Document:

Oceana
      Partners LLC 

    
      

    

    CORPORATE
      FINANCE 

    

    

    June
      13,
      2006

    

    Mr.
      Andrew Boyland

    Chief
      Executive Officer

    SweetskinZ
      Holdings, Inc.

    2311
      Wallace Street

    Philadelphia,
      PA 19130

    

    Dear
      Mr.
      Boyland,

    

    This
      agreement replaces in its entirety the earlier letter agreement dated November
      30, 2005. This engagement letter shall serve as our agreement (the “Agreement”)
      under which Oceana Partners LLC (“Oceana” or the “Advisor”) is retained as the
      exclusive financial advisor and placement agent to SweetskinZ Holdings, Inc.
      (the “Company”) and such other activities and services as the Company shall
      require. In connection therewith, the parties hereto agree as
      follows:

    

    1.
      Information
      and Coordination.
      The
      Company will supply Oceana with all current publicly disclosed information
      respecting the Company’s business prospects and operations (the “Information”).
      The Company recognizes and confirms that Oceana (a) will use and rely primarily
      on the Information in performing the services contemplated by this Agreement
      without having independently verified the same, (b) does not assume
      responsibility for the accuracy or completeness of the Information and (c)
      will
      not make an appraisal of any assets of the Company or any prospective investors
      or purchaser of the Offering. To the best of the Company’s knowledge, the
      Information to be furnished by the Company, when delivered, will be true and
      correct in all material respects and will not contain any material misstatement
      of fact or omit to state any material fact necessary to make the statements
      contained therein not misleading. The Company shall make available to Oceana
      and/or shall agree to have professionally prepared at the Company’s expense, all
      financial statements, marketing materials, subscription documents and other
      information which in Oceana’s reasonable judgment shall be necessary or
      appropriate. The Company will promptly notify Oceana if it learns of any
      material inaccuracy or misstatement in or material omission from, any
      Information theretofore delivered to Oceana. Advisor will coordinate its
      activities with the Company regarding the marketing of the securities to
      investors during the term of this Agreement, as herein defined. The Company
      will
      make senior management reasonably available for meetings with prospective
      investors. 

    

    2.
      Exclusive
      Engagement.
      During
      the Term, as below defined, Advisor shall serve as the exclusive advisor to
      the
      Company for purposes of the Company’s financial and capital formation,
      investment banking and merger and acquisition activities. Nothing herein shall
      preclude Advisor from engaging sub-advisors to assist Advisor in the performance
      of these activities. In such case, sub-advisors shall be compensated for their
      services from such portion of the compensation described under Section 4 hereof
      as Advisor shall determine in its sole discretion. Mr. David Nelson shall not
      be
      deemed a sub-advisor in connection herewith. Advisor shall identify on
      Attachment A hereto each potential investor in a financing under the Term,
      which
      the Advisor or any sub-advisors contact during the Term and the Company is
      not
      in discussions with or otherwise has a previous relationship with (the “Oceana
      Investor(s)”). It is specifically agreed that Advisor and any sub-advisors shall
      not be paid a fee on proceeds received by entities or individuals which or
      who
      are not introduced to the Company by Advisor or any sub-advisor.

    

      
        

      

    

    
      
        
          Oceana
            Partners LLC

          275
            Seventh Avenue, Suite 2000

          New
            York,
            New York 10001

          Phone
            (212) 661-5353 Fax (646) 486-6885 

        

      

      
        
        

        
          

        

      

      
        
          Oceana
            Partners LLC 

          
            

          

          CORPORATE
            FINANCE 

        

      

      
         

      

       

    

    3.
      Term.
      This
      Agreement shall become effective on the execution date hereof and, unless
      previously terminated pursuant to Paragraph 10 below, shall continue in effect
      until December 31, 2007 (the "Termination Date"). The period from the date
      hereof until the Expiration Date is hereafter referred to as the “Term.”

    

    4.
      Compensation. 

    

    
      	 	
              a.)

            	
              On
                each date on which any equity
                or equity linked debt securities
                are issued to an Oceana Investor and cash is received by the Company
                (each
                such date a "Closing Date"), the Company shall pay to Oceana or its
                designee, in cash, a commission equal to seven percent (7%) of the
                gross
                purchase price for the equity securities. In addition, the Company
                shall
                issue to Oceana, or its designee, common stock purchase warrants
                (the
                "Warrants") to purchase seven percent (7%) of the aggregate common
                stock
                issued on the Closing Date or Closing Dates at an exercise price
                per
                Warrant equal to the price of the common stock on such Closing Date.
                If
                different classes of securities are issued in the form of a Unit,
                then
                Oceana shall be issued a Unit Purchase option equal to seven percent
                (7%)
                of the aggregate Units issued at an exercise price per Unit equal
                to the
                price of the Unit on such Closing Date. The Warrants or Units shall
                be
                exercisable upon issuance, shall expire five years from the Closing
                Date,
                unless otherwise extended by the Company, and shall have cashless
                exercise
                provisions. The Warrants or Units shall also have piggyback and demand
                registration rights, anti-dilution and such other similar provisions
                identical to the securities sold on the Closing Date. 
                The Company shall have the right to reject in whole or in part any
                proposed purchaser of the securities in its sole and absolute discretion.
                In the event that the Company does not accept funds from any Oceana
                Investor, Oceana shall not be entitled to any commission hereunder
                relating to such proposed purchaser.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          Oceana
            Partners LLC 

          
            

          

          CORPORATE
            FINANCE 

        

      

       

       

    

    
      	 	
              b.)

            	
              On
                each date on which any non
                equity-linked debt securities
                are issued to an Oceana Investor and cash is received by the Company
                (each
                such date a "Closing Date"), the Company shall pay to Oceana or its
                designee, in cash, a commission equal to four percent (4%) of the
                gross
                purchase price for the debt securities. In the event derivative equity
                securities (such as warrants) are linked to such debt securities,
                the
                Company shall also issue to Oceana, or its designee, common stock
                purchase
                warrants (the "Warrants") to purchase seven percent (7%) of the aggregate
                derivative securities issued at an exercise price per Warrant equal
                to the
                conversion price per derivate security on such Closing Date. If different
                classes of derivative securities are issuable, then separate Warrants
                shall be issued in respect of each class of derivative securities
                equal to
                seven percent (7%) of the aggregate derivative securities issued.
                The
                Warrants shall be exercisable upon issuance, shall expire five years
                from
                the Closing Date, unless otherwise extended by the Company, and shall
                have
                cashless exercise provisions. The Warrants shall also have piggyback
                and
                demand registration rights, anti-dilution and such other similar
                provisions identical to the securities issuable upon conversion of
                the
                convertible debt sold on the Closing Date. 
                The Company shall have the right to reject in whole or in part any
                proposed purchaser of the debt securities in its sole and absolute
                discretion. In the event that the Company does not accept funds from
                any
                Oceana Investor, Oceana shall not be entitled to any commission hereunder
                relating to such proposed purchaser.

            

    

    

    
      	 	
              c.)

            	
              Notwithstanding
                the foregoing, in connection with Oceana’s placement on behalf of the
                Company of $4,133,793 of 5% senior convertible debentures and 4,133,793
                three year common stock purchase warrants (the “Warrants”) in May 2006,
                the Company shall pay Oceana a fee equal to $200,000 (of which $50,000
                has
                been paid) and a unit purchase option to purchase 200,000 units,
                each unit
                (“Unit”) consisting of one share of common stock and a warrant to purchase
                one share of common stock at an exercise price of $1.15 per share.
                The
                unit purchase option is exercisable for $1 per Unit. In addition,
                the
                Company shall pay Oceana an amount equal to 4% of the gross amount
                realized by the Company, if any, upon the exercise of the
                Warrants.

            

    

    

    
      	 	
              d.)

            	
              With
                respect to any merger and acquisition services to be rendered by
                Oceana during the Term, the parties shall negotiate an appropriate
                fee at that time.

            

    

    

    
      	 	
              e.)

            	
              This
                agreement shall act as irrevocable payment authorization instructions
                authorizing the Oceana Investor to wire payment of the fee directly
                to
                Oceana on the Closing Date.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          Oceana
            Partners LLC 

          
            

          

          CORPORATE
            FINANCE 

        

      

       

    

    5.
      Retainer.
       No
      retainers shall be payable hereunder. 

    

    6.
      Expenses.
      Oceana
      will be promptly reimbursed by the Company for all reasonable and authorized
      out-of-pocket expenses incurred in connection with its activities hereunder.
      These expenses may include, but are not limited to, travel
      and lodging expenses, due diligence and investor meetings and events, expenses
      to print documents for the Company, and postal expenses incurred for mailing
      documents, such as materials to investors, for the Company. Oceana shall not
      incur any expenses or series of related expenses, subject to reimbursement
      by
      the Company hereunder, which are in excess of $250, without obtaining the
      Company’s prior written approval.

    

    7.
      Indemnification.
      To the
      extent the Advisor becomes involved in any capacity in any action, claim,
      proceeding or investigation brought or threatened by any person, including
      the
      Company’s stockholders, related to or arising out of or in connection with this
      Agreement, the Company will promptly reimburse the Advisor for reasonable legal
      and other expenses as and when they are incurred in connection therewith. The
      Company will indemnify and hold the Advisor harmless from and against any
      losses, claims, damages, liabilities or expense to which the Advisor may become
      subject under any applicable Federal or state law, or otherwise, related to,
      arising out of or in connection with this Agreement, whether or not any pending
      or threatened action, claim, proceeding, or investigation giving rise to or
      on
      the Advisor’s behalf and whether or not in connection with any action,
      proceeding or investigation in which the Advisor is a party, except as to that
      portion of any such loss, claim, damage, liability or expense which is found
      by
      a court of competent jurisdiction in a judgment which has become final, in
      that
      it is no longer subject to appeal or review, to have resulted from the Advisor’s
      bad faith or gross negligence. The Advisor agrees to promptly notify the Company
      of any action, claim, proceeding or investigation with regard to which the
      Company may be liable for indemnification pursuant to the terms of this
      Agreement. Neither the termination of this Agreement nor the completion of
      the
      services provided hereunder shall affect these indemnification provisions which
      shall remain operative and in full force and effect.

    

    8.
      Arbitration.
      Any
      dispute between the Company and Oceana shall be subject to binding arbitration
      before a New York City based panel of one arbitrator in accordance with the
      rules of the American Arbitration Association. Prior to the selection of the
      arbitrator of the binding arbitration, the parties shall first attempt
      non-binding mediation before a mediator selected by said Association. In the
      event the mediator makes a determination and only one of the parties refuses
      to
      accept said determination, then the refusing party shall be responsible for
      all
      arbitration and attorney’s fees of the other party should the refusing party
      receive a less favorable result from the binding arbitration, subject however
      to
      the discretion of the arbitrators to reallocate these costs if cause is so
      found
      by the arbitrators.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          Oceana
            Partners LLC 

          
            

          

          CORPORATE
            FINANCE 

        

      

      
         

         

      

    

    9.
      Amendments This
      Agreement may only be varied by written agreement between the Advisor and the
      Company. All such variations shall only be effective when in writing, signed
      by
      the duly authorized representatives of both parties.

     

    10.
      Termination Subject
      to Paragraphs 4, 6, 7 and 11, the provision of services hereunder may be
      terminated prior to the Termination Date by the Company and/or the Advisor
      by
      giving written notice to the other party in the following events:

     

    -
      force majeure, defined
      as a situation which, in the opinion of either party, creates any change or
      development in existing laws and regulations or in local or international
      financial, political, military, economic or market conditions or currency
      exchange rate which is likely to render impossible the Offering;

     

    -
      breach
      of any commitments hereunder by Advisor (which is not remedied within 14 days
      after written notification to such effect);

     

    In
      the
      event that the Agreement is terminated prior to the Termination Date, the
      Company will forthwith pay the Advisor those of its expenses and fees incurred
      or owing up to the Termination Date. 

     

    11.
      Tail.
      Within
      20 business days of the Termination Date, the Advisor shall deliver to the
      Company a list identifying all investors that Oceana and any of its sub-advisors
      had solicited in connection herewith. In the event the Company thereafter
      receives funding from any Oceana Investor or an affiliate thereof, within 18
      months of the Termination Date (the “Tail Period”), then the Company shall pay
      the Advisor the fee as described in paragraph 4 (the “Tail Fee”). The Tail Fee
      shall apply to any Oceana Investors, including their affiliates, and to any
      third party investor introduced to the Company by Oceana Investors or affiliates
      thereof assuming such third party investor was not previously in discussions
      with the Company before such introduction.

    

    12.
      Notices.
      Notices
      shall be served to the address/fax number of each party set out in this letter
      (or such other address as any of the parties may notify to the other in writing
      from time to time). Such notice shall be deemed to be duly given or made when
      it
      shall have been delivered by registered mail, courier or fax, which shall be
      confirmed by registered mail or courier, to the party to which it is required
      to
      be given or made.

     

    
      	Contact Addresses:	 
	 	 
	 	 
	Oceana Partners LLC:	
              Mr. Courtlandt G. Miller

              
                Oceana
                  Partners LLC

                275
                  Seventh Avenue, Suite 2000

                New
                  York, NY 10001

                Tel:
                  212 661-5353

                Fax:
                  646 486-6885

              

            
	 	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          Oceana
            Partners LLC 

          
            

          

          CORPORATE
            FINANCE 

        

      

    

     

     

    
      	SweetskinZ Holdings,
              Inc.	
              Mr. Andrew Boyland

              
                2311
                  Wallace Street

                Philadelphia,
                  PA 19130

                Tel.
                  215 235-3555

                Fax
                  215 235-8971

              

            

    

        

    13.
      Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      New
      York.

    

    14.
      Miscellaneous.
      This
      Agreement sets forth the understanding of the parties relating to the subject
      matter hereof, and supersedes and cancels any prior communications,
      understandings and agreements between the parties with respect to the subject
      matter hereof. This Agreement cannot be modified or changed, nor can any of
      its
      provisions be waived, except in writing when signed by both parties.

    

    If
      the
      foregoing meets with your understanding, kindly acknowledge your acceptance
      at
      the place indicated on this letter and on the enclosed copy of this letter.
      Please return one of the executed letters to me and keep one for your
      files.    

    

    Sincerely,

    

    Oceana
      Partners LLC

    

    /s/
      Courtlandt G. Miller

    ____________________________

    Courtlandt
      G. Miller

    Senior
      Managing Director

    

         

    ACCEPTED
      AND AGREED TO BY:

    

    SweetskinZ
      Holdings, Inc.

    

    /s/
      Andrew Boyland

    ______________________

    Andrew
      Boyland 

    Chief
      Executive Officer

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          Oceana
            Partners LLC 

          
            

          

          CORPORATE
            FINANCE 

        

      

    

     

     

    ATTACHMENT
      A

    

    1.
      Siam Capital Management (Orlando)

    2. 
      DB Zwirn  (NYC)

    3. 
      Sandhurst Capital/Crestview Capital (Darien/Northbrook)

    4. 
      Laurus Funds (NYC)

    5. 
      Redwood (San Francisco)

    6. 
      Bushido/Gamma (NYC)

    7. 
      Iroquois (NYC)

    8. 
      MAG Capital (LA)

    9. 
      Omicron (NYC)

    10.
      Rock Hill (Bala Cynwyd)

    11.
      LV Equity (Hoboken)

    12.
      Vision Capital (NYC)

    13.
      Sangamon (Chicago)

    14.
      DC Asset Management (NYC)

    15.
      New York Consulting Group (NYC)

    16.
      Midsummer (NYC)

    17.
      Bristol Capital (San Francisco)

    18.
      Canaccord (Toronto)

    19.
      Enable Capital (San Francisco)

    20.
      LH Financial (NYC)

    21.
      Gryphon (Dallas) 

    22.
      GM Capital

    23.
      Ram (Truk)

    24.
      DH Blair

    25.
      Hudson Bay Capital

    26.
      Whalehaven

    27.
      Crestview

    28.
      CentreCourt Asset Managment

    29.
      LibertyView

    30.
      Dolphin Asset Management

    31.
      Scorpion Capital PartnersPURCHASE
      AND SALE AGREEMENT I

     

    This
      Purchase and Sale Agreement I ("Agreement"), dated as of May 8, 2006, is by
      and
      between NGS
      Sub Corp.,
      whose
      address is Two Memorial City Plaza, 820 Gessner Road, Suite 1340, Houston,
      TX
      77024 ( “Seller”), and
      Denbury Onshore, LLC, whose
      address is 5100 Tennyson Parkway, Suite 1200, Plano, Texas 75024 ("Buyer").
      Seller and Buyer are sometimes together referred to herein as
      "Parties".

