Document:

Exhibit 10.1

                       Exploration Participation Agreement

                                 By and Between

                               Chevron U.S.A. Inc.

                                       And

       Ridgewood Energy Corporation, Manager Ridgewood Energy Q Fund, LLC.

                                September 1, 2005

Chevron / Ridgewood EPA 9-1-05.doc
Final Agreement

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                                TABLE OF CONTENTS

ARTICLE                                                                     PAGE

1.  SUBJECT MATTER, DEFINITIONS, EXHIBITS AND CONSTRUCTION ....................2
    ------------------------------------------------------
  1.1 Subject Matter and Purpose ..............................................2
  1.2 Defined Terms ...........................................................2
  1.3    Exhibits .............................................................7
  1.4    Rules of Construction ................................................7

2.  CONTRACT ACREAGE ..........................................................8
    ----------------
  2.1 Contract Acreage ........................................................8
  2.2 Primary Package Prospects ...............................................8
  2.3 Additional Opportunities Prospects ......................................8
  2.4 Area of Mutual Interest .................................................9

3.  ASSIGNMENT OF INTEREST ...................................................10
    ----------------------
  3.1 Leasehold Assignment ...................................................10
  3.2 Ridgewood's Contribution to Well Costs .................................12
  3.3 Assignment Timing ......................................................12
  3.4 Proportionate Adjustment ...............................................13
  3.5 Additional Earning Option ..............................................14

4.  PROSPECT EVALUATION ......................................................14
    -------------------
  4.1 Primary Package Prospect Well Cost Sharing .............................14
  4.2 Additional Opportunities Prospect Well Cost Sharing ....................16
  4.3 Well Over-expenditure Limitation .......................................17
  4.4 Third Party Participation in Prospects .................................18
  4.5 Rights Limitation on Use of Existing Wells .............................18
  4.6 Wells Proposed by Chevron after the Effective Date .....................18
  4.7 Protection from Drainage ...............................................19

5.  FARMOUT OPTION ...........................................................19
    --------------
  5.1 Exhibit A or B Prospect Substitute Wells ...............................19
  5.2 Exhibit B Farmout Option ...............................................20
  5.3 Chevron's Participation Options and Overriding Royalties ...............20
  5.4 General Farmout Agreement Terms and Conditions .........................20
  5.5 Impenetrable Substances ................................................24
  5.6 Overriding Royalties ...................................................24
  5.7 Joint Operations for Earned Depths .....................................24

Chevron / Ridgewood EPA 9-1-05.doc
Final Agreement

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6.  PRESSURE COMMUNICATION AND COMMON RESERVOIRS .............................25
    --------------------------------------------
  6.1 Pressure Communication Restriction .....................................25

7.  OPERATING AGREEMENT ......................................................26
    -------------------
  7.1 Offshore Operating, Agreements .........................................26
  7.2 Designation of Operator ................................................27

8.  ADDITIONAL PARTNERS/CO-VENTURERS .........................................27
    --------------------------------
  8.1 Partners/Co-Venturers ..................................................27

9.  ACREAGE RELEASE ..........................................................27
    ---------------
  9.1 Option to Release Acreage ..............................................27
  9.2 Rights Termination .....................................................28
  9.3 Automatic Release ......................................................28

10. NOTICES ..................................................................28
    -------
  10.1 Notices ...............................................................28
  10.2 Change in Designated Representative ...................................29

11. EXISTING AGREEMENTS ......................................................29
  11.1 Existing Agreements ...................................................29

12. RIGHTS RESERVED ..........................................................30
    ---------------
  12.1 Lease Rights Reservations .............................................30

13. PRODUCTION PROCESSING AND CONTRACT PUMPING ...............................30
    ------------------------------------------
  13.1 Production Handling Option ............................................30
  13.2 Contract Operating Option .............................................31
  13.3 Use of Existing Facilities ............................................31

14. TAX MATTERS ..............................................................31
    -----------
  14.1 Income Tax Election ...................................................31

15. GEOPHYSICAL DATA .........................................................32
    ----------------
  15.1 Proprietary Seismic Data ..............................................32
  15.2 Hazard Survey Data ....................................................33
  15.3 Speculative Seismic Data ..............................................33

16. RENTALS, MINIMUM ROYALTY AND LEASE MAINTENANCE ...........................33
    ----------------------------------------------
  16.1 Rentals and Minimum Royalty ...........................................33

17. MEDIA RELEASES ...........................................................34
    --------------
  17.1 Public Announcements ..................................................34
  17.2 Media Releases ........................................................35

18. FILES ....................................................................35
    -----
  18.1 Access to Files .......................................................35

Chevron / Ridgewood EPA 9-1-05.doc
Final Agreement

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19. ASSIGNMENTS AND TRANSFER OF INTEREST .....................................36
    ------------------------------------
  19.1 Assignment of this Agreement ..........................................36
  19.2 Lease or Prospect Successors and Assigns ..............................36

20. CONFIDENTIALITY ..........................................................37
    ---------------
  20.1 Confidentiality .......................................................37
  20.2 Speculative Seismic Data ..............................................37
  20.3 Disclosure of Confidential Data .......................................38
  20.4 Risk of Use of Confidential Data ......................................38

21. GOVERNING LAW ............................................................39
    -------------
  21.1 Choice of Law .........................................................39
  21.2 Future Litigation and Claims ..........................................39

22. FORCE MAJEURE ............................................................39
    -------------
  22.1 Force Majeure .........................................................39

23. DISPUTE RESOLUTION .......................................................40
    ------------------
  23.1 Dispute Resolution ....................................................40

24. TERMINATION ..............................................................41
    -----------
  24.1 Termination ...........................................................41
  24.2 Lease Expiration or Termination .......................................41
  24.3 Agreement Extension ...................................................41

25. INDEMNITY ................................................................42
    ---------
  25.1 Indemnity .............................................................42

26. BREACH ...................................................................42
    ------
  26.1 Breach ................................................................42

27. SPECIAL WARRANTY .........................................................43
    ----------------
  27.1 Special Warranty ......................................................43

28. GENERAL PROVISIONS .......................................................44
    ------------------
  28.1 Prospects Treated Separately ..........................................44
  28.2 Non-Interference ......................................................44
  28.3 Governmental Approvals ................................................44
  28.4 Amendments ............................................................45
  28.5 Declaration of Agreement ..............................................45
  28.6 Other Rights, Remedies Reserved .......................................45
  28.7 No Waiver .............................................................45
  28.8 No New Lease Burdens ..................................................45
  28.9 Permitting Cost Sharing ...............................................46
  28.10 Audit Rights .........................................................46

Chevron / Ridgewood EPA 9-1-05.doc
Final Agreement

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  28.11 Severability .........................................................46
  28.12 Entire Agreement .....................................................46
  28.13 Further Assurances ...................................................47
  28.14 Surviving Obligation .................................................47
  28.15 Conflict of Terms ....................................................47

Chevron / Ridgewood EPA 9-1-05.doc
Final Agreement

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                                LIST OF EXHIBITS
                                ----------------

               Exhibit "A"       Primary Package Prospects

               Exhibit "B"       Additional Opportunities Prospects

               Exhibit "C"       List of Existing Agreement Restrictions,
                                 Exceptions and Obligations

               Exhibit "D"       Area of Mutual Interest

               Exhibit "E"       Offshore Operating Agreement

               Exhibit "F"       Dispute Resolution Procedure

               Exhibit "G"       Declaration of Agreement

Chevron / Ridgewood EPA 9-1-05.doc
Final Agreement

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                       EXPLORATION PARTICIPATION AGREEMENT

     THIS EXPLORATION PARTICIPATION AGREEMENT ("Agreement") is made and entered
into this 1st day of September 2005, by and between Chevron U.S.A. Inc., a
Pennsylvania corporation, hereinafter sometimes referred to as "Chevron" and
Ridgewood Energy Corporation, a Delaware corporation, Manager Ridgewood Energy Q
Fund, LLC. hereinafter sometimes referred to as "Ridgewood." Chevron and
Ridgewood are sometimes hereinafter referred to individually as "Party" and/or
collectively as "Parties."

                                   WITNESSETH:

     WHEREAS, Ridgewood has expressed a desire to secure the right to earn and
subsequently own certain leasehold interests currently owned by Chevron in the
Outer Continental Shelf, Offshore in the Gulf of Mexico; and

     WHEREAS, Chevron is desirous of having an entity with proven expertise in
oil and gas operations in the United States to evaluate, through exploratory
drilling, the hydrocarbon potential on a portion of the leasehold currently
owned by Chevron in such areas; and

     WHEREAS, Ridgewood has demonstrated its ability to find commercial
quantities of hydrocarbons in various locations throughout the United States and
is willing to commit financial and personnel resources now and in the future to
explore and develop the acreage of Chevron as described herein; and

     WHEREAS, Chevron is agreeable to grant Ridgewood the right and option to
explore certain Chevron leasehold along with Chevron to earn an interest in such
leasehold all as more particularly set forth below.

     NOW THEREFORE, for and in consideration of the mutual advantages and
benefits accruing to the Parties hereto, the sufficiency of which is hereby
acknowledged, the Parties hereto agree that the following shall constitute the
agreement between Chevron and Ridgewood concerning the drilling of various wells
hereinafter described on the "Contract Acreage" hereinafter identified and, upon
the satisfaction of certain conditions contained herein, the acquisition of
interests by Ridgewood from Chevron. This Agreement upon execution by Chevron
and Ridgewood shall supersede and replace all prior

                                        1

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agreements and oral conversations between Chevron and Ridgewood regarding the
transaction set forth herein including, but not limited to, that certain Letter
from Ridgewood to Chevron dated July 19, 2005,

                                    ARTICLE 1

1.   SUBJECT MATTER, DEFINITIONS, EXHIBITS AND CONSTRUCTION
     ------------------------------------------------------

     1.1  Subject Matter and Purpose.
          ---------------------------
     The subject matter of this Agreement is the exploration and development of
the Contract Acreage, as defined below, by Ridgewood and Chevron pursuant to the
terms and conditions hereinafter provided together with the rights and
obligations of Ridgewood and Chevron concerning such exploration and development
of the Contract Acreage.

     The purpose of this Agreement is to provide a means whereby Chevron is to
make available to Ridgewood acreage for the drilling of Exploratory Wells by
Chevron, Ridgewood and others in an attempt to find and develop economic
reserves for the benefit of the Parties. It is contemplated that situations will
arise during the term of this Agreement that is not specifically covered herein.
In the event these situations do arise the Parties agree, in the spirit of
cooperation, to use all reasonable efforts to resolve such situations to the
mutual benefit of all Parties.

     1.2  Defined Terms.
          --------------
     For purposes of this Agreement, including the Exhibits, except as otherwise
expressly provided, the terms defined in this Section 1.2 have the meanings
assigned to them herein and the capitalized terms defined elsewhere in the
Agreement by inclusion in quotation marks and parentheses have the meanings so
ascribed to them.

     "AFE" means an Authority for Expenditure prepared by a Party to this
Agreement or a Co-Working Interest Owner, for the purpose of estimating the Well
Costs to be incurred in connection with a proposal to drill, deepen, or
sidetrack a well hereunder.

     "Additional Opportunities Prospects" mean the Prospects identified by the
Parties listed on Exhibit "B."

     "Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling or controlled by, or under common control with, such
Person. For purposes of this definition, the term "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under

                                        2

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common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
of such Person, whether through ownership of voting securities, by contract or
otherwise, and specifically with respect to a corporation, partnership or
limited liability company means ownership of fifty percent (50%) or more of the
voting stock in such corporation or of the voting interest as a partner in such
partnership or as a member of such limited liability company.

     "Agreement" means this Exploration Participation Agreement between Chevron
and Ridgewood including the Exhibits attached hereto or referred to herein.

     "Area of Mutual Interest" or "AMI" means the areas and blocks listed on
Exhibits "A," B," and "D" attached hereto.

     "Available Acreage" shall mean Chevron's interest in the acreage described
on Exhibits "A" and "B" attached hereto and made a part hereof..

     "Business Day" means a day on which the Minerals Management Service New
Orleans Regional Office is open for business.

     "Casing Point" means that point in time when a well has reached the
Objective Depth, and all logs, cores and other tests have been completed that
are sufficient to make a determination concerning the running of production
casing or the plugging and abandonment of the well, and the results thereof have
been furnished to all Parties.

     "Contract Acreage" means collectively those portions of the Leases and
lands described as Available Acreage on Exhibits "A" and "B" attached hereto and
made a part hereof plus any acreage that becomes jointly owned pursuant to
Section 2.4.

     "Co-Working Interest Owner" is any Third Party, or their assignee, who owns
a Record Title Interest, Operating Rights Interest and/or real property
interest, with or without Chevron, in any Lease listed on or adjacent to
Exhibits "A" and "B," that either may or may not be a Party hereto.

     "Effective Date" means the effective date of this Agreement, being 7:00
a.m., Central Standard Time, September 1, 2005.

                                        3

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     "Existing Facilities" means all property located on or associated with the
Contract Acreage as of the Effective Date used or, held for use in connection
with the production, treatment, gathering, storage and compression of oil and/or
gas from, on, or attributable to any Lease listed on Exhibits "A" or "B,"
including but not limited to, (1) platforms, caissons, fixtures, tanks, pumps,
pipelines, appurtenances and improvements, (2) all equipment or material
permanently or temporarily located on the Contract Acreage; and, (3) other
structures located on or used in connection with the Leases.

     "Exploratory Objective" means any zone, interval or horizon not in pressure
communication with a zone, interval or horizon that is currently producing or is
currently known to be capable of producing oil and/or gas from an existing
wellbore located on a Lease.

     "Exploratory Well" means a well proposed to be drilled to evaluate an
Exploratory Objective. A well will be considered an Exploratory Well if any bona
fide objective in a well is an Exploratory Objective, even if other objectives
in the well do not qualify as Exploratory Objectives. Any substitute well for a
previously drilled Exploratory Well shall be considered an Exploratory Well if
and only if the substitute well is proposed to be drilled to not less than the
Objective Depth of the unsuccessful Exploratory Well it is replacing.

     "Farmout Agreement" means a mutually acceptable form of agreement to be
entered into by the Parties for each Exhibit "A" Prospect as to the Available
Acreage in the event Chevron elects not to participate in a Substitute Well as
to operations conducted in non jointly owned depths, and for each Exhibit "B"
Prospect in the event Chevron elects not to participate in the Initial Test
Well, or an Exhibit "B" Prospect where Chevron elects to participate in the
Initial Test Well but elects not to participate in a Substitute Well as to
operations conducted in non jointly owned depths.

     "Initial Test Well" shall be the first Exploratory Well proposed by Chevron
and drilled after the Effective Date of this Agreement on each Prospect located
on an Exhibit "A" or "B" Lease, or on lands pooled or unitized with an Exhibit
"A" or "B" Lease, or on a Prospect which includes all or a portion of an Exhibit
"A" or "B" Lease.

     "Land Cost" shall mean the total bonus, finder fees, accumulated annual
rentals and obligations to maintain any leases paid by Chevron before and after
the Effective Date of this Agreement for each Lease listed on Exhibits "A" and
"B." Exhibits "A" and "B" list the Land Costs paid by Chevron for each Lease
prior to the Effective Date of this Agreement.

                                        4

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     "Lease" or "Leases" shall mean the oil and gas leases issued by the United
States of America all as listed on Exhibits "A," "B" and "D," but as may be
depth or interest limited thereby.

     "Objective Depth" shall mean the total depth of an Initial Test Well or
Substitute Well(s) as specified in the AFE for such well as proposed in
accordance with the provisions of this Agreement and as shown on Exhibits "A"
and "B."

     "Operating Agreement" means the offshore operating agreement to be entered
into by the Parties in accordance with the provisions of this Agreement to
govern operations of the Parties on wells drilled under this Agreement.

     "Operating Rights" shall mean all of the rights, obligations, liabilities
and attributes of a working interest ownership covering less than all depths,
and potentially less than the entire surface area, in and on a Lease.

     "Person" means, and shall be interpreted broadly to include, without
limitation, any individual, corporation, association, company, limited liability
company, trust, estate, partnership, joint venture, unincorporated organization,
other business entity, any government or any department or agency thereof, or
any other legal entity.

     "Primary Package Prospect" shall mean those Prospects identified by Chevron
listed on Exhibit

     "Prospect" shall mean an area believed to encompass an accumulation(s) of
hydrocarbons having one or more productive formations. The area encompassing
these accumulations shall be described on a surface acreage basis and subject to
any depth limitations as specified on Exhibits "A" or "B" or as agreed to by the
Parties. If Ridgewood and/or Chevron owns or acquires an interest in a lease
contiguous to a Lease subject to this Agreement that is not on acreage listed on
Exhibits "A," "B," or "D," such lease (or portion thereof may also be included
in a Prospect at the request of Ridgewood, but subject to the approval of
Chevron.

                                        5

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     "Record Title" shall mean all of the rights, obligations, liabilities and
attributes of a working interest ownership covering all depths in and on a
Lease.

     "Representatives" mean the directors, officers, supervisors, employees,
partners, lenders, consultants, attorneys and legal counsel, financial advisors,
accountants, marketing representatives and other agents of the Parties.

     "Reservoir" means a subsurface porous, permeable rock body that contains or
is thought to contain an accumulation of oil and/or gas, separated by faulting
or other subsurface anomaly from other areas containing accumulations of oil
and/or gas in the same or different strata.

     " Ridgewood ACP Interest" shall mean the interest of Ridgewood in each
Lease as listed on Exhibits "A" and "B" under the column titled "RIDGEWOOD
Interest AFTER Casing Point."

     "Ridgewood BCP Interest" shall mean the interest of Ridgewood in each Lease
as listed on Exhibits "A" and "B" under the column titled "RIDGEWOOD Interest
BEFORE Casing Point."

     "Substitute Well" means a well proposed by a Party to the Objective Depth
of a Prospect as listed on Exhibits "A" or "B," or as otherwise mutually agreed
to by the Parties, as a result of the Initial Test Well, or a previous
Substitute Well, on such Prospect not reaching its Objective Depth.

     "Successful Well" means a well determined by the MMS (or meeting the
requirements of the MMS without a written determination) to be a producible well
pursuant to 30 CFR Part 250, Subpart A, or any successor regulation, for Leases
located in Federal offshore waters, as used in Articles 3, 4 and 5 or if
actually completed for production by a Party hereto or Co-Working Owner.

     "Third Parties" means a Person not a Party to this Agreement.

     "Well Costs" means the costs and expenses of all services and materials
used and associated with drilling, sidetracking, deepening and testing a well
hereunder, including, but not limited to the costs and expenses associated with
the following items: (1) permitting with applicable government agencies; (2)
drill site preparation (excluding hazard surveys, which are provided for in
Section 15.2 of this Agreement); (3) actual drilling, deepening or sidetracking
operations (including mobilization and demobilization of the rig to the drill
site); (4) logging, coring and testing of the well for the presence of oil

                                        6

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and/or gas; (5) the costs of plugging and abandonment if the well is not saved
for production; and (6) the cost to temporarily abandon a well.. All such costs
and expenses shall be determined in accordance with the accounting procedure
attached to the applicable Operating Agreement.

     "Unit" means the pooling of all or a portion of one or more Leases with all
or a portion of another lease or leases not subject to this Agreement.

     1.3  Exhibits.
          --------
     The following Exhibits are attached hereto and incorporated herein by
reference:

          Exhibit "A"           Primary Package Prospects

          Exhibit "B"           Additional Opportunities Prospects

          Exhibit "C"           List of Existing Agreement Restrictions,
                                Exceptions and Obligations

          Exhibit "D"           Area of Mutual Interest

          Exhibit "E"           Offshore Operating Agreement

          Exhibit "F"           Dispute Resolution Procedure

          Exhibit "G"           Declaration of Agreement

     1.4  Rules of Construction.
          ---------------------
     For purposes of this Agreement:

     (a) Unless the context otherwise requires: (1) "or" is not exclusive; (2)
     an accounting term not otherwise defend has the meaning assigned to it in
     accordance with accounting principles generally accepted in the United
     States of America; (3) words in the singular include the plural, and words
     in the plural include the singular; (4) words in the masculine include the
     feminine, words in the feminine include the masculine and words with
     appropriate correlative meanings include such correlative meanings; (5) any
     date specified for any action that is not a Business Day shall be deemed to
     mean the first Business Day after such date; (6) reference to a Person
     includes such Person's successors and assigns and, in the case of
     governmental bodies, Persons succeeding to their respective functions and
     capacities; (7) any amounts due or payable under this Agreement shall be
     paid in United States currency; and (8) the use of the words "contribute,
     contributing or contribution" shall refer to a payment due from one Party
     to the other as specified herein or in the applicable Operating Agreement.

                                        7

<PAGE>

     (b) References to Articles and Sections are, unless otherwise specified, to
     Articles and Sections of this Agreement. Neither the captions to Articles
     or Sections thereof nor the Table of Contents shall be deemed to be a part
     of this Agreement but are added for convenience only.

     (c) References herein to any agreement or other instrument shall, unless
     the context otherwise requires (or the definition thereof otherwise
     specifies), be deemed references to the same as it may from time to time be
     changed, modified, supplemented, amended or extended. There is no
     incorporation by reference herein unless expressly so stated.

                                    ARTICLE 2

2.   CONTRACT ACREAGE
     ----------------

     2.1  Contract Acreage.
          ----------------
     This Agreement shall cover only the Available Acreage as described in
Exhibits "A" and "B." Should any acreage be jointly acquired pursuant to the
provisions of this Agreement as stated in Section 2.4 below, then said newly
acquired acreage shall automatically become part of the Contract Acreage.

     2.2  Primary Package Prospects.
          -------------------------
     Attached hereto as Exhibit "A" is a list of Prospects Chevron has
identified covering various Leases subject to this Agreement. Prior to the
execution of this Agreement, a technical presentation was given to Ridgewood by
Chevron covering each of these Prospects. No acreage associated with the
Prospects listed on Exhibit "A" shall be expanded or contracted without the
mutual consent of the Parties. Notwithstanding the above, no approval by the
Parties will be required for the expansion of a Prospect as a result of acreage
acquired by Chevron pursuant to the provisions stated in Section 2.4; it being
understood that any such acreage acquired by Chevron pursuant to the provisions
stated in Section 2.4 would automatically be included in the affected Prospect.

     2.3  Additional Opportunities Prospects.
          ----------------------------------
     Exhibit "B" consists of a list of Leases and associated Prospects where a
technical presentation has been given to Ridgewood by Chevron. In accordance
with the provisions stated in this Agreement, it is anticipated the Parties may,
under the terms hereof, evaluate the hydrocarbon potential on these Exhibit "B"
Prospects to determine whether or not the Parties are interested in drilling an
Initial Test Well on these Prospects. Unless mutually agreed by the Parties
before, during or subsequent to the evaluation described herein regarding the

                                        8

<PAGE>

Prospects listed on Exhibit "B," each Prospect on Exhibit "B" will not be
expanded or contracted to include or exclude acreage or Leases. Notwithstanding
the above, approval of any expansion to a Prospect will not apply to acreage
acquired by Chevron pursuant to the provisions stated in Section 2.4; it being
understood that any such acreage acquired by Chevron pursuant to the provisions
stated in Section 2.4 would automatically be included in the affected Prospect.

     2.4  Area of Mutual Interest.
          -----------------------
     Absent an agreement to the contrary, and prior to Ridgewood earning an
interest in the Leases in a Prospect as described herein pursuant to Article 3,
should Ridgewood either (i) acquire an interest in an oil and gas lease covering
any of the blocks or acreage in such Prospect identified on Exhibits "A," "B" or
"D," or any portion of such blocks or acreage, or (.ii) acquire the right to
acquire an interest in an oil and gas lease covering any of the blocks or
acreage identified in such Prospect, or (iii) acquire an interest in an oil and
gas lease covering any of the blocks or acreage identified on Exhibit "A", "B"
or "D" for such Prospect should the original Lease expire or terminate before
termination of this Agreement, then Chevron shall have the right but not the
obligation to acquire from Ridgewood sixty-five percent (65%) interest and/or
right(s) acquired by Ridgewood covering any of the blocks or acreage identified
on Exhibit "A," "B" or "D," except for Mobile Blocks 945, 946 and 947, wherein,
Chevron shall have the right but not the obligation to acquire from Ridgewood
seventy-five percent (75%) interest and/or right(s) acquired by Ridgewood
covering Mobile Blocks 945, 946 and 947. Chevron shall be notified in writing by
Ridgewood within fifteen (15) days of such acquisition and shall have fen (15)
days after receipt of such notice to advise Ridgewood whether or not Chevron
elects to acquire its proportionate share of the interest and/or rights acquired
by Ridgewood. Any notice given shall include whatever supporting documentation
Ridgewood has available. If Chevron elects to exercise its right under this
Agreement, the consideration owed by Chevron to Ridgewood shall be equal to all
the consideration paid and/or tendered by Ridgewood for such interest and/or
right attributable to Chevron's proportionate share. In the event during the
term of this Agreement, Ridgewood acquires any such interest or acquires the
right to acquire any such interest as a result of an acreage exchange or
multi-property transaction, Chevron. shall be notified in writing by Ridgewood
within fifteen (15) days of such acquisition and Ridgewood and Chevron shall
make a good faith effort to negotiate a fair value wherein Chevron would have
the option to acquire from Ridgewood its proportionate share of the interest
and/or right acquired by Ridgewood in exchange for satisfactory consideration
equal to the total fair value of the acquired interest. Once Chevron and
Ridgewood have agreed on the fair value for the subject interest, Chevron shall
have fifteen (15) days after receipt of written notice from Ridgewood to advise
Ridgewood whether or not Chevron elects to acquire its proportionate share of
the interest and/or right acquired by Ridgewood. Should Chevron acquire any

                                                                        9

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interest, or acquires a right to acquire any interest in any acreage listed on
Exhibits "A," "B" or "D" prior to Ridgewood earning an interest in the Leases
included in the Prospect covering such acreage, Chevron will include the
acquired acreage, or right to acquire acreage, in such Prospect for all purposes
of this Agreement.

     After earning an interest in the Leases in a Prospect by Ridgewood, the
applicable Operating Agreement will control the obligations between the Parties
in the AMI for such Prospect established under the Operating Agreement, which
will consist of the acreage identified on Exhibits "A," "B" and "D" for such
Prospect, plus any acreage added to such Prospect pursuant to this Agreement, if
any.

     This AMI obligation shall be binding upon and shall inure to the Parties
hereto, for the longer period of either, (i) the Confidentiality/AMI Agreement
dated July 6, 2005, (ii) this Agreement or (iii) any applicable Operating
Agreement.

                                    ARTICLE 3

3.   ASSIGNMENT OF INTEREST
     ----------------------

     3.1  Leasehold Assignment.
          --------------------
     Exhibits "A" and "B" list the current ownership interests of Chevron in the
Leases. Exhibits "A" and "B" also list the portions of Chevron's interest, based
on 100% leasehold working interest, that Chevron will assign to Ridgewood
subject to the earning provisions stated in this Article 3. Prospect acreage
earned and the assignment(s) due will cover Record Title or Operating Rights
Interest as to the Ridgewood ACP Interest in and to the acreage listed on
Exhibits "A" or "B" in all the Leases in the Prospect and shall be delivered
under special warranty of title and on a form of assignment approvable by the
Minerals Management Service ("MMS"). Any assignment made as a result of this
Agreement shall be made specifically subject to this Agreement and the
restrictions, exceptions, limitations and obligations stated in the agreements
listed on Exhibit "C," as applicable, for each Lease to be assigned. These
agreements will be referenced in any assignment made.

     (a)  Upon (i) Ridgewood's participation in an Initial Test Well on a
          Prospect, (ii) which reaches its Casing Point for the Objective Depth,
          and (iii) regardless if the well is a Successful Well or not in the
          Available Acreage for that Prospect, then Ridgewood will be entitled
          to an assignment of the Ridgewood ACP Interest in each of the Leases
          included in the Prospect drilled as to the Available Acreage for that
          Prospect.

                                       10

<PAGE>

     (b)  Upon (i) Ridgewood's participation in an Initial Test Well on a
          Prospect, (ii) which fails to reach its Casing Point for the Objective
          Depth, (iii) the Parties have expended at least one hundred and twenty
          percent (120%) of the AFE dry hole costs estimated to drill the
          Initial Test Well as stated in the original AFE for such well, and
          (iv) regardless if the well is a Successful Well or not in the
          Available Acreage for that Prospect, then Ridgewood will be entitled
          to an assignment of the Ridgewood ACP Interest in each of the Leases
          included in the Prospect drilled as to the Available Acreage for that
          Prospect.

     (c)  Upon (i) Ridgewood's participation in an Initial Test Well on a
          Prospect, (ii) which fails to reach its Casing Point for the Objective
          Depth, (iii) the Parties fail to spend at least one hundred and twenty
          percent (120%) of the AFE dry hole costs estimated to drill the
          Initial Test Well as stated in the original AFE for such well, (iv)
          the well is not a Successful Well in the Available Acreage for that
          Prospect, and (v) the Parties mutually agree to cease further
          operations on such well, then Ridgewood will not have earned any
          interest in the Leases making up the Prospect. Upon Ridgewood
          participating in a Substitute Well on such Prospect and spending its
          obligated portion of the original AFE dry hole costs up to twenty
          percent (20%) over the original AFE dry hole costs for the Initial
          Test Well for the Prospect as further defined in this Agreement or
          upon such Substitute Well reaching Casing Point for the Objective
          Depth, Ridgewood will be entitled to an assignment of the Ridgewood
          ACP Interest in each of the Leases included in the Prospect drilled as
          to the Available Acreage for that Prospect. Ridgewood's cumulative
          costs on the Initial Test Well and all Substitute Wells shall be used
          in determining when and whether Ridgewood has satisfied its spending
          obligation for earning purposes for the Prospect.

     (d)  Upon (i) Ridgewood's participation in an Initial Test Well on a
          Prospect, (ii) which fails to reach its Casing Point for the Objective
          Depth, (iii) the Parties fail to spend at least one hundred and twenty
          percent (120%) of the AFE dry hole costs estimated to drill the
          Initial Test Well as stated in the original AFE for such well, (iv)
          the well is a Successful Well in the Available Acreage for that
          Prospect, (v) and the Parties mutually agree to cease further drilling
          operations, then Ridgewood will be entitled to an assignment of the

                                       11

<PAGE>

          Ridgewood ACP Interest in the Leases included in the Prospect, but
          limited in depths down to the stratigraphic equivalent of the base of
          the deepest interval that classifies such well to be a Successful
          Well. Upon Ridgewood participating in the drilling of a Substitute
          Well proposed and drilled to the original Casing Point for the
          Objective Depth as approved for the Initial Test Well on a Prospect,
          or upon Ridgewood spending its obligated portion of the original AFE
          dry hole cost up to twenty percent (20%) over the original AFE dry
          hole cost for the Initial Test Well for the Prospect, whether or not
          the Substitute Well is a Successful Well in the Available Acreage for
          that Prospect, Ridgewood will be entitled to an assignment of the
          Ridgewood ACP Interest in the deep rights not previously assigned, if
          any, for each Lease in the Prospect drilled as to the Available
          Acreage for that Prospect. Ridgewood's cumulative costs on the Initial
          Test Well and all Substitute Wells shall be used in determining when
          and whether Ridgewood has satisfied its spending obligation for
          earning purposes for the Prospect.

     3.2  Ridgewood's Contribution to Well Costs.
          --------------------------------------
     Subject to the proportionate and disproportionate payment obligations
stated in Sections 4.1 and 4.2 below, Ridgewood will also contribute toward
Chevron's share of the costs of drilling the Initial Test Well, or any
Substitute Well, on each Prospect an amount equal to the total Chevron Land
Costs for such Prospect multiplied by the Ridgewood ACP Interest. Such
contribution shall be paid by Ridgewood to Chevron, within 30 days after
commencement of operations to participate in the drilling of the Initial Test
Well.

     3.3  Assignment Timing.
          -----------------
     As soon as reasonably possible, but no later than thirty (30) days after
any earning event as specified in Article 3.1, Chevron will forward to Ridgewood
the applicable executed assignments of the Leases in the Prospect drilled, in a
recordable form and in a form approvable by the MMS, if applicable. Should
Ridgewood fail to meet its financial obligations as described in this Agreement,
or under the applicable Operating Agreement, Chevron will have the right and
option to withhold execution and delivery of the earned assignments until any
funds owed have been properly paid. Any assignment made to Ridgewood will
contain a special warranty of title by, through and under Chevron, but with no
other warranty or representation.

                                       12

<PAGE>

     3.4  Proportionate Adjustment.
          ------------------------
     The Parties recognize that certain Prospects listed on Exhibits "B" may
involve acreage not under the ownership or control of Chevron on the Effective
Date of this Agreement. Should Chevron secure an agreement from the Third Party
owner(s) of any offsetting acreage or Prospect Contract Acreage necessary to
control a Prospect before drilling an Initial Test Well, and said agreement
results in the reduction of the interest of Chevron in the Initial Test Well and
Prospect, the obligations and duties of the Parties hereto in regard to the
Prospect included under the agreement with a Third Party shall be
proportionately adjusted to compensate for the reduction in interest by Chevron
in the Prospect, dependent upon whether such reduction in interest results from
(i) a recordable or MMS approvable cross-assignment of Record Title or Operating
Rights Interests with the Third Party or (ii) an assignment of contractual
interests in a Prospect with a Third Party.

     In the event of a cross-assignment with a Third Party of Record Title or
Operating Rights Interest in a Prospect, the interest Chevron would assign to
Ridgewood in the Leases in the Prospect would be proportionately reduced by the
Ridgewood ACP Interest of the specific Prospect area, to reflect the Record
Title or Operating Rights Interest of Chevron remaining after such
cross-assignment. Ridgewood would also be entitled to an assignment of a similar
Record Title or Operating Rights Interest in lands acquired by Chevron from the
Third Party as the result of any such cross-assignment.

     In the event of a reduction of Chevron's interest in a Prospect by means of
a contractual arrangement that does not result in the cross-assignment of Record
Title or Operating Rights Interest in a Prospect with a Third Party, the
interest Chevron would assign to Ridgewood in the Leases in the Prospect would
be subject to such contractual rights, and Ridgewood would be entitled to its
proportionate share, of the specific Prospect area, of the contractual rights
acquired. The interest to be assigned by Chevron to Ridgewood in the Leases in
the Prospect would be proportionately reduced by the Ridgewood ACP Interest of
the specific Prospect area to reflect the contractual arrangement. Examples of
such contractual arrangements would be a pooling arrangement or a farmin between
Chevron and a Third Party that was not approved by the MMS.

     In no event shall Ridgewood be liable for or entitled to receive any
benefit from or associated with any promoted costs the Third Party may be
required to pay to Chevron. Ridgewood's obligations, rights and duties under
this Agreement would be adjusted as appropriate to recognize the interests to be
assigned to, or the contractual arrangement agreed to with, the Third Party.
Notwithstanding anything to the contrary stated in this Section 3.4, in no event

                                       13

<PAGE>

will the provisions of this Section further reduce or diminish the obligations
and duties under this Agreement of the Parties to each other with the exception
of any interest earned which Chevron is obligated to assign to Ridgewood as to
Exhibit "B" Prospects would be adjusted to compensate for the interest assigned
to or contractual arrangement made with a Third Party. Costs associated with any
obligation as to such prospects would also be adjusted accordingly.

     3.5  Additional Earning Option.
         --------------------------
     During the term of this Agreement should Ridgewood fail to earn an
assignment on all or a portion of the Available Acreage in a Prospect after
participating in the Initial Test Well, Ridgewood's continuing right and option
to participate in the drilling of a Substitute Well on the Prospect to earn
rights hereunder will continue to exist until (a) the termination of this
Agreement, (b) the expiration or termination of the Leases where all depths have
not been assigned, or (c) Ridgewood elects not to participate in a Substitute
Well proposed by Chevron or a Co-Working Interest Owner and such well is
thereafter drilled as proposed. Upon the occurrence of any of these events, on a
Prospect-by-Prospect basis, Ridgewood's option to earn the unearned acreage
shall cease without any further action by Chevron.

