Document:

ASSET PURCHASE AGREEMENT

                          DATED AS OF DECEMBER 20, 2010

                                     between

                           RANCHER ENERGY CORPORATION,

                                   AS SELLER,

                                       AND

                     LINC ENERGY PETROLEUM (WYOMING), INC.,

                                    AS BUYER

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INDEX OF SCHEDULES AND EXHIBITS

      Exhibit A            --       Bill of Sale
      Exhibit B            --       Assignment and Assumption Agreement
      Exhibit C            --       Litigation Agreement
      Exhibit D            --       Form of Assignment Instrument

      Schedule 2.1.1(a)    --       Post-Petition Contracts
      Schedule 2.1.1(b)    --       Assumed Contracts
      Schedule 2.1.1(c)    --       Receivables
      Schedule 2.1.1(d)    --       Real Property
      Schedule 2.1.1(e)    --       Inventory
      Schedule 2.1.1(f)    --       Chapter 11 Permits
      Schedule 2.1.1(g)    --       Software
      Schedule 2.1.1(h)    --       Intellectual Property Rights
      Schedule 2.1.1(i)    --       Machinery and Equipment
      Schedule 2.1.1(k)    --       Motor and Industrial Vehicles
      Schedule 2.1.1(o)    --       Performance Bonds; Insurance Policies; and
                                    Insurance Claims
      Schedule 2.1.1(p)    --       Cash and Cash Equivalents
      Schedule 2.1.1(r)    --       Deposits
      Schedule 2.1.1(s)    --       Equity Securities
      Schedule 2.1.3       --       Excluded Assets
      Schedule 2.1.5       --       Excluded Liabilities
      Schedule 2.1.6       --       Assumed Liabilities
      Schedule 3.4         --       Tax Allocation
      Schedule 5.4         --       Litigation
      Schedule 5.5         --       Compliance with Laws
      Schedule 5.9.1       --       Seller Plans
      Schedule 5.9.3       --       Compliance with Seller Plans
      Schedule 5.9.5       --       Violation of Labor Laws
      Schedule 5.10.1      --       Seller-Owned Intellectual Property Rights
      Schedule 5.10.5      --       Software: Defects in Title, Transferability
                                    and/or Functionality
      Schedule 5.13        --       Other Royalty Interests and Net Profits
                                    Interests
      Schedule 5.14        --       Certain Fees
      Schedule 5.15        --       Subsidiaries of Seller
      Schedule 9.2.2       --       Transferred Employees Accruals
      Schedule 10.2        --       List of Assignment Documents
      Schedule 14.15       --       Authorized Representatives of Seller

<PAGE>

     ASSET PURCHASE  AGREEMENT,  dated as of December 20, 2010,  between RANCHER
ENERGY CORPORATION,  a Nevada corporation ("Seller"),  and LINC ENERGY PETROLEUM
(WYOMING),  INC., a Delaware corporation (together with its successors,  assigns
and transferees,  "Buyer").  Each of Buyer and Seller is sometimes  individually
referred  to in this  Agreement  as a "Party,"  and all of them,  together,  are
sometimes referred to herein as the "Parties." Capitalized terms used herein are
defined in Section 1 or in the text hereof.

                                    RECITALS

     A. On October 28, 2009 (the "Petition Date"),  Seller commenced  Bankruptcy
Case No. 09-32943 MER (the "Bankruptcy Case") by filing a voluntary petition for
reorganization under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
101 et seq. (the "Bankruptcy Code"), with the United States Bankruptcy Court for
the District of Colorado (the "Bankruptcy  Court").  Seller continues to operate
its  business  and manage  its  Properties  as debtor  and  debtor-in-possession
pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.

     B. Buyer  desires to purchase  from Seller,  and Seller  desires to sell to
Buyer,  free and clear of all Liens and Claims  and on the terms and  subject to
the conditions of this  Agreement,  all of the Purchased  Assets in exchange for
the Purchase Price.

     C. Seller and GasRock entered into the GasRock Credit  Agreement on October
16, 2007,  pursuant to which,  among other things,  GasRock extended the GasRock
Debt to  Seller.  The  GasRock  Debt was  secured by (a) that  certain  Security
Agreement,  dated October 16, 2007 ("GasRock Security Agreement"),  and (b) that
certain  Mortgage,  Security  Agreement,  Financing  Statement and Assignment of
Production and Revenues, between Seller and GasRock, dated October 16, 2007 (the
"GasRock  Mortgage"  and  together  with the  GasRock  Security  Agreement,  the
"GasRock  Security  Documents"),  which,  together,  encumbered  all of Seller's
pre-petition assets. Prior to the Petition Date, Seller defaulted on the GasRock
Debt and negotiated  forbearances with GasRock in lieu of immediate  foreclosure
of the GasRock Mortgage.

     D. Seller granted to GasRock certain  interests,  pursuant to the following
(collectively,  the "GasRock  Agreements"):  (a) the  Conveyance  of Net Profits
Interest,  dated June 3, 2009,  made by Seller,  doing  business in the State of
Wyoming as Rancher Oil & Gas Corp., as grantor,  to and in favor of GasRock,  as
grantee,  recorded with the Converse County Clerk and Recorder on June 17, 2009,
as filing  number  951550,  at book  1362,  page 867 (the  interests  granted to
GasRock  thereunder  are the "10% NPI"),  (b)  Conveyance of Overriding  Royalty
Interest,  dated as of October 22, 2008, recorded with the Converse County Clerk
and Recorder on November 17, 2008, as filing number 954947,  at book 1349,  page
0069 (the interests  granted to GasRock  thereunder are the "1% ORRI"),  and (c)
the  Conveyance of Overriding  Royalty  Interest,  dated as of October 15, 2007,
made by Seller,  doing  business  in the State of  Wyoming as Rancher  Oil & Gas
Corp.,  as grantor,  to and in favor of GasRock,  as grantee,  recorded with the
Converse County Clerk and Recorder on October 31, 2007, as filing number 941798,
at book 1321, page 0792 (the interests granted to GasRock thereunder are the "2%
ORRI").

     E. Buyer and Seller are  parties to the Loan  Documents,  pursuant to which
Buyer has made the DIP Loan to Seller,  and  pursuant  to which  Seller  granted
Buyer a continuing perfected  super-priority first lien security interest in all
of  Seller's  Property.  The  Loan  Documents  were  approved  by  order  of the
Bankruptcy Court dated [__________ ___],  20[___].  The proceeds of the DIP Loan
were,  among  other  things,  used to satisfy the  GasRock  Loan,  and as of the
Closing Date,  Buyer is the first and only Lien holder on the  Purchased  Assets
(other than Permitted Liens).

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     F. Seller has  thoroughly  marketed the Purchased  Assets and believes this
Agreement and the Transaction to be in the best interests of Seller, its estate,
creditors, and all parties in interest.

     NOW,  THEREFORE,  in  consideration  of the mutual  covenants,  agreements,
representations and warranties  contained in this Agreement,  and for other good
and  valuable  consideration,  the receipt and  sufficiency  of which hereby are
conclusively acknowledged, the Parties agree as follows.

Section 1.        Defined Terms.

     1.1 Definitions.  The following  terms, as used herein,  have the following
meanings:

     "Affiliate"  has the meaning  set forth in Rule 12b-2 of the General  Rules
and Regulations of the Securities Exchange Act of 1934, as amended,  and Section
101 of the Bankruptcy Code.

     "Agreement"  means  this  Asset  Purchase  Agreement,   together  with  all
exhibits,  annexes  and  schedules  hereto,  and as the same may be  amended  or
restated from time to time.

     "Apportioned Obligations" has the meaning given to it in Section 8.5.3.

     "Assignment  and Assumption  Agreement"  means an assignment and assumption
agreement substantially in the form attached hereto as Exhibit B.

     "Assumed Contracts" has the meaning given to it in Section 2.1.1(b).

     "Assumed Liabilities" has the meaning given to it in Section 2.1.6.

     "Bankruptcy Case" has the meaning given to it in the recitals.

     "Bankruptcy Code" has the meaning given to it in the recitals.

     "Bankruptcy Court" has the meaning given to it in the recitals.

     "Bill  of Sale"  means a bill of sale  substantially  in the form  attached
hereto as Exhibit A.

     "Books and Records" means,  with respect to Seller,  originals or copies of
all  books,   records,   Organic  Documents,   contracts,   insurance  policies,
environmental  audits,  business plans, files,  financial statements (actual and
pro forma),  filings with federal,  state and local regulatory  agencies,  other
instruments and documents in the custody or control or otherwise belonging to or
property of Seller,  information  and records  prepared by or for its  certified
public  accountants and its banking and other  financial  institutions of Seller
relating to the Business or the Purchased Assets.

     "Business" means the oil and gas business operations of Seller.

     "Business  Day" means any day that is not a Saturday,  a Sunday or a day on
which banks are required or permitted to be closed in Denver, Colorado.

     "Buyer" has the meaning given to it in the  introductory  paragraph of this
Agreement.

     "Buyer Certificate" has the meaning given to it in Section 3.2.1.

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     "Buyer's  Closing  Month  Amount"  has the  meaning  given to it in Section
3.2.1.

     "Buyer's Share of the Post-Closing Adjustment Amount" has the meaning given
to it in Section 3.2.3(d).

     "Cash Purchase Price" has the meaning given to it in Section 3.1.1.

     "Chapter 11 Contracts" has the meaning given to it in Section 2.1.1(b).

     "Chapter 11 Permits" has the meaning given to it in Section 2.1.1(f).

     "Claim" means a "claim" as defined in Section 101 of the Bankruptcy Code.

     "Closing" has the meaning given to it in Section 4.1.

     "Closing Date" has the meaning given to it in Section 4.1.

     "Closing Month" means the calendar month in which the Closing occurs.

     "Closing Day DIP Loan Obligations" means the amount of all Obligations that
are  outstanding  or otherwise due and payable by Seller to Buyer under the Loan
Documents as of the Closing Date.

     "Control"  means,  with respect to a Person,  the  possession,  directly or
indirectly,  of the  power to direct or cause  the  direction  of such  Person's
management or policies,  whether through the ownership of voting securities,  by
contract or otherwise,  and "Controlling"  and "Controlled"  shall have meanings
correlative thereto.

     "Copyrights"  means all of the following now owned or hereafter  adopted or
acquired by Seller:  (a) all copyrights  and General  Intangibles of like nature
(whether registered or unregistered),  all registrations and recordings thereof,
and all  applications  in connection  therewith,  including  all  registrations,
recordings  and  applications  in the United States  Copyright  Office or in any
similar  office or  agency  of the  United  States,  and any state or  territory
thereof, or any other country or any political  subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

     "Cure Costs" means all amounts that must be paid and all  obligations  that
otherwise must be satisfied, including pursuant to Sections 365(b)(1)(A) and (B)
of the Bankruptcy Code, in connection with the assumption  and/or  assignment of
the Assumed  Contracts,  the Chapter 11 Permits  and the  Intellectual  Property
Rights to Buyer as provided herein.

     "Daily Pro Ration Amount" has the meaning given to it in Section 3.2.3(b).

     "DIP Loan" means the extensions of credit made by Buyer to Seller  pursuant
to the Loan Documents.

     "End Date" has the meaning given to it in Section 4.1.

     "Environmental  Condition"  means:  (a) any event or condition  (including,
without  limitation,  any Release)  with respect to air,  land,  soil,  surface,
subsurface  strata,  surface  water,  ground water,  or sediment that causes the
Purchased  Assets  to become  subject  to (or their  owner or  operator  to have
liability or be potentially  liable for) any removal,  remediation,  or response
action  under,  or not  be in  compliance  with,  any  Environmental  Law or any

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Environmental Permit pursuant to any Environmental Law; (b) the existence of any
written or oral Claim pending or threatened  that  reasonably may be expected to
subject  the  Purchased  Assets or the owner or the  operator  of the  Purchased
Assets to  liability  in favor of any  Governmental  Authority  or Person as the
result of the alleged violation by such owner or operator or any other Person of
any Environmental Law as it pertains to the Purchased Assets or the existence of
any event or condition on the Purchased Assets described in this definition; (c)
the  failure  of the  Purchased  Assets  to be in  compliance,  or the  owner or
operator  of the  Purchased  Assets  to  comply,  in each  case in all  material
respects with all  applicable  Environmental  Laws with respect to the Purchased
Assets;  (d) the  failure of the owner or operator  of the  Purchased  Assets to
obtain or maintain in full force and effect any Permit required under applicable
Environmental  Laws with respect to the  Purchased  Assets;  or (e) any event or
condition  described  in the  preceding  clauses  (a),  (b),  (c),  and (d) that
results,  or could  reasonably  be  expected  to  result,  in  liability  to any
Governmental Authority for any removal,  remediation, or response action, or any
other  Person for injury to or death of any  Person,  Persons,  or other  living
thing,  or damage,  loss, or  destruction  of property  located on the Purchased
Assets. An event or circumstance that results in the inaccuracy or breach of the
representations  and  warranties  contained  in Section  5.8.1 or Section  5.8.2
(insofar  only as such  representation  and  warranty  relates to  environmental
matters) shall constitute an Environmental  Condition.  The term  "Environmental
Condition" includes,  without limitation, any Release or any threatened Release,
of any Hazardous Material from, or related in any way to the use, ownership,  or
operation of, the Purchased Assets that has not been remedied in accordance with
all applicable Environmental Laws.

     "Environmental  Laws" means all  federal,  state and local laws,  statutes,
ordinances, orders and regulations, now or hereafter in effect, and in each case
as amended or  supplemented  from time to time, and any  applicable  judicial or
administrative  interpretation thereof relating to the regulation and protection
of human  health,  safety,  the  environment  and natural  resources  (including
ambient air, surface water,  groundwater,  wetlands,  land surface or subsurface
strata, wildlife,  aquatic species and vegetation).  Environmental Laws include,
but are not limited to, the Comprehensive Environmental Response,  Compensation,
and Liability Act of 1980, as amended (42  U.S.C.ss.ss.9601 et seq.) ("CERCLA");
the Hazardous Material  Transportation  Act, as amended (49  U.S.C.ss.ss.1801 et
seq.); the Federal  Insecticide,  Fungicide,  and Rodenticide Act, as amended (7
U.S.C.ss.ss.136 et seq.); the Resource Conservation and Recovery Act, as amended
(42  U.S.C.ss.ss.6901  et seq.) ("RCRA");  the Toxic  Substance  Control Act, as
amended  (15  U.S.C.ss.ss.2601  et  seq.);  the Clean Air Act,  as  amended  (42
U.S.C.ss.ss.740  et seq.);  the Federal Water Pollution  Control Act, as amended
(33  U.S.C.ss.ss.1251  et seq.);  the  Occupational  Safety and Health  Act,  as
amended (29 U.S.C.ss.ss.651 et seq.) ("OSHA");  and the Safe Drinking Water Act,
as  amended  (42  U.S.C.ss.ss.300(f)  et  seq.),  and any  and  all  regulations
promulgated  thereunder,  and all  analogous  state  and local  counterparts  or
equivalents and any transfer of ownership notification or approval statutes.

     "Environmental   Liabilities"  means,  with  respect  to  any  Person,  all
liabilities,  obligations,  responsibilities,  response,  remedial  and  removal
costs,  investigation  and  feasibility  study costs,  operation and maintenance
costs, losses,  damages,  punitive damages,  property damages,  natural resource
damages,  consequential  damages,  treble damages, costs and expenses (including
all  reasonable  fees,  disbursements  and  expenses  of  counsel,  experts  and
consultants),  fines, penalties,  sanctions and interest incurred as a result of
any claim,  suit,  action,  investigation,  proceeding  or demand by any Person,
whether based in contract, tort, implied or express warranty,  strict liability,
criminal or civil statute or common law,  including any arising under or related
to any  Environmental  Laws,  Environmental  Permits,  or in connection with any
Release or threatened  Release or the presence of a Hazardous  Material  whether
on, at, in,  under,  from or about or in the  vicinity  of any real or  personal
Property.

     "Environmental  Permits"  means  all  permits,  licenses,   authorizations,
certificates,  approvals or registrations required by any Governmental Authority
under any Environmental Laws.

