Document:

Exhibit 10.2

PARTICIPATION AGREEMENT

Eugene Island 29

Offshore, Louisiana

          THIS PARTICIPATION AGREEMENT, the
(“Agreement”), made effective the 25th day of October, 2007, is entered into by
and among Helis Oil & Gas Company,
L.L.C. (“Helis”), whose address is 228
St. Charles Ave., Suite 912, New Orleans, LA 70130, Houston Energy, L.P. (“Houston”) whose
address is 1415 Louisiana, Suite 2400, Houston, Texas 77002, Challenger
Minerals Inc. (“CMI”), whose mailing address is 15375 Memorial Drive, Suite G200,
Houston, Texas 77079-4101, Zenergy, Inc. (“Zenergy”), whose mailing address is
One Warren Place, 6100 South Yale Avenue, Suite 1700, Tulsa, Oklahoma 74136 and
Ridgewood Energy Corporation (“Ridgewood”), whose mailing address is 11700 Old
Katy Road, Suite 280, Houston, Texas 77079, sometimes hereinafter referred to
individually in this Agreement as a “Party” and jointly as the “Parties”;  

          WHEREAS,
Houston has licensed certain 3D seismic data in the Eugene Island area of
offshore Louisiana and has identified an area in Block 29 to have potential for
producing oil and/or gas and has designated the area as the Eugene Island Block
29 Prospect, said prospect area being hereinafter referred to as the
(“Prospect”); and

          WHEREAS,
Houston and Helis own rights in and to that certain Federal Offshore oil and
gas lease covering the Prospect. The oil and gas lease is further described in
Exhibit “A” (the “Lease”) and the area covered thereby depicted by a bold
outline on the plat attached hereto as Exhibit “B”, said exhibits attached
hereto and made a part of this Agreement for all purposes; and

          WHEREAS,
Houston and Helis have heretofore committed this Prospect to their offshore
exploration program agreement and now CMI, Zenergy and Ridgewood desire to
acquire an interest in the Lease and to participate with the Parties hereto in
the drilling of an initial exploratory well at the location set out herein on
the Prospect for the exploration and production of oil and gas according to the
terms and conditions of this Agreement; 

          NOW,
THEREFORE, in consideration of the foregoing recitals and premises and of the
mutual covenants, agreements and obligations herein contained, the Parties
hereto do hereby agree as follows, upon the condition precedent of assumption
by each Party, proportionate to its respective interest, of the obligations
contained in that certain Letter Agreement dated June 20, 2007 from Chevron
USA, Inc. and Offshore Shelf, LLC attached hereto as Exhibit “D” (“the Letter Agreement”):

ARTICLE I: CONTRACT AREA

          
The area subject to this Agreement shall encompass all of the area, whether
owned now or acquired in the future by any of the Parties, located within the
geographic boundaries of the area depicted and outlined by a heavy line on
Exhibit “B” (the “Contract Area”) and, except as otherwise provided for herein,
all operations conducted on the Contract Area shall be governed by the terms
and provisions contained in the Joint Operating Agreement to be executed or ratified
contemporaneously herewith, the (“JOA”) or (“Operating Agreement”). Zenergy has
or will be designated as operator with Houston, et al as non-operators. The
Operating Agreement shall be a covenant running with the land and all working
interest owners participating in any aspect of the operations for drilling,
completing or producing of any well on the Prospect shall be a party to the
Operating Agreement. In the event of any conflict between the terms of this
Agreement and those contained in the Operating Agreement, the terms and
provisions of this Agreement shall at all times and in all events prevail,
control and govern between the Parties hereto, with the non-conflicting terms
and provisions of the Operating Agreement continuing in full force and effect.
The presence of a term governing conduct in the Operating Agreement and the
absence of a term governing the same conduct in this Agreement shall not
constitute a conflict between the agreements.

ARTICLE II: AREA OF MUTUAL INTEREST (“AMI”)

          
The Parties hereto establish the area encompassing all of the lands located
within the geographic boundaries of the area depicted and outlined on the
attached Exhibit “B”, as an AMI and, and unless sooner terminated by mutual
agreement of the parties hereto, this designated AMI shall remain in full force
and effect for so long as any of the Lease remain or are continued in force,
whether by production, extension, renewal, or otherwise, plus one year.

          
Any Party acquiring any leasehold interest or a contractual right to earn a
leasehold interest within the AMI during the term above stated shall furnish
the other Parties actual copies of the lease, leases, or documents used in
acquiring said interest, documentation of the actual consideration paid or to
be paid for said interest, and any other document pertinent to the other
Parties evaluating the acquiring Party’s interest. The non-acquiring Parties
shall have thirty (30) days or forty-eight (48) hours in the case where a well
is in the process of being drilled, tested or completed by one or more of the
Parties within the AMI, following receipt of such notice in which to elect, as
to their respective proportionate after Production Casing Point share, as set
forth and outlined in Article V hereof, to participate in the acquired
interest. Such election shall be by written response to the acquiring Party
accompanied by a check covering its share of the acquisition costs. Failure of
a Party to reply within the above-specified period of time shall constitute an
election not to participate in such acquisition.

          
Any interest offered under this provision shall be offered without any
additional burdens and at the same net revenue interest as acquired by the
offering Party, except that, any interest acquired in the AMI by any Party
shall be subject to the HE&D Burden, as hereinafter defined, and the
acquiring Party of any interest in the AMI shall promptly assign to Houston
Energy, L.P, or its designee, such HE&D Burden, if it does not already burden
the interest acquired.

2

ARTICLE III: HE&D Burden 

          The interests of the Parties are subject to
a proportionate overriding royalty interest and back-in after payout, the
(“HE&D Burden”) in favor of HE&D Offshore, L.P. as described in this
Article III. As used herein below, “HE&D” shall refer to HE&D Offshore,
L.P. or its designees, and “Leasehold Interest” and “Lease” shall refer to the
Lease. The additional burdens are described as follows:

          HE&D
and its assigns are entitled to the right to or have heretofore been provided
an assignment of a proportionate 5.333% overriding royalty interest applicable
to the Lease. The overriding royalty
interest shall be a burden on all proceeds received from the sale of all
liquid or gaseous hydrocarbon substances produced, saved and marketed from or
attributable to the Leasehold Interest. Said overriding royalty interest shall
be proportionately reduced to the Party’s interest acquired and further reduced
in the event the interest shall cover and include less than the full and
complete fee interest in and to all oil, gas and hydrocarbons in, on and under
the lands covered by the Lease, or should the leasehold rights, titles and
interest in the Lease fail or terminate, in whole or in part for whatever reason,
and shall be computed and paid at the same time and in the same manner as
royalties are computed and paid to the Lessor under the terms of said Lease,
except as hereinafter provided; and

          HE&D is
entitled to an assignment proportionately from each Participant of a 10%
working interest after Prospect Payout in and to the Leasehold Interest
acquired by the Participants herein. “Prospect
Payout” as used herein shall be determined independently for each Party
and shall be defined as that point in time when each Participant in the
acquisition and development of the Lease or Leasehold Interest has recouped
from its share of the total value of production from the Lease (after deduction
of production taxes, excise taxes, lessor’s royalty, existing lease burdens and
HE&D’s overriding royalty) its share of the cost of drilling, testing,
completing, equipping and operating all wells, the costs of all platforms,
production facilities, pipelines, flowlines and other equipment necessary to
produce the same, any bonus, rentals or other payments made to appropriate
parties for the rights to such lease and production, less any proceeds received
for the sale of interest pursuant to this Agreement.

          It is
understood that the Contract Area, Eugene Island Block 29, contains multiple
prospects opportunities that have been disclosed to the Parties hereto. The
HE&D Burden shall be applicable to each prospect individually and Prospect
Payout shall be calculated on a prospect by prospect basis. The Parties acknowledge
that their respective geological and geophysical managers have knowledge of and
maps of the specific individual prospects within the Contract Area.

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ARTICLE IV: ASSUMPTION OF OBLIGATIONS AND
ASSIGNMENT OF INTEREST 

          By
execution of this Agreement, all Parties shall assume their after production casing
point (“ACP”), as hereinafter defined, proportionate share of the rights and
obligations contained in the Lease, the Letter Agreement, and the intermediate
assignments vesting leasehold interest in to Houston, and shall pay to Houston
their ACP proportionate share of a prospect fee and the sunk cost of the Lease
acquisition and maintenance for Block 29 (i.e. Ridgewood shall pay the amount
of $280,000 ($700,000 X 40%), CMI shall pay the amount of $105,000 ($700,000 X
15%), and Zenergy shall pay the amount of $192,500 ($700,000 X 27.5%)). Such payments shall be made to
Houston 7 days prior to spud of the Initial Test Well by wire transfer of
immediately available funds. Thereafter Houston shall
disburse to Helis their proportionate share of these funds and Houston and/or
Helis shall assign or cause to be assigned to Ridgewood an undivided 40%
interest in and to the Lease, to CMI an undivided 15% interest in and to the
Lease, and to Zenergy an undivided 27.5% interest in and to the Lease. The
proportionate net revenue applicable to the Leasehold Interest after
consideration of the burdens is 73.275%. The same proportionate net revenue
shall apply after payout. Such assigned interest shall be subject to its
proportionate share of existing Lease burdens (inclusive of the HE&D
Burden). The assignments shall be made without any warranties or
representations, express or implied, except that the assignors shall warrant
title to the leasehold interests assigned by, through and under them, but not
otherwise. Helis currently has the responsibilities for administrative
maintenance of the Lease and shall continue for the benefit of all the Parties
till such time that lease operations have been assigned to Zenergy. Thereafter,
Zenergy shall have the responsibilities for administrative maintenance of the
Lease and shall continue for the benefit of all the Parties.

          Houston and Helis, as to the interests to be assigned and conveyed
hereunder, represent that, to their knowledge:

	
 

	
 

	
 

	
 

	
i)

	
They have not dedicated or committed the Lease to any gas sales or
 other marketing agreements and has not agreed to the drilling of any wells on
 the Lease, except as provided for herein;

	
 

	
 

	
 

	
 

	
ii)

	
The Lease is in full force and effect in accordance with the terms
 and conditions thereof;

	
 

	
 

	
 

	
 

	
iii)

	
The Lease is free and clear of any mortgages, liens, or encumbrances
 of any kind or character created or suffered by Houston or Helis except as to
 the HE&D Burden as set forth herein;

	
 

	
 

	
 

	
 

	
iv)

	
Houston and Helis have good right and authority to enter into this
 Agreement and to execute any assignments provided for herein. 

ARTICLE V: INITIAL TEST WELL

	
 

	
 

	
1.

	
Subject to permitting and rig availability, Zenergy, as operator,
 shall use commercially reasonable efforts to commence or cause to be
 commenced by December 20, 2007 the turnkey drilling of a well using the
 Atwood Richmond rig at a location on the Lease set out on the Authority for
 Expenditure (AFE) attached hereto as Exhibit “C”, the “Initial Test Well”.
 Zenergy shall be
 permitted to extend the commencement date in the event the drilling rig,
 through no action of Zenergy, will not be
 available to commence the proposed operation before such date and Zenergy is successful in getting
 additional time prior to Lease expiration by obtaining a Suspension of
 Operations (“SOO”) or a Suspension of Production (“SOP”), as circumstances
 dictate, from the MMS for the Lease. 

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2.

	
The Parties agree to bear and pay their proportionate share as set
 forth below of all the cost, risk, expense and liability of any nature
 whatsoever incurred in the drilling, testing, logging, coring and evaluating
 the Initial Test Well (including plugging and abandonment costs, if a dry
 hole), subject to the AFE attached hereto. By execution of this agreement,
 each party approves the AFE.

	
 

	
 

	
 

	
The Initial
 Test Well shall be drilled pursuant to the terms of the Operating Agreement
 and all cost, risk, expense and liability for the drilling of the Initial
 Test Well to Production Casing Point, as hereinafter defined, and, if
 necessary, the plugging and abandonment cost shall be shared by the Parties
 hereto in the following proportions:

	
 

	
 

	
 

	
Zenergy

	
 

	
30.555

	
%

	
 

	
 

	
Ridgewood

	
 

	
44.444

	
%

	
 

	
 

	
CMI

	
 

	
16.666

	
%

	
 

	
 

	
Helis

	
 

	
5.557

	
%

	
 

	
 

	
Houston

	
 

	
2.778

	
%

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
100.000

	
%

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Parties
 before Production Casing Point interest as shown above is limited to the
 actual costs of the Initial Test Well to Production Casing Point or to one
 hundred percent (100%) of the dry hole costs connected with the Initial Test
 Well as reflected on the AFE attached hereto as Exhibit “C”, whichever first
 occurs. Thereafter all subsequent costs shall be borne by the Parties based
 on their ACP Interest.

	
 

	
 

	
 

	
Production
 Casing Point is defined herein as that point when the Initial Test Well has
 been drilled to Contract Depth and all logging, testing and evaluations have
 been conducted, and such information has been provided to the participating
 parties and the operator recommends either that production casing be set for
 a completion attempt or that the well be plugged and abandoned, and
 through plugging and abandonment, if no completion attempt shall be made.