                                    ARTICLE 4

4.   PROSPECT EVALUATION
     -------------------

     4.1  Primary Package Prospect Well Cost Sharing.
          ------------------------------------------
     Chevron will have the obligation to propose to Ridgewood the drilling of an
Initial Test Well on the Primary Package Prospects listed on Exhibit "A." It is
anticipated drilling operations will commence by November 30, 2005 for the
Bristol Prospect and in the IS` quarter 2006 for the Satellite Prospect; however
Chevron is only obligated to propose such wells during the term of the Leases
and is not committed to any order or exact date. When proposing a well, Chevron
will provide Ridgewood, an AFE detailing the specifications of the well to be
drilled for informational purposes only. The Parties will have the obligation to
participate, pursuant to the provisions of the applicable Operating Agreement
and this Agreement, in the drilling of an Initial Test Well on each of the
Primary Package Prospects listed on Exhibit "A." For each Exhibit "A" Prospect
drilled, Ridgewood will have the obligation of paying a contribution towards
Chevron's share of Well Costs (pursuant to Section 3.2) plus a share of the
Initial Test Well based on the Ridgewood BCP Interest for that Prospect as
listed on Exhibit "A" until Casing Point or until 120% of the estimated funds to
drill the Initial Test Well as stated in the original AFE have been spent to
drill the Initial Test Well, as required for the Ridgewood ACP Interest
assignment pursuant to Section 3.1. Upon earning an interest assignment for the
Prospect, Ridgewood will have the obligation of paying a share of any additional

                                       14

<PAGE>

cost associated with the Initial Test Well based on the Ridgewood ACP Interest
for the Lease upon which the Initial Test Well is located, subject to the
applicable provisions stated in the controlling Operating Agreement.

     The Parties shall have the option to participate in the drilling of a
Substitute Well(s). Should Ridgewood elect to participate in the drilling of a
Substitute Well, upon Ridgewood earning an interest assignment as described in
Article 3.1 herein, Ridgewood's disproportionate spending obligation will have
been satisfied for that particular Prospect and the cost of any operation
conducted thereafter shall be shared by the participating Parties in the
Substitute Well in accordance with the respective Ridgewood ACP Interest in the
Substitute Well. Upon Ridgewood earning an interest assignment as described in
Article 3.1 in each Prospect, the provisions of the applicable Operating
Agreement shall control the rights, obligations and options of the Parties
thereafter for that particular Prospect.

     Should Ridgewood elect not to participate in the drilling of a Substitute
Well before earning rights in a Prospect as provided herein, Ridgewood's rights
to earn an interest in that Prospect or the remaining Prospect area shall
terminate if such well is drilled as proposed. In addition, should Ridgewood
fail to participate in a Substitute Well before earning all the interest in a
Prospect as described herein, the non-consent provisions of the applicable
Operating Agreement shall not apply to the non-jointly owned interest in such
Substitute Well and Ridgewood will have no right to use of such Substitute Well
as to the unearned, non jointly owned interest unless mutually agreed upon by
the Parties. Should Chevron elect to participate in a Substitute Well, Chevron
will pay a share of the Well Cost of the Substitute Well based on the residual
portion of the Well Cost not being paid by Ridgewood or any Co-Working Interest
Owner. Should Chevron elect not to participate in the drilling of a Substitute
Well for the Initial Test Well, it will farmout as applicable, a portion of its
interest to Ridgewood, as specified in Article 5, as to all depths not
previously earned by Ridgewood pursuant to the drilling of the Initial Test
Well. Failure by Chevron to timely make an election pursuant to the response
periods provided in the applicable Operating Agreement shall be deemed an
election by Chevron not to participate in such operation and farmout under
Article 5. As to any depths previously earned by Ridgewood, a Party's election
not to participate in such Substitute Well shall be in accordance with the
provisions of the applicable Operating Agreement. The provisions of Article 5
shall apply to any farmout.

     Notwithstanding anything herein to the contrary, on any Substitute Well
being proposed on a Prospect where the Initial Test Well discovered a Reservoir,
a Party will have the right and option to limit its participation in the
drilling of any Substitute Well to those depths in the Available Acreage for
that Prospect previously drilled in the original Initial Test Well.

                                       15

<PAGE>

     4.2  Additional Opportunities Prospect Well Cost Sharing.
          ---------------------------------------------------
     The Parties will attempt to agree on a timetable for the drilling of one or
more Initial Test Wells on the Additional Opportunities Prospects once the
Parties agree an Additional Opportunities Prospect is ready to be drilled.
Notwithstanding an attempt to agree on a timetable to drill the Initial Test
Wells, it is the intention of the Parties not to defer drilling Additional
Opportunities Prospects that are ready to be drilled and to test all Additional
Opportunities Prospects during the term of this Agreement. Therefore the Parties
agree that after. April 1, 2006, either Party shall have the option to propose
to the other Party the drilling of an Initial Test Well on for any Prospects
listed on Exhibit "B." Between the Effective Date and April 1, 2006, the Parties
agree not to submit a proposal to the other regarding the drilling of an Initial
Test Well on any Prospect listed on Exhibit "B." After April 1, 2006, should a
Party wish to propose the drilling of an Initial Test Well on an Exhibit "B"
Prospect, the proposing Party shall provide the other Party with an AFE
detailing the specifications of the well to be drilled. The Parties will have
the option, but not the obligation, to elect to participate in the drilling of
an Initial Test Well on any Prospect listed on Exhibit "B." Should the Parties
elect to drill an Initial Test Well on any Prospect listed on Exhibit "B,"
Ridgewood will have the obligation of paying its share of the cost as set out in
Exhibit "B" or it's proportionately reduced share as applicable.

     The Parties shall have the option to participate in the drilling of a
Substitute Well(s). Should Ridgewood elect to participate in a Substitute Well,
upon earning an interest assignment as described in Article 3.1 herein, the
provisions of the applicable Operating Agreement shall control the rights,
obligations and options of the Parties thereafter for that particular Prospect.
Should Ridgewood elect not to participate in the drilling of a Substitute Well
before earning all leasehold rights in a Prospect as provided herein,
Ridgewood's rights to an interest in that Prospect or the remaining Prospect
area shall terminate if such well is drilled as proposed. In addition, should
Ridgewood fail to participate in a Substitute Well before earning all the
interest in a Prospect as described herein, the non-consent provisions of the
applicable Operating Agreement shall not apply to the non jointly owned interest
in such Substitute Well and Ridgewood will have no right to use of the
Substitute Well as to the unearned, non jointly owned interest unless mutually
agreed upon by the Parties. Should Chevron elect to participate in a Substitute
Well, Chevron will pay a share of the Well Cost of the Substitute Well based on
the residual portion of the Well Cost not being paid by Ridgewood or a
Co-Working Interest Owner. Should Chevron elect not to participate in the
drilling of a Substitute Well for the Initial Test Well, it will farmout as

                                       16

<PAGE>

applicable, a portion of its interest to Ridgewood, as specified in Article 5,
as to all depths not previously earned by Ridgewood pursuant to the drilling of
the Initial Test Well, or elect not to participate under the provisions of the
applicable Operating Agreement. Failure by Chevron to timely make an election
pursuant to the response periods provided in the applicable Operating Agreement
shall be deemed an election by Chevron not to participate in such operation and
the non-consent provisions of such Operating Agreement shall apply. As to any
depths previously earned by Ridgewood, a Party's election not to participate in
such Substitute Well shall be in accordance with the provisions of the
applicable Operating Agreement. The provisions of Article 5 shall apply to any
farmout.

     Notwithstanding anything herein to the contrary, on any Substitute Well
being proposed on a Prospect where the Initial Test Well discovered a Reservoir,
a Party will have the right and option to limit its participation in the
drilling of any Substitute Well to those depths previously drilled in the
original Initial Test Well.

     Should Ridgewood elect not to participate in the drilling of an Initial
Test Well drilled on a Prospect listed on Exhibit "B" the Leases associated with
that Prospect will be excluded from this Agreement and Ridgewood will no longer
have any rights or options associated with earning an interest in those Leases.

     Should Chevron elect not to participate in the drilling of an Initial Test
Well on the Prospect listed on Exhibit "B" that is proposed to be drilled to the
Casing Point for the Objective Depth, Chevron will farmout, as applicable, a
portion of its interest to Ridgewood, as specified in Article 5, its available
acreage in the specific Prospect area. Should Chevron elect not to participate
in the drilling of an Initial Test Well on an Exhibit "B" Prospect, the earning
provisions for Ridgewood as described in Article 3 and this Section 4.2,
including but not limited to the Land Cost reimbursement, shall not apply and
the earning provisions under the farmout shall control.

     4.3  Well Over-expenditure Limitation.
          --------------------------------
     Each Operating Agreement executed pursuant to this Agreement shall include
an over-expenditure provision that requires a new AFE for the current well
operation or substitute well operation if it appears that anticipated
expenditures will exceed the original well AFE estimate by twenty percent (20%),
allowing the Parties to elect not to participate in further operations on the
well.

                                       17

<PAGE>

     4.4  Third Party Participation in Prospects.
          --------------------------------------
     The Prospects identified in Exhibit "B" could possibly involve arrangements
where Third Parties will be asked to assign acreage and/or participate in the
drilling of the Initial Test Well and/or Substitute Well for those Prospects as
referenced in Section 3.4. Should a Third Party join in the drilling of a
Prospect, and the Parties agree on a different cost sharing percentage than what
would be followed should a Third Party not be involved in drilling the Initial
Test Well and/or Substitute Well, the Parties agree to adjust the cost sharing
as described in Sections 4.1 and 4.2 to compensate for the Third Parties
participation. Ridgewood will continue to have the obligation to pay, as
appropriate, a proportionate share of the Well Cost, in the same manner as
provided under Sections 3.2 and 4.1 or 4.2 above, for the Initial Test Well
and/or Substitute Well on the Prospect based on the Chevron leasehold assigned
to the Prospect. Land Cost contribution will also be adjusted to reflect this
change in cost sharing percentage and Ridgewood will continue to have the
obligation to contribute its adjusted proportionate share of the Land Costs
incurred by Chevron in acquiring and maintaining the Leases in the Prospect to
be drilled as described above.

     4.5  Rights Limitation on Use of Existing Wells.
          ------------------------------------------
     Notwithstanding anything to the contrary in this Agreement, without the
express approval of Chevron, Ridgewood shall not have the right and/or option to
propose or use any existing well bore which has been drilled into the Contract
Acreage prior to the Effective Date unless otherwise mutually agreed to by the
Parties and the owners of the well bore.

     4.6  Wells Proposed by Chevron after the Effective Date.
          --------------------------------------------------
     During the term of this Agreement, Chevron may identify one or more new
prospects on the Contract Acreage prior to Ridgewood earning an interest in
certain Leases in the Prospects identified for such Leases. Should Chevron
identify a new prospect on unearned acreage, it will submit a proposal in
writing to Ridgewood to drill an Exploratory Well to an Exploratory Objective,
or to deepen or sidetrack an existing Chevron well or wells to evaluate such
prospect. Chevron's notice shall include an identification of the prospect and
the information regarding the Exploratory Well and the Exploratory Objective to
be drilled. It is agreed between the Parties hereto that in the event Chevron
identifies a new prospect and proposes an Exploratory Well after the Effective
Date of this Agreement, the rights and options of Chevron and Ridgewood as to
that prospect and well proposed shall apply as if the prospect had been listed
on Exhibit "B" at the time of execution of this Agreement. All Exhibit "B"
Prospects initiated under this Section 4.6 shall be drilled under the terms and
conditions stated in Section 4.2 above, with the exception that Chevron shall
propose the prospect to Ridgewood and Ridgewood shall have the right, for thirty
(30) days from the receipt of the well proposal, to accept the prospect for

                                       18

<PAGE>

inclusion under the terms of this Agreement. Should Ridgewood choose not to
include the new prospect under the terms of this Agreement, Chevron will have
the right and option to drill or cause to be drilled the prospect and exclude
the acreage associated with this prospect from this Agreement limited to the
deepest depths drilled in such well if such well is a Successful Well. The
remaining acreage and depths in the applicable Prospect area would continue to
be subject to this Agreement.

     4.7  Protection from Drainage.
          ------------------------
     The Parties hereto recognize that producible Reservoirs common to both a
Lease and adjacent or adjoining lands not listed on Exhibits "A" and "B" may
exist. In the event the Parties hereto elect to develop or produce hydrocarbons
from such common Reservoirs from adjacent lands not listed on Exhibits "A" and
`B," Chevron and Ridgewood, in good faith, shall attempt to pool or unitize with
a Third Party that portion of the Lease so as to reasonably protect the Lease
from drainage. In addition, in the event a Third Party drills a well draining or
capable of draining the Contract Acreage, the Parties hereto will take
appropriate actions, to the extent they have the right to do so, to protect the
Contract Acreage from drainage, including but not limited to pooling,
unitization or the drilling a well as needed.

                                    ARTICLE 5

5.   FARMOUT OPTION
     --------------

     5.1  Exhibit "A" or "B" Prospect Substitute Wells.
          --------------------------------------------
     Should Chevron be required to farmout a portion of Chevron's interest to
Ridgewood, in a specific Prospect area, pursuant to elections made under Section
4.1 or 4.2, the Parties will execute a separate Farmout Agreement containing the
provisions set forth herein and such additional provisions as may be mutually
agreed upon.

     In as much as Chevron has or may enter into similar Agreements with other
parties or Co-Working Interest Owners which may cover Available Acreage on one
or more of the Prospects listed on Exhibit "A" and/or Exhibit "B," any Chevron
interest farmed out pursuant to this Agreement or participation agreements shall
be proportioned among the parties desiring to participate in that specific
Prospect well. Chevron's interest shall be farmed out to each party based on the
ratio of each Party's after casing point interest, as stipulated in its
respective agreement, to the total of after casing point interests for all
parties desiring to participate as stipulated in each party's applicable
agreement, unless otherwise mutually agreed by the parties.

                                       19

<PAGE>

     5.2  Exhibit "B" Farmout Option.
          --------------------------
     In the event Chevron elects not to participate in the drilling of an
Initial Test Well on an Exhibit "B" Prospect, Chevron will farmout its interest
in the Prospect to Ridgewood pursuant to a separate Farmout Agreement containing
the provisions set forth herein and such additional provisions as may be
mutually agreed upon. Under the Farmout Agreement as contemplated under this
Section 5.2, the geographic acreage associated with the acreage to be
farmed-out, including any geological restrictions/depth limitations, will be
identified and specifically stated as constituting the farmout acreage. The
acreage to be covered by the Farmout Agreement will consist of the Available
Acreage as to the respective Prospect on Exhibit "B."

     5.3  Chevron's Participation Options and Overriding Royalties.
          --------------------------------------------------------
     All the terms and conditions for each farmout executed pursuant to the
provisions of this Agreement shall be found in the applicable Farmout Agreement.
Under any Farmout Agreement contemplated pursuant to this Agreement, Chevron
shall retain the continuing rights, options and elections as follows: For
Substitute Wells drilled on any Exhibit "A" or "B" Prospects, as to the depths
previously unearned by Ridgewood, and for the Initial Test Well on an Additional
Opportunities Prospect, as shown on Exhibit "B," Chevron will retain a
proportionately reduced one-twelfth (1/120) overriding royalty and shall have
the option at "payout," as defined in the Farmout Agreement, of the Prospect's
Initial Test Well to either (1) convert said ORRI and back-in for a
proportionately reduced undivided thirty percent (30%) working interest and
begin participating in the continued operations on the Prospect and all
subsequent operations pursuant to the terms and conditions of the applicable
Operating Agreement, or (2) escalate the retained proportionately reduced
one-twelfth (1/12`x) overriding royalty interest to a proportionately reduced
one-tenth (1/10t) overriding royalty interest and Ridgewood shall have no
obligation to reimburse Chevron for Land Costs associated with such Prospect. In
the event Chevron elects to back-in for a working interest, in no event will
Chevron be required to reimburse Ridgewood for any costs or expenses incurred or
accrued in regard to any operations conducted on or associated with the Initial
Test Well prior Chevron's working interest back-in election. Chevron's "payout"
election as to the working interest option or overriding royalty interest option
shall be proportionately reduced based on the Chevron interest as shown on
Exhibits "A" or "B" under the column entitled "Chevron Interest."

     5.4  General Farmout Agreement Terms and Conditions.
          ----------------------------------------------
     Except as otherwise provided in this Agreement, the following terms and
conditions shall be applicable to all the Farmout Agreements executed by the
Parties hereto pursuant to the provisions of this Agreement.

                                       20

<PAGE>

          5.4.1 Within one hundred and twenty (120) days from the execution of a
          Farmout Agreement, or other mutually agreed period of time, Ridgewood
          will have the option to, at its sole cost, risk and expense, and
          subject to rig availability and the obtaining of required permits,
          commence the drilling of the initial test well under the Farmout
          Agreement. The surface location, bottomhole location and primary
          objective for the initial test well shall be mutually agreed upon
          between Chevron and Ridgewood, provided, however, in the event the
          Parties do not agree, Ridgewood's proposal(s) shall govern. The well
          commencement deadlines will be reflected in the appropriate Farmout
          Agreements and shall be subject to rig availability and the obtaining
          of required permits.

          5.4.2 If prior to reaching the objective depth on any well drilled
          pursuant to the provisions stated in a Farmout Agreement, conditions
          are encountered in such well which render further drilling operations
          impractical, Ridgewood will have sixty (60) days in which to advise
          Chevron of its election to drill a substitute well. In the event
          Ridgewood elects to drill a substitute well, the well must be
          commenced within forty-five (45) days after the date the rig is
          released from the previous well, subject to rig availability and the
          obtaining of any required permits. Any substitute well drilled will be
          drilled under the same terms and conditions as the well it is
          replacing.

               If, after reaching the objective depth on any well drilled
          pursuant to the provisions stated in a Farmout Agreement, the well
          fails to satisfy the standards stated in Subsection 5.4.3 below, and
          is abandoned by Ridgewood; Ridgewood will not have earned any interest
          in the acreage farmed-out. Ridgewood's right to cam an interest in the
          acreage farmed-out shall terminate forty-five (45) days after the date
          of the release of the drilling rig from such well, without further
          notice or demand from Chevron, unless within said forty-five (45) day
          period, Ridgewood advises Chevron in writing that Ridgewood elected to
          commence, within ninety (90) days after said release of the drilling
          rig from such well, actual drilling operations for a substitute well
          at a location selected by Ridgewood in the acreage farmed-out. If
          Ridgewood makes such election, Ridgewood's right to earn an interest
          in the acreage farmed-out by a substitute well shall terminate ninety
          (90) days after said release of the drilling rig from such substitute
          well without further notice or demand from the Chevron, unless within
          such ninety (90) day period, Ridgewood commences operations for
          drilling said substitute well.

                                       21

<PAGE>

               Until Ridgewood earns Ridgewood's ACP Interest of Chevron's
          proportionate share of the Prospect in the Record Title or Operating
          Rights Interest in the acreage farmed-out, Ridgewood shall have the
          continuing right to drill successive substitute wells in the acreage
          farmed-out so long as Ridgewood complies with the applicable time
          periods and provisions as stated above relative to the drilling of the
          first such substitute well. All provisions of the Farmout Agreement
          relating to the said initial test well shall also, unless clearly
          inappropriate, be applicable to each such substitute well.

               The only consequence for Ridgewood's failure to drill any well
          under the Farmout Agreement shall be the forfeiture of its right to
          drill such well. Ridgewood shall not be liable to Chevron or any other
          Third Party for any other costs, expenses or damages related to such
          failure to drill such well.

          5.4.3 In the event (1) the initial test well or its substitute on any
          individual Prospect is drilled to the objective depth and is a
          Successful Well and (2) Ridgewood, within sixty (60) days from rig
          release, commits in writing to Chevron its plans to install the
          necessary facilities as soon as practicable to develop the
          hydrocarbons discovered, Ridgewood will have earned an assignment from
          Chevron of Chevron's Record Title or Operating Rights Interest, as
          specified in the Farmout Agreement, in that portion of the Contract
          Acreage associated with the Prospect drilled, subject to the
          reservations stated in Section 5.3 above.

               In the event any such initial test well or its substitute does
          not reach the objective depth due to encountering any formation which
          cannot be penetrated, or any adverse condition which cannot be
          overcome by means considered reasonable and appropriate in the
          industry and at reasonable cost, but such well otherwise satisfies the
          criteria described above in (1) and (2) of this Section 5.4.3,
          Ridgewood will have earned an assignment of Record Title or Operating
          Rights Interest, as specified herein in that portion of the Contract
          Acreage associated with the Prospect limited in depths down to the
          stratigraphic equivalent of the base of the deepest interval that
          classifies such well to be a Successful Well. Ridgewood shall have the
          continuing right to ear deeper depths in such Prospect as to those
          depths not previously earned by Ridgewood by drilling additional wells
          under the terms of the Farmout Agreement.

                                       22

<PAGE>

          5.4.4 Unless otherwise specifically stated in this Agreement, any
          Record Title or Operating Rights Interest assignment made by Chevron
          in favor of Ridgewood where Chevron has made an election to retain
          only an overriding royalty interest, pursuant to the provisions stated
          in the applicable Farmout Agreement(s), will be made subject to
          Chevron retaining the overriding royalty specified in Section 5.3 in
          and to all production from the farmed-out acreage.

          5.4.5 Ridgewood shall not earn or have the right to ear any interest
          in nor be responsible or liable for any existing wells, platforms,
          flowlines or environmental conditions which are located on any portion
          of the Contract Acreage prior to the effective date of the applicable
          Farmout Agreement. In addition, notwithstanding anything herein to the
          contrary, under no circumstances will Ridgewood be allowed to earn any
          productive sand segment in pressure communication with Chevron's wells
          located in or around any acreage covered by any Farmout Agreement
          executed pursuant hereto except as otherwise mutually agreed. The
          pressure communication and common reservoir restrictions are found
          under Article 6 below.

          5.4.6 No well drilled by Ridgewood pursuant to any Farmout Agreement
          shall be abandoned by Ridgewood without Ridgewood first giving Chevron
          written notice thereof, together with a copy of the final electric log
          and copies of all other wireline logs, sidewall core analyses and
          other information required to be provided to Chevron under any Farmout
          Agreement. Within thirty (30) days (inclusive of weekends and
          holidays) after Chevron's receipt of such notice and logs [twenty-four
          (24) hours if the rig having drilled said well is on location and a
          decision has been made by Ridgewood to immediately plug and abandon
          the well], Chevron may notify Ridgewood that it elects to take over
          the well for such further operations it may wish to conduct. Chevron
          shall, at its sole risk and expense, thereupon take immediate
          possession of the well and of the materials and equipment owned or
          controlled by Ridgewood located at the well site in connection with
          Chevron's further operations testing, deepening, or evaluating the
          well.

               If, within the time provided, Chevron elects to take the well
          over, Ridgewood shall, except as hereinafter provided, have the same
          rights and responsibilities as if it had abandoned the well with
          Chevron's approval. After taking over the well, Chevron shall own all
          operating rights and working interest in the well and shall be

                                       23

<PAGE>

          responsible for and shall bear the entire expense of further
          operations in connection with the well, including the cost of
          completion and/or abandonment. In addition, Chevron shall own
          exclusively, free and clear of any Farmout Agreement and of any
          assignment or operating agreement entered into pursuant to the Farmout
          Agreement.

     5.5  Impenetrable Substances.
          -----------------------
     If Ridgewood drills to a depth shallower than the agreed upon objective
depth and encounters "impenetrables," including any formation which cannot be
penetrated, or any adverse condition which cannot be overcome, by means
considered reasonable and appropriate in the industry and at reasonable cost,
Ridgewood shall have the right to drill a substitute well in accordance with
Subsection 5.4.2 above.

     5.6  Overriding Royalties.
          --------------------
     Chevron's reserved overriding royalty as described in Section 5.3 above
shall be free and clear of all cost, of exploring, operating, and developing on,
and producing from, the acreage farmed-out, and maintaining said lease in force
and effect, as well as all cost for plugging, abandoning, clean-up and
restoration, but shall bear its proportionate share of all severance, production
and other taxes which are now or which may hereafter become applicable thereto.
Said overriding royalty shall be computed and paid at the same time and in the
same manner as royalties are computed and paid to the lessor under the leases
farmed-out.

     If Chevron elects to participate for a working interest at "payout" in a
farmed-out well, Chevron will proportionately share in any royalty relief
granted based on its working interest starting at that time of Chevron's
election, but in no event should Chevron be entitled to any royalty relief
granted prior to payout. However, should a farmed-out well be unsuccessful and
the MMS grants royalty relief on the Lease drilled, the owners of the shallow
production on such Lease in which royalty relief is granted shall be entitled to
the royalty relief so granted if any.

     5.7  Joint Operations for Earned Depths.
          ----------------------------------
     If Ridgewood has not earned an interest in all of the Available Acreage in
a Prospect listed on Exhibits "A" or "B," but has earned an interest in
shallower portions of the Leases comprising such Prospect by participating in an
Initial Test Well, then any well drilled by Ridgewood under the terms of this
Article 5 shall be subject to the terms of the applicable Operating Agreement
governing such shallower portions of the Lease unless otherwise mutually agreed
to by the Parties.

                                       24

<PAGE>

                                    ARTICLE 6

6.   PRESSURE COMMUNICATION AND COMMON RESERVOIRS
     --------------------------------------------

     6.1  Pressure Communication Restriction.
          ----------------------------------
     Notwithstanding anything herein to the contrary, any productive sand
interval encountered in any well drilled or caused to be drilled by the Parties
under this Agreement that is in a Reservoir or pressure communication with a
productive sand interval that is producing or is capable of producing from an
existing well in paying quantities from such sand interval drilled on a Lease by
Chevron or a Co-Working Interest Owners shall be excluded from this Agreement
and specifically reserved by Chevron. If at any time a Party proposes to drill a
well which could encounter a sand interval(s) which could potentially be in a
Reservoir or pressure communication with a productive sand interval(s) that is
producing or capable of producing in an existing well as described above, prior
to drilling such well Chevron and Ridgewood will establish the criteria for
determining whether the well once drilled would be in a Reservoir or pressure
communication. In the event the Parties drill a well and encounter a sand
interval(s) not originally anticipated to contain hydrocarbons in paying
quantities but, upon review by either Party is believed to potentially be in a
Reservoir or pressure communication with a productive sand interval(s) that is
producing or capable of producing in an existing well as described above, then
upon determination that such sand interval(s) could potentially be in a
Reservoir or pressure communication, the Parties hereto shall meet as soon as
reasonably possible to establish the criteria for determining whether or not the
well in question is actually, in a Reservoir or pressure communication.

     In the event there is a disagreement between Chevron and Ridgewood as to
whether or not a Chevron well and/or interval(s) is potentially in a Reservoir
or pressure communication with the new well and/or interval(s), then within one
hundred eighty (180) days after rig release from such well, Chevron and
Ridgewood shall furnish all available geological, geophysical and engineering
data, including bottom hole pressure data and Reservoir characteristics, to a
mutually acceptable engineering firm to determine, with reasonable confidence,
whether a Reservoir or pressure communication does or does not exist between the
wells. The decision of the engineering firm shall be final and binding on the
Parties hereto. The cost of the work performed by the engineering firm shall be
shared between Chevron and Ridgewood, at the ACP Interests.

     In the event the only sand interval(s) capable of producing hydrocarbons in
commercial quantities discovered in a well drilled by the Parties is in a
Reservoir or pressure communication with one or more sand interval(s) producing
or capable of producing from Chevron's well(s) on a Chevron Lease, and the well

                                       25

<PAGE>

has no further utility for options on the Prospect as agreed to by the Parties,
then Chevron will have the option to take over the well. If Chevron exercises
this option by giving Ridgewood written notice, Ridgewood shall be entitled to a
Well Cost adjustment for that portion of the wellbore associated with the
drilling, completing and equipping the well from the surface down to the base of
the Reservoir in pressure communication with the other well. All costs and
expenses paid by Ridgewood for the drilling of the well down to the base of said
Reservoir, along with all costs and expenses paid by Ridgewood, if any, in
completing and equipping the well for the Reservoir in pressure communication,
shall be reimbursed to Ridgewood by Chevron in an equitable manner, as agreed by
the Parties, based on the value and allocation recommended in the applicable
COPAS guidelines, as amended from time to time.

                                    ARTICLE 7

7.   OPERATING AGREEMENT
     -------------------

     7.1  Offshore Operating Agreements.
          -----------------------------
     Chevron and Ridgewood shall execute an Operating Agreement, on the form set
out as Exhibit "E," no later than thirty (30) Business Days before the Initial
Test Well is drilled on a Prospect. A separate Operating Agreement shall be
executed between the Parties for each Prospect. All Contract Acreage within the
Leases and included in a Prospect shall be covered and governed by the Operating
Agreement for that Prospect.

     Should any Prospect be expanded to include acreage not under the ownership
or control of Chevron or Ridgewood, and the Third Party owner of such acreage
elects to participate with the Parties in drilling an Initial Test Well on the
Prospect, the Parties shall propose utilizing the Operating Agreement attached
as Exhibit "E" to the Third Party for the controlling agreement covering
operations on the Prospect. Should the Third Party refuse to accept the use of
Exhibit "E," the Parties shall negotiate with the Third Party to enter a
mutually acceptable form of operating agreement to cover the Prospect.

     Notwithstanding anything to the contrary herein, the terms of the
applicable Operating Agreement apply to all operations with regards to a
Prospect, and all payments made with respect to such Prospect under this
Agreement or the applicable Operating Agreement, unless specifically in conflict
with the terms of this Agreement, in which event the terms of this Agreement
shall control as provided under Section 28.15 below.

                                       26

<PAGE>

     7.2  Designation of Operator.
          -----------------------
     As between the Parties, Chevron shall be designated as operator for the
Initial Test Well for each Prospect listed on Exhibits "A" and "B."

     The Parties will, if required, execute the appropriate Designation of
Operator forms, under the terms hereof, naming Chevron as Operator. Chevron
shall also assume the responsibility of the Designated Applicant for oil spill
financial responsibility purposes; however no Party is released from any its
liabilities for expenses, losses or damages by such assumption by Chevron. The
Parties will execute as soon as requested all necessary forms to reflect the
selection of operator and Designated Applicant for oil spill financial
responsibility purposes.

                                    ARTICLE 8

8.   ADDITIONAL PARTNERS/CO-VENTURERS
     --------------------------------

     8.1  Partners/Co-Venturers.
          ---------------------
     Nothing in this Agreement shall be construed to limit Chevron's right to
seek another partner/coventurer to participate in the drilling and development
of the Contract Acreage, but any such participation by a Third Party shall not
diminish Chevron's obligations under this Agreement, including, but not limited
to those obligations enumerated in Article 4. In addition, nothing herein shall
limit Chevron's right to sell, assign, transfer, exchange, burden or deliver any
Lease included under this Agreement as long as such conveyance is made
specifically subject and subordinate to this Agreement and the applicable
Operating Agreement.

                                    ARTICLE 9

9.   ACREAGE RELEASE
     ---------------

     9.1  Option to Release Acreage.
          -------------------------
     At any time during the term of this Agreement, Ridgewood shall have the
right and option to relinquish its right to earn any Lease listed on Exhibit "B"
by notifying Chevron in writing. On any Lease within its primary term, such
notice shall be made at least sixty (60) days prior to the next rental date. If
the Lease is held by production, or beyond its primary term, such notice shall
be made at any time.

                                       27

<PAGE>

     9.2  Rights Termination.
          ------------------
     Upon receipt by Chevron of the Ridgewood release notification, the rights
and options granted Ridgewood under this Agreement as to the released Leases and
Contract Acreage shall terminate. Notwithstanding anything herein to the
contrary, in no event shall the notification of a release as described in this
Article 9 relieve Ridgewood of any financial obligation that has been incurred
or accrued pursuant to this Agreement or any Operating Agreement.

     9.3  Automatic Release.
          -----------------
     If, under the operation of any provisions of this Agreement an interest in
the Contract Acreage or acreage made subject to this Agreement pursuant to
Section 2.4 is excluded or relinquished or is or becomes no longer subject to
this Agreement, including but not limited to a Lease terminating under the
provisions stated in said Lease, the excluded or relinquished Lease, or any
portion thereof will automatically be deemed to be released by Ridgewood and no
longer subject to this Agreement.

     After the release or relinquishment by Ridgewood or automatic release under
Section 9.3 of any Lease subject to this Agreement as provided under this
Article 9, Chevron shall be free to drill, sell, farmout, joint venture or
dispose of, in any manner it so chooses, the released acreage. Ridgewood hereby
agrees and releases Chevron from any liability whatsoever with regard to the
released acreage relating to the activities of Ridgewood and any information
and/or data Ridgewood may have given to Chevron in regard thereto. In the event
Chevron discloses Ridgewood solely-owned confidential data obtained under and
through this Agreement to any Third Party within two (2) years of the release of
acreage, Chevron will require the Third Party to execute an appropriate
confidentiality agreement.

                                   ARTICLE 10

10.  NOTICES
     -------
     10.1 Notices.
          -------
     All notices authorized or required between the Parties by any of the
provisions of this Agreement, unless otherwise specifically provided, shall be
in writing and delivered in person or by United States mail, overnight express
delivery, courier service or facsimile (with receipt confirmed), postage or
charges prepaid, and addressed to such Parties at the addresses set forth below:

                                       28

<PAGE>

    Chevron U.S.A. Inc.    **                     Ridgewood Energy Corporation

    14141 Southwest Freeway                       11700 Old Katy Road, Suite 280

    Sugar Land, Texas 77478                       Houston, Texas 77079

    Attention: Gulf of Mexico - Land Manager      Attention: W. Greg Tabor

    Fax: (281) 287-7575                           Fax: (281) 293 - 7391

**This address is temporary and will be amended as necessary by Letter
Agreement.

     Any originating notice and/or response thereto given under any provision
hereof shall be deemed given only when received by the Person to whom such
notice is directed, except that; (1) any notice or response by certified U.S.
mail, return receipt requested, properly addressed pursuant to this Article 10,
and with all postage and charges prepaid, shall be deemed received on the date
that the Person to whom it was directed has received it, (2) any notice or
response given by facsimile to the above facsimile phone number shall be deemed
received as of the time of confirmed receipt or (3) by overnight express
delivery or courier shall be deemed received upon acknowledgement of receipt by
the Person to whom it was directed, or within 72 hours of delivery of such
notice whichever is sooner.

     10.2 Change in Designated Representative.
          -----------------------------------
     Each Party shall have the right to change its address, facsimile number and
it's designated Representative at any time, and from time to time, by giving
prior written notice thereof to the other Party.

                                   ARTICLE 11

11.  EXISTING AGREEMENTS
     -------------------

     11.1 Existing Agreements.
          -------------------
     Ridgewood recognizes and acknowledges that certain Leases are subject to
certain agreements and other contracts that may affect the rights, obligations
and/or options granted to Ridgewood under this Agreement. These existing
agreements are listed on Exhibit "C." It is understood between the Parties
hereto that the rights and option of Ridgewood shall be specifically subject to
these existing agreements as those agreements apply to the Contract Acreage.
Ridgewood shall, upon execution of this Agreement, become bound by all existing
agreements, whether in Chevron's records or of Public records, relating to the
affected Prospects to the extent of any interest undertaken or earned by
Ridgewood. Ridgewood shall have the right of access to and review of copies of

                                       29

<PAGE>

such agreements, subject to any contractual restrictions therein and any
confidentiality agreements or arrangements required. Provided however, Ridgewood
shall be released from such agreements in the event Ridgewood, when not in
breach, does not drill or is unable to drill or to cause to be drilled any well
governed under this Agreement.

                                   ARTICLE 12

12.  RIGHTS RESERVED
     ---------------

     12.1 Lease Rights Reservations.
          -------------------------
     Chevron EXPRESSLY RETAINS AND RESERVES EXCLUSIVELY UNTO ITSELF THE
FOLLOWING:

     (a)  All rights of ingress, egress, use, occupancy, and any and all other
          rights granted by, through and under the federal leases subject
          hereto, necessary or convenient to exercise and enjoy all oil, gas and
          mineral rights reserved to Chevron, including but not limited to,
          construct, maintain and operate facilities, platforms and pipelines on
          and across Leases, subject to Ridgewood's rights to earn the
          assignment(s) as provided hereunder.
     (b)  All rights of ownership and use held by Chevron's Affiliates in any
          pipeline or rights of ways.
     (c)  The right of ownership and/or operatorship of the Existing Facilities
          and the revenues realized therefrom.
     (d)  Chevron also reserves any platform, facilities, wellbores, pipelines
          or rights-of-way installed, drilled or obtained in the future located
          on or in the vicinity of the Contract Acreage related to Chevron's
          operations on the Leases subject hereto, in which Ridgewood does not
          own an interest.
     (e)  Any and all rights and interests not expressly granted to Ridgewood.

