Document:

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                                                                   EXHIBIT 10.32

                           PURCHASE AND SALE AGREEMENT

                                 BY AND BETWEEN

                     TEXACO EXPLORATION AND PRODUCTION INC.

                                       AND

                              ENERGY PARTNERS, LTD.

                                SEPTEMBER 7, 2000

                        EFFECTIVE DATE: JANUARY 1, 2000

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

<S>                                                                       <C>
   PART ONE............................................................... 1

     SUBJECT MATTER, DEFINITIONS AND RULES OF CONSTRUCTION................ 1
        1.1    SUBJECT MATTER............................................. 1
        1.2    DEFINED TERMS.............................................. 1
          AFFILIATE....................................................... 1
          AGREED RATE..................................................... 1
          AGREEMENT....................................................... 2
          APPLICABLE LAW.................................................. 2
          ASSETS.......................................................... 2
          ASSUMED OBLIGATIONS............................................. 2
          BENEFICIAL INTERESTS............................................ 2
          BURDENS......................................................... 2
          BUSINESS DAY.................................................... 2
          CLOSING......................................................... 2
          CLOSING DATE.................................................... 2
          CODE............................................................ 2
          CONTEMPLATED TRANSACTIONS....................................... 3
          CONTRACTS....................................................... 3
          CORPORATE DOCUMENTS............................................. 3
          EASEMENTS....................................................... 3
          EFFECTIVE DATE.................................................. 3
          ENVIRONMENTAL LAW............................................... 3
          ENVIRONMENTAL OBLIGATIONS....................................... 3
          EXCLUDED ASSETS................................................. 3
          EXCLUDED OBLIGATIONS............................................ 5
          GOVERNMENTAL BODY............................................... 5
          HYDROCARBONS.................................................... 6
          KNOWLEDGE....................................................... 6
          LEASES.......................................................... 6
          LOSSES.......................................................... 6
          MATERIAL ENVIRONMENTAL CONDITION................................ 6
          OTHER PROPERTY.................................................. 6
          PERMITTED ENCUMBRANCES.......................................... 7
          PERSON.......................................................... 8
          PLUGGING AND ABANDONMENT........................................ 8
          PROPERTIES...................................................... 8
          TAXES........................................................... 8
          TITLE DEFECT ................................................... 8
        1.3     OTHER DEFINITIONS IN THE AGREEMENT........................ 9
        1.4     RULES OF CONSTRUCTION.................................... 10

   PART TWO.............................................................. 10

      SALE AND PURCHASE.................................................. 10

       2.1     PURCHASE AND SALE......................................... 10
       2.2     PURCHASE PRICE............................................ 11
       2.3     PERFORMANCE DEPOSIT ...................................... 11
</TABLE>

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<TABLE>
     <S>     <C>                                                           <C>
       2.4     CLOSING AND PAYMENT OF PURCHASE PRICE....................... 11
       2.5     METHOD OF PAYMENT........................................... 11

    PART THREE............................................................. 12

      REPRESENTATIONS AND WARRANTIES....................................... 12

       3.1     SELLER...................................................... 12
       3.2     BUYER....................................................... 13
       3.3     DISCLAIMER AND NOTIFICATIONS................................ 14

   PART FOUR............................................................... 17

      COVENANTS............................................................ 17

       4.1     COVENANTS OF SELLER......................................... 17
       4.2     COVENANTS OF BUYER.......................................... 18
       4.3     COVENANTS OF SELLER AND BUYER............................... 20

   PART FIVE............................................................... 27

     CONDITIONS TO CLOSING ................................................ 27

       5.1     SELLER'S CLOSING CONDITIONS................................. 27
       5.2     BUYER'S CLOSING CONDITIONS.................................. 28

   PART SIX................................................................ 29

      ENVIRONMENTAL MATTERS................................................ 29
        6.1    MATERIAL ENVIRONMENTAL CONDITIONS........................... 29

   PART SEVEN.............................................................. 30

      TAXES................................................................ 30
       7.1     PAYMENT AND APPORTIONMENT OF REAL PROPERTY
                TAXES AND PERSONAL PROPERTY TAXES.......................... 30
       7.2     OTHER TAXES................................................. 30
       7.3     SALES TAXES................................................. 30
       7.4     COOPERATION................................................. 30
       7.5     TAX PROCEEDINGS............................................. 30
   PART EIGHT.............................................................. 31

      INDEMNITY............................................................ 31
       8.1     SELLER...................................................... 31
       8.2     BUYER....................................................... 31
       8.3     LIMITATIONS................................................. 31
       8.4     METHOD OF ASSERTING CLAIMS.................................. 32
       8.5     PAYMENT..................................................... 33
       8.6     DISPUTED CLAIMS............................................. 33

    PART NINE.............................................................. 34

     MISCELLANEOUS......................................................... 34
        9.1    SUCCESSORS AND ASSIGNS...................................... 34
        9.2    WAIVERS AND AMENDMENTS...................................... 34
        9.3    NOTICES..................................................... 34
        9.4    COUNTERPARTS................................................ 35
        9.5    ENTIRE AGREEMENT............................................ 35
        9.6    SELLER'S OPTION TO ELECT A TAX DEFERRED EXCHANGE............ 35
        9.7    SEVERABILITY................................................ 35
        9.8    APPLICABLE LAW.............................................. 35
        9.9    EXPENSES.................................................... 35
        9.10   LAWS AND REGULATIONS........................................ 36
        9.11   PUBLIC ANNOUNCEMENTS........................................ 36
        9.12   ASSIGNABILITY .............................................. 36
        9.13   PROVISIONS SURVIVE CLOSING ................................. 36
        9.14   DISPUTE RESOLUTION ......................................... 36
        9.15   TERMINATION ................................................ 36
</TABLE>

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                           PURCHASE AND SALE AGREEMENT

         This agreement is made and entered into this 7th day of September 2000,
by and between Texaco Exploration and Production Inc., a Delaware corporation
(hereinafter "Seller"), and Energy Partners, Ltd., a Delaware corporation,
(hereinafter "Buyer"). Seller and Buyer are sometimes separately referred to
herein as a "Party" and collectively as "Parties."

                                    PART ONE

            SUBJECT MATTER, DEFINITIONS AND RULES OF CONSTRUCTION

         1.1 SUBJECT MATTER. The subject matter of this Agreement is the sale
by Seller to Buyer of the Assets, the purchase of the Assets and the assumption
of the Assumed Obligations by Buyer, and the terms and conditions upon which all
of the foregoing shall take place.

         1.2 DEFINED TERMS. For purposes of this Agreement, including the
Exhibits and Schedules hereto, except as otherwise expressly provided or unless
the context otherwise requires, the terms defined in this Section 1.2 have the
meanings assigned to them herein and the capitalized terms defined elsewhere in
the Agreement by inclusion in quotation marks and parentheses have the meanings
so ascribed to them.

                  "AFFILIATE" means, with respect to any Person, any other
         Person directly or indirectly controlling or controlled by, or under
         common control with, such Person. For purposes of this definition, the
         term "control" (including, with correlative meanings, the terms
         "controlling," "controlled by" and "under common control with") as
         applied to any Person, means the possession, directly or indirectly, of
         the power to direct or cause the direction of the management of such
         Person, whether through ownership of voting securities, by contract or
         otherwise, and specifically with respect to a corporation or
         partnership, means direct or indirect ownership of fifty percent (50%)
         or more of the voting stock in such corporation or of the voting
         interest as a partner in such partnership. In addition, Seller's
         Affiliates shall include Equilon Enterprises LLC, Motiva Enterprises
         LLC, Equiva Services LLC, Equiva Trading Company LLC and such other
         natural gas or liquids joint ventures in which Seller may own less than
         fifty percent (50%).

                  "AGREED RATE" means a rate per annum calculated on a 360-day
         basis which is equal to the lesser of (a) a rate which is one percent
         (1%) above the prime rate of interest of Chase Manhattan Bank, New
         York, New York, as announced or published by such bank from time to
         time (adjusted from time to time to reflect any changes in such rate
         determined hereunder), or (b) the maximum rate from time to time
         permitted by Applicable Law.

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                  "AGREEMENT" means this Purchase and Sale Agreement, including
         the Exhibits and Schedules.

                  "APPLICABLE LAW" means all laws, statutes, treaties, rules,
         codes, ordinances, regulations, certificates, orders, interpretations,
         licenses and permits of any Governmental Body, including the common or
         civil law, (including, without limitation, those pertaining to
         occupational health and safety, consumer product safety, employee
         benefits, the environment, securities or zoning) and all judgments,
         decrees, injunctions, writs, orders or like action of any court,
         arbitrator or other Governmental Body of competent jurisdiction.

                  "ASSETS" means collectively the Contracts, the Easements, the
         Leases, the Beneficial Interests and the Other Property, except to the
         extent constituting Excluded Assets.

                  "ASSUMED OBLIGATIONS" means, except as constitutes Excluded
         Obligations (i) all liabilities, duties, and obligations that arise
         from the ownership or operation of the Assets; (ii) all liabilities and
         obligations with respect to Plugging and Abandonment; (iii) all duties,
         liabilities and obligations under any contracts or agreements, both
         recorded and unrecorded, affecting the Assets in existence as of the
         Effective or Closing Dates, including, but not limited to, the
         Contracts; (iv) the Environmental Obligations and (v) all other duties,
         liabilities, and obligations assumed by Buyer under this Agreement.

                  "BENEFICIAL INTERESTS" means any and all rights, titles and
         interests owned by Seller in, under or derived from all of the
         presently existing pooling, unitization and communitization agreements
         or other operating agreements and the units created thereby (including
         without limitation, all units formed under orders, regulations, rules
         or other official acts of any Governmental Body having jurisdiction)
         not evidenced by Seller's ownership of lease, including all of Seller's
         rights, titles and interests to such Contracts as set forth on Schedule
         A.

                  "BURDENS" means royalties (including both lessors' royalties
         and nonparticipating royalty interests), overriding royalties, net
         profits interests, production payments, and other similar obligations
         and burdens payable out of production.

                  "BUSINESS DAY" means a day on which commercial banks are
         generally open for regular business in New Orleans, Louisiana.

                  "CLOSING" means the closing of the Contemplated Transactions
         at 10:00 a.m. local time at Seller's offices at New Orleans, Louisiana
         on the Closing Date or at such other time or place as the Parties may
         mutually agree upon in writing.

                  "CLOSING DATE" means September 7, 2000, or such other date as
         the Parties agree in writing.

                  "CODE" means the Internal Revenue Code of 1986, as amended, or
         any successor law, and regulations or rules issued under any of the
         foregoing.

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                  "CONTEMPLATED TRANSACTIONS" means each and all of the
         transactions contemplated by the Agreement.

                  "CONTRACTS" means, to the extent they are assignable, all of
         Seller's right, title and interest in and to all farmout agreements,
         unitization agreements, pooling agreements, unit declarations, gas
         sales or purchase contracts, operating agreements and other contracts
         attributable to the Assets, or other agreements and instruments
         (including all amendments thereto and any agreements settling claims
         asserted thereunder) to the extent and only to the extent that the same
         relate, pertain or are incidental to the Easements, the Leases, the
         Beneficial Interests or the Other Property, including, without
         limitation, those listed on Schedule A hereto, but specifically
         excluding the Easements and Leases.

                  "CORPORATE DOCUMENTS" means with respect to a Delaware
         corporation the Certificate of Incorporation and By-Laws or the
         equivalent documents of a corporation organized under the laws of
         another jurisdiction.

                  "EASEMENTS" means Seller's non-exclusive rights to the use and
         occupancy of the surface, including, without limitation, tenements,
         authorizations, variances, appurtenances, surface leases, easements,
         permits, licenses, servitudes, rights-of-way and similar rights and
         interests in any way appertaining, belonging, affixed or incidental to
         or used in connection with the ownership or operation of the Leases,
         Beneficial Interests or Other Property, except to the extent
         constituting Excluded Assets.

                  "EFFECTIVE DATE" shall mean 7:00 a.m., local time at the
         location of the Assets, January 1,2000.

                  "ENVIRONMENTAL LAW" means any Applicable Law relating to
         pollution, the protection of the environment, or the release or
         disposal of waste materials, but shall not include any Applicable Law
         associated with Plugging and Abandonment.

                  "ENVIRONMENTAL OBLIGATIONS" means, except for Material
         Environmental Conditions, any obligations or liability for claims
         arising from the following occurrences, events and activities on or
         related to the Assets, regardless of whether resulting from acts or
         omissions prior to the Closing Date, or the condition of the Assets at
         Closing: (i) environmental pollution or contamination with respect to
         the air, land, soil, surface, subsurface strata, surface water, ground
         water, or sediments, (ii) underground injection activities and waste
         disposal; or (iii) necessary remediation, and the cost of such
         remediation, or any control, assessment, or compliance with respect to
         any pollution or contamination.

                  "EXCLUDED ASSETS" means the following:

                           (a) all (i) trade credits, accounts receivable (other
                  than those specifically included in the definition of Other
                  Property), notes receivable and other receivables

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                  attributable to Seller's interest in the Assets with respect
                  to any period of time prior to the Effective Date, (ii)
                  deposits, cash, checks in process of collection, cash
                  equivalents and funds attributable to Seller's interest in the
                  Assets with respect to any period of time prior to the
                  Effective Date, and (iii) funds attributable to third Persons
                  for production prior to the Effective Date but suspended or
                  impounded by Seller;

                           (b) all corporate, financial, and tax records of
                  Seller;

                           (c) all claims and causes of action of Seller (i)
                  arising from acts, omissions or events, or damage to or
                  destruction of property occurring prior to the Effective Date,
                  and (ii) affecting any of the excluded assets set forth in (a)
                  through (q) of this definition;

                           (d) all rights, titles, claims and interests of
                  Seller accruing prior to the Effective Date (i) under any
                  policy or agreement of insurance or indemnity, (ii) under any
                  bond, or (iii) to any insurance or condemnation proceeds or
                  awards;

                           (e) all Hydrocarbons produced from or attributable to
                  the Assets with respect to all periods prior to the Effective
                  Date including all merchantable liquids in stock or sales
                  tanks or associated flowlines, together with all proceeds from
                  or of such Hydrocarbons;

                           (f) claims of Seller for refund of, or loss carry
                  forwards with respect to income or franchise taxes or any
                  other Taxes attributable to: (i) any period prior to the
                  Effective Date, or (ii) any of the excluded assets set forth
                  in (a) through (q) of this definition;

                           (g) all amounts due or payable to Seller as
                  adjustments or refunds under any contracts or agreements
                  affecting the Assets, with respect to periods prior to the
                  Effective Date, specifically including, without limitation,
                  amounts recoverable from audits under operating agreements;

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

                           (i) all proceeds, benefits, income or revenues
                  accruing (and any security or other deposits made) with
                  respect to (i) the Assets prior to the Effective Date; and
                  (ii) any of the excluded assets set forth in (a) through (q)
                  of this definition;

                           (j) all legal flies; attorney-client communications
                  or attorney work product; records and documents subject to
                  confidentiality provisions, claims of privilege or other
                  restrictions (including, without limitation, contractual
                  obligations to third Persons) on access; and auditor's
                  reports;

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                           (k) (i) reserve information and reports; (ii)
                  seismic, geochemical, and geophysical information and data, or
                  other proprietary information relating thereto, whether owned
                  or licensed by Seller, and any interpretive data, but only to
                  the extent that Seller is prohibited from assigning or
                  licensing such information to Buyer or that Buyer elects not
                  to license or accept assignment thereof.

                           (l) all other bids received by Seller for the Assets
                  or any portion thereof;

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

                           (n) all of Seller's vehicles, trucks (including
                  associated tools), boats, house trailers, tools, pulling
                  machines, warehouse stocks, microwave equipment, computer
                  equipment, remote terminal units, equipment or material
                  temporarily located on the Assets.;

                           (o) any pipelines, easements, fixtures, tanks, LACT
                  units or equipment located on the Assets which belong to
                  third Persons, including lessors and Affiliates of Seller;

                           (p) all of Seller's interest in any oil, gas or
                  mineral leases, which (i) are not set forth on Schedule B or
                  (ii) cover or pertain to lands or depths other than the
                  particular lands or depths described in the Leases
                  specifically referenced on Schedule B or such depths which are
                  specifically excepted or reserved on Schedule B; and

                           (q) all real or personal property held or owned by
                  Seller's Affiliates or any third Persons.

                    "EXCLUDED OBLIGATIONS" means, with respect to any Asset,
            except as constitutes Environmental Obligations, any obligations of
            Seller (i) due and owed prior to the Effective Date under any
            Contract; (ii) due and owed prior to the Effective Date with respect
            to the payment of Burdens; (iii) to third Persons arising from
            property damage or personal injury sustained prior to the Effective
            Date; and (iv) arising from any existing litigation or demands made
            as of the Effective Date (including, but not limited to those items
            of litigation disclosed on Schedule 3.1(g).

                  "GOVERNMENTAL BODY" means any Federal, state, county, parish,
         municipal, or other federal, state or local governmental authority or
         judicial or regulatory agency, board, body, department, bureau,
         commission, instrumentality, court, tribunal or quasi-governmental
         authority in any jurisdiction (domestic or foreign).

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                    "HYDROCARBONS" means crude oil, natural gas, casinghead gas,
            condensate, sulphur, natural gas liquids, plant products and other
            liquid or gaseous hydrocarbons (including without limitation,
            coalbed gas and CO(2) and shall also refer to all other minerals of
            every kind and character which may be covered by or included in the
            Assets.

                    "KNOWLEDGE" means the actual knowledge of a Party's current
            corporate officers and business unit managers.

                    "LEASES" means, except to the extent constituting Excluded
            Assets, any and all rights, titles and interests owned by Seller in
            all of the oil, gas or mineral leases, and other interests described
            on Schedule B to the Agreement, insofar and only insofar as such
            Leases pertain to the lands and interests described in said
            Schedules. The Leases shall include all of Seller's right, title and
            interest to all depths unless specifically limited on Schedule B.

                    "LOSSES" means any and all losses, liabilities, claims,
            demands, penalties, fines, settlements, damages, actions, or suits
            of whatsoever kind and nature (but expressly excluding consequential
            damages), whether or not subject to litigation, including, without
            limitation (i) claims or penalties arising from products liability,
            negligence, statutory liability or violation of any Applicable Law
            or in tort (strict, absolute or otherwise) and (ii) loss of or
            damage to any property, and all reasonable out-of-pocket costs,
            disbursements and expenses (including, without limitation, legal,
            accounting, consulting and investigation expenses and litigation
            costs).

                    "MATERIAL ENVIRONMENTAL CONDITION" means a condition
            (excluding any condition relating to Plugging and Abandonment) that
            exists prior to the Effective Date, and only to the extent in
            existence as of the Effective Date, with respect to the air, land,
            soil, surface, subsurface strata, surface water, ground water or
            sediments which causes an Asset to be subject to immediate
            remediation under Environmental Laws in effect as of the Effective
            Date, but only to the extent that (i) the condition was not
            disclosed or otherwise known to the Buyer prior to the execution of
            this Agreement, (ii) the cost to remediate such condition to
            lawfully acceptable levels will exceed, as to Buyer's share, the sum
            of $50,000; and (iii) the cumulative cost to remediate all
            conditions qualifying under (i) and (ii) above exceed[s] two per
            cent (2%) of the Purchase Price.