	
 

	
 

	
 

	
All cost,
 risk, expense and liability for the Initial Test Well after Production Casing
 Point (“ACP”) shall be performed under the terms and provisions of the JOA,
 and subject to elections made by the participants shall be shared by the
 Parties hereto in the following proportions:

	
 

	
 

	
 

	
Zenergy

	
 

	
27.5

	
%

	
 

	
 

	
Ridgewood

	
 

	
40.0

	
%

	
 

	
 

	
CMI

	
 

	
15.0

	
%

	
 

	
 

	
Helis

	
 

	
12.5

	
%

	
 

	
 

	
Houston

	
 

	
5.0

	
%

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
100.0

	
%

	
 

5

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
After
 Prospect Payout, as hereinabove defined, HE&D, or its designee, shall
 be entitled to receive from each participating Party a proportionate 10%
 back-in working interest.

	
 

	
 

	
3.

	
If the
 Initial Test Well provided for herein should fail to reach Contract Depth due
 to mechanical difficulties or because the well encounters excessive water
 flow, loss of circulation, excessive pressure, cavities, caprock, salt or
 salt dome material, heaving shale, or other practically impenetrable
 conditions which would, in the opinion of the operator, in its reasonable
 discretion, render further drilling impracticable, then the Parties may, at
 their election, commence, or cause to be commenced, actual drilling of a
 substitute well at approximately the same location within ninety(90) days
 after abandonment of said well. The substitute well shall be considered and
 treated for all purposes hereof as though the same were the well for which it
 is a substitute, and the costs of both wells shall be combined in computing
 the carry limitation stated in Article V, Section 2. Any Party who elects not
 to participate in the substitute well shall forfeit their interest in the
 leasehold and the leasehold interest of the participating parties shall be
 proportionately increased.

	
 

	
 

	
4.

	
All
 participating Parties or their duly authorized representatives shall be
 allowed free access to the derrick floor at their sole risk and expense and
 to any and all information, geological or otherwise, pertaining to the
 drilling of any well, substitute well and/or additional well. Prior to
 running any logging device, coring or taking any formation test or other
 similar type test, Zenergy shall first give all Parties notice in sufficient
 time to allow their representative to be present to witness such test.
 Zenergy agrees to furnish each Party all information associated with the
 drilling of the well and its operations thereof according to each Party’s
 well information sheet.

	
 

	
 

	
5.

	
Notwithstanding
 the provisions of the Operating Agreement, the Parties stipulate and agree
 that the AFE attached hereto is acceptable and that by execution hereof, the
 Parties hereby approve the AFE.

	
 

	
 

	
6.

	
Notwithstanding
 the provision of Article 10 of the JOA, Operator may cash call dry hole costs
 10 days prior to the anticipated spud date and parties shall remit such
 payment within 72 hours. In the event any party fails to remit such payment,
 Operator shall give notice of such failure, as set forth in Article VIII, and
 the non-paying party shall have 24 hours to remit the cash call payment to
 Operator. Thereafter, failure to remit timely results in forfeiture of the
 participants’ interest in lease.

6

	
 

	
 

	
 

	
 

	
 

	
 

	
7.

	
Should the
 Lease expire prior to the spud date, no party shall have any liability to any
 other Party under this Agreement and any Party that has received payments
 under Article IV shall refund those amounts to the Parties that have paid
 them.

ARTICLE VI: FORCE
MAJEURE

          No
Party hereto shall be liable to any other Party, its subsidiaries or affiliates
or any person, firm, or corporation in privity with such other Party, its
subsidiaries or affiliates, for any delays or damage or any failure to act
hereunder (except for the payment of monies due) that may be occasioned or caused
by reason of any laws, rules, regulations or orders promulgated by any federal,
state or local governmental agency or any court of law or by the rules,
regulations or orders of any public body or official purporting to exercise
authority or control respecting the activities and operations contemplated
herein, or due, occasioned or caused, directly or indirectly, by strikes,
action of the elements, acts of God, weather or water conditions, inability to
obtain fuel, equipment or other critical materials, means or supplies, or any
other cause beyond the reasonable control of the non-performing Party
(excluding financial distress or inability to pay debts when due). In the event
of the occurrence of any of the foregoing, the obligations of the non-performing
Party shall be suspended during the continuance of any such event or condition,
and the time permitted for performance under this Agreement shall be extended
for a period of time equal to the period of such suspension. Whenever a Party's
obligations or right is suspended under this Article, such Party shall
immediately notify the other Parties, give written explanation for the cause of
Force Majeure relied on and exercise reasonable best efforts to cure the cause
of the Force Majeure relied on and to resume performance.

ARTICLE
VII : MARKETING

          The
provisions of the Operating Agreement shall govern the relationship between the
Parties with respect to marketing. 

ARTICLE VIII: NOTICES 

          Any
notice provided or permitted to be given under this Agreement shall be in
writing, and may be sent by personal delivery or facsimile machine or by
depositing same in the United States Mail, addressed to the Party to be
notified, postage prepaid, and registered or certified with a return receipt
requested. Notices deposited in the mail in the manner hereinabove described
shall be deemed to have been given and received upon the date of delivery as
shown on the return receipt (or upon the date of attempted delivery where
delivery is refused). Notice served in any other manner shall be deemed to have
been given and received only if and when actually received by the addressee
(confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by telecopy or other facsimile means), and when
delivered according to the receipt, if hand-delivered, sent by express courier
or delivery service. For purposes of notice, the addresses of the Parties shall
be as follows:

7

	
 

	
 

	
 

	
Zenergy, Inc.

	
 

	
Zenergy, Inc.

	
15115 Park Row, Suite 110

	
 

	
6100 S. Yale Ave. Suite 1700

	
Houston, Texas 77084

	
and

	
Tulsa, Oklahoma 74136

	
Attn: Mr. John E. (Jay) Brown

	
 

	
Attn: Michele Knotts

	
Telephone – 281-829-6336

	
 

	
Telephone – 918-488-6438

	
Facsimile – 281-829-2959

	
 

	
Facsimile – 918-488-6508

	
 

	
 

	
 

	
Helis Oil & Gas Company, L.L.C.

	
 

	
 

	
228 St. Charles Ave. Suite 912

	
 

	
 

	
New Orleans, La. 70130

	
 

	
 

	
Attn: Mr. Doug St. Clair

	
 

	
 

	
Telephone –
 504-523-1831

	
 

	
 

	
Facsimile -
 504-522-6486

	
 

	
 

	
 

	
 

	
 

	
Houston Energy, L.P.

	
 

	
 

	
1415 Louisiana, Suite 2400

	
 

	
 

	
Houston, Texas 77002

	
 

	
 

	
Attn: Mr. P. David Amend

	
 

	
 

	
Telephone - 713-650-8008

	
 

	
 

	
Facsimile - 713-650-8305

	
 

	
 

	
 

	
 

	
 

	
Ridgewood Energy Corporation

	
 

	
 

	
11700 Old Katy Road, Suite 280

	
 

	
 

	
Houston, Texas 77079

	
 

	
 

	
Attn: Mr. W. Greg Tabor

	
 

	
 

	
Telephone – 281-293-8449

	
 

	
 

	
Facsimile – 281-293-7705

	
 

	
 

	
 

	
 

	
 

	
Challenger Minerals Inc.

	
 

	
 

	
15375 Memorial Drive, Suite G200

	
 

	
 

	
Houston, Texas 77079-4101

	
 

	
 

	
Attn: Mr. Jim Bibby

	
 

	
 

	
Telephone – 281-925-7200

	
 

	
 

	
Facsimile – 281-925-7280

	
 

	
 

or at such other address and number as a Party shall have previously
designated by written notice given to the other Parties in the manner
hereinabove set forth.

ARTICLE IX: GENERAL PROVISIONS

	
 

	
 

	
 

	
1.           Dispute
 Resolution. Any controversy, claim or other proceeding arising out of or
 relating to this Agreement, the validity, interpretation or the enforcement
 of this Agreement or because of an alleged dispute, breach, default, or
 misrepresentation in connection with this Agreement or the transactions
 contemplated hereby shall be settled by arbitration in accordance with the
 provisions set forth in the Exhibit “G” of the Operating Agreement. Each
 Party to this Agreement waives any and all claims for treble, punitive or
 exemplary damages arising out of or relating to this Agreement. 

8

	
 

	
 

	
 

	
2.           Further
 Assurances. The Parties hereto shall, from time to time and upon
 reasonable request, execute, acknowledge, and deliver, or cause to be
 executed, acknowledged, and delivered, such instruments, and take such other
 action, as may be necessary or advisable, to carry out their respective
 obligations under this Agreement.

	
 

	
 

	
 

	
3.           Assignment
 of Agreement. No Party shall assign this Agreement or any of its rights
 or obligations under this Agreement without obtaining the prior written
 consent of the other Parties, which consent shall not be unreasonably withheld.
 Notwithstanding the provisions of this Paragraph, and notwithstanding the
 provisions of ARTICLE IV and ARTICLE XXVI of the Operating Agreement, the
 Parties stipulate and agree that Zenergy, Inc. is in the process of
 qualifying two entities with the Minerals Management Service, United States
 Department of Interior (MMS) to participate in this Prospect. Zenergy
 Offshore Operating Company, LLC (a Delaware limited liability company) is the
 intended operator of this prospect and all Parties agree that upon its
 qualification with the MMS and upon its compliance with all prerequisites for
 operating in the Gulf of Mexico, all parties will stipulate to the
 substitution of Zenergy Offshore Operating Company as operator of the
 Prospect. Further, the Parties stipulate and agree that upon qualification of
 Zenergy Offshore Properties, LLC (a Delaware limited liability company) with
 the MMS, that Zenergy, Inc. may transfer all or part of its interest to that
 entity under such terms as Zenergy, Inc. and Zenergy Offshore Properties, LLC
 may agree without compliance with ARTICLE XXVI of the Joint Operating
 Agreement. Zenergy, Inc. hereby agrees that it shall remain liable for the
 obligations associated with the assigned interest for so long as the interest
 resides in Zenergy Offshore Properties, LLC. The Parties stipulate that it
 shall not be necessary for Zenergy Offshore Operating Company, LLC to own an
 interest in the leasehold to serve as operator of the Prospect, but in the
 event, and at such time as Zenergy Offshore Properties, LLC sells, transfers,
 or conveys its leasehold interest to a third party, Zenergy Offshore
 Operating Company, LLC shall be deemed to have resigned. Additionally, the
 parties agree that CMI shall have the right to assign a 5% ACP working interest
 to Providence Resources (Trading) LLC and Providence shall pay 5.555% BCP and
 CMI’s ACP and BCP interests shall be reduced accordingly.

	
 

	
 

	
 

	
4.           Compliance
 with Laws and Regulations. This Agreement, and all operations conducted
 by the Parties pursuant to this Agreement, are expressly subject to and shall
 comply with all laws, orders, rules, and regulations of any federal, state,
 or local governmental authority having jurisdiction. No Party shall suffer
 forfeiture or be liable in damages for failure to comply with any of the
 provisions of this Agreement if such compliance is prevented or if such
 failure results from compliance with any applicable law, order, rule, or
 regulation.

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5.           Applicable
 Law. THE PROVISIONS OF THIS AGREEMENT AND THE RELATIONSHIP OF THE PARTIES
 SHALL BE GOVERNED AND INTERPRETED ACCORDING TO THE LAWS OF THE STATE OF TEXAS
 WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.

	
 

	
 

	
 

	
6.           Severance
 of Invalid Provisions. In case of a conflict between the provisions of
 this Agreement and the provisions of any applicable laws or regulations, the
 provisions of the laws or regulations shall govern over the provisions of
 this Agreement. If, for any reason and for so long as, any clause or
 provision of this Agreement is held by a court of competent jurisdiction to
 be illegal, invalid, unenforceable, or unconscionable under any present or
 future law (or interpretation thereof), the remainder of this Agreement shall
 not be affected by such illegality or invalidity. Any such invalid provision
 shall be deemed severed from this Agreement as if this Agreement had been
 executed with the invalid provision eliminated. The surviving provisions of
 this Agreement shall remain in full force and effect unless the removal of
 the invalid provision destroys the legitimate purposes of this Agreement, in
 which event this Agreement shall be null and void. The Parties shall
 negotiate in good faith for any required modifications to this Agreement.

	
 

	
 

	
 

	
7.           Construction
 and Interpretation. The interpretation and construction of the terms of
 this Agreement will be governed by the following conventions:

	
 

	
 

	
 

	
 

	
(i)

	
Headings for
 Convenience: All captions, numbering sequences, paragraph headings, and
 punctuation used in this Agreement are inserted for convenience only and shall
 in no way define, limit, or describe the scope or intent of this Agreement or
 any part thereof.

	
 

	
 

	
 

	
 

	
(ii)

	
Gender and
 Number: The use of pronouns in whatever gender or number shall be deemed to
 be a proper reference to the Parties to this Agreement though the Parties may
 be business entities or groups thereof. Any necessary grammatical changes
 required to make the provisions of this Agreement refer to the correct gender
 or number shall in all instances be assumed as though each case was fully
 expressed.

	
 

	
 

	
 

	
 

	
(iii)

	
Independent
 Representation: Each Party has had the benefit of independent legal
 representation with respect to this Agreement. This Agreement, though drawn
 by one Party, shall be construed fairly and reasonably and not more strictly
 against one Party than the other.