                                   ARTICLE 13

13.  PRODUCTION PROCESSING AND CONTRACT PUMPING
     ------------------------------------------

     13.1 Production Handling Option.
          --------------------------
      The basic terms of production handling agreements will not be a part of
this Agreement but the Parties agree that it is the general intention of the
Parties to independently and in good faith evaluate the use of existing, nearby
sole ownership facilities of Chevron, if any and where appropriate, for the
handling of Prospect production from successful Prospect wells; however, neither

                                       30

<PAGE>

party is committed to bring its share of Prospect production to a Party's nearby
sole ownership facility or to accept production at a Party's nearby sole
ownership facility. The Parties will negotiate any such use in good faith, where
the Parties see mutual benefit to such use; however, the use of an Existing
Facility, or near by facility, will require the consent of both Parties to all
terms and condition of such use prior to such use.

     13.2 Contract Operating Option.
          -------------------------
     Should the Parties decide to transport co-owned production to a facility
owned by one of the Party's hereto but not the other, and the Parties are
successful in negotiating an agreement with the owners of the facility to handle
the production, as an accommodation to the non-owning Party, the owning Party
will consider, but will not have the obligation, to contract operate any
producing wells owned by the Party not an owner of the facility.

     13.3 Use of Existing Facilities.
          --------------------------
     Notwithstanding any rights and/or options provided Ridgewood under the
terms and conditions of this Agreement, this Agreement shall in no way be
construed in any manner whatsoever as a right and/or option for Ridgewood to
utilize any Existing Facility; provided, however, Chevron is agreeable to
assisting Ridgewood to provide Ridgewood with access to an Existing Facility if
capacity is available or projected to be available and not planned to be
utilized by Chevron and/or any Co-Working Interest Owners; provided Ridgewood
agrees to pay reasonable fees for the use of any such Existing Facility and the
services, if any, provided therewith. Notwithstanding the willingness of
Ridgewood to pay reasonable fees, under no circumstances will it be construed
that Chevron is under any obligation whatsoever to provide access to or capacity
on any Existing Facility located on any Lease subject to this Agreement. In no
event shall Ridgewood have any liability or obligation with respect to any
Existing Facility except as specifically provided in a separate written
agreement between Ridgewood and the owners of such facilities.

                                   ARTICLE 14

14.  TAX MATTERS
     -----------

     14.1 Income Tax Election.
          -------------------
     Notwithstanding any other provision herein, the rights and liabilities
hereunder are several and not joint or collective and this Agreement shall not
constitute a partnership. If for federal income tax purposes this Agreement and
the operations or activity hereunder are regarded as a partnership, then for
federal income tax purposes each party elects to be excluded from the

                                       31

<PAGE>

application of all provisions of Subchapter K, Chapter 1, Subtitle A, Internal
Revenue Code of 1986 as amended ("Code"), as permitted and authorized by Section
761 of said Code and the regulations promulgated thereunder. Chevron is hereby
authorized and directed to execute on behalf of each Party such evidence of this
election as may be required, including specifically, but not by way of
limitation, all of the returns, statements and data required by law.

     Should there be any requirement that each Party further evidence this
election, each Party agrees to execute such documents and furnish such other
evidence as may be required. Each Party further agrees not to give any notices
or take any other action inconsistent with the election made hereby. If any
present or future income tax law of the United States or any state contains
provisions similar to those contained in Subchapter K, Chapter 1, Subtitle "A"
of the Code, under which an election similar to that provided by Section 761 of
said Subchapter K is permitted, each Party agrees to make such election as may
be permitted by such laws. In making this election, each Party states that the
income derived by it from the operations or activities under this Agreement can
be adequately determined without the computation of partnership taxable income.

     The provisions of this Article 14 shall not affect or demise the Parties
rights and obligations under any Operating Agreement entered into pursuant to
this Agreement. Notwithstanding anything herein to the contrary under this
Article 14, for purposes of operations to be conducted under the applicable
Operating Agreements, the Parties hereto agree to use that form of tax
partnership as shown on Exhibit "F" of Exhibit "E."

                                   ARTICLE 15

15.  GEOPHYSICAL DATA
     ----------------

     15.1 Proprietary Seismic Data.
          ------------------------
     Should at any time prior to or during the term of this Agreement, Ridgewood
or Chevron acquire any proprietary seismic data covering a portion of the
Contract Acreage, the acquiring Party will allow the other Party access to this
proprietary seismic data. The acquiring Party will consider granting the other
Party a license covering that portion of the acquiring Party's proprietary
seismic data covering the Contract Acreage upon the other Party's request. The
fee to be paid to license the seismic data, and the licensing agreement to be
executed between the Parties, shall be negotiated at the time the Party elects
to license the data. Ridgewood or Chevron must submit a written proposal to the
acquiring Party prior to the termination of this Agreement proposing the license
of a portion of the acquiring Party's data. Failure of Ridgewood or Chevron to
submit such a proposal, or in the event the Parties are unable to negotiate a

                                       32

<PAGE>

mutually agreeable licensing fee and/or licensing agreement, shall terminate the
acquiring Party's option to consider licensing its data to the other Party. The
acquiring Party makes no representation and shall have no liability to the other
Party regarding the accuracy or completeness of any data disclosed to the other
Party hereunder. Any such information or data provided hereunder is provided as
a convenience only and any reliance on or use by Ridgewood or Chevron is at
Ridgewood's or Chevron's sole risk.

     15.2 Hazard Survey Data.
          ------------------
     Should Chevron possess or acquire any shallow hazard. data covering any
Leases subject hereto, and that data is used in support of permitting a location
to drill a well as a result of this Agreement or the applicable Operating
Agreement, then the cost Chevron paid for the shallow hazard data will be added
to the cost Ridgewood is required to contribute. Only Ridgewood's proportionate
share of the actual cost paid by Chevron for the shallow hazard survey, based on
the interest Ridgewood will be assigned in the Lease were the well will be
drilled, will be owed to Chevron. Ridgewood will contribute such amount upon
receipt of written notice from Chevron detailing the hazard survey charge.

     15.3 Speculative Seismic Data.
          ------------------------
     The Parties hereto may have in their possession certain seismic data
licensed from Third Parties ("Speculative Seismic Data") which impose various
restrictions and limitations on either Parties right to use, disclose and/or
display such data relating to the properties identified in Exhibit "A" or "B."
Treatment of this Speculative Seismic Data shall be controlled under
confidentiality provisions specified in Section 20.2 below.

                                   ARTICLE 16

16.  RENTALS, MINIMUM ROYALTY AND LEASE MAINTENANCE
     ----------------------------------------------

     16.1 Rentals and Minimum Royalty.
          ---------------------------
     Notwithstanding the obligations to compensate Chevron for Land Costs as
described under Section 3.2 above, Ridgewood shall be responsible for
contributing a portion of any rental or minimum royalty that comes due and
payable, on a lease-by-lease basis, for each Lease it is assigned as provided
herein commencing on the effective date of each such assignment. The share of
the rental or minimum royalty Ridgewood will owe will be calculated based on the
interest assigned in a Lease. This responsibility shall continue until the first
to occur of the following: (a) Ridgewood relinquishes its right to earn an
interest in the affected Lease in accordance with this Agreement or the

                                       33

<PAGE>

applicable Operating Agreement, or (b) the Lease terminates. Chevron shall pay
or cause to be paid the rental and/or minimum royalty on each Lease. Ridgewood
agrees to contribute its proportionate share of such rental and/or minimum
royalty within thirty (30) days after receipt of written notice from Chevron for
same. However, on a lease-by-lease basis and pursuant to Section 9.1 of this
Agreement, Ridgewood, at its sole option and discretion, shall have the right to
relinquish to Chevron its rights in a Lease and thereby relieving itself of its
obligation to reimburse Chevron. Should Ridgewood elect to relinquish its
interest to Chevron, but fail to provide Chevron with the required notice under
Section 9.1 of this Agreement, Ridgewood will remain liable for the next ensuing
rental or minimum royalty payment for which proper notification was not
received.

     Chevron shall not be liable for failure to make a proper payment during the
time in which it is responsible for doing so, but agrees to use the same degree
of care used in making such payments under its other leases. The termination of
this Agreement shall not relieve Ridgewood of its obligations to contribute to
any payments so made during the period this Agreement was in effect, and during
the period that such Lease(s) are subject to this Agreement, the right of such
termination to be an additional right reserved by Chevron and not a limitation
of any of Chevron's rights herein.

                                   ARTICLE 17

17.  MEDIA RELEASES
     --------------

     17.1 Public Announcements.
          --------------------
     The Parties hereto agree that prior to making any public announcement or
statement with respect to the transaction contemplated by this Agreement, the
Party desiring to make such public announcement or statement shall provide the
other Party with a copy of the proposed announcement or statement at least three
(3) Business Days prior to the intended release date of such announcement.
Release of reserves estimates is never permitted. The other Party shall
thereafter consult with the Party desiring to make the release, and the Parties
shall exercise their reasonable best efforts to (i) agree upon the text of a
joint public announcement or statement to be made by both such Parties or (ii)
in the case of a statement to be made solely by one Party, obtain approval of
the other Party hereto to the text of a public announcement or statement.
Nothing contained in this paragraph shall be construed to require either Party
to obtain approval of the other Party hereto to disclose information with
respect to the transaction contemplated by this Agreement to any state or

                                       34

<PAGE>

federal governmental authority or agency to the extent required by applicable
law or necessary to comply with disclosure requirements of the New York Stock
Exchange or any other regulated stock exchange.

     17.2 Media Releases.
          --------------
     Except as may be otherwise authorized by the applicable Operating
Agreement, if any, neither Party shall make any press release or other public
announcement regarding operations conducted pursuant to this Agreement without
the prior written consent of the other, which consent shall not be unreasonably
withheld. Each Party will have three (3) Business Days within which to review
and comment prior to public disclosure. Release of reserves estimates is never
permitted. The foregoing, however, shall not restrict disclosures by either
Party which are required by applicable securities or other laws or regulations
or the applicable rules of any stock exchange having jurisdiction over the
disclosing Party or its Affiliates.

                                   ARTICLE 18

18.  FILES
     -----

     18.1 Access to Files.
          ---------------
     During the term of this Agreement, either Party ("disclosing Party") shall
permit, to the extent it has the right to do so, a Party ("reviewing Party") and
its Representatives at reasonable times during normal business hours to examine,
in the disclosing Party's offices at their actual locations, the Prospect and
land files (excluding all economic and risk evaluations, reserve information,
all legal files, attorney-client communications or attorney work product,
records and documents subject to confidentiality provisions and auditor's
reports) pertaining to the Prospects listed on Exhibits "A." In addition, to the
extent it has the right to do so, reviewing Party will be allowed access to the
disclosing Party's geological, geophysical, engineering and land files, subject
to the same exclusions listed above, covering the Leases hereto in support of
the development of the Leases and Prospects listed on Exhibit "B." The reviewing
Party shall be obligated to maintain the confidentiality of such files and
information in accordance with the provisions and limitations described in
Article 20 below. The disclosing Party and its Representatives make no
representation or warranty as to, and shall have no liability to reviewing Party
regarding, the accuracy or completeness of the information disclosed to the
reviewing Party hereunder. Any information or data furnished hereunder by the
disclosing Party is provided as a convenience only and any reliance on or use of
same is at the reviewing Party's sole risk. The inadvertent disclosure by the
disclosing Party to the reviewing Party of attorney-client communications,
attorney work product, legal files or other confidential information shall not

                                       35

<PAGE>

be deemed to be a waiver of the attorney-client privilege, the attorney
work-product privilege, or any other privilege or right protecting the
confidentiality of data or information. Anything in this Agreement to the
contrary notwithstanding, however, the disclosing Party and their
Representatives shall have no liability to the reviewing Party for failing to
allow the reviewing Party to examine, or to grant the reviewing Party access to
any of the files or materials referred herein. Access to a disclosing Party's
Prospect files is strictly and solely as an accommodation to the reviewing
Party.

                                   ARTICLE 19

19.  ASSIGNMENTS AND TRANSFER OF INTEREST
     ------------------------------------

     19.1 Assignment of this Agreement.
          ----------------------------
     It is agreed that Ridgewood shall not assign, either in whole or in part,
its rights and interest in this Agreement without the prior written consent of
Chevron. Upon receipt of Chevron's written consent, which consent can be
conditioned on, but not limited to, requesting adequate security for the future
performance by assignee, payment of all delinquent accounts and resolving all
outstanding disputes, any assignment made by Ridgewood hereof shall 1) contain a
limitation in favor of Chevron requiring that Chevron's written consent must
also be obtained prior to any future assignments of this Agreement in whole or
in part, 2) that said instrument contain a provision indicating said assignment
is made subject to this Agreement, and 3) the assignee agrees in writing to be
bound by all the terms and conditions of this Agreement.

     19.2 Lease or Prospect Successors and Assigns
          ----------------------------------------
     It is agreed that Ridgewood, before earning an interest therein, shall not
assign, either in whole or in part, its interest or rights to interest in and to
any Lease or Prospect without the written consent of Chevron. Upon receipt of
Chevron's written consent any assignment made by Ridgewood hereof shall 1)
contain a limitation in favor of Chevron requiring that Chevron's written
consent must also be obtained prior to any future assignments of interest in
whole or in part, 2) that said instrument contain a provision indicating said
assignment is made subject to this Agreement, and 3) the assignee agrees in
writing to be bound by all the terms and conditions of this Agreement. It shall
be fully understood that in the event the assigning party encumbers or burdens
the Contract Acreage or any portion thereof after earning an interest herein,
the assigning party shall hold the non-assigning party free and clear of any and
all obligations, liability and/or responsibility for such encumbrance(s) or
burden(s). Any assignment made pursuant to this Section 19.2 shall be in
accordance with and in compliance to the accepted practices, guidelines and
policies of the Minerals Management Service or other governmental agencies that

                                       36

<PAGE>

my claim jurisdiction. After Ridgewood receives an assignment in a Lease, future
restrictions, if any, on subsequent assignments will be covered in the
applicable Operating Agreement.

                                   ARTICLE 20

20.  CONFIDENTIALITY
     ---------------

     20.1 Confidentiality.
          ---------------
     It is understood and agreed that no Party to this Agreement, for a period
of thirty-six (36) months from the Effective Date hereof, shall divulge to any
Third Party any geophysical, geological or engineering information that is
disclosed or received from the other Party on the Contract Acreage without first
obtaining the written consent of such other Party to this Agreement to release
any such information that it disclosed or received. Such consent, however, shall
not be necessary for a Party to divulge such information to any part(y)ies from
whom said Party to this Agreement may receive a contribution for the drilling of
a well under any farmout agreement, to a financial institution (or similar
entity) from whom a Party is attempting to secure funds or financing, or to a
pipeline company for the purpose of securing a pipeline connection.
Notwithstanding the above, either Party may disclose confidential data to its
Affiliate(s), consultants or other Representatives provided that such Affiliate,
consultant or Representative agrees to maintain the confidentiality of such
confidential data under the same conditions as stated herein.

     Subject to disclosures that may be authorized by any Operating Agreement
applicable to a particular Lease, any and all data revealed and disclosed by
Chevron to Ridgewood and Ridgewood to Chevron shall be treated as confidential,
less and except any data that now or hereafter becomes generally available to
the public, was blown by Chevron or Ridgewood prior to the Effective Date of
this Agreement, was already in Chevron's or Ridgewood's possession prior to the
Effective Date of this Agreement, or hereafter comes into Chevron's or
Ridgewood's possession from a Third Party who has the right to disclose such
information as applicable.

     20.2 Speculative Seismic Data.
          ------------------------
     The Parties hereto have in their possession certain seismic data licensed
from Third Parties which impose various restrictions and limitations on either
Parties right to use, disclose and/or display such data relating to the Leases
identified in Exhibits "A" or "B." Notwithstanding any other provision in this
Agreement to the contrary, Chevron and Ridgewood both agree that neither Party
shall remove from each other's office, copy, or reveal to any Third Party, any

                                       37

<PAGE>

Speculative Seismic Data disclosed by one Party to the other Party. Each Party
agrees it will only view such Speculative Seismic Data for no other purpose
other than necessary to review the work product generated as a result of the
purpose of this Agreement. Under no circumstances will the Party who views the
Speculative Seismic Data be allowed to use the Speculative Seismic Data for any
other purpose than what viewing the data was intended unless the viewing Party
has first obtained a license from the Third Party owner of such Speculative
Seismic Data or the disclosing Party, or the owner of the Speculative Seismic
Data advises the Parties that such data is no longer to be held confidential.

     20.3 Disclosure of Confidential Data.
          -------------------------------
     In the event a Party hereto, or its Representatives, are required by any
court or legislative or administrative body (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigation demand, or
any similar process) to disclose any confidential information or data not owned
by said Party, the Party required to make such disclosure shall provide the
owner of the confidential information or data with prompt notice of such
requirement in order to afford the owner of such information or data the
opportunity to seek an appropriate protective order. However, if the owner of
such information or data is unable to obtain or does not seek such protective
order and the Party that is required to make such disclosure, or its
Representatives, are, in the opinion of counsel, compelled to disclose
confidential information or data under pain of liability for contempt or other
censure penalty, disclosure of such information or data may be made without
liability.

     20.4 Risk of Use of Confidential Data.
          --------------------------------
     It is understood by the Parties hereto that any confidential information or
data, both oral and written, furnished by one Party to the other is to be
considered accurate, however, neither Party hereto makes any representations or
warranties, express, implied, statutory or otherwise, with respect to the
accuracy or completeness of the confidential information or data disclosed or
any condition or aspect thereof. To the best of its knowledge, the Party making
such disclosure represents that it has full legal or contractual authorization
or right to disclose such information and data to the other Party. Each Party
hereto agrees that it will use such confidential information and data at its
sole peril and risk, and the disclosing Party shall have no liability whatsoever
with respect to the use by the receiving Party of any information or data,
whether confidential or otherwise, furnished by the disclosing Party to the
receiving Party. Any decision or action taken by the receiving Party of such
disclosed confidential information and data shall be based solely on the
receiving Party's independent evaluation, judgment and decisions.

                                       38

<PAGE>

                                   ARTICLE 21

21.  GOVERNING LAW
     -------------

     21.1 Choice of Law.
          -------------
     The terms and conditions of this Agreement shall be governed and
interpreted under the LAWS OF THE STATE OF ALABAMA excluding, however, any
provisions of Louisiana law which might direct or refer such determination to
the laws of any other jurisdiction.

     21.2 Future Litigation and Claims.
          ----------------------------
     Ridgewood acknowledges and agrees that Chevron and its Affiliates shall
have full and unfettered discretion in the handling and settling of any such
claim, demand, action, cause of action, or lawsuit for events which occurred, or
alleged to have occurred prior to the Effective Date pursuant to any future
litigation as they relate to the Chevron Leases, and Ridgewood specifically
waives any claim it may otherwise have against Chevron arising out of or
relating to the handling or settling of any such claim, demand, action, cause of
action, or lawsuit asserted under future litigation; provided, however, that in
the event that such claim contemplated by this Section 21.2 covers periods after
the Effective Date, Ridgewood may assist in defending the litigation. Chevron
agrees that no such claim, demand, action, or cause of action, or lawsuit
arising out of or related to acts or omissions occurring prior to the Effective
Date will impair or affect any interest to be assigned to Ridgewood under this
Agreement or will impose any cost or liability on Ridgewood.

                                   ARTICLE 22

22.  FORCE MAJEURE
     -------------

     22.1 Force Majeure.
          -------------
     Should either Party be prevented from complying with any express or implied
covenant of this Agreement (other than the obligation to make monetary
payments), or from meeting any deadline under this Agreement by reason of "Force
Majeure," as hereinafter defined, the express or implied covenant or deadline so
affected shall automatically be extended so long as the cause or causes for such
delays or interruptions continue and for an additional sixty (60) days following
the cessation of such delay or interruption. "Force Majeure" is herein defined
as an act of God, adverse weather conditions, inability to obtain materials in
the open market or transportation thereof, war, strikes, lockouts, riots,
insurrections or any other conditions or circumstances not wholly within the

                                       39

<PAGE>

control of a Party hereto (other than financial) or any federal, state or
municipal law, order, permit, rule or regulation. The Party subject to the Force
Majeure event shall not be liable to the other Party in damages for failure to
perform as required hereunder or to comply with any covenant, agreement or
requirement hereof during the time the Party subject to the Force Majeure event
is relieved from its obligations hereunder, provided that the Party subject to
the Force Majeure event has given written notice to the other Party within
thirty (30) days after the occurrence of the cause relied upon to suspend the
obligations of the Party subject to the Force Majeure event. The Party subject
to the Force Majeure event shall not be relieved from any express or implied
obligations under any Lease by operation of Force Majeure hereunder, unless such
Lease also suspends such obligations for the same cause. Further, if any Lease
provides for a time for the suspension of obligations less than sixty (60) days,
the provisions of such Lease shall control. The Parties recognize that time is
of the essence in the performance of the obligations under this Agreement, and
every reasonable effort should be made by the Party affected by the Force
Majeure event to avoid delay or suspension of any work or acts to be performed
under this Agreement and to make all reasonable efforts to overcome the impact
of the Force Majeure as soon as possible. The requirement that the Force Majeure
be remedied with all reasonable dispatch shall not require a Party to settle
strikes or other labor difficulties.

                                   ARTICLE 23

23.  DISPUTE RESOLUTION.
     -------------------

     23.1 Dispute Resolution.
          ------------------
     Notwithstanding anything contained heretofore in this Agreement to the
contrary, with the exceptions of decisions made by engineering firms or
consultants as provided under Article 6, the Parties specifically acknowledge
and agree that any claim, controversy or dispute arising out of relating to, or
in connection with this Agreement, including the interpretation, validity,
termination or breach thereof shall be resolved solely in accordance with the
Dispute Resolution Procedure set forth in Exhibit "F" attached hereto and made a
part hereof. Disputes related to pressure communication or common reservoir
issues will be addressed in accordance with the procedures stated under Article
6 as applicable and not Exhibit "F."

                                       40

<PAGE>

                                   ARTICLE 24

24.  TERMINATION
     -----------

     24.1 Termination.
          -----------
     This Agreement shall begin on the Effective Date, and unless terminated
pursuant to another provision in this Agreement or unless extended pursuant to
another provision, shall remain in effect for a period of twenty-four (24)
months from the Effective Date at which time this Agreement shall automatically
terminate without any other action by any Party hereto. As to each Lease listed
on Exhibit "A" and "B," and any acreage made subject to this Agreement pursuant
to Section 2.4, as each Lease expires or terminates, it will no longer be
subject to this Agreement. It is understood between the Parties hereto that
after termination of this Agreement the only acreage Ridgewood will have access
to will be that acreage it has already earned or has committed to drill under
this Agreement as provided under Section 24.3 below. Notwithstanding the
termination of this Agreement, each Party shall continue to be obligated to
fulfill its existing commitments, obligations, liabilities both financial and
otherwise, and other undertakings theretofore incurred hereunder or incurred
under the terms of those agreements attached as Exhibits hereto.

     24.2 Lease Expiration or Termination.
          -------------------------------
     Although Chevron will use business-like efforts to monitor ongoing
activities on the Leases, Chevron shall not be liable to Ridgewood for any Lease
termination and/or Chevron's (or its co-owners) failure to maintain any Lease
during the term of this Agreement but Chevron will attempt, so long as Chevron
owns Record Title or Operating Rights Interest in any such Lease, to notify
Ridgewood at least sixty (60) days before such Lease will terminate.

     24.3 Agreement Extension.
          -------------------
     At the termination of this Agreement, should operations for the drilling of
an Initial Test Well or a Substitute Well have been commenced on a Prospect,
this Agreement shall continue in effect so long as operations are continuously
prosecuted on such well and any subsequent earning well with no more than ninety
(90) days elapsing from rig release of the preceding well and commencement of
operations on the next well. On the expiration of such period this Agreement
shall automatically terminate without any further action from any Party hereto.
As stated in Section 24.1 above, each Party shall continue to be obligated to
fulfill its existing commitments, obligations, liabilities both financial and
otherwise, and other undertakings theretofore incurred hereunder or incurred
under the terms of those agreements attached as Exhibits hereto.

                                       41

<PAGE>

                                   ARTICLE 25

25.  INDEMNITY
     ---------

     25.1 Indemnity.
          ---------
     Ridgewood, to the extent of the obligations undertaken herein, agrees to
protect, indemnify, and save Chevron, its parent, subsidiaries, affiliates,
and/or successors and the directors, officers, employees or agents of each
("Chevron Company Group") free and harmless from all obligations, business
dealings, liabilities, debts, charges, claims, damages, demands, costs
(including attorneys' fees and court costs), penalties and causes of action
arising directly or indirectly out of all of Ridgewood's actions or inactions
under this Agreement, and related to any dealing with any Third Party that
Ridgewood has or may have with regard to financing or the assignment of, in
whole or in part, any rights under this Agreement, and to relieve the Chevron
Company Group from any and all liability (exclusive of business debts and
charges) incurred as a result of such actions. The indemnities and covenants of
this Section 25.1 shall be effective whether or not such obligations, business
dealings, liabilities, debts, charges, claims, damages, demands, costs
(including attorneys' fees and court costs), penalties and causes of action
aforesaid are caused wholly or partly by negligence attributed to the Chevron
Company Group, or by any other means, excepting those occurrences involving the
gross negligence or willful misconduct of the Chevron Company Group.

                                   ARTICLE 26

26.  BREACH
     ------

     26.1 Breach.
          ------
     Anything herein to the contrary notwithstanding, any failure by Ridgewood
to comply with any material obligation hereunder shall be considered a breach of
this Agreement. In the event of any such breach, Chevron shall notify Ridgewood
of such breach and if Ridgewood does not correct or is not in good faith
attempting to correct such breach within thirty (30) days of receipt of such
notice, Chevron may terminate this Agreement in whole or in part by notifying
Ridgewood in writing of such termination, without prior notice or demand being
made upon Ridgewood and without the necessity of placing Ridgewood in default;
provided, however, the failure by Chevron to exercise at any time or from time
to time such right of termination shall not effect a waiver of any breach or of
Chevron's right subsequently to terminate this Agreement.

                                       42

<PAGE>

                                   ARTICLE 27

27.  SPECIAL WARRANTY
     ----------------

     27.1 Special Warrant.
          ---------------
     THIS AGREEMENT IS MADE WITHOUT ANY WARRANTY OF TITLE TO THE LEASES EXCEPT
BY, THROUGH AND UNDER Chevron. WITH THE EXCEPTION OF THIS LIMITED WARRANTY,
Chevron DOES NOT WARRANT EITHER EXPRESS, STATUTORY OR IMPLIED, AS TO TITLE,
MERCHANTABILITY, CONDITION, QUALITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO
THE Chevron LEASES, AND ALL OTHER PROPERTY COVERED BY THIS AGREEMENT, INCLUDING,
BUT NOT LIMITED TO THE WELL BORES, EQUIPMENT AND FACILITIES UTILIZED BY THE
PARTIES HEREUNDER, OR ANY OTHER SORT OF WARRANTY AND IS WITHOUT RECOURSE AGAINST
Chevron WHATSOEVER, EVEN AS TO THE RETURN OF CONSIDERATION. Chevron REPRESENTS
THAT IT HAS NOT ASSIGNED OR MORTGAGED THE Chevron LEASES. Chevron MAKES NO
REPRESENTATIONS OR WARRANTIES REGARDING RIDGEWOOD'S RIGHT OF INGRESS TO AND
EGRESS FROM THE Chevron LEASES ACROSS ADJACENT OR ADJOINING LANDS.

     Chevron SPECIFICALLY DISCLAIMS, AND RIDGEWOOD EXPRESSLY WAIVES THE IMPLIED
WARRANTY OF TITLE NOTED IN LA. R. S. 31:120 WITH RESPECT TO THE Chevron LEASES.
RIDGEWOOD ACKNOWLEDGES THAT THIS EXPRESS WAIVER SHALL BE CONSIDERED A MATERIAL
AND INTEGRAL PART OF THIS AGREEMENT AND PART OF THE CONSIDERATION GIVEN
THEREFOR. RIDGEWOOD FURTHER ACKNOWLEDGES THAT THIS WAIVER HAS BEEN SPECIFICALLY
BROUGHT TO RIDGEWOOD'S ATTENTION AND THAT RIDGEWOOD HAS VOLUNTARILY AND
KNOWINGLY CONSENTED TO THIS WAIVER. THE PARTIES AGREE THAT FOR THE PURPOSES OF
THIS WAIVER OF THE IMPLIED WARRANTY OF TITLE, Chevron AND THEIR AFFILIATES SHALL
BE CONSIDERED AS THE SELLER HEREUNDER AND RIDGEWOOD EXPRESSLY WAIVES ALL RIGHTS
OF SUBROGATION IN WARRANTY OF THE SELLER AGAINST OTHER PERSONS GRANTED TO A
BUYER BY LOUISIANA CIVIL CODE ARTICLE 2503.

     RIDGEWOOD ACKNOWLEDGES THAT (i) IT IS A SOPHISTICATED INVESTOR AND OPERATOR
IN THE OIL AND GAS BUSINESS; (ii) IT UNDERSTANDS THE RISKS INVOLVED IN OIL AND

                                       43

<PAGE>

GAS EXPLORATION AND DEVELOPMENT; AND (iii) IT UNDERSTANDS THAT ITS PARTICIPATION
IN THIS AGREEMENT IS A HIGHLY RISKY UNDERTAKING AND THAT RIDGEWOOD MIGHT NOT
RECOVER ANY OF ITS INVESTMENT MADE HEREUNDER.

                                   ARTICLE 28

28.  GENERAL PROVISIONS
     ------------------

     28.1 Prospects Treated Separately.
          ----------------------------
     Unless otherwise provided, the terms and provisions stated herein shall
apply separately to each Prospect listed on Exhibit "A" or "B."

     28.2 Non-Interference.
          ----------------
     Any and all operations conducted and/or performed on any Lease for which
Ridgewood is or becomes the well operator shall be conducted and performed with
due diligence and in a workmanlike manner and shall be coordinated and scheduled
so as not to unreasonably interfere with existing or anticipated operations
located on the interests in the Leases not transferred hereunder by Chevron, if
applicable. In the event that the proposed drilling of an Initial Test Well on
any Prospect is delayed because of potential interference with operations on a
Lease by Chevron or any of the Co-Working Interest Owner(s), then Chevron and
Ridgewood agree that the period to commence operations on the Initial Test Well
shall be extended, if requested by Ridgewood, for the duration of the
interference plus a reasonable amount of time for Ridgewood to coordinate its
activities after cessation of operations by Chevron or the Co-Working Interest
Owners.

     28.3 Governmental Approvals.
          ----------------------
     From and after the execution hereof, each of the Parties hereto, without
further consideration, shall use its business-like efforts to execute, deliver,
submit, gain approvals of and record (or cause to be executed, delivered,
submitted, and recorded) good and sufficient permits, designations, other
regulatory documents, and instruments of conveyance and transfer (as
applicable), and take such other action as may be reasonably required to carry
out the purposes of this Agreement and to give effect to the covenants,
stipulations and obligations of the Parties hereto.

                                       44

<PAGE>

     28.4 Amendments.
          ----------
     This Agreement shall not be modified or amended except by mutual agreement
of the Parties in writing. No action or failure to act on the part of either
Party hereto shall be construed as a modification or amendment to, or a waiver
of any of the provisions of this Agreement.

     28.5 Declaration of Agreement.
          ------------------------
     Should either Party request a Declaration of Agreement be executed for
filing in the applicable public records, both Parties agree to execute a
Declaration of Agreement similar in form as that which is attached hereto as
Exhibit "G." Either Party shall have the right and option, at its own expense,
of filing such Declaration of record in the appropriate State and/or Federal
offices.

     28.6 Other Rights, Remedies Reserved.
          -------------------------------
     No provision contained herein providing for the termination of this
Agreement shall be construed as precluding, nor shall it preclude, Chevron from
asserting its respective rights to specific performance, damages, or any other
rights or remedies to which it may be entitled.

     28.7 No Waiver.
          ---------
     Chevron's or Ridgewood's failure to enforce any of the provisions of this
Agreement shall not effect a waiver of any violation thereof nor preclude
enforcement of that or any other provisions hereof at that or any other time.

     28.8 No New Lease Burdens.
          --------------------
     As to each Lease that remains subject to this Agreement, until Ridgewood
has earned and received an assignment of an interest, or relinquishes its rights
to earn any interest therein, or until this Agreement terminates, Chevron agrees
not to create any additional lease burdens, marketing commitments, or other
contractual obligations on such Leases as to the Available Acreage and agrees
not to assign all or a portion of its interest in the Contract Acreage, except
as contemplated by Sections 3, 4 and 8. Prior to Ridgewood receiving an
assignment of an interest in a Prospect Chevron shall not create or allow the
creation of any additional lease burdens affecting the Contract Acreage which
Ridgewood has a right to earn hereunder. During the term of this Agreement,
Chevron will use business-like efforts not to unnecessarily prejudice the rights
and options of Ridgewood as stipulated hereunder.

                                       45

<PAGE>

     28.9 Permitting Cost Sharing.
          -----------------------
     In addition to the obligations under Section 3.2, Ridgewood will be
obligated to contribute Ridgewood's ACP Interest share of all direct permitting
and regulatory costs incurred by Chevron subsequent to the Effective Date of
this Agreement on each of the Leases subject hereto. This contribution will only
come due once Ridgewood agrees to participate in the drilling of the Initial
Test Well on a Prospect. Ridgewood's ACP Interest share of such cost shall be
based on the interest it will be entitled to cam on the Lease to be drilled.
Payment will be due upon receipt of Chevron's written notice of all such costs.

     28.10 Audit Rights.
           ------------
     Upon written notice to the other Party, any Party ("requesting Party") may
examine the accounts and records of the other Party from time to time during
normal business hours required to verify a Party's compliance with the financial
obligations assumed by that Party in this Agreement. Such examinations shall be
made directly by the requesting Party at its expense or through an independent
accounting firm of the requesting Party's choice retained at the requesting
Party's expense. If performed, the requesting Party shall commence its initial
audit of the other Party's accounts and records pursuant hereto, within
twenty-four (24) months from the Effective Date of this Agreement. After the
initial audit has been conducted or the initial audit period has expired without
such audit being commenced, the requesting Party may commence subsequent audits
only covering those periods following the end of the previous twenty-four (24)
month period.

     28.11 Severability.
           ------------
     Every provision in this Agreement is intended to be severable. If any term
or provision hereof is held by a court of competent jurisdiction to be illegal
or invalid for any reason whatsoever, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect.

     28.12 Entire Agreement.
           ----------------
     This Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof, superseding all negotiations, prior
discussions and prior agreements and understandings relating to the subject
matter hereof including that certain Letter from Ridgewood to Chevron dated July
19, 2005.

                                       46

<PAGE>

     28.13 Further Assurances.
           ------------------
     Each Party agrees to execute and deliver all such additional documents,
instruments and assurances and to perform such additional acts as may be
necessary or appropriate to effectuate and perform all of the terms and
conditions of this Agreement.

     28.14 Surviving Obligation.
           --------------------
     THE TERMINATION OF THIS AGREEMENT SHALL NOT RELIEVE ANY PARTY HERETO FROM
ANY EXPENSE, LIABILITY OR OTHER OBLIGATION OR ANY REMEDY THEREFOR WHICH HAS
ACCRUED OR ATTACHED PRIOR TO THE DATE OF SUCH TERMINATION.

     28.15 Conflict of Terms.
           -----------------
     In the event of any conflict between the main body of this Agreement and
attached exhibits, the provisions of the main body of this Agreement shall
control.

     IN WITNESS WHEREOF, this Agreement is executed and made effective by the
Parties hereto on the Effective Date as defined herein.