                  "OTHER PROPERTY" means, except to the extent constituting
         Excluded Assets,

                           (a) all of Seller's interest in all wells (including,
                  without limitation, all oil, gas, injection, disposal and
                  other wells, whether active or inactive, productive or
                  non-productive, plugged and abandoned or temporarily
                  abandoned), platforms, equipment, facilities and personal
                  property of any kind including but not limited to tubing,
                  casing, wellheads; pumping units, production units,
                  compressors, valves, meters, flowlines, pipelines, gathering
                  systems, undersea power cables, tanks, heaters, separators,
                  dehydrators, pumps and injection units which are located on or
                  connected with the Leases, the Beneficial Interests or
                  Easements and which are

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                  used solely and exclusively in connection with the production,
                  treatment, gathering or transportation of Hydrocarbons from
                  the Leases, Properties or Easements;

                           (b) copies of the following instruments, insofar as
                  the same are attributable to, appurtenant to, incidental to,
                  or used for the operation of the Leases, the Beneficial
                  Interests or Easements: (i) all unitization, communitization,
                  and pooling designations, declarations, agreements and orders
                  covering the Leases, the Beneficial Interests or Easements, or
                  any portion thereof; and the units and pooled or communitized
                  areas created thereby; and (ii) all lease files, land files,
                  well files, gas and oil sales contract files, gas processing
                  files, division order files, abstracts, title opinions, and
                  all other books, files and records, information and data not
                  constituting Excluded Assets; and

                           (c) subject to Section 4.3(a), all rights,
                  obligations, interests and benefits to gas imbalances with
                  respect to the Assets; and

                           (d) all licenses, authorizations, permits, variances
                  and similar rights and interests related to the Leases,
                  Beneficial Interests, Easements and Contracts and personal
                  property to be conveyed hereunder.

                  "PERMITTED ENCUMBRANCES" means:

                           (a) all leases, operating agreements, operator liens
                  and working interest owner liens, unit, communitization and
                  pooling agreements, farmout agreements, subleases and farmin
                  agreements and all Contracts that do not affect Seller's net
                  revenue interest;

                           (b) all Applicable Laws, and all rights reserved or
                  vested in any Governmental Body to control or regulate the
                  Assets in any manner including, without limitation, any
                  adjustment to Seller's net revenue interest or gross working
                  interest in a particular Property, caused by, or as the result
                  of any action of a Governmental Body which is not the result
                  of any negligent act or omission of Seller;

                           (c) liens for Taxes or assessments not yet due and
                  payable or not yet delinquent, or if delinquent, that are
                  being contested in good faith by appropriate action brought in
                  the normal course;

                           (d) reversionary interests arising under farmout and
                  farmin agreements, subleases, and the non-consent provisions
                  of applicable operating agreements, as set forth on Schedule
                  C;

                           (e) liens imposed by Applicable Law, such as
                  carriers', warehousemen's and mechanics' liens and other
                  similar liens arising in the ordinary course of

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                  business which secure payment of obligations not more than
                  sixty (60) days past due or which are being contested in good
                  faith;

                           (f) defects that have been cured by possession under
                  applicable statutes of limitation, and

                           (g) other minor defects or irregularities generally
                  waived by prudent purchasers of oil and gas properties.

                  "PERSON" means any natural person, corporation, division of a
         corporation, association, company, estate, trust, partnership, joint
         venture, unincorporated organization, Governmental Body, or any other
         entity.

                  "PLUGGING AND ABANDONMENT" means all plugging, replugging,
         abandonment, removal, disposal or restoration associated with the
         Assets, including, but not limited to, all plugging and abandonment,
         removal, surface restoration (including without limitation wetlands and
         marsh restoration), site clearance and disposal of the wells, well
         cellars, structures and personal property located on or associated with
         the Assets (whether drilled or placed on an Asset prior to or after the
         Effective Date), the removal and capping of all associated flowlines,
         the restoration of the surface, site clearance, and any disposal of
         related waste materials, including without limitation naturally
         occurring radioactive material (NORM) and asbestos, all in accordance
         with Applicable Laws and the terms and conditions of the Leases,
         Beneficial Interests, Easements and Contracts.

                  "PROPERTIES" means an accounting unit described on Schedule C
         which is utilized by Seller for an allocation of revenue and expenses
         from the Assets.

                  "TAXES" shall mean any and all fees (including, without
         limitation, documentation, license, recording, filing and registration
         fees), taxes (including without limitation, production, gross receipts,
         ad valorem, value added, windfall profit tax, environmental tax,
         turnover, sales, use, personal property (tangible and intangible),
         stamp, leasing, lease, user, leasing use, excise, franchise, transfer,
         heating value, fuel, excess profits, occupational, interest
         equalization, lifting, oil, gas, or mineral production or severance,
         and other taxes, levies, imposts, duties, charges or withholdings of
         any nature whatsoever, imposed by any Governmental Body or taxing
         authority thereof, domestic or foreign, together with any and all
         penalties, fines, additions to tax and interest thereon, whether or not
         such tax shall be existing or hereafter adopted.

                  "TITLE DEFECT" shall mean a material deficiency in one (or
         more) of the following respects, to wit:

                           (a) Seller's title at the Closing Date, as to all or
                  a part of the Assets, is subject to an outstanding mortgage,
                  deed of trust or lien (other than Burdens);

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                           (b) Seller owns a lesser net revenue interest than
                  that shown on Schedule C attached hereto or a greater working
                  interest than that shown on Schedule C that is not offset by a
                  proportionate increase in net revenue interest;

                           (c) Seller's rights and interests are subject to
                  being reduced by virtue of the exercise by a third Person of a
                  reversionary, back-in or other similar right not reflected in
                  Schedule C;

                           (d) Seller is in default under some material
                  provision of a lease, farmin agreement, or other contract or
                  agreement affecting all or any part of the Assets;

           but shall not include any Permitted Encumbrance.

                    Loss of Lease acreage will be a Title Defect only if final
           adjudication as to the loss of that Lease occurs prior to Closing. If
           there is a lien or encumbrance in the form of a judgment secured by a
           supersedeas bond or other security approved by the court issuing such
           order, such shall not be considered a Title Defect under this
           Agreement.

           1.3 OTHER DEFINITIONS IN THE AGREEMENT. The following terms shall
   have the respective meanings ascribed to them in the Sections of the
   Agreement set forth below opposite such terms:

         Affiliate Oil Purchaser ............................4.3(b)(i)
         Assignments ........................................2.5
         Buyer ..............................................Preamble
         Claim Notice .......................................8.4(a)
         Cure ...............................................4.3(l)(ii)
         Cure Notice ........................................4.3(l)(ii)
         Defect Value .......................................4.3(l)(i)
         Disputed Claim .....................................8.6
         Final Recap ........................................4.3(f)
         Indemnified Party ..................................8.4(a)
         Indemnifying Party .................................8.4(a)
         Interest Addition ..................................4.3(l)(v)
         Interest Addition Notice ...........................4.3(l)(v)
         Interest Addition Payment ..........................4.3(l)(v)
         Interest Addition Rejection Notice .................4.3(l)(v)
         Interest Addition Value ............................4.3(l)(v)
         Northstar Agreement ................................5.1(h)
         Notice Period ......................................8.4(a)
         Offset .............................................4.3(l)(v)
         Party ..............................................Preamble
         Performance Deposit ................................2.3
         Preliminary Recap ..................................4.3(g)
         Purchase Price .....................................2.2
         Rejection Notice ...................................4.3(l)(iii)

                                       9

<PAGE>   13

         1.4 RULES OF CONSTRUCTION. For purposes of this Agreement:

                  (a) GENERAL. Unless the context otherwise requires, (i) "or"
         is not exclusive; (ii) an accounting term not otherwise defined has the
         meaning assigned to it in accordance with accounting principles that
         are generally accepted in the United States of America; (iii) words in
         the singular include the plural and words in the plural include the
         singular; (iv) words in the masculine include the feminine and words in
         the feminine include the masculine; (v) any date specified for any
         action that is not a Business Day shall be deemed to mean the first
         Business Day after such date; (vi) a reference to a Person includes its
         successors and assigns; and (vii) the use of the word "include" or
         "including" when following any general statement, term or matter, shall
         not be construed to limit such statement, term or matter to the
         specific items or matters set forth immediately following such word or
         to similar items or matters, whether or not non-limiting language (such
         as "without limitation" or "but not limited to" or words of similar
         import) is used with reference thereto, but rather shall be deemed to
         refer to all other items or matters that could reasonably fall within
         the broadest possible scope of such general statement, term or matter.

                  (b) PARTS AND SECTIONS. References to Parts and Sections are,
         unless otherwise specified, to Parts and Sections of the Agreement.
         Neither the captions to Parts or Sections hereof nor the Table of
         Contents shall be deemed to be a part of the Agreement.

                  (c) EXHIBITS AND SCHEDULES. The Exhibits and Schedules form
         part of this Agreement and shall have the same force and effect as if
         set out in the body of this Agreement.

                  (d) OTHER AGREEMENTS. References herein to any agreement or
         other instrument shall, unless the context otherwise requires (or the
         definition thereof otherwise specifies), be deemed references to that
         agreement or instrument as it may from time to time be changed, amended
         or extended.

                                    PART TWO

                                SALE AND PURCHASE

         2.1 PURCHASE AND SALE. At the Closing, Seller shall sell, assign and
convey to the Buyer and Buyer shall purchase and pay for the Assets and assume
the Assumed Obligations as provided in 4.2(a) and the Material Environmental
Conditions as set forth in Section 4.2(b).

                                       10

<PAGE>   14

         2.2 PURCHASE PRICE. The purchase price shall be Two Million Seven
Hundred Ninety Thousand Dollars ($2,790,000.00) (the "Purchase Price"). The
amount of the Purchase Price is set in consideration of Buyer assuming the
Assumed Obligations as provided in Section 4.2(a) and the Material Environmental
Conditions as set forth in Section 4.2(b).

         2.3 PERFORMANCE DEPOSIT. As evidence of good faith, Buyer has tendered
to Seller, a cash performance deposit in the amount of Fifty Thousand Dollars
($50,000.00) (the "Performance Deposit"). The Performance Deposit is
non-interest bearing and non-refundable except as provided herein. At Closing,
Buyer shall pay and deliver to Seller the remaining unpaid Purchase Price as
provided herein.

                  EXCEPT WHERE BUYER'S PERFORMANCE IS EXCUSED PURSUANT TO PART
                  FIVE, IF BUYER FAILS TO COMPLETE THE TRANSACTION SET FORTH IN
                  THIS AGREEMENT, THE PARTIES AGREE THAT SELLER SHALL RETAIN THE
                  PERFORMANCE DEPOSIT AS LIQUIDATED DAMAGES, WHICH THE PARTIES
                  AGREE IS A REASONABLE SUM CONSIDERING ALL THE CIRCUMSTANCES
                  EXISTING ON THE DATE OF THIS AGREEMENT, INCLUDING THE
                  RELATIONSHIP OF THE SUM OF THE RANGE OF HARM TO SELLER THAT
                  REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT
                  PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. IN
                  PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS
                  THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT
                  EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE
                  CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME
                  THIS AGREEMENT WAS MADE.

                         Seller              Buyer
                         Initial________     Initial_________

         2.4 ALLOCATION OF PURCHASE PRICE. Schedule 2.4 will set forth a good
faith allocation of the Purchase Price among the groups of Properties which
comprise the Assets, which allocation will be prepared by Buyer and delivered to
Seller upon execution of this Agreement. Such allocation will be provided for
the purpose of (i) establishing a basis for certain Taxes and (ii) handling
those instances for which the Purchase Price is adjusted as provided herein. In
the event that a negative allocation is made with respect to any Asset and the
negative allocation is not the result of Seller's overproduced cumulative gas
production imbalance, Seller expressly reserves the right within 10 Business
Days prior to closing to withdraw such. Asset or Assets from the sale, and Buyer
agrees to increase the Purchase Price by the same dollar amount allocated to
such Asset or Assets.

         2.5 CLOSING AND PAYMENT OF PURCHASE PRICE. Subject to the terms and
conditions contained herein, this sale and purchase shall close on the Closing
Date. At Closing, Buyer will pay Seller the remaining unpaid portion of the
Purchase Price, adjusted pursuant to the terms of

                                       11

<PAGE>   15

this Agreement, by wire transfer of collected funds payable to Seller as set
forth below. At Closing, Seller shall deliver to Buyer assignments and bills of
sale in the forms attached hereto as Exhibits A-1 through A-2 (the
"Assignments"), as well as such certificates or other documents as are required
to effect the transfer of the Assets, or the subsequent operation thereof.

         2.6 METHOD OF PAYMENT. Any amount payable under this Agreement shall be
payable in immediately available funds by means of a wire transfer, if to
Seller, to Seller's account at Chase Manhattan Bank, 1 Chase Plaza, New York,
New York, ABA, #021000021, account number 9102582567 (with immediate telephone
notice to Luci Romano, 914-253-6071), or to such other account number as Seller
may by written notice direct, or if to Buyer, to Buyer's account as may be
designated by Buyer.

                                   PART THREE

                         REPRESENTATIONS AND WARRANTIES

         3.1 SELLER. Seller represents and warrants to Buyer that, as of the
Effective Date:

                  (a) ORGANIZATION AND STANDING. Seller has been duly organized
         and is validly existing in good standing under the laws of the State of
         Delaware, and is duly qualified to do business and is in good standing
         as a foreign corporation in all jurisdictions where the nature of its
         properties or business requires it.

                  (b) AUTHORITY AND NO VIOLATION. The Seller has the corporate
         power and authority to execute, deliver and perform its obligations
         under this Agreement. The execution, delivery and performance of this
         Agreement (a) has been duly authorized by all requisite corporate or
         shareholder action and (b) does not conflict with or result in a
         violation or breach of the Corporate Documents of the Seller or of any
         agreement, instrument, statute, regulation, rule, order, writ, judgment
         or decree to which the Seller or its property is directly or indirectly
         a party or is directly or indirectly subject.

                  (c) VALIDITY OF AGREEMENT. This Agreement is a legal, valid
         and binding obligation of Seller, enforceable against Seller in
         accordance with the terms of the Agreement, except as enforcement may
         be limited by bankruptcy, insolvency, reorganization or other similar
         Applicable Laws affecting the enforcement of creditor's rights
         generally. The enforceability of Seller's obligations under the
         Agreement is subject to general principles of equity (regardless of
         whether such enforceability is considered in a proceeding in equity or
         at law).

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

                                       12

<PAGE>   16

                  (e) BROKERS' FEES. Seller has not incurred any liability,
         contingent or otherwise, for brokers' or finders' fees relating to the
         Contemplated Transactions for which Buyer shall be liable.

                  (f) STATUS. Seller is not a non-resident alien, foreign
         corporation, foreign partnership, foreign trust or foreign estate (as
         those terms are defined in the Code and in the regulations promulgated
         pursuant thereto.

                  (g) LITIGATION. Except as set forth on Schedule 3.1(g), to the
         Knowledge of Seller there are no actions suits, or proceedings pending
         or threatened against Seller as to the Assets, before any court or
         arbitration tribunal or before or by any Governmental Body.

                  (h) NO CONSENTS REQUIRED. Except as set forth on Schedule
         3.1(h) or consents required from Governmental Bodies as part of an
         ordinary course transfer, no consents, approvals or other action by, or
         filing with any Person or Governmental Body is required in connection
         with the execution, delivery and performance by Seller of the
         Agreement.

                  (i) LIMITATION. The foregoing representations and warranties
         are given by Seller to Buyer and are not intended to be given or used
         by any other Person not a Party to this Agreement.

                  (j) NOTICE OF MATERIAL ENVIRONMENTAL CONDITION. Seller has not
         received notice of a Material Environmental Condition within 12 months
         prior to the date of execution of this Agreement from any operator of
         the Assets to the knowledge of Seller's current Gulf of Mexico Business
         Unit Leader, OBO Asset Manager, or Safety, Health and Environment
         Manager.

         3.2 BUYER. Buyer represents and warrants to Seller that, as of the
Effective Date:

                  (a) ORGANIZATION AND STANDING. Buyer has been duly organized
         and is validly existing in good standing under the laws of the State of
         Delaware, and is duly qualified to do business in Louisiana as Energy
         Partners of Delaware, Ltd. Buyer is in good standing as a foreign
         corporation in all jurisdictions where the nature of its properties or
         business requires it.

                  (b) AUTHORITY AND NO VIOLATION. The Buyer has the corporate
         power and authority to execute, deliver and perform its obligations
         under this Agreement. The execution, delivery and performance of this
         Agreement (a) has been duly authorized by all requisite corporate or
         shareholder action and (b) does not conflict with or result in a
         violation or breach of the Corporate Documents of the Buyer or of any
         agreement, instrument, statute, regulation, rule, order, writ, judgment
         or decree to which the Buyer or its property is directly or indirectly
         a party or is directly or indirectly subject.

                                       13

<PAGE>   17

                  (c) VALIDITY OF AGREEMENT. This Agreement is a legal, valid
         and binding obligation of Buyer, enforceable against Buyer in
         accordance with the terms of the Agreement, except as enforcement may
         be limited by bankruptcy, insolvency, reorganization or other similar
         Applicable Laws affecting the enforcement of creditor's rights
         generally. The enforceability of Buyer's obligations under the
         Agreement is subject to general principles of equity (regardless of
         whether such enforceability is considered in a proceeding in equity or
         at law).

                  (d) NO BANKRUPTCY. There are no bankruptcy, reorganization or
         receivership proceedings pending, being contemplated by, or to the
         actual knowledge of Buyer, threatened against Buyer.

                  (e) BROKERS' FEES. Buyer has not incurred any liability,
         contingent or otherwise, for brokers' or finders' fees relating to the
         Contemplated Transactions for which Seller shall be liable.

                  (f) KNOWLEDGEABLE INVESTOR. Buyer is an experienced and
         knowledgeable investor and operator in the oil and gas business. In
         making its decision to participate in this Agreement and the
         Contemplated Transactions, Buyer has relied solely on its own
         independent investigation, analysis and evaluation of the Assets.

                  (g) SECURITIES REPRESENTATION. Buyer is acquiring the Assets
         for its own account and not with a view to, or for offer of resale in
         connection with, a distribution thereof, within the meaning of the
         Securities Act of 1933, 15 U.S.C. Section 77a et seq., or any other
         Applicable Laws pertaining to the distribution of securities.

                  (h) FUNDING. Buyer has arranged to have available by the
         Closing Date sufficient funds to enable the Buyer to pay in full the
         Purchase Price as herein provided and otherwise to perform its
         obligations under this Agreement.

                  (i) QUALIFICATIONS AND APPROVALS. Buyer or Buyer's assignee(s)
         has obtained all necessary qualifications and approvals required by all
         Governmental Bodies having jurisdiction over the Assets.