    

    R
      E C I T A L S

    

    WHEREAS,
      Seller owns certain oil and gas leasehold interests and related assets more
      fully described on the exhibits hereto; 

    

    WHEREAS,
      Seller desires to sell and Buyer desires to acquire these interests and related
      assets on the terms and conditions hereinafter provided;

    

    WHEREAS,
      the Parties have previously executed a certain Purchase And Sale Agreement
      dated
      as of May 8, 2006 (the “Original Purchase and Sale Agreement”), which conveyed
      one hundred percent (100%) of Seller’s interest in the Delhi Holt Bryant Unit to
      Buyer (subject to other express terms and conditions contained
      therein);

    

    WHEREAS,
      the Seller desires to bifurcate the Original Purchase and Sale Agreement into
      two (2) separate agreements in order to assist in the consummation of a
      Like-Kind Exchange and Buyer has agreed to cooperate in said
      revisions;

    

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements hereinafter
      set forth, Seller and Buyer hereby agree as follows:

    

    

    ARTICLE
      1. - DEFINITIONS

    

    1.1. "Agreement"
      shall
      mean this Purchase and Sale Agreement I between Seller and Buyer, and said
      Agreement does hereby amend, supersede and replace the Original Purchase and
      Sale Agreement.
      

    

    1.2. "Assets"
      shall
      mean the following described assets and properties (except to the extent
      constituting Excluded Assets):

    

    
      	
            	(a)	
              the
                Leases;

            

    

    
      	
            	(b)	
              the
                Real Property, Personal Property and Incidental Rights;
                and

            

    

    
      	
            	(c)	
              the
                Inventory Hydrocarbons; and

            

    

    
      	
            	(d)	
              the
                Delhi Holt Bryant Unit.

            

    

    

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    1.3. "Assumed
      Obligations"
      shall
      mean:

    

    (a) all
      Environmental Obligations or Liabilities arising after the Effective Time;
      

    

    (b) all
      obligations with respect to gas production, sales or, subject to Article 18,
      processing imbalances with third parties; 

     

    (c) all
      liabilities, duties, and obligations that arise out of the ownership, operation
      or use of the Assets after the Effective Time, including, but not limited to,
      all liabilities, duties, and obligations, express or implied, imposed upon
      Seller herein under the provisions of the Leases and any and all assignments,
      subleases, farmout agreements, assignments of overriding royalty, joint
      operating agreements, easements, rights-of-way, and all other contracts,
      agreements and instruments affecting the Leases, or the premises covered
      thereby, whether recorded or unrecorded, and under all applicable laws, rules,
      regulations, orders and ordinances, excluding, but not limited to, the claims
      and suits set forth in Exhibit “F”.

    

    (d) the
      obligations of Seller under that certain Site Specific Trust Account as
      previously set up for the plugging of abandoned wellbores in the Delhi Holt
      Bryant Unit. Buyer shall within sixty (60) days after the Closing Date (as
      hereinafter defined) provide the requested cash or irrevocable stand-by letter
      of credit sufficient to assume all of Sellers obligations under the Site
      Specific Trust Account and to cause the Seller to be released from its financial
      obligations thereunder. 

    

    1.4. "Closing"
      shall be
      as defined in Section 13.1.

    

    1.5. "Closing
      Date"
      shall be
      as defined in Section 13.1.

    

    1.6. "Effective
      Time"
      shall
      mean 7:00 a.m., local time, on June 1, 2006.

    

    1.7. “Environmental
      Defect”
      shall
      mean: (i) a condition or activity with respect to an Asset that is in material
      violation, or reasonably likely to materially violate, any federal, state or
      local statute, or any rule, order, ruling or regulation entered, issued or
      made
      by any court, administrative agency, or other governmental body or entity,
      federal, state, or local, or any arbitrator (“Environmental
      Law”),
      or
      surface or mineral lease obligation, whether an express or implied obligation,
      relating to natural resources, conservation, the environment, or the emission,
      release, storage, treatment, disposal, transportation, handling or management
      of
      industrial or solid waste, hazardous waste, hazardous or toxic substances,
      chemicals or pollutants, petroleum, including crude oil, natural gas, natural
      gas liquids, or liquefied natural gas, and any wastes associated with the
      exploration and production of oil and gas (“Regulated
      Substances”);
      or
      (ii) the presence of Regulated Substances in the soil, groundwater, or surface
      water in, on, at or under an Asset in any manner or quantity which is required
      to be remediated by Environmental Law or by any applicable action or guidance
      levels or other standards published by any governmental agency with jurisdiction
      over the Assets, or by a surface or mineral lease obligation, whether an express
      or implied obligation. Buyer and Seller agree that for a condition to be in
      violation of any statute or regulation it shall not be necessary that Seller
      shall be under notice of violation from a federal or state regulatory agency
      or
      lessor. 

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    The
      Parties agree and acknowledge that Buyer will be provided an opportunity to
      examine the Assets for potential naturally occurring radioactive materials
      (“NORM”), and any potential obligations with respect to NORM and that the
      presence of NORM on any of the Assets, except with respect to inactive wells,
      facilities, pipelines and other equipment, may not be raised by Buyer as the
      subject of an Environmental Defect.

    

    1.8. "Environmental
      Obligations or Liabilities"
      shall
      mean all liabilities, obligations, expenses (including, without limitation,
      all
      attorneys' fees), fines, penalties, costs, claims, suits or damages (including
      natural resource damages) of any nature, associated with the Assets, and
      attributable to or resulting from: (i) pollution or contamination of soil,
      groundwater or air, on, in or under the Assets or lands in the vicinity thereof,
      and any other contamination of or adverse effect upon the environment, (ii)
      underground injection activities and waste disposal, (iii) clean-up responses,
      remedial, control or compliance costs, including the required cleanup or
      remediation of spills, pits, lakes, ponds, or lagoons, including any subsurface
      or surface pollution caused by such spills, pits, lakes, ponds, or lagoons,
      (iv)
      noncompliance with applicable land use, permitting, surface disturbance,
      licensing or notification requirements, including those in a surface or mineral
      lease, whether an express or implied obligation, (v) all obligations, whether
      pursuant to an Environmental Law or a surface or mineral lease obligation,
      whether express or implied, for plugging, replugging and abandoning any wells,
      the restoration of any well sites, tank battery sites and gas plant sites,
      and
      any other surface locations or sites, the proper removal, disposal and
      abandonment of any wastes or fixtures, and the proper capping and burying of
      all
      flow lines, which are included in the Assets; (vi) violation of any federal,
      state or local Environmental Law or land use law, or surface or mineral lease
      obligation, whether an express or implied obligation, and (vii) any other
      violation which could qualify as an Environmental Defect. Notwithstanding
      anything to the contrary set forth in, or implied by, this Section 1.8,
      "Environmental Obligations or Liabilities" does not include (i) personal injury
      or wrongful death occurring prior to the Effective Time or (ii) offsite waste
      disposal occurring prior to the Effective Time.

    

    1.9. "Excluded
      Assets"
      shall
      mean the following:

    

    (a) Seller
      saves and excepts from the Assignment and Conveyance , the lessors’ royalty, all
      overriding royalty and other burdens on production encumbering the Delhi Holt
      Bryant Unit as of the Effective Time (including, without limiting the foregoing,
      that certain Act of Sale And Assignment executed on January 31, 2006 but
      effective as of December 1, 2005, by and between James H. Jones and Kristi
      S
      Jones, as Vendors and NGS Sub Corp., as Vendee). It being the intention of
      the
      Seller to convey to Buyer a net revenue interest of not less than fifty six
      percent (56%) in the Delhi Holt Bryant Unit. 

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    (b) an
      undivided seventeen and one-half percent of eight eighths (17.5% of 8/8ths)
      working interest in and to the Assets which are not included in the Delhi Holt
      Bryant Unit. It being the intent of the Parties that the Seller shall convey
      to
      the Buyer, at Closing, an undivided fifty two and one-half percent of eight
      eighths (52.5% of 8/8ths) working interest in the Assets which are not included
      in the Delhi Holt Bryant Unit, proportionately reduced to the interest owned
      by
      Seller, if any. 

    

    (c) any
      acquisitions of, or agreements to acquire, royalty interests in the Leases,
      made
      by Seller prior to the Effective Time, which are identified and described in
      Exhibit “K”, and no additional offers to acquire such royalty interest have been
      or will be made by Seller after May 1, 2006.

    

    (d) an
      undivided reversionary working interest of seventeen and one-half percent of
      eight eighths (17.5% of 8/8ths ) and a net revenue interest of not less than
      fourteen percent of eight eighths (14.0% of 8/8ths), in the Delhi Holt Bryant
      Unit, (collectively, the “Reversionary Interests”), at such time as the Buyer
      has achieved “Payout” of the Delhi Holt Bryant Unit. “Payout” shall be defined
      as that point in time when Buyer has received “Total Net Cash Flow” from Buyer’s
      operation in and on the Delhi Holt Bryant Unit in the amount of two hundred
      million and no/100 dollars ($200,000,000.00) to the one hundred percent (100%)
      Working Interest. It being the intent of the parties that the Seller shall
      convey to the Buyer at Closing an undivided seventy percent (70.0%) working
      interest in the Delhi Holt Bryant Unit, subject to the Seller’s Reversionary
      Interests. Seller’s Reversionary Interests as set forth above will be
      proportionately reduced in the event Buyer’s actual working interest and/or net
      revenue interest, respectively, acquired by virtue of this Agreement are less
      than the interest set forth above. Seller’s Reversionary Interests shall
      automatically revert to the Seller once “Payout” has been achieved, without any
      further action on the part of the Seller. Seller’s Reversionary Interests will
      be effective on the first day of the month next succeeding the point in time
      in
      which “Payout” has occurred. Within fifteen (15) days after “Payout” has
      occurred, Buyer shall provide Seller with an Assignment of the Seller’s
      Reversionary Interests, which will be free and clear of all liens and
      encumbrances of any kind. Seller’s Reversionary Interests shall be subject to
      the following additional terms and provisions:

    

    (1) Total
      Net
      Cash Flow for purposes of this Agreement and as utilized in determining when
      “Payout” has occurred, is defined as being the excess of Net Revenues from the
      Delhi Holt Bryant Unit over all Operating Costs for the Delhi Holt Bryant Unit,
      being all costs and expenses to operate, maintain and produce the Delhi Holt
      Bryant Unit, but excluding capital costs and capital expenditures (including
      those set forth in Section 3.4). Net Revenues are defined as being gross
      revenues from the Delhi Holt Bryant Unit operations less any applicable federal,
      state and local taxes (including excise, production, severance, sales, and
      ad
      valorem taxes, but excluding any income based taxes) and less revenue
      attributable to royalties, Seller’s overriding royalty interest, and any other
      overriding royalty interests, production payments, net profit interest and
      similar interests or burdens of record prior to or as of the Effective Time.
      Operating Costs used in computing Total Net Cash Flow shall be the total Delhi
      Holt Bryant Unit operating costs and expenses (including administrative overhead
      charges) actually incurred and expended by the Operator and charged to the
      joint
      account by the Operator, as set forth in the Accounting Procedure of the Unit
      Operating Agreement, deemed transportation costs to deliver CO2 to the Delhi
      Holt Bryant Unit [being the stipulated and agreed costs set forth in
      subparagraph 1.9 (b)(2) below], deemed costs for CO2 delivered to the Delhi
      Holt
      Bryant Unit [being the stipulated and agreed costs set forth in subparagraph
      1.9
      (b)(2) below]. An “mcf” of CO2 shall be 1000 cubic feet of CO2 at standard
      conditions.

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (2) If
      CO2 is
      used by Buyer for enhanced oil production from the Delhi Holt Bryant Unit,
      Buyer
      shall act as a reasonable prudent operator in delivering C02 to the Delhi Holt
      Bryant Unit in a timely manner and in sufficient quantities to efficiently
      conduct operations to enhance oil production Buyer will deliver CO2 to the
      Delhi
      Holt Bryant Unit at a pipeline pressure of 1100 psi for a fixed transportation
      cost per standard mcf of twenty cents ($.20), for a period of time not to exceed
      ten (10) years from the date of first pipeline deliveries of CO2 to the Delhi
      Holt Bryant Unit. The agreed cost for the CO2 delivered to the Delhi Holt Bryant
      Unit will be equal to one percent (1%) of the price per barrel of crude oil
      sold
      from the Delhi Holt Bryant Unit per standard mcf of CO2 as determined each
      month. The agreed cost of the CO2 delivered by the Buyer to the Delhi Holt
      Bryant Unit shall not increase for the entire life of the CO2 operations
      conducted on the Delhi Holt Bryant Unit. The above transportation costs and
      costs for CO2 are stipulated by the Parties to be the deemed costs for purposes
      of the Delhi Holt Bryant Unit, regardless of actual costs or other factors
      or
      circumstances. All CO2 injected into the Delhi Holt Bryant Unit shall be owned
      by the working interest owners proportionate to their interests. Any CO2
      delivered to the Delhi Holt Bryant Unit and used by Buyer for any purpose other
      than in the Delhi Holt Bryant Unit shall be credited to the Total Net Cash
      Flow
      calculation as revenue at the same cost that the CO2 is charged as provided
      above.

    

    (3) Costs
      associated with building, owning, operating, and maintaining CO2 pipelines
      used
      by Buyer to deliver CO2 to the Delhi Holt Bryant Unit and within the Delhi
      Holt
      Bryant Unit, including pipelines from the source field for the CO2, shall not
      be
      included in the computation of the costs used to determine Total Net Cash Flow
      or “Payout”, but shall only be used in computing the capital expenditure
      commitment set forth in Section 3.4. All such CO2 pipelines shall be owned
      solely by Buyer, and Seller shall not have or be entitled to any interest in
      such pipelines, reversionary or otherwise.

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (4) Seller’s
      Reversionary Interests in the Delhi Holt Bryant Unit, after it reverts shall
      be
      subject to the terms and provisions of the Unit Operating Agreement. After
      such
      Reversionary Interests revert to Seller, Seller shall be liable for and shall
      assume and pay its proportionate working interest share of all subsequent costs
      associated with its working interest in the Delhi Holt Bryant Unit, including
      capital costs.

    

    (5) If
      for
      any reason Seller desires not to accept the Reversionary Interests provided
      for
      in this Paragraph (b), and the obligations and liabilities associated with
      such
      Reversionary Interests, Seller may decline to accept such Interests by notifying
      Buyer in writing on or before fifteen (15) days after the effective date of
      reversion. After receipt of such a notice, Seller’s right to the Reversionary
      Interests will terminate.

    

    (6)
      Prior
      to Payout Buyer shall
      provide to Seller (i) on a monthly basis operating reports covering revenues,
      operating expenses, capital expenditures, production and injection volumes
      and
      product prices received; and (ii) a quarterly statement (with all supporting
      documentation) identifying the status of Total Net Cash Flow amounts and Payout
      Statement for the Delhi Holt Bryant Unit; and (iii) Buyer shall further provide
      Seller with quarterly reports including historical and prospective technical
      information relating to the Delhi Holt Bryant Unit including, but not limited
      to
      injection and production data on a field and well basis, well logs, cores,
      tests
      and any other data necessary for Seller to perform its own technical analysis;
      and (iv) the right to request an annual technical presentation to be presented
      to Seller by the appropriate technical staff of Buyer. Seller shall have the
      right to conduct an annual audit of the accounts and records of Buyer (at a
      mutually convenient time during Assignor’s normal business hours and in
      accordance with the Council of Petroleum Accountants Society guidelines and
      practices for audits by working interest owners) to verify the accounting for
      the Total Net Cash Flow amount and Payout. Such audits may be performed by
      Seller directly or through an independent accounting firm of its choice, but
      in
      each case at the Seller’s sole cost and expense. Notwithstanding the above, all
      Payout accounting by Buyer during any calendar year shall conclusively be
      presumed true and correct after twenty four months following the end of any
      such
      calendar year, unless within the said twenty four month period, Seller takes
      written exception thereto and makes claim on Buyer for adjustments.

    

    (c) (i)
      all
      trade credits, accounts receivable, notes receivable and other receivables
      attributable to Seller's interest in the Assets with respect to any period
      of
      time prior to the Effective Time; (ii) all deposits, cash, checks in process
      of
      collection, cash equivalents and funds attributable to Seller's interest in
      the
      Assets with respect to any period of time prior to the Effective Time; and
      (iii)
      all proceeds, benefits, income or revenues accruing with respect to the Assets
      prior to the Effective Time;

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    (d) all
      corporate, financial, and tax records of Seller; however, Buyer shall be
      entitled to receive copies of any tax records which directly relate to any
      Assumed Obligations, or which are necessary for Buyer's ownership,
      administration, or operation of the Assets;

    

    (e) all
      claims and causes of action of Seller arising from acts, omissions or events,
      or
      damage to or destruction of the Assets, occurring prior to the Effective Time;
      provided, however, Seller shall transfer to Buyer all claims and causes of
      action of Seller against prior owners of the Assets or third parties for
      Environmental Obligations or Liabilities that are not Retained Environmental
      Obligations or Liabilities;

    

    (f) except
      as
      otherwise provided in Article 15, all rights, titles, claims and interests
      of
      Seller relating to the Assets prior to the Effective Time (i) under any policy
      or agreement of insurance or indemnity; (ii) under any bond; or (iii) to any
      insurance or condemnation proceeds or awards;

    

    (g) all
      Hydrocarbons produced from or attributable to the Assets with respect to all
      periods prior to the Effective Time, together with all proceeds from or of
      such
      Hydrocarbons, except the Inventory Hydrocarbons and the unsold inventory of
      gas
      plant products, if any, attributable to the Leases as of the Effective
      Time;

    

    (h) claims
      of
      Seller for refund of or loss carry forwards with respect to production, windfall
      profit, severance, ad valorem or any other taxes attributable to any period
      prior to the Effective Time, or income or franchise taxes;

    

    (i) all
      amounts due or payable to Seller as adjustments or refunds under any contracts
      or agreements (including take-or-pay claims) affecting the Assets with respect
      to any period prior to the Effective Time;

    

    (j) all
      amounts due or payable to Seller as adjustments to insurance premiums related
      to
      the Assets with respect to any period prior to the Effective Time;

    

    (k) all
      proceeds, benefits, income or revenues accruing (and any security or other
      deposits made) with respect to the Assets, and all accounts receivable
      attributable to the Assets, prior to the Effective Time; and

    

    (l) all
      of
      Seller's intellectual property, including, but not limited to, proprietary
      computer software, patents, trade secrets, copyrights, names, marks and logos.
      