WITNESSES:
---------

                        CHEVRON U.S.A. INC.

[SIGNATURE ILLEGIBLE]   By: /s/ G. R. Cain
---------------------      -----------------------------------------------------
                        Name:                     G. R. Cain
                             ---------------------------------------------------
[SIGNATURE ILLEGIBLE]   Title: Assistant Secretary & Gulf of Mexico Land Manager
---------------------         --------------------------------------------------

                        RIDGEWOOD ENERGY CORPORATION
                        MANAGER, RIDGEWOOD ENERGY Q FUND, LLC.
                        By: /s/ W.G. Tabor
---------------------      -----------------------------
                        Name: W. Greg Tabor
                             ---------------------------
                        Title: Executive Vice President
---------------------         --------------------------

                                       47Exhibit 10.2

                          OFFSHORE OPERATING AGREEMENT

                                 by and between

                               Chevron U.S.A. Inc.

                                       and

                          Ridgewood Energy Q Fund, LLC

                           effective November 30, 2005

                                    covering

                         Main Pass Block 30; OCS-G 4903

<PAGE>

                                TABLE OF CONTENTS

ARTICLE 1. APPLICATION ........................................................1

  1.1     Application to Contract Area ........................................1

ARTICLE 2. DEFINITIONS ........................................................2

  2.1     Additional Testing ..................................................2
  2.2     Affiliate ...........................................................2
  2.3     Authorization For Expenditure .......................................2
  2.4     Complete, Completing, Completion ....................................2
  2.5     Completion Equipment ................................................2
  2.6     Confidential Data ...................................................2
  2.7     Contract Area .......................................................2
  2.8     Deepen, Deepening ...................................................3
  2.9     Development Facilities ..............................................3
  2.10    Development Operation ...............................................3
  2.11    Development Well ....................................................3
  2.12    Exploratory Operation ...............................................3
  2.13    Exploratory Well ....................................................3
  2.14    Export Pipelines ....................................................4
  2.15    Force Majeure .......................................................4
  2.16    Hydrocarbons ........................................................4
  2.17    Joint Account .......................................................4
  2.18    Lease ...............................................................4
  2.19    MMS .................................................................4
  2.20    Non-consent Operation ...............................................4
  2.21    Non-consent Platform ................................................4
  2.22    Non-consent Well ....................................................4
  2.23    Non-operator ........................................................4
  2.24    Non-participating Party .............................................5
  2.25    Non-participating Party's Share .....................................5
  2.26    Objective Depth .....................................................5
  2.27    Objective Horizon ...................................................5
  2.28    Operator ............................................................5
  2.29    Participating Interest ..............................................5
  2.30    Participating Party .................................................5
  2.31    Platform ............................................................5
  2.32    Producible Reservoir ................................................5
  2.33    Producible Well .....................................................6
  2.34    Production Interval .................................................6
  2.35    Recomplete, Recompleting, Recompletion ..............................6
  2.36    Rework, Reworking ...................................................6
  2.37    Sidetrack, Sidetracking .............................................6
  2.38    Take-in-Kind Facilities .............................................6
  2.39    Transfer of Interest ................................................6
  2.40    Working Interest ....................................................6

ARTICLE 3. EXHIBITS ...........................................................7

  3.1     Exhibits ............................................................7
     3.1.1    Exhibit A - Operator, Description of Leases, etc ................7
     3.1.2    Exhibit B - Insurance Provisions ................................7
     3.1.3    Exhibit C - Accounting Procedure ................................7
     3.1.4    Exhibit D - Non-discrimination Provisions .......................7

                                        i

<PAGE>

     3.1.5    Exhibit E - Gas Balancing Agreement .............................7
     3.1.6    Exhibit F - Tax Partnership Provision ...........................7
     3.1.7    Exhibit G - Memorandum of Operating Agreement and Financing
                          Statement ...........................................7
     3.1.8    Exhibit H - Other ...............................................7
     3.1.9    Exhibit I - Security Rights, Default, Unpaid Charges,
                          Carved-out Interests ................................7
  3.2     Conflicts ...........................................................7

ARTICLE 4. OPERATOR ...........................................................8

  4.1     Operator ............................................................8
  4.2     Substitute Operator .................................................8
     4.2.1    Circumstances Under Which the Operator Must Conduct a
              Non-Consent Operation ...........................................8
     4.2.2    Operator's Conduct of a Non-Consent Operation in Which
              it is a Non-participating Party .................................9
     4.2.3    Appointment of a Substitute Operator ............................9
     4.2.4    Redesignation of Operator .......................................9
  4.3     Resignation of Operator .............................................9
  4.4     Removal of Operator .................................................9
  4.5     Selection of Successor Operator ....................................10
  4.6     Effective Date of Resignation or Removal ...........................10
  4.7     Delivery of Property ...............................................11

ARTICLE 5. AUTHORITY AND DUTIES OF OPERATOR ..................................11

  5.1     Exclusive Right to Operate .........................................11
  5.2     Workmanlike Conduct ................................................12
  5.3     Liens and Encumbrances .............................................12
  5.4     Employees and Contractors ..........................................12
  5.5     Records ............................................................12
  5.6     Compliance .........................................................12
  5.7     Contractors ........................................................12
  5.8     Governmental Reports ...............................................13
  5.9     Information to Participating Parties ...............................13
  5.10    Information to Non-participating Parties ...........................14

ARTICLE 6. VOTING AND VOTING PROCEDURES ......................................14

  6.1     Voting Procedures ..................................................14
     6.1.1    Voting Interest ................................................14
     6.1.2    Vote Required ..................................................14
     6.1.3    Votes ..........................................................14
     6.1.4    Meetings .......................................................15

ARTICLE 7. ACCESS ............................................................15

  7.1     Access to Contract Area ............................................15
  7.2     Reports ............................................................15
  7.3     Confidentiality ....................................................15
  7.4     Limited Disclosure .................................................16
  7.5     Limited Releases to Offshore Scout Association .....................16
  7.6     Media Releases .....................................................16

ARTICLE 8. EXPENDITURES ......................................................17

  8.1     Basis of Charge to the Parties .....................................17
  8.2     AFEs ...............................................................17
  8.3     Emergency and Required Expenditures ................................17
  8.4     Advance Billings ...................................................18
  8.5     Commingling of Funds ...............................................18
  8.6     Security Rights (LA) ...............................................18
  8.7     Overexpenditures ...................................................18

                                       ii

<PAGE>

ARTICLE 9. NOTICES ...........................................................19

  9.1     Giving and Receiving Notices .......................................19
  9.2     Content of Notice ..................................................19
  9.3     Response to Notices ................................................20
     9.3.1    Platform and/or Development Facilities Proposals ...............20
     9.3.2    Well Proposals
     9.3.3    Proposal for Multiple Operations ...............................20
     9.3.4    Other Matters ..................................................20
  9.4     Failure to Respond .................................................20
  9.5     Response to Counterproposals .......................................21
  9.6     Timely Well Operations .............................................21
  9.7     Timely Platform/Development Facilities Operations ..................21

ARTICLE 10. EXPLORATORY OPERATIONS ...........................................22

  10.1    Proposing Operations ...............................................22
  10.2    Counterproposals ...................................................22
  10.3    Operations by All Parties ..........................................22
  10.4    Second Opportunity to Participate ..................................22
  10.5    Operations by Fewer Than All Parties ...............................22
  10.6    Expenditures Approved ..............................................23
  10.7    Conduct of Operations ..............................................23
  10.8    Course of Action After Reaching Objective Depth ....................24
     10.81    Election by Participating Parties ..............................24
     10.82    Priority of Operations .........................................24
     10.8.3   Second Opportunity to Participate ..............................25
     10.8.4   Operations by Fewer Than All Parties ...........................25
     10.8.5   Subsequent Operations ..........................................27
  10.9    Wells Proposed Below Deepest Producible Reservoir ..................27
  10.10   Initial Exploratory Well on Prospect ...............................28

ARTICLE 11. DEVELOPMENT OPERATIONS ...........................................28

  11.1    Proposing Operations ...............................................28
  11.2    Counterproposals ...................................................28
  11.3    Operations by All Parties ..........................................29
  11.4    Second Opportunity to Participate ..................................29
  11.5    Operations by Fewer Than All Parties ...............................29
  11.6    Expenditures Approved ..............................................29
  11.7    Conduct of Operations ..............................................30
  11.8    Course of Action After Reaching Objective Depth ....................30
     11.8.1   Election by Fewer Than All Parties .............................30
     11.8.2   Priority of Operations .........................................30
     11.8.3   Second Opportunity to Participate ..............................31
     11.8.4   Operations by Fewer Than All Parties ...........................31
     11.8.5   Subsequent Operations ..........................................32

ARTICLE 12. PLATFORM AND DEVELOPMENT FACILITIES ..............................32

  12.1    Proposal ...........................................................32
  12.2    Counterproposals ...................................................33
     12.2.1   Operations by All Parties ......................................33
     12.2.2   Second Opportunity to Participate ..............................33
     12.2.3   Operations by Fewer Than All Parties ...........................33
  12.3    Ownership and Use of the Platform and Development Facilities .......34
  12.4    Rights to Take in Kind .............................................34
  12.5    Expansion or Modification of a Platform and/or Development
          Facilities .........................................................36

                                       iii

<PAGE>

ARTICLE 13. NON-CONSENT OPERATIONS ...........................................36

  13.1     Non-consent Operations ............................................36
     13.1.1     Non-interference .............................................36
     13.1.2     Multiple Completion Limitation ...............................36
     13.1.3     Metering .....................................................36
     13.1.4     Non-consent Well .............................................37
     13.1.5     Cost Information .............................................37
     13.1.6     Completions ..................................................37
  13.2    Relinquishment of Interest .........................................38
     13.2.1     Production Reversion Recoupment ..............................38
     13.2.2     Non-production Reversion .....................................39
  13.3    Deepening or Sidetracking of Non-consent Well ......................39
  13.4    Deepening or Sidetracking Cost Adjustments .........................40
  13.5    Subsequent Operations in Non-consent Well ..........................40
  13.6    Operations in a Production Interval ................................40
  13.7    Operations Utilizing a Non-consent Platform and/or Development
          Facilities .........................................................40
  13.8    Discovery or Extension from Non-consent Drilling ...................41
  13.9    Allocation of Platform/Development Facilities Costs to Non-consent
          Operations .........................................................42
     13.9.1      Investment Usage Fees .......................................42
     13.9.2      Operating and Maintenance Charges ...........................45
  13.10   Allocation of Costs Between Zones ..................................45
  13.11   Contract Area Maintenance Operations ...............................45
     13.11.1     Participation in Contract Area Maintenance Operations .......45
     13.11.2     Accounting for Non-participation ............................46
  13.12   Retention of Contract Area by Non-consent Well .....................46
  13.13   Non-Consent Premiums ...............................................47
  13.14   Non-Applicability to Exploratory Operations ........................47

ARTICLE 14. ABANDONMENT, SALVAGE AND SURPLUS .................................48

  14.1    Platform Salvage and Removal Costs .................................48
  14.2    Abandonment of Platforms, Development Facilities or Wells ..........48
  14.3    Assignment of Interest .............................................48
  14.4    Abandonment Operations Required by Governmental Authority ..........48
  14.5    Disposal of Surplus Material .......................................49

ARTICLE 15. WITHDRAWAL .......................................................49

  15.1    Right to Withdraw ..................................................49
  15.2    Response to Withdrawal Notice ......................................49
     15.2.1   Unanimous Withdrawal ...........................................50
     15.2.2   No Additional Withdrawing Parties ..............................50
     15.2.3   Acceptance of the Withdrawing Parties' Interests ...............50
     15.2.4   Effects of Withdrawal ..........................................50
  15.3    Limitation Upon and Conditions of Withdrawal .......................51
     15.3.1   Prior Expenses .................................................51
     15.3.2   Confidentiality ................................................52
     15.3.3   Emergencies and Force Majeure ..................................52

ARTICLE 16. RENTALS, ROYALTIES AND OTHER PAYMENTS ............................52

  16.1    Overriding Royalty and Other Burdens ...............................52
  16.2    Subsequently Created Interest ......................................53
  16.3    Payment of Rentals and Minimum Royalties ...........................53
  16.4    Non-participation in Payments ......................................53
  16.5    Royalty Payments ...................................................54

ARTICLE 17. TAXES ............................................................54

                                       iv

<PAGE>

  17.1    Property Taxes .....................................................54
  17.2    Contest of Property Tax Valuation ..................................54
  17.3    Production and Severance Taxes .....................................54
  17.4    Other Taxes and Assessments ........................................54

ARTICLE 18. INSURANCE ........................................................55

  18.1    Insurance ..........................................................55
  18.2    Bonds ..............................................................55

ARTICLE 19. LIABILITY, CLAIMS AND LAWSUITS ...................................55

  19.1    Individual Obligations .............................................55
  19.2    Notice of Claim or Lawsuit .........................................55
  19.3    Settlements ........................................................56
  19.4    Defense of Claims and Lawsuits .....................................56
  19.5    Liability for Damages ..............................................56
  19.6    Indemnification for Non-Consent Operations .........................57
  19.7    Damage to Reservoir, Loss of Reserves and Profit ...................57
  19.8    Non-Essential Personnel ............................................57
  19.9    Dispute Resolution Procedure .......................................58

ARTICLE 20. INTERNAL REVENUE PROVISION .......................................58

  20.1    Internal Revenue Provision .........................................58

ARTICLE 21 CONTRIBUTIONS .....................................................58

  21.1    Notice of Contributions Other Than Advances for Sale of Production .58
  21.2    Cash Contributions .................................................58
  21.3    Acreage Contributions

ARTICLE 22. DISPOSITION OF PRODUCTION ........................................59

  22.1    Take-in-Kind Facilities ............................................59
  22.2    Duty to Take-in-Kind ...............................................59
  22.3    Failure to Take Oil and Condensate in-Kind .........................60
  22.4    Failure to Take Gas in-Kind ........................................60
  22.5    Expenses of Delivery in-Kind .......................................60

ARTICLE 23. APPLICABLE LAW ...................................................60

  23.1    Applicable Law .....................................................60

ARTICLE 24. LAWS, REGULATIONS AND NON-DISCRIMINATION .........................61

  24.1    Laws and Regulations ...............................................61
  24.2    Non-discrimination .................................................61

ARTICLE 25. FORCE MAJEURE ....................................................61

  25.1    Force Majeure ......................................................61

ARTICLE 26. SUCCESSORS, ASSIGNS AND PREFERENTIAL RIGHTS ......................62

  26.1    Successors and Assigns .............................................62
  26.2    Transfer of Interest ...............................................62
  26.3    Consent to Assign ..................................................62
  26.4    Transfers Between Parties ..........................................63
  26.5    Division of Interest ...............................................63
  26.6    Preferential Rights- ...............................................63

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<PAGE>

ARTICLE 27. ADMINISTRATIVE PROVISIONS ........................................64

  27.1    Term ...............................................................64
  27.2    Waiver .............................................................65
  27.3    Waiver of Right to Partition .......................................65
  27.4    Compliance With Laws and Regulations ...............................65
     27.4.1   Severance of Invalid Provisions ................................65
     27.4.2   Fair and Equal Employment ......................................65
  27.5     Construction and Interpretation of this Agreement .................66
     27.5.1   Headings for Convenience .......................................66
     27.5.2   Article References .............................................66
     27.5.3   Gender and Number ..............................................66
     27.5.4   Future References ..............................................66
     27.5.5   Currency .......................................................66
     27.5.6   Optional Provisions ............................................66
     27.5.7   Joint Preparation ..............................................66
     27.5.8   Integrated Agreement ...........................................66
     27.5.9   Binding Effect .................................................67
     27.5.10  Further Assurances .............................................67
     27.5.11  Counterpart Execution ..........................................67
  27.6    Restricted Bidding .................................................67
  27.7    Conflict of Terms ..................................................67

                                       vi

<PAGE>

                          OFFSHORE OPERATING AGREEMENT

THIS OFFSHORE OPERATING AGREEMENT ("Agreement"), made effective the 30th day of
November, 2005, by and between Chevron U.S.A. Inc. ("Chevron") and Ridgewood
Energy Q Fund, LLC ("Ridgewood"), their respective heirs, successors, legal
representatives, and assigns, herein referred to collectively as the "Parties"
and individually as a "Party."

                                   WITNESSETH:

WHEREAS, the Parties will, with an earning of interest by Ridgewood, co-own
operating rights interests in one oil and gas Lease, as to one or more Contract
Areas, as identified in Exhibit "A" but within that Lease and desire to explore
an area governed by the "EPA", as defined hereafter, and under limited
application this Agreement, but to develop, produce, and operate those Contract
Areas pursuant to this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants in
this Agreement, the Parties agree as follows:

                                    ARTICLE I

                                   APPLICATION

1.1    Application to Contract Area

       This Agreement applies independently to the entirety of each Contract
       Area. For purposes of this Agreement, activities or operations affecting
       one Contract Area are considered activities or operations affecting only
       that Contract Area. Unless otherwise provided in this Agreement, the
       Parties, according to their respective Working Interests, own and hold
       all rights and obligations in and under each of the listed Contract
       Area(s) and, all property acquired with funds from the Joint Account, and
       all Hydrocarbons from or attributed to that Contract Area. Until an
       earning by Ridgewood in and to the Contract Area under that certain
       Exploration Participation Agreement ("EPA") dated November 30, 2005
       between Chevron U.S.A. Inc. and Ridgewood Energy Corporation, the
       application of the terms and provisions of this Agreement shall be
       limited to and shall govern and bear solely upon the operations of and
       conducted for the well or wells drilled under that EPA. The parties agree
       that the execution of this Agreement effective as of November 30, 2005 is
       not intended to grant or recognize any right to interest in ownership in
       the Contract Area by Ridgewood and that full application of this
       Agreement become effective only with an earning under the EPA. The
       Parties agree to amend Exhibit "A" hereof to cover the "Additional
       Opportunities Prospects" as such term is defined in the EPA, only upon
       the earning thereof by Ridgewood in accordance with the provisions of the
       EPA.

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<PAGE>

                                    ARTICLE 2
                                   DEFINITIONS

2.1    Additional Testing

       An operation not previously approved in the AFE and proposed for the
       specific purpose of obtaining additional subsurface data.

2.2    Affiliate

       For a person, another person that controls, is controlled by, or is under
       common control with that person. In this definition, (a) "control" means
       the ownership by one person, directly or indirectly, of more than fifty
       percent (50%) of the voting securities of a corporation or, for other
       persons, the equivalent ownership interest (such as partnership
       interests), and (b) "person" means an individual, corporation,
       partnership, trust, estate, unincorporated organization, association, or
       other legal entity.

2.3    Authorization For Expenditure (AFE)

       An authority to expend funds prepared by a Party to estimate the costs to
       be incurred in conducting an operation under this Agreement.

2.4    Complete, Completing, Completion

       An operation to complete a well for initial Hydrocarbon production in one
       or more Producible Reservoirs, including, but not limited to, setting
       production casing, perforating the casing, stimulating the well,
       installing Completion Equipment, and/or conducting production tests.

2.5    Completion Equipment

       That certain equipment on an Exploratory Well or a Development Well
       required to be installed prior to the movement of a well-completion rig
       off that well

       (a)    under 30 CFR 250.502, or any succeeding order or regulation issued
              by the MMS, up to and including the tree, and

       (b)    by any other regulatory agency having jurisdiction, including, but
              not limited to, a caisson and navigational aids.

2.6    Confidential Data

       The information and data obtained under this Agreement, including, but
       not limited to, geological, geophysical, and reservoir information;
       originals and copies of logs; core and core analysis; and other well
       information including, but not limited to, the progress, tests, or
       results of a well drilled or an operation conducted under this Agreement,
       except data or information that becomes public other than by breach of
       this Agreement or as agreed to in writing by the Participating Parties.

2.7    Contract Area

       The portions, area and depths of the Lease but solely within the Contract
       Area, listed on Exhibit "A" to this Agreement but after an earning by
       Ridgewood under the EPA.

MP 30 EPA JOA
                                        2

<PAGE>

2.8    Deepen, Deepening

       A drilling operation conducted in an existing wellbore below the
       Objective Depth to which the well was previously drilled.

2.9    Development Facilities

       Production equipment other than Completion Equipment that is acquired
       under this Agreement and installed on or outside the Contract Area in
       order to handle or process Hydrocarbon production. Development Facilities
       include, but are not limited to,

       (a)    compression, separation, dehydration, generators, treaters,
              skimmers, bunkhouses and metering equipment,

       (b)    the flowlines, gathering lines or lateral lines that deliver
              Hydrocarbons and water

              1      from the Completion Equipment to the Platform or to offsite
                     host facilities, or

              2      from the Platform to Export Pipelines; and

       (c)    injection and disposal wells. Development Facilities include
              Export Pipelines. All Chevron solely owned platforms, equipment
              and facilities in place prior to the effective date or installed
              for the Chevron account outside of this Agreement are excluded.

2.10   Development Operation

       An operation on the Contract Area other than an Exploratory Operation.

2.11   Development Well

       A well or portion of a well proposed as a Development Operation.

2.12   Exploratory Operation

       An operation that is conducted on the Contract Area and that is any of
       the following:

       (a)    proposed to Complete an Exploratory Well;

       (b)    proposed for an Objective Horizon that is not a Producible
              Reservoir; or

       (c)    proposed for an Objective Horizon that has a Producible Well, but
              that will be penetrated at a location where the distance between
              the midpoint of the Objective Horizon to be penetrated by the
              proposed operation and the midpoint of the same Objective Horizon
              where it is actually penetrated by a Producible Well will be at
              least six thousand (6,000) feet from a Gas Completion or three
              thousand ((3,000) feet from an Oil Completion.

       (d)    proposed for an Objective Horizon that is unanimously agreed by
              the Parties not to be in an existing Producible Reservoir; or

       (e)    proposed as a deeper drilling operation below the base of the
              deepest producible reservoir.

2.13   Exploratory Well

       A well or portion of a well proposed as an Exploratory Operation.

MP 30 EPA JOA
                                        3

<PAGE>

2.14   Export Pipelines

       Pipelines installed after the effective date hereof for the benefit of a
       Contract Area and to which a gathering line or lateral line downstream of
       the Platform and/or Development Facilities or, if there is no Platform,
       the Completion Equipment, is connected and which are used to transport
       Hydrocarbons or produced water to shore.

2.15   Force Majeure

       An event or cause that is reasonably beyond the control of the Party
       claiming the existence of such event or cause, which includes, but is not
       limited to, a flood, storm, hurricane, loop current/eddy, or other act of
       God, a fire, loss of well control, oil spill, or other environmental
       catastrophe, a war, terrorist act, a civil disturbance, a labor dispute,
       a strike, a lockout, compliance with a law, order, rule, or regulation,
       governmental action or delay in granting necessary, permits or permit
       approvals, and the inability to secure materials or a rig.

2.16   Hydrocarbons

       Oil and/or gas and associated liquid and gaseous by-products (except
       helium) which may be produced from a wellbore located on and in the
       Contract Area.

2.17   Joint Account

       This term has the same definition as the defined term "Joint Account" in
       Exhibit "C" (Accounting Procedure).

2.18   Lease

       That portion of the oil and gas Lease identified in Exhibit "A" and the
       lands covered by that Contract Area.

2.19   MMS

       The Minerals Management Service, United States Department of Interior, or
       its successor agency. Where appropriate, the reference to MMS shall
       include the appropriate state agency.

2.20   Non-consent Operation

       An operation conducted on the Contract Area by fewer than all Parties,
       which subjects the Nonparticipating Party to Article 13 (Non-Consent
       Operations).

2.21   Non-consent Platform

       A Platform installed after the effective date hereof for the benefit of a
       Contract Area and owned by fewer than all Parties.

2.22   Non-consent Well

       An Exploratory Well or a Development Well owned by fewer than all
       Parties.

2.23   Non-operator

       A Party other than the Operator.

2.24   Non-participating Party

       A Party other than a Participating Party.

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<PAGE>

2.25   Non-participating Party's Share

       The Participating Interest that a Non-participating Party would have had
       if all Parties had participated in the operation.

2.26   Objective Depth

       A depth sufficient to test the lesser of the Objective Horizon or the
       specific footage depth stated in the AFE and approved by the
       Participating Parties.

2.27   Objective Horizon

       The interval consisting of the deepest zone, formation, or horizon to be
       tested in an Exploratory Well, Development Well, Deepening operation, or
       Sidetracking operation, as stated in the AFE and approved by the
       Participating Parties.

2.28   Operator

       The Party designated in Article 4.1 (Designation of the Operator), a
       successor Operator selected under Article 4.5 (Selection of Successor
       Operator), and, if applicable, a substitute Operator selected under
       Article 4.2 (Substitute Operator).

2.29   Participating Interest

       The percentage of the costs and risks of conducting an operation under
       this Agreement that a Participating Party agrees, or is otherwise
       obligated, to pay and bear.

2.30   Participating Party

       A Party that executes an AFE for a proposed operation or otherwise
       agrees, or becomes liable, to pay and bear a share of the costs and risks
       of conducting an operation under this Agreement.

2.31   Platform

       An offshore structure installed after the effective date hereof and for
       the benefit of a Contract Area that supports Wells, Completion Equipment,
       or Development Facilities, whether fixed, compliant, or floating, and the
       components of that structure, including, but not limited to, caissons or
       well protectors to the extent same are not Completion Equipment, rising
       above the water line and used for the exploration, development, or
       production of Hydrocarbons. The term "Platform" shall also mean any
       offshore equipment or template (excluding templates used for drilling
       operations) and any component thereof, other than Completion Equipment
       (including, but not limited to, flow lines and control systems), that is
       resting on or attached to the sea floor and used to obtain production of
       Hydrocarbons. All Chevron solely owned platforms, equipment and
       facilities in place prior to the effective date or installed for the
       Chevron account outside of this Agreement are excluded.

2.32   Producible Reservoir

       An underground accumulation of Hydrocarbons (a) in a single and separate
       natural pool characterized by a distinct pressure system, (b) not in
       Hydrocarbon communication with another accumulation of Hydrocarbons, and
       (c) into which a Producible Well has been drilled.

MP 30 EPA JOA
                                        5

<PAGE>

2.33   Producible Well

       A well that is drilled under this Agreement and that (a) is producing
       Hydrocarbons; (b) is determined to be, or meets the criteria for being
       determined to be, capable of producing Hydrocarbons in paying quantities
       under an applicable order or regulation issued by the governmental
       authority having jurisdiction; or (c) is determined to be a Producible
       Well by two (2) or more Participating Parties having a combined Working
       Interest of fifty percent (50%) or more, even if the well has been
       plugged and permanently or temporarily abandoned.

2.34   Production Interval

       A zone or interval producing or capable of producing Hydrocarbons from a
       well without Reworking operations.

2.35   Recomplete, Recompleting, Recompletion

       An operation whereby a Completion in one Producible Reservoir is
       abandoned in order to attempt a Completion in a different Producible
       Reservoir within the existing wellbore.

2.36   Rework, Reworking

       An operation conducted in a well, after it has been Completed in one or
       more Producible Reservoirs, to restore, maintain, or improve Hydrocarbon
       production from one or more of those Producible Reservoirs, but
       specifically excluding drilling, Sidetracking, Deepening, Completing, or
       Recompleting the well.

2.37   Sidetrack, Sidetracking

       The directional control and intentional deviation of a well to change the
       bottom-hole location, whether it be to the original Objective Depth or
       formation or another bottom-hole location not deeper than the
       stratigraphic equivalent of the initial Objective Depth, unless the
       intentional deviation is done to straighten the hole or to drill around
       junk in the hole or to overcome other mechanical difficulties.

2.38   Take-in-Kind Facilities

       Facilities which (i) are not paid for by the Joint Account and (ii) are
       installed after the effective date hereof for the benefit of a Contract
       Area on a Platform but for the benefit and use of a particular Party or
       Parties to take its or their share of Hydrocarbon production in kind. All
       Chevron solely owned platforms, equipment and facilities in place prior
       to the effective date or installed for the Chevron account outside of
       this Agreement are excluded.

2.39   Transfer of Interest

       A conveyance, assignment, transfer, farmout, exchange, or other
       disposition of all or part of a Party's Working Interest.

2.40   Working Interest

       The record title interest, or where applicable, the leasehold interest or
       the operating rights of each Party in and to each Contract Area
       (expressed as the percentage provided in Exhibit "A"). If a Party's
       record title interest is different from its operating rights, the Working
       Interest of each Party is the interest provided in Exhibit "A".

MP 30 EPA JOA
                                        6

<PAGE>

                                    ARTICLE 3

                                    EXHIBITS

3.1    Exhibits

       The following exhibits are attached to this Agreement and incorporated
       into this Agreement by reference:

       (Check the exhibits the Parties wish to incorporate into this Agreement.)

       3.1.1  Exhibit "A"

                     Operator, Description of the Lease and Contract Area(s),
                     Division of Interests, and Notification Addresses

       3.1.2  Exhibit "B"

                     Insurance Provisions.

       3.1.3  Exhibit "C"

                     Accounting Procedure.

       3.1.4  Exhibit "D"

                     Non-discrimination Provisions.

       3.1.5  Exhibit "E"

                     Gas Balancing Agreement.

       3.1.6  Exhibit "F"

                     Tax Partnership Provision.

       3.1.7  Exhibit "G"

                     Memorandum of Operating Agreement and Financing Statement.

       3.1.8  Exhibit "H"

                     Dispute Resolution Procedure.

       3.1.9  Exhibit "I"

                     Security Rights; Default' Unpaid Charges' Carved-out
                     Interests

3.2    Conflicts

       If a provision of an exhibit, except Exhibits "D", "E", or "F", is
       inconsistent with a provision in the body of this Agreement, the
       provision in the body of this Agreement shall prevail. If a provision of
       Exhibit "D", "E", or "F", is inconsistent with a provision in the body of
       this Agreement, however, the provision of the exhibit shall prevail.

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<PAGE>

                               ARTICLE 4 OPERATOR

4.1    Operator

       Chevron U.S.A. Inc. is designated as the Operator of the Contract Area
       covered by this Offshore Operating Agreement. The Parties shall promptly
       execute and provide Operator with all documents required by the MMS in
       connection with the designation of Chevron as Operator or with the
       designation of any other Party as a substitute or successor Operator.
       Unless agreed to the contrary by all Parties hereto, Operator shall also
       be classified as the designated applicant for oil spill financial
       responsibility purposes and each Non-operating Party shall promptly
       execute the appropriate documentation reflecting this designation and
       promptly provide same to Operator for filing with MMS.

4.2    Substitute Operator

       Except as otherwise provided in Article 4.2.1 (Circumstances Under Which
       the Operator Must Conduct a Non-Consent Operation), if the Operator
       becomes a Non-participating Party in a Non-consent Operation, the
       Participating Parties may approve the designation of any Participating
       Party as the substitute Operator by the vote of one (1) or more of the
       Participating Parties having a combined fifty-one percent (51%) or more
       of the Participating Interests. The substitute Operator shall serve only
       (a) for the Non-consent Operation, (b) on the Contract Area, or that
       portion of the Contract Area governed hereby, affected by the Non-consent
       Operation, and (c) with the same authority, rights, obligations, and
       duties as the Operator. If a Non-operator is the only Participating Party
       in a Non-consent Operation, then the Non-operator shall be designated as
       the substitute Operator for that Non-consent Operation, with no vote
       required, unless the Non-operator elects not to accept the designation.
       No Non-operator shall ever be designated as a substitute Operator against
       its will. If a substitute Operator is not designated under the foregoing
       procedures, the Operator shall, upon the unanimous agreement of the
       Participating Parties and the Operator, conduct the Non-consent Operation
       on behalf of the Participating Parties and at the Participating Parties'
       sole cost and risk under Article 13 (Non Consent Operations).

       4.2.1  Circumstances Under Which the Operator Must Conduct a Non-Consent
              Operation

              If:

              (a)    a drilling rig is on location and the Operator becomes a
                     Non-participating Party in a supplemental AFE for an
                     Exploratory Operation, or Development Operation, or

              (b)    the Operator becomes a Non-participating Party in an
                     operation to be conducted from a Platform operated by the

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              Operator, the Operator, as a Non-participating Party, shall
              conduct the Non-consent Operation on behalf of the Participating
              Parties and at the Participating Parties' sole cost and risk under
              Article 13 (Non-Consent Operations).

       4.2.2  Operator's Conduct of a Non-Consent Operation in Which it is a
              Non-participating Party

              When, under Article 4.2 (Substitute Operator) or Article 4.2.1
              (Circumstances Under Which the Operator Must Conduct a Non-Consent
              Operation), the Operator conducts a Non-consent Operation in which
              it is a Non-participating Party, it shall follow the practices and
              standards in Article 5 (Authorities and Duties of Operator).
              Notwithstanding anything to the contrary in Exhibit "C", the
              Operator shall not be required to proceed with the Non consent
              Operation until the Participating Parties have advanced the total
              estimated costs of the Non-consent Operation to the Operator. The
              Operator shall never be obligated to expend any of its own funds
              for the Non-consent Operation in which it is a Non participating
              Party.

       4.2.3  Appointment of a Substitute Operator

              After expiration of all applicable response periods for the
              Non-consent Operation and selection of a substitute Operator, each
              Party shall promptly provide the substitute Operator with the
              appropriate MMS designation of operator forms and designation of
              oil spill responsibility forms. The Operator and the substitute
              Operator shall coordinate the change of operatorship to avoid
              interfering with ongoing activities and operations, if any,
              including but not limited to, Contract Area maintenance activities
              and operations.

       4.2.4  Redesignation of Operator

              Within five (5) days after conclusion of the Non-consent
              Operation, all Parties shall execute and provide the Operator with
              the appropriate MMS designation of operator forms and designation
              of oil spill responsibility forms to return operatorship to the
              Operator, thereby superseding the Parties' designation of the
              substitute Operator under Article 4.2.3 (Appointment of a
              Substitute Operator).

4.3    Resignation of Operator

       Subject to Article 4.5 (Selection of Successor), the Operator may resign
       at any time by giving written notice to the Parties, except that the
       Operator may not resign during a Force Majeure or an emergency that poses
       a threat to life, safety, property, or the environment. If the Operator
       ceases to own a Working Interest, the Operator automatically shall be
       deemed to have resigned as the Operator without any action by the
       Non-operators.

4.4    Removal of Operator

       Operator may be removed by an affirmative vote of the Parties owning a
       combined Working Interest of fifty-one percent (51%) or more of the
       remaining Working Interest after excluding the Operator's Working
       Interest if:

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       (a)    Operator becomes insolvent or unable to pay its debts as they
              mature, makes an assignment for the benefit of creditors, commits
              an act of bankruptcy, or seeks relief under laws providing for the
              relief of debtors;

       (b)    a receiver is appointed for Operator or for substantially all of
              its property or affairs;

       (c)    a Transfer of Interest by the Operator which reduces the
              Operator's Working Interest to less than twenty five percent
              (25%), whether accomplished by one or more Transfer of Interest;
              or

       (d)    Operator commits a substantial breach of a material provision of
              this Agreement and fails to cure the breach within sixty (60) days
              after notice of the breach.

       If a petition for relief under the federal bankruptcy laws is filed by or
       against Operator, and if a federal bankruptcy court prevents the removal
       of Operator, all Non-operators and Operator shall comprise an interim
       operating committee to operate until Operator has elected to reject or
       assume this Agreement under the Bankruptcy Code. An election by Operator
       as a debtor-in-possession or by a trustee in bankruptcy to reject this
       Agreement shall be deemed to be a resignation by Operator without any
       action by the Non-operators, except the selection of a successor. To be
       effective, a vote to remove Operator for any cause described above must
       be taken within sixty (60) days after a Non-operator receives actual
       knowledge of the cause. A change of corporate name or structure of
       Operator shall not be deemed to be a resignation or basis for removing
       Operator.