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     "ERISA" means the Employee  Retirement  Income Security Act of 1974 (or any
successor   legislation  thereto),  as  amended  from  time  to  time,  and  any
regulations promulgated thereunder.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with Seller and which,  together with Seller, is treated as
a single employer  within the meaning of Section 414(b),  (c), (m) or (o) of the
IRC.

     "Estimated Purchase Price" has the meaning given to it in Section 3.1.1.

     "Excluded Assets" has the meaning given to it in Section 2.1.3.

     "Excluded Liabilities" has the meaning given to it in Section 2.1.5.

     "Expenses" means expenses of the Business and the Purchased Assets, Assumed
Liabilities and Assumed  Contracts,  that are incurred in the ordinary course of
business,  and  shall not  include  (a) with  respect  to any  Person,  fees and
expenses  payable to a Person's legal,  investment  banking or other advisors in
connection with the  Transactions or the  transactions  contemplated by the Loan
Documents,  and (b) expenses, fees or costs arising out of or in connection with
any Avoidance Action.

     "Event of Default" has the meaning given to it in the Loan Agreement.

     "GasRock" means GasRock Capital, LLC, a Delaware limited liability company,
together with its successors and assigns.

     "GasRock Agreements" has the meaning given to it in the recitals.

     "GasRock Claims" means, collectively, claims that GasRock has or may assert
with respect to the GasRock Agreements or the 10% NPI, and the 1% ORRI.

     "GasRock Credit Agreement" means that certain Term Credit Agreement,  dated
October 16, 2007,  between Seller and GasRock,  together with amendments thereto
and modifications thereof, and all schedules, exhibits, and annexes thereto.

     "GasRock  Debt" means all  indebtedness  and  obligations of Seller arising
under the GasRock Credit  Agreement,  and all documents,  instruments,  security
agreements, pledges and financing statements contemplated therein.

     "GasRock Mortgage" has the meaning given to it in the recitals.

     "GasRock Security Agreement" has the meaning given to it in the recitals.

     "Governmental  Authority" means any (a) federal,  state, local,  municipal,
foreign or other government; (b) governmental or quasi-governmental authority of
any nature (including any governmental  agency,  branch,  division,  department,
official, or entity and any court or other tribunal); or (c) body exercising, or
entitled to  exercise  any  administrative,  executive,  judicial,  legislative,
police,  regulatory,  or taxing authority or power of any nature,  including any
arbitral tribunal.

     "Hazardous Material" means (a) any element,  material,  compound,  mixture,
solution, chemical,  substance, or pollutant within the definition of "hazardous
substance" under Section 101(14) of the  Comprehensive  Environmental  Response,
Compensation  and  Liability  Act,  42 U.S.C.  ss.  9601(14);  petroleum  or any
fraction,  byproduct or distillation product thereof; asbestos,  polychlorinated

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biphenyls,  or any  radioactive  substances;  and any  material  regulated  as a
hazardous  substance by any jurisdiction in which Seller owns or operates or has
owned or operated a facility;  or (b) any  element,  pollutant,  contaminate  or
discarded material (including any radioactive material) within the definition of
Section  103(6) of the Resource  Conservation  and Recovery  Act, 42 U.S.C.  ss.
6903(6);  and any material  regulated as hazardous waste by any  jurisdiction in
which  Seller owns or operates or has owned or operated a facility,  or to which
Seller sends or has sent material for  treatment,  storage or disposal as waste.
The term also includes naturally occurring  radioactive  material  concentrated,
disposed of, released or present on,  resulting from, or in association with oil
gas or hydrocarbon activities.

     "Intellectual  Property  Right" means,  for any Person,  collectively,  all
Trademarks,  and the goodwill associated with such Trademarks,  all Patents, all
Copyrights,  and all  Licenses  now held or  hereafter  acquired by such Person,
together  with  all  know  how,  franchises,   tax  refund  claims,   rights  of
indemnification,  payments under insurance policies, indemnities, warranties and
guarantees  payable  with  respect to the  foregoing,  and similar  intellectual
property rights.

     "IRC"  means  the  Internal  Revenue  Code of  1986,  as  amended,  and any
successor thereto.

     "IRS" means the Internal Revenue Service, or any successor thereto.

     "Law" means,  with respect to any Person,  all provisions of constitutions,
statutes,  rules,  regulations,   and  orders  of  all  governmental  bodies  or
regulatory agencies applicable to such Person, and all orders and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.

     "License" means, for any Person,  any Patent License,  Trademark License or
other  license of rights or  interests  now held or  hereafter  acquired by such
Person.

     "Lien"  means any  mortgage,  deed of trust,  lien  (statutory  or  other),
pledge,  hypothecation,  assignment, claim, charge, security interest, easement,
encumbrance, deposit arrangement, preference, priority, preferential arrangement
or security agreement, of any nature or kind whatsoever,  whether or not choate,
vested,  or perfected  (including any conditional  sale or other title retention
agreement,  any  easement,  right of way or other  encumbrance  on title to Real
Property and any financing lease having  substantially  the same economic effect
as any of the foregoing,  and the filing of, or agreement to give, any financing
statement  perfecting a security interest under the IRC or comparable law of any
jurisdiction).

     "Litigation  Agreement" means that certain Litigation Agreement in form and
substance attached hereto as Exhibit C.

     "Loan    Agreement"    means    the    Senior    Secured,    Super-Priority
Debtor-In-Possession  Credit  Agreement,  approved by the  Bankruptcy  Court and
dated as of December  20,  2010,  between  Buyer and Seller,  together  with all
exhibits and schedules thereto, as the same may be amended or restated from time
to time.

     "Loan  Documents"  means,  collectively,  the Loan Agreement,  the Security
Agreement  (as that term is defined in the Loan  Agreement),  the Term Loan Note
(as that term is defined in the Loan Agreement),  the Mortgages (as that term is
defined in the Loan  Agreement),  and each and every other "Loan  Document"  (as
that term is defined in the Loan Agreement).

     "Material  Adverse Effect" means a material  adverse change in, or material
adverse effect upon, Seller, the Business,  Seller's  operations,  the Purchased
Assets,  the Assumed  Liabilities,  the  condition  (financial  or otherwise) or

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prospects of the Business,  each individually or taken as a whole, excluding any
such effect to the extent  resulting from or arising in connection  with (a) the
Transaction  or the public  announcement  thereof,  (b)  changes  or  conditions
affecting  the  industry  generally  in which  Seller  operates,  (c) changes in
economic,  regulatory or political conditions  generally,  (d) changes resulting
from the  commencement or  continuation  of the Bankruptcy  Case, or (e) actions
taken by Seller  pursuant  to (or as  contemplated  by)  orders  entered  by the
Bankruptcy Court in the Bankruptcy Case.

     "Material  Decision"  means any of the following to the extent the same may
affect the Purchased Assets,  the Assumed  Liabilities or the Business following
the Closing:  (a) entering  into any  material  contract  involving in excess of
$10,000,  which obligations  thereunder shall become due after the Closing,  (b)
termination of any executory  contract or lease that involves future payments in
excess of $10,000, (c) material amendment or waiver of any of Seller's rights in
respect  of any  executory  contract  or lease  (for  purposes  of  clause  (c),
"material"  shall mean a value to Seller or a payable  from  Seller in excess of
$10,000),  (d) any action to  respond to any  material  customer  or  regulatory
complaint outside of the normal course of business;  (e) any communication  with
customers  of  Seller,  concerning  the  Transaction  and/or  the  status of the
operation of the Business, or (f) any material change of any of Seller's methods
of  collecting  Receivables  or any making or  agreeing  to make any  settlement
concerning a Receivable in excess of $1,000.

     "Non-Transferrable Assets" has the meaning given to it in Section 2.1.2.

     "Obligations" has the meaning given to it in the Loan Agreement.

     "Organic  Documents"  means,  with  respect  to Seller,  its minute  books,
organizational and other charter documents.

     "Party" and "Parties" has the meaning given to them in the introduction.

     "Patent  License"  means,  with  respect to any  Person,  rights  under any
written  agreement now owned or hereafter  acquired by such Person  granting any
right with respect to any invention on which a Patent is in existence.

     "Patents" means, with respect to any Person,  all of the following in which
such Person now holds or hereafter  acquires any right,  title or interest:  (a)
all letters  patent of the United  States of America or any other  country,  all
registrations and recordings thereof, and all applications for letters patent of
the  United  States of America or any other  country,  including  registrations,
recordings and  applications in the United States Patent and Trademark Office or
in any similar  office or agency of the United  States of America,  any State or
Territory  thereof,  or any  other  country,  and (b) all  reissues,  divisions,
continuations, continuations-in-part or extensions thereof.

     "Performance Bonds" means, collectively,  (a) Operator Bond #: WY000448 for
which a cash  deposit in the amount of $25,000 is being held on behalf of Seller
by the Bureau of Land Management,  (b) one Operator Bond and two Idle Well Bonds
for which a cash  deposit in the  aggregate  amount of $379,020 is being held on
behalf of Seller by the Office of State Land and Investments,  (c) Operator Bond
Rec #: 27347 for which a cash  deposit in the amount of $75,000 is being held on
behalf of Seller by the Wyoming Oil and Gas  Commission,  (d) Idle  'Addtl' Bond
Rec #: 27365 for which a cash  deposit in the amount of $34,000 is being held on
behalf of Seller by the Wyoming Oil and Gas  Commission,  (e) Idle Well Bond Rec
#: 27402 for which a cash  deposit in the  amount of  $109,000  is being held on
behalf of Seller by the Wyoming Oil and Gas  Commission,  and (f) Idle Well Bond
CD# 8104451 for which a cash  deposit in the amount of $192,334 is being held on
behalf of Seller by American National Bank.

                                       9
<PAGE>

     "Permitted  Lien"  means any (a) Lien for Taxes,  assessments  and  similar
charges that are not yet due or are being  contested in good faith and (b) Liens
granted at any time in favor of Buyer, including pursuant to the Loan Documents.

     "Person" means any  individual,  sole  proprietorship,  partnership,  joint
venture, trust, unincorporated organization,  association,  corporation, limited
liability company,  limited liability partnership,  institution,  public benefit
corporation,  entity  or  government  (whether  Federal,  state,  county,  city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof).

     "Post-Petition Contracts" has the meaning given to it in Section 2.1.1(a).

     "Post-Closing Adjustment" has the meaning given to it in Section 3.2.5.

     "Post-Closing  Adjustment  Amount" has the  meaning  given to it in Section
3.2.3(a).

     "Post-Closing  Adjustment  Certificate"  has  the  meaning  given  to it in
Section 3.2.3.

     "Post-Closing  Adjustment  Certificate Date" has the meaning given to it in
Section 3.2.3.

     "Post-Closing Tax Period" has the meaning given to it in Section 8.5.3.

     "Pre-Closing  Tax Period"  means (a) any Tax period ending on or before the
Closing  Date,  and (b) with respect to a Tax period that  commences  before but
ends after the Closing Date,  the portion of such period up to and including the
Closing Date.

     "Property"  means any  interest of any kind of  property or asset,  whether
real, personal or mixed, or tangible or intangible.

     "Property Taxes" means all Real Property Taxes, personal Property Taxes and
similar ad valorem  obligations  levied with respect to the Purchased Assets for
any taxable period.

     "Purchase Price" has the meaning given to it in Section 3.1.2.

     "Purchased Assets" has the meaning given in Section 2.1.1.

     "Real Property" has the meaning given to it in Section 2.1.1(d).

     "Receivables" has the meaning given to it in Section 2.1.1(c).

     "Release" means,  with respect to any Person,  any release or any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching,  dumping,  disposing  or migration  of a Hazardous  Material  into the
indoor or outdoor environment by such Person (or by a Person under such Person's
direction or Control), including the movement of a Hazardous Material through or
in the air, soil, surface water, ground water or property; but shall exclude any
release,  discharge,  emission or disposal  in material  compliance  with a then
effective permit, order, rule regulation or law of a Governmental Authority.

     "Sale Documents"  means,  collectively,  this Agreement and each instrument
and document contemplated hereunder,  including the Bill of Sale, the Assignment
and Assumption Agreement, and the Litigation Agreement, and the Sale Order.

     "Sale  Motion" has the meaning  given to it in Section  7.7.

                                       10
<PAGE>

     "Sale Order" means an order or orders of the  Bankruptcy  Court in form and
substance acceptable to Buyer, in its sole discretion,  approving this Agreement
and each other  Sale  Document  (including  but not  limited  to the  Litigation
Agreement),  all of the terms and conditions  hereof and thereof,  and approving
and  authorizing  Seller  to  consummate  the  Transaction,  pursuant  to and in
accordance with Sections 363 and 365 of the Bankruptcy Code.

     "Seller" has meaning given to it in the introduction.

     "Seller Certificate" has the meaning given to it in Section 3.2.2.

     "Seller's  Closing  Month  Amount" has the  meaning  given to it in Section
3.2.2.

     "Seller Plan" and "Seller Plans" have meaning given to it in Section 5.9.1.

     "Seller's  Share of the  Post-Closing  Adjustment  Amount"  has the meaning
given to it in Section 3.2.3(c).

     "Software"  means all  computer  programs  and any  supporting  information
provided in connection with transactions  relating to such programs,  including,
without limitation, all source codes, now owned or hereafter acquired by Seller,
other than software embedded in any category of goods.

     "Subsidiary"  means,  with respect to any Person (other than an individual)
any corporation or other organization,  whether  incorporated or unincorporated,
of which (a) at least a majority of the securities or other interests  having by
their terms ordinary  voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly  owned or controlled by such Person or by
any one or more of its  Subsidiaries,  or by such  Person and one or more of its
Subsidiaries  or (b) such  Person or any other  Subsidiary  of such  Person is a
general partner.

     "Tax" or "Taxes" means (a) any tax, levies,  imposts,  duties,  deductions,
withholdings,  assessments,  fees or other charges  imposed by any  Governmental
Authority or other like assessment or charge of any kind  whatsoever  (including
withholding  on amounts paid to or by any Person),  together  with any interest,
penalty,  addition  to tax or  additional  amount  imposed  by any  Governmental
Authority (a "Taxing Authority")  responsible for the imposition of any such tax
(domestic or foreign),  or (b)  liability  for the payment of any amounts of the
type  described in clause (a) as a result of being party to any agreement or any
express or implied obligation to indemnify any other Person.

     "Trademark  License" shall mean,  with respect to any Person,  rights under
any written  agreement now owned or hereafter  acquired by such Person  granting
any right to use any Trademark or Trademark registration.

     "Trademarks"  shall mean, with respect to any Person,  all of the following
in which such  Person now holds or  hereafter  acquires  any  interest:  (a) all
common law and statutory  trademarks,  trade names,  corporate  names,  business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general  intangibles  of like nature,  now existing or hereafter  adopted or
acquired,  all  registrations  and recordings  thereof,  and all applications in
connection therewith,  including  registrations,  recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States of America,  any state or territory  thereof,  or any other
country or any political  subdivision thereof;  (b) all reissues,  extensions or
renewals thereof; and (c) all licenses thereunder and together with the goodwill
associated with and symbolized by such trademark.

                                       11
<PAGE>

     "Transferred Employees" has the meaning given to it in Section 9.1.1.

     "Transferred  Employees'  Employment  Date" has the meaning  given to it in
Section 9.4.

     "Transaction" means,  collectively,  the transactions  contemplated in this
Agreement and the other Sale Documents.

     "WARN Act" means,  collectively,  (a) the Worker  Adjustment and Retraining
Notification Act, as amended,  and (b) any similar state or local Law arising as
a result of the Transaction.

     "Well" has the meaning given to it in Section 7.1.2.

