Document:

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                           PURCHASE AND SALE AGREEMENT

                                      AMONG

      ESENJAY EXPLORATION, INC., ESENJAY PETROLEUM CORPORATION, TRIJON
    EXPLORATION, INC., BRAZOS RESOURCES, INC., AND JLC ENTERPRISES, INC.,

                                   AS SELLERS,

                                       AND

                                SANTOS USA CORP.,

                                  AS PURCHASER

                                NOVEMBER 16, 2001

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                                TABLE OF CONTENTS

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<S>                                                                         <C>
ARTICLE 1 PURCHASE AND SALE..................................................1
Section 1.1  Purchase and Sale...............................................1
Section 1.2  Assets..........................................................1
Section 1.3  Excluded Assets.................................................3
Section 1.4  Effective Time; Proration of Costs and Revenues.................3
Section 1.5  Delivery and Maintenance of Records.............................5

ARTICLE 2 PURCHASE PRICE.....................................................5
Section 2.1  Purchase Price..................................................5
Section 2.2  Adjustments to Purchase Price...................................5
Section 2.3  Allocation of Purchase Price....................................6

ARTICLE 3 TITLE MATTERS......................................................7
Section 3.1  Sellers' Title..................................................7
Section 3.2  Definition of Defensible Title..................................7
Section 3.3  Definition of Permitted Encumbrances............................8
Section 3.4  Notice of Title Defects; Defect Adjustments.....................9
Section 3.5  Limitations on Applicability...................................11

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER..........................11
Section 4.1  Disclaimer.....................................................11
Section 4.2  Existence and Qualification....................................12
Section 4.3  Power..........................................................12
Section 4.4  Authorization and Enforceability...............................12
Section 4.5  No Conflicts...................................................13
Section 4.6  Liability for Brokers' Fees....................................13
Section 4.7  Litigation.....................................................13
Section 4.8  Taxes and Assessments..........................................13
Section 4.9  Environmental Laws.............................................14
Section 4.10 Safety and Health..............................................14
Section 4.11 Outstanding Capital Commitments................................14
Section 4.12 Compliance with Laws...........................................14
Section 4.13 Contracts......................................................14
Section 4.14 Payments for Production........................................15
Section 4.15 Gas Imbalances.................................................15
Section 4.16 Governmental Authorizations....................................15
Section 4.17 Consents and Preferential Purchase Rights......................15
Section 4.18 Absence of Certain Changes.....................................16
Section 4.19 Bankruptcy.....................................................16

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................16
Section 5.1  Existence and Qualification....................................16
Section 5.2  Power..........................................................16
Section 5.3  Authorization and Enforceability...............................16

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Section 5.4  No Conflicts...................................................17
Section 5.5  Liability for Brokers' Fees....................................17
Section 5.6  Litigation.....................................................17
Section 5.7  Financing......................................................17
Section 5.8  Independent Investigation......................................17

ARTICLE 6 COVENANTS OF THE PARTIES..........................................18
Section 6.1  Government Reviews.............................................18
Section 6.2  Letters-in-Lieu; Assignments; Operatorship.....................18
Section 6.3  Transition Agreement...........................................18
Section 6.4  Gas and NGL Imbalances.........................................18
Section 6.5  Consents and Preferential Rights...............................19
Section 6.6  Tax Matters....................................................20
Section 6.7  Further Assurances.............................................20
Section 6.8  Certain Covenants of Sellers...................................20

ARTICLE 7 CONDITIONS TO CLOSING.............................................20
Section 7.1  Conditions of Sellers to Closing...............................20
Section 7.2  Conditions of Purchaser to Closing.............................21

ARTICLE 8 CLOSING...........................................................22
Section 8.1  Time and Place of Closing......................................22
Section 8.2  Obligations of Sellers at Closing..............................22
Section 8.3  Obligations of Purchaser at Closing............................23
Section 8.4  Closing Payment and Post-Closing Purchase Price Adjustments....24

ARTICLE 9 TERMINATION AND AMENDMENT.........................................25
Section 9.1  Termination....................................................25
Section 9.2  Effect of Termination..........................................25

ARTICLE 10 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; LIMITATIONS...........25
Section 10.1  Receipts......................................................25
Section 10.2  Expenses......................................................26
Section 10.3  Assumption and Indemnification................................26
Section 10.4  Indemnification Actions.......................................29
Section 10.5  Limitation on Actions.........................................31
Section 10.6  Recording.....................................................31
Section 10.7  Special Provision for Casualty Loss or Condemnation...........31

ARTICLE 11 MISCELLANEOUS....................................................32
Section 11.1  Counterparts..................................................32
Section 11.2  Notice........................................................32
Section 11.3  Sales or Use Tax, Recording Fees and Similar Taxes and Fees...33
Section 11.4  Expenses......................................................33
Section 11.5  Replacement of Bonds, Letters of Credit and Guarantees........34
Section 11.6  Governing Law.................................................34
Section 11.7  Captions......................................................34

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Section 11.8  Waivers.......................................................34
Section 11.9  Assignment....................................................34
Section 11.10 Entire Agreement..............................................35
Section 11.11 Amendment.....................................................35
Section 11.12 No Third-Party Beneficiaries..................................35
Section 11.13 References....................................................35
Section 11.14 Construction..................................................35
Section 11.15 Limitation on Damages.........................................36

ARTICLE 12 DEFINITIONS......................................................36

EXHIBITS:

      Exhibit A         -    Leases
      Exhibit A-1       -    Interests in Wells and Units
      Exhibit B         -    Form of Conveyance
      Exhibit C         -    Form of Transition Agreement

SCHEDULES:

      Schedule 1.0      -    Sold and Retained Percentages
      Schedule 2.3      -    Allocated Values
      Schedule 4.7      -    Litigation
      Schedule 4.8      -    Tax Matters
      Schedule 4.9      -    Environmental Matters
      Schedule 4.11     -    Capital Commitments
      Schedule 4.12     -    Compliance with Law Issues
      Schedule 4.13     -    Contract Matters
      Schedule 4.14     -    Suspense Accounts
      Schedule 4.15     -    Gas and NGL Imbalances
      Schedule 4.16     -    Permit Issues
      Schedule 4.17     -    Preferential Rights to Purchase and Consents to Assignment
      Schedule 4.18     -    Certain Changes

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                           PURCHASE AND SALE AGREEMENT

      This Purchase and Sale Agreement (this "Agreement") is executed on
November [16,] 2001, by and among Esenjay Exploration, Inc., a Delaware
corporation ("Esenjay" or "Operator"), Esenjay Petroleum Corporation, a Texas
corporation ("EPC"), Trijon Exploration, Inc., a Texas corporation
("Trijon"), Brazos Resources, Inc., a Texas corporation ("Brazos"), and JLC
Enterprises, Inc., a Texas corporation ("JLC") (Esenjay, EPC, Trijon, Brazos,
and JLC are hereinafter collectively referred to as "Sellers" and
individually, as a "Seller"), and Santos USA Corp., a Delaware corporation
("Purchaser").  Sellers and Purchaser are hereinafter collectively referred
to as the "Parties" and individually, as a "Party."

                                    RECITALS:

      A.    Sellers are the owners of certain interests in oil and gas
properties that are defined and described herein.

      B. Sellers desire to sell and Purchaser desires to purchase that
percentage set forth under the column styled "Sold Percentage" in SCHEDULE
1.0 (with respect to each such Seller, the "Sold Percentage") out of each
Seller's right, title and interest in and to those properties and rights on
the terms and conditions hereinafter set forth.

      C. Capitalized terms used herein shall have the meanings ascribed to
them in this Agreement as such terms are identified and/or defined in Article
12 hereof.

      NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

                           ARTICLE 1 PURCHASE AND SALE

      SECTION 1.1 PURCHASE AND SALE.

      At the Closing and upon the terms and subject to the conditions of this
Agreement, Sellers agree to sell and convey to Purchaser, and Purchaser
agrees to purchase, accept and pay for the Assets (as defined in Section 1.2).

      SECTION 1.2 ASSETS.

      As used herein and elsewhere in this Agreement, the term "Assets"
means, with respect to each Seller, the Sold Percentage out of such Seller's
right, title, interest and estate, real or personal, recorded or unrecorded,
movable or immovable, tangible or intangible, in and to the following:

            (a) All of the oil and gas leases, oil, gas and mineral leases,
      subleases and other leaseholds, royalties, overriding royalties, net
      profits interests, mineral fee interests, carried interests, and other
      properties and interests described on EXHIBIT A, subject to

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      such depth limitations and other restrictions as may be set forth on
      EXHIBIT A (collectively, the "Leases"), and any and all oil, gas, water,
      CO2 or injection wells thereon, including the interests in the wells
      shown on EXHIBIT A-1 attached hereto (the "Wells");

            (b) Any pools or units which include all or a part of any Lease or
      include any Well, including those pools or units shown on EXHIBIT A-1 (the
      "Units"; the Units, together with the Leases and Wells, being hereinafter
      referred to as the "Properties"), and including production from any such
      pool or unit, whether such unit production comes from wells located on or
      off of a Lease, and all tenements, hereditaments and appurtenances
      belonging to the Leases and Units;

            (c) All presently existing contracts, agreements and instruments by
      which the Assets are bound, to the extent applicable to the Assets,
      including but not limited to, operating agreements, unitization, pooling
      and communitization agreements, declarations and orders, joint venture
      agreements, farmin and farmout agreements, exchange agreements,
      transportation agreements, agreements for the sale and purchase of oil,
      gas, casinghead gas or CO2 and processing agreements to the extent
      applicable to the Assets or the production of oil and gas and other
      minerals and products produced in association therewith from the Assets
      and all hedging contracts (all of which are hereinafter collectively
      referred to as "Contracts" but excluding any contracts, agreements and
      instruments to the extent transfer is restricted by third-party agreement
      or applicable Law), and provided that "Contracts" shall not include the
      instruments constituting the Leases;

            (d) All easements, permits, licenses, servitudes, rights-of-way,
      surface leases and other surface rights appurtenant to, and used or held
      for use primarily in connection with, the Assets, excluding any permits
      and other appurtenances to the extent transfer is restricted by
      third-party agreement or applicable Law;

            (e) Equipment, machinery, fixtures and other tangible personal
      property and improvements located on the Properties or used or held for
      use primarily in connection with the operation of the Properties,
      including any wells, tanks, boilers, buildings, fixtures, injection
      facilities, saltwater disposal facilities, compression facilities,
      gathering systems, gas treating facilities, machinery, computers and
      related peripheral equipment, inventory, power lines, telephone and
      telegraph lines, roads, and other appurtenances, easements and facilities
      (the "Equipment"); and

            (f) All lease files, land files, well files, gas and oil sales
      contract files, gas processing files, division order files, abstracts,
      title opinions, land surveys, geologic data (excluding interpretations
      thereof), files and all other books, records, data, files, maps and
      accounting records related solely to the Assets, or used or held for use
      primarily in connection with the maintenance or operation thereof, but
      excluding (i) any books, records, data, files, maps and accounting records
      to the extent disclosure or transfer is restricted by third-party
      agreement or applicable Law, (ii) work product of Sellers' legal counsel
      (other than title opinions) and (iii) records relating to the negotiation
      and consummation of the sale of the Assets (subject to such exclusions,
      the "Records");

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      provided, however, that Sellers may retain the originals of such files
      and other records as Sellers have determined may be required for
      litigation, Tax, accounting, and auditing purposes and provide Purchaser
      with copies thereof,

excluding, however, the Excluded Assets (as defined in Section 1.3).

      SECTION 1.3 EXCLUDED ASSETS.

      Notwithstanding the foregoing, the Assets shall not include, and there is
excepted, reserved and excluded from the purchase and sale contemplated hereby
(collectively, the "Excluded Assets"):

            (a) that percentage set forth under the column styled "Retained
      Percentage" in SCHEDULE 1.0 (with respect to each Seller, the "Retained
      Percentage") out of each Seller's right, title and interest in and to the
      oil and gas properties and other assets described in Section 1.2;

            (b) all corporate, financial, income and franchise tax and legal
      records of each Seller that relate to that Seller's business generally
      (whether or not relating to the Assets), and all books, records and files
      that relate to the Excluded Assets and those records retained by Sellers
      pursuant to Section 1.2(f) and copies of any other records retained by
      Sellers pursuant to Section 1.5;

            (c) all rights to any refund of Taxes or other costs or expenses
      borne by Sellers or Sellers' predecessors in interest and title
      attributable to periods prior to the Effective Time; and

            (d) Sellers' area-wide bonds, permits and licenses or other permits,
      licenses or authorizations used in the conduct of Sellers' business
      generally.

      SECTION 1.4 EFFECTIVE TIME; PRORATION OF COSTS AND REVENUES.

      Possession of the Assets shall be transferred from Sellers to Purchaser
at the Closing, but certain financial benefits and burdens of the Assets
shall be transferred effective as of 7:00 A.M., local time, where the
respective Assets are located, on September 16, 2001 (the "Effective Time"),
as described below.

      Purchaser shall be entitled to all production from or attributable to
each Seller's Sold Percentage interest in the Leases, Units and Wells at and
after the Effective Time (and all products and proceeds attributable
thereto), and to all other income, proceeds, receipts and credits earned with
respect to the Assets at or after the Effective Time, and shall be
responsible for (and entitled to any refunds with respect to) all Property
Costs incurred at and after the Effective Time and all costs and expenses
identified in the authority for expenditure for the Runnells No. 7 Well,
whether actually incurred before or after the Effective Time. Sellers shall
be entitled to all production from or attributable to Leases, Units and Wells
prior to the Effective Time (and all products and proceeds attributable
thereto), and to all other income, proceeds, receipts and credits earned with
respect to the Assets prior to the Effective Time, and shall be responsible
for (and entitled to any refunds with respect to) all Property Costs incurred
prior to

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the Effective Time, except that Sellers shall only be responsible for their
respective post-Effective Time working interest shares of the costs and
expenses that relate to the Runnells No. 7 Well, whether actually incurred
before or after the Effective Time. "Earned" and "incurred", as used in this
Agreement, shall be interpreted in accordance with generally accepted
accounting principles and Council of Petroleum Accountants Society (COPAS)
standards. "Property Costs" means: (i) all operating expenses attributable to
the Assets (including without limitation costs of insurance and ad valorem,
property, severance, production and similar Taxes based upon or measured by
the ownership or operation of the Assets or the production of Hydrocarbons
therefrom, but excluding any other Taxes); (ii) all capital expenditures
incurred in the ownership, drilling and development, and operation of the
Assets in the ordinary course of business; and (iii) all overhead costs
charged to the Assets under the applicable operating agreement or if none,
charged to the Assets on the same basis as charged on the Closing Date.
"Property Costs" shall not include liabilities, losses, costs, and expenses
attributable to the Assets that relate to: (i) claims, investigations,
administrative proceedings or litigation directly or indirectly arising out
of or resulting from actual or claimed personal injury or death, property
damage or violation of any Law; (ii) obligations to plug wells, dismantle
facilities, close pits and restore the surface around such wells, facilities
and pits (which are addressed in Section 10.3); (iii) obligations to
remediate any contamination of groundwater, surface water, soil or Equipment
under applicable Environmental Laws (which are addressed in Section 10.3);
(iv) obligations to furnish make-up gas according to the terms of applicable
gas sales, gathering or transportation contracts; (v) gas balancing
obligations; and (vi) obligations to pay working interests, royalties,
overriding royalties or other interests held in suspense, to the extent such
obligations are attributable to the Assets. For purposes of allocating
production (and accounts receivable with respect thereto), under this Section
1.4, (i) liquid hydrocarbons shall be deemed to be "from or attributable to"
the Leases, Units and Wells when they pass through the pipeline connecting
into the storage facilities into which they are run, (ii) gaseous
hydrocarbons shall be deemed to be "from or attributable to" the Leases,
Units and Wells when they pass through the delivery point sales meters on the
pipelines through which they are transported, and (iii) natural gas liquids
("NGLs") shall be deemed to be "from or attributable to" the Leases, Units
and Wells when they are sold based on weight and density at the point of
sale. Sellers shall utilize reasonable interpolative procedures to arrive at
an allocation of production when exact meter readings or gauging and
strapping data is not available. Sellers shall provide to Purchaser
contemporaneously with execution of this Agreement evidence of all meter
readings and all gauging and strapping procedures conducted on or about the
Effective Time in connection with the Assets, together with all data
necessary to support any estimated allocation, for purposes of establishing
the adjustment to the Purchase Price pursuant to Section 2.2 hereof that will
be used to determine the Closing Payment (as defined in Section 8.4(a)).
Taxes, right-of-way fees, insurance premiums and other Property Costs that
are paid periodically shall be prorated based on the number of days in the
applicable period falling before and the number of days in the applicable
period falling at or after the Effective Time, except that production,
severance and similar Taxes shall be prorated based on the number of units
actually produced, purchased or sold, as applicable, before, and at or after,
the Effective Time. In each case, Purchaser shall be responsible for the
portion allocated to the period at and after the Effective Time and the
applicable Seller shall be responsible for the portion allocated to the
period before the Effective Time.

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      SECTION 1.5 DELIVERY AND MAINTENANCE OF RECORDS.

            (a) Subject to the Transition Agreement, Sellers, at Sellers' cost,
      shall deliver the Records to Purchaser within ten (10) days following the
      Closing Date. Sellers may retain original Records set forth in Section
      1.2(f) and copies of any/or such Records.

            (b) Purchaser, for a period of seven (7) years following the Closing
      Date, will (i) retain the Records, (ii) provide Sellers, their respective
      Affiliates, and the officers, employees and representatives of Sellers and
      their respective Affiliates with access to the Records during normal
      business hours for review and copying at Sellers' expense and (iii)
      provide Sellers, their Affiliates, and officers, employees and
      representatives of Sellers and their respective Affiliates with access,
      during normal business hours, to materials received or produced after the
      Closing Date relating to any claim for indemnification made under Section
      10.3 of this Agreement (excluding, however, attorney work product and
      attorney-client communications with respect to any such claim being
      brought by Purchaser) for review and copying at Sellers' expense and to
      Sellers' and their Affiliates' employees for the purpose of discussing any
      such claim, provided that Purchaser shall have the right to have its own
      representatives present during any such meeting.

                            ARTICLE 2 PURCHASE PRICE

      SECTION 2.1 PURCHASE PRICE.

      The purchase price for the Assets (the "Purchase Price") shall be
Twenty-Four Million Seven Hundred Thousand Dollars ($24,700,000.00), adjusted
as provided in Section 2.2. The unadjusted Purchase Price shall be allocated
among Sellers based on each Seller's Sold Percentage.

      SECTION 2.2 ADJUSTMENTS TO PURCHASE PRICE.

      The unadjusted Purchase Price allocated among Sellers pursuant to
Section 2.1 shall be adjusted with respect to each Seller, as applicable, as
follows (as so adjusted, the "Adjusted Purchase Price") with all such amounts
being determined in accordance with generally accepted accounting principles
and Council of Petroleum Accountants Society (COPAS) standards and with each
adjustment being allocated among Sellers based upon the amounts attributable
to the Assets owned by each.

            (a) Reduced by the aggregate amount of the following proceeds
      received by such Seller between the Effective Time and the Closing Date
      (with the period between the Effective Time and the Closing Date referred
      to as the "Adjustment Period"): (i) proceeds from the sale of Hydrocarbons
      (net of any royalties, overriding royalties or other burdens on or payable
      out of production, gathering, processing and transportation costs and any
      production, severance, sales or excise Taxes not reimbursed to each Seller
      by the purchaser of production) produced from or attributable to the Sold
      Percentage interest in the Leases, Wells and Units during the Adjustment
      Period, and (ii) other proceeds earned with respect to the Assets during
      the Adjustment Period;

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            (b) Subject to Section 3.4, reduced by the Title Defect Amount (as
      determined under Section 3.4(e)) of any Title Defects attributable to such
      Seller; provided, however, that notwithstanding anything in this Agreement
      to the contrary, the purchase price adjustment under this Section 2.2(b)
      shall not exceed twenty percent (20%) of the unadjusted Purchase Price.

            (c) Reduced by the aggregate amounts payable to third-party owners
      of working interests, royalties and overriding royalties and other
      interests in the Properties held in suspense attributable to the interest
      of each Seller in the Assets as of the Closing Date, provided that at the
      Closing, Purchaser shall assume all obligations related to such suspense
      amounts as set forth in Section 10.3(a);

            (d) Increased by the amount of all Property Costs and other costs
      attributable to the ownership and operation of the Assets which are paid
      by each Seller and incurred at or after the Effective Time, except any
      Property Costs and other such costs already deducted in the determination
      of proceeds in Section 2.2(a); and

            (e)   Increased or decreased, as appropriate, pursuant to the
      provisions of Section 6.4.

      The adjustment described in Section 2.2(a) shall serve to satisfy, up to
the amount of the adjustment, Purchaser's entitlement under Section 1.4 to
Hydrocarbon production from or attributable to the Leases, Units and Wells
during the Adjustment Period, and to the value of other income, proceeds,
receipts and credits earned with respect to the Assets during the Adjustment
Period, and Purchaser shall not have any separate rights to receive any
production or income, proceeds, receipts and credits with respect to which an
adjustment has been made. Similarly, the adjustment described in Section 2.2(d)
shall serve to satisfy, up to the amount of the adjustment, Purchaser's
obligation under Section 1.4 to pay Property Costs and other costs attributable
and the ownership to operation of the Assets which are incurred during the
Adjustment Period, and Purchaser shall not be separately obligated to pay for
any Property Costs or other such costs with respect to which an adjustment has
been made.

      SECTION 2.3 ALLOCATION OF PURCHASE PRICE.

      SCHEDULE 2.3 sets forth the agreed allocation of the unadjusted Purchase
Price among each of the Assets, which has been made in compliance with the
principles of Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury regulations thereunder. The "Allocated Value" for any
Asset equals the portion of the unadjusted Purchase Price allocated to such
Asset on SCHEDULE 2.3, increased or decreased as described in this Section.
Sellers have accepted such Allocated Values for purposes of this Agreement and
the transactions contemplated hereby, but otherwise makes no representation or
warranty as to the accuracy of such values. Sellers and Purchaser agree (i) that
the Allocated Values shall be used by Sellers and Purchaser as the basis for
reporting asset values and other items for purposes of all federal, state, and
local Tax returns, including without limitation Internal Revenue Service Form
8594 and (ii) that neither they nor their Affiliates will take positions
inconsistent with the Allocated Values in notices to government authorities, in
audit or other proceedings with respect

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to Taxes, in notices to preferential purchaser right holders, or in other
documents or notices relating to the transactions contemplated by this
Agreement.

                             ARTICLE 3 TITLE MATTERS

      SECTION 3.1 SELLERS' TITLE.

            (a) Each Seller, severally and not jointly, represents and warrants
      to Purchaser that such Seller's title to its Sold Percentage of the
      Leases, Wells and Units shown on EXHIBIT A-1 as of the Effective Time is
      (and as of the Title Claim Date shall be) Defensible Title as defined in
      Section 3.2.

            (b) The conveyances to be delivered by each Seller to Purchaser
      shall be substantially in the forms attached hereto as EXHIBIT B (the
      "Conveyances") and contain a special warranty of title by, through and
      under the applicable Seller (as relates to the Properties only), subject
      to the Permitted Encumbrances, but shall otherwise be without warranty of
      title, express, implied or statutory, except that such conveyances shall
      transfer to Purchaser all rights or actions on title warranties given or
      made by the applicable Seller's predecessors (other than Affiliates of any
      Seller), to the extent that such Seller may legally transfer such rights.

            (c) Purchaser shall not be entitled to protection under Sellers'
      special warranties of title in the Conveyances against any Title Defect
      reported under this Article 3.

      SECTION 3.2 DEFINITION OF DEFENSIBLE TITLE.

      As used in this Agreement, the term "Defensible Title" means that title of
the applicable Seller which, subject to Permitted Encumbrances:

            (a) Entitles that Seller to receive throughout the duration of the
      productive life of any Lease, Unit or Well (after satisfaction of all
      royalties, overriding royalties, nonparticipating royalties, net profits
      interests or other similar burdens on or measured by production of oil and
      gas), not less than the "net revenue interest" share shown in EXHIBIT A-1
      for such Seller of all oil, gas and other minerals produced, saved and
      marketed from such Lease, Unit or Well, except decreases in connection
      with those operations in which that Seller may be a nonconsenting
      co-owner, decreases resulting from the establishment or amendment of pools
      or units, and decreases required to allow other working interest owners to
      make up past underproduction or pipelines to make up past under deliveries
      and except as stated in such EXHIBIT A-1;

            (b) Obligates that Seller to bear a percentage of the costs and
      expenses for the maintenance and development of, and operations relating
      to, any Lease, Unit or Well not greater than the "working interest" shown
      in EXHIBIT A-1 for such Seller without increase throughout the productive
      life of such Lease, Unit or Well, except as stated in EXHIBIT A-1 and
      except increases resulting from contribution requirements with respect to
      defaulting

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      co-owners under applicable operating agreements and increases that are
      accompanied by at least a proportionate increase in that Seller's net
      revenue interest; and

            (c)   Is free and clear of liens, encumbrances, obligations or
      defects.