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(iv)

	
Integrated
 Agreement: This Agreement, and the Exhibits attached and incorporated herein,
 contain the entire agreement of the Parties with respect to the subject
 matter of this contract. There are no representations, warranties, or
 promises; oral or written, express or implied, between the Parties other than
 those included in this Agreement and the Exhibits hereto. Each of the Parties
 acknowledges that the other Party has made no promise, representation, or
 warranty that is not expressly stated or incorporated in this Agreement or
 the Exhibits hereto. This Agreement shall not be modified or changed (nor any
 provision of this Agreement waived) except by a written amendment signed by
 all Parties. This Agreement is the entire agreement as to all of the
 performances to be rendered under it, and breach of any provision shall
 constitute a breach of the entire Agreement. A waiver of any breach or
 failure to enforce any of the terms or conditions of this Agreement shall not
 in any way affect, limit, or waive a Party's rights under this Agreement at
 any time to enforce strict compliance thereafter with every term or condition
 of this Agreement.

	
 

	
 

	
 

	
8.           Binding
 Effect: The terms and provisions of this Agreement shall inure to the
 benefit of, and shall be binding upon, the Parties, their respective
 successors and permitted assigns. The Parties agree to execute such other
 instruments as may be necessary to carry out or make effective the terms and
 provisions of this Agreement. 

	
 

	
 

	
 

	
9.           Relationship of the Parties: The
 rights and obligations of the Parties hereunder shall be individual,
 separate, and several and not joint and collective. It is expressly agreed
 that The Parties do not intend to create, and it is not the purpose or
 intention of this Agreement to create, and this Agreement shall never be
 construed as creating, a joint venture, mining partnership, or other
 relationship whereby any Party will be liable for the acts, either of
 omission or commission, of any other Party hereto. Each of the Parties hereby elects to have the Secretary of the
 Treasury of the United States, or his delegate, exclude all operations
 provided for in this agreement from the application of any of the provisions
 of Subtitle A, Chapter 1, Sub-chapter K of the Internal Revenue Code of 1986
 as amended, and, further each of such parties authorize the operator of the
 well hereunder to file with the Internal Revenue Service such documents,
 statements and copies of this agreement, as may be necessary or desirable to
 effect such exclusions of the Internal Revenue Code of 1986, as amended.
 Notwithstanding the provisions recited above and any provisions of ARTICLE XX
 of the Joint Operating Agreement, the Parties stipulate and agree that to the
 extent any party pays a greater proportion of expenditures (including, but
 not limited to intangible drilling costs) pursuant to a promotion by any
 other party, said parties shall be deemed to participate in a tax partnership
 in accordance with Exhibit “H” to the Operating Agreement of even date, to
 the extent of such promotion and said parties hereby agree to take such
 further and proper action as necessary to facilitate a federal income tax
 treatment that comports with the special allocation of the promotion
 expenditures.

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10.           Counterpart Execution: This Agreement may be executed by signing
 the original or a counterpart thereof. If this Agreement is executed in
 counterparts, all counterparts taken together shall have the same effect as
 if all Parties had signed the same agreement, but no Party shall be bound to
 this Agreement unless and until all Parties have executed a counterpart or
 the original.

          IN
WITNESS WHEREOF, the Parties have executed or caused the Agreement to be
executed as of the day and year first above written.

The remainder of this page intentionally left
blank.

12

SIGNATURE PAGE

to Participation Agreement covering Eugene
Island 29 dated effective October 25, 2007, by and between Helis Oil & Gas
Company, L.L.C., Houston Energy, L.P. and Ridgewood Energy Corporation et al.

	
 

	
 

	
 

	
 

	
 

	
Helis Oil & Gas Company, L.L.C.

	
 

	
Houston Energy, L.P.

	
By:

	
Helis Energy, Inc., Manager

	
 

	
By:

	
Sewanee Investments, LLC,

	
 

	
 

	
 

	
 

	
Its General Partner

	
 

	
 

	
 

	
 

	
 

	

	
 

	

	
By:

	
Doug St. Clair

	
 

	
By:

	
P. David Amend

	
 

	
Landman

	
 

	
 

	
Vice President - Land

	
 

	
 

	
 

	
 

	
Date: 

	
 

	
 

	
Date: 

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Challenger
 Minerals Inc.

	
 

	
Ridgewood Energy Corporation

	
 

	
 

	
 

	
 

	
 

	

	
 

	

	
By:

	
Ronald E. Symecko

	
 

	
By:

	
W. Greg Tabor

	
 

	
Vice President

	
 

	
 

	
Executive Vice President

	
 

	
 

	
 

	
 

	
 

	
Date:

	
 

	
 

	
Date:

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Zenergy, Inc.

	
 

	
 

	
 

	
 

	
 

	

	
 

	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
Date:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

13

Exhibit “A”

to Participation Agreement covering Eugene
Island 29 dated effective October 25, 2007, by and between Helis Oil & Gas
Company, L.L.C., Houston Energy, L.P. and Ridgewood Energy Corporation et al.

Oil and Gas Lease subject to
this Agreement:

Oil and Gas Lease of Submerged Lands bearing serial number OCS-G 23854
dated effective July 1, 2002, between the United States of America, as Lessor,
and Chevron U.S.A. Inc., as Lessee, described as all of Block 29, Eugene Island
Area, OCS Leasing Map, Louisiana Map No. 4, insofar and only insofar as it
covers the S1⁄2; NE1⁄4; W1⁄2NW1⁄4; E1⁄2SE1⁄4NW1⁄4; and the SW1⁄4SE1⁄4NW1⁄4 as to all depths and
NE1⁄4NW1⁄4 and the NW1⁄4SE1⁄4NW1⁄4 as to depths below the deepest depth drilled in the
Eugene Island 29 No. 1 Well. 

          END OF
EXHIBIT

14

Exhibit “B”

to Participation Agreement covering Eugene
Island 29 dated effective October 25, 2007, by and between Helis Oil & Gas
Company, L.L.C., Houston Energy, L.P. and Ridgewood Energy Corporation et al.

Plat of AMI and Contract
Area

All of Eugene Island Block 29

Less the operating rights from surface to 16,160’ TVD as to the NE/4 NW/4 

and the NW/4 SE/4 NW/4 

15

Exhibit “C”

to Participation Agreement covering Eugene
Island 29 dated effective October 25, 2007, by and between Helis Oil & Gas
Company, L.L.C., Houston Energy, L.P. and Ridgewood Energy Corporation et al.

AFE 

16

Exhibit “D”

to Participation Agreement covering Eugene
Island 29 dated effective October 25, 2007, by and between Helis Oil & Gas
Company, L.L.C., Houston Energy, L.P. and Ridgewood Energy Corporation et al.

Chevron and Offshore Shelf,
LLC Agreement 

See Attached

17Exhibit 10.5

                             PARTICIPATION AGREEMENT

                             Eugene Island Block 346
                             Eugene Island Block 347

     This Participation Agreement ("Agreement") is made and entered into
effective as of the 15th day of March, 2007 (the "Effective Date"), by and
between Newfield Exploration Company ("Newfield") and Ridgewood Energy
Corporation ("Ridgewood"). Newfield and Ridgewood are also sometimes hereinafter
referred to collectively as the "Parties" or individually as a "Party".

                                   WITNESSETH:

     WHEREAS, Apache Corporation ("Apache") owns one hundred percent (100%)
record title interest in the following described portion of oil and gas lease
and area:

     Oil and Gas Lease dated June 1, 1994, bearing serial number OCS-G 14482, by
     and between the United States of America, as Lessor, and Anadarko Petroleum
     Corporation and Phillips Petroleum Company, as Lessees, covering all of
     Block 346, Eugene Island Area, South Addition, OCS Leasing Map, Louisiana
     Map No. LA4A, containing approximately 5,000 acres more or less ("Apache
     Lease") and

     WHEREAS, Apache is willing to Farmout a portion of the Apache Lease to the
Contract Area (hereinafter defined), INSOFAR AND ONLY INSOFAR AS said Apache
Lease covers the West Half of the Southwest Quarter of the Northwest Quarter
(W/2 SW/4 NW/4); the Southeast Quarter of the Southwest Quarter of the Northwest
Quarter (SE/4 SW/4 NW/4); the Northwest Quarter of the Southwest Quarter (NW/4
SW/4) and the West Half of the Southwest Quarter of the Southwest Quarter (W/2
SW/4 SW/4) of said Apache Lease ("EI 346 Acreage").

     WHEREAS, Newfield owns one hundred percent (100%) record title interest in
the following described portion of oil and gas lease and area:

     Oil and Gas Lease dated June 1, 2006, bearing serial number OCS-G 27919, by
     and between the United States of America, as Lessor, and Newfield
     Exploration Company, as Lessee, covering all of Block 347, Eugene Island
     Area, South Addition, OCS Leasing Map, Louisiana Map No. LA4A, containing
     approximately 5,000 acres more or less ("Newfield Lease") and

     WHEREAS, Newfield is willing to commit its interest in a portion of the
Newfield Lease to the Contract Area INSOFAR AND ONLY INSOFAR AS said Newfield
Lease covers the Southeast Quarter of the Northeast Quarter (SE/4, NE/4); the
North Half of the Northeast Quarter of the Southeast Quarter (N/2 NE/4 SE/4);
the Southeast Quarter of the Northeast Quarter of the Southeast Quarter (SE/4
NE/4 SE/4) and the East Half of the Southeast Quarter of the Southeast Quarter
(E/2 SE/4 SE/4) of said Newfield Lease ("EI 347 Acreage").

     The alloquotted portions of the EI 346 Acreage and the alloquotted portions
of the El 347 Acreage as described above are hereinafter referred to as the
"Contract Area".

<PAGE>

     WHEREAS, Newfield and Apache entered into that certain Option Agreement,
dated September 14, 2006 ("Option Agreement"), which provided Apache the option
to either (i) participate with Newfield in drilling a test well on the Contract
Area or (ii) farmout the EI 346 Acreage within the Contract Area to Newfield. A
copy of the Option Agreement is attached hereto as Exhibit "A";

     WHEREAS, pursuant to the Option Agreement, Apache has elected to farmout
the Contract Area to Newfield, and Newfield has entered into a formal farmout
agreement with Apache ("Farmout Agreement") covering the Contract Area, which
provides that Apache shall reserve an overriding royalty interest ("ORRI") of
5.0% of 6/6ths, but proportionately in the event Apache owns less than one
hundred percent (100%) of the record title and/or operating rights in the
Contract Area which Newfield may earn. The Farmout Agreement is attached hereto
as Exhibit "B";

     WHEREAS, Ridgewood agrees to bear a disproportionate share of drilling
costs associated with the Initial Test Well (defined in Article 3 hereinbelow)
in order to earn an interest in the Contract Area and the Newfield Lease,
pursuant to the terms and conditions of this Agreement, the Option Agreement and
the Farmout Agreement;

     WHEREAS, the Parties desire to enter into this Agreement to set forth the
manner in which the cost of drilling, producing and operating wells, and the
production from the Contract Area and the Newfield Lease and the interest in the
Contract Area and the Newfield Lease shall be shared and/or owned.

     NOW, THEREFORE, for the consideration, being the mutual benefits and
advantages accruing hereunder, the sufficiency of which is hereby acknowledged,
the Parties agree as follows:

                       Article 1 - Interest of the Parties
                       -----------------------------------

     The costs, risk and liabilities associated with the exploration and
development of the Contract Area and the Newfield Lease (including all wells,
platforms, pipelines, facilities and equipment associated directly with the
specified operations herein) and all oil and gas produced from wells drilled
pursuant to the terms hereof, shall be borne and owned, subject to the terms and
conditions set out herein, and unless otherwise agreed, by the Parties in
accordance with the following percentage working interests ("Working
Interests"):

           Party                            Working Interests
           -----                            -----------------

          Newfield                               50.00000%
          Ridgewood                              50.00000%*

*Subject to an obligation to pay a disproportionate share of Initial Test Well
costs to Casing Point, as further described in Article 3.

    Participation Agreement-Eugene Island Block 346/347 dated March 15, 2007
           Newfield Exploration Company & Ridgewood Energy Corporation
                                     - 2 -
<PAGE>

                         Article 2 - Operating Agreement
                         -------------------------------

     2.1  Newfield is designated as the Operator of the Contract Area and the
Newfield Lease, and all operations conducted on the Contract Area and the
Newfield Lease shall be performed in accordance with and shall be subject to the
terms and provisions of this Agreement, the Option Agreement, the Farmout
Agreement and the Operating Agreement attached hereto as Exhibit "C" ("Operating
Agreement"). The Parties shall execute the Operating Agreement simultaneously
with this Agreement.

     2.2  Notwithstanding anything herein to the contrary, the non-consent
penalties set forth in Article XII of the Operating Agreement shall not be
applicable to drilling operations on the Initial Test Well, or substitute
therefor, prior to the Parties drilling an Earning Well (as hereinafter
defined).