     1.2 Rules of Construction.  The words "herein," "hereof" and "hereunder" or
other words of similar  import refer to the Agreement as a whole,  including the
exhibits and  schedules  thereto,  as the same may from time to time be amended,
modified or  supplemented,  and not to any  particular  section,  subsection  or
clause contained in this Agreement. For purposes of this Agreement and the other
Sale Documents,  the following additional rules of construction shall apply: (a)
wherever from the context it appears appropriate, each term stated in either the
singular or plural  shall  include the  singular  and the plural,  and  pronouns
stated in the masculine,  feminine or neuter gender shall include the masculine,
the feminine and the neuter,  (b) the term "including"  shall not be limiting or
exclusive,  unless specifically indicated to the contrary, (c) all references to
statutes and related  regulations  shall include any amendments  thereto and any
successor statutes and regulations, and (d) all references to any instruments or
agreements shall include any and all modifications or amendments thereto and any
and all extensions or renewals  thereof,  in each case,  made in accordance with
the terms  thereof.  Whenever any provision in any Sale  Document  refers to the
"knowledge"  of any Person,  such provision is intended to mean that such Person
has actual knowledge or awareness of a particular fact or circumstance,  or that
such Person, if it had exercised reasonable diligence, should have known or been
aware of such fact or circumstance.

Section 2.        Purchase and Sale.

     2.1 Purchase  and Sale.  Subject to the terms and  conditions  set forth in
this Agreement,  the Sale Order, the Bankruptcy Code and applicable Laws, Seller
agrees to sell, convey, transfer,  assign and deliver to Buyer, and Buyer hereby
agrees to purchase from Seller the Purchased Assets, as follows:

     2.1.1 Purchased Assets.  All right, title and interest in and to all of the
assets,  Properties,  rights and business of Seller of every kind, character and
description, as of the Closing Date, to the extent owned, held or primarily used
in the conduct of the Business,  including but not limited to the following, and
excluding the Excluded Assets (collectively, the "Purchased Assets"):

          (a) all of the contracts,  agreements, leases, commitments, and orders
     (including  customer  orders,  purchase  orders and orders with  vendors or
     other suppliers),  in each case executed or entered into after the Petition
     Date and listed on Schedule 2.1.1(a) (the "Post-Petition Contracts");

          (b) every executory  contract and unexpired  lease of Seller,  in each
     case  executed or entered into prior to the Petition  Date (the "Chapter 11
     Contracts";  the  Post-Petition  Contracts and the Chapter 11 Contracts are
     referred  to herein  collectively  as the  "Assumed  Contracts")  listed on
     Schedule 2.1.1(b);

          (c) all accounts,  notes and other  receivables of Seller  existing on
     the Closing Date, including  intercompany  receivables  (collectively,  the
     "Receivables"),  the amount of which as of the date  hereof is set forth on
     Schedule 2.1.1(c) (Signing Date), and the amount of which as of the Closing
     Date is set forth on Schedule 2.1.1(c) (Closing Date);

                                       12
<PAGE>

          (d) all of the real Property and all improvements to, and fixtures of,
     the real  Property  of Seller  (the  "Real  Property")  listed on  Schedule
     2.1.1(d);

          (e) all inventory,  in whatever form or state,  and wherever  located,
     including  all  inventory of oil as of date hereof as set forth on Schedule
     2.1.1(e)  (Signing  Date),  and as of the  Closing  Date  as set  forth  on
     Schedule 2.1.1(e) (Closing Date);

          (f) all  licenses,  permits,  franchises,  certificates  of occupancy,
     registrations  and approvals and other  authorizations  of any Governmental
     Authority of Seller to the extent the same are transferrable  (the "Chapter
     11 Permits") listed on Schedule 2.1.1(f);

          (g) all Software,  management  information systems, URLs, source codes
     and databases used by Seller whether owned, licensed, leased, or internally
     developed  (in each case,  subject to  applicable  restrictions),  servers,
     computer equipment and associated hardware, supplies, spare parts, portable
     devices,  peripheral  equipment,  telephone  equipment,  telephone numbers,
     facsimile  numbers,  and electronic  mail  addresses,  passcodes,  keys and
     security badges of Seller listed on Schedule 2.1.1(g);

          (h) all  Intellectual  Property  Rights of Seller  listed on  Schedule
     2.1.1(h);

          (i) all machinery, equipment (including office equipment),  furniture,
     furnishings,  fixtures,  leasehold improvements and other items of tangible
     personal Property of Seller listed on Schedule 2.1.1(i),

          (j) all warranties, representations and guarantees, if any, express or
     implied,  existing for the benefit of Seller from third parties relating to
     the  Purchased   Assets,  to  the  extent  the  same  are  transferable  or
     assignable;

          (k) all cars,  trucks,  forklifts,  other industrial or motor vehicles
     and other motor vehicles of Seller listed on Schedule 2.1.1(k);

          (l) all  rights  of  Seller  under  all  warranties,  representations,
     indemnities  or  guaranties  made by third parties to or for the benefit of
     Seller;

          (m) all Books and Records (other than the Organic Documents);

          (n) all claims and  defenses  which Seller may have against any Person
     with respect to any Assumed Contract, Purchased Asset or the Business;

          (o)  all  Performance  Bonds  and  all  cash  deposits  and  financial
     instruments  posted by Seller in connection with the Performance Bonds, and
     all insurance  policies of Seller or on which Seller is a named beneficiary
     or loss payee listed on Schedule  2.1.1(o),  and all claims  arising  under
     such policies (whether prior to or after the Closing), all credits, premium
     refunds,  proceeds, causes of action or rights thereunder, and all proceeds
     payable thereunder;

          (p)  all  of  Seller's  cash  and  cash  equivalents   (including  all
     undeposited  checks,  certificates  of  deposit,  Treasury  bills and other
     marketable  securities  owned by Sellers)  and in banks or other  financial
     institutions,  the  amount  of which as of the date  hereof is set forth on
     Schedule 2.1.1(p) (Signing Date), and the amount of which as of the Closing
     Date is set forth on Schedule 2.1.1(p) (Closing Date);

                                       13
<PAGE>

          (q) all Tax refunds,  Tax rebates and Tax reimbursements due to Seller
     or its Affiliates and relating to the Business that relate to periods prior
     to the Closing Date;

          (r) all deposits, prepaid expenses, advance payments and other prepaid
     items held by or maintained  with third  parties with respect to,  pursuant
     to, or in connection with, any Assumed Contract,  agreement or arrangement;
     deposits with creditors,  deposits held by parties to the Assumed Contracts
     and other deposits;  all utility deposits and security deposits of any kind
     or nature  whatsoever,  the amount and  description of which as of the date
     hereof is set forth on Schedule 2.1.1(r) (Signing Date), and the amount and
     description  of  which as of the  Closing  Date is set  forth  on  Schedule
     2.1.1(r) (Closing Date);

          (s) all equity securities of any Person,  and instruments  convertible
     into  equity  securities  of any  Person,  of  Seller  listed  on  Schedule
     2.1.1(s); and

          (t) all other Properties not  specifically  enumerated above which are
     used by or  useful  to  Seller in  connection  with the  Business,  but not
     including the Excluded Assets.

     2.1.2  Assignment of Assumed  Contracts and Rights.  To the maximum  extent
permitted by the Bankruptcy  Code, as a condition to the  effectiveness  of this
Agreement,  Seller shall assume all of the Assumed  Contracts  and  Intellectual
Property  Rights.  Seller shall assign to Buyer,  pursuant to Section 365 of the
Bankruptcy Code, all of the Assumed Contracts and Intellectual  Property Rights.
Notwithstanding  any other  provision of this  Agreement to the  contrary,  this
Agreement shall not constitute an agreement to assign any Purchased Asset or any
right thereunder if an attempted  assignment cannot be accomplished  pursuant to
Section 365 or any other provision of the Bankruptcy Code without the consent of
a third  party.  If such  consent  is not  obtained  or such  assignment  is not
attainable pursuant to Sections 105, 363 and/or 365 of the Bankruptcy Code, then
such Purchased Assets (collectively,  the "Non-Transferrable  Assets") shall not
be  transferred  hereunder,  the  Closing  shall  proceed  with  respect  to the
remaining  Purchased  Assets with a  reduction  in the  Purchase  Price for such
Non-Transferable Assets as provided for in Section 3.1.1.

     2.1.3  Excluded  Assets.   Notwithstanding  any  other  provision  of  this
Agreement  (or any Schedule  other than  Schedule  2.1.3) to the  contrary,  the
Purchased Assets shall exclude Seller's rights,  title and interest in or to the
Property listed on Schedule 2.1.3  (collectively,  the "Excluded  Assets").  The
Excluded Assets shall remain Property of Seller and its bankruptcy estate.

     2.1.4 Sale Free and Clear. The Purchased Assets will be sold free and clear
of all Liens and Claims  (including,  without  limitation,  the GasRock  Claims)
(other than  Permitted  Liens and  Assumed  Liabilities)  to the maximum  extent
permitted  by Section  363 of the  Bankruptcy  Code;  provided,  however,  that,
irrespective  of whether the Purchased  Assets are sold free and clear of the 1%
ORRI, and/or the 10% NPI, Buyer shall consummate the Transaction subject to such
interests and the Parties shall perform their  obligations  under the Litigation
Agreement,  which shall govern the agreement between the Parties with respect to
the 1% ORRI and the 10% NPI.

     2.1.5 Excluded  Liabilities.  Notwithstanding  any other  provision of this
Agreement to the  contrary,  Buyer is not  assuming,  and shall not be deemed to
have assumed, any liability or obligation of whatever nature,  whether presently
in existence or arising  hereafter,  other than the Assumed  Liabilities.  Buyer
expressly  disclaims  any express or implied  assumption of any  liabilities  of
Seller  of  any  kind,   character  or  description,   other  than  the  Assumed

                                       14
<PAGE>

Liabilities. All such other liabilities and obligations shall be retained by and
remain   obligations  and  liabilities  of  Seller  and  its  estate  (all  such
liabilities   and   obligations   other  than  the  Assumed   Liabilities   are,
collectively,  the  "Excluded  Liabilities").  For the  avoidance of doubt,  and
without  limiting the  generality of this Section  2.1.5,  Excluded  Liabilities
includes those liabilities and obligations set forth on Schedule 2.1.5.

     2.1.6 Assumed  Liabilities.  Buyer agrees,  from and after the Closing,  to
assume, pay, perform and discharge,  promptly when payment or performance is due
or required, the liabilities and obligations of Seller or the Business listed on
Schedule 2.1.6 (the "Assumed Liabilities").

Section 3.        Purchase Price.

     3.1 Purchase Price.

     3.1.1  The  consideration  to be paid to Seller  on the  Closing  Date (the
"Estimated  Purchase Price") shall be the amount equal to (a) $20,000,000  minus
(b) Closing Day DIP Loan Obligations minus (c) the sum of all Cure Costs arising
out of Assumed  Contracts  minus (d) the fair market  value of the net  economic
value of all  Assumed  Liabilities  minus (e) the fair  market  value of the net
economic  benefit inherent to Buyer with respect to the  Non-Transferred  Assets
minus (f) the full replacement cost of assets and Properties  listed on Schedule
2.1.1(a),  2.1.1(b), 2.1.1(d), 2.1.1(e) (other than inventory of oil), 2.1.1(f),
2.1.1(g),  2.1.1(h),  2.1.1(i),  2.1.1(k), 2.1.1(o), 2.1.1(r), 2.1.1(s), 5.4, or
5.13 that are not  delivered to Purchaser on the Closing Date (as  determined by
Purchaser  acting  reasonably and in good faith) minus (g) the fair market value
of assets and Properties that are Purchased  Assets that Buyer elects to exclude
on the Closing  Date after  completing  its due  diligence.  The "Cash  Purchase
Price"  means the amount equal to  $20,000,000  minus the amounts in clauses (b)
through (g) above.

     3.1.2 The  "Purchase  Price"  shall be the  amount  equal to the  Estimated
Purchase Price plus or minus the Post-Closing Adjustment,  if any, as calculated
pursuant to Section 3.2.

     3.2 Purchase Price Adjustment.

     3.2.1 Buyer  shall,  within 10 days  following  the last day of the Closing
Month, deliver to Seller a certificate ("Buyer  Certificate")  setting forth, in
detail, (a) the cash Receivables collected, and the cash Expenses paid, by Buyer
after the  Closing  Date  through  the last day of the  Closing  Month;  and (b)
Buyer's  calculation  of such  Receivables  minus such Expenses  (which may be a
positive or negative amount, "Buyer's Closing Month Amount").

     3.2.2 Seller  shall,  within 10 days  following the last day of the Closing
Month, deliver to Buyer a certificate ("Seller  Certificate")  setting forth, in
detail,  (a) the cash  Receivables  collected,  and the cash  Expenses  paid, by
Seller  commencing  on the first day of the Closing  Month through and including
the Closing Date; and (b) Seller's  calculation of such  Receivables  minus such
Expenses (which may be a positive or negative  amount,  "Seller's  Closing Month
Amount").

     3.2.3  Within  five  Business  Days after the later to occur of the date on
which the Seller  receives  the Buyer  Certificate  and the Buyer  receives  the
Seller Certificate (the "Post-Closing  Adjustment  Certificate Date"), the Buyer
shall  calculate,  and  deliver  to  Seller  a  certificate  (the  "Post-Closing
Adjustment Certificate") setting forth, the following information:

          (a) the  "Post-Closing  Adjustment  Amount,"  which shall be an amount
     equal to the sum of the Buyer's  Closing  Month  Amount  plus the  Seller's
     Closing Month Amount (which amount may be a positive or negative amount);

                                       15
<PAGE>

          (b) the "Daily Pro Ration  Amount,  which shall be an amount  equal to
     the  Post-Closing  Adjustment  Amount  divided by the number of days in the
     Closing Month;

          (c) the "Seller's Share of the Post-Closing  Adjustment Amount," which
     shall be an amount equal to the Daily Pro Ration  Amount  multiplied by the
     number  of days in the  Closing  Month  commencing  on the first day of the
     Closing Month and ending on the Closing Date;

          (d) the "Buyer's Share of the Post-Closing  Adjustment  Amount," which
     shall be an amount equal to the Daily Pro Ration  Amount  multiplied by the
     number of days in the Closing Month,  commencing on the first day after the
     Closing Date through and including the last day of the Closing Month;

          (e) the Seller's Share of the Post-Closing  Adjustment Amount less the
     Seller's Closing Month Amount (which may be a positive or negative amount);
     and

          (f) the  Buyer's  Share of the  Post-Closing  Amount  less the Buyer's
     Closing Month Amount (which may be a positive or negative amount).

     3.2.4 If the amount  described in clause (e) of Section 3.2.3 is a positive
amount,  then  Buyer  shall  pay to  Seller  such  positive  amount,  in cash or
immediately  available  funds,  within five Business Days after the Post-Closing
Adjustment  Certificate  Date;  or (b) if the amount  described in clause (f) of
Section 3.2.3 is a positive number, then Seller shall pay to Buyer such positive
amount, in cash or immediately  available funds, within five Business Days after
the Post-Closing Adjustment Certificate Date. The amount paid by Buyer or Seller
pursuant to this Section 3.2.4 is the "Post-Closing Adjustment." Absent manifest
error,  the Buyer's  calculations in this Section 3.2 shall be final and binding
on the Parties and shall be non-appealable.

     3.2.5 In the case of any taxable period that includes (but does not end on)
the  Closing  Date (a  "Straddle  Period"),  the amount of any Taxes based on or
measured  by  income  or  receipts  for the Pre  Closing  Tax  Period  shall  be
determined  based on an interim closing of the books as of the close of business
on the Closing Date,  and the amount of other Taxes for a Straddle  Period which
relates to the Pre Closing  Tax Period  shall be deemed to be the amount of such
Tax for the entire  taxable  period  multiplied  by a fraction the  numerator of
which is the number of days in the taxable period ending on the Closing Date and
the denominator of which is the number of days in such Straddle  Period.  Seller
shall pay to Buyer, on demand and in cash or immediately  available  funds,  all
Taxes paid or incurred  by, or assessed  against,  Buyer or the  Business or the
Purchased  Assets or Assumed  Liabilities  that  relate to the Pre  Closing  Tax
Period.

     3.3 Assumed  Contracts.  At or prior to Closing and pursuant to Section 365
of the  Bankruptcy  Code,  Seller  shall  assume and assign to Buyer the Assumed
Contracts.  The Cure Amounts,  as determined by the  Bankruptcy  Court,  if any,
related  to the  Assumed  Contracts,  and  payable  in order to  effectuate  the
assumption and assignment of the Assumed  Contracts by Seller to Buyer under the
Sale Order shall be paid by Buyer.

