Document:

Exhibit 10.103

 

THE
COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE
COMMISSION.  OMITTED PORTIONS ARE
INDICATED IN THIS EXHIBIT WITH “*****”.

 

 

 

May 1, 2009

 

W.O. Operating Company

c/o Cano Petroleum, Inc.

801 Cherry Street, Unit 25, Suite 3200

Fort Worth, TX 
76102

 

Attn:            Mr. Phillip Feiner

 

	
   

  	
  RE:

  	
  Valero #01-0838

  	
  Amendment 17

  

 

Dear Sir,

 

Reference is made to the above captioned
agreement and subsequent amendments thereto, if any. Subject agreement shall be
amended by deleting the “Price” and “Term” clauses and inserting the following:

 

	
  PRICE:

  	
  Valero’s posted price for Texas Panhandle
  crude oil, deemed 40 degrees API gravity, in effect during the month of
  delivery (EDQ), *****(1) per barrel.

  
	
   

  	
   

  
	
  TERM:

  	
  This agreement shall remain in effect for a
  term commencing on March 1, 2009 through February 28, 2010.

  

 

In addition, it is hereby mutually agreed that
said agreement shall be amended to delete the following
leases on the Exhibit “A” of the above referenced agreement:

 

	
  LEASE
  ID

  	
   

  	
  LEASE NAME

  	
   

  	
  LEGAL DESCRIPTION

  	
   

  	
  COUNTY/STATE

  	
   

  	
  EFFECTIVE DATE

  
	
  960002760

  	
   

  	
  COCKRELL D (01305)

  	
   

  	
  SEC 9, BLK b-3,
  D&SE SRVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  6/30/2008

  

 

For your convenience, attached please find an updated Exhibit “A”
for this Agreement.

 

Except as hereinabove provided, all terms and conditions of said
agreement and amendments thereto, if any, shall remain in full force and
effect.

 

If the revision reflects your understanding of our agreement, please so
indicate by signing in the space provided below and returning one (1) copy
to this office.

 

 

	
   

  	
  Yours Truly,

  
	
   

  	
   

  
	
   

  	
  /s/ L. S. Harding

  
	
   

  	
   

  
	
   

  	
  Valero
  Marketing and Supply Company

  

 

 

Accepted and agreed to
this 28th day of May 2009.

 

	
  W.O. OPERATING COMPANY

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Patrick M. McKinney

  	
   

  
	
   

  	
   

  	
   

  
	
  TITLE:

  	
  Vice President of
  Operations

  

 

(1) THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND
EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED
PORTIONS.  ACCORDINGLY, THE CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY
WITH THE COMMISSION.  OMITTED PORTIONS
ARE INDICATED IN THIS EXHIBIT WITH “*****”.

 

 

EXHIBIT “A”

W. O. OPERATING COMPANY

VALERO #01-0838

 

	
  LEASE ID

  	
   

  	
  LEASE
  NAME

  	
   

  	
  LEGAL
  DESCRIPTION

  	
   

  	
  COUNTY/STATE

  	
   

  	
  DIFFERENTIAL

  	
   

  
	
  960006144

  	
   

  	
  BLK A

  	
   

  	
  SEC 111, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006145

  	
   

  	
  BLK ABC

  	
   

  	
  SEC 111, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006146

  	
   

  	
  BLK B

  	
   

  	
  SEC 111, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006147

  	
   

  	
  BLK GULF

  	
   

  	
  SEC 112, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006125

  	
   

  	
  BLK, BF

  	
   

  	
  SEC 111, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  500001550

  	
   

  	
  BONEY, T J NCT-1

  	
   

  	
  SEC 91 & 108,
  BLK 4, I&GN SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  500001540

  	
   

  	
  BONEY, T J NCT-2

  	
   

  	
  SEC 90, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  500001530

  	
   

  	
  BONEY, T J NCT-4

  	
   

  	
  SEC 89, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  902017001

  	
   

  	
  BRYAN

  	
   

  	
  SEC 107, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  500001580

  	
   

  	
  BRYAN, E F (00155)

  	
   

  	
  SEC 107, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  500001790

  	
   

  	
  BURNETT, MC NCT-5

  	
   

  	
  SEC 85, BLK 5, H&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  500001800

  	
   

  	
  BURNETT, S B NCT-1

  	
   

  	
  SEC 114, BLK 5, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960009985

  	
   

  	
  BURNETT, S B NCT-12

  	
   

  	
  SEC 86, BLK 5, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  500001810

  	
   

  	
  BURNETT, S B NCT-2

  	
   

  	
  SEC 92, BLK 5, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  902549001

  	
   

  	
  CITIES SERVICE C

  	
   

  	
  SEC 108, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006379

  	
   

  	
  COOPER A & G

  	
   

  	
  SEC 4, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006381

  	
   

  	
  COOPER B & E

  	
   

  	
  SEC 5, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006380

  	
   

  	
  COOPER B (PHILLIPS)

  	
   

  	
  SEC 3, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006382

  	
   

  	
  COOPER C

  	
   

  	
  SEC 5, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006383

  	
   

  	
  COOPER E

  	
   

  	
  SEC 4, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006384

  	
   

  	
  COOPER G

  	
   

  	
  SEC 4, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006475

  	
   

  	
  COOPER, E A & H

  	
   

  	
  SEC 5, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006476

  	
   

  	
  COOPER, E NCT-A

  	
   

  	
  SEC 5, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006477

  	
   

  	
  COOPER, E NCT-B

  	
   

  	
  SECS 1 & 5, BLK
  9, I&GN SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006474

  	
   

  	
  COOPER, E NCT-C

  	
   

  	
  SEC 1, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960007224

  	
   

  	
  COOPER, OLIVE

  	
   

  	
  SEC 4, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006515

  	
   

  	
  FEE #244

  	
   

  	
  SECS 89, 90, 91,108,
  109 & 110, BLK 4, I&GN SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960009984

  	
   

  	
  FIRST STATE BANK OF
  WHITE DEER

  	
   

  	
  SEC 51 & 52,
  BLK 4, I&GN SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960009986

  	
   

  	
  GARNER, C R B NCT-2

  	
   

  	
  SEC 95, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006926

  	
   

  	
  JORD

  	
   

  	
  SEC 106, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006422

  	
   

  	
  JORDAN, D

  	
   

  	
  SEC 20, BLK M21, TCRR
  SVY; SECS 105 & 123, BLK 4, I&GN SVY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960007035

  	
   

  	
  LONG

  	
   

  	
   

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  
	
  960006817

  	
   

  	
  MCCONNELL, J C A

  	
   

  	
  SEC 66, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (2)

  

 

(2) THE COMPANY HAS REQUESTED AN ORDER
FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL
TREATMENT TO SELECTED PORTIONS. 
ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS
EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS
EXHIBIT WITH “*****”.

 

1

 

	
  LEASE ID

  	
   

  	
  LEASE
  NAME

  	
   

  	
  LEGAL
  DESCRIPTION

  	
   

  	
  COUNTY/STATE

  	
   

  	
  DIFFERENTIAL

  	
   

  
	
  960002772

  	
   

  	
  O’NEAL A

  	
   

  	
  SEC 51, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007327

  	
   

  	
  QUINN

  	
   

  	
  SEC 7, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006845

  	
   

  	
  QUINN, JK

  	
   

  	
  SEC 7, BLK 9, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007393

  	
   

  	
  SCHAFER

  	
   

  	
  SEC 195, BLK 3, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007395

  	
   

  	
  SCHAFER RANC 1, 2, 3

  	
   

  	
  SEC 69, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007413

  	
   

  	
  SEIBOLD

  	
   

  	
  SEC 125, BLK 4, I&GN
  SURVEY

  	
   

  	
  CARSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  903436001

  	
   

  	
  ANDERSON, CLARENCE B

  	
   

  	
  SEC 203, BLK B-2,
  H&GN SURVEY

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902543001

  	
   

  	
  ARNOLD, RALPH

  	
   

  	
  SEC 149, BLK 3,I&GN
  SURVEY

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006289

  	
   

  	
  CASTLEBERRY B

  	
   

  	
   

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  903437001

  	
   

  	
  EAKIN

  	
   

  	
  SEC 204, BLK B-2,
  H&GN RR SURVEY

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006511

  	
   

  	
  FAULKNER

  	
   

  	
  SEC 30, BLK B2, H&GN
  SURVEY

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902544001

  	
   

  	
  HARRAH, W.W.

  	
   

  	
  SEC150, BLK 3, I&GN
  SURVEY

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007620

  	
   

  	
  HARRAH, W.W.T.

  	
   

  	
   

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006425

  	
   

  	
  POPE, DAVE

  	
   

  	
   

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902542001

  	
   

  	
  SACKETT, RUBY

  	
   

  	
  SEC148, BLK 3, I&GN
  SURVEY

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007445

  	
   

  	
  SIN-HARRAH

  	
   

  	
   

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902546001

  	
   

  	
  VANIMAN, F.A.

  	
   

  	
  SEC 175, BLK 3, I&GN
  SURVEY

  	
   

  	
  GRAY/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006073

  	
   

  	
  BAILEY RICHARDSON

  	
   

  	
  SEC 2, BLK B-3, D&SE
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902024001

  	
   

  	
  CANADIAN-KINGSLAND
  (01320)

  	
   

  	
  SEC 4, BLK Y, M&C
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902025001

  	
   

  	
  COCKRELL A (01317)

  	
   

  	
  SEC 3, BLK Y, M&C
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007962

  	
   

  	
  COCKRELL B (01794)

  	
   

  	
  SEC 2, BLK B-3, D&SE
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007963

  	
   

  	
  COCKRELL B (03661)

  	
   

  	
  SEC 2, BLK B-3, D&SE
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006346

  	
   

  	
  COCKRELL E

  	
   

  	
  SEC 3, BLK M21, TCRR
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902027001

  	
   

  	
  COCKRELL E (01317)

  	
   

  	
  SEC 3, BLK Y, M&C
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  802026001

  	
   

  	
  COCKRELL F (01307)

  	
   

  	
  SEC 2, BLK B-3, D&SE
  RY CO SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007964

  	
   

  	
  COCKRELL F (03640)

  	
   

  	
  SEC 1 & 2, BLK
  -3, D&SE SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006344

  	
   

  	
  COCKRELL RANCH

  	
   

  	
  SEC 2, 3 &6,
  BLK M21, TCRR SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960008264

  	
   

  	
  COCKRELL, E

  	
   

  	
  SEC 8, BLK B3, D&SE SRVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006343

  	
   

  	
  COCKRELL NAVAJO (01290)

  	
   

  	
  SEC 2, BLK B3, D&SE
  SRVY

  	
   

  	
   

  	
   

  	
  *****

  	
  (3)

  
	
  960008261

  	
   

  	
  COCKRELL NAVAJO (03695)

  	
   

  	
  SEC 2, BLK B3, D&SE
  SRVY

  	
   

  	
   

  	
   

  	
  *****

  	
  (3)

  
	
  960008262

  	
   

  	
  COCKRELL NAVAJO (03698)

  	
   

  	
  SEC 2, BLK B3, D&SE
  SRVY

  	
   

  	
   

  	
   

  	
  *****

  	
  (3)

  
	
  960008263

  	
   

  	
  COCKRELL NAVAJO (03699)

  	
   

  	
  SEC 2, BLK B3, D&SE
  SRVY

  	
   

  	
   

  	
   

  	
  *****

  	
  (3)

  
	
  960002766

  	
   

  	
  DRILLEX (01784)

  	
   

  	
  SEC 3, BLK M-21, TCRR
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960007610

  	
   

  	
  HAILE, W B

  	
   

  	
  SEC 2, 3 & 4,
  BLK M21, TCRR SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006703

  	
   

  	
  HARVEY UNIT TR 10

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006704

  	
   

  	
  HARVEY UNIT TR 2

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006705

  	
   

  	
  HARVEY UNIT TR 3

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006706

  	
   

  	
  HARVEY UNIT TR 5

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006707

  	
   

  	
  HARVEY UNIT TR 6

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006708

  	
   

  	
  HARVEY UNIT TR 7

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006709

  	
   

  	
  HARVEY UNIT TR 8

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006710

  	
   

  	
  HARVEY UNIT TR 9

  	
   

  	
  SEC 71, BLK Z, HE&WT
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  960006421

  	
   

  	
  HUTCH-JORDAN, D

  	
   

  	
  SEC 20, BLK M21, TCRR
  SURVEY; SEC 123, BLK 4

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  
	
  902030001

  	
   

  	
  KINGSLAND (01317)

  	
   

  	
  SEC 3 & 4, BLK
  Y, M&C SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (3)

  

 

(3) THE COMPANY HAS REQUESTED AN ORDER
FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL
TREATMENT TO SELECTED PORTIONS. 
ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS
EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS
EXHIBIT WITH “*****”.

 

2

 

	
  LEASE ID

  	
   

  	
  LEASE
  NAME

  	
   

  	
  LEGAL
  DESCRIPTION

  	
   

  	
  COUNTY/STATE

  	
   

  	
  DIFFERENTIAL

  	
   

  
	
  902031001

  	
   

  	
  KINGSLAND B (01320)

  	
   

  	
  SEC 4, BLK Y, M&C
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  902032001

  	
   

  	
  KINGSLAND C (01317)

  	
   

  	
  SEC 4, BLK Y, M&C
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  902033001

  	
   

  	
  MAGIC (01320)

  	
   

  	
  SEC 4, BLK Y, M&C
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960006840

  	
   

  	
  MOORE, J W A

  	
   

  	
  N/A

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960006962

  	
   

  	
  N KINGSLAND B (01295)

  	
   

  	
  SEC 8, BLK M21, TCRR
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007191

  	
   

  	
  NEWBLK

  	
   

  	
  SEC 125, BLK 4, I&GN
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007192

  	
   

  	
  NEWBLK - LANGDON

  	
   

  	
  SEC 125, BLK 4, I&GN
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960006638

  	
   

  	
  PITCHER, H C

  	
   

  	
  SEC 19, BLK M21, TCRR
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007785

  	
   

  	
  POND, R L TRACT 1

  	
   

  	
  SEC 1, BLK M21, TC RR
  SRVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007786

  	
   

  	
  POND, R L TRACT 2

  	
   

  	
  SEC 1, BLK M21, TC RR
  SRVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007787

  	
   

  	
  POND, R L TRACT 3

  	
   

  	
  SEC 1, BLK M21, TC RR
  SRVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007788

  	
   

  	
  POND, R L TRACT 4

  	
   

  	
  SEC 1, BLK M21, TC RR
  SRVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007789

  	
   

  	
  POND, R L TRACT

  	
   

  	
  SEC 1, BLK M21, TC RR
  SRVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960002777

  	
   

  	
  SOUTHLAND B (01643)

  	
   

  	
  SEC 2, BLK B-3, D&SE
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007965

  	
   

  	
  SOUTHLAND B (03652)

  	
   

  	
  SEC 2, BLK B-3, D&SE
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960006952

  	
   

  	
  TURNER, KENT A #34-5

  	
   

  	
  SEC 3, BLK M21, TCRR
  SURVEY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960006953

  	
   

  	
  TURNER, KENT B

  	
   

  	
  SEC 11, BLKS B3,
  D & SE SEC 6, BLK M21, TCRR SVY

  	
   

  	
  HUTCHINSON/TX

  	
   

  	
  *****

  	
  (4)

  
	
  960007617

  	
   

  	
  COWAN, W R TR A #5

  	
   

  	
  SEC 194, BLK M2,
  BS&F SRVY

  	
   

  	
  ROBERTS/TX

  	
   

  	
  *****

  	
  (4)

  

 

(4) THE COMPANY HAS REQUESTED AN ORDER
FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL
TREATMENT TO SELECTED PORTIONS. 
ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS
EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT
WITH “*****”.

 

3Exhibit
10.104

 

THE
COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE
COMMISSION.  OMITTED PORTIONS ARE
INDICATED IN THIS EXHIBIT WITH “*****”.

 

 

GAS
PURCHASE AGREEMENT

 

By
And Between

 

Eagle
Rock Field Services, L. P.

 

and

 

W.O.
Operating Company Ltd.

and

Pantwist,
LLC

 

Dated:
April 1, 2007

 

Contract No.              

 

 

INDEX

 

	
  I.

  	
   

  	
  BASIS OF COMPENSATION

  	
   

  	
  Page 1

  
	
  II.

  	
   

  	
  TERM

  	
   

  	
  Page 1

  
	
  III. 

  	
   

  	
  DEDICATION, EXCLUSIVITY, INITIAL WELLS, AND SUBSEQUENT
  WELLS

  	
   

  	
  Page 2

  
	
  IV.

  	
   

  	
  RESERVATIONS OF SELLER AND
  BUYER

  	
   

  	
  Page 2

  
	
  V.

  	
   

  	
  QUALITY OF DELIVERED GAS

  	
   

  	
  Page 3

  
	
  VI. 

  	
   

  	
  DELIVERY, COMPRESSION, PRESSURES, METER FEES, REBUILD
  AND ALTERATIONS

  	
   

  	
  Page 3

  
	
  VII.

  	
   

  	
  DELIVERIES

  	
   

  	
  Page 4

  
	
  VIII. 

  	
   

  	
  PAYMENT, ESCALATION OF
  FEES, EXAMINATION, INDEMNIFICATION, SUSPENSION, AND DEDUCTIONS

  	
   

  	
  Page 4

  
	
  IX.

  	
   

  	
  WARRANTY, TITLE, AND
  EASEMENTS

  	
   

  	
  Page 5

  
	
  X.

  	
   

  	
  INDEMNITY, INTERRUPTION,
  AND FORCE MAJIEURE

  	
   

  	
  Page 5

  
	
  XI.

  	
   

  	
  ROYALTY AND TAXES

  	
   

  	
  Page 7

  
	
  XII.

  	
   

  	
  MEASUREMENT OF GAS VOLUME
  AND TESTING

  	
   

  	
  Page 8

  
	
  XIII.

  	
   

  	
  NOTICES AND STATEMENTS

  	
   

  	
  Page 10

  
	
  XIV.

