Document:

toot_ex101.htm

 

EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is made as of December 1, 2010, by and between Tootie Pie Company, Inc., a Nevada corporation (the “Company”), and Don L. Merrill, Jr., an individual residing in Texas (“Employee”).

W I T N E S S E T H:

WHEREAS, Employee is currently employed as Chief Executive Officer of the Company;

WHEREAS, the Company wishes to ensure that it will continue to have the benefits of Employee’s services on the terms and conditions hereinafter set forth; and

WHEREAS, Employee desires to work for the Company on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:

1.             Employment; Term.  The Company hereby employs Employee, and Employee hereby accepts employment with the Company, in accordance with and subject to the terms and conditions set forth herein.  The term of employment shall commence upon the Effective Date and shall continue for a period of five (5) years through November 30, 2015 (the “Term”), unless earlier terminated in accordance with Section 5 hereof.

2.             Employment.

(a)           The Company hereby agrees to employ Employee as Chief Executive Officer for the Term.  Employee agrees to serve in such capacity and shall have primary responsibility for the operation of the business of the Company and such other duties, responsibilities and authority, commensurate with such position as shall be assigned to him by the Board of Directors (the “Board”).

(b)           Employee shall devote Employee’s full business time and attention to Employee’s duties on the Company’s behalf.

3.             Compensation.

(a)           The Company shall pay Employee a base salary of One Hundred Five Thousand Dollars ($105,000) per annum (the “Base Salary”), payable in accordance with the Company’s then existing payroll practices and subject to all legally required or customary withholdings and other applicable taxes.  Executive shall be considered for an annual increase in Base Salary upon meeting performance standards reasonably established by the Board or otherwise based on performance as reasonably determined by the Board.

 

  

  

  

(b)           Employee will receive a cash bonus of $25,000 or 95,500 shares of stock at Employee’s option to recognize Employee’s performance during the fiscal year ended March 31, 2011.  Such bonus will be paid no later than December 31, 2010.

(c)           In consideration of Employee’s agreements hereunder, and as further performance incentive, the Company will issue to Employee two hundred eighty-six thousand (286,000) shares of common stock (the “Restricted Shares”) together with two hundred eighty-six thousand (286,000) warrants (the “Restricted Warrants”) providing Employee the right and priviledge to purchase a similar number of shares of common stock at a purchase price of $0.55 per share (the closing price as of November 11, 2010).  Said restricted common shares and restricted warrants shall be issued to Employee on January 15, 2011, subject to Employee’s execution hereof and pursuant to the Company’s Employee Stock Plan approved by the Board at a special meeting of Board of Directors on November 11, 2010.  Said restricted shares and warrants will have a five-year vesting schedule such that Employee can sell no more than one fifth of the restricted shares nor purchase more than one fifth of the restricted warrants per year, assuming compliance with all State and Federal laws regarding sales of restricted securities.  As further illustration, Employee shall vest in one fifth (57,200) of said restricted shares and warrants as of April 1, 2011 followed by a similar amount each subsequent April 1st until April 1, 2015 so long as Employee remains employed by the Company in accordance with and subject to the terms and conditions set forth herein.

(d)           Employee may also be eligible to receive in addition to the compensation outlined above an annual bonus award (“Annual Bonus”) based on the achievement of certain goals as established from time to time by the Board or Committee of the Board

4.             Benefits.

 

               (a)          The Company agrees to reimburse Employee for all reasonable out-of-pocket business expenses incurred by Employee in the normal course of business in connection with the performance of Employee’s duties under this Agreement in accordance with the Company’s policy as it may be amended from time to time.  The Company shall make such reimbursements within a reasonable amount of time after submission by Employee of vouchers, receipts, credit card bills or other documentation in accordance with the Company’s then applicable policies and procedures.  In addition, the Company shall pay Employee’s monthly business-related cellular telephone bill.

(b)           Employee shall be entitled to participate in any and all medical insurance, group health care programs, disability insurance, pension and other benefit plans which are made generally available by the Company to other similarly situated senior level employees of the Company performing similar functions as Employee.  The Company, in its sole discretion, may at any time amend or terminate its benefit plans or programs.

(c)           Employee shall receive an automobile allowance of up to five hundred fifty dollars ($550) per month.

 

 

  

  

  

(d)           Employee shall be entitled to three weeks paid vacation per annum.

        

(e)           Employee shall be entitled to such other benefits as are generally available to other similarly situated senior level employees of the Company performing similar functions as Employee.

5.             Termination.  Employee’s employment hereunder may be terminated under the following circumstances:

(a)           Death.  Employee’s employment hereunder shall terminate immediately upon Employee’s death.

(b)           Disability.  The Company may terminate Employee’s employment hereunder at any time after Employee becomes “Disabled.”  For purposes of this Agreement, Employee shall be “Disabled” upon Employee’s inability to perform the essential functions of the duties and responsibilities contemplated under this Agreement as determined in the reasonable judgment of a physician licensed in the State of Texas, selected by the Company.  Such termination shall become effective five business days after the Company gives written notice of such termination to Employee or to his legal representative, in accordance with Section 9 hereof.

(c)           Termination by the Company without Cause.  The Company may terminate Employee’s employment hereunder without Cause (as hereinafter defined) at any time after providing written notice to Employee.

(d)           Termination by the Company for Cause.  The Company may terminate Employee’s employment hereunder for Cause at any time after providing written notice to Employee, which notice shall provide in reasonable detail the reason(s) for such termination.  For purposes of this Agreement, “Cause” shall mean any of the following: (i) Employee’s willful or intentional failure or refusal to perform or observe any of Employee’s significant duties, responsibilities or obligations set forth in, or as contemplated under, this Agreement where such failure or refusal shall not have ceased or been remedied within thirty days following written warning from the Company, provided that such obligation to provide written warning and the related right to cure shall not apply to (x) such matters as are not curable, or (y) repeated violations of this clause (i); (ii) acts or omissions by Employee involving Employee’s gross negligence related to the discharge of Employee’s duties; (iii) any act or failure to act by Employee constituting fraud or involving a knowing, willful or intentional misrepresentation, theft, embezzlement, dishonesty or moral turpitude (collectively, “Fraud”); (iv) conviction of (or a plea of nolo contendere to) an offense which is a felony in the jurisdiction involved or which is a misdemeanor in the jurisdiction involved but which involves Fraud; (v) any willful or intentional act or omission by Employee which is intended to or which materially injures the reputation, business or business relationships of the Company, or Employee’s reputation or business relationships; (vi) alcoholism, drug abuse or other substance abuse having a material adverse effect on the performance of Employee’s duties hereunder; or (vii) Employee’s willful or intentional failure or refusal to comply with any reasonable and lawful request or direction of the Company not contrary to the provisions of this Agreement, where such failure or refusal shall not have ceased or been remedied within thirty days following written warning from the Company, provided that such obligation to provide written warning and the related right to cure shall not apply to (x) such matters as are not curable, or (y) repeated violations of this clause (vii).

  

  

  

 

(e)           Termination by Employee.  Employee may terminate Employee’s employment hereunder at any time, after providing thirty days-prior written notice to the Company.

6.             Compensation Following Termination Prior to the End of the Term.  In the event that Employee’s employment hereunder is terminated prior to the end of the Term, Employee shall be entitled only to the following compensation and benefits upon such termination:

(a)           Termination by Reason of Death or Disability.  In the event that Employee’s employment is terminated by reason of Employee’s death or Disability, respectively, the Company shall pay the following amounts to Employee (or Employee’s spouse or estate, as applicable):

(i)           Any accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof) for services rendered to the date of termination.

(ii)           In the event of Disability, an additional six months of Base Salary.  Additionally, in the event of Disability, Employee will remain covered on the Company’s health and dental insurance for up to eighteen months insurance on the same terms as when Employee was employed by the Company.

(iii)           Any accrued but unpaid expenses required to be reimbursed pursuant to Section 4(a) hereof.

(iv)           A pro rata share, based on the portion of the fiscal year in which Employee was employed at the time of his death or Disability, of the Annual Bonus to which Employee would have been entitled had Employee remained employed by the Company through the end of the then current fiscal year (as determined pursuant to Section 3(b) hereof).  Such amount shall be paid as soon as reasonably practicable following the calculation thereof at the end of such fiscal year.

Except as otherwise specifically provided herein, in the event Employee’s employment is terminated pursuant to this Section 6(a), the benefits to which Employee may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Section 4(b) hereof shall be determined and paid in accordance with the terms of such plans, programs and arrangements.

(b)           Termination by the Company for Cause or by Employee  In the event that Employee’s employment hereunder is terminated by the Company for Cause or by Employee, the Company shall pay the following amounts to Employee:

  

  

  

(i)           Any accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof) for services rendered to the date of termination.

(ii)           Any accrued but unpaid expenses required to be reimbursed pursuant to Section 4(a) hereof.

And the Employee shall return to the Company within 10 days of said termination, stocks shares and warrants previously awarded to Employee pursuant to Paragraph 3(c) above for which Employee has not yet been vested pursuant to the schedule outlined in Paragraph 3(c).

(c)           Termination by the Company Without Cause

(A)           In the event that Employee’s employment hereunder is terminated by the Company without cause, the Company shall pay the following amounts to Employee:

(i)           Any accrued but unpaid Base Salary (as determined pursuant to Section 3(a) hereof) for services rendered to the date of termination.

(ii)          Any accrued but unpaid expenses required to be reimbursed pursuant to Section 4(a) hereof.

(iii)         Base Salary for a period of six months from the date of termination payable in a lump sum at the time of termination.

(iv)        Access to benefits and insurance for a period of twelve months from the date of termination on the same terms as when Employee was employed including Company contributions. (Assuming the Company offers a plan at the time).

 

(v)        Within ten business days following termination, the Employee will provide a statement to the Company indicating how many shares of common stock he holds.  Within two weeks following the receipt of such statement, the Company may repurchase any shares of common stock of the Company held by Employee at purchase price equal to 125% of the closing price on the date of termination.   However, the Company shall not repurchase any common stock such that, along with any benefits listed in this Section 6(c), will require the Company to exceed the 2.99 limit in IRS Tax Sections 280G and 4999.

(B)           Except as otherwise specifically provided herein, in the event Employee’s employment is terminated pursuant to this Section 6(c), the benefits to which Employee may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Section 4(b) hereof shall be determined and paid in accordance with the terms of such plans, programs and arrangements.

  

  

  

(d)           General.  In the event that Employee’s employment is terminated for any reason, Employee shall cease to be an employee of the Company for all purposes, and, except as may be provided under this Agreement or under the terms of any incentive compensation, employee benefit or fringe benefit plan applicable to Employee at the time of Employee’s termination prior to the end of the Term, shall have no right to receive any other compensation, employee benefits or perquisites, or to participate in any other plan, arrangement or benefit, with respect to any future period after such termination.  In the event that Employee’s employment is terminated for any reason, the Company’s payment of salary and other amounts specifically provided for in the applicable previous paragraph of this Section 6 shall constitute complete satisfaction of all payment obligations of the Company to Employee pursuant to this Agreement, and Employee’s rights set out in this Section 6 shall constitute Employee’s sole and exclusive rights and remedies as a result of any actual or constructive termination of his employment hereunder.

7.             Non-Competition and Non-Solicitation; Non-Disclosure of Proprietary Information; Surrender of Records; Company Property.

(a)           General. Employee agrees to restrict Employee’s actions as provided for in this Section 7.  Employee understands that the provisions of this Section 7 may limit Employee’s ability to earn a livelihood in a business similar to the business of the Company but nevertheless agrees and hereby acknowledges that the consideration provided under this Agreement, including any amounts provided under Section 3 hereof, are sufficient to justify the restrictions contained in such provisions.  In consideration thereof, and in light of Employee’s education, skills and abilities, Employee agrees that Employee will not assert in any forum that the provisions of this Section 7 prevent Employee from earning a living or otherwise are void or unenforceable or should be held void or unenforceable.

(b)           Non-Competition.  Employee acknowledges and recognizes the highly competitive nature of the Company’s business and that Employee’s position with the Company and access to the Company’s confidential records and proprietary information renders Employee special and unique.  In consideration of payments made and to be made by the Company to Employee pursuant to this Agreement (including, without limitation, pursuant to Section 3 hereof), Employee agrees that (A) during the Term  or (B) in the event Employee’s employment is terminated prior to the end of the Term, until three years from the termination of this Agreement, Employee will not, directly or indirectly, in the United States or any other place in which the Company then does business, engage in, or be affiliated in any manner with any individual, partnership, venture, unincorporated association, organization, syndicate, corporation, limited liability company, or other entity, trust and trustee, executor, administrator or other legal or personal representative, or any government or agency or political subdivision thereof (any of the foregoing, a “Person”) engaged in, the business of manufacturing, marketing, distributing and/or selling (A) pies or other pre-made high-end desserts; (B) any other product categories the Company is actively manufacturing, marketing, distributing and/or selling as of the date of termination or expiration of this Agreement; or (C) any other product categories manufactured, marketed, distributed and/or sold by the Company during the Term.

  

  

  

(c)           Non-Solicitation.  In further consideration of the payments made and to be made by the Company to Employee pursuant to this Agreement (including, without limitation, pursuant to Section 3 hereof), Employee agrees that (A) during the Term  or (B) in the event Employee’s employment is terminated prior to the end of the Term, until three years from the termination of this Agreement, Employee shall not, directly or indirectly, on his own behalf or on behalf of any Person, (A) advise or encourage any employee, agent, consultant, representative, customer, licensor, vendor or supplier of the Company to terminate his, her or its relationship with the Company, or (B) solicit or attempt to solicit or participate in the solicitation of or employ or otherwise engage any employee, agent, consultant or representative of the Company, or otherwise encourage any such person to become an employee, agent, representative or consultant of or to any other Person.

(d)           Proprietary Information.  Employee acknowledges that during the course of Employee’s employment with the Company Employee will necessarily have access to and make use of proprietary information and confidential records of the Company.  Employee covenants that Employee shall not, during the Term or any time thereafter (irrespective of the circumstances under which Employee’s employment with the Company terminates), directly or indirectly, use for Employee’s own purpose or for the benefit of any person or entity other than the Company, nor otherwise disclose, any proprietary information of which Employee has knowledge to any person or entity, unless such disclosure has been authorized in writing by the Company or is otherwise required by law.  Employee acknowledges and understands that the term “proprietary information” includes, but is not limited to, patents, copyrights and trade secrets, including, without limitation: (i) the proprietary software products, programs, applications and processes utilized by or on behalf of the Company to the extent such information is unique to the Company or is not known to others outside the Company; (ii) the name and/or address of any customer, licensor or vendor of the Company, to the extent confidential, or any proprietary information concerning the transactions or relations of any customer of the Company with the Company or any of its principals, directors, employees or agents; (iii) any proprietary information concerning any product, technology or procedure employed by or on behalf of the Company but not generally known to its customers or competitors, or under development by or being tested by or on behalf of the Company but not at the time offered generally to customers; (iv) any information which is generally regarded and treated as confidential or proprietary in any line of business engaged in by or on behalf of the Company; (v) information belonging to customers or affiliates of the Company or any other individual or entity which the Company has agreed to hold in confidence (provided that Employee has knowledge of the Company’s duty to hold such third-party information in confidence); and (vi) all written, graphic or other material relating to or containing any of the foregoing.  The term “proprietary information” shall not include information generally available to or known by the public or in the industry, or information that is or becomes available to Employee on a non-confidential basis from a source other than the Company or the Company’s stockholders, principals, directors, officers, employees or agents (other than as a breach of any obligation of confidentiality).

  

  

  

(e)           Confidentiality and Surrender of Records.  Employee shall not, during the Term or any time thereafter (irrespective of the circumstances under which Employee’s employment with the Company terminates), except as required by law or as is necessary for the performance of Employee’s duties hereunder, directly or indirectly, publish, make known or in any fashion disclose any confidential records to, or permit any inspection or copying of confidential records by, any Person, and Employee shall not retain, and shall deliver promptly to the Company, any of the same following termination of Employee’s employment for any reason or upon request by the Company.  The term “confidential records” means all correspondence, memoranda, files, manuals, books, designs, sketches, lists, financial, operating or marketing records, magnetic tape, or electronic or other media or equipment for records of any kind which may be in Employee’s possession or under Employee’s control or accessible to Employee which may contain any proprietary information.  All confidential records shall be and remain the sole property of the Company during the Term and thereafter.

(f)           Disclosure Required by Law.  In the event Employee is required by law or court order to disclose any proprietary information or confidential records of the Company, Employee shall provide the Company with prompt written notice so that the Company may seek a protective order or other appropriate remedy, and if such protective order or other remedy is not obtained, Employee shall furnish only that portion of the proprietary information that is legally required as determined by counsel to the Company.

(g)           No Other Obligations.  Employee represents and warrants to the Company that Employee is not precluded or limited in Employee’s ability to undertake or perform the duties described herein by any contract, agreement, or restrictive covenant.  Employee covenants that Employee shall not employ the trade secrets or proprietary information of any other Person in connection with Employee’s employment by the Company.

(h)            Company Property.  All rights (if any) in reports, materials, inventions, processes, discoveries, improvements, modifications, know-how or trade secrets conceived, developed or otherwise made by Employee during the Term, alone or with others, and in any way relating to the present or future products or business of the Company (collectively, the “Developments”), shall be the sole property of the Company.  Employee agrees to, and hereby does, assign to the Company for no consideration all of Employee’s right, title and interest in and to all Developments.  Employee agrees that all such Developments that are copyrightable shall constitute works made for hire under the copyright laws of the United States and Employee hereby assigns to the Company all copyrights and other proprietary rights Employee may have in any such Developments to the extent that they might not be considered works made for hire.  Employee shall make and maintain adequate and current written records of all Developments, and shall disclose all Developments fully and in writing to the Company promptly after development of the same, and at any time upon request.

8.             No Third Party Rights.  The parties do not intend the benefits of this Agreement to inure to any person or entity not a party to this Agreement (other than to the spouse or estate of Employee in the case of death or Disability of Employee, in which case such spouse or estate shall be entitled to only those rights set forth in Section 6(a) hereof).  Notwithstanding anything contained in this Agreement, this Agreement shall not be construed as creating any right, claim or cause of action against any party by any person or entity not a party to this Agreement (other than the spouse or estate of Employee in the case of the death or Disability of Employee, in which case such spouse or estate shall be entitled to only those rights set forth in Section 6(a) hereof).

  

  

  

9.             Notices.  Unless otherwise provided herein, any notice required or permitted under this Agreement shall be given in writing and shall be deemed to have been duly given upon personal delivery to the party to be notified or three (3) days after being mailed by United States certified or registered mail, postage prepaid, return receipt requested or one (1) day after being sent by Federal Express or other recognized overnight delivery to such address as each may specify by notice to the other.

10.           Assignability; Binding Effect.  This Agreement is a personal contract calling for the provision of unique services by Employee, and Employee’s obligations hereunder may not be sold, transferred, assigned, pledged or hypothecated.  In the event of any attempted assignment or transfer of obligations hereunder by Employee contrary to the provisions hereof, the Company will have no further liability for payments hereunder.  The rights and obligations of the Company hereunder will be binding upon and inure to the benefit of the successors and assigns of the Company.

11.           Entire Agreement; Amendment; Waiver.  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.  This Agreement shall not be modified or amended except by a written instrument duly executed by each of the parties hereto.  Any waiver of any term or provision of this Agreement shall be in writing signed by the party charged with giving such waiver.  Waiver by either party hereto of any breach hereunder by the other party shall not operate as a waiver of any other breach, whether similar to or different from the breach waived.  No delay on the part of the Company or Employee in the exercise of any of their respective rights or remedies shall operate as a waiver thereof, and no single or partial exercise by the Company or Employee of any such right or remedy shall preclude other or further exercise thereof.

12.           Severability.  If any term or provision of this Agreement shall be held to be invalid or unenforceable for any reason, such term or provision shall be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining terms and provisions hereof, and this Agreement shall be construed as if such invalid or unenforceable term or provision had not been contained herein.

13.           Survivability.  The provisions of this Agreement, which by their terms call for performance subsequent to termination of Employee’s employment hereunder, or of this Agreement, shall survive such termination.

 

14.           Counterparts and Headings.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all which together shall constitute one and the same instrument.  Facsimile signatures shall be given the same legal effect as original signatures.  All headings are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

15.           Governing Law. This Agreement shall be construed in accordance with the internal laws of the State of Texas, without regard to principles of conflicts of laws.

 

 

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

	 	
TOOTIE PIE COMPANY, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Dan Gostylo	 
	 	 	Name: Dan Gostylo	 
	 	 	Title: Director	 
	 	 	 	 

	 	
EMPLOYEE

	 
	 	 	 	 
	
 

	 	/s/ Don L. Merrill, Jr.	 
	 	 	
DON L. MERRILL, JRExhibit 10.1

 ______________________________________________________________________________

                                CREDIT AGREEMENT

                                     AMONG

                              CEP-M PURCHASE, LLC

                        AMEGY BANK NATIONAL ASSOCIATION,
                            AS ADMINISTRATIVE AGENT
                          AND LETTER OF CREDIT ISSUER

                                      AND

                          THE LENDERS SIGNATORY HERETO

                               NOVEMBER 19, 2010

 ______________________________________________________________________________

             REVOLVING LINE OF CREDIT AND LETTER OF CREDIT FACILITY
                              OF UP TO $75,000,000
 ______________________________________________________________________________

<PAGE>
                               TABLE OF CONTENTS

                                                                        Page

ARTICLE I DEFINITIONS AND INTERPRETATION                                   1

1.1     Terms Defined Above                                                1
1.2     Additional Defined Terms                                           1
1.3     Undefined Financial Accounting Terms                              16
1.4     References                                                        16
1.5     Articles and Sections                                             17
1.6     Number and Gender                                                 17
1.7     Incorporation of Schedules and Exhibits                           17
1.8     Negotiated Transaction                                            17

ARTICLE II TERMS OF FACILITY                                              17

2.1     Revolving Line of Credit and Letter of Credit Facility            17
2.2     Limitations on Interest Periods                                   21
2.3     Limitation on Types of Loans                                      21
2.4     Use of Loan Proceeds and Letters of Credit                        21
2.5     Interest                                                          22
2.6     Repayment of Loans and Interest                                   22
2.7     Outstanding Amounts                                               23
2.8     Taxes and Time, Place, and Method of Payments                     23
2.10    Borrowing Base and Monthly Reduction Amount.                      27
2.11    Mandatory Prepayments                                             28
2.12    Voluntary Prepayments and Conversions of Loans                    28
2.13    Commitment Fees                                                   29
2.14    Engineering Fees and Expenses                                     29
2.15    Additional Fees                                                   29
2.16    Loans to Satisfy Obligations                                      30
2.17    General Provisions Relating to Interest                           30
2.18    Yield Protection                                                  31
2.21    Regulatory Change                                                 34
2.22    Letters in Lieu of Transfer Orders or Division Orders             34
2.23    Power of Attorney                                                 34
2.24    Security Interest in Accounts; Right of Offset                    35
2.25    Defaulting Lenders.                                               35

ARTICLE III CONDITIONS                                                    36

3.1     Receipt of Loan Documents and Other Items                         36
3.2     Each Loan                                                         39
3.3     Issuance of Letters of Credit                                     40

ART     ICLE IV REPRESENTATIONS AND WARRANTIES                            41

4.1     Due Authorization                                                 41

<PAGE>
4.2     Existence                                                         41
4.3     Valid and Binding Obligations                                     41
4.4     Security Documents                                                42
4.5     Title to Oil and Gas Properties                                   42
4.6     Scope and Accuracy of Financial Statements                        42
4.7     No Material Adverse Effect or Default                             42
4.8     No Material Misstatements                                         42
4.9     Liabilities, Litigation and Restrictions                          42
4.10    Authorizations; Consents                                          42
4.11    Compliance with Laws                                              43
4.12    ERISA                                                             43
4.13    Environmental Laws                                                43
4.14    Compliance with Federal Reserve Regulations                       43
4.15    Investment Company Act                                            43
4.16    Proper Filing of Tax Returns; Payment of Taxes Due                43
4.17    Refunds                                                           44
4.18    Gas Contracts                                                     44
4.19    Intellectual Property                                             44
4.20    Casualties or Taking of Property                                  44
4.21    Principal Location                                                44
4.22    Subsidiaries                                                      44
4.23    Compliance with Anti-Terrorism Laws                               44
4.24    Identification Numbers                                            45
4.25    Solvency                                                          45

ARTICLE V AFFIRMATIVE COVENANTS                                           46

5.1     Maintenance of and Access to Records                              46
5.2     Quarterly Financial Statements and Compliance Certificates        46
5.3     Annual Financial Statements and Compliance Certificate            46
5.4     Oil and Gas Reserve Reports and Production Reports                46
5.5     Title Opinions; Title Defects; Mortgaged Properties               47
5.6     Notices of Certain Events                                         48
5.7     Letters in Lieu of Transfer Orders or Division Orders             48
5.8     Commodity Hedging                                                 48
5.9     Joinder Agreements, Guaranties and Additional Security Documents  49
5.10    Additional Information                                            49
5.11    Compliance with Laws                                              49
5.12    Payment of Assessments and Charges                                49
5.13    Maintenance of Existence or Qualification and Good Standing       49
5.14    Payment of Notes; Performance of Obligations                      50
5.15    Further Assurances                                                50
5.16    Initial Expenses of Agent                                         50
5.17    Subsequent Expenses of Agent and Lenders                          50
5.18    Operation of Oil and Gas Properties                               50
5.19    Maintenance and Inspection of Properties                          51
5.20    Maintenance of Insurance                                          51

<PAGE>
5.21    Environmental Indemnification                                     51
5.22    General Indemnification                                           52
5.23    Evidence of Compliance with Anti-Terrorism Laws                   53
5.24    Operating Accounts                                                53

ARTICLE VI  NEGATIVE COVENANTS                                            53

6.1     Indebtedness                                                      53
6.2     Contingent Obligations                                            53
6.3     Liens                                                             54
6.4     Sales of Assets                                                   54
6.5     Leasebacks                                                        54
6.6     Sale or Discount of Receivables                                   54
6.7     Loans or Advances                                                 54
6.8     Investments                                                       55
6.9     Dividends and Distributions                                       55
6.10    Issuance of Equity; Changes in Structure                          55
6.11    Transactions with Affiliates                                      55
6.12    Lines of Business                                                 56
6.13    Plan Obligation                                                   56
6.14    Current Ratio                                                     56
6.15    Leverage Ratio                                                    56
6.16    Interest Coverage Ratio                                           56
6.17    Anti-Terrorism Laws                                               56

ARTICLE VII EVENTS OF DEFAULT                                             57

7.1     Enumeration of Events of Default                                  57
7.2     Remedies                                                          59

ARTICLE IX MISCELLANEOUS                                                  64

9.1     Assignments; Participations                                       64
9.2     Survival of Representations, Warranties, and Covenants            66
9.3     Notices and Other Communications                                  66
9.4     Parties in Interest                                               67
9.5     Renewals; Extensions                                              67
9.6     Rights of Third Parties                                           67
9.7     No Waiver; Rights Cumulative                                      67
9.8     Survival Upon Unenforceability                                    67
9.9     Amendments; Waivers                                               67
9.10    Controlling Agreement                                             68
9.11    Disposition of Collateral                                         68
9.12    Governing Law                                                     68
9.13    Waiver of Right to Jury Trial                                     68
9.14    Waiver of Class Action                                            68
9.15    Jurisdiction and Venue                                            69

<PAGE>
9.16    Integration                                                       69
9.17    Waiver of Punitive and Consequential Damages                      69
9.18    Counterparts                                                      69
9.19    USA Patriot Act Notice                                            69
9.20    Contribution and Indemnification                                  70
9.21    Tax Shelter Regulations                                           70

LIST  OF  SCHEDULES

Schedule 4.8      -     Liabilities and Litigation
Schedule 4.13     -     Environmental Matters
Schedule 4.17     -     Refunds
Schedule 4.18     -     Gas Contracts
Schedule 4.20     -     Casualties
Schedule 4.22     -     Subsidiaries
Schedule 4.24     -     Taxpayer Identification and Organization Numbers

LIST  OF  EXHIBITS

Exhibit I     -     Form of Note
Exhibit II    -     Form of Borrowing Request
Exhibit III   -     Form of Compliance Certificate
Exhibit IV    -     Facility Amounts
Exhibit V     -     Form of Opinion of Counsel
Exhibit VI    -     Form of Assignment Agreement

<PAGE>
                                CREDIT AGREEMENT

This  CREDIT  AGREEMENT  is  made  and  entered  into  effective the 19th day of
November,  2010,  by and among CEP-M PURCHASE, LLC, a Delaware limited liability
company  (the  "Borrower"),  each lender that is a signatory hereto or becomes a
signatory  hereto  as  provided  in Section 9.1 (individually, together with its
successors  and  assigns,  a  "Lender"  and  collectively,  together  with their
respective  successors  and  assigns,  the  "Lenders"),  and AMEGY BANK NATIONAL
ASSOCIATION,  a  national banking association ("Amegy"), as administrative agent
for  the Lenders, the issuing bank for letters of credit issued hereunder and as
collateral agent for the Lenders and any other Approved Hedge Counterparties (as
defined  hereinafter) under certain circumstances hereunder (in such capacities,
together  with  its  successors in such capacities pursuant to the terms hereof,
the  "Agent").

                              W I T N E S S E T H:

In  consideration  of  the mutual covenants and agreements herein contained, the
parties  hereto  hereby  agree  as  follows:

                                   ARTICLE I
                                   ---------

                         DEFINITIONS AND INTERPRETATION

1.1     Terms  Defined  Above.  As  used  in  this Credit Agreement, each of the
terms "Agent," "Amegy," "Borrower" and "Lenders" shall have the meaning assigned
to  such  term  hereinabove.

1.2     Additional Defined Terms.  As used in this Credit Agreement, each of the
following  terms  shall have the meaning assigned thereto in this Section 1.2 or
in  Sections  referred  to  in  this  Section  1.2, unless the context otherwise
requires:

"Acquisition"  shall  mean  the transaction which is the subject of that certain
Purchase and Sale Agreement dated effective July 1, 2010 between Pennaco Energy,
Inc.,  a  Delaware  corporation,  as  Seller,  and  the  Borrower, as Purchaser.

"Additional Amount" shall have the meaning assigned to such term in Section 2.8.

"Additional  Costs" shall mean costs which are attributable to the obligation of
the  Agent  or  any Lender to make or its making or maintaining any Loan, or any
reduction in any amount receivable by the Agent or such Lender in respect of any
such  obligation  or  any  LIBO  Rate Loan, resulting from any Regulatory Change
which  (a)  changes the basis of taxation of any amounts payable to the Agent or
such  Lender  under  this Agreement or any Note in respect of any LIBO Rate Loan
(other  than taxes imposed on the overall net income of the Agent or such Lender
or  its Applicable Lending Office (including franchise or similar taxes) for any
such  LIBO  Rate  Loan),  (b)  imposes or modifies any reserve, special deposit,
minimum  capital, capital ratio, or similar requirements (other than the Reserve
Requirement  utilized  in  the  determination of the Adjusted LIBO Rate for such
Loan)  relating  to any extensions of credit or other assets of, or any deposits
with  or  other  liabilities  of,  the Agent or such Lender (including LIBO Rate
Loans and Dollar deposits in the London interbank market in connection with LIBO
Rate  Loans),  or  the

<PAGE>
Commitment  of  the Agent or such Lender, or the London interbank market, or (c)
imposes  any other condition affecting this Agreement or any Note or any of such
extensions  of  credit,  liabilities,  or  Commitments.

"Adjusted Base Rate" shall mean, an interest rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Agent to be the greater
of  (a)  the  Base  Rate and (b) the sum of the Federal Funds Rate plus one half
percent  (0.50%).

"Adjusted LIBO Rate" shall mean, for any Interest Period for any LIBO Rate Loan,
an  interest rate per annum (rounded upwards, if necessary, to the nearest 1/100
of  1%) determined by the Agent to be equal to the quotient of (a) the LIBO Rate
for  such  Interest  Period  for  such Loan divided by (b) the remainder of 1.00
minus  the Reserve Requirement for such Loan for such Interest Period, but in no
event  less  than  one  percent  (1.00%).