      As used in this Agreement, the term "Title Defect" means any lien,
charge, encumbrance, obligation, or defect (including without limitation a
discrepancy in net revenue interest or working interest) that causes a breach
of the applicable Seller's representation and warranty in Section 3.1.

      SECTION 3.3 DEFINITION OF PERMITTED ENCUMBRANCES.

      As used herein, the term "Permitted Encumbrances" means any or all of
the following:

            (a) Lessors' royalties and any overriding royalties, reversionary
      interests and other burdens to the extent that they do not, individually
      or in the aggregate, reduce the applicable Seller's net revenue interests
      below that shown in EXHIBIT A-1 for such Seller or increase the applicable
      Seller's working interest above that shown in EXHIBIT A-1 for such Seller
      without a corresponding increase in the net revenue interest for such
      Seller;

            (b) All leases, unit agreements, pooling agreements, operating
      agreements, production sales contracts, division orders, participation
      agreements, letter agreements, exploration agreements, and other
      contracts, agreements and instruments applicable to the Assets (whether
      recorded or unrecorded) to the extent that they do not, individually or in
      the aggregate, reduce the applicable Seller's net revenue interests below
      that shown in EXHIBIT A-1 for such Seller or increase the applicable
      Seller's working interest above that shown in EXHIBIT A-1 for such Seller
      without a corresponding increase in the net revenue interest for such
      Seller;

            (c)   Subject to compliance with Section 6.5, preferential rights to
      purchase the Assets;

            (d)   Subject to compliance with Section 6.5, third-party consent
      requirements and similar restrictions;

            (e)   Liens for current Taxes or assessments not yet delinquent or,
      if delinquent, being contested in good faith by appropriate actions;

            (f) Materialman's, mechanic's, repairman's, employee's,
      contractor's, operator's and other similar liens or charges arising in the
      ordinary course of business for amounts not yet delinquent (including any
      amounts being withheld as provided by Law), or if delinquent, being
      contested in good faith by appropriate actions;

            (g) All rights to consent by, required notices to, filings with, or
      other actions by Governmental Bodies in connection with the sale or
      conveyance of oil and gas leases or interests therein if they are
      customarily obtained subsequent to the sale or conveyance;

                                       8

<Page>

            (h)   Rights of reassignment arising upon final intention to
      abandon or release the Assets, or any of them;

            (i)   Easements, rights-of-way, servitudes, permits, surface
      leases and other rights in respect of surface operations;

            (j) All rights reserved to or vested in any Governmental Body to
      control or regulate any of the Assets in any manner and all obligations
      and duties under all applicable laws, rules and orders of any such
      Governmental Body or under any franchise, grant, license or permit issued
      by any such Governmental Body;

            (k) Any encumbrance on or affecting the Assets which is expressly
      assumed, bonded or paid by Purchaser at the Closing Date or which is
      discharged by any Seller at or prior to the Closing; and

            (l) Any other liens, charges, encumbrances, defects or
      irregularities which do not, individually or in the aggregate, materially
      detract from the value of or materially interfere with the use or
      ownership of the Assets subject thereto or affected thereby (as currently
      used or owned) and which would be accepted by a reasonably prudent
      purchaser engaged in the business of owning and operating oil and gas
      properties.

      SECTION 3.4 NOTICE OF TITLE DEFECTS; DEFECT ADJUSTMENTS.

            (a) To assert a claim arising out of a breach of Section 3.1,
      Purchaser must deliver a claim notice (a "Title Claim Notice") to Sellers
      (whether or not applicable to each Seller) on or before the 90th day
      following the Closing Date (the "Title Claim Date"). Such notice shall be
      in writing and shall include (i) a description of the alleged Title
      Defect(s), (ii) the Leases, Units or Wells affected, (iii) the Allocated
      Values of the Leases, Units or Wells subject to the alleged Title
      Defect(s), (iv) supporting documents reasonably necessary for Sellers (as
      well as any title attorney or examiner hired by Sellers) to verify the
      existence of the alleged Title Defect(s), (v) the amount by which
      Purchaser reasonably believes the Allocated Values of those Leases, Units
      or Wells are reduced by the alleged Title Defect(s) and the computations
      and information upon which Purchaser's belief is based, and (vi) the
      amounts, if any, which Purchaser believes is applicable to each Seller.
      Purchaser shall be deemed to have waived all breaches of Section 3.1 of
      which Sellers have not been given notice on or before the Title Claim
      Date.

            (b) The applicable Seller shall attempt, at that Seller's sole cost,
      to cure or remove on or before the 30th day following receipt of any Title
      Claim Notice any Title Defects of which it has been advised by Purchaser.
      If the Title Defect is not cured to Purchaser's reasonable satisfaction
      within such time period, the Purchase Price shall be reduced by an amount
      (the "Title Defect Amount") equal to the reduction in the Allocated Value
      for such Lease, Unit or Well caused by such Title Defects, as determined
      pursuant to Section 3.4(e).

            (c) With respect to each Lease, Unit or Well affected by Title
      Defects reported under Section 3.4(a) and not cured during the period
      permitted under

                                       9

<Page>

      Section 3.4(b), the Purchase Price shall be reduced by the Title Defect
      Amount equal to the reduction in the Allocated Value for such Lease, Unit
      or Well caused by such uncured Title Defects, as determined pursuant to
      Section 3.4(e).

            (d) Sections 3.4(b) and (c) shall be the exclusive right and remedy
      of Purchaser with respect to any Seller's breach of its warranty and
      representation in Section 3.1.

            (e) The Title Defect Amount resulting from a Title Defect shall be
      determined as follows:

                  (i)   if Purchaser and Sellers agree on the Title Defect
            Amount, that amount shall be the Title Defect Amount;

                  (ii) if the Title Defect is a lien, encumbrance or other
            charge which is undisputed and liquidated in amount, then the Title
            Defect Amount shall be the amount necessary to be paid to remove the
            Title Defect from the affected Lease, Unit or Well;

                  (iii) if the Title Defect represents a discrepancy between (A)
            the net revenue interest for any Lease, Unit or Well and (B) the net
            revenue interest or percentage stated on EXHIBIT A-1, then the Title
            Defect Amount shall be the product of the Allocated Value of such
            Lease, Unit or Well multiplied by a fraction, the numerator of which
            is the net revenue interest or percentage ownership decrease and the
            denominator of which is the net revenue interest or percentage
            ownership stated on EXHIBIT A-1;

                  (iv) if the Title Defect represents an obligation,
            encumbrance, burden or charge upon or other defect in title to the
            affected Lease, Unit or Well of a type not described in subsections
            (i), (ii) or (iii) above, the Title Defect Amount shall be
            determined by taking into account the Allocated Value of the Lease,
            Unit or Well so affected, the portion of the Lease, Unit or Well
            affected by the Title Defect, the legal effect of the Title Defect,
            the potential economic effect of the Title Defect over the life of
            the affected Lease, Unit or Well, the values placed upon the Title
            Defect by Purchaser and Sellers and such other factors as are
            necessary to make a proper evaluation; and

                  (v) notwithstanding anything to the contrary in this Article
            3, the aggregate Title Defect Amounts attributable to the effects of
            all Title Defects upon any given Unit or Well shall not exceed the
            Allocated Value of such Lease, Unit or Well.

            (f) Sellers and Purchaser shall attempt to agree on all Title Defect
      Amounts by five (5) Business Days prior to the Final Settlement Date. If
      Sellers and Purchaser are unable to agree by that date, the Title Defect
      Amounts in dispute shall be exclusively and finally resolved by
      arbitration pursuant to this Section 3.4(f). During the 10-day period
      following the Final Settlement Date, Title Defect Amounts in dispute shall
      be submitted to a title attorney with at least 10 years' experience in oil
      and gas titles in the State of

                                       10

<Page>

      Texas as selected by mutual agreement of Purchaser and Sellers or
      absent such agreement during the 10-day period, by the Houston office
      of the American Arbitration Association (the "Title Arbitrator"). The
      arbitration proceeding shall be held in Houston, Texas and shall be
      conducted in accordance with the Commercial Arbitration Rules of the
      American Arbitration Association, to the extent such rules do not
      conflict with the terms of this Section. The Title Arbitrator's
      determination shall be made within 45 days after submission of the
      matters in dispute and shall be final and binding upon all Parties,
      without right of appeal. In making his determination, the Title
      Arbitrator shall be bound by the rules set forth in Section 3.4(e) and
      may consider such other matters as in the opinion of the Title
      Arbitrator are necessary or helpful to make a proper determination.
      Additionally, the Title Arbitrator may consult with and engage
      disinterested third parties to advise the arbitrator, including without
      limitation title attorneys from other states and petroleum engineers.
      The Title Arbitrator shall act as an expert for the limited purpose of
      determining the specific disputed Title Defect Amounts submitted by any
      Party and may not award damages, interest or penalties to either party
      with respect to any matter. Sellers and Purchaser shall each bear their
      own legal fees and other costs of presenting their respective cases.
      Purchaser shall bear one-half of the costs and expenses of the Title
      Arbitrator and Sellers shall bear the other half.

            (g) Any single asserted Title Defect that has a value of less than
      Ten Thousand Dollars ($10,000.00) will not be considered in the
      calculation of adjustments to the Purchase Price.

      SECTION 3.5  LIMITATIONS ON APPLICABILITY.

      The representation and warranty in Section 3.1 shall terminate as of the
Title Claim Date and shall have no further force and effect thereafter, provided
there shall be no termination of Purchaser's or Sellers' rights under Section
3.4 with respect to any bona fide Title Defect claim properly reported on or
before the Title Claim Date. Thereafter, Purchaser's sole and exclusive rights
and remedies with regard to title to the Assets shall be as set forth in, and
arise under, the respective Conveyances transferring the Assets from Sellers to
Purchaser.

                 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER

      SECTION 4.1  DISCLAIMER.

            (a) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 3 OR THIS
      ARTICLE 4, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH SELLER
      EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
      TO (I) TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE
      OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING
      CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING
      TO THE ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF PETROLEUM
      SUBSTANCES IN OR FROM THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE
      ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE PRODUCTION OF

                                      11
<Page>

      PETROLEUM SUBSTANCES FROM THE ASSETS, OR WHETHER PRODUCTION HAS BEEN
      CONTINUOUS, OR IN PAYING QUANTITIES, (VI) THE MAINTENANCE, REPAIR,
      CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, OR
      (VII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE
      OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
      AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE
      TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
      PRESENTATION RELATING THERETO, AND EACH SELLER FURTHER DISCLAIMS ANY
      REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY,
      FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF
      MATERIALS OF ANY EQUIPMENT IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE
      PARTIES HERETO THAT PURCHASER SHALL BE DEEMED TO BE OBTAINING EQUIPMENT IN
      ITS PRESENT STATUS, CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS"
      WITH ALL FAULTS AND THAT PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH
      INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.

            (b) Subject to the foregoing provision of this Section 4.1, and the
      other terms and conditions of this Agreement, each Seller severally, and
      not jointly, represents and warrants to Purchaser the matters set out in
      Sections 4.2 through 4.19 with respect only to each such Seller and only
      with respect to the Assets attributable to each such Seller; provided,
      however, that with respect to those matters set out in Sections 4.9, 4.10,
      4.14, 4.15, and 4.16, each Seller other than Esenjay represents and
      warrants such matters to Purchaser only to the best of its knowledge after
      due inquiry.

      SECTION 4.2  EXISTENCE AND QUALIFICATION.

      Each Seller represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified or licensed to do
business and is in good standing in the State of Texas.

      SECTION 4.3  POWER.

      Each Seller has all requisite power and authority to carry on its business
as presently conducted, to enter into and perform this Agreement and the other
documents and agreements contemplated hereby, to sell the Assets on the terms
described in this Agreement, and to perform its other obligations under this
Agreement and the other documents and agreements contemplated hereby.

      SECTION 4.4  AUTHORIZATION AND ENFORCEABILITY.

      The execution, delivery and performance of this Agreement, and the
performance of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of each Seller. This
Agreement has been duly executed and delivered by each Seller (and all documents
required hereunder to be executed and delivered by

                                      12
<Page>

each Seller at the Closing will be duly executed and delivered by each
Seller) and this Agreement constitutes, and at the Closing such documents
will constitute, the valid and binding obligations of each Seller,
enforceable in accordance with their terms except as such enforceability may
be limited by applicable bankruptcy or other similar Laws affecting the
rights and remedies of creditors generally as well as to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

      SECTION 4.5  NO CONFLICTS.

      Subject to the preferential purchase rights and restrictions on assignment
set forth on SCHEDULE 4.17, and to rights to consent by, required notices to,
and filings with or other actions by Governmental Bodies where the same are
customarily obtained subsequent to the assignment of oil and gas interests, the
execution, delivery and performance of this Agreement by each Seller, and the
transactions contemplated by this Agreement will not (i) violate any provision
of, or require the consent of any Person under, the certificate of incorporation
or bylaws of that Seller, (ii) conflict with, result in a breach of, constitute
a default under (without regard to requirements of notice or the lapse of time
or both), accelerate or permit the acceleration of the performance required by,
or require any consent, authorization, or approval under, or cause the creation
of any lien or encumbrance or give rise to any right of termination or
cancellation under, any of the terms, condition or provisions of any note, bond,
mortgage, credit agreement, indenture, lease, contract, license or other
agreement to which that Seller is a party or which affect the Assets, (iii)
violate any judgment, order, ruling, or decree applicable to that Seller as a
party in interest, (iv) violate any Laws applicable to that Seller or any of the
Assets, or (v) require any filing with, notification of or consent, approval or
authorization of any Governmental Body.

      SECTION 4.6  LIABILITY FOR BROKERS' FEES.

      Purchaser shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of such Seller,
for brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or the transactions contemplated
hereby.

      SECTION 4.7  LITIGATION.

      As of the date of execution of this Agreement, except as set forth in
SCHEDULE 4.7, there are no actions, suits or proceedings pending, or to any
Seller's knowledge threatened in writing, before any Governmental Body with
respect to the Assets.

      SECTION 4.8  TAXES AND ASSESSMENTS.

      Each Seller has timely filed, or caused to be filed, all Tax returns
required to be filed with respect to the Assets. All Taxes, assessments and
charges by Governmental Bodies which are due and payable by such Seller with
respect to the Assets have been paid, other than those Taxes, assessments and
charges by Governmental Bodies being contested in good faith for which an
adequate reserve has been established. Except as set forth in SCHEDULE 4.8,
there are no pending or, to the knowledge of such Seller, threatened audits,
actions, proceedings or investigations with respect to Taxes payable with
respect to the Assets. There are no outstanding waivers or

                                      13
<Page>

agreements which would extend the statutory period in which a taxing
authority may assess or collect a Tax with respect to the Assets for which
Purchaser could have any liability.

      SECTION 4.9   ENVIRONMENTAL LAWS.

      Except as set forth in SCHEDULE 4.9 or the other schedules hereto, the
Leases are and have been operated in compliance with all applicable
Environmental Laws. To the best of Sellers' knowledge after due inquiry, there
has been no contamination of groundwater, surface water or soil on the Leases
resulting from any Seller's operations thereon, or, to each Seller's knowledge,
on any portion of the Assets resulting from the operations of any other Person,
which in either case required remediation on or before the date of this
Agreement under applicable Environmental Laws but which has not been remediated.

      SECTION 4.10  SAFETY AND HEALTH.

      The Leases have been operated in compliance with all Laws addressing the
safety and/or health of employees, including but not limited to the Occupational
Safety and Health Act, 29 U.S.C.A. Section 651, et seq., and the regulations
promulgated pursuant thereto, except where a failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect.

      SECTION 4.11  OUTSTANDING CAPITAL COMMITMENTS.

      There are no outstanding AFEs or other commitments to make capital
expenditures which are binding on such Seller's Assets which Purchaser has not
executed in counterpart as of the date this Agreement is executed and which such
Seller reasonably anticipates will individually require future expenditures by
the owner of the Assets in excess of $25,000 other than those shown on SCHEDULE
4.11 hereto.

      SECTION 4.12  COMPLIANCE WITH LAWS.

      Except as disclosed on SCHEDULE 4.12, and except with respect to
Environmental Laws, which are addressed exclusively in Section 4.9, and employee
health and safety laws, which are addressed exclusively in Section 4.10, the
Leases have been owned, developed, operated and maintained in compliance with
all applicable Laws, and there are no judgments, injunctions, court or
administrative determinations by Governmental Bodies specifically rendered
against or affecting the Assets.

      SECTION 4.13  CONTRACTS.

      Except as disclosed on the SCHEDULE 4.13, the Contracts are in full force
and effect and, to the knowledge of such Seller, no third party to any Contract
has prepaid any amounts due thereunder. Such Seller has not waived its remedies
for default by, or expressly waived any other rights against, a third party
under any Contract. To the knowledge of such Seller, Sellers and each other
party thereto have made all payments due under the Contracts, except those being
contested in good faith, and have performed all of its obligations under such
Contracts, except for such failures to make payments or perform obligations
which would not, individually or in the aggregate, have a Material Adverse
Effect. Except as otherwise disclosed on SCHEDULE 4.13, to the knowledge of such
Seller, such Seller has not given to or received from any third party any

                                      14
<Page>

proposals or threats to cancel, revise or fail to renew any Contract or fail to
renew, cancel or revise any easement since the Effective Time. Each Seller has
paid its share of all costs payable by it under the Leases and Contracts to
which that Seller is a party, except those being contested in good faith. No
Seller is, nor to the knowledge of that Seller is any other party in default
under any Contract to which that Seller is a party except as disclosed on
SCHEDULE 4.13 and except such defaults as would not, individually or the
aggregate, have a Material Adverse Effect. Except as disclosed in SCHEDULE 4.13,
there are no Contracts with Affiliates of either Seller which will be binding on
the Assets after the Closing.

      SECTION 4.14  PAYMENTS FOR PRODUCTION.

      Except as disclosed in SCHEDULE 4.14, all proceeds from the sale of
Hydrocarbons attributable to each Seller's interest in its respective Properties
are currently being paid in full and, as of the Effective Time, no Seller was
holding in suspense any proceeds from the sale of Hydrocarbons from the Leases.
Further, no Seller is obligated by virtue of a take or pay payment, advance
payment or other similar payment (other than royalties, overriding royalties and
similar arrangements reflected on EXHIBIT A-1), to deliver Hydrocarbons, or
proceeds from the sale thereof, attributable to the Properties at some future
time without receiving payment therefor at or after the time of delivery.

      SECTION 4.15  GAS IMBALANCES.

      Except with respect to the Properties set forth on SCHEDULE 4.15, as of
the Effective Time, there are no gas or NGL imbalances with such Seller's
co-owners in the Properties.

      SECTION 4.16  GOVERNMENTAL AUTHORIZATIONS.

      Except as disclosed on SCHEDULE 4.16, such Seller possesses and at all
times in the past has possessed all federal, state and local governmental
licenses, permits, franchises, orders, exemptions, variances, waivers,
authorizations, certificates, consents, rights, privileges and applications
therefor ("Governmental Authorizations") that are or have been necessary or
required for the ownership and operation of the Properties (including, but not
limited to, those required under Environmental Laws). Except as disclosed in
SCHEDULE 4.7 or SCHEDULE 4.16 and except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) such Seller has owned and
operated its Properties in accordance with the conditions and provisions of such
Governmental Authorizations, and (ii) no notices of violation have been received
by any Seller, and no proceedings are pending or, to any Seller's knowledge,
threatened in writing that might result in any modification, revocation,
termination or suspension of any such Governmental Authorizations or which would
require any corrective or remediation action by that Seller.

      SECTION 4.17  CONSENTS AND PREFERENTIAL PURCHASE RIGHTS.

      None of the Assets, or any portion thereof, is subject to any preferential
rights to purchase or restrictions on assignment or required third-party
consents to assignment, which may be applicable to the transactions contemplated
by this Agreement, except for (i) governmental consents and approvals of
assignments that are customarily obtained after the Closing and (ii) all such
preferential rights, consents and restrictions as are set forth on SCHEDULE
4.17.

                                      15
<Page>

      SECTION 4.18  ABSENCE OF CERTAIN CHANGES.

      Except as set forth on SCHEDULE 4.18, since the Effective Time (i) the
Assets have been operated in the ordinary course of business consistent with
recent practices (with respect to this item (i) only, each Seller other than
Esenjay represents and warrants such matter to Purchaser only to the best of its
knowledge after due inquiry) and (ii) there has been no:

            (a)   material damage, destruction, or loss to the Assets (whether
      or not covered by insurance);

            (b) Material Adverse Effect on the operations, value or prospects of
      the Assets other than as a result of general or industry-wide conditions
      in the areas where the Assets are located.

      SECTION 4.19  BANKRUPTCY.

      There are no bankruptcy, reorganization or arrangement proceedings
pending, being contemplated by or to the knowledge of such Seller threatened
against Sellers or any Affiliate of Sellers.

               ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER

      Purchaser represents and warrants to Sellers the following:

      SECTION 5.1   EXISTENCE AND QUALIFICATION.

      Purchaser is a corporation organized, validly existing and in good
standing under the laws of the state of its incorporation and Purchaser is duly
qualified to do business and is in good standing in the State of Texas.

      SECTION 5.2   POWER.

      Purchaser has the corporate power to enter into and perform this Agreement
and consummate the transactions contemplated by this Agreement.

      SECTION 5.3   AUTHORIZATION AND ENFORCEABILITY.

      The execution, delivery and performance of this Agreement, and the
performance of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser (and all documents
required hereunder to be executed and delivered by Purchaser at the Closing will
be duly executed and delivered by Purchaser) and this Agreement constitutes, and
at the Closing such documents will constitute, the valid and binding obligations
of Purchaser, enforceable in accordance with their terms except as such
enforceability may be limited by applicable bankruptcy or other similar laws
affecting the rights and remedies of creditors generally as well as to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

                                      16
<Page>

      SECTION 5.4   NO CONFLICTS.

      The execution, delivery and performance of this Agreement by Purchaser,
and the transactions contemplated by this Agreement will not (i) violate any
provision of, or require the consent of any Person under, the certificate of
incorporation or bylaws of Purchaser, (ii) conflict with, result in a breach of,
constitute a default under (without regard to requirements of notice or the
lapse of time or both), accelerate or permit the acceleration of the performance
required by, or require any consent, authorization, or approval under, or cause
the creation of any lien or encumbrance or give rise to any right of termination
or cancellation under, any of the terms, conditions or provisions of any note,
bond, mortgage, credit agreement, indenture, lease, contract, license or other
agreement to which Purchaser is a party, (iii) violate any judgment, order,
ruling, or regulation applicable to Purchaser as a party in interest, or (iv)
violate any Law applicable to Purchaser or any of its assets, or (v) require any
filing with, notification of or consent, approval or authorization of any
Governmental Body or authority, except any matters described in clauses (ii),
(iii), (iv) or (v) above which would not have a material adverse effect on
Purchaser.

      SECTION 5.5   LIABILITY FOR BROKERS' FEES.

      Sellers shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of Purchaser,
for brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or any agreement or transaction
contemplated hereby.

      SECTION 5.6   LITIGATION.

      As of the date of the execution of this Agreement, there are no actions,
suits or proceedings pending, or to Purchaser's knowledge, threatened in writing
before any Governmental Body against Purchaser or any subsidiary of Purchaser
which are reasonably likely to impair materially Purchaser's ability to perform
its obligations under this Agreement.

      SECTION 5.7   FINANCING.

      Purchaser has sufficient cash, available lines of credit or other sources
of immediately available funds (in United States dollars) to enable it to pay
the Closing Payment to Sellers at the Closing.

      SECTION 5.8   INDEPENDENT INVESTIGATION.

      Purchaser acknowledges and affirms that (i) it has completed its
independent investigation, verification, analysis and evaluation of the Assets
and (ii) it has made all such reviews and inspections of the Assets as it has
deemed necessary or appropriate. Except for the representations and warranties
expressly made by each Seller in Articles 3 and 4 of this Agreement, or in any
certificate furnished or to be furnished to Purchaser pursuant to this
Agreement, Purchaser acknowledges that there are no representations or
warranties, express or implied, as to the Assets or prospects thereof, and that
in making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser has relied solely upon its own
independent investigation, verification, analysis and evaluation.

                                      17
<Page>

                       ARTICLE 6 COVENANTS OF THE PARTIES

      SECTION 6.1   GOVERNMENT REVIEWS.

      Each Seller and Purchaser shall in a timely manner (a) make all required
filings, if any, with and prepare applications to and conduct negotiations with,
each governmental agency as to which such filings, applications or negotiations
are necessary or appropriate in the consummation of the transactions
contemplated hereby, and (b) provide such information as each may reasonably
request to make such filings, prepare such applications and conduct such
negotiations. Each party shall cooperate with and use all reasonable efforts to
assist the other with respect to such filings, applications and negotiations.