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    1.10. "Hydrocarbons"
      shall
      mean crude oil, natural gas, casinghead gas, condensate, sulphur, natural gas
      liquids and other liquid or gaseous hydrocarbons (including CO2),
      and
      shall also refer to all other minerals of every kind and character which may
      be
      covered by or included in the Leases and Assets.

    

    1.11. "Inventory
      Hydrocarbons"
      shall
      mean all merchantable oil and condensate (for oil or liquids in storage tanks,
      being only that oil or liquids physically above the top of the inlet connection
      into such tanks) produced from or attributable to the Leases prior to the
      Effective Time which have not been sold by Seller and are in storage at the
      Effective Time.

    

    1.12. "Leases"
      shall
      mean, except to the extent constituting Excluded Assets, any and all interests
      owned by Seller, including but without limitation those set forth on Exhibit
      “A,” or which Seller is entitled to receive by reason of any participation,
      joint venture, farmin, farmout, joint operating agreement, unitization
      agreement, or other agreement, in and to the oil, gas and/or mineral leases,
      permits, licenses, concessions, leasehold estates, royalty interests, overriding
      royalty interests, net revenue interests, executory interests, net profit
      interests, working interests, reversionary interests, mineral interests, and
      any
      other interests of Seller in Hydrocarbons, in the Delhi Holt Bryant Unit,
      Franklin, Madison and Richland Parishes, Louisiana (referred to herein as the
      “Delhi Holt Bryant Unit” as more fully described below), and in those lands
      located within the aerial boundaries of the Delhi Holt Bryant Unit (the “Delhi
      Holt Bryant Unit Lands” as more fully described below) , it being the intent
      hereof that the leases, properties and interests and the legal descriptions
      and
      depth limitations set forth on Exhibit “A,” or in instruments described in
      Exhibit “A,” if any, are for information only and the term "Leases" includes all
      of Seller's right, title and interest in the above described Hydrocarbon
      interests in the Delhi Holt Bryant Unit and in the Delhi Holt Bryant Unit Lands,
      other than the Excluded Assets, including but not limited to those described
      on
      Exhibit “A,” or in instruments described in Exhibit “A,” even though such
      interests may be incorrectly described in Exhibit “A” or omitted from Exhibit
“A”. For purposes of this Agreement, the Delhi Holt Bryant Unit in Franklin,
      Madison and Richland Parishes, Louisiana, shall be as described in and governed
      by Louisiana Department of Natural Resources, Office of Conservation Orders
      Nos.96-F, 96-F-1, 96-G-4 and 96-G-5, as amended and supplemented. The Delhi
      Holt
      Bryant Unit Lands, being those lands within the aerial boundaries of the Delhi
      Holt Bryant Unit, as to all depths, are described in Exhibit “A-1”,

    

    1.13. "Performance
      Deposit"
      shall be
      as defined in Section 3.2.

    

    1.14. "Real
      Property, Personal Property and Incidental Rights"
      shall
      mean an undivided seventy percent (70%) of all right, title and interest of
      Seller in and to or derived from the following insofar as the same do not
      constitute Excluded Assets and are attributable to, appurtenant to, incidental
      to, or used for the operation of the Leases:

    

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (a) all
      interests in the surface estate in Delhi Holt Bryant Unit Lands, including
      but
      not limited to those described on Exhibit “A”; 

    

    (b) 
      all
      easements, rights-of-way, surface leases, permits, licenses, servitudes or
      other
      interests relating to the use of the surface, including but not limited to
      those
      described on Exhibit “A,” or in instruments described in Exhibit
“A”;

    

    (c) all
      wells, including but not limited to those listed on Exhibit “A-2" attached
      hereto, whether or not such wells are active or inactive, along with all
      equipment and other personal property, inventory, spare parts, tools, fixtures,
      pipelines, dehydration facilities, platforms, tank batteries, appurtenances,
      and
      improvements situated upon the Leases as of the Effective Time and used or
      held
      for use in connection with the development or operation of the Leases or the
      production, treatment, storage, compression, processing or transportation of
      Hydrocarbons from or in the wells or Leases;

    

    (d) all
      unit
      agreements, orders and decisions of state and federal regulatory authorities
      establishing units, joint operating agreements, enhanced recovery and injection
      agreements, farmout agreements and farmin agreements, options, drilling
      agreements, exploration agreements, assignments of operating rights, working
      interests, subleases and rights above or below certain footage depths or
      geological formations, to the extent same is attributable to the Assets, as
      of
      the Effective Time, including but not limited to those described on Exhibit
“A”;

    

    (e) all
      contracts, agreements, and title instruments to the extent attributable to
      and
      affecting the Assets in existence at Closing, including all Hydrocarbon sales,
      purchase, gathering, transportation, treating, marketing, exchange, processing,
      disposal and fractionating contracts, joint operating agreements, including
      but
      not limited to those described on Exhibit “A”; and

    

    (f) originals
      of all lease files, land files, well files, production records, division order
      files (including paysheets and supporting files), abstracts, title opinions,
      and
      contract files, insofar as the same are directly related to the Leases;
      including, without limitation, all geological, information and data, to the
      extent that such data is not subject to any third party restrictions, but
      excluding Seller's proprietary interpretations of same.

    

    1.15. "Purchase
      Price"
      shall be
      as defined in Section 3.1.

    

    1.16 “Retained
      Environmental Obligations or Liabilities” shall
      mean, (i) any Environmental Obligations or Liabilities of any nature related
      to
      the Excluded Assets, and (ii) any Environmental Obligations or Liabilities
      associated with the Assets which arose prior to the Effective Time.

    

    Notwithstanding
      anything herein to the contrary, Retained Environmental Obligations or
      Liabilities shall not include any Environmental Obligations or Liabilities
      that
      (a) relate to NORM, or (b) relate to the plugging and abandonment of the wells
      listed on Exhibit “A-2” and any related surface restoration of these well sites,
      or (c) resulted from or relate to an activity or a condition with the Assets
      first occurring after the Effective Time. 

    

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    1.17. “Retained
      Obligations”
      shall
      mean all liabilities, duties, and obligations that arise out of the ownership,
      operation or use of the Assets prior to the Effective Time, including, but
      not
      limited to, all liabilities, duties, and obligations, express or implied,
      imposed upon Seller herein under the provisions of the Leases and any and all
      assignments, subleases, farmout agreements, assignments of overriding royalty,
      joint operating agreements, easements, rights-of-way, and all other contracts,
      agreements and instruments affecting the Leases, or the premises covered
      thereby, whether recorded or unrecorded, and under all applicable laws, rules,
      regulations, orders and ordinances, including but not limited to the claims
      and
      suits set forth in Exhibit “F”, except for those specifically included in the
      definition of “Assumed Obligations.”

    

    1.18. “Unit
      Operating Agreement” shall
      mean that certain unit operating agreement dated August 5, 1952, covering the
      Delhi Holt Bryant Unit, as may be amended, and which is attached hereto as
      Exhibit J.

    

    

    ARTICLE
      2. - AGREEMENT TO PURCHASE AND SELL

    

    Subject
      to the terms and conditions of this Agreement, Seller agrees to sell and convey
      to Buyer and Buyer agrees to purchase and pay for the Assets and to assume
      the
      Assumed Obligations.

    

    

    ARTICLE
      3. - PURCHASE PRICE AND PAYMENT

    

    3.1. Purchase
      Price. 

    

    Subject
      to adjustment as set forth below, the Purchase Price for the Assets shall be
      thirty five million dollars ($35,000,000.00), allocated among the Assets as
      provided in Exhibit “B.”

    

    3.2. Performance
      Deposit.
      Intentionally
      deleted.

    

    3.3. Final
      Settlement/Purchase Price Adjustments.

    

    Within
      one hundred twenty (120) days after Closing, Seller shall provide to Buyer,
      for
      Buyer's concurrence, an accounting (the "Final Settlement Statement") of the
      actual amounts of Seller's and Buyer's Credits for the adjustments set out
      in
      this Section 3.3. Buyer shall have the right for thirty (30) days after receipt
      of the Final Settlement Statement to audit and take exceptions to such
      adjustments. The Parties shall attempt to resolve any disagreements on a best
      efforts basis. Those credits agreed upon by Buyer and Seller shall be netted
      and
      the final settlement shall be paid as directed in writing by the receiving
      party, on final adjustment by the party owing it (the "Final
      Settlement").

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    The
      Purchase Price shall be adjusted as follows:

    

    (a) The
      Purchase Price shall be adjusted upward by the following ("Seller's
      Credits"):

    

    (1) the
      value
      of (i) all Inventory Hydrocarbons, such value to be based upon the existing
      contract price for crude oil in effect as of the Effective Time, less severance
      taxes, transportation fees and other fees deducted by the purchaser of such
      oil,
      such oil to be measured at the Effective Time by the operators of the Assets;
      and (ii) the value of all of Seller's unsold inventory of gas plant products,
      if
      any, attributable to the Leases at the Effective Time valued in the same manner
      as if such products had been sold under the contract then in existence between
      Seller and the purchaser of such products or, if there is no such contract,
      valued in the same manner as if said products had been sold at the posted price
      in the field for said products;

    

    (2) the
      amount of all production expenses, operating expenses and all expenditures
      attributable to the operation of the Assets after the Effective Time and accrued
      by Seller prior to the Closing Date in accordance with generally accepted
      accounting principles and Section 11.1; 

    

    (3) an
      amount
      equal to the sum of any upward adjustments provided elsewhere in this Agreement;
      and

    

    (4) any
      other
      amount agreed upon by Seller and Buyer in writing prior to Closing.

    

    (b) The
      Purchase Price shall be adjusted downward by the following ("Buyer's
      Credits"):

    

    (1) the
      total
      collected sales value of all Hydrocarbons sold by the Seller after the Effective
      Time, all of which are attributable to the Assets, and any other monies
      collected by the Seller with respect to the ownership of the Assets after the
      Effective Time, but excepting interest income.

    

    (2) the
      amount of all unpaid ad valorem, property, production, excise, severance and
      similar taxes and assessments (but not including income taxes), which taxes
      and
      assessments become due and payable or accrue to the Assets prior to the
      Effective Time, which amount shall, where possible, be computed based upon
      the
      tax rate and values applicable to the tax period in question; otherwise, the
      amount of the adjustment under this paragraph shall be computed based upon
      such
      taxes assessed against the applicable portion of the Assets for the immediately
      preceding tax period just ended;

    

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (3) an
      amount
      equal to the sum of any downward adjustments provided elsewhere in this
      Agreement; and

    

    (4) any
      other
      amount agreed upon by Seller and Buyer in writing prior to Closing.

    

    (c) Seller
      shall prepare and deliver to Buyer, at least five business days prior to
      Closing, Seller's estimate of the adjusted Purchase Price to be paid at Closing,
      together with a preliminary statement setting forth Seller's estimate of the
      amount of each adjustment to the Purchase Price to be made pursuant to this
      Section 3.3. The Parties shall negotiate in good faith and attempt to agree
      on
      such estimated adjustments prior to Closing. In the event any estimated
      adjustment amounts are not agreed upon prior to Closing, the estimate of the
      adjusted Purchase Price for purposes of Closing shall be calculated based on
      Seller's and Buyer's agreed upon estimated adjustments and Seller's good faith
      estimate of any disputed amounts (and any such disputes shall be resolved by
      the
      Parties in connection with the resolution of the Final Settlement
      Statement).

    

    
      
        3.4
          Additional
          Capital Expenditure Commitment By Buyer.

      

    

    

    (a) As
      additional consideration for the execution of this Agreement by Seller, Buyer
      agrees to spend one hundred million dollars ($100,000,000.00) of cumulative
      capital expenditures (the “Required Cumulative Capital Expenditure Amounts”) for
      the development of the one hundred percent (100%) Working Interest for the
      enhanced production operation of the Delhi Holt Bryant Unit, which will include
      but is not limited to the cost of field development, facilities and CO2 delivery
      pipelines. Buyer shall make the Required Cumulative Capital Expenditures Amounts
      on or before the Commitment Dates set forth below:

     

    
      	
              “Commitment
                Date”

            	 	
              “Required
                Cumulative Capital Expenditure
                Amount”

            
	
              December
                31, 2007

            	 	
              $17,500,000

            
	
              December
                31, 2008

            	 	
              $35,000,000

            
	
              December
                31, 2009

            	 	
              $52,500,000

            
	
              December
                31, 2010

            	 	
              $70,000,000

            
	
              December
                31, 2011

            	 	
              $87,500,000

            
	
              December
                31, 2012

            	 	
              $100,000,000

            

    

     

    If
      the
      Buyer spends in excess of one hundred million dollars ($100,000,000.00) prior
      to
      the end of December 31, 2012, the development obligation has been
      fulfilled.

    

    (b) In
      the
      event Buyer fails to expend the Required Cumulative Capital Expenditure Amounts
      by the Commitment Dates set forth in (b) above, Seller shall be entitled to
      a
      cash payment equal to seventy percent (70%) of ten percent (10.0%) of the
      difference between the Required Cumulative Capital Expenditure Amounts for
      the
      applicable Commitment Date and the cumulative capital expenditures actually
      expended by Buyer from the Effective Date through such applicable Commitment
      Date (hereinafter referred to as the “Shortage
      Payment”).
      Said
      Shortage Payment shall be paid by Buyer to Seller within thirty (30) days after
      each Commitment Date. 

    

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    

    ARTICLE
      4. - SELLER'S REPRESENTATIONS AND WARRANTIES

    

    Seller
      represents and warrants to Buyer as of the date hereof, and the Closing Date
      that:

    

    (a) Seller
      is
      a corporation duly organized, validly existing, and in good standing under
      the
      laws of the State of Delaware, and is duly qualified to carry on its business
      in
      Louisiana;

    

    (b) Seller
      has all requisite power and authority to carry on its business as presently
      conducted, to enter into this Agreement and the other documents and agreements
      contemplated hereby, and to perform its obligations under this Agreement and
      the
      other documents and agreements contemplated hereby. Effective as of Closing,
      the
      consummation of the transactions contemplated by this Agreement will not
      violate, nor be in conflict with, any provision of its governing documents
      or
      any agreement or instrument to which it is a party or by which it is bound
      (except any provision contained in agreements customary in the oil and gas
      industry relating to (1) the Preferential Purchase Rights (defined below) as
      to
      all or any portion of the Assets; (2) required consents to transfer and related
      provisions; (3) maintenance of uniform interest provisions; and (4) any other
      third-party approvals or consents contemplated herein), or any judgment, decree,
      order, statute, rule, or regulation applicable to Seller;

    

    (c) This
      Agreement, and all documents and instruments required hereunder to be executed
      and delivered by Seller at Closing, constitute legal, valid and binding
      obligations of Seller in accordance with its respective terms, subject to
      applicable bankruptcy and other similar laws of general application with respect
      to creditors;

    

    (d) There
      are
      no bankruptcy, reorganization or receivership proceedings pending, being
      contemplated by, or to the actual knowledge of Seller threatened against
      Seller;

    

    (e) The
      execution, delivery and performance (effective as of Closing) of this Agreement,
      and the transaction contemplated hereunder have been duly and validly authorized
      by all requisite authorizing action, corporate, partnership or otherwise, on
      the
      part of Seller.

    

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    (f) Seller
      has not incurred any obligation or liability, contingent or otherwise, for
      brokers' or finders' fees in connection with this Agreement and the transaction
      provided herein;

    

    (g) Other
      than as set forth in Exhibit “F”, there are no claims, investigations, demands,
      actions, suits, or administrative, legal or arbitration proceedings (including
      condemnation, expropriation, or forfeiture proceedings) pending, or to the
      knowledge of Seller threatened, against Seller or any of its affiliates, or
      any
      Asset: (i) seeking to prevent the consummation of the transactions contemplated
      hereby, or (ii) which, individually or in the aggregate, would adversely affect
      the Assets.