"Affiliate"  shall  mean,  as  to  any  Person,  any  other  Person  directly or
indirectly, controlling, or under common control with, such Person, and includes
any  "affiliate"  of such Person within the meaning of Rule 12b-2 promulgated by
the  Securities  and Exchange Commission pursuant to the Securities Exchange Act
of  1934,  with  "control,"  as  used  in  this  definition, meaning possession,
directly  or  indirectly,  of  the  power  to  direct  or cause the direction of
management, policies or action through ownership of voting securities, contract,
voting trust, or membership in management or in the group appointing or electing
management  or  otherwise  through  formal  or informal arrangements or business
relationships; provided, however, that in no event shall the Agent or any Lender
be  deemed  an  Affiliate  of  the  Borrower.

"Agreement"  shall  mean  this  Credit  Agreement,  as  it  may  be  amended,
supplemented,  restated  or  otherwise  modified  from  time  to  time.

"Anti-Terrorism  Laws"  shall  mean  any  laws  relating  to  terrorism or money
laundering,  including  Executive  Order  No.  13224  and  the  USA Patriot Act.

"Applicable  Lending  Office"  shall mean, for each Lender and type of Loan, the
lending  office  of  such Lender (or an affiliate of such Lender) designated for
such type of Loan on the signature pages hereof or in an Assignment Agreement or
such other office of such Lender (or an affiliate of such Lender) as such Lender
may  from  time  to  time specify to the Agent and the Borrower as the office by
which  its  Loans  of  such  type  are  to  be  made  and  maintained.

"Applicable  Margin" shall mean on any day and as to each LIBO Rate Loan or Base
Rate  Loan  under the Facility, as the case may be, outstanding on such day, the
amount  determined  by  reference  to  the  following  table:

          Borrowing Base         Applicable Margin
          Utilization      LIBO RateLoans   Base Rate Loans
          ---------------  ---------------  ----------------
           80%                       3.75%             1.25%
          ---------------  ---------------  ----------------
           50%80%                    3.50%             1.00%
          ---------------  ---------------  ----------------
           25%50%                    3.25%             0.75%
          ---------------  ---------------  ----------------
           25%                       3.00%             0.50%
          ---------------  ---------------  ----------------

<PAGE>
provided,  however,  during  any  period  while there exists any Deficiency, the
relevant  amount  above  shall  be  increased  by  two  percent  (2.00%).

"Approved  Fund"  shall  mean  any  (a)  investment  company,  fund,  trust,
securitization  vehicle  or  conduit  that  is  (or  will be) engaged in making,
purchasing,  holding  or  otherwise  investing  in  commercial loans and similar
extensions  of  credit  in the ordinary course of its business or (b) any Person
(other  than a natural person) which temporarily warehouses loans for any Lender
or  any  entity  described in the preceding clause (a) and that, with respect to
each  of  the preceding clauses (a) and (b), is administered or managed by (i) a
Lender,  (ii)  an  Affiliate of a Lender or (iii) a Person (other than a natural
person)  or  an  Affiliate  of  a  Person  (other  than  a  natural person) that
administers  or  manages  a  Lender.

"Approved  Hedge  Counterparty"  shall  mean  any  Lender or an Affiliate of any
Lender.

"Assignment  Agreement"  shall  mean each Assignment Agreement, substantially in
the  form  of  Exhibit  VI,  with  appropriate  insertions.

"Available  Commitment"  shall  mean,  at  any  time,  an  amount  equal  to the
remainder, if any, of (a) the Commitment Amount in effect at such time minus (b)
the  sum  of  the  Loan Balance at such time plus the L/C Exposure at such time.

"Base Rate" shall mean the interest rate announced by Amegy from time to time as
its  prime rate or its general reference rate of interest, which Base Rate shall
change upon any change in such announced or published general reference interest
rate  and  which Base Rate may not be the lowest interest rate charged by Amegy.

"Base  Rate  Loan" shall mean any Loan and any portion of the Loan Balance which
the  Borrower has requested, in the initial Borrowing Request for such Loan or a
subsequent Borrowing Request for such portion of the Loan Balance, bear interest
on the basis of the Adjusted Base Rate, or which pursuant to the terms hereof is
otherwise  required  to  bear  interest  on the basis of the Adjusted Base Rate.

"Benefited  Lender"  shall  have  the  meaning  assigned to such term in Section
2.9(c).
     "Blocked  Person"  shall  have the meaning assigned to such term in Section
4.23(b).

"Borrowing  Base"  shall mean, at any time, the amount stated in Section 2.10(a)
and  each other amount established and in effect from time to time in accordance
with  the  provisions  of  Section  2.10.

"Borrowing Base Utilization" shall mean (a) the sum of (i) the Loan Balance plus
(ii)  the  L/C  Exposure  divided  by  (b) the Commitment Amount then in effect.

"Borrowing  Request"  shall mean each written request, substantially in the form
attached  hereto  as Exhibit II, by the Borrower to the Agent for a borrowing or
conversion  pursuant  to  Section  2.1  or  Section  2.12,  each of which shall:

     (a)  be  signed  by  a  Responsible  Officer  of  the  Borrower;

<PAGE>
     (b)  specify  the  amount and type of the Loan requested or to be converted
and  the  date  of  the borrowing or conversion (which shall be a Business Day);

     (c)  when  requesting  a Base Rate Loan, be delivered to the Agent no later
than  11:00 a.m., Central Standard or Central Daylight Savings Time, as the case
may be, on the Business Day preceding the requested borrowing or conversion; and

     (d)  when  requesting  a LIBO Rate Loan, be delivered to the Agent no later
than  11:00 a.m., Central Standard or Central Daylight Savings Time, as the case
may  be,  the third Business Day preceding the requested borrowing or conversion
and  designate  the  Interest  Period  requested  with  respect  to  such  Loan.

"Business Day" shall mean a day other than a Saturday, Sunday, legal holiday for
commercial  banks  under  the  laws of the State of Texas, or any other day when
banking  is  suspended  in the State of Texas and, with respect to all requests,
notices  and  determinations  in  connection with, and payments of principal and
interest  on,  LIBO  Rate  Loans, which is also a day for trading by and between
banks  in  Dollar  deposits  in  the  London  interbank  market.

"Business  Entity" shall mean a corporation, partnership, joint venture, limited
liability  company,  joint  stock  association, business trust or other business
entity.

"Closing"  shall  mean  the  establishment  of  the  Facility.

"Closing  Date"  shall  mean  the  date  of  this  Agreement.

"Collateral"  shall  mean the Mortgaged Properties and any other Property now or
at  any  time used or intended as security for the payment or performance of all
or any portion of the Obligations, including any Property that was considered in
determining  or  redetermining  the  Borrowing  Base and expressly including "as
extracted  collateral"  as  defined in the UCC or the Uniform Commercial Code of
any  other  applicable  state.

"Commitment  Amount"  shall  mean,  subject to the applicable provisions of this
Agreement  and the right of the Borrower to reduce such amount on an irrevocable
basis  by  written  notice  to  the  Agent  at  any time (provided, however, the
Borrower  shall  not be entitled to any reduction to an amount less than the sum
of  the  then existing Loan Balance and L/C Exposure), the lesser of (a) the sum
of  the  Facility  Amounts of the Lenders or (b) the Borrowing Base in effect at
such  time.

"Commitment  Fees"  shall mean the fees payable to the Agent (for the account of
the  Lenders)  by  the  Borrower  pursuant  to  the  provisions of Section 2.13.

"Commitment  Period"  shall  mean the period from and including the Closing Date
to,  but  not  including,  the  Commitment  Termination  Date.

"Commitments" shall mean the several obligations of the Lenders to make Loans to
or  for the benefit of the Borrower and the obligation of the Agent to issue and
the  Lenders  to  participate  in  Letters  of  Credit  pursuant  to  applicable
provisions  of  this  Agreement.

<PAGE>
"Commitment  Termination  Date" shall mean the earlier of (a) November 19, 2013,
and  (b)  the  date the Commitments are terminated pursuant to the provisions of
Section  7.2.

"Commodity  Hedge  Agreements"  shall  mean  crude  oil,  natural  gas  or other
hydrocarbon  floor,  collar,  cap,  price  protection  or  hedge  agreements.

"Commonly Controlled Entity" shall mean any Person which is under common control
with  the  Borrower  within  the  meaning  of  Section  4001  of  ERISA.

"Compliance  Certificate" shall mean each certificate, substantially in the form
attached  hereto  as  Exhibit  III,  executed  by  a  Responsible Officer of the
Borrower  and  furnished  to  the Agent from time to time in accordance with the
provisions  of  Section  5.2  or  Section  5.3,  as  the  case  may  be.

"Contingent  Obligation"  shall  mean,  as to any Person, any obligation of such
Person  guaranteeing  or  in  effect  guaranteeing  any  Indebtedness,  leases,
dividends,  or  other  obligations  of  any  other  Person (for purposes of this
definition,  a  "primary  obligation")  in  any  manner,  whether  directly  or
indirectly,  including any obligation of such Person, regardless of whether such
obligation is contingent, (a) to purchase any primary obligation or any Property
constituting  direct  or  indirect  security  therefor, (b) to advance or supply
funds  (i)  for  the  purchase  or payment of any primary obligation, or (ii) to
maintain working or equity capital of any other Person in respect of any primary
obligation,  or  otherwise  to  maintain  the net worth or solvency of any other
Person,  (c)  to  purchase  Property,  securities  or services primarily for the
purpose  of  assuring  the owner of any primary obligation of the ability of the
Person  primarily liable for such primary obligation to make payment thereof, or
(d)  otherwise  to  assure  or  hold  harmless  the  owner  of  any such primary
obligation  against  loss  in respect thereof, with the amount of any Contingent
Obligation  being deemed to be equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or, if
not  stated  or  determinable,  the  maximum reasonably anticipated liability in
respect  thereof  as  determined  by  such  Person  in  good  faith.

"Contribution Percentage" shall mean, for each party obligated to make a payment
due  pursuant  to  the  provisions  of  Section 9.20, the percentage obtained by
dividing such party's Obtained Benefit by the aggregate Obtained Benefits of the
Borrower  and  all  of  the  Guarantors.

"Credit  Parties"  shall  mean,  collectively,  the Borrower and the Guarantors.

"Current  Assets" shall mean all assets which would, in accordance with GAAP, be
included  as  current assets on a consolidated balance sheet of the Borrower and
its  consolidated  Subsidiaries  as  of the date of calculation, after deducting
adequate  reserves  in each case in which a reserve is proper in accordance with
GAAP,  plus  the  then  current  Available  Commitment,  but  excluding non-cash
derivative  current  assets arising from Commodity Hedge Agreements and Interest
Rate  Hedge  Agreements.

"Current Liabilities" shall mean all liabilities which would, in accordance with
GAAP,  be included as current liabilities on a consolidated balance sheet of the
Borrower  and its consolidated Subsidiaries, but excluding current maturities in
respect  of  the  Obligations,  both

<PAGE>
principal and interest, and non-cash derivative current liabilities arising from
Commodity  Hedge  Agreements  and  Interest  Rate  Hedge  Agreements.

"Default" shall mean any event or occurrence which with the lapse of time or the
giving  of  notice  or  both  would  become  an  Event  of  Default.

"Default  Rate" shall mean a daily interest rate equal to the per annum interest
rate  equal to the sum of (i) Adjusted Base Rate for each relevant day plus (ii)
the  Applicable  Margin plus (iii) two percent (2%) converted to a daily rate on
the  basis  of  a  year  of 365 or 366 days, as the case may be, and the rate so
determined  for  each  relevant  day  being  applied on the basis of actual days
elapsed  (including the first day, but excluding the last day) during the period
for  which  interest  is  payable at the Default Rate, but in no event shall the
Default  Rate  exceed  the  Highest  Lawful  Rate.

"Defaulting  Lender" means any Lender that (a) has failed to fund any portion of
any  Loan  required  to be funded by it hereunder within one Business Day of the
date  required  to be funded by it hereunder unless such failure has been cured,
(b) has otherwise failed to pay over to the Agent or any Lender any other amount
required  to  be  paid  by it hereunder within one Business Day of the date when
due,  unless the subject of a good faith dispute or unless such failure has been
cured  or  (c)  has  been  deemed, or whose parent or Affiliate has been deemed,
insolvent  or  become  the  subject  of  a  bankruptcy or insolvency proceeding.

"Deficiency"  shall  have  the  meaning  assigned  to such term in Section 2.11.

"Dollars"  and "$" shall mean dollars in lawful currency of the United States of
America.

"Domestic  Subsidiary"  shall  mean any Subsidiary of the Borrower or any of the
Guarantors  that  is organized under the laws of the United States of America or
any  state  thereof  or  the  District  of  Columbia.

"EBITDA"  shall  mean,  for  any  period  for  which the amount thereof is to be
determined  for  the Borrower, in each case on a consolidated basis for Borrower
and its consolidated Subsidiaries, Net Income for such period (but excluding (i)
unrealized  gains  or losses or charges in respect of Commodity Hedge Agreements
(including  those  under GAAP arising from the application of FAS 133), (ii) and
extraordinary  or  non-recurring  income  items  and,  to  the extent reasonably
acceptable  to  the  Agent,  expense  items  and  (iii) deferred financing costs
written off, including equity discounts and premiums paid in connection with any
early extinguishment of Indebtedness permitted pursuant to this Agreement, plus,
in  each case to the extent deducted in the determination of Net Income for such
period  and  without  duplication of any item in more than one category, each of
the  following  for  such  period:  (a)  Interest  Expense,  (b)  Taxes,  (c)
depreciation  and  amortization  expenses  and  (d)  other  non-cash  expenses,
including  write-downs  of  non-current  assets  and  unrealized non-cash losses
resulting  from  foreign currency balance sheet adjustments required under GAAP,
and  minus,  to  the extent credited in the determination of Net Income for such
period,  non-cash  credits  for  such  period.

"Environmental  Complaint"  shall  mean  any  written  or oral complaint, order,
directive,  claim, citation, notice of environmental report or investigation, or
other  notice  by any Governmental Authority or any other Person with respect to
(a)  air  emissions,  (b)  spills,  releases,

<PAGE>
or  discharges  to  soils,  any  improvements  located  thereon,  surface water,
groundwater, or the sewer, septic, waste treatment, storage, or disposal systems
servicing  any Property of the Borrower, (c) solid or liquid waste disposal, (d)
the  use,  generation,  storage,  transportation,  or  disposal of any Hazardous
Substance,  or  (e)  other environmental, health or safety matters affecting any
Property  of  the  Borrower  or  the  business  conducted  thereon.

"Environmental  Laws"  shall  mean (a) the following federal laws as they may be
cited,  referenced, and amended from time to time:  the Clean Air Act, the Clean
Water  Act,  the  Safe  Drinking  Water  Act,  the  Comprehensive  Environmental
Response,  Compensation  and  Liability  Act,  the  Endangered  Species Act, the
Resource  Conservation  and Recovery Act, the Hazardous Materials Transportation
Act, the Occupational Safety and Health Act, the Oil Pollution Act, the Resource
Conservation and Recovery Act, the Superfund Amendments and Reauthorization Act,
and  the  Toxic Substances Control Act; (b) any and all equivalent environmental
statutes of any state in which Property of the Borrower is situated, as they may
be cited, referenced and amended from time to time; (c) any rules or regulations
promulgated  under  or adopted pursuant to the above federal and state laws; and
(d)  any  other  equivalent federal, state, or local statute or any requirement,
rule,  regulation, code, ordinance, or order adopted pursuant thereto, including
those relating to the generation, transportation, treatment, storage, recycling,
disposal,  handling,  or  release  of  Hazardous  Substances.

"ERISA"  shall mean the Employee Retirement Income Security Act of 1974, and the
regulations  thereunder  and  interpretations  thereof.

"Event  of  Default"  shall  mean  any  of  the events specified in Section 7.1.

"Excess  Payments" shall have the meaning assigned to such term in Section 9.20.

"Excluded  Taxes" shall mean, with respect to any and all payments to the Agent,
any  Lender or any other recipient of any payment to be made by or on account of
any  Obligation,  net  income  taxes, branch profits taxes, franchise and excise
taxes  (to  the  extent  imposed in lieu of net income taxes), and all interest,
penalties  and  liabilities  with  respect  thereto, imposed on the Agent or any
Lender.

"Executive  Order  No.  13224" shall mean Executive Order No. 13224 on Terrorist
Financing,  effective  September  24,  2001,  as  the  same  has  been, or shall
hereafter  be,  renewed,  extended,  amended  or  replaced.

"Facility"  shall  mean the credit facility extended to the Borrower pursuant to
this  Agreement.

"Facility  Amount"  shall  mean,  for  each Lender and at any point in time, the
amount  set  forth  opposite  the  name  of  such Lender on Exhibit IV under the
caption "Facility Amounts," as modified from time to time to reflect assignments
permitted  by  Section  9.1  or  otherwise  pursuant  to  the  terms  hereof.

"Federal  Funds  Rate"  shall  mean,  for  any  day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve  System  arranged  by  federal

<PAGE>
funds  brokers  on such day, as published by the Federal Reserve Bank of Dallas,
Texas,  on  the  Business Day next succeeding such day, provided that (a) if the
day  for  which such rate is to be determined is not a Business Day, the Federal
Funds  Rate  for  such  day  shall be such rate on such transactions on the next
preceding  Business Day as so published on the next succeeding Business Day, and
(b)  if  such  rate  is not so published for any day, the Federal Funds Rate for
such  day  shall  be  the  average  rate  charged  to  Amegy on such day on such
transactions  as  determined  by  the  Agent.

"Financial  Statements"  shall  mean  consolidated  financial  statements of the
Borrower  and  its consolidated Subsidiaries as at the point in time and for the
period  indicated,  including  all  notes  thereto, and consisting of at least a
balance  sheet  and  related  statements of operations, member's equity and cash
flows  and,  when  required  by  applicable  provisions  of this Agreement to be
audited, accompanied by the unqualified certification of a nationally-recognized
or  regionally-recognized  firm  of  independent certified public accountants or
other  independent  certified  public  accountants  acceptable  to the Agent and
footnotes  to  any  of  the foregoing, all of which, unless otherwise indicated,
shall  be  prepared  in  accordance  with  GAAP  consistently  applied  and  in
comparative  form  with  respect  to  the  corresponding period of the preceding
fiscal  year.

"Foreign  Lender"  shall  have the meaning assigned to such term in Section 2.8.
     "GAAP"  shall  mean generally accepted accounting principles established by
the  Financial Accounting Standards Board or the American Institute of Certified
Public  Accountants  and  in  effect  in  the  United  States from time to time.

"Governmental  Authority"  shall  mean  any  nation,  country,  commonwealth,
territory,  government,  state, county, parish, municipality, or other political
subdivision  and  any  entity  exercising  executive,  legislative,  judicial,
regulatory,  or  administrative  functions  of  or  pertaining  to  government.

"Guaranties"  shall  mean,  collectively,  those certain agreements, each styled
"Guaranty",  entered  into  after  the  Closing  Date  by  newly formed Domestic
Subsidiaries  of the Borrower or any of the Guarantors in favor of the Agent for
the  benefit of the Lenders in form and substance reasonably satisfactory to the
Agent.

"Guarantors" shall mean any and all future Domestic Subsidiaries of the Borrower
or  any  of the Guarantors existing as of the Closing Date or formed thereafter.

"Hazardous Substances" shall mean flammables, explosives, radioactive materials,
hazardous wastes, asbestos, or any material containing asbestos, polychlorinated
biphenyls  (PCBs),  toxic  substances or related materials, petroleum, petroleum
products, associated oil or natural gas exploration, production, and development
wastes,  or  any  substances  defined  as  "hazardous  substances,"  "hazardous
materials,"  "hazardous  wastes,"  or "toxic substances" under the Comprehensive
Environmental Response, Compensation and Liability Act, the Superfund Amendments
and  Reauthorization  Act,  the  Hazardous  Materials  Transportation  Act,  the
Resource Conservation and Recovery Act, the Toxic Substances Control Act, or any
other  Requirement  of  Law.

<PAGE>
"Highest  Lawful  Rate"  shall  mean, as to any Lender, the maximum non-usurious
interest  rate,  if any (or, if the context so requires, an amount calculated at
such  rate), that at any time or from time to time may be contracted for, taken,
reserved,  charged,  or  received  under laws applicable to such Lender, as such
laws  are  presently  in  effect or, to the extent allowed by applicable law, as
such  laws  may  hereafter  be  in  effect  and  which  allow  a  higher maximum
non-usurious  interest  rate  than  such  laws  now  allow.

"Indebtedness"  shall  mean,  as  to  any  Person,  without duplication, (a) all
liabilities  (excluding  capital,  surplus,  reserves for deferred income taxes,
deferred  compensation  liabilities,  other deferred liabilities and credits and
asset retirement obligations) which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet,
(b)  all  obligations  of such Person evidenced by bonds, debentures, promissory
notes,  or similar evidences of indebtedness, (c) all other indebtedness of such
Person  for borrowed money, and (d) all obligations of others, to the extent any
such  obligation  is  secured by a Lien on the assets of such Person (whether or
not  such Person has assumed or become liable for the obligation secured by such
Lien),  (e) all direct or contingent obligations of such Person under letters of
credit,  banker's acceptances, surety bonds, and similar instruments and (f) net
obligations of such Person under any Commodity Hedge Agreements or Interest Rate
Hedge  Agreements.

"Indemnified  Taxes"  shall  mean  Taxes  other  than  Excluded  Taxes.

"Indemnitee"  shall  have  the  meaning  assigned  to such term in Section 5.21.

"Insolvency  Proceeding" shall mean application (whether voluntary or instituted
by another Person) for or the consent to the appointment of a receiver, trustee,
conservator,  custodian,  or liquidator of any Person or of all or a substantial
part  of  the  Property  of  such  Person,  or the filing of a petition (whether
voluntary  or  instituted by another Person) commencing a case under Title 11 of
the United States Code, seeking liquidation, reorganization, or rearrangement or
taking  advantage  of  any  bankruptcy,  insolvency,  debtor's  relief, or other
similar law of the United States, the State of Texas, or any other jurisdiction.

"Intellectual  Property"  shall  mean  patents, patent applications, trademarks,
tradenames,  copyrights,  technology,  know-how,  and  processes.

"Interest Expense" shall mean, for any period for which the amount thereof is to
be  determined,  any  and  all  expenses  relating to the accrual of interest on
Indebtedness  of  the  Borrower  and  its  consolidated  Subsidiaries, including
interest  expense  attributable  to  capitalized  leases.

"Interest  Period"  shall  mean, subject to the limitations set forth in Section
2.2,  with  respect  to any LIBO Rate Loan, a period commencing on the date such
Loan is made or converted from a Loan of another type pursuant to this Agreement
or  the last day of the next preceding Interest Period with respect to such Loan
and  ending  on  the numerically corresponding day in the calendar month that is
one,  two,  three  or,  if available, six months thereafter, as the Borrower may
request  in  the  Borrowing  Request  for  such  Loan.

<PAGE>
"Interest  Rate  Hedge  Agreements" shall mean interest rate floor, collar, cap,
rate  protection  or  hedge  agreements.

"Investment"  in  any Person shall mean any stock, bond, note, or other evidence
of  Indebtedness,  or  any other security (other than current trade and customer
accounts)  of,  investment  or  partnership interest in or loan to, such Person.

"Joinder  Agreement" shall mean each agreement, in form and substance reasonably
acceptable to the Agent, pursuant to which a Domestic Subsidiary of the Borrower
or  any  of  the  Guarantors makes certain representations and warranties to the
Agent  and  the Lenders and agrees to be bound by the covenants in Article V and
Article  VI  as  if  such were stated to be applicable to it and which agreement
shall  constitute  a  Loan  Document.

"L/C  Exposure"  shall  mean,  at  any  time,  the then aggregate maximum amount
available  to  be  drawn  under outstanding Letters of Credit plus, prior to the
making  of  any  related Letter of Credit Payments in respect of such Letters of
Credit, the aggregate of all unpaid reimbursement obligations in respect of such
Letters  of  Credit.

"L/C  Sublimit"  shall  mean  $500,000.

"Lender  Default"  shall have the meaning assigned to such term in Section 2.25.

"Letter  of  Credit"  shall  mean  any  standby  letter of credit issued for the
account  of  the  Borrower  pursuant  to  Section  2.1(d).

"Letter  of  Credit  Application"  shall  mean  the  standard  letter  of credit
application employed by Amegy, as the issuer of the Letters of Credit, from time
to  time  in  connection  with  its  issuance  of  letters  of  credit.

"Letter of Credit Payment" shall mean any payment made by Amegy on behalf of the
Lenders  under  a Letter of Credit, to the extent that such payment has not been
repaid  by  the  Borrower.

"LIBO  Rate"  shall  mean, with respect to any Interest Period for any LIBO Rate
Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%)  that  appears  on  Reuters Reference LIBOR01 (or any successor thereto) for
Interest  Periods  of  one  month,  two  months,  three  months  or  six months,
respectively  (or  if  such  shall  not  be  available, any successor or similar
service  selected by the Agent and the Borrower) as of approximately 11:00 a.m.,
Central  Standard  or  Central Daylight Savings Time, as the case may be, on the
day  two Business Days prior to the first day of such Interest Period for Dollar
deposits  in an amount comparable to the principal amount of such LIBO Rate Loan
and having a term comparable to the Interest Period for such LIBO Rate Loan.  If
neither  Reuters  nor  any  successor  or similar service is available, the term
"LIBO  Rate"  shall  mean, with respect to any Interest Period for any LIBO Rate
Loan,  the  rate per annum (rounded upwards if necessary, to the nearest 1/16 of
1%)  quoted  by  the  Agent at approximately 11:00 a.m., London time (or as soon
thereafter  as  practicable)  two  Business  Days  prior to the first day of the
Interest  Period  for  such  LIBO Rate Loan for the offering to Amegy by leading
banks  in  the  London  interbank  market  of  Dollar  deposits  in  an

<PAGE>
amount  comparable  to  the principal amount of such LIBO Rate Loan and having a
term  comparable  to  the  Interest  Period  for  such  LIBO  Rate  Loan.

"LIBO  Rate  Loan" shall mean any Loan and any portion of the Loan Balance which
the  Borrower has requested, in the initial Borrowing Request for such Loan or a
subsequent Borrowing Request for such portion of the Loan Balance, bear interest
on  the  basis  of  the  Adjusted LIBO Rate and which are permitted by the terms
hereof  to  bear  interest  on  the  basis  of  the  Adjusted  LIBO  Rate.

"Lien"  shall mean any interest in Property securing an obligation owed to, or a
claim  by, a Person other than the owner of such Property, whether such interest
is based on common law, statute, or contract, and including, but not limited to,
the  lien  or  security  interest  arising  from  a  mortgage,  ship  mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt, or a
lease, consignment, or bailment for security purposes (other than true leases or
true  consignments),  liens  of  mechanics,  materialmen, and artisans, maritime
liens  and  reservations,  exceptions,  encroachments, easements, rights of way,
covenants,  conditions,  restrictions,  leases,  and  other title exceptions and
encumbrances  affecting  Property which secure an obligation owed to, or a claim
by,  a  Person  other  than  the owner of such Property (for the purpose of this
Agreement, the Borrower shall be deemed to be the owner of any Property which it
has  acquired or holds subject to a conditional sale agreement, financing lease,
or  other  arrangement pursuant to which title to the Property has been retained
by  or  vested  in  some  other  Person  for  security  purposes).

"Limitation Period" shall mean, with respect to any Lender, any period while any
amount  remains  owing  on  the Note payable to such Lender and interest on such
amount,  calculated at the applicable interest rate, plus any fees or other sums
payable  to  such Lender under any Loan Document and deemed to be interest under
applicable  law,  would  exceed the amount of interest which would accrue at the
Highest  Lawful  Rate.

"Loan"  shall  mean  any  loan  made  by any Lender to or for the benefit of the
Borrower  pursuant to this Agreement and any payment made by Amegy, on behalf of
any  Lender,  under  a  Letter  of  Credit.

"Loan  Balance"  shall  mean,  at  any  point in time, the aggregate outstanding
principal  balance  of  the  Notes  at  such  time.

"Loan  Documents"  shall  mean  this  Agreement, the Notes, the Letter of Credit
Applications,  the  Letters  of  Credit,  the  Security  Documents,  any Joinder
Agreements,  any  Guaranties  and  all  other  documents  and instruments now or
hereafter  delivered  pursuant  to  the  terms  of  or  in  connection with this
Agreement,  the  Notes, the Letter of Credit Applications, the Letters of Credit
or  the  Security  Documents, and all renewals and extensions of, amendments and
supplements  to,  and  restatements of, any or all of the foregoing from time to
time  in  effect.

"Material  Adverse Effect" shall mean (a) any material and adverse effect on the
business,  operations, assets, properties, liabilities (actual or contingent) or
financial  condition  of  the  Borrower  on  a  consolidated  basis  with  its
consolidated  Subsidiaries,  (b)  any  material  and  adverse  effect  upon  the
Collateral,  including  any  material  and  adverse  effect  upon  the  value or

<PAGE>
impairment  of  the  Borrower's  ownership  of  the Collateral, (c) any material
adverse effect on the validity or enforceability of any Loan Document or (d) any
material  adverse  effect on the rights or remedies of the Agent, the Lenders or
any  other  Secured  Party  under  any  Loan  Document.

"Monthly  Reduction  Amount"  shall  mean, at any time, the amount determined as
such  by  the  Agent  (with  the  approval  of  the  Lenders  as required by the
provisions  of Section 9.9) and then in effect in accordance with the provisions
of  Section  2.10.

"Mortgaged  Properties"  shall  mean  all Oil and Gas Properties of the Borrower
subject  to a perfected first priority Lien (subject only to Permitted Liens) in
favor  of  the  Agent,  as  security  for  the  Obligations.

"Net Income" shall mean, for any relevant period, the net income of the Borrower
and  its  consolidated Subsidiaries during such period, determined in accordance
with  GAAP.

"Non-Defaulting  Lender" shall have the meaning assigned to such term in Section
2.25.

"Notes"  shall  mean,  collectively,  the  promissory notes of the Borrower each
payable  to  a  Lender  in  the  face amount of up to the Facility Amount of the
relevant  Lender and in the form attached hereto as Exhibit I with all blanks in
such  form  completed  appropriately, together with all renewals, extensions for
any  period,  increases  and  rearrangements  thereof.

"Notice  of Termination" shall have the meaning assigned to such term in Section
2.20.
     "Obligations"  shall  mean,  without duplication of the same amount in more
than  one category, (a) all Indebtedness of the Borrower evidenced by the Notes,
(b)  the obligation of the Borrower to provide to or reimburse the Agent, as the
issuer  of  the Letters of Credit, as the case may be, for amounts payable, paid
or incurred with respect to Letters of Credit, (c) the undrawn, unexpired amount
of all outstanding Letters of Credit, (d) the obligation of the Borrower for the
payment  of  Commitment  Fees  and other fees pursuant to the provisions of this
Agreement  and  (e) all other obligations and liabilities of the Borrower to the
Agent  or the Lenders, now existing or hereafter incurred, under, arising out of
or  in  connection  with  any  Loan  Document, and to the extent that any of the
foregoing  includes  or  refers to the payment of amounts deemed or constituting
interest,  only  so  much  thereof  as shall have accrued, been earned and which
remains  unpaid  at  each  relevant  time  of  determination.

"Obtained  Benefit" shall mean the aggregate amount of benefits, both direct and
indirect,  obtained by any of the Borrower and the Guarantors from the extension
of credit to the Borrower under this Agreement and not repaid by the Borrower or
any  of  the  Guarantors.

"OFAC"  shall  mean  the  Office  of Foreign Assets Control of the United States
Department  of  the  Treasury  or  any  successor  Governmental  Authority.