                          Article 3 - Initial Test Well
                          -----------------------------

     3.1  On or before May 30, 2007, Newfield shall commence actual drilling
operations for the Eugene Island 346 (OCS-G-14482) No. 7 Well at an approximate
surface and bottomhole location of 6,150' FSL and 900' FWL of Eugene Island 346
("Initial Test Well"). The Initial Test Well will be drilled in accordance with
Newfield's AFE dated October 27, 2006, and shall be drilled to a proposed total
depth of 12,890' TVD/MD, or to a depth sufficient to fully evaluate the "GA-1"
Sand, whichever is lesser depth ("Contract Depth"). The "GA-1" Sand correlates
to the shale interval which occurs at 10,550' MD (10,459' SSTVD) in the El 346,
Anadarko Petroleum Corporation Well No. 1 ST-1 (OCS-G 14482).

     3.2  As additional consideration for the opportunity to earn its Working
Interest in the Contract Area, the Parties will pay the following percentages of
the costs to drill the Initial Test Well to Casing Point (as described in
Article 3.3 below):

          Newfield             0%
          Ridgewood            100%

The dry hole well cost for the Initial Test Well is estimated to be
$18,036,673.00 ("Dry Hole Cost") as outlined on the drilling authorization for
expenditure ("AFE") for the Initial Test Well attached hereto as Exhibit "D".
Ridgewood's disproportionate cost sharing will cease once cumulative costs and
expenses for the Initial Test Well, and if drilled, the substitute well
therefore, reach Casing Point or $18,000,000.00, whichever occurs first.
Thereafter Newfield will bear its 50% and Ridgewood will bear its 50% share of
subsequent costs, subject to the non-consent rights set out in the Operating
Agreement.

    Participation Agreement-Eugene Island Block 346/347 dated March 15, 2007
           Newfield Exploration Company & Ridgewood Energy Corporation
                                     - 3 -
<PAGE>

     3.3  Casing Point is defined as that point in time when the Initial Test
Well, or substitute well therefor, has been drilled to the Contract Depth, and
all open-hole logs and all appropriate tests have been performed and delivered
to the Parties, and a recommendation is made to (i) set casing and complete the
well, (ii) plug and abandon the well or (iii) conduct other operations as
provided within the priority of operations outlined within the Operating
Agreement.

     3.4  If the Initial Test Well is either, i) unable to reach the Contract
Depth due to encountering domal material, heaving shale, saltwater, salt or
other impenetrable substance, or suffers any adverse condition (mechanical,
structural, stratigraphic or otherwise) in drilling said well, which substance
or condition cannot be overcome at a reasonable cost by means considered
customary or ordinary in the industry; or, ii) plugged and abandoned as a dry
hole, then any Party shall have the right to propose a substitute well in the
same manner as provided for and defined in the Farmout Agreement. Ridgewood
shall have the option, but not the obligation, to participate in such substitute
well; however, if Ridgewood elects not to participate in a substitute well, it
shall forfeit its rights under this Agreement, and in the Farmout Agreement. If
actual drilling operations are commenced on the substitute well within ninety
(90) days from the date of rig release of the Initial Test Well, then said well
shall be considered the Initial Test Well for purposes of this Agreement.

                 Article 4 - Assignment and Assumption of Rights
                 -----------------------------------------------

     4.1  Newfield will obtain Apache's written consent to assignment, by
Newfield to Ridgewood, of a 50.00% interest in the rights, duties and
obligations conferred by the Option Agreement and Farmout Agreement.

     4.2  Upon Ridgewood's participation pursuant to the terms and conditions
set forth herein and in the Farmout Agreement, and upon the Parties drilling an
Earning Well (as defined in the Farmout Agreement) and satisfying the Earning
Requirements defined and set out in the Farmout Agreement, the Parties who
participated in the Earning Well, and the full satisfaction of the Earning
Requirements, shall receive from Apache, an assignment of their respective
Working Interest shares of the operating rights interest in the Apache Lease
within the Contract Area, from the surface down to the base of the deepest
productive interval in said well and its stratigraphic equivalent, plus one
hundred (100) feet. In addition, Ridgewood shall be entitled to an assignment of
fifty percent (50%) of the Record Title interest in the entirety of the Newfield
Lease provided it participates in the drilling of the Initial Test Well or
substitute(s) thereof to Contract Depth as defined in the Farmout Agreement.

     4.3  The interest assigned to Ridgewood pursuant hereto shall be subject
only to the federal 1/6th royalty (subject to any applicable royalty relief
granted by the Minerals Management Service), and the Apache ORRI, and shall be
free and clear of any other overriding royalty interest, production payments, or
other burdens on production.

    Participation Agreement-Eugene Island Block 346/347 dated March 15, 2007
           Newfield Exploration Company & Ridgewood Energy Corporation
                                     - 4 -
<PAGE>

                       Article 5 - Ownership of Production
                       -----------------------------------

     Production from each well drilled on the Contract Area will be owned
pursuant to the terms of this Agreement, the Farmout Agreement and the Operating
Agreement.

                              Article 6 - Insurance
                              ---------------------

     In connection with any drilling and/or production operations on the
Contract Area, the Operator shall carry the type and amount of insurance
required by the Farmout Agreement and the Operating Agreement. No other
insurance shall be required of the Operator hereunder.

                      Article 7 - Miscellaneous Provisions
                      ------------------------------------

     Additionally, Ridgewood commits to participate in the drilling of the West
Cameron Block 296 Prospect pursuant to the terms of Letter Agreement dated
November 28, 2006, between Newfield and Ridgewood.

                           Article 8 - Confidentiality
                           ---------------------------

     Except for required disclosures as provided in the Operating Agreement, or
the Farmout Agreement, no Party shall release any geological, geophysical, or
reservoir information or any logs or other information pertaining to the
progress, tests, or results of any well drilled pursuant to this Agreement.

                              Article 9 - Conflicts
                              ---------------------

     Unless provided for otherwise in this Agreement, in the event of any
conflict between the terms and conditions as set forth herein and the terms and
conditions set forth in the Farmout Agreement, the terms and conditions set
forth in the Farmout Agreement shall control. In the event of any conflict
between the terms and conditions as set forth herein and the terms and
conditions set forth in the Operating Agreement, the terms and condition set
forth herein shall control.

                              Article 10 - Notices
                              --------------------

     All notices, requests or demands to be given under this Agreement shall be
in writing and shall be deemed to have been given (i) three (3) business days
after being sent by registered mail or certified mail, postage prepaid, or (ii)
on the day sent, if hand delivered or sent by facsimile, with receipt confirmed
and verbal confirmation, in each case addressed as follows or to such other
address as may have been furnished in writing to the other Parties hereto in
accordance herewith:

    Participation Agreement-Eugene Island Block 346/347 dated March 15, 2007
           Newfield Exploration Company & Ridgewood Energy Corporation
                                     - 5 -
<PAGE>

     If to Newfield:
     ---------------
     Newfield Exploration Company
     363 N. Sam Houston Pkwy. E., Suite 2020
     Houston, Texas 77060
     Attention: Ms. Christina Linscomb
     Office Phone: (281) 847-6074
     Fax Number:   (281) 405-4207

     If to Ridgewood:
     -----------------
     Ridgewood Energy Corporation
     11700 Old Katy Road, Suite 280
     Houston, Texas 77079
     Attn: Mr. Greg Tabor
     Office Phone: (281) 293-8449
     Fax Number:   (281) 293-7705

                          Article 11 - Topical Headings
                          -----------------------------

     Topical headings appearing at the top of each numbered article have been
inserted for convenience only and are to be given no force or affect whatsoever
in the interpretation of this Agreement.

                       Article 12 - Successors and Assigns
                       -----------------------------------

     This Agreement shall be binding upon each Party and their successors and
assigns. An assignment by a Party of any lands affected by this Agreement shall
be made expressly subject to, and the assignee shall expressly agree to assume
and comply with, the terms and provisions of this Agreement, the Option
Agreement, the Farmout Agreement and the Operating Agreement.

                       Article 13 - Counterpart Execution
                       ----------------------------------

     This Agreement may be executed by signing the original or a counterpart
thereof. If this Agreement is executed in counterparts, all counterparts taken
together shall have the same effect as if all the Parties had signed the same
instrument. However, this Agreement shall not be effective as to any Party,
until it has been executed by all Parties.

    Participation Agreement-Eugene Island Block 346/347 dated March 15, 2007
           Newfield Exploration Company & Ridgewood Energy Corporation
                                     - 6 -
<PAGE>

     IN WITNESS WHEREOF, this instrument is executed by each of the Parties on
the dates noted below, but shall be effective as of the Effective Date
hereinabove first written.

 WITNESSES:                               NEWFIELD EXPLORATION COMPANY

/s/ Christina Linscomb                    By:   /s/ W.M. Blumenshine
----------------------                          ----------------------
/s/ Rhoda Vaughn                          Name:     W.M. Blumenshine
---------------------                     Title:    Vice President - Land

WITNESSES:                                RIDGEWOOD ENERGY CORPORATION

Christina Linscomb                        By:   /s/ Randy Bennett
---------------------                           ----------------------
                                          Name:     Randy Bennett
                                          Title:    Land Manager

    Participation Agreement-Eugene Island Block 346/347 dated March 15, 2007
           Newfield Exploration Company & Ridgewood Energy Corporation
                                     - 7 -
<PAGE>

                                 [NEWFIELD LOGO]

                               September 14, 2006

Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, TX 77056
Attn:   Mr. Darrell Donaldson

        Re:  Option Agreement
             Eugene Island Block 346
             Eugene Island Block 347
             Federal Offshore Louisiana

Dear Mr. Donaldson:

Newfield Exploration Company ("Newfield") hereby proposes that Apache
Corporation ("Apache") as owner of Lease No. OCS-G 14482, Eugene Island Block
346, commit its interest in the West Half of the Southwest Quarter of the
Northwest Quarter (W/2SW/4NW/4), the Southeast Quarter of the Southwest Quarter
of the Northwest Quarter (SE/4SW/4NW/4), the Northwest Quarter of the Southwest
Quarter (NW/4SW/4) and the West Half of the Southwest Quarter of the Southwest
Quarter (W/2SW/4SW/4) of said lease ("EI 346 Acreage") and Newfield, as owner of
Lease No. OCS-G 27919, Eugene Island Block 347, commit its interest in the
Southeast Quarter of the Northeast Quarter (SE/4NE/4), North Half of the
Northeast Quarter of the Southeast Quarter (N/2NE/4SE/4), Southeast Quarter of
the Northeast Quarter of the Southeast Quarter (SE/4NE/4SE/4) and the East Half
of the Southeast Quarter of the Southeast Quarter (E/2SE/4SE/4) of said lease
("Newfield Acreage") with the combined El 346 Acreage and Newfield Acreage being
referred to herein as the ("Contract Area") under this option agreement ("Option
Agreement") pursuant to the following terms and conditions:

1.   Well Proposal.

     a.   Within thirty (30) days of full execution of this Option Agreement,
Newfield shall hold a technical review meeting in its offices and provide Apache
a prospect presentation, detailing Newfield's geological/geophysical evaluation
of the Contract Area, including any prospect Newfield has identified and whether
or not Newfield plans to drill same on the Contract Area. Said presentation
shall include a review of Newfield's licensed seismic data which shall be
subject to any restrictions imposed on the data to be shown to Apache by any
applicable confidentiality, license or other agreement, under the terms of the
Confidentiality Agreement attached hereto as Exhibit "A".

     b.   Within thirty (30) days following the technical review, and after due
consultation with Apache, Newfield may propose to Apache the drilling and
evaluating of a well (the "Initial Test Well") at a location of its choice on
the Contract Area to a minimum depth of 12,000' TVD, or a depth sufficient to
test the equivalent shale interval as seen in the El 346 OCS-G 14482 No. 1 ST-1

                                   EXHIBIT "A"
                   Attached to and made a part of that certain
                     Participation Agreement dated effective
                         March 15, 2007, by and between
                        Newfield Exploration Company and
                          Ridgewood Energy Corporation
Newfield Exploration Company                   (281) 847-6000 Fax (281) 405-4242

<PAGE>

Apache Corporation
September 14, 2006
Page 2

Well, whichever is the lesser depth ("Contract Depth"), and shall provide Apache
with a proposed location, objective, cost estimate, AFE and well plan. The
proposed target "GA-1" Sand should occur in a correlative position equivalent to
a shale interval which occurs at 10,550' MD (-10,459' SSTVD) in the EI 346,
Anadarko Petroleum Corporation Well No. 1 ST-1 (OCS-G 14482). Should Newfield
not propose the Initial Test Well as provided in this paragraph, this Option
Agreement will terminate on the thirtieth (30th) day after the technical review
provided for in Paragraph l.a above.

     c.   If Apache elects to participate pursuant to Article 2.a below and
Newfield elects to process its production from the Initial Test Well or its
substitute at Apache facilities or if the Initial Test Well or its substitute is
drilled from an Apache owned platform, Newfield would drill and complete such
well and thereafter Apache would become the operator. If Apache elects to
farmout pursuant to Article 2.b below and the Initial Test Well is drilled from
an Apache operated platform, Newfield would drill and complete such well and
Apache would operate the production as a contract operator.