    

    (h) Seller
      has not intentionally or willfully misrepresented or omitted any material
      information requested by Buyer about the Assets;

    

    (i) The
      transfer of the Assets to Buyer will not violate at the Closing Date any
      covenants or restrictions imposed on Seller by any bank or other financial
      institution in connection with a mortgage or other instrument, and will not
      result in the creation or imposition of a lien on any portion of the
      Assets;

    

    (j) Except
      as
      disclosed by Seller in writing, if Seller is the operator of an Asset, to
      Seller’s knowledge, it is in material compliance with all laws, rules,
      regulations and orders pertaining to the Assets, including Environmental Laws,
      which representation and warranty shall not survive the Closing of the
      transaction contemplated by this Agreement;

    

    (k) Except
      as
      disclosed by Seller in writing, if Seller is the operator of an Asset, to
      Seller’s knowledge, it has all governmental permits necessary for the operation
      of the Asset and is not in material default under any permit, license or
      agreement relating to the operation and maintenance of the Assets, which
      representation and warranty shall not survive the Closing of the transaction
      contemplated by this Agreement;

    

    (l) Except
      as
      set forth on Exhibit “H”, there are no waivers, consents to assign, approvals or
      similar rights owned by third parties and required in connection with the
      conveyance of the Assets from Seller to Buyer;

    

    (m) Except
      as
      set forth on Exhibit “H”, there are no rights of first refusal, preferential
      rights, preemptive rights or contracts, or other commitments or understandings
      of a similar nature to which Seller is a part or to which the Assets are
      subject;

    

    (n) No
      Hydrocarbons produced or to be produced from the Leases are subject to any
      gas
      sales contracts other than those identified on Exhibit “H” and, no third party
      has any call upon, option to purchase, dedication rights or similar rights
      with
      respect to the hydrocarbons produced to be produced from Seller’s interest in
      the Leases; and

    

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    (o) Except
      as
      set forth on Exhibit “G”, there are no oil or gas production imbalances with
      respect to the Leases;

    

    

    ARTICLE
      5. - BUYER'S REPRESENTATIONS AND WARRANTIES

    

    Buyer
      represents and warrants to Seller as of the date hereof, and the Closing Date
      that:

    

    (a) Buyer
      is
      a limited liability company duly organized, validly existing, and in good
      standing under the laws of the state of Delaware, and is duly qualified to
      carry
      on its business in those states where it is required to do so;

    

    (b) Buyer
      has
      all requisite power and authority to carry on its business as presently
      conducted, to enter into this Agreement and the other documents and agreements
      contemplated hereby, and to perform its obligations under this Agreement and
      the
      other documents and agreements contemplated hereby. The consummation of the
      transactions contemplated by this Agreement will not violate, nor be in conflict
      with, any provision of Buyer's articles of incorporation, partnership
      agreement(s), by-laws or governing documents or any agreement or instrument
      to
      which it is a party or by which it is bound, or any judgment, decree, order,
      statute, rule, or regulation applicable to Buyer;

    

    (c) the
      execution, delivery and performance of this Agreement and the transactions
      contemplated hereunder have been duly and validly authorized by all requisite
      authorizing action, corporate, partnership or otherwise, on the part of
      Buyer;

    

    (d) this
      Agreement, and all documents and instruments required hereunder to be executed
      and delivered by Buyer at Closing, constitute legal, valid and binding
      obligations of Buyer in accordance with their respective terms, subject to
      applicable bankruptcy and other similar laws of general application with respect
      to creditors;

    

    (e) there
      are
      no bankruptcy, reorganization or receivership proceedings pending, being
      contemplated by, or to the actual knowledge of Buyer threatened against
      Buyer;

    

    (f) Buyer
      has
      not incurred any obligation or liability, contingent or otherwise, for brokers'
      or finders' fees in connection with this Agreement and the transaction provided
      herein; 

    

    (g) Buyer
      is
      an experienced and knowledgeable investor and operator in the oil and gas
      business. Prior to entering into this Agreement, Buyer was advised by and has
      relied solely on its own expertise and legal, tax, reservoir engineering,
      accounting, and other professional counsel concerning this Agreement, the Assets
      and the value thereof;

    

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    (h) Buyer
      has, or by Closing will have, the financial resources to close the transaction
      contemplated by this Agreement, whether by third party financing or otherwise;
      and

    

    (i) Buyer
      acknowledges the existence of the claims and suits described in Exhibit “F” and
      that these claims and suits are Permitted Encumbrances as set forth in Section
      8.1(e). Buyer further acknowledges that Buyer has, or by Closing will have,
      legal counsel of its choice fully review those claims and suits identified
      on
      Exhibit “F”.

    

    

    ARTICLE
      6. - ACCESS TO INFORMATION AND INSPECTIONS

    

    6.1. Title
      Files.

    

    Promptly
      after the execution of this Agreement and until the Closing Date, Seller shall
      permit Buyer and its representatives at reasonable times during normal business
      hours to examine, in Seller's offices at their actual location, all abstracts
      of
      title, title opinions, title files, ownership maps, lease files, assignments,
      division orders, payout statements, title curative, other title materials and
      agreements pertaining to the Assets as requested by Buyer, insofar as the same
      may now be in existence and in the possession of Seller. No warranty of any
      kind
      is made by Seller as to the information so supplied, and Buyer agrees that
      any
      conclusions drawn therefrom are the result of its own independent review and
      judgment.

    

    6.2. Other
      Files. 

    

    Promptly
      after the execution of this Agreement and until the Closing Date, Seller shall
      permit Buyer and its representatives at reasonable times during normal business
      hours to examine, in Seller's offices at their actual location, all production,
      well, regulatory, engineering and geological information, accounting
      information, environmental information, inspections and reports, and other
      information, files, books, records, and data pertaining to the Assets as
      requested by Buyer, insofar as the same may now be in existence and in the
      possession of Seller, excepting economic evaluations and Seller’s proprietary
      interpretations of same, reserve reports and any such information that is
      subject to confidentiality agreements or to the attorney/client and work product
      privileges. No warranty of any kind is made by Seller as to the information
      so
      supplied, and Buyer agrees that any conclusions drawn therefrom are the result
      of its own independent review and judgment.

    

    6.3. Confidentiality
      Agreement. 

    

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    All
      information made available to Buyer pursuant to Article 6 shall be maintained
      confidential by Buyer until Closing. The information protected by such
      confidentiality obligation does not include any information that (i) at the
      time
      of disclosure is generally available to and known by the public (other than
      as a
      result of a disclosure by Buyer), or which after such disclosure comes into
      the
      public domain through no fault of Buyer or its representatives, or (ii) is
      or
      was available to Buyer on a nonconfidential basis, or (iii) is already known
      to
      Buyer, as evidenced by Buyer’s written records, at the time of its disclosure by
      Seller to Buyer. Buyer may disclose the information or portions thereof to
      those
      employees, agents or representatives of Buyer who need to know such information
      for the purpose of assisting Buyer in connection with its performance of this
      Agreement. Further, in the event that Buyer is requested or required (by
      deposition, interrogatory, request for documents, subpoena, civil investigative
      demand or similar process) to disclose any of the information, Buyer shall
      provide Seller with prompt written notice of such request or requirement, so
      that Seller may seek such protective order or other appropriate remedy as it
      may
      desire. Buyer shall further take reasonable steps to ensure that Buyer's
      employees, consultants and agents comply with the provisions of this Section
      6.3.

     

    6.4. Inspections. 

    

    Promptly
      after the execution of this Agreement and until Closing, Seller, subject to
      any
      necessary third-party operator approval, shall permit Buyer and its
      representatives at reasonable times and at their sole risk, cost and expense,
      to
      conduct reasonable inspections of the Assets for all purposes, including any
      Environmental Defects.

     

    6.5. No
      Warranty or Representation on Seller's Information. 

    

    EXCEPT
      AS
      SET FORTH IN THIS AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS
      OR IMPLIED, WITH RESPECT TO THE ACCURACY, COMPLETENESS, OR MATERIALITY OF THE
      INFORMATION, RECORDS, AND DATA NOW, HERETOFORE, OR HEREAFTER MADE AVAILABLE
      TO
      BUYER IN CONNECTION WITH THE ASSETS OR THIS AGREEMENT, INCLUDING, WITHOUT
      LIMITATION, ANY DESCRIPTION OF THE ASSETS, QUALITY OR QUANTITY OF HYDROCARBON
      RESERVES, IF ANY, PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES,
      GAS BALANCING INFORMATION, ALLOWABLES OR OTHER REGULATORY MATTERS, POTENTIAL
      FOR
      PRODUCTION OF HYDROCARBONS FROM THE ASSETS, OR ANY OTHER MATTERS CONTAINED
      IN OR
      OMITTED FROM ANY OTHER MATERIAL FURNISHED TO BUYER BY SELLER. ANY AND ALL SUCH
      DATA, INFORMATION AND MATERIAL FURNISHED BY SELLER IS PROVIDED AS A CONVENIENCE
      ONLY AND ANY RELIANCE ON OR USE OF SAME IS AT BUYER'S SOLE RISK.

    

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    6.6. Amendments
      to Exhibits. 

    

    Seller
      and Buyer acknowledge that Buyer’s inspection of Seller’s records and files, or
      further review by Seller, prior to Closing may indicate that some or all of
      the
      Exhibits attached to this Agreement were not complete or entirely correct at
      the
      time of execution of this Agreement. Accordingly, Seller and Buyer agree to
      revise and amend the Exhibits, as needed, so that they will be complete and
      accurate at Closing and shall be given effect as if made on the Closing Date
      prior to Closing, in the event Closing occurs. It is understood, however, that
      such revisions or amendments shall not otherwise be taken into account in giving
      effect to any representations, rights, options, conditions, covenants and
      obligations of the Parties contained in this Agreement as originally executed
      unless and until after Closing occurs.

    

    

    ARTICLE
      7. - ENVIRONMENTAL MATTERS AND ADJUSTMENTS

    

    7.1. Upon
      execution of and pursuant to the terms of this Agreement, Buyer shall have
      the
      right, at reasonable times during normal business hours, to conduct its
      investigation into the status of the physical and environmental condition of
      the
      Assets. If, in the course of conducting such investigation, Buyer discovers
      that
      any Asset is subject to a material Environmental Defect, Buyer may raise such
      Environmental Defect in the manner set forth hereafter. For purposes hereof,
      the
      term “material” shall mean that the Buyer’s good faith estimate, supported by
      documentation, of the cost of remediating any single Environmental Defect,
      or
      the net reduction in value of the Asset affected by such Defect, whichever
      is
      lesser, exceeds twenty five thousand dollars ($25,000.00), the Parties agreeing
      that such amount will be a per Asset deductible rather than a threshold. No
      later than 5:00 p.m. Central Time on May 22, 2006 (the “Environmental Defect
      Notice Date”), Buyer shall notify Seller in writing specifying such
      Environmental Defects, if any, the Assets affected thereby, and Buyer's good
      faith estimate of the costs of remediating such defects, or the net reduction
      in
      value of the Assets affected by such defects, whichever is lesser, together
      with
      supporting documentation. Seller may, but shall be under no obligation to,
      correct at its own cost and expense such defects on or before the Closing Date,
      in which case there shall be no reduction to the Purchase Price. Prior to
      Closing, Buyer and Seller shall treat all information regarding any
      environmental conditions as confidential, whether material or not, and shall
      not
      make any contact with any governmental authority or third party regarding same
      without the written consent of the other party unless required by
      law.

    

    7.2. If
      Buyer
      fails to notify Seller prior to or on the Environmental Defect Notice Date,
      of
      any Environmental Defects, all defects, whether known or unknown, will be deemed
      waived for purposes of adjustments pursuant to this Article 7, the Parties
      shall
      proceed with Closing, Seller shall be under no obligation to correct the
      defects, and Buyer shall assume the risks, liability and obligations associated
      with such defects, unless such defects constitute Retained Environmental
      Obligations or Liabilities of Seller. 

    

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    7.3. In
      the
      event any Environmental Defect, for which notice has been timely given as
      provided hereinabove, remains uncured as of Closing, Seller, at its sole option,
      shall, (i) agree to cure or remediate any Defect within a reasonable time after
      Closing and without any reduction to the Purchase Price in a manner acceptable
      to both Parties, or (ii) reduce the Purchase Price by the amount of the
      Environmental Defect Value as determined pursuant to Section 8.4, and subject
      to
      application of the twenty five thousand dollars ($25,000.00) deductible and the
      Aggregate Defect Basket described in Section 7.4. 

    

    7.4 The
      Parties agree that adjustments to the Purchase Price under this Article 7 and
      Article 8 shall only occur to the extent that the aggregate Environmental
      Defects and Title Defects, collectively, exceed five hundred thousand dollars
      ($500,000.00) (the “Aggregate Defect Basket”) after taking the applicable
      materiality deductible into account. For the avoidance of doubt and by way
      of
      example only, if there are a total of two (2) Environmental Defects of three
      hundred thousand dollars ($300,000.00) and two hundred thousand dollars
      ($200,000.00) and two (2) Title Defects of one hundred fifty thousand dollars
      ($150,000.00) and ten thousand dollars ($10,000.00), the total adjustment would
      be seventy five thousand dollars ($75,000.00) [being two hundred seventy five
      thousand dollars ($275,000.00) for Environmental Defect #1, plus one hundred
      seventy five thousand dollars ($175,000.00) for Environmental Defect #2, plus
      one hundred twenty five thousand dollars ($125,000.00) for Title Defect #1
      and
      zero ($0) for Title Defect #2, minus five hundred thousand dollars ($500,000.00)
      for the Aggregate Defect Basket]. 

    

    7.5 In
      the
      event any adjustment to the Purchase Price is made due to an Environmental
      Defect raised by Buyer, the Parties shall proceed with Closing, Seller shall
      be
      under no obligation to correct the Defect, and the Defect shall become an
      Assumed Obligation of Seller.

    

    

    ARTICLE
      8. - TITLE DEFECTS AND ADJUSTMENTS

    

    8.1. Definitions. 

    

    For
      purposes hereof, the terms set forth below shall have the meanings assigned
      thereto.

    

    (a) “Allocated
      Value”
shall
      mean the dollar amount allocated to each Asset as set forth on Exhibit
“B.”

    

    (b) "Defensible
      Title",
      subject to and except for the Permitted Encumbrances (as hereinafter defined),
      means: 

    

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    (1) As
      to the
      Leases, such title held by Seller and reflected by appropriate documentation
      properly filed in the official records of the jurisdiction in which the Lease
      or
      Leases are located that (a) entitles Seller and will entitle Buyer, after
      Closing, to own and receive and retain, without suspension, reduction or
      termination, payment of revenues for not less than a net revenue interest of
      at
      least fifty six percent (56.0%) of all oil and gas produced, saved and marketed
      from or attributable to the Delhi Holt Bryant Unit, excluding Permitted
      Encumbrances; (b) obligates Seller, and will obligate Buyer after Closing,
      to
      bear seventy percent (70.0%) of the costs and expenses relating to the
      maintenance, development and operation of such Delhi Holt Bryant Unit, ; (c)
      the
      Leases are free and clear of any liens, claims or encumbrances of any kind
      or
      character as of the Closing, except permitted encumbrances; and (d) the Seller
      is not in default under a material provision of any Lease, Unit Operating
      Agreement, or other contract or agreement affecting the Leases;

    

    (2) As
      to
      personal property included in the Assets, record title to such property is
      free
      and clear of any liens, claims or encumbrances of any kind or character as
      of
      the Closing, except Permitted Encumbrances; and

    

    (3) As
      to all
      other Assets, (a) such Assets are free and clear of any liens, claims or
      encumbrances of any kind or character as of the Closing; and (b) the Seller
      is
      not in default under a material provision of any Lease, operating agreement,
      or
      other contract or agreement affecting such Assets.

    

    (c) "Title
      Defect" shall mean (i) any matter which causes Seller to have less than
      Defensible Title to any of the Assets as of the Closing Date, or (ii) any matter
      that causes one or more of the following statements to be untrue, except for
      Permitted Encumbrances: 

    

    (1) Seller
      has not received written notice from any governmental authority or any other
      person (including employees) claiming any violation of any law, rule,
      regulation, ordinance, order, decision or decree of any governmental authority
      with respect to the Assets.

    

    (2) Seller,
      or the Operator of an Asset, has complied in all material respects with the
      provisions and requirements of all orders, regulations and rules issued or
      promulgated by governmental authorities having jurisdiction with respect to
      the
      Assets and has filed for and obtained all governmental certificates, permits
      and
      other authorizations necessary for Seller’s current operation of the Assets
      other than permits, consents and authorizations required for the sale and
      transfer of the Assets to Buyer;

    

    (3) Seller
      has not materially defaulted or materially violated any agreement to which
      Seller is a party or any obligation to which Seller is bound affecting or
      pertaining to the Assets other than as disclosed hereunder or on any exhibit
      attached hereto;

    

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    (4) The
      Leases included within the Assets are in full force and effect; and

    

    (5) All
      taxes, rentals, royalties, operating costs and expenses, and other costs and
      expenses related to the Assets which are due from or are the responsibility
      of
      Seller have been paid. 