"Oil  and  Gas  Properties"  shall mean fee, leasehold, or other interests in or
under  mineral  estates  or  oil,  gas,  and other liquid or gaseous hydrocarbon
leases,  including undivided interests in any such property rights owned jointly
with  others,  with  respect  to  Properties  situated  in  the United States or
offshore  from  any State of the United States, including overriding royalty and

<PAGE>
royalty interests, leasehold estate interests, net profits interests, production
payment  interests,  and mineral fee interests, together with contracts executed
in  connection  therewith  and  all tenements, hereditaments, appurtenances, and
Properties  appertaining,  belonging,  affixed,  or  incidental  thereto.

"Other  Taxes"  shall  mean  any  and all present or future stamp or documentary
taxes  or  any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement  of,  or  otherwise  with  respect  to,  any  Loan  Document.

"Parent"  means  Current  Energy  Partners  Corporation, a Delaware corporation.

"Percentage  Share"  shall  mean,  as  to each Lender, the percentage which such
Lender's  Facility  Amount constitutes of the sum of the Facility Amounts of all
Lenders.

"Permitted  Liens"  shall  mean  (a)  Liens  for  taxes,  assessments,  or other
governmental  charges or levies not yet due or which (if foreclosure, distraint,
sale,  or  other  similar  proceedings  shall not have been initiated) are being
contested  in  good faith by appropriate proceedings, and such reserve as may be
required  by  GAAP  shall  have been made therefor, (b) Liens in connection with
workers'  compensation,  unemployment  insurance or other social security (other
than  Liens  created  by  Section  4068  of  ERISA),  old-age  pension, employee
benefits,  or  public  liability  obligations which are not yet due or which are
being contested in good faith by appropriate proceedings, if such reserve as may
be  required  by  GAAP  shall  have  been  made  therefor, (c) Liens in favor of
vendors,  carriers,  warehousemen,  repairmen,  mechanics, workmen, materialmen,
constructors,  laborers,  landlords or similar Liens arising by operation of law
in  the  ordinary  course of business in respect of obligations that are not yet
due  or  which  are being contested in good faith by appropriate proceedings, if
such reserve as may be required by GAAP shall have been made therefor, (d) Liens
in  favor  of  operators  and  non-operators under joint operating agreements or
similar  contractual arrangements arising in the ordinary course of the business
of  the  Borrower  to secure amounts owing, which amounts are not yet due or are
being contested in good faith by appropriate proceedings, if such reserve as may
be  required  by  GAAP shall have been made therefor, (e) Liens under production
sales  agreements,  division  orders, operating agreements, and other agreements
customary  in  the  oil  and gas business for processing, producing, and selling
hydrocarbons  securing  obligations  not  constituting Indebtedness and provided
that such Liens do not secure obligations to deliver hydrocarbons at some future
date  without  receiving  full  payment therefor within 90 days of delivery, (f)
covenants,  liens,  rights,  easements,  rights  of way, restrictions, and other
similar  encumbrances  ,  and  minor  defects  in  the  chain of title which are
customarily  accepted  in  the  oil  and  gas  financing industry, none of which
interfere  with  the  ordinary  conduct  of  the  business  of  the  Borrower or
materially  detract  from  the value or use of the Property to which they apply,
(g)  Liens  securing  the  purchase  price  of  Property, including vehicles and
equipment,  acquired  by  the  Borrower  in  the  ordinary  course  of  business
(including  Liens existing under conditional sale or title retention contracts),
provided  that  such  Liens  cover  only the acquired Property and the aggregate
unpaid  purchase price secured by such Liens does not exceed $100,000, (h) Liens
securing  leases  of  equipment,  provided that, as to any particular lease, the
Lien  covers  only  the relevant leased equipment and secures only amounts which
are  not  yet due and payable under the relevant lease or are being contested in
good  faith  by  appropriate  proceedings and such reserve as may be required by

<PAGE>
GAAP  shall  have  been  made therefor, (i) Liens in favor or for the benefit of
providers  of such Commodity Hedge Agreements and Interest Rate Hedge Agreements
approved  by  the  Agent  securing  Indebtedness  of  the Borrower in respect of
Commodity Hedge Agreements and Interest Rate Hedge Agreements permitted pursuant
to  the  provisions  of  Section 6.1, (j) rights of offset or statutory banker's
Liens  arising  in the ordinary course of business in favor of commercial banks,
provided  that,  any  such  Lien  shall  only extend to deposits and property in
possession  of  such  commercial  bank  and  its  Affiliates, (k) Liens securing
judgments  permitted  under  Section  7.1(i), (l) good-faith pledges or deposits
made  in  the ordinary course of business to secure (i) the performance of bids,
tenders,  trade  contracts  (other  than for the repayment of borrowed money) or
leases,  (ii) statutory obligations, or (iii) surety or appeal bonds, indemnity,
performance,  or  other similar bonds, which, in the aggregate under this clause
(l),  do not exceed $500,000 and (m) Liens in favor of the Agent and other Liens
expressly  permitted  hereunder  or  in  the  Security  Documents.

"Person"  shall  mean  an  individual,  Business  Entity,  trust, unincorporated
organization,  Governmental  Authority  or  any  other  form  of  entity.

"Plan"  shall  mean,  at any time, any employee benefit plan which is covered by
Title  IV  of  ERISA  and  in  respect  of  which  the  Borrower or any Commonly
Controlled  Entity  of  any  is  (or, if such plan were terminated at such time,
would  under  Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section  3(5)  of  ERISA.

"Principal  Office" shall mean the office of the Agent in Houston, Texas located
at  4400  Post Oak Parkway, 4th Floor, Houston, Texas 77027 or such other office
as  the  Agent  may designate in writing to the Borrower and/or the Lenders from
time  to  time.

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

"Regulation  D" shall mean Regulation D of the Board of Governors of the Federal
Reserve  System  (or  any  successor).

"Regulatory  Change"  shall  mean,  with  respect  to  any  Lender, the passage,
adoption,  institution,  or  amendment  of any federal, state, local, or foreign
Requirement  of  Law (including Regulation D), or any interpretation, directive,
or  request  (whether  or  not  having  the  force  of  law) of any Governmental
Authority or monetary authority charged with the enforcement, interpretation, or
administration thereof, occurring after the Closing Date and applying to a class
of  lenders  including  such  Lender  or  its  lending  office.

"Release  of  Hazardous  Substances"  shall  mean  any emission, spill, release,
disposal,  or  discharge,  except  in  accordance  with a valid permit, license,
certificate,  or  approval  of  the  relevant  Governmental  Authority,  of  any
Hazardous  Substance  into  or  upon  (a) the air, (b) soils or any improvements
located  thereon,  (c)  surface water or groundwater, or (d) the sewer or septic
system,  or  the  waste  treatment,  storage,  or  disposal system servicing any
Property  of  the  Borrower.

"Replacement  Lenders"  shall  have the meaning assigned to such term in Section
2.20.

<PAGE>
"Required  Lenders"  shall  mean, at any time when no Loans or Letters of Credit
are outstanding, Lenders holding in the aggregate Percentage Shares greater than
sixty-six  and two-thirds percent (66-2/3%) of the Commitment Amount, and at any
time  when  any Loans or Letters of Credit are outstanding, Lenders which in the
aggregate  hold  more than sixty-six and two-thirds percent (66-2/3%) of the sum
of  the Loan Balance (without regard to any sale of a participation in any Loan)
and  the  L/C  Exposure;  provided that, the portion of the Commitment Amount or
Loan  Balance held or deemed held by any Defaulting Lender shall be excluded for
purposes  of  making  a  determination  of  Required  Lenders.

"Required  Payment" shall have the meaning assigned to such term in Section 2.7.

"Requirement  of  Law" shall mean, as to any Person, the certificate or articles
of  incorporation  and  by-laws, the certificate or articles of organization and
regulations,  operating  agreement  or  limited liability company agreement, the
agreement  of  limited  partnership,  the  partnership  agreement,  or  other
organizational  or  governing  documents of such Person, and any applicable law,
treaty,  ordinance,  order, judgment, rule, decree, regulation, or determination
of  an  arbitrator,  court,  or  other  Governmental Authority, including rules,
regulations,  orders,  and  requirements  for  permits, licenses, registrations,
approvals, or authorizations, in each case as such now exist or may be hereafter
amended and are applicable to or binding upon such Person or any of its Property
or  to  which  such  Person  or  any  of  its  Property  is  subject.

"Reserve  Report"  shall mean each report delivered to the Agent pursuant to the
provisions  of  Section  5.4.

"Reserve  Requirement"  shall  mean,  for  any Interest Period for any LIBO Rate
Loan,  the  average  maximum  rate  at  which  reserves (including any marginal,
supplemental,  or  emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in  Dallas,  Texas,  with  deposits  exceeding  one  billion  Dollars  against
"Eurocurrency  liabilities" (as such term is used in Regulation D) and any other
reserves  required  by  reason of any Regulatory Change to be maintained by such
member  banks against (a) any category of liabilities which includes deposits by
reference  to  which the LIBO Rate is to be determined as provided herein in the
definition  of  the term "LIBO Rate" or (b) any category of extensions of credit
or  other  assets  which  include  a  LIBO  Rate  Loan.

"Responsible  Officer" shall mean, as to any Business Entity, its President, any
Vice  President  or  any  other  Person  duly  authorized in accordance with the
applicable  organizational  documents, bylaws, regulations or resolutions to act
on  behalf  of  such  Business  Entity.

"Secured  Creditors"  shall  mean  the  Lenders,  any  other  Approved  Hedge
Counterparties  and  any  Secured  Third  Party  Hedge  Counterparties.

"Secured  Third  Party  Hedge  Counterparty"  shall mean any counterparty of the
Borrower to a Commodity Hedge Agreement or Interest Rate Hedge Agreement that is
party  to  an  intercreditor  agreement  with  the  Agent, in form and substance
satisfactory  to  the  Agent  and  such  counterparty.

"Security Documents" shall mean the security documents executed and delivered in
satisfaction  of  the  condition  set  forth  in  Section  3.1(f)  and all other
documents  and  instruments  at

<PAGE>
any time executed as security for all or any portion of the Obligations, as such
instruments  may  be amended, supplemented, restated, or otherwise modified from
time  to  time.

"Subsidiary"  shall  mean, as to any Person, any Business Entity of which shares
of  stock  or  other  equity  interests having ordinary voting power (other than
stock  or  other  equity  interests  having  such  power  only  by reason of the
happening  of  a  contingency)  to elect a majority of the board of directors or
other  governing  body or other managers of such Business Entity are at the time
owned,  or  the  management  of  which  is  otherwise  controlled,  directly  or
indirectly  through  one  or  more  intermediaries,  or  both,  by  such Person.

"Subsidiary  Guarantors"  shall mean, collectively, the Domestic Subsidiaries of
the  Borrower  or  any  of  the  Guarantors.

"Superfund  Site"  shall mean those sites listed on the Environmental Protection
Agency National Priority List and eligible for remedial action or any comparable
state  registry  or  list  in  any  state  of  the  United  States.

"Taxes" shall mean any and all present or future taxes, levies, imposts, duties,
fees, deductions, charges or withholdings imposed by any Governmental Authority.

"Terminated  Lender"  shall  have  the  meaning assigned to such term in Section
2.20.

"Termination Date" shall have the meaning assigned to such term in Section 2.20.

"Transferee"  shall  mean  any  Person  to  which any Lender has sold, assigned,
transferred, or granted a participation in any of the Obligations, as authorized
pursuant  to  the  provisions  of  Section  9.1,  and  any  Person acquiring, by
purchase,  assignment,  transfer,  or  participation,  from  any such purchaser,
assignee,  transferee,  or  participant,  any  part  of  such  Obligations.

"UCC"  shall  mean the Uniform Commercial Code as from time to time in effect in
the  State  of  Texas.

"USA  Patriot Act" shall mean the Uniting and Strengthening America by Providing
Appropriate Tools required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L.  No.  107-56,  115 Stat. 272 (2001), as the same has been, or shall hereafter
be,  renewed,  extended,  amended  or  replaced.

1.3     Undefined  Financial  Accounting Terms.  Financial accounting terms used
in  this  Agreement  without  definition  are  used  herein  with the respective
meanings  assigned  thereto  in  accordance  with  GAAP  at  the time in effect.

1.4     References.  References  in this Agreement to Schedule, Exhibit, Article
or Section numbers shall be to Schedules, Exhibits, Articles or Sections of this
Agreement,  unless  expressly  stated  to  the  contrary.  References  in  this
Agreement  to  "hereby,"  "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof,"  "hereunder" and words of similar import shall be to this Agreement in
its  entirety  and  not  only  to  the particular Schedule, Exhibit, Article, or
Section  in which such reference appears.  Specific enumeration herein shall not
exclude  the  general  and, in such regard, the terms "includes" and "including"
used  herein  shall  mean

<PAGE>
"includes,  without limitation," or "including, without limitation," as the case
may  be,  where  appropriate.  Except as otherwise indicated, references in this
Agreement to statutes, sections, or regulations are to be construed as including
all  statutory  or  regulatory  provisions  consolidating,  amending, replacing,
succeeding,  or  supplementing  the statute, section, or regulation referred to.
References in this Agreement to "writing" include printing, typing, lithography,
facsimile  reproduction,  and  other  means  of  reproducing words in a tangible
visible  form.  References in this Agreement to agreements and other contractual
instruments  shall  be  deemed  to  include all exhibits and appendices attached
thereto  and  all  subsequent  amendments  and  other  modifications  to  such
instruments,  but only to the extent such amendments and other modifications are
not  prohibited by the terms of this Agreement.  References in this Agreement to
Persons  include  their  respective  successors  and  permitted  assigns.

1.5     Articles  and  Sections.  This Agreement, for convenience only, has been
divided  into  Articles  and  Sections; and it is understood that the rights and
other  legal  relations  of  the  parties  hereto  shall be determined from this
instrument  as  an  entirety  and  without regard to the aforesaid division into
Articles  and  Sections and without regard to headings prefixed to such Articles
or  Sections.

1.6     Number and Gender.  Whenever the context requires, reference herein made
to  the  single  number shall be understood to include the plural; and likewise,
the  plural  shall  be understood to include the singular.  Definitions of terms
defined  in  the singular or plural shall be equally applicable to the plural or
singular,  as  the  case may be, unless otherwise indicated.  Words denoting sex
shall  be  construed  to  include  the masculine, feminine and neuter, when such
construction  is  appropriate;  and  specific  enumeration shall not exclude the
general  but  shall  be  construed  as  cumulative.

1.7     Incorporation  of  Schedules  and  Exhibits.  The Schedules and Exhibits
attached  to  this  Agreement  are incorporated herein and shall be considered a
part  of  this  Agreement  for  all  purposes.

1.8     Negotiated  Transaction.  Each  party  to  this Agreement affirms to the
others that it has had the opportunity to consult, and discuss the provisions of
this  Agreement with, independent counsel and fully understands the legal effect
of  each  provision.

                                   ARTICLE II

                               TERMS OF FACILITY

2.1     Revolving  Line  of  Credit  and  Letter of Credit Facility.    Upon the
terms  and conditions (including the right of the Lenders to decline to make any
Loan,  other  than  a  Letter of Credit Payment, so long as any condition to the
making of such Loan set forth in Section 3.2 has not been satisfied) and relying
on  the  representations and warranties contained in this Agreement, each Lender
severally  agrees  to  make  Loans  during  the  Commitment Period to or for the
benefit  of  the  Borrower  in  an aggregate outstanding principal amount not to
exceed  at any time the Percentage Share of such Lender of the Commitment Amount
then in effect (but such product not to exceed, at any time, the Facility Amount
of  the  relevant  Lender  then  in  effect),

<PAGE>
minus  the  Percentage  Share  of such Lender of the then existing L/C Exposure.
Loans  shall  be  made  from  time  to  time on any Business Day designated in a
Borrowing  Request.

(b)     Subject  to  the  provisions  of  this  Agreement, during the Commitment
Period,  the  Borrower  may borrow, repay, and reborrow and convert Loans of one
type  or with one Interest Period into Loans of another type or with a different
Interest  Period.  Each  borrowing  or  conversion of principal of (i) Base Rate
Loans  shall  be in an amount at least equal to $100,000 and a whole multiple of
$10,000  and  (ii)  LIBO  Rate  Loans  shall  be  in an amount at least equal to
$100,000  and  a  whole  multiple  of  $10,000  and, if any LIBO Rate Loan would
otherwise  be  in a lesser principal amount for any period, such Loan shall be a
Base  Rate Loan during such period.  Except for prepayments made pursuant to the
provisions  of  Section 2.11, each prepayment of principal shall be in an amount
at  least  equal  to  $100,000 and a whole multiple of $10,000.  Each borrowing,
prepayment,  or conversion of or into a Loan of a different type or, in the case
of  a  LIBO  Rate  Loan,  having  a different Interest Period, shall be deemed a
separate  borrowing,  conversion,  and prepayment for purposes of the foregoing,
one  for  each  type  of  Loan  or  Interest  Period.

(c)     The Agent shall notify each Lender of its receipt of a Borrowing Request
as  soon  as practicable following its receipt thereof, including in such notice
the  amount  of  the requested Loan and the requested date for the making of the
requested Loan.  Not later than 11:00 a.m., Central Standard or Central Daylight
Savings Time, as the case may be, on the date specified for each borrowing, each
Lender shall make available to the Agent, at an account designated by the Agent,
an  amount  equal  to the Percentage Share of such Lender of the borrowing to be
made  on  such  date.  The amount so received by the Agent shall, subject to the
terms  and  conditions  hereof, be made available to the Borrower in immediately
available  funds  at  the  Principal  Office.  All Loans by each Lender shall be
maintained  at  the  Applicable  Lending  Office  of  such  Lender  and shall be
evidenced  by  the  Note  of such Lender.  The failure of any Lender to make any
Loan  required  to be made by it hereunder shall not relieve any other Lender of
its  obligation  to make any Loan required to be made by it, and no Lender shall
be  responsible  for  the  failure  of  any  other  Lender  to  make  any  Loan.

(d)     Upon  the  terms  and  conditions  (including  the right of the Agent to
decline  to  issue,  renew  or  extend  any such Letter of Credit so long as any
condition  to  the  issuance,  renewal or extension of such Letter of Credit set
forth  in Section 3.3 has not been satisfied) and relying on the representations
and  warranties  contained in this Agreement, the Agent, as issuing bank for the
Lenders, agrees, from the date of this Agreement until the date which is 30 days
prior  to the Commitment Termination Date, to issue, on behalf of the Lenders in
their  respective  Percentage  Shares,  Letters of Credit for the account of the
Borrower and to renew and extend such Letters of Credit.  Such Letters of Credit
shall  be  issued,  renewed  or  extended  from time to time on any Business Day
designated  by  the  Borrower following the receipt in accordance with the terms
hereof  by  the  Agent  of  the written (or oral, confirmed promptly in writing)
request by a Responsible Officer of the Borrower therefor and a Letter of Credit
Application.  Letters  of Credit shall be issued in such amounts as the Borrower
may  request;  provided,  however,  that  (i)  no Letter of Credit shall have an
expiration  date  which is less than 30 days prior to the Commitment Termination
Date, (ii) the Loan Balance plus the L/C Exposure, including that under any then
requested  Letter of Credit, shall not exceed at any time the Commitment Amount,
(iii)  the  L/C  Exposure,  including  that  under  any then requested Letter of
Credit,  shall  not  exceed

<PAGE>
at  any time the L/C Sublimit and (iv) no Letter of Credit shall be issued in an
amount  less  than  $20,000.

(e)     In  connection  with  the issuance, renewal or extension by the Agent of
any  Letter  of Credit pursuant to Section 2.1(d), the Borrower shall pay to the
Agent, for the account of the Lenders, a letter of credit fee in an amount equal
to the greater of (i) the face amount of such Letter of Credit multiplied by the
then  effective  Applicable  Margin  for  a  LIBO Rate Loan made on such date of
issuance,  renewal or extension, calculated on the basis of a year of 365 or 366
days,  as  the case may be, and actual days elapsed (including the first day but
excluding  the  last day) on the amount of the L/C Exposure under such Letter of
Credit  and for the period for which such Letter of Credit is issued, renewed or
extended  and  remains outstanding, or (ii) $500.  Such fee with respect to each
Letter  of Credit shall be payable on the date of issuance, renewal or extension
of  the  relevant Letter of Credit.  Neither the Agent nor any Lender shall have
any  obligation to refund any portion of any such fee upon early cancellation of
the relevant Letter of Credit.  The Borrower also agrees to pay on demand to the
Agent,  solely  for  its account as issuer of the relevant Letter of Credit, its
customary  letter  of  credit transaction fees and expenses, including amendment
fees,  payable  with  respect  to  each  Letter  of  Credit.

(f)     The  Borrower  agrees  that  neither  the  Agent nor any Lender shall be
responsible  for,  nor shall the Obligations be affected by, among other things,
(i)  the  validity  or  genuineness  of  documents  or  any endorsements thereon
presented  in connection with any Letter of Credit, even if such documents shall
in  fact  prove  to be in any and all respects invalid, fraudulent or forged, so
long  as  the  Agent,  as  the  issuer  of  such Letter of Credit, has no actual
knowledge of any such invalidity, lack of genuineness, fraud or forgery prior to
the  presentment  for  payment  of a corresponding Letter of Credit or any draft
thereunder or (ii) any dispute between or among the Borrower and any beneficiary
of any Letter of Credit or any other Person to which any Letter of Credit may be
transferred, or any claims whatsoever of the Borrower against any beneficiary of
any  Letter of Credit or any such transferee.  The Borrower further acknowledges
and  agrees  that the Agent, as the issuer of Letters of Credit, shall be liable
to the Borrower to the extent, but only to the extent, of any direct, as opposed
to  consequential  or  punitive, damages suffered by the Borrower as a result of
the willful misconduct or gross negligence of the Agent as the issuer of Letters
of  Credit  in  determining whether documents presented under a Letter of Credit
complied  with  the  terms  of  such  Letter of Credit that resulted in either a
wrongful  payment  under such Letter of Credit or a wrongful dishonor of a claim
or  draft  properly  presented  under  such Letter of Credit.  In the absence of
gross  negligence or willful misconduct by the Agent as the issuer of Letters of
Credit,  the  Agent shall not be liable for any error, omission, interruption or
delay  in  transmission,  dispatch or delivery of any message or advice, however
transmitted,  in  connection with any Letter of Credit.  The Agent, the Lenders,
and  the Borrower agree that any action taken or omitted by the Agent, as issuer
of any Letter of Credit, under or in connection with any Letter of Credit or the
related  drafts  or  documents,  if  done  in the absence of gross negligence or
willful  misconduct,  shall  be  binding  as  among the Agent, as issuer of such
Letter  of  Credit or otherwise, the Lenders, and the Borrower shall not put the
Agent,  as issuer of such Letter of Credit or otherwise, or any Lender under any
liability  to  the  Borrower.

(g)     Unless  the Borrower provides to the Agent funds sufficient to allow the
Agent  to pay any drawing by a beneficiary under a Letter of Credit prior to the
Agent  being

<PAGE>
obligated  to pay the relevant drawing under a Letter of Credit, the Agent shall
make a Letter of Credit Payment in payment of such drawing.  Prior to any Letter
of  Credit  Payment  in  respect  of  any Letter of Credit, each Lender shall be
deemed  to  be  a  participant,  through  the Agent with respect to the relevant
Letter  of  Credit, in the obligation of the Agent, as the issuer of such Letter
of  Credit,  in  an  amount  equal to the Percentage Share of such Lender of the
maximum  amount  which  is  or  at  any  time  may  become available to be drawn
thereunder.  Upon delivery by such Lender of funds requested pursuant to Section
2.1(h),  such  Lender  shall  be  treated  as  having  purchased a participating
interest  in an amount equal to such funds delivered by such Lender to the Agent
in  the obligation of the Borrower to reimburse the Agent, as the issuer of such
Letter of Credit, for any amounts payable, paid or incurred by the Agent, as the
issuer  of  such  Letter  of  Credit,  with  respect  to  such Letter of Credit.

(h)     Each  Lender  shall  be  unconditionally and irrevocably liable, without
regard  to  the  occurrence of any Default or Event of Default, to the extent of
the  Percentage  Share  of such Lender at the time of issuance of each Letter of
Credit,  to  reimburse,  on  demand,  the Agent, as the issuer of such Letter of
Credit,  for  the  amount  of each Letter of Credit Payment under such Letter of
Credit.  Each  Letter  of  Credit  Payment  shall be deemed to be a Loan by each
Lender to the extent of funds delivered by such Lender to the Agent with respect
to such Letter of Credit Payment and shall to such extent be deemed a Loan under
and  shall  be  evidenced by the Note of such Lender and shall be payable by the
Borrower  upon  demand  by  the  Agent.

(i)     Each  Lender agrees to indemnify the Agent, as the issuer of each Letter
of Credit, and the officers, directors, employees, agents, attorneys in fact and
Affiliates  of  the  Agent  (to  the  extent  not reimbursed by the Borrower and
without  limiting the obligation of the Borrower to do so), ratably according to
the  Percentage  Share  of such Lender at the time of issuance of such Letter of
Credit,  from  and against any and all liabilities, claims, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of  any  kind whatsoever which may at any time (including any time following the
payment  and  performance  of  all  Obligations  and  the  termination  of  this
Agreement)  be  imposed  on,  incurred  by  or asserted against the Agent as the
issuer  of  such  Letter of Credit or any of its officers, directors, employees,
agents, attorneys in fact or Affiliates in any way relating to or arising out of
this  Agreement  or  such Letter of Credit or any action taken or omitted by the
Agent  as the issuer of such Letter of Credit or any of its officers, directors,
employees,  agents,  attorneys in fact or Affiliates under or in connection with
any  of  the  foregoing, including any liabilities, claims, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
imposed,  incurred  or  asserted  as a result of the negligence, whether sole or
concurrent,  of  the  Agent as the issuer of such Letter of Credit or any of its
officers,  directors,  employees,  agents,  attorneys-in-fact  or  affiliates;
provided  that  no  Lender  (other  than  the Agent as the issuer of a Letter of
Credit)  shall  be  liable  for  the payment of any portion of such liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  or  disbursements  resulting  from  the  gross  negligence  or willful
misconduct  of the Agent as the issuer of a Letter of Credit.  The agreements in

<PAGE>
this Section 2.1(I) shall survive the payment and performance of all Obligations
and  the  termination  of  this  Agreement.

2.2     Limitations  on  Interest Periods.  Each Interest Period selected by the
Borrower  (a)  which  commences on the last Business Day of a calendar month (or
any  day  for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month, (b) which would otherwise end on a day which is not a
Business  Day  shall  end  on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding  Business  Day),  (c)  which  would otherwise end after the Commitment
Termination Date shall end on the Commitment Termination Date and (d) shall have
a  duration  of  not  less  than  one  month  and,  if any Interest Period would
otherwise  be  a  shorter  period,  the  relevant Loan shall be a Base Rate Loan
during  such  period.

2.3     Limitation  on  Types  of  Loans.  Anything  herein  to  the  contrary
notwithstanding,  no more than six separate LIBO Rate Loans shall be outstanding
at any one time, with, for purposes of this Section, all LIBO Rate Loans for the
same  Interest  Period  constituting one LIBO Rate Loan.  Anything herein to the
contrary  notwithstanding,  if, on or prior to the determination of any interest
rate  for  any  LIBO  Rate  Loan  for  any  Interest  Period  therefor:

(a)     the  Agent  determines  (which determination shall be conclusive, absent
manifest  error)  that quotations of interest rates for the deposits referred to
in  the  definition  of "LIBO Rate" in Section 1.2 are not being provided in the
relevant  amounts or for the relevant maturities for purposes of determining the
rate  of  interest  for  such  Loan  as  provided  in  this  Agreement;  or

(b)     the  Agent  determines  (which determination shall be conclusive, absent
manifest  error)  that  the  rates  of interest referred to in the definition of
"LIBO Rate" in Section 1.2 upon the basis of which the rate of interest for such
Loan  for  such  Interest Period is to be determined do not adequately cover the
cost to the Lenders of making or maintaining such Loan for such Interest Period,
then  the  Agent  shall give the Borrower and the Lenders prompt notice thereof;
and  so  long as such condition remains in effect, the Lenders shall be under no
obligation  to make LIBO Rate Loans or to convert Base Rate Loans into LIBO Rate
Loans,  and  the  Borrower  shall,  on the last day of the then current Interest
Period for each outstanding LIBO Rate Loan, either prepay such LIBO Rate Loan or
convert  such  Loan  into a LIBO Rate Loan with amounts and maturities for which
quotations  are  provided,  or  convert  such  Loan  into  a  Base  Rate Loan in
accordance  with  the  provisions  of  Section  2.12.

2.4     Use  of  Loan  Proceeds  and  Letters of Credit.   Proceeds of all Loans
shall  be  used  solely  by  the Borrower (i) to acquire and develop Oil and Gas
Properties,  including  those which are the subject of the Acquisition, (ii) for
the  Borrower's  working  capital  and  general  business  purposes  and capital
expenditures  not  otherwise  prohibited  under  applicable  provisions  of this
Agreement,  (iii)  to  fund  loans  or advances to and Investments in Subsidiary
Guarantors  and  (iv)  to pay fees and expenses incurred in connection with this
Agreement  and  the Acquisition; provided, however, proceeds of Loans may not be
used  to  purchase or carry, directly or indirectly, any margin stock or for any
other  purpose  which  would  constitute  the  Facility  a

<PAGE>
"purpose credit" within the meaning of Regulation U of the Board of Governors of
the  Federal  Reserve  System.

(b)     Letters of Credit shall be issued solely for the account of the Borrower
for  general business purposes of the Borrower and the Subsidiary Guarantors not
otherwise  prohibited  under  applicable provisions of this Agreement; provided,
however, no Letter of Credit may be used in lieu or in support of stay or appeal
bonds  or  obligations in respect of Commodity Hedge Agreements or Interest Rate
Hedge  Agreements.

2.5     Interest.  Subject to applicable provisions of this Agreement (including
those  of  Section  2.17),  (a)  interest on Base Rate Loans shall accrue and be
payable at a daily interest rate based on the per annum rate equal to the sum of
the Adjusted Base Rate for each relevant day plus the Applicable Margin for Base
Rate  Loans on such day, converted to a daily rate on the basis of a year of 365
or  366  days,  as  the  case  may be; provided, however, in no event shall such
applicable  rate exceed the Highest Lawful Rate, with such rate being applied on
the  basis  of  actual  days elapsed (including the first day, but excluding the
last  day) during the period for which interest is payable at the relevant rate,
and  (b)  interest on LIBO Rate Loans shall accrue during each relevant Interest
Period and be payable at a daily interest rate based on the per annum rate equal
to  the Adjusted LIBO Rate on the first day of the relevant Interest Period plus
the  relevant  Applicable Margin for LIBO Rate Loans on such day, converted to a
daily  rate  on  the basis of a year of 360 days; provided, however, in no event
shall  such applicable rate exceed the Highest Lawful Rate, with such rate being
applied  on  the  basis  of  actual  days  elapsed (including the first day, but
excluding  the  last day) during the period for which interest is payable at the
relevant  rate.  Notwithstanding  the  foregoing, interest on past due principal
and,  to  the  extent  permitted  by applicable law, past due interest and fees,
shall  accrue  at the Default Rate and shall be payable upon demand by the Agent
at  any  time  as to all or any portion of such interest.  Interest provided for
herein  shall  be  calculated  on  unpaid sums actually advanced and outstanding
pursuant to the terms of this Agreement and only for the period from the date or
dates  of  such  advances to, but not including, the date or dates of repayment.
In  the  event  that  the  Borrower fails to select the duration of any Interest
Period  for  any LIBO Rate Loan within the time period and otherwise as provided
herein,  such  Loan  (if outstanding as a LIBO Rate Loan) shall be automatically
converted  into  a  Base  Rate Loan on the last day of the then current Interest
Period for such Loan or (if outstanding as a Base Rate Loan) shall remain as, or
(if  not  then  outstanding)  shall  be  made  as,  a  Base  Rate  Loan.