     3.4 Tax Allocation.  The Parties agree that the Purchase Price,  applicable
Assumed  Liabilities  and other  relevant items shall be allocated in accordance
with  Section 1060 of the IRC and the  regulations  promulgated  thereunder  and
Schedule 3.4 (such  schedule to be determined  jointly by Buyer and Seller prior
to  Closing).  The Parties  agree to provide the other  promptly  with any other
information  required to complete Schedule 3.4. Such allocation shall be binding
on the Parties for all  purposes,  including  the  reporting of gain or loss and

                                       16
<PAGE>

determination  of basis for income tax purposes,  and each of the Parties hereto
agrees that it will file a statement (on IRS Form 8594 or other applicable form)
setting forth such allocation  with its federal and applicable  state income tax
returns and will also file such further information or take such further actions
as may be necessary to comply with the  regulations  that have been  promulgated
pursuant to Section 1060 of the IRC and similar applicable Laws.

     3.5  No  Assumption  by  Buyer.   All  costs  accrued  in  connection  with
maintaining and operating the Purchased  Assets and the Business,  and retaining
and employing the Transferred Employees,  prior and up to the Closing Date shall
be the responsibility of Seller, and Buyer shall have no responsibility for such
liabilities  (other than the Assumed  Liabilities and which shall be prorated as
of the Closing Date).  Except as provided  herein,  under no circumstance  shall
Buyer be responsible for, or assume, any liabilities incurred by or on behalf of
Seller or Seller's  estate  resulting  from actions or inactions  that  occurred
prior to the Closing Date,  unless such liabilities are specifically  assumed by
Buyer in  writing.  Buyer  shall  not be  considered  a  successor  to Seller or
Seller's  estate for any purpose  whatsoever.  Should any claims arise after the
Closing Date,  based on events  occurring  before the Closing Date,  such claims
shall be asserted  only against  Seller's  estate and  resolved  pursuant to the
applicable claims provisions of the Bankruptcy Code.

Section 4.        Closing.

     4.1  Closing.  Unless  otherwise  agreed to in writing by each of Buyer and
Seller,  the closing (the  "Closing")  of the purchase and sale of the Purchased
Assets and the  assumption  of the Assumed  Liabilities,  all as provided for in
this Agreement,  shall take place at the offices of Ballard Spahr LLP, 1225 17th
Street,  Suite 2300,  Denver,  Colorado  80202, no later than five Business Days
after  satisfaction  or waiver of all of the  conditions set forth in Section 11
(other  than those  requiring  a  delivery,  or taking of other  action,  at the
Closing). For purposes of this Agreement, the term "Closing Date" means the date
upon which the Closing actually occurs.

     4.2 Time is of the Essence. Time is of the essence hereunder.

Section 5.        Representations and Warranties of Seller.

     Subject  to the  terms,  conditions  and  limitations  set  forth  in  this
Agreement,  Seller hereby  represents  and warrants to Buyer,  as of the date of
this Agreement and as of the Closing Date, as follows:

     5.1 Organization and Authority. Seller is duly organized, validly existing,
and in good  standing  under  the  laws of the  jurisdiction  of its  formation.
Subject to the entry of the Sale Order, Seller has all necessary corporate power
and  authority to own its  Properties  and to carry on its business and to enter
into and perform its obligations under the Sale Documents to which it is a party
and in connection with the Transaction.  Subject to the entry of the Sale Order,
each Sale Document  constitutes  a valid and binding  agreement of Seller and is
enforceable in accordance with its terms.

     5.2 No  Further  Approvals.  Subject  to the entry of the Sale  Order,  the
execution,  delivery and  performance  of each Sale Document by Seller does not,
and the  performance of each Sale Document (and the  Transaction) by Seller will
not, require any consent,  approval,  authorization or permit of, or filing with
or notification to, any Governmental Authority or any Person,  including but not
limited to the Bankruptcy Court.

     5.3  Noncontravention.  Subject  to  the  entry  of  the  Sale  Order,  the
execution,  delivery  and  performance  by Seller of each Sale  Document and the
consummation of the Transaction do not and will not (a) violate Seller's Organic
Documents,  (b) violate any  applicable  Law, (c)  constitute a default under or
give rise to any right of termination, cancellation or acceleration of any right

                                       17
<PAGE>

or  obligation or to a loss of any benefit  relating to any  Purchased  Asset to
which  Seller  is  entitled  under  any  provision  of any  agreement  or  other
instrument  binding upon Seller except for breaches and defaults  referred to in
Section  365(b)(2)  of the  Bankruptcy  Code,  or (d) result in the  creation or
imposition of any Lien on any Purchased Asset, except for Permitted Liens.

     5.4  Litigation.  Except as disclosed on Schedule 5.4,  there is no action,
suit,  investigation or proceeding  pending or threatened  against or affecting,
Seller, any Purchased Asset, or any Assumed Liability.

     5.5 Compliance with Laws and Court Orders.  Except as set forth on Schedule
5.5, Seller is not in violation of any Law applicable to the Purchased Assets or
the  Assumed  Liabilities  or the  Transferred  Employees  or the conduct of the
Business.

     5.6 Sufficiency of and Title to the Purchased Assets.

     5.6.1 The Purchased Assets  constitute all of the material  Property owned,
held or primarily  used in the conduct of the Business  (other than the Excluded
Assets).

     5.6.2  Since   November  1,  2010,   Seller  has  not  disposed  of,  sold,
transferred,  assigned,  or rejected any executory contracts or unexpired leases
of Seller or relating to the Business.

     5.6.3 Upon  consummation of the Transaction,  Buyer will have acquired good
and marketable  title in and to, or a valid  leasehold  interest in, each of the
Purchased  Assets,  free and clear of all Liens and Claims to the maximum extent
permitted by the Bankruptcy Code,  other than Assumed  Liabilities and Permitted
Liens;  provided,  however,  that  should  the  Sale  Order  not  authorize  the
Transaction free of the GasRock Claims pursuant to Section 363 of the Bankruptcy
Code, Seller shall not have violated this Section 5.6.3.

     5.6.4 No  Purchased  Asset is  subject to any Lien,  other  than  Permitted
Liens.

     5.7 Assumed Contracts.  Seller has not received written notice, nor does it
otherwise  have  knowledge,  that any party to any Assumed  Contract  intends to
cancel,  terminate or refuse to renew such contract or to exercise or decline to
exercise  any option or right  thereunder  and each such  contract  is valid and
binding upon such  parties in  accordance  with its terms,  except to the extent
excused by or  unenforceable  as a result of the commencement or pendency of the
Bankruptcy Case or the application of any provision of the Bankruptcy Code.

     5.8 Environmental Matters.

     5.8.1 (a) Seller has all  Environmental  Permits  required  by or under all
Environmental  Laws and is, and for Seller's  existence,  has been in compliance
with  such  permits  and  is  otherwise  in  compliance   with  all   applicable
Environmental  Laws,  (b)  Seller  has  not  received  any  written  notice  not
subsequently  resolved with respect to the business of, or any Property owned or
leased by Seller from any  Governmental  Authority or third party  alleging that
Seller or any aspect of the Business is not in compliance with any Environmental
Law and no such  condition  of  non-compliance  exists,  (c) except those not in
violation of  Environmental  Laws, there has been no Release,  disposal,  event,
condition,  circumstance,  activity,  practice or incident  concerning any land,
facility,  asset or property that constitutes a past or continuing  violation by
Seller  of,  or  otherwise  interferes,  or  prevents  compliance  or  continued
compliance by Seller with, any Environmental Law, and (d) there is no obligation
under Environmental Laws to perform remedial action relating to any Release of a
hazardous substance, waste, pollutant or contamination.

                                       18
<PAGE>

     5.8.2  There are no existing  Environmental  Liabilities  or  Environmental
Conditions  for  Seller,  the  Business  or  the  Purchased  Assets  or  Assumed
Liabilities.  Seller  has  provided  to  Buyer  copies  of all and  all  written
information pertaining to Environmental  Liabilities or Environmental Conditions
relating to or affecting Seller, the Business,  the Purchased Assets and Assumed
Liabilities.  Seller  hereby  acknowledges  and agrees that prior to the Closing
Date,  (a) Buyer has not ever been,  in control of any of Seller,  the Business,
the Purchased Assets or Assumed Liabilities or Seller's affairs,  and (b) except
as  provided  in the Loan  Documents,  does not have the  capacity  through  the
provisions of this  Agreement or any other document or agreement or otherwise to
influence  Seller's  conduct  with  respect  to  the  ownership,   operation  or
management  of  any  of the  Business,  the  Purchased  Assets,  or the  Assumed
Liabilities, or compliance (or not) with Environmental Laws.

     5.9 Employee Benefits; Labor Matters.

     5.9.1  Schedule  5.9.1  contains a true and complete list of each "employee
benefit plan" as defined in ERISA, that is sponsored, maintained, or contributed
to or  required  to be  contributed  to by Seller or any ERISA  Affiliate,  that
together with Seller would be deemed a "single  employer"  within the meaning of
Section 4001(b) of ERISA, or to which Seller or an ERISA Affiliate is party, for
the benefit of any employee of Seller engaged in the Business  (individually,  a
"Seller Plan," and collectively,  the "Seller Plans"). Buyer is not assuming and
shall have no liability in connection with any Seller Plan.

     5.9.2  No  Seller  Plan  is  (a)  subject  to  Title  IV  of  ERISA;  (b) a
multiemployer  plan within the meaning of Section 3(37) of ERISA; (c) maintained
in connection with any trust  described in Section  501(c)(9) of the IRC; or (d)
subject to the minimum  funding  standards  of ERISA  Section 302 or IRC Section
412. Further,  neither Seller nor any ERISA Affiliate has ever contributed to or
been  obligated  to  contribute  to a  multiemployer  plan within the meaning of
Section 4001(a)(3) of ERISA.

     5.9.3  Except  as set  forth on  Schedule  5.9.3,  Seller  and  each  ERISA
Affiliate is in material compliance with, and each Seller Plan has been operated
in accordance  with,  the  provisions  of such Seller Plan,  and Seller and each
ERISA  Affiliate  is in material  compliance  with ERISA,  the IRC and all legal
requirements governing each such Seller Plan, including but not limited to rules
and regulations promulgated by the U.S. Department of Labor, the Pension Benefit
Guaranty  Corporation  and the U.S.  Department of the Treasury  pursuant to the
provisions of ERISA and the IRC.

     5.9.4 Neither  Seller nor any ERISA  Affiliate is a party to any collective
bargaining  agreements  and  there are no labor  unions  or other  organizations
representing,  purporting to represent, or attempting to represent, any employee
of Seller.

     5.9.5 Except as set forth on Schedule  5.9.5,  Seller has not, with respect
to  employees  engaged  in the  Business,  violated  any  provision  of any  Law
regarding the terms and conditions of employment of employees,  former employees
or  prospective  employees or other labor related  matters,  including,  without
limitation,   Laws  relating  to   discrimination,   fair  labor  standards  and
occupational  health and safety,  wrongful  discharge or violation of the person
rights of  employees,  former  employees or  prospective  employees.  By listing
claims on Schedule 5.9.5, Seller does not admit the violation of any such Law.

     5.9.6 There are no pending claims or lawsuits by,  against,  or relating to
any Seller Plan that would,  if successful,  result in liability of Seller,  any
ERISA  Affiliate  or  Buyer,  and no  claims or  lawsuits  have  been  asserted,
instituted or, to the knowledge of Seller, threatened in writing by, against, or
relating to any Seller  Plan,  against the assets of any trust or other  funding
arrangement under any such Seller Plan, by or against Seller with respect to any

                                       19
<PAGE>

Seller Plan,  or by or against the plan  administrator  or any  fiduciary of any
Seller Plan,  and Seller does not have knowledge of any fact that could form the
basis for any such claim or lawsuit.  The Seller Plans are not  presently  under
audit or  examination  (nor has notice been  received  of a  potential  audit or
examination) by the IRS, the U.S. Department of Labor, or any other Governmental
Authority or entity,  and no matters are pending with respect to any Seller Plan
under the IRS' Voluntary  Compliance  Resolution program,  its Closing Agreement
Program, or other similar program.

     5.10 Intellectual Property Rights.

     5.10.1 Disclosure. Schedule 5.10.1 sets forth all United States and foreign
Intellectual Property Rights owned or licensed by Seller,  specifying as to each
owned item, as applicable:  (a) the nature of the item, including the title, (b)
the  owner of the  item,  (c) the  jurisdictions  in which the item is issued or
registered  or in which an  application  for issuance or  registration  has been
filed, and (d) the issuance, registration, or application numbers and dates.

     5.10.2   Ownership.   Except  as  would  not  reasonably  be  expected  to,
individually or in the aggregate, result in a Material Adverse Effect, as of the
Closing  Date,  Seller  will (a) own or have the  right to use and  transfer  to
Buyer,  free and clear of Liens,  other than Permitted  Liens,  and (b) have the
unrestricted  right to use, sell, or license,  all Intellectual  Property Rights
used in the  conduct  of the  Business  to the  maximum  extent  permissible  by
operation of the Bankruptcy Code.

     5.10.3 Claims.  Except as would not reasonably be expected to, individually
or in the aggregate,  result in a Material Adverse Effect,  Seller has not been,
during the five years preceding the date of this Agreement, a party to any claim
or action,  nor, to the knowledge of Seller,  is any claim or action  threatened
that challenges the validity, enforceability,  ownership, or right to use, sell,
or license any  Intellectual  Property  Right.  To the  knowledge of Seller,  no
Person is infringing upon any  Intellectual  Property  Right,  and Seller is not
infringing on any other Person's Intellectual Property Rights.

     5.10.4  Administration and Enforcement.  Seller has taken all necessary and
desirable action to maintain and protect each  Intellectual  Property Right used
and/or owned by Seller.

     5.10.5 Software.  Except as set forth on Schedule  5.10.5,  all Software is
held by Seller  legitimately,  is fully and freely transferable to Buyer without
any  third  party  consent,  and to the  knowledge  of  Seller  is free from any
significant  software  defect,  performs  substantially  in conformance with its
documentation, and does not contain any bugs or viruses or any code or mechanism
that may be reasonably likely to materially interfere with the operation of such
Software.

     5.11 Real  Property.  Seller's use of the Real  Property  complies with all
Laws and  Seller's  use of the Real  Property  is not  subject to any  permitted
nonconforming use or to any structure classification.

     5.12 Marketing. Seller has thoroughly marketed the Purchased Assets and the
Business.  During the preceding 11 months, Seller has contacted numerous parties
regarding  the sale of the Purchased  Assets.  In Seller's  reasonable  business
judgment,  no offer  heretofore  made to or  received  by Seller  yields as much
benefit to Seller, its estate, creditors, and all parties in interest, as do the
Transaction.

     5.13 Other Overriding  Royalties and Net Profits Interests.  Seller has not
granted or conveyed any right, title or interest in or to any oil or gas leases,
unit  interests,  profits  interest,  overriding  royalty  interest  or  similar
interest in or to any Property of Seller or otherwise  affecting  the  Business,
other  than the 1% ORRI,  the 2% ORRI and the 10% NPI.  Except  as set  forth on
Schedule 5.13,  Buyer will purchase the Purchased  Assets and assume the Assumed
Liabilities free and clear of all oil or gas leases, unit interests, net profits

                                       20
<PAGE>

interest,  overriding royalty interests,  royalty interests or similar interest;
provided,  however, that,  irrespective of whether the Purchased Assets are sold
free and clear of the 1% ORRI,  and/or the 10% NPI,  Buyer shall  consummate the
Transaction  subject to such  interests  and the  Parties  shall  perform  their
obligations  under the  Litigation  Agreement,  which shall govern the agreement
between the Parties  with  respect to the 1% ORRI and the 10% NPI.  There are no
amendments  or  modifications,   written  or  verbal,  to  any  of  the  GasRock
Agreements.

     5.14 Certain  Fees.  Except as set forth on Schedule  5.14,  Seller has not
incurred,  and will not incur,  any liability for any  investment  banking fees,
financial advisory fees, brokerage fees, finders' fees, or other similar fees in
connection with this Agreement or the Transaction.