  	
   

  	
  DEFAULT

  	
   

  	
  Page 11

  
	
  XV.

  	
   

  	
  DEFINITIONS

  	
   

  	
  Page 12

  
	
  XVI.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  Page 13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “A”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “B”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “C”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “D”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “E”

  	
   

  	
   

  

 

 

GAS PURCHASE AGREEMENT

 

This Gas Purchase Agreement
(“Agreement”) is made and entered into and is effective as of April 1, 2007, by and between Eagle Rock
Field Services, L. P., hereinafter referred to as “BUYER,” and WO Operating Company Ltd. and Pantwist, LLC,
hereinafter referred to collectively and/or individually as “SELLER”,
each individually referred to as a ‘Party” or together as “Parties”.
Notwithstanding anything to the contrary herein
contained, neither W.O. Operating Company, Ltd. nor Pantwist, LLC shall be responsible for the obligations of the other under the terms
and provisions of this Agreement.

 

WITNESSETH:

 

WHEREAS, SELLER owns and/or controls natural Gas produced from Wells
situated on the Lands or Leases more particularly described as to
each SELLER in Exhibit “B”
attached hereto, including the right to
process and sell such Gas, which shall be
delivered to BUYER; and

 

WHEREAS, BUYER desires to purchase and SELLER desires to sell said Gas to BUYER, and NOW THEREFORE, BUYER and
SELLER, in consideration of the mutual covenants, promises, and agreements
contained herein and for other good and valuable consideration, do hereby agree as follows:

 

I. BASIS OF COMPENSATION

 

1.1       Compensation. The basis of compensation is set forth in Exhibit “A”
attached hereto and included herein by this reference.  Furthermore, BUYER
hereby agrees to pay SELLER an incentive bonus of $*****(1) (“Bonus”)
as consideration for entering into this Agreement.  The Bonus will
be paid to SELLER in one payment no later than July 15, 2007 via check or wire transfer. Said Bonus is to be earned by SELLER over the term of this Agreement.  Therefore, termination or
breach of the Agreement by SELLER, without
cause, before the end of the Primary Term hereof ‘will result in a pro rata return of the Bonus to BUYER.  However, if SELLER terminates the Agreement
prior to the end of the Primary Term pursuant to
the provisions of Article XIV,
then SELLER shall be entitled to
retain the entire Bonus.

 

II. TERM

 

2.1       Term.  This Agreement shall be effective April 1, 2007 (“Effective Date”), and shall continue until March 31,
2009, (“Primary Term”), and Year
to Year thereafter until
terminated, such termination to be effective at the end of said Primary Term or at any anniversary
date thereafter by either party giving at least ninety (90)
days prior written notice to the other party or to be effective as otherwise provided by this Agreement.

 

(1)       THE COMPANY HAS REQUESTED AN
ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT
TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING
CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. 
ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS
EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS
EXHIBIT WITH “*****”.

 

 

III. DEDICATION, EXCLUSIVITY, INITIAL WELLS AND SUBSEQUENT
WELLS

 

3.1        Dedication. SELLER hereby
commits and dedicates to the performance of this Agreement and for the term hereof,
all of its owned or controlled interest in Gas produced from all geological
formations under the Lands and Leases and/or Wells described
in Exhibit “B” attached hereto, except for the following reservations
which SELLER specifically reserves:

 

3.1.1         To use Gas produced from or
under the Lands or Leases and/or Wells and used by SELLER
for the development and operation of same; including, but
not limited to, Gas used by SELLER in Gas lifting and pressure maintenance
operations;

 

3.1.2         To use Gas which may be
required to fulfills obligations to the lessors of said Leases and/or Wells for
domestic fuel or regarding payment of royalty in kind; and,

 

3.1.3         To use Gas used as fuel in
the operation of SELLER’s compression, dehydration or treating facilities, if
any, installed for the delivery of Gas hereunder.

 

3.2        Exclusivity. Subject to the
terms and conditions of this Agreement,
SELLER hereby contracts exclusively with BUYER for the purchase of SELLER’s Gas and
the right to process and extract Plant Products
attributable to SELLER’s Gas. SELLER further agrees to dedicate to BUYER and to
the terms and conditions of this Agreement any interest in said
Leases or Wells which (i) are subsequently
acquired by SELLER, or (ii) are owned by SELLER but are no longer
subject to the terms of any third-party agreement, subsequent to the
Effective Date hereof. Any transfer of
SELLER’s interest in the Leases or Wells dedicated hereunder shall be
subject to BUYER’s rights hereunder, and SELLER shall take action
necessary to ensure that any such transfer is subject to BUYER’s rights
hereunder.

 

3.3        Subsequent
Wells. If the location of any Well (“Subsequent Well”) is
within the dedication described in Exhibit “B” then SELLER shall notify
BUYER in writing upon start of the Subsequent Well’s drilling. After completion of the
Subsequent Well, SELLER shall, within seven (7) days
from the date of completion of such Subsequent Well, provide BUYER any and all relevant Well
data (including, but not limited to, daily drilling reports, logs, completion
reports, flow test, and gas analysis) (“Well Data”). BUYER
shall have the right, but not the obligation, to connect such Subsequent Well
to BUYER’s system at its expense. If BUYER elects not to construct such
facilities, or does not initiate right-of-way acquisition for such facilities within thirty (30) days after BUYER receives the
Well Data, SELLER may construct, at its expense, the facilities necessary to
deliver the Gas from such Subsequent Well to s existing system. If neither Party connects such
Subsequent Well, SELLER shall be entitled to a wellbore
release from this agreement for production from any such Subsequent Well.

 

IV.  RESERVATIONS OF SELLER
AND BUYER

 

4.1        SELLER’s  Reservations.

 

4.1.1       To operate said Leases and/or Wells free from
control by BUYER in such manner as SELLER, in SELLER’s sole
discretion, may deem advisable, including, without limitation, the right to
drill new Wells, to repair and rework old Wells, and to abandon any Well or
surrender any Lease when no longer deemed to be capable of producing Gas in
commercial paying quantities under normal methods of operation by SELLER.

 

4.1.2       To unitize or pool any of the Wells, Leases or portions thereof with other Leases or
Wells, in such event SELLER’s interest in the unit and the unit
Gas attributable to SELLER’s interest shall be subject to and SELLER agrees to take all action
necessary to commit such unit Gas attributable to SELLER’s
interest to this Agreement.

 

4.1.3       To retain all liquids and
Condensate separated from the Gas by the use of typical volumetric
(non-refrigerated) oil and Gas separators prior to the delivery of the Gas to
BUYER at the Receipt Point(s) specified herein.

 

2

 

4.2        BUYER’s Reservations.

 

4.2.1       Processing Rights. SELLER does
hereby grant, assign, and convey to BUYER exclusive processing rights for the
recovery of Plant Products for Gas delivered to BUYER for processing at the
Receipt Point(s). Except as set forth in Section 4.1.3
above, SELLER shall not process the Gas or allow the Gas to be processed prior
to receipt by BUYER hereunder for processing.

 

4.2.2       Condensate. Condensate recovered by
BUYER downstream of the Receipt Point(s) shall belong to BUYER. Title to
the Condensate shall pass to BUYER upon its recovery by BUYER and shall be free
and clear of all liens, claims, and encumbrances created by, through or under
SELLER.

 

4.2.3       Uneconomic. At any time during the term of this Agreement, in
the event purchasing of SELLER’s Gas from any Receipt Point becomes uneconomic,
as determined in the sole discretion and judgment of
BUYER, BUYER may terminate this Agreement in its entirety with at least thirty (30) days prior
written notice to SELLER.

 

V. OUALITY
OF DELIVERED GAS

 

5.1        The Gas delivered at
the Receipt Point(s) shall meet the quality specifications
defined in Exhibit “C” attached hereto.

 

5.2        BUYER shall have the right to either (i) accept Gas that does not conform to such
specifications and deduct from payment due SELLER, BUYER’s Treating
Fee set forth in Exhibit “A” or (ii) refuse delivery of the
nonconforming Gas. If BUYER refuses delivery of non-conforming Gas and SELLER elects
not to conform such Gas to the quality specifications
set forth herein, this Agreement may be terminated by BUYER with respect to
such non-conforming Gas upon ten (10) days prior notice.

 

5.3        BUYER’s acceptance of Gas that does not
conform to quality specifications set forth herein will not constitute a waiver
of SELLER’s obligation to conform to such specifications in
the future, nor a waiver of BUYER’s right to refuse delivery of such nonconforming
Gas at any time.

 

VI. DELIVERY, COMPRESSION, PRESSURES, METER

FEES,
REBUILD AND ALTERATIONS

 

6.1        Delivery. Gas shall be
delivered hereunder at the Receipt Point(s) described in Exhibit “B”
attached hereto and shall be at pressures sufficient to enter, but not to
exceed, the maximum allowable pressure for BUYER’s gathering system at the
Receipt Point(s). SELLER shall provide equipment required to protect BUYER’s
systems from receiving Gas at pressures that exceed the maximum allowable
pressures. BUYER will provide SELLER the maximum allowable
pressure for specific Receipt Point(s).

 

6.2        Administrative
Fees. In
the event that the total metered volume from any one (1) Receipt Point
falls below an average often (10) MCF
per Day for any Month, BUYER shall charge SELLER an Administrative fee for each
MCF delivered by or for the account of SELLER at that Receipt Point for that
Month. The Administrative fee for each MCF delivered shall be determined by
dividing a sum of
Three Hundred Dollars ($300) by the total metered volume (MCF) at that Receipt
Point for that Month. In the event the total metered volume is zero (0) the fee
shall be Three Hundred Dollars ($300) multiplied by SELLER’s owned or
controlled interest.

 

6.3        Rebuild and
Alterations.
BUYER reserves the right, in its sole discretion, to alter, repair, maintain,
expand or rebuild, without approval of SELLER, any portion of BUYER’s facilities. SELLER shall make no alterations, additions or repairs to or on the facilities of BUYER. SELLER agrees not to connect
or cause the connection of any third-party well to BUYER’s facilities for any purpose without the express written consent of BUYER, such consent to be in 

 

3

 

BUYER’s sole discretion. If this condition is
breached by SELLER, BUYER shall have the right and option,
notwithstanding any other provision of this Agreement, to terminate this
Agreement immediately and without further obligation
to SELLER.

 

VII. DELIVERIES

 

7.1        Deliveries. SELLER shall
deliver all available Gas in such uniform hourly flows as is commercially
practicable. In the event SELLER anticipates a material increase or decrease in
the flow of Gas at any Receipt Point, SELLER shall provide BUYER with reasonable
advance notice of change.

 

VIII. PAYMENT. ESCALATION OF FEES, EXAMINATION,

INDEMNIFICATION.
SUSPENSION. AND DEDUCTIONS

 

8.1        Payment. BUYER shall,
on the later of (i) the last day of the Month or (ii) within ten (10) day’s
of receipt of any necessary allocation statements, pay SELLER for the Gas
delivered hereunder during the preceding Month. During any period BUYER
purchases Gas from SELLER and other SELLER(s) delivered to any Receipt
Point(s), SELLER shall furnish, or cause to be furnished, to BUYER on or before
the fifteenth (15th)  Day of each calendar Month,
any necessary allocation statements containing data (including, but not limited
to, quantity and BTU content) that BUYER may require to enable BUYER to make
payments. SELLER is to cooperate with other SELLER(s) delivering Gas at
the Receipt Point(s) in order to appoint in writing a representative who,
as their agent, is to furnish an allocation statement. BUYER is entitled to
rely conclusively on such allocation statement, and has a complete defense to any claim by SELLER
for any sums due for Gas delivered by SELLER at the Receipt Point(s) during
any period by showing that BUYER has made payment to SELLER for its share, as
identified in such allocation statement, of the total quantity of Gas received
by BUYER at the applicable Receipt Point(s) during the period in question
(other than for measurement error as specified in the Article titled
MEASUREMENT OF GAS VOLUME AND TESTING). If any
allocation statement is not furnished to BUYER by the fifteenth (15th)
Day of any month, the time that BUYER has to make payment for delivered
Gas (without interest) is to be extended until the end of the next ensuing
payment cycle that occurs after BUYER’S receipt of the allocation statement.

 

8.2        Final
Payment. All payments under this Agreement will
be final unless questioned by either Party within two (2) Years
of the due date of a payment, and during this two (2) Year
period either Party may audit all records, accounts, books and charts of the
other party, upon reasonable advance notice and during normal office hours, to
verify the accuracy of any statement, charge, computation or demand made.

 

8.3        Escalation
of Fixed Fees. The fixed fee charges
contained herein, unless otherwise noted, shall be escalated annually beginning
on the first (1st) anniversary of the Effective Date of this Agreement based
on the GDP Implicit Price Deflator contained in the Gross Domestic Product,
fourth quarter (final) report, published by the U.S. Department of Commerce,
Bureau of Economic analysis, “GDP Deflator” in March of each Year for the
previous year. For purposes of escalating the fixed fee charges herein, the
annual rate escalation percentage (“Escalator”) will be determined by BUYER
each April 1 by calculating the percent of increase from the Year
preceding said previous Year’s GDP Deflator and the previous Year’s GDP
Deflator.

 

8.4        Examination
of Records. Each Party to this Agreement shall
have the right, at any and all reasonable times during normal business hours,
to examine the books and records of the other party, to the extent
necessary to verify the accuracy of any statement, charge, computation, or
demand made under or pursuant to this Agreement, and the Parties shall keep all
such records for

 

4

 

at least twenty-four (24) Months after the receipt of
Gas to which such records are applicable. Such books and records shall be
conclusively presumed to be correct, except as to claims or corrections by the
Parties made by written notice to the other within such twenty-four
(24) Month period.

 

8.5        Indemnification. Each Party agrees to
indemnify and hold the other Party harmless with respect to all costs, losses,
and damages (including without limitation reasonable attorney’s fees) arising
from or related to the breach of any covenant, representation, or warranty made
to the other Party contained in this Agreement.

 

8.6        Deductions. BUYER shall
also be entitled, at its option, in addition to any other rights it may have,
to deduct from any payment due SELLER under this Agreement any
amounts payable to BUYER from SELLER under this Agreement, and to apply such
amounts deducted to pay such amounts payable to BUYER, and such deduction and
application shall not constitute a breach of BUYER’s
payment obligations under this Agreement.

 

8.7        Reimbursement
of State Severance Taxes. The payment described on Exhibit “A”
for gas purchased by BUYER hereunder shall be deemed to be inclusive of
reimbursement to SELLER for production and severance taxes borne by SELLER. No
additional payment from BUYER to SELLER hereunder, other than that specified
on Exhibit “A”, shall be required to compensate SELLER for such tax
reimbursement.

 

IX. WARRANTY, TITLE AND
EASEMENTS

 

9.1        Warranty
of Title. SELLER warrants that it has
the tide to the Gas dedicated hereunder and delivered at the Receipt Point(s),
and said Gas is free from all liens and adverse claims of all kinds, for which
BUYER would be responsible, including the right and authority to sell and to
process for the recovery of Plant Products. SELLER shall hold BUYER harmless
against adverse claims related thereto.

 

9.2        Title. Title of the
Gas shall pass to BUYER at the Receipt Point(s).

 

9.3        Easements. To the extent
SELLER has the right to do so, SELLER hereby
permits BUYER the rights of ingress and egress on the
Leases to construct, install, operate, repair, inspect and maintain BUYER’s
facilities necessary to receive Gas from SELLER at the Receipt Point(s). SELLER
hereby assigns and grants to BUYER, to the extent it
has the right to do so, an easement and right-of-way upon all lands covered by
the Leases for the purposes above. Any property of
BUYER placed in or upon any of those lands shall remain the personal
property of BUYER, and may be disconnected and removed at any time.

 

X. INDEMNITY, INTERRUPTION,
AND FORCE MAJEURE

 

10.1      Indemnity. In addition to
the indemnities contained herein, BUYER shall indemnify and hold SELLER
harmless against any claims for damages arising out of the operations conducted
hereunder by BUYER. Likewise, SELLER shall indemnify and hold BUYER harmless
against any claims for damages arising out of s operations hereunder. The
obligations of the Parties under this Agreement are obligations of the Parties
only and no recourse or remedy shall be available against any officer,
director, or employee representative of a Party or against any affiliate of a
Party.

 

10.2      Interruption. It is
understood and agreed that either Party hereto may, without liability to the
other Party, interrupt the operations of its facilities for the purpose of
making necessary alterations, maintenance, or repairs thereto, but that such
interruption shall be for only such time as may be commercially reasonable to
perform such operations. Delivery and/or receipt of Gas pursuant to this Agreement may
be suspended for such period of interruption. Provided however

 

5

 

that if BUYER fails to accept Gas hereunder for a
period of thirty (30) consecutive Days for reason other than Force Majeure,
SELLER may terminate this Agreement within ten (10) days
of such event.

 

10.3      Force Majeure. If SELLER or
BUYER is rendered unable, wholly or in part, by reason of force majeure, from
carrying out its obligations under this Agreement
(other than the obligation to make payment of
amounts due hereunder), then upon said Party’s giving prompt written notice of
such force majeure to the other Party, the obligations of the Party giving such
notice, so far as they are affected by such force majeure, shall be suspended
during the continuance of any inability so caused, but for no longer period,
and such cause shall be remedied with all commercially reasonable dispatch. The
term “force majeure,” as used herein, shall include acts of God; acts of
federal, state, or local government or any agencies thereof~ compliance with
rules, regulations, permits or orders of any governmental authority or any
office, department, agency, or instrumentality thereof; strikes, lockouts, or
other industrial disturbances; acts of the public enemy, wars, blockages,
insurrections, riots, and epidemics; landslides, lightning, earthquakes, fires,
storms, floods, and washouts; arrests and restraint of people; civil
disturbances; explosions, leakage, breakage, or accident to equipment or pipes;
freezing of Wells or pipes; weather-related shutdowns; inability to secure
rights-of-way; inability to timely obtain equipment, supplies, materials,
permits, labor; failures or delays in transportation; receipt of
non-specification or non-merchantable Gas; and any other causes, whether of the
kind herein enumerated or otherwise, not within the
reasonable control of the Party claiming suspension, which, by the exercise of
due diligence, such Party shall not have been able to avoid. The settlement of
strikes or lockouts shall be entirely within the discretion of the Party having
the difficulty. The requirement that any force majeure shall be remedied with
all commercially reasonable dispatch shall not require the settlement of
strikes or lockouts by acceding to the demands of the opposing Party,
when such is deemed inadvisable by the Party involved. If a Party has been
unable to remedy any such Force Majeure for a period of ninety (90) consecutive
Days, the other Party may terminate this Agreement upon ten (10) days
notice.