                  (j) GOVERNMENTAL BODY APPROVAL. To Buyer's Knowledge, there
         are no facts or conditions with respect to the Assets that may cause
         any Governmental Body to withhold its unconditional approval of the
         Assignments.

         3.3 DISCLAIMER AND NOTIFICATIONS. THERE ARE NO WARRANTIES,
REPRESENTATIONS OR IMPLIED COVENANTS BETWEEN THE PARTIES EXCEPT THE MATTERS
EXPRESSLY PROVIDED FOR IN THIS AGREEMENT. THE PARTIES RESPECTIVELY DISCLAIM ANY
OTHER WARRANTIES OR REPRESENTATIONS INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES AND REPRESENTATIONS IMPLIED UNDER APPLICABLE LAW.

                                       14

<PAGE>   18

                  (a) NO IMPLIED REPRESENTATIONS. IT IS EXPRESSLY UNDERSTOOD BY
         THE PARTIES HERETO THAT SELLER DOES NOT MAKE ANY REPRESENTATIONS OR
         WARRANTIES, EXPRESS OR IMPLIED, AS TO TITLE OR THE CONDITION OR STATE
         OF REPAIR OF THE ASSETS, THEIR VALUE, QUALITY, MERCHANTABILITY,
         SUITABILITY OR FITNESS FOR ANY USES OR PURPOSES, NOR AS TO THE CURRENT
         VOLUME, NATURE, QUALITY, CLASSIFICATION, OR VALUE OF THE OIL, GAS OR
         OTHER MINERAL RESERVES THEREUNDER OR COVERED THEREBY, NOR WITH RESPECT
         TO ANY APPURTENANCES THERETO BELONGING OR IN ANY WISE APPERTAINING TO
         SAID ASSETS, OR OTHERWISE. Seller has advised Buyer and Buyer has
         acknowledged that certain spills of Hydrocarbons, produced water and
         chemicals from oil and gas exploration, development, production or
         processing have occurred, or may have occurred, upon the Assets, which
         could have resulted in contamination of the soil, water, ground water,
         or improvements on the Assets. Furthermore, Seller has cautioned Buyer
         to thoroughly examine and inspect the Assets for any such conditions or
         violations and generally as to the condition of the Assets and its
         improvements, including a recommendation by Seller to Buyer that Buyer
         engage an environmental consulting firm to make an environmental survey
         of the Assets, and Buyer hereby acknowledges such obligations and
         assumes all liabilities associated therewith.

                  (b) BUYER'S INSPECTION OF THE ASSETS. Further, Buyer certifies
         that the Assets (including, but not limited to, any oil, gas or other
         mineral reserves underlying the Assets) have been, or will be prior to
         Closing, carefully inspected by Buyer; that Buyer is, or will be prior
         to Closing, familiar with their condition and value thereof, and the
         improvements and appurtenances (including electric wiring and machinery
         installed thereon) located on the Assets, inclusive of any
         Hydrocarbons, other soil contaminants or waste substances, whether
         similar or dissimilar, that may be present in the soil, water and
         groundwater; that Buyer has engaged, or has had the opportunity to
         engage prior to Closing, such contractors or consultants as Buyer deems
         prudent for tests and surveys of the soil, water, groundwater, Other
         Property, and improvements on the Assets; and that Buyer assumes any
         and all obligations, risks and liabilities associated therewith. Buyer
         acknowledges that the Assets have been or may have been used in
         connection with oil, gas and other mineral exploration, development and
         operations, as well as with respect to processing and refining
         operations, and, as such, equipment, appurtenances, processing and
         other facilities, plants, buildings, structures, improvements,
         abandoned and other tanks and piping (including above ground and
         underground tanks and piping), storage facilities, gathering and
         distribution lines, wells and other petroleum production facilities and
         appurtenances which have not been excepted and excluded from this
         conveyance may be located thereon. Further, Buyer acknowledges that the
         Assets may also contain unplugged wells, wellbores or buried pipelines
         or other equipment, whether or not of a similar nature, the locations
         of which may not now be known by Seller or be readily apparent through
         a physical inspection of the Assets. Buyer further accepts the Assets
         (including, but not limited to, any oil, gas or other minerals and/or
         mineral reserves underlying said Assets) AS IS, WHERE IS, IN THEIR
         PRESENT CONDITION AND STATE OF REPAIR, AND WITHOUT ANY REPRESENTATIONS,
         GUARANTIES, OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THEIR TITLE,

                                       15

<PAGE>   19

         VALUE, QUALITY, MERCHANTABILITY, OR THEIR SUITABILITY OR FITNESS FOR
         BUYER'S INTENDED USE, OR FOR ANY USES OR PURPOSES WHATSOEVER, OR THAT
         THE ASSETS HAVE BEEN RENDERED FREE FROM ANY DEFECTS, HAZARDS, OR
         DANGEROUS CONDITIONS.

                  (c) DISCLAIMER. Without limiting the generality of the
         foregoing, but in furtherance of same, SELLER DISCLAIMS ANY AND ALL
         LIABILITY ARISING IN CONNECTION WITH ANY ENVIRONMENTAL MATTERS
         INCLUDING, WITHOUT LIMITATION, ANY PRESENCE OF NATURALLY OCCURRING
         RADIOACTIVE MATERIAL (NORM) ON THE ASSETS. IN ADDITION, THERE ARE NO
         WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO THE ACCURACY
         OR COMPLETENESS OF ANY DATA, INFORMATION OR MATERIALS HERETOFORE OR
         HEREAFTER FURNISHED IN CONNECTION WITH THE ASSETS OR AS TO THE QUALITY
         OR QUANTITY OF THE HYDROCARBONS AND ANY OTHER MINERAL RESERVES, IF ANY,
         ATTRIBUTABLE TO THE INTEREST CONVEYED HEREIN OR THE ABILITY OF THE
         ASSETS TO PRODUCE HYDROCARBONS OR ANY OTHER MINERALS, AND ANY AND ALL
         DATA, INFORMATION AND MATERIAL FURNISHED BY SELLER IS PROVIDED AS A
         CONVENIENCE ONLY AND ANY RELIANCE ON OR USE OF THE SAME IS AT BUYER'S
         SOLE RISK.

                  (d) YEAR 2000 DISCLAIMER. THE CONTEMPLATED TRANSACTION SHALL
         BE WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION THAT ANY
         ASSETS EXCHANGED HEREUNDER SHALL IN ANY WAY WHATSOEVER BE MILLENNIUM
         COMPLIANT. FOR PURPOSES OF THIS AGREEMENT, "MILLENNIUM COMPLIANT" MEANS
         THAT THE ASSETS WILL ACCURATELY: (A) HANDLE DATA BEFORE, DURING, AND
         AFTER JANUARY 1, 2000, INCLUDING, BUT NOT LIMITED TO, ACCEPTING DATE
         INPUT, PROVIDING DATE OUTPUT, AND PERFORMING CALCULATIONS ON DATES OR
         PORTIONS OF DATES; (B) FUNCTION WITHOUT INTERRUPTION BEFORE, DURING,
         AND AFTER JANUARY 1, 2000, WITHOUT ANY CHANGE IN OPERATIONS ASSOCIATED
         WITH THE ADVENT OF THE NEW CENTURY (INCLUDING THE FACT THAT THE YEAR
         2000 IS A LEAP YEAR); (C) ACCOMMODATE FOUR-DIGIT YEAR INPUT OR RESPOND
         TO TWO-DIGIT YEAR-DATE INPUT IN A WAY THAT RESOLVES THE AMBIGUITY AS TO
         CENTURY IN A DISCLOSED, DEFINED, AND PREDETERMINED MANNER; AND (D)
         STORE AND PROVIDE OUTPUT OF DATE INFORMATION IN WAYS THAT ARE
         UNAMBIGUOUS AS TO CENTURY.

                  (e) WAIVER OF IMPLIED WARRANTIES. BUYER UNDERSTANDS THAT UNDER
         ARTICLES 2520 THROUGH 2548 OF THE LOUISIANA CIVIL CODE, AS AMENDED, AND
         OTHER PROVISIONS OF LAW THIS SALE WOULD ORDINARILY INCLUDE A WARRANTY,
         IMPLIED BY LAW, AGAINST CERTAIN DEFECTS IN THE SALE CONTEMPLATED
         HEREUNDER. BUYER EXPRESSLY WAIVES ANY AND ALL SUCH WARRANTIES WITH
         RESPECT TO ALL

                                       16

<PAGE>   20

         DEFECTS, WHETHER APPARENT OR LATENT, VISIBLE OR NOT, AND REGARDLESS OF
         WHETHER BUYER IS PRESENTLY AWARE OF SUCH DEFECTS. THIS WAIVER OF
         WARRANTY EXTENDS TO ALL DEFECTS, EVEN IF THE DEFECT OR DEFECTS RENDER
         THE PROPERTY ABSOLUTELY USELESS, OR SO INCONVENIENT AND IMPERFECT THAT
         BUYER WOULD NOT HAVE PURCHASED THE PROPERTY HAD BUYER KNOWN OF THE
         DEFECT. BUYER HAS EXAMINED THE PROPERTY THOROUGHLY AND IS FULLY
         SATISFIED WITH ITS CONDITION. BUYER HAS READ AND UNDERSTANDS THE
         FOREGOING WAIVER OF THE IMPLIED WARRANTY PROVIDED FOR UNDER ARTICLES
         2520 THROUGH 2548 OF THE LOUISIANA CIVIL CODE, AS AMENDED, THE WAIVER
         HAS BEEN POINTED OUT AND EXPLAINED, AND QUESTIONS OR DOUBTS BUYER HAS
         CONCERNING THE SAME HAVE BEEN ANSWERED SATISFACTORILY. SELLER AND BUYER
         ACKNOWLEDGE AND STIPULATE THAT THE SALE PRICE WAS NEGOTIATED AND AGREED
         UPON AFTER CONSIDERATION OF THE WAIVER OF WARRANTY HEREIN SET FORTH.
         BUYER AND SELLER ACKNOWLEDGE READING AND UNDERSTANDING THE WARRANTY
         WAIVER PROVISIONS CONTAINED IN THIS INSTRUMENT BY THEIR INITIALS:

                           BUYER:_______ SELLER:______

                                    PART FOUR

                                    COVENANTS

         4.1 COVENANTS OF SELLER. Seller covenants with the Buyer as follows:

                  (a) ACCESS. From the date of execution of this Agreement until
         Closing, Seller shall afford Buyer and Buyer's representatives full and
         reasonable access to the Assets in the possession of Seller during
         normal working hours, and shall at Buyer's request, request access on
         behalf of Buyer to any Assets not operated by Seller.

                  (b) FILES. From the date of execution of this Agreement until
         Closing, Seller shall permit Buyer and its representatives at
         reasonable times during normal business hours to examine, in Sellers'
         offices at their actual location, all abstracts of title, title
         opinions, title files, ownership maps, lease files, assignments,
         division orders, payout statements and agreements pertaining to the
         Assets insofar as the same may now be in existence and in the
         possession of Seller, except those which constitute Excluded Assets.
         From the date of execution of this Agreement until Closing, Seller
         shall make available to Buyer for inspection by Buyer at reasonable
         times during normal business hours at their actual location, all
         production and engineering books, records and data in possession of
         Seller which are directly related to the Assets, and all other files,
         records, and data pertaining to the Assets, except those which may
         constitute Excluded Assets.

                                       17

<PAGE>   21

                  (c) CONSENTS. Subject to Section 4.3(n), Seller shall use
         reasonable efforts to obtain all necessary waivers, consents,
         approvals, permits and authorizations and actions of third Persons to
         complete the Contemplated Transactions prior to Closing.

                  (d) CONDUCT OF BUSINESS. From the date of execution of this
         Agreement and until the Closing, Seller shall (i) maintain books of
         account and records with regard to the Assets in accordance with
         Seller's past practices; and (ii) pay its share of all costs and
         expenses attributable to the Assets in accordance with past practices
         subject to its rights under the Final Recap set forth in Section
         4.3(f). Without limitation of the foregoing, after the execution of the
         Agreement and prior to Closing, Seller shall have the right to make any
         changes, repairs or modifications, or incur any expenditures necessary
         or desirable in Seller's opinion for the protection of the Assets,
         required under the Contracts, or to comply with any Applicable Law or
         other legal requirement relative to the premises or to prevent or react
         to an emergency or environmental incident. Seller shall have the right
         to effect such expenditure or action with or without the approval of
         Buyer, acting as would any prudent operator under similar
         circumstances. Unless Buyer and Seller otherwise agree, Seller shall
         not materially alter the Assets (other than the use of supplies and
         consumables) or remove any improvements, equipment or property which
         comprise the Assets (other than the use of supplies and consumables).

         4.2 COVENANTS OF BUYER. Buyer covenants with Seller as follows:

                  (a) ASSUMED OBLIGATIONS. At Closing, Buyer shall assume the
         Assumed Obligations.

                  (b) MATERIAL ENVIRONMENTAL CONDITIONS. Except with respect to
         any Material Environmental Condition indemnified or remediated by
         Seller under Section 6.1(a) or 6.1(d) hereof and without limitation of
         Section 4.2(a), at Closing, Buyer shall assume all obligations related
         to the Material Environmental Conditions.

                  (c) BUYER'S RESPONSIBILITIES. Buyer shall be responsible for
         the payment of all necessary and reasonable capital costs, Taxes,
         expenses and Burdens incurred against or applicable to the operation
         and use of the Assets from and after the Effective Date, whether
         invoiced or not. All production of Hydrocarbons from the Assets
         occurring from and after the Effective Date and all proceeds from or
         attributable thereto shall be the property of and belong to Buyer as of
         the Effective Date.

                  (d) PAYMENT OF BURDENS. Buyer shall commence, or cause to be
         commenced, the payment of Burdens for all Hydrocarbons produced
         beginning the first day of the month following the month in which
         Closing occurs.

                  (e) CONFIDENTIALITY. In the event that this Agreement is
         terminated or, if not terminated, until the Closing, all information
         made available to Buyer under Section 4.1 shall be maintained
         confidential by Buyer for a period of one year. Buyer shall take

                                       18

<PAGE>   22
            whatever reasonable steps as may be necessary to ensure that Buyer's
            employees, consultants and agents comply with the provisions of this
            Section 4.2(e).

                     (f) COMPLIANCE WITH LAWS. Buyer hereby covenants that it
            will comply with all Applicable Laws in its ownership and operation
            of the Assets. Buyer specifically covenants that it will comply with
            all Applicable Laws with respect to (i) all exploration, drilling,
            production, Plugging and Abandonment, and (ii) the control,
            regulation and prevention of pollution, including, but not limited
            to, saltwater discharge and contamination.

                     (g) RECOUPMENT OF OVERPAYMENTS. Buyer expressly agrees to
            assist Seller in recouping any monies from third Persons due to
            overpayments made prior to the Effective Date, provided there is no
            liability attributed to any action or inaction undertaken by Buyer
            on behalf of Seller. This assistance should replicate the reasonable
            and customary action that Seller would take in the event that Seller
            continued to own or operate the Assets.

                     (h) PERFORMANCE BONDS.

                              (i) In the event Buyer is required, by any
                     Governmental Body having jurisdiction and authority over
                     the Assets, to provide a letter of credit, surety bond or
                     other surety instrument in order to secure approval of the
                     Assignments contemplated hereby, Buyer shall furnish same
                     in a form acceptable to the Governmental Body, as soon as
                     possible after receipt of such Governmental Body's request
                     for security. Additionally Buyer shall provide Seller with
                     a copy of said bond, letter of credit or other surety
                     instrument, provide proof satisfactory to Seller that the
                     Governmental Body has accepted said bond or letter of
                     credit, and provide copies of the Governmental Body's
                     approval of the assignment of such Leases and Properties.
                     Buyer shall take whatever steps are necessary to expedite
                     approval of the Assignments from the appropriate
                     Governmental Body.

                              (ii) As part of the consideration for the
                     Contemplated Transactions, Buyer covenants to, and shall
                     guarantee full performance of, and compliance with, all
                     Assumed Obligations. The performance bonds utilized for
                     purposes of this paragraph shall be in the form attached as
                     Exhibit B. This obligation to provide security to Seller
                     shall be totally separate and apart from any such
                     obligations owed to any other Person or Governmental Body.

                     (i) INSURANCE. Buyer covenants that all insurance obtained
            by Buyer during its term of ownership of the Assets covering
            environmental damage, third Person property damage, personal injury
            or death shall name Seller as an additional insured to the extent of
            Seller's insurable interest and Buyer's liability and obligations
            assumed herein, including those of indemnification, and shall
            contain a waiver of subrogation against Seller.

                     (j) ACCESS. Buyer shall use its best efforts to secure for
            Seller the right to enter onto and use the Assets and such other
            resources, including but not limited to water and

                                       19
<PAGE>   23

            power, as are reasonably necessary for Seller to remedy any Material
            Environmental Condition pursuant to Section 6.1(a).

            4.3      COVENANTS OF SELLER AND BUYER. Buyer and Seller agree as
follows:

                     (a) PRODUCT IMBALANCES. With respect to product imbalances
            from the Assets, the Parties agree as follows:

                              (i) UNDERPRODUCTION. The Purchase Price reflects
                     Seller's underproduced gas position (if any) under any
                     Contracts or wells included in the Assets as shown on
                     Schedule 4.3(a). As of the Effective Date, Buyer shall
                     assume all of Seller's rights, obligations, liabilities and
                     responsibilities associated with Seller's underproduced gas
                     position, including any Taxes and royalties due or payable
                     on the value of Seller's underproduction and Seller shall
                     have no further rights or claims whatsoever with respect to
                     the underproduced gas. Seller and Buyer agree that the
                     Purchase Price shall be adjusted upward at the rate of
                     $1.50 per mcf at Closing to reflect the estimated value of
                     any additional underproduction not reflected on Schedule
                     4.3(a) or any reduction in overproduction described in
                     Section 4.3(a)(ii) as of the Effective Date. Any additional
                     underproduced volumes or reduction in overproduction
                     accrued prior to the Effective Date and identified after
                     Closing shall be accounted for as provided in Section
                     4.3(f) at the same rate of $1.50 per mcf.

                              (ii) OVERPRODUCTION. The Purchase Price reflects
                     Seller's overproduced gas position (if any) under any
                     Contracts or wells included in the Assets as shown on
                     Schedule 4.3(a). As of the Effective Date, Buyer hereby
                     agrees to and shall assume all rights to Seller's
                     overproduced gas position (but not including the gas
                     actually overproduced) including the right to recoup Taxes
                     and royalties associated with such overproduction, as well
                     as all of Seller's liabilities, responsibilities and
                     obligations to third Persons associated with such
                     overproduced gas position and Seller shall have no further
                     rights, liabilities, obligations or responsibilities
                     whatsoever with respect to the overproduced gas. Seller and
                     Buyer agree that the Purchase Price shall be adjusted
                     downward at the rate of $1.50 per mcf at Closing to reflect
                     the estimated value of any additional overproduction not
                     reflected on Schedule 4.3(a) or reduction in
                     underproduction described in 4.3(a)(i) as of the Effective
                     Date. Any additional overproduced volumes or reductions in
                     underproduction accrued prior to the Effective Date and
                     identified after Closing shall be accounted for as provided
                     in Section 4.3(f) at the same rate of $1.50 per mcf.