    

    (d) "Title
      Defect Property"
      shall
      mean any Lease or Asset or portion thereof burdened by a Title Defect.

    

    (e) "Permitted
      Encumbrances"
      shall
      mean any of the following matters:

    

    (1) defects
      in the early chain of title consisting of failure to recite marital status
      or
      the omission of succession or heirship proceedings;

    

    (2) defects
      or irregularities arising out of uncancelled mortgages, judgments or liens,
      the
      inscriptions of which, on their face, have expired as a matter of law prior
      to
      the Effective Time, or prior unreleased oil and gas leases which, on their
      face,
      expired more than ten (10) years prior to the Effective Time and have not been
      maintained in force and effect by production or operations pursuant to the
      terms
      of such leases;

    

    (3) tax
      liens
      and operator’s liens for amounts not yet due and payable, or those that are
      being contested in good faith by Seller in the ordinary course of
      business;

    

    (4) to
      the
      extent any of the following do not materially diminish the value of, or impair
      the conduct of operations on, any of the Assets and do not impair Seller's
      right
      to receive the revenues attributable thereto: (i) easements, rights-of-way,
      servitudes, permits, surface leases and other rights in respect of surface
      operations, pipelines, grazing, hunting, fishing, logging, canals, ditches,
      lakes, reservoirs or the like, (ii) easements for streets, alleys, highways,
      pipelines, telephone lines, power lines, railways and other similar
      rights-of-way, on, over or in respect of property owned or leased by Seller
      or
      over which Seller owns rights of way, easements, permits or licenses, and (iii)
      the terms and conditions of all leases, agreements, orders, instruments and
      documents pertaining to the Assets; 

    

    (5) all
      lessors' royalties, overriding royalties, net profits interests, carried
      interest, production payments, reversionary interests and other burdens on
      or
      deductions from the proceeds of production if the net cumulative effect of
      such
      burdens or deductions does not reduce the net revenue interest of Seller in
      any
      well affected thereby to the extent that Seller will not be able to deliver
      to
      Buyer at Closing, a net revenue interest of at least fifty six percent (56.0%)
      of all oil and gas produced, saved and marketed from or attributable to the
      Delhi Holt Bryant Unit or impair the right to receive revenues attributable
      thereto, it being understood that the McGowan wellbores are not being delivered
      to Buyer;

    

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

    (6) preferential
      rights to purchase and required third party consents to assignments and similar
      agreements with respect to which waivers or consents are obtained from the
      appropriate parties, or the appropriate time period for asserting the rights
      has
      expired without an exercise of the rights prior to the Closing
      Date;

    

    (7) all
      rights to consent by, required notices to, filings with, or other actions by
      governmental entities and tribal authorities in connection with the sale or
      conveyance of oil and gas leases or interests if they are customarily obtained
      subsequent to the sale or conveyance;

    

    (8) defects
      or irregularities of title arising out of events or transactions which have
      been
      barred by limitations or by acquisitive or liberative prescription;

    

    (9) any
      encumbrance or other matter having an aggregate adverse effect on the value
      of
      the Assets of less than twenty five thousand dollars ($25,000), the Parties
      agreeing that such amount will be a per Asset deductible rather than a
      threshold;

    

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

    

    (11) any
      encumbrance or other matter (whether or not constituting a "Title Defect")
      expressly waived in writing by Buyer or listed on Exhibit “F”, including the
      McGowan wellbores not delivered by Seller.

    

    8.2. Notice
      of Title Defects. 

    

    No
      later
      than 5:00 p.m. Central Time on May 22, 2006 (the “Title
      Defect Notice Date”),
      Buyer
      may provide Seller written notice of any Title Defect along with a description
      of those matters which, in Buyer's reasonable opinion, constitute Title Defects
      and setting forth in detail Buyer's calculation of the value for each Title
      Defect. Seller may elect, at its sole cost and expense, but without obligation,
      to cure all or any portion of such Title Defects prior to Closing, in a manner
      acceptable to both Parties, in which case no reduction in the Purchase Price
      shall be made. Buyer's failure to deliver to Seller such notice on or before
      the
      Defect Notice Date shall be deemed a waiver by Buyer of all Title Defects,
      known
      or unknown, that Seller does not have notice of from Buyer on such date. Any
      defect or deficiency concerning Seller’s title to the Assets not asserted by
      Buyer on or prior to the Title Defect Notice Date shall be deemed waived by
      Buyer for purposes of any adjustment to the Purchase Price, the Parties shall
      proceed with Closing, Seller shall be under no obligation to correct the
      defects, and Buyer shall assume the risks, liability and obligations associated
      with such defects. However, such waiver shall not effect or impair the
      warranties of Seller set forth in Section 8.5 or the indemnity obligations
      of
      Seller as set forth in Article 17.

    

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

    8.3. Title
      Defect Adjustment.
      

    

    (a) In
      the
      event any Title Defect, for which notice has been timely given as provided
      hereinabove, remains uncured as of Closing, Seller shall have the opportunity
      to
      cure, until sixty (60) days after Closing (“Cure
      Period”),
      such
      Title Defect. In the alternative, Seller may elect to (i) cure such Title Defect
      by indemnifying Buyer against any damages, claims or expenses that may arise
      out
      of such Title Defect, subject to the provisions of Section 8.3(c) below, with
      no
      reduction in the Purchase Price; or (ii) reduce the Purchase Price by an amount
      equal to the Title Defect Value as determined pursuant to Section 8.4, and
      subject to application of the twenty five thousand dollars ($25,000.00)
      deductible and the Aggregate Defect Basket described in Section 7.4. Should
      Seller elect either alternative “(i)” (indemnity) or “(ii)” (price reduction) in
      this Section 8.3(a), those Assets affected by the Title Defect shall be
      transferred to Buyer at Closing.

    

    (b) If
      Seller
      elects to attempt to cure a Title Defect after Closing, Closing with respect
      to
      the portion of the Assets affected by such Title Defect will be deferred (the
      “Closing Deferred Property”). Closing with respect to all other Assets will
      proceed as provided in this Agreement, but the Base Purchase Price delivered
      to
      Seller at such initial Closing shall be reduced by the Allocated Value of all
      Closing Deferred Properties. If Seller cures any Title Defect within the Cure
      Period, then the Closing with respect to the Closing Deferred Property for
      which
      such Title Defect has been cured will proceed and will be finalized within
      seven
      (7) days following the end of the Cure Period. If Seller fails or refuses to
      cure any Title Defect prior to the expiration of the Cure Period, Seller shall
      notify Buyer in writing of such failure or refusal promptly upon the expiration
      of the Cure Period. In this event, Buyer shall have the right to elect by
      written notice to Seller, which notice shall be delivered within seven (7)
      days
      after receipt by Buyer of Notice from Seller of such failure or refusal to
      cure
      any such Title Defect, to waive all of the Title Defects applicable to any
      Closing Deferred Property (which waived Title Defects shall be deemed Permitted
      Encumbrances) and proceed to Closing on such Closing Deferred Property. If
      Buyer
      does not elect to waive an existing Title Defect, Seller shall retain the
      Closing Deferred Property and the Parties shall have no further obligation
      with
      respect thereto. In the event that any such property is retained by Seller
      and
      such property has been receiving revenue, without complaint, for a period in
      excess of two (2) years, then Buyer agrees (i) not to take any action to
      interfere with such revenue stream, and (ii) to the extent that Buyer becomes
      payor of such revenue, to pay Seller such revenue upon receipt of an indemnity
      agreement from Seller.

    

    
      
         

      

      
        -23-

        
          

        

      

      
         

      

    

    (c) The
      following provisions shall apply to an election by Seller under the second
      sentence of Section 8.3(a) to cure a Title Defect by indemnifying Buyer with
      regard to such Title Defect:

    

    (1) Seller’s
      indemnity shall be limited to a period of two (2) years from the Effective
      Time.

    

    (2) In
      no
      event shall Seller’s indemnity exceed the amount of the Title Defect Value as
      determined under Section 8.4 hereof.

    

    (3) Seller’s
      indemnity shall be freely transferable by Buyer to its successors and assigns
      of
      the Assets affected by such Title Defect, including without limitation, any
      lender to Buyer and any purchaser of such Assets, whether directly from Buyer
      or
      through any foreclosure proceeding; and

    

    (4) If
      the
      Title Defect Value, as determined under Section 8.4 hereof, individually or
      in
      the aggregate, for one or more Title Defects to be covered by the Seller’s
      indemnity exceeds seven hundred fifty thousand dollars ($750,000.00) (after
      application of the appropriate deductible(s) and without application of the
      Aggregate Defect Basket provided for in Section 7.4), Seller shall have no
      right
      under the second sentence of Section 8.3(a) to indemnify Buyer with regard
      to
      such Title Defects without Buyer’s consent.

    

    (d) In
      the
      event any adjustment to the Purchase Price is made due to a Title Defect raised
      by Buyer, the Parties shall proceed with Closing, Seller shall be under no
      obligation to correct the Defect, and such Defect shall become an Assumed
      Obligation of Seller.

     

    8.4. Environmental
      Defect and Title Defect Values. 

    

    Upon
      timely delivery of notice of an Environmental or Title Defect, Buyer and Seller
      shall use their best efforts to agree on the validity and value of the claim
      for
      the purpose of making any adjustment to the Purchase Price based on the
      provisions herein (“Environmental
      or Title Defect Value”).
      Notwithstanding anything to the contrary set forth herein, the Environmental
      or
      Title Defect Value and any related adjustment to the Purchase Price shall in
      no
      event exceed the Allocated Value of the affected Asset. In determining the
      Value
      of an Environmental or Title Defect, it is the intent of the Parties to include,
      to the extent possible, only that portion of the lands, leases and wells, or
      other Assets, whether an undivided interest, separate interest or otherwise,
      materially and adversely affected by the Defect. The following guidelines shall
      be followed by the Parties in establishing the Value of any Environmental or
      Title Defect for the purpose of adjusting the Purchase Price if (a) the validity
      of the claim is agreed to by the Parties, (b) proper notice has been timely
      given, and (c) subject to (i) application of the appropriate deductibles as
      set
      forth in this agreement for Environmental Defects and Title Defects , and (ii)
      application of the Aggregate Defect Basket requirement as set forth in Section
      7.4 for Environmental and Title Defects:

    

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

    (a) If
      the
      Title Defect is based on a difference in net revenue interest or expense
      interest from that shown on Exhibit “B” for the affected property, then the
      Purchase Price shall be proportionately reduced or increased as the case may
      be.

    

    (b) If
      the
      Environmental or Title Defect is liquidated in amount (for example, but not
      limited to, a lien, encumbrance, charge or penalty), then the adjustment to
      the
      Purchase Price shall be the lesser of (1) the sum necessary to be paid to the
      obligee to remove the Defect from the property, or (2) the decrease in the
      fair
      market value of the Asset as a result of the Defect.

    

    (c) If
      the
      Environmental or Title Defect represents an obligation or burden upon the
      affected property for which the economic detriment is not liquidated but can
      be
      estimated with reasonable certainty as agreed to by the Parties, the adjustment
      to the Purchase Price shall be the sum necessary to compensate Buyer at Closing
      for the adverse economic effect which the Environmental or Title Defect will
      have on the affected property. This sum shall be the lesser of (1) the cost
      of
      remediating the Defect, or (2) the decrease in the fair market value of the
      Asset as a result of the Defect. The fair market value determination shall
      be
      made by the Parties in good faith taking into account all relevant factors,
      including, but not limited to, the following:

    

    (1) the
      Allocated Value of the leases, lands, wells and other Assets affected by the
      Environmental or Title Defect;

    

    (2) the
      productive status of the affected Asset (i.e., proved developed producing,
      etc.)
      and the present value of the future income expected to be produced
      therefrom;

    

    (3) if
      the
      Title Defect represents only a possibility of title failure, the probability
      that such failure will occur; and

    

    (4) the
      economic effect of the Environmental or Title Defect.

    

    (d) If
      the
      Value of the Environmental or Title Defect cannot be determined using the above
      guidelines, and if the Parties cannot otherwise agree on the amount of an
      adjustment to the Purchase Price, or if the validity of the claim as to an
      Environmental or Title Defect cannot be agreed upon, then the Closing shall
      include the Asset(s) affected thereby. If the validity of the claim is in
      dispute, there shall be no adjustment to the Purchase Price at Closing. If
      the
      value of the claim is in dispute, the Purchase Price at Closing shall be
      adjusted by Seller’s good faith estimate of the value thereof. In either case,
      Buyer shall have the right, exercisable within ninety (90) days after the
      Closing Date, to refer the disputed matter to mediation and arbitration in
      accordance with the dispute resolution procedures set forth in Exhibit “I.”
Subject to the terms of Exhibit “I”, the decision of the arbitrator regarding
      any Environmental or Title Defect Dispute shall be final as between the Parties,
      provided in no event shall the value of the disputed Environmental or Title
      Defect exceed the Allocated Value of the affected Asset.

    

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

    8.5. Title
      Warranty.

    

    SELLER
      SHALL CONVEY SELLER'S INTERESTS IN AND TO THE ASSETS TO BUYER AS PROVIDED IN
      THE
      FORM OF CONVEYANCE, ASSIGNMENT AND BILL OF SALE ATTACHED AS EXHIBIT “C” HERETO.
      THE CONVEYANCE, ASSIGNMENT AND BILL OF SALE SHALL BE MADE WITHOUT WARRANTY
      OF
      TITLE, EITHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND WITHOUT RECOURSE,
      EVEN AS TO THE RETURN OF THE PURCHASE PRICE OR OTHER CONSIDERATION, EXCEPT
      THAT
      SELLER SHALL WARRANT TITLE TO THE ASSETS WITHIN THE DELHI HOLT BRYANT UNIT
      (AND
      ONLY SUCH ASSETS) AGAINST ALL CLAIMS, LIENS, BURDENS AND ENCUMBRANCES ARISING
      BY, THROUGH OR UNDER SELLER, BUT NOT OTHERWISE AND NOT WITH RESPECT TO ANY
      IMPAIRMENT OR FAILURE OF TITLE RELATED TO ANY LACK OF PRODUCTION IN PAYING
      QUANTITIES. THE CONVEYANCE, ASSIGNMENT AND BILL OF SALE SHALL BE MADE WITH
      FULL
      SUBSTITUTION AND SUBROGATION TO BUYER IN AND TO ALL COVENANTS AND WARRANTIES
      BY
      OTHERS HERETOFORE GIVEN OR MADE TO SELLER WITH RESPECT TO THE
      ASSETS.

    

    IMBALANCES
      WITH RESPECT TO OIL OR NATURAL GAS ARE GOVERNED BY ARTICLE
      18 HEREOF.
      THE PARTIES AGREE THAT THE EXISTENCE OF ANY SUCH IMBALANCES SHALL NOT BE DEEMED
      A TITLE DEFECT. 

    

    

    ARTICLE
      9. - OPTION TO TERMINATE 

    

    If
      (a)
      the aggregate of the Values attributable to all Environmental and Title Defects
      determined pursuant to Articles 7 and 8 and the provisions of the next paragraph
      below, shall exceed five million dollars ($5,000,000.00) after the application
      of the Aggregate Defect Basket set forth in Section 7.4, or (b) the Values
      attributable to either such Title Defects or Environmental Defects determined
      in
      the same manner, considered separately and excluding application of the
      Aggregate Defect Basket, exceed two million five hundred thousand dollars
      ($2,5000,000.00), then either Buyer or Seller may, at its sole option, terminate
      this Agreement without any further obligation by giving written notice of
      termination to the other Party at any time prior to Closing. In the event of
      such termination, Seller shall return the Performance Deposit to Buyer, without
      interest, within five (5) days of receipt of the notice of termination and
      neither party shall have any further obligation or liability
      hereunder.

    

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

    In
      the
      event of a dispute between Seller and Buyer as to an Environmental or Title
      Defect Value, the Parties shall negotiate in good faith as to estimates of
      the
      values attributable to Environmental and Title Defects for purposes of this
      Article 9 only. Should the Parties be unable to agree on a value, the Buyer’s
      good faith estimate of the value shall be utilized. 

    

    

    ARTICLE
      10. - PREFERENTIAL PURCHASE RIGHTS

    AND
      CONSENTS OF THIRD PARTIES

    

    10.1. Actions
      and Consents. 

     

    (a) Seller
      and Buyer agree that each shall use all reasonable efforts to take or cause
      to
      be taken all such action as may be necessary to consummate and make effective
      the transaction provided in this Agreement and to assure that it will not be
      under any material corporate, legal, or contractual restriction that could
      prohibit or delay the timely consummation of such transaction.