     5.15  Subsidiaries.  Schedule  5.15  correctly  sets forth the name of each
Subsidiary  of  Seller,  the  jurisdiction  of such  Subsidiary's  formation  or
organization  and the Persons owning the outstanding  equity  securities of such
Subsidiary.  The  Subsidiaries of Seller have no assets or liabilities.  Neither
Seller  nor any  Subsidiary  of Seller  owns or holds the right to  acquire  any
capital stock or any other security or interest in any other Person. No transfer
of property is being made and no obligation is being incurred in connection with
the transactions contemplated by this Agreement with the intent to hinder, delay
or defraud either present or future creditors any Subsidiary.

     5.16 Capacity to Perform.  Seller has the required  capacity to perform its
obligations  under  this  Agreement,   and  to  the  knowledge  of  Seller,  the
Transaction is not the subject of any contingency or condition not  specifically
set forth in this Agreement.

     5.15 No Warranty.  BUYER ACKNOWLEDGES THAT, EXCEPT FOR THE  REPRESENTATIONS
AND  WARRANTIES  CONTAINED IN THIS  AGREEMENT,  THE  PURCHASED  ASSETS ARE BEING
CONVEYED  ON AN "AS IS,"  "WHERE IS," "WITH ALL  FAULTS"  BASIS.  FOLLOWING  THE
CLOSING,  SELLER MAKES NO REPRESENTATION OR WARRANTY,  EXPRESS OR IMPLIED,  WITH
RESPECT TO THE PURCHASED  ASSETS.  IN  PROCEEDING  WITH ITS  ACQUISITION  OF THE
PURCHASED  ASSETS,  BUYER  IS  VERIFYING  THAT  IT  HAS  INSPECTED,  HAS  HAD AN
OPPORTUNITY  AND WILL CONTINUE TO HAVE THE  OPPORTUNITY TO INSPECT THE PURCHASED
ASSETS.  BUYER IS NOT RELYING ON ANY  REPRESENTATIONS  OR WARRANTIES OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER OR ITS AGENTS OR REPRESENTATIVES, AS
TO ANY MATTERS CONCERNING THE SAME EXCEPT AS PROVIDED IN THIS AGREEMENT. NOTHING
HEREIN CONTAINED IS INTENDED TO CREATE ANY THIRD PARTY BENEFICIARY RIGHTS.

Section 6.        Representations and Warranties of Buyer.

     Subject  to the  terms,  conditions  and  limitations  set  forth  in  this
Agreement,  Buyer hereby  represents  and warrants to Seller,  as of the date of
this Agreement and as of the Closing Date, as follows:

     6.1 Organization and Authority. Buyer is duly organized,  validly existing,
and in good standing under the laws of Delaware and, as of the Closing Date will
be,  registered and qualified to do business in all jurisdictions in which it is
required to be so  registered  and  qualified.  Subject to the entry of the Sale
Order,  Buyer has all necessary  corporate power and authority to enter into and
perform its  obligations  under this  Agreement and each other Sale Document and
the Transaction.  Subject to the entry of the Sale Order,  each Sale Document to
which Buyer is a party constitutes a valid and binding agreement of Buyer and is
enforceable in accordance with its terms.

     6.2 No  Further  Approvals.  Subject  to the entry of the Sale  Order,  the
execution,  delivery and  performance  of each Sale Document to which Buyer is a
party by Buyer does not,  and the  performance  of each Sale  Document  to which

                                       21
<PAGE>

Buyer is a party (and the  Transaction) by Buyer will not,  require any consent,
approval,  authorization  or permit of, or filing with or  notification  to, any
Governmental  Authority  or  any  Person,  including  but  not  limited  to  the
Bankruptcy Court.

     6.3  Noncontravention.  Subject  to  the  entry  of  the  Sale  Order,  the
execution,  delivery  and  performance  by Buyer of each Sale  Document to which
Buyer is a party and the consummation of the Transaction do not and will not (a)
violate  Buyer's  certificate  of  incorporation  or bylaws,  or (b) violate any
applicable Law.

     6.4 Certain Fees.  Buyer has not incurred any liability for any  investment
banking fees,  financial advisory fees,  brokerage fees, finders' fees, or other
similar fees in connection with this Agreement or the Transaction.

     6.5 No Litigation.  There is no action,  suit,  investigation or proceeding
pending or threatened against or affecting Buyer, and there is no action,  suit,
investigation  or  proceeding  pending or threatened  against or affecting,  any
Affiliate  of Buyer that may affect  Buyer's  obligations  hereunder  or Buyer's
consummation of the Transaction.

     6.6  Capacity to Perform.  Buyer has the  required  capacity to perform its
obligations under this Agreement, and to the knowledge of Buyer, the Transaction
is not the subject of any contingency or condition not specifically set forth in
this Agreement.

Section 7.        Covenants of Seller.

     Seller hereby covenants and agrees as follows:

     7.1 Conduct of the  Business.  Except as may be required by the  Bankruptcy
Court,  except  for  the  consequences   resulting  from  the  commencement  and
continuation  of  the  Bankruptcy  Case,  and  except  as  may  be  required  or
contemplated by this Agreement,  from the date hereof until the earlier to occur
of (a) the Closing  Date,  and (b) the date of  termination  of this  Agreement,
Seller shall (i) conduct the Business in the ordinary course consistent with the
best practices of the industry,  (ii) preserve intact the business organizations
and relationships with third parties (including suppliers and customers),  (iii)
keep  available  the  services of the present  employees of the  Business,  (iv)
perform  and pay, as and when due,  all of its  post-petition  obligations,  (v)
comply  with all  applicable  Laws and other  requirements  of all  Governmental
Authorities,  and  (vi)  conduct  the  cash  management  customs  and  practices
(including the timing of collection of  Receivables  and payment of payables and
other  current  liabilities)  and maintain its books and records in the ordinary
and usual course of business consistent with past custom and practice.

     Without  limiting the  generality of the  foregoing,  from the date of this
Agreement  until  the  earlier  of (x) the  Closing  Date,  and (y) the  date of
termination of this  Agreement,  except (A) as may be required by the Bankruptcy
Court, (B) in the ordinary course of Business consistent with the best practices
of the industry,  (C) for the  consequences  resulting from the commencement and
continuation  of the Bankruptcy  Case, or (D) as may be required or contemplated
by this  Agreement,  from the date of this  Agreement  through and including the
Closing Date, Seller will not:

     7.1.1  acquire  more than  $25,000 of assets  (by  original  cost),  in the
aggregate,   from  any  other  Person  or  Persons,  in  a  single  or  multiple
transactions,  or make any single capital expenditure or commitment in excess of
$5,000 or make  aggregate  capital  expenditures  and  commitments  in excess of
$10,000;  delay or  otherwise  fail to make any capital  expenditures  that were
previously budgeted or scheduled to be made;

                                       22
<PAGE>

     7.1.2  enter  into,  terminate  or fail to renew any (a)  farmout or farmin
agreement;  or (b)  agreement  regarding  the  construction,  installation,  and
operation of any  gathering or  transportation  pipelines  intended to serve any
wells for the  production of  hydrocarbons  that are located on the Leases or on
other Real Property with which the Leases or the Real Property  covered  thereby
(a "Well");

     7.1.3 sell,  lease,  license or otherwise  dispose of any  Purchased  Asset
(including  plugging or abandoning  any Well or abandoning  any Lease or portion
thereof), except sales of inventory in the ordinary and usual course of business
consistent with past custom and practice;

     7.1.4 permit any insurance  policy naming Seller as a beneficiary or a loss
payee to be cancelled or terminated;

     7.1.5 incur any  liabilities or obligations  except current  liabilities or
obligations  for trade  payables  in  connection  with the  purchase of goods or
services  in the  ordinary  and usual  course of business  consistent  with past
custom and practice;  pay,  discharge or satisfy any liabilities  other than the
payment,  discharge or satisfaction in the ordinary and usual course of business
consistent  with past custom and practice of  liabilities  reflected or reserved
against in Seller's financial statements, or as contemplated herein, or incurred
since November 15, 2010 in the ordinary and usual course of business  consistent
with past custom and  practice;  borrow any money (other than trade  payables or
other  current  expenses,  all in the  ordinary  and usual  course  of  business
consistent with past custom and practice) or issue any bonds, debentures,  notes
or other securities evidencing money borrowed;

     7.1.6 write down the value of any inventories or write off as uncollectible
any Receivable; cancel any debts or waive any claims or rights;

     7.1.7 make any  change in any  method of  financial  or Tax  accounting  or
reporting or  financial  or Tax  accounting  or  reporting  practice,  except as
required by Generally Accepted Accounting  Principles in the United States; make
or change any election,  change an annual accounting period, adopt or change any
accounting  method,  file  any  amended  Tax  return,  enter  into  any  closing
agreement,  settle any Tax claim or  assessment,  surrender any right to claim a
refund of Taxes,  consent to any  extension or waiver of the  limitation  period
applicable to any Tax claim or assessment,  or take any other similar action, or
omit to take any action  relating to the filing of any Tax Return or the payment
of any Tax;

     7.1.8 make any Material  Decision without the prior express written consent
of Buyer;  modify,  amend or terminate any Assumed Contract;  waive,  release or
assign any material rights or claims under any Assumed Contract;  enter into any
contracts, agreements, arrangements or understandings;  engage in, or assist any
third party to engage in, any act, or fail to take any action or  encourage  any
third party to refrain from taking any action, that could reasonably be expected
to result in a Material Adverse Effect;

     7.1.9 provide  confidential  information  to any Person that has not signed
and  delivered  a  confidentiality  agreement  to Seller  in form and  substance
acceptable to Buyer in its sole discretion;

     7.1.10 except as set forth in Seller's First Amended Plan of Reorganization
(DKT #: 427) and the  Disclosure  Statement  related  thereto (DKT #: 429) filed
with the  Bankruptcy  Court on December 13, 2010,  amend or propose to amend its
Organic  Documents  or issue any shares or any other  equity  securities  to any
Person;   declare,   pay,  make  or  otherwise   effectuate  any  distributions,
redemptions,  equity repurchases or other  transactions  involving any ownership
interests or equity  securities;  sell,  transfer,  contribute,  distribute,  or
otherwise  dispose of any of its  securities  or equity  interests  (other  than
marketable securities);

                                       23
<PAGE>

     7.1.11 (i) accelerate the payment or vesting of benefits  payable under any
existing bonus, incentive,  severance, retention or termination arrangement with
any employees of Seller;  (ii) make any loans or advances to, or guarantees  for
the  benefit  of, or enter  into any  transaction  with any  employee,  officer,
manager, director or equityholder of Seller; (iii) without first consulting with
Buyer,  hire or terminate any employee (whether or not in the ordinary course of
business) who has an annual  salary in excess of $50,000;  or (iv) without first
consulting  with Buyer,  make, or permit any other Person to make, any change in
the  rate of  compensation,  commission,  bonus  or  other  direct  or  indirect
remuneration  payable,  or pay or  agree or  promise  to pay,  conditionally  or
otherwise,  any bonus,  incentive,  retention  or other  compensation,  to or in
respect of any equityholder,  manager, director, officer, employee,  consultant,
broker, salesman,  distributor or agent of Seller, or make or grant any increase
in, or establish,  amend or terminate, any plan, program, policy or arrangement,
including,  without limitation, any Seller Plan or arrangement, or adopt any new
Seller Plan or arrangement or enter into any new collective bargaining agreement
or other union contract or arrangement or multiemployer plan;

     7.1.12 sell, assign,  transfer,  abandon or permit to lapse any licenses or
permits or any portion  thereof,  or any  Intellectual  Property Rights or other
intangible  assets,  disclose any  material  confidential  information  or trade
secret to any person or grant any license or  sublicense  of any rights under or
with respect to any Intellectual Property Rights or other intangible assets;

     7.1.13 grant or convey any right, title or interest in or to any oil or gas
leases, unit interests, profits interest, overriding royalty interest or similar
interest in or to any Property of Seller or otherwise  affecting  the  Business,
other than the 1% ORRI, the 2% ORRI and the 10% NPI; amend or modify,  nor cause
to be amended or  modified,  either by written or verbal  agreement,  any of the
GasRock Agreements;

     7.1.14  institute,  settle or agree to  settle  any  litigation,  action or
proceeding by or before any Governmental Authority;

     7.1.15  take any action  that would  reasonably  be  expected  to cause the
failure of any  condition  contained in Section 11 (other than actions  taken by
Seller in  connection  with the  discharge of its  fiduciary  duties  during the
Bankruptcy Case); and

     7.1.16 agree,  whether in writing or otherwise,  to take any of the actions
set forth in this Section 7.1.

     7.2 Covenants and Obligations  Under Loan Documents.  From the date of this
Agreement  until  the  earlier  to  occur  of the  Closing  Date and the date of
termination of this Agreement,  Seller shall fully and timely perform all of its
obligations, covenants and duties arising under each and every Loan Document.

     7.3 Access to Information.  From the date hereof until the earlier to occur
of the Closing Date and the date of termination of this Agreement,  Seller shall
reasonably  afford,  and shall  cause each and all of its  officers,  employees,
attorneys  and other  agents to  reasonably  afford,  to Buyer and its  counsel,
accountants and other representatives, access (at reasonable times during normal
business hours) to officers and other employees of the Business for the purposes
of  evaluating  the Business and all  Properties  and Books and Records,  books,
accounts,  records and documents  of, or relating to, the  Business.  During the
period from the date hereof until the Closing,  each Company Party shall furnish
promptly  to Buyer all  information  concerning  its  business,  properties  and
personnel as Buyer may reasonably request.

                                       24
<PAGE>

     7.4  Notices of Certain  Events.  Seller  shall  promptly  notify  Buyer in
writing  of (a) any  notice  or other  written  communication  from  any  Person
alleging  that the consent of such  Person is or may be  required in  connection
with the consummation of the Transaction, (b) any material written communication
from  any  Governmental   Authority  in  connection  with  or  relating  to  the
Transaction  or  any  Purchased  Asset,  including  all  communication  from  or
regarding  GasRock,  and (c) the  commencement  or threat of commencement of any
actions, suits,  investigations or proceedings relating to Seller, any Purchased
Asset or the Business.

     7.5  Insurance.  Seller shall name,  or cause Buyer to be named,  as a loss
payee on all  insurance  policies  maintained  by  Seller  with  respect  to the
Business,  the  Purchased  Assets,  the  Transferred  Employees  and the Assumed
Liabilities.  Seller  shall  maintain in effect  insurance  with  respect to the
Purchased  Assets and the Business  providing the same type of coverage,  in the
same  amounts,  and with the same  deductibles  as the  insurance  maintained in
effect by Seller with  respect to such  Purchased  Asset and the Business on the
date of execution hereof.

     7.6 Disclosure Supplements.  From time to time prior to the Closing, Seller
shall  promptly  supplement  the  Schedules  hereto  with  respect to any matter
hereafter arising or any information obtained after the date hereof of which, if
existing,  occurring or known at or prior to the date of this  Agreement,  would
have been  required to be set forth or described in the  Schedules,  or which is
necessary  to  complete or correct any  information  in such  schedule or in any
representation  and  warranty  of  Seller  which  has been  rendered  inaccurate
thereby.  For purposes of  determining  the  satisfaction  of the conditions set
forth in Section 11.2.1, no such supplement or amendment shall be considered.

     7.7 Sale Motion and Sale Order.  Seller shall  promptly  file,  in no event
later than December 20, 2010, (a) a motion with the  Bankruptcy  Court in a form
and substance satisfactory to Buyer in its sole discretion seeking authorization
to sell to Buyer the  Purchased  Assets  free and clear of all Liens and  Claims
pursuant  to Section  363 of the  Bankruptcy  Code,  and to assume  the  Assumed
Liabilities,  and to enter into the Sale  Documents,  including  the  Litigation
Agreement  (the "Sale  Motion"),  and (b) a form of order in form and  substance
satisfactory  to  Buyer  in its  sole  discretion  authorizing  the  sale of the
Purchased  Assets to Buyer  pursuant to Section 363 of the  Bankruptcy  Code and
approving the Sale Motion in all respects.