2.6     Repayment  of  Loans  and Interest.  Accrued and unpaid interest on each
outstanding  Base  Rate  Loan shall be due and payable monthly commencing on the
first  day  of  November,  2010 and continuing on the first day of each calendar
month  thereafter  while  any Base Rate Loan remains outstanding, the payment in
each  instance to be the amount of interest which has accrued and remains unpaid
in  respect  of  the  relevant  Loan.  Accrued  and  unpaid  interest  on  each
outstanding  LIBO  Rate  Loan shall be due and payable on the earlier of (a) the
last  day  of the Interest Period for such LIBO Rate Loan or (b) if any Interest
Period  is of a duration longer than three months, on the day of the third month
of  the  relevant Interest Period corresponding to the day preceding the initial
day of such Interest Period and on the last day of the relevant Interest Period,
the  payment in each instance to be the amount of interest which has accrued and
remains unpaid in respect of the relevant Loan.  The Loan Balance, together with
all  accrued  and  unpaid  interest  thereon,  shall  be  due and payable on the
Commitment  Termination

<PAGE>
Date.  At  the  time  of  making  each payment hereunder or under the Notes, the
Borrower  shall  specify  to the Agent the Loans or other amounts payable by the
Borrower  hereunder  to  which  such payment is to be applied.  In the event the
Borrower  fails  to  so  specify,  or if an Event of Default has occurred and is
continuing,  the  Agent may apply such payment as it may elect in its discretion
and  in  accordance  with  the  terms  hereof.

2.7     Outstanding  Amounts.  The  outstanding principal balance of the Note of
each  Lender  reflected  by the notations of such Lender on its records shall be
deemed  rebuttably  presumptive  evidence  of the principal amount owing on such
Note.  The  liability  for  payment  of principal and interest evidenced by each
Note  shall  be  limited  to principal amounts actually advanced and outstanding
pursuant to this Agreement and interest on such amounts calculated in accordance
with  this  Agreement.  Unless the Agent shall have been notified by a Lender or
the Borrower prior to the date on which any of them is scheduled to make payment
to  the  Agent of (in the case of a Lender) the proceeds of a Loan to be made by
such  Lender  hereunder  or (in the case of the Borrower) a payment to the Agent
for  the  account  of  the  Agent  or one or more of the Lenders hereunder (such
payment  being  herein  called  the  "Required  Payment"), which notice shall be
effective  upon receipt, that it does not intend to make the Required Payment to
the  Agent, the Agent may assume that the Required Payment has been made and, in
reliance  upon  such  assumption,  may  (but  shall not be required to) make the
amount thereof available to the intended recipient on such date.  If such Lender
or  the  Borrower, as the case may be, has not in fact made the Required Payment
to the Agent, the recipient of such payment shall, on demand, repay to the Agent
solely  for  its  account  the  amount  so made available together with interest
thereon  in  respect  of  each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount  at  a rate per annum equal to, in the case of a Lender as recipient, the
Federal  Funds  Rate  or, in the case of the Borrower as recipient, the Adjusted
Base  Rate  plus  the  Applicable  Margin.

2.8     Taxes  and  Time, Place, and Method of Payments.   All payments required
pursuant  to  this  Agreement  or  the  Notes  shall  be made without set-off or
counterclaim  in  Dollars  and in immediately available funds free and clear of,
and  without  deduction  for,  any  Indemnified  Taxes or Other Taxes; provided,
however  that  if the Borrower shall be required to deduct any Indemnified Taxes
or  Other  Taxes from such payments, then (i) the sum payable shall be increased
by  the  amount  (the  "Additional  Amount")  necessary so that after making all
required  deductions  (including  deductions  applicable  to  additional  sums
described  in  this  paragraph)  the  Agent  or  any Lender, as the case may be,
receives  an  amount  equal  to  the  sum  it  would  have  received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower  shall  pay  the  full  amount  deducted  to  the relevant Governmental
Authority  in  accordance  with  applicable law.  In addition, to the extent not
paid in accordance with the preceding sentence, the Borrower shall pay any Other
Taxes  to the relevant Governmental Authority in accordance with applicable law.

(b)     THE  BORROWER  shall indemnify the AGENT AND EACH Lender for Indemnified
Taxes  and  Other  Taxes paid by SUCH PERSON, INCLUDING ANY INDEMNIFIED TAXES OR
OTHER  TAXES  ARISING  FROM  THE  NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE
AGENT OR ANY LENDER; provided, however, that the BORROWER shall not be obligated
to make payment to the AGENT OR ANY Lender in respect of penalties, interest and
other  similar  liabilities  attributable  to  such  Indemnified  Taxes  or

<PAGE>
Other  Taxes  if  such  penalties,  interest  or  other  similar liabilities are
attributable to the gross negligence or willful misconduct of the PERSON SEEKING
INDEMNIFICATION.

(c)     If a Lender or the Agent shall become aware that it is entitled to claim
a  refund from a Governmental Authority in respect of Indemnified Taxes or Other
Taxes  paid  by the Borrower pursuant to this Section 2.8, including Indemnified
Taxes  or  Other  Taxes  as to which it has been indemnified by the Borrower, or
with  respect  to which the Borrower has paid Additional Amounts pursuant to the
Loan  Documents,  it  shall  promptly notify the Borrower of the availability of
such  refund  claim  and,  if  the  Lender  or  the  Agent,  as the case may be,
determines in good faith that making a claim for refund will not have an adverse
effect  to its taxes or business operations, shall, within 10 days after receipt
of  a  request  by the Borrower, make a claim to such Governmental Authority for
such refund at the expense of the Borrower.  If a Lender or the Agent receives a
refund  in  respect of any Indemnified Taxes or Other Taxes paid by the Borrower
pursuant  to  the  Loan Documents, it shall within 30 days from the date of such
receipt  pay  over  such  refund  to  the  Borrower  (but  only to the extent of
Indemnified  Taxes or Other Taxes paid pursuant to the Loan Documents, including
indemnity  payments  made or Additional Amounts paid, by the Borrower under this
Section  2.8 with respect to the Indemnified Taxes or Other Taxes giving rise to
such  refund), net of all out of pocket expenses of such Lender or the Agent, as
the  case may be, and without interest (other than interest paid by the relevant
Governmental  Authority  with  respect  to  such  refund).

(d)     If  any  Lender or the Agent is or becomes eligible under any applicable
law,  regulation,  treaty  or  other  rule  to  a reduced rate of taxation, or a
complete  exemption from withholding, with respect to Indemnified Taxes or Other
Taxes  on payments made to it or for its benefit by the Borrower, such Lender or
the  Agent,  as  the  case  may be, shall, upon the request, and at the cost and
expense,  of  the  Borrower,  complete  and  deliver  from  time  to  time  any
certificate,  form  or  other document requested by the Borrower, the completion
and  delivery  of  which  are  a  precondition  to obtaining the benefit of such
reduced  rate  or  exemption,  provided  that  the taking of such action by such
Lender  or  the  Agent,  as  the case may be, would not, in the judgment of such
Lender  or  the  Agent, as the case may be, be disadvantageous or prejudicial to
such  Lender or the Agent, as the case may be, or inconsistent with its internal
policies  or  legal  or regulatory restrictions.  For any period with respect to
which  a Lender or the Agent, as the case may be, has failed to provide any such
certificate,  form  or  other document requested by the Borrower, such Lender or
the  Agent,  as the case may be, shall not be entitled to any payment under this
Section  2.8  in  respect of any Indemnified Taxes or Other Taxes that would not
have  been  imposed  but  for  such  failure.

(e)     Each  Lender  organized  under  the laws of the United States, any State
thereof or the District of Columbia (other than Lenders that are corporations or
otherwise exempt from United States backup withholding Tax) shall (i) deliver to
the  Borrower  and  the Agent, when such Lender first becomes a Lender, upon the
written  request  of  the  Borrower  or the Agent, two original copies of United
States  Internal  Revenue Form W-9 or any successor form, properly completed and
duly  executed by such Lender, certifying that such Lender is exempt from United
States  backup  withholding  Tax  on  payments  of  interest made under the Loan
Documents  and  (ii)  thereafter  at  each time it is so reasonably requested in
writing  by  the

<PAGE>
Borrower  or  the Agent, deliver within a reasonable time two original copies of
an updated United States Internal Revenue Service Form W-9 or any successor form
thereto.

(f)     Each  Lender  that  is  organized under the laws of a jurisdiction other
than the United States, any State thereof or the District of Columbia (each such
Lender,  a  "Foreign Lender") that is entitled to an exemption from or reduction
of  withholding  Tax under the laws of the jurisdiction in which the Borrower is
located,  or  any  treaty to which such jurisdiction is a party, with respect to
payments  under  the Loan Documents shall deliver to the Borrower and the Agent,
such properly completed and duly executed documentation prescribed by applicable
law  or  reasonably  requested  by the Borrower or the Agent as will permit such
payments to be made without withholding or at a reduced rate, unless in the good
faith  opinion of the Foreign Lender such documentation would expose the Foreign
Lender to any material adverse consequence or risk.  Such documentation shall be
delivered  by each Foreign Lender on or before the date it becomes a Lender and,
if  required  by law, on or before the date, if any, such Foreign Lender changes
its  Applicable  Lending  Office  by designating a different lending office with
respect to its Loans.  In addition, each Foreign Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such  Foreign  Lender.  Each  Lender  (and,  in the case of a Foreign Lender its
lending office), represents that on the Closing Date, payments made hereunder by
the  Borrower  or  the Agent to it would not be subject to United States Federal
withholding  tax.

(g)     Notwithstanding  the  provisions  of  subsections (a) and (b) above, the
Borrower  shall  not  be  required to indemnify any Foreign Lender or to pay any
Additional  Amounts  to  any Foreign Lender, in respect of United States federal
withholding Tax pursuant to subsections (a) or (b) above, (i) to the extent that
the  obligation  to  withhold  amounts  with  respect  to  United States federal
withholding  tax  existed  on the date such Foreign Lender became a Lender; (ii)
with  respect  to  payments  to a new lending office with respect to a Loan, but
only  to  the  extent that such withholding tax exceeds any withholding tax that
would  have  been  imposed on such Lender had it not designated such new lending
office;  (iii)  with  respect  to  a  change  by  such  Foreign  Lender  of  the
jurisdiction  in  which it is organized, incorporated, controlled or managed, or
in  which  it  is doing business, from the date such Foreign Lender changed such
jurisdiction,  but  only  to  the  extent  that such withholding tax exceeds any
withholding  tax  that would have been imposed on such Lender had it not changed
the  jurisdiction in which it is organized, incorporated, controlled or managed,
or  in  which it is doing business; or (iv) to the extent that the obligation to
indemnify  any  Foreign  Lender or to pay such Additional Amounts would not have
arisen but for a failure by such Foreign Lender to comply with the provisions of
Section  2.8(f).

(h)     All  payments by the Borrower shall be deemed received on (i) receipt or
(ii) the next Business Day following receipt if such receipt is after 3:00 p.m.,
Central  Standard  or  Central Daylight Savings Time, as the case may be, on any
Business Day, and shall be made to the Agent at the Principal Office.  Except as
provided  to  the  contrary  herein, if the due date of any payment hereunder or
under  any  Note would otherwise fall on a day which is not a Business Day, such
date  shall  be extended to the next succeeding Business Day, and interest shall
be  payable  for  any  principal  so  extended  for the period of such extension

<PAGE>
2.9     Pro  Rata  Treatment;  Adjustments.   Except  to  the  extent  otherwise
expressly  provided  herein, (i) each borrowing pursuant to this Agreement shall
be made from the Lenders pro rata in accordance with their respective Percentage
Shares, (ii) each reduction of the sum of the Facility Amounts of the Lenders at
the  request  of  the Borrower, as well as any subsequent increase in the sum of
the  Facility  Amounts  of  the  Lenders at the request of the Borrower and with
written  agreement  of  the Agent and all the Lenders, shall serve to adjust the
Facility Amounts of the Lenders pro rata in accordance with the Facility Amounts
of  the  Lenders  in effect immediately prior to any such adjustment, (iii) each
payment  of  Commitment  Fees  shall be made to the Agent for the account of the
Lenders  pro  rata  in  accordance with their respective Percentage Shares, (iv)
except  as otherwise provided herein, each payment by the Borrower of other fees
pursuant to this Agreement shall be made to Amegy solely for its account, except
as agreed otherwise by Amegy and any other Lender, (v) each payment of principal
of  Loans  shall be made to the Agent for the account of the Lenders pro rata in
accordance  with  their respective shares of the Loan Balance, (vi) each payment
of  interest  on Loans shall be made to the Agent for the account of the Lenders
pro  rata  in accordance with their respective shares of the aggregate amount of
interest  due and payable to the Lenders, and (vii) each payment by the Borrower
under  Commodity  Hedge  Agreements  and  Interest  Rate  Hedge  Agreements with
Approved  Hedge  Counterparties  shall  be  made  only  to the Person or Persons
entitled  thereto.

(b)     The  Agent shall distribute all payments with respect to the Obligations
under  the Loan Documents promptly upon receipt in like funds as received to the
Lenders  and  any  Approved  Hedge Counterparties entitled to participate in any
relevant payment.  In the event that any payments made hereunder by the Borrower
on  the  Obligations  under  the  Loan  Documents  at  any  particular  time are
insufficient to satisfy in full the Obligations under the Loan Documents due and
payable  at  such  time,  such  payments shall be applied (i) first, to fees and
expenses due pursuant to the terms of this Agreement or any other Loan Document,
(ii) second, to accrued interest, (iii) third, to the Loan Balance and any other
Obligations  under  the Loan Documents pro rata on the basis of the ratio of the
amount  of  all  such Obligations under the Loan Documents owing to the Agent or
the  relevant Lender, as the case may be, to the total amount of the Obligations
under  the  Loan  Documents then owing and (iv) fourth to cash collateralize the
L/C  Exposure  in  the  manner  provided  in  Section  2.11.

(c)     If  any  Lender  (for  purposes  of  this  Section  2.9(c), a "Benefited
Lender")  shall at any time receive any payment of all or part of its portion of
the  Obligations  under the Loan Documents, or receive any Collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings  of  the  nature referred to in Section 7.1(f) or Section 7.1(g), or
otherwise)  in  an  amount  greater  than  such  Lender  was entitled to receive
pursuant to the terms hereof, such Benefited Lender shall purchase for cash from
the  other  Lenders  such portion of the Obligations under the Loan Documents of
such other Lenders, or shall provide such other Lenders with the benefits of any
such  Collateral  or  the  proceeds thereof, as shall be necessary to cause such
Benefited  Lender  to share the excess payment or benefits of such Collateral or
proceeds  with each of the Lenders according to the terms hereof.  If all or any
portion  of  such  excess  payment or benefits is thereafter recovered from such
Benefited  Lender,  such  purchase shall be rescinded and the purchase price and
benefits  returned  by  such Lender, to the extent of such recovery, but without
interest.  The  Borrower agrees that each such Lender so purchasing a portion of
the  Obligations  under  the  Loan  Documents of another Lender may exercise all
rights  of payment (including rights of set-off) with respect to such portion as

<PAGE>
fully  as  if such Lender were the direct holder of such portion.  If any Lender
ever  receives,  by voluntary payment, exercise of rights of set-off or banker's
lien,  counterclaim,  cross-action or otherwise, any funds of the Borrower to be
applied to the Obligations under the Loan Documents, or receives any proceeds by
realization  on  or  with respect to any Collateral, all such funds and proceeds
shall  be forwarded immediately to the Agent for distribution in accordance with
the  terms  of  this  Agreement.

2.10     Borrowing  Base  and  Monthly  Reduction  Amount.

(a)     The  Borrowing  Base  as  of  the  Closing  Date  is acknowledged by the
Borrower,  the Agent and the Lenders to be $6,000,000.  Commencing on October 1,
2010  and  continuing thereafter on the first day of each calendar month through
the Commitment Termination Date, the amount of the Borrowing Base then in effect
shall be reduced by the Monthly Reduction Amount, which Monthly Reduction Amount
as  of  the  Closing  Date  is  acknowledged  to  be  $0.

(b)     The  Borrowing  Base  and  the  Monthly  Reduction  Amount  shall  be
redetermined,  by  the  Agent,  with  the  approval  of  the Lenders as required
pursuant to the provisions of Section 9.9, semi-annually (as soon as practicable
following  each  receipt, prior to the Commitment Termination Date, of a Reserve
Report  provided to the Agent pursuant to the provisions of Section 5.4 prior to
commencing  with  the  Reserve  Report to be provided to the Agent no later than
April  1,  2011)  on  the  basis  of  information  supplied  by  the Borrower in
compliance with the provisions of this Agreement, including Reserve Reports, and
all  other information available to the Agent and the Lenders.  In addition, the
Agent,  with  the approval of the Lenders as required pursuant to the provisions
of  Section  9.9, shall, in the normal course of business following a request of
the  Borrower,  redetermine the Borrowing Base and the Monthly Reduction Amount;
provided,  however,  the Agent and the Lenders shall not be obligated to respond
to  more  than  one  such  request  during  the  period  between  the  scheduled
semi-annual redeterminations provided for above.  Notwithstanding the foregoing,
the  Borrowing  Base  in  effect  at  any  time shall be subject to reduction in
accordance  with  applicable  provisions  of Section 6.4 and the Agent, with the
approval  of  the Lenders as required pursuant to the provisions of Section 9.9,
may  at  its discretion and shall, upon request by the Required Lenders and with
the  approval  of  the Lenders as required pursuant to the provisions of Section
9.9,  redetermine  the  Borrowing  Base  and the Monthly Reduction Amount at any
time; provided, however, the Agent and the Lenders shall not be entitled to more
than one such unscheduled redetermination between the scheduled redeterminations
provided  for  above.

(c)     Upon  each determination of the Borrowing Base and the Monthly Reduction
Amount,  the  Agent  shall  notify  the  Borrower orally (confirming such notice
promptly in writing) of such determination, and, subject to the operation of the
Monthly Reduction Amount, the Borrowing Base and the Monthly Reduction Amount so
communicated  to the Borrower shall become effective upon such oral notification
and  shall  remain  in  effect  until  the  next subsequent determination of the
Borrowing  Base  and  the  Monthly  Reduction  Amount.

(d)     The  Borrowing  Base  shall represent the determination by the Agent and
the Lenders, in accordance with the applicable definitions and provisions herein
contained  and  the customary lending practices of the Agent and the Lenders for
loans  of  this  nature  (but  taking

<PAGE>
into  account  floor  and  cap  prices or other price protection under Commodity
Hedge  Agreements), of the value, for loan purposes, of the Mortgaged Properties
and any other Oil and Gas Properties of the Borrower acceptable to the Agent and
the  Lenders, subject, in the case of any increase in the Borrowing Base, to the
credit  approval  processes  of the Agent and each of the Lenders.  Furthermore,
the  Borrower acknowledges that the determination of the Borrowing Base contains
an  equity cushion (market value in excess of loan value), which is acknowledged
by the Borrower to be essential for the adequate protection of the Agent and the
Lenders.

2.11     Mandatory  Prepayments.  If  at  any  time,  as  a result of the second
sentence  of subsection (a) of Section 2.10, the sum of the Loan Balance and the
L/C  Exposure  exceeds the Commitment Amount then in effect, the Borrower shall,
within  three  Business  Days  of  receipt  of  notice  from  the  Agent of such
occurrence, prepay such portion of the Loan Balance and/or, as provided below in
this  subsection  (a),  provide  cash  as Collateral so that the sum of the Loan
Balance  and  the  L/C  Exposure  does  not exceed the Commitment Amount then in
effect.  If  at  any  time,  other  than  as  a result of the second sentence of
subsection (a) of Section 2.10, the sum of the Loan Balance and the L/C Exposure
exceeds  the Commitment Amount then in effect (such excess, a "Deficiency"), the
Borrower  shall, within 30 days of notice from the Agent of such occurrence, (i)
prepay  the  amount  of  the  Deficiency in four substantially equal installment
payments,  each  for application on the Loan Balance and then to provide cash as
Collateral  for  the  L/C  Exposure in the manner provided below in this Section
2.11, the first of which being due on the thirtieth day following receipt by the
Borrower  of the relevant notice from the Agent and the second, third and fourth
of  which  being  due  on the sixtieth, ninetieth and one hundred twentieth day,
respectively,  following receipt by the Borrower of the relevant notice from the
Agent,  (ii)  provide additional Collateral, of character and value satisfactory
to  the  Required  Lenders  in  their reasonable credit judgment, and/or cash as
Collateral  to  secure  the Obligations, by way of the execution and delivery to
the  Agent of Security Documents in form and substance satisfactory to the Agent
or (iii) affect any combination of the alternatives described in clauses (i) and
(ii) of this sentence and acceptable to the Required Lenders in their reasonable
credit judgment.  Any prepayment pursuant to the provisions of this Section 2.11
shall be without premium or penalty, except as provided in Section 2.18, and the
amount  of  any  such prepayment may be reborrowed if otherwise available to the
Borrower pursuant to the terms of this Agreement.  In the event that a mandatory
prepayment  is  to  be  made  under  this  Section  2.11 or any other applicable
provision  of  this  Agreement  and  the  Loan  Balance  is less than the amount
required to be prepaid, the Borrower shall repay the entire Loan Balance and, in
accordance  with  the  provisions  of the relevant Letter of Credit Applications
executed  by the Borrower or otherwise to the satisfaction of the Agent, deposit
with  the Agent, as additional Collateral securing the Obligations, an amount of
cash,  in  immediately  available  funds,  equal  to  the L/C Exposure minus the
Commitment  Amount.  The  cash  deposited  with the Agent in satisfaction of the
requirement  provided  in  this  Section  2.11 shall be invested, at the express
direction  of the Borrower as to investment vehicle and maturity (which shall be
no  later than the latest expiry date of any then outstanding Letter of Credit),
for  the  account of the Borrower in cash or cash equivalent investments offered
by  or  through  Amegy.

2.12     Voluntary  Prepayments and Conversions of Loans.  Subject to applicable
provisions  of  this Agreement, the Borrower shall have the right at any time or
from  time  to  time  to  prepay Loans without prepayment penalty and to convert
Loans  of  one  type  or  with  one

<PAGE>
Interest  Period into Loans of another type or with a different Interest Period;
provided,  however,  that  (a)  the Borrower shall give the Agent notice of each
such  prepayment  or conversion of (i) all or any portion of a LIBO Rate Loan no
less  than three Business Days prior to prepayment or conversion and (ii) all or
any  portion  of  a  Base  Rate  Loan  no  less  than  one Business Day prior to
prepayment  or  conversion, (b) any prepayment of any LIBO Rate Loan shall be in
an amount of at least equal to $100,000 and a whole multiple of $10,000, (c) the
Borrower  shall  pay  all  accrued and unpaid interest on the amounts prepaid or
converted,  (d)  no  such  prepayment  or conversion shall serve to postpone the
repayment  when  due  of  any Obligation or any installments thereof and (e) the
Borrower  shall reimburse each Lender for any losses, expenses or costs incurred
by such Lender pursuant to prepayment or conversion of a Loan, or the failure of
the  Borrower to make such prepayment or conversion as provided in Section 2.18.
Except  as  provided  in  the  immediately  preceding  sentence,  any prepayment
pursuant  to  the  provisions  of  this Section 2.12 shall be without premium or
penalty  and  the  amount  of any such prepayment may be reborrowed if otherwise
available  to  the  Borrower  pursuant  to  the  terms  of  this  Agreement.

2.13     Commitment  Fees.  In  addition  to  interest  on the Notes as provided
herein  and  other  fees  payable  hereunder,  and to compensate the Lenders for
maintaining  funds  available  under the Facility, the Borrower shall pay to the
Agent,  for  the account of the Lenders, in immediately available funds, for the
calendar quarter ending on the last day of September, 2010 and for each calendar
quarter  thereafter  during  the  Commitment  Period  and  on  the  Commitment
Termination  Date,  a  fee  equal  to one-half of one percent (0.50%) per annum,
calculated  on  the  basis of a year of 365 or 366 days, as the case may be, and
actual  days  elapsed  (including  the  first  day, but excluding the last day),
multiplied  by  the  average daily amount of the Available Commitment during the
relevant quarterly or shorter period, as the case may be.  Commitment Fees shall
be  payable  by  the  Borrower  upon receipt of an invoice therefor or statement
thereof delivered by the Agent and shall be past due if not paid within ten days
of  receipt  of  each  such  invoice  or  statement.

2.14     Engineering  Fees  and  Expenses.  The  Borrower shall pay directly, or
reimburse the Agent for its payment of, the fees and expenses of the independent
petroleum  engineer  or  firm  of independent petroleum engineers engaged by the
Agent  in  connection  with  the  initial  determination  and  each  subsequent
redetermination  of  the  Borrowing  Base.  Such amounts shall be payable by the
Borrower  to the independent petroleum engineer or firm of independent petroleum
engineers  or to the Agent, as the case may be, within 30 days of receipt by the
Borrower  of  a  statement  therefor.

2.15     Additional  Fees.  In  addition  to  interest  on the Notes as provided
herein  and  other fees payable hereunder, and to compensate the Lenders for the
costs of the extension of credit hereunder, the Borrower shall pay to the Agent,
for  the  account  of the Lenders, on the Closing Date, in immediately available
funds,  a  fee in the amount of $75,000.  Additionally, the Borrower shall pay a
fee  to  the Agent on the Closing Date and each anniversary of the Closing Date,
for  its  account,  equal  to  $5,000  multiplied by the total number of Lenders
existing  at  such  time; provided, however, that in the event that Amegy is the
sole  Lender  existing at such time, such fee shall not apply.  Further, (a) the
Borrower  shall  pay  a fee to the Agent, for the account of the Lenders, at any
time  the  Borrowing  Base  is  increased  to an amount in excess of the highest
Borrowing  Base  ever  previously in effect equal to one and one-quarter percent
(1.25%)  of  the

<PAGE>
amount  of  such new Borrowing Base in excess of the highest Borrowing Base ever
previously  in  effect.

2.16     Loans  to  Satisfy  Obligations.  Upon  a Default, the Lenders may, but
shall  not be obligated to, make Loans for the benefit of the Borrower and apply
proceeds  thereof to the satisfaction of any condition, warranty, representation
or  covenant of the Borrower or any Guarantor contained in this Agreement or any
other  Loan Document.  Such Loans shall be evidenced by the Notes and shall bear
interest  at  the  Adjusted  Base  Rate plus the Applicable Margin in the manner
provided  in  Section  2.5,  subject,  however, to the provisions of Section 2.5
regarding  the accrual of interest at the Default Rate in certain circumstances.

2.17     General  Provisions  Relating to Interest.   It is the intention of the
parties  hereto to comply strictly with the usury laws of the State of Texas and
the  United  States  of  America.  In  this  connection,  there  shall  never be
collected,  charged,  or  received  on  the  sums advanced hereunder interest in
excess  of  that  which  would  accrue at the Highest Lawful Rate.  The Borrower
agrees  that, to the extent the Highest Lawful Rate is determined with reference
to the laws of the State to Texas, the Highest Lawful Rate shall be the "weekly"
rate  as  defined  in  Chapter 303 of the Texas Finance Code, provided, however,
that  the  Agent or any Lender may, at its election, substitute for the "weekly"
rate  the  "annualized"  or  "quarterly"  rate, as such terms are defined in the
aforesaid  statute,  upon the giving of notices provided for in such statute and
effective  upon  the giving of such notices.  The Agent and each Lender may also
rely,  to  the  extent permitted by applicable laws of the State of Texas or the
United  States  of America, on alternative maximum rates of interest under other
laws  of  the  State  of Texas or the United States of America applicable to the
Agent  or  the  relevant  Lender,  if  greater.

(b)     Notwithstanding  anything herein or in the Notes to the contrary, during
any  Limitation  Period, the interest rate to be charged on amounts evidenced by
the Notes held by any affected Lenders shall be the Highest Lawful Rate, and the
obligation,  if  any,  of  the Borrower for the payment of fees or other charges
deemed  to  be  interest  under  applicable  law shall be suspended.  During any
period or periods of time following a Limitation Period, to the extent permitted
by  applicable  laws  of the State of Texas or the United States of America, the
interest  rate to be charged hereunder on amounts evidenced by the Notes held by
any  affected Lenders shall remain at the Highest Lawful Rate until such time as
there  has  been  paid  to  each applicable Lender (i) the amount of interest in
excess  of  that accruing at the Highest Lawful Rate that such Lender would have
received  during  the  Limitation  Period  had the interest rate remained at the
otherwise  applicable  rate, and (ii) all interest and fees otherwise payable to
such  Lender  but  for  the  effect  of  such  Limitation  Period.

(c)     If,  under any circumstances, the aggregate amounts paid on the Notes or
under this Agreement or any other Loan Document include amounts which by law are
deemed  interest  and  which  would  exceed  the amount permitted if the Highest
Lawful  Rate  were  in  effect,  the  Borrower  stipulates that such payment and
collection  will  have  been  and  will  be  deemed  to have been, to the extent
permitted  by  applicable  laws  of  the  State of Texas or the United States of
America,  the  result  of  mathematical  error  on the part of the Borrower, the
Agent,  and  the  Lenders;  and  the  party receiving such excess shall promptly
refund  the  amount of such excess (to the extent only of such interest payments
in  excess of that which would have accrued and been payable on the basis of the
Highest  Lawful  Rate)  upon  discovery  of  such  error  by  such  party  or

<PAGE>
notice  thereof  from  the  Borrower.  In  the  event  that  the maturity of any
Obligation is accelerated, by reason of an election by the Lenders or otherwise,
or  in the event of any required or permitted prepayment, then the consideration
constituting interest under applicable laws may never exceed that payable on the
basis  of  the  Highest  Lawful  Rate,  and excess amounts paid which by law are
deemed  interest,  if any, shall be credited by the Agent and the Lenders on the
principal  amount  of  the  Obligations,  or  if  the  principal  amount  of the
Obligations  shall  have  been  paid  in  full,  refunded  to  the  Borrower.

(d)     All  sums  paid,  or agreed to be paid, to the Agent and the Lenders for
the  use,  forbearance  and  detention  of the proceeds of any advance hereunder
shall,  to  the  extent  permitted  by  applicable  law, be amortized, prorated,
allocated, and spread throughout the full term hereof until paid in full so that
the  actual  rate  of interest is uniform but does not exceed the Highest Lawful
Rate  throughout  the  full  term  hereof.

2.18     Yield Protection.   Without limiting the effect of the other provisions
of  this  Section  2.18 (but without duplication), the Borrower shall pay to the
Agent  and  each  Lender  from  time  to  time  such amounts as are necessary to
compensate  it  for  any  actual and reasonable Additional Costs incurred by the
Agent  or  such  Lender.

(b)     Without limiting the effect of the other provisions of this Section 2.18
(but  without  duplication),  the Borrower shall pay to each Lender from time to
time  on request such amounts as are necessary to compensate such Lender or such
Lender's  holding  company for any costs attributable to the maintenance by such
Lender (or any Applicable Lending Office), pursuant to any Regulatory Change, of
capital  in  respect  of  its Commitment, such compensation to include an amount
equal  to any reduction of the rate of return on assets or equity of such Lender
or  such  Lender's holding company (or any Applicable Lending Office) to a level
below that which such Lender or such Lender's holding company (or any Applicable
Lending  Office)  could  have  achieved  but  for  such  Regulatory  Change.

(c)     Without limiting the effect of the other provisions of this Section 2.18
(but  without  duplication),  in  the  event  that  any  Requirement  of  Law or
Regulatory  Change  or the compliance by the Agent or any Lender therewith shall
(i)  impose, modify, or hold applicable any reserve, special deposit, or similar
requirement  against  any  Letter  of  Credit  or obligation to issue Letters of
Credit,  or  (ii)  impose  upon  the  Agent  or  such Lender any other condition
regarding any Letter of Credit or obligation to issue Letters of Credit, and the
result  of  any  such  event  shall be to increase the cost to the Agent or such
Lender  of  issuing  or  maintaining any Letter of Credit or obligation to issue
Letters of Credit or any liability with respect to Letter of Credit Payments, or
to reduce any amount receivable in connection therewith, then upon demand by the
Agent or such Lender, as the case may be, the Borrower shall pay to the Agent or
such  Lender,  from  time  to  time  as  specified  by the Agent or such Lender,
additional  amounts  which  shall  be sufficient to compensate the Agent or such
Lender  for  such  increased  cost  or  reduced  amount  receivable.