2.   Apache Option. Apache shall have thirty (30) days from receipt of the
proposal under Paragraph 1(b) within which to elect in writing to either:

     a.   To participate in the drilling of the initial Well. If Apache decides
to participate, then:

          (i) The Initial Test Well, subsequent wells and related development
costs, if any, within the Contract Area, shall be funded fifty percent (50%) by
Newfield and fifty percent (50%) by Apache; and,

          (ii) If the Initial Test Well, or its Substitute Well (as described in
4.a), is timely drilled to Contract Depth and qualifies as a well capable of
producing in paying quantities in accordance with 30 CFR 250.115 or 30 CFR
250.116 and Newfield elects to complete said well, with the intention to produce
hydrocarbons to sales (an "Earning Well"), Newfield shall earn an assignment of
fifty percent (50%) of Apache's operating rights in the portion of the EI 346
Acreage comprising the Contract Area down to total depth drilled in said well
and its stratigraphic equivalent plus one hundred (100) feet. Likewise, Apache
shall be entitled to an equivalent assignment of operating rights in and to the
Newfield Acreage; and,

          (iii) All operations will be governed by a mutually acceptable
Operating Agreement covering the Contract Area limited in depth from the surface
to the Contract Depth or to the top of salt, whichever is shallower, under which
Newfield and Apache shall own their respective interests as set out above. The
operator would be in accordance with Article 1.c. above.

     b.   Or to farmout to Newfield the EI 346 Acreage within the Contract Area
on the following terms and conditions:

          (i) Newfield shall be designated Operator of the Contract Area, except
as to aliquots and/or wellbores associated with Apache's existing Eugene Island
Block 346 production operations. In the event the Initial Test Well is drilled
from an Apache owned platform, Apache would be designated contract operator of
the production in accordance with Article l.c. above;

<PAGE>

Apache Corporation
September 14, 2006
Page 3

          (ii) If the Initial Test Well, or its Substitute Well (as described in
4.a.), is an Earning Well, Newfield shall earn an assignment of one hundred
percent (100%) of Apache's operating rights in the EI 346 Acreage from the
surface down to total depth drilled in said well and its stratigraphic
equivalent plus one hundred (100) feet. Apache shall retain a five percent of
six-sixths (5.0% of 6/6ths) overriding royalty interest ("ORRI") in the EI 346
Acreage as to those depths included in the assignment of operating rights earned
by Newfield. Newfield will also assign to Apache a five percent of six-sixths
(5.0% of 6/6ths) ORRI in the Newfield Acreage from the surface down to a total
depth drilled in the Earning Well and its stratigraphic equivalent plus one
hundred (100) feet.

In the event Apache owns less than one hundred percent (100%) of the record
title and/or operating rights interest in the EI 346 Acreage comprising the
Contract Area, Apache's retained ORRI shall be proportionately reduced;

          (iii) Newfield will have the option to earn rights to deeper depths in
the Contract Area by commencing drilling operations on or before six (6) months
from the date on which the drilling rig is released from the Earning Well. Any
such additional well to earn the deeper rights shall be drilled in accordance
with the terms and conditions of this Option Agreement, except that the Contract
Depth shall be revised, as appropriate. Failure to drill or participate in the
drilling of an optional deeper test well during said period shall result in loss
by Newfield of any option to earn such deeper rights. Notwithstanding anything
herein to the contrary, Newfield shall not have the right to earn any depths
below the top of salt and any farmout agreement entered into between Apache and
Newfield shall be limited to those depths from the surface to the Contract Depth
or the top of salt whichever is shallower.

3.   Production Handling.

     Newfield, subject to capacity limitations of the facilities located on
Apache's Platform, shall have the option, but not the obligation, to process its
Contract Area production through Apache's existing production handling
facilities located on the Platform, under the terms of a mutually acceptable
production handling agreement which shall incorporate, among other provisions,
processing and handling rates of $.15/mcf for gas, $1.00/bbl for oil and
condensate, $1.00/bbl for water, and $.05/mcf per stage of compression, if
available and a monthly contract operating fee of $10,000.00 for the first well
and $5,000.00 for each additional well for a manned -facility or $12,500.00 for
the first well and $5,000.00 for each additional well for an unmanned facility
(collectively "Fees"). In any month in which there is production from the
Contract Area, if the Fees do not equal or exceed fifteen thousand dollars
($15,000.00) in any calendar month, then a minimum fee of fifteen thousand
dollars ($15,000.00) shall be charged to Newfield in lieu of fees based upon
throughput for such month, regardless of actual throughput. In any month in
which there is no production from the Contract Area, the minimum monthly fee
shall not exceed ten thousand dollars ($10,000.00). The Fees shall be adjusted
on the first day of April of each year by multiplying the rate currently in use
by the percentage increase in the average weekly earnings of Crude Petroleum and
Gas Production Workers for the last calendar year compared to the calendar year
preceding as shown by the index of average weekly earnings of Crude Petroleum
and Gas Production Workers as published by the United States Department of
Labor, Bureau of Labor Statistics. The increase in the Fees will be prorated to
the date of initial production during the first year of operation.
Notwithstanding the above, in the event Apache determines in its sole judgment

<PAGE>

Apache Corporation
September 14, 2006
Page 4

that it is uneconomic to continue to process Newfield's production at Apache's
production facilities, then Apache may discontinue the production handling
services upon sixty (60) days written notice to Newfield and the parties will
attempt to negotiate a sale or platform sublease agreement to allow continued
Contract Area production.

4.   General Terms and Conditions. Whether Apache agrees to participate or to
farmout under Paragraph 2, the parties agree that:

     a. Newfield will have the option to commence the drilling of another well
(a "Substitute Well") in the event the Initial Test Well is unable to reach
Contract Depth due to conditions beyond Newfield's control as a prudent
operator, within ninety (90) days of the date the rig is released on the well.
If the Initial Test Well, or any Substitute Well therefor, reaches Contract
Depth but does not qualify as an Earning Well, Newfield shall have ninety (90)
days after the plugging and abandonment of such well to commence the drilling of
an additional well in an attempt to earn an interest in the Contract Area; and,

     b. Subject to weather conditions, rig availability and acquiring all
necessary permits, Newfield must commence, or cause to be commenced, the
drilling of the Initial Test Well within one hundred eighty (180) days after
execution of this Option Agreement at a location of its choice on the Contract
Area. Drilling of the Initial Test Well shall thereafter continue in a
workmanlike manner to Contract Depth with the option to drill the Initial Test
Well or subsequent wells to a deeper depth. Newfield's only penalty for failure
to commence the Initial Test Well as provided herein shall be loss of all rights
to earn an interest in the EI 346 Acreage.

     c. Newfield shall not earn an interest in nor assume any additional
liability associated with any well, platform, facility, or pipeline currently
located on the Contract Area, except as may be provided under any production
handling agreement or platform sublease agreement that may be entered into
pursuant to this Option Agreement. Apache shall retain one hundred percent
(100%) of its rights and interests in any such well, platform, facility or
pipeline currently located on the EI 346 Acreage including the obligation to
abandon same.

     d. Newfield and Apache, if Apache elects to participate pursuant to Article
2. (a) above, shall not drill and produce, or cause to be drilled and produced,
from the Contract Area any reserves that are being produced or capable of being
produced by recompletion or other means of recovery from Apache's existing wells
in the EI 346 Acreage. Likewise, Apache shall not drill and produce, or cause to
be drilled and produced, any new wells on Eugene Island Block 346 which would
compete with and drain reserves discovered by any wells drilled pursuant hereto
on the Contract Area. Newfield shall not drill and produce or cause to be
drilled and produced, any new wells on Eugene Island Block 347 which would
compete with and drain reserves discovered by any wells drilled pursuant hereto
on the Contract Area,

     e. Following Apache's election to farmout or participate in the drilling of
the Initial Test Well, Newfield and Apache shall in good faith and in a timely
manner negotiate and execute a comprehensive farmout agreement or operating
agreement, as appropriate, consistent and in line with the terms hereof.

<PAGE>

Apache Corporation
September 14, 2006
Page 5

     f. The terms of this Option Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
No assignment shall be effective without the prior written approval of the
non-assigning party, which approval shall not be unreasonably withheld.

     g. Any assignment earned by Newfield pursuant to Article 2.a.(ii) or
2.b.(ii) of this agreement shall be without warranty of title, either express or
implied, except for a limited warranty by, through or under Apache, but not
otherwise. Any assignment earned by Apache pursuant to Article 2.a.(ii) of this
agreement shall be without warranty of title, either express or implied, except
for a limited warranty by, through or under Newfield, but not otherwise.

     h. For the purpose of giving notice of termination, or any other notice
that may be necessary in the performance of this agreement, notice shall be
deemed delivered when received. Notice shall be given at the following addresses
until written notice is provided by either party to the other of a change of
such address:

     Apache Corporation                         Newfield Exploration Company
     2000 Post Oak Blvd. Ste. 100               363 N. Sam Houston Parkway East,
     Houston, TX  77056                         Suite 2020
     ATTN: Mrs. Becky Harden                    Houston, TX  77060
     Phone: 713-296-6349                        ATTN: Mrs. Christina Linscomb
     Fax: 713-296-7024                          Phone: 281-847-6074
                                                Fax: 281-405-4207

If the terms and conditions described above are acceptable, please indicate your
agreement by signing in the space provided below and returning a signed copy of
this letter to the attention of the undersigned.

We appreciate your consideration of this proposal and look forward to hearing
from you soon. This offer shall expire at 4:00 p.m. C.S.T. on September 22,
2006. If you have any questions, please feel free to contact Christina Linscomb
at (281) 847-6074.

Sincerely,

/s/ John H. Jasek
John H. Jasek
General Manager - GOM

<PAGE>

Apache Corporation
September 14, 2006
Page 6

AGREED AND ACCEPTED this 19th day of September, 2006.

APACHE CORPORATION

By:     /s/ C.R. Harden
        ---------------
          C.R. Harden
Title:  Attorney-In-Fact
        ----------------

<PAGE>

--------------------------------------------------------------------------------
                                                       [APACHE CORPORATION LOGO]

2000 POST OAK BOULEVARD / SUITE 100 / HOUSTON, TEXAS 77056-4400
--------------------------------------------------------------------------------

                                                                  (713) 296 6000
                                                              WWW.APACHECORP.COM

February 28, 2007

Newfield Exploration Company
Attn: Ms. Christina B. Linscomb
363 N. Sam Houston Parkway East, Suite 2020
Houston, Texas 77060

Re:  Farmout Agreement
     OCS-G 14482
     Eugene Island Block 346
     Offshore Louisiana

Dear Chris,

Apache Corporation ("Apache") is the owner of the following oil and gas
lease situated Offshore Louisiana ("Apache Lease"):

     OCS-G 14482, dated effective June 1, 1994, between the United States
     of America, acting through the Director, Bureau of Land Management, as
     LESSOR, and Anadarko Petroleum Corporation and Phillips Petroleum
     Company, as LESSEE, covering and affecting lands described as all of
     Block 346, Eugene Island Area, containing 5,000 acres, more or less;
     limited specifically to the West Half of the Southwest Quarter of the
     Northwest Quarter (W/2 SW/4 NW/4), the Southeast Quarter of the
     Southwest Quarter of the Northwest Quarter (SE/4 SW/4 NW/4), the
     Northwest Quarter of the Southwest Quarter (NW/4 SW/4) and the West
     Half of the Southwest Quarter of the Southwest Quarter (W/2 SW/4 SW/4)
     of Eugene Island Block 346, being hereinafter described as the
     "Farmout Area".

Newfield Exploration Company ("Newfield") is the owner of the following oil and
gas lease situated Offshore Louisiana ("Newfield Lease"):

     OCS-G 27919, dated effective June 1, 2006, between the United States of
     America, acting through the Director, Bureau of Land Management, as LESSOR,
     and Newfield Exploration Company, as LESSEE, covering and affecting lands
     described as all of Block 347, Eugene Island Area, containing 5,000 acres,
     more or less; limited specifically to the Southeast Quarter of the
     Northeast Quarter (SE/4 NE/4), the Southeast Quarter of the Northeast
     Quarter of the Southeast Quarter (SE/4 NE/4 SE/4), the North Half of the
     Northeast Quarter of the Southeast Quarter (N/2 NE/4 SE/4) and the East
     Half of the Southeast Quarter of the Southeast Quarter (E/2 SE/4 SE/4) of
     Eugene Island Block 346.

                                   EXHIBIT "B"
                   Attached to and made a part of that certain
                     Participation Agreement dated effective
                         March 15, 2007, by and between
                        Newfield Exploration Company and
                          Ridgewood Energy Corporation

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 2 of 20

The Apache Lease and the Newfield Lease are hereinafter collectively described
as the "Contract Area".

Upon acceptance of this Farmout Agreement ("Agreement"), Apache grants to
Newfield the right to acquire one hundred percent (100%) of Apache's interests
in the Farmout Area, under the terms and conditions set out below. Apache and
Newfield are herein sometimes referred to collectively as "Parties" and
individually as "Party".

Newfield represents and warrants to Apache that Newfield is duly qualified with
the United States Minerals Management Service ("MMS") to do business in the
Outer Continental Shelf, Gulf of Mexico.

This Agreement implements an election by Apache pursuant to that certain Option
Agreement dated September 14, 2006, ("Option Agreement") between the Parties not
to participate in Newfield's proposed OCS-G 14482 Well No. 7.