      SECTION 6.2   LETTERS-IN-LIEU; ASSIGNMENTS; OPERATORSHIP.

            (a) Each Seller will execute on the Closing Date Letters in Lieu of
      Division and Transfer Orders relating to its respective Assets on forms
      approved by Purchaser to reflect the transactions contemplated hereby.

            (b) Each Seller will use all commercially reasonable efforts to
      cause Purchaser, effective as of the Closing Date, to be appointed
      Operator of all Leases operated by any Seller, including to the extent
      applicable and to the extent permitted by applicable operating agreements,
      the execution of a Form P-4 naming Purchaser as Operator. Promptly after
      the execution of this Agreement, Sellers shall send letters to all other
      parties to applicable operating agreements, recommending that Purchaser be
      appointed as successor operator, effective at the Closing, and asking for
      such parties' votes in favor of this proposal. In addition, each Seller
      shall in writing record its vote in favor of this proposal. Each Seller
      shall use all commercially reasonable efforts to obtain prompt favorable
      responses from as many parties as possible. At the Closing, Purchaser
      shall execute a Form P-4 naming Purchaser as Operator of the Leases.

      SECTION 6.3   TRANSITION AGREEMENT.

      Esenjay and Purchaser will execute at the Closing a transition agreement
in the form attached hereto as EXHIBIT C (the "Transition Agreement").

      SECTION 6.4   GAS AND NGL IMBALANCES.

      After the Closing, Purchaser expressly assumes any and all obligations
attributable to gas and NGL production imbalances with co-owners of the
Properties. Should Purchaser discover any inaccuracy in SCHEDULE 4.15 prior to
the submission of Purchaser's written report pursuant to Section 8.4(b),
Purchaser may assert a claim for an adjustment under this Section by delivering
a claim notice to Sellers. In the event that it is determined that there is an
inaccuracy in the gas or NGL imbalances set forth on SCHEDULE 4.15, then an
adjustment to the Purchase Price, at the rate of $1.50 per MMBtu or equivalent,
will be made as follows:

            (a) Should any Seller's total net gas or NGL overproduction
      imbalance increase, then the Purchase Price shall be reduced by the net
      change in the total imbalance times $1.50 per MMBtu or equivalent; or

                                      18
<Page>

            (b) Should any Seller's total net gas or NGL overproduction
      imbalance decrease, then the Purchase Price shall be increased by the net
      change in the total imbalance times $1.50 per MMBtu or equivalent.

      Any increase or reduction in the Purchase Price under this Section 6.4
shall be allocated to the Seller whose net gas or NGL overproduction imbalance
is decreased or increased, as applicable.

      This Section 6.4 provides the exclusive remedy for any breach of any
Seller's representation in Section 4.15 and any affirmation of such
representation in the certificate of each Seller delivered pursuant to Section
8.2(d). Purchaser shall be deemed to have waived any breaches of Section 4.15 if
Sellers have not been given timely written notice.

      SECTION 6.5   CONSENTS AND PREFERENTIAL RIGHTS.

      Promptly following the date of this Agreement, Sellers shall prepare and
send (i) notices to the holders of any required consents to assignment which are
set forth on SCHEDULE 4.17 requesting such consents and (ii) notices to the
holders of any applicable preferential rights to purchase which are set forth on
SCHEDULE 4.17 requesting waivers of such preferential rights to purchase. The
consideration payable under this Agreement for any particular Well, Unit, Lease
or other Asset for purposes of preferential purchase right notices and consents
to assign shall be the Allocated Value for such Well, Unit, Lease or other
Asset. The Conveyance from the applicable Seller to Purchaser of the Assets
affected by such preferential rights and consents to assign and that portion of
the adjusted Purchase Price attributable to such affected Assets shall be
delivered into a mutually agreeable escrow and Purchaser shall take beneficial
possession of the affected Assets and be entitled to all production, income,
proceeds, receipts and credits to which Purchaser would be entitled under
Section 10.1, and shall indemnify that Seller against any matters for which
Purchaser would be liable under the terms of Sections 10.2 and 10.3 with respect
to the affected Assets. Title to the affected Assets shall not transfer, and the
Conveyance and associated portion of the Purchase Price shall not be released
from escrow, until such preferential right to purchase or consent to assign has
been waived or granted (as applicable) or the time for exercise of the same has
expired. Sellers shall, at their sole expense, continue to use commercially
reasonable efforts to obtain the waiver of the preferential rights or the
consent to assign and shall continue to be responsible for the compliance
therewith. Should the holder of a preferential right exercise the same,
Purchaser and the applicable Seller agree to cause the affected Property to be
transferred to such holder on the terms and provisions set out herein and in the
applicable preferential right provision, and the applicable Seller shall cause
the release from escrow of the Allocated Value for such Asset (adjusted as set
out in Section 2.2) to Purchaser. In such event, the applicable Seller shall be
entitled to retain the consideration paid by the third party and the Purchase
Price shall be reduced by the Allocated Value for the affected Property. If the
restriction is waived or removed or consent is obtained or if the time limit
otherwise set forth relating to the preferential right expires, the applicable
Seller and Purchaser shall take all action necessary to ensure that the affected
Assets are promptly conveyed out of escrow to Purchaser and the associated
portion of the Purchase Price conveyed out of escrow to the applicable Seller.
Once the provisions set forth above are satisfied and all obligations in
connection therewith have been fulfilled, the Closing shall be deemed to have
occurred for all purposes hereunder with respect to the affected Assets.

                                      19

<Page>

      SECTION 6.6 TAX MATTERS.

      Subject to the provisions of Section 11.3, each Seller shall be
responsible for all Taxes (other than ad valorem, property, severance,
production and similar Taxes based upon or measured by the ownership or
operation of the Assets or the production of Hydrocarbons therefrom, which are
addressed in Section 1.4) with respect to the Assets owned by it attributable to
any period of time at or prior to the Closing, including without limitation
income Taxes arising as a result of the gain recognized on the transfer of such
Assets, and Purchaser shall be responsible for all such Taxes attributable to
any period of time after the Closing. Regardless of which party is responsible,
Sellers shall handle payment to the appropriate Governmental Body of all Taxes
with respect to the Assets which are required to be paid prior to the Closing
(and shall file all returns with respect to such Taxes).

      SECTION 6.7 FURTHER ASSURANCES.

      After the Closing, Sellers and Purchaser each agrees to take such further
actions and to execute, acknowledge and deliver all such further documents as
are reasonably requested by the other party for carrying out the purposes of
this Agreement or of any document delivered pursuant to this Agreement.

      SECTION 6.8 CERTAIN COVENANTS OF SELLERS.

      Sellers agree that until the Closing they: (i) will operate (or cause to
be operated) the Leases in the ordinary course of business consistent with past
practices; (ii) will not, without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, commit to any operation reasonably
anticipated by Sellers to require future capital expenditures by the owner of
the Assets in excess of $25,000, or make any capital expenditures in excess of
$25,000 except for matters set forth in SCHEDULE 4.11, or terminate, materially
amend, execute or extend any material agreements affecting the Assets, (iii)
will maintain general insurance coverage on the Assets presently furnished by
nonaffiliated third parties in the amounts and of the types presently in force,
(iv) will use commercially reasonable efforts to maintain in full force and
effect all Leases, (v) will maintain all material Governmental Authorizations
affecting the Assets, (vi) subject to the provisions relating to reimbursement
of costs and expenses incurred after the Effective Time, will pay or cause to be
paid their pre-Effective Time working interest shares of all costs and expenses
in connection therewith (except where being contested in good faith), and (vii)
will not sell, transfer, hypothecate, encumber or otherwise dispose of their
interests in any portion of the Assets.

                         ARTICLE 7 CONDITIONS TO CLOSING

      SECTION 7.1 CONDITIONS OF SELLERS TO CLOSING.

      The obligations of Sellers to consummate the transactions contemplated by
this Agreement are subject, at the option of each Seller, to the satisfaction on
or prior to the Closing of each of the following conditions:

                                      20
<Page>

            (a)   REPRESENTATIONS.  The representations and warranties of
      Purchaser set forth in Article 5 shall be true and correct in all material
      respects as of the date of this Agreement and as of the Closing Date as
      though made on and as of the Closing Date;

            (b)   PERFORMANCE.  Purchaser shall have performed and observed, in
      all material respects, all covenants and agreements to be performed or
      observed by it under this Agreement prior to or on the Closing Date;

            (c)   PENDING LITIGATION.  No suit, action or other proceeding by a
      third party (including any Governmental Body) seeking to restrain, enjoin
      or otherwise prohibit the consummation of the transactions contemplated by
      this Agreement shall be pending before any Governmental Body;

            (d)   DELIVERIES.   Purchaser shall have delivered to Sellers duly
      executed counterparts of the Conveyances and the other documents and
      certificates to be delivered by Purchaser under Section 8.3;

            (e)   PAYMENT.  Purchaser shall have paid the Closing Payment.

      SECTION 7.2 CONDITIONS OF PURCHASER TO CLOSING.

      The obligations of Purchaser to consummate the transactions contemplated
by this Agreement are subject, at the option of Purchaser, to the satisfaction
on or prior to the Closing of each of the following conditions:

            (a) REPRESENTATIONS. The respective representations and warranties
      of each Seller set forth in Article 4 shall be true and correct as of the
      date of this Agreement and as of the Closing Date as though made on and as
      of the Closing Date (other than representations and warranties that refer
      to a specified date which need only be true and correct on and as of such
      specified date);

            (b)   PERFORMANCE.  Each Seller shall have performed and observed,
      in all material respects, all covenants and agreements to be performed or
      observed by it under this Agreement prior to or on the Closing Date;

            (c)   PENDING LITIGATION.  No suit, action or other proceeding by a
      third party (including any Governmental Body) seeking to restrain, enjoin
      or otherwise prohibit the consummation of the transactions contemplated by
      this Agreement shall be pending before any Governmental Body;

            (d)   DELIVERIES.  Each Seller shall have delivered to Purchaser
      duly executed counterparts of the Conveyances and the other documents and
      certificates to be delivered by that Seller under Section 8.2; and

            (e) CONSENTS. Each Seller shall have obtained all required consents
      to assignment which are set forth on SCHEDULE 4.17 for the Leases unless
      otherwise waived in writing by Purchaser; provided that in the event of
      such waiver, the provisions of Section 6.5 shall apply.

                                      21
<Page>

                                ARTICLE 8 CLOSING

      SECTION 8.1 TIME AND PLACE OF CLOSING.

      Consummation of the purchase and sale transaction as contemplated by this
Agreement (the "Closing"), shall, unless otherwise agreed to in writing by
Purchaser and Sellers, take place at the offices of Baker Botts L.L.P. located
at One Shell Plaza, 910 Louisiana, Houston, Texas, 77002 at 10:00 a.m., local
time, on the Closing Date.

      SECTION 8.2 OBLIGATIONS OF SELLERS AT CLOSING.

      At the Closing, upon the terms and subject to the conditions of this
Agreement, each Seller shall deliver or cause to be delivered to Purchaser,
among other things, the following:

            (a) Conveyances of the Assets, in sufficient duplicate originals to
      allow recording in all appropriate jurisdictions and offices, duly
      executed by the applicable Seller;

            (b) a copy of the executed Partial Release of Lien and Security
      Interest, which form is acceptable to Purchaser in its reasonable
      discretion, releasing the Properties from all Deeds of Trust liens and
      security interests on file in the county records of Matagorda County,
      Texas, including, without limitation: (i) that certain Oil and Gas
      Properties Deed of Trust, Mortgage, Security Agreement and Assignment -
      Financing Statement dated February 19, 1999, from Esenjay Petroleum
      Corporation to Bank of America, N.A., recorded under File No. 991613 and
      in Volume 532, Page 423 of the Official Public Records of Matagorda
      County, Texas, which has been modified by Modification Agreements dated
      May 17, 2001, and September 30, 2001; (ii) that certain Deed of Trust
      dated April 2, 2001, from Rainbow Investments Company to American Bank,
      N.A., recorded under Document No. 012908, Volume 617, Pages 54-70 of the
      Real Property Records of Matagorda County, Texas; and (iii) that certain
      First Amendment to Amended and Restated Mortgage, Deed of Trust,
      Assignment, Security Agreement, Financing Statement and Fixture Filing
      from Esenjay Exploration, Inc. and Frontier Acquisition Corporation to
      Greg Maroney, Trustee, and Sandra Bell, Trustee and Deutsche Bank AG, New
      York and/or Cayman Island Branch, recorded at File No. 012857, Volume 616,
      Page 800, on April 30, 2001.

            (c)   letters-in-lieu of transfer orders covering the Assets, duly
      executed by the applicable Seller;

            (d) a certificate duly executed by an authorized corporate officer
      of each Seller, dated as of the Closing, certifying on behalf of that
      Seller that the conditions set forth in Sections 7.2(a) and 7.2(b) have
      been fulfilled;

            (e) a certificate duly executed by the secretary or any assistant
      secretary of each Seller, dated as of the Closing, (i) attaching, and
      certifying on behalf of that Seller as complete and correct, copies of (A)
      an extract of the resolutions of the Board of Directors of that Seller
      authorizing the execution, delivery and performance by that Seller

                                      22
<Page>

      of this Agreement and the transactions contemplated hereby and (B) any
      required approval by the stockholders of that Seller of this Agreement
      and the transactions contemplated hereby and (ii) certifying on behalf of
      that Seller the incumbency of each officer of that Seller executing this
      Agreement or any document delivered in connection with the Closing;

            (f) an executed statement described in Treasury Regulation Section
      1.1445-2(b)(2) certifying that that Seller is not a foreign person within
      the meaning of the Code;

            (g)   the Transition Agreement, duly executed by Esenjay;

            (h)   Form P-4s transferring operatorship of all Leases which are
      operated by any Seller to Purchaser; and

            (i) an original (which may include facsimile counterparts if so
      permitted by the Consent to Assign) of a Consent to Assign in a form
      approved by Purchaser and executed by all of the lessors under that
      certain Oil and Gas Lease (the "Lease") among Lacy Withers Armour Trusts
      et al. ("Lessors"), and Esenjay Exploration, Inc., dated February 1, 1999,
      of which a Memorandum of Lease pertaining thereto was recorded in Volume
      559, Page 942 of the Official Records of Matagorda County, Texas, granting
      such Lessors' consent to the assignment of the Lease as contemplated by
      this Agreement.

      SECTION 8.3 OBLIGATIONS OF PURCHASER AT CLOSING.

      At the Closing, upon the terms and subject to the conditions of this
Agreement, Purchaser shall deliver or cause to be delivered to each Seller,
among other things, the following:

            (a)   a wire transfer of that Seller's share of the Closing Payment
      in same-day funds to that Seller;

            (b)   Conveyances of the Assets, duly executed by Purchaser;

            (c)   letters-in-lieu of transfer orders covering the Assets, duly
      executed by Purchaser;

            (d) a certificate by an authorized corporate officer of Purchaser,
      dated as of the Closing, certifying on behalf of Purchaser that the
      conditions set forth in Sections 7.1(a) and 7.1(b) have been fulfilled;

            (e) a certificate duly executed by the secretary or any assistant
      secretary of Purchaser, dated as of the Closing, (i) attaching, and
      certifying on behalf of Purchaser as complete and correct, copies of (A)
      an extract of the resolutions of the Board of Directors of Purchaser
      authorizing the execution, delivery and performance by Purchaser of this
      Agreement and the transactions contemplated hereby and (B) any required
      approval by the stockholders of Purchaser of this Agreement and the
      transactions contemplated hereby and (ii) certifying on behalf of
      Purchaser the incumbency of each officer of Purchaser executing this
      Agreement or any document delivered in connection with the Closing;

                                      23
<Page>

            (f)   the Transition Agreement, duly executed by Purchaser; and

            (g)   Form P-4s transferring operatorship of all Leases which are
      operated by any Seller to Purchaser.

      SECTION 8.4 CLOSING PAYMENT AND POST-CLOSING PURCHASE PRICE ADJUSTMENTS.

            (a) Not less than three (3) Business Days prior to the Closing,
      Sellers shall deliver to Purchaser, using and based upon the best
      information available to Sellers, a preliminary settlement statement
      estimating the Adjusted Purchase Price after giving effect to all Purchase
      Price adjustments set forth in Section 2.2 and the share payable to each
      Seller. The estimate delivered in accordance with this Section 8.4(a)
      shall constitute the dollar amount to be paid by Purchaser to Sellers at
      the Closing (the "Closing Payment").

            (b) As soon as reasonably practicable after the Closing but not
      later than the 90th day following the Closing Date, Purchaser shall
      prepare and deliver to Sellers a statement setting forth the final
      calculation of the Adjusted Purchase Price and the share payable to each
      Seller and showing the calculation of each adjustment, based, to the
      extent possible on actual credits, charges, receipts and other items
      before and after the Effective Time. Purchaser and Sellers shall supply
      reasonable documentation available to support any credit, charge, receipt
      or other item. As soon as reasonably practicable but not later than the
      30th day following receipt of the statement hereunder, Sellers shall
      deliver to Purchaser a written report containing any changes that they
      propose be made to such Statement. The Parties shall undertake to agree on
      the final statement of the Adjusted Purchase Price no later than 150 days
      after the Closing Date (the "Final Settlement Date"). In the event that
      the Parties cannot reach agreement within such period of time, any Party
      may refer the remaining matters in dispute to Arthur Andersen, LLP or to a
      nationally-recognized independent accounting firm as may be accepted by
      Purchaser and Sellers, for review and final determination. The accounting
      firm shall conduct the arbitration proceedings in Houston, Texas in
      accordance with the Commercial Arbitration Rules of the American
      Arbitration Association, to the extent such rules do not conflict with the
      terms of this Section. The accounting firm's determination shall be made
      within 30 days after submission of the matters in dispute and shall be
      final and binding on all Parties, without right of appeal. In determining
      the proper amount of any adjustment to the Purchase Price, the accounting
      firm shall not increase the Purchase Price more than the increase proposed
      by Sellers nor decrease the Purchase Price more than the decrease proposed
      by Purchaser, as applicable. The accounting firm shall act as an expert
      for the limited purpose of determining the specific disputed matters
      submitted by any Party and may not award damages or penalties to any Party
      with respect to any matter. Sellers and Purchaser shall each bear their
      own legal fees and other costs of presenting their respective cases.
      Purchaser shall bear one-half of the costs and expenses of the accounting
      firm and Sellers shall bear the other half. Within 10 days after the
      earlier of (i) the expiration of Purchaser's 30-day review period without
      delivery of any written report or (ii) the date on which the Parties or
      the accounting firm, as applicable, finally determines the disputed
      matters, (x) Purchaser shall pay to Sellers the amount by which the
      Adjusted Purchase Price exceeds the Closing

                                      24
<Page>

      Payment or (y) Sellers shall pay to Purchaser the amount by which the
      Closing Payment exceeds the Adjusted Purchase Price, as applicable.

            (c) All payments made or to be made hereunder to each Seller shall
      be by electronic transfer of immediately available funds to a bank and
      account specified in writing to Purchaser by the applicable Seller. All
      payments made or to be made hereunder to Purchaser shall be by electronic
      transfer of immediately available funds to a bank and account specified in
      writing to the applicable Seller by Purchaser.

                       ARTICLE 9 TERMINATION AND AMENDMENT

      SECTION 9.1 TERMINATION.

      This Agreement may be terminated at any time prior to the Closing: (i) by
the mutual prior written consent of Sellers and Purchaser; (ii) by Purchaser, if
the Closing has not occurred on or before December 17, 2001; or (iii) by
Purchaser pursuant to Section 10.7, provided, however, that no Party shall be
entitled to terminate this Agreement under Section 9.1(ii) if the Closing has
failed to occur because such Party negligently or willfully failed to perform or
observe in any material respect its covenants and agreements hereunder.

      SECTION 9.2 EFFECT OF TERMINATION.

      If this Agreement is terminated pursuant to Section 9.1, this Agreement
shall become void and of no further force or effect (except for the provisions
of Sections 4.6, 5.5, and 11.4 which shall continue in full force and effect)
and Sellers shall be free immediately to enjoy all rights of ownership of the
Assets and to sell, transfer, encumber or otherwise dispose of the Assets to any
party without any restriction under this Agreement. Notwithstanding anything to
the contrary in this Agreement, the termination of this Agreement under Section
9.1(ii) shall not relieve any Party from liability (including liability for
consequential damages) for any willful or negligent failure to perform or
observe in any material respect any of its agreements or covenants contained
herein which are to be performed or observed at or prior to the Closing. In the
event this Agreement terminates under Section 9.1(ii) and any Party has
willfully or negligently failed to perform or observe in any material respect
any of its agreements or covenants contained herein which are to be performed at
or prior to the Closing, then Purchaser, in the case of a willful or negligent
failure by any Seller, or Sellers, in the event of a willful or negligent
failure by Purchaser, shall be entitled to all remedies available at law or in
equity, including specific performance, and shall be entitled to recover court
costs and attorneys' fees in addition to any other relief to which such Party
maybe entitled.

         ARTICLE 10 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; LIMITATIONS

      SECTION 10.1  RECEIPTS.

      Except as otherwise provided in this Agreement, any production from or
attributable to the Assets (and all products and proceeds attributable thereto)
and any other income, proceeds, receipts and credits attributable to the Assets
which are not reflected in the adjustments to the

                                      25
<Page>

Purchase Price following the final adjustment pursuant to Section 8.4(b)
shall be treated as follows: (a) all production from or attributable to the
Assets (and all products and proceeds attributable thereto) and all other
income, proceeds, receipts and credits earned with respect to the Assets to
which Purchaser is entitled under Section 1.4 shall be the sole property and
entitlement of Purchaser, and, to the extent received by any Seller, that
Seller shall fully disclose, account for and remit the same promptly to
Purchaser, and (b) all production from or attributable to the Assets (and all
products and proceeds attributable thereto) and all other income, proceeds,
receipts and credits earned with respect to the Assets to which any Seller is
entitled under Section 1.4 shall be the sole property and entitlement of that
Seller and, to the extent received by Purchaser, Purchaser shall fully
disclose, account for and remit the same promptly to that Seller.

      SECTION 10.2  EXPENSES.

      Except as otherwise provided in this Agreement, any Property Costs which
are not reflected in the adjustments to the Purchase Price following the final
adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
Property Costs for which any Seller is responsible under Section 1.4 shall be
the sole obligation of that Seller and that Seller shall promptly pay, or if
paid by Purchaser, promptly reimburse Purchaser for and hold Purchaser harmless
from and against same; and (b) all Property Costs for which Purchaser is
responsible under Section 1.4 shall be the sole obligation of Purchaser and
Purchaser shall promptly pay, or if paid by any Seller, promptly reimburse that
Seller for and hold that Seller harmless from and against same. Sellers are
entitled to resolve all joint interest audits and other audits of Property Costs
covering periods for which Sellers are in whole or in part responsible, provided
that Sellers shall not agree to any adjustments to previously assessed costs for
which Purchaser is liable without the prior written consent of Purchaser, such
consent not to be unreasonably withheld. Sellers shall provide Purchaser with a
copy of all applicable audit reports and written audit agreements received by
Sellers and relating to periods for which Purchaser is partially responsible.

      SECTION 10.3  ASSUMPTION AND INDEMNIFICATION.

            (a) Without limiting Purchaser's rights to indemnity under this
      Article 10 and except as otherwise provided in Section 1.4 above with
      respect to the Runnells No. 7 Well, after the Closing, Purchaser shall
      assume and hereby agrees to fulfill, perform, pay and discharge (or cause
      to be fulfilled, performed, paid or discharged) all of the obligations and
      liabilities of Sellers, known or unknown, with respect to the Assets that
      arise or are attributable to that period of time on or after the Effective
      Time, including but not limited to obligations to plug wells and dismantle
      structures and to restore and/or remediate the Assets in accordance with
      applicable agreements and Laws, and all of the obligations and liabilities
      of Sellers, known or unknown, with respect to the Assets regardless of
      whether the same arise or are attributable to that period of time before
      or after the Effective Time with respect to obligations to furnish makeup
      gas according to the terms of applicable gas sales, gathering or
      transportation contracts, gas balancing obligations, obligations to pay
      working interests, royalties, overriding royalties and other interests
      held in suspense (all of said obligations and liabilities, subject to the
      exclusions of the proviso below, herein being referred to as the "Assumed
      Seller Obligations");

                                      26
<Page>

      provided, however, that Purchaser does not assume any obligations or
      liabilities of Sellers to the extent that those obligations or liabilities
      are:

                  (i)   attributable to or arise out of the Excluded Assets;

                  (ii)  attributable to or arise out of (x) the actions, suits
            or proceedings, if any, set forth on SCHEDULE 4.7, (y) the blowout
            of the Runnels #5 Well, and (z) any other matters set forth on
            SCHEDULE 4.18, to the full extent of Sellers' pre-Closing
            obligation; or

                  (iii) the continuing responsibility of any Seller under
            Sections 10.2 and 10.3(c).