(d)     Without limiting the effect of the other provisions of this Section 2.18
(but  without  duplication), the Borrower shall pay to the Agent and each Lender
such  amounts  as shall be sufficient in the reasonable opinion of the Agent and
such  Lender  to  compensate  them  for any actual and reasonable loss, cost, or
expense  incurred  by  and  as  a  result  of:

<PAGE>
(i)     any  payment,  prepayment,  or conversion by the Borrower of a LIBO Rate
Loan  on  a date other than the last day of an Interest Period for such Loan; or

(ii)     any  failure by the Borrower to borrow a LIBO Rate Loan or to convert a
Base  Rate  Loan  into  a  LIBO  Rate  Loan  on  the  date for such borrowing or
conversion  specified  in  the  relevant  Borrowing  Request,

such compensation to include with respect to any LIBO Rate Loan, an amount equal
to the excess, if any, of (A) the amount of interest which would have accrued on
the  principal  amount so paid, prepaid, converted, or not borrowed or converted
for the period from the date of such payment, prepayment, conversion, or failure
to  borrow  or  convert  to the last day of the then current Interest Period for
such  Loan  (or,  in  the  case  of a failure to borrow or convert, the Interest
Period  for  such Loan which would have commenced on the date of such failure to
borrow or convert) at the applicable rate of interest for such Loan provided for
herein  over  (B)  the interest component of the amount the Agent or such Lender
would  bid  were  it  to  bid  at  the commencement of such period in the London
interbank  market  for  Dollar  deposits of amounts comparable to such principal
amount and maturities comparable to such period, as reasonably determined by the
Agent  or  such  Lender.

(e)     Determinations  by  the Agent or any Lender for purposes of this Section
2.18  of the effect of any Regulatory Change on capital maintained, its costs or
rate  of  return,  its  obligation  to  make  and  maintain  Loans,  issuing  or
participating in Letters of Credit, or on amounts receivable by it in respect of
Loans,  Letters  of Credit or such other obligations, and the additional amounts
required  to  compensate the Agent and such Lender under this Section 2.18 shall
be conclusive, absent manifest error, provided that such determinations are made
on  a  reasonable  basis.  The  Agent  or  the relevant Lender shall furnish the
Borrower  with  a  certificate  setting forth in reasonable detail the basis and
amount  of  Additional  Costs  or  any other loss, cost or expense incurred as a
result  of  any  such  event,  and  the  statements  set  forth therein shall be
conclusive, absent manifest error, provided that such determinations are made on
a  reasonable  basis.  The  Agent  or  the  relevant Lender shall (i) notify the
Borrower,  as  promptly  as  practicable  after the Agent or such Lender obtains
knowledge of any Additional Costs or other sums payable pursuant to this Section
and  determines  to  request compensation therefor, of any event occurring after
the  Closing  Date  which  will entitle the Agent or such Lender to compensation
pursuant to this Section 2.18; and (ii) designate a different Applicable Lending
Office  for  the Loans affected by such event if such designation will avoid the
need  for  or  reduce  the amount of such compensation and will not, in the sole
opinion  of  the  Agent  or such Lender, be disadvantageous to the Agent or such
Lender.  If  any  Lender  requests  compensation  from  the  Borrower under this
Section  2.18,  the Borrower may, after payment of all compensation then accrued
and  by  notice  to  the  Agent  and such Lender, require that the Loans by such
Lender  of  the  type  with  respect  to which such compensation is requested be
converted  into  Base  Rate  Loans  in  accordance  with  Section  2.12.  Any
compensation  requested by the Agent or any Lender pursuant to this Section 2.18
shall  be  due and payable within 30 days of receipt by the Borrower of any such
notice.

(f)     The  Agent  and the Lenders agree not to request, and the Borrower shall
not  be obligated to pay, any Additional Costs or other sums payable pursuant to
this  Section  unless  similar  Additional Costs and other sums payable are also
generally  assessed  by  the  Agent

<PAGE>
or  such  Lender against other customers similarly situated where such customers
are  subject  to  documents  providing  for  such  assessment.

2.19     Illegality.  Notwithstanding  any other provision of this Agreement, in
the  event  that  it  becomes  unlawful for any Lender or its Applicable Lending
Office to (a) honor its obligation to make LIBO Rate Loans, or (b) maintain LIBO
Rate  Loans,  then  such Lender shall promptly notify the Agent and the Borrower
thereof.  The obligation of such Lender to make LIBO Rate Loans and convert Base
Rate  Loans into LIBO Rate Loans shall then be suspended until such time as such
Lender  may  again  make  and maintain LIBO Rate Loans, and the outstanding LIBO
Rate  Loans  of  such  Lender  shall  be  converted  into  Base  Rate  Loans.

2.20     Replacement  Lenders.   If  any Lender has notified the Borrower of its
incurring  any  loss,  cost  or  expense  under  Section 2.18 or has invoked the
indemnification  as to certain Taxes set forth in Section 2.8, the Borrower may,
unless  such Lender has notified the Borrower that the circumstances giving rise
to  such  notice  no  longer  apply,  terminate,  in  whole but not in part, the
Commitment  of  such  Lender (other than the Agent) (the "Terminated Lender") at
any  time upon five Business Days' prior written notice to the Terminated Lender
and  the  Agent  (a  "Notice  of  Termination").

(b)     In  order  to effect the termination of the Commitment of the Terminated
Lender,  the  Borrower shall (i) obtain an agreement with one or more Lenders to
increase  their Commitments and/or (ii) request any one or more other Persons to
become  a  "Lender"  in place and instead of such Terminated Lender and agree to
accept  a Commitment; provided, however, that such one or more other Persons are
acceptable  to  the  Agent  and become parties hereto by executing an Assignment
Agreement (the Lenders or other Persons that agree to accept in whole or in part
the  Commitment  of  the  Terminated  Lender  being  referred  to  herein as the
"Replacement  Lenders"),  such  that  the  aggregate  increased  and/or accepted
Facility  Amounts  of  the  Replacement Lenders under clauses (i) and (ii) above
equal  the  Facility  Amount  of  the  Terminated  Lender.

(c)     The  Notice  of  Termination  shall  include  the name of the Terminated
Lender,  the  date  the  termination  will  occur  (the "Termination Date"), the
Replacement  Lender  or  Replacement Lenders to which the Terminated Lender will
assign  its  Commitment, and, if there will be more than one Replacement Lender,
the  portion  of  the  Terminated  Lender's  Commitment  to  be assigned to each
Replacement  Lender.

(d)     On  the  Termination  Date, (i) the Terminated Lender shall by execution
and delivery of an Assignment Agreement assign its Commitment to the Replacement
Lender  or  Replacement Lenders (pro rata, if there is more than one Replacement
Lender, in proportion to the portion of the Terminated Lender's Commitment to be
assigned  to each Replacement Lender) indicated in the Notice of Termination and
shall assign to the Replacement Lender or Replacement Lenders its Loans (if any)
then outstanding pro rata as aforesaid, (ii) the Terminated Lender shall endorse
its  Note,  payable without recourse, representation or warranty to the order of
the Replacement Lender or Replacement Lenders (pro rata as aforesaid), (iii) the
Replacement  Lender  or  Replacement Lenders shall purchase the Note held by the
Terminated  Lender  (pro  rata  as  aforesaid)  at  a  price equal to the unpaid
principal  amount  thereof  plus  interest  and  fees  accrued and unpaid to the
Termination  Date,  (iv)  the  Replacement  Lender  or

<PAGE>
Replacement  Lenders  will  thereupon  (pro rata as aforesaid) succeed to and be
substituted  in  all  respects  for the Terminated Lender with like effect as if
becoming  a  Lender  pursuant  to the terms of Section 9.1(b) and the Terminated
Lender will have the rights and benefits of an assignor under Section 9.1(b) and
(v)  the Terminated Lender shall have received payment of an amount equal to its
Percentage  Share of the Loan Balance and accrued interest thereon, accrued fees
owed  to  it  and  all other amounts due and owing to it hereunder and under the
other  Loan  Documents  (including  any loss, cost or expense under Section 2.18
incurred  up to, but not including, the Termination Date).  To the extent not in
conflict,  the  terms  of Section 9.1(b) shall supplement the provisions of this
Section  2.20.

(e)     Any  Terminated  Lender (including the Agent in its capacity as a Lender
and as Agent) shall reimburse the Borrower for all reasonable and necessary fees
and  expenses  of  counsel  to  the Borrower and, if required by the Replacement
Lender  or  Replacement  Lenders,  of  counsel  to  the  Replacement  Lender  or
Replacement  Lenders  in connection with replacing such Terminated Lender with a
Replacement  Lender  or  Replacement  Lenders.

2.21     Regulatory  Change.  In  the  event  that  by  reason of any Regulatory
Change  or  any  other circumstance arising after the Closing Date affecting any
Lender,  such  Lender  (a)  incurs  Additional Costs based on or measured by the
excess  above  a  level,  as  prescribed  from  time to time by any Governmental
Authority  with  jurisdiction  over  such Lender, of the amount of a category of
deposits  or  other  liabilities  of  such  Lender  which  includes  deposits by
reference  to  which  the  interest  rate on any LIBO Rate Loan is determined as
provided in this Agreement or a category of extensions of credit or other assets
of  such  Lender  which  includes  any LIBO Rate Loan, or (b) becomes subject to
restrictions  on the amount of such a category of liabilities or assets which it
may  hold, then, at the election of such Lender with notice to the Agent and the
Borrower,  the  obligation of such Lender to make LIBO Rate Loans and to convert
Base  Rate Loans into LIBO Rate Loans shall be suspended until such time as such
Regulatory  Change  or  other  circumstance ceases to be in effect, and all such
outstanding  LIBO  Rate  Loans  shall  be  converted  into  Base  Rate  Loans.

2.22     Letters  in  Lieu  of  Transfer  Orders  or Division Orders.  The Agent
agrees  that none of the letters in lieu of transfer or division orders provided
pursuant  to the provisions of Section 3.1(f) or Section 5.7 will be sent to the
addressees  thereof  unless  an Event of Default has occurred, at which time the
Agent  may,  at  its  option and in addition to the exercise of any of its other
rights  and  remedies,  send  any  or  all  of  such  letters.

2.23     Power  of  Attorney.  The  Borrower  hereby designates the Agent as its
agent  and attorney-in-fact, to act in its name, place, and stead solely for the
purpose  of  completing  and,  upon  the  occurrence  of  an  Event  of Default,
delivering  any  and  all  of the letters in lieu of transfer or division orders
delivered  by  the  Borrower  pursuant  to  the  provisions of Section 3.1(f) or
Section  5.7,  including  completing  any  blanks  contained in such letters and
attaching  exhibits  thereto  describing  the relevant Collateral.  The Borrower
hereby ratifies and confirms all that the Agent shall lawfully do or cause to be
done  by virtue of this power of attorney and the rights granted with respect to
such power of attorney.  This power of attorney is coupled with the interests of
the  Agent  in the Collateral, shall commence and be in full force and effect as
of  the  Closing  Date  and  shall  remain in full force and effect and shall be
irrevocable  so  long  as  any  Obligation  remains outstanding or unpaid or any
Commitment  exists.  The  powers  conferred  on

<PAGE>
the  Agent by this appointment are solely to protect the interests of the Agent,
the  Lenders  and  any  other  Secured  Creditors  under the Loan Documents with
respect  to  the assignment of production proceeds under certain of the Security
Documents  and  shall  not  impose  any duty upon the Agent to exercise any such
powers.  The  power  of attorney under this Section 2.23 is expressly limited to
the  rights  and  powers set forth herein and no additional rights or powers are
herein created or implied.  The Agent shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers and shall not be
responsible  to  the  Borrower or any other Person for any act or failure to act
with  respect to such powers, except for gross negligence or willful misconduct.

2.24     Security  Interest  in  Accounts; Right of Offset.  As security for the
payment  and  performance  of  the  Obligations,  the Borrower hereby transfers,
assigns,  and  pledges  to  the Agent, each Lender and each other Approved Hedge
Counterparty (for the pro rata benefit of such Persons) and grants to the Agent,
each Lender and each other Approved Hedge Counterparty (for the pro rata benefit
of  such  Persons)  a  security interest in all of its funds now or hereafter or
from  time to time on deposit with the Agent, such Lender or such other Approved
Hedge  Counterparty,  with such interest of the Agent, the Lenders and the other
Approved  Hedge  Counterparties to be retransferred, reassigned, and/or released
at the expense of the Borrower upon payment in full and complete performance  of
all  Obligations.  All remedies as secured party or assignee of such funds shall
be  exercisable  upon  the  occurrence  of  any  Event of Default, regardless of
whether  the  exercise of any such remedy would result in any penalty or loss of
interest  or  profit with respect to any withdrawal of funds deposited in a time
deposit account prior to the maturity thereof.  Furthermore, the Borrower hereby
grants to the Agent, each Lender and each other Approved Hedge Counterparty (for
the pro rata benefit of such Persons) the right, exercisable at such time as any
Obligation  shall  mature,  whether by acceleration of maturity or otherwise, of
offset  or  banker's lien against all of its funds now or hereafter or from time
to  time  on  deposit  with  the Agent, such Lender or such other Approved Hedge
Counterparty, regardless of whether the exercise of any such remedy would result
in  any  penalty or loss of interest or profit with respect to any withdrawal of
funds  deposited  in  a time deposit account prior to the maturity thereof.  The
provisions  of  this  Section  2.24  shall  in  all  respects  be subject to the
provisions  of  any  intercreditor agreement among any Secured Third Party Hedge
Counterparty,  the  Borrower  and  the  Agent.

2.25     Defaulting  Lenders.

(a)     Notwithstanding  anything to the contrary contained herein, in the event
any Lender (i) becomes a Defaulting Lender, or (ii) notifies either the Agent or
the  Borrower  that it does not intend to make available its portion of any Loan
(if  the  actual  refusal  would  constitute  a  breach  by  such  Lender of its
obligations  under  this  Agreement)  (each, a "Lender Default"), all rights and
obligations  hereunder of such Defaulting Lender and of the parties hereto shall
be  modified  to the extent of the express provisions of this Section 2.25 while
such  Lender  Default  remains  in  effect.

(b)     Loans shall be made pro rata from Lenders (the "Non-Defaulting Lenders")
which  are  not  Defaulting Lenders based on their respective Percentage Shares,
and  no  Percentage  Share  of  any  Lender  or  any pro rata share of any Loans
required  to  be  advanced  by any Lender shall be increased as a result of such
Lender  Default.  Amounts  received  in  respect  of

<PAGE>
principal  of  any type of Loans shall be applied to reduce the applicable Loans
of  each  Lender  (other  than  any  Defaulting  Lender)  pro  rata based on the
aggregate  of  the  outstanding Loans of that type of all Lenders at the time of
such application; provided that, the Agent shall not be obligated to transfer to
a  Defaulting  Lender  any  payments  received  by  the Agent for the Defaulting
Lender's  benefit,  nor  shall a Defaulting Lender be entitled to the sharing of
any  payments  hereunder  (including  any principal, interest or fees).  Amounts
payable  to  a  Defaulting  Lender  shall  instead be paid to or retained by the
Agent.  The  Agent  may hold and, in its discretion, re-lend to the Borrower the
amount  of  such  payments  received  or  retained by it for the account of such
Defaulting  Lender.

(c)     A  Defaulting  Lender  shall not be entitled to give instructions to the
Agent  or  to approve, disapprove, consent to or vote on any matters relating to
this  Agreement and the other Loan Documents.  All amendments, waivers and other
modifications of this Agreement and the other Loan Documents may be made without
regard  to  a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
either  Loans  outstanding  or  a  Percentage  Share.

(d)     Other  than  as  expressly  set out in this Section 2.25, the rights and
obligations  of  a  Defaulting Lender (including the obligation to indemnify the
Agent)  and  the  other  parties hereto shall remain unchanged.  Nothing in this
Section  2.25  shall  be  deemed  to  release  any  Defaulting  Lender  from its
obligations  under this Agreement and the other Loan Documents, shall alter such
obligations,  shall operate as a waiver of any default by such Defaulting Lender
hereunder,  or  shall  prejudice any rights which the Borrower, the Agent or any
Lender may have against any Defaulting Lender as a result of any default by such
Defaulting  Lender  hereunder.

(e)     In the event a Defaulting Lender retroactively cures to the satisfaction
of  the  Agent  the  breach  or  condition  which  caused  a  Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and  shall  be  treated  as  a  Lender  under  this  Agreement.

                                  ARTICLE III

                                   CONDITIONS

The obligations of the Agent and the Lenders to enter into this Agreement and to
make Loans or issue or participate in, as the case may be, Letters of Credit are
subject  to  the  satisfaction  of  the  following  conditions  precedent:

3.1     Receipt  of Loan Documents and Other Items.  Neither the Lenders nor the
Agent  shall  have  any  obligation  under  this  Agreement unless and until all
matters  incident  to  the  consummation of the transactions contemplated herein
shall  be  satisfactory  to  the  Agent and the Lenders, and the Agent and, upon
request,  any  Lender  shall  have received, reviewed and approved the following
documents  and  other  items,  appropriately  executed when necessary and, where
applicable,  acknowledged by one or more Responsible Officers of the Borrower or
other Persons, as the case may be, all in form and substance satisfactory to the
Agent and dated, where applicable, of even date herewith or a date prior thereto
or  thereafter  and  acceptable  to  the  Agent:

<PAGE>
(a)     multiple  counterparts  of  this  Agreement  as  requested by the Agent;

(b)     the  Notes  to  be  in  place  on  the  Closing  Date;

(c)     copies  of  the  organizational  documents  of  the  Borrower  and  all
amendments  to  any  of  such  documents, accompanied by a certificate dated the
Closing  Date  issued  by  the  secretary  or  an assistant secretary or another
authorized  representative  of the Borrower to the effect that each such copy is
correct  and  complete;

(d)     a  certificate  of incumbency dated the Closing Date, including specimen
signatures  of  all  officers  or  other representatives of the Borrower who are
authorized  to  execute  Loan  Documents  on  behalf  of the Borrower, each such
certificate being executed by the secretary or an assistant secretary or another
authorized  representative  of  the  Borrower;

(e)     copies  of  resolutions adopted by the directors of the Parent approving
the  Loan  Documents  to  which  the  Borrower  is  a  party and authorizing the
transactions contemplated herein and therein, accompanied by a certificate dated
the Closing Date issued by the secretary or an assistant secretary of the Parent
to  the  effect that such copies are true and correct copies of resolutions duly
adopted  and  that  such resolutions constitute all the resolutions adopted with
respect  to  such  transactions, have not been amended, modified or rescinded in
any respect and are in full force and effect as of the date of such certificate;

(f)     the  following  documents establishing Liens in favor or for the benefit
of  the  Agent,  for  the  benefit  of  the  Secured  Creditors,  in  and to the
Collateral,  including  Mortgaged  Properties  constituting  no less than ninety
percent (90%) of the discounted present value, as determined by the Agent in its
reasonable  discretion,  of  the proved reserves attributable to the Oil and Gas
Properties  of  the  Borrower:

(i)     security  documents  covering, in the aggregate and among other Property
of  the  Borrower,  Oil  and  Gas  Properties of the Borrower sufficient for the
Borrower  to  be  in  compliance  with  the  provisions  of  Section  5.5;  and

(ii)     undated  letters, in form and substance satisfactory to the Agent, from
the  Borrower  to  each purchaser of production and disburser of the proceeds of
production from or attributable to the Mortgaged Properties, with the addressees
left  blank,  authorizing  and  directing the addressees to make future payments
attributable  to production from the Mortgaged Properties directly to the Agent;

(g)     evidence  satisfactory to the Agent that, with the exception of delivery
by  the  Borrower of funds in payment of the purchase price for the Acquisition,
the  Acquisition  has  closed;

(h)     audited  financial  statements  of  the  Parent  and  its  consolidated
Subsidiaries  as  of December 31, 2009, together with opinion of the auditors of
the Parent with respect thereto, and a balance sheet of the Borrower prepared as
of  the  Closing  Date  and  giving  effect  to  the  Acquisition;

<PAGE>
(i)     certificates  dated  as  of a recent date from the Secretary of State or
other  appropriate  Governmental  Authority  evidencing  the  existence  or
qualification  and,  if  applicable,  good  standing  of  the  Borrower  in  its
jurisdiction  of  organization  and  in  any  other  jurisdictions where it owns
property  or  does  business;

(j)     results  of  a  search  of  the  uniform  commercial code records of the
Secretary  of  State of the State of Delaware, in the name of the Borrower, such
search  reports  to  be  from  a  source  or sources acceptable to the Agent and
reflecting  no  Liens, other than Permitted Liens, against any of the Collateral
as  to  which  perfection of a Lien is accomplished by the filing of a financing
statement;

(k)     confirmation,  acceptable  to  the  Agent, of the title of the Borrower,
free  and  clear  of  Liens  other than Permitted Liens, to Mortgaged Properties
constituting  no less than eighty percent (80%) of the discounted present value,
as  determined by the Agent in its reasonable discretion, of the proved reserves
attributable  to  such  Mortgaged  Properties;

(l)     confirmation  acceptable to the Agent that the Oil and Gas Properties of
the  Borrower  are  in  compliance,  in  all  material respects, with applicable
Environmental  Laws;

(m)     copies  of  executed  counterparts  of  all  operating, lease, sublease,
royalty,  sales,  exchange,  processing, farmout, bidding, pooling, unitization,
communitization  and  other  agreements relating to the Mortgaged Properties, as
requested  by  the  Agent  or  any  Lender;

(n)     engineering information regarding the Mortgaged Properties, as requested
by  the  Agent;

(o)     the  opinions  of  Porter  &  Hedges,  L.L.P. and Crowley Fleck PLLP, as
counsel  to  the  Borrower  in connection with this Agreement and the other Loan
Documents to which the Borrower is a party, which, when taken together, address,
in  substance,  the opinions set forth in the form of opinion attached hereto as
Exhibit  V;

(p)     certificates  evidencing  the  insurance  coverage  required  by  the
provisions  of  Section  5.20;

(q)     payment to Amegy of any fees due as of the Closing Date pursuant to this
Agreement;

(r)     payment  from the Borrower for estimated fees charged by filing officers
and  other  public  officials  incurred or to be incurred in connection with the
filing  and  recordation  of  any  Security  Documents  and fees and expenses of
Jackson  Walker L.L.P., counsel to the Agent, in connection with the transaction
which  is  the  subject  of this Agreement and, in each case, for which invoices
have  been  presented  as  of  the  Closing  Date;

(s)     copies of all Commodity Hedge Agreements, in form and substance and with
counterparties  acceptable  to  the  Agent,  for  purposes  of  determining  the
Borrowing  Base  as  of  the  Closing  Date,  if  any;

<PAGE>
(t)     certificates  of  Responsible  Officers of the Parent to the effect that
all representations and warranties made by the Borrower in this Agreement or any
other  Loan Document in place on the Closing Date are true and correct as of the
Closing  Date  and  that no Default or Event of Default exists as of the Closing
Date;

(u)     confirmation  acceptable  to  the  Agent  that no event or circumstance,
including  any  action,  suit,  investigation  or proceeding pending, or, to the
knowledge  of  the Borrower, threatened in any court or before any arbitrator or
Governmental  Authority,  shall have occurred which could reasonably be expected
to  have  a  Material  Adverse  Effect;  and

(v)     such  other  agreements, documents, instruments, opinions, certificates,
waivers,  consents  and  evidence  as  the  Agent  or  any  Lender  may request.

3.2     Each  Loan.  In  addition  to  the conditions precedent stated elsewhere
herein,  the  Lenders  shall  not  be  obligated to make any Loan, other than in
connection  with  a  Letter  of  Credit  Payment,  unless:

(a)     at least the requisite time prior to the requested date for the relevant
Loan,  the  Borrower shall have delivered to the Agent a Borrowing Request and a
funding direction advising the Agent whether the requested Loan should be funded
to  an  account of the Borrower at Amegy or should be funded by wire transfer to
an  account of another Person (in which case wire transfer instructions shall be
included)  and  each  statement  or certification made in such Borrowing Request
shall  be  true  and  correct  on  the  requested  date  for  such  Loan;

(b)     no  Event of Default, Default or Deficiency shall exist or will occur as
a  result  of  the  making  of  the  requested  Loan;

(c)     if  requested  by  the  Agent  or  any  Lender,  the Borrower shall have
delivered  evidence  satisfactory to the Agent or such Lender substantiating any
of  the  matters  contained  in this Agreement which are necessary to enable the
Borrower  to  qualify  for  such  Loan;

(d)     the  Agent  shall  have  received, reviewed and approved such additional
documents and items as described in Section 3.1 as may be requested by the Agent
with  respect  to  such  Loan;

(e)     no  event  shall have occurred which, in the opinion of the Agent or any
of  the Lenders, could reasonably be expected to have a Material Adverse Effect;

(f)     each of the representations and warranties of the Borrower or any of the
Guarantors  contained  in  this  Agreement and the other Loan Documents shall be
true  and correct in all material respects and shall be deemed to be repeated by
the  relevant  entity as if made on the requested date for such Loan, except for
any  such  representations  and  warranties  that  speak  to  a  specific  date;

(g)     all  of  the  Security  Documents  shall be in full force and effect and
provide  to  the  Agent  the  security  intended  thereby;

<PAGE>
(h)     neither the consummation of the transactions contemplated hereby nor the
making  of  such Loan shall contravene, violate or conflict with any Requirement
of  Law;

(i)     if  the  Borrower or any of the Guarantors has formed, after the Closing
Date,  any  Subsidiary,  such  Subsidiary,  if a Domestic Subsidiary, shall have
executed  and  delivered a Joinder Agreement and a Guaranty and, if requested by
the  Agent,  Security Documents covering the assets of such Domestic Subsidiary;
and

(j)     all  matters  incident  to  the  consummation of the transactions hereby
contemplated  shall  be  satisfactory  to  the  Agent.

3.3     Issuance  of  Letters  of  Credit.  The  obligation of the Agent, as the
issuer of the Letters of Credit, to issue, renew, or extend any Letter of Credit
is subject to the satisfaction of the following additional conditions precedent:

(a)     the  Borrower  shall  have  delivered  to  the Agent a written (or oral,
confirmed promptly in writing) request for the issuance, renewal or extension of
a Letter of Credit at least three Business Days prior to the requested issuance,
renewal  or  extension  date  and  a  Letter  of Credit Application at least one
Business  Day  prior  to  the  requested  issuance  date;  and each statement or
certification  made  in  such  Letter  of  Credit  Application shall be true and
correct  in all material respects on the requested date for the issuance of such
Letter  of  Credit;

(b)     no  Event of Default, Default or Deficiency shall exist or will occur as
a  result  of  the  issuance,  renewal,  or  extension of such Letter of Credit;

(c)     if  requested  by  the  Agent  or  any  Lender,  the Borrower shall have
delivered  evidence  satisfactory to the Agent or such Lender substantiating any
of  the  matters  contained  in this Agreement which are necessary to enable the
Borrower  to  qualify  for  the issuance, renewal or extension of such Letter of
Credit;

(d)     the  Agent  shall  have received, reviewed, and approved such additional
documents and items as described in Section 3.1 as may be requested by the Agent
with  respect  to  the  issuance, renewal or extension of such Letter of Credit;

(e)     no  event  shall have occurred which, in the opinion of the Agent or any
of  the Lenders, could reasonably be expected to have a Material Adverse Effect;

(f)     each of the representations and warranties of the Borrower or any of the
Guarantors  contained  in  this  Agreement and the other Loan Documents shall be
true  and  correct and shall be deemed to be repeated by the Borrower as if made
on  the  requested date for the issuance, renewal or extension of such Letter of
Credit  except  for  any  such  representation  and  warranties  that speak to a
specific  date;

(g)     all  of  the  Security  Documents  shall be in full force and effect and
provide  to  the  Lender  the  security  intended  thereby;

<PAGE>
(h)     neither the consummation of the transactions contemplated hereby nor the
issuance,  renewal  or  extension  of  such  Letter  of Credit shall contravene,
violate  or  conflict  with  any  Requirement  of  Law;

(i)     if  the  Borrower or any of the Guarantors has formed, after the Closing
Date,  any  Subsidiary,  such  Subsidiary,  if a Domestic Subsidiary, shall have
executed  and  delivered a Joinder Agreement and a Guaranty and, if requested by
the  Agent,  Security Documents covering the assets of such Domestic Subsidiary;

(j)     the  terms,  provisions  and beneficiary of the Letter of Credit or such
renewal  or  extension  shall be satisfactory to the Agent, as the issuer of the
Letters  of  Credit,  in  its  sole  discretion;  and

(k)     all  matters  incident  to  the  consummation of the transactions hereby
contemplated  shall  be  satisfactory  to  the  Agent.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

To  induce the Agent and the Lenders to enter into this Agreement, to induce the
Agent  to  issue  and renew Letters of Credit, and to induce the Lenders to make
the  Loans and to participate in Letters of Credit, the Borrower and each of the
Guarantors  represents  and  warrants  to  the  Agent  and  each  Lender  (which
representations  and  warranties  shall survive the delivery of the Notes) that:

4.1     Due  Authorization.  The  execution and delivery by it of this Agreement
and  the borrowings by the Borrower hereunder, the execution and delivery by the
Borrower  of  the Notes, the repayment by the Borrower of the Notes and interest
and  fees  provided  for  in  the  Notes  and  this Agreement, the execution and
delivery of the Security Documents to which it is a party and the performance by
it of its obligations under the Loan Documents to which it is a party are within
the  power  of  the Borrower or such Guarantor, have been duly authorized by all
necessary  action by the Borrower or such Guarantor, and do not and will not (a)
require  the  consent  of any Governmental Authority, (b) contravene or conflict
with  any  Requirement  of  Law,  (c) contravene or conflict with any indenture,
instrument  or  other  agreement  to  which it is a party or by which any of its
Property  may  be  presently bound or encumbered or (d) result in or require the
creation  or imposition of any Lien in, upon or on any of its Property under any
such  indenture, instrument or other agreement, other than under any of the Loan
Documents.

4.2     Existence.  It  is  a limited liability company or other Business Entity
duly  organized, legally existing and, if applicable, in good standing under the
laws  of  the  state  of  its  organization  and  is duly qualified as a foreign
Business  Entity  and,  if  applicable,  in  good  standing in all jurisdictions
wherein  the  ownership  of  its  Property  or  the  operation  of  its business
necessitates  same.

4.3     Valid  and  Binding  Obligations.  Each  Loan  Document to which it is a
party,  when duly executed and delivered by it, constitutes its legal, valid and
binding  obligation enforceable against it in accordance with its terms, subject
to  applicable  bankruptcy,  insolvency,

<PAGE>
reorganization,  moratorium  or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a  proceeding  in  equity  or  at  law.

4.4     Security  Documents.  The provisions of each Security Document, executed
by  it  are  effective  to  create,  in favor or for the benefit of the Agent, a
legal, valid and enforceable Lien in all of its right, title and interest in the
Collateral  described  therein,  which  Lien,  assuming  the  accomplishment  of
recording  and  filing  in  accordance  with  applicable  laws  prior  to  the
intervention  of  rights  of  other  Persons,  constitutes  a  fully  perfected
first-priority  Lien  (except  as to Permitted Liens) on all of its right, title
and  interest  in  the  Collateral  described  therein.

4.5     Title  to  Oil  and Gas Properties.  It has good and marketable title to
all  of its Oil and Gas Properties, free and clear of all Liens except Permitted
Liens.  No  Person  other  than  it has any ownership interest, whether legal or
beneficial,  in  its  interest  in  any  of  its  Oil  and  Gas  Properties.

4.6     Scope  and  Accuracy  of Financial Statements.  The Financial Statements
provided  to  the Agent prior to Closing present fairly in all material respects
the financial position and results of operations and cash flows of the Parent in
accordance  with  GAAP  as  at  the  relevant  point  in  time or for the period
indicated,  as  applicable.