    

    (b) Seller
      shall notify all holders of (i) preferential rights to purchase the Assets
      (“Preferential
      Purchase Rights”),
      (ii)
      rights of consent to the assignment, or (iii) rights of approval to the
      assignment of the Assets, and of such terms and conditions of this Agreement
      to
      which the holders of such rights are entitled. Seller shall promptly notify
      Buyer if any Preferential Purchase Rights are exercised, any consents or
      approvals denied, or if the requisite period has elapsed without said rights
      having been exercised or consents or approvals having been received. If prior
      to
      Closing, any such Preferential Purchase Rights are timely and properly
      exercised, or Seller is unable to obtain a necessary consent or approval prior
      to Closing, the interest or part thereof so affected shall be eliminated from
      the Assets and the Purchase Price reduced by the portion of the Purchase Price
      allocated to such interest or part thereof as provided in Exhibit “B.” If any
      additional Preferential Purchase Rights are discovered after Closing, or if
      a
      third party Preferential Purchase Rights holder alleges improper notice, then
      Buyer agrees to cooperate with Seller in giving effect to any such valid third
      party Preferential Purchase Rights. In the event any such valid third party
      preferential purchase rights are validly exercised after Closing, Buyer's sole
      remedy against Seller shall be return by Seller to Buyer of that portion of
      the
      Purchase Price allocated under Exhibit “B” to the portion of the assets on which
      such rights are exercised and lost by Buyer to such third party. The Parties
      agree that the Allocated Values for properties subject to Preferential Purchase
      Rights shall be the sole responsibility of Buyer, and Buyer agrees to indemnify
      and hold Seller harmless from all liability and claims related to the
      reasonableness of such values.

    

    (c) With
      respect to any portion of the Assets for which a Preferential Purchase Right
      has
      not been asserted prior to Closing or a consent or other approval to assign
      has
      not been granted and for which the time for election to exercise such
      Preferential Purchase Right or to grant such consent has not expired, Closing
      with respect to the portion of the Assets subject to such outstanding
      obligations will be deferred (the “Third Party Interests”). Closing with respect
      to all other Assets will proceed as provided in this Agreement, but the Base
      Purchase Price delivered to Seller at Closing will be reduced by the allocated
      value of the Third Party Interests. In the event that within ninety (90) days
      after Closing any such Preferential Purchase Right is waived or consent or
      approval is obtained or the time for election to purchase or to deliver a
      consent or approval passes (such that under the applicable documents, Seller
      may
      sell the affected Third Party Interest to Buyer), then the Closing with respect
      to the applicable portion of the Third Party Interests will proceed promptly.
      If
      such waivers, consents or approvals as are necessary are not received by Seller
      within the applicable ninety (90) day period, Seller shall retain such Third
      Party Interests and the Parties shall have no further obligation to each other
      with respect thereto.

    

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

    

    ARTICLE
      11. - COVENANTS OF SELLER

    

    11.1. Covenants
      of Seller Pending Closing. 

    

    (a) From
      and
      after the date of execution of this Agreement and until the Closing, and subject
      to Section 11.2 and the constraints of applicable operating and other
      agreements, Seller shall operate, manage, and administer the Assets as a
      reasonable and prudent operator and in a good and workmanlike manner consistent
      with its past practices, and shall carry on its business with respect to the
      Assets in substantially the same manner as before execution of this Agreement.
      Prior to Closing, Seller shall use all reasonable efforts to preserve in full
      force and effect all Leases, operating agreements, easements, rights-of-way,
      permits, licenses, and agreements which relate to the Assets in which Seller
      owns an interest, and shall perform all obligations of Seller in or under all
      such agreements relating to the Assets; provided, however, Buyer's sole remedy
      for Seller's breach of its obligations under this Section 11.1(a) shall be
      limited to the amount of that portion of the Purchase Price allocated in Exhibit
      “B” to that portion of the Assets affected by such breach. Seller shall, except
      for emergency action taken in the face of serious risk to life, property, or
      the
      environment (1) submit to Buyer, for prior written approval, all requests for
      operating or capital expenditures and all proposed contracts and agreements
      relating to the Assets which involve individual commitments of more than twenty
      five thousand dollars ($25,000.00); (2) consult with, inform, and advise Buyer
      regarding all material matters concerning the operation, management, and
      administration of the Assets; (3) obtain Buyer's written approval prior to
      voting under any operating, unit, joint venture, partnership or similar
      agreement; and (4) not approve or elect to go nonconsent as to any proposed
      well
      or plug and abandon or agree to plug and abandon any well without Buyer's prior
      written approval. On any matter requiring Buyer's approval under this Section
      11.1(a), Buyer shall respond within five (5) days to Seller's request for
      approval and failure of Buyer to respond to Seller's request for approval within
      such time shall release Seller from the obligation to obtain Buyer's approval
      before proceeding on such matter. With respect to emergency actions taken by
      Seller in the face of serious risk to life, property, or the environment,
      without prior approval of Buyer pursuant to the provisions above, Seller will
      advise Buyer of its actions as promptly as reasonably possible and consult
      with
      Buyer as to any further related actions.

    

    (b) Seller
      shall promptly notify Buyer of any suit, lessor demand action, or other
      proceeding before any court, arbitrator, or governmental agency and any cause
      of
      action which relates to the Assets or which might result in impairment or loss
      of Seller's interest in any portion of the Assets or which might hinder or
      impede the operation of the Assets.

    

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

    11.2. Limitations
      on Seller's Covenants Pending Closing. 

    

    To
      the
      extent Seller is not the operator of any of the Assets, the obligations of
      Seller in Section 11.1 concerning operations or activities which normally or
      pursuant to existing contracts are carried out or performed by the operator,
      shall be construed to require only that Seller use all reasonable efforts
      (without being obligated to incur any expense or institute any cause of action)
      to cause the operator of such Assets to take such actions or render such
      performance as would a reasonable prudent operator and within the constraints
      of
      the applicable operating agreements and other applicable
      agreements.

    

    

    ARTICLE
      12. - CLOSING CONDITIONS

    

    12.1. Seller's
      Closing Conditions. 

    

    The
      obligations of Seller under this Agreement are subject, at the option of Seller,
      to the satisfaction, at or prior to the Closing, of the following
      conditions:

    

    (a) all
      representations and warranties of Buyer contained in this Agreement shall be
      true, accurate, and not misleading in all material respects at and as of the
      Closing as if such representations and warranties were made at and as of the
      Closing, and Buyer shall have performed, satisfied and complied with all
      agreements and covenants required by this Agreement to be performed, satisfied
      and complied with by Buyer at or prior to the Closing;

    

    (b) the
      execution, delivery, and performance of this Agreement and the transactions
      contemplated thereby have been duly and validly authorized by all necessary
      action, corporate, partnership or otherwise, on the part of Buyer, and an
      officer’s certificate of Buyer confirming the same;

    

    (c) all
      necessary consents of and filings with any state or federal governmental
      authority or agency relating to the consummation of the transactions
      contemplated by this Agreement shall have been obtained, accomplished or waived,
      except to the extent that such consents and filings are normally obtained,
      accomplished or waived after Closing; and 

    

    
      
         

      

      
        -29-

        
          

        

      

      
         

      

    

    (d) as
      of the
      Closing Date, no suit, action or other proceeding (excluding any such matter
      initiated by Seller) shall be pending or threatened before any court or
      governmental agency seeking to restrain Seller or prohibit the Closing or
      seeking damages against Seller as a result of the consummation of this
      Agreement.

    

    12.2. Buyer's
      Closing Conditions. 

    

    The
      obligations of Buyer under this Agreement are subject, at the option of Buyer,
      to the satisfaction, at or prior to the Closing, of the following
      conditions:

    

    (a) all
      representations and warranties of Seller contained in this Agreement shall
      be
      true, accurate, and not misleading in all material respects at and as of the
      Closing as if such representations and warranties were made at and as of the
      Closing, and Seller shall have performed, satisfied and complied with all
      agreements and covenants required by this Agreement to be performed, satisfied
      and complied with by Seller at or prior to the Closing;

    

    (b) the
      execution, delivery, and performance of this Agreement and the transactions
      contemplated thereby have been duly and validly authorized by all necessary
      action, corporate, partnership or otherwise, on the part of Seller, and an
      officer’s certificate of Seller confirming the same;

    

    (c) all
      necessary consents of and filings with any state or federal governmental
      authority or agency relating to the consummation of the transactions
      contemplated by this Agreement shall have been obtained, accomplished or waived,
      except to the extent that such consents and filings are normally obtained,
      accomplished or waived after Closing; and

    

    (d) as
      of the
      Closing Date, no suit, action or other proceeding (excluding any such matter
      initiated by Buyer) shall be pending or threatened before any court or
      governmental agency seeking to restrain Buyer or prohibit the Closing or seeking
      damages against Buyer as a result of the consummation of this
      Agreement.

    

    

    ARTICLE
      13. - CLOSING

    

    13.1. Closing. 

    

    The
      closing of this transaction (the "Closing")
      shall
      be held at the offices of Seller on June 12, 2006, or at such earlier date
      or
      place as the Parties may agree in writing (herein called "Closing
      Date").
      Time
      is of the essence and the Closing Date shall not be extended unless by written
      agreement of the Parties. On or before five (5) business days prior to Closing,
      Buyer and Seller shall use their best efforts to provide each other copies
      of
      all closing documents.

    

    
      
         

      

      
        -30-

        
          

        

      

      
         

      

    

    13.2. Seller's
      Closing Obligations. 

    

    At
      Closing, except to the extent comprising the Excluded Assets, Seller shall
      deliver to Buyer the following:

    

    (a) the
      Assignment and Conveyance substantially in the form attached hereto as Exhibit
      “C” and such other documents as may be reasonably necessary to convey all of
      Seller's interest in the Assets to Buyer in accordance with the provisions
      hereof;

    

    (b) a
      nonforeign affidavit executed by Seller in the form attached as Exhibit
“D”;

    

    (c) appropriate
      regulatory forms appointing Buyer as the operator for those Assets which Seller
      operates;

    

    (d) copies
      of
      all third-party waivers, consents, approvals, permits and actions obtained;
      

    

    (e) exclusive
      possession of the Assets; 

    

    (f) letters-in-lieu
      of transfer orders in form acceptable to Seller and Buyer; 

    

    (g)
       a
      Reporting and Accounting Memorandum executed by Seller in the form attached
      as
      Exhibit “E”; and

    

    (h) releases
      of all mortgages, liens and similar encumbrances burdening the Assets in form
      and substance reasonably satisfactory to Buyer. 

     

    13.3. Buyer's
      Closing Obligations. 

    

    At
      Closing, Buyer shall deliver to Seller (i) by wire transfer in immediately
      available funds to a bank account or accounts designated by Seller, the Purchase
      Price (less the Performance Deposit) as adjusted by Section 3.3, and (ii) a
      Reporting and Accounting Memorandum executed by Buyer in the form attached
      as
      Exhibit “E.” 

    

    13.4. Joint
      Closing Obligations. 

    

    Both
      Parties at Closing shall execute a Settlement Statement evidencing the amount
      actually wire transferred and all adjustments to the Purchase Price taken into
      account at Closing. All events of Closing shall each be deemed to have occurred
      simultaneously with the other, regardless of when actually occurring, and each
      shall be a condition precedent to the other.

    

    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    

    

    ARTICLE
      14. - LIMITATIONS ON WARRANTIES AND REMEDIES

    

    THE
      EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENT
      ARE
      EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS,
      IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR
      WARRANTY WITH RESPECT TO THE QUALITY, QUANTITY OR VOLUME OF THE RESERVES, IF
      ANY, OF OIL, GAS OR OTHER HYDROCARBONS IN OR UNDER THE LEASES, OR THE
      ENVIRONMENTAL CONDITION OF THE ASSETS. THE ITEMS OF PERSONAL PROPERTY,
      EQUIPMENT, IMPROVEMENTS, FIXTURES AND APPURTENANCES CONVEYED AS PART OF THE
      ASSETS ARE SOLD HEREUNDER "AS IS, WHERE IS, AND WITH ALL FAULTS" AND NO
      WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
      INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
      PURPOSE OR CONDITION, ARE GIVEN BY OR ON BEHALF OF SELLER. IT IS UNDERSTOOD
      AND
      AGREED THAT PRIOR TO CLOSING BUYER SHALL HAVE INSPECTED THE ASSETS FOR ALL
      PURPOSES AND HAS SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
      CONDITION, BOTH SURFACE AND SUBSURFACE, AND THAT BUYER ACCEPTS SAME IN ITS
      "AS
      IS, WHERE IS AND WITH ALL FAULTS" CONDITION. BUYER HEREBY WAIVES ALL WARRANTIES,
      EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
      MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONDITION, OR CONFORMITY
      TO
      SAMPLES.

    

    BUYER
      EXPRESSLY WAIVES THE WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTEE
      AGAINST HIDDEN OR LATENT REDHIBITORY VICES UNDER LOUISIANA LAW, INCLUDING
      LOUISIANA CIVIL CODE ARTICLES 2520 (1870) THROUGH 2548 (1870), AND THE WARRANTY
      IMPOSED BY LOUISIANA CIVIL CODE ARTICLE 2475; BUYER WAIVES ALL RIGHTS IN
      REDHIBITION PURSUANT TO LOUISIANA CIVIL CODE ARTICLE 2520, ET SEQ; BUYER
      ACKNOWLEDGES THAT THIS EXPRESS WAIVER IS A MATERIAL AND INTEGRAL PART OF THIS
      SALE AND THE CONSIDERATION THEREOF; AND BUYER ACKNOWLEDGES THAT THIS WAIVER
      HAS
      BEEN BROUGHT TO THE ATTENTION OF BUYER AND EXPLAINED IN DETAIL AND THAT BUYER
      HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS WAIVER OF WARRANTY OF FITNESS
      AND/OR WARRANTY AGAINST REDHIBITORY VICES AND DEFECTS FOR THE ABOVE DESCRIBED
      PROPERTY.

    

    
      
         

      

      
        -32-

        
          

        

      

      
         

      

    

    

    ARTICLE
      15. - CASUALTY LOSS AND CONDEMNATION

    

    If,
      prior
      to the Closing, all or any portion of the Assets is destroyed by fire or other
      casualty or if any portion of the Assets shall be taken by condemnation or
      under
      the right of eminent domain (all of which are herein called "Casualty Loss"
      and
      limited to property damage or taking only), Buyer and Seller must agree prior
      to
      Closing either (i) to delete that portion of the Assets which is subject to
      the
      Casualty Loss from the Assets, and the Purchase Price shall be reduced by the
      value allocated to the deleted interest as set out in Exhibit “B,” or (ii) for
      Buyer to proceed with the purchase of such Assets, notwithstanding any such
      destruction or taking (without reduction of the Purchase Price) in which case
      Seller shall pay, at the Closing, to Buyer all sums paid to Seller by third
      parties by reason of the destruction or taking of such Assets and shall assign,
      transfer and set over unto Buyer all insurance proceeds received by Seller
      as
      well as all of the right, title and interest of Seller in and to any claims,
      causes of action, unpaid proceeds or other payments from third parties arising
      out of such destruction or taking. If the allocated value of that portion of
      the
      Assets affected by the casualty Loss as shown on Exhibit “B” exceeds two million
      five hundred thousand dollars ($2,500,000.00), Buyer and Seller shall each
      have
      the right to terminate this Agreement upon written notification to the other,
      the transaction shall not close and thereafter neither Buyer nor Seller shall
      have any liability or further obligations to the other hereunder. In the event
      of such termination, Seller shall return the Performance Deposit to Buyer,
      without interest. Prior to Closing, Seller shall not voluntarily compromise,
      settle or adjust any amounts payable by reason of any Casualty Loss without
      first obtaining the written consent of Buyer. 

    

    

    ARTICLE
      16. - DEFAULT AND REMEDIES

    

    16.1. Seller's
      Remedies. 

    

    If
      Seller
      and Buyer close the transaction contemplated by this Agreement on or before
      the
      Closing Date, as it may be extended in accordance herewith, the Performance
      Deposit will be applied to the Purchase Price and the amount due from Buyer
      at
      Closing will be reduced by the amount of the Performance Deposit. If the
      transaction contemplated by this Agreement does not close on or before the
      Closing Date, as it may be extended in accordance herewith, because (a) Seller
      is unable, unwilling or refuses to close, or because (b) a condition to Buyer’s
      obligation to close, as set forth in Section 12.2, is not satisfied, or because
      (c) Buyer terminates this Agreement under the provisions of Articles 9 or 15,
      or
      as elsewhere provided for and allowed in this Agreement, unless Buyer chooses
      the remedy of specific performance, if applicable, as set forth in Section
      16.2,
      Seller will refund the Performance Deposit to Buyer, without interest, within
      five (5) days following the later of the Closing Date or any extension thereof
      in accordance with the provisions of this Agreement. If for any reason other
      than those set forth in subparagraphs (a), (b) and (c) above, Buyer fails,
      refuses or is unable to close the transaction contemplated by this Agreement
      on
      or before the Closing Date, as it may be extended in accordance herewith, Seller
      shall retain the Performance Deposit as a liquidated damage and not as a
      penalty, and terminate this Agreement, as Seller's sole and exclusive remedies
      for such default, all other remedies (except as expressly retained in Section
      16.3) being expressly waived by Seller.

