Agreement dated effective December 14, 2007
was entered into by and between REP and the SMP Parties (“Purchase Option
Agreement”);

 

WHEREAS, REP is tendering this Reaffirmation
and Release in connection with its exercise of Option
       pursuant to the
                            
Agreement to acquire the following interest: 
[INSERT DESCRIPTION OF INTEREST] (“Subject Interest”);

 

WHEREAS, this Reaffirmation and Release is
executed as of the closing conducted with respect to Option
       pursuant to the
                        
Agreement; and

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged:

 

1.             The
definitions of the terms contained in the Base Agreement are incorporated
herein. All terms defined in the Base Agreement will have the same meaning when
employed in this Agreement.

 

2.             REP
hereby affirms that the representations set forth in Sections 4.1 and 4.3 of
the Base Agreement are true and accurate as of the date hereof.

 

3.             REP
hereby affirms that the representations set forth in Sections 4.1 and 4.3 of
the Base Agreement are true and accurate with respect to REP’s acquisition of
the Subject Interest.

 

4.             REP
hereby ratifies and affirms the disclaimers contained in Article V of the
Base Agreement as of the date hereof with respect to acquisition of the Subject
Interest.

 

5.             REP
on behalf of itself and, to the extent permitted by law or otherwise, on behalf
of all partners, members, shareholders and investors, hereby waives and
releases claims based upon or arising out of alleged (i) breach of any
duty as Operator under the applicable Operator 

 

 

Agreement during the period December     ,
2007 through the date hereof, (ii) breach by an SMP Party of the Base
Agreement during the period December     , 2007
through the date hereof, (iii) breach by an SMP Party of the
Development/Earn-In Agreement during the period December     ,
2007 through the date hereof, and (iv) breach by an SMP Party of the
Purchase Option Agreement during the period December       ,
2007 through the date hereof. THIS RELEASE COVERS CLAIMS BASED UPON OR ARISING
OUT OF THE FOUR ITEMS LISTED IN THIS PARAGRAPH REGARDLESS OF WHETHER KNOWN OR
UNKNOWN, AND HOWEVER OR WHENEVER ARISING. REP CERTIFIES
THAT THEY HAVE READ, UNDERSTAND AND EXPRESSLY WAIVE THE FOLLOWING PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542:

 

“A general release does not extend to claims
which creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”

 

REP UNDERSTANDS AND ACKNOWLEDGES THAT THE SIGNIFICANCE AND CONSEQUENCE
OF THIS WAIVER OF CALIFORNIA CIVIL CODE SECTION 1542 IS THAT EVEN IF IT
SHOULD EVENTUALLY SUFFER ADDITIONAL DAMAGES OR LOSSES FROM THEIR PRIOR
INTERACTIONS, OR SHOULD THERE EXIST OTHER UNDISCLOSED OBLIGATIONS OR
LIABILITIES EXISTING BETWEEN THEM, INCLUDING THEIR ASSIGNEES, REP WILL NOT BE
ABLE TO MAKE ANY CLAIM FOR THOSE DAMAGES, LOSSES OR OBLIGATIONS. FURTHERMORE,
REP ACKNOWLEDGES THAT IT INTENDS THESE CONSEQUENCES, EVEN AS TO CLAIMS FOR
DAMAGES, LOSSES OR OBLIGATIONS THAT MAY EXIST AS OF THE DATE OF THIS
AGREEMENT, BUT WHICH REP DOES NOT KNOW EXIST, AND WHICH, IF KNOWN, WOULD
MATERIALLY AFFECT ITS DECISION, EITHER SINGULARLY OR COLLECTIVELY, TO EXECUTE
THIS AGREEMENT, REGARDLESS OF THE CAUSE OR ITS LACK OF KNOWLEDGE. THE SMP
PARTIES ARE NOT RELEASED FROM ANY CLAIMS BASED UPON A BREACH OF ANY
REPRESENTATION WHICH WAS AFFIRMED IN THE SMP PARTIES REAFFIRMATION AND RELEASE
DATED
                                    ,
200    .

 

	
   

  	
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

2

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