4.7     No  Material  Adverse  Effect  or Default.  No event or circumstance has
occurred  since  the  date  of  the  Financial  Statements delivered pursuant to
Section  3.1(h)  which  could  reasonably be expected to have a Material Adverse
Effect,  and  no  Default  has  occurred  and  is  continuing.

4.8     No Material Misstatements.  No information, exhibit, statement or report
furnished  to  the  Agent  or any Lender by it or at its direction in connection
with  this  Agreement  or  any  other  Loan  Document  contains  any  material
misstatement of fact or omits to state a material fact or  any fact necessary to
make  the  statements  contained  therein  not misleading as of the date made or
deemed  made.

4.9     Liabilities,  Litigation  and  Restrictions.  Other than as reflected in
the  Financial  Statements  provided  to the Agent prior to Closing or listed on
Schedule  4.9  under the heading "Liabilities," it has no liabilities, direct or
contingent,  which  could  reasonably  be  expected  to  have a Material Adverse
Effect.  Except  as set forth under the heading "Litigation" on Schedule 4.9, no
litigation  or  other  action  of  any nature affecting it is pending before any
Governmental  Authority  or  threatened  against  or  affecting it or any of its
Subsidiaries  which  could  reasonably  be  expected  to have a Material Adverse
Effect.  No unusual or unduly burdensome restriction, restraint or hazard exists
by  contract,  Requirement  of  Law  or  otherwise  relative  to its business or
operations  or  its ownership and operation of any Collateral other than such as
relate  generally  to  Persons  engaged  in business activities similar to those
conducted  by  it.

4.10     Authorizations;  Consents.  Except  as  expressly  contemplated by this
Agreement,  no authorization, consent, approval, exemption, franchise, permit or
license  of,  or  filing with, any Governmental Authority or any other Person is
required  to  authorize,  or is otherwise required in connection with, the valid
execution  and  delivery  by  it  of  the  Loan  Documents  to  which  it  is  a

<PAGE>
party  or  any  instrument  contemplated  hereby, the repayment of the Notes and
interest and fees provided in the Notes and this Agreement or the performance of
the  Obligations,  in  each  case  except for any such authorizations, consents,
approvals,  exemptions,  permits,  or licenses that are normally obtained in the
ordinary  course  of  business.

4.11     Compliance  with  Laws.  It and its Properties, including any Mortgaged
Properties  and  Oil  and  Gas  Properties owned by it, are in compliance in all
material  respects  with  all  applicable  Requirements  of  Law.

4.12     ERISA.  It does not maintain, nor has it maintained, any Plan.  It does
not currently contribute to or have any obligation to contribute to or otherwise
have  any  liability  with  respect  to  any  Plan.

4.13     Environmental  Laws.  Except  as  described  on  Schedule  4.13:

(a)     no  Property  owned  by  it,  or,  to  its knowledge, Property of others
adjacent  to  Property  owned  by  it,  is  currently on or has ever been on any
federal  or  state  list  of  Superfund  Sites;

(b)     no  Hazardous  Substances  have  been  generated,  transported,  and/or
disposed  of  by  it  at  a  site  which  was,  at  the time of such generation,
transportation,  and/or  disposal,  or  has  since  become,  a  Superfund  Site;

(c)     except in accordance with applicable Requirements of Law or the terms of
a  valid  permit, license, certificate, or approval of the relevant Governmental
Authority,  no  Release  of  Hazardous  Substances  by  it or from, affecting or
related  to  any  Property  owned  by  it  has  occurred;  and

(d)     no  Environmental  Complaint  has  been  received  by  it  and  remains
unresolved.

4.14     Compliance  with  Federal  Reserve  Regulations.  No  transaction
contemplated  by the Loan Documents is in violation of, and it has not taken any
action  that  would result in any transaction contemplated by the Loan Documents
being  in  violation of any regulations promulgated by the Board of Governors of
the  Federal  Reserve  System,  including  Regulations  T,  U  or  X.

4.15     Investment  Company  Act.  It  is not, nor is it directly or indirectly
controlled  by  or  acting  on  behalf  of  any  Person which is, an "investment
company"  or  an  "affiliated  person"  subject  to regulation as an "investment
company"  within  the  meaning  of  the  Investment  Company  Act  of  1940.

4.16     Proper  Filing  of  Tax Returns; Payment of Taxes Due.  It has duly and
properly  filed  its  United States income tax returns and all other tax returns
which  are  required  to  be  filed  and has paid all taxes shown as due from it
thereon,  except  such  as  are  being  contested  in good faith and as to which
adequate  provisions and disclosures have been made.  The respective charges and
reserves  on  its books with respect to taxes and other governmental charges are
adequate.

<PAGE>
4.17     Refunds.  Except  as  described  on  Schedule  4.17,  no  orders  of,
proceedings  pending before, or other requirements of any Governmental Authority
exist  which  could  result  in  it  being required to refund any portion of the
proceeds  received  or  to  be  received  by  it  from  the sale of hydrocarbons
constituting  part  of  the  Mortgaged  Property or other Oil and Gas Properties
owned  by  it.

4.18     Gas  Contracts.  Except  as  described  on Schedule 4.18, (a) it is not
obligated  in  any  material  respect by virtue of any prepayment made under any
contract  containing  a  "take-or-pay"  or  "prepayment"  provision or under any
similar  agreement  to deliver hydrocarbons produced from or allocated to any of
the  Mortgaged  Property  or  other  Oil  and Gas Properties owned by it at some
future  date without receiving full payment therefor within 90 days of delivery,
and (b) it has not produced gas, in any material amount, subject to, and neither
it nor any of the Mortgaged Properties  or other Oil and Gas Properties owned by
it  is  subject  to,  balancing  rights of third parties or subject to balancing
duties  under  Requirements  of  Law, except as to such matters for which it has
established monetary reserves adequate in amount to satisfy such obligations and
has  segregated  such  reserves  from  other  accounts.

4.19     Intellectual  Property.  It owns or is licensed to use all Intellectual
Property necessary to conduct its business as currently conducted.  No claim has
been  asserted  or  is pending by any Person with respect to the use of any such
Intellectual  Property  or  challenging  or  questioning  the  validity  or
effectiveness  of any such Intellectual Property; and it knows of no valid basis
for  any  such  claim.  The  use  of  such  Intellectual Property by it does not
infringe  on  the rights of any Person, except for such claims and infringements
as  do  not,  in the aggregate, give rise to any material liability on its part.

4.20     Casualties  or  Taking  of  Property.  Except  as disclosed on Schedule
4.20,  since  the  later  of  (a)  the Closing Date, or (b) the date of the most
recent  Financial  Statements  furnished to the Agent pursuant to either Section
5.2  or  Section  5.3,  neither  its  business  nor any of its Property has been
affected  as  a  result  of  any  fire,  explosion,  earthquake, flood, drought,
windstorm,  accident, strike or other labor disturbance, embargo, requisition or
taking  of Property, or cancellation of contracts, permits or concessions by any
Governmental  Authority,  riot,  activities  of  armed  forces  or  acts of God.

4.21     Principal  Location.  Its  principal  place  of  business  and  chief
executive  office  is located at its address set forth in Section 9.3 or at such
other  location  as it may have, by proper written notice hereunder, advised the
Agent.

4.22     Subsidiaries.  It  has  no  Subsidiaries  other  than  as  set forth on
Schedule  4.22  or  as  otherwise  disclosed  to  the  Agent  in  writing.

4.23     Compliance  with  Anti-Terrorism  Laws.   Neither  it  nor  any  of its
Affiliates  is in violation of any Anti-Terrorism Law or knowingly engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose
of  evading  or  avoiding,  or  attempts to violate, any of the prohibitions set
forth  in  any  Anti-Terrorism  Law.

(b)     Neither  it  nor  any  of its Affiliates is any of the following (each a
"Blocked  Person"):

<PAGE>
     (i) a Person that is listed in the annex to, or is otherwise subject to the
provisions  of,  Executive  Order  No.  13224;

     (ii)  a  Person  owned or controlled by, or acting for or on behalf of, any
Person that is listed in the annex to, or is otherwise subject to the provisions
of,  Executive  Order  No.  13224;

     (iii)  a  Person  with  which  any  bank  or other financial institution is
prohibited  from  dealing  or  otherwise  engaging  in  any  transaction  by any
Anti-Terrorism  Law;

     (iv)  a  Person  that commits, threatens or conspires to commit or supports
"terrorism"  as  defined  in  Executive  Order  No.  13224;

     (v) a Person that is named as a "specially designated national" on the most
current  list  published  by  OFAC  at  its  official website or any replacement
website  or  other  replacement  official  publication  of  such  list;  or

     (vi)  an  Affiliate  of  a  Person  or  entity  listed  above.

(c)     Neither  it  nor  any  of  its  Affiliates  (i) conducts any business or
engages  in  making or receiving any contribution of funds, goods or services to
or  for the benefit of any Blocked Person or (ii) deals in, or otherwise engages
in  any  transaction  relating to, any property or interests in property blocked
pursuant  to  Executive  Order  No.  13224.

(d)     Neither  it  nor  any  of its Affiliates is in violation of any rules or
regulations  promulgated  by  OFAC  or  of  any  economic  or  trade  sanctions
administered  and  enforced  by OFAC or engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts  to  violate,  any  of  the  prohibitions  set  forth  in  any rules or
regulations  promulgated  by  OFAC.

4.24     Identification Numbers.  Its federal taxpayer identification number and
its  organizational  number  with  the  Secretary  of  State of the state of its
formation are as set out on Schedule 4.24 or as otherwise disclosed to the Agent
in  writing.

4.25     Solvency.  Immediately  after the Closing and immediately following the
making  of  each  Loan  made on the Closing Date and following the making of any
Loan  made after the Closing Date, after giving effect to the application of the
proceeds  of  each  such  Loan,  (a)  the  fair  value  of its assets, at a fair
valuation,  will  exceed  its debts and liabilities, subordinated, contingent or
otherwise,  at  a  fair  valuation;  (b)  the present fair saleable value of its
assets,  at  a  fair  valuation,  will  be  greater than the amount that will be
required  to  pay  the  probable  liability  of its debts and other liabilities,
subordinated,  contingent  or  otherwise,  as  such  debts and other liabilities
become absolute and matured considering all financing alternatives and potential
asset sales reasonably available to it; (c) it will be able to pay its debts and
liabilities,  subordinated,  contingent  or  otherwise,  as  such  debts  and
liabilities  become  absolute and matured; and (d) it will not have unreasonably
small  capital  with  which  to  conduct  the  business  in  which  it  is

<PAGE>
engaged  as  such  business  is  now  conducted and are proposed to be conducted
following  the  Closing  Date.

                                   ARTICLE V

                             AFFIRMATIVE COVENANTS

So  long  as  any  Obligation  remains  outstanding  or unpaid or any Commitment
exists,  the  Borrower  and  each  of the Guarantors (provided that Section 5.14
shall  apply  only  to  the  Borrower)  shall:

5.1     Maintenance  of  and  Access  to  Records.  Keep  adequate  records,  in
accordance with GAAP, of all its transactions so that at any time, and from time
to  time,  its  true and complete financial condition may be readily determined,
and promptly following the request of the Agent or any Lender, make such records
available  for  inspection by the Agent or any Lender and, at the expense of the
Borrower,  allow  the  Agent or any Lender to make and take away copies thereof.

5.2     Quarterly  Financial Statements and Compliance Certificates.  Deliver to
the  Agent  and,  upon  request, any Lender, on or before the 60th day after the
close  of  each quarterly period of each fiscal year of the Borrower, commencing
with  that  ending  December  31,  2010,  (a)  a copy of the unaudited Financial
Statements  of  the  Borrower  as at the close of such quarterly period and from
the  beginning  of  such  fiscal  year to the end of such period, such Financial
Statements to be certified by a Responsible Officer of the Parent as having been
prepared in accordance with GAAP consistently applied and as a fair presentation
of  the  financial  condition of the Borrower, subject to changes resulting from
normal  year end audit adjustments, and (b) a Compliance Certificate prepared as
of  the  close  of  such  quarterly  period.

5.3     Annual  Financial Statements and Compliance Certificate.  Deliver to the
Agent  and, upon request, any Lender, on or before the 120th day after the close
of each fiscal year of the Borrower, commencing with that ending on December 31,
2010,  (a)  a  copy  of the annual audited Financial Statements of the Borrower,
such  Financial  Statements  to  be accompanied by an unqualified opinion from a
nationally-recognized  or  regionally-recognized  firm  of independent certified
public  accountants or other independent certified public accountants acceptable
to  the  Agent and be certified by a Responsible Officer of the Parent as having
been  prepared  in  accordance  with  GAAP  consistently  applied  and as a fair
presentation  of  the  financial condition of the Borrower, and (b) a Compliance
Certificate  prepared  as  of  the  close  of  the  relevant  fiscal  year.

5.4     Oil  and  Gas  Reserve  Reports and Production Reports.   Deliver to the
Agent  and, upon request, any Lender, no later than each April 1 during the term
of  this  Agreement, an engineering report in form and substance satisfactory to
the  Agent,  prepared  as  of  the  preceding  January  1  and  certified  by  a
nationally-recognized  or  regionally-recognized  firm of independent consulting
petroleum  engineers or other firm of independent consulting petroleum engineers
acceptable  to  the  Agent as fairly and accurately setting forth (i) the proved
and  producing,  non-producing, shut-in, behind-pipe and undeveloped oil and gas
reserves  (separately  classified  as  such)  attributable  to  the  Mortgaged
Properties  and  other  Oil  and  Gas  Properties  of  the  Borrower

<PAGE>
and  its Subsidiaries as of the most recent practicable date, (ii) the aggregate
present  value  of  the  future  net income with respect to proved and producing
reserves  attributable  to  the  Mortgaged  Properties  and  other  Oil  and Gas
Properties  of  the  Borrower,  discounted  at a stated per annum discount rate,
(iii)  projections of the annual rate of production, gross income and net income
with  respect  to  such  proved  and  producing  reserves, (iv) information with
respect  to the "take-or-pay," "prepayment" and gas-balancing liabilities of the
Borrower  with  respect  to  such reserves and (v) general economic assumptions.

(b)     Deliver  to  the Agent and, upon request, any Lender, no later than each
October  1  during  the  term of this Agreement (commencing October 1, 2011), an
engineering report, in substantially the format of and providing the information
provided  in  the  engineering  reports  provided  pursuant  to  Section 5.4(a),
prepared  as  of  the  preceding  July  1  and certified, at the election of the
Borrower,  by  either  the chief operating officer or senior reserve engineer of
the  Borrower  or  a  nationally-recognized  or  regionally-recognized  firm  of
independent consulting petroleum engineers acceptable to the Agent as fairly and
accurately  setting  forth  the  information  provided  therein.

(c)     Deliver  to  the Agent and, upon request, any Lender, in connection with
each  unscheduled  redetermination  of  the  Borrowing  Base  requested  by  the
Borrower,  an  engineering  report, in substantially the format of and providing
the  information provided in the engineering report provided pursuant to Section
5.4(a), prepared as of a date no more than 60 days prior to such redetermination
date  (and  in the case of an unscheduled redetermination requested by the Agent
and  the Lenders, within 60 days of such request) and certified, at the election
of  the  Borrower,  by  either  the  chief  operating  officer or senior reserve
engineer  of  the  Borrower  or a nationally-recognized or regionally-recognized
firm  of  independent  consulting petroleum engineers acceptable to the Agent as
fairly  and  accurately  setting  forth  the  information  provided  therein.

(d)     Deliver  to  the  Agent, no later than the 60th day following the end of
each  calendar  quarter,  a  report,  in form satisfactory to the Agent, setting
forth  information as to quantities of production from the Mortgaged Properties,
volumes  of  production sold, volumes of production committed to Commodity Hedge
Agreements,  pricing,  purchasers of production, gross revenues, lease operating
expenses,  and  such  other information as the Agent may request with respect to
the  relevant  quarterly  period.

5.5     Title  Opinions; Title Defects; Mortgaged Properties.  Promptly upon the
request  of  the  Agent,  (a)  furnish  to the Agent title opinions, in form and
substance  and  by  counsel  satisfactory to the Agent, or other confirmation of
title  acceptable  to the Agent, covering Oil and Gas Properties of the Borrower
the  discounted  present  value of the proved reserves attributable to which, in
the  aggregate,  equals  no  less than eighty one percent (81%) of the aggregate
discounted  present value of the proved reserves attributable to the Oil and Gas
Properties  of  the  Borrower;  promptly,  but in any event within 30 days after
notice  by the Agent of any defect having a Material Adverse Effect on the value
of any Oil and Gas Property, clear such title defects; and promptly upon request
of  the Agent, execute and deliver to the Agent additional Security Documents as
necessary  to  maintain,  as Mortgaged Properties, Oil and Gas Properties of the
Borrower  constituting  no  less  than  ninety  percent  (90%)  of the aggregate
discounted  present value of the proved reserves attributable to the Oil and Gas
Properties  of  the  Borrower.

<PAGE>
5.6     Notices  of  Certain  Events.  Deliver to the Agent, promptly, but in no
event later than the fifth Business Day after having knowledge of the occurrence
of  any  of  the  following  events  or  circumstances, a written statement with
respect  thereto,  signed  by  a Responsible Officer of the Borrower and setting
forth  the  relevant  event  or  circumstance  and  the steps being taken by the
Borrower  with  respect  to  such  event  or  circumstance:

(a)     any  Default  or  Event  of  Default;

(b)     any  default  by  it under any contractual obligation or any litigation,
investigation, or proceeding between it and any Governmental Authority which, in
either  case, if not cured or if adversely determined, as the case may be, could
reasonably  be  expected  to  have  a  Material  Adverse  Effect;

(c)     any litigation or proceeding involving it as a defendant or in which any
of  its  Property  is  subject  to  a  claim and in which the amount involved is
$100,000 or more and which is not covered by insurance or in which injunctive or
similar  relief  is  sought;

(d)     the  receipt  by  it  of any Environmental Complaint, which if adversely
determined  could  reasonably  be  expected  to  have a Material Adverse Effect;

(e)     any  actual,  proposed,  or threatened testing or other investigation by
any  Governmental  Authority  or  other  Person  concerning  the  environmental
condition  of, or relating to, any of its Property following any allegation of a
violation  of  any  Requirement  of  Law;

(f)     any Release of Hazardous Substances by it or from, affecting, or related
to  any  of  its  Property or Property of others adjacent to any of its Property
which  could reasonably be expected to have a Material Adverse Effect, except in
accordance  with  applicable Requirements of Law or the terms of a valid permit,
license, certificate, or approval of the relevant Governmental Authority, or the
violation of any Environmental Law, or the revocation, suspension, or forfeiture
of  or  failure  to  renew,  any  permit,  license,  registration,  approval, or
authorization,  which  could  reasonably  be expected to have a Material Adverse
Effect;

(g)     any  change  in its ownership or in the senior management of the Parent;

(h)     any  material change in its accounting or financial reporting practices;
and

(i)     any  other event or condition which could reasonably be expected to have
a  Material  Adverse  Effect.

5.7     Letters  in  Lieu  of Transfer Orders or Division Orders.  Promptly upon
request  by  the Agent at any time and from time to time, and without limitation
on  the  rights  of  the  Agent  pursuant  to the provisions of Section 2.22 and
Section  2.23,  execute  such letters in lieu of transfer or division orders, in
addition  to the letters delivered to the Agent in satisfaction of the condition
set  forth  in  Section  3.1(f), as are necessary or appropriate to transfer and
deliver  to  the  Agent proceeds from or attributable to any Mortgaged Property.

5.8     Commodity  Hedging.  Comply  in all material respects with any Commodity
Hedge  Agreements  entered into by the Borrower in effect on the Closing Date or
subsequent  to

<PAGE>
the  Closing  Date  and  not  in  violation  of  the  provisions of Section 6.1;
provided,  however,  that  all of the foregoing is subject to the limitations on
Commodity  Hedge  Agreements  set  forth  in  Section  6.1.

5.9     Joinder Agreements, Guaranties and Additional Security Documents.  Cause
each  Domestic  Subsidiary of the Borrower or any of the Guarantors formed after
the Closing Date to execute and deliver a Joinder Agreement, a Guaranty in favor
of  the  Agent,  for the benefit of the Lenders and the other Secured Creditors,
and  Security  Documents, as requested by the Agent, in favor or for the benefit
of  the  Agent,  for the benefit of the Lenders and the other Secured Creditors,
covering  assets  of  such  Domestic  Subsidiary  and take all such other action
requested  by  the  Agent  or  any  Lender  to perfect the Lien of such Security
Documents,  and  execute  and  deliver  to  the  Agent multiple counterparts, as
requested  by  the  Agent,  Security Documents (as requested by the Agent and in
form  and  substance  satisfactory  to  the  Agent) establishing in favor of the
Agent,  for  the  benefit of the Lenders and any other Secured Creditors, a Lien
against all of the issued and outstanding capital stock of any such newly formed
Subsidiary  of  the  Borrower  or  any  of  the  Guarantors.

5.10     Additional  Information.  Furnish to the Agent and any Lender, promptly
upon  the request of the Agent or any Lender, such additional financial or other
information  concerning  its assets, liabilities, operations and transactions as
the  Agent or any Lender may from time to time request; and notify the Agent not
less  than  ten  Business Days prior to the occurrence of any condition or event
that may change the proper location for the filing of any financing statement or
other  public  notice  or  recording for the purpose of perfecting a Lien in any
Collateral,  including  any change in its name or jurisdiction of  organization;
and upon the request of the Agent, execute such additional Security Documents as
may  be  necessary  or  appropriate  in  connection  therewith.

5.11     Compliance  with Laws.  Comply with all applicable Requirements of Law,
including  (a)  ERISA,  (b)  Environmental  Laws  and (c) all permits, licenses,
registrations,  approvals,  and  authorizations  (i)  related  to any natural or
environmental  resource  or  media  located  on,  above,  within,  related to or
affected  by  any  of  its  Property,  (ii)  required for the performance of its
operations,  or  (iii)  applicable  to  the  use, generation, handling, storage,
treatment,  transport  or disposal of any Hazardous Substances; and use its best
efforts  to  cause  all  of  its  employees,  crew members, agents, contractors,
subcontractors  and  future  lessees (pursuant to appropriate lease provisions),
while such Persons are acting within the scope of their relationship with it, to
comply  with  all such Requirements of Law as may be necessary or appropriate to
enable  it  to  so  comply.

5.12     Payment  of  Assessments  and  Charges.  Pay  all  taxes,  assessments,
governmental charges, rent and other Indebtedness which, if unpaid, might become
a  Lien  against any of its Property, except any of the foregoing that are being
contested  in  good faith and as to which an adequate reserve in accordance with
GAAP  has  been  established  or unless failure to pay would not have a Material
Adverse  Effect.

5.13     Maintenance  of Existence or Qualification and Good Standing.  Maintain
its  separate  existence  and  identity  and,  if  applicable, good standing and
qualification  in  its

<PAGE>
jurisdiction  of  formation  and  in  all jurisdictions wherein the Property now
owned  or  hereafter  acquired  or  business  now  or  hereafter conducted by it
necessitates  same.

5.14     Payment  of Notes; Performance of Obligations.  Pay the Notes according
to the reading, tenor and effect thereof, as modified hereby, and do and perform
every  act  required  under  the  Loan  Documents and discharge all of the other
Obligations.

5.15     Further  Assurances.  Promptly  cure  any  defects in the execution and
delivery  of any of the Loan Documents to which it is a party and all agreements
contemplated  thereby,  and execute, acknowledge and deliver to the Agent or any
Lender  such  other  assurances  and instruments as shall, in the opinion of the
Agent  or any Lender, be necessary to fulfill the terms of the Loan Documents to
which  it  is  a  party.

5.16     Initial  Expenses  of  Agent.  Upon  request  by  the  Agent,  promptly
reimburse  the  Agent for, or pay directly to such special counsel, all fees and
expenses  of Jackson Walker  L.L.P., special counsel to the Agent, in connection
with  the  preparation  of  this  Agreement  and  all documentation contemplated
hereby,  the  satisfaction  of  the  conditions  precedent set forth herein, the
filing  and  recordation  of  Security  Documents  and  the  consummation of the
transactions  contemplated  in  this  Agreement.

5.17     Subsequent  Expenses  of Agent and Lenders.  Upon request by the Agent,
promptly  reimburse  the  Agent (to the fullest extent permitted by law) for all
amounts  expended, advanced or incurred by or on behalf of the Agent to evaluate
the  Mortgaged Properties or to satisfy any of the relevant Person's obligations
under  any  of the Loan Documents; to collect the Obligations; to ratify, amend,
restate or prepare additional Loan Documents, as the case may be; for the filing
and recordation of Security Documents; to enforce the rights of the Agent or any
of  the  Lenders  under  any  of the Loan Documents; and to protect the relevant
Person's  Properties  or business, including the Collateral, which amounts shall
be  deemed compensatory in nature and liquidated as to amount upon notice to the
relevant  Person  by  the  Agent  and  which amounts shall include (a) all court
costs,  (b)  reasonable  attorneys'  fees,  (c)  fees  and expenses of auditors,
accountants,  and  independent  petroleum  engineers  or incurred to protect the
interests of the Agent, the Lenders and any other Approved Hedge Counterparties,
(d) fees and expenses incurred in connection with the participation by the Agent
and  the  Lenders  as  members  of  the  creditors'  committee in any Insolvency
Proceeding,  (e)  fees  and  expenses  incurred  in  connection with lifting the
automatic stay prescribed in Sec.362 Title 11 of the United States Code, and (f)
fees  and  expenses  incurred in connection with any action pursuant to Sec.1129
Title  11 of the United States Code all incurred by the Agent and the Lenders in
connection  with  the  collection  of  any  sums  due  under the Loan Documents,
together with interest at the per annum interest rate equal to the Adjusted Base
Rate  plus  the  Applicable  Margin  on  each  such  amount  from  the  date  of
notification  that  the same was expended, advanced, or incurred by the Agent or
any  Lender  until  the  date it is repaid to the Agent or such Lender, with the
obligations  under  this  Section  5.16  surviving  the  non-assumption  of this
Agreement  in  any  Insolvency  Proceeding  and  being  binding upon it and/or a
trustee,  receiver,  custodian, or liquidator of it  appointed in any such case.

5.18     Operation of Oil and Gas Properties.  Develop, maintain and operate or,
to  the  extent that the right or obligation to do so rests with another Person,
use  commercially

<PAGE>
reasonable  efforts  to cause such other Person to develop, maintain and operate
its Oil and Gas Properties in a prudent and workmanlike manner and in accordance
with  customary  industry  standards.

5.19     Maintenance  and  Inspection of Properties.  Maintain or, to the extent
that  the  right  or  obligation  to  do  so  rests  with  another  Person,  use
commercially  reasonable  efforts  to cause such other Person to maintain all of
its  tangible  Properties  in  good repair and condition, ordinary wear and tear
excepted;  make  or,  to  the extent that the right or obligation to do so rests
with  another  Person,  use  commercially reasonable efforts to cause such other
Person to make all necessary replacements thereof and operate such Properties in
a  good  and workmanlike manner; and permit any authorized representative of the
Agent  or  any  Lender,  upon  prior  notice to visit and inspect, at reasonable
times,  any  of  its  tangible  Property.

5.20     Maintenance  of  Insurance.  Maintain  insurance  with  respect  to its
Properties  and  businesses  against  such  liabilities,  casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Agent, name the Agent as an additional insured (in the case of
liability  insurance)  and  co-loss  payee  (in  the  case  of  physical  damage
insurance),  and, upon any renewal of any such insurance and at other times upon
request  by the Agent, furnish to the Agent evidence, satisfactory to the Agent,
of  the  maintenance  of  such  insurance.  The  Agent  shall  have the right to
collect,  and  the  Borrower  and  each  of the Guarantors hereby assigns to the
Agent,  any  and  all  monies  that  may  become  payable  under any policies of
insurance  relating  to  business  interruption  or by reason of damage, loss or
destruction  of  any  of  the  Collateral.  In  the event of any damage, loss or
destruction  for  which  insurance  proceeds  relating  to business interruption
exceed  $250,000  or  Collateral  exceed $250,000, the Agent may, at its option,
apply all such sums or any part thereof received by it toward the payment of the
Obligations, whether matured or unmatured, application to be made first to fees,
then to interest and then to principal, and shall deliver to the Borrower or the
relevant  Guarantor,  as  the  case  may  be,  the  balance,  if any, after such
application  has  been  made.  In  the  event  of  any  other  damage,  loss  or
destruction  for  which  insurance  proceeds  received are $250,000 or less, and
provided  that  no  Default  or  Event  of Default has occurred, the Agent shall
deliver  any  such  proceeds  received  by  it  to  the Borrower or the relevant
Guarantor,  as  the  case  may  be,  for  use  to repair or replace the damaged,
destroyed  or lost property.  In the event the Agent receives insurance proceeds
not attributable to Collateral or business interruption, the Agent shall deliver
any  such  proceeds  to  the  Borrower.

5.21     Environmental  Indemnification.  INDEMNIFY  AND HOLD THE AGENT AND EACH
OF  THE  LENDERS  AND  THEIR  RESPECTIVE  SHAREHOLDERS,  OFFICERS,  DIRECTORS,
EMPLOYEES,  AGENTS,  ATTORNEYS-IN-FACT  AND  AFFILIATES AND EACH TRUSTEE FOR THE
BENEFIT  OF  THE  AGENT  OR THE LENDERS UNDER ANY SECURITY DOCUMENT (EACH OF THE
FOREGOING AN "INDEMNITEE") HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES,
DAMAGES,  LIABILITIES,  FINES,  PENALTIES,  CHARGES, ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS  AND  ORDERS,  JUDGMENTS,  REMEDIAL  ACTIONS,  REQUIREMENTS  AND
ENFORCEMENT  ACTIONS  OF  ANY  KIND,  AND  ALL  COSTS  AND  EXPENSES INCURRED IN
CONNECTION  THEREWITH  (INCLUDING  REASONABLE  ATTORNEYS'  FEES  AND  EXPENSES),
ARISING  DIRECTLY  OR  INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE PRESENCE OF
ANY  HAZARDOUS  SUBSTANCES ON, UNDER, OR FROM ANY OF ITS PROPERTY, WHETHER PRIOR
TO  OR  DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON ANY
OF  ITS

<PAGE>
PROPERTY,  WHETHER  PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY IT OR ANY
OF  ITS  PREDECESSORS IN TITLE, EMPLOYEES, AGENTS, CONTRACTORS OR SUBCONTRACTORS
OR  ANY  OTHER  PERSON  AT  ANY  TIME  OCCUPYING OR PRESENT ON SUCH PROPERTY, IN
CONNECTION  WITH  THE  HANDLING,  TREATMENT,  REMOVAL, STORAGE, DECONTAMINATION,
CLEANUP,  TRANSPORTATION,  OR  DISPOSAL  OF ANY HAZARDOUS SUBSTANCES AT ANY TIME
LOCATED  OR PRESENT ON OR UNDER SUCH PROPERTY, (C) ANY RESIDUAL CONTAMINATION ON
OR  UNDER  ANY OF ITS PROPERTY, (D) ANY CONTAMINATION OF ANY PROPERTY OR NATURAL
RESOURCES  ARISING  IN  CONNECTION  WITH THE GENERATION, USE, HANDLING, STORAGE,
TRANSPORTATION  OR  DISPOSAL  OF  ANY  HAZARDOUS  SUBSTANCES BY IT OR ANY OF ITS
EMPLOYEES,  AGENTS, CONTRACTORS, OR SUBCONTRACTORS WHILE SUCH PERSONS ARE ACTING
WITHIN  THE  SCOPE OF THEIR RELATIONSHIP WITH IT, IRRESPECTIVE OF WHETHER ANY OF
SUCH  ACTIVITIES  WERE  OR  WILL  BE  UNDERTAKEN  IN  ACCORDANCE WITH APPLICABLE
REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND ENFORCEMENT OF ANY LOAN DOCUMENT
OR  ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO ANY LOAN DOCUMENT
OR  THE  TRANSACTIONS  CONTEMPLATED  THEREBY,  INCLUDING  ANY  SUCH CLAIM, LOSS,
DAMAGE, LIABILITY, FINE, PENALTY, CHARGE, ADMINISTRATIVE OR JUDICIAL PROCEEDING,
ORDER,  JUDGMENT,  REMEDIAL  ACTION,  REQUIREMENT,  ENFORCEMENT  ACTION, COST OR
EXPENSE,  ARISING  FROM  THE NEGLIGENCE (BUT NOT THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT),  WHETHER  SOLE OR CONCURRENT, OF ANY INDEMNITEE; WITH THE FOREGOING
INDEMNITY  SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT,  UNLESS  ALL  SUCH OBLIGATIONS HAVE BEEN SATISFIED WHOLLY IN CASH AND
NOT  BY  WAY  OF  REALIZATION  AGAINST  ANY  COLLATERAL OR THE CONVEYANCE OF ANY
PROPERTY  IN  LIEU  THEREOF,  PROVIDED,  HOWEVER,  THAT SUCH INDEMNITY SHALL NOT
EXTEND  TO  ANY  ACT  OR OMISSION BY THE AGENT OR ANY LENDER WITH RESPECT TO ANY
PROPERTY  SUBSEQUENT  TO  THE  AGENT  OR  ANY  LENDER BECOMING THE OWNER OF SUCH
PROPERTY AND WITH RESPECT TO WHICH PROPERTY SUCH CLAIM, LOSS, DAMAGE, LIABILITY,
FINE, PENALTY, CHARGE, PROCEEDING, ORDER, JUDGMENT, ACTION OR REQUIREMENT ARISES
SUBSEQUENT  TO THE ACQUISITION OF TITLE THERETO BY THE AGENT OR ANY LENDER.  ALL
AMOUNTS DUE UNDER THIS SECTION 5.21 SHALL BE PAYABLE ON WRITTEN DEMAND THEREFOR.