                     (b) CALL ON PRODUCTION. With respect to the production of
            Hydrocarbons from the Assets, Buyer and Seller agree as follows:

                              (i) OIL. For a period of five (5) years following
                     Closing, Seller reserves on behalf of Equiva Trading
                     Company LLC or other Affiliates of Seller ("Affiliate

                                       20

<PAGE>   24

                     Oil Purchaser"), the right from time to time, to purchase
                     from Buyer at a price and on terms equivalent to the price
                     and terms offered to Buyer by any bona fide offer from a
                     third Person purchaser, the crude oil produced and saved
                     from the Properties, except any used for operating purposes
                     thereon. Said third Person offer shall be made either: (i)
                     in writing; or, (ii) orally, subsequently confirmed in
                     writing. Affiliate Oil Purchaser's election to purchase
                     said crude oil shall be given to Buyer in writing within
                     five (5) business days from receipt of notice from Buyer.
                     For the purpose of this Article 4.3(b), all notices should
                     be sent to the attention of Mr. D. R. Davis, Equiva Trading
                     Company LLC, Post Office Box 4604 Houston, Texas
                     77210-4604, phone number (713) 277-5873, fax number (713)
                     277-6105, or other such party or address as Affiliate Oil
                     Purchaser may specify, in writing, from time to time.

                              (ii) GAS. Seller reserves and is hereby given the
                     limited optional preferential right at any time, and from
                     time to time, to enter into a contract to purchase or
                     designate an alternate purchaser, (all herein called
                     Seller), for all of Buyer's gas, including casinghead gas,
                     produced from the Properties, such right to be exercised as
                     hereinafter provided. Therefore, in the event that Buyer
                     elects to enter into a contract which has a term of six (6)
                     months or longer for the sale of its gas, Buyer shall
                     promptly give Seller written notice of such fact, and
                     Seller shall have five (5) business days after receipt of
                     said notice to elect either to enter into a contract of
                     purchase, or to designate a third Person (which must be an
                     Affiliate of Seller) purchaser of such gas on either the
                     same terms and conditions or on more favorable terms and
                     conditions to Buyer, and if such third Person purchaser is
                     designated, such designation shall be binding on Buyer. If
                     Seller fails to notify Buyer within said five (5) business
                     day period of its election to exercise its preferential
                     right to purchase, then it shall have no right to exercise
                     said right during the contract term. If Seller does not
                     exercise such preferential right and for any reason Buyer
                     does not thereafter enter into said contract, or if the
                     resulting contract expires or is terminated or
                     renegotiated, then the foregoing reservation of said
                     optional preferential right shall continue in full force
                     and effect and said optional preferential right shall apply
                     with respect to any new proposed contract of six (6) months
                     or longer to purchase gas from the Properties. For the
                     purpose of this Article 4.3(b), all notices should be sent
                     to the attention of Mr. A. J. Brown, Texaco Natural Gas
                     Inc., 1437 South Boulder St., Tulsa, Oklahoma 74119-3609,
                     phone number (918) 560-6431, fax number (918) 560-6075, or
                     other such party or address as Seller or Affiliate of
                     Seller may specify, in writing, from time to time.

                              (iii) PROCESSING. At Closing, Buyer shall enter
                     into a processing agreement with Seller or Seller's
                     Affiliate, for the Assets in substantially the form
                     attached hereto as Exhibit C. Alternatively, in
                     consideration for an additional payment of Three Thousand
                     Dollars ($3,000), Buyer may at Closing enter into a
                     processing agreement with Seller or Seller's Affiliate for
                     the Assets in substantially the form attached hereto as
                     Exhibit D. Buyer shall advise Seller at least 5 Business
                     Days prior to closing as to the form of processing
                     agreement Buyer will exercise at Closing.

                                       21

<PAGE>   25

                     (c) TRANSFER OF RECORDS. With the exception of those items
            constituting Excluded Assets, copies of all the files, Contracts,
            and documents of which Seller has possession affecting title to the
            Leases, Beneficial Interests, Contracts and Easements, and all
            books, records, production records, logs, well files, information,
            and engineering data relating to the Assets, of which Seller has
            possession, shall be shipped to Buyer within sixty (60) days after
            Closing. Notwithstanding the foregoing, Seller shall use its
            reasonable efforts to transfer relevant files in Seller's inactive
            storage (if any) as soon as practicable after Closing, but Seller
            shall not be liable if it fails to identify such files after
            exercising its reasonable efforts or if such files are inadvertently
            destroyed prior to such transfer. Buyer shall designate the method
            of shipment and the carrier far enough in advance to allow for
            timely shipment and will be solely responsible for the cost and
            expense of reproduction and shipment and for any Losses occurring as
            a result of such shipment. To the extent practical, Seller may elect
            to provide the above records in electronic format in lieu of paper
            copies.

                     (d) LETTERS IN LIEU. Buyer shall prepare and Seller shall
            execute, acknowledge and deliver transfer orders or letters in lieu
            directing all purchasers of production to make payments to Buyer of
            proceeds attributable to production from the Assets at Closing.

                     (e) PRELIMINARY RECAP. Five days before the Closing, Seller
            shall provide to Buyer, for Buyer's concurrence, a Closing statement
            ("Preliminary Recap") with reasonable supporting documentation to
            account for all adjustments to the Purchase Price. In addition,
            Seller may include in the Preliminary Recap both revenues and
            expenses, including but not limited to the production proceeds
            received by Seller, the product imbalances determined pursuant to
            4.3(a), and all necessary and reasonable capital costs, Taxes,
            expenses and Burdens paid by Seller attributable to the Assets from
            and after the Effective Date. Seller shall cooperate with Buyer to
            resolve any disputes on a best efforts and good faith basis. The
            amounts due under the Preliminary Recap shall be an adjustment to
            the Purchase Price at Closing.

                     (f) FINAL RECAP. Within one hundred fifty (150) days after
            the Closing, Seller shall provide to Buyer, for Buyer's concurrence,
            a final recapitulation settlement ("Final Recap") to account for all
            production proceeds received by Seller, the product imbalances
            determined pursuant to Section 4.3(a), all accounts receivable from
            third Person working interest owners related to the Assets, and all
            necessary and reasonable capital costs, Taxes, including prorated
            estimates of ad valorem taxes in the absence of actuals, expenses
            and Burdens paid by Seller attributable to the Assets from and after
            the Effective Date. Buyer shall have the right, within thirty (30)
            days after receipt of the Final Recap, to audit and either (i)
            accept the Final Recap or (ii) take exceptions to the Final Recap.
            Any disagreements shall be resolved on a best efforts and good faith
            basis by Seller and Buyer. If the Parties are not able to resolve
            any disagreements within one hundred eighty days after exceptions to
            the Final Recap are taken, such disagreements shall be resolved
            pursuant to Section 9.14.

                                       22
<PAGE>   26

                     (g) PAYMENT. Payment of any amounts owed under the Final
            Recap is due within thirty (30) days of receipt of Buyer's notice of
            acceptance of the Final Recap, or within thirty (30) days of
            resolution of any exceptions to the Final Recap, whichever is later.
            After the expiration of the thirty (30) day period, interest will be
            applied to the balance due at the Agreed Rate.

                     (h) PARTIES' RESPONSIBILITY. Buyer shall be responsible for
            the payment of (or, if paid by Seller, shall monthly reimburse
            Seller for) all necessary and reasonable capital costs, Taxes,
            expenses and Burdens incurred against or applicable to the operation
            and use of the Assets from and after the Effective Date. All
            production from the wells located on or attributable to the Assets
            and all proceeds from or attributable to production from the Assets
            and sale thereof shall be the property of Buyer and, if received by
            Seller, shall be paid to Buyer on a monthly basis from and after the
            Effective Date.

                     (i) ACCESS TO DOCUMENTS. Each Party shall provide
            reasonable access to all relevant documents, data and other
            information which may be required by the other Party for the purpose
            of preparing tax returns and responding to any audit by any
            Governmental Body. Each Party shall cooperate with all reasonable
            requests of the other Party made in connection with contesting the
            imposition of Taxes. Notwithstanding anything to the contrary in
            this Agreement, neither Party shall be required at any time to
            disclose to the other Party any tax returns or other confidential
            tax information.

                     (j) AUDIT RIGHTS. Within one year after the Closing Date,
            Seller and Buyer may, at its own expense and by appointment only,
            audit the other Party's books, accounts and records relating to such
            production proceeds, capital costs, Taxes, expenses and Burdens
            relating to this transaction. Such audit shall be conducted so as to
            cause a minimum of inconvenience to the audited Party.

                     (k) FURTHER ASSURANCES. After Closing, Seller and Buyer
            agree to take such further actions and to execute, acknowledge and
            deliver all such further documents necessary or useful in carrying
            out the purposes of this Agreement or of any document delivered
            pursuant hereto.

                     (1) TITLE DEFECTS. With respect to Title Defects:

                              (i) On or before fifteen (15) Business Days prior
                     to the Closing Date, Buyer shall have the right to furnish
                     Seller with written notices of alleged Title Defects
                     ("Title Defect Notice"). The Title Defect Notice shall
                     state with reasonable specificity the Property affected,
                     the particular Title Defect claimed, and Buyer's good faith
                     estimate of the amount the Title Defect reduces the
                     Purchase Price ("Defect Value"). Buyer shall conclusively
                     be deemed to have waived any Title Defects not asserted by
                     a Title Defect Notice on or before fifteen (15) Business
                     Days prior to the Closing. For any Title Defect asserted,
                     Seller shall have the option of (i) curing the Title
                     Defect, (ii) contesting the Title Defect or Buyer's good
                     faith estimate of the value thereof, or (c) paying Buyer's
                     good faith estimate of the Defect Value as

                                       23

<PAGE>   27

                     an adjustment to the Purchase Price subject to the
                     limitations set forth below ("Title Indemnity Payment").

                              (ii) In the event Seller elects to cure the Title
                     Defect, Seller shall so notify Buyer in writing within ten
                     (10) Business Days after receipt of the particular Title
                     Defect Notice ("Cure Notice"). Within sixty (60) Business
                     Days after receipt of the Title Defect Notice, Seller shall
                     either cure the Title Defect to the reasonable satisfaction
                     of Buyer ("Cure"), or if Seller is unable to so cure the
                     Title Defect, make a Title Indemnity Payment for such Title
                     Defect equal to Buyer's good faith estimate of the Defect
                     Value as set forth in the Title Defect Notice.

                              (iii) If Seller contests the existence of a Title
                     Defect or Buyer's good faith estimate of the Defect Value,
                     then Seller shall so notify Buyer in writing before the
                     Closing Date but in no event more than thirty (30) Business
                     Days after Seller's receipt of the Title Defect Notice
                     ("Rejection Notice"). The Rejection Notice shall state with
                     reasonable specificity the basis of Seller's rejection of
                     the Title Defect or Buyer's good faith estimate of the
                     Defect Value. Within thirty (30) Business Days of Buyer's
                     receipt of the Rejection Notice, representatives of Buyer
                     and Seller, knowledgeable in title matters, shall meet and,
                     within sixty (60) Business Days after Buyer's receipt of
                     such Rejection Notice, either: (i) agree to mutually reject
                     the particular Title Defect, or (ii) agree on the validity
                     of such Title Defect and the Defect Value, in which case
                     Seller shall have sixty (60) Business Days after the date
                     of such agreement within which to Cure such Title Defect
                     and failing such Cure, to make the Title Indemnity Payment
                     therefor. If the Parties cannot agree on either options (i)
                     or (ii) in the preceding sentence, the Title Defect or the
                     Defect Value subject to the Rejection Notice shall be
                     submitted to dispute resolution in accordance with the
                     procedures set forth in Section 9.14. If Seller fails to
                     timely deliver a Rejection Notice or a Cure Notice, Seller
                     shall be deemed to have accepted the validity of the Title
                     Defect and Buyer's good faith estimate of the Defect Value,
                     and shall pay Buyer a Title Indemnity Payment for the Title
                     Defect equal to the Defect Value within sixty (60) Business
                     Days of Seller's receipt of the applicable Title Defect
                     Notice.

                              In the event a contested Title Defect cannot be
                     resolved prior to Closing, Seller shall convey the affected
                     Property to Buyer and Buyer shall pay for the Property at
                     Closing in accordance with the Agreement as though there
                     were no Title Defect, subject to Seller's obligations as
                     set forth in this Section 4.3(l)(iii) to Cure or to make a
                     Title Indemnity Payment to Buyer less any net revenues
                     (revenues net of costs and Burdens) received by Buyer
                     attributable to the interest in the Property on which the
                     Title Defect is claimed.

                              (iv) Title Indemnity Payments shall be made by
                     Seller to Buyer as an adjustment to the Purchase Price at
                     Closing if then determined or if not determined as of the
                     Closing, thereafter, consistent with the time frames set
                     forth in Section 4.3(1)(iii). Notwithstanding the
                     provisions of this Section 4.3(1), Seller is obligated

                                       24

<PAGE>   28

                     to make a Title Indemnity Payment only if the aggregate
                     Defect Value of all Title Defects exceeds a threshold (not
                     a deductible) of two per cent (2%) of the Purchase Price.
                     If a Defect Value is not liquidated or certain in amount,
                     the Defect Value shall be the amount necessary to
                     compensate Buyer for the adverse economic effect on the
                     Property, taking into account all relevant factors,
                     including without limitation, the Property's allocated
                     value, the time value of money, the practical and legal
                     effect of the Title Defect, and the amount of reduction in
                     net revenue interest or increase in the working interest of
                     the affected Property. The aggregated Defect Value on any
                     Asset shall never exceed the Purchase Price.

                              (v) If Seller discovers an increase in the Net
                     Revenue Interest shown on Schedule C with respect to a
                     Property which is free of Title Defects (an "Interest
                     Addition"), then Seller shall, from time to time and
                     without limitation, have the right to give Buyer written
                     notice of such Interest Additions ("Interest Addition
                     Notice"), as soon as practicable but no less than fifteen
                     (15) Business Days before Closing, stating with reasonable
                     specificity the Property affected, the particular Interest
                     Addition claimed, and Seller's good faith estimate of the
                     amount the Additional Interest increases the value of the
                     Purchase Price ("Interest Addition Value"). Seller shall
                     conclusively be deemed to have waived any additional
                     interest not asserted by an Interest Addition Notice on or
                     before fifteen (15) Business Days prior to Closing. If
                     Buyer agrees with the existence of the Additional Interest
                     and Seller's good faith estimate of the Interest Addition
                     Value, then the Interest Addition Value shall be applied as
                     an offset to any Title Indemnity Payment required of Seller
                     ("Offset"). If the Interest Addition Value exceeds the
                     amount of any Title Indemnity Payment(s) due Buyer, the
                     amount of such difference (an "Interest Addition Payment")
                     shall be paid by Buyer to Seller. In the event the Interest
                     Addition Payment is due on or before Closing, it shall be
                     paid as an adjustment to the Purchase Price at Closing. If
                     Buyer contests the existence of the Interest Addition or
                     Seller's good faith estimate of the Interest Addition
                     Value, then Buyer shall so notify Seller in writing within
                     ten (10) Business Days after Buyer's receipt of the
                     Interest Addition Notice ("Interest Addition Rejection
                     Notice"). The Interest Addition Rejection Notice shall
                     state with reasonable specificity the basis of Buyer's
                     rejection of the Additional Interest or Buyer's good faith
                     estimate of the Interest Addition Value. Within ten (10)
                     Business Days of Seller's receipt of the Interest Addition
                     Rejection Notice, representatives of Buyer and Seller,
                     knowledgeable in title matters, shall meet and, within
                     sixty (60) Business Days after Seller's receipt of such
                     Interest Addition Rejection Notice, either (a) agree to
                     mutually reject the Interest Addition in which case Seller
                     shall waive the Interest Addition, or (b) agree on validity
                     of such Interest Addition and the Interest Addition Value,
                     in which case Seller shall be entitled to an Offset or
                     Interest Addition Payment. If the Parties cannot agree on
                     either option (a) or (b) in the preceding sentence, the
                     Interest Addition subject to the Interest Addition
                     Rejection Notice shall be submitted to arbitration in
                     accordance with the procedures set forth in Section 9.14.
                     If Buyer fails to timely deliver an Interest Addition
                     Rejection Notice, Buyer shall be deemed to have accepted
                     the validity of the Interest Addition and

                                       25

<PAGE>   29

                     Seller's good faith estimate of the Interest Addition
                     Value, and Seller shall be entitled to an Offset or
                     Interest Addition Payment as described above.

                          (vi) If Seller makes a payment for Title Defect
                     pursuant to this Section 4.3(1) for one hundred percent
                     (100%) of the Defect Value, Buyer shall, at Seller's sole
                     option to be exercised no later than sixty (60) Business
                     Days after such payment, reconvey to Seller the Asset or
                     portion of the Asset with respect to which the Title
                     Indemnity Payment was made (effective as of the Effective
                     Date).

                     (m) CERTAIN FILINGS, CONSENTS AND PERMITS. With respect to
            certain filings and consents required by any Governmental Body, the
            Parties agree that Buyer and Seller shall cooperate with one another
            to make all filings necessary and to obtain any necessary consents,
            permits, authorizations, approvals or waivers, including but not
            limited to filings with the Minerals Management Service.

                     Without limitation of the foregoing, Seller shall endeavor
            to obtain, and Buyer shall cooperate in connection with such
            endeavors.

                     (n)      CONSENTS.

                              (i) If the holder of the right to consent
                     affirmatively refuses to consent prior to Closing, Seller
                     may withdraw the Property and terminate the Agreement.

                              (ii) Except for approvals from Governmental Bodies
                     normally received subsequent to assignment, if Seller
                     believes a consent or waiver may be obtained subsequent to
                     Closing, the Property shall be held by Seller for the
                     benefit of Buyer after Closing and Seller shall provide
                     Buyer with the economic benefits thereof until such consent
                     or waiver is received or until ninety (90) days following
                     Closing, if later, and Buyer shall pay for the Property at
                     Closing in accordance with the Agreement as though the
                     consent or waiver had been obtained. If Seller obtains the
                     consent or waiver on or before ninety (90) days following
                     Closing, then Seller shall deliver conveyances of the
                     Property to Buyer. If the consent or waiver is not obtained
                     or is affirmatively refused on or before ninety (90) days
                     following Closing, Seller shall refund the Purchase Price
                     to the affected portion of the Property to Buyer less any
                     net revenues (revenues net of costs and Burdens) received
                     by Buyer in connection with such affected portion of the
                     Property and Seller's holding for the benefit of Buyer
                     shall terminate.