     7.8 Further  Agreements.  Seller authorizes and empowers Buyer on and after
the Closing Date to receive and to open all mail received by Seller  relating to
the Purchased Assets,  the Business or the Assumed  Liabilities and to deal with
the contents of such communications in any proper manner.  Seller shall promptly
deliver to Buyer any mail or other  communication  received by Seller  after the
Closing Date  pertaining  to the Purchased  Assets,  the Business or the Assumed
Liabilities  and shall remit all payments  received on or after the Closing Date
with respect to any account  receivable.  Buyer shall promptly deliver to Seller
any mail or other communication received by it after the Closing Date pertaining
to the Excluded Assets or any Excluded Liabilities and any cash, checks or other
instruments  of payment in respect  thereof.  From and after the  Closing  Date,
Seller shall refer all  inquiries  with respect to the  Business,  the Purchased
Assets and the  Assumed  Liabilities  to Buyer,  and Buyer shall refer all calls
with respect to the Excluded Assets and the Excluded Liabilities to Seller.

Section 8.        Covenants of Seller and Buyer.

     Seller and Buyer each hereby covenants and agrees as follows:

     8.1 Efforts; Further Assurances. Seller covenants and agrees to warrant and
defend the sale,  transfer,  assignment,  conveyance,  grant and delivery of the
Purchased Assets hereby made against all Persons  whomsoever,  to take all steps
reasonably  necessary  to  establish  the record of Buyer's  title in and to the
Purchased  Assets and, at the request of Buyer,  to execute and deliver to Buyer
such other and further instruments of sale, transfer, conveyance, assignment and

                                       25
<PAGE>

delivery,  and  such  consents,  assurances,  and  other  instruments  as may be
requested by Buyer, and take such other action as Buyer may reasonably  request,
in order to vest in Buyer all right, title and interest of Seller in and to each
of the Purchased  Assets,  and to otherwise  carry out the intent and purpose of
this  Agreement,  all at the sole  cost and  expense  of  Buyer.  Seller  hereby
acknowledges  that from and after the Closing Date,  Seller shall have no right,
title or interest in or to any of the Purchased Assets.

     8.2 Certain  Filings.  The Parties  shall  cooperate in good faith with one
another  (a) in  determining  whether  any action by or in respect of, or filing
with,  any  Governmental  Authority  is  required,  or  any  actions,  consents,
approvals  or waivers are  required to be obtained  from  parties to any Assumed
Contracts,  Chapter 11 Permits or Intellectual  Property  Rights,  in connection
with the  consummation  of the  Transaction,  and (b) in taking such  actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.

     8.3 Public Announcements. Except as may be required by applicable Law or in
compliance  with public  disclosure  requirements  of any securities  regulatory
agency or national  securities  exchange,  the Parties shall not make any public
announcements  or statements  concerning the Transaction or the existence of any
agreement or negotiations  between the Parties without the prior written consent
of the  other  Party.  Buyer  agrees  that  Seller  may  provide  copies of this
Agreement  to  parties  in  interest  in the  Bankruptcy  Case  or as  otherwise
necessary or desirable in connection with the Bankruptcy Case. Seller also shall
be entitled to file copies with the Bankruptcy Court or as otherwise required by
Law.

     8.4 WARN Act. Buyer shall not assume any obligation or liabilities  for the
provision  of notice or  payment in lieu of notice or any  applicable  penalties
under the WARN Act.  Seller hereby agrees to indemnify  Buyer against and agrees
to hold Buyer harmless from and against any and all expenses, losses, Claims and
damages incurred or suffered by Buyer with respect to WARN Act. Buyer shall not,
at any  time  prior to 90 days  after  the  Closing  Date,  effectuate  a "plant
closing" or "mass  layoff" as those terms are defined in the WARN Act  affecting
the employees of Seller without complying fully with WARN Act.

     8.5 Tax Matters.

     8.5.1  Tax  Cooperation.  The  Parties  agree  to  furnish  or  cause to be
furnished  to each  other,  upon  request,  as  promptly  as  practicable,  such
information  and  assistance  relating to the Business and the Purchased  Assets
(including  access to Books and  Records)  as is  reasonably  necessary  for the
preparation and filing of all Tax returns,  the making of any election  relating
to  Taxes,  the  preparation  for any  audit by any  Taxing  Authority,  and the
prosecution or defense of any claim, suit or proceeding relating to any Tax. The
Parties  shall  cooperate  with each other in the  conduct of any audit or other
proceeding relating to Taxes involving the Purchased Assets or the Business.

     8.5.2 Transfer Taxes. If for any reason,  any sales, use, transfer or other
similar Taxes are assessed at Closing or at any time  thereafter on the transfer
of any  Purchased  Assets (the  "Transfer  Taxes"),  then in each  instance such
Transfer Taxes incurred as a result of the Transaction  shall be paid by Seller.
The Parties shall cooperate in providing each other with any appropriate  resale
exemption certifications and other similar documentation.

     8.5.3  Property  Taxes.  All Property Taxes for a Tax period which includes
(but  does  not  end  on)  the  Closing  Date  (collectively,  the  "Apportioned
Obligations")  shall be apportioned  between Seller, on the one hand, and Buyer,

                                       26
<PAGE>

on the other  hand,  based on the number of days of such Tax period  included in
the  Pre-Closing  Tax Period and the number of days of such Tax period after the
Closing  Date  (with  respect  to any such Tax  period,  the  "Post-Closing  Tax
Period").  Seller shall be liable for the proportionate  amount of such Property
Taxes that is attributable  to the  Pre-Closing  Tax Period,  and Buyer shall be
liable for the proportionate  amount of such Property Taxes that is attributable
to the Post-Closing Tax Period.

     8.5.4  Apportionment.  Apportioned  Obligations  or Transfer Taxes shall be
timely paid, and all applicable filings,  reports and returns shall be filed, as
provided by applicable Law. The paying Party shall be entitled to  reimbursement
from the non-paying  Party.  Upon payment of any such Apportioned  Obligation or
Transfer  Tax,  the  paying  Party  shall  present a  statement  and  reasonable
supporting  documents  to the  non-paying  Party  setting  forth  the  amount of
reimbursement  to  which  the  paying  Party is  entitled,  together  with  such
supporting  evidence as is  reasonably  necessary to calculate  the amount to be
reimbursed.  The non-paying Party shall make such reimbursement  promptly but in
no event  later  than 10 days  after the  presentation  of such  statement.  Any
payment  not made  within  such time shall bear  interest  at the rate per annum
equal to the rate of interest  announced  by JP Morgan  Chase N.A.  from time to
time as its base rate in New York City.

Section 9.        Employee Matters.

     9.1 Employees and Offers of Employment.

     9.1.1 As of the Closing  Date,  Buyer may, but shall not be  obligated  to,
offer  employment to certain  employees of Seller who are employed in connection
with the  Business  (Seller's  employees  who accept  offers of  employment  are
referred to as the  "Transferred  Employees")  on such terms and  conditions  as
agreed to Buyer and such Transferred Employees. Seller agrees that Buyer retains
sole and complete  discretion  with  respect to which  employees of Seller Buyer
shall offer employment.

     9.1.2 Seller will  terminate  all  Transferred  Employees as of the Closing
Date.  Seller shall  indemnify and hold Buyer harmless from any and all damages,
liabilities,  claims or expenses incurred by Buyer as a result of the failure of
Seller  to  comply  with  any of the  requirements  of the WARN  Act,  including
applicable  notice  requirements.  Seller will provide  Buyer with copies of all
notices it proposes to give to employees  regarding the  Transaction as promptly
as  practicable  (and in the case of notices  required  by the WARN Act or other
statutes,  at least five  Business  Days) in advance  of giving  such  notice to
employees.

     9.2 Employee Plans.

     9.2.1 The  Parties  recognize  that the  continued  employment  of  certain
employees  of  Seller  who are  employed  in  connection  with the  Business  is
significant  to the business  interests of both Buyer and Seller.  As such,  the
orderly  transfer of employment  relationships of such employees is important to
the Parties,  and Seller will use its best efforts to accomplish  the transition
with as little disruption to the Business as possible.

     9.2.2 Buyer agrees with respect to the Transferred  Employees:  (a) to give
such  Transferred  Employees credit under Buyer's benefit plans,  programs,  and
arrangements,  including credit for accrued vacation, for such employees' period
of service with Seller; provided,  however, that such credit shall only be taken
into account under any  tax-qualified  plan  maintained by Buyer for purposes of
determining  such employees'  eligibility for  participation  and eligibility to

                                       27
<PAGE>

satisfy any hours of service requirement in order to receive an allocation of an
employer  contribution  and (b) to provide the same coverage to such Transferred
Employees as is offered under Buyer's health,  medical, life insurance and other
welfare plans.  Schedule 9.2.2 sets forth the amounts  described in this Section
9.2.2.

     9.2.3 No  provision  of this  Section  9.2 shall  create  any  third  party
beneficiary  or other rights in any employee or former  employee  (including any
beneficiary  or dependent  thereof) of Seller or of any of its  subsidiaries  in
respect  of  continued  employment  (or  resumed  employment)  with  either  the
Business, Buyer any of its Affiliates and no provision of this Section 9.2 shall
create any such rights in any such Persons in respect of any  benefits  that may
be provided, directly or indirectly,  under any of Seller's Plans or any plan or
arrangement  which  may be  established  by Buyer or any of its  Affiliates.  No
provision of this  Agreement  shall  constitute a limitation on rights to amend,
modify or  terminate  after the Closing Date any such plans or  arrangements  of
Buyer or any of its Affiliate.

     9.3  Successor  Employer.  Buyer  shall use its best  efforts  to apply the
successor employer provisions of Treasury Regulation Section  31.3121(a)(1)-1(b)
with  respect to each  Transferred  Employee  hired by Buyer for the year of the
Closing.

     9.4  Workers'  Compensation.  Seller  shall  be  liable  for  all  workers'
compensation  claims  arising  out of  injuries  with  an  identifiable  date of
occurrence  sustained by Seller's  employees  prior to the Closing  Date.  Buyer
shall be liable for all  workers'  compensation  claims  arising out of injuries
with an identifiable date of occurrence, sustained only by Transferred Employees
on and after the dates  Buyer  hires such  Transferred  Employees  (hereinafter,
"Transferred  Employees'  Employment  Date"), and Seller shall be liable for all
workers'  compensation  claims arising out of injuries or occupational  diseases
without an identifiable date of occurrence or exposure,  originating from within
Seller's  facilities  and  sustained or  contracted  prior to the Closing  Date;
provided,   however,  such  claims  are  filed  with  the  appropriate  Workers'
Compensation   authority  within  45  days  after  the  Transferred   Employees'
Employment  Date.  Buyer shall be liable for all  workers'  compensation  claims
arising out of injuries or occupational diseases without an identifiable date of
occurrence or exposure,  which are alleged to have been  sustained or contracted
either before or after the Transferred  Employees'  Employment  Date;  provided,
however,  that such claims are filed with the appropriate workers'  compensation
authority more than 45 days after the Transferred Employees' Employment Date.

Section 10.       Closing Deliveries.

     10.1 Buyer's Deliveries at Closing. At the Closing,  Buyer shall deliver to
Seller  the  following:  (a)  the  Cash  Purchase  Price,  by wire  transfer  in
immediately  available  funds to an account  which  Seller  shall  designate  in
writing three  Business Days prior to the Closing Date;  (b) the  Assignment and
Assumption Agreement, duly executed by Buyer; (c) the Litigation Agreement, duly
executed by Buyer; (d) a certificate,  executed by a duly authorized  officer of
Buyer,  to the effect that all  conditions  to Closing  have been  satisfied  or
waived;  and  (e) all  other  documents,  instruments  and  writings  reasonably
requested by Seller to be delivered by Buyer at the Closing in  connection  with
the consummation of the Transaction.

     10.2 Seller's Deliveries at Closing.  At the Closing,  Seller shall deliver
to Buyer the following:  (a) the Sale Order,  together with the certification of
Seller's  counsel  that the sale has not been  stayed;  (b) the  Assignment  and
Assumption  Agreement,  duly  executed  by  Buyer;  (c) the Bill of  Sale,  duly
executed by Seller; (d) the Litigation  Agreement,  duly executed by Seller; (e)
duly executed deeds, assignments or other instruments necessary to convey all of
the Purchased  Assets,  and Assumed  Liabilities  to Buyer and to consummate the
Transaction (the form of which is attached hereto as Exhibit D, and list of such
assignment  documents is set forth on Schedule  10.2);  and (f)  certificates of
title to motor vehicles, if any, constituting a part of the Purchased Assets.

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<PAGE>

Section 11.       Conditions Precedent to Closing.

     11.1  Conditions to  Obligations  of Buyer and Seller.  The  obligations of
Buyer and Seller to consummate the Closing are subject to the  satisfaction  (or
waiver by Seller, as the case may be) of the following conditions:

     11.1.1  Buyer or Seller,  as the case may be, has not elected to  terminate
this Agreement;

     11.1.2  The  Bankruptcy  Court  shall  have  entered  the Sale Order in the
Bankruptcy Case, in form and substance reasonably acceptable to Seller and Buyer
(including a finding that Buyer is a "good faith"  purchaser  within the meaning
of  Section  363(m) of the  Bankruptcy  Code and  waiving  any stay  that  would
otherwise be applicable pursuant to Bankruptcy Rules 6004(h) or 6006(d)), and as
of the Closing Date,  the Sale Order shall be in full force and effect and shall
not have been stayed, vacated or reversed;

     11.1.3 No order  shall be  entered  in the  Bankruptcy  Case  granting  any
secured creditor,  lessor or other creditor relief from stay with respect to any
portion of the Purchased Assets, unless the Sale Order authorizes Seller to sell
the  affected  Property  free and  clear  of the  Lien or Claim of such  secured
creditor, creditor or lessor; and

     11.1.4  No  injunction,  stay or  similar  order or  decree,  issued by any
Governmental  Authority,  shall be in effect that restrains,  enjoins,  stays or
prohibits the consummation of the Transaction.

     11.2  Conditions  to  Obligations  of  Buyer.  The  obligation  of Buyer to
consummate  the Closing is subject to the  satisfaction  (or waiver by Buyer) of
the following further conditions:

     11.2.1 Seller has delivered all items deliverable pursuant to Section 10.1;

     11.2.2 All  representations  and warranties of Seller set forth in the Sale
Documents shall be true and correct in all respects as of the Closing Date;

     11.2.3  With  respect  to  the  Purchased  Assets,  the  Business  and  the
Transferred Employees,  there shall not have been any Material Adverse Effect or
material  loss or damage  sustained,  whether or not  insured,  that  materially
affects  the  Purchased  Assets,  the  Business  or the  Transferred  Employees,
individually or in the aggregate;  provided,  however,  that in the event of any
loss or damage to the Purchased Assets for which Seller has received, or has the
right to receive,  insurance proceeds, Buyer shall have the option to consummate
the Transaction and receive the insurance proceeds in the place of any Purchased
Assets;

     11.2.4 Seller shall have (a)  performed,  satisfied,  and complied with all
covenants,  agreements, and conditions required to be performed or complied with
by  Seller  on or before  the  Closing  Date,  and (b)  delivered  all items and
satisfied all obligations required at the Closing; and

     11.2.5 No Event of Default (as that term is defined in the Loan  Agreement)
shall have occurred at any time during the term of the Loan Agreement.

Section 12.       Survival; Indemnification.

     12.1  Survival.  The  representations  and  warranties  of Seller and Buyer
contained in this Agreement or in any certificate or other writing  delivered in

                                       29
<PAGE>

connection  herewith,  shall  survive the Closing  for 15 months  following  the
Closing Date.  The covenants and  agreements of each Seller and Buyer  contained
herein that by their terms are to be performed  after  Closing shall survive the
Closing for such terms as provide herein.

     12.2  Indemnification.  Seller agrees to indemnify and hold Buyer  harmless
with respect to any breach of any  representation,  warranty or covenant of this
Agreement  or any Sale  Document,  and with respect to every  obligation  of, or
claim arising out of, any Subsidiary of Seller.

Section 13.       Termination.