5.22     General  Indemnification.  INDEMNIFY  AND HOLD EACH INDEMNITEE HARMLESS
FROM  AND  AGAINST  ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED
EXPENSES,  INCLUDING  REASONABLE  ATTORNEYS'  FEES  AND  EXPENSES (INCLUDING THE
ALLOCATED  COST  OF  INTERNAL  COUNSEL),  INCURRED  BY  OR  ASSERTED AGAINST ANY
INDEMNITEE  ARISING OUT OF, IN ANY WAY CONNECTED WITH, OR AS A RESULT OF (A) THE
EXECUTION  AND  DELIVERY  OF  THIS  AGREEMENT  AND THE OTHER LOAN DOCUMENTS, THE
PERFORMANCE  BY  THE  PARTIES HERETO AND THERETO OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER  AND  THEREUNDER  AND  CONSUMMATION  OF  THE TRANSACTIONS CONTEMPLATED
HEREBY  AND  THEREBY, (B) THE USE OF PROCEEDS OF THE LOANS OR LETTERS OF CREDIT,
OR (C) ANY CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE
FOREGOING,  WHETHER OR NOT ANY INDEMNITEE IS A PARTY THERETO, INCLUDING ANY SUCH
LOSS,  CLAIM,  DAMAGE, LIABILITY OR EXPENSE ARISING FROM THE NEGLIGENCE (BUT NOT
THE  GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), WHETHER SOLE OR CONCURRENT, OF ANY
INDEMNITEE;  WITH  THE  FOREGOING  INDEMNITY  SURVIVING  SATISFACTION  OF  ALL
OBLIGATIONS  AND  THE TERMINATION OF THIS AGREEMENT.  ALL AMOUNTS DUE UNDER THIS
SECTION  5.22  SHALL  BE  PAYABLE  ON  WRITTEN  DEMAND  THEREFOR.

<PAGE>
5.23     Evidence  of Compliance with Anti-Terrorism Laws.  Deliver to the Agent
and  any  Lender any certification or other evidence requested from time to time
by  the  Agent  or  such Lender confirming its compliance with the provisions of
Section  6.17.

5.24     Operating  Accounts.  Establish  and  maintain with Amegy its principal
operating  accounts.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

So  long  as  any  Obligation  remains  outstanding  or unpaid or any Commitment
exists,  neither  the  Borrower  nor  any  Guarantor  shall:

6.1     Indebtedness.  Create,  incur,  assume  or  suffer  to  exist  any
Indebtedness,  whether  by  way  of  loan  or  otherwise; provided, however, the
foregoing  restriction  shall  not  apply  to (a) the Obligations, (b) unsecured
accounts  payable,  taxes  and  other  assessments, in each case incurred in the
ordinary course of business and which are not unpaid in excess of 90 days beyond
invoice  date  or are being contested in good faith and as to which such reserve
as  is  required  by  GAAP has been made, (c) Indebtedness under Commodity Hedge
Agreements, including reimbursement obligations under letters of credit securing
or  supporting  such Indebtedness, with any Approved Hedge Counterparty, Secured
Third  Party Hedge Counterparty or, so long as each such Person is acceptable to
the  Agent, other counterparties, provided that (i) such agreements shall not be
for  a  term  in  excess  of  five  years and shall not, except as to floors, be
entered  into  with  respect  to more than eighty percent (80%) of the projected
production  of proved developed producing volumes of each commodity category, as
reflected  in each Reserve Report provided pursuant to the provisions of Section
5.4 during the term of the relevant agreement, and (ii) the floor prices in such
agreements  are  not  less  than the prices used by the Agent in its most recent
Borrowing  Base  determination  as of the time the relevant agreement is entered
into,  (d)  Indebtedness  under Interest Rate Hedge Agreements with any Approved
Hedge  Counterparty,  Secured Third Party Hedge Counterparty or, so long as each
such Person is acceptable to the Agent, other counterparties, provided that such
agreements  shall not be entered into with respect to notional principal amounts
in excess of eighty percent (80%) of the Loan Balance, (e) Indebtedness incurred
with  respect  to all or a portion of the purchase price of Property acquired in
the  ordinary  course  of  business not exceeding $100,000 in the aggregate, (f)
Indebtedness owing by the Borrower or any Guarantor to the Borrower or any other
Guarantor  and  (g)  other  unsecured  Indebtedness or Indebtedness secured by a
Permitted  Lien  not  exceeding,  in the aggregate at any time, $100,000 for the
Borrower  on  a  consolidated  basis  with  its  consolidated  Subsidiaries.

6.2     Contingent  Obligations.  Create,  incur,  assume or suffer to exist any
Contingent  Obligation;  provided,  however, the foregoing restriction shall not
apply  to  (a)  performance  guarantees,  performance  surety  or other bonds or
endorsements  of  items  deposited  for collection, in each case provided in the
ordinary  course  of  business,  (b)  trade  credit incurred or operating leases
entered  into  in the ordinary course of business, or (c) Indebtedness permitted
by  Section  6.1  or  (d)  any  Guaranties.

<PAGE>
6.3     Liens.  Create,  incur, assume or suffer to exist any Lien on any of its
Oil  and  Gas  Properties  or any other Property, whether now owned or hereafter
acquired;  provided,  however,  the  foregoing  restriction  shall  not apply to
Permitted  Liens.

6.4     Sales  of Assets.  Sell, transfer or otherwise dispose of, in one or any
series  of  transactions,  any  of  its Property, whether now owned or hereafter
acquired, or enter into any agreement to do so; provided, however, the foregoing
restriction  shall not apply to (a) the sale of hydrocarbons or inventory in the
ordinary course of business, provided, however, that no contract for the sale of
hydrocarbons shall obligate the relevant Person to deliver hydrocarbons produced
from  any  of  its  Oil and Gas Properties at some future date without receiving
full  payment  therefor  within  60  days  of  delivery,  (b)  the sale or other
disposition  of  Property  destroyed,  lost,  worn  out,  damaged or having only
salvage  value  or no longer used or useful in the business in which it is used,
(c)  the  sale  or  other  disposition  of  any Property, other than Oil and Gas
Properties  by  the  Borrower  or  any  Guarantor  to  the Borrower or any other
Guarantor,  (d) so long as no Default or Event of Default exists, sales or other
dispositions  of Oil and Gas Properties of the Borrower between redeterminations
of  the  Borrowing  Base as provided in Section 2.10 the aggregate loan value of
which,  as  assigned  thereto  by  the  Agent  in the most recent setting of the
Borrowing  Base  in  accordance  with the provisions of Section 2.10, equals ten
percent  (10%)  or  less  of  the  amount  of  the then existing Borrowing Base;
provided,  however,  in  connection with any such transaction, the then existing
Borrowing  Base  shall  be automatically reduced by an amount equal to such loan
value  of the relevant Mortgaged Properties and further provided, however, that,
upon  consummation of any such transaction, if a Deficiency exists, the Borrower
shall  proceed  to  cure  such  Deficiency  in accordance with the provisions of
Section  2.11, or (e) so long as no Default or Event of Default exists, sales or
other  dispositions  of  Oil  and  Gas  Properties  of  the  Borrower  between
redeterminations of the Borrowing Base as provided in Section 2.10 the aggregate
loan value of which, as assigned thereto by the Agent in the most recent setting
of the Borrowing Base in accordance with the provisions of Section 2.10, exceeds
ten  percent  (10%)  of  the amount of the then existing Borrowing Base with the
consent  of  the  Agent  and  the  Required Lenders; provided, however, that the
Borrowing  Base  to  be  in  effect  immediately  upon  consummation of any such
transaction  shall be established by the Agent, with the approval of the Lenders
as  required pursuant to the provisions of Section 9.9, prior to consummation of
the  transaction,  and  further provided, however, that upon consummation of any
such transaction, if a Deficiency exists, the Borrower shall proceed to cure any
such  Deficiency  in  accordance  with  the  provisions  of  Section  2.11.

6.5     Leasebacks.  Enter  into  any agreement to sell or transfer any Property
and  thereafter rent or lease as lessee such Property or other Property intended
for  the  same  use  or  purpose  as  the  Property  sold  or  transferred.

6.6     Sale or Discount of Receivables.  Except to minimize losses on bona fide
debts  previously  contracted,  discount or sell with recourse, or sell for less
than  the  greater  of  the  face  or  market  value  thereof,  any of its notes
receivable  or  accounts  receivable.

6.7     Loans or Advances.  Make or agree to make or allow to remain outstanding
any  loans  or  advances  to  any  Person;  provided,  however,  the  foregoing
restriction  shall not apply to (a) advances or extensions of credit in the form
of  accounts  receivable  incurred  in  the ordinary course of business and upon
terms  common  in  the  industry  for  such  accounts  receivable,  (b)

<PAGE>
advances  to  employees  for  the  payment of expenses in the ordinary course of
business  not  exceeding  $50,000  in  the  aggregate  for  the  Borrower  on  a
consolidated  basis  with its consolidated Subsidiaries outstanding at any time,
(c)  loans  or  advances by the Borrower or any Guarantor to the Borrower or any
other  Guarantor or (d) other loans or advances so long as not exceeding, in the
aggregate outstanding at any time, $100,000 in the aggregate for the Borrower on
a  consolidated  basis  with  its  consolidated  Subsidiaries.

6.8     Investments.  Make  or  acquire Investments in, or purchase or otherwise
acquire  all  or  substantially  all  of  the  assets  of, any Person; provided,
however,  the  foregoing  restriction  shall  not  apply  to  the  purchase  or
acquisition  of  (a)  Oil and Gas Properties, (b) Investments in the form of (i)
debt securities issued or directly and fully guaranteed or insured by the United
States  Government  or any agency or instrumentality thereof, with maturities of
no  more  than one year, (ii) commercial paper of a domestic issuer rated at the
date  of  acquisition  at least P-2 by Moody's Investors Service, Inc. or A-2 by
Standard  & Poor's Corporation and with maturities of no more than one year from
the  date of acquisition or (iii) repurchase agreements covering debt securities
or  commercial  paper of the type permitted in this Section 6.8, certificates of
deposit,  demand deposits, eurodollar time deposits, overnight bank deposits and
bankers'  acceptances, with maturities of no more than one year from the date of
acquisition,  issued  by  or  acquired from or through any Lender or any bank or
trust  company  organized  under the laws of the United States of America or any
state  thereof  and  having capital surplus and undivided profits aggregating at
least  $100,000,000,  (c)  other  short-term  Investments  similar in nature and
degree  of  risk  to  those  described  in  clause  (b) of this Section 6.8, (d)
Investments  in  money-market  funds  sponsored  or  administered  by  Persons
acceptable to the Agent and which funds invest in short-term Investments similar
in  nature  and  degree of risk to those described in clause (b) of this Section
6.8,  (e)  Investments  by  the Borrower or any Guarantor in the Borrower or any
other  Guarantor  or  (f)  evidences  of loans or advances not prohibited by the
provisions  of  Section  6.7.

6.9     Dividends  and  Distributions.  Declare, pay or make, whether in cash or
Property  of  the Borrower, any dividend or distribution on, or purchase, redeem
or  otherwise acquire for value, any of its equity interests; provided, however,
the  foregoing  restriction  shall  not  apply to (a) so long as there exists no
Default  or  Event of Default and the Lender has received reasonable support for
the  amount  of  each  such dividend or distribution, dividends or distributions
paid  to  the  members  of  the  Borrower  in  the amount of up to the amount of
federal,  state and local income taxes that the members of the Borrower shall be
obligated to pay in respect of the taxable income of the Borrower, (b) dividends
or  distributions permitted by written consent of the Agent with the approval of
the  Required  Lenders  (not  to  be  unreasonably withheld) at each semi-annual
Borrowing Base redetermination or (c) dividends paid in common equity interests.

6.10     Issuance  of Equity; Changes in Structure.  Issue or agree to issue any
additional  equity  interests,  other  than  (a) common equity interests and (b)
preferred  equity  interests with terms approved in writing by the Agent and the
Required  Lenders in advance of the issuance thereof; enter into any transaction
of  consolidation,  merger  or  amalgamation  in  which  the Borrower is not the
survivor;  or  liquidate,  wind  up  or  dissolve  (or suffer any liquidation or
dissolution).

6.11     Transactions  with  Affiliates.  Directly or indirectly, enter into any
transaction  (including the sale, lease or exchange of Property or the rendering
of  service)  with  any  of  its

<PAGE>
Affiliates,  other  than  upon  fair and reasonable terms no less favorable than
could  be obtained in an arm's length transaction with a Person which was not an
Affiliate,  other  than  (a)  transactions disclosed in writing to the Agent and
consented  to  by  the Agent (such consent not to be unreasonably withheld), and
(b)  payments  from  the  Borrower  to  the  Parent  to reimburse the Parent for
expenses  of  the  Borrower  paid  on  its  behalf  by  the  Parent.

6.12     Lines  of Business.  Change its principal line of business from that in
which  it  is  engaged  as  of  the  date  hereof.

6.13     Plan  Obligation.  Assume  or otherwise become subject to an obligation
to  contribute  to  or  maintain any Plan or acquire any Person which has at any
time  had  an  obligation  to  contribute  to  or  maintain  any  Plan.

6.14     Current  Ratio.  Permit  the  ratio  of  Current  Assets  to  Current
Liabilities, determined as of the close of any calendar quarter, commencing with
the  quarterly  period  ending  December 31, 2010, to be less than 1.00 to 1.00.

6.15     Leverage  Ratio.  Permit  the  ratio, determined as of the close of any
calendar quarter, commencing with the quarterly period ending December 31, 2010,
of  (a)  Indebtedness  of  the  Borrower  on  a  consolidated  basis  with  its
consolidated  Subsidiaries  in  respect  of  borrowed  money, including the Loan
Balance  (exclusive,  for  the avoidance of doubt, of trade accounts payable and
accrued  liabilities,  net  unrealized losses or charges in respect of Commodity
Hedge  Agreements  or  Interest Rate Hedge Agreements and the undrawn, unexpired
amount  of  all  outstanding  Letters  of  Credit,  if  such  would otherwise be
included),  which  is  not subordinated to payment in full of all Obligations on
terms  approved  by  the  Agent  to (b) EBITDA of the Borrower on a consolidated
basis  with  its  consolidated  Subsidiaries  for  the  period  of four calendar
quarters  then  ended  (provided that (i) EBITDA for the quarterly period ending
December  31, 2010 shall be EBITDA for such quarterly period multiplied by four,
(ii)  EBITDA  for the quarterly period ending March 31, 2011 shall be EBITDA for
the two quarterly periods ending on such date multiplied by two and (iii) EBITDA
for  the  quarterly  period  ending  June 30, 2011 shall be EBITDA for the three
quarterly  periods  ending  on such date multiplied by one and one third), to be
greater  than  3.50  to  1.00.

6.16     Interest  Coverage Ratio.  Permit (a) for each of the quarterly periods
ending  December 31, 2010 through June 30, 2011, the ratio of (i) EBITDA for the
Borrower  on  a  consolidated  basis  with  its  consolidated  basis  with  its
consolidated  Subsidiaries  for  the  relevant quarterly period to (ii) Interest
Expense  for  the  Borrower  on  a  consolidated  basis  with  its  consolidated
Subsidiaries  for  the relevant quarterly period to be less than 2.50 to 1.00 or
(b) for each quarterly period ending thereafter, the ratio of (i) EBITDA for the
Borrower  on  a  consolidated  basis  with its consolidated Subsidiaries for the
twelve-month  period  then ending to (ii) Interest Expense for the Borrower on a
consolidated  basis  with  its  consolidated  Subsidiaries  for the twelve-month
period  then  ended  to  be  less  than  2.50  to  1.00.

6.17     Anti-Terrorism Laws.  Conduct any business or engage in any transaction
or  dealing  with  any  Blocked Person, including the making or receiving of any
contribution  of  funds,  goods or services to or for the benefit of any Blocked
Person;  deal  in,  or  otherwise  engage  in  any  transaction relating to, any
Property  or  interests  in  Property  blocked  pursuant  to  Executive  Order

<PAGE>
No.  13224; or engage in or conspire to engage in any transaction that evades or
avoids,  or  has the purpose of evading or avoiding, or attempts to violate, (i)
any  of  the  prohibitions  set  forth  in  Executive Order No. 13224 or the USA
Patriot  Act,  or  (ii)  any  prohibitions set forth in the rules or regulations
issued  by  OFAC  or any sanctions against targeted foreign countries, terrorism
sponsoring  organizations,  and  international  narcotics  traffickers  based on
United  States  foreign  policy.

                                  ARTICLE VII

                               EVENTS OF DEFAULT

7.1     Enumeration  of  Events  of  Default.  Any of the following events shall
constitute  an  Event  of  Default:

(a)     default  shall be made in the payment when due of (i) any installment of
principal  or  interest  under  this Agreement or the Notes, (ii) in the payment
when  due  of any fee or other sum payable under any Loan Document, or (iii) any
Indebtedness  of  the  Borrower  under any Commodity Hedge Agreement or Interest
Rate  Hedge  Agreement permitted or required under applicable provisions of this
Agreement;

(b)     default  shall  be  made by the Borrower or any of the Guarantors in the
due observance or performance of any of its obligations, covenants or agreements
under  the Loan Documents, and, as to compliance with the obligations, covenants
or  agreements  under  Article  V  (other than Section 5.14), such default shall
continue  for  30  days  after  the  earlier  of  notice thereof by the Agent or
knowledge  thereof  by  the  Borrower;

(c)     any  representation  or warranty made by or on behalf of the Borrower or
any of the Guarantors in any of the Loan Documents proves to have been untrue in
any  material  respect  or  any  representation,  statement (including Financial
Statements), certificate or data furnished or made to the Agent or any Lender in
connection herewith proves to have been untrue in any material respect as of the
date  the  facts  therein  set  forth  were  stated  or  certified;

(d)     default  shall  be  made  by  the  Borrower or any of the Guarantors (as
principal  or  guarantor  or  other surety) in the payment or performance of any
bond,  debenture,  note  or  other  Indebtedness  in  excess  of $100,000 in the
aggregate  or  under any credit agreement, loan agreement, indenture, promissory
note  or  similar agreement or instrument executed in connection with any of the
foregoing,  and such default shall remain unremedied for in excess of the period
of  grace,  if  any,  with  respect  thereto  or  there shall occur any event or
condition  in  respect  of  any  such Indebtedness which would allow the holders
thereof  to  require  such  Indebtedness  to be repaid, repurchased or redeemed;

(e)     the  Borrower  shall  be  unable  to  satisfy  any condition or cure any
circumstance  specified  in  Article III, the satisfaction or curing of which is
precedent to the right of the Borrower to obtain a Loan or the issuance, renewal
or  extension  of  a  Letter  of Credit, and such inability shall continue for a
period  in  excess  of  60  days;

(f)     the  Borrower or any of the Guarantors shall (i) apply for or consent to
the  appointment  of  a  receiver,  trustee,  or  liquidator  of  it or all or a
substantial  part  of  its  assets,  (ii)

<PAGE>
file  a  voluntary  petition  commencing  an Insolvency Proceeding, (iii) make a
general  assignment  for the benefit of creditors of all or substantially all of
its  assets, (iv) be unable, or admit in writing its inability, to pay its debts
generally  as  they  become  due,  or  (v) file an answer admitting the material
allegations  of  a  petition  filed  against  it  in  any Insolvency Proceeding;

(g)     an  order,  judgment  or decree shall be entered against the Borrower or
any  of  the  Guarantors  by any court of competent jurisdiction or by any other
duly  authorized authority, on the petition of a creditor or otherwise, granting
relief  in  any  Insolvency  Proceeding  or  approving  a  petition  seeking
reorganization or an arrangement of its debts or appointing a receiver, trustee,
conservator,  custodian,  or  liquidator of it or all or any substantial part of
its assets, and such order, judgment, or decree shall not be dismissed or stayed
within  60  days;

(h)     the levy against any significant portion of the Property of the Borrower
or  any  of  the  Guarantors  of  any  execution,  garnishment,  attachment,
sequestration  or  other  writ  or  similar proceeding in an amount in excess of
$100,000  which  is not permanently dismissed or discharged within 60 days after
the  levy;

(i)     a  final  and  non-appealable order, judgment or decree shall be entered
against  the  Borrower  or  any  of  the  Guarantors  for  money  damages and/or
Indebtedness due in an amount in excess of $100,000, and such order, judgment or
decree  shall  not be dismissed or stayed within 60 days or is not fully covered
by  insurance  (excluding  any  deductible);

(j)     any charges are filed or any other action or proceeding is instituted by
any  Governmental  Authority against the Borrower or any of the Guarantors under
the Racketeering Influence and Corrupt Organizations Statute (18 U.S.C. Sec.1961
et  seq.),  the  result  of  which  could  be  the forfeiture or transfer of any
material  Property  of  the  Borrower  subject  to  a Lien in favor of the Agent
without (i) satisfaction or provision for satisfaction of such Lien or (ii) such
forfeiture  or  transfer  of  such Property being expressly made subject to such
Lien;

(k)     the  Borrower or any of the Guarantors shall have (i) concealed, removed
or  diverted, or permitted to be concealed, removed or diverted, any part of its
Property,  with intent to hinder, delay or defraud its creditors or any of them,
(ii)  made  or  suffered  a  transfer of any of its Property which is fraudulent
under  any  bankruptcy,  fraudulent  conveyance,  or  similar law with intent to
hinder,  delay or defraud its creditors, (iii) made any transfer of its Property
to  or  for  the  benefit of a creditor at a time when other creditors similarly
situated  have  not  been  paid  with  intent  to  hinder,  delay or defraud its
creditors,  or  (iv)  shall  have  suffered  or  permitted, while insolvent, any
creditor  to obtain a Lien upon any of its Property through legal proceedings or
distraint  which  is  not  vacated  within  60  days  from  the  date  thereof;

(l)     any  Security  Document  shall  for  any reason not, or cease to, create
valid  and  perfected  first  priority  Liens  (subject only to Permitted Liens)
against  the  Collateral  purportedly  covered  thereby,  except  to  the extent
permitted  by  this  Agreement;

(m)     any  Loan Document, at any time after its execution and delivery and for
any  reason  other  than  as  expressly  permitted  hereunder  or  thereunder or
satisfaction  in  full  of  all

<PAGE>
Obligations  and termination of the Commitments and this Agreement, ceases to be
in  full  force  and  effect;

(n)     the  Borrower  or any of the Guarantors purports to revoke, terminate or
rescind  any  Loan  Document  or  any  provision  of  any  Loan  Document;

(o)     neither the Parent nor High Plains Gas, LLC, a Wyoming limited liability
company,  shall  be  serving as the sole manager of the Borrower; the Parent and
High  Plains  Gas,  LLC shall cease to own, in the aggregate, at least fifty one
percent (51%) of the common equity interests in the Borrower; or, if High Plains
Gas, LLC owns at least fifty one percent (51%) of the common equity interests in
the Borrower, Mark Hettinger shall cease to own at least fifty one percent (51%)
of  the  equity  interests  in  High Plains Gas, LLC with the right to elect its
managers  or  to  manage  such  Business  Entity;  or

(p)     the  occurrence  of  a  Material  Adverse  Effect.

7.2     Remedies.   Upon  the  occurrence  of  an  Event of Default specified in
Section  7.1(f)  or  Section  7.1(g),  immediately  and  without notice, (i) all
Obligations  under the Loan Documents shall automatically become immediately due
and  payable,  without presentment, demand, protest, notice of protest, default,
or  dishonor, notice of intent to accelerate maturity, notice of acceleration of
maturity, or other notice of any kind, except as may be provided to the contrary
elsewhere  herein,  all of which are hereby expressly waived by the Borrower and
the  Guarantors  and  (ii) the Commitments shall immediately cease and terminate
unless  and  until  reinstated  by  the  Agent  and  the  Lenders  in  writing.

(b)     Upon  the  occurrence of any Event of Default other than those specified
in  Section 7.1(f) or Section 7.1(g), (i) the Agent may and, upon the request of
the  Required  Lenders, shall, by notice in writing to the Borrower, declare all
Obligations  under  the  Loan  Documents  immediately  due  and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent  to  accelerate  maturity,  notice  of acceleration of maturity, or other
notice  of any kind, except as may be provided to the contrary elsewhere herein,
all  of which are hereby expressly waived by the Borrower and the Guarantors and
(ii)  the Agent may and, upon the request of the Required Lenders, shall declare
the  Commitments  terminated,  whereupon the Commitments shall immediately cease
and  terminate  unless  and  until  reinstated  by  the Agent and the Lenders in
writing.

(c)     Upon the occurrence of any Event of Default,  the Agent may, in addition
to  the  foregoing  in  this  Section 7.2, exercise any or all of the rights and
remedies  provided  by  law  or  pursuant  to  the  Loan  Documents.

(d)     Should  the  Obligations under the Loan Documents become immediately due
and  payable in accordance with any of the preceding subsections of this Section
7.2, the obligation of the Borrower with respect to the L/C Exposure shall be to
provide cash as Collateral therefor, to be held and administered by the Agent as
provided  in  Section  2.11  with  respect to mandatory prepayments and, failing
receipt  by  the  Agent  of  immediate  payment in full of the Loan Balance, any
additional Obligations then due and payable, and all accrued and unpaid interest
and  fees  and  such cash to serve as Collateral for the L/C Exposure, the Agent

<PAGE>
shall  be  entitled  to  proceed  against  the Collateral, and proceeds from any
realization  against  any such Collateral, other than cash, in excess of the sum
of  the  costs of such realization, the Loan Balance, any additional Obligations
then  due and payable, and accrued and unpaid interest and fees shall constitute
cash  Collateral  for  the  remaining  L/C  Exposure,  if  any,  to  be held and
administered  by  the  Agent  as  provided  in  Section  2.11.

(e)     Proceeds  from  realization  against  the Collateral and any other funds
received  by  the Agent from the Borrower or any of the Guarantors when an Event
of  Default  has  occurred and is continuing shall be applied (i) first, to fees
and  expenses  due  pursuant  to  the  terms  of  this Agreement, any other Loan
Document  or any Commodity Hedge Agreement or Interest Rate Hedge Agreement with
an  Approved  Hedge  Counterparty,  (ii)  second,  to  accrued  interest  on the
Obligations  under  the  Loan  Documents  or  any  Commodity  Hedge Agreement or
Interest  Rate Hedge Agreement with an Approved Hedge Counterparty, (iii) third,
to the Loan Balance, in any manner elected by the Agent (with the consent of the
Required  Lenders),  and any other Obligations then due and payable, pro rata in
accordance  with the ratio of the Loan Balance or such other Obligations, as the
case  may be, to the sum of the Loan Balance and such other Obligations and (iv)
as  provided  in  subsection  (d)  immediately  above,  if  applicable.

                                  ARTICLE VIII

                                   THE AGENT

8.1     Appointment.  Each  Lender  hereby  designates and appoints the Agent as
the agent of such Lender under this Agreement and the other Loan Documents.  The
Agent  shall  also act hereunder as agent for all Approved Hedge Counterparties.
Each  Lender  authorizes  the  Agent, as the agent for such Lender, to take such
action  on  behalf of such Lender under the provisions of this Agreement and the
other  Loan Documents and to exercise such powers and perform such duties as are
expressly  delegated  to  the Agent by the terms of this Agreement and the other
Loan  Documents,  together  with  such other powers as are reasonably incidental
thereto.  Notwithstanding  any  provision  to  the  contrary  elsewhere  in this
Agreement  or in any other Loan Document, the Agent shall not have any duties or
responsibilities  except  those  expressly set forth herein or in any other Loan
Document  or  any  fiduciary  relationship  with  any  Lender;  and  no  implied
covenants,  functions,  responsibilities, duties, obligations, or liabilities on
the  part  of  the  Agent  shall  be  read into this Agreement or any other Loan
Document  or  otherwise  exist  against  the  Agent.

8.2     Delegation  of  Duties.  The  Agent  may execute any of its duties under
this  Agreement  and  the  other  Loan  Documents  by  or  through  agents  or
attorneys-in-fact  and  shall  be  entitled  to advice of counsel concerning all
matters  pertaining  to  such duties.  The Agent shall not be responsible to any
Lender  for  the  negligence  or  misconduct  of any agents or attorneys-in-fact
selected  by  it  with  reasonable  care.

8.3     Exculpatory  Provisions.  Neither  the  Agent  nor  any of its officers,
directors,  employees,  agents,  attorneys-in-fact  or  affiliates  shall be (a)
required  to  initiate  or  conduct  any  litigation  or  collection proceedings
hereunder,  except  with the contribution by each Lender of its Percentage Share
of  costs  reasonably  expected  by  the  Agent  to  be  incurred  in connection
therewith, (b) liable for any action lawfully taken or omitted to be taken by it
or  such  Person

<PAGE>
under  or  in  connection with this Agreement or any other Loan Document (except
for  gross  negligence or willful misconduct of the Agent or such Person) or (c)
responsible in any manner to any Lender or any other Approved Hedge Counterparty
for any recitals, statements, representations or warranties made by the Borrower
or  any  of the Guarantors or any officer or representative thereof contained in
this  Agreement  or  any  other  Loan  Document  or  in any certificate, report,
statement  or  other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
for  the  value,  validity,  effectiveness,  genuineness,  enforceability  or
sufficiency  of  this Agreement or any other Loan Document or for any failure of
the  Borrower  or  any of the Guarantors to perform its obligations hereunder or
thereunder.  The  Agent  shall  not be under any obligation to any Lender or any
other  Approved  Hedge  Counterparty  to  ascertain  or  to  inquire  as  to the
observance  or  performance of any of the agreements contained in, or conditions
of,  this  Agreement  or  any other Loan Document, or to inspect the properties,
books  or  records  of  the  Borrower  or  any  of  the  Guarantors.