                     (o) RISK OF LOSS. The risk of casualty loss relating to the
            Assets shall pass from Seller to Buyer as of the Effective Date. If,
            prior to the Closing Date, all or any material portion of an Asset
            is destroyed by fire or other casualty, is taken in condemnation or
            under the right of eminent domain or proceedings for such purposes
            are pending or threatened, Buyer shall purchase such portion of the
            Assets, notwithstanding any such destruction, taking or pending or
            threatened taking. Seller shall pay to Buyer (as an adjustment to
            the Purchase Price) all sums paid to Seller by third Persons by
            reason of the

                                       26

<PAGE>   30

            destruction or taking of such portion of the Assets to be assigned
            to Buyer, and shall assign, transfer and set over to Buyer all of
            the right, title and interest of Seller in and to any unpaid awards
            or other payments from third Persons arising out of the destruction,
            taking or pending or threatened taking as to such interest. If prior
            to the Closing Date, the applicable Assets are destroyed by fire or
            other casualty and the sums transferred to Buyer pursuant to the
            foregoing sentence do not equal the amount necessary to replace or
            restore the pertinent Assets to the condition they were in prior to
            such fire or casualty, Seller shall pay to Buyer, or the Purchase
            Price shall be reduced by the additional amount necessary to repair
            or replace all destroyed Assets or restore the Assets to their
            condition prior to the fire or casualty loss. If the sums that
            Seller would be responsible for pursuant to the foregoing sentence
            exceed fifty percent (50%) of the Purchase Price, Seller may elect
            to remove the Asset and terminate this Agreement. Seller shall not
            voluntarily compromise, settle or adjust any material amounts
            payable by reason of any material destruction, taking or pending or
            threatened taking as to any Asset without first obtaining the
            written consent of Buyer, which shall not be unreasonably withheld.

                     (p) POST-CLOSING ACCESS. Except as otherwise expressly
            provided herein, from and after the Closing Date, Buyer and Seller
            shall reasonably cooperate and afford each other or cause to be
            afforded to their respective officers, employees, accountants and
            other representatives access, upon reasonable notice, during
            business hours with respect to the facility to which access has been
            requested, to review and copy the books, documents, databases or
            other records relating to the Assets not including the Excluded
            Assets (which books, documents, databases, records, or employees
            files or other information the Parties shall cooperate and assist
            one another in identifying and locating), interview, depose or seek
            testimony of employees, provide assistance in proceedings with
            employees as witnesses or advisors, investigate the physical
            premises, take photographs or videotapes, identify employees and
            contractors with knowledge of any matter which is the subject of a
            claim for which a Party has responsibility and make such employees
            available to such Party and provide reasonable office space to do
            any of the foregoing in connection with any matter affecting or
            alleged to affect the Party requesting such access.

                     (q) FILING AND RECORDING OF ASSIGNMENTS, ETC. Buyer shall
             be solely responsible for recording of the, Assignments and any
             other documents related to the Assets and Buyer shall promptly
             provide Seller with recorded copies of same. Further, Buyer shall
             be responsible for any recording or filing fees and documentary or
             transfer Taxes resulting from the Contemplated Transactions.

                                    PART FIVE

                              CONDITIONS TO CLOSING

             5.1 SELLER'S CLOSING CONDITIONS. The obligations of Seller to
   consummate the Contemplated Transactions are subject to the following
   conditions:

                                       27

<PAGE>   31

                     (a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
            representations and warranties of Buyer contained in the Agreement
            or in connection with the Contemplated Transactions were true and
            correct when made, and shall be true and correct on and as of the
            Closing Date as though such representations and warranties were made
            at and as of such date except as otherwise expressly provided
            herein.

                     (b) COMPLIANCE WITH AGREEMENT. On and as of the Closing
            Date, Buyer shall have performed and complied with all agreements,
            covenants, and conditions required by the Agreement to be performed
            and complied with prior to or on the Closing Date.

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

                     (d) CONVEYANCE. Buyer shall execute, acknowledge and
            deliver to Seller the Assignments substantially in the form of
            Exhibits A-l through A-2; as well as designation of operator forms
            required by Applicable Laws and such other documents as may be
            necessary to carry out the purposes of the Agreement.

                     (e) LETTERS IN LIEU. Buyer and Seller shall execute,
            acknowledge and deliver all letters in lieu as set forth in Section
            4.3(d).

                     (f) SECURITY. Any security required by Seller of Buyer
            contemplated in Section 4.2(i)(ii) shall have been obtained.

                     (g) PROCESSING AGREEMENTS. Buyer and Seller, or Seller's
            Affiliate, shall execute, acknowledge and deliver all processing
            agreements as set forth in Section 4.3(b)(iii).

            5.2      BUYER'S CLOSING CONDITIONS. The obligations of Buyer to
   consummate the Contemplated Transactions are subject to the following
   conditions:

                     (a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
            representations and warranties of Seller contained in the Agreement
            or in connection with the Contemplated Transactions were true and
            correct when made, and shall be true and correct on and as of the
            Closing Date as though such representations and warranties were made
            at and as of such date except as otherwise expressly provided
            herein.

                                       28

<PAGE>   32

                     (b) COMPLIANCE WITH AGREEMENT. On and as of the Closing
            Date, Seller shall have performed and complied with all agreements,
            covenants, and conditions required by the Agreement to be performed
            and complied with prior to or on the Closing Date.

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

                     (d) CONVEYANCE. Seller shall execute, acknowledge and
            deliver to Buyer the Assignments substantially in the form of
            Exhibits A-l through A-2, as well as designation of operator forms
            required by Applicable Laws and such other documents as may be
            necessary to carry out the purposes of the Agreement.

                     (e) LETTERS IN LIEU. Buyer and Seller shall execute,
            acknowledge and deliver all letters in lieu as set forth in Section
            4.3(d).

                     (f) PROCESSING AGREEMENTS. Buyer and Seller, or Seller's
            Affiliate, shall execute, acknowledge and deliver all processing
            agreements as set forth in Section 4.3(b)(iii).

                                    PART SIX

                              ENVIRONMENTAL MATTERS

           6.1 MATERIAL ENVIRONMENTAL CONDITIONS. Upon discovery of a Material
   Environmental Condition, but in no event later than ten (10) Business Days
   prior to Closing, Buyer shall immediately notify Seller of the nature of such
   condition and shall furnish Seller with Buyer's basis for the assertion of
   such condition along with available data in support thereof. In the event
   Buyer has properly notified Seller of one or more Material Environmental
   Conditions, Seller, at its sole discretion, shall select one of the following
   options:

                     (a) Seller shall remedy the Material Environmental
            Condition at its own expense and to the satisfaction of the
            appropriate Governmental Body prior to Closing or as soon thereafter
            as is reasonably practicable;

                     (b) Seller shall reduce the Purchase Price by an amount
            equal to the cost of the remediation of the Material Environmental
            Condition, as determined by a third Person contractor to be mutually
            agreed upon by Buyer and Seller;

                     (c) Seller shall terminate this Agreement; and

                                       29

<PAGE>   33

                     (d) Seller shall indemnify and hold Buyer harmless from any
            and all Losses arising from the Material Environmental Condition.

            Any Material Environmental Condition which is not disclosed by Buyer
   to Seller prior to ten (10) Business Days before Closing shall conclusively
   be deemed waived by Buyer.

                                   PART SEVEN

                                      TAXES

            7.1 PAYMENT AND APPORTIONMENT OF REAL PROPERTY TAXES AND PERSONAL
   PROPERTY TAXES. Seller shall retain liability for all adjustments,
   examinations or claims relating to Taxes that are paid by Seller and that are
   allocated to Seller pursuant to Section 7.2. Seller shall administer and
   defend any examination, claim or adjustments arising in connection with Taxes
   to be paid by Buyer but which are allocated to Seller pursuant to Section
   7.2.

            7.2 OTHER TAXES. All excise, windfall profit and other Taxes
   relating to production of Hydrocarbons attributable to the Assets prior to
   the Effective Date shall be allocated to Seller, and all such Taxes relating
   to production on or after the Effective Date shall be apportioned to Buyer.

            7.3 SALES TAXES. The Purchase Price does not include any sales Taxes
   or other transfer Taxes imposed in connection with the sale of the Assets.
   Accordingly, Seller will not collect any such taxes at closing. Buyer shall
   pay any sales Tax or other transfer Tax, as well as any applicable
   conveyance, transfer and recording fee, and real estate transfer stamps or
   taxes imposed on the transfer of the Assets pursuant to the Agreement.

            7.4 COOPERATION. Each Party to the Agreement shall provide the other
   Party with reasonable access to all relevant documents, data and other
   information which may be required by the other Party for the purpose of
   preparing Tax returns, establishing or defending a Tax position and
   responding to any audit by any taxing jurisdiction. Each Party to the
   Agreement shall cooperate with all reasonable requests of the other Party
   made in connection with contesting the imposition of Taxes. Notwithstanding
   anything to the contrary in the Agreement, neither Party to the Agreement
   shall be required at any time to disclose to the other Party any Tax returns
   or other confidential or privileged Tax information.

            7.5 TAX PROCEEDINGS. In the event Buyer receives notice of any
   examination, claim, adjustment or other proceeding relating to the liability
   for Taxes of or with respect to Seller for any period Seller is or may be
   liable under the Agreement, Buyer shall within ten (10) days notify Seller in
   writing thereof. As to any such Taxes for which Seller is or may be liable
   under the Agreement, and Seller does not contest such liability as against
   Buyer, Seller shall be entitled at Seller's expense to control or settle the
   contest of such examination, claim, adjustment or other proceeding, provided
   Seller notifies Buyer in writing within thirty (30) days after receipt of the
   notice described in the preceding sentence that Seller desires to do so. The
   Parties shall

                                       30
<PAGE>   34

   cooperate with each in the negotiations and settlement of any proceeding
   described in this Section 7.5. Buyer shall provide, or cause to be provided,
   to Seller necessary authorizations, including powers of attorney, to control
   any proceeding which Seller is entitled to control pursuant to Part 7.

                                   PART EIGHT

                                    INDEMNITY

            8.1 SELLER. Seller shall indemnify, defend and hold harmless Buyer
   from and against all Losses based upon, arising out of, in connection with,
   or relating to:

                           (a) any breach of any representation, warranty,
                  covenant or agreement of Seller contained in the Agreement
                  provided that Buyer has delivered to Seller a Claim Notice in
                  compliance with Section 8.3 on or before 12 months following
                  the Closing Date, or

                           (b) the Excluded Obligations.

            8.2 BUYER. Buyer shall indemnify, defend and hold harmless Seller
   from and against all Losses based upon, arising out of, in connection with,
   or relating to:

                           (a) any breach of any representation, warranty,
                  covenant or agreement of Buyer contained in the Agreement;

                           (b) if the Closing occurs, any matter arising in
                  connection with the ownership or operation of, or production
                  of Hydrocarbons from, the Assets from and after the Effective
                  Date;

                           (c) if the Closing occurs, any Environmental
                  Obligations and any Material Environmental Conditions assumed
                  by Buyer pursuant to Section 4.2(b);

                           (d) Buyer's inspection of the Assets prior to
                  Closing;

                           (e) if the Closing occurs, the Assumed Obligations;
                  and

                           (f) if the Closing occurs with respect to the
                  affected Asset, any Title Defect for which Buyer has received
                  a Title Indemnity Payment.

            8.3 LIMITATIONS AND DISCLAIMER.

                           (a) LIMITATIONS. The indemnity obligations of each of
                  the Parties hereunder are subject to the following
                  limitations:

                                       31

<PAGE>   35

                                       (i) Neither Seller nor Buyer shall be
                              liable to the other for any punitive, exemplary,
                              consequential or special damages;

                                       (ii) Seller shall not be liable to, nor
                              have any obligation to indemnify Buyer unless and
                              until Buyer has incurred Losses pursuant to
                              Section 8.1 in excess of a deductible of
                              $100,000.00, after which Seller shall be obligated
                              to indemnify Buyer from and against any further
                              Losses which are in excess of such deductible
                              amount;

                                       (iii) Seller's financial obligations
                              under Section 8.1 shall not exceed the Purchase
                              Price.

                                       (iv) No Party shall be obligated to
                              indemnify the other for the breach of any
                              representation or warranty, or for any other
                              matter, to the extent that the Party claiming a
                              Loss as a result thereof had actual knowledge of
                              such breach or other matter at or prior to the
                              Closing.

                     (b) DISCLAIMER. BUYER'S OBLIGATIONS UNDER THIS PART SHALL
            APPLY REGARDLESS OF THE FAULT OR NEGLIGENCE OF SELLER, INCLUDING
            STRICT OR STATUTORY LIABILITY OF SELLER UNDER ANY APPLICABLE LAW.

            8.4 METHOD OF ASSERTING CLAIMS. All claims for indemnification under
   the Agreement shall be asserted and resolved as follows provided that the
   provisions of Sections 8.4 through 8.6 shall be covenants and not conditions
   to the defense and indemnity obligations to which they apply:

                     (a) THIRD PERSON CLAIMS. In the event that any claim for
            which a Party providing indemnification (the "Indemnifying Party")
            would be liable to a Party or any of its officers, directors,
            employees, agents or representatives entitled to indemnification
            hereunder (the "Indemnified Party") is asserted against or sought to
            be collected by a third Person, the Indemnified Party shall promptly
            notify the Indemnifying Party of such claim, specifying the nature
            of such claim and the amount or the estimated amount thereof to the
            extent then feasible (which estimate shall not be conclusive of the
            final amount of such claim) (the "Claim Notice"). The Indemnifying
            Party shall have thirty (30) days from its receipt of the Claim
            Notice (the "Notice Period") to notify the Indemnified Party (i)
            whether or not it disputes its liability to the Indemnified Party
            hereunder with respect to such claim; and (ii) if it does not
            dispute such liability, whether or not it desires, at its sole cost
            and expense, to defend the Indemnified Party against such claim;
            provided, however, that the Indemnified party is hereby authorized
            prior to and during the Notice Period to file any motion, answer or
            other pleading, submission or document which it shall deem necessary
            or appropriate to protect its interests. In the event that the
            Indemnifying Party notifies the Indemnified Party within the Notice
            Period that it does not dispute such liability and desires to defend
            against such claim or demand, then, except as hereinafter provided,
            the Indemnifying Party shall have the right to defend such claim

                                       32

<PAGE>   36

            or demand by appropriate proceedings, which proceedings shall be
            promptly settled or prosecuted to a final conclusion, in such a
            manner as to avoid any risk of the Indemnified Party becoming
            subject to liability. If the Indemnified Party desires to
            participate in, but not control, any such defense or settlement, it
            may do so at its own cost and expense. If the Indemnifying Party
            disputes its liability with respect to such claim, or elects not to
            defend against such claim, whether by not giving timely notice as
            provided above or otherwise, the Indemnified Party shall have the
            right but not the obligation to defend against such claim, and the
            amount of any such claim, or if the same be contested by the
            Indemnifying Party or by the Indemnified Party, then that portion
            thereof as to which such defense is unsuccessful, shall be
            conclusively deemed to be a liability of the Indemnifying Party
            hereunder (subject, if it has timely disputed liability, to a
            determination in accordance with Section 8.4 that the disputed
            liability is covered by this Part 8).

                     (b) OTHER CLAIMS. In the event that the Indemnified Party
            shall have a claim against the Indemnifying Party hereunder which
            does not involve a claim or demand being asserted or sought to be
            collected from it by a third Person, the Indemnified Party shall
            promptly send a Claim Notice with respect to such claim to the
            Indemnifying Party. If the Indemnifying Party does not notify the
            Indemnified Party within the Notice Period that it disputes such
            claim, the amount of such claim shall be conclusively deemed a
            liability of the Indemnifying Party hereunder.

            8.5 PAYMENT. Payments under this Part 8 and under any other
   indemnity provision of this the Agreement shall be made as follows:

                     (a) PAYMENT OF UNDISPUTED AMOUNT. In the event that the
            Indemnifying Party is required to make any payment under this Part
            8, the Indemnifying Party shall promptly pay the Indemnified Party
            the amount so determined. If there should be dispute as to the
            amount or manner of determination of any indemnity obligation owed
            under this Part 8, the Indemnifying Party shall nevertheless pay
            when due such portion, if any, of the obligation as shall not be
            subject to dispute. The difference, if any, between the amount of
            the obligation ultimately determined as properly payable under this
            Part 8 and the portion, if any theretofore paid, shall bear
            interest at the Agreed Rate as provided in Section 8.5(b). Upon the
            payment in full of any claim, the Indemnifying Party shall be
            subrogated to the rights of the Indemnified Party against any Person
            or other entity with respect to the subject matter of this claim.

                     (b) INTEREST. If all or part of any indemnification
            obligation under the Agreement is not paid when due upon resolution
            of the claim, then the Indemnifying Party shall pay upon demand to
            the Indemnified Party interest at the Agreed Rate on the unpaid
            amount of the obligation for each day from the date the amount
            became due until payment in full.

            8.6 DISPUTED CLAIMS. If the Indemnifying Party shall notify the
   Indemnified Party during the Notice Period that it disputes any claim under
   Section 8.4 (the "Disputed Claim"), the Disputed Claim shall be subject to
   the dispute resolution procedures pursuant to Section 9.14.

                                       33
<PAGE>   37

                                    PART NINE

                                  MISCELLANEOUS

            9.1 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
   benefit of and be binding upon the successors and assigns of the respective
   Parties.

            9.2 WAIVERS AND AMENDMENTS. All amendments and other modifications
   hereof shall be in writing and signed by each of the Parties. Any Party may
   by written instrument (i) waive compliance by the other Party with, or modify
   any of, the covenants or agreements made by the other Party in this Agreement
   or (ii) waive or modify performance of any of the obligations or other acts
   of the other Party. The delay or failure on the part of any Party to insist,
   in any one instance or more, upon strict performance of any of the terms or
   conditions of this Agreement, or to exercise any right or privilege herein
   conferred shall not be construed as a waiver of any such terms, conditions,
   rights or privileges but the same shall continue and remain in full force and
   effect. All rights and remedies are cumulative.

            9.3 NOTICES. All notices, consents and other communications under
   this Agreement shall be in writing and shall be deemed to have been duly
   given (a) when delivered by hand, (b) when sent by telecopier (with receipt
   confirmed), provided that a copy is promptly thereafter mailed in the USA by
   first class postage prepaid mail, (c) when received by the addressee, if sent
   by Express Mail, Federal Express, other express delivery service (receipt
   requested) or by such other means as the Parties may agree from time to time
   or (d) five (5) Business Days after being mailed in the USA, by first class
   postage prepaid registered or certified mail, return receipt requested; in
   each case to the appropriate address and telecopier number set forth below
   (or to such other address and telecopier number as a Party may designate as
   to itself by notice to the other Party):

                 (i)      if to Seller:

                          Daniel P. Loughry
                          Land Manager
                          Texaco Exploration and Production Inc.
                          P.O. Box 60252
                          New Orleans, LA 70160
                          400 Poydras St.
                          New Orleans, LA 70130
                          Phone:   (504) 680-1330
                          Fax:     (504) 680-408?

                                       34
<PAGE>   38

                 (ii)     if to the Buyer:

                          L. Keith Vincent
                          Vice President, Land
                          Energy Partners, Ltd.
                          201 St. Charles Avenue, Suite 3400
                          New Orleans, LA 70170
                          Phone:   (504)636-1983
                          Fax:     (504)569-1874

   Each Party shall have the right upon giving ten (10) Business Days prior
   written notice to the other in the manner hereinabove provided, to change its
   address for purposes of notice.