                                       I.
                                INITIAL TEST WELL
                                -----------------

     Subject to rig availability, weather conditions and acquiring all necessary
permits, Newfield will commence or cause to be commenced the drilling of the
OCS-G 14482 Well No. 7 ("Initial Test Well"), on or before May 30, 2007, at a
surface and bottomhole location of 6,150' FSL and 900' FWL of Eugene Island
Block 346. The well will be drilled in accordance with Newfield's AFE dated
October 27, 2006, and to a proposed total depth of 12,890' TVD/MD or to a depth
sufficient to fully evaluate the "GA-1" Sand whichever is lesser depth
("Contract Depth"). The "GA-1" Sand correlates to the shale interval which
occurs at 10,550' MD (10,459' SSTVD) in the El 346, Anadarko Petroleum
Corporation Well No. 1 ST-1 (OCS-G 14482).

     Newfield shall not commence operations under this Agreement until Apache
has received a fully executed copy of this Agreement, Newfield has been
designated as Operator for conducting operations under this Agreement, and
Newfield has acquired all the necessary permits.

     The Initial Test Well, Subsequent Well(s) (defined in Section II below) or
any Substitute Well (defined in Section II below) drilled under the terms of
this Agreement, shall be drilled free of any cost and/or liability of any kind
or character to Apache, and all risk, liability, costs or expenses incurred in
connection with drilling, testing, completing, operating and associated tie-in
of said well or wells and/or plugging or abandoning said well or wells shall be
borne solely by Newfield.

     Newfield shall not be obligated to drill or commence drilling the Initial
Test Well or any other well under the terms of this Agreement. If Newfield fails

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 3 of 20

to timely commence drilling the Initial Test Well, Newfield will suffer no
penalty other than the forfeiture of all rights under this Agreement.

                                       II.
                     SUBSTITUTE WELL and SUBSEQUENT WELL(S)
                     --------------------------------------

     If, during the drilling of the Initial Test Well, or a Substitute Well
(defined in this paragraph), Newfield is unable to reach Contract Depth due to
conditions beyond Newfield's control, which in the opinion of a reasonably
prudent Operator under the same or similar conditions would render further
drilling impracticable or hazardous, and such condition prevents further
drilling of the well, Newfield may commence a "Substitute Well", provided actual
drilling of this Substitute Well is commenced within ninety (90) days after
release of the drilling rig used for the Initial Test Well or any Substitute
Well, and is drilled pursuant to all the terms and provisions of this Agreement
applicable to the well for which it is substituted.

     If the Initial Test Well or any Substitute Well therefore, reaches Contract
Depth but does not qualify as an Earning Well as described in Section III below,
Newfield shall have the continuing right to drill "Subsequent Well(s)" on the
Contract Area provided that each such Subsequent Well shall be subject to all
the terms and provisions of this Agreement, and further provided that Newfield
commences actual drilling operations on such Subsequent Well within ninety (90)
days from plugging and abandonment of the prior well. In the event Newfield does
not commence a Substitute Well or Subsequent Well within the applicable ninety
(90) day period, this Agreement and Contract Area and all the terms and
conditions contained herein shall terminate except for Newfield's obligation to
plug and abandon any wells and/or platforms drilled and/or installed on the
Contract Area by Newfield,

     Newfield will have the option to earn rights to deeper depths in the
Contract Area by commencing drilling operations on or before one hundred eighty
(180) days from the date on which the drilling rig is released from the Earning
Well. Any such "Additional Well" to earn the deeper rights shall be drilled in
accordance with the terms and conditions of this Agreement. Failure to drill or
participate in the drilling of an Additional Well during said period shall
result in loss by Newfield of any option to earn such deeper rights.
Notwithstanding anything contained herein to the contrary, Newfield shall not
have the right to earn any depths below the Deepest Earning Depth (defined in
Section III below).

     Notwithstanding anything herein to the contrary, Newfield shall not have
the right to drill any Substitute Well, Subsequent Well or Additional Well from
Apache's Eugene Island Block 346 "A" platform ("Platform") located at 3,298' FNL
and 3,543' FWL of Eugene Island 346.

                                      III.
                                 INTEREST EARNED
                                 ---------------

     Should Newfield drill the Initial Test Well or a Subsequent Well (or a
Substitute Well for either the Initial Test Well or a Subsequent Well) to the
Contract Depth, comply with the terms of this Agreement, and obtain MMS

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 4 of 20

determination that said well is a well capable of commercial production as
provided under 30 CFR ss.250 115 or 116 and Newfield commences actual production
within one hundred eighty (180) days of release of the drilling rig, or failing
to obtain this determination, should Newfield elect to complete the well and
equip same for the production of oil and/or gas in commercial quantities and
Newfield commences actual production within one hundred eighty (180) days of
release of the drilling rig, then said well shall be deemed the "Earning Well"
and Apache shall execute and deliver an "Assignment" assigning to Newfield an
interest in the operating rights to the Farmout Area. The Assignment shall:

A.   Be prepared by Apache and delivered to Newfield within sixty (60) days of a
     well being deemed an Earning Well, with the effective date of the
     Assignment being the date that the well is deemed an Earning Well.

B.   Be without warranty of title, statutory, express or implied, other than by,
     through and under Apache, and subject to all terms and conditions contained
     in all contracts (including but not limited to that certain Oil Purchase
     and Sale Agreement between Anadarko Petroleum Corporation and Texaco
     Trading and Transportation Inc. dated December 23, 1995) and agreements
     (recorded and unrecorded) attributable to the assigned interest, to the MMS
     reserved royalty interest, and the overriding royalty interest reserved by
     Apache as provided in Section III.(F) below and any overriding royalty
     interest or similar burdens affecting the Contract Area and filed of record
     as of December 5, 2006. Newfield acknowledges that it has reviewed Apache's
     files and is familiar with the Apache Lease and all agreements relating to
     the Farmout Area and takes cognizant of all matters relating to same.

C.   Be subject to the approval of the authorized officer of the MMS.

D.   Convey to Newfield one hundred percent (100%) of Apache's interest in and
     to the operating rights in the Farmout Area, from the surface down to the
     stratigraphic equivalent of the total depth drilled in the Earning Well
     plus one-hundred feet (100'), but in no event deeper than the top of salt.
     "Deepest Earning Depth" is defined as Contract Depth plus one hundred feet
     (100') or the top of salt, whichever is shallower.

E.   Reserve to Apache all rights to drill through the Farmout Area in order to
     explore, develop and/or operate all rights owned by Apache below the
     Contract Area or on lands pooled, or to be pooled, unitized or communitized
     therewith.

F.   Reserve to Apache an overriding royalty interest in the Apache Lease,
     including the Earning Well, of five percent of six-sixths (5.0% of 6/6ths)
     of all liquid and/or gaseous hydrocarbon substances produced and/or saved,
     either through testing or production on the Apache Lease.

     Simultaneously with Apache's execution of the Assignment, Newfield shall
     assign to Apache an overriding royalty interest of five percent of

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 5 of 20

     six-sixths (5 0% of 6/6ths) of all liquid and/or gaseous hydrocarbon
     substances produced and/or saved, either through testing or production on
     the Newfield Lease.

     Both the overriding royalty reserved by Apache on the Apache Lease and the
     overriding royalty assigned to Apache on the Newfield Lease shall be
     collectively referred to as the overriding royalty interest ("ORRI").

G.   Apache's ORRI shall be computed in the same manner and paid at the same
     time as the Lessor's royalty under the Apache Lease and the Newfield Lease
     and shall be free and clear of all royalty (other than MMS royalty),
     overriding royalty, and other burdens associated with production and all
     costs and expenses of drilling and production, except that the ORRI shall
     be charged with and bear its proportionate part of ad valorem, production,
     severance, excise, and other similar taxes on production. In the event the
     interest owned by Apache in the Farmout Area is less than a full leasehold
     interest, then the overriding royalty interest retained by Apache in the
     Apache Lease and the interest earned by Newfield shall each be
     proportionately reduced.

H.   Newfield shall not earn an interest in nor assume any additional liability
     associated with any well, platform, facility or pipeline currently located
     on the Farmout Area, except as provided in the PHA, as herein defined.
     Newfield shall not drill and produce or cause to be drilled and produced,
     from the Contract Area, any reserves that are being produced or capable of
     being produced from Apache's existing wells in the Contract Area or wells
     drilled in the Contract Area pursuant to this Agreement by recompletion of
     existing wells or the drilling of new wells for reserves that are capable
     of being produced in existing wells. Apache shall not drill and produce or
     cause to be drilled and produced, any new wells or the sidetrack of an
     existing well on the Contract Area, which would compete with and drain
     reserves discovered by any wells drilled hereunder pursuant to this
     Agreement.

I.   In the event Newfield fails to commence production from the Earning Well
     within one (1) year from rig release on the Earning Well then, unless
     Newfield can demonstrate a good faith effort on its part in attempting to
     initiate the sale of production from the Contract Area, the Contract Area
     shall terminate and Newfield will reassign to Apache any interest assigned
     to Newfield in the Farmout Area.

J.   Upon the total cessation of production from all wells drilled under this
     Agreement for a consecutive period of one hundred twenty days (120) days,
     during which period of time no operations are being conducted on the
     Contract Area in a good faith effort to re-establish production, the
     Contract Area shall terminate and at the request of Apache Newfield will
     re-assign to Apache any interest earned under this Agreement unless
     Newfield can demonstrate to Apache that reasonable circumstances exist
     which prohibit Newfield from conducting operations to re-establish
     production, but that Newfield is preparing to conduct such operations no
     later than one hundred fifty (150) days following such total cessation of
     production. Additionally, Apache will re-assign to Newfield any

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 6 of 20

     overriding royalty interest previously assigned to Apache by Newfield
     pursuant to III. F. above.

K.   Any interest assigned from Newfield to Apache shall be free and clear of
     any liens, claims, encumbrances or any other burdens created by, through or
     under Newfield, but shall be subject to the interests reserved herein by
     Apache and all burdens of record as of December 5, 2006.

                                       IV.
                               PRODUCTION HANDLING
                               -------------------

     Newfield, subject to capacity limitations of the facilities located on the
Platform, shall have the option, but not the obligation, to process its
production from the Contract Area ("Farmout Production") through Apache's
existing production handling facilities located on the Platform, under the terms
of a mutually acceptable production handling agreement ("PHA") which shall
incorporate, among other provisions, processing and handling rates of $.15/mcf
for gas, $1.00/bbl for oil and condensate, $1.00/bbl for water, and $.05/mcf per
stage of compression, if available and a monthly contract operating fee of
$10,000.00 for the first well and $5,000.00 for each additional well for a
manned facility or $12,500.00 for the first well and $5,000.00 for each
additional well for an unmanned facility (collectively "Fees"). In any month in
which there is Farmout Production, if the Fees do not equal or exceed fifteen
thousand dollars ($15,000.00) in any calendar month, then a minimum fee of
fifteen thousand dollars ($15,000.00) shall be charged to Newfield in lieu of
fees based upon throughput for such month, regardless of actual throughput. In
any month in which there is no Farmout Production, the minimum monthly fee shall
not exceed ten thousand dollars ($10,000.00). The Fees shall be adjusted on the
first day of April of each year by multiplying the rate currently in use by the
percentage increase in the average weekly earnings of Crude Petroleum and Gas
Production Workers for the last calendar year compared to the calendar year
preceding as shown published by the United States Department of Labor, Bureau of
Labor Statistics. The increase in the Fees will be prorated to the date of
initial Farmout Production during the first year of operation. Notwithstanding
the above, in the event Apache determines in its sole judgment that it is
uneconomic to continue to process Newfield's Farmout Production at Apache's
production facilities, then Apache may discontinue the production handling
services upon sixty (60) days written notice to Newfield and the parties will
attempt to negotiate a sale or platform sublease agreement to all continued
Farmout Production from wells drilled pursuant to this Agreement. The PHA shall
provide that in the event such an agreement cannot be reached, then Apache shall
designate Newfield as operator of the necessary Platform and facilities to
enable Newfield to continue to process and handle its Farmout Production and in
lieu of any fees under the PHA, Newfield shall bear and pay all actual LOE
incurred in operating and maintaining the relevant Platform and facilities until
Newfield's Farmout Production has depleted and Newfield has plugged and
abandoned its wells at which time Apache shall be responsible for the plugging
and abandonment of its wells and for the removal of its Platform. Newfield shall
be responsible for all maintenance and repairs of the Platform, the facilities
and its wells during Newfield's operation of the Platform and facilities.
Newfield shall also be responsible for emergency and spill response as

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 7 of 20

required by regulatory authorities and shall be responsible for regulatory
report while such Platform and facilities are operated by Newfield. NEWFIELD
SHALL DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS APACHE FROM AND AGAINST ANY
SUCH DUTIES, RESPONSIBILITIES AND LIABILITIES.

     In the event installation of additional facilities for the separation,
dehydration, compression, water disposal, measurement and sales ("Processing")
of the Farmout Production or any modifications or upgrades to the Platform are
necessary for the Processing of the Farmout Production, Newfield will incur all
costs associated with such modifications and/or upgrades.