     13.1  Termination.  This  Agreement and the  Transaction  may be terminated
without  breach by the  terminating  Party in any of the following  ways, at any
time prior to Closing:

     13.1.1 by mutual written consent of Seller and Buyer;

     13.1.2 by Buyer, in its sole and unrestricted discretion, at any time up to
and including January 21, 2011 if (a) Buyer is not satisfied with the results of
its due diligence review of Seller,  the Business,  the Purchased Assets and the
Assumed Liabilities, determined by Buyer in its sole and absolute discretion;

     13.1.3 by Seller or Buyer,  at its  option as  applicable,  if the  Closing
shall  not  have  been  consummated  (other  than by  reason  of the  breach  of
obligations by the non-terminating  Party) on or before the 15th day after entry
of the Sale Order by the Bankruptcy Court (the "End Date");

     13.1.4 by Seller or Buyer,  if any  condition  set forth in Section 11.1 is
not  satisfied,  and such  condition is incapable of being  satisfied by the End
Date;

     13.1.5 by Buyer,  if any  condition  set forth in Section 11.2 has not been
satisfied,  and such  condition is  incapable of being  satisfied by the Closing
Date; or

     13.1.6 by Buyer,  if any Event of Default shall have  occurred,  whether or
not such Event of Default is continuing.

     The Party desiring to terminate this Agreement  pursuant to this Section 13
shall give  notice of such  termination  to the other Party in  accordance  with
Section 14.3.

     13.2  Effect  of  Termination.   Notwithstanding  anything  herein  to  the
contrary,  if this  Agreement  is  terminated  pursuant  to Section  13.1,  such
termination  shall  be  without  liability  of the  terminating  Party  (or  any
stockholder,  director,  officer,  employee,  counsel, financial adviser, agent,
consultant  or  representative  of  such  Party)  to the  other  Party  to  this
Agreement.

Section 14.       Miscellaneous.

     14.1  Amendments;  Severability.  Neither this Agreement nor any other Sale
Document nor any terms hereof or thereof may be changed,  waived,  discharged or
terminated  unless such change,  waiver,  discharge or termination is in writing
and signed by Buyer and approved by the  Bankruptcy  Court,  if such approval is
required.  If any provision of this Agreement or the application  thereof to any
Party or  circumstances  shall  for any  reason  be held  invalid,  illegal,  or
unenforceable in any respect, such invalidity,  illegality,  or unenforceability
shall not affect any other provisions of this Agreement and this Agreement shall

                                       30
<PAGE>

be construed as if such invalid,  illegal, or unenforceable  provision had never
been part of this Agreement. Furthermore, in lieu of each such illegal, invalid,
or unenforceable  provision,  there shall be added automatically as part of this
Agreement  a  provision  as  similar  in  terms  to such  illegal,  invalid,  or
unenforceable provision as may be possible and be legal, valid, and enforceable.

     14.2 Reasonable Access to Records and Personnel. Following the Closing Date
and so long as such access does not unreasonably interfere with Buyer's business
operations,  Buyer shall permit Seller's  representatives  reasonable  access to
Buyer's  employees  and any Books and Records  (whether in  documentary  or data
form). Such access shall include the right of such  representatives  to copy, at
Seller's expense, such documents and records; provided, however, that copies may
be in  electronic  format if elected by Seller.  Buyer shall  preserve  Seller's
Books and Records for at least two years from the Closing Date.

     14.3 Notices.  Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication  shall or may be given to or served  upon either of the Parties by
the other Party, or whenever either of the Parties desires to give or serve upon
the other Party any  communication  with  respect to this  Agreement,  each such
notice, demand, request, consent,  approval,  declaration or other communication
shall be in writing and shall be deemed to have been  validly  served,  given or
delivered (a) upon the earlier of actual receipt and three days after deposit in
the United States Mail,  registered or certified mail, return receipt requested,
with proper  postage  prepaid,  (b) upon  transmission,  when sent by  facsimile
transmission  or  electronic  mail,  (c) one Business  Day after  deposit with a
reputable  overnight courier with all charges prepaid or (d) when delivered,  if
hand-delivered by messenger,  all of which shall be addressed to the party to be
notified and sent to the address or facsimile  number indicated below or to such
other address (or  facsimile  number) as may be  substituted  by notice given as
herein  provided.  The giving of any notice required  hereunder may be waived in
writing  by the Party  entitled  to  receive  such  notice.  Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other  communication  to any Person  (other than Buyer or Seller)  designated
below to receive copies shall in no way adversely  affect the  effectiveness  of
such  notice,  demand,  request,   consent,   approval,   declaration  or  other
communication.

                      If to Buyer, at:  Linc Energy Petroleum (Wyoming), Inc.
                                        c/o Linc Energy Operations, Inc.
                                        1200 17th Street, Suite 2100
                                        Denver, Colorado 80202
                                        Attention:  Don Schofield
                                        Facsimile:  (303) 623-0547
                                        Telephone:  (303) 623-0510

                                  And:  Linc Energy Petroleum (Wyoming), Inc.
                                        c/o Linc Energy Operations, Inc.
                                        1200 17th Street, Suite 2100
                                        Denver, Colorado 80202
                                        Attention:  Gerry Agranoff
                                        Facsimile:  (303) 623-0547
                                        Telephone:  (303) 623-0510

                       With copies to:  Ballard Spahr LLP
                                        1225 17th Street, Suite 2300
                                        Denver, Colorado 80202
                                        Attention: Carl A. Eklund, Esq.
                                        Facsimile: (303) 296-3956
                                        Telephone: (303) 292-2400

                                       31
<PAGE>

                And:                    Ballard Spahr LLP
                                        1225 17th Street, Suite 2300
                                        Denver, Colorado 80202
                                        Attention: Carl A. Eklund, Esq.
                                        Facsimile: (303) 296-3956
                                        Telephone: (303) 292-2400

     If to Seller, at:                  Rancher Energy Corporation
                                        999 18th Street, Suite 3400
                                        Denver, Colorado 80202
                                        Attention: Jon Nicolaysen
                                        Facsimile: (720) 904-5698
                                        Telephone: (303) 629-1122

                       With a copy to:  Onsager, Staelin & Guyerson, LLC
                                        1873 S. Bellaire St., Suite 1401
                                        Denver, CO 80222
                                        Attention: Christian C. Onsager, Esq.
                                        Facsimile: (303) 512-1129
                                        Telephone: (303) 512-1123

                                  And:  Overton & Associates, LLC
                                        6950 Belleview Ave., Suite 202
                                        Greenwood Village, Colorado 80111
                                        Attention: Mark Overton, Esq.
                                        Facsimile: (303) 779-6006
                                        Telephone: (303) 779-5900

     14.4 No Waiver.  No failure on the part of Buyer,  at any time or times, to
require strict  performance by Seller of any provision of this Agreement and any
of the other Sale Documents  shall waive,  affect or diminish any right of Buyer
thereafter to demand strict  compliance and performance  therewith.  None of the
undertakings,  agreements,  warranties,  covenants and representations of Seller
contained in this Agreement or any of the other Sale  Documents  shall be deemed
to have been suspended or waived by Buyer unless such waiver or suspension is by
an instrument in writing signed by an officer of or other authorized employee of
Buyer. No failure on the part of Seller, at any time or times, to require strict
performance  by Buyer of any  provision of this  Agreement  and any of the other
Sale Documents shall waive, affect or diminish any right of Seller thereafter to
demand strict  compliance and performance  therewith.  None of the undertakings,
agreements, warranties, covenants and representations of Buyer contained in this
Agreement  or any of the  other  Sale  Documents  shall be  deemed  to have been
suspended  or  waived by  Seller  unless  such  waiver  or  suspension  is by an
instrument in writing  signed by an officer of or other  authorized  employee of
Seller.

     14.5  Assignment.  This  Agreement  shall be binding  upon and inure to the
benefit and burden of the  Parties,  their  successors  and  assigns.  Except as
otherwise  provided  herein  this  Agreement  may not be  assigned  by any Party
without the express  written  consent of the other Party,  which  consent may be
withheld in the sole  discretion of the Party  granting such consent;  provided,
however,  that Buyer may assign its rights and obligations  under this Agreement
to any of its  Affiliates  without the need for any such  consent,  and any such
Affiliate  assignee shall be deemed a good faith purchaser pursuant to 11 U.S.C.
ss. 363(m).

                                       32
<PAGE>

     14.6 Expenses.  All expenses incurred by the Parties in connection with the
Transaction,  including, without limitation, legal and accounting fees, shall be
the  responsibility  of and  for  the  account  of the  Party  who  ordered  the
particular service or incurred the particular expense.

     14.7  Governing  Law.  EXCEPT  AS  OTHERWISE  EXPRESSLY  PROVIDED  IN  THIS
AGREEMENT OR ANY OF THE OTHER SALE  DOCUMENTS,  IN ALL  RESPECTS,  INCLUDING ALL
MATTERS OF  CONSTRUCTION,  VALIDITY  AND  PERFORMANCE,  THIS  AGREEMENT  AND THE
OBLIGATIONS  ARISING  HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF COLORADO,  APPLICABLE TO CONTRACTS
MADE AND  PERFORMED  IN SUCH  STATE,  AND ANY  APPLICABLE  LAWS.  SELLER  HEREBY
CONSENTS AND AGREES THAT THE BANKRUPTCY COURT HAS EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES  PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER  SALE  DOCUMENTS  OR TO ANY  MATTER  ARISING  OUT OF OR  RELATED  TO  THIS
AGREEMENT OR ANY OF THE OTHER SALE DOCUMENTS;  PROVIDED, HOWEVER, THAT BUYER AND
SELLER  ACKNOWLEDGE  THAT ANY APPEALS FROM THE  BANKRUPTCY  COURT MAY HAVE TO BE
HEARD BY A COURT OTHER THAN THE  BANKRUPTCY  COURT.  BUYER AND SELLER  EXPRESSLY
SUBMIT  AND  CONSENT  IN  ADVANCE  TO SUCH  JURISDICTION  IN ANY  ACTION OR SUIT
COMMENCED IN ANY SUCH COURT,  AND BUYER AND SELLER  HEREBY  WAIVE ANY  OBJECTION
WHICH EITHER MAY HAVE BASED UPON LACK OF PERSONAL  JURISDICTION,  IMPROPER VENUE
OR FORUM NON CONVENIENS.

     14.8 Waiver of Jury Trial.  BECAUSE  DISPUTES  ARISING IN  CONNECTION  WITH
COMPLEX   TRANSACTIONS  ARE  MOST  QUICKLY  AND  ECONOMICALLY   RESOLVED  BY  AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE  STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN  ARBITRATION  RULES),  THE PARTIES  DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH  APPLICABLE  LAWS.  THEREFORE,  TO
ACHIEVE  THE BEST  COMBINATION  OF THE  BENEFITS OF THE  JUDICIAL  SYSTEM AND OF
ARBITRATION,  THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,  WHETHER IN CONTRACT,  TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH,  RELATED TO, OR INCIDENTAL TO, THIS
AGREEMENT OR ANY OF THE OTHER SALE  DOCUMENTS OR THE  TRANSACTIONS  CONTEMPLATED
HEREBY OR THEREBY.

     14.9  Headings.  The  section  and  paragraph  headings  contained  in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

     14.10 Counterparts and Facsimiles. This Agreement may be executed in one or
more  counterparts,  each of which shall be deemed an original  but all of which
together shall constitute one and the same  instrument.  The Parties may execute
the Sale  Documents by facsimile or electronic pdf  signature,  which  signature
shall be deemed an original signature;  provided,  however, that at the Closing,
the Parties shall deliver original signatures to all Sale Documents that require
original  signatures in order to be valid or  enforceable  or to record with any
Governmental  Authority,  in the opinion of Buyer's  counsel,  including but not
limited to certificates of motor vehicles and deeds.

     14.11 Entire Agreement. This Agreement and the other Sale Documents and the
Loan Documents,  together with the schedules, exhibits and other documents to be
delivered pursuant hereto and thereto, constitute the entire agreement among the
Parties,  and there are no agreements,  representations  or warranties which are
not set forth herein. All prior negotiations,  agreements and understandings are
superseded hereby.

                                       33
<PAGE>

     14.12  Parties  Including  Trustees;  Bankruptcy  Court  Proceedings.  This
Agreement and the other Sale Documents shall be binding upon Seller,  the estate
of Seller,  and any trustee or successor in interest of Seller in the Bankruptcy
Case or any subsequent  case commenced  under Chapter 7 of the Bankruptcy  Code,
and shall not be subject to Section 365 of the Bankruptcy  Code.  This Agreement
and the other Sale Documents shall be binding upon, and inure to the benefit of,
the successors of Buyer and its transferees and endorsees.

     14.13 Conflict of Terms.  Except as otherwise provided in this Agreement or
any  of the  other  Sale  Documents  by  specific  reference  to the  applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict  with,  or  inconsistent  with,  any provision in any of the other Sale
Documents,  the provisions  contained in this Agreement shall govern and control
the transactions contemplated hereby.

     14.14 Right of Setoff.  Buyer may at any time or from time to time,  at its
sole discretion and without further order of the Bankruptcy  Court or demand and
without  notice to anyone,  setoff any liability owed to Buyer by Seller whether
under any Sale Document, Loan Document or otherwise, whether or not due, against
any indebtedness.

     14.15 Authorized Signature.  Until Buyer shall be notified by Seller to the
contrary,  the  signature  upon any document or  instrument  delivered  pursuant
hereto and reasonably  believed by Buyer or any of Buyer's officers or employees
to be that of an officer or duly authorized  representative  of Seller listed on
Schedule  14.15 shall bind Seller and be deemed to be the act of Seller  affixed
pursuant to and in accordance with resolutions duly adopted by Seller's Board of
Directors, and Buyer shall be entitled to assume the authority of each signature
and authority of the Person whose  signature it is or reasonably  appears to be.
Until  Seller is  notified  by Buyer to the  contrary,  the  signature  upon any
document or instrument  delivered  pursuant  hereto and  reasonably  believed by
Seller or any of Seller's officers or employees to be that of an officer or duly
authorized representative of Buyer listed on Schedule 14.15 shall bind Buyer and
be deemed to be the act of Buyer  affixed  pursuant  to and in  accordance  with
resolutions  duly  adopted  by  Buyer's  Board of  Directors  or other  managing
authority,  and  Seller  shall be  entitled  to  assume  the  authority  of each
signature  and  authority  of the Person  whose  signature  it is or  reasonably
appears to be.

            [The remainder of this page is left blank intentionally.]

                                       34
<PAGE>

                  IN WITNESS WHEREOF,  the parties have caused this Agreement to
be executed by their duly authorized  representatives  on the day and year first
above written.

                                     Seller:

                                     RANCHER ENERGY CORPORATION,
                                     a Nevada corporation

                                     By:    _______________________________
                                            Name:
                                            Title:

                                     Buyer:

                                     LINC ENERGY PETROLEUM (WYOMING), INC.,
                                     a Delaware corporation

                                     By:    _______________________________
                                            Name:
                                            Title:

<PAGE>
*
                                    EXHIBIT A

                                  BILL OF SALE

     BILL OF SALE (this "Bill of Sale"),  dated as of [__________ ___], 20[___],
executed  and  delivered by Rancher  Energy  Corporation,  a Nevada  corporation
("Seller"),  in favor of LINC  ENERGY  PETROLEUM  (WYOMING),  INC.,  a  Delaware
corporation  (together with its successors,  assigns and transferees,  "Buyer").
Capitalized terms used herein and not defined have the meanings given to them in
the Purchase Agreement (as defined below).

     On October 28, 2009 (the "Petition Date"), Seller commenced Bankruptcy Case
No.  09-32943  MER (the  "Bankruptcy  Case") by filing a voluntary  petition for
reorganization under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
101 et seq. (the "Bankruptcy Code"), with the United States Bankruptcy Court for
the District of Colorado (the "Bankruptcy  Court").  Seller continues to operate
its  business  and manage  its  properties  as debtor  and  debtor-in-possession
pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.

     Buyer and Seller are  parties to that  certain  Asset  Purchase  Agreement,
dated as of December  20, 2010,  (the  "Purchase  Agreement"),  and that certain
Senior Secured,  Super-Priority  Debtor-In-Possession Credit Agreement, dated as
of December 15, 2010 (the "Loan Agreement").  The execution and delivery of this
Bill of Sale is a condition to Buyer's obligations under the Purchase Agreement.

     On or about [__________ ___], 20[___], an order of the Bankruptcy Court was
entered authorizing and approving the Purchase Agreement.