            9.4 COUNTERPARTS. This Agreement may be executed in one or more
   counterparts, each of which shall be an original, but all of which together
   shall constitute one and the same document.

            9.5 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
   Schedules hereto, contains the entire agreement between the Parties hereto
   with respect to the subject matter hereof and supersedes all prior
   discussions, understandings, agreements and undertakings between the Parties
   hereto relating to the subject matter hereof. There are no additional terms,
   whether consistent or inconsistent, oral or written which are intended to be
   part of the Parties' understanding which have not been incorporated into this
   Agreement, including the Exhibits and Schedules.

            9.6 SELLER'S OPTION TO ELECT A TAX DEFERRED EXCHANGE. Seller retains
   the right to sell its interest in the Assets to Buyer as a non-simultaneous
   like-kind property exchange for cash pursuant to Section 1031 of the Internal
   Revenue Code of 1986. Seller shall have the right to elect this tax-deferred
   exchange at any time prior to the date of Closing. Buyer agrees to execute
   additional escrow instructions, documents, agreements, or instruments to
   effect the exchange, provided that Buyer shall incur no material additional
   costs, expenses, fees or liabilities as a result of or in connection with the
   exchange.

            9.7 SEVERABILITY. Every provision in this Agreement is intended to
   be severable. If any term or provision hereof is held to be illegal or
   invalid for any reason whatsoever, all other conditions and provisions of
   this Agreement shall nevertheless remain in full force and effect so long as
   the economic or legal substance of Contemplated Transactions is not affected
   in a materially adverse manner with respect to either Party.

            9.8 APPLICABLE LAW. This Agreement shall be governed by and
   interpreted, construed and enforced in accordance with the laws of the State
   of Louisiana.

            9.9 EXPENSES. Except as specified herein and as the Parties may
   otherwise agree, each Party shall be solely responsible for all expenses
   incurred by it in connection with any and all Contemplated Transactions.

                                       35

<PAGE>   39

            9.10 LAWS AND REGULATIONS. This Agreement is subject to all
   Applicable Laws.

            9.11 PUBLIC ANNOUNCEMENTS. The Parties hereto agree that prior to
   making any public announcement or statement with respect to the Contemplated
   Transaction, the Party desiring to make such public announcement or statement
   shall provide the other Party with a copy of the proposed announcement or
   statement at least seven (7) Business Days prior to the intended release date
   of such announcement. The other Party shall thereafter consult with the Party
   desiring to make the release, and the Parties shall exercise their reasonable
   best efforts to (i) agree upon the text of a joint public announcement or
   statement to be made by both such Parties or (ii) in the case of a statement
   to be made solely by one Party, obtain approval of the other Party hereto to
   the text of a public announcement or statement. Nothing contained in this
   paragraph shall be construed to require either Party to obtain approval of
   the other Party hereto to disclose information with respect to the
   Contemplated Transaction to any Governmental Body to the extent required by
   Applicable Law or necessary to comply with disclosure requirements of the New
   York Stock Exchange or any other regulated stock exchange.

            9.12 ASSIGNABILITY. Prior to Closing, the rights and obligations
   created or assumed hereunder shall not be assignable or delegable by Buyer
   and any assignment thereof shall be void ab initio, unless Buyer obtains
   Seller's written consent thereto.

            9.13 PROVISIONS SURVIVE CLOSING. All representations and warranties
   contained in the Agreement shall survive the Closing and continue with
   respect to claims made on or before twelve months following the Closing Date.
   Except as otherwise provided herein, the covenants, indemnities and
   agreements made hereunder or pursuant hereto shall survive Closing and be and
   remain enforceable and continue in full force and effect as to their terms
   and conditions following Closing and shall not be deemed to have been merged
   into the Closing or into the assignments or other closing documents.

            9.14 DISPUTE RESOLUTION. Any and all disputes, controversies or
   claims relating to or arising out of the Contemplated Transactions shall be
   resolved in accordance with the dispute resolution procedures outlined in
   Schedule D attached hereto and made a part hereof for all intents and
   purposes. The Parties further agree that neither party will institute
   litigation against the other relating to or arising out of the Contemplated
   Transactions, except as provided in the attached Schedule D.

            9.15 TERMINATION. This Agreement may be terminated (i) by the mutual
   consent of the Parties at any time prior to Closing; (ii) by any Party, if a
   condition to its obligation to consummate the Contemplated Transactions (a)
   shall not be fulfilled on or before September 15, 2000, (b) shall have become
   impossible of fulfillment, in which case such Party shall give notice of
   termination to the other within ten (10) days after it receives written
   notice of the impossible condition, failing which it shall be deemed to have
   waived such condition, or (c) as otherwise provided in this Agreement. Upon
   termination the Parties shall have no further obligations under the
   Agreement; provided, however, the provisions of Sections 4.2(e) and 8.2(d)
   shall survive termination.

                                       36

<PAGE>   40

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

WITNESSES:                              SELLER:
                                        TEXACO EXPLORATION AND
                                        PRODUCTION INC.

/s/ WITNESS                             /s/ D.P. LOUGHRY
-------------------------------         ----------------------------------------
                                        NAME: D.P. Loughry

                                        TITLE:    Attorney-In-Fact
/s/ WITNESS                             Tax ID:   51-0265713
-------------------------------

WITNESSES:                              BUYER:
                                        ENERGY PARTNERS, LTD.

/s/ WITNESS                             /s/ RICHARD A. BACHMANN
-------------------------------         ----------------------------------------
                                        NAME:     Richard A. Bachmann
                                        TITLE:    President
/s/ WITNESS                             Tax ID:   72-1409562
-------------------------------

                                       37<PAGE>   1
                                                                   EXHIBIT 10.33

                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

                             ONLINE RESOURCES, INC.

                                    (SELLER)

                                       AND

                              ENERGY PARTNERS, LTD.

                                     (BUYER)

                             DATED OCTOBER 29, 1999

                            EFFECTIVE OCTOBER 1, 1999

                       SOUTH TIMBALIER/BAY MARCHAND AREA

<PAGE>   2

                           PURCHASE AND SALE AGREEMENT

         THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of
October 29, 1999, is by and among ONLINE RESOURCES, INC., a Louisiana
corporation ("ORI"), with a mailing address of 318 Camp Street, Suite 201, New
Orleans, LA 70130 (herein sometimes referred to as "Seller") and Energy
Partners, Ltd., a Delaware corporation ("EPL"), with a mailing address of 201
St. Charles Avenue, Suite 3400, New Orleans, LA 70170 (herein sometimes referred
to as "Buyer").

                                    RECITALS

         Seller desires to sell to Buyer and Buyer desires to purchase from
Seller on the terms set forth in this Agreement those certain oil and gas
interests and associated assets herein identified in Exhibits "A" and "B"
attached hereto and other related assets.

         In consideration of the foregoing, the parties hereby agree as follows:

                            AGREEMENT OF THE PARTIES

1. SALE AND PURCHASE OF ASSETS

         1.1   Asset To Be Sold. Seller shall sell, transfer, and assign to
               Buyer and Buyer shall purchase and receive, all of the right,
               title and interest of Seller in (i) the oil and gas Leases
               described in Exhibit "A", referred to as "Leases") and the lands
               covered thereby ("Lands"), (ii) all oil and/or gas wells (whether
               producing, shut-in, temporarily abandoned, plugged and abandoned,
               or otherwise), equipment and other appurtenances and tangible
               property located thereon or thereunder, including without
               limitation, any production platform located on the Leases (the
               "Platform") and the wells and other facilities described on
               Exhibit "B", (iii) all agreements described in Exhibit "C", to
               the extent such agreements relate to the assets described in
               clauses (i) or (ii) above (together with the Leases referred to
               on Exhibit "A", the "Listed Contracts"), and (iv) all other
               tangible property wherever located thereon or extending therefrom
               and primarily used in connection with the ownership or

                                       2
<PAGE>   3

               operation of the Leases or the other assets described in clauses
               (i) through (iii) of this sentence (collectively and as to
               Seller, the "Assets"). Such transfer of interests will be made at
               Closing, but shall be made effective as of the Effective Date of
               Sale referred to in Section 2.7.

         1.2   Assets Excluded. The Assets do not include:

                 (i)    accounts receivable associated with the Assets and
                        relating to operations prior to Effective Date of Sale;

                 (ii)   liquid hydrocarbon inventory in tanks above the pipeline
                        connections as of 7:00 a.m. on the effective Date of
                        Sale (which shall be sold to Buyer separately as
                        provided in Section 2.10.1);

                 (iii)  Seller's area wide permits, licenses, bonds or other
                        permits, licenses or authorizations used to conduct
                        Seller's business;

                 (iv)   Gas produced and marketed off the Leases through the
                        designated sales meter prior to 7:00 a.m. on the
                        Effective Date of Sale, and

                 (v)    All seismic data held or used under license or agreement
                        to, from or with a third party owner of such data.

         1.3   Securities Transaction Disclaimer. Each of the parties hereto
               agree that the transaction contemplated herein is not intended as
               a securities transaction and further agrees that Seller is not
               considered by any party hereto as an issuer of securities for the
               purposes of this Agreement.

2.       PURCHASE PRICE

         2.1   a) Price. As consideration for the sale of the Assets, Buyer
               shall pay to Seller $1,500,000.00 (the "Purchase Price"). In
               addition, Seller shall retain an overriding royalty interest
               equal to 2% of 8/8ths, proportionately reduced to Online's
               working interest ownership in each lease or tract. Said override
               shall only be payable on production from new operations which are
               conducted with a drilling rig and on workover operations which
               are recompleted to new zones which require the utilization of a
               workover rig or drilling rig.

               b) Subject to adjustment as set forth below and the other
               provisions of this Agreement, Buyer shall pay the Purchase Price
               to Seller, at Closing by company check or wire, in immediately
               available funds. Wiring instructions will be provided prior to
               closing. This agreement is subject to a deposit equal to 15% of
               the purchase price. The deposit has already been tendered to the
               Seller by a payment of

                                       3
<PAGE>   4

               $50,000.00 on October 15, 1999 and $150,000.00 on October 22,
               1999 for a total of $200,000.00 deposit.

               c) The $200,000.00 deposit shall be refundable within 5 business
               days following notice of the occurrence of one of the events for
               termination or refund as set forth elsewhere in this Agreement.

         2.2   Assumption of Liabilities. As additional consideration for the
               sale of the Assets, if the Closing occurs, Buyer shall assume the
               following obligations and liabilities ("Assumed Obligations"):

                 (i)    all obligations and liabilities relating to the
                        ownership or use of the Assets that arise and are
                        attributable to periods of time subsequent to the
                        Effective Date of Sale (except for (1) any liability or
                        obligation that arises under contracts or agreements
                        other than the Listed Contracts that arise from or are
                        the subject of a breach by Seller of any of its
                        covenants, representations or warranties hereunder, or
                        that is a Retained Obligation, as defined in Section 2.4
                        hereof, none of which shall be Assumed Obligations, and
                        (2) any payment obligation associated with an agreement
                        for the supply of material, goods or service, which
                        shall be Assumed Obligation only to the extent that the
                        material, goods or service with respect to which such
                        payment is due is received by Buyer after the Effective
                        Date of Sale);

                 (ii)   all obligations and liabilities for site reclamation,
                        plugging and abandonment of all wells, platforms and
                        other facilities located on the Lands, and part of the
                        assets herein conveyed, regardless whether such
                        obligation or liability arose prior to or after the
                        Effective Date of Sale, and

                 (iii)  all liabilities and obligations (including, without
                        limitations, all liabilities and obligations under
                        present and future federal, state and local laws
                        relating to the protection of health or the environment)
                        in respect to the condition of the Assets as of the
                        Closing (including, without limitation, conditions
                        resulting from Environmental Matters occurring on or
                        after the Effective Date of Sale), other than any
                        condition that is the subject of a breach by Seller of
                        any of its representations and warranties under this
                        Agreement or of its obligations under Section 5.3.

                                       4
<PAGE>   5

                  Buyer shall not assume any obligations or liabilities of
         Seller other than the Assumed Obligations. As used herein, the term
         "Environmental Matters" shall mean any pollution, contamination,
         degradation, damage or injury caused by, related to or arising from or
         in connection with the generation, use, handling, treatment,
         remediation, storage, transportation, disposal, discharge, release or
         emission of any Hazardous Materials by, in, on or underlying the
         Assets. As used in the preceding definition, "Hazardous Materials"
         means any asbestos material, pollutants, contaminants, hazardous,
         corrosive or toxic substances, special waste or waste of any kind, and
         any other material or substance the storage, manufacture, disposal,
         treatment, generation, use, transportation, remediation or release into
         the environment of which is prohibited, controlled, regulated or
         licensed under present or future Federal, State and Local laws
         (including statutory and common laws) relating to the protection of
         health or the environment.

         2.3.  Indemnity in Favor of Seller. If the Closing occurs, Buyer shall
               indemnify and defend Seller, its officers, directors, agents,
               employees, successors and assigns ("Seller Indemnified Parties"),
               against any and all losses, claims suits, controversies,
               liabilities and expenses (including reasonable attorney's fees)
               arising directly or indirectly out of (i) the Assumed
               Obligations, (ii) liabilities and obligations (other than
               Retained Obligations) relating to or arising out of the ownership
               or operation of the Assets and attributable to any act, omission,
               occurrence, or event occurring after the Effective Date of Sale
               (INCLUDING, WITHOUT LIMITATION, ANY LIABILITIES [OTHER THAN
               RETAINED OBLIGATIONS UNDER SECTION 2.4] ARISING IN WHOLE OR IN
               PART FROM THE NEGLIGENCE OR STRICT LIABILITY OF SELLER), and
               (iii) all liabilities and obligations relating to or arising out
               of NORM contamination (as defined in Section 7.3) to the
               properties being acquired hereunder, whether such contamination
               occurred prior to or after the Effective Date of Sale.

         2.4   Retained Obligations. If the Closing occurs, Seller shall retain,
               and Buyer shall not assume the following liabilities and
               obligations ("Retained Obligations"):

                 (i)    all liabilities and obligations relating to or arising
                        out of the ownership or operation of the Assets
                        (including, without limitation, liabilities and
                        obligations under the listed Contracts) that arose prior
                        to, or are attributable to periods of time or acts or
                        omissions prior

                                       5
<PAGE>   6

                        to, the Effective Date of Sale (other than those
                        liabilities and obligations referred to in clauses (ii)
                        and (iii) of the definition of Assumed Obligations in
                        Section 2.2);

                 (ii)   those liabilities and obligations that result in a
                        credit or payment to Seller under Section 2.10;

                 (iii)  all liabilities and obligations incurred in violation
                        of, or arising out of a breach of, the covenants,
                        representations or warranties of Seller under this
                        Agreement;

                 (iv)   all liabilities and obligations under contracts and
                        agreements to which the Assets are subject on the date
                        hereof other than the Listed Contracts.

         2.5   Indemnity In Favor of Buyer. If the Closing occurs, Seller shall
               indemnify, defend and hold harmless Buyer, and its respective
               officers, directors, agents, employees, partners, lenders,
               successors and assigns ("Buyer Indemnified Parties") against (i)
               any and all losses, claims, suits, controversies, fines,
               judgements, penalties, damages, liabilities and expenses of every
               kind and nature (including, without limitation, reasonable
               attorney's fees) arising out of any breach by Seller of any of
               its representations, warranties or covenants under this
               Agreement, and (ii) its proportionate share of any and all
               losses, claims, suits, controversies, fines, judgements,
               penalties, damages, liabilities and expenses of every kind and
               nature (including, without limitation, reasonable attorney's
               fees), arising out of the Retained Obligations described in
               Section 2.4.

         2.6   Invoices. After the effective date, Seller shall be required to
               pay only that portion of invoices received under the listed
               Contracts that are applicable to work performed or goods or
               material received in the period prior to the Effective Date of
               Sale; other charges and invoices for work performed or goods or
               material received will be returned to the vendor for rebilling to
               Buyer. Any charges or invoices paid by Seller that are applicable
               to work performed or goods or material received subsequent to the
               Effective Date of Sale will be credited to Seller pursuant to
               Sections 2.10.2 and 2.10.3. Similarly, after the date of Closing,
               Buyer shall be required to pay only that portion of invoices
               received under the Listed Contracts that are applicable to work
               performed or goods or material received in the period on or
               subsequent to the Effective Date of Sale; other charges and
               invoices for work performed or goods or material received will be
               returned to the vendor for rebilling to

                                       6
<PAGE>   7

               Seller. Any charges or invoices paid by Buyer that are applicable
               to work performed or goods or material received prior to the
               Effective Date of Sale shall be credited to Buyer pursuant to
               Sections 2.10.2 and 2.10.3.

         2.7   Effective Date of Sale. The Effective Date of Sale of the Assets
               shall be 7:00 a.m. Local Time on October 1, 1999.

         2.8   Closing. The Closing of the transactions contemplated herein and
               the transfer of the Assets shall occur at 10:30 a.m. local time
               on December 15, 1999, at the office of Online Resources, Inc., or
               such other date, time and place as Seller and Buyer may agree in
               writing. If all conditions to Closing provided in this Agreement
               are satisfied or waived on or before Closing, at the Closing the
               following shall occur.

                 (i)    Seller and Buyer will execute and deliver an Assignment
                        and Bill of Sale in the form attached hereto as Exhibit
                        "D", pursuant to which Seller will convey the Assets to
                        Buyer with special warranty of title;

                 (ii)   Buyer shall pay to Seller the Purchase Price as provided
                        in Section 2.1;

                 (iii)  Seller shall deliver to Buyer possession of the Assets;

                 (iv)   Seller and Buyer shall execute, acknowledge and deliver
                        transfer orders or letters in lieu of transfer orders
                        directing all purchasers of production to make payment
                        to Buyer of proceeds attributable to production from the
                        Assets effective with production occurring from and
                        after the Effective Date of Sale;

                 (v)    Seller and Buyer shall execute and deliver such other
                        agreements and instruments as shall be necessary to
                        complete the intent of the Agreement.

               If the Closing occurs, (a) Buyer shall be deemed to have
               represented and warranted to Seller that, except as disclosed to
               Seller in writing at Closing, Buyer has performed and complied
               with all material terms of the Agreement required to be performed
               or complied with by it prior to Closing, and the representations
               and warranties of Buyer contained in the Agreement are, if
               qualified by materialty standards, true and correct, and if not
               so qualified, are true and correct in all material respects, at
               and as of the Closing as if such representations and warranties
               were made at and as of the Closing, and (b) Seller shall be
               deemed to have represented and warranted to Buyer that except as
               disclosed to Buyer in writing at Closing, Seller has performed
               and complied with all material terms of this Agreement required
               to be performed

                                       7
<PAGE>   8

               or complied with by it prior to Closing, and the representations
               and warranties of Seller contained in this Agreement are, if
               qualified by materiality standards, true and correct, and if not
               so qualified, are true and correct in all material respects, at
               and as of the Closing as if such representations and warranties
               were made at and as of the Closing.