            (b)   Purchaser shall indemnify, defend and hold harmless Sellers
      from and against all Damages incurred or suffered by Sellers

                  (i)   caused by or arising out of or resulting from the
            Assumed Seller Obligations,

                  (ii)  caused by or arising out of or resulting from the
            ownership, use or operation of the Assets after the Closing Date,

                  (iii) caused by or arising out of or resulting from
            Purchaser's breach of any of Purchaser's covenants or agreements
            contained in Sections 6.1 or 6.2, or

                  (iv)  caused by or arising out of or resulting from any breach
            of any representation or warranty made by Purchaser contained in
            Article 5 of this Agreement or in the certificate delivered by
            Purchaser at the Closing pursuant to Section 8.3(d),

      EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
      (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
      OF ANY INDEMNIFIED PERSON, but excepting in each case Damages against
      which any Seller would be required to indemnify Purchaser under Section
      10.3(d) at the time the claim notice is presented by Purchaser.

            (c) Without limiting each Seller's right to indemnity under this
      Article 10, and except as otherwise provided in Section 1.4 above with
      respect to the Runnells No. 7 Well, after the Closing, each Seller,
      severally and not jointly, with respect only to itself, shall retain and
      hereby agree to fulfill, perform, pay and discharge (or cause to be
      fulfilled, performed, paid or discharged) its pre-Effective Time
      proportionate share of the obligations and liabilities, known or unknown,
      with respect to the Assets that arise or are attributable to that period
      of time prior to the Effective Time which are asserted in writing to the
      applicable Seller on or before December 31, 2003, including but not
      limited to obligations to plug wells and dismantle structures that were
      located on the Leases but were not in use as of the Effective Time, and to
      restore and/or remediate the Assets with respect to conditions in
      existence as of the Effective Time in accordance with applicable
      agreements and Laws (all of said obligations and liabilities, subject to
      the exclusions of

                                      27
<Page>

      the proviso below, herein being referred to as the "Retained Seller
      Obligations"). "Retained Seller Obligations" shall specifically exclude
      the Assumed Seller Obligations, including without limitation all of the
      obligations and liabilities of Sellers, known or unknown, with respect
      to the Assets that arise or are attributable to that period of time
      before the Effective Time with respect to obligations to furnish makeup
      gas according to the terms of applicable gas sales, gathering or
      transportation contracts, gas balancing obligations, obligations to pay
      working interests, royalties, overriding royalties and other interests
      held in suspense, which obligations and liabilities are assumed by
      Purchaser under Section 10.3(a).

            (d) Each Seller severally, and not jointly, shall indemnify, defend
      and hold harmless Purchaser against and from all Damages incurred or
      suffered by Purchaser which are applicable to such Seller:

                  (i)   caused by or arising out of or resulting from the
            Retained Seller Obligations which are applicable to such Seller;

                  (ii)  caused by or arising out of or resulting from those
            obligations and liabilities described in Sections 10.3(a)(i) and
            10.3(a)(ii) that are attributable to such Seller;

                  (iii) caused by or arising out of or resulting from that
            Seller's breach of any of such Seller's covenants or agreements
            contained in Sections 6.1, 6.2, or 6.5 of this Agreement; or

                  (iv)  caused by or arising out of our resulting from any
            breach of any representation or warranty made by such Seller
            contained in Article 4 of this Agreement, or in the certificate
            delivered by such Seller at the Closing pursuant to Section 8.2(d),

      EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
      (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
      OF ANY INDEMNIFIED PERSON.

            (e) Notwithstanding anything to the contrary contained in this
      Agreement, this Section 10.3 contains the Parties' exclusive remedy
      against one another with respect to breaches of the representations,
      warranties, covenants and agreements of the Parties contained in Articles
      4 (other than Section 4.15), 5 and Sections 6.1, 6.2, and 6.5 and the
      affirmations of such representations, warranties, covenants and agreements
      contained in the certificate delivered by each Party at the Closing
      pursuant to Sections 8.2(d) or 8.3(d), as applicable.

            (f) Claims for Property Costs shall be exclusively handled pursuant
      to the Purchase Price adjustments in Section 2.2, and pursuant to Section
      10.2, and shall not be subject to indemnification under this Section 10.3.

            (g) Title Defects shall be exclusively handled pursuant to Section
      3.4, and, if applicable, pursuant to the Purchase Price adjustment
      mechanism in Section 2.2 and shall not be subject to indemnification under
      this Section 10.3.

                                      28
<Page>

            (h) "Damages", for purposes of this Article 10, shall mean the
      amount of any actual liability, loss, cost, expense, claim, award or
      judgment incurred or suffered by any Indemnified Party arising out of or
      resulting from the indemnified matter, including reasonable fees and
      expenses of attorneys, consultants, accountants or other agents and
      experts reasonably incident to matters indemnified against, and the costs
      of investigation and/or monitoring of such matters, and the costs of
      enforcement of the indemnity; provided, however, that Purchaser and
      Sellers shall not be entitled to indemnification under this Section 10.3
      for, and "Damages" shall not include, (i) loss of profits or other
      consequential damages suffered by the party claiming indemnification, or
      any punitive damages, (ii) any liability, loss, cost, expense, claim,
      award or judgment that does not individually exceed $10,000, and (iii) any
      liability, loss, cost, expense, claim, award or judgment to the extent
      resulting from or increased by the actions or omissions of any Indemnified
      Party after the Closing Date.

            (i) The indemnity of each Party provided in this Section 10.3 shall
      be for the benefit of and extend to such Party's present and former
      Affiliates, and its and their directors, officers, employees, and agents.

      SECTION 10.4      INDEMNIFICATION ACTIONS.

      All claims for indemnification under Section 10.3 shall be asserted and
resolved as follows:

            (a) For purposes of this Article 10, the term "Indemnifying Party"
      when used in connection with particular Damages shall mean the Party or
      Parties having an obligation to indemnify another Party or Parties with
      respect to such Damages pursuant to this Article 10, and the term
      "Indemnified Party" when used in connection with particular Damages shall
      mean the Party or Parties having the right to be indemnified with respect
      to such Damages by another Party or Parties pursuant to this Article 10.

            (b) To make claim for indemnification under Section 10.3, an
      Indemnified Party shall notify the Indemnifying Party of its claim under
      this Section 10.4, including the specific details of and specific basis
      under this Agreement for its claim (the "Claim Notice"). In the event that
      the claim for indemnification is based upon a claim by a third party
      against the Indemnified Party (a "Claim"), the Indemnified Party shall
      provide its Claim Notice promptly after the Indemnified Party has actual
      knowledge of the Claim and shall enclose a copy of all papers (if any)
      served with respect to the Claim; provided that the failure of any
      Indemnified Party to give notice of a Claim as provided in this Section
      10.4 shall not relieve the Indemnifying Party of its obligations under
      Section 10.3 except to the extent such failure results in insufficient
      time being available to permit the Indemnifying Party to effectively
      defend against the Claim or otherwise prejudices the Indemnifying Party's
      ability to defend against the Claim. In the event that the claim for
      indemnification is based upon an inaccuracy or breach of a representation,
      warranty, covenant or agreement, the Claim Notice shall specify the
      representation, warranty, covenant or agreement which was inaccurate or
      breached.

                                      29

<Page>

            (c) In the case of a claim for indemnification based upon a Claim,
      the Indemnifying Party shall have 30 days from its receipt of the Claim
      Notice to notify the Indemnified Party whether it admits or denies its
      liability to defend the Indemnified Party against such Claim at the sole
      cost and expense of the Indemnifying Party. The Indemnified Party is
      authorized, prior to and during such 30-day period, to file any motion,
      answer or other pleading that it shall deem necessary or appropriate to
      protect its interests or those of the Indemnifying Party and that is not
      prejudicial to the Indemnifying Party.

            (d) If the Indemnifying Party admits its liability, it shall have
      the right and obligation to diligently defend, at its sole cost and
      expense, the Claim. The Indemnifying Party shall have full control of such
      defense and proceedings, including any compromise or settlement thereof.
      If requested by the Indemnifying Party, the Indemnified Party agrees to
      cooperate in contesting any Claim which the Indemnifying Party elects to
      contest. The Indemnified Party may participate in, but not control, any
      defense or settlement of any Claim controlled by the Indemnifying Party
      pursuant to this Section 10.4(d). An Indemnifying Party shall not, without
      the written consent of the Indemnified Party, (i) settle any Claim or
      consent to the entry of any judgment with respect thereto which does not
      include an unconditional written release of the Indemnified Party from all
      liability in respect of such Claim or (ii) settle any Claim or consent to
      the entry of any judgment with respect thereto in any manner that may
      materially and adversely affect the Indemnified Party (other than as a
      result of money damages covered by the indemnity).

            (e) If the Indemnifying Party does not admit its liability or admits
      its liability but fails to diligently prosecute or settle the Claim, then
      the Indemnified Party shall have the right to defend against the Claim at
      the sole cost and expense of the Indemnifying Party, with counsel of the
      Indemnified Party's choosing, subject to the right of the Indemnifying
      Party to admit its liability and assume the defense of the Claim at any
      time prior to settlement or final determination thereof. If the
      Indemnifying Party has not yet admitted its liability for a Claim, the
      Indemnified Party shall send written notice to the Indemnifying Party of
      any proposed settlement and the Indemnifying Party shall have the option
      for 10 days following receipt of such notice to (i) admit in writing its
      liability for the Claim and (ii) if liability is so admitted, reject, in
      its reasonable judgment, the proposed settlement.

            (f) In the case of a claim for indemnification not based upon a
      Claim, the Indemnifying Party shall have 30 days from its receipt of the
      Claim Notice to (i) cure the Damages complained of, (ii) admit its
      liability for such Damages or (iii) dispute the claim for such Damages. If
      the Indemnifying Party does not notify the Indemnified Party within such
      30 day period that it has cured the Damages or that it disputes the claim
      for such Damages, the amount of such Damages shall conclusively be deemed
      a liability of the Indemnifying Party hereunder.

                                      30
<Page>

      SECTION 10.5      LIMITATION ON ACTIONS.

            (a) The representations and warranties of Sellers in Article 4
      (other than Section 4.15) and the corresponding representations and
      warranties given in the certificate delivered at the Closing pursuant to
      Section 8.2(d) shall survive the Closing for a period of two (2) years.
      The representations and warranties of Purchaser in Article 5 and the
      covenants and agreements of the Parties in Article 6, and the
      corresponding representations and warranties given in the certificate
      delivered at the Closing pursuant to Section 8.3(d) shall survive the
      Closing for a period of one year. The representations and warranties of
      each Seller in Section 3.1 shall terminate at the Title Claim Date. The
      representations and warranties of each Seller in Section 4.15 and the
      corresponding representations and warranties given in the certificate
      delivered by each Seller at the Closing pursuant to Section 8.2(d) shall
      terminate on the deadline for delivery (or, if earlier, the date of
      delivery) of Purchaser's written report pursuant to Section 8.4(b). The
      remainder of this Agreement shall survive the Closing without time limit
      except as may otherwise be expressly provided herein. Representations,
      warranties, covenants and agreements shall be of no further force and
      effect after the date of their expiration, provided that there shall be no
      termination of any bona fide claim asserted pursuant to this Agreement
      with respect to such a representation, warranty, covenant or agreement
      prior to its expiration date.

            (b) The indemnities in Sections 10.3(b)(iii), 10.3(b)(iv),
      10.3(d)(iii) and 10.3(d)(iv) shall terminate as of the termination date of
      each respective representation, warranty, covenant or agreement that is
      subject to indemnification, except in each case as to matters for which a
      specific written claim for indemnity has been delivered to the
      Indemnifying Party on or before such termination date. Purchaser's
      indemnities in Sections 10.3(b)(i) and 10.3(b)(ii) and Sellers'
      indemnities in Section 10.3(d)(ii) shall continue without time limit and
      Sellers' indemnities in Section 10.3(d)(i) shall continue for the period
      specified in Section 10.3(c).

      SECTION 10.6      RECORDING.

      As soon as practicable after the Closing, Purchaser shall record the
conveyances in the appropriate counties as well as the appropriate governmental
agencies and provide Sellers with copies of all recorded or approved
instruments.

      SECTION 10.7      SPECIAL PROVISION FOR CASUALTY LOSS OR CONDEMNATION.

      If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain, Purchaser shall nevertheless be
required to Close and Sellers shall, at the Closing, pay to Purchaser that
portion of all sums paid to Sellers by third parties attributable to the Assets
by reason of such casualty or taking and shall assign, transfer and set over to
Purchaser or subrogate Purchaser to all of Sellers' right, title and interest
(if any) in insurance claims, unpaid awards, and other rights against third
parties (other than Affiliates of Sellers and their directors, officers,
employees and agents) arising out of the casualty or taking; provided, however,
in the event the loss as a result of such casualty or taking is equal to ten
percent (10%)

                                      31
<Page>

or more of the unadjusted Purchase Price, Purchaser shall have the option, in
its sole discretion, to terminate this Agreement pursuant to Article 9.

                            ARTICLE 11 MISCELLANEOUS

      SECTION 11.1      COUNTERPARTS.

      This Agreement may be executed in counterparts, including facsimile
counterparts, each of which shall be deemed an original instrument, but all such
counterparts, including facsimile counterparts, together shall constitute but
one agreement.

      SECTION 11.2      NOTICE.

      All notices which are required or may be given pursuant to this Agreement
shall be sufficient in all respects if given in writing and delivered
personally, by telecopy or by registered or certified mail, postage prepaid, as
follows:

            If to Sellers:          Esenjay Exploration, Inc.
                                    One Allen Center
                                    500 Dallas Street, Suite 2920
                                    Houston, TX 77002
                                    Attention:  David B. Christofferson, Vice
                                     President
                                    Telephone:  (713) 739-7100
                                    Telecopy:   (713) 739-7124

                                                and

                                    Esenjay Petroleum Corporation
                                    500 North Water Street
                                    Suite 1100 South
                                    Corpus Christi, TX 78471
                                    Attention:  Michael Johnson, President
                                    Telephone:  (361) 883-7464
                                    Telecopy:   (361) 884-5420

                                                and

                                    Brazos Resources, Inc.
                                    P.O. Box 1050
                                    Corpus Christi, TX 78403
                                    Attention:  Duane Herbst, Vice President
                                    Telephone:  (361) 882-8407
                                    Telecopy:   (361) 882-9210

                                                and

                                      32
<Page>

                                    Trijon Exploration, Inc.
                                    615 N. Upper Broadway, Suite 2040
                                    Corpus Christi, TX 78447
                                    Attention:  John T. Corcoran, President
                                    Telephone:  (361) 888-7794
                                    Telecopy:   (361) 888-5204

                                                and

                                    JLC Enterprises, Inc.
                                    615 N. Upper Broadway, Suite 1935
                                    Corpus Christi, TX 78477
                                    Attention:  James L. Claughton, President
                                    Telephone:  (361) 887-2991
                                    Telecopy:   (361) 883-4790

            If to Purchaser:        Santos USA Corp.
                                    2500 Tanglewilde, Suite 160
                                    Houston, Texas 77063
                                    Attention:  Kathleen A. Hogenson
                                    Telephone:  (713) 986-1700
                                    Telecopy:   (713) 986-4200

            With a copy to:         Baker Botts L.L.P.
                                    One Shell Plaza
                                    910 Louisiana
                                    Houston, Texas  77002-4995
                                    Attention:  Lori J. Khan, Esq.
                                    Telephone:  (713) 229-1318
                                    Telecopy:   (713) 229-2718

Any Party may change its address for notice by notice to the other in the manner
set forth above. All notices shall be deemed to have been duly given at the time
of receipt by the party to which such notice is addressed.

      SECTION 11.3      SALES OR USE TAX, RECORDING FEES AND SIMILAR TAXES AND
                        FEES.

      Purchaser shall bear any sales, use, excise, real property transfer or
gain, gross receipts, goods and services, registration, capital, documentary,
stamp or transfer Taxes, recording fees and similar Taxes and fees incurred and
imposed upon, or with respect to, the property transfers or other transactions
contemplated hereby. If such transfers or transactions are exempt from any such
Taxes or fees upon the filing of an appropriate certificate or other evidence of
exemption, Purchaser will timely furnish to Sellers such certificate or
evidence.

      SECTION 11.4      EXPENSES.

      Except as provided in Section 11.3, all expenses incurred by Sellers in
connection with or related to the authorization, preparation or execution of
this Agreement, the conveyances

                                      33
<Page>

delivered hereunder and the Exhibits and Schedules hereto and thereto, and all
other matters related to the Closing, including without limitation, all fees
and expenses of counsel, accountants and financial advisers employed by
Sellers, shall be borne solely and entirely by Sellers, and all such expenses
incurred by Purchaser shall be borne solely and entirely by Purchaser.

      SECTION 11.5      REPLACEMENT OF BONDS, LETTERS OF CREDIT AND GUARANTEES.

      The Parties understand that none of the bonds, letters of credit and
guarantees, if any, posted by any Seller with Governmental Bodies and relating
to the Assets may be transferable to Purchaser. Promptly following the Closing,
Purchaser shall obtain, or cause to be obtained in the name of Purchaser,
replacements for such bonds, letters of credit and guarantees, to the extent
such replacements are necessary to permit the cancellation of the bonds, letters
of credit and guarantees posted by any Seller or to consummate the transactions
contemplated by this Agreement.

      SECTION 11.6      GOVERNING LAW.

      This Agreement and the legal relations between the Parties shall be
governed by and construed in accordance with the laws of the State of Texas
without regard to principles of conflicts of laws.

      SECTION 11.7      CAPTIONS.

      The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.

      SECTION 11.8      WAIVERS.

      Any failure by any Party or Parties to comply with any of its or their
obligations, agreements or conditions herein contained may be waived in writing,
but not in any other manner, by the Party or Parties to whom such compliance is
owed. No waiver of, or consent to a change in, any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.

      SECTION 11.9      ASSIGNMENT.

      No Party shall assign all or any part of this Agreement, nor shall any
Party assign or delegate any of its rights or duties hereunder, without the
prior written consent of the other Parties and any assignment or delegation made
without such consent shall be void, except that prior to Closing Purchaser may
assign this Agreement to any direct or indirect wholly-owned subsidiary of
Purchaser. Following such an assignment, Purchaser shall remain liable for its
duties, liabilities and obligations hereunder, and Purchaser does hereby
guarantee unto Sellers, the performance by such assignee of all of the duties,
liabilities and obligations hereunder that are assigned to such designee in
accordance with the foregoing. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and assigns.

                                      34
<Page>

      SECTION 11.10     ENTIRE AGREEMENT.

      This Agreement and the documents to be executed hereunder and the Exhibits
and Schedules attached hereto constitute the entire agreement among the Parties
pertaining to the subject matter hereof, and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties pertaining to the subject matter hereof.

      SECTION 11.11     AMENDMENT.

            (a)   This Agreement may be amended or modified only by a written
      agreement, designated as an amendment or modification, executed by all of
      the Parties.

            (b)   No waiver of any right under this Agreement shall be binding
      unless executed in writing by the Party to be bound thereby.

      SECTION 11.12     NO THIRD-PARTY BENEFICIARIES.

      Nothing in this Agreement shall entitle any Person other than Purchaser
and Sellers to any claims, cause of action, remedy or right of any kind, except
the rights expressly provided to the Persons described in Section 10.3(g).

      SECTION 11.13     REFERENCES.

      In this Agreement, unless the context clearly indicates otherwise,

            (a)   References to any gender includes a reference to all other
      genders;

            (b)   References to the singular includes the plural, and vice
      versa;

            (c)   Reference to any Article or Section means an Article or
      Section of this Agreement;

            (d)   Reference to any Exhibit or Schedule means an Exhibit or
      Schedule to this Agreement, all of which are incorporated into and made a
      part of this Agreement;

            (e)   Unless expressly provided to the contrary, "hereunder",
      "hereof", "herein" and words of similar import are references to this
      Agreement as a whole and not any particular Section or other provision of
      this Agreement; and

            (f)   "Include" and "including" shall mean include or including
      without limiting the generality of the description preceding such term.

      SECTION 11.14     CONSTRUCTION.

      Purchaser is a party capable of making such investigation, inspection,
review and evaluation of the Assets as a prudent purchaser would deem
appropriate under the circumstances including with respect to all matters
relating to the Assets, their value, operation and suitability. Each Seller and
Purchaser have had substantial input into the drafting and preparation of this
Agreement and has had the opportunity to exercise business discretion in
relation to the

                                      35
<Page>

negotiation of the details of the transaction contemplated hereby. This
Agreement is the result of arm's-length negotiations from equal bargaining
positions.

      SECTION 11.15     LIMITATION ON DAMAGES.

      Notwithstanding anything to the contrary contained herein, none of
Purchaser, Sellers or any of their respective Affiliates shall be entitled to
punitive damages in connection with this Agreement and the transactions
contemplated hereby and Purchaser and each Seller, for itself and on behalf of
its Affiliates, hereby expressly waives any right to punitive damages in
connection with this Agreement and the transactions contemplated hereby.

                             ARTICLE 12 DEFINITIONS

      "Adjustment Period" has the meaning set forth in Section 2.2(a).

      "Adjusted Purchase Price" has the meaning set forth in Section 2.2.

      "Affiliate" with respect to any Person, means any person that directly or
indirectly controls, is controlled by or is under common control with such
Person.

      "Agreement" has the meaning set forth in the first paragraph of this
Agreement.

      "Allocated Value" has the meaning set forth in Section 2.3.

      "Assets" has the meaning set forth in Section 1.2.

      "Assumed Seller Obligations" has the meaning set forth in Section 10.3(a).

      "Business Day" means each calendar day except Saturdays, Sundays and
federal holidays.

      "Claim" has the meaning set forth in Section 10.4.

      "Claim Notice" has the meaning set forth in Section 10.4.

      "Closing" has the meaning set forth in Section 8.1.

      "Closing Date" means the third Business Day following the day on which all
conditions in Article 7 to be satisfied prior to the Closing have been satisfied
or waived.

      "Closing Payment" has the meaning set forth in Section 8.4(a).

      "Code" has the meaning set forth in Section 2.3.

      "Contracts" has the meaning set forth in Section 1.2(c).

      "Conveyance" has the meaning set forth in Section 3.1(b).

      "Damages" has the meaning set forth in Section 10.3(h).

                                      36
<Page>

      "Defensible Title" has the meaning set forth in Section 3.2.

      "Effective Time" has the meaning set forth in Section 1.4.

      "Environmental Laws" means, as the same have been amended to the date
hereof, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 ET SEQ.; the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 ET SEQ.; the Federal Water Pollution Control Act,
33 U.S.C. Section 1251 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET
SEQ.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1471 ET
SEQ.; the Toxic Substances Control Act, 15 U.S.C. Sections 2601 through 2629;
the Oil Pollution Act, 33 U.S.C. Section 2701 ET SEQ.; the Emergency Planning
and Community Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.; and the Safe
Drinking Water Act, 42 U.S.C. Sections 300f through 300j; and all similar Laws
as of the date hereof of any Governmental Body having jurisdiction over the
property in question addressing pollution or protection of the environment and
all regulations implementing the foregoing.

      "Equipment" has the meaning set forth in Section 1.2(e).

      "Excluded Assets" has the meaning set forth in Section 1.3.

      "Governmental Authorization" has the meaning set forth in Section 4.16.

      "Governmental Body" means any federal, state, local, municipal, or other
governments; any governmental, regulatory or administrative agency, commission,
body or other authority exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; and any court or governmental tribunal.

      "Hydrocarbons" means oil, gas, condensate and other gaseous and liquid
hydrocarbons or any combination thereof and sulphur extracted from hydrocarbons.

      "Indemnified Party" has the meaning set forth in Section 10.4.

      "Indemnifying Party" has the meaning set forth in Section 10.4.

      "Laws" means all statutes, rules, regulations, ordinances, orders, and
codes of Governmental Bodies.

      "Leases" has the meaning set forth in Section 1.2(a).

      "Material Adverse Effect" means any material adverse effect on the
ownership, operation or value of the Assets, as currently operated, taken as a
whole, provided, however, that "Material Adverse Effect" shall not include
general changes in industry or economic conditions or changes in laws or in
regulatory policies.

      "NGL" or "NGLs" has the meaning set forth in Section 1.4.

      "Permitted Encumbrances" has the meaning set forth in Section 3.3.

                                      37
<Page>

      "Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, government or agency or subdivision thereof or any other entity.

      "Properties" has the meaning set forth in Section 1.2(b).

      "Property Costs" has the meaning set forth in Section 1.4.

      "Purchase Price" has the meaning set forth in Section 2.1(a).

      "Purchaser" has the meaning set forth in the first paragraph of this
Agreement.

      "Records" has the meaning set forth in Section 1.2(g).