     NOW,  THEREFORE,  in  consideration  of the mutual  covenants,  agreements,
representations  and  warranties  contained in this Bill of Sale,  and for other
good and valuable consideration, the receipt and sufficiency of which hereby are
conclusively acknowledged, Seller states as follows.

     1. In  consideration  of the  payment  by Buyer to Seller  of the  Purchase
Price,  the receipt and  sufficiency  of which hereby are  acknowledged,  Seller
hereby sells, transfers, assigns, transfers, conveys, quitclaims and delivers to
Buyer, and Buyer hereby accepts from Seller, subject to the terms and conditions
of the  Purchase  Agreement,  all  right,  title and  interest  in and to all of
Seller's right,  title and interest in and to the Purchased Assets  constituting
tangible or intangible personal property, effective as of the Closing Date.

     2. Notwithstanding anything herein or in any Sale Document to the contrary,
in no event shall the Purchased Assets include any Excluded Assets.

     3. Seller  covenants  and agrees to warrant and defend the sale,  transfer,
assignment,  conveyance,  grant and delivery of the Purchased Assets hereby made
against  all  Persons  whomsoever,  to take all steps  reasonably  necessary  to
establish the record of Buyer's title in and to the Purchased Assets and, at the
request of Buyer,  to  execute  and  deliver  to Buyer  such  other and  further
instruments of sale,  transfer,  conveyance,  assignment and delivery,  and such
consents,  assurances,  and other  instruments as may be requested by Buyer, and
take such  other  action as Buyer may  reasonably  request,  in order to vest in
Buyer all right,  title and  interest of Seller in and to each of the  Purchased
Assets,  and to otherwise  carry out the intent and purpose of this Bill of Sale

<PAGE>

and the Purchase Agreement,  all at the sole cost and expense of Seller.  Seller
hereby  acknowledges  that at the  Effective  Time,  Seller shall have no right,
title or interest in or to any of the Purchased Assets.

     4.  Without  limiting  paragraph  1 of this  Bill of  Sale,  Seller  hereby
appoints  Buyer the true and lawful agent and  attorney in fact of Seller,  with
full power of substitution, in whole or in part, in the name and stead of Seller
but on behalf and for the benefit of Buyer to: (a)  demand,  receive and collect
any and all of the  Purchased  Assets and to give  receipts and releases for and
with respect to the same, or any part thereof,  (b) institute and prosecute,  in
the name of Seller or otherwise,  any and all  proceedings  at all, in equity or
otherwise,  that Buyer may deem  proper in order to collect or enforce any claim
or right of any kind hereby assigned or transferred,  intended so to be, and (c)
do all things legally permissible,  required or reasonably deemed by Buyer to be
required to recover and collect the Purchased Assets and to use Seller's name in
such  manner as Buyer may  reasonably  deem  necessary  for the  collection  and
recovery of the same.  The  foregoing  power of attorney is  irrevocable  and is
coupled with an interest.

     5. This Bill of Sale shall be governed by and construed in accordance  with
the laws of the State of Colorado.

     6.  Nothing  contained  in this Bill of Sale shall be  construed to expand,
limit  or  otherwise  modify  or  terminate  the  representations,   warranties,
covenants,  agreements and indemnities set forth in the Purchase  Agreement.  In
the case of any conflict or any inconsistency  between the terms of this Bill of
Sale  and the  terms  of the  Purchase  Agreement,  the  terms  of the  Purchase
Agreement shall control.

            [The remainder of this page is left blank intentionally.]

<PAGE>

     IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the day and
year first above written.

                                     Seller:

                                     RANCHER ENERGY CORPORATION,
                                     a Nevada corporation

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

<PAGE>

                                    EXHIBIT B

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

     ASSIGNMENT  AND  ASSUMPTION  AGREEMENT  (this  "Agreement"),  dated  as  of
[__________ ___], 20[___], executed and delivered by Rancher Energy Corporation,
a Nevada corporation  ("Seller"),  in favor of LINC ENERGY PETROLEUM  (WYOMING),
INC.,  a  Delaware  corporation  (together  with  its  successors,  assigns  and
transferees,  "Buyer").  Capitalized  terms used herein and not defined have the
meanings given to them in the Purchase Agreement (as defined below).

     On October 28, 2009 (the "Petition Date"), Seller commenced Bankruptcy Case
No.  09-32943  MER (the  "Bankruptcy  Case") by filing a voluntary  petition for
reorganization under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
101 et seq. (the "Bankruptcy Code"), with the United States Bankruptcy Court for
the District of Colorado (the "Bankruptcy  Court").  Seller continues to operate
its  business  and manage  its  properties  as debtor  and  debtor-in-possession
pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.

     Buyer and Seller are  parties to that  certain  Asset  Purchase  Agreement,
dated  December 20, 2010,  (the "Purchase  Agreement"),  and that certain Senior
Secured,  Super-Priority  Debtor-In-Possession  Credit  Agreement,  dated  as of
December 15, 2010 (the "Loan  Agreement").  The  execution  and delivery of this
Agreement is a condition to Buyer's obligations under the Purchase Agreement.

     On or about [__________ ___], 20[___], an order of the Bankruptcy Court was
entered authorizing and approving the Purchase Agreement.

     NOW,  THEREFORE,  in  consideration  of the mutual  covenants,  agreements,
representations and warranties  contained in this Agreement,  and for other good
and  valuable  consideration,  the receipt and  sufficiency  of which hereby are
conclusively acknowledged, the Parties agree as follows.

     1. Seller hereby assigns to Buyer the Assumed Liabilities.

     2. Buyer hereby assumes the Assumed  Liabilities,  and no other liabilities
or  obligations  of Seller,  in each case from and after the Closing  Date,  and
hereby  assumes,  and  agrees  to be bound  by,  pay and  fully  and  faithfully
discharge and perform,  all obligations of Seller under the Assumed  Liabilities
from and after the Closing Date.

     3.  Notwithstanding  any other provision of this Agreement to the contrary,
nothing contained in this Agreement shall in any way supersede, modify, replace,
amend, change,  rescind, waive, exceed, expand, enlarge or in any way effect the
provisions,   including,   but  not  limited  to,  the  warranties,   covenants,
agreements,  conditions,  representations or, in general,  any of the rights and
remedies, and any of the obligations and indemnifications of Buyer or Seller set
forth in the Purchase  Agreement nor shall this Agreement  expand or enlarge any
remedies under the Purchase Agreement including without limitation any limits on
indemnification specified therein. This Agreement is intended only to effect the
transfer of certain liabilities and obligations assumed pursuant to the Purchase
Agreement  and  shall be  governed  entirely  in  accordance  with the terms and
conditions of the Purchase Agreement.

     4. This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado.

<PAGE>

     IN WITNESS  WHEREOF,  Seller  and Buyer have  caused  this  Assignment  and
Assumption  Agreement to be executed  and  delivered on the date first set forth
above.

                                   Seller:

                                   RANCHER ENERGY CORPORATION,
                                   a Nevada corporation

                                   By:    _______________________________
                                          Name:
                                          Title:

                                   Buyer: ________________________________

                                   LINC ENERGY PETROLEUM (WYOMING), INC.,
                                   a Delaware corporation

                                   By:    _______________________________
                                          Name:
                                          Title:

<PAGE>

                                    EXHIBIT C

                              LITIGATION AGREEMENT

<PAGE>

                                    EXHIBIT D

                          FORM OF ASSIGNMENT INSTRUMENT

                                [TO BE PROVIDED.]

<PAGE>

                                 Schedule 2.1.3

                                 Excluded Assets

          "Excluded Assets" means only the following Property:

     (a)  All Avoidance Actions or other causes of action, whether arising under
          the  Bankruptcy  Code or  otherwise,  and  the  proceeds  thereof,  of
          whatever kind or nature, and whether asserted or unasserted, including
          (but subject to the terms and conditions of the Litigation Agreement),
          any recovery or award or settlement  of the Avoidance  Action known as
          AP: No.  10-01173-MER  Rancher Energy Corp. v. GasRock  Capital,  LLC.
          "Avoidance  Action"  means all  actions  for  preferences,  fraudulent
          conveyances, and other avoidance power claims and any recoveries under
          Section  552(b),  Section 506(c) and Sections 542, 544, 545, 547, 548,
          549, 550 and 553 of the Bankruptcy Code.

     (b)  The Organic Documents of Seller.

     (c)  All rights  and  receivables  of Seller  arising  under  that  certain
          Assignment  Agreement,  dated effective  March 1, 2009,  between Merit
          Energy Company LLC and Seller.

     (d)  All rights of Seller  arising  under this  Agreement or in  connection
          with the Transaction.

     (e)  All rights of Seller arising under the Litigation Agreement.

     (f)  All  rights of seller  arising  out of the Real  Property  lease  (the
          "Denver  Office  Lease") for office space  located at 999 18th Street,
          Denver, Colorado 80202 (the "Denver Office").

     (g)  Any cash  security  deposit held by or for the account of the landlord
          or lessor  pursuant to the Denver Office Lease (the "Lease  Deposit"),
          if any.

     (h)  Retainer amounts held by Seller's legal professionals.

     (i)  The following  insurance  policies for liability  insurance,  property
          damage and worker's  compensation relating to the Denver Office Leased
          and premises leased thereunder: [To be provided by Seller]

     (j)  After payment in full of all  obligations of Seller under the Purchase
          Documents  and Loan  Documents,  cash in an amount  equal to  $350,000
          minus the Lease  Deposit,  minus any and all amounts paid by Seller in
          connection with any acquisitions pursuant to clause (t) below..

     (k)  The name Rancher Energy Incorporated, including registered tradenames,
          and  including  cardstock,   letterhead,   checkstock  and  stationary
          containing such name.

     (l)  Passcodes and keys that permit access to the Denver Office premises.

     (m)  Seller's Directors and Officers Liability Insurance Policy, identified
          as follows: [To be provided by Seller]

     (n)  Telephone numbers and facsimile numbers relating to the Denver Office;
          email  addresses  of  employees  and  former  employees  who  are  not
          Transferred  Employees;  cell phone  numbers of  employees  and former
          employees who are not Transferred Employees.
<PAGE>

     (o)  Solely to the extent  attorney-client  privilege is claimed by Seller,
          emails stored on Seller's  computer  servers through and including the
          Closing Date, and any other  attorney-client  privileged  materials in
          any other format.

     (p)  Equity  securities of Rancher Energy  Wyoming,  LLC, a Wyoming limited
          liability company.

     (q)  Refunds, if any, of any insurance policy premiums assumed by Buyer.

     (r)  SEC  Records,  as well as all  records  that  Rancher is  required  to
          possess  pursuant to the SEC and Sarbanes  Oxley;  Corporate  Minutes,
          Resolutions,   and  any  associated  corporate  records,   Stockholder
          Records,  Stockholder  Agreements,  Stock Option Records, Stock Option
          Agreements, and all records associated therewith.

     (s)  All records associated with the Cutler litigation.

     (t)  All  potential  claims  against  former  officers  and  directors  and
          Rancher's professionals,  including any rights to disgorgement of fees
          paid.

     (s)  All of Rancher's employee records, other than Transferred Empoylees.

     (t)  All  personal  property  acquired by Rancher  after the date hereof as
          reasonably   necessary  to  operate   post-closing,   i.e.  computers,
          furniture, equipment, not to exceed the amount of [$20,000.00], a list
          of which will be provided to Buyer prior to Closing.

     (u)  Tax returns.

<PAGE>

                                 Schedule 2.1.5

                              Excluded Liabilities

     Without limiting the generality of Section 2.1.5, the Excluded  Liabilities
shall include, but are not limited to:

     (a) any  liabilities or obligations  which arise at any time, out of, or in
connection with, the Excluded Assets;

     (b) any liabilities or obligations  under or in connection with the Assumed
Contracts, Purchased Assets, Transferred Employees or the Business that arose or
accrued on or prior to the Closing Date;

     (c) any liabilities or obligations  arising out of, or in connection  with,
any  proceedings  arising out of the  operation of the Business on or before the
Closing Date;

     (d) any liabilities or obligations arising out of or in connection with any
indebtedness  of  Seller  to  its  lenders,  capital  lease  lessors,   vendors,
customers,  employees,  agents, Governmental Authorities or any other Person for
any reason;

     (e) any liabilities or obligations  attributable to, incurred in connection
with, arising from, or relating to, any collective bargaining agreement,  or any
bonus,  incentive,  deferred  compensation,   medical,  health,  life  or  other
insurance,   welfare,  fringe  benefit,   severance,   termination,   retention,
consulting,  change of control,  employment,  stock option,  stock  appreciation
right,  stock  purchase,  phantom  stock  or  other  equity-based,  performance,
pension,  retirement  or any other  incentive,  compensation  or  benefit  plan,
program,  policy,  agreement or arrangement (including,  but not limited to, any
"employee  benefit  plan" as  defined  in  Section  3(3) of  ERISA),  sponsored,
maintained,  contributed  to or  required  to be  contributed  to at any time by
Seller or any trade or business  which  together with Seller would be deemed (or
at any time would have been) a "single  employer"  within the meaning of section
4001 of ERISA,  for the  benefit  of any  current or former  employee,  officer,
director, agent or consultant of Seller, or any ERISA Affiliate,  whether formal
or informal and whether legally binding or not;

     (f) any liabilities or obligations for income Taxes of Seller and any other
Taxes  of  Seller  of any  kind,  including,  but  not  limited  to,  all  Taxes
attributable  to, incurred in connection with or arising out of the operation of
the Business or the  ownership  of the  Purchased  Assets,  prior to the Closing
Date, regardless of when due or assessed;

     (g)  any  liabilities  or  obligations   owed  to  stockholders  or  former
stockholders of any Seller;

     (h) all liabilities and obligations arising under or in connection with the
any  agreement,  arrangement  or  understanding  with  GasRock,  or  any  of its
Affiliates, successors, transferees or assigns, including but not limited to the
GasRock Agreements; and

     (i) all liabilities  arising out of, resulting from, or relating in any way
to the  existence  of an  environmental  condition on or relating to one or more
assets or  Properties  or Assumed  Liabilities  conveyed by Seller to  Purchaser
(including, without limitation,  liability for injury to or death of any person,
persons, or other living things, or loss or destruction of or damage to property
occurring  as the result  thereof),  regardless  of whether  such  environmental
condition  is known,  anticipated,  or suspected  as of the  possession  time of
Purchaser for the relevant asset or Property or Assumed Liability, to the extent

<PAGE>

that: (a) such  environmental  condition,  or the acts,  omissions,  events,  or
conditions  giving rise thereto,  arose,  existed,  or occurred,  in whole or in
part,  prior to such  possession  time;  or (b) Seller  receives  notice of such
environmental  condition from Purchaser or otherwise within 15 months after such
possession time.lasvegas8k20100303ex10-7.htm

 

February 28, 2011

 

Las Vegas Railway Express, Inc.

6650 Via Austi Parkway, Suite 170

Las Vegas, NV 89119

	
Attn:

	
Mr. Michael A. Barron,

	  	
Mr. Joseph Cosio-Barron

	  	
Board of Directors

Dear Mike and Joe,

On August 1, 2010 I accepted the responsibilities of our company’s Chief Financial Officer with specific direction to lead our efforts in establishing our strategic financial plans, including our Pre-Opening and Operating plans for the establishment of our X Train and to establish internal operating controls and procedures which needed to be updated and documented for our company. Further, I accepted the position with the agreed upon knowledge that once these specific tasks were accomplished and once it was determined that our vision was to enter into the actual development stage of our plan, I would transition to the position of Executive Vice President and Chief Operating Officer. I wrote to you on December 15, 2010 that I would resign as the Chief Financial Officer on January 1, 2011 to become the Executive Vice President and Chief Operating Officer. Since my letter dated December 15, 2010 some challenges we all felt were completed have surfaced that need my assistance and as such, I will continue my responsibilities as Chief Financial Officer until these items are complete or until such time a replacement is appointed. This event has happened as we have brought on Greg West as our Chief Financial Officer on February 28, 2011 allowing me to move forward as the Executive Vice President and Chief Operating Officer.

Most sincerely yours,

/s/ John M. Zilliken

John M. Zilliken

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