 

10.4      Adequate
Assurance. During the term of this
Agreement, if SELLER has reasonable grounds to believe that the
creditworthiness of BUYER has become unsatisfactory, then SELLER will send
BUYER notice requesting adequate credit assurance from BUYER in an amount
determined by the SELLER in a commercially reasonable manner (“Request for
Assurance”). Adequate credit assurance includes, without limitation, the
following: (i) an irrevocable letter of credit in form and substance
acceptable to SELLER, (ii) a corporate guaranty provided by a creditworthy
Person acceptable to SELLER, (iii) cash or prepayment in immediately
available U. S. dollars. None of the above shall exceed two (2) months of
deliverable Gas production. Upon receipt of the Request for Assurance, the BUYER
will have until the close of business on the second Day after receiving the
Request for Assurance, but in no event less than one (1) Business Day to
deliver the adequate assurance to the SELLER. If the BUYER fails to deliver the
adequate assurance with the time permitted under this Section 10.4, then
the SELLER may, at its sole option, effective as of any date specified by
SELLER in its subsequent notice, suspend delivery of gas. If BUYER does not
provide credit assurance within five (5) Business Days
of SELLER’S notice, SELLER shall have the continuing right, but not the
obligation to terminate this Agreement. If the BUYER satisfies the SELLER’S
Request for Assurance and does so within the period written above, the SELLER
will continue its performance under this Agreement without interruption. If the
SELLER suspends its performance as allowed under this Section and BUYER
later delivers adequate assurance, SELLER shall resume performance under this
Agreement not more than two (2) Days after receiving adequate assurance.
The SELLER also is entitled to pursue any other remedy provided under this
Agreement or available at law or in equity.

 

6

 

XI. ROYALTY
AND TAXES

 

11.1      Royalty. Except as
provided in Section 11.2 below, SELLER shall account for and pay all
royalties, overrides, and other sums due by SELLER to the owners of the
mineral, royalty, and other interests in the Gas, and SELLER shall indemnify
and save BUYER harmless against all loss, damage, and expense of every
character on account of adverse claims by royalty owners to all such Gas,
Residue Gas, and Plant Products or royalties, taxes, payments, or other charges
due thereon. Should BUYER be obligated by law or regulation to make payment for
any royalties or overrides due to be paid by SELLER, BUYER shall deduct such
payments from any amounts due by BUYER to SELLER under this Agreement. Should
such payments be in excess of amounts due by BUYER to SELLER, SELLER shall
promptly reimburse BUYER for the amount of royalties or overrides so paid
within ten (10) Days of receipt of such statement.

 

11.2      Royalty Payments by Buyer. BUYER may,
upon written request from SELLER and in accordance with SELLER’s instructions,
pay the owners of royalty and overriding royalty interests in the Gas on SELLER’S
behalf and deduct any amounts so paid from the consideration due SELLER
hereunder on a meter by meter basis. BUYER shall be entitled to rely upon, and
make such payments in accordance with, SELLER’S instructions, and SELLER shall
indemnify, protect and defend BUYER from any and all claims from any party
entitled thereto so long as BUYER has made such payments in accordance with
SELLER’S instructions. BUYER shall charge SELLER a royalty disbursement fee
equal to thirty dollars ($ 30) per meter per Month for the payment services
provided by BUYER in accordance with this paragraph. BUYER shall not commence
any payment service on behalf of SELLER hereunder prior to thirty (30) Days
following the receipt of SELLER’s payment instructions and any title
information BUYER may reasonably require. BUYER shall have the right to cease
paying royalties for SELLER in accordance with this Section upon thirty
(30) Days prior written notice if and when BUYER ceases to pay royalties for
all parties delivering Gas to BUYER.

 

11.3      Taxes. SELLER shall
pay any sales, transaction, occupation, service, production, severance,
gathering, transmission, or excise taxes, assessments, or fees levied,
assessed, or fixed, whether by the United States, the state, or other
governmental agency, in respect of or applicable to the Gas delivered
hereunder. Any taxes and statutory charges levied or assessed against s
properties, facilities, or operations shall be borne by SELLER. BUYER shall
bear all taxes levied against its properties or facilities. Should BUYER be
obligated by law or regulation to make payment for any taxes due to be paid by
SELLER, BUYER shall deduct such payments from any amounts due by BUYER to
SELLER. BUYER shall have the right to cease remitting severance taxes on behalf
of SELLER upon thirty (30) Days prior written notice if and when BUYER ceases
to remit severance taxes for all parties delivering Gas to Buyer.

 

11.4      Production Taxes.
Notwithstanding the provisions of Section 11.3, above, as an accommodation
to SELLER, BUYER shall remit on behalf of SELLER any state production taxes in
respect of or applicable to the Gas delivered hereunder. BUYER shall deduct
such state production taxes remitted on behalf of SELLER from any amounts due
by BUYER to SELLER. Should such state production taxes remitted on behalf of
SELLER be in excess of amounts due by BUYER to SELLER, SELLER shall promptly
reimburse BUYER for the amount of such production taxes so remitted within ten (10) Days
of receipt of such statement. It is recognized that the remittance of state
production taxes by BUYER on behalf of SELLER is a voluntary accommodation by
BUYER to SELLER and not an obligation of BUYER hereunder. BUYER may, in its
sole discretion, cease remitting state production taxes on behalf of SELLER at
any time upon thirty (30) Days’ written notice to SELLER.

 

7

 

XII. MEASUREMENT OF GAS VOLUME AND TESTING

 

12.1      Calibration. BUYER shall
keep and maintain its measurement equipment accurately calibrated and in
repair, making tests at reasonable intervals of no less than twice (2) every
Year.  BUYER agrees to give SELLER
reasonable notice of such tests of the measuring equipment so that, if SELLER
desires, it may have its representative present. In the event the meters are
found to be inaccurate, such meters will be adjusted to register accurately.

 

12.2      Accuracy. Each Party
shall have the right to challenge the accuracy of any related equipment and,
when challenged, the equipment shall be tested, calibrated and repaired by
BUYER; the cost of any such special test shall be borne by BUYER if the
percentage of inaccuracy is found to be more than two percent (2%), but if the
percentage of inaccuracy is found to be two percent (2%) or less, the cost of
such special test shall be borne by SELLER. If, upon any test, the percentage
of inaccuracy of the measuring equipment is found to be in excess of two
percent (2%), registrations thereof and any payment based upon such
registration shall be corrected for a period extending back to the time (not to
exceed one (1) Year) when such inaccuracy began, if such time is
ascertainable, and if not ascertainable, then back one-half (‘/2)
of the time elapsed since the last date of calibration.

 

12.3      Repairs. If, for any
reason, the meters are out of service or out of repair so that the amount of
Gas delivered cannot be ascertained or computed from the reading thereof, the
Gas delivered during the period such meters are out of service or out of repair
shall be estimated and agreed upon by the Parties hereto upon the basis of the
data available using the first of the following methods that is feasible:

 

12.3.1    By using the registration of
any check meter or meters if installed and accurately registering, or in the
absence of (12.3.1) then;

 

12.3.2    By correcting the error if
the percentage of error is ascertainable by calibration, special test, or
mathematical calculation, or in the absence of both (12.3.1) and (12.3.2) then;

 

12.3.3    By estimating the quantity
of Gas delivered based on the registration of any meter or meters if installed
and accurately registering, or in the absence of (12.3.1), (12.3.2), and
(12.3.3) then;

 

12.3.4    By estimating the quantity
of Gas delivered or redelivered based on deliveries or redeliveries during
preceding periods under similar conditions when the meter was registering
accurately.

 

12.4      Records. The records
from the measuring equipment shall remain the property of the Party owning such
equipment and shall be kept by such Party on file for a period of not less than
two (2) Years. At any time within such period, such Party shall, upon
request of the other Party, submit to such Party records from the measuring
equipment, together with calculations therefrom, for inspection and
verification, subject to return within thirty (30) Days from receipt thereof.

 

12.5      Measurement Standards. The measuring
station or stations provided for hereunder shall be so equipped with meters,
recording gauges, or other types of meter or meters of standard make and design
used in the industry and according to applicable AGA or API standards when
installed, so as to accomplish the measurement of Gas delivered and redelivered
hereunder. Gas measured hereunder will have its volume, mass, gravity,
composition or energy content determined and computed in accordance with
applicable AGA standards in effect at the date of installation of the
measurement equipment and shall comply with applicable state and federal
regulation. At BUYER’s option, BUYER may update the measurement equipment
and/or the determination of volume, mass, gravity, composition or energy
content in accordance with subsequent revisions, supplements, and appendices to
said AGA standards.

 

12.6      Pulsation. The Parties
shall design, install, operate and maintain their respective equipment in such
a manner that pulsation-induced measurement error is minimized.
Pulsation-induced error shall not exceed one quarter of one percent (0.25%)  of square root
error (SRE). Either Party has 

 

8

 

the right to request a test
of the orifice meter facility. If SRE is found to exceed the limit stated
above, the Party responsible for the creation of the SRE must have a plan for
the elimination of the SRE within thirty (30) Days and equipment installed or
modified to correct SRE in a reasonable amount of time, not to exceed six (6) months.
Pulsation errors determined by the use of a square root error indicator
manufactured under a license for the Southern Gas Association are to be used
only for the purpose of determining SRE and are not to be used for adjusting
measured volumes.

 

12.7      Boyle’s Law. The
measurement hereunder shall be corrected for deviation from Boyle’s Law at the
pressures and temperatures under which Gas is delivered hereunder.

 

12.8      Temperature. The
temperature of the Gas shall be determined to the nearest one degree Fahrenheit
(1°F) at the points of measurement by the continuous use of recording
thermometers of standard manufacture acceptable to the Parties, to be installed
in accordance with the recommendations contained in American Gas Association
Measurement Committee Report Number 3, 7, or 9 as appropriate, and the
arithmetical average of hourly temperatures of the Gas so determined each day
shall be used in computing temperatures of the Gas during each day.

 

12.9      Supercompressibility. Unless
otherwise allowed by state law, adjustment for the effect of
supercompressibility shall be determined by test or by mutual consent of the
Parties hereto according to the provisions contained in American Gas
Association Measurement Committee Report Number 3, 7, 8 or 9 as appropriate,
for the average conditions of pressure, flowing temperature, and specific
gravity at which the Gas was measured during the period under consideration and
with the respective proportionate values for carbon dioxide and nitrogen
fractional values and to obtain subsequent values of these Components as may be
required from time to time.

 

12.10    Check Measurement. At the Receipt
Point(s) SELLER may install check measuring equipment at its own cost and
expense; provided, such equipment shall be so installed as not to interfere
with the operations of the BUYER. BUYER’s meter shall be the meter used for all
measurement purposes. BUYER and SELLER, in the presence of each other, shall
have access to the other’s measuring equipment at all reasonable times; but the
reading, calibrating, and adjusting thereof, and the changing of charts, if
any, shall be done only by the owner of the meter or its representative unless
otherwise agreed. Each Party shall give notice sufficiently in advance, and the
other Parties notified shall have the right to be present at the time of any
installing, reading, cleaning, changing, repairing, inspecting, testing,
calibrating, or adjusting done in connection with the other’s measuring
equipment; provided, however, failure of either party so notified to witness
such an operation after due notification shall not affect the validity of such
operation in any way.

 

12.11    Sampling. BUYER shall
obtain a sample at least twice a year of Gas at the Receipt Point(s) by
using methods contained in GPA Standard 2166 / API 14.1, as revised, “Methods
for Obtaining Natural Gas Samples for Analysis by Gas Chromatography.” This
sample may be obtained utilizing a spot sampler, continuous sampler, on-stream
chromatograph or other instruments approved by BUYER. SELLER may request that
additional samples be taken in order that SELLER may have its own sample tested
independently. Any additional samples requested by SELLER shall be at SELLER’s
sole expense.

 

12.12    Composition, Gross Heating Value,
Specific Gravity. The composition of the Gas shall be determined
from the sample of the Gas by using GPA Standard 2261, as revised, “Method of
Analysis for Natural Gas and Similar Gaseous Mixtures by Gas Chromatography,”
with the exception of sulfur compounds. The gallons per MCF and the Gross
Heating Value of the Gas shall be determined by using technically correct
methods contained in GPA Standard 2172, as revised, “Method for Calculation of
Gross Heating Value, Specific Gravity, and Compressibility of Natural Gas
Mixtures from Compositional Analysis”, and the Gross Heating Values from GPA
Standard 2145, as revised from time to time, “Table of Physical Constants for
the Paraffin Hydrocarbons and Other Components of Natural Gas.” Each
composition, Gross Heating Value and Specific Gravity determination shall be
effective until the next determination. The Specific 

 

9

 

Gravity of the Gas shall be
recorded to the nearest one-thousandth (0.001).

 

12.13    Water Content. Gas delivered
at the Receipt Point(s) shall be considered to be saturated with water at
measurement temperature and pressure, unless Gas has been dehydrated to a water
content of seven (7) lbs/MMCF or less prior to the point of measurement.
The water content shall be determined by BUYER using practices contained in GPA
181, GPA 2172, AGA Report No. 3 or other reasonable practices as
determined appropriate by BUYER. Gas with seven (7) lbs/MMCF or less shall
be considered dry, i.e. containing no water

 

12.14    Assumed Atmospheric Pressure. The
atmospheric pressure shall be assumed to be the average atmospheric pressure
for the elevation as used by BUYER in that particular geographic area
regardless of the actual atmospheric pressure where Gas is measured.

 

12.15    Sulfur. The sulfur
content shall be determined from tests taken at the Receipt Point(s) by
methods accepted in the industry, such as GPA Standard 2377, as revised, “Method
of Test for Hydrogen Sulfide and Carbon Dioxide in Natural Gas Using Length of
Stain Tubes.” Other sulfur species can be determined by chromatographic
analysis conditional on the Parties’ acceptance of the type of analysis to be
used and the condition of the sample.

 

12.16    NGL Measurement. The Natural
Gas Liquids removed by processing will be measured using measurement equipment
and practices accepted in the industry and supported by AGA, API and/or GPA
standards, as applicable.

 

XIII. NOTICES AND STATEMENTS

 

13.1      All notices, statements,
payments and other communications required or permitted to be given hereunder
shall be in writing and shall be deemed to have been effectively given when
delivered by facsimile or mailed by first class mail, addressed to the Parties
as follows:

 

	
  NOTICE TYPE

  	
   

  	
  BUYER

  	
   

  	
  SELLER

  
	
  CONTRACTS

  	
   

  	
  Eagle Rock Field
  Services, L. P.

  	
   

  	
  W. O. Operating Company
  Ltd.

  
	
   

  	
   

  	
  Attn:
  Panhandle Contract Administration

  	
   

  	
  Attn:
  Scott White

  
	
   

  	
   

  	
  14950
  Heathrow Forest Parkway, Suite 111

  	
   

  	
  PO Box 1061

  
	
   

  	
   

  	
  Houston, Texas 77032

  	
   

  	
  Pampa,
  Texas 79065

  
	
   

  	
   

  	
  Telephone:
  (832) 327-8000

  	
   

  	
  Telephone:
  (806) 665-8298

  
	
   

  	
   

  	
  Fax:
  (832) 327-8009

  	
   

  	
  Fax: (806) 665-1960

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULING

  	
   

  	
  Eagle
  Rock Field Services, L. P.

  	
   

  	
  W.
  O. Operating Company Ltd.

  
	
   

  	
   

  	
  Attn:
  Scheduling

  	
   

  	
  Attn:
  Scott White

  
	
   

  	
   

  	
  14950
  Heathrow Forest Parkway, Suite 111

  	
   

  	
  PO Box 1061

  
	
   

  	
   

  	
  Houston, Texas 77032

  	
   

  	
  Pampa,
  Texas 79065

  
	
   

  	
   

  	
  Telephone:
  (832) 327-8000

  	
   

  	
  Telephone:
  (806) 665-8298

  
	
   

  	
   

  	
  Fax:
  (832) 327-8009

  	
   

  	
  Fax: (806) 665-1960

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTING

  	
   

  	
  Eagle
  Rock Field Services, L. P.

  	
   

  	
  W.
  O. Operating Company Ltd.

  
	
   

  	
   

  	
  Attn:
  Panhandle Plant Accounting

  	
   

  	
  Attn:
  Scott White

  
	
   

  	
   

  	
  14950
  Heathrow Forest Parkway, Suite 111

  	
   

  	
  PO Box 1061

  
	
   

  	
   

  	
  Houston, Texas 77032

  	
   

  	
  Pampa,
  Texas 79065

  
	
   

  	
   

  	
  Telephone: (832) 327-8000

  	
   

  	
  Telephone:
  (806) 665-8298

  
	
   

  	
   

  	
  Fax:
  (832) 327-8009

  	
   

  	
  Fax: (806) 665-1960

  

 

10

 

	
  PAYMENTS

  	
   

  	
  By
  Check

  	
   

  	
  By
  Check

  
	
   

  	
   

  	
  Eagle Rock Field
  Services, L. P.