     In the event Apache's production of oil and gas from the Platform is
interrupted for a period exceeding forty-eight (48) consecutive hours for each
interruption as a result of Newfield's operations including but not limited to
construction, installation, maintenance, well abandonment operations or removal
of any facilities which belong to Newfield, then Newfield shall make a payment
("Downtime Fee") to Apache within thirty (30) days of receipt of a bill with
supporting information from Apache. The Downtime Fee is to be calculated
according to the number of hours of downtime per downtime event exceeding
forty-eight (48) consecutive hours on the basis of Apache's average daily
production for the previous forty-five (45) days and on the basis of the average
published commodity price, for like kind and grade of product, which would have
been received during such downtime period, as follows:

     (A x B) x (C) divided by (45 x 24)

     Where:    A  =  number of hours of downtime after consecutive forty-eight
                     (48) hour free period
               B  =  total daily production for previous forty-five (45) days
               C  =  Apache's average commodity sale price during downtime
                     period

                                       V.
                            INFORMATION REQUIREMENTS
                            ------------------------

Newfield shall deliver to Apache, free of cost, the information set out in
Exhibit "A", attached hereto, and all other geological and geophysical,
engineering, technical, production test, exploratory, and reservoir information,
and any logs or other information and data that Newfield might acquire from the
Initial Test Well or any other well drilled by Newfield on the Contract Area but
only to the extent that such information is not restricted by licensing
agreements. Delivery of such information to Apache shall be a condition of
Newfield earning the Assignment provided for in Section III.

                                       VI.
                                 CONFIDENTIALITY
                                 ---------------

A.   The term "Confidential Information" shall include any geological,
     geophysical, engineering, technical, production test, exploratory, or
     reservoir information, or any logs or other information delivered to

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 8 of 20

     Apache by Newfield pursuant to Section V above. Confidential Information
     shall be the property of the Parties and shall be maintained by Apache as
     confidential for a period of two (2) years from the effective date of this
     Agreement or until such information is made public by a governmental
     authority, whichever is earlier. Each Party shall use at least the same
     degree of care in protecting the Confidential Information as it uses in
     protecting its own proprietary materials.

B.   Apache shall not have any obligation to limit disclosure or use of any
     portion of Confidential Information which:

     1.   Is already in Apache's possession prior to receipt hereunder;

     2.   Is now in or hereafter becomes publicly available through no fault of
          Apache;

     3.   Is disclosed to Apache without obligation of confidence by a third
          party which has the right to make such disclosure; or

     4.   Is independently developed by or for Apache without reference to
          Confidential Information received under this Agreement.

C.   Any Party may make Confidential Information available to third parties
     without the consent of the other Party as follows:

     1.   To a consultant or engineering firm for hydrocarbon reserve or other
          technical evaluation, analysis or interpretation or for reprocessing,
          provided that such consultant or engineering firm is not allowed to
          retain a copy of the Confidential Information after completion of its
          services and agrees in writing to treat it as confidential.

     2.   To show, but not provide copies, to a third party with which a Party
          is negotiating sale of all or part of its interest in the Contract
          Area, or a possible merger or consolidation or sale of its business
          operations; provided that such third party or parties agree in
          writing, to hold all such Confidential Information in confidence. In
          the event of completion of a transaction contemplated by this Section
          VI.C.2., a copy of all Confidential Information may be provided to the
          successor in interest of such Party and such Party may also retain
          copies of the Confidential Information with all the rights and
          obligations which it had prior to the completion of the transaction.

     3.   To show and provide copies of the Confidential Information to
          affiliates or financial institutions provided that such affiliates or
          financial institutions agree to be bound by the confidentiality
          provisions of this Agreement.

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 9 of 20

     4.   To show the Confidential Information to and provide copies thereof to
          agencies of federal and state governments having jurisdiction to the
          extent required by applicable law, rule or regulation, provided that
          such Party shall take all actions to require the confidential
          treatment of the Confidential Information which must be disclosed.

                                      VII.
                                CONSENT TO ASSIGN
                                -----------------

     Except for assignments to affiliates of Newfield, internal partners of
Newfield or financial institutions as part of a financing arrangement, Newfield
may not assign any rights Agreement without the prior written consent of Apache,
and any assignment made without such consent shall be void. Such request shall
contain the name, address and percentage of participation of the proposed
assignee. Should Newfield request Apache's consent to assign to a willing and
financially able party, Apache's consent shall not be unreasonably withheld.
Notwithstanding Apache's consent to assign, Newfield shall remain fully liable
to Apache for the performance of all obligations incurred prior to the effective
date of the Assignment under this Agreement. All assignments shall be made
expressly subject to this Agreement and Apache shall not be under any obligation
to recognize any assignment of this Agreement pursuant to the terms hereof
unless and until it has received from Newfield a true and correct copy of same
and assignee has ratified this Agreement.

                                      VIII.
                                    INDEMNITY
                                    ---------

     NEWFIELD SHALL RELEASE, DEFEND, INDEMNIFY, AND HOLD APACHE, ITS AFFILIATES
AND CONTRACTORS, AND EACH OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, OR REPRESENTATIVES, CONTRACTORS, SUBCONTRACTORS, SUCCESSORS AND ASSIGNS
HARMLESS, TO THE MAXIMUM EXTENT PERMITTED BY LAW, FROM AND AGAINST ANY CLAIMS,
LIABILITIES, AND LOSSES FOR INJURY, DEATH OR DAMAGE OF EVERY KIND AND CHARACTER
TO PERSONS, PROPERTY OR THE ENVIRONMENT (INCLUDING, BUT NOT LIMITED TO THE COST
OF LITIGATION AND ATTORNEY'S FEES INCURRED IN CONNECTION WITH THE SAME) ARISING
OUT OF OR IN CONNECTION WITH NEWFIELD'S OPERATIONS UNDER THE TERMS OF THIS
AGREEMENT, OR NEWFIELD, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
REPRESENTATIVES, CONTRACTORS, SUBCONTRACTORS, SUCCESSORS, AND ASSIGNS; PROVIDED
THAT IF ANY SUIT IS FILED ON ANY CLAIM, NEWFIELD SHALL IMMEDIATELY NOTIFY APACHE
AND PERMIT APACHE TO PARTICIPATE IN THE DEFENSE THEREOF WITHOUT WAIVER OR
IMPAIRMENT OF NEWFIELD INDEMNITIES TO APACHE; HOWEVER, THE ABOVE SHALL NOT APPLY
TO APACHE IN THE EVENT OF APACHE'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 10 of 20

                                       IX.
                            ASSUMPTION OF LIABILITIES
                            -------------------------

     It is understood that Newfield shall assume all duties, responsibilities
and liabilities in connection with all of its operations on the Contract Area
limited to the interests subject to this Agreement, and that Newfield shall
perform all duties and make any and all filings and reports as necessary and
obtain all necessary permits in connection with the drilling and plugging and
abandoning of any well or wells drilled under the terms of this Agreement.
NEWFIELD DOES HEREBY AGREE TO DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS
APACHE FROM AND AGAINST ANY SUCH DUTIES, RESPONSIBILITIES AND LIABILITIES.

     Although Apache, as the current Operator of the Farmout Area, will provide
Newfield copies of permits and site data (including any shallow hazard surveys,
bathymetry reports, and soil boring reports) if and when available, APACHE MAKES
NO WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND HEREBY EXPRESSLY
DISCLAIMS ALL SUCH WARRANTIES, AS TO THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION, PERMITS OR DATA SO FURNISHED. NEWFIELD HEREBY EXPRESSLY ASSUMES THE
RISK OF THE INACCURACY OR INCOMPLETENESS OF SUCH INFORMATION, PERMITS OR DATA,
WAIVES ANY CLAIMS AGAINST APACHE REGARDING SUCH INFORMATION, PERMITS OR DATA,
AND ACKNOWLEDGES THAT, WITHOUT SUCH WAIVER, APACHE WOULD NOT FURNISH SUCH
INFORMATION, PERMITS OR DATA.

     Notwithstanding the above, neither Party hereto shall be liable in an
action initiated by one (1) against the other for special, indirect,
consequential, exemplary or punitive damages resulting from or arising out of
this Agreement, including, without limitation, loss of profit or business
interruptions, however same may be caused.

                                       X.
                                SEVERAL LIABILITY
                                -----------------

     The Parties hereby agree that the respective obligations and liabilities of
the Parties under this Agreement shall be several, not joint or collective, and
each Party shall be responsible for its own obligations. It is not the intention
of the Parties to create, nor shall this Agreement be construed as creating, a
mining or other partnership, agency or association between the Parties or liable
as partners, agents or associates.

                                       XI.
                                   COMPLIANCE
                                   ----------

     Newfield shall comply with the laws and regulations applicable to any
activities carried out by Newfield under the provisions of this Agreement and
any amendments hereto. Newfield agrees to immediately notify Apache of any
material failures to comply with applicable laws or regulations, AND AGREES TO

<PAGE>

Newfield Exploration Company
February 28, 2007
Page l1 of 20

RELEASE, INDEMNIFY, DEFEND, AND HOLD HARMLESS APACHE FROM AND AGAINST ANY AND
ALL LOSSES, LIABILITIES, CLAIMS, DEMANDS, ORDERS, JUDGMENTS, NOTICES, DAMAGES OR
OTHER MATTERS, WHETHER SIMILAR OR DISSIMILAR IN NATURE WHICH MAY ARISE FROM
NEWFIELD'S FAILURE TO COMPLY WITH SUCH LAWS AND REGULATIONS.

                                      XII.
                                    INSURANCE
                                    ---------

     During the term of this Agreement, Newfield shall maintain insurance
coverage, with reasonable deductibles and insurers acceptable to Apache, as set
forth in Exhibit "B". Newfield also require its contractors and subcontractors
to carry prudent insurance coverage for the types of operations undertaken. Any
deficiencies in the insurance policies of Newfield's contractors and
subcontractors shall be the sole responsibility of Newfield. It is expressly
understood and agreed that the coverages required in Exhibit "B" represent
Newfield's minimum insurance requirements and are not to be construed to fund or
limit the liability or any indemnity obligations that are undertaken by Newfield
in this Agreement.

     With respect to the liabilities assumed in this Agreement, the insurers of
the specified policies of insurance hereunder, including those insurance
policies required of Newfield's contractors and/or subcontractors, shall waive
their rights of subrogation against Apache, their subsidiary and affiliated
companies, their directors, officers, employees, agents, representatives,
invitees, co-lessees, co-owners, partners, joint venturers, contractors and
subcontractors, and their insurers, and each of their respective successors,
spouses, relatives, dependents, heirs and

     With respect to the liabilities assumed in this Agreement, the insurers of
the specified policies of insurance required hereunder shall include Apache and
their subsidiary and affiliated companies as additional insureds. However, this
provision shall not apply to the Workers' Compensation policies of either
Newfield or of its contractors and/or subcontractors.

     Prior to any work commencing under this Agreement, Newfield shall furnish
Apache with certificates of insurance indicating that the required insurance
policies are in full force, and that such policies shall not be cancelled
without thirty (30) days prior written notice to Apache.

                                      XII.
                               REPORTING ACCURACY
                               ------------------

     All financial settlements, billings and reports rendered to Apache by
Newfield and all bills given to Newfield by Apache pursuant to this Agreement
and/or any amendments, shall reflect properly the facts about all activities and
transactions. Each Party agrees to notify the other Party promptly upon
discovery of any instance where it has reason to believe data supplied is no
longer accurate or complete.

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 12 of 20

                                      XIV.
                                  AUDIT RIGHTS
                                  ------------

     Apache, upon written notice to Newfield, shall have the right, for a period
of twenty-four (24) months from the end of the calendar year in which a payout
statement or ORRI disbursement is or should have been received, to audit
Newfield's records of all proceeds, operating expenses and any other data or
information attributable to such payout statement, ORRI disbursement and the
rights of Apache pursuant to this Agreement.

                                       XV.
                                  WELL TAKEOVER
                                  -------------

     If, at any time, Newfield elects to permanently abandon any well drilled
under this Agreement, then Apache shall have the option to take over said well
for any purpose. If Newfield elects to abandon such a well, it shall give notice
to Apache within forty-eight (48) hours (inclusive of weekends and holidays) of
making its decision to so abandon. Within ten (10) business days after receipt
of such notice, or if a drilling rig is on location, within forty-eight 48)
hours, exclusive of weekends and holidays, Apache shall notify Newfield whether
it elects to exercise its option. Failure to respond timely shall be deemed a
negative election.

     If Apache exercises the option to take over the well, it shall be entitled
to operate the well in conjunction with any facilities which are or would have
been connected with operation of the well, and Apache shall further be entitled
to produce the well from any zone, formation, or reservoir previously
encountered in the well to be taken over whether or not the zone, formation, or
reservoir has been previously completed. In the event Apache exercises such well
takeover option, it shall pay Newfield the salvage value of the well and
associated equipment (including the salvage value of the platform and facilities
associated with the well), if any, less the estimated costs of salvaging and
shall thereafter assume all further risk, responsibility and expense of plugging
and abandoning the well. If Apache elects not to take over the well, then
Newfield shall thereafter promptly plug and abandon it and any associated
flowline or pipeline in accordance with all rules and regulations of the MMS.

                                      XVI.
                              RIGHTS TO PRODUCTION
                              --------------------

     Each Party shall own and have the right to receive in-kind and to
separately dispose of its proportionate share of the oil and gas production from
the Contract Area.