4.5    Selection of Successor

       Upon resignation or removal of Operator, a successor Operator shall be
       selected from among the Parties by an affirmative vote of one (1) or more
       Parties having a combined Working Interest of fifty-one percent (51%) or
       more. If the resigned or removed Operator is not entitled to vote, fails
       to vote, or votes only to succeed itself, then the successor Operator
       shall be selected by the affirmative vote of the Parties owning a
       combined Working Interest of fifty-one percent (51%) or more of the
       remaining Working Interest after excluding the Working Interest of the
       resigned or removed Operator. If the Operator assigns all or a part of
       its Working Interest, then under Article 4.3 (Resignation of Operator) or
       Article 4.4.(c), the Party who acquired all or a part of the former
       Operator's Working Interest shall not be excluded from voting for a
       successor Operator. If there are only two Parties to this Agreement when
       the Operator resigns or is removed, then the Non-operator automatically
       has the right, but not the obligation, to become the Operator. If no
       Party is willing to become the Operator, this Agreement shall terminate
       under Article 27.1 (Term).

4.6    Effective Date of Resignation or Removal

       The resignation or removal of the Operator shall become effective as soon
       as practical but no later than 7:00 a.m. on the first day of the month
       following a period of ninety (90) days after the date of resignation or
       removal, unless a longer period is required for the Parties to obtain
       approval of the designation of the successor Operator, and designated
       applicant for oil spill

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       financial responsibility purposes, by the MMS; however, in no event shall
       the resignation or removal of Operator become effective until a successor
       Operator has assumed the duties of Operator. The resignation or removal
       of the outgoing Operator shall not prejudice any rights, obligations, or
       liabilities resulting from its operatorship. The successor Operator may
       charge the Joint Account for reasonable costs incurred in connection with
       copying or obtaining the former Operator's records, information or data
       except when the change of Operator results from a merger, consolidation,
       reorganization or sale or transfer to an Affiliate of the Operator.

4.7    Delivery of Property

       On the effective date of resignation or removal of the Operator, the
       outgoing Operator shall deliver or transfer to the successor Operator
       custodianship of the Joint Account and possession of all items purchased
       for the Joint Account under this Agreement, all Hydrocarbons that are not
       the separate property of a Party, all equipment, materials, and
       appurtenances purchased for the Joint Account under this Agreement, which
       are not already in the possession of the successor Operator, and all
       books, records, and inventories relating to the Joint Account (other than
       those books, records, and inventories maintained by the outgoing Operator
       as the owner of a Working Interest). The outgoing Operator shall
       distribute or return all funds related to the Joint Account to the
       Parties who contributed the funds or are otherwise entitled to receive
       the funds under this Agreement. The outgoing Operator shall further use
       its reasonable efforts to transfer to the successor Operator, as of the
       effective date of the resignation or removal, its rights as Operator
       under all contracts exclusively relating to the activities or operations
       conducted under this Agreement, and the successor Operator shall assume
       all obligations of the Operator that are assignable under the contracts.
       The Parties may audit the Joint Account and conduct an inventory of all
       property and all Hydrocarbons that are not the separate property of a
       Party, and the inventory shall be used in the accounting to all Parties
       by the outgoing Operator of the property and the Hydrocarbons that are
       not the separate property of a Party. The inventory and audit shall be
       conducted under Exhibit "C".

                                    ARTICLE 5

                        AUTHORITY AND DUTIES OF OPERATOR

5.1    Exclusive Right to Operate

       Unless otherwise provided in this Agreement, Operator shall have the
       exclusive right and duty to conduct operations (or cause them to be
       conducted) under this Agreement. In performing services under this
       Agreement for the Non-operators, Operator shall be an independent
       contractor, not subject to the control or direction of Non-operators,
       except for the type of operation to be undertaken in accordance with the
       voting and election procedures in this Agreement. No Party shall be
       deemed to be, or hold itself out as, the agent or fiduciary of another
       Party.

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5.2    Workmanlike Conduct

       Operator shall timely commence and conduct all operations in a good and
       workmanlike manner, as would a prudent operator under the same or similar
       circumstances. OPERATOR SHALL NOT BE LIABLE TO NON-OPERATORS FOR LOSSES
       SUSTAINED OR LIABILITIES INCURRED, EXCEPT AS MAY RESULT FROM OPERATOR'S
       GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Operator shall never be required
       under this Agreement to conduct an operation that it believes would be
       unsafe or would endanger persons, property or the environment. Unless
       otherwise provided in this Agreement, Operator shall consult with
       Non-operators and keep them informed of all important matters.

5.3    Liens and Encumbrances

       Operator shall endeavor to keep the Contract Area, wells, Platforms,
       Development Facilities, and other equipment free from all liens and other
       encumbrances occasioned by operations hereunder, except those provided in
       Article 8.6 (Security Rights).

5.4    Employees and Contractors

       Operator shall select employees and contractors and determine their
       number, hours of labor, and compensation. The employees shall be
       employees of Operator.

5.5    Records

       The Operator shall keep or cause to be kept accurate books, accounts, and
       records of activities or operations under this Agreement in compliance
       with the Accounting Procedure in Exhibit "C". Unless otherwise provided
       in this Agreement, all records of the Joint Account shall be available to
       a Non-operator as provided in Exhibit "C". The Operator shall use
       good-faith efforts to ensure the settlements, billings, and reports
       rendered to each Party under this Agreement are complete and accurate.
       The Operator shall notify the other Parties promptly upon the discovery
       of any error or omission pertaining to the settlements, billings, and
       reports rendered to each Party.

5.6    Compliance

       Operator shall comply, and shall require all agents and contractors to
       comply, with all applicable laws, rules, regulations, and orders of
       governmental authorities having jurisdiction.

5.7    Contractors

       Operator may enter into contracts with qualified and responsible
       independent contractors for the design, construction, installation,
       drilling, production or operation of wells, Platforms and Development
       Facilities. Insofar as possible, Operator shall use competitive bidding
       to procure goods and services for the benefit of the Parties. All
       drilling operations conducted under this Agreement shall be conducted by
       properly qualified and responsible drilling contractors under current
       competitive contracts. A drilling contract will be deemed to be a current
       competitive contract if it (a) was made within twelve (12) months before

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<PAGE>

       the commencement of the well and (b) contains terms, rates, and
       provisions that, when the contract was made, did not exceed those
       generally prevailing in the area for operations involving substantially
       equivalent rigs that are capable of conducting the drilling operation. At
       its election, Operator may use its own or an Affiliate's drilling
       equipment, derrick barge, tools, or machinery to conduct drilling
       operations, but the work shall be (i) performed by Operator or its
       Affiliate acting as an independent contractor, (ii) approved by written
       agreement with the Participating Parties before commencement of
       operations, and (iii) conducted under the same terms and conditions and
       at the same rates as are customary and prevailing in competitive
       contracts of third parties doing work of similar nature.

5.8    Governmental Reports

       Operator shall make reports to governmental authorities it has a duty to
       make as Operator and shall furnish copies of the reports to the
       Participating Parties. The Operator shall provide each Non-operating
       Party with a copy of each notice, order, and directive received from the
       MMS, As soon as reasonably practicable, each Party shall give written
       notice to the other Parties before each meeting with government
       authorities of which it has notice and that affects the Contract Area.

5.9    Information to Participating Parties

       Except as provided in Article 8.6, Operator shall furnish each
       Participating Party the following information, if applicable, for each
       activity or operation conducted by Operator:

       5.9.1  A copy of the application for permit to drill and all amendments
              thereto.

       5.9.2  A daily drilling report (or Reworking report or Recompletion
              report, if applicable), giving the depth, corresponding
              lithological information, data on drilling fluid characteristics,
              information about drilling or operational difficulties or delays,
              if any, and other pertinent information, by facsimile transmission
              or electronic mail within twenty-four (24) hours (inclusive of
              Saturdays, Sundays, and federal holidays) for well operations
              conducted in the preceding twenty-four (24) hour period.

       5.9.3  A complete report of each core analysis.

       5.9.4  A copy of each electrical survey, currently as it is run; all data
              for each radioactivity log, temperature survey, deviation or
              directional survey, caliper log, and other log or survey obtained
              during the drilling of the well; and, upon completion of the well,
              a composite of all electrical-type logs, insofar as is reasonable
              and customary.

       5.9.5  A copy of all well test results, bottom-hole pressure surveys, and
              fluid analyses.

       5.9.6  Upon written request received by Operator before commencement of
              drilling, samples of cuttings and cores taken from the well (if
              sufficient cores are retrieved), packaged in containers furnished
              by Operator at the expense of the requesting Party, marked as to
              the depths from which they were taken, and shipped at the expense
              of the requesting Party by express courier to the address
              designated by the requesting Party.

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       5.9.7  To the extent possible, twenty-four (24) hours' advance notice of,
              and access to, logging, coring, and testing operations.

       5.9.8  A monthly report on the volume of Hydrocarbons and water produced
              from each well; however, Operator shall provide reports more often
              if feasible.

       5.9.9  A copy of each report made to a governmental authority having
              jurisdiction. 5.9.10 Upon written request, other pertinent
              information available to Operator, including, but not limited to,
              those portions of the contracts to be used for the benefit of the
              Joint Account and which pertain to the Contract Area, but
              excluding the Operator's proprietary or secret information and its
              subsurface interpretations that have been independently developed
              at Operator's sole cost and expense.

5.10   Information to Non-participating Parties

       Operator shall furnish each Non-participating Party a copy of each
       Operator's governmental report that is available to the public and
       associated with the applicable Non-consent Operation. Until the
       applicable recoupment under Article 13 (Non-consent Operations) is
       complete, a Non participating Party shall not receive or review any other
       information specified by Article 5.9 (Information to Participating
       Parties), except as may be necessary for a payout audit of the Non
       consent Operation.

                                    ARTICLE 6

                          VOTING AND VOTING PROCEDURES

6.1    Voting Procedures

       Unless otherwise provided in this Agreement, each matter requiring
       approval of the Parties shall be determined as follows:

       6.1.1  Voting Interest

       Subject to Article 8.6 (Security Rights), each Party shall have a voting
       interest equal to its Working Interest or its Participating Interest, as
       applicable.

       6.1.2  Vote Required

       Unless expressly stated to the contrary herein, a matter requiring
       approval of the Parties shall be decided by the affirmative vote of two
       (2) or more Parties having a combined voting interest of fifty-one
       percent (51%) or more.

       6.1.3  Votes

       The Parties may vote at a meeting; by telephone, promptly confirmed in
       writing to Operator; or by facsimile transmission. Operator shall give
       each Party prompt notice of the results of the voting.

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       6.1.4  Meetings

              Meetings of the Parties may be called by Operator upon its own
              motion or at the request of a Party having a voting interest of
              not less than twenty-five percent (25%). Except in an emergency,
              no meeting shall be called on less than ten (10) days' advance
              written notice, and the notice of meeting shall include the
              meeting agenda prepared by the Operator or the requesting Party.
              The representative of Operator shall be chairman of each meeting.
              Only matters included in the agenda may be discussed at a meeting,
              but the agenda and items included in the agenda may be amended
              prior to or during the meeting by unanimous agreement of all
              Parties.

                                    ARTICLE 7

                                     ACCESS

7.1    Access to Contract Area

       Except as provided in Article 8.6, each Party shall have access, at its
       sole risk and expense and at all reasonable times, to the Contract Area,
       Platform, Development Facilities and Joint Account assets to inspect
       activities, operations and wells in which it participates, and to
       pertinent records and data. A Non-operator shall give Operator at least
       twenty-four (24) hours' notice of the Non-operator's intention to visit
       the Contract Area. To protect Operator and the Non-operators from
       unnecessary lawsuits, claims, and legal liability, if it is necessary for
       a person who is not performing services for Operator directly related to
       the joint operations, but is performing services solely for a
       Non-operator or pertaining to the business or operations of a
       Non-operator, to visit, use, or board a rig, well, Platform, or
       Development Facilities subject to this Agreement, the Non-operator shall
       give Operator advance notice of the visit, use, or boarding, and shall
       secure from that person an agreement, in a form satisfactory to Operator,
       indemnifying and holding Operator and Non-operators harmless, or shall
       itself provide the same hold harmless and indemnification in favor of
       Operator and other Non-operators before the visit, use, or boarding.

7.2    Reports

       On written request, Operator shall furnish a requesting Party any
       information not otherwise furnished under Article 5 (Authority and Duties
       of Operator) to which that Party is entitled under this Agreement. The
       costs of gathering and furnishing information not furnished under Article
       5 shall be charged to the requesting Party. Operator is not obligated to
       furnish interpretative data that was generated by Operator at its sole
       cost.

7.3    Confidentiality

       Except as otherwise provided in Article 7.4 (Limited Disclosure), Article
       7.5 (Limited Releases to Offshore Scout Association), Article 7.6 (Media

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       Releases), and Article 21.1 (Notice of Contributions Other Than Advances
       for Sale of Production), and except for necessary disclosures to
       governmental authorities having jurisdiction, or except as agreed in
       writing by all Participating Parties, no Party or Affiliate shall
       disclose Confidential Data to a third party. This Article 7.3 shall be in
       force and effect for a term of two (2) years after termination of this
       Agreement.

7.4    Limited Disclosure

       A Party may make Confidential Data to which it is entitled under this
       Agreement available to:

       (a)    outside professional consultants and reputable engineering firms
              for the purpose of evaluations and/or submitting bids;

       (b)    gas transmission companies for Hydrocarbon reserve or other
              technical evaluations;

       (c)    reputable financial institutions for study before commitment of
              funds;

       (d)    governmental authorities having jurisdiction or the public, to the
              extent required by applicable laws or by those governmental
              authorities;

       (e)    the public, to the extent required by the regulations of a
              recognized stock exchange;

       (f)    third parties with whom a Party is engaged in a bona fide effort
              to effect a merger or consolidation, sell all or a controlling
              part of that Party's stock, or sell all or substantially all
              assets of that Party or an Affiliate of that Party; and

       (g)    an Affiliate of a Party.

       (h)    such limited well information that is typically disclosed by
              Operator's representative during meetings of the Offshore Oil
              Scouts Association.

       (i)    third parties with whom a Party is engaged in a bona fide effort
              to sell, farm out, or trade all or a portion of its interest in
              the Contract Area;

       Confidential Data made available under Articles 7.4(f) and 7.4(i) shall
       not be removed from the custody or premises of the Party making the
       Confidential Data available to third parties described in those Articles.
       A third party permitted access under Articles 7.4, (a), (b), (c), (f),
       and (i) shall first agree in writing neither to disclose the Confidential
       Data to others nor to use the Confidential Data, except for the purpose
       for which it was disclosed. The disclosing Party shall give prior notice
       to the other Parties that it intends to make the Confidential Data
       available.

7.5    Limited Releases to Offshore Scout Association

       The Operator may disclose Confidential Data to the Offshore Oil Scouts
       Association at their regularly scheduled meetings. The Confidential Data
       that may be disclosed is limited to information concerning well
       locations, well operations, and well completions to the extent reasonable
       and customary in industry practice or required under the by-laws of the
       Offshore Oil Scouts Association.

7.6    Media Releases

       Without the prior written consent of the other Participating Parties, no
       Party shall issue a news or media release about operations on the
       Contract Area. In an emergency involving extensive property or
       environmental damage, operations failure, loss of human life, or other

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       clear emergency, and for which there is insufficient time to obtain the
       prior approval of the Parties, Operator may furnish the minimum, strictly
       factual, information necessary to satisfy the legitimate public interest
       of the media and governmental authorities having jurisdiction. Operator
       shall then promptly advise the other Parties of the information furnished
       in response to the emergency. The foregoing, however, shall not restrict
       disclosures by either Party which are required by applicable securities
       or other laws or regulations or the applicable rules of any stock
       exchange having jurisdiction over the disclosing Party or its Affiliates.

                                    ARTICLE 8

                                  EXPENDITURES

8.1    Basis of Charge to the Parties > Subject to the other provisions of this
       Agreement, Operator shall pay all costs incurred under this Agreement,
       and each Party shall reimburse Operator in proportion to its
       Participating Interest. All charges, credits, and accounting for
       expenditures shall be made and done pursuant to Exhibit "C".

8.2    AFEs

       Before undertaking an operation or making a single expenditure to be in
       excess of Two Hundred and Fifty Thousand Dollars ($250,000), and before
       conducting an activity or operation to drill, Sidetrack, Deepen,
       Complete, Rework or Recomplete a well (regardless of the estimated cost),
       Operator shall submit an AFE for the operation or expenditure to the
       Parties for approval. Operator shall also furnish an informational AFE to
       all Parties for an operation or single expenditure estimated to cost Two
       Hundred and Fifty Thousand Dollars ($250,000) or less, but in excess of
       Fifty-Thousand Dollars ($50,000), if Operator prepares same for its own
       use.

8.3    Emergency and Required Expenditures

       Notwithstanding anything in this Agreement to the contrary, Operator is
       hereby authorized to conduct operations and incur expenses that in its
       opinion are reasonably necessary to safeguard life, property, and the
       environment in case of an actual or imminently threatened blowout,
       explosion, accident, fire, flood, storm, hurricane, catastrophe, or other
       emergency, and the expenses shall be borne by the Participating Parties
       in the affected operation. Operator shall report to the Participating
       Parties, as promptly as possible, the nature of the emergency and the
       action taken. Operator is also authorized to conduct operations and incur
       expenses reasonably required by statute, regulation, order, or permit
       condition or by a governmental authority having jurisdiction, which
       expenses shall be borne by the Participating Parties in the affected
       operation, subject to Exhibit "C".

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8.4    Advance Billings

       Operator may require each Party to advance its respective share of
       estimated expenditures pursuant to Exhibit "C".

8.5    Commingling of Funds

       Funds received by Operator under this Agreement may be commingled with
       its own funds.

8.6    Security Rights (LA)

       Exhibit "I" (LOUISIANA) if applicable, applies.

8.7    Overexpenditures

       Operator shall notify the Participating Parties when it appears that
       actual expenditures for an approved operation in an Exploratory or
       Development Well or for the design, construction, and installation of a
       Platform or Development Facilities will exceed the AFE estimate (the
       excess being an "Overexpenditure") by more than twenty percent (20%),
       hereinafter referred to as the "Allowable Variance". Operator's notice
       shall be forwarded for information only. Except for an Exploratory Well,
       if Operator determines that the Overexpenditure will exceed the Allowable
       Variance, Operator shall submit a new AFE for the current operation
       ("Supplemental AFE") for approval of the Participating Parties. The
       Participating Parties may then elect whether to continue to participate
       within thirty (30) days or forty-eight (48) hours if a rig is on
       location, inclusive of Saturdays, Sundays, and federal holidays, after
       receipt of the Supplemental AFE. If one (1) or more Participating Parties
       elect to continue to participate in the current operation and agree to
       pay and bear one hundred percent (100%) of the costs and risks of
       conducting it, Operator shall continue to conduct the current operation.
       Otherwise, the operation shall cease. A Participating Party that elects
       not to continue to participate in the current operation shall become a
       Non-participating Party in the operation, from and after the date when
       the Overexpenditure exceeds the Allowable Variance, not including
       emergency expenditures, and Article 13.2 (Relinquishment of Interest)
       shall apply to the Party only to the extent that the costs of the
       operation exceed the Allowable Variance. Unless otherwise agreed by the
       Participating Parties, each Participating Party electing to continue to
       participate in the current operation may, but is not obligated to, pay
       and bear that portion of the costs and risks attributable to the
       interests of the Non-participating Parties in the ratio that the
       Participating Party's interest bears to the total interests of all
       Participating Parties electing to continue participating in the current
       operation. If it appears to Operator that actual expenditures for an
       approved operation will exceed the Supplemental AFE estimate, Operator
       shall again repeat the procedure of this Article 8.7, using the estimate
       in the most recently approved Supplemental AFE as the basis for
       determining the Overexpenditure and Allowable Variance. An initial
       Participating Party in an operation shall remain responsible for its
       share of all costs and risks for plugging, replugging, capping, burying,
       disposing, abandoning, removing, and restoring associated with the
       operation, subject to Article 14 (Abandonment, Salvage, and Surplus),

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       regardless of its subsequent election on a Supplemental AFE, except to
       the extent such costs were increased by subsequent operations in which it
       elected not to participate. Notwithstanding anything in this Article to
       the contrary, if expenditures exceed the Allowable Variance for an
       emergency, as provided in Article 8.3 (Emergency and Required
       Expenditures), Operator shall not be required to secure the approval of
       the Participating Parties, as the expenditures will be borne by all
       Participating Parties. However, once stabilization takes place and
       emergency expenditures are no longer being incurred, Operator shall
       promptly furnish a Supplemental AFE to the Participating Parties for
       their review and election, as provided above.

                                    ARTICLE 9

                                     NOTICES

9.1    Giving and Receiving Notices

       Except as otherwise provided in this Agreement, all AFEs and notices
       required or permitted by this Agreement shall be in writing and shall be
       delivered in person or by mail, courier service, or facsimile
       transmission, with postage and charges prepaid, addressed to the Parties
       at the addresses in Exhibit "A". When a drilling rig is on location and
       standby charges are accumulating, however, notices pertaining to the rig
       shall be given orally or by telephone. All telephone or oral notices
       permitted by this Agreement shall be confirmed immediately thereafter by
       written notice. A notice shall be deemed to have been delivered only when
       received by the Party to whom it was directed, and the period for a Party
       to deliver a response thereto begins on the date the notice is received.
       "Receipt", for oral or telephone notice, means actual and immediate
       communication to the Party to be notified, and for written notice, means
       actual delivery of the notice to the address of the Party to be notified,
       as specified in this Agreement, or to the facsimile machine of that
       Party. A responsive notice shall be deemed to have been delivered when
       the Party to be notified is in receipt of same. When a response is
       required in forty-eight (48) hours or less, however, the response shall
       be given orally or by telephone or facsimile transmission within that
       period. If a Party is unavailable to accept delivery of a notice required
       to be given orally or by telephone, the notice may be delivered by any
       other method specified in this Article 9.1. A message left on an
       answering machine or with an answering service or other third person
       shall not be deemed to be adequate telephonic or oral notice.

9.2    Content of Notice

       An AFE or notice requiring a response shall indicate the maximum response
       time specified in Article 9.3 (Response to Notices). A proposal for a
       Platform and/or Development Facilities shall include an AFE, containing a
       description of the Platform and/or Development Facilities, including, but
       not limited to, location, and the estimated costs of design, fabrication,
       transportation, and

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       installation. A proposal for a well operation shall include an AFE,
       describing the estimated commencement date, the proposed depth, the
       objective formation or formations to be penetrated or tested, the
       Objective Horizon, the surface and bottomhole locations, proposed
       directional or horizontal drilling operations, the type of equipment to
       be used, and the estimated costs of the operation, including, but not
       limited to, the estimated costs of drilling, testing, and plugging and
       abandoning the well, if applicable. If a proposed operation is subject to
       Article 13.11 (Contract Area Maintenance Operations), the notice shall
       specify that the proposal is a Contract Area Maintenance Operation. A
       proposal for multiple operations on more than one well location by the
       same rig shall contain separate AFEs or notices for each operation and
       shall specify in writing in what order the operations will be conducted.
       Each Party shall respond to each proposed multiple operation in the
       manner provided in Article 9.3.3 (Proposal for Multiple Operations).

9.3    Response to Notices

       Except as provided in Article 9.1, each Party's response to a proposal
       shall be in writing to the proposing Party. Unless otherwise provided in
       this Agreement, the response time shall be as follows:

       9.3.1  Platform and/or Development Facilities Proposals

              Each Party shall respond within ninety (90) days after its receipt
              of the AFE or notice for a Platform and/or Development Facilities.

       9.3.2  Well Proposals

              Except as provided in Article 9.3.3 (Proposal for Multiple
              Operations), each Party shall respond within thirty (30) days
              after receipt of the well, Rework or Recompletion proposal, but if
              (a) a drilling rig is on location, (b) the proposal relates to the
              same well or its substitute, and (c) standby charges are
              accumulating, a response shall be made within forty-eight (48)
              hours after receipt of the proposal, inclusive of Saturdays,
              Sundays, and federal holidays.

       9.3.3  Proposal for Multiple Operations

              When a proposal is made to conduct multiple Development Operations
              at separate well locations using the same rig, each Party shall
              respond (a) to the well operation taking precedence, within thirty
              (30) days after receipt of the proposal; and (b) to each
              subsequent well location, within forty-eight (48) hours after
              completion of approved operations at the prior location and
              notification thereof by Operator.

       9.3.4  Other Matters

              For all other matters requiring notice, each Party shall respond
              within thirty (30) days after receipt of notice.

9.4    Failure to Respond

       Failure of a Party to respond to a proposal or notice, to vote, or to
       elect to participate within the period required by this Agreement shall
       be deemed to be a negative response, vote, or election.

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9.5    Response to Counterproposals

       Should a counterproposal be allowed under this Agreement, responses to
       that counterproposal must be made within the response period for the
       original proposal.

9.6    Timely Well Operations

       Unless otherwise provided, an approved well shall be commenced within one
       hundred twenty (120) days after the date when the last applicable
       election on that well may be made. Wells shall be deemed to have
       commenced on the day charges commence under the drilling contract for
       that well. If the Operator does not commence the drilling of an approved
       well within the one hundred twenty (120) day time frame, the other
       Participating Parties in that well may select a substitute Operator to
       drill the approved well. In all events, including the occurrence of a
       Force Majeure, if the substitute Operator fails to commence actual
       drilling operations on an approved well within one hundred eighty (180)
       days from the proposal of the approved well, the proposal of the well and
       its approval will be deemed to have been withdrawn. Subject to Exhibit
       "C", if a proposal for a well is deemed to have been withdrawn, all costs
       incurred in the preparation for or in furtherance of that well will be
       chargeable to the Parties who voted to participate in the well proposal
       for that well.

9.7    Timely Platform/Development Facilities Operations

       Unless otherwise provided, Operator shall commence, or cause to commence,
       the construction, acquisition, or refurbishment of an approved proposal
       for a Platform and/or Development Facilities within one hundred eighty
       (180) days after the date when the last applicable election on that
       Platform and/or Development Facilities may be made. The construction,
       acquisition, or refurbishment of an approved Platform and/or Development
       Facilities proposal shall be deemed to have commenced on the date the
       contract is awarded for the design, acquisition, fabrication, or
       refurbishment of the Platform and/or Development Facilities. If the
       Operator does not commence the construction, acquisition, or
       refurbishment of an approved Platform and/or Development Facilities
       proposal within the one hundred eighty (180) day time frame, the other
       Participating Parties in that Platform and/or Development Facilities
       proposal may select a substitute Operator to commence the Platform and/or
       Development Facilities. In all events, including the occurrence of a
       Force Majeure, if the substitute Operator fails to commence the
       construction, acquisition, or refurbishment of an approved Platform
       and/or Development Facilities within two hundred forty (240) days from
       the proposal of the approved Platform and/or Development Facilities, the
       proposal of the Platform and/or Development Facilities and their approval
       will be deemed to have been withdrawn. Subject to Exhibit "C", regardless
       of whether or not the construction, acquisition, or refurbishment of a
       Platform and/or Development Facilities is commenced, all costs incurred
       by Operator, attributable to that activity, shall be paid by the
       Participating Parties.

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                                   ARTICLE 10

                             EXPLORATORY OPERATIONS

10.1   Proposing Operations

       Subject to the provisions of the EPA, any Party may propose an
       Exploratory Operation in accordance with Article 9 (Notices) to the other
       Parties who are entitled to vote or make an election in regard to that
       operation.

10.2   Counterproposals

       When an Exploratory Operation is proposed, a Party may, within ten (10)
       days after receipt of the AFE or notice for the original proposal, make a
       counterproposal to conduct an alternative Exploratory Operation by
       sending an AFE or notice to such Parties in accordance with Article 9
       (Notices). The AFE or notice shall indicate that the proposal is a
       counterproposal to the original proposal. If one or more counterproposals
       are made, such Parties shall elect to participate in either the original
       proposal, one counterproposal, or neither the original proposal nor a
       counterproposal. If two or more proposals receive the approval of the
       number of Parties and combined Working Interests required by Article 10.5
       (Operations by Fewer Than All Parties), the proposal receiving the
       largest percentage of Working Interest approval shall take precedence,
       and in the event of a tie between two (2) or more approved proposals, the
       proposal first received by the Parties shall take precedence. Except for
       the response period provided in this Article 10.2, a counterproposal
       shall be subject to the same terms and conditions as the original
       proposal.

10.3   Operations by All Parties

       If all Parties elect to participate in the proposed operation, Operator
       shall conduct the operation at their cost and risk.

10.4   Second Opportunity to Participate

       If fewer than all but one (1) or more Parties having a combined Working
       Interest of forty-five percent (45%) or more elect to participate, then
       the proposing Party shall notify the Parties of the elections made,
       whereupon a Party originally electing not to participate may then elect
       to participate by notifying the proposing Party within forty eight (48)
       hours, inclusive of Saturdays, Sundays, and federal holidays, after
       receipt of such notice. If all Parties elect to participate in the
       proposed operation, Operator shall conduct the operation at their cost
       and risk.

10.5   Operations by Fewer Than All Parties

       If after the election (if applicable) made under Article 10.4 (Second
       Opportunity to Participate), fewer than all but one (1) or more Parties
       having a combined Working Interest of forty-five percent (45%) or more
       have elected to participate in the proposed operation, then, in such
       event:

       (a)    if Chevron is the Proposing Party and Ridgewood is the
              Non-Participating Party, Ridgewood shall, in accordance with

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       Article 4.2 of the EPA (Additional Opportunities Prospect Well Cost
       Sharing), immediately forfeit all right to earn or own any interest in
       the Contract Area for the "Prospect Area" (as such is defined in the EPA)
       covered by the subject proposal or,

       (b)    if Ridgewood is the proposing Party and Chevron is the
              Non-Participating Party, Chevron shall, in accordance with Article
              5 of the EPA (Farmout Option), immediately farmout its interest to
              Ridgewood interest in the Contract Area for the "Prospect Area"
              (as such is defined in the EPA) covered by the subject proposal
              and such Prospect shall not be covered by this Agreement, but
              rather under the farmout provisions contained in the EPA.

10.6   Expenditures Approved

       Approval of an Exploratory Operation shall cover all necessary
       expenditures associated with the operation proposed in the AFE or notice
       that are incurred by Operator in connection with (a) preparations for
       drilling; (b) the actual drilling; (c) evaluations, such as testing,
       coring, and logging; and (d) plugging and abandonment, subject to any
       limitation that may exist as provided under Article 8 above.

10.7   Conduct of Operations

       After commencement of drilling an Exploratory Well, Operator shall
       diligently conduct the operation without unreasonable delay until the
       well reaches the Objective Depth, unless the well encounters, at a lesser
       depth, impenetrable conditions or mechanical difficulties that cannot be
       overcome by reasonable and prudent operations and that render further
       operations impracticable, except as may otherwise be provided in optional
       provision Article 8.7 (Overexpenditures), if selected. If a well does not
       reach its Objective Depth as a result of the conditions mentioned in this
       Article 10.7, the operation shall be deemed to have been completed and
       the rights and obligations of the Parties are as set out in the EPA (e.g.
       if the well described in this Article 10.7 is the initial Exploratory
       Well in a Prospect, either Party may propose the drilling of a
       "Substitute Well" (as such term is defined in the EPA).for such initial
       Exploratory Well in that Prospect with the election of the Parties to
       participate or not to participate in such Substitute Well being subject
       to the provisions of this Agreement, including but not limited to
       Articles 10.1 through 10.5, inclusive.

       Notwithstanding the above, in the event that the Exploratory Well does
       not reach its Objective Depth as a result of the conditions mentioned in
       this Article 10.7, but either Party proposes that the well be completed
       for production at a depth above Objective Depth, then the following
       conditions shall apply:

       (a)    If both Parties elect to participate in the proposed operation,
              Operator shall conduct the operation at their cost and risk, or

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       (b)    if Chevron is the Proposing Party and Ridgewood is the
              Non-Participating Party, Ridgewood shall, in accordance with
              Articles 3 and 4 of the EPA, immediately forfeit all right to earn
              or own any interest in the Contract Area for the "Prospect Area"
              (as such is defined in the EPA) covered by the subject proposal
              except as such rights as it may have to propose or participate in
              the drilling of a Substitute Well or,

       (c)    if Ridgewood is the proposing Party and Chevron is the
              Non-Participating Party, Chevron shall, in accordance with Article
              5 of the EPA (Farmout Option), immediately farmout its interest to
              Ridgewood interest in the shallower depths earned by Ridgewood in
              the Contract Area for the "Prospect Area" (as such is defined in
              Article 3.1(c) of the EPA) covered by the subject proposal and
              such depth-limited Prospect Area shall not be covered by this
              Agreement, but rather under the farmout provisions contained in
              the EPA.

10.8   Course of Action After Reaching Objective Depth

       When an Exploratory Well has been drilled to its Objective Depth and
       reasonable testing, coring, and logging have been completed as set forth
       in the approved AFE and the results have been furnished to the
       Participating Parties, Operator shall notify the Participating Parties of
       Operator's recommendation for further operations in the well, and the
       following provisions shall apply:

       10.8.1 Election by Participating Parties

              A Participating Party shall have the right to propose another
              operation by notifying the Operator and the other Participating
              Parties of its proposed operation within twenty-four (24) hours,
              inclusive of Saturdays, Sundays, and federal holidays, of receipt
              of the Operator's notice. The Participating Parties shall notify
              Operator within forty-eight (48) hours, inclusive of Saturdays,
              Sundays, and federal holidays, of receipt of the Operator's
              proposal whether the Participating Parties elect to (a)
              participate in Operator's recommended operation, (b) participate
              in another proposed operation, or (c) not participate in any
              operation. Failure to respond shall be deemed to be an election
              not to participate in any of the proposed operations. The
              Participating Parties shall respond to all proposals within the
              period allotted to the original proposal.

       10.8.2 Priority of Operations

              If all Participating Parties elect to participate in the same
              proposed operation, Operator shall conduct the operation at their
              cost and risk. If more than one (1) operation is approved by one
              (1) or more Participating Parties having a combined Working
              Interest of forty-five percent (45%) or more, then the approved
              operation with the lowest number as indicated below shall take
              precedence:

              (Indicate the order of preference.)

              1      Additional Testing, coring, or logging. (if conflicting
                     proposals are approved, the proposal receiving the largest
                     percentage of Working Interest approval shall take

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                     precedence, and in the event of a tie between two (2) or
                     more approved proposals, the approved proposal first
                     received by the Parties shall take precedence.)

              2      Deepen. (If conflicting proposals are approved, the
                     proposal receiving the largest percentage Working Interest
                     approval shall take precedence, and in the event of a tie
                     between two (2) or more approved proposals, the approved
                     proposal first received by the Parties shall take
                     precedence.)

              3      Sidetrack. (if conflicting proposals are approved, the
                     proposal receiving the largest percentage Working Interest
                     approval shall take precedence, and in the event of a tie
                     between two (2) or more approved proposals, the approved
                     proposal first received by the Parties shall take
                     precedence.)

              4      Complete at the Objective Horizon

              5      Complete above the Objective Horizon. (If conflicting
                     proposals are approved, the operation proposed at the
                     deepest depth shall take precedence.)

              6      Other operations: (If conflicting proposals are approved,
                     the proposal receiving the largest percentage Working
                     Interest approval shall take precedence, and in the event
                     of a tie between two (2) or more approved proposals, the
                     approved proposal first received by the Parties shall take
                     precedence.

              7      Temporarily abandon.

              8      Plug and abandon.

       10.8.3 Second Opportunity to Participate

              If fewer than all but one (1) or more Participating Parties having
              a combined Working Interest of forty-five percent (45%) or more
              elect to participate in an operation, the proposing Party shall
              notify the Participating Parties of the elections made, whereupon
              a Party originally electing not to participate in the proposed
              operation may then elect to participate by notifying the proposing
              Party within twenty four (24) hours, inclusive of, Saturdays,
              Sundays, and federal holidays, after receipt of such notice. If
              all Parties elect to participate in the proposed operation,
              Operator shall conduct the operation at their cost and risk.