  	
   

  	
  NA

  
	
   

  	
   

  	
  Attn: Panhandle Plant
  Accounting

  	
   

  	
   

  
	
   

  	
   

  	
  14950 Heathrow Forest
  Parkway, Suite 111

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, Texas 77032

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PAYMENTS

  	
   

  	
  By
  Wire

  	
   

  	
  By
  Wire

  
	
   

  	
   

  	
  N/A

  	
   

  	
  W. O. Operating Company
  Ltd

  
	
   

  	
   

  	
   

  	
   

  	
  Worth National Bank

  
	
   

  	
   

  	
   

  	
   

  	
  ABA Number 111907568

  
	
   

  	
   

  	
   

  	
   

  	
  Account Number 31012159

  
	
   

  	
   

  	
   

  	
   

  	
  Tax ID: 75-2675224

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TAX ID:

  	
   

  	
  20-3609438

  	
   

  	
  By
  Wire

  
	
   

  	
   

  	
   

  	
   

  	
  Pantwist, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  Worth National Bank

  
	
   

  	
   

  	
   

  	
   

  	
  ABA Number 111907568

  
	
   

  	
   

  	
   

  	
   

  	
  Account Number 31014674

  
	
   

  	
   

  	
   

  	
   

  	
  Tax ID: 20-4766962

  

 

13.2      Changes. Notices of
change of address of any of the Parties shall be given in writing to the other
in the manner aforesaid and shall be observed in the giving of all future
notices, statements, or other communications required or permitted to be given
hereunder.

 

XIV. DEFAULT

 

14.1      If either Party shall fail
to perform any of the covenants and obligations imposed upon it under and by
virtue of this Agreement (except where such failure shall be excused under any
of the provisions of this Agreement and further except where shorter time
frames and/or other remedies are provided in this Agreement), then in such
event the other Party may, at its option, terminate this Agreement by
proceeding as follows:

 

14.1.1     The Party not in default
shall give notice stating specifically the cause for terminating this Agreement
and declaring it to be the intention of the Party giving the notice to
terminate same.

 

14.1.2     The Party in default shall
have thirty (30) Days after the service of the aforesaid notice in which to
remedy or remove cause or causes stated in the notice for terminating this
Agreement, and, if within said period of thirty (30) Days, the party in default
does so remove or remedy said cause or causes and frilly indemnifies and/or
reimburses the Party not in default for any and all damages, losses, and
consequences of such breach, then such notice shall be withdrawn and this
Agreement shall continue in full force and effect.

 

14.1.3     In case the Party in default
does not so remedy and remove the cause or causes or does not indemnify and/or
reimburse the Party giving the notice for any and all damages, losses, and
consequences of such breach within said period of thirty (30) Days, then this
Agreement shall, at the expiration of said thirty (30) Day period, terminate,
except as to 

 

11

 

all accrued obligations not yet discharged; provided, however, that if
such default be remedied but no indemnification therefore has been made due to
a bona fide dispute between the Parties as to the amount thereof, then this
Agreement shall not terminate, but the Party not in default shall have the
right to seek indemnification in any manner provided by law or by this
Agreement.

 

Any cancellation of this
Agreement, pursuant to the provisions of this Article, shall be without
prejudice to the right of the Party not in default to collect any amounts due
for breach of this Agreement; provided, however, the provisions herein for
termination of this Agreement shall not apply if the failure of BUYER involves
failure to pay any sum or amount due hereunder, and BUYER’s refusal to pay is
subject to a bona fide dispute, and BUYER pays all amounts not in dispute.

 

14.2          No waiver of any default
under this Agreement shall constitute a waiver of any other default, whether of
like or different character.

 

XV. DEFINITIONS

 

15.1          For the purpose of this
Agreement, unless the context clearly indicates otherwise, the following
definitions shall be applicable:

 

15.1.1             BTU  shall mean British Thermal
Unit and is equal to 1055.05585262 Joule.

 

15.1.2             Business Day  shall mean any
day except Saturday, Sunday or Federal Reserve Bank holidays starting at eight
o’clock a.m. Central Standard Time.

 

15.1.3             Condensate shall mean the
liquid hydrocarbons that are recovered from the Gas in typical oil and Gas
separators or pipeline drips, compressor discharge or suction scrubbers,
usually from changes in ambient or ground temperature and/or pressure, but not
from processing.

 

15.1.4             Cubic Foot of Gas for the
purpose of measurement of the Gas delivered hereunder shall mean the amount of
Gas necessary to fill one cubic foot of space at a base pressure of fourteen
and seventy-three hundredths (14.73) pounds per square inch absolute and at a
base temperature of sixty degrees Fahrenheit (60°F) (“Base Conditions”) and
shall be the volume unit of measurement.

 

15.1.5             Day or day  shall mean a
twenty-four (24) consecutive hour period. For measurement purposes described
herein it will begin with the hour that is the then beginning hour that is the
standard practice of BUYER.

 

15.1.6             Dehydration shall mean the
dehydration process that removes water and water vapor from the Gas or Natural
Gas Liquids such as with the use of glycol, methanol, molecular sieves, etc.

 

15.1.7             FL&U shall mean the
sum of the MMBTIJ’s of field fuel and the MMBTU’s of lost and unaccounted gas,
including other fuel retained for services such as compression.

 

15.1.8             Gas or gas shall mean
natural gas as produced from Wells in its natural state that meets the quality
specifications of Article V of this Agreement.

 

15.1.9              GPM  shall
mean gallons per MCF.

 

15.1.10           Gross Heating Value of the Gas shall mean the
BTU content of one Cubic Foot of Gas at defined conditions which is the number
of BTU’s produced by the complete combustion of such Cubic Foot of Gas, at
constant pressure with air of the same temperature and pressure as the Gas,
when the products of combustion are cooled to the initial temperatures of the
Gas and air, and when water is formed by such combustion is condensed to a
liquid state at the initial temperature of the Gas.

 

15.1.11           Gross Heating Value of the NGL’s shall mean the BTU per gallon, fuel as ideal gas, as
described in the current GPA Standard 2145 with the exception of hexanes plus,
which shall be that recommended in the current GPA Standard 2261, i.e. 60% 

 

12

 

hexane, 30% n-heptane and
10% n-octane

 

15.1.12           Lands and Lease(s) shall mean the
contractual right to the title of and to the minerals, including oil and gas,
from geological formations on and below the properties described in Exhibit “B”
attached hereto and made a part hereof and as amended from time to time,
including certain surface rights as necessary to explore, develop, drill and
produce said minerals from such properties or lands.

 

15.1.13           MCF shall mean one
thousand (1,000) Cubic Foot of Gas.

 

15.1.14           MMBTU shall mean one
million (1,000,000) British Thermal Units.

 

15.1.15           MMCF shall mean one
million (1,000,000) Cubic Foot of Gas.

 

15.1.16           Month shall mean
that period of time beginning on the first Day of a calendar Month and ending
on the first Day of the following calendar Month, except that the first Month
shall commence on the Day of initial receipt of Gas hereunder and shall end on
the first Day of the following calendar Month.

 

15.1.17           Natural Gas Liquids or NGL’s  shall mean
those liquid hydrocarbons extracted from the Gas from Processing. The
components (“Components”) of the NGL’s are identified as ethane, propane,
iso-butane, normal butane, natural gasolines and incidental methane and other
miscellaneous liquids that become associated with the NGL’s.

 

15.1
..18          Psig shall mean pounds per
square inch gauge.

 

15.1.19           Psia  shall mean
pounds per square inch absolute.

 

15.1.20           Plant(s) shall mean Gas
Processing facilities where Natural Gas Liquids and other Plant Products are
separated from the Gas as a result of Processing.

 

15.1.21           Plant Products shall mean the
Natural Gas Liquids, as extracted from Processing.

 

15.1.22           Processing shall mean the
extraction of Natural Gas Liquids from the Gas through equipment specifically intended
to extract Natural Gas Liquids and/or Plant Products from the Gas such as
turboexpander (cryogenic), refrigeration, refrigerated lean oil absorption,
ambient oil absorption, joule thompson or similar processes.

 

15.1.23           Receipt
Point(s) shall mean the inlet flange
of s pipeline facilities installed to take deliveries of Gas from SELLER.

 

15.1.24           Treating shall mean the
treating process by which contaminates are removed from the Gas or Natural Gas
Liquids. These contaminates can be, but not limited to, hydrogen sulfide,
sulfur compounds, carbon dioxide and mercury.

 

15.1.25           Wells shall mean the
Well or Wells productive of Gas from all geological formations which is
completed on the Leases described in Exhibit “B” attached hereto and in
which SELLER has an interest, owns or controls the right to dispose of Gas
produced therefrom.

 

15.1.26           Year  shall mean any
period of twelve (12) consecutive calendar Months.

 

XVI. MISCELLANEOUS

 

16.1          Changes. All
modifications, ratifications, amendments or changes to this Agreement, whether
made simultaneously with or after the execution of this Agreement shall be in
writing, executed by the duly authorized representatives of both BUYER and
SELLER, and attached hereto.

 

16.2          Regulation. This Agreement
shall be subject to all valid rules, regulations, interpretations, and orçlers
of any duly constituted federal or state regulatory body having jurisdiction
hereof This Agreement and the respective rights and obligations of the Parties
hereto are subject to all existing and future laws, statutes, rules,
regulations, orders or directives promulgated by any duly constituted state or
federal governmental authority, regulatory body or commission having
jurisdiction or control over the Parties, their respective facilities or services
contemplated herein. Should either Party be ordered or required to do any act
inconsistent with the provisions of this 

 

13

 

Agreement, this Agreement
shall be deemed modified to conform to the requirements of such law or
regulation. If any provision of this Agreement is held to be illegal, invalid,
unenforceable or have a material and substantial negative impact on the rights,
duties or obligations of either Party, then the Parties shall meet in good faith
to determine if such negative impact can be eliminated or mitigated. If such
negative impact cannot be eliminated or mitigated to the satisfaction of either
Party, then either Party shall have the right to terminate this Agreement.

 

16.3          Assignment. Neither Party
shall have the right to assign all or any part of its rights under this
Agreement without the prior written consent of the other Party, such consent
not to be unreasonably withheld. Each Party shall have ten (10) Days to
provide the other with a copy of all statements effecting the assignment.

 

16.4          Entire Agreement. This Agreement
contains the entire agreement between the parties hereto and there are no oral
promises, agreements, or warranties affecting same.

 

16.5          Headings. The topical
headings and index used herein are inserted for convenience only and shall not
be construed as having any substantive significance or meaning whatsoever, or
as indicating that all of the provisions of this Agreement relating to any
particular topic are to be found in any particular section.

 

16.6          Interpretations. The Parties
hereto agree and confirm that, in the consideration and interpretation of this
Agreement, same shall be governed by, enforced under and construed in
accordance with the laws of the State of Texas, excluding any conflicts of law,
rule, principle, or law which might refer to the laws of another state and this
Agreement was prepared by all Parties hereto and not by any Party to the
exclusion of the other or others.

 

16.7          Independent Contractor. It is not the
intention of the Parties hereto to create, nor is there created hereby, a
partnership, joint venture, or association. The status of each Party hereunder
is solely that of an independent contractor.

 

16.8          Confidentiality. SELLER AND
BUYER AGREE THAT THE TERMS ANT) CONDITIONS OF THIS AGREEMENT WILL BE HELD
CONFIDENTIAL AND SHALL NOT BE DISCLOSED TO OTHER PARTIES WITHOUT CONSENT OF THE
OTHER UNLESS THAT DISCLOSURE IS REQUIRED BY FEDERAL OR STATE LAW OR AGENCY.
THE  DISCLOSING PARTY SHALL FURNISH THE OTHER
PROMPT NOTICE IF SUCH DISCLOSURE IS MADE. BOTH PARTIES SHALL BE ENTITLED TO
DISCLOSE THOSE PORTIONS OF THIS AGREEMENT WHICH ARE REQUIRED TO BE
DISCLOSEDUNDER APPLICABLE SECURITIES REGULATIONS AND TO ITS LENDERS.

 

16.9          Alternative Dispute Resolution. The Parties
agree that all claims, controversies and disputes arising out of or relating to
this Agreement, or to the breach, termination, interpretation or validity
thereof (“Disputes”), shall be handled as follows:

 

a.             The Party initiating the
Dispute shall first give notice of the Dispute to the other Party. Executives
(of each Party) having authority to settle the Dispute shall then meet,
negotiate and endeavor in good faith to resolve the Dispute. If such executives
fail to meet or are unable to resolve the Dispute within thirty (30) Days after
the notice from the Party initiating the Dispute, the Parties shall endeavor in
good faith to settle the dispute by mediation under the Mediation Procedure of
the CPR Institute for Dispute Resolution (“CPR”) in effect on the date of this
Agreement.

 

b.             The Parties have agreed that
CPR shall select a mediator in any such Dispute, and such person will agree to
serve in that capacity and to be available on reasonable notice. If the
foregoing selected individual becomes unwilling or unable to serve, CPR shall
appoint another mediator. If neither of these two selected individuals is able
or willing to serve, the Parties will agree on a substitute with the assistance
of CPR. Unless otherwise agreed in writing, the Parties will select a mediator
from the CPR Panels of Distinguished Neutrals. Each Party agrees to bear fifty
percent (50%)  of the mediation costs, including
the fees and expenses of the mediator; provided, however, each Party shall bear
and pay 

 

14

 

all fees and expenses of its own attorneys, accountants, experts and
witnesses.

 

c.             If the Dispute has not been
resolved by mediation within sixty (60) Days after the mediator has commenced
such mediation, such Dispute shall be settled by binding “baseball” arbitration
(pursuant to which each Party submits a proposed monetary award for the dispute
to the arbitrator and the arbitrator chooses one such proposed award, without
modification, as his decision) in accordance with the CPR Rule for
Non-Administered Arbitration in effect on the date of this Agreement by a sole
arbitrator agreed to by the Parties. If the Parties cannot agree upon the
arbitrator, such arbitrator shall be an arbitrator recommended by the CPR
Institute for Dispute Resolution from the CPR Panel of Distinguished Neutrals.
The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.
Sections 1-16, to the exclusion of state laws inconsistent therewith, and
judgment upon the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof. Except as the Parties may otherwise agree, the
place of the arbitration will be Houston, Texas. The arbitrator shall not be
empowered to award damages in excess of compensatory damages except to the
extent such excess damages would be recoverable under the indemnity obligations
in this Agreement of the Party liable therefore.

 

16.10        Damages.

 

16.10.1                    In no event shall any Party
be liable to the other for consequential, incidental, special, punitive,
indirect damages, lost profits, or other business interruption damages in
connection with the performance or nonperformance of the Parties under this
Agreement.

 

16.10.2                    THE PARTIES CERTIFY THAT
THEY ARE NOT “CONSUMERS” WITHIN THE MEANING OF THE TEXAS DECEPTIVE TRADE
PRACTICES CONSUMER PROTECTION ACT, SUBCHAPTER E OF CHAPTER 17, SECTIONS 17.41 ET SEQ. OF THE TEXAS BUSINESS AND COMMERCE
CODE, AS AMENDED, (“DTPA”). THE PARTIES COVENANT, FOR THEMSELVES AND FOR AND ON
BEHALF OF ANY SUCCESSOR OR ASSIGNEE, THAT, IF THE DTPA IS APPLICABLE TO THIS
AGREEMENT, (1) THE PARTIES ARE “BUSINESS CONSUMERS” AS THAT TERM IS
DEFINED IN THE DTPA, (2) OTHER THAN SECTION 17.555  OF THE
TEXAS BUSINESS AND COMMERCE CODE, EACH PARTY HEREBY WAIVES AND RELEASES ALL OF
ITS RIGHTS AND REMEDIES THEREUNDER AS APPLICABLE TO THE OTHER PARTY AND ITS
SUCCESSORS AND ASSIGNS, AND (3) EACH PARTY SHALL DEFEND
AND INDEMNIFY THE OTHER PARTIES FROM AND AGAINST ANY AND ALL CLAIMS OF OR BY THE INDEMNIFYING PARTY OR ANY OF ITS SUCCESSORS AND ASSIGNS OR ANY OF ITS OR THEIR AFFILATES
OR SUBSIDIARIES BASED IN WHOLE OR IN PART ON THE DTPA ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

16.11        Replacement. This Agreement
terminates and supersedes, as of the Effective Date, any obligations found in
the prior agreements between the Parties or their predecessors in interest
concerning the right or obligation to buy or. sell any gas produced from any
sources covered by this Agreement described in Exhibit “B” hereto as of
the Effective Date, although the Parties expressly agree that the provisions
related to indemnification and audit rights as found in these prior agreements
shall survive such termination. It is further agreed that this Agreement shall
not affect in any way, any claims, disputes, known or unknown, between the
Parties or their predecessors in interest under any such prior agreements
regardless of whether the underlying agreement has been subsequently
terminated.

 

16.12        Residue Return. BUYER is
currently operating a residue return delivery system (RRDS) which delivers
Residue Gas to the leases shown in Exhibit “D” attached hereto and made a
part hereto. In as much as BUYER, in its sole judgment, continues to operate
the RRDS, then BUYER shall 

 

15

 

on a fully interruptible
best efforts basis receive and redeliver Residue Gas for the development and
operation of said leases, not to exceed an amount equal to the SELLER’S share
of Residue Gas attributable to the Gas concurrently delivered to BUYER from
said leases as determine in this Agreement. Any additional connection by SELLER
to BUYER’S RRDS shall be at BUYER’S sole discretion and at a mutually agreeable
point to both BUYER and SELLER. Utilization of said Residue Gas so returned by
BUYER shall be a SELLER’S exclusive risk. BUYER shall deduct the volume of
Residue Gas delivered into RRDS on behalf of SELLER from SELLER’s Residue Gas
entitlement. In the event SELLER should take delivery of residue gas furnished
by BUYER in excess of Residue Gas attributable to SELLER, then BUYER shall
deduct the cost of such excess residue gas from the proceeds due SELLER for
SELLER’S share of Plant Products. SELLER shall not use the Residue Gas returned
to the leases for the purpose of gas lifting, pressure maintenance or cycling
operations. BUYER may in its sole discretion discontinue any or all residue
deliveries at any time. BUYER shall have the right to cease operating the RRDS
at any time with at least thirty (30) Days prior written notice to SELLER.