                                      XVII.
                           LEASE MAINTENANCE PAYMENTS
                           --------------------------

     Prior to the time Newfield receives an Assignment under this Agreement,
Apache shall pay any rentals and/or minimum royalty necessary to perpetuate the
Apache Lease. Subsequent to such Assignment, Apache will continue to make such
payments; provided however, Apache may be relieved of such obligation at such

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 13 of 20

time as all wells on the Apache Lease in which Apache has a working interest are
no longer capable of producing in Apache's sole judgment and Apache gives
Newfield notice at least sixty (60) days prior to any payment due date, and
thereafter Newfield shall be responsible for such payments. Any payments made by
Apache prior or subsequent to any Assignment hereunder, shall be reimbursed to
Apache by Newfield within thirty (30) days of its receipt of invoice for such
payment. Upon the written request of a non-paying Party, the Party responsible
for making the rental or minimum royalty payments shall provide proof of any
such payment.

                                     XVIII.
                                 APPLICABLE LAW
                                 --------------

     THE APACHE LEASE AND NEWFIELD LEASE AND ALL OPERATIONS CONDUCTED HEREUNDER
BY NEWFIELD SHALL BE SUBJECT TO ALL VALID AND APPLICABLE FEDERAL LAWS, RULES,
REGULATIONS AND ORDERS ("FEDERAL LAW"). TO THE EXTENT REQUIRED BY FEDERAL LAW,
THE LAWS OF THE STATE ADJACENT TO THE LEASE SHALL APPLY. THIS AGREEMENT SHALL
OTHERWISE BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS
OF THE STATE OF TEXAS, EXCLUSIVE OF ANY PROVISIONS THAT WOULD DIRECT THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION. In the event this
Agreement or such operations, or any part thereof, contemplated hereby are found
to be inconsistent with or contrary to any such laws, rules, regulations or
orders, the laws, rules, regulations or orders shall be deemed to control and
this Agreement shall be regarded as modified accordingly and as so modified
shall continue in full force and effect.

                                      XIX.
                                  MISCELLANEOUS
                                  -------------

A.   Except as otherwise provided for in this Agreement, this Agreement contains
     and comprises the entire agreement between the Parties regarding the Apache
     Lease, Newfield Lease and Contract Area and supersedes any previous
     negotiations or documents related thereto. Any amendments, changes or
     modifications to the rights and obligations of the Parties hereto shall be
     in writing and shall be effective only when agreed in writing by all
     Parties. Apache makes no warranty, statutory, express or implied, with
     respect to its ownership in the Apache Lease, except by, through or under
     Apache.

B.   The section headings used herein are for convenience only and shall not be
     construed as having any substantive significance or as indicating that all
     of the provisions of this Agreement relating to any particular topic are to
     be found in any particular section.

C.   All notices given hereunder, except information as specified in Exhibit
     "A", shall be given to the Parties at the following addresses:

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 14 of 20

                        Apache Corporation
                        2000 Post Oak Blvd, Suite 100
                        Houston, Texas 77056
                        Attn: Land Manager - Gulf Coast Region
                        Telephone:   (713) 296-6349
                        Facsimile:   (713) 296-7024

                        Newfield Exploration Company
                        363 North Sam Houston Pkwy. E., Suite 2020
                        Houston, Texas 77060
                        Attn: Ms. Christina Linscomb
                        Telephone:   (281) 847-6074
                        Facsimile:   (281) 405-4207

     All notices hereunder shall be deemed given for all purposes if in writing
     and delivered personally, sent by documented mail or overnight delivery
     service or, to the extent receipt is confirmed, telecopy, facsimile or
     other electronic transmission service to the appropriate address or number
     set forth above, and deemed delivered when received.

D.   All obligations imposed by this Agreement on each Party, except for the
     payment of money and providing of indemnification, shall be suspended and
     all periods of time for exercising any rights hereunder shall be extended
     while compliance is prevented, in whole or in part, by a labor dispute,
     fire, food, hurricane, war, civil disturbance, or act of God; by laws; by
     governmental rules, regulations, or orders; by governmental action or
     governmental delay; by inability to obtain a rig or secure materials; or by
     any other cause, whether similar or dissimilar, beyond the reasonable
     control of the said Party; provided, however, that performance shall be
     resumed within a reasonable time after such cause has been removed; and
     provided further that no Party shall be required against its will to settle
     any labor dispute ("Force Majeure"). Whenever a Party's obligations or
     rights are suspended or extended hereunder, such Party shall immediately
     notify the other Party, giving full particulars of the reason for such
     suspension or extension, and such Party shall hereafter diligently endeavor
     to remove or correct the cause of such Force Majeure event as soon as
     reasonably possible: If necessary to maintain the Apache Lease in full
     force and effect, Apache will provide Newfield with all reasonable
     assistance in filing for and seeking MMS approval of a Suspension of
     Operations/Production ("SOP") (or such other documents, applications and
     requisite governmental permits) to cover a time period adequate to allow
     Newfield to obtain all necessary drilling permits and until a rig is in
     place. In the event an SOP is obtained, which extends the time period
     during which drilling operations and/or production must be commenced or
     obtained in order to maintain the Apache Lease, the Parties shall amend
     the first paragraph of Section I of this Agreement to replace "May 30,
     2007" with a date consistent with any extension provided under the
     MMS-approved SOP or other authority.

<PAGE>

Newfield Exploration Company
February 28, 2007
Page 15 of 20

E.   Any overriding royalty, production payment, or net profits interest burden
     that may be created by Apache subsequent to the date of this Agreement
     other than the ORRI reserved by Apache under this Agreement ("Excess
     Burdens") shall not burden, in any manner, the interests that Newfield may
     earn.

F.   The Exhibits to this Agreement, listed below, are hereby incorporated
     herein for all intents and purposes.

           Exhibit "A" - Well Information
           Exhibit "B" - Newfield's Insurance Provisions

If the foregoing terms and conditions are acceptable to Newfield, please execute
and return an original to Apache.

Very truly yours,

Apache Corporation

By:  /s/ C. R. Harden
     ----------------
Name:    C. R. Harden
Title: Land Manager - Gulf Coast Region

AGREED TO AND ACCEPTED this day 8th day of March, 2006.

Newfield Exploration Company

By:  /s/ Mark Blumenshine
     --------------------
Name:    Mark Blumenshine
Title:   Vice President

<PAGE>

                                   EXHIBIT "A"

         ATTACHED TO AND MADE A PART OF THAT CERTAIN FARMOUT AGREEMENT
           DATED FEBRUARY 28, 2007, BY AND BETWEEN APACHE CORPORATION
                       AND NEWFIELD EXPLORATION COMPANY.

                          WELL INFORMATION REQUIREMENTS
                          -----------------------------
                                 (NON-OPERATED)
                                 --------------

TO:                     Newfield Exploration Company

WELL:                   Eugene Island 346 #7

PROSPECT:               Eugene Island 346

COUNTY/STATE:           Offshore Louisiana

PLEASE SEND THE NUMBER OF COPIES INDICATED ON EACH OF THE DATA LISTED BELOW TO:

                        Apache Corporation
                        2000 Post Oak Blvd., Suite 100
                        Houston, Texas 77056-4400
                        Attn: Joe Young

PRIOR TO SPUDDING
NUMBER OF COPIES
   To Apache                    DATA
   ---------                    ----

        1               Application for Well Permit
        1               Wellsite Survey Plat
        1               Drilling AFE with Drilling Program
        1               Drilling Geological Prognosis
        1               Notice of Spudding

AFTER SPUDDING
NUMBER OF COPIES
   To Apache
   ---------
DATA
----
        1               Daily Well Report:
                        Telecopy to: Joe Young (713) 296-6467
                             AND
                             ---
        2                Mail to: Apache Corporation
                                  2000 Post Oak Blvd., Suite 100
                                  Houston, Texas 77056-4400
                                  Attn: Ms. Kathy Mangum
                                  ----------------------

                                       1
<PAGE>

AFTER SPUDDING
NUMBER OF COPIES
   To Apache                    DATA
   ---------                    ----

        1               Geologist or Mud Logger Reports (If facilities permit,
                        Apache Requires daily transmission of mud log data c/o:
                        Joe Young at (713) 296-6467.

AFTER SPUDDING
NUMBER OF COPIES
   To Apache                    DATA
   ---------                    ----

        1               LAS Format 3.5" floppy disk
        4               DST or FT Data
        4               Field Print of all Log Runs: Lognet Yes
        4               Preliminary Core and Fluid Analyses
        4               Directional Surveys
        1               Notice of Abandonment
        1               Completion Program

DURING COMPLETION
NUMBER OF COPIES
   To Apache                    DATA
   ---------                    ----

        1               All Logs Run After Setting Production Casing
        1               Perforation Records
        1               Complete Description of Stimulation Treatments
        1               Daily Reports During Production

AFTER COMPLETION OR ABANDONMENT
NUMBER OF COPIES
   To Apache                    DATA
   ---------                    ----

        1               Drilling and Completion Reports, DST Charts
        4               Final Copy of:
                           Fluid and Core Analyses
                           Sample Descriptions
                           Paleo
                           Mud Logs
                           Directional Surveys, etc.
        4               Final copies of 1 " and 5" Log Prints 1 Sepia of Film of
                        all Wireline Logs and Tests
        1               Composite LAS Format 3.5" floppy disk
        1               Copies of all Reports Sent to Regulatory Bodies

                                       2
<PAGE>

PRIOR TO LOGGING, PLEASE NOTIFY

Geologist:
----------
                           Joe Young      Office: (713) 296-6567
                                          Home: (281) 360-9568
                                          Cell: (713) 501-9866

Reservoir Engineer:
-------------------
                           Dan Moore      Office: (713) 296-6351
                                          Home: (281) 373-9044
                                          Cell: (281) 627-0312

             The remainder of this page is left blank intentionally

                                       3
<PAGE>

                                   EXHIBIT "B"

          ATTACHED TO AND MADE A PART OF THAT CERTAIN FARMOUT AGREEMENT
         DATED FEBRUARY 28, 2007, BY AND BETWEEN APACHE CORPORATION AND
                          NEWFIELD EXPLORATION COMPANY.

                         NEWFIELD'S INSURANCE PROVISIONS
                         -------------------------------

     Newfield shall secure and maintain and/or cause its contractors and
subcontractors to arrange and maintain the following insurance coverages:

     A.   Newfield will ensure that all personnel, whether employees, agents,
representatives, consultants, contractors or subcontractors involved with the
operations contemplated in this Agreement are covered by Worker's Compensation
and Employer's Liability Insurance in accordance with all applicable federal,
state and maritime laws (including the Longshoremen's and Harbor Worker's Act
and its extension by the Outer Continental Shelf Lands Act, the Death on the
High Seas Act and the Jones Act) covering Newfield's personnel, with limits for
Employer's Liability Insurance, including Maritime Employer's Liability, of not
less than $1,000,000 per occurrence. If applicable, such insurance shall include
a territorial extension covering the area of the Gulf of Mexico where the
operations under this Agreement are to be performed.

     B.   General Liability Insurance, with limits of liability for bodily
injury and property damage of not less than $1,000,000 any occurrence. Such
insurance shall provide coverage for pollution liability and contractual
liability, and should also include the following:
     1.   Territorial extension to include coverage for the area of the Gulf of
          Mexico where the operations under this Agreement are to be performed.
     2.   "In rem" endorsement, stating that an action "in rem" shall be treated
          as a claim against the insured "in personam".

     C.   Aircraft Liability insurance for any of Newfield's operations that may
require the use of aircraft, including helicopters, secured by either Newfield
or the aircraft owner, with a combined single limit of not less than $5,000,000
per occurrence covering public liability, passenger liability, and property
damage liability. Such insurance shall cover all owned and non-owned aircraft,
including helicopters, used by Newfield or its contractors or subcontractors in
connection with its operations contemplated in this Agreement.

     D.   Excess liability insurance over the liability insurance policies
listed above with limits of not less than $25,000,000.

     E.   During any drilling, completion, plugging, workover or recompletion
activity on any well drilled hereunder, Operator's Extra Expense insurance, with
a minimum limit of $35,000,000, which includes coverage for Control of Well,
Pollution Liability and Cleanup, Deliberate Well Firing, Making Wells Safe and
voluntary Removal of Wreck/Debris whether such removal is at the request of a
government authority or Apache.

<PAGE>

     F.   Vessel P&I and Hull Insurance secured by Newfield or the vessel owner
for all vessels owned, chartered or operated by Newfield, its contractors or
subcontractors in performance of operations contemplated in this Agreement
secured by either Newfield or the vessel owner. The Hull insurance shall be in
an amount equal to the value of the vessel(s), and the P&I insurance shall be in
an amount equal to the value of the vessel(s) or $10,000,000, whichever is
greater.

     G.   With respect to its offshore operations, Newfield shall comply with
all applicable governmental regulations including the demonstration of Oil Spill
Financial Responsibility for its offshore facilities. Apache has agreed to
undertake the obligation to assume OSFR demonstration to the MMS on behalf of
Newfield with respect to the operations contemplated herein.

     H.   Operators Care Custody and Control Limit of not less than $2,000,000.

             The remainder of this page is left blank intentionally

                                       2

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