       10.8.4 Operations by Fewer Than All Parties

              If, after the election (if applicable) made under Article 10.8.3
              (Second Opportunity to Participate), fewer than all but one (1) or
              more Parties having a combined Working Interest of forty-five
              percent (45%) or more elect to participate in the proposed
              operation that takes precedence, the proposing Party shall notify
              the Participating Parties and each Participating Party shall have
              twenty four (24) hours, inclusive of Saturdays, Sundays, and
              federal holidays, after receipt of the notice to notify the
              proposing Party of the portion of the costs and risks attributable
              to the total Non-participating Parties' interests it elects to pay
              and bear. Unless otherwise agreed by the Participating Parties,

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              each Participating Party may, but shall not be obligated to, pay
              and bear that portion of the costs and risks attributable to the
              total Non-participating Parties' interests in the ratio that the
              Participating Party's interest bears to the total interests of all
              Participating Parties who elect to pay and bear a portion of costs
              and risks attributable to the Non-participating Parties'
              interests. Failure to respond shall be deemed to be an election
              not to pay or bear any additional costs or risks. However, if
              Chevron is the sole Participating Party, and, as the Participating
              Party, it agrees to bear one hundred percent (100%) of the costs
              and risks of the operation, other than an operation to either
              temporarily abandon, or permanently plug and abandon the well,
              Operator, subject to Article 4.2 (Substitute Operator), shall
              conduct the operation as a Non-consent Operation for the benefit
              of the Participating Party, and the provisions of Article 13
              (Non-consent Operations) shall apply to Ridgewood's interest;
              provided, however, that if:

              (a)    the proposal by Chevron is for the Deepening of
                     Sidetracking of a Well to a depth deeper than the Objective
                     Horizon contained in the original proposal for the drilling
                     of such well, Ridgewood shall, like and in accordance with
                     Articles 3 and 4 of the EPA, immediately forfeit all right
                     to earn or own any additional interest in those proposed
                     deeper depths in the Contract Area for the "Prospect Area"
                     (as such is defined in the EPA) covered by the subject
                     Sidetracking or Deepening proposal of such well, less and
                     except such rights as Ridgewood may have to propose or
                     participate in the drilling of a Substitute Well as
                     provided for in the EPA; but, if,

              (b)    the proposal by Chevron is for any other Exploratory
                     Operation, including but not limited to Ridgewood's right
                     to elect or elect not to participate in the Completion of
                     an Exploratory Well or to the Sidetracking of an
                     Exploratory Well to the Objective Horizon contained in the
                     original proposal for the drilling of such well, then, in
                     such event Ridgewood's interest shall be subject to the
                     provisions of Article 13. (Non-consent Operations)
                     including but not limited to those contained in 13.2.1 (a).

              If Ridgewood is the Participating Party of a proposal to either
              Complete the well at the Objective Horizon or above the Objective
              Horizon, and Chevron is the Non-Participating Party, Chevron
              shall, in accordance with Article 5 of the EPA (Farmout Option),
              immediately farmout its interest to Ridgewood for the "Prospect
              Area" (as such is defined in Article 3.1(c) of the EPA) covered by
              the subject proposal and such Prospect Area shall not be covered
              by this Agreement, but rather under the farmout provisions
              contained in the EPA.

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              Subject to the other provisions contained hereinabove and
              elsewhere in this Agreement, if a Participating Party in a well
              elects not to participate in the Deepening or Sidetracking
              operation, in the well, such non-consenting Party shall become a
              Non-participating Party in all operations conducted in the
              Deepened or Sidetracked portion of the well after that election.

              If the Non-consent Operation is an Additional Testing, coring, or
              logging operation, Article 13 (Non-consent Operations) shall not
              apply, however, a Party electing not to participate in the
              Additional Testing, coring, or logging shall not be entitled to
              information resulting from the operation.

       10.8.5 Subsequent Operations

              Upon completion of an operation conducted under Article 10.8
              (Course of Action After Reaching Objective Depth), if the well is
              not either (a) Completed as a Producible Well, or (b) temporarily
              abandoned or permanently plugged and abandoned, Operator shall
              notify the Participating Parties of Operator's recommendation for
              further operations in the well under Articles 10.8.1 through
              10.8.4, which again shall apply. If sufficient approval is not
              obtained to conduct a subsequent operation in a well or if all
              Participating Parties elect to plug and abandon the well, subject
              to Article 14 (Abandonment, Salvage, and Surplus), Operator shall
              permanently plug and abandon the well at the cost and risk of all
              Participating Parties. Each Participating Party shall be
              responsible for its proportionate share of the plugging and
              abandonment costs associated with the operation in which it
              participated.

10.9   Wells Proposed Below Deepest Producible Reservoir

       If a proposal is made to conduct an Exploratory Operation involving the
       drilling of a well to an Objective Horizon below the base of the deepest
       Producible Reservoir, a Party may elect within the applicable period to
       limit its participation in the operation down to the base of the deepest
       Producible Reservoir. For purposes of this Article 10.9, a Party who
       elects to limit its participation in the operation down to the base of
       the deepest Producible Reservoir shall be referred to as "Shallow
       Participant" and a Party who elects to participate in the entire
       operation shall be referred to as "Deep Participant". If a Party elects
       to limit its participation to the base of the deepest Producible
       Reservoir, Operator shall prepare and submit to the Shallow Participant,
       for informational purposes, a separate AFE covering operations down to
       the deepest Producible Reservoir. The Shallow Participant shall be a
       Participating Party in, and shall pay and bear the costs and risks of,
       each operation to the base of the deepest Producible Reservoir, according
       to its Participating Interest. The Shallow Participant shall be a
       Non-participating Party in each operation below the deepest Producible
       Reservoir, and the operation shall be considered a Non-consent Operation,
       and the provisions of Article 13 (Non-consent Operations) shall apply. If

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       the well is Completed and produces Hydrocarbons from a horizon below the
       deepest Producible Reservoir, the Deep Participant shall reimburse the
       Shallow Participant for its share of the actual well costs to the base of
       the deepest Producible Reservoir. Payment shall be due within thirty days
       after receipt of notice of the well being completed below the deepest
       Producible Reservoir. If the well is Completed and produces Hydrocarbons
       from a horizon below the deepest Producible Reservoir, the Shallow
       Participant shall reimburse the Deep Participant for its Working Interest
       share of the actual well costs to the base of the deepest Producible
       Reservoir in accordance with Article 13.4 (Deepening or Sidetracking Cost
       Adjustments), upon the earlier of the time that (a) the well is plugged
       back to a horizon above the base of the deepest Producible Reservoir, as
       determined when the original well was proposed, (b) the well is plugged
       and abandoned, or (c) the amount to be recouped by the Deep Participant
       under Article 13 (Non consent Operations) is recovered.

10.10  Initial Exploratory Well on Prospect "A" of the EPA

       Notwithstanding anything contained in this Agreement to the contrary, in
       accordance with the provisions of the EPA Chevron and Ridgewood have
       already elected to participate in the initial Exploratory Well for
       Prospect "A" under the EPA in accordance with and subject to the
       provisions contained in the EPA, including, but not limited Article 4.1
       (Primary Prospect Well Cost Sharing) thereof.

                                   ARTICLE 11

                             DEVELOPMENT OPERATIONS

11.1   Proposing Operations

       A Party may propose a Development operation in accordance with Article 9
       (Notices) to the other Parties who are entitled to vote or make an
       election in regard to that operation.

11.2   Counterproposals

       When a Development Operation is proposed, a Party may, within ten (10)
       days after receipt of the AFE or notice for the original proposal, make a
       counterproposal to conduct an alternative Development Operation by
       sending an AFE or notice to such Parties in accordance with Article 9
       (Notices). The AFE or notice shall indicate that the proposal is a
       counterproposal to the original proposal. If one or more counterproposals
       are made, such Parties shall elect to participate in either the original
       proposal, one counterproposal, or neither the original proposal nor a
       counterproposal. If two or more proposals receive the approval of the
       number of Parties and combined Working Interests required by Article 11.5
       (Operations By Fewer Than All Parties), the proposal receiving the
       largest percentage Working Interest approval shall take precedence, and
       in the event of a tie between two (2) or more approved proposals, the
       approved proposal first

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       received by the Parties shall prevail. Except for the response period
       provided in this Article 11.2, a counterproposal shall be subject to the
       same terms and conditions as the original proposal.

11.3   Operations by All Parties

       If all Parties elect to participate in the proposed operation, Operator
       shall conduct the operation at their cost and risk.

11.4   Second Opportunity to Participate

       If fewer than all but one (1) or more Parties having a combined Working
       Interest of forty-five (45%) or more elect to participate, then the
       proposing Party shall notify the Parties of the elections made, whereupon
       a Party originally electing not to participate may then elect to
       participate by notifying the proposing Party within forty eight (48)
       hours, inclusive of Saturdays, Sundays, and federal holidays, after
       receipt of such notice. If all Parties elect to participate in the
       proposed operation, Operator shall conduct the operation at their cost
       and risk.

11.5   Operations by Fewer Than All Parties

       If after the election (if applicable) made under Article 11.4 (Second
       Opportunity to Participate), fewer than all but one (1) or more Parties
       having a combined Working Interest of forty-five percent (45%) or more
       have elected to participate in the proposed operation, the proposing
       Party shall notify the Participating Parties, and each Participating
       Party shall have forty eight (48) hours, inclusive of Saturdays, Sundays,
       and federal holidays, after receipt of the notice to notify the proposing
       Party of the portion of the costs and risks attributable to the total
       Non-participating Parties' interests it elects to pay and bear. Unless
       otherwise agreed by the Participating Parties, each Participating Party
       may, but shall not be obligated to, pay and bear that portion of costs
       and risks attributable to the total Non-participating Parties' interests
       in the ratio that the Participating Party's interest bears to the total
       interests of all Participating Parties who elect to pay and bear a
       portion of the costs and risks attributable to the total
       Non-participating Parties' interests. Failure to respond shall be deemed
       to be an election not to pay or bear any additional costs or risks. If
       the Participating Parties agree to pay and bear one hundred percent
       (100%) of the costs and risks of the operation, Operator, subject to
       Article 4.2 (Substitute Operator) shall conduct the operation as a
       Non-consent Operation for the benefit of the Participating Parties, and
       the provisions of Article 13 (Non-consent Operations) shall apply. If
       such agreement is not obtained, however, the operation shall not be
       conducted and the effect shall be as if the proposal had not been made.

11.6   Expenditures Approved

       Approval of a Development Operation shall cover all necessary
       expenditures associated with the operation proposed in the AFE or notice
       that are incurred by Operator in connection with (a) preparations for
       drilling; (b) the actual drilling; (c) evaluations, such as testing,
       coring, and logging; and (d) plugging and abandonment, subject to any
       limitation that may exist as provided under Article 8 above.

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11.7   Conduct of Operations

       After commencement of a Development Well, Operator shall diligently
       conduct the operation without unreasonable delay until the well reaches
       the Objective Depth, unless the well encounters, at a lesser depth,
       impenetrable conditions or mechanical difficulties that cannot be
       overcome by reasonable and prudent operations and render further
       operations impracticable, except as may otherwise be provided in optional
       provision Article 8.7 (Overexpenditures), if elected. If a well does not
       reach its Objective Depth as a result of the conditions mentioned in this
       Article 11.7, the operation shall be deemed to have been completed and
       Article 13 (Non consent Operations) shall apply to each Non-participating
       Party for the portion of the well drilled.

11.8   Course of Action After Reaching Objective Depth

       When a Development Well has been drilled to its Objective Depth and
       reasonable testing, coring, and logging have been completed and the
       results have been furnished to the Participating Parties, Operator shall
       notify the Participating Parties of Operator's recommendation for further
       operations in the well and the following provisions shall apply:

       11.8.1 Election by Fewer Than All Parties

              A Participating Party shall have the right to propose another
              operation by notifying the Operator and the other Participating
              Parties of its proposed operation within twenty-four (24) hours,
              inclusive of Saturdays, Sundays, and federal holidays, of receipt
              of the Operator's notice. The Participating Parties shall notify
              Operator within forty-eight (48) hours, inclusive of Saturdays,
              Sundays, and federal holidays, of receipt of the Operator's
              proposal whether the Participating Parties elect to (a)
              participate in Operator's recommended operation, (b) participate
              in another proposed operation, or (c) not participate in any
              operation. Failure to respond shall be deemed to be an election
              not to participate in any of the proposed operations. The
              Participating Parties shall respond to all proposals within the
              period allotted to the original proposal.

       11.8.2 Priority of Operations

              If all Participating Parties elect to participate in the same
              proposed operation, Operator shall conduct the operation at their
              cost and risk. If more than one (1) operation is approved by one
              (1) or more Participating Parties having a combined Working
              Interest of forty-five percent (45%) or more, then the approved
              operation with the lowest number as indicated below shall take
              precedence:

              (Indicate the order of preference.)

              1      Additional Testing, coring, or logging. (If conflicting
                     proposals are approved, the proposal receiving the largest
                     percentage of Working Interest approval shall take
                     precedence, and in the event of a tie between two (2) or
                     more approved proposals, the approved proposal first
                     received by the Parties shall take precedence.)

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              2      Complete at the Objective Horizon.

              3      Complete above the Objective Horizon. (If conflicting
                     proposals are approved, the operation proposed to the
                     deepest depth shall take precedence.)

              4      Deepen. (if conflicting proposals are approved, the
                     proposal receiving the largest percentage of Working
                     Interest approval shall take precedence, and in the event
                     of a tie between two (2) or more approved proposals, the
                     approved proposal first received by the Parties shall take
                     precedence.)

              5      Sidetrack. (If conflicting proposals are approved, the
                     proposal receiving the largest percentage of Working
                     Interest approval shall take precedence, and in the event
                     of a tie between two (2) or more approved proposals, the
                     approved proposal first received by the Parties shall take
                     precedence.)

              6      Other operations: (If conflicting proposals are approved,
                     the proposal receiving the largest percentage of Working
                     Interest approval shall take precedence, and in the event
                     of a tie between two (2) or more approved proposals, the
                     approved proposal first received by the Parties shall take
                     precedence.)

              7      Temporarily abandon.

              8      Plug and abandon.

       11.8.3 Second Opportunity to Participate

              If fewer than all but one (1) or more Participating Parties having
              a combined Working Interest of forty-five percent (45%) or more
              elect to participate in an operation, the proposing Party shall
              notify the Participating Parties of the elections made, whereupon
              a Party originally electing not to participate in the proposed
              operation may then elect to participate by notifying the proposing
              Party within twenty four (24) hours, inclusive of Saturdays,
              Sundays, and federal holidays, after receipt of such notice. If
              all Parties elect to participate in the proposed operation,
              Operator shall conduct the operation at their cost and risk.

       11.8.4 Operations by Fewer Than Ail Parties

              If, after the election (if applicable) made under Article 11.8.3
              (Second Opportunity to Participate), fewer than all but one (1) or
              more Parties having a combined Working Interest of forty-five
              percent (45%) or more elect to participate in the proposed
              operation that takes precedence, the proposing Party shall notify
              the Participating Parties and each Participating Party shall have
              twenty four (24) hours, inclusive of Saturdays, Sundays, and
              federal holidays, after receipt of the notice to notify the
              proposing Party of the portion of the costs and risks attributable
              to the total Non-participating Parties' interests it elects to pay
              and bear. Unless otherwise agreed by the Participating Parties,
              each Participating Party may, but shall not be obligated to, pay

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              and bear that portion of the costs and risks attributable to the
              total Non-participating Parties' interests in the ratio that the
              Participating Party's interest bears to the total interests of all
              Participating Parties who elect to pay and bear a portion of costs
              and risks attributable to the Non-participating Parties'
              interests. Failure to respond shall be deemed to be an election
              not to pay or bear any additional costs or risks. If the
              Participating Parties agree to pay and bear one hundred percent
              (100%) of the costs and risks of the operation, Operator, subject
              to Article 4.2 (Substitute Operator), shall conduct the operation
              as a Non-consent Operation for the benefit of the Participating
              Parties, and the provisions of Article 13 (Non-consent Operations)
              shall apply. If such agreement is not obtained, however, the
              operation shall not be conducted and the effect shall be as if the
              proposal had not been made. If a Participating Party in a well
              elects not to participate in the Deepening or Sidetracking
              operation in the well, such non-consenting Party shall become a
              Non-participating Party in all operations conducted in the
              Deepened or Sidetracked portion of the well after that election.
              If the Non-consent Operation is an Additional Testing, coring, or
              logging operation, Article 13 (Non-consent Operations) shall not
              apply, however, a Party electing not to participate in the
              Additional Testing, coring, or logging shall not be entitled to
              information resulting from the operation.

       11.8.5 Subsequent Operations

              Upon the completion of an operation conducted under Article 11.8
              (Course of Action After Reaching Objective Depth), if the well is
              not either (a) Completed as a well capable of producing
              Hydrocarbons in paying quantities, or (b) temporarily abandoned or
              permanently plugged and abandoned, Operator shall notify the
              Participating Parties of Operator's recommendation for operations
              in the well under Articles 11.8.1 through 11.8.4, which again
              shall apply. If sufficient approval is not obtained to conduct a
              subsequent operation in a well, or if all Participating Parties
              elect to plug and abandon the well, subject to Article 14
              (Abandonment, Salvage, and Surplus), Operator shall permanently
              plug and abandon the well at the expense of all Participating
              Parties. Each Participating Party shall be responsible for its
              proportionate share of the plugging and abandonment costs
              associated with the operation in which it participated.

                                   ARTICLE 12

                       PLATFORM AND DEVELOPMENT FACILITIES

12.1   Proposal

       A Party may propose the fabrication or acquisition and installation of a
       Platform and/or Development Facilities, by sending an AFE or notice to

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       the other Parties in accordance with Article 9 (Notices). Any proposal by
       a Party for a Platform and/or Development Facilities shall not provide
       for excess capacity and/or space which is greater than ten percent (10%)
       of what is required for such Platform and/or Development Facilities based
       upon the expected size of the Producible Reservoir(s); the number of
       existing Producible Wells; the quality of Hydrocarbons to be produced,
       processed, and transported; and the number of scheduled Development
       Wells.

12.2   Counterproposals

       When a Platform and/or Development Facilities is proposed under Article
       12.1, a Party may, within thirty (30) days after receipt of the AFE or
       notice for the original proposal, make a counterproposal to fabricate or
       otherwise acquire and install said Platform and/or Development Facilities
       by sending an AFE or notice to the other Parties in accordance with
       Article 9 (Notices). The AFE or notice shall indicate that the proposal
       is a counterproposal to the original proposal. If one or more
       counterproposals are made, each Party shall elect to participate in
       either the original proposal, one counterproposal, or neither the
       original proposal nor a counterproposal. If two or more proposals receive
       the approval of the number of Parties and combined Working Interests
       required by Article 12.2.3 (Operations By Fewer Than All Parties), the
       proposal receiving the largest percentage Working Interest approval shall
       be deemed approved, and in the event two (2) or more approved proposals
       receive the same Working Interest approval, the approved proposal first
       received by the Parties shall be deemed approved.

       12.2.1 Operations by All Parties

              If all Parties elect to participate in the proposed operation,
              Operator shall conduct the operation at their cost and risk.

       12.2.2 Second Opportunity to Participate

              If fewer than all but one (1) or more Parties having a combined
              Working Interest of forty five percent (45%) or more elect to
              participate in the Platform and/or Development Facilities, then
              the proposing Party shall notify the Parties of the elections
              made, whereupon a Party originally electing not to participate may
              then elect to participate by notifying the proposing Party within
              forty eight (48) hours, inclusive of Saturdays, Sundays, and
              federal holidays, after receipt of such notice. If all Parties
              elect to participate in the Platform and/or Development
              Facilities, Operator shall timely commence the fabrication and
              installation of the Platform and/or Development Facilities at
              their cost and risk.

       12.2.3 Operations by Fewer Than All Parties

              If after the election (if applicable) made under Article 12.2.2
              (Second Opportunity to Participate), fewer than all but one (1) or
              more Parties having a combined Working Interest of forty-five
              percent (45%) or more elect to participate in the Platform and/or
              Development Facilities, the proposing Party shall notify the
              Participating Parties, and each Participating Party shall have

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              forty eight (48) hours, inclusive of Saturdays, Sundays, and
              federal holidays, after receipt of the notice to notify the
              proposing Party of the portion of the costs and risks attributable
              to the total Non-participating Parties' interests it elects to pay
              and bear. Unless otherwise agreed by the Participating Parties,
              each Participating Party may, but shall not be obligated to, pay
              and bear that portion of costs and risks attributable to the total
              Non-participating Parties' interests in the ratio that the
              Participating Party's interest bears to the total interests of all
              Participating Parties who elect to pay and bear a portion of the
              costs and risks attributable to the total Nonparticipating
              Parties' interests. Failure to respond shall be deemed to be an
              election not to pay or bear any additional costs or risks. If the
              Participating Parties agree to pay and bear one hundred percent
              (100%) of the costs and risks of the operation, the Operator,
              subject to Article 4.2 (Substitute Operator), shall conduct the
              operation as a Non-consent Operation for the benefit of the
              Participating Parties, and except as provided in Article 12.4
              (Rights to Take in Kind), the provisions of Article 13.2.1.(b)
              shall apply. If such agreement is not obtained, however, the
              fabrication and installation of the Platform and/or Development
              Facilities shall not be commenced, and the effect shall be as if
              the proposal had not been made.

12.3   Ownership and Use of the Platform and Development Facilities

       The Participating Parties in the Development Facilities own all of the
       excess capacity of the Development Facilities and the excess weight,
       space and buoyancy of the Platform. Each Participating Party in the
       Development Facilities does not have the right to use its Participating
       Interest share of the excess capacity, weight, space and buoyancy for
       hydrocarbon production from outside the Contract Area. Each Participating
       Party in the Development Facilities or Platform must obtain the unanimous
       approval of the other Participating Parties in the Development Facilities
       or Platform in order to utilize any portion of the excess capacity,
       weight, space and buoyancy. It must negotiate the payment of a fee with
       the Participating Parties in the Development Facilities or Platform in
       order to utilize any portion of the excess capacity, weight, space and
       buoyancy. Each of the Participating Parties in the Development Facilities
       or Platform shall receive its Participating Interest share of all fees
       derived from the utilization of the excess capacity, weight, space and
       buoyancy. All hydrocarbon production from outside the Contract Area shall
       be processed under a "Facilities Use and Production Handling Agreement"
       unanimously agreed to by the Participating Parties in the Development
       Facilities.

12.4   Rights to Take in Kind

       Nothing in this Article 12 shall act to limit a Party's rights under
       Article 22 (Disposition of Production), or to otherwise separately
       dispose of its share of Hydrocarbon production. If a Party elects (a) not
       to participate in an approved Development Facilities proposal and (b) to
       separately dispose of its share of Hydrocarbon production (the
       "Separately Disposing Party"), the Separately Disposing Party shall not
       be subject to the provisions of Article 13.2.1.(b), but must provide

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       proof to the Participating Parties in the approved Development Facilities
       proposal, within sixty (60) days from the last applicable response date
       to the Development Facilities proposal that it has entered into
       fabrication and transportation contracts to separately dispose of its own
       share of Hydrocarbon production. If a Separately Disposing Party fails to
       provide such proof by that deadline and if there is sufficient capacity
       for the Development Facilities to accommodate the Separately Disposing
       Party's share of the Hydrocarbons, it shall immediately (I) become a
       Participating Party in the Development Facilities and utilize the
       Development Facilities for its share of Hydrocarbon production, (II) pay
       to the Participating Parties in the approved Development Facilities
       proposal an amount equal to one hundred fifty percent (150%) of what
       would have been the Separately Disposing Party's share of the costs and
       expense of the Development Facilities had it elected to participate in
       the Development Facilities under Article 12.1 or 12.2, and (III) assume
       its share of the risks and liabilities associated with the construction
       and ownership of the Development Facilities as of the date of
       commencement of the operations to construct same. The Participating
       Parties in the original Development Facilities and the Separately
       Disposing Party, which becomes a Participating Party in the original
       Development Facilities under Article 12.4 (I), shall own the original
       Development Facilities based on their Participating Interest share in the
       original Development Facilities. If a Separately Disposing Party fails to
       provide such proof by that deadline and if there is insufficient capacity
       for the Development Facilities to accommodate the Separately Disposing
       Party's share of the Hydrocarbons, the Separately Disposing Party shall
       (I) become a Participating Party in the original Development Facilities
       and utilize the available capacity in the original Development
       Facilities, if any, for its share of Hydrocarbon production, (ii) pay one
       hundred percent (100%) of the costs of an expansion or modification of
       the Development Facilities, which is required to accommodate all or a
       portion of its share of the Hydrocarbons, and assume one hundred percent
       (100%) of the risks and liabilities associated with (A) the construction,
       installation and commissioning of the expanded or modified Development
       Facilities and (B) the utilization of the expanded or modified
       Development Facilities for seven (7) days subsequent to the commencement
       of Hydrocarbon production through same, (iii) pay to the Participating
       Parties in the approved Development Facilities proposal an amount equal
       to one hundred fifty percent (150%) of what would have been the
       Separately Disposing Party's share of the costs and expense of the
       original Development Facilities had it elected to participate in the
       original Development Facilities under Article 12.1 or 12.2, (iv) assume
       its share of the risks and liabilities associated with the construction
       and ownership of the original Development Facilities as of the date of
       commencement of the operations to construct the original Development
       Facilities. The Participating Parties in the original Development
       Facilities and the Separately Disposing Party, which becomes a
       Participating Party in the original Development Facilities under Article
       12.4(i), shall own the expanded or modified Development Facilities based

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       on their Participating Interest share in the original Development
       Facilities, and the Participating Parties in the original Development
       Facilities shall assume their Participating Interest share of the risks
       and liabilities associated with the ownership of the expanded or modified
       Development Facilities seven (7) days after that the expanded or modified
       Development Facilities have been utilized.

12.5   Expansion or Modification of a Platform and/or Development Facilities

       After installation of a Platform and/or Development Facilities, any
       Participating Party in that Platform and/or Development Facilities may
       propose the expansion or modification of that Platform and/or Development
       Facilities by written notice (along with its associated AFE) to the other
       Participating Parties in that Platform and/or Development Facilities.
       That proposal requires approval by two of more of the Participating
       Parties in the Platform and/or Development Facilities with more than
       seventy five percent (75%) of the Participating Interest in the Platform
       and/or Development Facilities. If approved, that proposal will be binding
       on all Participating Parties in that Platform and/or Development
       Facilities, and the Operator shall commence that expansion or
       modification at the sole cost and risk of all of the Participating
       Parties in that Platform and/or Development Facilities unless otherwise
       agreed.

                                   ARTICLE 13

                             NON-CONSENT OPERATIONS

13.1   Non-consent Operations

       Operator or substitute Operator under Article 4.2 (Substitute Operator)
       shall conduct Non-consent Operations at the sole cost and risk of the
       Participating Parties in accordance with the following provisions:

       13.1.1 Non-interference

              Non-consent Operations shall not interfere unreasonably with
              operations approved by all of the Parties.

       13.1.2 Multiple Completion Limitation

              Subject to Article 10.9, a Non-consent Operation shall not be
              conducted in a well having multiple Completions unless (a) each
              Completion is owned by the same Parties in the same proportions;
              (b) the well is incapable of producing from any Completion; or (c)
              all Participating Parties in the well consent to the operation.

       13.1.3 Metering

              In Non-consent Operations, Hydrocarbon production shall be
              determined upon the basis of appropriate well tests, unless
              separate metering devices are required by a governmental authority
              having jurisdiction.

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       13.1.4 Non-consent Well

              Operations on a Non-consent Well shall not be conducted in a
              Producible Reservoir without approval of all Parties unless (a)
              the Producible Reservoir is designated in the notice as a
              Completion objective; (b) Completion of the well in the Producible
              Reservoir will not increase the rates of Hydrocarbon production
              that are prescribed and approved for the Producible Reservoir by
              the governmental authority having jurisdiction; and (c) the
              horizontal distance between the vertical projections of the
              midpoint of the Producible Reservoir in the well and an existing
              well currently completed in and producing from the same Producible
              Reservoir will be at least one thousand (1,000) feet from another
              Completion.

       13.1.5 Cost Information

              Operator shall, within one hundred twenty (120) days after
              completion of a Non-consent Operation, furnish the Parties either
              (a) an inventory and an itemized statement of the cost of the
              Non-consent Operation and equipment pertaining thereto, or (b) a
              detailed statement of the monthly billings. Each month thereafter,
              while the Participating Parties are being reimbursed under Article
              13.2.1 (Production Reversion Recoupment), Operator shall furnish
              the Non-participating Parties a monthly statement detailing all
              costs and liabilities incurred in the Non-consent Operation,
              together with a statement of the quantities of Hydrocarbons
              produced from it and the amount of the proceeds from the sale of
              the Non-participating Parties' relinquished Hydrocarbon production
              from the Non consent Operation for the preceding month. Operator
              shall prepare the monthly statement of the quantities of
              Hydrocarbons produced and the amounts of the proceeds from the
              sale of Non-participating Parties' relinquished Hydrocarbon
              production based on the proceeds received for the Operator's share
              of Hydrocarbon production. When Operator's payout calculation
              indicates that payout has occurred, Operator shall promptly notify
              all Parties. The Participating Parties who assumed a portion of
              the Non participating Parties' relinquished interest shall then
              provide Operator all information pertaining to the cumulative
              proceeds received from the sale of the Non-participating Parties'
              relinquished Hydrocarbon production. Operator shall revise the
              payout date using the actual proceeds from the sale of the
              Non-participating Parties' relinquished Hydrocarbon production and
              administer any subsequent adjustments between the Parties.

       13.1.6 Completions

              For determinations under Article 13.1 (Non-consent Operations),
              each Non-consent Operation in a single wellbore shall be accounted
              for separately.

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13.2   Relinquishment of Interest

       Upon commencement of Non-consent Operations, other than Non-consent
       operations governed by Article 13.7 (Operations Utilizing a Non-consent
       Platform and/or Development Facilities), each Non-participating Party's
       interest and Contract Area operating rights in the Non-consent Operation
       and title to Hydrocarbon production resulting therefrom; and if Article
       13.8 (Discovery or Extension from Non-consent Drilling) is effective,
       one-half (1/2) of each Non-participating Party's interest and Contract
       Areahold operating rights and title to Hydrocarbon production from wells
       mentioned in Article 13.8 (Discovery or Extension from Non-consent
       Drilling); shall be owned by and vested in each Participating Party in
       proportion to its Participating Interest, or in the proportions otherwise
       agreed by the Participating Parties, for as long as the Non-Consent
       Operation is being conducted or Hydrocarbon production is obtained
       therefrom, subject to the following:

       13.2.1 Production Reversion Recoupment

              When the Participating Parties have recouped out of Hydrocarbon
              production from the Non-consent Operations attributable to the
              Non-participating Party's interest an amount, which when added to
              amounts received under Article 13.3 (Deepening or Sidetracking of
              Non-consent Well), equals the sum of the following:

              (a)    Six hundred percent (600%) of the Non-participating Party's
                     share of the costs of the following Non-consent Exploratory
                     Operations, or four hundred percent (400%) of the
                     Non-participating Party's share of the costs of the
                     following Non consent Development Operations: drilling,
                     testing, Completing, Recompleting, Deepening, Sidetracking,
                     Reworking, plugging back, and temporarily abandoning a
                     well, reduced by the Non-participating Party's Share of a
                     cash contribution received under Article 21.2 (Cash
                     Contributions);

              (b)    Three hundred percent (300%) of Non-participating Party's
                     Share of the cost of Platforms and/or Development
                     Facilities approved under Article 12.1 (Proposal) or
                     Article 12.2 (Counterproposals); such recoupment is limited
                     to the Non participating Party's Share of the Hydrocarbon
                     production that utilize such Platform and/or Development
                     Facilities;

              (c)    Four hundred percent (400%) of the Non-participating
                     Party's Share of the cost charged in accordance with
                     Article 13.9 (Allocation of Platform/Development Facilities
                     Costs to Non-consent Operations) of using an existing
                     Platform/Development Facilities; and

              (d)    the Non-participating Party's Share of the costs of
                     operation, maintenance, treating, processing, gathering,
                     and transportation, including, but not limited to, an
                     offsite host facilities' handling fees, as well as lessor's
                     royalties and severance, Hydrocarbon production, and excise
                     taxes,

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              then, the relinquished interests of the Non-participating Party
              shall automatically revert to the Non-participating Party as of
              7:00 a.m. of the day after the recoupment occurs. Thereafter, the
              Non-participating Party shall own the same interest in the
              Non-consent Well, equipment pertaining thereto, including, but not
              limited to, any Platform or Development Facilities, and the
              Hydrocarbon production therefrom as the Non participating Party
              would have owned or been entitled to if it had participated in the
              Non consent Operation. Upon reversion, the Non-participating Party
              shall become a Participating Party and, as such, shall become
              liable for its proportionate share of the further costs of the
              operation as set forth in this Agreement and Exhibit "C".

       13.2.2 Non-production Reversion

              If the Non-consent Operation fails to obtain Hydrocarbon
              production or if the operation results in, Hydrocarbon production
              that ceases before complete recoupment by the Participating
              Parties under Article 13.2.1 (Production Reversion Recoupment),
              such Contract Areahold operating rights shall revert to each
              Non-participating Party, except that all Non-consent Wells,
              Platforms, and Development Facilities shall remain vested in the
              Participating Parties (but the salvage value in excess of the sum
              remaining under Article 13.2.1 shall be credited to all Parties).

13.3   Deepening or Sidetracking of Non-consent Well

       If a Participating Party proposes to Deepen or Sidetrack a Non-consent
       Well, a Non-participating Party may then elect to participate in the
       Deepening or Sidetracking operation by notifying Operator within thirty
       (30) days, or within forty-eight (48) hours, inclusive of Saturdays,
       Sundays, and federal holidays, if a rig is on location and standby
       charges are being incurred, after receiving notice of the proposal. A
       Non-participating Party that elects to participate in Deepening or
       Sidetracking the well, as proposed, shall immediately pay the
       Participating Parties, in accordance with Article 13.4 (Deepening or
       Sidetracking Cost Adjustments), its Working Interest share of actual well
       costs (excluding logging, coring, testing, and Completion costs other
       than the cost of setting any casing or Completion Equipment that is used
       in the Deepening or Sidetracking), less all amounts recovered by the
       Participating Parties from the proceeds of Hydrocarbon production from
       the well, as if the Non-participating Party had originally participated
       to the initial objective depth or formation, in the case of a Deepening
       operation, or the depth at which the Sidetracking operation is initiated.
       Thereafter, the Non-participating Party shall be deemed to be a
       Participating Party for the Deepening or Sidetracking operations, and
       Article 13.2.1(a) shall not apply to that Party for the Deepened or
       Sidetracked portion of the well. The initial Participating Parties,
       however, shall continue to recoup out of the proceeds of Hydrocarbon
       production from the non-consent portion of the well any balance for the
       Non-consent Well remaining to be recovered under Article 13.2.1
       (Production Reversion Recoupment), less the amounts paid by the
       Non-participating Party under this Article 13.3.

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13.4   Deepening or Sidetracking Cost Adjustments

       If a proposal is made to Deepen or Sidetrack a Non-consent Well, a well
       cost adjustment will be performed as follows:

       (a)    Intangible drilling will be valued at the actual cost incurred by
              the Participating Parties.

       (b)    Tangible materials will be valued at the actual cost incurred by
              the Participating Parties.

       (c)    For Sidetracking operations, the values determined in Articles
              13.4(a) and 13.4(b) shall be reduced by the amount allocated to
              that portion of the well from the surface to one hundred feet
              (100') below the point at which the Sidetracking was initiated.
              Such allocations shall be consistent with the guidelines
              recommended by the applicable Council of Petroleum Accountants
              Societies ("COPAS") Guideline, as amended from time to time.

       (d)    Amortization/depreciation shall be applied to both intangible and
              tangible values at the rate of ten percent (10%) per annum from
              the date the well commenced Hydrocarbon production to the date
              operations commence to Deepen or Sidetrack the well, provided,
              however, the value of tangible materials after applying
              depreciation shall never be less than fifty percent (50%) of the
              value determined in Article 13.4(b).

13.5   Subsequent Operations in Non-consent Well

       Except as provided in Article 13.3 (Deepening or Sidetracking of
       Non-consent Well), an election not to participate in the drilling,
       Sidetracking, or Deepening of a well shall be deemed to be an election
       not to participate in any subsequent operations in the well before full
       recovery by the Participating Parties of the Non-participating Party's
       recoupment amount.