 

Remainder of Page Intentionally
Blank

Signatures Follow

 

16

 

IN
WITNESS WHEREOF, the Parties have executed this Agreement in one or more copies
or counterparts, each of which, when executed by BUYER and SELLER, shall
constitute and be an original effective Agreement between BUYER and such
SELLER.

 

 

	
  “BUYER”

  	
   

  	
  “SELLER”

  
	
  Eagle Rock Field Services, L. P.

  	
   

  	
  W. O. Operating Company, Ltd

  
	
   

  	
   

  	
  By:    WO
  Energy Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  StacyHorn

  	
   

  	
  By:

  	
  /s/
  Jeff Johnson

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  J. Stacy Horn

  	
   

  	
  Name:

  	
  Jeff Johnson

  
	
  Title:

  	
  Vice President Commercial
  Development

  	
   

  	
  Title:

  	
  President

  
	
  Date:

  	
  7/3/07

  	
   

  	
  Date:

  	
  5/8/07

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “SELLER”

  
	
   

  	
   

  	
  Pantwist, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jeff Johnson

  
	
   

  	
   

  	
  Name:

  	
  Jeff Johnson

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
  Date:

  	
  5/8/07

  

 

17

 

EXHIBIT “A”

Proceeds Sharing

Fixed Recoveries

 

This Exhibit “A” is incorporated into that certain Gas Purchase
Agreement dated April 1, 2007, by and between Eagle Rock Field Services,
L. P., hereinafter referred to as “BUYER,” and W. O. Operating Company, Ltd.
and Pantwist, LLC, hereinafter referred to as “SELLER.”

 

BASIS OF COMPENSATION shall be the sum of the following:

 

1.                Natural
Gas Liquids Payment. BUYER shall pay to SELLER an amount equal
to the “Contract Percentage” as shown in the following “Percentage Table”
multiplied by the Net NGL Proceeds.

 

2.                Residue
Gas Payment. BUYER shall pay to SELLER an amount equal to the “Contract
Percentage” as shown in the following “Percentage Table” multiplied by the Net
Residue Proceeds.

 

3.                Treating
Fee.  BUYER shall charge SELLER and
deduct from payments due SELLER a “treating fee” of $.10/MCF for all Gas BUYER
agrees to accept in excess of the quality specifications as listed in Exhibit “C”.

 

4.                Percentage Table.

 

For the total Gas Delivered to Bryan Carson. Cararay &
Schafer Systems as denoted on Exhibit “B”

 

	
  Contract
  Percentage:0 – 80,000 MCF/Month

  	
   

  	
  *****(2)%

  
	
               >80,000
  MCF/ Month

  	
   

  	
   *****(2)%

  
	
  NGL Efficiencies:  C2 – *****(2)%, C3 – *****(2)%, C4 – *****(2)%, C5+ - *****(2)%

  
	
  FL&U:

  	
   

  	
  *****(2)%

  	
   

  	
   

  
					

 

For the total Gas Delivered to Kingsmill System as
denoted on Exhibit “B”

 

	
  Contract
  Percentage:

  	
   

  	
  0
  – 20,000 MCF/Month

  	
   

  	
  *****(2)%

  
	
   

  	
   

  	
  20,001
  – 30,000 MCF/Month

  	
   

  	
  *****(2)%

  
	
   

  	
   

  	
  >30,000
  MCF/ Month

  	
   

  	
  *****(2)%

  

 

	
  NGL
  Efficiencies:  C2 – *****(2)%, C3 –
  *****(2)%, C4 – *****(2)%, C5+ - *****(2)%

  
	
  FL&U:

  	
   

  	
  *****(2)%

  	
   

  	
   

  

 

For  the
total Gas Delivered to Lefors System as denoted on Exhibit “B”

 

	
  Contract Percentage: *****(2)%

  	
   

  	
   

  
	
  NGL Efficiencies: C2 –  *****(2)%, C3 – *****(2)%, C4
  –  *****(2)%, C5+  – *****(2)%

  
	
  FL&U:

  	
   

  	
  *****(2)%

  	
   

  	
   

  
					

 

(2) THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND
EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED
PORTIONS.  ACCORDINGLY, THE CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY
WITH THE COMMISSION.  OMITTED PORTIONS
ARE INDICATED IN THIS EXHIBIT WITH “*****”.

 

1

 

For Gas Delivered to Turkey Creek System as denoted on
Exhibit “B”

 

	
  Contract Percentage: *****(3)%

  	
   

  	
   

  
	
  NGL Efficiencies: C2 – *****(3)%, C3 – *****(3)%, C4 – *****(3)%, C5+ –
  *****(3)%

  
	
  FL&U:

  	
   

  	
  *****(3)%

  	
   

  	
   

  
					

 

DEFINITIONS:

 

1.                SELLER’s  Gas Delivered for Processing at the Plant(s) inlet shall be that quantity delivered at the Receipt
Point(s) less FL&U. BUYER shall retain FL&U from SELLER without
payment therefore.

 

2.                Seller’s
Natural Gas Liquids shall be determined by multiplying the MCF’s
of SELLER’s Gas Delivered for Processing by the GPM content of each NGL
Component contained in the Gas as determined from samples taken at the Receipt
Point(s) and that product by the fixed “NGL Efficiencies” as described in
the above Percentage Table.

 

3.                Net
NGL Proceeds shall be each Component of SELLER’s Natural Gas
Liquids multiplied by the Monthly Average Sales Price of each Component.

 

4.                Monthly Average Sales Price shall mean the average of the daily high/low spot price for the Month of
production for each Component of Natural Gas Liquids, f.o.b. Conway, as quoted
by the Oil Price Information Service (“OPTS”), less a transportation and
fractionation (“T&F”) fee equal to six and six hundred and ninety-five
thousandths cents ($0.06695) per
gallon.

 

5.                Residue
Gas shall be determined by subtracting the NGL Shrinkage MMBTU’s and
Residue Gas Return MMIBTUs from the MMBTUs of Seller’s Gas Delivered for
Processing.

 

6.                NGL
Shrinkage shall be determined by multiplying the number of
gallons of each Component of SELLER’s Natural Gas Liquids by the Gross Heating
Value of the NGL’s.

 

7.               FL&U  shall be
determined by multiplying the MMBTU’s delivered by the SELLER at the Receipt
Point(s) by a percentage as shown in the above percentage table.

 

8.                Residue
Price shall mean average net price per MMBTU received by
BUYER, f.o.b. BUYER’s Plant for the sale of Residue Gas less a Residue Gas
Marketing fee of three cents ($.03) per Residue Gas MIMIBTU.

 

9.                Net
Residue Proceeds shall be determined by multiplying the SELLER’s
Residue Gas MIMBTU’s by the Residue Price.

 

(3) THE COMPANY HAS REQUESTED AN ORDER
FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL
TREATMENT TO SELECTED PORTIONS. 
ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS
EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS
EXHIBIT WITH “*****”.

 

2

 

EXHIBIT “B”

 

This
Exhibit “B” is incorporated into that certain Gas Purchase Agreement dated
April 1, 2007, by and between Eagle Rock Field Services, L. P.,
hereinafter referred to as “BUYER,” and W.O. Operating Company Ltd. and
Pantwist, LLC, hereinafter referred to as “SELLER.”

 

The following is a current listing by Gathering System of meter station
numbers and meter station names of receipt points under this Agreement, which
may change from time to time. This listing is for informational purposes only
and shall not limit the dedication of wells, leases and acreage further
described in this Exhibit “B”.

 

	
  System Name

  	
   

  	
  Meter

  	
   

  	
  Meter Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BRYAN/CARSON

  	
   

  	
  41481

  	
   

  	
  COOPER “C”

  
	
  BRYAN/CARSON

  	
   

  	
  41491

  	
   

  	
  OLIVE COOPER

  
	
  BRYAN/CARSON

  	
   

  	
  40301

  	
   

  	
  JUDE - JORDAN

  
	
  BRYAN/CARSON

  	
   

  	
  40081

  	
   

  	
  BRYAN STA 5

  
	
  BRYAN/CARSON

  	
   

  	
  40141

  	
   

  	
  E COOPER NCT B

  
	
  BRYAN/CARSON

  	
   

  	
  40216

  	
   

  	
  BRYAN ABCD

  
	
  BRYAN/CARSON

  	
   

  	
  41251

  	
   

  	
  BLOCK B

  
	
  BRYAN/CARSON

  	
   

  	
  41271

  	
   

  	
  BLOCK C

  
	
  BRYAN/CARSON

  	
   

  	
  41281

  	
   

  	
  COOPER H

  
	
  BRYAN/CARSON

  	
   

  	
  41291

  	
   

  	
  QUINN

  
	
  BRYAN/CARSON

  	
   

  	
  41301

  	
   

  	
  LANGD0N/NEW

  
	
  BRYAN/CARSON

  	
   

  	
  41321

  	
   

  	
  SIEBOLD

  
	
  BRYAN/CARSON

  	
   

  	
  41331

  	
   

  	
  B.F. BLOCK

  
	
  BRYAN/CARSON

  	
   

  	
  41341

  	
   

  	
  BLOCK

  
	
  BRYAN/CARSON

  	
   

  	
  41351

  	
   

  	
  PITCHER,H.C

  
	
  BRYAN/CARSON

  	
   

  	
  41421

  	
   

  	
  COOPER G

  
	
  BRYAN/CARSON

  	
   

  	
  41431

  	
   

  	
  COOPER E

  
	
  BRYAN/CARSON

  	
   

  	
  41511

  	
   

  	
  E COOPER NCT A

  
	
  BRYAN/CARSON

  	
   

  	
  526170

  	
   

  	
  1ST ST. BANK OF WHITE DEER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CARGRAY

  	
   

  	
  526482

  	
   

  	
  CRUTCHFIELD #1

  
	
  CARGRAY

  	
   

  	
  525205

  	
   

  	
  MCCONNELL #2

  
	
  CARGRAY

  	
   

  	
  1555

  	
   

  	
  COWAN, W.R. TR A ROBERTS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KINGSMILL / GRAY

  	
   

  	
  66003

  	
   

  	
  HARRAH

  
	
  KINGSMILL / GRAY

  	
   

  	
  66018

  	
   

  	
  W.W. HARRAH

  
	
  KINGSMILL / GRAY

  	
   

  	
  77139

  	
   

  	
  PHILLIPS - CASTLBERRY

  
	
  KINGSMILL / GRAY

  	
   

  	
  70771

  	
   

  	
  ANDY

  
	
  KINGSMILL / GRAY

  	
   

  	
  72439

  	
   

  	
  BEDNORZ

  
	
  KINGSMILL / GRAY

  	
   

  	
  71031

  	
   

  	
  HEITHOLT

  
	
  KINGSMILL / GRAY

  	
   

  	
  70221

  	
   

  	
  ELLER #1

  
	
  KINGSMILL / GRAY

  	
   

  	
  70251

  	
   

  	
  MCCULLOUGH E 1

  
	
  KINGSMILL / GRAY

  	
   

  	
  70443

  	
   

  	
  HUSTED #3

  

 

1

 

	
  KINGSMILL / GRAY

  	
   

  	
  70982

  	
   

  	
  HUSTED CDP

  
	
  KINGSMILL / GRAY

  	
   

  	
  525018

  	
   

  	
  ARCO FEE 203 WELL #2

  
	
  KINGSMILL / GRAY

  	
   

  	
  57142

  	
   

  	
  SIEBER 1-R

  
	
  KINGSMILL / GRAY

  	
   

  	
  77140

  	
   

  	
  VICARS

  
	
  KINGSMILL / GRAY

  	
   

  	
  54701

  	
   

  	
  B&B FARMS - COFFEE #3

  
	
  KINGSMILL / GRAY

  	
   

  	
  55291

  	
   

  	
  B&B FARMS - SEIBER #8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LEFORS/KELLERVILLE

  	
   

  	
  940010

  	
   

  	
  ROB NO 1

  
	
  LEFORS/KELLERVILLE

  	
   

  	
  940020

  	
   

  	
  HAYNES NO 2

  
	
  LEFORS/KELLERVILLE

  	
   

  	
  930001

  	
   

  	
  HARLAN A

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHAFER

  	
   

  	
  40411

  	
   

  	
  TEXACO-GARNER, C.R. B

  
	
  SCHAFER

  	
   

  	
  525533

  	
   

  	
  SOUTHLAND B

  
	
  SCHAFER

  	
   

  	
  525346

  	
   

  	
  LONG

  
	
  SCHAFER

  	
   

  	
  525402

  	
   

  	
  MOORE, J.W.

  
	
  SCHAFER

  	
   

  	
  66002

  	
   

  	
  VANIMAN #3

  
	
  SCHAFER

  	
   

  	
  66016

  	
   

  	
  ARNOLD

  
	
  SCHAFER

  	
   

  	
  66017

  	
   

  	
  R.W.HARRAH

  
	
  SCHAFER

  	
   

  	
  66019

  	
   

  	
  POPE #1

  
	
  SCHAFER

  	
   

  	
  66021

  	
   

  	
  SACKETT

  
	
  SCHAFER

  	
   

  	
  66060

  	
   

  	
  VANIMAN #7

  
	
  SCHAFER

  	
   

  	
  248057

  	
   

  	
  SIN-HAR LEOPO

  
	
  SCHAFER

  	
   

  	
  525380

  	
   

  	
  GIRTHA MCCONNELL

  
	
  SCHAFER

  	
   

  	
  523438

  	
   

  	
  SCHAFER RANCH 296

  
	
  SCHAFER

  	
   

  	
  525067

  	
   

  	
  BONEY NCT #4

  
	
  SCHAFER

  	
   

  	
  525068

  	
   

  	
  BONEY NCT #2

  
	
  SCHAFER

  	
   

  	
  525158

  	
   

  	
  COCKRELL #1

  
	
  SCHAFER

  	
   

  	
  525248

  	
   

  	
  W. B. HAILE

  
	
  SCHAFER

  	
   

  	
  525273

  	
   

  	
  HARVEY UNIT (#8)

  
	
  SCHAFER

  	
   

  	
  525301

  	
   

  	
  D. JORDAN #2

  
	
  SCHAFER

  	
   

  	
  525383

  	
   

  	
  MCCONNELL J.C. (C.H.)

  
	
  SCHAFER

  	
   

  	
  525513

  	
   

  	
  SCHAFER RANCH #295(GW)

  
	
  SCHAFER

  	
   

  	
  525515

  	
   

  	
  SCHAFER RANCH #9 (GW)

  
	
  SCHAFER

  	
   

  	
  525546

  	
   

  	
  TEX ELLER #1

  
	
  SCHAFER

  	
   

  	
  525660

  	
   

  	
  WO 49 CDP

  
	
  SCHAFER

  	
   

  	
  526149

  	
   

  	
  D. JORDAN #1

  
	
  SCHAFER

  	
   

  	
  526179

  	
   

  	
  SCHAFER RANCH BATT. #1

  
	
  SCHAFER

  	
   

  	
  526181

  	
   

  	
  SCHAFER RANCH #2 A

  
	
  SCHAFER

  	
   

  	
  40302

  	
   

  	
  WO FEELAND 116

  
	
  SCHAFER

  	
   

  	
  40481

  	
   

  	
  D JORDAN

  
	
  SCHAFER

  	
   

  	
  40491

  	
   

  	
  JORDAN D S-WEST

  
	
  SCHAFER

  	
   

  	
  72521

  	
   

  	
  MCCONNELL J

  
	
  SCHAFER

  	
   

  	
  248018

  	
   

  	
  FEE 244 STA

  
	
  SCHAFER

  	
   

  	
  525650

  	
   

  	
  MCCONNELL #3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TURKEY CREEK

  	
   

  	
  415070

  	
   

  	
  BOST #1

  

 

2

 

Each SELLER dedicates to
this Gas Purchase Agreement, as amended from time to time, the Wells and Leases
and Acreage as described and indicated below. Except where noted as such Wells,
Leases and Acreage being dedicated by Pantwist, LLC, all Wells, Leases and
Acreage listed below are dedicated by W.O. Operating Company, Ltd.

 

Bryan
Carson System

 

B.F. BLOCK      MS
41331

 

Northwest Quarter (NW/4) of Section One
Hundred Eleven (111), Block 4, I&GN RR Co. Survey, Carson County, Texas.

 

BLOCK     MS
41341

 

Northeast Quarter (NE/4) of Section Number
One Hundred Twelve (112), Block (4), I&GN RR Co. Survey, Carson County,
Texas.

 

BLOCK “A”     Into
Block “B” MS 41251

 

All of the North Half (N/2) of the Northwest
Quarter (NW/4) of the Southeast Quarter (SE/4), and the Southeast Quarter
(SE/4) of the Northwest Quarter (NW/4) of the Southeast Quarter (SE/4), and the
North Half (N/2) of the Northeast Quarter (NE/4) of the Southeast Quarter
(SE/4), and the Southeast Quarter (SE/4) of the Northeast Quarter (NE/4) of the
Southeast Quarter (SE/4), and the Northeast Quarter (NE/4) of the Southwest
Quarter (SW/4) of the Southeast Quarter (SE/4) and the Southwest Quarter (SW/4)
of the Southeast Quarter (SE/4) of the Southeast Quarter (SE/4) of Section Number
One Hundred Eleven (111), Block Number Four (4), I&GN RR Co. Survey, Carson
County, Texas as to oil and casinghead gas rights only.

 

BLOCK “B”     MS
41251

 

All of the East Half (E/2) of the Southeast
Quarter (SE/4) of the Southeast Quarter (SE/4), and the Northwest Quarter
(NW/4) of the Southeast Quarter (SE/4) of the Southeast Quarter (SE/4), and the
Southwest Quarter (SW/4) of the Northeast Quarter (NE/4) of the Southeast
Quarter (SE/4), and the Southwest Quarter (SW/4) of the Northwest Quarter
(NW/4) of the Southeast Quarter (SE/4), and the Northwest Quarter (NW/4) of the
Southwest Quarter (SW/4) of the Southeast Quarter (SE/4), and the South Half
(S/2) of the Southwest Quarter (SW/4) of the Southeast Quarter (SE/2) of Section Number
One Hundred Eleven (111), Block Number Four (4), I&GN RR Co. Survey, Carson
County, Texas, as to oil and casinghead gas rights only, down to and including
3,300 feet below the surface.