         2.9   Failure to Close. If the Closing does not occur on or before
               December 15, 1999, any party, if not in default hereunder, may
               terminate this Agreement by giving written notice to the other
               party. If the sale contemplated hereby is not consummated at
               closing because of the failure of a condition to Closing under
               Section 6.1 or 6.2, this Agreement shall terminate and no party
               shall have any further obligations to the other party hereunder,
               other than liabilities hereunder arising prior to such
               termination and those obligations that by their terms survive the
               termination of the Agreement. If the sale contemplated hereby is
               not consummated at Closing because of a breach by any party (the
               "Defaulting Party") of its obligations hereunder, the Agreement
               shall not terminate and the other party (the "Non-Defaulting
               Party") shall have the right to specific performance of the
               obligations of the parties within 30 days after the scheduled
               Closing. If the Non-Defaulting Party does not notify the
               Defaulting Party of its election to exercise specific performance
               within 30-day period, this Agreement shall terminate and no party
               shall have any further obligations to the other hereunder, other
               than liabilities hereunder arising prior to such termination and
               those obligations that by their terms survive the termination of
               this Agreement. In the event closing does not occur or this
               agreement is terminated for any reason, due to Seller's inability
               or refusal to close, the deposit shall be refunded in accordance
               with 2.1. However buyer shall retain all rights and remedies
               contained herein or otherwise available to buyer.

         2.10  Closing Adjustments.

               2.10.1 Inventory Value. If applicable, at least five (5) days
               prior to Closing, Seller shall furnish to Buyer the quantities of
               liquid hydrocarbon inventory as described in Section 1.2 actually
               on hand as of the Effective Date of Sale and shall compute the
               value of the liquid hydrocarbon inventory using usual industry
               valuation practice. The value of the inventory shall be credited
               to Seller pursuant to the provisions of Section 2.10.2 and
               Section 2.10.3 and the liquid hydrocarbon inventory shall become
               the property of buyer as of the Effective Date of Sale.

                                       8
<PAGE>   9

               2.10.2 Adjustments to Purchase Price. The Purchase Price shall be
                      adjusted as follows and in accordance with Section 2.10.3:

                           (i)      decreased by the estimated net revenue
                                    received by Seller for hydrocarbons produced
                                    from the Assets subsequent to the Effective
                                    Date of Sale;

                           (ii)     increased by the estimated expenses incurred
                                    by Seller subsequent to the Effective Date
                                    of Sale;

                           (iii)    increased by the inventory value as
                                    determined in Section 2.10.1 hereof, and

                           (iv)     such other adjustments as may be applicable
                                    and agreed to by the parties.

                           (v)      deposit

                           The Purchase Price, as adjusted herein, shall be paid
               by Buyer at closing as required in Section 2.8. Seller shall
               furnish Buyer, at least three (3) days prior to Closing, the
               adjustments to the Purchase Price.

               2.10.3 Final Adjustments. Within one hundred twenty days (120)
                      days after the date of closing, Seller shall prepare a
                      final accounting for the actual net revenue received by
                      Seller for hydrocarbons produced from the Assets
                      subsequent to the Effective Date of Sale, less actual
                      expenses incurred by the Seller subsequent to the
                      Effective Date of Sale and attributable to the operation
                      of the Assets after the Effective Date of Sale, and plus
                      the final inventory value (if appropriate) as determined
                      in Section 2.10.1 hereof. Seller shall submit the final
                      accounting statement to Buyer, who shall have sixty (60)
                      days to audit same and confirm the accuracy thereof. Upon
                      the agreement by Seller and Buyer as to the accuracy of
                      said final accounting, Seller or Buyer, whichever the case
                      may be, shall within 30 days, pay to the other such sum as
                      may be found due, net of the preliminary accounting
                      amount.

               2.10.4 Exclusions. The following expenses shall be excluded from
                      any adjustment under Sections 2.10.2 and 2.10.3: (i)
                      intercompany interest expense, and (ii) overhead and
                      general administrative expenses of Seller other than
                      direct overhead charges under Listed Contracts.

               2.10.5 Gas Imbalances. Seller and Buyer acknowledge that, as of
                      the Effective Date of Sale, certain gas imbalances may
                      exist between

                                       9
<PAGE>   10

                      Seller and others with respect to gas production
                      attributable to Seller's ownership of gas produced from
                      the Leases prior to the Effective Date of Sale. The
                      Purchase Price in Section 2.1 shall not be adjusted under
                      Sections 2.10.2 and 2.10.3 for Seller's gas imbalances.
                      Notwithstanding anything herein to the contrary, Seller
                      and Buyer agree that all liabilities, duties, obligations,
                      benefits and entitlements with respect to the gas
                      imbalances are specifically included in this sale to
                      Buyer, and Buyer accepts all entitlements and obligations
                      (contractual or otherwise), attributable to settle such
                      imbalances up to 50,000 mcf as of October 1, 1999. Seller
                      and Buyer further agree that the existence of such
                      imbalances shall not be deemed to be a deficiency in
                      Seller's title.

3. TAXES

         3.1   Property Taxes. All ad valorem taxes, real property taxes,
               personal property taxes, and similar obligations ("Property
               Taxes") in respect of the Assets are Seller's obligation for
               periods before the Effective Date of Sale and Buyer's obligation
               for periods after the Effective Date of Sale. If Property Taxes
               for the current tax year have not been assessed and paid as of
               the Closing, buyer shall file all required reports and returns
               incident to the Property Taxes and pay the Property Taxes for the
               current tax year and subsequent periods. Seller will reimburse
               Buyer promptly for Seller's proportionate share of the portion of
               those taxes attributable to the portion of the current tax year
               prior to the Effective Date of Sale upon receipt of evidence of
               the Buyer's payment of the taxes. If Property Taxes for the
               current tax year have been assessed and paid as of the Closing
               Date, Buyer will reimburse Seller for the portion of those taxes
               attributable to the portion of the current tax year after the
               Effective Date of Sale.

         3.2   Sales Taxes. Buyer shall be responsible for all sales, use and
               similar taxes arising out of the sale of the Assets. The Assets
               are located offshore in federal waters, and therefore the sale of
               Assets pursuant to this Agreement is exempt from state sales
               taxes. If Buyer subsequently uses the Assets in a state, such use
               is expected to be exempt from sales or use tax as the sale is
               expected to qualify as an isolated or occasional sale. Seller
               agrees to cooperate with Buyer in demonstrating that the
               requirements for an isolated or occasional sale or any

                                       10
<PAGE>   11

               other sales or use tax exemption have been met. Buyer shall
               assume liability for any sales or use taxes assessed by any
               taxing authority in respect of this sale, including the amounts
               of any penalties and interest. Buyer shall hold harmless and
               shall indemnify Seller for any sales or use taxes assessed
               against Seller by any taxing authority in respect of this sale,
               including the amounts of any penalties, interest and attorney's
               fee except to the extent that buyer paid such tax to Seller in
               addition to the Purchase Price. The Purchase Price is not
               inclusive of any such sales or use taxes. Any reasonable legal
               expenses incurred by Seller after consultation with Buyer to
               reduce or avoid any of the aforementioned taxes shall be paid or
               reimbursed by Buyer.

4. REPRESENTATIONS AND WARRANTIES

         4.1   Seller's Representations and Warranties. Seller represents and
               warrants that, except as set forth in the Disclosure Statement
               attached hereto as Exhibit "F";

                 4.1.1     Seller is a corporation duly organized and validly
                           existing, in good standing, under the laws of the
                           state of its formation. Seller has the power and
                           authority to own its property and to carry on its
                           business as now conducted and to enter into and carry
                           out the terms of this Agreement.

                 4.1.2     The execution and delivery of this Agreement, the
                           performance of this Agreement by Seller, and the
                           consummation of the transactions contemplated hereby,
                           will not (i) conflict with or result in a breach of
                           any provision of Seller's certificate of
                           incorporation or bylaws (ii) except with respect to
                           third-party consents or preferential rights required
                           in connection with agreements and properties to be
                           assigned pursuant to this Agreement, result in a
                           material default (with due notice or lapse of time or
                           both) or give rise to any right to termination,
                           cancellation or acceleration under any of the terms,
                           conditions or provisions of any note, bond, mortgage,
                           indenture, license or agreement to which Seller is a
                           party or by which Seller or any Seller's properties
                           or assets may be bound, or (iii) violate any order,
                           writ, injunction, judgement, decree, statute, rule or
                           regulation applicable to Seller, or Seller's
                           properties or assets (assuming receipt of all routine
                           governmental consents typically received after
                           consummation of transactions of the nature

                                       11
<PAGE>   12

                           contemplated by the Agreement, which governmental
                           consents Seller has no reason to believe will not be
                           granted).

                 4.1.3     To Seller's knowledge (i) there are no contracts or
                           agreements to which the Assets are subject other than
                           the Listed Contracts, and (ii) the Listed Contracts
                           are in full force and effect in accordance with their
                           respective terms.

                 4.1.4     Seller has not (i) received any advance "take-or-pay"
                           or other similar payments under production sales
                           contracts with respect to any of the Assets that
                           entitle the production purchasers to "make-up" or
                           otherwise receive deliveries of hydrocarbons at any
                           time after the Effective Date of Sale without paying
                           at such time the contract price therefor (or to
                           receive a cash payment in lieu thereof), (ii)
                           received any payments for hydrocarbons delivered
                           under any production sales or processing contracts
                           with respect with to any of the Assets in excess of
                           the amounts to which Seller was actually entitled
                           under the terms of such contracts, or (iii) received
                           any payments for hydrocarbons produced from the
                           Assets that are currently subject to refund.

                 4.1.5     There are no outstanding Authorities for Expenditure
                           with respect to the Assets except as shown on Exhibit
                           "F":

                 4.1.6     There is no action, investigation, suit or proceeding
                           pending against Seller or the Assets, with respect to
                           the Assets, before any court, administrative agency
                           or arbitral tribunal or, to the knowledge of Seller,
                           threatened against it or the asset or pending or
                           threatened against any other person or entity in
                           which any relief is claimed that, if granted, might
                           reasonably be expected to have a Material Adverse
                           Effect (as that term is defined below). Seller has
                           not been charged with any violation of or, to its
                           knowledge, threatened with a charge of violation of,
                           any provision of any law or regulation relating to
                           the Assets, which violation might be reasonably
                           expected to have a Material Adverse Effect, and, to
                           the knowledge of Seller, no other person or entity
                           has been charged with any violation of, or threatened
                           with a charge of violation of, any provision of any
                           law or regulation relating to the Assets, which
                           violation might reasonably be expected to have a
                           Material Adverse Effect. As used in this Agreement,
                           "Material Adverse Effect" shall mean a material

                                       12
<PAGE>   13

                           adverse effect on the value, use, operation or
                           ownership of the Assets, taken as a whole, or on the
                           Assumed Obligations, taken as a whole.

                 4.1.7     To Seller's knowledge neither Seller nor any other
                           person or entity is in default under, and no
                           condition exists that with notice or lapse of time or
                           both would constitute a default under, any order,
                           judgement, contract, lease, license or instrument,
                           which default or potential default might reasonable
                           be expected to have a Material Adverse Effect. To its
                           knowledge, Seller has compiled with all laws,
                           regulations, orders, judgements or decrees of any
                           federal or state court or governmental authority
                           applicable to the ownership or operation of the
                           Assets, other than violations that are not,
                           individually or in the aggregate, reasonably expected
                           to have a Material Adverse Effect; provided, however,
                           that no representation or warranty is made as to
                           compliance with the Natural Gas Act or the Natural
                           Gas Policy Act of 1978 (or any regulations or orders
                           pertaining to either of these acts) relating to well
                           classification filings, other than the representation
                           that Seller has followed customary practices in the
                           oil and gas industry and has used all reasonable
                           efforts in attempting to comply with such laws,
                           regulations and orders.

                 4.1.8     Since the Effective Date of Sale, to Seller's
                           knowledge there has not been:

                           (i)      any adverse change in the Assets that was
                                    not the result of any industry-wide
                                    development affecting other companies in the
                                    oil and gas industry;

                           (ii)     any damage, destruction or loss to or of the
                                    Assets, whether or not covered by insurance;

                           (iii)    any release, abandonment, encumbrance, sale,
                                    Leases or disposition of any portion of the
                                    Assets other than sales of hydrocarbons in
                                    the ordinary course of business;

                           (iv)     any waiver by Seller of any rights in
                                    respect of Assets unless consented to by
                                    Buyer;

                           (v)      any condemnation or taking of all or any
                                    portion of any of the Assets; or

                                       13
<PAGE>   14

                           (vi)     any contract or commitment to do any of the
                                    foregoing unless consented to by Buyer;
                                    that, individually or in the aggregate,
                                    might reasonably be expected to have a
                                    Material Adverse Effect.

                 4.1.9     Except as identified on Exhibit "A" hereto, there are
                           no material non-consent operations with respect to
                           the Assets which have resulted or will result in a
                           temporary or permanent increase or decrease in
                           Seller's net revenue interest or working interest in
                           the Assets.

                 4.1.10    There are no claims, suits, actions or proceedings
                           (including government investigations and audits) now
                           pending or, to the best of Seller's knowledge,
                           threatened, against Seller relating to material
                           Environmental Matters with respect to the Assets, and
                           Seller is not aware of any reasonable basis for
                           believing that any such claims for material
                           Environmental Matters may be asserted against Seller,
                           the Assets or any other person or entity with respect
                           to the Assets. To Seller's knowledge, Seller has all
                           material licenses and permits (federal, state,
                           foreign and local) necessary to own and operate the
                           Assets, and such licenses and permits are in full
                           force and effect. To the best of Seller's knowledge,
                           no violations are or have been recorded in respect of
                           such licenses or permits and no proceeding is pending
                           or threatened seeking the revocation or limitation of
                           any such licenses or permits.

                 4.1.11    To Seller's knowledge, there are no royalties,
                           shut-in royalties, Lease rental payments or other
                           payments for which Seller has or would have any
                           responsibility or liability that are delinquent, and
                           all such payments that are due have been timely paid.

                 4.1.12    Seller is not a party to, or in any way obligated
                           under, nor does Seller have any knowledge of, any
                           contract or outstanding claim for the payment of any
                           broker's or finder's fee in connection with the
                           origination, negotiation, execution, or performance
                           of this Agreement for which Buyer has any liability.

                 4.1.13    All of Seller's representations where made in this
                           Agreement or in connection with the negotiation,
                           execution or performance of this Agreement, are
                           subject to the best of Seller's knowledge. The best

                                       14
<PAGE>   15

                           of Seller's knowledge is limited to matters known to
                           Seller's current Officers and Directors.

                 EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.8 (i) AND 4.1., BUYER
                 UNDERSTANDS AND AGREES THAT THE ASSETS ARE SOLD "AS IS" AND
                 "WHERE IS", WITH ALL FAULTS AND DEFECTS, WITHOUT RECOURSE BY
                 BUYER, ITS SUCCESSORS AND/OR ASSIGNS, AGAINST SELLER AND
                 WITHOUT COVENANT, REPRESENTATION OR WARRANTY WHATSOEVER,
                 EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE; AND WITHOUT
                 LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING
                 CLAUSE, SELLER EXPRESSLY DISCLAIMS AND NEGATES (a) ANY IMPLIED
                 AND EXPRESS WARRANT OF FITNESS FOR A PARTICULAR PURPOSE AND/OR
                 TITLE TO THE ASSETS EXCEPT AS TO TITLE CLAIMS ARISING BY,
                 THROUGH AND UNDER SELLER (BUT NOT OTHERWISE) AND (b) ANY
                 IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY. EXCEPT AS
                 PROVIDED IN SECTIONS 2.2 (iii) AND 2.4, BUYER HEREBY RELEASES
                 SELLER FROM ANY AND ALL LIABILITY WITH RESPECT TO THE CONDITION
                 OF THE ASSETS, WHETHER OR NOT CAUSED BY SELLER'S SOLE OR
                 PARTIAL NEGLIGENCE, AND WAIVES ITS RIGHT TO RECOVER FROM SELLER
                 ANY DAMAGES, CLAIMS, FINES, PENALTIES OR EXPENSES THAT MAY IN
                 ANY WAY BE CONNECTED WITH THE PHYSICAL CONDITION OF THE ASSETS,
                 WHETHER NOW KNOWN OR UNKNOWN.

         4.2   Buyer's Representations and Warranties. Buyer represents and
               warrants:

                 4.2.1     Buyer is a corporation duly organized and validly
                           existing, in good standing, under the laws of the
                           state in which it is incorporated and has the
                           corporate power and authority to own its property and
                           to carry on its business as now conducted and to
                           enter into and to carry out the terms of this
                           Agreement.

                 4.2.2     The execution and delivery of this Agreement, the
                           performance of this Agreement by Buyer, and the
                           consummation of the transactions

                                       15
<PAGE>   16

                           contemplated hereby, will not (i) conflict with or
                           result in a breach of any provision of Buyer's
                           certificate of incorporation or bylaws, (ii) result
                           in a material default (with due notice or lapse of
                           time or both) or give rise to any right of
                           termination, cancellation or acceleration under any
                           of the terms, conditions or provisions of any note,
                           bond, mortgage, indenture, license or agreement to
                           which Buyer is a party or by which Buyer or any of
                           Buyer's properties or assets any be bound or (iii)
                           violate any order, writ, injunction, judgement,
                           decree, statute, rule or regulation applicable to
                           Buyer, or any Buyer's properties or assets.

                 4.2.3     Buyer is not a party to, or in any way obligated
                           under, nor does Buyer have any knowledge of, any
                           contract or outstanding claim for the payment of any
                           broker's or finder's fee in connection with the
                           origin, negotiation, execution, or performance of
                           this Agreement for which Seller has any liability.

                 4.2.4     Buyer will make or will arrange for others to make an
                           inspection of the Assets. Subject to Seller's
                           foregoing representations and warranties in Section
                           4.1, Buyer accepts all platforms and equipment in an
                           "as is" and "where is" condition.

                 4.2.5     Buyer is directly and actively engaged in the
                           business of exploration for and production of oil and
                           gas. Buyer is a sophisticated investor in oil and gas
                           properties and has knowledge and expertise in
                           financial and business matters relating to the
                           evaluation and purchase of producing oil and gas
                           properties. Buyer is acquiring the interest conveyed
                           herein for investment purposes and not for
                           distribution in violation of any applicable
                           securities laws.

                 4.2.6     Buyer has sufficient cash, available lines of credit
                           or other sources of immediately available funds (in
                           United States dollar) to enable it to pay the
                           Purchase Price to Seller at the Closing, and to
                           perform its obligations hereunder.