    

    
      
         

      

      
        -33-

        
          

        

      

      
         

      

    

    16.2. Buyer's
      Remedies. 

    

    Upon
      failure of Seller to comply herewith by the Closing Date, as it may be extended
      in accordance herewith, Buyer, at its sole option and in addition to any other
      remedies it may have at law or equity, may (i) enforce specific performance,
      or
      (ii) terminate this Agreement. In the event Buyer elects to terminate this
      Agreement as set forth above, Seller shall immediately return the Performance
      Deposit to Buyer, without interest.

    

    16.3. Other
      Remedies.

    

    Notwithstanding
      the foregoing, termination of this Agreement shall not prejudice or impair
      Buyer's obligations under Section 6.3 (and the confidentiality agreements
      referenced therein). The prevailing party in any legal proceeding brought under
      or to enforce this Agreement shall be additionally entitled to recover court
      costs and reasonable attorneys' fees from the non-prevailing party.
      Notwithstanding the provisions of Sections 16.1 and 16.2, the remedy of
      mediation and arbitration provided in Section 8.4(d) shall be the exclusive
      remedy for the matters provided for in such Section.

    

    16.4. Effect
      of Termination. 

    

    In
      the
      event of termination of this Agreement under this Article 16, the transaction
      shall not close and neither Buyer nor Seller shall have any further obligations,
      remedies, liabilities, rights or duties to the other hereunder, except as
      expressly provided herein.

    

    

    ARTICLE
      17. - ASSUMPTION AND INDEMNITY

    

    17.1. Assumed
      Obligations; Pre-Closing Liabilities.

    

    Upon
      and
      after Closing Buyer shall own the Assets, together with all the rights, duties,
      obligations, and liabilities accruing after Closing, including the Assumed
      Obligations and Buyer's indemnity obligations hereunder. Buyer agrees to assume
      and pay, perform, fulfill and discharge all Assumed Obligations and Buyer’s
      indemnity obligations. Seller agrees to retain and pay, perform, fulfill and
      discharge all Retained Obligations, and Seller’s indemnity
      obligations.

    

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

    17.2. Buyer's
      Indemnity. 

    

    BUYER
      AGREES TO INDEMNIFY, DEFEND AND HOLD SELLER AND SELLER’S EMPLOYEES, OFFICERS AND
      DIRECTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LOSSES,
      DAMAGES, PUNITIVE DAMAGES, COSTS, EXPENSES, CAUSES OF ACTION OR JUDGMENTS OF
      ANY
      KIND OR CHARACTER INCLUDING, WITHOUT LIMITATION, ANY INTEREST, PENALTY,
      REASONABLE ATTORNEYS' FEES AND OTHER COSTS AND EXPENSES INCURRED IN CONNECTION
      THEREWITH OR THE DEFENSE THEREOF (COLLECTIVELY THE “CLAIMS”), WITH RESPECT TO
      ALL LIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIES AND
      OBLIGATIONS CAUSED BY, RELATED TO, ATTRIBUTABLE TO, OR ARISING OUT OF THE
      ASSUMED OBLIGATIONS. 

    

    17.3. Seller's
      Indemnity. 

    

    SELLER
      AGREES TO INDEMNIFY, DEFEND AND HOLD BUYER AND BUYER’S EMPLOYEES, OFFICERS AND
      DIRECTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS WITH RESPECT TO ALL
      LIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIES AND OBLIGATIONS
      CAUSED BY, RELATED TO, ATTRIBUTABLE TO, OR ARISING OUT OF THE RETAINED
      OBLIGATIONS. 

    

    17.4. Negligence.
      

    

    THE
      INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS PROVIDED FOR IN THIS
      AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND
      DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE,
      COMPARATIVE, OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF THE
      PARTIES HERETO.

    

    
      
        17.5.
          Broker
          or Finder's Fee. 

      

    

    

    Each
      party hereby agrees to indemnify and hold the other harmless from and against
      any claim for a brokerage or finder's fee or commission in connection with
      this
      Agreement or the transactions contemplated by this Agreement to the extent
      such
      claim arises from or is attributable to the actions of such indemnifying party,
      including, without limitation, any and all losses, damages, punitive damages,
      attorneys' fees, costs and expenses of any kind or character arising out of
      or
      incurred in connection with any such claim or defending against the
      same.

    

    

    ARTICLE
      18. - GAS IMBALANCES

    

    Seller
      and Buyer will use their best efforts to update (to the Effective Time) the
      gas
      imbalance volume amounts listed on Exhibit “G.” If, prior to the Final
      Settlement Date, either party hereto notifies the other party hereto that the
      volumes set forth in Exhibit “G” are incorrect, then Buyer or Seller will pay
      the other at the Final Settlement, as appropriate, an amount equal to the NYMEX
      price at the end of the month in which the variance occurs, per net mmbtu
      variance from the net imbalance shown on Exhibit “G.” Subject to such adjustment
      on the Final Settlement Date, as of the Closing Buyer agrees to assume any
      liability and obligation for gas production imbalances (whether over or under)
      attributable to the Assets. Except as set forth in this Article 18, in assuming
      this liability at Closing, Buyer shall not be obligated to make any additional
      payment over the Purchase Price to Seller, and Seller shall not be obligated
      to
      refund any of said price to reimburse Buyer for any over-balances existing
      at
      the time of sale. 

    

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

    

     

    ARTICLE
      19. - PREFERENTIAL RIGHT TO PURCHASE 

    AND
      AREA OF MUTUAL INTEREST PROVISION

    

    19.
      1 Preferential
      Right to Purchase.
      

    

    This
      Agreement is also made expressly subject to a Preferential Right to Purchase,
      the terms and conditions of which are as follows:

    

    (a) In
      the
      event Seller or Buyer receives a bona fide offer from a third party to purchase
      all or a part of the interests of Seller (overriding royalty interest or
      reversionary working interest, before or after reversion) or Buyer (the
“Selling
      Party”)
      in the
      Delhi Holt Bryant Unit, Delhi Holt Bryant Unit Lands, or other jointly owned
      lands within the Area of Mutual Interest (including
      interests hereafter owned or acquired),
      and once
      the Selling Party and a proposed transferee have fully negotiated the principal
      terms and conditions of a transfer (which principal terms shall include all
      material terms and conditions necessary for a purchaser to make an informed
      decision including, but not necessarily limited to, price, timing, scope,
      character and description of the interests to be transferred, agreed
      indemnities, reservations and exclusions), Selling Party shall disclose such
      principal terms and conditions in detail to the other party to this Agreement
      (the “Receiving
      Party”)
      in a
      written notice. Receiving Party shall have the right to acquire the interest
      proposed to be transferred from the Selling Party on the same terms and
      conditions agreed to by the proposed transferee if, within ten (10) Days after
      receipt of Selling Party’s written notice, the Receiving Party delivers to the
      Selling Party a counter-notification that Receiving Party accepts the agreed
      upon terms and conditions of the transfer without reservations or conditions.
      If
      the Receiving Party does not deliver such counter-notification, the transfer
      to
      the proposed transferee may be made, subject to the provisions of this
      Agreement, under terms and conditions no more favorable to the transferee than
      those set forth in the notice to Receiving Party, provided that the transfer
      shall be concluded within one hundred eighty (180) days from the date of Buyer’s
      receipt of Selling Party’s written notice. In the event the proposed sale of the
      interest to a third party is timely consummated, the preferential right to
      purchase shall no longer attach to the interest transferred to the third party.
      In the event the proposed sale of the interest to the third party is not
      consummated, then the preferential right to purchase such interest shall be
      reinstated as to any future offers to purchase the interest.

    

    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    

    (b) In
      the
      event Selling Party’s proposed transfer of part or all of its interest in the
      Delhi Holt Bryant Unit, Delhi Holt Bryant Unit Lands, or other jointly owned
      lands within the Area of Mutual Interest, involves consideration other than
      cash
      or involves other properties included in a wider transaction (package deal),
      then the interest to be assigned by Selling Party (or part thereof) shall be
      allocated a reasonable and justifiable cash value in the notification to
      Receiving Party. Receiving Party may satisfy the requirements of this Article
      19.1 by agreeing to pay such cash value in lieu of the consideration payable
      in
      the third-party offer.

     

    (c) The
      preferential right to purchase shall be applicable to any
      transfer of all or a portion of a Selling Party’s interest in the Delhi Holt
      Bryant Unit, Delhi Holt Bryant Unit Lands,
      or other
      jointly owned lands within the Area of Mutual Interest, whether
      directly or indirectly by assignment, merger, consolidation, or sale of stock,
      or other conveyance, other than with or to an affiliate, subsidiary, or parent
      company existing as of the date of this Agreement, and provided further, the
      preferential right to purchase shall not apply if the Selling Party is selling
      or transferring all or substantially all of its oil and gas assets, and such
      oil
      and gas assets being sold include oil and gas assets other than interests in
      the
      Delhi Holt Bryant Unit, Delhi Holt Bryant Unit Lands,
      or
      other jointly owned lands within the Area of Mutual Interest.

    

    19.2
      Area
      of Mutual Interest Provision.

    

    (a) The
      Parties hereby agree to the establishment of an Area of Mutual Interest which
      shall encompass all those lands within the area outlined in red on the plat
      attached hereto as Exhibit “L” (as further described in Exhibit “L-1”) as to all
      depths which shall constitute and shall hereinafter sometimes be referred to
      as
      an “Area
      of Mutual Interest”.

    

    (b) If,
      after
      the date of this Agreement, either party to this Agreement (“Acquiring
      Party”)
      acquires either an oil and gas lease or mineral interest (or any interest
      therein), royalty interest, or an option to acquire an oil and gas lease, or
      any
      other oil and/or gas interest covering lands lying within the Area of Mutual
      Interest, including oil, gas and mineral leases acquired pursuant to the
      exercise of any options (all of the foregoing hereinafter sometimes being
      referred to as “Oil
      and Gas Interests”),
      or if
      the Acquiring Party enters into any type of agreement by which an Oil and Gas
      Interest may be acquired or otherwise earned by conducting drilling, seismic,
      or
      other operations on the lands lying within the Area of Mutual Interest, then
      the
      Acquiring Party shall promptly notify the other party of such acquisition or
      such agreement. If either party to this Agreement acquires an Oil and Gas
      Interest covering lands within the geographical confines of the Area of Mutual
      Interest, the other party shall have the right to participate in any such
      acquisition of such Oil and Gas Interest to the extent of its then existing
      ownership interest in the Area of Mutual Interest by paying its proportionate
      share of the actual costs of acquiring such Oil and Gas Interests. Any interest
      acquired by a party to this Agreement in lands outside of the Area of Mutual
      Interest, however, shall not be subject to the terms of this Article. If, after
      the date of this Agreement, additional parties acquire an interest from the
      original Parties in the Area of Mutual Interest, in the event not all parties
      elect to participate in an acquisition, then any such non-participating party’s
      interests shall be offered in writing to the other participating parties in
      the
      proportions that their ownership interests in the Area of Mutual Interest at
      the
      time of the acquisition bear to the total of the ownership interests of all
      participating parties in the acquisition.

    

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

    (c) The
      notification provided for in Paragraph (b) above shall contain all available
      title information and copies of leases, agreements by which the Oil and Gas
      Interest may be acquired, and all other pertinent instruments and information
      regarding the proposed acquisition. It shall also describe in detail the cost
      and expense of such acquisition and any other obligation that may be incurred
      pursuant thereto.

    

    (d) If
      drilling, seismic, or other operations are not required to acquire the Oil
      and
      Gas Interest, the party entitled to receive notice set forth in Paragraph (b)
      shall have fifteen (15) days from receipt of notice thereof in which to elect
      to
      participate in such acquisition to the extent of its interest. In the event
      a
      drilling or workover rig is on location at the time of the acquisition, such
      notice period shall be forty-eight (48 hours). Failure to give written notice
      to
      the Acquiring Party of its election, as specified herein, shall constitute
      an
      election not to participate. If a party elects to participate in such
      acquisition as set forth herein, such party (“Participating
      Party”)
      shall
      reimburse the Acquiring Party for its proportionate share of the costs thereof
      within fifteen (15) days of receipt of an invoice from the Acquiring Party
      setting forth in detail the cost and expense of such acquisition. The Acquiring
      Party shall, within thirty (30) days after receipt of payment from a
      Participating Party, assign to the Participating Party the Participating Party’s
      proportionate interest in the acquisition, subject to any applicable burdens
      on
      such Participating Party’s interest in the acquisition. All Participating
      Parties shall be entitled to participate in any acquisition within the Area
      of
      Mutual Interest on a ground floor basis and subject to no additional burdens
      placed on an acquisition by the Acquiring Party, with Seller’s original
      ownership interest in the Area of Mutual Interest being seventeen and one-half
      percent (17.5%) and Buyer’s original interest being fifty two and one-half
      percent (52.5%). Likewise, Acquiring Party’s interest in an acquisition shall
      not be subject to any additional burdens on production in favor of Participating
      Parties.

    

    (e) If
      the
      acquisition requires drilling, seismic, or other operations on the lands lying
      within the Area of Mutual Interest, the election of a party to participate
      in
      such operations shall constitute an election to participate in the agreement
      governing such operations, to the extent necessary to acquire the interest.
      No
      party shall be required to make such an election more than sixty (60) days
      or
      less than thirty (30) days prior to the commencement of initial
      operations.

    

    
      
         

      

      
        -38-

        
          

        

      

      
         

      

    

    (f) To
      receive an assignment of its proportionate share of the Oil and Gas Interest
      acquired as a result of conducting drilling, seismic, or other operations on
      the
      Area of Mutual Interest, a Participating Party must have:

    

    (1) Participated
      in all operations necessary for the acquisition of the Oil and Gas Interest,
      and
      also must have paid all costs and expenses incurred in connection
      therewith;

    

    (2) Participated
      in any previous drilling, seismic, or other operations that were necessary
      or
      were a condition precedent to the operations resulting in the acquisition of
      the
      Oil and Gas Interest; and

    

    (3) Participated
      in accordance with the terms, provisions, covenants, and conditions of the
      agreements governing the acquisition of an Oil and Gas Interest.

    

    (g) If
      both
      Parties elect to participate in any acquisition of an Oil and Gas Interest,
      then
      any such acquired Oil and Gas Interest shall thereafter be subject to the
      Operating Agreement attached to this Agreement. If, after the date of this
      Agreement, additional parties acquire an interest from the original Parties
      in
      the Area of Mutual Interest, and if more than one, but fewer than all such
      parties participate in the acquisition of an Oil and Gas Interest, such
      Participating Parties agree that the acquisition shall be subject to such
      Operating Agreement, with adjustments made to the interests of the parties
      as
      applicable. If the Acquiring Party shall be the sole party electing to
      participate in an acquisition of an Oil and Gas Interest, then such acquisition
      shall not be subject to the terms of this Area of Mutual Interest provision
      or
      the Operating Agreement.

    

    (h) For
      purposes of this Section 19.2, the term “Oil
      and Gas Interest”
shall
      also include surface rights or interests (including easements, rights-of-way,
      and surface ownership) in lands lying within the Area of Mutual Interest ,
      and
      options to acquire such surface rights or interests, and any surface rights
      or
      interests acquired pursuant to the exercise of any options.

    

    (i) Notwithstanding
      anything to the contrary in the provisions above, only Buyer shall have the
      right to commence acquisitions of Oil and Gas Interests in the Area of Mutual
      Interest commencing on the Closing Date, and for a period of two (2) years
      thereafter. 

    

    (j) Notwithstanding
      anything herein to the contrary, the above Area of Mutual Interest provisions
      shall not apply to any acquisitions of, or agreements to acquire, royalty
      interests made by Seller within the Area of Mutual Interest prior to the
      Effective Time, which are identified and described in Exhibit “K” and no
      additional offers to acquire such royalty interest have been or will be made
      by
      Seller after May 1, 2006.

    

    
      
         

      

      
        -39-

        
          

        

      

      
         

      

    

    (k)
      In
      the event that either party should acquire any interest from McGowan Working
      Partners, Inc.(or its successors, subsidiaries, affiliates, or assigns) which
      is
      located within the aerial boundaries of the Delhi Holt Bryant Unit prior to
      Payout, the Parties shall in good faith mutually agree to the value of the
      acquisition that is attributable to the Delhi Holt Bryant Unit for the purposes
      of determining a value for the Capital Expenditure Commitment and Seller shall
      only retain its Reversionary Interests, until Payout, in any interest located
      in
      the Delhi Holt Bryant Unit. 

    

    (l) The
      terms
      of this Section 19.2. [except for 19.2(j) and (i)] shall remain in full force
      and effect covering the lands lying within the Area of Mutual Interest for
      a
      period of eight (8) years commencing from the Effective Time, unless extended
      for an additional period or terminated earlier by written agreement of the
      Parties.