      "Retained Seller Obligations" has the meaning set forth in Section
10.3(c).

      "Seller" and "Sellers" has the meaning set forth in the first paragraph of
this Agreement.

      "Taxes" means all federal, state, local, and foreign income, profits,
franchise, sales, use, ad valorem, property, severance, production, excise,
stamp, documentary, real property transfer or gain, gross receipts, goods and
services, registration, capital, transfer, or withholding taxes or other
governmental fees or charges imposed by any taxing authority, including any
interest, penalties or additional amounts which may be imposed with respect
thereto.

      "Title Arbitrator" has the meaning set forth in Section 3.4(f).

      "Title Claim Date" has the meaning set forth in Section 3.4(a).

      "Title Claim Notice" has the meaning set forth in Section 3.4(a).

      "Title Defect" has the meaning set forth in Section 3.2.

      "Title Defect Amount" has the meaning set forth in Section 3.4(b).

      "Transition Agreement" has the meaning set forth in Section 6.3.

      "Units" has the meaning set forth in Section 1.2(b).

      "Wells" has the meaning set forth in Section 1.2(a).

                                      38
<Page>

      IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties
hereto on the date first above written.

      SELLERS:

                                    ESENJAY EXPLORATION, INC.

                                    By:
                                       ------------------------------
                                    Name:
                                         ----------------------------
                                    Title:
                                          ---------------------------

                                    ESENJAY PETROLEUM CORPORATION

                                    By:
                                       ------------------------------
                                    Name:
                                         ----------------------------
                                    Title:
                                          ---------------------------

                                    BRAZOS RESOURCES, INC.

                                    By:
                                       ------------------------------
                                    Name:
                                         ----------------------------
                                    Title:
                                          ---------------------------

                                    TRIJON EXPLORATION, INC.

                                    By:
                                       ------------------------------
                                    Name:
                                         ----------------------------
                                    Title:
                                          ---------------------------

                                      39
<Page>

                                    JLC ENTERPRISES, INC.

                                    By:
                                       ------------------------------
                                    Name:
                                         ----------------------------
                                    Title:
                                          ---------------------------
      PURCHASER:

                                SANTOS USA CORP.

                                    By:
                                       ------------------------------
                                    Name:
                                         ----------------------------
                                    Title:
                                          ---------------------------

                                      40<Page>

                           PURCHASE AND SALE AGREEMENT

                                  BY AND BETWEEN

                           ESENJAY EXPLORATION, INC.,

                                    AS SELLER,

                                       AND

                                SANTOS USA CORP.,

                                   AS PURCHASER

                                NOVEMBER 16, 2001

<Page>

                                TABLE OF CONTENTS

<Table>

<S>                                                                         <C>
ARTICLE 1 PURCHASE AND SALE..................................................1
Section 1.1   Purchase and Sale..............................................1
Section 1.2   Assets.........................................................1
Section 1.3   Excluded Assets................................................3
Section 1.4   Effective Time; Proration of Costs and Revenues................3
Section 1.5   Delivery and Maintenance of Records............................5

ARTICLE 2 PURCHASE PRICE.....................................................5
Section 2.1   Purchase Price.................................................5
Section 2.2   Adjustments to Purchase Price..................................5
Section 2.3   Allocation of Purchase Price...................................6

ARTICLE 3 TITLE MATTERS......................................................7
Section 3.1   Seller's Title.................................................7
Section 3.2   Definition of Defensible Title.................................7
Section 3.3   Definition of Permitted Encumbrances...........................8
Section 3.4   Notice of Title Defects; Defect Adjustments....................9
Section 3.5   Limitations on Applicability..................................11

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER..........................11
Section 4.1   Disclaimer....................................................11
Section 4.2   Existence and Qualification...................................12
Section 4.3   Power.........................................................12
Section 4.4   Authorization and Enforceability..............................12
Section 4.5   No Conflicts..................................................12
Section 4.6   Liability for Brokers' Fees...................................13
Section 4.7   Litigation....................................................13
Section 4.8   Taxes and Assessments.........................................13
Section 4.9   Environmental Laws............................................13
Section 4.10  Safety and Health.............................................14
Section 4.11  Outstanding Capital Commitments...............................14
Section 4.12  Compliance with Laws..........................................14
Section 4.13  Contracts.....................................................14
Section 4.14  Payments for Production.......................................14
Section 4.15  Gas Imbalances................................................15
Section 4.16  Governmental Authorizations...................................15
Section 4.17  Consents and Preferential Purchase Rights.....................15
Section 4.18  Absence of Certain Changes....................................15
Section 4.19  Bankruptcy....................................................16
Section 4.20  Development Status............................................16

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................16
Section 5.1   Existence and Qualification...................................16
Section 5.2   Power.........................................................16

                                      i

<Page>

Section 5.3   Authorization and Enforceability..............................16
Section 5.4   No Conflicts..................................................16
Section 5.5   Liability for Brokers' Fees...................................17
Section 5.6   Litigation....................................................17
Section 5.7   Financing.....................................................17
Section 5.8   Independent Investigation.....................................17

ARTICLE 6 COVENANTS OF THE PARTIES..........................................17
Section 6.1   Government Reviews............................................17
Section 6.2   Letters-in-Lieu; Assignments; Operatorship....................18
Section 6.3   Area of Mutual Interest Agreement.............................18
Section 6.4   Gas and NGL Imbalances........................................18
Section 6.5   Consents and Preferential Rights..............................19
Section 6.6   Tax Matters...................................................19
Section 6.7   Further Assurances............................................19
Section 6.8   Certain Covenants of Seller...................................20

ARTICLE 7 CONDITIONS TO CLOSING.............................................20
Section 7.1   Conditions of Seller to Closing...............................20
Section 7.2   Conditions of Purchaser to Closing............................21

ARTICLE 8 CLOSING...........................................................21
Section 8.1   Time and Place of Closing.....................................21
Section 8.2   Obligations of Seller at Closing..............................21
Section 8.3   Obligations of Purchaser at Closing...........................22
Section 8.4   Closing Payment and Post-Closing Purchase Price Adjustments...23

ARTICLE 9 TERMINATION AND AMENDMENT.........................................24
Section 9.1   Termination...................................................24
Section 9.2   Effect of Termination.........................................24

ARTICLE 10 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; LIMITATIONS...........25
Section 10.1  Receipts......................................................25
Section 10.2  Expenses......................................................25
Section 10.3  Assumption and Indemnification................................26
Section 10.4  Indemnification Actions.......................................28
Section 10.5  Limitation on Actions.........................................30
Section 10.6  Recording.....................................................31
Section 10.7  Special Provision for Casualty Loss or Condemnation...........31

ARTICLE 11 MISCELLANEOUS....................................................31
Section 11.1  Counterparts..................................................31
Section 11.2  Notice........................................................31
Section 11.3  Sales or Use Tax, Recording Fees and Similar Taxes and Fees...32
Section 11.4  Expenses......................................................32
Section 11.5  Replacement of Bonds, Letters of Credit and Guarantees........33
Section 11.6  Governing Law.................................................33

                                     ii

<Page>

Section 11.7  Captions......................................................33
Section 11.8  Waivers.......................................................33
Section 11.9  Assignment....................................................33
Section 11.10 Entire Agreement..............................................33
Section 11.11 Amendment.....................................................34
Section 11.12 No Third-Party Beneficiaries..................................34
Section 11.13 References....................................................34
Section 11.14 Construction..................................................34
Section 11.15 Limitation on Damages.........................................34

ARTICLE 12 DEFINITIONS......................................................35

EXHIBITS:

      Exhibit A         -    Leases
      Exhibit A-1       -    Interests in Wells and Units
      Exhibit B         -    Form of Conveyance
      Exhibit C-1       -    Ashland Deep Prospect Plat
      Exhibit C-2       -    Triple Play Plat
      Exhibit D              Triple Play Area

SCHEDULES:

      Schedule 1.0      -    Sold and Retained Percentages
      Schedule 2.3      -    Allocated Values
      Schedule 4.7      -    Litigation
      Schedule 4.8      -    Tax Matters
      Schedule 4.9      -    Environmental Matters
      Schedule 4.11     -    Capital Commitments
      Schedule 4.12     -    Compliance with Law Issues
      Schedule 4.13     -    Contract Matters
      Schedule 4.14     -    Suspense Accounts
      Schedule 4.15     -    Gas and NGL Imbalances
      Schedule 4.16     -    Permit Issues
      Schedule 4.17     -    Preferential Rights to Purchase and Consents to Assignment
      Schedule 4.18     -    Certain Changes

</Table>

                                     iii

<Page>

                           PURCHASE AND SALE AGREEMENT

      This Purchase and Sale Agreement (this "Agreement") is executed on
November 16, 2001, by and between Esenjay Exploration, Inc., a Delaware
corporation ("Seller"), and Santos USA Corp., a Delaware corporation
("Purchaser"). Seller and Purchaser are hereinafter collectively referred to
as the "Parties" and individually, as a "Party."

                                    RECITALS:

      A.    Seller is the owner of certain interests in oil and gas
properties that are defined and described herein.

      B. Seller desires to sell and Purchaser desires to purchase that
percentage set forth under the column styled "Sold Percentage" in SCHEDULE
1.0 (the "Sold Percentage") out of Seller's right, title and interest in and
to those properties and rights on the terms and conditions hereinafter set
forth.

      C. Capitalized terms used herein shall have the meanings ascribed to
them in this Agreement as such terms are identified and/or defined in Article
12 hereof.

      NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

                           ARTICLE 1 PURCHASE AND SALE

      SECTION 1.1 PURCHASE AND SALE.

      At the Closing and upon the terms and subject to the conditions of this
Agreement, Seller agrees to sell and convey to Purchaser, and Purchaser agrees
to purchase, accept and pay for the Assets (as defined in Section 1.2).

      SECTION 1.2 ASSETS.

      As used herein and elsewhere in this Agreement, the term "Assets" means
the Sold Percentage out of Seller's right, title, interest and estate, real or
personal, recorded or unrecorded, movable or immovable, tangible or intangible,
in and to the following:

            (a) All of the oil and gas leases, oil, gas and mineral leases,
      subleases and other leaseholds, royalties, overriding royalties, net
      profits interests, mineral fee interests, carried interests, and other
      properties and interests described on EXHIBIT A, subject to such depth
      limitations and other restrictions as may be set forth on EXHIBIT A
      (collectively, the "Leases"), and any and all oil, gas, water, CO2 or
      injection wells thereon, including the interests in the wells shown on
      EXHIBIT A-1 attached hereto (the "Wells");

                                       1

<Page>

            (b) Any pools or units which include all or a part of any Lease or
      include any Well, including those pools or units shown on EXHIBIT A-1, but
      specifically excluding any interest in the Runnells Gas Unit as described
      in that certain Designation of Pooled Unit dated July 27, 2000, covering
      704.00 acres, more or less, as recorded at Book 600, Pages 423-458 of the
      Official Records of Matagorda County, Texas (the "Units"; the Units,
      together with the Leases and Wells, being hereinafter referred to as the
      "Properties"), and including production from any such pool or unit,
      whether such unit production comes from wells located on or off of a
      Lease, and all tenements, hereditaments and appurtenances belonging to the
      Leases and Units;

            (c) All presently existing contracts, agreements and instruments by
      which the Assets are bound, to the extent applicable to the Assets,
      including but not limited to, operating agreements, unitization, pooling
      and communitization agreements, declarations and orders, joint venture
      agreements, farmin and farmout agreements, exchange agreements,
      transportation agreements, agreements for the sale and purchase of oil,
      gas, casinghead gas or CO2 and processing agreements to the extent
      applicable to the Assets or the production of oil and gas and other
      minerals and products produced in association therewith from the Assets
      and all hedging contracts (all of which are hereinafter collectively
      referred to as "Contracts" but excluding any contracts, agreements and
      instruments to the extent transfer is restricted by third-party agreement
      or applicable Law), and provided that "Contracts" shall not include the
      instruments constituting the Leases;

            (d) All easements, permits, licenses, servitudes, rights-of-way,
      surface leases and other surface rights appurtenant to, and used or held
      for use primarily in connection with, the Assets, excluding any permits
      and other appurtenances to the extent transfer is restricted by
      third-party agreement or applicable Law;

            (e) Equipment, machinery, fixtures and other tangible personal
      property and improvements located on the Properties or used or held for
      use primarily in connection with the operation of the Properties,
      including any wells, tanks, boilers, buildings, fixtures, injection
      facilities, saltwater disposal facilities, compression facilities,
      gathering systems, gas treating facilities, machinery, computers and
      related peripheral equipment, inventory, power lines, telephone and
      telegraph lines, roads, and other appurtenances, easements and facilities
      (the "Equipment");

            (f) All lease files, land files, well files, gas and oil sales
      contract files, gas processing files, division order files, abstracts,
      title opinions, land surveys, geologic data (excluding interpretations
      thereof), files and all other books, records, data, files, maps and
      accounting records related solely to the Assets, or used or held for use
      primarily in connection with the maintenance or operation thereof, but
      excluding (i) any books, records, data, files, maps and accounting records
      to the extent disclosure or transfer is restricted by third-party
      agreement or applicable Law, (ii) work product of Seller's legal counsel
      (other than title opinions) and (iii) records relating to the negotiation
      and consummation of the sale of the Assets (subject to such exclusions,
      the "Records"); provided, however, that Seller may retain the originals of
      such files and other records as

                                       2

<Page>

      Seller has determined may be required for litigation, Tax, accounting,
      and auditing purposes and provide Purchaser with copies thereof, and

            (g) The right to participate as the owner of working interests equal
      to the Sold Percentage interests in operations conducted by or through
      Seller within the area depicted as the Triple Play Area on EXHIBIT D
      attached hereto (the "Triple Play Area"),

excluding, however, the Excluded Assets (as defined in Section 1.3).

      SECTION 1.3 EXCLUDED ASSETS.

      Notwithstanding the foregoing, the Assets shall not include, and there is
excepted, reserved and excluded from the purchase and sale contemplated hereby
(collectively, the "Excluded Assets"):

            (a) that percentage set forth under the column styled "Retained
      Percentage" in SCHEDULE 1.0 (the "Retained Percentage") out of Seller's
      right, title and interest in and to the oil and gas properties and other
      assets described in Section 1.2;

            (b) all corporate, financial, income and franchise tax and legal
      records of Seller that relate to Seller's business generally (whether or
      not relating to the Assets), and all books, records and files that relate
      to the Excluded Assets and those records retained by Seller pursuant to
      Section 1.2(f) and copies of any other records retained by Seller pursuant
      to Section 1.5;

            (c) all rights to any refund of Taxes or other costs or expenses
      borne by Seller or Seller's predecessors in interest and title
      attributable to periods prior to the Effective Time; and

            (d) Seller's area-wide bonds, permits and licenses or other permits,
      licenses or authorizations used in the conduct of Seller's business
      generally.

      SECTION 1.4 EFFECTIVE TIME; PRORATION OF COSTS AND REVENUES.

      Possession of the Assets shall be transferred from Seller to Purchaser at
the Closing, but certain financial benefits and burdens of the Assets shall be
transferred effective as of 7:00 A.M., local time, where the respective Assets
are located, on September 16, 2001 (the "Effective Time"), as described below.

      Purchaser shall be entitled to all production from or attributable to the
Sold Percentage interest in the Leases, Units and Wells at and after the
Effective Time (and all products and proceeds attributable thereto), and to all
other income, proceeds, receipts and credits earned with respect to the Assets
at or after the Effective Time, and shall be responsible for (and entitled to
any refunds with respect to) all Property Costs incurred at and after the
Effective Time. Seller shall be entitled to all production from or attributable
to Leases, Units and Wells prior to the Effective Time (and all products and
proceeds attributable thereto), and to all other income, proceeds, receipts and
credits earned with respect to the Assets prior to the Effective Time, and shall
be responsible for (and entitled to any refunds with respect to) all Property
Costs incurred

                                       3

<Page>

prior to the Effective Time. "Earned" and "incurred", as used in this
Agreement, shall be interpreted in accordance with generally accepted
accounting principles and Council of Petroleum Accountants Society (COPAS)
standards. "Property Costs" means: (i) all operating expenses attributable to
the Assets (including without limitation costs of insurance and ad valorem,
property, severance, production and similar Taxes based upon or measured by
the ownership or operation of the Assets or the production of Hydrocarbons
therefrom, but excluding any other Taxes); (ii) all capital expenditures
incurred in the ownership, drilling and development, and operation of the
Assets in the ordinary course of business; and (iii) all overhead costs
charged to the Assets under the applicable operating agreement or if none,
charged to the Assets on the same basis as charged on the Closing Date.
"Property Costs" shall not include liabilities, losses, costs, and expenses
attributable to the Assets that relate to: (i) claims, investigations,
administrative proceedings or litigation directly or indirectly arising out
of or resulting from actual or claimed personal injury or death, property
damage or violation of any Law; (ii) obligations to plug wells, dismantle
facilities, close pits and restore the surface around such wells, facilities
and pits (which are addressed in Section 10.3); (iii) obligations to
remediate any contamination of groundwater, surface water, soil or Equipment
under applicable Environmental Laws (which are addressed in Section 10.3);
(iv) obligations to furnish make-up gas according to the terms of applicable
gas sales, gathering or transportation contracts; (v) gas balancing
obligations; and (vi) obligations to pay working interests, royalties,
overriding royalties or other interests held in suspense, to the extent such
obligations are attributable to the Assets. For purposes of allocating
production (and accounts receivable with respect thereto), under this Section
1.4, (i) liquid hydrocarbons shall be deemed to be "from or attributable to"
the Leases, Units and Wells when they pass through the pipeline connecting
into the storage facilities into which they are run, (ii) gaseous
hydrocarbons shall be deemed to be "from or attributable to" the Leases,
Units and Wells when they pass through the delivery point sales meters on the
pipelines through which they are transported, and (iii) natural gas liquids
("NGLs") shall be deemed to be "from or attributable to" the Leases, Units
and Wells when they are sold based on weight and density at the point of
sale. Seller shall utilize reasonable interpolative procedures to arrive at
an allocation of production when exact meter readings or gauging and
strapping data is not available. Seller shall provide to Purchaser
contemporaneously with execution of this Agreement evidence of any meter
readings and any gauging and strapping procedures conducted on or about the
Effective Time in connection with the Assets, together with all data
necessary to support any estimated allocation, for purposes of establishing
the adjustment to the Purchase Price pursuant to Section 2.2 hereof that will
be used to determine the Closing Payment (as defined in Section 8.4(a)).
Taxes, right-of-way fees, insurance premiums and other Property Costs that
are paid periodically shall be prorated based on the number of days in the
applicable period falling before and the number of days in the applicable
period falling at or after the Effective Time, except that production,
severance and similar Taxes shall be prorated based on the number of units
actually produced, purchased or sold, as applicable, before, and at or after,
the Effective Time. In each case, Purchaser shall be responsible for the
portion allocated to the period at and after the Effective Time and Seller
shall be responsible for the portion allocated to the period before the
Effective Time.

                                       4

<Page>

      SECTION 1.5 DELIVERY AND MAINTENANCE OF RECORDS.

            (a) Seller, at Seller's cost, shall deliver the Records to Purchaser
      within ten (10) days following the Closing Date. Seller may retain
      original Records set forth in Section 1.2(f) and copies of any/or such
      Records.

            (b) Purchaser, for a period of seven (7) years following the Closing
      Date, will (i) retain the Records, (ii) provide Seller, its Affiliates,
      and the officers, employees and representatives of Seller and its
      Affiliates with access to the Records during normal business hours for
      review and copying at Seller's expense and (iii) provide Seller, its
      Affiliates, and officers, employees and representatives of Seller and its
      Affiliates with access, during normal business hours, to materials
      received or produced after the Closing Date relating to any claim for
      indemnification made under Section 10.3 of this Agreement (excluding,
      however, attorney work product and attorney-client communications with
      respect to any such claim being brought by Purchaser) for review and
      copying at Seller's expense and to Seller's and its Affiliates' employees
      for the purpose of discussing any such claim, provided that Purchaser
      shall have the right to have its own representatives present during any
      such meeting.

                            ARTICLE 2 PURCHASE PRICE

      SECTION 2.1 PURCHASE PRICE.

      The purchase price for the Assets (the "Purchase Price") shall be Three
Million Eight Hundred Thousand Dollars ($3,800,000.00), adjusted as provided in
Section 2.2.

      SECTION 2.2 ADJUSTMENTS TO PURCHASE PRICE.

      The unadjusted Purchase Price shall be adjusted as follows (as so
adjusted, the "Adjusted Purchase Price") with all such amounts being determined
in accordance with generally accepted accounting principles and Council of
Petroleum Accountants Society (COPAS) standards.

            (a) Reduced by the aggregate amount of the following proceeds
      received by Seller between the Effective Time and the Closing Date (with
      the period between the Effective Time and the Closing Date referred to as
      the "Adjustment Period"): (i) proceeds from the sale of Hydrocarbons (net
      of any royalties, overriding royalties or other burdens on or payable out
      of production, gathering, processing and transportation costs and any
      production, severance, sales or excise Taxes not reimbursed to Seller by
      the purchaser of production) produced from or attributable to the Sold
      Percentage interest in the Leases, Wells and Units during the Adjustment
      Period, and (ii) other proceeds earned with respect to the Assets during
      the Adjustment Period;

            (b) Subject to Section 3.4, reduced by the Title Defect Amount (as
      determined under Section 3.4(e)) of any Title Defects attributable to
      Seller; provided, however, that notwithstanding anything in this Agreement
      to the contrary, the purchase price adjustment under this Section 2.2(b)
      shall not exceed twenty percent (20%) of the unadjusted Purchase Price.

                                       5

<Page>

            (c) Reduced by the aggregate amounts payable to third-party owners
      of working interests, royalties and overriding royalties and other
      interests in the Properties held in suspense attributable to the interest
      of Seller in the Assets as of the Closing Date, provided that at the
      Closing, Purchaser shall assume all obligations related to such suspense
      amounts as set forth in Section 10.3(a);

            (d) Increased by the amount of all Property Costs and other costs
      attributable to the ownership and operation of the Assets which are paid
      by Seller and incurred at or after the Effective Time, except any Property
      Costs and other such costs already deducted in the determination of
      proceeds in Section 2.2(a); and

            (e)   Increased or decreased, as appropriate, pursuant to the
      provisions of Section 6.4.

      The adjustment described in Section 2.2(a) shall serve to satisfy, up to
the amount of the adjustment, Purchaser's entitlement under Section 1.4 to
Hydrocarbon production from or attributable to the Leases, Units and Wells
during the Adjustment Period, and to the value of other income, proceeds,
receipts and credits earned with respect to the Assets during the Adjustment
Period, and Purchaser shall not have any separate rights to receive any
production or income, proceeds, receipts and credits with respect to which an
adjustment has been made. Similarly, the adjustment described in Section 2.2(d)
shall serve to satisfy, up to the amount of the adjustment, Purchaser's
obligation under Section 1.4 to pay Property Costs and other costs attributable
and the ownership to operation of the Assets which are incurred during the
Adjustment Period, and Purchaser shall not be separately obligated to pay for
any Property Costs or other such costs with respect to which an adjustment has
been made.

      SECTION 2.3 ALLOCATION OF PURCHASE PRICE.

      SCHEDULE 2.3 sets forth the agreed allocation of the unadjusted Purchase
Price among each of the Assets, which has been made in compliance with the
principles of Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury regulations thereunder. The "Allocated Value" for any
Asset equals the portion of the unadjusted Purchase Price allocated to such
Asset on SCHEDULE 2.3, increased or decreased as described in this Section.
Seller has accepted such Allocated Values for purposes of this Agreement and the
transactions contemplated hereby, but otherwise makes no representation or
warranty as to the accuracy of such values. Seller and Purchaser agree (i) that
the Allocated Values shall be used by Seller and Purchaser as the basis for
reporting asset values and other items for purposes of all federal, state, and
local Tax returns, including without limitation Internal Revenue Service Form
8594 and (ii) that neither they nor their Affiliates will take positions
inconsistent with the Allocated Values in notices to government authorities, in
audit or other proceedings with respect to Taxes, in notices to preferential
purchaser right holders, or in other documents or notices relating to the
transactions contemplated by this Agreement.

                                       6

<Page>

                             ARTICLE 3 TITLE MATTERS

      SECTION 3.1 SELLER'S TITLE.

            (a) Seller represents and warrants to Purchaser that Seller's title
      to the Sold Percentage interest of the Leases, Wells and Units shown on
      EXHIBIT A-1 as of the Effective Time is (and as of the Title Claim Date
      shall be) Defensible Title as defined in Section 3.2.

            (b) The conveyances to be delivered by Seller to Purchaser shall be
      substantially in the forms attached hereto as EXHIBIT B (the
      "Conveyances") and contain a special warranty of title by, through and
      under Seller (as relates to the Properties only), subject to the Permitted
      Encumbrances, but shall otherwise be without warranty of title, express,
      implied or statutory, except that such conveyances shall transfer to
      Purchaser all rights or actions on title warranties given or made by
      Seller's predecessors (other than Affiliates of Seller), to the extent
      that Seller may legally transfer such rights.