8.4     Reliance  by  Agent.  The  Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine  and  correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
the  Borrower  or  any  of  the  Guarantors),  independent accountants and other
experts  selected  by  the Agent.  The Agent may deem and treat the payee of any
Note  as the owner thereof for all purposes unless and until a written notice of
assignment,  negotiation,  or  transfer  thereof shall have been received by the
Agent.  The  Agent  shall  be fully justified in failing or refusing to take any
action  under  this  Agreement  or any other Loan Document unless it shall first
receive  such  advice  or  concurrence  of  the  Required  Lenders  as  it deems
appropriate  and  contribution  by  each Lender of its Percentage Share of costs
reasonably  expected  by  the Agent to be incurred in connection therewith.  The
Agent  shall  in  all  cases be fully protected in acting, or in refraining from
acting,  under  this Agreement and the other Loan Documents in accordance with a
request  of  the Required Lenders.  Such request and any action taken or failure
to act pursuant thereto shall be binding upon the Lenders and all future holders
of  the  Notes.  In no event shall the Agent be required to take any action that
exposes the Agent to personal liability or that is contrary to any Loan Document
or  applicable  Requirement  of  Law.

8.5     Notice  of  Default.  The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the Agent has
received  notice  from a Lender, the Borrower or any of the Guarantors referring
to  this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default."  In the event that the Agent receives such
a  notice,  the  Agent  shall  promptly give notice thereof to the Lenders.  The
Agent shall take such action with respect to such Default or Event of Default as
shall  be  reasonably directed by the Required Lenders; provided that unless and
until  the  Agent shall have received such directions, subject to the provisions
of  Section 7.2, the Agent may (but shall not be obligated to) take such action,
or  refrain  from  taking  such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.  In the
event  that  the  officer  of  the  Agent  primarily responsible for the lending
relationship  with  the  Borrower  or  the  officer  of  any  Lender  primarily
responsible  for the lending relationship with the Borrower becomes aware that a
Default  or  Event  of  Default  has  occurred  and  is continuing, the Agent or

<PAGE>
such  Lender, as the case may be, shall use its good faith efforts to inform the
other Lenders and/or the Agent, as the case may be, promptly of such occurrence.
Notwithstanding  the  preceding  sentence,  failure to comply with the preceding
sentence  shall  not  result  in  any  liability  to  the  Agent  or any Lender.

8.6     Non-Reliance  on  Agent  and  Other  Lenders.  Each  Lender  expressly
acknowledges  that  neither  the  Agent  nor  any  other Lender nor any of their
respective  officers,  directors,  employees,  agents,  attorneys-in-fact  or
affiliates  has  made  any representation or warranty to such Lender and that no
act  by  the  Agent or any other Lender hereafter taken, including any review of
the  affairs  of  the  Borrower  or  any  of  the Guarantors, shall be deemed to
constitute  any  representation  or  warranty  by the Agent or any Lender to any
other  Lender.  Each  Lender  represents to the Agent that it has, independently
and  without  reliance  upon  the  Agent  or any other Lender, and based on such
documents  and  information as it has deemed appropriate, made its own appraisal
of  and  investigation  into  the  business,  operations,  property,  condition
(financial  and  otherwise)  and  creditworthiness  of  the  Borrower  and  the
Guarantors and the value of the Collateral and other Properties of the Borrower,
any of the Guarantors or any other Person and has made its own decision to enter
into  this  Agreement.  Each  Lender also represents that it will, independently
and  without  reliance  upon  the  Agent  or  any other Lender and based on such
documents  and information as it shall deem appropriate at the time, continue to
make  its  own credit analysis, appraisals and decisions in taking or not taking
action  under  this  Agreement  and  the  other Loan Documents, and to make such
investigation  as  it  deems  necessary  to  inform  itself  as to the business,
operations,  property,  condition (financial and otherwise) and creditworthiness
of  the  Borrower  and  the  value of the Collateral and other Properties of the
Borrower,  any  of  the  Guarantors  or  any  other Person.  Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the  Agent  hereunder,  the  Agent  shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations,  property,  condition (financial and otherwise), or creditworthiness
of  the  Borrower,  and  the  Guarantors or the value of the Collateral or other
Properties  of the Borrower, any of the Guarantors or any other Person which may
come  into  the  possession  of  the  Agent  or  any of its officers, directors,
employees,  agents,  attorneys-in-fact  or  affiliates.

8.7     Indemnification.  Each  Lender  agrees  to  indemnify  the Agent and its
officers, directors, employees, agents, attorneys-in-fact and Affiliates (to the
extent  not  reimbursed  by  the  Borrower  or any of the Guarantors and without
limiting  the  obligation  of  the  Borrower to do so), ratably according to the
Percentage  Share  of  such  Lender,  from  and against any and all liabilities,
claims,  obligations,  losses,  damages,  penalties,  actions, judgments, suits,
costs,  expenses  and disbursements of any kind whatsoever which may at any time
(including any time following the payment and performance of all Obligations and
the  termination  of  this  Agreement)  be  imposed  on, incurred by or asserted
against  the  Agent  or  any  of  its  officers,  directors,  employees, agents,
attorneys-in-fact  or  affiliates  in any way relating to or arising out of this
Agreement  or  any  other  Loan  Document, or any other document contemplated or
referred  to  herein or the transactions contemplated hereby or any action taken
or  omitted  by  the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact  or  Affiliates  under  or  in  connection  with  any  of  the
foregoing,  including  any  liabilities,  claims,  obligations, losses, damages,
penalties,  actions,

<PAGE>
judgments,  suits,  costs,  expenses  and  disbursements  imposed,  incurred  or
asserted as a result of the negligence, whether sole or concurrent, of the Agent
or  any  of  its  officers,  directors,  employees, agents, attorneys-in-fact or
Affiliates;  provided  that  no  Lender  shall  be liable for the payment of any
portion  of  such liabilities, obligations, losses, damages, penalties, actions,
judgments,  suits,  costs,  expenses  or disbursements resulting solely from the
gross  negligence  or  willful  misconduct  of the Agent or any of its officers,
directors,  employees,  agents, attorneys-in-fact or Affiliates.  The agreements
in this Section 8.7 shall survive the payment and performance of all Obligations
and  the  termination  of  this  Agreement.

8.8     Restitution.  Should  the  right  of  the Agent or any Lender to realize
funds  with respect to the Obligations be challenged and any application of such
funds  to  the  Obligations  be  reversed,  whether by Governmental Authority or
otherwise, or should the Borrower or any of the Guarantors otherwise be entitled
to a refund or return of funds distributed to the Lenders in connection with the
Obligations, the Agent or such Lender, as the case may be, shall promptly notify
the  Lenders  of  such  fact.  Not  later than noon, Central Standard or Central
Daylight  Savings  Time,  as the case may be, of the Business Day following such
notice,  each Lender shall pay to the Agent an amount equal to the ratable share
of  such  Lender  of the funds required to be returned to the Borrower or any of
the  Guarantors.  The  ratable  share  of each Lender shall be determined on the
basis  of the percentage of the payment all or a portion of which is required to
be  refunded  originally  distributed  to such Lender, if such percentage can be
determined,  or,  if  such  percentage cannot be determined, on the basis of the
Percentage  Share  of  such  Lender.  The  Agent shall forward such funds to the
Borrower, the relevant Guarantor or to the Lender required to return such funds.
If  any such amount due to the Agent is made available by any Lender after Noon,
Central  Standard  or  Central Daylight Savings Time, as the case may be, of the
Business  Day  following such notice, such Lender shall pay to the Agent (or the
Lender required to return funds to the Borrower or any of the Guarantors, as the
case  may be) for its own account interest on such amount at a rate equal to the
Federal  Funds  Rate  for  the  period  from  and  including  the  date on which
restitution  to  the  Borrower or any of the Guarantors is made by the Agent (or
the Lender required to return funds to the Borrower or any of the Guarantors, as
the  case  may be,) to, but not including, the date on which such Lender failing
to  timely forward its share of funds required to be returned to the Borrower or
the  relevant  Guarantor  shall  have  made  its  ratable  share  of  such funds
available.

8.9     Agent in Its Individual Capacity.  The Agent and its Affiliates may make
loans  to,  accept  deposits  from, and generally engage in any kind of business
with  the  Borrower  and  the  Guarantors as though the Agent were not the agent
hereunder.  With  respect to any Note issued to the Lender serving as the Agent,
the Agent shall have the same rights and powers under this Agreement as a Lender
and  may  exercise  such rights and powers as though it were not the Agent.  The
terms "Lender" and "Lenders" shall include the Agent in its individual capacity.

8.10     Successor  Agent.  The  Agent may resign as Agent upon ten days' notice
to  the Lenders, all Approved Hedge Counterparties under then existing Commodity
Hedge  Agreements  or  Interest  Rate Hedge Agreements and the Borrower.  If the
Agent  shall  resign as Agent under this Agreement and the other Loan Documents,
Lenders  (other  than  the  Agent  in  its  capacity  as a Lender) for which the
Percentage  Shares  aggregate  at  least  fifty-one  percent  (51%)  of  the

<PAGE>
Percentage  Shares  of  all  Lenders  (other than the Agent in its capacity as a
Lender)  shall  appoint from among the Lenders a successor agent for the Lenders
and  the  Approved  Hedge  Counterparties,  whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent; provided, however, should
the  Agent resign at a point when all Loans, accrued interest and fees hereunder
have  been  paid  in  full and the Commitments have terminated, resulting in the
only  then  existing  Obligations  being  the  liability  of  the Borrower under
Commodity  Hedge  Agreements and/or Interest Rate Hedge Agreements with Approved
Hedge  Counterparties,  the  successor  agent  shall be selected from among such
Approved  Hedge  Counterparties  by  majority  vote  of  such  Approved  Hedge
Counterparties.  The term "Agent" shall mean such successor agent effective upon
its  appointment.  The  rights,  powers, and duties of the former Agent as Agent
shall  be  terminated,  without  any other or further act or deed on the part of
such  former Agent or any of the parties to this Agreement or any holders of the
Notes.  After  the  removal  or resignation of any Agent hereunder as Agent, the
provisions  of this Article VIII and those of any Section hereof relating to the
Agent, including Section 5.16, Section 5.17, Section 5.20 and Section 5.21 shall
inure  to its benefit as to any actions taken or omitted to be taken by it while
it  was  Agent  under  this  Agreement  and  the  other  Loan  Documents.

8.11     Applicable  Parties.  The provisions of this Article are solely for the
benefit of the Agent and the Lenders, and neither the Borrower nor any Guarantor
shall have any rights as a third party beneficiary or otherwise under any of the
provisions  of  this  Article.  In performing functions and duties hereunder and
under  the  other Loan Documents, the Agent shall act solely as the agent of the
Lenders  and  any  other  Approved Hedge Counterparties and does not assume, nor
shall  it  be deemed to have assumed, any obligation or relationship of trust or
agency with or for the Borrower or any legal representative, successor or assign
of  any  such  Person.

8.12     Releases.  Each  Lender  hereby  authorizes  the  Agent  to release any
Collateral that is permitted to be sold or released pursuant to the terms of the
Loan  Documents.  Each Lender hereby authorizes the Agent to execute and deliver
to  the  Borrower, at the Borrower's sole cost and expense, any and all releases
of  Liens,  termination  statements,  assignments  or other documents reasonably
requested  by  the  Borrower in connection with any sale or other disposition of
Property  of  the  Borrower  or any of the Guarantors to the extent such sale or
other  disposition  is  permitted  by  the  terms  of  the  Loan  Documents.

                                   ARTICLE IX

                                 MISCELLANEOUS

9.1     Assignments;  Participations.   Neither  the  Borrower  nor  any  of the
Guarantors  may  not assign any of its rights or delegate any of its obligations
under  any Loan Document without the prior consent of the Agent and the Lenders.

(b)     With  the consent of the Agent and, except when a Default or an Event of
Default  shall  have  occurred,  the  Borrower  (which shall not be unreasonably
withheld  or  delayed  in  either  case),  any  Lender may assign to one or more
assignees  all  or  a portion of its rights and obligations under this Agreement
pursuant  to an Assignment Agreement; provided, however, (i) such consents shall
not  be  required  with  respect to an assignment from one Lender to one or more
other  Lenders  or Affiliates of Lenders, (ii) the consent of the Borrower shall
not  be

<PAGE>
required  with  respect  to  an assignment from a Lender to one or more Approved
Funds  or Affiliates of Approved Funds and (iii) any such assignment shall be as
to  a  Facility Amount of at least $5,000,000 (or any whole multiple of $100,000
in  excess  thereof),  unless  the relevant assignment is to an Affiliate of the
assigning  Lender  or is an assignment of the entire Commitment of the assigning
Lender.  The  assignee  shall  pay  to the Agent a transfer fee in the amount of
$5,000  for  each  such  assignment.  Any such assignment shall become effective
upon  the execution and delivery to the Agent of an Assignment Agreement and, if
required, the consent of the Agent and the Borrower.  Promptly following receipt
of an executed Assignment Agreement, the Agent shall send to the Borrower a copy
of  such  executed  Assignment  Agreement.  Promptly  following  receipt of such
executed  Assignment  Agreement,  the Borrower shall execute and deliver, at its
own  expense, a new Note to the assignee, if such assignee is not then a Lender.
Upon  the  effectiveness  of any assignment pursuant to this Section 9.1(b), the
assignee  will become a "Lender," if not already a "Lender," for all purposes of
the  Loan  Documents,  and  the  assignor  shall  be relieved of its obligations
hereunder to the extent of such assignment.  If the assignor no longer holds any
rights  or  obligations  under this Agreement, such assignor shall cease to be a
"Lender"  hereunder,  except  that  its rights under Section 5.16, Section 5.17,
Section  5.20 and Section 5.21, shall not be affected.  On the last Business Day
of  each  month during which an assignment has become effective pursuant to this
Section  9.1(b) or sooner following an assignment, the Agent shall prepare a new
Exhibit  IV  giving effect to all such assignments effected during such month or
any  relevant  assignment,  as the case may be, and will promptly provide a copy
thereof  to  the  Borrower  and  each  Lender.

(c)     Each  Lender may transfer, grant, or assign participations in all or any
portion  of  its  interests  hereunder  to  any  Person pursuant to this Section
9.1(c),  provided  that  such Lender shall remain a "Lender" for all purposes of
this  Agreement  and the transferee of such participation shall not constitute a
"Lender"  hereunder.  In  the  case  of  any such participation, the participant
shall not have any rights under any Loan Document, the rights of the participant
in  respect of such participation to be against the granting Lender as set forth
in  the  agreement with such Lender creating such participation, and all amounts
payable  by the Borrower hereunder shall be determined as if such Lender had not
sold  such  participation.  Each agreement creating a participation must include
an  agreement  by  the participant to be bound by the provisions of Section 8.3,
Section  8.6  and  Section  8.7.

(d)     The  Lenders  may furnish any information concerning the Borrower or any
of  the  Guarantors  in  the  possession  of  the  Lenders  from time to time to
assignees  and  participants  and  prospective  assignees  and  participants.

(e)     Notwithstanding anything in this Section 9.1 to the contrary, any Lender
may  assign  and  pledge  all or any of its Notes or any interest therein to any
Federal  Reserve  Bank  or  the  United  States  Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve System
and  any  operating  circular  issued by such Federal Reserve System and/or such
Federal  Reserve Bank.  No such assignment or pledge shall release the assigning
or  pledging  Lender  from  its  obligations  hereunder.

(f)     Notwithstanding any other provisions of this Section 9.1, no transfer or
assignment  of  the  interests  or  obligations  of  any  Lender  or  grant  of
participations therein shall be permitted if such transfer, assignment, or grant
would  require  the  Borrower  to  file  a  registration

<PAGE>
statement  with  the  Securities  and  Exchange  Commission  or  any  successor
Governmental  Authority  or  qualify  the Loans under the "Blue Sky" laws of any
state.

9.2     Survival  of  Representations,  Warranties,  and  Covenants.  All
representations  and  warranties  of  the  Borrower  and  the Guarantors and all
covenants  and  agreements  of the Borrower and the Guarantors herein made shall
survive  the  execution and delivery of the Notes and the Security Documents and
shall remain in force and effect so long as any Obligation is outstanding or any
Commitment  exists.

9.3     Notices  and  Other Communications.  Except as to oral notices expressly
authorized  herein,  which  oral  notices  shall  be  confirmed  in writing, all
notices,  requests,  and communications hereunder shall be in writing (including
by  facsimile,  electronic  mail  or  other  electronic form).  Unless otherwise
expressly  provided  herein,  any  such  notice,  request,  demand,  or  other
communication  shall be deemed to have been duly given or made when delivered by
hand or by a nationally-recognized overnight courier service, or, in the case of
delivery  by  mail, five days after being deposited in the mail, certified mail,
return  receipt requested, postage prepaid, or, in the case of facsimile notice,
when  receipt  thereof is acknowledged orally or by written confirmation report,
addressed  as  follows:

     (a)     if  to  the  Agent,  to:

               Amegy Bank National Association
               4400 Post Oak Parkway, 4th Floor
               Houston, Texas 77027-1739
               Attention:  Energy Lending Dept.
               Facsimile:  (713) 561-0345

               or  for  notice  by  mail:

               Amegy Bank National Association
               P.O. Box 27459
               Houston, Texas 77227-7459
               Attention:  Energy Lending Dept.

     (b)     if  to  any  Lender, to the address, including facsimile number, of
such  Lender  reflected  on  Exhibit  IV  or  any  replacement  thereof.

     (c)     if  to  the  Borrower  or  any  of  the  Guarantors,  to:

               11038 Highland Blvd., Suite 400  with a copy to:
               Highland, Utah  84003
               Attention:  Brandon W. Hargett   Miller Guymon, P.C.
               Attention:  Brent M. Cook        165 Regent Street
               Facsimile:  (801) 492-0716       Salt Lake City, Utah 84111
                                                Attention:  Blake Miller
                                                Facsimile:  (801) 363-5601

<PAGE>
Any party may, by proper written notice hereunder to the others, change the
individuals or addresses to which such notices to it shall thereafter be sent.

9.4     Parties  in  Interest.  Subject  to  the  restrictions  on  changes  in
structure  set forth in Section 6.10 and other applicable restrictions contained
herein,  all  covenants  and  agreements herein contained by or on behalf of the
Borrower,  any of the Guarantors, the Agent or the Lenders shall be binding upon
and  inure  to the benefit of the Borrower, the relevant Guarantor, the Agent or
the  Lenders,  as  the  case may be, and their respective legal representatives,
successors  and  permitted  assigns.

9.5     Renewals;  Extensions.  All provisions of this Agreement relating to the
Notes  shall apply with equal force and effect to each promissory note hereafter
executed which in whole or in part represents a renewal or extension of any part
of the Indebtedness of the Borrower under this Agreement, the Notes or any other
Loan  Document.

9.6     Rights  of  Third Parties.  All provisions herein are imposed solely and
exclusively  for the benefit of the Agent, the Lenders, any other Approved Hedge
Counterparties, the Borrower and the Guarantors.  No other Person shall have any
right,  benefit,  priority,  or interest hereunder or as a result hereof or have
standing  to  require satisfaction of provisions hereof in accordance with their
terms.

9.7     No  Waiver;  Rights Cumulative.  No course of dealing on the part of the
Agent or the Lenders or their officers or employees, nor any failure or delay by
the  Agent  or  the Lenders with respect to exercising any of their rights under
any  Loan  Document  shall operate as a waiver thereof.  The rights of the Agent
and the Lenders under the Loan Documents shall be cumulative and the exercise or
partial  exercise of any such right shall not preclude the exercise of any other
right.  Neither  the making of any Loan nor the issuance of any Letter of Credit
shall  constitute a waiver of any of the covenants, warranties, or conditions of
the  Borrower  or  any  of  the  Guarantors  contained herein.  In the event the
Borrower is unable to satisfy any such covenant, warranty, or condition, neither
the  making  of any Loan nor the issuance of any Letter of Credit shall have the
effect  of  precluding  the  Agent or the Lenders from thereafter declaring such
inability  to  be  an  Event  of  Default  as  hereinabove  provided.

9.8     Survival  Upon  Unenforceability.  In  the  event any one or more of the
provisions  contained  in  any  of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Obligations shall, for any
reason,  be  held  to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of  any  Loan Document or of any other instrument referred to herein or executed
in  connection  with  such  Obligations.

9.9     Amendments;  Waivers.  Neither  this  Agreement nor any provision hereof
may  be  amended,  waived,  discharged  or  terminated  orally,  but  only by an
instrument  in  writing  signed  by  the  party  against whom enforcement of the
amendment, waiver, discharge or termination is sought.  Subject to the preceding
sentence,  any  provision  of  this  Agreement or any other Loan Document may be
amended,  modified  or  waived  by the Borrower, the Guarantors and the Required
Lenders;  provided  that, notwithstanding any provision of this Agreement to the

<PAGE>
contrary,  (a)  no  amendment,  modification  or  waiver which extends the final
maturity  of  the  Loans, increases the Commitment Amount, increases, affirms or
reduces  the  Borrowing  Base  or  the  Monthly  Reduction  Amount, forgives the
principal  amount  of  any  Indebtedness  of the Borrower outstanding under this
Agreement  or  interest thereon or fees owing under this Agreement, releases any
guarantor  of  such  Indebtedness,  releases  all  or  substantially  all of the
Collateral,  reduces  the  interest  rate  applicable  to  the Loans or the fees
payable  to  the  Lenders  generally,  affects Section 2.1, Section 2.2, Section
7.2(c)  or  this  Section  9.9, modifies the definition of "Required Lenders" or
postpones  the  date  of  payment  of  any amount due as a result of the Monthly
Reduction  Amount  or  any  fee payable hereunder shall be effective without the
consent  of  each  Lender  effected  thereby;  (b) no amendment, modification or
waiver which increases the Facility Amount or the Percentage Share of any Lender
shall  be  effective  without  the consent of such Lender; and (c) no amendment,
modification  or  waiver which modifies the rights, duties or obligations of the
Agent  shall  be  effective  without  the consent of the Agent.  Notwithstanding
anything  to  the  contrary herein, no Defaulting Lender shall have any right to
approve  or  disapprove  any amendment, waiver or consent hereunder, except that
the  Commitment  of  such  Lender  may  not be increased or extended without the
consent  of  such  Lender.

9.10     Controlling  Agreement.  In  the  event  of  a  conflict  between  the
provisions  of  this  Agreement  and  those  of  any  other  Loan  Document, the
provisions  of  this  Agreement  shall  control.

9.11     Disposition  of  Collateral.  Notwithstanding  any  term  or provision,
express  or implied, in any of the Security Documents, but subject to applicable
provisions  of  this Agreement, the realization, liquidation, foreclosure or any
other  disposition  on  or of any or all of the Collateral shall be in the order
and  manner  and  determined  in  the  sole  discretion  of the Agent; provided,
however,  that  in  no  event shall the Agent violate applicable law or exercise
rights  and  remedies  other  than  those provided in such Security Documents or
otherwise  existing  at  law  or  in  equity.

9.12     Governing  Law.  THIS  AGREEMENT  AND  THE  Notes SHALL BE DEEMED TO BE
CONTRACTS  MADE  UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE  LAWS  OF  THE  STATE  OF TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF
RELATING  TO  CONFLICTS  OF  LAW.

9.13     Waiver  of  Right to Jury Trial.  THE BORROWER, EACH OF THE GUARANTORS,
THE  AGENT AND EACH OF THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY  AND  UNCONDITIONALLY  WAIVES  ALL  RIGHTS  TO  TRIAL BY JURY IN ANY
ACTION,  SUIT,  PROCEEDING,  COUNTERCLAIM OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS
OF  THE AGENT OR ANY LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS
OF  THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO.
THE  PROVISIONS OF THIS SECTION 9.13 ARE A MATERIAL INDUCEMENT FOR THE LENDER TO
ENTER  INTO  THIS  AGREEMENT.

9.14     Waiver  of  Class  Action.  THE  BORROWER,  EACH OF THE GUARANTORS, THE
AGENT AND EACH OF THE LENDERS WAIVES THE RIGHT TO LITIGATE ANY CLAIM, DISPUTE OR

<PAGE>
------
CONTROVERSY WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AS A CLASS
ACTION,  EITHER  AS  A  MEMBER OF A CLASS OR AS A REPRESENTATIVE, OR TO ACT AS A
PRIVATE  ATTORNEY  GENERAL.

9.15     Jurisdiction  and  Venue.  ALL  ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING  DIRECTLY  OR  INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS  AGREEMENT  OR  ANY  OTHER  LOAN  DOCUMENT  MAY  BE  LITIGATED, AT THE SOLE
DISCRETION  AND ELECTION OF THE AGENT, IN COURTS HAVING SITUS IN HOUSTON, HARRIS
COUNTY,  TEXAS.  IN  SUCH REGARD, THE BORROWER AND EACH OF THE GUARANTORS HEREBY
SUBMITS  TO  THE  JURISDICTION  OF  ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN
HOUSTON,  HARRIS  COUNTY,  TEXAS,  AND  HEREBY  WAIVES ANY RIGHTS IT MAY HAVE TO
TRANSFER  OR  CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST
IT  BY  THE  AGENT  OR  ANY  LENDER  IN  ACCORDANCE  WITH  THIS  SECTION  9.15.

9.16     Integration.  THIS  AGREEMENT  AND  THE OTHER LOAN DOCUMENTS CONSTITUTE
THE  ENTIRE  AGREEMENT  AMONG THE PARTIES HERETO AND THERETO WITH RESPECT TO THE
SUBJECT  HEREOF  AND  THEREOF  AND SHALL SUPERSEDE ANY PRIOR AGREEMENT AMONG THE
PARTIES  HERETO  AND  THERETO,  WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT
HEREOF  AND  THEREOF,  INCLUDING  ANY TERM SHEET PROVIDED TO THE BORROWER BY THE
AGENT  OR ANY LENDER.  FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER
WRITTEN  LOAN  DOCUMENTS  REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES  THERETO  AND  MAY  NOT  BE  CONTRADICTED  BY  EVIDENCE  OF  PRIOR,
CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL AGREEMENTS OF SUCH PARTIES.  THERE ARE NO
UNWRITTEN  ORAL  AGREEMENTS  AMONG  SUCH  PARTIES.

9.17     Waiver  of  Punitive  and Consequential Damages.  THE BORROWER, EACH OF
THE GUARANTORS, THE AGENT AND EACH OF THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY  AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT IT MAY LAWFULLY
AND EFFECTIVELY DO SO, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY DISPUTE
BASED  HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION  WITH  THE  LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR
ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY, ANY SPECIAL, EXEMPLARY, PUNITIVE
OR  CONSEQUENTIAL  DAMAGES,  OR  DAMAGES  OTHER  THAN, OR IN ADDITION TO, ACTUAL
DAMAGES  AND  (B)  ACKNOWLEDGES  THAT  IT  HAS  BEEN  INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY  BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN  THIS  SECTION  9.17.

9.18     Counterparts.  For  the  convenience of the parties, this Agreement may
be executed in multiple counterparts and by different parties hereto in separate
counterparts,  each of which for all purposes shall be deemed to be an original,
and  all  such  counterparts  shall  together  constitute  but  one and the same
Agreement  and  shall be enforceable as of the date hereof upon the execution of
one  or more counterparts hereof by each of the parties hereto.  In this regard,
each  of  the  parties  hereto acknowledges that a counterpart of this Agreement
containing a set of counterpart execution pages reflecting the execution of each
party  hereto  shall be sufficient to reflect the execution of this Agreement by
each  party  hereto  and  shall  constitute  one  instrument.

<PAGE>
9.19     USA  Patriot Act Notice.  Each Lender and the Agent (for itself and not
on  behalf  of any Lender) hereby notifies the Borrower and the Guarantors that,
pursuant  to  the requirements of the USA Patriot Act, it is required to obtain,
verify  and  record  information that identifies the Borrower, which information
includes  the  name  and address of the Borrower and other information that will
allow  such  Lender  or  the  Agent,  as applicable, to identify the Borrower in
accordance  with  the  USA  Patriot  Act.

9.20     Contribution  and  Indemnification.  In the event that any Credit Party
pays (whether through direct payments or as a result of providing Collateral for
the Obligations) any amounts on the Obligations in excess of such Credit Party's
Obtained Benefit (the "Excess Payments"), such Credit Party shall be entitled to
make demand on the other Credit Parties for such Excess Payments, and to receive
from  each  other  Credit  Party  that received an Obtained Benefit, such Credit
Party  Contribution Percentage of the Excess Payment.  If any party obligated to
make  such  a payment is unable to pay the Contribution Percentage of the Excess
Payment,  each  other  Credit  Party  agrees to make a contribution to the party
entitled  to  such  payment  to  the  extent necessary so that each Credit Party
shares equally the liability for such Excess Payment in relation to the relative
Obtained Benefit received by such Credit Party.   IN SUCH REGARD, TO THE MAXIMUM
EXTENT  PERMITTED  BY  LAW,  EACH  CREDIT PARTY SHALL INDEMNIFY, DEFEND AND HOLD
HARMLESS  THE  OTHER  CREDIT  PARTIES  FROM  AND  AGAINST ANY AND ALL LIABILITY,
CLAIMS,  COSTS  AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES)
ARISING  WITH RESPECT TO THE OBLIGATIONS AND EXCEEDING SUCH OTHER CREDIT PARTY'S
OBTAINED  BENEFIT  OR  CONTRIBUTION  PERCENTAGE THEREOF AS PROVIDED HEREIN.  Any
amount  due  under this Section 9.20 shall be due and payable within ten days of
demand  therefor by the party entitled to payment and shall be made to the party
entitled  thereto  at  the  address for notices to the Credit Parties under this
Agreement,  in  immediately  available  funds, not later than 2:00 p.m., Central
Standard  or  Daylight  Time,  on the date on which such payment shall come due.
The  remedies  available  to any Credit Party pursuant to the provisions of this
Section  9.20  are  not  exclusive.  All  rights  and  claims  of  contribution,
indemnification  and  reimbursement under this Section 9.20 shall be subordinate
in  right  of  payment  to  the  prior  payment in full of the Obligations.  The
provisions of this Section 9.20 shall, to the extent expressly inconsistent with
any  provision  in  any  Loan  Document,  supersede such inconsistent provision.

9.21     Tax  Shelter  Regulations.  The  Borrower  does not intend to treat the
Loans and related transactions hereunder and under the other Loan Documents as a
"reportable  transaction" (within the meanings under current Treasury Regulation
Section  1.6011-4 and Proposed Treasury Regulation Section 1.6011-4, promulgated
on  November  1, 2006).  In the event the Borrower determines to take any action
inconsistent  with  the  foregoing  statement, it will promptly notify the Agent
thereof.  If  the Borrower so notifies the Agent, the Borrower acknowledges that
one  or  more  of  the  Lenders  may  treat  its  Loans and related transactions
hereunder  and  under  the other Loan Documents as part of a transaction that is
subject  to  current Treasury Regulation Section 301.6112-1 or Proposed Treasury
Regulation  Section  301.6112-1,  promulgated  on November 1, 2006, and, in such
case,  such  Lender or Lenders, as applicable, will maintain the lists and other
records  required,  if  any,  by  such  Treasury  Regulations.

                     (SIGNATURES APPEAR ON FOLLOWING PAGES)

<PAGE>

     IN  WITNESS  WHEREOF, this Agreement is executed as of the date first above
written.

                              BORROWER:

                              CEP-M PURCHASE, LLC

                              By:  Current Energy Partners Corporation,
                                   its Manager

                                   By:  \s\ Brent M. Cook
                                        Brent M. Cook
                                        Chief Executive Officer

                    (Signatures continue on following page)

<PAGE>

                              AGENT:

                              AMEGY BANK NATIONAL ASSOCIATION, as Agent

                              By:  \s\ Charles W. Patterson
                                   Charles W. Patterson
                                   Senior Vice President

                              LENDER:

                              AMEGY BANK NATIONAL ASSOCIATION

                              By:  \s\ Charles W. Patterson
                                   Charles W. Patterson
                                   Senior Vice President

                              Contact Information and
                              Applicable Lending Office
                              for Base Rate Loans
                              and LIBO Rate Loans:

                              4400 Post Oak Parkway
                              4th Floor
                              Houston, Texas  77027
                              Attention:  Energy Lending Dept.
                              Facsimile:  (713) 561-0345

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00186-of-00352.parquet"}]]