13.6   Operations in a Production Interval

       A Participating Party in a Production Interval may propose Rework or
       Sidetrack operations within that Production Interval, or to permanently
       plug and abandon that Production Interval in a well; however, no
       Production Interval in a well shall be abandoned without the unanimous
       approval of the Participating Parties in the Production Interval. If a
       proposal, estimated to exceed the amount specified in Article 8.2
       (Authorization), is made to Rework or Sidetrack a Production Interval and
       the Participating Parties elect to participate in the proposed operation,
       Operator shall conduct the operation at their sole cost and risk. If
       fewer than all but one (1) or more Parties having a combined
       Participating Interest of forty-five percent (45%) or more elect to
       participate in the proposed operation, Operator shall conduct the
       Reworking or Sidetracking operation at the cost and risk of the
       Participating Parties owning an interest in the Production Interval. A
       proposal to Rework an interval, other than a Production Interval, shall
       be made and approved in accordance with Article 11.5 (Operations by Fewer
       Than All Parties).

13.7   Operations Utilizing a Non-consent Platform and/or Development Facilities
       Except as otherwise provided in Article 12.4 (Rights to Take in Kind) and
       this Article 13.7, if applicable, a Party that did not originally

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       participate in a Platform and/or Development Facilities shall be a
       Non-participating Party for all operations utilizing the Platform and/or
       Development Facilities and shall be subject to Article 13.2
       (Relinquishment of Interest). Notice, in accordance with Article 9
       (Notices), shall be given to the Non-participating Party for all wells
       proposed to be drilled from or tied-back to the Non-consent Platform
       and/or handled by non-consent Development Facilities. If a
       Non-participating Party in a Non-consent Platform and/or Development
       Facilities desires to participate in the drilling of any such well
       proposed by the Participating Parties in the Platform and/or Development
       Facilities, the Non-participating Party desiring to join in the proposed
       well shall first pay the Participating Parties in the Platform and/or
       Development Facilities its proportionate share of the cost of the
       Platform and/or Development Facilities, including, but not limited to,
       costs of material, fabrication, transportation, and installation plus any
       remaining amounts to be recouped under Article 13.2.1(b). The
       Non-participating Party shall remit payment to Operator and Operator
       shall (a) reimburse the Participating Parties in the Platform and/or
       Development Facilities in the same proportions they are sharing in the
       Platforms and/or Development Facilities recoupment account, and (b)
       credit the applicable payout account. Upon payment of that amount, the
       original Non-participating Party shall become an owner and a
       Participating Party in the Platform and/or Development Facilities in the
       same manner as if recoupment had occurred under Article 13.2.1
       (Production Reversion Recoupment), and may participate in all future
       wells drilled from or tied back to the Platform. As to well operations
       conducted from the Platform and/or Development Facilities prior to
       payment under this Article 13.7, the original Non-participating Party
       shall remain a Non-participating Party in such Non consent Operations
       until such time as the entire recoupment balance applicable to all such
       Non consent Operations in the aggregate has occurred, as provided for in
       Articles 13.2.1 (a) and 13.2.1 (d).

13.8   Discovery or Extension from Non-consent Drilling

       If a Non-consent Well (a) discovers a new Producible Reservoir or (b)
       extends an existing Producible Reservoir beyond its recognized
       boundaries, as unanimously agreed by the Participating Parties in all
       existing wells currently producing from the existing Producible Reservoir
       before commencement of drilling operations, the recoupment of costs for
       the well shall be governed by Article 13.2 (Relinquishment of Interest)
       and shall be recovered by the Participating Parties in one of the
       following ways:

       (a)    if the Non-consent Well is not completed and produced, recoupment
              shall be out of one half (1/2) of each Non-participating Party's
              interest in Hydrocarbon production from all subsequently drilled
              and completed wells on the Contract Area that are completed in the
              Producible Reservoir discovered, or in that portion extended, by
              the Non-consent Well and in which the Non-participating Party has
              a Participating Interest; or

       (b)    if the Non-consent Well is completed and produced, recoupment
              shall be out of the Non participating Party's Share of all

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              Hydrocarbon production from the Non-consent Well and one-half
              (1/2) of the Non-participating Party's interest in Hydrocarbon
              production from all subsequently drilled and completed wells on
              the Contract Area that are completed in the Producible Reservoir
              discovered, or in that portion extended, by the Non-consent Well
              and in which the Non-participating Party has a Participating
              Interest.

13.9   Allocation of Platform/Development Facilities Costs to Non-consent
       Operations

       In the event a well is drilled from or produced through a Platform or is
       produced through Development Facilities which are owned by the
       Participating Parties in different proportions than the ownership of the
       Non-consent well, the rights of the Participating Parties in such well
       and the costs to utilize such Platform or Development Facilities for such
       well shall be determined as follows:

       13.9.1 Investment Usage Fees

              The Participating Parties in such well shall pay to the Operator,
              for credit to the owners of the Platform and/or Development
              Facilities, a one-time usage fee for the right to use the Platform
              and/or Development Facilities. Such usage fees shall be determined
              in accordance with paragraphs (a) and (b) below:

              (a)    A fee for slot usage will be determined as follows:

                     (i)    In the event the well uses a platform with well
                            slots and such platform has no Development
                            Facilities installed on it, the slot usage fee shall
                            be an amount equal to the ratio which one Platform
                            slot bears to the total number of slots on the
                            Platform times the total cost of the Platform.

                     (ii)   In the event the well uses a Platform with well
                            slots and such Platform has Development Facilities
                            installed on it, the slot usage fee shall be an
                            amount equal to the ratio which one Platform slot
                            bears to the total number of slots on the Platform
                            times the total cost of the Platform attributable to
                            well slot area, determined as follows:

                     Slot Usage Fee = (one platform slot divided by total
                       platform slots) x [(Total Cost of Platform - Any Cost of
                       Development Facilities Included In the Total Cost of
                       Platform) x Well Slot Area %]

                     Well Slot Area % = Deck Space Dedicated to Well Slots
                       divided by (Deck Space Dedicated to Well Slots + Deck
                       Space Dedicated to Development Facilities)

                     The cost of Development Facilities [as used in Article
                     13.9.1 (a) and (b)] shall include the cost of design,
                     material, fabrication, transportation, installation and
                     modifications of such Development Facilities.

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                     For purposes of calculating the slot usage fee [under
                     Article 13.9.1 (a) (i) or (ii)], the total cost of the
                     Platform shall be reduced by 0.83333% per month, commencing
                     on the first day of the month following the date the
                     Platform was installed and continuing every month
                     thereafter until the month actual drilling operations on
                     such well is commenced; however, the total cost of the
                     Platform shall not be reduced by more than forty percent
                     (40%) of the total Platform costs. The cost of additions to
                     the Platform shall be reduced in the same manner commencing
                     the first day of the month after the addition is installed

                     If such well is abandoned, having never produced, the right
                     of the Participating Parties in such well to utilize the
                     Platform slot through which such well was drilled shall
                     terminate unless such Parties commence drilling a
                     substitute well for the abandoned well through the same
                     slot within ninety (90) days of the abandonment. If such
                     substitute well is abandoned, having never produced, the
                     right of the Participating Parties in such well to utilize
                     the Platform slot through which such well was drilled shall
                     terminate.

                     No refund or credit of the slot usage fee shall be given or
                     due if a subsequent well operation is conducted through the
                     same slot or if that Platform slot is restored to a usable
                     condition.

                     If subsequent Non-consent Operations (such as Workover,
                     Recompletion, Deepening, or Sidetracking operations) are
                     conducted in any wellbore where either all Parties to this
                     agreement participated in the original well drilling costs
                     or a previous Non-consent Operation was conducted, no slot
                     usage fee shall be charged to the Participating Parties in
                     the subsequent Non-consent Operation.

              (b)    The Participating Parties in such well shall pay to the
                     owners of the Development Facilities a sum equal to that
                     portion of the total cost of such Development Facilities
                     which the throughput volume of the Non-consent Operation
                     bears to the total design throughput volume of the
                     Development Facilities at the time such well is connected.
                     Throughput volume shall be estimated by the Operator using
                     an average daily volume of the first three months of
                     production from the Non consent Operation.

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              The Total Cost of Development Facilities shall include the cost of
              design, material, fabrication, transportation, installation and
              modifications of Development Facilities plus that portion of the
              cost of the Platform attributable to Development Facilities Area.
              The Development Facilities Usage Fee shall be based on the
              following:

              Development Facilities Usage Fee =Total Cost of Development
                Facilities x Throughput Volume of Non-consent Well divided by
                Total Design Throughput of Facilities

              Total Cost of Development Facilities = Cost of Development
                Facilities + [(Total Cost of Platform - Any Cost of Development
                Facilities Included In the Total Cost of Platform) x Development
                Facilities Area %]

              Development Facilities Area % = Deck Space Dedicated to
                Development Facilities divided by (Deck Space Dedicated to Well
                Slots + Deck Space Dedicated to Development Facilities)

              For purposes of calculating the Development Facilities usage fee,
              the total cost of the Development Facilities, shall be reduced by
              0.83333% per month, commencing from the first day of the month
              following the date when the Development Facilities where installed
              and continuing every month thereafter until the first day of the
              month during which production from the Non-consent Operation is
              commenced; however, the total cost of the Development Facilities
              shall not be reduced more than forty percent (40%). If
              modifications, expansions or additions to the Development
              Facilities are made after commencing first production and prior to
              the connection of the Non-consent Operation to the Development
              Facilities, such Development Facilities investment shall be
              reduced in the same manner as described above, from the first day
              of the month the Development Facilities modification, expansion or
              addition is completed until the first day of the month during
              which production from the Non-consent Operation is commenced.

              If modifications, expansions or additions are made to the
              Development Facilities after connection of the Non-consent Well
              which benefit the Non-consent Well, such costs shall be shared by
              the Non-consent Well based on that portion which the throughput
              volume of the Non-consent Well bears to the total design
              throughput volume of the Development Facilities at the time of
              completion of such modification, expansion or addition. The
              Non-consent well's throughput volumes shall be determined in the
              same manner as described above.

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              Payment of sums under this Article 13.9.1 is not a purchase of an
              additional interest in the Platform or the Development Facilities.
              Such payment shall be included in the total amount that the
              Participating Parties are entitled to recoup out of Hydrocarbon
              production from the Non-consent Well.

       13.9.2 Operating and Maintenance Charges

              The Participating Parties shall pay all costs necessary to connect
              a Non-consent Well to the Platform and/or Development Facilities
              and that proportionate part of the costs of operating and
              maintaining the Platform and/or Development Facilities applicable
              to the Non-consent Well. Platform operating and maintenance costs
              that are costs not directly attributable to a wellbore shall be
              allocated equally to all actively producing Completions. Operating
              and maintenance costs for the Development Facilities shall be
              allocated on a volume throughput basis, that is, in the proportion
              that the volume throughput of the well bears to the total volume
              throughput of all wells connected to the Development Facilities.
              Operating and maintenance expense for support facilities (e.g.,
              electrical systems and living quarters which do not handle
              production) shall be allocated by applying a usage basis
              appropriate for that support facility.

13.10  Allocation of Costs Between Zones

       Except as provided in Article 10.9 (Wells Proposed Below Deepest
       Producible Reservoir), if for any reason the Participating Interests of
       the Parties in a well are not the same for the entire depth or the
       Completion thereof, the costs of drilling, Completing, and equipping the
       well shall be allocated in an equitable manner, as agreed by the Parties,
       based on the value and allocation recommended in the applicable COPAS
       Guideline, as amended from time to time.

13.11  Contract Area Maintenance Operations

       For the purposes of this Article 13.12, the Contract Area will be deemed
       to be governed by the same terms and conditions as bear upon lease
       maintenance obligations under the Lease. An operation proposed within the
       last six (6) months of the primary term or, subsequent thereto, an
       operation proposed to perpetuate the Contract Area or portion thereof at
       its expiration date or otherwise, including, but not limited to, well
       operations, regulatory relief (for example, course of action necessary to
       satisfy the statutory or regulatory requirements of the governmental
       authority having jurisdiction), and other Contract Area operations, shall
       be deemed to be a "Contract Area Maintenance Operation." To invoke this
       Article 13.11, a notice or AFE that proposes an operation must state that
       the proposed operation is a Contract Area Maintenance Operation.

       13.11.1 Participation in Contract Area Maintenance Operations

               A Party may propose a Contract Area Maintenance Operation by
               giving notice to the other Parties. If fewer than all Parties
               elect to participate in the proposed Contract Area Maintenance
               Operation, the proposing Party shall notify the Parties of the

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               elections made. Each Party electing not to participate shall then
               have a second opportunity to participate in the proposed
               operation by notifying the other Parties of its election within
               forty-eight (48) hours after receipt of the notice. A Contract
               Area Maintenance Operation shall not require minimum approval,
               either of the number of Parties or the percentage of the voting
               interests of the Parties otherwise required in Article 6.1.2
               (Vote Required). For a Contract Area Maintenance Operation to be
               conducted, the Participating Parties must agree to pay and bear
               one hundred percent (100%) of the costs and risks of the
               operation. If more than one Contract Area Maintenance Operation
               is proposed, the operation with the greatest percentage approval
               shall be conducted. Notwithstanding the recoupment provisions of
               this Agreement, a Party electing not to participate in a well
               operation proposed as a Contract Area Maintenance Operation shall
               promptly assign, effective as of the date the operation
               commences, to the Participating Parties all of its right, title,
               and interest in and to that portion of the Contract Area, being
               the affected Contract Area, that would otherwise expire and the
               property and equipment attributable thereto, in accordance with
               Article 26 (Successors, Assigns, [and Preferential Rights]). If
               more than one Contract Area Maintenance Operation is proposed and
               there is a tie between two proposed operations, both operations
               shall be conducted and the costs and risks of conducting both
               operations shall be paid and borne by the Participating Parties.
               If the drilling of a well is undertaken as a Contract Area
               Maintenance Operation, further operations conducted by the
               Participating Parties in the well shall be governed by Article
               10.9 (Course of Action After Reaching Objective Depth) or Article
               11.9 (Course of Action After Reaching Objective Depth), whichever
               applies. If more than one well operation is conducted, any of
               which would perpetuate the Contract Area or such portion thereof,
               an assignment shall not be required from a Party participating in
               any such well operation.

       13.11.2 Accounting for Non-participation

               If after one (1) year from completion of a well operation
               conducted as a Contract Area Maintenance Operation, the Contract
               Area or portion thereof is being perpetuated by a Contract Area
               Maintenance Operation, as provided in Article 13.11.1
               (Participation in Contract Area Maintenance Operations), Operator
               shall render a final statement, if applicable, to the assigning
               Party for its share of all expenses attributed to the assigned
               interest before the effective date of the assignment, plus any
               credit or deficiency in salvage value calculated under Article
               15.3.1 (Prior Expenses). The assigning Party shall settle any
               deficiency owed the non-assigning Parties within thirty (30) days
               after receipt of Operator's statement.

13.12  Retention of Contract Area by Non-consent Well

       For the purposes of this Article 13.12, the Contract Area will be deemed
       to be governed by the same terms and conditions as bear upon lease
       maintenance obligations under the Lease. If, at

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       the expiration of the primary term of the Contract Area, one or more
       Non-consent Wells are the only wells perpetuating the Contract Area,
       Operator shall give written notice to each Nonparticipating Party that
       the Non-consent Wells are serving to perpetuate the Contract Area. Each
       Non-participating Party shall, within thirty (30) days after receipt of
       Operator's written notice, elect one of the following:

       (a)    to assign its entire interest in the Contract Area to the
              Participating Parties in the proportions in which the Non-consent
              Wells are owned; or

       (b)    to pay the Participating Parties, within sixty (60) days after its
              election, the lesser of its proportionate share of the actual well
              costs of the wells, as if the Non-participating Party had
              originally participated, or the balance of the recoupment account.
              The payment shall be made to Operator and credited to the account
              of each Participating Party. The Nonparticipating Party shall
              remain as a Non-participating Party until full recoupment is
              obtained, but the payment shall be credited against the total
              amount to be recouped by the Participating Parties.

       A Non-participating Party that fails to make the required election shall
       be deemed to have elected under Article 13.12(a) to relinquish its entire
       interest in the Contract Area. If a Non-participating Party elects to
       make payment under Article 13.12(b) but fails to make the required
       payment within sixty (60) days after its election, the Non-participating
       Party shall either remain liable on the obligation to pay or, by
       unanimous vote of the Participating Parties, be deemed to have elected
       under Article 13.12(a) to relinquish its entire interest in the Contract
       Area. Each relinquishing Non-participating Party shall promptly execute
       and deliver an assignment of its interest to the Participating Parties,
       in accordance with Article 26 (Successors, Assigns, [and Preferential
       Rights]).

13.13  Non-Consent Premiums

       A non-consent premium paid by a Non-Participating Party to the
       Participating Parties shall be allocated to the Participating Parties
       based on their original Participating Interest share in the Non-consent
       Operation which generated the non-consent premium.

13.14  Non-Applicability to Exploratory Operations

       Notwithstanding anything contained in this Agreement to the contrary,
       Chevron and Ridgewood agree that this Article 13 (Non-Consent Operations)
       shall not apply nor or be construed to apply to any Exploratory
       Operation.

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                                   ARTICLE 14

                        ABANDONMENT, SALVAGE, AND SURPLUS

14.1   Platform Salvage and Removal Costs

       When the Parties owning wells, Platforms and/or Development Facilities
       unanimously agree to dispose of the wells, Platforms and/or Development
       Facilities, it shall be disposed of by Operator in the time and manner
       approved by the Parties. The costs, risks, and net proceeds, if any, for
       the disposal shall be shared by the Parties in proportion to their
       Participating Interests therein.

14.2   Abandonment of Platforms, Development Facilities or Wells

       Except as provided in Article 10 (Exploratory Operations) and Article 11
       (Development Operations), a Participating Party may propose the
       abandonment of a Platform and Development Facilities or wells, by
       notifying the other Participating Parties. No Platform and Development
       Facilities or wellbore shall be abandoned without the unanimous approval
       of the Participating Parties. If the Participating Parties do not approve
       abandoning the Platform and Development Facilities or wells, the Operator
       shall prepare a statement of the abandoning Party's share of estimated
       wellbore plugging and abandonment costs, Platform and Development
       Facilities removal costs and/or any related reclamation costs, less its
       share of estimated salvage value, as determined by the Operator pursuant
       to Exhibit "C". The Party desiring to abandon it shall pay the Operator,
       on behalf of the Participating Parties for that Party's share of the
       estimated abandonment costs, less its share of estimated salvage value,
       within thirty (30) days after receipt of the Operator's statement. If an
       abandoning Party's respective share of the estimated salvage value is
       greater than its share of the estimated costs, Operator, on behalf of the
       Participating Parties, shall pay a sum equal to the deficiency to the
       abandoning Party within thirty (30) days after the abandoning Party's
       receipt of the Operators statement.

14.3   Assignment of Interest.

       Each Participating Party desiring to abandon a Platform and Development
       Facilities or wells under Article 14.2 (Abandonment of Platforms,
       Development Facilities or Wells) shall assign, effective as of the last
       applicable election date, to the non-abandoning Parties, in proportion to
       their Participating Interests, its interest in the Platform and
       Development Facilities or wells and the equipment therein and its
       ownership in the Hydrocarbon production from the wells. A Party so
       assigning shall be relieved from further liability for the Platform and
       Development Facilities or wells, except liability for payments under
       Article 14.2 (Abandonment of Platforms, Development Facilities or Wells).

14.4   Abandonment Operations Required by Governmental Authority

       A well abandonment or Platform and Development Facilities removal
       required by a governmental authority having jurisdiction shall be
       accomplished by Operator with the costs, risks, and net proceeds, if any,
       to be shared by the Parties owning the well or Platform and Development

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       Facilities in proportion to their Participating Interests therein. No
       approval by the Parties will be necessary for Operator to proceed with
       the government required well abandonment, or Platform and Development
       Facilities removal. The Operator shall provide the Parties with an
       informational AFE prior to commencing such an abandonment or removal.

14.5   Disposal of Surplus Material

       Material and equipment acquired hereunder may be classified as surplus by
       Operator when deemed no longer needed in present or foreseeable
       operations. Operator shall determine the value and cost of disposing of
       the materials in accordance with Exhibit "C". If the material is
       classified as junk or if the value, less cost of disposal, is less than
       or equal to One Hundred Thousand Dollars ($100,000), Operator shall
       dispose of the surplus materials in any manner it deems appropriate. If
       the value, less the cost of disposal of the surplus material, is greater
       than One Hundred Thousand Dollars ($100,000), Operator shall give written
       notice thereof to. the Parties owning the material. Unless purchased by
       Operator, the surplus material shall be disposed of in accordance with
       the method of disposal approved by the Parties owning the material.
       Proceeds from the sale or transfer of surplus material shall be promptly
       credited to each Party in proportion to its ownership of the material at
       the time of retirement or disposition.

                                   ARTICLE 15

                                   WITHDRAWAL

15.1   Right to Withdraw

       Subject to this Article 15.1, any Party may withdraw from this Agreement
       as to one or more Contract Areas (the "Withdrawing Party") by giving
       prior written notice to all other Parties stating its decision to
       withdraw ("the withdrawal notice"). The withdrawal notice shall specify
       an effective date of withdrawal that is at least sixty (60) days, but not
       more than one hundred twenty (120) days, after the date of the withdrawal
       notice. Within thirty (30) days of receipt of the withdrawal notice, the
       other Parties may join in the withdrawal by giving written notice of that
       fact to the Operator ("written notice to join in the withdrawal") and
       upon giving written notice to join in the withdrawal are "Other
       Withdrawing Parties". The withdrawal notice and the written notice to
       join in the withdrawal are unconditional and irrevocable offers by the
       Withdrawing Party and the Other Withdrawing Parties to convey to the
       Parties who do not join in the withdrawal ("the Remaining Parties") the
       Withdrawing Party's and the Other Withdrawing Parties' entire Working
       Interest in all of the Contract Area or Contract Areas, Hydrocarbon
       production, and other property and equipment owned under this Agreement.

15.2   Response to Withdrawal Notice

       Failure to respond to a withdrawal notice is deemed a decision not to
       join in the withdrawal.

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       15.2.1 Unanimous Withdrawal

              If all the other Parties join in the withdrawal,

              (a)    no assignment of Working Interests shall take place;

              (b)    subject to Article 14.4, no further operations may be
                     conducted under this Agreement unless agreed to by all
                     Parties;

              (c)    the Parties shall abandon all activities and operations
                     within the Contract Area and relinquish all of their
                     Working Interests to the MMS within fifteen (15) days of
                     the conclusion of the thirty (30) day joining period; and

              (d)    notwithstanding anything to the contrary in Article 14
                     (Abandonment, Salvage and Surplus), the Operator shall:

                     1)     furnish all Parties a detailed abandonment plan, if
                            applicable, and a detailed cost estimate for the
                            abandonment within thirty (30) days after the
                            conclusion of the thirty (30) day joining period;
                            and

                     2)     cease operations and begin to permanently plug and
                            abandon all wells and remove all Facilities in
                            accordance with the abandonment plan.

       15.2.2 No Additional Withdrawing Parties

              If none of the other Parties join in the withdrawal, then the
              Remaining Parties must accept an assignment of their Participating
              Interest share of the Withdrawing Party's Working Interest.

       15.2.3 Acceptance of the Withdrawing Parties' Interests.

              If one or more but not all of the other Parties join in the
              withdrawal and become Other Withdrawing Parties, then within
              forty-eight (48) hours (exclusive of Saturdays, Sundays, and
              federal holidays) of the conclusion of the thirty (30) day joining
              period, each of the Remaining Parties shall submit to the Operator
              a written rejection or acceptance of its Participating Interest
              share of the Withdrawing Party's and Other Withdrawing Parties'
              Working Interest. Failure to make that written rejection or
              acceptance shall be deemed a written acceptance. If the Remaining
              Parties are unable to select a successor Operator, if applicable,
              or if a Remaining Party submits a written rejection and the other
              Remaining Parties do not agree to accept one hundred percent
              (100%) of the Withdrawing Party's and Other Withdrawing Parties'
              Working Interest within ten (10) days of the conclusion of the
              forty-eight (48) hour period to submit a written rejection or
              acceptance, the Remaining Parties will be deemed to have joined in
              the withdrawal, and Article 15.2.1 (Unanimous Withdrawal) will
              apply.

       15.2.4 Effects of Withdrawal

              Except as otherwise provided in this Agreement, after giving a
              withdrawal notice or a written notice to join in the withdrawal,
              the Withdrawing Party and Other Withdrawing Parties are not
              entitled to approve or participate in any activity or operation in

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              the Contract Area, other than those activities or operations for
              which they retain a financial responsibility. The Withdrawing
              Party and Other Withdrawing Parties shall take all necessary steps
              to accomplish their withdrawal by the effective date referred to
              in Article 15.1 (Right to Withdraw) and shall execute and deliver
              to the Remaining Parties all necessary instruments to assign their
              Working Interest to the Remaining Parties. A Withdrawing Party and
              Other Withdrawing Parties shall bear all expenses associated with
              their withdrawal and the transfer of their Working Interest.

15.3   Limitation Upon and Conditions of Withdrawal

       15.3.1 Prior Expenses

              The Withdrawing Party and Other Withdrawing Parties remain liable
              for their Participating Interest share of the costs of all
              activities, operations, rentals, royalties, taxes, damages,
              Hydrocarbon imbalances, or other liability or expense accruing or
              relating to (i) obligations existing as of the effective date of
              the withdrawal, (ii) operations conducted before the effective
              date of the withdrawal, (iii) operations approved by the
              Withdrawing Party and Other Withdrawing Parties before the
              effective date of the withdrawal, or (iv) operations commenced by
              the Operator under one of its discretionary powers under this
              Agreement before the effective date of the withdrawal. Before the
              effective date of the withdrawal, the Operator shall provide a
              statement to the Withdrawing Party and Other Withdrawing Parties
              for (1) their respective shares of all identifiable costs under
              this Article 15.3.1 and (2) their respective Participating
              Interest shares of the estimated current costs of plugging and
              abandoning all wells and removing all Platforms, Development
              Facilities, and other materiel and equipment owned by the Joint
              Account, less their respective Participating Interest Shares of
              the estimated salvage value of the assets at the time of
              abandonment, as approved by vote. This statement of expenses,
              costs, and salvage value shall be prepared by the Operator under
              Exhibit "C". Before withdrawing, the Withdrawing Party and Other
              Withdrawing Parties shall either pay the Operator, for the benefit
              of the Remaining Parties, the amounts allocated to them as shown
              in the statement, or provide security satisfactory to the
              Remaining Parties for all obligations and liabilities they have
              incurred and all obligations and liabilities attributable to them
              before the effective date of the withdrawal. All liens, charges,
              and other encumbrances, including but not limited to overriding
              royalties, net profits interest and production payments, which the
              Withdrawing Party and Other Withdrawing Parties placed (or caused
              to be placed) on their Working Interest shall be fully satisfied
              or released prior to the effective date of its withdrawal (unless
              the Remaining Parties are willing to accept the Working Interest
              subject to those liens, charges, and other encumbrances).

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       15.3.2 Confidentiality

              The Withdrawing Party and Other Withdrawing Parties will continue
              to be bound by the confidentiality provisions of Article 7.3
              (Confidentiality) after the effective date of the withdrawal but
              will have no further access to technical information relating to
              activities or operations under this Agreement. The Withdrawing
              Party and Other Withdrawing Parties are not required to return to
              the Remaining Parties Confidential Data acquired prior to the
              effective date of the withdrawal.

       15.3.3 Emergencies and Force Majeure

              No Party may withdraw during a Force Majeure or emergency that
              poses a threat to life, safety, property or the environment but
              may withdraw from this Agreement after termination of the Force
              Majeure or emergency. The Withdrawing Party and Other Withdrawing
              Parties remain liable for their share of all costs and liabilities
              arising from the Force Majeure or emergency, including but not
              limited to the drilling of relief wells, containment and cleanup
              of oil spills and pollution, and all costs of debris removal made
              necessary by the Force Majeure or emergency.

                                   ARTICLE 16

                      RENTALS, ROYALTIES AND OTHER PAYMENTS

16.1   Overriding Royalty and Other Burdens

       If the Working interest or Participating Interest of a Party is subject
       to an overriding royalty, Hydrocarbon production payment, net profits
       interest, mortgage, lien, security interest, or other burden or
       encumbrance, other than lessor's royalty and other burdens listed in
       Exhibit "A", the Party so burdened shall pay and bear all liabilities and
       obligations created or secured by the burden or encumbrance and shall
       indemnify and hold the other Parties harmless from all claims and demands
       for payment asserted by the owners of the burdens or encumbrances. If a
       Party becomes entitled to an assignment under this Agreement, or as a
       result of Non-consent Operations hereunder becomes entitled to receive a
       relinquished interest, as provided in Article 13.2 (Relinquishment of
       Interest), otherwise belonging to a Non-participating Party whose Working
       Interest in the operations is so burdened or encumbered, the Party
       entitled to receive the assignment from the Non-participating Party or
       the relinquished interest of the Non-participating Party's Hydrocarbon
       production shall receive same free and clear of all such burdens and
       encumbrances, and the Non-participating Party whose interest is subject

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       to the burdens and encumbrances shall hold the Participating Parties
       harmless for the burdens and encumbrances, and will bear same at its own
       expense.

16.2   Subsequently Created Interest

       Notwithstanding anything in this Agreement to the contrary, if a Party,
       after execution of this Agreement, creates an overriding royalty,
       Hydrocarbon production payment, net profits interest, carried interest,
       or any other interest out of its Working Interest which the Parties do
       not unanimously agree to list on Exhibit "A", (hereinafter called
       "Subsequently Created Interest"), the Subsequently Created Interest shall
       be made specifically subject to this Agreement. If the Party owning the
       interest from which the Subsequently Created Interest was established
       fails to pay, when due, its share of costs, and if the proceeds from the
       sale of Hydrocarbon production under Article 8.6 (Security Rights) are
       insufficient for that purpose, or elects to abandon a well, or elects to
       relinquish its interest in the Contract Area, the Subsequently Created
       Interest shall be chargeable with a pro rata portion of all costs in the
       same manner as if the Subsequently Created Interest were a Working
       Interest, and Operator may enforce against the Subsequently Created
       Interest the lien and other rights granted or recognized under this
       Agreement to secure and enforce collection of costs chargeable to the
       Subsequently Created Interest. The rights of the owner of the
       Subsequently Created Interest shall be, and hereby are, subordinated to
       the rights granted or recognized by Article 8.6 (Security Rights).

16.3   Payment of Rentals and Minimum Royalties

       Operator shall pay in a timely manner, for the joint account of the
       Parties, all rentals, minimum royalties, and other similar payments
       accruing under the Contract Area and shall, on request, submit evidence
       of each such payment to the Parties. Operator shall not be held liable to
       the other Parties in damages for loss of the Contract Area or interest
       therein if, through mistake or oversight, a rental, minimum royalty, or
       other payment is not paid or is erroneously paid. The loss of a Contract
       Area or interest therein resulting from the Operator's failure to pay, or
       erroneous payment of rental or minimum royalty shall be a joint loss, and
       there shall be no readjustment of interests. For Hydrocarbon production
       delivered in kind by Operator to a Non-operator or to another for the
       account of a Non-operator, the Non-operator shall provide Operator with
       information about the Non-operator's proceeds received or the value of
       the Hydrocarbon production taken in kind in order that Operator may make
       payments of minimum royalties due.

16.4   Non-participation in Payments

       A Party that desires not to pay its share of a rental, minimum royalty,
       or similar payment shall notify the other Parties in writing at least
       sixty (60) days before the payment is due. Operator shall then make the
       payment for the benefit of the Parties that do desire to maintain the
       Contract Area. In such event, the Non-participating Party shall assign to
       the Participating Parties, upon their request, the portions of its
       interest in the Contract Area maintained by the payment. The assigned
       interest shall be owned by each Participating Party in proportion to its
       Participating Interest. The assignment shall be made in accordance with
       Article 27 (Successors, Assigns, [and Preferential Rights]).

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16.5   Royalty Payments

       Each Party shall be responsible for and shall separately bear and
       properly pay or cause to be paid all royalty and other amounts due on its
       share of Hydrocarbon production taken in accordance with state or federal
       regulations, as may be amended from time-to-time. Adjustments shall be
       made among the Parties in accordance with Exhibit "E" (Gas Balancing
       Agreement). During a period when Participating Parties in a Non-consent
       Operation are receiving a Nonparticipating Party's share of Hydrocarbon
       production, the Participating Parties shall bear and properly pay, or
       cause to be paid, the Contract Area royalty on the Hydrocarbon production
       taken, and shall hold the Non-participating Parties harmless from
       liability for the payment.

                                   ARTICLE 17

                                      TAXES

17.1   Property Taxes

       Operator shall render property covered by this Agreement for ad valorem
       taxation, if applicable, and shall pay the property taxes for the benefit
       of each Party. Operator shall charge each Party its share of the tax
       payments. If the ad valorem taxes are based in whole or in part upon
       separate valuations of each Party's Working Interest, then
       notwithstanding anything in this Agreement to the contrary, each Party's
       share of property taxes shall be in proportion to the tax value generated
       by that Party's Working Interest.

17.2   Contest of Property Tax Valuation

       Operator shall timely and diligently protest to a final determination
       each tax valuation it deems unreasonable. Pending such determination,
       Operator may elect to pay under protest. Upon final determination,
       Operator shall pay the taxes and the interest, penalties, and costs
       accrued as a result of the protest. In either event, Operator shall
       charge each Party its share of any amounts due, and each Party shall be
       responsible for reimbursing Operator for any such amounts paid.

17.3   Production and Severance Taxes

       Each Party shall pay, or cause to be paid, all production and severance
       taxes due on Hydrocarbon production that it receives under this
       Agreement.

17.4   Other Taxes and Assessments

       Operator shall pay other applicable taxes (other than income taxes,
       excise taxes, or other similar types of taxes) or assessments and charge
       each Party its share.

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                              ARTICLE 18 INSURANCE

18.1   Insurance

       Operator shall provide and maintain the insurance prescribed in Exhibit
       "B" and charge those costs to the Joint Account. No other insurance shall
       be carried for the benefit of the Parties or separately by the Parties
       under this Agreement, except as provided in Exhibit "B".

18.2   Bonds

       Operator shall obtain and maintain all bonds or financial guarantees
       required by an applicable law, regulation or rule. The costs of those
       bonds or financial guarantees acquired exclusively for the conduct of
       activities and operations under this Agreement shall be charged to the
       Joint Account, including an amount equivalent to the reasonable cost of
       that bond or financial guarantee if Operator provides that bond or
       guarantee itself and does not engage a third party to do so. Operator
       shall require all contractors to obtain and maintain all bonds required
       by an applicable law, regulation or rule.

                                   ARTICLE 19

                         LIABILITY, CLAIMS, AND LAWSUITS

19.1   Individual Obligations

       The obligations, duties, and liabilities of the Parties under this
       Agreement are several, not joint or collective. Nothing in this Agreement
       shall ever be construed as creating a partnership of any kind, joint
       venture, agency relationship, association, or other character of business
       entity recognizable in law for any purpose. In their relations with each
       other under this Agreement, the Parties shall not be considered to be
       fiduciaries or to have established a confidential relationship, except as
       specifically provided in Article 7.3 (Confidentiality) and Article 7.4
       (Limited Disclosure), but rather shall be free to act at arm's length in
       accordance with their own respective self-interests. Each Party shall
       hold all other Parties harmless from liens and encumbrances on the
       Contract Area arising as a result of its acts.

19.2   Notice of Claim or Lawsuit

       If, on account of a matter involving activities or operations under this
       Agreement, or affecting the Contract Area, a claim is made against a
       Party, or if a party outside of this Agreement files a lawsuit against a
       Party, or if a Party files a lawsuit, or if a Party receives notice of a
       material administrative or judicial hearing or other proceeding, that
       Party shall give written notice of the claim, lawsuit, hearing, or
       proceeding ("Claim") to the other Parties as soon as reasonably
       practicable.

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19.3   Settlements

       The Operator may settle a Claim, or multiple Claims arising out of the
       same incident, involving activities or operations under this Agreement or
       affecting the Contract Area, if the aggregate expenditure does not exceed
       Two Hundred Fifty Thousand Dollars ($250,000) and if the payment is in
       complete settlement of these Claims. If the amount required for
       settlement exceeds this amount, the Parties shall determine the further
       handling of the Claims under Article 19.4 (Defense of Claims and
       Lawsuits).