            (c) Purchaser shall not be entitled to protection under Seller's
      special warranty of title in the Conveyances against any Title Defect
      reported under this Article 3.

      SECTION 3.2 DEFINITION OF DEFENSIBLE TITLE.

      As used in this Agreement, the term "Defensible Title" means that title of
the Seller which, subject to Permitted Encumbrances:

            (a) Entitles Seller to receive throughout the duration of the
      productive life of any Lease, Unit or Well (after satisfaction of all
      royalties, overriding royalties, nonparticipating royalties, net profits
      interests or other similar burdens on or measured by production of oil and
      gas), not less than the "net revenue interest" share shown in SCHEDULE 1.0
      of all oil, gas and other minerals produced, saved and marketed from such
      Lease, Unit or Well, except decreases in connection with those operations
      in which Seller may be a nonconsenting co-owner, decreases resulting from
      the establishment or amendment of pools or units, and decreases required
      to allow other working interest owners to make up past underproduction or
      pipelines to make up past under deliveries and except as stated in such
      SCHEDULE 1.0;

            (b) Obligates Seller to bear a percentage of the costs and expenses
      for the maintenance and development of, and operations relating to, any
      Lease, Unit or Well not greater than the "working interest" shown in
      SCHEDULE 1.0 without increase throughout the productive life of such
      Lease, Unit or Well, except as stated in EXHIBIT A-1 and except increases
      resulting from contribution requirements with respect to defaulting
      co-owners under applicable operating agreements and increases that are
      accompanied by at least a proportionate increase in Seller's net revenue
      interest; and

            (c)   Is free and clear of liens, encumbrances, obligations or
      defects.

                                       7

<Page>

      As used in this Agreement, the term "Title Defect" means any lien, charge,
encumbrance, obligation, or defect (including without limitation a discrepancy
in net revenue interest or working interest) that causes a breach of Seller's
representation and warranty in Section 3.1.

      SECTION 3.3 DEFINITION OF PERMITTED ENCUMBRANCES.

      As used herein, the term "Permitted Encumbrances" means any or all of the
following:

            (a) Lessors' royalties and any overriding royalties, reversionary
      interests and other burdens to the extent that they do not, individually
      or in the aggregate, reduce Seller's net revenue interests below that
      shown in SCHEDULE 1.0 for Seller or increase Seller's working interest
      above that shown in SCHEDULE 1.0 without a corresponding increase in the
      net revenue interest for Seller;

            (b) All leases, unit agreements, pooling agreements, operating
      agreements, production sales contracts, division orders, participation
      agreements, letter agreements, exploration agreements, and other
      contracts, agreements and instruments applicable to the Assets (whether
      recorded or unrecorded) to the extent that they do not, individually or in
      the aggregate, reduce Seller's net revenue interests below that shown in
      SCHEDULE 1.0 for Seller or increase Seller's working interest above that
      shown in SCHEDULE 1.0 without a corresponding increase in the net revenue
      interest for Seller;

            (c)   Subject to compliance with Section 6.5, preferential rights
      to purchase the Assets;

            (d)   Subject to compliance with Section 6.5, third-party consent
      requirements and similar restrictions;

            (e)   Liens for current Taxes or assessments not yet delinquent
      or, if delinquent, being contested in good faith by appropriate actions;

            (f) Materialman's, mechanic's, repairman's, employee's,
      contractor's, operator's and other similar liens or charges arising in the
      ordinary course of business for amounts not yet delinquent (including any
      amounts being withheld as provided by Law), or if delinquent, being
      contested in good faith by appropriate actions;

            (g) All rights to consent by, required notices to, filings with, or
      other actions by Governmental Bodies in connection with the sale or
      conveyance of oil and gas leases or interests therein if they are
      customarily obtained subsequent to the sale or conveyance;

            (h)   Rights of reassignment arising upon final intention to
      abandon or release the Assets, or any of them;

            (i)   Easements, rights-of-way, servitudes, permits, surface
      leases and other rights in respect of surface operations;

            (j) All rights reserved to or vested in any Governmental Body to
      control or regulate any of the Assets in any manner and all obligations
      and duties under all

                                       8

<Page>

      applicable laws, rules and orders of any such Governmental Body or under
      any franchise, grant, license or permit issued by any such Governmental
      Body;

            (k) Any encumbrance on or affecting the Assets which is expressly
      assumed, bonded or paid by Purchaser at the Closing Date or which is
      discharged by Seller at or prior to the Closing; and

            (l) Any other liens, charges, encumbrances, defects or
      irregularities which do not, individually or in the aggregate, materially
      detract from the value of or materially interfere with the use or
      ownership of the Assets subject thereto or affected thereby (as currently
      used or owned) and which would be accepted by a reasonably prudent
      purchaser engaged in the business of owning and operating oil and gas
      properties.

      SECTION 3.4 NOTICE OF TITLE DEFECTS; DEFECT ADJUSTMENTS.

            (a) To assert a claim arising out of a breach of Section 3.1,
      Purchaser must deliver a claim notice (a "Title Claim Notice") to Seller
      on or before the 90th day following the Closing Date (the "Title Claim
      Date"). Such notice shall be in writing and shall include (i) a
      description of the alleged Title Defect(s), (ii) the Leases, Units or
      Wells affected, (iii) the Allocated Values of the Leases, Units or Wells
      subject to the alleged Title Defect(s), (iv) supporting documents
      reasonably necessary for Seller (as well as any title attorney or examiner
      hired by Seller) to verify the existence of the alleged Title Defect(s),
      (v) the amount by which Purchaser reasonably believes the Allocated Values
      of those Leases, Units or Wells are reduced by the alleged Title Defect(s)
      and the computations and information upon which Purchaser's belief is
      based, and (vi) the amounts, if any, which Purchaser believes is
      applicable to Seller. Purchaser shall be deemed to have waived all
      breaches of Section 3.1 of which Seller has not been given notice on or
      before the Title Claim Date.

            (b) Seller shall attempt, at Seller's sole cost, to cure or remove
      on or before the 30th day following receipt of any Title Claim Notice any
      Title Defects of which it has been advised by Purchaser. If the Title
      Defect is not cured to Purchaser's reasonable satisfaction within such
      period, the Purchase Price shall be reduced by an amount (the "Title
      Defect Amount") equal to the reduction in the Allocated Value for such
      Lease, Unit or Well caused by such Title Defects, as determined pursuant
      to Section 3.4(e).

            (c) With respect to each Lease, Unit or Well affected by Title
      Defects reported under Section 3.4(a) and not cured during the period
      permitted under Section 3.4(b), the Purchase Price shall be reduced by the
      Title Defect Amount equal to the reduction in the Allocated Value for such
      Lease, Unit or Well caused by such uncured Title Defects, as determined
      pursuant to Section 3.4(e).

            (d) Sections 3.4(b) and (c) shall be the exclusive right and remedy
      of Purchaser with respect to Seller's breach of its warranty and
      representation in Section 3.1.

            (e) The Title Defect Amount resulting from a Title Defect shall be
      determined as follows:

                                       9

<Page>

                  (i)   if Purchaser and Seller agree on the Title Defect
            Amount, that amount shall be the Title Defect Amount;

                  (ii) if the Title Defect is a lien, encumbrance or other
            charge which is undisputed and liquidated in amount, then the Title
            Defect Amount shall be the amount necessary to be paid to remove the
            Title Defect from the affected Lease, Unit or Well;

                  (iii) if the Title Defect represents a discrepancy between (A)
            the net revenue interest for any Lease, Unit or Well and (B) the net
            revenue interest or percentage stated on SCHEDULE 1.0, then the
            Title Defect Amount shall be the product of the Allocated Value of
            such Lease, Unit or Well multiplied by a fraction, the numerator of
            which is the net revenue interest or percentage ownership decrease
            and the denominator of which is the net revenue interest or
            percentage ownership stated on SCHEDULE 1.0;

                  (iv) if the Title Defect represents an obligation,
            encumbrance, burden or charge upon or other defect in title to the
            affected Lease, Unit or Well of a type not described in subsections
            (i), (ii) or (iii) above, the Title Defect Amount shall be
            determined by taking into account the Allocated Value of the Lease,
            Unit or Well so affected, the portion of the Lease, Unit or Well
            affected by the Title Defect, the legal effect of the Title Defect,
            the potential economic effect of the Title Defect over the life of
            the affected Lease, Unit or Well, the values placed upon the Title
            Defect by Purchaser and Seller and such other factors as are
            necessary to make a proper evaluation; and

                  (v) notwithstanding anything to the contrary in this Article
            3, the aggregate Title Defect Amounts attributable to the effects of
            all Title Defects upon any given Unit or Well shall not exceed the
            Allocated Value of such Lease, Unit or Well.

            (f) Seller and Purchaser shall attempt to agree on all Title Defect
      Amounts by five (5) Business Days prior to the Final Settlement Date. If
      Seller and Purchaser are unable to agree by that date, the Title Defect
      Amounts in dispute shall be exclusively and finally resolved by
      arbitration pursuant to this Section 3.4(f). During the 10-day period
      following the Final Settlement Date, Title Defect Amounts in dispute shall
      be submitted to a title attorney with at least 10 years' experience in oil
      and gas titles in the State of Texas as selected by mutual agreement of
      Purchaser and Seller or absent such agreement during the 10-day period, by
      the Houston office of the American Arbitration Association (the "Title
      Arbitrator"). The arbitration proceeding shall be held in Houston, Texas
      and shall be conducted in accordance with the Commercial Arbitration Rules
      of the American Arbitration Association, to the extent such rules do not
      conflict with the terms of this Section. The Title Arbitrator's
      determination shall be made within 45 days after submission of the matters
      in dispute and shall be final and binding upon all Parties, without right
      of appeal. In making his determination, the Title Arbitrator shall be
      bound by the rules set forth in Section 3.4(e) and may consider such other
      matters as in the opinion of the Title Arbitrator are necessary or helpful
      to make a proper determination.

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      Additionally, the Title Arbitrator may consult with and engage
      disinterested third parties to advise the arbitrator, including without
      limitation title attorneys from other states and petroleum engineers. The
      Title Arbitrator shall act as an expert for the limited purpose of
      determining the specific disputed Title Defect Amounts submitted by any
      Party and may not award damages, interest or penalties to either party
      with respect to any matter. Seller and Purchaser shall each bear their
      own legal fees and other costs of presenting their respective cases.
      Purchaser shall bear one-half of the costs and expenses of the Title
      Arbitrator and Seller shall bear the other half.

            (g) Any single asserted Title Defect that has a value of less than
      Ten Thousand Dollars ($10,000.00) will not be considered in the
      calculation of adjustments to the Purchase Price.

      SECTION 3.5 LIMITATIONS ON APPLICABILITY.

      The representation and warranty in Section 3.1 shall terminate as of the
Title Claim Date and shall have no further force and effect thereafter, provided
there shall be no termination of Purchaser's or Seller's rights under Section
3.4 with respect to any bona fide Title Defect claim properly reported on or
before the Title Claim Date. Thereafter, Purchaser's sole and exclusive rights
and remedies with regard to title to the Assets shall be as set forth in, and
arise under, the Conveyance transferring the Assets from Seller to Purchaser.

              ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER

      SECTION 4.1 DISCLAIMER.

            (a) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 3 OR THIS
      ARTICLE 4, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER
      EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
      TO (I) TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE
      OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING
      CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING
      TO THE ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF PETROLEUM
      SUBSTANCES IN OR FROM THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE
      ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE PRODUCTION OF
      PETROLEUM SUBSTANCES FROM THE ASSETS, OR WHETHER PRODUCTION HAS BEEN
      CONTINUOUS, OR IN PAYING QUANTITIES, (VI) THE MAINTENANCE, REPAIR,
      CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, OR
      (VII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE
      OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
      AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE
      TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
      PRESENTATION RELATING THERETO, AND SELLER FURTHER DISCLAIMS ANY
      REPRESENTATION OR WARRANTY,

                                       11

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      EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
      OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT IT BEING
      EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT PURCHASER
      SHALL BE DEEMED TO BE OBTAINING EQUIPMENT IN ITS PRESENT STATUS,
      CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS AND
      THAT PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS
      PURCHASER DEEMS APPROPRIATE.

            (b) Subject to the foregoing provision of Section 4.1, and the other
      terms and conditions of this Agreement, Seller represents and warrants to
      Purchaser the matters set out in Sections 4.2 through 4.20.

      SECTION 4.2 EXISTENCE AND QUALIFICATION.

      Seller represents and warrants that it is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified or licensed to do business and is in good
standing in the State of Texas.

      SECTION 4.3 POWER.

      Seller has all requisite power and authority to carry on its business as
presently conducted, to enter into and perform this Agreement and the other
documents and agreements contemplated hereby, to sell the Assets on the terms
described in this Agreement, and to perform its other obligations under this
Agreement and the other documents and agreements contemplated hereby.

      SECTION 4.4 AUTHORIZATION AND ENFORCEABILITY.

      The execution, delivery and performance of this Agreement, and the
performance of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller (and all documents
required hereunder to be executed and delivered by Seller at the Closing will be
duly executed and delivered by Seller) and this Agreement constitutes, and at
the Closing such documents will constitute, the valid and binding obligations of
Seller, enforceable in accordance with their terms except as such enforceability
may be limited by applicable bankruptcy or other similar Laws affecting the
rights and remedies of creditors generally as well as to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).

      SECTION 4.5 NO CONFLICTS.

      Subject to the preferential purchase rights and restrictions on assignment
set forth on SCHEDULE 4.17, and to rights to consent by, required notices to,
and filings with or other actions by Governmental Bodies where the same are
customarily obtained subsequent to the assignment of oil and gas interests, the
execution, delivery and performance of this Agreement by Seller, and the
transactions contemplated by this Agreement will not (i) violate any provision
of, or require the consent of any Person under, the certificate of incorporation
or bylaws of Seller, (ii) conflict

                                       12

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with, result in a breach of, constitute a default under (without regard to
requirements of notice or the lapse of time or both), accelerate or permit
the acceleration of the performance required by, or require any consent,
authorization, or approval under, or cause the creation of any lien or
encumbrance or give rise to any right of termination or cancellation under,
any of the terms, condition or provisions of any note, bond, mortgage, credit
agreement, indenture, lease, contract, license or other agreement to which
Seller is a party or which affect the Assets, (iii) violate any judgment,
order, ruling, or decree applicable to Seller as a party in interest, (iv)
violate any Laws applicable to Seller or any of the Assets, or (v) require
any filing with, notification of or consent, approval or authorization of any
Governmental Body.

      SECTION 4.6 LIABILITY FOR BROKERS' FEES.

      Purchaser shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of Seller, for
brokerage fees, finder's fees, agent's commissions or other similar forms of
compensation in connection with this Agreement or the transactions contemplated
hereby.

      SECTION 4.7 LITIGATION.

      As of the date of execution of this Agreement, except as set forth in
SCHEDULE 4.7, there are no actions, suits or proceedings pending, or to Seller's
knowledge threatened in writing, before any Governmental Body with respect to
the Assets.

      SECTION 4.8 TAXES AND ASSESSMENTS.

      Seller has timely filed, or caused to be filed, all Tax returns required
to be filed with respect to the Assets. All Taxes, assessments and charges by
Governmental Bodies which are due and payable by Seller with respect to the
Assets have been paid, other than those Taxes, assessments and charges by
Governmental Bodies being contested in good faith for which an adequate reserve
has been established. Except as set forth in SCHEDULE 4.8, there are no pending
or, to the knowledge of Seller, threatened audits, actions, proceedings or
investigations with respect to Taxes payable with respect to the Assets. There
are no outstanding waivers or agreements which would extend the statutory period
in which a taxing authority may assess or collect a Tax with respect to the
Assets for which Purchaser could have any liability.

      SECTION 4.9 ENVIRONMENTAL LAWS.

      Except as set forth in SCHEDULE 4.9 or the other schedules hereto, the
Leases are and have been operated in compliance with all applicable
Environmental Laws. To the best of Seller's knowledge after due inquiry, there
has been no contamination of groundwater, surface water or soil on the Leases
resulting from Seller's operations thereon, or, to Seller's knowledge, on any
portion of the Assets resulting from the operations of any other Person, which
in either case required remediation on or before the date of this Agreement
under applicable Environmental Laws but which has not been remediated.

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      SECTION 4.10      SAFETY AND HEALTH.

      The Leases have been operated in compliance with all Laws addressing the
safety and/or health of employees, including but not limited to the Occupational
Safety and Health Act, 29 U.S.C.A. Section 651, et seq., and the regulations
promulgated pursuant thereto, except where a failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect.

      SECTION 4.11      OUTSTANDING CAPITAL COMMITMENTS.

      There are no outstanding AFEs or other commitments to make capital
expenditures which are binding on Seller's Assets which Purchaser has not
executed in counterpart as of the date this Agreement is executed and which
Seller reasonably anticipates will individually require future expenditures by
the owner of the Assets in excess of $25,000 other than those shown on SCHEDULE
4.11 hereto.

      SECTION 4.12      COMPLIANCE WITH LAWS.

      Except as disclosed on SCHEDULE 4.12, and except with respect to
Environmental Laws, which are addressed exclusively in Section 4.9, and employee
health and safety laws, which are addressed exclusively in Section 4.10, the
Leases have been owned, developed, operated and maintained in compliance with
all applicable Laws, and there are no judgments, injunctions, court or
administrative determinations by Governmental Bodies specifically rendered
against or affecting the Assets.

      SECTION 4.13      CONTRACTS.

      Except as disclosed on the SCHEDULE 4.13, the Contracts are in full force
and effect and, to the knowledge of Seller, no third party to any Contract has
prepaid any amounts due thereunder. Seller has not waived its remedies for
default by, or expressly waived any other rights against, a third party under
any Contract. To the knowledge of Seller, Seller and each other party thereto
have made all payments due under the Contracts, except those being contested in
good faith, and have performed all of its obligations under such Contracts,
except for such failures to make payments or perform obligations which would
not, individually or in the aggregate, have a Material Adverse Effect. Except as
otherwise disclosed on SCHEDULE 4.13, to the knowledge of Seller, Seller has not
given to or received from any third party any proposals or threats to cancel,
revise or fail to renew any Contract or fail to renew, cancel or revise any
easement since the Effective Time. Seller has paid its share of all costs
payable by it under the Leases and Contracts to which Seller is a party, except
those being contested in good faith. Seller is not, nor to the knowledge of
Seller is any other party, in default under any Contract to which Seller is a
party except as disclosed on SCHEDULE 4.13 and except such defaults as would
not, individually or the aggregate, have a Material Adverse Effect. Except as
disclosed in SCHEDULE 4.13, there are no Contracts with Affiliates of Seller
which will be binding on the Assets after the Closing.

      SECTION 4.14      PAYMENTS FOR PRODUCTION.

      Except as disclosed in SCHEDULE 4.14, there are no proceeds from the sale
of Hydrocarbons attributable to Seller's interest in the Properties. As of the
Effective Time, Seller was not holding in suspense any proceeds from the sale of
Hydrocarbons from the Leases.

                                       14

<Page>

Further, Seller is not obligated by virtue of a take or pay payment, advance
payment or other similar payment (other than royalties, overriding royalties
and similar arrangements reflected on SCHEDULE 1.0), to deliver Hydrocarbons,
or proceeds from the sale thereof, attributable to the Properties at some
future time without receiving payment therefor at or after the time of
delivery.

      SECTION 4.15      GAS IMBALANCES.

      Except with respect to the Properties set forth on SCHEDULE 4.15, as of
the Effective Time, there are no gas or NGL imbalances with Seller's co-owners
in the Properties.

      SECTION 4.16      GOVERNMENTAL AUTHORIZATIONS.

      Except as disclosed on SCHEDULE 4.16, Seller possesses and at all times in
the past has possessed all federal, state and local governmental licenses,
permits, franchises, orders, exemptions, variances, waivers, authorizations,
certificates, consents, rights, privileges and applications therefor
("Governmental Authorizations") that are or have been necessary or required for
the ownership and operation of the Properties (including, but not limited to,
those required under Environmental Laws). Except as disclosed in SCHEDULE 4.7 or
SCHEDULE 4.16 and except as would not, individually or in the aggregate, have a
Material Adverse Effect, (i) Seller has owned and operated the Properties in
accordance with the conditions and provisions of such Governmental
Authorizations, and (ii) no notices of violation have been received by Seller,
and no proceedings are pending or, to Seller's knowledge, threatened in writing
that might result in any modification, revocation, termination or suspension of
any such Governmental Authorizations or which would require any corrective or
remediation action by Seller.

      SECTION 4.17      CONSENTS AND PREFERENTIAL PURCHASE RIGHTS.

      None of the Assets, or any portion thereof, is subject to any preferential
rights to purchase or restrictions on assignment or required third-party
consents to assignment, which may be applicable to the transactions contemplated
by this Agreement, except for (i) governmental consents and approvals of
assignments that are customarily obtained after the Closing and (ii) all such
preferential rights, consents and restrictions as are set forth on SCHEDULE
4.17.

      SECTION 4.18      ABSENCE OF CERTAIN CHANGES.

      Except as set forth on SCHEDULE 4.18, since the Effective Time the Assets
have been operated in the ordinary course of business consistent with recent
practices and there has been no:

            (a)   material damage, destruction, or loss to the Assets
      (whether or not covered by insurance);

            (b) Material Adverse Effect on the operations, value or prospects of
      the Assets other than as a result of general or industry-wide conditions
      in the areas where the Assets are located.

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      SECTION 4.19      BANKRUPTCY.

      There are no bankruptcy, reorganization or arrangement proceedings
pending, being contemplated by or to the knowledge of Seller threatened against
Seller or any Affiliate of Seller.

      SECTION 4.20      DEVELOPMENT STATUS.

      There are no oil, gas, water, carbon dioxide or injection wells located on
the Leases.

            ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER

      Purchaser represents and warrants to Seller the following:

      SECTION 5.1 EXISTENCE AND QUALIFICATION.

      Purchaser is a corporation organized, validly existing and in good
standing under the laws of the state of its incorporation and Purchaser is duly
qualified to do business and is in good standing in the State of Texas.

      SECTION 5.2 POWER.

      Purchaser has the corporate power to enter into and perform this Agreement
and consummate the transactions contemplated by this Agreement.

      SECTION 5.3 AUTHORIZATION AND ENFORCEABILITY.

      The execution, delivery and performance of this Agreement, and the
performance of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser (and all documents
required hereunder to be executed and delivered by Purchaser at the Closing will
be duly executed and delivered by Purchaser) and this Agreement constitutes, and
at the Closing such documents will constitute, the valid and binding obligations
of Purchaser, enforceable in accordance with their terms except as such
enforceability may be limited by applicable bankruptcy or other similar laws
affecting the rights and remedies of creditors generally as well as to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

      SECTION 5.4 NO CONFLICTS.

      The execution, delivery and performance of this Agreement by Purchaser,
and the transactions contemplated by this Agreement will not (i) violate any
provision of, or require the consent of any Person under, the certificate of
incorporation or bylaws of Purchaser, (ii) conflict with, result in a breach of,
constitute a default under (without regard to requirements of notice or the
lapse of time or both), accelerate or permit the acceleration of the performance
required by, or require any consent, authorization, or approval under, or cause
the creation of any lien or encumbrance or give rise to any right of termination
or cancellation under, any of the terms, conditions or provisions of any note,
bond, mortgage, credit agreement, indenture, lease, contract, license or other
agreement to which Purchaser is a party, (iii) violate any judgment,

                                       16

<Page>

order, ruling, or regulation applicable to Purchaser as a party in interest,
or (iv) violate any Law applicable to Purchaser or any of its assets, or (v)
require any filing with, notification of or consent, approval or
authorization of any Governmental Body or authority, except any matters
described in clauses (ii), (iii), (iv) or (v) above which would not have a
material adverse effect on Purchaser.

      SECTION 5.5 LIABILITY FOR BROKERS' FEES.

      Seller shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of Purchaser,
for brokerage fees, finder's fees, agent's commissions or other similar forms
of compensation in connection with this Agreement or any agreement or
transaction contemplated hereby.

      SECTION 5.6 LITIGATION.

      As of the date of the execution of this Agreement, there are no actions,
suits or proceedings pending, or to Purchaser's knowledge, threatened in writing
before any Governmental Body against Purchaser or any subsidiary of Purchaser
which are reasonably likely to impair materially Purchaser's ability to perform
its obligations under this Agreement.

      SECTION 5.7 FINANCING.

      Purchaser has sufficient cash, available lines of credit or other sources
of immediately available funds (in United States dollars) to enable it to pay
the Closing Payment to Seller at the Closing.

      SECTION 5.8 INDEPENDENT INVESTIGATION.