5. ADDITIONAL COVENANTS

         5.1   Approvals, Consents and Preferential Rights to Purchase. If the
               transfer of the Assets, or any portion thereof, is subject to the
               consent or approval of a lessor or any governmental agency having
               jurisdiction, or is subject to rights of first refusal,
               preferential rights to purchase, or any other form of

                                       16
<PAGE>   17

               consent or restriction on transfer, the Buyer and Seller shall
               use reasonable efforts to obtain such consents and approvals and
               releases or waivers of any such rights of first refusal,
               preferential rights to purchase and other transfer restrictions
               prior to the Closing, unless the same are customarily obtained
               after closing. In the event preferential rights are exercised,
               this agreement shall terminate between the parties. The deposit
               shall be refunded to buyer in accordance with 2.1 and all
               provisions which may otherwise survive termination, including but
               not limited to indemnities, warranties and representations, shall
               terminate upon exercise of such preferential rights or rights of
               first refusal. In the event consents or approvals required to be
               obtained prior to closing are not obtained, Buyer, at its option,
               may terminate this agreement and the deposit shall be refunded
               under 2.1. In the event that the Assignments are not approved by
               the Minerals Management Service or any other governmental body
               whose approval is required, Buyer at its option may rescind this
               agreement and all closing documents and shall be entitled to a
               full refund of the purchase price including the deposit, adjusted
               for revenue and expenses in the interim. Buyer shall execute any
               and all instruments required to reconvey the assets to the
               Seller.

         5.2   Asset Title Review. Immediately upon execution of this agreement,
               Seller shall make available to Buyer next day, without express or
               implied warranty of any kind regarding the accuracy of such
               information, copies of information in Seller's possession
               regarding its title to the Assets. Seller shall not perform any
               additional title work, and Seller will not make existing
               abstracts and title opinions current. Buyer specifically agrees
               that any conclusions made from any examination done or caused to
               be done shall result from its own independent review and
               judgement only. In the event of a title defect that would result
               in Seller not having Defensible Title (as such term is defined
               below) to one of the Assets, Buyer shall notify Seller of such
               defect no later than 5 days before closing. If Seller and Buyer
               cannot agree on resolution of such defect, Seller shall elect (a)
               a cure the defect at its own expense prior to Closing, or (b) to
               delete its interest in the Asset with such defect from the sale
               to Buyer in which event the amount to be paid by Buyer for the
               Assets at Closing and the amount which Seller would otherwise be
               entitled to receive under Section 2.1 shall be reduced by an
               amount mutually agreed to by Seller and Buyer provided,

                                       17
<PAGE>   18

               however, that if Seller does not cure such defect, and if Seller
               and Buyer cannot agree upon the downward adjustment to the
               Purchase Price, or the total reductions under this Section 5.2 as
               a result of all uncured title defects exceeds 10% of the Purchase
               Price, either Seller or Buyer may terminate this Agreement. In
               such event the deposit shall be refunded to Buyer in accordance
               with 2.1. In the case of an interest in the Leases, "Defensible
               Title" shall mean, with respect to Seller such title, free and
               clear of all liens, claims, impairments, or encumbrances other
               than the Listed Contracts, as (a) will entitle Buyer to receive a
               percentage of the oil and gas produced and saved from the lands
               covered by such Leases, without limitation as to the depth, after
               deducting all applicable Production Burdens, that is not less
               than the "Net Revenue Interest" of Seller in the Leases shown on
               Exhibit "A" without reduction throughout the productive life of
               the Leases, and (b) will obligate Buyer to bear and pay a portion
               of the costs and expenses of operating the lands covered by such
               interest in the Leases that is not greater than the "Working
               Interest" of Seller shown on Exhibit "A" without increase
               throughout the productive life of the Leases. In the case of all
               other Assets, "Defensible Title" shall mean, with respect to
               Seller, good and marketable title free and clear of all liens,
               claims, impairments or encumbrances other than the Listed
               Contracts and any encumbrances created thereby. As used herein,
               "Production Burdens" shall mean royalty interests, overriding
               royalty interests, production payments, net profit interests or
               other similar interests that constitute a burden on, are measured
               by or are payable out of the production of hydrocarbons or the
               proceeds realized from the sale or other disposition thereof.

         5.3   Operations Prior to Closing. After the date of this Agreement and
               prior to the Closing, Seller shall use its best efforts to
               maintain the Assets in substantially the same manner in which
               they have been used and maintained prior to this Agreement.
               Unless Seller and Buyer otherwise agree, Seller shall not enter
               into any agreement or transaction in relation to the Assets
               excepting those with unaffiliated third parties which (i)
               individually involve a fair market value of less than Ten
               Thousand Dollars ($10,000), and (ii) are entered into in the
               ordinary course of business consistent with past practices.
               Seller shall not incur without the concurrence of Buyer, any
               expenditures for purposes other than normal day-to-day operations
               and actions required to address any sudden emergency to safeguard
               life and

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<PAGE>   19

               property (Seller agrees that it will respond to any such
               emergency in the same manner that it would customarily respond to
               a similar emergency affecting similar properties owned by Seller
               that are not the subject of a pending sale), between the
               execution of this Agreement and the Closing. If an expenditure
               for other purposes is proposed or contemplated, Seller shall
               submit such proposal to Buyer for its approval. If the Closing
               occurs, Buyer will assume the risk of any consequences, which
               arise as a result of Buyer's failure or refusal to approve and
               pay such expenditure. Unless Buyer and Seller otherwise agree,
               Seller shall not materially alter the Assets (other than the use
               of supplies and consumables) or remove any improvements,
               equipment or property which comprise the Assets (other than the
               use of supplies and consumables) with the exception of individual
               Assets (i) involving a fair market value of less than Two
               Thousand Dollars ($2,000) and (ii) sold or transferred to
               unaffiliated third parties or disposed of or consumed in the
               ordinary course of business. From the date of this Agreement
               until Closing, Seller will not, without the prior written consent
               of Buyer (which consent will not be unreasonably withheld),
               directly or indirectly (i) waive any right of material value
               relating to the Assets, (ii), modify, in any material respects or
               terminate any of the Listed Contracts. From the date of this
               Agreement until Closing, Seller shall maintain and operate the
               Assets as a reasonably prudent operator, in compliance in all
               material respects with all applicable laws, rules, regulations
               and orders, and in accordance with the Listed Contracts. Seller
               shall promptly notify Buyer of any material matter affecting the
               Assets known to Seller which arises from the date of this
               Agreement to the date of Closing.

         5.4   Casualty. If the Assets are damaged by fire, casualty or any
               other cause prior to Closing and such damage is not repaired by
               Seller (the parties agreeing that Seller has no obligation to do
               so) before Closing, Buyer shall have the right either to
               terminate this Agreement, or to purchase the Assets in such
               damaged condition, in which event the Purchase Price will be
               reduced by Seller's share of the estimated cost of repairing such
               damage. In the event this agreement should be terminated the
               deposit shall be refunded pursuant to 2.1.

         5.5   Buyer has contractual obligations with owners or right holders of
               other undivided interest owners of the leases and lands subject
               to this agreement. In the event Buyer's due diligence review of
               Seller's assets reveals an

                                       19
<PAGE>   20

               agreement, requirement, obligation etc. which causes or requires
               Buyer to violate, breach or impinge on Buyer's current
               contractual arrangements, then Buyer shall immediately notify
               Seller and this agreement shall be terminated at Buyer's option.
               In such event the deposit shall be refunded in accordance with
               2.1.

6. CONDITIONS PRECEDENT TO CLOSING

         6.1   Seller's Conditions Precedent. The obligation of Seller to
               consummate the transactions contemplated by this Agreement is
               subject to the satisfaction or waiver by Seller of each of the
               following conditions:

                 6.1.1     Buyer shall have performed and compiled with all
                           terms of this Agreement required to be performed or
                           complied with by Buyer prior to Closing.

                 6.1.2     No action or proceeding by or before any governmental
                           authority shall have been instituted or threatened
                           (and not subsequently dismissed, settled or otherwise
                           terminated) which might restrain, prohibit or
                           invalidate any of the transactions contemplated by
                           this Agreement.

                 6.1.3     The representations and warranties of Buyer contained
                           in the Agreement shall, if qualified by materiality
                           standards, be true, and if not so qualified, shall be
                           true in all material respects, on the date of this
                           Agreement and also at and as of the Closing as if
                           such representations and warranties were made at and
                           as of the Closing.

                 6.1.4     All material federal, state and local government
                           consents or approvals required for the consummation
                           of the transactions contemplated hereby (other than
                           those routine consents and approvals that are
                           customarily obtained after the consummation of
                           transactions of the type contemplated hereby) shall
                           have been obtained.

         6.2   Buyer's Conditions Precedent. The obligations of Buyer to
               consummate the transactions contemplated by this Agreement are
               subject to the satisfaction or waiver by Buyer of each of the
               following conditions:

                 6.2.1     Seller shall have performed and complied with all
                           terms of this Agreement required to be performed or
                           complied with by Seller prior to Closing.

                                       20
<PAGE>   21

                 6.2.2     No action or proceeding by or before any governmental
                           authority shall have been instituted or threatened
                           (and not subsequently dismissed, settled, or
                           otherwise terminated) which might restrain, prohibit
                           or invalidate any of the transactions contemplated by
                           this Agreement.

                 6.2.3     The representatives and warranties of Seller
                           contained in this Agreement shall, if qualified by
                           materiality standards, be true, and if not so
                           qualified, shall be true in all material respects, on
                           the date of this Agreement and also at and as of the
                           Closing as if such representations and warranties
                           were made at and as of the Closing.

                 6.2.4     All material federal, state and local government
                           consents or approvals required for the consummation
                           of the transactions contemplated hereby (other than
                           those routine consents and approvals that are
                           customarily obtained after the consummation of
                           transactions of the type contemplated hereby) shall
                           have been obtained.

                 6.2.5     Since the Effective Date of Sale, no events shall
                           have occurred that, individually or in the aggregate,
                           may reasonably be expected to:

                           (i)    materially and adversely affect the value of
                                  all or any material portion of the Assets,
                                  except affecting the value of oil and gas
                                  properties generally, or

                           (ii)   result in substantial liabilities with respect
                                  to which Seller is entitled to indemnification
                                  by Buyer under this Agreement, or

                           (iii)  result in substantial liabilities with respect
                                  to which Buyer is entitled to indemnification
                                  by Seller under this Agreement.

                 6.2.6     This transaction is subject to Buyer obtaining
                           approval of its Board of Directors. Buyer will use
                           its best efforts to obtain such approval, which shall
                           be promptly sought and Seller shall be timely
                           notified. However should Buyer fail to obtain such
                           approval, deposit shall be refunded to Buyer as
                           provided in 2.1.

7. MISCELLANEOUS

         7.1   Payment of Expenses and Fees. Each party hereto shall bear its
               own costs and expenses, including buy not limited to attorney's
               fees incurred in connection with the transactions contemplated in
               this Agreement; provided,

                                       21
<PAGE>   22

               however, Buyer shall pay all recording, MMS and filing fees or
               transfer fees and/or taxes in connection with the recording of
               any instrument of transfer of Assets from Seller to Buyer
               hereunder.

         7.2   Environmental Review. Promptly after signing this Agreement,
               Seller shall give Buyer access to environmental data in Seller's
               files for the Assets to be sold herein. Buyer specifically
               acknowledges that such access is given as an accommodation only,
               that Seller makes no representations whatsoever as to the
               accuracy, completeness, or reliability of any such environmental
               information disclosed to or obtained by Buyer and that Buyer
               relies and depends on and uses any and all such environmental
               information exclusively and entirely at its own risk and without
               any recourse whatsoever. Seller shall use reasonable efforts to
               arrange for the performance of any additional environmental
               testing at Buyer's expense which Buyer may reasonably request,
               and Seller and Buyer shall cooperate to ensure that such testing
               is performed on an expedited basis before Closing. If it is
               determined by Closing that any conditions exist on the Assets
               that are the result of any Environmental Matter, and if Seller
               and Buyer cannot agree on the resolution of such matter prior to
               Closing, any party shall have the right to terminate this
               Agreement, in which event there shall be no further obligation or
               liability between Buyer and Seller. In the event the agreement
               shall be terminated as provided herein, the deposit shall be
               refunded to buyer as provided in 2.1.

         7.3   NORM. It is expressly recognized and acknowledged by Buyer that
               naturally occurring radioactive material (NORM) is normally
               associated with oil and gas producing operations, and as a result
               the facilities and production equipment transferred herein may be
               contaminated by NORM. Accordingly, Buyer shall comply with
               present and future applicable federal and state laws and
               regulations governing (I) NORM and (ii) facilities and equipment
               contaminated by or containing NORM.

         7.4   Books and Records. Seller shall deliver to Buyer promptly after
               Closing copies of any records, materials, contract, accounting
               and agreement files, logs, well files, uninterpreted engineering
               data (such as bottom-hole pressure data, gas analysis) and field
               records pertaining to the Assets which may exist in Seller's
               files.

         7.5   Assignment. Prior to Closing, Seller may not assign any rights
               acquired hereunder or delegate any duties assumed hereunder
               without the prior

                                       22
<PAGE>   23

               written consent of Buyer, and Buyer may not assign any rights
               acquired hereunder or delegate any duties assumed hereunder
               without the prior written consent of Seller. After Closing, Buyer
               may freely assign any interest it acquires in the Assets, assign
               any rights acquired, or delegate any duties assumed herein or
               hereafter. Notwithstanding anything herein to the contrary, Buyer
               shall remain responsible to Seller for all obligations and
               liabilities under this Agreement and under said sale and
               assignment.

         7.6   Entire Agreement. This Agreement constitutes the entire agreement
               between Seller and Buyer with respect to the transactions
               contemplated herein, and supersedes all prior oral or written
               agreements, commitments, understandings, or information otherwise
               furnished by Seller to Buyer with respect to such matters. No
               amendments shall be binding unless in writing and signed by
               representatives of both parties. Headings used in this Agreement
               are only for convenience of reference and shall not be used to
               define the meaning of any provision. This Agreement is for the
               benefit of Seller, the Seller Indemnified Parties, Buyer and the
               Buyer Indemnified Parties only and not for the benefit of third
               parties.

         7.7   Notices. All notices and consents to be given hereunder shall be
               in writing and shall be deemed to have been duly given if
               delivered personally, telecopied with receipt acknowledged,
               mailed by registered mail, or delivered by a recognized
               commercial courier to the party at the address set forth on the
               first page of this Agreement or such other address as any party
               shall have designated by ten days written notice to the other
               party.

         7.8   Governing Law. This Agreement shall be governed by and construed
               in accordance with the laws of the State of Louisiana without
               regard to rules concerning conflicts of law.

         7.9   Confidentiality. Buyer acknowledges that all information
               furnished or disclosed pursuant hereto must remain confidential.
               Buyer may disclose such information only to its subsidiaries or
               affiliates, agents, advisors, financial sources, investors,
               banks, partners or representatives (herein "Representatives") who
               have agreed in writing, prior to being given access to such
               information, to be bound by the terms of this Section 7.9. The
               provisions of this Section 7.9 shall no longer apply if closing
               occurs.

         7.10  No Negotiations. From and after the date of this Agreement,
               Seller and its directors, officers, employees and representatives
               shall not directly or indirectly solicit, encourage or initiate
               any offer or proposal from, or

                                       23
<PAGE>   24

               engage in any discussions or negotiations with, or provide any
               information to, any person, entity or group (other than Buyer and
               its employees, agents and representatives) concerning any
               inquires or proposals for the acquisition of all or any portion
               of the Assets.

         7.11  Further Assurances. After the Closing, each of the parties shall
               execute, acknowledge and deliver to the other such further
               documents and take such other action, as may be reasonably
               required in order to carry out the purposes of this Agreement or
               any document delivered pursuant to the Agreement.

         7.12  Price Allocation. In the event either party desires to file IRS
               Form 8594, then that party shall give written notice to the other
               party. Seller and Buyer shall then jointly prepare such form
               pursuant to the Temporary Treasury Regulation Section 1.1060-1T
               to report the allocation of the purchase price among the Assets.
               Such allocation shall be as set forth in Exhibit "G". Each party
               hereto agrees not to assert, in connection with any tax return,
               tax audit or similar proceeding, any allocation of the Purchase
               Price that differs from that set forth in such Exhibit.

         7.13  Access. With reasonable advance notice to Seller, Seller shall
               give Buyer reasonable access to the Assets prior to Closing to
               permit Buyer to conduct their due diligence review of the Assets.

         7.14  Public Announcements. Subject to the provisions of Section 7.9,
               the parties hereto agree that prior to making any public
               announcement or statement with respect to the transaction
               contemplated by this Agreement, the party desiring to make such
               public announcement or statement shall consult with the other
               party hereto and exercise its best efforts to (i) agree upon the
               text of a joint public announcement or statement to be made by
               both of such parties or (ii) obtain approval of the other party
               hereto to the text of a public announcement or statement to be
               made solely by Seller or Buyer, as the case may be. Nothing
               contained is this paragraph shall be construed to require either
               party to obtain approval of the other party hereto to disclose
               information with respect to the transaction contemplated by this
               Agreement to any state or federal governmental authority or
               agency to the extent required by applicable law or by any
               applicable rules, regulations or orders of any governmental
               authority or agency having jurisdiction or as advised by counsel
               to comply with disclosure standards of

                                       24
<PAGE>   25

               the New York Stock Exchange and applicable securities exchange
               laws and rules.

         7.15  Amendment. No amendment or modification of this Agreement shall
               be effective unless in writing signed by all parties.

         7.16  Waiver. No waiver of any provision of or rights under this
               Agreement shall be effective unless in writing signed by the
               waiving party. No waiver of any specified right or provision
               shall be construed as a waiver of any other right or provision.

         7.17  Severability. If any term or other provision of this Agreement is
               invalid, illegal or incapable of being enforced by any rule of
               law or public policy, all other terms and provisions of this
               Agreement shall nevertheless remain in full force and effect so
               long as the economic or legal substance of the transactions
               contemplated hereby is not affected in any material adverse
               manner to any party. Upon any binding determination that any term
               or other provision is invalid, illegal or incapable of being
               enforced, the parties hereto shall negotiate in good faith to
               modify this Agreement so as to effect the original intent of the
               parties as closely as possible and in an acceptable manner, to
               the end that the transactions contemplated hereby may be
               completed to the extent possible.

         7.18  Exhibits. Exhibits attached to and referenced in this Agreement
               are hereby incorporated in this Agreement and made a part of this
               Agreement.

         7.19  Survival. The provisions of this Agreement shall survive the
               Closing. Seller's and Buyer's Representations and Warranties and
               indemnities shall survive the closing for a period of eighteen
               (18) months, other than Section 4.1.4 which shall survive the
               term of this Agreement.

         7.20  Counterparts. This Agreement may be executed in any number of
               counterparts, all of which taken together shall constitute one
               Agreement.

         7.21  Not a consumer under LA UFTPA. Buyer and Seller both hereby
               confirm that neither is a "consumer" as used in the Louisiana
               Unfair Trade Practices and Consumer Protection Act, Louisiana
               Revised Statutes, 51:1401 et. Seq.

                                       25
<PAGE>   26

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.

                                     SELLER

                                     ONLINE RESOURCES, INC.

                                     By: /s/ MAX E. MAXWELL
                                        ----------------------------------------
                                     Name:   Max. E. Maxwell
                                     Title:  President

                                     BUYER

                                     ENERGY PARTNERS, LTD.

                                     By: /s/ JAMES E. ORTH
                                        ----------------------------------------
                                     Name:   James E. Orth
                                     Title:  Vice President, Production &
                                             Engineering

                                       26

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