 

BLOCK “C”     MS
41271

 

Northeast Quarter (NE/4) of Section One
Hundred Eleven (111), Block 4, I&GN RR Co. Survey, Carson County, Texas as
to all rights in and to the Brown Dolomite and the White Dolomite Formations,
found at a depth of approximately 2,900 feet to 3,250 feet below the surface,
but in no event to depths exceeding 3,250 feet below the surface.

 

CALDWELL BRYAN     Into
EF Bryan MS 40216

 

Northwest Quarter (NW/4) of the Northeast
Quarter (NE/4) of the Southwest Quarter (SW/4) and the North Half (N/2) of the
Southwest Quarter (SW/4) of the Northeast Quarter (NE/4) of the Southwest
Quarter (SW/4) of Section Number Ninety-Two (92), BLOCK FOUR (4), I&GN
RY. CO. Survey, Carson County, Texas

 

CITIES SERVICE C     MS
40301

 

NW/4 of Section 108, Block 4, I&GN
Survey, Carson County, Texas

 

3

 

COOPER “A”     Into
Cooper G MS 41421

 

The Northwest Quarter (NW/4) of the Southeast
Quarter (SE/4) of the Southwest Quarter (SW/4) of the Northeast Quarter (NE/4)
of Section Four (4), Block Nine (9), I&GN RR Co. Survey, Carson
County, Texas.

 

COOPER “B”     Into
Cooper E MS 41431

 

The Northeast Quarter (NE/4) of the Northeast
Quarter (NE/4) and the North Half (N/2) of the Southeast Quarter (SE/4) of the
Northeast Quarter (NE/4) of Section Five (5), Block Nine (9), I&GN RR
Co. Survey, Carson County, Texas.

 

COOPER “E”     MS
41431

 

Northwest Quarter (NW/4) of Section Four
(4), Block Nine (9), I&GN RR Co. Survey, Carson County, Texas.

 

COOPER “G”     MS
41421

 

The Southeast Quarter (SE/4) of the Northeast
Quarter (NE/4) and the Northeast Quarter (NE/4) of the Southeast Quarter (SE/4)
of Section Four (4), Block Nine (9), I&GN RR Co. Survey, Carson County,
Texas.

 

COOPER “H”     MS
41281

 

East Half (E/2) of the Northwest Quarter (NW/4)
of Section Five (5), Block Nine (9), I&GN RR Co. Survey, Carson
County, Texas.

 

E. COOPER NCT “A”, “B”, AND “C”     MS
41511, 40141 & Into Cooper G MS 41421

 

Southwest Quarter (SW/4) of Section One
(1), and all of the Southwest Quarter (SW/4) of Section Four (4), and all
of the Southwest Quarter (SW/4) of Section Five (5), all in Block Nine
(9), I&GN RR Co. Survey, Carson County, Texas.

 

E.F. BRYAN     MS
40216 & 40081

 

S/2 NE/4 SE/4, SE/4 SE/4, NW/4 NW/4 SE/4, NE/4
SW/4, E/2 NW/4 SE/4, Section 107 Block 4, I&GN RR Co. Survey,
Carson County, Texas.

 

FIRST STATE BANK OF WHITE DEER     MS
526170

 

I&GN RR Co. Survey, Block 4, Section 51:
N/2, SW/4; Section 52: All; Section 59: S/2, NE/4; Section 60:
S/2, NW/4

 

Containing 2080.0 acres, more or less in Carson
County, Texas, AS TO AND ONLY AS TO oil and casinghead gas rights from
the surface to 100 feet below the Granite Wash Formation.  LESS AND EXCEPT water well located 324 feet
from the East Line and 2, 227 feet from the South line in Section 59,
Block 4, I&GN RR CO. Survey.

 

JK QUINN     Into
Quinn MS 41291

 

North Half (N/2), Southeast Quarter (SE/4) of Section 7,
Block 9, I&GN RR Co. Survey, Containing 480 acres, more or less, in Carson
and Hutchinson Counties, Texas, AS TO AND ONLY AS TO oil and casinghead
gas rights from the surface to 100 feet below the base of the Granite Wash
Formation

 

4

 

LANGDON     41301

 

North Half (N/2) of the Northeast Quarter (NE/4)
of Section One Hundred Twenty-Five (125), Block Four (4), I&GN RR Co.
Survey, Carson County, Texas

 

NEWBLOCK     Into
Langdon MS 41301

 

South Half (S/2) of the Northeast Quarter (NE/4)
of Section One Hundred Twenty-Five (125), Block Four (4), I&GN Co.
Survey, Carson County, Texas.

 

OLIVE COOPER     MS
41491

 

S/2 of the SE/4, Section Four, Block Nine,
I&GN Survey, Carson County, Texas.

 

PHILLIPS BRYAN     Into
E F Bryan MS 40216

 

W/2 of the NE/4 of the SW/4; W/2 of the SW/4 of
the SE/4; N/2 of the NE/4 of the SE/4 of Section 107, Block 4, I&GN
Survey, Carson County, Texas.

 

N/2 and SE/4 of SE/4 of NW/4; S/2 and NW/4 of
NW/4 of NE/4; SW/4 of NE/4 of NE/4; W/2 of SW/4 of NE/4; S/2 and NE/4 of SE/4
of NE/4 of Section 92, Block 4, I&GN Survey, Carson County, Texas.

 

PHILLIPS COOPER “B”     Into
Cooper E MS 41431

 

W/2 of the SW/4 of Section Three (3), Block
Nine (9), I&GN Survey, Carson County, Texas.

 

PHILLIPS COOPER “C”     MS
41481

 

W/2 of the NE/4, Section Five, Block Nine,
I&GN RR Survey, Carson County, Texas.

 

PITCHER     MS
41351

 

Northwest Quarter (NW/4) of Section Nineteen
(19), Block M-21, TCRR Survey, Hutchinson County, Texas.

 

QUINN     MS
41291

 

Southwest Quarter (SW/4) of Section Seven
(7), Block (9), I&GN RR Co. Survey, Hutchinson County, Texas.

 

SEIBOLD     MS
41321

 

East Half (E/2) of the Southeast Quarter (SE/4)
of Section One Hundred Twenty-Five (125), Block Four (4), I&GN RR Co.
Survey, Hutchinson and Carson Counties, Texas.

 

SMITTY     Into
Cooper “G” MS 41421

 

Section One (1), Block Nine (9), I&GN
RR Survey, Carson County, Texas

 

Cargray System

 

CRUTCHFIELD #1     MS
526482 (Pantwist, LLC)

 

160 acres, more or less, being the Southwest
Quarter (SW/4) of Section 28, Block 4, I&GN RR Co. Survey, Carson
County, Texas.

 

5

 

COWAN, A.     MS
1555 (Pantwist, LLC)

 

All of Section 160, the North Half (N/2),
and the Southeast quarter (SE/4) of Section 165, and all of Section 194,
Block M-2, Beaty, Seal and Forwood Survey, Roberts County, Texas.

 

McCONNELL (DANCO)     MS
525205 (Pantwist, LLC)

 

West Half (W/2) of the Northwest Quarter (NW/4)
of the Northeast Quarter (NE/4) and the West Half (W/2) of the Northeast
Quarter (NE/4) of the Northeast Quarter (NE/4) and the East Half (E/2) of the
Southwest Quarter (SW/4) of the Northeast Quarter (NE/4) and East Half (E/2) of
the Southwest Quarter (SE/4) of the Northeast Quarter (NE/4) of Section 28,
Block 7, I&GN RR Co. Survey, Carson County, Texas lying North of the
right-of-way of the Panhandle & Santa Fe Railway Company.

 

Schafer System

 

ARNOLD     MS
66016

 

East Half of the Northeast Quarter (E/2 NE/4) of
Section 149, Block 3, I&GN RR Co. Survey, Gray County, Texas.

 

T. J. BONEY NCT 1     Into
Fee 244 Master MS 248018

 

Northwest Quarter (NW/4) of Section 91, and
Southwest Quarter (SW/4) of Section 108, Block 4, I&GN Survey, Carson
County, Texas.

 

T.J. BONEY NCT 2     MS
525068

 

Southwest Quarter (SW/4) of Section 90,
Block 4, I&GN RR. Co. Survey, Carson County, Texas.

 

T.J. BONEY NCT 4     MS
525067

 

Northwest Quarter (NW/4) of Section 89,
Block 4, I&GN RR Co. Survey, Carson County, Texas.

 

COCKRELL B     Into
Southland B MS 525533

 

E/2 SE/4, Section 2, Block B-3, D&SE RR
Survey, Hutchinson County, Texas.

 

S/2 SE/4 NE/4, Section 2, Block B-3,
D&SE RR Survey, Hutchinson County, Texas

 

COCKRELL F     Into
Southland B MS 525533

 

W/2 NW/4, Section 2, Block B-3, D&SE RR
Survey, Hutchinson County, Texas.

 

NW/4 NE/4, Section 2, Block B-3, D&SE
RR Survey, Hutchinson County, Texas.

 

North 40 acres of Section 1, Block B-3,
D&SE RR Survey, Hutchinson County, Texas.

 

W/2 SW/4, Section 2, Block B-3, D&SE RR
Survey, Hutchinson County, Texas. NE/4 NW/4, Section 2, Block B-3,
D&SE RR Survey, Hutchinson County, Texas

 

6

 

COCKRELL RANCH     MS
525660 & 525158

 

(1) Section 11, Block B-3, D&SE
Ry. Co. Survey, Hutchinson County, Texas, among other lands not affected
hereby, less and except the following described lands:

 

                (a) 100
acres in the Southwest corner of Section 11, Block B-3, D&SE Survey,
Hutchinson County, Texas, said 100 acres more particularly described as
follows:  Beginning at the Southwest
corner of Section 11, Block B-3, D&SE Survey, Hutchinson County Texas;
Thence North, with the West line of said Section 11, 2203.1 feet; Thence
East, parallel with the South line of Section 11, 1320 feet; Thence South,
parallel with the West line of Section 11, 1320 feet; Thence East,
parallel with the South line of Section 11, 1639.8 feet; Thence South,
parallel with the West line of Section 11, 883.1 feet to a point in the
South line of Section 11, Thence West, with the South line of Section 11,
2959.8 feet to the point of beginning and containing 100 acres, more or less.

 

(b)  132.3 acres in Section 11, Block
B-3, D&SE Survey, Hutchinson County, Texas, said 132.3 acres being more
particularly described in six tracts as follows:

 

TRACT 1: 
Beginning at a point in the North line of Section 11, Block B-3,
D&SE Survey, Hutchinson County, Texas, 660.0 feet East from its Northwest
corner;

Thence East, with the North line of Section 11,
660.0 feet;

Thence South, parallel with the West line of Section 11,
660.0 feet;

Thence West, parallel with the North line of Section 11,
660.0 feet;

Thence North, parallel with the West line of Section 11,
660.0 feet, to the point of beginning, containing 10.0 acres, more or less.

 

TRACT 2: 
Beginning at a point in the West line of Section 11, Block B-3,
D&SE Survey, Hutchinson, County, Texas, 1533.3 feet South from its
Northwest corner;

Thence North, with the West line of Section 11,
873.3 feet;

Thence East, parallel with the North line of Section 11,
660.0 feet;

Thence South, parallel with the West line of Section 11,
660.0 feet;

Thence East, parallel with the North line of Section 11,
660.0 feet;

Thence South, parallel with the West line of Section 11,
213.3 feet;

Thence West, parallel with the North line of Section 11,
1320.0 feet, to the point of the beginning, containing 16.5 acres, more or
less.

 

TRACT 3: 
Beginning at a point 1320.0 feet East and 660.0 feet South of the
Northwest corner of Section 11, Block B-3, D&SE Survey, Hutchinson
County, Texas;

Thence East, parallel with the North line of Section 11,
660.0 feet;

Thence South, parallel with the South line of Section 11,
660.0 feet;

Thence West, parallel with the North line of Section 11,
660.0 feet;

Thence North, parallel with the West line of Section 11,
660.0 feet, to the point of beginning, containing 10.0 acres, more or less.

 

TRACT 4: 
Beginning at the Northeast corner of Section 11, Block B-3,
D&SE Survey, Hutchinson County, Texas;

Thence South, parallel with the East line of Section 11,
1320.0 feet;

Thence West, parallel with the North line of Section 11,
1094.7 feet;

Thence North, parallel with the East line of Section 11,
660.0 feet;

Thence West, parallel with the North line of Section 11,
660.0 feet;

Thence North, parallel with the East line of Section 11,
660.0 feet;

Thence East, with the North line of Section 11,
1754.7 feet, to the point of beginning, containing 43.2 acres, more or less.

 

TRACT 5: 
Beginning at a point in the East line of Section 11, Block B-3,
D&SE Survey, Hutchinson Count, Texas, and 565.6 feet North of its Southeast
corner;

Thence West, parallel with the South line of Section 11,
770.1 feet;

 

7

 

Thence North, parallel with the East line of Section 11,
530.8 feet;

Thence West, parallel with the South line of Section 11,
324.6 feet;

Thence North, parallel with the East line of Section 11,
660.0 feet;

Thence West, parallel with the South line of Section 11,
660.0 feet;

Thence North, parallel with the East line of Section 11,
660.0 feet;

Thence East, parallel with the South line of Section 11,
660.0 feet;

Thence South, parallel with the East line of Section 11,
397.9 feet;

Thence East, parallel with the South line of Section 11,
1094.7 feet;

Thence South, parallel with the East line of Section 11,
1452.9 feet to the point of the beginning, contain 42.6 acres, more or less.

 

TRACT 6: 
Beginning at the Southwest corner of Section 11, Block B-3,
D&SE Survey, Hutchinson County, Texas;

Thence North, with the West line of Section 11,
1096.4 feet;

Thence East, parallel with the South line of Section 11,
1320.0 feet to the Southwest beginning corner of the herein described tract;

Thence North, parallel with the West line of Section 11,
660.0 feet;

Thence East, parallel with the South line of Section 11,
660.0 feet;

Thence South, parallel with the South line of Section 11,
660.0 feet;

Thence West, parallel with the South line of Section 11,
660.0 feet, to the point of beginning of the herein described tract, containing
10.0 acres, more or less.

 

(2) Section 6, Block M-21, TCRR
Survey, Hutchinson County, Texas, among other lands not affected hereby, less
and except the following described lands:

 

110.0 acres in Section 6, Block M-21, TCRR
Survey, Hutchinson County, Texas, said 110.0 acres being more particularly
described in two tracts as follows:

 

TRACT 1: 
Beginning at a point in the most northerly South line of Section 6,
Block M-21, TCRR Survey, Hutchinson County, Texas approximately 1570.0 feet
easterly from the most northerly Southwest corner of said Section 6;

Thence North, parallel with the most westerly
West line of Section 6, 660.0 feet;

Thence East, parallel with the most northerly
South line of Section 6, 660.0 feet;

Thence South, parallel with the West line of the
herein described tract 660.0 feet to the most northerly South line of Section 6;

Thence West, with the said most northerly South
line, 660.0 feet to the point of beginning, containing 10.0 acres, more or
less.

 

TRACT 2: 
Beginning at the most southerly Southwest corner of Section 6,
Block M-21, TCRR Survey, Hutchinson County, Texas;

Thence North, with the most easterly West line
of Section 6, 1160.0 feet;

Thence East, parallel with the most southerly
South line of Section 6, 620.0 feet;

Thence North, parallel with the most easterly
West line of Section 6, 1510.0 feet;

Thence East, parallel with the most southerly
South of Section 6, 775.0 feet;

Thence South, parallel with the most easterly
West line of Section 6, 1225.0 feet;

Thence East, parallel with the most southerly
South line of Section 6, 580.0 feet;

Thence North, parallel with the most easterly
West line of Section 6, 1215.0 feet;

Thence East, parallel with the most southerly
South line of Section 6, 775.0 feet;

Thence South, parallel with the most easterly
West line of Section 6, 1540.0 feet;

Thence West, parallel with the most southerly
South line of Section 6, 600.0 feet;

Thence South, parallel with the most easterly
West line of Section 6, 570.0 feet;

Thence West, parallel with the most southerly
South line of Section 6, 1200 feet;

Thence South, parallel with the most easterly
West line of Section 6, 550.0 feet to a point in the most southerly South
line of Section 6;

Thence West, with the said southerly South line,
950.0 feet to the point of 100.0 acres, more or less.

 

8

 

(3)  East 199.9 acres of N/2, East 160
acres of South 320 acres of Section 3, Block M-21, TCRR Survey, Hutchinson
County, Texas, among other lands not affected hereby, less and except the
following described tract of land:

 

20 acres of land in the South part of Section 3,
M-21, TCRR Survey, Hutchinson County, Texas, more particularly described as
follows:

 

Beginning at a point
in the South line of section 3, M-21, TCRR Survey, Hutchinson County, Texas,
3532.2 feet East from the Southwest corner of said Section 3;

Thence North, parallel
with the West line of Section 3, 660 feet;

Thence East, parallel
with the South line of Section 3, 1320 feet;

Thence South, parallel
with the West line of Section 3, 660 feet;

Thence West, along with the South line of Section 3,
1320 feet to the point of beginning, containing 20.0 acres, more or less.

 

(4)  West 240 acres of North 320 acres of Section 2,
M-21, TCRR Survey, Hutchinson County, Texas, among other lands not affected
hereby, less and except the following described land:

 

Beginning at a point on the East line of Section 10
of D&SE RR Co. Survey, in Block

B-3, a distance of 1975.1 feet South from the
Northeast corner thereof;

Thence North 1582 feet to a point on the East
line of said Section 10;

Thence East, parallel to the North line of said Section 2,
a distance of 1572.667 feet to a point;

Thence North 660 feet to a point in the North
line of said Section 2;

Thence East along the North line of Section 2,
a distance of 786.333 feet to a point;

Thence South 01 degrees 01 feet 30 inches East,
1494.667 feet;

Thence West, parallel to the North line of said Section 2,
a distance of 969.933 feet to a point;

Thence South 01 degrees 01 feet 30 inches East,
a distance of 747.333 feet to a point;

Thence South 88 degrees 58 feet 30 inches West,
a distance of 1389.067 feet to the place of beginning, containing 81 acres,
more or less.