19.4   Defense of Claims and Lawsuits

       The Operator shall supervise the handling, conduct, and prosecution of
       all Claims involving activities or operations under this Agreement or
       affecting the Contract Area. Claims may be settled in excess of the
       amount specified in Article 19.3 (Settlements) if the settlement is
       approved by vote of the Participating Parties (in accordance with Article
       6.1.2) in the activity or operation out of which the Claim arose, but a
       Party may independently settle a Claim or the portion of a Claim which is
       attributable to its Participating Interest share alone as long as that
       settlement does not directly adversely affect the interest or rights of
       the other Participating Parties. Charges for services performed by the
       legal staff of a Party shall be made in accordance with Exhibit "C", but
       all other expenses incurred by the Operator in the prosecution or defense
       of Claims for the Parties, together with the amount paid to discharge a
       final judgment, are costs and shall be paid by the Parties in proportion
       to their Participating Interest share in the activity or operation out of
       which the Claim arose. The employment of outside counsel, but not the
       selection of that counsel, requires unanimous approval by the Parties
       involved in the activity or operation out of which the Claim arose. If
       the use of outside counsel is approved, the fees and expenses incurred as
       a result thereof shall be charged to the Parties in proportion to their
       Participating Interest share in the activity or operation out of which
       that Claim arose. Each Party has the right to hire its own outside
       counsel at its sole cost with respect to its own defense in which case
       the Party would not be obligated to participate in the cost of retaining
       outside counsel selected by Operator.

19.5   Liability for Damages

       UNLESS SPECIFICALLY PROVIDED OTHERWISE IN THIS AGREEMENT, LIABILITY FOR
       LOSSES, DAMAGES, COSTS, EXPENSES OR CLAIMS INVOLVING ACTIVITIES OR
       OPERATIONS UNDER THIS AGREEMENT OR AFFECTING THE CONTRACT AREA WHICH ARE
       NOT COVERED BY OR IN EXCESS OF THE INSURANCE CARRIED FOR THE JOINT
       ACCOUNT SHALL BE BORNE BY EACH PARTY IN PROPORTION TO ITS PARTICIPATING
       INTEREST SHARE IN THE ACTIVITY OR OPERATION OUT OF WHICH THAT LIABILITY
       ARISES, EXCEPT TO THE EXTENT LIABILITY RESULTS FROM THE GROSS NEGLIGENCE
       OR WILLFUL MISCONDUCT OF A PARTY, IN WHICH CASE THAT PARTY SHALL BE

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       SOLELY RESPONSIBLE FOR LIABILITY RESULTING FROM ITS GROSS NEGLIGENCE OR
       WILLFUL MISCONDUCT.

19.6   Indemnification for Non-Consent Operations

       TO THE EXTENT ALLOWED BY LAW, THE PARTICIPATING PARTIES WILL HOLD THE
       NON-PARTICIPATING PARTIES (AND THEIR AFFILIATES, AGENTS, INSURERS,
       DIRECTORS, OFFICERS, AND EMPLOYEES) HARMLESS AND RELEASE, DEFEND, AND
       INDEMNITY THEM AGAINST ALL CLAIMS, DEMANDS, LIABILITIES, REGULATORY
       DECREES, AND LIENS FOR ENVIRONMENTAL POLLUTION AND PROPERTY DAMAGE OR
       PERSONAL INJURY, INCLUDING SICKNESS AND DEATH, CAUSED BY OR OTHERWISE
       ARISING OUT OF NON-CONSENT OPERATIONS, AND ANY LOSS AND COST SUFFERED BY
       A NON-PARTICIPATING PARTY AS AN INCIDENT THEREOF, EXCEPT WHERE THAT LOSS
       OR COST RESULTS FROM THE SOLE, CONCURRENT, OR JOINT NEGLIGENCE, FAULT OR
       STRICT LIABILITY OF THAT NON-PARTICIPATING PARTY, IN WHICH CASE EACH
       PARTY SHALL PAY OR CONTRIBUTE TO THE SETTLEMENT OR SATISFACTION OF
       JUDGMENT IN THE PROPORTION THAT ITS NEGLIGENCE, FAULT OR STRICT LIABILITY
       CAUSED OR CONTRIBUTED TO THE INCIDENT. IF AN INDEMNITY IN THIS AGREEMENT
       IS DETERMINED TO VIOLATE LAW OR PUBLIC POLICY, THAT INDEMNITY SHALL THEN
       BE ENFORCEABLE ONLY TO THE MAXIMUM EXTENT ALLOWED BY LAW.

19.7   Damage to Reservoir, Loss of Reserves and Profit

       NOTWITHSTANDING ANY CONTRARY PROVISION OF THIS AGREEMENT, OTHER THAN
       ARTICLES 10.8.6 AND 11.8.6, IF SELECTED, NO PARTY IS LIABLE TO ANY OTHER
       PARTY FOR DAMAGE TO A RESERVOIR, LOSS OF HYDROCARBONS, LOSS OF PROFITS,
       OR OTHER CONSEQUENTIAL DAMAGES, DAMAGES FOR BUSINESS INTERRUPTION, OR
       PUNITIVE DAMAGES, EXCEPT TO THE EXTENT THAT THE DAMAGE OR LOSS ARISES
       FROM A PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN WHICH CASE THAT
       PARTY SHALL BE SOLELY RESPONSIBLE FOR DAMAGE OR LOSS ARISING FROM ITS
       GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; NOR DOES A PARTY INDEMNIFY ANY
       OTHER PARTY FOR THAT DAMAGE OR LOSS.

19.8   Non-Essential Personnel

       A NON-OPERATOR THAT REQUESTS TRANSPORTATION OR ACCESS TO A DRILLING RIG,
       PLATFORM, VESSEL, OR OTHER FACILITY USED FOR ACTIVITIES OR OPERATIONS
       UNDER THIS AGREEMENT SHALL HOLD THE OTHER PARTIES HARMLESS AND SHALL
       RELEASE, DEFEND, AND INDEMNIFY THEM AGAINST (I) ALL CLAIMS, DEMANDS, AND
       LIABILITIES FOR PROPERTY DAMAGE AND (II) ALL CLAIMS, DEMANDS, AND
       LIABILITIES FOR ANY LOSS OR COST SUFFERED BY A PARTY AS AN INCIDENT
       THEREOF, INCLUDING, BUT NOT LIMITED TO, INJURY, SICKNESS AND DEATH,
       CAUSED BY OR OTHERWISE ARISING OUT OF THAT TRANSPORTATION OR ACCESS, OR

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       BOTH, EXCEPT TO THE EXTENT THAT LOSS OR COST RESULTS FROM THE GROSS
       NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY SO INDEMNIFIED AND
       PROTECTED.

19.9   Dispute Resolution Procedure

       Any claim, controversy or dispute arising out of, relating to, or in
       connection with this Agreement or an activity or operation conducted
       under this Agreement shall be resolved under the Dispute Resolution
       Procedure in Exhibit "H" to this Agreement.

                                   ARTICLE 20

                           INTERNAL REVENUE PROVISION

20.1   Internal Revenue Provision

       Notwithstanding any provision in this Agreement to the effect that the
       rights and liabilities of the Parties are several, not joint or
       collective, and that this Agreement and the activities and operations
       under this Agreement do not constitute a partnership under state law;
       however, the Parties agree that the activities and operations under this
       Agreement shall constitute a partnership for federal and, to the extent
       allowable, state and local income tax law and shall be governed for such
       purposes by the terms of Exhibit F hereto.

                                   ARTICLE 21

                                  CONTRIBUTIONS

21.1   Notice of Contributions Other Than Advances for Sale of Production

       Each Party shall promptly notify the other Parties of all offers of
       contributions that it may obtain, or contributions it is attempting to
       obtain, for the drilling of a well or the conducting of an operation on
       the Contract Area. Payments received as consideration for entering into a
       contract for the sale of Hydrocarbon production from the Contract Area,
       loans, and other financial arrangements shall not be considered
       contributions for the purpose of this Article 21. No Party shall release
       or obligate itself to release Confidential Data in return for a
       contribution from a third party without prior written consent of the
       Participating Parties or Parties having the right to participate in the
       well.

21.2   Cash Contributions

       If a Party receives a cash contribution for drilling a well on the
       Contract Area or conducting an activity or operation on the Contract
       Area, the cash contribution shall be paid to Operator, and Operator shall
       credit the amount thereof to the Parties in proportion to their
       Participating Interests

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       in the well or the Platform and/or Development Facilities. If the well is
       a Non-consent Well, the amount of the contribution shall be deducted from
       the cost specified in Article 13.2.1(a) before computation of the amount
       to be recouped out of Hydrocarbon production.

21.3   Acreage Contributions

       If a Party receives an acreage contribution for the drilling of a well on
       the Contract Area, the acreage contribution shall be shared by each
       Participating Party that accepts it in proportion to its Participating
       Interest in the well. As between the Participating Parties, this
       Agreement shall apply separately to the acreage.

                                   ARTICLE 22

                            DISPOSITION OF PRODUCTION

22.1   Take-in-Kind Facilities

       Subject to Article 22.2, a Party may, at its sole cost and risk,
       construct Take-in-Kind Facilities to take its share of Hydrocarbon
       production in kind.

22.2   Duty to Take in Kind

       Each Party shall own and, at its own cost and risk, shall take in kind or
       separately dispose of its share of the oil, gas, and condensate produced
       and saved from the Contract Area, exclusive of Hydrocarbon production
       used by Operator in activities or operations conducted under this
       Agreement, subject to this Article 22. In order to avoid interference
       with operations on or regarding the Platform, the Development Facilities,
       and the Contract Area, a Party exercising its right to construct Take-in
       Kind Facilities ("the Take in Kind Party") shall provide the Operator
       with a list of equipment it deems necessary for its Take in Kind
       Facilities ("the components") along with its notice informing the
       Operator of its election to take in kind. If the Operator agrees to
       install and operate the Take-in Kind Facilities, the Operator shall
       purchase the components and install it on behalf of the Take in Kind
       Party at the Take in Kind Party's sole risk and cost, including, but not
       limited to, any fees, penalties or other costs incurred as a result of
       any cancellation of placed orders as may be requested by the Take in Kind
       Party. The Operator shall provide the Take in Kind Party with monthly
       updates on the progress of the ordering and installation of the Take in
       Kind Facilities. The Operator, based on the instructions of Take in Kind
       Party, shall install and operate all of the components. The Operator
       shall not be responsible for any losses or damages to the components or
       the Take in Kind Party's Hydrocarbon production metered, treated,
       processed or transported by the components unless such losses or damages
       are the result of the Operator's gross negligence or willful misconduct.
       If the Operator refuses or fails to commence the installation of the
       Take-in Kind Facilities by thirty (30) days prior to the deadline
       provided in Section 12.4, the Take-in Kind Party shall have the right to

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       install and operate the Take-in Kind Facilities providing that such
       operations do not interfere with existing operations or proposed
       operations that have been approved under terms of this Agreement.

22.3   Failure to Take Oil and Condensate in Kind

       Notwithstanding Article 22.2 (Duty to Take in Kind), if a Party fails to
       take in kind or dispose of its share of the oil or condensate, Operator
       shall have the right, but not the obligation, subject to revocation at
       will by the Party owning the Hydrocarbon production, to purchase for its
       own account, sell to others, or otherwise dispose of all or part of the
       Hydrocarbon production at the same price at which Operator calculates and
       pays lessor's royalty on its own portion of the oil or condensate.
       Operator shall notify the non-taking Party when the option is exercised.
       A purchase or sale by Operator of any other Party's share of the oil or
       condensate shall be for such reasonable periods of time as are consistent
       with the minimum needs of the industry under the circumstances, but in no
       event shall a contract be for a period in excess of one (1) year.
       Proceeds of the oil or condensate purchased, sold, or otherwise disposed
       of by Operator under this Article 22.3 shall be paid to the Party that
       had, but did not exercise, the right to take in kind and separately
       dispose of the oil or condensate. Operator, in disposing of another
       Party's oil or condensate, shall not be responsible for making any filing
       with regulatory agencies not required by law to be made by it in respect
       to another Party's share of oil or condensate. Unless required by
       governmental authority having jurisdiction or by judicial process, no
       Party shall be forced to share an available market with a non-taking
       Party.

22.4   Failure to Take Gas in Kind

       Article 22.3 (Failure to Take Oil and Condensate in Kind) shall not apply
       to gas produced from the Contract Area. In no event shall Operator be
       responsible for, or obligated to dispose of, another Party's share of gas
       production. If for any reason a Party fails to take or market its full
       share of gas as produced, that Party may later take, market, or receive a
       cash accounting for its full share in accordance with Exhibit "E".

22.5   Expenses of Delivery in Kind

       A cost that is incurred by Operator in making delivery of a Party's share
       of Hydrocarbons or disposing of same shall be paid by the Party.

                                   ARTICLE 23

                                 APPLICABLE LAW

23.1   Applicable Law

       THIS AGREEMENT AND THE RELATIONSHIP OF THE PARTIES UNDER THIS AGREEMENT
       SHALL BE GOVERNED BY AND INTERPRETED UNDER FEDERAL LAWS AND LAWS OF THE
       STATE OF LOUISIANA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS
       THAT WOULD OTHERWISE REFER THE MATTER TO THE LAWS OF ANOTHER
       JURISDICTION.

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                                   ARTICLE 24

                    LAWS, REGULATIONS AND NON-DISCRIMINATION

24.1   Laws and Regulations

       This Agreement and operations under this Agreement are subject to all
       applicable laws, rules, regulations, and orders by all governmental
       authorities claiming jurisdiction now and in the future. A provision of
       this Agreement found to be contrary to or inconsistent with any such law,
       rule, regulation, or order shall be deemed to have been modified
       accordingly.

24.2   Non-discrimination

       In performing work under this Agreement, the Parties shall comply and
       Operator shall require each independent contractor to comply with the
       governmental requirements in Exhibit "D" and with Articles 202(1) to (7),
       inclusive of Executive Order 11246, as amended.

                                   ARTICLE 25

                                  FORCE MAJEURE

25.1   Force Majeure

       If a Party is unable, wholly or in part because of a Force Majeure, to
       carry out its obligations under this Agreement, other than the obligation
       to make money payments, that Party shall give the other Parties prompt
       written notice of the Force Majeure with full particulars about it.
       Effective upon the date notice is given, the obligations of the Party, so
       far as they are affected by the Force Majeure, shall be suspended during,
       but no longer than, the continuance of the Force Majeure. Time is of the
       essence in the performance of this Agreement, and every reasonable effort
       will be made by the Party to avoid delay or suspension of any work or
       acts to be performed under this Agreement. The requirement that the Force
       Majeure be remedied with all reasonable dispatch shall not require a
       Party to settle strikes or other labor difficulties.

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                                   ARTICLE 26

                   SUCCESSORS, ASSIGNS AND PREFERENTIAL RIGHTS

26.1   Successors and Assigns

       This Agreement binds and inures to the benefit of the Parties and their
       respective heirs, successors, and assigns and shall constitute a covenant
       running with the Contract Area. Each Party shall incorporate in each
       assignment of an interest in the Contract Area a provision that the
       assignment is subject to this Agreement.

26.2   Transfer of Interest

       No transfer, assignment, or other disposition of interest by a Party
       shall relieve the Party of liabilities and obligations it has incurred or
       that are attributable to the interest transferred before the date of the
       transfer, and the obligation to pay and bear all costs and risks
       attributable to an operation in which, the Party was a Participating
       Party before making the transfer, and the lien and security rights
       granted by Section 8.6 (Security Rights) shall continue to burden the
       interest transferred to secure payment of the obligations. The transferor
       shall be liable for all costs, expenses, and liabilities for well
       plugging and abandonment, Platform and Development Facilities removal and
       disposal, and site clearance for property and equipment attributable to
       the assigned interest before the date of the transfer, net of salvage
       proceeds.

26.3   Consent to Assign

       Ridgewood may not sell, transfer, farm out, assign, or otherwise dispose
       of all or part of its Working Interest in the Contract Area without the
       prior written consent of Chevron. No Party may sell, transfer, farm out,
       assign, or otherwise dispose of all or part of its Working Interest in
       the Contract Area unless:

       (a)    the transferee is financially capable of assuming the obligations
              hereunder and, in accordance with Subsection 26.3(c), the
              transferor furnishes the Parties with proof of such financial
              capability that, in the case of Outer Continental Shelf Contract
              Areas, shall be proof that the transferee is currently qualified
              by the Minerals Management Service, an agency of the United States
              Department of the Interior, or a successor agency having
              jurisdiction (hereinafter "MMS"), to own Outer Continental Shelf
              Contract Areas and that the transferee would not be required by
              the MMS to post a supplemental bond pursuant to 30 CFR ss.
              256.53(d) & (e) if such transferee owned 100% of the Working
              Interest in the Contract Area.

       (b)    the transferee agrees in writing to assume all obligations and
              liabilities under this Agreement related to the interest acquired
              arising from and after the effective date of the transfer; and

       (c)    the transferor has given the other Parties written notice of the
              transfer at least fifteen (15) days before the date of the
              transfer, such notice to include the name of each proposed
              transferee, a description of the interests to be transferred, and
              the proof set forth in Subsection 26.3(a).

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       The requirements of this Section 26.3 shall not apply to a merger,
       consolidation, reorganization, sale or transfer to an Affiliate, a
       mortgage by a Party of its interest in the Contract Area, a sale of all,
       or substantially all, of a Party's domestic exploration and production
       properties, or a transfer or disposition between the Parties hereto.

26.4   Transfers Between Parties

       A transfer, relinquishment, or other disposition of interests in the
       Contract Area between Parties under the Acreage Out Option (if selected)
       under Section 10.5 (Operations by Fewer Than All Parties); Section 13.11
       (Contract Area Maintenance Operations); Section 13.12 (Retention of
       Contract Area by Non-consent Well); Article 15 (Withdrawal); or Section
       16.4 (Non-participation in Payments) shall be made without warranty of
       title. Any such transfer between the Parties, if applicable, shall be
       free and clear of all Subsequently Created Interests, as defined in
       Section 16.2 (Subsequently Created Interest), and all mortgages, liens,
       and encumbrances.

26.5   Division of Interest

       If, at any time, the interest of a Party is divided among and owned by
       four (4) or more co-owners, Operator, at its discretion, may require the
       co-owners to appoint a single trustee or agent with full authority to
       receive notices, approve expenditures, receive billings for, and approve
       and pay the Party's share of the joint expenses, and to deal generally
       with, and with power to bind the co owners of the Party's interest within
       the scope of the operations embraced in this Agreement. All such
       co-owners may separately dispose of their respective shares of the oil,
       gas, and condensate produced from the Contract Area and may receive,
       separately, payment of the sale proceeds thereof.

26.6   Preferential Rights

       If Ridgewood or any of Ridgewood's successors-in-interest, desires to
       transfer, sell, farm out, assign, or otherwise dispose of all or part of
       its Working Interest ("Disposing Party"), it shall promptly give written
       notice to Chevron and any of Chevron's successors-in-interest ("Acquiring
       Party(ies)") with full information about the proposed transaction,
       including, but not limited to, the name and address of the prospective
       transferee (who must be ready, willing, and able to acquire the interest
       and deliver the stated consideration therefor), the consideration for the
       transfer, farm out terms, and all other terms of the offer. In the case
       of a package sale of oil and gas interests that includes all or part of
       the Disposing Party's Working Interest, or if the proposed transaction is
       structured as a non-simultaneous, like-kind exchange under Section 1031
       of the Internal Revenue Code of 1986, as amended ("Code"), the Working
       Interest that is subject to this preferential right shall be separately
       valued in good faith and the notice shall state the value attributed to
       the interest by the prospective transferee. The Acquiring Party(ies)
       shall then have an optional prior right, for a period of thirty (30) days
       after receipt of the notice, to elect to purchase or acquire on the same
       terms and conditions, or on equivalent terms for a non-cash transaction,
       all of the Working Interest that the Disposing Party is proposing to

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       transfer. If this preferential right is exercised by an Acquiring
       Party(ies), the purchasing or Acquiring Party(ies) shall share the
       purchased or acquired interest in the proportions that the Working
       Interest of each bears to the total Working Interest of all Acquiring
       Party(ies), or in such proportions as the Acquiring Party(ies) otherwise
       agree. This preferential right shall apply separately to each Working
       Interest or part thereof covered by this Agreement, regardless of whether
       it is included in the proposed transaction along with other oil and gas
       interests, whether as a sale, farm out, or non-simultaneous, like-kind
       exchange, and no provision in this Agreement shall be interpreted to
       defeat this preferential right. Upon exercise of this preferential right,
       the acquiring Party(ies) shall agree to perform all obligations of the
       prospective transferee under the proposed transaction only for the
       Working Interest subject to the proposed transaction. This preferential
       right, however, shall not exist or apply when a Party proposes (a) to
       mortgage its interest; (b) to dispose of or transfer its interest to a
       third party by (i) merger, (ii) reorganization, or (iii) consolidation;
       (c) to sell all of its exploration and production properties located in
       the Gulf of Mexico, Outer Continental Shelf of the United States of
       America; or (d) to transfer the interest under a property exchange
       transaction other than a non-simultaneous, like-kind exchange under
       Section 1031 of the Code. If the proposed transaction is not consummated
       within six (6) months after receipt of the notice by the other Parties,
       the Working Interest shall again be governed by this Section 26.6 and the
       preferential right shall again arise for the offered interest as herein
       described.

                                   ARTICLE 27

                            ADMINISTRATIVE PROVISIONS

27.1   Term

       This Agreement shall remain in effect so long as any Contract Area
       remains in effect and thereafter until (a) all wells have been abandoned
       and plugged or turned over to the Parties owning an interest in the
       Contract Area on which the wells are located; (b) all Platforms,
       Development Facilities, and equipment have been disposed by the Operator
       in accordance with Article 14 (Abandonment, Salvage, and Surplus); (c)
       all Claims as defined in Article 19 (Liability, Claims, and Lawsuits)
       have been settled or otherwise disposed of; and (d) there has been a
       final accounting and settlement by all Parties. In accordance with
       Article 4.5 (Selection of Successor Operator), this Agreement will
       terminate if no Party is willing to become Operator, effective after all
       conditions in clauses (a) through (d) above have been completed. In
       accordance with Article 15.2.1 (Unanimous Withdrawal), this Agreement
       will terminate if all Parties elect to withdraw, effective after all
       conditions in clauses (a) through (d) above have been completed.
       Termination of this Agreement shall not relieve a Party of a liability or

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<PAGE>

       obligation accrued or incurred before termination and is without
       prejudice to all continuing confidentiality obligations or other
       obligations in this Agreement.

27.2   Waiver

       A term, provision, covenant, representation, warranty, or condition of
       this Agreement may be waived only by written instrument executed by the
       Party waiving compliance. The failure or delay of a Party in the
       enforcement or exercise of the rights granted under this Agreement shall
       not constitute a waiver of said rights nor shall it be considered as a
       basis for estoppel. Time is of the essence in the performance of this
       Agreement and all time limits shall be strictly construed and enforced.

27.3   Waiver of Right to Partition

       Each Party waives the right to bring an action for partition of its
       interest in the Contract Area, wells, Platform, Development Facilities,
       and other equipment held under this Agreement, ,and covenants that during
       the existence of this Agreement it shall not resort at any time to an
       action at law or in equity to partition any or all of the Contract Areas
       and lands or personal property subject to this Agreement.

27.4   Compliance With Laws and Regulations

       This Agreement, and all activities or operations conducted by the Parties
       under this Agreement, are expressly subject to, and shall comply with,
       all laws, orders, rules, and regulations of all federal, state, and local
       governmental authorities having jurisdiction over the Contract Area.

       27.4.1 Severance of Invalid Provisions

              If, for any reason and for so long as, a clause or provision of
              this Agreement is held by a court of competent jurisdiction to be
              illegal, invalid, unenforceable or unconscionable under a present
              or future law (or interpretation thereof), the remainder of this
              Agreement will not be affected by that illegality or invalidity.
              An illegal or invalid provision will be deemed severed from this
              Agreement, as if this Agreement had been executed without the
              illegal or invalid provision. The surviving provisions of this
              Agreement will remain in full force and effect unless the removal
              of the illegal or invalid provision destroys the legitimate
              purposes of this Agreement; in which event this Agreement shall be
              null and void.

       27.4.2 Fair and Equal Employment

              Each of the Parties is an Equal Opportunity Employer, and the
              equal opportunity provisions of 30 CFR 270 and 41 CFR 60-1, as
              amended or modified, are incorporated in this Agreement by
              reference. The affirmative action clauses concerning disabled
              veterans and veterans of the Vietnam era (41 CFR 60-250) and the
              affirmative action clauses concerning employment of the
              handicapped (41 CFR 60-741) are also incorporated in this
              Agreement by reference. In performing work under this Agreement,
              the Parties shall comply with (and the Operator shall require each
              independent contractor to comply with) the governmental
              requirements in Exhibit "E" that pertain to non-segregated
              facilities.

MP 30 EPA JOA
                                       65

<PAGE>

27.5   Construction and Interpretation of this Agreement

       27.5.1 Headings for Convenience

              Except for the definition headings in Article 2 (Definitions), all
              the table of contents, captions, numbering sequences, and
              paragraph headings in this Agreement are inserted for convenience
              only and do not define, expand or limit the scope, meaning, or
              intent of this Agreement.

       27.5.2 Article References

              Except as otherwise provided in this Agreement, each reference to
              an article of this Agreement includes all of the referenced
              article and its sub-articles.

       27.5.3 Gender and Number

              The use of pronouns in whatever gender or number is a proper
              reference to the Parties to this Agreement though the Parties may
              be individuals, business entities, or groups thereof. Reference in
              this Agreement to the singular of a noun or pronoun includes the
              plural and vice versa.

       27.5.4 Future References

              A reference to a Party includes such Party's successors and
              assigns and, in the case of governmental bodies, persons
              succeeding to their respective functions and capacities.

       27.5.5 Currency

              Any amounts due or payable under this Agreement shall be paid in
              United States currency.

       27.5.6 Optional Provisions

              In the event that any "Optional" provision of this Agreement is
              not adopted by the Parties to this Agreement by a typed, printed
              or handwritten indication, such provision shall not form a part of
              this Agreement, and no inference shall be made concerning the
              intent of the Parties in regard to the subject matter of the
              "Optional" provision

       27.5.7 Joint Preparation

              This Agreement shall be deemed for all purposes to have been
              prepared through the joint efforts of the Parties and shall not be
              construed for or against one Party or the other as a result of the
              preparation, submittal, drafting, execution or other event of
              negotiation hereof.

       27.5.8 Integrated Agreement

              This Agreement contains the final and entire agreement of the
              Parties for the matters covered by this Agreement and, as such,
              supersedes all prior written or oral communications and
              agreements. This Agreement may not be modified or changed except
              by written amendment signed by the Parties.

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<PAGE>

       27.5.9 Binding Effect

              To the extent it is assignable, this Agreement shall bind and
              inure to the benefit of the Parties and their respective
              successors and assigns, and shall constitute a covenant running
              with the land comprising the Contract Area. This Agreement does
              not benefit or create any rights in a person or entity that is not
              a Party to this Agreement.

       27.5.10 Further Assurances

              Each Party will take all actions necessary and will sign all
              documents necessary to implement this Agreement. Except as
              otherwise provided in this Agreement, within (30) days after their
              receipt of a valid written request for those documents from a
              Party, all other Parties shall prepare and execute the documents.

       27.5.11 Counterpart Execution

              This Agreement may be executed by signing the original or a
              counterpart. If this Agreement is executed in counterparts, all
              counterparts taken together shall have the same effect as if all
              Parties had signed the same agreement. No Party shall be bound to
              this Agreement until all Parties have executed a counterpart or
              the original of this Agreement. This Agreement may also be
              ratified by a separate instrument that refers to this Agreement
              and adopts by reference all provisions of this Agreement. A
              ratification shall have the same effect as an execution of this
              Agreement.

27.6   Restricted Bidding

       If more than one Party is ever on the list of restricted joint bidders
       for Outer Continental Shelf ("OCS") lease sales, as issued by the MMS
       under 30 CFR 256.44, as amended, the Parties shall comply with all
       statutes and regulations regarding restricted joint bidders on the OCS.

27.7   Conflict of Terms

       Chevron U.S.A. Inc. and Ridgewood Energy Corporation hereby agree and
       acknowledge that this Agreement is made subject and subordinate to that
       certain Exploration Participation Agreement (EPA) dated November 30, 2005
       between Chevron U.S.A. Inc. and Ridgewood Energy Corporation, and that in
       the event of a conflict between the terms and provisions of this
       Agreement and the EPA, the terms and provisions of the EPA shall control.

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                                       67

<PAGE>

                 IN WITNESS WHEREOF, this Agreement has been executed by the
Parties as of the day and year first above written.

WITNESSES:                          Chevron U.S.A. Inc.

[SIGNATURE ILLEGIBLE]               By: /s/ G. R. Cain
---------------------                  ----------------------------

[SIGNATURE ILLEGIBLE]               Title: Assistant Secretary
---------------------                     -------------------------

                                    Ridgewood Energy Q Fund, LLC
                                    By Ridgewood Energy Corporation, its Manager

/s/ Sandy Bennett                   By: /s/ W. G. Tabor
---------------------                  ----------------------------

[SIGNATURE ILLEGIBLE]               Title: Executive Vice President
---------------------                     -------------------------

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                                       68

<PAGE>

                                   Exhibit "A"

Attached to and made a part of that certain Offshore Operating Agreement
effective as of November 30, 2005, between Chevron U.S.A. Inc. and Ridgewood
Energy Q Fund LLC., covering Main Pass Block 30, Offshore, Gulf of Mexico

1.   Chevron U.S.A. Inc. (Chevron) is designated as Operator.

2.   Contract Area:

     That portion of that certain Oil and Gas Lease of Submerged Lands bearing
     Serial No. OCS-G 4903, dated effective December 1, 1981, by and between the
     United States of America, as Lessor, and Texaco Inc. et al as Lessee,
     covering all of Block 30, Main Pass Area, insofar and only insofar as it
     covers and affects Prospect "A", as defined in Exhibit A"" of that certain
     Exploration Participation Agreement dated November 30, 2005 between Chevron
     and Ridgewood.

3.   Division of Interest

     Company                                        Working Interest Percentage
     --------------------------------------------------------------------------
     Chevron U.S.A. Inc. (Chevron)                          55.000%
     Ridgewood Energy Q Fund, LLC (Ridgewood)               45.000% **
                                                            -------
                                                           100.000%

     * Chevron's interest is subject to the Exploration Participation Agreement
     (EPA) dated November 30, 2005 between Chevron and Ridgewood. The 55%
     working interest represents Chevron's After Casing Point interest in the
     Contract Area as referenced in subject EPA.

     ** Ridgewood's interest, rights and obligations are pursuant to the
     Exploration Participation Agreement (EPA) dated November 30, 2005 between
     Chevron and Ridgewood. The 45% working interest represents Ridgewood's
     After Casing Point interest in the Contract Area as referenced in subject
     EPA.

4.   Notification Addressees

     Chevron U.S.A. Inc.                                Tel.: (504) 592-6356
     935 Gravier Street                                 Fax:  (504) 592-
     New Orleans, LA 70112
     Attention: Mr. Gordon R. Cain
                   Gulf of Mexico-Land Manager

     Ridgewood Energy Q Fund, LLC                       Tel: (281) 293-8449
     c/o Ridgewood Energy Corporation                   Fax: (281) 293 - 7391
     11700 Old Katy Road, Suite 280
     Houston, Texas 77079
     Attention: Mr. W. Greg Tabor

JOA Exhibit "A"
                                        1

<PAGE>

                                   Exhibit "B"

Attached to and made a part of that certain Offshore Operating Agreement
effective as of November 30, 2005, between Chevron U.S.A. Inc. and Ridgewood
Energy Q Fund, LLC., covering Main Pass Block 30, Offshore, Gulf of Mexico.

                             INSURANCE REQUIREMENTS
                             ----------------------

1.   Operator shall carry insurance as follows for the benefit and protection of
     the Parties to this Agreement:

     a)   Worker's Compensation Insurance in accordance with laws of
          governmental bodies having jurisdiction including, if applicable,
          United States Longshore and Harbor Workers' Compensation Act with
          Outer Continental Shelf Extension, Maritime Employers' Liability
          (including, but not limited to, the Jones Act and Death on the High
          Seas Act) and Employers' Liability Insurance. Employers' Liability
          Insurance shall provide coverage of $10,000,000 per accident.

     b)   Any other insurance or surety bond that may be required elsewhere in
          this agreement or by applicable federal, state and local laws and
          regulations.

     Operator may include the aforesaid risks under its qualified self-insurance
     program provided Operator complies with applicable laws, and in such event
     Operator shall charge to the Joint Account a premium determined by applying
     manual insurance rates to the payroll.

2.   Each Party to this Agreement shall carry the following insurance for their
     percentage interest:

     a)   Commercial General Liability (Bodily Injury and Property Damage)
          Insurance, including coverage for; premises-operations, products and
          completed operations, independent contractors liability, contractual
          liability to cover liabilities assumed under this Agreement, coverage
          for explosion, collapse and underground hazards, and sudden and
          accidental pollution. The limits of such insurance shall not be less
          than $25,000,000 combined single limit per occurrence.

     b)   Automobile Public Liability and Property Damage Insurance covering all
          owned, non-owned, and hired vehicles used in performance of this
          Agreement. The limits of such insurance shall not be less than
          $1,000,000 combined single limit per occurrence.

     c)   Hull and Machinery Insurance, including collision liability coverage,
          on all vessels and barges, if any, used in performance of this
          agreement. The limit of such insurance shall not be less than the fair
          market value of each vessel and/or barge.

     d)   Protection and Indemnity Insurance on each vessel and barge used in
          performance of this agreement, including but not limited to coverage
          for injuries to or death of masters, mates and crew, collision
          liabilities not covered under the H&M policy, excess collision
          liabilities and pollution liabilities arising under State and Federal
          laws. The limits of such insurance shall not be less than $10,000,000
          per occurrence.

     e)   If the Parties use aircraft, including but not limited to helicopters
          (excepting such aircraft and helicopters furnished by or employed for
          hire from Chevron) in performance of this Agreement, Operator shall
          maintain or require owners of such aircraft to maintain, Aircraft
          Liability (Bodily Injury - including liability to passengers - and
          Property Damage) Insurance with an overall combined single limit per
          occurrence of not less than $25,000,000.

JOA - Exhibit "B"
                                       1

<PAGE>

     f)   Operator's Extra Expense insurance including, but not limited to:
          coverage for control of well (including underground control of well);
          redrill and extra expense; extended and unlimited redrill; seepage,
          pollution, clean-up and contamination; evacuation expense; making
          wells save and care custody and control. The limits for such insurance
          shall not be less than $25,000,000 combined single limit per
          occurrence.

     The above insurance shall contain waivers of subrogation in favor of the
     other Parties to this Agreement.

     Each Party shall provide evidence of the above insurance, satisfactory to
     Operator, prior to commencement of any work under this Agreement and
     subsequently with each policy's renewal date.

3.   Operator shall not be obligated or authorized to obtain or carry on behalf
     of the Joint Account any additional insurance covering the Parties or the
     operations to be conducted hereunder. Each Party individually may acquire
     at its own expense such insurance as it deems proper to protect itself
     against claims, losses, damage to or destruction of property of third
     parties, or personal injury or death of third persons arising out of the
     joint operations. All uninsured losses and all damages to jointly owned
     property shall be borne by the Parties in proportion to their respective
     interests.

4.   Operator shall require all contractors engaged in operations under this
     Agreement to comply with the applicable Worker's Compensation and
     Employers' Liability laws and to maintain such other insurance and in such
     amounts as Operator deems necessary.

5.   In the event less than all Parties participate in an operation conducted
     under the terms of this Agreement, then the insurance requirement and
     costs, as well as all losses, liabilities and expenses incurred as the
     result of such operation, shall be the burden of the Party or Parties
     participating therein.

JOA - Exhibit "B"
                                        2

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