      Purchaser acknowledges and affirms that (i) it has completed its
independent investigation, verification, analysis and evaluation of the Assets
and (ii) it has made all such reviews and inspections of the Assets as it has
deemed necessary or appropriate. Except for the representations and warranties
expressly made by Seller in Articles 3 and 4 of this Agreement, or in any
certificate furnished or to be furnished to Purchaser pursuant to this
Agreement, Purchaser acknowledges that there are no representations or
warranties, express or implied, as to the Assets or prospects thereof, and that
in making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser has relied solely upon its own
independent investigation, verification, analysis and evaluation.

                       ARTICLE 6 COVENANTS OF THE PARTIES

      SECTION 6.1 GOVERNMENT REVIEWS.

      Seller and Purchaser shall in a timely manner (a) make all required
filings, if any, with and prepare applications to and conduct negotiations with,
each governmental agency as to which such filings, applications or negotiations
are necessary or appropriate in the consummation of the transactions
contemplated hereby, and (b) provide such information as each may reasonably
request to make such filings, prepare such applications and conduct such

                                       17

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negotiations. Each party shall cooperate with and use all reasonable efforts
to assist the other with respect to such filings, applications and
negotiations.

      SECTION 6.2 LETTERS-IN-LIEU; ASSIGNMENTS; OPERATORSHIP.

            (a) Seller will execute on the Closing Date Letters in Lieu of
      Division and Transfer Orders relating to its respective Assets on forms
      approved by Purchaser to reflect the transactions contemplated hereby.

            (b) Seller will use all commercially reasonable efforts to cause
      Purchaser, effective as of the Closing Date, to be appointed Operator of
      all Leases operated by Seller, including to the extent applicable and to
      the extent permitted by applicable operating agreements, the execution of
      a Form P-4 naming Purchaser as Operator. Promptly after the execution of
      this Agreement, Seller shall send letters to all other parties to
      applicable operating agreements, recommending that Purchaser be appointed
      as successor operator, effective at the Closing, and asking for such
      parties' votes in favor of this proposal. In addition, Seller shall in
      writing record its vote in favor of this proposal. Seller shall use all
      commercially reasonable efforts to obtain prompt favorable responses from
      as many parties as possible. At the Closing, Purchaser shall execute a
      Form P-4 naming Purchaser as Operator of the Leases.

      SECTION 6.3 AREA OF MUTUAL INTEREST AGREEMENT.

      Seller and Purchaser will execute at the Closing an Area of Mutual
Interest Agreement in a form mutually agreeable to both Parties covering the
lands depicted on EXHIBITS C-1 and C-2 (the "AMI Agreement").

      SECTION 6.4 GAS AND NGL IMBALANCES.

      After the Closing, Purchaser expressly assumes any and all obligations
attributable to gas and NGL production imbalances with co-owners of the
Properties. Should Purchaser discover any inaccuracy in SCHEDULE 4.15 prior to
the submission of Purchaser's written report pursuant to Section 8.4(b),
Purchaser may assert a claim for an adjustment under this Section by delivering
a claim notice to Seller. In the event that it is determined that there is an
inaccuracy in the gas or NGL imbalances set forth on SCHEDULE 4.15, then an
adjustment to the Purchase Price, at the rate of $1.50 per MMBtu or equivalent,
will be made as follows:

            (a) Should Seller's total net gas or NGL overproduction imbalance
      increase, then the Purchase Price shall be reduced by the net change in
      the total imbalance times $1.50 per MMBtu or equivalent; or

            (b) Should Seller's total net gas or NGL overproduction imbalance
      decrease, then the Purchase Price shall be increased by the net change in
      the total imbalance times $1.50 per MMBtu or equivalent.

      This Section 6.4 provides the exclusive remedy for any breach of Seller's
representation in Section 4.15 and any affirmation of such representation in the
certificate of Seller delivered

                                       18

<Page>

pursuant to Section 8.2(d). Purchaser shall be deemed to have waived any
breaches of Section 4.15 if Seller has not been given timely written notice.

      SECTION 6.5 CONSENTS AND PREFERENTIAL RIGHTS.

      Promptly following the date of this Agreement, Seller shall prepare and
send (i) notices to the holders of any required consents to assignment which are
set forth on SCHEDULE 4.17 requesting such consents and (ii) notices to the
holders of any applicable preferential rights to purchase which are set forth on
SCHEDULE 4.17 requesting waivers of such preferential rights to purchase. The
consideration payable under this Agreement for any particular Well, Unit, Lease
or other Asset for purposes of preferential purchase right notices and consents
to assign shall be the Allocated Value for such Well, Unit, Lease or other
Asset. Title to the affected Assets shall not transfer, and the Conveyance and
associated portion of the Purchase Price shall not be delivered, until such
preferential right to purchase or consent to assign has been waived or granted
(as applicable) or the time for exercise of the same has expired. Seller shall,
at its sole expense, continue to use commercially reasonable efforts to obtain
the waiver of the preferential rights or the consent to assign and shall
continue to be responsible for the compliance therewith. Should the holder of a
preferential right exercise the same, Seller shall transfer the affected
Property to such holder on the terms and provisions set out herein and in the
applicable preferential right provision. In such event, Seller shall be entitled
to retain the consideration paid by the third party and the Purchase Price shall
be reduced by the Allocated Value for the affected Property. If the restriction
is waived or removed or consent is obtained or if the time limit otherwise set
forth relating to the preferential right expires, Seller and Purchaser shall
take all action necessary to ensure that the affected Assets are conveyed at the
Closing to Purchaser and the associated portion of the Purchase Price shall be
paid to Seller as part of the Closing Payment. Once the provisions set forth
above are satisfied and all obligations in connection therewith have been
fulfilled, the Closing shall be deemed to have occurred for all purposes
hereunder with respect to the affected Assets.

      SECTION 6.6 TAX MATTERS.

      Subject to the provisions of Section 11.3, Seller shall be responsible for
all Taxes (other than ad valorem, property, severance, production and similar
Taxes based upon or measured by the ownership or operation of the Assets or the
production of Hydrocarbons therefrom, which are addressed in Section 1.4) with
respect to the Assets owned by it attributable to any period of time at or prior
to the Closing, including without limitation income Taxes arising as a result of
the gain recognized on the transfer of such Assets, and Purchaser shall be
responsible for all such Taxes attributable to any period of time after the
Closing. Regardless of which party is responsible, Seller shall handle payment
to the appropriate Governmental Body of all Taxes with respect to the Assets
which are required to be paid prior to the Closing (and shall file all returns
with respect to such Taxes).

      SECTION 6.7 FURTHER ASSURANCES.

      After the Closing, Seller and Purchaser each agrees to take such further
actions and to execute, acknowledge and deliver all such further documents as
are reasonably requested by the

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<Page>

other party for carrying out the purposes of this Agreement or of any
document delivered pursuant to this Agreement.

      SECTION 6.8 CERTAIN COVENANTS OF SELLER.

      Seller agrees that until the Closing it: (i) will operate (or cause to be
operated) the Leases in the ordinary course of business consistent with past
practices; (ii) will not, without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, commit to any operation reasonably
anticipated by Seller to require future capital expenditures by the owner of the
Assets in excess of $25,000, or make any capital expenditures in excess of
$25,000 except for matters set forth in SCHEDULE 4.11, or terminate, materially
amend, execute or extend any material agreements affecting the Assets, (iii)
will maintain general insurance coverage on the Assets presently furnished by
nonaffiliated third parties in the amounts and of the types presently in force,
(iv) will use commercially reasonable efforts to maintain in full force and
effect all Leases, (v) will maintain all material Governmental Authorizations
affecting the Assets, (vi) subject to the provisions relating to reimbursement
of costs and expenses incurred after the Effective Time, will pay or cause to be
paid its pre-Effective Time working interest share of all costs and expenses in
connection therewith (except where being contested in good faith), and (vii)
will not sell, transfer, hypothecate, encumber or otherwise dispose of its
interests in any portion of the Assets.

                         ARTICLE 7 CONDITIONS TO CLOSING

      SECTION 7.1 CONDITIONS OF SELLER TO CLOSING.

      The obligations of Seller to consummate the transactions contemplated by
this Agreement are subject, at the option of Seller, to the satisfaction on or
prior to the Closing of each of the following conditions:

            (a)   REPRESENTATIONS.  The representations and warranties of
      Purchaser set forth in Article 5 shall be true and correct in all
      material respects as of the date of this Agreement and as of the
      Closing Date as though made on and as of the Closing Date;

            (b)   PERFORMANCE.  Purchaser shall have performed and observed,
      in all material respects, all covenants and agreements to be performed
      or observed by it under this Agreement prior to or on the Closing Date;

            (c)   PENDING LITIGATION.  No suit, action or other proceeding by
      a third party (including any Governmental Body) seeking to restrain,
      enjoin or otherwise prohibit the consummation of the transactions
      contemplated by this Agreement shall be pending before any Governmental
      Body;

            (d)   DELIVERIES.   Purchaser shall have delivered to Seller duly
      executed counterparts of the Conveyances and the other documents and
      certificates to be delivered by Purchaser under Section 8.3;

            (e)   PAYMENT.  Purchaser shall have paid the Closing Payment.

                                       20

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      SECTION 7.2 CONDITIONS OF PURCHASER TO CLOSING.

      The obligations of Purchaser to consummate the transactions contemplated
by this Agreement are subject, at the option of Purchaser, to the satisfaction
on or prior to the Closing of each of the following conditions:

            (a) REPRESENTATIONS. The representations and warranties of Seller
      set forth in Article 4 shall be true and correct as of the date of this
      Agreement and as of the Closing Date as though made on and as of the
      Closing Date (other than representations and warranties that refer to a
      specified date which need only be true and correct on and as of such
      specified date);

            (b)   PERFORMANCE.  Seller shall have performed and observed, in
      all material respects, all covenants and agreements to be performed or
      observed by it under this Agreement prior to or on the Closing Date;

            (c)   PENDING LITIGATION.  No suit, action or other proceeding by
      a third party (including any Governmental Body) seeking to restrain,
      enjoin or otherwise prohibit the consummation of the transactions
      contemplated by this Agreement shall be pending before any Governmental
      Body;

            (d)   DELIVERIES.  Seller shall have delivered to Purchaser duly
      executed counterparts of the Conveyances and the other documents and
      certificates to be delivered by Seller under Section 8.2; and

            (e) CONSENTS. Seller shall have obtained all required consents to
      assignment which are set forth on SCHEDULE 4.17 for the Leases unless
      otherwise waived in writing by Purchaser.

                                ARTICLE 8 CLOSING

      SECTION 8.1 TIME AND PLACE OF CLOSING.

      Consummation of the purchase and sale transaction as contemplated by this
Agreement (the "Closing"), shall, unless otherwise agreed to in writing by
Purchaser and Seller, take place at the offices of Baker Botts L.L.P. located at
One Shell Plaza, 910 Louisiana, Houston, Texas, 77002 at 10:00 a.m., local time,
on the Closing Date.

      SECTION 8.2 OBLIGATIONS OF SELLER AT CLOSING.

      At the Closing, upon the terms and subject to the conditions of this
Agreement, Seller shall deliver or cause to be delivered to Purchaser, among
other things, the following:

            (a)   Conveyances of the Assets, in sufficient duplicate
      originals to allow recording in all appropriate jurisdictions and
      offices, duly executed by Seller;

            (b) a copy of the executed Partial Release of Lien and Security
      Interest, which form is acceptable to Purchaser in its reasonable
      discretion, releasing the Properties from

                                      21
<Page>

      all Deeds of Trust liens and security interests on file in the county
      records of Matagorda County, Texas, that burden Seller's interest in
      the Properties, including without limitation that certain First
      Amendment to Amended and Restated Mortgage, Deed of Trust, Assignment,
      Security Agreement, Financing Statement and Fixture Filing from Esenjay
      Exploration, Inc. and Frontier Acquisition Corporation to Greg Maroney,
      Trustee, and Sandra Bell, Trustee and Deutsche Bank AG, New York and/or
      Cayman Island Branch, recorded at File No. 012857, Volume 616, Page 800,
      on April 30, 2001;

            (c)   letters-in-lieu of transfer orders covering the Assets,
      duly executed by Seller;

            (d) a certificate duly executed by an authorized corporate officer
      of Seller, dated as of the Closing, certifying on behalf of Seller that
      the conditions set forth in Sections 7.2(a) and 7.2(b) have been
      fulfilled;

            (e) a certificate duly executed by the secretary or any assistant
      secretary of Seller, dated as of the Closing, (i) attaching, and
      certifying on behalf of Seller as complete and correct, copies of (A) an
      extract of the resolutions of the Board of Directors of Seller authorizing
      the execution, delivery and performance by Seller of this Agreement and
      the transactions contemplated hereby and (B) any required approval by the
      stockholders of Seller of this Agreement and the transactions contemplated
      hereby and (ii) certifying on behalf of Seller the incumbency of each
      officer of Seller executing this Agreement or any document delivered in
      connection with the Closing;

            (f) an executed statement described in Treasury Regulation Section
      1.1445-2(b)(2) certifying that Seller is not a foreign person within the
      meaning of the Code;

            (g)   Form P-4s transferring operatorship of all Leases which are
      operated by Seller to Purchaser;

            (h) an original (which may include facsimile counterparts if so
      permitted by the Consent to Assign) Consent to Assign in a form or forms
      approved by Purchaser and executed by all of the lessors under the Leases
      set forth on SCHEDULE 4.17, granting such Lessors' consent to the
      assignment of the Leases as contemplated by this Agreement; and

            (i)   the AMI Agreement, duly executed by Seller.

      SECTION 8.3 OBLIGATIONS OF PURCHASER AT CLOSING.

      At the Closing, upon the terms and subject to the conditions of this
Agreement, Purchaser shall deliver or cause to be delivered to Seller, among
other things, the following:

            (a)   a wire transfer of the Closing Payment in same-day funds to
      Seller;

            (b)   Conveyances of the Assets, duly executed by Purchaser;

            (c)   letters-in-lieu of transfer orders covering the Assets,
      duly executed by Purchaser;

                                      22
<Page>

            (d) a certificate by an authorized corporate officer of Purchaser,
      dated as of the Closing, certifying on behalf of Purchaser that the
      conditions set forth in Sections 7.1(a) and 7.1(b) have been fulfilled;

            (e) a certificate duly executed by the secretary or any assistant
      secretary of Purchaser, dated as of the Closing, (i) attaching, and
      certifying on behalf of Purchaser as complete and correct, copies of (A)
      an extract of the resolutions of the Board of Directors of Purchaser
      authorizing the execution, delivery and performance by Purchaser of this
      Agreement and the transactions contemplated hereby and (B) any required
      approval by the stockholders of Purchaser of this Agreement and the
      transactions contemplated hereby and (ii) certifying on behalf of
      Purchaser the incumbency of each officer of Purchaser executing this
      Agreement or any document delivered in connection with the Closing;

            (f)   Form P-4s transferring operatorship of all Leases which are
      operated by Seller to Purchaser;

            (g)   Copies of all documents necessary, if any, to allow
      Purchaser to assume operation of the Leases; and

            (h)   the AMI Agreement, duly executed by Purchaser.

      SECTION 8.4 CLOSING PAYMENT AND POST-CLOSING PURCHASE PRICE ADJUSTMENTS.

            (a) Not less than three (3) Business Days prior to the Closing,
      Seller shall deliver to Purchaser, using and based upon the best
      information available to Seller, a preliminary settlement statement
      estimating the Adjusted Purchase Price after giving effect to all Purchase
      Price adjustments set forth in Section 2.2. The estimate delivered in
      accordance with this Section 8.4(a) shall constitute the dollar amount to
      be paid by Purchaser to Seller at the Closing (the "Closing Payment").

            (b) As soon as reasonably practicable after the Closing but not
      later than the 90th day following the Closing Date, Purchaser shall
      prepare and deliver to Seller a statement setting forth the final
      calculation of the Adjusted Purchase Price and showing the calculation of
      each adjustment, based, to the extent possible on actual credits, charges,
      receipts and other items before and after the Effective Time. Purchaser
      and Seller shall supply reasonable documentation available to support any
      credit, charge, receipt or other item. As soon as reasonably practicable
      but not later than the 30th day following receipt of the statement
      hereunder, Seller shall deliver to Purchaser a written report containing
      any changes that it proposes be made to such Statement. The Parties shall
      undertake to agree on the final statement of the Adjusted Purchase Price
      no later than 150 days after the Closing Date (the "Final Settlement
      Date"). In the event that the Parties cannot reach agreement within such
      period of time, any Party may refer the remaining matters in dispute to
      Arthur Andersen LLP, or to a nationally-recognized independent accounting
      firm as may be accepted by Purchaser and Seller, for review and final
      determination. The accounting firm shall conduct the arbitration
      proceedings in Houston, Texas in accordance with the Commercial
      Arbitration Rules of the American

                                      23
<Page>

      Arbitration Association, to the extent such rules do not conflict with
      the terms of this Section. The accounting firm's determination shall be
      made within 30 days after submission of the matters in dispute and
      shall be final and binding on all Parties, without right of appeal. In
      determining the proper amount of any adjustment to the Purchase Price,
      the accounting firm shall not increase the Purchase Price more than the
      increase proposed by Seller nor decrease the Purchase Price more than
      the decrease proposed by Purchaser, as applicable. The accounting firm
      shall act as an expert for the limited purpose of determining the
      specific disputed matters submitted by any Party and may not award
      damages or penalties to any Party with respect to any matter. Seller
      and Purchaser shall each bear their own legal fees and other costs of
      presenting their respective cases. Purchaser shall bear one-half of the
      costs and expenses of the accounting firm and Seller shall bear the
      other half. Within 10 days after the earlier of (i) the expiration of
      Purchaser's 30-day review period without delivery of any written report
      or (ii) the date on which the Parties or the accounting firm, as
      applicable, finally determines the disputed matters, (x) Purchaser
      shall pay to Seller the amount by which the Adjusted Purchase Price
      exceeds the Closing Payment or (y) Seller shall pay to Purchaser the
      amount by which the Closing Payment exceeds the Adjusted Purchase
      Price, as applicable.

            (c) All payments made or to be made hereunder to Seller shall be by
      electronic transfer of immediately available funds to a bank and account
      specified in writing to Purchaser by Seller. All payments made or to be
      made hereunder to Purchaser shall be by electronic transfer of immediately
      available funds to a bank and account specified in writing to Seller by
      Purchaser.

                       ARTICLE 9 TERMINATION AND AMENDMENT

      SECTION 9.1 TERMINATION.

      This Agreement may be terminated at any time prior to the Closing: (i) by
the mutual prior written consent of Seller and Purchaser; (ii) by Purchaser, if
the Closing has not occurred on or before December 17, 2001; or (iii) by
Purchaser pursuant to Section 10.7, provided, however, that no Party shall be
entitled to terminate this Agreement under Section 9.1(ii) if the Closing has
failed to occur because such Party negligently or willfully failed to perform or
observe in any material respect its covenants and agreements hereunder.

      SECTION 9.2 EFFECT OF TERMINATION.

      If this Agreement is terminated pursuant to Section 9.1, this Agreement
shall become void and of no further force or effect (except for the provisions
of Sections 4.6, 5.5, and 11.4 which shall continue in full force and effect)
and Seller shall be free immediately to enjoy all rights of ownership of the
Assets and to sell, transfer, encumber or otherwise dispose of the Assets to any
party without any restriction under this Agreement. Notwithstanding anything to
the contrary in this Agreement, the termination of this Agreement under Section
9.1(ii) shall not relieve any Party from liability (including liability for
consequential damages) for any willful or negligent failure to perform or
observe in any material respect any of its agreements or covenants contained
herein which are to be performed or observed at or prior to the Closing. In the
event this Agreement terminates under Section 9.1(ii) and any Party has
willfully or negligently failed

                                      24
<Page>

to perform or observe in any material respect any of its agreements or
covenants contained herein which are to be performed at or prior to the
Closing, then Purchaser, in the case of a willful or negligent failure by
Seller, or Seller in the event of a willful or negligent failure by
Purchaser, shall be entitled to all remedies available at law or in equity,
including specific performance, to cause the failing party to close the
transaction contemplated by this Agreement and shall be entitled to recover
court costs and attorneys' fees in addition to any other relief to which such
Party maybe entitled. In the case of a willful failure or refusal of Seller
to close the transactions contemplated hereby after all conditions to close
have either been satisfied or waived by the Parties and Purchaser has given
Seller written notice of the Closing Date, Purchaser, at Purchaser's option,
shall have the right to demand and receive from Seller a lump sum stipulated
termination fee in the amount of Two Million Five Hundred Thousand Dollars
($2,500,000.00). The Parties stipulate and agree that Purchaser's actual
damages cannot be quantified with certainty and the stipulated termination
fee shall constitute agreed liquidated damages among the Parties in the case
of Seller's willful failure or refusal to close the transaction. Upon payment
of the termination fee by Seller to Purchaser, Purchaser shall be
conclusively deemed to have waived all other rights and remedies available
under this Section 9.2, released Seller from any and all obligations
hereunder, and this Agreement shall be terminated for all purposes.

      ARTICLE 10 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; LIMITATIONS

      SECTION 10.1  RECEIPTS.

      Except as otherwise provided in this Agreement, any production from or
attributable to the Assets (and all products and proceeds attributable thereto)
and any other income, proceeds, receipts and credits attributable to the Assets
which are not reflected in the adjustments to the Purchase Price following the
final adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
production from or attributable to the Assets (and all products and proceeds
attributable thereto) and all other income, proceeds, receipts and credits
earned with respect to the Assets to which Purchaser is entitled under Section
1.4 shall be the sole property and entitlement of Purchaser, and, to the extent
received by Seller, Seller shall fully disclose, account for and remit the same
promptly to Purchaser, and (b) all production from or attributable to the Assets
(and all products and proceeds attributable thereto) and all other income,
proceeds, receipts and credits earned with respect to the Assets to which Seller
is entitled under Section 1.4 shall be the sole property and entitlement of
Seller and, to the extent received by Purchaser, Purchaser shall fully disclose,
account for and remit the same promptly to Seller.

      SECTION 10.2  EXPENSES.

      Except as otherwise provided in this Agreement, any Property Costs which
are not reflected in the adjustments to the Purchase Price following the final
adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
Property Costs for which Seller is responsible under Section 1.4 shall be the
sole obligation of Seller and Seller shall promptly pay, or if paid by
Purchaser, promptly reimburse Purchaser for and hold Purchaser harmless from and
against same; and (b) all Property Costs for which Purchaser is responsible
under Section 1.4 shall be the sole obligation of Purchaser and Purchaser shall
promptly pay, or if paid by Seller, promptly

                                      25
<Page>

reimburse Seller for and hold Seller harmless from and against same. Seller
is entitled to resolve all joint interest audits and other audits of Property
Costs covering periods for which Seller is in whole or in part responsible,
provided that Seller shall not agree to any adjustments to previously
assessed costs for which Purchaser is liable without the prior written
consent of Purchaser, such consent not to be unreasonably withheld. Seller
shall provide Purchaser with a copy of all applicable audit reports and
written audit agreements received by Seller and relating to periods for which
Purchaser is partially responsible.

      SECTION 10.3  ASSUMPTION AND INDEMNIFICATION.

            (a) Without limiting Purchaser's rights to indemnity under this
      Article 10, after the Closing, Purchaser shall assume and hereby agrees to
      fulfill, perform, pay and discharge (or cause to be fulfilled, performed,
      paid or discharged) all of the obligations and liabilities of Seller,
      known or unknown, with respect to the Assets that arise or are
      attributable to that period of time on or after the Effective Time,
      including but not limited to obligations to plug wells and dismantle
      structures and to restore and/or remediate the Assets in accordance with
      applicable agreements and Laws, and all of the obligations and liabilities
      of Seller, known or unknown, with respect to the Assets regardless of
      whether the same arise or are attributable to that period of time before
      or after the Effective Time with respect to obligations to furnish makeup
      gas according to the terms of applicable gas sales, gathering or
      transportation contracts, gas balancing obligations, obligations to pay
      working interests, royalties, overriding royalties and other interests
      held in suspense (all of said obligations and liabilities, subject to the
      exclusions of the proviso below, herein being referred to as the "Assumed
      Seller Obligations"); provided, however, that Purchaser does not assume
      any obligations or liabilities of Seller to the extent that those
      obligations or liabilities are:

                  (i)   attributable to or arise out of the Excluded Assets;

                  (ii)  attributable to or arise out of (x) the actions, suits
            or proceedings, if any, set forth on SCHEDULE 4.7, (y) the blowout
            of the Runnels #5 Well, and (z) any other matters set forth on
            SCHEDULE 4.18, to the full extent of Seller's pre-Closing
            obligation; or

                  (iii) the continuing responsibility of Seller under
            Sections 10.2 and 10.3(c).