 

INSOFAR ONLY as the same covers and affects the
oil, gas and other minerals in the interval between the surface and 100 feet
below the base of the Chase Group of the Wolfcamp Series of the Permian
System.

 

DAVE POPE (gas well)     MS
66019

 

Southwest Quarter (SW/4) of Section 173,
Block 3, I&GN RR Co. Survey, Gray County, Texas.

 

D JORDAN     MS
40481, 40491, 525301 & 526149

 

The Southwest Quarter (SW/4) of Section 20,
Block M-21, TCRR Co. Survey, Cert. 1011, Hutchinson County, Texas; the
Southeast Quarter (SE/4) of Section 123, Block 4, I&GN RR Co. Cert.
1326, Hutchinson and Carson Counties, Texas; The Southwest Quarter (SW/4) of Section 114,
Block 4, I&GN RR Co. Survey, Cert. 1317, Carson County, Texas; and the
Southwest Quarter (SW/4) of Section 105, Block 4, I&GN RR Co. Survey,
Cert. 1308, Carson County, Texas; INSOFAR ONLY as the same covers and affects
the oil, gas, and other minerals in the interval between the surface and 100
feet below the base of the Chase Group of the Wolfcamp Series of the
Permian Series.

 

DRILLEX     Into
Cockrell Ranch CDP 525660

 

West 60 acres of the North 319.9 acres and the
West 80 acres of the South 320 acres of Section 3, Block M-21, TC Survey,
Hutchinson County, Texas.

 

9

 

E. COCKRELL     Into Cockrell Ranch CDP MS 525560

 

That certain portion of the West 280 acres of Section 3,
Block M-21, TCRR Survey.

 

That certain portion of the East 60 acres of the
West 120 acres of the North 319.9 acres and the East 80 acres of the West 160
acres of the South 320 acres of Section 3, Block M-21, TCRR Survey,
Hutchinson County, Texas.

 

That certain portion of the West 120 acres of
the North 319.9 acres and the East 80 acres of the West Half (W/2) of the South
320 acres of Section 3, Block M-21, TCRR Survey, Hutchinson County, Texas.

 

FEE 244     MS 248018 & 40302

 

E/2, SW/2 Section 89; N/2 Section 90;
E/2 and SW/4 Section 91; E/2 Section 108, All of Section 109;
and E/2 and SW/4 Section 110, Block 4, I&GN RR Co. Survey, Carson
County, Texas.

 

C.R. GARNER     MS 40411

 

I&GN RR Co. Survey, Block 4, Section 95:
All

 

Containing 640 acres, more or less, in Carson
County, Texas, AS TO AND ONLY AS TO oil and casinghead gas rights from
the surface to 100 feet below the base of the Granite Wash Formation.

 

W.B. HAILE     MS 525248

 

Southwest Quarter (SW/4) of Section 4,
Block M-21, TCRR Co. Survey, Hutchinson County, Texas.

 

HARVEY UNIT     MS 525273

 

TRACT 2:                                          South Half (S/2) of the East Half (E/2)
of the Southwest Quarter (SW/4) of Section 74, Block Z, HE&WT RR
Survey, Hutchinson County, Texas, among other lands not affected hereby.

 

TRACT 3:                                          East Half (E/2) of the Northwest Quarter
(NW/4) of Section 71, Block Z, HE&WT RR Survey, Hutchinson County,
Texas, among other lands not affected hereby.

 

TRACT 5:                                          Southwest Quarter (SW/4) of the Southwest
Quarter (SW/4) of the Northeast Quarter (NE/4) of Section 71, Block Z,
HE&WT RR Survey, Hutchinson County, Texas, among other lands not affected
hereby.

 

TRACT 6:                                          Southwest Quarter (SW/4) of Section 71,
Block Z, HE&WT RR Survey, Hutchinson County, Texas, among other lands not
affected hereby.

 

TRACT 7:

 

                                                Lease No. 1:

 

                                                                West
Half (W/2) of the West Half (W/2) of the Northwest Quarter (NW/4) of Section 14,
Block M-21, TCRR Survey, Hutchinson County, Texas, among other lands not
affected hereby

 

                                                Lease No. 2:

 

                                                                Northwest
Quarter (NW/4) of the Northwest Quarter (NW/4) of the Southwest Quarter (SW/4)
and the South Half (S/2) of the South Half (S/2) of the Southwest Quarter
(SW/4) of Section 14, Block M-21, TCRR Survey, Hutchinson County, Texas,
among other lands not affected hereby.

 

10

 

TRACT 8:

 

                                                Lease No. 1:

 

                                                                (1) Beginning
at the Southwest corner of the Southeast Quarter (SE/4) of Section 71,
Block Z, HE&WT Survey, Hutchinson County, Texas; Thence East 660 feet;
Thence North 660 feet; Thence West 660 feet; Thence South 660 feet to the point
of beginning, and containing 10 acres.

 

                                                                (2) Beginning
at a point in the South line of Section 71, Block Z, HE&WT Survey, Hutchinson
County, Texas, 1320.01 feet East of the Southwest corner thereof for beginning
corner of this tract; Thence East 660 feet; Thence North 660 feet; Thence West
660 feet; Thence South 660 feet to beginning corner this tract, and containing
10 acres.

 

                                                                (3) East
Half (E/2) of the West Half (W/2) of the Northwest Quarter (NW/4) and the
Southeast Quarter (SE/4) of the Northwest Quarter (NW/4) of Section 14,
Block M-21, TC Ry. Co. Survey, Hutchinson County, Texas.

 

                                                                (4) Northeast
Quarter (NE/4) and the Northeast Quarter (NE/4) of the Southeast Quarter (SE/4)
of Section 14, Block M-21, TC Ry. Co. Survey, Hutchinson County, Texas,
less and except the following:

 

(a) Beginning at
the Northeast corner of said Section 14; Thence West 660 feet; Thence
South 1320 feet; Thence East 660 feet; Thence North 1320 feet, containing 20
acres.

 

(b) Beginning at
a point in the East line of Section 14, 1980.5 feet from the Northeast
corner; Thence West 660 feet; Thence South 1320 feet; Thence West 660 feet;
Thence South 660 feet; Thence East 1320 feet; Thence North 1980 feet to the
point of beginning, containing 40 acres;

 

among other lands not
affected hereby.

 

Lease No. 2:

 

Southwest Quarter (SW/4) of the Northwest
Quarter (NW/4) of the Southwest Quarter (SW/4), and the East Half (E/2) of the
Northwest Quarter (NW/4) of the Southwest Quarter (SW/4), and the Northeast
Quarter (NE/4) of the Southwest Quarter (SW/4), and the North Half (N/2) of the
South Half (S/2) of the Southwest Quarter of Section 14, Block M-21, TCRR
Survey, Hutchinson County, Texas, among other lands not affected hereby.

 

Lease No. 3:

 

                Northwest
Quarter (NW/4) of the Southeast Quarter (SE/4), and the Northeast Quarter
(NE/4) of the Northwest Quarter (NW/4) of Section 14, Block M-21, TCRR
Survey, Hutchinson County, Texas.

 

TRACT 9:

 

                A
tract of land beginning at a point in the East line 1980 feet from the
Northeast corner of Section 14, Block M-21, TCRR Survey, Hutchinson
County, Texas; Thence West 660 feet; Thence South 1320 feet; Thence West 660
feet; Thence South 660 feet; Thence East 1320 feet to a point on the East line
of Section 14, Thence North 1980 feet to the point of beginning, among
other lands not affected here.

 

TRACT 10:

 

                160
acres out of Section 16, Block M-21, TCRR Survey, Hutchinson County,
Texas, described as follows: Beginning at the Southwest corner of said Section 16;
Thence East 1320 feet along the South boundary line of said Section; Thence
North parallel to the West line of said Section 5280 feet; Thence 

 

11

 

West 1320 feet to the North line of said
Section; Thence South 5280 feet along the West line of said Section, to the
point of beginning.

 

J.C. McCONNELL “A”     MS 525383

 

Northeast Quarter (NE/4) of Section 66,
Block 4, I&GN RR Co. Survey,

 

Containing 160 acres, more or less, in Carson
County, Texas, AS TO AND ONLY AS TO oil and casinghead gas rights from
the surface to 100 feet below the base of the Granite Wash Formation

 

JW MOORE     MS 525402

 

S/2 NE/4 and the W/2 NW/4 NE/4, of Section 21,
Block M-21, T.C. Ry. Co. Survey, Hutchinson County, Texas.

 

LONG     MS 525346

 

North Half (N/2) less the West Half of the
Southwest Quarter of the Northwest Quarter (W/2 SW/4 NW/4), Section 113,
Block 4, I&GN Survey, Carson County, Texas.

 

RUBY SACKETT     MS 66021

 

Southwest Quarter (SW/4) of Section 148;
Northwest Quarter (NW/4) of Section 148, all lying in Block 3, I&GN RR
Co. Survey, less the East 80 acres thereof.

 

R.W. HARRAH     MS 66017

 

South 40 acres of the East 120 acres of the Northeast
Quarter (NE/4) of Section 163, Block 3, I&GN RR Co. Survey, Gray
County, Texas.

 

SCHAFER     Into Fee 244 MS 248018

 

106.62 acres of land out of the Northwest
Quarter (NW/4) of Section Number One Hundred Ninety-Five (195), in Block
Three (3), I&GN RR Co. Survey, Carson County, Texas, more particularly
described as follows:

 

BEGINNING at the Southwest corner of said NW/4
of Section 195;

 

THENCE North with the West line of Section 195,
1980 feet to a point;

 

THENCE East parallel with the South line of said
NW/4 Section 195, 660 feet to a point;

 

THENCE South parallel with the West line of said
Section 195, 294 feet to a point;

 

THENCE East parallel with the South line of said
NW/4 of Section 195, 1980 feet to a point in the East line of the NW/4 of
said Section 195;

 

THENCE South with the East line of the NW/4 of
said Section 195, 1686 feet to the Southeast corner of the NW/4 of said Section 195;

 

THENCE West parallel with the South line of said
Section 195, 2640 feet to the PLACE OF BEGINNING.

 

SCHAFER RANCH     MS 526179, 525515, 523438, 526181 &
525513

 

SW/4 Section 87, Block 4, I&GN Survey,
Carson County, Texas, INSOFAR AND ONLY INSOFAR AS to oil and casinghead gas
rights from the surface to 100’ below the base of Granite Wash.

 

12

 

SE/4 Section 87, Block 4, I&GN Survey,
Carson County, Texas, INSOFAR AND ONLY INSOFAR AS to the surface to 100’ below
the base of Granite Wash.

containing 640 acres, more or less in Carson
County, Texas.

 

S/2, W2NW/4 of Section 86, Block 4,
I&GN Survey, Carson County, Texas, INSOFAR AND ONLY INSOFAR AS to oil and
casinghead gas rights from the surface to 100’ below the base of Granite Wash.

 

E/2 NW/4, NE/4 of Section 86, N/2 of Section 87,  Block 4, I&GN Survey, Carson County,
Texas, INSOFAR AND ONLY INSOFAR AS to oil and casinghead gas rights from the
surface to 100’ below the base of Granite Wash.

 

Containing 640 acres, more or less in Carson
County, Texas.

 

E/2 E/2 NE/4 of Section 85, Block 4,
I&GN Survey, Carson County, Texas, INSOFAR AND ONLY INSOFAR AS to oil and
casinghead gas rights from the surface to 100’ below the case of Granite Wash.

 

W/2 SW/4, W/2 E/2 SW/4 of Section 88, Block
4, I&GN Survey Carson County, Texas INSOFAR AND ONLY INSOFAR AS to the
surface to 100’ below the base of Granite Wash.

 

Containing 160 acres, more or less in Carson
County, Texas.

 

N/2, SE/4 of Section 68, Block 4, I&GN
Survey, Carson County, Texas, INSOFAR AND ONLY INSOFAR AS to oil and casinghead
gas rights from the surface to 100’ below the base of Granite Wash.

 

Containing 480 acres, more or less in Carson
County, Texas.

 

E/2 NE/4 of Section 69, Block 4, I&GN
Survey, Carson County, Texas, INSOFAR AND ONLY INSOFAR AS to oil and casinghead
gas rights from the surface to 100’ below the base of Granite Wash.

 

Containing 80 acres, more or less in Carson
County, Texas.

 

SIN-HARRAH     MS 248057

 

North 80 acres of the East 240 acres, Section 163,
Block 3, I&GN RR Co. Survey, Gray County, Texas.

 

SOUTHLAND B     MS 525533

 

SW/4 NE/4, Section 2, Block B-3, D&SE
RR Survey, Hutchinson County, Texas.

North 30 acres of the E/2 NE/4 of Section 2,
Block B-3 D&SE RR Survey, Hutchinson County, Texas.

 

W/2 SE/4 Section 2, Block B-3, D&SE RR
Survey, Hutchinson County, Texas.

 

E/2 NE/4 Section 2, Block B-3, D&SE RR
Survey, Hutchinson County, Texas.

 

E/2 SW/4 of section 2, Block B-3, D&SE RR
Survey, Hutchinson County, Texas.

 

TURNER KENT “A”     Into Cockrell Ranch CDP MS 525660

 

30 acres in Section 3, Block M-21, TCRR
Survey, Hutchinson County, Texas being more particularly described as follows:

 

                Beginning
at a point in the most southerly North line of Section 3, Block M-21, TCRR
Survey, 2426.7 feet East from its most southerly Northwest corner; Thence East,
with the most southerly North line of Section 3, 446.1 feet; Thence South,
parallel with the most westerly West line of Section 3, 660.0 feet; Thence
East, parallel with the most southerly North line of Section 3, 660.0
feet; Thence South, parallel with the most westerly West line of Section 3,
819.8 feet; Thence West, parallel with the most southerly North line of Section 3,
883.1 feet; 

 

13

 

Thence North, parallel with the most westerly
West line of Section 3, 493.3 feet; Thence West, parallel with the most
southerly North line of Section 3, 883.0 feet; Thence North, parallel with
the most westerly West line of Section 3, 326.5 feet; Thence East,
parallel with the most southerly North line of Section 3, 660.0 feet;
Thence North, parallel with the most westerly West line of Section 3,
660.0 feet to the point of beginning, and containing 30.0 acres, more or less.

 

100 acres in the south part of Section 3,
Block M-21, TCRR Survey, Hutchinson County, Texas, being more particularly
described as follows:

 

                Beginning
at a point in the South line of Section 3, Block M-21, TCRR Survey,  1766.1 feet easterly from the southwest
corner of said Section 3; Thence North, parallel with the west line of Section 3,
2466.5 feet; Thence East, parallel with the south line of Section 3, 883.0
feet Thence South, parallel with the West line of Section 3, 986.6 feet;
Thence East, parallel with the South line of Section 3, 883.1 feet; Thence
South, parallel with the West line of Section 3, 819.9 feet; Thence East,
parallel with the South line of Section 3, 1320 feet; Thence South,
parallel with the West line of Section 3, 660.0 feet to a point in the
South line of Section 3; Thence West, with the South line of Section 3,
3086.1 feet to the point of beginning, and containing 100 acres, more or less.

 

TURNER KENT “B”     Into Cockrell Ranch CDP MS 525660

 

PARCEL I: 
100 acres in the Southwest corner of Section 11, Block B-3,
D&SE Survey, Hutchinson County, Texas, among other lands not affected
hereby, said 100 acres more particularly described as follows:

 

Beginning at the Southwest corner of Section 11,
Block B-3, D&SE Survey, Hutchinson County, Texas; Thence North, with the
west line of said Section 11, 2203.1 feet; Thence East, parallel with the
South line of Section 11, 1320 feet; Thence South, parallel with the west
line of Section 11, 1320 feet; Thence East, parallel with the South line
of Section 11, 1639.8 feet; Thence South, parallel with the West line of Section 11,
883.1 feet to a point in the South line of Section 11; Thence West, with
the South line of section 11, 2959.8 feet to the point of beginning and
containing 100 acres, more or les.

 

PARCEL II: 
132.3 acres in Section 11, Block B-3, D&SE Survey, Hutchinson
County, Texas among other lands not affected hereby, said 132.2 acres being
more particularly described in six tracts as follows:

 

                TRACT
1:  Beginning at a point in the North
line of Section 11, Block B-3, D&SE Survey, Hutchinson County, Texas
660.0 feet East from its Northwest corner; Thence East, with the North line of Section 11,
660.0 feet; Thence South, parallel with the West line of Section 11, 660.0
feet; Thence West, parallel with the North line of Section 11, 660.0 feet;
Thence North, parallel with the West line of Section 11, 660.0 feet to the
point beginning containing 10.0 acres, more or less.

 

                TRACT
2:  Beginning at a point in the West line
of Section 11, Block B-3, D&SE Survey, Hutchinson County, Texas,
1533.3 feet South from its Northwest corner; Thence North, with the West line
of Section 11, 873.3 feet; Thence East, parallel with the North line of Section 11,
660.0 feet; Thence South, parallel with the West line of Section 11, 660.0
feet; Thence East parallel with the North line of Section 11, 660.0 feet;
Thence South, parallel with the West line of Section 11, 213.3 feet;
Thence West, parallel with the North line of Section 11, 1320.0 feet to
the point of beginning containing 16.5 acres, more or less.

 

                TRACT
3:  Beginning at a point 1320.0 feet East
and 660.0 feet South of the Northwest corner of Section 11, Block B-3,
D&SE Survey, Hutchinson County, Texas; Thence East, parallel with the North
line of Section 11, 660.0 feet; Thence South, parallel with the West line
of section 11, 660.0 feet; Thence West, parallel with the North line of Section 11,
660.0 feet; Thence North, parallel with the West line of Section 11, 660.0
feet to the point of beginning containing 10.0 acres, more or less.