    

    

    ARTICLE
      20. - MISCELLANEOUS

    

    20.1 Receivables
      and other Excluded Funds.

    

    Buyer
      shall be under no obligation to collect on behalf of Seller any receivables
      or
      other funds included in the Excluded Assets and described in Section 1.9(c)
      above. With respect to receivables, Buyer shall be free to treat the interests
      of any party with a delinquent receivable in any manner deemed appropriate
      by
      Buyer.

    

    20.2. Public
      Announcements. 

    

    The
      Parties hereto agree that prior to Closing, each may publicly disclose the
      principal terms of this Agreement following its execution (excluding the cost
      for CO2 and the transportation costs for CO2), provided that prior to making
      any
      public announcement or statement with respect to the transaction contemplated
      by
      this Agreement, the party desiring to make such public announcement or statement
      shall consult with the other party hereto and exercise its best efforts to
      (i)
      agree upon the text of a joint public announcement or statement to be made
      by
      both of such Parties; or (ii) obtain written approval of the other party hereto
      to the text of a public announcement or statement to be made solely by Seller
      or
      Buyer, as the case may be. Nothing contained in this paragraph shall be
      construed to require either party to obtain approval of the other party hereto
      to disclose information with respect to the transaction contemplated by this
      Agreement to any state or federal governmental authority or agency to the extent
      (i) required by applicable law or by any applicable rules, regulations or orders
      of any governmental authority or agency having jurisdiction; or (ii) necessary
      to comply with disclosure requirements of the New York Stock Exchange or other
      recognized exchange or over the counter, and applicable securities laws.
      .

    

    
      
         

      

      
        -40-

        
          

        

      

      
         

      

    

    20.3. Filing
      and Recording of Assignments, etc. 

    

    Buyer
      shall be solely responsible for all filings and the prompt recording of
      assignments and other documents related to the Assets and for all fees connected
      therewith, including the fees charged by any regulatory authority in connection
      with the change of operator, and Buyer shall furnish certified copies of all
      such filed and/or recorded documents to Seller. Seller shall not be responsible
      for any loss to Buyer because of Buyer's failure to file or record documents
      correctly or promptly. Buyer shall not be responsible for any loss to Seller
      because of Seller's failure to record this document correctly or promptly.
      Buyer
      shall promptly file all appropriate forms, declarations or bonds with federal
      and state agencies relative to its assumption of operations and Seller shall
      cooperate with Buyer in connection with such filings.

    

    20.4. Further
      Assurances and Records. 

    

    (a) After
      the
      Closing each of the Parties will execute, acknowledge and deliver to the other
      such further instruments, and take such other action, as may be reasonably
      requested in order to more effectively assure to said party all of the
      respective properties, rights, titles, interests, estates, and privileges
      intended to be assigned, delivered or inuring to the benefit of such party
      in
      consummation of the transactions contemplated hereby. Without limiting the
      foregoing, in the event Exhibit “A” incorrectly or insufficiently describes or
      references or omits the description of a property or interest intended to be
      conveyed hereby as described in Sections 1.12 or 1.14 above, Seller agrees
      to,
      within twenty (20) days of Seller’s receipt of Buyer’s written request, together
      with supporting documentation satisfactory to Seller, correct such Exhibit
      and/or execute an amended assignment or other appropriate instruments necessary
      to transfer the property or interest intended to be conveyed hereby to
      Buyer.

    

    (b) Buyer
      agrees to maintain the files and records of Seller that are acquired pursuant
      to
      this Agreement for seven (7) years after Closing. Buyer shall provide Seller
      and
      its representatives reasonable access to and the right to copy such files and
      records for the purposes of (i) preparing and delivering any accounting provided
      for under this Agreement and adjusting, prorating and settling the charges
      and
      credits provided for in this Agreement; (ii) complying with any law, rule or
      regulation affecting Seller's interest in the Assets prior to the Closing Date;
      (iii) preparing any audit of the books and records of any third party relating
      to Seller's interest in the Assets prior to the Closing Date, or responding
      to
      any audit prepared by such third parties; (iv) preparing tax returns; (v)
      responding to or disputing any tax audit; or (vi) asserting, defending or
      otherwise dealing with any claim or dispute under this Agreement or as to the
      Assets.

    

    (c) Buyer
      agrees that within thirty (30) days after Closing or within thirty (30) days
      after operations are actually transferred, whichever is later, it will remove
      or
      cause to be removed its signs and the names and marks used by Seller and all
      variations and derivatives thereof and logos relating thereto from the Assets
      and will not thereafter make any use whatsoever of such names, marks and
      logos.

    

    
      
         

      

      
        -41-

        
          

        

      

      
         

      

    

    (d) To
      the
      extent not obtained or satisfied as of Closing, Seller agrees to continue to
      use
      all reasonable efforts, but without any obligation to incur any cost or expense
      in connection therewith, and to cooperate with Buyer's efforts to obtain for
      Buyer (i) access to files, records and data relating to the Assets in the
      possession of third parties; and (ii) access to wells constituting a part of
      the
      Assets operated by third parties for purposes of inspecting same.

    

    (e) Buyer
      shall comply with all current and subsequently amended applicable laws,
      ordinances, rules, and regulations applicable to the Assets and shall promptly
      obtain and maintain all permits required by governmental authorities in
      connection with the Assets.

    

    20.5. Notices. 

    

    Except
      as
      otherwise expressly provided herein, all communications required or permitted
      under this Agreement shall be in writing and may be given by personal delivery,
      facsimile, US mail (postage prepaid), or commercial delivery service, and any
      communication hereunder shall be deemed to have been duly given and received
      when actually delivered to the address of the Parties to be notified as set
      forth below and addressed as follows:

    

    If
      to
      Seller, as follows:

    

    NGS
      Sub Corp.

    

    Two
      Memorial City Plaza

    820
      Gessner Road

    Suite
      1340

    Houston,
      TX 77024

    Attention: Robert
      S.
      Herlin

    President
      & CEO

    

    Telephone:
      (713) 935-0122

    Facsimile:
      (713) 935-0199

    

    
      
         

      

      
        -42-

        
          

        

      

      
         

      

    

    If
      to
      Buyer, as follows:

    

    Denbury
      Onshore, LLC

    5100
      Tennyson Parkway

    Suite
      1200

    Plano,
      Texas 75024

    Attention:
      Ray Dubuisson

    Vice
      President-Land

    Telephone:
      (972)-673-2044

    Facsimile:
      (972)-673-2299

    

    Provided,
      however, that any notice required or permitted under this Agreement will be
      effective if given verbally within the time provided, so long as such verbal
      notice is followed by written notice thereof in the manner provided herein
      within twenty-four (24) hours following the end of such time period. Any party
      may, by written notice so delivered to the other, change the address to which
      delivery shall thereafter be made.

    

    20.6. Incidental
      Expenses. 

    

    Buyer
      shall bear and pay (i) all state or local government sales, transfer, gross
      proceeds, or similar taxes incident to or caused by the transfer of the Assets
      to Buyer, (ii) all documentary, transfer and other state and local government
      taxes incident to the transfer of the Assets to Buyer; and (iii) all filing,
      recording or registration fees for any assignment or conveyance delivered
      hereunder. Each party shall bear its own respective expenses incurred in
      connection with the negotiation and Closing of this transaction, including
      it
      own consultants' fees, attorneys' fees, accountants' fees, and other similar
      costs and expenses.

    

    20.7. Waiver. 

    

    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 this Agreement, 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 this Agreement,
      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.

    

    20.8. Binding
      Effect; Assignment. 

    

    All
      the
      terms, provisions, covenants, obligations, indemnities, representations,
      warranties and conditions of this Agreement shall be covenants running with
      the
      land and shall inure to the benefit of, and be binding upon, and shall be
      enforceable by, the parties hereto and their respective successors and assigns.
      The rights of Buyer under this Agreement to acquire the Assets are personal
      and
      this Agreement may not be assigned or transferred by Buyer to any other party,
      firm, corporation or other entity, without the prior, express and written
      consent of Seller, and such consent may be withheld for any reason, including
      convenience. Any attempt to assign this Agreement by Buyer over the objection
      or
      without the express written consent of the Seller shall be absolutely void.
      Seller may condition its consent to assign this Agreement on Buyer providing
      Seller with an appropriate guarantee of its assignee's performance. Any
      subsequent transfer of this Agreement or of all or any part of the Assets shall
      be made expressly subject to the terms and provisions of this
      Agreement.

    

    
      
         

      

      
        -43-

        
          

        

      

      
         

      

    

    20.9. Taxes. 

    

    (a) Seller
      and Buyer agree that this transaction may be subject to the reporting
      requirement of Section 1060 of the Internal Revenue Code of 1986, as amended,
      and that, therefore, IRS Form 8594, Asset Acquisition Statement, will be filed
      for this transaction. The Parties agree that, for all Tax purposes: the fair
      market value of the personal property acquired by the Buyer constitutes less
      than five percent of the Purchase Price and the Parties will take no tax
      reporting position to the contrary. The Parties will confer and cooperate in
      the
      preparation and filing of their respective forms to reflect a consistent
      reporting of the agreed upon allocation.

    

    (b) Seller
      shall be responsible for all state, local and federal property, ad valorem,
      excise, and severance taxes attributable to or arising from the ownership or
      operation of the Assets prior to the Effective Time. Buyer shall be responsible
      for all property and severance taxes attributable to or arising from the
      ownership or operation of the Assets after the Effective Time. Any party which
      pays such taxes for the other party shall be entitled to prompt reimbursement
      upon evidence of such payment. Each party shall be responsible for its own
      federal and state income taxes, if any, as may result from this
      transaction.

    

    (c) If
      this
      transaction is determined to result in state sales or transfer taxes, Buyer
      shall be solely responsible for any and all such taxes due on the Assets
      acquired by Buyer by virtue of this transaction. If Buyer is assessed such
      taxes, Buyer shall promptly remit same to the taxing authority. If Seller is
      assessed such taxes, Buyer shall reimburse Seller for any such taxes paid by
      Seller to the taxing authority.

     

    20.10. Intentionally
      Deleted

    

    20.11. Audits. 

    

    It
      is
      expressly understood and agreed that Seller retains its right to receive its
      proportionate share of the proceeds from any audits relating to activities
      prior
      to the Effective Time, and Seller shall likewise pay its share of any costs
      attributable to the period prior to the Effective Time resulting from any such
      audits.

    

    
      
         

      

      
        -44-

        
          

        

      

      
         

      

    

    20.12. Like-Kind
      Exchanges. 

    

    Each
      party consents to the other party's assignment of its rights and obligations
      under this Agreement to its Qualified Intermediary (as that term is defined
      in
      Section 1.1031(k)-l(g)(4)(iii) of the Treasury Regulations) in connection with
      effectuation of a like-kind exchange. However, Seller and Buyer acknowledge
      and
      agree that any assignment of this Agreement to a Qualified Intermediary does
      not
      release either party from any of their respective liabilities and obligations to
      each other under this Agreement. Each party agrees to cooperate with the other
      to attempt to structure the transaction as a like-kind exchange.

    

    20.13. Governing
      Law. 

    

    THIS
      AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
      LAWS
      OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS
      OTHERWISE APPLICABLE TO SUCH DETERMINATIONS. 

    

    20.14. Entire
      Agreement. 

    

    This
      Agreement embodies the entire agreement between the Parties and replaces and
      supersedes all prior agreements, arrangements and understandings related to
      the
      subject matter hereof, whether written or oral. 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 this Agreement shall be binding or valid. This
      Agreement may be supplemented, altered, amended, modified or revoked by a
      writing only, signed by the Parties hereto. The headings herein are for
      convenience only and shall have no significance in the interpretation hereof.
      The Parties stipulate and agree that this Agreement shall be deemed and
      considered for all purposes, as prepared through the joint efforts of the
      Parties, and shall not be construed against one party or the other as a result
      of the preparation, submittal or other event of negotiation, drafting or
      execution thereof. It is understood and agreed that there shall be no
      third-party beneficiary of this Agreement, and that the provisions hereof do
      not
      impart enforceable rights in anyone who is not a direct, initial party
      hereto.

    

    20.15. Severability. 

    

    If
      any
      provision of this Agreement 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.

    

    20.16. Exhibits. 

    

    All
      Exhibits attached to this Agreement, and the terms of those Exhibits which
      are
      referred to in this Agreement, are made a part hereof and incorporated herein
      by
      reference.

    

    
      
         

      

      
        -45-

        
          

        

      

      
         

      

    

    20.17. Delivery
      of Files After Closing. 

    

    The
      Assets set out in Section 1.14(f) shall be provided by Seller to Buyer within
      five (5) business days after the Closing Date at a location to be specified
      by
      Seller. Any transportation, postage, or delivery costs from Seller's offices
      shall be at Buyer's sole cost, risk and expense.

    

    20.18. Survival. 

    

    Unless
      otherwise specifically provided in this Agreement, all of the representations,
      warranties, indemnities, covenants and agreements of or by the Parties hereto
      shall survive the execution and delivery of the Conveyance, Assignment and
      Bill
      of Sale. Additionally, those provisions set forth in Articles 1.9, 3.4 and
      19
      shall survive the execution and delivery of the Conveyance, Assignment and
      Bill
      of Sale, and shall be deemed as between the Parties, there successors and
      assigns to be covenants running with the land. 

    

    20.19. Subsequent
      Adjustments. 

    

    Regardless
      of the date set for the Final Settlement, Buyer and Seller agree that their
      intent is to allow for the earliest practical forwarding of revenue and
      reimbursement of expenses between them, and Seller and Buyer recognize that
      either may receive funds or pay expenses after the Final Settlement Date which
      are properly the property or obligation of the other. Therefore, upon receipt
      of
      net proceeds or payment of net expenses due to or payable by the other party
      hereto, whichever occurs first, Seller or Buyer, as the case may be, shall
      submit a statement to the other party hereto showing the relevant items of
      income and expense with supporting documentation. Payment of any net amount
      due
      by Seller or Buyer, as the case may be, on the basis thereof shall be made
      within ten (10) days of receipt of the statement.

    

    20.20 Counterparts. 

    

    This
      Agreement may be executed in any number of counterparts, and each and every
      counterpart shall be deemed for all purposes one (1) agreement.

    

    20.21 Subrogation.
      

    

    To
      the
      fullest extent allowed by law and the applicable agreements with third parties,
      Seller grants Buyer a right of subrogation in all claims or rights Seller may
      have against third parties to the extent they relate to the Assumed
      Obligations.

    

    
      
         

      

      
        -46-

        
          

        

      

      
         

      

    

    20.22 Suspended
      Monies.

    

    At
      Closing, Seller shall deliver to Buyer the monies held in suspense by Seller
      for
      the account of third parties, or relate to a title dispute or question as to
      ownership, along with any documentation in Seller’s possession or available to
      Seller in support of such suspended funds. Any additional monies of this nature
      received by Seller after Closing shall be remitted to Buyer within one hundred
      twenty (120) days after the Closing hereof. At Closing, Buyer shall assume
      the
      obligation for the payment of these monies.

    

    20.23.
      Buyer
      as Operator.

    

    After
      the
      Closing Date, Buyer shall operate, manage, and administer the Assets as a
      reasonable prudent operator and in a good and workmanlike manner in accordance
      with the Unit Operating Agreement. The Parties acknowledge that changes and
      amendments to the Unit Operating Agreement are necessary and required by both
      Parties and will be negotiated prior to the Closing Date. These changes and
      amendments may be in the form of changes and amendments to the existing Unit
      Operating Agreement, a new unit operating agreement, or a side letter agreement.
      The Unit Operating Agreement, as so amended or supplemented, will include,
      among
      other provisions, the following:

    

    (a) language
      giving Seller the right to make reasonable site visits to the Delhi Holt Bryant
      Unit with its employees, agents, or investors, after reasonable notice to Buyer,
      and at Seller’s sole cost, risk and expense, and this right will not be
      unreasonably withheld;

    

    (b) the
      provisions Section 1.9 (d) (6);

    

    (c) the
      right
      of Seller to take its share of production in kind, subject to Buyer reserving
      a
      competitive call on Seller’s share of production that provides Buyer the right
      to match any third party offers to purchase Seller’s production, provided that
      this competitive call is limited to Seller’s working interest share of
      production, but not applicable to its overriding royalty interest;

    

    (d) a
      CO2 gas
      balancing agreement; and,

    

    (e) After
      Closing and prior to Payout, Seller may vote its Reversionary Interests with
      respect to any changes or amendments to the Unit Operating
      Agreement.

     

    
      
         

      

      
        -47-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
      above written.

     

    
      	 	 	 
	WITNESSES: 	SELLER:
	 	 
	_________________________ 	NGS SUB CORP.  
	 
_________________________ 	 
 	 
 
	 	By:  	 
	 	
              
Robert
              S. Herlin
	 	President
&
              CEO 

    

     

    
      	 	 	 
	 	BUYER:
	 	 
	_________________________ 	DENBURY ONSHORE, LLC 
	 
_________________________	 
 	 
 
	 	By:  	 
	 	
              
H.
              Raymond Dubuisson
	 	Vice
              President-Land

    

        

    
      
         

      

        -48-

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