            (b)   Purchaser shall indemnify, defend and hold harmless Seller
      from and against all Damages incurred or suffered by Seller

                  (i)   caused by or arising out of or resulting from the
            Assumed Seller Obligations,

                  (ii)  caused by or arising out of or resulting from the
            ownership, use or operation of the Assets after the Closing Date,

                  (iii) caused by or arising out of or resulting from
            Purchaser's breach of any of Purchaser's covenants or agreements
            contained in Sections 6.1 or 6.2, or

                                      26
<Page>

                  (iv) caused by or arising out of or resulting from any breach
            of any representation or warranty made by Purchaser contained in
            Article 5 of this Agreement or in the certificate delivered by
            Purchaser at the Closing pursuant to Section 8.3(d),

      EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
      (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
      OF ANY INDEMNIFIED PERSON, but excepting in each case Damages against
      which Seller would be required to indemnify Purchaser under Section
      10.3(d) at the time the claim notice is presented by Purchaser.

            (c) Without limiting Seller's right to indemnity under this Article
      10, after the Closing, Seller shall retain and hereby agrees to fulfill,
      perform, pay and discharge (or cause to be fulfilled, performed, paid or
      discharged) its pre-Effective Time proportionate share of the obligations
      and liabilities, known or unknown, with respect to the Assets that arise
      or are attributable to that period of time prior to the Effective Time
      which are asserted in writing to Seller on or before December 31, 2003,
      including but not limited to obligations to plug wells and dismantle
      structures that were located on the Leases but were not in use as of the
      Effective Time, and to restore and/or remediate the Assets with respect to
      conditions in existence as of the Effective Time in accordance with
      applicable agreements and Laws (all of said obligations and liabilities,
      subject to the exclusions of the proviso below, herein being referred to
      as the "Retained Seller Obligations"). "Retained Seller Obligations" shall
      specifically exclude: (i) the Assumed Seller Obligations; and (ii) all of
      the obligations and liabilities of Seller, known or unknown, with respect
      to the Assets that arise or are attributable to that period of time before
      the Effective Time with respect to obligations to furnish makeup gas
      according to the terms of applicable gas sales, gathering or
      transportation contracts, gas balancing obligations, obligations to pay
      working interests, royalties, overriding royalties and other interests
      held in suspense, which obligations and liabilities are assumed by
      Purchaser under Section 10.3(a).

            (d) Seller shall indemnify, defend and hold harmless Purchaser
      against and from all Damages incurred or suffered by Purchaser:

                  (i)   caused by or arising out of or resulting from the
            Retained Seller Obligations;

                  (ii)  caused by or arising out of or resulting from those
            obligations and liabilities described in Sections 10.3(a)(i) and
            10.3(a)(ii) that are attributable to Seller;

                  (iii) caused by or arising out of or resulting from Seller's
            breach of any of Seller's covenants or agreements contained in
            Sections 6.1, 6.2, or 6.5 of this Agreement; or

                  (iv) caused by or arising out of our resulting from any breach
            of any representation or warranty made by Seller contained in
            Article 4 of this

                                      27
<Page>

            Agreement, or in the certificate delivered by Seller at the Closing
            pursuant to Section 8.2(d),

      EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
      (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
      OF ANY INDEMNIFIED PERSON.

            (e) Notwithstanding anything to the contrary contained in this
      Agreement, this Section 10.3 contains the Parties' exclusive remedy
      against one another with respect to breaches of the representations,
      warranties, covenants and agreements of the Parties contained in Articles
      4 (other than Section 4.15), 5 and Sections 6.1, 6.2, and 6.5 and the
      affirmations of such representations, warranties, covenants and agreements
      contained in the certificate delivered by each Party at the Closing
      pursuant to Sections 8.2(d) or 8.3(d), as applicable.

            (f) Claims for Property Costs shall be exclusively handled pursuant
      to the Purchase Price adjustments in Section 2.2, and pursuant to Section
      10.2, and shall not be subject to indemnification under this Section 10.3.

            (g) Title Defects shall be exclusively handled pursuant to Section
      3.4, and, if applicable, pursuant to the Purchase Price adjustment
      mechanism in Section 2.2 and shall not be subject to indemnification under
      this Section 10.3.

            (h) "Damages", for purposes of this Article 10, shall mean the
      amount of any actual liability, loss, cost, expense, claim, award or
      judgment incurred or suffered by any Indemnified Party arising out of or
      resulting from the indemnified matter, including reasonable fees and
      expenses of attorneys, consultants, accountants or other agents and
      experts reasonably incident to matters indemnified against, and the costs
      of investigation and/or monitoring of such matters, and the costs of
      enforcement of the indemnity; provided, however, that Purchaser and Seller
      shall not be entitled to indemnification under this Section 10.3 for, and
      "Damages" shall not include, (i) loss of profits or other consequential
      damages suffered by the party claiming indemnification, or any punitive
      damages, (ii) any liability, loss, cost, expense, claim, award or judgment
      that does not individually exceed $10,000, and (iii) any liability, loss,
      cost, expense, claim, award or judgment to the extent resulting from or
      increased by the actions or omissions of any Indemnified Party after the
      Closing Date.

            (i) The indemnity of each Party provided in this Section 10.3 shall
      be for the benefit of and extend to such Party's present and former
      Affiliates, and its and their directors, officers, employees, and agents.

      SECTION 10.4  INDEMNIFICATION ACTIONS.

      All claims for indemnification under Section 10.3 shall be asserted and
resolved as follows:

            (a) For purposes of this Article 10, the term "Indemnifying Party"
      when used in connection with particular Damages shall mean the Party or
      Parties having an obligation to indemnify another Party or Parties with
      respect to such Damages pursuant

                                      28
<Page>

      to this Article 10, and the term "Indemnified Party" when used in
      connection with particular Damages shall mean the Party or Parties having
      the right to be indemnified with respect to such Damages by another Party
      or Parties pursuant to this Article 10.

            (b) To make claim for indemnification under Section 10.3, an
      Indemnified Party shall notify the Indemnifying Party of its claim under
      this Section 10.4, including the specific details of and specific basis
      under this Agreement for its claim (the "Claim Notice"). In the event that
      the claim for indemnification is based upon a claim by a third party
      against the Indemnified Party (a "Claim"), the Indemnified Party shall
      provide its Claim Notice promptly after the Indemnified Party has actual
      knowledge of the Claim and shall enclose a copy of all papers (if any)
      served with respect to the Claim; provided that the failure of any
      Indemnified Party to give notice of a Claim as provided in this Section
      10.4 shall not relieve the Indemnifying Party of its obligations under
      Section 10.3 except to the extent such failure results in insufficient
      time being available to permit the Indemnifying Party to effectively
      defend against the Claim or otherwise prejudices the Indemnifying Party's
      ability to defend against the Claim. In the event that the claim for
      indemnification is based upon an inaccuracy or breach of a representation,
      warranty, covenant or agreement, the Claim Notice shall specify the
      representation, warranty, covenant or agreement which was inaccurate or
      breached.

            (c) In the case of a claim for indemnification based upon a Claim,
      the Indemnifying Party shall have 30 days from its receipt of the Claim
      Notice to notify the Indemnified Party whether it admits or denies its
      liability to defend the Indemnified Party against such Claim at the sole
      cost and expense of the Indemnifying Party. The Indemnified Party is
      authorized, prior to and during such 30-day period, to file any motion,
      answer or other pleading that it shall deem necessary or appropriate to
      protect its interests or those of the Indemnifying Party and that is not
      prejudicial to the Indemnifying Party.

            (d) If the Indemnifying Party admits its liability, it shall have
      the right and obligation to diligently defend, at its sole cost and
      expense, the Claim. The Indemnifying Party shall have full control of such
      defense and proceedings, including any compromise or settlement thereof.
      If requested by the Indemnifying Party, the Indemnified Party agrees to
      cooperate in contesting any Claim which the Indemnifying Party elects to
      contest. The Indemnified Party may participate in, but not control, any
      defense or settlement of any Claim controlled by the Indemnifying Party
      pursuant to this Section 10.4(d). An Indemnifying Party shall not, without
      the written consent of the Indemnified Party, (i) settle any Claim or
      consent to the entry of any judgment with respect thereto which does not
      include an unconditional written release of the Indemnified Party from all
      liability in respect of such Claim or (ii) settle any Claim or consent to
      the entry of any judgment with respect thereto in any manner that may
      materially and adversely affect the Indemnified Party (other than as a
      result of money damages covered by the indemnity).

            (e) If the Indemnifying Party does not admit its liability or admits
      its liability but fails to diligently prosecute or settle the Claim, then
      the Indemnified Party shall have the right to defend against the Claim at
      the sole cost and expense of the Indemnifying

                                      29
<Page>

      Party, with counsel of the Indemnified Party's choosing, subject to the
      right of the Indemnifying Party to admit its liability and assume the
      defense of the Claim at any time prior to settlement or final
      determination thereof. If the Indemnifying Party has not yet admitted
      its liability for a Claim, the Indemnified Party shall send written
      notice to the Indemnifying Party of any proposed settlement and the
      Indemnifying Party shall have the option for 10 days following receipt
      of such notice to (i) admit in writing its liability for the Claim and
      (ii) if liability is so admitted, reject, in its reasonable judgment,
      the proposed settlement.

            (f) In the case of a claim for indemnification not based upon a
      Claim, the Indemnifying Party shall have 30 days from its receipt of the
      Claim Notice to (i) cure the Damages complained of, (ii) admit its
      liability for such Damages or (iii) dispute the claim for such Damages. If
      the Indemnifying Party does not notify the Indemnified Party within such
      30 day period that it has cured the Damages or that it disputes the claim
      for such Damages, the amount of such Damages shall conclusively be deemed
      a liability of the Indemnifying Party hereunder.

      SECTION 10.5  LIMITATION ON ACTIONS.

            (a) The representations and warranties of Seller in Article 4 (other
      than Section 4.15) and the corresponding representations and warranties
      given in the certificate delivered at the Closing pursuant to Section
      8.2(d) shall survive the Closing for a period of two (2) years. The
      representations and warranties of Purchaser in Article 5 and the covenants
      and agreements of the Parties in Article 6, and the corresponding
      representations and warranties given in the certificate delivered at the
      Closing pursuant to Section 8.3(d) shall survive the Closing for a period
      of one year. The representations and warranties of Seller in Section 3.1
      shall terminate at the Title Claim Date. The representations and
      warranties of Seller in Section 4.15 and the corresponding representations
      and warranties given in the certificate delivered by Seller at the Closing
      pursuant to Section 8.2(d) shall terminate on the deadline for delivery
      (or, if earlier, the date of delivery) of Purchaser's written report
      pursuant to Section 8.4(b). The remainder of this Agreement shall survive
      the Closing without time limit except as may otherwise be expressly
      provided herein. Representations, warranties, covenants and agreements
      shall be of no further force and effect after the date of their
      expiration, provided that there shall be no termination of any bona fide
      claim asserted pursuant to this Agreement with respect to such a
      representation, warranty, covenant or agreement prior to its expiration
      date.

            (b) The indemnities in Sections 10.3(b)(iii), 10.3(b)(iv),
      10.3(d)(iii) and 10.3(d)(iv) shall terminate as of the termination date of
      each respective representation, warranty, covenant or agreement that is
      subject to indemnification, except in each case as to matters for which a
      specific written claim for indemnity has been delivered to the
      Indemnifying Party on or before such termination date. Purchaser's
      indemnities in Sections 10.3(b)(i) and 10.3(b)(ii) and Seller's
      indemnities in Section 10.3(d)(ii) shall continue without time limit and
      Seller's indemnities in Section 10.3(d)(i) shall continue for the period
      specified in Section 10.3(c).

                                      30

<Page>

      SECTION 10.6  RECORDING.

      As soon as practicable after the Closing, Purchaser shall record the
conveyances in the appropriate counties as well as the appropriate governmental
agencies and provide Seller with copies of all recorded or approved instruments.

      SECTION 10.7  SPECIAL PROVISION FOR CASUALTY LOSS OR CONDEMNATION.

      If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain, Purchaser shall nevertheless be
required to Close and Seller shall, at the Closing, pay to Purchaser that
portion of all sums paid to Seller by third parties attributable to the Assets
by reason of such casualty or taking and shall assign, transfer and set over to
Purchaser or subrogate Purchaser to all of Seller's right, title and interest
(if any) in insurance claims, unpaid awards, and other rights against third
parties (other than Affiliates of Seller and its directors, officers, employees
and agents) arising out of the casualty or taking; provided, however, in the
event the loss as a result of such casualty or taking is equal to ten percent
(10%) or more of the unadjusted Purchase Price, Purchaser shall have the option,
in its sole discretion, to terminate this Agreement pursuant to Article 9.

                            ARTICLE 11 MISCELLANEOUS

      SECTION 11.1  COUNTERPARTS.

      This Agreement may be executed in counterparts, including facsimile
counterparts, each of which shall be deemed an original instrument, but all such
counterparts, including facsimile counterparts, together shall constitute but
one agreement.

      SECTION 11.2  NOTICE.

      All notices which are required or may be given pursuant to this Agreement
shall be sufficient in all respects if given in writing and delivered
personally, by telecopy or by registered or certified mail, postage prepaid, as
follows:

         If to Seller:        Esenjay Exploration, Inc.
                              One Allen Center
                              500 Dallas Street, Suite 2920
                              Houston, TX 77002
                              Attention: David B. Christofferson, Vice President
                              Telephone: (713) 739-7100
                              Telecopy:  (713) 739-7124

                                          and

                                      31

<Page>

                              Esenjay Petroleum Corporation
                              500 North Water Street
                              Suite 1100 South
                              Corpus Christi, TX 78471
                              Attention: Michael Johnson, President
                              Telephone: (361) 883-7464
                              Telecopy:  (361) 884-5420

         If to Purchaser:     Santos USA Corp.
                              2500 Tanglewilde, Suite 160
                              Houston, Texas 77063
                              Attention: Kathleen A. Hogenson
                              Telephone: (713) 986-1700
                              Telecopy:  (713) 986-4200

         With a copy to:      Baker Botts L.L.P.
                              One Shell Plaza
                              910 Louisiana
                              Houston, Texas 77002-4995
                              Attention: Lori J. Khan, Esq.
                              Telephone: (713) 229-1318
                              Telecopy:  (713) 229-2718

Any Party may change its address for notice by notice to the other in the manner
set forth above. All notices shall be deemed to have been duly given at the time
of receipt by the party to which such notice is addressed.

      SECTION 11.3  SALES OR USE TAX, RECORDING FEES AND SIMILAR TAXES AND FEES.

      Purchaser shall bear any sales, use, excise, real property transfer or
gain, gross receipts, goods and services, registration, capital, documentary,
stamp or transfer Taxes, recording fees and similar Taxes and fees incurred and
imposed upon, or with respect to, the property transfers or other transactions
contemplated hereby. If such transfers or transactions are exempt from any such
Taxes or fees upon the filing of an appropriate certificate or other evidence of
exemption, Purchaser will timely furnish to Seller such certificate or evidence.

      SECTION 11.4  EXPENSES.

      Except as provided in Section 11.3, all expenses incurred by Seller in
connection with or related to the authorization, preparation or execution of
this Agreement, the conveyances delivered hereunder and the Exhibits and
Schedules hereto and thereto, and all other matters related to the Closing,
including without limitation, all fees and expenses of counsel, accountants and
financial advisers employed by Seller, shall be borne solely and entirely by
Seller, and all such expenses incurred by Purchaser shall be borne solely and
entirely by Purchaser.

                                      32

<Page>

      SECTION 11.5  REPLACEMENT OF BONDS, LETTERS OF CREDIT AND GUARANTEES.

      The Parties understand that none of the bonds, letters of credit and
guarantees, if any, posted by Seller with Governmental Bodies and relating to
the Assets may be transferable to Purchaser. Promptly following the Closing,
Purchaser shall obtain, or cause to be obtained in the name of Purchaser,
replacements for such bonds, letters of credit and guarantees, to the extent
such replacements are necessary to permit the cancellation of the bonds, letters
of credit and guarantees posted by Seller or to consummate the transactions
contemplated by this Agreement.

      SECTION 11.6  GOVERNING LAW.

      This Agreement and the legal relations between the Parties shall be
governed by and construed in accordance with the laws of the State of Texas
without regard to principles of conflicts of laws.

      SECTION 11.7  CAPTIONS.

      The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.

      SECTION 11.8  WAIVERS.

      Any failure by any Party or Parties to comply with any of its or their
obligations, agreements or conditions herein contained may be waived in writing,
but not in any other manner, by the Party or Parties to whom such compliance is
owed. No waiver of, or consent to a change in, any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.

      SECTION 11.9  ASSIGNMENT.

      No Party shall assign all or any part of this Agreement, nor shall any
Party assign or delegate any of its rights or duties hereunder, without the
prior written consent of the other Party and any assignment or delegation made
without such consent shall be void, except that prior to the Closing Purchaser
may assign this Agreement to any direct or indirect wholly-owned subsidiary of
Purchaser. Following such an assignment, Purchaser shall remain liable for its
duties, liabilities and obligations hereunder, and Purchaser does hereby
guarantee unto Seller, the performance by such assignee of all of the duties,
liabilities and obligations hereunder that are assigned to such designee in
accordance with the foregoing. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and assigns.

      SECTION 11.10 ENTIRE AGREEMENT.

      This Agreement and the documents to be executed hereunder and the Exhibits
and Schedules attached hereto constitute the entire agreement among the Parties
pertaining to the subject matter hereof, and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties pertaining to the subject matter hereof.

                                      33

<Page>

      SECTION 11.11 AMENDMENT.

            (a) This Agreement may be amended or modified only by a written
      agreement, designated as an amendment or modification, executed by all of
      the Parties.

            (b) No waiver of any right under this Agreement shall be binding
      unless executed in writing by the Party to be bound thereby.

      SECTION 11.12 NO THIRD-PARTY BENEFICIARIES.

      Nothing in this Agreement shall entitle any Person other than Purchaser
and Seller to any claims, cause of action, remedy or right of any kind, except
the rights expressly provided to the Persons described in Section 10.3(g).

      SECTION 11.13 REFERENCES.

      In this Agreement, unless the context clearly indicates otherwise,

            (a) References to any gender includes a reference to all other
      genders;

            (b) References to the singular includes the plural, and vice versa;

            (c) Reference to any Article or Section means an Article or Section
      of this Agreement;

            (d) Reference to any Exhibit or Schedule means an Exhibit or
      Schedule to this Agreement, all of which are incorporated into and made a
      part of this Agreement;

            (e) Unless expressly provided to the contrary, "hereunder",
      "hereof", "herein" and words of similar import are references to this
      Agreement as a whole and not any particular Section or other provision of
      this Agreement; and

            (f) "Include" and "including" shall mean include or including
      without limiting the generality of the description preceding such term.

      SECTION 11.14 CONSTRUCTION.

      Purchaser is a party capable of making such investigation, inspection,
review and evaluation of the Assets as a prudent purchaser would deem
appropriate under the circumstances including with respect to all matters
relating to the Assets, their value, operation and suitability. Seller and
Purchaser have had substantial input into the drafting and preparation of this
Agreement and has had the opportunity to exercise business discretion in
relation to the negotiation of the details of the transaction contemplated
hereby. This Agreement is the result of arm's-length negotiations from equal
bargaining positions.

      SECTION 11.15 LIMITATION ON DAMAGES.

      Notwithstanding anything to the contrary contained herein, none of
Purchaser, Seller or any of their respective Affiliates shall be entitled to
punitive damages in connection with this

                                      34

<Page>

Agreement and the transactions contemplated hereby and Purchaser and Seller,
for itself and on behalf of its Affiliates, hereby expressly waives any right
to punitive damages in connection with this Agreement and the transactions
contemplated hereby.

                             ARTICLE 12 DEFINITIONS

      "Adjustment Period" has the meaning set forth in Section 2.2(a).

      "Adjusted Purchase Price" has the meaning set forth in Section 2.2.

      "Affiliate" with respect to any Person, means any person that directly or
indirectly controls, is controlled by or is under common control with such
Person.

      "Agreement" has the meaning set forth in the first paragraph of this
Agreement.

      "Allocated Value" has the meaning set forth in Section 2.3.

      "AMI Agreement" has the meaning set forth in Section 6.3.

      "Assets" has the meaning set forth in Section 1.2.

      "Assumed Seller Obligations" has the meaning set forth in Section 10.3(a).

      "Business Day" means each calendar day except Saturdays, Sundays and
federal holidays.

      "Claim" has the meaning set forth in Section 10.4.

      "Claim Notice" has the meaning set forth in Section 10.4.

      "Closing" has the meaning set forth in Section 8.1.

      "Closing Date" means the third Business Day following the day on which all
conditions in Article 7 to be satisfied prior to the Closing have been satisfied
or waived.

      "Closing Payment" has the meaning set forth in Section 8.4(a).

      "Code" has the meaning set forth in Section 2.3.

      "Contracts" has the meaning set forth in Section 1.2(c).

      "Conveyance" has the meaning set forth in Section 3.1(b).

      "Damages" has the meaning set forth in Section 10.3(h).

      "Defensible Title" has the meaning set forth in Section 3.2.

      "Effective Time" has the meaning set forth in Section 1.4.

                                      35

<Page>

      "Environmental Laws" means, as the same have been amended to the date
hereof, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 ET SEQ.; the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 ET SEQ.; the Federal Water Pollution Control Act,
33 U.S.C. Section 1251 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET
SEQ.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1471 ET
SEQ.; the Toxic Substances Control Act, 15 U.S.C. Sections 2601 through 2629;
the Oil Pollution Act, 33 U.S.C. Section 2701 ET SEQ.; the Emergency Planning
and Community Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.; and the
Safe Drinking Water Act, 42 U.S.C. Sections 300f through 300j; and all
similar Laws as of the date hereof of any Governmental Body having
jurisdiction over the property in question addressing pollution or protection
of the environment and all regulations implementing the foregoing.

      "Equipment" has the meaning set forth in Section 1.2(e).

      "Excluded Assets" has the meaning set forth in Section 1.3.

      "Governmental Authorization" has the meaning set forth in Section 4.16.

      "Governmental Body" means any federal, state, local, municipal, or other
governments; any governmental, regulatory or administrative agency, commission,
body or other authority exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; and any court or governmental tribunal.

      "Hydrocarbons" means oil, gas, condensate and other gaseous and liquid
hydrocarbons or any combination thereof and sulphur extracted from hydrocarbons.

      "Indemnified Party" has the meaning set forth in Section 10.4.

      "Indemnifying Party" has the meaning set forth in Section 10.4.

      "Laws" means all statutes, rules, regulations, ordinances, orders, and
codes of Governmental Bodies.

      "Leases" has the meaning set forth in Section 1.2(a).

      "Material Adverse Effect" means any material adverse effect on the
ownership, operation or value of the Assets, as currently operated, taken as a
whole, provided, however, that "Material Adverse Effect" shall not include
general changes in industry or economic conditions or changes in laws or in
regulatory policies.

      "NGL" or "NGLs" has the meaning set forth in Section 1.4.

      "Permitted Encumbrances" has the meaning set forth in Section 3.3.

      "Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, government or agency or subdivision thereof or any other entity.

      "Properties" has the meaning set forth in Section 1.2(b).

                                      36

<Page>

      "Property Costs" has the meaning set forth in Section 1.4.

      "Purchase Price" has the meaning set forth in Section 2.1(a).

      "Purchaser" has the meaning set forth in the first paragraph of this
Agreement.

      "Records" has the meaning set forth in Section 1.2(g).

      "Retained Seller Obligations" has the meaning set forth in Section
10.3(c).

      "Seller" has the meaning set forth in the first paragraph of this
Agreement.

      "Taxes" means all federal, state, local, and foreign income, profits,
franchise, sales, use, ad valorem, property, severance, production, excise,
stamp, documentary, real property transfer or gain, gross receipts, goods and
services, registration, capital, transfer, or withholding taxes or other
governmental fees or charges imposed by any taxing authority, including any
interest, penalties or additional amounts which may be imposed with respect
thereto.

      "Title Arbitrator" has the meaning set forth in Section 3.4(f).

      "Title Claim Date" has the meaning set forth in Section 3.4(a).

      "Title Claim Notice" has the meaning set forth in Section 3.4(a).

      "Title Defect" has the meaning set forth in Section 3.2.

      "Title Defect Amount" has the meaning set forth in Section 3.4(b).

      "Transition Agreement" has the meaning set forth in Section 6.3.

      "Units" has the meaning set forth in Section 1.2(b).

      "Wells" has the meaning set forth in Section 1.2(a).

                                      37

<Page>

      IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties
hereto on the date first above written.

      SELLER:

                                    ESENJAY EXPLORATION, INC.

                                    By:
                                       -----------------------------------------
                                    Name:
                                         ---------------------------------------
                                    Title:
                                          --------------------------------------

      PURCHASER:

                                    SANTOS USA CORP.

                                    By:
                                       -----------------------------------------
                                    Name:
                                         ---------------------------------------
                                    Title:
                                          --------------------------------------

                                      38

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