 

                TRACT
4:  Beginning at the Northeast corner of Section 11,
Block B-3, D&SE Survey, Hutchinson County, Texas; Thence South, with the
East line of Section 11, 1320.0 feet; Thence West, parallel with the North
line of Section 11, 1094.7 feet; Thence North, parallel with the East line
of Section 11, 660.0 feet; Thence West, parallel with the North line of Section 11,
660.0 feet; Thence North, parallel with the East line of Section 11, 

 

14

 

660.0 feet to its North line; Thence East, with
the North line of Section 11, 1754.7 feet to the point of beginning
containing 43.2 acres more or less.

 

                TRACT
5:  Beginning at a point in the East line
of Section 11, Block B-3, D&SE Survey, Hutchinson County, Texas, 565.5
feet North of its Southeast corner, Thence West, parallel with the South line
of Section 11, 770.1 feet; Thence North, parallel with the East line of Section 11,
530.8 feet; Thence West, parallel with the South line of Section 11, 324.6
feet; Thence North, parallel with the East line of section 11, 660.0 feet;
Thence West, parallel with the South line of Section 11, 660.0 feet; Thence
North, parallel with the East line of Section 11, 660.0 feet; Thence East,
parallel with the South line of Section 11, 660.0 feet; Thence South,
parallel with the East line of Section 11, 397.9 feet; Thence East,
parallel with the South line of Section 1094.7 feet to its East line;
Thence South, with the East line of Section 11, 1452.9 feet to the point
of beginning, containing 42.6 acres, more or less.

 

                TRACT
6:  Beginning  at the Southwest corner of Section 11,
Block D-3, D&SE Survey, Hutchinson County, Texas; Thence North, with the
West line of Section 11, 1096.4 feet; Thence East, parallel with the South
line of Section 11, 1320.0 feet to the Southwest and beginning corner of
the herein described tract; Thence North, parallel with the West line of Section 11,
660.0 feet; Thence East, parallel with the South line of Section 11, 660.0
feet; Thence South, parallel with the West line of Section 11, 660.0 feet;
Thence West, parallel with the South line of Section 11, 660.0 feet to the
point of beginning of the herein described tract containing 10.0 acres, more or
less.

 

PARCEL III: 
110.0 acres in Section 6, M-21, TCRR Survey, Hutchinson County,
Texas, among other lands not affected hereby, said 110.0 acres being more
particularly described in two tracts as follows:

 

                TRACT
1:  Beginning at a point in the most
northerly South line of Section 1, Block M-21, TCRR Survey, Hutchinson
County, Texas, approximately 1570.0 feet easterly from the most northerly
Southwest corner of Section 6; Thence North, parallel with the most
westerly West line of Section 6, 660.0 feet; Thence East, parallel with
the most northerly South line of Section 660.0 feet; Thence South,
parallel with the West line of the herein described tract 660.0 feet to the
most northerly South line of Section 6; Thence West, with the said most
northerly South line, 660.0 feet to the point of beginning and containing 10.0
acres, more or less.

 

                TRACT
2:  Beginning at the most southerly
Southwest corner of Section 6, Block M-21, TCRR Survey, Hutchinson County,
Texas; Thence North with the most easterly West line of Section 6, 1160.0
feet; Thence East, parallel with the most southerly South line of Section 6,
620.0 feet; Thence North, parallel with the most easterly West line of Section 6,
1510.0 feet; Thence East, parallel with the most southerly South line of Section 6,
775.0 feet; Thence South, parallel with the most easterly West line of Section 6,
1225.0 feet; Thence East, parallel with the most southerly South line of Section 6,
580.0 feet; Thence North, parallel with the most easterly West line of Section 6,
1215.0 feet; Thence East, parallel with the most southerly South line of Section 6,
775.0 feet; Thence South, parallel with the most easterly West line of Section 6,
1540.0 feet; Thence West, parallel with the most southerly South line 660.0
feet; Thence South, parallel with the most easterly West line of Section 6,
570.0 feet; Thence West, parallel with the most southerly South line of Section 6,
1200.0 feet; Thence South, parallel with the most easterly West line of Section 6,
550.0 feet to a point in the most southerly South line of Section 6;
Thence West, with the said southerly South line 950.0 feet to the point of
beginning containing 100.0 acres, more or less.

 

INSOFAR ONLY as the above description covers and
effects the oil, gas, and other minerals in the interval between the surface
and 100 feet below the base of the Chase Group of the Wolfcamp Series of
the Permian System.

 

VANIMAN     MS 66002 & 66060

 

East Half of the Northeast Quarter (E/2 NE/4) of
Section 175, Block 3, I&GN RR Co. Survey, Gray County, Texas

 

J.C. McCONNELL (gas
well)     MS 72521

 

Section Sixty-Six (66), Block Four (4),
I&GN, Carson County, Texas

 

15

 

McCONNELL (gas well)     MS
525650

 

W/2 Section 65, Block 4, I&GN Co.
Survey, Carson County, Texas.

 

TEX-ELLER (gas well)     MS 525546

 

All of the Southeast Quarter (SE/4) of Section 200,
Block 3, I&GN RR Co. Survey, Carson County, Texas.

 

McCONNELL, GIRTHA MULTI     MS 525380 (Pantwist, LLC)

 

East Half of Northwest Quarter (E/2 of NW/4) and
the West Half of Northeast Quarter (W/2 of NE/4), Section 67, Block 4,
I&GN RR Co. Survey, Carson County, Texas.

 

.Kingsmill
System

 

CASTLEBERRY B     MS 77139

 

North 80 acres of the West 100 acres of the
North Half, Section 151, Block 3, I&GN Survey, Gray County, Texas.

 

W.W. HARRAH       MS 66018

 

North Half of the Northeast Quarter (N/2 NE/4)
and the Southwest Quarter of the Northeast Quarter (SW/4 NE/4) of Section 150,
Block 3, I&GN RR Co. Survey, Gray County, Texas.

 

W.W. HARRAH T.     MS 66003

 

Southeast Quarter (SE/4) of Section 150,
Block 3, I&GN RR Co. Survey, Gray County, Texas.

 

COFFEE #3     MS 54701 (Pantwist, LLC)

 

West
Half (W/2) of Section 15, Block 4, I&GN RR Co. Survey, Carson County,
Texas.

 

SEIBER #8    
MS 55291 & 57142
(Pantwist, LLC)

 

West Half (W/2) and the North Half of the
Northeast Quarter (N/2 of NE/4), Section 10, Block 7, I&GN RR Co.
Survey, Carson County, Texas.

 

ELLER #1-200     MS 70221 (Pantwist, LLC)

 

Southwest Quarter (SW/4) of Section 200,
Block 3, I&GN RR Co. Survey, Carson County, Texas.

 

*Limited to Gas Rights Only as to the Brown
Dolomite Formation

 

McCULLOUGH -E- No. 1     MS70251(Pantwist, LLC)

 

127.9 acres in Section 153, Block 3,
I&GN RR Co., Gray County, Texas.

 

16

 

VICARS LEASE     MS 77140(Pantwist, LLC)

 

Southwest Quarter (SW/4) and the East Half of
the Northwest Quarter (E/2 of NW/4) each in Section 127, Block 3, I&GN
RR Co., Gray County, Texas, containing 240 acres, more or less.

 

HEITHOLT NO. 2     MS 71031(Pantwist, LLC)

 

All that part of Section 153, Block 3, of
the I&GN RR Co. Survey, in Gray County, Texas, lying North of the
right-of-way of the Panhandle and Santa Fe Railway Company containing 122 acres
of land, more or less.

 

ANDY     MS 70771(Pantwist, LLC)

 

Located in Section 124, Block B-2, H&GN
Survey, Gray County, Texas.

 

ARCO FEE     MS 525018(Pantwist, LLC)

 

Located in Section 203, Block 3, I&GN
Survey, Carson County, Texas.

 

BEDNORZ     MS 72439

 

Located in Section 202, Block 3, I&GN
Survey, Carson County, Texas.

 

HUSTED #2R     MS 70982(Pantwist, LLC)

 

Located in Section 116, Block B-2, K&GN
Survey, Gray County, Texas.

 

HUSTED #3    
MS 70443(Pantwist, LLC)

 

Located in Section 116, Block B-2, H&GN
Survey, Gray County, Texas.

 

Lefors System

 

HAYNES NO. 2 & ROB NO.
1     MS 940020 &
940010(Pantwist, LLC)

 

The West Half of the Southeast Quarter (W/2 of
SE/4) of Section 6, Block 26, H&GN RR Co. Survey, Gray County, Texas.

 

The Southwest Quarter (SW/4) of Section 6,
Block 26, H&GN RR Co. Survey, Gray County, Texas.

 

HARLAN “A”     MS 930001(Pantwist, LLC)

 

All of the E/2 of NW/4, Section 49, Block
24, H&GN Ry. Co. Survey, Wheeler County, Texas.

 

All of the W/2 of NW/4, Section 49, Block
24, H&GN Ry. Co. Survey, Wheeler County, Texas

 

Turkey Creek System

 

BOST NO. 1     MS 415070(Pantwist, LLC)

 

All of the North 90 acres of Section 6,
Block Y-2, TT Ry. Co. Survey, SAVE & EXCEPT 40 acres in the form of a
square in the Northeast Corner of Section 6, Hutchinson County, Texas.

 

BOST #2     Into Bost 1 MS 415070(Pantwist, LLC)

 

Located in Section 6, Block B-2, TTRR
Survey, Hutchinson County, Texas

 

17

 

EXHIBIT “C”

 

Quality Specifications.  Unless excepted by specific exemption on Exhibit “B”
attached hereto, Gas from each
Receipt Point(s) shall meet the following quality specifications:

 

Hydrogen Sulfide.  The Gas shall not contain more than ten part
per million (10 ppm) of hydrogen sulfide by volume as determined by a
method generally acceptable for use in the gas industry and to the Parties
hereto.

Total Sulfur.  The Gas shall not contain more than one
quarter (1/4) grain of total sulfur per one hundred (100) Cubic Foot of Gas as
determined by a method generally acceptable for use in the gas industry and to
the Parties hereto.

Temperature.  The Gas shall not have a temperature of less
than forty degrees Fahrenheit (40°F) nor more than one hundred-twenty degrees
Fahrenheit (120°F).

Carbon Dioxide.  The Gas shall not contain in excess of
five-tenths of one percent (0.5%) by volume of carbon dioxide.

Nitrogen.  The Gas shall not contain in excess of seven
percent (7%) by volume of nitrogen.

Oxygen.  The Gas shall not contain in excess of two
hundred fifty parts per million (250 ppm) by volume of oxygen.

Objectionable Liquids,
Solids, Contaminants.  The Gas
shall be free of liquids and solids and other potentially harmful contaminants
such as arsenic, mercury, selenium, radon, or antimony, Well treating
chemicals, dust, gums, gum-forming constituents, or other objectionable liquid
or solid matter.

Hazardous Waste.  The Gas shall be free from all “hazardous
waste” as defined in the Resources Conservation and Recovery Act, 42 USC 6901,
et seq.

Water.  The Gas shall not contain free water.  Gas which contains in excess of seven (7) pounds
of water vapor per one million (1,000,000) Cubic Foot shall incur a charge for
dehydration service as shown in Exhibit “A” attached hereto.

Mercaptans.  The Gas shall have a mercaptan content not in
excess of one tenth of one part per million (0.1 ppm) by volume.

Hydrogen.  The Gas shall contain no carbon monoxide,
halogens, or unsaturated hydrocarbons, and no more than four hundred parts per
million (400 ppm) of hydrogen.

Hydrocarbon Constituents. The Gas shall
have not less than a ninety-five percent (95%) hydrocarbon constituency by
volume and shall have a Heating Value of not less than one thousand two hundred
(1,200) BTU per Cubic Foot.

 

1

 

EXHIBIT “D”

 

Residue Return.   The following is a
listing of leases connected to RRDS as of April 1, 2007.  This listing is for informational purposes
only and shall not limit the addition or deletion of leases from the RRDS from
time to time.

 

	
  System

  	
   

  	
  Meter

  	
   

  	
  Lease Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BRYAN/CARSON

  	
   

  	
  40301

  	
   

  	
  JUDE - JORDAN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BRYAN/CARSON

  	
   

  	
  40141

  	
   

  	
  E COOPER NCT B

  
	
  BRYAN/CARSON

  	
   

  	
  41271

  	
   

  	
  BLOCK C

  
	
  BRYAN/CARSON

  	
   

  	
  41281

  	
   

  	
  COOPER H

  
	
  BRYAN/CARSON

  	
   

  	
  41291

  	
   

  	
  QUINN

  
	
  BRYAN/CARSON

  	
   

  	
  41321

  	
   

  	
  SIEBOLD

  
	
  BRYAN/CARSON

  	
   

  	
  41331

  	
   

  	
  B.F. BLOCK

  
	
  BRYAN/CARSON

  	
   

  	
  41351

  	
   

  	
  PITCHER,H.C

  
	
  BRYAN/CARSON

  	
   

  	
  41421

  	
   

  	
  COOPER G

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KINGSMILL / GRAY

  	
   

  	
  66003

  	
   

  	
  HARRAH

  
	
  KINGSMILL / GRAY

  	
   

  	
  66018

  	
   

  	
  W.W. HARRAH

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHAFER

  	
   

  	
  525346

  	
   

  	
  LONG

  
	
  SCHAFER

  	
   

  	
  525402

  	
   

  	
  MOORE, J.W.

  
	
  SCHAFER

  	
   

  	
  66016

  	
   

  	
  ARNOLD

  
	
  SCHAFER

  	
   

  	
  66017

  	
   

  	
  R.W.HARRAH

  
	
  SCHAFER

  	
   

  	
  525067

  	
   

  	
  BONEY NCT #4

  
	
  SCHAFER

  	
   

  	
  525068

  	
   

  	
  BONEY NCT #2

  
	
  SCHAFER

  	
   

  	
  525248

  	
   

  	
  W. B. HAILE

  
	
  SCHAFER

  	
   

  	
  525273

  	
   

  	
  HARVEY UNIT (#8)

  
	
  SCHAFER

  	
   

  	
  525383

  	
   

  	
  MCCONNELL J.C. (C.H.)

  
	
  SCHAFER

  	
   

  	
  526179

  	
   

  	
  SCHAFER RANCH BATT. #1

  
	
  SCHAFER

  	
   

  	
  248018

  	
   

  	
  FEE 244 STA

  

 

1

 

EXHIBIT “E”

 

Previous Agreements.  The following is a
listing of the Previous Agreements between Eagle Rock Field Services, L. P., as
BUYER and W. O. Operating Company, Ltd. and Pantwist, LLC as SELLER, which are
to be superseded and replaced by this Gas Purchase Agreement dated April 1,
2007, as the Effective Date.

 

	
  BUYER

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Plant/System

  	
   

  	
  Contract #

  	
   

  	
  Date of Agreement

  	
   

  	
  Type of Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BC

  	
   

  	
  12317

  	
   

  	
  NO CONTRACT FILE

  	
   

  	
   

  
	
  BC

  	
   

  	
  431207

  	
   

  	
  5/1/1997

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  BC

  	
   

  	
  431856

  	
   

  	
  1/1/2005

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  BC

  	
   

  	
  431681BC

  	
   

  	
  NO CONTRACT FILE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHAFER

  	
   

  	
  11492

  	
   

  	
  11/1/1983

  	
   

  	
  GAS PURCHASE CONTRACT

  
	
  SCHAFER

  	
   

  	
  14156

  	
   

  	
  5/24/1974

  	
   

  	
  GAS CONTRACT

  
	
  SCHAFER

  	
   

  	
  14198

  	
   

  	
  5/1/1995

  	
   

  	
  GAS PURCHASE CONTRACT

  
	
  SCHAFER

  	
   

  	
  430233

  	
   

  	
  1/1/1997

  	
   

  	
  GAS PURCHASE CONTRACT

  
	
  SCHAFER

  	
   

  	
  430704

  	
   

  	
  8/1/1994

  	
   

  	
  GAS PURCHASE CONTRACT

  
	
  SCHAFER

  	
   

  	
  431172

  	
   

  	
  3/1/2003

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  SCHAFER

  	
   

  	
  431681SCH

  	
   

  	
  NO CONTRACT FILE

  	
   

  	
   

  
	
  SCHAFER

  	
   

  	
  431856SCH

  	
   

  	
  1/1/2005

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CARGRAY

  	
   

  	
  1317

  	
   

  	
  6/1/1997

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  CARGRAY

  	
   

  	
  14019

  	
   

  	
  12/9/1974

  	
   

  	
  GAS CONTRACT

  
	
  CARGRAY

  	
   

  	
  50005

  	
   

  	
  1/1/2001

  	
   

  	
  GAS PURCHASE AND PROCESSING AGREEMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GRAY

  	
   

  	
  11484

  	
   

  	
  8/1/1994

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  GRAY

  	
   

  	
  12236

  	
   

  	
  11/1/1994

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  GRAY

  	
   

  	
  431171

  	
   

  	
  1/1/1993

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  GRAY

  	
   

  	
  400239

  	
   

  	
  6/1/1999

  	
   

  	
  GAS PURCHASE AND PROCESSING AGREEMENT

  
	
  GRAY

  	
   

  	
  430462

  	
   

  	
  6/1/1997

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  GRAY

  	
   

  	
  431625

  	
   

  	
  10/1/2004

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  GRAY

  	
   

  	
  431980

  	
   

  	
  9/1/2005

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LEFORS

  	
   

  	
  431675

  	
   

  	
  8/1/2004

  	
   

  	
  GAS PURCHASE AGREEMENT

  
	
  LEFORS

  	
   

  	
  085159A

  	
   

  	
  5/1/1999

  	
   

  	
  GAS SERVICES AND/OR PURCHASE AGREEMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TC

  	
   

  	
  431183

  	
   

  	
  1/1/2003

  	
   

  	
  GAS PURCHASE AGREEMENT

  

 

1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]